In this article we will define the differences between the Average and Actual pay methods.
NOTE: The Trackforce Valiant Time and Labor Management software defaults to use the “Average” pay method to help ensure that users are in compliance with the Fair Labor Standards Act (“FLSA”) with regard to calculating multiple pay rates for overtime pay.
Since use of the “Actual” basis selection setting may result in non-compliance with FLSA guidelines, Time and Labor Management application users who wish to enable the “Actual” setting, must select the pay classification for which the “Actual” setting is being requested:
Additionally, you are required to provide authorization by signing the Request To Enable “Actual” Basis Setting and returning it to Trackforce Valiant.
Sample Request to Enable “Actual” Basis Setting
After having been advised of the risks associated therewith, Client hereby requests that the “Actual” basis selection for calculating multiple pay rates involving overtime wages be enabled in the Valiant Time and Labor Management set-up application. Client hereby agrees to indemnify, defend and hold harmless Valiant Communication, Inc., its affiliated companies, and its and their officers, directors, shareholders, employees and agents, from and against any and all claims, demands, actions, suits or proceedings which arise out of or are brought as a result of or due to Client’s choice to enable or use of the “Actual” basis selection in the Time and Labor Management application.
The overtime rate is based on a weighted average for a one-week period (the “Average” method). All regular hours are averaged and one overtime rate is computed. For example, if the Employee works:
Post1 for 30 hours at $10.00 per hour and the Overtime rate is 1.5% and also
Post2 for 15 hours at $8.00 per hour and the Overtime rate is 1.5%
(30 hours X $10.00 = $300.00) + (15 hours X $8.00 = $120.00) = $420.00
$420 / 45 hours = $9.333 Average pay rate.
$9.333 X 1.5 = $13.999 Overtime rate
The Employee will be paid:
Regular Pay: 40 hours X $9.333 = $373.320
Overtime Pay: 5 hours X $13.999 = $ 69.999
$373.320 + 69.998 = $443.32 Gross Pay Amount using the Average Method
Actual will use the Actual rate by the number of hours worked at that rate. For example, if the Employee works:
Post 1 for 30 hours at $10.00 per hour and the Overtime rate is 1.5%
Post 2 for 15 hours at $8.00 per hour and the Overtime rate is 1.5%
(The employee worked the first 30 hours at Post 1 and then worked at Post 2 at the end of the week.)
(30 hours X $10.00 = $300.00) + (10 hours X $8.00 = $80.00) = $380.00
$8.00 X 1.5 = $12.00 Overtime Rate; 5 hours X $12.00 = $60.00
The Employee will be paid:
Regular Pay: $300.00 + 80.00 = $380.00
Overtime Pay: 5 hours X $12.00 = $60.00
$380.00 + 60.00 = $420.00 Gross Pay Amount using the Actual Method
* Special Note: Federal regulations prohibit employers from paying employees overtime at a rate less than 1.5 times their weighted average rate of pay. To avoid this situation, it is suggested that the Average calculation be used. Trackforce Valiant sets the Vision™ Division settings to the Average Method and requests a signed release in the event the Actual Method is chosen by the user.