Microsoft Dynamics GP and Comprehensive Leave Manager Strategies for FFCRA Paid Sick Leave Act

STEP 1 – Determine the number of leave hours an employee should receive

• Full Time Employees – 80 Hours
• Part Time Employees = Calculated. It is average number of hours in a two-week work period. Hence the following order:

1. Normally Scheduled Hours for a two-week period (unless not known or changes regularly). In that case, #2 below.
2. Average hours over last 6 months to get a daily average. Then use that average for leave allowance per day (unless not employed 6 months). In that case, #3 below.
3. Amount of hours the employee was hired to work for a two-week period according to employment agreement (unless there is no agreement). In that case #4 below.
4. Average hours per day the employee was scheduled to work over the entire term of his or her employment.

Calculation Options

Option 1: Dynamics GP SmartList

This step is done manually but we have included a SmartList .zip file that you can import to assist with determining how much Paid Sick Leave a Part Time employee is entitled to.

• Filter by Type of Employment to evaluate part time employees.
• Filter by Check Date to establish the period over which to look at part time hours.
• Export the SmartList to Excel for data aggregation and calculations.

Option 2: SQL Query

We have included a SQL Query .zip file to download.

• This script sums all hours for that an employee worked in the specified time period.
• Fields: Employee ID, Last Name, First Name, Middle Name, Employment Type, Hours
• Filtered on Payroll Code Type “Pay Code” and date range on Check Date.
• This could be installed and SmartList created against it, or linked to from Excel.

Note: If using Comprehensive Leave Manager, you can create this leave time in a special bucket. Then assign to the employees. See Addendum A.

STEP 2 – Set up Pay Codes in Dynamics GP which will be used to pay the employees for the special paid sick leave.

See additional notes regarding taxation in the GP Technical Update below.

Each Employee will have two new Pay Codes for the Paid Sick Leave:

• for Sick time if they themselves are sick and
• for Sick time used to care for a family member who is sick.

The settings below are recommended based on DOL guidance for establishing upper dollar limits on per-day usage.

• Pay Code for Sick Leave to care for yourself
  • Pay Type is Sick
  • Equal to the Employees Regular Rate of Pay
  • Maximum of $63.87/hour (Daily max of $511 / 8 hours per day)
• Pay Code for Sick Leave to care for a family member
  • Pay Type is also Sick
  • Equal to 2/3 of employee’s regular rate of pay
  • Maximum of $25/hour (Daily max of $200 / 8 hours per day)

For sake of this demonstration, we are using CVSELF and CVFAM as the pay codes to represent the sick leave for self, versus the sick leave for caring for family. They are of type “HOURLY” and are linked to the hourly code “HOUR4”. This prevents the special leave from affecting existing sick time, which would happen if you tried to use a pay type of “SICK”. The pay code link method avoids this problem and allows for the ratio needed for the self and family leave (100% and 67% respectively).

NOTE: THIS METHOD REQUIRES THE MICROSOFT HUMAN RESOURCES AND PAYROLL EXTENDED PACK. If you do not have this, see Addendum B for alternate method using Overtime Codes and contact your Partner for more information about the HR & Payroll Extended Pack.

Assign the pay codes to the employees. This can be done via an Employee Class as shown below.

Open the Employee Class Setup window and select a class ID then click the “Codes” button.

Then choose the code you want to assign the employees and select to insert.

You may get a modal dialogue asking as shown below.

In most cases you will answer “Yes” because you are deliberately wanting this code to be assigned to all employees.

STEP 3– Payment to an employee for use of Paid Sick Leave

• Create pay code transactions using the new paid codes in step 1 to pay out the leave.
• Run Payroll normally.
• You will need to take manual steps to assure that the leave hours aren’t exceeded on a per-employee basis. See STEP 4 and STEP 5 for help on this.

STEP 4 – Validating that employees have not exceeded the aggregate time allowed or the daily limit on hours paid out.

You may use the same STEP 1 SmartList or SQL Query above to also help you evaluate how many COVID-19 Paid Sick Leave hours an employee as used:

• Filter by Pay Code to include CVSELF or CVFAM (based on our examples).

STEP 5 – Posting the paid time to the GL to set up for tracking tax credits

If you were wanting to track the leave, and payouts thereof, on a GL basis you could set up a special posting account for that purpose. This may be useful if financials are tracking the expenses for purposes of proper accounting or even government reimbursement. See our blog, “Helpful Coronavirus Facts and Tips for Employers and HR” for information as it becomes available.

