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Accounting 23 - Payroll Accounting > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

What are the two types of payroll professionals?

A
  1. Payroll Clerk

2. Payroll Manager

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2
Q

What are the responsibilities of payroll clerks?

A

Collect, review, approve and record time records. Additionally, clerks update vacation, sick and personal day attendance records.

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3
Q

What 6 things are commonly inputed into the payroll system?

A
  1. Time-worked data
  2. Pay rate changes
  3. Tax rate changes
  4. Employee - authorized payroll deductions
  5. New employee information
  6. Marital and employee allowance changes
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4
Q

What are the final stages of the payroll profession?

A
  1. The completion of payroll tax returns.
  2. Employee information returns
  3. Federal and state census surveys.
  4. Fringe benefit and welfare plan returns.
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5
Q

What are the first 4 APA code of ethics?

A
  1. To be mindful of the personal aspect of the payroll relationship between employer and employee.
  2. To strive for perfect compliance, accuracy, and timeliness of all payroll activities.
  3. To keep abreast of the state pf the payroll art with regard to developments in technology.
  4. To be current with legislative developments and actions on the part of regulatory bodies, as long as they affect payroll.
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6
Q

What are the final 4 APA code of ethics?

A
  1. To maintain the absolute confidentiality of the payroll within the procedures of the employer.
  2. To refrain from using Association activities for one’s personal self-interest or financial gain.
  3. To take as one’s commitment the enhancement of one’s professional abilities through the resources of the American Payroll Association.
  4. To support one’s fellow Payroll professionals, both within and outside one’s organization.
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7
Q

What is the Fair Labor Standards Act?

A

A group of laws that outline fair practices that must be followed in the U.S.

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8
Q

What are the main characteristics of the Fair Labor Standards Act?

A
  1. Minimum wage of $7.25 per hour, and overtime pay requirements.
  2. Coverage of employers that engage in interstate commerce.
  3. Maintaining records that explain the basis of wage differentials paid to employees of opposite sex for equal work.
  4. Displaying a poster informing employees of the provisions of the law.
  5. State’s minimum wage and maximum hour laws that also establish minimum wage rates for covered employees. Where both federal and state laws cover the same employee, the higher of two rates prevails.
  6. The state’s wage orders that also can affect pay periods, pay for call-in and writing times, rest and meal periods, uniforms, etc.
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9
Q

Who funds Medicare?

A

Medicare is funded by taking a percent of gross pay from employees and employers.

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10
Q

Do self-employed individuals get taxed?

A

Yes, self-employed individuals get taxed on their net earnings. (SECA)

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11
Q

What is FICA?

A

FICA stands for Federal Insurance Contributions Act. Employees and employers have a percent of gross pay withheld in order to suppler social security and medicare. (Disability, Survivors Fund, and Old-Age)

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12
Q

Is Income Tax withheld from people’s paychecks?

A

Yes, income tax is withheld on most employees paychecks.

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13
Q

Who has the right to withheld income tax from individuals paychecks?

A

Federal, state and local governments.

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14
Q

How is the amount of federal income tax to be withheld determined?

A

It is determined through a percentage formula or a wage bracket chart, every paycheck, a certain amount is withheld.

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15
Q

How is state income tax to be withheld determined?

A

It varies from state to state.

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16
Q

What is FUTA?

A

FUTA stands for Federal Unemployment Tax Act. The tax is levied on employers and is used to pay state and federal administrative expenses of the unemployment program.

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17
Q

Do employers usually pay the full percentage amount of FUTA?

A

No, usually a large credit is granted by the government if the employer pays a SUTA tax. A smaller credit is granted to employer’s in states where the state has not paid by their debt to the federal government for unemployment benefits.

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18
Q

What is SUTA?

A

SUTA stands for State Unemployment Tax Act. Employer’s pay SUTA taxes, and these taxes are used to pay unemployment benefits.

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19
Q

Does the law require record keeping requirements?

A

Yes, the law requires record keeping requirements. Despite this, no specific form of record is mandated.

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20
Q

What are Fair Employment Laws?

A

Fair employment laws deal with discrimination on the basis of age, race, color, religion, gender, or national origin.

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21
Q

How does the Civil Rights Act of 1964 relate to the Fair Employment Laws?

A

A title of the civil rights act provides several fair employment practices.

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22
Q

What is the EEOC?

