Vision Payroll

This week’s question comes from Luna, a business owner: I have employees who bicycle to work; can I reimburse them for their costs? Answer: §132(f) of the Internal Revenue Code has been amended by §211 of the Emergency Economic Stabilization Act (Public Law 110-343 or the “bailout bill”) so that effective with tax years beginning after December 31, 2008, employers may reimburse employees who “regularly [use] the bicycle for a substantial portion of the travel between [their] residence and place of employment” as long as the employee does not receive any other “qualified transportation fringe”. Costs to be reimbursed include “purchase of a bicycle and bicycle improvements, repair, and storage”. The limitation is $20 per month multiplied by the number of qualified commuting months. Contact Vision Payroll if you have any question on reimbursements for any qualified transportation fringe benefit.

According to the US Department of Labor, in the week ending November 1, the advance figure for seasonally adjusted initial claims was 481,000, a decrease of 4,000 from the previous week’s revised figure of 485,000. The 4-week moving average was 477,000, unchanged from the previous week’s revised average of 477,000.

Are you ready to make a higher contribution to your retirement plan in 2009? Did your company establish an HSA and you’re not sure how much you can put away? Do you need to know the maximum Social Security tax that can be withheld? The election results are in and so are most of the 2009 inflation adjustments for payroll facts and figures. We’ve collected what you’ll need and added them to our 2007 and 2008 presentation and now you can get them all in one place. Click Tutorials, then Important Facts and Figures. We’ll update them as needed so you can always visit VisionPayroll.com when you need the latest results.

Vermont Governor James H. Douglas announced recently that pursuant to Title 21 of the Vermont Statutes, Annotated §384, the minimum wage for the state of Vermont will increase to $8.06 per hour effective January 1, 2009. The law requires an adjustment to the minimum wage be calculated each year. The adjustment is tied to the change in the federal Consumer Price Index, US city average, not seasonally adjusted (CPI-U) for the 12 months ending in August and cannot increase more than five percent per year. The 5.4% increase in the CPI-U will result in an increase of the statutory maximum of five percent or $0.38 for 2009. Contact Vision Payroll if you have any questions on the Vermont minimum wage increase or visit our Minimum Wage Chart.

California Attorney General Edmund G. Brown, Jr. recently filed suit against three trucking companies alleging that the companies improperly classified their employees as independent contractors. The suits filed against Guasimal Trucking, LLC, Noel A. Moreno and Emma R. Moreno, owners of Moreno Trucking, and Edmundo Jose Lira, operator of a trucking business. All three companies hire drivers to transport cargo from the ports of Los Angeles and Long Beach. The suits allege that by misclassifying their drivers the companies fail to pay Unemployment Insurance taxes, to pay Employment Training Fund taxes, to withhold and transmit State Disability Insurance taxes, to withhold State income taxes and file a withholding return, to provide workers’ compensation insurance, and to provide employees with pay stubs. All these items are required under various sections of California law. Please contact your labor law attorney immediately if you have questions on the proper classification of your workers as employees or independent contractors. Vision Payroll will work with you to help ensure proper taxes are paid, returns filed, and pay stubs provided.

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. Earlier posts discussed the definition of an administrative employee. The following are examples of specific jobs that generally either qualify or don’t qualify the employee under the administrative exemption:

• Insurance claims adjusters qualify whether they work for an insurance or other type company.
• Financial services employees who analyze information, advise customers, market, service or promote the products qualify, but not those whose primary duty is selling.
• Employees who lead a team of employees “assigned to complete major projects for the employer”, even those without direct supervisory authority should qualify.
• Executive assistant or administrative assistant to a business owner or senior executive will qualify if the assistant has been delegated authority over significant matters.
• Human resources mangers who “formulate, interpret or implement employment policies” do qualify. Personnel clerks who screen applicants for minimum acceptable standards as set by others generally do not qualify.
• Management consultants who propose changes in a business’s operation qualify.
• Purchasing agents with authority to make significant purchases qualify even if the agents need consultation for unusually large commitments.
• Inspectors “along standardized lines involving well-established techniques and procedures” and those doing other ordinary inspection work do not qualify.
• Examiners or graders do not qualify, even if the employee has progressed to a point that reference to written standards is unnecessary because of acquired knowledge.
• Comparison shoppers who report prices to a retail stores buyer do not qualify, but the buyer who evaluates the information to set the prices does qualify.
• Inspectors and investigators in the public sector, including those involved in “fire prevention or safety, building or construction, health or sanitation, environmental or soils specialists” among others do not qualify.

Note that merely giving someone a title does not qualify the employee as exempt unless the duties and responsibilities that the job encumbers are also designated. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

The Labor Department of the Arizona Industrial Commission announced recently that pursuant to Arizona Revised Statutes §23-363, the minimum wage for the state of Arizona will increase to $7.25 per hour effective January 1, 2009. The law requires an adjustment to the minimum wage be calculated each year. The adjustment is tied to the US All-Urban Consumer Price Index (CPI) for the 12 months ending in August. The 5.4% increase in the CPI will result in an increase of $0.35 for 2009. Contact Vision Payroll if you have any questions on the Arizona minimum wage increase or visit our Minimum Wage Chart.

This week’s question comes from Dan, a business owner: I just found out that I had an ADP failure. What can I do to fix it? Answer: ADP failures are unfortunately too common, but Vision Payroll can easily help fix them. ADP, or Actual Deferral Percentage, and ACP, or Actual Contribution Percentage, are two tests that must be passed by many 401(k) retirement plans. These tests serve to limit the benefits provided to highly compensated employees (HCEs) in relation to the benefits provided to non-highly compensated employees (NHCEs).

  

In the ADP test, the average salary deferral of each group is calculated and compared to the other. The ADP of the HCEs may not exceed the ADP of the NHCEs by 1.25% or the lesser of the average NHCE percentage plus 2% or the average NHCE percentage times two. If it does, the plan has an ADP failure.

  

There are various methods for correcting an ADP failure depending on how quickly the failure is discovered. Unfortunately, many companies are unaware of the problems caused by ADP failures until it’s too late. Generally, if too much time has elapsed, fixing an ADP failure will become more expensive. Vision Payroll can work with your plan administrator to fix the ADP failure and provide solutions to make sure there are no ADP failures in your future.

According to the US Department of Labor, in the week ending October 25, the advance figure for seasonally adjusted initial claims was 479,000, unchanged from the previous week’s revised figure of 479,000. The 4-week moving average was 475,500, a decrease of 5,000 from the previous week’s revised average of 480,500.

Do your employees still waste time and money driving around to get a pay check cashed? Direct deposit is a great solution, but what about employees without a bank account. A Vision Payroll Platinum Pay Card is the answer. With low fees to the employee, it’s usually significantly less expensive than a check cashing service or banks that charge up to $6 to cash a check. And there’s no worry for an employee on vacation or stuck in bad weather. Each week’s pay will automatically be added to the card. Accepted at more than 24 million locations worldwide that accept Visa® debit cards and with the ability to get cash at more than 1 million ATMs, a Vision Payroll Platinum Pay Card is safer than cash. Employees get free account access online or multi-lingual customer support available 24/7/365. Best of all, there’s no charge to employers other than a nominal direct deposit fee. Contact Vision Payroll today or get your Vision Payroll Platinum Pay Card right now.