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Business Procedures Manual

5.3 Employee Pay

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5.3.1 Method of Payment for Compensation and Expense Reimbursement

New and Rehired Employees

Electronic funds transfer is the required method of payroll payments to employees. All newly hired or rehired employees on or after July 1, 2011 are required to enroll in direct deposit within thirty (30) days of hire or rehire and remain enrolled in direct deposit for the remainder of their employment. Institutions with procedures to issue the final payment to an employee leaving employment by paper check may continue that process. In addition, there may be unique situations where the institution may need to make payments via paper check (i.e., first payment for a new employee, off-cycle payments, etc.) or when the institution has determined that paper checks are the most cost-effective and efficient method of paying an employee or a group of employees. Newly hired or rehired employees will be required to sign the “Direct Deposit Notification Form,” indicating their understanding and compliance with the direct deposit policy. Any such employee who does not complete the appropriate direct deposit information within (30) days of hire or rehire, and who is not granted an exemption as provided for herein, may be subject to dismissal.

Current Employees

All employees employed prior to July 1, 2011 receiving their pay by direct deposit or pay card will continue those processes. No action is required on their part. All employees employed prior to July 1, 2011 who are receiving their pay by paper check will be required to enroll in direct deposit by completing a “Direct Deposit Authorization Form,” unless granted an exemption as provided for herein. The deadline for current employees to enroll in direct deposit or apply for an exemption is October 1, 2011. Once enrolled in direct deposit, employees are required to remain enrolled in direct deposit for the remainder of their employment.

Exemption Process

An employee may be exempted from participating in direct deposit if he/she does not have an account at an eligible financial institution, and further provides evidence that he/she cannot obtain an account at an eligible financial institution.

The institution’s Chief Business Officer (or his/her designee) has exclusive authority to grant any exemption from the direct deposit requirement. An exemption may be granted only for the reason stated above (i.e., unable to acquire an account at a financial institution) or other specific situations that the institution’s Chief Business Officer (or his/her designee) may deem to be an extreme hardship. An employee desiring to request an exemption from the direct deposit requirement will do so by completing a “Direct Deposit Personal Exemption Request Form.” The exemption should be documented and maintained for future review as needed for auditing purposes.

In addition, the Chief Business Officer (or his/her designee) may exempt an employee, or category of employees, from participating in direct deposit if the institution determines it is more cost effective and efficient to issue paper checks. Documentation of this determination should be maintained for future review as needed for auditing purposes.

Pay Card Process

Employees that are granted an exemption from direct deposit will be paid in the form of a pay card, if that option is available at the institution.

Paper Check Process

Employees that are granted an exemption from participating in direct deposit, and are employed at institutions where the pay card option is not available, will receive a paper check. Any employee receiving pay by paper check will be responsible for notifying their payroll provider of address changes using the electronic, self-service method at their institution, or in writing if an electronic method is not available. If a paper paycheck is printed at the institution, the institution may select a method of distribution other than mailing if the alternate method is deemed to be more efficient and cost effective.


5.3.2 Extra Compensation

Extra compensation may be paid to employees for tasks performed after normal business hours for duties not included in the employee’s normal job responsibilities, provided the following three criteria are met:

  1. The tasks must be outside of the employee’s regular department.

  2. The Departmental Agreement Form, must be completed and signed by the appropriate department heads.   Departmental Agreement Form

  3. The employee must meet at least one of the criteria listed below (Criteria from the Official Code of Georgia Annotated Section 45-10-25):

    • Chaplain
    • Fireman
    • Dentist
    • Certified Oral or Manual Interpreter for Deaf Persons
    • Registered Nurse
    • Licensed Practical Nurse
    • Psychologist
    • Teacher or Instructor of an evening or night course or program
    • Professional holding a doctoral or masters degree from an accredited college or university
    • Part-time employee

Also, an employee meeting all three criteria listed above may be paid extra compensation for a task for another department during normal job hours if the task is not part of the employee’s normal job responsibilities, and the employee takes annual leave for the portion of time that is being used for the task receiving extra compensation.

Employees that have been determined by the institution to be non-exempt, as defined by the Fair Labor Standards Act (FLSA), and are performing extra duties could qualify for overtime pay. Non-exempt employees should be paid at least the overtime rate or more.

