Workers Compensation Workers Compensation
Overview
This accounting software easily handles the demands of tracking and reporting Workers Compensation amounts. After defining any number of Workers Compensation codes, state-specific rates can be set up for each code and these codes may be attached to employee records or budgeted cost codes.
During timesheet entry, the system will supply a default Workers Compensation code for each line of timesheet information. It is possible to change the Workers Compensation code or rate at this time or at any time before payroll posting.
When timesheets are posted, the system calculates all applicable Workers Compensation amounts, stores totals in history files, and sends transactions to the general ledger for the Workers Compensation expense and accrued liability. Reports reflect Workers Compensation calculations by employee and in total. These reports may be used for payment of Workers Compensation premiums.
Feature only available in Preferred Edition
Workers Compensation Audit Reports may be printed at any time. These reports read from timesheet detail files and report Workers Compensation information in any one of five different forms depending on the desired information. The user can choose from a reports sorted by Job, by Employee, by State, by Overtime of an Employee or by Overtime on a certain Job.
Expensing Workers Compensation
The first step in setting up Workers Compensation in the accounting system is to instruct the system where to post the expense for Workers Compensation accrued during payroll postings.
Defining Workers Compensation Craft Codes
Workers Compensation craft codes are defined in the Workers Comp. Code Entry program found in the Payroll main menu. The entry screen looks like this:
Entering codes is simple. Press the Insert button and enter the W/C Code and Description for each code. To change a code, highlight the desired code and press the Change button. Enter the W/C Code and Description for each code
Setting Up State-Specific Calculations
Worker’s Compensation varies considerably from state to state in the rate and the way it is calculated. For this reason, Workers Compensation calculation parameters may be set up for individual states in which there are employees working. Contact the state agency that deals with Worker’s Compensation Insurance to obtain the current rates, wage limits and base. This is accomplished through Setup: Payroll Options: State and Local Taxes. The following screen will come into view when the Workers Comp Tab is chosen.
Workers Compensation - Accounts
Indicate the general ledger accounts into which Workers Compensation amounts should be accrued during payroll posting.
Workers Compensation - Wage Limit
The limit is the gross wage at which the employer no longer accrues Workers Compensation.
Workers Compensation - Calculation Method
Indicate the method used to calculate Workers Compensation amounts in this state.
Workers Compensation Rate Table
Now, using the Worker’s Compensation code and rate table, assign an employer rate and an employee rate to each different craft code. The rates normally vary with the type of labor being performed. For companies who do not break down the time into labor categories, the maximum possible rate will apply to all time. Breaking down time into different labor classes makes it possible to save money. Rather than charging everything at the maximum rate, the time can be calculated at a lower rate for a majority of the time. Remember, most states do not have an employee-paid portion. If this is the case, leave the Employee column blank
Assigning Workers Compensation State and Default Craft Code during Employee Record Entry
Each employee must have a Workers Compensation State and should have a Default Workers Compensation Craft assigned in their employee record. These two fields are essential for proper operation of the Timesheet Entry and Payroll Posting programs.
Employee record information is entered through the Employee Record Entry program in the Payroll main menu. Select the Rates tab and the following screen will come into view.
Workers Comp State
Enter the abbreviation of the State under which worker’s compensation is to be calculated for this employee. Ordinarily worker’s compensation will be calculated according to the laws of employee's state of residence; however, some states have formed a compact which allows the employer to pay worker’s compensation to any of the states included in the compact. For example: If the company is based in Utah, and the employee is working in Nevada, worker’s compensation may be paid under either Utah law or Nevada law. Worker’s compensation rate tables are established for each state in the State & Local Tax table. Pressing the lookup button will cause a list of Available States to come into view. Select the correct state and press the OK button.
Workers Comp ID
Enter the default Workers Compensation craft code for this employee or press the lookup button and the Workers Comp Code Setup screen will come into view. This is the craft the employee works at most often. During timesheet entry, the system will automatically use this craft to determine the proper rate. This code may be overridden manually during timesheet entry. Also, this craft may be automatically overridden by a different Workers Compensation code which has been set up in job budget entry
Tying Workers Compensation Craft Codes to Job Cost Codes During Code Dictionary Entry
Workers Compensation craft rates are based on the type of work an employee is performing (not necessarily their job description). Since cost code dictionaries are also frequently broken down into types of work an employee might perform, it is logical that the system should be able to tie a particular Workers Compensation craft to a budgeted cost code.
The accounting system provides this capability through the Code Dictionary Entry and Job Entry programs.
Code Dictionary Entry
After selecting Cost Codes from the Job Costing Main Menu, select the Insert or Change button. The following screen will appear.
This is where cost codes are created and maintained in the code dictionary. As shown above, a Workers Compensation code can be permanently tied to this cost code. This will cause the Job Entry program to use the entered Workers Compensation code in the labor budget entry line by default.
