Paying Employees from Start to Finish and …...Paying Employees from Start to Finish and Everywhere...

©2016 The Payroll Advisor 1

Paying Employees from Start to Finish and Everywhere in

Between Presented on Tuesday, May 3, 2016

Housekeeping

©2015 The Payroll Advisor

3

Credit Questions Today’s

topic Speaker

To earn RCH credit you must


4

Stay on the webinar, online for the full 60 minutes

Be watching using your unique URL

Certificates delivered by email, to registered email,

by June 3rd

Our Focus For Today

Required payroll notices that must be given to new hires

The laws concerning the frequency of wage payments

What must be included on a paystub

When paystubs are mandatory

When and how can the employer use electronic paystubs instead of paper

What is the acceptable lag time between closing the payroll and distributing the check

Pay date rules

What payment methods are permitted by the states including cash, check, direct deposit and payroll cards

The laws concerning the tracking hours worked under the DOL and the state

When and how terminated employees must be paid

The latest on when vacation pay or PTO must be paid out to a terminated employee and when it is still a matter of company policy

5


About the Speaker


6

Vicki M. Lambert, CPP, is President and Academic

Director of The Payroll Advisor™, a firm specializing

in payroll education and training. The company’s

website www.thepayrolladvisor.com offers a

subscription payroll news service which keeps

payroll professionals up-to-date on the latest rules

and regulations.

As an adjunct faculty member at Brandman

University, Ms. Lambert is the creator of and

instructor for the Practical Payroll Online payroll

training program, which is approved by the APA for

recertification credits.

http://www.thepayrolladvisor.com/

Payday Notices


7

Time and place of payment, rate of pay, benefits type notices

Example: ID: at time of hire notification of rate of pay, and regularly scheduled payday

Of course—Anti-wage theft law for California, Hawaii, New York and Tennessee

Massachusetts requires notification upon hire

Statements (Paystubs)


8

Statements are paystubs

No requirement on the federal level

42 states have some type of requirement

As little as list the deductions

As big as explain the whole check (of course CA!)

Be careful about putting the social security number on the paystub

States With No Requirement


9

The following 8 states have no requirements for issuing paystubs or statements

Arkansas

Florida

Georgia

Louisiana

Mississippi

Ohio

South Dakota

Tennessee

Employee Request


10

The following states require the employer to give a paystub or statement upon employee request

Iow

a

• Itemized statement of earnings and deductions

• Within 10 days of request

Kansas

• Itemized statement of deductions

• But full statement must be provided to employees on direct deposit

Virgin

ia

• Gross wages earned

• Amount and purpose of deductions

Mandatory Statement


11

The following states require the employer give the employee a full statement that must include some or all of the following items: pay rate, gross to net calculation, pay period dates, hours worked and deductions. May also have to include employee and employer information.

As of 4-4-16: Add Oregon to this list

Alaska California Colorado Connecticut

Delaware Hawaii Indiana Iowa

Maine Massachusetts Michigan Minnesota

New Mexico New York North Dakota Pennsylvania

Texas Vermont Washington West Virginia

Statement of Deductions


12

The following states require the employer give the employee a statement concerning the deductions taken from their paycheck. These include:

The following states require that gross wages also be included with deductions: Maryland and South Carolina

Idaho Illinois Kentucky New Jersey

Montana Nevada New Hampshire Rhode Island

North Carolina Oklahoma Wyoming

Utah Wisconsin Missouri

Direct Deposit Pay Cards


13

Three states have a specific requirement for employees that receive their paycheck either by direct deposit or pay cards

Arizona Kansas Maine South

Carolina

Electronic Statements


14

Paper or electronic-the following states have enacted legislation permitting electronic statements or not forbidding them

Delaware, Hawaii, Iowa, Maine, Minnesota (must have computers available), North Carolina (must be printable), Oklahoma, Texas, and Washington

California, New Mexico, New York, Oregon and Vermont employee must agree to it

Michigan: must be in a retainable form

Frequency of Wage Payments


15

How often an employee is paid is a state matter—federal just that they must be paid

