E1: 07: Calculate Overtime Premiums Retroactively (Doc ID 2265507.1)

Last updated on APRIL 04, 2025

Applies to:

Symptoms

The law states that we now have to divide the an employee's bonus (lump sum) pay (for example, retention bonus) by each historical pay period end date or each week to determine total wages paid and to pay any difference for the overtime premium.

Refer to https://www.dol.gov/whd/regs/compliance/WH1262.pdf for DOL's OT compensation regulations.

For example, a retention bonus is paid once the employee has met all of the conditions of the payment. Once all of the conditions are met the payment is made to the employee on a particular check date but covers the assigned time frame. In this example the employee was paid of bonus of $1500 on 5/14/16 but we have to divide the bonus by the number of pay periods it covers (like 6 months).

Need the ability to utilize retro pay functionality to look at prior pay periods and apply the lump sum amount given to determine if there is an OT premium that is to be paid.

Calculation example:

Employee paid a $1500 bonus

Each pay period then has to have the total wages calculated to include the retention bonus portion attributed to the pay period.

Originally 1/9/16 Check Date

Regular Hours 80 @ 17.44

Overtime Hours 38.92 @ (17.44 *1.5) 26.16

New Calculation

Regular Hours 80 @ 17.44

Overtime Hours 38.92 @ 17.44

Retention bonus portion @ 166.66

Total Earnings @ 2240.62 / Hours @ 118.92 = 18.84

Current rate of pay = 18.84 * .5 = 9.42 New premium overtime amount

Base overtime premium amount was 17.44 * .5 = 8.72

New overtime premium amount is 9.42

9.42 - 8.72 = .60 * 38.92 = 27.27 now owed to the employee for the 1/9/16 check date because of the retention bonus

Changes

Cause

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