Justworks supports automated overtime calculations for hours worked in all 50 states. Justworks’ overtime calculations do not take into consideration local wage payment laws, shift overtime, industry-specific requirements, or additional pay requirements. Customers should continue to supplement the Justworks system as necessary to comply with these requirements.
Paying Overtime for a Single Rate
Only Admins with “Make payments” or “Manage all Timecards” permissions or Managers with “Manage all Timecards” permission can add overtime onto the Timecard. Employees are unable to add overtime.
If your Timecard employees earn a single hourly rate, you can simply click “Calculate overtime” on each Timecard at the end of the pay period, and Justworks will show the total hours worked and then break down hours into Regular and Overtime hours.. Overtime hours will be based on the federal FLSA and state overtime requirements based on your employee’s current work location in Justworks.
After you calculate overtime, review the hours and make any necessary changes. If you need to make a change to regular hours after you have clicked “Calculate overtime”, you will also need to manually adjust the overtime hours as necessary. As the final step, click Approve for each Timecard. Before you click “Approve”, review the Timecard to make sure that the wage payments are accurate and complete. In addition to any specific requirements applicable to your business, here are some examples of what you should review:
- All hours worked have been accurately reported
- Meal periods have been accurately reported
- Applicable wage rates, including local wage requirements, are applied; and
- Overtime wage calculations are accurate and complete, including the calculations that Justworks has automated for you, and any additional calculations that may be applicable to your business, such as shift overtime, industry-specific requirements, overtime wage calculations include any other wage payments (e.g., piece-rate pay or shift differentials)
Important notes to keep in mind:
- If you use the “Add another row” option to add an additional rate on an employee’s Timecard, read the section below “Paying Overtime for Multiple Rates”.
- If you use the Import Hours Spreadsheet because you use an external Time and Attendance solution, you will not see the “Calculate overtime” button since overtime hours would have already been uploaded to Justworks based on the data on your spreadsheet.
- Justworks’ system does not count PTO hours towards the overtime thresholds, consistent with FLSA requirements.
For more resources on federal and state overtime laws, visit our compliance starter guides.
Some states have state overtime laws, in addition to the federal FLSA overtime law. Below are the five current states with these overtime laws.
Alaska and Nevada
Alaska and Nevada require daily overtime to be paid when the hours worked exceed 8 hours in a given day. Remember that for any hours in excess of 40 hours that have not received overtime per state rules, the FLSA overtime wage payment laws (and similar state laws) will apply. You should review the calculations to ensure they comply with wage payment requirements applicable to your situation.
Let’s consider Pamela’s Timecard:
Once we click on “Calculate overtime”, Justworks will display total hours worked and then a breakdown of hours based on the rate type. We can see total hours worked, and then a break down of Regular and Overtime, each showcasing the number of hours or minutes worked and the rate at which they will be paid.:
California law requires employers to pay employees overtime, unless otherwise exempt, when they work more than eight hours in a workday or in certain situations described below work a seventh consecutive day in a workweek. An employer is required to pay:
- One and one-half times (1.5x) the employee's regular rate of pay for all hours worked in excess of 8 hours up to and including 12 hours in any workday, and for the first 8 hours worked on the 7th consecutive day of work in a workweek; and
- Double (2.0x) the employee's regular rate of pay for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of 8 on the 7th consecutive day of work in a workweek.
- 7th consecutive day overtime must be paid when the employee works 6 hours or more on any of the prior 6 days in the workweek OR works 30 hours or more during the prior 6 days of the workweek.
Finally, California also requires that overtime be paid after 40 hours in a workweek. For example, if an employee works 8 hours from Monday through Friday, and 4 hours on Saturday, this would result in 4 hours of overtime on Saturday.
Justworks provides these calculations for you, so you only need to click on “Calculate overtime” for the Timecard to calculate overtime and then break down the hours into their corresponding rates according to California state law. You should review the calculations to ensure they comply with wage payment requirements applicable to your situation.
In this example, once you click on “Calculate overtime”, Justworks will show the total hours worked and then break down hours into Regular and Overtime hours.
- The employee did not work 7 consecutive days, so the 7th consecutive day rule did not apply here.
- The employee worked 15 min above 12 hours on Monday, so this time is paid at a double-time rate.