Can be as soon as weekly or as long as monthly—South Dakota is monthly

Exempt usually longer than nonexempt

MT

WY

ID

WA

OR

NV

UT

CA

AZ

ND

SD

NE

CO

NM

TX

OK

KS

AR

LA

MO

IA

MN

WI

IL IN

KY

TN

MS AL GA

FL

SC

NC

VA WV

OH

MI

NY

PA

MD

DE

NJ

CT RI

MA

ME

VT

NH

AK

HI

Max Period Permitted for Nonexempt Employees for Private

Sector Employers


Weekly Biweekly

Semi-monthly Either Biweekly or Semi-monthly

Monthly None specified/designated by employer

Days Between Pay Periods

Number of days the state allows to go by before the employee must be paid again

Not all states have a requirement in this area

Example:

AZ & ME: not more than 16 days apart

CA is 10 (actually lists dates in code)

17



Not More Than 16 Days

Apart

Lists Dates in Code Weekly Paydays Monthly Paydays No Requirements

Arizona California – 10 days Connecticut Colorado Arkansas

Georgia (must divide month

into equal parts)

Michigan –15 days New Hampshire Delaware Florida

Hawaii – 15 days Ohio—1st & 15th Rhode Island Idaho Nebraska

Illinois Pennsylvania 15th & Last Vermont Kansas North Carolina

Indiana Tennessee—20th & 5th Minnesota North Dakota

Iowa Texas—Split month Oregon South Carolina

Kentucky Wyoming—15th & 1st South Dakota

Louisiana Washington

Maine Wisconsin

Maryland

Massachusetts

Mississippi

Missouri

Montana

Nevada

New Jersey

New Mexico

New York

Oklahoma

Utah

Vermont

Virginia

West Virginia

Lag Time Issues

How many days will pass from end of pay period to pay day? This is known as “lag time”. What does the state allow?

Example:

AZ allows 5 for in state employers and 10 for out of state

CA, DE, HI, NY, and WA allow 7 days

19


Lag Time Issues

Even if the states have the same payroll frequency requirements does not mean they have the same lag time.

For example: TN which requires a semi-monthly pay frequency dictates the following lag time:

20


TN Example

All wages or compensation earned and unpaid prior to the first day of any month shall be due and payable not later than the 20th day of the month following the one in which the wages were earned. All wages or compensation earned and unpaid prior to the 16th day of any month shall be due and payable not later than the fifth day of the succeeding month.

TN therefore permits a 20-day lag or processing time for the employer

21


OH Example

But OH which also requires a semi-monthly pay frequency dictates the following lag time: Every employer doing business in the state shall, on or before the first day of each month, pay all its employees the wages earned by them during the first half of the preceding month ending with the fifteenth day therefor, and shall, on or before the fifteenth day of each month, pay such employees the wages earned by them during the last half of the preceding calendar month.

So OH, though semi-monthly, only permits a 15-day lag time for processing the payroll.

22



Within 5

Days

Within 6

Days

Within 7 Days Within 8 Days Within 9

Days

Within 10

Days

Arizona Vermont California Connecticut Rhode

Island

Colorado

Delaware Maine Indiana

Hawaii New Hampshire Louisiana

Illinois--weekly Mississippi

Massachusetts Montana

New York New Jersey

Washington-

monthly

New Mexico-in

state

Utah

Washington if

other than

monthly

Illinois: If biweekly or semimonthly within 13 days

Wisconsin: 31 days


Within 11

Days

Within

12

Days

Within 14

Days

Within 15

Days

Within

16 Days

Within 20

Days

No

Requirements

Oklahoma Iowa Michigan Alabama Missouri Tennessee Alaska

Virginia Idaho Arkansas

West Virginia Kansas Georgia

Nevada Maryland

New Mexico-out of

state

Minnesota

Ohio Nebraska

Pennsylvania

North Carolina

Texas North Dakota

Virginia Oregon

Wyoming South Carolina

Method of Payment


25

Many acceptable payments are available to employers under state law—again no federal law

Cash

Check or negotiable instrument

Direct deposit

Pay Cards

Cash and Checks


26

Cash is acceptable so start from there!

Lawful money of the United States

Checks okay (must be funded!)

