Use overtime preprocessing to change the way in which worked time is allocated to be paid. You can specify how hours are paid under specific criteria, for example, a requirement that a regular-hours threshold is met before overtime is paid.
Consider the following scenario: There is an overtime rule requiring employees to work 39 hours in a week before any overtime is counted as payable. There are daily overtime rules that also apply:
- Daily OT 8.5 — An employee working more than 8.5 hours in a day is paid 1.5 times the regular pay rate.
- Daily OT 12.5 — An employee working more than 12.5 hours in a day is paid 2.0 times the regular pay rate.
Using overtime preprocessing, when an employee does not reach 39 weekly hours with regular time, overtime can be used to reach that threshold. The overtime that would qualify as Daily OT 12.5 type hours paid at the regular rate first.
Setup for the overtime, combination rules, and pay code distribution that governs how this employee is paid:
| Overtime and Combination Rules | Definition | Payout Rate (based on Pay Code Distribution) |
|---|---|---|
| Daily OT 8.5 (overtime preprocessing is selected) | Daily overtime @ 1.5 regular pay for more than 8.5 hours | Regular rate |
|
Daily OT 12.5 (overtime preprocessing is selected) |
Daily overtime @ 2.0 regular pay for more than 12.5 hours |
Regular rate |
| Weekly Over 39 | Sets minimum number of weekly hours (39) before daily overtime is paid | Regular rate under 39 hours, overtime over 39 hours |
| Daily over 8.5 + Weekly over 39 | Daily overtime @ 1.5 regular pay if weekly overtime is more than 39 hours | 1.5 times regular rate |
| Daily OT 12.5 + Weekly 39 | Daily overtime @ 2.0 regular pay if weekly overtime is more than 39 hours | 2.0 time regular rate |
The processing order for the overtime rules is chronological with rules listed in the Total Last option box as:
- Daily OT 12.5 (first)
- Daily OT 8.5 (second)
When processing occurs without overtime preprocessing, the Total Last order does not take effect because the processing logic uses any daily hours accumulated beyond 8.5 hours to meet the weekly Over 39 hours rule. The Over 8.5 hours threshold is always reached before the Over 12.5 hours threshold, so the Over 8.5 hours are used first for meeting the 39-hour minimum.
When processing occurs with overtime preprocessing, the Total Last order does take effect and Daily OT 12.5 hours, which are marked as a separate set of hours, can be used first to backfill the 39 weekly hours for regular pay. With overtime preprocessing, hours can be processed in an order that is “out-of order.”
This employee works the following schedule during a week.
| Day | Working Time | Worked Hours |
|---|---|---|
| Monday | 9 AM to 11 PM | 14 hours |
| Tuesday | 9 AM to 5 PM | 8 hours |
| Wednesday | 9 AM to 5 PM | 8 hours |
| Thursday | 9 AM to 1 PM | 4 hours |
| Friday | 9 AM to 11 PM | 14 hours |
|
|
Total Hours | 48 hours |
Daily hours for this schedule are accumulated as follows:
| Day | Worked Hours | Marked hours |
|---|---|---|
| Monday | 14 hours |
8.5 hours regular time 4 hours overtime applying the Daily Over 8.5 rule 1.5 hours applying the Daily Over 12.5 rule |
| Tuesday | 8 hours |
8 hours regular time |
| Wednesday | 8 hours |
8 hours regular time |
| Thursday | 4 hours |
4 hours regular time |
| Friday | 14 hours |
8.5 hours regular time 4 hours overtime applying the Daily Over 8.5 rule 1.5 hours overtime applying the Daily Over 12.5 rule |
| Totals for the week | 48 hours | 37 hours regular time, 8 hours applying the Daily Over 8.5 rule, 3 hours applying the Daily Over 12.5 rule |
Because the total number of regular hours does not reach the 39-hour weekly minimum, some of the daily overtime hours are used as backfill. These hours are paid as regular time.
The selection of overtime hours to be paid as regular time varies, depending on the selection of overtime preprocessing, as illustrated in the following cases.
With overtime preprocessing selected: Hours are paid as follows:
| Day | Worked Hours | Paid hours |
|---|---|---|
| Monday | 14 hours |
10 hours regular time (includes 1.5 hours of the Daily Over 12.5 hours time) 4 hours overtime at 1.5 the regular rate |
| Tuesday | 8 hours | 8 hours regular time |
| Wednesday | 8 hours | 8 hours regular time |
| Thursday | 4 hours | 4 hours regular time |
| Friday | 14 hours |
9 hours regular time (includes 0.5 hour of the Daily Over 12.5 hours time) 4 hours overtime at 1.5 the regular rate 1.0 hours overtime at 2.0 times the regular rate |
| Totals for the week |
48 hours |
39 hours regular time, 8 hours overtime at 1.5 the regular rate, 1 hour at 2.0 times the regular rate |
Without overtime preprocessing: The hours are paid as follows:
| Day | Worked Hours | Paid hours |
|---|---|---|
| Monday | 14 hours |
10.5 hours regular time 2 hours overtime at 1.5 the regular rate 1.5 hours overtime at 2.0 times the regular rate |
| Tuesday | 8 hours | 8 hours regular time |
| Wednesday | 8 hours | 8 hours regular time |
| Thursday | 4 hours | 4 hours regular time |
| Friday | 14 hours |
8.5 hours regular time 4 hours overtime at 1.5 the regular rate 1.5 hours overtime at 2.0 times the regular rate |
| Totals for the week | 48 hours |
39 hours regular time, 6 hours overtime at 1.5 the regular rate, 3 hours overtime at 2.0 times the regular rate |
These two calculations differ with respect to the time that is counted to meet the 39 hour weekly rule and therefore the overtime that is paid.
When overtime preprocessing is in effect, hours from an overtime category are paid as regular time, using the Daily Over 12.5 hours type first and the Daily Over 8.5 hours type second. The “out-of-order” setup pays Daily Over 12.5 type hours from both Monday and Friday as regular time, leaving most of the remaining overtime as the Daily Over 8.5 hours type.
When overtime preprocessing is not in effect, overtime hours are counted chronologically as regular time until 39 hours are reached. The remaining hours are designated overtime using the overtime rules that apply for each day.