Workforce Management

Payroll Rules

Payroll Business Rules are used to set up overtime rules, minimum wage and overtime rules. Overtime rules can be stated in two related sections: Distribution of Hours and Applicable Rate. PAR OPS allows for these two sections to be configured per state as each state is able to enforce a standard for each of these sections at or greater than the federal standards for these rules.

This activity is available through the Smart Client ONLY.

Overtime Split - Daily Payroll Transactions Report

Overtime pay can be split into OT50 and OT100 segments.

Overtime Rules Tab

Once you have opened Payroll Rules, perform the following

  1. Click Overtime Rules tab
  2. Click "..." to expand the details of this payroll rule
  3. Select the appropriate overtime rule from the following options in the drop down in the 'RULE' column
    1. Daily Overtime: Overtime begins when an employee works consecutively more than the amount of Test Hours entered in one day, this is typically set as 8 hours.
    2. Weekly Overtime: Overtime begins when an employee works more than the amount of Test Hours entered in one week, this is typically set as 40 hours.
    3. Daily Extra-Overtime: Overtime begins when an employee works consecutively more than the amount of Test Hours entered in one day. This is used in conjunction with the Daily Overtime rule to apply a different level of overtime when more hours are worked.
    4. Holiday Overtime: Overtime begins when an employee works more than the amount of Test Hours on a holiday marked with the Apply Overtime Rule in Calendars - Holidays.
    5. Holiday Extra Overtime: Overtime begins when an employee works more than the amount of Test Hours on a holiday marked with the Apply Overtime Rule in Calendars - Holidays. This is used in conjunction with the Holiday Overtime rule to apply a different level of overtime when more hours are worked.
    6. Consecutive 7 Overtime: Overtime begins when an employee works more than the amount of Test Hours on the 7th consecutive day in 1 week.
    7. Consecutive 7 Extra-Overtime: Overtime begins when an employee works more than the amount of Test Hours on the 7th consecutive day in 1 week. This is used in conjunction with the Consecutive 7 Overtime rule to apply a different level of overtime when more hours are worked.
    8. Consecutive hours worked (30 min break max): Overtime begins when an employee who works more than the amount of Test Hours across multiple shifts with no more than a 30 minutes break between shifts.
    9. Consecutive 24 hours Overtime: Overtime begins when an employee who works more than the amount of Test Hours in a 24 hour time frame.
  4. Enter overtime criteria in the 'TEST HOURS' column
  5. Enter overtime percentage in the 'PREMIUM %' column
  6. Check this box to hide overtime rule in the 'HIDE' column
  7. Select the country where the overtime rules apply in the 'COUNTRY' column
  8. Select the state if the country selected is the USA in the 'STATE' column
  9. Check box in the 'HIDE' column to hide the overtime rules for that particular region specified

Easy mode does not have an option to show hidden rows. Carefully consider this before selecting the Hide option.

Minimum Wage Tab

Once you have opened Payroll Rules, perform the following

  1. Click on the Minimum Wage tab.
  2. Identify the Payroll District.
  3. Click "..." to expand the details of the Payroll District to review the rates applied.

How Are Minimum Wage Rates Updated?

PAR OPS updates state minimum wage values yearly based on the information currently found on the Department of Labor website.  Please be sure to review these rates for accuracy, should you find any inconsistencies, please send an email with details to suppot@restaurantmagic.com.

How Are The Minimum Wage Values Used in PAR OPS?

The minimum wage values entered in Payroll Rules are used in the Below Minimum Wage report and pay memo calculations. This rate is also visible as a column in the Payroll Research report.

Can I Update Minimum Wage Rates?

State rates are updated by PAR OPS and can only be edited by PAR OPS.  They are marked as Internal in the Payroll Rules – Minimum Wage details.  Some states have additional minimum wage values by county whose entries are the responsibility of the client to enter and update as needed.

  1. Login as Administrator
  2. Click Restaurants, Logins, and Groups
  3. Click Advanced Permission Grants
  4. Select Allow Edit Min Wage in the 'DESCRIPTION' column.
  5. Click "..." Details to review the Smart Group assigned to this permission. If no smart group is assigned, assign the appropriate group.
  6. Click Logins
  7. Select the login that should have the ability to adjust minimum wage values
  8. Click Next on the Task Ribbon.
  9. Click Smart Groups on the Task Ribbon.
  10. In the Operation drop down menu, select Assign Group.
  11. In the Group drops down menu, select the same Smart Group assigned to the Allow Edit Min Wage Advanced Permission.
  12. Click OK
  13. Click the Save button on the Task Ribbon.
  14. Click Labor and Scheduling
  15. Click Payroll Rules
  16. Click Minimum Wage tab
  17. Select the Payroll District
  18. Click the Add button on  the Task Ribbon.
  19. Enter the As of Date, Minimum Wage and Min Wage for Tipped Employees rates.
  20. Select the Save button on the Task Ribbon

Minor Rules Tab

Employees flagged as minors in the Employee Wizard are restricted by these rules on the schedule.
Once you have opened Payroll Rules, perform the following

