What is Back Pay?

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Back pay is utilized when there is a discrepancy with an employee’s compensation. The actual amount is referred to as back pay – the sum of what the employee should have been paid, less the amount paid out. There are several instances where an employee may be eligible for back pay.

  1. Retroactive Increase. Perhaps an employee had been performing tasks above and beyond their normal job requirements to prove they were ready to take on more responsibility. The successful completion of these tasks resulted in a promotion, at which point the employer provided the employee with back pay at the new rate for the time that he or she had truly been in the new role.
  1. Terminations & Lay Offs. If an employee was fired or laid off and did not receive compensation they are owed and/or were fired under false pretenses, in certain circumstances they are eligible to pursue back pay. If approved in court, the company will be ordered to pay back pay and possibly damages and court costs as well.
  1. Incentives. Many start-ups will leverage back pay as an incentive for employees. Since these businesses generally are working with a fixed amount of capital yet seeking talent at the upper echelon of the spectrum, they need to get creative with salaries. By promising back pay under certain pretenses, the employer may get a higher quality candidate who is intimately bound to the financial success of the company. It results in a mutual benefit should the company see success.
  1. Error in Payroll Processing.
    If there was a clerical error in processing payroll that resulted in an employee receiving less than they should have, the company will be required to provide that individual with back pay for the time the issue occurred.

We love to share tidbits about the business world – covering topics that may or may not present themselves in your workplace is something that we feel is valuable. We hope you do too! Stay tuned in to our blog for other informative pieces and check out our archive to see topics we have covered in the past!

Have a topic you want covered? Shoot us a note!

How to Deal With Employee Substance Abuse

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It may seem unlikely that a gainfully employed individual is struggling with a substance abuse issue. According to a 2011 study from the US Department of Health and Human Services, of the 18.9 million adults classified as having problems with substance dependence or abuse, 52% of them were employed full time. This makes this a very real problem for employers. Often those who have substance abuse issues are exceptional at hiding these struggles.

Having employees who struggle with substance abuse can be costly to your business. Typically it results in:

  • Safety risks for other employees
  • Increased healthcare costs for illness and injuries
  • Increased rates of absenteeism
  • Reductions in productivity and performance

Any of these outcomes have the ability to affect not only your bottom line but your company’s culture and reputation. Identifying an employee’s substance abuse problem can be challenging however there are some common identifiers including:

  • Recurrent financial or legal problems
  • Frequent bouts of absenteeism without notice
  • Failure to fulfill personal, social and business related obligations
  • Personality imbalances – frequent “highs and lows”

Handling substance abuse problems with employees is a touchy, delicate subject as often people are embarrassed, ashamed and in denial about these struggles. Dealing with this requires a patient, strategic approach. Employer Solutions Plus is well versed in all elements of employee management and can point you in the right direction for help with employee substance abuse and compliance. If you already work with a PEO, consult your team for advice; PEOs are experts in employee management and will ensure that the situation is approached correctly.

Contact us today to find out how we can help you help your employees.

Administrative Functions That Don’t Bring in Money

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In our last blog, we discussed the administrative cost of employees. We pulled together some figures and shared with you the cost that is associated strictly from an administrative perspective. One thing we didn’t touch on was the functions that help bring that cost to such a high rate.

As we mentioned, the administrative functions of a business operation are required for the fulfillment of the production of goods and services. However, if you are a small to medium sized business, some of these tasks do not require a full time employee. For instance, if you have an office with 10 people, chances are you don’t need someone on full-time to train new hires in HR policies like sexual harassment and whistle blowing.

Employer Solutions Plus has long served the business community and thanks to this experience can quickly identify some administrative functions that could readily be outsourced to save the company unwise human capital investments. These roles are easily outsourced because having them in-house does not often offer a competitive advantage in the marketplace as they do not affect the productivity or culture of the business.

  • Payroll
  • HR Information Systems
  • HR Training
  • Benefits Administration
  • Employee Liability and Legal Administration
  • Compliance Officers
  • Tax Administration

We find that one of the most common reasons businesses are hesitant to outsource is because they are unsure if the quality of work that their internal team delivers will be matched. We can assure you that if you choose to outsource HR tasks through Employer Solutions Plus, you will not only receive the quality (check out our testimonials!) but we can help you become an employer of choice.

Contact us today to schedule a consultation and find out how we can help you streamline your business and impact the bottom line!

Administrative Cost of Employees

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What is the greatest asset to a business? It is not the building where it operates or the equipment that produces the goods or the orders. It is the individual employees who facilitate the day to day operations to make the business run. We know how highly valuable employees are – without them your business can not run. However, these valuable employees are also a huge expense.

Just how much do they cost? We’ve broken it down for you. Here’s the SAMPLE scenario – you are a 25 person company in a white collar industry. You have a $500,000 annual payroll with a per employee average salary of $20,000. Your annual turnover rate is 10%.

