• Small businesses may be exempt from paying overtime.construction worker image by MAXFX from Fotolia.com
  
  Federal labor law, established through the Fair Labor Standard Act, and Kentucky state labor law require all employers to pay overtime to their employees. With some exceptions, overtime is calculated as one and a half times the employee's regular hourly wage and must be paid for any hours worked in excess of 40 hours in one week.
  
  

Small Business Exemption

• Small businesses that have less than $500,000 in annual sales and do not engage in interstate commerce--which means conducting business between states--are exempt from paying overtime under the Fair Labor Standards Act and Kentucky state law. Businesses grossing more than $500,000 in annual sales or small businesses that engage in interstate commerce must pay overtime absent another exemption.
  
  

Salaried Employee Exemption

• Certain well-paid salary employees are exempt from receiving overtime under the Fair Labor Standards Act and Kentucky state labor law regardless of company size. Employees who earn more than $455 per week as a salary and are not primarily engaged in manual labor are exempt from the overtime provisions. Thus, a small business with well-paid salary employees such as executives, managers, administrators, computer technicians or outside sales persons does not have to pay overtime to those employees.
  
  

Other Considerations

• In Kentucky, employers are prohibited from giving comp time in lieu of paying overtime if the employee is otherwise qualified to receive overtime pay. Employers are also permitted under Kentucky law to require employees to work overtime, whether it is in excess of eight hours in one day or 40 hours in one week. Overtime is only paid, however, for hours worked beyond the 40-hour weekly threshold.