New Website for Us

Thank you for visiting my blog.  I have exciting news today.  We are working this week on the final touches for my new website.  So I invite you to peruse my previous blogs for a couple of days while we work on getting the information loaded on the website.

The new site will have my entire 900 page manual "The Complete Guide to Federal and State Payoll Compliance" on it. To make it easier to use online,  it will be broken out by topic.  So if we were speaking of wage and hour law today, you could go to "O" for overtime and find the information you need on calculating regular rate of pay.

In addition to the wage and hour or tax law information contained in my manual, the site will have daily news updates right on the home page.  And it will have a power point reader version of all my presentations on such topics as wage and hour law, fringe benefits, multistate taxation, and child support.

So enjoy our previous blogs, which have some great information for you and I will see you next week..

Are Garnishment Limits on the Rise?

As I was reading my daily news updates and preparing them for distribution to my newsletter subscribers I found a very interesting item on an area that doesn’t get changed very often. Florida is amending its wage garnishment provisions to increase the amount of wages exempt from creditor garnishments. This applies to the head of household or head of family category. They are increasing it from $500 to $750 a week. Anything under that limit cannot be attached or garnished. It allows for the garnishment to take place if the person agreed to it in writing. But it provides the form to be used for the agreement to waive the exempt to garnishment. It is very rare that these types of amounts are changed. It usually only happens when the minimum wage is increased or they haven’t been changed for many years.


Another reason I find this interesting is the wave of questions I have been getting lately concerning payday loans or personal loans at payday stores. When a person gets such a loan, it appears, they sign a letter that states they agree to allow the amount to be deducted from their wages if they don’t repay the loan. So payroll professionals are unsure sometimes whether to honor the agreement. Most that I know do not as they are a voluntary wage assignment and employers are not legally bound to honor them in most cases. But I was wondering if this increase in the amount subject to garnishment in Florida and the fact that they now have a special form to use and the growth of payday loans is somehow related.

So will we be seeing a rise in garnishment limits in the future in large numbers or is this a one-off case for just Florida? We will have to wait and see.

In the meantime, have you been getting any requests from payday loan type establishments wanting you to honor withholding agreements? Let us know how you handled it.

Have You Heard the Latest?

This is the information age for sure. We are all constantly bombarded with news and updates—practically 24/7. But is it useful information, that is the question. Nine times out of ten it is not. But current information is vital to today’s payroll professional. Changes occur daily, weekly, and monthly nowadays rather than just annually in January as in days gone by. With the Form 941 changing in April two years in a row, COBRA subsidy extensions coming in ad nauseum , and states changing or updating laws all year long it is surely a best practice to make sure you are getting the current information—shall I dare say “currently”.


But what is current in this electronic age? Even 5 years ago getting a monthly or a biweekly newsletter was sufficient to keep the payroll professional informed. But today it is just too slow. Newsletters may come electronically but they are still composed the old fashion way. They need to be written, then edited, desktopped, then finally distributed. So by the time the newsletter lets you know that the Form 941 has been updated for the second quarter and how to handle it is coming soon, the IRS, who is working in real time, has not only posted the form, but the instructions, the FAQs, and the corrections to their website.

Don’t get me wrong, newsletters are still very valuable. They are able to give you the full story, the details that a news bulletin cannot. But that is for later, when you are studying the information, not when you need to know about it now. So how does one obtain this up-to-the-minute news? Actually by spending a little time, you can acquire it very easily.

All of the federal agencies and most of the state agencies as well, now offer free e-mail news updates along with their monthly newsletters. By taking the time to go to each website and sign up you can have this information right at your fingertips at the same time as the large payroll news services and for free to boot.

It will cost you some time to sign up, after all nothing comes without some cost. Most states have a minimum of two sites that you will need to sign up for--one for taxes and one for wage and hour law. In addition other states divide up the responsibilities for the taxes. One agency may handle income taxes while another handles unemployment insurance. But it is well worth the time you spend on this.

If you have a staff you may want them to read the updates as well. You can distribute them via e-mail of course. Some departments are actually setting up a special e-mail address for these types of updates. That keeps the updates from being caught in spaminators or getting lost in the clutter of your e-mail first thing in the morning.

