Tag: payroll

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What is FUTA and how to calculate it

Summary:

  • FUTA is a payroll tax used for unemployment benefits. Unlike FICA taxes, it’s solely covered by the employer.

  • FUTA can be as low as $42 per employee annually, but it can quickly become significant for bigger workforces spanning different states.

  • Payroll software simplifies and automates FUTA calculations, ensuring timely payments and accurate filing.

The Federal Unemployment Tax Act (FUTA) is a key component of payroll taxes and a critical responsibility of employers. It funds unemployment benefits and provides a safety net for unemployed workers. 

A clear understanding of FUTA and other payroll taxes is vital for business owners. This guide will explain what employers need to know about FUTA, how to calculate it, and practical tips to simplify the process.

What is FUTA?

Administered by the Department of Labor, FUTA is a payroll tax intended to fund unemployment insurance and job programs across the United States. Unlike the Federal Insurance Contributions Act taxes (Social Security and Medicare), FUTA is solely the employer’s responsibility. There is no employee contribution or employer match. However, the FUTA amount an employer owes is directly tied to employee wages. 

Generally, employers are obligated to pay FUTA if they:

  • Paid wages of $1,500 or more to employees in any calendar quarter during the last two years. 
  • Had at least one employee for part of a day in 20 or more different weeks during the previous two years.

The Internal Revenue Service (IRS) uses a rolling assessment model for the above criteria, which looks at current operations and recent employment patterns. As we transition to 2025, the reference years for calculation are 2023 and 2024.

FUTA rules for agriculture and household employers
Because of their work patterns and employment relationships, there are specific rules for household and agricultural employers. For instance, agricultural work is seasonal, while household employees are often hired in small-scale settings. 

Household: 

Employers must pay FUTA taxes for household employees who perform work in a private home, local college club, fraternity or sorority chapter if they pay a total of $1,000 or more in cash wages during any calendar quarter in the current or preceding two calendar years.

Agriculture:

Employers who have farmworkers must pay FUTA taxes if they:

  • Paid cash wages of $20,000 or more to farmworkers during any calendar quarter in the current or preceding two calendar years
  • Employed 10 or more farmworkers working at any time during 20 or more different weeks in the current or previous two years.

Are there FUTA exemptions for small businesses and self-employed individuals?

If you’re running a small business and don’t meet the IRS criteria, you are exempt from FUTA tax. The same goes if you hire independent contractors instead of full-time employees.

Self-employed individuals are generally exempt from FUTA tax liabilities. 

Also read: How to Manage Compliance for Contractors

FUTA credit reduction

The FUTA tax rate is 6% and applies to the first $7,000 of an employee’s annual wages. This is known as the federal wage base. Most employers can qualify for a 5.4% tax credit, bringing the FUTA tax rate down to just 0.6% per employee. That’s only $42 per employee per year if all conditions are met. 

Employers can qualify for the tax credit under the following conditions: 

  • The State Unemployment Tax Act (SUTA) tax must be fully paid by the Form 940 deadline, before January 31.
  • The FUTA applies to the same $7,000 wage base. You automatically meet this condition if your state’s wage base is higher. If it’s lower, you may not qualify for the full tax credit. 
  • The state is not a credit reduction state. A state is considered a credit reduction state if it received a loan from the federal government to fund its unemployment benefits and failed to pay it back within two years. If the state has an outstanding loan balance from the federal government on January 1 for two consecutive years and fails to repay it in full by November 10 of the second year, the FUTA tax credit for employers in that state is reduced by 0.3% each year, and the loan remains unpaid.

How to calculate FUTA tax liability

FUTA tax is calculated quarterly for deposit purposes. The tax report, on the other hand, is filed annually through the Form 940. 

Here are two example methods of FUTA calculations, assuming that the employer is eligible for the maximum credit (5.4%): 

Example 1: 

  1. Subtract the maximum allowable state credit (5.4%) from the FUTA rate (6.0% in 2024).
  2. Multiply each employee’s wages, up to the $7,000 wage base, by 0.6%.
  3. Total these amounts for your net quarterly FUTA tax liability.

Example 2:

  1. Calculate the gross FUTA tax liability by multiplying each employee’s taxable wages (up to $7,000) by the full FUTA rate of 6.0%.
  2. Determine the maximum allowable credit by multiplying the same taxable wages by 5.4%.
  3. Subtract the credit amount from the gross liability to get the net liability.

FUTA calculations can be straightforward if operating in a non-credit reduction state that matches the federal wage base. However, it can become more complicated when you operate in states considered credit reduction states or states where the wage base is different from the federal one. 

When are FUTA liabilities paid?

FUTA tax payments are typically due quarterly, but whether you need to pay each quarter depends on how much FUTA tax you owe. 

Quarterly payment due dates

If you owe FUTA taxes for the quarter, payments are due by:

  • April 30 for the first quarter
  • July 31 for the  second quarter
  • October 31 for the  third quarter
  • January 31 for the fourth quarter of the previous calendar year

Do you need to pay this quarter? 

Here are general guidelines in terms of timing your FUTA deposits:

  • If you have $500 or more in FUTA liability in a calendar year, you should pay by the next quarterly deadline. 
  • If it’s less than $500 in a quarter, you can roll it over to the next quarter and continue doing so until your cumulative amount due is more than $500. 
  • If your liability for the entire year is less than $500, you can wait and pay it when filing Form 940, due by January 31.

What if the deadline falls on a non-business day (weekend or legal holiday)? You can make your payments on the next business day, which will still be considered on time.

How to pay FUTA tax liabilities

FUTA taxes are primarily paid to the U.S. government via the Electronic Federal Tax Payment System (EFTPS). This 24/7 free service offered by the U.S. Department of Treasury, allows employers to make payments, track payment history, schedule a payment in advance, and get support when making tax payments. 

An alternative method is same-day wire transfers, where the employer makes direct payments via bank, but this can incur transaction fees. Another option is to delegate tax payments through a payroll service provider or tax professional.

