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Introduced in 2017 via the 21st Century Cures Act, the QSEHRA is an employer-funded health benefit that enables tax-free reimbursements. Only small employers with fewer than 50 full-time employees and those who do not otherwise provide a group health plan can offer a QSEHRA. In a nutshell, the employer provides a monthly allowance, which signifies the maximum monthly amount that’s reimbursable to employees for personal health care expenses. When the QSEHRA was initially enacted, many small employers questioned how it should be taxed. The IRS responded through Notice 2017-67, which also addresses W-2 reporting for the benefit.

General Taxation

In 2019, employers with a QSEHRA can offer up to $5,150 for employees with self-only coverage and up to $10,450 for employees with family coverage — increasing from $5,050 for self-only coverage and $10,250 for family coverage in 2018. The employer does not pay any payroll taxes — including Social Security tax, Medicare tax and FUTA tax — on payments made within those ranges. However, the employee must have Minimum Essential Coverage (MEC) in order to receive tax-free reimbursements. Without MEC, the employee’s reimbursements are taxable and must be included in his or her gross income.

W-2 Reporting

In its W-2 instructions, the IRS added a new stipulation, specifically for employers with a QSEHRA. Per the IRS, “a new box 12 Code FF has been added to report the total amount of permitted benefits under a qualified small employer health reimbursement arrangement (QSEHRA).” Therefore, when reporting QSEHRA benefits on eligible employees’ W-2, you will need to state in box 12 (using Code FF) the total amount the employee was eligible to receive for the calendar year. Note that the IRS is only interested in what the employee was entitled to, and this amount may vary from what the employee actually received. The allowed benefit amount should not include carryovers from previous years, only the permitted available funds for the current year. If the employee did not participate in the QSEHRA for the entire year, you will need to prorate the amount. Let’s say an employee became eligible on June 1 for an allowed benefit of $3,000 for the year. You would report an allowed benefit of $1,750 ($3,000 x 7/12) for the year in box 12 using Code FF. As long as the reimbursements are tax-free, you do not need to report the QSEHRA benefit anywhere else on the W-2.

Taxable Versus Tax-Free Reimbursements

Tax-free reimbursements should not be included in the employee’s W-2 federal wages, Social Security wages and Medicare wages. But if the reimbursements are taxable — such as reimbursements the employee received while without MEC — the amounts should be included in the employee’s W-2 federal wages, Social Security wages and Medicare wages. Taxable QSEHRA reimbursements include over-the-counter drugs purchased without a prescription and pretax premiums for coverage sponsored by the employer of the eligible employee’s spouse. Remember that Form W-2 requirements are subject to frequent change, so be sure to work from the latest versions as you get closer to filing time. For further insight into W-2 reporting for the QSEHRA, give us a call today.

© 2019

Do you need help with tax reporting and filing? Click below to learn more.

The post Proper Reporting for QSEHRA Benefits appeared first on Payroll Management, Inc.

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Question:
Can we give employees different amounts of vacation or PTO time?

Answer from Jenny, SPHR, SHRM-SCP:

If the differing amounts of vacation or PTO are based on a clearly-defined employee grouping, such as seniority, department, or exempt versus non-exempt status, then yes. It’s a common practice, for example, for employers to offer more vacation time to employees who have been with the organization for longer.

Where you can run into trouble is offering different amounts of vacation on an individual basis or without clearly-defined criteria, either of which can lead to discrimination claims. For instance, if Rafik and Anita are hired at the same time for similar jobs in the accounting department at the same rate of pay, but the organization offers Rafik more vacation, Anita could potentially bring a claim under federal or state discrimination or pay equity laws.

Over her 20 years of experience, Jenny has specialized in helping small to mid-sized businesses across a variety of industries to reduce their risks and manage employee relations issues. Jenny holds a Bachelors of Business Administration (BBA) degree in Human Resources Management from the University of Georgia and a Masters of Business Administration (MBA) degree with a concentration in Human Resources Management from Georgia State University.

Clients of Payroll Management, Inc. who are enrolled in HR Support Center or HR On Demand receive email newsletters from HR Pros like Jenny.

The post Giving Employees Different Vacation or PTO? appeared first on Payroll Management, Inc.

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If your remote employees live in the state where your business is located, you must follow federal employment laws plus your state’s employment rules. But if your remote employees live in a different state from where you conduct business, you must comply with federal employment laws plus the labor laws for each state in which your employees reside. This applies to all areas of employment, including hiring, performance management, payroll and employee benefits.

