Compliance Watch:
What are my overtime rights in Alabama?

September 18th 2024

Understanding overtime regulations is essential for preventing employee exploitation and ensuring fair work conditions. In Alabama, understanding your overtime rights can help you secure fair compensation for any extra hours you work.

This article offers a thorough overview of the laws, regulations, and best practices concerning overtime in Alabama. By staying informed about your rights and the legal framework in Alabama, you can better advocate for yourself and ensure that your hard work is recognized and rewarded appropriately.

This Article Covers

Understanding Overtime in Alabama
Common Questions About Overtime in Alabama
Legal Working Hours in Alabama
Overtime Eligibility in Alabama
Overtime Payment Calculations in Alabama
Receiving Overtime Payment in Alabama
Violations of Overtime Law in Alabama

Understanding Overtime in Alabama

Is overtime pay mandatory in Alabama?

Yes, overtime pay is mandatory in Alabama. Employers must adhere to the federal Fair Labor Standards Act (FLSA) to ensure compliance. These laws mandate overtime pay for non-exempt employees working over 40 hours per week. Certain exemptions apply, including for executive, administrative, and professional employees, as well as specific industries such as fishing and certain seasonal activities.

When do I qualify for overtime pay in Alabama?

In Alabama, employees qualify for overtime pay based on the federal FLSA, which mandates that non-exempt employees receive overtime pay for hours worked over 40 in a single workweek. Alabama follows these federal guidelines and does not have additional state-specific rules for daily overtime.

Alabama laws do not require special pay rates for work performed on weekends, nights, or holidays unless these hours contribute to a total exceeding 40 hours in a week. Employers can implement their policies with higher rates for these times, provided they comply with or exceed federal minimum requirements.

How much is overtime pay in Alabama?

In Alabama, employees working over 40 hours in a workweek must be compensated at least one and a half times their regular hourly rate. For example, an employee earning $20 per hour would receive $30 per hour for overtime.

Alabama does not have a state-specific minimum wage, so the federal minimum wage of $7.25 per hour applies. Therefore, the minimum overtime wage in Alabama is $10.88 per hour (1.5 times $7.25).

Which laws govern overtime in Alabama?

Alabama does not have additional state-specific overtime laws and thus adheres strictly to the federal guidelines set by the Fair Labor Standards Act (FLSA). The FLSA defines various elements related to overtime pay as follows:

  • Overtime Threshold: Under the FLSA, non-exempt employees must be paid overtime for any hours worked beyond 40 in a given workweek.
  • Overtime Pay Rate: Overtime pay must be at least one and a half times the regular pay rate. 
  • Work Hours: Overtime is not required for work performed on weekends, nights, or holidays unless the total hours worked exceed 40 in the workweek. This policy ensures that extra pay is due only when the weekly threshold is crossed.
  • Workweek Definition: The FLSA defines a workweek as a fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods. This workweek can start on any day and at any time of day.
  • Minimum Wage: As Alabama does not have a state-specific minimum wage, the federal minimum wage of $7.25 per hour applies, making the minimum overtime wage $10.88 per hour (1.5 times $7.25).

The U.S. Department of Labor oversees the enforcement of federal labor laws, including overtime regulations. Employers must comply with federal requirements, and failure to do so can result in penalties.

Further details about overtime in Alabama can be found in Alabama Overtime Laws.

Common Questions About Overtime in Alabama

Do employers have to pay overtime in Alabama?

Yes, employers in Alabama must pay overtime to non-exempt employees according to federal laws. The FLSA sets standards for minimum wage, overtime pay, recordkeeping, and youth employment for most businesses with annual sales over $500,000 or those engaged in interstate commerce. Under the FLSA, non-exempt employees are entitled to overtime pay at one and a half times their regular rate for hours worked over 40 in a workweek.

Can an employee refuse to work overtime in Alabama?

In Alabama, employers have the authority to mandate overtime, and employees are generally expected to comply. There are no state laws limiting the number of hours required in a week, and for overtime worked beyond 40 hours in a week, employers must provide compensation at one and a half times the regular pay rate, as stipulated by the FLSA.

