Overtime Rules
What is the federal overtime threshold for non‑exempt employees?
1.5x regular rate for hours worked over 40 in a workweek.
What is Retro Pay?
Pay owed for a prior period due to late increases, corrections, or missed earnings.
True or False: If an employee is salaried, they are automatically exempt.
False-- depends on duties and salary thresholds
What is $7.25
An employer wants to deduct the cost of uniforms, but doing so would drop the employee below minimum wage. Can they do it?
No — under FLSA, uniform deductions cannot reduce pay below minimum wage, regardless of state.
Name one type of pay that must be included in the regular rate calculation.
Shift Differentials, On-Call Pay, Commissions, Incentive Pay, Non discretionary bonuses
If a raise is effective Jan 1 but processed Feb 15, what must payroll do?
Calculate and pay retro for all affected hours.
True or False: We can delay a final paycheck until equipment is returned.
False-- states set strict final-pay deadlines; equipment recovery is separate.
Which of the 4 states has an annually indexed minimum wage? (OK, TX, AR, or MO)
Missouri
Starting in 2026, Missouri’s minimum wage is indexed annually. If inflation spikes mid‑year, can the minimum wage change again before January?
No — Missouri adjusts once per year, effective January 1, even if inflation changes later.
An employee works 43 hours and earns a $100 nondiscretionary bonus for the week. What must be done before calculating OT?
Allocate the bonus across all hours worked to increase the regular rate.
Does retro pay affect overtime?
Yes — retro must be allocated back to the original workweeks to recalc OT.
True or False: Bonuses do not affect overtime.
False-- non discretionary bonuses must be included in the regular rate.
If an employee lives in Arkansas but works in Oklahoma, which state’s income tax applies?
Arkansas (state of residence), because Oklahoma has no reciprocity but Arkansas taxes residents on all income.
An Arkansas employer pays a bonus in 2026 for work performed in 2025. Which year’s W‑2 does the bonus belong on?
2026 — wages are taxed in the year paid, not earned.
True or False: Employers may average hours over two weeks for OT if the pay period is biweekly.
False — OT is always based on a single workweek.
What is the IRS rule for taxing retro pay?
It is supplemental wages and may be taxed using the supplemental method.
False-- Repayments made in a later year fall under "Claim of Right"; no W-2c.
Which of the four states has the most employer-friendly rules on deductions?
Texas--- follows FLSA with minimal additional restrictions
A remote employee works in Oklahoma, but the employer is in Texas. The employer wants to follow Texas payday rules. Can they?
No — payday rules follow the employee’s work location, so Oklahoma rules apply.
A salaried non‑exempt employee earns $800/week and works 50 hours. What is the OT premium owed?
Regular rate = $800 ÷ 50 = $16; OT premium = 10 hours × $8 = $80.
If retro pay crosses tax years, which year’s W‑2 does it belong on?
The year it is PAID, not earned.
True or False: Remote Workers follow the employer's state wage rules.
False: Wage rules follow WHERE the employee physically works, not their primary company location.
An employee lives and works remotely in Oklahoma, but their employer is located in Arkansas. Which state’s minimum wage applies?
Oklahoma’s — minimum wage is based on where the work is physically performed, not where the employer is located. (Arkansas’ higher minimum wage does not apply unless the employee performs work in Arkansas.)
A non‑exempt Oklahoma employee earns a nondiscretionary quarterly bonus in 2026. Payroll forgets to include it in the regular rate for overtime. How must payroll correct it?
Allocate the bonus back to each Oklahoma workweek in the quarter
Recalculate the regular rate for each affected week
Pay retroactive overtime based on the adjusted regular rate
Tax the retro as supplemental wages in 2026
Ensure compliance with Oklahoma’s final pay and deduction rules if the employee has since terminated