Labor Rules Overview

R365 offers a suite of labor rules to assist in managing labor compliance. Configuring labor rules has the following benefits:

• Proactive alerts when scheduling to help managers avoid overtime and labor compliance violations before schedules are posted.

• Increased accuracy in labor reporting by calculating overtime and penalties for both scheduled and actual labor.

Labor Rules Across Locations

Labor Rules can be set to be calculated for each location separately or for all locations associated with an employee. 

When the 'Apply Labor Rules Across Locations' setting on the System Preferences Miscellaneous tab is enabled, labor rules will combine all punches and scheduled shifts from all locations associated with each employee when making calculations. 

If the locations an employee works at do not all have the same labor rule, the rule for their primary location will be used when calculating that labor rule across locations.

Labor Rules and Start of Business Day Time

Most labor rules use 'business days' and 'workweeks' within R365 for daily and weekly calculations. By default, a 'business day' starts at 12:00 am, and a 'workweek' starts at 12:00 am on the first day of the operational week. When a custom start of day time is defined for a location, a 'business day' is the 24-hour period from the custom start of day time, and a 'workweek' is the 168-hour period from the custom start of day time of the first day of the operational week. 

Some labor rules do not use 'business days' and 'workweeks' that start at a custom time. The following labor rules always use calendar days and operational weeks that start at 12:00 am:

• Minor Rules

• Clopening Rules (configured as part of Split Rules)

• Shift Differential Rules

Regular Rate vs Job Rate

Some labor rules have an option to use the employee’s ‘regular rate’ when calculating penalty earnings. The regular rate factors in an employee’s rate from all jobs that they work in a week as well as other applicable earnings.

When a labor rule is set to ‘job rate’, only the rate associated with the job worked is used; other worked jobs and earnings are not included.

An employee’s regular rate is calculated at the end of each workweek, as follows:

1. Combined straight time earnings are calculated for a full workweek:

   • (Job Rate A x Hours Worked in Job A) + (Job Rate B x Hours Worked in Job B) + Applicable Other Earnings = Straight Time Earnings

2. Regular Rate is calculated:

   • Straight Time Earnings / Total Weekly Hours = Regular Rate

Regular Rate - Other Applicable Earning Types

As part of regular rate calculations, wages associated with applicable penalty earnings are included. Only earnings that have been added to an employee’s daily sales summary labor details or their timecard are included in these calculations. Earnings added after labor has been exported to payroll are not included.

Default earning types used in regular rate calculations include:

• Shift Differential

• Bonus

• Service Charge

To enable or disable earning types used in regular rate calculations, contact R365 Support.

Excluded Employees

Labor Rules in Scheduling

Calculations from the the following labor rules are included in labor totals and warnings on the Schedule Calendar:

• Overtime Rules

• Break Rules

• Split Rules

• Spread of Hours Rules

• Shift Differential Rules

• Minor Rules

Projected Overtime

Hours for employees with projected overtime are displayed in red.

Projected overtime warnings are configured in the following labor rules:

• Overtime Rules

Projected Penalties

Projected Labor $ and Labor % totals for each day will include the dollar amounts associated with projected penalties.

Penalties from the following labor rules are included in projected penalties:

• Break Rules

• Split Rules

• Spread of Hours Rules

Schedule Conflict Warning

When a shift is saved, any labor rule violations are listed. The user can then choose to adjust the shift to avoid penalties or proceed with saving the shift despite the violations.

Schedule conflict warnings are generated for the following labor rules:

• Overtime Rules

• Break Rules

• Split Rules

• Minor Rules

• Spread of Hours Rules

Publish With Conflicts Confirmation

When publishing a schedule, any rule violations will be listed. The user can choose to adjust the schedule to remove the violations or publish it with the conflicts intact.

Publish with conflicts confirmations are generated for the following labor rules:

• Overtime Rules

• Break Rules

• Split Rules

• Minor Rules

• Spread of Hours Rules

Labor Rules in Actual & Scheduled Labor Reporting

For R365 overtime rules to be used for calculating actual overtime for a location, the 'Overtime Tracking' setting on the associated location record must be set to 'R365 OT Rules'.

