Payroll News and Updates

We have identified a list of important payroll news and notes that range from HSA contributions to terminated employee pay that may impact your business.

  •  The IRS has announced the 2013 HSA contribution limits. The individual limit will increase from $3100 to $3250. The family limit will increase from $6250 to $6450. The catch up limit for individuals over age 55 will remain at $1000.
  • The Trustees of the Social Security Trust have proposed increasing the wage base for 2013 by $3600 to $113,700. Employees and employers would each pay a maximum of $7049.40 in social security taxes next year if this wage base is ratified and the payroll tax holiday expires.
  • On August 31, 2012, the current I-9 form will expire. Checkright will upload the new form to our website at that time on the Client Resources Tab. Make sure that if you have these forms pre-printed out for use in your office, that you dispose of the old ones and print the new version after September 1st.
  • Now that April 15th has come and gone, you may dispose of your payroll records for 2007 and older. The IRS mandates that employers retain all payroll records up to the employee’s filing date for four years. If you are trying to figure out how that works, the 2008 tax returns were due on April 15th, 2009, and four years from that date is April 15th, 2013.
  • With the recent Supreme Court case on the Arizona immigration laws leaving some provisions intact, expect the march by the states to mandatory use of E-Verify to continue. Virginia now requires all government entities to use E-Verify, and beginning December 1st, any company with 50 employees and government contracts will have to begin using it. It is still unclear at this time if current employees will be exempt from checking.
  • More than once at Checkright, we have heard (usually from the employee) that a terminated employee is due all unpaid wage at the time of termination. A quick check of the Virginia statute shows that the employer must pay unpaid wages on or before when they were normally due-so the employer can choose to pay the terminated employee early, but is under no obligation to do so.

How to “Go Green” with Payroll when a Few Employees Won’t Choose Direct Deposit

Running a paperless payroll makes sense on many levels. When all employees utilize direct deposit, there is no lost productivity created from employees leaving work to deposit or cash their paychecks. Businesses no longer have to incur the cost of delivery. Employees can retrieve their paystubs online and can get all their stubs, cutting down on administrative requests for copies of old stubs. Employers can take advantage of a wealth of online features to review reports and submit payroll-all without the paper that had to be delivered, filed, and stored. And last but not least, there is the environmental component to consider. Paperless payroll saves trees, cuts down on the use of fossil fuels, and helps the environment and atmosphere.

So if it makes sense on multiple levels, why doesn’t every company go paperless? One of the most frequent responses is that employers can’t convince all their employees to use direct deposit. In the last several years, however, many states are changing their statutes to allow employers to mandate direct deposit. Twenty two states now allow mandatory direct deposit, and three others are phasing it in over time. In Virginia, for example, an employer can require any employee hired after January 1st, 2010 to receive their paycheck through direct deposit. As more and more time passes, there are fewer and fewer employees that can exempt themselves from this requirement.

What about the employees who either don’t have a bank account or won’t provide the banking information when asked? The answer is a pre-paid debit card. These cards are part of a growing trend in the payroll industry. The payroll company provides the cards to the employer and then uses the routing number and account number of the debit card to post the employee’s wages straight to the card. The employee can use the card anywhere credit cards are accepted and can make cash withdrawals from most ATM’s. On the next payday, the card is funded again. There can be the regular $1.00 or so ATM fees associated with cash withdrawals, but for many of the employees who have struggled to maintain a traditional bank account, these fees replace much steeper check cashing fees. Check cashing stores, banks, and big box stores all typically charge more to cash a non-customer check than a single ATM fee.

Consider joining the more than 25% of Checkright customers who have gone completely paperless. It is not often that small businesses can make moves that save productivity, money, and the planet, all at once. Go green!

Massive Changes to Tax, Policy, Law, and Benefits Only about Six Months Away

Between a potential new President or new majority in Congress, the sun-setting of the Bush tax cuts, ending of long term unemployment benefits and the payroll tax holiday, and massive across the board spending cuts, the possibility of wholesale changes to our economy and personal situations loom large for the end of 2012.

