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Payroll 101

Payroll 101

What makes an entertainment payroll company different?

Perhaps the most basic distinction between an entertainment payroll company and other kinds of third-party payroll services is that an entertainment payroll firm is typically a “full-service” provider. This means that in addition to processing paychecks, the payroll company is responsible for making payments on all payroll taxes, unemployment and workers’ compensation insurance.

What an Entertainment Payroll Company Does

What an Entertainment Payroll Company Does

In addition to acting as payroll provider, an entertainment payroll company focuses on concerns specific to the film, television and commercial production industries. This includes following all wage and hour laws particular to the entertainment business. The California Wage Order for the Motion Picture Industry differs in significant ways from the state’s wage orders for the transportation and agricultural industries, for example. Overtime rules, meal periods and penalties are defined specifically for entertainment workers. For union productions, it is essential that the payroll company be well versed in the contracts of the many union locals and guilds that serve the entertainment employee community. Collective bargaining agreements lay out minimum wage scales and working conditions for each member of a production’s crew and talent staff. The rules can vary widely from one entertainment local to the next.

Of even greater importance to entertainment workers and their unions is that the payroll company understands the contribution rates for pension, health and welfare funds, and that it has a system in place to make those contributions in a timely and accurate way. Often, independent productions will negotiate “one-off” deals with unions; these individual agreements may allow better terms than the collective studio agreement, but the unions will want to be assured that a capable entity is going to take responsibility for making benefit contributions. In many cases, that means working with a payroll company with a solid history of union contributions reporting.

Employees and the Fair Labor Standards Act (FLSA)

Employees and the Fair Labor Standards Act (FLSA)

The Fair Labor Standards Act (FLSA) was enacted in 1938 with the aim of protecting workers particularly vulnerable to being taken advantage of, such as children and low-wage employees. The federal statute established stringent rules for the employment of minors, and created the basis for our current wage-and-hour laws. Minimum wage, the 40-hour workweek and mandatory payment of overtime all have their roots in the original tenets of the FLSA. Over the years, the statute has evolved, but it still remains the basis of federal employment law throughout the United States.

The FLSA applies to the entertainment industry as to any other. Production companies and even crew members have at times sought to avoid the strictures of the statute by classifying entertainment workers as independent contractors rather than employees. But over time, the government has become increasingly vigilant about the misclassification of production employees as contractors. The feds are concerned about two things here: the loss of income tax from misclassified contractors (although those taxes are at least partially recaptured) and the loss of payroll taxes from production companies when crew members are misclassified. Those payroll taxes go toward funds that are drawn on by U.S. workers in entertainment and other industries alike; those funds include Social Security and Medicare. How do I know if a crew member is an employee or independent contractor? Who qualifies as an employee versus an independent contractor in the entertainment industry?

Definition of Employee
An employee is required to comply with directions as to when, where, and how the employer wants him or her to work. An employee is hired by the employer, works exclusively for the employer and is subject to dismissal or can quit at will. An employee performs services under the company’s name, is generally paid a salary, reimbursed for expenses and fringe benefits and is furnished tools, equipment, materials and training.

Independent Contractors vs. Employees
Employee – Required to comply with when, where, and how to work
Independent Contractor – Sets own hours, determines own sequence of work

Employee – Works exclusively for the employer
Independent Contractor – Can work for multiple employers; his or her services are available to the public

Employee – Hired by the employer
Independent Contractor – Self-employed

Employee – Subject to dismissal, can quit at will
Independent Contractor – A contract governs how the relationship ends

Employee – Has a continuing relationship with the employer
Independent Contractor – Works by the job

Employee – Does all work personally
Independent Contractor – Permitted to employ assistants

Employee – Performs services under the company’s name
Independent Contractor – Performs services under the worker’s business name

Employee – Paid a salary, reimbursed for expenses & fringe benefits
Independent Contractor – Payment by the job

Employee – Is furnished tools, equipment, materials and training
Independent Contractor – Furnishes own tools, equipment, and training

Common Law Test
The only actual legal test the IRS can use to determine a worker’s classification is the “Common Law Test,” which says that if a business tells, or has the right to tell, a worker, how, when, and where to work, then the worker is an employee.

The top three factors the IRS looks at are:

Instructions to workers. A crew member is probably an employee if he or she is required to follow instructions as to when, where and how the work is to be done.
Job Training. Training indicates that the work must be performed in a particular manner. Any form of employer-provided training suggests the worker is an employee.
Realization of profit or loss by a worker. An employee does not realize a profit or incur a loss from his or her work, but an independent contractor does.

