The IRS has issued final
regulations for supplemental wages, explaining the difference between regular
and supplemental wages and how supplemental wages must be treated for
withholding purposes. In general, supplemental wages are those that vary by
payroll period based on factors other than hours worked.
The regulations take
effect for wages paid beginning Jan. 1, 2007, and contain some important
changes from existing law. For example, the new rules permit certain payments
to be treated as supplemental wages even if no regular wages are paid in the
current or prior year—as may be the case with ongoing deferred compensation or
settlements for back wages—as well as allow employers to treat tips and
overtime pay as regular wages even if such payments would otherwise qualify as
supplemental wages. Employers should take a close look at their payroll systems
to ensure they’re ready to comply with the rules by January 1.
The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.