Washington Labor and Industry (L & I)
The Washington State Labor & Industries Tax differs from other taxes because it is based on the number of hours worked by employees. You must create a deduction and an employer expense for every risk class that could apply to your employees, in order to track the tax. Here's how:
CREATE A DEDUCTION FOR EACH RISK CLASS
- In the Payroll Command Center, select Payroll Categories.
- Click on the Deduction tab then click the New icon in the lower left corner of the window.
- In the Deduction Name field of the Deduction Information window, enter WA L&I Class XXXX. (XXXX represents the risk class number.)
- Under Type of Deduction, select "Equals $0.00 Dollars Per hour".
- Enter the employee deduction amount for the risk class you're creating in the Dollars Per field.
- Choose Hour from the frequency list.
- Note: The deduction amount per hour for each risk class is listed in the employee risk class table from the Department of Labor and Industry. Link to this site here: http://www.lni.wa.gov/
- In the Deduction Limit field, be sure the No Limit selection is marked.
- Click the Employee button in the lower left hand corner of the window.
- In the Linked Employee window, mark the Select field next to the name of each employee who is in the risk class. Click OK when finished.
- Note: When you are ready to create a new risk class, click the New button in the Deduction Information window.
CREATE AN EMPLOYER EXPENSE FOR EACH RISK CLASS
- In the Payroll Categories list, click the Employer Expense tab then select the New button.
- In the Employer Expense Information window, enter WA L&I Class XXXX as the Employer Expense Name. (XXXX represents the risk class number).
- Choose Other as the Type of Expense.
- In the Expense Basis field, select the "Equals 0% Percent of ____".
- In the risk class tables from the Department of Labor and Industry, locate the employee deduction amount and the composite amount for the risk class.
- Make the following calculations:
- Subtract the employee deduction amount from the composite amount. The difference is the employer expense amount for the risk class.
- Divide the employer expense amount you calculated in step 6.1 by the employee deduction amount. This is the employer expense percentage for this risk class.
- Enter the employer expense percentage you calculated in step 6.2 in the Percent Of field.
- From the Percent Of list, choose the WA L&I deduction that corresponds to the employer expense you are creating.
- Click the Employee button in the lower left corner of the Employer Expense Information window.
- In the Linked Employee window, mark the Select field next to the name of each employee in this risk class.
- Click OK to return to the Employer Expense Information window.
- Note: When you are ready to create a new risk class, click the New button in the Employer Expense Information window.
- When calculations are made on paychecks for salaried employees that are assigned the WA L&I deduction, the calculations are based upon the number of hours in your company's work week.