Inappropriate Dual Payroll Payments

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The COVID-19 pandemic increased opportunities for people to work remotely and to work multiple jobs. While uncommon now, dual employment may become more common in remote-work environments. This is even the case in government employment.

Dual employment, in which one person is employed by two government agencies, can appear problematic. This is true if the person indeed holds two conflicting, full-time jobs. But as this performance audit shows, it can be appropriate for a state employee to be paid for work outside of their primary job role. However, doing so can pose challenges to the state agencies managing their work. It can also create the risk that public funds might be used improperly. The State Auditor’s Office has investigated several instances when employees inappropriately worked at two agencies during overlapping office hours.

State agencies and the Office of Financial Management (OFM) both play a role in mitigating risks associated with dual employment. This audit assessed strategies to help state agencies identify and manage employees’ dual employment.

Read a two-page summary of the report.

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Key results

We invited staff from five state agencies to discuss challenges they face in managing dual employees. We learned that state agencies struggle to identify workers that are dual-employed, and at times lack coordination between employers. As a result, they cannot be certain employees have established separate work schedules for each job.

Additionally, our research identified five key leading practices that could help agencies better manage dual-employed staff. For example, employers should keep up-to-date information on dual-employed workers. They should also provide supervisors with remote work guidance. If followed, such practices can help agencies mitigate dual employment risks. The risks include employees who work the two jobs during overlapping work schedules. In addition, state workers might accrue duplicated leave or other benefits.

This audit focused on practices to identify and manage dual-employed workers between state agencies. Nonetheless, some practices could also be useful for state-to-local or state-to-private-sector dual employment.

Background

State agencies are required to follow several statewide personnel and payroll requirements concerning dual employment. Washington's Office of Financial Management issues the rules and provides guidance to agencies on implementing them. If explicit rules do not exist in a certain area, agencies idependently develop their own policies and procedures. Agencies are also responsible for devising internal rules around hiring and onboarding new employees. This might include asking workers to disclose if they plan to hold another job when they join the agency.

OFM collects statewide payroll data from most state agencies. This data can identify state workers who receive payroll payments from more than one state agency. OFM also manages statewide human resources policy functions. At present, OFM’s Human Resources Management System support website offers technical guidance in three areas:

  • Hiring dual-employed workers
  • Coordinating with other state agencies
  • Running a report on all active dual-employed state workers

Agencies struggle to mitigate risks

State agencies experience challenges in identifying staff that are dual employed. This can lead to problems coordinating their work and managing risks around dual employment. We held focus group meetings with five state agencies to learn about problems they faced. These conversations highlighted three areas they found especially challenging.

First, government agencies have few avenues to identify dual-employed workers. They rely on employee honesty and self-disclosure. The statewide payroll system only alerts the hiring agency about a candidate’s dual employment, not the current employer.

Second, poor coordination between two employers can lead to problems with work schedules, overtime pay and leave accruals. Again, agency staff said they relied on employees to reveal conflicts between the needs of two employers.

Third, most selected agencies only asked about secondary employment upon hiring. This means they lack up-to-date information about workers’ ongoing status, which can mask dual employment.

Five practices can help

Leading practices suggest employers develop policies and processes to identify and manage instances of dual employment. During the audit, we identified leading practices from a variety of organizations. They included: the U.S. Office of Personnel Management, several other states, and the five selected state agencies in Washington. These practices revealed five useful categories:

  1. Develop dual employment policies and procedures

  2. Identify dual-employed workers

  3. Coordinate schedules, benefits and overtime between employers

  4. Keep up-to-date information on dual-employed workers

  5. Provide guidance to supervisors around remote work 

For example, a policy might state that dual employment cannot interfere with employee work performance. Related procedures could establish how to review and approve or disapprove requests for dual employment. Additionally, the agency could ask candidates to fill in a form disclosing a second job.

OFM could also help

OFM provides some technical guidance to state agencies concerning people employed by more than one state agency. Its website contains materials that address hiring dual-employed workers. For example, it advises the hiring agency to coordinate hours worked and benefits with other state agencies employing the worker. OFM already provides technical advice to agencies about hiring practices. Given its expertise in this area, it is well positioned to offer them additional guidance about dual employment.

Guidance for all agencies

We consider these audit results so broadly applicable that it is in the state’s best interest for all government agencies to consider the strategies highlighted in this report, including:

  • Ensure that policies and procedures include key components on dual employment
  • Identify dual-employed workers using several approaches, such as requiring all new workers to submit self-disclosure forms
  • Coordinate work schedules between employers to prevent conflicts around dual employment
  • Keep information up to date on dual-employed workers
  • Provide guidance to supervisors on managing employee remote work

Recommendations

We made a series of recommendations to OFM to provide state agencies with guidance around dual employment policies and procedures. We recommended OFM help agencies learn how to run reports to identify all active dual-employed employees. Finally, OFM should make sure its new payroll software has controls in place to alert state agencies when people have more than one state employer.

The audit did not make formal recommendations to the five state agencies we interviewed. However, we consider it is in the state’s best interest for all government agencies to consider the strategies highlighted in this report.