Vision Payroll

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.

This week’s question comes from Matt, a business owner. I received my unemployment rate from the Commonwealth of Massachusetts, but don’t remember receiving my rate for Massachusetts Health Insurance Contribution Act Tax. How do I determine my tax rate for Massachusetts Health Insurance Contribution Act Tax? Answer: Under Massachusetts General Laws c. 151A, §14G, Unemployment health insurance contribution; medical security trust fund, employers are effectively exempt from the tax for the first two calendar years they become subject to the tax, regardless of employee count. For the third calendar year, the rate is 0.04%, for the fourth calendar year, the rate is 0.08%, and for the fifth and subsequent years, the rate is 0.12%. Employers must pay this tax on subject wages up to $14,000 per year per covered employee. Contact Vision Payroll if you have questions on the Massachusetts Health Insurance Contribution Act.

According to the US Department of Labor, in the week ending April 25, the advance figure for seasonally adjusted initial claims was 631,000, a decrease of 14,000 from the previous week’s revised figure of 645,000. The 4-week moving average was 637,250, a decrease of 10,750 from the previous week’s revised average of 648,000.

The advance seasonally adjusted insured unemployment rate was 4.7 percent for the week ending April 18, an increase of 0.1 percentage point from the prior week’s unrevised rate of 4.6 percent.

The advance number for seasonally adjusted insured unemployment during the week ending April 18 was 6,271,000, an increase of 133,000 from the preceding week’s revised level of 6,138,000. The 4-week moving average was 6,076,000, an increase of 131,500 from the preceding week’s revised average of 5,944,500.

The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 4.894 million.

Could you use a systematic, objective tool to assess regulatory or policy compliance in the workplace? Would you like to identify areas of strength? Do you need to note areas of concern? Sign on today to MyHRSupportCenter and take the 3-minute HR audit. You’ll be asked a series of questions that will take just three minutes to complete. Within one business day you’ll receive an e-mail notifying you when your results are complete. For questions on or assistance with the results, Vision Payroll can provide you with the name of a competent HR professional in your area. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

Effective May 1, 2009, revised withholding tables are in effect for the New York State personal income tax and the Yonkers resident personal income surcharge tax for certain taxpayers. Vision Payroll will be using the revised tables for all payrolls after April 30, 2009. These changes are required by recent law changes. There are no changes to the New York City personal income tax rates or the Yonkers nonresident earnings tax rate. The revisions are in accordance with the new rules promulgated in Publication NYS-50-T.1, Revised New York State and Yonkers Withholding Tax Computation Rules. Employers are advised that Form IT-2104, Employee’s Withholding Allowance Certificate, has also been revised to reflect the changes and employers should encourage impacted taxpayers to complete the revised form to prevent under-withholding. Contact Vision Payroll if you have any questions on these changes.

Vision Payroll has learned from informal discussions with the Massachusetts Division of Unemployment Assistance that some taxpayers may have incorrectly received letters indicating that they were exempt from filing the Fair Share Contribution Report for 2009. As a precaution, Vision Payroll is recommending that taxpayers that have received this letter file the Fair Share Contribution Report regardless. It is generally better to file a form unnecessarily than to not file a form that is required. Contact Vision Payroll if you have any questions or need assistance filing the Fair Share Contribution Report or the Employer Health Insurance Responsibility Disclosure (HIRD) Report.

The Internal Revenue Service (IRS) recently released an advance copy of Notice 2009-27, Premium assistance for COBRA benefits. 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 provided an overview of Notice 2009-27 when it was first issued. Today we will be reviewing Additional Issues under Notice 2009-27.

The IRS indicated in Notice 2009-27 that it is aware of additional issues not addressed in Notice 2009-27. The IRS and the US Department of the Treasury are still considering these issues and may issue future guidance on them.

This concludes our summary of Notice 2009-27. Contact Vision Payroll if you have any questions on Notice 2009-27.

According to the California Employment Development Department (EDD), employers statewide directly affected by the decline in population of the Sacramento River Fall Run Chinook Salmon may request up to a 60-day extension of time from EDD to file their State payroll reports and/or deposit State payroll taxes without penalty or interest. This extension may be granted under Section 1111.5 of the California Unemployment Insurance Code (CUIC). Written request for extension must be received within 60 days from the original delinquent date of the payment or return to file/pay. Contact Vision Payroll if you’ve been affected and need to file the extension request.

This week’s question comes from Carolyn, a business owner. I recently hired some new employees. Am I required to file Massachusetts Form 1700-HI? Answer: Employers in Massachusetts should count the number of employees who worked or received pay for any part of the pay period that includes the twelfth of the month for each of the three months in the quarter. If the sum of those three numbers is eighteen or more, then the employer is required to file Form 1700-HI and pay tax at the rate assigned by the Massachusetts Division of Unemployment Assistance. Contact Vision Payroll if you have any questions on Form 1700-HI, Health Insurance Quarterly Contribution Report.