EPY: Garnishment exemption amounts can be incorrect with 27/53 pay periods in year (Doc ID 607479.1)

Last updated on APRIL 11, 2024

Applies to:

This document was previously published as Customer Connection Solution 33956

Symptoms

Garnishment exemption amounts incorrect with 27 pay periods (or 53) when based on minimum wage or if using $U Levy rules

1)
Tax Levies and Writs where the system determines that using the minimum wage calculation results in the most favorable exemption calculation for the employee.

Assume current minimum wage of 5.15 / hour. Because there are 27 pay periods in 1998 rather than the usual 26, instead of calculating an exemption of 309.00 bi-weekly, the system takes the bi-weekly amount, multiplies it by 26 (pay periods per year) and then divides by 27 to arrive at the bi-weekly exemption amount for the employee (309.00 x 26= 8,034/27= 297.56). This is not correct because, even though there are 27 pay periods in 1998, each of those pay periods is entitled to 30 hours per week towards the minimum wage exemption calculation.

2)
Tax Levies where the system determines that using exemption and dependent information results in the most favorable exemption calculation for the employee.

For example, for Federal purposes, for an individual claiming a filing status of married filing separately, the monthly exemption is 295.83, with an additional exemption amount per dependent of 225.00 per month. When there are 26 pay periods in the year, this results in a bi-weekly standard exemption of 136.54, and an additional exemption amount per dependent of 103.85. However, in a year where there are 27 pay periods per year, PeopleSoft calculates the standard bi-weekly exemption of 131.48 (295.83 x 12/27=131.48), and the additional exemption amount per dependent as 100.00 (225.00 x 12/27= 100.00). If we have an employee who claims 3 exemptions, this amounts to a total exemption amount of 448.09 when using 26 pay periods per year (136.54 + ( 103.85 x 3) = 448.09), and a total exemption amount of 431.48 when using 27 pay periods per year (131.48 +(100 x 3)= 431.48). This means that in a year where there are 27 pay periods, the system calculates an exemption of 16.61 LESS than it would in a year where there was only 26 pay periods. Again, this is not correct, as each of the 27 pay periods is entitled to the full bi-weekly exemption amount.

Cause

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