We will assume the following costs:

Payroll Processing, Tax and Administration $2,600
Payroll Delivery $300
401k Retirement Plan & Vendor Administration $3,500
Full Service Section 125 Plan & Vendor Administration $2,400
Employment Practices Liability Insurance $4,000
Total Vendor Cost $12,800
Staff Administration Cost $20,000
Total HR Administration Cost $32,800

So what do these sample numbers boil down to? Your administrative function just to process payroll and benefits is 6.56% of your entire payroll. Per employee, per year that is an average cost of $1,312. Over 6,150 transactions annually are required to accomplish this. Quite the reality check, right?

There are solutions however – small to medium sized business choosing to outsource these administrative functions can make drastic improvements to their bottom line but also to productivity.

Human Resources Challenges in the IT Industry

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Over the last fifty years the landscape of the dominant industries has changed. Perhaps, most notably one of the industries that have grown at exponential rates is the IT industry. Information Technology is at the forefront of our economy and the foundation of most businesses today. With this boom comes unique challenges in managing the talent that is the driving force of the industry’s success.

Employer Solutions Plus has extensive experience in delivering HR solutions for the IT industry. This experience gives us inside insight into the challenges that most IT companies are facing from an HR standpoint.

We have identified the top 3 challenges that IT companies face as they continue to be a pillar of the global economy.

1. Recruiting & Retaining Talent.

The IT industry is cutthroat – it requires that employers must be able to offer strong benefits packages to potential employees. They also need to ensure that these packages remain competitive in order to retain employees. Human capital is critical to the success of an IT company. High rates of attrition or the inability to recruit quality talent will quickly cannibalize a company.

2. Performance Management.

Managing employees in the IT industry can prove to be challenging. You need to create a culture of success and the desire to perform. Fostering a culture of accountability, personal growth and a connection to the business is critical. This industry makes it very easy to move swiftly from one company to the next.

3. Maximizing your ROI.

As we mentioned, the IT industry is a human capital investment. If you are unable to maximize the return on this investment by streamlining processes, having a strong management focus on the bottom line and reducing your liabilities as an employer, your business will suffer.

Employer Solutions Plus has an industry leading PEO Program that is uniquely positioned to help you address these challenges.

Contact us today to find out how we can help you tackle these challenges!

Business Tax Credits for Electric Vehicles

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Are you in the market for a new vehicle or perhaps a fleet of vehicles for your business? Have you considered going electric? Most people think that the only major financial benefit to electric vehicles is the gas savings – truth be told, that is just the tip of the iceberg.

In addition to saving up to 75% in fuel costs there are major savings in maintenance and mechanics. Because these vehicles do not have a transmission or combustion engine you will be able to omit oil changes, fuel filters, emissions testing and other costly upkeep. In addition to being low maintenance, the drive train and braking system design is simpler, resulting in greater reliability which will render fewer repairs. And last but not least, electric vehicles also offer tax credits!

According to the IRS.gov website, “For vehicles acquired after December 31, 2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500.”

Electric vehicle pricing is comparable to that of mid-range cars on the market. What does that mean? That means that simply by purchasing a single electric vehicle, you immediately save up to $7500 on your taxes. You are, at the end of the day, saving money on a purchase you would have made regardless.

Have you recently purchased an electric vehicle used for business purposes? Are you planning on purchasing one? Calculating the tax breaks can be challenging – we recommend reaching out to someone who has experience. Employer Solutions Plus is partnered with those who are well versed in tax filings and can help you maximize your deductions like this one.

Contact us today for a consultation!

 

ADA Standards for Design

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At Employer Solutions Plus we find that one of the most challenging things for our clients is navigating regulatory compliance. Whether it is with taxes or building designs, ensuring that you are not in violation of the requirements can be very daunting and time consuming.

One of the most recent changes in regulatory compliance is with new construction specific to the Americans with Disabilities Act (ADA). For those unfamiliar, the ADA was put in place in 1990 to ensure that individuals with disabilities are not discriminated against in all facets of employment, from wages to workplaces. This act applies to any employer with more than 15 employees.

The ADA Standards for Accessible Design are applied to public and commercial facilities, including businesses and apply to standards for both employees and customers. The requirements outlined within this document are enforceable by law and all businesses must be compliant.

While our team at Employer Solutions Plus is unable to help you design your building, we can help you address disability regulatory compliance, and so can your PEO if you are already working with one.

To request a consultation, contact us today!

What Business Expenses Can Be Deducted?

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Did I save my receipts? Can I deduct this? Will this be flagged? What if I get audited??

Do these questions sound familiar? They sure do to us! As business owners ourselves we completely understand the stress, the confusion and the pressure that tax season brings.

