Participating as a Research Subject. POL 05.15.03 for Non-Salary and Deferred Compensation authorizes incentive payments to employees who participate in an approved NCSU research study. Such payments are compensation that is reportable and taxable. Payments may be in the form of cash, processed through the HR System by the department; or, a gift certificate with a specific face value. The value of gift certificates purchased by the department and given to an individual who is an employee must be reported to University Payroll. (Note: Gift cards/certificates should not be purchased using a departmental PCard.)
Teaching Executive Education. POL 05.15.3 also authorizes compensation paid from NCSU-associated entities to faculty who teach in executive education or comparable programs; however, payments in excess of 20% of the faculty member’s base salary (from all sources including supplemental or overload pay that is subject to the 20% overload limit) require approval on a case-by-case basis by the chancellor, on the recommendation of the dean and provost.
Athletics Bonuses. Incentive payments provided to any Athletics employee for reasons including (but not limited to) reaching performance goals such as post-season playoffs or student academic achievement levels, must be approved in advance by the Board of Trustees. The Non-Salary Compensation Form must be completed, approved and submitted prior to payment. (The athletic director and head coaches with contracts are covered by UNC Policy 1100.3 for this type of compensation and therefore, exempt from this policy.)
Any other form of incentive-based compensation beyond base salary for achieving performance or productivity goals, is prohibited unless expressly authorized by the UNC Board of Governors.
Taxability of Payment
Cash incentive payments are entered by the department/college for inclusion in the employee’s paycheck, and are subject to social security (OASDI), Medicare (Fed-Med), federal withholding, and state withholding taxes. In addition, such payments are subject to retirement if paid to a retirement-contributing employee.
The value of non-cash incentive payments (gift certificates) is reportable and included in the taxable grosses for social security, Medicare, federal, and state tax reporting. Social security (OASDI) and Medicare taxes (Fed-Med) are withheld on the paycheck.
Employee: The employee has no reporting responsibility.
College or Department: The college or department is responsible for entering the cash incentive payment into the Time and Labor module of the HR System, using the appropriate earnings/time reporting code (TRC):
- IP1 – IncentPay – Incentive Pay
- AP1 – AthPerfInc – Athl Performance Inc
University Controller’s Office: Non-cash incentive payments must be compiled onto a spreadsheet by the University Controller’s Office and reported to University Payroll by the 5th of each month for the previous month. The spreadsheet should include:
- Employee name
- Employee ID number
- Date the gift certificate was provided
- Dollar value of gift certificate
University Payroll: University Payroll will include incentive payments entered into Time & Labor by departments, as part of the regular payroll processing. The value of gift certificates reported by the University Controller’s Office will be processed in the HR System using the earnings code of GC1.