Why Don't All Jobs Pay Overtime?

Ever wonder why some jobs pay overtime while others don't? This isn't just a simple function of an employer choosing how it prefers to compensate its employees. Instead, determining which positions require overtime compensation is a matter of federal employment law, as outlined in the Fair Labor Standards Act, or FLSA. The FLSA's overtime provision specifies that covered employers must pay their employees at least 1.5 times their regular pay rate for all hours beyond 40 that they physically work in a workweek. (By the way, here's our discussion on the case for a four-day workweek.)

Almost all employers are covered under the FLSA, which applies to organizations that engage in interstate commerce or that have over $500,000 in annual revenue. While that sounds like just about every worker in the country is entitled to overtime pay, that's not the case. One major caveat to the FLSA's overtime provision is that it only applies to nonexempt workers.

Under the Fair Labor Standards Act, jobs are classified as either exempt or nonexempt, and this determines whether or not they're legally entitled to overtime pay. If you're employed in an exempt job, that means the FLSA overtime provisions don't apply to you, and your employer isn't required to pay you for overtime, no matter how many hours you work in a workweek (note that a workweek is considered seven consecutive days for 168 hours total). On the flip side, a nonexempt employee is entitled to such pay if they work over 40 hours in a workweek. (On that note, here's what to do if your employer doesn't pay you.)

Blue-collar jobs aren't exempt from overtime. If a job is blue-collar in nature, it has to pay at least time-and-a-half the regular pay rate for overtime hours. Types of jobs include production workers in manufacturing plants, mechanics, construction workers, machinists, and welders. The fact that blue-collar workers are eligible for overtime is part of the reason many high-paying jobs don't require a college degree.

As for white-collar jobs, some are exempt from overtime pay, but not all. White-collar jobs that require employees be paid for overtime work include most non-managerial retail positions, as well as call center representatives, inside sales reps, data entry clerks, bank tellers, and clerical workers.

It's not the job title that determines whether a position can be exempt from overtime. To be exempt from overtime, a position has to meet specific duties and salary requirements. Regarding salary, with a few exceptions, a position must pay at least $844 per week (as of July 1, 2024; this will increase to $1,128 on January 1, 2025) on a salary/fee basis to be exempt from overtime pay, but only if the role passes the duties test as well. Per the Department of Labor, there are five categories of exemptions: administrative, computer, executive, outside sales, and professional.

There are several ways jobs that meet the salary basis requirement qualify as exempt. For example, someone who manages two or more full-time equivalent employees would pass the duties test under the administrative category. Meanwhile, a person working in a creative field whose primary duties involve, according to the DOL, "invention, imagination, originality, or talent," would be considered exempt, too. Examples of positions that are usually exempt from overtime pay include managers with multiple direct reports, data analysts, engineers, graphic designers, accountants, and doctors. Also, teachers and school administrators are both considered exempt employees at the federal level.