Reporting FUTA Tax Payments

FUTA taxes are reported annually using Form 940, the Employer’s Annual Federal Unemployment Tax Return. In this IRS form, employers document all FUTA tax payments made during the year and disclose any remaining amounts due.

The filing deadline is January 31, but if all FUTA tax deposits are paid on time, employers get a grace period until February 10 to submit the form. While Form 940 focuses exclusively on federal unemployment taxes, it’s often compared to Form 941, which covers payroll taxes like Social Security and federal income tax withheld from employees’ wages.

FUTA and SUTA: What sets them apart?

FUTA and SUTA are similar because they have the same overarching purpose: to fund unemployment programs. However, there are some operational differences. The most obvious difference is that FUTA is imposed on a federal level, while SUTA is a state-specific tax that goes to unemployment insurance programs for eligible workers in the state. 

Another key difference is the FUTA tax credit. Employers who make timely SUTA payments can qualify for up to a 5.4% credit, which can reduce their FUTA liability. On the other hand, SUTA is strictly a state-imposed tax and doesn’t have a tax credit system. 

Like FUTA, SUTA tax is also imposed on a wage base. However, FUTA uses a uniform base of $7,000, while SUTA wage bases vary. Some states like Arkansas and California follow the same $7,000 base as the federal government. While states like Washington and New York impose higher bases. Specific industries have additional assessments or alternate rates, so it’s always good pratice to review your state’s latest guidelines. 

Another key difference between FUTA and SUTA is who foots the bill. FUTA is entirely paid by the employer. In the case of SUTA, some states like Pennsylvania and New Jersey, require both employers and employees to contribute.

Simplify FUTA calculations with Workforce.com

FUTA tax liabilities may seem small at just $42 per employee annually, but, it can quickly increase as your workforce grows and spans multiple states. As a result, managing FUTA and other payroll taxes can become more complex. 

Workforce.com can help you stay on top of FUTA tax liabilities and other employment taxes. Here are some of the ways the platform can help streamline your process.

Automated payroll calculations and reporting

Workforce.com’s payroll system automatically calculates wages when you reach the FUTA wage base. It helps ensure timely tax payments and handles overtime, payroll taxes , and deductions. 

Accurate time and attendance tracking

Since FUTA calculations are tied to wages, accurate time and attendance tracking is essential. Wokforce.com ensures that employee hours are recorded in real-time so that hourly wages are always precise and tax calculation errors are avoided. 

Unified employee data

Employee information, such as pay rates and employment status, is centralized in a single profile, eliminating redundant data entry. This single source of information powers payroll computations and includes FUTA tax liabilities. 

If you run an hourly workforce, discover how Workforce.com can help you comply with FUTA obligations and other payroll or labor regulations. Want to see it in action? Get a demo and learn how it can simplify HR, scheduling, and payroll for your hourly team. 

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Work Opportunity Tax Credit (WOTC): How to claim & where to file

oil painting of blue collar workers

Summary:

  • WOTC is a federal tax credit available to organizations that hire marginalized job seekers, like disabled veterans or ex-felons, who traditionally have a difficult time finding employment. 
  • Employers typically receive a maximum tax credit equal to 40% of up to $6,000 of wages paid to a qualified WOTC employee in their first year of employment. WOTC cannot be claimed beyond that first year.
  • To claim WOTC, employers must fill out additional IRS and DOL forms and submit them to their State Workforce Agency
  • Many Payroll & HR Software providers handle WOTC screening and certification requests for employers, making the process of claiming tax credits much easier. 

The Work Opportunity Tax Credit (WOTC) is a federal tax credit that incentivizes employers to hire people who typically face significant barriers to employment. This program typically offers employers between $2,400 – $9,600 per new qualifying hire. According to the U.S. Department of Labor, roughly $1 billion in tax credits are handed out yearly through WOTC. 

To receive the credit, taxable organizations must complete a screening and certification process when hiring potentially eligible staff. If approved, employers then file an additional form with their annual business tax return. Non-taxable organizations can also participate in the program by receiving a credit against their payroll taxes. 

Introduced in 1996 as part of the Small Business Protection Act, the program was recently extended through Dec 31, 2025, largely due to the impact COVID-19 has had on the labor market. Currently, there is a bipartisan push in Congress to make WOTC permanent.

Benefits of the Work Opportunity Tax Credit

The intended goal of WOTC is to benefit both employers and employees alike. Incentivizing the hiring of targeted individuals through tax credits not only reduces costs for employers by decreasing their federal income tax liability, but it also makes it much easier for these individuals to get hired. WOTC also benefits non-taxable employers by allowing them to receive a credit against their share of Social Security taxes.

While the financial boon to employers is obviously a nice benefit, the main purpose of WOTC is really to help individuals who typically have a difficult time finding a job get hired. Over the years, WOTC has helped people like disabled veterans and ex-felons find jobs, re-enter the workforce, and get a fresh start. Not only is WOTC supposed to help these people get hired, but the program also encourages job retention by requiring WOTC-certified new hires to work a minimum of 120 hours before employers can receive the minimum credit. 

Who is eligible? 

The IRS specifies nine “target groups” employers can hire from to receive tax credits. These groups are:

  • Qualified veterans
  • Ex-felons
  • Designated community residents in Empowerment Zones or Rural Renewal Counties
  • Vocational rehabilitation referrals
  • Summer youth employees living in Empowerment Zones
  • Supplemental Nutrition Assistance Program (SNAP) recipients
  • Supplemental Security Income (SSI) recipients
  • Temporary Assistance for Needy Families (TANF) recipients
  • Long-term unemployment recipients designated by a local agency who have been unemployed for at least 27 consecutive weeks

For the most part, employers can only claim tax credits during the first year a person from one of these target groups is employed. The only exception is for TANF recipients, who employers may claim credit during the first two years.