Cashed for lawful money

At full face value—no discounts

Watch for hidden fees

May be liable for bank charges if check bounces

May have to arrange for checks to be cashed “without difficulty”

Direct Deposit


27

Direct deposit can not be mandated if you force the employee to pick a financial institution—federal law and most states

Written consent is normally required and it must be voluntary

States can mandate for their own employees

A few states permit it to be done but the employee must be able to opt out

Some states do not address the issue

State Requirements


28

States that do not address the issue for private sector employers include: Alabama, Hawaii, Louisiana, Massachusetts, Mississippi, Missouri, Nebraska, Ohio, and Washington and Wisconsin

States that permit unless employee opts out: Arkansas, Connecticut, Georgia, Minnesota, North Carolina, Oklahoma, Tennessee, Texas, and Utah,

States that require fee free withdrawal include: Arizona, Kentucky, Maine, Nevada, Oregon, and South Carolina

Example of Unique Requirements


29

Iowa: Employees hired on or after July 1, 2005 generally may be required to receive wages via direct deposit into financial institutions of their choice, unless any of the following conditions exist: The costs to the employee of establishing and maintaining an account for purposes of the direct deposit would effectively reduce the employee's wages to a level below the minimum wage; the employee would incur fees charged to the employee's account as a result of the direct deposit; or a collective bargaining agreement mutually agreed upon by the employer and the employee organization prohibit the employer from requiring an employee to sign up for direct deposit as a condition of hire.

Pay Cards


30

Permitted on the federal level usually with restrictions such as first withdrawal is free of fees and voluntary on employee’s part

States have similar restrictions

First withdrawal is free of fees for entire amount of paycheck

List of all fees must be provided

Some require to be voluntary on employee’s part rather than mandated

Mailing Paychecks

©The Payroll Advisor, 2016

32

The IRS and state tax agencies do accept the mailing date as the date paid or filed if you mail a deposit or a return

This in no way applies to wages

Two totally separate codes and purposes

The U.S. Postal Service does not “accept responsibility” for getting the payment there on time!

For Example: Texas

©The Payroll Advisor, 2016

33

Paying Terminated Employees


34

No law on federal level

Can range from immediately in CA, especially if discharged to the next normal payroll cycle for voluntary resignations in NV.


State Terminated Employees Voluntary Resignations Alabama No provisions No provisions

Arizona 7 working days or end of regular pay period whichever

is sooner

Next regular payday

Arkansas Date of discharge or within 7 days of demand No provisions

California Immediately 72 hours if no notice

Colorado Immediately Next regular payday

Connecticut Next business day Next regular payday

Delaware Next regular payday Next regular payday

Florida No provisions No provisions

Georgia No provisions No provisions

Hawaii Time of discharge Next regular payday

Idaho The earlier of next regular payday or within 10 days Next regular payday

Illinois Time of separation Next regular payday

Indiana Next regular payday Next regular payday

Iowa Next regular payday Next regular payday

Kansas Next regular payday Next regular payday

Kentucky Next regular payday or within 14 days Next regular payday

Louisiana Next regular payday or within 15 days Next regular payday

Maine Next regular payday Next regular payday

Maryland Next regular payday Next regular payday

Massachusetts Next regular payday Day of discharge

Michigan Immediately As soon as amount can be

determined

Minnesota Immediately Next regular payday

Mississippi No provisions No provisions

Missouri Day of discharge Next regular payday

Montana Immediately unless policy extends to next payday Next regular payday


State Terminated Employees Voluntary Resignations

Nebraska Next regular payday or within 2 weeks Next regular payday

Nevada Immediately Next regular payday or within 7 days

New

Hampshire

Within 72 hours Next regular payday

New Jersey Next regular payday Next regular payday

New Mexico Within 5 days of discharge Next regular payday

New York Next regular payday Next regular payday

North

Carolina

Next regular payday Next regular payday

North Dakota Next regular payday Next regular payday

Ohio No provisions No provisions

Oklahoma Next regular payday Next regular payday

Oregon End of 1st business day after discharge Immediate if give 48 hours

Pennsylvania Next regular payday Next regular payday

Rhode Island Next regular payday Next regular payday

South

Carolina

Within 48 hours of separation or by next payday Within 48 hours of separation or by next

payday

South Dakota Next regular payday Next regular payday

Tennessee Next regular payday Next regular payday

Texas 6th day after discharge Next regular payday

Utah Within 24 hours Next regular payday

Vermont Within 72 hours Next regular payday

Virginia Next regular payday Next regular payday

Washington Next regular payday Next regular payday

West Virginia Next regular payday or 4 days whichever is first Next regular payday

