Vision Payroll

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2008-13. 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).

This Opinion Letter examines whether under the FLSA paid emergency medical technicians (EMTs) may also volunteer their services for the local volunteer emergency crew (crew). The crew in question started providing emergency services in the county in 1970. A tax-exempt volunteer organization, it maintains it own by-laws and policies, elects a Board of Trustees made up of the general public, and maintains virtually complete control over its volunteers. In 2002, the county hired a Director of Emergency Services and five EMTs. The question is whether the paid EMTs may continue to volunteer for the crew under the FLSA.

The DOL considered both the FLSA and the decision in Benshoff v. City of Virginia Beach, 180 F.3d 136 (4^th Cir. 1999). It found the following similarities between Benshoff and the instant case:

1. The volunteer squads provided services before the county became involved.
2. The volunteer squads had their own officers and directors.
3. Even though the county holds certification power, the rescue squads reserve the right to accept or reject certified volunteers.
4. The county provides some funding to the squads, but the squads also have other funding sources.

One difference was that in the case under consideration, the county EMTs performed the same services as the volunteers, while in Benshoff, only the volunteers performed advanced life support.

The DOL concluded that the county has not eviscerated the independent nature of the crew and that the crew remains separate and independent under 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.

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2008-12. 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). This Opinion Letter discusses whether bonuses must be included in the regular rate of pay for overtime calculations under the FLSA.

On December 22, 2005, a city paid a bonus to generally all full-time emergency communications operators “in recognition of the high stress level of the employees’ duties.” The city had not previously promised this bonus, but the union representing the employees needed to approve it before payment. Since discretionary bonuses may be excluded from the regular rate of pay for overtime rate calculations, the Opinion Letter must resolve if the bonus be discretionary.

The city was concerned that even though it considered the bonus discretionary, it might be construed as non-discretionary since the city reached a memorandum of understanding (MOU) with the union representing the workers on December 14, 2005 and did not pay the bonus until December 22, 2005. The DOL concluded that the bonuses were not issued “pursuant to the MOU, but rather used the agreement to formalize a decision previously made.” Therefore the bonus was considered discretionary and “excludable from the regular rate of pay under §7(e)(3).”

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.

This week’s question comes from Kelly, a business owner. I already gave my employees their W-2s. Do I still need to file Form W-3? Answer: Anyone required to provide a Form W-2 to an employee must file Form W-3, Transmittal of Wage and Tax Statements. Employers may file Form W-3 on paper if transmitting fewer than 250 Forms W-2. Transmit Copy A of Form W-2 with Form W-3 to the Social Security Administration (SSA). Employers transmitting 250 or more Forms W-2 must file them electronically. All employers are encouraged by the SSA to file electronically, even if not otherwise required, to reduce costs and increase accuracy. Vision Payroll files Forms W-3 for all clients electronically with the SSA.

According to the US Department of Labor, in the week ending February 7, the advance figure for seasonally adjusted initial claims was 623,000, a decrease of 8,000 from the previous week’s revised figure of 631,000. The 4-week moving average was 607,500, an increase of 24,000 from the previous week’s revised average of 583,500.

Employers must file the 2008 Form W-3, Transmittal of Wage and Tax Statements, on or before March 2, 2009 if filing by paper or March 31, 2009 if filing by an approved electronic means.

Employers should check only one box in section b, Kind of Payer. The only exception is for Third-party sick pay, which should be checked along with one other box if third-party sick pay is reported on the Form W-3.

Box c should include only the total number of valid Forms W-2 filed, not including voids.

Box h should contain other EINs (employer identification numbers) used on Form 941, Form 943, Form 944, or Form CT-1 during the year. An example is a prior owner for whom the filer is a successor.

Boxes 1 through 11 should contain a simple arithmetic sum of all the Forms W-2 filed with this Form W-3 for the respective box.

Box 12 should also contain a sum of all the Forms W-2 filed with this Form W-3, but should be totaled irrespective of and without reference to any code.

Box 14 should contain the “federal income tax withheld on third-party payments of sick pay” even though the amount was already reported in box 2.

Box 15 should contain the two-character abbreviation for the state being reported, but if more than one state is reported, only an X should be entered. Likewise, boxes 16-19 should include the total for all such boxes, regardless of how many are reported.

Employers should reconcile Forms W-3 not only to the individual Forms W-2, but also to the sum of Forms 941, Forms 943, Forms 944, or Forms CT-1 filed for the year.

Vision Payroll files Forms W-3 for all clients electronically with the Social Security Administration. Contact Vision Payroll if you have any questions on Form W-3.

The US Department of Labor recently issued Administrator signed Opinion Letter FLSA2008-11. 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). This Opinion Letter discusses whether Assistant Athletic Instructors (AAIs) qualify as teachers exempt under the FLSA.

The facts are that AAIs “teach proper skills and skill development to student-athletes”; a bachelor’s degree is required although a master’s degree or equivalent experience is preferred. The AAIs spend more than half their time teaching “physical health, team concepts, and safety.” Although they work under a head coach, they also exercise considerable discretion and independent judgment.

