Alabama Overtime Laws

2025

Alabama’s labor law does not have its own overtime regulations so it mainly follows the federal Fair Labor Standards Act (FLSA). These laws establish the criteria for determining overtime eligibility, the rate of overtime pay, and the obligations of employers to provide fair compensation to their employees.

This Article Covers:

Alabama Overtime Rates

Alabama overtime rates determine how much extra pay eligible employees get for working more than a set number of hours in a week.

Employees in Alabama who work more than 40 hours a week are entitled to an overtime rate of 1.5 times the regular hourly rate.

Employers covered by the FLSA must pay at least the federal minimum wage of $7.25 per hour. This makes Alabama’s minimum overtime wage $10.88 per hour.

Overtime Entitlement in Alabama

Overtime pay in Alabama is required for all non-exempt employees.

As per the FLSA, an employee who earns below $684 per week (equivalent to a $35,568 annual salary) and works in a non-exempt industry is entitled to overtime pay.

However, an employee’s overall eligibility for overtime pay will be based on what their job duties are as well as what type of business they are in.

Read more about your Overtime Rights in Alabama.

Overtime for Tipped Employees in Alabama

Employers in Alabama can claim a maximum tip credit of up to $5.12 per hour, meaning they can pay tipped employees a lower hourly wage of at least $2.13 per hour.

Regardless of whether an employer pays tipped workers less than the minimum wage by using a tip credit, they must still calculate overtime based on the full minimum wage of $7.25 per hour. They also can’t take a bigger tip credit for overtime hours than for regular hours.

Some extra earnings, like service charges, commissions, and bonuses, are not always included when calculating overtime pay.

It’s important to note that to be considered a tipped employee in Alabama, a service worker must receive more than $30 in tips each month.

Overtime for Salaried Employees in Alabama

A salaried employee earns a fixed amount, no matter how many hours they work. Non-exempt salaried employees in Alabama can still get overtime pay.

To calculate their overtime pay, the employer first needs to calculate their hourly rate. This is done by dividing their weekly salary by the number of work hours it covers for that week.

Then, take the hourly pay rate to calculate the overtime rate for salaried employees using the following formula:

Overtime Rate: Hourly pay rate x (1.5)

If an employee’s salary is for less than 40 hours a week, they are still paid their regular rate for any extra hours worked until they reach 40 hours. Overtime pay (time-and-a-half) will only apply after 40 hours.

Learn more on how to calculate overtime in Alabama. 

Overtime for Fluctuating Workweek (FWW)

Non-exempt salaried employees in Alabama can still qualify for overtime under the Fluctuating Workweek Method (FWW), even when their hours change from week to week.

Overtime for FWW in Alabama is calculated at 0.5 times an employee’s hourly rate for any hours over 40. Since work hours change weekly, the hourly rate also varies.

With the fluctuating workweek method, overtime pay is based on the employee’s average hourly rate for that week. This rate is calculated by dividing their fixed salary (plus any extra pay like commissions, bonuses, or hazard pay) by the total hours they worked that week.

For FWW to apply, both the employer and employee must agree that the salary covers all regular hours worked, but not overtime or extra pay.

Learn more about the Fluctuating Workweek Method.

Overtime for Commissioned Employees in Alabama

Employees in Alabama who receive commissions can be eligible for overtime at a rate of 1.5 times their regular hourly rate. This hourly rate must include their earned commissions as well.

However, only half (0.5) of the employee’s regular hourly wage—including commissions—is used for overtime calculations.

For example, let’s say an employee works 45 hours a week at a rate of $7.25/hour (Alabama minimum wage) and receives $50 in commissions for that week. We need first to calculate the new regular hourly rate: 

Calculating New Regular Hourly Rate

(Total hours x Hourly Rate) + Commission

= (45 x 7.25) + 50

= $376.25

Then, divide that by the total hours worked in the week.

= 376.25 / 45

=$8.36 (new regular hourly rate)
Calculating Overtime Rate

To determine the overtime rate for the commissioned employees, we need to take that new regular hourly rate and halve it.

$8.36 / 2

= $4.18

Since the employee worked an extra 5 hours in the week, that makes his overtime compensation $20.90 ($4.18 x 5 hours).

The amount will vary according to the hours worked, hourly rate, and commission earned.

Overtime Exemptions in Alabama

Effective January 1, 2025, employees earning less than $35,568 annually are entitled to overtime pay, according to the U.S. Department of Labor (DOL).

However, certain employees are exempt from this rule and do not qualify for overtime pay. These include:

  • Highly compensated employees earning over $107,432 per year, including at least $684 per week paid on a salary or fee basis
  • Executive, administrative, learned, and creative professional workers receiving a salary of at least $684 per week
  • Computer employees working on an hourly basis with an hourly pay of no less than $27.63
  • Outside sales employees

It is important to note that “blue-collar” workers, including police officers, firefighters, paramedics, rescue workers, and similar community workers are categorized as non-exempt workers and thus qualify for overtime pay.