The biggest potential change for every American is the expiration of the Bush Tax Cuts, which are currently scheduled to expire December 31, 2012. At that time, the tax rates for all Americans would increase.

  • The 10% tax bracket would be eliminated, replaced by the 15% bracket on the lower income end, while the top bracket would increase from 35% to 39.6%.
  • The Child Tax Credit would fall from $1000 to $500, and the marriage penalty would be reinstated.
  • For investment income, long term capital gains would increase from 15% to 20%, and dividends would go from 15% to ordinary income tax rates.

The Republicans favor making these cuts permanent while President Obama’s most recent proposals only seek to repeal the parts of the cuts that favor families making over $250,000. The problem to watch for is that the sides can’t agree to anything and the whole law expires.

In similar fashion, as part of the Debt Ceiling Increase Deal, $1.2 trillion in automatic, across the board budget cuts to government spending are scheduled to take effect January 1, 2013. The size of these cuts, coupled with the tax hikes from the end of the Bush cuts could throw the economy as a whole into recession. That could be the backdrop to the end of the Payroll Tax Holiday, which will take $1000 out of the average worker’s paycheck next year, further restricting spending and GDP.  Finally, the often extended unemployment benefits for the long term unemployed will expire on December 31, 2012.

Clearly, the national elections in November will play a huge role in whether any of these changes will take effect. Depending on those results, the status quo could be extended or most of these changes could all come to pass. Obamacare, another sea change for many Americans may also be up in the air depending on which party assumes power after the elections. However it plays out, the smart move is to keep an eye on these topics and what each party’s position on each issue is so we can all plan accordingly for what could be a very different economic and tax environment next year.

Checkright News – Closings, New Hire, and our New Online System

Checkright will be closed Monday, May 28th for the Memorial Day Holiday. A complete list of office closings for the remainder of the year is posted below:

  • Wednesday, July 4th, Independence Day.
  • Monday, September 3rd, Labor Day.
  • Thursday, November 22nd and Friday, November 23rd, Thanksgiving.
  • Monday, December 24th and Tuesday, December 25th, Christmas.

Please join us in welcoming our newest Checkright team member, Rachel Haines. Rachel is a graduate of Millersville University in Pennsylvania where she received a Bachelor of Science in Business Administration and Accounting. She came to us from Susquehanna Bank when she relocated from Pennsylvania to Richmond this year. Rachel will be taking the National payroll Certification exam in the fall. She enjoys spending time at the “Rivah” and with her dogs. Welcome Rachel!

Checkright is also pleased to announce we are in the final phases of testing of our new online platform, which we will introduce to customers this summer. This robust platform includes a multitude of new features and information that will be available to our clients, including greatly enhanced HR features, single sign in for time-keeping and pay stubs, single sign in for multiple EIN’s, real time synching of data with our servers, and much, much more. We are excited about this upgrade and will look forward to sharing it over the some months-more news to follow.

Checkright’s New Website

Checkright is excited to unveil our all new company website at the same web address www.checkright.net. The new site has some features of note:

  • We have made customer log-in simpler. You now log-in directly on the home page instead of redirecting to our Client Resources Page.
  • We have staff pictures sprinkled throughout the website and on the Contact Us page if you have always wanted to put a face with a name.
  • Our newsletter/blog now interacts with the site. The most recent 5 or 6 stories are accessible from the home page and all the old ones will be archived on the Blog/Newsletter Page.
  • The site has a more professional yet simple and sleek design.
  • The site will give Checkright enhanced Google presence (SEO) once it has been active a few weeks.
  • We have added LOTS of content especially in the Products Tab. Check out what features other companies are using in their payroll process.

We would welcome any feedback and hope our site continues to be a valuable resource for you!

