Overtime Laws by State: 2026 Guide for Employers

Overtime in the United States starts with one federal rule: the Fair Labor Standards Act requires covered, non-exempt employees to be paid one and a half times their regular rate for every hour worked past 40 in a workweek. That is the floor, not the ceiling. A handful of states require more, which is why an employer running crews in California and Texas is following two meaningfully different sets of rules on the same payroll.

Two things changed for 2026, and both matter more than the weekly threshold most employers focus on. The federal salary level for exempt status was formally rolled back in May, and overtime pay now carries a federal tax deduction with a new W-2 reporting requirement attached. This page covers both, then links to a full guide for every state.

The Federal Rule in 2026

The Fair Labor Standards Act requires overtime pay of at least one and a half times an employee's regular rate for hours worked beyond 40 in a single workweek. A workweek is a fixed, recurring period of 168 consecutive hours. It does not have to start on Monday and it does not have to match a pay period, but once an employer sets it, it cannot be shifted around to avoid paying overtime.

Two details cause most of the trouble. First, the regular rate is not always the hourly wage. Nondiscretionary bonuses, shift differentials, and commissions generally have to be folded into the regular rate before the overtime multiplier is applied, which means an employee earning a production bonus has a higher overtime rate than their base wage suggests. Second, overtime is calculated per workweek and cannot be averaged across two weeks of a biweekly pay period. Fifty hours one week and thirty the next is ten hours of overtime, not zero.

What Changed in May 2026

The exempt salary threshold has been unsettled since 2024, and it is now settled again. The Biden administration's DOL finalized a rule in April 2024 raising the standard salary level to $844 per week, scheduled to rise to $1,128 in January 2025. Two federal courts in Texas vacated that rule in late 2024, and the Fifth Circuit dismissed the appeals in early May 2026.

On May 15, 2026, the DOL published a technical amendment in the Federal Register removing the 2024 rule's language from the Code of Federal Regulations and reinstating the 2019 regulations. The amendment took effect immediately. The operative federal numbers are now:

• $684 per week ($35,568 annually) for the executive, administrative, and professional exemptions.
• $107,432 per year in total annual compensation for the highly compensated employee exemption, including at least $684 per week paid on a salary basis.
• The automatic three-year escalator built into the 2024 rule no longer applies.

In practice these have been the enforced numbers since the courts acted in late 2024, so the amendment mostly makes the written regulations match reality. Two things worth noting: the DOL was explicit that this does not foreclose future notice-and-comment rulemaking on the threshold, and legislation to raise it has been introduced in Congress without being enacted. Employers who raised salaries in 2024 in anticipation of the higher threshold are not required to reverse those increases, and doing so carries its own morale and retention consequences.

State Salary Thresholds Above Federal

The federal rollback changes nothing for employers in states that set their own, higher floor. Six states currently require more than $684 per week for exempt status:

• Washington — $1,541.70 per week as of January 1, 2026. Exempt computer professionals may be paid hourly at no less than $59.96.
• California — $1,352 per week ($70,304 a year) as of January 1, 2026, set at twice the state minimum wage for a 40-hour week. The computer software employee exemption has its own higher rates.
• New York — $1,275 per week in New York City and Nassau, Suffolk, and Westchester counties; $1,199.10 per week elsewhere in the state, both as of January 1, 2026.
• Alaska — $1,120 per week ($58,240 a year) as of July 1, 2026, up from $1,040, tied to the state minimum wage rising to $14.00.
• Colorado — $1,111.23 per week as of January 1, 2026 under the COMPS Order.
• Maine — $871.16 per week as of January 1, 2026, driven by the state minimum wage increase.

Alaska's mid-year effective date is the one most likely to be missed. An employer that audited exempt salaries in January and considered the job done was compliant through June and out of compliance from July forward, with no notice that anything had changed. Any state that adjusts outside the January cycle needs its own review date on the calendar.

States With Daily Overtime

In most of the country, an employee can work a 12-hour day with no overtime owed as long as the week stays at or under 40 hours. In five states and Puerto Rico, that is not true, and the difference is expensive for anyone running long shifts.

