Why is Overtime calculated on the newly added pay type and not regular pay?

I created a new pay type named "Overtime Taxable Under 40" to help me track overtime that I pay for hours that the state of Alabama would not qualify for the new Alabama Overtime exemption law.

The new pay type "Overtime Taxable Under 40" will be the same hourly rate as Normal Overtime.   It serves to help me track the overtime I pay to person who has not reached 40 hours.  We often do this for people who work in the middle of the night, or weekends or if we are charging a customer overtime.  But the new state rule does not exempt time and half overtime unless the employee has actually worked more than 40 regular hours.  So I want a pay type that I can enter OT  hours into and not reduce the state tax.

But now I find when I use that newly created pay type that normal overtime is no longer calculated on regular hours but on the newly created rate.  How can I stop this,
Thanks
LDO 

I'm here to provide you with some information about how QuickBooks calculates overtime pay, @LDO. 

To calculate overtime pay, our program uses the hourly rate you have provided for each employee. If an employee has multiple hourly rates, we use the higher rate as the base for overtime and double overtime calculations. 

If the overtime rate is not being calculated correctly, you can check the employee's profile to ensure that the correct rate is applied. 

Here are the steps to do so: 

1. Click on the Payroll option in the sidebar menu. 
2. Go to the Employees tab. 
3. Select the employee whose profile you want to review. 
4. Scroll down to the How much do you pay [employee name] section and click on the Edit icon.
5. Verify the hourly rates for 
6. If needed, update the rates with the correct amounts and click Done to save the changes.

Here's more information about setting up an overtime pay item in QuickBooks Online Payroll: Add overtime pay to an employee. 

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

If you need further assistance setting up your overtime pay, please let me know by leaving a reply below. Have a great week and stay safe!

MJoy_D,

Obviously you did not read my original post.  Please stop and reread it outloud slowly.   Look at the picture carefully.  This is another example of the too common common complaint that QB moderators respond with out reading and just copy and paste. 

I have done over 700 weekly payrolls  since i been using Intuit Payroll Quickbooks since 2009,  In my 43+year career I have done over 2300 weekly payrolls.  I understand how overtime works,

If you re-read my original post you will see that it was the addtion of the new pay type that caused this error.
Does  QB have a flaw in their software or did I set up the new pay type wrong,.

LDO

I appreciate you getting back to the thread, @LDO.

I can understand the urgency of this matter. Let me add more details about how we can fix this in a secure space and timely manner.

In this case, I recommend contacting our QuickBooks Support Team. This way, they can help you check your pay type setup and provide fixes on the issue in a secure space. You can request a screen-sharing session with them.

Here's how:

1. Sign in to your QuickBooks Online (QBO) account.
2. Click the Help button.
3. In the QuickBooks Assistance chatbox, select Talk to a human and choose I still need a human.
4. Then, hit Contact Us.

Please check out this article for QuickBooks support hours: Contact Payroll Support in QuickBooks Online.

If you want to run payroll reports to view useful information about your business and employees, check out this article for further guidance: Run payroll reports.

Come back to this post if you have clarification about managing payroll in the program. I'll always be happy to assist you.

Here is the answer I got from a QB customer rep  John I talked with on the phone.

He said that the QB overtime field will always figure time and half on the highest pay rate. So if you have other payrates that are higher than your regular rate you will get bad totals 

What I decided to do is make the newly created pay type "overtime under 40"  to have a $1.00 per hour rate.  This way my normal overtime is still calculated on regular rate x 1,5.   But it also means I will have to manually change this new paytype for each person after I have previewed payroll and right before I submit . With this plan the worst case scenario is that I might forget and only pay $1.00 an hour for this pay type.   But if  dont do this I will be paying time and half on time half.   Note: This is also  trueon double overtime   
 I hope QB gets this fixed.  (it worked just fine in INTUIT 2010-2021)   Thanks

@LDO  RE: He said that the QB overtime field will always figure time and half on the highest pay rate. So if you have other payrates that are higher than your regular rate you will get bad totals 

That's horrible! What buggy junk! OT Pay rates for one OT item have nothing to do with the OT pay of another OT item. Once again QB Online "wows" us with its incompetence.

I am thinking that I can hope and pray 1) that there is no over time on holiday weeks and 2) that I can turn off holiday pay as a rate for the weeks that there is not a holiday present to receive holiday rate of pay for productive hours so that overtime is calculated correctly.

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 notice 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 I had created (because QB does not allow you to set a pay rate for their default item "Holiday Pay" - another huge flaw), 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...

Well, you're dealing with QuickBooks Online.

None of the problems and limitations you mention exist in QuickBooks Desktop Payroll.

Yes, of course you are right, but is this really acceptable?  I do books for some companies using desktop and for others we use online due to needing the ability for employees at locations that are many miles away from each other to be able to make invoices and receive payments, etc.  I continue to come across flaws in this online system, despite the fact I've been literally using it for years.  We all know their customer service is the worst - if there are any solutions to be had they must be found in the community.  Maybe some smart person out there will come up with a much better product some day and we can all jump ship.  We can only hope...

Yes, and yet Intuit thinks they can push everyone to QuickBooks Online as if it is a reasonable replacement for Desktop.

Even if they could convince their customers that keeping their books on an Intuit server that is up occasionally, which they can't, at the least they could make the Online product be on par with their Desktop product. They've had 25 years, but they don't seem at all interested in doing that.

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.