Now for a commercial break! Hey it’s my blog. Those of you have been reading this blog over the last couple of months know that I don’t usually do commercials for my company. But it just so happens that I am starting a news service for payroll professionals. As I have signed up for these services that I advocate here plus I pay for several other services I am certainly on top of the breaking news. Right now I am posting a small portion of these news items on my website. However, I am setting up a brand new website starting July 1st. At that time I am offering a subscription service to the Payroll Advisor’s E-News. For a small fee you can receive the latest news from the IRS, DOL, SSA and all 50 states for wage and hour as well as SIT and SUI changes right to your designated mailbox. I have been asked to do this for years and now I finally have the means and method to do so. So visit my new website after July 1st and sign up for a 30-day free trial subscription.

If you sign up for the e-mails directly you should be aware that there will be chaff with the good stuff. Depending on how the state sets it up you may get sales tax info along with withholding. With the IRS you will get a lot of CPA type updates along with the payroll news. But again well worth the quick scan to see what you need to read further.

So whether you sign up directly or use a payroll news service keeping up-to-date on payroll news and information is definitely a best practice.

So how do you keep up to date?  Let us know.

It Bears Repeating--Let's Have A Lunch Break

Today I want to repeat a blog I did on May 3, 2010.  It is about something that has bothered me for a long time. And that is the fact that the United States has no federal law that requires employees to receive a meal period. There are states that do require a meal period. Check the link http://www.dol.gov/whd/state/meal.htm for a list from the DOL’s state laws page. Less than half or 20 out of 50 states plus DC require a meal period. That means that while employees in California, Nevada, Massachusetts or Rhode Island for example are entitled to take time to eat, employees in Mississippi, Florida or Georgia must rely on the kindness or good will of their employer to eat a meal.

That is why my question today is simple: Why is there no law under the federal rules to require an employee to receive a lunch break? It’s not necessary is one argument I hear constantly. No employees would work for a company that didn’t give them a lunch. I actually had that discussion during lunch at the International Association for Human Resource Information Management Exposition. The HR professionals all agreed to that premise. Maybe in good times when jobs are plentiful, but what about these economic times? Or in low pay jobs?

Another argument against regulating lunch is that it is such a common practice in most cases so there’s no reason to have to legislate it. But is it common practice or common myth? If you follow the DOL on their audit information they release or court cases you know that failure to pay employees when they have worked through a lunch is actually quite common. In other words employers illegally dock employees for lunch when they haven’t taken it so what makes anyone think that they are offering lunches to everyone when not required to.

I am not asking for a paid lunch. But simply require that all employees within the United States regardless of the area of the country they live in deserve and are entitled to 30 minutes to eat lunch during the course of the work day. This wouldn’t be that hard. Other industrial nations offer it. 20 states offer it. And unlike the minimum wage that is actually based on the economics of the area where the employee works eating lunch is not. I totally agree that the cost of living in Kansas may be lower than in California so each state should be free to set a higher or lower minimum wage than the other. But the need to take time to eat food during the course of an eight hour day is not decided by geographical location.

Maybe payroll professionals should rise up and start the “Let’s Have Lunch” movement to make the law universal to all employees in all states. It certainly would make our job easier if the laws were more streamline. That’s my thought for today on wage and hour law…what do you think?

What Changing Already?

When you start a blog like this one its always difficult to know how to organize it and what to write about. So you start out organizing it one way but soon discover it doesn't quite work for you, so you make some changes.  And that, ladies and gentlemen, is what has happened to me.

When I first started I thought it would be best to have a specific topic on payroll for each day of the week.  This way all topics are covered and I would always know what to write about on that day instead of sitting around going what should I write about today? But now that I have a few months under my belt I find this method doesn't work very well for me.  I feel like I am missing out on pressing or current topics. For example, Monday is wage and hour law.  But the DOL  or a state announces a change on Tuesday.  To keep to the topic schedule I wait until the following Monday to write on the news.  And that I just don't like.  I want this blog to be current, in real time so to speak.  If the DOL announces it today, I want to write on it either today or tomorrow, not a week from now.

So as of today I will be making some changes.  I will use the news of the day for my topic first instead of the daily subject.  And if there is no relevant news of the day, then I will use the topic when needed.  And you can rest assured that anytime I feel the need to blog on the payroll profession I will do so regardless of which day of the week it is.

In addition, this will be my last Friday blog.  I will only be blogging Monday through Thursday.  Now before you start accusing me of taking time off and what kind of payroll professional can I be if I can take time off, I actually need to use Fridays for my business.  You see every other Friday I use as my catch up day.  I update my school websites and manuals, write newsletters, answer questions from seminar attendees, do phone conferences with clients etc.  Trying to blog on that day is really tough.  And on the opposite Fridays I handled all of my business out of the office such as appointments with clients etc.  So that means this is my last one for Fridays.

