Overtimes

Overtime rules define conditions that must be met for employees to earn extra pay. For example, an employee might be paid overtime after working 8 hours in a day or after 40 hours in a week. You can also assign an extension to an overtime rule, which adds additional conditions to the overtime rule, and may modify some of the standard conditions.

Note: Overtime rules are assigned to a work rule (as described in Work Rules) and work rules are assigned to pay rules, which are assigned to employees in People Information.

Use the Overtimes page (Administration > Application Setup> Pay Policies > Work Rule Building Blocks > Overtimes) to configure overtime rules. To add an overtime rule or edit an existing one, click New or select an overtime rule and select Duplicate or Edit and complete the following fields.

Note: If an overtime rule has an active extension, a check mark appears in the Extension column.

Select one of the following from the Reset drop-down list:

Use New day to create daily overtime. The system resets the daily counter when it sees a new day, or the Day Divide Time that defines when one day ends and a new day begins. The day divide is defined in a pay rule. If a shift crosses the day divide, the pay rule defines how the hours are allocated: to the day before, the day after, or to the day on which the worked hour occurred.. The Day Divide is defined in Fixed rules. The Day Divide defaults to 12:00am and is the first minute of every day.

The Day Divide option affects the reset as follows:

  • If shifts do not cross the day divide, the overtime reset is the day divide.
  • If shifts cross the day divide, the Hours belong to option in the Fixed rule determines the day on which hours accumulate. When Hours belong to is:
    • Day Actually Worked, the reset occurs at the day divide.
    • Scheduled In-Day, the reset occurs at the end of the shift.
    • Scheduled Out-Day, the reset occurs at the beginning of the shift.
    • Day with Majority Hours, the reset occurs either at the beginning of the shift or at the end of the shift.

Use Date Pattern to define a period, the end of which is the reset date.

Note: The Date Pattern for an overtime rule must use a Site-Wide date for the Reference Date. Take caution when editing an overtime rule and be sure not to select a Date Pattern that uses a Person-specific Reference Date. Person-specific dates with overtime rules can cause system errors and display issues.

For more information about date patterns, see Date patterns.

Use New shift to create daily overtime. The overtime accumulator resets to zero after each shift.

The new shift reset looks only at punches The entries on a timecard that mark the beginning (in-punch) or end (out-punch) of a work interval, such as the beginning of a shift or transfer..

The reset occurs between shifts when:

  • Employees work more than one scheduled shift.
  • Employees work two shifts in a day, scheduled or unscheduled.
  • Employees forget to punch in from a break and when they punch out, their punches are interpreted as the start of a new shift.

To use consecutive hours overtime, use this method with another overtime rule.

Use this option to create daily overtime. This overtime reset can reward employees who work several shifts separated by short intervals. If employees punch out only for a short length of time, they earn the overtime hour type. This reset is appropriate for environments where employees work shifts that are less than 24 hours apart.

To specify the maximum length of time between shifts before the overtime counter resets, enter a time in Reset At.

To have the system use the actual punch time when deciding if the next shift is overtime, deselect Use Rounded Rounding is a way to simplify payroll accounting and reporting, and to enforce shift start and end times. Punch rounds divide hours into equal segments of an hour. Time.

The Specified amount of time is generally three or four hours.

For example, an employee works from midnight until 8:00 am, then from 8:59 am to 10:00 pm. The reset time is one hour. The new shift starts one minute under the one-hour reset time. If the overtime rule uses the unrounded time of 8:59 am, the second shift violates the one-hour reset interval by a single minute. The second shift is paid as overtime. If the second shift uses rounded time, the start time is rounded to 9:00 A.M. This time meets the one-hour reset interval, and the second shift is not paid as overtime.

Use 24-hour rule to establish 24-hour time periods, during which employees who work more than the overtime limit can earn the overtime hour type.

This reset method is used to configure overtime that complies with overtime laws of Puerto Rico, or with certain union regulations, particularly in manufacturing environments.

