When a worker logs hours that would qualify under both a daily overtime rule and a weekly overtime rule, two different layering methods exist in US law: stacking with anti-double-counting (federal FLSA + most states with daily OT) and greater-of (Alaska, by statute).
In the modern US, only Alaska uses greater-of. Every other state with daily OT (California, Colorado, Nevada wage-conditional, Oregon manufacturing) stacks. The two methods usually produce the same total compensation, but the breakdown between "weekly OT" and "daily OT" categories differs — and that difference matters for audit trails, downstream payroll rules, and wage-and-hour traceability.
TimeCardCruncher applies the correct method per state automatically — Alaska batches get the greater-of calculation; other states stack with anti-double-counting.
The two methods, plainly
Both the daily rule and the weekly rule apply, but no hour is counted twice. Hours that triggered daily overtime are excluded from the weekly overtime calculation; whatever weekly overtime is still owed (because the worker crossed the weekly threshold on hours that weren't already at a daily premium) is added on top.
This is the federal FLSA model and the default for almost every state with a daily OT rule. The rule preserves both protections without compounding them.
The employer pays whichever of the two calculations — the daily-overtime total or the weekly-overtime total — yields more premium hours. The worker gets the more favorable of the two, never both.
Alaska's statute has been interpreted this way by the state Department of Labor since the law's enactment. The practical effect is that the worker is never short-changed by a quirk in the layering, but the daily and weekly OT premiums don't compound.
Where each method applies
| State | Daily OT? | Method |
|---|---|---|
| Alaska | 8h | Greater-of (AS 23.10.060) |
| California | 8h / 12h DT | Stacking |
| Colorado | 12h or 12 consecutive | Stacking |
| Nevada | 8h (wage-conditional) | Stacking |
| Oregon (mfg) | 10h | Stacking |
| Kansas | — | Federal FLSA (40h weekly only) |
| Minnesota | — | Federal FLSA (40h weekly only) |
| Federal (FLSA) | — | Weekly 40h only — no layering question |
States with no daily OT rule never face the layering question: there's only the weekly calculation, so neither stacking nor greater-of applies. The question only arises when daily and weekly thresholds both potentially fire.
Side-by-side worked example
To make the divergence concrete, here's how a single Alaska worker logging 56 hours across six days classifies under each method. The Alaska result on the right is what actually applies for AK-state workers — the stacking result on the left is shown for contrast against how the same hours would classify in a state with the same thresholds but the stacking convention.
| Day | Hours | Classification |
|---|---|---|
| Mon | 12.00 | |
| Tue | 12.00 | |
| Wed | 8.00 | |
| Thu | 8.00 | |
| Fri | 8.00 | |
| Sat | 8.00 |
| Day | Hours | Classification |
|---|---|---|
| Mon | 12.00 | |
| Tue | 12.00 | |
| Wed | 8.00 | |
| Thu | 8.00 | |
| Fri | 8.00 | |
| Sat | 8.00 |
Both columns deliver 16 hours of premium pay at one and one-half times the regular rate — total compensation is identical. The split is the difference: the stacking column books 8 hours as weekly overtime and 8 hours as daily overtime, while the Alaska column books all 16 as weekly overtime. For the worker's paycheck, this is a wash. For the auditor confirming the invoice traces back to the right statute — AS 23.10.060 for Alaska, vs. FLSA Section 7 plus state daily rules for stacking states — it is decisive.
When the two methods converge
The methods produce the same category split — not just the same dollar total — when the daily-overtime premium hours equal the weekly-overtime excess. A worker logging five 10-hour days (50 total hours in a state with an 8-hour daily threshold) hits this convergence:
- Daily premium: 5 days × 2 hours over 8 = 10 hours of daily overtime.
- Weekly excess: 50 hours − 40-hour weekly threshold = 10 hours of weekly overtime in the abstract.
- Stacking result: 10 hours daily OT + 0 incremental weekly OT (already covered by daily) = 40 REG + 10 DOT.
- Greater-of result: daily-premium total (10) ties weekly-OT total (10), so daily wins by convention — 40 REG + 10 DOT.
Convergence is more common than divergence in real staffing schedules. Most workweeks land in territory where the two methods produce the same totals and the same categories. The divergence shows up specifically when the worker's hours-per-day pattern is uneven — concentrated heavy days plus light days — so the weekly excess outruns the daily premium.
Do PTO, holiday, and sick hours count toward overtime?
