Stay Informed with Time & Pay

What’s New? Does your organization encourage annual W4 reviews? Each year, employers are forced to have tough conversations with employees that owe more taxes than expected after they file their return. While the employer is responsible for withholding and filing payroll taxes on their employee’s behalf, it is up to the employee to determine how much federal income tax is withheld from their wages. It is also the employee’s responsibility to make sure enough income tax is being withheld to cover their annual tax burden. What Should You Do? The amount of federal income taxes withheld from employee wages is determined by how they fill out their W4 . All employees are required to complete a W4 during the initial onboarding process, but very few review and make adjustments. For this reason, we recommend that employers actively encourage their employees to take these steps each year: Use the IRS tax calculator to get an idea of what tax liabilities will be for the year. Review check stubs to make sure enough federal and state income taxes are being withheld. Submit a new W4 if income tax withholdings are insufficient. Employers should also encourage employees to submit a new W4 if they: Experience a life-changing event (marriage, children, divorce, etc.). Add another source of income (2nd job, “side hustle”, contract work, etc.) Have had to pay additional taxes after filing their annual return for previous year. How Can Time & Pay Help  Detailed Check Stubs: Time & Pay provides detailed earning statements for all employees we process payroll for. Paychecks that we produce include a check stub that shows all wages, deductions, and taxes withheld on the current payroll, as well as year-to-date totals. If your employee isn’t receiving a paper check, check stubs are sent via mail, or electronically to the employer to distribute. If the client is a Payentry subscriber, check stubs are available online through an employee self-service portal, as well as details about how their withholding status is currently set up. There is also a mobile app available on Apple and Android devices that give employees access anywhere they have internet access.

What’s New? The IRS uses a 20 factor test when considering whether a worker is an employee or independent contractor. With a new final rule set to go into effect on March 11, 2024, it’s a good time to review these factors, as well as how workers are classified within your organization. What are the 20 Factors? When considering whether a worker is an employee or independent contractor, you should ask yourself these questions: Instructions – Do we provide instructions on when, where, how to do the work? Training – Do we train the worker? Subcontracting – Can the worker subcontract part of the work, or does the worker have to perform the work? Control of Workforce – Is the worker allowed to hire and terminate their own workers? Length of Employment – how long will the worker be expected to work for us? Schedule – Did we set the schedule? Full Time Work – Are they working full-time for us? Order or sequence – Do we require the work to be done in a specific order or sequence? Work on premise – Does the work have to be done at our office or work space? Reports – Do we require the worker to provide reports and status updates? Pay – Do we pay the worker by the hour, week, month, or job? Expenses – Are we paying or reimbursing the worker for expenses? Tools and Materials – Do we provide tools to the worker? Investment – Does the worker have investment in the essential tools and/or facilities where work is performed? Profit / Loss – Can the worker suffer a profit or loss on the job depending on their performance? Integration – Is the worker doing work that is vital to our operation? Exclusivity – Does the worker perform work for more than one company at a time? Availability – Does worker make their services available to the general public? Termination – Can our company fire the worker without liability? Resignation – Can the worker quit without liability? Overview:  All 20 factors are related to these 3 items: Behavioral Control – Does the company have the right to control how the worker performs their services? Financial Control – Are the business aspects of the worker’s services controlled by the company? Relationship of the Parties – Is the relationship between the worker and the company defined in legal documents? Does the company provide insurance for the worker? Are the worker’s services a vital part of the company’s operations? Fines and penalties assessed due to misclassification of workers could be devastating for businesses. Time & Pay clients have access to complimentary consultations through SESCO HR Management . If you have questions or concerns about how certain workers in your organization are classified, contact us today!

