Using Dayforce Wallet, you can directly pay out the total amount of non-cash tips owed to an employee at the end of their shift, without any tax or other deduction withholdings.
Prerequisites
Important: Before your instance of Dayforce is configured to use pre-tax tips, you must sign a pre-tax tips contract and you must set up an additional pre-funding account with the Dayforce Finance team.
For information, contact the Dayforce Wallet Customer Success team at walletsuccess@dayforce.com.
Process Flow
- The employee works, and tips are recorded in your point-of-sale (POS) system or in a rules engine .
- Tips information is then sent to Dayforce Wallet using an API or an SFTP import.
- Dayforce Wallet determines whether or not the tips can be successfully deposited. Successfully deposited tips are made available on the employee’s Dayforce Wallet Card
- You receive paid and unpaid (unsuccessful) tips data by the method you used, whether API or SFTP import.
- Depending on which method you use to send tips to Dayforce Wallet, one of the following applies:
- If you use the API, you must manually record the tips in Dayforce, in WFM as pay codes (which get sent to Payroll as part of the Pay Admin Checklist process), or you can enter them in Payroll as earnings codes.
- If you use SFTP, the successful tips are automatically entered into Timesheet (WFM) as paid pay codes. For the unpaid tips, the employer needs to review the information and action accordingly.
- Payroll calculates and withholds taxes for paid pre-tax tips from normal earnings.
- Payroll is committed, after which employees can see their pre-tax tips earnings on their regular earning statements. Separate earning statements are not created each time tips are paid out.
Dayforce Configuration for Recording Pre-tax Tips
To support pre-tax tips in Dayforce, you must determine how you want to track and report on pre-tax tips. The options are using the WFM feature or the Payroll feature.
It is very important to note that pre-tax tips are not automatically entered or recorded in Dayforce if you use the API. If you use SFTP, the paid tips are recorded in WFM automatically.
Depending on how you want to track pre-tax tips, you must consider the following:
If you plan to use WFM:
- Will you use existing pay codes, or will you create new pay codes?
- Which pay policies have rules around tipping? If you create new codes, you must update the pay policy rules.
- Which pay codes map to which earning codes?
- What users need access to the new pay codes or pay code groups?
- Are any new pay categories required?
- Do you need to update time entry policies because of new pay codes?
- Do entitlement accruals need to be updated to include the new pay codes?
See the following topics in the Dayforce Implementation Guide about the necessary WFM configurations:
If you plan to use Payroll:
- Will you use existing earnings codes or new earnings codes?
- Do you need new Payroll Mappings?
- Are calculations for Deferred Compensation or Pension Plan, such as 401(k), necessary? If so, you must add the new earnings code to the calculations
- Do any Payroll policy rules need to be updated with new earnings codes?
- Do you need to update Equifax mapping codes with the earnings type?
- For Reporting, you must configure any reports (such as the Earnings History Report or Earnings Register Report) to include paid and unpaid tips.
- Do you need to update any additional feeds that might use the new earning codes?
- Do you need to make general ledger updates?
- Do you need to update expressions or expression tables?
See the following topics in the Dayforce Implementation Guide about the necessary Payroll configurations:
- Earning Codes
- Payroll Configuration Overview , which links to payroll mapping information in other topics in the same guide.
- Create Deductions, which has information on considerations for 401(k) calculations.
- Payroll Policies
- Verification Services, which has information on considerations for Equifax mapping codes.
- Payroll Setup > Report Output
- Expression Rate Tables
Some Recommendations:
As a best practice, It is recommended that you mark tip-eligible employees as not eligible for on-demand pay (ODP). This configuration ensures that employees have funds to cover taxes and deductions for the paid tips.
Another consideration is that WFM has pay policy rules that can be used for calculations if required.
If you record paid tips in Payroll, it can be better for taxation purposes to add the paid pre-tax tips into the Payroll feature to ensure that paid tips are recorded in the same pay period that the employee is paid in.
Dayforce Wallet SFTP Transmission
You can submit pre-tax tips data using the Employee Pay Adjustment Import file in XML format (CSV isn’t supported). Download the Dayforce Interface Specifications ZIP file and see the Employee Pay Adjustment Import Specification document for more information about this import.
You send the Employee Pay Adjustment Import XML file using your SFTP server. The required file name format is EmployeeTips-<Namespace>-YYYMMDDHHMMSS.xml.
Important: You must send the pay code associated to a taxable benefit earning code in the employee pay adjustment import to avoid duplicate payouts.
The Employee Pay Adjustment Import background job runs and generates the following files:
- Successful tips to WFM: EmployeePayAdjustment-YYYMMDDHHMMSS.xml
- Unsuccessful tips: EmployeePayAdjustment-<Namespace>-TipsUnpaid-YYYYMMDDHHMMSS.xml
- CSV with all results: <Namespace>-TipsResults-YYYYMMDDHHMMSS.csv
Dayforce Wallet pays the tip amounts for the employee in their Dayforce Wallet account and automatically communicate the paid tips to WFM Timesheets for recording and taxation purposes.
Possible Messages for Tips
The following is a list of possible messages, including failure reasons, that are sent to you either in the API response or in the CSV file if you use the SFTP import option:
- Failure to process employee’s tip transaction.
- Duplicate tip failure due to existing prior tip transaction.
- Employee does not have a valid Dayforce Wallet account.
- Employee does not have an active bank account to load funds to.
- Employee does not have a Dayforce account actively linked to their Dayforce Wallet account.
- Dayforce is currently down and unable to load funds to the employee’s bank account.
- Attempts to retry call to Dayforce failed, unable to load funds to the employee’s bank account.
- Employee is under a state-mandated cooldown period where the loading of funds is restricted.
- Employee has an issue with their configuration in Dayforce. Missing liability date/next pay date.
- Employee has an issue with their configuration in Dayforce. Missing TSID.
- Processor is currently down and unable to load funds to the employee’s bank account.
- Attempts to retry call to processor failed, unable to load funds to the employee’s bank account.
- Processor is currently down and unable to load funds to the employee’s bank account.
- Request to process tip successfully loaded onto employee’s Dayforce Wallet account.
- Employee tip load request is in a pre-processing state.