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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 employee
The 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 Policy
Create 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 Information
Element 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 Information
To attach policies and plans to employee assignment
6- Enable Profile Option
Set the profile option HXT: Compare Special Rules Evaluation

Step1 Enable OTLR for employee
Navigation: 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.

NAME TYPE ELEMENT DAYS HOURS
Daily Regular Daily Regular

8
Daily Overtime Daily Overtime

12
Daily Doubletime Daily Doubletime

99
Weekly Regular Weekly Regular

40
Weekly Overtime Weekly Overtime

52
Weekly Doubletime Weekly Doubletime

999
7th OT Special Overtime 7 8
7th DT Special Doubletime 7 24
Holiday Worked Holiday Holiday Worked

24

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 7
th
Day rule wherein if the employee works on all the 7 days of the week then for
the first 8 hours worked on the 7
th
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 Information
In 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
Regular 1 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 form
Navigation: 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 Information
After 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 Option
For 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 Combination
2 Weekly
3 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 - 1
Weekly overtime is calculated within a single week's period. (Timecard period = Monday through Sunday.)
Enter hours as follows:
Hours Type - AM Regular Time
Mon 10 - Tue 12 - Wed 13 - Thu 10 - Fri 8 - Sat 8
For 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 Saturday
Daily Point = 8x1 = 8 points
Weekly Points = 8x1.5 = 12 points
Hence 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 7
th
day of the week. The 7
th
day special rule was not
applied.


Example Scenario 2
Employee does not work in excess of 8 hours per day nor 40 hours in the week but works on the 7
th
day of the week
and is paid overtime for the 7
th

Timecard period = Monday through Sunday.
Enter hours as follows:
Hours Type - AM Regular Time
Mon 1 - Tue 1 - Wed 1 - Thu 1 - Fri 1 - Sat 1 - Sun 1




In this example we find that the 7
th
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 3
Employee works in excess of 8 hours per day and 40 hours in the week and works on the 7
th
day of the week and is paid
daily, weekly but not the 7
th
day overtime because he did not work on Saturday.
Enter hours as follows:
Hours Type - AM Regular Time
Mon 10 - Tue 12 - Wed 8 - Thu 8- Fri 8 - Sat 0- Sun 1
This 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 7
th
day rule was not applied as the employee did not work on all the 7 days of the week.



One Extra Setup Step for 7
th
Day Rule
Due to bug 3631327, it was previously discovered that the 7
th
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 7
th
day. To get around this issue Oracle
Development provided a workaround.

For any system using the 7
th
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 determine any 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.

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