WWW.ADP.COM
4Page 2
ADPAdvisor
TM
Fall 2007
• New version of ezLaborManager® adds even
more automation and convenience
• Helpful Hints for 401(k) Plan Administrators
• New release of ADP’s HR/Benefits Solution
tracks employee training, certifications, skills
4Page 3
• Association Spotlight
• Federal minimum wage increase to have
different effect on different states
4Page 4
• Ask the ADP Advisor
• See ADP solutions in action!
• ADP’s Taxware® automates calculation of
sales, use, VAT, and other transaction taxes
Vol. 17 No. 4
Payback time: what you need to know about
recovering overpayments to employees
Payroll mistakes happen. In fact,
someone enters the wrong hours or
of working out a repayment schedule.
according to the American Payroll
the wrong pay rate.” Additional causes
In most cases, a nominal overpayment
Association’s most recent benchmarking
can include:
($100 or less) is deducted from the
study, they happen at a median rate of
• Terminated employees who use up
employee’s next paycheck. Repayment
1.24%. Of those errors, an estimated
17% are overpayments.
What are the typical causes?
“Incorrect time sheet reporting is
probably the most prevalent source,”
says Jim Medlock, Senior Director
their vacation time before actually
of a larger amount may be spread out
earning it
over time. Typically, the individual
• New hires who receive relocation
payments, but fail to stay with the
15% of gross wages for that pay period.
company for the required time
• Workers on disability who fail to
of Education and Training with
report state disability benefits to
the American Payroll Association.
their employers
“Intentionally or unintentionally,
deductions will be no greater than
• Managers who award bonuses to
ineligible employees.
In the case of incorrect pay rates,
the amounts at stake can grow quite
large, with erroneous payments
continuing for years.
Outlook varies with exempt and
nonexempt employees
When employees are not receptive
to repaying you, your prospects vary,
depending on whether they have
exempt or nonexempt status.
“Because of FLSA law, it is almost
impossible to recover overpayments
without written consent from exempt
employees who have worked during
er
Free Off
Who is exempt?
Nonexempt?
Free ADP guide
explains FLSA
regulations
4See page 4
“
...incorrect time sheet
reporting is probably the
most prevalent source of
payroll mistakes.
“If the employee is gone, the
money is probably gone, too.”
a workweek,” says Mr. Medlock. “They
Can your company get its money back?
reduction.” Some organizations
“The odds are poor if the employee has
require employees to sign an advance
left your company,” Mr. Medlock
agreement promising to refund any
observes. “Some employers send
overpayments. “That’s a nice step, but
invoices or hand the case over to
it’s not legally binding,” Mr. Medlock
collection. But if the employee is gone,
remarks. “The FLSA governs this issue
the money is probably gone, too.” He
and the courts have essentially ruled
adds that unless the case involves an
that it’s the employer’s responsibility
especially large amount, the cost of
to correctly pay employees.”
collection is rarely worth the effort.
are guaranteed their salary without
On the other hand, federal law
If the employee is still with your
allows you to recover overpayments
company, and willing to do the right
to nonexempt employees without the
thing, then it’s a straightforward matter
employee’s consent. However, your
continued on page 3
New release of ADP’s
HR/Benefits Solution
tracks employee training,
certifications, skills
o make the best possible use of your people,
T
you need to know what training and skills
they possess. That’s why the newest version of
ADP’s HR/Benefits Solution (HR/B), includes a
powerful new set of talent management tools.
The newest version of ezLaborManager will automate the entire process of requesting and approving time off.
New version of ezLaborManager® adds even
more automation and convenience
Released this past June, the enhanced version
lets you track:
• Prior work experience
• Education and training
• Specialized work or language skills
his coming September, ADP will release an enhanced version of ezLaborManager®,
T
the ADP-hosted, Web-based time and attendance system. Among the new features:
• Request for Time Off automates the entire time off request, approval, and
scheduling process.
• Actual vs. Scheduled Report provides a quick, easy way to spot variations
• Licenses, certificates, and awards
• Professional affiliations
A robust search engine quickly creates
reports of which employees have which skills.
