Setup Considerations: Flat Sum Bonuses (USA)

You can use this topic to help make decisions when planning your configuration and use of Workday flat sum bonus functionality. It explains:

Why to set it up.

How it fits into the rest of Workday.

Downstream impacts and cross-product interactions.

Security requirements and business process configurations.

Questions and limitations to consider before implementation.

Refer to detailed task instructions for full configuration details.

What It Is

Workday developed flat sum bonus functionality in response to a California Supreme Court ruling (Alvarado v. Dart Container Corporation
) which addressed the method employers in California should use to calculate the bonus overtime premium when a worker receives a flat sum bonus. The method outlined by the California Supreme Court is different from the method used to calculate bonus overtime premium under the federal Fair Labor Standards Act (FLSA).

If your state doesn't require special calculation of flat sum bonus overtime premiums, you don't need to set up this functionality. You would continue to use the existing FLSA functionality.

Business Benefits

Configuration of flat sum bonus functionality helps you be compliant with California overtime rules for hourly workers.

Use Cases

To reduce compliance risk and manual entries, you can set up a flat sum bonus earning to use special state rules.

Questions to Consider

Question	Considerations
Have you implemented Workday FLSA functionality?	Flat sum bonus functionality requires FLSA functionality. That is, the calculation uses FLSA work period calendar rules and work period calendars. If you have an existing FLSA earnings code, you can update the earning to include flat sum bonus. Workday then looks at the employee's work state to determine whether to pay the bonus overtime premium using FLSA or flat sum bonus rules.
How do your employees report overtime hours?	You can report regular and overtime hours for a flat sum bonus either by: Day using pay input or Workday Time Tracking. Week by aggregating hours and aligning your coverage dates with an FLSA workweek. These 2 ways are the only ways to be compliant.

Recommendations

Create separate earnings for regular time and overtime hours. This configuration enables you to display straight time overtime and overtime premium as separate rates in pay results.

When you need to update an flat sum bonus pay component after you've completed your payroll results; Workday recommends that you create a new effective-dated snapshot and:

Don't edit the existing effective-dated snapshot for the flat sum bonus earning.

Don't add or remove the non-effective dated flat sum bonus pay component groups for the earning.

Requirements

Either Workday Time Tracking or a third-party time tracking application that has the ability to calculate period-based overtime.

Pay input must be one-time, not ongoing, and include start and end dates.

A flat sum bonus entered by pay input must have a single direct amount entry. Don't enter a value for any PCRC (except for the Workday-owned Net for Gross-Up PCRC, where applicable). The entry of a PCRC causes the input to revert and processes as a standard earning without any flat sum bonus-specific functionality.

To calculate flat sum bonus overtime, you must configure:

FLSA work period calendar rules.

FLSA work period calendars.

Configure earnings to support the flat sum bonus calculation.

Limitations

The Workday flat sum bonus overtime functionality:

Works going forward after setup. You can't run retro on a period before it was set up.

Is for hourly workers only.

Only validates that the worker has a flat sum bonus and has overtime. It doesn't validate whether a worker is exempt or nonexempt.

Doesn't support adjusting regular hours on an on-demand payment for a previously paid flat sum bonus. Adjusting regular hours won't create an overtime adjustment to the overtime premium caused by the flat sum bonus.

Requires you to complete on cycle pay results before an on-demand additional payment for a flat sum bonus for the same period can resolve. A flat sum bonus paid as on demand additional only resolves the overtime premium for completed payroll results.

Doesn't count paid time off entered through Absence Management as worked hours.

Doesn't support Tax Location Mapping (TLM) or hours adjusted by TLM.

Doesn't support the automatic adjustment of overtime premium caused by a previously paid flat sum bonus when regular hours are subsequently added or adjusted within its coverage period.

The Workday flat sum bonus earnings code:

Can't be future-dated.

Doesn't enable you to pay a Flat Sum Bonus through Workday Time Tracking.

Requires you to pay using pay input or one-time payments.

Doesn't prorate.

Workday doesn't support this use case:

In pay period 1, you pay the worker regular and overtime hours in an on-cycle payment. You run and complete payroll.

In pay period 2, you pay the worker for the regular and overtime hours worked. You include a flat sum bonus with coverage dates that cover pay periods 1 and 2. You run and complete payroll.

You use pay input to enter additional overtime hours for pay period 1. You run and complete this payment as a prior period on-demand additional payment.

Since you paid the flat sum bonus in pay period 2, Workday doesn't adjust the overtime premium for pay period 1.

Tenant Setup

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 overtime premium.

Applies that premium to all overtime hours in the extended period.

If you don't want Workday to extend the coverage dates, you can select the

Disable FLSA Period Alignment for Flat Sum Bonus Coverage Date

check box on the

Edit Tenant Setup - Payroll

task. When you disable FLSA period alignment, Workday:

Still refers to FLSA workweeks.

Disregards all hours that aren't part of a full FLSA week based upon coverage dates.

In the overtime premium calculation for the bonus, Workday doesn't include hours that fall outside the coverage dates that are within the FLSA week.

Security

Domain	Considerations
Process: Run Batch Calculations in the Core Payroll functional area.	Users secured to this domain can view and process payroll batch calculations.
Set Up: Payroll (Calculations - Payroll Specific) in the Core Payroll functional area.	Users secured to this domain can create and modify earnings and deductions.
Set Up: Payroll (FLSA) - USA in the USA Payroll functional area.	Users secured to this domain can create and modify FLSA configuration and earnings.

Business Processes

No impact.

Reporting

Report	Considerations
FLSA Calendar Changes by Worker	Use this report to review workers who changed FLSA calendars for completed or in-progress pay periods by: FLSA Calendar as of Period End Date. FLSA Calendar as of Period Start Date. Worker ID number. Worker name.
FLSA Processing Status for Group of Workers	Use this report before running payroll to verify settings. It indicates whether the period is in sync with the FLSA work period. Use it after processing payroll to view results and verify the status of any worker.
Payroll Register	Use this report to review FLSA payroll results data by subperiod dates.
Pay Calculation Results for Group of Workers	Use this report to review FLSA payroll results data by subperiod dates.
View FLSA Work Period Calendar Rules	Use this report to review FLSA rules for payroll processing, their conditions, and the calendars that use them.
View FLSA Work Period Calendar	Use this report to review work periods set up for an FLSA calendar.

Integrations

No impact.

Connections and Touchpoints

Workday offers a Touchpoints Kit with resources to help you understand configuration relationships in your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.