Issue/Symptom/Question

Administering Prevailing Wage Payroll- Cash Fringe Method for Non-Union Employees

Applies To

Penta for Windows

Payroll

Reference Manual

Resolution/Fix/Answer

After completing this Business Process, you will have configured and processed payroll for Prevailing Wage / Davis – Bacon jobs using the Cash Fringe Payment method for non-union employees paid weekly.

This Business Process is intended for Payroll personnel and prevailing wage administrators.

Prerequisites

• Implemented Paid Time Off (PTO) Tracking
• Established Master Deductions and Master Reimbursements
• Set up Job Information
• Defined Payroll Classes
• Defined Pay Groups with Pay Frequency Code 52 (Weekly)
• Set up Employee Payroll Information
• In the Options window, query and review System Options affecting prevailing wage payroll:
  • Option # 185 (Spec Pay Rt vs Prevailing Wage): Review the Alphabetic /Boolean Value and change it if needed:
    • Y = Special Pay Rate Overrides Prevailing Wage
    • N = Special Rate is only used if greater than Prevailing Rate
  • Option # 199 (Edit Job Fringe Override): Review the Alphabetic / Boolean Value and change it if needed:
    • Y = Provide warning when job specific fringe not set up
    • N = Do not provide warning
• In the Define Users window, query each appropriate user and review user security affecting prevailing wage payroll:
  1. Query a User Id.
  2. In the Module Security tab under Module PRTE, review the setting of the ‘Can access override certified code’ Action and change it if needed.

1. Define Payroll Classes for Non-union Prevailing Wage Payroll Processing

A. Create a Fringe Benefit to govern non-union prevailing wage processing.

Payroll > Setup > Pay Groups, Payroll Classes and Workers Compensation >Union Fringe Benefit Information

1. Create a unique identifier in the Fringe Number field.
2. Create a Description.
   Note: PENTA prints this Description on check stubs and advise notices when payroll processing results in a cash payment made because a pay rate plus employer-paid benefit value are less than the job’s prevailing pay rate plus benefit rate.
3. Close the window.

B. Assign the fringe benefit and Cash Fringe Calculation Base to non-union Payroll Classes requiring prevailing wage payroll processing.

The Cash Fringe Calculation Base (#19) tells PENTA that the non-union method of prevailing wage processing applies to the Payroll Class.

Notes:

• You cannot assign the prevailing wage Cash Fringe Calculation Base to payroll classes assigned the prevailing wage Self-adjusting Fringe Benefit Calculation Base (#14).
• If an employee’s master record (Employee Payroll Information window) has a Prevailing Wage Comparison Benefit Value and is paid in a Payroll Class that has a Cash Fringe assigned, PENTA uses the Cash Fringe unless the employee’s Pay Rate # is defined as an ineligible rate for the Cash Fringe.

Payroll > Setup > Pay Groups, Payroll Classes and Workers Compensation>Payroll Classes

1. Query a non-union Payroll Class.
2. Click on the Fringe Benefits tab.
3. In the Fringe Benefit # field, enter the number of the fringe you defined to govern non-union prevailing wage payroll processing.
4. Enter Y in the Taxable field.
5. Enter Y in the Add to Gross field.
6. Enter N in the Deduct From Check/Employee Paid field.
7. Enter an Effective Date in the Calculation Information block.
8. In the Calc Base # field, enter 19.
   Note: Calculation Base #19 (Cash Fringe) instructs PENTA to apply the following procedures to timecards for jobs defined as subject to prevailing wage regulations (see Step 3):
   • Compares the employee’s normal pay rate to the job pay rate and selects the greater rate to pay the employee.
   • Determines the value of employer-paid benefits.
9. If you are not using job-specific fringe rates (see Step 4.B), enter the generic fringe rate in the Amount field.
10. If you are not using job-specific fringe records (see Step 4.B) and require different generic rates for different Pay Rate #s click the Pay Rate Ovr button and enter those rates in the pop-up.
11. If certain Pay Rate #s apply to employees who are exempt from prevailing wage requirements, click on the Inelig Rates button and enter those rate numbers in the pop-up.
    Note: Prevailing wage processing affects hourly pay rates. Salaried Pay Rate #s not entered as ineligible cause salaried employees to receive the fringe at the stated amount per hour for the job, not adjusted per pay rate + benefits.
12. Repeat steps 1.B. 1 to 1.B.11 for each non-union prevailing wage Payroll Class.
13. Close the window.

