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Payroll

SuccessWare, Inc. 1

Payroll Overview

Payroll

2 SuccessWare, Inc.

Table of Contents

Introduction ....................................................................................... 3

Accounting Flow ................................................................................ 4

Where do the transactions post? ................................................................. 4

Other things to consider .................................................................... 9

What is “Regular” pay? .............................................................................. 15

Number of Hours ......................................................................................... 15

Premium Rate .............................................................................................. 16

Overtime options ........................................................................................ 23

Deferred Wages and Overtime Calculations ............................................. 26

Payroll

SuccessWare, Inc. 3

The

Payroll

Manager

Timecards Miscellaneous

Wages

QuickBooks Pro General Ledger

INTRODUCTION

The SuccessWare21 Payroll Manager allows you to maintain and post timecard entries,

other earnings, and employer expenses into SuccessWare21. Once employee wages have

been paid, you will use the reconcile feature to balance your actual payroll to the original

gross wages by recording net wages, deductions and additional expenses. SuccessWare21

will generate and post journal entries to reflect these totals.

Earnings are entered as timecard entries or as miscellaneous wages. You will prepare,

verify, and post them in the Payroll Manager.

If you are using the interface with QuickBooks Pro, you will export gross

wage information from SuccessWare21 into QuickBooks. QuickBooks will

calculate the net wages and generate checks for your employees. You can then

import the reconciliation information back into the SuccessWare21 Payroll

Manager.

If you are using an outside payroll service or other third party software to

calculate taxes and generate checks, you will obtain reports from the other

source and use the information to manually enter the reconciliation

information in SuccessWare21.

After the reconciliation information has been imported or manually entered, you will post

the reconciliation that will update the General Ledger with the actual payroll entries.

Payroll

4 SuccessWare, Inc.

ACCOUNTING FLOW

Where do the transactions post?

Earnings

All earnings are entered using Pay Items. You will add pay items while setting up

Payroll. A pay item consists of a code and description and also determines the pay type

(hourly, salary, piece rate or commission), whether the earnings are job related or not,

whether the earnings should factor into overtime calculations, and where the earnings

expense should post in the general ledger.

Sample Pay Items

The expense type you have selected for the pay item defines the general ledger account.

You will set up an expense type for every general ledger account you wish to affect with

gross pay. You will have some expense types for direct costs (above the line) and others

for operating expenses (below the line.) The department will default to the job’s

department for job related transactions. You will select the desired department for non

job-related transactions.

Whether you are entering earnings in the timecard manager or as miscellaneous wages, or

the earnings are generated automatically for salaried employees, it is the pay item that

will determine where to post in general ledger.

How is the Pay Item assigned?

When entering miscellaneous wages you will select which pay item to use for each line

item.

Salaried earnings are set up on each salaried employee.

Payroll

SuccessWare, Inc. 5

Timecard entries are automated. When setting up payroll you will select an hourly pay

item to use as the Standard Labor (default) pay item. You will select the pay item that

will be used most often for hourly timecard entries. When you complete call progress the

system creates timecard entries for “dispatched”, the time segment from dispatched to

onsite, and “onsite”, the time segment between on-site and completed. When the entry is

created, the system will look at payroll setup to determine what the pay item should be.

What if you want to use a different pay item for some jobs? You can select a pay item for

each job/call type. If a job/call type includes a pay item, that pay item will be used rather

than the standard labor pay item. Open the job/call type reference library table to add pay

items to the job/call types that you wish to post differently. You DO NOT need to select

a pay item for job/call types that should post to the standard labor (default) pay item.

Is there any other way to use a different pay item for hourly timecard entries? Yes. A

pay item assigned to a timecard status code will override the job/call type pay item. For

instance, if you want to charge travel time to a different account, you can change the

timecard status code of “dispatched” to use a pay item for travel time. Just remember

that ALL “dispatched” timecard items will post based on that pay item.

To review:

Timecard Entries

Job Related timecard entries look at the timecard status for a pay item. If there is no pay

item, the system will look at the job/call type to see if there is a pay item there. If not, the

system will look at payroll setup to find the standard labor pay item.

Non-job related timecard entries look at the timecard status for a pay item. If there is no

pay item, the system will look at payroll setup to find the standard labor pay item.

Miscellaneous Wages

When entering miscellaneous wages you will select the desired pay item for each entry.

