Multi-State Payroll. Paying Employees Non-Tax Challenges 10/4/2016. Part 1 Non-Tax Challenges

Transcription

1 Multi-State Payroll Part 1 Non-Tax Challenges Charlotte N. Hodges, CPP October 7, 2016 Paying Employees Non-Tax Challenges Wage and Hour Issues Minimum Wage Overtime Paid Sick Leave Benefits Garnishments New Hire Reporting Child Support Pay Frequency / Lag Time (pay date) Final Pay at Termination Methods of Pay / Pay Statements 1

2 Wage and Hours Issues The Federal Wage-Hour Law does: Set the minimum wage and overtime rates employees must receive for their work Require recordkeeping by employers Place restrictions on the types of work children can do and the hours they can work Mandates equal pay for equal work Wage and Hours Issues The Federal Wage-Hour Law does NOT: Require employers to provide paid vacations, sick days, jury duty leave, holidays, lunch breaks, or coffee breaks Regulate how often employees must be paid, or when they must be paid after termination of employment (either voluntarily or involuntarily) Restrict the hours that employees over 16 years of age may be required to work 2

3 Minimum Wage States with no minimum wage rate or where the minimum wage is lower than the federal minimum wage 0f $7.25 The federal rate applies to employees covered by the Fair Labor Standards Act (FLSA) States with a higher minimum wage rate than the federal rate The state rate applies to employees covered by state law Minimum Wage Nevada The hourly minimum wage for covered employees is $7.25 for employees to whom qualifying health benefits have been provided by the employer The rate is $8.25 for all other employees District of Columbia Effective July 1, 2016, the hourly minimum wage is $

4 Minimum Wage Maryland Effective July 1, 2016, the state's hourly minimum wage is $8.75 Virginia Employees covered by Virginia's minimum wage law must be paid $7.25 an hour Minimum Wage Alabama Counties and municipalities are not allowed to require employers to provide a minimum wage rate or employment benefits, following an Alabama law (H.B. 157) signed Feb. 25, 2016 Birmingham Note: the citywide hourly minimum wage that took effect Feb. 24, 2016 is void following state legislation signed Feb. 26,

5 Minimum Wage California Berkeley Citywide hourly minimum rate: $11, effective Oct. 1, 2015, for all employees within the city boundaries. The wage is to increase to $12.53 on Oct. 1, 2016, to $13.75 Oct. 1, 2017, and to $15 Oct. 1, 2018 Emeryville Citywide hourly minimum rate: $14.82 for employers in the city with 56 or more employees and $13 for employers with fewer than 56 employees, effective July 1, The larger employer minimum wage rate is annually indexed to inflation July 1. Overtime Overtime requirements apply to employees covered by each state s wage-hour law Exemptions are similar to those under the FLSA States with no general overtime pay provision Employers covered by the FLSA must follow the federal overtime pay requirements 5

6 Overtime Alabama Maximum Hours Before Overtime No Provision Amount of Overtime Pay No Provision Overtime California Maximum Hours Before Overtime Employees who work more than eight hours a day, more than 40 hours a week or for seven consecutive days are entitled to premium pay Amount of Overtime Pay Overtime pay is one and one-half times the regular rate of pay for hours worked in excess of eight per day. Employees also must be paid one-and-one-half times their regular rate of pay for hours worked in excess of 40 a week. Employees who work more than 12 hours a day must be paid double their regular rates of pay. 6

7 Overtime California But Wait there s more Employees must be paid one and one-half times their regular rate of pay for the first eight hours of work on the seventh day of work in any workweek, regardless of the number of hours worked during the previous six days. When employees work more than eight hours on the seventh day, they must be paid double their regular rate of pay for all hours worked over eight. Overtime California But Wait there s even more Alternate Work Weeks Employers may institute, following an election by affected workers, an alternative workweek schedule that includes workdays of more than eight hours. Under an alternative workweek schedule, employees who work more than 10 hours in a day or 40 hours in a workweek must be paid one and one-half times their regular rates of pay. Employees who work more than 12 hours in a day must be paid double their regular rates of pay. 7

