Time and labor Overtime Calculations based on California Labor Regulations

This Whitepaper goes over some of the most common setups which are required for OTL to calculate the overtime on timecards and then look at some examples of how these overtime calculations work based on the setups which we define as they apply for California Labor Regulations. Please note that even though the main focus of this whitepaper is California Overtime Calculations but the concepts can be used for just about any type of explosion even if you are not doing a California timecard.

What is OTLR? OTLR is a set of rules which you define in the OTL Application which allows the system to auto calculate overtime on an employees timecard. You can setup either a daily overtime rule or a weekly overtime rule or a mix of both as in the California Labor Overtime regulations. Using these rules it is possible to setup quite complex requirements based on Company, local, state legislations or federal regulations.

Employees just need to enter the hours worked on their timecards and the system will automatically calculate and display the overtime based on the rules setup as opposed to in the past wherein these calculations had to be done manually and with that we avoid all the mistakes and headaches which one had to go through while doing manual entries.

So what is this California Overtime Regulation ?California Overtime Labor law defines overtime as any work in excess of 8 hours in one work day and any work in excess of 40hours in any one work week and the first eight hours worked on the seventh day of work in any one work week shall be compensated at the rate of no less than one and a half times the regular rate of pay for an employee. Which means there is a set of rules for a daily overtime and also for weekly overtime. In most US states we usually have just a weekly rule wherein an employee working more than a set number of hours in a work week receives overtime but California is special as it has both a daily rule and a weekly rule. The Federal Fair labor Standards Act (FLSA) forms the basis for most employee wage and hour regulations.We will now look at the setups which are required to enable OTLR within the OTL Application and the various setup steps required to set the rules. This whitepaper assumes that we already have a working OTL environment wherein we are able to create and submit a timecard without explosion.

Steps involved in setting up Overtime Rules / Calculations

1- Enable OTLR for employeeThe Self-Service preference to Allow Rules Evaluation must be set to yes and the overtime recurring period must be of type weekly. Also set the review layout to OTLR review in order to see the explosion.2- Create an Earning Group Earning Group defines the elements, which would participate in calculation for reaching Overtime Cap.3- Create an Earning PolicyCreate an Earning Policy of type Special which uses points for evaluation. Pre-requisites for this include creating an Earnings Group and Holiday Calendar 4- Enter Element Time InformationElement Time Information for the elements used in the Earning policy and assign points to use when evaluating the rules that are setup in the Earning policy.5- Create Assignment Time InformationTo attach policies and plans to employee assignment6- Enable Profile Option Set the profile option HXT: Compare Special Rules Evaluation

Step1 Enable OTLR for employeeNavigation: US OTL Application Developer > Preferences (Self Service Preference to Allow Rules Evaluation) Setup the Preference Self Service Preference to Allow Rules Evaluation to Yes as shown in the picture below.

Next Setup the Timecard Review Layout to display the Overtime Calculations. By setting this to Details Review Layout, the employee will be able to see the overtime calculations when he reviews the timecard before submitting it for approval. You can also setup the Details Notification Layout, so the Employees manager can too see the detailed overtime explosion when he receives the notification of the Employees Timecard submission for approval.

Navigation: US OTL Application Developer > Preferences (Self Service Timecard, Review and Confirmation Layout Pages)

Step2 - Create an Earning Group The next step is to define an Earnings Group. The Earnings Group basically tells the system which elements you want the system to use to be counted towards overtime calculations.

Tip: Normally you would not put Overtime / Double time hours in your Earnings Group since you do not want those hours to be calculated towards your overtime calculations. Similarly Sick Time should not be included in the Earnings Group as normally it is not counted towards overtime calculations.

In the example provided below we are adding only the regular hours to the Earnings Policy. You can include many other elements based on your requirements. Just remember that all the elements included in the Earning Group will count towards overtime. So if you do not want a particular element to count towards overtime then do not include it in the Earning Group.

Navigation: US OTL Application Developer > OTL Time Accounting > Table Setup and Maintenance > Earning Group

Step3 Define an Earnings Policy

Lets first look at the California Overtime Policy before we define the Earnings Policy. The table below provides a graphical overview of the policy.

