This topic covers the Enable Work Week Proration checkbox of the Payroll FLSA Overtime Adjustment Rule in Payroll Setup > Payroll Policies. It is a best practice to select this checkbox to provide a more precise calculation than the default behavior of the rule. 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. The adjustment is still paid out as a single amount. Only the calculation method changes.
- It enables the application to respect the business dates of earnings both in current and past pay periods, in order to only pay out adjustments for overtime hours within the FLSA date range that you define. Conversely, the default behavior does not respect business date, and pays out an adjustment for all of the overtime hours in the pay periods where the FLSA period falls.
The calculation process when the Enable Work Week Proration checkbox is selected is as follows:
- The rule divides the total bonus or lump sum amount by the number of weeks in the FLSA period. If the start or end date of the FLSA period falls mid-week, this week is still counted. This is illustrated in Example 1, below. Moreover, the number of weeks also depends the Start of Week setting defined for the employee's pay group in the Pay Group Properties tab in Pay Setup > Pay Group.
- After the rule determines the weekly bonus amount, it calculates the overtime adjustment for each week that has overtime. Because the rule respects business date, it only pays out an adjustment for overtime hours that fall within the FLSA period. However, if the start or end date of the FLSA period falls mid-week, and this week has overtime, the application still uses all of the work hours of the week to calculate the increase in regular rate. This is illustrated in Example 2, below.
The following two examples illustrate the calculation process when the Enable Work Week Proration checkbox is selected:
Example 1:
The employee is in a weekly pay group with a start of week on Sunday. The current pay period runs from August 26 to September 1. In it, you add a $750 bonus entry with an FLSA period of August 1 to August 31, 2018.
While the first week of August starts on Sunday July 29, the rule still counts this week when calculating the weekly bonus amount, as shown in the following example:
As a result, the rule calculates a weekly bonus amount of $150 ($750 divided by the 5 weeks of August).
If the employee worked 10 hours of overtime in the week of the 12th, and another 10 hours in the week of the 19th, the application generates an adjustment of $30 ($15 for each week). The calculation for each week looks as follows:
| Calculation Step | Description |
|---|---|
$150 / 50 weekly hours = $3
|
(Increase regular weekly rate) |
$3 x 0.5 = $1.50
|
(Increase in the overtime premium) |
$1.50 x 10 overtime hours = $15
|
(Overtime adjustment amount) |
Example 2:
An employee in a biweekly pay group with a start of week on Sunday has 3 pay groups in August 2018, as shown in the following example:
The current pay period runs from August 26 to September 8. In it, you add a quick entry for the employee for a $750 bonus with an FLSA period of August 1 to 31.
The employee worked two hours of overtime each day between Monday July 30th and Friday August 3, totaling 10 hours. No other overtime is worked in August.
As such, the application only pays out an overtime adjustment for the 6 hours of overtime worked in August, leading to an adjustment of $9. However, the application still uses all 50 hours worked the week of July 29th to determine the increase in the employee's regular rate.
The calculation can be broken down into the following steps:
$150 / 50 weekly hours = $3$3 x 0.5 = $1.50$1.50 x 6 overtime hours = $9