Concept: Convenience of Employer Rule

Workday enables you to configure a convenience of employer (COE) rule for your payroll tax setup. You can use the COE rule to support workers who work in and are taxed in a different state from their company.

The COE rule isn't supported for:

Companies in single legal entity (SLE) company relationships when the companies have different tax reporting setup.

Exemptions for MSRR or for Fort Campbell in Kentucky.

Local taxes.

Multiple states where work is directed from.

Nonresident alien workers.

Prior period tax adjustments.

Retroactive changes to the COE rule. If you make retroactive changes to the worker’s tax elections, the tax elections use the current COE rule.

Tip wages.

Trailing payments.

U.S. territories.

Workers who have an international assignment position.

You'll continue to either:

Manually process taxes for workers who work remotely if your worker isn’t covered by a COE rule for 100% of their time in the

State of Remote Work

Set up an ongoing multiple work jurisdiction for the state that work is directed from if you don’t set up a COE rule.

Custom Reports for COE Rules

You can use these report fields on the Worker and the Worker Tax Withholding Elections business objects to monitor and review your COE rules:

Start Date for Convenience of Employer Rule

End Date for Convenience of Employer Rule

State Work is Directed From

State of Remote Work

Web Services for COE Rules

You can use these web services to create and retrieve payroll data related to COE rules:

Web Service	Domain	Description
Get Payroll USA State Convenience Rule Elections (Web Service)	Worker Data: Payroll (Company Specific) - USA	Returns these details about the COE rule: Start date End date State work is directed from Remote work state
Put Payroll USA State Convenience Rule Election (Web Service)	Worker Data: Payroll (Company Specific) - USA	The Start Date of the COE rule must be on or after 2024-01-01. The End Date of the COE must be on or after the Start Date .

Copied COE Rules

You can use these check boxes on the

Copy Tax Elections for Workers

task to verify if you also will mass copy COE rules when you copy workers’ tax elections:

Source Company Allows Convenience of Employer Rules

Proposed Source Company Allows Convenience of Employer Rules

These check boxes are automatically populated based on if the source and proposed companies allow COE rules. To copy over COE rules for workers, ensure that both check boxes are checked.

You can use the Convenience of Employer Rule
type on the

Mass Copy Tax Elections Audit

report to find and verify these details about a worker’s COE rule:

The effective state date.

The state of remote work and the state where their work is directed from.

FLSA and Flat Sum Bonuses

Workday takes into account a worker’s COE rule depending on the type of bonus they receive and the states they work in or are directed from:

Bonus Type	Tax Setup	Scenario	Description
Flat Sum Bonus	COE rule	A worker's: State Work is Directed From is New York. State of Remote Work is California.	Because the worker: Works in California, Workday pays the worker following California's flat sum bonus requirements. Has a COE rule, their bonus is subject to New York's tax requirements.
Flat Sum Bonus	COE rule or OMWJ	A worker's: Lives and works in California. Has a ongoing work jurisdiction tax allocation of 100%in New York.	Because the OMWJ adds New York: The worker's bonus is subject to New York's tax requirements. The worker's bonus follows the FLSA bonus functionality.

Example of COE Rule

Jane:

Works remotely in New Jersey.

Reports to a company located in New York.

On the

Add Worker US Tax Elections

task, Jane’s payroll administrator configures the COE rule with:

New York
as the

State Work is Directed From

New Jersey
as the

State of Remote Work

For this pay cycle, Jane has:

A base pay compensation of $4,000.

A bonus of $1,000 for work completed in Connecticut, as directed by the company.

Jane's taxes look like this on her pay result:

Pay Component	Worktags	Amount	Related Calculation	Amount
State Withholding (Resident) [USA]	New Jersey	0.00	Gross Wages	5,000.00
			Subject Wages	5,000.00
			Taxable Wages	5,000.00
State Withholding (Work) [USA]	New York	172.38	Gross Wages	4,000.00
			Subject Wages	4,000.00
			Taxable Wages	4,000.00
State Withholding (Work) [USA]	Connecticut	69.90	Gross Wages	1,000.00
			Subject Wages	1,000.00
			Taxable Wages	1,000.00

As a result of Jane's COE rule:

Pay Component	State Tax	Description
State Withholding (Resident) [USA]	New Jersey	Workday uses Jane’s total wages to calculate this tax. Multistate withholding rules apply to the pay calculations, so the amount that Workday withholds is zero.
State Withholding (Work) [USA]	New York	Workday: Follows the COE rule. Uses the wages allocated to the State of Remote Work of New Jersey to calculate this tax.
State Withholding (Work) [USA]	Connecticut	Connecticut isn’t part of Jane’s COE rule so Workday doesn’t calculate these wages as part of the wages for the State Work is Directed From .

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