What’s New? On January 10th, 2024 the Department of Labor announced a final rule that will be used when determining whether a worker should be classified as an employee or independent contractor. The new rule will replace the previous rule established in 2021, and is set to go into effect on March 11th, 2024. What is the New Rule? The new rule restores a standard of analysis that helps ensure that all relevant factors are considered when determining how a worker should be classified. There are six primary factors that guide the analysis of the worker / employer relationship: Factor 1: Opportunity for Profit / Loss Does the worker have the opportunity for profit or loss based on their success or failure? If no, then this factor would suggest that the worker is an employee. Factor 2: Investments by Worker and Employer Are a worker’s investments (tools, insurance, etc.) in their work entrepreneurial in nature, and allow them to work independently? If no, then this factor would suggest that the worker is an employee. Factor 3: Degree of Permanence of the Relationship How permanent is the work relationship between worker and employer? If sporadic or project-based, then this factor could suggest the worker could be an independent contractor. Factor 4: Nature and Degree of Control Does the employer have control over the worker in regards to performance of the work, schedule, supervision, pricing of services, etc.? If yes, then this factor would suggest that the worker is an employee. Factor 5: Work Integral to the Employer’s Business Is the work performed an integral part of the employer’s business? If yes, then this factor would suggest that the worker is an employee. Factor 6: Skill and Initiative Does the worker bring specialized skills to the work relationship, and not dependent on the employer for training? If yes, then this factor could suggest that the worker is an independent contractor. In addition to these 6 factors, the IRS has a 20 factor test employers can use to determine if their worker needs to be classified as an employee or independent contractor. Why is this Important? The IRS continues to invest more and more time and resources into enforcing FLSA compliance, especially as it relates to misclassification of employee vs. independent contractor. Fines associated with non-compliance can be devastating to a business, so it is important to analyze each working relationship in order to avoid having to pay back-taxes, penalties, and interest. How Does Time & Pay Help? While we do not help determine employment status, our clients receive free consultations through SESCO HR Management . SESCO will look at all factors, and help you determine whether or not your worker should be classified as an employee or independent contractor. Contact us today to learn more!

What’s New? The Department of Labor announced a proposal that would extend overtime for lower-paid salaried workers who are currently considered “exempt” from overtime pay. Currently, the minimum salary requirement for an employee to be considered exempt is $35,568 per year (or $684 per week). The overtime proposal would increase that requirement to $55,068 per year (or $1059 per week), which would extend overtime protection for 3.6 million workers. What Should I Do? Although the change to the salary threshold is still under review, employers should begin taking steps to make sure they are prepared should the overtime proposal become permanent. Time & Pay’s partner, SESCO Management Consultants , has outlined the following recommendations to help avoid major increases in labor costs: Identify salary-exempt employees that currently make less than $55,068 per year. Require these individuals to begin keeping an accurate record of time to determine actual hours worked. Determine if any employees making less than $1059 per week work in excess of 40 hours per week. If overtime is worked, determine if hours can be reduced to less than 40. If the position does require that the employee consistently works over 40 hours, determine whether or not you wish to increase their salary to $55,068 per year. If the increase in salary to the minimum requirement is not practical, determine if you prefer to pay 1.5x for hours over 40, or if a Fluctuating Workweek Method would be appropriate. What is a Fluctuating Workweek Method?  The Fluctuating Workweek Method is a mutual agreement between the employer and the employee. It dictates that the employee will earn a guaranteed salary no matter how many hours they work in a week, plus .5x pay for hours worked in excess of 40 hours. This plan helps employers avoid having to pay 1.5x for overtime, while also ensuring that employees earn a minimum salary each week. More information about the fluctuating workweek method can be found in this article, including your requirements, and states that are not eligible. Time & Pay and SESCO are here to help provide you with answers and tools to help you minimize labor costs while maintaining compliance. If you have questions about the proposed changes, or would like to consider implementing the Fluctuating Workweek Method, please contact us today !