2. Define Bona Fide Non-union Benefits

A. Define accrual schedules for Paid Time Off qualifying as a prevailing wage benefit.

Payroll > Setup > PTO and Hours Classification Codes > PTO Accrual Schedule Information

1. Query a Schedule that qualifies as a prevailing wage benefit.
2. Enter Y in the Prevailing Wage Comp Benefit field.
   Note:The value in the schedule Annual Accr Hr Limit field affects the valuation of PTO for prevailing wage purposes. When the Annual Accr Hr Limit is:

   null, PENTA determines the PTO value by this calculation:

   Accrued per Reg Hr Worked x timecard hourly pay rate

   not null, PENTA determines the value by this calculation:

   timecard hourly wage rate * Annual Accr Hr Limit )/2080

3. Repeat steps 2.A.1 – 2.A.2 for each qualifying Schedule.
4. Close the window.

B. Define prevailing wage valuation method for contributions to bona fide benefit plans.

Deductions assigned Calculation Base 1 or 15 are eligible for prevailing wage benefit valuation.

Payroll > Setup > Deductions, Reimbursements, and Other > Master Deductions

1. Query a deduction that qualifies as a prevailing wage benefit.
2. Click the Prevl Wage button.
3. In the Prevailing Wage Comparison pop-up:
   1. Enter Y in the Comparison Benefit field.
      If the Deductions Calculation Base is 15, PENTA auto-populates the “Use (D)eduction Amount or (C)omparison Amount for Prevailing Wage Evaluation” field with D and prevents entry in that field, the Comparison Amount field, and in the Benefit Plan Contribution Frequency field.
   2. For Deductions assigned Calculation Base 1, enter ‘D’ or ‘C’ in the “Use (D)eduction Amount or (C)omparison Amount for Prevailing Wage Evaluation” field.
      • If you enter ‘D’, PENTA prevents entry in the Comparison Amount field and in the Benefit Plan Contribution Frequency field.
      • If you enter ‘C’, PENTA requires entry in the Comparison Amount field and in the Benefit Plan Contribution Frequency fields:
        • In the Comparison Amount field, enter the total cost (employer + employee contributions) of the benefit.
        • In the Benefit Plan Contribution Frequency field, enter the frequency with which you pay the Comparison Amount value to the plan administrator.
   3. Close the Prevailing Wage Comparison pop-up window.
4. Repeat steps 2.B.1 to 2.B.2 for all Deductions qualifying as prevailing wage benefits.

3. Identify Jobs Subject to Prevailing Wage Regulations

A. Mark appropriate jobs as being subject to prevailing wage rates.

Project Management > Jobs > Job Information

1. Query a Job that is subject to prevailing wage regulations.
2. In the Other tab’s Payroll sub-tab, place a checkmark in the Prevailing Wage/Davis Bacon box.
3. In the Other tab’s Reporting sub-tab, place a checkmark in the Certified Report Required box.
4. Repeat steps 3.A.1 to 3.A.3 for each job subject to prevailing wage regulations.
5. Close the window.

4. Establish Prevailing Wage Determination Rates

Refer to published prevailing wage determinations to obtain hourly wage and benefit rates to establish for your prevailing wage jobs.

A. Establish job pay rates per prevailing wage determination publications.

Typically, you use the Job Pay Rate/Standard Charge Schedule window to establish the hourly pay rate portion of a prevailing wage determination. If appropriate for your organization and jobs, you may also use other schedules in the standard pay rate selection hierarchy.

Project Management > Jobs > Job Standard Charge Schedules > Job Pay Rate/Standard Charge Schedule

1. Enter the Job Id.
   PENTA populates the Currency field with currency of the Job’s OU.
2. Enter the Effective Date.
3. Either use the ‘Copy from another Schedule’ button to open the ‘copy from’ pop-up to specify parameters and execute the copy, or manually define the job pay rate information by:
   1. Entering a Payroll Class # associated with a Cash Fringe (Calculation Base 19).
      PENTA populates the Currency field with the currency assigned to the Payroll Class.
   2. Entering a Pay Rate # that exits for the Payroll Class.
   3. Using the Hourly Pay Rates fields to enter the Job’s pay rates per the prevailing wage determination.
   4. For each affected Pay Rate # in the Payroll Class, adding a new Payroll Class/Pay Rate Markups record and repeating steps 4.A.3.a – 4.A.3.c.
4. Repeat steps 4.A.3.a and 4.A.3.b for each affected Pay Rate #.
5. Repeat step 4.A.3 for each affected Payroll Class.
6. Repeat steps 4.A.1 to 4.A.7 for each prevailing wage job and rate effective date.
7. Close the window.

B. Establish job benefit rates per prevailing wage determination publications.

The Job Fringe Override schedule provides the per hour benefit rate for a prevailing wage job. If you do not enter a job-specific value, PENTA uses the rate you assigned to the Calculation Base 19 fringe at the Payroll Class level.

