Establishing Earnings Codes

When you select this option, a blank field appears where you enter the new rate, which the system uses to calculate the earnings amount. This overrides the hourly rate in the employee's Job record. You must enter the number of units, or hours worked, in the Hours field on the paysheet, but you do not need to change the hourly rate on the paysheet. You can use earnings codes based on the unit or override rate for piecework earnings.

For example, you pay 2 USD for each door that an employee fastens on a new vehicle. You define an earnings code, ASM, and enter 2 in the Unit/Override Rate field. During the first pay period, an employee fastens 428 doors. On the employee's paysheet, you insert an Other Earnings entry with the code ASM and enter 428 in the Hours field. The system calculates the earnings as 2 USD × 428, or 856 USD.

If you set up an earnings code for shift pay that uses the unit/override rate and is based on a single earnings code, you must ensure that you include the shift earnings code on each payline that contains the earnings on which it is based. For example, if the shift earnings is based on the REG earnings, and if you add an additional REG payline to the paysheet, you must manually add the shift earnings code to that payline as well.

When you select this option, a blank field appears where you enter the flat amount. The system uses the flat amount from the Earnings table instead of the rate in the employee's Job record.

To give multiple employees a flat amount of additional pay, make blanket changes to the flat amount in the Earnings table instead of maintaining multiple Additional Pay records at the employee level.

Select this check box if payees can receive retro pay for the earnings code. Selecting this check box enables you to include the earnings code in a retro pay program.

Select this check box if the earnings code is used to pay retroactive earnings. Selecting this check box enables you to associate this earnings code with a retro-eligible earnings code when you set up a retro pay program.

Select this check box to distribute standard hours to a nonregular earnings code according to the parameters on the Job Data - Earnings Distribution page. This check box controls the distribution of standard hours to nonregular earnings codes for salaried employees whose job earnings distribution type is either by amount or by percent. The distributed hours are based on a proration of the employee's total standard hours defined in the Job Data component (JOB_DATA).

These hours appear on Paycheck Inquiry pages and in the payroll registers. Note, however, that hours are not displayed on paychecks for salaried employees.

The system automatically processes and displays the distribution of standard hours to the regular earnings code, regardless of the hours distribution setting.

For example, a salaried employee has 80 standard hours per biweekly pay period. The job earnings distribution information specifies a 50 percent distribution to a regular earnings code (REG) and a 50 percent distribution to a nonregular earnings code (STD). The STD earnings code has a payment type of Either Hours or Amounts OK.

• If the Hours Distribution check box for the STD earnings code is not selected, 40 hours are associated with the REG earnings code, and blank hours are associated with the STD earnings code.

• If the Hours Distribution check box for the STD earnings code is selected, 40 hours are associated with the REG earnings code, and 40 hours are associated with the STD earnings code.

Select this check box to indicate that this earnings code is an administrative stipend. The system uses this information, in conjunction with the Job Earnings Distribution table, to distribute administrative stipend earnings for the Statistics Canada Academic Teaching Survey.

Select this button to access the Additional Earnings page.

Use this field when setting up a payback earnings code to use for payback situations such as pay advance or negative adjustment. In this field, enter the payback deduction code that corresponds with the payback earnings code. If you enter a deduction code in this field, the system will automatically create an arrears balance assigned to that deduction code for the earnings amount that you enter with the corresponding payback earnings code on the paysheet.

See Setting Up and Processing Payback Deductions.

Select this option to annualize the earnings, calculate tax on the annualized amount, and divide the tax by the number of pay periods in the year. The result is the withholding for the pay period. This is the most common tax method.

(USA) Select this option to add together the YTD earnings and the earnings for this pay period, annualize the result, and calculate the annualized tax. The system de-annualizes the tax by dividing it by the number of tax periods on the paysheet. If the result is greater than the YTD withholding, the difference becomes the withholding for the pay period. Use this option for employees whose wages vary significantly from pay period to pay period, such as salespeople on commission.

Select this option to instruct the system to use the tax method specified on the paysheet. The default method on the paysheet is annualized, which you can override on the paysheet if you set up the earnings code's tax method as Specified on Paysheet.

Select this option for earnings codes that identify supplemental wages. Do not use it for bonus and stock option payments if you have employees in California.

Indicate whether supplemental wages are paid with regular pay or as separate pay on the Federal/State Tax Table - General page.

