Keeping current with changing payroll legislation
From the December 2008 issue of Ceridian Connection.
It is a full-time job to keep up with the legislative changes on the federal, state and local levels. The troubled economy and sweeping changes in Washington seem to indicate it is not going to become easier to stay current and anticipate new laws. In addition to monitoring changes, there is another aspect to the legislative equation. "It is not just learning about legislation, individuals need to decide what they are going to do with the information to enable their organizations to remain complaint," says Jill Barber, Ceridian's compliance manager, regulations.
What is a payroll professional to do?
Make use of available resources
To help you keep up with legislative changes, Barber lists several resources that are available to most payroll professionals. Some resources require a paid subscription or membership; others are free or available through online registration.
Professional organizations: The American Payroll Association (APA) offers several mediums for members to stay current with legislation. The Society of Human Resource Management (SHRM) monitors HR changes that can impact benefits and payroll.
Subscription newsletters and services: The Bureau of National Affairs, Inc. (BNA) publishes print and electronic news, analysis and reference products. These cover legal, regulatory, legislative and economic developments that impact businesses. CCH products track, report, explain and analyze tax and related law in print and electronic form for tax, accounting, legal, human resources, banking, securities, insurance, government and health care professionals.
Federal government: The Department of Labor (DOL) Web site addresses all topics related to job seekers, wage earners and retirees. The Internal Revenue Service (IRS) Web site offers a broad look at all things related to tax collection and enforcement.
State government: Many states send free, periodic e-mail updates about changes. However, you may also receive a lot of irrelevant information. Visit your state's Web site to determine if it offers this service. Typically, these updates do not include pending legislation.
Chamber of Commerce: National and state chamber Web sites offer tools and resources.
Networking: Professionals within your company and your counterparts elsewhere can be an excellent source of information. These individuals may receive notices from other sources regarding pending legislation.
User groups: Users of a particular software or technology platform may also convene periodically to address issues of mutual interest. In addition to sharing a common technology, members of a user group may be a rich source of information about upcoming legislation that will affect payroll processing, wage attachments, employment verification, tax withholdings or related human resource issues.
Legislation -- count on change
Payroll processing is increasing in complexity, even when you know about the changes in advance. In July 2008 the Federal minimum wage increased to $6.55 under the Fair Minimum Wage Act of 2007. It is scheduled to increase incrementally again in 2009. Minimum wage increases also occur at the individual state levels and need to be watched closely by multi-state employers. Companies can learn about these changes by proactively monitoring legislation or signing up to receive e-newsletters provided by the Wage and Hour Division of the Department of Labor. As with the most recent updates to the FLSA, one piece of legislation can cover incremental changes over multiple years. It is the responsibility of payroll professionals to track the incremental increases and make the correct updates.
The impact of not making minimum wage adjustments can be far-reaching. The minimum wage rate goes into the calculation of total disposable income. This number is then used to determine deductions such as child support and garnishments.
W-4 violations have received much attention in recent years. The IRS has taken more aggressive steps to ensure proper tax collection by sending "lock-in" letters to companies about employees who may have claimed excessive deductions on their W-4 forms. Companies must comply with the lock-in letter, which indicates the number of deductions to be applied, or face tax liability that transfers from the employee to the employer. The letters have led to more accurate tax collections, and the IRS will most likely continue this practice.
Companies should also anticipate continued changes at the Federal and state level to immigration and family and medical leave laws in 2009 and beyond.
Proactive monitoring
Another way to stay current with legislative updates is to seek help from your payroll service provider. "We have found that our proactive legislative communications help companies eliminate surprises and allow time to plan for upcoming changes," says Barber.
As your strategic partner, your payroll provider can also:
In 2009, with a new president and Congress legislating in an unstable economy, there will most likely be many changes in areas such as health care and employment verification. Employers and their payroll professionals are wise to employ multiple methods of monitoring legislation and regulatory changes to ensure compliance and reduce risk.
