From time to time, someone must work more than their allotted 40-hour workweek to complete the objectives of a particular project. Overtime pay for non-exempt employees may be charged directly to the appropriate 53 accounts in proportion to the effort spent on each project unless specifically disallowed by the sponsor in the award terms and conditions.
As with any direct cost, overtime charges must be allocable, allowable, and reasonable according to the Uniform Guidance, the sponsor’s guidelines, and university policies. Like regular effort, overtime costs must be directly related to the work performed on the sponsored project. The PI must ensure that sufficient funds are available in the sponsored project account to cover the overtime costs. Overtime work must be pre-approved by the PI. Justification for overtime must be documented, including the necessity for project objectives and alignment with sponsor requirements. Per CSU HR, only non-exempt employees are eligible for overtime compensation.
Let’s look at an example for calculating overtime:
The overtime calculation begins once an employee has worked 40 hours in a given week. For our example, consider a non-exempt employee who worked 9 hours every day, with the last 2 hours each day on an extra project:
For 4 days, their effort is split as follows:
· Project A: 7 hours (77.78%)
· Project B: 2 hours (22.22%)
On the 5th day, their effort is split into regular and overtime:
· Project A: 3 hours (regular time), 4 hours (overtime)
· Project B: 1 hour (regular time), 1 hour (overtime)
In Conclusion:
1. The timecard for this employee should reflect the hours worked on each project so that the department can determine when overtime begins and ensure accurate distribution of costs.
2. Time and effort reports must accurately reflect the hours worked, including overtime, and the sponsored projects benefiting from the work. Documentation of pre-approval and justification for overtime must be retained by the department and made available for audit purposes.
3. Payroll records must clearly indicate the overtime hours and the corresponding sponsored project account to which the overtime is charged.
Blog post by Brigette Pfister, Financial Compliance Manager, Office of Sponsored Programs