Overtime labor rules define how employee overtime pay is calculated when worked hours exceed standard thresholds. Payroll and workforce administrators use these rules to ensure overtime earnings follow federal, state, and business requirements.
Overtime rules evaluate hours worked using methods such as daily, 24-hour, weekly, and 7th Day consecutive. Updates to overtime rules apply only to future payroll and do not recalculate previously processed payroll.
Update an overtime rule when:
Overtime requirements change due to labor regulations
A location opens, closes, or moves to a different overtime policy
Overtime pay multipliers or minimum wage requirements change
Updates to overtime rule settings affect future payroll calculations and do not recalculate previously processed payroll.
Security
Users with the following permission will be able to create overtime rules:
Labor → Labor Rules → Overtime Rules → Create Overtime Rules
Users with the following permission will be able to edit overtime rules:
Labor → Labor Rules → Overtime Rules → Edit Overtime Rules
These permissions can be added to custom user roles or individual users. The Permission Access report can be used to determine which user roles or users already have these permissions assigned. For more information, see User Setup and Security.
Open an Overtime rule
Select Admin from the left navigation rail.
Expand Workforce.
Select Labor rules.
Select the rule to open its record.
Tip:
Find the rule Type in the Type column. In this example, Break type is selected.
Change locations assigned to an overtime rule
Follow these steps when a location opens, closes, or moves to a different overtime policy:
Click steps to expand for additional information and images.
1) Open the Overtime rule to be edited.
2) Select the Locations dropdown.
An overtime rule applies only to the locations selected in 'Locations.' Locations not selected do not use this rule.
3) Check additional locations and/or remove locations.
To add locations, select the checkbox.
To remove a location, clear the checkbox or click the X next to the location name.
4) Click Save.
Configure weighted average overtime for employees with multiple pay rates
Follow these steps when employees work multiple jobs with different pay rates in the same work week:
Click steps to expand for additional information and images.
1) Open the Overtime rule to be edited.
2) Navigate to the Weighted average overtime calculation (WAOT) section.
3) Select the desired weighted average overtime calculation.
One weighted average overtime calculation method can be selected at a time.
When None is selected, WAOT is disabled and the minimum wage field is hidden.
4) Click Save.
Set the state minimum wage for tipped overtime calculations
Follow these steps when tipped employees are paid below the state minimum:
Click steps to expand for additional information and images.
1) Open the Overtime rule to be edited.
2) Navigate to the State minimum section.
3) Enter the state minimum wage for the location.
Use this field only if tipped employees are paid below the state minimum and the state allows tip credit.
4) Click Save.
Apply daily overtime rules by business day
Follow these steps set daily overtime rules by business day:
Click steps to expand for additional information and images.
1) Open the Overtime rule to be edited.
2) Navigate to the Daily overtime section.
3) Check the checkbox for 'Calculate overtime based on hours worked in a _____.'
4) Click the dropdown arrow and select 'business day.'
5) Click Add row.
6) Enter the number of hours an employee can work in a day before overtime is calculated.
This value determines the total daily hours before overtime applies.
7) Enter an overtime factor.
The overtime factor determines how much an employee is paid for overtime hours. The factor multiplies the employee's regular hourly rate for any hours that meet the defined threshold.
For example, if an employee works 12 hours and the overtime factor is 3.0, qualifying overtime hours are paid at three times the regular rate.
Each row defines a threshold based on total daily hours worked.
8) Add additional rows. (Optional)
Repeat steps #6 and #7 for all rows added.
9) Click Save.
Calculate daily overtime using a consecutive 24-hour period
Follow these steps to use a consecutive 24-hour period to apply daily overtime rules:
Click steps to expand for additional information and images.
1) Open the Overtime rule to be edited.
2) Navigate to the Daily overtime section.
3) Check the checkbox for 'Calculate overtime based on hours worked in a _____.'
4) Click the dropdown arrow and select '24 hour period.'
5) Select the 'Consecutive' option.
6) Enter the number of hours an employee can work consecutively in 24 hours before overtime is calculated.
This value determines the total daily hours before overtime applies.
7) Enter an overtime factor.
The overtime factor determines how much an employee is paid for overtime hours. The factor multiplies the employee's regular hourly rate for any hours that meet the defined threshold.
For example, if an employee works 12 hours and the overtime factor is 3.0, qualifying overtime hours are paid at three times the regular rate.
Each row defines a threshold based on total daily hours worked.
8) Enter a value for the maximum minutes between punches.
9) Click Save.
Calculate daily overtime when the qualifying wage is met within a 24-hour period
Follow these steps to apply daily overtime when the qualifying wage is met in a 24-hour period:
Click steps to expand for additional information and images.
1) Open the Overtime rule to be edited.
2) Navigate to the Daily overtime section.
3) Check the checkbox for 'Calculate overtime based on hours worked in a _____.'
4) Click the dropdown arrow and select '24 hour period.'
5) Select the 'Qualifying wage of _____' option and enter a dollar value.
6) Enter a number in the Total daily hours worked column.
This value determines the total daily hours before overtime applies.
7) Enter an overtime factor.
The overtime factor determines how much an employee is paid for overtime hours. The factor multiplies the employee's regular hourly rate for any hours that meet the defined threshold.
For example, if an employee works 12 hours and the overtime factor is 3.0, qualifying overtime hours are paid at three times the regular rate.
Each row defines a threshold based on total daily hours worked.
8) Click Save.
Calculate the weekly overtime rate based on hours worked
Follow these steps to apply weekly overtime based on total hours worked in the week:
Click steps to expand for additional information and images.
1) Open the Overtime rule to be edited.
2) Navigate to the Weekly overtime section.
3) Check the checkbox for Calculate overtime rate based on weekly hours worked.
4) Click Add row.
5) Enter a number in the total weekly hours column.
This value determines the total daily hours before overtime applies.
6) Enter an overtime factor.
The overtime factor determines how much an employee is paid for overtime hours. The factor multiplies the employee's regular hourly rate for any hours that meet the defined threshold.
For example, if an employee works 12 hours and the overtime factor is 3.0, qualifying overtime hours are paid at three times the regular rate.
Each row defines a threshold based on total daily hours worked.
7) Add additional rows. (Optional)
Repeat step #5 and #6 for all added rows.
8) Click Save.
Calculate seventh-day overtime based on total hours worked
Follow these steps to apply overtime based on total hours worked on the seventh day of the workweek:
Click steps to expand for additional information and images.
1) Open the Overtime rule to be edited.
2) Navigate to the 7th Day consecutive overtime section.
3) Check the checkbox for Calculate overtime based on total hours worked on 7th day of a work week.
4) Click Add row.
5) Enter a number in the total hours worked column.
This value determines the total daily hours before overtime applies.
6) Enter an overtime factor.
The overtime factor determines how much an employee is paid for overtime hours. The factor multiplies the employee's regular hourly rate for any hours that meet the defined threshold.
For example, if an employee works 12 hours and the overtime factor is 3.0, qualifying overtime hours are paid at three times the regular rate.
Each row defines a threshold based on total daily hours worked.
7) Add additional rows. (Optional)
Repeat step #5 and #6 for all added rows.
8) Click Save.
