DOL Issues New Opinion Letters Including Lump Sums

The Federal Department of Labor (DOL) has been issuing a flurry of opinion letters recently.   But even more  amazing, is that one of the opinion letters actually deals with a subject long been a thorn in payroll’s side and one that some of us have waited years for a ruling.  The basic problem is whether or not lump sum payments such as bonuses are the same as normal wages under the law when it comes to withholding for garnishments.  You see many of the states do not think that lump sum payments fall under the Consumer Credit Protection Act or CCPA.  This is the Act, written in 1970, that sets the limits for what can be deducted from an employee’s pay for such garnishments as child support and creditor garnishments.  The DOL is actually in charge of enforcing the Act, but has always been unclear on their position on whether or not lump sum payments are covered under the Act.  This is especially true for child support, as employers may actually be required to report the pending lump sum payment and wait for instructions on withholding, usually for back child support owed to the state.  For example, according the the Office of Child Support Enforcement’s matrix on states and lump sums, Alabama requires 100% of all lump sums.  California states that it is subject to 50% unless the lump sum payment does “not involve earnings”. while Indiana follows the CCPA, So we have tried to look to the DOL to give a definition ruling on this and low and behold, they finally have.

In opinion letter CCPA2018-1NA the DOL has answered numerous questions on what constitutes earnings by discussing 18 different specific examples of common types of lump sum payments that an employer may issue to an employee.  These include commissions, discretionary and non discretionary bonuses, profit sharing, production bonuses, sign-on bonuses, relocation incentive payments and safety awards.

Child Support Report is In–Payroll Doing a Great Job!

The Office of Child Support Enforcement (OCSE) has submitted its Annual Report to Congress FY 2015.  The report outlines its accomplishments and provides a status for the program. This fiscal year marked the 40th anniversary of the Child Support Program, which was established in 1975.  In total, $32.4 billion  in child support was collected in FY 2015.  Of this $24.3 billion or 75% was collected through income withholding from the employee’s paycheck.  Well done payroll professionals!

 

PA Child Support Changes–More Problems for Payroll

Pennsylvania has recently passed legislation on collecting fees for withholding child support payments. Normally this is good news for payroll. However, the PA legislature has really gone out of its way to make it tough for payroll to enforce the new rules.  If I can get on my soap box for one moment, this is the reason I dread state legislatures getting involved in enacting legislation that is payroll related before check with payroll professionals, which they never do! This legislation, in fact,  could cause “nightmares” for payroll systems as it goes against the norm for collecting such fees.  Basically it boils down to this, which was distributed by the Office of Child Support Enforcement (OCSE):

On July 1, 2016 Governor Tom Wolf signed Act 64, which amends Section 4348(j) of Title 23 of the Pennsylvania Consolidated Statutes. Section 4348(j) permits employers to charge their employees an administrative fee for withholding income for support.  Employers were previously permitted to deduct up to two percent of the ordered amount per pay period as reimbursement for administrative costs related to withholding support. Effective August 30, 2016, employers may deduct a one-time fee of $50 for reimbursement of expenses related to withholding income for support. The two-percent fee is no longer permitted. There are no other changes to the law. Pennsylvania’s income withholding requirements stipulate that administrative fees cannot be deducted from the withholding amount and that Consumer Credit Protection Act (CCPA) limitations apply to amounts withheld from the obligor’s income.

The Pennsylvania Bureau of Child Support Enforcement is providing the Frequently Asked Questions below to address concerns related to the implementation of the new fee. Additional questions regarding the implementation of Act 64 should be directed to the Pennsylvania State Collection and Disbursement Unit at 1-877-676-9580. 

Frequently Asked Questions:

 1. Can employers assess the fee on subsequent orders?

Answer: The one-time $50 fee applies to each employee, not each order. Therefore, employers may only collect up to $50 in administrative fees for the duration of the individual’s employment, regardless of the number of income attachments received for the employee.

2. How should employers handle employees who left employment and were subsequently rehired? When can the fee be reassessed?

Answer: The $50 one-time fee limitation applies for the duration of the individual’s employment. Seasonal, transient, and other typically low-income employees will be adversely affected by Act 64 if each subsequent rehire with the same company is regarded as a new eligibility period for the $50 one-time fee. Therefore, rehired individuals are only eligible for a new $50 fee when their start date is greater than one year from their previous leave date.

3. What should employers do if they are unable to update their payroll system before the August 30, 2016 effective date?

Answer: Employers may withhold the one-time $50 fee at any time during the income attached employee’s tenure with the company. Employers who are unable to update their payroll systems before August 30, 2016 may elect to withhold the fee after their system updates are complete. Employers may not continue to withhold a percentage fee until they are able to take the $50 one-time fee.

