July 2003
Using formulas in the OSAS system for payroll deductions can be a very powerful and useful feature. The best teacher is a specific example. This example illustrates using a formula to take a percentage of disposable earnings (gross earnings less federal and state taxes) and also shows the use of an optional cap or limit on the deduction. Please be careful when setting up deduction formulas so that you test and check your results.
In Payroll – Codes Maintenance – Deductions, you can establish the deduction number for the garnishment:
*
Deductions 03

1
 Deduction
Codes 1

1
*07
 No
Description Emplr? Liab
Acct Accr Ded Acct Def Comp Calc On 1
 1
Medical Ins NO 535000 NO
Gross Pay 1
 2
Dental Ins NO
535000
NO Gross Pay 1
 3
United Way NO 204000 NO
Gross Pay 1
 4
Credit Union NO 999900 NO
Gross Pay 1
 5
Dues NO 999900 NO
Gross Pay 1
 6
401K NO 205000 YES
Gross Pay 1
 7
IRA Plan NO 200000 NO
Gross Pay 1
 8
Parking NO 801000 NO
Gross Pay 1
 9
Cash Advance NO 101000
NO Gross Pay 1
 10
Stock Plan NO 205000 NO
Gross Pay 1
 11
Uniform NO 801000 NO
Gross Pay 1
 12
Garnishment NO 801000 NO Net Pay 1

1

1

Deduction (012 of 012) 1
*07
 Enter = edit, Append, Formula, Exclude
earning codes, Copy Deduction 1
* Company
H  Quick  Verify 05
In this example, deduction number 12 is the garnishment we are working with. NOTE: If you are going to use calculations such as tax withholdings in your formula as I am in this example, then you must set the Calc On to NET PAY. Net pay deductions are calculated after the taxes are withheld while Gross Pay deductions are calculated prior to taxes being done. You can use an existing deduction code if you like for this formula and simply change the setting from Gross to Net.
After establishing the deduction code, with the prompt > on the left side pointing to your deduction, press the letter F to go to the formula screen. By pressing the F while next to your deduction, the system automatically names the formula for you. You should keep the name provided by the system.
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Formula Maintenance 03
 Formula ID
PD012H__.RTN 1
 Description
Percentage of Disposable 1
 Factor 1 10.0000 Factor
2 99999.0000 Factor 3 0.0000 1
 Factor 4 0.0000 Factor
5 0.0000 Factor 6 0.0000 1
*07
 Variable Formula 1
 LI001 TOTEARNFEDWITHSTATEWITH 1
 LI002 LI001*FC1/100 1
 LI003 IF(FC2<LI002) TH (FC2) EL (LI002) 1
 LI004 IF (LI003<0) TH (0) EL (LI003) 1
 1

