Common Paymaster Reporting Not Permitted Under the Pennsylvania Unemployment Compensation Law
A “common paymaster” is one employer within a group of employers that pays the wages of its own employees as well as the wages of the employees of the other members of the group.
Under certain circumstances, a common paymaster is treated as the employer for the employees of all members of the group for purposes of the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA). The common paymaster files FICA and FUTA returns and pays the corresponding taxes for all the employees to whom it pays remuneration, including employees of the other group members.
While FICA and FUTA may allow a common paymaster to include in its tax returns the employees of other employers, common paymaster reporting is not permitted under the Pennsylvania Unemployment Compensation Law (UC Law). Section 302 of the UC Law provides that the “department shall establish and maintain for each employer a separate employer’s reserve account …” Section 302 clearly requires each legal entity providing employment to have its own, separate UC account. Distinct reporting for each employer is necessary to implement experience rating.
Common paymaster reporting may result in significant penalties. Section 802.1 of the UC Law provides that any employer, agent of an employer or other person that “willfully reports…the wages of one or more employees on an unemployment compensation account other than the account of the employer under this act…” is subject to a penalty. The penalty can be as high as $10,000, and each employer and each calendar quarter for which wages are reported on the wrong account is the basis for a separate penalty.
If you have questions about common paymasters, please call the Employer Contact Center at 1-866-403-6163 weekdays from 8:00 a.m. until 4:30 p.m., Eastern Time.
If you need help to correct a reporting error, please contact our Pittsburgh Field Accounting Service office at 412-565-5121.