7/26/2019 Payroll Administration 1 Chapter 1 The Fair Labor Standards Act: Introduction and Overview 2 2 Learning Outcomes Recall the Fair Labor Standards Act and its role in payroll issues Identify if an individual is an independent contractor or employee Distinguish between exempt versus nonexempt employees Recall rights of exempt employees Payroll Administration 3 3 Treasury Management 1
7/26/2019 FLSA – Introduction Establishes minimum wage, • overtime pay, record-keeping and child labor standards Wage and Hour Division • responsible for administering and enforcing FLSA for government employees Payroll Administration 4 4 FLSA Requirements for Employers Pay at least the Federal minimum wage to nonexempt employees Pay at least time and one-half for all hours worked over 40 in the workweek Comply with the child labor standards Comply with the recordkeeping requirements Payroll Administration 5 5 Who are your Employees? • Hired by another person or business for a wage or fixed payment in exchange for personal services and who does not provide the services as part of an independent business Any individual employed by an • employer Payroll Administration 6 6 Treasury Management 2
7/26/2019 Independent Contractor or Employee? Important Behavioral • distinction control for tax purposes Courts will • Categories examine facts that fall under Financial Relationship of three the parties control categories Payroll Administration 7 7 #1 Behavioral Control Show whether there is a right to direct or control how the worker does the work Considered an employee when the business has the right to direct and control the worker • Doesn’t have to actually direct or control the way the work is done – as long as the employer has the right to direct and control the work Payroll Administration 8 8 Instruction You receive Ho w, whe n o r whe re to do the wo rk extensive instructions Wha t to o ls a nd e q uipme nt to use on how work is to be done Wha t a ssista nts to hire to he lp with the wo rk Whe re to purc ha se supplie s a nd se rvic e s Wha t wo rk must b e pe rfo rme d b y a spe c ifie d individua l Wha t o rde r o r se q ue nc e to fo llo w You might be an employee! • Continued on next slide Payroll Administration 9 9 Treasury Management 3
7/26/2019 Instruction Amount needed varies among • different jobs • Sufficient behavioral control may exist even if no instructions are given – Key consideration: whether the government has retained the right to control the details of a worker’s performance or instead has given up that right Payroll Administration 10 10 Training • Government provides you with training about required procedures and methods…… you might be an employee! Payroll Administration 11 11 Evaluation • Evaluation system measures the details of how the work is performed… you might be an employee! Payroll Administration 12 12 Treasury Management 4
7/26/2019 #2 Financial Control Significant investment • I nve stme nt must ha ve sub sta nc e . Ho we ve r, a sig nific a nt inve stme nt is no t ne c e ssa ry to b e a n inde pe nde nt c o ntra c to r. Expenses • No t b e ing re imb urse d fo r so me o r a ll e xpe nse s Opportunity for profit or loss Payroll Administration 13 13 #2 Financial Control Services available to the relevant market • F re e to se e k o ut b usine ss o ppo rtunitie s • Adve rtise , ma inta in a visib le b usine ss lo c a tio n, a nd a re a va ila b le to wo rk in the re le va nt ma rke t Paying the worker • E mplo ye e : re g ula r wa g e a mo unt • Inde pe nde nt c o ntra c to r: pa id a fla t fe e fo r the jo b • K e e p in mind tha t it is c o mmo n to pa y so me inde pe nde nt c o ntra c to rs ho urly Payroll Administration 14 14 #3 Relationship to Parties Employee benefits • I f yo u re c e ive ….yo u mig ht b e a n e mplo ye e • I f yo u do no t re c e ive ….yo u still mig ht b e a n e mplo ye e Written contracts Permanency of the relationship • Will the re la tio nship c o ntinue inde finite ly? Extent to which services performed are a key aspect • I ndic a te s it is mo re like ly tha t yo u will ha ve the rig ht to dire c t a nd c o ntro l a c tivitie s Payroll Administration 15 15 Treasury Management 5
