You can access the Earnings & Deductions view from the People icon. Use this screen to add or modify recurring earnings or deductions for an employee.
When this view is selected, a table displays with all of the recurring earnings and deductions for that person. Many of the fields for the earning or deduction are able to be edited within the table view. Select Edit to modify any elements for the item that are not displayed in the table view.
Add Earnings & Deductions
Select Earnings & Deductions from the View menu.
Select Add Earning or Deduction from the Earnings & Deductions Add menu.
| The Earnings & Deductions add dialog window contains all recurring earnings and deductions set up at the company level. If you need to add a recurring earning or deduction to an employee and the item does not display in the list, contact your Paychex representative to set up the recurring earning or deduction at the company level. |
Select the appropriate recurring earning or deduction, then click ADD.
Complete the applicable fields.
| An asterisk (*) indicates a required field. |
Some earnings and deductions require additional set up. Contact your Paychex representative for assistance.
For Paychex administered plan earnings and deductions, contact your Paychex representative to make modifications.
Earning/Deduction: The drop-down menu displays the earnings, deductions, or informational items listed in the Summary table for a person. It does not list all the earnings and deductions that are set up. Select an item from the drop-down menu to make modifications.
To add an Earning or Deduction to a person, select
to the right of the Earning/Deduction drop-down menu. The Add Earning/ Deduction screen displays, allowing you to select an item to add. Initial values and defaults for the added earning or deduction are based on what is set up at the company level.
to the right of the Earning/Deduction drop-down menu. The Add Earning/ Deduction screen displays, allowing you to select an item to add. Initial values and defaults for the added earning or deduction are based on what is set up at the company level.The first section that displays is the Summary that contains the Start Date, the End Date, and the Effect on Pay for the amount to be earned or deducted.
Start Date*: Enter the date the employee began having the deduction taken in MMDDYYYY format.
End Date: Enter the date the employee stopped having the deduction taken in MMDDYYYY format.
Effect on Pay:
Adds to pay – The item increases the paycheck amount. For example, an earning adds to pay.
Reduces pay – The item decreases the paycheck amount. For example, health benefits reduce pay.
No effect on pay – The item is informational. For example, a memo is added for reporting purposes.
Add to pay for tax calculation – The item adds to the pay but is subtracted from net pay. For example, the personal use of a company car.
The Calculation section contains the primary calculation elements of the Earning or Deduction.Each Calculation type will present a custom set of information.For example, several calculation types allow you to specify a Wage Base for the calculation, while others require target amounts specified.
Calculation Type*: Indicates the type of calculation for the pay component.
| You cannot modify any data for a pay component with a calculation type of Catch-Up Match, Standard Match, Taxable Compensation disability calculation, or the calculation types as noted below. |
Calculation Methods for Recurring Earnings and Deductions
Most of the calculations offered are available for all recurring earnings, deductions and memo items:
Flat dollar amount - this calculation is used when the same dollar amount is earned regularly. For example, an employee may earn a salary of $500.00 per pay period.
Annualized calculation - this calculation may be used when a recurring earning is based on a percentage of annualized wages minus a specific amount. For example, some Massachusetts educators may be offered a retirement plan where they contribute each pay period based on a percentage of their annualized wages minus $30,000. You cannot modify any data for a pay component with this calculation type.
Percentage - this calculation is used when a recurring earning is based on a percentage of a group of recurring earnings and deductions (called a calculation base) on a regular basis. For example, an employee’s 401(k) contribution is often calculated as a percentage of all his recurring earnings.
This calculation may also be used if a recurring earning is calculated as a percentage of a single recurring earning or deduction. For example, an employer’s 401(k) match may be 50% of each employee’s 401(k) contribution.
Rate X hours - this calculation may be used when a recurring earning is based on the number of hours entered for another recurring earning, deduction, or memo item. For example, machinist union dues may be calculated as $ .30 for every hour paid with “machinist pay” (a recurring earning).
Rate X units - this calculation may be used when a recurring earning is based on the number of units entered for another recurring earning, deduction, or memo item. For example, commission may be calculated as $5.00 for every unit of “# of bottles sold” (a memo item).
Tiered match - this calculation may be used when a recurring earning varies based on the tiered value of another recurring earning or deduction, or group of recurring earnings or deductions. For example, an employer’s 401(k) match may be 30% of each employee’s 401(k) contribution (a deduction) of less than 5% of all recurring earnings, but it may go down to 25% for each employee’s contribution of more than 5%. Or, a bonus earning may be $0 if “gross sales” (a memo item) is equal to $10,000 or less; it increases to $500 for “gross sales” between $10,001 and $30,000; and caps out at $1,000 for “gross sales” at $30,001 and up. You cannot modify any data for a pay component with this calculation type.