It is a full-time job to keep up with the legislative changes on the federal, state and local levels. The troubled economy and sweeping changes in Washington seem to indicate it is not going to become easier to stay current and anticipate new laws. In addition to monitoring changes, there is another aspect to the legislative equation. "It is not just learning about legislation, individuals need to decide what they are going to do with the information to enable their organizations to remain complaint," says Jill Barber, Ceridian's compliance manager, regulations.
What is a payroll professional to do?
Make use of available resources
To help you keep up with legislative changes, Barber lists several resources that are available to most payroll professionals. Some resources require a paid subscription or membership; others are free or available through online registration.
Professional organizations: The American Payroll Association (APA) offers several mediums for members to stay current with legislation. The Society of Human Resource Management (SHRM) monitors HR changes that can impact benefits and payroll.
Subscription newsletters and services: The Bureau of National Affairs, Inc. (BNA) publishes print and electronic news, analysis and reference products. These cover legal, regulatory, legislative and economic developments that impact businesses. CCH products track, report, explain and analyze tax and related law in print and electronic form for tax, accounting, legal, human resources, banking, securities, insurance, government and health care professionals.
Federal government: The Department of Labor (DOL) Web site addresses all topics related to job seekers, wage earners and retirees. The Internal Revenue Service (IRS) Web site offers a broad look at all things related to tax collection and enforcement.
State government: Many states send free, periodic e-mail updates about changes. However, you may also receive a lot of irrelevant information. Visit your state's Web site to determine if it offers this service. Typically, these updates do not include pending legislation.
Chamber of Commerce: National and state chamber Web sites offer tools and resources.
Networking: Professionals within your company and your counterparts elsewhere can be an excellent source of information. These individuals may receive notices from other sources regarding pending legislation.
User groups: Users of a particular software or technology platform may also convene periodically to address issues of mutual interest. In addition to sharing a common technology, members of a user group may be a rich source of information about upcoming legislation that will affect payroll processing, wage attachments, employment verification, tax withholdings or related human resource issues.
Legislation -- count on change
Payroll processing is increasing in complexity, even when you know about the changes in advance. In July 2008 the Federal minimum wage increased to $6.55 under the Fair Minimum Wage Act of 2007. It is scheduled to increase incrementally again in 2009. Minimum wage increases also occur at the individual state levels and need to be watched closely by multi-state employers. Companies can learn about these changes by proactively monitoring legislation or signing up to receive e-newsletters provided by the Wage and Hour Division of the Department of Labor. As with the most recent updates to the FLSA, one piece of legislation can cover incremental changes over multiple years. It is the responsibility of payroll professionals to track the incremental increases and make the correct updates.
The impact of not making minimum wage adjustments can be far-reaching. The minimum wage rate goes into the calculation of total disposable income. This number is then used to determine deductions such as child support and garnishments.
W-4 violations have received much attention in recent years. The IRS has taken more aggressive steps to ensure proper tax collection by sending "lock-in" letters to companies about employees who may have claimed excessive deductions on their W-4 forms. Companies must comply with the lock-in letter, which indicates the number of deductions to be applied, or face tax liability that transfers from the employee to the employer. The letters have led to more accurate tax collections, and the IRS will most likely continue this practice.
Companies should also anticipate continued changes at the Federal and state level to immigration and family and medical leave laws in 2009 and beyond.
Proactive monitoring
Another way to stay current with legislative updates is to seek help from your payroll service provider. "We have found that our proactive legislative communications help companies eliminate surprises and allow time to plan for upcoming changes," says Barber.
As your strategic partner, your payroll provider can also:
- Mitigate risk of noncompliance and related fines and penalties
- Provide subject matter expertise on employment and payroll-related compliance issues
- Save you time researching regulations and translating them into system updates
- Represent your business interests in Washington, D.C. by working closely with decision makers and those who influence impending government regulations.
In 2009, with a new president and Congress legislating in an unstable economy, there will most likely be many changes in areas such as health care and employment verification. Employers and their payroll professionals are wise to employ multiple methods of monitoring legislation and regulatory changes to ensure compliance and reduce risk.
