payroll job costing and overtime

TammyM12 · ‎February 20, 2019

Client is using job costing with employee's payroll; The challenge is that any overtime the employee is entitled to falls into the last job that she posts. She is using 2016 Desktop. Would a more recent version be able to allocate the overtime over? Or what are others doing to spread overtime across jobs.

qbteachmt · ‎February 20, 2019

The issue is, if you Know you can assign that the OT is direct to any specific job, or if the Work Day just ran late.

For this: "The challenge is that any overtime the employee is entitled to falls into the last job that she posts."

Stop using a Multiplier item for OT. Set up the Half Rate as a separate Payroll Compensation item. Use it, like this:

Timesheet entry, Service item = Laborer, Payroll item = Hourly pay, 10 hours, Smith. Billable or not. Next line, for the same date, Service item = Laborer, OT Payroll item = set for half-rate Hourly pay, 2 hours, Smith. Billable or not. Then, Jones job, with or without OT as its own entry.

Now you see Smith: 10 hours at full rate + 2 hours at half-rate. That = 11 hours' of $, the same math as "8 + (2 x 1.5)."

And the reason I like to do this is not just Job Tracking, but also, my Worker Comp reporting wants only Base Rate for all hours. I exclude OT for WC, so that means I am tracking it as a Shift Differential concept.

View solution in original post

Anonymous · ‎February 20, 2019

You can specify the Job for Overtime just like other earnings items. You can also split the overtime just like you can other earnings items. What challenge to you see in this?

qbteachmt · ‎February 20, 2019

The issue is, if you Know you can assign that the OT is direct to any specific job, or if the Work Day just ran late.

For this: "The challenge is that any overtime the employee is entitled to falls into the last job that she posts."

Stop using a Multiplier item for OT. Set up the Half Rate as a separate Payroll Compensation item. Use it, like this:

Timesheet entry, Service item = Laborer, Payroll item = Hourly pay, 10 hours, Smith. Billable or not. Next line, for the same date, Service item = Laborer, OT Payroll item = set for half-rate Hourly pay, 2 hours, Smith. Billable or not. Then, Jones job, with or without OT as its own entry.

Now you see Smith: 10 hours at full rate + 2 hours at half-rate. That = 11 hours' of $, the same math as "8 + (2 x 1.5)."

And the reason I like to do this is not just Job Tracking, but also, my Worker Comp reporting wants only Base Rate for all hours. I exclude OT for WC, so that means I am tracking it as a Shift Differential concept.

Anonymous · ‎February 20, 2019

This won't work if you have any taxes based on hours and it'll make the pay stubs wrong - as they won't indicate the actual number of hours worked.

qbteachmt · ‎February 20, 2019

Yes, it reports the Total Hours just fine: on the Paycheck, the Hours is compensation in the top left = 10. The Additional Half rate is the left side = qty 2 at Half Rate.

And for any other Addition or Deduction item based on "Quantity" it either also reads the 10, or I can enter the qty that applies. If something is not supposed to be based on OT hours, I enter 8 in the item on the left side of Paycheck details.

I used it for years, and it works fine.

Anonymous · ‎February 20, 2019

12 is not the correct number of hours worked if the employee worked 10.

What you described is for a custom item. It won't work for state taxes that are based on hours worked, where you have no opportunity to adjust the hours on the tax.

qbteachmt · ‎February 21, 2019

@Anonymous

Nothing in my description was 12. The Math total was 11 Paid Rate. The Actual Worked as 10.

Let's use $10 an hour.

Option 1: Using the OT Multiplier results in 8 hours at base rate and 2 at (X1.5) = 11 Paid rate:

8 x $10 = $80

2 x $15 = 30

= $110 total, or 11 hours if computed at base rate; but the Units of Hours Worked is 10 hours.

Option 2: Using the Differential Method for "half-rate OT pay" as 10 hours base rate and the taxable differential for working OT as "half-rate addition":

10 x $10 = $100 <== top of paycheck details

2 x $5 = $10 <== left side of paycheck details

= $110 Total, or 11 hours if computed at base rate; and the Units of Hours Worked is 10 hours.

And you could do that same type of item if you also need to add a Shift Differential, such as they work Graveyard Shift. That's why I know it works and used it for years.

Anonymous · ‎February 21, 2019

The pay stub will show 12 hours worked in the Hours column. Not appropriate when the employee worked 10 hours.

Note this also won't work if you use the workman's comp feature as it won't be able to detect the regular and overtime components of the earnings in order to calculate the correct WC amount.

qbteachmt · ‎February 21, 2019

This is Not entered into the Top left of Paycheck details:

"The pay stub will show 12 hours worked in the Hours column."

You are confusing where the Time is seen, for the payroll item that is based on that Time Worked. The differential is a taxable addition based on the units, but not Top Left.

And this is exactly what is Wrong with the OT Multiplier provision: "Note this also won't work if you use the workman's comp feature as it won't be able to detect the regular and overtime components of the earnings in order to calculate the correct WC amount."

