| Can you dock a salaried employee for hours missed?
Martha is a salaried employee earning $550.00 per week. She has used all of her sick, personal and vacation time for this year. In order to get to the annual sale at Kmart, she informs her employer (George) that she will be 3 hours late for work on Friday. George decides to dock her pay the following week for the 3 hours. Can he do that?
Answer. No, true salaried employees cannot have partial day deductions from their pay. By making the deduction, George has effectively converted Martha into an hourly employee and she is now subject to the overtime and other hourly rules.
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What can happen with “under the table” employees?
George hired his retired father-in-law (Larry) to clean the offices daily. In order not to affect Larry’s Social Security, George pays him $200 cash every week. One winter day while taking out the garbage, Larry slips, falls and breaks his hip. Another employee takes Larry to the emergency room. When filling out the forms, Larry indicates that his injury occurred at work. Since the injury was serious and involves extensive rehabilitation, the hospital files claims with George’s Workers Compensation carrier. Will they pay?
Answer. No. In fact George will be liable for treble damages, since Larry was paid cash no insurance premium was ever paid on him and thus George is responsible for all Larry’s expenses times 3.
When is a 1099 employee is not a 1099 employee?
Sam does maintenance at several apartment complexes owned by Elaine. She provides him with tools, supplies and an apartment to live in. He has worked for her for 3 years and has no other job. She checks on him several time a day to make sure he is doing exactly as she requested. She pays him by the hour and he works about 40 hours every week. At the end of the each year she gives him a 1099 for the hours he worked. Elaine sells the buildings and the new owner has decided to do his own maintenance, so Elaine tells Sam he is laid off. Sam goes to unemployment to put in a claim and finds that they have no record of his wages. Does Elaine have a problem?
Answer. Yes. Elaine tries to claim that Sam was an independent contractor, but fails because he does not meet any of the tests. Elaine eventually became responsible for back unemployment taxes, plus Social Security, plus State and Federal withholding on wages and value of housing totaling nearly $75,000.
What to do about those expense advances?
Alex works for Susan as a salesman. She pays him commissions plus $200 per week for expenses. When is the $200 per week non taxable to Alex.
Answer. When they are paid under an accountable plan. What is an accountable plan? To be an accountable plan, your reimbursement or an allowance arrangement must require your employees to meet all three of the following rules.
1) They must have paid or incurred deductible expenses while performing services as your employees
2) They must adequately account to you for these expenses within a reasonable period of time.
3) They must return any amounts in excess of expenses within a reasonable period of time.
Amounts paid under an accountable plan are not wages and are not subject to income tax withholding and payment of social security, Medicare, and Federal unemployment taxes.
If the expenses covered by this arrangement are not substantiated or amounts in excess of expenses are not returned within a reasonable period of time, the amount is treated as paid under a non-accountable plan. This amount is subject to income tax withholding and payment of social security, Medicare, and Federal unemployment taxes for the first payroll period following the end of the reasonable period.
What do you do with uncashed checks?
Answer. You are required to exercise due diligence to locate the Payee. This must include mailing notice to payee’s last known address one year after presumption of abandonment. Wages become abandoned 3 years after becoming payable. On March 31 of each year, you must remit abandoned wages as of December 31 of the previous year and file an accompanying Form ST-77 to the State of Connecticut, Unclaimed Property Division, 55 Elm St. Hartford, CT 06106
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