Labor Rules for Payroll

Earnings associated with labor rules that are added to the DSS are included in payroll information. 

Workforce

When Workforce is enabled, the following earning types are included when hourly earnings are sent to Workforce from the Labor Dashboard:

• Overtime

• Break Penalty

• Split Penalty

• Clopening Penalty

• Tip Credit (Tip Makeup)

• Spread of Hours

• Reporting Time Pay

• Shift Differential

R365 Payroll Export

The R365 Payroll Export found on the Labor tab of My Reports includes the following earnings from labor rules:

• Overtime

• Break Penalty

• Split Penalty

• Clopening Penalty

Overtime Rules

Overtime rules configure how overtime is calculated for locations in R365. When an overtime rule is applied to a location, projected overtime will be calculated for that location in Scheduling. Users will then receive overtime warnings when creating or publishing shifts, and projected overtime will be included in scheduled labor reporting.

R365 overtime calculations can also be calculated for actual labor brought in through the Daily Sales Summary for the location. When overtime tracking is set to ‘R365 OT Rules’, the overtime values in the daily sales summary, labor reporting, and payroll exports are calculated by R365. Overtime information found in POS data is not used.

Overtime rules can be configured to calculate multiple types of overtime, including Daily, 24-Hour, Weekly, and 7th Day Consecutive. 

For accurate labor reporting, some employees (such as salaried employees) should not be included in projected or actual overtime calculations. These employees can be marked as exempt from overtime hours and/or pay calculations. Employees are exempted from overtime calculations in the Settings section on the Employment tab of their employee record.

Learn more about overtime rules configuration here.

Break Rules

Once break rules are created, they are applied to the Schedule Calendar for applied locations. If an employee's scheduled hours violate the break rules set for their location, the employee's total labor hours will be reduced by the total break minutes per day and/or per shift, depending on the rule configuration. The total labor hours for the employee will then be updated to show a more accurate prediction.

Penalties associated with violations of break rules can also be configured.

Learn more about break rules configuration here.

Minor Rules

Minor rules define shift length thresholds and shift hour windows for set date ranges based on the employee’s age and if school is in session.

Warnings are displayed in the Schedule Calendar when shifts that exceed the shift threshold are assigned to employees whose age is within the configured age group. Warnings appear when creating shifts and publishing schedules, as well as in the Manager Queue. 

Learn more about the Schedule Calendar's minor rule warnings here.

Learn more about minor rules configuration here.

Split Rules

Split rules contain configurations for split shifts and clopening. The settings for ‘Split Rules’ define how penalties for split shifts are calculated and are triggered by the length of the break between two shifts worked in the same day. The settings for ‘Clopening’ define how penalties for clopening shifts are calculated and are triggered by the length of the break between two shifts on consecutive days. 

Learn more about split rules configuration here.

Tip Makeup Rules

Tip makeup rules calculate the difference between the minimum wage set on the rule and the pay from hours worked in tipped jobs in a single workweek by the employee at locations associated with a single legal entity. If a tip makeup earning is owed, this earning is placed on the last day of the week.

Any tip makeup earnings will be included in Labor $ and Labor % amounts for Labor Trends, OT Performance, and the Actual vs Scheduled Report. Tip makeup earnings can be viewed on the Daily Sales Summary when reviewing labor.

Learn more about tip makeup rules configuration here.

Spread of Hours Rules

Spread of hours rules add an additional hour of pay at a configured minimum wage for employees when the hours between their start time and end time in a single business day exceed a specified hour threshold.

Learn more about spread of hours rules configuration here.

Reporting Time Pay Rules

Reporting time pay rules will compare an employee’s actual hours to their scheduled hours. Reporting time pay earnings will be added if the employee’s actual hours do not meet the threshold of minimum hours or percentage of scheduled hours set in the rule.

Learn more about reporting time pay rules configuration here.

Shift Differential Rules

Shift differential rules will add additional earnings for employees who work during specific hours of the day. This rule is frequently used by locations where swing shifts or graveyard shifts are paid an hourly or per-shift bonus. 

Learn more about shift differential rules configuration here.