“So if I’m a manager with a special project, I can
between actual hours and scheduled hours.
• Central Inbox and Automated Messaging provides a single access point for
viewing notifications and responding to all actionable items.
• Automated Reports lets you schedule reports to run at predefined frequencies
and times.
• Kiosk-style Web Clocking provides a faster and more secure Web interface for
employees to quickly and easily clock in and out without having to log in to
ezLaborManager.
• History Archive Reports speeds system performance by automatically moving
data older than two years to a separate but readily available History Archive
Report folder.
■
For additional information on ezLaborManager, check item #48 on your Reader Service Form, or visit
www.majoraccounts.ADP.com/time.
H E L P F U L H I N T S F O R 4 0 1 ( K ) P L A N A D M I N I S T R AT O R S
Analysis supports need for automatic enrollment
Is anyone in your company a certified project manager? The
newly released version of ADP’s HR/Benefits Solution makes
it easy to find out.
look across the whole company for an employee
“It’s one thing to know how much to save for retirement, it is quite another to do it,” says
Mark Warshawsky, Director of Retirement Research at Watson Wyatt Worldwide, a leading
global consulting firm. In its analysis of 300,000 workers at 32 large employers, Watson Wyatt
found that more than half of workers with an annual salary between $10,000 and $25,000
choose not to participate in a 401(k) plan. Even among higher earners, nearly one out of
10 workers earning more than $100,000 a year choose not to participate.
When employees do participate, their contribution rates tend to be low, especially among
younger and lower-income workers. Workers earning between $10,000 and $25,000 a year
contribute just 6.2% of their salary to 401(k) plans, while those earning at least $100,000
contribute nearly 10%.
The result of such low contribution rates can be underfunded retirement accounts.
Watson Wyatt found that two out of three workers who earn $10,000 to $25,000 annually, and
who have been with the same employer for 20 years, have accumulated less than one year’s
annual pay in their accounts. Even in the $75,000 and higher pay category, about one out of four
workers comes up short of a year’s pay.
Mr. Warshawsky notes that participation in 401(k) plans could increase in the future as
employers are encouraged by the Pension Protection Act to automatically enroll employees.
Some employers are already taking such steps and have found that with automatic enrollment
more than 90% of employees participate in the 401(k) plan.
For more on the Watson Wyatt report, visit http://tinyurl.com/2bsopu. For more on ADP Retirement Services offerings,
check item #14 on the Reader Service Form; call 1-800-432-401k, Promo Code 454; or visit www.adp401k.com.
2
who might have the skill set I need,” explains
Kay Lucas, Senior Director of Product Strategy &
Quality Assurance at ADP. “It’s a way for you to
mine the talent within your own organization.”
The new talent management tools integrate
with the performance management module in
HR/B, so supervisors can incorporate talent
development objectives into an employee’s
performance review.
HR/B is a full-featured HR and benefits
administration system, including employee and
manager self-service, recruitment, HR reporting,
insurance carrier invoice reconciliation, and
more. Because HR/B is Web-based and securely
hosted by ADP, there is no software for you to
install or maintain.
■
For more on ADP’s HR/Benefits Solution, check item #3
on your Reader Service Form, or visit
www.majoraccounts.adp.com/benefits.
Payback time:
continued from page 1
deductions cannot put that employee below the
minimum wage for a 40-hour workweek. And
the employee’s overtime earnings may not be
included in your calculation. Many states impose
additional restrictions, some going as far as to
require the nonexempt employee’s consent.
ASSOCIATION SPOTLIGHT
Payroll profession to be recognized during
National Payroll Week, September 3–7
ADP celebrates 11th year as Diamond Sponsor
National Payroll Week celebrates the hard work by America's 156 million wage
earners and the payroll professionals who pay them. Throughout this week, local
chapters of the American Payroll Association (APA) will host presentations to school
and civic groups, participate in community
Tax reporting of repayments
service initiatives, and use local media to
Assuming you have authority — or the
pass along information to today’s workers
employee’s consent — to make repayment
and the workers of tomorrow. ADP has
deductions, the next question is how to handle
been the sole Diamond Sponsor of this
the tax reporting. This is easiest when the
event since it began.
overpayment and repayment occur in the same
As in the past, ADP and the APA are
calendar year (a powerful reason to catch such
collaborating to educate employees about
mistakes quickly). Simply subtract the repaid
their paychecks. The MyPaycheck Web site
amount from the employee’s gross pay. The
includes tips and tools for adjusting your
relevant tax calculations will be proportionately
withholdings and reducing pretax
adjusted.
income.
