Customize overtime calculations in QuickBooks Time

Disclaimer: Check your federal and state labor laws when customizing your overtime settings. This is just an example, not a recommendation. 

Company X is setting up their customized overtime in QuickBooks Time and creates a new setting in the Pay Rate Engine named Setting Y. Setting Y was assigned to Team Member Z and has 4 different rules with these types and rate multipliers:

• Daily: applies to every day when a team member works over 8hrs/day at 1.5 x base pay
• Holiday: applies when team member works September 4 at 2 x base pay
• Time of Day: applies when team member works between 8 PM – 8 AM at 1.75x base pay
• Weekly: applies when team member works over 40hrs/week at 1.25 x base pay

This is Team Member Z’s schedule for the week of September 3-9th, and the breakdown of how their pay is calculated:  

Sunday, September 3: 12 PM – 4 PM = 4 hours 

• 4 regular hours of work are calculated

Monday, September 4: 1 PM – 9 PM = 8 hours

• Monday was a holiday and 8 PM – 9 PM fell into the Time of Day rule. However, because the Holiday rule rate is higher, all 8 hours are calculated at 2x Holiday.  

Tuesday, September 5: 8 AM – 4 PM = 8 hours

• 8 regular hours of work are calculated

Wednesday, September 6: 8 AM – 4 PM = 8 hours

• 8 regular hours of work are calculated

Thursday, September 7: 9 AM – 6 PM = 9 hours

• Thursday fell past the daily limit of 8 hours. Therefore, 8 hours are calculated as regular, and 1 hour is calculated at 1.5x  Daily.

Friday, September 8: 8 AM – 4 PM = 8 hours

• 8 regular hours of work are calculated

Saturday, September 9: 1 PM – 9 PM = 8 hours

• 4 hours are calculated as regular. 3 hours are calculated at 1.25x Weekly, and the 1 hour between 8 and 9 PM is calculated at 1.75x Time of Day.  

Total hours Sunday through Saturday

Overtime setup through account settings page

1. Go to Settings ⚙, then Account and settings.
2. Select Time.
3. From Overtime, select Edit ✎.
4. Create or edit your overtime policy.

Overtime setup through worker settings page

1. Go to All apps , then Time, then Assignments (Take me there).
2. Select the Workers tab.
3. Select View settings.
4. From Overtime, select Edit ✎.
5. Select an overtime rule for your worker:
   • Use company level settings.
   • Use custom rules for this worker
6. Once finished, select Save.

Overtime notification setup

1. Go to Settings ⚙, then Account and settings.
2. Select Time.
3. From Notifications, select Edit ✎.
4. Scroll down to the Overtime section. Select Daily or Weekly and customize the settings.
5. Select Save.

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.