Earning Types

Earning types are used to classify other pay types and benefits that your employees might earn or accrue. The main classifications of earning types include earnings, memos, and accruals. 

Note: To configure advanced earning types, contact your Client Success Manager (CSM) or Service Desk. Advanced earning types, such as regular and premium, might impact on hours distribution calculations and therefore require additional configurations.

Earnings

An earning is any type of taxable income that is reflected in an employee's paycheck. Earnings can include the employee's normal rate of pay, payment from a tip pool, accrued benefits, and so on. For example, if an employee receives a raise, the increased rate is reflected in the gross earnings on their paycheck. Cash and charge tips can also result in an increase to the employee's gross earnings. In some cases, an employee might be granted a fixed amount. For example, the addition of eight vacation hours results in the employee earning and receiving an additional eight hours of pay. 

There are typically three types of earnings:

• Hours based 

• Calculated on the hour (such as a shift differential)

• Fixed cost amount

Memos

Memos are entered for informational purposes only and are not calculated as taxable revenue. An employee who gets assigned amounts from a memo does not receive additional compensation for them and does not pay taxes on them. An example of a memo is the entry of gross sales for food and beverage employees. For example, tipped employees in the Food & Beverage (F&B) division are required by the government to claim at least 8% of their gross sales in tips. This percentage is tracked by entering each employee's gross sales as a memo. Other memos include benefit balances, manual check payments, and any other miscellaneous tracking that does not affect an employee's paycheck.

Accruals

You use accrual types to create earnings for the purpose of accruing benefits. For example, if an employee accrues vacation benefits, you create an accrual earning type that would keep track of the vacation benefit accrual.

Tips vs. Gratuities

Tips: Tips are paid to the employee directly from the hotel or cashier's bank, usually on a nightly basis. Payroll taxes are not deducted when employees receive their tips. Employees must record their tips or enter them at the Time Clock to inform the payroll processor that those wages have been received but not yet taxed. The payroll processor can then deduct taxes based on the reported earnings. Generally, tips are received from restaurants, bars, and room service. Tips do not typically include pooled tips or banquet gratuities.

Gratuities: Usually from banquets or pooled room service tipping, gratuities are not paid to the employee during the pay period. They are instead paid as part of their paycheck. Gratuities are added as an increase to the gross earnings and are therefore subject to normal payroll tax deductions.

Earning types associated with tips and gratuities vary depending on your system configuration.