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Employers may unknowingly trigger risks of labor violation penalties and fines by improperly classifying individuals as independent contractors. By doing so, employers may also be denying workers certain employee benefits (e.g., overtime and the federal Family Medical Leave Act). In fact, a 2007 Cornell University study had estimated the average unemployment insurance taxable wages (from 2002-2005) that were left underreported due to employers misclassifying workers as independent contractors was $4.28 billion for the state of New York alone.

Classify Employees and Independent Contractors Correctly

Employers need to take the following steps to respond proactively to recent changes:

• Become aware of developments and efforts relating to the “Worker Classification Initiative,”
• Know the various types of tests such as the 20-factor test used by the Internal Revenue Service (IRS) to distinguish between employees and independent contractors, and
• Take certain immediate actions in light of increased enforcement by the US Department of Labor.

Find Out More About Conducting Your Contractor Classification Check-ups Now

For more information, be sure to read the featured article by the HR pros at MyHRSupportCenter, Time to Conduct Your Contractor Classification Check-ups. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

The Arizona Department of Economic Security has announced the taxable wage base for 2011. The wage base will remain at $7,000 for 2011.

Some Tax Rates Adjusted Slightly for 2011

Employer rates will go from a low 0.02% for employers with a positive ratio of 13% or more to a high of 5.86% for employers with a negative ratio of 13% or more. The new employer rate remains at 2.00% for 2011.

Find Out the Wage Base for All States by Visiting the Vision Payroll Unemployment Taxable Wage Base Page

Contact Vision Payroll if you have any questions on Arizona unemployment taxable wage base or visit our Unemployment Taxable Wage Base page.

The Massachusetts Division of Occupational Safety (DOS) issues prevailing wage schedules to cities, towns, counties, districts, authorities, and agencies of the Commonwealth for construction projects and several other types of public work. These prevailing wage schedules contain hourly wage rates that workers must receive when working on a public project.

DOS Recently Released PW-2010-13-12.13.10 on Prevailing Wages

The DOS regularly issues Prevailing Wage Opinion Letters and recently released PW-2010-13-12.13.10. This letter confirms the job classifications “for workers who perform certain tasks related to the construction of either concrete or asphalt sidewalks.”

DOS Job Classifications of the Tasks

According to the DOS, the relevant job classifications are the following:

1. Removal of the existing materials (old sidewalk) using a backhoe or front end loader.
2. Removal of existing materials with hand tools, primarily shovels, or jackhammer.
3. Gravel and sub-grade materials are put in place using hand shovels and rakes.
4. With respect to concrete sideways, the installation with hammers and stakes of wood edging of 1 inch by 4 inches. Thereafter, the area is filled with concrete from a pre-mix truck using shovels, rakes and wheelbarrows. The cement is leveled and swept with brooms.
5. In the asphalt installation, the process is similar to the concrete but the asphalt is leveled with rakes and shovels. It is then rolled with a hand roller.
6. Installation of curbing using a front end loader and guidance of the curbing into place

The DOS Concludes that the Work Is Subject to the Prevailing Wage Law

With the exception of the operation of the backhoe, front end loader, and jackhammer, described in items 1, 2 and 6, each of the listed tasks is paid at the rate for “Laborer” as indicated on the rate sheet.

The operation of a jackhammer, as described in item 2, is paid at the rate for “Jackhammer & Paving Breaker Operator” as indicated on the rate sheet. 

The operation of a backhoe or loader, as described in items 1 and 6, is paid at the rate for a “Backhoe/Front End Loader” as indicated on the rate sheet.

Vision Payroll Assists Employers Preparing Certified Weekly Payroll Reports

Vision Payroll is ready to assist employers in gathering information for certified weekly payroll reports. Vision Payroll can also prepare the certified weekly payroll reports for submission to the proper authorities. Contact Vision Payroll today to get started.

According to the California Employment Development Department (EDD), employers in the county of Mariposa directly affected by the winter storms 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).

Mariposa County in a Declared State of Emergency Due to Winter Storms

Written request for extension must be received within 60 days from the original delinquent date of the payment or return to file/pay.

