Our First Payroll Lecture is Here

I am offering my first payroll lecture of the year next week on June 18th.  The subject will be travel pay. The lecture is two hours from 10:00 am to Noon Pacific time.  It is approved by the APA for 2 RCHs.  The nominal charge for the webinar is $99.  You can register under our Shop on our website. 

Learning Objectives:

  • Understand the FLSA requirements for paying an employee who travels
  • Comprehend the best practices for tracking and paying for travel pay
  • Understand the IRS requirements for taxing travel pay reimbursements including per diems and accountable plans.

EFT, ACH and EDI are Different and It Matters

In payroll we tend to use the terms EFT, ACH and EDI interchangeably.  But in actual practice they are quite different.  To help explain these important differences the National Automated Clearing House Association or NACHA has provided some guidance on their April 29, 2019 blog, written by Rober Unger.   It is helpful to payroll professionals to understand these terms and use them correctly.  I found this blog extremely helpful and I hope you do to.

A Fresh Approach to Payroll Training is Coming Your Way!

I am proud to announce that I am once again offering training webinars but this time with a fresh approach.  We are an approved provider by the American Payroll Association (APA).  This means that my training can earn you RCHs as well as enhance your education.  But my training will be different than the usual fare that you get for webinars, even the ones I conduct for other vendors.  Instead of just listening, my webinars or “lectures” as I call them, will be interactive. Let me explain how this works.  I am an adjunct faculty member at Brandman University and am responsible for their Practical Payroll Online program. I do all of the materials for the program as well as teach the courses.  Each year I record various topical lectures for my students to use in each of the five courses.  These “lectures” are provided live to the students at a certain date and time and are recorded using the Zoom software Brandman provides. Students may attend the live event or may choose to view the recorded version, it is up to them. Because these are related to the course work, they include more interaction than standard or traditional webinars. For example, you can ask questions at any time during the lecture just as you would in a live classroom setting. You may have forms to complete (such as the lecture on the Form 941 or Form W-2) or you may have calculations to perform for the child support lecture. Each lecture is a full two hours, so more time to devote to the information and to related questions.

Students enrolled in the Brandman program are permitted to attend the lectures for free and do not receive RCHs.  However, I have had numerous requests to provide payroll training that gives RCHs so this is how I have decided to offer that training to my non-students.  I will post the latest lecture on my website.  All lectures are during normal business hours and usually held on Tuesday, Wednesday or Thursday.  I cannot offer these lectures for free.  There is a fee for APA certification, but I want to keep the costs within everyone’s budgets.  The introductory cost will be $99 per lecture per attendee.  That is two RCHs for less than $100 and no sales pitches or follow-ups about buying anything.  You may sign up with a personal email or with your business email, whichever you prefer.  And you don’t need to worry about getting your questions answered.  Since this is still a “class-room” style setting I am limited to only 20 additional attendees per lecture. So you won’t be lost in the multitude of other attendees vying for attention.

I will be offering our first lectures in May on Travel Pay, Child Support, Multistate Taxation, and Wage and Hour Law.  June’s lectures will include California Wage and Hour Law, Tax Levies and Creditor Garnishments, Payroll Procedures, and Abandoned Wages.  As each lecture is approved by the APA it will be posted to our website and open for registration. You simply pay online for the lecture and you will receive all the info for how to log into the classroom on the day of the lecture within two business days of registering.  After the lecture, your Certificate of Attendance will be issued once we verify you have completed all the required time in the classroom, the required APA polls, and the survey,  usually within 2 weeks after the lecture.

Unfortunately, although the lectures are recorded for use on the Brandman website, I cannot offer the lecture as an on-demand product or after the fact electronic version.  Only live attendees will be accepted. But you always have the option of signing up for the Brandman course which features the lecture and if you complete the tests and quizzes can receive up to 8 RCHs for $200 per course for APA members. One more way to earn RCHs at a low price.

We are very excited to be offering this learning opportunity to our social media network.  We hope you find our lectures informative and useful. Further announcements for exact dates and topics will be coming.

New DOL Wage and Hour Opinion Letters Have Been Delivered. Let’s Look Inside…

The U.S. Department of Labor (DOL) announced on March 14th, that they had released new opinion letters on their website.  These letters address the compliance issues related to the Family and Medical Leave Act (FMLA) and the Fair Labor Standards Act (FLSA).  Before we review the new opinion letters for the FLSA, let’s do a quick review of what exactly is an opinion letter.

The Wage and Hour Division issues guidance primarily through Opinion Letters, Ruling Letters, Administrator Interpretations, and Field Assistance Bulletins. They are provided on the DOL website.

