Example of Hourly FLSA Calculation

The information in these tables is summarized on the employee paysheet by earnings codes. The FLSA function does not determine overtime rules. In this example, the Higher of FLSA/Contractual option is selected in the FLSA Rule group box on the FICA/Tax Details page that is accessed from the Company - Default Settings page.

This is the general FLSA formula that also applies to exception hourly weekly and biweekly employees:

FLSA rate = (regular period pay + overtime pay at contractual + total other FLSA eligible earnings) / total FLSA eligible hours
FLSA overtime premium = overtime hours × .5 × FLSA rate

Item	Description
Employee	Sam
Contractual hourly rate	6.00 USD
Workday	8 hours
FLSA period	7 days
Pay period	Weekly
Bonus	12.00 USD

Contractual Calculation

Earnings Code	Hours	Rate	Earnings
Regular	40	6.00 USD	240.00 USD
Overtime at 1.5	6	9.00 USD = 6.00 USD × 1.5	54.00 USD
Bonus			12.00 USD

Sam's contractual premium pay:

18.00 USD = 6.00 USD × 0.5 × 6 overtime hours.

If Sam's regular rate is less than the minimum wage, you must calculate his overtime using the highest of the jurisdiction (if the Minimum Wage Jurisdiction option is enabled in the employee’s pay group), state or federal minimum wage. Jurisdiction minimum wage data is stored in the Minimum Wage Jurisdiction table, and state and federal minimum wage data is stored in the Federal/State Tax table.

Sam's bonus might cover a work period that exceeds the current pay period.

FLSA Calculation

Earnings Code	Hours	Straight-Time Rate	Straight-Time Earnings
Regular	40	6.00 USD	240.00 USD
Overtime at 1.0	6	6.00 USD	36.00 USD
Bonus			12.00 USD
Totals	46		288.00 USD

The Minimum Wage Jurisdiction feature is turned off in this example.

Calculations:

FLSA rate:

6.26 USD = 288.00 USD / 46 total weekly hours.
Premium pay:

18.78 USD = 6.26 USD × 0.5 × 6 overtime hours.

Because the FLSA overtime premium of 18.78 USD is greater than the contractual premium of 18 USD, use the FLSA rate to calculate Sam's overtime.