How to claim in 5 steps

The process for claiming the Work Opportunity Tax Credit upon hiring a qulaiifed individual is relatively straightforward, but it does involve multiple steps and additional tax forms. For more information, visit the IRS website. But for now, here is the general timeline:

  1. Screen Applicants: you’ll want to ensure every new hire is screened for WOTC eligibility. Do this by ensuring applicants complete the IRS Form 8850 Pre-Screening Notice on or before the job offer date. You’ll submit this form and a written request to your State Workforce Agency (SWA) to see if an applicant qualifies for the tax credit. Visit the DOL website for a complete list of links to State Workforce Agencies. 
  2. Complete DOL ETA Form 9061 or 9062: The WOTC Individual Characteristics Form should be completed by the new hire as part of their onboarding. Along with this form, the new hire will typically need to provide supporting documentation or forms certifying their status as a member of a targeted group. 
  3. File Documents: Submit Form 8850 and 9061 along with all supporting documentation to your SWA within 28 days of the new hire’s start date. The SWA decides the eligibility of your new hire and can sometimes request additional information before approving your certification request.
  4. Track hours and wages: To claim the minimum tax credit, qualified new hires must work at least 120 hours in their first year of employment. Depending on how many qualified staff an employer has, accurately tracking all of this information can be tedious. To make things easier, use a Time and Attendance system to automatically record hours and wages on electronic timesheets. 
  5. Claim the tax credit: To receive the tax credits, submit IRS Form 5884 when filing your annual tax returns at the end of the year. Tax-exempt organizations will need to submit Form 5884-C. 


If an employer uses an outside consultant, such as a payroll or CPA firm, to sign and file WOTC forms on their behalf, they will also need to complete the Employer Representative Declaration form 9198. This form essentially declares a third party as a legal representative to manage WOTC certification requests.

How is it calculated?

At the end of the year, employers receive a maximum tax credit equal to 40% of up to $6,000 of wages paid to a qualified WOTC employee in their first year of employment. The employee needs to work at least 400 hours for the employer to receive the credit.

If the maximum tax credit above is met, employers typically receive $2,400 in credit per WOTC employee. However, employers may also claim credit on 25% of the first-year wages earned by a qualifying employee who works at least 120 hours.

There are several exceptions to the maximum credit amount of $2,400. Here are the WOTC target groups with different maximum credit amounts:

  • Veterans with service-connected disabilities who have been employed for more than six months – $9,600
  • Long-Term Family Assistance recipients who have received TANF benefits for at least 18 consecutive months – $9,000
  • Summer Youth program participants ages 16 and 17 and live in a designated community area – $1,200

Is WOTC truly a win-win?

The Work Opportunity Tax Credit program has obvious benefits for both employers and individuals in target groups. Over the years, the tax credit incentive has not only saved organizations thousands of dollars every year but also helped marginalized people across the country re-enter the workforce and provide for themselves.

However, there are some question marks regarding the effectiveness of the WOTC program. 

One of the proposed benefits of WOTC is to encourage retention. Unfortunately, meeting the minimum 120 hours for tax credit only equates to roughly three weeks of full-time employment. This low threshold has led to temporary employment agencies taking full advantage of WOTC, hiring cheap labor, getting a tax credit, and then quickly moving on from these workers.

But temp agencies aren’t the only problem. Large, low-wage employers with high turnover also take advantage of WOTC. Investigative journalism outlet ProPublica discovered that Walmart, Dollar General, and Amazon were some of the top recipients of the tax credit in a 2022 analysis. While these large companies are raking in the financial benefits, workers from target groups tend to fall by the wayside, working low-wage, high-stress jobs for a few weeks before getting laid off and starting the whole process over again.

This begs the question: With the government losing out on over $1 billion due to WOTC and temp agencies sometimes earning $114 million over the past ten years in credit, who is truly benefitting here? Without WOTC, what could the government spend its money on instead to help marginalized Americans? 

The outlook for WOTC is still uncertain. As of now, it is set to end after 2025. But, if it is either renewed or made permanent, perhaps a reassessment of who benefits from this program the most is in order. 

In the meantime, smaller employers would do well to make the most of this tax credit while also taking genuine steps to retain WOTC-qualified new hires for the long term. In most situations, WOTC is a win-win for employers and job seekers, and the program’s effect is most likely a net positive for the job market, even with a few bad actors tainting the program.

Claiming WOTC through Workforce.com

Properly screening new applicants for WOTC can be time-consuming and overburden your HR team. Not only does it prolong the hiring process, but it also opens the door to all kinds of mistakes if either a new hire or HR team member fills out a WOTC application form incorrectly.

If your organization wants to qualify for tax credits but doesn’t want to deal with the hassle, find a payroll system that does all of the work for you. 

Workforce.com features an easy-to-use WOTC screening service that allows new job applicants to check a few boxes to determine their eligibility. Using this information, Workforce.com fills out both forms 9061 and 8850 for you and sends them to your SWA for approval. Once approved, you can track all wages and hours worked through Workforce.com’s Time & Attendance system. At the end of each pay cycle, these hours are automatically reported for your organization so that you’ll receive the tax credit at the end of the year.

To learn more about claiming WOTC through Workforce.com, please reach out. We’d be happy to talk!

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What is Earned Wage Access (EWA)? A Few Considerations

An astronaut husky holding an iiphone with money raining down

Summary

  • Earned wage access (EWA) programs are an increasingly popular way for employees to access their earned wages before their next scheduled payday.
  • Implementing an EWA program helps employers attract and retain top talent and reduces employee absenteeism. 
  • Before implementing an EWA program, ensure that any direct deposit arrangements are compliant with your state laws and consider the associated charges for using an EWA service.

In a bid to improve employee retention in the current landscape, employers are turning to advancements in payment technology and alternative payroll processes. One solution that is gaining momentum is earned wage access (EWA), also known as on-demand pay. 

Earned wage access programs allow employees early access to parts of their salaries before their scheduled pay period. Unlike payday loans and advances, EWA solutions only grant employees access to money that they have already earned.  

