Ch1 The need for payroll
Americans with Disabilities Act of 1990
A law passed in 1990 that requires employers and public facilities to make "reasonable accommodations" for people with disabilities and prohibits discrimination against these individuals in employment. prohibits employers with 15 or more employees, employment agencies, labor organizations, or joint labor management committees from discriminating against qualified persons with disabilities because of their disability. applies to job application procedures, hiring, advancement, termination, compensation, job training, and other conditions of employment In addition, reasonable accommodations, such as wheelchair-accessible restrooms and ramps for qualified disabled job applicants and workers, must be provided. Under the ADA, a person is considered "qualified" if he or she can perform the essential functions of the job with or without reasonable accommodation.
Hiring Notice (Human Resources System)
After the successful applicant is notified of employment and the starting date, time, and to whom to report, a hiring notice is sent to the Payroll Department so that the new employee can be added properly to the payroll. usually gives the name, address, and telephone number of the new employee, the department in which employed, the starting date, the rate of pay, the number of withholding allowances claimed, and any other information pertaining to deductions that are to be made from the employee's wages.
Recordkeeping Requirements
Although the laws do impose recordkeeping requirements on employers, no specific form of record is mandated
McNamara-O'Hara Service Contract Act
An act to do with contracts for many different types of services.
Age Discrimination in Employment Act of 1967
Bans age discrimination for jobs unless age is related to job performance prohibits employers, employment agencies, and labor unions from discriminating on the basis of age in their employment practices. The act covers employers engaged in an industry affecting interstate commerce (who employ 20 or more workers), employment agencies, and labor unions. The act also covers federal, state, and local government employees, other than elected officials and certain aides not covered by civil service All workers over 40. EXCEPTION is executives who are 65 or older and who have held high policy-making positions during the two-year period prior to retirement
State Disability Benefit Laws
California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico have passed laws to provide disability benefits to employees absent from their jobs because of illness, accident, or disease not arising out of their employment
Fair Employment Laws (Equal Employment Opportunity)
Civil Rights Act of 1964 ("Equal Employment Opportunity,) The act, as amended, forbids employers to discriminate in hiring, firing, promoting, compensating, or in any other condition of employment on the basis of race, color, religion, gender, or national origin. This act covers all employers who engage in an industry "affecting commerce" and who employ 15 or more workers for each working day in each of 20 or more weeks in the current or preceding calendar year Employers specifically EXCLUDED from coverage: • U.S. government (state and local governments are covered) • corporation wholly owned by the United States • Indian tribes • private membership clubs (other than labor unions) exempt from federal income tax, • religious societies in the employment of members of a particular religion to work on the societies' religious activities. The Civil Rights Act of 1991 grants compensatory and punitive damages in cases where the discrimination is intentional. It also provides for the repayment of attorney fees and the possibility of a jury trial.
Executive Orders
Employers not subject to the Title VII coverage discussed above may come within the scope of the Civil Rights Act by reason of a contract or a subcontract involving federal funds. In a series of executive orders, the federal government has banned, in employment on government contracts, discrimination based on race, color, religion, gender, or national origin.
Employee Access—Personnel Files (Record keeping system)
Even though personnel files are the property of the employer, employees may have the right to view and receive a copy of their own file some documents are considered confidential, and employers should not allow employees to view anything that would be considered an invasion of privacy
Fair Employment Laws
Federal and state legislations have been enacted to enforce fair employment practices. Many of these laws deal with discrimination on the basis of age, race, color, religion, gender, or national origin.
Immigration Reform and Control Act of 1986
Federal law requiring employers to verify and maintain records on applicants' legal rights to work in the United States Form I-9, Employment Eligibility Verification. Photocopying new employees' I-9 documents is permitted but not required. If done, photocopying should apply to all new employees. Section 1 of the form must be signed by the employee no later than the first day of employment, but not before accepting a job offer. Section 2 must be signed by the employer or authorized representative within three business days of the employee's first day of employment. The person signing Section 2 must be the same person who examined the employee's documents. fines to the employer of $3,000 in criminal penalties (civil penalties range from $539-$21,563 depending on occurrence) for each unauthorized alien and/or six months in jail. form must be retained for three years after the date of hiring or for one year after the date the employment is terminated, whichever is later.
