Regulations that all Employers Need to Know

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Written on July 8, 2010 at 1:34 pm, by CEO Systems

Has your business grown to the point that you are too busy to do all the work yourself? The decision to hire employees involves more than just hiring, training, and managing. It also involves following all of the employment laws that the federal and state government have in place. Often, when new business owners decide to hire employees, they do not realize all of the different regulations that they need to adhere to and end up receiving steep penalties from the government. To help you understand the regulations that are involved with employing an individual, CEO Systems has created an outline of the regulations that every employer needs to know.

Payroll Taxes
As an employer you are responsible for withholding and paying payroll taxes. This includes withholding the correct amount of money from your employee’s paychecks for federal and state taxes, paying a portion of your employee’s Social Security and Medicare, and paying unemployment tax. This money must be paid to the government in a timely manner to avoid penalties.

Social Security (FICA)
Employers are required to pay half of their employee’s Social Security tax. They are also required to withhold the employee’s portion and pay that money directly to the IRS. The employer is responsible for ensuring that this tax is withheld accurately and paid in a timely manner. Depending on the size of payroll, taxes are most commonly paid quarterly on a Form 941. Each quarter, employers pay the full tax to the government. The amount that is paid to the government is reported through a W-2 and W-3. You are able to claim the amount of money that you pay for Social Security on your business taxes. For more information on Social Security Taxes, click HERE.

Medicare
Employers are required to pay half of their employee’s Medicare tax. They are also required to withhold the employee’s portion and pay that money directly to the IRS. The employer is responsible for ensuring that this tax is withheld accurately and in a timely manner. Each quarter, employers pay the full tax to the government. The amount that needs to be paid to the government is reported through a W-2 and W-3. You are able to claim the amount of money that you pay for Medicare on your business taxes. For more information on Medicare Taxes, click HERE.

Federal Unemployment Taxes (FUTA)The Federal Unemployment Tax is paid by every employer to the federal government. For 2010, the tax amount that is due is .80% of the first $7,000 that is paid to each employee. If you have had an unemployment claim, your rate may be higher. Employers report this tax by filing an annual Form 940. For more information on Federal Unemployment taxes, click HERE.

Federal Tax Withholding
Employers are required to withhold a portion of each employee’s paycheck and give this money directly to the Internal Revenue Service. The amount of money that needs to be withheld will vary for each employee. To figure out how much money to withhold, have each employee fill out a W-4 and then calculate the tax by using the tax calculator that can be found on the IRS website or IRS publication. To learn more about Federal Tax withholding, click HERE.

State Taxes
The amount of money that needs to be withheld for state taxes varies from state to state. Research how much money your state requires to be withheld by visiting your state’s government website. The taxes that you need to know about include:
· State Tax Withholding
· Local Taxes
· Supplemental Taxes

Garnishments
It is the employer’s responsibility to garnish an employee’s paycheck if they have been served with garnishment papers. An employer must withhold the correct amount of money from the employee’s paycheck and pay that amount to the institution that is owed. There are critical timelines and calculations to follow, so read the accompanying paperwork closely. Garnishment laws vary from state to state, for more information you can visit the Department of Labor website by clicking HERE.

Worker’s Compensation
In the event that an employee is injured on the job, worker’s compensation may cover the medical expenses and wage loss. Most states require that you carry worker’s compensation for your employees. To avoid being fined, check your state’s worker’s compensation requirements before hiring any employees.

There are a variety of companies that offer worker’s compensation coverage. To choose the right company for your business, research the different providers, ask other business owners what company they use, or ask your business liability insurance carrier what company they recommend.

Unemployment Claims
If you terminate an employee and they file for unemployment, then you will receive a Claimant’s Separation Statement from the Employment Security Department (ESD). If you terminated the employee due to lack of work, you cannot fight the claim. Simply file the form and be aware that your unemployment tax may increase. If you terminated the employee with just cause then you will need to return the form with documentation that proves that you had just cause. For more information about unemployment claims, you can visit the Employment Security Department website by clicking HERE.

Federal Labor Standards Act (FLSA)
There are laws at both the state and federal level that regulate the wages that you must pay to your employees for the hours that they have worked. For more information on these regulations, visit the Department of Labor website by clicking HERE.

Occupational Safety and Health Act (OSHA)
As an employer you are responsible for maintaining a safe work environment and for holding monthly safety meetings. For more information about the regulations in your industry, visit the Occupational Safety and Health website at www.osha.gov. For more information about establishing a safety policy for your business you can read our article, Safety in the Workplace.

To help you efficiently run and document your company’s safety meetings, CEO Systems has created a safety meeting notes template. To download this helpful document, click HERE.

Equal Employment Opportunity Commission
It is important that you are an equal opportunity employer and do not discriminate against any employee for race, gender, religion, disability, etc. For more information about discrimination, you can visit the Equal Opportunity website by clicking HERE.

Family Medical Leave Act (FMLA)
Employers with 50 or more employees are required to offer FMLA. Most states have their own guidelines, so be sure to check with your state’s government website to ensure that you comply with all the regulations that are required in your state.

American Disabilities Act (ADA)
The American Disabilities Act is applicable to employers with 15 or more employees. The ADA protects employees from discrimination in all employment practices including: job application procedures, hiring, firing, training, pay, promotion, benefits, and leave. Under this act, every employee has a right to be free from harassment because of their disability and an employer may not fire or discipline an employee for asserting their rights.

According to ADA, employees have the right to request a reasonable accommodation that will allow them to apply for the job or perform their work. A reasonable accommodation is any change or adjustment to a job, the work environment, or the way things are usually done, that would allow them to apply for a job, perform job functions, or enjoy equal access to benefits available to other individuals in the workplace. For more information on The American Disabilities Act, visit their website by clicking HERE.

Comprehensive Omnibus Budget Reconciliation Act (COBRA)
COBRA requires employers to provide the opportunity for employees to pay for continued health coverage after leaving employment. Under federal law, COBRA is required for group health plans that are sponsored by employers with 20 or more employees. It is the responsibility of the employer to notify past employees that COBRA coverage is available.

Following all of the federal and state regulations that are involved with employing individuals is extremely important. If following these regulations seems overwhelming, consider hiring employees through an employment agency. When you use an agency, they are responsible for payroll and ensuring that all the government regulations are adhered to, allowing you to enjoy the benefits of having a great employee. There is a fee involved for this service, but in return you receive piece of mind.

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