Earnings, Deductions, and Benefits (Detailed Guide + FAQ) #

This guide explains how to set up employee earnings, deductions, and benefits in Friday. Proper setup ensures payroll calculations are accurate, compliant, and reflects employee agreements.

Earnings #

Hourly and Overtime #

• Hourly: Employee pay per hour worked.
• Overtime: Automatically calculated at 1.5× hourly rate after 40 hours/week (per law).

To set or update hourly rate:

1. Go to Team → select the employee.
2. Click the pencil icon next to Wage Settings Profile.
3. Choose Wage Type → Hourly → enter hourly rate (e.g., $16/hr).
4. The system automatically applies overtime rules.
5. Click Submit to save.

Additional Wage Types #

• Default Reimbursements: Recurring allowances, e.g., $20 per payroll for phone reimbursement.
• Custom Earnings: Payment for specific work, projects, or tasks.
• Salary:

1. Select Salary under Wage Type.
2. Enter amount per week, bi-weekly, monthly, or yearly.
3. Submit → system automatically divides the salary across payroll periods.

Tip: Ensure correct period selection (weekly, bi-weekly, monthly) to match payroll schedule.

Deductions #

There are multiple deduction types, each with specific rules:

Child Support #

• Sent automatically to the agency (state sends notice).

Setup:

1. Go to Team → Employee → Deductions → Pencil → +
2. Enter:

– Description
– Amount
– Percent (if applicable)
– External ID (from notice)
– Issue & Effective Dates
– Agency (e.g., New York State)

Post-Tax Deductions (e.g., Employee Loans) #

• Example: Loan repayment ($50 per payroll).

Setup:

1. Go to Deductions → Add
2. Enter total amount, per-payroll amount or percent.
3. Submit → deduction reduces net pay only, taxes remain unchanged.

Garnishments #

• Court or agency-mandated wage garnishments (e.g., IRS, local government).

Setup:

1. Enter description, total amount, annual limit, priority (if multiple garnishments), per-payroll amount or percent, and start date.
2. System enforces maximum allowed per payroll (e.g., 50% of employee’s earnings).

• Employer must submit garnished funds to the agency.

One-Time Deductions/Reimbursements #

• Applied directly in Payroll → Process Payroll → Pencil icon → add wage type → one-time deduction
• Enter name, description, and amount.
• Applies only to the selected payroll and does not recur.

Benefits #

• Examples: 401(k), medical, disability, life insurance.
• Pre-tax deductions (like Section 125 medical plans) reduce taxable wages.

Setup:

1. Go to Benefits → Pencil → +
2. Enter:

– Description (e.g., Medical Insurance)
– Type (e.g., 125 Medical)
– Start date
– Period:
– Monthly: Amount divided evenly across payrolls in the month
– None: Fixed amount each payroll
– Employee contribution (percent or amount)
– Company contribution (percent or amount, if applicable)

1. Click Save

Note: Friday withholds funds for the employer but does not send payments to agencies. Employers are responsible for submitting funds for 401(k), medical, garnishments, etc. Only child support is sent automatically.

Summary Table #

| Item | Setup Location | Notes |
|——————————-|—————————|———————————————|
| Hourly / Overtime | Team → Wage Settings | Overtime auto-calculated |
| Salary | Team → Wage Settings | Enter period and amount |
| Default Reimbursements | Wage Settings | Recurring per payroll |
| Custom Earnings | Wage Settings | Specific work or task pay |
| Child Support | Deductions tab | Automatically sent to agency |
| Misc / Post-Tax Deduction | Deductions tab | Reduces net pay, not taxes |
| Garnishments | Deductions tab | Employer responsible for submission |
| Benefits (401k, Medical) | Benefits tab | Pre-tax or post-tax; employer submits to agencies |
| One-Time Deductions / Reimbursements | Payroll → Process Payroll | Applies only to selected payroll |

FAQ #

Q1: Can I update an employee’s hourly rate mid-year?
Yes. Go to Team → Employee → Wage Settings → Pencil and update the hourly rate. Overtime is recalculated automatically.

Q2: Do garnishments affect taxes?
No. Garnishments reduce net pay but do not change taxable income.

Q3: Are one-time deductions recurring?
No. One-time deductions or reimbursements applied via the payroll screen apply only to that payroll.

Q4: Who sends withheld funds to agencies?

• Child Support: Friday sends automatically.
• Other deductions/benefits (401k, medical, garnishments): Employer is responsible for submitting.

Q5: How is a monthly benefit deducted if a month has extra payroll periods?
The system divides the total monthly contribution evenly across payrolls. If a month has 5 payrolls instead of 4, the per-payroll deduction remains the same; the total may not exceed the monthly limit.

Q6: Can I set a deduction to end automatically?
Yes. When creating a deduction or benefit, you can specify an end date to stop the deduction automatically.