A

The EEOC is the Equal Employment Opportunity Commission establishes guidelines for employers. For example, the EEOC has banned employers from discriminating on height or weight requirements as it could be seen as discrimination against national origin.

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23
Q

Can Unions discriminate?

A

No, unions cannot exclude or segregate based religion, race, age, color or national origin.

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24
Q

Which employers are specifically excluded from the fair employment practices?

A
  1. The U.S government
  2. Corporations owned wholly by the United States
  3. Indian Tribes
  4. Private Membership club (non unions) that are exempt from federal income tax
  5. Religious societies in employment of members of a particular religion in order to work on the societies religious activities.
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25
Q

Are employees protected against arbitrary treatment or dismissal under the civil rights act?

A

No, employees are not protected against arbitrary treatment as long as the employer does not employ these practices in a discriminatory manner.

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26
Q

When does the EEOC get involved?

A

The EEOC becomes involved in the form of court proceedings. The EEOC can only become involved after an employee complains with the local law or state department. If there are no laws involving fair employment laws in a particular area, the EEOC can become involved instantly.

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27
Q

How does the Civil Rights Act of 1991 aid employees who file complaints against discrimination?

A

The Civil Rights Act of 1991 helps protect employees as employees who face discrimination can receive compensation for punitive damages, and attorney fees can also be waived for those employees. employees may also receive a jury trial.

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28
Q

How have executive orders helped protect employees further against discrimination in the work place?

A

Employers that have been deemed exempt from fair employment laws are not exempt from many federal funding contract that include the inability for employers to discriminate. Basically, employers that need federal funds cannot discriminate because the contract they sign for the funds, includes fair employment laws within the contract.

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29
Q

What is the ADEA?

A

The ADEA is the Age Discrimination in Employment Act which prohibits employers, unions and employment agencies from discrimantion on the basis of age.

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30
Q

Who does the ADEA cover?

A

The ADEA covers virtually everyone 40 years and older from discrimination on the basis of age.

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31
Q

Are there any exceptions to the ADEA?

A

One key exception to the ADEA is that persons 65 and older who have held high-policy making decisions for the 2 years prior to their retirement, and the employee is entitled to a retirement benefit of at least $44,000 then that employee can be forcibly retired.

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32
Q

How do employers prove that they are in compliance with fair employment laws?

A

Employers must keep accurate payroll and personnel records. In addition, employers should keep employee applications with those dispositions. Also, all records pertaining to promotions, discharges, seniority plans, merits plans, etc. should be retained.

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33
Q

What is the ADA?

A

The ADA is the American Disability Act which prohibits employers, labor organizations, and employment agencies from discriminating against qualified individuals with disabilities because of their disabilities.

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34
Q

Do employers have to accommodate people with disabilities?

A

Yes, employers must provide reasonable accommodations for individuals with disabilities.

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35
Q

According to the ADA, what makes an individual qualified to do a job?

A

Under the ADA, an individual with disabilities is qualified to do the job if the person is able to do the essential functions of the job with or without reasonable accommodation.

36
Q

What is the Federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996?

A

The act mandates that all states require employers to report new-hires.

37
Q

Why did the government require states to establish new-hire reporting systems?

A
  1. The office of child support enforcement requires new-hires to be reported because it helps inform the agency on individuals financial situation in terms of the ability for an individual to pay child support.
  2. It helps reduce fraud in unemployment programs, worker’s compensation, and public assistance programs.
38
Q

What is the fine on employers if they do not report new-hire information?

A

$25 for each new-hire.

39
Q

Are independent contractors required to report information about new-hires?

A

Maybe, in 16 states they are required to report new-hire information.

40
Q

What is the Immigration and Reform Act of 1986?

A

The Immigration and Reform Act bans employers from hiring people that are unauthorized to work in the United States. The act also requires employers to verify the employee’s eligibility to work through Form I-9, Employment Eligibility Form.

41
Q

What does an employer have to do with an I-9 Form, Employment Eligibility Form?

A

An employer must verify the authenticity of the documents and record the the appropriate information on the form. Employers also must follow-up on employee’s documents that have an expiration date for that individual to work.

42
Q

Can an individual be terminated if that individual fails to produce the I-9 forms?

A

Yes, as long as the employer applies this uniformly to all employees.

43
Q

What is E-verify?

A

E-verify is a government based internet system that allows employers to check the employment eligibility of an employee’s Form I-9 with the databases of the Social Security Administration and the department of Homeland Security. E-verify requires a SSN for an employee so, employees must apply for an SSN as soon as possible after being hired.

