1 Overview to U.S. Payroll

This chapter contains these topics:

Processing your organization's payroll in-house saves money and gives you control over your payroll functions. The JD Edwards World Payroll system offers simple, yet complete solutions for all your payroll processing needs. You can use this flexible system to efficiently manage the unique payroll needs of your organization, even as your business grows and your requirements change.

1.1 System Integration

Your Payroll system integrates with other JD Edwards World systems to simplify your processes and facilitate communication within your organization. Integrating Payroll with other systems saves time and reduces keying errors by:

  • Eliminating redundant data entry

  • Maintaining current and accurate information across all your business operations

To prevent unauthorized access to confidential information, you can set up system security that allows users to access only the information they need for their jobs.

The Payroll system integrates with the following JD Edwards World systems:

System Description
Address Book The Address Book system contains employee names and addresses.
Human Resources The Human Resources and Payroll systems share a common database of employee information. You can use either system to enter employee information, which is then available to users of both systems. The Human Resources system also incorporates the Benefits Administration system.

Additionally, the Payroll system integrates with other JD Edwards World systems:

System Description
General Accounting You can set up your Payroll system to integrate with the General Accounting system so that Payroll automatically updates general ledger transactions and account balances. The Payroll system can create and post transactions to the general ledger using the accounting instructions you define. You can use full detail on your labor accounts and summarize your liabilities and cash accounts.
Accounts Payable You can set up your Payroll system to integrate with the Accounts Payable system, so that you can use payroll information to create vouchers for payroll taxes and other payroll liability amounts. The Payroll system creates vouchers for these payees for employee-paid and company-paid benefits and taxes and for employee obligations, such as wage attachments.
Job Cost You can use the Payroll system to enter labor and equipment time by day. Then, you can use the Job Cost system to analyze the labor and equipment costs for a job.
Service Billing You can use the Payroll system to enter labor and equipment time by job (business unit). Then, you can use the Service Billing system to bill customers for the labor and equipment expenses associated with that job. You can also use Service Billing to charge customers for payroll burden expenses.
Equipment/Plant Management You can use the Payroll system to enter labor and equipment time. Then, you can use the Equipment/Plant Management system to:

  • Charge a job for use of equipment

  • Track labor for equipment maintenance

  • Track labor for work orders
Contract Billing You can use the Payroll system to enter labor and equipment time by job (business unit). Then, you can use the Contract Billing system to bill customers for that time.
Work Orders You can use the Payroll system to enter labor and equipment time against a work order. You can use the Work Orders system to identify specific costs of a task or to track equipment repair costs. You can create work orders for small projects and service calls.

1.2 System Features

The Payroll system includes many features that you can adapt to meet the unique payroll needs of your organization. The following table highlights some of the many ways you can use the system to meet your payroll processing needs.

Task Description
Define your payroll environment You can use your Payroll system to:

  • Track information for an unlimited number of companies within your organization.

  • Keep your payroll journal entries in balance when employees work in multiple companies.

  • Set up default values for commonly used information. When necessary, you can override default values.

  • Set up master pay cycles that define your organization's pay periods and corresponding check dates.

  • Define an unlimited number of employee and employer payroll deductions, benefits, and accruals.

  • Restrict access to confidential information.

  • Process your payroll in a union environment.
Simplify tax calculations You can use your Payroll system to:

  • Identify an unlimited number of taxing entities.

  • Take advantage of the payroll tax program that integrates with the Payroll system. This program, supplied by Vertex, calculates federal, state, and local taxes.

  • Tax employees who work in more than one state during a single pay period.
Track complete employee information Eliminate redundant data entry and improve communication between departments by using JD Edwards World integrated Payroll and Human Resource systems.
Give employees a variety of payment options You can set up employees to receive their payments by check, automatic deposit, cash, or any combination of these forms of payment.
Choose from a variety of time entry methods To record employees' time, you can:

  • Choose from several methods of entering timecards, including by employee, by business unit, or by day.

  • Simplify timecard entry by defining default job and pay information at the employee or group level. When necessary, you can override default values.

  • Eliminate manual timecard entry for salaried employees and hourly employees who work standard hours.

  • Automatically generate an extensive number of timecards for various reasons.

  • Automatically create overtime pay from regular hours.
Process payments outside the payroll cycle When you need to process payments outside the payroll cycle, you can:

  • Use the interim check feature for special circumstances, such as terminations, pay advances, and vacation pay.

  • Quickly calculate an employee's gross-to-net pay for a manual or computer-printed check.
Process payrolls efficiently When you process payrolls, you can:

  • Select the employees to include in a payroll. You can simultaneously process multiple payrolls for different groups of employees.

  • Review employees' payroll information before you print payments and make any necessary last-minute changes. You can review (and, if necessary, rerun) the steps in the cycle.

  • Control the sequencing of employees' checks to make it easier to distribute payments.

  • Print time entry, pay, summary, and tax reports during a payroll processing cycle.

  • Create journal entries automatically each time you process a payroll. When you integrate JD Edwards World Payroll and General Accounting systems, you can automatically post the journal entries to the general ledger.
Review payroll history Review history for pay types, deductions, benefits, accruals, timecards, paychecks, taxes, and insurance. You can review historical information online, or print history reports.
Satisfy government reporting requirements Print federal, state, and local tax reports, year-end forms for employees, and employee EEO reports.
Prepare required tax forms Process pay period, monthly, quarterly, and year-end tax forms.

