2.2.3 University Payroll
Formerly Known As Policy Number: 35
This Guide Memo contains general policies concerning the university payroll. SLAC National Accelerator Laboratory (SLAC) currently applies the applicable policies contained herein. SLAC departments should consult SLAC Business Services Division for SLAC procedures.
1. Employer/Employee Relationship
Whether an individual is a university employee or an independent contractor is a determination with important practical and legal consequences.
a. Definitions of Employee and Independent Contractor/Consultant
Federal tax rules define an employee as an individual who performs services subject to control by an employer both as to what services shall be performed and how they shall be performed. If the university has the legal right to control both the method and result of services, that person is considered an employee and therefore subject to income tax withholding. By contrast, for independent contractors (sometimes called consultants), the university does not control where and how the work is performed but only receives a final deliverable. Independent contractors or consulting firms should be procured through the procurement contract process on the Fingate website. For more information, refer to IRS guidance at Employee or Independent Contractor Status. If the person and/or work being performed do not legally qualify for Independent Contractor status, hiring the person as a contingent worker may be the appropriate option.
2. Employment Categories
Employees are categorized within the payroll system according to the length of the appointment, the percentage of time worked, and the type of position they fill. These categories in combination affect eligibility for most employment benefits.
a. Length of Appointment
Continuing employees are expected to remain on the payroll for six months or more (four months or more for Bargaining Unit employees).
Temporary employees are expected to remain on the payroll for less than six months (less than four months for Bargaining Unit employees). Stanford students working less than 50% time may be appointed for the entire academic year as temporary employees. Temporary employees are not eligible for employment benefits.
b. Scope of Appointment
The percentage of a full-time equivalent position (% FTE) an employee works affects both eligibility and level of benefits. See Guide Memo 2.2.1: Definitions for the % FTE of a continuing appointment that grants "regular employee" status and eligibility for most benefit plans and programs.
c. Type of Position
The job classification defines whether the position is:
(1) Salaried or Hourly-Paid
- Salaried employees are paid their semi-monthly salary (less authorized deductions) every pay period unless an exception (such as authorized overtime hours or leave without pay) is reported. Subject to exceptions, the gross salary amount of the paycheck is the same for each pay period, regardless of the number of working days in the period.
- Hourly-paid employees are paid for actual hours worked (less authorized deductions) as shown on a timecard submitted for the pay period.
(2) Exempt or Non-exempt
See the definitions in Guide Memo 2.2.1: Definitions. Employees who are exempt from the provisions of the Fair Labor Standards Act are not paid overtime.
3. Compliance with Employment Law
a. Documentation of Eligibility for Employment
(1) Completing Form I-9
All new and rehired employees must complete a U.S. Citizenship and Immigration Services (USCIS) Form I-9 by the end of the day on their first day of (re)employment, and provide appropriate original document(s) to establish identity and work authorization. The hiring department, or other university designee, must review the original document(s) and complete the employer portion of this form within three business days of the first day of employment. Employers cannot specify which document(s) the employee must present. Completed forms are submitted to Payroll for review and document retention.
(2) Updating Form I-9
Eligibility to work in the U.S. may expire for certain types of temporary visitors. Documentation of continued eligibility to work must be provided before the work eligibility expiration date.
(3) Re-verifying Form I-9
A new or re-verified Form I-9 must be completed after any break in employment. Certain exceptions apply for instructional staff/faculty, student, or seasonal/temporary employees returning to the same job in the same department following an expected break in employment of less than one year. See Topic Overview: Verify Eligibility for Employment and Form I-9 on the Fingate website for detailed guidelines.
(4) Failure to Complete/Update Form I-9
Failure to comply with USCIS Form I-9 requirements will result in ineligibility for employment and/or immediate termination.
b. Tax Requirements
(1) Withholding Tax Information
New employees must complete a withholding declaration at hire. In the absence of a completed withholding declaration, withholding tax will be applied as if the employee had claimed "Single" status with no withholding allowances on their W-4 and DE-4.
(2) Tax Treaties
Some employees who are not residents of the U.S. may qualify for full or partial exemption from withholding tax based on tax treaties between the U.S. and their country of tax residence. Texts of most treaties (in both English and the language of the other country) are available from the IRS website. For more information and to obtain the necessary documents to claim a tax treaty, see How to: Claim Tax Treaty for Salary Payments on the Fingate website.
(3) Social Security Number
A Social Security number is required for all employees working in the U.S. Employees who do not already have a Social Security number may begin employment, but must immediately apply for one and obtain a receipt of application. Once received, the hiring department must enter the employee's Social Security number in the university's human resource management system.
