Archive for August, 2011

PCS Partners

Tuesday, August 30th, 2011

Integrated PartnersWe at PCS are proud to offer a wide array of timekeeping, payroll and HRIS solutions to our customers… but we realize we can’t be all things to all people.  In order to maintain our high service standards, our focus must remain on our core competencies, which is why we have chosen to partner with other local service providers.

This strategy allows us to provide you with best in class solutions, from local vendors who do business next door.  They care about their reputation and have met our standards for quality service and integrity.  We hope you take the time to review our partners each time you have a business services need.  By doing business with PCS Partners, you can feel comfortable you’ll receive the same quality service commitment you get from us.  Plus, wherever possible, we’ve built integrations with our partners to deliver efficient data transfer and reporting.

Featured Partners

TSC
Tax Sheltered Compensation is one of Minnesota’s leading 401k administrators. They help convert your retirement plan from being an ordinary operating expense to an extraordinary management tool.  TSC believes that the key components of a successful corporate retirement plan are:

  • Customized and cost effective
  • Minimal plan management and administration
  • Worry-free compliance
  • Adequacy of retirement benefits
  • Exceptional service by an experienced team

Experience the TSC difference by contacting them today, visit their website by clicking here.

Global Cash Card
PCS has entered into an agreement with Global Cash Card to provide PayCards for our Clients and their employees.  If you are considering going paperless, have unbanked employees or are looking for alternatives to promote electronic payment, you should take a look at this pay option for your employees.

It is proven that PayCards save money and time on the distribution of employee payroll and provides an additional NO COST employee benefit.  Yes, no cost to you the employer, AND the employee can easily enjoy NO COST usage of the card by following simple rules that are outlined in their activation kit.  Find out more by clicking here.

Better Business Solutions
Reduce credit card processing fees by joining the BBS Buying Group where they utilize a two step process that can help your organization keep a lot more of your money in regards to credit card fees. Step 1 is helping your organization initially eliminate layers of profit being made by your current credit card company and step 2 is using the BBS Buying Group Advertising Program to continue to reduce the costs of accepting credit cards. Many of our members continue to save thousands annually by telling others about the BBS Buying Group.

Visit their website today and let them know PCS sent you!

Safe Shield
Keep your corporate status intact and gain anytime/anywhere access to all of your corporate papers and important information by utilizing Safe Shield’s services.

Safe Shield monitors ever changing corporate compliance regulations, completes required annual filings with the Minnesota Secretary of State, conducts regular reviews of all business activities, documents the review, and manages your Business Record Book through its proprietary online record book application.

TaxBreak
TaxBreak helps businesses owners and human resource executives implement an easy-to-manage system for taking advantage of employer tax credits designed to offset labor costs.  One form when hiring your employees does it all.  Contingency based so you pay nothing unless they find you Tax Credits!

These are just a few of the many partner relationships we have developed in order to serve you better.  Visit the partner section of our website to see our complete listing of Agreed Partners, Recommended Vendors and others today!

If you are interested in becoming a PCS Partner, please contact John De Leeuw, jdeleeuw@pcspayroll.com, 763.746.1938 Direct.

Exempt From Minimum Wage?

Tuesday, August 30th, 2011

Wage and Hour - Minimum Wage ExemptionsThe FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.

However, Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. Section 13(a)(1) and Section 13(a)(17) also exempt certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. Job titles do not determine exempt status. In order for an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the Department’s regulations.

See other fact sheets in this series for more information on the exemptions for executive, professional, computer and outside sales employees, and for more information on the salary basis requirement.

Administrative Exemption
To qualify for the administrative employee exemption, all of the following tests must be met:

  • The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
  • The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
  • The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

Primary Duty
“Primary duty” means the principal, main, major or most important duty that the employee performs. Determination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole.

Directly Related to Management or General Business Operations
To meet the “directly related to management or general business operations” requirement, an employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example from working on a manufacturing production line or selling a product in a retail or service establishment. Work “directly related to management or general business operations” includes, but is not limited to, work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations; government relations; computer network, Internet and database administration; legal and regulatory compliance; and similar activities.

