Dayforce defines the terms Check Type and Check Template as follows:
Check Types
Check Types refer to the type of check that the payment is associated with, such as Additional, Manual, or Onsite (US Only).
- Additional check amounts are added onto the employee's regular earning statement and are used for payments such as bonuses and vacation pay. Dayforce, Inc. generates the check when you commit payroll.
- Manual checks are issued outside of Dayforce, and are used for payments such as accounts payable. They appear on an separate earning statement from the employee's normal earnings.
- Onsite checks (US Only) are used for immediate payment and are printed at the work location. They aren’t associated with an earning statement in Dayforce, because Dayforce, Inc. doesn’t process or print the check. Instead, the check details are appended to a copy of the check itself, which you can see when you preview an onsite check in Dayforce.
- ODP Off-Cycle True-Up is a check type that is used automatically when Dayforce processes an on-demand payment that falls in a pay period that crosses one quarter to the next, or that crosses one year to the next. For more information, see the topic “On-Demand Off-Cycle True-Ups” in the Dayforce Wallet Administrator Guide.
Check Templates
Check templates are set up in Payroll Setup > Check Templates. In Dayforce, all payments that employees receive are associated with check templates that determine which generated earnings, deductions, or taxes are applied to the check amount.
Check templates only include generated earnings and deductions that are configured in the employee payroll policy, as well as those earnings and deductions configured for individual employees as payroll elections in the People feature.
By default, the Normal check template is configured to apply any generated earnings, auto pay earnings, deductions, and taxes as configured in the employee payroll policy. Typically, the Normal check template is used for all regular payroll payments. You can configure additional check templates to restrict which generated earnings, deductions, or taxes are applied, ensuring that generated amounts aren’t incorrectly applied.
Check templates are used when you create quick entries in the Quick Entry tab in Payroll > Pay Run Management and Payroll > Data Entry. When you create a quick entry, the Check Templates drop-down list is displayed in the quick entry, and you can select a check template in this drop-down list, provided you have created the template. If the quick entry is for a normal pay run, the Normal option is selected by default. If the quick entry is for an off-cycle pay run, the check template that you selected when you created that pay run is used. You can create and select a custom check template if needed.
Examples of Using Custom Check Templates
Example One
Employees pay for parking, gym memberships, and health insurance through deductions that come off their regular earnings, which are paid semi-monthly using the Normal check template. These deductions are applied and the amounts are subtracted from their regular earnings.
In this example, employees are eligible for an annual bonus, paid in December. These bonuses are paid in addition to their regular earnings. Because the bonus is an additional payment, applicable taxes must still be calculated and deducted, but the usual deductions for parking, gym memberships, and health insurance shouldn’t be taken off of bonus earnings, because those deductions were taken off of their regular earnings.
To accommodate this need, you can configure a Bonus check template that includes applicable payroll taxes but that excludes the parking, gym, and insurance deductions. When you are entering quick entries in Payroll for the bonus amounts, you can select the Bonus check template to ensure the deductions aren’t incorrectly applied.
Example Two
You can configure separate check templates to limit what generated earnings are calculated and applied to an employee's earnings if there are situations when employees shouldn’t receive a generated earning they would otherwise earn.
An employer uses a generated earning amount to contribute to an employee's 401(k) account, and the generated amount is calculated at 5% of the employee's regular earnings. This amount is calculated and paid as a generated earning on an employee's normal pay. However, if an employee is terminated mid-pay period, they are paid their regular earnings for the hours they have already worked but don’t earn the 401(k) contribution for the pay period.
To accommodate this need, you can configure a Pay-out to-date check template that excludes the 401(k) contribution generated earning. When you create an off-cycle pay run to pay the employee their earned to-date wages, selecting the Pay-out to date check template ensures that the application doesn’t calculate and include the 5% generated earning in the payment
Additional Check Template Configurations
Exclusion Options
In the Exclusion Options section of a check template, you can configure which types of accounts payments are sent based on the check template used; you can configure check templates to ignore either direct deposit or payroll card options, so that payments made with the check template selected aren’t sent to employees using direct deposit or payroll cards, even if an employee has elected to receive a portion of their earnings through direct deposit or on a payroll card. This functionality is controlled by the Exclude direct deposit accounts from disbursement checkbox and the Exclude pay card accounts from disbursement checkbox.
United States Taxation
You can configure taxation parameters for US payments in the United States Taxation section of a selected check template.
