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Monthly Archives / September 2017

  • Sep 17 / 2017
What's New

APA Helps Stop California Student Loan Garnishment Bill

By Alice P. Jacobsohn, Esq.

In a win for APA, a California bill (S.B. 16) that would have tied student loan garnishment calculations to state and local minimum wage rates was voted down in a state Assembly vote of 38 to 24 in June, although the bill sponsor was given leave to try again later in this session to get the bill passed. APA’s lobbying effort began last February when it informed the Legislature that the proposed calculation method was inherently unfair to California residents.

In a letter to lawmakers, APA’s Government Relations Task Force (GRTF) Subcommittee on Child Support and Other Garnishments stated, “APA supports fairness in the wage garnishment process that emphasizes a reasonable approach for employees without unduly increasing the administrative burden on employers. As payroll professionals, we appreciate provisions that help the employees we pay, but we also ask lawmakers to recognize that, in the case of a garnishment, employers are third parties to a legal dispute.”

Read more:   http://www.americanpayroll.org/paytechonline-wider/government-corner/

  • Sep 10 / 2017
What's New

California, Virgin Islands Apply for Benefit Cost Rate Add-on Waiver

California and the Virgin Islands have applied to the U.S. Department of Labor (DOL) for a Benefit Cost Rate (BCR; sometimes referred to as Benefit Cost Ratio) add-on waiver by the, deadline. California and the Virgin Islands are on the DOL’s updated list of potential Federal Unemployment Tax Act (FUTA) credit reduction states for 2017 [DOL, Potential 2017 Federal Unemployment Tax Act (FUTA) Credit Reductions, rev. July 2017]. States had until July 1, 2017, to apply for a waiver.

What Is BCR Add-on?
The BCR add-on is in addition to the 0.3% per year FUTA credit reduction (see The Payroll Source®, p. 7-8). The additional tax varies by state and is based on a complex calculation. The calculation compares the average benefits that have been paid out by the state, the taxable wages, and the average tax rate on taxable wages in the state.

Outstanding Loans
California and the Virgin Islands continue to have outstanding Federal Unemployment Account (FUA) loans, and, therefore, will likely be subject to a 2017 FUTA credit reduction. The credit reduction was also predicted in the spring, with the potential total credit reduction remaining 2.1% for California and 3.2% for the Virgin Islands unless it receives the BCR waiver.

Note that California may not have been subject to the BCR add-on for 2017. The calculation is based on the difference between a state’s average total Unemployment Insurance (UI) benefits paid over the past five years and the state’s average UI tax rate in the previous year. The calculation, using estimated wages, came out to zero for California because its average tax rate was greater than its average UI benefits for the past five years. However, the state applied for the waiver, “just in case.”

Deadline For Credit Reduction
The final determination of FUTA credit reductions will not be made until the November 10, 2017, repayment deadline.

Pay News Now will continue to monitor any updates to the FUTA credit reductions.

Courtesy of American Payroll Assoc.


  • Sep 04 / 2017
What's New

Court Invalidates DOL’s Overtime Rule

Following up on its preliminary order issued last November, a Texas federal district court has ruled that the DOL’s rule, which would have increased the minimum salary threshold for exempt “white collar” employees from $455 to $913 per week, is invalid. In its final order, the court said that the higher salary level impermissibly undercut the effectiveness of the duties test. The court also found that the mechanism that would have adjusted the salary level for inflation was invalid. The current salary threshold and duties test remain in effect.

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