If you’re signing up for next year’s workplace 401(k) plan benefits, now is the best time to develop a strategy for increasing your savings.
Benefits season also happens to coincide with the annual IRS release of the 2021 maximum contribution limits for certain tax-advantaged accounts, including your 401(k) plan, individual retirement account and healthcare flexible spending accounts.
Uncle Sam updates these figures around this time each year to reflect inflation.
The Basic Rules
Under the federal Fair Labor Standards Act (FLSA), an employer can generally reduce exempt employees’ regular salary for COVID-19-related reasons. However, the reduction cannot be made after the fact or based on the employer’s day-to-day or week-to-week needs, according to the DOL.
“In other words, exempt employees must be paid their predetermined salary for any workweek in which the employee provided any services,” said Lisa Reimbold, an attorney with Clark Hill in Los Angeles “As such, any pay reduction for an exempt employee can only apply to future workweeks.”
The FLSA requires most businesses to pay employees 1 1/2 times their regular hourly rate for hours worked in excess of 40 in a workweek, unless employees fall under an exemption. The most common exemptions are administrative, executive and professional, which are collectively called white-collar exemptions.
To read more, click here.
President Trump’s payroll tax deferral plan allows employers to suspend collection of the employee’s Social Security payroll taxes is in effect through Dec. 31. Below is a summary of the IRS issued guidance on the repayment of deferred employee Social Security taxes under President Trump’s Executive Order signed on August 8, 2020.
Employers should consider the following if you decide to partake in the tax deferral:
• Participation is optional for employers and there are no penalties for noncompliance. The tax deferral applies to employees whose wages are less than $4,000 for a biweekly pay period, including salaried workers earning less than $104,000 per year.
o Note this is figured on a pay period by pay period basis, which means an employee could qualify one pay period and not the next due to fluctuations in pay, like overtime.
• The deferral applies to wages paid starting on September 1, 2020, not wages earned. In other words, any paycheck dated September 1, 2020, through December 31, 2020, is covered.
• The deferred amounts must be collected between January 1, 2021, and April 30, 2021. If the entire amount is not recouped by May 1, 2021, interest and penalties will ensue.
• Employers can fulfill this obligation by collecting additional taxes from the workers’ paychecks early next year. Employers should explain to employees that this collection will result in smaller paychecks during the first four months of the year.
• Employers can make “arrangements” to collect the total tax due from employees. No detail is provided on what “arrangements” may be.
• If an employer chooses to suspend withholdings and an employee leaves the company before repaying the deferred taxes, the employer is still liable, but the due date is just extended to the next year.
Until further clarity on the guidance is available, employers who receive requests from employees to withhold Social Security taxes or who wish to suspend withholdings under the deferral program should first speak with their tax expert or tax attorney.
Additional information can be found here:
https://www.irs.gov/newsroom/guidance-issued-to-implement-presidential-memorandum-deferring-certain-employee-social-security-tax-withholding
For further information regarding the guidance under this notice, please call the Notice 2020-65 Hotline at (202) 317-5436 (not a toll-free number).
During these uncertain times, Miami Payroll Center is keeping up to date on all legislative and tax related responses to the COVID-19 crisis as they relate to small businesses and their employees. As additional information becomes available from related government agencies such as the Department of Labor and the IRS, this page will be updated accordingly.
On Wednesday, March 18th, the President signed the Families First Coronavirus Response Act to take effect on April 1, 2020 and will sunset on December 31, 2020. The Act provides for mandated paid emergency sick leave and paid family and medical leave for many workers. To offset wages paid under the program, employers will receive a tax credit. There are still several uncertainties, such as the timing of the credits to offset the payments required by employers. Many of the details for implementation are still unknown until individual government agencies, e.g. DOL, IRS, release their own guidance between now and April 1, 2020. As additional details are released for implementation, we will update the information on this page.
If you have specific questions as to how these changes may affect your business, please contact us at 305-273-4066.