Workers Comp
If a craft code is entered here, it will be used as the default during job budget entry. Enter the code for Workers Comp or press the lookup button and the Workers Comp Codes screen will come into view
Tying Workers Compensation Craft Codes to Job Cost Codes During Job Budget Entry
As mentioned above, a Workers Compensation code can be tied to a job cost code either during Code Dictionary Entry or during Job Budget Entry. When labor costs are being set up through Job Budget Entry, the following screen is accessed through the Job Setup Screen. It is found on the Budget tab by pressing the Insert or Change button.
Workers Comp
This will only be accessible if Labor is chosen for Cost Type. Press the lookup button and the Workers Comp. Code Setup screen will come into view. Enter the worker’s compensation craft code to be associated with this code during timesheet entry. This field will default to the Workers Comp. code associated with this cost code in the Cost Code Dictionary.
Advantages of Tying Workers Compensation Codes to Cost Codes
•Convenience During Timesheet Entry. If the Workers Compensation code is entered here, it will not be required to research and find the proper Workers Compensation code during timesheet entry.
•Detailed Tracking of Varying Workers Compensation. If one employee works on multiple cost codes (with different Workers Compensation codes and rates) during the week, the accounting system will keep track of how many hours the employee worked on each craft code. This information can be accessed later using the Workers Compensation Audit Reports.
•Cost Savings. In using another accounting system, there may have been an employee who worked at multiple crafts during the week, but the system accrued Workers Compensation for the employee at the highest rate he worked on during the week. The accounting system can constantly change an employee’s Workers Compensation accrual to match their actual task. The net result is usually that less Workers Compensation liability is accrued.
Disadvantages of Tying Workers Compensation Codes to Cost Codes
•Some states and/or Workers Compensation insurance carriers do not allow multiple rates to be reported for one employee during the pay period. In these cases, it is not appropriate to tie a Workers Compensation code to the cost code.
Working with Workers Compensation Codes and Rates During Timesheet Entry
As timesheets are entered, the accounting system allows the operator to input a craft code for each set of hours entered. Depending upon the level of setup that has been done, the system will retrieve its default craft code from either the Job Budget file or the Employee Record file. The system always looks in the Job Budget file first. If no Workers Compensation code is found, it will automatically look in the Employee Record file. If no Workers Compensation code is found there either, the field will be left blank.
Regardless of whether the accounting system inserts a craft code by default or not, the craft code can always be changed by entering the desired code manually.
Once the craft code field has been set, the system will look in the employee record to determine the employee’s Workers Compensation State and retrieve the corresponding Workers Compensation rate from the state tax file. The rate field may also be overwritten during entry, although this is not recommended.
Workers Compensation Treatment During Payroll Posting
While timesheets are being posted, the accounting system calculates all Workers Compensation amounts. Several of the payroll posting reports reflect this calculation.
Payroll Earnings Detail Listing
This report breaks down the payroll by individual employee. The Workers Compensation column shows the dollar amount and percentage of accrual for each separate timesheet entry for the employee. The Amount column is totaled at the bottom, indicating the total Workers Compensation accrual for the employee during the posting. In the CR. column under the UNION heading, the report shows the Workers Compensation Craft Rate for each timesheet entry.
Workers Compensation by State and Rate
This report gives totals for the entire posting. Each state is listed with its corresponding Workers Compensation totals by rate.
G/L Summary of Payroll Posting
This report prints at the end of the posting as transactions are written to the General Ledger Transaction file. One credit will be sent to each state’s Workers Compensation Accrued account, while the expenses for Workers Compensation are distributed to the locations specified during payroll Setup.
Paying Workers Compensation Premium Payments Through Accounts Payable Invoice Entry
As timesheets are posted, Workers Compensation Liability is accrued into an account in the liability section of the general ledger. To make premium payments to the Workers Compensation insurance carrier, simply enter an Accounts Payable Invoice for the amount of Workers Compensation to be paid, charging the amount to the Workers Compensation liability account.
Reporting Using Workers Compensation Audit Reports
At any time, the Workers Compensation Audit menu option from the Payroll Report menu may be used to print Workers Compensation information from the timesheet detail files.
Using this option, information can be obtained in five different report formats: Overtime by Employee, Overtime by Job ,Workers Compensation by State, Employee, or Job. It may be a good idea to experiment with these reports to find the format which best suits the operator's needs.
Date Limits for the Workers Compensation Audit by Employee
This particular report is presented by pay period. The accounting system considers one week’s time to be a pay period. It will assume that whatever date was entered as the beginning timesheet date on the limit screen is literally the first day of a pay period. For this reason, make sure to enter the actual beginning date of one of the pay periods into this limit!
As an example, if it is wished to see all the hours for November of 1999, the operator may be tempted to set the date limit as 11/1/99 through 11/30/99. If this is done, the report will assume that 11/1/99, a Monday, was the first day of the pay period. If the pay period actually began on Sunday the 7th, the report will not match the actual postings and may create confusion.