Customize overtime calculations in QuickBooks Time

Learn how to customize your overtime calculations in QuickBooks Time using the Pay Rate Engine. 

Understand how overtime calculations are applied

• If a timesheet has already had a rule applied to it, another rule can't be applied to that time. So, if there are overlapping or conflicting rules, only one rule will be applied.
• Daily, Consecutive Days, Time of Day, and Holiday rules are all calculated on the day the timesheet is created. Whichever rule has the highest rate multiplier is the one that gets applied. 
  • Shift differential or holiday hours are counted as overtime in our system, even if they technically aren’t. If one of these rules is applied to time first, no other rule will be applied. 
• Weekly overtime doesn't calculate until there are 40 hours of regular time worked (or however many hours you set for weekly). However, daily rules get applied before weekly rules, including on the final day(s) of the week.
  • For example, a week with 8, 8, 8, 8, and 9 hours worked will get 1 hour of daily overtime. 
• Overtime rules only apply to regular time (not other overtime, not time off, and not breaks). Once a timesheet is marked as “overtime”, it won’t have any additional rules applied.
  • For example, a timesheet can't have both shift differential and weekly overtime rules applied. It'll ‌have one or the other applied.

If you send time to QuickBooks Online Payroll

• If you have QuickBooks Online Payroll and your employee tracks overtime in QuickBooks Time, you need to add their pay types in Payroll and set up overtime so overtime exports correctly. 
• If you use the Pay Rate Engine with your QuickBooks integration, you’ll need to map the overtime pay items for each rule in the rule editor. 
  • You can only set up rates of 1.5x or 2.0x in the Pay Rate Engine to map to the Overtime Pay Type and Double Overtime Pay Type from QuickBooks Online Payroll.

Customize overtime calculations

Set up overtime customizations

1. Go to Company Settings, select Payroll & Overtime, then select Overtime.
2. Select Use Pay Rate Engine, then Manage Pay Rates.
3. Select Add Setting, and enter a name.
   • A "setting" is the name of a set of overtime rules. One or more rules can be applied to a setting.
4. Assign team members to the setting. Each team member can be assigned to only one setting:
   • To assign it to all team members, select Default Setting.
   • To assign it to individual team members, select No team members assigned, make your selections, and select Ok.
5. Select Add. 
6. Select the setting you just created, then Add Rule.
   • A "rule" defines what the pay rate will be after a team member works a certain number of hours, during certain hours / on certain days. One or more pay rates can be applied to a rule.
7. Enter a Rule Name, and select a Type:
   • ​​​Day: Applies a rate multiplier or fixed rate to one or more days after a certain number of hours worked. Select Add to add a different rate after a certain number of hours.
     • Note: If the rate needs to apply to the whole day, set "Start After" to 0 hours/day.
   • Week: Applies a rate multiplier or fixed rate after a certain number of hours worked in a week.
     • Note: This is dependent on your company's week start setting.
   • Pay Period: Applies a rate multiplier or fixed rate after a certain number of hours worked in a pay period.
     • Note: This is dependent on your company's payroll settings.
   • Holiday: Applies a rate multiplier or fixed rate to any time worked on one or more specific dates. Enter the rate and select Add Holiday. Enter the Name and Date of the holiday, then Add.
     • Note: Holiday rules only apply once. If you have recurring holidays, enter the rule each calendar year.
   • Time of Day: Applies a rate multiplier or fixed rate to any time worked between a specific shift's start and stop time on one or more days. Select Allow shift to run late if the rate should continue to be applied even after the specified end time as long as the team member remains clocked in. Select Add to add a different rate for a different shift (start and stop times can't overlap).
     • Notes:
       • The time of day rule is dependent on turning on Split timesheets at midnight (found in Company Settings, select Time Options, then Time Entry).
       • If a shift was started 10 minutes or more before the time of day rule, and Allow shift to run late is selected, then the time of day rule won't apply to that shift.
   • Consecutive Days: Applies a rate multiplier or fixed rate after a defined number of days are worked in a row within a workweek. Enter the consecutive day the rule should start on, and how many hours on that day it should start after. For example, if you want overtime to apply after 5 days worked, enter 6.
     • Note: Consecutive days can only apply to days within the workweek (you can set your week start day in company settings).
8. Enter the appropriate settings for the rule selected.
   • Choose whether the rule is a Rate multiplier  (for example, base pay x 1.5 /hr) or a Fixed rate (for example, base pay + $2 /hr)
   • When setting rate multiplier, make sure the value is greater than 1.0.
9. Select Save.

Change customized overtime settings

1. Go to Feature Add-ons, then Pay Rate Engine to make your changes:
   • To change the setting name or which team members the setting applies to, in the setting box, select More options, then Edit.
   • To change the rules associated with the setting, select the setting name, then select the rule name.