Arch Wallace
10120 W. Broad Street, Suite N
Glen Allen, VA 23060
(804) 716-2369

Department of Labor (DOL) Issues New Guidance on Tipped Employees

The Department of Labor (DOL) recently updated its guidance for employers who have tipped employees (restaurant and hospitality workers) that make an hourly wage less than the minimum wage. In these instances, where a server is making $2.13 per hour plus tips, DOL is now REQUIRING employers to make these tipped employees aware that the employer is taking a tip credit, that the credit is supplementing the minimum wage, and that those tips are the property of the employee. These regulations are not new-the new part is requiring employers to disclose, either verbally or in writing, these facts. The National Restaurant Association is recommending that all tipped employees be required to sign the disclosure with the employer retaining a copy at the time of their hire. This action is just another in a trend of the DOL to get more information and tools in the hands of employees to protect their rights. In our modern litigious society, look for this new regulation to spark more DOL complaints and lawsuits. Below is a link to the NRA website for the disclosures:

NRA Guidelines

The National Restaurant Association is currently suing the DOL because these regulations were implemented with no input from the NRA and the DOL only gave restaurants until June 4th to comply with the rules. If you have tipped employees, make sure you read and understand the new regulations.

 

Checkright Excited to Welcome Two New Team Members

Tim Barnett is our new Director of Sales and Marketing. Tim joins us after many years with his family’s business, Barnett’s Hallmark, which owned and operated 5 Richmond-area Hallmark Stores for years. As Chief Operating Officer, Barnett’s was named Richmond’s Retail Merchant of the Year in 2000. Tim brings great experience from all areas of the small business organization, making him a great resource for our customers and Checkright. Tim graduated from Juniata College, a small liberal arts college in Pennsylvania. You can reach Tim at 716-2369 ext. 305, and his email is timb@checkright.net.

Olivia Chin joins us fresh out of VCU. She graduated in December with a B.S. in Marketing with a concentration in Business Administration. Olivia was in VCU’s Honor College, which requires a heavier workload and a minimum GPA of 3.5 each semester. Olivia was born and raised in Jamaica where she lived through high school. You can reach Olivia at 716-2369 ext. 300, and her email is oliviac@checkright.net

 

Checkright to Celebrate Labor Day by Closing

We are closing our office Monday, September 5th for the Holiday-contact your payroll representative to see if your payroll schedule needs changing. Read on for a brief history of the Labor Day Holiday.

Here are some fun facts on our nation’s birthday:The first Labor Day was celebrated on Tuesday, September 5th, 1882 in New York City, and was switched to the first Monday in September two years later.

  • Labor Day became a Federal Holiday in 1894 as a celebration of the American Worker.
  • Virginia schools have traditionally been prohibited from opening before Labor Day, a statute known as the “Kings Dominion Law” because the amusement parks need teen labor at their facilities through the end of the summer. These laws were overturned in some counties in Virginia this year.
  • In high society, Labor Day is the last day of the year that a lady can wear white, as well as the beginning of the period when it is “safe” to eat raw oysters again.
  • Labor Day marks the traditional kick-off of college and pro football and the playing of the US Open tennis tournament, as well as the closing of neighborhood pools.
  • Checkright hopes you have a happy and safe Labor Day however you celebrate.

     

    “Client View-Only” EFTPS PIN Set Up for Checkright Clients

    • Checkright clients will receive a PIN number in the mail within a week.
    • Clients will be able to verify all Federal Tax Payments themselves.

    On Monday, August 15th, Checkright initiated a “view-only PIN request” to EFTPS on behalf of all of our customers. EFTPS is the Department of Treasury’s electronic payment portal that Checkright (and most payroll companies) use to pay all the federal payroll taxes for our clients. Checkright clients will now have their own PIN number to go to the website and verify for themselves all federal payments, dates paid, and amounts of payments. Collecting and making tax payments is a serious responsibility and the more safeguards and checks and balances we can provide to our clients the better. After receiving the letter in the mail from EFTPS, you will be able to log on to the website and view your tax payments account. The letter will contain your PIN, your enrollment trace number, and your federal identification number, which is all that is needed to set up the account. As always, call us with any questions you may have once you have received the enrollment letter.

    The website is www.eftps.com

    The support phone number is 800.945.0966

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