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The True Cost of a Remote Hire - Know the State Laws: Overtime

Updated: Feb 16, 2021

When hiring in 2021, most companies already have their plan in place around a remote, on-site, or hybrid model. Regardless of your model, most companies are taking advantage of geographic locations with typically lower costs of living. Keeping that in mind, there are more things than just salary you’ll want to consider when it comes to hiring state to state - in particular, overtime, paid sick leave, and general cost of living. These can help you figure out the true cost of an employee and help you put the best strategy for you and your organization. We’ll start this series below with some much needed insight into overtime for anyone who is looking into remote hiring within your current workforce.

In particular, now that much of the workforce is working from home, the line is more blurred between when is work time and when is off time, so you’ll want to do some research on the laws of the state before making any decisions. Even if you’re paying someone less money than you otherwise would have, if they’re working overtime, it could end up costing you more in the end. When hiring someone, you want to take into account the total cost of hiring them and the multiple factors that entails.

In an effort to help you do your homework, here’s a quick cheat sheet for overtime laws state-by-state. For example, see below that 21 of the 50 states have no state laws on overtime outside of the FSLA, while 22 have their own laws based on a 40 hour work week, and another 7 have laws very specific to themselves and even specific counties.

What is the FLSA?

The FLSA, or Fair Labor Standards Act, is a federal law that establishes standards for things such as minimum wage, overtime pay, youth employment, and record keeping. States are allowed to pass their own laws on these topics, but they may only add to what the FLSA already grants to employees. If the FLSA already grants a non-exempt employee overtime at 40 hours, state law cannot make them wait until 50 hours. However, if an employee is not covered for overtime pay under the FLSA and they are covered under the state law, they would be paid in accordance with state law.

In regards to overtime, the FLSA dictates that all non-exempt employees receive overtime pay for any hours worked over 40 hours per workweek. Overtime pay is defined as at least one and a half times the rate of regular pay - you may often hear this referred to as “time and a half.” The FLSA does not regulate how many hours an employee is allowed to work during a week, only that however many they do work over 40 must be paid 1.5x their normal hourly rate.

Employees can be covered by the FLSA via “enterprise coverage” or “individual coverage.” Employees who work for businesses with at least two employees that either have at least $500,000 of annual business done or are hospitals, schools, preschools, government agencies, or provide medical or nursing care. Employees are also covered if their work involves them in “commerce between states” (i.e. producing goods that are sent out of state, making calls between states, traveling to other states, etc.).

Some states have no particular laws regarding overtime.

Since overtime tends to be a fairly straightforward topic, many states choose to use the FLSA as their standard for overtime. Because the FLSA is federal, even if a state passes no laws at all regarding overtime, the FLSA will still cover employees in that state. In these states, overtime pay is based on a 40 hour work week, and every hour that an employee works beyond 40 hours in a period of seven consecutive 24-hour-days must be paid out at a rate of 1.5x their normal hourly rate.

States that default to the FLSA:

Some states have laws based on a 40 hour work week.

As mentioned previously, all states are held to the minimum standard of the FLSA, but many states have chosen to pass their own laws regarding overtime. Most of these states have stayed close to the FLSA in their own legislation. These states may have certain stipulations in their laws - for example, in Washington state, some salaried employees are eligible for overtime - but the basis of the state law is overtime pay for hours worked over 40 a week, based on that same seven consecutive 24-hour days as the FLSA.

States with individual laws based on a 40 hour work week:

Some states have their own laws that offer even more.

This really depends on the state how in-depth the law goes, but some states have created overtime laws based on other factors. Some states base overtime on hours worked in a day or automatically pay overtime for the seventh day worked in a week. These are the ones you’ll want to examine more closely.

  1. Alaska - Alaska’s overtime laws dictate that employees must be paid 1.5x their normal rate for any hours over 40 worked in a week or for any hours over eight worked in a day. However, the Alaska Wage and Hour Act also offers an extensive list of individuals who are exempt from overtime payment (and minimum wage).

  2. California - California state law dictates that employees should be paid 1.5x their normal rate for any hours worked beyond eight, up to and including twelve hours in a single day. They also must be paid for the first eight hours worked on a seventh consecutive day of work in a week. If an employee works in excess of 12 hours in a single workday or more than eight hours on the seventh consecutive day of work, they must be paid double time, or twice their normal hourly wage.

  3. Colorado - Colorado requires employees to be paid overtime pay (1.5x) for any hours worked beyond 40 hours in a week, 12 hours in a day, or 12 consecutive hours without regard to the start or end of the workday. Whichever calculation of hours results in the greater payment of wages is the one required to be used by employers.

  4. Kansas - While federal law says that overtime is due once an employee has worked 40 hours, Kansas state law says that overtime is due once an employee has worked 46 hours. The Kansas Department of Labor states that whether employers must follow state or federal law comes down to the amount of annual revenue and interstate commerce of business.

  5. Minnesota - Again, while federal law states overtime is due for anything worked over 40 hours a week, the Minnesota Fair Labor Standards Act requires overtime pay for all hours worked in excess of 48 hours per work week. Employees covered under the FLSA will be paid overtime for 41+ hours a week, and employees who are exempt from federal law but covered under state law will be paid overtime for 49+ hours a week.

  6. Nevada - For employees who make less than 1-½ times the minimum wage ($12.00 an hour if offered health benefits or $13.50 if not offered health benefits), overtime pay at 1.5x the normal hourly rate kicks in for anything worked over eight hours in a 24 hour period or anything worked over 40 hours in a work week. Employees who make more than those hourly rates are eligible for overtime pay for anything worked beyond 40 hours in a work week.

  7. Kentucky - Kentucky requires employees to be paid overtime for any hours worked over 40 in a week, but they also require in certain instances that any employees who work seven days a week be paid overtime for all hours worked on the seventh day.

One more thing to note about overtime laws:

All laws, whether federal or state, are much more complex than have been broken down here. This is a good starting point, but you should always read further into the laws in your area or in the area of your employee so you have a full understanding of what can be expected of you as the employer.

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1 Comment

Michael Miller
Michael Miller
Feb 28, 2023

Thanks for the interesting article. Our company is constantly improving the software to facilitate the work of the personnel department.

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