West Chester, PA, July 08, 2016 --(PR.com
)-- With the onslaught of delegates pouring into The City of Brotherly Love for the 2016 Democratic National Convention (DNC), many businesses are encouraging overtime for employees and hiring temporary staff to meet the increased service demands placed on them this July. However, according to area-based payroll and benefits administrator, PrimePay, LLC, if business owners are not careful, their financial windfall can spiral into a compliance and penalty nightmare.
“The DNC is a potential boondoggle for many of Philadelphia’s small businesses. However, reaping the financial rewards from an event such as this requires more than increasing staff and inventory,” said PrimePay’s Executive Vice President and Chief Service Officer, Martin Stowe. “For example, if requiring employees to work overtime is the solution to handling the heightened demands, owners have to take into account less obvious compliance issues.”
In the case of local business Philly Bread, owner Pete Merzbacher is one such business owner who anticipates having all hands on deck with employees working 12-hour shifts during the convention.
“In my business, baking is a specialty so bringing in outside help isn’t an option,” said Merzbacher. “I’m 27 years old and this is the first business I’ve ever started. I started it because of my love of food and baking bread became a passion. Three years ago it was just me and now I have 11 more people working for me.”
For companies such as Philly Bread and their specific needs, Stowe recommends a time and labor management solution to schedule employee hours, track attendance, and handle reporting.
“In cases similar to Philly Bread, our team could help review the time employees work. We would also bring any potential compliance issues he may face to his attention with the FLSA’s new overtime rules,” explained Stowe.
Stowe also acknowledges that unless engaged with a company like PrimePay, it is unlikely that most small business owners have the expertise to fully understand the laws that come along with hiring temporary help. Therefore, he offers the following tips to give owners a better understanding of the associated legal and tax obligations:
Employee Status - If businesses are directly hiring temporary employees – not independent contractors – owners still must provide certain benefits by law.
In the commonwealth of Pennsylvania these include:
· Unemployment Benefits – Temporary employees are eligible to earn leave and are covered by Social Security and unemployment compensation, but do not receive the other fringe benefits provided to career civil service employees. As employers generally are not exempt from unemployment benefit obligations, there may be exceptions for seasonal employers. This is because the nature of their business requires temporary employees for 10 weeks or less.
· Social Security/Medicare – Employers must withhold part of Social Security and Medicare taxes from employees' wages and pay a matching amount themselves.
· Workers’ Compensation – Businesses with employees are required to carry workers’ compensation insurance coverage through a commercial carrier, on a self-insured basis, or through the state’s workers' compensation insurance program.
· Fringe Benefits - Certain benefits, also known as fringe benefits, are not required by law and are offered at the employer’s discretion. These include paid leave, retirement plans, and medical insurance. Whether an employer decides to offer these or not is up to them, but it is best to be explicit in advance about what will and will not be provided during the recruitment process.
· Taxes - Part-time and temporary employees are subject to the same tax withholding rules that apply to regular, full-time employees. For details on tax reporting responsibilities, refer to IRS regulations on temporary help. It is also important to check Pennsylvania tax laws that pertain to these employees.
“PrimePay has taken care of the back-office stuff like compliance, health care, and overtime so I can focus on what I love doing,” said Merzbacher. “Leaving those types of things in their hands lets me concentrate on opportunities like the DNC and looking for new space to open another location.”
To learn more about PrimePay’s payroll and benefits administration services, or read more advice for small businesses from Martin Stowe, visit www.PrimePay.com .