Employees who refuse mandated overtime can face disciplinary action, including termination, based on their employment agreements or company policies. However, employees are protected if their contracts or collective bargaining agreements specify different terms regarding overtime. These agreements take precedence over general mandates, allowing employees to decline overtime if it contradicts their contractual terms.

Certain industries, like transportation, are subject to stricter regulations on working hours to ensure safety and prevent fatigue. Employers must adhere to these industry-specific rules and balance operational needs with health and safety standards. Ensuring a safe working environment is a legal obligation, and excessive overtime in safety-sensitive roles must be managed to mitigate the risk of accidents and injuries.

Can I take comp time instead of overtime pay in Alabama?

No, in Alabama, private sector employees cannot take comp time instead of overtime pay; only public sector employees are allowed comp time under specific conditions. The key differences between the two sectors are as follows:

  • Public Sector Employees: Public sector employees, such as those working for state, county, and municipal governments, can receive comp time instead of overtime pay. This arrangement requires a written agreement between the employee and employer before the overtime work is performed. Employees should be able to use their comp time within a reasonable period, provided it does not disrupt business operations. Public sector employees can accrue up to 240 hours of comp time, and any excess must be compensated as overtime pay. The comp time must be equivalent to the overtime pay rate, giving employees an hour and a half of paid time off for each hour of overtime worked.
  • Private Sector Employees: In the private sector, the FLSA generally prohibits employers from offering comp time instead of overtime pay. Private sector employees must be paid overtime wages for hours worked over 40 in a workweek. Alabama state law does not provide exceptions to this federal rule, so private sector employees in Alabama must receive overtime pay rather than comp time.

Can I get overtime pay in Alabama without employer approval?

Yes, non-exempt employees in Alabama can receive overtime pay for working more than 40 hours a week, even without the employer’s approval. According to federal law, employers must pay for all hours worked if they know or reasonably should know about the extra hours, such as seeing your work late or noticing your timesheets.

Although most employees are entitled to overtime pay, getting approval before working additional hours is generally a good idea.

Does Alabama have double-time pay?

In Alabama, there are no state laws requiring employers to pay double time for specific hours or days worked. Similarly, federal laws, including the FLSA, do not mandate double-time pay for employees.

Employers in Alabama may offer double-time pay for specific days, such as holidays or weekends, but this is not required by law. For example, an employer may choose to offer double-time pay for hours worked on holidays, weekends, or during extra-long shifts as an incentive or benefit to their employees. These arrangements are usually outlined in company policies, employee handbooks, or employment contracts.

In some cases, double-time pay might be included in collective bargaining agreements (CBAs) negotiated between employers and labor unions. These agreements can specify higher pay rates for certain hours or conditions worked, such as double-time for holiday work or extensive overtime. Employees covered by such agreements should refer to their specific contract terms for details on double-time pay.

Certain industries may have their standards or practices regarding double-time pay to attract and retain employees, especially in sectors with demanding schedules or those requiring work during unconventional hours. However, these practices are not mandated by law and are at the discretion of the employer.

What is working ‘off-the-clock’ in Alabama?

Off-the-clock work in Alabama refers to any work performed by employees outside of their officially recorded working hours for which they do not receive compensation. This can include:

  • Working through a designated meal or rest breaks: Employees might continue working during their legally required breaks without clocking in the time.
  • Completing tasks before scheduled shifts: Arriving early to perform duties such as setting up equipment or preparing the workspace.
  • Performing post-shift responsibilities: Activities like cleaning up, closing a job site, or completing administrative tasks after the official shift ends.
  • Correcting mistakes or redoing projects: Spending additional time outside regular hours to fix errors or rework projects to meet quality standards.

Working off-the-clock in Alabama, as in other states, is illegal and violates the FLSA. Employers must ensure that all work performed by employees is compensated and accurately recorded. Employees should be aware of their rights and report any violations to the appropriate authorities, such as the U.S. Department of Labor. Employers are obligated to pay for all hours worked, and failing to do so can result in penalties and legal action.

What are common ways employers avoid paying overtime in Alabama?

