Introduction to pay deductions covered by the Fair Labor Standards Act (FLSA) The Fair Labor Standards Act (FLSA) establishes, among other things, federal standards for minimum wages and overtime pay that employers are required to follow. Unless a specific minimum wage and overtime exemption applies, employees must be paid at least the applicable minimum wage for each hour worked and overtime for any hours in excess of 40 hours worked in the workweek. Employees who do not qualify for an exemption are commonly referred to as "nonexempt employees" and those employees who do qualify are referred to as "exempt employees." Risks The issue of improper deductions applies to all employees, both nonexempt and exempt. An improper deduction from either is a violation of the FLSA law and such violations can result in investigations by the United States Department of Labor (DOL) and/or expensive and time-consuming litigation. As an employer considering taking deductions from any employee's wages ...

Pay Deductions Quiz: Uniforms for a minimum wage employee. You hire a minimum wage employee to work as a cashier at your auto parts store. The employee signs an agreement to have $20.00 deducted from her first check to cover the cost of a uniform. You then, as agreed upon, deduct $20.00 from the employee's first check to cover the cost of the uniform. Have you violated any Fair Labor Standards Act (FLSA) requirements? Here, you have violated the FLSA's requirement that a nonexempt employee be paid the minimum wage for each hour worked. It makes no difference that the employee agreed to the deduction. Because the employee is a minimum wage employee, there was nothing that could legally be deducted from the employee's wage to cover the cost of the uniform. Any deduction puts the employee below the minimum wage level.   Feel free to visit the main page we’ve created for Articles on Payroll Services. Modern Business Associates frequently deals with payroll issues. As a Profession ...

Note these legal age issues when planning to layoff employees. The Older Workers Benefit Protection Act (OWBPA) provides additional protection to employees covered by the Age Discrimination in Employment Act (ADEA). The OWBPA affects downsizing employers in two ways. First, the OWBPA places strict requirements on an employee's release of an ADEA claim. Requirements include:   It requires such a release to be in writing as part of the information given to the employee during the layoff. Employees must be able to easily understand the release. (the "knowing and voluntary requirement"). The employee must be advised to consult with an attorney after the day of the layoff. Employees must be given a 21-day consideration period to evaluate the release The employee must be given a seven-day revocation period after signature. Second, the OWBPA includes potentially dangerous conditions for group layoffs. If an employer offers severance and an associated release to ...

HIRE Act Requires Individuals to Sign an affidavit

The HIRE Act requires that an individual sign an affidavit attesting to certain requirements that would make the employer eligible for the payroll tax exemption available under the law.  MBA has received several recent inquiries regarding where this affidavit can be obtained.  Please be advised that the IRS is expected to issue a model affidavit to be used for this purpose (see http://www.irs.gov/businesses/small/article/0,,id=220749,00.html).   

 

When the IRS publishes this affidavit, MBA will make it available to you.  In the meantime, please exercise caution using any affidavits located on the internet, as they have not been approved by the IRS.
 

New jobs bill, how do I get the most retention tax credits. President Obama signed into law a new jobs bill (HIRE Act) in March of 2010. The jobs bill pays you Retention Tax Credits to hang onto your employees. As an incentive to retain employees who qualify for Social Security tax forgiveness, the jobs bill provides up to a maximum $1,000 tax credit to employers for each qualified retained employee as a Section 38(b) business tax credit. The credit is the lesser of 6.2% of wages or $1,000. To be eligible for the jobs bill credit the qualified retained employee must: Be employed for 52 consecutive weeks. There is no provision for prorating the credit. Earn wages during the last 26 week period that are at least 80% of the wages for the first 26 week period. Note These jobs bill tax credits will be available to be taken on employers’ 2011 income tax returns. The jobs bill does not allow carry back of any unused Section 38 business tax credits that are attri ...