UW System Administrative Policy 230 (formerly F29)

Salary & Fringe Benefit Calculations

Original Issuance Date: January 8, 1976

Last Revision Date: December 22, 2021

1.     Policy Purpose

This policy describes the process for calculating salaries and fringe benefits to UW System employees.

2.     Responsible UW System Officer

Senior Associate Vice President and Chief Human Resource Officer

3.     Scope and Institutional Responsibilities

This policy applies to UW System faculty, academic staff, limited appointees, and university staff.

4.     Background

This policy sets forth proper bases to use for calculations concerned with salaries and fringe benefits of employees of the UW System in alignment with UW System Administrative Policy 215 (SYS 215), Payment Methods and Timing for Payroll, and s.109.03, Wis. Stats., which also address pay period assignment and payment issuance.

5.     Definitions

Academic basis (“C”): Faculty, academic staff, and limited appointees directly tied to the academic year calendar (39 weeks) and who are FLSA exempt employees.

Summer basis (“S”): Employment periods between the end of one academic year and the beginning of the next.

Annual basis (“A”): Faculty, academic staff, and limited appointees directly tied to the fiscal year and who are FLSA exempt employees.

Hourly basis (“H”): In addition to FLSA non-exempt staff who all have an established hourly rate of pay, infrequent appointments for faculty, academic staff, and limited appointees where workloads typically fluctuate and it is not practical to determine a salaried rate of pay or where the employees is classified as FLSA non-exempt.  This category also includes FLSA exempt University Staff.

Lump Sum basis (“L”): Short-term cases where establishing a rate of pay would be inappropriate.

Summer Service basis (“V”): Employment periods between the end of one academic year and the beginning of the next for Research/Other.

Terminal leave: The payout of accumulated leave balances when employees cease their employment.

Work Week: For a position designated as 1.0 Full Time Equivalent (FTE), a standard work week is presumed to be 40 hours.

Pay Period: A two-week period starting on a Sunday and ending on a Saturday; published annually.

6.     Policy Statement

Employees are compensated in accordance with this policy. Employees are eligible for benefits based on the appointment type, time base of the appointment (FTE), and the length of the appointment(s) (duration).

Generally, employees are paid biweekly for all compensable time worked and reported during the prior two week pay period. Payroll calendars are established annually which outline the default designated workweek for purposes of the Fair Labor Standards Act (FLSA).

A.     Constraints

In addition to this policy, calculations of salaries and fringe benefits are subject to the following rules and regulations:

B.      Calculation of A and C Basis Bi-Weekly Rates of Pay

A and C Basis pay are generally stated as an annual or academic year salary, respectively.   (refer to SYS 215, Payment Methods and Timing for Payroll,). Under the regular payroll schedules, the payment is for services rendered during the preceding pay period.

For full-time exempt employees, the biweekly rate of pay equals the annual/academic year contract salary rate (if the position is budgeted, this is the budgeted rate) divided by the number of biweekly pay periods associated with the pay basis and payroll schedule. Examples follow.

 

Pay Basis Annual Contract Salary Pay periods Bi-weekly Rate Hours Hourly Rate
A (annual) $45,000 26[1] $1730.77 2080 $21.64
C (academic) $45,000 19.5 $2,307.69 1560 $28.85

 

The Rate of pay for part-time faculty, academic staff and limited appointees is the full-time rate prorated for the part-time percentage, based on FTE.

The Hourly Rate is rounded using the process in section 6.N.ii of this policy.

[1] Periodically, 27 biweekly payroll periods will occur in a given year.  In those cases, employee’s biweekly pay will continue to be calculated using formula outlined herein.

C.      Payment for Partial Pay Periods and Leaves of Absence

Non-exempt staff are paid for actual hours worked during the pay period.

