Payroll and holiday pay can be confusing and overwhelming and here we are right at the height of the upcoming holiday season! I found these great tips from HR Matters and wanted to share them with you. These tips provide answers to common questions such as: Do you have to provide paid holidays? What about for new employees? Do you have to pay overtime to employees who have to work on a holiday?
We’re officially heading into the holiday season with Thanksgiving coming up next week and Christmas and the New Year just around the corner. If you are like most employers, you may be dealing with holiday pay issues. To help you out, the HR Matters E-Tips Editors have put together the top seven holiday questions that they answer on a regular basis. (You also can find the answers to these and many more holiday questions in the HR Matters Tools and Resource Center online, Policy Manual, Holidays, Chapter 503.)
1. Do we have to provide paid holidays?
Absent a collective bargaining agreement or other contract providing paid holidays, federal law does not require you to pay nonexempt employees for holidays that they do not work. Most organizations offer a limited number of paid holidays to create employee goodwill. According to the Society for Human Resource Management 2011 Benefits Survey, 97% of responding employers provide paid holidays to their employees.
Note, however, that if you do not provide paid days off for holidays, you should pay exempt employees for any holidays that your organization is closed. (As a reminder, the Department of Labor (DOL) regulations implementing the Fair Labor Standards Act (FLSA) provide that the following categories of employees are exempt from the overtime and minimum wage requirements of the FLSA: (1) bona fide administrative, executive, or professional employees; (2) workers employed in outside sales; (3) highly skilled computer-related employees; and (4) certain “highly-compensated” employees.)
Although the DOL regulations implementing the FLSA do not specifically address unpaid holidays, they do provide that an employee will not be considered paid “on a salary basis” if deductions are made “for absences occasioned by the employer or by the operating requirements of the business.” Unpaid holidays generally are considered the type of absence “occasioned by the employer.” According to a DOL Wage & Hour Opinion Letter dated 5/27/99, the DOL indicated that an employee will not be considered to be paid on a salary basis if deductions from the employee’s predetermined compensation are made for absences occasioned by the employer, such as being closed on certain holidays, or the operating requirements of the business. Further, the regulations recognize only a limited number of instances when an employer may make deductions (or “dock”) for absences of a full day or more without jeopardizing the exemption and thus incurring overtime liability. But, holidays do not fall under any of those exceptions.
2. Can we require employees to complete an introductory period before becoming eligible for holiday pay?
You most likely can exclude new nonexempt employees from holiday pay. If there is no collective bargaining agreement or other contract specifying that new employees are eligible for holiday pay, then it is up to your organization’s policy. Many employers exclude new employees from certain benefits granted to longer-term employees until completion of the introductory period.
However, new exempt employees should not be covered by this policy and should receive pay for holidays. As explained in # 1, above, if you do not pay exempt employees, new or old, for holidays they do not work, you may jeopardize their exempt status.
3. Can we require employees to work on holidays?
Since paid holidays are a discretionary benefit, you may require employees to work holidays according to the operating needs of the organization (and assuming no collective bargaining agreement or other contract prohibits this work). We recommend that employers’ holiday policies should include language that indicates employees may be required to work on holidays. For example, our HR Matters Tools and Resource Center, Policy Manual, includes the following provision in the model Holiday policy in Chapter 503: “The Company may schedule work on an observed holiday as it considers necessary. Normally, work on an observed holiday will be paid as if the day were a regularly scheduled work day. Employees will be given the option of receiving additional pay for the day or a “floating” holiday that may be taken, with the prior approval of their supervisor, at another time during the year.”
Note that you generally are not required to pay nonexempt employees for time and one-half for holiday work unless the employee has already worked 40 hours in the week (see # 4, below) or to provide a paid floating holiday at a later point. However, the model policy provides these extra benefits in recognition of the extra burden for employees who work on holidays.
4. Do we owe nonexempt employees overtime if they work on holidays?
The FLSA requires you to pay overtime to nonexempt employees at time and one-half their regular rate of pay for all hours actually worked over 40 in a single workweek. Accordingly, you will owe nonexempt employees who work on holidays overtime only if the employees end up working more than 40 hours because they are working on the holiday.
