How Overtime Pay payroll items work
How QuickBooks calculates the Overtime Pay payroll item's rate
The Overtime Pay payroll item is a multiplier. setting up payroll, overtime, how the Overtime Payroll item works, payroll items, overtime, . It does not necessarily have
a rate of its own. setting up payroll, overtime, how the Overtime Payroll item works, payroll items, overtime, . Instead, QuickBooks bases its rate on the value of the
multiplier you chose when you created the payroll item multiplied by the rate
for the Regular Pay payroll item above it in the employee record or
paycheck.
Example
Let's say time-and-a-half is an overtime pay payroll item. setting up payroll, overtime, how the Overtime Payroll item works, payroll items, overtime, . The
multiplier you chose when you created the payroll item is 1.50.
When you tab from the Item Name column to the Rate column, QuickBooks
automatically calculates the rate for the Time-and-a-Half payroll item by
multiplying 1.50 times the rate for the Regular Pay payroll item above it and
gives it a rate of 30.00. setting up payroll, overtime, how the Overtime Payroll item works, payroll items, overtime, . (1.50 x 20.00 = 30.00)
Entering Overtime Pay payroll items in the correct order
When used as a multiplier, an Overtime Pay payroll item's rate is
ultimately set on the paycheck. setting up payroll, overtime, how the Overtime Payroll item works, payroll items, overtime, . It must follow the Regular Pay payroll item on
which it is based in order for QuickBooks to calculate the appropriate overtime
rate. setting up payroll, overtime, how the Overtime Payroll item works, payroll items, overtime, . The best way to ensure this is to set up your payroll items in the
correct order on the employee record.
If an employee has two Regular Pay payroll items
If an employee has two Regular Pay payroll items, you must create two
Overtime Pay payroll items and make sure that they follow the correct Regular
Pay payroll item in the Earnings table on the employee record and on the
employee's paychecks.
Example
Let's say you have a catering business and you pay different rates for
setup/cleanup than for serving. setting up payroll, overtime, how the Overtime Payroll item works, payroll items, overtime, . Let's say you have an employee show
performs both tasks and also earns time-and-a-half overtime for each kind of
task. setting up payroll, overtime, how the Overtime Payroll item works, payroll items, overtime, . For example, at an event one day, they work setup/cleanup and earn both
regular hours and overtime. setting up payroll, overtime, how the Overtime Payroll item works, payroll items, overtime, . The next day, the employee does the serving and
earns both regular hours and overtime.
In this case, you need:
Two regular pay payroll items (Regular Pay-Setup, Cleanup and
Regular Pay-Serving)
Two overtime pay payroll items (Overtime-Setup, Cleanup and Overtime
Pay-Serving) whose multiplier you set to 1.5 (for time-and-a-half)
To make sure that each overtime item follows the correct regular pay item in
the Earnings table on the employee's paycheck
The Earnings table on the paycheck should look like this:
Notice how in the Rate column, each Overtime Pay payroll item picks up the
correct rate from the Regular Pay payroll item above it. setting up payroll, overtime, how the Overtime Payroll item works, payroll items, overtime, . The overtime rate for
setup/cleanup is $15.00, or 1.5 x $10, where $10 is the regular pay rate for
setup/cleanup. setting up payroll, overtime, how the Overtime Payroll item works, payroll items, overtime, . Similarly, the overtime rate for serving is $18.75, or 1.5 x
$12.50, where $12.50 is the regular pay rate for serving.
Transferring time from timesheets
When an employee has two Regular Pay and two Overtime Pay payroll items, and
you transfer their time to their timesheets to their paychecks, you should
always review their paychecks to make sure the payroll items are appearing in
the correct order. setting up payroll, overtime, how the Overtime Payroll item works, payroll items, overtime, . If they are not, re-order them so that the Overtime Pay
payroll items follow their corresponding Regular Pay payroll items.
Specifying a fixed rate
If you prefer, you can specify a fixed rate for an Overtime Pay payroll item
by entering your own rate on either the employee record or the paycheck.
QuickBooks will use that as the rate.
Exceptions
In the following situations, QuickBooks will override the specified rate for
an overtime pay payroll item and recalculate it in relation to the regular pay
payroll item above it:
You change the rate of the regular pay payroll item above the overtime pay
payroll item
You insert a new regular pay payroll item directly above the overtime pay
payroll item
You delete the regular pay payroll item directly above the Overtime Pay
payroll item
You change the name of a regular pay payroll item directly above the
Overtime Pay payroll item
Note: If you use the Workers Compensation feature, we recommend
recommend that you do not enter a fixed rate for overtime pay payroll items because
QuickBooks will not be able to back out
overtime premiums if
you do.
See also