See Special Withholding Tax Status.

Select this option for bonus and stock option payments if you have employees in California. These payments in California are subject to a higher supplemental withholding rate than other types of supplemental wage payments such as commissions and overtime pay.

If you have employees in California and other states, use the Special Supplemental option. When you use this option to pay bonuses to an employee not in California, the system automatically calculates the tax using the supplemental method. This enables you to set up one bonus earnings code for all U.S. employees.

Select this option to calculate taxes on irregular payments, such as bonus payments. The system calculates tax differently, depending on whether the payment is included with other earnings or paid in a separate check.

Select this option to use amounts from the Commission group box (Income, Expenses, and RPP/RRSP Limit [Registered Pension Plan/Registered Retirement Savings Plan limit] fields) on the Canadian Income Tax Data page and the Quebec Income Tax Data page. If these amounts are not entered, the system calculates tax using the annualized tax method, resulting in a higher amount of tax withheld. The commission tax method calculates the taxes on commissions differently, depending upon whether you are calculating CIT or QIT.

Select this option to determine the withholding for the period using the corresponding taxable gross rates from the Federal CIT Lump-Sum Rates group box or the Quebec (QIT) Lump-Sum Rates group box on the Tax Rates, Credits and Other page.

Specify the effect that the earnings code has on the corresponding taxable grosses. The system maintains separate accumulators for each of the taxable grosses.

See (USA) Updating the Taxable Gross Definition Table.

This check box is selected by default, indicating that the earnings code is subject to federal income tax withholding. If you deselect this check box, you can still add to the earnings to the taxable gross, but withholding isn't taken for this earnings code. For example, tuition reimbursement is an earnings code that adds to taxable gross, but is not subject to withholding. Normally, this check box should be selected to prevent underwithholding.

Most earnings are taxable for FWT, FICA, and FUT, but deselect these check boxes for nontaxable earnings codes (such as expense reimbursements and salary advances).

Payroll for North America normally sets the taxable gross used for calculating state and local income tax withholding to the same value as the taxable gross for federal withholding. It also sets the taxable gross for state unemployment and disability to the same value as the taxable gross for federal unemployment. However, some states and localities don't follow federal rules for the taxability of all types of wages.

Select a value to override the federal rules for taxability: 125, 401K, GTL (group-term life), or TIP.

The taxable gross component ID code defines a taxable gross base—different from federal—to use when calculating state and local taxes. This code points to information in the Taxable Gross Definition table, which:

• Indicates which federal taxable gross level (such as FWT, FUT, or FICA) is used as a base for state and local taxable gross.

• Specifies how to add to, or subtract from, the state and local base when it differs from the federal definition.

PeopleSoft maintains state and local taxable grosses that have been adjusted for 401(k), Thrift Savings Plan, Section 125, group life plans, and Federal Employee Group Life Insurance (FEGLI) plans. You can add entries to the Taxable Gross Definition table for other types of earnings that need adjusting. PeopleSoft also maintains a taxable gross definition called TIP for employers of tipped people.

Specify a nonresident alien income code for 1042-S processing. Values come from the Income Code Table Page.

Select this check box to indicate that an employee receives actual dollars for this earnings code. Most, but not all, earnings add to gross pay.

For example, some earnings don't actually consist of dollars paid, such as the value of a company-supplied automobile. Because the company supplies the employee with a car—not with the money to buy one—you do not add these earnings to the gross income. However, the value of the car must appear as taxable wages, and you must track it for the reporting on W-2 or T4. To define this auto earnings code, deselect the Add to Gross Pay check box, and select the appropriate U.S. or Canadian subject to tax check boxes. For an expense advance, however, select the Add to Gross Pay check box, but do not select a subject to tax check box.

Select this check box to automatically maintain YTD, quarter-to-date, and month-to-date earnings balances. Select this check box for all earnings codes.

This check box is for your information only.

Select this check box if the earnings code is for shift pay and you're using the pay group setID and Shift table method of calculating shift pay. If an employee is assigned to a shift, the system checks each earnings code that is eligible for shift differential and performs the calculation based on the routines selected in the Shift table and on the shift to which the employee is assigned. You can also specify shift differentials at the employee level.

See Understanding Shift Pay Calculation Methods.