Hiring Policies for Remote Employees

When hiring remote employees, you must consider all laws affecting the recruiting, interviewing and hiring processes. Among them are federal anti-discrimination laws, such as Title VII of the Civil Rights Act of 1964 and the Equal Pay Act of 1963.

Note that many states have their own anti-discrimination laws, and some jurisdictions prohibit employers from requesting that applicants disclose their salary history.

In addition, employers must conduct employment eligibility verification via Form I-9 and perform new hire reporting with the state.

Talent Management

Managing a remote team is considerably different from managing an on-site team. With remote employees, you cannot walk over to their desks to chat or have in-person meetings with them.

Without proper support, your remote team can easily become disengaged. And if you’re not careful, you could find yourself forgetting essential duties, such as tracking their time worked and staying abreast of PTO requests.

Below are suggestions for avoiding these pitfalls and attaining an engaged remote team:

  • Set clear expectations, upfront, with each team member.
  • Let them know who to contact if they have questions.
  • Have a system in place that promptly addresses their concerns.
  • Build a rapport with each team member.
  • Encourage their input on matters affecting their work or the team.
  • Offer regular feedback via one-on-one meetings using Skype, Zoom, Google Hangouts or another video conferencing platform.
  • Help them fulfill their career goals by fairly evaluating their performance, developing action plans for improvement and rewarding high performance.
  • Utilize technology that simplifies timekeeping and leave of absence administration.
Payroll and Benefits

Like on-site employees, remote employees are subject to federal and state payroll laws plus applicable employee benefits regulations. These laws relate to:

  • Minimum wage
  • Overtime
  • Exempt employees
  • Tax withholding
  • Paycheck deductions
  • Payday frequency
  • Final wages
  • Breaks and meal periods
  • Workers’ compensation
  • Unemployment insurance
  • Paid and unpaid time off
  • Voluntary benefits, such as health insurance and retirement plans
  • Record keeping
Health and Safety

The Occupational Safety and Health Administration has stated in the past that it does not perform inspections of employees’ home offices and that employers are generally not responsible for home-based safety issues. This is a gray area. Therefore, employers with remote employees should obtain legal advice regarding health and safety.

Other complex areas that may require legal counsel include when employees work both remotely and on-site, when employees work in a different country and when an employer terminates a remote employee.

© 2019

The post Handling HR and Payroll for Remote Employees appeared first on Payroll Management, Inc.

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Are you unsure about the employee benefits you must legally provide? 

Unemployment insurance

Unemployment insurance benefits are provided through the Federal-State Unemployment Insurance Program, which delivers short-term benefit payments to employees who lose their jobs through no fault of their own. The program is funded via federal and state unemployment taxes. Only the employer pays federal unemployment tax. Further, most states require only the employer to pay state unemployment tax. (A few states require both employers and employees to pay state unemployment tax.)

Workers’ compensation

Workers’ compensation insurance is a state-operated program that provides medical care and compensation for lost wages to employees who suffer work-related injuries or illnesses. In most states, as long as you have employees, you must carry workers’ compensation. The inner workings of the program, however, vary from state to state.

Family and medical leave

The federal Family and Medical Leave Act gives eligible employees up to 12 weeks of unpaid, job-protected leave during a 12-month period for qualifying family and medical reasons. Also, a growing number of states are following suit by implementing their own family and medical leave laws — most of which expand on the amount of leave that can be taken or the classes of individuals to whom the leave applies.

Disability insurance

In states such as California, New York, New Jersey and Rhode Island, employers must provide temporary (or short-term) disability insurance to employees. The insurance partially replaces the wages of employees who are unable to work due to a nonwork-related illness or injury. Depending on the state, either the employer or the employee, or both, pay for state disability insurance.

Paid sick leave

According to the National Conference of State Legislatures, as of mid-2018, 10 states plus Washington, D.C., require employers to provide paid sick leave. The amount of paid sick time that should be granted varies by state.

School/parental leave

To help employees balance their work and home lives, a few states — including California, Illinois and North Carolina — require that employers provide employees with a limited number of hours to attend their children’s school-related events.

