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Compensatory time off in place of payment for overtime is not legal in the private sector. Federal exemptions from overtime the flsa allows for exemptions from the federal overtime (and minimum wage) requirements for certain employees who work in administrative, professional and executive jobs (known as exempt employees). In order to determine if a job is exempt from overtime, the flsa provides a series of tests to determine the overtime eligibility of an employee based on pay rate, working conditions, skill level, and other factors.

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This obligation introduces new compliance and communication challenges for employers and payroll teams who will be required to reconfigure earnings.

Your employer must pay you at the overtime rate for the extra hours you worked

Use the department of labor’s overtime pay calculator to estimate how much overtime pay you may earn. In this article, we define overtime pay, explain how it functions under federal law and state laws, review different types of overtime work, and provide steps to calculate it using your regular rate of pay or hourly rate. Overtime pay ensures employees are fairly compensated for extra time on the job. This template outlines the conditions for overtime eligibility, helping employers effectively control labor costs and adhere to regulatory standards.

Here are some key points to know for both federal and state exemptions from overtime for 2026