Compliance and Payroll Law
Compliance questions test whether you can apply a statute to a pay scenario. Start with the FLSA: covered nonexempt employees earn at least the federal minimum wage and overtime at 1.5 times the regular rate for hours over 40 in a workweek. The regular rate includes hourly pay plus nondiscretionary bonuses, shift differentials, and commissions, but excludes discretionary bonuses and certain gifts. Trap: overtime is based on hours worked in a single workweek, not a pay period; paid leave does not count as hours worked.
Know the tax deposit rules: deposit timing depends on the lookback period and the amount accumulated-monthly or semiweekly depositor status-plus the next-day rule for large liabilities. FUTA applies to the first $7,000 of wages per employee, with credits and possible credit reduction states. FICA splits Social Security and Medicare, with wage bases and additional Medicare withholding thresholds.
Other laws appear as distractors: FMLA (leave, not pay), ADA, Title VII, Equal Pay Act, USERRA, COBRA, ERISA, and wage payment/garnishment rules. Trap: federal law sets a floor; state or local law may be stricter, and the employee-favorable rule often controls.
Worked example: An employee earns $15/hour and works 45 hours, plus a $50 nondiscretionary bonus. Regular rate = ($15 × 45 + $50) ÷ 45 = $16.11. Overtime premium = $16.11 × 0.5 × 5 = $40.28. Total pay = $675 + $50 + $40.28 = $765.28.