Application for Employment (Human Resources System)
Gives applicant an opportunity to provide complete information as to: 1. Personal information including the name, address, telephone number, and social security number of the applicant. 2. Educational background including a summary of the schools attended, whether the applicant graduated, and degrees conferred. 3. Employment and experience record. 4. Type of employment desired. 5. References.
Terminating an Employee (Human Resources System)
If an employee has an employee contract or if promises were made to the employee, termination can only be done with "good cause." This means the firing must be based on reasons related to business needs and goals. An "at-will" employee can be discharged for any reason as long as it is not a discriminatory reason, even if the employee just does not work well together with the staff
Income Tax Withholding Laws
Income tax is levied on the earnings of most employees and is deducted from their gross pay. Income taxes can be imposed by federal, state, and local governments. Federal Income Tax (FIT) employs a percentage formula used by each employer to withhold a specified amount from each wage payment. State tax rates vary from state to state.
American Payroll Association (APA)
Membership in the association is open to anyone interested in or engaged in the support of payroll accounting The APA offers professional training seminars and various publications to its members. Each year, the APA administers examinations for the payroll accountant and awards certificates to those who pass the exams, Fundamental Payroll Certification (to demonstrate a baseline of payroll competency) and Payroll Professional Certification (for the experienced professional to demonstrate the full-range of payroll competency). This testing and certification process has helped the payroll profession to gain recognition in the business community. The APA has also established guidelines for the conduct of the payroll professional.
The Fair Labor Standards Act (FLSA) ( Federal Wage and Hour Law)
Minimum wage ($7.25 per hour) and overtime pay requirements. In addition, equal pay for equal work, employment of child labor, public service contracts, and wage garnishment. Coverage of employers engaged in interstate commerce or in production of goods and services for interstate commerce. Maintaining records that explain the basis of wage differentials paid to employees of opposite sex for equal work. Displaying a poster (from the regional office of the Wage and Hour division) informing employees of the provisions of the law. States' Minimum Wage and Maximum Hour Laws that also establish minimum wage rates for covered employees. Where both federal and state laws cover the same employee, the higher of two rates prevails (e.g., Rhode Island—$9.60 per hour). The State's wage orders that also can affect pay periods, pay for call-in and waiting times, rest and meal periods, absences, meals and lodging, uniforms, etc.
Paycheck (Payroll Accounting System)
Most paychecks carry a stub, or voucher, that shows the earnings and deductions
Job Descriptions (Human Resources System)
One way to protect companies from discrimination charges in hiring practices is to have true and clear job descriptions for every position in the organization The descriptions should highlight: • The job's essential functions, including any physical requirements. • Secondary duties. • Attendance requirements. • Education requirements and special skills needed. • Job holder's supervisor. • Positions that the applicant will be responsible for overseeing.
Occupational Safety and Health Administration (OSHA) 1970
Sets specific occupational and health standards for employers; requires that the records be kept of work related injuries, illnesses and deaths.
Unemployment Tax Acts
Tax levied on employers (Federal Unemployment Tax Act—FUTA) that is used to pay state and federal administrative expenses of the unemployment program. A credit granted against most of the FUTA tax if the employer pays a state unemployment tax. A smaller credit is granted to states that have not paid back borrowings from the federal government which were used to pay the cost of benefits to their eligible unemployed workers. State unemployment taxes (SUTA) on employers imposed by all states. These taxes are used to pay unemployment benefits. Standards set by the Social Security Act that result in a high degree of uniformity in the requirements of state unemployment laws. Employers' need to be aware of the SUTA laws in the states where they operate.
