Alabama labor laws do not establish state-specific overtime rules. Most employers must follow the federal overtime rules under the Fair Labor Standards Act (FLSA), which requires overtime pay for eligible employees who work more than 40 hours in a workweek.
This guide explains how overtime works in Alabama, including overtime pay rates, employee eligibility, exemptions, compensatory time policies, and penalties for violations.
Alabama Overtime Laws Summary
| State overtime law | None |
| Federal law | FLSA provisions for overtime |
| Overtime pay | 1.5 times the regular hourly wage for all hours worked over 40 in a workweek |
| Minimum overtime wage | $10.88 per hour for minimum wage workers |
| Compensatory time instead of overtime pay | Allowed for public-sector employees |
| Salary threshold for overtime exemption | $684/week |
This Article Covers
- Overtime Pay Rates in Alabama
- Who is Entitled to Overtime in Alabama?
- Overtime Exemptions in Alabama
- Overtime for Tipped Employees in Alabama
- Overtime for Salaried Employees in Alabama
- Fluctuating Workweek (FWW) Method in Alabama
- Overtime for Commissioned Employees in Alabama
- Can Alabama Employers Give Compensatory Time Instead of Overtime Pay?
- Recordkeeping Requirements for Alabama Employers
- Penalties for Violating Overtime Laws in Alabama
Overtime Pay Rates in Alabama
Overtime pay in Alabama must be at least 1.5 times the employee’s regular rate of pay for all hours worked over 40 in a workweek, under the FLSA. There is no limit to the number of hours an employee can work as overtime.
Employers covered by the FLSA must pay at least the federal minimum wage of $7.25 per hour. This makes Alabama’s overtime minimum wage $10.88 per hour.
In Alabama, overtime pay is calculated as: Employee’s Regular Rate × 1.5
| Employee’s Hourly Wage | Overtime Wage | |
| Minimum wage as per the FLSA | $7.25 | $10.88 per hour |
| Example 1 | $12.00 | $18.00 per hour |
| Example 2 | $20.00 | $30.00 per hour |
What counts as hours worked for overtime calculations?
For overtime purposes, an employee’s hours worked include all the time they are required to be on the worksite, on duty, or actively performing job-related tasks.
Under the FLSA, overtime is not automatically required for work performed on weekends, holidays, or regular days off. Instead, overtime pay applies only when an employee’s total working hours exceed 40 hours in a single workweek.
What is a workweek under the FLSA?
A workweek is a fixed period of 168 hours or seven consecutive 24-hour days, which can start on any day and at any time chosen by the employer.
For overtime and minimum wage calculations under the FLSA, each workweek is treated separately. Employers cannot average hours across multiple weeks.
Who is Entitled to Overtime in Alabama?
Employees in Alabama are eligible for overtime if they are classified as non-exempt under the FLSA. However, an employee’s overall eligibility for overtime pay depends on:
- Job duties
- Salary level
- Industry
Employees earning less than $684 per week (equivalent to $35,568 annually) are generally entitled to overtime unless they fall under specific exemptions. Learn more about your overtime rights in Alabama.
Overtime Exemptions in Alabama
Employees earning at least $684 per week (equivalent to $35,568 annually) are classified as exempt and not entitled to overtime pay under federal law in Alabama.
Exempt employees also include:
- Highly compensated employees earning over $107,432 per year, including at least $684 per week paid on a salary or fee basis
- Motion Picture industry employees earning over $1,043 per week (or a proportionate amount based on the number of days worked)
- Salaried computer employees earning over $27.63 per hour
- Executive, administrative, and professional employees
- Outside sales employees
- Employees working for seasonal amusement and recreational businesses
- Employees at small local newspapers
- Farmworkers employed by small farms with limited labor usage
- Babysitters and companions for elderly or disabled individuals
- Certain commissioned employees in retail or service businesses
- Salespeople and mechanics working for automobile, truck, or farm equipment dealerships
- Some transportation workers, including railroad and airline employees, taxi drivers, and certain motor carrier workers
- Live-in domestic help
Partial overtime exemptions in Alabama
Some industries follow special overtime rules instead of the standard 40-hour workweek under federal law. For example:
- Certain agricultural workers and petroleum distribution employees may have partial overtime exemptions.
