Setting up Rate Classes for Union Payroll

Rate classes allow you to assign wage rates, benefits, and deductions to union employees by category. Within a particular rate class/union, you can create multiple rate classes based on different combinations of positions, pay codes, and deduction/benefit categories.

• Multiple unions for one rate class
  You can have multiple unions for the same rate class. This is useful if you have employees from multiple trades employed on the job or an employee who works for another union local (besides his home local) for a short amount of time. Conversely, you can also have one union be part of multiple rate classes.
• Multiple calculation methods for benefits and deductions
  You can calculate benefits or deductions based on % of Net Wages, % of Gross Wages, % of Deduction, and % of Earnings Wages, just as you can in Microsoft Dynamics GP. In addition, the system allows fixed Microsoft Dynamics GP benefits and deductions to be calculated, even if they are not set up as being part of a rate class, for example, if an employee has garnishments set up in GP.
• Prevailing wage and benefit determination
  You can implement prevailing wage and fringe rates into your payroll calculations, based on the information from the government-supplied Davis-Bacon Act (DBA) wage determination sheet. This information is based on the union, county, and occupational (fed class) code and includes standard and overtime rates for wage and fringe benefits.

The rate class feature allows employees to use the same "base" pay codes and benefit codes, relying on the system to substitute the appropriate pay rate or benefit/deduction calculation depending on several factors such as varying union local guidelines, job location (for example, Milwaukee vs. Chicago), or even the type of job (for example, heavy commercial vs. light commercial).

An example would be when an employee receives a completely different compensation package for a period of time, such as when a journeyman is the most senior person on a job site and thus qualifies for the Foreman wage and benefit package for that period of time.
The rate class calculates rates based on a matrix of job positions (classification), pay codes, and union codes; each of which can be changed on a line-by-line basis on the timesheet.

In a union environment, companies are faced with complex methods to determine the rate of pay for an employee. In addition to specific wage rates based on the worker’s experience level and classification within a union, the location of the work and the employee’s relationship with the company can become a factor. See Over-Scale Pay Rate Support for Unions for more information.

Before you install the latest Microsoft Dynamics GP service pack relating to payroll issues, and before you use rate classes, contact WennSoft Support.

Before You Begin

Before you use rate classes, make sure the following have been set up:

• Employee pay codes, deductions, and benefits
• Union categories and union codes

If the deductions and benefits are not set up for an employee, they will not be included in the paychecks.

• To set up pay codes, select Microsoft Dynamics GP > Tools > Setup > Payroll > Pay Code.
• To set up deductions, select Microsoft Dynamics GP > Tools > Setup > Payroll > Deductions.
• To set up benefits, select Microsoft Dynamics GP > Tools > Setup > Payroll > Benefits.

Once you decide to use rate classes, make sure you set up all pay codes as part of a rate class. Otherwise, checks will be calculated based on Microsoft Dynamics GP Payroll instead of rate classes.

Setting up Rate Classes

Setting up rate classes involves the following.

Step 1: Enable the Rate Class Feature

You enable the rate class feature in the Posting Options window.

1. Select Microsoft Dynamics GP > Tools > Setup > Job Cost > Job Cost Setup > Posting Options.
2. In the Payroll section, mark the Rate Class checkbox.
3. Select Save.

Step 2: Set up Rate Class Codes

This is where you enter your rate class codes, enable prevailing wage and fringe rate calculation feature (which includes use highest wage rate), or only the use highest wage rate (excluding prevailing calculation).

1. Select Microsoft Dynamics GP > Tools > Setup > Job Cost > Payroll Setup > Rate Class.
2. Enter a Rate Class code name. Give some thought as to how you want to categorize/name your rate classes. For example, if you are setting up your rate classes to reflect the type of job, for example, heavy commercial vs. light commercial, indicate that in the rate class name.
3. Complete the remaining fields, as necessary.
   • Rate Class
     Enter the name of your rate class, being as descriptive as possible.
   • Description
     It might be a good idea to include the names of the unions assigned to this rate class, in this description.
   • Use Prevailing Wage and Fringe (Davis Bacon)
     If your organization pays its employees' wages and fringes based on the government-supplied wage determination sheet, mark this checkbox so that you can set up rate classes to automatically calculate those rates and fringes. If this checkbox is marked, the second is automatically marked. When you mark this checkbox, the Use Highest Wage Rate checkbox is marked automatically, as the prevailing feature must first determine the highest wage rate for an employee.
   • Use Highest Wage Rate
     If your organization pays its employees the highest rate no matter what, mark this checkbox, and leave the other checkbox unmarked. The system determines the highest rate from the following: 1) employee 2) rate class 3) job rate class and 4) transaction (if different).
4. Select Save.

Copying Rate Classes

You can copy an existing rate class to save time. When you copy a rate class, all position/pay code/deduction-benefit category combinations are copied also.

