important issues for public sector payroll - vspc...
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09/11/17
1
Important Issues for Public Sector
Payroll Presented by Ron Moser, CPP
Payroll/Employee Benefits Consultant – Taxing Matters
Member of the American Payroll Association Speakers Bureau
1
COMPENSATORY TIME
2
Basics
State and local government employers may provide nonexempt employees with compensatory time off as a substitute for paying overtime
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Compensatory time
09/11/17
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Basics
Granted to nonexempt employees working > 40 hours in a workweek
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Compensatory time
Basics
Granted in place of paying overtime
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Compensatory time
Basics
Conditions
• Provided at 1½ hours for each hour of overtime worked
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Compensatory time
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Basics
Conditions
• Employees represented under a collective bargaining agreement must have compensatory time as part of the agreement
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Compensatory time
Basics
Conditions
• Employees not represented under a collective bargaining agreement must have an understanding about compensatory time before the compensatory time is granted
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Compensatory time
Accural Limited
Public safety, emergency response, or seasonal activities
• May not accrue more than 480 hours
• 320 hours of overtime
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Compensatory time
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Accural Limited
All other employees
• May not accrue more than 240 hours
• 160 hours of overtime
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Compensatory time
Accural Limited
When performing public safety activities, emergency response activities, or seasonal activities must have more than occasional duties
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Compensatory time
Accural Limited
Office employees performing public safety activities or emergency response in emergencies will not be allowed the 480-hour limit
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Compensatory time
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Accural Limited
Seasonal activities
• Work periods of increased demand
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Compensatory time
Accural Limited
Seasonal activities
• That are regularly recurring
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Compensatory time
Accural Limited
Seasonal activities
• The projected overtime will cause the accumulated compensatory time
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Compensatory time
> 240 hours
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Accural Limited
Seasonal activities are not limited to those that are susceptible to weather
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Compensatory time
Accural Limited
• Seasonal activities = processing tax returns
• Short periods of intense activity are not seasonal
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Compensatory time
Using Comp Time
Request to use comp time must be granted within a “reasonable period of time” unless it is “unduly disruptive”
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Compensatory time
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Using Comp Time
When determining a reasonable period of time, consider the facts and circumstances of each case
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Compensatory time
Using Comp Time
Mere inconvenience is not basis for denying use
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Compensatory time
Using Comp Time
U.S. Supreme Court ruled
• Can compel use of comp time
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Compensatory time
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May Opt to Pay Overtime
Government employers may opt to pay overtime instead of granting comp time
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Compensatory time
Paid at Termination
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Compensatory time
Unused compensatory time must be paid at the employee’s termination
Paid at Termination
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Compensatory time
Rate at which unused compensatory time is paid must be not less than
• Average rate received during the last three years, or
• Final regular rate of pay received
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DOL Guidance
Use of compensatory time to pay nonexempt employees for hours worked between 37½ and 40 in a week
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Compensatory time
DOL Guidance
Non-overtime weeks
• If meeting minimum wage
• May provide 2½ hours comp time
• Is not required to provide comp time
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Compensatory time
DOL Guidance
Overtime weeks
• If meeting minimum wage
• Must be paid for all hours worked up to 40
• May be provided comp time for hours worked > 40
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Compensatory time
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Special Exemption
Exempt from 7 day work week
• If employed on work period basis
• Work periods are > 7 days but ≤ 28 days
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Fire Protection and Law Enforcement
Special Exemption
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Fire Protection and Law Enforcement
Work periods are not required to coincide with duty cycles or pay period
Special Exemption
No requirements when the work period must start
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Fire Protection and Law Enforcement
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Special Exemption
A defined work period remains fixed
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Fire Protection and Law Enforcement
Special Exemption
A work period may be changed
• Changing work periods must not be intended to evade overtime
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Fire Protection and Law Enforcement
Special Exemption
Separate work periods may be defined for groups or specific employees
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Fire Protection and Law Enforcement
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Special Exemption
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Fire Protection and Law Enforcement
Work Periods (days)
Fire Protection Maximum Hours
Law Enforcement
Maximum Hours
16 121 98
17 129 10418 136 110
Special Exemption
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Fire Protection and Law Enforcement
Employees working > maximum hours for work period, FLSA overtime rules apply
OCCASIONAL -SPORADIC AND
SUBTITUTE EMPLOYMENT
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Occasional/Sporadic Employment
• Work for the same government organization in a different capacity
• Defined as occasional or sporadic
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Compensable Activities
Occasional/Sporadic Employment
• Hours from both positions are not combined
• When deciding if the hours worked exceed 40 in the workweek