Initially a concept that gained popularity in the gig economy, EWA programs have now drawn the attention of employers and employees across all industries. Research shows that access to EWA has become a priority for job seekers around the country. 

From small businesses to large corporations, there are a number of things to consider before adding EWA as an employee benefit to your retention strategy. Employers must understand the different EWA models out there as well as the common features across EWA providers, integrating it into their payroll system and remaining in line with any regulatory requirements. 

The two types of EWA models

Earned wage access products generally require employees to download a mobile app that they will later use to gain on-demand access to their salaries. These advances are paid directly into the employees’ account or to a dedicated pay card. EWA products function in one of two ways.

  • Employer-sponsored – In these cases, the employer contracts an EWA service provider and integrates it directly into their own payroll system using an API. In these models, the employer pays a flat rate for the use of the service.
  • Direct-to-consumer – Here, an agreement is set up directly between the employee and the EWA provider. The employee receives funds directly into their account and is charged a transaction fee each time a withdrawal is made. 

The 4 main features of an EWA service 

Although there are differences between earned wage access services, there are four core features that are common in any solution out there.

  1. The funding of EWA – The capital for granting employees access to their funds usually comes directly from the EWA provider. The service provider pays through their own available funds or through a debt facility. The service provider verifies that the funds are, in fact, available through an integration with the employer’s payroll provider.
  2. Disbursement methods – There are various ways that funds are distributed to employees: Direct deposit, a pre-allocated bank account that the employee sets up through the EWA provider, or a prepaid card.
  3. Method of payment collection by EWA provider – The vendor is usually repaid directly from the upcoming pay cycle.
  4. The time it takes a payment to reach the employee – This varies depending on the method used:
    • Direct deposit – the next business day
    • Prepaid or debit cards – takes up to 48 hours
    • Bank transfers – instant but can carry a fee
    • EWA vendor-provided bank accounts – free and instant  

Benefits of earned wage access for employees

Earned wage access has gained popularity with employees over the last few years as a great way to ease the financial stress of trying to survive between paychecks. Rising inflation over the past few years continues to worsen as experts believe that we are hurtling toward a cost of living crisis. Forty-one percent of employees have received pay raises this year. Of these, only 28% claim to have received a raise higher than the current inflation rate. 

 

Webinar: How to Navigate the Inflation Crisis

 

One study found that the reasons for utilizing EWA varied between employees from different age groups. Gen Z workers tend to use it to pay for everyday expenses like groceries or make loan or rent payments. It reduces the stress of not having the cash flow available until the next payday. 

Millennials also used EWA to cover family-related expenses, bills, and unexpected expenses related to vehicle maintenance. Gen X and boomers rely on EWA for family expenses, bills, and groceries but also use it to cover any emergency medical expenses. Either way, EWA has broad appeal across all age groups. 

The COVID-19 pandemic and the uncertainty that followed meant that more people started to prioritize building up a financial safety net. Earned wage access makes this easier to do. Unlike payday loans and advances, employees are less likely to accumulate debt from high-interest rates and overdraft fees. 

Benefits of earned wage access for employers

Signing up for an EWA program means more work for your human resources team, but the benefits of offering your employees more flexible access to their paychecks could outweigh the effort required.

Employees continue to struggle with inflation and trying to keep up with the high costs of living. Research shows that 78% of employees are seeking alternative employment in hopes of achieving better financial well-being.

 

Webinar: How to Stop Employee Turnover

 

By offering your staff the option of EWA and contributing to their financial wellness, you are more likely to attract top talent. In fact, 76% of employees agree that it is important for employers to offer EWA. Besides attracting talent, looking out for your staff’s financial health through EWA helps you improve your employee retention. 

A lack of financial well-being is a major cause of stress for many employees. Furthermore, stress is the third-leading cause of long-term workplace absence and the fourth cause of short-term absence. Improving this situation means your employees will also be more present at work. 

What to consider before implementing an EWA program

When looking at integrating an EWA program into your company, there are two things to consider: the associated fees for you or your employees and the legal implications of doing so based on where you are based. 

It is important to understand your state’s direct deposit laws. Some states only allow employers to pay via direct deposit when the employee gives their consent through a written agreement. If the EWA program you have signed up for requires a separate bank account to be set up, this might not be applicable within that agreement. You may need to obtain additional written authorization to ensure compliance with laws and regulations.

The charges associated with EWA programs vary from one provider to another. Some involve charging employers a flat fee, while others charge employees per transaction. Before contracting an EWA service provider, you need to budget for any charges you will absorb or analyze whether or not your staff are willing to pay transaction fees themselves. 

A successful EWA program begins with accurate timekeeping 

If you are going to offer EWA, you need to ensure that the wages employees have access to are accurate as soon as they are recorded. After all, fixing pay errors is much harder when employees have already spent their money. With automated time and attendance software, you can record accurate timesheets in real-time before they even reach your payroll or EWA system. This way, you can give your employees immediate access to their funds with peace of mind.

Workforce.com’s time and attendance is also synced with an employee scheduling system, meaning you can see wage and hour variances in real-time and on timesheets. With this visibility, you’ll be able to immediately catch where and when an employee’s pay doesn’t match up to their scheduled hours.

To find out more about how to lock in accurate wages BEFORE employees get access to them, check out our whitepaper on timekeeping below, or get in touch with us today.

The Practical Guide to Time and Attendance

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PBJ Reports: What you need to know

Nurse looking at a pb&j sandwich on her screen

Summary

  • The CMS requires long-term care facilities to submit quarterly Payroll-Based Journal Reports detailing direct care labor hours and payroll information.

  • PBJ reports include information such as work hours, work dates, job titles, and more.

  • PBJ information can be compiled and submitted to the CMS manually, or, time and attendance software can automatically build PBJ reports for you.

Nearly everybody loves PB&J sandwiches, save for people with severe peanut allergies of course. These deliciously gooey creations are packed with not only taste but nostalgia for the blissful freedom of childhood.