Employers may use illegal or questionable strategies to avoid paying overtime, which can lead to legal action or penalties. Common tactics include:

  • Requiring Employees to Perform ‘Off-the-Clock’ Work: Employers may assign tasks such as prep work, answering phone calls, or completing post-shift duties outside of regular work hours without compensating the employees. Employers are obligated to document all tasks performed by employees and provide appropriate compensation. Off-the-clock work is illegal and must be paid if the employer knows or should have known about it. This includes tasks completed before the start of a shift, during unpaid breaks, and after the shift has ended.
  • Averaging Hours Worked: This tactic involves scheduling employees in a way that balances their hours over multiple weeks. For instance, if an employee works 49 hours one week, the employer might schedule them for only 31 hours the following week, making it appear as though they worked two 40-hour weeks. Under the FLSA, overtime must be calculated every week, not averaged over multiple weeks. This ensures that employees are fairly compensated for all the overtime they work in any given week.
  • Providing Comp Time: Employers may offer time off to employees to prevent them from working overtime hours. For example, allowing an employee to take Friday off if they worked a double shift on Thursday. In the private sector, compensatory time off instead of overtime pay is generally not allowed under the FLSA. This practice is only permissible for public sector employees under specific conditions and agreements. Public sector employees can receive comp time instead of overtime pay, but it must be agreed upon in writing before the overtime work is performed and must be used within a reasonable period without unduly disrupting the employer’s operations.
  • Misclassifying Workers as Salaried Employees: Employers may misclassify employees as salaried workers to avoid paying overtime rates. Misclassification involves incorrectly categorizing non-exempt employees as exempt salaried employees. To be exempt from overtime, a salaried employee must meet the salary threshold and job duty requirements set by the FLSA. The current threshold is $844 per week or $43,888 annually. Employers who incorrectly classify employees to avoid paying overtime can face significant penalties. Employers must ensure that employees meet all criteria for exemption to classify them as exempt from overtime.

Can you work seven days in a row in Alabama?

In Alabama, there are no state or federal laws that specifically limit the number of consecutive days an employee over the age of 16 can work. This allows employers to schedule employees for seven or more days in a row if necessary. However, employees must be compensated for additional hours worked beyond 40 in a workweek, as per the FLSA.

Certain industry-specific regulations do apply. For example, transportation workers, such as truck drivers, are subject to federal hours-of-service rules enforced by the Federal Motor Carrier Safety Administration (FMCSA) to ensure safety. Similarly, healthcare workers may have guidelines to prevent excessive consecutive workdays to avoid burnout and maintain patient safety.

Additionally, employees covered by contracts or collective bargaining agreements might have specific provisions that limit the number of consecutive days they can work. These agreements are negotiated between employers and employees (or their representatives) and could include terms to protect employees from long stretches of work.

For minors under 18, Alabama state law imposes more restrictive work hour limitations. For example, minors aged 14 or 15 are limited in the number of hours they can work on school days, non-school days, and non-school weeks. Employers must comply with these regulations to ensure the safety and well-being of young workers.

How many ten-hour days can you work in a row in Alabama?

In Alabama, there are no specific state laws restricting the number of consecutive ten-hour days an employee can work. Employers can generally schedule employees to work ten-hour days for multiple days in a row, but they must comply with overtime regulations and consider industry-specific rules.

Under the FLSA, overtime pay is required for hours worked over 40 in a workweek at one and a half times the regular pay rate. So, if an employee works four ten-hour days, totaling 40 hours, they are not eligible for overtime. However, if they work more than 40 hours in a week, they must be compensated at the overtime rate for the additional hours.

Employees covered by contracts or collective bargaining agreements may have specific terms regarding consecutive ten-hour days and compensation for extended hours. Employers should also consider the health and safety implications of extended work periods, as excessive hours without adequate rest can lead to fatigue and an increased risk of accidents. Balancing operational needs with employee well-being is essential.

What are full-time hours in Alabama?

In Alabama, there is no specific state law defining full-time employment. Instead, full-time hours are typically determined based on:

  • Federal Guidelines: Under the Affordable Care Act (ACA), full-time employment is generally considered to be at least 30 hours per week or 130 hours per month. This guideline is mainly used to determine eligibility for health insurance benefits under the ACA.
  • Industry Standards: Full-time hours can vary by industry and employer. While a 40-hour workweek is common, some industries may have different standards. Employers in Alabama have the discretion to define full-time employment according to their operational needs, provided they comply with federal regulations.
  • Employer Policies: Employers may specify their definitions of full-time employment in employee handbooks, contracts, or company policies. These definitions can vary and often determine eligibility for employee benefits such as health insurance, retirement plans, and paid time off. Additionally, full-time employees might receive company-specific perks like tuition reimbursement and wellness programs.