What’s New? Time & Pay partners with ZayZoon to offer employee financial wellness tools to their clients. ZayZoon has been a leader in providing earned wage access to employees across the country since 2014. Recently, however, they have expanded their offerings to help put more money in their users’ pockets, and provide more resources to help improve their financial well being. What is Earned Wage Access? For those not familiar with earned wage access, it’s a service that provides employees with access to the wages they have already earned prior to their regularly scheduled check date. ZayZoon ‘s platform allows for employees in need to request funds through an online portal. If approved, money will be deposited into their account that day, and the total will automatically be deducted from their following paycheck. This process is automated with Time & Pay’s system so there are no manual entries, and there is zero risk to employers. Best of all, ZayZoon charges a $5 fee for each transaction, not a high interest rate that is typical amongst cash-advance establishments. What Else Does ZayZoon Provide to Employees? ZayZoon ‘s goal is to improve financial wellness for their partners and their employees. In addition to EWA, ZayZoon offers: Financial Education – Intermediate and advanced educational courses and articles are available to users. Topics include everything from opening your first bank account to building credit. Smart Insights – Employee portals connect with user banking data to provide deeper insights into spending behavior and cash flow. Tips are also provided to help users make better financial decisions. Customized Alerts – Notifications can help alert users when they are at risk of incurring minimum balance or overdraft fees based on billing and pay history. Cash Rewards – earned wages can be transferred to gas cards or gift cards at no cost, and users can receive up to a 25% bonus with each transaction. What Are the Benefits to Employers?  A Forrester study found that 48% of employees who are stressed about their financial situation are more likely to consider leaving their current job. A Deloitte study found that 83% of employees indicate that financial stress impacts their productivity at work. In addition, the same study found that employees who experience financial stress take, on average, nearly six extra sick days per year. Bottom line, employee financial wellness tools reduce costs for employers related to lost productivity, hiring, and training. Time & Pay is proud to partner with ZayZoon in order to help put their clients and their employees in a better financial position. If you would like learn more about ZayZoon , and how to add their services to your employee benefits package, contact us today !

What’s New? The U.S. Department of Labor (DOL) mandates employers to display official posters informing employees of their rights and responsibilities under federal laws. The DOL has announced updates to certain labor posters in the coming months. These must be posted in an accessible area. What has changed? The updated posters include: Fair Labor Standards Act Poster: Reflects recent legal changes under the Providing Urgent Maternal Protections for Nursing Mothers (PUMP) Act . Family Medical Leave Act Poster: Minor changes to FMLA and employee complaint filing process. U.S. Equal Employment Opportunity Commission Know Your Rights Poster: Updates coming to address provisions of the Pregnant Workers Fairness Act , effective June 27, 2023. What You Should Know: The DOL offers free electronic copies of required posters on its website. Employers can use the elaws Poster Advisor to find the required posters for their place(s) of business. Posting requirements vary by statute, so not all employers have the same obligations. Time & Pay has partnered with PosterElite to assist clients in complying with DOL poster requirements. PosterElite provides subscribers with updated and new posters required by the DOL. Non-compliance may result in fines or penalties. Contact us today for more information! Update: Updated posters are available here: Updated FLSA Posting Updated FMLA Post ing Updated EEOC Posting

What’s New? As ERC fraud rises, the IRS is stepping up efforts to warn employers of parasitic companies, and encourage careful review ERC guidelines before claiming any tax credits. The Employee Retention Credit program was created to incentivize employers to keep their employees on payroll in 2020 and 2021, despite economic conditions and supply chain issues brought on by the Covid pandemic. Washington’s intentions were good, but unfortunately, it has led to fraudulent activity that could cost employers thousands in fines, penalties, and tax repayments. What you should know: Parasitic companies offering to help claim ERC on behalf of an employer may market false information, and take liberties to claim more than what their “client” actually qualifies for. These companies typically charge a percentage of the credits they help claim, and are therefore incentivized to claim as much money as possible. Ultimately, it is up the employer to determine whether or not they qualify for employee retention credits. Any fines and penalties for wrongfully claiming ERC will be assessed to the employer, not the company that helped them claim the credit. Before claiming ERC, employers should do their own research to make sure they meet the qualification requirements outlined by the IRS . Employers should also know that owners’ wages, and wages of parties related to the owner cannot be included when calculating the tax credits, nor can credits be claimed on any wages that were paid using funds from forgiven PPP loans. These companies also frequently fail to mention that the employer will need to reduce the wage deductions they claimed on their business’ federal income tax return by the amount of the credit. Summary:  Employee Retention Credits have helped employers, who may have struggled in recent years, keep their doors open and keep employees on payroll. Unfortunately, they have also created an opportunity for fraud. Be wary if anything sounds too good to be true, and do your own research to determine whether or not you should claim ERC. Ultimately, it is the employer’s responsibility to determine eligibility and ensure they follow all IRS guidelines. Time & Pay is happy to answer questions and provide guidance to anyone interested. We can also help employers claim credits, and our fees are not based on the amount of money you qualify for, only the amount of time we spend on the project. Contact us today for more information!

