Lump Sum Pay Basis Appointments

UW–Madison policy for Lump Sum appointments.

Functional Owner

Assistant Vice Chancellor for Human Resources

Executive Sponsor

Vice Chancellor for Finance and Administration

Policy Contact

Director, Employee Services

Policy Summary

Employees paid on a lump sum pay basis are considered to be non-hourly employees for purposes of the Affordable Care Act (ACA). Under the final ACA regulations, employers may use one of three methods to track hours for non-hourly employees: (1) actual hours: (2) days-worked equivalency (each workday of service – 8 hours credited); (3) weeks-worked equivalency (one week of service = 40 hours credited). This policy identifies how the University will remain ACA compliant with the identification of hours worked for individuals paid solely on a lump sum pay basis.

Who This Policy Applies To

Faculty, Academic Staff, Limited Appointees, and Ad Hoc Program Specialists (Employee Class OT) hired using the pay basis of Lump and do not concurrently hold a benefits-eligible position paid on an annual, academic, or hourly pay basis.

Student hourly lump sum appointments are addressed in the Student Hourly Employee policy.

This policy does not apply to lump sum payments awarded to active employees on their regular Annual, Academic, or Hourly pay basis appointments.

Rationale

Employees hired solely on a lump sum pay basis are not benefits eligible. With the new rules of the Affordable Care Act, the University must lay out the guidelines for use of lump sum pay basis appointments and for tracking of hours to determine if an employee meets the definition of full time under the ACA and must then be offered health insurance.

Policy Detail

Whenever it is possible to establish an FTE or track hours worked, individuals should be paid on an hourly or annual pay basis. For employees receiving payment solely on a lump sum basis, an appropriate title must be identified based on the duties being performed, and the amount of payment must be appropriate based on the salary minimum (and maximum if applicable) of the title and the expected amount of work to be performed. The appointment letter or signed employment agreement must include specific information for the period of time for which the payment represents (i.e., the earnings beginning and end dates), and the anticipated hours required to complete the work. The hours worked (or counted as working under the ACA) are not to exceed an average of 30 hours per week or 130 hours per month. Divisions must report hours worked by employees paid on a lump sum pay basis appointment on a monthly basis using either a timesheet or a method determined by division to track and record hours in HRS. Appointments expected to exceed 30 hours per week or 130 hours per month must be reviewed for conversion to an annual (A) basis appointment with an established FTE or hourly (H) pay basis appointment.

University Staff nonexempt positions must be paid as hourly and are subject to the University Staff Overtime policy for all hours worked over 40 in a week.

For ACA purposes, UW System is a single employer. Therefore, the restricted hours pertain to any hours worked at all UW–Madison divisions or any other UW System institution statewide. If an employee works for 3 different divisions or at another institution, all hours worked/reported must be combined and stay below the 30-hour weekly average.

Consequences for Non-Compliance

Individuals working more than 30 hours per week and paid on a lump sum must be offered health insurance: Penalties reference.

Failure to identify the expected hours worked will result in application of the days-worked equivalency method which may result in fines for failure to offer the individual health insurance. For example, if an individual is hired to shoot a video for a department and is given two months to complete that assignment, the appointment period would be two months (e.g., August 1 through September 30th). Using a days-worked equivalency method, that employee would then be credited with 360 hours of service for ACA purposes.

Supporting Tools

Title Guideline

Time Reporting Presentation

Definition

Employee status: Based upon the ACA common law definition of employee. A full-time employee is an employee who works on average at least 30 hours per week or 130 hours per month.

Benefits eligible: An employee of the UWS that is eligible for either WRS or the Graduate Assistant/Short-Term AS Benefit Package.

Hours of service: Include hours worked, and hours for which an employee is paid but does not work, such as vacation, holiday, illness or disability, jury duty, military duty, or paid leave of absence.

Non-benefits eligible: An employee of the UWS that is not WRS eligible or the Graduate Assistant/Short-Term AS Benefit Package through employment.

Responsibilities

Office of Human Resources (OHR)
  • Work with divisional HR to convert lump sum pay basis appointments to hourly when possible
  • Provide recommendations and support to divisions in the evaluation of lump sum appointments
  • Provide documents, such as sample timesheets, to be in compliance with tracking hours worked for individuals paid on a lump sum pay basis (for ACA purposes)
College/School/Division HR
  • Track and record hours tied to a lump sum payment in HRS
  • Review all lump sum pay basis appointments to ensure compliance with this policy
  • Work with OHR to convert lump sum pay basis appointments to hourly when possible
  • Monitor lump sum appointments and terminate those as the work is completed by the individual

Link to Related Policy

Financial Policies and Procedures




Keywords:lump sum, lumps, ACA, health insurance, FTE, hourly   Doc ID:66884
Owner:OHR .Group:HR Policies
Created:2016-09-13 11:17 CDTUpdated:2016-12-13 14:24 CDT
Sites:HR Policies
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