Vision Payroll

Although there are no federal or state laws that require an employer to pay for vacation or sick time, many employers offer these benefits as an additional enticement for employees. Employers need to consider whether they should maintain a traditional paid vacation/sick program or a paid time-off (PTO) program.

The traditional program maintains separate “banks” for vacation and sick time and generally has different policies for vacation time and for sick time regarding usage, carryover, vesting, etc.

The PTO plan lumps all time together and doesn’t differentiate as to why the employee is taking the time.

There are benefits and drawbacks to both and state laws can impact programs in areas such as vesting. Employers should carefully consider the pros and cons of each and then establish clearly defined policies in their Employer Handbooks.

To learn more be sure to read this month’s featured article by the HR pros at MyHRSupportCenter, Traditional or PTO. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

Employers are often thrilled to have those employees who are always on time, never take a sick day, and never take a vacation. But are they model employees, necessary employees, or a stress case waiting to happen? Does returning to a desk-full of unfinished work worry them? Are they worried about losing work to a co-worker? Or in this time of layoffs are they worried about appearing to uncommitted to their work?

Learn the answers to these questions and also what you need to know about how local laws may impact your vacation policies in this month’s HRCast, a recording provided by our team of HR Pros and available exclusively on MyHRSupportCenter. You’ll learn if you must offer vacation time and if you should offer vacation time. Learn if you can cap the employee’s balance at some pre-determined level, whether you can limit how much vacation is taken, or when it is taken. Learn what you need to know about forced vacation time and how it’s impacted by the employee’s exempt or non-exempt status.

Visit MyHRSupportCenter regularly not only for our HRCasts, but also to get late-breaking compliance alerts, best practices to implement, and HR tools to use every day. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2009-2. 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, the DOL concluded that an employer “may require exempt employees to use accrued vacation time during a plant shutdown of less than a workweek without violating the salary basis test and thereby affecting their exempt status” under the FLSA.

There is no requirement under the FLSA to provide vacation to employees. Employers may require employees to use vacation time or leave time “whether for a full or partial day’s absence, provided the employees receive in payment an amount equal to their guaranteed salary.” Therefore, so long as the employees receive their guaranteed salary there is no impact on their exempt status. Exempt employees without available time for vacation or leave must still receive their full salary “for any absence(s) occasioned by the employer or the operating requirements of the business.”

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 IRS recently issued guidance for reporting wages paid in 2008 (including accrued wages and vacation pay) on behalf of deceased employees. Although state law generally controls who receives the unpaid wages, the reporting follows the same rules even if the check is reissued in the name of the employee’s estate or beneficiary. If the employee died in 2008, the employer withholds social security and Medicare taxes and reports the payments in boxes 3 and 5 of the 2008 Form W-2. The wages are not to be reported in box 1 of the 2008 Form W-2 and no income tax is to be withheld. Instead, the amount of the payment must be reported in box 3 of the 2008 Form 1099-MISC using the name and taxpayer identification number of the recipient of the payment. If the employee died in 2007 or before, there is no reporting on the 2008 Form W-2 and no withholding of social security and Medicare taxes. The payment must still be reported in box 3 of the 2008 Form 1099-MISC using the name and taxpayer identification number of the recipient of the payment. Contact Vision Payroll to ensure proper reporting for payments of wages made on behalf of your deceased employees.