If employees work more than eight hours in a 24 hour period, they begin to accrue overtime. For example, employees who work from 3:30PM to 11:30 PM on Saturdays and Sundays earn a total of eight regular hours each day. They accrue overtime if they work more than the eight regular hours between 3:30PM and 3:30PM the next day.

Note: On the Sunday of the spring Daylight Saving Time event, the first hour that employees work on the Sunday can be overtime instead of regular. Because of the time change, it is only 23 hours from 3:30PM on Saturday to 3:30PM on Sunday. When employees punch in at 3:30 PM on Sunday, the system sees that as the last hour of the 24 hour period. Because the employees already worked from 3:30PM to 11:30 PM on Saturday, the system assigns it to overtime.

When you select 24-hour rule, complete tracking begins at the following options:

  • Scheduled Start — Resets the overtime accumulator 24 hours after the scheduled start time. If the employee is unscheduled, the system uses the rounded in-punch of the previous shift. It does not matter if the employee is late or early for the schedule, the start time is the reset.
  • Actual Start — Resets the overtime accumulator 24 hours after the rounded in-punch. This reset is commonly used in manufacturing and union environments.
  • When you select Actual Start, the following options become available:
    • Previous Shifts In-punch — Creates the Government Way of tracking overtime for Puerto Rico. With this option, when employees punch in earlier than on the previous day, a tracking period begins when the tracking period of the previous day ends. For example, on day one, employees punch in at 8:00 A.M.; on day two, they punch in at 6:00 A.M. The first tracking period starts at 8:00 A.M. on day one and ends 24 hours later. The second tracking period begins on day two at 6:00 A.M. and ends 24 hours later. A third tracking period begins on day two at 8:00 A.M. This type of tracking period is also known as non-punch related.
    • In-Punches of Breaks — Creates additional tracking periods that begin when employees punch in from a break. For example, employees punch in at 8:00 A.M., punch out at 12:00 P.M., punch in at 1:00 P.M. and punch out at 5:00 P.M. Tracking periods start at 8:00 A.M. and 1:00 P.M.
  • Earlier of the Two — Resets the overtime accumulator 24 hours after the schedule time or the rounded in-punch, whichever is earlier. The in-punch is compared to the schedule:
    • If the scheduled time occurs before the in-punch, the accumulator resets 24 hours after the scheduled start time.
    • If the in-punch occurs before the scheduled start time, the accumulator resets 24 hours after the rounded in-punch.

Count Overlapping Periods— Indicates whether overlapping hours are to be counted as overtime in the first tracking period and as regular time that is counted toward the over time in the second tracking period.

New week tracks overtime that is not related to a weekly or pay period boundary. A new week can reset after a specified number of days.

Use a new week that resets after a specified time to track overtime when employees work a 9/80 in a bi-weekly pay period. (9/80 is nine hours per day for eight days and eight hours per day for one day.)

When you select New week as the reset method, the following option appears:

  • Reset on - Select the day of the week that overtime accumulator resets.

The overtime accumulator resets to zero each week at the day divide of the selected day, when shifts do not cross the day divide.

Use New bi-week to create a weekly overtime rule for semimonthly and monthly pay periods.

This option is directly dependent on the Hours Belong To option defined in Fixed rules.

When you select New bi-week, select a Reset date. Right-click to use the calendar to specify the month, day, and year that the overtime accumulator resets. The accumulator resets every 14 days from the specified date.

The overtime accumulator resets to zero every 14th day at the day divide, when shifts do not cross the day divide.

When shifts cross the day divide, the Hours belong to option in the Fixed rule determines on which day the hours are accumulated. When Hours belong to is:

  • Day Actually Worked, the reset occurs at the day divide.
  • Scheduled In-Day, the reset occurs at the end of the shift.
  • Scheduled Out-Day, the reset occurs at the beginning of the shift.
  • Day with Majority Hours, the reset occurs either at the beginning of the shift or at the end of the shift.