4. Payroll Accounting
a. Semi-Monthly Payroll
University employees are paid semimonthly. Pay periods are the 1st through 15th and the 16th through the last day of the month. See Payroll Schedules and Deadlines on the Fingate website.
b. Salary Approvals
Department heads or other authorized university officers approve charges of salaries and wages to their projects, tasks and awards (PTAs) in accordance with budgets, compensation policies, and collective bargaining agreements. In addition to the department head, certain offices have responsibility for reviewing salaries and wages for specific categories of employees. Salary changes, supplementary compensation, salary during leave of absence, and termination of salary require the same authorization and review. Supervisors (or, in their absence, designees with first-hand knowledge of employees work hours) are responsible for approving employees' timecards, including leave usage for exempt and non-exempt employees and work hours for non-exempt employees.
- Faculty and Academic Staff: Salaries for faculty and academic staff are reviewed and approved by the cognizant dean and the Provost's Office.
- Salaried Staff: Salaries for staff employees are established, reviewed, and approved by the cognizant dean, director, or equivalent university officer. In some cases, review by Human Resources is also required.
- Hourly-paid Staff: Hourly wages are reviewed and approved by Human Resources.
- Students: See Undergraduate Student Wage Scales, Guide Memo 10.2.1: Graduate Student Assistantships, and the Graduate Student Assistantship Supplement.
c. Charges to Projects, Tasks and Awards
Financial Management Services (FMS) charges salary and wage expenditures to PTAs designated by the department through Labor Schedules. Oracle Business Intelligence (OBI) reporting provides information about charging salary through a number of monthly expenditure reports. The Consolidated Expenditure Reporting dashboard focuses on the PTAs where salary has already been charged. The Payroll and Labor Management dashboard focuses more on the individual employee. See the Fingate website for the training information and requirements that must be completed to access Labor Schedules.
(1) Multiple Activities/Accounts
If an employee is paid from more than one PTA, the authorized portion of salary or wage is allocated to the appropriate PTA. The paycheck or bank deposit advice delivered to the employee combines all earnings into one check.
(2) Organization Suspense Account
Each department designates an unrestricted PTA as an Organization Suspense Account to which salaries of department employees are charged whenever the source of salary funding (such as a grant or contract) runs out and is not immediately replaced by alternative funding. Charges to Organization Suspense Account PTAs, which are charged to the expenditure type 51610, should be reviewed on a timely basis to determine if transfers are needed. See Guide Memo 3.2.2: Cost Transfers.
5. Taxes on Salaries and Wages
a. Taxable Earnings
The university withholds Federal, State, and other applicable taxes from all taxable earnings paid to employees. Taxable earnings include regular pay, overtime pay, supplementary compensation, and any additional and miscellaneous payments for work performed for the university. This may also include taxable reimbursements. See Guide Memo 5.4.2: Business and Travel Expenses for additional details on taxable reimbursements.
b. W-2 Statements
At the end of each tax year (January 1 through December 31), Stanford compiles and distributes a W-2 statement for each employee. By default, W-2 statements are mailed to the employee's mailing address on file with the university. Employees may elect to have their W-2 statement sent to them electronically in the Axess portal. The university also sends Form W-2 data, as required, to Federal and State governments.
c. Tax Exemptions
Employees may not claim more withholding allowances than those allowed by the Internal Revenue Service or Franchise Tax Board. Fewer allowances may be claimed or additional dollar amount of taxes may be withheld if an employee wishes to increase the amount of tax withheld. Information about completing the IRS W-4 form and Franchise Tax Board form DE-4, used to specify withholding allowances, is located on the Fingate website at How to: Declare or Change Withholding Allowances.
d. Student Employees
Students who take jobs with the university while pursuing their studies are paid through the university payroll. Degree-seeking Stanford student employees, who are employed while enrolled in classes, do not pay Social Security taxes or Disability Insurance.
e. Scholarships and Fellowships
Scholarship and fellowship payments are not considered payments for work performed and the recipients are not placed in an employer-employee relationship because of receipt of this money from the university.
f. Research and Teaching Assistants
Research and teaching assistantships are taxable and tax is withheld from the semi-monthly salary.
g. Non-California Residents
Employees who physically work in California are treated as California residents for California tax purposes.
h. Tax Status of Non-U.S. Residents
Salaries and wages paid to non-residents of the U.S. fall under the tax laws of the United States and the state of California. The specific provisions of the tax laws, treaties, conventions, and determinations in regard to non-residents are handled by the IRS and the California Franchise Tax Board.
