What Employers Face. The Governmental Trinity.

Employer Blog is intended to help small employers and business people learn and understand the governmental regulations and taxes that they are subject to as employers. An employer ignorant of even the basic information is placing their business, livelihood and future in jeopardy. And if an employer agrees to use anyone of the host of employee leasing or payroll service companies they will need this information to determine which outside service provider will best fit the employer's situation and judge if the service provider is performing agreed upon services.

There are three principal government agencies with oversight and enforcement powers regarding employee compensation, taxation and reporting; The Department of Labor (DOL) charges with enforcing federal labor laws principally under the Fair Labor Standards Act (FLSA). The Internal Revenue Service (IRS) which is responsible for for tax reporting and collections to the federal government. Each state has an agency that is responsible for administering a program for unemployment taxes and benefits. In Texas the Texas Workforce Commission (TWC) is responsible for enforcing Texas Labor Laws and collecting and administering unemployment taxes from employers and to workers, aiding employers find employees and in some training of workers.

Because each agency has authority over the employer/employee relationship complying with the laws, regulations, reporting requirements for employee taxes, benefits etcetera can be overwhelming to business people to remain informed, compliant and still run a business. To complicate the issue for an employer recently the IRS and DOL have signed a Memorandum of Understanding (MOU) to share information “to end the business practice of misclassifying employees in order to avoid providing employment protections”. Now if the DOL learns of an employer who has not followed the labor laws the DOL will inform the IRS and vice versa. To further complicate matters for the employer the IRS Small Business/Self-Employed Division and 37state have had a MOU since the early 2000s to exchange information on abusive tax avoidance transactions (ATAT). This can result in the employer complying with the DOL and suddenly find the IRS and state employment agency asking questions of the employer. It is easier and less costly to comply with the labor laws. To comply an employer and management must be aware of the laws that affect their industry and be aware of changes as they occur.

The right sidebar provides the current numbers, rates and amounts used in payroll, tax, and financial calculations.

First subject to be posted Tuesday will be a summary of DOL FSLA standards for determining hours worked, minimum wage, overtime rate and pay period and the related TWC pay day rules. The following Thursday a basic payroll calculation will be demonstrated using an excel spreadsheet.

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