Deduction from gross earnings

Ty

After attending a wage and hour seminar, we were told by the facilitator that we could not deduct from an employee's gross payment for a monthly bill.
We have an employee who is paying for his friends phone bill (which is on our company account) by having us reduce his gross pay by the amount of this phone bill. At the seminar we were told this was not correct. When we explained this too our accounting dept. they informed us to process it as done in the past. I'm sure the facilitator is correct in what he told us. We in payroll feel it should be taken as a payroll deduction.
Can anyone give us some direction.

thanks in advance

SMace

I think what you are asking is how can you get the acct. dept to listen to you.

I'm the farthest thing from a payroll expert, but reducing gross wages for payment of a phone bill is not legal. It reduces his and the company's tax liability and the govt doesn't like that. IMHO you need to explain what is going on to your boss and the CFO. If they don't listen give your concerns in writing to both of them and hold your breath.

My gut tells me if they are doing this, they are doing other things. I might start looking at the want ads.

marc

The issue is to determine on which amount the company is using to calculate withholding, fica and medi. IF they are calculating these things before the deduction, then this is like one of many items that can be deducted from the EEs check on an after-tax basis. If they are deducting before taxes, that is not correct.