Must an employer take bonuses into account when figuring an hourly employee's overtime pay? I have been told I should and am confused at why QB would not do that for me.

Hello, @jowens-arcticair.

Depending on the overtime requirements your State sets, just make sure to enter your payroll information in QuickBooks. The system automatically calculates overtime pay when you set up the Overtime (OT) pay type for your eligible hourly employees.

When you run payroll, just make sure to enter the overtime hours in the OT box.

You don’t need to manually multiply the overtime wages by 1.5. You can read through this article for more detailed steps in setting up the overtime pay item: Add overtime pay for an employee.

Also, you can check these articles to learn more about managing payroll items and reports in QuickBooks:

• Calculating overtime based on two hourly rates
• Pay an employee bonus

• Run payroll reports

Lastly, I'd recommend consulting with your accountant so you'd be guided in managing your payroll transactions.

Know that I am always here to help if you have other questions, feel free to leave your comments below.

Federal OT rule is anything above 40 hours in a 7 day period gets time and a half. Some states mandate daily over 8. Check your state.

But a bonus is just a bonus and is not calculated by hours and there is no such thing as OT on bonus or even commissions 

Under the FLSA rules, if an employer is paying non-discretionary bonuses or commission, that amount must be factored into the overtime rate. It is a complicated formula, which is why I am here doing research as to how can you incorporate this formula into QuickBooks. It is a rule under the FLSA, so I am trying to understand why I am not finding information easily. 

Struggling with same issue. The FLSA requires that overtime pay be calculated on an employee's regular rate of pay, and any nondiscretionary bonuses an employee earns must be factored into the employee's regular rate of pay for OT calcs. Does QBO support this???

I have been in contact with QB about this and they do not support this. It is mind boggling to me that one of the biggest payroll companies can't offer options to the many different ways of pay that are acceptable under the FLSA. Unfortunately, it has been my experience that most of the employees are account technicians with no education or formal training on these topics. 

Are there any updates on this?  Has anyone figured out how to be compliant with the law and use QuickBooks payroll?

Thank you for joining this thread, Vtabee.

The option to calculate a bonus and commission by the hour or add them to overtime pay is currently unavailable. Incorporating the function to include non-discretionary bonuses or commissions into overtime compensation is a terrific addition to the online program. I suggest submitting feedback on this to our engineers so they can integrate it into future updates.

Here's how:

1. In your company, tap the Gear icon in the upper right and choose Feedback under Profile.
2. Enter your product suggestions in the field box.
3. Click Next to submit.

For more in-depth information on how the QBO payroll handles bonuses and overtime rates, see the following articles:

• Pay an employee bonus
• Set up and pay overtime based on different hourly rates

You can also save the link to the Payroll Hub in your browser for future use. It contains a list of topics that will guide you on how to deal with tax notices, worker information, and processing payroll forms, to name a few.

Keep in touch if you have additional questions about tracking bonuses, and other pay types. I'm more than happy to respond to them.

Thank you for the update.  I don't understand why they would still not have this option.

Have anyone figured out a workaround for this?

Totally agree with you.  QB online payroll should have a solution for this, but they don't.  We have to use Excel to calculate a new OT rate that includes the non-discretionary bonus and then edit the overtime rate in QB payroll for each employee that received a non-discretionary bonus.  Takes extra time every payroll when this task should be automated for the subscription fees that we pay.