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

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: 

1. Navigate to Payroll and select Employees.
2. Press the employee's name.
3. Tap Edit next to Pay types.
4. 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! 

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, 

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!

Zack,

Unfortunately, your reply did not come close to answering my question in my post.  Is there someone out there that can?

Hi there, @Bob Bookkeeper. I appreciate you coming back to this thread. 

To set up another Overtime section custom pay type, click the + New Pay Type option and create a new pay type.

Select "Other Earnings"  to ensure the system does not require adding a rate.

We also recommend consulting an accounting professional who ensures accuracy and compliance in payroll management. 

Please respond to this thread if you have additional questions.

Thanks for the reply.  This not what is needed either.  I setup two payroll items and then tried to show why each of them does not provide the solution we need.

We need a payroll item that is similar to the current Payroll Item named "Overtime Pay" but is not included in your calculation for Qualified Overtime Tracking.  This pay item needs to be Hourly, and the Rate needs to be Editable.  The reason it needs to be editable is because we pay a blended OT rate as employees have more than one pay rate.  We will name the pay item something like "Overtime - California".

I hope this makes sense.  How can this be done?

Thanks, 

Hello QuickBooks Team,

Is there any senior member of the community than can read my last post, including the screenshot explaining what the issues are with the proposed solutions so far, and solve this?

It appears that QuickBooks developers have not put enough effort into Qualified Overtime Tracking with flexibility to meet the needs of its ONLINE CORE PAYROLL clients that pay overtime differently than 1.5X and reside in a State like CA with specific State overtime requirements.

If no one has an answer, can this be expedited to a developer?  I opened a case #15152020041 on 1/23/26 already with no response.

Hey there, @Bob Bookkeeper. 

We appreciate you coming back into the Community with your concerns. 

We hear your concerns regarding the Qualified Overtime Tracking and the specific needs for your California-based business. It’s clear how important it is to have the flexibility required to stay compliant with state overtime rules, and we want to help you get this resolved. 

To ensure you get the specialized support you need, we are connecting you with our Next Level Help team. One of our experts will carefully review your Community comments, the screenshots you provided, and your existing case (#15152020041) to understand the full scope of the issue.   You can expect a member of that team to contact you within 1–2 business days with the next steps.

Feel free to reach back out if you have any other questions. We're always here to help! 

Thank you, Candice.  This is a step in the right direction. 

I received a call from QuickBooks advanced case management. It was nice to get a call so quick. I spoke with Brandon for 19 minutes, explaining why the basic solution to Qualified Overtime Tracking does not work for California employers.  He understood, but the only answer that he had for me was "This is a product limitation". He closed the case.  Very disappointed that QuickBooks has no solution for Qualified Overtime Compensation tracking for the likely tens of thousands of QuickBooks customers that use CORE payroll to pay employees in California.

Hi Bob,
As we discussed on the phone, you can submit your feedback using the feedback option provided. This will allow the back-end team to review it and consider it for future updates.
With that said, I will proceed with closing the case on my end.
Thank you for your time!
Best regards,
Brandon
Intuit Advanced Case Management Team