Vision Payroll Can Assist Mariposa County Clients with Extension Application

Contact Vision Payroll if you’ve been affected and need to file the extension request.

The Massachusetts Division of Occupational Safety (DOS) issues prevailing wage schedules to cities, towns, counties, districts, authorities, and agencies of the Commonwealth for construction projects and several other types of public work. These prevailing wage schedules contain hourly wage rates that workers must receive when working on a public project.

DOS Recently Released PW-2010-12-11.08.10 on Prevailing Wages

The DOS regularly issues Prevailing Wage Opinion Letters and recently released PW-2010-12-11.08.10. This letter clarifies “that the installation of photovoltaic modules or linking of the individual modules together to form photovoltaic arrays, including hardware is to be paid at the rate for an ‘Electrician.’” Furthermore, if portions of the roof structure are removed or re-roofed or flashing or other roofing material is required to be installed as part of the project, such work is to be paid at the rate for a ‘Roofer.’”

DOS Job Classifications of the Tasks

According to the DOS, “the relevant job classifications of the tasks listed in [the] request” are the following:

1. Construction of a Unirac ULA support structure for the photovoltaic modules: The Unirac ULA is an aluminum pipe support structure for photovoltaic modules that was constructed on the roof of the building in question.
2. Attaching the supporting structure to the roof with bolts.
3. Construction of a rail system with square tubing which is used to act as an angled base where the photovoltaic modules are installed.

The DOS Concludes that the Work Is Subject to the Prevailing Wage Law

“An examination of the applicable collective bargaining agreements and nature of the work confirms that the rate for ‘Electrician’ applies to such work including the installation of mounting brackets and attachment of such brackets to the roof as these tasks are integral to the to the installation of the modules themselves.”

Vision Payroll Assists Employers Preparing Certified Weekly Payroll Reports

Vision Payroll is ready to assist employers in gathering information for certified weekly payroll reports. Vision Payroll can also prepare the certified weekly payroll reports for submission to the proper authorities. Contact Vision Payroll today to get started.

This week’s question comes from Jordan, a company controller. For most employees in our company, the Massachusetts wages reported on the Form W-2 equal the federal wages on the Form W-2. My Massachusetts wages, however, are higher than my federal wages. Why don’t my Massachusetts wages equal my federal wages on my W-2? Answer: There may be several reasons why Massachusetts wages don’t equal federal wages on a Form W-2.

Differences Between Federal Wages and Massachusetts Wages on Form W-2

Although Massachusetts generally follows federal law on income taxation of wage benefits, certain items may increase or decrease Massachusetts wages as compared to federal wages. Among the differences are the following:

1. Employee and employer contributions to Massachusetts governmental unit §414(h) retirement plans are taxable for Massachusetts purposes and not for federal purposes,
2. The value of an employer-provided monthly transit pass in excess of $120 and not in excess of $230 per month is taxable for Massachusetts purposes and not for federal purposes,
3. Imputed income from cost of health insurance coverage of former spouses and non-dependent children as required under Massachusetts law is taxable for federal purposes and not for Massachusetts purposes (prior to the change included in the Patient Protection and Affordable Care Act),
4. Employee contributions to cafeteria plans for the benefit of a same-sex spouse and that spouse’s children when the same-sex spouse or that spouse’s children do not qualify as a dependent of the employee are taxable for federal purposes and not for Massachusetts purposes,
5. Qualified tuition reduction that an educational organization provides to the same-sex spouse of an employee is taxable for federal purposes and not for Massachusetts purposes, and
6. Employer contributions to an accident or health insurance plan for the benefit of a same-sex spouse and that spouse’s children when the same-sex spouse or that spouse’s children do not qualify as a dependent of the employee are taxable for federal purposes and not for Massachusetts purposes.

Contact Vision Payroll Now

Contact Vision Payroll if you have further questions on the differences between federal wages and Massachusetts wages on Form W-2.

According to the US Department of Labor, in the week ending January 22, the advance figure for seasonally adjusted initial claims was 454,000, an increase of 51,000 from the previous week’s revised figure of 403,000. The 4-week moving average was 428,750, an increase of 15,750 from the previous week’s revised average of 413,000.

