Understanding FLSA overtime requirements

 

The Fair Labor Standards Act ("FLSA") requires the payment of 1.5 times an employee's normal hourly rate for each hour worked in excess of 40 hours in any workweek. FLSA's overtime requirements remain a critical cornerstone of employment law, yet they continue to be one of the most frequent sources of litigation for both employers and employees in 2026.

At Stavros Law, we recognize that the landscape of wage and hour compliance is often shaped by a misunderstanding of the fundamental rule of the FLSA: unless specifically classified as exempt, every employee must receive overtime pay for all hours worked exceeding 40 in a single workweek at a rate no less than 1.5 times their regular pay. It is equally important for both parties to understand what FLSA does not require. For instance, federal law does not mandate extra pay for weekend or night work, nor does it require payment for time not worked, such as vacations, sick leave, or holidays. These benefits, along with meal and rest periods, are generally matters of agreement between the employer and the employee unless specific state laws or other exceptions apply. 

For a business owner, the primary risk lies in misclassification, particularly the common misconception that a salaried title automatically removes the obligation to pay overtime. To legally qualify for an exemption, an employee must satisfy three distinct criteria: the salary basis test, the salary level test, and the duties test. The salary level test focuses on the amount of money paid to an employee. The salary basis test focuses on how the employee is paid, requiring a guaranteed, fixed salary that is not subject to deductions based on hours worked or performance. The duties test focuses on the employee's actual duties performed  and whether those duties fit within an exemption under the law allowing an employee to be exempt from overtime.

Under the salary basis test, an employee must receive a predetermined, fixed salary each pay period that is not subject to reduction based on the quality or quantity of work performed. Under the salary level stest, the  current federal salary level threshold in 2026 remains at $684 per week, or approximately $35,568 annually (after legal challenges to previously proposed increases). Employers should be particularly cautious regarding the salary basis requirements and duties requirements. If an employer makes improper deductions from an exempt employee’s salary, the employer risks losing the exemption entirely for that employee and others in the same job classification, potentially triggering significant back-pay liabilities. And if the employee's duties does not qualified for exemption, the employer may be liable to pay an employee unpaid overtime and penalties, called liquidated damages in addition to attorneys fees and costs.

Equally critical to any overtime considerations is the FLSA’s robust protection against retaliation. This provision makes it unlawful for any person to discharge or discriminate against an employee because they have filed a complaint or participated in a proceeding related to the Act. Courts continue to apply a broad standard to these claims, holding that even internal, oral complaints regarding pay practices are protected activity. Retaliation is not limited to termination. Retaliation also includes any material action that might dissuade a reasonable worker from asserting their rights, such as reducing hours, changing shifts to less desirable times, or take other similar action. For an employer, a retaliation claim can often be more difficult and expensive to defend than the underlying wage claim itself, as it focuses on the intent and timing of the employer’s actions rather than the technicalities of the clock.

For employees, understanding these nuances is vital following recent federal tax code adjustments that have increased the net value of overtime earnings. Under the new qualified overtime compensation rules applicable to the 2025 and 2026 tax years, eligible workers can deduct a portion of their overtime pay from their federal taxable income. We frequently see cases where workers are incorrectly told they are ineligible for overtime or are discouraged from reporting discrepancies. Because the distinction between an exempt and non-exempt role often hinges on the specific level of independent discretion exercised by the employee rather than a simple job description, professional legal oversight is indispensable for both sides of the employment relationship. Whether you are a business seeking to perform a comprehensive classification audit to mitigate risk or an employee who believes your rights have been violated, Stavros Law's Utah employment lawyers provides the targeted expertise necessary to navigate these complexities.

At Stavros Law, our Utah employment lawyers have assisted both employees and employers with FLSA overtime, minimum wage, and retaliation claims, including filing claims with the Department of Labor or initiating claims in federal court. 

For assistance, call Stavros Law today at (801) 758-7604 to schedule a consultation, or you can email us at scheduling@stavroslaw.com or fill out an intake form on our website, www.stavroslaw.com.