Overtime pay laws by state

Overtime compliance can feel like a moving target, especially when you're running payroll in multiple states. Federal law sets the floor, but state rules can raise it. Miss a requirement, and you could face back-pay claims, government investigations, or costly litigation.

This guide covers the federal baseline, how overtime laws by state differ, which states require daily overtime or double-time pay, how employee classification works, and what the new federal overtime deduction means for your business.

What is overtime pay?

Overtime pay is extra compensation that covered, non-exempt employees earn when they work more than 40 hours in a workweek under federal law. A workweek is a fixed, recurring period of 168 hours, or seven consecutive 24-hour days. Employers calculate overtime separately for each workweek.

The most common overtime rate is time-and-a-half, which equals 1.5 times an employee’s regular rate of pay. Overtime is based on hours worked, not hours scheduled. For example, if an employee is scheduled to work 38 hours but works 44, the additional six hours generally qualify as overtime.

Federal overtime law (FLSA) basics

Federal overtime law is grounded in the Fair Labor Standards Act (FLSA), passed in 1938 and administered by the U.S. Department of Labor. For covered, non-exempt employees, the FLSA requires overtime pay at 1.5 times the regular rate for all hours worked beyond 40 in a workweek.

Some employees may be exempt from federal overtime requirements based on factors such as their job duties and salary level. Before deciding how overtime applies, employers should confirm whether each role is classified as exempt or non-exempt.

Federal law acts as a minimum standard. States may, and sometimes do, provide greater protections. When they do, employers operating in those states generally must follow the stricter rule.

See our full guide to federal overtime laws for a deeper look at FLSA requirements, recordkeeping obligations, and exempt classifications.

How overtime laws vary by state

State overtime rules generally fall into one of five categories:

1. No separate state overtime law: The FLSA governs overtime requirements for most workers in these states. Examples include Alabama and Texas. Some states, such as Florida, add limited premium-pay rules for certain manual laborers but do not create a broader state overtime framework.
2. State-level 40-hour weekly rule: These states write the 40‑hour weekly overtime standard into state law, generally mirroring the FLSA and requiring overtime after 40 hours in a workweek. Examples include Oregon, New Jersey, and New Mexico.
3. Daily overtime requirements: Overtime pay begins after an employee works a set number of hours in a single day, regardless of the employee’s weekly total. Examples include Alaska, California, and Nevada.
4. Double-time requirements: Employers must pay an employee at twice their regular rate in certain circumstances. California is one example and is effectively the only state with codified daily double‑time rules for many non‑exempt employees.
5. Higher weekly thresholds or industry-specific rules: Some states apply a higher weekly overtime threshold to certain workers or industries. Examples include Kansas, which uses a 46-hour threshold in some cases, and Minnesota, which uses a 48-hour threshold for many employers.

When a state rule is more protective than the federal rule, employers covered by both laws generally must follow the state standard.

State overtime comparison table

Here’s a general overview of overtime laws by state. Verify current requirements with your state labor agency before relying on this table. Laws can change, and local rules may also apply.

States with daily overtime or double-time rules

Daily overtime states require premium pay once an employee exceeds a set number of hours in a single workday, regardless of their weekly total. Here are the verified states with daily overtime requirements:

• Alaska: 1.5x pay for hours beyond 8 in a single day, in addition to the weekly 40-hour threshold.
• California: 1.5x pay for hours 8 through 12 in a workday, and for the first 8 hours worked on the seventh consecutive day in a workweek.
• Colorado: 1.5x pay for hours beyond 12 in a workday, or for any work beyond 12 consecutive hours, plus overtime after 40 hours in a workweek, with the state requiring employers to use whichever measure yields the greatest overtime pay.
• Kentucky: 1.5x pay for work performed on the seventh consecutive day of the workweek, in addition to weekly overtime for hours over 40. This is a seventh‑day premium rule, not a general daily overtime requirement.
• Nevada: 1.5x pay for hours beyond 8 in a single day, but only for employees earning less than 1.5 times the state minimum wage (under $18/hour). All non‑exempt employees receive 1.5x pay for hours worked over 40 in a workweek, regardless of wage, and a mutually agreed, written 4‑day, 10‑hour schedule can waive the daily 8‑hour rule.
• Oregon: 1.5x pay for hours beyond 10 in a single day. Daily overtime applies to covered manufacturing, mill, cannery, and similar establishments and is paired with a weekly 40‑hour overtime threshold. Employers must pay the higher of the two calculations.

California overtime rules also include the only state-mandated double-time requirement in the U.S. California employers must pay 2x an employee's regular rate for hours worked beyond 12 in a single workday, and for all hours worked beyond 8 on the seventh consecutive day of a workweek.

