Hiring bookkeepers in the US under FLSA overtime and state wage rules

Four steps cover the hiring decision.

Confirm coverage and work location

Begin by checking both enterprise coverage and individual employee coverage, then identify where each employee actually works. A small bookkeeping firm or professional-services business is not automatically outside the FLSA. Remote work and interstate activity can matter even when the firm has only one office.

Enterprise coverage may apply when the firm meets the relevant annual sales or business-volume threshold. Individual coverage can also reach an employee whose work involves interstate commerce. Consider how client information, bank activity, and services move across state lines, rather than deciding coverage solely from office size or local registration.

Client records handled through cloud ledgers, bank feeds, and remote workflows may be relevant to that assessment. The details depend on the work performed, so examine the firm's actual activity rather than assuming that a bookkeeping business is local simply because its employees work from one state.

The federal minimum wage is $7.25 an hour and has applied since July 24, 2009. Covered workers generally receive overtime at one and one-half times their regular rate for hours above 40 in a workweek. These federal protections apply to small firms as well as larger employers.

Decide status from the work itself

Evaluate the work actually assigned, not the label on the offer. Exempt status requires the salary-basis, salary-level, and duties tests; missing any one leaves the employee non-exempt. Routine client bookkeeping usually remains non-exempt, so overtime can apply beyond 40 hours in a workweek.

The administrative exemption calls for office work related to management or general business operations, along with discretion and independent judgment on significant matters. Preparing reconciliations under fixed procedures may require skill, but skill alone does not establish the required discretion.

Use evidence about actual duties when making the decision. The month-end checklist illustrates structured production work that commonly remains non-exempt. A working supervisor may also fail the executive exemption when hands-on bookkeeping is the primary duty, so document responsibilities and the basis for the classification.

The current federal salary threshold is $684 a week, or $35,568 a year, after a federal court vacated the 2024 increase on November 15, 2024. Some states require a higher salary threshold. Check the applicable state rule before relying on an exemption, and retain the basis for the decision.

When duties are uncertain, paying overtime to a non-exempt employee avoids relying on a doubtful exemption. Small firms often combine tasks, which can make non-exempt status more likely. A staff training path may help develop responsibilities, but seniority by itself does not change the legal test.

Do not decide contractor status from a 1099 label or written agreement alone. The Department of Labor considers economic reality, including control, opportunity for profit or loss, and whether the work is central to the business. Assess how the relationship works in practice before choosing the payment and tax treatment.

Bookkeeping is the firm's core service, so regular staff positions may be difficult to defend as contractor work. Set hours, assigned clients, firm-provided software access, required internal meetings, and hourly-style pay are warning signs. A contractor classification guide can help review the full working arrangement.

Misclassification can lead to back wages, liquidated damages, payroll taxes, interest, and penalties. State consequences may add further exposure, and the worker may qualify for protections or benefits the firm assumed did not apply. Where someone is embedded in client work and regularly available, employment may better fit the relationship.

Review interns and trainees with the same care. An unpaid intern doing productive bookkeeping for firm clients is generally an employee for wage purposes. If the training mainly benefits the firm rather than the learner, treat that time as paid work and include it in the firm's employment analysis.

Set the workweek and payroll controls

Set one fixed, recurring workweek of 168 hours, write down its start and end, and apply it consistently. It need not match a calendar week or payroll period. Stable boundaries give the firm a reliable basis for comparing hours and calculating overtime due for each workweek.

Count hours actually worked above 40 during the defined week. Paid leave, holidays, and sick days do not count toward that threshold. For example, a week with 38 hours worked and one paid vacation day does not create overtime under this calculation, though state rules may add requirements.

The regular rate can be higher than the stated hourly rate. Include nondiscretionary bonuses, shift differentials, and some commissions before applying the overtime multiplier; a discretionary bonus is generally excluded. Work out the regular rate for the week before calculating the overtime premium owed.