Tax Method
In the United States Taxation section, you can select an option in the Tax Method drop-down list to define an override tax method if payments or quick entries that use this check template are supplemental in nature, such as bonuses or off-cycle payments. Leave this setting blank and the system will take into account the employee’s pay amount and frequency when determining the appropriate tax bracket.
Consider a simplified example where an employee earns $1,000 per week. To determine the taxes to withhold, the application multiplies 1,000 by 52 to determine their annual salary, uses this number to determine their tax bracket, and multiplies the percentage for their tax bracket by $1,000 to determine the amount of taxes to withhold.
If supplemental payments were taxed with the same calculation, the application would over withhold taxes; continuing the example above, when the same employee earns a bonus of $4,000 on a separate check, the application would incorrectly calculate the employee’s annual income as $208,000 (4,000 multiplied by 52). As a result, the employee belongs to a higher tax bracket than they should and likely pays a higher tax rate than they should on their bonus.
The application treats payments made on check templates configured as supplemental payments differently; a flat rate is applied to the payment amount and the application doesn’t calculate the employee’s taxes as if they made the supplemental payment on each pay run.
To configure check templates as supplemental payments, select Supplemental in the Tax Method drop-down list.
Check templates can also be configured so that payments are combined with the last previous regular pay and the tax is calculated on the total. The tax previously withheld from the last regular pay is subtracted to find the tax attributable to the check payment. This functionality is typically used for bonuses but can cover any payments made with a check template configured with Supplemental With Separate Aggregation selected in the Tax Method drop-down list.
Depending on state jurisdiction, bonus and stock option checks might require a supplemental flat tax rate. In this case, configure the check template with Supplemental Flat Rate selected in the Tax Method drop-down list, and select either 1-Regular Method or 2-Bonus/Stock Options in the Supplemental Alternate Calculation Method drop-down list, depending on state requirements.
If the selected method isn’t applicable, the application applies the tax using the system default rate for the jurisdiction.
Payment Frequency
In the United States Taxation section of a selected check template, you can select an option in the Payment Frequency drop-down list to override the number of pay periods per year the application uses in tax calculations.
For example, an employee that is normally paid $1,000 weekly is paid their two weeks’ vacation time up front on an additional check of $2,000; when the application calculates the taxes to withhold, it would normally multiply the payment about by 52 (as an employee paid weekly is paid 52 times a year). However, multiplying 2,000 by 52 implies that the employee earns more annually than they actually do.
Because this payment represents two weeks of pay, taxes should be calculated based on 26 pay periods per year. To accomplish this, administrators can configure check templates with different pay frequencies.
In the example above, when the two weeks’ vacation time is paid on a check template with a bi-weekly pay frequency, the application can correctly calculate taxes based on 26 pay periods in the year.
To configure check templates with different pay frequencies, select a frequency in the Payment Frequency drop-down list.
Canada Taxation
You can configure taxation parameters for Canadian payments in the Canada Taxation section of a selected check template.
Gross Up
The Gross Up checkbox is located in the General section of a selected check template: You can configure a check template so that earnings that use it are treated as target disposable income rather than gross payments. Dayforce then performs a gross up calculation that increases the gross payment needed to cover items included in gross up such as mandatory taxes. Selecting the Gross Up checkbox in the General section of the check template displays the Gross Up Options section in the check template.
Debit Deduction Arrears
Whether the Debit Deduction Arrears checkbox is selected in a check template determines how Dayforce calculates and applies deduction arrears amounts. This checkbox only impacts deductions that the application automatically calculates from earnings. It doesn’t affect any manual deduction entries that you add in Payroll.
For example, you have configured a payroll policy that automatically deducts $10 every time employees are paid. Say that one employee has an arrears amount of $100 owing. You add an onsite check for this employee. The check template that you use determines what happens next:
- If you use a check template with the Debit Deduction Arrears checkbox selected, Dayforce deducts the $10 amount as a new amount owing and doesn’t apply it to the existing arrears balance. If there aren’t enough earnings on the check to cover the $10 deduction, the arrears balance increases to $110.
- If you use a check template with the Debit Deduction Arrears checkbox cleared, Dayforce deducts the $10 amount by applying it to the employee's existing arrears balance, reducing the arrears amount to $90. If there aren’t enough earnings on the check to cover the entire $10, the arrears balance of $100 remains the same.
See Impromptu Arrears for Manual Deduction Entries in the Dayforce Implementation Guide.