Title: Dilution for Salaried Employees with Non-standard Business Weeks (e.g., 32 hours per week)
This entry describes how to set up salaried employees with nonstandard business weeks (e.g., 32 hours) in Unanet to ensure dilution is calculated appropriately. Unanet triggers dilution when the timesheet reaches COMPLETED status; it calculates an effective labor cost rate by multiplying a dilution factor (standard period hours/hours worked) against the user's hourly cost rate stored in the person profile (see Help Docs - Dilution for more information). By default, the standard period hours used in determining the dilution factor is obtained from the "Work Hours" associated with each user's corresponding time period (see KC - Time Period Setup for more information about time periods). With this in mind, the recommended solution varies depending on the types of time periods utilized by your organization for salaried employees.
What’s covered in this document:
Solution for Weekly, Weekly-Overlap, or Bi-Weekly Time Periods
As mentioned above, the standard period hours used in determining the dilution factor, by default, is obtained from the "Work Hours" associated with each user's corresponding time period. Alternatively, you can configure the following property to have the standard pay period hours determined by each user's business week definition: Use Business Week Hours for Dilution (unatime.dilution_hours_from_business_week). With this property enabled, dilution will calculate accurately assuming each user's business week has been defined appropriately (see KC - Business Week for more information).
Please note that this is a system-wide property applied to all users; this solution should probably be used only if your organization does not use monthly or semi-monthly time periods for any of its salaried employees because semi-monthly or monthly periods have different numbers of business hours; therefore this method will result in different salary amount per period. The only reason for using the Business Week Dilution property with Semi-monthly time periods is if you actually pay your salaried employees fluctuating amounts each pay period (which is rare.)
Solutions for Monthly or Semi-Monthly Time Periods
If your organization uses monthly or semi-monthly time periods for any of its salaried employees, there are three options available to ensure that dilution is calculated appropriately for salaried employees with non-standard work weeks (Option 1 being the recommended best practice). However, if your organization pays its salaried employees varying amounts each pay period depending on the number of days (or business days) in each pay period, you could consider the solution offered above for week-based pay periods. Note also that the three options below are independent of the decision on whether or not to turn the Use Business Week Hours For Dilution property on.
Option 1 (Recommended Best Practice) - Create a New Time Period for Employees with Non-Standard Business Weeks to Reflect the Appropriate "Work Hours"
As mentioned above, the standard period hours used in determining the dilution factor, by default, is obtained from the "Work Hours" associated with each user's corresponding time period. Therefore, to ensure dilution is calculated accurately for salaried employees with non-standard business weeks, Administrators using this option will need to (1) create a new time period in Admin > Time > Time Period Setup with the appropriate number of "Work Hours," and (2) assign users to the time period accordingly. Please note this solution is the recommended best practice; however, if such non-standard work arrangements are anticipated to change in the near-term (thus requiring a future change in time period for the applicable employee(s)), then Option 2 or 3 should be considered.
Step 1: Create a New Time Period with the Appropriate Number of "Work Hours"
For Monthly and Semi-Monthly time periods, the value in the "Work Hours" field defaults to 173.3333 (2,080/12) and 86.6667 (2,080/24), respectively. However, this value should be modified accordingly when creating time periods for salaried employees with non-standard business weeks. For example, let's assume a salaried employee is only required to work 32 hours a week (i.e., 80% of the standard 40 hour week). Let's also assume that the employee's company uses semi-monthly time periods for all of its employees. With these assumptions in mind, the Administrator would need to use a value of 69.3333 (2,080/24*80%) in the "Work Hours" field in Admin > Time > Time Period Setup when creating a time period for this employee.
Step 2: Assign Users to the Time Period Accordingly
After the time period has been created (see Step 1), the Unanet Administrator will need to assign users to the time period accordingly via the Time tab of their Help Docs - People Profile. Following along with the example introduced in Step 1, the People Profile would be updated as illustrated below.
Note: When exporting time to downstream systems, you will need to run for each time period definition. Email reminders setup and TS Pie/Status report may be impacted as well.
Option 2 - Manually Change the "Hours In Period" for Users with Non-Standard Business Weeks After Completion of Every Time Period
Administrators have the ability to modify the "Hours In Period" used to calculate the dilution factor via an individual's People Profile after completion of each time period. Administrators could then recalculate dilution using the hours specified (on a time period-by-time period basis). Please note, due to the ongoing maintenance required by this solution (since each person impacted must have the Dilution screen of their person profile edited), it is recommended that Option 1 be used instead when possible. This concern may have less impact if you have a very small number of salaried employees with non-standard business weeks and such work arrangements are anticipated to change soon.
Step 1 - Modify "Hours In Period" Accordingly
Once a timesheet has been completed, the Administrator will need to edit the Hours In Period field as illustrated below via the Dilution option found in the left menu of the People Profile (see Help Docs - People Dilution for more information).
Step 2 - Recalculate the Dilution Factor
After the "Hours In Period" field has been updated and saved, a check mark will appear in the CALCULATION REQUIRED column indicating that the dilution calculation needs to be rerun.
To recalculate dilution, simply click on the blue calculator icon and the dilution factor will update accordingly.
Option 3 - Assign a "Diluted" Cost Rate to Users with Non-Standard Business Weeks
Administrators could enter a "diluted" hourly cost rate for applicable employees which would eliminate the need to create separate time periods (as suggested in Option 1). For example, let's assume a salaried employee is only required to work 32 hours a week (i.e., 80% of the standard 40 hour week) and receives an annual salary of $20,800. Under these assumptions, an hourly cost rate of $12.50 ($20,800/(2,080*80%)) would typically be recommended for the employee; however, this solution would instead require the use of a $10 hourly cost rate ($20,800/2,080). Therefore, using this "diluted" cost rate of $10 per hour, the effective rate calculated by Unanet upon completion (i.e., approval) of each timesheet would be accurate. Please note that since the dilution calculation is triggered first upon timesheet completion, the labor costs associated with incomplete timesheets will likely be understated for applicable employees prior to completion; which could impact project planning and reporting. Considering this, it is recommended that Option 1 be used instead when possible; however, this option may be relevant if you have a large number of salaried employees with non-standard business weeks and such work arrangements are anticipated to change soon.