The AAIs spend time on activities that don’t include teaching activities, “such as developing effective recruitment strategies, recruiting and following up on prospective students, researching and targeting high schools and athletic camps as sources for potential student-athletes, and visiting high schools and athletic camps to conduct student interviews.” Since they spend more than half their time on teaching activities, however, the non-teaching time is not determinative. Furthermore, the institutions of higher learning where the AAIs work would presumably qualify as educational establishments. Therefore, the AAIs would qualify as exempt from minimum wage and overtime requirements under 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.

Monday, February 16, 2009 will be Washington’s Birthday, a federal holiday. Although the offices of Vision Payroll will be open and payrolls will be processed, most banks will be closed in observance of the holiday.

Payrolls dated February 16 will be paid February 13 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 February 19.

The next federal holiday will be Monday, May 25, 2009, Memorial Day. Contact Vision Payroll as soon as possible to make changes to or for questions on your processing schedule.

The US Department of Labor recently issued Administrator signed Opinion Letter FLSA2008-10. 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). This Opinion Letter discusses whether employers must pay for replacement uniforms for employees who repeatedly damage uniforms in non-work-related activities.

A tipped employee who worked in a dining facility received $2.13 in cash wages and the employer claimed a tip credit so that the employee received at least the federal minimum wage. The employer requires the employee to wear a uniform that is provided by the employer at no cost to the employee. The employer provides an adequate number of uniforms to employees “relative to the nature of their work assignments and job duties.” The uniform does not require any special laundering.

One employee damaged several uniforms while riding a skateboard on days that he wasn’t working. The employer wanted to know if it must continuously replace such uniforms at no cost to the employee or if the employee could be charged for the uniforms. Employers may not charge directly or indirectly for uniforms required as a condition of employment if the charge would reduce the employee’s wages below the required minimum wage or overtime pay. The employer must also replace uniforms damaged at work using the same guidelines. Employers may charge, however, both for additional uniforms voluntarily purchased by any employee beyond the normal allotment and for uniforms damaged by the employee during personal use without violating 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.

Nonfarm payroll employment fell sharply in January (-598,000) and the unemployment rate rose from 7.2% to 7.6%, the Bureau of Labor Statistics of the US Department of Labor reported recently. Payroll employment has declined by 3.6 million since the start of the recession in December 2007; about one-half of this decline occurred in the past 3 months. In January, job losses were large and widespread across nearly all major industry sectors.

Both the number of unemployed persons (11.6 million) and the unemployment rate (7.6%) rose in January. Over the past 12 months, the number of unemployed persons has increased by 4.1 million and the unemployment rate has risen by 2.7 percentage points.

The unemployment rate continued to trend upward in January for adult men (7.6%), adult women (6.2%), whites (6.9%), blacks (12.6%), and Hispanics (9.7%). The jobless rate for teenagers was unchanged at 20.8%. The unemployment rate for Asians was 6.2% in January, not seasonally adjusted.

Among the unemployed, the number of job losers and persons who completed temporary jobs increased to 7.0 million in January. This measure has grown by 3.2 million during the last 12 months.

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 2.6 million in January. Over the past 12 months, the number of long-term unemployed was up by 1.3 million. The number of persons unemployed less than 5 weeks rose to 3.7 million in January.

This week’s question comes from Carolyn, a business owner. I read recently about statutory employees and would like to find out if some of our new hires would qualify as statutory employees. Can you tell me more about statutory employees? Answer: Common law considers some workers employees and some independent contractors. By statute, some independent contractors are treated as employees for employment tax purposes.

There are four categories of independent contractors that might be statutory employees:

1. A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission.
2. A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company.
3. An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done.
4. A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. The goods sold must be merchandise for resale or supplies for use in the buyer’s business operation. The work performed for you must be the salesperson’s principal business activity.

If the independent contractor must perform the services personally as an explicit or implicit clause of the service contract, if the independent contractor does not have a substantial investment in the non-transportation facilities property and equipment, and the services are performed for the same payer on a continuing basis, then the payer must withhold social security and Medicare tax from payments to contractors.

For workers in categories 1 and 4 above who have payments subject to social security and Medicare tax under these rules, the payments are also considered wages for federal unemployment (FUTA) purposes. Payments to workers in categories 2 and 3 above are never considered wages for FUTA purposes.

Payments to statutory employees are never subject to federal income tax withholding.

Report payments to statutory employees on Form W-2, box 1, box 3 (to the wage limit), and box 5. Be sure to check the box 13 “Statutory employee” checkbox on the Form W-2. Statutory employees report the amount from Form W-2, box 1 on Form 1040, Schedule C, line 1 and complete the checkbox on that line. They may also deduct related business expenses on Schedule C, to the extent allowable by law.

Contact Vision Payroll if you have any questions on statutory employees.