But I am not here to sing praises to the whimsical marriage of peanut and fruit. No, instead a more important topic must be discussed concerning an extremely close relative to the PB&J sandwich: the infamous PBJ Report.

 

What is a PBJ Report?

Payroll-Based Journal (PBJ) Reports are not scrumptious lunchtime meals, unfortunately. They are quarterly reports from long-term care facilities to the Centers for Medicare and Medicaid Services (CMS) detailing direct care payroll and staffing data.

This reporting began in 2010 with Section 6106 of the Affordable Care Act. In 2018, the CMS introduced the PBJ system to facilitate the process of collecting and gaining insight into direct care staffing.

Payroll-Based Journal Reports typically include the following information:

  • Employee ID
  • Labor classification/job title
  • Job title code
  • Pay type code (exempt, non-exempt, contract staff)
  • Hire date (optional)
  • Termination date (optional)
  • Work days and dates
  • Hours worked per day
  • Job/labor descriptions
  • Census data (optional)

Review the CMS’ PBJ Policy Manual for more details.

 

Why are PBJ Reports Necessary?

The broader answer to this question is that they help the CMS monitor staffing level issues within the long-term care industry. They also help increase the amount of freely accessible data available to the public for analysis. Lack of adequate staff in healthcare can have serious repercussions, and it is more commonplace than one would think with labor shortages persisting across the country.

More specifically, Payroll-Based Journal Reporting is necessary for nursing homes to maintain their Five-Star Quality Rating on the CMS’ nursing home compare website. A good rating is crucial for attracting patients and gaining referrals – something that can’t happen if a facility reports a lack of staff, or worse still, reports inaccurate staff hours.

The impact of accurate PBJ reporting cannot be overstated. In 2018, the CMS handed out 1,400 one-star reviews to nursing homes across the country for being insufficiently staffed. This came on the back of new regulation from the CMS stating that all long-term care facilities reporting four days or longer in a quarter with zero registered nurse hours on their PBJ report would receive a one-star rating. The previous cut-off was seven days.

Non-compliant PBJ reports may happen for a variety of reasons. For one, they could be due to healthcare facilities simply being understaffed. They could also occur due to manual calculation errors. Regardless, it’s essential that facilities figure out a streamlined way to record and report direct care worker hours accurately and honestly.

 

PBJ Submission

There are two methods for submitting a PBJ report to the CMS.

The first way is to manually enter all information into the CMS’ system via their website. This data would include info about employees, their hours paid to work, dates worked, and census information (optional).

Alternatively, you can skip all the manual work by using an automated time and attendance system for nursing homes or payroll system to create a report which you can then upload to the CMS website in XML file format. Seeing as the CMS’ reporting requirements are quite strict, you’ll need to ensure your report includes all the necessary data and is properly formatted according to CMS guidelines.

Registering to submit PBJ data requires several steps:

Review the CMS’ PBJ FAQ document for more information.

 

PBJ Report Deadlines

Below you can find the quarterly deadlines for PBJ submission to the CMS:

FISCAL QUARTER REPORTING PERIOD DUE DATE

1

 October 1 – December 31 February 14
2 January 1 – March 31 May 15
3 April 1 – June 30 August 14
4 July 1 – September 30 November 14

 

Automate PBJ Reporting to the CMS

Creating and submitting PBJ reports does not need to be difficult or time-consuming. With the right systems in place, maintaining staff records and generating reports is actually quite simple. What’s difficult is finding and retaining the staff you need to maintain a five-star rating.

Webinar: How to Retain Hourly Employees

With Workforce.com, long-term care facilities can automate PBJ reporting to the CMS, freeing up hours of admin time to work on more pressing issues like employee turnover and short-staffing. The cloud-based timekeeping system maintains employee info like job codes, titles, and pay rates, while recording hours worked, breaks, and pay on a daily basis. And with a click of a button, you can create an accurate PBJ report and export it as an XML file.

For more information on PBJ Reporting visit the CMS website or review their PBJ policy manual. If you want to learn more about how to automate PBJ reports, contact us today, or, visit our long-term care page to find out how to comply with the CMS’ five-star quality rating system.

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Labor Department fines, penalizes contractor $100K for falsified overtime records

employment law, labor law, overtime records

Recent wage and hour violations by a New Hampshire contractor is a signal to other employers that they should review their workforce management policies and overtime records for compliance with federal, state and local labor laws.

Facades Inc., a commercial exterior surfaces applicator-installer in Hampstead, New Hampshire, falsified pay records to cover up its failure to pay employees the required overtime wages they earned, according to a U.S. Department of Labor investigation.

The Labor Department’s Wage and Hour Division recovered $87,360 in back wages owed to 28 Facades Inc. employees. It also assessed a civil money penalty of $19,516 to address the willful nature of the violations, which included the employer’s falsification of payroll records, according to a DOL press release.

Check your workforce management policies

Small business owners have numerous priorities, and accurately managing payroll and time and attendance policies should always remain at the top, as the Facades case shows. Effectively tracking employee hours with an automated workforce management solution will clean up compensation and support compliance practices.

Investigators found Facades Inc. violated the Fair Labor Standards Act when it paid straight time for overtime hours worked by employees and concealed those payments as “reimbursements” in payroll registers. Rather than recording and paying for overtime hours at time-and-one-half workers’ regular rates of pay, the employer recorded only up to 40 hours in their records and masked their straight time payment for any additional hours, the release stated.

“Workers deserve to get paid all the wages they have earned, and our enforcement of the law ensures that happens,” said Wage and Hour Division District Director Daniel Cronin in Manchester, New Hampshire. “In this case, the employer attempted to conceal illegal straight-time-for-overtime payments. In addition to being held accountable for back pay, the employer paid a significant civil money penalty. Other employers should use the outcome of this investigation as an opportunity to review their own pay practices to avoid violations like those found in this case.”

Automate your processes to avoid penalties

Employees deserve their paychecks on time and to be accurately compensated for the time they spend working. Automated payroll practices help eliminate delays, improve compliance and minimize costly errors.

