Overtime and pay rules let you pay employees correctly for extra hours and special situations, automatically. You can set up overtime multipliers, additional rates, flat amounts such as bonuses and reimbursements, and break compliance penalties. Each rule applies on the timesheet and flows into your payroll export, so you do not calculate anything by hand.
What is the Difference Between Overtime & Pay Rules?
Before we begin setting things up, let’s go over the difference between the two:
Overtime increases pay for hours beyond a standard limit. For example, an employee who works more than 8 hours in a day.
Pay rules add extra pay for specific hours or situations. For example, working on Christmas, a night shift, or earning a bonus, tip, or reimbursement.
If both overtime and pay rules apply to your organization, you can set up both. In those cases, the pay rule supplements the overtime rate.
How to Set Up Overtime & Pay Rule Policies
A policy is a group of rules that you assign to employees. To set up a new overtime or pay rule policy, follow these steps:
Open the Users page from the left sidebar.
Click the Company Policies tab at the top right of the screen.
Open the Overtime and Pay rules tab.
Click Add policy.
Enter a policy name, for example “Full time employees”.
Choose whether this is a default policy. A default policy is assigned automatically to every new employee who joins the company app.
Click Add rules and create the rules you need. The next sections explain each rule type.
Assign the users this policy applies to. To assign a smart group, filter by the relevant group at the top, then select all users.
Choose the effective date. The policy takes effect on the date you select. To set one date for everyone, click Select all, click the Actions tab, and set the effective date.
Review the summary and click Save.
How to Create Overtime & Pay Rules
Rules define how extra pay is calculated. To create a rule, follow these steps:
Open the Users tab from the left sidebar.
Click the Company Policies tab at the top right.
Open the Overtime and Pay rules tab, then switch to the Manage pay rules tab.
Click Add rule. A default rule called Regular already exists for regular working hours.
Enter a rule name, and add a Code if your payroll provider needs one, for example WKND.
Select a Rule type. The available types are described in the table below.
Set the condition for when the rule applies, for example weekly after 40 hours.
Click Save rule.
How to Create an Overtime Rule
An overtime rule increases an employee’s pay for hours worked beyond a limit you set. You choose the multiplier and the condition that triggers it.
To create an overtime rule, follow these steps:
Open the Users tab from the left sidebar.
Click the Company Policies tab at the top right.
Open the Overtime and Pay Rules tab, then switch to the Manage Pay Rules tab.
Click Add Rule.
Enter a rule name, and add a Code if needed, for example x1.5.
Select Overtime as the Rule Type.
Set the multiplier that the base wage is multiplied by, for example 1.5 or 2.
Set the condition that triggers the overtime, for example daily after 8 hours or weekly after 40 hours.
Click Save Rule.
The rule types you can choose are:
Regular: Sets the base wage. You can create several regular rules for different employee groups.
Overtime: Multiplies the base wage by a multiplier you set (for example 1.5x or 2x), for hours worked beyond a limit such as 8 hours per day or 40 hours per week.
Additional rate: Adds either a fixed amount per hour worked, or a percentage multiplier on top of regular or overtime wages.
Flat pay: Adds a fixed dollar amount for a day worked, for bonuses, tips, commissions, or reimbursements. See “How to create a flat pay rule”.
Breaks premium: Automatically pays a penalty when a mandatory break is missed, taken late, or cut short. See “How to create a breaks premium rule”.
To separate holiday pay from overtime, you can set the multiplier to a partial value. For example, if employees are paid 1.5x for holiday hours, set the multiplier to 0.5. Connecteam calculates the additional pay separately and adds it to the regular hourly rate, which appears in its own column on the timesheet. This keeps your hours classification flexible and helps you meet specific payroll and compliance requirements.
You can create more than one daily overtime rule. For example, you can pay 1.5x after 8 hours and 2x after 10 hours on the same day.
To set advanced options, click Advanced settings. There you can exclude overtime from other conditions, and limit a rule to specific jobs, clients, or projects by turning on Limit condition to specific job items only and selecting the relevant items.
