Many human resources and payroll teams are gearing up for changes to the Fair Labor Standards Act (FLSA), which could come as early as this month. These laws can have a significant impact on payroll and the time needed to calculate overtime. In many cases, pay is not always linear and employees may not always work a 40-hour workweek. As such, businesses may need to employ the fluctuating workweek method for calculating overtime, which is also proving to be complicated.
As discussed in “Calculating overtime using the fluctuating workweek method,” posted by Anne Torregrossa on HR.BLR.com, employees are often divided into two groups, salaried and hourly, to differentiate which group is eligible for overtime. Changes with the FLSA are effecting ‘nonexempt’ and ‘exempt’ classifications, which can be confusing as a salaried employee can also be eligible for overtime pay. Federal regulations allow a salaried employee’s overtime to be calculated using a fluctuation workweek (FWW) calculation. An employer may choose to pay a nonexempt employee on a salary basis which includes allowances for bonuses or the flexibility for workers to focus on their tasks, without worrying about the number of hours they work.
Torregrossa’s example discusses a bookkeeper with a straight salary of $26,000 and an agreement to work an average of 32 hours per week. In a quiet week, the bookkeeper may only work 25 hours, as compared to 50 hours during a busier week. According to the FWW, the employee’s hourly rate is $20 for the 25-hour week and $10 for the 50-hour week. Calculating time-and-a-half overtime depends on the hours worked during the week. In the example of the 50-hour workweek, the employee’s overtime rate would be $15 for the time worked over 40 hours.
Don’t Risk Calculating Overtime hours by Relying on Manual Processes
Calculating overtime hours for each employee with varying schedules will be time-consuming when relying on manual processes. Overtime Hours Rules is a solution that provides the right platform for managing overtime in Microsoft Dynamics® GP Payroll. You can set the rules based on employee, department, position, and state or corporate policy. Rules can be managed by the day, week, or pay period, and Overtime Hours Rules automatically calculates the overtime during the payroll process. Don’t get trapped by these new regulations. Position your business to manage the new FLSA rules with efficiency and accuracy. Contact Integrity Data for more information about Overtime Hours Rules and other time-saving payroll solutions.