Pyramiding of overtime is when an employee receives overtime for working more than 40 hours in one week and working more than a certain number of hours set by each state in a single day. When pyramiding occurs, an employee is essentially paid twice for a single hour of overtime.

While relatively uncommon, if an employee consistently receives a double overtime payout, it could lead to financial losses and set a bad precedent for your company.

To avoid pyramiding, some states calculate daily and weekly overtime independently. This means you cannot count daily overtime toward your 40-hour work week. Weekly overtime only applies to overtime that was not accrued through daily overtime.

For example, an employee in California works 10 hours a day for 5 days, totaling 50 hours in a week. The employee was then paid for his daily overtime at 2 hours a day, or 10 hours across the week. Since their 10 hours of overtime were paid for through daily overtime, they cannot also claim 10 hours of weekly overtime. Doing so would give them an additional 10 hours of overtime pay resulting in 20 total hours, pyramiding the hours.