Only rate classes that contain valid pay codes and deductions/benefits will be copied.

1. Select Microsoft Dynamics GP > Tools > Setup > Job Cost > Payroll Setup > Rate Class.
2. Select a Rate Class and select Copy.
3. Select Copy to the message asking if you want to copy the rate class.
4. Enter a New Rate Class, Rate Class Description, and New Union Code.
5. Select Copy.

Step 3: Set up Rate Class Detail

You can set up multiple rate classes for multiple positions/pay code/deduction-benefit category combinations. You can enter special rates for benefits and deductions using either a fixed dollar amount or a percentage of gross wages. These amounts override any rates set up in the Employee Deduction Maintenance window (for deductions) and the Employee Benefit Maintenance window (for benefits).

You can set up multiple rate classes for the same union.

1. Select Microsoft Dynamics GP > Tools > Setup > Job Cost > Payroll Setup > Rate Class.
2. Select a Rate Class code.
3. Complete the remaining fields, as necessary.
   • Federal Classification Code
     The federal classification code is an assigned code for this type of work. This field acts as a filtering field, which allows you to view the rate classes for just one particular federal classification code.
   • Union Code
     Enter a union code to be associated with this rate class.
   • Payroll Record Type
     Select from Pay Codes, Deductions, and Benefits.
   • Position
     The job position associated with this union/rate class.
   • Deduction/Benefit Code
     If the Payroll Record Type is Deductions or Benefits, select a Deduction/benefit code from the lookup.
   • Calculation Method
     Select from the following:
     • Percent of Gross Wages: e.g. 401K matching based on employee contribution
     • Percent of Net Wages: e.g. Vacation pay or employee garnishments
     • Amount Per Unit: e.g. Pension, Health, and Welfare
     • Percent of Earnings Wages: e.g. Over-scale pay rates
   • Pay Code
     The pay code associated with this rate class, for example, hourly, salary, overtime, double-time, and so on.

   • Dollar Amount/Percentage
     For pay rate or deduction/benefit, enter a dollar amount if the calculation method is Amount per Unit, or a percentage if the method involves a percentage, for example, % of gross wages. 

     If you will be printing the Microsoft Dynamics Worker's Compensation Summary report (Reports > Payroll > Period-End), you will need to up the Job Cost Rate Class amount so that it takes into account the pay factor for the pay codes set up in Microsoft Dynamics GP. For example, if you are creating an overtime rate class and in Microsoft Dynamics GP you've created a standard pay code that is $10/hr and then create an Overtime pay code that has a pay factor of 1.5 and is based on the standard pay code, you will need to enter $15 for the Overtime rate class.
4. When finished, select Save. Your new rate class will appear in the scrolling window in the lower portion of the window. Proceed with adding other unions to the current rate class - OR - create additional rate classes.
5. To print the Rate Class report, select the printer button. This report contains a list of all rate classes and their associated unions. If a rate class is selected when you select the printer button that the rate class and union code will default as the selection criteria in the Rate Class Report window. To edit a rate class, double-click a record and edit the fields. If you change the Position, Pay Code, or Deduction/Category field, a new record will be created. The record you first selected is not overridden. The first record is overridden only if you change the amount or percentage in the Calculation Type field.

You cannot delete a rate class if it is assigned to an employee, a job, an uncommitted TimeTrack transaction, or an uncommitted Microsoft Dynamics GP Payroll transaction. You can delete an entire rate class (and all its records) if a rate class is selected and none of the individual records are selected.

Step 4: Assign Rate Classes to Union Employees

You can assign a rate class to each union employee. Each employee can be assigned to only one rate class.

1. Select Microsoft Dynamics GP > Tools > Setup > Job Cost > Payroll Setup > Employee Codes.
2. Enter an Employee ID.
3. Enter a Rate Class. The Union Code field automatically defaults to the union code associated with that rate class.
4. Enter a Federal Classification Code.
5. Select Save. You can also assign a rate class to an employee in the following ways:
   • Assign a rate class to a job that an employee is associated with. This overrides the rate class in the Employee Maintenance Codes window. See Assign rate classes to jobs (below).
   • Assign the rate class to payroll transactions. The rate class is assigned to the employee for that transaction only and overrides the rate class assigned in the Job Maintenance and Employee Maintenance Codes windows.

Step 5: Assign Rate Classes to Jobs

You can assign one rate class for each job. The rate class entered in the Job Maintenance window overrides the rate class in the Employee Maintenance Codes window.

1. Select Cards > Job Cost > Job.
2. Complete the Job Maintenance window, assigning a rate class to the job. See Creating a Job Record. 
3. Select Save.

For information on processing payroll with rate classes, see Processing Payroll with Union Rate Classes (optional). This section also contains examples of the many uses of the rate class feature.

See also: