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Administrator Guide
Last Updated: 2024-05-03
Setup Considerations: Successor Employer Company Relationships (USA)

Setup Considerations: Successor Employer Company Relationships (USA)

You can use this topic to help make decisions when planning your configuration and use of USA successor employer company relationships. It explains:
  • Why to set it up.
  • How it fits into the rest of Workday.
  • Downstream impacts and cross-product interactions.
  • Security requirements and business process configurations.
  • Questions and limitations to consider before implementation.
Refer to detailed task instructions for full configuration details.

What It Is

This feature enables you to set up company and employee data to continue payroll and tax reporting in a new company relationship after an acquisition or a merger.
Specify the relationship type to define what Workday brings to the successor company from the predecessor company:
  • Asset Purchase - Alternate
  • Asset Purchase - Standard
  • Merger

Business Benefits

  • You can continue your payroll and tax reporting in a new relationship whenever you merge or acquire companies.
  • Workday uses wages paid by the predecessor company when determining limits for taxes such as OASDI, Medicare, FUI, and SUI.
  • You can copy the worker tax elections from the predecessor company instead of adding them for each worker, saving time on data entry.
  • You can copy the worker withholding orders from the predecessor company instead of adding them for each worker, saving time on data entry.
For alternate asset purchases, Workday:
  • Includes wages paid by both the predecessor and successor companies in tax filing.
  • Provides workers with a single W-2 from the successor company that includes wages paid by the predecessor.
For standard asset purchases, Workday:
  • Includes wages paid only by the successor company when tax filing.
  • Provides workers with a W-2 for the predecessor company, and a separate W-2 for the successor company.
For mergers, Workday:
  • Uses payroll data for all companies in the relationship to determine IWO limits.
  • Displays YTD data for all employees in predecessor and successor companies in W-2 reports.
  • Provides workers with a single W-2 from the successor company that includes wages paid by the predecessor.
  • Continues taxes for noncontinuing workers in the successor company, instead of starting them over.

Use Cases

  • For asset purchases, Workday pays mid workweek overtime based on all hours worked, helping you comply with the Fair Labor Standards Act (FLSA).
  • For mergers, Workday pays mid workweek overtime based on all hours worked, helping you comply with FLSA.

Questions to Consider

Questions
Considerations
Is the predecessor company in Workday?
If the predecessor company isn’t in Workday, create the company and load its employee and payroll data into Workday.
See
Steps: Set Up Companies and Steps: Prepare and Load Payroll History
.
What's the start date of the first payroll processed by the successor company?
The date that you must enter as the
Payroll Processing Begin Date
 when setting up the company relationship.
You can enter any date, but make sure the:
  • Date is based on the year in which you want the relationship.
  • Payroll Processing Begin Date is equal to the worker's transfer date.
  • Pay date after the transfer date is within the correct year that you intend for tax reporting to report all workers under the successor company.
  • Affected workers have at least 1 pay result with a pay date:
    • After the worker transfer date to the successor company.
    • In that year.
Workday requires that you set 1
Payroll Processing Begin Date
 that applies to all workers in the companies. This solution ensures that results and reporting are correct, and is regardless of different pay frequencies.
For mergers, this date must be 2013-10-01 or later.
The worker transfer date must be equal to the
Payroll Processing Begin Date
. For companies that have multiple pay groups with overlapping period dates in the relationship, Workday calculates multiple results for the worker and creates subperiods for the appropriate company.
Example: You have 2 pay groups whose workers have a
Transfer Effective Date
 of
1/1/2022
:
  • Pay Group 1:
    • Pay Period: 12/18/2021 - 12/31/2021
    • Paid on 1/7/2022.
  • Pay Group 2
    • Pay Period: 12/25/2021 - 1/7/2022.
    • Paid on 1/7/2022
You enter 1/1/2022 in the
Payroll Processing Begin Date
 field. The
Active Through End of Tax Year
 displays
2022
.
Workday issues multiple gross to nets if there are multiple pay groups with start dates different from the
Payroll Processing Begin Date
.
Workday recommends that you preview any impacted W-2 forms in a Sandbox Preview tenant.
Do the companies have multiple pay groups with overlapping period dates in the company relationship?
If the payroll processing begin date falls within the pay period, Workday will calculate multiple results for the worker, and create subperiods for the appropriate company.
Are there worker payments in progress for both the companies?
Workday considers the taxable wages and taxes with limits from the predecessor company when calculating the successor company. Complete worker payroll results in predecessor companies before completing payroll in the successor company.