An interpretation or ruling issued by the Administrator interpreting the Fair Labor Standards Act (FLSA), the Davis-Bacon Act (DBA), or the Walsh-Healey Public Contracts Act (PCA) is an official ruling or interpretation of the Wage and Hour Division for purposes of the Portal-to-Portal Act. 29 U.S.C. § 259. Such rulings provide a potential good faith reliance defense for actions that may otherwise constitute violations of the FLSA, DBA, or PCA. Prior rulings and interpretations are affected by changes to the applicable statute or regulation so an employer should always periodically review any relevant opinion letters that it uses as a basis for a policy to ensure that changes have not occurred. From time to time the DOL updates its interpretations in response to new information, such as court decisions, and may withdraw a ruling or interpretation in whole or in part.

Now on to the new letters just recently issued.

FLSA2019-1:  This opinion letter clarifies the FLSA wage and recordkeeping requirements for residential janitors and the “good faith” defense. Discusses what to do if the FLSA and state requirements do not match. In this case the state of New York did not consider the employee subject to minimum wage and overtime but the FLSA does.

FLSA2019-2: Addresses the FLSA compliance related to the compensability of time spent participating in an employer-sponsored community service program.

I always encourage employers to use the opinion letters when formulating policy.  If you don’t see an opinion letter that addresses your issue, you may ask for one to be issued on that policy or question by submitting the request online.  Of course, not all requests submitted result in an opinion letter being issued. Or it may be issued but as a non-administrative letter which holds less weight. But it doesn’t hurt to ask!

Reminder: Keep up with the payroll news by subscribing to Vicki’s e-news alerts, Payroll 24/7.  The latest payroll news when you need it, right to your inbox.

With Higher Minimum Wages Can Come Higher Penalties

As my Payroll 24/7 subscribers found out today, Illinois is increasing its minimum wage to $15.00 per hour by the 2025.  But the bill, Senate Bill 1, also increases the penalties for failure to follow

the new requirements.  One of blogs that I follow, Wage & Hour Insights has an excellent post on this very issue.  I urge you to take a moment to read Bill Pokorny’s blog on the new Illinois minimum wage violations penalties, Stiff New Employer Penalties Included in Illinois $15 Minimum Wage Law. It is an excellent source on the new requirements.

Average vs. Weighted Average When It Comes to Calculating Overtime Rates–Another Use for Algebra!

Calculating overtime is always tricky.  What rate is the “regular rate of pay” as required by the Fair Labor Standards Act (FLSA) is a question that must be answered each time for each calculation.  What can make this even more difficult is when the employee works at more than one rate in the workweek.  What rate do you use for the “regular rate of pay” if the employee has two or more hourly rates during the workweek? Can you simply average the different rates or is something more required?  The Department of Labor recently addressed this situation in Opinion Letter FLSA 2018-28, dated December 21, 2018.

Facts of the letter:  The employer in question wanted to determine if their compensation plan, which pays an average hourly rate that may vary from workweek to workweek, complies with the FLSA. It was concerned in both the area of minimum wage and calculating the overtime rate.  The employer pays a different rate for when an employee is working with a client as opposed to when the employee is traveling between clients.  It makes sure that the typical standard rate of pay is $10.00 per hour and if the employee works over 40 hours in any given workweek, they are paid overtime based on the $10.00 rate.

The DOL agreed that the employer followed the minimum wage requirement as the employer is paying well above the minimum wage of $7.25 per hour.  However, the problem for the employer is with the rate used to calculate overtime.  According to the letter:

…If the employer always assumes a regular rate of pay of $10 per hour when calculating overtime due, then the employer will not pay all overtime due to employees whose actual regular rate of pay exceeds $10 per hour. 29 C.F.R. § 778.107. Neither an employer nor an employee may arbitrarily choose the regular rate of pay; it is an “actual fact” based on “mathematical computation.” Walling v. Youngerman-Reynolds Hardwood Co., Inc., 325 U.S. 419, 42425 (1945); 29 C.F.R. § 778.108. That said, the compensation plan does comply with the FLSA’s overtime requirements for all employees whose actual regular rates of pay are less than $10 per hour, as an employer may choose to pay an overtime premium in excess of the statutorily required amount.

So what rate should an employer use to calculate the overtime in situations where the employee is working two or more rates within the workweek?  The rate is determined by what is known as a “weighted average” not an average of the rates. The DOL addresses this method in Fact Sheet #23: Overtime Pay Requirements of the FLSAIt reads as follows:

…Where an employee in a single workweek works at two or more different types of work for which different straight-time rates have been established, the regular rate for that week is the weighted average of such rates. That is, the earnings from all such rates are added together and this total is then divided by the total number of hours worked at all jobs. In addition, section 7(g)(2) of the FLSA allows, under specified conditions, the computation of overtime pay based on one and one-half times the hourly rate in effect when the overtime work is performed. The requirements for computing overtime pay pursuant to section 7(g)(2) are prescribed in 29 CFR 778.415 through 778.421.

