Introduction
Many employers offer paid personal time off benefits, which are typically accrued over time according to the organization's PTO, vacation, and/or sick leave policies. In some states, like New Jersey and New York, there are laws mandating accrued sick time that employees are entitled to use when unable to work due to illness.
Regardless of whether an employer follows internal or state-mandated accrual policies, Empeon's straightforward Accrual Module automatically calculates and tracks employee accrual benefits as needed. This tool accommodates any accrual policy by breaking down policy rules into a series of logical steps and conditions.
Please Note: It is important for Workforce Administrator(s) to first have a complete understanding of their organization's accrual policy before utilizing Empeon's Accrual Module.
Accrual Policies
To view, maintain or create an Accrual Policy, navigate to the Benefits section with the Company tab and select the Accruals Card.
A company can have as many accrual banks as needed, however usually there doesn't need to be more accrual banks than accrual policies. Click the three-dot menu to review and/or edit existing policies or click "+ New Accrual Policy" to create a new policy bank.
Empeon's Accrual Module calculates and tracks accrual policies through the setup of five sections within the bank. The five sections are the Policy Info, Accrual Method, Eligibility, Plan Year, and Rules & Rates. As long as these accrual policy items are properly identified and applied into the corresponding section of the module, employee accruals will calculate and track as needed.
Policy Info
The Policy Info section of the accrual bank confirms the type of policy and if or how accrual balances are displayed on employee checks.
- Select a Policy Type - This is to confirm the type of policy, such as a "Vacation" or "Sick" policy. No matter what's chosen for the Policy Type, it's only for informational purposes. It has no effect on how the accrual bank actually calculates accruals.
- Enter a Unique Code For This Policy - Identify the accrual bank representing the policy with a 10 character max code.
- Enter A Policy Description - Enter a short description for the accrual policy. Important Note: It is the policy description that displays on employee checks and in ESS. This means that a company with separate policies for different groups of employees, like "Vacation Hourly" and "Vacation Salary", can apply a "Vacation" description for both if differentiating accrual policies isn't relevant to the employee.
- Show the Available Balance Of This Policy - Choose whether accrual balances should be displayed on check stubs and/or ESS Hub. To avoid employee confusion when initially setting up accrual policies or when applying significant changes to existing banks; it may be best to not show balances until the calculations from a new setup are reviewed and verified after the first payroll has been processed.
Policy Accrual Method
The Accrual Method section is for choosing the accrual rate calculation method of the bank. Employees generally accrue over time via one of two methods; per hour worked or a fixed amount per a consistent period of time (schedule).
- Will This Policy Accrue Hours or Dollars - Accrual banks can calculate and track accruals by hours or dollars. However a single bank can't calculate both at once. This setting can't be changed after the bank's first accrual process. Accrue Dollars is usually only setup for unique benefit calculation needs. The vast majority of accrual policies are set up via Accrue Hours.
- What Is The Accrual Method For this Policy
- Rate Per Hour Worked - Accruals are calculated on a per hour rate. Accruals per hour are usually appropriate for hourly employees whose pay is also determined per hour worked. Please Note: The accrual rate(s) per hour are applied in the Rules & Rates section of the accrual bank setup.
- Fixed Amount Per Schedule - Accruals calculate at a specific rate on a consistent schedule. This accrual method is usually only appropriate for salary like employees who work a consistent amount of hours and their amount of pay isn't determined by exact hours worked. Choose the appropriate Accrual Schedule (often matching the pay frequency) and the day the system should calculate. Please Note: The accrual per schedule rate is applied in the Rules & Rates section of the accrual bank setup.
- Only Accrue if employee is paid - When this optional setting is activated, the bank will only apply an accrual amount per schedule for employees that are actually paid in the payroll batch.
Policy Eligibility
The Eligibility section is for identifying which group of employees should be applied this accrual policy. The eligibility section can be setup to simply include all employees, or any specific group of employees through the use of an effective condition utility.
- Employee Status & Employee Type - The Employment Status and Employment Type assigned within the Employee Profile is established here in order to identify the group of employees eligible for the accrual policy bank. For more information on how to add or change the setup of Employment Statuses & Types, review Empeon's articles: Company Setup: Status Codes, Reasons and Employment Types & Employee Profile: Employment Status Card.
- Filter Group - A Filter Group identifying a specific group of employees can be setup and then applied to an accrual policy. First create a Filter Group with the appropriate conditions needed in the Rules & Alerts section of Workforce. Once created, select the Filter Group from the dropdown field.
- Should this Policy be Added Automatically? - Be sure the "added to eligible employees automatically" option is activated if you wish the accrual policy/bank to be added to employees automatically per the accrual Eligibility settings.
