Overtime Thresholds and Rules

Defines the threshold and multiplier terms that govern when and how overtime pay is triggered under federal and state law.

FLSA Workweek

FLSA workweek is a fixed, regularly recurring period of 168 consecutive hours (seven 24-hour periods) that an employer designates as the unit for calculating overtime obligations under the Fair Labor Standards Act. It cannot be averaged across two or more weeks. EasyClocking by WorkEasy Software anchors every overtime calculation to the employer's designated FLSA workweek.

Employers may set the workweek to start on any day; once set, it must remain consistent.

Overtime Threshold

Overtime threshold is the number of hours worked beyond which an employer must pay overtime rates. Under federal law, it is 40 hours per FLSA workweek; under California law, it is 8 hours per workday or 40 hours per workweek, whichever triggers first.

California's daily threshold (8 hours/day) is independent of the weekly threshold; both can apply in the same workweek.

Daily Overtime

Daily overtime is an overtime obligation triggered by hours worked beyond a daily threshold rather than a weekly one. In California, time-and-a-half applies after 8 hours in a workday and double time applies after 12 hours in a workday. EasyClocking by WorkEasy Software applies California daily overtime rules at the workday level, stacking them correctly against weekly FLSA thresholds.

Only a minority of states (notably California and Alaska) mandate daily overtime; FLSA does not require it.

Seventh-Day Rule

Seventh-day rule is a California overtime provision requiring time-and-a-half pay for the first 8 hours worked on the seventh consecutive day in a single workweek, and double time for all hours beyond 8 on that day.

Applies only when the employee works all seven days of the same California workweek; does not require seven consecutive calendar days across workweeks.

Time and a Half

Time and a half is an overtime pay rate equal to 1.5 times an employee's regular rate of pay, applied to hours that exceed the applicable overtime threshold. It is the standard federal overtime rate under FLSA and the first-tier overtime rate in California.

Also known as: 1.5x Pay, One and a Half Times

On a holiday, time and a half may stack with a holiday premium if employer policy or a CBA requires both; these are additive, not merged.

Holiday Pay Obligations

Covers the specific terms governing holiday premium pay, mandatory vs. voluntary obligations, and how holiday hours are classified for payroll purposes.

Holiday Premium Pay

Holiday premium pay is additional compensation paid to employees who work on a designated holiday, commonly time and a half or double time. It may be required by employer policy, a collective bargaining agreement or state law, but is not mandated by the FLSA. EasyClocking by WorkEasy Software applies employer-configured holiday premium rules at the pay-code level.

FLSA does not require holiday premium pay; the obligation arises from employer policy, CBAs or state statutes (e.g., Rhode Island, Massachusetts).

Holiday Pay

Holiday pay is compensation provided to employees for designated holidays, either as paid time off when not working or as a premium rate when working. It is a paid-but-not-worked benefit under most employer policies and does not count as hours worked under FLSA for overtime purposes.

Because holiday pay is not 'hours worked' under FLSA, it does not count toward the 40-hour weekly overtime threshold unless employer policy or a CBA explicitly includes it.

Double Time

Double time is a pay rate equal to 2 times an employee's regular rate of pay, required in California for hours beyond 12 in a workday or beyond 8 on the seventh consecutive workday. Some employers also apply it voluntarily on holidays. EasyClocking by WorkEasy Software flags double-time eligibility automatically when California workday or seventh-day thresholds are crossed.

Also known as: 2x Pay

Double time and a half (2.5x) is not required by any U.S. statute; it appears only in employer policies or CBAs.

Overtime on a Holiday

Overtime on a holiday refers to hours worked on a designated holiday that also exceed the applicable overtime threshold, potentially triggering both a holiday premium and an overtime premium. Whether both apply simultaneously depends on employer policy, CBA terms or applicable state law. EasyClocking by WorkEasy Software resolves overtime-on-a-holiday stacking by applying each pay rule in sequence.

FLSA does not require stacking; many employers pay the higher of the two rates rather than both additively.

Leave Interactions with Overtime

Defines how paid-but-not-worked hours (PTO, sick, holiday) interact with overtime thresholds, the core ambiguity driving payroll errors in mixed pay-code weeks.

