Basic Overview of Form W-4

Form W-4 is completed by new employees so that the employer can withhold the correct federal income tax from the employees pay. Anytime an employee's personal or financial situation changes they should complete a New Form W-4 to adjust their withholding appropriately.

The Form W-4 doesn't calculate the actual dollar amount to be withheld from the employees pay but rather the number of "allowances" requested by the employee.

 Employees can determine their allowances one of three ways:

1. Personal Allowances Worksheet (main one used/most common)
2. Deductions and Adjustments
3. Two Earner/Two Job Worksheet.

The Personal Allowance Worksheet is the most commonly used worksheet and it's very self explainatory. You really only need to have the employee read the question and answer it if  applies to them. The questions are listed as A - H. The employee needs to start with Line A to determine the amount of allowances they're eligible for. The employee will end with Line H where it asks them to total the number of allowances they listed from Line A- Line G. This would be the number of allowances their eligible to claim and what you need to enter into your payroll system.

Agents benefit when they consider PEOs as option for some clients

As agents continue to try and find the best fit for themselves and their clients as it relates to workers’ compensation insurance coverage, it is important to consider all options available in today’s marketplace. One option that needs to be strongly considered is the use of a PEO (Professional Employer Organization) for not only workers’ compensation coverage, but for all of the added benefits that can be gained for both agents and clients alike.

In a PEO relationship, client companies are partnered as co-employers. While maintaining the benefits of ownership, such as the ability to hire and fire employees, set wages, and autonomously manage your own business, companies that partner with a PEO are free from many of the liabilities associated with being an employer. With the expertise PEOs have in the field of payroll, unemployment taxes and health benefits, business owners no longer have the risk and headaches associated with these responsibilities. PEOs, particularly the more established ones in the industry, have experts in these areas that will ensure payroll, benefits and taxes are processed and reported correctly. As co-employers, they also take on the liability for correct reporting associated with these programs.

 

Besides the obvious advantages a PEO can offer to business owners, agents can benefit tremendously from placing their clients with a PEO as well. This is particularly true in the areas of marketing support and agent commissions. While the standard workers’ compensation market pays commission solely as a percentage of the total premium generated on a given account, PEOs offer a much wider range of commission structures that will allow agents to increase commission revenue while still providing their clients with the lowest cost workers’ compensation option. PEOs will typically pay agents on a percentage of gross wages or as a combination of gross wages and workers’ compensation premium. In addition, commissions do not decline upon renewal, and there are no volume commitments placed on agents by most PEOs. This arrangement helps agents to maximize client retention and foster loyalty within their client base while building a profitable residual revenue stream.

 

As opposed to earning commission on just the workers’ comp piece, agents earn commission on the entire HR outsourcing model through a PEO. The benefit to the agent is particularly eye-opening in the white and grey-collar sectors, where premiums and commissions are particularly low due to the inexpensive nature of the associated workers’ compensation classifications. For example, take a clerical risk with $1 million in annual payroll. The premium on this level of payroll may be only $5,000. Where an agent can expect to collect possibly 10% of this premium ($500) in annual commissions, a PEO commission structure equal to 1% of that $1 million in annual payroll would garner an agent $10,000.00 in annual commission. This 2000% increase in commission revenue cannot be ignored. While the commission benefits related to these low-risk classes of business are astonishing, there are additional commission dollars available for all types of businesses, even high-risk exposures. Agents can almost always earn more commission through a PEO than through typical stand-alone policy arrangements.

What many agents do not realize is that some PEOs actually own their own insurance companies and are able to offer workers’ compensation coverage not only on a payas-you-go basis, but often for a much lower annual cost than a typical stand-alone policy. PEOs that own their own insurance companies are also positioned favorably to write certain classes of business that are frowned upon by many insurance carriers, such as trucking, staffing and roofing risks.

Another great benefit of entering into a business relationship with a PEO that owns its own insurance company is that the PEO will have the same agenda as business owners when it comes to limiting and properly managing workers’ compensation claims. Since they are responsible to pay any workers’ compensation claims, it is in the PEOs best interest to manage and minimize claims, and, as such, they have fully staffed divisions dedicated just to this purpose. While the PEO benefits from keeping claims down, so do their client companies. Through loss control and risk management efforts initiated by the PEO (at no cost to their clients) as well as their claim management expertise, client companies ultimately benefit through reduced experience mods, lowering workers’ compensation costs for many years to come. A company with a stand-alone workers’ compensation policy is on its own when it comes to loss control and managing claims. There is typically no one fighting to keep costs down on their behalf, and, even if there is, they rarely have the level of expertise that a PEO with its own in house insurance company will possess.

Just from a workers’ compensation standpoint, these factors alone make the PEO a unique and cost-saving option. However, in addition to the potential cost savings on workers’ compensation insurance, PEO’s also offer many other benefits to agents and clients that do not exist in the standard Workers’ Comp market. For example, PEOs will perform payroll services, provide and manage benefit packages, file both state and federal unemployment taxes, and most importantly allow business owners and executives more time to focus on the core of their business, free from the burdens of these intricate and time-consuming responsibilities.

