Federal Law

U.S. Federal Overtime Law Explained

In the United States, the Fair Labor Standards Act of 1938 establishes a standard work week of 40 hours for certain kinds of workers, and mandates payment for overtime hours to those workers of one and one-half times the worker’s normal rate of pay for any time worked above 40 hours. The law creates two broad categories of workers, those that are “exempt” from the regulation and those that are “non-exempt”. Classes of workers that are exempt from the regulation include certain types of administrative, professional, and managerial employees. Under the law, employers are not required to pay exempt employees overtime but must do so for non-exempt employees. Out of approximately 120 million American workers, nearly 50 million are exempt from overtime laws (U.S Department of Labor, Wage and Hour Division, 1998). As a result, Americans rank near the top for the average number of hours worked per year (1,979) compared to other advanced capitalist nations. (International Labor Organization, Table 6b).

The overtime laws were overhauled by President George W. Bush and the Department of Labor, on August 23, 2004. The changes to the law, pushed for by large retailers and other business interests, were controversial. According to one study, the changes could have significant impact on the number of workers covered by overtime laws and exempt several million more workers. (Economic Policy Institute). The Bush administration maintained that the impact would be minimal and would help clarify an out-dated regulation. In September 2004, both Republican controlled chambers of Congress voted to block the Labor Department from putting the overtime law changes into effect.