But maybe it won't be the last blog we post on Fridays.  What I hope will happen is all the payroll professionals out there who want to do a blog one time or every once in a while, might submit their blog to me and I can use Fridays for posting their blogs.  So Friday is guest blog day.  If you want to get something off your chest and it is payroll related send it to me at payrolladvisor@cox.net.  I will be posting your blogs on Friday.

I hope you like the changes.  Please let me know what you think.

The Answer We Waited a Week For

Last Thursday I blogged about using the Employer Social Security Credit under the Hire Act. You can re-read the blog for the full scope of the discussion.  But one point that I made was that while researching questions on using the credit I wondered how the IRS would answer if the question of whether or not an employer can use the credit at the end of the quarter or do they have to do deposit by depost was put to them.

So as I said in the blog I e-mailed the IRS and asked the following question:

I have a webinar atendee who is using the Employer Social Security Tax Credit under the Hire Act for the first time in the second quarter.  The question is can an employer take the credit on the Form 941 only and forgo using the credit for each deposit made or must the credit be used as each tax deposit is made for the appropriate payrolls? 

I got the answer back on the following Tuesday so as promised here is the IRS's response to the question:

Since the credit allowed under the HIRE act reduces the total tax liability on the Form 941, the deposits may be reduced accordingly but it is not a requirements that those deposits be adjusted.  If the tax deposits are not reduced, the result will be an overpayment of the tax and a refund may be claimed when the Form 941 is filed.

Well I feel really great about this.  My answer to my seminar attendee was spot on! But it never hurts to confirm it with the IRS.

How are you using the credit?  Let us know

Electronic Signals or Piles of Paper--You Decide

At this year's APA  Congress a panel was held on Electronic Income Withholding Orders for Child Support (e-IWO).  According to Bill Stuart, a software developer who works with the federal Office of Child Support Enforcement, the Electronic Income Withholding Order, designed for large employers, has become so prevalent that some states are considering the mandatory use of the program.

The e-IWO portal, which facilitates the transmission of the withholding orders to employers, is used in 22 states.  New Jersey began using the portal on May 26th.  The e-IWO program allows employers to make entries on a spreadsheet or PDF.  The program is user-friendly, accurate and provides secure delivery to employers.  The portal is a central location for child support orders and is helpful for employers dealing with multiple employment sites.  The portal also quickly gets payments to state disbursement units (SDU) and recipients.  The panel also discussed converting to not just receiving support orders electronically, but also sending payments to the SDUs using electronic funds transfers.  With the exception of South Carolina, SDUs receive and send payments electronically, said Nancy Benner, employer services specialist for the Office of Child Support Enforcement.

Boy, have things changed since I began my payroll career back in the mid-70's. Back then and through the decades since we basically had paper everywhere when it came to child support.  As laws were passed that increased our responsibility in collecting child support, the paper piles increased as well.

So our best practice suggestion for today is to take advantage of modern technology when you can and sign up for electronic Income Withholding Orders.  In addition, set up a program to submit your child support payments via EFT through the SDUs.

Let us know what you are doing in your payroll department.  Are you signed up for the e-IWO?  What has been your experience using the system--good or bad?  Do you have questions about using SDUs?  Post them here and we will get the answer for you. 

HHS Wants Us Fit—IRS Wants the Tax

It’s been in the news a lot lately—how unfit Americans have become. The First Lady is advocating programs to fight childhood obesity while AARP is starting an online movement to get fit over the summer. Everyone is being asked to join in and help. But for employers helping fight obesity is a two-edged sword.


If the employer takes office space and puts in a gym on site for employees to use, it is tax free and employee good will is created in addition to the benefit of giving employees a chance to work out. But for the employer to use valuable and sometimes nonexistent “extra” office space to put in a gym can cause a lot of “bad will” among workers who are crammed into cubicles. And let’s face it not too many companies have an extra 500 square feet just laying empty. Plus I really have to ask how many of us overweight and out of shape payroll professionals want to huff, puff, and sweat in front of our staff and fellow co-workers. I know I never did. Plus with no shower that’s not too pleasant back in the small and cramped payroll office. And if the employer does put in a shower, I really don’t want to strip and shower in front of my staff!

