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Administrator Guide
Last Updated: 2025-07-11
Set Up Convenience of Employer Rule

Set Up Convenience of Employer Rule

You can set up a convenience of employer (COE) rule to define the COE states for your remote workers’ tax elections. This feature helps you comply with different state requirements for tax reporting.
You can only configure 1 COE rule for a worker at a time.
  1. Access the
    Edit Company Federal US Tax Reporting
     task.
    Complete the
    Company Tax Reporting
    grid:
    Start Date
    The effective date for the company tax reporting. This date must be on or after 2024-01-01 for you to enable a COE rule for your company.
    Enable Convenience of Employer Rule
    Select the check box.
    Security:
    Set Up: Payroll - Company Specific (Taxes) - USA
     domain in the USA Payroll functional area.
  2. Access the
    Add Worker US Tax Elections
     task for a worker.
    Complete the
    Convenience of Employer
     tab to define the details for the COE rule:
    Start Date
    The effective date for when the COE rule begins. Select a date on or after 2024-01-01.
    End Date
    The effective date for when the COE rule ends.
    State Work is Directed From
    The state where work is directed from, or the physical company location.
    This state follows the excluded exceptions configured on the
    Maintain Tax Authority Exceptions Pay Component Groups
    task.
    You can only select one state for this field.
    Start of Remote Work
    The physical location where the employee works. You can select multiple states for this field.
    Security:
    Worker Data: Payroll (Company Specific) - USA
     domain in the USA Payroll functional area.
  3. (Optional) To end a COE rule:
    1. Access the
      Worker US Tax Elections
       report.
    2. On the
      Convenience of Employer
       tab, select
      Worker Tax Election
      Edit
       from the related actions menu of the
      Tax Jurisdictions
       column.
    3. Update the
      End Date
      .
    Security:
    Worker Data: Payroll (Company Specific) - USA
     domain in the USA Payroll functional area.
After you configure the COE rule:
  • Workday determines state withholding taxes for the worker based on the COE rule and applies multistate withholding rules to the pay calculations.
  • Employees can view the COE rule by accessing the
    Tax Elections
     report of the
    Pay
     profile group on their profile.
You set up a COE rule for a worker with:
  • New Jersey as their state of remote work.
  • New York as the state where work is directed from.
Workday calculates the worker's state withholding tax as if the wages were earned in both the state of remote work and the state the work was directed from. This results in their wages being subject to tax in both New York and New Jersey.
If you also configured an ongoing multiple work jurisdiction tax allocation for a worker, Workday uses 100% of the worker’s earnings assigned to their
State of Remote Work
 when calculating taxes for their
State Work is Directed From
.
To process payroll for workers with retroactive changes after you’ve enabled your COE rule, create an on-demand additional payment to change the tax authorities.