Federal Insurance Contributions Act
Tax on employees (set percent of their gross wages) and employers for the Federal Old-Age and Survivors' Trust Fund and the Federal Disability Insurance Trust Fund. Separate tax on employees and employers to finance the Health Insurance Plan—Medicare. Tax on net earnings of the self-employed individual (Self-Employment Contributions Act—SECA). Making payments to persons who are entitled to benefits under these social security taxes.
Uniformed Services Employment and Reemployment Rights Act of 1994
The Employee Retirement Income Security Act of 1974 (ERISA) covers employee pension and welfare plans established or maintained by any employer or employee organization representing employees engaged in commerce or in any industry or activity affecting commerce. Vesting conveys to employees the right to share in a retirement fund if they are terminated before the normal retirement age Currently, the law provides for full vesting of the employer's contributions in three years or gradually over six years (20 percent after two years and 20 percent a year for the next four years)
Vocational Rehabilitation Act of 1973
The act requiring certain federal contractors to take affirmative action for disabled persons.
APA code of ethics
To be mindful of the personal aspect of the payroll relationship between employer and employee, and to ensure that harmony is maintained through constant concern for the Payroll Professional's fellow employees. To strive for perfect compliance, accuracy, and timeliness of all payroll activities. To keep abreast of the state of the payroll art with regard to developments in payroll technologies. To be current with legislative developments and actions on the part of regulatory bodies, insofar as they affect payroll. To maintain the absolute confidentiality of the payroll within the procedures of the employer. To refrain from using Association activities for one's personal self-interest or financial gain. To take as one's commitment the enhancement of one's professional abilities through the resources of the American Payroll Association. To support one's fellow Payroll Professionals, both within and outside one's organization.
Reference Inquiry (Human Resources System)
Today, any type of reference checking has taken on new meaning—expensive litigation. In most cases, respondents to these inquiries will verify dates of employment only, with no information on former employees' work habits. To reduce the increasing number of "failure-to-warn" lawsuits, a number of states have passed laws providing protection from liability to employers who want to provide references. Recent court decisions have held the reference process to be priviledged.
Workers' Compensation Laws
Workers' compensation insurance protects employees and their dependents against losses due to work-related injury, illness, or death.
payroll register (Payroll Accounting System)
a multicolumn form used to assemble and summarize the data needed at the end of each payroll period. It provides a detailed listing of a company's complete payroll for that particular pay period. Thus, the payroll register lists all the employees who earned remuneration, the amount of remuneration, the deductions, and the net amount paid. used primarily to meet the requirements of the Fair Labor Standards Act. However, the register also provides information for recording the payroll entries and for preparing reports required by other federal, state, and local laws.
Record keeping system
advantageous to have four separate sets of records for each employee: • Personnel file—basic information (e.g., name, address, etc.). • Payroll file—salary and benefits. • Medical file—insurance and private medical data. • I-9 file—copies of the forms and the appropriate documents.
Federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996
all states must establish new-hire reporting programs Every employer is required to report the name, address, and social security number on each new employee and the employer's name, address, and federal employer identification number within 20 days of hire to the State Directory of New Hire Reporting. Submitting w-4 is enough for many states This information must then be forwarded within 5 business days by the state to the federal Office of Child Support Enforcement (OCSE) for entry into the National Directory of New Hires. Employers with operations in more than one state may file one report with the state of their choice. That state is then to share the information with the other states. main reason for this requirement: 1)Enforce Child Support 2) reduce fraud in the unemployment, workers' compensation, and public assistance programs Failure: fines of up to $25.00 per new hire
Walsh-Healey Act
applies to U.S. government contracts. It requires that a minimum wage, as well as overtime pay at 1.5 times regular pay rates, be paid to employees of manufacturers or suppliers entering into contracts with agencies of the federal government. Act that extended concept of prevailing wage to employers who manufacture or supply goods under government contracts and required time and a half. (The beginning of minimum wage)
employee history record (Human Resources System)
continuous record of the relationship between the employer and the employee. The employee history record is such a record and, in addition to providing personal and other information usually found on an application, provides space to record the employee's progress, attendance, promotions, performance appraisals, and salary increases. As with most records, the individual employee must have access to his or her human resource files.
change in payroll rate form (Human Resources System)
document that notifies the proper departments of a change in the employee's rate of remuneration.