With employment contracts, timesheets, benefits and labor laws, there are a lot of factors involved in payroll that can result in miscalculations. Workforce.com’s payroll integration solution connects with more than 50 payroll systems to ease compliance and enhance efficiency. 

Ask for a demo of Workforce.com’s powerful time and attendance platform today and see how to make workplace compliance effortless and effective.

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Hearing Care Solutions improves onboarding and simplifies scheduling with Workforce.com

employee communication, hearing, talk, schedules

Since its founding in 2009, Hearing Care Solutions has become a leading health care company by understanding how hearing-loss technology vastly improves its patients’ lives.

Knowing that hearing loss left untreated hinders communication and ultimately affects social interaction and quality of life, HCS is advancing hearing care through a variety of fully digital instruments at varying levels of technology from nine leading manufacturers.

As Denver-based HCS continues to implement new technologies to grow its hearing-solutions business, they also have embraced Workforce.com’s workforce management platform to improve the lives of its employees.

HCS already is reaping the benefits since introducing Workforce.com to its employees in August 2020. HCS is saving 30 minutes per employee every two weeks by using Workforce.com, said Nallely Yearwood, executive director, operations at HCS.

Yearwood also cited three advantages since implementing Workforce.com.

  • Saving time on payroll days.
  • Saving time during onboarding.
  • Accessibility for all staff for schedules and time off requests through the app, which makes it easier for management.

Simplify the scheduling process

Yearwood discovered Workforce.com through research of workforce management applications, including reviews. Since its rollout, building schedules for its 100 employees has become more efficient and strategic with Workforce.com, Yearwood said.

“Workforce.com relieves me of the handwritten schedules and saves me a lot of time pre-payroll as well,” said Yearwood, who has been with HCS for five years. “It has also helped our payroll department save a significant amount of time.”

Efficiently onboard new employees

As an essential service, HCS is bullish on its plans for growth over the next 12 to 18 months as it adds new employees to meet business demand. Since the pandemic swept across the business landscape in March, Yearwood said candidate interviews have been held virtually via video calls.

Workforce.com has been a crucial partner to bring new employees into the fold, she added.

Since its implementation, “Hearing Care Solutions has been able to streamline the onboarding process in addition to giving us a more effective way of managing both remote and on-site employees,” Yearwood said.

There have been several lessons learned from operating a business during COVID-19, Yearwood said.

“While it is a new challenge to actually implement a full-blown pandemic policy, we welcome the challenges as it strengthens our internal community and our commitment to providing services to our clients,” she said.

Easy access for all employees

Everyone on the HCS staff uses Workforce.com, Yearwood added, both management and employees. “It gives us the opportunity to ensure staffing and scheduling follows our business needs and also allows our employees to easily manage their schedules and PTO requests,” she said.

With an efficient staff management system in place, Yearwood and her team want to continue improving their online platforms and seek ways to provide the best service to their customers as they expand. Employees have endorsed several Workforce.com features, she said.

“The (time clock) app is great, and it allows them to see their schedules ahead of time and to request time off,” Yearwood said.

Keeping employees healthy and productive will always be top of mind for HCS executives.

“Our priorities are always the safety and health of our staff and ensuring our policies and supporting processes are compliant and as staff-friendly as possible,” she said.

Hearing Care Solutions has made its workplace more efficient and productive. Book a demo and see how Workforce.com can help you.

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Tracking time and attendance a basic but crucial workplace function

time clock, workforce management, scheduling, time and attendance

There are some functions that are so elementary to an organization that without them, there is no business.

People need to show up for work. From the single-person hair salon to a 10,000-employee utility company, time and attendance is mandatory for a business to function at its most basic level. And those workers must spend a requisite amount of time to get the job done.

Digitally pairing the perfect couple

Like Abbott and Costello, salt and pepper and peas and carrots, some things just belong together. For employers, time and attendance and employee scheduling software are two workplace basics that fit hand in glove to make an organization go.

Also read: Timesheet rounding isn’t necessary with the right technology

Like many HR functions, tracking how long employees work each day has evolved from pen and paper to a digital process. Today’s time and attendance solutions reach far beyond a punch clock with employees merely clocking in and out. They typically provide employers with everything needed to track and manage all aspects of their employees’ time.

The value of time and attendance systems

These systems record when employees start and end their day, display their weekly schedules and provide a tool to manage time-off requests. 

Also read: Knock out the practice of buddy punching for good

Employees can no longer round up the hours they’ve worked or buddy punch their co-workers in and out. Employees are held accountable for the hours they have worked. Many time and attendance systems will offer other values, including:

  • Payroll accuracy.
  • Simplify paid time off management.
  • Time and attendance mobility features.

Accurate pay

You want to track employee hours and streamline your payroll processes. But you’re stuck in a paper-based payroll system. Save ink and save a tree by taking payroll digital. Organizations typically want to adopt a time and attendance management system that can integrate with payroll systems, and it has never been easier to make sure all employees are paid accurately and on time. Digital time and attendance systems let supervisors expedite timesheet review and approval.

They can also quickly and easily track that the right person clocks in for the right shift through electronic photo verification and unique pass codes. These, along with payroll add-ons, lets employers do away with lengthy steps and potential errors in computing payroll.

Simplify paid time off management

Time and attendance software often allows employers to record paid time off — sick time, vacation time and other types of paid time off. In addition, employees can use the software to request time off,and managers can either approve or deny those requests. Workforce.com’s intuitive leave management system makes it easy to manage time off by automatically applying changes to schedules and timesheets.

Time and attendance mobility features

Perhaps most importantly, employees have the ability to clock in and out from their mobile devices. A mobile time clock app automates how the staff clocks in while improving the accuracy and efficiency for every manager. Every internet-connected device essentially becomes a time clock. No one has to touch a communal device or handle paper time cards. Spreadsheets and calculators are no longer necessary since a mobile solution streamlines cumbersome administrative tasks. More than a time clock in their pocket, the multi-tool mobile app lets employees use their phones to clock in and out and allows managers to monitor in real time where and when the punch in or punch out occurs.