So, for example, if an employee has worked four 10-hour days (40 hours) and then works on a designated holiday that same week, then the employee should receive overtime for all of the holiday work hours. But, if the employee works four 8-hour days (32 hours) and then works an additional eight hours on the holiday, for a total of 40 hours worked in the week, then that employee is not entitled to overtime for the holiday work hours. (Note, however, that a limited number of states, such as Rhode Island, require payment of at least time and one-half for employees who work on certain holidays, so be sure to check state law, too.)
As an aside, if you voluntarily pay a premium of time and one-half (the equivalent of overtime) for work on a holiday, the FLSA regulations generally allow you to credit this extra compensation towards any overtime that might actually be earned in the same week.
5. If an employee works 40 hours in a week and then takes a paid holiday, do we owe the employee overtime?
No. As discussed in # 4, above, nonexempt employees must be paid overtime only for all hours actually worked over 40 in a single workweek. Thus, in calculating actual working hours for a nonexempt employee, you do not have to count any paid time off in the overtime calculation if the employee did not perform any work during the time off.
So, even if a nonexempt employee works a full 40-hour workweek and also takes a day of paid holiday and is paid for 48 hours that week, the employee is not entitled to overtime pay since he did not actually work more than 40 hours in the workweek.
6. What if an employee is on FMLA leave when a holiday occurs? Should they receive holiday pay?
The answer depends on your policy. You generally do not have to pay an employee for holidays that occur while the employee is out on unpaid FMLA leave if it is not the employer’s policy to provide this benefit during other types of unpaid leave. Similarly, if an employee’s work schedule is reduced for intermittent FMLA leave, you may reduce proportionately the employee’s benefits, such as holiday pay, if the employer’s normal practice is to base this benefit on the number of hours an employee works. However, you may not eliminate the full-time employee’s benefits because the employee is working a part-time schedule if part-time employees normally are not eligible for these benefits.
7. How do we pay nonexempt employees who work a compressed workweek, working four days a week, ten hours a day? Should these employees receive holiday pay if the holiday falls on a day that they are not scheduled to work?
Whether the nonexempt employees working compressed workweeks qualify for holiday pay depends on the terms of your holiday policy and how it has been implemented. Employers using compressed schedules (such as employees working four days/ten hours a day) generally take three basic approaches to eligibility for holiday pay.
(Download free Holidays model policy including best HR practices and legal background. Will require that you create a free account.)
Some employers pay only for holidays occurring on the employee’s regularly scheduled work day. Another more common approach is to allow compressed workweek employees to take off a day on which they would otherwise be scheduled to work. For example, if the employees normally work four days, they work only three days during weeks with holidays. Still other employers prefer to have compressed workweek employees on the job at least four days a week and pay for the holiday even if the employee is not scheduled otherwise to work that day, giving the employees an extra day of pay. This last practice, however, may lower the morale of employees who work a regular schedule and thus receive less pay for the holiday week.
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We hope you’ve found these answers to 7 holiday pay questions to be helpful; if so please take a moment to leave a comment or share this with others on your favorite social networking sites.
The Internal Revenue Service has released guidance aimed at clarifying the tax treatment of mobile phones provided by employers to their employees. The guidance explains a provision of last fall’s Small Business Jobs Act of 2010 that removed cell phones from the definition of listed property, a category under tax law that normally requires taxpayers to perform additional recordkeeping.
IRS Notice 2011-72, issued in mid-September, provides guidance on the treatment of employer-provided cell phones as an excludible fringe benefit. According to the new guidance from the IRS, when an employer provides an employee with a cell phone primarily for noncompensatory business reasons, the business and personal use of the cell phone is generally nontaxable to the employee. The IRS will not require recordkeeping of business use in order to receive this tax-free treatment.
Employers had long complained that the categorization of mobile phones as listed property required businesses and their employees to keep detailed records listing exactly which phone calls were business-related and which ones were personal. Many employees needed to carry multiple cell phones just to avoid having their personal calls going to their business phone, and risk a heavy recordkeeping burden.
