California Payroll / Time Tracking Advice Needed…

[ChrisAnthony]

Hello Everyone,

First, let me apologize for the lengthy post. I was just hired by a small California construction company for an IT/Office clerk position and have been tasked with finding a system to help us streamline our business operations when it comes to payroll. I’m hoping that I can lay out all the information I know in regards to our business and payroll and someone can help point me in the right direction of a solution.

From what I understand, our company filed a 511 with the EDD which allows us to have an alternative workweek of 10-hour days. This means our pay structure is as follows:

10 hours: Regular Time
10-12 Hours: Overtime
12+ Hours: Double Time
40+ Hours a week: Overtime

Entering time manually into QuickBooks works find for most of our employees, but we have several employees with multiple wage rates which really throws a wrench into the system. For example:

Let’s say one of our construction employees has an hourly rate of $20/hr. This same employee also does sales, which is a commission only position ($0/hr. + Commission). This makes trying to figure out the employees pay a bit tricky when it comes to overtime since any overtime acquired when this employee is doing sales would end up being 1.5 x $0/hr.

Our current solution is to adjust the hours/overtime ratio of the previous day to cover the overtime acquired during sales hours that fell into either the 10+ daily or 40+ weekly overtime limit. This makes for quite a bit of manual factoring and data entry that I feel should either be able to be automated or eliminated.

First and foremost, is this the correct way of handling overtime for employees with multiple pay rates? If so, can anyone suggest a good payroll / time tracking software solution that will handle this type of scenario? I’ve peeked at a few that will handle California overtime rates but most do not (from what I understand) handle the multiple pay rates very gracefully.

Any advice would be greatly appreciated.

Thanks!

[tallen]

Which hours constitute the overtime hours? The hours working construction at 20/hr or the hours doing sales at 0/hr + commission?

I don't know Calif. rules, but it would seem that someone being paid on a commission-only basis would not be subject to overtime for that work -- they work as many (or as few) hours as they have to in order to make the sale....

But maybe a different example - somebody working construction at $20/hr and cleaning (or whatever) at $25/hr -- again you have to decide which hours are the hours that created the overtime situation.

As to software solutions that would cover multi-rate wage situations such as this... I used to run my own payrolls manually with a set of spreadsheets that I built myself, but we recently switched to Paychex. I know Paychex has the facility to handle , but I don't know whether they can handle the overtime problems you have. Beyond that, I am not familiar with other solutions.

[ChrisAnthony]

Thanks for the reply Tallen!

The trouble comes when the the overtime falls on the 0/hr + commission time. We use Paychex as well now (just switched from doing it ourselves from QuickBooks) and they take care of everything, but only once we have correctly calculated and submitted the employees times on our end. Our rep is a very nice young lady but she also struggles when it comes to our payroll. I'm trying to make it as easy as possible on everyone :)

[tallen]

I think you really should talk directly to your state's Labor Department, since they are the ones who set and enforce the overtime rules that you are trying to comply with.

My take, fwiw, would be that the hours spent doing sales work solely on a commission basis, beyond the 10/day or 40/week that they might have put in doing other work paid on an hourly basis, simply do not count as overtime hours. The worker puts in as many or as few hours as they feel they need to in order to earn the commission they want to earn. The sales work, compensated solely by commission, is just not hourly work.... 1.5 x $0/hour = $0..... Like I said, just my take. Talk to the Labor Department to get theirs (which is the one that counts).