When employees are overpaid in one
■
At www.MyPaycheck.org, your employees can
learn how to increase their take-home pay, save
for retirement and college, and more.
Encourage your employees to visit www.MyPaycheck.org. For more information about National Payroll
Week, visit www.nationalpayrollweek.com.
calendar year and pay you back in a subsequent
one, they must report the overpayments to the
IRS as taxable income. They can then deduct
their repayments in the subsequent year’s return.
“Because you don’t want to be in the
Federal minimum wage increase to have
different effect on different states
he federal minimum wage increase that took effect on July 24 (to $5.85/hr.) will
business of giving tax advice, you should refer
T
these employees to IRS Publication 525,” Mr.
to increase again to $6.55 on July 24, 2008 and to $7.25 on July 24, 2009.
Medlock suggests. That publication provides
• Seven states will be unaffected until 2008 because their minimum wages are
guidance on the handling of deductions. In
general, if the repaid amount is less than
$3,000, employees can subtract it from their
gross income. Larger amounts must be treated
as itemized deductions.
have different effects in different states. The federal minimum wage is scheduled
currently higher than $5.85: Arkansas, Maryland, Minnesota*, Missouri, Montana*,
North Carolina, and Wisconsin.
• Ten states will be unaffected until 2009 because their minimum wages are currently
higher than $6.55: Alaska, Arizona, Colorado, Delaware, Florida, Maine, New Jersey,
New York, Ohio*, and Pennsylvania.
• Five states have minimum wages that are scheduled to rise to or above federal levels
Recovering overpaid Social Security
and Medicare taxes
Your next challenge is to recover the overpaid
Social Security and Medicare taxes. The employee
at a faster pace: Illinois, Iowa, Kentucky, Michigan, and West Virginia.
• 17 states and Puerto Rico will increase their minimum wage levels because they
do not have a state minimum wage law, they are tied to the federal changes, or
they have a minimum wage that is lower than the federal wage. They include:
Alabama, Georgia*, Idaho, Indiana, Kansas, Louisiana, Mississippi, Nebraska,
must authorize you to do this in writing. Have
North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah,
the employee sign a statement that you will be
Virginia, and Wyoming.
obtaining a refund from the IRS and that he or
• Eight states already have minimum wages that are at or above the 2009 federal rate
she will not file a claim of their own for the
of $7.25 per hour: California, Connecticut, Hawaii, Massachusetts, Oregon, Rhode
Social Security and Medicare taxes. Then file
Island, Vermont, and Washington.
In New Hampshire and New Mexico, the minimum wage will switch back and
Forms W-2c and 941c with the IRS.
You have a choice of methods for receiving
the employer tax refunds. You can deduct the
credited amounts from your next tax deposits.
Or you can file IRS Form 843, a claim for a
refund. “It’s probably safer and cleaner to
request the refund,” Mr. Medlock advises.
forth between federal and state levels, depending on which is higher. The Nevada
minimum wage is lower than the federal level if employers offer health benefits and
higher if they don’t. Nevada employers who are subject to FLSA must pay at least the
federal minimum wage even if they provide health benefits. In states with minimum
wages indexed to inflation, annual adjustments could affect whether the applicable
minimum wage is at the federal or state rate.
Because federal law covers nearly all employees, you may ensure compliance
“There’s less risk of inadvertently triggering an
with both federal and state law by always paying the rate most beneficial to the
alarm in the IRS’s computer systems.”
employee. Every employer, no matter how small, must put up a new minimum wage
■
poster each time the law changes.
■
* Different rules apply to smaller employers not covered by the FLSA. Check with your state’s Department of Labor.