NAMETYPEELEMENTDAYSHOURS

Daily RegularDailyRegular8

Daily OvertimeDailyOvertime12

Daily DoubletimeDailyDoubletime99

Weekly RegularWeeklyRegular40

Weekly OvertimeWeeklyOvertime52

Weekly DoubletimeWeeklyDoubletime999

7th OTSpecialOvertime78

7th DTSpecialDoubletime724

Holiday WorkedHolidayHoliday Worked24

The above table tells us Daily Rule if an employee works for more than 8 hours a day but less than 12 hours then any hours worked after the first 8 hours he will receive Overtime for those remaining hours. If he works more than 12 hours in a day then for any hours worked after the first 12 hours he will receive double time for those remaining hours.

Weekly Rule If an employee works for more than 40hours in a week but less than 52 hours in any one work week, then he will receive overtime for any hours worked after the initial 40 hours. Similarly if the employee works for more than 52 hours in any one work week, then he will receive double time for any hours worked beyond the initial 52hours.

Please remember these rules are based on a weekly time as defined in Payroll and will not span two different payroll weeks.

California also has this special 7th Day rule wherein if the employee works on all the 7 days of the week then for the first 8 hours worked on the 7th day the employee will receive Overtime and any hours worked beyond the 8 hours the employee will receive doubletime.

Now we will see how this policy is implemented in OTL

Navigation: US OTL Application Developer > OTL Time Accounting > Policies > Earning

The points to keep in mind while creating the Earnings Policy for California Overtime Calculations is that the Type will be Special Overtime Earnings Type and checkbox to Use Points has to be checked. Include the Earnings Group which was created in the previous section in the Earnings included to meet OVT Cap field.

Note the Type / Earning Type / Hours field in the table from the screenshot.

It is very important to enter the correct effective dates as by default the system enters the current sysdate and your timecard period may be starting on a prior date.

Step4 Enter Element Time InformationIn the Earnings Policy setup we checked the Points checkbox to Yes. The Earnings Policy uses the points to evaluate the rules which are setup in the Policy and these points are defined on the Element Time information form for each element which we are using the overtime calculations.

Element Time Information for the elements used in the Earning policy Regular1 point Overtime 1.5 points Doubletime 2 points

Earnings Category can be Absence, Holiday, Overtime, Regular, Regular Non-Worked, Day of the Week Premium, Other Premium, Shift Diff. Premium and Holiday Premium.

To enter the Elements Time Information go to the Element Time Information formNavigation: US OTL Application Developer > OTL Time Accounting > Element Time Information

Here we are entering the Element Time information for the Regular Hours Element. The points value is 1.

Here we are entering the Element Time information for the Overtime Element. The points value is 1.5.

Here we are entering the Element Time information for the Double time Element. The points value is 2.

Step 5 - Create Assignment Time InformationAfter we have defined the Earnings Policy and the Element Time information we now attach the Earnings Policy to an Employee via the Assignment Time Information form. For every employee for whom you want the system to calculate the overtime hours, you will need to attach the Employee Assignment to a valid Earnings Policy.

Currently there is no supported API which will allow you to attach an Employee to an Earnings Policy programmatically. An Enhancement Request has been filed with Oracle Development for the same.

Navigation: US OTL Application Developer > OTL Time Accounting > Assignment Time Information

Step 6 - Enable Profile OptionFor the system to be able to resolve any conflict between the daily overtime policy and a weekly overtime policy you need to define a Profile Option called HXT: Compare Special Rules Evaluation

Navigation: System Administrator > Profile > System

Once this profile is set to Yes, then the Combination functionality will be applied (i.e., if the profile is set to 'Yes' then include combination points while determining the greatest of the Daily, Weekly and combination points). If all three are of the same points then Combination takes the precedence. The order of precedence in case of 'EQUAL' points is as follows:1 Combination2 Weekly3 Daily

We will now look at some examples of how the system calculates the overtime in different situations based on the setup which we have just defined.

Example Scenario - 1Weekly overtime is calculated within a single week's period.(Timecard period = Monday through Sunday.)Enter hours as follows:Hours Type - AM Regular TimeMon 10 - Tue 12 - Wed 13 - Thu 10 - Fri 8 - Sat 8For this example the 7 day overtime rule does not take effect because only 6 days were worked in the weekly period. However work in excess of eight hours in one workday and any work in excess of 40 hours in any one workweek will be paid as overtime.This calculation follows the California Labor Law.

