Although many small business owners are aware of the repercussions of not properly defining their employees – exempt or non-exempt; salaried or hourly; some small business owners still runs into problems come tax time. By not properly defining your employees’ statuses, businesses owners can face hefty fines and penalties even if the error was completely unintentional.
To avoid getting penalized and fined, business owners, especially small business owners, should understand how to properly determine an employee’s classification and how they should get paid.
A salaried employee is paid on an annual, fixed amount. The salary is divided by the pay periods based on 2,080 hours. Employees whom are salaried do not have to clock in and are not required to submit time sheets.
An hourly employee is paid on the hours that are worked. Hourly employees are required to submit time sheets and clock in and clock out.
Best Practices on Differentiating an Hourly Employee and Salaried Employee
Here are some best practices on how you can differentiate an employee who should be salaried versus hourly.
- Hourly employees are required by law to be paid overtime if they exceed their 40 hours in a single work week. If you have to pay overtime to these employees then this means they should be considered non-exempt and are entitled to overtime.
- A common misconception is that salaried employees are not entitled to overtime, however, that is not the case. Just because an employee is salaried does not make them automatically exempt. Salaried employees who make less than the minimum amount of money set by the Department of Labor are able to receive overtime and a half; they are also able to be classified non-exempt.
- An employee can be considered exempt if they pass the white collar exemption test. Senior executives, managers and supervisors are most commonly classified as exempt.
For more information about overtime, white collar exemption and other employee law information, please visit the Department of Labor’s website .
Also – don’t forget Easy Time Clock is a cloud-based time and attendance system that provides a comprehensive, accurate, and affordable solution allowing employees to clock in and out with a computer, mobile device, or biometric reader. Let us keep track of your hourly employees’ time and benefits!
By: Alisha Allen Gardner
I wanted to take Easy Time Clock to a new level and begin to offer other Software as a Service (SaaS) products. One of the major pain points I felt as a child care provider in my past, and now as a parent with a child in daycare, was the lack of ability to communicate digitally with the provider. We are in a time in which we live off of technology. If you don’t take a credit card, that’s a burden on the parents to make sure they have checks or cash on hand (who even keeps their checks on them anymore?). Every day at pickup, you are provided a daily sheet that inevitably ends up on the floor of your car. As a parent who has shared custody, I never knew what was going on with my kiddo unless someone else told me. MyLilypadApp.com solves all of those problems and more. Lilypad brings the power of the internet to your daycare to save the provider time and money. We offer time tracking, a parent portal for payments, daily sheets, calendar access, and billing management for the provider. It is also super cute and offers different blog options than Easy Time Clock. I hope, in time, we are able to be a provider and parent resource for anything kiddo related.
What three traits define you?
What makes Easy Time Clock such a great place to work?
Held at Allegiance Credit Union on August 6, Good to Grow: A Health and Wellness Expo was a success! Below is a list of all the booths that we had this year.
- Allegiance Credit Union
- Allena Massage Therapy
- Bethany Library
- Captain Supertooth
- Community Builders Church
- Danny Gordon Art
- Delishes Dishes
- Easy Time Clock
- Family Builders
- Hearts for Hearing
- InBalance Chiropractic & Wellness
- Just Kids Pediatrics
- Kona Ice
- Northwest OKC Chamber
- Sams Club and Immunizations
- Smart Start Central
- Variety Care
- Crafty Communications for photography
In addition to the booths, we had an activity center where every 15 to 30 minutes an interactive activity was held. Captain Supertooth showed us the benefit of oral health care, Danny Gordon Art taught us all how to draw a fish and we wrapped up the day with a Story from the Bethany Library. Throughout the event we gave away over 20 free raffle items for participants.
KOCO aired an interview with Co Partner Jill McCartney of the NWOKC Chamber and our CEO, Alisha (Pictured Above). Representative Tammy West showed an interest by appearing and participating as well. All signs point to this becoming an ongoing annual event. Through Good to Grow, we have created a series of excellent networking contacts who have a heart for the community and partnership.
Introducing Rob Allen
Chief Officer of Operations
Rob brings 20 years of leadership as a pastor, counselor and vice-president of a non-profit and an additional 10 plus years in new home sales and construction management. Married to Beth, he is the father of three (Alisha, Ashley and Alex) and grandfather of four (Phoenix, Hunter, Paisley & Pierce). A California native, he graduated from Fresno State before going on to seminary and graduate work in theology, counseling and business. His focus is to devise and implement systems and processes that improve productivity and customer satisfaction. His great passion is to develop team members to be the best they were designed to be. Rob reads a lot and is a student of leadership and history. When not working or with family, he enjoys oil painting and sketching.