Wisconsin Next regular payday Next regular payday

Wyoming Next regular payday Next regular payday

Vacation Pay and Termination


37

No law on federal level

CA: Labor Code Section 227.3 considered wages-cannot take back

MA: Considered wages and must be paid for all earned vacation upon termination

NE: RS 48-1229: Due and payable upon termination—even PTO

NY: If in writing can lose vacation

Vacation Pay and Termination


38

Never required to offer vacation

Vacation pay can be considered wages therefore must be paid out

May allow employer to designate the requirements within their own policy

State may have no provisions so the employer policy will rule out

Court cases can be the determining factor in many states


State Must be Paid

Out

Depends on

Policy

No Provisions

Alabama X

Alaska X

Arizona X

Arkansas X

California X

Colorado X X

Connecticut X

Delaware X

Florida X

Georgia X

Hawaii X

Idaho

Illinois X

Indiana X

Iowa X

Kansas X

Kentucky X

Louisiana X

Maine X

Maryland X

Massachusetts X

Michigan X

Minnesota X

Mississippi X

Missouri X

Montana X

This has a lot of

gray areas within

the law

Can depend on

current court cases

or recent

interpretations

Especially careful

how policy is

written and worded

on paying upon

termination


State

Must be Paid Out Depends on Policy No Provisions

Nebraska X

Nevada May be considered wages

New Hampshire X

New Jersey May be considered wages

New Mexico Court may consider as wages

New York X

North Carolina X

North Dakota X

Ohio Must be paid unless policy states

Oklahoma X

Oregon X

Pennsylvania X

Rhode Island X

South Carolina X

South Dakota X

Tennessee X

Texas X

Utah X

Vermont X

Virginia X

Washington X

West Virginia X

Wisconsin X

Wyoming X

Deducting from Wages


41

Depends on what you are deducting for

Of course taxes, court orders etc. are permitted

Uniforms, purchases etc. can be trickier—overpayments are the hardest

Usually cannot take below minimum wage

Some states such as CA and NY do not permit at all unless requested by employee

Overpayments: FLSA Requirements


42

DOL accepts inadvertent overpayments will occur

If the employer and the employee do not agree that the wages were overpaid or if employee refuses to repay the amount legal options must be considered

If both agree the wages were overpaid there are methods to recoup

Overpayments: California


43

Under most circumstances CA law prohibits an employer from deducting from an employee’s wages any debt the employee may owe the employer.

Barnhill v. Saunders began with withholding for a loan upon termination

California State Employees’ Association v. State of California extended to cover overpayment of wages


Indiana Sec. 22-2-6-4.[Wage deductions; Overpayments; Disputed amounts; Limitations].—

Sec. 4. (a) If an employer has overpaid an employee, the employer may deduct from the wages of the employee the amount of the overpayment. A deduction by an employer for reimbursement of an overpayment of wages previously made to an employee is not a fine under IC 22-2-8-1 or an assignment of wages under section 2 of this chapter. An employer must give an employee two (2) weeks notice before the employer may deduct, under this section, any overpayment of wages from the employee's wages.

(b) An employer may not deduct from an employee's wages an amount in dispute under IC 22-2-9-3.

(c) The amount of a wage deduction made by an employer under subsection (a) is limited to the following:

(1) Except as provided in subdivision (2), the maximum part of the aggregate disposable earnings of an employee for any work week that is subjected to an employer deduction for overpayment may not exceed the lesser of:

(A) twenty-five percent (25%) of the employee's disposable earnings for that week; or

(B) the amount by which the employee's disposable earnings for that week exceed thirty (30) times the federal minimum hourly wage prescribed by 29 U.S.C. 206(a)(1) in effect at the time the earnings are payable.