1.3 Terms and Concepts

The following terms and concepts are important to your understanding of the Payroll system:

  • Information about the employee

    • Job type versus job

    • Pay frequency

    • Autopay

  • Paying the employee

    • Pay types (transactions)

    • Hourly rates

    • Deductions, benefits, and accruals (transactions)

    • Net pay instructions

  • Transferring information to general accounting

    • Automatic Accounting Instructions (AAIs)

    • Payments outside the pay cycle

      • Interim checks

1.3.1 Information About the Employee

This section discusses information about the employee.

1.3.1.1 Job Type Versus Job

In the Payroll system, the term job is used in two contexts:

  • Job type

  • Job (business unit)

Job types are the classifications your organization uses to identify employees who perform identical (or similar) tasks and functions. For example, your organization might define job types such as administrative assistant, accountant, foreman, and vice president of finance. You can associate pay rates and benefit plans to job types.

Typically, when you see the word job alone, it denotes a business unit. A job (business unit) is an entity within your organization for which you track costs. For example, a business unit might be a warehouse, a project, or a construction site. Although you must assign a home business unit to each employee, the business unit in which the employee works can vary by pay period.

1.3.1.2 Pay Frequency

You must enter a pay frequency for each employee. The pay frequency indicates how often the employee receives payments and determines how the system calculates taxes. Typical pay frequencies include weekly, biweekly, semi-monthly, and monthly.

1.3.1.3 Autopay

During payroll cycle processing, the system uses timecards to create payments for employees. All employees must have timecards to receive payments.

For certain employees, you can automatically generate timecards during payroll cycle processing. Employees whose timecards are automatically generated are classified as autopay employees. Autopay employees include:

  • Salaried employees

  • Hourly employees for whom you entered standard hours

For autopay employees, you can enter exception timecards for time other than regular work hours, such as holiday and vacation time. You can also use time entry to override the default timecard information for an employee.

1.3.2 Paying the Employee

This section discusses paying the employee.

1.3.2.1 Pay Types (Transactions)

You use pay types to categorize employee earnings. You can set up pay types to meet the needs of your organization. Typical pay types include regular pay, overtime, sick time, and vacation. When you enter timecards for employees, you charge their time to pay types.

1.3.2.2 Hourly Rates

Hourly rates are the pay rates that the system uses to calculate an hourly employee's pay. You can enter hourly rates in several places in the system. There are processing options in time entry that you can set to control the sequence the system uses to search for the hourly rate of pay for each employee included in a payroll cycle. The sequence includes the following rates:

  1. An hourly rate override entered in time entry

  2. A rate for a specific group, such as a union, in a pay rate table

  3. A rate per employee by job type using occupational pay rates

  4. A rate per pay grade in the Pay Grade Step Table

  5. A rate per employee

For each employee, the system stops searching when it finds an hourly rate.

1.3.2.3 Deductions, Benefits, and Accruals (Transactions)

You set up deductions, benefits, and accruals (DBAs) to automate the process of subtracting monies, calculating benefits, and tracking accruals when you run your payroll cycle.

Deductions represent dollar amounts, excluding taxes, withheld from an employee's earnings. Benefits and accruals represent amounts that the company funds for additional employee compensation. You set up DBAs before you can assign them to employees at the group or individual level.

After you set up a DBA, you can assign it to an employee at several places in the system. During payroll cycle processing, the system uses a default sequence to search these places for the appropriate DBAs for each employee included in a payroll cycle. For each employee, the system stops searching when it finds a DBA assignment.

1.3.2.4 Net Pay Instructions

The payments you issue to employees can be any combination of the following forms:

  • Check

  • Automatic deposit

  • Cash

When you print payments, the system prints a different form for each type of payment. Each of these forms contains a pay stub that lists the employee's earnings, deductions, and taxes.

1.3.3 Transferring Information to General Accounting

This section discusses transferring information to general accounting, including automatic accounting instructions (AAIs).

1.3.3.1 Automatic Accounting Instructions (AAIs)

You set up tables of AAIs that control the accounts to which the system posts payroll journals. During payroll cycle processing, the Payroll system creates a journal entry of every calculation for every employee included in the cycle. These calculations include salary and wage expenses, cash disbursements, liabilities, and accruals. After it creates and summarizes journal entries, the system passes them to the general ledger.

You can also set up rules for how the system summarizes journal entries.

1.3.4 Payments Outside the Payroll Cycle

This section discusses payments outside of the payroll cycle.

1.3.4.1 Interim Checks

When you need to print a check between payroll cycles, you can print an interim check. You might print an interim check for an employee who is terminated, goes on vacation and misses payday, or receives a bonus.

The interim check feature gives you the flexibility to either print an interim check from the Payroll system or write a manual interim check and enter its information into the Payroll system. The system creates historical records of both computer and manual interim checks.

1.4 Payroll System Flow (Payroll Cycle)

The following graphic shows the system flow that you use to process payrolls for employees.