What you might not know about Rob is that he is our CEO, Alisha’s, dad! “I am extremely excited and grateful that my dad has graciously accepted joining our team. His guidance and experience will make our team and business grow leaps and bounds!” -Alisha
According to the U.S. Small Business Administration, there are 28 million small businesses in America that provide 55% of all jobs. Since 1982, the number of small businesses has increased by 49 percent. Imagine now, you’ve worked hard and spent countless hours each week locked away from friends and family to create your own small business. It’s grown to a handful of employees and you contract out or hire a manager for your payroll services which, in turn, allows you to focus more on growing the business, instead of the administration side. A year or two down the road, you realize money isn’t staying in the business like it once was. You decide to check in on your payroll processes and realize your company has sixteen employees, but you send out paychecks to twenty-two employees. You decide to investigate, only to find out you’re paying ghost employees. And to top it off, your payroll manager is skimming off the top and bulking up their own salary without telling you. If this happens, you’re not the first business owner that has had funds embezzled from them via a payroll fraud scheme.
The estimated cost to employers related to payroll fraud is nearly $3 trillion dollars according to Ceridian, a human capital management company. The median amount lost per fraud event is $72,000, an amount that could cripple most small businesses. 8.5% of workplace fraud is related to payroll processes and the average time it takes to discover a payroll fraud is 24 months. There are also other types of payroll fraud other than ghost employees:
- Falsified hours and salary occurs when employees say they work more hours than they actually do to increase their take home salary. Sometimes managers can give preferential treatment to employees they favor or employees who give them cash in return.
- Commission schemes occur when individuals fake the number of sales made so they can increase their overall salary. If employees are responsible for turning in their own sale sheets, they can easily fabricate the numbers to give them a higher return of commission.
- False workers’ compensation claims happen when employees fake injuries to collect disability payments. In some cases, the employees will claim disability from one job while working another.
- Ghost employees refer to someone that is on the payroll, yet not an actual employee. Ghost employees can take on several forms:
- Disgruntled Payroll Manager: If the individual who handles your payroll system doesn’t believe they are getting their fair share, it is relatively easy for them to fabricate payroll records and collect the funds themselves.
- Multi-Employee Fraud: In complex payroll systems, one employee will be able to add new employees, but another must sign off on their checks. These two employees will get together and collude to falsify time sheets.
- Family/Friend Compensations: An employee creates a payroll account for a friend or family so they can receive a paycheck and share the funds.
Small Businesses have a couple of different routes in protecting themselves from payroll fraud. The first is hiring professional auditors to come in and look at the business books and make sure all the financial aspects of the company are being done in a legal manner. Professional auditors work with their client to uncover any fraudulent employees and can be valuable assets for any business. However, many of these auditors can be expensive, in both the financial investment and the time commitment. When these auditors come in, they can occupy work space, pulling employees from their current projects to discuss previous ones, and even lower employee morale, if the employees find out management brought the auditors in because they do not trust them.
That being said, not all small businesses can afford to have yearly audits done, so here are some key steps the business owners themselves can do to prevent payroll fraud.
- Separate payroll duties for preparation, disbursement, and distribution. The individual that creates the employee database and puts in their salaries, should be different from the person that prints up and signs the check. You can also decrease the likelihood by implementing direct deposit. To change it up, once or twice a year hand deliver your employees’ checks if possible, to make sure no one is trying to skim money from you.
- Evaluate HR policies and make sure staff is up to date on adding/removing employees. By being diligent and removing previous employees’ information from the dataset, you make it much more difficult for former employees’ information to be used for ghost employment.
- Make it harder to falsify time sheets by implementing automated time tracking for employees to clock in and out. This can be as sophisticated as swipe cards with GPS tracking software placed in them, or as low-key as a security camera at the timesheet box that takes snapshots of the time when employees check-in and out during the work day.
