How to configure FLSA (Weighted Average Overtime) in Kronos Workforce Central

How to configure FLSA (Weighted Average Overtime) in Kronos Workforce Central

Federal laws have changed and will become more stringent on compliance for how companies pay Overtime for Hourly and Salary Plus Overtime employees. Kronos has allotted for FLSA(Fair Labor Standards Act) configuration since Kronos Workforce Management v6.2+ using Pay Code Definition configuration. If this configuration is required to be set up, it is best to get a trained Kronos configuration expert to assist. Examples of how Payroll Departments pay employees.

  • Hourly: Straight hourly rate for hours worked up to 40; 1.5 times regular rate of pay for hours worked in excess of 40
  • Salary Plus Overtime: Salary for hours worked up to 40 (or some lower number); 1.5 times regular rate of pay for hours worked in excess of 40
  • Fluctuating Workweek: Agreement with employee to pay salary for all straight-time hours worked; 1⁄2 time of salary divided by hours worked for OT hours
  • Fluctuating Workweek/Static OT Rate: Agreement with employee to pay salary for all straight-time hours worked; 1⁄2 time of salary divided by 40 for OT hours

The attached 2 documents outlines the basic of the setup.

Companies should do the following:

  • Must maintain accurate time records (even if no OT worked)
  • Must ensure proper control of employee work, such as:

    • Off-the-clock
    • Meal and rest breaks • Travel time
    • Remote access

  • Must pay OT premium for hours work in excess of 40/week

    • No method of compensation permits an employer to avoid keeping accurate time records for non-exempt employees

U.S. Department of Labor Facts

https://www.dol.gov/whd/overtime/final2016/overtime-factsheet.htm

The Final Rule focuses primarily on updating the salary and compensation levels needed for EAP workers to be exempt. Specifically, the Final Rule:

  1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South, which is $913* per week or $47,476 annually for a full-year worker;
  2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally, which is $134,004; and
  3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level. The Final Rule makes no changes to the duties tests.

Effective Date

The effective date of the Final Rule is December 1, 2016. The initial increases to the standard salary level (from $455* to $913* per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.

Reference:

  • http://www.flsa.com/coverage.html
  • https://www.dol.gov/whd/overtime/final2016/
  • https://www.shrm.org/legalissues/federalresources/pages/flsa-overtime- rule-infographic.aspx
  • http://blog.dol.gov/2016/05/18/plenty-of-options-with-new-overtime-rule/
  • How Does the New Overtime Rule Affect Your Mobile Device Policy?
  • http://www.kronos.com/compliance-resource-center.aspx
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