Calculating overtime and double overtime for workers who have multiple pay rates can be done in one of two ways.
Regular rate of pay: the weighted average of hourly rates worked during the work week
Highest pay rate: the highest hourly rate worked during the work week
The calculation you select will apply to both overtime and double overtime earnings types for your workers with multiple pay rates.
- Open the Payroll app and navigate to the Settings tab.
- In the Features section, click the Set up your overtime premium calculation link.
- In the pop-up window, you'll choose one of the two overtime premium calculations.
- If you select Regular Rate of Pay, then you'll be prompted to choose which Earnings* will be included in the average rates.
- Once you've selected the Earnings, Save.
*Note: It's recommended to include Regular Earnings, as well as any other Pay Types that might qualify to be included in the Regular Rate of Pay. Ultimately, please refer to your FLSA guidelines.
Depending on where your company and workforce resides, there may be an advantage to choosing one of the overtime calculation methods due to state regulations. Some states have overtime rules that go beyond what is mandated by the FLSA and Department of Labor.
Each state's labor jurisdiction is linked below for your convenience.