Contact your ADP representative to learn more about ADP's Poster Compliance Program.
3
FREE
TO READERS OF THE ADP ADVISOR
Who is exempt? Nonexempt?
Free ADP guide explains FLSA regulations
ASK THE ADP ADVISOR
Does the higher minimum
wage affect the employer
tip credit?
Q: Will the higher federal minimum wage
Payroll managers often assume that salaried employees are exempt from
overtime pay regulations. But an employee’s status has little to do with
job title and whether the employee is salaried or not. It has much more
to do with the employee's level of responsibility and his or her status as
a professional.
The difference is worth knowing because willful violations of the
Fair Labor Standards Act (FLSA) may be prosecuted criminally, with violators
fined up to $10,000. A second conviction can result in imprisonment.
You might want to conduct an audit of how your workforce is classified and ensure that
your company is in compliance. To help you do this, ADP has prepared the handy Guide to
FLSA Rules Regarding Exempt/Nonexempt Employees. This convenient overview explains
the salary test for executive, administrative, and professional employees. It describes the
duties tests for administrative and executive employees, as well as the highly compensated
employee test.
This guide is available FREE to readers of the ADP Advisor. Simply check item #1 on
your Reader Service Form.
reduce the credit my service establishment can
claim against the Social Security and Medicare
taxes we pay on employee tip income?
A: This credit is claimed on Form 8846 as part
of the general business tax credit and may be
used to offset regular income tax liability. It is
available to employers in the food and beverage
industry who:
• Had employees who received tips from customers
for providing, delivering, or serving food or
beverages for consumption; and
• Paid or incurred employer Social Security
and Medicare taxes on these tips.
Such employers may not claim credit,
however, for taxes paid on tips that were used to
ADP’s Taxware® automates calculation of sales,
use, VAT, and other transaction taxes
arbanes-Oxley, state sales tax holidays, certified solutions, carousel fraud. Tax
S
calculation and compliance have never been so complex. That’s why thousands of
companies of all sizes and industries rely on ADP’s Taxware®. ADP’s automated systems
assign taxing jurisdictions, calculate taxes on transactions, manage product taxability rules,
keep track of exemption certificates, and automate returns and filings.
• Taxware Enterprise is a global dashboard for transaction tax calculation and
compliance based upon the latest industry standards and technologies.
• The Sales and Use Tax Solution is a transaction tax engine for the United States and
Canada, relied upon by thousands of companies across North America.
• TaxSolver® offers industry-leading forms preparation for the United States, Canada, and
the European Union.
■
For more information, check item #41 on your Reader Service Form, visit www.taxware.com, or call
877-TAXWARE (877-829-9273) between 8:00 a.m. and 5 p.m. EST.
meet the minimum wage rate of $5.15 per hour.
The good news is: the recent minimum wage
increase will not affect the calculation of this
credit. You must only exclude taxes paid on tips
used to reach the old minimum wage of $5.15
per hour.
TM IMPORTANT NOTICE: ADP publishes the ADP Advisor free of charge to
ADP Advisor
its clients. It is accepted with the understanding that the publisher is not
engaged in the business of rendering legal or accounting services. If legal,
accounting, or other professional assistance is required, the service of an
attorney or a certified public accountant should be sought.
■
Misplaced your copy of the ADP Advisor? Want to check a back issue? Visit www.ADP.com/home/advisor
For more information about this tax credit, go to
www.IRS.gov and search for “IRC 45 B Credit.”
See ADP solutions
in action!
The best way to learn about ADP’s comprehensive
solutions is to see and hear about them in person
from ADP experts.
For the most current trade show information, see the
“Industry Events” section at www.resourcecenter.ADP.com.
YOUR SUGGESTED TOPICS FOR THE ADP ADVISOR ARE WELCOME
Please address your correspondence to:
ADP Employer Services, MS #460 • One ADP Boulevard • Roseland, New Jersey 07068
Margit Rademacher, Managing Editor
The ADP Logo, ADP Connection, and ADP Resource are registered trademarks of ADP of North America,
Inc. ADP Payroll is a service mark of ADP of North America, Inc.
