Flag Pay Overview

Flag rate is based on a pre-designated amount of time that a task should take when performed under normal circumstances. The Flag Rate Pay is calculated by multiplying the employee's hourly pay rate by the flag time rather than the actual time spent to complete the task.

Flag pay is commonly used to pay mechanics for specific tasks. For example, here's a breakdown of Flag Pay versus Actual Pay for a mechanic throughout a work week.

The mechanic's flag pay is 44 hours multiplied by his hourly pay of $25 for a total pay of $1100 even though he spent only 42.75 hours at the job. This rate excludes overtime and other types of pay, which will be discussed below.

Flag pay can be recorded when the project is completed as in the example above or time can be entered on a daily basis using time clocks and adjusted when the project is completed.

Mix Pay Types

EBMS gives the user the ability to mix flag pay with other types of pay, such as regular hourly pay to clean the bay (see the Thursday example above) as well as the following pay types:

• Vacation, Holiday, Sick, and other pay:  Benefit Pay

• Commissions and other dollar-based pay:  Pay Types

• Reimbursements: Worker Reimbursements

• Piecework: Piecework Payroll Processing Overview

The EBMS software includes powerful and flexible tools to calculate overtime pay, which includes flag pay. Overtime is based on the actual hours rather than flag time. In the example above, overtime (1.5 time) is calculated based on the average hourly rate of $25.73 an hour ($1100 / 42.75 actual hours) rather than the standard overtime rate of $25.  EBMS can calculate on a daily overtime (over 8 hours) basis as well as the standard weekly overtime (over 40 hours) calculation.  

EBMS contains the tools to add paid break time for employees or unproductive paid time to reimburse employees when they need to wait for a task. Some states have mandated that break time and unproductive time (waiting time) be paid in addition to flag pay or piecework pay.  

Configure Flag Pay

Flag pay configuration must be completed since EBMS is not distributed with Flag Pay configured. Review the Flag Rate Configuration section for setup instructions before continuing with the processing section.

Review the Processing Flag Pay section if flag pay has already been set up.

Business Scenarios

Scenario:  An automotive company that sells and installs aftermarket parts wishes to pay their employees flag pay to install accessories and complete auto services for their clients. Tasks are created from a quote or sales order using product service codes. The task calculates billable time based on the quantity of time entered into the sales document. The employee is paid for the project based on the estimated amount of time for the project. Additional pay may be added to the employee’s timecard for non-billable time or adjusted time on a work order. The timecard for the employee may contain flag pay, straight time, and benefit pay. Each type of pay is clearly noted on the employee’s pay stub. The Employee’s timecard is processed using the EBMS payroll system and deposited into the employee’s bank account using the direct deposit process. 

Related Videos and Content

Videos

Flag Pay Feature Introduction 1 minute

Flag Pay ERP Support Training