7/26/2019 Payroll Administration 1 Chapter 1 The Fair Labor - - PDF document
7/26/2019 Payroll Administration 1 Chapter 1 The Fair Labor Standards Act: Introduction and Overview 2 2 Learning Outcomes Recall the Fair Labor Standards Act and its role in payroll issues Identify if an individual is an independent
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Relationship of the parties
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Show whether there is a right to direct or control how the worker does the work
the way the work is done – as long as the employer has the right to direct and control the work Considered an employee when the business has the right to direct and control the worker
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You receive extensive instructions
is to be done
Ho w, whe n o r whe re to do the wo rk Wha t to o ls a nd e q uipme nt to use Wha t a ssista nts to hire to he lp with the wo rk Whe re to purc ha se supplie s a nd se rvic e s Wha t wo rk must b e pe rfo rme d b y a spe c ifie d individua l Wha t o rde r o r se q ue nc e to fo llo w
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nve stme nt must ha ve sub sta nc e . Ho we ve r, a sig nific a nt inve stme nt is no t ne c e ssa ry to b e a n inde pe nde nt c o ntra c to r.
e xpe nse s
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re e to se e k o ut b usine ss o ppo rtunitie s
a nd a re a va ila b le to wo rk in the re le va nt ma rke t
mplo ye e : re g ula r wa g e a mo unt
jo b
e e p in mind tha t it is c o mmo n to pa y so me inde pe nde nt c o ntra c to rs ho urly
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f yo u re c e ive ….yo u mig ht b e a n e mplo ye e
f yo u do no t re c e ive ….yo u still mig ht b e a n e mplo ye e Employee benefits Written contracts
Permanency of the relationship
ndic a te s it is mo re like ly tha t yo u will ha ve the rig ht to dire c t a nd c o ntro l a c tivitie s Extent to which services performed are a key aspect
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Independent Contractor Employee
An attorney or accountant who has his or her own
under "Attorneys“ or "Accountants," bills clients by the hour, is engaged by the job or paid an annual retainer, and can hire a substitute to do the work. An attorney or accountant who is employed by a firm to handle their legal affairs or financial records, works in an office at the firm’s place of business, attends meetings as needed, and the firm bills the clients and pays the attorney or accountant on a regular basis. An auto mechanic who has a station license, a resale license, buys the parts necessary for the repairs, sets his
her own hours and days of work, and owns or rents the shop from a third party. An auto mechanic working in someone’s shop who is paid a percentage of the work billed to the customer, where the owner of the shop sets the prices, hours, and days the shop is open, schedules the work, and collects from the customers. Dance instructors who select their own dance routines to teach, locate and rent their own facilities, provide their own sound systems, music and clothing, collect fees from customers, and are free to hire assistants. Dance instructors working for a Parks and Recreation department where the department sets hours of work, the routines to be taught and pays the instructors from fees collected from the customers. A repairperson who owns or rents a shop, advertises the services to the public, furnishes all of the tools, equipment, and supplies necessary to make repairs, sets the price for services, and collects from the customers. A repairperson working in a shop where the owner sets the prices, the hours and days the shop is open, and the repairperson is paid a percentage of the work done.
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Services rendered Permanency of relationships Contractor investment in facilities and equipment Control of principal Profit and loss opportunities Initiative, judgment and foresight Degree of independent business organization and
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wa g e s
e mplo ye e
xc e ptio ns: e mplo ye e s living a wa y fro m ho me fo r mo re tha n o ne ye a r tha t re c e ive living c o sts
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c urre nt jo b
pro mo te the pe rso n o r shift the m into a n unre la te d po sitio n re q uiring diffe re nt skills
a ng ib le pro pe rty, g ive n in re c o g nitio n o f le ng th
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income charged is calculated using the IRS mileage reimbursement rate of 58 cents per mile less the 5.5 cents per mile if the employee purchases fuel – Appro a c h is a c c e pta ble if the ve hic le fa ir ma rke t va lue is le ss tha n $50,400
Guide.pdf
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transmittal Form 1096 by the end of January.
Revenue by the end of January with G- 1003.