How to Set Up a Weighted Overtime Rate
Some employees earn different pay rates for different work, for example one rate for driving and another for on-site work. When an employee works overtime across those roles in the same period, U.S. federal law requires overtime to be paid on a weighted average of all the rates worked, not on a single rate. A weighted overtime rate calculates that blended rate for you automatically, so your overtime pay stays accurate and compliant without manual math.
To learn how to set up the rates each employee earns, make sure to check out this article first.
What Is a Weighted Overtime Rate?
A weighted overtime rate averages the different rates an employee earns during a pay period, based on the hours worked at each rate, and uses that average as the base for their overtime pay.
For example, if an employee works some hours at $20 per hour and some at $30 per hour, their overtime is not paid at a flat $20 or $30. Instead, Connecteam calculates the average rate across all the hours worked and applies the overtime multiplier to that blended figure.
How to Turn On Weighted Overtime
To set up a weighted overtime rate, follow these steps:
Make sure the Pay Rates feature is enabled for your account.
Access the Users page on the left sidebar.
Enter the Company Policies tab in the top right of the screen.
Access the Overtime & Pay Rules tab.
Select Manage pay rules.
Open the overtime rule you want to update, or create a new one.
Turn on the Weighted overtime setting.
Save your changes.
💡 Tip: Weighted overtime applies only to employees who have more than one pay rate during the period. Employees with a single rate are unaffected.
Where the Weighted Rate Appears
Once weighted overtime is turned on, the calculated rate is shown in several places:
On the admin timesheets, where you can review the blended rate applied to overtime hours.
In the total pay figures available to admins.
In your payroll exports, so the weighted rate carries through to your payroll provider.
How to Create a Flat Pay Rule for Bonuses, Tips, and Reimbursements
A flat pay rule adds a fixed dollar amount to an employee’s pay for a day worked. Use it for bonuses, tips, commissions, reimbursements, or allowances that are not tied to hours. The amount is added automatically to the timesheet, your reports, and your payroll export.
To create a flat pay rule, follow these steps:
Open the Users tab from the left sidebar.
Click the Company Policies tab at the top right.
Open the Overtime and Pay rules tab, then switch to the Manage pay rules tab.
Click Add rule.
Enter a rule name, for example “Daily tips”, and add a Code if needed, for example TIP.
Select Flat pay as the Rule type.
Set the condition for when the flat pay applies.
Click Save rule.
Once saved, assign the rule to your employees the same way you assign any other pay rule, either company wide through a policy or per employee from their user profile.
In the Timesheet, enter the fixed amount you want to add. This is a set dollar figure, not an hourly rate or a multiplier.
💡 Tip: Give every flat pay rule a clear code that matches your payroll provider’s pay codes. It keeps your export clean and turns end-of-cycle reconciliation into a non-event.
How to Create a Breaks Premium Rule for Break Compliance Penalties
A breaks premium rule automatically pays a penalty when an employee’s mandatory break is missed, taken late, or cut short. This is common where break penalties are legally required, such as California. The penalty is calculated automatically, shown in its own column on the timesheet, and included in reports, payroll exports, supported integrations, and estimated pay.
To create a breaks premium rule, follow these steps:
Open the Users tab from the left sidebar.
Click the Company Policies tab at the top right.
Open the Overtime and Pay rules tab, then switch to the Manage pay rules tab.
Click Add rule.
Enter a rule name, for example “Meal break penalty”, and add a Code if needed.
Select Breaks premium as the Rule type.
Define how the premium is calculated when a mandatory break is missed, late, or short.
Set the condition for when the rule applies.
Click Save rule.
When a break issue is detected, such as a break taken 14 minutes late or 5 minutes short, the premium is calculated automatically and shown next to the break issue. An admin can review why the penalty was applied before approving payroll.
Examples of Overtime and Pay Rules
Use these examples as a starting point for your own rules:
Weekday overtime: any hours worked beyond the standard workweek.
Weekend: hours worked on Saturday or Sunday.
Holiday: hours worked on company-recognized holidays.
Night shift: hours worked through the night.
Bonuses, tips, and reimbursements: a fixed flat pay amount added per day worked.