Use New pay period when overtime accrues after working 80 hours and pay period lengths are either semi-monthly or monthly. This option creates weekly and biweekly overtime. The overtime accumulator resets each pay period.

Resets when employees work over a set number of hours in a given period that does not coincide with a pay period. The number of days value is inclusive. Use this reset in situations where employees work shifts that are within specified work periods.

For example, a work period is defined as 22 days and overtime is earned after 167 hours. An employee who works 180 hours in a 22-day work period earns 13 hours overtime.

When you select Specified number of days as the overtime reset, the following options are available:

  • Reference Date — The date on which the overtime work period begins.
  • Number of Days —The time period that an employee must work to qualify for overtime. The default is 1 day.
  • For example, the Reference Date is June 30 (6/30/2006) and the Number of Days is 22. The overtime work period would begin on June 30 and reset on July 22.

The system resets the overtime counter when it encounters the specified day of the week and time of day. This is used most commonly for employees who work a compressed (9/80) work week (80 hours over 9 days rather than the traditional 10). Employees work eight 9-hour days and one 8-hour day to complete an 80-hour pay period. Define the reset to split the 8-hour day between the two weeks so that each week has 40 hours in the overtime counter.

Note: The overtime week must begin and end at a different time of day than when a new pay period begins so that overtime is not triggered.

For more information, see Compressed work week (9/80).

The Actions tab appears when the Date Pattern reset option is selected.

  • Automatic Shortfall Adjustment — Select to specify the paycode used for automatic shortfall adjustment.
  • Pay Code — Select the shortfall paycode.

Use this tab to specify the paycodes that count toward overtime.

  • Pay Codes configured to count toward overtime limits — Includes all paycodes that have the Edits Count Towards Overtime option selected in their paycode definition.
  • Contributing Pay Codes — Select a Contributing Paycodes rule. The paycodes in that rule define the paycode set, which determines:
    • Paycode edits that contribute to the overtime rule.
    • Worked paycode totals that contribute to the overtime rule.
  • Selected Pay Codes for this rule only — Select the paycodes whose edits count toward this overtime rule. This option overrides the count toward overtime setting in the paycode definition.

Note: These options are not available if you select New shift or Specified amount of time as the Reset option.

To select paycodes for the Counts Toward Overtime option:

  1. On the Counts Toward Overtime tab, click Selected Pay Codes for this rule only.
  2. Available Pay Codes are hourly paycodes currently in the system that do not count toward overtime. Selected Pay Codes are hourly paycodes that count toward overtime. You can override the paycode definitions.
  3. Select the appropriate paycodes and move them to Available or Selected Pay Codes.

Use this tab to specify preprocessing and how overtime is allocated in certain situations.

  • Overtime Preprocessing — Process selected overtime before other overtime. For example, overtime that is accumulated for an “Over 12 hours worked on a day” rule can be processed before the time accumulated for an “Over 8 hours worked on a day” rule. This processing occurs even though the 8-hour overtime limit is reached before the 12-hour overtime limit. With overtime preprocessing, the 12-hour overtime is computed first and marked, before other overtime.
    • Note: If selected, settings on the Counts Toward Overtime tab of the Combination Rule page might not take effect. For example, a user has a Daily 8 rule and a Weekly 40 rule. The combination rule is set so that Weekly 40 does not count toward the Daily 8. If Overtime Processing is selected for the Daily 8 rule, the Counts Towards Overtime configuration does not take effect because, the system processes Daily 8 first, with no knowledge of the Weekly 40 rule.
  • Overtime Allocation — Use Overtime Allocation to specify how overtime is allocated for shifts and labor categories when the overtime hours are the result of call-in time, extra shifts, and floating hours.
  • Any settings applied in this overtime rule override settings configured in the Processing Order building block.
    • Charge Order — Select the order in which overtime categories are processed:
    • Chronological — Assigns overtime hours beginning with the last hours worked and moves toward the first hours.
    • Reverse Chronological — Assigns overtime beginning with the first hours worked and moves toward the last hours.
    • Prorated — Allocates overtime based on a portion of the total number of hours worked in that shift or department.
    • All selections charge overtime hours to the selected work rule for each category of overtime.
    • Process Order — Change the order in which the overtime categories are processed.
    • Reasons for Overtime — Select a work rule or a labor category to which hours are assigned for the different categories of overtime:
    • Call-in Work Rule
    • Extra Shift

This example illustrates how the Overtime Charge Order can affect the allocation of overtime.

