Puzzling
Payroll
Predicaments
Laura Kushner
Human Resources
League of Minnesota Cities
Agenda
Election Judges
Fringe Benefits
Independent Contractor Update
Minnesota Minimum Wage Law
Fair Labor Standards Act
Expansion of sick leave (if time)
Election Judges
Fringe Benefits
Benefits provided to employees
are taxable, unless there is a
specific exemption in the tax code.
Accountable Plan
 Business connection to the expenditure
 Reasonable accounting for expense
 Excess reimbursements or advances
repaid to city
Accountable Plan
Example:
 City provides city manager with a monthly
car allowance of $500. The city manager
does not need to substantiate the
business connection and does not need
to turn in receipts or track miles.
Fringe Benefits
 Taxable unless a
specific exclusion
applies; or
 Unless “de minimis”
“De Minimis” -amount is so small that
accounting for it would
be administratively
difficult
Fringe
Benefits
Examples of fringe benefits excluded from income:
 Accident & health benefits
 Major medical, HRA’s, VEBA, Cafeteria Plans
 Achievement awards (limits)
 Dependent care (limits)
 Health Savings Accounts (limits)
Athletic & Fitness Memberships
Example:
City has a
fitness facility
in community
center.
Employees are
provided free
memberships.
Athletic & Fitness Memberships
To be excluded
from income:
 Substantially all
of the use of the
facility is by
employees,
spouses, and
dependents
 No public use /
access
Gift Cards
Example:
City offers gift cards
in varying amounts
as incentives and
prizes for
participation in its
wellness program.
Gift Cards
 Treated same as cash
 Any amount is taxable income
No “de minimis” for
gift cards
$5.00 gift card to
Caribou = $5.00 of
taxable income to
employee
Independent Contractors
 New guidance issued by DOL
 Strong area for compliance/audits, etc.
 “Economic realities” test
 Is the work integral part of the city?
 Does worker’s skill affect profit/loss?
 How does worker’s investment compare to
employer’s investment?
 Work require special skill and initiative?
 Relationship permanent vs. indefinite?
 Nature and degree of employer control?
Independent Contractor?
City Hall Custodian
City Attorney
MN Minimum Wage Law
Small Employer
 Total budget amount
under $500,000
 $7.25/hour (8/1/15)
 $7.75/hour (8/1/16)
 Indexed by economic
indicators after that
Large Employer
 Total budget amount
over $500,000
 $9.00/hour (8/1/15)
 $9.50/hour (8/1/16)
 Indexed by economic
indicators after that
 Employees under 18
 $7.25 – 8/1/2015
 $7.75 -- 8/1/2016
YOUTH & MN Minimum Wage Law
First 90 days of
employment
– IF UNDER AGE 20
 $7.25/hour
(8/1/2015)
 $7.75/hour
(8/1/2016)
 Indexed by
economic indicators
after that
ONE MORE THING ….
Definition of Employee does NOT
include:…
(1) elected official or commission
member
(2) person ineligible for
membership in PERA because:
• Less than $5,100/year ($3,800
schools)
• < 23 yrs, full-time student
(3) under 18, <20 hrs., recreation
program employee
FAIR LABOR STANDARDS ACT –
IT’S COMING ….
Expansion of Sick Leave Benefits
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Resources
 Internal Revenue Service
Lori.A.Stieber@irs.gov
 Public Employees Retirement Association
 Your City Auditor
 League of Minnesota Cities
 HRBenefits@lmc.org (E-MAIL IS OFTEN FASTEST!)
 651-281-1200
 800-925-1122
Ask for
HR
DEPT