Payroll Journal with Workplace Breakdown

Check offers various out-of-the-box reports to enable our partners to provide first-class payroll reporting to your customers with little development effort necessary. One of the most commonly-used payroll reports is the Payroll Journal, which lists all employees’ earnings, deductions, and taxes, broken out by payroll.

Check also offers the ability to further drill down this report based on workplaces where employees earned wages. This report is useful for multi-location employers, especially those that have employees working at multiple workplaces in the same pay period. These employers often need to understand how payroll is distributed across all of their workplaces, and this report enables various use cases, including labor allocation reporting, per-location accounting, and understanding cost-centers.

While earnings are directly attributable to the workplace they were worked at, other amounts, such as benefits and deductions, are not specifically attributable to a workplace. This guide details the structure of our payroll journal with workplace breakdown reporting, as well as the calculation methods used to generate the report, to better enable our partners to address employer needs.

Learn more about Check Payroll Reporting and including this report in product.

Report structure

This report’s structure is an extension of our core payroll journal report. The extension adds a “Workplace” column, that allows the company to view information on how net pay was distributed for employees at each of their worked locations. Each report line item represents an employee <> pay period <> workplace combination. This means that if an employee worked at three workplaces on two separate pay days, there will be 6 line items for that employee.

Calculation

Most of the calculations shown in this report are based off of the pay calculations completed at the time of running payroll. However, this report does some additional calculation methods to arrive at workplace breakdowns. Since not all amounts that make up pay are directly attributable to a specific workplace (e.g. benefits and deductions don’t apply to specific workplaces), this report’s calculations uses various methods to arrive at a final net pay number.

The core of these calculation methods are:

1. Allocating amounts that were explicitly applicable to a workplace to that workplace.

2. Allocating all other non-workplace-attributable amounts across all workplaces, using a ratio of each workplace’s gross pay to total earnings (which we’ll refer to as “ratio to gross pay”).

Earnings and reimbursements

Gross pay earnings and their hours are easily attributable to a workplace, since these are associated with workplaces at time of payroll creation. In the report, earning amounts will reflect in the line item of the applicable workplace where wages were earned.

Reimbursements, benefits and post-tax deduction

Reimbursements, however, are not associated directly with workplaces, instead will be applied to all workplaces worked by ratio to gross pay. For example, if Tony Stark earned $300 at Workplace A and $700 at Workplace B, 30% of Tony Stark’s reimbursement amounts would be distributed to Workplace A and 70% to Workplace B.

Similar to reimbursements, benefits and post-tax deductions are not associated with any specific workplace. For that reason, their amounts deducted from pay are similarly allocated across all workplaces worked on that payroll by ratio to gross pay.

Taxes

Taxes vary in their direct relation to workplaces, and therefore, we use multiple methods to allocate taxes to specific workplaces.

Many taxes are attributable to a specific workplace — for example, if an employee works in both NY and GA, any NY taxes present on a payroll can easily be attributable to the NY workplace, and similarly for the GA taxes. For taxes that are easily attributable to only one workplace, all of that tax’s amounts will be allocated to that workplace.

However, if multiple workplaces are in the same jurisdiction, then those tax amounts will be distributed between those workplaces based on their gross pay ratios to each other. Let’s take a look at an example below:

1. Employee works at two Georgia workplaces, and one NY workplaces. Employee earns $400 at GA workplace 1, $200 at GA workplace 2, and $400 at the NY workplace.
2. All workplaces will be allocated Federal taxes, based on ratio of gross pay. GA workplace 1 will be allocated 40% of the Federal taxes, GA workplace 2 will receive 20% of Federal taxes, and the NY workplace will receive 40% of the Federal taxes.
3. Since there is only one NY workplace, 100% of any NY taxes will be distributed to it.
4. However, since there are two GA workplaces, GA taxes have to be allocated between them. To do this, we need to find the gross pay ratios between them. Total GA earnings were $600, with $400 from Workplace 1 and $200 from Workplace 2. That means that Workplace 1 will receive $400/$600 = 2/3 of the GA taxes, and GA workplace 2 will receive the remaining $200/$600 = 1/3 of the GA taxes.

There are various other taxes, most notably residence taxes, that are not applicable to to any specific workplace. These will be allocated across all workplaces, weighted by the workplace’s ratio to gross pay. For example, if an employee works in Alabama and Florida in one pay period, but lives in Georgia, there is the possibility that Georgia taxes are deducted. Since there is no Georgia workplace, all Georgia taxes will be broken out across the Alabama and Florida workplaces by ratio to the workplace’s gross pay.

Note that if workplaces shares certain taxes with an employee’s residence, the residence taxes will be allocated only to those workplaces. For example, if an employee both works in NY and lives in NY, but occasionally works in NJ, all NY state taxes will be allocated to the NY workplace, and none will be applied to NJ. On the contrary, if the employee lives in NY but worked only in NJ, meaning there was no NY workplace to allocate the NY taxes too, then these residence taxes would be applied to the NJ workplace (again, by ratio to gross pay if there are other workplaces).

Final net pay calculation

Intuitively, net pay for that workplace will be based off the workplace’s gross pay, plus the allocated reimbursements, and then minus the allocated taxes, benefits, and post-tax deductions.

Limitations

Reporting out breakdowns of net-pay is a useful feature for multi-location employers. However, there is not one set method used to do this, and some employers may have different expectations for how this report should work. Alongside the concrete calculation methods defined above, we have listed the assumptions we have made when building this report below:

• This report does not surface contractors, since contractors can only ever work at one workplace per pay period.
• This report does not support by-role or by-project breakdowns.
• Some employers may want to allocate benefits, post-tax deductions, and reimbursements in other ways, including either by attributing these totals to a primary workplace, or specifying percentages for each workplace by which to allocate. This is currently not possible in this report. The employer can instead perform these allocation changes after receiving the report.
• While Check does not allow negative net pay for a single employee in a single payroll, if an employee has few earnings in one state, but high taxes attributed to that workplace because of that jurisdiction’s tax mechanics, it is possible for a specific workplace’s negative net pay to show as negative. However, for a single employee in a pay period, their total earnings across all workplaces cannot be negative.