8 Overtime Colorado Maximum Hours Before Overtime Employees who work more than 12 consecutive hours, 12 hours in a day or 40 hours per week are entitled to premium pay Amount of Overtime Pay Overtime pay is one and one-half times the regular rate of pay for hours worked over the maximum Overtime Nevada Maximum Hours Before Overtime Generally, employers must pay employees overtime for all hours worked in excess of 40 in a week. Daily overtime: Employers must pay daily overtime to covered employees who earn less than 1.5 times the minimum wage for hours worked over eight in a workday. A workday is defined as a period of 24 consecutive hours that begins when the employee starts work 8

9 Overtime Nevada Maximum Hours Before Overtime Employers scheduling workers covered by the daily overtime provision must determine the start and end times of these workers over consecutive days For example, a covered employee working a shift from 2 p.m. to 10 p.m. who is scheduled to work the next day starting at 10 a.m. will trigger the daily overtime provision for the time worked until 2 p.m. that second day Overtime Nevada Maximum Hours Before Overtime Flexible scheduling: Employees can work a 10-hour day without overtime consequences if employer and employee agree to a work schedule of 10 hours a day over four days a week. Amount of Overtime Pay All covered employees must be paid at a rate of 1.5 times the regular rate of pay for all hours worked in excess of 40 in a workweek. 9

10 Overtime District of Columbia / Maryland Maximum Hours Before Overtime Employees who work over 40 hours per week are entitled to premium pay. Amount of Overtime Pay Overtime pay is one-and-one-half times the regular rate of pay for hours worked over 40 per week Overtime Virginia Maximum Hours Before Overtime No Provision Amount of Overtime Pay No Provision 10

11 Benefits Paid Sick Leave Sick leave (or paid sick days or sick pay) is time off from work that workers can use to stay home to address their health and safety needs without losing pay Paid sick leave is a statutory requirement Benefits Paid Sick Leave District of Columbia D.C. Code (2008, amended 2013)(effective 2014) Connecticut (2011)(effective 1/2012) California (2014, amended 2015 and 2016) (effective 7/2015; 2016 expansion effective 7/2018) Massachusetts (2014) (effective 7/2015) Oregon (2015) (effective 1/2016) Oregon s law preempted the ordinance that was enacted by Eugene, Ore.; Eugene s ordinance was no longer in effect as of January 1,

12 Benefits Paid Sick Leave Montgomery County, MD (2015) (effective 10/2016) EEs whose place of business has five or more EEs accrue one hour of paid sick time for every 30 hours worked and can accrue up to 56 hours and use up to 80 hours All others receive an equivalent 32 paid and 24 unpaid hours Covers sick time for EE or family members care, absences associated with EE or family member s domestic violence, sexual assault or stalking, closures due to a public health emergency and care for a family member exposed to a communicable disease Benefits Paid Sick Leave The cities of San Francisco, Washington, D.C., Seattle, New York City, Oakland (CA.), Tacoma (WA), Philadelphia, Emeryville (CA) and the New Jersey cities of Newark, Jersey City, Irvington, Passaic, East Orange, Paterson, Trenton, Montclair, Bloomfield, New Brunswick and Elizabeth have laws that allow workers to earn paid sick days to recover from a short-term illness, care for a sick family member or seek routine medical care The San Francisco, Washington, D.C., Seattle, New Brunswick, Tacoma, Philadelphia and Emeryville laws also include paid "safe" days that provide earned leave that allows survivors of domestic violence, sexual assault (all but Tacoma), and stalking (all but Tacoma) to seek services related to these incidents 12

13 Benefits Paid Sick Leave San Diego (CA) also adopted a paid sick days law but it was challenged by opponents; in 2016, voters rejected the challenge and the law is expected to take effect later in 2016 Eugene's and Portland's laws were preempted by the passage of Oregon's statewide law Pittsburgh's law was ruled invalid by a county court judge; its implementation is on hold pending appeal and rulings from higher state courts. Benefits Paid Sick Leave In 2016, Spokane (WA), St. Paul (MN), Chicago (IL) and the California cities of Santa Monica and Los Angeles passed sick and safe days laws Berkeley (CA) and Morristown and Plainfield (NJ) passed paid sick days laws 13

