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Payroll Compliance Requirements

Payroll Compliance Requirements

Worker classification, exemptions, deferred compensation, cafeteria plan deductions, sick pay, stock options, expense reimbursements, relocation, fringe benefits, reporting. Payroll management is just not easy!

There are many, many payroll compliance requirements, and getting any one of them wrong can cost your company thousands in fines and penalties.

Foundation Of Payroll Compliance & Administration Requirements: The FLSA

The Fair Labor Standards Act (FLSA) is a federal law enacted by Congress in 1938. The Act set minimum wage, overtime pay, equal pay, recordkeeping, and child labor standards for all workers covered by and not exempted from the Act.

Exemptions to the minimum wage and overtime rules were given to special industries such as agricultural workers, certain employees of retail and service establishments, motor bus carriers, seamen, and all employees engaged in the fishing industry.

However, as time went by, court cases and decisions by the Supreme Court expanded the regulations under the Act. Congress has reacted by enacting amendments to the Act over the decades to try and coordinate all the rulings. The amendments state the agreements reached by collective bargaining, and could bind the parties on such matters as:Payroll Record Keeping
  • Definition of working time
  • Treatment of jobs requiring irregular hours
  • Premium time for hours outside the regular workweek
  • Overtime for piecework
The definition of employees covered by the FLSA was also altered during this time to include:
  • Eligible nonexempt government employees will be paid overtime
  • Compensatory time off in lieu of overtime is allowed under certain conditions for government employees
  • Legislative employees are exempt from certain provisions of the Act
  • Volunteers for public employers may be paid expenses, reasonable benefits or a nominal fee
  • Antidiscrimination provisions preventing retaliations against public employees were strengthened
If an employer is found in violation of the FLSA requirements, the DOL may assess a penalty against the employer.

Other Payroll Compliance & Administration Requirements: Wage & Hour Laws

In addition to minimum wage and overtime regulations, payroll professionals' payroll management processes must comply with other provisions of wage and hour laws. These provisions may include rest and meal periods, legal deductions form an employee?s paycheck, and whether or not compensatory time off is allowed.

There also are special federal acts and regulations that apply only to employers who are conducting mass layoffs, who have contracts with the federal government, or who have employees in law enforcement, fire safety, or work in a hospital.

Other Payroll Compliance & Administration Requirements: Classification Of Workers

To determine the proper taxation and reporting of payments, an employer must classify each worker they utilize. The method used under federal law to determine the worker?s classification is found in the Internal Revenue Service regulations. There are five common classifications of workers under the Internal Revenue Code (IRC):
  • Common Law Employee
  • Independent Contractor
  • Statutory Employee
  • Statutory Nonemployee
  • Leased Employee
Exempt Vs. Nonexempt

As long as they meet specific requirements, the FLSA provides an exemption from both minimum wage and overtime pay for the employees employed in the following jobs:
  • A bona fide executive
  • Administrative
  • Professional
  • Outside sales employees
  • Certain computer employees
Additionally, there are special rules for highly compensated workers.

Other Payroll Compliance & Administration Requirements: State Wage & Hour Law

State governments are autonomous when it comes to laws within its own borders. Each state can have its own set of laws in addition to federal requirements for such items as minimum wage, overtime, child labor, and new hire reporting.

The state may match the federal standards, may be higher or lower than the federal requirements, or may even have no provisions governing a certain area of the law. Again, it is strictly up to the state.

Other Payroll Compliance & Administration Requirements: Notice Posting Requirements

Employers with employees covered by the FLSA are required to display a special poster that describes the FLSA's minimum wage, overtime, and equal pay requirements.

Payroll Compliance & Administration Requirements: What You Need To Know

Below is a listing of topics that you, as a payroll professional, will need to know how to handle as part of your payroll management processes and procedures. Note: The list below shows the topics you need to know about for proper payroll administration, but not the rules and requirements for each, so please make sure to educate yourself on these areas. To find training on these topics, either select a recommended course or use the search box below.

  • Federal Payroll Taxes
  • State Payroll Taxes
Wages & Compensation
  • Wages and Compensation
  • Employee Withholding Allowance
  • Supplemental Wages and Pay Periods
  • Deceased Employee WagesFringe Payroll
  • Tips
Benefit Deductions
  • Deferred Compensation
  • Cafeteria Plans
  • Dependent Care Plans
  • Flexible Spending Plans
  • Third-Party Sick Pay
  • Group Term Life Insurance
Special Deductions
  • Expense Reimbursements
  • Personal Use of a Company Vehicle
  • Relocation
  • Stock Options
  • Garnishments and Levies
  • Expatriate Employees & International Payroll
Paycheck Calculations
  • Gross to Net Calculations

Find Payroll Compliance & Administration Training Requirement Courses

To find training courses to help with your payroll compliance needs, either select one of the recommended courses below or select "Payroll" from the "Professional Development" section of the search box below.
Find Seminars, Webinars, And Online Training In Your Area
Professional Development
Products & Services to help manage and grow your career!

Find Specialty Payroll Training Webinars
Unclaimed Paychecks offers payroll training webinars on a wide variety of topics, including multi-state payroll, how to do an audit, rules for terminated employees and uncollected paychecks, payroll recordkeeping, and more.

To see more details on these courses, go to

HR Training Center 5755 North Point Parkway Suite 227 Alpharetta, GA 30022 770-410-1219
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