Salaried Earnings

You have two options for expensing salaries when setting up salaried employees. You

can expense salaries using timecard entries or salary splits.

You can use timecard entries to determine where to post earnings on employees for

whom you schedule and track call progress through the call center but pay a salary. As

you dispatch and enter on-site and completed times for jobs, the system creates timecard

entries whether the employee is paid based on timecard entries or not. You can take

advantage of that feature to split a salaried employee’s earnings. For instance, if 20% of

his timecard entries are for direct cost and department 21, 20% of his salary will post to

direct cost and department 21. Using timecard entries to determine the split will ensure

that the employee’s earnings are always split based on where he or she worked. This

method is NOT recommended for employees that have very little timecard activity. For

instance, if you have a manager that spends most of his time in the office but maybe spent

8 hours at a jobsite, you would not want his entire salary to be split based on those 8

hours.

Payroll

6 SuccessWare, Inc.

Using Salary splits allows you to predetermine where the employee’s salary will post

every pay period. You can use any combination of pay items and departments to split the

salary by percentage. For instance, you may want all earnings to post to the same pay

item but split them departmentally.

You may split the salary by pay item.

Or, you may want all earnings to post the same.

When posting the gross payroll expense from earnings, the system will offset the entries

with Accrued Payroll. You will select the liability account to use for accrued payroll

when you set up general ledger default accounts.

Deductions and Other Employer Expenses

You will determine where deductions and other employer expenses will post when setting

up payroll.

When setting up the GL tab of payroll setup, you will list all deductions and other

expenses and indicate whether they are deductions, expenses, or both. For instance FICA

(Social Security) is both deducted from each employee’s paycheck and an expense to the

employer. You will also enter the general ledger account or accounts you wish to affect

when the payroll reconciliation is posted.

For employer expenses, you will enter both the liability account that you will use to

accrue the expense and the actual expense. There are fields for sub accounts when using

accounts for which there are sub accounts.

Payroll

SuccessWare, Inc. 7

Sample Deductions & Employer Expenses

If you are using sub accounts you must enter a deduction or expense for each sub

account. Notice in the example above that there is an Employee Receivable for Fred and

Jim. The EmpeAcct (Employee Account) is the same but the appropriate sub accounts

have been entered in the next field.

Deductions may post to a liability account as an accrual. However, in some cases, you

may wish to reduce an expense with the deduction (such as employee reimbursement for

expenses or employee portion of uniforms or insurance.)

Deductions and Expenses that your company is responsible for administering are

considered to be Employer Managed. That column is provided for companies using a

payroll service to indicate which items they are responsible for and which ones are

handled by their payroll service. If you are using the interface to QuickBooks Pro, all

items will be Employer Managed.

Deductions that are not Employer Managed will not update the General Ledger when the

reconciliation is posted. An example of a deduction that is typically not employer

managed is Federal Withholding. Since the payroll service withholds the deduction and

reports it to the IRS, it never accrues nor has to be paid out of your general ledger.

Employer Expenses that are not Employer Managed will update the General Ledger

expense account only. The Employee and Employer liability accounts will not be

updated. An example of an expense that is typically not employer managed is the

employer’s portion of FICA and Medicare. Since the payroll service withholds the

deduction, accrues the employer’s portion, and reports it to the IRS, it never accrues nor

has to be paid out of your general ledger. The expense for the employer’s portion will be

posted.

Note: If you are separating deductions by sub accounts in SuccessWare21, you must

also use separate deductions for those items in QuickBooks.

Payroll

8 SuccessWare, Inc.

Checks/Disbursements

The system uses information in the PAYROLL CHECK or DISBURSEMENTS tab of the

payroll reconciliation to determine how to post net pay.

If you are using the QuickBooks Pro interface, you will import the net checks

and actual deductions and expenses to post in SuccessWare21.

If you are creating paychecks in a different software package, you will

manually enter net checks and actual deductions and expenses.

If you are using an outside payroll service, you will manually enter the

disbursements, as they will appear on your bank statement, and the actual

deductions and expenses.

The deductions and expenses will post as described in the previous section. Checks or

disbursements will post to the general ledger account and register account that is selected

when you post the reconciliation.

When setting up payroll you will select a register account and mark it as “default payroll

account”. That register will display as the Payroll Bank Account in payroll

reconciliation. You can select a different account if necessary.