The following are registered trademarks of ADP, Inc.: Benefits eXpert, DocuMax, eTIME, Enterprise
eTIME, Expense eXpert, ezLaborManager, GlobalView, HR Perspective, HR/Profile, Pay-by-Pay, Pay
eXpert, PayForce, TaxSolver, Taxware, TimeSaver, TotalPay, and TotalSource. The following are either
trademarks or service marks of ADP, Inc.: ADPCheck, ADP Payroll, Enterprise HR, TotalPay® Card, and
Total Tax Plus. ReportSmith is a trademark of Strategic Reporting Systems, Inc. All other trademarks
and service marks are the property of their respective owners.
11-245-087 320M Printed in USA © 2007 ADP, Inc.
4
ADPAdvisor
TM
READER SERVICE FORM
PLEASE PRINT
Name
Title
E-mail Address
Phone
Street Address
City
ADP Client Code
No. of employees at this location
FREE from ADP!
1■
Company
State
Zip
No. of employees in your company
Banking Services
Guide to FLSA Rules Regarding Exempt/Nonexempt Employees — The salary
and duties tests for determining who should and should not get overtime pay.
To receive more information, simply check your area(s) of interest below:
Human Resources
2 ■ ADP’s Pre-employment Services — quick, cost-effective background checks
3 ■ ADP’s HR/Benefits Solution — hosted, full-featured, Web-based HR and benefits administration
solution for corporations with 50–999 employees
4 ■ HR/Profile® — a cost-effective solution for basic HR recordkeeping
5 ■ HR Perspective® — full-featured HR information system that integrates with ADP PC/Payroll
6 ■ Enterprise HRSM — combines HR and payroll data with powerful Web-based functionality to enable
employee and manager self-service in large corporations
7 ■ ADP’s Portal With Content Management — a turnkey corporate communications Web site, fully hosted
and supported by ADP, where employees can access self-service offerings and your company’s news
and policies
8 ■ ADP Connection® — integrates ERP HR management systems with ADP solutions
Benefits Administration Services
9 ■ Benefits Services — a full range of outsourced benefits administration solutions
10 ■ Benefits eXpert® — benefits administration system with Web-based employee self-service
11 ■ COBRA Services — ADP provides administrative services in connection with continued health
coverage for terminated employees
12 ■ ADP’s Flexible Spending Account (FSA) Services — employees use pretax dollars to pay for certain
health and daycare expenses
13 ■ Premium Only Plan — fights rising group insurance costs by letting employees pay their share of
premiums on a pretax basis
14 ■ Section 125 Compliance — ADP handles the reporting for your pretax plan
15 ■ ADP PayrollSM-integrated 401(k) Plans — we make it easy to offer this popular benefit
16 ■ Executive Deferred Compensation Services — ADP administers your non-qualified executive
retirement program
Payroll Management
17 ■ Pay eXpert® — ADP’s Internet payroll service lets you access payroll processing from anywhere, anytime,
for companies with 50–999 employees
18 ■ ADP’s PayForce® — a flexible, Internet-based payroll software solution for corporations with 1,000 or more
employees
19 ■ ADP PC/Payroll — prepare payroll data on your own PC
20 ■ iPayStatements — employees can update their own W-4 information, view and print their own copies of
pay statements and W-2 forms
21 ■ Automatic check insertion into window envelopes
22 ■ Automatic laser check signing
23 ■ Customized management reports — ADP generates reports based on your payroll data
Business Process Outsourcing
24 ■ TotalSource® — outsource employment administration to a Professional Employer Organization (PEO)
25 ■ ADP Resource® — outsource HR administration without the co-employment relationship of a PEO
26 ■ Comprehensive Outsourcing Services — our BPO solution for larger employers
27 ■ GlobalView® — provides payroll, HR management, and self-service solutions for multinational
organizations
28 ■ Full Service Direct Deposit (FSDD) — salary payments go directly to your employees’ bank accounts
29 ■ TotalPay® Card — employee pay is electronically transferred to a stored value card, good at most
ATM machines and merchants displaying the Visa® logo
