Overtime: US

This overtime policy explains how your organization authorizes, tracks, and pays overtime for non-exempt employees under the federal Fair Labor Standards Act (FLSA), including its overtime requirement in 29 U.S.C. Section 207 and the U.S. Department of Labor's guidance on hours worked and overtime calculation rules in 29 C.F.R. Part 778; it also helps set clear expectations around getting approval before working extra hours, defining your workweek, and understanding what counts as time worked, while leaving room to provide any higher overtime benefits required by state or local law.

The History Behind Overtime Policies in the US

Overtime rules in the United States began in the Great Depression era push to spread work and curb abusive schedules, which is why modern Wages & Hours compliance still treats overtime as a pay issue tied to timekeeping. Congress passed the Fair Labor Standards Act (FLSA) in 1938, and its overtime core still lives in 29 U.S.C. 207. The statute set the basic federal baseline: if a non-exempt employee works more than 40 hours in a workweek, your organization owes time-and-a-half.

After the FLSA passed, the fight moved to the details, especially what counts as "hours worked" and what pay counts in the "regular rate." The U.S. Supreme Court pushed Congress to clarify the rules in cases like Anderson v. Mt. Clemens Pottery Co. (1946), which accepted reasonable time estimates when an employer failed to keep accurate records, and Steiner v. Mitchell (1956), which treated certain required pre- and post-shift activities as compensable. Congress responded with the Portal-to-Portal Act of 1947, which narrowed some claims but kept the basic overtime structure intact. The Department of Labor later codified the regular rate and overtime calculation framework in regulations that now sit in 29 C.F.R. Part 778.

Employers started writing overtime policies because the FLSA leaves room for expensive misunderstandings, even when nobody's trying to cut corners. Managers ask for "just a little extra" work, employees check email after hours, and payroll teams have to decide what counts toward the 40-hour threshold and how to calculate the regular rate for bonuses and differentials. State and local laws piled on by adding daily overtime, double time, or stricter rules in some places, which made a clear internal approach to approval, timekeeping, and classification a practical necessity.

Which Law is this Overtime Policy Meant to Comply With?

If you create and distribute an Overtime Policy for your US-based employees, it's in an effort to comply with the US's Fair Labor Standards Act (FLSA), 29 U.S.C. Section 207 and the US Department of Labor's implementing guidance on overtime calculations and hours worked, including 29 C.F.R. Part 778 (Overtime Compensation) and WHD Fact Sheet #22: Hours Worked Under the FLSA.

How to Write an Overtime Policy Compliant with US Federal Laws

• Start with "why" and introduce the concept of overtime as occasional extra work to meet business needs.
• Set an expectation that employees should get approval before working overtime.
• Define who is eligible for overtime pay by distinguishing non-exempt versus exempt employees.
• State the overtime pay rate for non-exempt employees and note that state or local law may require a higher benefit.
• Define the workweek used to calculate overtime.
• Clarify that only hours actually worked count toward overtime eligibility, and paid time off does not.
• Tell employees where to direct questions or concerns about overtime and classification.

When to Include this Policy in Your Employee Handbook

The law does not require you to publish a policy or issue a specific notice. That said, you still have to comply with the requirements that apply to you as an employer. 

Even when notice is not required, this is still the kind of policy most employers should put in their handbook or otherwise publish to employees. It answers a question employees will ask, sets expectations, and gives managers a consistent script. If you do not include it, you will end up explaining it ad hoc, and that is when inconsistency, resentment, and accidental noncompliance shows up.

Other Considerations

The law applies to US employers who have at least 1 employee in the US.

Exceptions

There are situations where these legal requirements don't apply.

• Types of employers and operations:
  • Federal, state, and local government employers (different overtime rules apply).
  • Railroad and air carrier employers, and certain related employees, that are covered by other federal transportation laws.
• Specific industries and establishments:
  • Certain agricultural employers and agricultural work.
  • Certain seasonal amusement or recreational establishments.
  • Small newspapers with limited circulation.
• Special overtime frameworks (instead of the standard 40-hour rule):
  • Hospitals and residential care establishments that use an alternative work period arrangement permitted by federal law.
  • Fire protection and law enforcement employees of public agencies that use a longer work period permitted by federal law.