- The employee worked more than 8 hours on Monday, Tuesday, and Wednesday, so all hours above 8 hours and under 12 hours on each of those days are shifted to per the daily overtime rule.
Colorado requires daily overtime to be paid when the hours worked exceed 12 hours in a given day. Remember that for any hours in excess of 40 hours that have not received overtime per state rules, the FLSA overtime wage payment laws (and similar state laws) will apply. You should review the calculations to ensure they comply with wage payment requirements applicable to your situation.
Let’s consider Laura’s Timecard:
Once we click on “Calculate overtime”, Justworks will show the total hours worked and then break down hours into Regular and Overtime hours.
Kentucky requires employers to pay overtime when employees work seven consecutive days in the workweek. Kentucky’s “seventh-day” law applies when an employee
(i) works all seven days in a single workweek and
(ii) works more than 40 hours in that workweek.
When those two conditions are met, the employee is entitled to time and a half for all hours they work on the seventh day. This is true even if the employee has not yet worked 40 hours in that week when they begin work on the seventh day. You should review the calculations to ensure they comply with wage payment requirements applicable to your situation
For example, let’s look at Kimberly’s Timecard:
Once we click on “Calculate overtime”, Justworks will shift the hours from Regular into Overtime as follows:
As always, you are responsible for ensuring that work time is accurately reported and all earned wages are paid, so be sure to review your reports of hours worked for accuracy and review the wage payment calculations, including overtime and double time calculations to ensure they comply with wage payment requirements applicable to your situations.
Justworks can help you calculate overtime when an employee earns multiple hourly rates during a single pay period. In Justworks, you can choose how to calculate overtime for workers with multiple pay rates, using the weighted average or the highest rate, so let’s dig in!
After you click “Calculate overtime” on each Timecard at the end of the pay period, all hours originally recorded on the Timecard will remain in the “Hours worked” row, and then those hours will be broken down into a separate Regular row and Overtime row. You’ll notice that the overtime calculation used is based on a x0.5 multiplier instead of the x1.5 used when an employee earns a single hourly rate. Using the x.0.5 multiplier will allow us to automate overtime calculations for customers who pay multiple hourly rates in the same workweek.
You can choose to calculate overtime using the weighted average, or you can choose to calculate overtime using the highest hourly rate worked on that Timecard. Select your preferred overtime calculation by using the drop-down menu for each Timecard. The default overtime calculation used is the “weighted average”. Let’s take a look at both!
When a Timecard includes multiple pay rates, Justworks will default to paying overtime at the weighted average of hours worked at those respective rates. The weighted average calculation first calculates the average hourly rate by multiplying each rate by the number of hours worked at that rate, add the totals together and divide by the total hours worked then calculates overtime. It’s easier than having to calculate the overtime pay for each rate separately and then add everything up.
Here is a step-by-step breakdown of the weighted average:
- Step 1: Calculate the regular compensation by multiplying each hourly rate by the total number of hours worked at that rate (overtime hours included) then add these amounts together.
- Step 2: Calculate the weighted average overtime rate by dividing your regular pay by the total hours worked in the pay period (overtime hours included).
- Step 3: Calculate the additional overtime premium pay by multiplying the weighted average overtime rate by .5 (for regular overtime) or 1 (for double overtime), and then multiplying this rate by the amount of overtime hours workedt.
- Step 4: Add the regular pay to the overtime premium pay to get the total gross wages for that pay period.
Let’s look at the below example for how the weighted average calculation is done in Justworks’’ platform when multiple hourly rates are present on a Timecard.
In this example, Nick is a non-exempt employee working in New York, where there are no state overtime laws and is only subject to the federal overtime rule. Over the course of a bi-weekly pay period, Nick worked 45 hours in Week 1 as follows::
- Nick worked 20 regular hours at $20 per hour and three hours of overtime as a project manager.
- He also worked 20 regular hours at $30 per hour and two hours of overtime as product support.
