Payroll processing in Florida encompasses the complete range of tasks associated with compensating employees for their services. This includes calculating the total earnings for each employee, managing deductions, submitting requisite reports, handling payroll tax procedures, and ultimately disbursing payments.
Given the unique considerations pertaining to minimum wage, tax regulations, and labor laws in Florida, effectively managing payroll in this state necessitates a thorough grasp of the local regulatory landscape.
For this reason, we have compiled a set of step-by-step guidelines designed to assist you in navigating each pay cycle specifically within the context of Florida. This article is intended to equip you with crucial insights into the nuances of payroll operations in the state, ensuring that you have a clear understanding of your circumstances and can identify any areas where you may require additional support.
This Article Covers
Laws That Affect Payroll Procedures in Florida
Worker Classifications in Florida
Payroll Forms and Relevant Bodies in Florida
Applicable Taxes in Florida
Key Pay Elements That Impact Payroll in Florida
- Workers’ Compensation Insurance
- Minimum Wage
- Overtime
- Payment method
- Pay Stub Laws
- Florida Payday and Minimum Pay Frequency
- Paycheck Deduction
- Final Paycheck
Step-by-Step Guide to Payroll in Florida
Laws That Affect Payroll Procedures in Florida
In the area of payroll, certain legal regulations govern how employees are compensated. In certain instances, these laws overlap between state and federal levels, while in others, only one level of regulation is applicable.
Florida Laws
A number of state legislation will impact payroll processing in Florida, including:
- Florida Statutes: The Florida Statutes refer to the collection of laws and regulations enacted by the state of Florida to outline the legal framework for taxation, labor regulations, criminal law, civil law, environmental policies, and more. Each year, the Florida Legislature passes new laws and updates existing ones, which are then compiled into the Florida Statutes. These statutes serve as the official record of the state’s laws and are used by legal professionals, government officials, and the public to understand and enforce the laws of Florida.
- Minimum Wage: Florida imposes a minimum pay that employers must pay their employees. The state’s current minimum wage stands at $11 per hour and the state is in the process of gradually increasing its minimum wage, with the goal of reaching $15 per hour by 2026. Download U.S. Minimum Wage 2024 Poster now.
- Overtime: Florida adheres to federal overtime regulations and does not introduce any state-specific exceptions. This means that all nonexempt employees in Florida are entitled to receive overtime compensation at a rate of one and a half times their regular pay for any hours worked beyond 40 in a workweek. The overtime exemptions provided under federal law also apply to Florida’s overtime rules.
- Rest Periods: Paid and unpaid breaks adhere to certain laws in Florida. Florida break laws do not require employers to provide meal breaks for adult employees. However, if these breaks are provided and last less than 20 minutes, they must be compensated. Breaks lasting 30 minutes or more can be unpaid if employees have the freedom to use this time as they see fit. State law mandates mandatory meal breaks for employees under 18 years old, whereas federal labor regulations govern meal breaks for adult employees.
- Paydays and Pay Periods: Florida payroll regulations dictate that all paychecks must be issued for standard pay periods, which should not exceed one calendar month or thirty days, whichever is longer. Employers are obligated to furnish their employees with a comprehensive paycheck that provides a breakdown of their earnings accrued during the respective pay period, inclusive of tax withholdings, and any other pertinent information related to that pay period.
- Paid Time Off and Leaves: Federal and Florida labor laws dictate rules regarding leave pay. Employers are not obligated to provide compensation for any form of leave, including sick leave, holiday leave, jury duty leave, voting leave, or bereavement leave, as mandated by any level of law.
- Severance Pay: It is not a legal requirement for employers to offer severance pay upon employees’ departure. However, employers are bound by the severance provisions specified in their employment contracts and policies.
- Child Labor Requirements: Florida state regulations, as well as federal laws, prohibit minors aged 14 and 15 from working during school hours. However, they are permitted to work for up to 15 hours per week, with a daily limit of no more than three hours on school days. Minors aged 16 and 17 have the flexibility to work up to 30 hours per week, as long as it does not conflict with their school hours. While there are exceptions related to educational activities, it’s important to note that Florida specifically restricts the working hours of 16- and 17-year-olds.
Federal Laws
There are three key pieces of federal legislation that will impact your payroll processing steps:
- The Fair Labor Standards Act (FLSA): The FLSA sets benchmarks and criteria for minimum wage, overtime compensation, recordkeeping, exemption classification, and regulations concerning child labor within various sectors, including private businesses as well as federal, state, and local government entities.
