General Tab
      Back to home
      1. Protiv Knowledge Base
      2. Settings
      3. General Tab

      What is the OT Difference in Protiv? 🤔

      This article explains how Protiv calculates overtime differences when bonuses are involved, ensuring compliance with the Fair Labor Standards Act (FLSA) within the United States of America. ⚖️

      When you give your workers bonuses, the Fair Labor Standards Act (FLSA) requires you to adjust their overtime rates. Don't worry, Protiv's got your back! We automatically calculate these adjustments for you. 💪


      Why the Adjustment?       🧮

      The FLSA mandates that overtime pay be calculated based on the employee's regular rate of pay, which includes bonuses. This means that if an employee earns a bonus, their overtime rate needs to be recalculated to reflect the increased hourly earnings.


      How Protiv Calculates OT Difference       🤖

      Protiv automatically calculates the OT (Overtime) Difference for you, ensuring you remain compliant with the FLSA. Here's how it works:

      1. Bonus Rate per Hour: The bonus amount is divided by the total number of hours worked (regular and overtime) to determine the bonus rate per hour.

      2. Adjusted Regular Rate: The regular hourly rate is added to the bonus rate per hour to get the adjusted regular rate.

      3. Adjusted OT Rate: The adjusted regular rate is multiplied by 1.5 (the typical overtime multiplier) to calculate the adjusted overtime rate.

      4. OT Difference Rate: The adjusted OT rate is subtracted from the regular OT rate to find the OT difference rate.

      5. OT Difference Amount: The OT difference rate is multiplied by the number of overtime hours worked to determine the OT difference amount.

      Example:

      Let's say your employee earns $20/hour and works 50 hours in a week (10 of which are overtime). They also receive a $200 bonus. Protiv would calculate the OT difference as follows:

      1. Bonus Rate per Hour: $200 / 50 hours = $4.00

      2. Adjusted Regular Rate: $20 + $4 = $24.00

      3. Adjusted OT Rate: $24 x 1.5 = $36.00

      4. OT Difference Rate: $36 - $30 (regular OT rate) = $6.00

      5. OT Difference Amount: $6 x 10 hours = $60.00


      Turning Off Automatic OT Difference Calculation       📴

      If you prefer to calculate the OT difference yourself, you can turn off Protiv's automatic calculation:

      1. Go to Settings > General.

      2. Scroll down to Additional Settings.

      3. Toggle off the "Calculate OT Difference" option.


      Important Note:       This information is specific to U.S. companies and the Fair Labor Standards Act (FLSA). Overtime laws vary by location, so always consult with an HR professional or legal expert to ensure compliance with your local regulations.

       

      📚 TOOLS & RESOURCES:

      1. Article: What is the Payroll Bonus Report in Protiv, and what does it tell me?
      2. U.S. Department of Labor: Fact Sheet #56C: Bonuses under the Fair Labor Standards Act (FLSA)