The 9th Circuit Court of Appeals ruled Monday that salary history is not an acceptable reason for pay differences under the Equal Pay Act (EPA), even when used in conjunction with other factors. The EPA first became law in 1963 and prohibits the payment of different wages to men and women who do work that requires equal skill, effort, and responsibility under similar working conditions.
The new reading of the law impacts employers in Alaska, Washington, Montana, Idaho, Oregon, California, Nevada, and Arizona, but since Circuit Courts often rely on one another’s rulings, it’s very possible that the impact of this decision will spread.
As written, the EPA allows for pay discrepancies for the following reasons:
The new site is a more user-friendly resource to verify employment eligibility
U.S. Citizenship and Immigration Services (USCIS) launched a new, user-friendly E-Verify.gov website today. According to USCIS, the new site is the authoritative source for information on electronic employment eligibility verification and can be used by employers, employees and the general public.
The website provides information about E-Verify as well as Form I-9 Employment Eligibility Verification, including employee rights and employer responsibilities in the employment verification process. E-Verify.gov allows employers to enroll in E-Verify directly and permits current users to access their accounts. Individuals with myE-Verify accounts can also access their accounts through E-Verify.gov.
Small businesses are popular targets of cyber criminals. Thousands of attacks happen every day—with successful ones costing organizations hundreds of thousands of dollars, or more. According to Symantec’s Internet Security Threat Report, malicious threats such as email phishing, malware and ransomware are on the increase, with many specifically targeting small businesses.
Fortunately, there are effective measures you can take to prevent hackers, scammers, and other dark web types from compromising your network, stealing information, and harming your organization, employees, partners and customers.
It’s the time of year when business owners are approached by college students seeking summer internships to acquire skills and bulk up their resumes. It can be a symbiotic relationship, with the intern gaining experience in their field of study and the employer getting assistance on tasks that might not get handled otherwise. Prior to new rules published by the Department of Labor (DOL) earlier this year, unpaid internships could be perilous territory for employers who agreed to hire interns without paying them.
The new test outlined by the DOL—called the primary beneficiary test—is used to determine if a worker can be properly classified as an unpaid intern, or instead, should be covered under the Fair Labor Standards Act (FLSA) and be paid minimum wage and overtime. The test adopted by the DOL has already been in use in four federal appellate courts, most recently the Ninth Circuit Court of Appeals. The DOL’s switch to the primary beneficiary test creates a nationwide standard.
The establishment of a 401(k) plan is one of the most important steps an employer can take to benefit their business, their own retirement, and that of their employees. Tax and other financial benefits accrue to the business, as well.
A Must-Have to Attract and Retain Talent
The most recent annual Metlife employee benefit trends study found that 72% of employees consider a 401(k) or other retirement plan a “must-have” benefit, ranking second only behind health insurance coverage. In the current full employment market, offering that benefit helps small business employers level the playing field in attracting and retaining the best talent. And with the high cost of employee turnover, a 401(k) plan offers an affordable benefit to help keep employees on board.
Helps the Employer Plan
Business owners focused on running and growing a successful business may not take the time to establish a plan to help themselves prepare for retirement. It’s critical to address their own retirement early on, so when it comes time to spend a little more time on the golf course or with the grandkids, they’re not reliant solely on the proceeds from the sale of the business. By planning ahead, they can get started accumulated assets to supplement retirement income.
Last year, nearly 27,000 charges of sexual harassment were filed with the Equal Employment Opportunity Commission (EEOC). This number doesn’t include charges filed with state and local agencies or situations where employees went directly to an attorney, and many employees who are victims of sexual harassment or are affected by it never report the incidents at all.
Victims and witnesses of harassment often refrain from reporting because the harasser has the power to retaliate or because the organization has not set up adequate channels for reporting. In other cases, victims report the harassment, but nothing is done about it. The harassment is excused, and the complaints are rebuffed. Word gets around that the organization tolerates harassment, and people cease reporting it internally. They either keep quiet, file charges with a governmental agency, or seek out an attorney.