How many hours straight can you legally work in Alabama?

In Alabama, there is no state law that limits the number of hours an adult employee can work in a day or week. However, certain exemptions exist:

  • Transportation Workers: Federal regulations limit truck drivers to 11 hours of driving after ten consecutive hours off, with a mandatory 30-minute break after eight hours of driving.
  • Healthcare Workers: Employers often implement rest guidelines to prevent fatigue, but these can vary by institution.
  • Collective Bargaining Agreements: Employees covered by these agreements may have specific terms limiting consecutive work hours.
  • Youth Employment: Minors have stricter work limits, with 14-15-year-olds limited to 3 hours on school days and 16-17-year-olds restricted to 30 hours during school weeks.

These exemptions ensure worker safety in specific industries and age groups.

Is overtime after eight hours or 40 hours in Alabama?

In Alabama, overtime pay rules align with the FLSA, requiring non-exempt employees to receive one and a half times their regular pay rate for hours worked over 40 in a workweek. There are no state provisions for daily overtime, meaning working more than eight hours in a day does not automatically qualify an employee for overtime unless the weekly total exceeds 40 hours.

For instance, an employee working 10-hour days from Monday to Friday, totaling 40 hours for the week, would not receive overtime. However, if they worked an additional five hours on Saturday, bringing the total to 45 hours, they would receive five hours of overtime pay.

Although employers in Alabama may offer daily or weekend overtime pay, these are not mandated by law and typically depend on individual company policies or collective agreements.

Does working on the weekend qualify for overtime pay in Alabama?

In Alabama, working on the weekend does not automatically entitle an employee to overtime pay. The FLSA, which sets federal guidelines, requires overtime pay at one and a half times the regular rate only for hours worked over 40 in a single workweek, irrespective of the day of the week. Therefore, weekend work does not qualify for overtime unless it pushes the total weekly hours beyond 40.

Employers may, at their discretion, offer premium pay for weekend or holiday work, but this is not a legal requirement. Employees should consult their employment contracts, handbooks, or company policies to understand if additional pay for weekend work is provided by their employer. Industry-specific regulations may apply to sectors like healthcare and emergency services, requiring adherence to both federal guidelines and any additional rules relevant to those fields.

How many hours off between shifts is required in Alabama?

There are no specific state or federal laws that mandate the amount of time an employee must have off between shifts, giving Alabama employers flexibility in scheduling. However, there could be exceptions:

  • General Workforce: State law and the FLSA do not mandate rest periods, allowing employers to schedule shifts without requiring a minimum rest time between them.
  • Transportation Industry: The Federal Motor Carrier Safety Administration (FMCSA) mandates that truck drivers must have at least ten consecutive hours off-duty between shifts to prevent fatigue.
  • Healthcare Industry: While not legally required, healthcare institutions often follow internal guidelines recommending rest periods to ensure patient safety and staff well-being.
  • Collective Bargaining Agreements (CBAs) and Company Policies: Union agreements may include specific rules about rest periods between shifts, and some employers may adopt policies to promote work-life balance. Employees should check their CBAs or company policies for any provisions regarding rest between shifts.

What does ‘hours worked’ include in Alabama?

In Alabama, “hours worked” encompasses all the time an employee spends performing duties for their employer, whether on or off the premises. This includes tasks performed before and after scheduled shifts if the work is related to job duties and the employer knows or should know about it. Here’s a detailed breakdown of what constitutes ‘hours worked’:

  • Meal Breaks: If the employee is completely relieved from duty during a meal break (typically 30 minutes), this time is not considered hours worked and is unpaid. However, if the employee is required to stay on the premises or perform any work during the meal break, this time must be considered hours worked and compensated accordingly.
  • Rest Breaks: Short breaks, typically lasting from five to 20 minutes, are considered hours worked, and employees must be compensated for them. These breaks are designed to provide brief rest periods to enhance productivity and well-being.
  • Travel Time: Time spent commuting to and from your workplace is not considered work time. However, if you travel during your working hours as part of your job duties, that time counts as hours worked. For example, an employee tasked with traveling for an overnight assignment during their working hours, even on non-workdays, is counted as hours worked.
  • Training and Meetings: Time spent in training or meetings is considered work time if the training is mandatory and directly related to the job. However, if training is voluntary and unrelated to the employee’s job, it is not counted as work hours.
  • On-Call Time: Times when an employee is required to stay on the employer’s premises while on call are counted as work hours. However, if the employee stays off-site and only responds to calls or emergencies, do not count as work time unless their activities are heavily restricted.

What is the most hours a salaried employee can work in Alabama? 

In Alabama, regulations for salaried employees do not impose a maximum limit on the number of hours a salaried employee can work per day or week, meaning there is no legal cap on required working hours. Salaried employees are classified as either exempt or non-exempt, with exempt employees not entitled to overtime pay and expected to work beyond 40 hours without additional compensation.

While there is no legal cap on working hours for salaried employees, contractual, industry-specific, and employer policies play crucial roles in managing work hours and ensuring employee well-being. Employers are advised to adopt reasonable scheduling practices to maintain a healthy and productive workforce.

What is the maximum number of hours an hourly employee can work in Alabama?

In Alabama, there is no maximum limit on the number of hours an hourly employee can work in a single day or week. However, all hours worked over 40 in a workweek must be compensated with overtime pay as required by the FLSA.

Overtime Eligibility in Alabama

Who is eligible for overtime pay in Alabama?

In Alabama, overtime pay eligibility is governed by the Fair Labor Standards Act (FLSA). Non-exempt employees are entitled to overtime pay for hours worked over 40 in a workweek. These employees typically include those who:

  • Paid on an hourly basis: Hourly employees are generally considered non-exempt and must receive overtime pay for any hours worked over 40 in a workweek.
  • Perform non-exempt tasks: Employees performing tasks that do not fall into the executive, administrative, or professional categories defined by the FLSA are eligible for overtime. This includes roles such as manual labor, customer service, clerical tasks, and other similar positions.

Who is exempt from overtime pay in Alabama?

In Alabama, exempt employees typically hold “white-collar” positions in administrative, professional, or executive roles or work as salespeople. To be classified as exempt from overtime, employees must meet specific criteria based on three tests under the FLSA:

  • Salary Basis Test: The employee must receive a fixed salary, regardless of the number of hours worked or the quantity of work completed. This ensures they are salaried employees, not hourly employees, providing consistent and predictable compensation.
  • Salary Level Test: The employee must earn a salary that meets the minimum requirement of the exemption threshold. As of 2024, the minimum salary threshold is $844 per week ($43,888 annually) and will increase to $1,128 per week ($58,656 annually) on January 1, 2025. Further increases every three years will start on July 1, 2027.
  • Duties Test: The employee’s primary job duties must involve executive, administrative, or professional responsibilities, which typically include exercising discretion and independent judgment in significant matters.

In addition, there are certain industry-specific exemptions which include:

  • Airline Employees: Based on job roles and the nature of their work.
  • Babysitters on a Casual Basis: Irregular, casual babysitting services.
  • Commissioned Sales Employees: Particularly in retail and sales environments.
  • Drivers and Loaders: In the transportation and logistics sector.
  • Live-in Domestic Employees: Living in the employer’s home and providing domestic services.
  • Farmworkers on Small Farms: Based on the size and nature of the farm.
  • Federal Criminal Investigators: Working for federal agencies.
  • Fishermen: Due to the unique nature of their work.
  • Railroad Employees: Based on industry-specific regulations.
  • Salesmen and Mechanics: Involved in selling or repairing vehicles and other equipment.
  • Switchboard Operators: Working in telecommunications under specific conditions.
  • Taxicab Drivers: Generally exempt from overtime regulations.

For detailed information and specific regulations that apply, employees and employers should refer to the official U.S. Department of Labor website.

Can salaried employees get overtime pay in Alabama?

