Payroll Info

Beginning on 7/23/7 $5.85 per hour
Beginning on 7/23/8 $6.55 per hour
Beginning on 7/23/9 $7.25 per hour

With a 40% increase in minimum wage and the continued growth of technology and robotics I wonder how many minimum wage jobs are going to be eliminated.  I remember when garbage trucks had three workers. 

Have you ever watched the “Dirty Jobs” show on the Discovery Channel.  The host goes around and does for a day a dirty job that somebody has to do in the economy.  Making charcoal, raking seaweed, cleaning garbage separators etc. I often think a well-designed machine could do the same job.  It may now be worth the time and money to design and build those machines.

In Dallas the garbage truck used to be manned by three people (not paid minimum wage). Now they only have a driver and the truck has lifts that grab the garbage can and dump it automatically.  The city has used capital (a fancier truck and special cans) to eliminate workers.

In North Texas they are eliminating toll collectors on the toll roads.  They just take pictures and send bills to the license plate owners.  This will eliminate over 200 toll collectors, dozen of people to count package and transport all the change that use to be collected and no new positions will be created.

Congress has in its wisdom declared that low paying jobs should be eliminated with the application of capital. The young will no longer have a place to go and learn about working while being paid what they are worth.  I guess all the uneducated and untrained can vote for the democrats to try and up welfare payments paid by the taxes of those who still have a job.  Between more welfare and paying social security for the baby boomers and Medicare for everyone (if Hillary gets her way) the working person won’t clear minimum wage.  Maybe we should all quit.

How can payroll be dangerous?  US Immigration and Customs Enforcement (ICE) is now pursuing criminal charges against companies.  For instance a felony charge of harboring illegal aliens that can result in a 10-year prison sentence. 

An example is IFCO Systems of North America, Inc. (IFCO) which according to an informant:

•  Hired workers without social security cards or used other peoples
• Payroll employees were directed to use eight allowances on W-4’s because some Hispanic workers were not going to file tax returns
• The company arranged to transport illegal workers from Texas to NY
• The company provided housing for illegal aliens and charged them rent
• The company transported the illegal workers back and forth to work.

ICE also found the IFCO had in excess of 50% of the SSN’s on the payroll were false or did not match to the person claiming it.  Repeated notices to the company correct only a small fraction of the problems.

The result of the investigation was that seven managers were arrested and charged with felonies.  Also 1187 illegal aliens employed by the company around the country were arrested as well.  At least six of the managers have pleaded guilty to counts that start at six months in jail plus fines.

Another business Rosenburg-Cunningham International, Inc., which does cleaning, and maintenance services for restaurant chains and hospitality sites around the country has spawned similar charges.  Here the managers have entered guilty pleas to: harboring illegal aliens, false statements on tax returns, aiding and abetting unlawful employment of aliens and trafficking in means of identification.

There is nothing to keep ICE from charging payroll employees who knowingly participate in a similar scheme with misdemeanor or even felony charges.  If you work for a company that knowingly employs illegal aliens and you are related in any way to the hiring or paying of those illegal aliens you are in jeopardy.  How does five years in a federal penitentiary sound?

PayrollOnABudget.com provides solutions for companies with less than 25 employees.  CustomPayroll.com is full service payroll processing company, with over thirteen (13) years of experience in the payroll industry.

We - PayrollOnABudget.com - received a notice today from the IRS that said one of our clients owed $3500.00 in taxes for 2004.  It was a form CP220 with no explanation of the taxes due just the penalty and interest calculations.  That seemed strange so I called the Practitioners Hotline I wanted to find out what taxes were due.  The nice young lady at the IRS told me it was from the reconciliation of the W3’s and the 941’s.  That seemed strange so she checked a little more for me. 

She told me there were 31 1099-Rs and no Form 945 had been filed for them.  The IRS just assumed that the money was due to the IRS and sent a notice with out explanation.  If you don’t work with the IRS all the time you might not realize that that is a little unusual.  Normally they explain exactly what tax is due and why.  Not that they are right but they are certain.

 We don’t do 1099Rs for this client.  I called the client and asked about their 401K plan for that year.  Sure enough they had 31 1099-Rs which had $3500.00 of withholding.  Employees who had terminated and left the 401K plan and did not roll over their account.  My client called T. Rowe Price who was the plan administrator and Trustee.  Seems like T. Rowe had a computer glitch for 2004 and most of their 401(K) Form 945 for their clients were filed with the wrong tax ID number.

It makes me wonder how many companies just wrote a check to the IRS to fix a problem that T. Rowe Price caused.  Wrote a check for money that was not really due. 

According to the IRS’s own Tax Payer Advocate 40% of all employment tax notices the IRS sends out are settled for zero dollars.  Add to that those that are paid because people either don’t understand, are too scared to fight, are too lazy to fight, its too expensive to fight or are just paid because the IRS has to be right!  The odds are that if you receive employment taxes notice you really don’t owe anything.  What a deal from our kinder and gentler IRS (they have dropped that marketing phrase).

The Energy Savings Act of 2005 which was signed into law last August extends Daylight Savings Time by four weeks.  If you automated time system is not update you may find your self with a problem. This year Daylight Saving Time starts on March 11 and ends on November 04.

The change happens at 2AM so normally third shift workers are affected.  In the spring you can overpay  workers with ease.  They were there from 11:00PM to 7:00 AM but in reality only worked seven hours.  The clock “Spring(ed) Forward”.  In the fall you can under pay because the third shift of eight hours was really nine hours long because the clock “Fall Back”.