14 Garnishments Maximum Withholding Amount Under the federal Consumer Credit Protection Act (15 U.S.C. 1673) the maximum amount of an employee s disposable earnings that can be garnished to repay a debt is the lessor of: 1. 25% of the employee s disposable earnings for the week; or 2. The amount by which the employee s disposable earnings for the week exceed 30 times the federal minimum hourly wage in effect Garnishments Maximum Withholding Amount CCPA garnishment limits take precedence over state laws that allow greater amounts to be garnished State law will apply if the maximum amount subject to garnishment is lower than the federal minimum or if state law does not allow creditor garnishment The federal maximum applies no matter how many garnishments are received for an employee The wage garnishment law specifies that the garnishment restrictions do not apply to certain bankruptcy court orders, or to debts due for federal or state taxes 14

15 Garnishments Disposable Earnings The amount left after legally required deductions are made Examples of such deductions include federal, state, and local taxes, the employee's share of State Unemployment Insurance and Social Security It also includes withholdings for employee retirement systems required by law. Garnishments Disposable Earnings Deductions not required by law usually may not be subtracted from gross earnings when calculating disposable earnings under the CCPA Examples of such deductions include voluntary wage assignments, union dues, health and life insurance, contributions to charitable causes, purchases of savings bonds, retirement plan contributions (except those required by law) and payments to employers for payroll advances or purchases of merchandise 15

16 Garnishments Debt Collection Improvement Act Authorizes federal agencies or collection agencies under contract with them to garnish up to 15% of disposable earnings to repay defaulted debts owed the U.S. government Garnishments Higher Education Act Authorizes the Department of Education's guaranty agencies to garnish up to 10% of disposable earnings to repay defaulted federal student loans Such withholding is also subject to the provisions of the federal wage garnishment law, but not state garnishment laws Unless the total of all garnishments exceeds 25% of disposable earnings, questions regarding such garnishments should be referred to the agency initiating the withholding action 16

17 Garnishments District of Columbia Follows federal law in determining the amount of disposable wages exempt from a garnishment order The maximum amount that employers can withhold is the lesser of 25% of disposable wages or the amount by which weekly disposable wages exceed 30 times the federal minimum wage Employers cannot, however, withhold more than 10 percent of gross wages if monthly wages are below $200 or more than 20 percent if wages are below $500 Disposable wages are earnings remaining after deductions required by law are made Garnishments Maryland The maximum amount exempt from garnishment is the greater of 75% of disposable wages or $145 multiplied by the number of weeks in which wages were earned In Caroline, Kent, Queen Anne's, and Worcester counties, however, the maximum amount exempt from garnishment is the greater of 75 % of disposable wages or 30 times the federal minimum wage Disposable wages are those remaining after deductions required by law. Any medical insurance payments deducted from employee wages by employers are exempt from garnishment 17

18 Garnishments Texas Except for child support obligations, a court cannot enter or enforce an order that requires wages to be withheld and remitted for the satisfaction of a judgment Unpaid commissions for personal services of up to 25% also are exempt from garnishment The aggregate limitations of garnishment for unpaid commissions are $30,000 for a single adult and $60,000 for a family Garnishments Virginia Except for a support or bankruptcy order or a tax levy, the maximum that employers can withhold is the lesser of 25% of disposable earnings or the amount by which weekly disposable earnings exceed 40 times the federal minimum wage Disposable earnings are those remaining after deductions required by law Certain low-income custodial parents who support dependent children can claim an additional exemption from garnishment This additional wage exemption amount is not available to a parent whose household gross income, including any support payments for children living in the home, exceeds $1,750 per month. 18

19 New Hire Reporting Employers are required to report basic information on new and rehired employees within 20 days of hire Some states require it sooner By reporting new hires employers allow child support agencies to quickly locate parents who owe child support and send income withholding orders Private sector employers report to the State Directory of New Hires Federal agency employers report to the National Directory of New Hires New Hire Reporting New hire reports are matched against child support records at the state and national levels to locate parents who owe child support When there is a match, the system provides the information to the appropriate state agency This is especially helpful when the parent and the child live in different states Employers with employees in more than one state may report all new hire information to a single state, provided they register with the Secretary of Health and Human Services 19