Health insurance

This is one of those employee benefits that straddles the fence by being both legally required and voluntary. Per the Affordable Care Act, employers with more than 50 full-time and full-time equivalent employees must offer qualified health insurance. If employers choose not to provide health insurance, they may have to pay a penalty. There’s also the Consolidated Omnibus Budget Reconciliation Act, which says that employers with at least 20 employees must offer continued group health coverage to enrollees who lose their job or would otherwise lose health coverage. Many states have “mini COBRA” laws, which cover smaller employers or provide greater protection than COBRA. Note that regulations — both federal and state — can change quickly, so check the details before changing a policy at your company.

© 2019

Employee handbooks

Do you have an updated employee handbook? Click below to learn more about our HR On-Demand Services.

The post Are Employee Benefits Legally Required? appeared first on Payroll Management, Inc.

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Are you unsure about the employee benefits you must legally provide? 

Unemployment insurance

Unemployment insurance benefits are provided through the Federal-State Unemployment Insurance Program, which delivers short-term benefit payments to employees who lose their jobs through no fault of their own. The program is funded via federal and state unemployment taxes. Only the employer pays federal unemployment tax. Further, most states require only the employer to pay state unemployment tax. (A few states require both employers and employees to pay state unemployment tax.)

Workers’ compensation

Workers’ compensation insurance is a state-operated program that provides medical care and compensation for lost wages to employees who suffer work-related injuries or illnesses. In most states, as long as you have employees, you must carry workers’ compensation. The inner workings of the program, however, vary from state to state.

Family and medical leave

The federal Family and Medical Leave Act gives eligible employees up to 12 weeks of unpaid, job-protected leave during a 12-month period for qualifying family and medical reasons. Also, a growing number of states are following suit by implementing their own family and medical leave laws — most of which expand on the amount of leave that can be taken or the classes of individuals to whom the leave applies.

Disability insurance

In states such as California, New York, New Jersey and Rhode Island, employers must provide temporary (or short-term) disability insurance to employees. The insurance partially replaces the wages of employees who are unable to work due to a nonwork-related illness or injury. Depending on the state, either the employer or the employee, or both, pay for state disability insurance.

Paid sick leave

According to the National Conference of State Legislatures, as of mid-2018, 10 states plus Washington, D.C., require employers to provide paid sick leave. The amount of paid sick time that should be granted varies by state.

School/parental leave

To help employees balance their work and home lives, a few states — including California, Illinois and North Carolina — require that employers provide employees with a limited number of hours to attend their children’s school-related events.

Health insurance

This is one of those employee benefits that straddles the fence by being both legally required and voluntary. Per the Affordable Care Act, employers with more than 50 full-time and full-time equivalent employees must offer qualified health insurance. If employers choose not to provide health insurance, they may have to pay a penalty. There’s also the Consolidated Omnibus Budget Reconciliation Act, which says that employers with at least 20 employees must offer continued group health coverage to enrollees who lose their job or would otherwise lose health coverage. Many states have “mini COBRA” laws, which cover smaller employers or provide greater protection than COBRA. Note that regulations — both federal and state — can change quickly, so check the details before changing a policy at your company.

© 2019

Employee handbooks

Do you have an updated employee handbook? Click below to learn more about our HR On-Demand Services.

The post Are Employee Benefits Are Legally Required? appeared first on Payroll Management, Inc.

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In an effort to further reduce the gender pay gap, Maine has joined a growing number of states and municipalities that have banned salary history inquiries. The state amended the Maine Human Rights Act, which already included pay equity provisions, to include the salary history ban. The law takes effect September 17, 2019.

Maine Salary History Inquiry Ban

The new law makes it illegal for employers to ask an applicant about their salary history or to direct a third party (e.g., a background check provider) to make such inquiries.

If an applicant volunteers their salary history, an employer may verify it, but employers should not in any way encourage candidates to disclose this information.

Employers may ask about the salary history of a prospective employee after an offer of employment has been made that has already been fully negotiated and includes all terms of compensation.

Discussion of Wages Must Be Allowed (Still)
Maine made it illegal for employers to prohibit employees from discussion their wages or inquiring about the wages of their co-workers years ago. The recent amendment, however, makes it an employee’s right to also disclose the wages of other employees, if done so to enforce equal pay rights. Because the purpose of disclosure is relevant, this does not give someone in accounting or HR the right to share salaries willy-nilly. The law does not require that an employer (or other employees) provide the requested wage information.

Action Items
By September 17, 2019:
• Train anyone involved in the interview process to steer clear of salary history questions.
• Ensure that your application forms don’t ask for salary history. We have a compliant application available in the HR Support Center, which you can find by using the search bar and typing in Employment Application.

