Future of the Overtime Rule

Remember that overtime regulation that was supposed to take effect on December 1, 2016?  It would have doubled the Fair Labor Standards Act’s (FLSA’s) salary threshold for exemption from overtime pay from $23,660 to $47,476. Then in November, 2016 there was a federal court decision that halted the rule.  Now what can we expect?

That probably depends on whether the current nominee for Secretary of Labor is confirmed.  Alexander Acosta was questioned during a March 22 confirmation hearing before the Senate Health, Education, Labor and Pensions Committee.  At that time he said that he believed the salary threshold figure should be somewhere around $33,000 after adjusting for the cost of living since the last time the threshold was adjusted back in 2004.  He has not said what he thinks of the pending litigation, but he did suggest that if confirmed the Department of Labor will review the rule and possibly make changes.  Acosta even said that he is not sure whether the dollar threshold would supersede a duties test, and therefore not be in accordance with the law.  He said he would consult with officials at the Department of Justice to make a determination.

The Senate Committee is expected to approve Acosta’s nomination this week.  If approved it will then go to a full senate vote.  If confirmed Acosta said he would put all Department of Labor regulations through a review.  Stay tuned for more changes in 2017.

IRS Deadline

Tax Returns Due April 18

The Internal Revenue Service (IRS) has announced that tax season will begin Monday, January 23, 2017 and that the filing deadline to submit 2016 tax returns is April 18, 2017.

Tax Season Begins January 23
The IRS will begin accepting electronic tax returns on January 23, 2017. Many software companies and tax professionals will be accepting tax returns before January 23 and then will submit the returns when IRS systems open. The IRS will begin processing paper tax returns at the same time. According to the IRS, there is no advantage to filing tax returns on paper in early January instead of waiting for the IRS to begin accepting e-filed returns.

The IRS also reminds taxpayers that they should keep copies of their prior-year tax returns for at least 3 years. Taxpayers who are changing tax software products this filing season will need their adjusted gross income from their 2015 tax return in order to file electronically. The Electronic Filing Pin is no longer an option.

According to the IRS, “Where’s My Refund?” remains the best way to check the status of a refund.

April 18 Filing Deadline
The filing deadline to submit 2016 tax returns is April 18, 2017, rather than the traditional April 15 date. In 2017, April 15 falls on a Saturday, and this would usually move the filing deadline to the following Monday, April 17. However, Emancipation Day—a legal holiday in the District of Columbia—will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 18, 2017. Under the tax law, legal holidays in the District of Columbia affect the filing deadline across the nation.

ACA – What Now?

First and foremost, just because we had an election doesn’t mean that everything changes immediately.  The Affordable Care Act forms are still going to be required for 2016 reporting.  You do have a one month reprieve:  the forms were originally due to employees on January 31, 2017 and now they are  due on March 2, 2017.  That extra time will be helpful to employers, but perhaps even more helpful is the IRS’s change regarding penalty relief.  Originally the IRS said employers would have to show “reasonable cause” to have penalties waived for 2016 reporting.  Instead, they are extending the good faith penalty relief from 2015 reporting for another year.  Saying ” I though this would go away after the election” will probably not be considered a good faith excuse, however so you should be prepared to take the forms seriously again this year.

There are some changes for 2016 reporting. Most notable is the change to the indicator codes denoting spousal coverage.  Codes 1J and 1K have been added to indicate conditional offers of healthcare coverage to spouses.  The codes go on Part II, Line 14 of Form 1095-C.  These codes will cover situations where coverage is available to the spouse only under certain situations such as when the spouse certifies that he or she is not eligible for other group coverage through an employer or not eligible for Medicare.

The deadlines for filing with the feds remain the same.  The deadline for filing employer copies on paper is February 28, 2917.  The deadline for electronic filing is March 31, 2017.  One reason to consider getting it all done in January is that you can get a special discount if you use the Aatrix tax filing service and are ready to send out W-2’s and 1095-C’s at the same time.

 

 

Employee or Contractor?

Trying to determine whether someone is an employee can have a big impact on both the employer and the worker.  If the worker is an employee you must withhold income tax and Federal Employment Taxes.  You may also have benefits costs, worker’s compensation and other costs to consider.  If the worker is truly an independent contractor you only have to worry about paying them for their services.  That makes it very tempting to define someone as an independent contractor but you have some risks if you classify someone incorrectly.