- Probation: When are employees eligible to start using the balance accrued under this policy? - An important piece of many accrual policies is when new hires can start to use accruals in relation to their hire date. For any policy where employees can only start using accrued paid time off after a set amount of days from their hire date, use the Probation feature to support this common accrual policy rule.
Plan Year
The Plan Year section is for identifying when the new plan year starts, if or how many accruals should carry over from the prior plan year, and how the carry over balance should be applied for the next plan year.
- When does the plan year start for this policy? - Identify the recurring start date for the accrual bank's new plan year. Options like calendar year, employee anniversary, or a specific date can be applied.
- At the end of the plan year, can employees carry over balances to the next plan year? - Confirm whether any remaining accrual balances should carryover to the next plan year; whether it's the full balance, limited amount, or no carryover. Carryovers will apply every year on the identified plan year start date.
- What should happen to the balance that carries over? - When a full or limited carryover is applicable, identify if the carry over balance should be applied to the current accrual bank or choose a different accrual bank from the drop down field. Please Note: For the vast majority of accrual policy circumstances, Workforce's Accrual Module handles plan year carry overs to the current bank as needed. Having separate "Prior Year" accrual banks for prior year accrual balances isn't usually necessary.
- What should happen to the balance that will not carry over? - For accrual plans that have a limited amount carryover, identify in this field whether the accruals that did not carryover should be wiped or transferred to another bank.
Rules & Rates
The Rules & Rates section is for confirming at what rates accruals should calculate under what conditions and rules. This section also identifies what Earning Codes should accrue (usually codes representing worked hours like "Reg") and what Earning Codes should use accruals (usually codes like "Sick" or "Vacation").
The Rules and Rates are setup via a grid set-up solution per the example image below. Each line represents unique conditions or rules that need to be applied within the accrual policy bank. In order to better see the entire grid setup on your screen per the example image below, click the "Pop out" link. Click the blue "Customize" links to add the needed Conditions and Rules that are applicable to the accrual policy.
There are a variety of Rules & Conditions Customize options available to ensure that an Empeon Accrual Bank can address any accrual policy need. Review the items below for more information about these options.
Conditions - These field options defines which employees should be applied the accrual rule(s).
- Length of Service (LOS) Months: A common part of many accrual policies is applying different accrual rates and limits depending on employees' LOS. Add this condition field and then and click "Add Row" representing each LOS months period along with it's applicable accrual rate and other rules. In most instances there should be a rule line where the LOS Months field is blank (Default) which represents the accrual rule for newly hired employees.
- Other condition options can be pulled in so that different rates can be applied across other employee group differentiators like Position, Department, or Employee Type.
Rules - These field options define at what accrual rates, limits, and caps should be applied per each employee group condition.
- Rate - The rate that employees should accrue per hour worked or per schedule.
- Accrual Limit - The amount of total hours an employee can accrue for the plan year.
- Balance Limit - The maximum accrual balance (cap) an employee can have within a plan year.
- Usage Limit - The maximum amount of accruals an employee can use within a plan year.
- Carryover Limit - For accrual policies with a limited carryover to the next plan year, identify the limited amount of accruals that should carryover in this rule field.
Please Note: It's important to understand the difference between Accrual Limit (how much can be accrued in a plan year), Balance Limit (the accrual balance cap for the plan year), and Usage Limit (the accrual usage limit for the year). Whether or not these rule fields should be setup depends on the specifics of an organization's accrual policy. Contact Empeon Client Service for additional guidance on if or how these rules should be applied to an accrual bank.
Earnings that Accrue or Use
The bottom half of the Rules and Rates page is where to identify which Earning Codes should accrue (for accrual policy methods that calculate by rate per hour worked) and what Earning Codes should reduce the bank.
- On which paid hours should this policy accrue on?
- A single Earning Code can be identified confirming which earning, usually representing worked hours, should accrue. However many organizations have multiple Earning Codes that represent worked hours (codes like "Reg", "Hourly", and "Training") so often a Code Group containing the relevant earning codes should be selected.
- Which paid hours should reduce the bank balance for this policy?
- Identify the Earning Code, or Code Group if necessary, that are used for recording accruals taken and should reduce the employees' accrual policy balance (for example "Sick" or "Vacation").
Accrual Calculations
Once an accrual policy is set up and activated, included employees' accruals will calculate based on it's rules and conditions. Accrual calculations are performed along with payroll calculations in a payroll batch. In the Pay Entry view of an employee's check, the "Show Details" section includes an area for "Accruals" that displays the hours that will accrue once payroll is processed.
To review all accrual calculations, the Verification screen offers the option to "Preview Accruals" to view all records where hours are accruing per employee.
After initiating or editing an Accrual Policy for the first time, be sure to review the accrual calculations before payroll processing to ensure the setup change is applying the intended result.
After payroll is processed, a historical log of accrual calculations can be found in the Accrual Card on the Employee Profile, as well as in the "Accruals Transactions" Live Report.