The Top 10 Things You Need to Know About Payroll
On Demand Payroll Webinar
Payroll is an important part of a business owner’s overall responsibilities, but it can be a challenge to keep up with the ever-changing requirements. Are you classifying your employees and contractors correctly? Is your recordkeeping appropriate? Are you ready for payroll tax changes? Download the recorded webinar below or view the presentation document to learn about the top 10 things you should know about payroll:
1. How to avoid misclassifying employees
2. Hiring family members
3. New hire forms and reporting
4. Exempt vs. nonexempt employees
5. FLSA and federal minimum wage
6. Recordkeeping
7. Pay day
8. Overtime calculations
9. Payroll taxes
10. What’s new in 2011
This webinar was presented by Jean A. Domaingue, CPP, area director of sales for CompuPay, with over 30 years of payroll experience.
Frequently Asked Questions
The following are questions posed by attendees of this webinar, along with corresponding answers:
Q: Why does the I9 form need to be kept separate from all other employee documents?
A: The I-9 forms should be kept in a separate file from the employee’s personnel file for a number of reasons. Chief among these is the fact that if an auditing agent receives the employee personnel file along with the I-9, they will read the entire personnel file and have the authority to pass on the information they gain to other areas of the government. The Department of Labor and the Department of Homeland Security are working together and communicating with each other.
Q: Where to find information on exempt vs. nonexempt salaried employees per state?
A: Check your state’s Department of Labor website – links to state websites can be found on the American Payroll Association’s website.
Q: When does the Social Security change?
A: The wage base limit generally changes each calendar year and is announced in or around October of the year. As for the percentage withheld from EE’s pay, the change in 2011 is for 2011 only.
Q: With the I-9 SS verification: when we discover a SS that is invalid, the SSA says we can’t dismiss an employee based on that. How do we handle that?
A: The Social Security Online Social Security Number Verification Service has specific guidelines listed on their website.
Q: What is casual labor and would a “trial period” qualify as casual labor?
A: Please see the definition of casual labor on the Nolo.com website.
Q: What was the statement about paying weekly instead of monthly?
A: You should check with your state to determine what pay frequencies are allowed. Many states have different frequency requirements based on the type of worker, the industry, etc.
Q: What about overtime when you pay hourly plus commission - do you know what the calculation should be?
A: If your commissioned employees are non-exempt, then you should take the hourly pay for the week (47 hours x rate of pay), add the commissions to that amount and then divide the total pay by the number of hours worked. This will give you the “regular rate of pay” for that week. OT would then be calculated at 1/2 that rate x the OT hours worked.
Q: Can you go over again the differences on salaried employees?
A: Any employee may be paid a salary, but that does not necessarily mean that the employer, by paying a salary, can exclude that worker from overtime. The FLSA identifies those job duties which qualify as exempt from OT.
Q: Should copies of the documents given for an I-9 be attached to the I-9?
A: The law says you do not have to keep the documentation, but you can. Whatever you decide, you need to make sure that you are consistent with all employees. For example, you either keep copies of documents for all employees, or you don’t keep copies for all employees. Additional information can be found on the United States Citizenship and Immigration Service website.
Q: On the overtime issue, if a part time employee who works 25 hours a week goes over the 25, are we required to pay overtime after the 25 hours or after 40 hours?
A: The FLSA defines OT as hours worked over 40 hours - so by the FLSA, the answer is no. However, there are some states that have different OT requirements (more that 8 hours in a day, for example). Check with your state to see what the requirements are.
Q: Most of our employees are out of state. We email these forms to them. The return the I9, along with copies of the SS care and driver’s license. Should we have our employees have their I9 notorized?
A: I believe that would be an excellent practice, because it is the employer’s responsibility to verify those documents.
Q: Is there a set limit between full and part time? Say 32 hours.
A: There is no specific definition for “part-time”. That is determined by the employer.
Q: Is there a penalty for reporting new employees late?
A: Many states do have a penalty for late reporting. You should check with your state to make sure you are compliant.
Q: Is it still true that if a company is verifying the SSN for applicants, we have to do it for ALL new applicants as part of a procedure?
A: Details on the requirements for verifying Social Security numbers can be viewed on the Social Security Administration website.
Q: What if company decides to reduce the employee’s salary without proper documentation? Is that legal?
A: Nolo.com has an excellent article that explains this well.
Q: Is family members payroll regs different for Sub S Corporations?
A: 2% or more shareholders of an S corp do not qualify for benefits under IRC Section 125 (pre-tax health, etc.). Other than that, family members are treated as employees.