The system will offset the reconciling entries with accrued payroll (zeroing out the

account.)

Payroll

SuccessWare, Inc. 9

OTHER THINGS TO CONSIDER

Estimated Labor Burden

What is Estimated Labor Burden and why would I want to post it with payroll?

Labor Burden is the additional expense you incur simply because you have employees. It

includes employee benefits, taxes (the employer portion), insurance, etc.

You can use historical payroll reports to calculate what percentage of your overall payroll

is the additional expense. The following sample payroll report is an example:

In this example the employer has incurred 8,858.60 in gross pay. That is what he is

paying his employees for salary and commissions they have earned. But, he has also

incurred an expense of 1,052.52 for taxes and other contributions. So his total payroll

expense is 9,911.12 – about 12% more than his gross.

SuccessWare21 can include the additional 12% as an Estimated Labor Burden when

posting your initial payroll expense. When you reconcile payroll with your actual

numbers, the estimated labor burden will reverse and actual numbers will post.

Payroll

10 SuccessWare, Inc.

There are a couple of reasons why you may wish to have this estimated burden post:

1. Expenses will be more accurate on financial reports prior to reconciling

payroll.

2. Using Estimated Labor Burden will departmentalize the expense.

When setting up Payroll, you will have 3 options for posting estimated labor burden:

Not to post an estimated labor burden

To post an estimated labor burden to a default labor burden expense

account

To post an estimated labor burden as indicated by the (associated)

timecard entry’s pay item

Sample Accounting Flow for Estimated Labor Burden Options

In this example the total earnings for both monthly, salaried employees is $3,333.36 in

salary and $5,525.24 in commissions. The initial payroll posting will post the actual

earnings to the appropriate expense account as defined on the pay item’s expense type.

This will be offset with Accrued Payroll. The entries will use the timecard date for

timecard entries, or the ‘released’ date for miscellaneous wage entries, as the post date.

Payroll

SuccessWare, Inc. 11

When Payroll is reconciled the amount credited to Accrued Payroll will be debited.

Balancing entries will be made in the accounts defined for listed deductions and

additional expenses as determined in Payroll setup.

All entries posted during reconciliation use the Check Date as the posting date.

Method 1 – Posting payroll without an Estimated Labor Burden

Original Posting

Account/department Debit Credit

2101 – Accrued Payroll 8,858.60

4650-21 – Cost of Sale Commissions 5,525.24

6000-21 – Salesperson Wages 3,333.36

8,858.60 8,858.60

Payroll


Reconciliation Posting



1004 – Checking Payroll 6,442.92

2201 – FICA & Medicare Withheld 677.68

2202 – Federal Withholding 1,546.00

2205 – FICA & Medicare Employer 677.68

2206 – State Unemployment 77.91

2207 – Federal Unemployment 31.17

2311 – 401(k) Contribution 265.76

2312 – 401(k) Withheld 125.00

6400-00 – FICA & Medicare Expense 677.68

6420-00 – Payroll Taxes Other 109.08

6520-00 – Group Medical Reimbursement 67.00

6540-00 – 401(k) Expense 265.76

9,911.12 9,911.12

Method 2 – Post an Estimated Labor Burden to the default Estimated Labor

Burden account as defined in General Ledger setup. (In our example-6510.)

Original Posting





6510-21 – Estimated Labor Burden 1,240.27

10,098.87 10,098.87

Payroll











2311 – 401(k) Contribution 265.76

2312 – 401(k) Withheld 125.00



6510-00 – Estimated Labor Burden 1,240.20


6540-00 – 401(k) Expense 265.76

11,151.32 11,151.32

The original posting applied the estimated labor burden to the default estimated labor

burden account (6510) and the same department to which the earnings were posted.

The system credits the estimated labor burden from the default estimated labor burden

account (6510) and department 00 and posts the actual payroll expenses when it is

reconciled.

Method 3 – With an Estimated Labor Burden as indicated by the timecard Pay

Items (labor burden is added directly to each payroll item, including the item’s

department number.)

Original Posting





10,098.87 10,098.87

Payroll











2311 – 401(k) Contribution 265.76

2312 – 401(k) Withheld 125.00

4610-00 – Burden Applied 1,240.20




6540-00– 401(k) Expense 265.76

11,151.32 11,151.32

The original posting applied the estimated labor burden to the same expense and

department to which the earning was posted.

