CHAPTER 3: OTHER ADMINISTRATIVE REGULATIONS

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SUBSECTION 4.3.2.1
GENERAL

4.3.2.1.1

Purpose

Effective Date:

July 1, 1995

These payroll accounting policies and procedures serve as a basis for preparing, processing, and recording payrolls.

4.3.2.1.2

Authority

Effective Date:

July 1, 1995

OFM is responsible for establishing the necessary systems, policies, and procedures for payroll preparation and accounting. (See Chapter 42.16 RCW.) Existing Title 251 WAC and Title 356 WAC regulations administered by the Department of Personnel (DOP) supplement these instructions.

4.3.2.1.3

Applicability

Effective Date:

July 1, 1995

This part applies to all agencies of the state of Washington unless otherwise exempted by statute and to all their payroll processing and payment systems used to pay employees’ salaries, wages, and benefits. A variety of payroll systems are used by state agencies:

4.3.2.1.3.a

Most agencies use a centralized payroll system maintained by the Human Resources Information Systems Division (HRISD), DOP.

4.3.2.1.3.b

The State Liquor Control Board maintains its own payroll system.

4.3.2.1.3.c

The community and technical colleges, The Evergreen State College, and Eastern Washington University use the Payroll Personnel Management system maintained by the Communications Technology Center (CTC).

4.3.2.1.3.d

Each of the remaining universities uses its own payroll system.

4.3.2.1.4

Definitions

Effective Date:

July 1, 1995

4.3.2.1.4.a
State Employee

Generally, an individual is an employee when the employer has the legal right to direct when, where, and how the work is done. Section 7.2.6 of this manual provides a more detailed definition of Salaries and Wages (Object A). There is also information on personal service contracts in Sections 4.3.1 and 7.2.6 (Object C) covering those individuals paid by the state who are not employees.

Several definitions of "state employee" exist in statute for different purposes. However, RCW 42.18.130 is the basis for the following general definition.

A State Employee means any individual who is appointed by an agency head or designee and serves under the supervision and authority of any agency carrying out the ongoing business of the agency, unless designated otherwise in statute.

For employment tax purposes, each federal and state agency that regulates employment has its own definition of "employee" based on what taxes that agency levies or collects. For example, the IRS collects federal income, OASI, and Medicare taxes. Labor and Industries (L&I), on the other hand, collects moneys for the worker’s compensation program. An individual can be an "employee" by one agency’s definition, but not by another’s definition.

The following federal and state agencies publish regulations or WACs that define an "employee" from their perspective:

The Internal Revenue Service (Revenue Ruling 87-41, Publications 15 (Circular E), and 937 (Employment Taxes).

The Washington State Department of Labor and Industries (Chapter 296 WAC).

The Washington State Department of Employment Security (Chapter 192 WAC and the federal/state 218 agreement).

The Washington State Department of Revenue (Chapter 458 WAC).

If you have questions about whether a specific tax applies, contact the appropriate agency and/or your agency’s assistant attorney general. Also refer to applicable state statutes.

4.3.2.1.4.b
"Full Time Equivalent"(FTE)

The term "Full Time Equivalent" (FTE) is a budgeting term used to measure one full calendar year of paid employment, or the equivalent of 2,088 hours (the number of average available work hours in a year). A staff month is equivalent to 174 hours (the average available work hours in a month).

The hours used in FTE calculations are for hours worked by state employees. State statutes may exempt certain groups from the "state employee" definition for FTE computation purposes. However, these exemptions do not relieve the employing agency from paying appropriate federal and state employment taxes.

Return to CHAPTER 3: OTHER ADMINISTRATIVE REGULATIONS

	This part applies to all agencies of the state of Washington unless otherwise exempted by statute and to all their payroll processing and payment systems used to pay employees’ salaries, wages, and benefits. A variety of payroll systems are used by state agencies:
4.3.2.1.3.a	Most agencies use a centralized payroll system maintained by the Human Resources Information Systems Division (HRISD), DOP.
4.3.2.1.3.b	The State Liquor Control Board maintains its own payroll system.
4.3.2.1.3.c	The community and technical colleges, The Evergreen State College, and Eastern Washington University use the Payroll Personnel Management system maintained by the Communications Technology Center (CTC).
4.3.2.1.3.d	Each of the remaining universities uses its own payroll system.

4.3.2.1.4.a	State Employee
	Generally, an individual is an employee when the employer has the legal right to direct when, where, and how the work is done. Section 7.2.6 of this manual provides a more detailed definition of Salaries and Wages (Object A). There is also information on personal service contracts in Sections 4.3.1 and 7.2.6 (Object C) covering those individuals paid by the state who are not employees.
	Several definitions of "state employee" exist in statute for different purposes. However, RCW 42.18.130 is the basis for the following general definition.
	A State Employee means any individual who is appointed by an agency head or designee and serves under the supervision and authority of any agency carrying out the ongoing business of the agency, unless designated otherwise in statute.
	For employment tax purposes, each federal and state agency that regulates employment has its own definition of "employee" based on what taxes that agency levies or collects. For example, the IRS collects federal income, OASI, and Medicare taxes. Labor and Industries (L&I), on the other hand, collects moneys for the worker’s compensation program. An individual can be an "employee" by one agency’s definition, but not by another’s definition.
	The following federal and state agencies publish regulations or WACs that define an "employee" from their perspective:
	The Internal Revenue Service (Revenue Ruling 87-41, Publications 15 (Circular E), and 937 (Employment Taxes).
	The Washington State Department of Labor and Industries (Chapter 296 WAC).
	The Washington State Department of Employment Security (Chapter 192 WAC and the federal/state 218 agreement).
	The Washington State Department of Revenue (Chapter 458 WAC).
	If you have questions about whether a specific tax applies, contact the appropriate agency and/or your agency’s assistant attorney general. Also refer to applicable state statutes.

4.3.2.1.4.b	"Full Time Equivalent"(FTE)
	The term "Full Time Equivalent" (FTE) is a budgeting term used to measure one full calendar year of paid employment, or the equivalent of 2,088 hours (the number of average available work hours in a year). A staff month is equivalent to 174 hours (the average available work hours in a month).
	The hours used in FTE calculations are for hours worked by state employees. State statutes may exempt certain groups from the "state employee" definition for FTE computation purposes. However, these exemptions do not relieve the employing agency from paying appropriate federal and state employment taxes.