Hours Worked

Hours worked is the FLSA-defined category of time that counts toward the overtime threshold. It includes all time an employer suffers or permits an employee to work, but excludes paid-but-not-worked time such as PTO, holiday pay and sick leave unless employer policy or a CBA specifies otherwise.

The DOL's 29 CFR Part 785 governs what constitutes hours worked under FLSA.

PTO (Paid Time Off)

PTO (paid time off) is employer-provided paid leave, encompassing vacation, personal days or a combined leave bank, that compensates employees for non-worked time. PTO does not count as hours worked under FLSA, meaning PTO hours do not accumulate toward the 40-hour overtime threshold. EasyClocking by WorkEasy Software tracks PTO hours in a separate pay code bucket so they are excluded from FLSA hours-worked totals by default.

Also known as: Paid Time Off, Vacation Time

Some CBAs explicitly include PTO in overtime calculations even though FLSA and most state laws do not require it.

Sick Pay

Sick pay is compensation provided to employees for absences due to illness or medical appointments. It is paid-but-not-worked time that does not count as hours worked under FLSA and therefore does not contribute to the 40-hour weekly overtime threshold.

Also known as: Paid Sick Leave

Some state paid sick leave laws (e.g., California, New York) require sick pay but do not require it to count toward overtime; employer policy or CBAs may differ.

Paid-But-Not-Worked Hours

Paid-but-not-worked hours are hours for which an employee receives compensation, such as PTO, holiday pay or sick pay, without performing work. These hours are excluded from the FLSA hours-worked count used to determine overtime eligibility unless a CBA or employer policy explicitly includes them. EasyClocking by WorkEasy Software separates paid-but-not-worked hours from worked hours at the pay-code level.

Also known as: Non-Worked Paid Hours

Misclassifying paid-but-not-worked hours as hours worked inflates overtime liability; the reverse error suppresses it. Both are audit findings.

Related: Hours Worked, PTO, Sick Pay, Holiday Pay

Payroll Output and Compliance

Covers the output-layer and audit terms practitioners use when producing and defending compliant paychecks after overtime and holiday calculations are resolved.

Pay Code

Pay code is a labeled classification assigned to each type of compensation in a payroll system, such as REG (regular), OT (overtime), HOL (holiday) or PTO, that determines which pay rules, tax treatments and overtime logic the system applies to those hours. EasyClocking by WorkEasy Software uses configurable pay codes to route each hour type through the correct calculation rule.

Also known as: Earnings Code

Incorrectly mapped pay codes are among the top causes of overtime miscalculation in payroll audits.

Payroll-Ready Output

Payroll-ready output is a finalized, calculation-complete payroll file in which all hours have been classified, all overtime and premium pay rules have been applied, and all pay amounts are accurate and defensible, requiring no manual adjustment before processing. EasyClocking by WorkEasy Software produces payroll-ready output by resolving overtime, holiday and leave interactions at the time of timesheet approval.

Payroll-ready output is the operational goal of automated overtime and holiday pay systems; manual cleanup after export is the failure mode it eliminates.

Audit Trail

Audit trail is a timestamped, immutable record of every calculation step, rule applied and data input used to produce an employee's paycheck. It enables employers to demonstrate compliance with FLSA, state wage laws and internal policy during a DOL investigation or employee dispute. EasyClocking by WorkEasy Software generates a per-employee audit trail for every pay period.

Also known as: Payroll Audit Log

FLSA requires employers to retain payroll records for at least three years (29 CFR Part 516).

Pay Period

Pay period is the recurring interval, weekly, biweekly, semimonthly or monthly, over which an employer tracks hours and calculates wages for payroll processing. It is distinct from the FLSA workweek and must not be used as the unit for overtime calculations under federal law.

Also known as: Payroll Period

A biweekly pay period spans two FLSA workweeks; overtime must be calculated separately for each workweek, not averaged across the two.

Overtime & Holiday Pay Glossary. 22 Key Terms Defined

Pay Rate Foundations

Fair Pay Starts at the Clock

Overtime Thresholds and Rules

Holiday Pay Obligations

Leave Interactions with Overtime

Payroll Output and Compliance

How These Terms Relate

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