How Do State Overtime Pay Rules Differ from Federal Law?

This is the second in a series of articles about wage and hour compliance. This article examines differences between the federal Fair Labor Standards Act and state overtime wage laws. Read the first part here and the third part here.

Under federal law, employers must pay nonexempt workers time and a half for all hours worked beyond 40 in a workweek. That may seem straightforward, but differences in state laws make overtime compliance more complicated.

Some states have more-stringent overtime requirements than the federal Fair Labor Standards Act (FLSA)—yet other states have less stringent laws or no specific requirements at all. Employers should keep in mind that the most employee-friendly rules apply.

"The FLSA expressly reserves to states the right to enact more-generous overtime laws," noted Cheryl Orr, an attorney with Drinker Biddle in San Francisco.

HR professionals must evaluate each requirement that applies to their workforce and figure out a compliance strategy. They could take a jurisdiction-by-jurisdiction approach or decide to pay all employees everywhere according to the strictest overtime requirements applicable to any of them anywhere, said John Thompson, an attorney with Fisher Phillips in Atlanta.

[SHRM members-only multistate coverage: Multistate Employer Resources]

Daily Overtime Rules

Unless employees are exempt from the FLSA's overtime pay provisions, they must be paid at least 1.5 times their regular rate of pay for all hours worked in excess of 40 in a workweek. A workweek doesn't have to be the same as a calendar week—rather, it is "a fixed and regularly recurring" block of seven consecutive 24-hour periods, according to the U.S. Department of Labor.

Some states go further than the FLSA and require employers to pay daily overtime premiums when nonexempt employees' hours exceed a certain threshold.

"Employers doing business in states that have daily overtime requirements must comply with these state laws," Orr said.

In Alaska, California and Nevada, employers must pay overtime premiums for any hours worked beyond eight in a day. California workers also must be paid double time after working 12 hours in a day.

In Colorado, a time-and-a-half daily overtime premium kicks in after the 12th hour worked.

Employers must also note industry-specific daily overtime rules—such as in Oregon, where manufacturing workers must be paid premiums after working 10 hours.

Some states also mandate overtime premiums if employees perform work on all seven days in a particular workweek. For example, California employees must be paid time and a half for the first eight hours on the seventh consecutive day of work in a workweek and must receive double time for hours worked beyond eight.

With some exceptions, Kentucky employees who work seven days in any workweek must also be paid time and a half on the seventh day.

FLSA Is Sometimes More Generous

States that either don't have their own overtime provisions or have laws that are less stringent than the FLSA include Alabama, Florida, Kansas, Louisiana, Mississippi, Oklahoma, South Carolina, Texas, Utah and Virginia.

In Kansas, for example, overtime pay is required only after an employee has worked 46 hours in a week.

"These less stringent state laws apply only to employers and employees not covered by the FLSA," Orr said.

However, most public and private employers are covered by the federal law—which broadly applies to organizations with annual sales of at least $500,000 and to employees who are engaged in interstate commerce. The FLSA also applies to some organizations regardless of their annual sales, including hospitals, businesses that provide medical or nursing care for residents, schools and preschools, and government agencies.

Overtime Exemptions Vary

Employers must also take a look at which jobs are exempt from overtime pay—and these jobs may be different under federal and applicable state laws.

The FLSA has white-collar exemptions for executive, administrative and professional employees who earn a certain minimum salary and perform certain job duties. Different exemption rules apply to computer-related, outside sales and highly compensated positions.

It's important to note that states may have their own exemption categories, salary thresholds and duties tests. Employers must comply with the most employee-favorable applicable overtime requirement in each jurisdiction, Thompson said.

There are also industry exemptions under the FLSA, such as for agricultural employees. The coverage and scope of state laws and regulations may vary significantly with that of the FLSA, Orr said. For example, in California, agricultural employers are currently required to pay:

• Time and a half for all hours exceeding 10 in a workday.
  
• Time and a half for the first eight hours worked on the seventh consecutive day of the workweek.
  
• Double time for all hours worked beyond eight on the seventh consecutive day of the workweek.
  

"California agricultural employers must comply with these overtime requirements regardless of the FLSA exemption," Orr noted.

Identifying the nuances in each applicable law and developing a compliance strategy must be a part of an employer's analysis for each jurisdiction in which it employs workers, Thompson said.

This was the second installment in a three-part series. The first installment examined federal and state record-keeping requirements for nonexempt employees. The final segment will discuss federal and state laws that apply to tipped workers. 

 

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