- Hospitals and residential care facilities may use a 14-day work period, with overtime paid for hours exceeding eight hours in a day or 80 hours in 14 days, depending on the agreement with employees.
- Firefighters and police officers working for public agencies may have work periods ranging from seven to 28 days, with overtime calculated differently.
Learn more about federal overtime exemptions with a Handy Guide to the FLSA.
Overtime for Tipped Employees in Alabama
Employees in Alabama must receive more than $30 in tips each month to be considered a tipped employee as per the FLSA.
The federal law allows employers to pay tipped workers a lower cash wage (at least $2.13 per hour) and claim a tip credit (up to $5.12 per hour) toward meeting the federal minimum wage of $7.25 per hour.
However, the employee’s total earnings, including tips and direct wages, must equal the federal minimum wage each workweek. If tips are not enough to reach this amount, the employer must pay the difference.
Tipped employees must receive overtime pay for all hours worked after 40 hours in a workweek. This overtime is calculated using the full minimum wage ($7.25), not the $2.13 cash wage.
For example:
Regular minimum wage = $7.25 per hour
Overtime rate = 1.5 x $7.25 = $10.88 per hour
Employers cannot take a larger tip credit for overtime hours than for regular hours.
In addition, employers are not allowed to keep employees’ tips or require workers to share tips with managers or supervisors. Tip pooling is permitted only under certain conditions and typically must involve employees who regularly receive tips, such as servers or bartenders.
These rules ensure that tipped employees receive proper wages and overtime compensation under federal labor law.
Overtime for Salaried Employees in Alabama
Salaried employees earn a fixed amount of pay each pay period, regardless of the number of hours worked. In most cases, this salary cannot be reduced based on the quantity or quality of work performed, and the employee must receive their full salary for any week in which they perform work.
Overtime pay for salaried employees in Alabama is calculated based on their regular hourly rate. To find this rate, the employee’s salary is divided by the number of hours it covers.
For example, if an employee earns $350 per week for a 35-hour workweek, their regular hourly rate is $10 per hour ($350 ÷ 35). If they work overtime, they must receive 1.5 times their regular rate, which is $15 per hour (1.5 x $10), for any hours worked beyond 40 in a workweek.
If an employee’s salary is for less than 40 hours a week (like for 35 hours in the example above), they are still paid their regular rate for any extra hours worked until they reach 40 hours. Overtime pay will only apply after 40 hours.
Use our overtime calculator to calculate overtime hours and pay in Alabama.
Overtime Under the Fluctuating Workweek (FWW) Method in Alabama
Non-exempt salaried employees in Alabama can receive overtime under the Fluctuating Workweek Method (FWW) when their work hours vary from week to week.
For FWW to apply, several conditions must be met:
- The employer and employee must agree that the fixed salary covers all regular hours worked each week, whether the employee works more or fewer hours.
- The employee’s work hours must vary from week to week.
- The employee must still receive the full salary even if they work fewer hours than usual.
Because the salary already covers straight-time pay for all hours worked, overtime is paid at an extra half (0.5) of the employee’s regular hourly rate for each hour over 40. Since work hours change weekly, the hourly rate also varies.
This hourly rate is calculated by dividing the fixed salary (plus any extra pay as commissions, bonuses, or hazard pay) by the total hours worked that week.
For example: If an employee earns a fixed salary of $600 per week and works 50 hours in a week, first, calculate their:
Regular hourly rate: $600 ÷ 50 hours = $12 per hour
Overtime rate (half of the regular rate): $12 × 0.5 = $6
If the employee worked 10 overtime hours (50 − 40), overtime pay will be: 10 × $6 = $60
Total weekly pay: $600 salary + $60 overtime = $660 for that week
Overtime for Commissioned Employees in Alabama
Employees in Alabama must always receive overtime pay that reflects their total earnings, including commissions. Under the FLSA, the overtime pay rate is 1.5 times an employee’s regular hourly rate.