When exempt staff begin employment after the beginning of a pay period or end employment before the end of a pay period, their partial salary shall be determined on the basis of 8 hours per day worked in the pay period prorated to FTE (80 hours worked per bi-weekly pay period for 1 FTE). The partial salary calculations are also used when a leave of absence without pay occurs during a payroll period, in accordance with the following methodology:

  • (Bi-weekly Salary / 10 (i.e. the number of workdays in the pay period) x (Days worked in the pay period) days to be paid = amount to be paid for partial pay period

Examples:

  • A new employee on an annual (A basis) pay basis of $45,000 ($1,730.77 per biweekly pay period) begins employment on the third day of a pay period. Partial payment for March is calculated as follows:
    • $1,730.77 /10 = $173.08* x (8) = $1,384.64
    • The Hourly Rate is rounded using the procedure in section (6)(N)(ii) of this policy.
  • To determine the pay for an employee returning from a leave of absence on during the middle of a pay period, use the same calculation shown above.
  • For example, an employee on an academic year (C basis) with an annual salary of $45,000 ($2,307.69 per biweekly pay period) who begins an unpaid leave of absence after the 2nd work day of the pay period would be calculated as follows:
    • $2307.69/ 10= $230.77 x 2 = $461.54

D.     Summer Payments

Persons employed on an academic year basis shall be compensated for additional assignments during the summer session at the rate up to the equivalent of 4.5 biweekly pay periods (9 weeks) of the previous academic year’s budgeted biweekly pay rate for a full-time work load. All summer payments, whether summer session and/or summer service, are counted towards this compensation limit. If the institution determines that there are differences in summer session workload from a full-time workload, then an appropriate compensation level shall be established. (Additional employment periods during the summer may be determined by the institution.) Compensation received in the summer period may not in aggregate exceed 4.5 biweekly pay periods of the academic year salary of the person appointed unless an explicit exception is granted by the Chancellor or designee, regardless of source of funds. However, in no case can summer compensation exceed the equivalent of 6.5 biweekly pay-periods for additional summer assignments.

Effective July 1, 2013, per s.16.417(2)(f), Wis. Stats., the overload cap that applies to state employees does not apply to employees of the Board of Regents of the University of Wisconsin System unless the compensation received is from a non-UW state employer. See HRD Overload and UW System Administrative Policy 1277, Compensation.

E.      Calculation of Overload Payments

UW System allows most employees (excluding Student Hourly) to work up to, but not beyond, 100 percent time. The salary received by full-time faculty, academic staff, FLSA exempt university staff, and limited appointees is considered to be full compensation for all work during the period of appointment. faculty, academic staff, FLSA exempt university staff, and limited appointees are expected to expend the total effort necessary to complete their assignments without additional compensation. The chancellor or designee may approve increased compensation in the form of an overload payment in cases where a temporary assignment is undertaken at another UW System institution, or an individual is asked to assume additional short-term responsibilities.

However, on occasion, an employee may be asked to perform duties outside of normal work assignments. In these extraordinary circumstances, an overload request – identified as employment beyond 100 percent – may be approved if the need for additional compensation can be sufficiently demonstrated.

Overload payments may be subject to limitations imposed on a calendar year basis as outlined by SYS 165, Academic Year Definition And Assorted Derivatives, SYS 1277, Compensation, and HRD 11.02: Overload (UW-Madison), and s.16.417(2), Wis. Stats. Violations of s.16.417(2), Wis. Stats., must be repaid by the employee.

F.      Pay Basis Conversions for A and C Basis Salaries

When a FLSA-exempt faculty, academic staff, limited or other appointment is converted between an annual and an academic year appointment the following calculations shall be used:

“A” to “C” = Rate * (9/11)

”C” to “A” = Rate * (11/9)

The conversion denominator of 11 takes into consideration the one-month vacation granted annual appointments. The Hourly Rate is rounded using the procedure in section 6.N.ii of this policy.

G.     Calculation of Hourly Rates for “A” and “C” Basis Employees

The official hourly rates for an “A” or “C” basis employees shall be determined based on the following calculation.

“A” to “H” = Rate/2080

“C” to “H” = Rate/1560

The Hourly Rate is rounded using the procedure in section 6.N.ii of this policy.