Project Management > Jobs > Job Standard Charge Schedules > Job Fringe Overrides

1. Either use the ‘Copy Fringe Overrides’ button to open the Copy Fringe Overrides pop-up to specify parameters and execute the copy, or manually define the job fringe information by:
   1. Enter a Job Id.
   2. Enter the Payroll Class # of a class associated with a Cash Fringe (Calculation Base 19).
   3. Enter the Fringe Benefit # (the Calculation Base 19 fringe you assigned the Payroll Class).
      PENTA populates the Calc Base # field with 19.
   4. Enter an Effective Date.
   5. Enter A in the Override Status field.
   6. Enter the per hour benefit portion of the applicable prevailing wage determination in the Amount field.
   7. If the benefit amount varies for different Pay Rate #s, click the Pay Rate Overrides button and establish those amounts in the pop-up.
2. Repeat step 4.B.1 for each of your prevailing wage job/payroll class combinations.
3. Close the window.

5. Identify Employees in Prevailing Wage Work Classifications Who Must be Reported on Certified Payroll Reports

A. Identify employees in prevailing wage work classifications who must be reported on certified Payroll reports.

Payroll > Employees > Employee Payroll Information

1. Query the employee
2. Click on the Reporting tab.
3. Enter Y in the Incl. On Cert. PR Rpts field.
   This flag provides the default value for the Include on Cert PR Rpts field on timecards, which in turn controls inclusion of the timecard hours on Certified Payroll reports.
4. Repeat 5.A.1 – 5.A.3 for each employee in prevailing wage work classifications who must be reported on Certified Payroll reports.
5. Close the window.

6. Process Payroll

A. Process payroll so PENTA can determine pay rates, benefit values, and cash fringe payments.

1. Complete the suite of Processing Payroll Business Processes.
   Notes:
   • When the Job Information window’s Prevailing Wage/Davis-Bacon box has a checkmark, payroll processing uses PENTA’s standard pay rate selection hierarchy to select a pay rate for hours charged to the job. The source of the selected pay rate determines PENTA’s actions. When the source is:
     • a pay rate schedule – PENTA compares the selected hourly rate to the employee’s normal hourly rate (found on the Employee Payroll Information window’s Pay Rate tab) and uses the higher of the two rates to pay the employee for hours charged to that job.
     • a Pay Rate # keyed on a timecard as an override of the Pay Rate # defaulting from the timecard – PENTA uses the rate associated with the timecard override rate number to pay the employee for hours charged to that job.
     • the Special Pay Rate field on the timecard – PENTA uses the rate per the setting of System Option 185 (“Spec Pay Rt vs Prevailing Wage”):
       • Y = special pay rate used regardless of whether it is greater than or less than the employe’s normal rate and job schedule rates.
       • N = special pay rate is used only if it is greater than the higher of the employee’s normal rate and job schedule rates.
   • When the job or the associated payroll class has a Calculation Base 19 fringe assigned, PENTA does the following during gross to net processing:
     • Determines an hourly value for the employer’s contribution to non-union benefits based on PTO schedules and Master Deductions flagged as prevailing wage benefits.
       • PTO hourly value determination:
         • If Annual Accr Hr Limit is null, PENTA multiples the Accrued Per Reg Hr Worked by the selected pay rate.
         • If Annual Accr Hr Limit is not null, PENTA multiples the PTO Annual Accrual Hours Limit by the selected pay rate and divides the result by 2080.
       • Deduction hourly value determination:
         • ‘D’ Method (Deduction Amount ) Deduction: calculated by dividing the deduction Amount by the number of hours worked. This type of deduction usually has an offsetting Reimbursement defined. The Amount deducted is the employer’s contribution to the benefit.
         • ‘C’ Method (Comparison Amount) Deduction: calculated by using the deduction’s Comparison Amount and Benefit Plan Contribution Frequency by determining factors X and Y and executing a per hour value calculation:
           • X = Annualized Comparison Amount (Comparison Amount * Benefit Plan Contribution Frequency)
           • Y = Annualized employee portion of the Comparison Amount (Timecard voluntary deduction amount * Benefit Plan Contribution Frequency). Per hour value calculation of employer’s portion of the total contribution: ((X – Y) ÷ 52 weeks) ÷ 40 hours.
       • Adds the selected pay rate to the benefits hourly value to determine the total for the employee.
       • Adds the job pay rate to the job benefit rate to determine the job total.
       • Compares the employee total to the job total.
       • Pays a Cash Fringe amount for the difference if the employee total is less than the job total.
         When (selected pay rate + benefit value) < (job pay rate + job benefit rate) Cash Fringe payment = the difference.
   • When a Shift Premium, Hazard Duty Premium, or Add-To-Rate affects prevailing wage payroll, PENTA adds those rates to the selected pay rate and uses the total as the employees hourly pay rate.
     These extra hourly rates do not affect the Cash Fringe payment calculation.

7. Prepare and Submit Certified Payroll Reports

A. Prepare and submit Certified Payroll Reports

1. Refer to and perform the Certified Payroll Reporting Business Process.