Dec 042018

A reimbursement or allowance arrangement is a system by which you pay the advances, reimbursements, and charges for your employees’ business expenses. How you report a reimbursement or allowance amount depends on whether you have an accountable or a nonaccountable plan. If a single payment includes both wages and an expense reimbursement, you must specify the amount of the reimbursement.

These rules apply to all ordinary and necessary employee business expenses that would otherwise qualify for a deduction by the employee.


Accountable plan.

To be an accountable plan, your reimbursement or allowance arrangement must require your employees to meet all three of the following rules.

  1. They must have paid or incurred deductible expenses while performing services as your employees. The reimbursement or advance must be payment for the expenses and must not be an amount that would have otherwise been paid to the employee as wages.
  2. They must substantiate these expenses to you within a reasonable period of time.
  3. They must return any amounts in excess of substantiated expenses within a reasonable period of time.

Amounts paid under an accountable plan aren’t wages and aren’t subject to income, social security, Medicare, and FUTA taxes.

If the expenses covered by this arrangement aren’t substantiated (or amounts in excess of substantiated expenses aren’t returned within a reasonable period of time), the amount paid under the arrangement in excess of the substantiated expenses is treated as paid under a nonaccountable plan. This amount is subject to income, social security, Medicare, and FUTA taxes for the first payroll period following the end of the reasonable period of time.

A reasonable period of time depends on the facts and circumstances. Generally, it is considered reasonable if your employees receive their advance within 30 days of the time they incur the expenses, adequately account for the expenses within 60 days after the expenses were paid or incurred, and return any amounts in excess of expenses within 120 days after the expenses were paid or incurred. Also, it is considered reasonable if you give your employees a periodic statement (at least quarterly) that asks them to either return or adequately account for outstanding amounts and they do so within 120 days.


Nonaccountable plan.

Payments to your employee for travel and other necessary expenses of your business under a nonaccountable plan are wages and are treated as supplemental wages and subject to income, social security, Medicare, and FUTA taxes. Your payments are treated as paid under a nonaccountable plan if:

  • Your employee isn’t required to or doesn’t substantiate timely those expenses to you with receipts or other documentation,
  • You advance an amount to your employee for business expenses and your employee isn’t required to or doesn’t return timely any amount he or she doesn’t use for business expenses,
  • You advance or pay an amount to your employee regardless of whether you reasonably expect the employee to have business expenses related to your business, or
  • You pay an amount as a reimbursement you would have otherwise paid as wages.

Source:  IRS Publication 15

 Posted by at 10:17
Dec 032018
A recent judgment by the U.S. District Court for the District of Oregon requires the owner of a courier service, Gerald Brazie, Jr., and three of his Portland-based companies (Senvoy LLC, Driver Resources LLC, and ZoAn Management Inc.) to pay their drivers $3,087,100 in wages and liquidated damages as well as $112,900 in civil money penalties for violations of the Fair Labor Standards Act (FLSA).  The companies must also classify all drivers as employees and obtain a third party audit to ensure compliance with the FLSA.


The companies initially classified the drivers as employees but converted them to independent contractors in 2010.  As independent contractors, drivers were not paid overtime, minimum wage, or reimbursed for the costs of operating and owning or leasing their vehicles.  The change in classification reflected an attempt to keep up with competitors who treated drivers as independent contractors pursuant to a common industry practice.


The District Court evaluated the relationship between the companies and drivers and ultimately found the drivers should be classified as employees based on the FLSA’s economic realities test.  For example, the company controls the manner in which the work is performed in several ways including requiring drivers install a specific cell phone application for GPS tracking, requiring drivers wear uniforms, and preventing drivers from freely rejecting work.  The drivers have little ability to profit depending on their own managerial skills because of limitations on hiring their own employees and working for other employers.  These and other factors outweigh the fact that the drivers invest in their own vehicle, cell phone, uniform, fuel, and insurance, which tend to weigh in favor of an independent contractor classification.


This case is an important reminder that industry practice is not a defense to worker misclassification, and businesses should conduct a careful analysis to ensure compliance with federal and state law.

Source:  Barran Liebman LLP

 Posted by at 16:39
Apr 182018

In January of 2018, significant new laws affecting cleaning services in Oregon went into effect.  Property Services contractors are required to obtain a labor contractor license from the Oregon Bureau of Labor and Industries (BOLI).  Initially, BOLI was also requiring all property services contractors to submit weekly certified payroll reports.  As of March 12, 2018, certified payrolls report are no longer required.

