SUBSECTION 4.3.2.7
PAYMENT METHODS

4.3.2.7.1

Employee Payment Options

Effective Date:

July 1, 1995

There are two ways to pay employees: by warrant (check), or, by direct deposit into an employee’s account. Direct deposit requires written authorization by the employee.

4.3.2.7.2

Agency Deposit of Employee’s Earnings

Effective Date:

July 1, 1995

There are three methods of depositing an employee’s earnings: (a) Electronic Funds Transfer of aggregate net pay; (b) Single warrant (check) per agency of aggregate net pay; and (c) Individual employee warrants (checks).

Regardless of the method used, an employee is limited to one account for direct deposit of net pay.

4.3.2.7.2.a

This is the most common form for direct depositing an employee’s net pay into a financial institution. There is one EFT per institution for all employees’ net pay being deposited. (Refer to RCW 41.04.240.)

OFM must approve direct deposit systems. (See Chapter 43.41 RCW.) Submit the direct deposit proposal to OFM for review along with a request for approval.

4.3.2.7.2.a(1)

4.3.2.7.2.a(1)(a)

The employee is paid through a payroll system participating in an approved program.

4.3.2.7.2.a(1)(b)

The employee is paid on a regularly scheduled payroll.

4.3.2.7.2.a(1)(c)

An employee signed authorization for direct deposit by EFT is on file at the agency.

4.3.2.7.2.a(1)(d)

The employee has an account in either a bank or credit union which belongs to an automated clearing house or is an open access member of a federal reserve bank.

4.3.2.7.2.a(2)

4.3.2.7.2.a(2)(a)

An agency’s internal controls must include a positive validation of the amounts transferred for an employee’s net pay.

4.3.2.7.2.a(2)(b)

The procedures should be designed to prevent a loss of state funds.

4.3.2.7.2.a(3)

4.3.2.7.2.a(3)(a)

Payroll systems must develop standard procedures that apply to agencies participating in the system.

4.3.2.7.2.a(3)(b)

OFM must approve direct deposit programs prior to implementation.

4.3.2.7.2.a(3)(c)

Standard procedures require that the employee receive a "Notice of Deposit" in place of a warrant that contains at least the following information:

• The name of the bank or credit union receiving the deposit of net pay.

• The employee’s account number.

• The employee’s name.

• The amount of the deposit.

4.3.2.7.2.a(4)

4.3.2.7.2.a(4)(a)

The bank or credit union must be a member of an automated clearing house association or an open access member of a federal reserve bank.

4.3.2.7.2.a(4)(b)

The bank or credit union must confirm all requests transmitted for verification of the employee’s account number.

4.3.2.7.2.a(4)(c)

The bank or credit union should not process any deposits to an employee’s account without a valid account number.

4.3.2.7.2.b

This means writing one check per institution for all the net pay being deposited. This is a seldom used option which requires OFM approval and the following other requirements:

4.3.2.7.2.b(1)

The agency must have 25 or more employees who have authorized a deposit to the same financial institution.

4.3.2.7.2.b(2)

There must be a procedure in place that allows individual account corrections at the bank or credit union after payroll is processed.

4.3.2.7.2.b(3)

The agency deposit must include a listing of the amounts to deposit to each employee account.

4.3.2.7.2.b(4)

Distribute deposit receipts to employees with the same information noted in section 4.3.2.7.2.a.(3)(c).

4.3.2.7.2.c

On rare occasions, an agency unable to qualify under agency EFT or Single Warrant requirements (due to the agency’s payroll system constraints), needs to deposit individual employees’ checks to their accounts. Using this option requires OFM approval. Distribute deposit receipts for these transactions to the employees including the information noted in section 4.3.2.7.2.a.(3)(c).

4.3.2.7.3

Amounts Due to Deceased Employees

Effective Date:

July 1, 1995

When an employee dies, promptly record the pay owed to them in a designated liability GL Code. Refer to accounting procedures provided in Section 2.2.3.3.3 of this manual. Under certain conditions, family members or the executor or administrator of the estate can claim the funds owed.

In all cases, the agency is to require proof of the claimant’s relationship to the deceased employee by affidavit (Claim for Indebtedness of State of Washington to Deceased Employee - SF200).

4.3.2.7.3.a

No executor or administrator of the estate has been appointed. (This is restricted to the limits in RCW 49.48.120.)

These payments are limited to $2,500 or less.

4.3.2.7.3.b

The right to the deceased’s pay becomes the property of the surviving spouse as follows:

4.3.2.7.3.b(1)

The agency that employed the deceased pays the surviving spouse either the total of the deceased’s pay or that portion governed by the community property agreement.

4.3.2.7.3.b(2)

This payment requires the surviving spouse to present the community property agreement along with a Claim for Indebtedness of State of Washington to Deceased Employees (SF 200). This claim form must state that such agreement was executed in good faith between the parties and had not been rescinded prior to the death of the deceased.

NOTE: The fact that Washington is a community property state is not sufficient. The parties must have a community property agreement to qualify for the above payment.

4.3.2.7.3.c

4.3.2.7.3.d

• The agency processes a warrant or check and releases it to the claimant relative or successor.

• The agency makes the warrant or check payable to the deceased employee. Include the following prescribed endorsement on the warrant or check prior to its release:

4.3.2.7.3.e

If an executor or administrator for the estate of the deceased has been appointed and approved by the court, all amounts owed, including that in excess of $2,500, are to be made payable to the deceased and transmitted as requested to the executor or administrator.

4.3.2.7.3.f

4.3.2.7.3.g

The rules for withholding federal income, OASI, and medicare employment taxes and reporting wages paid after death vary. The lapsed time between the date of the employee’s death and the payment date to the claimant affects withholding and reporting.

Refer to the current IRS Publication 15 (Circular E) and other regulations for withholding and Form W-2 reporting requirements regarding deceased employees’ wages. Also note the IRS Form 1099-MISC reporting requirements for payments to estates or beneficiaries.