Kentucky Overtime Laws & Regulations: What Employers Must Know

Complying with Kentucky’s overtime laws requires a clear understanding of the specific rules that go beyond federal requirements. Employers managing payroll in the state need to stay informed to avoid errors, penalties, or employee disputes related to overtime pay. Familiarity with Kentucky's unique provisions can help businesses maintain compliance and ensure employees are paid accurately.

Kentucky labor laws include nuanced overtime regulations that differ from federal standards. While the Fair Labor Standards Act (FLSA) provides a general framework, Kentucky law takes a more detailed approach to certain overtime situations. Employers who rely solely on federal guidelines without considering state-specific rules may inadvertently miscalculate overtime.

Key provisions under Kentucky's overtime laws include a weekly hour threshold, specific rules for seventh-day work, and strict guidelines for calculating workweeks. KRS 337.285, the state law governing overtime pay, outlines these requirements clearly. Employers who understand these rules can streamline payroll processes and avoid compliance risks.

Understanding Kentucky's Overtime Requirements

Kentucky's overtime rules fall under KRS 337.285, which requires employers to pay one and a half times an employee's regular hourly rate for all hours worked over 40 in a single workweek. Unlike states with daily overtime laws, such as California, Kentucky does not mandate overtime pay for employees who work more than eight hours in one day unless otherwise required by a contract or agreement.

Kentucky law also includes a specific rule for employees who work seven consecutive days in one workweek. If an employee works every day within a single workweek, employers must pay overtime for all hours worked on the seventh day, regardless of whether the employee reached the 40-hour threshold earlier in the week. This ensures employees are compensated for extended stretches of continuous work.

The calculation of overtime in Kentucky is based on a fixed workweek, which is defined as a recurring 168-hour period made up of seven consecutive 24-hour days. Employers cannot average hours across multiple weeks to determine overtime eligibility. For example, if an employee works 35 hours one week and 45 the next, the employee is entitled to five hours of overtime pay for the second week, even if the combined total hours for both weeks average less than 40 per week.

Who Is Covered vs. Who Is Exempt

Not all employees in Kentucky are entitled to overtime pay. The distinction between non-exempt and exempt employees depends on specific job duties, pay structure, and classification rules. Employers must carefully evaluate each role to ensure compliance with state overtime laws in Kentucky.

Non-Exempt Employees

Non-exempt employees are eligible for overtime pay when they work over 40 hours in a single workweek. This category generally includes:

• Hourly employees: Most workers paid by the hour fall under the non-exempt classification. Employers must calculate overtime at 1.5 times the employee's regular hourly rate.

• Salaried employees earning below the minimum threshold: Kentucky follows federal guidelines for salary thresholds. If a salaried worker earns less than the set threshold, they qualify as non-exempt.

• Workers paid on commission: Employees earning commissions are typically non-exempt unless their specific duties meet exemption standards outlined by law.

Employees in these roles are protected by overtime laws, and employers are responsible for correctly tracking and compensating their hours.

Exempt Employees

Exempt employees are not eligible for overtime pay. To qualify for an exemption, workers must meet specific criteria related to both their salary and job responsibilities. Common exempt roles include:

• Executives: Individuals managing at least two employees and holding authority over hiring, firing, or other significant employment decisions.

• Administrative professionals: Employees handling office or non-manual work tied to business operations. They must also exercise independent judgment on significant matters.

• Learned professionals: Workers like doctors, teachers, or engineers who perform tasks requiring advanced knowledge gained through extensive education.

• Outside sales representatives: Employees primarily working away from the employer's location to secure sales or contracts.

• Industry-specific roles: Certain jobs in agriculture, transportation, or other regulated fields may qualify for exemptions based on industry standards.

How Kentucky Applies Exemption Standards

Kentucky applies strict guidelines when determining whether an employee is exempt. Employers must follow the rules outlined in 803 KAR 1:061, which include specific instructions for roles paid by salary, piece-rate, or commission. For example, commission-based employees must have overtime calculated from an hourly equivalent rate. Employers cannot assume a role is exempt without verifying that all exemption criteria are met.

