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Construction Companies: Overtime Rules and Payroll Compliance (2026)
Overtime in construction companies is time and one half after 40 hours on the regular rate, and the regular rate has to absorb prevailing wage compliance and certified payroll before the premium is applied. BEG runs construction company payroll for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
The overtime rules that apply to construction companies
A construction business with two or more employees and $500,000 or more in annual gross sales is covered by the FLSA, and individual employees whose work involves interstate commerce are covered regardless of the employer's sales. Overtime is owed after 40 hours in each workweek; paying overtime only after 80 hours in a biweekly period is illegal because each workweek stands alone.
DOL lists these typical construction violations: not recording work before or after the shift, shorting hours as down time or rain delay, unpaid meal breaks where the employee is not fully relieved, banking overtime as comp time, failing to combine hours worked in more than one job classification in the same workweek, and not paying for travel from the shop to the work site and back.
Non-management construction workers such as carpenters, electricians, plumbers, iron workers, operating engineers and laborers are blue-collar employees who cannot be classified as exempt under the FLSA white-collar exemptions no matter how highly paid. Those exemptions require a duties test and a salary of at least $684 per week.
A worked example at construction company wages
Construction laborers at the May 2025 national median of $47,120 earn about $23 an hour on a 2,080-hour year. Ten overtime hours in a week cost $340 at time and one half. If that week also carried prevailing wage compliance, the amount folds into the regular rate first and the premium rises with it; leaving it out is the most common overtime error in this industry.
How the payroll is set up to get it right
Each pay component is flagged at setup as included in or excluded from the regular rate, hours are captured by workweek rather than pay period, and any industry exemption is applied per employee with the supporting record kept. Overtime is then arithmetic, not judgment, on every run.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- A construction business with two or more employees and $500,000 or more in annual gross sales is covered by the FLSA, and individual employees whose work involves interstate commerce are covered regardless of the employer's sales. Overtime is owed after 40 hours in each workweek; paying overtime only after 80 hours in a biweekly period is illegal because each workweek stands alone. [DOL Fact Sheet #1]
- DOL lists these typical construction violations: not recording work before or after the shift, shorting hours as down time or rain delay, unpaid meal breaks where the employee is not fully relieved, banking overtime as comp time, failing to combine hours worked in more than one job classification in the same workweek, and not paying for travel from the shop to the work site and back. [DOL Fact Sheet #1]
- Non-management construction workers such as carpenters, electricians, plumbers, iron workers, operating engineers and laborers are blue-collar employees who cannot be classified as exempt under the FLSA white-collar exemptions no matter how highly paid. Those exemptions require a duties test and a salary of at least $684 per week. [DOL Fact Sheet #17P]
Read the full guide to how to calculate overtime pay, and the rest of the construction company payroll library.
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Frequently Asked Questions
Which construction company employees are exempt from overtime?
A construction business with two or more employees and $500,000 or more in annual gross sales is covered by the FLSA, and individual employees whose work involves interstate commerce are covered regardless of the employer's sales. Overtime is owed after 40 hours in each workweek; paying overtime only after 80 hours in a biweekly period is illegal because each workweek stands alone.
How is overtime calculated on prevailing wage compliance?
prevailing wage compliance is added to the week's straight-time pay, the total is divided by hours worked to get the regular rate, and the half-time premium is paid on that rate for every hour over 40. DOL lists these typical construction violations: not recording work before or after the shift, shorting hours as down time or rain delay, unpaid meal breaks where the employee is not fully relieved, banking overtime as comp time, failing to combine hours worked in more than one job classification in the same workweek, and not paying for travel from the shop to the work site and back.
What does an overtime hour cost at construction company wages?
At the BLS May 2025 national median for construction laborers, $47,120 a year or about $23 an hour, an overtime hour is $34 before any bonus or differential is added to the rate.
What does managed payroll cost for a construction company?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Prevailing wage compliance, certified payroll and union vs non-union are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Construction Companies. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Overtime Pay Under the FLSA
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