Updated: 04/20/23

Understanding and Setting up Workers

Compensation

Updated: 04/20/23

Workers Compensation is payment by the employer and employee in some states for some part of the cost of

injuries received by employees in the course of their work.

Workers Compensation

Updated: 04/20/23

Worker Compensation Overview

• How much workers compensation you owe depends on the arrangement you have with your insurance

carrier. Some insurance carriers ask you to pay periodic payments of the actual amount of insurance

you have accrued, based on wages paid or hours worked. Other carriers ask you to pay an estimated

amount; then, at the end of the year, they perform a reconciliation to determine whether you've paid the

appropriate amount, compared to the actual accruals. Payment schedules also vary. Some

insurance companies ask you to pay every month. Others arrange a different schedule with you.

Updated: 04/20/23

•From the Edit menu, Select Preferences.•Click the Payroll & Employee Icon.•Click on the Company Preference Tab.

Turning on Workers Comp

Updated: 04/20/23

Workers Comp Preferences

• Select Track Workers Comp.

•Options:• Display message to assign codes give a warning.• Exclude overtime premium from Workers Comp calculation, excludes the overtime premium.

Updated: 04/20/23

Workers Comp Payroll Item

• When Workers Compensation is turned on a payroll item is create for Workers Compensation.

Updated: 04/20/23

Entering New Workers Compensation Code

• From the List Menu, select Workers Comp List.• Click on the Workers Compensation Code button.• Enter the Workers Compensation Code.• Enter a Description.• Enter a Rate. The rate should be entered per

$100.00 of gross wages. • Enter a date for the Start using rate on.

Updated: 04/20/23

Experience Modification Factor

• Some insurance companies assign you an experience modification factor to use when you calculate your workers compensation premiums. This rate is based on your company's record of workers compensation claims. The better your track record, the lower your rate (or at least the fewer increases), which sometimes results in a discount on your workers compensation premiums. The more claims you have, the higher your rate, which sometimes results in a higher premium.

Updated: 04/20/23

Enter Experience Modification Factor

• QuickBooks supports one Experience Modification Factor.

• If the client has no Experience Modification Factor then enter 100.0%

Note: If the Experience Modification Factor is left blank QuickBooks will not calculate Workers Compensaton. KB 1007577

10 Updated: 04/20/23

Worker Comp Code List

11 Updated: 04/20/23

Assigning Workers Compensation Code in Employee Record

• Edit the Employee.• In the Change Tabs: select Workers Compensation• Enter the Workers Comp Code in Assign Workers

Comp Code.• If the Employee is exempt select “Exempt” from

the menu.

Updated: 04/20/23

How Workers Compensation is Calculated

Hourly Wages X Total Hours = WagesWages X Workers Comp rate = Workers Comp

Workers Comp X Experience Mode = Workers Comp Amount

14.50 X 48 = 696.00 X .1755 = 122.15 X .81 = 98.94

Updated: 04/20/23

Paycheck with Workers Compensation

Updated: 04/20/23

Editing Experience Modification Factor

• From the List Menu, Select Workers Comp Code List.• Click on the Experience Modification Button and

select edit.

Updated: 04/20/23

Editing the Experience Modification Continues

• In the New Experience Modification Factor enter the new rate.

• Enter a date for the Start using rate on and click Okay.

• Click Ok.

Updated: 04/20/23

Workers Compensation Summary

• From the Report menu, select Employees and Payroll and then Workers Compensation Summary or Workers Compensation Detail.

Updated: 04/20/23

Calculating Washington (WA) Workers compensation

• By product design, the QuickBooks Workers Compensation feature (that works with either the Enhanced or Assisted Payroll service) calculates workers compensation based on wages earned. Some States requires that workers compensation is calculated based on the number of hours worked.

• KB 1000660 Washington Is one of these States

• The State of Washington has several different L&I rates.

Updated: 04/20/23

Setting up Payroll Items for WA Workers Compensation

• The first item is an Hourly wage compensation item.

• The second item is a Company Contribution, Tax Tracking set to none and calculated based on hours.

• The third item is a Deduction, with W2 tax tracking set to "none” and calculated based on hours and Gross Pay. (This payroll item is setup if part of the workers compensation is being paid by the employee.)

Updated: 04/20/23

Payroll Item List

Updated: 04/20/23

Add the Payroll Items to the Employee Defaults

• In the Payroll & Compensation Info tab for each employee record, add the Earnings, Company Contribution and Deductions payroll items.

Updated: 04/20/23

Creating paycheck with multiple Workers Compensation Rates.

• When you create paychecks, the hours will then track to the payroll items. If an employee works multiple jobs with different workers compensation rates, select the payroll items for each rate and then input the hours for each rate in the other payroll items manually, distributing the total hours into the separate workers compensation rates.

• Important: You must carefully match the workers compensation code payroll items to the matching company contribution and deductions payroll items on the paycheck.

Updated: 04/20/23

Creating a Paycheck with Washington Workers Compensation

Updated: 04/20/23

Payroll Summary Report

• From the Report Menu, select Employees and Payroll.• Click on Payroll Summary.• Click on Modify Report• Enter the correct Date range.• In the Display Columns by Select Total Only.• Click on the Filter Tab.• Under the Filter select Payroll Items.• Select Multi Items.• Check all the payroll items associated with the worker

compensation, include the earning items, company contribution and deduction items.

Updated: 04/20/23