Employer’s Customers
An employee may qualify for the administrative exemption if the employee’s primary duty is the performance of work directly related to the management or general business operations of the employer’s customers. Thus, employees acting as advisors or consultants to their employer’s clients or customers — as tax experts or financial consultants, for example — may be exempt.

Discretion and Independent Judgment
In general, the exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct and acting or making a decision after the various possibilities have been considered. The term must be applied in the light of all the facts involved in the employee’s particular employment situation, and implies that the employee has authority to make an independent choice, free from immediate direction or supervision. Factors to consider include, but are not limited to: whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices; whether the employee carries out major assignments in conducting the operations of the business; whether the employee performs work that affects business operations to a substantial degree; whether the employee has authority to commit the employer in matters that have significant financial impact; whether the employee has authority to waive or deviate from established policies and procedures without prior approval, and other factors set forth in the regulation. The fact that an employee’s decisions are revised or reversed after review does not mean that the employee is not exercising discretion and independent judgment. The exercise of discretion and independent judgment must be more than the use of skill in applying well-established techniques, procedures or specific standards described in manuals or other sources.

Matters of Significance
The term “matters of significance” refers to the level of importance or consequence of the work performed. An employee does not exercise discretion and independent judgment with respect to matters of significance merely because the employer will experience financial losses if the employee fails to perform the job properly. Similarly, an employee who operates very expensive equipment does not exercise discretion and independent judgment with respect to matters of significance merely because improper performance of the employee’s duties may cause serious financial loss to the employer.

Educational Establishments and Administrative Functions
The administrative exemption is also available to employees compensated on a salary or fee basis at a rate not less than $455 a week, or on a salary basis which is at least equal to the entrance salary for teachers in the same educational establishment, and whose primary duty is performing administrative functions directly related to academic instruction or training in an educational establishment. Academic administrative functions include operations directly in the field of education, and do not include jobs relating to areas outside the educational field. Employees engaged in academic administrative functions include: the superintendent or other head of an elementary or secondary school system, and any assistants responsible for administration of such matters as curriculum, quality and methods of instructing, measuring and testing the learning potential and achievement of students, establishing and maintaining academic and grading standards, and other aspects of the teaching program; the principal and any vice-principals responsible for the operation of an elementary or secondary school; department heads in institutions of higher education responsible for the various subject matter departments; academic counselors and other employees with similar responsibilities. Having a primary duty of performing administrative functions directly related to academic instruction or training in an educational establishment includes, by its very nature, exercising discretion and independent judgment with respect to matters of significance.

Highly Compensated Employees
Highly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 or more (which must include at least $455 per week paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee identified in the standard tests for exemption.

Where to Obtain Additional Information
For additional information, visit our Wage and Hour Division Website: http://www.wagehour.dol.gov and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-4USWAGE (1-866-487-9243).

When the state laws differ from the federal FLSA, an employer must comply with the standard most protective to employees. Links to your state labor department can be found by clicking here.

This publication is for general information and is not to be considered in the same light as official statements of position contained in the regulations.

U.S. Department of Labor
Frances Perkins Building 200 Constitution Avenue, NW
Washington, DC 20210
1-866-4-USWAGE
TTY: 1-866-487-9243

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Supplemental Wage Taxation

Tuesday, August 30th, 2011

Supplemental WagesWe’ve all heard the terms “supplemental wages” and “bonus rate”, but what exactly are they… and why should employers be concerned about them?

The Internal Revenue Service (IRS) lays out rules, regulations, definitions and calculations in Publication 15 – (Circular E) Employer’s Tax Guide.  This guide is updated annually and can be found online by clicking here.  It is highly recommended that this publication be downloaded and reviewed by employers on an annual basis.

The IRS defines supplemental wages as “wage payments to an employee that are not regular wages.”  “Regular” wages can practically be defined as regular salary, base salary or base rate.  It’s the regular wages you pay an employee for doing their job, exclusive of any other incentive, bonus or any other additional wages or income.

Below are some examples of common supplemental wages. This list is not exhaustive and does not include all the possible types of supplemental wages that may be paid to an employee.

