Payroll Legal Alert

Q: Our company president’s teenage son has been hired to do what the president calls incidental work around our office this summer. He’s signed a “Professional Services Agreement,” which specifies that he will be paid $10 an hour. Payroll has been told not to put him on the payroll because he’s an independent contractor. We think he should be put on the payroll. Who’s correct?

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Under tax code Section 83, you don’t tax employees who receive company stock, stock options or other property that is subject to a substantial risk of forfeiture until the risk lapses and the property vests. Final regulations issued in February, which closely follow proposed regs, clarify what counts as a substantial risk of forfeiture.

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This is your monthly guide to critical payroll due dates.

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Employees who send their kids to day camp can reap a double bonus—their kids will be entertained, and they can defray some or all of those expenses through the company’s dependent care assistance plan, up to the $5,000 annual limit. For kids who aren’t nature lovers, expenses incurred for specialty camps, such as computer camps, count too.

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If you focus strictly on the ACA health care reform law’s free-rider penalties for not providing full-time employees with health insurance, or not providing insurance that’s affordable and offers minimum value, you’re missing the bigger picture.

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For Payroll, time-off complications make summer about as special as that first sunburn. It doesn’t have to be that way. Here are some no- or low-cost solutions that can take the sting out of summer.

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Q: Last March, we hired a staff member’s college freshman daughter for several weeks and we paid her the $4.25 an hour opportunity wage. We’d like to hire her again for the summer. Can we continue to pay her $4.25 an hour?

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Q: An employee exhausted all of his vacation and sick days, before he got sick again. He worked for only five days of our 15-day semimonthly pay period. Should he be paid for the entire pay period, or should he be docked for the days he didn’t work during that pay period?

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In a unanimous decision, the U.S. Supreme Court on March 25 reversed the 6th Circuit Court of Appeals, ruling that an employer’s severance pay plans were FICA-taxable. As a result, the IRS isn’t on the hook to pay up to $1 billion in FICA refunds to various employers and their employees who were let go over the past several years.

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State laws usually require that employees voluntarily participate in direct deposit or paycard programs. This chart summarizes the states’ direct deposit/paycard rules.

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