No. Whichever layering method applies, the weekly overtime threshold is measured against hours worked — and paid time when no work is performed is not "hours worked." Vacation, holiday, and sick/PTO hours you bill do not push a worker over the 40-hour weekly threshold, and they are not part of the regular rate the premium is calculated on.
Federal regulation 29 CFR 778.218 (cross-referenced by 778.219) provides that payments for occasional periods when no work is performed — holiday, vacation, illness — are excluded from the regular rate and are not counted as hours worked. A worker paid for 38 hours of work plus 8 hours of holiday pay has worked 38 hours for overtime purposes, not 46. TimeCardCruncher bills the non-worked hours on their own line and never adds them to the worked hours the overtime calculation is measured against.
| Line | Hours | Classification | Amount |
|---|---|---|---|
| Worked | 38.00 | $1,900 | |
| PTO (not worked) | 8.00 | $400 |
Total paid hours come to 46, but only 38 are worked — under the 40-hour threshold, so zero overtime. A naive "all paid hours count" approach would wrongly bill 6 hours of overtime (46 − 40). The invoice shows 38 regular hours, a separate 8-hour PTO line at the rate you set, and no overtime — the non-worked hours never bridge the worker to 40+.
Does: records the non-worked hours and the rate you supply, bills them on a separate line, and keeps them out of both the overtime threshold and the regular rate — so a week with paid leave doesn't accidentally manufacture overtime.
Does not: track PTO accrual, balances, or eligibility, and does not determine paid-sick-leave-mandate compliance. Those live in your payroll or HR system. You record what you owe for the non-worked time and the rate to bill it at; the system bills it. It does not compute the worker's pay-side entitlement.
Why most states stack and Alaska doesn't
Stacking is the FLSA default. Federal law sets the 40-hour weekly threshold and is silent on how a state's daily threshold interacts — the result, by convention and Department of Labor opinion, is that both rules apply where both fire, with anti-double-counting to prevent compounding. States that added daily OT thresholds (California, Colorado, Nevada, Oregon-mfg) inherited this convention without modification.
Alaska's statute was drafted with the "greater of" language explicitly, and the state Department of Labor has interpreted it that way consistently since enactment. The policy rationale is worker-favorability: the worker gets whichever calculation yields more premium, regardless of which threshold fires.
California's choice not to use greater-of is notable because California also has a double-time threshold (over 12 hours in a day, paid at 2×). With three rates in play (1.0× regular, 1.5× daily/weekly OT, 2.0× double-time), the "greater of" comparison becomes mechanically awkward. The California statute prescribes stacking explicitly to keep the three-rate model coherent.
Common mistakes
-
Computing both premiums and adding them.
Under stacking, the same hour can only be premium under one rule — daily OR weekly. A worker logging 12 hours in a day in a state with both rules gets 4 hours of daily OT; those same 4 hours are not also counted toward the weekly calculation. Forgetting to subtract daily-premium hours from the weekly count double-counts the premium and overstates the invoice.
-
Stripping daily OT in stacking states because "the weekly already covers it."
This is the inverse error. Daily OT and weekly OT are independent statutory triggers. Daily OT still applies even if the worker hasn't crossed the weekly threshold yet (a single 12-hour day still owes daily OT regardless of the rest of the week). The anti-double-counting rule prevents compounding, not the existence of the daily premium itself.
-
Treating Alaska like other states (or vice versa).
Alaska is the only modern US state using greater-of. A spreadsheet or payroll tool that stacks Alaska hours gives the wrong category split (even if the dollar total ties); a tool that uses greater-of for, say, California gives the wrong dollar amount because California's DT rule depends on the stacking-with-anti-double-counting model. The method is per-state, not per-company.
-
Assuming the dollar total always ties.
It usually does in practice — because Alaska's daily and weekly OT are both at 1.5×, with no Alaska double-time rule. But the principle "dollar total ties" depends on every premium being 1.5×; a state that combined a daily 2× threshold with greater-of would diverge on dollars, not just categories. Don't generalize from Alaska's specific configuration to a universal rule.
What you get with TimeCardCruncher
Alaska is the only US state with the greater-of rule — every other state stacks. The difference is invisible to most payroll systems, which means an Alaska invoice can come back classified wrong even when the totals tie.
You don't have to flag which state needs which method, hand-verify that Alaska batches landed on the greater-of calculation, or explain to a client why an Alaska invoice looks structurally different from an otherwise-identical Colorado one — the math runs against every timecard you submit, every batch. Invoices come back ready to defend if anyone asks which statute justified which premium.