CPA Practice Advisor

OCT 2014

Today's Technology for Tomorrow's Firm.

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October 2014 • www.CPAPracticeAdvisor.com 9 I n 2 015 , t he re w i l l b e s e v e r a l changes that can afect how your cli- ents pay their employees. Many of these will be on the state level, how- ever, home care agencies across the cou nt r y w i l l be i mpac ted by t he Department of Labor's Final Rule, efective January 1, 2015. Effective Januar y 1, 2015, home c a r e a g e n c i e s a n d t h i r d - p a r t y employers will be required to pay at least the federal minimum wage and overtime pay to any direct care worker (certified nursing assistants, home hea lt h a ides, persona l ca re a ides, caregivers and companions) that they jointly or solely employ, regardless of the worker's duties. In addition, agencies and third-party employers w ill no longer be able to claim the overtime pay exemption for live-in domestic service workers or the companionship exemption. Te com- pa n ionsh ip ser v ices exempt ion no longer applies if the worker spends more than 20 percent of his or her workweek performing care, and the employee is entitled to minimum wage and over- time. However, an individual, family, or household employing such workers may claim any applicable exemption. Also efective January 1, 2015, the Social Security Administration will no longer process paper third-party sick pay recaps or accept electronic third- pa r t y sick pay recap repor ts. A ny electronic and paper wage reports that contain a W-2 w ith any of the fol- lowing conditions will be returned to employers: • Medicare wages and tips are equal to less than the sum of social security wages and social security tips on the W-2; • Social security tax is greater than zero and social security wages and social security tips are equal to zero; • Medicare tax is greater than zero and Medicare wages and tips are equal to zero. On the state level, laws have been passed, or will be voted on, to increase the minimum wage in several states, including I l linois, Massachusetts, Rhode Island, California, Connecticut and West Virginia. During the November election, Illinois voters will decide if the min- imum wage and tip credit should be increased. Both would go into efect January 1, 2015. In addition, Illinois has passed a law to regulate the use of payroll cards, making it the 21st state to do so. Under the new law, employees must explicitly agree to receive pay- ment v ia pay roll card and the card cannot be a condition of employment. Employers may not automatically sign up employees for a payroll card, even if the employee does not have a bank account. Te law also regulates the fees that can be charged in relation to use of a payroll card. Massachusets passed legislation that will increase the minimum wage and tax credit in three steps, starting January 1, 2015. Te Unemployment Insurance taxable wage base will also increase, efective January 1, 2015. In the state of R hode Island, the minimum wage and tip credit w ill both increase, effective Januar y 1, 2015. Te law also prohibits munici- palities from establishing different minimum wage rates. I n C a l i for n ia , a proposed law would increase the state minimum wage in three steps, beginning January 1, 2015. Employers wou ld a lso be required to prov ide paid sick leave u nder a not her proposed law t hat would allow employees to accrue one hour of sick leave for every 30 hours worked, beginning on the 90th cal- endar day of employment. W hile there are a number of pro- posed state laws in California, several cities have their own laws that would increase the minimum wage in their areas. Berkeley passed a law that would increase the minimum wage in three phases, efective October 1, 2015. San Diego, one of the largest cities to do so, pa ssed a n ord i na nce to ra i se t he m i n i mu m w a ge i n t h re e ph a se s , beginning January 1, 2015, as well as allow employees to accrue one hour of sick pay for every 30 hours worked, up to fve paid sick days. Oakland and San Francisco are both set to vote on laws in November that would increase the minimum wage. In addition, the ballot in Oakland would also seek to require paid sick leave. E f fec t i ve Ja nu a r y 1, 2 015 , t he minimum wage in Connecticut will increase as the frst of a multi-phase i n c r e a s e . T h i s w i l l i m p a c t a l l e m p l o y e e s , e x c e p t f o r s e r v i c e employees in the restaurant industry. However, if a service employee does not earn sufficient tips to equal the m i n i mu m wage or more over t he workweek, the employer must pay the diference as wages. In West Virginia, a law has been passed to raise the minimum wage in two phases – frst on January 1, 2015, and then again on January 1, 2016. In addition, the law will also increase the training wage for the frst 90 days of employment for any employee hired afer January 1, 2015. As a payroll practitioner, you can he lp you r c l ie nt s n av i g at e t he s e cha nges by ma k i ng su re t hey a re aware of any changes to loca l and state minimum wage laws and their e f f e c t i v e d at e s . E n s u re t he y a re com mu n icat i ng a ny for t hcom i ng c h a n ge s to t he i r e mploy e e s i n a timely manner, as well as updating any legal posters within their ofces. As you manage their payroll process, make sure they have the processes in place to implement any changes by the required time. A Year in the Life of a PAYROLL Accountant is sponsored by SurePayroll and ADP Payroll Accountant's Checklist for October ✓ Get updated employment information from clients. ✓ Have clients confrm employees' addresses, social security numbers and other contact information. ✓ Confrm year-end payroll deadlines and fnal federal/ state deposit dates. ✓ Check deduction codes for any employees making charitable donations through payroll deductions. This information will be reported in Box 14 of their Forms W-2. ✓ Remind clients to have employees update their consents for electronic Forms W-2. ✓ Order Forms W-2 and W-3 from the IRS for the current tax year. What's New in Payroll and Labor Laws? By Taija Jenkins, Assistant Editor K eeping up-to-date on changes and p r o p o s e d c h a n ge s c a n b e ove r - whelming, especially if you have a business to run that doesn't involve pay roll . That 's w hy, as a pay roll practitioner, it's important that you help your cli- ents understand any new changes and what they mean for their business.

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