In order for an employee to qualify as a volunteer, these four criteria must be met:.
Source: Bureau of Labor and Industries
Only government agencies are permitted to offer compensatory time in lieu of overtime. If you are a private sector employer, you must pay overtime when an employee works over 40 hours in a workweek. (If your employee works 45 hours during one workweek, you could choose to schedule the employee for 35 hours during the following week, but that would not relieve you of the obligation to pay for the five hours of overtime during the first workweek.)
Source: BOLI
Several states have announced increases to their minimum wages effective January 1, 2012. These include:
The Social Security Administration has announced that the Social Security wage limit for 2012 has increased to $110,100
The IRS has released Pension Plan limitations for 2012:
If you took advantage of the HIRE Act tax credit last year, you may be eligible for the HIRE Retention credit on your 2011 business tax return.
The HIRE retention credit is a general business credit to encourage retention of new hires and will be claimed on the employers income tax return. The amount of the credit is the lesser of $1000 or 6.2 percent of wages (as defined for income tax withholding purposes) paid by the employer to the retained qualified employee during the 52 consecutive week period. The qualified employees wages for such employment during the last 26 weeks must equal at least 80% of wages for the first 26 weeks. Click here for the FAQs http://www.irs.gov/businesses/small/article/0,,id=220747,00.html.
If you qualify for this tax credit, tell your CPA or tax preparer when you have your business tax return done.
What do employers do with uncollected paychecks which either were not picked up by the employee or were returned to the employer as “address unknown?
We recommend employers to consider the following:
You have an employee who is shared by more than one company. The employee works less than 40 hours in a given week at each company, but when you add the the time cards together, she worked more than 40 hours in that week. Is the employee due overtime pay?
It depends on whether a “joint employment” relationship exists between the companies.
“Joint employment” describes the situation in which an employee works for more than one employer, but the employers have enough in common to be considered “one” under state and federal wage and hour laws. And if the employers meet this threshold and an employee works for both of them in a workweek, all of the hours must be counted to determine whether overtime is owed.
Whether a particular arrangement translates into “joint employment” is based upon all the circumstances in that individual case. The courts have used the following factors to make this determination:
For instance, common ownership would support the control necessary to establish joint employment.
This does not mean that the employee will get paid overtime twice, but simply there is a shared obligation to compensate the employee for overtime hours paid.
Source: BOLI
Wondering whether company-paid cell phone service should be considered a fringe benefit, and as such added to the employee’s wages as income?
The IRS provides the following guidance:
Contact us if you need further assistance on this topic.
Source: IRS
Many business owners wonder if they should include themselves in the workers compensation policy for the company. Rarely does this make sense, for the following reasons:
Insurance companies regard workers compensation coverage for company owners as a moral hazard; that is, if the business experiences financial problems, the owner may be incented to stage a workplace accident or otherwise compromise the guidelines of the policy. As a result of this inherent risk, workers compensation coverage for company owners is generally cost-prohibitive.
Moreover, workers compensation policies are not designed to provide adequate coverage or compensation in cases where the owner becomes incapacitated due to illness or accident that is unrelated to the workplace. Therefore, disability insurance and life insurance become logical choices for business owners concerned with protecting their ability to meet financial obligations, continue to earn income, and protect future income. Life and disability policies provide sound alternatives to the limited benefits of workers compensation insurance.
If you are a business owner in need of a trustworthy professional with whom to discuss insurance and asset protection, we would be happy to provide you with a personal recommendation.
As always, we’re here to provide the resources you need.
~Time 4 Payroll
Independent contractors are common in many industries. Within these industries, there is a high likelihood that businesses may believe some of their workers are independent contractors when they are not.
Also, employees who are performing services on a part-time, temporary, or probationary basis are sometimes thought to be independent contractors.
If you’re an employer and you treat someone as an employee or an independent contractor, the answer affects your bottom line. An employer will pay a percentage of an employee’s gross earnings toward taxes and entitlements such as workers compensation, Social Security, unemployment insurance, and varied retirement and health plans. Some businesses seek to eliminate these obligations and taxes to reduce business expenses.
Unfortunately, it can become much more costly to the business owner when a government auditor converts workers from independent contractors to employee status.
An independent contractor is a person or business entity which
1. is free from another’s right to direct and control;
2. is responsible to the customer only for the contracted result of the work, not the manner or method used to accomplish the work;
3. controls how the service is provided, who provides it, and the means of accomplishing it;
4. sets their own prices for goods, fees for service;
5. terminates one contract while not terminating the business;
6. terminates one contract while not creating an unemployment situation;
7. has customers and prospective customers as a result of advertising and being known by the public as a going business;
8. provides goods and/or services to a public of their own choosing.
Here are some examples to consider:
| INDEPENDENT CONTRACTOR | EMPLOYEE | |
| Free from direction and control | Means and manner of work are controlled by employer | |
| Does tasks in own way | Does tasks the employer’s way | |
| Has necessary skills and training to complete job | Trained by employer to perform job | |
| Has an assumed business name | Works under the employer’s assumed business name | |
| Has a business location | Works at employer’s business location | |
| Performs services for multiple customers | Works for one employer, may serve that employer’s customers | |
| Sets own hours | Works hours set by employer | |
| Determines own price for contracted services | Accepts wage, salary, or commission determined by the employer | |
| Not eligible for employee benefits | May be covered by minimum wage, overtime, safety, unemployment, and workers’ comp | |
| Directly affected by business profit or loss | Not directly affected by employer’s profit or loss | |
| Owns equipment and tools used to complete job | Employer provides and controls equipment and tools | |
| Purchases materials and supplies needed to do job | Employer purchases materials and supplies | |
| Personally liable for errors and/or accidents | Employer liable for employee errors and/or accidents | |
| Files self-employment taxes. Receives a Form 1099-MISC |
Does not file self-employment taxes. Receives a Form W-2 from employer |
|
| Has right to hire and fire workers | Is hired and/or fired by employer | |
| Must legally complete each contract | May quit working for an employer at any time |
These examples are meant to be guidelines only. If you need more information than presented here, let us know and we’ll put you in touch with a tax auditor to give you further guidance.
As a reflection of leadership’s strategy about how it values its employees, a well-established compensation system allows employers to optimize on employee engagement, productivity, financial resources, and organizational goals.
Consider the following components and how to apply them into your business today:
Taking care of employees with a well-designed and well-communicated compensation program will help in the long-term investment of your employees as the company’s strongest asset.
Source: HR Support Center