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Childcare Centers & Preschools: Overtime Rules and Payroll Compliance (2026)
Overtime in childcare centers is time and one half after 40 hours on the regular rate, and the regular rate has to absorb licensing-tied payroll records and subsidy payment coordination before the premium is applied. BEG runs childcare center payroll for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
The overtime rules that apply to childcare centers
Since the 1972 FLSA amendments, preschools and daycare centers are covered enterprises regardless of annual dollar volume and whether public, private, for profit or nonprofit. Every nonexempt employee must be paid at least $7.25 per hour for all hours worked and overtime after 40 hours in each workweek, not after 80 hours in two weeks.
Bona fide preschool and kindergarten teachers may be exempt from minimum wage and overtime as professionals when their primary duty is teaching, under the same conditions as elementary school teachers. Preschool employees whose primary duty is caring for the physical needs of the children would ordinarily not meet the teacher exemption.
Time spent attending training that the state requires for daycare center licensing is working time that must be paid. Short rest breaks of about 20 minutes or less are paid, and a meal period is unpaid only if the employee is completely relieved of duty; an employee who must watch children while eating is still working.
A worked example at childcare center wages
Childcare workers at the May 2025 national median of $34,980 earn about $17 an hour on a 2,080-hour year. Ten overtime hours in a week cost $252 at time and one half. If that week also carried licensing-tied payroll records, the amount folds into the regular rate first and the premium rises with it; leaving it out is the most common overtime error in this industry.
How the payroll is set up to get it right
Each pay component is flagged at setup as included in or excluded from the regular rate, hours are captured by workweek rather than pay period, and any industry exemption is applied per employee with the supporting record kept. Overtime is then arithmetic, not judgment, on every run.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Since the 1972 FLSA amendments, preschools and daycare centers are covered enterprises regardless of annual dollar volume and whether public, private, for profit or nonprofit. Every nonexempt employee must be paid at least $7.25 per hour for all hours worked and overtime after 40 hours in each workweek, not after 80 hours in two weeks. [DOL Fact Sheet #46]
- Bona fide preschool and kindergarten teachers may be exempt from minimum wage and overtime as professionals when their primary duty is teaching, under the same conditions as elementary school teachers. Preschool employees whose primary duty is caring for the physical needs of the children would ordinarily not meet the teacher exemption. [DOL Fact Sheet #46]
- Time spent attending training that the state requires for daycare center licensing is working time that must be paid. Short rest breaks of about 20 minutes or less are paid, and a meal period is unpaid only if the employee is completely relieved of duty; an employee who must watch children while eating is still working. [DOL Fact Sheet #46]
Read the full guide to how to calculate overtime pay, and the rest of the childcare center payroll library.
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Frequently Asked Questions
Which childcare center employees are exempt from overtime?
Since the 1972 FLSA amendments, preschools and daycare centers are covered enterprises regardless of annual dollar volume and whether public, private, for profit or nonprofit. Every nonexempt employee must be paid at least $7.25 per hour for all hours worked and overtime after 40 hours in each workweek, not after 80 hours in two weeks.
How is overtime calculated on licensing-tied payroll records?
licensing-tied payroll records is added to the week's straight-time pay, the total is divided by hours worked to get the regular rate, and the half-time premium is paid on that rate for every hour over 40. Bona fide preschool and kindergarten teachers may be exempt from minimum wage and overtime as professionals when their primary duty is teaching, under the same conditions as elementary school teachers.
What does an overtime hour cost at childcare center wages?
At the BLS May 2025 national median for childcare workers, $34,980 a year or about $17 an hour, an overtime hour is $25 before any bonus or differential is added to the rate.
What does managed payroll cost for a childcare center?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Licensing-tied payroll records, subsidy payment coordination and part-time variable-hour staff are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Childcare Centers & Preschools. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Overtime Pay Under the FLSA
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