Federal law requires that all non-exempt employees are paid at a rate of one and one half times their regular rate of pay for all hours worked over 40 in a workweek. This is pretty straightforward to figure out when a payroll is processed on a weekly or biweekly schedule because the number of days in the pay period remain the same. But for employers who pay their employees semi-monthly (i.e., the 1st and the 15th of the month) the number of work days fluctuate from one pay period to the next depending on the way the calendar falls.
The federal overtime requirement is based on a workweek which is determined by the company. You can make the workweek whatever you would like, however it should stay the same consistently. If you do decide to change it, the change should be intended permanently and the change cannot be made just to avoid paying overtime to an employee or a group of employees. Commonly employers establish workweeks from Sunday through Saturday or from Monday through Sunday, but any seven consecutive day period is fine.
When calculating overtime for a semi-monthly payroll, you may have to include hours worked in the previous pay period. Overtime must be calculated for each workweek, so if the start of the pay period is in the middle of a workweek you also need to count the hours worked at the beginning of that workweek that were paid on the last pay period. For example, if your pay period is the 1st through the 14th of the month and the 1st falls on a Thursday, and your workweek is defined as Sunday through Saturday, you would need to count any hours worked Sunday, Monday, Tuesday and Wednesday that were paid in the previous pay period as well as the hours worked on Thursday, Friday, and Saturday in this pay period to determine whether any hours should be paid at the overtime rate.
This can become even more complicated when wages outside of the regular hourly pay rate are included in compensation such as a nondiscretionary bonus or commission. This other pay would also be included in the regular rate of pay when calculating overtime, making your overtime calculation between two pay periods more complex.
If you have non-exempt employees, you may find paying them biweekly to be a simpler approach to ensure you are in compliance with federal overtime regulations rather than a semi-monthly payroll schedule.
You should also review state and local law as there may be additional overtime requirements above the federal regulations (for example, in California any hours over 8 in a workday must be paid at an overtime rate).