Human Resources System
embodies all those procedures and methods related to recruiting, selecting, orienting, training, and terminating personnel Extensive recordkeeping procedures are required in order to: Provide data for considering promotions and changes in the status and earnings of workers. Provide the information required by various federal, state, and local laws. Justify company actions if investigated by national or state labor relations boards. Justify company actions in discussions with local unions or plant committees.
Payroll Profession
entry-level payroll clerk collects, reviews, approves, and records time records. clerk also updates attendance records, including vacation, sick, and personal days Responsibilities include: Time-worked data. Pay rate changes. Tax rate changes. Employee-authorized payroll deductions. New employee information. Marital and employee allowance changes. Providing information to the Finance Department concerning the amounts to be paid for taxes, health insurance premiums, retirement plans, etc., may also be part of the evolving duties of the advancing payroll professional final stages involves the completion of payroll tax returns, employee information returns, federal and state census surveys, and fringe benefit and welfare plan returns.
Outsourcing Payroll (Payroll Accounting System)
may be an affordable option for small businesses. in order to reduce the risk of unpaid payroll taxes, the following steps should be followed: • Hire only bonded service bureaus. • Do not allow the service bureau to sign tax returns. • Do not allow tax correspondence to be sent to the service bureau. • Request regular IRS transcripts of the company accounts.
Requisition for Personnel (Human Resources System)
notifies the Human Resources Department of the need for additional or replacement employees.
Davis-Bacon Act
requires contractors and subcontractors working on federal government construction projects to pay "prevailing wages" to their employees
Family and Medical Leave Act of 1993
requires employers to provide up to 12 weeks of unpaid leave for family and medical emergencies requires employers that have 50 or more employees within a 75-mile radius, for at least 20 weeks in the current or preceding calendar year, to grant workers unpaid leave for a family or medical emergency During the leave, employers must continue health-care coverage, and they must also guarantee that the employee will return to the same job or to a comparable position Employers can exempt the following: 1) The highest-paid 10 percent of their workforce. 2) Those who have not worked at least one year and at least 1,250 hours in the previous 12 months for the company.
Vietnam Era Veteran's Readjustment Act of 1974
requires federal contractors and subcontractors to take affirmative action toward employing veterans of the Vietnam War
Employee's Earnings Record (Payroll Accounting System)
separate payroll record on each employee provides the information needed to prepare periodic reports required by the withholding tax laws, the FICA tax law, and state unemployment or disability laws. Employers also use the employee's earnings record in preparing Form W-2, Wage and Tax Statement.
Payroll Accounting System
those procedures and methods related to the disbursement of pay to employees.
Affordable Care Act of 2010 (ACA)
two pieces of legislation: 1) Patient Protection and Affordable Care Act and 2) Health Care and Education Reconciliation Act. Individuals and families with incomes between 100 percent and 400 percent of the federal poverty level will receive subsidies to buy coverage. Insurance provided by employers must meet minimum essential coverage tests: 1) Value test—plan that pays at least 60 percent of medical expenses on average for a standard population, and 2) Affordability test—employee's premium contribution for self-only coverage for the lowest cost plan cannot exceed 9.5 percent of employee's household income. Applicable Large Employers (ALEs) are required to provide coverage for all full-time employees and for their dependents. There are two information reporting obligations for applicable large employers (Form 1095-C): A return to be filed with the IRS for each employee with information about the health coverage offered, or not offered, to that employee during the previous year. This return is due to the IRS by February 28 on paper or March 31 if filed electronically. An information statement to each full-time employee containing certain health coverage facts. This statement is due by January 31. The law also provides for a Medicare tax increase on wages over $200,000 for single filers and $250,000 for joint filers. This tax must be withheld by the employer of any worker whose wages exceed $200,000 (see Taxable Wage Base).