One of our bookkeeping customers asks:
Can we issue safe harbor checks based on growers only? Some of my clients worked for “Grower W”, the grower will pay the back break pay for all of their employees. However, most of these FLCs worked for other growers. I can print the Safe Harbor check detailed report by growers. So, can I also print the checks out by growers so that we do not print any of the back break pay that was generated from “Grower W”.
Note: This is a followup to a previous blog post, in which we advise FLCs in this situation to seek legal advise.
We are planning on addressing this, but need feedback from customers on how they want to handle this. Therefore, no features have been included in the current version of the program to handle this.
The main problem is that AB 1513 does not include any provisions or guidance for growers making Safe Harbor payments.
One thing you must make sure of is that both the labor contractor and the grower are using the same method (4% or actual sums due). If they are using actual sums due, then both should agree on the definition of actual sums due.
A big issue is the statement that the employer is required to give to the employee with the check. If you are using the 4% method, the grower of course can only list the pay periods that the employees worked for them, even though the requirement is to list all of the pay periods for the Safe Harbor period. (Technically the employees only “worked” for the grower during those pay periods.) The labor contractor however is required to list all pay periods during the Safe Harbor period. We would not advise that the labor contractor simply not list the pay periods that are going to be covered by the grower from the statement.
As we see it, there are two possibilities.
The first is show zero for the subject wages, breaks previously paid and nonproductive time in which the employee worked for grower Instead of showing the numbers, show a message like “Paid separately by [Grower Name]” or perhaps put an asterisk by the gross or subject wages and a footnote that indicates that the pay period was included separately in the grower’s payment.
Under this method, if you have a pay period where an employee worked for two different growers, then we would probably just print two lines for the same period, with the wages for one grower listed on one line with the notation/asterisk and the wages for the other grower(s) on the second line.
The second approach would be to go ahead and show the subject wages, breaks paid, nonproductive wages paid, and perform all of the normal calculations after the totals are printed. Then at the bottom, after the calculation for the net due to the employee, show another line with the amount of the payment made by the grower.
The second method does require some coordination with the grower, as they will need to provide you with the employee account #’s and amounts paid for you to include that information on the check. We will then need to import that into our system so we can include that information on the statement. You will also need to wait to issue checks for the FLCs until after the grower has issued their checks.
What if an employee worked exclusively for the grower making the Safe Harbor payment and did not work for any other growers? In that case the labor contractor would not need to issue a check, but would the labor contractor need to provide a statement? We cannot answer that question.
We cannot answer whether the statements issued by either the grower or the labor contractor in this scenario will meet the requirements of the law, or whether they have advised their labor contractors on how to format their statements. We assume that the grower has lawyers that have looked into this.
The DIR has not provided any guidance on how to handle this situation. We don’t know if anyone has asked them, and we don’t know if they are likely to comment either way.
There is at least one additional complication, we don’t know how common this will be but it should be considered.
Using the 4% method, the gross break due is calculated on the entire gross wages. What if an employee worked for two growers in the same pay period, earning hourly wages at one grower and piecework wages at the other grower? In that case, the grower where the hourly wages were earned is still subject to the 4% calculation, even though there are no piecework wages.
What if the grower that had the hourly wages is the grower that is issuing the Safe Harbor payments? They will not be aware of the piecework wages earned at the other grower because you will only be sending them the payroll detail for their account. They will not know that the hourly wages that they have for that pay period are subject to the 4% calculation. They will not include this in their check and this could create a compliance problem.
The same problem exists using the actual sums due method if you use the new AB 1513 calculation put into effect 1/1/2016 for the Safe Harbor Period. This calculation requires that all breaks taken in a pay period in which there are any piecework wages are paid at the regular rate of pay, even breaks taken while the employee is earning hourly wages.
If you use a different definition of actual sums due that only applies only to piecework wages themselves, then the fact that there are piecework earnings in the same pay period as hourly wages is not an issue. The piecework wages for the other grower would be evaluated without impacting the hourly wages earned when the employee was working for the other grower.
In terms of how we plan the program to actually work, what we will do is add a grower selection to the Create Checks and Statement Printing options. This will allow you to exclude one or more the growers from the calculations.