Accurate classification matters. Misclassifying an employee as exempt can lead to significant penalties, back pay claims, and legal disputes. By understanding the clear distinctions between exempt and non-exempt roles, employers can minimize risks and maintain compliance with state overtime laws in Kentucky.

Determining the Workweek and the 7th Day Rule

A workweek in Kentucky is always a fixed, recurring 168-hour timeframe made up of seven consecutive 24-hour days. Employers must set the start of the workweek (e.g., Monday at 12:00 a.m.) and keep it consistent for payroll and overtime purposes. Changing the workweek to avoid overtime pay is prohibited, so clarity and consistency are key for compliance.

Kentucky's seventh-day overtime rule applies when an employee works every day of the workweek. If all seven days are worked, employers must pay overtime (time-and-a-half) for all hours worked on the seventh day. However, this requirement only applies if the employee's total hours for the week exceed 40. If the employee works fewer than 40 hours across the first six days, the seventh day is paid at the regular hourly rate.

Overtime must always be calculated within the boundaries of a single workweek. Kentucky law does not allow averaging hours over multiple weeks. For example, if an employee works 30 hours in one week and 50 hours in the following week, the employee must still receive 10 hours of overtime for the second week. Each workweek stands alone, and all overtime eligibility is based only on hours worked within that specific week.

This approach applies to all pay structures, whether hourly, salaried, commission-based, or piece-rate. Employers must carefully track hours within the established workweek to ensure compliance with overtime rules and avoid payroll errors.

Calculating Overtime Pay

Understanding how to calculate overtime pay correctly is a foundational responsibility for employers in Kentucky. The approach varies depending on how an employee is compensated, whether hourly, salaried, commission-based, or paid at multiple rates in a single workweek. Kentucky's rules require precision to ensure employees are paid fairly and employers remain compliant.

Hourly Employees

For hourly workers, overtime pay is straightforward. Employers must pay 1.5 times the regular hourly rate for all hours worked over 40 in a single workweek. The same rule applies to hours worked on the seventh consecutive day if the total hours for the week exceed 40.

Example:
An employee earning $16 per hour works 45 hours in a week:

• Regular Pay: 40 hours × $16/hour = $640

• Overtime Pay: 5 hours × ($16 × 1.5) = $120

• Total Weekly Pay: $640 + $120 = $760

Accurate time tracking and consistent application of the 1.5× rate are non-negotiable for compliance.

Salaried Non-Exempt Employees

For salaried non-exempt employees, overtime calculation starts by determining the regular hourly rate. Divide the weekly salary by the total hours worked. Then, apply 1.5 times that rate to any hours worked over 40.

Example:
A salaried employee earns $850 per week and works 50 hours:

1. Regular Hourly Rate: $850 ÷ 50 hours = $17/hour

2. Overtime Rate: $17 × 1.5 = $25.50/hour

3. Overtime Pay: 10 hours × $25.50 = $255

4. Total Weekly Pay: $850 + $255 = $1,105

Employers must include all hours worked—even if they exceed the usual schedule—to calculate overtime properly.

Commission or Piecework Employees

For employees paid by commission or piecework, the regular hourly rate is calculated by dividing total weekly earnings by total hours worked. Overtime is then paid at 1.5 times this rate for all hours over 40.

Example:
An employee earns $1,200 in commission during a week where they worked 50 hours:

1. Regular Hourly Rate: $1,200 ÷ 50 hours = $24/hour

2. Overtime Rate: $24 × 1.5 = $36/hour

3. Overtime Pay: 10 hours × $36 = $360

4. Total Weekly Pay: $1,200 + $360 = $1,560

Employers must include all forms of compensation—such as bonuses or incentives—in total weekly earnings before determining the regular rate.