To calculate the overtime premium using the weighted average, you will first want to calculate Nick’s regular earnings for the week divided by hours worked during the pay period and multiply by half. Like this:
- Step 1: Calculate Nick’s regular pay by:
- multiply 20 hours at $20 per hour to get $400
- then multiply 20 hours by $30 per hour to get $600
- for overtime earnings, multiply three hours by $20 and multiply two hours by $30, added together results in $120
- then add those two together to get your total regular earnings of $1120
- Step 2: Calculate Nick’s overtime premium rate by:
- take Nick’s regular earnings of $1120 and divide by the total number of hours worked during that pay period which is 45 hours to get $24.89
- then you'll take that total of $24.89 and divide by half which will bring you to your overtime premium rate of $12.45 per hour.
- Step 3: Calculate Nick’s overtime premium pay by:
- multiply total overtime hours he worked, which is 5, by $12.45 per hour to get the total overtime premium earnings of $62.25
- Step 4: Add Nick’s regular pay to his overtime premium pay for that week by:
- adding together $1120 of regular earnings and $62.25 of overtime premium earnings to get $1182.25 the total gross wages for that pay period.
Please see below for an example of this weighted average in action. We can see that on Natalie’s timecard below, they worked two different rates in a week with some overtime and the calculations for overtime based on the weighted average have been calculated automatically once you hit the “Calculate Overtime” link.
If you prefer to use the “highest rate” overtime calculation instead of the “weighted average”, click the dropdown menu at the bottom of each Timecard you want to use this calculation for. The highest rate calculation Justworks calculates overtime based on the highest hourly rate during that pay period.
Let’s take a look at how to calculate overtime premium with multiple pay rates using the “highest rate” calculation method.
In this example, over the course of a workweek, Nick worked 55 hours:
- Nick worked 30 regular hours at $60 per hour as a project manager
- Nick also worked 20 regular hours at $20 per hour and five overtime hours as product support
To calculate Nick’s overtime premium rate using the highest rate calculation, we’d follow these steps:
- Step 1: Calculate Nick’s regular (non-overtime) pay by:
- multiply 30 hours by $60 per hour to get $1800
- then, multiply 20 hours by $20 per hour to get $400
- add these together to get a total of $2200
- Step 2: Calculate Nick’s overtime premium rate by:
- multiply Nick’s highest hourly rate of $60 per hour times half (0.5) to get $30 per hour
- Step 3: Calculate Nick’s overtime premium pay by:
- Multiply Nick’s five overtime hours by $60 to get $300 for his overtime earnings
- multiply the five overtime hours he worked times our Overtime Premium rate of $30 per hour giving us $150 as his total for overtime premium earnings.
- Add these together to get a total of $450
- Step 4: Add Nick’s total pay to his overtime premium pay for that week by:
- adding $2200 total regular and overtime pay to $450 overtime premium earnings to get a total gross wages of $2650
Let’s use the same example from above in the weighted average section to take a look at the highest rate calculation for Erin’s Timecard. We can now see that if we select “Highest Rate” from the overtime premium calculation dropdown menu, the rates for overtime premiums are now based on the highest rate Erin worked during that week.
Important note to keep in mind:
When an employee earns a single rate in the first week of a bi-weekly pay period, and then earns multiple rates in the second week, Justworks will calculate overtime for the first week using 1.5x the single rate and calculate overtime for the second week using 0.5x the multiple rate.
After you calculate overtime, review the hours and make any necessary changes. If you need to make a change to regular hours after you have clicked “Calculate overtime”, you will also need to manually adjust the overtime hours as necessary. As the final step, click Approve for each Timecard.
Justworks now supports automatic overtime calculations for your non-exempt employees and makes it easier for you to keep track of your team’s payroll. When you visit the Timecards page in Justworks, simply click the ‘Timecards Settings’ button on the upper right-hand side and change your overtime calculations settings to “automatic.” This update will help you save time and reduce costly admin errors each pay period. For more information about our Timecard Settings page, head over to the Paying Employees Via Timecards page.
Note that the automatic overtime calculations do not take into consideration local wage payment laws, shift overtime, or industry-specific requirements, or other additional pay requirements. Customers should continue to supplement the Justworks system as necessary to comply with these requirements. Before you click “Approve”, review the Timecard to make sure that the wage payments are accurate and complete.
Automatic overtime calculations automate and simplify the process of calculating overtime on Justworks Timecards by applying all the same overtime rules we apply when you click the “Calculate Overtime” link on Timecards. When the Automatic Overtime setting is turned on, Justworks will automatically calculate and recalculate your employees overtime as you enter hours into their Timecard.
