Workers' compensation

Workers' compensation policy

When you set up a WC policy, you enter into the Payroll application the general information about the policy. This includes the policy number, the insurance company that provides WC coverage for the policy, the contact at the insurance company, and the effective dates of the policy.

You also define a policy code that you can select when you set up workers' compensation classes.

For United States WC, you select the policy when you calculate the premiums.

Workers' compensation classes

Workers' compensation classes are used to represent a rate and limit used to calculate WC premiums.

You also associate WC classes with specific information you want Payroll to use when it calculates WC premiums, such as:

• WC policy (U.S. only)

• WC state or province

• Amount of wages on which the WC premium is based

• Annual and monthly limits of accessible wages for WC

You must assign WC classes to job codes or Payroll cannot determine the wages on which to calculate premiums.

How does Payroll calculate workers' compensation premiums?

• Workers' compensation classes determine the specific rates, limits, and additional information used to calculate workers' compensation premiums.

• Job codes determine the wages on which workers' compensation premiums are calculated. Each employee must be assigned a job code with a WC class.

• Company paid WC deduction codes accrue the workers' compensation cost for each employee. Each employee can be assigned a company-paid WC deduction to track the WC cost through General Ledger.

When you run calculate earnings and deductions during your payroll cycle each pay period, the Payroll application determines

• each employee's current pay period wages

• the WC class on the job code assigned to the employee

Using the parameters set up on the WC Class, Payroll calculates the premium for the employee's wages, creates the company paid deduction, and posts the premium to General Ledger.