An employee’s regular hourly rate in Alabama must include commissions, regardless of how they are calculated (percentage of sales, sales above a certain amount, or another formula). Even if commissions are paid monthly or later than the normal payday, they still have to be factored into overtime pay.
Overtime for weekly commissions
If commissions are paid weekly, they’re added to the employee’s earnings for that week. The total weekly earnings are divided by the hours worked to find the regular hourly rate.
For example:
Weekly pay = $400 salary + $100 commission = $500
Hours worked = 50
Regular rate of pay = $500 / 50 = $10 per hour
Overtime is then paid at half that rate for each hour worked over the 40-hour workweek.
Overtime rate = $10 / 2 = $5 per hour
Overtime pay = 10 overtime hours x $5 = $50 extra
Overtime for deferred commissions
If commissions are calculated later, Alabama employers can pay overtime based on an employee’s salary/hourly wages first. Once the commission amount is known, the employer must go back and pay the extra overtime owed.
When commissions cover multiple weeks, they must be spread out fairly:
Equal per week method: Employers can divide the total commission by the number of weeks and add that weekly amount to earnings and recalculate overtime.
For example, if an employee earned $400 commission in four weeks, that is equal to $100 per week. If they worked 44 hours in one week, the commission adds about $2.27 ($100 / 44) per hour to their rate.
Overtime rate = $2.27 / 2 = $1.14 per hour
Overtime pay = 4 (44 – 40) overtime hours × $1.14 = $5.14 for that week
Equal per hour method: Employers can divide the commission amount by the total hours worked in the period and multiply half of that by overtime hours to calculate overtime pay for commissioned employees in Alabama.
For example, if an employee earned $200 commission for 100 hours (with 10 overtime hours), that is $2 ($200 / 100) extra per hour.
Overtime rate = $2 / 2 = $1 per hour
Overtime pay = 10 overtime hours × $1 = $10
Can Alabama Employers Give Compensatory Time Instead of Overtime Pay?
Alabama state agencies can give compensatory time instead of overtime pay to employees covered by FLSA. However:
- There are limits on how much compensatory time can be accumulated. Regular employees can accumulate up to 240 hours of compensatory time. Law enforcement officers and seasonal workers can accumulate up to 480 hours.
- When leaving state employment, employees must be paid for unused compensatory time, up to these limits.
- State employees must use compensatory time before using annual leave. It cannot be used to work another job during scheduled work hours.
- Compensatory time balances do not transfer between departments. The state department where compensatory time was earned must settle (pay or clear) it before the employee transfers.
- Exempt employees generally don’t qualify for compensatory time unless allowed by law or approved by the State Personnel Board.
Recordkeeping Requirements for Alabama Employers
Alabama employers must keep clear records of hours worked and wages earned for all non-exempt employees under the FLSA. These records include an employee’s:
- Hours worked each day
- Total hours worked each week
- Regular hourly pay rate
- Total straight-time earnings (daily or weekly)
- Total overtime earnings for the week
Employers must keep supporting documents for at least two years. They can use any timekeeping method they choose, as long as it accurately tracks hours. Try our time tracking software to maintain records and ensure compliance.
Penalties for Violating Overtime Laws in Alabama
Violating overtime laws under the FLSA can lead to serious consequences for Alabama employers. The U.S. Department of Labor’s Wage and Hour Division investigates complaints and audits businesses to ensure compliance.
If violations are found, employers may be required to pay back wages owed to employees, plus an equal amount in liquidated damages. Employees can also file private lawsuits to recover unpaid overtime, along with attorney fees and court costs.
Employers who willfully or repeatedly break the rules can face civil penalties of up to $1,000 per violation. In extreme cases, willful violations may lead to criminal prosecution, fines up to $10,000, and even imprisonment for repeat offenders.
Important Cautionary Note
This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.
