Defining workers' compensation deductions

Workers' compensation (WC) deductions allow you to accrue the workers' compensation cost for each employee. Each employee must be assigned a company-paid WC deduction. Workers' compensation deduction codes are one element in WC setup. To calculate WC premiums you must also setup WC classes and WC plans.

See Setting up workers' compensation.

Note: Before you define workers' compensation deduction codes, you must define deduction required codes.

See Defining deduction required codes.

Define workers' compensation deductions

  1. Access Deduction (PR05.1).
  2. Define deduction code and description. Use these guidelines to specify the field values:
    Deduction

    The code that represents the deduction.

    (Description)

    The description of the deduction.

    Payment Description

    The description of this deduction that prints on payments.

    Note: If you assign a deduction class to this deduction code, then the payment description on the deduction class overrides this payment description.
  3. Select how you want Payroll to calculate the deduction in the Calculation Type field.
    If the deduction is a Select
    Percent of employee gross pay Percent.
    Flat amount to be deducted Flat Amount.
    Flat amount multiplied by the number of hours worked Amount per Hour.
    User defined calculation User Exit.
  4. Define pay information. Use these guidelines to specify the field values:
    Pay Class

    Determines if you want the application to calculate the deduction on pay associated with a specific pay class.

    Note: Use a pay class that includes All Hours Worked.
    Amount or Percent

    Specify an amount or percent. The type that you select in the Calculation Type field determines if the system considers the value that you specify an amount or a percent.

    Currency

    Determines the currency that you want Payroll to use to calculate the deduction.

    If the company uses one currency, then the company currency is set as default in this field.

    If the company uses multiple currencies, the process level currency is set as default in this field.

    Note: The employee currency and deduction currency must match for you to be able to assign the deduction to the employee.
  5. Select Company Paid in the Adjust Pay field.
  6. If you want to include this deduction in a deduction class, then select the deduction class in the Deduction Class field.
  7. Define deduction processing options. Use these guidelines to specify the field values:
    Priority

    The number that represents the order in which Payroll takes the deduction within the category of other deductions.

    Cycles

    Determines the currency that you want Payroll to use to calculate the deduction.

    If the company uses one currency, then the company currency is set as default in this field.

    If the company uses multiple currencies, then the process level currency is set as default in this field.

    Note: The employee currency and deduction currency must match for you to be able to assign the deduction to the employee.
  8. If you want Payroll to automatically assign this deduction to certain employees, then select the deduction required code in the Required Code field.
    Note: When you calculate earnings and deductions, Payroll verifies the effective date to ensure that it must take the deduction.
  9. Specify the beginning date or the date range that the deduction is in effect in the Effective Date fields.
  10. Specify the accrual account for the deduction in the Accrual Account field.
  11. If you want to override the accounts defined at the HR Company level, then select accounts for the deduction in the Expense Account field.
  12. If you use the Project Accounting application, then you must define activity options. Use these guidelines to specify the field values:
    Activity

    The activity to which Payroll associates any deduction expenses.

    Account Category

    The activity category to which Payroll associates any deduction expenses.

  13. Select Yes in the WC Rate Table field to indicate that this deduction is based on a workers' compensation premium rate table.
  14. Define deduction limits. Use these guidelines to specify the field values:
    Monthly Limit

    The maximum amount Payroll can deduct for this deduction in one month.

    Payment Limit

    The maximum amount Payroll can deduct for this deduction in one payment.

  15. If you use the Accounts Payable application, then define AP options. Use these guidelines to specify the field values:
    Update Accounts Payable

    Select whether or not to create invoices for payroll-related payables when you close Payroll.

    Create Invoice by Employee

    Select whether or not to create AP invoices by employee.

    See your Accounts Payable User Guide.

    Vendor

    The vendor that you want to use to create accounts payable invoices for this deduction.

    Note: Click Addl Vendors to define vendors and process level combinations for this deduction.
    Remit To

    Remit To identifies a vendor location where payments are to be remitted. This field populates the Remit-To-Code on AP invoice records (AP20.1) via the AP interface.

    If you use this field, then the payment address comes from Vendor Location (AP10.2). If this field is left blank, then the payment address defaults from Vendor (AP10.1).

    Remit To can be defined for:

    • An individual garnishment on US Employee Garnishment (PR26.1) or Canada Employee Garnishment (PR47.1)

    • An individual process level override within deduction on Additional Vendors (PR05.3).

    • An entire deduction on Deduction (PR05.1).

      If you use this field, then you must also select a vendor in the Vendor field.

Related reports and inquiries

To Use
List deductions Deduction Listing (PR205)
Related topics