6. Payroll Deductions
a. Deductions for Benefits
Employees eligible for benefits (e.g., regular staff, faculty) may pay the employee's share of the cost of some insurance programs and benefits by payroll deduction. For more information, go to the Cardinal at Work website.
b. Other Authorized Deduction
The university has authorized voluntary payroll deductions for payments to certain organizations (such as the Stanford Faculty Club). Any employee who wishes to use this procedure should make arrangements directly with the organization for which the deduction is authorized. That organization will send the authorization to Payroll.
c. Reporting Deductions
Deductions from each paycheck are itemized on the pay statement. The amounts deducted are sent to the designated organizations.
d. Cessation of Deductions
Payroll deductions for benefits cease during leaves of absence without pay. An employee on leave without pay will receive information from the university's leave administrator on how to pay for the employee's share of the costs for applicable insurance plans. Benefit deductions also stop when an employee's status changes to a non-benefits-eligible position (see Guide Memo 2.2.1: Definitions) and when employment terminates. At that time, terminated employees with retirement savings plans should review the available distribution options on the Cardinal at Work website.
(2) Other Authorized Deductions
Such deductions cease during leaves of absence without pay, at termination of employment, or on retirement.
7. Delivery of Checks and Bank Deposit Advices
a. Direct Deposit of Paychecks
Employees are encouraged to have their paychecks deposited directly into their bank accounts. Employees may use any bank, savings and loan or credit union that is a member of the Automated Clearing House and can accept electronic fund transfers. Direct deposit enrollment instructions are available at How to: Enroll/Update/Cancel Direct Deposit on the Fingate website.
b. Delivery of Semi-monthly Paychecks
Pay statements are provided for all employees electronically in the Axess portal. Payroll distributes live paychecks to the mailing address on file. Paper pay statements are distributed through interdepartmental mail. Employees who wish to receive a paper pay statement must select this option in the Axess portal.
c. Undelivered Checks
Payroll will reach out to the department and/or the employee for checks returned by the Post Office in an effort to re-mail the checks to the employee. Paychecks issued in error must be returned to Payroll for cancellation and reversal of earnings from the employee's W-2.
d. Stale-Dated Checks
Paychecks are negotiable for six months from date of issue. Stale-dated checks should be returned to Payroll for reissue. Funds from checks not cashed after one year from date of issue are remitted to the Unclaimed Property Bureau.
e. Delivery of Final Paycheck
An individual's final paycheck must include the total amount of salary or wages owed as of the date of termination. This includes all payments due, including accumulated, unused vacation leave, PTO and floating holiday, less authorized deductions. The department should contact Employee & Labor Relations in advance if questions arise.
- If the university initiates the termination, or if the employee initiates the termination and gives at least 72 hours notice, the final paycheck must be given to the employee on the date of termination.
- When an employee initiates the termination and gives less than 72 hours notice, the final paycheck is due to the employee within 72 hours after termination. Departments are responsible for making sure final paychecks are delivered to employees under the time limitations provided by law. A completed termination transaction must be submitted to Payroll in order to process the final paycheck.
8. Salary and Wage Calculations
a. Vacation Payment and Vacation Credit
Vacation earned but unused at termination is paid on the basis of the employee’s hourly rate at termination. For salaried employees at 100% FTE, the hourly rate is calculated by dividing the annual salary by 2080 (hours in a working year). If an employee leaves one position and accepts another position within the university, the employee retains their accumulated vacation accruals. (See Guide Memo 2.1.6: Vacations). The vacation accrual template found at How to: Calculate Vacation Accrual on the Fingate website and can be used to calculate vacation when an employee terminates.
b. Partial Pay Period Pay Calculation
Pay for less than a full pay period for new or terminating salaried employees is calculated by dividing the annual salary by 2080 (hours in a working year) and multiplying that number by the number of days the employee actually worked, including adjacent holidays, in the pay period multiplied by eight (assume eight hours/day for a full-time exempt employee.) Holidays are counted as workdays when the employee works or is on paid leave (including vacation), both the day immediately preceding and the day following a holiday.
9. Special Situations
a. Salary Advances
Under certain circumstances as described below, salary advances are available to regular staff employees who are not in bargaining units. (Find information on salary advances for Bargaining Unit members in the applicable agreement.)
(1) Vacation Advance
An employee scheduled to take vacation leave of at least 10 consecutive workdays outside the San Francisco Bay Area, may request early payment of any regular paychecks that would be issued during that period.
(2) Emergency Advance
Only in an emergency and with the concurrence of their department, a regular employee may receive an advance of salary already earned in one pay period prior to the regular payday for that pay period. No more than two emergency advances for the same employee will be processed in a 12-month period.
b. Faculty Terminations
A faculty member leaving after completing the employment obligation but before the designated end date of their appointment may receive the balance of salary through a special processing procedure. If this option is exercised, the faculty member's status as an employee ends on the termination date. The termination date must not be later than the date of the final check.