Labor Distribution
Policy
FIACCT 17-02_00 Labor Distribution – Excess/Comp Pool (Payroll System)
Effective: July 1, 1994
Revised: June 1, 2009
Reviewed: June 1, 2009
Purpose
This policy provides general information concerning the Excess/Comp pools.
Definitions
Excess Time
Excess time is the total hours exceeding the overtime base that are charged but not worked. An example of this is when a holiday is encountered during the regular work week. If a non-exempt employee works 42 hours during the week then the employee would earn 8 excess hours and 3 (1.5 * 2 hours ) hours of comp time.
Comp Time
Comp time are those hours worked in excess of the overtime base. For exempt employees the overtime base is 80 hours. For non-exempt employees the overtime base is 40 hours.
Policy
A. The Division of Finance will maintain the functional components within the Payroll System for calculating the amounts to be placed into the excess/comp pools.
B. When excess/comp hours are earned by an employee they are coded into the Payroll System. The Payroll System then performs the following calculation: (Excess/Comp Hours Earned) * (Pay Rate) * (1 + Departmental Benefit Rate) This amount is charged to agency budgets and an excess/comp pool is credited.
C. When excess/comp hours are taken by the employee and the hours are coded into the Payroll System, the amount paid out will automatically come from the pool, not from the agency’s budget.
D. Each agency will be required to have a pool. This pool will be identified as an organization. All agencies will use the same organization number to identify the pool.
E. Each Department is required to submit a departmental benefit rate to the Division of Finance which can be adjusted at any time during the year. If the department does not submit a departmental benefit rate to the Division of Finance then a default benefit rate will be used.
Background
The accumulation of excess/comp hours represents a department liability that must be recognized at the department level.
Individual departmental pools will be established for the vested portion of the hours. The expense will be charged to department budgets as the hours are earned.
The Departmental Benefit Rate is used to estimate the cost of benefits and potential salary increases at the point in time comp or excess is used. This rate is determined by each department and it can be changed any time throughout the year. If a department does not submit a rate to the Division of Finance, a default rate will be used.
With the creation of excess/comp pools, the accrual of excess/comp hours will impact every department. When excess/comp is earned, the costs will be charged to department budgets and the credit will go to the pool.
When the excess/comp is taken, the charge will be made to the pool and the department budget will be unaffected.
Excess/comp is handled differently depending on the FLSA exempt/non-exempt status of the employee. The following definitions help explain this distinction:
Excess (FLSA Non-Exempt Employees) – Excess hours occur when leave (holiday, overtime, annual) is taken and extra hours are worked, per week, in the two-week payroll cycle.
When a non-exempt employee earns excess time, the amount is distributed to the FINET coding block which results in a charge against the department budgets and a credit to the excess/comp pool. When the excess time is used, it is charged to the departmental excess/comp pool.
Note: Excess is handled the same for both exempt and non-exempt employees.
Excess (FLSA Exempt Employees) – Excess hours occur when leave (holiday, overtime, annual) is taken and extra hours are worked in the two-week payroll cycle.
When an exempt employee earns excess time, the amount is distributed to the FINET coding block which results in a charge against the department budgets and a credit to the excess/comp pool. When the excess time is used, it is charged to the departmental excess/comp pool.
Note: Excess is handled the same for both exempt and non-exempt employees.
Comp (FLSA Non-Exempt Employees) – Comp hours occur when more than forty hours of regular time is worked, per week, in the two week payroll cycle.
When a non-exempt employee earns comp time, the amount is distributed to the FINET coding block which results in a charge against the department budgets and a credit to the excess/comp pool. When the comp time is used, it is charged to the departmental excess/comp pool.
Note: Comp is handled differently for exempt versus non-exempt employees.
Comp (FLSA Exempt Employees) – Comp hours occur when more than eighty hours of regular time is worked in the two week payroll cycle.
When an exempt employee earns comp time, the hours are recorded on payroll but no expenditure transaction is posted to FINET. This occurs because exempt employees cannot have vested comp time. All comp time must be used by the end of the year or the time is lost.
When comp time is used, the amount is distributed to the FINET coding block which results in a charge against the department budgets. The pool is not affected by either earnings or usage of comp time by an exempt employee.
Note: Comp is handled differently for exempt versus non-exempt employees.
The following sections discuss the setup and processing methods for the excess/comp pools. There is also a section dedicated to the creation of the pool (vested excess/comp hours).