Using the guidance at IRS.gov, we have put together a basic guide for you to understand what you can and cannot deduct. Hopefully this helps reduce some of your stress as you prepare your tax paperwork for your accountant!

What qualifies as a business expense?

  • A business expense must be “ordinary and necessary.” Well that sure is confusing – what does that mean? If it is required to run your business – i.e. a cell phone, employee pay, insurance, office space – it counts.

What does not qualify as a business expense?

  • According to the IRS website, “The expenses used to figure out the cost of goods sold, capital expenses and personal expenses” do not count as business expenses. In general, you can’t deduct personal expenses. However, if you use something for both business and personal, you can divide the usage and deduct a percentage of the cost.

What if I use my home office or car for business purposes?

  • Here’s where it gets tricky, if you work out of your home you may be able to deduct things like mortgage interest, utilities, etc. For more specific information, review the Home Office Deduction guidelines provided at the IRS website. Car deductions are a bit more complex – you can find out mileage rates, and what is included and excluded here.

Hopefully our high level overview gives you a bit of clarity to navigate your way through tax season! Did you know that through our PEO partnerships and small business resources, Employer Solutions Plus can help find your business the perfect tax filing services? Professional help can assist you in streamlining your administrative functions and without having to memorize every single tax law you can focus more time on growing your business!

Contact us today to see how we can help!

Standard Paid Time Off

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The digital world we live in today makes it nearly impossible for us to truly “shut down” when we leave the office. 24/7 access to email, social media and work create an environment of constant contact and can often leave employees and management alike burned out. The Fair Labor and Standards Act does not set a requirement for paid time off (PTO) for employees.

The PTO model generally combines sick and vacation time under a single umbrella. This model differs from the traditional segmented sick/vacation days. While this offers more flexibility in some situations, if you use all of your PTO at the beginning of the year and end up getting sick later on, you may be required to take unpaid time off.

So what is the average PTO for employees in the United States? According to the Bureau of Labor Statistics, for full-time employees in the private sector they receive an average of 10-15 days of paid time off after one year of employment. In most instances, as you spend more time with a company you accrue PTO at a higher rate, resulting in more days on a year over year basis.

In addition to vacation and sick PTO, there is also holiday PTO which is not factored into the above statistics. Once again, there is no requirement set forth for employers to provide PTO for holidays, including federal, to their employees. Most companies in the private sector follow the federal holiday calendar, which gives 10 paid holidays to their employees.

With so many options and so little regulation around PTO for employees it can be quite overwhelming to develop your company’s policy. We recommend reaching out to a team like Employer Solutions Plus, which can provide you with guidance surrounding the types of PTO that would work best for your company. Our experience in employee management and benefits allows us to design a plan that is a best fit for your organization and company culture.

If you work with a PEO, your PEO may already have PTO templates and resources for you to take full advantage of – just ask! Contact us today for additional information.

Employee Theft – How to Handle it

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As an employer, you want to foster an environment of trust, collaboration and respect. Workplaces that empower and trust employees to make decisions with reduced hierarchy have proven to be extraordinarily successful and also receive positive employee reviews. However sometimes, this positive environment is breached by a single individual who chooses to break the trust by stealing.

Employee theft is an extremely sensitive subject for a few key reasons:

  • Emotions run high…on both sides of the spectrum. As the employer, you will likely experience feelings of frustration, anger and disrespect. The employees will often be extremely defensive, emotional and angry as well.
  • The repercussions of stealing are life-long. If you steal, are caught and are prosecuted and found guilty, even the smallest amount will permanently be on your record. This means no more passing background checks – whether it is to rent a home or get a job. In more serious cases of theft, steep fines and possibly even jail time are potential punishments.
  • Reputation. Both the company’s reputation and the employee’s reputations are compromised. If the employee stole from a client, not only does it reflect poorly on them, but as an employer your reputation is also on the line.

So, how do you mitigate employee theft?

  • Know your employees. The first step to ensuring you have trustworthy employees is to run a background check. Not only must you run the background check but you absolutely cannot ignore what the background check tells you. Once they are hired, develop a professional relationship with them – connect, be aware of any circumstances that might affect their work and help them address those things.
  • Open lines of communication. Employees should feel that they are able to safely let you know if something fishy is going on. Develop an anonymous tip line or another way to privately and discretely alert management of improper behavior.
  • Run quarterly audits. A lot of theft in the workplace is buried in invoices – over-ordering, over-charging, etc. Audit your financials, your work orders, etc. on a quarterly or bi-annual basis to ensure that there is nothing going on.

If you do come into a situation where you believe an employee is stealing, do not act on it without obtaining some sort of outside council. Seeking a third party, such as Employer Solutions Plus who can provide you with guidance is important. We are here to answer any questions you may have!