Overtime Rules

The 40-hour workweek

Overtime kicks in after 40 hours in a single workweek — a seven-day period the employer sets. It does not average across weeks. If you work 50 hours one week and 30 hours the next, the first week still has 10 hours of overtime due even though your two-week average is 40 per week.

"Work week" is a specific calendar designation; most employers use Sunday-to-Saturday but the employer can pick any consistent seven-day period. The employer cannot change the workweek to avoid paying overtime.

The regular rate

Overtime is 1.5× the "regular rate," which is not always the same as the hourly rate.

The regular rate includes:

• Hourly wages
• Salary divided by hours worked (for hourly-equivalent calculation)
• Nondiscretionary bonuses — performance bonuses, production bonuses, attendance bonuses
• Commission payments
• Shift differentials
• On-call premiums

The regular rate does not include:

• Gifts and discretionary bonuses
• Expense reimbursements
• Premium pay for weekends or holidays (if paid at 1.5× or more)
• Stock options

Employers often pay straight time on bonuses that should be included in the regular rate — a common violation.

Exempt vs non-exempt

Overtime exempt means not entitled to overtime. The employer bears the burden of proving exemption. Misclassification as exempt is a major source of wage theft.

To be exempt, an employee generally must meet both:

1. Salary basis test — paid a predetermined salary (as of 2024, at least $43,888/year under federal rules; certain state rules may be higher)
2. Duties test — job duties fit one of the exempt categories

Executive exemption

• Primary duty is managing the enterprise or a department
• Regularly directs the work of 2+ full-time employees
• Has authority to hire/fire or give strong input

Administrative exemption

• Primary duty is office/non-manual work directly related to management or general business operations
• Exercises discretion and independent judgment on significant matters

Professional exemption

• Learned professional (work requires advanced knowledge in science or learning, customarily acquired by prolonged specialized instruction)
• Creative professional (work requires invention, imagination, originality, or talent in a recognized creative field)

Other exemptions

Computer employees, outside sales, highly compensated employees (over approximately $151,164/year in 2024 with a modified duties test), and specific industry-based exemptions.

Common exemption errors

• "Salaried" means "exempt" — wrong. Being paid a salary does not automatically make you exempt. Both salary basis AND duties test must be met.
• Job title doesn't determine exemption. "Assistant Manager" does not mean exempt if your actual duties are working the register.
• Exempt status can be lost. If an employer makes improper deductions from an exempt employee's salary, the exemption can be lost for that employee and similarly-situated employees.
• Partial-day deductions. Exempt employees generally cannot have pay deducted for partial-day absences — they must receive the full week's salary if they worked any part of the week.

Independent contractor misclassification

Employers sometimes classify workers as independent contractors (1099) instead of employees (W-2) to avoid overtime, minimum wage, tax withholding, workers' comp, and other obligations. The IRS, DOL, and Illinois each apply their own tests — but the core question is economic reality: who controls the work, who provides tools, whose business is it, how is the worker paid.

Signs that 1099 status is misclassification:

• Employer sets specific hours
• Employer controls how the work is done, not just the result
• Worker uses employer's tools and workplace
• Employer has right to discipline or fire
• Employer's business depends on the worker's service
• Long-term or indefinite relationship

Misclassified workers can file wage-and-hour claims, back taxes, and workers' comp claims. Illinois has specific penalties for misclassification in the construction industry.

Calculating overtime damages

If an employer has failed to pay overtime, damages typically include:

• Unpaid overtime — the straight overtime amount owed
• Liquidated damages under federal law — typically equal to the unpaid overtime, making total 2× the unpaid amount
• Treble damages under Illinois law — for some IWPCA violations, 5% of the amount owed per month plus the underlying unpaid wages
• Attorney's fees — both FLSA and IWPCA provide for fee-shifting

Statute of limitations: 3 years back pay under FLSA for willful violations (2 years for non-willful); 10 years under IWPCA.

Collective actions

FLSA allows collective actions where multiple employees have the same or similar claims. Co-workers can opt in. Collective actions are effective when entire classifications have been misclassified or entire teams have been denied overtime systematically.

How to document overtime claims

1. Keep your own time records. Don't rely on the employer's records — which may be the evidence of the violation. Note start time, end time, meal breaks, any off-the-clock work.
2. Save communications. Emails, texts, voicemails about work hours, schedule changes, after-hours requests.
3. Note who worked when. Witnesses help.
4. Pay stubs. Keep every stub — they show what you were paid.