Leave employee with net pay equal to - this calculation is used when an employee wants all but a certain net pay amount deducted. For example, an employee may want pay back a 401(k) loan amount by having all but $500.00 deducted every pay period. Deduction calculation method only. You cannot modify any data for a pay component with this calculation type.
For group term life recurring earnings, there is an additional calculation available:
Value of excess group term life insurance - This calculation is used when an employer wants to calculate the imputed value of employer-provided group-term life insurance every pay period. It takes the value of the group term life policy that goes over the federal limit, and calculates the imputed value of the excess based on the employee’s age on the check date.
Amount: Enter the flat dollar amount or percentage to be applied to each check.
The Frequency section is where the Earning or Deduction can be customized for specific check dates, period end dates, and designated for a specific payroll to begin use in the worker’s check calculation.Additional Options are given for blocking earnings and deductions for specific scheduled runs or additional checks.
Frequency*: Select the frequency of when the earning will be paid.
A Bank Account section may display next if the selected component has been set up by Paychex to be able to be direct deposited. This type of set up is not typical.
Check Limits: Indicates if a check limit has been applied to a pay component.
Choose any limits that need to be applied to the earning/deduction from the following list:
There is no limit. Applies the earning/deduction to each pay check.
New limit. Stops when a certain dollar amount is added/deducted. The item will stop once a designated threshold limit is reached.
Change current limit. Stops when a certain dollar amount is added/deducted.
Do not add/deduct more than a certain dollar amount per check. The calculation will not exceed a designated amount per check.
Do not add/deduct more than a certain dollar amount per check. Stops when a certain dollar amount is added. The calculation amount will not exceed a designated amount per check and will stop being applied when a threshold is met.
Start earning/deduction when year-to-date cash wages reach a certain dollar amount. The item will start being calculated when annual wages reach a certain threshold.
| A Group Term Life section may display if the calculation type on the item is Value in excess of group term life insurance. The Birth Date and Group Term Life Policy Amount fields are required data for that calculation type. |
Tell Me More About…
Garnishment
When a Pay component is designated as a Garnishment, there are additional sections.
The Court Order Maintenance section displays the garnishment details needed for payment to the court ordered Agency.
| Paychex Garnishment Payment Service clients will be provided a robust selection of system loaded agencies. Additional agencies can be added using the People/Agency view, prior to setting up the garnishment pay component. Non-Garnishment Payment Service clients must set up all new agencies. |
The Protected Income section is used with garnishment deductions to capture the court ordered amounts for minimum wage protection (if designated in the order).
Garnishment Fee
The Garnishment Fee section is only shown for a garnishment fee deduction. This Fee must always be set up after the worker Garnishment deduction is established.
| Garnishment processing fees are regulated by state laws. Please review the guidelines for your states before applying this deduction to your employees, as the rules change periodically. |
The Garnishment Fee may be payable to the agency and/or the worker’s company. The court order will specify the agency fee, if required. It is possible to have both an agency and company fee associated with a garnishment and deducted from the check.
Click SAVE.
Along with Garnishments and Garnishment Fees, there are other payroll deductions that must be set up in a particular sequence because they depend upon each other. For example, an employee with a retirement plan deduction may also have a catch up match deduction linked to it. Conversely, this type of paired deduction must be removed in the opposite sequence order. A garnishment fee must be removed before the garnishment deduction can be removed. The system messages will guide you in these dependencies.
Deductions with Direct Deposit
For direct deposit deductions, you are required to specify at least one bank account to associate to the deduction.
| You cannot assign a deduction to be direct deposited unless the deduction is created at the client level by a Paychex representative. |
The following information is required:
Routing & Transit Number*: The Routing & Transit Number is for the bank that the account is drawn on. This must be nine-digits long and completely filled with digits. The Routing & Transit Number is the first part of the MICR line that prints on every check.
Account Number*: This is the Account Number of the direct deposit bank account. The Account Number should be entered exactly as it is to appear on the check, with preceding spaces and spaces within the number if necessary. It is the second part of the MICR line that prints on every check.
Account Type: This is the type (checking or savings) of the direct deposit bank account; default is checking.
You can to add a new Routing and Transit number or select an active Routing and Transit number that is set up.
If the direct deposit deduction needs to be set up to split between multiple bank accounts, contact your Paychex representative to edit the accounts.
When a bank account is committed for a direct deposit deduction, any modifications to the bank account information applies an end date (the system date minus one day) on the initial bank associated with the deduction.
There is no end date in the Bank Account section. If an End Date is entered in the Summary section, the earning or deduction is end dated and no longer available. Please contact your Paychex representative to delete direct deposit
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