Click here for the link to BOLI’s revised rule.

To read more about which professions fall under the Property Services/Janitorial Services rule, and the link to the revised 2018 Labor Contracting in the Janitorial Services Industry handbook, click here.

 Posted by at 07:47
Apr 132018

The Tax Cuts and Jobs Act signed into law by the President on December 22, 2017 made changes to Qualified Transportation Fringe Benefits that effect employers and employees.

Employers can no longer deduct the expenses for providing tax-free qualified transportation fringe benefits to employees, unless the employer treats the transportation fringe benefit as taxable W-2 wages to the employee.

Employees may still pay for transportation expenses with pre-tax dollars.

A Qualified Transportation Fringe is defined as:

  • Transportation in a commuter highway vehicle for travel between the employee’s residence and place of business
  • Transit passes
  • Qualified parking
  • Qualified bicycle commuting reimbursement

For 2018, the monthly limit on the amount that may be excluded from an employee’s income for qualified parking benefits will be $260 for parking at or near an employer’s worksite, or a facility from which the employee commutes via transit, vanpool or carpool.

Previously qualified Bicycle Commuting Benefits are no longer eligible as a tax free benefit.

 Posted by at 09:23
Sep 232017

When T4P runs your payroll, we always make sure you are notified of your cash requirement amounts.

The fund transactions will be of different types:  payroll direct deposit, live checks, taxes and payroll service invoice.

In your payroll bundle there is one report in particular that brings it all together for you:  the Cover Page.

On the right side of the Cover Page you will notice a Bank Information section which will look something like this:

Sample of Bank Account Information section of Cover Page

Remember, the electronic debits will be effective early morning the banking day before your pay date (before the bank even opens), unless you have made a different arrangement with your Payroll Specialist.

 Posted by at 10:31
Sep 232017

Oregon Saves is a new state-sponsored program that provides a vehicle for employees to save for retirement.

This program applies to all employers who don’t already offer a retirement plan to their employees.

Eligible employers will need to implement on the following timeline:

  • more than 100 employees: enroll in October 2017, start participating November 15th, 2017
  • 50 – 99 employees: enroll in April 2018, start participating May 15th, 2018
  • 20 – 49 employees: enroll in November 2018, start participating December 15th, 2018
  • 10 – 19 employees: enroll in April 2019, start participating May 15th, 2019
  • 5 – 9 employees: enroll in October 2019, start participating November 15th, 2019
  • 4 or fewer employees: enroll in April 2020, start participating May 15th, 2020

Most interaction with the plan will be through a website. Oregon Saves will mail an enrollment form to all employers of record in the state with instructions on either certifying they are exempt, or enrolling in the program.

New employers will be subject to the rules starting 90 days after being deemed an employer.

Once an employer is a participant in Oregon Saves, all new hires will be enrolled by default, with a savings rate of 5% of gross earnings. The rate will automatically increase each year thereafter by 1%, up to a maximum savings rate of 10%.

Employees can choose to change their savings rate, including stopping contributions.

Here is an introductory video that explains the program:

 Posted by at 10:18
Sep 232017

The minimum wage in Washington State is $11.00 per hour in 2017.  This minimum wage applies to all jobs, including agriculture. Employers must pay employees age 16 and older at least $11.00 per hour in 2017.

Employers are allowed to pay 85% of the minimum wage to employees under age 16. For 2017, this equates to $9.35 per hour.

Seattle, Tacoma, and the City of SeaTac currently have higher minimum wage rates. The local rate applies if it is higher than the state minimum wage rate.

Overtime pay requirements are not affected.

The minimum wage will increase annually over the next three years:

  • 2018: $11.50
  • 2019: $12.00
  • 2020: $13.50

Source: Washington Department of Labor & Industries

 Posted by at 08:43
Mar 022016

Oregon will soon see a three-tiered incremental minimum wage increase. Beginning July 1, 2016, the minimum wage in Oregon will increase at three different rates depending on location within the state. Employers in Portland’s Urban Growth Boundary will see the largest annual increases, while employers in frontier counties will see the smallest. The annual breakdown of the rate increases from 2016 until 2022 is as follows, with each increase taking place on July 1:

  1. Within Portland’s Urban Growth Boundary: $9.75, $11.25, $12.00, $12.50, $13.25, $14.00, $14.75
  2. Frontier Counties*: $9.50, $10.00, $10.50, $11.00, $11.50, $12.00, $12.50
  3. Remaining Areas: $9.75, $10.25, $10.75, $11.25, $12.00, $12.75, $13.50

Starting in 2023, the rates will be annually adjusted for inflation.
Currently we do not know how the new minimum wages will apply to companies that operate in multiple counties with varying minimum wages. The Commissioner of the Bureau of Labor and Industries will soon issue rules explaining this, and we will notify you once these rules are published.