Reconciling left that estimated amount in the expense and department but reversed the

original estimated amount using a burden-applied account. The net result is that the labor

burden (albeit an estimate) will appear on financials with the labor. Since there is an

offsetting entry to 4610 the bottom line remains the same.

Overtime

You can select to calculate overtime automatically or enter it manually.

Automatic Overtime can be configured to calculate daily or weekly for hourly

employees. It is applied to timecard entries only.

Manual Overtime can be entered for any employee. It can be entered as a premium

code on timecard entries or miscellaneous wage entries.

Whether you select to use Automatic or Manual overtime, the system will refer to the

‘RegOT’ column on pay items to determine which pay items should factor into number of

hours and/or pay rate to use for overtime calculations.

Overtime is calculated based on several options that you will configure when setting up

Payroll.

Payroll


The Automatic Overtime option in the Employee form – selected on

employees for whom you wish to automatically calculate overtime.

The Pay Items that have been marked as “RegOT”

Overtime Setup – can choose to accumulate daily or weekly or both.

Payroll Premium Setup – can choose to calculate the base and premium

based on the employee’s standard hourly rate, “normal” rate of the pay item,

or a calculated average rate for each payroll period.

What is “Regular” pay?

Regular pay and hours represent the type of earnings an employee will typically earn

throughout the year. Those earnings should be taken into consideration when calculating

overtime.

Pay Items such as Vacation or Holiday are not usually considered regular pay. For

instance, suppose an employee has 42 hours on his timecard and you pay overtime on

hours over 40. However, 8 of those hours were vacation hours so he really only worked

34 hours. Would you pay him 2 hours of overtime? If not, the vacation pay item should

not be marked RegOT. Then the system will calculate that he has 34 ‘regular’ hours for

the week and automatic overtime will not add 2 hours overtime.

You will determine if earnings such as Commissions or Bonuses should factor into the

rate for premium calculation. Since commissions and bonuses are not hourly pay items

they will not affect the number of hours the employee has for the week. However, when

the system calculates the average rate for the payroll period it may consider those

earnings as part of the employee’s regular earnings. The system will divide regular

earnings by regular hours to determine the pay period’s average pay rate.

As mentioned earlier, you will indicate which pay items should be considered regular pay

and factored into overtime/premium calculations by typing an X in the RegOT column

when adding Pay Items.

Number of Hours

Overtime is always paid as hourly pay within SuccessWare21.

When using Automatic Overtime for your employees, the system will automatically

calculate how many hours each employee has earned for the pay period based on the

number of hours on his or her timecard that were entered using a pay item that is marked

RegOT and how you configured Overtime Setup when setting up payroll.

You can select to calculate overtime on a weekly basis or a daily basis. You will also

enter the number of hours after which you consider overtime (i.e. 40 hours for the week

or 8 hours for a day.)

You can also select both. The system would calculate daily overtime first, then weekly

overtime.

Example:

Payroll


The sample employee has 44.25 regular hours for the weekly payroll period. It is broken

down by day as follows:

Day of Week # of hours OT hrs/day

Monday 11 3

Tuesday 9.25 1.25

Wednesday 8.5 .5

Thursday 9.5 1.5

Friday 6 0

Total Hrs. 44.25 6.25

If you calculated the employee’s overtime on a weekly basis after 40 hours, he would

receive 4.25 hours in overtime pay.

If you calculated the employee’s overtime on a daily basis after 8 hours, he would receive

6.25 hours in overtime pay.

If you selected to calculate the employee’s overtime on both, he would receive 6.25 hours

in overtime pay because the system is calculating daily first, then weekly.

So what advantage is there to using both? Why not just use daily?

The advantage to using both daily and weekly overtime would be when the employee

does not have over 8 hours on any day, but worked over 40 hours for the week. For

instance, the employee worked 8 hours every day Monday through Friday, then worked

4.5 hours on Saturday. If you were only using the daily calculation he would not receive

any overtime pay even though he worked 44.5 hours for the week.

