Microsoft Dynamics GP Payroll Earning Codes; set up and what to use them for

Terry R Heley Microsoft Employee

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Hi Community,

We see cases asking how to setup payroll earnings codes, what they can be used for and examples of some ways to use them. In this blog I will go over these requests.

In Microsoft Dynamics GP, Earning Codes are used to define an employee’s Net Disposable Income (NDI).

We have seen earnings codes used mainly for garnishments. However, there are other uses where earning codes can be used. A recent use we have received cases on is how to set up a deduction for FMLA or Paid Family Leave Insurance.

Let's begin with the basics, how to set up an earnings code. Here is a great article on setting up earning codes: Set-up earning codes and earning code groups.

Important note to remember about setting up an earnings code in GP:

We have seen cases with the issue of setting up the earnings code on the company level. If you add a percent amount it does not save and flow down to the employee level. This functionality is working by design. Typically, earnings codes are used for garnishments which are employee specific. The workaround we recommend in cases like this is to use the type “garnishment” on the deduction and set up a class for these employees.

Use the ‘garnishment’ type rather than standard type in the deduction set up window. Even though this is not a garnishment.
Set up a Class. This will allow the setup to flow to the employees in that Class (HR & Payroll >> Setup >> Payroll >> Employee Class)
You can test updating the table in SQL at setup level by executing this SQL statement: Update UPR40900 set DEDNPRCT_1='2.00000' --or enter the percentage you want. Then when you assign it to all your employees by class the 2% does roll down to all employees automatically.
When you create new employees assign them to the class ID so the percentage will default in.

Next, garnishment deductions and earnings codes. Please review this article to see how earning codes are used in garnishment setup: U.S. Payroll - Setting up garnishment

Finally, State Paid Family Leave deduction: We have received some cases asking how to set up Paid Family Leave per state regulations requirements; This article will show you 2 state Paid Family Leave setup examples1 example is post-tax and 1 example is pre-tax deductions. Please use these examples as a guide to setup your state Paid Family Leave insurance.

Example 1: State requires 1% of wages; 60% paid by employee, 40% paid by employer.

State requires to include pre-tax (TSA) deductions for example health insurance or 401k in the calculation of taxable wages we recommend using an earnings code.

Example 2: Set up the Earning code to include the pay codes and the deductions that are pre-tax (TSA) to calculate the taxable wages.

Include the pay codes that should be in the calculation and include the pre-tax deductions that should be in calculation of taxable wages HR & Payroll >> Setup >> Payroll >> Earnings Setup.