But the employer really wants to offer a healthier lifestyle to its employees. And many local businesses want to help other local businesses by buying services. So they buy a gym membership for all their employees. It might be a one-off benefit or even part of a larger and more complex wellness program that includes quitting smoking and diet tips. Either way it doesn’t matter. If the employer buys the gym membership everyone is paying taxes on it. FIT, FICA, FUTA, SIT, SDI (where required), SUI, Local Taxes. All of them. In essence the employer is made to pay more simply because they don’t want a gym next to their conference room.

My point is if the government wants Americans to get fit why make it harder and more expensive to buy a gym membership rather than gym equipment. Why should employers have to pay more for offering basically the same thing.

That’s my thought, what do you think?

Does your company have a gym? Do they buy memberships? Let us know what you do and how you handle it.

Multiple Rates of Pay—Finally a Use for High School Math

Under the FLSA it is required that employers pay employees overtime based upon the regular rate of pay. Over the course of the next few months we will often discuss this topic. But today I want to look at one facet of calculating overtime and the regular rate of pay. What to do when an employee works at two or more different rates within the same workweek. In this type of situation, the regular rate of pay for the week is the weighted average of all the rates. Remember weighted average is not the same as average.

Let’s do an example: At Secrest Corp this week Paul worked to cover for other employees on vacation. His time card reads as follows:

Day                     Per Hour Rate               Number of Hours Worked
Monday                    $8.00                                 8
Tuesday                    $8.00                                 8
Wednesday               $9.00                                 8
Thursday                   $8.75                                 9
Friday                       $7.50                                10
Total Hours                                                        43

Paul does not work in a state which requires daily overtime. So under the FLSA we would calculate his gross pay as follows:

Step 1… Calculate the Earnings for Each Day
Monday                            8 x $8.00 = $64.00
Tuesday                            8 x $8.00 = $64.00
Wednesday                       8 x $9.00 = $72.00
Thursday                           9 x $8.75 = $78.75
Friday                             10 x $7.50 = $75.00
Total                                                    $353.75

Many times I have seen payroll professionals confuse weighted average with average. They add up the rates then divide by the number of rates. For example $41.25 (total of all the rates) divided by 5 (number of rates) = $8.25 and try to use that as the regular rate of pay. In this case it would be close enough. But unfortunately it doesn’t always work out so close and can end up underpaying the employee.

Step 2: Divide the total earnings by the total hours worked to determine the regular rate of pay
$353.75 divided by 43 = $8.23 (regular rate of pay)

Step 3: Determine the premium pay for overtime by multiplying the regular rate of pay by .5 (or divide by 2) then multiplying that amount by the number of overtime hours
$8.23 x .5 x 3 = $12.35

Step 4: Determine the total weekly compensation by adding the total earnings (step 1) and the premium pay (step 3)
$353.75 + $12.35 = $366.10 (total weekly compensation)

These 1938 rules under the FLSA require this method to properly pay employees working at more than one rate in a workweek. So you see, you should have paid closer attention to your teacher in high school math class.

Do you have to do weighted averages where you work? How do you handle it?

Let us know. Join in the discuss.

Where is my PH.D in Payroll?

A good friend of mine that I have known for over 30 years joined the thousands of grads this year by getting her Master’s Degree. She had a BA but decided to get her Master’s. This happy event got me to thinking maybe I should go back and get my Master’s or even a Ph.D. I have always wanted to be known as Doctor Vicki. But then the same old roadblock comes up. What would I get the degree in? When I first started out in payroll in 1977 or so I was still attending college as an undergrad. When I realized what I wanted to do with my life (I live for payroll, of course!) I encountered the fact that there were no under graduate or graduate degrees in either personnel or payroll at that time just accounting.

Well 10 years later I was able to finally get my undergraduate degree but it was in Business Administration with an emphasis in Personnel Management. And I had to go to National University to get it. I was living in San Diego at the time and San Diego State didn’t offer it. But neither school had anything that related to payroll. Now, of course, 25 years later I can go back and get a Master’s degree in Human Resources Management from Penn State or even Rutgers or San Diego State if I wanted to. I can even get a Ph.D in Human Resources from Temple University or UCLA. But where the f%$@ is my Ph.D in payroll!

Google it sometime and you will see. You can take payroll accounting courses, human resources courses, labor law courses but nothing that prepares you for payroll itself. Yet, as a payroll professional I am required to know all of the wage and hour laws not only on the federal level, but for every state in which I have one employee located. How many attorneys can say they know wage and hour law in 47 states well enough to actually pay an employee? I’ll be the answer is zippo! But there are thousands of payroll professionals who must know this information on a daily basis and do.

