Federal Tax and Labor Law Summary for Community Acupuncture Clinics
The following federal and state laws apply to a small business, no matter what
size. However, if a state or municipality has a law pertaining to the following that
is more beneficial to the employee, that law will preempt the federal law. State
and municipal labor laws can be found by contacting your state’s Department of
Labor. You can view labor laws for each state online, and additional tools,
posters, for purchase or download, are usually available.

Federal (and State) Income Tax Withholding (FIT): You will need to
withhold income taxes from your employees paychecks based on their
federal and state income tax filing status. (All but 9 states levy a tax on
earned income.)
There are two Federal payroll tax requirements – FICA and FUTA.
o FICA (Federal Insurance Contributions Act) is composed of
Social Security and Medicare taxes. Employers are required to
withhold the employee’s share of FICA, and to pay the employer’s
share. The most current edition of Circular E (issued by IRS)
explains what the current tax rates are for FICA. Currently the rate
paid by the employee (but withheld by the employer through
payroll) is 5.65% (4.2% for social security tax and 1.45% for
Medicare tax. For employers the current FICA rate is 7.65% (6.2%
for social security tax and 1.45% for Medicare tax). In 2011
individual earnings above $106,500.00 are no longer taxed for
Social Security (maximum withholding is $4,485.60). However
there is no wage limit for Medicare.
o FUTA (Federal Unemployment Tax Act). This tax is solely the
responsibility of the employer. FUTA taxes are paid to the federal
government and most often in conjunction with individual state’s
unemployment systems. The State portion of the unemployment
Tax (SUTA) is a separate tax that must be calculated and sent to
the appropriate state office. When a state requires unemployment
tax, there is usually a drastic reduction on the rate for the Federal
Unemployment Tax. However the net tax remains about the same:
more of it is paid to the state, rather than the federal government.
The total unemployment tax for each employee earning $7000 or
more per year is around $70.
FICA and FUTA, and SUTA must be calculated for each employee
for each pay period. A payroll service does this automatically (see
note below)
o In addition some states require a Temporary Disability Insurance
withholding on employee earnings, which must be deposited to the
state unemployment system.

For employers who chose not to use a payroll service or bank to do
payroll, they have to periodically deposit the withheld monies to make
payment pay the IRS and to the appropriate state agencies. There are
steep penalties for paying these taxes late or for miscalculated payroll
taxes. It is highly recommended that small businesses consider a payroll
service that will calculate all payroll taxes, and make deposits to the IRS
on the business’s behalf in a timely manner. Make sure you hire a payroll
service that will be responsible to pay the penalties and fees if they make
a mistake or mis-file any of your taxes.
The following federal labor laws apply to all businesses, regardless of size:

Equal Pay Act—requires that differences in pay between sexes be based
on seniority, merit, wage incentive plans, or factors other than gender, for
jobs performed under similar conditions, requiring similar skills, efforts and
responsibilities.

Immigration Reform and Control Act (IRCA)—requires employers to
verify that applicants for employment are authorized to work in the United
States. To comply applicants must complete an I-9 form (Employment
Eligibility Verification), and the employer must view and/or make a
photocopy of acceptable documentation as specified on the form. A
completed I-9 form should be on file for each employee.
This act also prohibits discrimination based on national origin or
citizenship provided the individual is authorized to work in the U.S. The
Department of Justice and the Immigration Naturalization Service (INS)
enforce this law. Knowingly violating this act can carry both civil and
criminal penalties for an employer.

The Fair Labor Standards Act (FLSA)—addresses minimum wage,
overtime, record keeping and child labor practices. The employees of CA
clinics will be for the most part considered exempt from these laws,
because of the “professional” or “white collar” nature of the work (i.e. we
are not producing goods for interstate commerce and generally do not
employ anyone for more than 40 hours per week).
If you have more than 14 employees your business is subject to:

Title VII Civil Rights Act

American with Disabilities Act (ADA)

Pregnancy Discrimination Act
If you have more than 19 employees your business is subject to:

Age Discrimination in Employment Act (ADEA)

Older Worker Benefit Protection Act (OWBPA)

Employee Retirement Income Security Act (ERISA)
Safety
The Occupational Safety & Health Administration Act (OSHA) requires
businesses that employ 10 or more people to report illnesses and injuries at work
and to be inspected periodically. Certain types of “low-hazard” business are
exempt from OSHA reporting and inspection requirements too. Community
Acupuncture clinics most likely fall into this exempt category, however it is in the
best interest of all employers and business owners to promote a safe and
hazard-free workplace and to comply with other OSHA requirements.
Some of the basic safety concerns that may concern CA clinics are:

Having a fire/emergency evacuation plan

Having fire extinguisher(s) on the premises

Making sure that entry/exit is unobstructed and sound. For example there
is a secure handrail if there is a staircase, or ice and pooled water is kept
to a minimum

All walking surfaces are unobstructed and slip-proof

Having a needle stick protocol in place

Making sure that employees are aware of potential work hazards and
know what policies and protocols to follow should an incident occur.
Again, this is not meant to serve as legal guidance for you or your practice.
Please use this information as a starting point for your own research or seek out
legal counsel in your area.