Vision Payroll

Monday, May 25, 2009 will be Memorial Day, a federal holiday. The offices of Vision Payroll will close May 22 at 5 pm EDT and re-open Tuesday May 26. Most banks will also be closed in observance of the holiday.

Payrolls dated May 25 will be paid May 22 unless a previous change in schedule has been submitted. Payrolls submitted after these processing deadlines will be pushed back until the next available processing day. No changes are required for payrolls dated May 28.

The next federal holiday will be Saturday, July 4, 2009, Independence Day. Contact Vision Payroll as soon as possible to make changes to or for questions on your processing schedule.

Secretary of Labor Hilda L. Solis recently released the US Department of Labor’s (DOL) fiscal year (FY) 2010 budget request. The budget requests $104.5 billion including $13.3 billion in discretionary funding and 17,477 full-time equivalent employees (FTEs). This represents an increase of $400 million in non-Recovery Act discretionary spending and 997 non-recovery Act FTEs.

Solis said that the DOL will measure its progress in FY 2010 through its progress toward meeting four strategic goals:

Goal 1 — A Prepared Workforce: Develop a prepared workforce by providing effective training and support services to new and incumbent workers and supplying high quality information on the economy and labor market.

Goal 2 — A Competitive Workforce: Meet the competitive labor demands of the worldwide economy by enhancing the effectiveness and efficiency of the workforce development and regulatory systems that assist workers and employers in meeting the challenges of global competition.

Goal 3 — Safe and Secure Workplaces: Promote workplaces that are safe, healthful and fair; guarantee workers receive the wages due them; foster equal opportunity in employment; and protect veterans’ employment and re-employment rights.

Goal 4 — Strengthened Economic Protections: Protect and strengthen worker economic security through effective and efficient provision of unemployment insurance and workers’ compensation; ensuring union transparency; and securing pension and health benefits.

To meet these goals, the DOL plans to hire 670 new enforcement staff including 200 new Front-line Investigators for the Wage and Hour Division, 130 new Occupational Safety and Health Administration (OSHA) officers, 75 new staff at the Employee Benefits Security Administration (EBSA) and 213 new staff at the Office of Federal Contract Compliance (OFCCP).

The DOL also plans to use $8.7 billion for employment and training programs, including $50 million for green jobs. From the Recovery Act funding, the DOL intends $500 million for competitive grants for green worker training. Another $135 million will go to the Career Pathways Innovation Fund, formerly known as Community-Based Job Training Grants. The new program will focus on developing career pathways in community colleges for high-growth careers in partnership with workforce investment boards, faith-based groups and other community groups. Transitional jobs program testing will receive $50 million to see if such programs can help individuals with severe employment barriers gain the skills and experience they need to find unsubsidized jobs. YouthBuild is scheduled to receive $114 million for low-income and at-risk youth to receive the opportunity to obtain a high school diploma or GED while building affordable housing and learning the skills necessary for construction jobs. An additional 7,200 homeless veterans, especially women, would be the beneficiaries of $255 million as would green jobs training for veterans and employment workshops for veterans to assist in the transition to civilian life.

Vision Payroll has provided this brief summary of the budget proposal. Interested parties may find more detailed information at the DOL website.

Nonfarm payroll employment continued to decline in April (-539,000), and the unemployment rate rose from 8.5% to 8.9%, the Bureau of Labor Statistics of the US Department of Labor reported recently. Since the recession began in December 2007, 5.7 million jobs have been lost. In April, job losses were large and widespread across nearly all major private-sector industries. Overall, private-sector employment fell by 611,000.

The number of unemployed persons increased by 563,000 to 13.7 million in April, and the unemployment rate rose to 8.9%. Over the past 12 months, the number of unemployed persons has risen by 6.0 million, and the unemployment rate has grown by 3.9 percentage points.

Unemployment rates rose in April for adult men (9.4%) and blacks (15.0%). The jobless rates for adult women (7.1%), teenagers (21.5%), whites (8.0%), and Hispanics (11.3%) were little changed over the month. The unemployment rate for Asians was 6.6% April, not seasonally adjusted, up from 3.2% a year earlier.

Among the unemployed, the number of job losers and persons who completed temporary jobs rose by 571,000 in April to 8.8 million. This group has more than doubled in size over the past 12 months.

The number of long-term unemployed (those jobless for 27 weeks or more) increased by 498,000 to 3.7 million over the month and has risen by 2.4 million since the start of the recession in December 2007.

The civilian labor force participation rate rose in April to 65.8%, and the employment-population ratio was unchanged at 59.9%. The employment-population ratios for adult men and women showed little or no change over the month. However, since December 2007, the men’s ratio was down by 4.4 percentage points, while the women’s ratio was down by 1.3 percentage points.

In April, the number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 8.9 million; however, the number of such workers has risen by 3.7 million over the past 12 months.

This week’s question comes from Rosa, a business owner. I paid over $5,000 in premiums for former employees who are eligible for the COBRA premium subsidy. The reduction in the federal tax deposit was only about $3,000. Why is my COBRA credit limited? Answer: Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a credit on their Form 941 to be reimbursed for the assistance provided. Vision Payroll will limit the amount of the credit utilized to offset any particular payroll’s liability to the total of the federal tax deposit for that payroll. Credits in excess of that payroll’s federal tax deposit will be limited and the overage will be used to offset future liabilities for that quarter, unless the payroll is the last of the quarter. Contact Vision Payroll if you have any questions on the COBRA premium subsidy.