Reasonable Basis Test
There are possible exceptions to the Common Law Test which are outlined in the Reasonable Basis Test. The IRS will look at the following exceptions:

The employer has not treated the worker or similar workers as an employee.
here is a recognized practice in the employer’s industry of treating similar workers as independent contractors.
here are court decisions for treating similar workers as independent contractors.
The IRS has ruled in a “published ruling” that the workers are independent contractors.
The company has received a specific ruling from the IRS that the workers are independent contractors.
A past IRS employment audit of the employer did not disallow the worker’s treatment as an independent contractor.

Misclassification Problems
If you misclassify an employee as an independent contractor, it can create significant problems for your production company. Misclassifications represent a large potential loss of revenue for all levels of government. Because of the loss to Social Security, Medicare, disability and unemployment insurance the government looks negatively at independent contractors as not contributing to the economy. If the independent contractor faces tax problems, needs unemployment or disability benefits, at that point they have an incentive to go back and claim they were employees all along… and then it is up to the employer to prove they are actually independent contractors. If the production company is unable to prove that the worker is an independent contractor, it can cost the company a substantial amount of money in federal and state taxes, penalties, and employment benefits.

Exempt and Non-Exempt Production Employees
Non-Exempt Employees – Employees who are covered by the FLSA’s minimum wage and overtime laws are called non-exempt employees. The federal government and most states have set a minimum wage for non-exempt workers. If the employer is covered by both state and federal law and the two rates are not the same, the employer is required to pay the higher minimum wage based on the state in which the employee works.

Exempt Employees – Those not covered by the FLSA minimum wage and overtime laws are called exempt employees. Exemptions to the FLSA requirements are not based on job title but on the employee’s actual duties, responsibilities, and level of authority. In almost all cases an exempt employee must make a minimum of $455 a week (Federal), $800 (California). FLSA regulations include the following types of white collar exempt employees:

Executives – To be classified as an executive, a person must direct the work of at least two full-time workers, have hiring/firing authority, and use discretionary powers. Executives include department managers and supervisors who are directly associated with management decisions.
Administrative Employees – The primary duty of exempt administrative employees is, the performance of office work related to management or general business operations. Employees who perform special assignments (like auditors) are exempt. They must exercise independent judgement and discretion in matters of significance.
Professionals – Learned professionals, whose duties involve the use of advanced knowledge acquired by specialized study. Teachers, engineers, and attorneys are some examples.
Outside Salespeople – Are exempt if they meet two requirements: (1) they are engaged in selling or getting orders for the company’s product/service and (2) they work away from the employer’s premises. There is no salary requirement for outside salespeople.

What Is Governed by the FLSA
The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments. Covered, nonexempt workers are entitled to a minimum wage, which varies by state. Nonexempt workers must be paid overtime pay at a rate of not less than one and one-half times their regular rate of pay after 40 hours (Federal), after 8 hours daily (California) up to 12 hours, double time after 12 hours.

What Is Not Governed by the FLSA
Vacation, holiday, severance, or sick pay
Meal or rest periods, holidays off
Premium pay for weekend or holiday work
Pay raises or fringe benefit
A discharge notice, reason for discharge, or immediate payment of final wages to terminated employees. These are determined at the state level.

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Entertainment Payroll Basics

Entertainment Payroll Basics

The basic laws covering film and TV production payroll are similar to those that govern payroll for other businesses. But some wage-and-hour rules are made specific to the entertainment business in the California Wage Order for the Motion Picture Industry. Other provisions are made for specific crew member classifications, or for entire areas of production, in collective bargaining agreements negotiated by film and TV union locals. In this section, we examine some of the basic legal requirements for processing entertainment payroll, particularly in the state of California. We also define and explain some common terms in entertainment labor law, e.g. workweek, hours worked, regular rate of pay, the difference between a discretionary and nondiscretionary bonus, and the distinction between net pay and disposable pay. Many of these rules and terms will be most useful in non-union payroll situations, but some will apply to union cast and crew as well.

Minimum Wage and Overtime Laws
The Fair Labor Standards Act (Federal) requires that all non-exempt employees be paid 1 ½ times their regular rate of pay for all hours actually worked over 40 hours in one week. According to the California Labor code, section 500-510, all non-exempt employees must be paid 1 ½ times their regular rate of pay for all hours actually worked after 8 hours per day, 2X after 12 hours. For the 6th day worked, 1 ½ for the first 12 hours, 2X after 12. For the 7th day worked, 1 ½ for the first 8 hours worked, 2X after 8 hours.