Notice how the system has applied the daily rule on Monday to Thursday and then the weekly rule on Saturday.

On Monday since the employee worked 10 hours as per the rules which we have defined the employee received 8 hours of regular time and 2 hours of overtime.

Similarly on Tuesday as the employee worked for 12 hours, he received 8 hours of regular time and 4 hours. He did not receive any double time since he did not exceed 12 hours in a day on the daily rule.

On Wednesday, as the employee worked for 13 hours he received 8 hours of regular time, 4 hours of overtime and 1 hour of Doubletime as he exceeded the 12 hours limit on the daily rule for the overtime.

Notice on Friday the employee did not receive any overtime for the daily or the weekly rule. Remember that as per our definition on the Earnings Group only the regular hours are counted towards the overtime calculations and the number of regular hours worked before Friday were 32 hours. The hours in the overtime and doubletime bucket do not count towards the overtime calculations.

On Saturday the employee works for 8 hours and receives 8 hours of overtime as we reached the weekly regular hours cap of 40 hours on Friday.

Points Calculation on SaturdayDaily Point = 8x1 = 8 pointsWeekly Points = 8x1.5 = 12 pointsHence Weekly Rule wins over Daily Rule and hence we apply the Weekly Rule on Saturday.

Since the employee did not work on Sunday which is the 7th day of the week. The 7th day special rule was not applied.

Example Scenario 2Employee does not work in excess of 8 hours per day nor 40 hours in the week but works on the 7th day of the week and is paid overtime for the 7th Timecard period = Monday through Sunday.Enter hours as follows:Hours Type - AM Regular TimeMon 1 - Tue 1 - Wed 1 - Thu 1 - Fri 1 - Sat 1 - Sun 1

In this example we find that the 7th day rule is being applied as the employee has worked on all 7 days of the week even though he has not worked for full 8 hours shift on any one day and nor has he received any overtime or double time for any day of the week.

Example Scenario 3Employee works in excess of 8 hours per day and 40 hours in the week and works on the 7th day of the week and is paid daily, weekly but not the 7th day overtime because he did not work on Saturday.Enter hours as follows:Hours Type - AM Regular TimeMon 10 - Tue 12 - Wed 8 - Thu 8- Fri 8 - Sat 0- Sun 1This calculation also follows the California Labor Law.

Here we find that the daily overtime rules were applied on Monday and Tuesday and then the weekly overtime rule was applied on Sunday. The 7th day rule was not applied as the employee did not work on all the 7 days of the week.

One Extra Setup Step for 7th Day RuleDue to bug 3631327, it was previously discovered that the 7th day rule was being applied to timecards even when the employee was on vacation for 6 days of the week and then worked on the 7th day. To get around this issue Oracle Development provided a workaround.

For any system using the 7th day rule in the Earnings Policy, needs to define a special Earnings Group called OTLR 7th Day Hours. In this earning group include all elements which are to be considered as Hours Worked to count towards overtime calculation. In this earning group include the overtime elements as defined in the Earning Policy (ex Overtime and Doubletime) . A customer specific setup is required to determineany other elements which are to count towards overtime calculation (ex. Vacation, Sick Jury Duty, Training). You do not use this Earnings Group in any Earnings policy. The name of the Earning Group has to be exactly as OTLR 7th Day Hours for this fix to work.

Some Important Points to Remember It is extremely important to remember that this explosion works only on a Weekly Timecard. It will not work if you have a bi-weekly, semi-monthly or a monthly timecard. Another important point to remember when creating your Earning Group is to consider which elements you would like to use as your base elements. In the examples provided we used only one element for simplicity, however it is possible to use multiple elements in there. When attaching the Earnings Policy to the Employee it is important to correct the start date, by default sysdate is populated in that field. If you are not eligible to all elements in the earnings policy then you won't see the policy in the lov on the assignment time information screen If assignment time information is changed mid period, timecard explosion may not work properly. Whenever there is a mid period assignment change its best to create two separate timecards and manually add the Overtime Hours. They will act as override hours and will not count towards overtime. You can add hours type on a timecard which are not included in the Earnings Group and they will not count towards overtime calculations.