Earnings Codes Table

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Earnings Code for a Regular Earning

Fields on the Earnings Code Table

Earnings Code. The code name should be ten characters or less, be all uppercase, and should not contain any special characters or spaces. The code can be an abbreviated description of the earning.
Description. The description can be up to 30 characters. It provides additional information about the actual Earning code, helps identify the earning, and is printed on standard payment forms.
Active? An active code has the Active checkbox selected, making the code available and keeping the code in effect as a valid choice.
Earning Category Code. The earning category is used to further group earnings together for reporting and processing purposes and is most commonly used when special accumulators are needed in the calculation of hours and earnings.
Process Sequence. The process sequence number defines the priority of each earning payment, with the number 1 being the highest priority. The Process Sequence number defines the order in which (within the group of earnings codes) this code is processed when included in a payroll. Thus, process sequence determines the order in which funds are added to the available wages.
Reduce Auto Pay Hours? For proper payment when time-off hours are paid to an employee in addition to scheduled Auto Pay hours, mark Reduce Auto Pay Hours on the earning code for paid time-off (PTO), vacation or sick hours, to cause this earning to reduce auto pay hours by the number of hours paid to the time off earning.

Processing Information

Enter the Earning Amount or Earning Percentage.

Earning Amount. Enter 0, or if all employees being paid this earning are paid the same amount the amount can be entered here or can be entered as an auto pay for a pay group on the Auto Create Time Entry validation table.

For instance, for an earning code entered to run checks for a standard company bonus of $500.25, enter 500.25 here for the BONUS code. Decimals are optional when entering a whole dollar amount.

Earning Percentage. Enter a percentage in the Earning Percentage field to pay a percentage of an accumulated base amount determined by the Payroll Accumulator selected in the Accumulator Processing section. Enter 0, or if all employees being paid this earning are paid the same percentage the percentage can be entered here.For instance, enter 10% as 10.0.
Rate Factor. For most earnings, entering a Rate Factor of 1.0 is recommended.

1.0. Where no rate factor is entered on the Earnings Code, pay entry assumes a rate factor of 1.0. However, some reporting may look specifically for a 1.0 rate factor, so entering the 1.0 rate factor on the Earnings code is a best practice if the intended rate factor is 1.0. Some workers compensation reporting and custom reports may disregard or calculate earnings with a rate other than 1.0.

Note: When defining Time Clock Transaction Codes for self-service online weekly timesheets and associated earnings, note that the setup of Time Clock Transaction Codes for overtime/ doubletime should have earnings codes with a rate factor of 1.0 due to calculations included in the self-service weekly timesheets.

Rate Factor Over 1.0. A rate factor over 1 is often used with overtime earnings, such as 1.5 for time and a half and 2.0 for double time.

Rate Factor Under 1.0. A rate factor under 1, such as 0.50 is sometimes used for overtime where hours for overtime are entered in addition to those for the online weekly timesheets).

Fixed Pay Rate. The Fixed Pay Rate defines an hourly rate for all employees to be paid these earnings.
W2 Box. The W2 field defines in what box the year-to-date amount for the earning code is reported (other than Box 1).
Attendance Code. If the earning also is defining paid time-off hours and dollars, the Attendance Code links the earning code with its corresponding hours accrual code.
Use Min Wage Pay Rate? If the earning code should always be paid at the applicable minumum wage (federal or state, whichever is higher), select the checkbox for Use Min Wage Pay Rate.

Accumulator Processing

Accumulator Code. Accumulator codes are sometimes part of an earning code's processing information. If this earning is a percentage of an accumulated amount or calculated amount, choose the payroll accumulator to identify that calculation. The system has a standard set of Accumulator Codes that are described in the help systems. A custom accumulator and stored procedure can be created if a standard accumulator doesn't accumulate the specific amounts or hours needed.

Payroll processing accumulators are SQL Stored Procedures formatted to accumulate specific amounts or hours. The first time that a new payroll accumulator is used, process the payroll through gross-to-net to initialize it.

Other Indicators

As with all checkboxes, if marked, the option is set to yes, and if left clear, the option is set to no.

For each earnings code, it is important to check the appropriate checkboxes in the other indicators section because these flags direct complex system processing to track earnings against related benefit eligibility, taxes, and hour accruals for several other compensations.

