Table of Contents

The Payroll Source®

Table of Contents pages: 1 2 3 4

• ABOUT THE AUTHOR 33
• ACKNOWLEDGEMENTS 44
• SECTION 1: THE EMPLOYER-EMPLOYEE RELATIONSHIP 55
• • 1.1 Importance of the Determination 66
  • 1.2 Employee vs. Independent Contractor 77
  • • 1.2-1 Common Law Test 88
    • 1.2-2 Reasonable Basis Test 99
  • 1.3 Employment Status Determined by Law 1010
  • • 1.3-1 Statutory Employees 1010
    • 1.3-2 Statutory Nonemployees 1111
  • 1.4 Temporary Help Agency Employees 1212
  • 1.5 Other Third-Party Arrangements—Leased Employees, PEOs, Statutory Employers, Payer Agents 1313
  • 1.6 Employees Under Other Federal and State Laws 1414
  • • 1.6-1 Fair Labor Standards Act 1414
    • 1.6-2 State Wage-Hour Laws 1515
    • 1.6-3 State Income Tax Withholding Laws 1616
    • 1.6-4 State Unemployment Insurance Laws 1717
    • 1.6-5 State Disability Insurance Laws 1818
  • 1.7 Worker Misclassification: Enforcement and Penalties 1919
  • • 1.7-1 IRS Penalties 1919
    • 1.7-2 IRS Enforcement Efforts 2020
    • 1.7-3 FLSA Complaints Filed With the Department of Labor 2121
    • 1.7-4 State Unemployment Agencies 2222
  • 1.8 Proof of the Right to Work in the U.S. 2323
  • 1.9 New Hire Reporting 2424
  • 1.10 Review Questions and Exercises 2525
• SECTION 2: FEDERAL AND STATE WAGE-HOUR LAWS 2626
• • 2.1 Fair Labor Standards Act 2626
  • 2.2 Federal/State Relationship 2727
  • 2.3 Employer and Employee Coverage 2828
  • 2.4 Exempt and Nonexempt Employees 2929
  • • 2.4-1 White Collar Exemption 2929
    • 2.4-2 Retail and Service Industry Exemption 3030
    • 2.4-3 Public Sector Exempt Employees 3131
    • 2.4-4 Other Exempt Employees 3232
  • 2.5 Minimum Wage 3333
  • • 2.5-1 Tips and the Tip Credit 3434
    • 2.5-2 Equal Pay for Equal Work 3535
  • 2.6 Overtime Pay Requirements 3636
  • • 2.6-1 The Workweek 3737
    • 2.6-2 Hours Worked 3838
    • 2.6-3 Regular Rate of Pay 3939
    • 2.6-4 Special Problems in Regular Rate Determinations 4040
    • 2.6-5 Compensatory Time Off 4141
  • 2.7 Compensable Time Issues 4242
  • • 2.7-1 Unauthorized Overtime 4242
    • 2.7-2 Meal and Rest Periods 4343
    • 2.7-3 Travel Time 4444
    • 2.7-4 On-Call Time 4545
    • 2.7-5 Waiting Time 4646
    • 2.7-6 Time Spent at Meetings and Training Sessions 4747
    • 2.7-7 Preliminary and Postliminary Activities 4848
    • 2.7-8 Receiving Medical Attention 4949
    • 2.7-9 Telework 5050
  • 2.8 Child Labor Restrictions 5151
  • 2.9 Enforcement and Penalties 5252
  • 2.10 Public Contracts Laws 5353
  • • 2.10-1 Walsh-Healey Public Contracts Act 5353
    • 2.10-2 Wage Rates for Public Buildings and Works (Davis-Bacon and Related Acts) 5454
    • 2.10-3 Contract Work Hours and Safety Standards Act 5555
    • 2.10-4 Service Contract Act 5656
    • 2.10-5 Copeland ‘Anti-Kickback’ Act 5757
  • 2.11 State Wage-Hour Charts 5858
  • • 2.11-1 State Minimum Wage Rates 5959
    • 2.11-2 State Tip Credits 6060
    • 2.11-3 State Overtime Pay Requirements 6161
    • 2.11-4 State Meal and Rest Period Requirements 6262
    • 2.11-5 Directory of State Wage and Hour Agencies 6363
  • 2.12 Review Questions and Exercises 6464