The post Maine Bans Salary History Inquiries appeared first on Payroll Management, Inc.

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Under the Fair Labor Standards Act, employers generally do not have to provide short breaks or lunch periods to employees. However, the Act places restrictions on employers who choose to provide them. The FLSA also has guidelines for dealing with sleep time and breastfeeding breaks. Let’s review these breaks individually.

Short Employee Breaks

These include coffee, snack or rest breaks that typically last anywhere between 5 and 20 minutes. The FLSA regards these breaks as paid time. Therefore, the time taken must be included in the employee’s hours worked for the week and should be factored in when determining whether he or she worked overtime. Employees who knowingly use more than their allotted break time do not have to be paid for the unauthorized time taken. Regarding bathroom breaks, OSHA requires that employers do not impose unreasonable restrictions on restroom use and allow workers to leave their work locations to use a restroom when needed.

Employee Lunch Breaks

Lunch breaks or meal periods usually last 30 minutes or more. The FLSA does not consider meal periods as work hours — which means the time is unpaid and should not be included in the employee’s hours worked. However, for the time to be unpaid, the employee must be completely relieved of all duties. Employees who are required to perform any duties during the meal period — for example, working while eating — must be paid for the lunch break.

Employee Sleeping Periods

Employers that allow employees to sleep while on duty for less than 24 hours must pay them for the sleeping period. If the employee’s work shift comprises 24 hours or more, the employer and the employee can agree to exclude sleeping periods of up to 8 hours from the employee’s time worked — provided certain conditions are met, as defined by the FLSA. This exclusion is permissible as long as there is an agreement between the employer and the employee.

Breastfeeding Breaks for Employees

The FLSA requires that employers give nursing mothers a reasonable amount of break time to provide milk to their nursing child for up to one year after giving birth. In addition, they must provide a private space for the employee to express milk. (Bathrooms do not count.) Employers are not required to compensate nursing mothers for time spent expressing milk.

State Laws on Employee Breaks

Many states have their own break criteria, which may be identical or similar to the FLSA or may differ considerably. For example, some states have lunch and rest break laws that are specific to minors. Further, some states have day of rest laws, which require that employers provide a day of rest to employees who work a certain number of days or hours consecutively. It’s crucial that employers scrutinize federal and state laws when developing internal policies on employee breaks. This is doubly true for multistate employers. If both federal and state laws apply, the statute that favors employees the most takes precedence.

© 2019

The post Breaking Down Employee Breaks appeared first on Payroll Management, Inc.

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There have been recent updates to posting requirements in Maine and Massachusetts. These posting changes are summarized below. To stay in compliance with these recent changes, all businesses in Maine and Massachusetts with at least one employee on payroll must display these updated postings in their locations.

Maine Labor Law Updates Employment Security Law

March 14, 2019 The Maine Department of Labor has updated their Employment Security Law notice. The name of the agency that checks the Social Security and/or Alien Permit numbers of alien workers has changed. This process is now handled by the United States Citizenship and Immigration Services. On the previous Employment Security Law notice, the agency was listed as the Department of Homeland Security, Immigration and Naturalization Service. The poster revision date is March 14, 2019.

Regulation of Employment

March 14, 2019 The Maine Department of Labor has updated their Regulation of Employment notice. The updated notice reflects a new email address. The poster revision date is March 14, 2019.

Massachusettes Labor Law Update

Paid Family and Medical Leave

April 8, 2019 The Massachusetts Department of Family and Medical Leave (DFML) has released a Paid Family and Medical Leave notice. The new notice reflects that most workers in Massachusetts will be eligible to get up to 12 weeks of paid family leave and up to 20 weeks of paid medical leave. The program will be funded by premiums paid by employees, employers, and the self-employed. Contributions to the program will begin on July 1, 2019, and will be managed through the Department of Family and Medical Leave (DFML). The poster revision date is April 8, 2019.

  Labor Law Poster Updates – Click to Learn More

The post ME & MA Labor Law Poster Updates appeared first on Payroll Management, Inc.

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A lookback period is the length of time that the IRS uses to measure the amount of taxes paid by an employer. The lookback period also helps the employer determine its deposit schedule.

Payroll Taxes, Filings and Lookback Periods

Employers must withhold federal income tax, Social Security tax and Medicare tax from employees’ wages, plus pay their own share of Social Security and Medicare taxes. These taxes must be paid together to the IRS.

Most employers must report these taxes to the IRS quarterly via Form 941. However, small employers with a tax liability of $1,000 or less may be allowed to file annually via Form 944.

