Payroll Overview

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Commonwealth Vernacular/Definitions: Agencies: DOA, VRS, DHRM

Systems: BES, PMIS, VNAV, CARS, CIPPS, PAT

Payroll Overview

Payroll Overview

Paying employeesProcessing court ordered withholdingsManagement Review/Audit of payroll

entriesReconciliationsAdjustmentsPreparation of regulatory information

Payroll Overview

Importance of payroll to the agency

• Cost of Personal Services and Fringe Benefits as a percent of total agency expenditures

• Employee morale is affected by payroll administration

• Payroll controls and administration go beyond the system – human interaction is required

Payroll Overview

Importance of Payroll Administration to Agency Fiscal Management

• High exposure area of responsibility

• Opportunity for fraud when internal controls are not applied

• High risk function

• Potential for error or fraud

• Safeguard of Commonwealth assets

Payroll Overview

• Agency Fiscal Management must be the controlling party to ensure the accuracy of payroll and payroll related expenditures.

• Management Review, Establishment of Policy, and Adherence to Procedures are integral controls outside of the system

• Payroll Administration goes beyond payroll processing. Paying employees is only one facet of the responsibilities of Payroll Administration

Payroll Overview

Payroll Administration is comprised of several facets of responsibilities

• Compliance with Federal and State Tax laws and Regulatory reporting

• Compliance with Federal Labor Law for FLSA and Wage and Hour Laws

• Administration of Benefits for employees to include disbursement to the receiving entity

• Accounting of Payroll and Benefit Expenditures in CARS

Payroll Overview

Agency Liability for Non-Compliance with Federal and State Regulations

• Penalties for non-compliance

• Amounts for under-withholding of Garnishments

Payroll Overview

TYPES OF EMPLOYEESSalaried – Classified/Faculty

Automatic-no pay transaction is required to pay the employee

Paid a predetermined amountVirginia Personnel ActThe Comptroller of Virginia establishes the pay dates for

classified employees

...more

Payroll Overview

TYPES OF EMPLOYEES cont.Hourly - Wage-Non Automatic

Pay transaction is required to pay the employee.Paid a predetermined hourly rate for hours worked;Payment is for a prior pay period rather than current;Not entitled to state funded benefits;Limited to 1500 hours in an anniversary year, andAutomatically eligible for overtime.

Payroll Overview

TYPES OF PAYMENTS AND PAYROLL CALCULATIONS

Salary paymentsWage paymentsOvertime payments (FLSA impact)Shift Differential payments ...more

Payroll Overview

TYPES OF PAYMENTS AND PAYROLL CALCULATIONS cont.Special Pays for Supplemental Payments

Any additional money to be paid to an employee:• Moving/Relocation,• Workers Compensation,• Disability Benefits, • Leave Payouts, etc.

Payroll Overview

TYPES OF PAYMENTS AND PAYROLL CALCULATIONS cont.Special Pays for Fringe Benefits

• Imputed Life - Considered a benefit by the Federal government if a “salaried” employee’s annual salary exceeds $25,000

• Company Car

...more

Payroll Overview

WITHHOLDINGS FROM PAY• DeductionsFixed Dollar AmountsPercentages

• Based on Net Pay• Based on Gross Pay• Based on the value of a specific special pay

or a combination of pays

...more

Payroll Overview

WITHHOLDINGS FROM PAY cont.Taxes

Federal Income Tax (FIT)• W-4 Form for withholding• W-4’s claiming exempt status

...more

Payroll Overview

WITHHOLDINGS FROM PAY cont.Taxes

State Income Tax (SIT) Virginia and other states

Reciprocal Taxing ( i.e. Maryland)Local Income Tax Withholding

Payroll Overview

WITHHOLDINGS FROM PAY cont.Taxes

• FIT – Federal Income• FICA (OASDI plus HI)

• OASDI Rate/Limit - 6.2%, up to the established limit stated on the Social Security Administration website (SSA.GOV)

• HI – 1.45% with no limit

Payroll Overview

MANDATORY DEDUCTIONS

Retirement – for salaried employeesHybrid Plan: Deferred Compensation of 1%

Court Ordered DeductionsGarnishmentsTax LeviesChild/Spousal SupportBankruptcyGarnishment Fee

Payroll Overview

VOLUNTARY DEDUCTIONSBenefits/Voluntary DeductionsCombined Virginia CampaignDeferred Compensation/Annuities –Alternative

Retirement Contribution PlansVPEP/VEST-Virginia College Savings PlansParkingFlexible Spending Accounts

Payroll Overview

Deferred Compensation and Annuities

§ Limit on withholdings for an annual period

§ Applicable Tax Exclusion from FIT and SIT

Payroll Overview

Healthcare Different providers available to State employees

Applicable Tax Exclusion

Rates are determined by DHRM

Direct Deposit- RequiredDirect Deposit of a Fixed Amount or aPercentage of Net Pay

Payroll Overview

FRINGE BENEFITS CALCULATED AS AGENCY PAID DEDUCTIONS

Agency paid Health CareGroup Life InsuranceRetiree CreditLong term Disability Insurance Cash Match

Payroll Overview

MONTHLY RECONCILIATIONS/REVIEWS

Tax Profile/Accumulator Reconciliation Healthcare Reconciliation VRS Reconciliation VEC New Hire Reporting

Payroll Overview

QUARTERLY RECONCILIATIONS/REVIEWSQuarterly Certification to DOA – Control Totals

Database IRS – Form 941 - Required Reporting

Reconciliation of Tax Deposits of Wages and Taxes

Unemployment Wage Reporting to VEC

Payroll Overview

ANNUAL RECONCILIATIONS/REVIEWSAnnual Certification of taxable wages and taxes

withheld for W-2 preparationReporting to Department of TaxationReporting to Other States

Payroll Overview

DOA Responsibilities Schedules the processing of all payrolls Performs VA State and Federal regulatory reporting Establishes and controls security to CIPPS and Payline Ensures all certified payrolls are processed by the due date Ensures timely response to agency questions and concerns Provides training to agency personnel Provides on-site assistance when justified Develops and coordinates changes to CIPPS Issues Payroll Bulletins and maintains the CAPP Manual

Payroll Overview

Agency Responsibilities Provides accurate and timely payments of employees Timely entry into PMIS, BES, VNAV, CIPPS Collects and maintains payroll source documents Authorizes and certifies payroll data Establishes internal controls Ensures separation of duties

Payroll Overview

Education:Additional education opportunities are available through other organizations including:

The American Payroll Association (APA)http://www.americanpayroll.org/

Local APA chapters statewide

Certifications for FPC and CPP