This is the second part of an article from BCM Payroll Services that address some of the issues you face as an employer. BCM Payroll Services has helped local businesses in Pennsylvania, Maryland, West Virginia, and Virginia for more than 18 years.
Holiday pay can be another area of confusion for employers. How you handle holiday pay is depends for the most part on whether an employee is exempt or non-exempt under the FLSA.
When your business is closed on a holiday you are generally not required to pay non-exempt employees when they do not work on a holiday unless you have a practice or policy that states otherwise.
The rule is very different for exempt employees. If an exempt employee works any part of the week they generally must receive their full salary if the company closes for a holiday – regardless of whether the company policies includes holiday pay.
When an employee does work on a holiday, employers are generally not required to pay a premium for days worked on holidays (other than normal overtime pay if applicable). However, there are some state rules that impact holiday pay. Massachusetts and Rhode Island are two such states. Be sure you know your state rules as well.
The other area that can be impacted by holidays is the date payroll is paid. In some states employees must be paid the day prior to the holiday, if the holiday falls on a previously scheduled pay date. The best way to handle paydays that fall on a holiday is to establish pay dates at the beginning of the year.
An employees final paycheck must generally be paid by the next regular payday, according to Federal Law but in some states a shorter timeframe has been mandated. The final deadlines at the state level generally depend on who initiates the separation – the employee or the employer. In some states, like California, the final pay must be provided at the time of termination. In some states 72 hours is the requirement. Check with BCM Payroll Services for the rules in your state.
Vacation pay is generally not required to be paid at the federal level, but some states do require that accrued vacation is paid to the separated employee. In some cases the requirement to pay or not pay accrued but unused vacation pay is determined by written company policy so it’s important that these policies be current and up-to-date.
Federal Law requires that employers retain pay records for at least 3 years. These records should include:
- Total Hours Worked each day and work week
- Total straight time hours
- Total overtime
- Deductions or additions to wages
- Total wages paid each week
- Pay Date and pay period covered
Payroll records required for tax purposes should be retained for 4 years.
Check stubs for each pay period are not required by the federal government but many states do require a pay statement and most employees expect one either in print or online.
Some states outline the information that must be included on employee pay stubs. Check with BCM Payroll if you have any questions at all.
Paying employees involves a lot more than just wages and taxes. You need to understand the different types of pay (regular, overtime, holiday and vacation), how terminated employees have to be handled, record keeping and final paycheck requirements. There are many local and state requirements that impact your business as well. That’s what it’s so important to engage the services of BCM Payroll to take these complex tasks off your hands.