A wizard has been created that will assist you in setting up general ledger accounts, worker’s comp table entries, wage types, and leave definitions.
Before using this wizard, you will need to perform 2 or 3 steps:
- If you are a farm labor contractor, set up a grower account to enter Covid-19 paid leave wages on.
- Create at least one Cost Center or Crop ID for Covid-19 paid leave.
- Create at least one Job/Phase Code for Covid-19 paid leave.
Grower/Crop ID/Job ID Setup for Labor Contractors
Covid-19 Paid Leave wages, federal taxes, and qualified health care plan expenses are funded by the federal government. You don’t need to charge your grower for these costs. We recommend setting up a grower account to charge all Covid-19 Paid Leave wages to. It can be as simple as the following example:
Grower/Crop ID/Job ID Setup for Labor Contractors
Next set up a Crop ID for Covid-19 wages:
Make sure you enter the grower account that you set up for the paid leave wages in the Grow # column.
Finally, set up one or more Job ID’s for the Covid-19 paid leave. Here is an example:
How many job codes you set up is up to you. In this example, we set up a separate job code for each of the six reasons employees can use the Emergency Paid Sick Leave, as well as a separate code for the Emergency Family Medical Leave. Doing this will allow you to see what type of leave and what reason the employee took the leave by the codes used on the checks.
You might also only set up two different codes, one for the Emergency Paid Sick Leave and one for the Emergency Family Medical Leave. Or you might set up two codes, one for leave paid at 100% of the employee’s regular rate of pay and one for leave paid at 66% of the employee’s regular rate of pay.
Cost Center/Job Code Setup for Growers
Growers can set up cost centers and job codes to track Covid-19 paid leave. The process is similar to the instructions above for labor contractors, the only difference is the windows used to set up the entries.
One or more cost centers can be set up:
You may want to set up different cost centers for cost accounting purposes. For instance, you might want to have different overhead cost centers with different allocations. Or if you want to track Emergency Sick Pay Leave separately from the Emergency Family Medical Leave, you could set up two cost centers.
One or more Job/Phase codes should also be set up:
Final Set Up
In addition to the entries described above, wage types, general ledger accounts, worker’s comp table entries, and leave definitions must be set up. A wizard has been provided to automate most of this work for you. To use the wizard, go to the Payroll > Setup > Covid-19 Paid Leave Setup Wizard on the main menu. Click on the Next button on the Introduction page:
The program will find two unused general account numbers to use for Covid-19 paid leave wages and tax credits. A default description will be provided for each account which you can change if you like. If you want to enter a different G/L account number that is not currently in use, you can override the number selected by the program. Click on the Next button when done.
The next page will show the wage type codes and descriptions proposed for paying Covid-19 paid leave. If you have already created a wage type to use for Covid-19 related leave, you can click on the Use Existing option and select the wage type that you have already created.
The top wage type is only for use in paying Covid-19 Paid Leave. This wage type will be set up so that wages entered under it are not taxable for employer social security taxes.
The bottom wage type may be used if your company offers paid leave that is separate from existing sick pay, vacation pay, PTO, and the Covid-19 paid leave. This might be used in cases where your company is exempt from the Covid-19 paid leave requirement but you want to offer employees your own paid leave option.
When creating new wage types, you can change the codes and descriptions as long as the code that you enter has not already been used (for example, you can’t enter “CO” for the Covid-19 paid leave code because that is already used by the Commission wage type).
Click on the Next button to proceed.
The next page will let you select the Crop ID(s)/cost center(s) that you have set up specifically to use when paying Covid-19 paid leave. Enter each ID and then click on the Add button to add it to the list. Click on the Next button after all ID’s have been added to the list.
On this page, select all of the Job ID’s that you will use in paying Covid-19 paid leave. This operates the same way as the previous page. Enter the Job ID and click Add to add the code to the list. When you are done adding the ID’s to the list, click on the Next button.
The final page will display a summary of the actions to be performed. After reviewing this, click on the Finish button to complete the wizard and performed the actions listed.
When you select the option to use and existing wage type for your Covid-19 paid leave wages, the program will look for any checks issued form 4/1/20 on that have used that wage type. If it finds any, it will automatically run the Payroll Audit to adjust the total employer social security wages. Depending on the number of employees and checks you have so far this year, this process could take several minutes.
If you have updated any Payroll Journals with those wages, you will need to unfinalize those journals are refinalize them. When the Payroll Journal is refinalized, it will recalculate the employer portion of the social security tax, exempting the Covid-19 Paid Leave wages from this calculation.
Detailed instructions on unfinalizing/refinalizing payroll journals will be provided in a future blog post.
After the wizard has completed, it will open the Leave Type Setup Window:
This table is created automatically by the wizard, and defines the codes used by paid leave wages and identifies what type of wages they are. The first column is a generic description generated by the wizard. You can change this description as you like.
The second column defines what type of paid leave the wages are as well as the reason that the paid leave was taken. The options are EPSL (Emergency Paid Sick Leave) followed by the numbers 1-6, corresponding to the six reasons Covid-19 paid sick leave may be taken (see IRS FAQ #20). Other options include “FMLA+” (Expanded FMLA Paid Emergency Leave for child care), “FMLA (Unpaid)” and “Other”.
By default, all entries are created with “EPSL 1” as the Leave Type. If you have created different job codes for different leave type reasons, you may change the Leave Type for each entry.
At this time, we do not know what reporting requirements will be for Covid-19 Paid Leave reporting. If the IRS will require an employee detail report listing the reason, hours, and wages paid for each employee, having separate job codes as shown above will allow the program to identify the reason for the leave and type of leave taken from the information entered on the check. It is up to you to decide how to structure your cost center/job codes used for Covid-19 paid leave.
Do not adjust the Wage Type, G/L #, Cost ID or Job ID in the tables.
Now that the setup work is completed, you can enter Covid-19 Paid Leave wages. The next blog post will cover this process.