Pago accumulates overtime pay different from other timekeeping and payroll systems. Traditional timekeeping and payroll systems treat hours worked in an overtime period as time-and-a-half pay. Pago has worked with ag labor attorneys and determined that the most accurate and compliant way to track and pay overtime is to track it as premium pay on top of regular pay, rather than time-and-a-half pay.
Pago Overtime Premium
Pago overtime premium is calculated and paid as an additional premium paid at one-half the weekly regular rate of pay hourly rate for the hours worked in an overtime period.
Example (California 2019)
Daily Overtime Premium
An employee is paid $12 per hour and receives no other forms of compensation. In one workday, she works 10 hours. Out of those 10 hours, 0.5 are overtime premium hours.
Regular Hourly Pay: 9.67 hours x $12/hour pay rate = $116.04
Rest and Recovery (Break) Pay: 0.33 hours x $12/hour pay rate = $3.96
Overtime Premium Pay: 0.5 overtime hours x $12/hour pay rate x 0.5 overtime premium rate = $3.00
Total Pay = $123.00
Notice that the Regular Hourly Pay value includes the hours of overtime pay and that overtime premium is added for the overtime hours at one-half the pay rate. The payroll export file created by Pago will contain 3 records for Regular Hourly Pay, Rest and Recovery Pay, and Overtime Premium Pay.
Traditional Overtime Pay
Traditionally, other timekeeping and payroll systems pay overtime at one-and-a-half times the employee's regular rate of pay for all hours worked in the overtime period.
Example
Daily Overtime Pay
An employee is paid $12 per hour and receives no other forms of compensation. In one workday, she works 10 hours. Out of those 10 hours, 0.5 are overtime hours.
Regular Hourly Pay: 9.17 hours x $12/hour pay rate = $110.04
Rest and Recovery (Break) Pay: 0.33 hours x $12/hour pay rate = $3.96
Overtime Pay: 0.5 overtime hours x $12/hour pay rate x 1.5 overtime pay rate = $9.00
Total Pay = $123.00
Notice that the Total Pay in both examples are the same. However, the method used by Pago is the correct method to ensure compliance with California overtime laws.
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