The Fair Labor Standards Act sets the baseline for overtime pay in the United States: any non-exempt employee who works more than 40 hours in a single workweek must be paid at 1.5× their regular rate for every hour beyond 40. That sounds simple until you layer on state daily overtime rules, prevailing wage fringe interactions, salaried-exempt misclassifications, and anti-pyramiding clauses that trip up even experienced payroll departments.
Contractors face unique challenges because crews move between states, work variable schedules during shutdowns and turnarounds, and often blend straight-time, overtime, and premium pay on a single check. This guide breaks down the federal floor, the state rules that raise it, and the mistakes that generate DOL back-pay orders averaging $1,200 per affected worker.
Federal FLSA Overtime Basics
Under the FLSA, overtime is calculated on a workweek basis—a fixed, recurring 168-hour period that the employer defines. It does not have to start on Monday; many contractors run Sunday-through-Saturday or even mid-week starts to align with project schedules. The critical rule is that the workweek must be consistently applied and cannot be changed to avoid overtime liability.
The "regular rate" is not simply the hourly wage. It includes shift differentials, non-discretionary bonuses, piece-rate earnings, and certain per-diem payments if they are tied to hours worked rather than expenses incurred. Failing to include these in the regular rate before applying the 1.5× multiplier is the single most common FLSA violation in construction payroll. For example, a worker earning $30/hr base plus a $3/hr night differential has a regular rate of $33/hr, making overtime $49.50/hr—not $45.
The FLSA does not require overtime for working more than 8 hours in a day, working weekends, or working holidays. Those requirements come from state law or union contracts. Federal law only counts total hours in the defined workweek.
Overtime Pay Calculator
Calculate overtime pay with federal FLSA and state-specific daily OT rules for California, Alaska, Colorado, and Nevada. Handles anti-pyramiding, prevailing wage fringe, and common schedule presets.
State Daily Overtime Rules
Several states impose daily overtime thresholds that stack on top of the federal weekly rule. California is the most aggressive: any work beyond 8 hours in a day triggers 1.5× pay, and any work beyond 12 hours in a day triggers double time (2.0×). The 7th consecutive day in a workweek also triggers overtime for the first 8 hours and double time after that. These rules apply regardless of whether the employee exceeds 40 hours in the week.
Alaska requires 1.5× after 8 hours in a day and after 40 hours in a week. Nevada requires 1.5× after 8 hours in a day for employees making less than 1.5× the state minimum wage. Colorado enacted daily overtime effective 2022, requiring 1.5× after 12 hours in a day or 12 consecutive hours regardless of start time. Oregon has daily overtime for manufacturing workers (10 hours). Washington state has been considering daily OT legislation as well.
For contractors working across state lines, the state where the work is physically performed governs overtime rules—not the state where the employer is headquartered. A Texas-based contractor running a shutdown in California must comply with California daily OT rules for every hour worked in the state. Tracking this correctly requires job-code-level timekeeping, not just weekly totals.
Anti-Pyramiding Explained
Anti-pyramiding prevents an employee from stacking multiple overtime premiums on the same hour. Without an anti-pyramiding clause, a worker in California who works 10 hours on a Saturday (the 7th day) could theoretically claim daily overtime (hours 9–10), 7th-day overtime (all hours), and weekly overtime if over 40—tripling the premium on some hours.
Most collective bargaining agreements and many state laws include anti-pyramiding provisions that say once an hour has been compensated at a premium rate under one rule, it cannot be counted again under another. The highest applicable rate applies to that hour, and the hour counts toward weekly totals at its premium-paid status. For example, if daily OT at 1.5× has already been paid for hours 9 and 10 on Tuesday, those same hours are not double-counted toward the weekly 40-hour threshold for additional OT. The worker still gets 1.5× for those hours, but the employer does not owe a second premium.
Where it gets tricky is union contracts that intentionally allow pyramiding for specific scenarios (holiday overtime worked on a 7th day, for example). Always read the CBA language carefully. If the contract is silent on pyramiding, the default depends on state law and DOL interpretation.
Common Contractor Violations
The Department of Labor's Wage and Hour Division recovers over $300 million annually in back wages, and construction consistently ranks among the top industries for violations. The most frequent mistakes are misclassifying workers as independent contractors (1099 vs W-2), failing to include shift differentials and per diem in the regular rate, averaging hours across a pay period instead of calculating weekly, and not paying for travel time between job sites during the workday.
Another common trap involves "comp time" in lieu of overtime pay. Private-sector employers cannot offer compensatory time off instead of overtime wages under the FLSA. Some contractors try to give workers a day off the following week to offset long hours this week—that is illegal. Government employers have a narrow comp-time exception, but private contractors do not.
Willful violations carry penalties of up to $2,074 per violation (adjusted annually for inflation), plus liquidated damages equal to the back wages owed, effectively doubling the liability. Criminal penalties including fines up to $10,000 and imprisonment apply to repeat willful violators. The statute of limitations is 2 years for standard violations and 3 years for willful ones.
Break & Lunch Compliance Checker
Check meal and rest break requirements for all 50 states. Shows required breaks for your shift length, premium pay penalties for violations, and federal FLSA rules.
How to Audit Your Payroll
A quarterly internal audit takes about two hours and can prevent six-figure back-pay liability. Start by pulling a sample of 10–15 employees who worked overtime in the last quarter. For each, verify that the regular rate includes all required components: base hourly rate, shift differentials, non-discretionary bonuses (prorated across the hours worked), and any taxable per-diem amounts. Recalculate the overtime rate and compare it to what was actually paid.
Next, check that your workweek definition is documented and consistently applied. Review any weeks where hours were close to 40 and verify that all hours were captured—including pre-shift safety meetings, post-shift cleanup, and travel between sites. If you operate in a daily-OT state, verify that daily hours are tracked separately from weekly totals and that the correct premium was applied. Finally, spot-check any workers classified as exempt to confirm they meet the salary basis ($684/week minimum as of 2024) and duties tests for executive, administrative, or professional exemptions.
Overtime Pay Calculator
Calculate overtime pay with federal FLSA and state-specific daily OT rules for California, Alaska, Colorado, and Nevada. Handles anti-pyramiding, prevailing wage fringe, and common schedule presets.