Overtime Rules and the FLSA
The federal Fair Labor Standards Act (FLSA) requires that most non-exempt employees be paid at one-and-a-half times their regular rate of pay for any hours worked beyond 40 in a single workweek. Several states impose stricter rules — California, for example, mandates daily overtime after 8 hours and double-time after 12 hours in a day, or after 8 hours on the seventh consecutive day worked.
Whether a worker qualifies for overtime depends on the FLSA exemption tests: executive, administrative, professional, computer, and outside sales categories can exempt salaried employees who meet specific duty and salary-level requirements. Most hourly workers and many lower-paid salaried workers are non-exempt and entitled to time-and-a-half. Overtime wages are taxed at the same rates as regular wages — there is no special "overtime tax" — but a heavier paycheck can withhold more federal tax for that pay period, which evens out at tax time.