  • Overtime
  • Bonus
  • Commission
  • Benefit Accrual Payouts
  • Awards, Prizes and Gifts
  • Severance Pay
  • Retroactive Pay
  • Non Deductible Moving Expenses
  • Taxable Fringe Benefits
  • Non-Accountable Expense Reimbursement

The biggest difference between regular wages and supplemental wages is their tax treatment.  The IRS mandates one of three methods in calculating an employee’s check with supplemental pay.

The IRS makes a very clear distinction between regular wages and supplemental wages and that any supplemental wages are to be taxed differently than regular wages.  The acceptable methods of calculating these taxes override what the employee is claiming on their W4 for regular wages.  It is important to remember that it is the EMPLOYER that determines the tax calculation method, not the employee. The employee cannot request that a certain amount of taxes be withheld or that taxes be withheld at a lower rate.  Also, once the decision is made by the employer on the method, the method must be applied to all employees, no exceptions.

So how do you determine how to calculate the appropriate withholdings? There are two categories of supplemental payment rules which are based on the amount of supplemental wages an employee will receive in a calendar year.  If the employee will receive less than $1,000,000, there are two methods to choose from.  If the employee will make more than $1,000,000 in supplemental wages, only one method is available.

Employees with Supplemental Earnings Less Than $1,000,000 Annually

Method 1 – Supplemental Wages Combined with Regular Wages
If you do not differentiate between regular wages and any sort of supplemental wages (i.e., everything is classified as Regular) then Federal Income Tax (FIT) is withheld on the total amount as if the total was a single payment for that regular pay period.

Another way of looking at this is that this is the method used to calculate taxes due when Overtime (OT) is paid to an employee on a single check, along with their regular wages for a pay period.  The OT wages are added to regular pay and the taxes are then calculated at the higher rate of pay for that pay period only.  The higher pay amount does not carry forward to the next pay period.

Method 2 – Supplemental Wages Identified Separately From Regular Wages
If the supplemental wages are identified as a separate earnings type other than regular, there are two methods for calculating the withholding due.

Method 2a:
Withhold Federal Income Tax (FIT) at a 25% rate. No other percentage is allowed.

Method 2b:
If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. Subtract the tax withheld from the regular wages. Withhold the remaining tax from the supplemental wages. If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and the previous supplemental wage payments, and withhold the remaining tax.

Due to the complicated nature of this calculation, it is recommended that the standard 25% withholding rate be used.

Employees with Supplemental Earnings More Than $1,000,000 Annually
If any employee receives in excess of $1,000,000 per calendar year in supplemental wage payments, all supplemental wage payments made that exceed the $1,000,000 threshold are to be taxed at 35%.

If you have any questions about how to correctly tax supplemental payments to employees, please contact your Client Account Manager and they will be happy to walk through the regulations with you, as well as make any necessary changes to your company setup.

Submitted By:

Susan Lindsay
PCS Customer Service Team
slindsay@pcspayroll.com
763.746.5428 Direct

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

The Paperless Desk

Tuesday, August 30th, 2011

Going PaperlessIn 1975 Business Week pushed forward the idea of a paperless office, where every desk would have a computer where all of our information would be stored, organized, and at our fingertips.  More than three decades later we find a computer on every desk, but we’ve also learned that it’s just as easy to lose a file on a hard drive as it is in a row of filing cabinets.  We can communicate electronically, but at some point every one of us is going to print out an email and walk it back to the sender with hand written notes.  And while the dream of a paperless office is still enticing, we know a lot of work goes into converting not just old files but current habits.

When imagining a paperless utopia, it is easy to forget the little things that we do on a day to day basis. How many notes are written on the top page of a pad and then torn off and thrown away when they are no longer relevant?  How many to-do lists are written out, and then replaced the next day with the most current tasks?  No matter your workspace, be it cubicle, office or communal, here are a couple of tools to help you keep it paperless.

Evernote (evernote.com)
There are numerous note taking programs out there, but the reason that Evernote gets the nod is because it is everywhere.  You can install it on your computer, put it on just about any smart phone, or access it from their website.  In every place, your notes are synced so you can pick up right where you left off.  Additionally, you can share your notes with others, allowing them to collaborate with you.