Contractor Worksheet – Exhibit 3-4 Employee-Independent Contractor Form SS-8
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Allows employees to pay for some benefits with pretax dollars so that the amount of taxable income to them is reduced Employees choose the total amount of their annual cafeteria plan deductions at the beginning of the plan year
(including adoptions) or the status of those dependents, change in residential address affecting eligibility for coverage,
dependent
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– Can accept coverage for an additional 18 months – Extends to 36 months if an employee becomes entitled to Medicare coverage or becomes divorced – If a spouse or dependent child of an employee loses coverage due to death of an employee, then they can obtain coverage for up to 36 months
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to take up to 12 weeks of unpaid leave each year for a specified list of family and medical reasons – Continued medical coverage – Recommended that employer fill out a formal, detailed response to a request – Upon returning, an employee must be given the same or equivalent job with the same level of pay and benefits
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allowable contributions to the plan on behalf of participants. Income earned by the plan is not income until they withdraw funds. – Defined contribution plan – employer liable for payment but not size of the return – Defined benefit plan – itemizes a specific dollar amount participants will receive
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Form G-4 to have state taxes withheld from their wages
withhold taxes as though the employee were single with zero allowances
G-4 claiming more than 14 allowances or exempt from withholding to the Georgia Department of Revenue for approval
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Deposits can be made in three ways:
– No later than the 15th day of the month following the reporting period – Use only if the total amount of deposits during the lookback period is less than $50,000
– Mandatory if the lookback period exceeds $50,000 – Deposits must be made if payroll falls during the week
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File on Georgia Tax Center (GTC) Taxes withheld for each month
Taxes Paid for each month should
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– Borrow money and can’t pay back – Child support – Failure to file and pay state or federal income taxes
initiated – Employer is held liable for withholding funds from workers – Money deducted directly from paychecks to service debt
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– Does not protect employee from discharge if employee’s earnings have been garnished for second or subsequent debt
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receive earnings for personal services – Wages – Salaries – Commissions – Bonuses – Payments from pension or retirement program
territories and possessions.
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disposable earnings subject to withholding is 60% of his/her pay or 50% if the employee is already making payments to support other children or spouses
employee is 12 or more weeks in arrears in making support payments
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If for business trip, usually paid through an accounts payable system If employee neglects to turn in an expense report, he/she is liable to the employer for the amount of the advance
paychecks to recover the amounts outstanding
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Only 15% of certain types of payments are subject to the tax levy (Page 6-7)
Certain allowable deductions (Page 6-7)
IRS table used to determine the amount of net wages that are exempt from the tax levy
Exhibit 6-1 IRS Pub 1494.pdf
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Integrity/ethical values – Commitment to competence – Management’s philosophy/operating style – Organizational structure – Assignment of responsibility/authority – Human resource policies/procedures
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–
Examination of overall values, systems, policies and procedures
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Does not relate to particular application such as capital asset system, cash receipts, cash disbursement, payroll
is minimized
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Written process for hiring
Budget approval
Authority to advertise
Appropriate applicant information
Established selection process
Formal job offering (Letter)
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Authorization – Required to ensure that only valid transactions are entered into payroll system Time sheets signed by employee and supervisor –Supervisor’s approval = authorization to pay and certifies time recorded is actual time worked. Payroll should be authorized by supervisor –Verify that all supporting documentation is present prior to approving payroll –Could be manual or electronic approval
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– Examples:
and timely posting
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irregularities are prevented or detected
normal course of business.
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Authorization
Custody (Access to Asset)
Record-Keeping
Reconciliations (Accountability)
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At a minimum, no person should be able to perform more than two of the functions. The matrix illustration below presents various ways to assign responsibilities that are less than the optimum.
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– Lists the dates on which
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Publication 15-A, Employer’s Supplemental Tax Guide This manual discusses the legal definition of an employee, special types of wage compensation, sick pay reporting, pensions, and annuities, and alternative methods for calculating withholding.
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Publication 15-B, Employer’s Tax Guide to Fringe Benefits
This publication covers a wide range of fringe benefit exclusion rules,
ranging from accident and health benefits to working condition benefits.
It also addresses fringe benefit valuation rules, as well as rules for
withholding, depositing and reporting taxes.
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Plan and schedule for the worst-case scenario
Ensure your payroll systems have a “backup”
Cross-train personnel
Deal promptly and effectively with issues
Notify those “who need to know”
Develop, document, and assess crisis procedures for validity and results
Review and update procedures annually
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