The IRS has established a special section focused on steps to help taxpayers, businesses and others affected by the coronavirus. This page will be updated as new information is available.
Effective January 1, 2018, the minimum wage increased from $8.10 to $8.25 per hour for most employees in Florida, with exceptions for tipped employees, some student workers, and other exempt occupations. The federal minimum wage is $7.25.
The annual calculation is based on the percentage increase in the federal Consumer Price Index for Urban Wage Earners and Clerical Workers in the South Region for the 12-month period prior to September 1, 2017. The Florida minimum wage was $8.05 per hour in 2015, $7.93 per hour in 2014, $7.79 per hour in 2013, and $7.67 per hour in 2012. Due to the inflation and cost of living formula used, a minimum wage increase did not occur in January 2016.
The Federal Fair Labor Standards act defines special minimum wage rates applicable to certain types of workers. Employees may be paid under the Florida minimum wage if they fit into one of the following categories:
Download the updated Florida Minimum Wage Poster here.
An employer found liable for intentionally violating minimum wage requirements is subject to a fine of $1,000 per violation, payable to the state.
Need help ensuring your Human Resources and Pay practices are up to date? Contact our HR team today!
On December 22, 2017, President Donald Trump signed the Tax Cuts and Jobs Act of 2017 bringing with it a slew of changes to the corporate and personal tax code.
One of the impacts of the new law is the reduction in payroll tax withholding rates for 2018. The IRS is currently working to develop withholding guidance to implement the tax reform bill. The IRS emphasizes this information will be designed to work with the existing Forms W-4 that employees have already filed, and no further action by taxpayers is needed at this time.
When will your employees see a reduction in their payroll withholding?
February, or sometime shortly thereafter. The IRS is currently developing initial withholding guidance which will come out in the form of Notice 1036 slated to be published sometime in January ’18.
Keep in mind that depending on the final IRS guidelines, your employees may need to complete and return to you a new W-4 form. Current W-4 form asks employees if they were married and about the number of children in their family. The new tax bill eliminates those exemptions, so the old W-4 will likely be invalid.
The law changes the tax rates and the brackets of taxable income to which the rates apply (see below). It also increased the standard deduction for individuals who do not itemize deductions, suspended the deduction for personal exemptions and increased the child/family tax credit. The new tax rates and tax payer brackets are as follows:
| 2018 Tax Rate | Single | Married Filing Jointly |
| 10% | $0 to $9,525 | $0 to $19,050 |
| 12% | $9,525 to $38,700 | $19,050 to $77,400 |
| 22% | $38,700 to $82,500 | $77,400 to $165,000 |
| 24% | $82,500 to $157,500 | $165,000 to $315,000 |
| 32% | $157,500 to $200,000 | $315,000 to $400,000 |
| 35% | $200,000 to $500,000 | $400,000 to $600,000 |
| 37% | Over $500,000 | Over $600,000 |
versus
| 2017 Tax Rate | Single | Married Filing Jointly |
| 10% | $0 to $9,325 | $0 to $18,650 |
| 15% | $9,325 to $37,950 | $18,650 to $75,900 |
| 25% | $37,950 to $91,900 | $75,900 to $153,100 |
| 28% | $91,900 to $191,650 | $153,100 to $233,350 |
| 33% | $191,650 to $416,700 | $233,350 to $416,700 |
| 35% | $416,700 to $418,400 | $416,700 to $470,700 |
| 39.6% | Over $418,400 | Over $470,700 |
Stay tuned to our blog here, or register for our newsletter- and we will keep you informed once final IRS guidelines have been issued.
Have a Happy and Prosperous 2018 everyone!
As we all work to recover from the damage caused by Hurricane Irma, know that Miami Payroll Center is here for you. It’s what family does.
We are open and operating out of our satellite offices which do have electricity. Your employees will get paid, and its one less thing you should have to worry about during these trying times.