Multiple Rates or Shift Differentials

When employees work at different pay rates or receive shift differentials, employers must use the weighted average method to calculate overtime. This ensures overtime pay reflects the combined rates instead of defaulting to one rate.

Steps to calculate the weighted average:

1. Multiply hours worked at each rate by that rate.

2. Total the pay for all hours worked.

3. Divide the total pay by total hours worked to find the regular hourly rate.

4. Apply 1.5 times the hourly rate to all hours worked over 40.

Example:
An employee works 20 hours at $19/hour and 25 hours at $23/hour in one week:

1. Total Pay: (20 × $19) + (25 × $23) = $380 + $575 = $955

2. Regular Hourly Rate: $955 ÷ 45 hours = $21.22/hour

3. Overtime Rate: $21.22 × 1.5 = $31.83/hour

4. Overtime Pay: 5 hours × $31.83 = $159.15

5. Total Weekly Pay: $955 + $159.15 = $1,114.15

This method ensures employees are compensated accurately, and employers stay within the boundaries of Kentucky's overtime regulations.

Minimum Wage Considerations

Kentucky's minimum wage remains $7.25 per hour, aligning with the federal standard. Employers must ensure that employees are paid at least this hourly rate unless local laws or agreements specify a higher amount. For workers earning the minimum, overtime pay calculations start here and must follow strict guidelines.

Overtime pay is always calculated at 1.5 times an employee's regular hourly rate. For someone earning $7.25 per hour, overtime pay cannot be less than $10.88 per hour. Employers cannot substitute the actual rate with a flat payment or ignore the hours worked when calculating overtime. Each hour beyond 40 in a workweek must be paid individually and at the correct rate.

Private-sector employers in Kentucky cannot offer compensatory time off as a replacement for overtime pay. While compensatory time may be permitted in the public sector under specific rules, private businesses must pay employees for every overtime hour worked. Employers must track hours accurately and calculate overtime based on the employee's regular hourly earnings, ensuring compliance with state and federal regulations.

Clarifying minimum wage and overtime rules for payroll ensures employees are fairly compensated and helps businesses avoid penalties.

Frequently Asked Questions (FAQ)

Kentucky overtime laws can feel complicated, especially when employers need to account for unique rules like the seventh-day overtime requirement. Below are clear, straightforward answers to common questions about state overtime laws in Kentucky.

What are Kentucky's overtime rules for consecutive days worked?

If an employee works seven consecutive days during one workweek, the hours worked on the seventh day must be paid at 1.5 times the employee's regular rate. This applies only when the total hours worked during the week exceed 40. If total hours remain under 40, the seventh day is paid at the regular rate without overtime.

Does Kentucky require overtime after eight hours in a day?

No. Unlike some states, Kentucky does not require overtime pay for employees who work more than eight hours in a single day. Overtime is calculated weekly and applies only to hours worked beyond 40 in a workweek or on the seventh consecutive day under specific conditions. Employers may still owe daily overtime if their written policies or contracts include it.

Can an employer "average" two weeks' hours to avoid overtime?

No. Hours worked cannot be averaged across multiple weeks. Each workweek stands alone and is fixed as a recurring 168-hour period over seven consecutive days. For example, if an employee works 35 hours one week and 45 hours the next, they are entitled to five hours of overtime for the second week. Any attempt to average hours would violate state law.

What if employees work unauthorized overtime?

Employers must pay for all overtime hours worked, even if those hours were not pre-approved. Refusing to pay would violate wage and hour laws. However, employers can enforce overtime policies through disciplinary actions when employees fail to follow procedures for obtaining approval. This ensures compliance without sacrificing internal controls.

Navigating Kentucky's overtime laws requires attention to detail and a commitment to compliance. By understanding the state's unique rules and ensuring accurate payroll calculations, you can protect your business and support your employees. If you're looking for a partner to help streamline your HR processes and maintain compliance, book a demo with GoCo today and discover how our platform can support your success.