Yes, salaried employees in Alabama can qualify for overtime pay if they do not meet certain criteria set by the federal Fair Labor Standards Act (FLSA). To be exempt from overtime, three main requirements must be met:

  • Salary Threshold: Employees must earn at least $844 per week as of the current threshold. This threshold is set to increase to $844 per week in 2024 and $1,128 per week in 2025, with further adjustments every three years starting in 2027. If an employee’s salary falls below this threshold, they are deemed non-exempt and are entitled to overtime pay.
  • Job Position: The employee’s position must be categorized under professional, administrative, or executive roles. These roles typically involve:
    • Executive: Managing other employees, having authority to hire or fire, and overseeing a department or subdivision.
    • Administrative: Performing office or non-manual work related to management or general business operations and exercising discretion and independent judgment on significant matters.
    • Professional: Performing work requiring advanced knowledge in a field of science or learning, acquired through prolonged education, or involving creative or artistic endeavors.
  • Job Duties: The job duties must include the use of independent judgment and discretion. This means the employee must have the authority to make significant decisions, set policies, or manage crucial aspects of the business. If an employee’s role does not satisfy these criteria, they are classified as non-exempt and are eligible for overtime pay.

Salaried employees who do not meet the criteria for exemption are considered non-exempt and are entitled to overtime pay for hours worked over 40 in a workweek. This means they must receive one and a half times their regular rate of pay for any overtime hours worked.

Overtime Payment Calculations in Alabama

What is my regular rate of pay in Alabama?

The regular rate of pay refers to the amount an employee earns for each hour worked and must at least meet the minimum wage requirements. Here’s how it applies to different types of employees in Alabama:

  • Hourly Employees: The regular rate of pay for hourly employees is their standard hourly wage. The federal minimum wage is $7.25 per hour, which applies in Alabama. Employers must ensure that hourly employees are paid at least this amount for each hour worked.
  • Salaried Employees: Calculating the regular rate of pay for salaried employees involves several steps:
    • Annual Salary: Multiply the monthly salary by 12 to ascertain the annual salary.
    • Weekly Salary: Divide the annual salary by 52 (the total number of weeks in a year) to calculate the weekly salary.
    • Hourly Rate: Divide the weekly salary by the maximum number of standard hours worked in a week (40 hours).
  • Piecework or Commission Employees: For piecework or commission-based employees, there are methods to determine the regular rate of pay:
    • Rate per Piece or Commission: The rate of the piece or commission can be used if the pay is directly tied to the number of pieces produced or sales made.
    • Weekly Earnings Divided by Hours Worked: Calculate the total amount earned in a workweek and divide it by the number of hours worked. This method ensures that the employee’s earnings are spread evenly across all hours worked.
    • Group Piece Rate: When working as part of a group, first compute the group rate by dividing the total number of pieces produced by the number of individuals in the group. Then, multiply this rate by the number of hours worked by each individual to determine their regular rate of pay.

How do you calculate overtime in Alabama?

To calculate overtime pay in Alabama, follow these steps in accordance with the FLSA:

Step 1: Determine the Regular Rate of Pay:

  • Hourly Employees: The regular rate of pay is their standard hourly wage.
  • Salaried Employees: Calculate the regular rate by dividing the weekly salary by the standard number of working hours (typically 40).

Example: If a salaried employee has a weekly salary of $800, their regular rate of pay would be $800 / 40 hours = $20 per hour.

  • Multiple Rates: If an employee works at multiple rates during a single week, calculate the regular rate as the weighted average of those rates by dividing the total earnings by the total hours worked.

Example: If an employee earns $400 for 20 hours at one job and $300 for 20 hours at another, the total earnings are $700 for 40 hours. The regular rate is $700 / 40 hours = $17.50 per hour.

Step 2: Compute the Overtime Rate: Multiply the regular rate by 1.5 to get the overtime rate.

Example: If the regular rate is $20 per hour, the overtime rate would be $20 x 1.5 = $30 per hour.

Step 3: Calculate Total Overtime Pay: Multiply the overtime rate by the number of overtime hours worked.

Example: If the employee worked 5 overtime hours at the overtime rate of $30 per hour, the total overtime pay would be $30 x 5 = $150.

How is overtime taxed in Alabama?