Recommendations

  • Copy the worker tax elections from the predecessor company.
  • Copy withholding orders from the predecessor company.
  • Set 1
    Payroll Processing Begin Date
     that applies to all workers in the companies. This solution ensures that results and reporting are correct, and is regardless of different pay frequencies.
  • For merger and acquisition scenarios where you want to process the differences in off-cycle payments, Workday recommends that you use manual methods such as payroll inputs.

Requirements

  • If the predecessor company isn't in Workday, create the company, and load payroll history.
  • Move workers from the predecessor company to the successor company.
  • For mergers and alternate asset purchases, you must obtain the form W-4 records of the predecessor.
  • Only create 1 relationship type per company per year.

Limitations

You can't modify this relationship type once you've completed a payroll.
You need to complete retro manually for the predecessor company. When workers have retro differences from companies that went through a merger and acquisition, Workday only supports paying retro differences:
  • From a company that's the predecessor of the workers' current primary job company.
  • In the on-cycle payroll of the workers.
For asset purchases, Workday doesn't carry over prior withholding order limit balances and only carries over support orders to the successor company.
Workday doesn't support successor employer company relationships for workers who have an international assignment position in the U.S.

Tenant Setup

No impact.

Security

Domains
Set Up: Payroll (Tax Filing/W-2s) - USA
 domain in the USA Payroll functional area.
Manage: Company
 domain in the Organizations and Roles functional area.
Enables you to create and edit successor employer company relationships.
Manage: Company
 and
Set Up: Payroll - Company Specific (Taxes) - USA
 domain in the USA Payroll functional area.
For an acquisition, enables you to load successor employer types of company relationships using web services.

Business Processes

Configure these business processes and security policies in the Staffing functional area:
  • Change Job
  • Move Workers (By Organization)
  • Move Workers (Supervisory)
Configure these business processes and security policies in the USA Payroll functional area:
  • Copy Tax Elections for Workers
  • Copy Withholding Orders for Workers

Reporting

Reports
Considerations
Tax Filing Periodic Data by Company
Tax Filing Periodic for Workers
Tax Filing Monthly Data for Workers
Tax Filing Quarterly Data by Company
Tax Filing Quarterly for Workers
You can view balances from the predecessor company for the
Asset Purchase - Alternates
 and
Mergers
 successor employer types.
Multiple Worksite Report by Company
Multiple Worksite Report by Worker
You can view combined predecessor amounts for QTD and YTD for all employees in predecessor and successor companies.
Tax Filing Periodic Data for Workers
You can view periods from the predecessor company.
For alternate acquisitions, Workday W-2 reports display combined year-to-date data for all employees in predecessor and successor companies.
You can create custom reports from the
All Successor Employers
 report data sources.

Integrations

Web Services
Considerations
Get Multiple Worksite Report
Includes combined predecessor amounts for QTD and YTD for all employees in predecessor and successor companies.
Get Successor Employer
Put Successor Employer
For an acquisition, Workday enables you to load successor employer types of company relationships using these web services.
Get Periodic Company Tax Filing Data
Get Periodic Worker Tax Filing Data
Get Monthly Worker Tax Filing Data
Get Quarterly Worker Tax Filing Data
These web services include balances from the predecessor company for alternate asset purchases and mergers.

Connections and Touchpoints

  • HCM Staffing.
  • Multiple Worksite Reporting.
  • Year-End.
Workday offers a Touchpoints Kit with resources to help you understand configuration relationships in your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.