Break penalty: an automatic premium when a mandatory break is missed, late, or short.
Overtime Conditions You Can Set
A condition decides when a rule applies. The available conditions are:
Condition | When it applies |
Daily | When an employee works more than a set number of hours in a day. For example, 1.5x after 8 hours, Monday to Friday. |
Weekly | When an employee works more than a set number of hours in a week. For example, an extra amount per hour after 40 hours. |
Pay period | When an employee works a set number of hours in a payroll period, for example 60 hours per pay period. |
Partial day | When an employee works specific hours, for example Monday to Friday between 21:00 and 01:00. |
Consecutive days | When an employee works more than a set number of days in a row, for example after the 5th consecutive day. |
Holiday | On specific dates set in advance, for example 2x on December 31. You can repeat it every year. |
Note that the pay period overtime is calculated based on the payroll period previously set in your time clock setting. To learn about setting your payroll period click here.
How to Edit and Manage Policies
To manage an existing policy, follow these steps:
Open the Users tab from the left sidebar.
Click Company Policies, then open the Overtime and Pay rules tab.
Click the three dots next to the relevant policy and select the option you need.
To see who is assigned, click the user icons next to the policy.
You can also see which policies are assigned to one employee by opening the Users tab, selecting the employee, and opening the Employment tab.
How to Set Overtime and Pay Rules for One Employee
To assign rules to a single employee, follow these steps:
Open the Users tab from the left sidebar and select the employee.
Open the Employment tab and find the Overtime and Pay Rules section.
Click the three dots next to the assigned policy and select Update.
Choose whether to assign a company-wide policy or specific rules.
To assign a specific rule, select Assign specific rules and click Add rule.
Select the rule and click Continue.
Choose the effective date. This replaces existing pay rules effective on that date.
Click Confirm.
To assign a rule to many employees at once, assign it in bulk from the policies page instead of one profile at a time. To learn more about setting up company-wide policies, make sure to check out this article!
How Overtime and Pay Rules Appear on Timesheets
Overtime and pay rules are visible to both admins and employees on the timesheet.
For Admins
To review rules on a timesheet, open the Timesheets tab and select an employee timesheet. Your overtime and regular policies are listed on the right. Hover over an overtime value to see which condition triggered it.
Flat pay amounts appear as their own line, separate from hourly earnings. A breaks premium appears in its own column next to the related break issue, so it is clear what was paid as a bonus or penalty versus what was earned for hours worked.
For Employees
To view your own hours, open your timesheet in the Time Clock. Overtime appears under the OT column, and any flat pay or breaks premium added to your day appears as its own line.
How to Export Overtime Hours and Pay Rules
When you export payroll totals, you can show pay rules as rows instead of columns. Each pay rule, including flat pay and breaks premium, appears in its own row to match your payroll provider’s structure. The original column-based export is still available under the Columns format option.
Breaks premium amounts are included in the export, in supported payroll integrations, and in estimated pay. This aligns the export with your provider’s format and removes manual calculation.
Frequently Asked Questions
Q: What is the difference between an additional rate and flat pay?
A: An additional rate is added per hour worked, either as a fixed amount per hour or a percentage. Flat pay adds a single fixed dollar amount for a day worked, regardless of hours.
Q: Can I use flat pay for reimbursements and mileage?
A: Yes. Flat pay is designed for bonuses, tips, commissions, reimbursements, and allowances. Enter the fixed amount and assign the rule to the relevant employees.
Q: When is a breaks premium applied?
A: A breaks premium is applied automatically when an employee’s mandatory break is missed, taken late, or cut short, based on the break rules you set. The penalty appears next to the break issue on the timesheet.
Q: Will a new pay rule change past timesheets?
A: A pay rule applies from its effective date. When you assign a rule to an employee, you choose the effective date, and it replaces existing pay rules effective on that date.
Q: Why is my pay rule not showing on a timesheet?
A: Confirm the rule’s condition matches the hours worked, the rule is assigned to that employee with an effective date on or before the shift, and the rule is not limited to a different Time Clock or job. Adjust the condition or assignment and the rule will appear.
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