20 Child Support Enforcement Joint federal/state responsibility Federal laws provide standards state laws must meet or exceed to qualify for federal funding of state child support enforcement programs State standards are contained in Part D of Title IV of the Social Security Act as amended most recently by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 Title IV-D and the federal Consumer Credit Protection Act (CCPA) provide the legal framework around which state child support withholding laws are constructed Child Support 20

21 Child Support Precedence An IRS tax levy is the only deduction that takes precedence over child support Child support should always be withheld before the following voluntary and involuntary deductions: Assignment of wages Nontax federal debt State and local taxes Creditor garnishments Child Support Federal CCPA Limits 50% - Supports a second family with no arrearage or less than 12 weeks in arrears 55% - Supports a second family and more than 12 weeks in arrears 60% - Single with no arrearage or less than 12 weeks in arrears 65% - Single and more than 12 weeks in arrears 21

22 Child Support Federal CCPA Limits State child support withholding laws may impose lower limits on the amount that may be withheld State withholding limits cannot exceed the limits imposed by the CCPA Child Support Arizona Wages, salary, commissions, bonuses, workers' compensation, disability payments and pension or retirement benefits are subject to withholding. The amount subject to income withholding under a child support order is 50 percent of disposable income. In addition to current support, an income withholding order can include an installment for arrearages 22

23 Child Support Arizona If the arrearage is an amount equal to at least two months but no more than six months of support, the income withholding order will include an additional 25 percent of the current support to cover the arrearage If the arrearage is equal to at least six months, an additional 33 percent of the current support is added If the arrearage is equal to one year or more, the additional amount can exceed 33 percent. Child Support District of Columbia 50% to 55% of net disposable income (NDI) If the employee is supporting a spouse or dependent child in the household other than the child at issue in the support order. 60% to 65% of NDI If the employee is not supporting a spouse or dependent child in his or her household 23

24 Child Support Maryland The upper limit on what may be withheld is based on the Federal Consumer Credit Protection Act (CCPA) The Federal CCPA limit is 50% of the disposable earnings if the employee supports a second family and 60% if the employee does not support a second family These limits increase to 55% and 65% respectively if the employee owes arrearages that are 12 weeks or more past due Child Support Virginia The amount subject to withholding under a child support order is 50% of disposable income if a noncustodial parent is supporting a second family or 60% if there is no second family The amounts become 55% and 65%, respectively, if earnings are subject to withholding for support that is more than 12 weeks in arrears 24

25 Pay Frequency / Lag Time The Federal Wage-Hour Law does NOT: Regulate how often employees must be paid, or when they must be paid after termination of employment (either voluntarily or involuntarily) Pay frequency is left up to the individual states Most states regulate timing of payments in some way Pay Frequency / Lag Time Alabama No Provision Arizona Employers covered by Arizona's wage payment law must pay wages at least twice in a calendar month Payments must be no longer than 16 days apart and within five working days after the pay period ends Overtime pay or exception pay must be paid no later than 15 days after it is earned 25

26 Pay Frequency / Lag Time California Employers covered by California's wage-payment law must pay wages at least twice in a calendar month Payment for the first half of the month must be made by the 26th day of the month and payment for the second half must be made by the 10th day of the following month District of Columbia Employers covered by the District of Columbia's wagepayment law must pay wages at least twice in a month Paydays must be not more than 10 working days after the close of pay periods Pay Frequency / Lag Time Maryland In general, employers must pay wages no less frequently than biweekly or semimonthly Paydays can be less frequent for executive, administrative, or professional employees Lag Time no provision Virginia Employers must pay salaried employees at least once a month and hourly employees at least biweekly or twice a month Lag Time - no provision 26

27 Final Pay at Termination California Discharged Employees - Employers must pay wages immediately at the place of discharge, including all earned commissions Employee Quits - Employers must pay wages not later than 72 hours after the employee quits and who do not have written employment contracts for specified time periods 72 Hours Advance Notice Given by Employee - Employers must pay wages at the time employment ends (final day of employment) Final Pay at Termination California Vacation Pay - At the time of termination employers must pay vested vacation that is unused at the final pay rate when an employment contract or company policy provides for paid vacation Deceased Employees - Employers must pay unpaid wages and compensation for unused vacation, up to $15,000, immediately to the surviving spouse or the guardian of the estate upon an affidavit or declaration under penalty of perjury 27

