Payroll Processes

By | June 21, 2015

A new payroll system would require the ability to enter and maintain payroll information from many departments, and possibly two campuses. The system will be required to provide concurrent use of multiple pay periods.
VU offers a wide and diverse choice of payroll deductions. Individuals may hold multiple appointments concurrently: Faculty, Classified, or Student, or any combination thereof, which may require different withholdings in the same or different pay cycles.
VU employs a wide variety of faculty, unclassified staff, classified staff, research staff, and students. Individuals may be appointed for one-time contracts of various lengths of time and multi-year appointments for portions of a year (e.g. one, 9, 10, 11, 12 months), hold multiple classification of jobs (e.g. researchers, graduate students, etc.), receive pay over periods not always consistent with appointment dates (e.g. work nine months but receive pay over twelve months) and be covered by benefits (including leave accruals). VU also offers non-salaried appointments to individuals, (e.g. visiting faculty, post doctoral, etc.).
1 Payroll Processing Overview
1.1 Demonstrate multiple pay frequencies (e.g. monthly, semi-monthly, biweekly, weekly and off-cycle) and perform all these cycles for one employee.
1.2 Faculty1 becomes Department Chair effective 8/25/98. Demonstrate a payroll change that converts Faculty1 from a 9-month pay at $60,000 to 12-month pay at $72,000.
1.3 Demonstrate simultaneous processing of multiple payroll groups with one Federal ID (e.g. faculty, classified staff, students, and Health Care Providers (HCPs))
1.4 Show how to set-up selected on-call employees for positive pay and autopay including exception pay with or without stop dates (e.g. overtime, shift, or on-call reimbursements).
1.5 Establish and override labor distribution on a temporary or fixed basis for fixed distribution employees.
1.6 Demonstrate how pay/benefits is calculated for an employee starting on date other than first day of pay period.
2 Payroll Employee Information Maintenance
Occasionally a large number of employees will require a standard adjustment to their data.
2.1 Demonstrate the ability of your software to link pay adjustments to a pay for performance review process. This should include a standard formula for rating employees and distributing salary increases with ability to manually override.
3 Earnings
VU employees often hold jobs in more than one department and/or on one or more projects. Each job may be subject to different salary structures, job administration policies, leave programs, benefits eligibility, time reporting, leave accruals, tax withholding and reporting, etc. These units may be consolidated for payroll processing and tax treatment.
3.1 Show how components of pay are separated (e.g. straight time, overtime, vacation, and current pay).
Dept1 has agreed to pay an employee $300 per month as a Housing allowance.
3.2 Demonstrate how to establish start dates, stop dates, and ceiling amounts on recurring payments ( e.g. severance pay, housing allowances, unit pays, stipends).
3.3 Display how to maintain and calculate user-defined shift codes with an associated rate or premium. Also include the establishing of a shift premium that can be designated by job class and / or position number. Establish a default shift code for each employee and by job classification with the ability to override the default code.
3.4 Show how earnings can be generated based upon classification codes or licenses/training. An example would be doctors receiving physician’s incentive pay defined by an external physician’s practice group. Show that the system will accept electronic feeds of additional pay information from the outside organization
3.5 Show how differential rates would be calculated based on geographical area. Demonstrate how the rates of pay are associated with classification code, location, and time spent in salary grade.
3.6 Show ability to calculate tax based on gross wages less pre-tax deductions (e.g. health insurance, dependent child care, and student exemption from FICA withholding).
3.7 Demonstrate how monetary and non-monetary earnings are grossed-up for taxes in such situations as performance awards and suggestion awards. Include a demonstration of gross-to-net check modeling.
3.8 Demonstrate ability to stop FICA WH (manual override) based on a calculated ceiling derived from another system.
An employee has now been offered a full time position and will be reimbursed for moving expenses.
3.9 Create an earnings for moving expense and show how the earning is automatically placed on the W-2.
3.10 An employee was paid the correct salary for the past three months, however, the department discovered the costs were charged to the wrong account. Demonstrate the process for retroactively correcting the account to which the salary was charged so that the earnings records reflect the proper accounts.
