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 HR Compensation before they are communicated to the staff member.
With the exception of acting rates, 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). An acting rate is a temporary increase to base pay, not supplemental pay, and therefore is included in the Tax Deferred Retirement Plan (TDR).
Extra compensation pay must meet the criteria outlined below.
305.1 ADDITIONAL PAY PRE-WORK APPROVAL
Payments for Extra Services, Wharton Executive Education, and Allowances for exempt and non-exempt staff are types of Extra Compensation that need to be submitted for approval (via the PennWorks Additional Pay request process) before work begins and the rate is communicated to the employee. This will ensure that the compensation is appropriate and conforms to University guidelines.
305.2 ACTING RATES
Acting Rates may be awarded to 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 must be approved by the Compensation Office and are entered directly into PennWorks 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 approved by the Compensation Office before work begins and the rate is communicated to the employee. Acting Rates for non-exempt employees are paid via the PennWorks Additional Pay module. This module can be found in the PennWorks application. The amount of the acting rate is included in the calculation of the regular rate of pay for overtime purposes.
305.3 EXTRA PAY
Extra Pay may be awarded for the completion of work that is outside the scope of the staff member's job classification, is not performed on a continuing basis or during the staff member’s regular work schedule, and, typically, is not for the staff member's supervisor. Extra Pay must be requested and approved by the payee’s supervisor, Home School/Center approvers, Central Human Resources and Paying Organization prior to performing work for any Department/School/Center and before anything is communicated to the staff member performing the work. Extra Pay is requested and approved via the Additional Pay module found in the PennWorks application. The original requester later confirms the completion of work, and the Paying Organization completes the payment details via PennWorks. Earnings for extra services performed by non-exempt (weekly and hourly-paid) staff must be specified for each pay period on the Additional Pay Form Worksheet. This worksheet must be attached with the Additional Pay request after the work is completed. Such hours and payments are included in the calculation of the regular rate of pay used to calculate overtime pay.
Access administrators are responsible for maintaining the approver hierarchy online for Additional Pay requests. To view the list of PennWorks Additional Pay Access Administrators for each School and Center, click here.
Bonuses are special one-time, lump-sum payments made to staff members. Depending upon the type of bonus, supporting documentation will be required to be attached with the Additional Pay request. Bonuses are processed via the PennWorks Additional Pay module. This module can be found in the PennWorks application.
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.
A bonus is a special one-time, lump-sum payment made to a staff member to reward extraordinary performance. It must be pre-approved by the President, Provost, or EVP or their designee and is processed via the PennWorks Additional Pay module. This module can be found in the PennWorks application. Approval of the Dean, Vice President, Director, Administrative Unit Head, or designee, as defined in the financial approval process of the School or Center will be required to be attached with the Additional Pay request.
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 that 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.
Bonuses should not be discussed with the intended recipients until all approvals have been obtained.
BONUS AWARD PROGRAM
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 its program. These payments should be awarded judiciously and reserved for the most productive and meritorious performance. They are processed via the PennWorks Additional Pay module. This module can be found in the PennWorks application.
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.
Incentive Bonuses are processed via the PennWorks Additional Pay module. This module can be found in the PennWorks application. Supporting documentation must be attached outlining the incentive or retention plan.
Allowance should be used for reimbursement of expenses for travel, relocation or required education. Documentation such as receipts, bills, or a reimbursement form is required to substantiate expenses.
Allowances must be approved in advance through the Additional Pay request process prior to communication to the staff member. After expenses are incurred and documentation is ready to submit, the original requester confirms the payment details and the Paying Organization completes them via the PennWorks application.
305.6 ON-CALL PAY
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 for exempt employees via the PennWorks Additional Pay module by selecting Extra Services Additional Pay type. Non-exempt employees are processed via On-Line Time Reporting using earnings type CLL (on-call differential). This module can be found in the PennWorks application.
305.7 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.
305.8 FACULTY AND WORK-STUDY STUDENTS/STUDENT WORKERS
Additional pay for faculty and student workers should be submitted via the PennWorks Additional Pay module. This module can be found in the PennWorks application. Faculty additional pay will be routed through the Provost's Office, and student worker additional pay will be routed through Human Resources.
WORK-STUDY STUDENTS/STUDENT WORKERS
Extra services cannot be paid for using the college work-study job class code. However, a student can receive extra services using the student worker job class code.
305.9 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.
Policy Number: 305
Effective Date: 08/25/2016
Supersedes Policy Number(s): 305 (09/01/1992, 04/01/2001, 01/24/2008, 02/21/2011, 08/02/2012, 07/25/2016)
Applicability: All Regular Staff Members
Cross-reference: Policy 001, Policy 004, Policy 301, Policy 302