Yes. If your workers are employees, federal law makes you pay them 1.5 times their regular rate for every hour over 40 in a workweek, and almost nobody swinging a hammer or running a crew is exempt from that. It does not matter if you pay them a salary, a day rate, or cash. It does not matter if they agreed to straight time. Overtime on the hours over 40 is owed, and the penalty for skipping it is back wages plus an equal amount on top, going back two years or three. Here is exactly when it kicks in and the traps that catch contractors.
The federal rule in one line
Under the Fair Labor Standards Act (FLSA), a non-exempt employee gets 1.5 times their regular rate for all hours worked past 40 in a fixed, seven-day workweek. That is the whole federal rule, and it applies to almost every trade worker.
A few things that trip people up:
- The workweek is a fixed 168-hour block, and it does not have to be Monday to Sunday. You pick the start day, you write it down, and you keep it consistent. Overtime is figured week by week inside that block.
- There is no federal daily overtime. Federally, a 12-hour day followed by three short days is not overtime as long as the week stays under 40. Some states change that (see below).
- Overtime is on the "regular rate," not just base pay. If you pay a nondiscretionary bonus, a shift premium, or a per-job spiff, that money gets folded into the regular rate before you multiply by 1.5. The regular rate is usually higher than the base hourly number.
Salary does not mean "no overtime"
This is the single most common mistake. Paying someone a salary does not make them exempt from overtime. Exemption has two parts, and you have to clear both:
- A salary floor. Exempt white-collar workers have to be paid a set salary at or above a federal threshold (around $684 a week in 2026). That number has bounced around in court over the last couple of years, so do not lean on the exact figure, and confirm the current one at dol.gov.
- A duties test. The job itself has to be genuinely executive, administrative, or professional work. Manual labor never qualifies. A framer, a laborer, a plumber, an installer, a working foreman who is mostly on the tools: these are non-exempt no matter how you pay them.
So a salaried lead carpenter who spends the day building is still owed overtime. A true office manager or a genuine standalone estimator might be exempt if they also clear the salary floor. When in doubt, treat the person as non-exempt and pay the overtime.
The traps that turn into back-pay claims
- "Comp time" instead of overtime pay. Giving a private-sector worker time off next week instead of paying the overtime this week is illegal. Only government employers can use comp time. Private contractors have to pay the cash.
- Straight time for the extra hours. Paying the same rate for hours 41 and up, in cash or on the check, is wage theft. The premium half is what is owed.
- Day rate and piece rate. Paying a flat daily amount or by the piece does not get you out of overtime. You convert the pay to an hourly regular rate for that week and pay the half-time premium on the hours over 40.
- Averaging two weeks. You cannot smooth 50 hours one week and 30 the next into "two 40s." Each workweek stands alone.
- 1099-ing your crew to dodge it. Calling a worker an independent contractor so you do not owe overtime is the oldest trick, and it is exactly what enforcement looks for. If you control how they work and they do your core trade, they are your employee, the 1099 does not save you, and you are on the hook for the back overtime plus penalties. See the guide on 1099 versus W-2.
If you are the worker: are you owed overtime?
If you are an employee and you worked more than 40 hours in a week, you are almost certainly owed time-and-a-half on the extra hours, whatever your boss told you. A 1099 form, a "salary," a handshake deal for straight time, none of that cancels the right. Keep your own record of the hours you actually work: dates, start and stop times, the job. That personal log is what wins an unpaid-overtime claim.
If you have not been paid the overtime you earned, you can file with the U.S. Department of Labor Wage and Hour Division at 1-866-487-9243. They handle it confidentially, and it applies to every worker on the job regardless of immigration status. Back overtime generally reaches back two years, or three if the employer knew better and did it anyway, and the law can add an equal amount again as damages plus your attorney's fees. Your state labor department may give you an even longer window, so check both.
Some states go further than the FLSA
The federal rule is the floor, not the ceiling. States can and do add to it:
- Daily overtime. A handful of states require overtime once you pass a set number of hours in a single day, not just 40 in a week. California is the long-standing example, but it is not the only one, and the exact trigger and any double-time rule vary.
- Higher exempt salary floors. Some states set the salary bar for exemption well above the federal one, often tied to the state minimum wage, which pulls more workers into overtime eligibility.
- Meal and rest breaks and other pay rules that the FLSA does not require at all.
Every one of those is a state-specific number that changes, so do not assume. Get your state's overtime, break, and exemption rules from Working in Your State before you build a schedule or a bid around them.
Common questions
Do I have to pay overtime if my employee agreed to work for straight time?
No agreement can waive overtime. If the worker is a non-exempt employee, you owe 1.5 times the regular rate for hours over 40 no matter what they signed or shook on. The right to overtime belongs to the worker and cannot be given away, so a "he agreed to it" defense fails. Paying straight time for the extra hours is wage theft and exposes you to back pay plus an equal amount in damages.
Are salaried construction workers exempt from overtime?
Almost never. Paying a salary does not make someone exempt; the job also has to be genuine executive, administrative, or professional work, and manual trade work does not qualify. A salaried lead carpenter or foreman who is on the tools is still owed overtime. Only a true office or management role that also clears the federal salary floor is exempt, so when in doubt, treat trade workers as non-exempt and pay it.
Can I give comp time instead of paying overtime?
No. Private employers cannot swap paid time off for overtime pay; only government employers can use comp time. If your employee works past 40 hours in the workweek, you have to pay the time-and-a-half in cash on that pay period. Banking the hours for time off later is a violation, even if the worker prefers it.
I'm paid a day rate. Do I still get overtime?
Yes. A day rate does not remove your right to overtime. Your total pay for the week is converted to an hourly regular rate, and you are owed extra for the hours over 40. The same is true for piece-rate work. If you regularly work long weeks on a flat daily amount and get nothing extra, you are likely being underpaid, and you can raise it with the U.S. Department of Labor Wage and Hour Division at 1-866-487-9243.
How far back can I claim unpaid overtime?
Federal unpaid-overtime claims generally reach back two years, or three years if the employer's violation was willful, and the law can add an equal amount again as liquidated damages. You can also recover your attorney's fees. Some states allow a longer lookback than the federal rule, so check Working in Your State as well as filing with the U.S. Department of Labor.
The honest bit
- The federal figures here are current for 2026: the $7.25 federal minimum wage, the 40-hour overtime trigger, and the roughly $684-a-week exemption salary floor. That salary floor in particular has been litigated and changed recently, so verify the current numbers at dol.gov.
- Daily overtime, higher state exemption thresholds, meal and rest breaks, and final-pay timing all vary by state and sit on top of the federal rule. Route them to Working in Your State.
- This is general guidance, not legal advice. Overtime and misclassification are heavy enforcement areas, so for a real dispute or an audit, get an employment attorney or the Wage and Hour Division involved.
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Sources
- US Department of Labor - Overtime Pay · The FLSA time-and-a-half requirement over 40 hours in a workweek
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