If you have any questions, please contact Susana Muniz at susym@miamipayrollcenter.com, or Willy Muniz at willym@miamipayrollcenter.com.
Thank you, and be safe!
One of the biggest challenges employers face is recruiting good employees to round out their teams. In South Florida where we operate, the marketplace for talent is beyond cut throat competitive. There are reasons for this of course, we have a large immigrant population where there is always someone willing to “work for less”. We also have a large percentage of jobs in the low-paying tourist and service industries. Couple these factors with a Republican dominated Legislature which works mostly for the state’s business community and you get a market with an overabundance of low-paying jobs and a healthy supply of labor to sustain it.
The U.S. Bureau of Labor Statistics Occupational Employment data, for the year 2015 show the Orlando-Kissimmee-Sanford metropolitan area had the lowest median pay among the country’s 50 largest employment centers, according to an analysis by FloridaPolitics.com. Miami’s pay rates take the second-lowest spot.
According to the BLS, the average median pay, annualized [meaning workers are assumed to be working full time, all year, at the rates of pay reported to the feds] for all occupations was $31,990 in Miami. Sometimes, in order for you to acquire the best talent available and take your company to the next level- you simply have to pay up for it. And yes, if you pay more than your competitors or above market average for some key positions in your company you will get better results.
Read more here:
http://money.cnn.com/2017/07/11/news/economy/job-skills-gap-employer-pay/index.html?iid=hp-grid-dom
Each year by October 15th the State of Florida determines what the following year’s minimum wage rate will be. Take a minute to check your calendar – we can expect this announcement soon! While many would like to think these decisions are completely left to politics and protesters, the minimum wage determination in Florida is actually made using a formula that ties the minimum wage to the consumer price index (CPI).[1]
Last October it was announced that there would be no minimum wage increase in Florida for 2016. The decision was a surprise to some, especially those in the hospitality industry which contains a large number of the state’s minimum wage workforce. However, since Florida has already established a minimum wage higher than the federal minimum, news of a flat year was welcomed by employers.
Employers in the hospitality industry have come to terms with Florida’s higher-than-federal minimum wage, but many struggle with the tipped minimum wage and how to ensure compliance when paying tipped employees. The current minimum wage in Florida is $8.05 per hour, with a minimum directly paid wage of at least $5.03 per hour for tipped employees (with tips making up the difference).
Thus, in Florida, the employer can claim $3.02 toward the $8.05 minimum wage as long as the employee actually receives $3.02 in tips per hour. If the employee does not receive $3.02 per hour in tips the employer must pay the difference so that the full minimum wage is met.
While we wait to see if the state minimum wage (as well as the tipped minimum wage and tip credit amounts) will change for next year, now is a good time to review related Department of Labor Rules.
To begin with, employers must provide tipped employees specific information from the start of employment[2]:
Two aspects seem to be at the root of many tipped minimum wage and hour disputes: Dual jobs and tip pools.
Many employers don’t consider their tipped staff to have dual jobs. However, if tipped workers are expected to spend some of their shift completing work that does not provide tips, they may have a dual job. Take a server for example. The server may spend four hours waiting tables, but then two additional hours cleaning, taking inventory, stocking table condiments, etc. The employer must pay the server the full minimum wage, without taking a tip credit, for those two hours.[3]
Another issue is tip pooling. Although tip pooling has potential benefits for employees, it can also be misused by employers. While many believe that back-of-house staff (line cooks, dishwashers, bussers, etc.) deserve a cut of the tip for their role in the dining experience, this practice cuts wait staff tip wages by more than 50%, which is definitely not in accordance with the law. According to the Federal Department of Labor, only employees who regularly receive tips can be part of the pool and employees must receive notice that they will be pooling. The law says that employees cannot be required to share their tips with employees who do not receive their own tips, like dishwashers or cooks.[4]
Whether or not the minimum wage (and tipped minimum wage!) will change next year as a result of the CPI formula or the presidential election, employers should review their payroll practices to ensure compliance and minimize the chance of wage and hour issues!
