Staying compliant with federal payroll laws is a crucial HR responsibility. If you find this intimidating, read on to learn the basics and what to watch out for.
There are hundreds of federal and state laws related to employment that govern workplace activities for both employees and employers. These federal laws determine everything related to employment, including wages, hours, paid time off, benefits, etc., and protect employees from workplace discrimination. These federal laws are called employment laws, and laws that govern how employees are paid are known as federal payroll laws. Administered by the
U.S. Department of Labor, there are around 180 federal laws that pertain to
payroll.
Federal payroll laws protect the rights of both employees and employers.
Of the estimated 180 federal employment laws, five stand out as the most common and important for every organization to know.
According to the
US Department of Labor,“The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. This law also regulates child labor, record keeping, and limitations of how many hours an employee may work in a given period.
The
EPA states that all the employees performing the same task at the same workplace should be paid equally, irrespective of their sex.
FUTA is also known as unemployment benefits. This payroll tax, along with state unemployment programs, helps to provide temporary relief to employees who have lost their job due to no fault of theirs. This tax is paid by the employer, not the employee.
FICA provides Social Security and Medicare benefits. This tax is deducted from every paycheck and consists of contributions from both employees and employers.
The Davis-Bacon Act states that businesses working on federal and state projects should pay prevailing wages to laborers and mechanics working on public works projects.
It is very important for a business to ensure that they are in compliance with federal employment laws and federal payroll laws. Make sure that your organization meets these criteria.
The
classification of employees as full-time, part-time, temporary, intern or seasonal, as well as exempt/non-exempt, should be done correctly so that wages are paid according to the payroll law.