Time and attendance and employee scheduling software systems offer a huge benefit to your employees as well as their managers. They simplify an employee’s time-keeping responsibilities via clock in using a computer or mobile device.

Investing in digital time and attendance also benefits a business in many ways. Having a system to accurately track an employee’s time simply saves money. It eliminates manual recordkeeping, which reduces errors and more readily demonstrates compliance with labor laws and other regulations.

Simplicity is a key component to efficiency. Make your time and attendance process seamless for employees, and allow your managers to be more effective and focus on the needs of the organization.

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The rundown on wage law compliance: What organizations should know

wage and hour law compliance, wages

Paying people properly is crucial to workforce management. But it goes beyond releasing pay on time. It’s about compensating workers according to the work they do and adhering to all the wage laws that apply — and there are many that organizations need to navigate. 

Andrew Stirling, head of product compliance at Workforce.com, sheds light on what companies need to know about complying with wage laws, the real cost of failure to comply and the different ways organizations can meet requirements under varying rules and regulations. 

Setting a compliance strategy

“To have a compliance strategy, you need to start by knowing what the rules are. That might sound trite, but you need a system for keeping current as the rules change,” Stirling said. 

Businesses are generally good at evolving their practices in the face of law and regulation changes. While there’s a level of adjustment when new laws are implemented, companies tend to adapt efficiently, he explained.

Identifying the type of employment relationship a business has with its workers is crucial to getting the rules right. This has become more important as the types of work relationships have multiplied.

“With the gig economy growing, more and more workers are being engaged to work in nontraditional ways. Generally, a worker in your business will be either an employee or an independent contractor. Businesses need to be careful to assign workers to the right category, because getting this wrong means that they may not meet all the wage laws that apply,” said Stirling. 

Once the rules are known, it’s time for the business to assess and implement solutions to comply with those rules. The solutions can be more than just the obvious.

For example, employee scheduling can play a key role in wage compliance. When creating schedules, managers need to be aware of when overtime will apply and how much the business must pay for those hours when it does. This becomes challenging for managers with a group of employees under different working arrangements. Without good solutions, things can fall through the cracks, resulting in underpayment or higher labor costs.

The real cost of noncompliance

Noncompliance can result in crippling financial repercussions, but it also can cause reputational damage.

“The financial costs of noncompliance are obvious,” Stirling said. “For example, if employees have been underpaid, the business might have to make large amounts of back payments in one hit. You need to have the cash on hand for that.” There are other financial costs, like penalties and legal costs to contest a court case.

But there’s also the real potential for reputational damage. That’s often a more significant motivation for employers to comply.

“An underpayment scandal can bring companies to their knees. Customers can decide to take their business elsewhere. People are less likely to visit a restaurant or shop that has been reported for underpaying their people,” he said. 

Aside from a less favorable customer perspective, companies with underpayment issues can risk losing in the labor market, he said. When looking for a job, people tend to sort out who the good and bad players are, and wage compliance can be a huge factor.

Ensuring compliance at all levels

While wage compliance may mostly be seen as a job for payroll teams, HR and managers also play a crucial role. Payroll teams would primarily be responsible for the final pay outcome.

“From a payroll perspective, I would be focused on two things. One is making sure that I understand the complex wage rules that apply. The second thing is making sure that I have the correct data. Am I getting the information that I need to properly calculate pay? Are we capturing time and attendance accurately? Yes, knowing the rules are important, but the inputs need to be correct, too,” Stirling said.

HR has a leading role here. They need to have a good understanding of the business and the particular wage rules that apply. It’s also their responsibility to ensure that the right systems are in place for wage compliance. 

wage law compliance“In my experience, HR will often document the duties of a position and then help to assign those duties to a particular minimum wage,” Stirling explained.

Managers, meanwhile, have a role in ensuring that all inputs are correct. They monitor that employees are recording time correctly and that there are no discrepancies.

“If rules in a particular jurisdiction require employees to be paid more for doing particular types of work, managers are the ones who will know,” he said. The extra payments might include allowances, commissions, bonuses and tips to the extent that they are relevant in a jurisdiction.

Managers generally play less of a role in ensuring the amount on a paycheck is correct. Still, they follow processes and systems that ensure all the information passed on to payroll is accurate. 

Compliance challenges per industry

Different industries face varying compliance challenges. A lot of this difference comes from meeting customer demand or expectations.

If customer demand comes in after standard business hours and on weekends, that’s when employees need to be at work. Working outside standard business hours often will entitle an employee to overtime or other financial obligations.

“If you’re in retail or hospitality, you’d miss out on opportunities if you just open from 9 to 5. Efficient workforce management can meet these demands with cost-effective shifts without compromising service and wage law compliance,” he said. 

Similar issues arise in industries that make use of machines and equipment that are most efficiently run 24/7. Mining, oil and gas, and manufacturing companies often run this way. Stirling said that this scenario also puts businesses in a space where they pay different penalties that come with varying shifts and work hours.

On the other hand, there are many industries where working standard office hours is still the norm. “Calculating pay for people who get to work at 9 in the morning and leave at 5 in the afternoon is usually relatively easy,” he said.

Ways to stay at pace with labor law changes

There are many moving parts involved with wage law compliance, and staying on pace is crucial. 

“Going to the source is always best. That’s a good start,” Stirling said. He advised signing up for government websites that explain what the law is. Businesses can often sign up for alerts to be updated should any of the laws change.

There are also subscription services to stay abreast of the labor law, including publications and journals. Another option is to join employer associations that can help keep track of changes as well. 

Overcoming wage compliance challenges 

Having the right people, implementing the right systems, and investing in the right technology — Stirling believes that these things can help businesses comply with wage laws. 

Computers are binary and will give an output based on the input. Automated compliance is more efficient and effective than human-driven compliance. Companies must implement the right systems to make sure that both people and technology can function effectively. 

