How the Payroll Process Determines the Employee Work State

For some state taxes, such as unemployment insurance (SUI) and disability insurance (SDI), the payroll process must determine the employee's state of employment.

Note: Retirees aren't subject to unemployment or disability taxes. Therefore the following hierarchy doesn't apply to them.

How the Work State Is Determined

The payroll process uses the following hierarchy based on the employee's primary assignment associated with the tax reporting unit (TRU).

1. If the employee is designated as work-at-home, it uses the state on their residence tax address.

2. If the employee isn't work-at-home, it checks for a work address override.

   If there is, it uses the state identified on the override.

3. It then checks for a work-location tax override.

   If there is, it uses the state identified on the override.

4. If there are no overrides, it uses the state identified on the assignment for the work location.

Note: If there is no primary assignment associated with the TRU, the payroll process applies this hierarchy to the assignment with the lowest assignment ID associated with that TRU.