If you are using Exceptions in PayPunch, such as holidays, sick days, etc., and you are also calculating Overtime, you may notice some employees regular hours to be greater than the required amount for daily/weekly overtime.
We give overtime pay after 40 hours of work, but I see this employee has 45 regular hours, and no overtime hours. Is this a bug?
This is not a bug; it it is an option in the exceptions which you can turn on or off.
Let’s take this overtime setting as an example. After 40 hours of regular hours a week, an employee will get overtime pay. Overtime pay is at time and a half, so for every 1 hour of work, they will receive 1.5 times the pay.
For the Exception, we will use the Holiday exception.
Paid Hours are hours that the employee will get for FREE. They do not need to come into work that day to get the hours. Normally Paid Hours is set to 8, but for this example it has been changed to 9.
Coefficient: This is the rate that the employee will get if they do come to work that day. In this example, the rate is 1.5, so if they work 8 hours, they will get 8 x 1.5 = 12 hours. The 4 bonus hours are considered regular hours, while the 8 are considered working hours.
Include these exception hours in the overtime calculation: When this box is checked, the Paid Hours are included in the overtime calculation. Overtime would be the working hours plus the paid hours.
Include these working hours in the overtime calculation: When this box is checked, the hours worked on the vacation are included in the overtime calculation.
In these examples, the Coefficient and the Overtime rate are both 1.5x the hours. While the time is multiplied by 1.5, to avoid any confusion, calculations will show coefficient if it is multiplied by the coefficient, or overtime/time and a half if for the overtime rate.
Dayna, our employee, has worked Monday to Thursday for 9 hours each day and by Thursday, she has worked 36 hours. Friday is a holiday, so we will add different exceptions to see how her time card changes.
Timecard from Monday – Thursday
Below are 4 different time cards, each with different settings.
Paid Hours – Not included in overtime calculation
In this time card, the Holiday Exception gives 9 Paid Hours. She did not need to come into work that day for the 9 hours. These hours are Not Included in the overtime calculation which is why she has 45 Regular Hours.
For simplicity, we will say she gets paid $10 an hour. She will have earned $450 this week.
Paid Hours – Included in overtime calculation
In this time card, she also receives 9 Paid Hours, which she did not need to come into work to receive. However, this time they Are Included in the overtime calculation.
Since Dayna already had 36 Hours, she will then have a total of 45 Hours. As overtime is after 40 hours and these hours are included in the overtime calculation, 5 of those exception hours are paid overtime. These 5 overtime hours will be multiplied by the overtime rate of 1.5, so she will get 7.5 hours of pay.
Keeping with the $10/hour she gets paid, she will make $475 this week. $400 is from the 40 regular hours, and the $75 is from the 5 overtime hours, which are considered 7.5 hours.
Working Hours – Not included in overtime calculation
Paid hours are now set to 0, so she only gets paid if she comes into work. When she does, she will get a coefficient of 1.5x for all the work that was done. For example, she works 2 hours, you will multiply 2 hours of time by the coefficient of 1.5 making 3 hours.
Dayna comes to work on Friday for 9 hours. These hours are Not Included in the overtime calculation.
Since these hours are multiplied by a coefficient, she works for 9 hours, but they are considered 13.5 hours (9 * 1.5 = 13.5)
Since these hours are not considered in the overtime calculation, they are considered regular hours even though it brings her above 40 working hours.
Continuing with the $10/h, she will have made $495 this week. $360 from Monday – Thursday, and $135 on Friday (9 hours * 1.5 coefficient * 10$/h).
Working Hours – Included in overtime calculation
In this example, it is the same as the above, but instead the working hours during the holiday will be included in the overtime calculation.
Dayna works the 9 hours on Friday and receives the 1.5x hours from the coefficient. In total, she will have 13.5 hours, which is 9 hours times the 1.5 coefficient. This will be considered 9 working hours, and 4.5 bonus hours making 13.5 hours.
She is already at 36 hours from Monday – Thursday, so 4 of the working hours will still be regular hours and the remaining 5 will be overtime hours. The bonus hours she received from the 1.5x coefficient (4.5 hours) will not be included in the overtime calculation. This is why you see the regular hours to be 44:30.
She will then earn $520 this week. So how is this calculated?
- She received 4.5 Bonus hours from the 1.5 coefficient from working on the Friday. These are not included in the overtime calculation and she is paid $45 (4.5 hours x $10/h)
- Since the holiday hours are included in the overtime calculation, we will add the 9 hours on Friday to the 36 hours from Monday – Thursday, totalling 45 hours.
- 40 hours will be regular pay $400 (40 hours * $10)
- 5 hours will be overtime, and multiplied by 1.5, giving $75 (5 hours x 1.5 x $10/h)