What Is Overtime?
Hours worked beyond the standard 40-hour workweek (or daily threshold in some states), which must be paid at a higher rate (at least 1.5x) under federal law. Some states require even higher rates or have different overtime thresholds.
What Is Overtime?
Overtime refers to hours worked beyond the standard workweek threshold that trigger premium pay. Under the federal Fair Labor Standards Act (FLSA), non-exempt employees must be paid at least 1.5 times their regular rate of pay for every hour worked over 40 in a workweek. Some states have additional requirements — California, for example, mandates daily overtime after 8 hours and double-time after 12 hours.
Overtime is one of the most regulated and litigated areas of employment law. Getting it wrong — even unintentionally — can result in significant back pay, penalties, and legal liability.
Who Gets Overtime
Most hourly workers are non-exempt, meaning they're entitled to overtime pay. Exempt employees — typically salaried workers in executive, administrative, or professional roles who meet specific salary and duties tests — are not entitled to overtime under the FLSA.
The exemption isn't based on job title or how the worker is paid. It's based on specific legal criteria. Misclassifying a non-exempt worker as exempt to avoid overtime is one of the most common FLSA violations.
Calculating Overtime Pay
The regular rate of pay — the basis for the 1.5x overtime multiplier — isn't always just the hourly rate. It includes shift differentials, non-discretionary bonuses, commissions, and certain other forms of compensation. Failing to include these in the overtime calculation leads to underpayment, which creates wage-and-hour liability.
Consult with a qualified payroll professional to ensure your overtime calculations include all required compensation components.
Managing Overtime Costs
- Accurate forecasting — Predict demand accurately so you schedule the right number of workers without forcing overtime.
- Flex staffing — Use on-demand workers to cover demand spikes instead of pushing your core team past 40 hours.
- Real-time tracking — Monitor hours throughout the week so you can adjust before overtime kicks in.
- Cross-training — Give workers skills across multiple roles so you have more scheduling flexibility.
Overtime Management on GigSmart
G-Force tracks hours in real time for your core team, giving managers visibility into who's approaching overtime before it happens. When demand exceeds your core team's capacity, G-Flex fills the gap with flex workers — covering shifts that would otherwise push your permanent staff into overtime territory.
It's a straightforward trade-off: paying overtime at 1.5x, or posting a flex shift at the standard rate. For most businesses, the math favors flex staffing — and the workers get additional earning opportunities without anyone burning out.
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