Overtime earnings in Alabama are subject to the following taxes:

  • Federal Income Tax: Overtime pay is added to your gross income and taxed at your marginal federal tax rate, which varies based on your total income and filing status. The federal tax rates for 2024 range from 10% to 37%, depending on income levels.
  • Alabama State Income Tax: For the tax year beginning on or after January 1, 2024, overtime pay received by a full-time hourly wage-paid employee for hours worked above 40 in any given week is excluded from gross income and, therefore, exempt from Alabama state income tax. This exemption applies to overtime pay received from January 1, 2024, to June 30, 2025.
  • FICA Taxes: The Federal Insurance Contributions Act (FICA) taxes cover Social Security and Medicare.
    • Social Security Tax: 6.2% on earnings up to the wage base limit (for 2024, this limit is $160,200).
    • Medicare Tax: 1.45% on all earnings, with an additional 0.9% Medicare surtax on earnings over $200,000 for single filers or $250,000 for married couples filing jointly.

For example, if an employee earns $1,000, including overtime pay, the employee’s tax is calculated by:

  • Calculating the employee’s federal income tax depending on the tax bracket. If the employee is in the 22% bracket, their federal tax is $220 ($1,000 x 22%).
  • Determining the employee’s state income tax. If the employee is a full-time hourly employee, then they are exempt from Alabama state income tax.
  • Calculating the FICA taxes. Social Security tax is 6.2% of the employee’s earnings; in this case, the employee pays $62 ($1,000 x 6.2%). Medicare tax is 1.45% of the employee’s earnings; if the employee earns $1,000, their medicare tax is $14.50 ($1,000 x 1.45%).
  • Calculating the total income tax. Combine the employee’s federal income tax, state income tax, and FICA taxes. In the example above, the total taxes is $296.50.

Key Points:

  • Overtime Earnings Exemption: Overtime pay for full-time hourly employees is exempt from Alabama state income tax for hours worked over 40 per week from January 1, 2024, to June 30, 2025.
  • Inclusion in Federal Income: Overtime pay is included in your gross income and taxed at the federal level.
  • FICA Taxes: Overtime pay is subject to Social Security and Medicare taxes.

Employer Reporting Requirements:

  • One-Time Report: Employers must report the aggregate amount of overtime paid during the 2023 calendar year and the total number of full-time hourly employees who received overtime pay by January 31, 2024.
  • Monthly/Quarterly Reporting: Beginning in the 2024 tax year, employers must report the aggregate amount of overtime paid (exempt portion) and the total number of full-time hourly employees who received overtime pay with their Form A-6 (monthly) and Form A-1 (quarterly) withholding returns.

Receiving Overtime Payment in Alabama

How is overtime paid in Alabama?

In Alabama, acceptable methods for paying overtime wages are similar to those used for regular wages. Employers must ensure that employees receive their overtime pay promptly and clearly documented. The methods include:

  • Check: Employers can issue checks to employees, including for overtime wages. It must include a detailed pay stub showing the overtime hours worked and the wages paid.
  • Cash: Employers may also pay in cash, allowing immediate access to funds. However, they must still provide a detailed pay stub or receipt showing the overtime hours worked and the wages paid to ensure proper recordkeeping.
  • Payroll Card Account: Wages can be loaded onto a prepaid payroll card. This method allows employees to withdraw cash, make purchases, or transfer funds.
  • Direct Deposit: This method involves electronically transferring wages directly into an employee’s bank account. It is convenient and secure. Employers must obtain the employee’s consent before using direct deposit and provide an electronic or paper pay stub detailing the overtime hours worked and the wages paid.

When do I receive my overtime paycheck in Alabama?

In Alabama, overtime pay must be included in the regular paycheck for the pay period during which the overtime was worked. This ensures employees receive timely compensation for their overtime work according to their regular payroll schedule. Key points include:

  • Regular Pay Period: Overtime pay must be included in the paycheck for the pay period in which the overtime hours were worked. For example, if an employee works overtime during the first week of a two-week pay period, the overtime pay should be included in the paycheck for those two weeks.
  • Payroll Schedule: Employers must adhere to their established payroll schedules, whether they are weekly, bi-weekly, semi-monthly, or monthly. Overtime compensation should be paid according to this schedule.
  • Timely Payment: Both the FLSA and Alabama state laws require that employees receive their full wages, including overtime pay, on the established payday for the pay period in which the work was performed. Delays in overtime payment can result in legal consequences for employers.

