Step-by-Step Instructions for Implementing FLSA Calculations in Payroll

  • by Nikhil S. More, Manager, Capgemini
  • April 22, 2014
Follow these step-by-step instructions to configure and customize SAP Payroll when an employee gets a bonus or has a recurring or an additional payment that needs to be included in the calculation of FLSA—the US Fair Labor Standards Act--overtime premium.
Learning Objectives

Reading this article you will learn how to:

  • Configure SAP and customize the payroll schema to include recurring or additional payments in the calculation of the FLSA overtime premium.
Key Concept

The US Fair Labor Standards Act (FLSA) is the law regulating minimum wages and overtime pay for private employers engaged in interstate or foreign commerce and for all public-sector employers. Minimum wage in the US is the gross hourly wage, before deductions, that must be paid to employees for each hour worked. The FLSA sets only the minimum; there is no maximum.

The US Fair Labor Standards Act (FLSA) requires that overtime premiums be calculated by including a bonus or commission amount in the FLSA base rate. The standard US Payroll schema calculates FLSA in the time schema. Recurring payments and additional payments are processed at a much later stage in the standard schema. Using an example case, I will demonstrate how to customize the standard schema to read the recurring or additional payments prior to the time schema and to configure the wage types so that they are valuated with the new calculated rate of pay.

It is imperative that FLSA overtime pay be calculated correctly in order to avoid incurring federal and state fines, compensatory damages, and attorney fees.

Nikhil S. More

Nikhil S. More has over 10 years of experience designing and deploying HR business processes across multiple industry sectors. He has substantial experience managing the delivery of the SAP ERP HCM enterprise application and hands-on experience managing the delivery of SuccessFactors/SAP ERP HCM hybrid solution. Nikhil has expertise implementing Employee Benefits and US Payroll with good knowledge of Employee Central. Nikhil is currently a Manager at Capgemini.

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