Setup Considerations: Payroll Processing for the Fair Labor Standards Act (FLSA)
You can use this topic to help make decisions when planning your configuration and use of FLSA. 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
When configured, Workday processes payroll in compliance with the Fair Labor Standards Act (FLSA) to pay employees at the required rate for overtime hours. Example: Nonexempt employees who work more than 40 hours in a week must receive overtime pay at the rate of 1.5 times their regular rate of pay.
There are times when an employee receives additional pay for a work period, such as a bonus. You enter that bonus as pay input and provide coverage dates. The bonus effectively adds to the hourly pay rate used to calculate the overtime premium. Workday can automatically:
- Adjust the FLSA regular rate on each FLSA work period impacted by the bonus.
- Recalculate any overtime premium.
- Pay the difference.
Workday FLSA payroll processing enables:
- FLSA work periods that cross pay periods.
- Manual and on-demand payroll results to accumulate by FLSA work period.
- Retro processing of FLSA eligible bonuses.
Business Benefits
Workday FLSA enables you to:
- Spend less time manually calculating FLSA rates.
- Increase the accuracy of FLSA processing.
- Reduce the need for corrections.
Use Cases
When configured, Workday calculates FLSA for these work period types:
Work Period Durations | Employees |
|---|---|
7-Day | Workers on a standard 40-hour, 7-day workweek. |
14-Day | Healthcare workers on a standard 80-hour, 14-day workweek. |
7 Day to 28 Day | Public safety workers, such as police and fire, whose workweeks can range from 7 to 28 days. Each workweek length has a different number of hours and a different overtime threshold.
This work period type requires you to use either Workday Time Tracking or a third-party time tracking application. It requires the ability to calculate period-based overtime. |
Questions to Consider
Questions | Considerations |
|---|---|
Is your industry subject to FLSA rules for a standard 7-day, 40-hour workweek? | You can use the Workday-delivered work period type Standard 7-day Workweek . When the employee submits overtime, Workday calculates overtime based on work periods that are 7 days long. Example: An employee reports 40 regular hours and 7 overtime hours. Workday calculates 7 hours of overtime premium based on FLSA overtime rules and processes payroll accordingly. |
Is your industry healthcare and subject to the FLSA 8/80 rule? | Use the Workday-delivered Standard 14-day Workweek . When the employee submits overtime, Workday calculates the overtime based on a 14-day work period. Example: A healthcare worker works 56 hours in the first week and 27 hours in the second week, for a total of 83 hours. Workday calculates 3 hours of overtime premium and processes payroll accordingly. |
Are you in the public safety industry, such as police or fire, where workweeks range from 7 days to 28 days? | When the employee submits overtime, Workday references tables that contain the statutory overtime thresholds for workweeks of each duration. Workday then calculates overtime and processes payroll accordingly.
Example: By regulation, firefighters working a 21-day workweek have a 159-hour statutory threshold. Police officers working a 21-day workweek have a 128-hour statutory threshold. Workday references the threshold for the 21-day workweek, calculates overtime for hours worked over 128, and processes payroll accordingly. |
Recommendations
Set up your time tracking application to report regular and overtime hours. Example: When an employee works 48 hours in a workweek, your time tracking application reports 40 regular hours and 8 hours of overtime.
On your annual end-of-year checklist, ensure that you create FLSA work period calendars for the upcoming year.
When there's a midperiod pay group change, and you add a pay input with coverage dates that includes both pay groups; you must complete the on-cycle and pay the bonus on an off-cycle to the worker's current position and pay group.
When determining eligibility for a related calculation it's best practice to use the worker eligibility or a use a specific compensation element as opposed to adding additional complexity to the related calculation. This is regardless if your calculation includes numeric or non-numeric fields.
