Quickbooks payroll is inputting incorrect payrates for overtime

Hi there, brad64.

Let me share some insights on how QuickBooks calculates overtime pay.

By default, the program determines the overtime rate based on the amount you've entered. If you have employees who are paid at two or more hourly rates, the program uses the higher one (Regular, Hourly 2) as the base rate for overtime and double overtime calculations.

To isolate the issue, you can open your employee profile and make sure that the appropriate overtime rate was applied. I'll show you how:

1. Select Payroll from the sidebar menu.
2. Go to the Employees tab.
3. Choose the appropriate employee.

4. Head to the How much do you pay [employee name] section, then click the Edit icon.

5. Review the rate review the hourly rate (Regular and Hourly 2).

6. Make sure to enter the correct amount, then click Done to save the changes.

With regard to our customer supports, we've updated the option to connect with us. This time, you'll have to enter a specific keyword in the QB Assistant window to get the Chat and Callback options. I'll show you how to use it:

1. Go to the Help icon.
2. Select Talk to a human from the Here are some ways to get started section.
3. Enter "Talk to a human" again in the search bar.
4. Choose I still need a human, then click Get help from a human or Contact us.
5. Select Have us call you or Chat with us to start a conversation.

I'm also adding this article to help track and manage your payroll transactions in QuickBooks Online: Run payroll reports.

I'll be right here to continue helping if you have any other payroll-related questions and concerns. Assistance is just a post away.

Hi brad64,

Hope you’re doing great. I wanted to see how everything is going about the issue in your overtime pay rate. Was it resolved? Do you need any additional help or clarification? If you do, just let me know. I’d be happy to help you at anytime.

Looking forward to your reply. Have a pleasant day ahead!

Why would the system default to "highest rate" when calculating overtime? What if someone needs to be paid OT on both of their rates?

It looks like the only solution is to create multiple "Other Compensation" listings for the 2nd rate and 2nd rate's overtime rate to avoid the "Overtime" from choosing the wrong rate. (This is cumbersome and creates a lot of room for error in the future.)

For instance, we have someone making $20/hour and $22/hour in their different roles. If we put "Hourly 2" and then "OT Hourly 2" as Pay Types, the Overtime column in Payroll calculates as $49.50/hour because it's keying off of the "OT Hourly 2" that's at $33/hour.

As a point of reference, Intuit Assisted Payroll in Quickbooks Desktop did not have this problem. Varying / multiple hourly & overtime rates lined up fairly easily & cleanly and didn't require workarounds in the "Other" area of compensation. You might consider bringing that back / using that in QB Online Payroll.

This is so incredibly frustrating.  We just  had some of our stores be open for New Year's Day for the first time.  I had completed payroll and submitted for processing for 59 employees when I just happened to noticed someone's pay seemed higher than I would have thought.  I took a look and the system had done time and a half on the "Working Holiday" item, which is already time and a half! I had to go back and edit every check for those that worked that day to the correct rate for their overtime hours.  And now, based on prior comments, it looks like I will have to go back and adjust all the items in my payroll for each employee so this doesn't happen again.  How can this happen on software that supposedly specializes on these things!  It's beyond understanding...

I have found a solution for this problem. Although it's not perfect, it does work. 

The key is no NOT USE the default options under common pay types for overtime, double overtime or holiday pay.  I unchecked them, then created my own hourly pay rate for "overtime" "double overtime" and "holiday pay" using the correct rates for my company of 1 1/2 times regular rate for OT and holiday pay, and double regular rate for double time (we do it it during busy holiday seasons from time to time).  This eliminates any automatic calculations by QB.  Took me a while to update 62 employees, but it seemed to work.  Hope this helps someone else.

Thanks for that suggestion. I will talk with my HR team to see if this is viable - we don't have that many people on multiple rates, so it might work in those cases.