Vision Payroll

This week’s question comes from Andrea, an HR director. We hired an employee who qualified for the HIRE Act Incentives, including payroll tax forgiveness. We had to lay him off temporarily and don’t know if he still qualifies under his previous layoff or if he needs to requalify. What is the impact of temporary layoff on the HIRE Act incentives? Answer: Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are exempt from certain employment taxes and may receive other tax benefits. In order to qualify under the HIRE Act, employers are required to “get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for someone else during the 60-day period.” Workers who are temporarily laid off may or may not have to requalify and fill out a new Form W-11 or the Spanish-language equivalent, Form W-11(SP).

IRS Addresses Issue in Information Letter 2010-0198

The Internal Revenue Service (IRS) addressed this issue in Information Letter 2010-0198. According to the IRS:

An individual who is already a qualified employee and who experiences a short term or temporary interruption in his or her performance of services continues to be a qualified employee unless the interruption constitutes a termination of employment. Whether a short term or temporary interruption of an employee’s performance of services constitutes a termination of employment depends on the facts and circumstances. In the case of an individual who was previously employed as a qualified employee and whose employment is terminated, the employee will have to again meet the requirements for qualified employee status at the time the employment relationship is reestablished.

Documentation Is Key to Support Employer Position

Vision Payroll recommends that employers document thoroughly why a “temporary interruption” was not a termination of employment if they do not requalify an employee under the HIRE Act. Consultation with a qualified labor law attorney to determine when employment terminates is strongly recommended.

According to the US Department of Labor, in the week ending October 9, the advance figure for seasonally adjusted initial claims was 462,000, an increase of 13,000 from the previous week’s revised figure of 449,000. The 4-week moving average was 459,000, an increase of 2,250 from the previous week’s revised average of 456,750.

Advance Seasonally Adjusted Insured Unemployment Rate Decreases

The advance seasonally adjusted insured unemployment rate was 3.5% for the week ending October 2, a decrease of 0.1 percentage points from the prior week’s revised rate of 3.6%.

Advance Seasonally Adjusted Insured Unemployment Decreases

The advance number for seasonally adjusted insured unemployment during the week ending October 2 was 4,399,000, a decrease of 112,000 from the preceding week’s revised level of 4,511,000. The 4-week moving average was 4,488,500, a decrease of 34,500 from the preceding week’s revised average of 4,523,000.

In Notice 2010-69, the Internal Revenue Service (IRS) announced that the reporting of the cost of coverage under an employer-sponsored group health plan on Form W-2, Wage and Tax Statement, would not be mandatory for 2011 Forms W-2.

Additional Time Is Needed to Make Changes to Payroll Systems

According to Notice 2010-69, “[t]he Treasury Department and the IRS have determined that this relief is appropriate to provide employers with additional time to make any necessary changes to their payroll systems or procedures in preparation for compliance with the reporting requirement.”

Aggregate Cost Determined Using COBRA Rules

When reporting begins, “the aggregate cost is to be determined under rules similar to the rules of §4980B(f)(4), referring to the definition of the “applicable premium” under the rules providing for COBRA continuation coverage.”

Vision Payroll Will Assist Employers in Transition to New Rules

Contact Vision Payroll today for assistance in planning your transition to the new reporting rules for Form W-2.

The Connecticut Department of Labor has announced the taxable wage base for 2011. The wage base will remain at $15,000 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 Connecticut unemployment taxable wage base or visit our Unemployment Taxable Wage Base page.

The Arkansas Department of Workforce Services has announced the taxable wage base for 2011. The wage base will remain at $12,000 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 Arkansas unemployment taxable wage base or visit our Unemployment Taxable Wage Base page.

The Ohio Department of Commerce announced recently that, effective January 1, 2011, the minimum wage for the state of Ohio will increase to $7.40 per hour for non-tipped employees and $3.70 for tipped employees.

Minimum Wage Applies to Employers That Gross More than $271,000 per Year

The minimum wage will apply to employers who gross more than $271,000 per year.

Annual Adjustment Is Constitutionally Required

As a result of a constitutional amendment that passed in 2006 an adjustment to the minimum wage must be applied on January 1 of each year. The adjustment is tied to the Consumer Price Index (CPI) for urban wage earners and clerical workers for the 12-month period prior to September. The 1.4% increase in the CPI is rounded to the nearest five cents  to calculate the amount of the adjustment.