Payroll professionals must know all the Internal Revenue Codes that relate to paying employees including taxation of fringe benefits, withholding tax and deposit/reporting requirements. If they make a mistake—fines and penalties. Not only do they need to know it for the IRC but for every state they are located in. And not just income tax, but FUTA, and the state’s SUI plus local taxes. How many CPAs can claim they can rattle of the taxation requirements for SUI for 50 different states and the District of Columbia and are able to do the 941 in Spanish for Puerto Rico?

So where do we have to learn this? Where do the 214,000 payroll professionals working in the United States (as of 2004) learn it all? By hook or by crook. By reading IRS publications, begging for funds to take a training course or two, taking my on-line courses, attending free seminars given by the IRS or State agencies or by learning from each other.

This is no way for the number one collector of taxes and child support in the nation to be trained. Why can’t I as a payroll professional attend college, learn all about everything I need to know, take that into the real world, find out it is useless and then learn it all on the job just like all other professions such as lawyers, human resource professionals and accountants! Where is my Ph.d in Payroll!

What about you? What did you end of getting your degree in or have you not bothered since it doesn’t matter in payroll? Let’s hear from you.

Employer Social Security Credit—Whose Using and How

In May I conducted a webinar on the Form 941. As is customary attendees can submit questions in advance. One question that I received was very intriguing. The attendee wanted to know if anyone was actually claiming the Employer Social Security Credit permitted under the Hire Act. And if they were using it, how were they taking it. Was it per deposit? Or were they just going to wait and claim the entire quarterly credit on the Form 941? The attendee went on to ask if taking the credit at the end of the quarter was even permitted by the IRS.

See what I mean about intriguing. Of course the first step I took was to review the new instructions for the 941 concerning the credit. Nothing there prohibited the employer from taking it all at once but nothing said okay either. I read the FAQs and again the same thing. So the opinion I gave the attendee was simply that I didn’t see anything that prohibited the employer from taking the credit as a lump sum on the 941 instead of using it deposit by deposit.

But then the more I thought about it the more I wondered if the IRS would actually make the same interpretation if the question were put to them directly. So this morning I sent an e-mail over to the IRS and asked them about taking the credit as a lump sum on the 941. I will share their answer with you in next Thursday’s blog on reporting. I should have it back by then.

The second part of the attendees question asked how other payroll departments were handling the credit in the real world. I made a few phone calls to some payroll friends to take a quick unscientific survey. Amazingly I got the same answer from all of them. If they were using the credit they were waiting until the end of the second quarter and just claiming as a lump sum. It was not worth the time and effort to do it deposit by deposit. What surprised me a little is how many companies are not even using the credit.

So our discussion for today is simple. What are you doing in your payroll department? Are you taking the credit deposit by deposit? Are you going to wait until quarter end and do a lump sum on the 941? Or maybe your company isn’t even taking advantage of the credit. Post a comment and let us know.

Reconciling Form 941 to Forms W-2 is Definitely a Best Practice

Hey everybody I am back! Sorry to disappear so suddenly and for two weeks (in the cyber world a long time!) right after starting the blog. I would love to be able to tell you that I took an impromptu vacation to a beautiful island in the Caribbean but unfortunately that was not the case. I got laid up with a severe bout of pneumonia. Between urgent care trips, hospital stays, and sleeping for 7 days with a temperature of 103 degrees the blog, as important as it is to me, got lost in the chaos. Trust me I wish I could have done the blog instead of watching Real Housewives of New Jersey! Those ladies are CRAZY! So please accept my apology and let’s get back up and running.

We use Wednesdays for our best practices in payroll topic so today I would like to discuss reconciling the Form 941 against the W-2s quarterly. This is the best and most efficient way to ensure that your W-2s balance before final processing during year end. The reason I am picking this topic today is it seems to be on everyone’s mind with the new version of the Form 941 being released recently.

Now a lot of payroll professionals tell me they don’t do this quarterly. After all year end is 2 quarters away why reconcile now. Why not just do it when year-end gets here. But that is just the point. By reconciling each quarter you know as you go along that everything is in balance. Then at year end it’s just a quick reconcile of the 4th quarter and a submission to close out the year. This is much more efficient and definitely a better way than to sit down in January and hope it all balances. Basically it is balance now or balance later. And I hate spending all of January looking for a $4.00 difference!

What about you? What do you think?

Note: For those of you who would like more on reconciling Form 941 to Form W-2 I will be placing a white paper on my new website www.thepayrolladvisor.com by the end of this quarter. It will be available for download.