Who Actually Makes Overtime Law? The Legal Authority Chain (2026)

Four Institutions, One Paycheck

When someone tells you "the law says you get overtime," they are compressing four separate sources of authority into one sentence. Understanding which source produced a rule tells you how firm that rule is, how fast it can change, and who to argue with when your employer reads it differently.

The chain runs like this: Congress writes the statute, the Department of Labor writes the regulations that interpret it, federal courts decide what both of those actually mean in a dispute, and states layer their own laws on top. Each link can move without the others.

Layer One: Congress and the Statute

The Fair Labor Standards Act of 1938 is the foundation. It is an act of Congress, codified at 29 U.S.C. 201 and following. It says, in substance, that covered non-exempt employees must receive one and a half times their regular rate for hours worked beyond forty in a workweek.

What matters about statutory authority is its stability. A statute changes only when Congress amends it, which is rare. The forty-hour threshold has survived every administration since 1940. So when you read that "overtime starts after 40 hours," you are reading the most durable rule in the entire system.

What the statute does not do is define its own terms with enough precision to run a payroll. It does not say what counts as "executive" work, or how to value a non-cash bonus, or when travel becomes hours worked. That gap is filled by the next layer.

Layer Two: The Department of Labor

The Wage and Hour Division of the DOL issues regulations under authority Congress delegated to it. Those regulations live in the Code of Federal Regulations, mostly at 29 C.F.R. Parts 516, 541, 778, and 785. If the statute is the constitution of overtime, these are the operating manual.

Part 541 defines the white-collar exemptions and the salary threshold. Part 778 explains how to compute the regular rate when pay includes bonuses, commissions, or multiple rates. Part 785 defines hours worked — waiting time, on-call time, training, travel.

Regulations carry the force of law, but they move faster than statutes. A new administration can propose changes to the salary threshold, take public comment, and finalise a rule within a year or two. This is the layer that generates most of the headlines, and it is the layer worth checking annually rather than assuming last year's number still holds.

Below regulations sit sub-regulatory materials: opinion letters, Field Assistance Bulletins, and the Field Operations Handbook. These express the agency's enforcement position. They are persuasive and practically important — an employer following a current opinion letter has a good-faith defence — but a court is not bound by them.

Layer Three: The Federal Courts

Courts resolve what the statute and regulations mean when parties disagree. A district court ruling binds the parties. A circuit court ruling binds every district in that circuit. A Supreme Court ruling binds everyone.

This is why identical facts can produce different outcomes in different parts of the country. A worker in the Fifth Circuit and a worker in the Ninth Circuit can hold the same job, work the same hours, and get different answers about whether their pay structure satisfies the salary basis test, because their circuits have read the same regulation differently. That split persists until the Supreme Court resolves it or the DOL rewrites the rule.

Practically: if your situation is unusual, the general rule you read online may not be the rule in your circuit. That is one of the few moments where a consultation with an employment attorney genuinely pays for itself.

Layer Four: State Law

The FLSA sets a floor, not a ceiling. Section 218 expressly preserves state laws that are more generous to employees. States use that room aggressively.

California requires daily overtime after 8 hours and double time after 12. Alaska, Nevada, and Colorado have their own daily rules. Several states set salary thresholds for exemption well above the federal level. Others add nothing at all, leaving the FLSA to govern alone — which is why our state overtime pages exist as separate documents rather than one national summary.

The operating rule when federal and state law both apply is simple: the employee receives whichever calculation produces more pay. Not the state rule by default, and not the federal rule by default — the better outcome for the worker, applied provision by provision rather than as a whole package.

Who Wins When They Conflict?

Work down this order:

• . More generous wins. Between federal and state, apply whichever provision pays the employee more.
• . Statute beats regulation. If a regulation cannot be reconciled with the statute, the statute controls — though it takes a court to say so.
• . Binding court precedent beats agency guidance. In your circuit, a published appellate decision outranks an opinion letter.
• . Written policy never beats law. An employee handbook can add rights. It cannot remove them. Neither can a signature: you cannot waive FLSA overtime by agreement, and an employer's "unauthorised overtime is unpaid" policy does not eliminate the obligation to pay for hours actually worked.

That last point catches people constantly. Unauthorised overtime is a discipline matter. It is not a payroll matter. The hours were worked, so the hours are paid.

How to Verify a Rule Yourself

Three habits keep you accurate:

• Go to the primary text. The eCFR is free and searchable. Reading the actual regulation takes ten minutes and beats reading five blog summaries of it.
• Check your state agency separately. The DOL maintains a directory of state labor offices. Your state's rules are not on the federal site.
• Note the date on everything. A 2023 article about the salary threshold is describing a number that has changed. If a page does not say when it was updated, treat its figures as unverified.

For a plain-language walkthrough of the rules themselves rather than the authority behind them, read overtime laws in simple language. To see what your own hours produce under the rules that apply to you, use the overtime pay calculator or your state calculator.

The Short Version

Congress sets the floor. The DOL fills in the detail and changes it more often than people expect. Courts settle the arguments and can differ by region. States can only add. And no contract, handbook, or verbal agreement removes a right that any of those four layers grants you.

Knowing which layer produced a rule tells you how much weight to give it — and that, more than memorising any single number, is what keeps you from being talked out of pay you are owed.