An overtime rule specifies that overtime is charged to Department 1 (D1) and Department 2 (D2) for transfer hours that result in more than 40 weekly hours.

An overtime rule is established for one week with overtime starting after 40 hours. On the Advanced tab, overtime allocation is set up to process float time first, followed by extra shift hours and call-in hours respectively. Department is selected as the labor category for float overtime. The transfer hours are handled as float overtime.

An employee works the following schedule:

Day Hours Transfer
Monday 10 Home
Tuesday 4 Department 1
  4 Department 2
  2 Home
Wednesday 10 Home
Thursday 4 Department 1 (D1)
  4 Department 2 (D2)
  2 Home
Friday 10 Home

If the Overtime Allocation setting is Chronological, then the following distribution occurs:

Regular Hours Transfer Hours
M,W, F = 30 T, Th=4 Hours used to meet weekly regular hours threshold Overtime hours
Tues. D1=4 Tues. D2 = 2 Tues.
D2 = 2 		Thurs.
D1=4 		Thurs.
D2 =4

Employee pay is allocated as follows:

Regular Pay:

  • Home —34 hours
  • Department 1— 4 hours
  • Department 2— 2 hours

Overtime pay:

  • Department 1— 4 hours
  • Department 2 — 6 hours

If the Overtime Allocation setting is Reverse Chronological, then the following distribution occurs:

Regular Hours Transfer Hours
M,W, F = 30 T, Th=4 Hours used to meet weekly regular hours threshold Overtime hours
Thurs. D2=4 Thurs. D1 = 2 Thurs.
D1 = 2 		Tues.
D2=4 		Tues.
D1 =4

Employee pay is allocated as follows:

Regular Pay:

  • Home —34 hours
  • Department 1— 2 hours
  • Department 2— 4 hours

Overtime pay:

  • Department 1— 6 hours
  • Department 2 — 4 hours

If the Overtime Allocation setting is Prorated, overtime is allocated proportionally using the following formula:

A=B x (C/D)

Where:

  • A = Prorated hours assigned for a defined span and work rule or labor category
  • B = Span hours
  • C = Overtime hours allocated
  • D = Total hours in the target spans

In this example, the calculations are:

Tuesday overtime for Department 1 = 4 hours x 10/16 = 2.5 hours

Tuesday overtime for Department 2 = 4 hours x 10/16 = 2.5 hours

Thursday overtime for Department 1 = 4 hours x 10/16 = 2.5 hours

Thursday overtime for Department 2 = 4 hours x 10/16 = 2.5 hours

Total Overtime = 10 hours

Employee pay is allocated as follows:

Regular Pay

  • Home —34 hours
  • Department 1— 3 hours
  • Department 2— 3 hours

Overtime pay

  • Department 1— 5 hours
  • Department 2 — 5 hours

Weighted Average Rate calculations can be used to calculate overtime pay. This involves considering the sum of total compensation (usually from multiple different rates of pay) divided by the total hours of worked time. The result is the Weighted Average Rate.

You can specify the paycodes that are included for the total hours and total wages in the weighted average rate calculation.

