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Applies to versions: 2.0, 2.1, 2.2, 2.3
Overtime Policies define how overtime is calculated for workweeks. These policies stand alone and do not, by themselves, determine how overtime is calculated for any one employee. Instead, you must link Overtime Policies to Workweek Groups.
NOTE: If you have upgraded your TimeIPS system, you may notice that you have Overtime Policies named after individual employees. These employees had custom legacy rules that were upgraded.
Using the left pane Main Menu » Administration, click on: Payroll » Overtime Policies
Create a New Overtime Policy
- Click on the + (plus) sign to the left of the Create a New Overtime Policy bar.
- Type the new overtime policy Name.
- Click on the Add Overtime Policy button.
- The new overtime policy will be created and added to the list of Existing Overtime Policies below.
Edit Existing Overtime Policies
- Select the Overtime Policy by clicking the + (plus) sign next to the name.
- Adjust the information as necessary under the General, Advanced, and Pay Overrides tabs.
- Approve Overtime Policy: You can approve these overtime policy settings by making changes or if the current settings are correct, using the Approve Policy button. NOTE: Payroll exports will give a warning if these settings are used in an export and have not been approved.
- The Name is used to identify this overtime policy on the workweek groups page. You can change it here. Use a different name for each group of employees with different overtime requirements. For example, Direct, Contract, Hourly, Salary, Office, or Warehouse.
NOTE: The above settings are the default settings for all new overtime policies. Based on your company's needs, you can modify these settings using the following options.
- Modify the Rate Multiplier, Workweek Requirement, and Daily Requirement for Overtime, Doubletime, and Premium Time as needed.
- The Workweek Requirement is the number of standard hours in a week an employee must work before their time is promoted to that pay type. For example a Workweek Requirement of 40 for Overtime means that an employee will go into Overtime as soon as they have 40 qualifying hours within a workweek.
- Daily Requirements define the number of hours in a day before an employee's time is promoted to that type.
TIP: If this overtime policy should not pay Doubletime or Premium Time, set the Workweek Requirement for Doubletime or Premium Time to 169 and the Daily Requirement for Doubletime or Premium Time to 25. If this overtime policy should not pay overtime, also set the Workweek Requirement for Overtime to 169 and the Daily Requirement for Overtime to 25.
- Choose your option for 168 Hour Workweeks. If this option is checked, workweeks will be considered to be recurring periods of 168 hours, without exception. If this option is unchecked, workweeks may vary in length to accommodate DST changes (if DST is in use/effect).
- Most company's overtime is based on hours worked in one week and/or in one day. If your company calculates overtime based on time worked in two-to-four weeks, set the following options as applicable:
- Choose whether you want to Prorate Truncated Averaging Periods. If this option is checked, in the event that workweeks of more than one calendar week overlap due to changes in Workweek Group settings the first overlapping workweek will have its overtime (and doubletime) calculated based on prorated overtime rules. If unchecked, overtime in overlapping workweeks of more than one calendar week in length will be calculated according to U.S. Department of Labor (US), Field Operations Handbook 32j13(c) as of Jun 30, 2000.
- Choose whether to Combine Overlapping Long Workweeks. If workweeks of more than one calendar week in length overlap but are the same length, some companies treat the overlapping workweeks as one workweek for overtime and doubletime calculation purposes. To enable this behavior, check the box. Most organizations will prefer to leave it unchecked to disable this behavior.
- If applicable, choose your option for California Seventh Day Overtime and Doubletime.
- Treat work done in the "first eight hours worked on the seventh day of work in any one workweeks" as overtime and "any work in excess of eight hours on any seventh day of a workweek as doubletime" in accordance with California Labor Code (Section 510 (a)) by selecting Yes (1).
- Choose Yes (2) if you are a California company that chooses to follow the interpretation of Section 510(a) as follows: "the [Labor Commissioner] has indicated in its enforcement policy that it intends to follow the historical rule and require the premium only if an employee works all seven days in the workweek." As explained by the author earlier in the footnote, "[t]he seventh-day premium has historically applied only if an employee worked on each of the days in the workweek, not simply on the seventh day. If A.B. 60 were construed otherwise, it would result in the illogical conclusion that overtime premiums would be owed for a single day of work if that work occurred on the last day of the workweek."
- Some employers choose to pay doubletime for any work on the seventh CONSECUTIVE day of work in a work week; select Yes (3) to pay this way.
- If Section 510(a) of California's Labor Code does not apply to employees following this Overtime Policy, select No.
- Choose whether All Work on the 7th day of a Workweek is Overtime/Doubletime. Some companies treat all time worked on the 7th day of a workweek as overtime or doubletime regardless, with no change after eight hours. If this is the desired behavior for employees following this Overtime Policy choose "Overtime" or "Doubletime" otherwise, choose "No."
- Choose whether Daily (or Forced) OT/DT/PT Reduces Weekly Requirement for OT/DT/PT: If checked, when employees receive OT/DT/PT due to daily requirements or forced overrides, the weekly hours required to reach OT/DT/PT should be reduced as well.