Your business is booming. In three short years, you’ve grown from a solo landscape and lawn treatment service in a home office to a full-blown professional suite with an office manager, administrator and a team of professionals who work all over the city. With three new hires this week, you’ve reached 16 employees. Congratulations!
Did you know that when you cross the threshold to 15 employees, certain federal laws apply to your business? From our HR Support Center, here is a brief summary of what you need to know about them:
Your new employee, Anna, starts today. Your onboarding package includes a Form W-4, the Employee’s Withholding Allowance Certificate, which you’ll collect from her and use to ensure she has the correct federal income tax withheld from her paycheck. If your business is located in a state with a state income tax, you will also provide her with the appropriate state withholding form.
You also give her a Form I-9, Employment Eligibility Verification. This form, and the accompanying documents Anna provides, is used by the federal government to verify her identity and employment authorization.
Those are the basic forms your new employee is required to fill out. So you’re done, right?
You, the employer, must also report Anna as a new hire to your state and the federal government.
What Exactly is “New Hire” Reporting?
New hire reporting was established in 1996 by the federal government as part of welfare reform. Under this Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) employers are required to report newly hired and re-hired employees within 20 days of their hire or re-hire date to the federal government as well as designated state agencies. All employers are required to report new hires, including public, private, not-for-profit and government organizations. While federal law does not require reporting of independent contractors, many states do.
“I’ll only hire independent contractors, so I won’t have to deal with taxes and overtime.”
If you have had that thought, you may be operating under the false assumption that you can call someone an independent contractor, or mutually agree to that title, when they are in fact employees subject to federal and state withholding as well as employer-paid taxes. Employees are also covered by overtime rules and entitled to workers compensation insurance coverage. You could have significant penalties imposed by the Internal Revenue Service (IRS) and other government agencies for the misclassification, even if it is unintentional.
What determines if a worker is an Independent Contractor?
The IRS publication covering the classification of employees and independent contractors says that the degree of control the employer exerts over the worker determines how they should be treated. When examining the overall relationship, factors that provide evidence of the degree of control exerted fall under three basic categories:
Behavioral control looks to how the worker does the job. If the employer dictates where and when the individual works, as well as what equipment, tools and methods they use, then it is likely an employer-employee relationship. Conversely, if the worker is given an objective, but uses their own methods to achieve work results, then an independent contractor role probably exists.
When staffing your business, you need to consider whether your employees are “exempt” or “nonexempt” from being paid overtime. The Fair Labor Standards Act (FLSA) sets out federal guidelines on exempt and nonexempt classifications. Most states have their own wage and hourly rate laws you will need to check out as well.
The FLSA requires that most employees receive at least minimum wage for each hour worked and overtime pay for hours worked over 40 in a workweek. Employees entitled to both of these are considered “nonexempt,” while, generally speaking, salaried employees who do not receive overtime pay and/or minimum wage are considered “exempt.”
Helps Employees Withhold the Correct Amount from Their Paychecks
If you’ve noticed a bump in your take home pay since the new withholding tables went into effect, you’re not alone. The Treasury Department estimated that 90% of taxpayers would see higher paychecks once the new tables were implemented. But, depending on your situation, you could be under-withheld. When you file your 2018 tax return next year, you may owe more taxes and potentially could be subject to underpayment penalties.
Conversely, if you haven’t adjusted your withholding allowances in a while, you could be over-withheld and get a big refund check next tax season. (More than 7 in 10 taxpayers fall into this category, receiving an average refund of over $2800!) While it may be nice to see that extra influx of cash once a year, perhaps you would be better served with a little more money each pay period to spend or invest as you wish.
The updated withholding calculator put out by the Internal Revenue Service (IRS) yesterday will help you figure out if you’re getting too little—or too much—taken out of your paycheck using the new tax tables. A revised withholding worksheet was also issued. Either tool can help you determine how many withholding allowances you should claim on your Form W-4, which tells your employer how much to withhold from your paycheck each pay period.
