Advice with the TWP system is misleading and could be causing clients with tip credits to think they're blending appropriately when they're really not.
Instructions in TWP:
Go to > Accountant Menu > Processing Rules > Pay Rate Calculation (radio button) > BlendPayRates and follow the instructions to choose the blending method.
The way the system calculates this is to add up the total amount of pay (rates * hours) in a pay period then divide that by the amount of hours worked in that same pay period. It then uses that rate when promoting to OT.
For example an employee has 10 hours at a rate of $5.00 ($50.00) and 10 hours at $10.00 an hour ($100.00). It would take the total amount earned ($50 + $100 = $150) and then divide that by the total amount of hours worked ($150 / 20 = $7.50). So for OT promotion it would use $7.50 * 1.5 as the OT rate ($7.50 * 1.5 = $11.25).
$50.00 + $100.00 = $150 / 20 = $7.50 * 1.5 = $11.25 OT
This is wrong - you can't calculate an overtime rate on a sub-minimum wage rate without assessing the minimum overtime wage rate and then subtracting the tip credit from that rate.
Here's the compliant math for the state of NY:
REGULAR RATE:
10 x ($8.75-$3.75) = 10 x $5.00 = $50.00
10 x $10.00 = $100.00
20 hours = $100.00 + $50.00 = $150.00
$150.00 / 20 = $7.50
OVERTIME RATE:
10 x (($8.75 x 1.5) - $3.75) = 10 x ($13.125 - $3.75) = 10 x $9.375 = $93.75
10 x ($10.00 x 1.5) = 10 x $15.00 = $150.00
20 hours = $93.75 + $150.00 = $243.75
$277.50 / 20 = $12.18
$12.18 is the correct overtime rate given your example, not $11.25.
TWP should implement functionality to account for tip credits, by state, and seamlessly adjust overtime figures accordingly.
SwipeClock OT Premium Example.xlsx"
Guest
As the tipped minimum wage, and therefore the tipped overtime amount, increases, the necessity for TWP to accurately calculate tipped overtime is more pressing than ever. Some clients have caught on to the fact that the overtime rate is wrong and we're unable to provide them with a sufficient explanation for why this is the case.
How can we escalate the priority on this item as it affects an entire industry/sector of employment, and one that SwipeClock specifically caters to nonetheless? This is one of the very few things on a relatively short list of intolerable limitations SwipeClock currently has. Please consider prioritizing the need to employ this overtime calculation.
Attachments Open full size
The need for accurate pay calculations in all scenarios is extremely dire and with SwipeClock being able to accommodate so many other nuances of the hospitality industry, not having the subminimum wage calculate at the correct overtime rate is a huge, gaping hole in the system's capabilities.
Take into account that you are now posting compliance information in regards to this on your own website, yet the software is not capable of calculating overtime in the fashion you're relaying is mandated for compliance purposes.
While the payroll software is ultimately charged with assessing weighted overtime, the timekeeping software must mirror those calculations if you're providing the ability to add wages and schedule against a budget or run labor costs. Have understated overtime is a huge blow to employers reconciling their labor costs for the week.
See article http://www3.swipeclock.com/avoid-flsa-violations-by-calculating-regular-rate-of-pay-with-tips-commissions-part-2/?utm_source=LI+IG&utm_medium=social&utm_campaign=Boss+client for reference on how the system should be setup to accommodate these needs.
Thank you.
Attachments Open full size
We have also requested this and hate that we can't allow clients who choose to put rates in the clock to print the timecards with the wages on them because the OT is understated. We can't have a mismatch between the check which does weighted OT correctly and the timecard which simply multiplies the subminimum wage by 1.5.
Attachments Open full size