How Does Grant Management Handle Salary Cap Violations?
Funding agencies can limit the amount of employee salary that can be charged to a grant. If an employee's annual earnings are more than the annual salary cap set forth by the agency, the excess salary cannot be charged to the grant and must be assumed by the grant's recipient.
To enforce a salary cap, you must enable the Salary Cap option and assign a salary schedule to the grant on Activity (AC10.1). On AC10.1, you must also indicate whether the salary cap to be used is the salary cap that is in effect at the time the grant is created or the most current salary cap in the schedule. When checking for salary cap violations, the system obtains the appropriate salary cap amount from the salary schedule.
On AC10.1, you can also select an overage activity and account category, an overage GL account, and an overage user analysis to which the overage (excess) salary should be charged.
When you add or update a distribution line on Labor Distribution Template Entry (GM10.2) or on Labor Cost Transfer Template Entry (GM12.2), the system checks whether salary cap is enabled for the activity (grant). If it is enabled, the system finds the salary cap that is in effect. If the salary for the line exceeds the salary cap, a warning message is displayed for the distribution line or labor cost transfer line. You can then execute the Salary Cap action to recalculate the salary percentage allowable for the grant and create an overage distribution or labor cost transfer line to hold the non-allowable portion of the salary.
If the overage line GL account, activity, account category, and user analysis are defined on AC10.1, these values are used for the overage line. If the GL account and user analysis values are not defined on AC10.1, the values on the originating distribution or labor cost transfer line are used. If the overage activity is not defined on AC10.1, no activity or account category is used on the overage line. If the overage activity is defined on AC10.1 without an account category, the overage line will use the account category on the originating distribution or labor cost transfer line.
You can view the calculation detail on Labor Distribution Template Salary Cap (GM10.5) which you access from GM10.2 or Labor Cost Transfer Template Salary Cap (GM12.6), which you access from GM12.2.
Other Methods to Monitor Salary Cap Violations
The system automatically checks for salary cap violations and alerts are generated on Labor Distribution Template Entry (GM10.2), Labor Cost Transfer Template (GM12.2), Labor Distribution Template Approval by Employee (GM11.1), Labor Distribution Template Approval by Activity (GM11.2), and Labor Distribution Template Approval (GM11.4), Labor Cost Transfer Template Entry (GM12.2), Labor Cost Transfer Template Approval (GM13.1), and Labor Cost Transfer Approval (GM13.2). However, you can only apply the salary cap rules on GM10.2 or GM12.2. If you see a salary cap alert on one of the approval forms, you must unrelease the template so that you can execute the Salary Cap action on GM10.2 or GM12.2.
The Salary Cap Mass Calculation (GM116) can be run to evaluate existing labor distribution or labor cost transfer templates, salary cap schedules and employee pay to expose templates where an employee’s salary exceeds the award’s salary cap and salary cap rules have not been applied. It will then calculate the salary cap and update the same templates rather than manually updating the templates one at a time. The Salary Cap Mass Calculation can be run for labor distribution, labor cost transfers, or both.
In addition, you can import a labor distribution template from a non-Lawson system by running Labor Distribution Template Interface (GM510). If you select the Apply Salary Cap option, the system will automatically create adjusting distribution lines for imported template lines that exceed the salary cap.
Grant Management also provides two reports that check for salary cap violations:
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Run Salary Cap Alert Report (GM412) to evaluate existing labor distribution templates, salary cap schedules, and employee pay to expose templates where an employee's salary exceeds the award's salary cap and salary cap rules have not been applied.
Templates are also included in the report if salary cap rules have previously been applied, but a change in salary cap amount or an employee salary has occurred.
Template lines must contain an activity to be eligible for the report.
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Run Salary Cap Analysis Report (GM468) to compare actual pay to salary cap for selected employees and dates. The employee salaries can come from Lawson or non-Lawson payroll.
You can run this report at any time. We recommend that you run it in conjunction with Effort Variance Report (GM465) or Labor Cost Transfer Template Creation (GM466) to expose individuals whose pay exceeded the salary cap for an effort reporting period.
This report is designed for .csv output so that users can easily extract and analyze data.
Salary Cap Calculations
When checking for salary cap violations and applying salary cap rules, these amounts are considered by the system:
| Amount | Description |
|---|---|
| Annual employee salary | The total salary for all the positions in effect for the employee on the template's effective date. |
| Template salary percentage | This is the salary percentage on the template line by which the salary is multiplied to determine what salary amount is assigned to the grant. This is the number that must be adjusted on the labor distribution template line if the salary cap is exceeded. |
| Calculated salary amount |
The employee's calculated salary for the template distribution line (annual salary * template salary percentage). Example Assume an annual salary of $100,000 and a salary percentage of 60%. The calculated salary amount will be: $100,000 * 60 /100 = $60.000 |
| Annual salary cap |
The salary cap in effect for the grant from the salary cap schedule. The salary cap is based on a full-time salaried employee. |
| Employee FTE |
The full-time employee percentage assigned to the employee (from HR10.1). Full-time is 1.0, half-time is .5, and so on. If the employee is part-time, the allowed salary cap must be prorated. For example, if the annual salary cap for a full-time employee is $100,000, a half-time employee (.5 FTE) will be evaluated against a salary cap of $50,000. |
| Salary allowed on grant |
This is a calculated amount derived as follows: annual salary cap * employee FTE * salary percentage Example Assume a salary cap of $175,700 for a half-time employee with a distribution line percentage of 60%. The allowed salary will be $175,700 * 0.5 * 60 / 100= $52,710 |
| Salary overage |
The calculated non-allowable part of the salary for the distribution line is calculated as follows: calculated salary amount - salary allowed on grant Example In our example, the calculated salary is $60,000 and an allowed salary is $52,710 The salary overage is $60,000 - $52,710 = $7,290 |
| Capped salary percentage |
This is the new salary percentage that must be assigned to the grant on the labor distribution template to comply with the salary cap. It is calculated as follows: Salary allowed on grant / calculated salary amount * template salary percentage Example In our example, the allowed salary of $52,710, the calculated salary is $60,000, and the template salary percentage is 60%. The capped salary percentage is: $52,710 / $60,000 * 60 = 52.71% |
| Overage salary percentage |
This is the offset percentage that will be entered on the overage distribution line that is created on the template when you execute the Salary Cap action. The overage salary that is calculated from this percentage is posted to the overage GL account and optional overage accounting unit, account category, and user analysis defined on AC10.1. The overage salary percentage is calculated as follows: template salary percentage - capped salary percentage Example In our example, the template salary percentage is 60% and the capped percentage is 52.71%. The overage salary percentage is: 60% - 52.71% = 7.290% |