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TAXWatch: It’s Not Easy Bein’ an Employer

It’s tough being an employer, especially here in Hawai`i.

If I am a business, or even a nonprofit, in Hawai`i and I want to hire paid staff, there are all kinds of things to consider.

Before I hire the worker, I need to comply with laws saying what I can and can’t ask the prospective employee.  I might get in trouble if I ask the prospect what he or she was paid at the prospect’s previous job, for example.  If I clear that mine field and find a prospect that I want to hire (which is challenging because our unemployment rate is so low) there are laws saying I need to check on things like immigration status and documentation, or whether there is an outstanding child support obligation.

When I pay the worker, I need to comply with wage and hour laws, meaning that I need to pay the worker at least a certain amount per hour, provide breaks at various times, and if I go over a certain number of hours in a week I need to provide for overtime pay.  The definition of exempt employee who can be paid on a salaried basis has been shifting, so I need to be sure my understanding of that is current as well.

Then, I need to set up withholding for federal and state income tax, unemployment tax, and Social Security.  I need to have some required insurance in place, like temporary disability insurance, workers’ compensation, and Obamacare-compliant prepaid health care insurance.  Each of the insurers then has the right to audit my operations, to make sure I am in the proper risk category.  So, I can look forward to a bit of extra work whenever one of these audits takes place.

At the place of employment, I need to make sure that I have a number of signs and placards that are required by federal, state, and local employment laws.  There are different agencies that specify the content of these placards, and from time to time the required language changes.  So, I need to have a current set of these signs and placards.

Besides having all of these required items, and I probably missed some, then there are items that I as an employer need to provide just to be competitive.  For the overall work schedule, I provide for paid holidays, sick leave, family leave, vacation.  Providing a simple “here’s x days of paid time off,” although previously legal, now might lead to problems.

Some workers want to see that employers have a retirement plan (that the employer pays into).  Having one of these is not a piece of cake.  When I had one, IRS requirements shifted every year, so I would have to have a law firm review the plan every two or three years, and of course the firm charged a princely sum for their services.  When a financial advisor I knew found out how many employees I had that were covered by the plan (I could count them on one finger), he burst out laughing.  I got rid of the plan at the end of that year.

Man, it’s not easy bein’ an employer.

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About Tom Yamachika

Tom Yamachika
Tom Yamachika is the President of the Tax Foundation of Hawaii, a private, nonprofit educational organization dedicated to informing the taxpaying public about the finances of our state and local governments in Hawaii. Tom is also a tax attorney in solo practice and has been since early 2013. Prior to 2013, he was with the accounting firm Accuity LLP, which was formed in 2006 from the Honolulu office of Coopers & Lybrand (which later became PricewaterhouseCoopers). Before that, he served as an Administrative Rules Specialist in the State of Hawaii Department of Taxation from 1994 to 1996, where he drafted rules, interpretive releases, and legislation on several different state taxes. Prior to that, he practiced litigation and tax law with Cades Schutte Fleming & Wright in Honolulu.

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