Premium Rate

Once you, or the system, have determined the number of hours that should be considered

overtime, the system will calculate the premium rate of pay based on the following

formula:

Premium Rate = Base Rate + Premium Addition

You have 3 options to select the Base Rate. By:

Normal rate for work performed (Recommended)

Employee’s calculated average (regular) rate for the given period

Standard hourly rating from Employee Setup (if higher than regular rate)

You have 2 options to select the Premium Addition. By:

Employee’s calculated average (regular) rate for the given period

(Recommended)

Standard hourly rating from Employee Setup (if higher than regular rate)

Therefore, you have 5 different combinations you can select to calculate the correct

premium calculation for your employees:

Payroll


Normal base + calculated average premium addition

Normal base + standard hourly rate for premium addition

Calculated average base + calculated average premium addition

Calculated average base + standard hourly rate for premium addition

Standard hourly rate base + standard hourly rate for premium addition

The system calculates the “average” hourly rate based on total regular earnings. It does

so to ensure employees with no, or varying, hourly rates are paid a fair wage. The

average rate is calculated by dividing the regular earnings by regular hours for the payroll

period.

You may select to use “Employee’s standard hourly rating in employee setup” for the

base and/or the premium addition. However, if the system calculates an average rate that

is higher than the employee’s standard hourly rate, it will use the average anyway. If that

situation occurs, the system will display a message indicating that there are employees in

the pay period whose calculated rate is higher than the employee’s standard rate. It will

allow you to display a list of the affected employees.

You must understand how rates are calculated for the different types of employees in

order to determine how you wish to set up employees and how you wish to enter their

overtime, if any.

Some examples of rate calculation follow:

Rate calculation and overtime for Salaried Employees

Example 1 – Salaried employee with salary expensed using timecard entries

The sample employee is set up to be paid a salary of $1,000.00 each week. How that

salary is split by date, GL account, and departmentally will be determined by his timecard

entries.

When entering payroll information for Pete, we indicated that his annual salary would be

$52,000.00, which is $1,000.00 per week. We also indicated that his ‘average’ hours per

pay period would be 40 so the system calculated an hourly rate of $25.00.

For our sample payroll period, Pete had 46.5 hours on his timecard; one hour for pay item

TECH and department 10, 7.5 hours for pay item TECH and department 20 and 38 hours

of SHOP time.

Note: The standard hourly rate base is not an option when using the calculated

average for a premium addition.

Payroll


Notice that his earnings are $1,000.01 and were calculated with a rate of $21.5054.

Here’s why:

The system will calculate his rate each pay period by dividing $1,000.00 by the number

of regular hours on the employee’s timecard. In this case the employee has 46.5 hours on

his timecard so the calculation is 1,000.00/46.5 = 21.50537634 and is rounded to

21.5054. That is the calculated average (regular) rate for the employee this pay period.

If you add the total earnings from the wage summary in the example above you will

notice that the 3 calculated earnings do total $1,000.01 because of rounding.

If you apply an overtime premium to a one-hour timecard entry the system will calculate

the overtime rate as described below.

Payroll


Example 2 – Salaried employee with salary expensed using salary splits

The sample employee is set up to be paid a salary of $1,000.00 each week. How that

salary is split by GL account, and departmentally will be determined by percentage splits

defined in employee setup.

How the employee’s salary earnings will post by date is determined by the employee’s

schedule and the number of hours in the pay period. For instance, the sample employee’s

schedule is Monday through Saturday and there are 40 hours in the employee’s payroll

period so the system will post 6.75 hours each for those 6 days.

Any additional hours entered in Miscellaneous Wages will post on the item’s date to the

general ledger account indicated on the pay item. If the Pay Item is marked IsRegOT, the

hours will be added to the standard hours from the employee’s setup when calculating the

average rate for the period.

Payroll Setup

Base/Premium

Base Rate Premium

Addition

OT Rate

Normal/Calculated 21.5054 10.7527 (1/2 of 21.5054)

32.2581

Normal/Standard 21.5054 12.50 34.0054

Calculated/Calculated 21.5054 10.7527 32.2581

Calculated/Standard 21.5054 12.50 34.0054

Standard/Standard 25.00 12.50 37.50

NOTE: The normal rate is the rate on the timecard entry to which the premium is

applied. For a salaried employee, the timecard rate is the calculated average rate.

Payroll


You will notice that, when using Salary Splits, the system maintains a rate that is

approximately 25.00 per hour. You will see a variance plus or minus by a penny or two

for rounding.

