Exempt or Non-Exempt?

Proper employee classification now, may mean avoiding expense in the future.

There are three main categories of employees that are generally not entitled to overtime: administrative, professional and executive. These categories are typically known as exempt, but there may be some blurring of the lines.

Administrative classification require that those employees have decision-making authority and may be involved with contract negotiations. The professional classification are for those employees with advanced degrees or specific training, but only if they are using those skills while on the job. A lawyer driving a forklift should not be classified as exempt. The executive exemption usually is used for management running the company or a particular business unit. These are all fine lines and mis-classifying employees may cost you.

Department of Labor audits usually come on the heals of an employee complaint. If you have misclassified the employee, you may owe back pay for the entire term of that person's employment. In 2006, the Department of Labor collected over $170 million in back wages. In addition to back pay you most likely will have to pay attorney and consulting fees.

Be careful of docking an employee's pay for coming in late, missing a workday or lost company property. When you dock pay you are linking it to the quality of their work. Exempt employees are "guaranteed" regular pay.

If you have questions about proper employee classification, speak with an attorney or business consultant that deals specifically with employment matters; it may help avoid trouble in the future.

Paychex helps clients get hiring tax credits

(June 7, 2007) — Paychex Inc. introduced Tax Credit Services on Wednesday to help small and medium-sized businesses apply for wage-based tax credits."There is a lack of awareness that these are even available to the smaller and medium-size business owners," said Laura Saxby Lynch, corporate communications director. "And for those who are qualified ..., there's a real tax liability benefit for them."
Wage-based tax credits are incentives for hiring that reduce businesses' state and federal income tax liability. They can be used in the current year or can be held to reduce tax bills in future years.
Paychex customers are screened by the service. They are then contacted and educated about possible benefits.A lot of the program is educational, said Steve Beauchamp, 35, vice president of Paychex product management.
The initial service is free for customers, including the screening and help in obtaining credits. If credits are earned, Paychex will then take 20 percent to 25 percent.
The service has been tested over the last year and has helped hundreds of customers, many who did not know they were eligible, Beauchamp said.The new service determines eligibility for two types of business tax credits: location-based, which benefit businesses that locate and hire people in designated zones; and job creation, which benefit businesses that hire targeted individuals.
Paychex provides human resources services to small- to medium-sized businesses. The Penfield company has about 543,000 clients nationwide. via Rochester Democrat and Chronicle