- The Federal Insurance Contributions Act (FICA): Under FICA, both employers and employees are obligated to contribute to Social Security and Medicare. Employers are responsible for deducting 6.2% for Social Security tax and 1.45% for Medicare tax from each employee’s paycheck. Furthermore, employers must match these deductions, resulting in a combined FICA payroll tax processing rate of 15.3% for each employee.
- The Federal Unemployment Tax Act (FUTA): The FUTA mandates that employers pay unemployment taxes, which fund benefits for qualifying employees who experience job loss. While not precisely a payroll deduction, as it pertains solely to employers, FUTA contributions still necessitate recording in every payroll cycle. Exceptions might be applicable according to the industry, but generally, a 6% tax on the initial $7,000 paid to an employee annually is expected.
HR Laws
- New Hire Reporting: In Florida, employers must notify the state about newly hired employees within 20 days of their hiring date. This can be done using the Florida New Hire Reporting Form, which can be submitted through mailing or faxing to the designated address indicated on the form. Alternatively, employers have the option to electronically report new hires through the Department of Revenue Child Support Services for Employers.
- Poster Laws Requirements: Annually, employers are required to refresh their labor law posters, which are regularly updated by the state. These posters encompass any midyear modifications, such as Florida’s September minimum wage adjustments. Notably, the updated posters feature an informative “Know Your Rights” section that includes a QR code for additional information on filing workplace discrimination claims. Failing to display these notices can result in fines and sanctions.
Worker Classifications in Florida
Florida workers fall into two main categories: employees and independent contractors. This categorization holds significant importance when it comes to the tax forms that businesses must produce.
Employees and Independent Contractors
Employers in Florida are required to differentiate between an employee and an independent contractor to ensure accurate reporting on their Employer’s Quarterly Report.
Worker misclassification isn’t solely a matter of tax reporting; it can also impact claims for reemployment assistance benefits. If an individual files a benefits claim, and the employer hasn’t been reporting them on the quarterly report, it can lead to delays in benefit disbursements. Deliberate misclassification of a worker is considered a felony offense.
Common-Law Rules in Florida
In the case of most workers, Florida employs the Common-Law Test, also commonly called the Right-to-Control Test to establish whether an individual qualifies as an employee or an independent contractor in most legal contexts. The test primarily assesses several criteria to assist in this determination, which encompass:
- The level of control exercised, as agreed upon between the employer and the worker, over the work’s specific details.
- Whether the individual engaged in the work is pursuing a distinct profession or business.
- Whether the work typically conducted in a specific location is directed by the employer or performed independently by a specialist without supervision.
- The degree of skill required for the particular occupation.
- Whether the employer or the worker provides the tools, equipment, and workspace for the work.
- The duration of the employment relationship.
- The payment method, whether based on hours worked or completed tasks.
- Whether the work is an integral part of the employer’s regular business operations.
- The mutual understanding between the parties that they are establishing an employer-employee relationship.
- The business status of the hiring party.
Florida’s common law criteria align with, but remain distinct from, the Internal Revenue Service (IRS) criteria for determining independent contractor status. To learn more about the entitlements of both salaried and hourly employees, you can refer to our articles on your rights as a salaried employee in Florida, and your rights as an hourly employee in Florida.
Payroll Forms and Relevant Bodies in Florida
Florida Payroll Forms
Florida doesn’t impose personal income taxes, alleviating the need for a state W-4 form. Florida Withholding Forms include:
- RT-6 Form: Employers use the RT-6 form for reporting reemployment tax withholdings. It’s required to be filed every calendar quarter if you are liable for SUTA (State Unemployment Tax Act), regardless of whether you have any claims to report during that quarter. If more space is needed, the RT-6A form can be used, and instructions for completion are available on the RT-6N form.
- Florida New Hire Reporting Form: The Florida New Hire Reporting form is utilized by all Florida employers to report newly hired employees.
Federal Payroll Forms
Employers are required by law to submit various forms related to their employees’ payroll to the IRS. Forms for Federal Payroll include:
- W-4 Form: The W-4 Form aids employers in determining tax withholding from employee salaries.
- W-2 Form: The W-2 Form is used to document the overall yearly earnings for each employee (individual form per employee).
- W-3 Form: The W-3 Form is utilized to summarize total wages and taxes across all employees.
- Form 940: Form 940 is submitted to the IRS to declare and compute unemployment taxes owed.
- Form 941: Form 941 is used for quarterly filing to report income and FICA tax deductions from paychecks.
- Form 944: Form 944 is used for yearly reporting of income and FICA tax deductions from paychecks.