In the case of earnings for a pay period other than a week, the earnings must be computed upon a multiple of the federal minimum hourly wage equivalent to thirty (30) times the federal minimum hourly wage as prescribed in this section.

(2) If a single gross wage overpayment is equal to ten (10) times the employee's gross wages earned due to an inadvertent misplacement of a decimal point, the entire overpayment may be deducted immediately.

Michigan


45

Section 7(4) of Wage Payment Act: Employers may recover overpayments within 6 months after making the overpayments without written consent if: (1) the overpayment resulted from a clerical mistake or mathematical miscalculation made by the employer or the employee, (2) the employer gives the employee a written explanation of the deduction at least one pay period before the wages affected by the deduction are paid, (3) the deduction is not more than 15% of the gross wages earned in the pay period, (4) the deduction is made after all deductions required by law or collective bargaining agreement and any employee-authorized deduction are made, and (5) the deduction does not reduce regular gross wages below the applicable minimum wage. Guide furnished: http://www.michigan.gov/documents/GuidetoOverpay_89309_7.pdf

http://www.michigan.gov/documents/GuidetoOverpay_89309_7.pdf

New Hampshire


46

New Hampshire now allows withholding from wages for any purpose on which the employer and employee mutually agree that does not grant financial advantage to the employer, if the employee has given his or her written authorization and deductions are duly recorded. The withholding may not be used to offset payments intended for purchasing items required in the performance of the employee's job in the ordinary course of the operation of the business. (H.B. 647, Laws 2011, approved June 7, 2011, effective August 6, 2011.)

Oklahoma


47

Sec. R. 380:30-1-11., (a) If an employer determines that an employee has been overpaid, the employer may recover the overpaid sum from the employee in one of two ways:

(1) Lump sum cash repayment; or

(2) Agreement for payroll deduction in a lump sum or in installments over a term not to exceed the length of the term in which the erroneous payments were made, provided that such agreement is made pursuant to the provisions of this subchapter regarding deductions.

(b) The election as to which method is used, and the terms thereof, shall be made by the employee in writing, and shall be subject to all other provisions of law and which may apply. The employee may elect to use a combination of the above two methods, if the employer agrees.

(c) Upon termination of the employment agreement, any remaining balance of overpayment shall be considered an offset to any final wages otherwise due the employee.

Washington


48

Sec. WAC 296-126-030.Adjustments for overpayments.—

(1) An overpayment occurs when an employer pays an employee for:

(a) More than the agreed-upon wage rate; or

(b) More than the hours actually worked.

(2) Recouping the overpayment may reduce the employee's gross wages below the state minimum wage.

(3) An employer cannot recover an overpayment when the disputed amount concerns the quality of work.

(4) An employer can recover an overpayment from an employee's paycheck provided the overpayment was infrequent and inadvertent. Infrequent means rarely, not occurring regularly, or not showing a pattern. Inadvertent means an error that was accidental, unintentional, or not deliberately done. The burden of proving the inadvertent error rests with the employer who made the error. The employer has ninety days from the initial overpayment to detect and implement a plan with the employee to collect the overpayment. If the overpayment is not detected within the ninety-day period, the employer cannot adjust an employee's current or future wages to recoup the overpayment. Recouping of overpayments is limited to the ninety-day detection period.

(5) In the case of employees covered by an unexpired collective bargaining agreement that expires on or after January 1, 2006, in which overpayments are included in the terms of the collective bargaining agreement, the effective date of this rule shall be the later of:

(a) The first day following expiration of the collective bargaining agreement; or

(b) The effective date of the revised collective bargaining agreement.

Washington-continued…


49

The following are examples of when overpayments may or may not be allowed:

Example 1. Allowed. Overpayment of agreed wage rate: An employee was paid an agreed rate of ten dollars per hour but received a paycheck at the rate of eleven dollars per hour. The employer provided documentation of the overpayment to the affected employee and adjusted the employee's next paycheck for the amount overpaid in the previous pay period.

Example 2. Allowed. Overpayment for hours worked: An employee worked seventy-two hours in the pay period, but the employee was paid for eighty hours for that period. The employer provided documentation of the overpayment to the affected employee and adjusted the employee's next paycheck for the eight hours overpaid in the previous pay period.

