When an employee passes away, the agency must complete the following tasks:
1. CHOP Request for final pay
a. Pay: Pay employee for all time worked since last pay period (regular, shift, overtime, etc.), all unused annual leave up to maximum of accrual rate, and ¼ of unused sick leave up to maximum accrual of 360 hours. (See Personnel Rules pg 30)
i. Current month health, dental, and life insurances (current payment is for current month’s coverage)
iv. Local Occupational Privilege Tax (if applicable)
v. Optional Deductions
· 401k and 457. The money will go the beneficiary listed on the plan.
c. Do NOT Deduct:
i. PERA Life Insurance: GTN 059 (current payment is for next month’s coverage)
ii. Federal Taxes: per the IRS, final payments to deceased employees are not subject to income tax, only Medicare tax.
iii. State Taxes: per the Department of Revenue, any income that is not taxable under Federal regulations is not taxable for Colorado.
d. Write the date of death and the beneficiary’s name and address on the CHOP Request.
i. The beneficiary for the final paycheck is generally the same person listed as the life insurance beneficiary. If there is confusion, try speaking to the emergency contact listed on Personnel Inquiry, Screen 5.
e. Fax the CHOP request to Central Payroll, 303-866-4138, Attn: Deceased CHOP
2. CPPS Changes in Personnel Update Screens (Screen 01)
a. Personnel Action Data Screen (Screen 3): Change the status to ‘T’ for terminated using the date of death. The separation reason should be 80 (without survivors) or 81 (with survivors).
b. Job Screen (Screen 4): Stop date the job as of the last day of the prior pay period. (Example: if a monthly employee dies on February 17th, the stop date should be January 31st.)
c. Personal Data Screen (Screen 5): Change name to LAST DEC’D,FIRST (no space between the comma and the employee’s first name). Change the address to the beneficiary’s address.
3. Payroll Timing Issues:
a. If a payroll is processing and the employee is in a batch, please delete the lines from the batch and adjust the batch header. If this happens on the day that payroll is processing, please contact the Garnishment Desk in Central Payroll (303-866-5804) to make the deletion and the correction to the batch header.
b. If the employee passes away after payroll has run but before payday, please contact the Direct Deposit Desk in Central Payroll (303-866-6227) to cancel the advice.
Central Payroll’s Process
Central Payroll will send legal documents to the beneficiary listed on the CHOP request to determine whether the final check should be made payable to the estate or to the beneficiary. The CHOP will not be entered into CPPS until after the documents have been completed, or until 1 month after the date of death (whichever comes first). After the final pay has been entered into CPPS, a balance adjustment is done to remove the final pay taxable grosses from the year-to-date balances, as this pay is not taxable to the employee. The check is considered taxable income for the estate or the beneficiary and a 1099 is sent out the following February. If you have any questions regarding final pay processing for deceased employees, call Central Payroll at 303-866-5418.