Simultaneously with the notice issued in September, the IRS also announced in a memo to its examiners a similar administrative approach that applies with respect to arrangements common to small businesses that provide cash allowances and reimbursements for work-related use of personally owned cell phones.
Under this approach, employers that require employees, primarily for noncompensatory business reasons, to use their personal cell phones for business purposes may treat reimbursements of the employees’ expenses for reasonable cell phone coverage as nontaxable. This treatment does not apply to reimbursements of unusual or excessive expenses or to reimbursements made as a substitute for a portion of the employee’s regular wages, the IRS noted.
Under the guidance, in cases where employers provide cell phones to their employees or where employers reimburse their employees for the business use of their personal cell phones, tax-free treatment is available without burdensome recordkeeping requirements. The guidance does not apply to the provision of cell phones or reimbursement for cell phone use that is not primarily business-related, as such arrangements are generally taxable. Details are in the memo and in Notice 2011-72, posted on IRS.gov.
Protecting your business from fraud and theft is a tough job these days – are you doing enough as a business owner to ensure that your assets are safe?
Did you know that according to a 2010 report from the Association of Certified Fraud Examiners, incidents of occupational fraud are 31% more likely to occur at small business as opposed to larger companies? And, to add insult to injury, as many as 40% of small business owners are embezzlement victims and that a staggering one-third of all bankruptcies are the direct result of internal theft!
To be hones, I had no idea of these statistics – until I read a very interesting article yesterday called Five steps to prevent small business fraud, in the Hartford Business Journal Online.
The article discussed:
- Managing finances using secure online banking
- Protecting computer systems and practicing online awareness
- Safely handling sensitive documents and financial statements
- Obtaining fidelity insurance {which protects your business against criminal acts such as robbery, embezzlement, forgery, and credit card fraud}, and
- Incorporating appropriate checks and balances
The author, Michael LaBella, offered some excellent advice about incorporating appropriate checks and balances;
Every small business owner should perform an internal review and assessment of company finances on a monthly basis. Make sure payment amounts match all invoices and check for any missing documents. Running random audits or having a third party audit your books once a year will show your employees you are serious about fraud and deter them from committing deceptive acts.
While that’s very good advice, I don’t think it’s quite enough, below are some additional tips for protecting your business from fraud.
- As a business owner you should be signing all of the checks written on your company checking account – throw out the signature stamp and don’t use the QuickBooks option that allows checks to be printed with your signature already in place! That’s just asking for trouble…..
- Balance your checking account and credit card statements each month – that way you can “see” those transactions and verify where the company’s money has gone.
Yes, this means more for you to do as a business owner – and I’m sure that you already have a full plate – but isn’t it better to be safe than sorry?
What safeguards do you have in place to protect your business from fraud?
I hope you’ve found this article to be helpful and thought provoking, if so please take a moment to leave a comment or share it with others on your favorite social media platform using the buttons below.
Many business owners feel that they can pay their employes “whenever” they want and that is true to a point. Business owners can pay their employees whenever they want as long as the “whenever” meets the laws of the state their business resides in.
As a business owner you probably feel “in control” when it comes to setting a payroll schedule for the people you hire. Certainly you have options, you can issue payroll on a:
- weekly
- bi-weekly {every other week}
- semi-monthly {twice a month, perhaps on the 1st and the 15th}
- or a monthly basis
While there is no federal laws that require how often you pay your employees, the payroll schedule you choose MUST conform to the requirements of the state that your business is located in.
Most states require that every employer has to pay all of the wages due to an employee on a regular payroll schedule, which is determined by you the business owner – BUT you must notify the employees of how frequently you intend to pay them. A “regular schedule” means that you must consistently pay your employees using whatever frequency you choose, in other words you can’t just randomly issue a payroll check.
Many states also tell a business owner how much of a “holdback” they can take. Meaning that if you decide your workweek starts on a Sunday and ends on a Saturday and that you will pay your employees on the Friday AFTER the end of the work week; you are holding back a week’s worth of pay.
