California Worker's Compensation

How do I set up payroll deductions for California Worker's Compensation Insurance?

Goldenseal construction payroll software uses Category Taxes to calculate the rates for worker's compensation insurance. It will automatically calculate the correct rate for each employee's hours, depending on the type of work they do. If you have employees that work at more than one type of work, you can save hundreds of dollars by paying comp rates on actual work done!

Basic Setup

When you import the California tax tables, you will automatically get a California Worker's Comp Tax Item that is set up as a Category Tax.

To enter the rates for your business, follow these steps:

1. Choose Category Setup from the Costs menu, and choose Category Systems from the submenu.
2. Double-click on the first Category System.
3. Click in the first cost category. Enter the rate for that type of work into the Comp Rate column. NOTE-- If you need to pay two different rates for different wage rate amounts, enter the low-wage rate into the Comp Rate column, and the high-wage rate into the Tax Rate column.
4. If the category system has subcategories, enter the rates for each subcategory item into the Comp Rate column (and the Tax Rate column if there are two rates).
5. Repeat steps 3 and 4 for each category and subcategory in the system.
6. Click OK.
7. Repeat steps 3 to 6 for each Category System that you use to classify employee time.

employee Hours

When you enter Labor Hours for your employee's time, enter the type of work they did into the Category and optional Subcategory fields (click the More Info button to see them).

When you use the Write Payroll command to generate the week's paychecks, Goldenseal will automatically use the category info to calculate the worker's comp premiums for each item of work.

High/Low Rates

If your industry uses two different worker comp rates for wages over or under a certain amount, you'll need to set up a second set of Category Taxes so you can handle the split rates.

First, set up another Tax Item for the second rate:

1. Choose Payroll Setup from the Costs menu, and choose Tax Items from the submenu.
2. Click on the CA Worker's Comp item.
3. Click the Duplicate button.
4. Change the Name to CA Comp High Wage Rate.
5. Change the Calculation Method to Category Tax Rate.
6. Click OK.

Next, create a Tax Package that uses the second rate :

1. Choose Payroll Setup from the Costs menu, and choose Tax Packages from the submenu.
2. Click on th California Tax Package.
3. Click the Duplicate button.
4. Change the Name to California High Wage Rate.
5. Turn off the checkmark next to CA Worker's Comp, and turn on the checkmark next to CA Comp High Wage Rate.
6. Click OK.

Finally, assign the new package to Employees who are at the high-wage rate:

1. Choose Employees from the Accounts menu.
2. Find an employee whose wage rate is above the cutoff amount.
3. Click the Payroll Setup button.
4. Enter the appropriate tax package into the Tax Package field, depending on that employee's wage rate.
5. Click OK.
6. Repeat steps 2 to 5 for each employee at the higher wage rate.

NOTE-- If some employees work at both the high-wage and low-wage rates, life is more complicated. You'll need to create multiple Wage Schedules with different tax packages so each Labor Hours record gets the correct worker's comp rate. For more about that, check the writeup on multiple wage rates.

Click here for more about payroll in the Getting Started manual.
Click here for more about payroll in the Reference manual.

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