Process payroll in a sequential date order based on the start and end dates of the pay period. Use coverage start and end date to process a bonus (current or prior period). This ensures that the bonus is allocated to the appropriate FLSA subperiods and creates any premium adjustment differences if applicable. Example: As a payroll administrator, you:
- Run and complete a pay calculation for a worker for the pay period 10/02/2022 - 10/15/2022.
- Pay an annual bonus in between your next on-cycle for the work period 06/13/2021 - 06/11/2022.
When you reverse a previously completed payroll, manually remove the difference in the current period. Example: You can update the hours via time block when there's a correction to the hours for the worker.
When you need to update an FLSA 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 FLSA earning.
- Don't add or remove the non-effective dated FLSA pay component groups for the earning.
Automate updating your FLSA work period calendars by using the
Schedule Work Period Calendar Update
task. Requirements
For public safety overtime calculations, you must have either Workday Time Tracking or a third-party time tracking application. The time tracking application must have the ability to calculate period-based overtime.
Completed retro must have a target result. If you don’t, it negatively impacts your FLSA calculation for that period. You can identify workers without a target result using the
Retro Calculation Processing Report
and selecting the Display Only Workers with Unpulled Retro Results
check box.Limitations
Workday only calculates coverage dates back to the date that you enabled FLSA adjustments.
When a pay period spans multiple FLSA periods, ongoing gross-up amounts won't create FLSA subperiods. Workday pays the full grossed-up amount in the first FLSA period.
When creating an FLSA bonus earning:
- Directly reference the amount entered in the pay input or one-time payment as amount based and not rate based with percentages.
- You can't use a related calculation or a pay-component related calculation.
Workday doesn't support FLSA for workers who have an international assignment position in the U.S.
Buy Time Off shouldn't be considered FLSA eligible.
The
Schedule Work Period Calendar Update
task only flags FLSA work period calendars set to expire within 90 days of the current date. Example: If the current date is 2025-06-01 and your FLSA calendar is configured through 2026-01-01, the task doesn’t proactively notify you about the expiring calendar.Tenant Setup
No impact.
Security
Domains | Considerations |
|---|---|
Process: Run Batch Calculations (Payroll Calculation) domain in the Core Payroll functional area. | Enables users to view and process batch calculations for payroll. |
Set Up: Payroll (Calculations - Payroll Specific) domain in the Core Payroll functional area. | Enables users to create and modify earnings and deductions. |
Set Up: Payroll (FLSA) - USA domain in the USA Payroll functional area. | Enables users to create and modify FLSA configuration and earnings. |
Business Processes
No impact.
Reporting
Reports | Considerations |
|---|---|
FLSA Calendar Changes by Worker
| Use this report to see workers who changed FLSA calendars for completed or in-progress pay periods by:
|
FLSA Processing Status for Group of Workers
| Use this report before running payroll to ensure that settings are correct. 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 data by subperiod dates. |
Pay Calculation Results for Group of Workers
| Use this report to review data by subperiod dates. |
View FLSA Work Period Calendar
| Use this report to review work periods setup for an FLSA calendar. |
View FLSA Work Period Calendar Rules
| Use this report to review FLSA rules for payroll processing, their conditions, and the calendars that use them. |
Integrations
No impact.
Connections and Touchpoints
Touchpoints | Considerations |
|---|---|
Compensation | Compensation plans tie to compensation elements, which in turn tie to payroll earnings. Without proper configuration, compensation amounts won't flow to payroll.
Compensation plans, with their respective amounts, are associated with employees. This information passes to payroll for processing. Make sure that you configure eligibility rules for the plans correctly. Example: You can select the Enable Coverage Dates check box on One-Time Payment Plans . |
Time Tracking | The 7-day to 28-day work period type requires you to use either:
|
Retro Differences from Current Tax Authority Change | When Workday forwards retroactive pay including overtime premiums in an on-demand payment with the tax authorities from the source period; you can pay subsequent overtime premium adjustments in the on-cycle payroll using current period tax authorities. |
Payroll Processing Positions | Configuring the payroll processing position for multiple job workers:
|
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.