[1] http://www.orlandosentinel.com/business/brinkmann-on-business/os-florida-minimum-wage-20151019-post.html
[2] http://hr.blr.com/HR-news/Compensation/FLSA-Fair-Labor-Standards-Act/Florida-court-FLSA-rules-valid-tip-credits-pools/#
[3] http://www.nolo.com/legal-encyclopedia/florida-laws-tipped-employees.html
[4] http://www.danzlaw.net/blog/2016/06/understand-the-tipped-minimum-wage-laws-and-common-florida-violations.shtml
Small business owners without any HR expertise and without seeking outside counsel tend to classify their employees on a whim, believing that granting someone “exempt” status will save the business on overtime expenses. Little thought is given to whether their “exempt” employees actually qualify for their exempt status. This is a problem that unfortunately, many of them don’t realize the severity of until there’s a claim of overtime that allows for them to learn about the qualifications for the exemption. By then, its usually too late and they are well on their way to losing a case.
Generally, an employee is paid on a salary basis if s/he has a “guaranteed minimum” amount of money s/he can count on receiving for any work week in which s/he performs “any” work. To qualify as exempt, employees must generally be paid a predetermined amount over $455 per week each pay period not-dependent on the quality or quantity of the work performed. Starting December 1st, 2016, the salary threshold of $455 a week will rise to $913 ($47,476 per year) making an additional 4.2 million workers eligible for overtime pay.
An employee who meets the salary level tests and also the salary basis tests is exempt only if s/he also performs exempt job duties.
There are three typical categories of exempt job duties, called “executive,” “professional,” and “administrative.”
Exempt executive job duties.
Job duties are exempt executive job duties if the employee
“Mere supervision” is not sufficient. In addition, the supervisory employee must have “management” as the “primary duty” of the job.
Business owners should remember to look at the job duties of the position, not the job title of an employee to determine whether an exempt status applies. The Fair Labor Standards Act (FLSA) also provides certain exemptions for outside sales personnel, certain specialized computer personnel, certain highly compensated employees, certain retail sales employees, and employees covered by the Motor Carrier Act (MCA); Qualifying for these and documenting your rationale can get a little technical, and business owners should consult with an HR or Labor Attorney to ensure the exemption will hold up if ever challenged.
With the new salary threshold becoming effective in a few months, the time is perfect for employers to reevaluate their exempt/nonexempt classifications. If you are concerned that some of your exempt workers may be misclassified, the new regulations will give you another reason to revise their classification without necessarily creating liability for past wages.
In case you’ve missed the onslaught of radio, TV, print and social media messages, hurricane season is here again! Most of those messages, however, are geared towards making sure your home and family are prepared for potential storms. Planning for the workplace, however, is another story. Not only are there physical assets to consider, but your human capital as well.
The physical safety of your workers, securing the building and protecting equipment is almost always the first step. Keep in mind, however, that you may need to provide employee training for specific preparation tasks so that those designated know exactly what to do. Who are the essential personnel that you want back as soon as possible after a hurricane? Decide now what system will be in place to authorize re-entry to your facility after a storm.
Your employees will want to know the status of company operations. Ensure that contact information is current and that all employees know how you will communicate with them after a storm passes. Having a written policy in place is highly suggested.
Preparing for payroll continuity is often a challenge and plans should be made far in advance of an actual weather event. The Fair Labor Standards Act (FLSA) requires employers to pay non-exempt staff only for hours actually worked. Therefore, an employer is not required to pay these non-exempt employees if the employer is unable to provide work due to a natural disaster. An exception to this rule is made for those employees who receive fixed salaries for fluctuating workweeks. An employer must pay these employees their full weekly salary for any week in which any work was performed.[1]
Employers are required to pay exempt personnel a full salary if the worksite is closed due to weather or a natural disaster for less than a full work week. However, employers are permitted to require exempt employees to use allowed leave for this time.