What’s New?  Each year, employees anxiously await their W2 so that they can file their tax returns with the expectation that they will receive a substantial windfall of cash in the form of a tax refund from the IRS. A large portion of this refund is often a result of the child tax credit, which increased from $2,000 per eligible child in 2020 to up to $3,600 per eligible child in 2021. As you are probably aware, the IRS also issued advance payments to those who qualified. Payments were issued to qualifying families and individuals with children (unless they opted out) over the course of 6 months, totaling one-half of the tax credit they were eligible to receive. What Does This Mean? The child tax credit advances were aimed to help make sure parents had a little extra income to care for their children, but your employees need to be aware that they will have an effect on their tax refund. There is a chance that their tax refund may be smaller than expected, or they could even owe the IRS money if they did not have enough taxes withheld from their wages throughout the year. Employees should understand that they are still receiving the full amount in child tax credits, but half of that credit has already been issued to them as an advance. How Can You Help? Employers may want to encourage their employees to fill out a new W4 for 2022 in order to help ensure they are having enough federal income tax withheld from their paycheck each pay period. Another available tool is a tax calculator that the IRS developed to help show individuals what their annual tax liabilities will be. Employees with a better understanding of their taxes should help lower financial stress, and lead to a happier employee !

What’s New? The infrastructure bill , signed by President Biden on 11/15, has ended the employee retention credit program effective 9/30/21. This means that the majority of employers will not be able to claim the credit for Q4 of 2021. Only employers who qualify for the ERC as a recovery startup business will be able to claim the credit for the 4th quarter. Per the IRS , businesses that received advance payments for the 4th quarter or 2021, and are not recover startup business, will need to repay those credits by the due date of the applicable employment tax return in order to avoid penalties. Can I Still Claim the ERC?  Employers that qualify for the employee retention credit during any period in 2020, as well as Q1 through Q3 of 2021, can still claim the credit available to them. The deadline for claiming the credit is three years after the original employment tax return was filed. For example, if an employer is eligible for the ERC in Q3 of 2021, they will have until October of 2024 to file an amended 941 in order to claim the credit. Just as the ERC program ended abruptly as part of President Biden’s infrastructure bill, the deadline to claim these credits could be altered by future legislation. It is recommended that employers who qualify work to take advantage of this program as soon as they determine eligibility. If you need help claiming the employee retention credit, or need additional information, contact us today !

