How to Calculate Overtime Using Automating Tools
Overtime shifts. Time and a half. Holiday pay.
It can all seem overwhelming at first, but learning how to calculate overtime isn’t a chore when you have experts like at actiTIME helping you out.
Like with anything, however, it is a learning curve. And this is especially so because there are different kinds of overtime calculations that need to be taken into account.
First, there are the simple ones. These ones you probably already know, especially if you’ve been reading some of our other posts here at actiTIME. How you need to calculate the hours totaled in a workweek. How sometimes different states have different laws, including daily overtime thresholds or circumstances that activate double-time instead of time-and-a-half. When you can use overtime pay rates and when can you give out comp time.
But those are the basics, often for employees paid by the hour. Then you have salaried employees, especially ones with occasional bonuses that impact overtime rates. Then you have sales staff whose salaries are often heavily made up of commissions — and commissions often have to be calculated every week to figure out an ever-changing overtime rate. Then you have workers who are paid by the day or by the amount of pieces produced, or ones that have two different roles (with different salaries) within the same company.
In short, while the ground rules are simple, keeping track of who’s earned what can take up a large chunk of your HR worker’s or accountant’s time. Which begs the question: what are some ways that you can automate the process? And what are some tools that might be able to help you free up more time to invest in your business?
Luckily, our experts have put together a list that answers just these questions.
Free Online Calculators
One of the first tools that you’ll be looking for will be an online calculator that has different functions to help you figure out overtime rates for different employees. There’ll be a few features you will need to look for.
First, you’ll need to think about what your multiplier is. Usually, most employees are going to be making 1.5x their usual pay rate (known as ‘time-and-a-half’), but there are certain circumstances when you’ll be needing to calculate for double-time instead. This is often dependent on what state your company is in, as places like California have additional rules for daily overtime thresholds. For instance, in that state anything over 8 hours a day counts as time-and-a-half, while anything over 12 counts as double-time. If you have a calculator that can switch between different overtime regimes, it saves your team time.
If you work with sales staff, then you’ll also be interested in calculators that can take commissions into account — this is where you’ll be looking at needing automation the most. Since time-and-a-half is based on figuring out your worker’s regular pay and then multiplying it by 1.5, you’ll have to add their weekly commissions to their base pay and then multiply it. Here’s an example of what that would look like:
And this kind of calculation will have to be done every week — finding ways to automate this will go a long way to optimizing your HR department.
Similar calculations will have to be done when including benefits, including for salaried employees, and having a calculator to do that will also be a great help. Some brands that offer tools like this include Jouroff and Jibble. Many of these are generic clock and tracking apps, but our own actiTIME calculator, on the other hand, was designed with overtime practices in mind. We also include a handy tool for figuring out if certain positions are overtime-exempt (read more about that here), which is another question that can easily confuse HR staff members.
While specified overtime trackers are always great, investing in a good set of general time trackers is always a good move.
The benefit of comprehensive time trackers, especially with learning how to calculate overtime, is that it integrates a whole number of streams at once. You’ll be able to track particular projects as well as employees and create data that your top management will be able to look at in just a glance. In addition to tracking overtime, you’ll be tracking regular hours and you’ll be able to point out patterns. Like what times of the year people are working more or less, or what kinds of projects (launches, for example) take up a lot of working hours.
When you connect these trackers to apps that automatically do the tracking, it frees up your time from the banal task of inputting in all those numbers by hand. And if you train your employees to be tracking their overtime as well, then all that data will be streaming into one centralized place. You’ll also be able to create trackers dedicated to certain types of tasks (calls, meetings, etc) so that you’ll have a better birds-eye-view of your operations. That, and you’ll see just what tasks are stretching longer into overtime hours.
These can be done using tools that are already integrated into popular software, like Intuit QuickBooks, iFlow or CakeHR by Sage. Of course, our time tracking software at actiTIME does all this and more, supporting additional features like visual work boards and customizable interfaces.
When dealing with your employees, their hourly shifts and their overtime record, it pays to get it right. And we at actiTIME have your back, and so we’ve set up our free online trial so you can experience HR freedom for yourself and get back to doing what you do best: thinking about your business and your employees.