However, if you have other regular earnings, such as Commissions, the calculated rate

will be affected. For instance, if this employee also has commission earnings of $250.00,

his total regular earnings for the payroll period will be $1,250.00. The system will divide

total regular earnings by the number of hours in the payroll period to determine the

hourly rate. In this case it will be:

$1,250.00/40 = 31.25

The system will use $31.25 as the calculated average for overtime purposes.

If you add an hour of overtime to this employee for this pay period the system will

calculate the overtime rate as described below. Since we are adding an hour at $25.00

(the employee’s standard rate) the calculated average will change to accommodate the

new earnings. The new average rate will be 1275.00/41 = 31.0976.

Since the calculated rate is higher than the standard rate, the system will use the

calculated rate when standard is the setup option.

Calculations based on the different setup options for sample employee:

Payroll Setup

Base/Premium

Base Rate Premium

Addition

OT Rate


40.5488

Normal/Standard 25.00 15.5488 40.5488




Payroll


Rate calculation and overtime for Piece Rate Employees

Piece rate wages are entered in the Piece Rate Assistant or Miscellaneous Wages for

Piece rate employees. Piece rate earnings are not associated with number of hours

worked. They can be entered as a Base amount, a percentage of Total Sale, or a

combination of the two.

The Wage Summary will show the earnings as they are split between department and/or

Pay Item.

The system will calculate the piece rate employee’s average rate based on the number of

regular hours on the timecard or entered as hourly miscellaneous wages. It will divide

total regular earnings by the regular hours per period. Therefore, his average rate may

vary from week to week.

The sample piece rate employee was set up with an average check of $1,000.00 and

average hours per pay period of 40.

In our sample pay period, the employee has regular earnings of $940.77. He has 41

regular hours from his timecard entries and miscellaneous wages. His calculated average

hourly rate for this pay period is $22.9456 ($940.77/41 = 22.9456).


Payroll Setup

Base/Premium

Base Rate Premium

Addition

OT Rate


36.4728

Normal/Standard 25.00 12.50 37.50




Rate calculation and overtime for Hourly Employees

Payroll


The rate calculation for hourly employees is pretty simple – regular earnings divided by

regular hours. However, there can be some instances that complicate it somewhat.

If the employee has other regular earnings, or has non-regular hours, his calculated

average hourly rate will be affected.

Example 1:

This hourly employee is set up for automatic overtime. He makes $20.00 per hour and

has 47.75 hours on his timecard. However, 1.5 hours is non-paid and he took 4 hours of

vacation time, which are not regular hours. Therefore, his regular hours add up to 42.25.

To determine the calculated average hourly rate the system multiplies Total regular hours

by the employee’s hourly rate to get regular earnings. It then divides regular earnings

by the number of regular hours to get the hourly rate. Or,

42.25 x 20.00 = 845.00/42.25=20.00

Since the employee has no other regular earnings, it is simply his normal hourly rate.

Since his Normal, Standard and Calculated rates are the same, his overtime rate will be

30.00 no matter what options are selected in Payroll Setup.

Payroll


Example 2:

The same employee has other regular earnings that are not hourly. His average hourly

rate will change. The system will use the same formula to calculate his average hourly

rate but the regular earnings will have increased. For example, assume the employee also

earned $250.00 in regular commissions. The system will calculate:

(42.25 x 20.00) + 250.00 = 1095.00/42.25=25.92

Therefore, the system will use the rate of 25.92 as the Calculated average rate. The

employee’s Normal and Standard rates will remain 20.00.

Example 3:

The same employee has 47.25 hours on his timecard. Of the 47.25 hours, only 42.25 is

regular time. In addition, he has 8 hours of overtime that was entered through

Miscellaneous Wages. When the employee works in the shop he is paid a different

hourly rate than when he is on service calls. He will be paid 18.00 per hour for shop

time.

His earnings will calculate based on 15.5 hours of Shop time and 34.75 hours of regular

hourly pay.

The system will calculate his average hourly rate as follows:

(15.5 x 18.00) + (34.75 x 20.00) = 974.00/50.25 = 19.3831


Payroll Setup

Base/Premium

Base Rate Premium Addition OT Rate

Normal/Calculated - Shop 18.00 9.6916 (1/2 of 19.3831)

27.6916

Normal/Calculated - Tech 20.00 9.6916 29.6916

Normal/Standard - Shop 18.00 10.00 28.00

Normal/Standard – Tech 20.00 10.00 30.00




Note: If the system is set up to use the standard rate and the calculated

average rate is higher, the calculated average rate will be used.