California is the outlier by a wide margin: overtime after 8 hours in a day, double time after 12, and premium pay on the seventh consecutive day worked in a workweek. Alaska requires overtime past 8 hours in a day, and its overtime law applies only to employers with four or more employees. Colorado owes overtime past 12 hours in a day or past 12 consecutive hours worked, whichever calculation favors the employee. Nevada requires daily overtime past 8 hours, but only for employees earning less than one and a half times the state minimum wage, making the rule wage-dependent rather than universal. Oregon limits its daily rule to manufacturing establishments and canneries, where overtime is owed past 10 hours. Puerto Rico requires overtime past 8 hours and double time past 10.

Kentucky is a partial case worth knowing: it has no daily rule, but requires premium pay for work performed on the seventh consecutive day of a workweek.

Where both a daily and a weekly rule apply, the employer calculates under both and pays whichever produces the higher amount. Compressed schedules are where this bites hardest. A 4/10 or 9/80 arrangement that costs nothing extra in most states can generate significant daily overtime in California or Alaska. If you are considering one, read the 4/10 work schedule guide and the 9/80 schedule guide alongside your state's rules.

The New Overtime Tax Deduction and W-2 Reporting

The One Big Beautiful Bill Act created a temporary federal income tax deduction for qualified overtime compensation, covering tax years 2025 through 2028. Employees can deduct up to $12,500 of qualified overtime from federal taxable income, or $25,000 for joint filers, with the deduction phasing out above $150,000 in modified adjusted gross income ($300,000 joint).

Three points employers get asked about constantly, and where the answer is usually not what the employee expects:

• Only the premium portion counts. The deduction applies to the "half" in time and a half, not the whole overtime payment. An employee earning $20 an hour who works overtime at $30 has $10 per overtime hour that is potentially deductible, not $30.
• Only FLSA-required overtime qualifies. This is the one that catches employers in daily-overtime states. Overtime owed because of a state daily rule, a union contract, or employer generosity is not FLSA-required overtime and does not qualify. A California employer paying daily overtime has to separate the FLSA-required portion from the state-required portion to report it correctly.
• Nothing changes at the paycheck. Overtime is still subject to withholding and FICA. The deduction is claimed by the employee on their individual return, not applied by the employer at payroll.

The reporting obligation is where small employers have real exposure. For tax year 2025, the IRS granted penalty relief and separate reporting was optional, with many employers using Box 14. That relief is over. Beginning with tax year 2026, employers are required to report qualified overtime compensation separately on Form W-2, in Box 12 using code TT. Payroll systems that were never set up to split the overtime premium from base overtime pay need to be, before year-end.

Exempt vs Non-Exempt: Where Employers Get This Wrong

Most overtime liability does not come from miscounting hours. It comes from classifying an employee as exempt when they are not. Paying someone a salary does not, on its own, make them exempt. Exemption requires meeting a salary basis test, a salary level test, and a duties test, and all three have to be satisfied. The duties test is the one that fails most often.

A shift supervisor who spends most of the week doing the same work as the crew is unlikely to qualify for the executive exemption regardless of title or salary. An office administrator following established procedures usually does not meet the administrative exemption, which requires the exercise of discretion and independent judgment on significant matters. Misclassification is expensive because it is retroactive: unpaid overtime accumulates quietly for years and surfaces all at once.

Worth knowing: the exemption belongs to the employer, not the employee. An employer may choose to treat a qualifying exempt employee as non-exempt and pay them overtime, which is sometimes the simpler answer for a borderline role.

Running Payroll Across More Than One State

The rule that applies is generally the one where the work is physically performed, not where the company is headquartered. A business based in Texas with a crew working in Nevada owes Nevada's daily overtime for those hours. For employees who cross state lines within a single week, hours have to be tracked by location, not just by total.

This is where spreadsheets start to fail. Reconstructing which hours happened in which state, applying two different daily rules, checking the weekly total against both, and now separating FLSA-required overtime from state-required overtime for W-2 reporting is the kind of calculation that is easy to get wrong and hard to audit later. Tracking punches against a job, project, and location from the start is what makes the answer defensible.

If you want to build this yourself first, the Excel and Google Sheets timesheet template and the Excel time tracking template will get you a working system, and converting hours and minutes to decimal covers the formula step most people stumble on. For the calculation itself, the step-by-step California overtime walkthrough is the most complete worked example, since if you can calculate it there you can calculate it anywhere.

Overtime Guides by State

Thresholds, exemptions, and calculation examples for each state, including which states add daily overtime rules.

Related Reading

Calculation guides, trackers, and the rules that interact with overtime.

Frequently Asked Questions