• SECTION 3: TAXABLE AND NONTAXABLE COMPENSATION 6565
• • 3.1 Gross Income and Wages Under the IRC 6565
  • • 3.1-1 Income and Employment Taxes Defined 6666
    • 3.1-2 Fair Market Value 6767
  • 3.2 Fringe Benefits Under the Internal Revenue Code 6868
  • • 3.2-1 Nontaxable Fringe Benefits 6868
    • 3.2-2 Personal Use of Employer-Provided Vehicles 6969
    • 3.2-3 Personal Use of Employer-Provided Aircraft 7070
    • 3.2-4 Free or Discounted Commercial Flights 7171
    • 3.2-5 Discounts on Property or Services 7272
    • 3.2-6 Club Memberships 7373
    • 3.2-7 Emergency Responder Benefits 7474
  • 3.3 Additional Employer-Provided Benefits 7575
  • • 3.3-1 Life Insurance 7575
    • • Definition of split-dollar life insurance arrangement. 7676
      • Taxation under the economic benefit regime. 7777
    • 3.3-2 Moving Expenses 7878
    • 3.3-3 Educational Assistance 7979
    • 3.3-4 Group Legal Services 8080
    • 3.3-5 Employee Business Travel Expense Reimbursements 8181
    • 3.3-6 Employer-Provided Meals and Lodging 8282
    • 3.3-7 Adoption Assistance 8383
  • 3.4 Other Payments 8484
  • • 3.4-1 Advances and Overpayments 8484
    • 3.4-2 Awards and Prizes 8585
    • 3.4-3 Back Pay Awards 8686
    • 3.4-4 Bonuses 8787
    • 3.4-5 Commissions 8888
    • 3.4-6 Conventions 8989
    • 3.4-7 Death Benefits 9090
    • 3.4-8 Dependent Care Assistance Programs 9191
    • 3.4-9 Directors’ Fees 9292
    • 3.4-10 Disaster Relief Payments 9393
    • 3.4-10a Emergency Paid Sick Leave and Expanded Family and Medical Leave 9494
    • 3.4-10b Employee Retention Credit Wages 9595
    • 3.4-11 Employer-Paid Taxes (Grossing-Up) 9696
    • 3.4-12 Equipment Allowances 9797
    • 3.4-13 Gifts 9898
    • 3.4-14 Golden Parachute Payments 9999
    • 3.4-15 Guaranteed Wage Payments 100100
    • 3.4-16 Jury Duty Pay 101101
    • 3.4-17 Leave-Sharing Plans 102102
    • 3.4-18 Loans to Employees 103103
    • 3.4-19 Military Pay 104104
    • 3.4-20 Outplacement Services 105105
    • 3.4-21 Retroactive Wage Payments 106106
    • 3.4-22 Security Provided to Employees 107107
    • 3.4-23 Severance or Dismissal Pay 108108
    • 3.4-24 Stocks and Stock Options 109109
    • 3.4-25 Strike Benefits 110110
    • 3.4-26 Supplemental Unemployment Benefits 111111
    • 3.4-27 Tips 112112
    • 3.4-28 Uniform Allowances 113113
    • 3.4-29 Vacation Pay 114114
    • 3.4-30 Wages Paid After Death 115115
  • 3.5 Withholding and Reporting Rules for Employer-Provided Benefits 116116
  • • 3.5-1 Withholding on Cash Fringe Benefits 116116
    • 3.5-2 Withholding and Reporting on Noncash Fringe Benefits 117117
  • 3.6 Review Questions and Exercises 118118
• SECTION 4: HEALTH, ACCIDENT, AND RETIREMENT BENEFITS 119119
• • 4.1 Health Insurance 119119
  • • 4.1-1 Affordable Care Act Health Insurance Requirements 120120
    • • Part I—Employee and Employer 121121
      • Part II—Employee Offer and Coverage 122122
      • Part III—Covered Individuals 123123
      • Part I—Applicable Large Employer Member 124124
      • Part II—ALE Member Information 125125
      • Part III: ALE Member Information—Monthly 126126
      • Part IV: Other ALE Members of Aggregated ALE Group 127127
