Accurately calculating your employees' hours is essential for running a business and directly affects your organization's payroll accuracy. Determining overtime hours and accounting for special pay, such as holidays, night shifts, or weekends, can be complex. Therefore, setting up clear overtime and pay rules is crucial to ensure employees will be paid correctly for their work and to comply with regional labor laws, protecting your business from potential legal issues.
In this article, we will go over:
What is the Difference Between Overtime & Pay Rules?
Before we begin setting things up, let's go over the difference between overtime and pay rules:
Overtime -increases pay for hours beyond the standard limit. For example, an employee worked for more than 8 hours a day.
Pay Rules - Add extra pay for specific hours. For example, an Employee might work on Christmas or a night shift.
If both overtime and pay rules apply to your organization, you can set up both. In cases such as these, the pay rule supplements the overtime rate.
How to Set Up Overtime & Pay Rules
To enable and set up new Overtime Policies or Pay Rules, follow these steps:
Access the Users tab on the left sidebar and enter the Company Policies tab on the top right of the screen.
Access the Overtime & Pay rules tab and click on Add policy.
Give the policy a name and decide if it should be a default policy or not. Default policies will be automatically assigned to all new employees who join the company app.
Next, Add Rules. A separate modal will open, allowing you to set up all the necessary details. To learn more about creating a new overtime or pay rule, refer to this article!
Assign the users that this policy will apply to; you will also be able to set custom overtime & pay rules per user separately. To apply the policy to a smart group, use the filter at the top in order to filter by the relevant group, and select all users.
Next, choose the effective dates for the new policy. The policy will take effect on the date you select at this step. To set an effective date for all users in bulk, click on Select all, click on the blue Actions tab and set the effective date.
In the Summary stage, go over all the details to ensure everything is correct, and click Save!
Examples of Company Wide Overtime or Pay Rules
Below are a few examples of company wide overtime or pay rule policies to guide you!
Weekday Overtime: any hours worked beyond the standard workweek.
Saturday or Sunday: hours worked during the weekend.
Holiday: hours worked on company-recognized holidays.
Night Shift: hours worked throughout the night.
Emergency Overtime: overtime required due to urgent business needs.
Voluntary Overtime Incentives: employees who voluntarily work overtime on weekends or holidays may receive bonus pay.
Peak Season Overtime: during peak business periods (e.g., end-of-quarter, holiday rush).
On-Call Overtime: employees required to be on call during weekends or holidays.
How to Edit & Manage Overtime & Pay Rule Policies
To manage your overtime and pay rule policies, access the Users tab from the left sidebar, click on Company policies and enter the Overtime & Pay rules tab. Next to the relevant policy, click on the three dots. Here you'll be able to select the relevant option and proceed.
In the Overtime & Pay rules tab, you can click on the user icons next to the relevant policy. Here you will be able to see a list of all employees assigned to that policy.
You can also see which policies are assigned to a specific employee in their user profile. To do so, head to the Users Tab, enter the relevant user, and select the Employment tab.
Viewing Overtime & Pay Rules on Employee Timesheets
Overtime can be viewed in the timesheet by both managers and employees allowing for transparency and accuracy when it comes to how much extra an employee is working or if a specific employee is working on days where additional rates are applied. Below we go over how overtime looks on the timesheets for both admins and employees.
For Admins
As an admin when preparing for payroll, you are likely reviewing employee timesheets and checking how much overtime was worked by employees. To view overtime, navigate to the timesheets tab and enter an employee timesheet. You'll be able to see the different overtime policies you have set up to the right. By hovering over an employee overtime you can see exactly which conditions caused the employee to enter overtime.
💡Tip: For better accuracy have employees submit their timesheets at the end of the payroll period. This ensures that have reviewed their hours, including overtime, and made sure they are correct. To learn more about this capability click here
For Users
As an employee, you can stay on top of the amount you have been working by checking your timesheets, found in the Time Clock. Here you can see that overtime appears under the column OT.
Exporting Overtime Hours & Pay Rules
When exporting payroll totals, you can now choose to present the pay rules as rows instead of columns! This organizes hours by pay rule and each pay rule is displayed in its own row, to fit payroll providers data structure. Note that the current payroll export was not changed, and is still available under the “Columns” format option.
This capability simplifies data transfer for payroll, aligning with payroll providers format, and eliminates manual intervention, saving you significant time and reducing errors!
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