A common paymaster situation exists when two or more related corporations concurrently employ the same individual and one of the corporations compensates the individual for the concurrent employment. Internal Revenue Service rules and determinations related to a common paymaster situation are not controlling but serve as guidelines in DWS' determination as to which entity is the employing unit.
DWS will recognize a common paymaster if closely related corporations satisfy all of the following criteria:
Each related company is a corporation;
There is at least 50 percent common ownership of stock or interest, or there is at least 50 percent common officers in the related companies, or 30 percent of the employees work for all of the related companies;
The reporting for any calendar year must be consistent with FUTA annual 940 reporting; and
Employee(s) must be performing concurrent service for some or all of the related companies.
Employers who wish to report under a common paymaster will need to petition DWS in writing for authorization. That authorization will stipulate the requirements for reporting under a common paymaster, indicating that if at any time, the above criteria are not met, the DWS authorization is void.
Payrolling is NOT allowed. Payrolling is defined as the practice of an employing unit paying wages to the employees of another employer or reporting those wages on its payroll tax reports.
Generally an employee is reportable by the employer:
Who has the right to hire and fire the employee;
Who has the responsibility to control and direct the employee;
For whom the employee performs the service.
For unemployment contribution purposes, payrolling is NOT allowed. Exceptions to this provision are noted in the rules pertaining to leasing and temporary service companies and common paymasters.