Overview of FLSA Calculations

FLSA calculations apply only to the U.S. The Fair Labor Standards Act of 1937 requires that you pay overtime to nonexempt employees who work more than 40 hours in a week.

Note: Normally, Payroll for North America does not calculate FLSA if the employee does not have at least 40 FLSA hours in the week. For nonexempt or alternative overtime employees working in California, however, FLSA will be paid on all overtime hours, without first having to verify that employees have at least 40 hours of regular earnings. So, if the paysheet shows 30 REG and 10 OT, FLSA will be paid on the 10 hours of OT (overtime).

How you calculate overtime, prorate bonuses, and handle other earnings (such as shift differentials and tips) depends on whether the employees are subject to FLSA standards or exempt from them.

FLSA calculation is affected by the pay frequency. Supported pay frequencies are weekly, biweekly, monthly and semimonthly. Frequency factors that are defined on the Frequency table may be required in converting the amounts from pay period to FLSA period frequency.

Note: Payroll for North America does not calculate a blended FLSA rate for employees working in multiple companies, because each job would have its own FLSA rate.

Note: Payroll for North America does not calculate an FLSA adjustment on a separate on-cycle check that is processed in the same pay run as the regular check. To calculate FLSA for a separate check in the same pay run, it must be an off-cycle check.

These definitions aid in the discussion of FLSA calculations:

Field or Control

Definition
FLSA rate

FLSA rate = (regular period pay + overtime pay at contractual + total other FLSA eligible earnings) / total FLSA eligible hours.

Note: If an employee's FLSA rate is less than the minimum wage, the minimum wage (either federal or state, whichever is greater) is used for overtime compensation rather than the FLSA rate.

Contractual rate

Equivalent to the hourly rate or compensation rate.
Premium

The extra amount of the contractual rate paid for overtime, stated as a percentage. The FLSA premium is fixed at 0.5.