Answers - Payroll 101 - Special Topics
Special Payroll Topics
Media Services acts as a full-service payroll provider for your freelance cast and crew. Media can provide all the payroll processing for features, television, commercials, music, and residuals with the knowledge and complete compliance of all union agreements and wage and hour laws. We can also provide production accounting requirements for productions, no matter what the size or scope of the production may be. This includes budgeting, accounting, estimates, and post production, including accounts payable, cost reports and ledger closings.
Employment Verification Letters
These letters are usually prepared for someone who is trying to get into the union. These employees usually worked on a non-union production. This type of letter is addressed to one employee, gives the name of the production, the number of days worked during a specific time period, and the classification/occupation worked.
Contract Services Letters
These letters are issued for two reasons:
- The employee is working on a permit and needs 30 days to become rostered.
- The employee is already rostered and has completed the required number of days and or hours to be upgraded to another classification within their local.
Generally a “Right to Work “ law does not allow a union to require membership as a condition of employment, but there are exceptions. Because of this, there are no rules that can be consistently applied to all productions. When a production company is shooting in a “Right to Work” state we suggest that you speak to our Business Affairs Department to ensure that you are aware of all the rules that apply to that jurisdiction. It is important to be aware that when a company signs a union agreement, even in a “Right to Work” state, they are bound by the terms and conditions of that agreement for all employees covered by that agreement, even if they are not members of the union. The following is a list of “Right to Work” states: Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Iowa, Kansas, Louisiana, Mississippi, Nebraska, Nevada, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia.
State Tax Reciprocal Agreements
Almost all states that have an income tax require that the tax be paid on all income earned in that state, including income earned by non-residents. Residents can usually take a credit on their return for their state of residence for taxes paid to other states. Many states have entered into reciprocal agreements. If two states have a reciprocal agreement and an individual lives in one of those states and works in the other, the individual will only be subject to the tax in the state they live. Almost all states that have reciprocal agreements have a form that an employee can complete that would make his or hers income exempt from withholding of the income tax for the state where the employee works.
Work State/ Resident State
Most states demand that a State Income Tax be withheld whenever a person is performing work in that state, even if the person’s permanent residence is in another state. If this happens, the employee will be paying the higher of the two state taxes. For example, if an employee lives in California but works in North Carolina, and the California state tax is higher than the North Carolina state tax, North Carolina taxes are withheld in full and California taxes are withheld for the difference between the North Carolina tax and what would have been the total California tax.
FICA Under the Federal Insurance Contributions Act (FICA), workers are required to contribute to the cost of Social Security/Disability (OASDI) and Medicare hospital insurance (HI). FICA refers to the combined cost of coverage for old age and survivors insurance, disability insurance and Medicare hospital insurance. United States employers are required to make contributions for FICA equal to the amount withheld from the employee. The rates are standard for all employers set each year by the Social Security Administration. Generally it is the employers responsibility to pay the employees portion of FICA if it fails to collect the employee’s share of tax. Old age, survivor & Disability – 4.2 (2011) cutoff of $106,800 Medicare Hospital Insurance – 1.45% No Limit FUTA Federal Unemployment Tax Act (FUTA) the employer, not the employee, is liable for this tax. This tax provides for payments of unemployment compensation to workers who have lost their jobs. United States employers are liable for this tax, which are standard rates set by the federal government annually. The FUTA tax has a cap of $7,000. SUTA State Unemployment Tax Act (SUTA) rates are set by each state on an annual basis. It is based on actual unemployment claim experience in each state. SUTA is paid by an employer and is added to a fund that can be used by a worker in the event he or she is becomes unemployed.
The basic Federal payroll recordkeeping requirements are contained in regulations issued by the Wage and Hour Division of the Department of Labor under the FLSA. Records that must be kept for each employee for at least three years after their last date of entry include:
- Name, as it appears on the employee’s social security card;
- Home address, including zip code;
- Date of birth;
- Sex and occupation (for use in determining Equal Pay Act compliance);
- Regular rate of pay for overtime weeks, the basis for determining the rate, and any payments excluded from the regular rate;
- Hours worked each workday and workweek;
- Straight-time earnings;
- Overtime premium earnings;
- Additions to and deductions from wages for each pay period (e.g. bonuses, withheld taxes, benefits contributions, garnishments);
- Total wages paid for each pay period;
- Date of payment and the pay period covered;
- Collective bargaining agreements;
- Certificates authorizing the employment of minors.
Unclaimed Checks – What You Need To Know
Wages not claimed by employees (uncashed paychecks) must eventually be turned over to state treasuries under each state’s abandoned property (escheat) laws. In California the time period determining when such unclaimed wages are considered abandoned is one year. When wages are abandoned, employers must make a report to the state and remit the abandoned amounts. Employers also generally keep a record of the employee’s name and last known address for a specific period of time after the wages become reportable. In California it is seven years.
Under the California Labor Code, “minor” means any person under the age of 18 years who is required to attend school under the provisions of the Education Code, and includes minors under the age of six. All minors under 18 years of age employed in the state of California must have a permit to work. The federal Fair Labor Standards Act (FLSA) also requires a certificate of age for working minors. The state Permit to Employ and Work is accepted as the federal certificate of age. The minor’s school issues Permits to Employ and Work. All employers must have a Permit to Employ and Work on file and available for inspection by school and labor officials at all times.
The Coogan Law went into effect on January 1, 2000. It was designed to protect the earnings of child actors, musicians, and sport figures. It covers 100% of all minor contracts. It makes the earnings the separate property of the child, rather than community property of the parents. It establishes the rate of 15% of gross earnings to be set aside for the minor. The 15% is the minimum amount, the trustee may elect to contribute more. Within 7 business days after the child’s contract has been signed by the minor and employer, the trustees are required to establish a trust account at a bank, savings and loan, credit union or other company registered under the Investment Company Act of 1940, unless a similar trust has been previously established. Within 10 days after the minor has signed the contract, the trustee needs to prepare a written statement that includes the name and number of the account, the name of the minor beneficiary, the name of the trustees of the account and other information needed by the minor’s employer to make the required deposit.