Regular Rate of Pay
The regular rate of pay is an hourly pay rate determined by dividing the total regular pay actually earned for the workweek by the total number of hours worked.

“Hours Worked” Defined
“Hours Worked” includes the time during which an employee is subject to the control of an employer, and includes all the time the employee is permitted to work, whether or not required to do so.

“Workweek” Defined
A workweek is defined by the FLSA is a fixed, recurring period of 168 consecutive hours (7 days X 24 hours).

A workweek defined by the California Labor Code and the IWC is any seven consecutive 24 hour periods, starting with the same calendar day each week, beginning at any hour on any day, so long as it is fixed and regularly recurring.

What’s Included in Regular Rate of Pay
Base pay for all hours worked. Nondiscretionary bonuses – also known as “bumps,” “adjustments” or any payment made related to production, efficiency, quality or performance. Fair market value of noncash items. Shift premiums. Retroactive pay – it must be prorated over the period covered.

Multiple Hourly Rate Calculations
The following example is how to calculate multiple rates worked in one workweek:

Mon – $8.00 X 8 hours = $64.00
Tues – $8.00 X 9 hours = $72.00
Wed – $9.50 X 8 hours = $76.00
Thur – $10.50 X 10 hours = $105.00
Fri – $8.00 X 8 hours = $64.00
Total – $381.00

$381.00 divided by 43 hours = $8.86
$8.86 X .5 = $4.43 (overtime premium rate)
$4.43 X 3 hours = $13.29 (premium for overtime)
$381.00 + $13.29 = $394.29 = Total weekly pay

Bonuses (Discretionary vs. Nondiscretionary)
The answer to whether a bonus, adjustment or bump must be included in the regular rate of pay for overtime depends on the reason for the extra pay. A nondiscretionary bonus, or one that is promised or announced to the employee in advance to being paid or that is dependent on hours worked, or productivity must be included in the regular rate of pay for overtime purposes. For example, an hourly employee who earns $8.00 per hour in a 40 hour workweek has a regular rate of pay of $8.00 per hour and an overtime rate of $12.00 ($8.00 X 1.5). If that same employee received a $50.00 production adjustment for that week, the employee’s regular rate of pay would change to $9.25 per hour ($50.00 plus the regular weekly rate of $320.00, divided by 40 hours) and the overtime rate becomes $13.88 per hour for that week ($9.25 X 1.5). A discretionary bonus which is paid solely at the discretion of the employer, such as a Christmas bonus, does not have to be included in the regular rate of pay. The bonus should not be measured by or dependent on hours worked, productivity, or efficiency, and it may not be part of any employment agreement.

Retroactive Pay
Retroactive pay is a delayed payment for work which has already been completed. The most common reason is ongoing labor negotiations. While negotiations are being reached, the employer continues to pay the employees at their established rate. When the negotiations are over, and there is a clause that entitles the employees to a wage increase on a set date, the employer is required to make up the difference with a retroactive pay check. Media Services calculates all retroactive payments for its clients, based on union agreements.

Vacation Pay
For non-union film and TV crew, there is no legal requirement in California that an employer provide its employees with paid or unpaid vacation time. However, if an employer has an established policy to provide paid vacation, then certain restrictions are placed on the employer as to how it fulfills its obligation. Under California law, earned vacation time is considered wages, and vacation time is earned, or “vests,” as labor is performed. Vacation pay accrues as it is earned, and cannot be forfeited, even upon termination of employment, regardless of the reason for the termination. All earned and unused vacation must be paid to the employee upon termination at his or her final rate of pay. In California because vacation pay is considered wages, an employer cannot have a “use it or lose it” policy, it is illegal and will not be recognized by the Labor Commissioner. An employer can put a “cap” or “ceiling” on vacation time that can be accrued. Once a certain level or amount of accrued vacation is earned and not taken, no further vacation pay accrues until the balance falls below the cap.

