Additional Medicare Tax: An additional Medicare tax will impact employers and payroll service providers. The Patient Protection and Affordable Care Act (PPACA) increases the Medicare tax rate on wages by 0.9% (from the current rate of 1.45% to 2.35%) for higher-income individuals starting in 2013. This Medicare payroll tax increase applies to wages over $200,000 for single tax filers and $250,000 for couples filing jointly ($125,000 for a married individual filing separately). The Internal Revenue Service (IRS) plans to release revised Forms 941, 943 and the tax return schemas for the Form 94X series of returns. For additional information, contact your payroll provider, a Certified Public Accountant (CPA), or visit the HR Support Center.
Continue using Form I-9. Until further notice, employers should continue using the Form I-9 currently available in the HR Support Center (even though the OMB control number expiration date of August 31, 2012 has passed). USCIS will provide updated information about the new version of the Form I-9 as it becomes available. Employers must complete Form I-9 for all newly-hired employees to verify their identity and authorization to work in the United States.
IRS Extends Filing And Payment Deadlines. The Internal Revenue Service (IRS) has extended until February 1, 2013 the deadlines for most income tax returns, income tax payments and other time-sensitive actions for taxpayers affected by Hurricane Sandy in federally declared disaster areas in Connecticut, New Jersey and New York. For additional information, refer to the law summaries of the HR Support Center.
IRS Standard Mileage Rates for 2013. The Internal Revenue Service issued the 2013 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Effective January 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be: 56.5 cents per mile for business miles driven, 24 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations.
Labor Law Posters. Since it is a new year, ensure your labor law posters (federal and state) are updated to reflect current/updated 2013 information (especially for minimum wage). For additional information, refer to the law summaries or consult with a HR Professional.
OASDI Tax Rates. The Social Security’s Old-Age, Survivors and Disability Insurance (OASDI) program limits the amount of earnings subject to taxation within a given year. This limit is updated each year with changes in the national average wage index. For earnings in 2013, the Social Security wage base is $113,700. The OASDI tax rate is set by statute at 6.2 percent for both employees and employers. However, in 2011 and 2012, federal legislation temporarily lowered the Social Security tax rate for an employee from 6.2% to 4.2%, but the employer continued to pay 6.2% of earnings. This lower employee Social Security tax rate is due to expire on December 31, 2012. Thus, assuming no extension of the temporary rate reduction, an individual with wages equal to or larger than $113,700 will contribute 6.2 percent or $7,049.40 to the OASDI program in 2013 and his or her employer will contribute the same amount.
State Minimum Wage Increases. Several state minimum wage rates have increased. Review the state law summaries, alerts, or the minimum wage guide in the HR Support Center to stay updated on your states minimum wage.
W-2 Report for 2012. The W-2 Form for 2012 reporting must provide tax information from January 1, 2012 December 31, 2012. The actual form must be distributed to employees by January 31st, 2013. In addition, employers issuing 250 or more W-2 forms must include the cost of health coverage on the W-2. For most plans, the benefit amount reported on the W-2 should include both the portion the employee contributed towards the health insurance premium as well as the portion the employer contributed to the plan.
$2,500 Limit on Health FSA Annual Pre-Tax Contribution. Effective January 1, 2013, employee pre-tax contributions to Health Flexible Spending Accounts (FSAs) will be limited to $2,500 per calendar year. For subsequent years, this amount will be indexed to the Consumer Price Index (CPI). Employers with non-calendar year health care FSAs may keep higher reimbursement limits in effect through the end of their 2012-2013 plan year.
Tips from Your Human Resources Professionals:The beginning of a new year is a great time to internally audit some of your HR-related practices. The following are a few tips to get you started:
- Employee Handbook: It’s not a bad idea to have an HR Professional review your handbook annually for compliance issues. Also, if there are any policies that you would like to edit, the beginning of the year makes for a clean break for new policy implementation. If you do not have a handbook, the first of the year is the perfect time to create and implement one into your organization.
