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Supplemental Wage Payments: Common Withholding Guidelines

OnDemand Webinar (84 minutes)

Know when wage payments should be classified as supplemental wages and the applicable withholding rules that apply.On January 1, 2020, the new overtime regulations put in place by the United States Department of Labor (USDOL) allows employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the new required exempt salary level of $684 per week (or $35,568 per year for a full-year worker). This is one example of the many ways supplemental wages can be an excellent resource for employers to incentivize employees as well as augment their wages. If managed correctly, supplemental wages, as part of a total compensation package, can be an effective talent recruiting, staff retaining and marketing tool. As with all human capital management-related items, an appreciated and valued employee, is a happy employee. Happy employees provide better service to clients. Better serviced clients stay clients.

Authors

Tricia Richardson, CPP, SPHR, SHRM-SCP, Purposed Payroll Professional

Agenda

Defining Supplemental Wages

• The Internal Revenue Service (IRS) Publication 15-B

• The United States Department of Labor (USDOL)

• The Employee Handbook

Calculating the Withholding Amount

• Cash vs. Fair Market Value

• Determining the Taxable Amount

• Determining Rate

Best Practices

• Grossing-up Taxes

• Other Considerations (Pensionable, Other Benefits)

• Communicating to the Employee