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Add overtime pay to an employee

SOLVEDby QuickBooks248Updated September 14, 2023

Learn how to set up an overtime pay item in QuickBooks Online Payroll and QuickBooks Desktop Payroll.

Do you need to pay certain employees overtime? We’ll show you how to set up an overtime pay item, so that you can pay your employees for their extra hours.

Federal and state overtime requirements

When an employee works more than 40 hours in a workweek, they must be paid overtime wages. Under the Federal Labor Standards Act (FLSA), overtime is paid to nonexempt employees at a rate of at least 150% of their regular hourly rate.

The FLSA requires overtime to be paid to nonexempt employees who work more than 40 hours in a work week. However, each state can set its own overtime requirements. When state law differs from the FLSA, you must follow the standard most protective to your employees. 

For more information about federal and state overtime requirements, check out FLSA and state labor department’s websites.

Note: Salaried employees are exempt from overtime pay if they meet the duty and responsibility tests and the salaries exceed a certain level. All other salaried employees must be paid overtime. For more info on the exemptions, check out this FLSA’s publication.

Note: Not sure which payroll service you have? Here's how to find your payroll service.

Step 1: Set up overtime pay item

  1. Go to Payroll, then select Employees (Take me there).
  2. Select your employee.
  3. From Pay types, select Start or Edit.
  4. In the Common pay types section, select Overtime Pay. (If applicable, select Double Overtime Pay.)
  5. Select Save.

Step 1: Create the overtime pay item 

  1. Select Lists, then Payroll Item List.
  2. Select the Payroll Item ▼ dropdown, then New.
  3. Select Custom Setup, then Next.
  4. Select Wage, then select Next twice.
  5. Select Overtime Pay, then Next.
  6. Enter the name of the item. Select Next.
  7. Select the overtime rate you want to pay your employee, then Next.
  8. Select the Expense account (or add it) where you want to track the item. 
  9. Select Finish.

Step 2: Add the item to the employee

  1. Select Employees, then Employee Center.
  2. Double-click the employee’s name.
  3. Select Payroll Info.
  4. In the Earnings section, add the overtime pay item.
  5. Select OK.

Step 2: Create a paycheck with overtime pay

You can now create a paycheck with overtime pay.

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