Question: Why Outsource Payroll? Answer: Outsourcing payroll can 100% save you money! Here’s how: In general, professional payroll services only get paid for the number of checks they produce. Thus payroll processing becomes a variable cost, a direct function of the number of employees you have, as opposed to a fixed cost of having an employee on staff processing your payroll. For example, a Time & Pay outsourced solution for a company with 20 employees paying on a weekly basis will cost on average between $60 and $70 per payroll period . This includes pay checks, management reports, tax filings – with guaranteed compliance, quarterly tax reporting and more. This translates into about $3,400 per year . You know that you cannot hire a person in-house to do payroll for that little cost. For a qualified individual, it would be at least 10 times that, plus overhead. Add to or reduce staff, and the cost of the payroll service varies depending on the cost per check, while your fixed in-house cost for qualified staff will remain the same, and increase over time. Your in-house staff may have trouble keeping up with payroll compliance depending on their resources and the demands on their time. Failure to keep up will prove costly! Your outsourced payroll professional always keeps up with the rules and regulations, never works overtime, never goes on paid vacation, never gets sick pay, and will always be there around the holidays to meet any special payroll needs you may have. Yes, we know this in-house person may be doing some other bookkeeping functions as well, but keep in mind processing payroll does not generate any income for your business. You know your staff needs to spend as much time as they can servicing your existing clients, finding new ones, collecting valuable receivables and other income generating tasks. What are other cost saving advantages to our payroll services? Guaranteed compliance. The IRS notes that up to 40% of all businesses will be subject to costly IRS penalties for compliance failures. A reputable payroll service like Time & Pay will take responsibility for any penalties that are a result of errors on their part thus eliminating the cost of non-compliance penalties. The cost of compliance is always less than the cost of non-compliance A good payroll service provider will include other compliance services such as new hire reporting (included at no cost as part of Time & Pay services) or garnishment compliance that will eliminate your cost of meeting those requirements and the greater risks/costs of non-compliance. A good payroll service provider will utilize superior systems that will eliminate all the costly errors associated with manually calculating paid hours, payroll, payroll taxes and other associated information as well as the cost of redoing the payroll if errors are made. Think you produce an error free payroll? Do this simple exercise to see if our services will help you. A good payroll service provider will offer quality, in-depth management reports that will help you better define, and thus control your labor costs as well as integrate the information with your accounting system. A good payroll provider like Time & Pay will be able to provide you with a quality automated timekeeping system that will eliminate most of the costs, and all of the costly inefficiencies of tracking hourly employee’s time at work. Still using a manual time clock or time sheets? Be sure to see our automated time and attendance services. Often times, employers are not aware of, or do not take advantage of, pre-tax deductions. A good payroll provider will be able to help you determine pre-tax benefits , accurately account for and process pre-tax deductions and create tax savings for your company that often times exceed the cost of the payroll service provided. A good service provider will be able to offer you other cost-saving means to help you manage your employees , their benefits and other HR issues. These are areas fraught with risks/costs if overlooked or ignored. For example, as a customer of Time & Pay, you have complimentary access to qualified HR consultants to address HR issues that need your attention due to legal considerations. This is a very valuable service that could normally cost you thousands of dollars a year depending on how often you need the expertise. A reduction in the “cost of ownership”. Many studies have shown that companies will significantly underestimate the cost of implementation and maintenance of in-house payroll/HR software and technology. When you take into account required IT infrastructure, labor, maintenance, as well as the on-going investment of bringing this technology in-house, the costs are much greater than estimated. They add up quickly and can easily far exceed outsourced solutions. Now is the time! Yes, there may be a few situations where outsourcing your payroll may not be cost-effective. But now is the time to find out if an outsourced solution will save your business valuable resources. Now, more than ever, it is important for businesses to operate as efficiently as possible in order to keep the doors open and maintain a competitive edge. You may be overlooking an important avenue for your cost-cutting measures if you have not looked at an outsourced option. Take the important step of evaluating an outsourced payroll solution for your business.

Question: How do I reduce labor costs? Answer: Accurately track employee time down to the minute. “It’s Only 5 Minutes!” is often what employers think when considering their employees’ time cards, but what is “It’s only 5 minutes” really costing you? The cost of using timesheets can grow into something substantial, especially if they aren’t accurate. If you’re asking yourself “how do I reduce labor costs,” you may want to consider these questions, as well: How often are your employees’ times fudged by 5 to 10 minutes? If you are using a time clock/time cards, how often are the totals rounded off just a little for ease of calculating? How often are mathematical errors made in tabulating hours worked? How often are employees forgetting to clock in or out with omissions inaccurately reported days later? These little errors occur more often than you think while also costing your company a significant amount of money! Chances Are Your Employees Are Being Over Paid! After many extensive studies by the American Payroll Association and many other businesses nationwide, it has been determined that employees are overpaid from 1% to 8% of their annual wage. This is simply due to the errors that commonly occur in manually recording and calculating hours worked. Therefore, “It’s only 5 minutes” adds up quickly. The table below shows what a miscalculation of “just 5 minutes” (1%) a day per employee is costing your company annually.