A word of caution – a business can get into trouble if it doesn’t pay it’s employees as often as the law requires – and I’m sure you don’t want or need that additional headache! Believe it or not, but each state has their own set of rules and regulations {imagine that!}, in some states the rules are different depending upon the employees occupation. In other words, setting a payroll schedule that is realistic for your company AND that conforms to state requirements can be a mess!
The U.S. Department of Labor provides a fairly detailed overview of employee payroll schedules by state, you can find State Payday Requirements here, the information provided is ONLY an overview of general information – you should most definitely contact your state department of labor for all of the details!
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QuickBooks 2012 has both good and bad pop-up messages – just like any other version of QuickBooks, but there is nothing more annoying than having an ad pop-up when you are working in QuickBooks. Let’s be honest, getting rid of the message is another mouse click that you have to make and if messages and ads are popping up frequently we get into the habit of not reading what they have to say and miss something that could very well be important. This article discusses how you can turn off most of them in QuickBooks 2012.
Ok, I get it – Intuit is a business that makes it’s money selling software and services to it’s customers; but as a customer/business owner I have already purchased the software and probably have the services that I need already in place; so to be honest I get really annoyed with pop-up messages and ads. I bet you do also.
To be fair, there are actually some good pop-up messages in QuickBooks – for example:
- those that prompt or remind you to add a class to a transaction when you’ve forgotten and you’ve turned on the class tracking feature
- the one that warns you when you are posting a transaction directly to Retained Earnings – which is something that you really do NOT want to do
- the warnings that appear when you accidentally select a date that is 90 days in the past or 30 days in the future
- the warning that will appear if you enter duplicate bill numbers for the same vendor
- the warning that will appear if you enter a check number, invoice number, estimate number, etc. that has previously been used
For the most part messages & pop-ups can be controlled through settings in the Preferences section {Edit menu -> Preferences}; where you will find both personal and company preference settings. Only the QuickBooks Administrator can make changes to the settings in the Company Preferences tab when they are logged into QuickBooks in single-user mode; yes, another inconvenience but one that is well worth the effort. I highly recommend that the QuickBooks Administrator take the time to check out the Company Preference tab for each of the 22 different sections and choose which types of messages should and should not appear.
Individual users also have some control over what messages appear. For experienced users, I recommend that they to to the Edit menu -> choose Preferences and:
- select Desktop View -> My Preferences tab and uncheck the Show Getting Started Window
- select General -> My Preferences tab and uncheck the Bring back all one-time messages, Turn off pop-up messages for products and services, and Show ToolTips for clipped text
- select Sales & Customers -> My Preferences and uncheck the Show Payment toolbar on Receive Payments and Sales Receipts forms if your company does not wish to add Intuit credit card or eCheck processing
- select Service Connections -> My Preferences and uncheck Give me the option of saving a file whenever I download Web Connect data and If QuickBooks is run by my browser, don’t close it after Web Connect is done – if you do not use Online banking
Many pop-up windows and messages have a “Don’t show this again” checkbox option, checking this option instead of just clicking the OK button will rid you of the annoying box for good; so taking a minute or so each time a window pops up can help you to make informed decisions and rid you of wasted mouse clicks later. I know, sometimes it’s just “easier” at the moment to click the OK button just to get rid of the window – but that is a bad habit to get into.
Some advertising messages, you just can’t get rid of, for example the Do More with QuickBooks block on the Home page, but you can close it.
In QuickBooks 2012, Intuit has added a new “advertising” message to printed Employee Pay Stubs – you’ll now find a Powered by Intuit logo on each pay stub that you print for your employees. I found this to be quite annoying. Only the QuickBooks Administrator can remove this logo by going to the Edit menu -> Preferences -> Payroll & Employees -> Company Preferences -> Pay Stub & Voucher Printing -> and uncheck the Print Intuit logo option.
Are you annoyed with pop-up messages and ads? If so please take a moment to leave a comment or share this article with others on your favorite social networking site.