If an employee’s appointment is changing from between an “A” or “C” basis appointment, use the formula outlined in Section 6.F above.

H.     Salary Advances for Academic Year Faculty

Institutions may offer new academic year faculty employees a salary advance to cover living expenses during the first month of employment. Advances of up to 35% of two pay period’s gross pay may be granted. Generally, a salary advance is granted when the employee’s start date is more than 28 days from the employee’s pay date. A repayment agreement must be signed by the employee prior to the advance being made. (Salary Advance Request and Payroll Deduction Form can be downloaded.) Salary advances are to be repaid in full via payroll deduction pursuant to the repayment agreement outlined in the Salary Request Advance and Payroll Deduction form.

  1. New C-basis employee submits a Salary Advance Request and Payroll Deduction Form through appropriate institution channels.
  2. Information is provided by the institution to UW-Shared Services during the annual process information request.
  3. In coding the expenditure, the institution may use any chart field string it chooses, but must use ACCOUNT 6160 (“Salary Advances”).
  4. Institution’s Human Resources Office enters a one-time payroll deduction for “Salary Advance Repayments” on the employee’s first regular payroll.
  5. The Payroll Calculation will result in a one-time payroll deduction and produce an Inter-Unit Journal (IUJ).
  6. The Institution’s Business Office will reconcile all Salary Advances issued against repayments to ensure compliance with UW System policies.

I.        Calculating Wisconsin Retirement System Service Credit

For full-time faculty, academic staff, and limited appointee employees, 80 hours of work per pay period shall be reported to the Wisconsin Retirement System (WRS). One year of creditable service is equal to 1,320 hours except for employees in the executive retirement plan where it is equal to 1,904 hours.

For part-time faculty, academic staff, and limited appointees, the number of hours to be reported to the WRS is determined by the relationship of the employee’s gross pay for the pay period to the full-time rate that the employee would have received if a full-time employee. For example, a 0.5 FTE employee would have half as many hours reported as a 1.0 FTE employee. University staff hours are reported to the WRS according to the hours in pay status reported on payroll.

Periodically employees are paid on a Lump Sum basis (“L”) for short-term or special project assignments, where payment based on an hourly rate of pay is impractical. For purposes of tracking potential WRS creditable service, hours need to be assigned to the lump sum payments as required by s.40.22(2m), Wis. Stats., and s.40.22(3), Wis. Stats. [1]

At the beginning of each fiscal year, an hourly rate will be determined which shall be used when there is not an active position in a similar capacity or another reasonable method to access hours worked for a lump sum payment. For academic staff employees, this rate will be based on the annual salary for academic staff, using the calculations identified in Section  6.G.

[1] For purposes of reporting under the Affordable Care Act, a daily equivalency of 8 hours for each work day during the payroll period will be used in absence of actual hours reported for payments of lump sums to employees.

J.       Sick Leave Conversion Value

As required by Wis. Admin Code ETF 10.01(1m), in determining the hourly rate of earnings for computing the value of accumulated sick leave for faculty, academic staff, and limited appointee employees upon retirement, terminal leave, layoff or death, the highest annual full-time rate of pay shall be converted to an hourly rate using the procedure in section 6.G of this policy. The Hourly Rate is rounded using the procedure in section 6.N.ii of this policy.

The hourly basis employees (H), the highest hourly rate of pay where sick leave was earned is used to calculate the value of accumulated sick leave.

K.      Leave of Absence Without Pay

The same methodology outlined in Section 6.C, should be used in cases of leave of absence without pay for faculty, academic staff, and limited appointees. For university staff, their current hourly rate should be used to calculate appropriate deductions for leaves of absence without pay. Deductions shall not be made from an exempt staff member’s salary for time off of less than one full work day.

L.       Calculation of Vacation upon Termination/Transfer or Overdrawn Leave Credits

For university staff, their current hourly rate should be used to calculate lump sum payments of accrued vacation and any overdrawn leave amounts that must be repaid.

