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Payment from Dept of Labor & Industries-Stay at work Program- How Do I report reimbursement

Cheri Chelone's Profile

We are a services business in the State of Washington. We have 5 locations and over 50 employees. Recently we found out about a plan from Dept of Labor call "Stay at work program". Occasionally we will have an employee who injures themselves on the project. We are not a construction company. We do inspections and consulting services for Large building projects. The injury keeps them from continuing on doing the services they are required and we loose out on that billing time. Instead of keeping them home and getting paid from L&I, we keep them at work doing small jobs. We continue to pay them there normal wages until they are healed and are allowed by doctors consent to go back out in the field to work and bill. The Dept of L&I has reimbursed us for that time paid to employee. They feel it is cheaper to keep them on this program then pay them for loss time and other expenses staying at home. HOW do I record this reimbursement from the State? I asked them, they will not assist me. The incoming funds do not go to the employee, it gets paid directly to our business. Do I need to record/make any adjustments to our 941? Upon entering this into GL, what is the other side to cash, do I credit Payroll G&A cost ? Seems to me it would make a mess balancing my GL to my 941, W2s and all other Payroll Quarterly reports come year end if I do this. We have internal WSDOT audits so I have to be concerned with this entry. I dont only want to record in my GL correctly but I want to make sure ALL MY PAYROLL reports are prepared correctly. Help.. In all my years of financial reporting, I am somewhat at a stump on this one.

Answers

Anonymous
(Controller) |
Anonymous
(Controller) |
EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

In concept, reimbursements should be contra (reduction) of the expenses where it was originally booked. It will be a reconciling item between what was paid to the employee and what the company has in it's books. I may be wrong since I have not had this experience, but it should NOT be a mess as it may be the only reconciling item you will have and the auditors may (in all likelihood) have already encountered this before in other companies.

Cheri Chelone
Title: Controller
Company: MTC, Inc
(Controller, MTC, Inc) |

I dont believe that will work. You cant apply too the Employees records/file. It isnt a reduction/ reimbursement in there wages. Isnt that the way Payroll numbers works, each EE figures makes up the total Payroll amount in GL. Whether it be in COS, Sales or Admin. They way I understand your theory is, it would reconcile/reduce there personal W2 total ?. I am not/will not be reducing there on hand wages. There W2 will be what our company paid them. Not less this reimbursement, correct.. By making this GL entry too me, it is stating an indiviual employee, not company got reimbursed.
No employee was reimbursed anything. It still stands for discussion on How will this credit reconcile with all the Payroll taxes a business reports? Sorry, still not clear on this.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

No, it will NOT reduce the employee wages. Your total booked wages is the one that is affected. From your description, the program aims to help the EMPLOYER not the EMPLOYEE. As far as the employee is concerned, nothing happened and they still get paid. Your total company wages though is going to be less...thus the reimbursement as a reconciling item.

Topic Expert
Scott MacDonald
Title: President/Owner
Company: AlphaMac Resources, Inc.
(President/Owner, AlphaMac Resources, Inc.) |

I agree with Emerson, set up a contra expense account on the General Ledger called something like Stay At Work Reimbursement. This will reduce the labor expense on you P&L. It won't have any effect on payroll records.

Cheri Chelone
Title: Controller
Company: MTC, Inc
(Controller, MTC, Inc) |

I had thought of this also.. My concern was when Audit occurs and I show this credit as a separate line in P&L it wont flag anything? I didnt want to credit within the existing G&A Labor exp because they always total up all my Wages in the audit to see if it agrees with payroll reports/941/W2's. We do overhead and direct costs reports for allowed state billing. Do you feel if I present this separate acct on P&L it should'nt cause any havoc to the auditor?

I also was not sure if the IRS would come back stating I have to pay some sort of payroll tax on this?

Topic Expert
Scott MacDonald
Title: President/Owner
Company: AlphaMac Resources, Inc.
(President/Owner, AlphaMac Resources, Inc.) |

I don't see any audit issues. It is easily explained and reconciled especially since it is in a separate account.

I don't see any issue from a tax/IRS perspective either. It actually increases your taxable income. There isn't any impact on payroll tax, as you already paid your portion of SS and Medicare, Unemployment, etc on the actual salary.

The payment is a benefit to the company, not the employee.

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