Example of Creating Labor Costing Multipliers

Set up the labor costing multipliers using the Manage Labor Costing Multipliers task. The application uses the labor costing multiplier to calculate the overtime labor cost rate for an employee using the formula:

The application then multiplies the overtime premium labor cost rate by the number of overtime hours that an employee works to calculate the overtime premium for the employee. This is represented by the following formula:

Labor Costing Multipliers

You define a labor costing multiplier for each kind of overtime your business uses, such as double time or time and a half. For example, if you pay an employee double time for all overtime hours, you define a labor cost multiplier of 2.0. You multiply the employee's labor cost rate by 2.0 to calculate the employee's overtime premium labor cost rate. If you pay an employee time and a half for all overtime hours, you define a labor cost multiplier of 1.5 to calculate the employee's overtime premium labor cost rate. An employee's total labor cost is the overtime premium plus the straight time cost. This is represented by the following formula:

The following table shows examples of labor cost multipliers for double time, time and a half, and uncompensated overtime.

Labor Costing Multiplier Name	Multiplier
Double Time	2.0
Time and a Half	1.5
Uncompensated Overtime	0