Handling your company’s payroll may sound simple. An employee works X hours a week for Y dollars per hour. Multiply X times Y, send a percentage off to the government for taxes, and you’re done. Anyone who passed basic algebra should be able to handle it, right?
Wrong. The reality is, payroll is a complex thing, according to Douglas Zucker, who will lead a seminar sponsored by Lorman Education Services on payroll compliance on Tuesday, September 9, at 8:30 a.m. at the Hyatt Regency, New Brunswick. Cost: $329. For registration call 866-352-9539.
In today’s competitive environment you must be able to effectively, economically, and lawfully manage your company’s payroll by staying current on the latest rules and regulations, says Zucker. This seminar is designed for payroll professionals, human resource and benefits professionals, CPAs and accountants, finance officers, and small business owners. Continuing education credits are available for those who complete the course.
A partner in Bauch, Zucker, Hatfield LLC in Springfield, Zucker focuses his practice on all aspects of labor and employment law for private and public sector employers, as well as not-for-profit organizations. He also provides counseling to individuals and executives on employment and post-termination release agreements.
Zucker has prosecuted and defended restrictive covenant litigation, and defended employers against employment discrimination and harassment suits in state and federal court as well as before administrative agencies such as the NJ Division on Civil Rights.
He received his bachelor’s degree in business and industrial relations from Rider in 1981, a master’s in industrial relations and human resources from Rutgers in 1985, and a law degree from Fordham in 1990.
Before attending law school Zucker worked as the administrative director of employee relations for a northern New Jersey hospital and as director of labor relations for a New York City building maintenance firm. He decided law would allow him “to help a lot of companies, rather than working with just one,” he says. “I found that even though I was fully trained and capable to deal with employee relations and compliance situations many companies preferred using someone with a law degree.”
Determining exemptions. Determining which employees are exempt from wage and hour laws and which are not can be complicated, says Zucker. While many people will use the terms “salaried” versus “hourly” employees, it is important to understand which categories of employees can fall in the “salary” category and which can not. Non-exempt workers must be paid overtime for hours worked in excess of a 40-hour week. Salaried, or exempt employees, are not eligible for overtime no matter how many hours are worked in a week.
Under state and federal law there are five categories of exemption: executives, professionals, administrators, outside sales people, and computer software professionals. An executive is defined as a person who is supervising two or more employees, while the professionals category includes a broad category of people such as doctors, lawyers and creative professionals. The administrative category is the most confusing, says Zucker. It can be defined as “a person who has the discretion to implement employer policies.”
For example, a human resources person who is instrumental in making policy decisions would be exempt, while a bookkeeper who makes out the checks for the office but has no say in which bills are paid, would not. It is also important to remember that while an outside salesperson is exempt from wage and hour regulations, an inside salesperson is not.
Calculating work hours. Once again, what seems easy on the surface can become more difficult when making sure that an employer is following all of the state and federal regulations, says Zucker. The employee clocks in at 9 a.m. and clocks out at 5 p.m. It sounds like a simple eight hour day. But what about lunch? If the employee leaves his or her desk for lunch, it is not considered work time and not part of the 40-hour week.
However, if an employee eats lunch at his or her desk and continues to work it does count as a work hour. In addition, if a break is under 15-20 minutes it can still be counted in the work hours, while longer breaks are not.
Family and medical leave. A new area of payroll compliance that many employers and employees alike find confusing is the Family and Medical Leave Act. Both the federal government and the state of New Jersey have such acts, and while many of the rules and regulations are the same, there are also important differences that employers must be aware of, says Zucker.
The federal act, for example, applies to companies with 50 or more employees, he explains, and allows qualified employees to take up to 12 weeks of unpaid leave in any 12 month period for family or personal medical reasons, or for the birth or adoption of a child. In other words, leave can be granted for a personal medical problem or to care for an immediate family member. The federal government defines immediate family members as a parent, spouse, or child.
The New Jersey law has some differences from its federal counterpart and in some cases is more lenient, Zucker adds. Under the New Jersey regulation the term “family member” also includes a parent-in-law or a civil union partner as well as a parent, spouse, or child. The state act also requires an employee to have worked only 1,000 hours in a 12-month period rather than the 1,250 required under the federal law.
Under certain circumstances the two regulations can be piggybacked to allow the employee more than 12 weeks of coverage, says Zucker. For example, an employee who takes several weeks leave for a personal illness under the federal regulations may then be eligible in the same year to take leave for the illness of a spouse or parent under the New Jersey rules. “If the federal law and state law provide the same benefit the leave is concurrent,” Zucker says. “If the two laws are different the employee gets the benefit of both.”
Paid family leave. A new wrinkle in family and medical leave regulations is paid family leave. This new state act goes into effect on January 1 and affects any employer in New Jersey, regardless of size, whose employees could collect benefits under the New Jersey Temporary Disability Benefits law.
The law extends temporary disability benefits up to six weeks for employees to care for a sick family member or following the birth or adoption of a child. The leave is financed solely by employee deductions, not by employer contributions. Deductions will be made from employee paychecks on January 1, however, employees will not be eligible to take the leave until July 1. This gives the state six months to build the fund, explains Zucker.
Understanding complexities such as these is what keeps payroll compliance experts in business, he adds. Because penalties and interest charges on even small errors can be extremely costly it is always important that employers stay current on even small changes in the law.