Question

Qualified Overtime Tracking for California Employers - QuickBooks Online - Core Payroll

Forum|Forum|5 months ago
January 29, 2026
1 reply
49 views

Hello,

Looking for Guidance from QuickBooks on this subject. The Guidance I have found from QuickBooks does not cover California OT rules that are over and above the Federal FLSA rules. It is my understanding that the law requires the tracking of only overtime that meets the FLSA rules, so daily OT over 8 hours does not count, only weekly OT over 40 hours.

I spent 3 hours last Friday chatting with QB support, 3 different associates. One seemed to share that there was a solution if you subscribe to QuickBooks Time, which we do not. Very frustrating as I got no answer that works for CORE Payroll.

How does a California Employer that uses QuickBooks Online CORE Payroll get the tracking correct on pay stubs and the year end W2?

I'm thinking we are likely going to need a second Overtime Item and a second Double time item, one that is for overtime that qualifies under the FLSA rules and one that is for the "excess" California overtime that we must pay.

Is that the solution or is there another one?

If that is the solution, how do we set up a second Overtime Item and Double time item?

Thanks for your help. I will be calling QuickBooks support again but looking for any guidance.

C

Candice14

Level 8

Hello, @Bob Bookkeeper.

Thanks for reaching back out in the Community with your questions about qualified overtime.

Since you're using QuickBooks Online Core Payroll (without QBT), managing 2026 "Qualified Overtime" (FLSA >40hrs) alongside CA daily OT, the system requires manual tracking and creating a specific payroll item. Because QB automatically calculates CA overtime (daily/8hrs) but not federal "qualified" overtime, you must calculate the weekly FLSA-qualified hours manually and create a custom, non-tax-advantaged item for the excess, or use a custom item to specifically report the qualified amount.

Here's how to create a second OT item:

Navigate to Payroll and select Employees.
Press the employee's name.
Tap Edit next to Pay types.
Click Add new pay type or navigate to Other Pay Types.
- Select Custom Pay Type (or "Other" if available) and name it "2026 Qualified OT".

- Set the rate formula (e.g., multiplier of 1.5 of hourly rate) and assign it to the employee.

Feel free to come back if you have any other questions or concerns. Take care!

B

Bob BookkeeperAuthor

There is no option to "add a custom pay type" that I can see. If I add an "hourly" pay type, it requires a rate.

I need a second OT field that can be used for California OT (the excess above what is FLSA OT for the Qualified OT tracking that is not calculated as part of the Qualified Overtime Tracking provided by QB. The rate for this pay item needs to be EDITABLE, just like the existing OT item that we use.

We pay all hours worked on the regular pay codes and we calculate and pay the OT premium only on the Overtime pay item. This requires us to edit the rate to the blended 1/2 time rate for just the OT premium.

Any thoughts are appreciated. Right now, we cannot accurately track Qualified OT using what QB has provided. Thanks,

Z

ZackE_

Moderator

Thanks for getting back with the Community, Bob Bookkeeper.

Once you've accessed your employee's Pay types section and selected Edit, you'll be able to make changes to their Overtime Pay. If you're unsure of what to be entering, I'd recommend working with an accounting professional.

If you're in need of one, there's an awesome tool on our website called Find a ProAdvisor. All ProAdvisors listed there are QuickBooks-certified and able to provide helpful insights for driving your business's success.

I've also included a detailed resource about working with overtime which may come in handy moving forward: Add overtime pay to an employee

I'll be here to help if there's any questions. Have a wonderful Tuesday!

Sign up

Login with SSO

Let's get you signed in

Login with SSO