28 Final Pay at Termination California Deductions from final pay Opinion Letter Division of Labor Standards Enforcement (DLSE) said that a deduction for previous overpayment of wages is not unlawful under the following conditions. There is a written agreement based upon voluntary consent of the employee There is no deduction from the final paycheck After making the deduction there is no less than the minimum wage for all hours worked in the pay period Final Pay at Termination California Deductions from final pay Department of Industrial Relations My employer loaned me $500.00, and per our written agreement was taking $50.00 from each paycheck as an installment payment on the loan. When I quit last week my employer deducted the outstanding loan balance of $ from my final paycheck. Is this legal? No. Although a California court has held that deductions for the periodic installment payments on a loan made to an employee by the employer are permissible when authorized in writing by the employee, the court also concluded that the balloon (lump sum) payment of the outstanding balance to be made at the time the employment relationship ends is not allowed notwithstanding the fact the employee has given his or her written consent to such a payment. When the employment relationship ends, your employer can only deduct the amount of one installment payment from your final paycheck. 28

29 Final Pay at Termination Connecticut Discharged Employees - Employers must pay the employees' wages in full no later than the next business day following the date of discharge Employee Laid Off - Employers must pay employees who are laid off by the next regular payday. Employee Quits - Employers must pay wages in full no later than the next regular pay day, either through regular payment channels or by mail Final Pay at Termination Connecticut Vacation Pay When an employment contract or company policy provides for payment of accrued fringe benefits at termination, employers must pay accrued fringe benefits that are unused at the time of termination Accrued fringe benefits include vacation, holidays, sick days and earned leave. Deceased Employees Employers may pay up to $40,000 in unpaid wages to a deceased employee's spouse or next of kin upon application Employers also may pay unpaid wages to a deceased employee's partner in a civil union. Employers may require appropriate waivers, bonds of indemnity or receipts for payment prior to paying owed wages 29

30 Final Pay at Termination Connecticut Deductions from final pay CT General Statute Section 31-71e Withholding of part of wages No employer may withhold or divert any portion of an employee's wages unless (1) the employer is required or empowered to do so by state or federal law, or (2) the employer has written authorization from the employee for deductions on a form approved by the commissioner, or (3) the deductions are authorized by the employee, in writing, for medical, surgical or hospital care or service, without financial benefit to the employer and recorded in the employer's wage record book Final Pay at Termination District of Columbia Discharged Employees - Employers must pay wages on the next working day after discharge Employee Quits - Employers must pay employees who quit and who do not have written contracts for a period of more than 30 days, on the next regular payday or within seven days, whichever is earlier When discharging an employee responsible for the employer's money, the employer can pay the wages up to four days from the date of discharge or date of resignation so that the employer can determine the accuracy of the employee's accounts. 30

31 Final Pay at Termination District of Columbia Vacation Pay - District law does not directly address the question of whether vacation pay is included in wage Deceased Employees - No Provision Deductions From Final Pay no specific requirements for deducting from final wage payments Final Pay at Termination Maryland Discharged Employees - Employers must pay discharged employees all wages* owed for work performed before the termination by the next regular payday Employee Quits - Employers must pay employees who quit all wages* owed for work performed before the termination by the next regular payday * Wages means all compensation owed to employees, including a bonus, commission, fringe benefit, overtime wages or any other remuneration promised for service 31

32 Final Pay at Termination Maryland Vacation Pay An employer is not required to pay accrued leave to an employee on termination if: the employer has a written policy that limits compensation of accrued leave to employees, the employer notified the employee of the leave benefits at the time of hire and the employee is not entitled to payment for accrued leave at termination under the terms of the employer's policy Deceased Employees No Provision Final Pay at Termination Maryland Deductions from final pay Wage deductions are extraordinary, and are prohibited unless: The Commissioner of the Maryland Division of Labor and Industry has allowed the deduction to offset or "pay for" something of value the employee has received.examples include long distance telephone calls on the employer's business phone, personal loans, wage advances, etc. The employee has given express written authorization to the employer to make the deduction. This should take the form of a separate and distinct statement, signed by the employee, concerning only the deduction and nothing more 32