- Paid Time Off Benefits If you are looking at making some changes to your paid time off benefits (i.e. vacation, sick, personal leave and holidays), the beginning of the calendar year is typically the best time to do so. One of the more popular changes that we have seen in recent years is the transition away from a traditional vacation, sick and personal leave benefit policy in favor of a more flexible, all-inclusive Paid Time Off or PTO policy. Feel free to reach out to your HR Professional regarding the benefits and drawbacks of making such a change. Additionally, we recommend sending all employees the 2013 holiday schedule at the beginning of the year so they may plan accordingly.
- Performance Management System: The start of a new year is also a great time to determine when annual performance reviews will be conducted. Some businesses prefer to conduct such reviews throughout the year on or around each employees anniversary date. Others prefer to choose a month during the year (perhaps when business is typically slower) to conduct reviews for all employees.
- Health Care Reform Requirements: Most likely, your next Health Care Reform task will be to issue an Exchange and Subsidy Notice to each employee on or before March 1, 2013. It is important to ensure that you have determined the best method to distribute such notices. You may also wish to speak with your insurance broker or carrier to determine if their organization will be available to answer employee questions arising out of these notices.
- Posters : A few states have recently experienced poster updates. We recommend reviewing the list of required posters (both federal and state-level) and ensuring that your business has all of the required posters posted in a conspicuous location within your workplace. To review the posters required for your state.
- OSHA 300A Summary: Many employers are required to complete an annual Summary of Workplace Illnesses and Injuries (OSHA 300A) and post it in a conspicuous workplace location from February 1st April 30th annually. If you had ten or fewer employees during all of the last calendar year (2012) or if your business is classified in a specific low-hazard industry, you are not subject to this requirement.
Hopefully, these payroll service tips will assist you in establishing your Human Resources priorities and improve your organization’s Human Resources functions. Please let us know how we can help. !
Payroll Services Question & Answer
Exempt vs. Non-Exempt Status: Making Sure Employees are Categorized Correctly
Q: What is the difference between exempt status and non-exempt status employees?
A: Non-exempt status employees are subject to both minimum wage and overtime guidelines. Typically, non-exempt status employees are paid on an hourly or piece-rate basis. Any employee may qualify to be a non-exempt employee, as there are no guidelines or criteria that must be met to fall into the non-exempt category.
Exempt status employees are typically salaried employees and are paid for the work performed, not for the hours worked. The term exempt refers to their exemption from both minimum wage and overtime guidelines. To qualify for an overtime exemption, the employee must meet all of the job duties and salary criteria under one of the specific exemption categories. Some of the most common overtime exemptions are known as thewhite collar exemptions. Among these are the Executive Exemption, Professional Exemption, Administrative Exemption, Outside Sales Exemption, Computer Employee Exemption, and Highly Compensated Exemption. To view the guidelines for each of these exemptions, review the FLSA Fair Pay Exemption Checklist in the HR Support Center.
Workplace Perks: Its more than Coffee and Doughnuts
It’s never too late to focus on health and well-being. For some people, it may be a means to diminish the damage caused by the excessive imbibing during the holiday season, and, for others, it is a symbol of making a fresh start in a brand new year. Whatever the reason may be, an employers EAP or Employee Assistance Program is an effective tool in providing employees and their immediate family members with helpful resources.
- An Employee Assistance Program offers voluntary short-term counseling services on matters such as grief, stress and family relationship issues as well as free-of-charge referral services, advice on programs such as health club memberships, alcohol and substance abuse rehabilitation programs, mental health specialists and legal resources. These options and other beneficial sources provide a resource for employees and their immediate family members who may be in need of guidance regarding matters impacting their personal lives that potentially have an adverse impact on their work performance.
- EAPs provide confidential, discreet assistance to employees and their immediate families. The employer will not be notified of an employee or his/her family members solicitation of an EAPs services, as the EAP is an organization that provides advice and referral services to employees independently of the company. The contact information for the EAP should be included in the literature that is disseminated during benefits enrollment periods, within the employers intranet website, and in the Employee and Benefits Handbooks.
Life is full of stressful and challenging events, but having reliable resources such as an Employee Assistance Program readily available to employees is a valuable addition to an employer’s benefits package.