Here is an example of a weighted average calculation: The employee has worked the following hours at the following rates for the workweek:

Step 1: To determine the weighted average the following calculations would be required:

Step 2: Divide the total earnings by the total hours worked to determine the regular rate of pay

$475.75 divided by 43 = $11.06 (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

$11.06 x .5 x 3 = $16.59

Step 4: Determine the total weekly compensation by adding the total earnings (step 1) and the premium pay (step 3): $475.75 + $16.59 = $492.34.  $492.34 is the total weekly compensation.

In closing, it must be remembered that it is the employer’s responsibility to ensure that the regular rate of pay used for overtime calculations is the correct one.

 

FLSA Video Training Has Arrived at DOL/WHD

The Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) is launching a new series of brief, plain-language videos to help employers understand their legal obligations when it comes to calculating overtime etc.  According the the WHD website these videos “strip away the legalese and provide employers with basic information…”  The topics provided so far are:

  • Coverage: Does the Fair Labor Standards Act (FLSA) apply to my business?
  • Minimum Wage: What minimum wage requirements apply to my business?
  • Deductions: Can I charge my employees for uniforms or other business expenses?
  • Hours Worked: Do I have to Pay for that time?
  • Overtime: When do I owe overtime compensation and how do I pay it correctly?

The videos are very well done and cover the rules quite nicely.  For example the overtime video does go into all the calculations needed for regular rate of pay.  They last an average of seven or eight minutes each. If you are looking for a good basic training on these topics listed check out the videos from WHD.

WHD Launches PAID Program

Paid Logo

The Wage and Hour Division (WHD) of the U.S. Department of Labor has launched a new nationwide pilot program, the Payroll Audit Independent Determination (PAID) program. According to the WHD, PAID facilitates resolution of potential overtime and minimum wage violations under the Fair Labor Standards Act (FLSA). The program’s primary objectives are to resolve such claims expeditiously and without litigation, to improve employers’ compliance with overtime and minimum wage obligations, and to ensure that more employees receive the back wages they are owed—faster.

Under the PAID program, employers are encouraged to conduct audits and, if they discover overtime or minimum wage violations, to self-report those violations. Employers may then work in good faith with WHD to correct their mistakes and to quickly provide 100% of the back wages due to their affected employees.

WHD is implementing this self-audit pilot program nationwide for approximately six months. At the end of the pilot period, WHD will evaluate the effectiveness of the pilot program, potential modifications to the program, and whether to make the program permanent.

However there are potential pitfalls to the new program.  The Blog Wage & Hour Insights, which I feature quite often in my blogs, has an excellent post by Staci Ketay Rotman, Bill Pokorny and Erin Fowler on this very subject that I encourage you to read to get a better understanding of this new program.

Thinking About Getting Your CPP or FPC?

I get a lot of questions on whether or not a payroll professional should get certified and if they should then which certification should they try for first. Should they go right into the CPP exam? Or start off with the FPC and work up to the CPP? Many payroll professionals are even confused as to which certification they could qualify for. In their blog, Payroll News, Symmetry Software has done a very nice and quick comparison of the two certifications offered by the APA. If you are looking to certify but aren’t sure which test to try for, take time to check out the blog today.

Don’t Get Rejected by the IRS…Make Sure Your 941 Balances

A recent article from RIA told of the following problem:              

Mike McGuire from IRS Modernized e-File (MeF) told listeners to the May 4 payroll industry telephone conference call that the IRS has been rejecting “tens of thousands” of 2017 first quarter electronically-filed Forms 941, Schedule B (Report of Tax Liability for Semiweekly Schedule Depositors) because the total tax liability on Schedule B does not agree with the total tax liability on Form 941, line 12 (Total taxes after adjustments and credits). Prior to the 2017 tax year, the total tax liability on Schedule B had to agree with Form 941, line 10 (Total taxes after adjustments), or the IRS would reject it. However, the IRS revised some of the line numbers on Form 941, beginning with the 2017 tax year, to take into account that “qualified small businesses” may now elect to claim a portion of their research credit as a payroll tax credit against their employer FICA tax liability, rather than against their income tax liability.  Beginning with the 2017 tax year, the total tax liability on Schedule B must agree with Form 941, line 12 (Total taxes after adjustments and credits) rather than line 10. Some electronic filers have not adjusted their programs to take this change into account. Rejected returns have to be resubmitted to the IRS.

Make sure your system has made this change.

 

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