Set up and pay Overtime

Overtime refers to the extra hours an employee works beyond their regular working hours, typically during a workweek. These additional hours often come with a higher rate of pay, providing an incentive for employees to work longer than their standard schedule.

Who is eligible?

Overtime eligibility depends on a few factors, but generally, non-exempt employees are eligible for overtime pay. Exempt employees, who often hold salaried positions and meet certain criteria outlined by the Fair Labor Standards Act (FLSA), are not entitled to overtime pay. However, specific job roles, employment agreements, and state regulations may affect eligibility.

How is overtime calculated?

Overtime hours are calculated based on the number of hours an employee works in a given workweek, within a single workday or by consecutive work days. The overtime rules applicable depend on the state rules for the work location of the worker. Commonly, overtime is granted when an employee exceeds 40 hours of work in a single workweek.

The standard overtime rate is typically 1.5 times an employee's regular hourly wage. For example, if your regular hourly wage is $10, you would earn $15 per hour for each hour of overtime worked. Some states may use different rates e.g. California uses both Overtime at 1.5x and Double Overtime at 2x the regular wage.

How to set up automatic overtime calculation?

Salsa offers the possibility to calculate the Overtime pay automatically depending on the following:

1. The worker has an EMPLOYEE classification and is overtimeEligible in their WorkerContract.

curl --location 'https://api.sandbox.salsa.dev/api/rest/v1/employers/${employerId}/workers/${workerId}/contracts' \
--header 'Content-Type: application/json' \
--header 'Accept: application/json' \
--header 'Authorization: Bearer ${YOUR_API_TOKEN}' \
--data '{
  "classification": "EMPLOYEE",
  "overtimeEligible": "true"
}'

{
    "data": {
        "id": "wrctr_ea2079074-da76-48c9-99e1-9w1f7ou9adw2",
         "classification": "EMPLOYEE",
         "overtimeEligible": true,
         "effectiveDate": "2023-01-01",
         "hireDate": null,
         "endDate":null
    }
}

2. Send us the hours broken down by day. You can use our Paystream Payroll Elements endpoint.

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Note

While Paystream supports receiving pay entries that span several days, Salsa requires the granularity to be day by day to be able to calculate overtime. If pay entries that span more than one day for a given worker are detected, the system will not calculate overtime for that worker.

curl --location --request POST 'https://api.sandbox.salsa.dev/api/rest/v1/paystream/payroll-elements' \
--header 'Content-Type: application/json' \
--header 'Accept: application/json' \
--header 'Authorization: Bearer ${YOUR_API_TOKEN}' \
--data-raw '{
  "data": {
    "type": "PaystreamPayrollElementPeriodReplacementInput",
    "workers": [
      {
        "pay": [
          {
            "hours": 20,
            "endDate": "2024-01-01",
            "startDate": "2024-01-01",
            "rate": "15.00",
            "payReferenceId": "${YOUR_HOURLY_COMPENSATION_REFERENCE_ID}"
          },
          {
            "hours": 8,
            "endDate": "2024-01-02",
            "startDate": "2024-01-02",
            "rate": "15.00",
            "payReferenceId": "${YOUR_HOURLY_COMPENSATION_REFERENCE_ID}"
          }
        ],
        "workerId": "${YOUR_WORKER_ID}"
      }
    ],
    "periodEndDate": "2024-01-01",
    "periodStartDate": "2024-01-07"
  }
}'

3. The worker must make a certain amount of hours in a given workweek, within a single work day or consecutive days depending on the rules of the work location state.

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Example

In California overtime hours and rates are triggered by:

• workweek hours:
  • 1.5x Overtimerate if the the worker works more than 40 hours a given workweek
• single work day hours:
  • 1.5x Overtimerate if the worker works between 8 and 12 hours in a single day
  • 2x Double Overtimerate if the worker works more than 12 hours in a single day
• consecutive days:
  • 1.5x Overtimerate for the first 8 hours on the 7th consecutive day of work in a workweek
  • 2x Double Overtimerate for all hours worked in excess of 8 on the 7th consecutive day of work in a workweek

4. Once the above steps are complete, during each Payroll Run the overtime calculation will happen automatically in the background and you should see the system calculated overtime on the payslip. Both overtime amounts can be manually overwritten in the Payroll Run if needed.

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Example

A California based employee is marked as overtime eligible and we are receiving Hourlyhours day-by-day. The employee is on a WEEKLYschedule and they work:

• 13 hours on Monday
• 6 hours on Tuesday
• 6 hours on Wednesday

at $3 per hour. In total the worker works 25 hours in the week.

The system will calculate:

• 20 hours of Hourlypay at $3 per hour
• 4 hours of Overtimeat 1.5x3 = $4.5 per hour and
• 1 hour ofDouble Overtimeat 2x3 = $6 per hour

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Note

If you'd like Salsa not to automatically calculate the overtime we can enable Overtime pay types for you to send us the amounts directly.