About Workers' Compensation Classes

Workers' compensation class codes define the job classes for the different types of work your employees perform and are used in conjunction with the state workers’ compensation taxes set up in Setup > Payroll Details > Employers > Detail tab > Taxes tab. Work and earnings in various classes are then used in workers' compensation reporting. By setting up classes you can more accurately report time for employees who work in job categories that are subject to high workers’ compensation rates. When a workers' compensation class is created, it is automatically added to all employers in the database on the Taxes tab. If the state for the workers' compensation class was not added for the employer prior to creating the workers' compensation class, it will also be added.

To setup information specific to this workers' compensation class, select Setup > Payroll Details > Employers > Taxes tab. From the left side of the screen, under the state abbreviation the class was created in, select Workers' Compensation and then on the right side of the screen add/verify the workers' compensation identification number, liability account, and determine the workers' compensation overtime earning calculation. Then, select the workers' compensation class you created from the left side of the screen, and on the right side of the screen setup the expense account, select the date the workers' compensation class becomes effective, and enter the rate for the class.

When you process and post payroll, the text automatically generated from the Notation field will display "State-WC-Workers' Compensation Class" (for example, MN-WC-Salesperson) on the Transaction Journal to easily identify the information for workers' compensation tax.

Select Setup > Payroll Details > Workers' Compensation Classes.
Enter an Abbreviation and Name for the class.
In the State box, select the state this class applies to.
Enter the Class Code that identifies a specific category of work (usually used by insurance companies to estimate workers' compensation rates).
Select the Liability and Expense Accounts for this class.
If applicable, in the Certified Payroll Codes 1-4 boxes, enter the certified payroll work classification codes (usually apply for Federally funded building projects).
Under Rate Detail, enter the Employer rate. Some workers' compensation classes will also have an Employee rate selection.
The class is automatically added to the employer, see the Verify/Change a Workers' Compensation Class for an Employer to complete the setup.