Print on Check? Select Print on Check to print earnings associated with this code on the checks at issue. Option to print the Current and Year to date amounts on the employee payment forms.
Reportable Comp? To report this earning in Box 1 of the W-2, select the Reportable Comp checkbox. This is for reportable compensation.
Wages Worked? To be paid through the system, "Wages Worked" needs to be selected. Wages worked are the gross wages that are used to calculate pay.
Deferred Comp? Consider whether these earnings be considered eligible for deferred compensation calculations. For earnings eligible for deferred compensation calculations, select Deferred Comp.
Pension Eligible? Consider whether these earnings are considered eligible for a pension plan. For custom pension calculations to determine pension benefits or eligible hours, select the Pension Eligible checkbox.
Work Comp Eligible? Consider whether dollar amounts paid on this earning be reported for workers' compensation. Having a checkmark for Work Comp Eligible defines earnings that are counted toward worker's compensation calculations.
Include Labor Distr? Most earnings need the checkbox for "Include Labor Distr" selected. This checkmark causes payroll processing to include the earning in labor distributions for labor distribution reporting and for general ledger reporting by payroll distribution. Omitting this selection keeps this earning from being considered for these labor distribution allocations when payroll processes and the payroll history information for reporting is created.
Non-Cash Earning? Consider whether the wages paid on this earnings represent wages paid for tax purposes only. Select Non-Cash Earning for a benefit provided to employees in a form other than as cash, e.g., company car, parking facility, which can be taxable or nontaxable. As a result, the amount isn't paid as wages, yet the amount can be added to taxable wages by selecting the appropriate tax authorities to withhold the appropriate tax(es) and the Reportable Comp checkbox and/or the appropriate W-2 box can be selected for proper reporting.
Accumulate FLSA? Do the hours and compensation for this earning need to be included in the calculation to determine the new regular rate of pay for overtime calculations under the Fair Labor Standards Act? This control on the Earnings Code allows administrators to define what is and what is not eligible to be included in the weighted average for FLSA overtime based on the organization's policies and state and federal regulations. To track the accumulated hours and amounts eligible for Fair Labor Standards Act overtime, select Accumulate FLSA.
FLSA OT Record? If this is the Fair Labor Standards Act overtime record, select the FLSA OT Record checkbox. During detailed pay entry, the FLSA OT earning can be selected to cause the weighted overtime rate to be calculated when the pay entry record is saved.
Verify Avail Hours? Where employee available hours balances for an earning or benefit should be considered prior to payment, select the Verify Avail Hours checkbox for the earning. This causes payroll processing to look at whether the employee has the time available before paying it out and to look at the "Pay Hours in Arrears" checkbox to determine whether a negative balance is permitted. (Even if the time is unavailable, the hours are paid if "Pay Hours in Arrears" also is selected).
Pay Hours in Arrears? To enable the earning to pay hours in arrears, select the Pay Hours in Arrears checkbox. If the "Pay Hours in Arrears" checkbox is selected along with "Verify Available Hours," payroll processing pays hours entered and maintains a negative hours-available balance if the employee doesn't have the time available.

Select both the Pay Hours in Arrears and the Verify Avail Hours checkboxes for all earnings where employee available balances should be verified prior to payment and updated after payment. This way, payroll processing will pay hours entered and maintain a negative hours available balance if the employee has not had enough time accrued for payment prior to payroll processing.

Benefit Eligible? Benefit eligible earnings associated with this code are counted in related benefit calculations.

Tip Payment Processing

For accurate Tips and Service Charges in Minimum Wage Makeup processing, the Earning Codes Table includes a "Tips Payment Processing" row of checkboxes:

Direct Tips Eligible? Accumulate earnings for Direct Tips calculation in pay entry.
Service Charge Eligible? Accumulate earnings for Service Charge calculation in pay entry.
Tip Credit Eligible? Accumulate earnings for Tip Credit calculation in pay entry.
Tip Credit Record? This is the defined Tip Credit record to be created in pay entry.
Minimum Wage Makeup Eligible? Accumulate earnings for Minimum Wage Makeup Calculation.

The "Tips Payment Processing" checkboxes can be selected or cleared even after an Earnings code is used.

Tax Authority

Update EE Taxable Wages

Each tax authority checkbox is designed to ask "Are the wages paid on this earning included in taxable wages for the correct calculation of taxes?" A selected checkbox indicates that this earning is included in the update totals for the taxable wages for the tax authority. Select the appropriate tax authorities for each earnings code.

FIT (Federal Income Tax). Update taxable wages for employee federal income tax calculations.
FICA (Federal Insurance Contributions Act). Update taxable wages for employee Social Security.
FHI (Federal Hospitalization Insurance). Update taxable wages for employee Medicare.
SIT (State Income Tax). Update taxable wages for employee state income tax calculations.
SDIS (State Disability Insurance Service). Update taxable wages for employee state disability insurance services.
SUIS (State Unemployment Insurance Service). Update taxable wages for employee state unemployment insurance services.
LOCAL RES (Local). Update employee taxable wages for local taxes based on locality of residence.
LOCAL WORK (Local). Update employee taxable wages for local taxes based on locality of work.

Update ER Taxable Wages

Where an earning updates taxable wages for the employee tax, the earning often needs to update taxable wages for the equivalent employer tax.

Each tax authority checkbox for "Update ER Taxable Wages" is designed to ask "Are the wages paid on this earning included in the employer taxable wages for the correct calculation of taxes?" A selected checkbox indicates that this earning is included in the update totals for the employer taxable wages for the tax authority. Select the appropriate tax authorities for each earnings code.

FICA (Federal Insurance Contributions Act). Update taxable wages for employer Social Security.
FHI (Federal Hospitalization Insurance). Update taxable wages for employer Medicare.
FUTA (Federal Unemployment Tax Act). Update taxable wages for employer Federal Unemployment Tax Act.

SDIS (State Disability Insurance Service). Update taxable wages for employer state disability insurance services.
SUIS (State Unemployment Insurance Service). Update taxable wages for employer state unemployment insurance services.
LOCAL RES (Local). Update employer taxable wages for local taxes based on locality of residence.
LOCAL WORK (Local). Update employer taxable wages for local taxes based on locality of work.