In Payroll, FLSA overtime adjustments are generated by the Payroll FLSA Overtime Adjustment Rule of the employee’s payroll policy in Payroll Setup > Payroll Policies. In the Eligible FLSA adjustable earnings setting of this rule, you must define which bonus or lump-sum earning codes trigger the rule to run. The bonus or lump-sum earning codes that you select as eligible in the rule must have the FLSA Adjustable checkbox selected in the General sub-tab of the Earnings tab in Payroll Setup > Earnings and Deductions.
Before You Begin: Flat sum bonuses for California employees in Payroll use a separate functionality than the standard FLSA calculation. See California FLSA Flat Sum Bonus Overtime Adjustments in Payroll.
The rule is triggered to run when you add or import an eligible bonus or lump-sum earning entry for the employee in the Quick Entry or Checks tab of Payroll. In the details of this entry, you must define the FLSA Adjust Start Date and FLSA Adjust End Date columns to set which hours the application includes in the calculation.
The rule calculates the overtime adjustments by calculating the total hours paid between the FLSA start and end dates. Optionally, you can select the Enable Work Week Proration checkbox to use a weekly proration calculation, instead of the default total hours method. Selecting this checkbox does the following:
- It enables the application to calculate FLSA overtime adjustments on a week-by-week basis, rather than through a single calculation for the entire FLSA date range that you define for the bonus or lump sum.
- It respects the business dates of earnings, both in current and past pay periods, to only pay out adjustments for overtime hours within the FLSA date range that you define.
See The Enable Work Week Proration Option.
After you save the bonus or lump-sum quick entry or check entry in Payroll, the application calculates the employee's total work hours and overtime hours over the FLSA date range that you defined. In the rule parameters, you can customize which hours are considered work hours and overtime hours. For example, you can set work hours to include regular and overtime hours or just regular hours.
The calculation only includes earnings that have associated hours and rate data. Hours and rate data can be sourced from WFM or external time data that is mapped to earning codes in Payroll or from earning entries added directly in Payroll (for example, quick entries). The application is unable to use payroll election earnings or other generated earnings in the calculation because these earnings do not have associated hours.
After the rule runs, the application pays out the overtime adjustment, using the earning code that you specify in the Overtime adjustment earning setting of the rule parameters. You can review the adjustment in the employee earning statement and the Preview tab of Payroll.
The following is an example of an adjustment in the earning statement, using the OT Adjustment earning code that the customer created for this purpose:
The earning also appears in the Supplemental Earnings Statement section at the bottom of the statement, as shown in the following example:
To populate the Hours/Units and Rate columns for FLSA overtime adjustments in earning statements, as shown in the previous examples, the rule parameters must have the Compute hours and rate for adjustment earning checkbox selected.
As described earlier, when you select the Enable Work Week Proration checkbox of the rule parameters, the application performs a separate calculation for each week in the FLSA date range. This means that, depending on the total work hours each week, the rate that is used to calculate the overtime adjustment can vary from week to week. If the Compute hours and rate for adjustment earning checkbox of the rule is also selected, the earning statement displays a separate line for each week that has a different rate. These separate lines with different rates are shown the following example:
You can prevent the statement from displaying separate lines for each rate by hiding the rate for the overtime adjustment earning code. When you hide the rate, the statement only displays a single line. You can do this for the earning in the General sub-tab of the Earnings tab in Payroll Setup > Earnings and Deductions by setting the Display Hourly Employee Rates and Display Salary Employee Rates parameters to No.
Moreover, when you select the Enable Work Week Proration checkbox, you can configure the Supplemental Earnings Statement section of the earning statement to display a weekly breakdown of the FLSA calculation for each week. The earnings information at the top of the statement still only displays one line for the adjustment.
You can do this in the Reports tab of Payroll Setup > Report Output by selecting Earning Statement in the list of system reports and selecting the Display FLSA Work Week Detail in Supplemental Section checkbox.
The following screenshot is an example of the weekly breakdown of overtime adjustments. The rate is hidden based on the earning definitions: