Payment Calculations

Salaried Employees

Salaried employees are paid based on the compensation that is entered in their job record. While the rate elements defined for hourly employees should capture both pay and bill rates, the rate elements used for salaried employees should capture only bill rates as the job record (and not the assignment) drives the salary compensation. When the payroll process is run, the paycheck that is generated is not based on the time entered for the pay period because the employee's salary is a fixed amount.

Depending on the Staffing Installation Options configuration in the Financials database, PeopleSoft Pay/Bill Management processes assignments, additional jobs, and time entry for salaried employees in one of two ways:

If the Salaried Employees check box on the Installation Options - Staffing page is not selected, PeopleSoft Pay/Bill Management does not create any additional jobs for salaried employees when assignments are created. During time entry in the Rapid Time component, the system will not automatically perform rate overrides for the time entered, and the Labor Distribution process (executed as part of the Extract Time and Labor Costs process) will populate the payable time records for salaried employees with actual costs paid in the paycheck. (Labor Distribution is able to distribute costs because both the paycheck and the time entered point to the sample employee job record number.)
If the Salaried Employees check box is selected on the Staffing Installation page, PeopleSoft Pay/Bill Management creates an additional job record for salaried employees for each assignment created. However, although the employee job record created when the employee was hired has the salary compensation, these additional job records have zero compensation. During time entry in the Rapid Time component, the system will automatically populate the rate override field for the time entered with an estimated cost equal to the annual salary divided by 2080 hours. The PeopleSoft Time and Labor Distribution process (executed as part of the Extract Time and Labor Costs program) in this case cannot populate the payable time records for salaried employees with actual costs paid in the paycheck. (Labor distribution is not able to distribute costs because the paycheck and the time entered point to different employee job record numbers.) It is the estimated cost (salary divided by 2080 hours) that is passed to PeopleSoft Project Costing as the labor cost for the salaried employee assignment.

Note:

To prevent time data from being sent to the payroll system, you must enter time using a time reporting code (TRC) that is not mapped to an earnings code for employee records 1, 2, 3, and so forth. If a salaried employee's time data is sent to the payroll system, this could result in paying an employee more than once for the extra time that is reported.

Hourly Employees

Hourly employees are paid based on the amount of time they have worked. The rate elements used in hourly employee assignments are typically configured to capture both pay and bill rates. The time entered on the Pay/Bill Rapid Time page is processed by Time Administration and sent to the payroll system. Employee paychecks are generated based on the pay rate specified in the assignment multiplied by the amount of time the employee worked during the pay period PeopleSoft Pay/Bill Management does not rely on the compensation specified in the job record for hourly employees.

Note:

The system does rate lookups for non-exempt employees who are in a paygroup that is FLSA required.

Non-Employees (Contractors)

Non-employees (contractors) are also paid based on the amount of time they have worked, but they are typically paid through a voucher from the payables system because they are not employees. After time data is entered and processed by Time Administration, contractor time must be approved, then sent to PeopleSoft Project Costing as actuals. After you send the approved time rows to PeopleSoft Project Costing, you can run the PeopleSoft Pay/Bill Management FO_TO_AP process to generate vouchers in PeopleSoft Payables based on the time reported. The voucher is generated for the supplier ID and supplier location specified in the assignment.

Note:

When you hire a non-employee (contractor), the system automatically deselects the Send Time to Payroll check box on the Maintain Time Reporter page in Time and Labor. This ensures that contractor time is not sent to the payroll system. If you decide to pay contractors using PeopleSoft Payroll rather than PeopleSoft Payables, you must manually select the Send Time to Payroll option on the Maintain Time Reporter page.