Rather than limit yourself to standard earning types—like bonus, tips, and commission—you can create a custom earning type and name it whatever you like. Custom earnings can be added when running regular payroll or an off-cycle payroll.
Custom earnings are supplemental wages that are usually tracked and reported separately from standard pay. Some custom earnings will impact overtime pay—learn more here.
Pro tip: For hourly employees with more than one job or pay rate, you can set up additional jobs and pay rates. This allows them to track hours at multiple rates.
Reminders
For non-exempt employees, custom earnings generally count toward overtime pay (with some federal exceptions) and need to be allocated to a workweek for accurate overtime calculations.
You can specify if an earning should be included or excluded from overtime. If you’re unsure whether to include a specific custom earning, consult the Department of Labor website or an HR Pro.
If you’re paying a bonus, it’s important to know when to include or exclude it from overtime.
If a bonus is discretionary (meaning you, the employer, are not contractually obligated to give it), it should be excluded from overtime.
Create a custom earning for these bonuses, so Gusto can automatically exclude them during payroll, in compliance with Department of Labor guidelines.
All other bonuses will be included in overtime pay.
Customers on Gusto's Plus and Premium plans have access to unlimited custom earnings types and HR Pros who can help navigate tricky wage/hour rules—upgrade your plan at any time. Simple plan customers get 1 custom earnings type (Minister Housing Allowance and Distributed Service Charges, if applicable, do not count toward your custom earnings type limit).
The table below shows the supported custom earning types in the Gusto app. Once you’ve set up custom earnings, they’ll show up in the run payroll flow for your employees.
Each earning has its own description to help you determine if it’s the right one for your payroll. If you’re not sure, you can categorize an earning type as “Other” and select if it should be included or excluded from the overtime calculation.
Earning
Description
Included in OT
Commission
Paid in addition to a base salary or hourly rate (as incentive-based pay).
Yes
Discretionary bonus
Payment is optional (meaning there's no contractual obligation to pay it), and not dependent on the quality, quantity, or efficiency of work.
No
On-call pay
Payment for waiting for work (while on employer's premises or at a prescribed workplace).
Yes
Distributed service charges
Service charges are amounts a business automatically adds to a bill, such as for large parties or events. Customers cannot change the amount.
If the business shares or distributes these charges with employees, use this code to track them.
This ensures the amounts distributed are not treated as tips for tax purposes, but are:
Included in overtime pay calculations, and
Used to meet minimum wage requirements.
Learn more in our article on tip wages, service charges, and tip credits.
Yes
Other
*This earning type allows you to choose to include or exclude it from the OT calculation
Any other custom earning type that's not otherwise categorized.
Dependent*
Admins with the required permissions can create as many custom earning types as they'd like, and they'll be available for all employees on all payroll runs.
Click the Pay section.
At the top of the page, click Settings.
Toggle to the Custom earnings tab.
Click + Add custom earning.
If you have a Simple plan and do not see this option, you may need to upgrade your plan.
Select the custom earning category (Categorize the earning) that best applies to your item.
If using Other as an earning type, you'll have the option to include or exclude the earning in overtime pay.
Name the earning.
Note: When naming your earning type, it must be named something different from Gusto's default earning types. You'll get an error if you try to name your custom earning one of the following:
Bonus, Commission, Paycheck Tips, Cash Tips, Correction Payment, Severance, Minimum Wage Adjustment, Owner's Draw, Taxable Disability Distribution, Non-Taxable Disability Distribution.
This name will appear on employee paystubs and in your reports.
Click Save.
Now when you enter wages in a regular, off-cycle, or extra pay payroll, you'll see this custom earning type in the “Additional earnings” column. If you’re using the payroll spreadsheet in a regular payroll, you’ll see a column specific to custom earnings.
Admins with the required permissions can change the name of a custom earning.
To change the type of custom earning, you’ll need to deactivate the earning and add a new one with the correct earning type.
Click the Pay section.
At the top of the page, click Settings.
Toggle to the Custom earnings tab.
Under the "Actions" column, click the three dots and select Edit.
Make the necessary changes and click Save.
Admins with the required permissions can remove a custom earning at any time.
Click the Pay section.
At the top of the page, click Settings.
Toggle to the Custom earnings tab.
Under the "Actions" column, click the three dots and select Deactivate.
Click Yes, deactivate.
Deactivating a custom earning will remove it from the list when running payroll. You’ll have to create a new custom earning to add it back in the payroll flow.