Payroll question, Salary Hourly Rate

[nhutchins (Norman Hutchins)]

Sorry in advance for the long post.

This question is related to Salary employees, actually clocking time and what happens to their labor rate when payroll is run. We have a government contract that requires us to accurately report the hourly rate for all employees. Which for salaried employees changes depending on how many hours they actually work.

What’s working
Let say a salaried employee who makes $62,400 ( $30/hour).

• If they clock 40 hours in a week when a check is created from those labor records, their pay rate will be their standard $30/hour for all labor records. If I were to add another record manually to the check for 4 hours, it would calculate a new rate of 27.27/hour for all time records.
• If they clock 50 hours in a week when a check is created from those labor records, their pay rate will be adjusted to $24/hour. If I were to add another record to the check for 4 hours, it would calculate a new rate of 22.22/hour for all time records.

What’s not working:

• If they clock 36 hours in a week when a check is created from those labor records, their pay rate will be their standard $30/hour for all labor records, because the system automatically will create a “make-up” record to make the check equal 40 hours.

What we need it to do and what I’ve tired

• If they clock 36 hours in a week when a check is created from those labor records, their pay rate should be $33.33/hour for all labor records.
• I thought I could just delete the “make-up” record from the check and the system would recalculate a new rate for all of the records, like it does when it’s over 40. However, the system does not. Instead, it just changes the rate of the previous record to make the check equal $1,200. See images below.

Highlighted records is the “make-up” hours, created by the system.

If I deleted the “make-up” hours, here’s what happens to the pay rate.

Any thoughts or insight is welcome!

[jadecorp (Joe J)]

The interesting thing… is how you are approaching this!
First, reach out to the government for clarification as in many states EVEN SALARIED EMPLOYEE’s are to be paid for their overtime!

Yeah, really!

The ‘soft-line’ on having to do so is how many companies ignore paying for Salaried overtime… boils down to demanding the employee work the extra hours or not!
EX: I can’t just work 60 hours because I want to… but if my boss wants me to work 30 hours over the weekend for an UPgrade/other demands.
Gets crazier… if my project is slated for 30 hrs per week and 10 hours on other stuff, but WE fall behind, or the project expands… forcing more work to hit due-dates, then I work 12 hr days… and when dealing with the GOV’t your company may be obligated to pay the overtime!

So, I suggest you check-out the specifics.

~ ~ ~ ~
As to your method… during the completion of Payroll entry, have a BAQ to dump weekly Hours, then figure out what the rate would be for any number of hours… adjust the rate before processing payroll, having the payout always match the total amount per week for a salaried employee.

[nhutchins (Norman Hutchins)]

Thanks for the reply @jadecorp. I thought about doing a manual calculation for the correct pay rate, however, was hoping there might be an easier, cleaner way. But, I believe there isn’t, as Epicor’s reply is “work as designed.”

This requirement has to do with a DCAA (Defense Contract Audit Agency) pre-audit report for a Government Cost Plus Contract. The government’s concern is paying real costs to only their project. It’s referred to as Uncompensated Overtime.

48 CFR 52.237-10 - Identification of Uncompensated Overtime.

( a )Definitions. As used in this provision -

Adjusted hourly rate (including uncompensated overtime) is the rate that results from multiplying the hourly rate for a 40-hour work week by 40, and then dividing by the proposed hours per week which includes uncompensated overtime hours over and above the standard 40-hour work week. For example, 45 hours proposed on a 40-hour work week basis at $20 per hour would be converted to an uncompensated overtime rate of $ 17.78 per hour ($ 20.00 × 40 divided by 45 = $ 17.78).

Uncompensated overtime means the hours worked without additional compensation in excess of an average of 40 hours per week by direct charge employees who are exempt from the Fair Labor Standards Act. Compensated personal absences such as holidays, vacations, and sick leave shall be included in the normal work week for purposes of computing uncompensated overtime hours.

( b )

( 1 ) Whenever there is uncompensated overtime, the adjusted hourly rate (including uncompensated overtime), rather than the hourly rate, shall be applied to all proposed hours, whether regular or overtime hours.

( 2 ) All proposed labor hours subject to the adjusted hourly rate (including uncompensated overtime) shall be identified as either regular or overtime hours, by labor categories, and described at the same level of detail. This is applicable to all proposals whether the labor hours are at the prime or subcontract level. This includes uncompensated overtime hours that are in indirect cost pools for personnel whose regular hours are normally charged direct.

( c ) The offeror’s accounting practices used to estimate uncompensated overtime must be consistent with its cost accounting practices used to accumulate and report uncompensated overtime hours.

( d ) Proposals that include unrealistically low labor rates, or that do not otherwise demonstrate cost realism, will be considered in a risk assessment and will be evaluated for award in accordance with that assessment.

( e ) The offeror shall include a copy of its policy addressing uncompensated overtime with its proposal.