Concept: Overtime Payments for Flat Sum Bonuses (USA)
California calculates the rate of the bonus overtime premium for flat sum bonuses differently from the method prescribed by the federal Fair Labor Standards Act (FLSA).
You can create 2 types of flat sum bonus overtime earnings. The difference between them is how Workday displays the overtime rates on payslips. When you combine the overtime regular hours and overtime premium hours into 1 earning, Workday displays an aggregated overtime rate. Workday displays rates separately when you use separate earnings for:
- Regular overtime hours.
- Hours that earn the overtime premium rate.
Workday calculates overtime premium rates and processes flat sum bonuses when you:
- Configure Workday for the flat sum bonus functionality.
- Report regular and overtime hours by day using pay input or Workday Time Tracking.
- Report aggregated hours using pay input and align your coverage dates with an FLSA workweek.
- Enter bonus coverage dates using pay input or a one-time payment configured to use coverage dates.
Workday uses submitted payroll input or approved time blocks to calculate the flat sum bonus overtime premium. When you submit payroll input or approved time blocks in error, correct the error in the original source. Example: A worker submits a time block through Time Tracking and it's approved. However, the worker didn't actually work the time. You correct the error in Time Tracking.
Provide coverage dates. If you do, Workday calculates the flat sum bonus using California flat sum bonus rules. If you don't, when you set up the bonus as:
- A stand-alone flat sum bonus earning without FLSA configured, the bonus has no overtime premium impact.
- A combination of both FLSA and flat sum bonus, Workday adds the flat sum bonus to FLSA wages. It's added because it's a member of theFLSA Wagespay component group.
- Example: Flat Sum Bonus Calculation
- In 1 pay period, Catherine works 40 regular and 10 overtime hours, and receives a 50 USD flat sum bonus. Her regular pay rate is 20USD/hour. Her pay for the week is 1 118.75 USD, calculated as:CalculationExampleBase pay for the 40-hour weekThe regular rate x the number of regular hours.20 USD x 40 = 800 USDOvertime rateRegular rate x 1.5.20 USD x 1.5 = 30 USDOvertime payOvertime rate x number of overtime hours.30 USD x 10 = 300 USDOvertime premium rate(Flat sum bonus amount /Number of regular hours in the pay period) x 1.5.(50 USD / 40) x 1.5 = 1.875 USDOvertime premiumOvertime premium rate x number of overtime hours.1.875 USD x 10 hours = 18.75 USDPay for regular hours + Pay for overtime hours + bonus overtime premium.800 + 300 + 18.75 = 1,118.75 USD
- Overtime Earnings Impacted by a Flat Sum Bonus
- You can create 2 types of overtime earnings with impact to flat sum bonus overtime premium. The difference between them is how Workday displays the overtime rates on payslips:EarningsImpactActionCreate a combined overtime earning.The straight time of overtime and the overtime premium display as 1 aggregated rate.Modify your existing FLSA combined overtime earning.Create separate earnings for the:
- Regular time of overtime.
- Overtime premium.
The straight time of overtime and the overtime premium display as separate rates.Modify your FLSA overtime premium earning to support the flat sum bonus calculation.
- Reporting Daily Hours with Coverage Dates that Align with the FLSA Workweek
- Ideally, you report actual hours worked for each day in the FLSA workweek and align the coverage dates with the FLSA workweek. Workday calculates the bonus overtime premium based on all regular hours worked within the workweek. Workday reports the coverage dates on payslips.
- Reporting Aggregated Hours with Coverage Dates that Align with the FLSA Workweek
- If you're not able to report actual daily hours, you can report an aggregate number of hours for the workweek and align the coverage dates with the FLSA workweek. Workday calculates the bonus overtime premium based on all regular hours worked within the workweek. Workday reports the coverage dates Workday used in the calculation on payslips.
- Reporting Aggregated Hours with Coverage Dates that Don't Align with the FLSA Workweek
- When you report an aggregate number of hours for the workweek and you don't align the coverage dates with the FLSA workweek, Workday automatically:
- Extends the coverage dates to include the FLSA workweek, capturing all regular hours in the FLSA workweek.
- Calculates the bonus overtime premium.
- Applies that premium to all overtime hours in the extended period.
- Workday automatically considers all pay-component related calculations (PCRCs) on a flat sum bonus overtime earning to be aggregate when even 1 PCRC on the earning has the Aggregate check box selected.
- If you don't want Workday to extend the coverage dates, you can select theDisable FLSA Period Alignment for Flat Sum Bonus Coverage Datecheck box on theEdit Tenant Setup - Payrolltask. When you disable FLSA period alignment, Workday doesn't include hours that fall outside the coverage dates within the FLSA week in the overtime premium calculation for the bonus. When using Disable FLSA Period Alignment for Flat Sum Bonus Coverage Date feature the aggregate check box must be selected on the hours PCRC for all FLSA earnings code.
- Workday still refers to FLSA workweeks and disregards all hours that aren’t part of a full FLSA week based upon coverage dates.
- Example: You enter a flat sum bonus with coverage dates 1 - 30. You select theDisable FLSA Period Alignment for Flat Sum Bonus Coverage Datecheck box on theEdit Tenant Setup-Payrolltask. Therefore, Workday doesn't extend the coverage dates to include the hours for days outside an FLSA work period. In this case, the first and last weeks of the month aren't complete FLSA work periods. Workday ignores them and those hours aren't included in the flat sum bonus overtime premium calculation.
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- Multi-Jurisdiction Considerations
- When you have a mobile workforce with workers who move from 1 tax jurisdiction to another during a work period, Workday uses these factors to calculate which rules to apply when calculating the overtime premium:
- Gross-to-net end date.
- Coverage dates.
- Tax authority exceptions.
- When you pay a flat sum bonus for a mobile workforce, Workday uses the end date of the last gross-to-net within the coverage period to calculate the overtime premium.
- Examples:
Tax authority overrides on hours don't impact flat sum bonus overtime premium calculations. Flat sum bonus functionality is managed at the worker level. When a worker is eligible, all worked hours are considered in the overtime premium calculation, regardless of jurisdiction.Jurisdiction ChangeOngoing Multiple Work Jurisdictions (OMWJ) ConfiguredCoverage DatesCalculationCA to AZNoCoverage dates fall within the first gross-to-net.Workday calculates the bonus overtime premium using only the hours in the first subperiod.CA to AZNoGross-to-Net end date falls within the second subperiod.No flat sum bonus overtime premium.CAYesGross-to-Net end date falls within the second subperiod.California rules are used to calculate the bonus overtime premium. Workday ignores the subperiod end date for OMWJ.If a worker has a retroactive bonus, or a bonus with previous coverage dates, Workday uses the FLSA or flat sum bonus rules of the state the worker is currently in. You can pay the bonus using prior state rules. Target the bonus overtime premium dates to the prior period and override the state worktag. Example: A worker moves from CA to AZ with a gross-to-net end date falling within the second FLSA subperiod. You edit the bonus to target the coverage dates to the first subperiod. You override the state worktag to CA. Workday now calculates bonus overtime premium using flat sum bonus rules.