Non-Compliance Can Be Costly
In order to stay compliant with federal and state labor laws, employers must display labor posters in a conspicuous place, easily visible to employees. Labor law posters notify employees—and in some cases, job applicants—of their employment rights, including:
Penalties for non-compliance can run into the thousands of dollars. For example, violation of the posting requirements prescribed under OSHA can run as high as $12,934.
So how often do need to update your labor law posters to avoid citations or expensive penalties?
Whenever federal or state labor law changes are made, you need to update your posters. However, those changes don’t always occur on January 1st. Government agencies may issue postings before or after the effective date of the regulatory update. Minimum wage changes may go into effect mid-year. So buying a new employment poster at the beginning of the year isn’t the answer.
An easy way to ensure your business remains compliant with federal and state labor laws is to enroll in a Labor Poster Subscription Program. Then, you will automatically be forwarded new labor posters when regulations change under federal law and/or for your specific state(s).
Ready to subscribe and save yourself the compliance hassle? If you have questions, please contact your Payroll Specialist.
Corporate Payroll Services Clients Will See Changes Reflected in
Payrolls Processed Beginning Monday, January 15, 2018
On January 11, the Internal Revenue Service released updated withholding tables for 2018 to reflect changes required by the Tax Cuts and Jobs Act signed into law last month. Employers should begin to use the new withholding tables as soon as possible, but no later than February 15, 2018, according to the January 11 news release. Clients of Corporate Payroll Services will see the withholding changes reflected in paychecks processed beginning Monday, January 15, 2018, a full month ahead of the IRS deadline.
The new tables take into account the changes in tax rates and brackets, the increase in the standard deduction and the repeal of personal exemptions. They are designed to work with the current W-4 forms that employees have filed with their employers to claim withholding allowances. No changes to the forms are required at this time.
However, the IRS indicated that it is working to revise the Form W-4 and provide a new online calculator by the end of February. The new form and calculator will take into account changes in itemized deductions, increases in the child tax credit, the new dependent credit and the repeal of dependent exemptions, with a goal of producing the correct amount of withholding and avoiding under- or over-withholding of income taxes.
The IRS also posted a Frequently Asked Questions document to clarify commonly asked questions about the withholding changes. Of course, as a Corporate Payroll Services client, if you have a question about your specific situation, please reach out to your local branch office and ask to speak to your Payroll Specialist.
Minimum wage rates are increasing in many states this year. Unless otherwise noted, the minimum wage rates in bold are updated rates effective January 1, 2018. States with no change in minimum wage rates are not bolded.
Social Security Maximum Taxable Earnings Updated…Again
Due to potential tax changes currently being considered in Congress, the IRS has indicated that guidance for the 2018 tax year, which includes the payroll tax tables, will be issued later than normal. Since both the House and Senate bills contain changes to income tax rates, personal exemptions and the standard deduction, which may be effective in 2018, it is anticipated that the withholding tables and Form W-4 will require extensive revisions.
Currently, the final bill is being negotiated in conference committee to reconcile the different tax reform bills passed by the House and the Senate. That final negotiated bill would have to be passed by both houses and signed into law by the President.
When and if a bill is signed into law, employers will continue to use 2017 withholding tables until the new 2018 tables are released. Even if the rates are effective January 1, 2018, the IRS will need time to incorporate changes required by the new law. The IRS acknowledged that payroll professionals will need time to program and test the updates, as well. Of course, Corporate Payroll Services will continue to monitor the changes and keep you updated as guidance is provided.
Social Security Earnings Limit Changes
The maximum earnings subject to the Social Security tax will increase to $128,400 in 2018 from $127,200 in 2017. The original increased amount was $128,700, but it was recalculated when the Social Security Administration received additional salary data after the deadline which was not included in the original calculation. The $1200 or 0.95 percent increase is based on the government’s estimate of inflation-adjusted wage growth. Employers may want to notify affected employees of the increase.
