Payroll Reporting

Baseline Payroll Reporting Requirements (Compliance with these baseline requirements will be evaluated during the July 1, 2024 to June 30, 2025 Compliance Review and Evaluation Period)

1. What are the general payroll reporting requirements?
The following are general payroll reporting requirements.  See attachments for detailed requirements, description of payroll reporting issues (Attachment A), and payroll file layout field modifications (Attachment B).

  1. Payroll transactions shall be reported electronically following the ERS approved 600-byte layout, version 2. This applies to reporting of current payroll transactions, as well as prior period transactions, adjustments, and corrections.
  2. Files shall be submitted on a semi-monthly basis including adjustment and correction files. Additional supplemental files are created when off-cycle payroll is processed.
  3. Only ERS eligible compensation based on the pay type listings provided to each employer shall be reported.
  4. Files shall contain the correct semi-monthly earning periods for the compensation reported and associated to the correct ERS pay fields.
  5. ERS eligible compensation shall be reported with the correct ERS group and class code that pay was earned as and contributions are calculated based on the required contribution rate for that group and class code.

Payroll File Layout

Payroll Information Template

Attachment A

Attachment B

2. What happens if I made an error in a payroll file that has already been sent to the ERS?
Please follow the below guidance when reporting adjusting transactions to the ERS, more detailed information can be found in Attachment A:

Employee dies in active service with unpaid salaries and/or vacation pay due.

ERS reporting requirement:
Report ERS eligible compensation and contributions for post death payments in the semi-monthly work report file based on when it is paid. Submit contributions when it gets reported. ERS requests that calculation and payment be made as soon as possible to minimize impact on benefit calculations and recalculations.

Employee is overpaid and overpaid salary and/or contributions were reported to ERS.

ERS reporting requirement:
Report through payroll negative adjustment(s) of salary and negative adjustment(s) of contributions for each earning period the overpayment was reported to ERS. Negative adjustment(s) should be reported through payroll as soon as overpayment is identified. Do not report negative adjustment(s) of overpaid salary and contribution(s) that were not originally reported to ERS. Reporting in this manner will allow ERS to determine retirement service credit, salaries earned by the employee, and correct their account balances in a timely manner. The negative salary and negative contribution adjustment should be reported to ERS even though the employer has not recovered the overpayment or the employer has received reimbursement of the contributions deducted from the overpaid salaries.

ERS suggests that the employers create new pay types similar to lien/levy tracking to be used for the negative adjustment when initially reported and for the recovery so that an employee’s current reported salary is not reduced by the recovery.

Incorrect employee contributions reported to ERS resulting in excess employee contributions. Excess employee contributions could be a result of contributions deducted at a higher rate than required by the employee’s group and classification category, contributions deducted from compensation not reportable to ERS, etc.

ERS reporting requirement:
Employer to notify ERS of the incorrect employee contributions by completing the “Payroll Information Template” available on the ERS website under ” Employer-Forms.” ERS will refund the excess contributions and any applicable interest directly to the employee.

Advance pay to employees for payroll lag purposes causes erroneous and inflated salaries reported for the period of the advance payment.

ERS reporting requirement:
ERS to process negative salary and contribution adjustments to reverse the advance payments that have not previously been adjusted due to recovery/repayment by the employee. Future recovery/repayment should not be reported to ERS and should not reduce reporting of the employee’s current or final salary/vacation payout. ERS will credit the employer using the employer rate at the time of the advance pay. Employer to notify ERS of any plan to process an advance payment for future payroll lags. Do not report the advance payment to ERS.

3. What are the reporting requirements for Compensatory Time Cash Out Payments?
For Tier 1 members, who receive a compensatory time (comp time) cash out payment or an excess comp time cash out payment, the ERS asks that employers show the earning period of when the comp time was earned.

The ERS statutes require that all eligible compensation to be included in the pay period that it was earned and not when it was paid. Under internal current procedures, if comp time pay is reported as a lump sum payment (and not reported in the actual earning period), ERS will redistribute the pay over the prior 12-month period. This often results in pension spiking, employer liability for costs associated with the spiking, and increased unfunded liability to the ERS.

Example (assumes that actual comp time was earned outside or before AFC periods):
          Retired employee receives 240-hour comp time cash out ($10K) at time of retirement.
          Average Final Compensation (AFC, aka High 3) with comp time cash out:
          Year #1: $110K ($100K base + $10K comp time cash out)
          Year #2: $90K
          Year #3: $80K

          Average Final Compensation (AFC, aka High 3) without comp time cash out:
          Year #1: $100K
          Year #2: $90K
          Year #3: $80K

The difference in the AFC amount (with the comp time cash out included) will result in a higher pension payment to the retiree. The costs associated with the higher payment may be passed on to the employer (pension spiking) and/or will result in increased unfunded liability to the ERS.

Note: The ERS takes no position on the employers using a FIFO (first in, first out) or LIFO (last in, first out) method, as long as the comp time pay is reported in the correct actual earning period.


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