For example, a California employee who works a 14-hour shift would receive regular pay for the first 8 hours, time-and-a-half for hours 9 through 12, and double time for hours 13 and 14.

Exempt vs. non-exempt employees

Non-exempt employees are generally entitled to overtime pay. Exempt employees generally are not. But paying someone a salary does not automatically make them exempt.

Under federal law, an employee generally must meet three requirements to qualify for an exemption:

• They must be paid on a salary basis.
• They must earn at least the current FLSA salary level (currently $684 per week for most white-collar exemptions).
• They must perform qualifying executive, administrative, professional, computer, or outside sales duties.

If an employee doesn’t meet the applicable requirements, they’re usually considered non-exempt. Job titles alone don’t determine classification.

State law may set a higher standard. Some states use higher salary thresholds or stricter duties tests. In California, for example, the current threshold for these exemptions is $1,352 per week, which is twice the state minimum wage for full-time work. This means an employee could qualify as exempt under federal law but still be entitled to overtime under California law.

Misclassification can create serious problems, including unpaid overtime, back pay claims, and recordkeeping issues. Some occupations and industries, including agricultural workers, commissioned retail employees, motor carrier drivers, and seasonal amusement or recreational workers, may be subject to different federal or state rules.

Review overtime exemptions for each role based on the employee’s duties, pay, industry, and work location. For close calls, consider working with a qualified employment or payroll professional.

The "No Tax on Overtime" deduction

The No Tax on Overtime deduction is a temporary federal income tax deduction created by the One Big Beautiful Bill Act (OBBBA). For tax years 2025 through 2028, eligible workers can deduct the premium portion of their overtime, the extra "half" of time-and-a-half required by the FLSA, up to $12,500 for single filers or $25,000 for joint filers.

There are a few clarifications to keep in mind. This is an income tax deduction, not an exemption from payroll taxes (Social Security and Medicare taxes still apply to overtime wages), and it doesn’t change any employer's obligation to pay overtime. Employers must still calculate, track, and pay overtime in full.

Additional eligibility rules, income phase-outs, and reporting requirements apply, so workers should review the latest IRS guidance or consult a tax professional before claiming the deduction.

For a deeper dive on this information, check out our resource on how the OBBBA affects payroll.

How to stay compliant with overtime laws

Overtime compliance comes down to consistent practices. Here's a practical framework to help you stay on track.

1. Identify which employees are covered

Review every worker's classification. Confirm that exempt employees genuinely meet both the duties test and the applicable salary threshold under federal and state law. Don't assume that salaried workers are automatically exempt.

2. Check federal, state, and local requirements

Compare all applicable rules for each location where your employees work. Federal law is the floor, while state law may be higher. Local ordinances can add another layer. Monitor rule changes regularly, since thresholds and requirements can shift.

3. Track every hour worked

Record regular hours, overtime hours, and any other time that counts as hours worked under applicable law, including travel between work sites and certain on-call time. Accurate time records protect both your employees and your business. QuickBooks time tracking tools can help you capture hours in real time.

4. Calculate the regular rate correctly

The regular rate used to calculate overtime may include more than just base hourly wages. Certain nondiscretionary bonuses and other compensation may need to be factored in. See our calculation guide for a step-by-step breakdown of how to calculate overtime under FLSA rules.

5. Keep complete payroll records

Maintain accurate time and pay records for each employee. Federal law requires employers to keep payroll records for at least three years. Complete records can help protect your business during a wage dispute or government investigation.

6. Review policies and payroll settings regularly

Set a schedule to review your overtime policies, at least annually and whenever there's a change in the law. When in doubt, consult a qualified payroll professional, employment attorney, or HR advisor. The stakes for getting it wrong are high.

How QuickBooks helps you track and calculate overtime

Manual overtime tracking is where classification errors, missed hours, and calculation mistakes tend to start, the kind that turn into the back-pay claims and investigations mentioned above. Connecting time data directly to payroll closes that gap.

QuickBooks Workforce brings time tracking and payroll together in one place, so hours worked flow straight into pay calculations without manual re-entry:

• Automatic overtime calculation: Once hours are logged, QuickBooks applies the correct overtime rate to hours worked beyond 40 in a week, without manual math.
• Anomaly detection: Payroll AI flags missing punches, unusual overtime spikes, or hours that don't match a scheduled shift before you submit payroll, so issues surface before payday instead of after.
• Centralized records: Time and pay data live together, supporting the recordkeeping practices covered above, including the federal requirement to retain payroll records for at least three years.

A connected system won't tell you which state's overtime rules apply to a given employee, but it removes the manual re-entry and missed-hours errors that often turn a compliance question into a compliance problem.

Explore QuickBooks Workforce to find the setup that fits your team and business needs.