1

1

1

1

1
 1

1

1

Formula Line (001 of 004) 1
*07
 Enter = edit, Append, Header,
Create program 1
*
Company H  Quick  Verify 05
Note that in this example, factor 1 at the top of the screen is set to 10.0000. This represents the default percentage for the calculation of the garnishment as being 10%. Note that whole numbers are used and not decimals. My choice to use whole numbers will effect the formula since my formula will then need to divide by 100 at some point to convert this number into a percentage. You may use any default percentage you desire. I will show later how to override the factors for an individual employee.
My intention is to build flexibility into the formula, and I will use Factor 2 at the top of the screen as a place to set an upper dollar limit or cap on the deduction amount. The default setting of 99999 is set sufficiently high as to have no limit by default, but this limit can be set individually in the employee’s file by overriding the factors, thus making it personal to the individual if there is a cap amount.
You may copy the formula as you see it above. The only letter O is found in TOTEARN on line 001 while all the rest of the round things are zeros. Refer to your OSAS Payroll User’s manual if necessary for more details on entering the formula. You append one line at a time, <PgDn>, then append the next line.
LI001 TOTEARNFEDWITHSTATEWITH
This line takes the employees total earnings for the period, then subtracts all the federal income, social security, and medicare taxes, then subtracts the state withholdings.
LI002 LI001*FC1/100
This line takes the result of line one, then multiplies it by factor 1, then divides by 100 so as to treat factor 1 as a percentage. This line will then represent the percentage calculation amount of the deduction.
LI003 IF(FC2<LI002) TH (FC2) EL (LI002)
This line checks to see if factor 2 is less than the percentage of earnings calculated on line 002. The result of this test is that line 003 will contain either the percentage calculated on line 002 or the dollar value in factor 2, whichever is SMALLER. This basically establishes the cap, but remember we set the default cap to be $99999.
LI004 IF (LI003<0) TH (0) EL (LI003)
This line is a standard line I use in most formulas. It is intended to eliminate the possibility of accidentally generating a negative deduction. A negative deduction could be calculated if for some reason negative earnings were entered. By having this Iine in my formula, I have decided that when there are negative earnings, I don’t want any deduction amount calculated.
So my generic formula is set with a default withholding percentage of 10% and a cap of $99999 on the deduction amount. In practice, you may make these defaults anything you wish.
By using factors in the formula, we add a lot of flexibility because factors can be overriden on an individual basis. So the same generic formula and deduction number can be used for different employees, and each can have their own percentage and cap.
To override the factors in the formula for a specific employee, you go to Payroll – File Maintenance – Employees. Say YES to the salary information screen, get to the window that has the scheduled deductions for this employee. When you define the deduction for this employee, you should use F as the setting (compared to the usual Y). The deduction line for this employee will look like:
> 12 Garnishment FFFNN .00 .00
The F says to use the formula associated with this deduction. It is useful to note that you can still use this same deduction number for other employees with garnishments and use the Y to take a fixed dollar amount. You are always limited, however, to only using a given scheduled deduction code number once per setup for an employee. So you can not use deduction code 12 as both a formula deduction and a fixed amount deduction for the same employee. You would need to use two separate deduction codes in this case. For example, some authorities allow you to withhold a separate fee for processing the deduction. This fixed fee would have to be on another deduction code. (Or a creative type may want to build it into the formula!)
When you have the prompt > pointing to the scheduled deduction in the employee’s file, you will have the option of pressing the letter C to change the factors. Pressing the C will bring up a window that allows you to define the factors for this employee.
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Salary Information 03

Employee ID BOU001 Bourne, Linda C 1
***
 
Pay Information    Scheduled Deductions  

Dept 500 
No Description 12345 Amount
Balance 
 Labor
Class Prs 
1 Medical Ins * Factor Entry * 

Corporate Officer? NO 
6 401K  Override Factors? YES  

Seasonal Employee? NO 
3 United Way  Factor 1 20.0000  
 Type
(H or S) S 
4 Credit Union Factor 2
125.0000  

Exempt? NO 
10 Stock Plan  Factor 3 0.0000  

Adjust to Minimum? NO 
2 Dental Ins  Factor 4 0.0000  
 Group
Code (09) 1 1
12 Garnishment  Factor 5
0.0000  
 Pay
Periods/Year 12 1  Factor 6 0.0000  
 Check
Location 
** 

Earning Code SAL  

Salary 813.05 1 

Hourly Rate 10.170 1 

Override Pay .00 
Deduction
(007 of 007) 

Status Fulltime
6*
 Sick
Accrual Code XX 
Sick Hours Remaining
96.000 
 Vac
Accrual Code XX 
Vacation Hours Remaining
107.000 

Verification 
 Press <PgDn> to proceed 1
**
In the factor window, you say YES to override factors, then you can enter the custom factors for this employee. You must enter settings for both factors used in the formula if you are going to override either of the factors. In this example, this employee will have 20% of disposable earnings calculated as the deduction with a cap of $125. If you do not override the factors for a given employee, then the default factors defined in the deduction formula will be used.
See how powerful this formula can be? Each employee can have their own settings, yet the same formula is used for all employees who have a garnishment based on disposable earnings (gross – taxes), and the same deduction code can be used for fixed amount deductions simultaneously for separate employees.
When you try this formula, always check your edit register or use the manual checks function in payday work to view the effected employee(s). You can always override the deduction amount using the manual checks function prior to printing the checks if you need to.
For more information about formulas and a list of the available variable names that you can use in your formulas, please consult the payroll user’s manual appendix.