Payroll Limitations
A comprehensive overview of the worker types, business structures, industries, payroll situations, features, taxes, and forms that are not supported and must be evaluated prior to onboarding to ensure compliance and eligibility.
Limitations and Restrictions
Below are a list of the types of workers, businesses, industries, features, taxes, and payroll situations that are not supported by OnTheClock Payroll.
If you have any questions about your ability to enroll in this service, please reach out to our support team: support@ontheclock.com.
Before onboarding any customer, we strongly recommend reviewing their payroll journals to ensure there is nothing they require that appears on this list.
Types of Workers
Note: Unless otherwise noted, these are hard blockers.
- Government employees (including but not limited to: public school teachers and administrators, public librarians and administrators, police officers, fire fighters, city or county clerks, environmental protection officers, postal workers, public works employees in sanitation and/or water treatment, department of motor vehicles staff, etc.)
- Employees with addresses located in Puerto Rico or the US Territories
- Household employees
- Non-resident aliens
(Exception: We could onboard this worker if they have an SSN, but they would be under-taxed.) - Railroad employees
- H-2A and H-2B visa workers
- Special taxation for American Indians or individuals working on tribal reservations
Types of Companies
Note: Unless otherwise noted, these are hard blockers.
- Agricultural employers
- Government and Federal contractors
- PEOs (or companies migrating from certain PEOs)
- Nevada Financial Institutions
- Companies located in Puerto Rico and the US Territories
- Pass-through entities
- Companies with over 2,000 active or inactive workers on a single EIN
Note: This limit applies at onboarding. If a company grows beyond this amount after onboarding, they will not be removed from the platform. - A single payroll can have a maximum of 1,500 payroll items
- Common Paymaster
Types of Industries
Note: Unless otherwise noted, these are hard blockers.
- Gambling, including physical locations, online gaming, lottery, games of chance, fantasy sports leagues, etc.
- Marijuana sales or dispensaries
- Sale of guns and/or ammunition
- Sale of flammable and combustible substances
- Drug paraphernalia used to produce or consume controlled substances
- Adult entertainment businesses that directly or indirectly provide sex-related services
- Virtual currency (e.g., Bitcoin) and related services
- Sales, distribution, or access to counterfeit licensed materials
- Shell banks
- Bearer share companies (unless publicly traded on a recognized exchange)
Payroll Situations and Features Not Supported
Soft Blockers
Companies can still use OnTheClock but must manage these externally.
- Tax deferrals
- Applying tax credit balances to future quarter liabilities
- Tax withholdings or deductions from contractor payments
- Automated remittance of child support garnishments to tribal agencies
- Automated remittance of non-child support garnishments (e.g., tax liens)
- New hire reporting for contractors
- State-specific service member exemption form
- NQDC plans
- Tiered 401(k) matching
- 408(k)
- QSEHRA reimbursements
- COBRA benefits/reporting
- ACA reporting
- W-4 Lock-in Letters
- Net to Gross Wage Calculation
- EITC Notices
- Predecessor/successor handling (Transfer of Experience; 941/W-2 reconciliations due to acquisitions)
- Self tax payment and/or filing outside of OnTheClock
- SUI out of state wage credits
- Employer Simple IRA match
- Worksite reporting
- Certified reporting
- Optional PFML contribution rates
- PA local combined tax filings to one collector regardless of work location
- CA voluntary disability plan
Not Supported Payroll Scenarios
- Courtesy withholding
- Child support payments to tribal support agencies (payroll deductions can be supported as post-tax deductions)
- Wage garnishment compliance
- Regular rate of pay calculation
- Shortfall payroll reports when not enough taxes are withheld
- Tip credit calculations
- Commuter benefits (Section 132)
- Primary workplace unemployment tax allocation when income tax and unemployment tax must be assessed in different states for the same worker
Unsupported Tax Handling and Required Manual Filings
Tax Remittance
Soft Blocker – Companies must remit these taxes on their own.
|
Tax Name |
Jurisdiction |
|
Hawaii SDI |
Hawaii |
|
New York Paid Family Leave Insurance |
New York |
|
New York SDI |
New York |
Tax Calculation
Soft Blocker – Companies must calculate and adjust pay/paystubs manually.
Federal
- Employer RRTA Tier I Tax
- Employer RRTA Tier II Tax
- Railroad Unemployment Tax
Alabama
- Hobson City Tax
California
- San Francisco Payroll Expense
Delaware
- Wilmington Business License Fee – Employer
Illinois
- University Park Employer Expense Tax
Kentucky (Various TIF & Local Taxes)
- Williamstown Ark Encounter TIF
- Warren County ITA Transpark Tax
- Boone County – TIF
- Ferguson Blvd TIF
- Boone's Ridge TIF
- Walton Industrial Park TIF
Nevada
- Nevada MBT Financial Institution
New Jersey
- NJ Waterfront Payroll Tax – Employer
- Newark Employer Payroll Tax
- Jersey City – Employer Tax
- Jersey City – Employer CITY
New York
- New York Employer Compensation Expense Tax
- NY Waterfront Payroll Tax – Employer
Ohio (JEDD & Local Taxes)
(Complete JEDD list retained exactly as provided)
Washington
- Seattle Payroll Expense Tax
- Seattle Social Housing Tax
West Virginia
- Smithers City Tax
For more information about unsupported taxes, see the Unsupported Tax Guide.
For supported Pennsylvania locals, see the Pennsylvania Local Tax Support article.
Unsupported Forms
Soft Blocker – Companies may file these forms independently.
- Form 8027 — Tip Reporting
- Form 8846 — FICA Credit on Tips