4 Payroll Processing/Check Production
4.1 Illustrate a typical payroll processing cycle, including the steps initiated by users and screens accessed by various users. Include an explanation of lockout features, checkpoints in the process, etc. Describe, in a simplified way, how to initiate the payroll gross-to-net process (e.g. one command, one menu option, etc.). Describe payroll control reporting, including exception reports, range checks, etc. Show how the system is available to users during the payroll processing cycle.
4.2 Explain and demonstrate the payment generation process:
• Can payment amounts be at least 10-digits (9,999,999,999)?
• Does the system permit customizable 8.5″ x 11″ earnings statements which list detailed pay types, taxes, deductions, etc.?
• Can earnings statement messages vary by employee type, campus location, employee classification, tax status, etc.?
• Are earnings statements printed for zero net payments?
• Show ability to add any pay or benefit field to the earnings statements
• Capture ability to process in one cycle all pay types, but not pay certain pay types whose time has not yet been recorded.
• Produce earnings advice via letter, e-mail or post to a web site.
• Print one-time information messages on earnings advice that can vary by employee type.
4.3 Demonstrate the interfacing with the General Ledger system to show:
• Ability to distribute an employee’s pay and benefits costs to multiple general ledger accounts based on designated percentages or based on actual hours worked.
• Ability to charge the costs of an employee’s fringe benefit to different general ledger accounts than the cost of an employee’s pay.
• Ability to identify expense accounting (object) codes and distribution by earnings type.
• Ability to report on vacation liability for journal entries to accounting system.
• Capability for calculating period-end accruals and reversals for journal entries to accounting system.
• Capability to retain accounting data with payroll in order to prevent discrepancies between payroll and accounting.
• Support the encumbrance and accrual (9 paid over 12 months) processes
• Show the use of effective dating in these processes.
4.4 Demonstrate capability to interface to Accounts Payable for creation of third party checks or EFT transmissions.
5 Time Reporting
The current time entry and leave system is designed to process time worked and/or leaves taken for wage, classified, and faculty research scientists and assistants.
All time worked for wage employees and overtime worked for classified employees is reported on automated time sheets. Wage hours worked and classified overtime hours are processed through payroll resulting in the production of pay checks for the employees.
Leave taken by classified employees and faculty research scientists and assistants is reported on monthly leave reports. The monthly leave reports are completed and approved by the departments. Processing of the leave taken for classified employees and faculty research scientists and assistants is processed through the leave system resulting in the appropriation of leave accruals and leave balances. Currently, the leave system handles in excess of 25 different types of leaves.
5.1 Enter an employee’s work hours information on-line and real-time. Demonstrate ability to generate time automatically based on a work schedule. Include a review of the following functionality:
• Ability to handle varying schedules
• On-line validation of pay accounting and time reporting information
• Real-time updates to database
• Segregate components of pay (e.g. straight time vs. overtime)
• Multiple types of shift codes, each with an associated rate
• Ability to override account (labor) distribution of any special pay
• Multiple input sites (i.e., primary timekeeper location and alternative or backup locations)
• Automatically have default hours indicated (to reduce amount of input if no deviation)
• Ability to distribute time among as many jobs, projects and departments as required
• Have the capacity to handle an Employee Work Record on-line and be routed for appropriate approvals notify person when request is waiting for approval
• Accept time through interfacing with Work Management Systems
• Ability to electronically sign the time report
• Ability to route the time report to a supervisor who will also electronically approve the time report
• Validate available amounts of sick and vacation time
• Ability to revert to other types of leaves when balances are not sufficient to cover time (i.e., if an employee does not have sufficient sick leave, then it is automatically converted to comp then to annual).
5.2 Illustrate how leave balances are maintained based on time and/or status of the employee for the following (e.g. leave and part-time):
• Ability to maintain records of vacation, personal time, sick leave, military leave, educational leave, jury duty, funeral leave and other paid leave used in accordance with state policies
• Automatically accrue leave earned based on a calculation algorithm reflecting the leave earning policies
• Ability to transfer leave balances to following year based on carry over rules
• Accruing future year vacation hours based on calendar year, not on hours worked.
• Reducing balances when maximums are exceeded.
• Generating and sending notices to employee regarding changes or other information.
• Show number of allowed leaves.
• Retroactive leave processing
• Leave reversion based on defined leave substitutions (e.g. no sick leave reverts to vacation).
• Leave with time restriction for use.