Statute of Limitations For Unpaid Overtime Claims in Alabama

Employers in Alabama can be held liable for any unpaid overtime wages for two years from the date the wages were earned, according to Alabama overtime laws.

However, for willful overtime violations by an employer, the statute of limitations can increase to 3 years.

Legal Cases Relating to Overtime Compensation in Alabama

Below, we present law cases relating to fair overtime compensation for employees in Alabama: 

1. Transportation Supervisor Filed for Overtime Back Wages After Statute of Limitations Ends

In the case of Seals v. Sylacauga City School Board, Nathaniel Seals filed a lawsuit in 2019 against his former employer, Sylacauga City School Board (‘the Board”), for failure to pay him overtime wages. Seals worked as a Transportation Supervisor from 2013 until his retirement in 2016.

Seal claimed the Board required him and other employees to work over 40 hours a week without proper overtime pay. The Board argued for dismissal, stating that (1) the statute of limitations had expired, (2) Seal’s position was exempt from overtime under the FLSA, and (3) he lacked proof of unpaid overtime.

The court found Seal couldn’t prove unpaid overtime after January 2016, making his claim time-barred.

Ultimately, a summary judgment was granted in favor of the Board and the court dismissed this case with prejudice, meaning that Seals cannot pursue this claim again in the future.

Key lessons from this case:
  • Employees must be aware of the applicable time limits for filing overtime claims, as exceeding the statute of limitations can result in the claim being time-barred. They must also prove they worked overtime without proper compensation. If the deadline has passed, the court can dismiss the case without further review.
  • If the court determines that a case is ineligible due to being time-barred (the statute of limitations has passed), the court may grant summary judgment without reviewing other factors in the case.

2. Collective Action Lawsuit was Filed Seeking Unpaid Overtime Compensation

In Taunton v. Korens USA, Inc., Landon Taunton sued his employer, Korens USA, for not paying overtime for hours worked beyond 40 per week. He filed the lawsuit on behalf of himself and other employees in the same situation. Both sides asked the court to approve a collective action, allowing other affected employees to join, and to approve a settlement.

The court agreed, finding that the employees were similarly affected, and granted conditional certification. The proposed settlement covered 100% of unpaid wages and damages for Taunton and those who joined the case. A common fund was created to pay claims, attorney fees, and costs, with $8,500 set aside for legal expenses.

In return for the damages received, Taunton and the other potentially involved employees agreed to release their claims related to the acts alleged in the lawsuit, including wage and hour claims under the FLSA. Ultimately the court granted the joint motion and settlement agreement and further dismissed the case with prejudice.

Key lessons from this case:
  • Unlike traditional class actions, FLSA collective actions require workers to affirmatively choose to participate by submitting written consents to the court. They are not automatically included.
  • Settlement agreements often include releases, which prevent employees from bringing future claims that relate to the specific allegations in the lawsuit, such as unpaid overtime.
  • Collective certification under the Fair Labor Standards Act (FLSA) gives employees who are similarly situated the chance to join a lawsuit and seek remedies for unpaid overtime wages.

3. Settlement Agreement Between Sound Director and Theater Owner for Overtime Back Wages

In the case of Livingston v. Birmingham Landmarks, Inc., Jeremy Livingston filed a lawsuit against his former employer, Birmingham Landmarks (owner of theaters), for allegedly violating the Fair Labor Standards Act (FLSA). Livingston claimed that he was employed as a Sound Director by Birmingham Landmarks but was misclassified as an independent contractor. He alleged that Birmingham Landmarks failed to pay him for the overtime hours he had worked. Additionally, Livingston claimed he was terminated in retaliation for complaining about his lack of overtime compensation.

Birmingham Landmarks denied hiring Livingston as a Sound Director, receiving overtime complaints from him, or retaliating against him.

After court-led mediation, both parties agreed on a settlement and submitted it for approval. Livingston received $17,500, covering overtime back wages, damages, and legal fees.

The court’s priority was ensuring fairness and preventing employer exploitation. It recognized a valid dispute and found the settlement reasonable for both sides, ultimately approving the agreement.

Key lessons from this case:
  • The case highlights the use of court-conducted mediation to facilitate settlement discussions between two parties. Mediation can provide an opportunity for resolution and avoid lengthy litigation.
  • The existence of a legitimate dispute between the parties is a crucial factor in determining the validity of a settlement.
  • This case demonstrates how both parties in a lawsuit can assess the potential risks and outcomes of litigation, leading them to pursue a settlement agreement as a strategic resolution.

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.