Once you visit the Timecard Settings page and turn Automatic Overtime on, you will see a notification on each timecard to remind you the setting is on or off as shown below.
Let’s start with a blank Timecard. In this example, this employee has worked 40 hours each week and Automatic Overtime calculations are set to on. Let’s take a look at what that Timecard looks like before any more hours are added.
As we can see above, there is no Calculate Overtime option on the right side of each week to calculate overtime hours based on the hours worked over the course of the period when Automatic Overtime calculations are on. Since this employee reported 40 hours worked for each workweek (and not more than 8 work hours on any day) , there isn’t any overtime to calculate yet. Let’s add some more hours worked and see how Justworks calculates overtime for you.
Once we add some more hours to Monday in the second week of this Timecard, Justworks will automatically calculate overtime and wages owed based on the applicable overtime laws. In this example we have 10 hours on Monday with a California employee which equates to two hours of overtime. As we can see below, the Justworks platform calculated overtime, the wages owed, and updated the Timecard with that data as new hours were input.
You can expand the section “View Overtime Breakdown” to show a breakdown of the hours worked and the applicable rates and wages owed to that employee.
Paying Overtime on Incentive Payments
What is incentive pay?
Incentive pay is defined as additional compensation awarded to employees for results they achieved, i.e “pay for performance”. All commission payments are considered incentive pay, and some types of bonuses, such as non-discretionary bonuses, also fall in this category. Read more about non-discretionary bonuses in the U.S. DOL Fact Sheet 56C, and how to record them in our help center article. Be sure to also check applicable state and local law as there may be different requirements.
When is overtime owed on incentive pay and who is eligible?
The amount of overtime pay due to an employee is based on the employee’s regular rate of pay and the number of hours worked in a workweek. Under the FLSA, all compensation for hours worked, services rendered, or performance is included in the regular rate of pay, except for certain enumerated types of payments.
Generally, discretionary bonuses may be excluded from the regular rate, while non-discretionary bonuses may not. Whether a bonus is discretionary or non discretionary is fact-specific and the label assigned to a bonus is not determinative.
When a non-exempt employee receives incentive pay, such as a non-discretionary bonus, for a workweek(s) during which they worked overtime, the regular rate for those workweeks need to be recalculated and the additional overtime on the incentive pay must be paid out.
How does Justworks help me pay overtime on incentive pay?
The Justworks Payments Center has built-in features to help you comply with this requirement:
A required field to classify a bonus as discretionary or non-discretionary
Automatically detecting when a non-exempt employee worked overtime (based on hours approved in Timecards) during the work period covered by the non-discretionary bonus
Automatically calculating the overtime wages and adding it to the incentive pay
We want to help make this complex topic simple, so we will help you calculate and pay out overtime on incentive pay. When you schedule a non-discretionary bonus or a commission payment, we will alert you if any of the employees receiving this one-time payment has worked overtime during the applicable work period you have entered. We can detect this immediately based on the hours that have been approved on Timecards.
If we detect that an employee worked overtime in the applicable pay period, we will automatically calculate the overtime owed on this incentive pay, and add it to the total amount you’re scheduling.
For non-discretionary bonuses and commission payments, we use the following formula to calculate the additional pay owed:
Additional pay = 0.5 * (Incentive pay amount / All hours in the work period) * Overtime hours in the work period
In this case, the overtime rate is 0.5 * (Incentive pay amount / All hours in the work period).
Before you submit the incentive pay, you’ll have a chance to review the amounts that will be paid out. As you can see in the example below, this includes a breakdown of both the incentive pay amount and the additional payment (overtime) owed.
How will this be taxed?
Overtime on incentive pay will be taxed at the same rate used for the supplemental pay it’s attached to.
What about flat-sum bonuses in California?
Flat-sum bonuses are non-discretionary bonuses that are not determined by hours worked (for example, attendance bonuses or safety bonuses). For flat-sum bonuses in California, we use the following formula to calculate the additional pay owed:
Additional pay = 1.5 * (Flat-sum amount / Straight hours in the work period) * Overtime hours in the work period. In this case, the overtime rate is 1.5 * (Flat-sum amount / Straight hours in the work period).
Where can I reference this information after I schedule the payment?
