Company Earning Code Setup
Introduction
Empeon Workforce uses Earning Codes for the categorization of varying kinds of pay (Regular, Bonus, Overtime, Holiday, etc.) applied to employees. Each Earning Code represents a particular kind of employee pay, which in turn allows for employers to review their varying pay classifications within the system's reports. Different kinds of earnings need to be coded separately in order for Empeon to properly apply custom calculations for items like overtime and accruals. Empeon's earning codes are also sometimes used as memos to track Non-Cash Benefits provided by the employer.
Every Empeon company has a standard set of Earning Codes available for use from the start. For instances where additional Earning Codes need to be added to the system, this article details the process of adding and adjusting the setup of Earning Codes within Empeon Workforce.
Setting Up Earning Codes
To set up new Earning Codes at the company level or review and manage those that have already been configured, navigate to the Payroll section within the Company tab and select Earnings & Rates Card.
The Earnings & Rates Card will default to the subtab for Earning Codes and display all active Earning Codes that have been set up and are available for use. To set up a new earning, click the blue button that says "+ New Earning" in the top right corner of the screen.
General Settings
When setting up a new Earning Code or editing an existing one, a window will appear prompted for the configuration of the earnings General Settings.
Here is a breakdown of each field on this screen:
- Earning Type - The Earning Type has to be identified before any other piece of an Earning Code is configured. It ensures that the earning is applied the appropriate grouping for some of Empeon's reports, and certain types are reported in the necessary boxes on employee W2s.
- Though there are a variety of Earning Types to choose from, type Reg is appropriate for the vast majority of pay classification needs. However, for any pay coding for Overtime Pay, be sure to use the OT Earning Type.
- There are other Earning Types listed in the dropdown that could be needed under very specific circumstances. For example, there are Memo types of earnings that can be used for information only (no pay) records or used for recording employee non-cash benefits. There are also Earning Types for "Tips" to help report "Tip" type of pay on W2's.
- If you feel that an Earning Code needs a different type than Reg or OT, be sure to reach out to Empeon Client Services for guidance.
- Unique Earning Code - This will be the payroll code seen within the system and used in Empeon's reports. Earning codes have a 10-character limit and it's best not to use special characters.
- Earning Description - Enter a short, title-like length for the earning's description. Please note: It is this description that prints on employees' checks associated with the earning amount.
- Block tax withholdings - Toggling this on will block the tax withholding for all applicable non-percentage withholding taxes. Understand that activating this setting does not exempt the earning from taxes, it simply blocks the withholding amount. Taxable wages will still be recorded.
- Exclude From Total Hours on paystub - When toggled on, this setting prevents the hours record of the Earning Code from being included on the Total Hours record of paystubs. This can be a helpful feature for organizations that want the Total Hours records to align more with the actual hours they worked. Reach out to Empeon Client Services for additional guidance on using this feature.
- Include on Pay Stub? - This is a required field with three options to choose from: Yes, No, Benefits Section.
- Yes - Hours and wages recorded under this Earning Code will print in the Earnings section of the employee's paystub ('Yes' is applied by default). Empeon recommends that any Earning Codes affecting employee gross should be included on employee paystubs.
- No - Hours and wages recorded under this Earning Code will not display on the employee's paystub. This is sometimes appropriate for Memo types of earnings used for employer tracking purposes but are not relevant information for the employee.
- Benefits Section - Amounts recorded under an Earning Code with this setting will print in the Benefits section of the employee's paystub. It's usually best to display Earning Codes used for non-cash employer benefits in the Benefits Section, like an employer provided 401k match amount.
- Third Party Agency - For memo types of earnings used to track employee non-cash benefits, the employer can actually pay the third-party benefit provider by choosing the party (Agency) from within this field. For information on how to set up Agencies to be available within this dropdown, review Empeon's article: Agency (Third Party) Payment Setup.
