Payroll 2018 - Does anyone know if Sage 100 Payroll can handle an employee that is subject to fluctuating (or variable) work week?
Using the fluctuating work week (FWW), the employee is paid a ""base salary"" for every week worked, regardless of how many hours he/she worked in that week, plus an ""overtime premium"" for any hours worked over 40.
The formula is as follows:
Gross wages for a given week = Base Salary + [(Base Salary / Total Hours Worked) x 0.5 x (Hours Worked Over 40)]
Rather than time-and-a-half for every hour past 40, the employee gets essentially half-time wages, and the hourly value of those overtime wages are a declining function. However, when the hours worked and gross wages reach the point where the employee would make more at minimum wage plus time-and-a-half, the fluctuating workweek becomes illegal and the employer must switch over to the currently mandated minimum wage plus time-and-a-half. Hence, the test that the calculation performs.
The biggest drawback to the fluctuating workweek method is that most employees don't understand it without careful explanation. It can be described as a cross between hourly and salaried, whereby the employee receives a fixed salary for all hours worked each week (whether it's 37, 40, 45 or whatever) and they also receive an overtime supplement for all hours worked over 40. Unlike straight-salaried employees who receive NO additional pay for hours over forty, the fluctuating workweek employee receives what amounts to roughly ""half-time"" pay for those overtime hours. Further, this obviously benefits the employer, as they don't have to pay a time-and-a-half premium for those hours. However, FWW benefits the employee well, since the employer is not so heavily incented to fill those hours with another employee at straight-time, and it therefore enables employees who are willing to work more to earn more.