  1. Click Minor Rules tab
  2. Click "..." to expand the details of minor rules
  3. Enter the date that this rule will be in effect in the 'AS OF DATE' column
  4. Enter minimum age an employee can work with appropriate paperwork and approval in the 'MIN AGE' column
  5. Enter the maximum age for this rule to apply in the 'MAX AGE' column
  6. Select Yes in the 'SCHOOL IN SESSION' column
  7. Enter a rule in the 'RULE' column to add:
    1. Earliest Start Time: The earliest time a minor may begin work.
    2. Job Restriction: Restricts minor from working certain jobs.
    3. Latest End Time: The latest time a minor may end work.
    4. Max Days/Hours per Week: The maximum number hours a minor can work per day, per week.
    5. Max Monday: – Friday hours per day: The maximum number of hours a minor can work on a weekday.
  8. Set value in the 'RULE VALUE' column
  9. Check this box 'CAN BE EXEMPT' column if the minor can be exempted
  10. Select the country where the minor rules will apply 'COUNTRY' column
  11. Select the state if the country selected is the USA in the 'STATE' column
  12. Check box in the 'HIDE' column to hide the minor rules for that particular region specified

Easy mode does not have an option to show hidden rows. Carefully consider this before selecting the Hide option.

School In Session Tab

This feature is helpful if employing school students with availability restrictions. By defining the school in session dates, PAR OPS will enforce scheduling rules only when school is in session.

Once you have opened Payroll Rules, perform the following

  1. Click School in Session tab
  2. Select the unit these rules apply to in the 'UNIT' column
  3. Select the Smart Group for these rules in the 'GROUP' column
  4. Enter the start date for this rule to apply in the 'START DATE' column
  5. Enter the end date for this rule to apply in the 'END DATE' column
  6. Check this box if school is in session in the 'IN SESSION' column

Below Minimum Wage Overtime Calculations

The Department of Labor (DOL) outlines laws regarding minimum wage for employees who are normally tipped, and therefore whose regular hourly rate is less than minimum wage. Below are two links to DOL websites that discuss this topic, and an example of how PAR OPS currently calculates overtime for these employees. The links provided are only a sample of DOL websites regarding this topic. PAR OPS is not responsible for providing legal advice regarding payroll regulations, and legal counsel is advised. Below is a simplified example of an overtime calculation within PAR OPS, but may not take into account variables in laws in a particular state; those variables are configured appropriately inside PAR OPS to calculate properly.

http://www.dol.gov/whd/regs/compliance/whdfs15.htm

http://www.dol.gov/elaws/esa/flsa/otcalc/glossaryall.asp#OvertimePay

How Is The Below Minimum Wage Calculated?

The Below Minimum Wage report identifies those employees not making at least minimum wage. It compares the Total Weekly Wages to the Minimum Wage (as of the last day of the week)* Weekly Hours Worked. If the weekly wages are less than Minimum Wage wages, the employee will post on the report with a value posted in the Difference column. The Difference is the amount owed to the employee.

  • Non Tipped Jobs Calculation: Minimum Wage (as of the last day of the week)* Weekly Hours Worked – Total Wages = Amount Owed. If the Total Wages is more than Minimum Wage wages then the employee will not show on the report and has made at least minimum wage for week. If an employee working a non tipped position receives additional monies, ie. Declared tips, those dollars are not included in the Below Minimum Wage calculation.
  • Tipped Jobs Calculation: Minimum Wage (as of the last day of the week)* Weekly Hours Worked – Total Wages (Paycheck amount + all Earnings Contribution Pay Memos) = Amount Owed. If the Total Wages is more than Minimum Wage wages then the employee will not show on the report and has made at least minimum wage for week. If an employee working a tipped position receives additional monies, ie. Declared tips, those dollars are included in the Below Minimum Wage calculation.

What is a 'Tip Credit'?

In most states, employers may pay tipped employees less than the minimum wage, as long as employees receive enough in tips to make up the difference. The "tip credit" is the amount the employer doesn't have to pay, so the applicable minimum wage (federal or state) less the tip credit is the least the employer can pay you per hour, assuming the tips bring the employee above minimum wage.

How is PAR OPS's Overtime Calculated?

  • Scenario 1:
    • John Doe is an employee who, because he is tipped, receives compensation of $2.13 an hour. The minimum wage in his state is the same as the federal minimum wage, at $7.25.
    • If John Doe worked only regular hours, his 'tip credit' per hour is (7.25 - 2.13) = 5.12
  • Scenario 2:
    • If John Doe worked 5 hours of overtime, PAR OPS calculates the overtime wage such that the tip credit for overtime hours is the same as the tip credit for regular hours.
    • The overtime rate for an employee who makes exactly minimum wage would be (7.25 * 1.5) = 10.875
    • The "premium" portion of the overtime for an employee at minimum wage is the "extra" amount above their regular wage, or (10.875 - 7.25) = 3.625
    • Adding the $3.625 premium to John Doe's sub-minimum wage regular rate would result in (3.625 + 2.13) = 5.755
  • Scenario 3:
    • If John Doe's overtime rate was $5.755 as calculated above, then the difference between his overtime rate and the minimum wage overtime rate would be (10.875 - 5.755) = 5.12. This is the difference between the two rates, or again, the 'tip credit.' This tip credit of $5.12 is the same tip credit amount for both regular and overtime.
    • A common misconception is that overtime is simply a regular wage times 1.5. While this basic sample does not cover intricacies in different states, it can shed some light on what PAR OPS is calculating, and why it is not simply the rate times 1.5.