Select this check box to have hours or earnings entered for the earnings code reduce the employee's regular pay by an equivalent number of hours entered on the paysheets. Use this check box for earnings codes such as holiday, sick leave, and vacation leave. Hours posted to the earnings code reduce regular hours for hourly employees (or regular earnings for salaried employees) by the number of hours entered during the payroll calculation run.

How you use this check box depends on how you report time. You typically use positive time entry for hourly employees, so in effect their hours are already reduced.

For example, you might enter 32 hours of regular pay and eight hours of vacation pay on an hourly employee's paysheet. For exception hourly and salaried employees, you typically enter only exception pay, but not regular pay. If a salaried employee takes eight hours off in a given week, you only enter eight hours of vacation time on paysheets. For different employee types, you can establish some earnings codes that use this feature and others that don't.

Select this check box to include the earnings code in garnishment processing.

Most earnings are taxable for CIT, EI, and CPP, but deselect these check boxes for nontaxable earnings (such as expense reimbursements, uniform allowances, auto reimbursements, and so on). If the company is in Quebec, most earnings also reflect QIT and QPP.

Select the Subject EI Earn check box if the amount that is associated with an earnings code is subject to EI premiums and insurability. Select the Subject EI Hrs check box if EI reporting requires the hours associated with an earnings code. This information is for the Record of Employment.

When setting up earnings subject to EI, you must determine whether to accumulate both the dollars and hours, or just the dollars. To accommodate the accumulation of dollars, but not hours, the system segregates EI options by hours and earnings when multiple earnings codes representing the same hours (and subject to EI) are paid in conjunction with one another. This applies to premiums or differentials that are paid in conjunction with regularly paid work hours.

For example, if you define shift premiums as earnings codes in the Earnings table, but pay them in conjunction with regular pay, use the following EI tax options:

• Regular pay: EI earnings (yes), EI hours (yes)

• Shift premiums: EI earnings (yes), EI hours (no)

Select this check box if the earnings represent the accumulation of total federal employment income for Canada.

Select this check box if the earnings represent the accumulation of total provincial employment income for Quebec.

Specify whether the earnings are subject to T4A or RL-2 withholding. This ensures that the appropriate amount of tax appears on the T4A and RL-2 year-end slips. The system automatically selects the Subject to CIT check box (for T4A) or the Subject to QIT check box (for RL-2) when you save the record.

You can reclassify the same earnings code between T4 and T4A (or RL-1 and RL-2) earnings before running payrolls in the new tax year. A mid-year reclassification of earnings, however, requires that you define a separate earnings code to allocate the earnings to the correct T4 and T4A (or RL-1 and RL-2) accumulators.

Select this check box if the earnings are subject to the Northwest Territories or Nunavut payroll tax.

By default, the system calculates and withholds a 1 percent payroll tax on specified remuneration paid to employees for work performed in the Northwest Territories or Nunavut. A Northwest Territories or Nunavut employee whose total Northwest Territories or Nunavut earnings do not total more than 5,000 CAD for the calendar year are not subject to this tax. To stop the tax withholding for these exempt employees, select the Payroll Tax Exempt check box on the Canadian Income Tax Data page.

Deselect the check box if the earnings is not subject to QPIP.

Select if the earnings adds to other pay in the employees Job - Compensation Data - Other Earnings page.

Select to include the earnings in total Projected/Future pay for annual total pay cap limitations.

When no Adds to Projected Pay check boxes are selected, the system reverts to using the employee’s regular biweekly pay for projected and future pay calculation.

For information on how the system calculates annual total pay caps and limits, see Understanding Annual Total Pay Caps and Limits Calculation.

Select if earnings add to FEGLI base rate calculation.

Select if the earning code is for the FMLA.

Select if the earnings code is used to pay federal overtime.

Select if the earnings code adds to other pay on the SF50 or SF52.

Select if this earning code is for the FEFFLA.

If additional earnings for this earnings code are reportable to the CPDF, select the CPDF earnings code: Not Rpted (not reported), Retn Allow (retention allowance), Staff Diff (staffing differential), or Suprv Diff (supervisory differential).

Select a value if you're defining an earnings code to use with a leave transfer program type. Valid values are:

Donate to Bank: For donor activity in Leave Bank Transfer programs.

Donate to Emergency: For donor activity in Emergency Leave Transfer programs.

Donate to Recipient: For donor activity in Voluntary Leave Transfer programs.

Receive from Bank: For recipient activity in Leave Bank or Emergency Leave Transfer programs.

