Overview
In Washington State, Employers must purchase workers compensation insurance through the Department of Labor & Industries. The coverage rate is determined by risk classification and other company factors. A rate notice is normally provided when a company registers with the department. The amount remitted quarterly is the total rate multiplied by the number of Employee hours. For more information, visit www.lni.wa.gov.
Employers generally choose to collect a portion of the amount due from the Employee's paychecks. The amount that is allowed by law to be deducted is one-half the Medical Aid Fund rate, Stay at Work rate and Supplemental Pension Fund assessment. Washington L&I is reported based upon the employee's primary work site and is tied to the state unemployment compensation code.
Information Needed
- Risk Class Codes
- Risk Classifications
- Premium Rates
- L&I Account ID
Tip: You can use this search tool to help you find risk classes and subclasses, as defined in the Washington Administrative Code WAC296-17A.
Setup of Washington L&I Disability Tax Codes in WinTeam
- Open the Payroll module, and then click Taxes.
- In the Government Type field, select Disability.
- In the toolbar, click the new icon.
- In the Description field, enter WA L&I.
- In the State Code field, enter WA.
- In the Associated State UC field, select WA UC.
- In the Calculation Method area, select Shared, and in the Paycheck Description field enter WA L&I.
- Enter the employee's percentage in the Employee’s Pct Share field—the employer's portion is automatically entered.
- In the Liability GL Number field, enter the general ledger account number to which this deduction posts.
- In the Expense GL Number field, enter the expense general ledger account number to which the employer’s portion posts.
- Make sure the Deduct 401K Withholding From Taxable Earnings check box is cleared.
- In the Report Information area, clear the Include On W-2 check box. Typically, Washington labor and industry deductions are not included on the W-2 form.
- Enter the Formula Reference Code—the format must start with WALI, followed by the four-digit class risk code and two-digit risk subcategory (for example WALI490400).
- On the Status and Rates tab, in the Tax Year column of the grid enter the tax year, and in the Status column select All Statuses.
- Click the Formula button, and then enter the tax formula information.
- Click the Table button and then enter the tax rate for the company as a percentage which is the tax rate dollar amount divided by 100.
Tip: Set up each risk classification using a unique description such as WA L&I Clerical, WA L&I Janitorial, WA L&I Security Guard.
Note: A Formula Reference Code is required for ADP tax filing.
Tip: You can use the following table to copy the expressions and paste them into the tax formula dialog box in WinTeam. Copying and pasting can help you avoid entry errors that will cause the formula to fail. However, it is important that you verify the withholding percentage amounts with the agency because these values can change each tax year.
| Line | Result | Expression | Comments |
|---|---|---|---|
| 10 | A | GetHours() | The GetHours() function looks at hours worked |
| 20 | B | lif([A]<=0,0,GetRatesByCompany()) | Finds the rate set up for the employee's company |
| 30 | Tax | [A]*[B]*100 | Hours Worked x Rate = Tax Calculation x 100 |
Note:
There are two ways to set up Line 10 of the formula depending on how your company handles tax calculations for salaried employees. Assumed hours are always used for employees with a pay type of Other Comp. No WA L&I tax is calculated for employees with a pay type of hourly or salaried who are issued a separate paycheck for Other Compensation.
1. Use Actual Hours—Line 10 of the formula should be GetHours()
Use this method if you track hours for salaried employees through Timekeeping. Any timekeeping hours that exist for a salaried employee are used to calculate the WA L&I tax. If no timekeeping hours are found during the pay period, then assumed hours are used.
2. Use Assumed Hours—Line 10 of the formula should be GetHourlyHours1920()
Ignores any existing timekeeping hours for a salaried employee and uses the assumed hours.
| Pay Frequency | Assumed Hours |
|---|---|
| Assumed hours vary depending on the pay frequency of the employee. | |
| Annual | 1920 |
| Monthly | 160 |
| Semi-monthly | 80 |
| Bi-weekly | 73.85 |
| Weekly | 36.92 |
| Daily | 7.38 |
Example: If the tax rate is $14.75 enter 0.1475%
To enter this tax code into the Employee Master File, do the following:
- Open either the Human Resources module or the Payroll module, and then click Employee Master File.
- Locate the record for the eligible employee, and then click the Tax Info tab.
- Select WAUC in the Work Site State for UC Tax field.
- In the Local 1, Local 2, or Local 3 fields, select WA L&I.
- In the Filing Status field, select All Statuses.
- In the Number of Allowances field, enter 0.
Note: The number of allowances does not affect this deduction calculation. Enter a zero because it is a required field.
Balancing and Reporting
The Washington L&I premiums based upon hours worked including overtime. Leave hours (Sick, Vacation and Holiday) are not counted, even if paid. Any Hours Type marked as vacation, sick or holiday in SYS: Hours Types Defaults will be excluded from the tax calculation in payroll processing. The total hours sent through in the ADP Quarterly Tax file will also exclude these hours.
The amount due and the number of hours are reported each quarter.
The Timekeeping and Employee W-2 reports can be used to verify hours and total WA L&I tax calculated for the period or the quarter. Tax Adjustments can impact reported totals because the tax is based upon Hours. If tax adjustments are processed within the quarter, we recommend you review closely.
Note: For ADP Tax Filing Clients, if tax adjustments have been made, hours may need to be adjusted in the Quarterly transporter file before transmitting them to ADP. For assistance, contact TEAM Client Services by phone at 800-500-4499 or by email at supportstaff@teamsoftware.com.