The IRS has a form that you can use to help determine whether someone is a contractor or should be an employee.  They also have a voluntary program to change someone’s status and limit your exposure to back taxes and penalties.  This form can be filed with the IRS by an individual who thinks they have been mis-classified or a company wanting a determination.  Here are examples of some of the questions on the form:

  1. What specific training and/or instruction is the worker given by the firm?
  2. How does the worker receive work assignments
  3. Who determines the methods by which the assignments are performed?
  4. At what location(s) does the worker perform services?
  5. Did the worker perform similar services for others during the time period?
  6. How does the firm represent the worker to its customers (for example, employee, partner, representative, or contractor), and under whose business name does the worker perform these services?

If you think you may be vulnerable to an IRS audit of your independent contractors you may want to review the Form SS-8 and the Voluntary Classification Settlement Program .

 

 

Overtime in the news

Just as we have all been busy trying to figure out how to deal with reporting for the Affordable Care Act, another major project for Human Resources and top management is looming.  The Obama Administration has proposed updated overtime rules that could become law as early as January 2016.  Under the current overtime rules employees making under $455 per week ($23,660/year) are automatically considered non-exempt and eligible for overtime.  For employees above this pay level the overtime classification is based on what is called the “duties test.”  The duties test is designed to determine whether a job is exempt from the overtime requirement due to classification as Executive, Administrative, Professional or Outside Sales.

Under the proposed rules changes, the compensation test would be based on a salary level equal to the 40th percentile of earnings for full-time salaried workers.  That works out to $970 per week or $50,440 annually or thereabouts for 2016.

What should you be doing?

  • Now is definitely time to review your current job classifications, especially those jobs that are paid between $23,660 and $50,000 per year.
  • Take a look at your other policies – Do you have benefits that are different for Salaried and Hourly employees?  How many employees will be affected?
  • Consider what time keeping policies will need to be changed.
  • Decide whether some salaries will need to change to maintain and exempt status.

Above all, you should pay attention to the news about the proposed overtime rule changes.  We are now in the comment period and changes could still be made.  No matter what, however, you can expect increased attention as to who should be getting overtime pay in your company.

 

 

Understanding Payroll Tables

If you are a former Abra Suite user you have probably found that writing Crystal Reports using HR data is not all that much different in Sage HRMS.  The transition is so easy that most reports will simply convert by choosing a new data source.  Payroll, on the other hand, is a completely different story.  Table and file names are completely different.  For example:

Table:  UPEMPL

This is the payroll version of the HRPERSNL table in HRMS.  This is where you find information like the employee name, SSN, hire date and other demographic information.  For the most part, if you are writing a payroll report you will start with this file rather than HRPERSNL.  Here are some of the important fields:

  • EMPLOYEE – Employee Number
  • FIRSTNAME – Employee First Name
  • LASTNAME – Employee Last Name
  • FULLNAME – Employee name in Last, First Middle format

Table:  UPCHKH

This is the check header file.  This is where you find information that relates to the entire check like the check date, the net pay amount, bank account information, etc.  Here are some of the important fields:

  • EMPLOYEE – Employee Number
  • PEREND – Period End Date
  • ENTRYSEQ – This is similar to a payroll batch number.  If you process more than one payroll on the same day they will have different values in the ENTRYSEQ field even though they may have all the same dates.
  • TRANSDATE – This is the check date, stored as either YYYMMDD or MM/DD/YYYY depending on your version of Sage HRMS.
  • TRANSAMT – This is the net cash pay amount

NOTE:  EMPLOYEE, PEREND, and ENTRSEQ are all keys that need to be used to link the UPCHKH (Check Header) and UPCHKD (Check Detail) tables.  Also, once you have three tables rather than two tables in the report you will need to be very careful about trying to create totals using  fields from the Header.  It will be easier to create totals using the Detail fields.

 

Table:  UPCHKD

This is where the check details are stored.  This table gives you the complete detail of every single posting; whether it was an earning, deduction, or tax;  and where it was charged for General Ledger.  For tax records or percentage deductions it will also show the wagebase.  Here are some of the important fields:

  • Employee – Employee Number
  • PEREND – Period End Date
  • ENTRYSEQ – Entry sequence (payroll batch number)
  • EARNDED – The code for the earning, deduction, tax, accrual, or benefit.
  • HOURS – The hours associated with an earning or accrual record.
  • EEXTEND – The dollar amount of the earning, deduction, or tax.
  • REXTEND – The employer match for items such as 401(k) deductions or the employee portion of benefits.
  • TAXEARNS – The taxable wages for items that don’t have a ceiling.
  • TAXEARNCEIL – The taxable wages for items that do have a ceiling.
  • PCATEGORY – Flag to determine if the record is an earning, deduction, tax, benefit, or accrual.
    • 1 = Earning
    • 2 = Deduction
    • 3 = Tax
    • 4 = Accrual
    • 5 = Benefit