Example 3. Not allowed. Overpayment not detected within ninety days of first occurrence: An employer agreed to pay an employee ten dollars per hour, but when the first check was received, the amount paid was paid at eleven dollars per hour. The employee may or may not have brought it to the attention of the employer. Six months later the employer detected the overpayments and adjusted the employee's wages in the next paycheck for the entire amount of the overpayment. This is not an allowable adjustment because it was not detected within ninety days from the first occurrence.

Washington-continued…


50

(6) The employer must provide advance written notice to the employee before any adjustment is made. The notice must include the terms under which the overpayment will be recouped. For example: One adjustment or a series of adjustments.

(7) The employer must provide documentation of the overpayment to the affected employee or employees.

(8) The employer must identify and record all wage adjustments openly and clearly in employee payroll records.

(9) Regardless of the provisions of this section, if appropriate, employers retain the right of private legal action to recover an overpayment from an employee.

(10) This regulation does not apply to public employers. See chapter 49.48 RCW, Wages—Payment—Collection.

[WAC 296-126-030, as adopted November 29, 2005, and effective January 1, 2006 (Rulemaking Order CR-103). Last amended effective March 15, 2010; Filed February 2, 2010 (WSR 10-04-092).]

Tennessee


51

Effective July 1, 2011: An employer may offset an employee's wages due and owing for an amount the employee owes the employer if: (1) an employer enters into an agreement with an employee to advance the employee wages prior to the date the wages are due and owing, agrees to otherwise lend the employee money, or permits the employee to charge personal items on the business or corporate credit card issued to the employee;

Tennessee Cont…


52

(2) the employee signs a written agreement prior to any actions occurring pursuant to item (1) allowing the employer to offset the employee's wages for any amount the employee owes the employer, and the employer has in its possession at the time of the offset a copy of such signed agreement; (3) the employer notifies the employee in writing 14 days prior to the payment of wages due and owing that: (a) there is an amount the employee owes the employer; (b) the employee's wages may be offset if the amount owed is not paid prior to the payment of wages due and owing; and

Tennessee Cont…


53

(c) the employee may submit an affidavit as described just below; and (4) the employee has not paid the amount owed the employer that was described in the notice sent by the employer.

The employer is not entitled to offset an employee's wages due and owing if the employee sends a sworn affidavit to the employer, and a copy of such affidavit to the Tennessee Department of Labor and Workforce Development, no later than seven days after receiving notification from the employer, contesting the amount owed.

Tennessee Cont…


54

If an employee contests an amount owed, then the employer may commence an appropriate civil action to recover the amount the employer alleges that the employee owes the employer.

Change due to passage of H.B. 1819

Deducting for Advanced Vacation


55

If an employee is paid vacation before it is earned it is an advance on wages if the employee terminations

Always verify vacation rules in addition to overpayment rules for each state

Usually falls under “overpayment rule”

New York


56

Per Section 193: Access at http://www.labor.ny.gov/formsdocs/wp/LS605.pdf

Tracking Hours

57

The DOL and the states no not restrict employers from requiring any employee to track time

This applies to exempt employees as well

Tracking time alone does not threaten exempt status


Are There Any Questions?


58

How Can Ascentis Help Me?

59

Process payroll

• Real time flexible processing

• 100% accuracy

• Reduce processing time by up to 30%

Employee portal

• Paycheck data

• Paystubs

• Tax forms

• Paycheck simulation tools

To earn RCH credit you must


60

Stay on the webinar, online for the full 60 minutes

Be watching using your unique URL

Certificates delivered by email, to registered email,

by June 3rd

On-Demand Webinars

Watch from anywhere, at anytime, at no cost to you!

61


Download Slides? Watch again? 62



63

Sharing the Education

Contact Us

[email protected]

www.ascentis.com

800.229.2713

64


Paying Employees from Start to Finish and …...Paying Employees from Start to Finish and Everywhere...

Documents

Transcript of Paying Employees from Start to Finish and …...Paying Employees from Start to Finish and Everywhere...