Conclusion

You are now ready to pay out leave time for the special leave using the “CVSELF” pay code. Should this leave ever expire or circumstances change, you can make a COVID19 adjustment, to zero out balances or (if you are using Dynamics GP2018 R2 or later) you can also set an end date to the CVSELF pay code.

Addendum A – Using Comprehensive Leave Manager to track Coronavirus Paid Sick Leave Hours

• Assign to Employees
• Distribute Leave by creating balances

Create the leave code you will use to track the special purpose leave time that will be made available. For sake of this example the leave is a simple lump sum which will be made available to the employee. The setting below would establish the leave code and ensure that on the first pay run after the “effective date” the leave would be made available to the employee with the code. In our example, 80 hours will be credited.

NOTE: In the example below the “accrued based on” date needs to be set to the last day of the prior pay period. The screenshot assumes this is the day before the leave code goes into effect. It may be earlier depending on your setups. Also, you must make sure the “Calculate Earned Time During Payroll Processing” is checked. Otherwise, this leave won’t be credited.

If you didn’t want to wait until the first pay run to make the leave available, you could manually deliver the leave via an adjustment (discussed later).

Also note that the Taken Code is set to “CVSELF” which is the pay code that was used to pay out the time in the earlier example and, in our case with Comprehensive Leave Manager, will reduce the leave time in the “COVID19” leave bucket.

Assign to Employees

The leave code established must be assigned to the employees who are going to potentially receive the leave time. The easiest way to assign this is via the Leave Mass Assignment window shown below.

Distribute Leave by creating balances

As mentioned earlier there are 2 ways to ensure that employees receive the leave time to use.

One way is simply to assign the codes and wait for the first pay run when the leave would be auto-credited based on the lump sum posting schedule. In our case, the posting is on the effective date and thus the first pay run after the effective date would trigger this.

The second way is to have no lump sum posting, but rather create a leave transaction to assign some time to the employees. This would take the form of an adjustment to the leave bucket (COVID19) and would be done via the Mass Leave Transaction Entry window shown below.

NOTE: The window will have only the employees listed who have the leave code assigned. (In this example, the window has only a few such employees.)

A quick check of the Leave Summary for one of our employees confirms the leave was assigned. See below:

NOTE: If you selected to go the route of running a payroll to get the leave credited to the employee, instead of mass creating an adjustment transaction, then your window above would show the 80 hours as “earned” rather than “adjusted.”

Addendum B – Using Overtimes codes instead of linked pay codes.

Please note that this method of setup may or may not work for everyone and has not been tested with Automatic Overtime in Dynamics GP. This method may also impact reporting if you track codes of type “Overtime.”

Set up the codes in Pay Code Setup as follows, note that the Code and Description can be different based on your own preferences. This is just a sample:

NOTE: In the above screenshot, the factor is set to 1.0. This means this “overtime” code will pay out at the same rate as the hourly pay code it is based on. This is what the law calls for in terms of Paid Sick Leave for caring for oneself.

NOTE: In the above screenshot, the factor is set to .67. This means this “overtime” code will pay out at a 2/3 rate (rounded up) of the hourly pay code it is based on. This is what the law calls for in terms of Paid Sick Leave for caring for family members and childcare (See DOL guidelines).

Technical update for use of codes and reporting in Dynamics GP

Additional clarity surrounding the taxation of Paid Sick Leave wages provided for by FFCRA have revealed that these wages are not subject to the employer portion of FICA SS (Social Security). In all other respects the wages are taxed as normal wages and are subject to the same provisions normal wages would be.

So, Federal, State & Local taxes; Tax sheltered deductions for retirement (e.g. 401(k)) and other deductions are all still considered. The same is true for employer side contributions for things like health insurance premiums and contribution matches for retirement.

However, the separate treatment of Paid Sick Leave’s FICA SS for employee and employer poses a special problem in Dynamics GP, since pay codes cannot be designated as subject to one without the other.

Microsoft’s Terry Heley has written about this extensively in her blog, “Tips to setup Coronavirus (COVID) paid leave in Microsoft Dynamics GP” and has outlined a method by which you can get access to the employer side FICA SS information for purposes of reporting and use in adjustment calculating for IRS 941 liabilities.

Terry outlines two tables where information can be accessed using either a window in Dynamics GP or by using a SmartList / SQL view combination. She further elaborates on how this can be used for manual checks in adjusting liabilities when it’s time to deal with IRS credits. (Hat tip, Terry!)