Setting Up Earnings

This chapter provides an overview of earnings and discusses how to:

• Modify and update delivered earnings.

• Create new earnings.

Understanding Earnings

This section discusses:

• Delivered earnings.

• Delivered supporting elements.

• User fields.

• Earnings assignments.

• Required supporting elements.

• Process lists and sections.

• Viewing delivered elements.

Delivered Earnings

PeopleSoft delivers a number of earnings for the U.S. that demonstrate the flexibility of Global Payroll rules to meet common processing requirements such as the calculation of wages and overtime.

In this table, the first column combines the name and description of the delivered earnings. The other columns indicate the calculation rule components, such as Unit, Rate, Percent, and Amount, and the pre- and post-process formulas for each earning.

Note. These elements are defined as PS Delivered/Not Maintained. This means that you can use them as delivered, modify them, or replace them with new elements.

Note. Global Payroll for United States also delivers absence-related earnings. These are discussed in a separate chapter in this PeopleBook.

See Setting Up Absence Elements.

Regular Hourly Pay and Wages

Global Payroll for United States delivers two types of earnings for calculating regular pay:

• REGULAR

  Use this earning to calculate pay for hourly payees who require positive input.

• WAGES

  Use this earning to calculate pay for hourly payees who only need to report exceptions to their standard hours.

The calculation rule for both REGULAR and WAGES is Unit x Rate.

Both earnings use the rate code K1GCRH for the Rate component. This rate code is used to calculate pay for all hourly payees.

The Unit component differs for these two earnings:

• The REGULAR earning assumes that the Unit (time paid) is recorded at the payee level through positive input.

• The WAGES earning assumes that payees are paid a standard set of hours for each pay period, and that only exceptions need to be reported through positive input. The Unit component for this earning includes a formula—ERN FM SALARY HOURS— that calculates the standard hours.

  This formula:

  1. Multiplies the STD HRS system element by the STD HRS FREQ FACTOR system element to calculate the ANNUAL HOURS (stored as a variable).

  2. Divides the ANNUAL HOURS variable by the PRD FREQ FACTOR (pay period frequency factor) system element to calculate the pay period standard hours.

The post-process formula for the WAGES earning, ERN FM RED HRS/AMT, reduces the pay period standard hours by any absence or holiday hours. This formula requires the use of the REDUCE SAL H accumulator to sum up the hours for all earnings, such as vacation, that should reduce the standard hours.

In addition, this formula ensure that the WAGES earning is not reduced by absences to a negative amount.

Salary

Use the SALARY earning to pay salaried employees.

The calculation rule for SALARY is Amount, with the amount defined as the rate code K1GCRH.

The post-process formula for the SALARY earning, ERN FM RED SALARY, performs two functions:

• It calculates standard hours and reduces these hours by the number of absence hours.

• It ensures that the salary amount is not reduced by absences to a negative amount.

Overtime

Global Payroll for United States delivers two overtime earnings: OVT 1.5 for overtime calculated at 1.5 times the regular pay rate, and OVT 2.0 for overtime calculated at twice the regular pay rate.

The calculation rule for both overtime earnings is Unit x Rate x Percent, where Unit is the number of overtime hours that a payee works, Rate is the formula ERN FM OVT RATE, and Percent is either 150 or 200. The units are entered at the payee level.

Note. The delivered overtime earnings include a shift differential. This differential is included in the calculation of the earnings only if the employee is associated with a shift group and a shift ID.

Premium Pay

Premium pay refers to the excess over the regular rate of pay that is paid for extended working hours, overtime, or work during holidays. Global Payroll for United States delivers the PREMIUM earning to calculate premium pay.

The calculation rule for premium pay is Unit x Rate x Percent, where Unit is the number of extended hours worked, Rate is the formula ERN FM OVT RATE, and Percent is 50. The units are entered at the payee level.

Note. Premium pay includes a shift differential. This differential is included in the calculation of the earnings only if the employee is associated with a shift group and a shift ID.

Bonus

Global Payroll for United States delivers the BONUS earning to calculate bonus pay. The calculation rule for bonus pay is Amount, where a payee's bonus is entered as a numeric amount at the payee level.

The BONUS earning uses the Supplemental tax method.

Personal Use of A Company Car

Global Payroll for United States delivers the COMPANY CAR earning to calculate the personal use of a company car. The calculation rule for COMPANY CAR is Amount; the amount is entered at the payee level. The COMPANY CAR earning does not add to gross pay, but to taxable gross.

Shift Differential

Global Payroll for United States delivers two earnings to calculate shift differentials: SHIFT - R and SHIFT PCT.

The calculation rule for SHIFT R is Unit x Rate, where Unit is the accumulator SHIFT DIFF UNIT, and Rate is the bracket ERN BR SHIFT DIFF.

The calculation rule for SHIFT PCT is Unit x Rate x Percent, where Unit is the Accumulator SHIFT DIFF UNIT, Rate is the system element HOURLY RT, and Percent is the variable ERN VR SHIFT D PCT.