Federal records include an employee's name, address, occupation, and gender, plus a birth date for anyone under 19. Record the pay rate and its basis, hours worked each day and week, overtime earnings, additions, deductions, and the pay period. Records generally must be retained for at least three years.

A shared spreadsheet may suit a small team, while a time clock or practice-management timer can create a clearer record. Whatever method the firm chooses, employees need to record brief remote work as well as longer shifts. Keep payroll records that support the hours and pay reported.

Federal law does not require paid meal breaks, rest breaks, or holidays, and it does not limit how many hours an adult employee may work. A lunch period spent answering client email counts as compensable time. State requirements can add break obligations, so build applicable rules into timekeeping.

Apply work-state rules and preserve the decision

For each employee, apply the wage rules that govern the place where work is performed, using the requirement that gives greater protection. Record the location-based decision in payroll setup and revisit it when an employee's role or work location changes. The firm's headquarters alone do not select the employee's protections.

State requirements can include daily overtime, higher exemption salary thresholds, and meal or rest breaks. A remote firm may need to administer different rules at the same time, so connect each employee's work location with the timekeeping and payroll settings used for that person.

California's listed rules include overtime after eight hours in a day and double time after twelve hours. New York sets different exempt salary levels for New York City, Long Island, and Westchester than for other parts of the state. State and local employment costs deserve extra attention in higher-cost locations; see pricing a monthly close in New York and Los Angeles.

Washington's overtime guidance sets out the state's rules, and the state also has strict meal and rest break requirements, while Texas, Florida, and Georgia follow the federal overtime standard closely, with fewer add-ons. Texas has a separate payday law for wage claims. Illinois has no separate white-collar threshold above the federal figure for most private bookkeeping roles, and state law includes a day-of-rest rule for certain employees.

The table's figures are those in effect on January 1, 2025, and thresholds are adjusted most years, so check current agency guidance before setting or changing pay.

Each state's rules come from a named law and agency:

Other states have their own statutes. The Department of Labor's State Labor Offices directory lists the wage agency in every state, so use it to find the rules for any state not covered here.

Apply the rules based on where the employee works, not simply the firm's location. A Texas firm with a remote California bookkeeper would need to meet California's listed $1,320 weekly threshold for that employee's exemption, while Texas staff remain under the federal $684 figure shown in the table.

Before advertising a position, decide its classification, pay range, and governing state rules. Write down why the role is exempt or non-exempt so another reviewer can follow the reasoning. A clear file also helps keep the job description aligned with the work the employee will actually perform.

An offer should state the pay rate or salary, pay frequency, workweek, and whether a non-exempt role qualifies for overtime. Do not promise a salary in exchange for all hours needed. Salary pay does not remove overtime obligations when the employee is non-exempt.

Collect the federal W-4 and applicable state withholding form, verify work authorization on Form I-9, and register for state unemployment and workers' compensation where required. Employees receive W-2 forms, while genuine contractors receive 1099 forms; those choices follow the status decision.

Test payroll before the first live pay period. Confirm the workweek start, overtime multiplier, rounding approach, and treatment of bonuses in the regular rate. Run a sample calculation with a known overtime total and check it by hand, so a setup mistake is found before it affects repeated payments.

Training records can support the classification file. A senior bookkeeper treated as exempt should have evidence of client sign-off authority, judgment calls, and independent work. The firm's licensing and compliance requirements also rely on a clear paper trail when employment records are reviewed.

Budget wages, payroll taxes, state unemployment, workers' compensation, benefits, and overtime together. Including those expenses in labor cost projections helps account for the full cost of a hire before busy periods increase working hours.

Review classifications, salary thresholds, and overtime settings at least annually, and whenever a role or work location changes. Confirm that remote employees are assigned the rules for the places where they work. Keep supporting time, pay, and classification documents together so the firm can explain its decisions.

Federal and state resources help check the rules, but the decision still depends on actual duties and working arrangements. For an uncertain exemption or contractor relationship, preserve the analysis and consider qualified employment advice before changing the person's status or pay.