- Lastly, the owner themselves, or a trusted advisor, can run internal audits on the payroll system. These are key points to be on the lookout for:
o Deceased person’s or previous employee’s social security numbers.
o Paycheck without any state or federal tax deductions.
o Employee ID numbers that are much higher than those of legitimate employees.
o Multiple direct deposits going to same bank account.
o Multiple checks being delivered to the same address.
Payroll fraud can be debilitating to a small business and run even the most successful ones into the ground. But, by taking a few steps and implementing some standard security and business procedures, businesses can drastically reduce their likelihood of being taken advantage of and losing funds to a payroll scheme.
Easy Time Clock
Oklahoma City, OK – Easy Time Clock is partnering with the Northwest Oklahoma City Chamber to present Good to Grow: A Family Health and Wellness Expo. On August 6th, families of 6 months to school agers are invited to the Allegiance Credit Union Operations Center from 2pm- 4pm for oodles of helpful resources and FUN! Other partners include Civil Air Patrol, Community Builders Church, Delishes Dishes Mobile Chef, Family Builders, Hearts for Hearing, InBalance Chiropractic & Wellness, Just Kids Pediatrics, OKDHS, Smart Start, Variety Care, Vizavance and more!
We’re excited to announce that Good to Grow is proudly benefiting the schools of the Oklahoma City Metro by collecting school supplies and providing goodie bags for all attendees! Guests will receive free books, door prizes and popcorn, and Kona Ice will be on grounds for purchase!
This free event is open to the public. Confirmed events include FREE sports physicals, hearing and vision screenings, blood pressure checks and various family-friendly physical activities. Kids will have a blast in our activity center with engaging art, cooking activities, and winding down with a storytelling session. And of course, there will be a few other surprises in store!
“Our hope is that Good to Grow can help highlight some of the resources, programs, and healthy activities available to families. It’s crucial for parents to take the initiative to encourage healthy behaviors and choices – from exercise to annual physicals. I’m so happy to be working with my team at Easy Time Clock and the Northwest Oklahoma City Chamber, who shows such passion for serving their community.” – Alisha Gardner, Owner of Easy Time Clock
The Northwest Oklahoma City Chamber is a non-profit organization that provides trainings, Community Engagement, Business Networking, and education resources for business owners. This is the Community Engagement Committee’s highlight of the year, and they plan to host more events in the future to better serve their community.
Easy Time Clock is a locally owned and operated online time and attendance system with a variety of options that serve businesses of every size. Recently, ETC debuted a new app, Lilypad: an “all in one” app for childcare providers!
As most of you may not be aware, my mom was diagnosed with Stage 4 Lung Cancer in March 2016. It had metastasized to her bones with a large mass in her lung (about 6 cm). When tested, it showed it was a mutating cancer. Which is why I jokingly call my mom a mutant…
When we finally figured it all out last year, we had one option. To do an oral chemo called Irressa for about a year or so (hopefully) and then do traditional IV Chemo about a year or so (hopefully). Statistically at that point in time, people with this diagnosis had 2 years to live with 5% making it to 5 years. So, you certainly don’t want to use up the medication any faster than necessary.
The February 2017 PET Scan showed the main mass was growing back. It had grown at least a centimeter in mass or around or however you look at that. May 16 2017 scan showed the mass had grown another half centimeter all around.
Luckily, we got the year that the Irressa was supposed to give us. We were expecting to have to go to our only option left, IV Chemo.
Recently a new drug was released that was presented by a pharmaceutical sales rep in the last few weeks to our doctor. After reviewing mom’s PET scan, he called the rep to find out if mother’s circumstances are applicable.
To be applicable, her cells need to have developed an abnormality of a specific kind (I believe it has to have a specific protein but don’t quote me on that). If she is able to, she will be the FIRST for our doctor to use this drug.
In addition, due to the way her cells have mutated there is also a chance now, that we didn’t have last year, that she could be applicable for an immune therapy drug that boosts the immune system. We proceeded to do the biopsy to confirm what she was applicable for.
Thanks to the testing that was completed, my mother is eligible for an immune activator medication. She started her first treatment June 19th which will be via IV once every 3 to 4 weeks.
The cancer doctor has officially taken any amount of time left off of the table and mentioned several more options recently made available.
In light of our good news we celebrated by watching Wonder Woman and sporting some WW shirts to show our Butt Kicking Cancer Girl Power!
My mom was told she was going to die in less than 5 years. A year into that we were placed with an infinite amount of time available. It is amazing what 1 year in today’s science world can make.