Examples of situations justifying the payment of extra compensation are:

  • An employee teaching a continuing education course after hours or while taking annual leave, when teaching the course is not part of the employee’s normal job responsibilities.

    Note: This is allowable under the Official Code of Georgia Annotated Section 45-10-25, No. 15.

  • A part-time public safety officer working extra hours to referee a ball game.

    Note: Georgia Code 45-10-25 does not apply to part time employees.

  • A staff member with a masters degree doing web design for another department.

    Note: This is allowable if the required Departmental Agreement Form is completed and signed by the appropriate department heads.

In addition, the Official Code of Georgia Annotated Section 45-10-25, No. 10, allows for an exemption for an emergency situation that must be made to protect the health, safety, or welfare of any citizens or property of Georgia.

Under no circumstances should an employee receive extra compensation for a task while receiving normal compensation for the same time period. Extra compensation does not add to earnings used for retirement calculations, and no retirement deductions are taken from extra compensation pay.

Employees receiving extra compensation shall be paid said extra compensation through the institutional payroll. Such compensation shall be subject to existing Internal Revenue Service regulations as to taxability and/or withholding taxes. No compensation, as defined above and paid to employees who are on the institutional payroll, shall be paid as per diem and fees or as stipends.


5.3.3 Joint Staffing

The practice of employing faculty and other personnel by two or more institutions within the system during the same period of time is a recognized method of keeping costs to a minimum.

The Employment Compensation Agreement form has been developed to comply with the requirements of the Official Code of Georgia Annotated Section 45-10-25, No. 8. If the president of an institution wishes to delegate signature authority to department heads, etc. for this process, this must be done in writing with specific reference to the Official Code of Georgia Annotated Section 45-10-25, No. 8.

Employee Compensation Agreement Form

Due to the complexities of payroll-related reporting, only one institution may record and report the complete payroll activity for the shared employee, using the Employee Compensation Agreement form shown on the preceding page, with these guidelines:

  1. The employee will be considered as a full-time employee at the home institution, and will receive full contract pay from the home institution.

  2. Each institution sharing the time of the employee will budget its share of the employee’s time (EFT) and dollars.

    Note: For contract employees, close coordination between institutions is necessary to ensure that the EFT and dollars do not exceed those noted in the employee’s contract.

  3. After the employee is paid by the home institution using the normal payroll methods, the home institution will enter the personal service expenditures into its accounting records as noted in the example starting on the second following page:

    Example

    Institution A employs Mr. Smith at a salary of $60,000 per annum. An agreement is reached between institution A and institution B to have Mr. Smith teach one course for a semester at institution B, with the remaining course load being taught at institution A.

    • Record the monthly personal services expenses at institution A as normal.

         
      Dr. Salaries-Regular Faculty
      $6,000.00
      Account 511100
      Dr. FICA-Employer
      $372.00
      Account 551100
      Dr. FICA-Employer Medicare
      $87.00
      Account 551100
      Dr. Teachers Retirement
      $540.00
      Account 552100
      Dr. Group Insurance-Health
      $150.00
      Account 553100
      Dr. Group Insurance-Life
      $25.00
      Account 553200
      Cr. Cash in Bank-Payroll
      $7,174.00
      Account 118500
    • Record the amount due from institution B as an account receivable. In this example, assume that 1/3 of the costs will be recovered from institution B.

         
      Dr. Receivables-Other
      $2,391.33
      Account 127100
      Cr. Salaries-Joint Staffed
      $2,391.33
      Account 539100
    • Record the payment as a personal services amount on the records at institution B, in response to a billing or some other notice as arranged by the fiscal officers at each institution.

         
      Dr. Salaries-Joint Staffed
      $2,391.33
      Account 539100
      Cr. Cash in Bank or Accounts Payable
      $2,391.33
      Account 539100
    • Record the payment as a receipt of settlement by institution A:

         
      Dr. Cash in Bank-Demand Deposits
      $2,391.33
      Account 118100
      Cr. Receivables-Other
      $2,391.33
      Account 127100
    • The results of these transactions leave the proper amounts in the personal services accounts of each institution. For both institutions, however, Account 539100 will be a reconciling item when reconciling total payroll to total personal services. When financial records for all USG institutions are combined into one statement, the values in Account 539100 will net to zero.

