Deduction Effective Dating by Pay Group – Released 08/13/2020

We have released the ability to have deductions included in a pay cycle based on Pay Cycle Start and End Date or Pay Cycle Pay Date.

 

BACKGROUND

In February of 2020, we released our new Automated Salaried Proration tool, which automatically prorates salaried wages when employees begin working in the middle of a pay period, has a pay raise in the middle of a pay period, or has a departure date in the middle of the pay period.

We additionally released a feature that prorated deductions based on the same logic. For these changes to be function correctly, we updated our system's logic so that deductions were included in pay cycles and calculated based on Pay Cycle Start and End Date. Previously, deductions would only be included in a pay cycle if the deduction start date was on or after the pay cycle Pay Date. 
 

The following formula is used to calculate both prorated salaried wages and prorated deductions.

 

  • (Number of Days Worked / Number of Business Days in Pay Cycle) * Rate

 

Here's an example of how the system would prorate a $100.00 per pay period deduction for medical insurance for an employee hired in the middle of a pay period:

 

  • Standard Deduction Rate: $100.00

  • Pay Cycle Start Date: 06/01/2020

  • Pay Cycle End Date: 06/14/2020

  • Employee Hire Date: 06/08/2020

  • (5 days worked/10 business days in pay cycle) * $100.00 contribution per pay period = $50.00 

 

NEXT STEPS

We've researched client use cases and are adding some flexibility to the way deductions are included in pay cycles. You will now have the ability to have deductions included in a pay cycle based on Pay Cycle Start and End Date or Pay Cycle Pay Date. You can select either option on a per Pay Group basis, under Company > Pay Group in Namely Payroll. 

Deductions will be included in pay cycles based on start date and end date by default. If you'd like to change your deduction behavior, go to Company > Pay Group tab in Namely Payroll.


TIP:

If you choose to have your deductions included in a pay cycle based on Pay Date, the proration feature will no longer work, as deductions need to be included based on pay period start and end date for the calculation to work properly.

 

This release will not impact salaried proration, and regardless of the deduction behavior that you select, salaried proration is still an option.

 

FREQUENTLY ASKED QUESTIONS

I want all of my pay groups to have deductions included based on the pay cycle start date. Is any action required?

No. All pay groups are currently configured to have deductions included based on the pay cycle start date.

 

I want all of my pay groups to have deductions included based on the pay date. Is any action required?

Yes. All pay groups are currently configured to have deductions included based on the pay cycle start date. If you would like to change your deductions to be included based on pay date, please navigate to the Company > Pay Group tab in Payroll.

 

Can I have my deductions included in a pay cycle based on the pay date and have my deductions prorated?

No. Deductions need to be included based on pay period start and end date for the calculation to capture the number of days worked in the pay period.

 

Can I have my deductions included in a pay cycle based on the pay cycle start date and have my deductions automatically prorated?

Yes. If your deductions are set up based on pay cycle start and end date, and you would like any of your company deductions to be automatically prorated, please go to Company > Deductions. 

 

Can I change how deductions are included in a pay cycle from employee to employee?

No. The behavior of company deductions can be changed based on pay group, but not from employee to employee. If you want deductions to be included in a pay cycle differently for certain employees, you would need to set up a new pay group.

 

Can I have some of my deductions included by pay cycle start date, and others by pay date?

No. The behavior of deductions can be changed based only on pay group. Meaning, all deductions in one pay group have to be included in the pay cycle either by pay cycle start date or by pay date only.

 

If I have one pay group that includes deductions based on pay cycle start date, and one pay group that includes deductions based on pay date, and the company deduction is set to be prorated, will it prorate the deductions in both pay groups?

No. That deduction will only prorate in the pay group that includes deductions based on pay cycle start date. Deductions need to be included based on pay period start and end date for the calculation to capture the number of days worked in the pay period.

 

If I open a pay cycle where deductions are included based on pay cycle start date, but I want to change the behavior to be based on pay date, what do I have to do?

If you have changed the way in which deductions are included for a pay group after you have opened a pay cycle for that pay group, please ensure that you reset your pay cycle to ensure that deductions are included based on the new behavior that you selected.