- 1099 Forms: The 1099 Forms furnishes the IRS with details about non-employee compensation, facilitating tax collection for contract work.
Federal and Florida Payroll/ Tax Bodies
- Florida Department of Financial Services: The Florida Department of Financial Services (DFS) is a state government agency in Florida, United States. Its primary mission is to provide a wide range of financial and insurance-related services to the residents and businesses of Florida. The DFS plays a significant role in regulating various financial sectors and industries within the state, including insurance, banking, and securities.
- Department of Management Services: The Department of Management Services (DMS) is a state government agency in Florida, United States. Its primary mission is to provide a wide range of support services to other state agencies, local governments, and the public. The DMS aims to enhance government efficiency and effectiveness by offering centralized administrative, technology, and business operations services
- The Florida Department of Revenue: The Florida Department of Revenue is an organization that is easily reachable and responsive to the public, ensures equitable and effective management of tax and child support matters, and attains the utmost levels of voluntary adherence. The Department manages three primary initiatives: Child Support Program, General Tax Administration, and Property Tax Oversight.
- Internal Revenue Service (IRS): The IRS, or Internal Revenue Service, is the revenue service of the United States federal government. It operates under the authority of the Department of the Treasury and is responsible for administering and enforcing federal tax laws and regulations. The IRS collects taxes, processes tax returns, provides taxpayer assistance, and oversees various tax-related matters, including audits and investigations. Its primary mission is to ensure that individuals and businesses comply with the tax laws and fulfill their tax obligations.
- The Social Security Administration (SSA): The Social Security Administration (SSA) ensures the financial well-being of American citizens, offering support across various life stages. The SSA oversees programs related to retirement, disability, survivor benefits, and family assistance, as well as facilitating Medicare enrollment. Furthermore, the SSA provides Social Security Numbers, unique identifiers crucial for employment, financial transactions, and determining eligibility for specific government services.
- Wage and Hour Division (WHD): The Wage and Hour Division (WHD) of the United States Department of Labor ensures labor standards’ compliance for the welfare of the workforce. It enforces provisions of the Fair Labor Standards Act, covering federal minimum wage, overtime, recordkeeping, and child labor. Additionally, WHD enforces laws like the Migrant and Seasonal Agricultural Worker Protection Act, Employee Polygraph Protection Act, Family and Medical Leave Act, and wage garnishment rules under the Consumer Credit Protection Act, along with worker protections in immigration statutes. WHD also administers prevailing wage requirements in the Davis-Bacon Act and Service Contract Act, and oversees regulations for federal contracts involving construction and service provision.
Applicable Taxes in Florida
State Taxes
- Income Taxes: Florida stands out as it does not impose personal income taxes, a characteristic that simplifies payroll procedures and allows employees to retain more of their earnings. While Florida does not impose a state income tax, in Florida, businesses have an array of taxes to address, encompassing corporate income taxes and sales taxes, with the state unemployment insurance tax (SUTA) being the only payroll tax that employers are obligated to remit state or reemployment taxes.
- State Unemployment Insurance Tax (SUTA): In Florida, the sole payroll tax is the State Unemployment Tax Act (SUTA), also known as the reemployment tax. Effective January 1, 2023, the minimum rate for this tax is set at 0.0010 (0.10%). For new employers subject to reemployment tax, the initial rate is 0.0270 (2.7%). The highest permissible tax rate is 0.0540 (5.4%), which may apply to employers with delinquencies exceeding one year. This tax is assessed on the first $7,000 of an employee’s wages. Employers are required to pay this tax if they have paid a total of at least $1,500 in wages during a calendar quarter, employed at least one individual for any part of 20 separate weeks in a calendar year, or are liable for federal unemployment tax (FUTA). Employees exempt from coverage include those working for a church, sole proprietors, partners or members of an LLC, college students employed by their enrolled institution, commission-only paid barbers, and individuals under 18 engaged in newspaper delivery
Federal Taxes
When it comes to payroll management in Florida, Federal taxes remain a consideration. Employers must ensure the accurate handling of FICA taxes, which encompass Social Security, Medicare, retirement benefits, and other social programs for employees.
- Federal Insurance Contributions Act (FICA) Taxes: In the US, the majority of employers are required to pay Federal Insurance Contributions Act (FICA) taxes, with only a few exceptions. Presently, the FICA tax rates for Social Security and Medicare are 6.2% and 1.45%, respectively. While Florida does not impose personal income tax, businesses have various other tax obligations, ranging from corporate income taxes to sales tax.