PAR OPS also has a wealth of options surrounding deeper overtime calculations, as well as overtime at home versus borrowed stores. For more configuration options, see Overtime Calculation Methods in DC.

Overtime Calculation Methods in DC

To understand how we will compute Overtime rates we must first divide the applicable rate into two components; standard and premium.

Overtime Formulas:

  • Applicable Rate = (Standard Rate = Regular Rate) + (Premium Rate = Regular Rate * 50%)
  • Applicable Rate = ($10.00) + ($5.00)

The above applicable rate is overly simplified, but you can see how this works for the illustration. The applicable rate must include recognition of prevailing minimum wage and the possibility that the user may have worked more than one job. The important and constant part to note is that the Standard Rate is always determined from the POS Job Rate or DC Job Rate. The Premium rate must be determined by PAR OPS based upon rules and methods.
 

How Do I Launch Overtime Calculation Methods In DC activity

Below are the steps on how to launch Overtime Calculation Methods in DC

  1. Select Labor and Scheduling from the Menu Folder
  2. Select Overtime Calculation Methods in DC activity

Premium Method

The following options are available for calculating premium rate:

  • Job: indicates that employee job rate for the job worked while in overtime will be used as the basis of the premium rate.
  • Day Weighted Average: the weighted average of all jobs worked, for employee, for the specific day will be used as basis for the premium
  • Full 7-Day Cycle Weighted Average: the weighted average of all jobs worked, for 7 days through the date of overtime will be used as the basis for the premium rate. Seven days may include days from previous payroll cycle.
  • WTD Weighted Average: the weighted average of all jobs worked, for the specific week-to-date (WTD) up and through the date of overtime will be used as the basis for the premium rate. WTD includes current payroll week cycle.
  • Highest Rate: max of all employee job rates during payroll period will be used as the basis for the premium rate.
  • Highest Above Min Wage Rate: max of all employee job rates above min wage during payroll period will be used as the basis for the premium rate as well as standard rate. If an employee only works jobs that are below Full Minimum wage, the overtime will be calculated at the Full Minimum Wage rate.

The first 5 methods calculate premium rate, compare it with min wage and take the maximum of two. This maximum rate is multiplied by 0.5 and added to Standard rate. The last method calculates premium rate as max of all employee rates and min wage. This rate is multiplied by 1.5 – this is the major difference. Highest Above Min Wage is the only method that applies premium rate instead of Standard rate.

Overtime Method

The following options are available for calculating overtime rate:

  • POS Method: overtime is imported from POS ‘as is’.
  • Unit Method: overtime is calculated for each Unit individually. If employee works 30 hours in unit #1 and 20 hours in unit #2, no overtime will be calculated.
  • Group Method: overtime is calculated for all units in payroll group. If employee works 30 hours in unit #1 and 20 hours in unit #2, and both units belong to the same payroll group, 10 hours of overtime will be calculated. See Allocation method (below) for details about who will pay for overtime.

Allocation Method

This applies to who pays for overtime in Group Method. This is selected in the Payroll Settings activity in the Groups tab

  • Calendar Based: Means the unit where overtime happens will pay regardless if it is home or borrowed.
  • Home/Borrowed Precedence: Means borrowed unit pays.

If overtime hours are greater than hours worked in borrowed units, the remaining hours are charged to home unit (Overtime Hrs – Hrs Worked in Borrowed Units).

How Do I Configure a Scheduling Threshold for Full-Time or Part-Time Employees?

Scheduling thresholds for Full-Time or Part-Time employees can be configured in the FT/PT Thresholds Tab.  Based on configuration, these thresholds appear in the Scheduling activity as either warnings that can be overridden or errors that block scheduling employees beyond the set hour amounts. An employee must be designated as Full-Time or Part-Time in the Labor Options tab of the Employees activity for this setting to apply.

  1. Go to the Payroll Rules activity in the Smart Client.
  2. Go to the FT/PT Thresholds Tab.
  3. Select any empty line to create a new threshold.
  4. Select a Country.
  5. Select a Payroll District.
  6. Select an Employee Type (Full Time or Part Time.)
  7. Enter a Threshold amount. This sets the number of hours this Employee Type can be scheduled.
  8. Check the box in the Enabled column to enable the threshold.
  9. Check the box in the Allow Override column to allow the threshold to be overridden when scheduling.
  10. Select Save.
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Due to configuration options available with PAR OPS®, any reports or activities shown in the Knowledgebase may appear or be named differently in your database. The processes outlined are recommendations which may be implemented differently for your company.
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