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Other Taxes - Disability, Paid Family Leave, Commuter

Other Taxes - Disability, Paid Family Leave, Commuter

Explore disability insurance, paid family leave, and commuter tax management for employees.

Overview

Disability Insurance (DBL) replaces part of an employee's income if they can't work due to disability, with Short-Term and Long-Term options available. Some states require disability insurance and payroll deductions. Paid Family Leave (PFL) provides wage replacement for family or medical reasons, and commuter taxes fund transit infrastructure in certain areas. Manage these taxes and benefits in Console by setting up workplaces and tax configurations.

Disability Insurance (DBL)

Disability insurance is a benefit that replaces a portion of an employee’s income if they are unable to work due to a qualifying disability. There are two primary types:

  • Short-Term Disability (STD): Provides income replacement for a short duration, typically 3 to 6 months.
  • Long-Term Disability (LTD): Kicks in after STD benefits are exhausted and can last for several years or until retirement age, depending on the policy.

Disability insurance premiums can be paid by either the employer, the employee, or both. If premiums are employee-paid, you’ll need to manage payroll deductions. Consult with the provider to see if these deductions should be set up as a pretax benefit or as a post tax deduction.

Some states, like California and New York, require employers to provide disability insurance. These state programs often require payroll deductions, which must be correctly calculated and remitted. Below is a listing of the states with requirements for payroll with disability.

State
Contributions
Check Supported?
California
Employee funded through payroll.
Yes
Hawaii
Can be funded by the employer, the employee, or both. Employee contributions are capped.
Check collects, but does not remit
New Jersey
Funded by payroll deductions from both employees and employers.
Yes
New York
Can be funded by the employer, the employee, or both. Employee contributions are capped.
Check collects, but does not remit
Rhode Island
Employee funded through payroll.
Yes

Paid Family Leave (PFL)

Paid Family Leave provides employees with a portion of their wages when they take time off for family or medical reasons. Typically, PFL is state-mandated and helps cover scenarios such as:

  • Bonding with a new child (birth, adoption, or foster care).
  • Caring for a seriously ill family member (parent, child, spouse, etc.).
  • Attending to personal health needs in some states.
  • Military-related exigencies (in certain states).

Depending on the state, PFL programs may be funded entirely by employee payroll deductions, by employer contributions, or by both.

State
Contributions
Check Supported?
California
Funded by employee payroll deductions.
Yes
Colorado
Funded by both employee and employer contributions.
Yes
Connecticut
Funded by employee payroll deductions.
Yes
Massachusetts
Funded by both employee and employer contributions.
Yes
New Jersey
Funded by both employee and employer contributions.
Yes
New York
Funded by employee payroll deductions.
Check collects, but does not remit
Oregon
Funded by both employee and employer contributions.
Yes
Rhode Island
Funded by employee payroll deductions.
Yes
Washington
Funded by both employee and employer contributions.
Yes

Commuter Tax

Some areas also have a commuter tax which is imposed on employers that are located in certain areas with mass transit. The funds collected through this tax are used for he upkeep, improvement, and expansion of the transit infrastructure, including subways, buses, and commuter rail services.

There are two notable programs that fund commuter taxes through payroll:

  • New York - Payroll Mobility Tax (PMT): This tax applies to employers in the MTA region, including New York City and its suburbs. It helps fund the Metropolitan Transportation Authority (MTA). Although not a commuter benefit program itself, it indirectly supports the transit system used by commuters.
  • Oregon - Portland (TriMet): TriMet, which serves the Portland area, is funded partly by a payroll tax. Employers within the TriMet service area are required to contribute a certain percentage of their payroll to fund the transit system. This is similar to New York's PMT but is specific to the TriMet district.

Using Console

In Console, it is recommended to first add an applicable workplace, handle company tax setup, and then apply the workplace to the employee. This will enable the tax to calculate for the employee and will also determine who is responsible for the contribution (employer and/or employee).

Workplace:

  1. Click into the company.
  1. Got the bottom of the Company Info Tab and select the plus sign to add a workplace.
  1. Enter the requested fields:
      • Name - Work location name
      • Address Line 1 - Work address
      • Address Line 2 - Work address
      • City
      • State
      • Postal Code
      • Can be associated with the employee for payroll: check box
  1. Save

Company Tax Setup:

  1. Click into the Taxes tab.
  1. Expand the state with the tax you wish to view.
  1. Select the pencil icon to make and edits and Save.

Apply Workplace to Employee:

  1. Click into the Employees tab.
  1. Select the employee name and go to the Employee Info tab.
  1. Select the pencil icon and add/delete/edit the workplaces as desired.
  1. Save

FAQs

What if an employer is exempt from this tax?

Check the tax setup screen for an option to mark the company as exempt. If not available, submit a ticket to request an exemption. The setup process may vary by state and tax.

Recording

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Last updated on June 30, 2024

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