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Compensable Activities
Occasional/Sporadic Employment
Work assignments must not be in the same general occupational category as the employee’s regular work
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Compensable Activities
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Occasional/Sporadic Employment
Decision to partake in the assignments must be made freely and without coercion
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Compensable Activities
Substitution
• Two individuals employed in the same occupation by the same government
• May agree to substitute for one another
• With the approval of the organization
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Compensable Activities
Substitution
When substitution occurs, the hours worked substituting for another employee are excluded from the overtime
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Compensable Activities
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Substitution
• Each employee must be free to decline to substitute
• Government organization is not required to keep records of the substitute hours
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Compensable Activities
VOLUNTEER EMPLOYMENT
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Volunteer Activities School District Employees
Wage and Hour Opinion Letter
• Individuals are volunteerswhen they
• Perform services for civic, charitable, or humanitarian reasons without promise, expectation, or receipt of compensation for the services rendered
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Compensable Activities
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Volunteer Activities School District Employees
Wage and Hour Opinion Letter
• Individuals are volunteers when they
• Can either receive no compensation or be paid expenses or a nominal fee
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Compensable Activities
Volunteer Activities School District Employees
Wage and Hour Opinion Letter
• Individuals are volunteers when they
• Offer their services freely
• Are not employed by the same public agency to perform the same services for which they volunteer
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Compensable Activities
Volunteer Activities School District Employees
Whether the services are the same services they are employed to perform depends upon the facts and circumstances
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Compensable Activities
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Volunteer Activities School District Employees
Use the Dictionary of Occupational Titles – online.onetcenter.org
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Compensable Activities
CLOTHING UNIFORMS DONNING/DOFFING
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Time Spent Changing Clothes
Changing clothes is worktime if changing clothes is integral and indispensable
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Compensable Activities
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Time Spent Changing Clothes
Time spent donning basic “nonunique” protective gear is not compensable
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Compensable Activities
Time Spent Changing Clothes
Police officers changing in and out of uniforms
• Courts are split
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Compensable Activities
?
Donning/Doffing ≠ Compensable
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Compensable Activities
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Donning/Doffing ≠ Compensable
• Police officers in uniform at start of shift
• Home or Police Station?
• City sued
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Compensable Activities
Donning/Doffing ≠ Compensable
Court ruled
• Donning/doffing time not compensable!
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Compensable Activities
Excluded from income
Are they taxable?Uniforms
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Excluded from income Must be worn as a condition of your
employment
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Uniforms
Are they taxable?
Excluded from income They are not suitable for
everyday wear
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Uniforms
Are they taxable?
It is not enough that the clothing be distinctive
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Uniforms
Are they taxable?
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The clothing must not be suitable for regular clothing
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Uniforms
Are they taxable?
Workers that may have the cost and upkeep of work clothes excluded from income
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Uniforms
Are they taxable?
Workers that may have the cost and upkeep of work clothes excluded from income
Delivery workers
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Uniforms
Are they taxable?
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Workers that may have the cost and upkeep of work clothes excluded from income
Firefighters
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Uniforms
Are they taxable?
Workers that may have the cost and upkeep of work clothes excluded from income
Health care workers
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Uniforms
Are they taxable?
Workers that may have the cost and upkeep of work clothes excluded from income
Law enforcement officers
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Uniforms
Are they taxable?
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Workers that may have the cost and upkeep of work clothes excluded from income
Letter carriers
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Uniforms
Are they taxable?
Painter’s clothing that is not distinctive
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Uniforms
Are they taxable?
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Uniforms
Painter’s clothing that is not distinctive
White capPainter’s clothing that is not distinctive
Are they taxable?
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Painter’s clothing that is not distinctive
Blue shirt
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Uniforms
Are they taxable?
Painter’s clothing that is not distinctive
White jacket
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Uniforms
Are they taxable?
Painter’s clothing that is not distinctive
White bib overalls
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Uniforms
Are they taxable?
09/11/17
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Painter’s clothing that is not distinctive
Standard work shoes
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Uniforms
Are they taxable?
Protective clothing can be excluded from income
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Uniforms
Are they taxable?
Protective clothing
Safety shoes or boots
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Uniforms
Are they taxable?
09/11/17
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Protective clothing
Safety glasses
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Uniforms
Are they taxable?
Protective clothing
Hard hats
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Uniforms
Are they taxable?
Protective clothing
Work gloves
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Uniforms
Are they taxable?