As a word to the wise, agents need to ask themselves, “Have I ever risked losing or even lost an account to a PEO?” If the answer to that is “Yes”, then it only makes sense to consider fostering a relationship with at least one PEO that can be used as an option to place their accounts. Agents that have used PEOs as a replacement or supplement to their current carrier options can find PEOs to be an effective solution for businesses large and small in virtually all types of industries. It is important, however, to partner with an established and reputable PEO (preferably one with its own insurance company) that has the financial stability and expertise needed to service their accounts for the long haul. Finding the right PEO will maximize the potential benefits to both agents and clients alike, providing a valuable resource and an outstanding additional option to agents looking to find the best fit for themselves and their clients.

Elizabeth L. Porter is the Mid-Atlantic region’s broker manager for FrankCrum, a professional employment organization based in Clearwater, Fla. She can be reached at 301-922-6578 or lizp@frankcrum.com

New Health Care Reform Site Launched

Aetna has just launched an on-line resource for employers and individuals regarding the Health Care Reform. You can visit - http://www.aetna.com/health-reform-connection/index.html

The US Department of Health and Human Services has also created an on-line tool for consumers which provides access to health information, resources, and quality, affordable health care coverage options:

Launched July 1st, 2010 -   WWW.HEALTHCARE.GOV

These on-line tools will provide the following:

• Public health care options
• Private health care options
• Options tailored specifically for individual needs
• Easy comparisons of health insurance plans for consumers and small businesses
• Easy navigation and accessibility to multiple resources

Trend will continue to post Health Care Reform resources as they become available. 

Tips for Completing Form I-9's

Form I-9 is used for Employment Eligibility Verification before you hire an individual to work.

This is a government form and it is updated from time to time so make sure you stay current by using the most recently updated form. You can visit http://www.uscis.gov/portal/site/uscis and click on Forms on the top right of the screen.

The employee must be presented with the Form I-9,  Insutructions and List of Acceptable Documents. If they're not all availble to the employee then you will have violated federal regulations regarding employment eligibility verification.

Employees are required to complete a Form I-9. You cannot require a volunteer, independent contractor or trainee to complete a Form I-9.

Section 1.

• Must be completed by employee unless physically unable.
• Must be completed before Section 2.
• Must be legal name of employee.
• Address must be a street name and number of the employees residence
• Post Office box or Work address is not allowed.
• Give the employee a new form if they make any obvious errors.
• Employee must sign and attest their citizenship status.
• If for any reason the employee needed a translator or someone to prepare the document due to any disability, the translator or prepare must complecet the Preparer/Translator Certifaction section.

Section 2.

• Employee must select the documention, employer cannot require which documents to use for verification
• Employer must present List of Acceptable Documents to the employee for guidance and options.
• Employee can only complete either List A OR Complete both B and C. Not both. You cannot over document.
• Employer is to carefully examine documents provided by employee in order to appropriately fill out section 2.
• Employer must certify the Month, Day and Year the documents and form were reviewed/completed.
• Employer must complete their information below Certification.

Section 3.

• Must remain blank. Only complete if they employee is being reverified or information is being updated.

 Making corrections to the form:

• White out is not acceptable. Error made must be visible.
• Corrections can be made by drawing one line through an error, write the correct information, intial and date the change.
• If the reason for the change isn't obvious then you must attach a signed and dated memo with the explanation
• Corrections/changes must only be made by the person who made the error.

Reasons to Terminate Employees

Employees can be terminated for the following reasons:

1.) The Employee violated a known company rule/policy that they signed and agreed to follow.

They signed the policy and new that failure to follow such policy would result in disciplinary action, up to and including, immediate termination. You have the signed document in their file and inform them upon violation that they're being released because of their failure to follow company rules and/or policies.

2.) The Employee is not able to perform the job adequately.

You've informed the employee that their performance is not meeting company standards and you've given them an opportunity to improve their behavior.  You gave them resources if they needed it and you gave them an appropriate amount of time to correct their performance based on the severity of the performance issue. They signed a counseling form understanding that they needed to improve their performance or failure to do so would result in disciplinary action, up to and including, immediate termination.

3.) Insubordination.

The employee failed to follow orders even after being warned that they must follow orders / protocol. They should have been warned that they must adhere to / follow your orders / company protocol or they would be terminated for insubordination. If they continue to be insubordinate then you terminate their employment.

4.) The company is reducing is workforce for economic reasons.

As an employer, you have the right to reduce your work force when your business slows down. The key is to make sure that your inform your staff that your letting them go because of the lack of sales / production. Make sure that your layoff doesnt cause a disparate impact on a group of people who fall under a protected EEOC category.

5.) Temp job / assignment has ended.

When you hire people as "temps" to complete work on a temporary basis then their assignment will end as the job is completed. The employee was told up front that theywere working on a temporary assignment. You let them go once the assignment is over. You may have to let them go for one of the reasons listed above before the assignmentends.