    • 4.1-2 Tax Treatment of Contributions and Benefits 128128
    • • Definitions 129129
    • 4.1-3 Medical Savings Accounts 130130
    • 4.1-4 Long-Term Care Insurance 131131
    • 4.1-5 COBRA Health Insurance Continuation 132132
    • 4.1-6 Health Reimbursement Arrangements 133133
    • 4.1-7 Health Savings Accounts 134134
  • 4.2 Family and Medical Leave Act 135135
  • 4.3 Sick Pay 136136
  • • 4.3-1 Sick Leave Pay 137137
    • 4.3-2 Sick Pay Under a Separate Plan 138138
    • 4.3-3 Permanent Disability Benefits 139139
  • 4.4 Workers’ Compensation Insurance 140140
  • • 4.4-1 Benefit Payments 140140
    • 4.4-2 Premium Payments 141141
  • 4.5 Cafeteria Plans 142142
  • • 4.5-1 What Benefits Can Be Offered 143143
    • 4.5-2 How Cafeteria Plans Are Funded 144144
    • 4.5-3 What the Cafeteria Plan Document Must Contain 145145
    • 4.5-4 Benefit Elections 146146
    • 4.5-5 Who Can Participate in the Plan 147147
    • 4.5-6 Nondiscrimination Testing 148148
    • 4.5-7 Flexible Spending Arrangements 149149
    • 4.5-8 Tax Treatment of Cafeteria Plans 150150
    • 4.5-9 Reporting Requirements 151151
  • 4.6 Retirement and Deferred Compensation Plans 152152
  • • 4.6-1 Qualified Pension and Profit-Sharing Plans (IRC §401(a)) 153153
    • 4.6-2 Cash or Deferred Arrangements (IRC §401(k)) 154154
    • 4.6-3 Tax-Sheltered Annuities (IRC §403(b)) 155155
    • 4.6-4 Deferred Compensation Plans for the Public Sector and Tax-Exempt Groups (IRC §457(b)) 156156
    • 4.6-5 Employee-Funded Plans (IRC §501(c)(18)(D)) 157157
    • 4.6-6 Individual Retirement Accounts 158158
    • 4.6-7 Simplified Employee Pensions (IRC §408(k)) 159159
    • 4.6-8 Savings Incentive Match Plans for Employees of Small Employers (SIMPLE Plans) 160160
    • 4.6-9 Employee Stock Ownership Plans 161161
    • 4.6-10 Nonqualified Deferred Compensation Plans 162162
    • • Treatment of payments or losses of deferred amounts after they are included in income. 163163
  • 4.7 State Taxability of Cafeteria Plan and §401(k) Salary Reductions 164164
  • 4.8 Review Questions and Exercises 165165
• SECTION 5: PAYING THE EMPLOYEE 166166
• • 5.1 Pay Frequency 167167
  • 5.2 Payment on Termination 168168
  • 5.3 Payment Methods 169169
  • • 5.3-1 Cash or Check 169169
    • 5.3-2 Direct Deposit (Electronic Funds Transfer) 170170
    • 5.3-3 Electronic Paycards 171171
  • 5.4 Pay Statements Provided to Employees 172172
  • 5.5 Unclaimed Paychecks 173173
  • 5.6 Wages Owed Deceased Employees 174174
  • 5.7 Extra Paydays Caused by the Calendar 175175
  • 5.8 Review Questions and Exercises 176176
• SECTION 6: WITHHOLDING TAXES 177177
• • 6.1 The Principle of Actual or Constructive Payment 177177
  • 6.2 Social Security Numbers 178178
  • • 6.2-1 Obtaining an Employee’s SSN 178178
    • 6.2-2 Verifying Social Security Numbers 179179
  • 6.3 Employee Withholding Certificates 180180
  • • 6.3-1 Form W-4 180180
    • 6.3-2 Form W-4P 181181
    • 6.3-3 Form W-4S 182182
    • 6.3-4 State Employee Withholding Certificates 183183
  • 6.4 Methods of Withholding Federal Income Tax 184184

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