puzzling payroll predicaments laura kushner human resources league of minnesota cities
TRANSCRIPT
PuzzlingPayroll Predicaments
Laura KushnerHuman Resources
League of Minnesota Cities
AgendaElection JudgesFringe Benefits Independent Contractor
UpdateMinnesota Minimum Wage
Law Fair Labor Standards ActExpansion of sick leave (if
time)
Election Judges
Fringe Benefits
Benefits provided to employees are taxable, unless there is a specific exemption in the tax
code.
Accountable Plan
Business connection to the expenditure
Reasonable accounting for expense Excess reimbursements or
advances repaid to city
Accountable Plan
Example: City provides city manager with a
monthly car allowance of $500. The city manager does not need to substantiate the business connection and does not need to turn in receipts or track miles.
Taxable or not
taxable?
Fringe Benefits
Taxable unless a specific exclusion applies; or
Unless “de minimis”
“De Minimis” -- amount is so small that accounting for it would be administratively difficult
IRS Publication 15-B:
www.irs.gov
Fringe BenefitsExamples of fringe benefits excluded
from income: Accident & health benefits
Major medical, HRA’s, VEBA, Cafeteria Plans
Achievement awards (limits) Dependent care (limits) Health Savings Accounts (limits)
Athletic & Fitness MembershipsExample:City has a fitness facility in community center. Employees are provided free memberships.
Taxable or not taxable?
Taxable or not taxable?
Athletic & Fitness Memberships
To be excluded
from income: Substantially
all of the use of the facility is by employees, spouses, and dependents
No public use / access
Gift Cards
Example:City offers gift cards in varying amounts as incentives and prizes for participation in its wellness program.
Taxable or
not taxable?
Gift Cards Treated same as cash Any amount is taxable income
No “de minimis” for gift cards
$5.00 gift card to Caribou = $5.00 of taxable income to employee
Independent Contractors New guidance issued by DOL Strong area for compliance/audits,
etc. “Economic realities” test
Is the work integral part of the city? Does worker’s skill affect profit/loss? How does worker’s investment compare
to employer’s investment? Work require special skill and initiative? Relationship permanent vs. indefinite? Nature and degree of employer control?
Independent Contractor?City Hall Custodian
City Attorney
MN Minimum Wage Law
Small Employer Total budget
amount under $500,000
$7.25/hour (8/1/15)
$7.75/hour (8/1/16)
Indexed by economic indicators after that
Large Employer Total budget
amount over $500,000
$9.00/hour (8/1/15)
$9.50/hour (8/1/16)
Indexed by economic indicators after that
Employees under 18 $7.25 – 8/1/2015 $7.75 -- 8/1/2016
YOUTH & MN Minimum Wage LawFirst 90 days of employment
– IF UNDER AGE 20
$7.25/hour (8/1/2015)
$7.75/hour (8/1/2016)
Indexed by economic indicators after that
ONE MORE THING ….Definition of Employee does NOT include:…
(1) elected official or commission member
(2) person ineligible for membership in PERA because:• Less than $5,100/year
($3,800 schools)• < 23 yrs, full-time student
(3) under 18, <20 hrs., recreation program employee
FAIR LABOR STANDARDS ACT – IT’S COMING ….
Expansion of Sick Leave Benefits
#1
#2
#4
#5
#3
#6
Resources Internal Revenue Service
Public Employees Retirement Association
Your City Auditor League of Minnesota Cities
[email protected] (E-MAIL IS OFTEN FASTEST!)
651-281-1200 800-925-1122
Ask for HR DEPT