Employees receiving overtime on their incentive pay will see a breakdown of the payment (including the overtime on incentive pay amount, the number of overtime hours, and the overtime rate) included in the Notes section of their pay stub. This detailed breakdown to the Notes section is important for compliance with wage statement requirements. When reviewing the Invoices and Payroll Report, the overtime on incentive pay will be reflected along with the total incentive payment in one aggregated sum.
You will not see these Notes when scheduling the payments, but you can view them and adjust them if needed when editing the employee’s individual payment.
What if I need to edit the incentive payment?
If you need to edit the original incentive pay amount, it’s best to cancel the payment and reschedule a new incentive pay so we can help calculate the overtime on incentive pay for you. For example, if you intended to schedule a $1,000 commission, but accidentally scheduled a $100 commission, it would be best to cancel the $100 commission and schedule a brand new commission for $1,000. To do so, go to the employee’s profile under “View payments” and cancel the payment from the One-time payments tab. You can then schedule a new commission payment from the same page.
If you need to edit the total amount of the payment because you want to change the overtime we calculated, go to the employee’s profile, click View Payments, and edit the payment in the One-time payments tab. In this case, we will give you full control over the total amount paid and will not calculate any overtime that may be owed on the incentive pay.
Are there cases when Justworks will not calculate overtime owed on incentive pay?
There are three cases where Justworks can’t calculate this additional payment owed for you:
You are scheduling the incentive pay with an applicable work period that hasn’t finished yet, or for which the applicable Timecards have not been approved yet
In this case, since Timecards are not yet approved, we won’t know the total hours worked by your employee, so you will need to schedule any applicable overtime on incentive pay owed after you have approved the Timecard using the Other supplemental pay type (see steps above).
The data we have on your employees’ hours is at the weekly level, but you have entered a work period that does not align with the Sunday-Saturday workweek
In this case, Justworks can’t know which hours are attributable to this payment, so we are not adding additional pay to the incentive pay you’re scheduling, as we would risk to underestimate that amount.
There are missed Timecards in the past that you’ve had to make up using the off-cycle salary pay type:
In this case, since we are using the hours approved in Timecards, there may be a gap in the hours recorded in Justworks for your employees, so we recommend that you double check and adjust the calculation if there were overtime hours in those missed Timecards.
If you’re paying a flat sum bonus to an employee working in California, and you select a work period for which there’s only overtime hours and no regular hours, we can’t calculate the overtime on incentive pay for you given the denominator would be zero.
Be sure to schedule any applicable overtime owed on incentive pay after you have approved the Timecard. You can do so by using the Payments Center and selecting the Other Supplemental pay type (see steps above).
What if I need to calculate the overtime owed and schedule it on my own?
If you have missed Timecards in the past for an employee, or if we can’t calculate the overtime owed because of the reasons laid out above, we might not have all the hours we need to calculate the overtime on incentive pay for that employee. In this case, you will need to schedule individual payments per employee to ensure that the information in the Notes section is specific to the employee. As a reminder, information in the Notes section will be reflected on the employee’s paystub. You can schedule these payments by following these steps:
Head to the Payments Center and select “Other supplemental pay” type to schedule the overtime on incentive pay.
To comply with wage statement requirements, add the following to the Notes when scheduling that payment:
Overtime on incentive pay: $Total amount of overtime paid on incentive pay
Overtime hours in the applicable work period: XX.YY hours
Overtime rate: $XX.YY/hr
If any of the information added to the Notes differs per employee, you should be scheduling these payments one employee at a time.
Paying Overtime when using Justworks Hours
If your business uses Justworks Hours, you can set up overtime rules for each office in Justworks Hours so that overtime hours automatically sync to Timecards in Justworks*. After you setup your overtime rules, Overtime Watch will appear on your Justworks Hours dashboard so you can track how much overtime your employees are working.
*Please note that overtime hours will only sync to Timecards in Justworks if your employees earn single hourly rates in the pay period. If employees earn multiple rates in a pay period, overtime hours will not sync. The Admin must manually calculate overtime hours directly on the Justworks Timecard by clicking “Add overtime”.
For step by step instructions on establishing overtime rules in Justworks Hours, use this Help Center article.
If you choose not to set up overtime rules in Justworks Hours, that’s totally fine! Admin will continue to click “Calculate overtime” for each Timecard in Justworks and then click Approve.