payroll

How Do I Handle a Retroactive Salary Increase When Sponsored Funds Are Involved?

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HappyOfficeWorker

Let’s pretend it’s March 1, 2015, and you have two JHU faculty members who both received retroactive raises in letters from the promotion committee dated March 1, 2015. Dr. Einstein’s raise is effective November 1, 2014 (more than 90 days ago) and Dr. Watson’s raise is effective January 1, 2015 (less than 90 days ago). Both faculty are paid from sponsored and non-sponsored funds. Here’s how you (in the departments) deal with each situation.

Retroactive by more than 90 days — Dr. Einstein (Raise Date: November 1, 2014)

  1. By the next available payroll cutoff date, submit a Salary Change ISR.
    • The begin date is the date the raise becomes effective.
    • Enter the new actual and semi-monthly pay rates.
    • Leave the cost distribution section “as is.”
    • Add to comments section: Dept. will do E-form to correct retroactive cost distribution amounts and accounts.
  2. At least one business-day AFTER receiving the email from HRSS that the Salary Change ISR is complete and approved:
    • Submit an E-form to correct retroactively and prospectively appropriate cost distributions (as your budgets allow) to match the new semi-monthly amounts.

Retroactive by less than 90 days — Dr. Watson (Raise Date: January 1, 2015)

  1. By the next available payroll cutoff date, submit a Salary Change ISR.
    • The begin date is the date the raise becomes effective.
    • Enter the new actual and semi-monthly pay rates.
    • In the Cost Distribution section of the Salary Change ISR, enter the cost distributions retroactively and prospectively (as your budgets allow) so that they total to the new semi-monthly amount. HRSS will enter these changes (sponsored AND non-sponsored) into the record.
  2. In most cases, an E-form will need to be submitted in addition to the Salary Change ISR, especially if the cost distribution is complex (for instance, if it changes amounts and accounts every month or pay period). You should submit an E-form at least one business-day AFTER receiving the email from HRSS that the Salary Change ISR is complete and approved.

NOTE: The Cost Distribution section of a Salary Change ISR differs from the Cost Distribution section of an E-form. In the Cost Distribution section of a Salary Change ISR, the total of all the cost-distribution lines must equal the semi-monthly amount. In an E-form Cost Distribution section, you may enter multiple periods at different rates for the same account.

In both cases above, HRSS will have the salary difference allocated to the control salary account if the new cost distribution does not match the new semi-monthly amount and/or does not cover all the retro pay periods.

For more information, review the following:

Sponsored funds procedure for JHU semi-monthly faculty, staff, and students

Cut-off dates for ISRs

Cut-off dates for E-forms

 

Overpayments

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Overpayments

In life, change is inevitable, and it sometimes requires employees to take time away from the university. An employee may need to take a leave of absence for health reasons, to care for a sick family member, to welcome a new child into the family, or to serve in the armed forces. Some employees will resign and leave the university.

When an employee takes a leave of absence or ends employment, certain procedures need to be followed and payroll adjustments need to be made. If these procedures aren’t followed, serious and costly mistakes can occur.

For instance, if an employee takes a leave of absence without pay, and this is not properly registered in SAP, the employee could continue to get regular pay amounts from the university. This is what is known as an “overpayment.” An overpayment is money paid to an employee in excess of the amount owed.

Overpayments cost the university millions of dollars every year. Resolving an overpayment takes a lot of time and effort. Since the employee has to pay federal and state income taxes on the overpayment, this can add to the confusion and complexity of the situation. And if the employee was overpaid with grant funding, this can put the university at risk.

Overpayments can be avoided if you follow correct procedure when processing leaves of absence and terminations. And if a mistake is made, it’s easier to remedy if it’s discovered early and dealt with immediately!

To learn more about the procedures that must be followed (and how to deal with an overpayment if it occurs), please take the e-course, “Managing Payroll for Leaves and Terminations.” This course will provide you with the information you need to process leaves of absence and terminations appropriately, and avoid costly overpayments. You can also view and print a series of detailed job aids, and practice what you’ve learned by working through several realistic practice scenarios.

http://lms4.learnshare.com/l.aspx?CID=89&A=2&T=229076

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