44
Q

Is E-verify required by law for employers to use?

A

No, E-verify is not required by law. It is only required to be used if the work being done Is under a federal contract that has an e-verify clause. Some states require e-verify through states laws.

45
Q

What happens if there is a discrepancy with the e-verify?

A

If there is a discrepancy with the e-verify, the employee has 8 working days to figure out the problem or be fired.

46
Q

What is the Family and Medical Leave Act of 1993?

A

The Family and Medical Leave Act is an act that forces employers to grant unpaid leave for family and medical emergencies if they employ at least 50 people.

47
Q

How much time is granted for FMLA leave?

A

A person can use up to 12 week of FMLA time.

48
Q

Can employers exempt anyone from the FMLA act?

A

Yes, employers can exempt:

  1. The highest-paid 10 percent of their workforce.
  2. Those who have not worked at least one-year and at least 1,250 hours in the past 12 months.
49
Q

What is the benefit of an employer paying an employee 50% of their wages while on FMLA?

A

The benefit for employers is that employers receive a general business tax credit of 12.5 percent with the ability raise the tax credit by 0.5 percent for every percentage point over the 50 percent mark. (Maximum credit is equal to 25 percent).

50
Q

Are there any plans that include paid FMLA?

A

Yes, in some states paid leave plans are implemented which state that employees can be paid 2/3 of their salary or a maximum of $859 per week in order to spend time with a new child or take care of someone with a serious medical condition. This is covered through payroll deductions.

51
Q

What is the Uniformed Services Employment and Reemployment Rights Act of 1994?

A

The Unformed Services Employment and Reemployment Rights Act of 1994 gives military personnel the right to take leaves of absences from their civilian jobs for active military duty and return with accrued seniority.

52
Q

What are military personnel owed when they return to their civilian jobs?

A

Military personnel are owed their job back with an equivalent position two weeks after filing for hiring, and they are owed health benefits immediately.

53
Q

What is ERISA?

A

ERISA stands for Employee Retirement Income Security Act which was established in 1974 which covers employee pension plans and welfare plans established by employers.

54
Q

Are employers required to have a pension plan for employees?

A

No, employers do not have a legal obligation to have pensions plans for employees. If the employer has a pension plan, anyone 21 and older or after one year of service has the right to a pension plan from the employer.

55
Q

What does ERISA do for employees?

A

ERISA safeguards how pension funds are raised and disbursed, who controls the fund, and what happens if benefits are unable to be payed.

56
Q

What are the two types of benefit plans for retirement?

A
  1. Defined Benefit Plan: Benefits to the employee or his/her beneficiary will be based on a definitive formula.
  2. Defined Contribution Plan: Benefits are based solely on the contributions into the employee’s account.
57
Q

What is Vesting?

A

Vesting is the process in which an employee has the right to share in a retirement fund after a certain amount of years no matter if they quit or are terminated.

58
Q

How does ERISA cover terminated plans?

A

Terminated plans are protected by the Pension Benefit Guaranty Corporation which pays benefits that could not be payed by the plan.

59
Q

What needs to be included in the informational reports regarding pensions plans that are sent to the IRS, U.S Department of Labor, and government insurance programs?

A

The informational reports are usually descriptions of the plans and financial data that relates. The descriptions usually include eligibility for the plans, disqualification that can result in the plan being terminated, and the current value of the plan assets and liabilities.

60
Q

What was the point of the Affordable Care Act?

A

The act was designed to extend health coverage to more Americans with better benefits while reducing costs.

61
Q

What are state-based health insurance exchanges?

A

State-based health insurance exchanges are places where individuals who do not have employer provided coverage or who do not qualify for medicaid.

62
Q

What did the Tax Overhaul Bill of 2017 do to the ACA?

A

The overhaul bill made it so that not every American would not be required to have health care, and this decreased the amount of insurance agencies on the states’ exchange.

63
Q

Who is considered an Applicable Large Employer?

A

ALEs are employers that employed 50 or more employees in the past year. ALEs are required to provide coverage for all full-time employees and their dependents.

64
Q

What happens if an ALE does not provide coverage for a full-time employee?

A

If an ALE does not provide coverage to those eligible, they are subject to owe a penalty for each employee.

65
Q

What are the two information reporting obligations for ALEs?