In my State, WC is reported at Base Rate. If the person works 48 hours in the week, that would be $480 for this example for WC premium charge. But the Gross Pay is:

40 x $10 = $400

8 x $15 = $120

= $520

And every "QB and Payroll" class that teach, someone finds they can submit for Refunds from Worker Comp, because they have been overpaying :)

Anonymous · ‎February 21, 2019

@qbteachmt

OK, I re-read your posts and now understand that you're saying to use an Addition type Compensation item for the OT instead of an OT item.

But now I'm confused as to how this helps with the OP's request?

The request was:

"The challenge is that any overtime the employee is entitled to falls into the last job that she posts. ... what are others doing to spread overtime across jobs. "

Depending on your settings, doing this will either results in the Addition being pro-rated without control across all of the Jobs used on the earnings table, or not at all.

But, isn't it the case (real world question, not QB) that the employee's time can be associated with work for particular Jobs? If so, then wouldn't it be better to use a standard overtime item for the overtime, and use it as many times as needed on the earnings table, for each job where overtime applies?

qbteachmt · ‎February 21, 2019

@Anonymous

Thanks for your input. This is the Very First sentence in my initial response:

The issue is, if you Know you can assign that the OT is direct to any specific job, or if the Work Day just ran late.

Anonymous · ‎February 21, 2019

RE: The issue is, if you Know you can assign that the OT is direct to any specific job, or if the Work Day just ran late.

I can't parse this. I don't know what it means.

TammyM12 · ‎February 21, 2019

thank you to both you and BRC for drilling this down for clarification. Question to both of you, do you use an upload to payroll or manual entry? Client has about 50 checks with majority holding overtime. They utilize a time tracking system that exports to QBs. It is customizable.

qbteachmt · ‎February 21, 2019

"do you use an upload to payroll or manual entry?"

QB Desktop has Payroll functions in it. You can pay for the tax table subscription or "run manually" in the QB US as long as you never enabled Multi-Currency.

"Client has about 50 checks with majority holding overtime."

That's Banking. That isn't Payroll, but Takehome and Tax payments.

"They utilize a time tracking system that exports to QBs."

That's Tasks. That isn't Cost data. Costs come from Paying for something.

For instance, in Desktop, you use the timesheet, you set the Preferences to Job Track Per Earnings item, so that you can Reiterate the pay item, and you set the Employee Default to Pay From Time Data, so that the single activity view or weekly view for task entries includes both the Payroll Item and the Service item, for job tracked task lines. Now, when you Run Payroll, that info is passed to the paycheck, giving Job Cost allocations, including Employer taxes. The Payroll item flows the pay data to the accounting, the Service item links that cost to the Service for Job tracking, and now you have all the reporting, including quantity, and the ability to compare estimates to actuals by quantity and/or values, to compare revenue to cost for that same service, if that is something you sell, etc.

Please see my attachment.

qbteachmt · ‎February 21, 2019

Here in this attachment, just follow the Like Color across the side-by-side reporting.

qbteachmt · ‎February 21, 2019

Here in this attachment, see the way the time entries transfer to payroll, reiterated for costing.

qbteachmt · ‎February 21, 2019

Here is a timesheet view.

TammyM12 · ‎February 22, 2019

Thank you the attachments that you sent in this reply and those following this. They are helpful. I need to better explain my question. The time upload comes from a third party software. QuickBooks and the Time Tracking Software are linked and she does a simply one-step upload from one to the other. Most of the employees in that data have overtime (50 employees). The time related to jobs is in that data, also. So it is all electronically uploaded. This is the point where QuickBooks groups all the overtime into the last job. As I am typing this, I realized that perhaps the client will need to talk with her Time Tracking Software provider to ensure that the overtime is separated by job before the upload occurs. .

qbteachmt · ‎February 22, 2019

The Time data sent to QB either needs to have the details expected, or once it is imported to Time data in QB, you update and refine it there. Here's what I teach in my class: You cannot Report what you did not track.

TammyM12 · ‎February 23, 2019

Client was successful in administering your recommendation. It was spot on for what she needed. Thank you!

qbteachmt · ‎February 23, 2019

Glad to help.

@Anonymous

I just realized you asked about "is OT job-specific or not."

Example:

We work on three job sites on any one specific date, and during the summer, the day runs from 5am to 8 pm. This is called Construction Season; our other Seasons are Hunting Season (Fall) and Ski Season when we don't work. During construction season, we work longer days. That means nearly every day might run into OT under the Labor regulations. But that is indirect Overhead adding to labor burden (increasing total labor costs, and can be allocated to all jobs in that time frame), not job specific. The Job Time is the Job Time, from being on site. (Example: check out the 2019 HGTV Dream Home.)

Or,

We are a Plumbing, HVAC entity. We have a lot of Emergency Call outs, so the Job is the reason for the OT. All Jobs down for call out are also charged OT price to the customer, or, "Emergency call out rate is different than if we were scheduled to show on Monday during regular business hours."

Hope that helps.

Topics

Training

Community

Resources

payroll job costing and overtime