33 Final Pay at Termination Virginia Discharged Employees - Employers must pay wages on the next regular payday to discharged employees Employee Quits - Employers must pay employees who quit on the next regular payday Final Pay at Termination Virginia Vacation Pay - Virginia has no specific requirements for vacation pay on termination; however, employers that give employees amounts for a benefit that was earned under company policy for such benefit, the employer may not later deduct such amounts from amounts identified as being owed for time 33

34 Final Pay at Termination Virginia Deceased Employees Employers may pay all wages owed to a deceased employee up to $15,000 if at least 60 days have passed since the employee's death and no one has applied for appointment or been appointed by the court to serve as executor or administrator of the estate The wages may be paid to any person, other than a creditor, who is entitled to all or part of the deceased employee's estate Any payment made by the employer will constitute full discharge of the sum paid Thirty days after the employee's death, if no personal representative has been appointed, a successor may direct the employer to pay any wages owed to the entity handling the funeral arrangements, up to a maximum of $3,500. Final Pay at Termination Virginia Deductions from final pay Virginia has no specific requirements for deducting from final wage payments of the Code of Virginia Virginia Payment of Wage Law The law prohibits employers from making deductions, other than for taxes or other items required by law such as garnishments, without first securing the employee's written authorization to do so 34

35 Methods of Pay / Pay Statements Federal Wage-Hour Law (FLSA) Does not govern the method or means employers must use to pay employees State Laws Nearly all states have enacted laws ensuring that employees are paid either in cash, by check, or some other kind of negotiable instrument Within the state (or at a convenient location) For face value and without charge or discount imposed by a bank or other financial institution Methods of Pay / Pay Statements State Laws Paycards An alternate method of pay that provides a method of paying under-banked or unbanked employees Serves as an electronic wage payment alternative to direct deposit According to the American Payroll Association 35 states permit paycards (2016 APA s Guide to State Payroll Laws) 35

36 Methods of Pay / Pay Statements State Laws Most state laws regulate to varying degrees the items that must appear on each employees pay statement Including items such as gross and net pay, itemized deductions, pay rates and hours worked, and so on Some states include special provisions for certain classes of employee such as migratory farm labors, piece rate workers, commissioned salespeople, etc. Methods of Pay / Pay Statements Connecticut Employers may pay wages in cash, by negotiable check, or by direct deposit Direct deposit Employers may pay employees by direct deposit upon employees written consent 36

37 Methods of Pay / Pay Statements Connecticut Payroll Cards There are no state laws or regulations currently in effect regarding payroll debit cards A law to took effect Oct. 1, 2016, will allow employee payment by payroll debit card as long as certain conditions are met According to the Connecticut Department of Labor, employers may pay employees by debit card as long as wages are paid on regular paydays, employees have the option to be paid by check, and all funds are immediately available to employees No fees can be charged to the employees' accounts. The card must not be redeemable at only one bank. Methods of Pay / Pay Statements Connecticut Electronic Pay Statements There are no state laws or regulations regarding electronic pay statements According to the Connecticut Department of Labor Electronic pay statements are permitted if all employees have easy access to the statements and can print them out 37

38 Methods of Pay / Pay Statements District of Columbia Wages may be paid in cash or check or by direct deposit into the employee's bank or other financial institution Direct deposit Direct deposit is allowed after an employee voluntarily authorizes the deposit There can be no cost or charges to employees to retrieve all their wages on payday Methods of Pay / Pay Statements District of Columbia Payroll Cards There are no local laws or regulations regarding payroll debit cards According to the District of Columbia Department of Employment Services, employers can pay employees with debit cards if employees voluntarily agree to participate There can be no cost or charges to employees to retrieve all wages on payday 38

39 Methods of Pay / Pay Statements District of Columbia Electronic Pay Statements There are no state laws or regulations regarding electronic pay statements District law does not define the format in which pay statements must be provided According to the District of Columbia Department of Employment Services, there is no restriction on providing the information electronically as long as employees have the ability to retrieve and print the statements Methods of Pay / Pay Statements Maryland Wages must be paid in cash or by a check that may be cashed, without discount, at a bank or other financial institution that is readily available to the employee Direct deposit Employers may deposit employees' wages directly into a bank or other financial institution as authorized by the employee Private employers cannot adopt a policy requiring employees to receive their pay via direct deposit State employers may adopt a policy where direct deposit is the standard method of payment provided that employees receive notice of their right to request an exemption 39