Note: The system will use the pay rate for each pay item when the Payroll Setup uses

the Normal rate option for the base pay. Therefore, the overtime rate is different for

Shop time than Tech pay.

Payroll


Overtime options

There are three methods you can use to pay overtime to your employees. Refer to the

chart to determine which method is recommended for your employees.

Method

No. Description

Recommended for Employees with Pay Type

Hourly Piece Rate Salary

1 Automatic overtime Yes No No

2

Manually assign premium codes to

timecard or hourly miscellaneous wage

entries

Yes Maybe Maybe

3 Manually enter lump sum earnings for

overtime in miscellaneous wages No Maybe Yes

Method 1 – Automatic Overtime

Automatic overtime can only be used for hourly employees whose hours are entered

through the Timecard Manager. This includes entries that are automatically created as

Call Progress is completed, and manual timecard entries.

The system will calculate overtime weekly and daily for all regular hours worked based

on your overtime setup (in Payroll Setup). It can be combined with manual overtime and

can be overridden for a payroll period.

You will select the “Automatic Overtime” checkbox in Employee Setup for all

employees that should calculate automatic overtime.

Example 1:

This is an example of automatic overtime calculation with no manually entered overtime.

The employee is an hourly employee who has 46.25 paid hours in the payroll period. The

system is set up to calculate overtime after 40 hours in a week. Four of the hours were

for vacation pay and are not considered regular hours.

The

Payroll


employee only has 42.25 regular hours worked so that is what the system will use to

calculate that he has 2.25 hours of overtime. Notice that the system used the average

hourly rate to determine the premium rate.

Example 2:

The same employee has the same 46.25 hours on his timecard, 4 of which are non-

regular. However, he worked 3 hours late on Monday so the employer wishes to apply

that as overtime to the specific job he was on that day. A premium code of OT was

manually assigned to 3 hours on the employee’s timecard for that day.

The system will pay him the 3 hours as overtime since it was manually entered, but does

not automatically calculate any overtime hours because the 3 manual hours exceeds the

2.25 hours the system would automatically calculate.

If the manual overtime is less than what the system would calculate for overtime, the

system will calculate the difference automatically when you calculate overtime. For

instance, in this case the employee should be paid 2.25 hours in overtime. If 1 hour was

manually assigned a premium code, the system will automatically calculate the remaining

1.25 hours.

Method 2 – Manually assign premium codes

You can manually assign a premium code to timecard or hourly miscellaneous wage

entries in order to calculate overtime pay for employees. The system will look at the

premium code setup to determine what it should use for a multiplier.

When assigning a premium to timecard entries, you can determine how many of the

hours in the time segment should be paid at the premium rate.

Payroll


Note: You will only enter hourly miscellaneous wages if you wish to add

hours to the employee’s payroll period. Additional regular hours will affect

the calculated average rate for the period.

Manual premium assignments to timecard entries should be used for salaried employees

whose salary is posted based on timecard entries, or hourly employees.

When assigning a premium to miscellaneous wage entries you will enter separate line

items for the regular vs. premium rate hours. You will use this method to enter overtime

for hourly employees whose time is not entered through the timecard manager

Do not change the RegRate when manually entering overtime in miscellaneous wages.

The system will look at the premium code to determine how to calculate the overtime

earnings. For instance, if the premium code OT has a multiplier of 1.5, the system will

apply .5 of the premium addition to the base amount for the overtime earnings. Premium

code DT has a multiplier of 2 so the system will apply the full premium addition to the

base amount.

Method 3 – Manually enter lump sum overtime earnings

If you have an occasion to pay a salaried or piece rate employee overtime, you must

manually calculate the amount you owe the employee for his or her overtime pay and

enter the amount in miscellaneous wages.

Be sure to use a Pay Item that will post to the correct GL account. You will enter the

amount in the Base column only.

Deferred Wages and Overtime Calculations

When entering Miscellaneous Wages, the release date and earned date allow you to

control the period whose premium rate is affected by the deferred wage separately from

the period in which the wage is paid to the employee. For instance, you can hold all

commissions and release them in the last period of the month without having the

commissions affect the regular rate for the last period of the month.

