Calculating tip credit records (U.S. and CA)

If you use the Tips application, you must process the Tip Calculation to:

  • Verify minimum wage requirements according to the employee's work state or federal requirements

  • Calculate the tip credit if minimum wage has not been met

  • Create time records for any shortfall amount

  • Create tip history records used for tip allocation

  • Calculate the hours worked in tipped jobs for tip allocation using the hours worked method

Tipped employees can be identified either by a job code flagged in the Job Code field on the Assignment tab, or the Tipped Employee Flag on the Pay tab on Employee (HR11.1).

Calculate tip credit records

  1. Access Tip Calculation (TP135).
  2. Select the Parameters Tab. Specify this information:
    Rerun

    Select whether this is a rerun of Tip Calculation (TP135).

    When you rerun TP135 during a cycle, the application performs the same calculations again. Previously created records are deleted and recreated based on the re-run.

    Errors Only

    Select whether you want to run the report for time records in error status.

    Manual and Adjustment Only

    Select whether to perform a tip credit calculation on only manual and adjustment time records. Manual payments are created in PR80.1 (Manual Payment); adjustments, in PR82.1 (Adjustment).

    If you select Yes and run the report using the Yes update option, the application does not set a cycle flag, allowing manual payments and adjustments to be closed outside a payroll cycle.

    Pay Class

    Select the pay class representing the kind of pay you want to include in the tip credit calculation.

    Update Option

    Select whether or not you want to update the application with tip pay records and time records for shortages.

    Pay Code

    If you selected Yes in the Update Option field, select the pay code you want the application to use for the time record created for the shortage.

    Report Sequence

    Select the sequence in which you want the report to print.

    The report sequence is based on the process level, department, and job code from the time record; not on the "home" process level, department, or job code from the employee record.

    Employee Sequence

    Select the employee sequence in which you want the report to print. If you do not select an employee sequence, the sequence defaults as defined in the Print Order field of Company (HR00.1).

  3. On the Default tab select the default pay codes. Use the following guidelines to enter field values:
    Direct Tipped Pay Code

    Select the direct tipped pay code you want to use to update or create tip history records when no tip time record exists.

    Indirect Tipped Pay Code

    Select the indirect tipped pay code you want to use to update or create tip history records when no tip time record exists.

    Override Minimum Wage

    Specify a minimum wage to override what is entered on PR06. Use for Local Minimum Wage which is higher than State Minimum Wage.

  4. On Hawaii tab, select Additional Minimum Wage and Pay Code. Use these guidelines to specify field values:
    Additional Minimum Wage

    Specify the Additional Minimum Wage needed to take advantage of the Tip Credit in Hawaii.

    Pay Code

    Specify the Pay Code to be used for the Additional Minimum Wage calculation.

  5. Select the Submit form action to submit the calculation.
  6. Access Payroll Cycle Status (PR00.1).
    Note: Running Payroll Close (PR197) at the end of the payroll cycle updates tip records to history.
  7. Verify the completion of tip credit calculation.
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