• Leave with set maximum hour restriction
5.3 Demonstrate how to access and track hours worked. Include the tracking of temporary and part-time employees. Can employees be on fixed time distribution or time cards? Can all the “rules” for time reporting be maintained in a single place? Show how.
5.4 Show how the system would handle changes to time reporting data in a common entry mechanism for both normal input and corrective entries. Include in this demonstration the ability to define and handle multiple alternative work schedules.
5.5 Show how Family and Medical Leave Act (FMLA) information is stored for multiple occurrences in a year. Allow percentage use of sick leave for FMLA.
6 Research Effort Processing
Research Effort Reporting is a requirement of Health and Human Services (HHS). The purpose is to certify that employees working on grants actually put in the effort being charged to the grant within a -4% error margin (i.e., an employee committed 20% to a grant must charge at least 16% to the grant and can charge higher than 20%).
Currently, research effort reporting at VU is very different depending on whether the employee being reported is wage auto-paid, classified or faculty.
Effort reporting for classified, salaried employees is simply a quarterly report to be verified by a Principal Investigator (PI) that the classified staff effort charged to the grant did work on the grant for the amount charged. Effort reporting for wage, auto-paid employees is the same but with different reporting periods, more similar to faculty. For employees that are wage, timecard-required, certification is done at the time the hours are submitted; therefore, they are not a requirement of this process.
Effort reporting for faculty employees can be broken into three processes: pre-report processing, report processing, and post-report processing. Effort reporting for the non-medical faculty occurs three times during the year (September-December, January-May and June-August). Effort reporting for the medical faculty occurs twice (January-June and July-December) and it also includes compensation paid by VU’s related Health Services Foundation.
Pre-report processing captures salary information from Fiscal file and non-UVa payroll file and contributed effort information for medical or non-medical faculty employees/accounts and posts it to the ‘Research Effort Reporting’ file. The Office of Sponsored Programs has the ability to make on-line changes to this report file before proceeding to the next phase. This phase also includes the calculation of payroll effort percent.
The report processing phase produces the actual research effort report. The Individual Effort Certification Report has different formats depending on whether the employee is medical or non-medical.
Post-report processing allows for batch entry of data captured on the ‘turnaround’ effort report.
It is expected that these processing cycles will overlap (i.e., the processing of the ‘turnaround’ reports will continue for the ‘old’ period while pre-report and report processing are happening for the ‘new’ period).
6.1 Demonstrate the ability to generate effort reports based on actual payroll source history for various reporting periods for selected groups of employees.
6.2 Demonstrate the ability to combine contributed effort and/or payments from additional sources prior to calculating the payroll percentage of effort.
6.3 Demonstrate how to update the effort reporting records with actual effort as opposed to payroll effort.
6.4 Describe the impact of paying 9 months faculty over 12 months would have on the effort reporting system.
7 Student Employment
The Student Employment Office operates on two periods: the academic school year (September to May) and the summer (May to September).
Students can hold multiple positions on campus under different working programs (Work-Study or non-Work-Study). A student receiving a Federal Work-Study award of $2000, chooses to take a Work-Study position with VU in Dept1. The Federal Work-Study Program is subsidized by the Federal Government. The student earns his Work-Study goal of $2000 and the government subsidizes his earnings (the percentages are set yearly in the payroll tables). Then, the same student takes another position for additional spending and living expenses. The student may add a library position, which is a non Work-Study position (100% of the department’s funds).
Undergraduate need-based financial aid, which may include Federal Work-Study Grants, is affected by non-work study employment and officials of VU must be notified when such employment is undertaken. As a result of additional earnings, the student’s award package may need to be recalculated.
7.1 Demonstrate the system’s ability to handle the situation outlined above.
Students may also work on or off campus under different work programs. A student takes a position on campus, which does not require Work-Study so he/she decides not to use the $2000 award. However, an opportunity to gain practical experience working off-campus at a community service center appeals to the student. He/she may work off-campus at certain pre-approved off-campus organizations, which qualify for Federal Work-Study. This student is paid through VU’s payroll system because of Federal Work-Study fund requirements. The community center is responsible for a percentage of the gross earnings, which is set yearly in the payroll tables. The center must prepay the VU or they are billed monthly (after the fact).
7.2 Demonstrate the system’s ability to handle the student employment issues.