May 2026 Payroll News

Agencies should ensure all prior period transactions are entered in Workday@OK prior to payroll beginning. Payroll partners should review all retro transactions when the payroll first begins and compare to communicated changes. If any additional prior pay period changes are made, the retro results will need to be recalculated. To request a retro calculation, please submit a Payroll Support request.

Additional retro calculations will not be run after 4:30 p.m. on the day the payroll’s continuous calculation process turns off. This deadline still allows the agencies plenty of time to review the payroll after the retro calculations have been completed and request additional retro calculations if needed. The deadline prevents last-minute work and changes so agencies can finalize their documents and ensure the budget is available. If an employee’s payroll is not correct or needs a retro calculation after this time, the employee should be placed on hold by going to the related actions button (…) for the payroll results and selecting Pay Calculation > Hold. Placing the employee on hold, allows the agency time to continue finalizing the rest of the payroll and more time for review of the employee after the payroll completes. Agencies know the payroll is complete when the RPT00094 – Payroll Warrant Register is burst to agency partners. After receiving this report, the employee can be taken off hold by going to the related actions button (…) for the payroll results and selecting Pay Calculation > Un Hold. After this process, the payroll results will need to be recalculated. If additional retro calculations are required or support is needed, please submit a Payroll Support request. Once the employee is correct, the required payroll documents will need to be sent in for the payroll to be processed.

Note: This retro deadline does not apply to on-demand payroll processing. 

Workday@OK state agencies are required to have payroll documents to OMES by noon five business days prior to the pay date. All required documents must be submitted by the deadline to ensure adequate time for audit and processing. The following documents are required to be submitted by state agencies:

1. The final budget-checking report showing no budget deficit.
2. The signed payroll claim document.

Submit the paperwork to payrolltransprocess@omes.ok.gov with read receipts turned on. On-cycle payrolls are completed based on the published schedules. Payrolls not submitted timely are subject to being placed on hold as outlined so that processing may continue for all other agencies.

Off-cycle payrolls are processed upon receipt of required documents listed above and according to the standard processing schedule.

Institutions of higher education have different documentation requirements. The following is required from these institutions:

1. The validated PFT Funding report showing no budget deficit.
2. The signed payroll claim document.

Institutions of higher education are required to have payroll documents to OMES by 3 p.m. five business days prior to the pay date.

The One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, included a provision for no taxes on the premium portion of overtime pay. Eligible individuals who receive qualified overtime compensation that is required by the Fair Labor Standards Act (FLSA) may be able to claim a deduction on their personal tax return. Payroll taxes must still be withheld from all overtime compensation, with both the wages and taxes reported on the employee's W-2 form. For 2025, information was provided to employees for use when completing their personal tax returns. As of this year, the qualified overtime is required to be reported on the W-2 in box 12 with code TT.

In Workday@OK, overtime earning codes have been identified, and configuration is being completed to capture the qualified overtime payments for eligible employees. The system will track the amounts to be included on the W-2 at year-end. Manual calculations are not needed to capture the overtime wages and taxes.

For agencies that submit EIB files to pay overtime, the qualified amounts paid to eligible individuals will need to be provided to OMES after the last payment of the year so that the amounts can be loaded for correct W-2 reporting. 

Payslips that employees view from completed payrolls will not reflect payroll corrections when the employee had an adjustment for an overpayment or other correction for that period or a prior period. Agency payroll personnel can view the payslip with the updated year-to-date information on the worker’s profile under: Pay > Results and then View Payslip from the related actions button […] on the applicable payroll result row. The employee’s payslip PDF is static (will not change) while the payroll partner’s payroll result view of the payslip is dynamic (will update with changes). Future employee payslip PDFs that are processed on completed payrolls after adjustments were made will include the amounts in the year-to-date totals.

Agencies are responsible for sending vendors backup documentation for payments processed to ensure proper crediting to employees’ accounts. This will be one of the following from Workday@OK:

• RPT00234 – Deductions Register
• RPT00095 – Deduction by Confirm Date
• CR INT066 Vendor Withholding Order Payroll Result Lines (BIRT)

When contacted by vendors or the central payroll team to provide this information, a prompt response is required, especially due to the time sensitivity of some payments. Without this information, the vendor may not timely credit an employee’s account, and if for garnishments or liens, penalties or interest may be added to the employee’s account in error.

When mailing payments, please ensure all documentation related to the payments is included. When payment is processed as an electronic funds transfer (EFT) or Interagency WIR, please be sure to fax, scan and email, or mail the proper documentation. Vendors may have a specific method for receiving payment information; if so, their instructions must be followed.

