Do vacation hours count as overtime? This is a common question among employers and employees alike. If an employee takes 8 hours of vacation or PTO on a week where he works more than 32 hours in that week, will those hours over 40 be counted as overtime?
(Before I answer that, I wanted to share a link to our free accrual calculator in case that comes in handy.)
The answer is no. Overtime is calculated only on actual hours worked and not simply the hours on the timecard. If the employee doesn’t physically work 40 hours in the week, then he/she should not be paid overtime.
For example, if the employee works 35 hours Monday through Thursday and then takes another 8 hours vacation on Friday, the employee won’t be owed any overtime at all, even though he/she will be getting paid for 43 hours.
Note, the situation can call for overtime if the employee works in California and works more than 8 hours in a day. But California overtime is more complicated than it is in most other states so this may not apply to you. When calculating daily overtime, the same situation as above would call for 8 hours of overtime, or 2 hours for each day the employee worked more than 8 hours.
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