09/11/17
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Workers who may be required to wear safety items
Carpenters
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Uniforms
Are they taxable?
Workers who may be required to wear safety items
Electricians
80
Uniforms
Are they taxable?
Workers who may be required to wear safety items
Machinists
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Uniforms
Are they taxable?
09/11/17
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Workers who may be required to wear safety items
Truck drivers
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Uniforms
Are they taxable?
Working condition fringe benefits
Issued to police officers & firefighters
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Uniforms
IRS Rules!
Working condition fringe benefits
Suitable for ordinary wear
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Uniforms
IRS Rules!
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Working condition fringe benefits
Employer restrictions on off-duty wear
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Uniforms
IRS Rules!
Working condition fringe benefits
With department insignia
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Uniforms
IRS Rules!
Working condition fringe benefits
Restricting off-duty wear
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Uniforms
IRS Rules!
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Working condition fringe benefits
Not suitable for ordinary wear
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Uniforms
IRS Rules!
Procedural change
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Uniforms
IRS Rules!
Uniform Allowances
Advance
90
Uniforms
Are they taxable?
09/11/17
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Uniform Allowances
Reimbursement
91
Uniforms
Are they taxable?
Uniform Allowances
Amount paid is not wages
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Uniforms
Are they taxable?
Uniform Allowances
Amount paid is not wages • Condition of employment
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Uniforms
Are they taxable?
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Uniform Allowances
Amount paid is not wages o Cannot be worn as street clothes
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Uniforms
Are they taxable?
Uniform Allowances
Amount paid is not wages o Employee must return any excess amounts
advanced
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Uniforms
Are they taxable?
VEHICLE USE?
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Business-related purposes = No income
Income?Vehicles
97
All other use = Income
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Vehicles
Income?
Exceptions
De minimis fringe benefit
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Vehicles
Income?
09/11/17
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Exceptions
Qualified nonpersonal use vehicle
100
Vehicles
Income?
Clearly marked police vehicles
What are qualified nonpersonal use vehicles?
101
Vehicles
Clearly marked fire vehicles
102
Vehicles
What are qualified nonpersonal use vehicles?
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Ambulances
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Vehicles
What are qualified nonpersonal use vehicles?
Vehicle designed to carry cargo with a loaded gross vehicle weight over 14,000 pounds
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Vehicles
What are qualified nonpersonal use vehicles?
Bucket trucks (“cherry pickers”)
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Vehicles
What are qualified nonpersonal use vehicles?
09/11/17
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Delivery trucks with seating only for the driver
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Vehicles
What are qualified nonpersonal use vehicles?
Dump trucks
107
Vehicles
What are qualified nonpersonal use vehicles?
Passenger buses
108
Vehicles
What are qualified nonpersonal use vehicles?
09/11/17
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Qualified specialized utility repair trucks
109
Vehicles
What are qualified nonpersonal use vehicles?
School buses
110
Vehicles
What are qualified nonpersonal use vehicles?
Unmarked vehicles used by law enforcement officers
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Vehicles
What are qualified nonpersonal use vehicles?
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Unmarked vehicles used by law enforcement officers Substantiation requirements do not apply to officially authorized
uses
112
Vehicles
What are qualified nonpersonal use vehicles?
Unmarked vehicles used by law enforcement officers Law enforcement officer’s definition
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Vehicles
What are qualified nonpersonal use vehicles?
Employee must account to the employer for the business use
Accounting for vehicle use
114
Vehicles
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Substantiating the usage
115
Vehicles
Accounting for vehicle use
Substantiating the usage Mileage
116
Vehicles
Accounting for vehicle use
Substantiating the usage Time and place of the travel
117
Vehicles
Accounting for vehicle use
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Substantiating the usage Business purpose of the travel
118
Vehicles
Accounting for vehicle use
Option Treat all employee use as personal use
119
Vehicles
Accounting for vehicle use
Maintain adequate records
Recordkeeping
120
Vehicles
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Employee should log the business use of the vehicle for each trip
121
Vehicles
Recordkeeping
If the employee’s business or personal mileage is the same for each period during a year
122
Vehicles
Recordkeeping
If the employee’s business or personal mileage is the same for each period during a year Adequate records kept during one period can be
used to project totals
123
Vehicles
Recordkeeping
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Avoid substantiation requirements
124
Vehicles
Recordkeeping
Avoid substantiation requirements Enforcing a written policy against
personal use of vehicles
125
Vehicles
Recordkeeping
Avoid substantiation requirements Considering all employee use of the vehicles as personal use
126
Vehicles
Recordkeeping
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