Tipped Employees
Posted on November 30, 2011
Payroll can be a unique challenge for businesses that employ tipped workers. Complex regulations that change from federal to state and local levels make handling payroll for tipped employees a complicated undertaking for many small businesses. By understanding government regulations concerning tipped employees, employers can take appropriate steps to reduce risk and ensure compliance.
Minimum Wage for Tipped Employees
Federal law determines the minimum wage rate at which employees can be paid. Although individual states set their own minimum wage rate, unless the state rate is higher, employers must pay their employees based on the federal minimum wage. This is true for tipped employees as well.
As of July 24, 2009, the federal minimum wage rate is set at $7.25 per hour. However, federal law also allows employers to count employee tips as part of their wages by taking a credit against the minimum wage requirement. The maximum amount of credit that the employer can apply is $5.12 per hour resulting in a tipped employee federal minimum wage of $2.13 per hour when the maximum credit is applied. This credit applies only to tipped employees, and many states have regulations concerning these credits. The Wage and Hour Division of the U.S. Department of
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Preparing Payroll for Year-End
Frequently Asked Questions
Posted on October 27, 2011
December and January are very busy months for payroll processing. As one year comes to a close and the new year begins, several payroll-related tasks need to be accomplished by employers. Some activities need to occur prior to the new year and others after the new year has begun.
In an effort to organize payroll activities and plan for the new year, several questions may arise:
What do I need to do before my last payroll of the year?
- Confirm accuracy of current data - It is important that all employee information is checked for accuracy and updated if necessary. Employee names, addresses and Social Security numbers (SSN) are information required on Form W-2 that must be updated prior to the final payroll processing for the year. Incorrect or mismatched employee names or Social Security numbers can result in penalties imposed by the Internal Revenue Service (IRS) as well as some states. (If an employee does not have an SSN, information on how to apply for a Social Security number is available through the Social Security Administration’s website.) It is recommended to have each of your employees verify that their SSN is recorded correctly in your system. SSNs can also be verified online through
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Workers’ Compensation
Posted on September 28, 2011
Workers’ compensation programs in the United States provide for the needs of employees who incur work-related injuries or illnesses. Benefits can include compensation for wages lost while recuperating from an injury, medical and rehabilitation costs, disability benefits, as well as survivor and death benefits. In return for coverage under a workers’ compensation program, covered employees relinquish their rights to sue their employer in the case of work-related illness or injury.
History of Workers’ Compensation Laws in the United States
Before the Supreme Court upheld the constitutionality of compulsory workers’ compensation programs by the states in 1917, workers had little recourse if they were injured while on the job. An employee who became hurt had to turn to the courts for restitution. Most workers did not have the financial resources to sue the employer; those who could, faced a difficult time, as the onus was on the employee to prove negligence on the employer’s part. As a result, very few employees received any compensation. Additionally, employees and employers alike faced an unpredictable system where the settlement might be less than the employee’s legal costs or an exorbitant amount that might be more than the employer could afford to pay.
Initially, the concept of workers’ compensation was not widely embraced. In addition to resistance from employers, unions opposed workers’ compensation laws, as they feared that the necessity of unions would decline if the states controlled worker benefits. Between 1902 and 1910, four states
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What Employers Need to Know About Visas
Posted on August 31, 2011
The first United States federal immigration law was passed on March 26, 1790, and established a two-year residency requirement for naturalization. Since then, over one hundred immigration statutes have been enacted to facilitate and control the entry of noncitizens, also known as aliens, into the U.S. A major policy update was made via the Immigration Act of 1990 that has provided the framework for today’s immigration policy.
Visas allow individuals who are citizens of a foreign country to enter and work in the United States. The U.S. Department of State regulates visa policy and issues visas. There are two basic types of visas: nonresident visas are granted to individuals who are on a temporary stay in the U.S, while resident visas are granted to those desiring permanent residency. There are over 70 temporary and permanent visa types, which are largely determined by the reason for the individual’s visit to the U.S.
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Payroll Management for Small Business: Part 2 - Paying Employees
Posted on July 27, 2011
Every business owner or manager faces a multitude of challenges on a daily basis. In addition to the day-to-day operations of the business, the processes involved with paying workers can often be overwhelming, and mistakes made can result in sizeable financial penalties and fines. In the second of a two-part series on managing payroll for small businesses, Jean Domaingue, area director of sales for CompuPay, outlines essential information that every employer should know when paying employees.
Minimum Wage
As of July 24, 2009, the minimum wage that employers are required to pay their employees was set by the federal government at $7.25 per hour. However, each state has its own minimum wage requirement. If the state minimum wage is set below the federal rate, employers in that state must use the federal minimum wage amount. If the state minimum wage exceeds the federal rate, employers in that state must pay their employees at the state minimum wage. A list of state minimum wage information contacts is available on the U.S. Department of Labor’s website.
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