  4. Settlement of accounts between institutions may be affected by arrangement between the fiscal officers at each institution involved. The timing and method of settlements shall be at the discretion of these fiscal officers.

  5. Fringe benefits related to the personal services dollars involved may be transferred if the fiscal officers concerned deem the amount material.

  6. In instances where sponsored operations are involved, the overhead allowance in any given contract shall remain at the institution where the sponsored project is located.

    Note: Exceptions to this rule may be made if the amount is material. An amount shall be considered material if it exceeds fifty percent (50%) of the total overhead allowance for the sponsored project.


5.3.4 Limitation of Summer Faculty Pay

A faculty member teaching on a 10 month contract may receive payment for teaching summer session courses in addition to the payment received for the 10 month contract. Such payment for teaching summer session courses may not exceed 33 1/3 % of the 10 month contract amount for the previous academic year.


5.3.5 Salary Expense Charges for Summer Session Payroll Expenses

To provide management information about the cost of operations of summer sessions, pay for teaching summer session courses will be charged to Account Code 513000 titled “Salaries-Summer Faculty”. The cost of fringe benefits will be charged to the normal account codes for fringe benefits, same as normal salary fringe benefits.


5.3.6 Overtime and Compensatory Time

The standard workweek in the University System is forty (40) hours. Institutions are expected to abide by the provisions of the Fair Labor Standards Act. The distribution of hours throughout the week is a scheduling decision left to the individual institutions.

Overtime work shall be authorized for employees who are not exempt from the provisions of the Fair Labor Standards Act only when the work is deemed necessary by the president or a designated representative. Payment for overtime work will be made in accordance with the Fair Labor Standards Act.

Compensatory time may be granted in lieu of payment for approved overtime work at the rate of one and one-half hours of compensatory time for each hour of overtime work. Approved compensatory time is subject to a maximum accumulation of sixty (60) hours and must be expended by the end of the succeeding calendar quarter.


5.3.7 Relocation Expenses

An institution is permitted to pay relocation expenses of a specific amount that is set out in the original written offer of employment. “Original written offer” is emphasized because any post-offer negotiated amounts will be considered a violation of the Gratuities clause of the Constitution of the State of Georgia.

Each institution that intends to pay relocation expenses should adopt written procedures, approved by the institution President, governing the practice. These procedures should reflect at a minimum:

  • Budget constraints at the institution, with the maximum amount of relocation expenses that can be offered to a prospective employee;
  • Specific positions or levels of positions that are eligible for payment of relocation expenses;
  • Tax implications under IRS regulations;
    • Note: See IRS Publication 521 for moving/relocation taxation rules.
  • Permitted expenses;
  • Prohibited expenses;
    • For example, institutions should not end up owning someone’s home in another location.
  • Method of payment; and,
  • Recordkeeping.

If the method of payment in the written policy is directly to vendors on behalf of the employee, all State of Georgia purchasing regulations apply. For example, moving company expenses exceeding $5,000 must be competitively bid.

Using the same example of moving company expenses exceeding $5,000 related to employee reimbursement as the method of payment, employees are required to obtain three (3) quotes and to submit the quotes to the institution as evidence that the company providing the lowest quote was selected.

Relocation expenses, if part of an institution’s approved procedures, that are generally not subject to tax withholding are:

  • Moving household goods and personal effects, and
  • Traveling, including lodging but not meals, from the employee’s former home to the new home by the shortest and most direct route.

These reimbursements are fringe benefits excludable from the employee’s income as qualified moving expense reimbursements. The institution should report these reimbursements in box 12 on the employee’s Form W-2.

In general, all other relocation expenses reimbursed to an employee or paid on behalf of an employee are subject to tax withholding and reported as taxable wages in box 1 of Form W-2. For complete rules regarding Relocation expense tax implications, see IRS Publication 521.

Relocation expenses are not subject to Continuous Audit reporting and should be reported in account 565xxx, Relocation Expense, for GAAP reporting.


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