40 Methods of Pay / Pay Statements Maryland Payroll Cards Employers can pay wages to an employee on a debit card or card account from which the employee is able to access the funds through withdrawal, purchase, or transfer if: authorized by the employee; and any fees applicable to the debit card or card account are disclosed to the employee in writing in at least 12 point font Methods of Pay / Pay Statements Maryland Electronic Pay Statements There are no state laws or regulations regarding electronic pay statements There is no law declaring the wage statement should be written on paper Most states with this rule interpret it as giving employees access to electronic pay stubs 40

41 Methods of Pay / Pay Statements Virginia Wages may be paid in cash, by check, or by direct deposit Direct deposit Employers may deposit the wages of an employee into an account in the name of the employee at a financial institution designated by the employee Methods of Pay / Pay Statements Virginia Payroll Cards Code of Virginia Payment of wages or salaries shall be (i) in lawful money of the United States, (ii) by check payable at face value upon demand in lawful money of the United States, (iii) by electronic automated fund transfer in lawful money of the United States into an account in the name of the employee at a financial institution designated by the employee, or (iv) by credit to a prepaid debit card or card account from which the employee is able to withdraw or transfer funds with full written disclosure by the employer of any applicable fees and affirmative consent thereto by the employee 41

42 Methods of Pay / Pay Statements Virginia Payroll Cards However, an employer that elects not to pay wages or salaries in accordance with clause (i) or (ii) to an employee who is hired after January 1, 2010, shall be permitted to pay wages or salaries by credit to a prepaid debit card or card account in accordance with clause (iv), even though such employee has not affirmatively consented thereto, if the employee fails to designate an account at a financial institution in accordance with clause (iii) and the employer arranges for such card or card account to be issued through a network system through which the employee shall have the ability to make at least one free withdrawal or transfer per pay period, which withdrawal may be for any sum in such card or card account as the employee may elect, using such card or card account at financial institutions participating in such network system Methods of Pay / Pay Statements Virginia An employer must provide a written wage statement to an employee only if the employee requests it Electronic Pay Statements There is no law declaring the wage statement should be written on paper Most states with this rule interpret it as giving employees access to electronic pay stubs 42

43 Unclaimed Property - Escheat Escheat property is property that reverts to a government entity in the absence of legal claimants or heirs and includes abandoned and unclaimed property Unclaimed wages become a form of abandoned property which the employer must pay over to the appropriate state agency after a certain number of years State laws that govern abandoned property are known as escheat laws because the property escheats to the state Unclaimed Property - Escheat District of Columbia Wages are presumed abandoned one year after becoming payable District of Columbia employers must report and remit unclaimed wages annually As part of a due diligence requirement, employers must send written notice to payee at last known address not more than 120 days before filing a report Employers holding unclaimed wages must send a verified report before Nov. 1 of each year for wages unclaimed as of June 30 of that year Employers holding unclaimed wages must send payment before Nov. 1 of each year for wages unclaimed as of June 30 of that year 43

44 Unclaimed Property - Escheat Maryland Wages are presumed abandoned three years after becoming payable No provision related to notification requirements Employers holding unclaimed wages in excess of $50 must send a verified report no later than Oct. 31 of each year for wages unclaimed as of June 30 of that year Employers holding unclaimed wages in excess of $50 must remit them no later than Oct. 31 of each year for wages Unclaimed Property - Escheat Virginia Wages are presumed abandoned one year after becoming payable As part of a due diligence requirement, employers must mail a notice to payees owed at least $100. This notice must be sent at least 60 but no more than 120 days before the date the report is due Employers holding unclaimed wages must file a verified report with the state treasurer, before Nov. 1 of each year, reflecting wages unclaimed as of the preceding June 30 Employers must remit unclaimed wages with their reports, before Nov. 1 of each year 44

45 Charlotte N. Hodges, CPP Thank you for listening to me today and for sharing your valuable time with me. 45