When you cannot prove that any of the above are true then you will have failed to follow the law and will be considered to have wrongfully terminated an employee. If they're part of a protected class then you are in real big trouble because you then have the issue of discrimination. Make sure you understand that if the employee you wish to terminate doesn't fall into one of the four categories listed above then it is advised that your contact your lawyer or HR department for guidance.

Contact TrendHR at 214-553-5505 if you find yourself in a situation that you're not sure how to handle. How you terminate your employees is incredibly important because you can easily create hardships for you and your company if you fail to terminate properly.

Use Caution when Terminating Employees

erminating an employee is not an easy task. With the increase in lawsuits and employment law claims, an employer must be cautious during this process. When you have reached the conclusion that it is time to terminate an employee, please keep the following in mind:

• Be sure you have maintained very accurate records of employee discipline in the event of a dispute. Has the employee been given at least one written warning?
• Has the employee been given reasonable opportunity to correct the issue?
• Remember, when terminating an employee of a protected class or an employee who has recently made a complaint or exercised a statutory right, the employer’s decision should be completely independent of those factors. Do you have accurate documentation of any and all complaint investigations involving the employee?
• Be honest with the employee about the performance problems leading to the termination. Always be tactful and professional. Be quick and to the point.
• Do not discuss the termination with other employees prior to the event. The termination should be private and confidential.
• An employer should never send an e-mail or text regarding a termination decision.
• It is best to have another supervisor or HR manager present during the termination meeting. The third party should take notes on what was discussed in the event of a dispute. The termination should occur in a private area away from other staff members. Minimize contact with other employees.
• It is important to follow your policy and procedure for all terminations. All terminations should comply with your policy. Review your policy with management and staff periodically.
• It is best to terminate an employee early in the week. Termination before a weekend or holiday is not recommended. Termination at the start of the week allows the employee to begin searching for new employment.
• Have a security plan in place should a terminated employee become violent or irrational during the termination meeting.
• Has all company property been returned? It is also recommended that an employer back up all computer files before terminating the employee, as not to lose valuable information should the employee decide to delete information.
• Prepare final paycheck

Tornado Tips

Tornadoes are nature’s most violent storms. Spawned from powerful thunderstorms, tornadoes can cause fatalities and devastate a neighborhood in seconds. A tornado appears as a rotating, funnel-shaped cloud that extends from a thunderstorm to the ground with whirling winds that can reach 300 miles per hour. Damage paths can be in excess of one mile wide and 50 miles long. Every state is at some risk from this hazard.
Some tornadoes are clearly visible, while rain or nearby low-hanging clouds obscure others. Occasionally, tornadoes develop so rapidly that little, if any, advance warning is possible.
Before a tornado hits, the wind may die down and the air may become very still. A cloud of debris can mark the location of a tornado even if a funnel is not visible. Tornadoes generally occur near the trailing edge of a thunderstorm. It is not uncommon to see clear, sunlit skies behind a tornado.
The following are facts about tornadoes:

• They may strike quickly, with little or no warning.
• They may appear nearly transparent until dust and debris are picked up or a cloud forms in the funnel.
• The average tornado moves Southwest to Northeast, but tornadoes have been known to move in any direction.
• The average forward speed of a tornado is 30 MPH, but may vary from stationary to 70 MPH.
• Tornadoes can accompany tropical storms and hurricanes as they move onto land.
• Waterspouts are tornadoes that form over water.
• Tornadoes are most frequently reported east of the Rocky Mountains during spring and summer months.
• Peak tornado season in the southern states is March through May; in the northern states, it is late spring through early summer.
• Tornadoes are most likely to occur between 3 p.m. and 9 p.m., but can occur at any time.

What to do Before a Tornado
Be alert to changing weather conditions.

• Listen to NOAA Weather Radio or to commercial radio or television newscasts for the latest information.
• Look for approaching storms
• Look for the following danger signs:
  • Dark, often greenish sky
  • Large hail
  • A large, dark, low-lying cloud (particularly if rotating)
  • Loud roar, similar to a freight train.

If you see approaching storms or any of the danger signs, be prepared to take shelter immediately.
What to Do During a Tornado
If you are under a tornado WARNING, seek shelter immediately!
A structure (e.g. residence, small building, school, nursing home, hospital, factory, shopping center, high-rise building)

• Go to a pre-designated shelter area such as a safe room, basement, storm cellar, or the lowest building level. If there is no basement, go to the center of an interior room on the lowest level (closet, interior hallway) away from corners, windows, doors, and outside walls. Put as many walls as possible between you and the outside. Get under a sturdy table and use your arms to protect your head and neck. Do not open windows.

A vehicle, trailer, or mobile home

• Get out immediately and go to the lowest floor of a sturdy, nearby building or a storm shelter. Mobile homes, even if tied down, offer little protection from tornadoes.

 The outside with no shelter

• Lie flat in a nearby ditch or depression and cover your head with your hands. Be aware of the potential for flooding.
• Do not get under an overpass or bridge. You are safer in a low, flat location.
• Never try to outrun a tornado in urban or congested areas in a car or truck. Instead, leave the vehicle immediately for safe shelter.
• Watch out for flying debris. Flying debris from tornadoes causes most fatalities and injuries.

---fema.gov