Employees should be entering their tax elections directly into Workday. If an agency allows employees to submit a W-4 to staff for entry into the system, the form must be the current version. If not the current version, the form should be disregarded and returned to the employee, with no changes made in the system.

Agency personnel who enter W-4 information must use care when entering employee W-4 elections. If the information is not entered correctly, employees may have more or less withholding than desired, which could impact them at year-end. In addition, not entering the information correctly based on the actual W-4 form would be an audit finding and could result in penalties and/or interest being assessed to the agency.

Agencies with employees in other states are required to know the rules for those specific states and if a state W-4 is also required to be completed.

With employee self-service in Workday@OK, direct deposit information should be entered directly by employees per OAC 260:25-25-16.

If an agency makes an exception to enter an employee’s direct deposit information on their behalf, the employee must complete the HCM-73 Automatic Deposit Transmittal form and provide it to the agency along with an official document from the financial institution. Bank deposit slips should not be used to get the bank routing/transit number for setting up direct deposit information. A voided check from the employee is the most reliable method.

If the employee does not have a voided check or wants to deposit into another type of account, have the employee call the bank directly to get the routing/transit number. A bank routing/transit number should never start with the digit 5. This indicates a branch of the bank and will cause the direct deposit to fail. A direct deposit that fails will not leave OST, and the agency will be required to pay the employee. 

47 O.S. § 156.1, as amended, prohibits the personal use of state-owned motor vehicles but permits the use of the vehicles for commuting in very specific situations. 2007 OK AG Opinion 18 also addresses this issue.

When a state employee is allowed to commute in accordance with the statute or the attorney general opinion, the agency must notify the governor, the president pro tempore of the Senate and the speaker of the House of Representatives. In addition, when an employee is using a vehicle from OMES CAM Fleet Management, the agency must complete OMES CAM Form FM022, Authorization to Commute in State Vehicle.

The IRS considers commuting to be a noncash taxable benefit to the employee, even when the use of the vehicle is for the benefit of the employer. There are very few exceptions to the taxability of commuting. Exceptions are for certain vehicles that are not likely to be used for personal use because of their design. These vehicles are listed in IRS Publication 15-B. The method of calculating the taxable fringe benefit is dependent on the employee’s status.

• Commuting Rule: Most state employees may use the Commuting Rule. Under this rule, the value of a vehicle provided to an employee for commuting is computed by multiplying each one-way commute by $1.50. If more than one employee commutes in the vehicle, this value applies to each employee. This amount must be included in the employee’s wages or reimbursed by the employee.
• Cents-Per-Mile Rule: The Cents-Per-Mile rule may also be used by most state employees.
• Automobile Lease Value Rule: Elected officials or employees whose compensation is at least as great as a federal government employee at Executive Level V (for 2026; $184,900) are not allowed to compute taxable income under the Commuting Rule. These officials and employees must use the Automobile Lease Value Rule to compute taxable income.

All valuation methods are described in detail in IRS Publication 15-B.

The employee may choose to have the value included as taxable income or pay the employer for personal use rather than having it treated as wages. When treating the value as wages, the imputed income is subject to FICA and income tax withholding. The taxable amount, if not paid by the employee, must be processed through payroll so that taxes are calculated, and these amounts are reported on the employees’ W-2.

The taxable amount will need to be processed through Workday@OK as a One-Time Payment, a pay input or entered on the timesheet, depending on the agency’s processing policy. The amount will be included as taxable income and will be taxed on the paycheck.

We recommend including the vehicle usage in the employee’s payroll each pay period to prevent a large sum being included in the employee’s last pay of the calendar year, resulting in a higher-than-normal amount of taxes withheld. Additionally, up-to-date reporting of vehicle usage will benefit the agency should the employee terminate during the year.

For more information, email the Central Payroll team.

When processing non-paying taxable fringe benefits for employees through payroll, only include the amount when processing payable wages. Nonpaying taxable fringe benefits such as vehicle usage, miscellaneous noncash earning and gifts for employees are subject to taxes and require payable wages to collect the employee share of taxes. Questions may be directed to the Central Payroll team.

Military differential wage payments are payments made to an employee during the time the individual is on active duty for a period of more than 30 days and represents all or a portion of the wages an employee would have received from the employer if the individual was performing services for the employer.

Military differential pay is includable as wages for income tax purposes on Form W-2 but is excludable from Social Security and Medicare taxes. To correctly report military differential wage payments, the amount should process through the correct compensation plan.

The military differential pay is also included in wages for OPERS, OLERS and URSJJ retirement contributions and must be correctly processed for the information to be sent to the retirement systems correctly.

Please refer to 72 O.S. § 48 and OAC 260:25-15-44 for additional information related to leave of absence due to military service.