- Federal Unemployment Tax Act (FUTA): The primary distinction between FUTA and SUTA lies in their respective federal and state nature. FUTA constitutes a federal tax, whereas SUTA is a state tax. Consequently, FUTA taxes are remitted to the federal government, while SUTA taxes are directed to the state government. FUTA taxes play a role in offering federal assistance to state unemployment programs and workforce agencies. Employers bear the responsibility of remitting both FUTA and SUTA taxes, with employees not directly involved in the payment of these taxes.
Key Pay Elements That Impact Payroll in Florida
Workers’ Compensation Insurance
Every employer in Florida, whether a government agency, employment agency, or employee leasing organization, must provide workers’ compensation coverage when they have four or more employees. Even in the case of construction workers, the requirement for workers’ compensation insurance applies even if there is just one employee.
However, there are exceptions to this rule, which include:
- Homeowners who hire individuals for construction work unrelated to the property’s sale or lease.
- Domestic workers.
- Inmates serving sentences in state prisons or county jails.
- Agricultural labor conducted by a legitimate farmer with fewer than five full-time employees or 12 seasonal workers.
- Professional athletes.
- Labor performed as part of a court-ordered sentence.
Employers can obtain workers’ compensation insurance through private insurance companies, typically costing around $1.30 for every $100 of payroll processed.
Minimum Wage
The present minimum wage in Florida stands at $11 per hour for employees who do not receive tips, and it’s $7.98 per hour for employees who earn tips. In Florida, employers have the option to offset up to $3.02 per hour as tip credit for employees who receive tips. These minimum wage rates align with federal regulations concerning exemptions from minimum wage mandates. Please be aware that Florida is in the process of gradually increasing its minimum wage, aiming to reach $15 per hour by 2026. Subsequently, it will be adjusted based on the Consumer Price Index for Urban Wage Earners and Clerical Workers.
Overtime
Florida overtime laws adhere to federal laws and do not introduce any state-specific exceptions. This implies that all employees who are not exempt must receive overtime compensation at a rate of one and a half times their regular pay for any hours worked beyond 40 in a workweek. The federal law exemptions are also applicable to Florida’s overtime rules. The most common exemptions include professional employees, executive employees, computer employees, and administrative employees.
Payment Method
Employers have the option to compensate employees through electronic means, checks, or cash. Alternatively, employers can use coupons, punch-outs, tickets, tokens, or similar items instead of cash, as long as they are fully redeemable in the United States. However, it’s essential to ensure that employees receive their wages without any deductions. For instance, paying through platform, which imposes a transaction fee on recipients, is not permitted.
Pay Stub Laws
Florida lacks specific regulations pertaining to pay stubs for the majority of its employees. Nevertheless, if employers manage a labor pool, it is obligatory to furnish day laborers with a detailed statement illustrating any deductions made from their wages. Nonetheless, it is generally advisable to provide all employees with such itemized statements as a standard practice.
Florida Payday and Minimum Pay Frequency
Florida is one of just two states that do not require a specific minimum frequency for employee payments, although it is essential to have a consistent and scheduled payday. Once the employer establishes a pay schedule and publicly announces it, they must adhere to it. The majority of companies compensate their employees either bi-weekly or twice a month.
Paycheck Deduction
Florida lacks legislation that outlines specific restrictions on deductions that can be taken from an employee’s salary. Furthermore, it permits employers to mandate employees to cover uniform expenses, thereby allowing for deductions of such costs from their paychecks. Although it is not legally mandated, it is considered a best practice to obtain written consent from employees for less common deductions to prevent any potential disputes. Some of the more common deductions include:
- Taxes and State Unemployment Tax Act (SUTA) contributions.
- Garnishments ordered by legal actions.
- Employee contributions toward benefit payments.
- Reimbursement for uniforms or tools.
- Compensation for damages or losses incurred due to an employee’s actions.
Final Paycheck
Florida does not have precise regulations governing the timing and method of disbursing final wages to employees. It is advisable to compensate terminated or resigning employees on the upcoming scheduled payday.
Step-by-Step Guide to Payroll in Florida
Providing a structured and consistent payroll procedure is crucial to ensure accurate processing during each pay period. Below, we list the vital steps for effectively managing payroll processing:
- Step 1: Identify Payroll Rules Applicable to Your Company: Prior to commencing payroll operations in Florida, it’s essential to familiarize yourself with the state’s regulations that pertain to your company. These regulations encompass aspects like minimum wage, overtime, and tax laws. Neglecting this crucial step could lead to audits, fines, and financial repercussions. The precise payroll rules impacting your enterprise are contingent upon variables such as your company’s size, geographical location, industry, and the employment classification of your personnel, whether they are full-time, part-time, or independent contractors.