The system processes these earnings only if the accumulator SHIFT DIFF UNIT holds units (hours) processed for the eligible shift earnings. Only two of the delivered earnings–REGULAR and WAGES–are defined as eligible. That is, the units of these earnings are the only members of this accumulator. If there are no units from these earnings, then SHIFT - R and SHIFT PCT are not processed. In addition, payees must be assigned to shift groups and shift IDs before the system can process SHIFT - R or SHIFT PCT.

Note. The earnings SHIFT - R and SHIFT PCT use the generation control element ERN GC SHIFT EXC to control processing. This formula looks at the accumulator SHIFT DIFF UNIT and the values of the shift group and shift ID. If the value of SHIFT DIFF UNIT is greater than zero and the payee is in a shift group and has a shift ID, the system processes the earnings.

See Assigning Earnings.

Delivered Supporting Elements

This table lists the key supporting elements used to define the delivered earnings:

User Fields

All of the delivered earnings are associated with the following user fields:

• TAX VR RPT TYPE

  This user field determines the year-end form—W2, W2PR, W2AS, and so on—used to report an earnings element.

  Note. You define a default report type for a payee on the Payee Tax Profile page. You can change the default by entering a supporting element override for the variable TAX VR RPT TYPE.

  See Maintaining Payee Tax Information.

• TAX VR STATE

  This user field determines the state or territory in which each earning is taxed.

  Note. The default state or territory for a payee is the one for which the UI Jurisdiction check box is selected on the State Tax Data page. You can change the default by entering a supporting element override for the variable TAX VR STATE.

  See Maintaining Payee Tax Information.

• TAX VR METHOD

  This user field stores the tax method to use when calculating an earning.

  Note. The default tax method is defined at the element level on the Supporting Element Overrides page of the Earnings component (GP_EARNING). You can override the default at the payee level by entering a supporting element override for the variable TAX VR METHOD.

  See Overriding Earning Elements.

There are two additional user fields associated with all earnings that process shift differentials:

• ERN VR SHIFT GRP

  This user field is used to associate an earning with a shift group.

• ERN VR SHIFT ID

  This user field is used to associate an earning with a shift ID.

Note. To assign a default shift group and shift ID to a payee, select Global Payroll & Absence Mgmt, Payee Data, Create Overrides, Supporting Elements, and specify the values of the variables ERN VR SHIFT GRP and ERN VR SHIFT ID (these variables store the shift group and shift ID respectively). You can override the defaults on the One Time (Positive Input) page.

See Also

Managing Multiple Resolutions of an Earning or Deduction

Earnings Assignments

Earnings with a component of their calculation rule set to Payee Level must be assigned to individual payees before they can be processed, and require positive input for either the Unit, Rate, Base, or Percent component.

The following delivered earnings for the U.S. fall into this category:

See Also

Setting Up Overrides

Assigning Earnings

Required Supporting Elements

Many earnings require that you define the value of supporting elements in order to be processed correctly. This table lists the required supporting elements for the earnings delivered by Global Payroll for United States, and explains how to define the values of these elements.

See Also

Setting Up Overrides

Overriding Earning Elements

Process Lists and Sections

All delivered earnings are members of the GENERAL EARNINGS section.

The GENERAL EARNINGS section is included in the USA STD PAYROLL process list.

Viewing Delivered Elements

The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for the U.S. Instructions for running the query are provided in the PeopleSoft Enterprise Global Payroll 8.9 PeopleBook.

See Also

Viewing the Delivered Elements

Modifying and Updating Delivered Earnings

This section provides an overview of earnings schedules and discusses how to modify delivered earnings.

Understanding Earnings Schedules

Global Payroll for U.S. delivers several generation control elements that can be used to control the processing of earnings:

Note. These elements are discussed in detail in the chapter Setting Up General Deductions.

PeopleSoft delivers two additional generation control elements that can be used to manage the processing of earnings:

See Also

Setting Up General Deductions

Modifying Delivered Earnings

Global Payroll for United States delivers earnings elements based on practices that are common to many businesses in the U.S. Although most of the delivered earnings are created according to common industry standards or based on statutory requirements, a company's specific business practices may require modifications to the delivered elements. This section provides examples of common earnings rules modifications.

Modifying SALARY

If you create new absence-related earnings and want the new earning to reduce the SALARY earning, you must add the automatically generated units accumulator from the new earning to the REDUCE SAL H accumulator. You can add the units accumulator for the new absence-related earnings to the REDUCE SAL H accumulator on the Accumulators - Members page.

See Setting Up Accumulators.

Modifying BONUS

The delivered BONUS earning is designed to be taxed using the supplemental tax method, and is multiplied by the state supplemental rate. Business practices may require that you calculate bonuses as separate payments or process them with regular wages. If you want to use a different supplemental rate for the BONUS earning, you must enter this change on the State Tax Rates USA page.

See Setting Up Taxes.

Modifying Shift SHIFT - R and SHIFT PCT

There are several things you should keep in mind when modifying the delivered shift differential rules:

• The shift differential earnings SHIFT - R and SHIFT PCT are defined with a calculation rule of Rate x Unit and Rate x Unit x Percent (respectively), with the Unit component defined as the accumulator SHIFT DIFF UNIT. As delivered, the members of this accumulator are the units calculated for the earnings WAGES and REGULAR. If you want to include units (hours) from other earnings in the calculation of differential pay, you must add the units from these earnings to SHIFT DIFF UNIT using the accumulator definition component.