*Frontier counties include Malheur, Lake, Harney, Wheeler, Sherman, Gilliam, Wallowa, Grant, Jefferson, Baker, Union, Crook, Klamath, Douglas, Coos, Curry, Umatilla, and Morrow.

 Posted by at 08:51
Aug 032015

On December 29, 1970, Richard Nixon signed the Occupational Safety and Health Act into law, calling it “probably one of the most important pieces of legislation” ever passed by Congress. In a nutshell, the Act says workplaces must be “free from recognized hazards that are causing or are likely to cause death or serious physical harm.”

These hazards were far from negligible. At the time, an estimated 14,000 workers were killed on the job every year. The Act created an administration agency under the U.S. Department of Labor—the Occupational Safety and Health Administration (OSHA). OSHA was tasked with setting and enforcing protective workplace safety and health standards, as well as providing information, training, outreach, and assistance to employers and workers.

Who Does OSHA Regulate?
OSHA has jurisdiction over most employers. The agency covers private sector employers and employees in all 50 states, the District of Columbia, and other U.S. jurisdictions. Some states have an OSHA-approved state program, which must be at least as stringent as the Federal OSHA program, handling coverage for that state.

What Does OSHA Do?
OSHA sets standards or rules employers must follow to protect their workers from hazards. These standards include requirements to provide fall protection, prevent exposure to some infectious diseases, ensure the safety of workers who enter confined spaces, prevent exposure to harmful substances, and install guards on machines.

OSHA enforces these rules by conducting inspections . When it finds violations, it may issue citations and fines and require prompt remediation. OSHA gave its first citation to a chemical company for exposing workers to mercury. Since then, the agency has noted nine million violations and issued 36 health standards. It currently regulates 470 substances. OSHA’s effect? Since the agency began, the daily fatal work injuries rate has dropped from 38 to 12 and work-related injuries and illnesses have decreased by 40%.

What Does OSHA Mean for Employers?
Under the Act, employers have the responsibility to provide a safe workplace. Employers must follow relevant OSHA safety and health standards, find and correct safety and health hazards, inform employees about workplace hazards, provide personal protective equipment where required, post OSHA materials, notify OSHA of fatalities or serious work-related injuries, keep accurate records of work-related injuries and illness, and refrain from retaliating against workers for exercising their rights under the Act, such as calling the agency about dangers in the workplace.

How Does OSHA Help Employers?
Fundamentally, OSHA helps employers by providing them with guidance and information that will reduce the risk of injury in the workplace; this is valuable both financially and as a way to keep employees – an organization’s most valuable asset – healthy and safe. Employers who would like to be proactive, or feel they may be in need of assistance with OSHA requirements, can request a free on-site consultation. OSHA provides this service for small businesses with no penalties or citations attached. OSHA also provides services through compliance assistance specialists, cooperative programs, and training and education materials.

 Posted by at 12:11
Aug 032015

Following a directive from President Obama, the Department of Labor has proposed changes to the federal Fair Labor Standards Act (FLSA) rules regarding the executive, professional, and administrative exemptions (also called the white collar exemptions). Under the proposed rule, the annual salary requirement for a white collar exempt employee would more than double to approximately $50,000. This more-than-doubling of the salary requirement would mean that approximately five million workers who are currently exempt from overtime and minimum wage requirements would no longer qualify for an exemption.

In addition to the white collar salary requirement increasing, the proposed rules call for the salary requirement for exempt highly compensated employees to increase from $100,000 to about $122,000 per year. Finally, the rules contain a mechanism by which both the white collar and highly compensated employee salary requirements will adjust annually.

Before these proposed rules can go into effect, there will be a notice and comment period, followed by time for the Department of Labor to review and respond to comments and draft final rules. The last time large revisions were made to the FLSA, in 2004, 13 months elapsed between the introduction of the proposed rules and the release of the final rules. As before, we expect a large number of comments and much opposition from the business sector, and therefore a similarly long span of time before the rules are finalized. While it will likely be mid-to-late 2016 or even early 2017 before any changes to the FLSA white collar exemptions go into effect, given the sizeable increase to the salary requirement, we recommend employers begin to consider how they will handle the new requirements in their organization.

 Posted by at 12:09