According to the US Department of Labor, in the week ending May 2, the advance figure for seasonally adjusted initial claims was 601,000, a decrease of 34,000 from the previous week’s revised figure of 635,000. The 4-week moving average was 623,500, a decrease of 14,750 from the previous week’s revised average of 638,250.

The advance seasonally adjusted insured unemployment rate was 4.8% for the week ending April 25, an increase of 0.1 percentage point from the prior week’s unrevised rate of 4.7%.

The advance number for seasonally adjusted insured unemployment during the week ending April 25 was 6,351,000, an increase of 56,000 from the preceding week’s revised level of 6,295,000. The 4-week moving average was 6,207,250, an increase of 125,250 from the preceding week’s revised average of 6,082,000.

The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 4.953 million.

You’ve certainly heard stories in the media about the swine flu, officially known as influenza a virus subtype H1N1 “A(H1N1)”. The global response is being coordinated by the World Health Organization or WHO, but how your company responds can impact both the health of your employees and the health of your business. Employees are concerned about how A(H1N1) will impact the workplace. To learn what actions you should take to prepare your company for a possible pandemic, be sure to read this month’s featured article by the HR Pros at MyHRSupportCenter, 10 Action Items against H1N1 aka Swine Flu Threat.

Learn what you should consider as you decide how to address employee concerns, who you should establish communications plans with, how you should deal with employees who exhibit symptoms and much more that can be used not only when dealing with A(H1N1), but also when preparing for future pandemics.

To learn more, sign into MyHRSupportCenter and read this month’s featured article. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

Due to severe storms and flooding in Minnesota on March 16, 2009, President Barack Obama declared the following counties a federal disaster area: Clay, Norman, Traverse, Wilkin, Beltrami, Marshall, and Polk. Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after March 15, 2009 and before March 31, 2009 as long as the deposits were made by March 30, 2009. Also, affected taxpayers will have until May 15, 2009 to file most tax returns. Contact Vision Payroll if you were affected by the storms and flooding and need further information on the relief provided by the IRS.

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2009-4. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA).

In this Opinion Letter, the DOL concluded that a convention and visitors services sales manager whose “primary duty is marketing and promotional work to enhance the city as a destination for conventions and visitors” qualified for the administrative exemption to the FLSA. In addition to a salary of at least $455 per week, to qualify for the administrative exemption an employee must perform office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers and a primary component of which involves the exercise of independent judgment and discretion about matters of significance.

The employee in question was primarily involved in marketing, which is considered office or non-manual work. This is true even though the employee performed some support and clerical duties, since this non-exempt work was not the employee’s primary duty. Furthermore, the employee exercised independent judgment and discretion since the employee performed important duties on matters of significant economic import to the city with minimal supervision.

The DOL did not address whether the employee qualified under the professional exemption since the matter was moot.

State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about this Opinion Letter.

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2009-3. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA).

In this Opinion Letter, an employer requested an opinion as to whether its method of calculating retroactive overtime pay was compliant with the FLSA. After a reorganization at the employer, certain formerly exempt employees no longer performed the duties that qualified them as exempt. These employees had been paid a salary even after they had become non-exempt employees. This salary might have been reported on their bi-weekly pay stubs as 100 hours worked at $18.25 per hour for a salary of $1,825.00 regardless of the number of actual hours worked. This was due to an understanding that these employees would generally work at least fifty hours each work week and the limitations of the employer’s payroll department and software.

The employer’s method for calculating overtime for the newly non-exempt employees was as follows:

1. Determine the actual hours worked by an employee for a given week.
2. Calculate the equivalent of the employee’s weekly salary by dividing the bi-weekly salary by two.
3. Divide that weekly salary by the number of hours worked in that week.
4. Divide that resulting hourly rate equivalent by two in order to determine the hourly overtime premium.
5. Multiply that overtime premium rate by the overtime hours worked in that week.

In all cases, the resulting hourly rate calculated exceeded the applicable minimum wage.

The Opinion Letter stated that the fact the payroll software displayed an hourly rate on the check did not mean that the employer was required to pay overtime based on that rate; therefore, the employer’s method of calculating overtime was in compliance with the FLSA.

State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about this Opinion Letter.

Effective May 1, 2009, new withholding Chart 3 took effect, increasing the percentage of federal income tax to be withheld for Arizona withholding tax purposes. Employees subject to Arizona withholding should see the impact in their next paycheck. Chart 3 applies to wages paid after April 30, 2009 and before January 1, 2010. Withholding Chart 4, which has also been released by the Arizona Department of Revenue (AZDOR), will apply to wages paid after December 31, 2009 and before July 1, 2010. Wages paid after June 30, 2010 will have withholding tax calculated based on new tables yet to be released by the AZDOR and will no longer have tax withholding calculated based on a percentage of federal withholding.

A revised Arizona Form A-4, Employee’s Arizona Withholding Percentage Election, is now available to allow employees to adjust their withholding. Withholding chart 1 and withholding chart 2 for pension and annuity payments were also released and are identical to the changes for those earning less than $15,000. Contact Vision Payroll if you have any questions on the withholding changes.