What minimum wage and overtime rules apply to a small US employer?
The federal floor of 7.25 dollars per hour and time and a half beyond 40 hours per week, unless the state or city rate is higher, in which case that rate applies. Exemption from overtime requires the salary level and the duties test together.
The answer differs between the federal level and the states, see the rows below.
The answer by level
Federal level
The federal floor is 7.25 dollars per hour, and overtime is one and a half times the regular rate for hours worked beyond 40 in a workweek.
29 U.S.C. §§ 201 to 219, 29 CFR Parts 500 to 899State level
Where a state or city sets a higher minimum wage, the higher rate applies; the consolidated state table states the rate in force.
State minimum wage laws, consolidated tableThreshold
An exemption from overtime requires both a salary basis at or above the threshold and duties that meet the executive, administrative or professional test.
29 CFR Part 795, employee or independent contractor classification
Source lines
- The federal wage and hour act sets the minimum rate and the 40 hour overtime threshold per workweek.
- State and local minimum wage rates apply where they exceed the federal floor.
- Exempt status depends on both a salary basis and duties, not on a job title or a salaried payment method alone.
What it means for the company
Most exposure comes from treating a salaried role as exempt without the duties test. Back pay is calculated per workweek for the whole period.
| Level | Requirement | Source |
|---|---|---|
| Federal level | The federal floor is 7.25 dollars per hour, and overtime is one and a half times the regular rate for hours worked beyond 40 in a workweek. | 29 U.S.C. §§ 201 to 219, 29 CFR Parts 500 to 899 |
| State level | Where a state or city sets a higher minimum wage, the higher rate applies; the consolidated state table states the rate in force. | State minimum wage laws, consolidated table |
| Threshold | An exemption from overtime requires both a salary basis at or above the threshold and duties that meet the executive, administrative or professional test. | 29 CFR Part 795, employee or independent contractor classification |
What it means for the individual
An employee paid a fixed salary can still be owed overtime where the duties do not meet the exemption.
Source lines
- Fair Labor Standards Act29 U.S.C. §§ 201 to 219, 29 CFR Parts 500 to 899 · read 2026-08-25 · proof ce008ccb794798af
- U.S. Department of Labor, Wage and Hour DivisionState minimum wage laws, consolidated table · read 2026-08-25 · proof ce008ccb794798afOfficial source
- Electronic Code of Federal Regulations29 CFR Part 795, employee or independent contractor classification · read 2026-08-25 · proof ce008ccb794798afOfficial source
Next step
Review each exempt role against the salary level and the duties test, and record the higher of federal, state and local rate per work location.
This page reports what the sources say, with the identifier and address of the publisher. It is not legal advice and does not decide an individual matter.
Next step
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