Salaried employees occasionally need to be docked pay for absences that are taken without time off. FMLA and Extended Maternity Leave are two possible examples.
When the employer desires to dock all the pay as a lump sum from one pay, the docked pay Knowledge Base article should be followed. However, with extended absences, the docked amount can become so large as to result in a very reduced pay that isn’t enough to cover normal deductions.
When the employer prefers to spread out the docked pay over multiple paychecks so that the employee gets some pay every payroll, you’ll create a new payroll item in order to control the rate of docked pay.
Risks
Calculating Dock Amount
Recording the Absence
Spread Out Docked Pay
1. Create District Payroll Item
2. Add Item to Employee
3. Remove Default Docked Pay
Risks
Spreading out docked pay is useful when there is confidence the employee will return on schedule. A small risk the employer takes by spreading out docked pay is that the employee can take more time than initially planned. For example, the employee could have planned on taking one week, but ended up taking one month instead. However, if this occurs, it can be resolved by adjusting their salary again.
A greater risk is that the employee quits instead of returning to work. This can result in the employee being paid more than they have earned. An example would be when a teacher expects to be on maternity leave for the first month of the school year, but then quits before ever returning. In that case, wages would have been paid out for a contract the employee never actually worked a single day of.
The district would need to determine how to handle these situations.
Calculating Dock Amount
Determine the amount the employee will need docked by figuring out:
- How many days to dock
- What the daily dock rate is (yearly salary / number of work days)
Then figure the total amount to be docked by multiplying these numbers.
Next, determine how many pays to spread this dock over so that the employees remaining check still covers deductions and benefits.
For example, imagine a teacher with a yearly salary of $38,675.00 and 180 contract days and monthly pay missed 14 days of work in December with no time off balance remaining.
She has a daily rate of ($38,675/180) = $214.86.
$214.86 x 14 dock days = $3,008.04 of docked pay.
$3,008.04 is too great of dock for one single month of regular pay for this teacher, so we decided to split it up over the next six months. She will be docked $501.34 in each of six pay periods.
Recording the Absence
Create an attendance record as described in the Docked Pay guide by going to Human Resources > Employee Attendance/Time Off/Substitutes > Create Attendance. Enter the dates that will be docked with the following settings:
- Time Off Type: [leave blank]
- Time Off Amount: 0
- If in Illinois, see Leave of Absence vs Dock Day below to decide whether to check the “Unpaid Leave of Absence (board approved)” box.
Spread Out Docked Pay
The recorded absence above will automatically create a docked pay wage item in the payroll register(s) of the dates entered, but this docks everything at once. In order to spread out the pay, you’ll add a second wage item with a negative value.
The screenshot below is of the second paystub with docked pay. The teacher can see their current expected normal salary of $3,222.92 and a second line of the docked wage of -$501.34, and the YTD reflects that the dock has been taken twice for a total of -$1002.68.
1. Create District Payroll Item
If this is your first time spreading out docked pay, you need to create a District Payroll Item for the wage reduction payroll item by going to Payroll > District Payroll Items. Click Create Payroll Item and use the following settings:
- Description: Docked Pay Wage Reduction (suggestion)
- Payroll Calculation Step: Wages
- Payroll Item Type: Wage
- Algorithm: Amount Series
- Expenditure Account: FF-ENNNN-OOO-R in Illinois, FF-NNNN-OOOO-LLLL-S-PPPPP in Missouri
- Liability Account: FF-L471 in Illinois, FF-NNNN-2171 in Missouri
- All Subtotal Types = “+”
2. Add Item to Employee
Add the Docked Pay item to the employee who needs it.
- Go to Human Resources > Employee - Single View and search for your employees
- Select their Payroll tab
- Scroll to the bottom and click Add Payroll Item
- In the District Payroll Item field, select the item you just created
- Don’t check Regular Pay; amount series items show up automatically on the selected pays
- In the Custom Pay Periods field
- Check the pay periods the docked pay will be taken on
- Enter the negative amount to be docked from each pay period (-501.34 in our example)
- Set the subtotals for the employee, increasing the ones applicable to their retirement plan, just like you would for a positive wage item
- Save
Now there should be two wages under the employee who is getting a dock.
In our example, the employee took the entire month of December off as unpaid leave, so 14 calendar days are being docked at a total of $3008.04 over 6 periods.
3. Remove Default Docked Pay
The Employee Payroll Item added in the previous step should show up automatically in the payroll registers of the selected pay periods. However, at least the first pay period will also import a “Salary Docked” amount based on the entered absence. This amount is not spread out, so you should zero out the amount.
In the Time Off tab, after importing attendance to the register, notice the default docked pay on this page the system calculates automatically as a lump sum of $3008.04.
Zero out the system generated lump sum docked pay on the Time Off tab because this docked pay will be spread out instead of lump sum.
Verify that the docked pay is applied correctly by going to the Summary tab and clicking Enter. Notice the created Docked Pay Wage Reduction is a negative second wage item of -$501.34 and the system default lump sum Docked Pay is zeroed out.
Return to the Payroll Register and process the rest of payroll like normal.
The imported docked pay may appear on multiple runs, depending on exactly how the distribution of absent days aligns with the pay periods, so you should carefully check the Time Off tab every time.