Which Dilution style should I use in Unanet?
The answer to this question depends on a number of variables:
- Do you have a semi-monthly or monthly time period?
- If so, Unanet recommends Style 1 dilution, which will equalize the salaried rate calculations regardless of the business days within each semi-monthly or monthly time period. Because business days vary by period, this is our best methodology.
- Note: If you have Cost Plus contracts, you may wish to use Style 2. Let's say a person has a salary of $104K and therefore a derived cost rate of $50/hour ($104,000/2080 = $50). If this person works less than the expected number of hours (e.g., 65 hours in a period that has 88), then Style 1 would result in an inflated cost rate in order to match your payroll costs. This is because salaried works are typically paid the same whether they work more or less than the hours in the period. You may, however, not want to bill your client on Cost Plus contracts the inflated cost. Instead, you may choose to bill your client the flat $50/hour rate. If this is your situation, then you will want to use Style 2 dilution.
- For weekly or bi-weekly time periods, do you pay employees their full salary if they work less than the expected number of hours?
- If so, Unanet recommends Style 1 dilution.
- If not, Unanet recommends Style 2 dilution. Style 2 will only dilute the cost rate if the employee has recorded more than the expected number of hours in a period.