Understanding Overtime Rules
Due to federal, state, or union requirements, most organizations need to pay employees overtime pay when employees work a certain number of hours. When you pay overtime to employees, you can use the Overtime Rules program (P186401) to automate many actions. You can create an overtime rule set, which is a group of overtime rules that the system uses to automate the calculation of overtime pay. The system uses overtime rule sets to:
Determine which employees in an employee group are eligible for overtime pay.
Identify the timecards that are the basis for overtime pay calculation, based on a user-defined date range.
Calculate the overtime pay for each eligible employee.
Change current, unprocessed timecards, or create new timecards for the overtime pay.
Note: Overtime rule sets can affect current, unprocessed timecards. Historical timecards are not affected when you process overtime rule sets.
An overtime rule set is a group of individual overtime rules that contains the employee group or groups for which you want to process the set of overtime rules. An overtime rule is a set of specifications that specify how the system calculates different types of overtime. This example illustrates how you can use overtime rules and overtime rule sets.
A typical overtime calculation for a company might be to pay all nonexempt employees one-and-a-half times their base salary for any time that they worked over 8 hours a day or 40 hours a week. The company might also pay employees double time for any time that they worked over 12 hours a day. To accommodate this overtime calculation, use a rule set and attach an employee group consisting of all nonexempt employees. This rule set would consist of:
A rule to calculate time-and-a-half for all hours worked over 8 hours per day.
A rule to calculate time-and-a-half for all hours worked over 40 hours per week.
A rule to calculate double time for all hours worked over 12 hours per day.
You can create four types of overtime rules within an overtime rule set, as described in this table:
Rule Type |
Description |
|---|---|
Timecard change rules |
Timecard change rules use if/then logic to change original timecards, but they do not create new timecards. For example, if a timecard includes regular time on a designated company holiday, then change the pay type from regular pay to overtime pay. In this example, the system changes the pay types on the original timecards. |
Timecard accumulator rules |
Timecard accumulator rules enable you to pay overtime based on a specified limit and time period, and create additional timecards for the overtime pay. When you use timecard accumulator rules, you must use employee groups to identify eligible employees. The accumulator rule then calculates the overtime pay, changes the original timecards to remove the original overtime amounts, and creates new timecards for the overtime pay. For example, you can create an overtime rule to pay employees one-and-a-half times their regular rate for any hours worked over 40 in a week. Therefore, if an employee timecard included 45 hours of regular time in a given week, the system would change the existing timecard to include 40 hours of regular time, and create a new timecard, or timecards, that would include 5 hours of overtime. |
Call custom rules |
Use call custom rules to call a user-defined business function. If a company has special overtime requirements that cannot be accommodated using change or accumulator rules, you can create a custom function and have the system call the function in the custom rule. For example, if you want to pay a meal allowance of 8.00 USD per day for all employees who work over nine-and-a-half hours, you can create a call custom rule because neither the timecard change rule nor the timecard accumulator rule can perform this calculation. |
Call rule set rules |
Use call rule set rules to call overtime rule sets that you have previously defined. Call rule set rules enable you to reuse rule sets in a variety of situations and eliminate the need to re-create rule sets that you use frequently. |
The system uses overtime rule sets to calculate overtime amounts for batches of timecards. You can have several different overtime rules within one overtime rule set. However, you must have at least one overtime rule for the system to process an overtime rule set. Also, because you create overtime rules within overtime rule sets, an overtime rule cannot exist outside of an overtime rule set.
You create an overtime rule set and then create and add the overtime rules to the set. After you have created the overtime rules within a rule set, you must sequence the rules in the appropriate processing order. The system must process certain rules before others to obtain the desired results. For example, the system should process the rule for time-and-a-half over 8 hours per day before it processes the rule for time-and-a-half over 40 hours per week. If the rules are processed out of sequence, the rule set might not meet overtime requirements.
The Overtime Rules program uses an employee group, a date range, and the overtime rules that you identify to determine which timecards are affected. After the system selects the appropriate timecards, the Overtime Rules program uses these timecards as the basis to create new timecards or to change existing ones as necessary. The system does not change historical timecards, nor does it process any original voided timecards.
The system processes these timecards but does not change the types:
Posted timecards.
Interim, nonvoided timecards.
Printed check timecards.
After you submit the overtime rule set for processing, you can use the Reviewing and Approving program (P186601) to review, approve, or cancel a batch. If you cancel a batch, the system restores the original timecards. You can review the processing report from within the Overtime Rule Sets program. Later, you can review the results, without the processing notes, of submitting the overtime rule set in the Reviewing and Approving Timecards program.