It only happens twice a year but it needs to be done right.

The ordinance mandates that every employer with a payroll provide paid sick days to employees.  See http://www.sfgov.org/site/olse_index.asp?id=54150 for more details.  The devil is in the details as always. For every 30 payroll hours worked an employee earns one hour of sick pay.  Small employers only have to accrue 30 hours for an employee; larger employers have to accrue up to 72 hours for an employee. 

But the limit to how much paid sick time they can take is only limit by their imagination and the payroll hours they work in a year.  Let’s take a creative young worker.  He works 240 hours earning 8 hours of paid sick time and then takes it.  Every 240 hours or 6 weeks all year long he does this. At the end of the year he has taken 8 full days or 64 hours off, paid by his employer.  And he has earned over three hours of paid sick time toward his next day off.  He can turn all of his three-day holiday weekends in to four-day holiday weekends with a cold or sniffle.  Of course with a little over two days a week overtime our aggressive young worker can get nine days a year off.

Even if an employer knows an employee is doing this they cannot do anything about it.  The presumption is always with the employee.  Never with the employer who has created a job for the worker and is paying him to be productive.  The City of San Francisco has mandate, in effect, a 3.33% tax to small business payrolls in the City.

Now of course if you offer vacation that can be used for sick time then you already comply with the new ordinance.  Unless of course you only offer a week or 40 hours.  Then you don’t offer enough time off for our creative young worker and he will file a claim for the rest of his 64 plus hours and the employer will have to pay through the nose.

Of course no payroll provider software calculates deductions on a floating basis like this with out a fixed annual cap.  So payroll companies are going to be scrambling to fix their programs to handle a unique payroll deduction created in the unique City of San Francisco

Are your employee’s that tele commute or have home offices subject to all the regulations, overtime, reimbursement and so on.? Are they eligible for Workers Compensation if they are working at home and trip over the dog and break their arm?  Or are they Independent Contractors and you are relieved of all those liabilities? See http://www.workerscompinsider.com/archives/000617.html on workers compensation and it’s associated links.  This is one blog I view every time it is updated for the fascinating information on workers compensation.

Do you still have vacation days, floating holidays, sick days, mental health days, birthday day off, etc etc?  Many of my clients and my own company have switched to PTO days, Personal Time Off.  This way we have just on category to track and compute.  In smaller business and in some larger ones there is no difference how the various time off categories are paid at time of use or at termination.  But there may we many different accrual methods depending on the type of time off.  I still have a few clients who may track as many as seven different time off categories.  By lumping all time off into a category and accruing every payday life is much simpler. 

Add up all the various time off you give employees and re-label it PTO.  They have one set of rules for getting time off, what ever you decide they are.  You have one rule for what gets paid or not at termination.  Not an argument what is vacation and due to be paid and what is sick pay and not eligible to be paid and so on.

It is easy to set up the single accrual and it can be easily increased based on seniority.  No more arguments about employees not getting their “floating holiday” or whatever, this is one way to make payroll administration easier, fairer, simpler and more accurate.

Has your Workers Compensation Policy renewed lately, or is it going too soon.  Tired of paying a huge downpayment?  Then don’t.  Find a pay as you go Workers Compensation Insurance provider.  Each payroll your workers compensation premium is calculated along with your actual payroll.  The insurance company drafts only for the amount of premium earned that pay period.  Not a penny more.  No more big downpayments or audit corrections. You know exactly where you are each pay period.

Do you know the dirty little secret of Workers Compensation Insurance?  Do you know that workers compensation insurance agents are paid commission based on the size of your company premium?  The bigger the premium you pay the bigger your agent’s commission.  Your agent may never cause your premium to go up unnecessarily but has he done everything he can to reduce it and reduce his commission?”  To learn more about the dirty little secret of Workers Compensation Insurance

Payroll check fraud came calling four days before Christmas.  A branch of our main bank called and wanted to verify a check.  The young lady who took the call in our office quickly realized that the check was out of sequence and for a person not on the client’s payroll.  The check was cut on our trust account.  I spoke to the bank employee who had called us.  They were stalling the person by having then fill out an account application, more about that later.  I took the location of the bank and called the local police department.  Of course I didn’t have the right exact city and had to make an additional call.  The police finally were dispatched to the grocery store where the branch bank was.  The woman trying to cash the check was gone.  But the police were fairly sure that they would apprehend her soon.  Next day she tried to pass a check on someone else at a different bank. The police were called and she was arrested and turned over on a filed warrant to the police I had called.  They had issued a warrant the same day she cashed a check on us and had given the bank as part of the paperwork a copy of her real drivers license. No one ever claimed crooks were smart.
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Unemployment Rate changes are coming out all over the country.  Have you gotten yours yet?  If your rate is up because you didn’t protest a case and that darn ex-employee stayed on the dole for all 26 weeks.  You know they were working and getting paid under the table.  Next time you will remember to fight and appeal, appeal, appeal!

Oh have you sent a copy to your payroll provider.  Up or down, they need to know so they can properly calculate and pay your unemployment taxes.  Next time maybe you should talk to their unemployment expert about how to appeal that employee who really quit and then went and claimed unemployment.  Or better yet talk to them now and figure out how to handle terminations voluntary and inventory so as to minimize the impact on your unemployment rate.