- Include in ACA Measurement? - This required field determines whether the Earning Code should be classified as worked hours to determine their full-time/part-time status under the Affordable Care Act (ACA). For Earning Codes representing an hour worked or paid time off, this field should be set to "Yes". For Earning Codes that are used to "add on" pay on top of hour worked earning codes, this field should be set to "No". For ACA reporting purposes, it's important for this field to be identified appropriately. For additional assistance on what constitutes as an hour of service under the ACA, please refer to Empeon's article Affordable Care FAQ's. For any additional questions surrounding this field, please don't hesitate to reach out to Empeon Client Services for guidance.
Calculation Settings
Once the Earning Code's General Settings have been attended to accordingly, click "Next" to go onto the Earning Code's Calculation Settings. This section of the Earning Code setup is for applying special calculations when an earning code is used.
For most earning codes, the hours, rate, or flat amount is determined per employee; so for most Earning Code needs, the calculation settings are left blank. When left blank, the system assumes to use the employee's default rate when applied on the check. However, for circumstances where an Earning Code needs to apply an additional calculation on the check for ALL employees when used, use these calculation fields as needed.
Here is a breakdown of each field on this screen:
- Fixed Rate - If the pay for an Earning Code should be applied at one consistent rate across the board for each employee it is applied, enter the fixed rate in this box. A common kind of earning where this is used is for codes representing Shift Differential rates that add on to an employee's regular hour earnings.
- Rate Addition - The amount entered in this field will add an additional amount to the Employee Profile's hourly default rate when the Earning Code is applied. For example, by entering a "2" in this field, and then applying hourly pay for an employee with a default rate of $20 using this earning code, a rate of $22 will be calculated on the check.
- Rate Multiplier - The value entered in this field will be multiplied by the hourly default rate of the employee when the corresponding Earning Code is used. A common usage example is for basic Overtime Calculation needs. Earning Codes for worked overtime are often applied 1.5 in this field so that the employee's default rate multiplies by 1.5 when paying the hours using this code.
- Special Rate Code - You can select a specific Rate Code to be tied to this Earning Code. If a Rate Code is selected, pay entries recorded under this Earning Code will use the selected Rate Code.
- Adjust Base Auto Pay - This option should usually only be activated for non-worked Earning Codes, such as Paid Time-Off (PTO). It only affects employees that are set to Salary or Auto Pay Hours within their Employee Profile. When this option is toggled on, hours recorded for a PTO kind of code will reduce the employee's Default Hours when applied on the check. This results in the employee's hours being properly adjusted when being paid non-worked earnings like PTO and Sick, without the need for the Payroll Admin to manually adjust this on the check. For example, if an employee's is set up with a Base Auto Pay of 40 Default Hours and they take 8 hours of PTO, enabling this setting ensures they are still paid 40 total hours when auto-paid, but the hours will be split between 32 hours Reg, and 8 hours PTO on the check.
- Please Note: The Adjust Auto Pay card should only be activated if there are employees Pay Info cards that have Default Hours, Auto Pay Hours active, and a rate in the Default Rate field.
- Deduction Match - This functionality is usually for Earning Codes that represent Taxable Non-Cash Benefits that need to be recorded in payroll for tax reporting purposes. When assigning a general deduction code as the Deduction Match, an equating deduction will reduce all the amount applied when using the earning code so that cash isn't actually paid. However, that amount's taxable wages will still be recorded for tax purposes in payroll.
As noted, these settings are more relevant when configuring the Earning Code on the Employee Profile. Any configurations made to the Calculation Settings at the company level will apply uniformly to all employees assigned the code. For more information on setting up an earning on an Employee Profile, refer to Empeon's article Fringe Benefits & Employee Auto Pays.
After reviewing each field on this screen, click the blue "Save" button to finalize the Earning Code. After saving, a reminder about existing Code Groups set up in the company settings will appear. For any newly added Earning Codes that may apply to these Code Groups, review the relevant Code Groups accordingly.