A deferred wage will affect premium rate calculations for the period that includes the

earned date.

A deferred wage will be paid to the employee in the period that includes the release date.

If those wages are earned in periods prior to the period in which they are paid (released),

SuccessWare21 will recalculate the premium rates for the previous periods and make a

special miscellaneous wage entry for additional premiums that must be paid (if any).

This additional premium is based on the difference between the original premium rate of

the prior period and the new premium rate as affected by the released wages.

Payroll


For example:

- If an employee earns a commission of $200 on 03/24/04 for the weekly

period ending 03/27/04, and the commission is not released, this

commission is not included in this period’s wage summary.

- This commission does not affect the regular rate or the premium rate

calculation for the weekly period ending 03/27/04.

- The 03/27/04 period includes 6.25 hours of overtime. The calculated

average (regular) rate for the period ending 03/27/04 (not including the

$200 commission) is calculated to be $19.3837/hr and is the “premium

base”. The regular rate (and premium base) is calculated by adding all

earnings that are considered “regular wages” and dividing that total by

“regular hours”. In our example, $974.00/62.25 = 19.3831.

Examples display the heading of the Wage Source report for the

employee and the section of the Payroll Period Summary in detail for the

employee.

The sample payroll company is set up to use the Normal rate for the base

portion and the Calculated average rage for the premium addition. Notice

that the system calculated the overtime rate based on the base of $18.00

for Shop time and $20.00 for Tech earnings. The same premium addition

of $9.6916 was added to both base wages (19.3831/2 = 9.6916).

The wage is then released on 04/01/04 to be included in the period ending

04/03/04. The commission is included in this periods wage summary.

Payroll


- The commission does not affect the regular rate or the premium rate

calculation for the weekly period ending 04/03/04. However the regular

rate for the period ending 03/27/04 is recalculated to be $23.3632/hr, now

that the $200 commission earned during that period has been released.

The regular rate and premium base for the current weekly period ending

04/03/04 is calculated using the same formula – regular earnings divided

by regular hours, or, 856.67/42.83 = 20.0001. It does not include the

$200.00 commission to determine the premium rate even though the pay

item is marked IsRegOT.

Because it is a deferred wage, the commission is included in the Premium

excess. The premium excess includes Non-regular earnings, deferred

earnings, and premium earnings. Premium earnings only include the

premium addition portion of premium pay. For instance, of the 27.6916

premium earning for Shop overtime, the 18.00 base is not included. Only

the 9.6916 is reported as premium earnings.

- The system will include special miscellaneous wage entries in the current

period to make up for any premiums that were missed in the pay period

ending 03/27/04 as a result of the deferred earnings. Notice there are

three overtime entries in the sample period summary at a rate of 1.9900.

Those are entries to pay the employee the missed premium.

Run the Deferred Wages report for the detail.

Payroll


Look at the Period Summary for the first payroll period ending 03/27/04.

Notice that the employee had 1.75 hours of SHOP-OT, department 20, 3

hours of TECH-OT department 21, and 1.5 hours of TECH-OT

department 22.

The Deferred Wages report identifies the overtime entries in payroll

period in which the commission was earned and calculates what the

premium rate would have been if the commission had been released in the

same payroll period. In our example the adjusted Regular Rate is 23.3632.

Then it calculates the overtime rate based on the new regular rate.

The system will only pay the employee the premium pay that he would

have made, not the adjusted regular rate. It will calculate the difference in

the premium pay as follows:

Original Overtime rate – Original Premium Base rate = Original Premium rate

27.6916 – 18.00 = 9.6916 or 29.6916 – 20.00 = 9.6916

Adjusted Overtime rate – Original Premium Base rate = Adjusted Premium rate

29.6816 – 18.00 = 11.6816 or 31.6816 – 20.00 = 11.6816

Adjusted Premium rate – Original Premium rate = Rate

11.6816 – 9.6916 = 1.99

The additional premium wages are created for each related entry from the

prior period. This allows SuccessWare21 to relate the additional premium

to the appropriate pay item and job, so that the items are properly

expensed. Notice that there are entries for 1.75 hours of SHOP-OT,

department 20, 3 hours of TECH-OT department 21, and 1.5 hours of

Payroll


TECH-OT department 22 in the current payroll period (ending 04/03/04)

at a rate of 1.99.

Date post:	15-Jun-2018
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