Violations of Overtime Law in Alabama

What if my employer refuses to pay me overtime in Alabama?

Employers in Alabama who refuse to pay overtime are violating federal labor laws. An employee can address this issue first directly to their employer. It might be a payroll mistake that can be easily resolved through internal communication. In such cases, employees are advised to provide documentation of their hours worked and pay stubs to clearly explain the discrepancy and request the overtime owed.

However, if internal complaints do not resolve the issue, employees can file a complaint with the U.S. Department of Labor’s Wage and Hour Division, which investigates claims of unpaid wages. Employees have at least two years from the date of violation to file a wage claim, but if the violation was proven willful, the statute of limitations may extend to three years.

What is the penalty for failing to pay overtime in Alabama?

Employers in Alabama who fail to pay overtime wages as required by federal laws, specifically the FLSA, can face significant penalties designed to enforce compliance and compensate employees for unpaid wages. The penalties include:

  • Back Wages: Employers must pay the full amount of unpaid overtime wages owed to the employee.
  • Liquidated Damages: Under the FLSA, employees can recover liquidated damages equal to the amount of unpaid wages. This effectively doubles the compensation owed to the employee. For example, if an employee is owed $1,000 in unpaid overtime, they would receive $1,000 in back wages and $1,000 in liquidated damages, totaling $2,000.
  • Civil Penalties: The U.S. Department of Labor (DOL) can impose civil penalties on employers for wage violations. These penalties can be substantial and are intended to deter non-compliance.
  • Criminal Penalties: Deliberate violations may lead to criminal charges. Employers who willfully fail to pay overtime wages can face fines and potential imprisonment for repeated offenses. Under federal law, the DOL can impose fines of up to $10,000 for willful violations and may pursue criminal charges.
  • Attorney’s Fees and Court Costs: If an employee successfully sues an employer for unpaid overtime, the employer may be required to pay the employee’s attorney’s fees and court costs. This provision aims to encourage employees to pursue their rightful wages without the burden of legal expenses.

How can I file a wage claim for overtime in Alabama?

If you are owed overtime pay in Alabama, you can file a wage claim through the U.S. Department of Labor (DOL) by taking the following steps:

  • Gather Evidence: Collect pay stubs, timesheets, employment contracts, correspondence with the employer, and any records of unpaid overtime hours.
  • File a Complaint: Submit a claim with the U.S. DOL’s Wage and Hour Division. You can fill out an online form on their website or call their helpline at 1-866-487-9243 for assistance.
  • Work with a DOL Representative: A representative will be assigned to your case. Representatives generally investigate your claim, contact your employer, try to negotiate a resolution, and guide you through additional legal steps.

Can employers retaliate against employees for making a wage claim in Alabama?

No, employers are legally prohibited from retaliating against employees who make wage claims in Alabama. Federal laws provide robust protections against such retaliation. Retaliation can encompass any adverse action taken by the employer in response to an employee filing or threatening to file a wage claim. This can manifest in various forms, such as:

  • Termination: Firing the employee for making a wage claim.
  • Demotion: Lowering the employee’s job position or title.
  • Reduction in Pay: Decreasing the employee’s wages or benefits.
  • Unjustified Negative Evaluations: Providing unwarranted poor performance reviews.
  • Unwarranted Disciplinary Actions: Issuing baseless disciplinary measures.
  • Changes in Job Duties or Schedules: Altering the employee’s responsibilities or work hours to their disadvantage.
  • Harassment or Hostile Work Environment: Creating an intimidating, hostile, or offensive work environment.

Employees who experience retaliation for asserting their wage rights can pursue legal action against their employer, which can result in:

  • Reinstatement: Returning to their previous job position.
  • Recovery of Lost Wages and Benefits: Compensation for lost earnings and benefits.
  • Compensation for Emotional Distress: Damages for mental anguish caused by the retaliation.
  • Liquidated Damages: Additional compensation to penalize the employer and prevent future violations.

Learn more about Alabama Labor Laws through our detailed guide.

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.