Monetary awards to university employees that are based on performance must be processed through payroll, as they are considered taxable compensation per IRS regulations, regardless of amount. Award payments are included on an employee’s regular payroll check and cannot be paid from state funds (i.e. 14 or 20 account numbers).
Required Documentation
Departmental awards for employees must be approved in advance by the dean or vice president of the awarding college or department. Award program approval letters sent to deans and vice presidents must contain their signature of approval and include the following information:
- Award name
- Selection criteria
- Frequency (e.g., one award paid annually in May)
- Amount per award
- Account number(s)
Processing
Awards are initiated in Workday via the Request One-Time Payment business process and route to Payroll Services for final approval. These payments should be routed for approval in accordance with the deadlines and paydays reflected on the regular On-Cycle Monthly or Semi-Monthly calendars for the employee’s pay group.
If selecting Award Gross-Up in Workday as opposed to Award, the payroll will process the amount entered as the "net" amount to be paid to the employee. The "gross" earning amount will be calculated and increased by the employee's personal tax calculations. The departmental charge will be for the “grossed up" value that was calculated in the payroll in order for the employee to receive the specified amount. This should only be used when the award letter authorizes this method.
Please be sure to attach the award program approval letter to the One-Time Payment Request in Workday and confirm that the Cost Center entered is not state funded (14 or 20 account). If either of these are missing or incorrect, the request will be returned for correction and may result in delayed payment to the employee.
Payment
Award payments are included on an employee’s regular On-Cycle Monthly or Semi-Monthly payroll check and paid according to the employee’s Payment Elections (e.g., direct deposit or paper check). Awards are subject to the supplemental withholding tax rate and social security deductions, but are not includable compensation for retirement purposes.
Student Awards
Awards to students that are not related to the student's employment performance should be processed through Accounting and Financial Management, not Payroll Services, as these awards are not subject to payroll taxes.
Last updated 11/8/2018