Office of State Uniform Payroll Memorandum #98-02

To:	All UPS Agencies
From:	Ronald S. Mitchell, Director
Subject:	Per Diem Payments to Board Members

OSUP recently attended an Outreach Workshop conducted by the State Treasurer's Office, the Social Security Administration, and the Internal Revenue Service. At the workshop an IRS representative indicated that persons who receive per diem pay, such as board members, are considered employees and must have a W-2 produced to report this income. These wages should not be reported on a Form 1099. Please refer to Office of Statewide Reporting and Accounting Policy's memorandum #SA 97-57 for a detailed explanation of per diem payments to board members.

The following are special UPS procedures for setting up and entering time for employees who are paid on a per diem basis:

• 1. On the Employee Basic Data Screen (M201,M211) enter "B" (Board/Commission Member) in the C/U (Employee Classification Indicator) field. Also enter "00" in the LV CD (Leave Code) field.
• 2. On the Salary Information Screen (M202,M212) establish employee as an hourly employee using the per diem rate for the hourly rate.
• 3. Determine if Social Security/Medicare or retirement should be deducted. Set the Retirement Code and/or Medicare indicator accordingly ( if the employee is a member of a retirement system, but should not pay retirement on per diem pay, set the retirement code to "13").
• 4. Enter one hour for each day or occurrence worked to pay the correct per diem pay.

Example: Board member "A" is paid $75.00 per day to attend a monthly meeting. Board member "B" is paid $75.00 per meeting to attend a monthly meeting regardless of the number of days. Each attends a 3 day meeting.

Enter three (3) hours for board member "A" to receive $225.00 Gross Wages.
Enter one (1) hour for board member "B" to receive $75.00 Gross Wages.

If you have any questions about the above procedures, please call the Help Desk at (504) 342-8928. Any questions about whether an employee should pay retirement should be directed to each retirement system. Questions regarding Social Security and Medicare withholdings should be directed to Ms. Linda Yelverton of the State Treasurer's Office at (504) 342-0026.

RSM:FLR:mpb

c: Linda Yelverton

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