The amount of taxes you reported during your lookback period dictates your deposit schedule — which can be monthly or semiweekly. The actual time frame that makes up this period depends on whether you’re a Form 941 or a Form 944 filer.

To determine whether your federal income tax, Social Security tax and Medicare tax deposits are due monthly or semiweekly, you’ll need to know the amount of taxes reported during your Form 941 or Form 944 lookback period.

Lookback Period and Deposit Schedule for 941 Filers

The lookback period for Form 941 filers comprises 12 months — covering four quarters, starting on July 1 and ending on June 30.

For example, the  period for 2019 comprises:

  • July 1, 2017 – Sept. 30, 2017
  • Oct. 1, 2017 – Dec. 31, 2017
  • Jan. 1, 2018 – March 31, 2018
  • April 1, 2018 – June 30, 2018

Your deposit schedule is monthly if you reported a tax liability of $50,000 or less during the four-quarter lookback period. In this case, your tax liability for each month is due by the 15th of the following month.

Your deposit schedule is semiweekly if you reported a tax liability of more than $50,000 during the four-quarter lookback period. In this case, deposits for paydays that fall on Saturday, Sunday, Monday or Tuesday are due by the following Friday. Deposits for paydays that fall on Wednesday, Thursday or Friday are due by the following Wednesday.

Lookback Period and Deposit Schedule for 944 Filers

The lookback period for Form 944 filers is the second preceding calendar year. For example, the  period for 2019 is calendar year 2017.

The same $50,000 threshold that is used to determine deposit schedules for Form 941 filers is also used to determine deposit schedules for Form 944 filers. For example, if you reported a tax liability of $1,000 in 2017, your deposit schedule is monthly. But if you reported a tax liability of $60,000 in 2018, your deposit schedule is semiweekly.

Note that this article covers only the basics of lookback periods and does not include the many nuances that come with this IRS designation. For more information, consult IRS Publication 15 or contact your payroll provider.

© 2019

The post Know Your Lookback Period for Payroll Taxes appeared first on Payroll Management, Inc.

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We live in a fast-paced society where people are forever on the go. There’s hardly ample time for work-life balance, let alone continuing education. Yet studies show that employees want opportunities for learning and development.

According to a Gallup survey, 87 percent of millennials say professional development is important in a job. Further, the Harvard Business Review concluded that lack of opportunities for promotion or growth is a key reason people quit their jobs. Employees want to take their careers to the next level — and employers are encouraging them via tuition reimbursement programs.

A study by the International Foundation of Employee Benefit Plans found that around 83 percent of surveyed organizations provided some type of tuition reimbursement or education assistance to their employees. In that same survey, nearly 75 percent of employers said their tuition assistance program was successful, having a positive impact on career outcomes, job satisfaction and employee loyalty.

Higher retention rates

According to EdAssist, nearly six in 10 employees who use tuition assistance programs say “they were offered a promotion, new opportunities within the organization, or other professional benefits within two years of completing the program.”

Additionally, eight in 10 employees say tuition assistance “makes them more likely to stay with their employer.” This finding contradicts the notion that the employer will be left “out in the cold” after the employee completes his or her degree or course of study.

Lower recruiting costs

After finishing the educational program, the employee becomes more promotable and an even stronger asset to the company. By promoting from within, the employer saves on recruiting costs while cementing its reputation as an employer willing to invest in its workforce’s future.

Tax breaks, a compelling incentive

The IRS allows employers to write off tuition reimbursements of up to $5,250 per year. The employee, as well, may qualify for education-related tax credits and deductions.

The case for reimbursement

Tuition reimbursement programs are usually offered by larger employers with bigger budgets. In these companies, the program is likely to be utilized at a rate that justifies the investment. This doesn’t mean that small employers cannot benefit from providing tuition assistance, as it all comes down to the needs of the company.

Typically, the employer paying the reimbursement requires that the pursued degree or courses be applied within the organization. So, if there’s room for advancement within the company, there’s a case to be made for tuition reimbursement — no matter the size of the business.

Keep in mind that the employer decides the level of tuition reimbursement, whether that’s up to the tax-deductible amount of $5,250 or more. Also, reimbursement can be for nondegree programs, such as workshops, certification programs and individual courses — which may cost less than degree programs.

© 2019

The post Is Tuition Reimbursement Right for Employers? appeared first on Payroll Management, Inc.

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