8 tips for handling summer military-leave payroll issues — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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8 tips for handling summer military-leave payroll issues

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in FMLA Guidelines,Small Business Tax Deduction Strategies

Summer is usually when employees who belong to the National Guard and military Reserves give their two weeks of duty to Uncle Sam. Some military-connected employees may be deployed for longer periods of time. Now is the time to prepare for their absence.

  1. Make a calendar. Ask reservists about their periods of military leave. Note: Some states allow reservists’ family members to also take leave.
  2. You don't have to pay exempt employees for full weeks they miss due to military service, although many employers do. For military leave beginning midweek, offset military pay against exempts’ salaries. Nonexempts need no offset, since they need not be paid if they don’t work.
  3. Reservists may choose to use vacation time for military leave; withhold taxes from vacation pay and from the value of time donated to them by co-workers.
  4. Withhold income and FICA taxes from military differential payments made to reservists who are absent for up to 30 days. Withhold only income taxes from differential pay paid to reservists who are serving for longer periods. You may treat the pay as supplemental wages.
  5. Benefits such as health insurance must match benefits provided to employees on nonmilitary leave. If leave is for 31 or fewer days, you can’t charge reservists more than the regular amount. Idea: Allow them to prepay.
  6. For longer periods of military leave, reservists and their dependents can elect COBRA-like benefits (i.e., benefits for 24 months at 102% of the premium). Warning: This applies to all employers, including small employers that aren’t covered under COBRA. For COBRA-covered employers, COBRA also applies.
  7. The accrual rate for seniority-based benefits includes all time spent on military leave. Example: If vacation increases from two to three weeks after five years, military service counts when determining when that threshold is met.
  8. Employers’ pension contributions continue during reservists’ absence; reservists must be allowed to make up contributions when they return to work. Reservists called to military duty for a period exceeding 30 days may receive distributions of their 401(k) pretax amounts.

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