W-2 code TT: State daily overtime (California and others)
Short answer: Overtime owed only because of state law, such as hours over 8 in a day, is not code TT. Only hours over 40 in the FLSA workweek count, at half the regular rate.
Example
Four 10-hour days make 40 hours with 8 hours of California daily overtime. The week is not over 40 hours, so code TT is $0. If the same employee works a fifth day of 6 hours (46 hours) at $25, code TT is 0.5 × $25 × 6 = $75, whatever daily overtime California also required.
Four 10-hour days make 40 hours with 8 hours of California daily overtime. The week is not over 40 hours, so code TT is $0. If the same employee works a fifth day of 6 hours (46 hours) at $25, code TT is 0.5 × $25 × 6 = $75, whatever daily overtime California also required.
The rules
- Overtime required by state law or a union contract is not qualified overtime (FS-2026-13 Q4, Q16).
- Premiums for hours over 8 in a day, weekends or holidays in a week of 40 hours or less are left out (FS-2026-13 Q16; 29 CFR 778.202, 778.203).
- Use the FLSA workweek, not the state's workday, to count hours.
Work it out for your payroll
The free code TT calculator does this per workweek for one employee or a whole payroll CSV, with bonuses spread back and weeks split by pay date. It runs in your browser.
The free code TT calculator does this per workweek for one employee or a whole payroll CSV, with bonuses spread back and weeks split by pay date. It runs in your browser.
Whole payroll, offline? The W-2 Code TT Kit runs every employee in one file with no network access, plus CSV templates, the week-by-week audit trail and a 12-page guide to every rule.
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Get the kit ($29, accountants $99)
Sources
- IRS FS-2026-13: Qualified overtime compensation FAQs (August 2026)
- eCFR: 29 CFR 778.202
- eCFR: 29 CFR 778.203
Not tax or legal advice. Facts checked 27 Oct 2026 against the IRS FAQs (FS-2026-13) and the FLSA regulations.
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