Find Out the Minimum Wage for All States by Visiting the Vision Payroll Minimum Wage Chart Page

Contact Vision Payroll if you have any questions on the Ohio minimum wage increase or visit our Minimum Wage Chart.

Nonfarm payroll employment edged down (-95,000) in September, and the unemployment rate was unchanged at 9.6 percent, the US Bureau of Labor Statistics reported recently. Government employment declined (-159,000), reflecting both a drop in the number of temporary jobs for Census 2010 and job losses in local government. Private-sector payroll employment continued to trend up modestly (+64,000).

The number of unemployed persons, at 14.8 million, was essentially unchanged in September, and the unemployment rate held at 9.6%

Among the major worker groups, the unemployment rate for adult men (9.8%), adult women (8.0%), teenagers (26.0%), whites (8.7%), blacks (16.1%), and Hispanics (12.4%) showed little or no change in September. The jobless rate for Asians was 6.4%, not seasonally adjusted.

The number of long-term unemployed (those jobless for 27 weeks and over), at 6.1 million, was little changed over the month but was down by 640,000 since a series high of 6.8 million in May. In September, 41.7% of unemployed persons had been jobless for 27 weeks or more.

In September, both the civilian labor force participation rate, at 64.7%, and the employment-population ratio, at 58.5%, were unchanged.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) rose by 612,000 over the month to 9.5 million. Over the past 2 months, the number of such workers has increased by 943,000. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

About 2.5 million persons were marginally attached to the labor force in September, up from 2.2 million a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 1.2 million discouraged workers in September, an increase of 503,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.3 million persons marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

This week’s question comes from Kevin, a business owner. We’ve been charged an employer surcharge in South Dakota for the first three quarters of 2010. What is the status of the South Dakota employer surcharge for Q4 2010? Answer: An employer surcharge is not in effect for Q4 2010 in South Dakota.

UI Trust Fund Balance Determines if Surcharge Is in Effect

The surcharge automatically goes into effect when the UI Trust Fund balance is below $11 million at the end of any quarter. The balance was $27.7 million on September 30, 2010.

No Surcharge Projected for Q1 2011

The South Dakota Department of Labor projects that the Trust Fund balance will be $25 million on December 31, 2010, so the surcharge would not be in effect for the first quarter of 2011.

Contact Vision Payroll for Further Information

Contact Vision Payroll for further questions on the South Dakota employer surcharge.

According to the US Department of Labor, in the week ending October 2, the advance figure for seasonally adjusted initial claims was 445,000, a decrease of 11,000 from the previous week’s revised figure of 456,000. The 4-week moving average was 455,750, a decrease of 3,000 from the previous week’s revised average of 458,750.

Advance Seasonally Adjusted Insured Unemployment Rate Decreases

The advance seasonally adjusted insured unemployment rate was 3.5% for the week ending September 25, a decrease of 0.1 percentage points from the prior week’s revised rate of 3.6%.

Advance Seasonally Adjusted Insured Unemployment Decreases

The advance number for seasonally adjusted insured unemployment during the week ending September 25 was 4,462,000, a decrease of 48,000 from the preceding week’s revised level of 4,510,000. The 4-week moving average was 4,510,750, a decrease of 27,750 from the preceding week’s revised average of 4,538,500.

Recently, the Wage & Hour Division (WHD) of the US Department of Labor (DOL) has increased its enforcement and audit efforts with employers. The WHD wants to ensure workers are fairly paid and employers uphold the law. Unfortunately, businesses that have violated wage and hour laws can face heavy fines and penalties. Many employers often assume a low likelihood of being audited, but they can be targeted, and the likelihood of an audit has been increasing.

Audit Selection Can Be Announced or Unannounced

Find out what makes your business more likely to be audited and what the impact is for targeted industries.

Non-Compliant Businesses Are at a Higher Risk

Certain employers may be high on the DOL watch list, especially for repeat violations. Learn which violations can be especially troublesome.

Be Ready if a DOL Representative Visits Your Business to Conduct an Audit

Know the appropriate actions to take if the DOL visits your workplace for a wage and hour audit.

Find Out More About the Implications of Wage and Hour Audits for Employers Now

For more information on each of these topics, be sure to read the featured article by the HR pros at MyHRSupportCenter, The Implications of Wage and Hour Audits for Employers. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.