Receive from Donor: For recipient activity in Voluntary Leave Transfer programs.

Select this check box if additional earnings for this earnings code are associated with basic compensation and are IRR reportable.

Select this check box if additional earnings for this earnings code are considered leave without pay on the IRR. These earnings are reported on the Leave Audit SF1150 report (FGSF1150).

Select an option to indicate the type of other earnings on which the earnings code is based, and enter an earnings code or special accumulator code in the associated field.

Select this check box to base the earnings on the specified earnings code or special accumulator for the employment record being processed. Deselect the check box when the earnings code is based on the combined earnings or special accumulator for all of an employee's jobs.

Specify how to calculate earnings:

None: The default.

Amount: The system calculates the earnings by applying the multiplication factor to the current period amount for the earnings code or special accumulator code specified. For example, to calculate the earnings code that you're setting up as 4 percent of a specified earnings code, enter a multiplication factor of .04.

Hours: The system calculates the earnings by multiplying the current period hours for the specified earnings code or special accumulator code by the hourly rate on the paysheet entry. Then it applies the multiplication factor.

For example, to calculate a bonus earnings code as ten percent of the employee's regular pay, select the Single Earnings type option and enter the earnings code REG. Specify that the calculation is based on amount, and enter .1 as the multiplication factor.

Select this option if these earnings are not overtime and are used in the calculation of the FLSA rate.

Select this option if this earnings code has an effect on overtime or alternative overtime pay. When selected, the system displays a Regular Pay Included check box. If the multiplication factor for overtime is .9 or less, deselect this check box. If the multiplication factor is 1.1 or greater, select this check box.

Select this option if these earnings have no effect on the FLSA calculation.

Select this check box for earnings codes (such as vacation or sick) that subtract from the leave plan balance. The system updates the unprocessed data on the Leave Accruals page by adding to the leave plan balance for hours taken, but it does not update the hours taken from the actual leave plan balance until you run the leave accrual program.

Select this check box if the leave plan accrues based on the number of hours an employee has worked (service hours). The system adds the hours that are associated with the earnings code to an employee's service hours that are maintained on the leave plan accrual balances. However, if the employee is not enrolled in that leave plan, the system does not update the service hours fields in leave accruals.

For example, suppose a company's employee leave plan offers 0.02 hours of vacation time for every hour of regular time and overtime that employees work. In this case, select the Service Hours check box for regular and overtime earnings codes to show that they add to the accrual balance for the employee leave plan. If Jan has 30 hours of regular and 10 hours of overtime earnings, the system adds 40 service hours to her leave plan. It also updates the leave accruals unprocessed data for her leave plan, and accrues 0.8 hours of vacation time when the leave accrual program is run.

Select this check box if you are defining the earnings code only to add hours to, or subtract hours from, an employee's accrual balances. When you perform the actual adjustments on paysheets, the system accepts positive or negative hours.

For example, Jessica Morris, came to CCB from her former company with an intercompany transfer agreement. As part of the agreement, CCB let her carry over 25 hours of vacation time from her old company. To do this, the payroll clerk added 25 hours of accrual adjustment time to Jessica's paysheet. The system—looking at the Earnings table already set up for this type of situation (with Adjusted selected for the VAC leave plan type)—did the rest.

If your company has a vacation buy or sell plan, select a check box to indicate that the earnings code affects vacation hours bought or sold. Use deductions to handle the actual buying and selling and earnings codes to handle the accruals.

For example, Theresa bought 20 hours of vacation time. The payroll clerk added the hours using an earnings code defined with the VAC leave plan type and the Bought check box selected. He used a deduction to take the money that Theresa used to buy the vacation time.

If an employee sells vacation time, subtract from the accrual balance using an earnings code defined with the VAC leave plan type and the Sold check box selected. Use a negative deduction to give the employee the money.

Use special accumulators to roll together earnings codes to use later in deduction earning calculations or for tracking supplemental wages for tax purposes.

Before you enter this code, define the special accumulator code in the Special Accumulator table.

Select a value to designate how the earnings affects the special accumulator:

• Adds to Special Balance: Adds to the special accumulator balance.

• Subtracts from Special Balance: Subtracts from the special accumulator balance.

• Adds TXGRS to Special Balance: Adds taxable gross to the special accumulator balance. Select this option for the special accumulator associated with supplemental earnings.