Toodledo (toodledo.com)
Toodledo is an easy way to organize your tasks.  Better than a paper list, you can reprioritize on the fly, and organize your tasks making it so you can keep your personal and work to-dos in one place but keep them distinct.

Scribblar (scribblar.com)
More than just a place to doodle, Scribblar is an online whiteboard.  Like a physical whiteboard in a shared space, you can bring others in to see what you’re working on and give input.  You can also use it to give presentations, import images from your computer or the web.

Submitted By:

David Koplos
IT Development
PCS
dkoplos@pcspayroll.com
763.746.1943 Direct

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Uniform and Other Deductions

Tuesday, August 30th, 2011

Uniform DeductionThe FLSA does not allow uniforms, or other items which are considered to be primarily for the benefit or convenience of the employer, to be included as wages. Thus, an employer may not take credit for such items in meeting his/her obligations toward paying the minimum wage or overtime.

Requirements
Uniforms: The FLSA does not require that employees wear uniforms. However, if the wearing of a uniform is required by some other law, the nature of a business, or by an employer, the cost and maintenance of the uniform is considered to be a business expense of the employer. If the employer requires the employee to bear the cost, it may not reduce the employee’s wage below the minimum wage of $7.25 per hour effective July 24, 2009. Nor may that cost cut into overtime compensation required by the Act.

For example, if an employee who is subject to the statutory minimum wage of $7.25 per hour (effective July 24, 2009) is paid an hourly wage of $7.25, the employer may not make any deduction from the employee’s wages for the cost of the uniform nor may the employer require the employee to purchase the uniform on his/her own. However, if the employee were paid $7.75 per hour and worked 30 hours in the workweek, the maximum amount the employer could legally deduct from the employee’s wages would be $15.00 ($.50 X 30 hours).

The employer may prorate deductions for the cost of the uniform over a period of paydays provided the prorated deductions do not reduce the employee’s wages below the required minimum wage or overtime compensation in any workweek.

Other Items: Employers at times require employees to pay or reimburse the employer for other items. The cost of any items which are considered primarily for the benefit or convenience of the employer would have the same restrictions as apply to reimbursement for uniforms. In other words, no deduction may be made from an employee’s wages which would reduce the employee’s earnings below the required minimum wage or overtime compensation.

Some examples of items which would be considered to be for the benefit or convenience of the employer are tools used in the employee’s work, damages to the employer’s property by the employee or any other individuals, financial losses due to clients/customers not paying bills, and theft of the employer’s property by the employee or other individuals. Employees may not be required to pay for any of the cost of such items if, by so doing, their wages would be reduced below the required minimum wage or overtime compensation. This is true even if an economic loss suffered by the employer is due to the employee’s negligence.

Employers may not avoid FLSA minimum wage and overtime requirements by having the employee reimburse the employer in cash for the cost of such items in lieu of deducting the cost from the employee’s wages.

Typical Problems

  1. A minimum wage employee working as a cashier is illegally required to reimburse the employer for a cash drawer shortage.
  2. An employer improperly requires tipped employees to pay for customers who walk out without paying their bills or for incorrectly totaled bills.
  3. An employer furnishes elaborate uniforms to employees and makes them responsible for having the uniforms cleaned.
  4. An employee driving the employer’s vehicle causes a wreck, and the employer holds the employee responsible for the repairs, thereby reducing the employee’s wages below the minimum wage.
  5. A security guard is required to purchase a gun for the job, and the cost causes him/her to not earn the minimum wage.
  6. The cost of an employer-required physical examination cuts into an employee’s minimum wage or overtime compensation.

Where to Obtain Additional Information
For additional information, visit our Wage and Hour Division Website and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-4USWAGE (1-866-487-9243).
This publication is for general information and is not to be considered in the same light as official statements of position contained in the regulations.  Click here for a PDF printable version of this article.

U.S. Department of Labor Frances Perkins Building 200 Constitution Avenue, NW Washington, DC 20210
1-866-4-USWAGE
TTY: 1-866-487-9243Contact Us

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.