Minimum Wage and Overtime Laws
The Fair Labor Standards Act (Federal) requires that all non-exempt employees be paid 1 ½ times their regular rate of pay for all hours actually worked over 40 hours in one week. According to the California Labor code, section 500-510, all non-exempt employees must be paid 1 ½ times their regular rate of pay for all hours actually worked after 8 hours per day, 2X after 12 hours. For the 6th day worked, 1 ½ for the first 12 hours, 2X after 12. For the 7th day worked, 1 ½ for the first 8 hours worked, 2X after 8 hours. For union employees, their vacation pay is determined by a Collective Bargaining Agreement. Most agreements pay 4% of straight time earnings directly on the employee’s check.

Holiday Pay
There is nothing in California state law that mandates an employer to pay an employee a special premium for work on a holiday, Saturdays, or Sundays, other than the overtime premium required for work over 8 hours in a day and 40 hours in a workweek. For union employees subject to a collective bargaining agreement, such as the Hollywood Basic, holiday is generally accrued at 3.719% of straight time earnings and paid out at the end of the show.

Waiting Time
To ensure that employers comply with the law governing the payment of wages when an employment relationship ends, the Legislature enacted Labor Code 203, which provides for a penalty against the employer when there is a willful failure to pay wages due the employee at the end of the employment relationship. If an employee is fired, all wages including any unused vacation must be paid at termination. The same applies if the employee has given 72 hours notice of quitting. If the employee does not give notice, the employer has 72 hours to make payment or waiting time penalties will apply. The penalty is the employee’s daily rate for each day the employee was not paid, up to a maximum of 30 days. The waiting time penalty is not wages, so no deductions are taken from the payment. The penalty includes all days including weekends, non-workdays and holidays.

Rest Periods
In the state of California, employers must give employees a 10 minute paid rest period for every 4 hours worked. The rest break must be given as close to the middle of the 4 hour period as practical. A rest period is not required for employees who total daily work time is less than 3 ½ hours. If an employer fails to give an employee a rest period, the employer shall pay the employee one additional hour of pay at the employee’s regular rate of pay for each workday that the rest period is not provided. Working through rest periods does not entitle an employee to leave early or come to work late.

Reporting Time Pay
Reporting time pay is an important concept for production payroll. Each workday an employee is required to report to work, but is not put to work or is furnished with less than half of his or her usual or scheduled day’s work, the employee must be paid for half the usual or scheduled day’s work, for no less than 2 hours and no more than 4 hours. No reporting time pay is due when the following conditions exist: 1. When the employer’s operations cannot begin or continue due to threats to employees or property. 2. When public utilities fail to supply electricity, water or gas. 3. When the interruption of work is caused by an “Act of God,” such as an earthquake. 4. When the employee leaves work on his or her own accord. Reporting time pay is not considered wages, and therefore not used in determining if overtime is due.

Meal Periods
In California, an entertainment industry employer may not have an employee work for a period of more than 6 hours (5 hours for other industries) per day without providing a meal period of at least 30 minutes. The exception to this rule is when the total work per day is 6 hours or less. Unless the crew member is relieved of all duty during his or her 30 minute meal period, it is considered a “on duty” meal period that is counted as hours worked and paid at the employee’s regular rate of pay. If the production fails to provide an employee a meal period, the company must pay one additional hour of pay at the employee’s regular rate of pay for each workday that a meal period is not provided.

Layoffs
Many states and unions have regulations regarding final payments to employees who are laid-off. In many cases a check must be issued within 24 hours after the lay-off, excluding Saturdays and Sundays. California law states that if an employee is fired, the final check must be given immediately. If the employee quits, the check must be available within 72 hours, or immediately if 72 hours notice was given. On the final timecard for an employee the production should write “Finished” or “COA” (completion of assignment) and get it to the payroll company as soon as possible. If an employee is fired for cause and the production wishes to fight unemployment for the fired employee, they should write “fired” on the timecard and attach a full explanation.

Disposable Pay vs. Net Pay
Under the CCPA (Consumer Credit Protection Act) earnings, for the purpose of defining disposable pay include salaries, commissions, bonuses or other compensation. They also include payments to a retirement and pension program. Disposable pay is not net pay. Net pay is the result of subtracting all deductions from gross pay. Disposable pay is derived by deducting from gross pay all deductions required by law, including federal and state taxes. Not included is deductions for health insurance, retirement plans, credit unions, bonds, other wage attachments and voluntary deductions. The computation for disposable pay varies from state to state. Where state and federal differ, employees are protected by whichever law is the most protective of the employee.

Non-Taxed Income
This includes any income that is voluntarily withheld to pay for an employee’s medical or dental premiums, or any contributions to a “cafeteria” type medical plan. It can also include contributions to a retirement plan such as a 401(k). Media Services offers health plan options to clients who process their in-house staff payroll with us. We will also withhold contributions for a retirement plan, if the production company or studio provides one.