Q: Do pay cards require a different set up for processing?
A: Pay cards are set up exactly like you would set up Direct Deposit. The issuing bank for the pay cards will provide you with the cards and appropriate documentation to do so.
Q: In FL do we have to pay for jury duty for hourly employees?
A: Please see the full explanation at floridajuryduty.com.
Q: What can you dock for salaried employees?
A: Please see the legal guidelines provided on the Nolo.com website.
Q: If you have contractors that you provide 1099’s for do you have to pay taxes? ie. unemployment?
A: In most cases, the answer is no. Check with your state to verify its regulations regarding unemployment and worker’s compensation.
Q: If you classify someone as salary but you actually pay an hourly rate is that legal?
A: I’m not sure I understand the question. Is this person classified as salary because he/she is exempt from overtime? If the answer is yes, then you must ensure that the pay is meeting the FLSA requirements, whether the pay is calculated via hourly rate or salary.
Q: If someone works overtime but did not have permission to do so do you have to pay them overtime?
A: The Fair Labor Standards Act website contains a clear definition of “work time.”
Q: If I hire an employee for a specific event-based time period, what are their rights to filing for unemployment after the contract period ends? (they were treated as an employee, i.e. taxes taken out; for a 5 month period around festival prep).
A: You should check with your state to find out if your state recognizes seasonal employment status. In some states, there is a seasonal designation which disallows those EE’s from collecting unemployment benefits.
Q: I got a letter regarding child support garnishment for a 1099 employee who has not worked for us since 2009 and I don’t plan to hire her again. Can the State go after prior payments?
A: You should check with your state’s child support enforcement group. There are various regulations around subcontractors (1099).
Q: As a CompuPay client, I assume that the CompuPay Client Resource Binder has all the records I’ll need.
A: For the most part. You need to keep copies of W-4, I-9s, time-sheets, policies etc. CompuPay does have the bulk of your records for the time that you are a client.
Q: How is considered if we hire only in summer a 16 years old employee?
A: If the 16 year old is an employee, he/she should be treated as such with appropriate documentation and withholdings.
Q: Explain nonexempt from OT employees.
A: A non-exempt employee is not exempt from overtime laws and must receive overtime pay for hours worked more than 40 in a workweek. Check you state for additional OT regulations.
Q: If we have CompuPay do our payroll then are you keeping up with most of these changes based on by state?
A: Yes, one of the benefits of using a payroll service is that we have a compliance department that focuses on the ever changing laws and keeps a client informed.
Q: Do you have information that you can share regarding the guidelines for the Section 125 and cafeteria plans.
A: IRS Publication 15-B is an excellent resource on this topic.
Q: Is there a state or government website that defines required overtime calculations? Such as overtime hours can be paid at the regular hourly rate without any adjustments?
A: The American Payroll Association website has links to state agencies under their Web links tab.
Q: Does CompuPay notify the National Directory of New Hires regarding new hires for the company?
A: Yes, if you have elected to use that service which is included in our fees.
Q: Do owner’s salaries get exempted from the calculation for heath reform credit?
A: According to the IRS website “A family member of any of the business owners or partners… or a member of such a business owner’s or partner’s household, is not considered an employee for purposes of the credit.” For more information please visit the IRS website.
Q: Do not for profits have to pay unemployment tax for employees?
A: Most non-profits are exempt from federal unemployment tax. You should check with your state to verify its requirements. Some states allow for a direct reimbursement program, others do not.
Q: Do businesses verify SSN? How?
A: Yes, online through the Social Security Number Verification Service.
Q: Can you provide a resource and state law that references employees that are getting uniform cost deducted from their paycheck? Would this also address employees that get money deducted from their paycheck for coming up short on their cash drawer/till?
A: US Department of Labor states that deductions made from wages for such items as cash or merchandise shortages, employer-required uniforms, and tools of the trade, are not legal to the extent that they reduce the wages of employees below the minimum rate required by the FLSA or reduce the amount of overtime pay due under the FLSA.
Q: What is a commission driver?
A: Agent-drivers or commission-drivers: The driver must be engaged in distributing meat, vegetables, fruits, baked goods, beverages (other than milk), or laundry or dry-cleaning services. The driver must also be paid on a commission basis, or the difference between the sales price of the goods or services and the price paid by the driver.
The material contained in this FAQ is for informational purposes only and is current as of the date of publication (September 2011). CompuPay is not a legal advisor or financial advisor and makes no claims as such. For financial or legal advice, please see a professional.