Title: Straight Time Overtime for Salaried Employees
Some companies have a policy to pay salaried employees for all hours worked, even hours above the standard eight hours in a business day. This is sometimes called Straight Time Overtime (STOT) or Extended Work Week (EWW). The salaried employee is paid their regular period salary, plus an hourly rate for each hour over eight hours in a day. This policy can vary in that it may depend on what type of work is eligible for the additional pay. For example, a company may require that additional hourly pay may only be earned on billable client hours. In Unanet, rules such as these may be enforced with a validation stored procedure (VSP).
These straight time overtime situations are sometimes of a defined duration and/or in support of special projects. They may also pertain to periods when contract work demands exceed current staffing, yet do not warrant increasing staff due to the uncertainty of the continuation of the work.
To accommodate this need, Unanet provides an Additional Pay (Undiluted) option when setting up a pay code. When entering hours beyond 40 hours in the week, exempt employees enter an additional row for the extra hours using a Pay Code that has been set up with the Additional Pay (Undiluted) option.
IMPORTANT NOTE: MOST COMPANIES PAY SALARIED EXEMPT EMPLOYEES ONLY THEIR SALARIED PAY, WITHOUT ANY ADDITIONAL HOURLY PAY. THIS INFORMATION IS FOR COMPANIES WHO DO PAY MORE THAN SALARY FOR SALARIED EMPLOYEES.
THIS INFORMATION IS NOT FOR MOST COMPANIES.
What’s covered in this document:
- Dilution should be turned on in your property settings (Admin > Properties > Time > General).
- You must set up two Pay Codes as follows in Admin > Setup > Pay Codes. Salaried employees will charge their time as indicated in the table below.
|Type of hours charged in timesheet||Admin > Setup > Pay Codes - Exempt Usage||Admin > Setup > Pay Codes - Label example|
|Salaried hours up to 40 hrs in a week||"Standard Pay (Diluted)"||"RT" or "1" or any preferred label|
|Hours over 40 which will be paid above the salary||"Additional Pay (Undiluted)"||"RT1" or "STOT" or any preferred label|
How time will be charged and salaried pay/cost diluted when both Pay Codes are used in a weekly timesheet
Salaried person normally works 40 hours at $77.25 per hour, and gets paid $3090/week.
Approver requests the person to work 50 hours, with the extra 10 hours paid on top of the person's weekly salary.
Person specifies the additional 10 hours by adding a row to the timesheet and putting those hours against the STOT Pay Code.
Approver approves the time.
Person receives $3862.50 instead of the normal $3090 for the week.
The screenshot below shows the 50 hours reported on two rows with the additional hours reported to the "STOT" pay code (set up in Pay Code Setup as "Additional Pay (Undiluted)").
The exempt person is paid additionally and costed for the extra 10 hours at the person’s hourly rate.
What happens when all hours are charged to the regular pay code in a weekly timesheet
The screenshot below shows the 50 hours reported on one row of the timesheet with one pay code (RT), which is incorrect if additional pay is desired.
The exempt person is paid and costed at their normal weekly salary since all hours were diluted. This would not be correct if additional pay is desired.
A semi-monthly or monthly period contains a different number of business hours depending on how the weekdays fall in the various months. For example, the end of February could contain 80 business hours while the end of August could contain 96 business hours. A salaried exempt employee typically receives the same salary for each period no matter whether it is a longer or shorter period. Using Unanet dilution, the salaried person's cost rate is adjusted for the regular hours charged to a diluted pay code in the period. This occurs in order to calculate a correct semi-monthly (annual salary divided by 24 periods) or monthly salary (annual salary divided by 12 periods).
In the event that a company's policy is to pay a salaried employee for hours worked above the business hours in the period (e.g., 85 hours in an 80-hour period, or 97 hours in a 96-hour period), the extra paid hours will need to be identified differently on the timesheet via a separate Pay Code.
A time submittal validation stored procedure (VSP) can be used to look at a given period's business hours (80, 88, 96, etc.) and require that any hours worked above that value are charged to the undiluted pay code.
How time will be charged and salaried pay/cost diluted when both Pay Codes are used in a semi-monthly timesheet
Company XYZ pays its salaried employees for all hours worked. If a semi-monthly period has 96 hours, then the salaried employee receives their regular salary for that period, plus any hours worked above 96 hours at an additional hourly rate.
The employee must charge 96 hours to the diluted pay code "RT" and then charge 4 hours to the undiluted pay code "STOT."
The screenshot below shows the report for the semi-monthly period with 96 hours of regular time. Note that the employee is paid $7,725 which is the sum of:
- The semi-monthly salary for 96 hours in this case (although the person would be paid the same for an 80-hour period or a 88-hour period) = $7,416.
- 4 additional hours at the $77.25 rate on the STOT Pay Code = $309.
- Total for 100 hours = $7,725.
What happens when all hours are charged to the regular pay code in a semi-monthly timesheet
The screenshot below shows all hours reported on one row of the timesheet with one pay code, which is incorrect if additional pay is desired.
The person's salary should be $7,416 plus any additional pay if authorized by the company. You can see below that when charging all time to one diluted Pay Code, the cost of additional hours are diluted, which is incorrect if additional pay is desired. The correction would be to move the 4 additional hours to the Undiluted Pay Code (see above).