Presented Tuesday, April 2, PDF Free Download

1 Presented Tuesday, April 2, 2015

2015 The Payroll Advisor 2

Housekeeping 3 Credit Questions Today s topic Speaker 2015 The Payroll Advisor

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 May 1 st 2015 The Payroll Advisor

About the Speaker 5 Vicki M. Lambert, CPP, is President and Academic Director of Vicki M. Lambert, LLC, a firm specializing in payroll education and training. Known as The Payroll Advisor, Ms. Lambert is Founder and Director of www.thepayrolladvisor.com, a website that provides unique and expert services for anyone dealing with the complexities and technicalities of the payroll process. As an adjunct faculty member at Brandman University, Ms. Lambert is the creator and instructor for the Practical Payroll Online payroll training program, which is approved by the APA for recertification credits.

Our Focus For Today 6 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

Our Focus For Today 7 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

Our Focus For Today 8 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

Payday Notices 9 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) 10 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!) Only Nebraska requires a statement with wages and taxes withheld Be careful about putting the social security number on the paystub

States With No Requirement 11 The following states have no requirements for issuing paystubs or statements Alabama Florida Mississippi South Dakota Arkansas Georgia Ohio Tennessee

Employee Request 12 The following states require the employer to give a paystub or statement upon employee request Kansas Nebraska Louisiana Virginia

Mandatory Statement 13 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. 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 14 The following states require the employer give the employee a statement concerning the deductions taken from their paycheck. These include: Idaho Illinois Kentucky Missouri Montana Nevada New Hampshire New Jersey North Carolina Oklahoma Oregon Rhode Island Utah Wisconsin Wyoming The following states require that gross wages also be included with deductions: Maryland and South Carolina

Direct Deposit Pay Cards 15 Three states have a specific requirement for employees that receive their paycheck either by direct deposit or pay cards Arizona, Maine and South Carolina

Electronic Statements 16 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, Oregon, Texas, and Washington California, New Mexico, New York and Vermont employee must agree to it Michigan: must be in a retainable form

Frequency of Wage Payments 17 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

Max Period Permitted for Nonexempt Employees for Private Sector Employers WA MT ND ME OR ID SD MN WI NY VT NH MA CA NV UT WY CO NE KS IA MO IL MI OH IN KY WV VA PA DE MD NJ RI CT AZ NM OK AR TN SC NC MS AL GA T LA FL Weekly Biweekly AK HI Semi-monthly Either Biweekly or Semi-monthly 18 Monthly None specified/designated by employer

Days Between Pay Periods 19 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)

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 1 st & 15th Rhode Island Idaho Nebraska Illinois Pennsylvania 15 th & Last Vermont Kansas North Carolina Indiana Tennessee 20 th & 5th Minnesota North Dakota Iowa Texas Split month Oregon South Carolina Kentucky Wyoming 15 th & 1st South Dakota Louisiana Maine Maryland Massachusetts Mississippi Missouri Montana Nevada New Jersey New Mexico New York Oklahoma Utah Vermont Virginia West Virginia changed to 19 days apart June 19th Washington Wisconsin 20

Lag Time Issues 21 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

Lag Time Issues 22 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:

TN Example 23 All wages or compensation earned and unpaid prior to the first day of any month shall be due and payable not later than the 20 th day of the month following the one in which the wages were earned. All wages or compensation earned and unpaid prior to the 16 th 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

OH Example 24 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.

Within 5 Days Within 6 Days Within 7 Days Within 8 Days Within 9 Days Within 10 Days Arizona Vermont California Connecticut Rhode Colorado Island Delaware Maine Indiana Hawaii New Hampshire Louisiana Illinois--weekly Massachusetts New York Washington Mississippi Montana New Jersey New Mexico-in state Utah Illinois: If biweekly or semimonthly within 13 days Wisconsin: 31 days 25

Within 11 Days Within 12 Days Within 14 Days Within 15 Days Within 16 Days Within 20 Days Oklahoma Iowa Michigan Alabama Missouri Tennessee Alaska No Requirements Virginia Idaho Arkansas West Virginia Kansas Georgia Nevada New Mexico-out of state Maryland Minnesota Ohio Pennsylvania Nebraska North Carolina Texas North Dakota Virginia Wyoming Oregon South Carolina 26

Method of Payment 27 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 28 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 29 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 30 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 31 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 32 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

Paycards by State WA MT ND ME OR ID SD MN WI NY VT NH MA CA NV UT WY CO NE KS IA MO IL MI OH IN KY WV VA PA DE MD NJ RI CT AZ NM OK AR TN SC NC MS AL GA T LA FL 33 AK HI Paycards permitted restrictions may apply Permitted with restrictions & must be voluntary by employee Paycards highly restricted Not addressed by state Not addressed but not prohibited by DOL I

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.

35 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 Immediately As soon as amount can be Michigan 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 Within 72 hours Next regular payday Hampshire 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 Next regular payday Next regular payday Carolina North Dakota Next regular payday Next regular payday Ohio No provisions No provisions Oklahoma Next regular payday Next regular payday Oregon End of 1 st 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 6 th 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 eff. 3-4-15 Next regular payday eff. 3-4-15 36

Vacation Pay and Termination 37 No law on federal level CA: Labor Code Section 227.3 considered wagescannot 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

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 Alabama Alaska Arizona Must be Paid Out Depends on Policy Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana No Provisions 39

State Must be Paid Out Depends on Policy No Provisions Nebraska Nevada New Hampshire May be considered wages New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina May be considered wages Court may consider as wages Must be paid unless policy states 40 South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

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. 44

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

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 2015 The Payroll Advisor

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

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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

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