the need for payroll & personnel records developed by lisa swallow, cpa cma ms payroll...
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THE NEED FOR THE NEED FOR
PAYROLL & PERSONNEL RECORDSPAYROLL & PERSONNEL RECORDS
Developed by Lisa Swallow, CPA CMA MSDeveloped by Lisa Swallow, CPA CMA MS
Payroll Accounting 2009Payroll Accounting 2009
Bernard J. Bieg and Judith A. TolandBernard J. Bieg and Judith A. Toland
Positions within payroll profession Range from payroll clerk to senior payroll
manager Salaries range accordingly
Professional membership – American Payroll Association [APA] Certified Payroll Professional exam
Code of Ethics sets direction for profession
Fair Labor Standards Act of 1938 State minimum wage and maximum hour
laws Federal Insurance Contribution Act (FICA) Income tax withholding laws
Federal, state and local Unemployment tax acts Fair employment laws Other federal and state laws
Federal Wage & Hour Law of 1938 Minimum wage until 7/24/09 = $6.55/hour
Then $7.25/hour by end of 2009 Always get overtime
Equal pay for equal work provisions Sets law for companies involved
in interstate commerce or in production of goods/services for
interstate commerce Requires payroll records be maintained
Established minimum wage rates for specific industries
Employees covered by both federal and state laws receive the higher hourly rates
State minimum rates and regulations vary
Comprised of two taxes paid by employers (ER) and employees (EE) OASDI (Old Age, Survivors & Disability)
6.2% with a cap that changes each yearER and EE pay
HI (Hospital Insurance, part of Medicare)1.45% with no ceiling ER and EE pay
SECA (Self Employment Contributions Act) applies to self employed people
Federal income tax Levied on earnings of employees Income tax is withheld from paychecks
State and local income tax Income tax is withheld from paychecks Different in each state
FUTA (Federal Unemployment Tax Act) ER tax –paid on $7,000 per EE per year Taxes used to pay state and federal
administrative expenses, not used to pay unemployment benefits
SUTA (State Unemployment Tax Act) Mandatory unemployment insurance –
each state has different laws SSA outlines what kinds of standards each
state’s unemployment compensation law must follow
Used to pay unemployment benefits
Title VII of the Civil Rights Act of 1964 EEO (Equal Employment Opportunity)
Can’t discriminate in hiring, firing, promoting or compensating based on color race religion national origin gender
Gender orientation added in certain statesSee http://www.eeoc.gov/ for more information
ADEA states employers cannot use age to discriminate in hiring firing or promoting applies to employers with 20+ employees
Exception to rule is Executives aged 65 or over and Who hold key strategic decision-making positions
for prior two-year period Can face mandatory retirement if annual pension
from ER will be at least $44,000
Prevents employers with 15 or more employees from discriminating against disabled employees and job candidates based upon disability
‘Reasonable accommodation’ must be provided This is a very vague term and subject to
court interpretation
Requires employers to report all new hires within 20 days to state agency Records coordinated through Office of
Child Support Enforcement (OCSE) Fines of $25/hire levied for failure to
report A few states now require same from
independent contractors
Bars hiring and retaining aliens unauthorized to work in U.S.
Accomplished by employee completing I-9 within 3 business days of employment Or termination may result
U.S. Citizenship & Immigration Services may audit and levy penalties Criminal penalties if discriminatory practices
found
Covers companies with 50+ employees within 75 mile radius
EE guaranteed 12 weeks unpaid leave for Birth, adoption, critical care Can use for child, spouse or parent
Leave may be used all at once or at separate times – but must be within 12 months of qualifying event
ER continues health care coverage Right to return to same/comparable job and
continue health coverage in absence
Military personnel given right to take leaves of absences from civilian jobs Right to return to prior jobs with seniority
intact Health benefits must be started without a
waiting period Doesn’t apply if dishonorably
discharged
Trustees must monitor pension plans Vested 100% in 3-6 years
Example of a vesting plan Years of % Vested in Service Pension Plan
2 50%
4 75%
5 100% Provides for PBGC PBGC (Pension Benefit Guaranty Corporation) is a federal agency which guarantees benefits to employees
Stringent recordkeeping required including financial statements
Workers’ Compensation Most states require employers to pay
workers compensation premiums Can self insure if state approvedDifferent premiums based upon job class
State Disability Benefit Laws Five states plus Puerto Rico have
established laws requiring employers to provide disability benefits
This applies even if the disability did not arise due to employment!
FLSA requires stringent personnel record- keeping
Pre-hire inquiries like application/screening document design and retention also critical No questions alluding to religion, gender, race,
age or national origin allowed Unless implicates ability to perform job (for
example, bilingual capabilities) If application asks age/birth date, should
contain ADEA language notifying candidate of anti-discriminatory provisions
Reference Checks Due to amount of litigation in this area, respondents
should only verify facts **not offer subjective information**
Really diminishes credibility of reference inquiries Prospective ER may require applicant to sign
“Employment Reference Release” Interview records should be written/retained Employee history record contains performance
evaluations, compensation adjustments, disciplinary issues, etc.
Critical area – employment related litigation is very expensive and often times avoidable
Payroll Department documentation Change in payroll rate form notifies proper
departments of rate change Payroll Register compiles data per paycheck EE Earnings Record outlines earnings per period,
quarter-to-date and year-to-date for each EE Paycheck
Paycheck or direct deposit
Outsourcing Payroll Many small- to mid-sized businesses hire a payroll
company to do their processing This independent company responsible for compliance
and can quickly and efficiently process payroll