“I’m a big believer in technology as a solution to a lot of these problems,” he said. “That’s where the future is. As technology becomes more powerful, the types of work that people are doing will change. They’ll spend less time crunching numbers, for example, to make sure pays are right and spend more time checking that the inputs into the technology are right.”

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Companies may pay the price for poorly managed payroll practices

compensation, payroll, blue collar

Culture may eat strategy for lunch, but a fair, well-oiled compensation plan can gobble up culture for breakfast, dinner and maybe even a midnight snack.

While culture indeed is crucial to engagement and retention, compensation still remains near or at the top of most employee satisfaction surveys. Poorly run compensation and payroll practices makes engaging employees an impossibility if they are not being paid fairly and on time.

Get a handle on your payroll practices

Employees deserve their paychecks on time. They also deserve to be accurately compensated for the time they put in. Both of these points may seem to be forgone conclusions when it comes to an organization making its payroll.

But according to a survey earlier this year, 32 percent of small business owners have made a payroll mistake at least once. What is more troubling, the same survey also noted that it took 56 percent of business owners longer than 24 hours to fix a payroll mistake.

That’s a problem for any employee. For those living paycheck to paycheck, a payroll snafu can be devastating.

Also read: Knock out the practice of buddy punching for good

Considering that employee engagement figures typically hover somewhere around 33 percent in good economic times and in bad, there is no faster way to turn a loyal staff member into a disengaged one than a blunder with payroll.

Automate payroll processes to eliminate delays and errors

Automating payroll may initially seem imposing. Organizations are locked into legacy practices, and payroll typically is one such function.

Some 39 percent of small business owners spend one to three hours on payroll per week. That’s hundreds of hours spent poring over timesheets, tapping digits on a calculator, assessing overtime and finally scratching out checks, which if the sun, moon and stars properly align there won’t be any mistakes.

Save a tree, cut back on paper-based payroll

Many organizations rely on a paper-based system, too. A 2017 survey revealed that 65 percent of people surveyed said that HR information is still managed using paper documents, paper-based processes and stored in filing cabinets. 

Implementing a payroll solution not only improves the company’s bottom line but it minimizes hours of repetitive tasks and effort spent on high-volume, low-value work. The result is a better functioning payroll system that affords time to focus on correcting errors, improving processes and delivering payroll efficiently and on time. Automation is assisting payroll teams perform their jobs in several ways. 

Managing compliance risks

It’s a challenge to stay abreast of tax laws, rules and regulations, especially for organizations working across multiple states. Payroll mistakes are costly and learning all the nuances to stay in compliance is a huge time drain. It’s crucial to stay on top of what it takes to remain compliant to reduce legal liability. Workforce.com’s payroll integration platform is designed to keep pace with labor law changes and ensure that pay rates are always updated. 

Gathering the metrics

Collecting timesheets from multiple departments and in varying formats is the height of payroll inefficiency. An automated payroll solution turns data collection inefficiencies into a faster and simpler task.

Move data quickly

An automated, integrated platform also allows for the smooth transfer of information between systems. There’s no need to wait on various departments or managers to file and then crunch their data.

Added expenses due to poor data entry errors and payroll oversights are avoidable. By upgrading an outdated payroll function with an automated platform eliminates inefficiencies, promotes compliance and allows employers to stay on top of wage costs.

With employment contracts, timesheets, benefits and labor laws, there are a lot of factors involved in payroll that can result in miscalculations. Workforce.com’s payroll integration solution connects with more than 50 payroll systems to ease compliance and enhance efficiency.

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Connecting to community with Grand Finale Desserts and Pastries

time clock, food

Justin Raha of Grand Finale Desserts and Pastries knows exactly why his business has been so successful.

Starting out as a baker’s apprentice with a passion for pastry, Raha eventually founded Grand Finale, starting out with a focus on wedding cakes and chocolate. He diversified to include more types of baked goods and pastries. Now, the small business employs five people and enjoys a good reputation among the local community of Grand Haven, Michigan. 

Locals supporting local

“We use Michigan blueberries, Michigan strawberries, Michigan raspberries. We use dried fruit and we try to use Michigan sugar, and we get Michigan eggs, and so everything that we’re getting we’re trying to get as local as possible.” These ingredients are what makes Grand FInale’s treats so special, Raha said. The result? Quality products at affordable prices, with the added bonus of supporting other local businesses in the area. 

Raha’s commitment to using local ingredients and participating in community events has solidified Grand Finale’s charm — they aren’t just another bakery in the area, but a recognizable name in the neighborhood.

Also read: Building a safety policy was vital to Shawmut Design and Construction’s health

“We give back to the community a lot which is really big. We have a really strong local community that is all about growth and support of each other and different tasks, fundraisers, organizations, and groups,” Raha said. “And so any opportunity we can to help out more for our community we try to do that, which has gotten really substantial in kick back toward our business because people see that we give back to the community and donate to them. Because of that they tend to want to come to us.” 

Smoother payroll with time clock software

Raha found Workforce.com through the mobile app store and thought to try it out. After trying a few other apps, he found Workforce.com the most user-friendly and affordable for Grand Finale’s needs, especially the notification aspect that allows requests to come in through email. Now, the small business has been using Workforce.com’s time clock software for over a year, as well as the employee scheduling features to keep track of operations.

While employee schedules are consistent, what the time clock software has done for them is make shift durations much easier to track. With all the data about when employees clock in and out, calculating wages is faster — Raha just sends the timesheets over to his accountant, and a process that used to take an hour now lasts 15 minutes. 

Sweet gestures

Whether it’s the local farmers’ market, events supporting mental health programs or environmental fundraisers, Grand Finale Desserts and Pastries is there to lift the spirits of anyone who tries their baked treats. Building trust between small business owners and customers over time, through authenticity and visible effort are the key ingredients to the bakery’s success.  

“They know we’re good,” Raha said. “They know that their money is going to stay local and get back into the community.”Â