POLICY NO: 305
EFFECTIVE DATE: 01/24/2008

EXTRA COMPENSATION

Extra Compensation includes acting rates, pay for extra services, bonuses, and incentive compensation. Each school or center may use the extra compensation programs, balancing their ability to fund the programs with their need to ensure that staff members are equitably rewarded and to recognize productive employee behaviors. Certain extra compensation arrangements require consultation with the Compensation Office of the Division of Human Resources as defined below.

All extra compensation payments for staff require review and approval by the Compensation Office before they are submitted to Payroll and before they are communicated to the staff member. Extra compensation is not part of the staff member 's base rate of pay; it is a supplement to the base pay, and is not eligible for inclusion in the Tax Deferred Retirement Plan (TDR). Extra compensation pay must meet the criteria outlined below.

305.1 ACTING RATES

Acting Rates represent extra compensation for a staff member who has temporarily assumed major responsibility for, and performance of, a vacant position in a pay grade that is higher than that of his/her current position. Such assumed responsibility is usually in addition to his/her primary job responsibilities.

The Compensation Office determines acting rates in accordance with the extra duties performed. They may range from 5% to 10% of the staff member’s current monthly salary or weekly pay. Acting rates above 10% require review and approval of the Director of Compensation and the Vice President of Human Resources.

Acting rates must have a specified beginning and ending date approved by the Compensation Office. They are usually for no longer than six (6) months and should not extend beyond the end of the current fiscal year. Requests for extension of payment of acting rates into successive fiscal years must be reviewed and approved by the Compensation Office. Acting rates will end when the position is filled.

Acting rates for exempt (monthly-paid) positions are entered directly to the on-line Personnel/Payroll System using a separate job number assignment and the acting rate job class code (899000). Entering the information to the system is the responsibility of the school/center. Authorization to pay acting rates is based on a memo from the Compensation Office.

Acting rates for non-exempt (weekly and hourly-paid) positions must be paid via the "Additional Pay Form" using code ES1. This form can be found at www.finance.upenn.edu/forms/add_pay_form.doc. The amount of the acting rate is included in the calculation of the regular rate of pay for overtime purposes.

305.2 EXTRA PAY (ESH AND ES2)

Extra Pay may be awarded for the completion of work which is outside the scope of the staff member's job classification, is not performed on a continuing basis or during the regular work schedule of the staff member, and, typically, is not for the staff member's supervisor. Extra Pay must be approved by the Compensation Office before it is communicated to the staff member. These payments are processed on an "Additional Pay Form" using the code ESH or ES2.

The staff member must receive approval from his/her supervisor prior to performing work for another department/school/center.

ESH earnings are for extra services performed by non-exempt (weekly and hourly-paid) staff. Hours worked in the performance of this work must be specified for each pay period on the “Additional Pay Form Worksheet”. Such hours and payments are included in the calculation of the regular rate of pay used to calculate overtime pay.

ES2 earnings are for extra services performed by monthly-paid staff.

305.3 BONUSES

Bonuses are special one-time, lump-sum payments made to staff members. Sign-off by DHR/ Compensation is required. They are processed on a “Performance Bonus Pay Form”. The form requires the signature of the Dean, Vice President, Director, Administrative Unit Head, or designee, as defined in the financial approval process of the school or center.

BONUS (BNS)
A bonus is a special one-time, lump-sum payment made to a staff member to reward extraordinary performance. It must be approved by the President, Provost, or EVP and is processed on a “Performance Bonus Pay Form”. The form requires sign-off by the Compensation Office and the Dean, Vice President, Director, Administrative Unit Head, or designee, as defined in the financial approval process of the school or center.

A bonus may be used to reward a staff member’s special efforts and high performance on projects or special assignments. This type of bonus payment is used at the discretion of management to recognize high performance, which results in significant and documented cost reductions, savings or income to the school or center. It may be used to recognize unexpected, self-starting, extraordinary individual accomplishments in support of organizational performance effectiveness occurring outside the boundaries of the expected performance of the staff member’s job.

Bonus amounts should not exceed 5% of the staff member’s salary.

BONUS AWARD PROGRAM (SAL)
The University does not have an on-going year-end bonus program. The decision to include a bonus in the Annual Salary Increase Program and the bonus parameters are reviewed each year and will be announced in the annual Budget Call Letter and Salary Increase Guidelines. Each school or center is responsible for funding the program. These payments should be awarded judiciously and reserved for the most productive and meritorious performance.

INCENTIVE BONUS (ICV)
An incentive bonus is reserved for bonuses established as part of a formal, documented and approved Incentive Bonus Plan. These plans must be developed in consultation with the Compensation Office and approved by the Director of Compensation and the Vice President of Human Resources. Payments of these bonuses are based on performance measured against the written goals and objectives of the Plan.

An incentive bonus may also be used as a retention tool to encourage a key employee to stay through a particular work-cycle or project. It may be paid incrementally. Retention bonuses should not exceed 5% of the staff member’s salary.

All incentive bonus payments for non-exempt (weekly and hourly-paid) staff are non-discretionary and must be included in the calculation of the regular rate of pay for overtime purposes.

Bonuses should not be discussed with the intended recipients until all approvals have been obtained.

NOTE: The department and/or school center is responsible for ensuring and verifying that any staff member recommended for a Bonus has a current performance appraisal or performance letter/memorandum on file with the department or school/center. The performance appraisal or performance letter/memorandum must document the performance and contributions that warrant the bonus. The staff member must have an overall performance rating of “consistently meets” or higher. The “Performance Bonus Pay Form” requires a signature verifying the performance documentation. The Compensation Office will not process any “Performance Bonus Pay Form” without the appropriate signature verifying the performance documentation.

305.4 ON-CALL PAY (ESH and ES2)

On-call pay refers to extra compensation for staff members who are required to be available for emergencies and must respond at unusual hours outside their scheduled work hours. All on-call pay plan designs and rates must be reviewed by the Compensation Office in advance of implementation. These payments are processed on an "Additional Pay Form".

305.5 OVERTIME COMPENSATION

Extra compensation programs cannot be used to compensate non-exempt (weekly and hourly-paid) staff in lieu of overtime pay, i.e. hours worked in excess of forty hours per week. Non-exempt staff are covered by the Fair Labor Standards Act (FLSA) which requires that all non-discretionary pay must be included in the computation of overtime. Non-exempt staff must be paid time and one-half their regular rate of pay for all time worked over 40 in a workweek.

Exempt, monthly-paid staff are not eligible for overtime pay.

305.6 FACULTY AND WORK-STUDY STUDENTS/STUDENT WORKERS

“Additional Pay Forms” for faculty and college work-study students and student workers should not be submitted to the Compensation Office. They should be processed and forwarded directly to the Payroll Department as follows:

FACULTY
Extra payments of $500.00 or greater require the approval of the Dean’s and Provost's Offices; payments of less than $500.00 require approval by the Dean or Director's Office.

WORK-STUDY STUDENTS/STUDENT WORKERS
“Additional Pay Forms” in the amount of $200.00 or greater require approval by the supervisor, the Business Administrator, and the Dean or Director's Office; payments of less that $200.00 require approval by the supervisor and the Business Administrator.

305.7 UNIVERSITY STAFF WHO ARE COVERED BY COLLECTIVE BARGAINING AGREEMENTS

University employees covered by collective bargaining agreements should refer to the appropriate article in their contract.

Applicability: All Regular Staff Members
Cross-reference: Policy 001, Policy 004, Policy 301, Policy 302
Supersedes Policy Number(s): 305 (09/01/1992, 04/01/2001)