• Any additional earnings whose units you add to the accumulator SHIFT DIFF UNIT should be defined with ERN VR SHIFT GRP (shift group) and ERN VR SHIFT ID (shift ID) as user fields. Use the delivered earnings WAGES and REGULAR as models.

• The shift differential earnings use the bracket ERN BR SHIFT DIFF to return the correct differential and percentage. The differential and percentage values in the bracket are defined as sample data; you must modify this data to conform to the rules that apply within your organization. In addition, you may want to add additional search keys to the bracket (the delivered bracket uses shift group and shift ID as search keys).

Creating New Earnings

This section discusses:

• Accumulator structure of earnings.

• Creating new earnings for shift differentials.

• How to configure earnings/deduction assignments and override components.

• User fields.

Understanding the Accumulator Structure of Earnings

If you create new earnings, make sure that they conform to the accumulator structure of the delivered earnings. This is to ensure that the new elements are processed correctly and are included in the appropriate gross-to-net calculations.

For example, when you create a new earning, you must add the earning to the TOTAL EARNINGS N accumulator so that is can be processed correctly.

Note. For each taxable earning that you create, you must also define the tax method. To do this, associate the variable TAX VR METHOD with the new earning on the Supporting Element Overrides page, and assign it a value of A (annual), S (supplemental), or C (cumulative).

See Defining Earning and Deduction Elements.

Accumulator Structure of Earnings

This table describes the accumulator structure of earnings:

Creating New Earnings that Include Shift Differentials

When creating new unit-based earnings that impact or are impacted by shift differentials, you can:

• Add the units (hours) processed for the new earnings to the accumulator SHIFT DIFF UNIT. This accumulator functions as the Unit component in the calculation rule of the delivered SHIFT - R and SHIFT PCT earnings. SHIFT - R and SHIFT PCT are resolved only if there are units from other earnings included in the SHIFT DIFF UNIT accumulator.

  Note. The generation control element ERN GC SHIFT EXC prevents resolution of these earnings if the SHIFT DIFF UNIT accumulator contains no units. This element looks at the accumulator and the values of the shift group and shift ID. If the value of SHIFT DIFF UNIT is greater than 0 and the payee is in a shift group and has a shift ID, the system processes the earnings.

  Note. As delivered, only units from WAGES and REGULAR are included in SHIFT DIFF UNIT.

• Use the formula ERN FM OVT RATE to calculate the shift differential directly in the Rate component of the earnings' calculation rule. Use OVT 1.5, OVT 2.0, or PREMIUM as models for the new elements.

  ERN FM OVT RATE is defined as follows:

  ERN BR SHIFT DIFF   >>  GP TEMP001 NUM
  If ERN VR SHIFT GRP <> '' Then
      If ERN VR SHIFT D PCT <> 0 Then
          HOURLY RT * ( 1 + ERN VR SHIFT D PCT / 100 )   >>  ERN FM OVT RATE
      Else
          HOURLY RT + ERN BR SHIFT DIFF   >>  ERN FM OVT RATE
      Endif
  Else
      HOURLY RT   >>  ERN FM OVT RATE
  Endif

  This formula defines the rate in one of three ways:

  1. As the system element HOURLY RT x (1 + ERN VR SHIFT D PCT / 100) if the payee is associated with a shift group and the bracket ERN BR SHIFT DIFF returns a shift percent that is not zero.

  2. As the system element HOURLY RT + ERN BR SHIFT DIFF if the percent returned by the bracket is zero.

  3. If neither 1 nor 2 is true, the rate used is the system element HOURLY RT.

Understanding How to Configure Earnings/Deduction Assignments and Override Components

If you create earnings that use variables or other supporting elements in their calculation, you can modify or replace the standard supporting element override components to facilitate entering the values of these variables and other elements at either the payee or calender ID override levels.

Note. You can modify the standard supporting element override components by adding or changing field labels, prompt tables, and other page elements to better suit the elements you want to override.

See Also

Configuring Element Overrides

Understanding User Fields

This section discusses:

• User fields for new taxable earnings.

• User fields for new earnings that calculate or affect shift differential pay.

User Fields for New Taxable Earnings

If you create new taxable earnings, you should associate them with the same tax-related user fields used to define the delivered earnings. These are TAX VR RPT TYPE, TAX VR STATE, and TAX VR METHOD. In addition, all taxable earning accumulators should include these variables as user keys.

User Fields for New Earnings that Calculate or Affect Shift Differential Pay

If you define new earnings that calculate or affect shift pay, you should associate them with the same shift-related user fields used to define WAGES, REGULAR, SHIFT - R , SHIFT PCT, and the overtime earnings. These are ERN VR SHIFT GRP and ERN VR SHIFT ID. In addition, all accumulators for earnings that process or affect shift differentials should include these variables as user keys.

See Also

Managing Multiple Resolutions of an Earning or Deduction