Payroll Management

Under most states’ wage payment laws, each failure to provide a pay stub to an employee counts as a separate violation. A new court ruling shows how liability can add up quickly … and it serves as another cautionary tale about mislabeling employees as independent contractors.

The IRS, through its Questionable Employment Tax Practices initiative, is successfully working with states on worker misclassification issues. However, one agency with which the IRS doesn’t work well is the DOL’s Wage and Hour Division, according to a GAO report.

Q. Does asking independent contractors to complete a time sheet jeopardize their contractor status?

Q. Because of a time-clock malfunction, we couldn’t determine how much pay we owed some employees. What is our obligation to pay employees if we can’t calculate the exact number of hours worked? Is there any penalty for the delayed payment?

You must backup withhold on payments made to independent contractors if they don’t certify their Taxpayer Identification Numbers to you prior to payment. Contractors may make those certifications by providing you with Form W-9, which you must keep for three years. Caution: You may want to retain these forms for longer than three years. Here's why:

The 0.2% “temporary” FUTA surtax, which has been in effect since 1976, expired at the end of June. So far, Congress hasn’t introduced legislation to extend it. But if the surtax is re-enacted retroactively?

Most states have laws that require employers to provide workers with regular statements about their compensation. To help you prevent pay-stub violations, this downloadable PDF chart cites the pay-statement laws for all states that have such laws. Plus, it explains whether pay stubs can be provided to employees electronically ...

Question: My company provides group-term life insurance with a value of more than $50,000 to some retirees. I know I have to report the uncollected employee FICA taxes on their W-2s in Box 12 with Codes M and N. Do we have to pay the employer share of these taxes? If so, when are they due? Also, how are the amounts reported on Form 941?

Remember Wal-Mart's $640 million wage-and-hour mistake? That was all because of the federal Fair Labor Standards Act (FLSA). The FLSA seems straightforward, but small compliance errors can add up to big penalties. Here are the basics you need to know to stay out of court:

Before any employee begins telecommuting, there are payroll issues you need to resolve: keeping time for nonexempts, how and when to pay, and reimbursement for business expenses.