For example, an employee works 40 hours in a week with 8 hours promoted to OT due to exceeding daily requirements. With this option unchecked the employee would not earn weekly overtime until 48 hours total (when the weekly ST hours reach 40). With this option checked, the employee would begin earning weekly overtime at 40 hours total (when weekly ST hours reach 32).
This option should generally be unchecked for federal labor law compliance.
- Choose whether an employee following this policy Qualifies for Benefits That Count Towards Overtime. Check the "Qualifies For Benefits" box if the employees following this policy should qualify for benefit types designated to count towards overtime/doubletime calculation. It is recommended this be checked.
- Choose whether to Assign Overtime Requirements for Individual Work Days. By default, TimeIPS uses the same overtime rules for all days in each work week. Use this option to assign different rules for each work day. These work days are defined according to the start of the work week, either as 24-hour days if the "168 Hour Workweeks" option is enabled or starting at the same clock time each day otherwise. This option only allows specifying rules for seven days; if used for an averaging period of two weeks or longer, the rules will be repeated each week.
NOTE: When this option is enabled, the single "Daily Requirements" option on the "General" tab is ignored.
- Click the Save button to impletment the change.
- Choose whether to Assign Weekly Requirements for Individual Work Days. By default, TimeIPS uses the same weekly overtime rules for all days in each work week. Use this option to assign different rules for each work day. These work days are defined according to the start of the work week, either as 24-hour days if the "168 Hour Workweeks" option is enabled or starting at the same clock time each day otherwise. This option only allows specifying rules for seven days; if used for an averaging period of two weeks or longer, the rules will be repeated each week.
NOTE: When this option is enabled, the single "Weekly Requirements" option on the "General" tab is ignored.
Example 1: Employees should earn ooubletime on the 7th day of the week, as long as they've worked at least 40 hours: Set the weekly doubletime level to 169 for days 1-6 and 40 on day 7.
Example 2: Employees should earn overtime on the weekend, as long as they've worked at least 32 hours in the week. Set the weekly overtime level to 40 for days 1-5 and 32 on days 6-7.
Example 3: Employees earn overtime after 32 hours during the week, but after 40 hours on weekends. Set the weekly overtime level to 32 for days 1-5 and 40 on days 6-7. Important: When the required hours increases later in the week, use care when combining this with the Daily (or Forced) OT/DT/PT Reduces Weekly Requirement for OT/DT/PT rule above. When employees reach OT for any reason, the weekly requirement will be reduced and it can result in unexpected overtime on days where the requirement level is increased.
- Click on the Set Requirements button to Edit the Weekly Overtime Rules.
NOTE: Changing these settings will invalidate any pending payroll exports that use this policy.
- Once you have completed your adjustments on the Advanced tab, click on the Save Row button to save your changes, or click on the Revert Row button to exit without saving your changes.
Employee pay calculations can be configured to be overridden when employees work on specific jobs, during certain shifts, during holiday observances or even on an individual event basis. The options in this panel define how these overrides are handled when an employee could potentially qualify for multiple overrides.
For each mode, choose how overrides are calculated when mulitiple overrides exist.
- Highest Priority will use the override source with the highest defined priority.
- Most Common will attempt to choose the override value that is the most common among all overrides. In the case of a tie among multiple options, the system can either choose the best option for the employee (Maximum) or the worst option for the employee (Minimum).
- Minimum will use the worst overrides for the employee.
- Maximum will use the best overrides for the employee.
- Average will attempt to calculate the average value of overrides.
- Sum will attempt to add the value of all overrides.
- Once you have completed your adjustments, click on the Save Row button to save your changes, or click on the Revert Row button to exit without saving your changes.
Net Pay Calculation Source
As of TimeIPS v1.5, TimeIPS Overtime/Doubletime Net Pay Calculations are based on the following documentation taken from: http://www.dol.gov/dol/allcfr/ESA/Title_29/Part_548/29CFR548.2.htm
(e) The basic rate so established is authorized by Sec. 548.3 or is authorized by the Administrator under Sec. 548.4 as being substantially equivalent to the average hourly earnings of the employee, exclusive of overtime premiums, in the particular work over a representative period of time;See Also:Workweek Groups (1.5, 1.6, 1.8, 1.9, 1.10, 1.11, 2.0, 2.1, 2.2, 2.3, 2.4)
(f) Overtime hours are compensated at a rate of not less than one and one-half times such established basic rate;
(g) The hours for which the employee is paid not less than one and one-half times such established basic rate qualify as overtime hours under section 7(e) (5), (6), or (7) of the Act;
(h) The number of hours for which the employee is paid not less than one and one-half times such established basic rate equals or exceeds the number of hours worked by him in any workweek in excess of the maximum workweek applicable to such employees under subsection 7(a) of the Act;
(i) The employee's average hourly earnings for the workweek exclusive of payments described in paragraphs (1) through (7) of section 7(e) of the Act are not less than the minimum hourly rate required by this Act or other applicable law;
(j) Extra overtime compensation is properly computed and paid on other forms of additional pay which have not been considered in arriving at the basic rate but which are required to be included in computing the regular rate.
[20 FR 5679, Aug. 6, 1955, as amended at 26 FR 7731, Aug. 18, 1961]
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