7shifts Payroll: Custom Earning Codes

What Are Custom Earning Codes?

Custom earning codes allow businesses to categorize different types of employee compensation in 7shifts Payroll. These codes determine how earnings are calculated, taxed, and reported. Employers can create or modify earning codes to match their pay structures, comply with tax laws, and streamline payroll processing.

Why Are Custom Earning Codes Important?

  • Payroll Accuracy – Ensures employees receive correct pay.
  • Tax & Compliance – Helps categorize taxable and non-taxable earnings for payroll tax reporting.
  • Automation & Reporting – Simplifies payroll processing and financial reporting (e.g., W-2, 1099 forms).

Need Help? If you’re unsure which earning codes to use, check with your payroll administrator or accountant for guidance. 


Configuring Custom Earning Codes

To set up custom earning codes in 7shifts Payroll:

  1. Login as an Admin.
  2. Head to Payroll > Settings > General tab.
  3. Click + Add Custom Earning:


Supported Custom Earning Codes: 

Below is a list of earning codes currently supported in 7shifts Payroll:

Custom Earning Code

Description

2% Shareholder BenefitsHealth and accident insurance premiums are paid on behalf of a 2% shareholder. These benefits are taxed differently than regular earnings and are reported in Box 14 of the W-2.
2% Shareholder HSACompany HSA contributions are paid to a 2% shareholder. HSA earnings for 2% shareholders are taxed differently than regular earnings and are reported in Box 14 of the W-2.
BonusPayment made as a bonus to an Employee. Bonus earnings are taxed differently than regular earnings.
Cash TipsTips received in cash by an Employee. Cash tips are taxed normally but are not included in the Employee’s net pay because they’ve already received them. They are not taken into account with any 7shifts tip calculations.
CommissionPayment to an Employee based on commission. Commission earnings are taxed differently than regular earnings.
Group Term LifeThe imputed cost of coverage above $50,000 for Group Term Life (GTL) must be included in income. The total can be calculated using the IRS Premium Table. GTL imputed income amounts are subject to social security and Medicare taxes. Group Term Life is reported in Box 12(code C) of the W-2.
Non-hourly RegularIncome not associated with hours, such as paid leave. This is taxes as regular earnings.
Other ImputedIncome imputed from sources other than group term life insurance. These earnings will be taxed normally. Some examples include the use of a company car or a gym membership.
Paycheck TipsTips that an Employee has not yet received. They are taxed normally and will also be included in the employee net pay because they have not already received them. They are not taken into account with any 7shifts tip pools and calculations.
SeverancePayment to an Employee as a one-time sum at termination. Severance pay is not the same as the payment for final hours worked and is taxed differently than regular earnings.

Not Currently Supported: 

The following earning codes are not currently supported in 7shifts Payroll:

Custom Earning Code

Description

Weighted OvertimeAny weighted overtime pay that a piecework employee makes. Piece overtime is taxed like regular earnings.
Double OvertimeRegular hours worked by hourly employees, excluding overtime.
HourlyHours under the Employer's control, excluding rest and recovery periods, where no work is done or work can’t be completed due to factors beyond an employee's control. Earnings during non-productive hours are taxed like regular earnings.
Non-productiveHours worked by an Employee that count as overtime. Earnings from overtime are taxed like regular earnings.
OvertimeHours worked by an Employee on a holiday. Earnings from paid holidays are taxed like regular earnings.
Paid HolidayWork where Employees are paid a fixed piece rate for each unit produced. Piece earnings are taxed like regular earnings.
PieceWork where Employees are paid a fixed piece rate for each unit produced. Piece earnings are taxed like regular earnings.
Piece AdjustmentAdditional contributions made by an employer to ensure a piece-rate worker meets the minimum wage requirement. Piece adjustments are taxed like regular earnings and require a piece earning.
Paid Time OffAny hours worked by an employee that qualify as double overtime. Earnings from double overtime are taxed in the same way as regular earnings.
Rest and RecoveryUninterrupted breaks where the Employee can’t be required to work but must be compensated for. Earnings during rest and recovery are taxed like regular earnings.
SalariedHours worked by salaried Employees. Although hours may not be tracked, it's recommended to include 40 hours per week.
SickPaid time off during which an Employee was sick. Sick earnings are taxed like regular earnings.
Tip Credit AdjustmentAdditional contributions made by an Employer to ensure a tipped employee meets the minimum wage requirement. Tip credit adjustments are taxed like regular earnings.
Weighted Double OvertimeAny weighted double overtime pay that a piecework employee makes. Piece double overtime is taxed like regular earnings and requires a piece earning.


 

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