A
  1. A return must be filed with the IRS regarding each employee with the health care offered or not offered to that individual.
  2. An information statement to each full-time employee containing certain health coverage facts.
66
Q

What occurs if an employer fails to report health coverage offered or not?

A

A fine of $250 for each employee up to 3 million dollars total.

67
Q

Do small employers have to provide health coverage to employees?

A

No, but if small employers provide health coverage, a sliding income tax credit is provided.

68
Q

Is there an extra medicare tax for certain individuals?

A

Yes, single filers making $200,00 are subject to an increase in medicare tax and joint filers making more than $250,000 are subject to an increase as well. Employers must withhold this additional tax from employee wages of those making over $200,000.

69
Q

What does worker’s compensation insurance protect?

A

Worker’s compensation insurance protects employees and their dependents from losses due to work-related injury, illness, and death.

70
Q

How are employers required to provide worker’s compensation insurance to employees?

A
  1. Contribution to a state compensation insurance fund.
  2. Purchase of worker’s compensation insurance from a private insurance company authorized by the state.
  3. Establishment of a self-insurance plan, approved by the state, under which the company bears all the risk.
71
Q

What are worker’s compensation benefits used for?

A

Worker’s compensation benefits are used to cover medical bills and cover some of the wages of the worker during the time the employee is unable to work.

72
Q

How much are worker’s compensation insurance premiums?

A

The rate is usually in an amount which correlates to the amount of $100 that is paid to employees. For example, some companies pay 75 cents per $100 on the premium while others pay more or less. It depends on the work being done.

73
Q

What are disability benefits?

A

Disability benefits are benefits paid to persons with disabilities that are absent from work and will receive wages due to their illness, injury, or accident. These absences are due to their disability, not work-related.

74
Q

What is the benefit of keeping properly designed forms and records?

A

The benefit of keeping properly designed forms and records is that it allows for efficiency and accuracy in accordance with the laws. Also, it helps management make decisions and view the company’s records more easily.

75
Q

What are the 4 main reasons as to why the human resource system must keep extensive records?

A
  1. Provide data for considering promotions and changes in an employees pay.
  2. Provide information required by local, state, and federal laws.
  3. Justify actions if investigated by local or state labor boards.
  4. Justify actions with local unions or plant committees.
76
Q

Why are job descriptions important?

A

Job descriptions are important because they protect the employer from discrimination charges. The job description must be very clear.

77
Q

What should a job description include?

A
  1. Job title
  2. Essential and nonessential duties
  3. Department/supervisor
  4. Necessary skills
  5. Needed experience
  6. Education, credentials required.
  7. Working conditions
78
Q

What is a requisition of personnel?

A

A requisition of personnel is a request sent to the HR department for the need of additional or replacement of staff. The process can be done through a memo or preprinted form.

79
Q

What should a job application include?

A
  1. Personal information (phone, SSN, etc.)
  2. Educational background
  3. Employment and experience record
  4. Type of employment desired
  5. References
80
Q

What are pre-hire inquires?

A

Pre-hire inquires are questions asked on applications or in employment interviews. These questions can be whatever the employer wants, but if the questions cannot be explained in a reasonable logic, the questions are discriminatory.

81
Q

Can employers ask for criminal records?

A

No, it is illegal.

82
Q

What is the FCRA?

A

The Fair Credit Reporting Act.

83
Q

What are the 3 steps that must be followed when an investigative consumer report is being used?

A
  1. Notify the applicant in writing that the information obtained will be used in employment decision.
  2. Have the applicant sign the notice.
  3. Give a notice and the report to the applicant 5 days before an adverse employment decision.
  4. Provide a copy of the government document, “A summary of your rights under the FCRA.”
84
Q

What types of tests are approved by the EEOC in terms of job applicants?

A

Personality tests are approved to be used by the EEOC. Lie detector tests are illegal.

85
Q

Is drug testing legal by employers?

A

It depends on the state’s laws. Some states approve drug testing as long as it relates to job performance or job safety.

86
Q

Can employers ask for age on a job application?

A

Yes, but they should provide a statement that says the ADEA prohibits discrimination on the basis of age for individuals 40 and older.

87
Q

What should the final part of the job application have?

A
  1. Verify the information on the application
  2. Terminate the employee for any false information on application or interview process.
  3. Obtain authorization to run credit or background checks.

Accounting 23 - Payroll Accounting (3 decks)

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