Setting Up Worker's Comp.

Setting up Worker's Compensation

The CCS Payroll program, provides several very powerful features for calculating and reporting of Worker's Compensation. There are basically three different methods for setting up Worker's Compensation to handle single rate companies, craft (skill) only based calculations and departmental-craft based calculations. These methods are described in complete detail below:

If you have a single rate of Worker's compensation for all employees in your company, simply edit code 94, and enter the rate in the Amount field of this code, click the Global check box and save the Code. When you create checks, this code will be present on all employee checks, and calculated at the rate you have entered. You can then print reports (See the Worker's Compensation report under end of month reports.) and pay this liability via the disbursements screen. (Be sure to enter your banking information if you wish to disburse this payment.) The proper category for a Worker's compensation code is "W", this indicates that this is an Employer tax of the category Worker's Compensation. If the employee makes a contribution to this tax, please see the section below on setting up the Employee portion of Worker's Comp.

Muti-rate Worker's compensation can be setup in one of two ways: Department-Craft based, or Craft only based.

We will describe the Craft only based setup 1st:

Worker's compensation is based on the type of work an employee performs. Different types of trades and professions, require different rates. In the CCS Payroll, an employee's trade or profession is entered via the use of Craft codes. Craft codes can be assigned Worker's compensation numbers. (Often called "Class" by insurance providers), each of these rate "Classes" can and often do have a different rate. Please do not confuse the CCS Class codes, which are payrate classifications with Worker's compensation Class codes, which are handled via Craft codes in CCS. The Worker's compensation code you enter into a Craft, determines which Deduction code (In the Earning and Deductions form) will be used for calculation of the Worker's compensation on each paycheck.

For example: If an Employee works in a fruit orchard, you would setup a Craft code for this craft, and a deduction code for the rate, then enter the applicable Worker's compensation code in the craft code and deductions codes you created. This craft code will then link to the appropriate deduction code, based on the Worker's compensation # of the craft form and the WComp field of the deduction code. Please see the image below.

In the above example, craft code 400, links to deduction code 860. These numbers are not important, and you may use any available numbers you choose. It is generally recommended that deduction codes are in the range of 500-999, for organization purposes only. The values that setup the link are the two entries of "4803" in the Craft code and the Deduction code. This relationship, causes anyone assigned to craft 400 (via the Employee assignment tab), to have Worker's compensation calculated based on deduction code 860, in this case at 46 cents per hour. (Worker's comp. can be calculated based on hours or dollars)

Note: The WComp field in the deduction code is only visible when the code you are adding or editing is a Worker's Compensation code (or links to a Worker's compensation code.)

Departmental based Worker's Compensation:

What if; however, the same employee works in two or more Worker's compensation rates from time to time, or even in the same pay period? You will then need to setup, department-craft based Worker's compensation.

The above image, depicts a Department (See the Department form) to Craft link for Department 400 to Craft 400. (These two numbers did not have to be the same.). This relationship tells the CCS Paycheck and reporting routines, that anyone assigned to department 400 will have Worker's compensation calculated based on the craft code of 400, which is handled by deduction code 860.

Multiple Worker's compensation per pay period is fully supported, when you use the "Multiple dept. on Paycheck mode". In this mode, each earning you enter in the paychecks detail area, can be entered using a different department. When this occurs, the CCS Payroll Paycheck calculation routines, will analyze the relationships between departments, crafts and Worker's compensation codes, and if necessary add the appropriate Worker's compensation deduction code to the paychecks list of deductions (on the fly), and calculate each Worker's compensation code on the Paycheck based only the department they are associated with. Note: This automatic calculation and inclusion logic requires that you either click the global check box for code 94 (The company level Worker's Comp. code) or assign code 94 to those employees who will have Worker's compensation. If code 94 is not assigned to an employee either globally or directly, no automatic Worker's compensation relationships will be processed during Paycheck generation. When code 94 is assigned, it will be replaced on the Paycheck by the most appropriate Worker's compensation code based on your current setup, of department->craft-> deduction code links.

Setting up an Employee portion of Worker's Compensation:

When an Employee is required to pay a portion of the Worker's compensation tax (Washington L & I for instance has an employee and employer tax) you will need to create a deduction code representing the employee portion of the tax, then use the Links to Code field in the deduction code to link this employee portion to the employer portion. When you link any deduction code to a Worker's Compensation code, the WComp field of the code will be inherited from the code you are linking to. (This value will be entered for you when you close the deduction dialog, or click the Update All button). Once these codes are linked, they will be added together on the Worker's Compensation report, as well as any applicable state forms that report on Worker's compensation. Any departmental or craft based WComp logic that applies to the Employer side will apply to the employee portion due to this link.

Below is continuation of the examples earlier, that incorporates the employee portion of the Worker's compensation for "Class" 4803.

The image above depicts a deduction code (code 861) for the employee portion of the Washington L & I tax for employees working in a Fruit orchard. It is an employee deduction; however, will be calculated in the same manner as a Worker's compensation because it links to a Worker's compensation code (code 860) Note the entry in the Links with Code. Since this code links with a category 'W' (Worker's Compensation Code) it inherits the WComp number from the code it links to, which in this case is code 860, having a WComp. Number of 4803. All codes that have the same WComp number are summed together when printed on the Worker's Compensation reports.

Multi-State W/Compensation Setup:

If your Company will be paying Worker's Compensation to more than one state, or your rates are based on tables from more than one state. Then you will need to setup WComp. codes for each state. Below are the steps involved to automate the handling of multi-state WComp.

Setup a Company Level Workers Compensation Code for each state.

Link each of these codes to the state's Suta code: -- See image below:

Note: We have defined several Company level state specific Worker's Compensation codes (94) .

Each of these codes links to to the applicable state Suta code.

Their rates are zero, and the "W/Comp" field is also zero. This code is used only to establish the link to the proper state (we'll explain below).

Next, add 'W' category codes for each of your classes for each of your states, that are applicable to your company: See Image below:

Notice how this WComp. code for this code (WComp 3830), links to the "AL Workers Comp. (code 94). You could also have a WComp 3830 for another state as well.

When you link a "W" category code to a code 94, that code inherits the State from the code 94 it links to (this is done when you click update all or close the dialog). This code is then applicable to that state (Alabama in this case) only.

So how does the program know what WComp to use:

Based on the links we have setup, the Paycheck generation process performs the following:

1) When the Suta code is brought into the paycheck (by the default codes logic), it will cause the state specific code 94 to be selected as well.

2) The program will the replace the code 94, with the correct 'W' category code based on the department, craft logic you have setup in the same manner as described in the top of this document.

Note: When you setup WComp in this manner, you should not assign the WComp codes to any employee, either directly or globally (do not check the global check box for any of your WComp codes.) The WComp. codes will be included onto the paycheck via the link to the Suta code. The exception will be if you need to process Worker's Compensation for an employee who is not subject to Suta. In this case, simply assign the generic code 94 to the employee via their deduction pick list.