Empeon Workforce Overtime Card
To support the overtime tax deduction requirements under the One Big Beautiful Bill Act (OBBBA), Empeon is adding a new Overtime Tax Deduction Card within the Payroll section of the Company tab.
The Overtime Card focuses solely on determining eligibility for the OBBBA overtime tax deduction. It does not calculate actual overtime pay, which continues to be managed by Empeon, elsewhere within the system. Instead, the card tracks how overtime is handled so that the system can determine which hours qualify for the OBBBA tax deduction and which do not.
Upon accessing this card for the first time, users will be guided through an introductory explanation before proceeding with configuration.
What is FLSA Overtime?
It’s important to note that the OBBBA overtime tax deduction applies only to FLSA overtime. FLSA overtime refers to the rules established by the Fair Labor Standards Act (FLSA) for non-exempt employees. Non-exempt employees are typically hourly workers who are eligible for overtime pay when they work more than 40 hours in a week. These rules do not apply to exempt employees, who are usually salaried and not eligible for overtime under FLSA.
Under FLSA rules for non-exempt employees:
- Overtime applies only after an employee works more than 40 hours in a single work week
- Overtime is calculated at 1.5 times the regular rate of pay
- Only worked hours are counted toward the overtime threshold; PTO, holidays, and other non-worked hours are not included
Any overtime paid under different conditions, such as daily overtime rules, company-specific policies for exempt employees, or the inclusion of non-worked hours, does not fall under standard FLSA rules.
OBBBA Tax Deduction Configuration
Upon reviewing the introduction for the Overtime Tax Deduction Card, click "Next" at the bottom of the screen.
After selecting "Yes", the next step is to indicate how your company calculates overtime premium. If you have overtime premiums calculated through Empeon, this option may be auto-populated for you. There are two options:
- Flat Overtime – Choose this if overtime is paid at a single rate for all hours worked beyond 40 in a week. Then select all earning codes used to pay overtime, including any applicable shift differentials. This ensures the system accurately identifies which overtime earnings qualify for the OBBBA tax deduction.
- Weighted (Blended) Overtime – Choose this if overtime is calculated using a blended rate, where multiple pay rates are averaged to determine the overtime rate. Then select the earning code used to pay the OT Premium portion. In most cases this is "OTPR". This ensures the system applies the correct rate for the OBBBA overtime tax deduction while keeping standard overtime pay calculations separate.
After configuring how your company calculates overtime premium, the last step on this screen is to indicate whether there were any changes to the overtime calculation method mid-year in 2025.
While uncommon, if a change did occur, the system will need to know when this change occurred.
- If Flat was entered above, the system will ask for the Overtime Premium code (OTPR) to identify the totals for when the OT calculation was previously set up as Weighted earlier in the year.
- If Weighted was entered above, the system will ask for all earning codes used to pay OT to identify the totals associated with these earning codes when the company was previously set up as Flat.
Regardless of what was selected above, it will prompt for the check date of when this change took effect. This configuration only applies when setting up the Overtime Card for 2025; it will not be used for setups in 2026 or later.
Once everything on this screen has been configured, click "Save". For any questions on this process please don't hesitate to reach out to Empeon Customer Support.