Deductions from Pay: Voluntary vs. Involuntary
There are two kinds of employee payroll deductions: voluntary and involuntary. Voluntary deductions include those mentioned above, such as health plan premiums and 401(k) deductions. Involuntary deductions include all garnishments, such as tax levies, marital and child support, attachments and creditor collections. While income tax may be an involuntary deduction, the employee to some extent determines the rate at which taxes are deducted each paycheck, via withholdings on his or her W-4.

Employment Eligibility for Production Companies

Employment Eligibility for Production Companies

Form I-9
Form I-9 helps employers to verify individuals who are authorized to work in the United States. Every employee hired after November 6, 1986 must fill out an I-9.

On March 1, 2003 the former Immigration and Naturalization Services (INS) were transferred to three new agencies in the U.S. Department of Homeland Security (DHS): U.S. Citizenship and Immigration Services (USCIS), U.S. Customs and Border Protection (CBP), and U.S. Immigration and Customs Enforcement (ICE). You do not need to complete a Form I-9 for persons who are hired before November 7, 1986, employed for casual domestic work in a private home, independent contractors, or persons not working on U.S. soil.

Every Form I-9 must be fully completed within 3 business days of the first day of work.

Section 1 – Every employee needs to complete section 1 when he or she begins to work by filling in the correct information and signing and dating the form.

Section 2 – The production employee must present to the employer an original document or documents that establish identity and employment authorization within 3 business days of the date employment starts. List A documents establish both identity and employment authorization. List B documents establish identity only. List C documents establish employment authorization only. The employee can choose which documents he or she wants to present from the Lists of Acceptable Documents.

After documents have been presented and examined by the employer, the date employment begins is entered and then signed and dated.

Form W-4
The Form W-4 is designed to tell the employer how many withholding allowances the production employee is claiming, this number will determine the amount to withhold from the employee’s wages for federal and state income tax. The form may also indicate that the employee wants an additional dollar amount withheld beyond the amount based on the withholding allowances claimed.

Employees cannot indicate on their W-4 that they wish to have a flat dollar amount of tax or a percentage of earnings withheld rather than an amount based on the number of withholdings allowances that can be claimed.

Employers must keep all employees’ W-4 forms for at least four years after the last return was filed using the information on the W-4.

Verifying Social Security Numbers
The request to see an employee’s Social Security card is only for tax withholding and reporting purposes, not to substantiate the employee’s right to work in the United States.

E-Verify is an Internet-based system that compares information from an employee’s Form I-9, to data from the U.S. Department of Homeland Security and Social Security Administration records to confirm employment eligibility. You will be notified if the name and Social Security Number do not match.

The following are some examples of invalid social security numbers:

- SSNs having 000 or 666 as the first 3 digits
- SSNs greater than 773 as the first 3 digits
- SSNs having 00 as the fourth and fifth digits
- SSNs having 0000 as the sixth through ninth digits

Start Card
A start card must be filled out for every new employee per show. A start card is show specific, not production company specific. One of the reasons entertainment payroll companies like Media Services require the form is that we are obligated to inform various state governments of any new hires within two weeks. A new start card should be filled out for any changes during the production: address change, rate change, department change, account code, union change, job classification or work state.

Foreign Documentation
All documents must be valid and not expired. The following verify employment authorization and identity:

- U.S. Passport or passport card.
- Permanent Resident Card or Alien Registration Receipt Card (Form I-551).
-Foreign passport that contains a temporary I-551 stamp or temporary I-551 printed notation on a machine-readable immigrant visa (MRIV).
- Employment Authorization Document Card that contains a photograph (Form I-766).
- In the case of a nonimmigrant alien authorized to work for a specific employer, a foreign passport with Form I-94 or Form I-94A bearing the same name as the passport, and the period of endorsement has not expired and has no restrictions or limitations identified on the form.
- Passport from the Federated States of Micronesia (FSM) or the Republic of the Marshall Islands (RMI) with Form I-94 or Form I-94A indicating nonimmigrant admission under the Compact of Free Association between the United States and the FSM or RMI.

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Special Payroll Topics

Special Payroll Topics

Full-Service Payroll
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.
Right-to-Work Laws
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.

Employer Taxes
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.

Recordkeeping
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.

Minors
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.

Coogan Law
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.