HOW TO SPLIT PAYROLL IF AN EMPLOYEE DOES MORE THAN ONE JOB?
It’s possible to have an employee do multiple jobs and have their payroll put into multiple class codes. This is usually in the best interest of the company as it will result in a lower workers compensation premium. When an employer doesn’t have adequate record keeping to allow for a payroll split, usually the employee’s payroll will get placed into the highest rated class which can cost a company extra money on their workers compensation premium.
The splitting of payroll is commonly called Labor Interchange or Interchange of labor. There are certain rules regarding Interchange of Labor that will be discussed below.
In our first example let’s say you own a residential construction company. Depending on the day and the type of job your employee may do the following duties: carpentry, concrete layer and a roofer. In this scenario all of the payroll could be split between the three classes. In order to split the payroll it’s important to have proper recordkeeping. Rules do not allow for a business at audit time to estimate a percentage of time an employee did something. What the rules do allow for is on a daily or weekly basis for an employer to separate payroll. If an employer and employee were to keep track on a regular basis they could split the payroll. This can be done by job or notes on the time card. Let’s say Joe Employee spent two days preparing and pouring a driveway and then three days framing a house. Their weekly time card could should 8 hours on Monday and Tuesday under the concrete class code and on Wednesday, Thursday and Friday in the carpentry class code.
The problem with splitting payroll is when you have an employee who’s payroll is classified in one of the Standard Exception Codes.
Standard Exception Codes
There are 4 codes called the Standard Exception Codes where payroll is not available for division.
- 8810 – Clerical Office
- 8871 – Clerical Telecommuter
- 8742 – Sales Persons
- 8871 – Automobile Salespersons
In these scenarios an auditor is not going to allow the payroll to be split for this individual between clerical and any other classification. So let’s say your company is a delivery service where you have dispatch, drivers, and a repair service. An auditor will allow the payroll to be split between Driver and Auto Maintenance but not between clerical and maintenance.
The class code for a driver is 7382 and for auto maintenance is 8385. Please note that your payroll recordkeeping when splitting class codes on an employee has to be in actual dollars and cannot be a guesstimate. If they could clock in separate or on days 1 and 2 do driving and days 3,4,5 do maintenance and you coded it that way weekly, that would be acceptable.
It’s better in some cases for your business to be somewhat vague when it comes to describing duties. We have seen where a company will say that Suzy who is the receptionist also will drive once in a while if needed in a pinch. That immediately takes 100% of Suzy’s payroll and puts in the higher rated driver class even though she may have only driven 1 or 2 times in the past year because of the standard exception rule. The rules are very clear on this. In this example it would be best if your company put that Suzy is a receptionist and nothing more….as an example.
Sometimes less is more.
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