7/26/2019 Independent Contractor Employee An attorney or accountant who has his or her own An attorney or accountant who is employed by a firm office, advertises in the yellow pages of the phone book to handle their legal affairs or financial records, works under "Attorneys“ or "Accountants," bills clients by in an office at the firm’s place of business, attends the hour, is engaged by the job or paid an annual meetings as needed, and the firm bills the clients and retainer, and can hire a substitute to do the work. pays the attorney or accountant on a regular basis. An auto mechanic who has a station license, a resale An auto mechanic working in someone’s shop who is license, buys the parts necessary for the repairs, sets his paid a percentage of the work billed to the customer, or her own prices, collects from the customer, sets his or where the owner of the shop sets the prices, hours, and her own hours and days of work, and owns or rents the days the shop is open, schedules the work, and shop from a third party. collects from the customers. Dance instructors who select their own dance routines Dance instructors working for a Parks and Recreation to teach, locate and rent their own facilities, provide department where the department sets hours of work, their own sound systems, music and clothing, collect the routines to be taught and pays the instructors from fees from customers, and are free to hire assistants. fees collected from the customers. A repairperson who owns or rents a shop, advertises A repairperson working in a shop where the owner sets the services to the public, furnishes all of the tools, the prices, the hours and days the shop is open, and the equipment, and supplies necessary to make repairs, sets repairperson is paid a percentage of the work done. the price for services, and collects from the customers. Payroll Administration 16 16 Employment Relationship under the FLSA U.S. Services rendered Supreme Court Permanency of relationships factors Contractor investment in facilities and equipment Control of principal Profit and loss opportunities Initiative, judgment and foresight Degree of independent business organization and operation Payroll Administration 17 17 Identifying Factors Review checklist on page 1-6 Payroll Administration 18 18 Treasury Management 6
7/26/2019 Exempt or Nonexempt Nonexempt – entitled to • overtime Most employees covered by the • FLSA are nonexempt Some jobs are classified as • exempt by definition Teachers • Most employees must meet all • three “tests” to be exempt Payroll Administration 19 19 Three Tests Salary Level Duties Salary Test Basis Payroll Administration 20 20 Three Tests • Salary Level – Less than $47,476 = nonexempt – More than $134,004 = exempt • Salary Basis – Minimum amount paid for “any” work performed – Salary is annual figure divided by the number of pay periods in a year Payroll Administration 21 21 Treasury Management 7
7/26/2019 Three Tests • Duties Test – Actual job tasks must be evaluated – Exempt executive job duties – Exempt professional job duties – Exempt administrative job duties Payroll Administration 22 22 Rights of Exempt Employees Full amount of the base salary in any • work period during which she/he performs any work No limits on the amount of work time • required/expected by employee “No rights at all” under the FLSA overtime rules Payroll Administration 23 23 Exercise Chapter 1 24 24 24 Treasury Management 8
7/26/2019 Chapter 2 The Payroll Process 25 25 Learning Outcomes Recall the steps involved in the payroll process Recognize the basic documents for new hire packages Identify the documents maintained in a personnel file Recall how to document payroll changes Payroll Administration 26 26 Overview • Step #1 – Set up new employees • Step #2 – Time card information • Step #3 – Verify information • Step #4 – Data input • Step #5 – Calculate taxes • Step #6 – Calculate wage deductions • Step #7 – Separate manual payments Payroll Administration 27 27 Treasury Management 9
7/26/2019 Overview • Step # 8 – Create payroll register • Step # 9 – Verification • Step #10 – Print checks • Step #11 – Journal entries • Step #12 – Send out direct deposit notifications • Step #13 – Deposit withheld taxes • Step #14 – Issue paychecks • Step #15 – Issue payroll reports Payroll Administration 28 28 New Hire Packages New hire packages Personal Information should capture all Compensation information needed by the Taxes payroll office to process paychecks Deductions for new employees Payroll Administration 29 29 New Hire Packages Checklist • – Exhibit 2-1 Morgan County New Hire Checklist.pdf • Government go-to list’ Government directory • Payroll Administration 30 30 Treasury Management 10
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