Your guide to payroll laws: Everything you need to know
If you are a business owner, you need to be aware of the payroll laws in your state. Ignorance of the law is not an excuse, and you could face severe penalties if caught violating any of the regulations. This blog post will provide an overview of the essential payroll laws that you need to know.
The minimum wage requirements: Every state has its minimum wage, and it is essential to be aware of the requirements in your state. In most states, the minimum wage is set at a higher rate than the federal minimum wage.
The Fair Labor Standards Act (FLSA): The FLSA sets national standards for overtime pay and child labor laws. It also requires employers to keep records of hours worked and wages paid.
Overtime pay: Under the FLSA, employees are entitled to overtime pay if they work more than 40 hours in a week. The overtime pay rate is one-and-a-half times the employee’s regular pay rate.
Employee classification: Employees can be classified as exempt or non-exempt. Exempt employees are not entitled to overtime pay, while non-exempt employees are.
Time and attendance tracking: Employers are required to track the hours worked by their employees. This process can be done manually or electronically.
Payroll tax obligations: Businesses have several payroll tax obligations, including federal income taxes, Social Security taxes, and Medicare taxes. It is crucial to ensure you withhold the correct amount of taxes from your employees’ paychecks.
Tax deductions and allowances: Employees may be able to claim certain tax deductions and allowances on their tax returns. It is essential to know which deductions and allowances your employees are eligible for so that you can withhold the correct amount of taxes from their paychecks.
Workers’ compensation: Employers must provide workers’ compensation insurance for their employees. This benefits employee who are injured or become ill due to their job.
Disability insurance: Employers may also be required to provide disability insurance for their employees. Disability insurance benefits employees who cannot work due to an illness or injury.
Pay promptness: Employees are entitled to receive their paychecks regularly. Most employers are required to pay their employees within a certain number of days after the end of the pay period.
Getting paid after leaving a job: Employees are sometimes entitled to receive their final paycheck after leaving a job. This depends on the state in which they live.
Docking pay for poor performance: Employers cannot dock employees’ paychecks for poor performance. Should you decide to dock an employee’s pay for poor performance, you first have to explain the new terms to the employee and let them decide if they want to quit or stay.
Paying employees in cash: Employers are not allowed to pay their employees in cash unless they have obtained written authorization from the employee. All payments, especially payroll, need to be authorized through a bank.
Employee handbooks: It is a good idea for employers to create an employee handbook and distribute it to all employees. The handbook should include information on the company’s policies and procedures, including its payroll policies and procedures.
Knowing about payroll laws is essential for two reasons. First, ignorance of the law is not a defense. If you are caught violating a payroll law, you will be held liable, regardless of whether or not you knew the law. Second, compliance with payroll laws is often a condition of doing business. Many government contracts and licenses are only granted to companies that can prove they comply with all applicable payroll laws.
There are also other benefits to knowing and complying with payroll laws. A well-run workplace that complies with all applicable laws is likely to be more productive and have lower employee turnover rates than one that does not comply with the law. In addition, employers who comply with the law may be eligible for workers’ compensation premium discounts. Aside from basic payroll laws, there are a few acts that you need to be aware of. The following is a brief overview of some of the most important acts:
The FLSA requires employers to pay employees a minimum wage for all hours worked and overtime pay for over 40 in a week.
The FMLA entitles eligible employees to take unpaid leave for specific family and medical reasons.
The ADA prohibits discrimination against qualified individuals with disabilities in the workplace.
The COBRA law allows employees who have lost their jobs to continue receiving health insurance coverage for a limited period.
These are just a few of the essential payroll laws. To learn more, consult an attorney who specializes in employment law. Remember, not complying with payroll laws because you didn’t know about them is not a valid excuse in a court of law.