Module 1 Flashcards
Payroll Concepts
Tipped employee’s hourly rate:
Under the FLSA, tipped employees may be paid no
less than $2.13 per hour.
An employee’s Form W-4 is invalid when:
Alterations, additions, or deletions have been made to the form. If the form is not signed and dated. If there is a request for a flat dollar or percentage to be withheld. If the employee indicates the form is false.
Child labor laws ages 14 and 15:
May only work in nonhazardous jobs for 3 hours per day and 18 hours in a week when school is in session.
They may work up to 8 hours a day and 40 hours a
week when school is not in session.
Child labor rules under age 14:
Child labor laws generally prohibit employment of
minors under age 14, unless the minor works for a parent or in some situations, actors, batboys or girls and ballboys or girls.
Child labor under age 18:
Restricts minors under the age of 18 from working in a job that has been declared hazardous by the DOL.
Employees are covered under FLSA by:
Either the enterprise coverage test or the individual employee coverage test.
Excluded from regular rate of pay:
Gifts, reimbursed expenses, paid hours not worked, stock options, discretionary bonuses, and overtime premiums in excess of the FLSA requirements are not
included in the regular rate of pay.
Exempt administrative employee’s duties:
Primary duties are performing nonmanual or office work directly related to the management or business operations of the employer or customers and must also be able to exercise discretion and independent judgment regarding matters of significance.
Exempt employees are determined by:
The employee’s primary job duties and weekly salary.
Exempt executive employee’s primary duties:
The management of the business, direct 2 or more fulltime employees (or equivalent), and authority or recommendation to hire and fire employees.
Exempt professional employee’s duties:
is either a learned or
creative professional. Learned professionals’ work requires advanced knowledge. Creative professionals’ work involves invention or talent.
FLSA highly compensated employee:
Meets at least one or more of the exempt duty tests for an executive, administrative, or professional employee
and has an annual compensation of $107,432.
FMLA leave guarantees:
12 weeks of unpaid leave in a 12 month period to an
eligible employee and requires group health benefits to be maintained during the leave.
IRS penalties for intentional misclassification of
an employee:
The employer is liable for 100% of FIT, social security
and Medicare (both employee and employer share) when a worker is intentionally misclassified as an independent contractor.
IRS penalties for unintentional misclassification
of an employee:
The IRS may assess penalties of 1.5% of wages and 20% of the employee’s share of social security and
Medicare taxes when a worker is unintentionally
misclassified as an independent contractor.
Methods Form I-9 can be completed by:
Using a paper or electronic form.
Minimum weekly exempt salary:
Under the FLSA white collar exemption rules, exempt employees must be paid a minimum salary of $684 per week. Teachers, lawyers and attorneys are not required
to be paid a minimum salary.
Overnight travel is time worked:
When on scheduled and non-scheduled work days, if the travel times coincide with the employee’s regular working hours.
The reasonable basis test:
Allows employers to treat individuals as independent
contractors, if there is a reasonable basis for doing so.
Traits of an employee include:
Has taxes withheld from wages; reimbursed for
expenses; complies with employer’s instructions about when, where, and how to work; work is done
personally; performs services under company’s name.
Traits of an independent contractor.
Sets own hours; determines own sequence of work; works for multiple organizations; self-employed; works
by the job; employs assistants.
Types of exempt employees:
Administrative, executive, professional, and outside
sales.
What does an exempt Form W-4 mean?
indicates the employer is not to withhold federal income tax from compensation. Exempt Forms W-4 expire February 15 of the year following the submission.
What does the FLSA cover?
The Fair Labor Standards Act establishes minimum
wage, overtime pay, record keeping, child labor rules,
and equal pay rules.
What is E-Verify?
is a free online tool that allows verification of a
new hire’s identity and eligibility to work in the United States. Government contractors and employers in some states are required to use E-Verify.
What is SSNVS?
Social Security Number Verification Service is SSA’s
system that allows employers to verify if an employee’s name and SSN match SSA’s records.
What is the 8/80 Rule?
rule is a workweek exception for hospitals and nursing homes. Employers using this rule pay overtime for work over 8 hours a day or 80
hours in a 14-day period.
What is Form I-9?
Employment Eligibility Verification, verifies
an individual’s identity and right to work in the United
States.
What is Form SS-8?
Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, is filed with the IRS to obtain a
determination of a worker’s status. Form W-4S, Request for Federal Income Tax Withholding from Sick Pay, allows employees the ability to request income tax withholding from thirdparty
sick pay.
What is Form W-4?
Employee’s Withholding Certificate, is completed by employees, submitted to the employer, and is the basis of the federal income tax withholding on taxable wages.
What is Form W-4P?
Withholding Certificate for Periodic Pension or Annuity Payments, allows retirees to request the amount of federal income tax to withhold from pensions or annuity payments.
What is Form W-4S?
Request for Federal Income Tax Withholding from Sick Pay, allows employees the ability to request income tax withholding from thirdparty
sick pay.
What is Form W-9?
Request for Taxpayer Identification Number and Certification, is used by a payee to provide its taxpayer identification number (TIN), which
can be a SSN or EIN.
What is a workweek?
consists of any seven 24-hour periods totaling 168 consecutive hours. Employers set when a
workweek begins. Workweeks are intended to be permanent but can be changed when a business need
occurs.
What is a nondiscretionary bonus?
is a contractual or agreed upon bonus or incentive. Nondiscretionary bonuses
paid to nonexempt employees are included in the regular rate of pay.
What is an IRS Lock-In Letter?
directs employers to calculate federal income tax withholding in a certain matter, overriding the employee’s Form W-4.
What is backup withholding?
24% FITW on reportable non-payroll payments when a TIN is not provided or the organization is notified by the IRS to withhold. It is reported annual on Form 945.
What is engaged to be waiting?
is compensable time because the employer requires the employee to wait to begin
work.
What is the FLSA tip credit?
$5.12 per hour
What is the federal minimum wage?
$7.25 per hour
What is the federal wage & hour law also known
as?
The Fair Labor Standards Act (FLSA)
What is the regular rate of pay?
is used to calculate a
nonexempt employee’s overtime premium
What is waiting to be engaged?
is not compensable time
because the employee is free to pursue personal
business.
When an
What varies in a fluctuating workweek?
the employee’s hours vary while the employee’s salary remains constant. An overtime premium must be paid for time worked over 40 hours
in a workweek.
When are meal periods time worked?
A meal period that is not at least 30 minutes of
uninterrupted time is time worked under the FLSA.
When is an amended W-4 implemented?
it must be implemented with the first payroll no later than 30 days after the form is submitted.
When must a Form W-4 be completed?
New employees complete Form W-4 before their first
payroll is calculated. Others must complete a new Form W-4 when their tax liabilities increase.
Who is a statutory employee?
is an agent-driver or commissiondriver;
full-time life insurance salesperson; homeworker; or a traveling or city salesperson.
Who is a statutory nonemployee?
is a qualified real estate
agent or a direct seller.
Who is an exempt employee?
Under the FLSA white collar exemptions, employees perform job duties meeting certain requirements and are paid a weekly salary of at least $684 per week. Exempt employees are exempt from minimum hourly
wage and overtime.
Who uses economic realities factors?
The DOL uses the economic realities factors to determine an employer-employee relationship where the worker is economically dependent on the employer.