Of course, nothing is as simple as exempt vs non-exempt when it comes to payroll during a disaster. Those essential personnel we talked about earlier? Well, if they are “on call” and remain on site so that they can deal with emergency repairs, they have to be compensation even if they do not perform any work.[2]
After a storm employees are often eager to get back to work and may volunteer to help with the clean-up effort just to get the organization back to regular operation. Sounds ideal, but the FLSA does not permit employees to volunteer unpaid time to the employer under any but the narrowest of circumstances.[3]
Storm preparation at your organization should not start at the threat of a storm, but rather in written policies and procedures that are well planned in advance and shared with all. Providing training to employees to ensure that everyone is prepared to act will pay off in the long term.
Do you have any written policies and procedures related to natural disasters? Share your best practices in the comments below.
Sources:
[1] https://www.shrm.org/hrdisciplines/compensation/articles/pages/disasters.aspx#sthash.wNPbwayP.dpuf
[2] https://www.shrm.org/hrdisciplines/compensation/articles/pages/disasters.aspx#sthash.wNPbwayP.dpuf
Choosing how much to pay your employees can be difficult. Are you paying too much? Too little? How much is enough to keep your best and brightest employed within your organization? Being fair to all employees while also showing that they’re valued takes more than a standard pay scale. While the ability to hire a great candidate is often reliant on salary, retaining a great employee may require a little more than just dollars and cents.
Fairness in compensation within your organization, otherwise known as internal equity, is somewhat of a preoccupation in today’s workplace. Our employees can’t help comparing what they’re making to what their peers are making, both inside the organization and out. While we try to keep salary information confidential, the information is easily obtained, sometimes by word of mouth and by information found online. Creating internal equity can help create and maintain the loyalty of your employees.
Looking at the balance between internal and external salary equity is a great place to start. However, no matter how complex and complete your compensation formulas are in reality (assuming all related laws are considered), it is how they are perceived that can truly impact employee loyalty and happiness. If employees perceive that they are not being paid fairly in comparison to their coworkers, they may not feel valued and may leave. If the employee perceives that they do more work than their peers but are paid the same, this may create a similar outcome.
Wages should not be based on job title alone. The tasks completed are more important than the titles. Similar tasks should earn similar wages. Of course, beyond job tasks it is certainly acceptable to consider an employee’s education and prior experience.
More and more employers are creating compensation plans built on the idea of transparency, which helps them to explain why compensation decisions were made. Explaining the factors that led to a compensation decision will allow employees to understand your exact reasoning, which can result in the perception of being paid fairly. The employee’s perception of being paid a fair wage is just as important as the wage itself.
If you haven’t reviewed your pay or internal equity structure recently, now is the time. Your best employees are probably already aware of how much their peers are making and how much they could be making elsewhere.
As the beginning of a new year approaches, many of us will try to organize our offices, de-clutter both our physical desktop and our virtual one, and simply get rid of the unnecessary. One thing that Human Resources is known for is lots and lots of paperwork. While a large part of it is stored electronically these days, it’s still there, taking up space. Hey, record keeping is part of our job – we need to keep those records! That’s true. But are we keeping them longer than necessary?
Before we talk about how long to hold onto certain items, a quick reminder of the types of information that should be in an employee’s personnel file: Only information that can be legally used as a basis for an employment-related decision should be in an employee’s file. That means that information related to EEO, disability records and wage garnishments – all things that we cannot base employment decisions on – should be in separate files. A good practice is to keep I-9s in a separate file as well.
The list below outlines a few of the federal guidelines, although it is important to note that if state guidelines are different, you should pick the one with the longer time frame. Better to keep it longer than necessary than not long enough. Of course, some industries or circumstances come with their very own sets of requirements (such as Federal Contractors) and those do not follow the guidelines offered below.
There are many more types of records that we hold on to, and each has guidelines regarding how long you need to retain them.