1. Who is an employer? (back to top)
An employer is a person or legal entity who hires one or more persons to work for a wage or salary. Wages are compensation for services performed, including but not limited to, cash payments, commissions, bonuses, and the reasonable cash value of nonmonetary payments for services such as meals and lodging.
2. What are some employer resources? (back to top)
See our page of useful links. Two crucial publications addressing employer taxation and wages are the California Employer’s Guide (DE 44) and IRS Publication 15, Circular E, Employer’s Tax Guide. Employers also need information from the Department of Labor regarding human resources and labor standards, worker’s compensation, unemployment insurance.
3. What do I need to do when I find someone I want to hire? (back to top)
You must verify that each new employee is legally eligible to work in the United States. This will include completing the U.S. Citizenship and Immigration Services Form I-9. You are also required to report any new employee to your designated state new hire registry.
4. What is the most important thing an employee can do when he/she receives their first payroll check? (back to top)
Information such as social security number, marital status and withholding exemptions, name and address are factors that your employees should review on their first payroll check. Any inaccuracies should be directed to their employer as soon as possible.
5. Why Outsource? (back to top)
“bottom line”……COMPLIANCE & EFFICIENCY = SUCCESS
Your time is valuable. Outsourcing allows you to focus on what you do best while efficient professionals handle the rest.
California Payroll Concepts will reduce your payroll processing, time, frustrations, and costs as well as reduce your risk of taxation, reporting and filing errors and omissions. One tax penalty and/or time wasted addressing an IRS or EDD filing error could pay for an entire year of payroll service!
Whether you employ someone in your home or run a multi-state business with several hundred employees and departments, your business will benefit by streamlining your payroll administration and having your payroll taxes and filings managed.
Call now for a quote: 530-823-7000.
Payroll 101: More Q & A
Commonly asked questions for your reading pleasures - courtesy of California Payroll Concepts
as provided by the State of California, Department of Industrial Relations, Div. Of Labor Standards Enforcement, doc rev 7-2002
1. Pay Days (back to top)
Wages must be paid according to a regularly set schedule. When employees work overtime during a pay period, the payment of the overtime wages may be delayed to the next payday. All earned wages must be paid at least twice a month on days designated in advance by the employer. Work performed between the 1 st and 15 th of any calendar month must be paid between the 16 th & 26 th day of the same month and work between the 16 th and the last day of the month must be paid between the 1 st & 10 th of the month. Weekly, bi-weekly, or semi-monthly payroll may be paid within seven (7) days of the pay period in which the wages were earned.
Executive, Administrative and Professional employees may be paid on a monthly basis, providing all of the following conditions are met: (1) employees are not covered by a collective bargaining agreement containing language regarding paydays to be applied; (2) employees are not subject to the FLSA; (3) employees’ monthly remuneration does not include overtime pay; and (4) employees must be paid within seven days of the close of their monthly payroll period.
2. Record Keeping (back to top)
a. Statement of Wages
At the time that employees are paid, the employer must provide each employee with a written, detachable or separate, itemized statement that contains the following information:
• gross wages earned
• total hours worked (if compensated on hourly basis)
• all deductions (if authorized by the employee, all may be aggregated and shown as one item)
• net wages paid
• inclusive dates of pay period
• name of the employee and social security number
• name and address of the employer (legal entity)
• number of piece rate units (if applicable)
• all applicable hourly rates in effect during the pay period and corresponding number of hours at each rate
• These itemized statements must recorded in ink or other indelible form and a copy maintained by the employer for at least three years.
b. Recording Hours Worked
c. Employer Records
Employers must keep records in indelible ink of the time worked by their non-exempt employees. This can be done by writing out the time worked or by punching a time clock. The time records must show when the employee begins and ends each work period, as well as meal periods, split shift intervals and the total daily hours worked. Meal periods during which all operations cease and authorized rest period need not be recorded.
The employer must maintain employee records in English in indelible ink or equivalent form. All documents must be properly dated. In addition to the statement of wages, the employer must maintain comprehensive records showing employees’ names, addresses, occupations, social security number, and ages of minors, as well as payroll records showing the hours worked each day and the wages paid to each employee and keep those records for a period of three years. Employers are required to permit an employee to inspect or copy records.
3. Hours and Days of Work (back to top)
Daily Overtime-general provisions: All employees shall not work more than eight (8) hours in any workday, more than six days in any workweek, or more than 40 hours in any workweek unless the employee receives one and one-half (1 ½ ) time regular rate of pay for hours that exceed. Double pay is required for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of eight hours on the seventh consecutive day of work in a workweek.
4. When are my payroll taxes due? (back to top)
Payroll taxes are due on a monthly or semi-weekly basis. A monthly tax depositor has until the 15 th of the next month to pay their federal taxes for the current month. A semi-weekly tax depositor’s due date varies depending on the check date on a weekly basis.
5. How long does an employer have to provide a final check to a terminated employee? (back to top)
Each state holds different provisions for terminated employees. The state of California states, that an employer must provide a final check at the time of termination. If the employee quits, within 72 hours.
6. When must an employee fill out a W-4? (back to top)
A W-4 must be filled out and submitted when a new employee gets hired into the company. A W-4 must also be filled out if there are any changes to name, marital status or exemptions. Exempt employees must complete a new W-4 every year.
7. What is the most import thing can do when he/she receives their first payroll check? (back to top)
Verify social security number, marital status, exemptions, name and address are all correct.
8. Who is considered to be exempt from federal or state income tax withholding? (back to top)
The are two conditions that apply in order to be exempt from income tax withholding:
1) employee did not owe federal taxes last year and all federal taxes withheld during the year was refunded after the employee filed and 2) the employee does not expect to owe any tax for the current year.
9. What is the “EMPLOYER” tax costs when hiring a new employee? (back to top)
FICA 6.2%, M/C 1.45%, SUI 3.4% (+/-)*, ETT 0.10%, FUTA 0.80%
TOTAL: 11.95% **
* CA unemployment insurance rates can vary from set 3.4% after three years in business
** not including worker’s compensation
10. What do I do if I found out an employee has an incorrect SS#? (back to top)
California Payroll Concepts can deal with these types of corrections for you.
11. If an employee’s work contract is for 3 (or 4) days a week at 10 hours per day, do I still have to pay overtime? (back to top)
There are different circumstances in considering whether overtime should be paid to an employee. CA labor law states that anything over 8 hours in a day or 40 hours in a week is overtime. Please contact the Labor Board for more information.
12. When is the tax impound and direct deposit monies withdrawn from my account? (back to top)
Tax deposit will be debited the same day as your payroll check date. Direct Deposit monies must be debited two business days before your payday.
13. What are “disposable” earnings? (back to top)
A: Earnings left after subtracting withholding required state and federal taxes, not voluntary deductions such as 401K, medical, and wage assignments.
14. Are garnishment deductions tax exempt? (back to top)
15. What is an “exempt” salaried employee? (back to top)
This refers to exemption from overtime rules (not taxes!). Generally, to be an exempt employee these general guidelines must be considered:
- supervise at least 2 or more employees - ability to hire and fire
- 50% of work must be in a supervisory position - must meet specific minimum salary amounts
16. I don’t want “employees”; can’t the worker just agree to an independent contractor relationship? (back to top)
A written contract by itself may not protect you from tax and labor issue liabilities. Please contact Department of Labor or CA EDD for more information. General guidelines to consider:
- right to control manner/means by which work is done - are services repetitive or long term basis?
- are tools, equipment, and place of work provided? - work paid based on time or piece rate?
- is the work different/separate from the regular service provided by the principal?