Employer-provided 401(k) plans are a very popular retirement savings vehicle. In fact, according to a 2015 study, 85% of employees who have access to a 401(k) plan participate in it.
While 401(k) plans typically offer a variety of investment options, one key factor is often overlooked by both employers and employees in deciding the funds to offer and invest in: plan fees.
Best Predictor of Fund Performance is...
Plan fees can run from well under 1% to over 2% of assets under management. While 1% or 2% might not seem like a lot, the fee will heavily impact the growth of savings toward retirement over time. According to Morningstar and Consumer Reports, the best predictor of fund performance is not the experience of the fund manager or the fund’s past performance. Instead, the best predictor of performance is...
If you received an email from "the boss" requesting a PDF of the 2016 W-2s and earnings summary of all staff for quick review, would you send it?
The Internal Revenue Service issued a News Release on January 25 warning about an email scam that uses a corporate officer’s name to request employee Forms W-2 from company payroll and human resources departments.
The IRS received notification that the scam, which first appeared in 2016, is making its way around the country again this year. The fraudulent email, which may contain the actual name of the CEO, requests employee W-2 information. Cybercriminals then file fraudulent returns for tax refunds.
For the IRS News Release about this alert, please check the Forms and Downloads page in the Customer Center.
If your company pays weekly or bi-weekly, will you have an extra check date this year? In other words, if your company pays weekly, will you pay your employees 52 times this year or 53? Likewise, if your company pays bi-weekly, will you pay your employees 26 times this year or 27? The 27th/53rd additional pay date occurs every 5 or 6 years if you pay weekly and every 11 years if you pay bi-weekly. The easiest way to understand why these additional pay dates occur is to review a calendar:
Combine the extra day left over year after year, coupled with the extra day from leap year every 4 years, and you have an issue to deal with every 5-6 years or every 11 years depending on your pay frequency.
The week of December 5-9 was National Tax Security Awareness Week. The IRS, along with payroll processors, tax return preparers and software firms provided tips to alert taxpayers to security threats, including identity theft and tax refund fraud.
The weeklong series of news releases, available in the Client Center, covered topics and suggestions including:
It's the Social Security Administration!
If you’ve received a “No-Match Letter” from the Social Security Administration (SSA), there’s no reason to say, “Good grief!”
It does mean that an employee’s name and social security number (SSN) do not match in the government’s system. However, it does not necessarily mean that you, or your employee, have done anything wrong. In all likelihood, it is the result of a clerical error.
When you receive the letter, please do not ignore it. You should take reasonable steps to resolve the mismatch and you must apply the steps uniformly across all of your employees. Of course, you should also document and date your attempts to resolve the mismatch.
Specifically, you should:
To verify all Social Security Numbers in our system for all of our customers, we send electronic files to the SSA. If there are any discrepancies, we forward a report of those inconsistencies to you. You can also verify the employee’s name and SSN match by going to the SSA website at http://www.ssa.gov/employer/ssnv.htm
We also offer E-Verify services, so you can check the SSN of your new hires and confirm that they’re eligible to work in the United States at the same time. You will have no “tricks,” just peace of mind knowing that you are in compliance with the law.
The Internal Revenue Service released a new Tax Tip about fake tax bill notices related to the Affordable Care Act (ACA.) The scam involves fraudulent versions of notice CP2000 for tax year 2015 and may be received via email, as an attachment, or by mail.
You’ll be able to tell if you receive one of these fraudulent notices if -
(CLICK HERE TO READ THE ENTIRE IRS NOTICE regarding the “Fake IRS Tax Bill Notices”)
Take a break...
The Breakroom is the Corporate Payroll Services resource center for 'News You Can Use,' feature stories, holiday notices, regulatory updates, product announcements, commentary and more.