So payroll can only deduct a one-time fee per employee no matter how many income withholding orders are received for that employee.  PA child support has also provided additional clarification after releasing the above information.  One addresses the issue of insufficient funds.  If there are not enough funds to take the entire fee in one pay period, can it be pro-rated and taken over multiple periods?  PA Child Support says yes, the employer may deduct the fee over multiple periods if there are insufficient funds to deduct in a single payment.

There are still a lot of unanswered questions for payroll.  I will keep you posted on any further changes to the PA child support situation as they come in.

 

OCSE Redesigns Website with Users in Mind

This is a first for us today.  We have a guest blogger.  Tristan Anderson from the Office of Child Support Enforcement (OCSE). OCSE has redesigned and launched their new website.  Her blog post today will help guide users through this new, redesigned OCSE website with all its great new features.  Welcome Tristan:

Here Today, Gone Tomorrow:

Technology moves fast. What once was new can quickly become old and outdated. Although we redesigned and launched a new website in 2012, by 2014 it no longer fit our users’ needs. In September 2012, only 12 percent of the people visiting our website did so on a mobile device. By September 2013, almost 25 percent were mobile users — a 102 percent increase in just 12 months! Each year we see a steady increase in the number of mobile users.

ocse blog picture 2On average, about 35 percent of our visitors are on their mobile device. To keep up with demand, we decided to redesign our website and make it mobile-friendly. That means our site will re-adjust the content to fit the size of any device, whether it is a desktop computer, a smart phone, a tablet, or something else.

Considerations for developers

  • Define your audience — who needs to know what? Our site must meet the needs of a variety of audiences: from parents to child support professionals, employers, and other partners; all groups need accurate information specific to them.
  • Identify top tasks — why are people visiting our site and what do they need? To answer these questions, we went to frequent website visitors.

User testing with employers

User testing with employers gave us insight into why you visit our website and how you navigate it. Based on feedback, we organized the main menus and submenus to accommodate your top tasks.

Here are examples of the most popular reasons you visit our website:

Understand employer responsibilities

Learn about electronic and online services

Find a complete list of federal forms used by employers

Access state contact information and program requirements

Get answers to frequently asked questions on a variety of topics

As more people visit websites using mobile platforms and as technology moves forward, you will see more updates and refinements. If you’d like to help test our site or have suggestions for improvements, contact Tristan Anderson at tristan.anderson@acf.hhs.gov.

Anyone for E-IWO (Except SC)

Well the day has finally come when all the states (except South Carolina) are now offering electronic Income Withholding Orders or e-IWO.  What exactly is an e-IWO and how does it differ from getting cheiwoild support orders on paper?  Very simply, by using the e-IWO employers receive their Income Withholding Orders (IWO) for child support electronically as a pdf file rather than through the snail mail on paper.  This saves a lot of time and expenses on the side of the state.  But the employer also gets to acknowledge the receipt electronically which saves time and money on that side as well.  In addition, the same portal also allows the employer to report terminations and lump sum payments electronically, again saving time and money.

All you need to do to partake in this system is to implement the e-IWO in one of two ways.  For large (I mean really large) employers with thousands of child support orders you could set up a system-to-system process.  This obviously is going to take a lot of programming and time.  But if you are a smaller employer with maybe only dozens of child support orders or less you could set up the No Programming option.  This is just like setting up your phone really. You just set up the port etc. and then begin receiving the IWOs.  Takes just a few weeks but well worth it in terms of time and money saved.

Want more info before making the plunge to electronic then check out the Office of Child Support Enforcement’s website on e-IWO. There you will find all the info you need on setting up the different systems as well as FAQs. Want to speak to someone directly about the program.  By all means contact William Stuart @william.stuart@acf.hhs.gov.  Bill will be glad to answer your questions, give you back ground info and even give you info on other employers, who are just like you, so you can speak with them about the system.

Electronic is the wave of the future for payroll so don’t be left out and holding the paper form when everyone else is going paperless with their IWOs.  The system is up and running so now is the time to check it out and start using it.

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Child Support Lump Sum Reporting and Terminations Can Now be Done Electronically

Reporting lump-sum payments for child support used to be done online through what was called Debt Inquiry Service. Now using the Employer’s Services Web Application employers can report lump-sums and terminations to states quickly and efficiently. Debt Inquiry Service is now known as Lump-Sum Reporting. eTerm allows employers to report termination to participating states electronically. eTerm can also be used to respond to income withholding orders received for individuals who no longer or never worked for your company. This takes the place of completing page 3 of the IWO and sending it to the child support agency. Employers using e-IWO can do both processes through the e-IWO system. For more info about lump sum reporting or eTerm or to schedule a demonstration contact OCSE Employer Services at employerserviceswebapp@acf.hhs.gov.

 

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