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A state-by-state wage calculation answers one practical question: does the hourly rate you plan to pay meet the higher applicable minimum wage for the employee's work location. The federal baseline is $7.25 per hour for covered nonexempt employees. Employees covered by both federal and state minimum-wage laws are entitled to the higher applicable minimum wage, so the state figure matters whenever it exceeds the federal floor.
The result gives you a wage floor for straight-time hours and a starting point for gross pay. It does not replace payroll withholding. U.S. net pay still depends on taxable wages for the pay period, Form W-4 details, IRS Publication 15-T methods, employee Social Security and Medicare taxes, state withholding where applicable, and any pre-tax or post-tax deductions.
The common mistake is treating the federal $7.25 rate as the whole answer. For a covered nonexempt employee, the federal rate is only the floor. If a state minimum wage applies at a higher rate, the higher rate controls. If a state does not set a higher applicable rate for that worker, the federal baseline remains the number to test.
Use the worker category and location before you calculate. A rate for one state, city, employer size, industry, or worker group does not automatically apply to another. Payroll teams also need a current effective date, because state rates and local rules can change. The calculation stays simple only after the applicable rate is identified correctly.
Start with the applicable minimum hourly rate, multiply it by regular hours, then apply overtime for covered nonexempt employees when hours actually worked exceed 40 in one fixed 168-hour workweek. Federal law requires overtime pay at not less than one and one-half times the regular rate for covered nonexempt employees. Averaging hours over two or more weeks is not permitted.
For example, use an applicable minimum rate of $15.50 per hour for a covered nonexempt employee who works 44 hours in one fixed workweek. Regular pay is 40 × $15.50 = $620.00. Overtime pay is 4 × $23.25 = $93.00. Total gross wages before withholding are $713.00. The same hours paid at the federal $7.25 floor would produce a different gross result only if no higher applicable state or local rate applied.
A one-off calculation is enough when you need to test a single rate, estimate one paycheck, or confirm whether a planned hourly wage clears the applicable floor. Keep the calculation narrow: rate, worker category, covered nonexempt status, hours actually worked, overtime hours, and pay period. Payroll withholding and employer taxes come after gross wages are established.
A managed workflow fits repeated payroll review. Everhour Team Management lets admins set team policies, lock completed periods, correct time entries, manage approvals, and group team members for reporting. That matters when minimum-wage checks depend on approved hours, corrected punches, overtime review, and a clean handoff from timesheets to payroll records.
This content is for general information only, may not be fully up to date, and is provided without any warranty or liability.
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Use the higher applicable minimum wage for the covered nonexempt employee's work location and worker category. The federal minimum wage is $7.25 per hour, but employees covered by both federal and state minimum-wage laws are entitled to the higher applicable minimum wage. State, local, employer-size, industry, and worker-category exceptions must be checked before payroll uses the rate.
Minimum wage sets the hourly floor, but overtime uses the employee's regular rate. Covered nonexempt employees must receive overtime pay at not less than one and one-half times the regular rate for hours worked over 40 in a fixed 168-hour workweek. Payroll cannot average two weeks together to avoid overtime.
Paid vacation is pay for time not worked, and the FLSA does not require vacation, sick leave, holiday pay, or other paid leave. If an employer provides vacation pay, payroll withholds it as regular wages or as supplemental wages when paid as an additional lump sum. It does not create hours actually worked for federal overtime.
State payday rules change timing, not the federal minimum-wage baseline. The United States does not use one national statutory payday frequency for private employers. State requirements set payday timing, while common pay periods include weekly, biweekly, semimonthly, and monthly schedules. The applicable hourly minimum still has to be tested against covered work hours.
Federal income-tax withholding follows the employee's Form W-4 and IRS Publication 15-T. For wages paid in 2026, employee Social Security tax is 6.2% up to the $184,500 annual wage base, and Medicare tax is 1.45% on covered wages with no wage cap. Additional Medicare withholding starts when wages paid to an employee exceed $200,000 for the calendar year.
Everhour Team Management gives admins lock rules, approval workflows, admin time correction, roles, project assignments, team groups, and team-wide policy defaults. Managers can protect approved periods from edits and correct time entries before payroll review, so wage checks use controlled hours instead of loose spreadsheet totals.
Track approved hours, corrections, and locked periods before payroll review. Everhour Team Management gives teams a controlled time record that supports cleaner wage checks and payroll handoffs.
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