When it is determined that a lump sum payment of accrued vacation is appropriate for faculty, academic staff and limited appointees, it will be calculated as follows:

Annual compensation/2080 x number of vacation hours. The Hourly Rate is rounded using the procedure in section 6.N.ii of this policy. The same calculations should be used to determine any overdrawn leave to be repaid.

M.   Calculation of Terminal Leave

Effective July 1, 2016, the University will charge a leave benefit rate at the time annual leave is earned and record the leave benefits as a liability. Terminal Leave rate will be charged on all funding strings associated with salary payments. An institution pooled account will house lump sum funds until the unused leave benefits are paid out.

When employees leave and lump sum terminal leave payments are made, UW-Shared Services, Service Operations will charge the salary and related fringes to the institutions terminal leave pool department. See SFS Accounting Manual, Category: General Ledger – Allocations.

N.    Rounding for Salary-Basis Compensation and Hourly Rates

i. This subsection applies to FLSA-Exempt employees whose wages are expressed as a salary.

For purposes of establishing salary ranges, initial starting salaries, salary increases pursuant to a pay plan increase, merit increases and any other salary changes; employee salaries shall be rounded to the nearest whole dollar using the following methodology:

The rounding will be applied against the employee’s calendar year annual salary if the employee is employed on a 12-month basis, or against the employee’s academic year salary if the employee is employed on a 9-month basis.  If the employee is employed for less than a full calendar or academic year, the rounding shall be applied against the employee’s salary for the term of their appointment.

Where a salary calculation would result in a salary ending in .50 through .99, the salary will be rounded up to the next whole dollar.  Where a salary calculation would result in a salary ending in .01 through .49, the salary will be rounded down to the previous whole dollar amount.

Examples: A salary calculation that results in $35,950.79 would be rounded to $35,951.  A salary calculation that results in $41,358.22 would be rounded down to $41,358.

ii. This subsection applies to any hourly pay rate utilized for any purpose.

The process expressed in this section shall be used for the purpose of rounding hourly rates to the nearest whole cent, whether those rates are an initial hourly rate or are derived though a mathematical calculation including, but not limited to: the conversion of a fixed salary to an hourly rate of pay, a percentage increase or percentage reduction of an hourly pay rate, the calculation of an overtime pay rate for an hourly employee, the calculation of the value of any paid time off expressed in hourly increments, etc.

The result of any mathematical calculation shall be carried out three places to the right of the decimal.  Any results beyond the third decimal place are disregarded.  The result is then rounded to whole cents using the following method:

If the digit in the third decimal place is 0 through 4, the result is rounded down to the previous whole cent.  If the digit in the third decimal place is 5 through 9, the result is rounded up to the next whole cent.

Example: 

$45,000 annual salary converted to hourly rate. (“A” Basis employee)

$45,000 / 2080 = $21.6346153846  (Annual salary divided by 2080)

$21.6346153846 -> $21.634  (Digits after the third decimal place dropped)

$21.634 -> $21.63  (Result rounded to nearest whole cent.  Digit in the third decimal place is 4, so result is rounded down.)

7.     Related Documents

Section 16.417(2), Wis. Stats., Dual Employment or Retention
Section 16.417(2)(f), Wis. Stats., Dual Employment or Retention

Section 40.22(2m), Wis. Stats., Participating Employees
Section 40.22(3), Wis. Stats., Participating Employees
UW System Administrative Policy 1277 (SYS 1277), Compensation
UW System Administrative Policy 165 (SYS 165), Academic Year Definition And Assorted Derivatives
UW System Administrative Policy 215 (SYS 215), Payment Methods and Timing for Payroll

HRD 11.02: Overload (UW-Madison)
SFS Accounting Manual, Category: General Ledger – Allocations

8.     Policy History

Revision 9: December 22, 2021

Revision 8: May 6, 2021

Revision 7: May 6, 2019

Revision 6: December 1, 2004

Revision 5: October 13, 1997

Revision 4: September 1, 1994

Revision 3: April 16, 1992

Revision 2: March 23, 1976

Revision 1: January 8, 1976

9.     Scheduled Review

December 2026