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Technology & SaaS Companies: Overtime Rules and Payroll Compliance (2026)
Overtime in technology companies is time and one half after 40 hours on the regular rate, and the regular rate has to absorb equity compensation handling and remote employee multi-state tax before the premium is applied. BEG runs technology company 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 technology companies
Computer systems analysts, programmers, software engineers, and similarly skilled workers are exempt from minimum wage and overtime under sections 13(a)(1) and 13(a)(17) if they meet the duties test and are paid either on a salary or fee basis at the standard salary level or on an hourly basis at not less than $27.63 an hour.
Sales employees who sell by phone, email, or the Internet from an office or home office are not outside sales employees, because a fixed site used for telephone solicitation counts as the employer's place of business. Inside sales staff paid on commission remain entitled to overtime unless another exemption applies.
The computer employee exemption does not cover employees who manufacture or repair computer hardware, or workers such as engineers and drafters whose jobs depend heavily on computers but who are not primarily engaged in systems analysis, programming, or similarly skilled computer work.
A worked example at technology company wages
Software developers at the May 2025 national median of $135,980 earn about $65 an hour on a 2,080-hour year. Ten overtime hours in a week cost $981 at time and one half. If that week also carried equity compensation handling, 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.
- Computer systems analysts, programmers, software engineers, and similarly skilled workers are exempt from minimum wage and overtime under sections 13(a)(1) and 13(a)(17) if they meet the duties test and are paid either on a salary or fee basis at the standard salary level or on an hourly basis at not less than $27.63 an hour. [DOL Fact Sheet #17E]
- Sales employees who sell by phone, email, or the Internet from an office or home office are not outside sales employees, because a fixed site used for telephone solicitation counts as the employer's place of business. Inside sales staff paid on commission remain entitled to overtime unless another exemption applies. [DOL Fact Sheet #17F]
- The computer employee exemption does not cover employees who manufacture or repair computer hardware, or workers such as engineers and drafters whose jobs depend heavily on computers but who are not primarily engaged in systems analysis, programming, or similarly skilled computer work. [DOL Fact Sheet #17E]
Read the full guide to how to calculate overtime pay, and the rest of the technology company payroll library.
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Frequently Asked Questions
Which technology company employees are exempt from overtime?
Computer systems analysts, programmers, software engineers, and similarly skilled workers are exempt from minimum wage and overtime under sections 13(a)(1) and 13(a)(17) if they meet the duties test and are paid either on a salary or fee basis at the standard salary level or on an hourly basis at not less than $27.63 an hour.
How is overtime calculated on equity compensation handling?
equity compensation handling 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. Sales employees who sell by phone, email, or the Internet from an office or home office are not outside sales employees, because a fixed site used for telephone solicitation counts as the employer's place of business.
What does an overtime hour cost at technology company wages?
At the BLS May 2025 national median for software developers, $135,980 a year or about $65 an hour, an overtime hour is $98 before any bonus or differential is added to the rate.
What does managed payroll cost for a technology company?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Equity compensation handling, remote employee multi-state tax and contractor classification 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 Technology & SaaS Companies. 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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