To specify paycodes for weighted average rate calculation:

  1. Create new money/wage and hours combined paycodes to hold the paycodes that are used for both the hours and wage portions of the calculation.
  2. For details on configuring combined paycodes, see Combined Paycodes.
  3. Add the combined paycodes to a work rule.
  4. This configuration only applies to an employee's default work rule. When specifying the combined paycodes, you can also select to include the minimum wage adjustment in the calculation.
  5. Since the paycodes are configured as part of a work rule, this allows you to effective date the changes. Be sure to effective date all work rule configuration changes properly in order to avoid unwanted historical corrections Edits that occur after timecards are approved and signed-off..
  6. For details on specifying the paycodes for weighted average rate, see the Weighted Average option (General tab) in Work Rules.

Note: In the Pay Code Definition, if Contributing Shift Rule is selected, it is not used in the enhanced weighted rate enhancement calculation.

If an employee work rule contains more than one periodic overtime limit, Weighted Average Overtime uses the first overtime period in an alphabetized list for the weighted average calculation. To ensure that processing occurs in the correct order, the appropriate overtime period must be first in the alphabetized list.

Note: An alternative method for calculating overtime pay uses a single paycode for both the regular and overtime components of each overtime hour worked.

Periodic overtime uses one of the following overtime periods to calculate the weighted average rate:

New Week: A 7-day time span that begins on a Sunday.

New Week at set time: A 7-day time span that begins on a day configured by the user.

Note: Do not set the reset time to the day divide time when you use this option. The expectation is that the reset on the overtime amount will be 12 hours from the day divide. for example, in a 9/80 work scheme, the day ends halfway through the shift at the end of each week.

New Bi-Week: A 14-day time span.

Specified Number of Days: A time period designated by the user.

Example 1 uses a weekly period. Use cases that use other overtime periods are similarly calculated. Five of the hours that Bruce worked are overtime and must be paid using a weighted average. This example shows how the weighted average rate is calculated and applied.

The following paycodes are used:

Regular: Wages contribute to the weighted average rate.

Overtime: Wages pay out using weekly weighted average rate.

The pay rate, according to labor account and hours worked:

Labor Account Hours Rate Total
Machine Operator 35 $15.00 $525.00
Lawn Mower 10 $7.00 $70.00
Totals 45 (40 hours of regular pay + 5 hours of overtime) n/a $ 595.00

The schedule for the week:

Labor Account Mon Tue Wed Thu Fri Sat
Machine Operator 8 hrs 8 hrs 8 hrs 8 hrs 3 hrs  
Lawn Mower            
            5 hrs paid as overtime

For each hour counted as overtime, the regular component of the hour is paid at the weighted rate and the overtime premium component is paid using the multiplier of the weighted rate.

Bruce receives a premium of 0.5 hours for each of the 5 overtime hours worked at the computed rate. He is paid the following based on the configuration example:

Calculations Totals

35 hours of Regular pay at $15.00 per hour

$525.00

10 hours of Regular pay at $7.00 per hour

$70.00

5 hours of Overtime pay at $6.61 per hour

$33.06

Total pay is $525.00 + $70.00 + $33.06 =

$628.06

The following paycodes are used:

Regular: Wages contribute to the weighted average rate

Overtime: Wages pay out using the daily weighted average rate

The schedule for the week

For each hour that is counted as overtime, the regular component of the hour is paid at the weighted rate and the overtime premium component is paid using the multiplier of the weighted rate.

Pay calculations:

Calculations Totals

22:00 hours of machine Operator regular at $12.50 per hour

$275.00

3:00 hours of Lawn Mower Regular pay at $13.10 per hour

$39.30

2:00 hours of Overtime pay at $6.34 per hour

$12.68

Total pay is $275.00 + $13.10 + $38.04 =

$326.98

Note: Users who pay overtime using a single paycode (instead of regular and overtime paycodes) to reach a close approximation of the weighted average amount can select "Include the effect of multiplier and add in the paycode's contribution." This does not generate exactly the same result as the FLSA weighted average calculation in all circumstances. The exact result can only be obtained if the regular and overtime components of an overtime hour are paid using separate paycodes.

Related topics

Overtime preprocessing example