30 ■ ADPCheck™ — ADP signs and stuffs your payroll checks; you reconcile just one debit for net payroll
each processing
31 ■ Direct debit of fees — eliminates the need for manual payment of ADP’s fees
Reporting Options
32 ■
33 ■
34 ■
35 ■
36 ■
iReports — secure online access and searching of your payroll and tax reports
CheckView — review individual checks or entire pay histories online
DocuMax® — payroll reports, W-2s, earnings records, and wage and tax register delivered on CD-ROM
ReportSmith™ for ADP PC/Payroll — custom design reports based on your payroll information
Data Access — custom reports from Masterfile, year-to-date, and payroll data
Print Services
37 ■ Forms W-2 and 1099 — let ADP print these payroll statements for you
38 ■ Laser Print Back — ADP processes your payroll, you print checks and statements at your convenience
Tax Filing and Compliance Services
39 ■ Payroll Tax Filing — helps ensure accurate payroll tax filing and deposits for all state, local, and
federal jurisdictions
40 ■ Unemployment Compensation Management Services — manages your claims process and helps
lower State Unemployment Insurance (SUI) costs
41 ■ Taxware Services — businesses in the United States and around the globe can simplify their tax
calculation and compliance with ADP solutions for sales, use, value-added and other consumption
taxes
42 ■ Pay-by-Pay® Program for Workers’ Compensation — improves your cash flow by using actual (not
estimated) payroll data to calculate Workers’ Compensation insurance premiums
43 ■ ADP’s Tax Credit Services — helps reduce corporate tax liability through tax credits based on
employee demographics, geographic location, investment practices, and other incentives
44 ■ Wage Garnishment Service — ADP calculates, deducts, and disburses court-ordered garnishments
and tracks changing legislation that can effect compliance
45 ■ New Hire Reporting Service — ensures prompt, accurate filing of all new hire reporting information
Accounts Payable
46 ■ Automated Accounts Payable Solution — reduces the cost of invoice and check processing, helps
increase working capital and improve SOX compliance
Time and Labor Management
47 ■ eTIME® — automated time and labor management system, integrated with ADP Payroll
48 ■ ezLaborManager® — Web-hosted time and labor management solution, integrated with ADP Payroll
49 ■ Enterprise eTIME® — scalable, Web-based time and labor management solution for large
companies, integrated with ADP Payroll
50 ■ TimeSaver® — time and labor management solution for the hospitality industry, integrated
with ADP Payroll
Expense Management
51 ■ Expense eXpert® — automates your travel and expense reimbursement process
NOTE: The products and services described in this publication may not be available to all ADP clients
in all geographic areas.
Enjoy a Starbucks Card, loaded with $5, as our gift! Do you know other companies that could benefit from the time savings
and accuracy of ADP’s services? Refer them to us and we’ll send you a Starbucks Card loaded with $5! Enjoy a refreshing break with our compliments
at any participating Starbucks retail location in the United States or Canada.
■ Yes, I know some people who could benefit
from ADP services. Please mail my Starbucks
Card to the address I have listed above.
Please help us keep your accountant up-to-date on payroll tax regulations.
With more than 500 payroll tax law changes each year, we like to keep our clients’ accountants well
informed. Please help us make sure your accountant is on our mailing list:
Your Accountant’s Name
Name
Title
Your Accountant’s Firm
Company
Address
Address
City/State/Zip
City/State/Zip
Area Code/Phone
11-245-087 EFE0598
Area Code/Phone
Fax this form to: 1-800-462-4006. Or detach, fold, seal, and drop it in any mailbox.
No. of Employees
Starbucks, the Starbucks Logo and the Starbucks Card design are either
trademarks or registered trademarks of Starbucks U.S. Brands, LLC.
C
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
BUSINESS REPLY MAIL
FIRST-CLASS MAIL PERMIT NO. 118 ALLENDALE, NJ
POSTAGE WILL BE PAID BY ADDRESSEE:
ADP RESPONSE CENTER
50 COMMERCE DRIVE
ALLENDALE NJ 07401-9940
!0740199406!