Advance Seasonally Adjusted Insured Unemployment Rate Increases

The advance seasonally adjusted insured unemployment rate was 3.2% for the week ending January 15, an increase of 0.1 percentage points from the prior week’s unrevised rate of 3.1%.

Advance Seasonally Adjusted Insured Unemployment Increases

The advance number for seasonally adjusted insured unemployment during the week ending January 15 was 3,991,000, an increase of 94,000 from the preceding week’s revised level of 3,897,000. The 4-week moving average was 3,975,500, a decrease of 39,750 from the preceding week’s revised average of 4,015,250.

The Internal Revenue Service (IRS) has released an updated version of Publication 15-A, Employer’s Supplemental Tax Guide (Supplement to Publication 15 (Circular E), Employer’s Tax Guide) for use in 2011. Publication 15-A contains information on the following areas:

1. Who Are Employees?
2. Employee or Independent Contractor?
3. Employees of Exempt Organizations
4. Religious Exemptions and Special Rules for Ministers
5. Wages and Other Compensation
6. Sick Pay Reporting
7. Special Rules for Paying Taxes
8. Pensions and Annuities
9. Alternative Methods for Figuring Withholding
10. Tables for Withholding on Distributions of Indian Gaming Profits to Tribal Members

Additional Information provided in Publication 15-A

In addition, Publication 15-A provides information on What’s New, Reminders, and Useful Items.

Contact Vision Payroll Today

Contact Vision Payroll if you have any questions on Publication 15-A.

This is the last in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Boxes 15 through 20, state and local income tax information.

Two States May Be Reported on Each Individual Form

Employers report state and local tax information in boxes 15 through 20. There is room for two states on each individual form with one state reported above the broken line and one state reported below the broken line. You should report local information in the same manner. If you must report information for more than two states or localities, use a second form. Do not complete federal information on any additional form for the same employee unless it is information that couldn’t fit on the first form or is being reported separately. For the state name, use the two-character abbreviation assigned by the United States Postal Service. The state taxing authority should have assigned the employer’s state ID number to use.

State Wage Reporting Should Follow Rules of That State

State wages reported in box 16 and local wages in box 18 must be reported according to the reporting requirements of the state or locality and may or may not equal wages reported in box 1, box 3, or box 7.

Final Installment in Series on 2010 Form W-2

Although this ends this series on the 2010 Form W-2, Vision Payroll will continue to provide information throughout the year to assist you in the process of gathering data to help ensure an accurate and efficient 2011 year-end reporting season. Contact Vision Payroll with any questions on the 2010 Form W-2.

This is one in a continuing series on the 2010 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than January 31, 2011. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 14, other.

Use Box 14 to Provide Additional Inforamtion

Box 14 is used to provide additional information that employees may want or need for their tax records. Employers must report the lease value of a vehicle reported in box 1 either here or in a separate statement provided to the employee. The following are examples of items that employers may want to disclose in box 14:

• State disability insurance taxes withheld
• Union dues
• Uniform payments
• Health insurance premiums deducted
• Nontaxable income
• Educational assistance payments
• Clergy’s parsonage allowance and utilities
• Nonelective employer contributions to a pension plan on behalf of an employee
• Voluntary after-tax contributions to a pension plan that are deducted from an employee’s pay (not including Roth contributions)
• Required employee contributions to a pension plan
• Employer matching contributions to a pension plan

USERRA Reporting for Makeup Amounts Is Done in Box 14

Employers may also report prior-year makeup amounts for nonelective employer contributions, voluntary after-tax contributions, required employee contributions, and employer matching contributions made under the Uniformed Services Employment and Reemployment Rights Act of 1994, also known as USERRA. Such amounts should be reported separately for each year.

Label Amounts in Box 14

Amounts included in box 14 should include a separate label for each item.

Boxes 15 Through 20, State and Local income Tax Information Is the Next Topic

The next topic in this continuing series will be Boxes 15 through 20, state and local income tax information. Contact Vision Payroll with any questions on the 2010 Form W-2.