RedWolf Payroll

Archive for the ‘Regulations’ Category

Payroll touches each and every employee of an organization who receives a regular wage or other compensation. Some employees may be paid a salary while others are based on the number of hours worked.  Many of these different payment methods are calculated by a payroll specialist and the appropriate paychecks are issued. Organizations often use objective measuring tools such as timecards or timesheets completed by supervisors to determine the total amount of payroll due each pay period.  All in all, there are a vast amount of records that can pile up related to employees.Many payroll records are based on objective criteria such as timecards and federal tax forms.  For many small business owners, this mountain of records can be a daunting task to keep organized.  This is a major reason that many business owners choose to hire outside accountants to perform all of the calculations; store all of the year-to-date records and issue paychecks in a timely fashion. Employers simply need to update their payroll firm with changes in employee pay rates or deductions.In payroll personal file is essential that information is easily accessible and accurate when it is needed. Business owners and managers will eventually encounter the need to produce documentation about employee performance and work history. When outside people ask the company to provide verification of certain employment information, make it a practice to confirm only the information your employees have authorized you to release.The following items constitute a list of what items should be retained related to your employees. Keep in mind that this list is not all inclusive, and may vary based on your company or industry.

1.  Offer and hiring records (including employment contracts and/or agreements)
2. Employment applications (include supporting documentation such as resume, transcripts, interviewer notes, recommendation letters and/or reference checks.
3.  Job Descriptions
4.  Receipt for Employee Handbook (if applicable)
5.  Testing and/or Training Records (if applicable)
6.  Performance Evaluations
7.  Awards or disciplinary actions
8.  Personal data (name, address, birth date, sex, etc.)
9.  Payroll records
10.  Employee pay and benefit plans records
11.  Records and logs of occupational injuries
12.  Employee terminations and exit interview notes
13.  Promotions, demotions, and transfers
14.  INS Form I9
15.  Tax Withholding Forms (W-4, W-5, and any required state forms)

The following records are considered confidential, and should be kept separate from the regular personnel file when others may access the information inappropriately. 

1. Supervisor’s administrative file
2. Medical records and medical history of employees regarding ADA, FMLA, Rehabilitation, or work-related injury and/or illness claims and reports, and referrals concerning employees’ participation in Employee Assistance Programs
3. Medical records and medical history of family members of employees
4. Assessments functional capacity
5. Fitness for duty examination results
6. Discrimination claims and/or reports, including investigative materials.

New entrepreneurs need to have a strong respect for employee issues and legal regulations. Employee rights law has become a major issue in today’s workplace. It is crucial that employees are classified correctly as there are large tax implications and penalties when they are misclassified.

• Instructions about when, where, and how to work. Even if no instructions are given, sufficient behavioral control may exist if the employer has the right to control how the work results are achieved.
• Training the business gives the worker. An employee may be trained to perform services in a particular manner. Independent contractors ordinarily use their own methods.

• The extent to which the worker has unreimbursed business expenses. Independent contractors are more likely to have unreimbursed expenses than employees. Fixed ongoing costs that are incurred regardless of whether work is currently being performed are especially important. However, employees may also incur unreimbursed expenses in connection with the services they perform for their business.
• The extent of the worker’s investment. An independent contractor often has a significant investment in the facilities he or she uses in performing services for someone else. However, a significant investment is not required.
• The extent to which the worker makes services available to the relevant market.
• How the business pays the worker. An employee is generally paid by the hour, week, or month. An independent contractor is usually paid by the job. However, it is common in some professions, such as law, to pay independent contractors hourly.
• The extent to which the worker can realize a profit or incur a loss. An independent contractor can make a profit or loss.

Type of Relationship. Facts that show the parties’ type of relationship include:

• Written contracts describing the relationship the parties intended to create.
• Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay.
• The permanency of the relationship. If you engage a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or period, this is generally considered evidence that your intent was to create an employer-employee relationship.
• The extent to which services performed by the worker are a key aspect of the regular business of the business of the company. If a worker provides services that are a key aspect of your regular business activity, it is more likely that you will have the right to direct and control his or her activities. For example, if a law firm hires an attorney, it is likely that it will present the attorney’s work as its own and would have the right to control or direct that work. This would indicate an employer-employee relationship.