- Step 2: Register Your Business as an Employer with the IRS: At the federal level, this involves obtaining your Employer Identification Number (EIN) and setting up an account within the Electronic Federal Tax Payment System (EFTPS). For new businesses, it is crucial to secure an EIN before embarking on the creation of a customized, systematic payroll process flowchart. The EIN, comprising nine digits, serves as a unique identifier utilized by the Internal Revenue Service (IRS) to monitor a company’s tax-related operations. You can easily apply for an EIN online using Form SS-4.
- Step 3: Register for Taxes and Fees in Florida: Complete form DR-1 and deliver it to a Department of Record Service Center or utilize the online submission option. If you require assistance, refer to the guide on how to complete the DR-1 form. Consider enrolling in e-Services for the convenience of online form submission and tax payment.
- Step 4: Gather Employee Payroll Forms. New hires should provide specific documentation, including payroll forms, during their onboarding process. All employees must complete I-9 verification within their first three days of employment. Additionally, every employee should have a completed W-4 form on record. In Florida, you can use the federal version of the W-4, as there is no separate state-specific form. Employees should also furnish direct deposit information.
- Step 5: Track Time and Attendance: Ensuring precise payroll management requires a thorough approach to time and attendance tracking. Establish a comprehensive system that covers workweeks, overtime calculations, break times, paid leave, and sick leave entitlements. Employ digital tools such as timesheet software, a payroll hours tracker, or a time off tracker to minimize inaccuracies. It’s imperative for employers to gather timesheets well in advance, allowing ample time for review and approval before meeting the state’s prescribed payroll submission deadlines.
- Step 6: Establish a Payroll Cycle: Set up the dates on which employees will be compensated. Florida payroll laws stipulate that paychecks must be provided within regular pay periods, which should not extend beyond one calendar month or thirty days, whichever duration is longer.
- Step 7: Gather, Review, and Approve Time Sheets. You have the option to use paper time sheets or opt for cost-effective time and attendance software, which can be obtained for free or at a low cost.
- Step 8: File Federal Payroll Taxes. Comply with IRS guidelines for federal taxes, including unemployment tax. When making federal tax payments, you have two options: If assigned a monthly schedule by the IRS, deposit employment taxes for payments made during a calendar month by the 15th of the following month.If assigned a semiweekly schedule, deposit employment taxes for payments made on Wednesday, Thursday, and Friday by the following Wednesday, and for payments made on Saturday, Sunday, Monday, and Tuesday, by the following Friday.
- Step 9: File Florida Payroll Taxes. Complete Form RT-6 for Florida payroll tax reporting. If you had ten or more employees in any calendar quarter of the previous fiscal year, you must file electronically. Otherwise, you can opt for paper filing, but the forms must be in color copies, which can be printed if you have a color printer. You can choose to pay your quarterly amount in a lump sum or in installments, with a $5 fee for the latter. Reemployment (unemployment) tax reports must be submitted by specific deadlines, regardless of whether you have employees or wages to report.
- Step 10: Calculate Payroll and Compensate Employees. You can disburse payments to employees through various methods, such as cash, checks, or direct deposit. Streamlining your payroll process and using payroll software for calculations can simplify your tasks and reduce errors. There are multiple methods to calculate payroll, allowing you to select the one that best suits your needs.
- Step 11: Maintain and Archive Your Payroll Records. It’s crucial to retain records for all employees, including former ones, for an extended period. For detailed guidance on record retention, refer to our article on this topic. Florida does not impose any extra regulations on document storage, so adhere to federal guidelines.
- Step 12: Complete Year-End Payroll Tax Reporting. This includes federal Forms W-2 (for employees) and 1099 (for contractors). Employees and contractors should receive these forms by January 31 of the subsequent year. Florida does not require any additional forms beyond federal reporting.
Final Thoughts
In essence, the complexities of payroll administration, encompassing aspects like calculating employee compensation, handling deductions, navigating tax protocols, and disbursing payments, underscore its pivotal role in the employment landscape within Florida. To successfully manage payroll in Florida, it’s imperative to grasp and comply with state-specific minimum wage regulations, tax obligations, and labor legislation. The good news is that there are numerous tools at your disposal to simplify this undertaking. We have compiled a list of the top 6 apps designed to streamline your payroll operations in the US. Alternatively, if you already have an existing system in place, we offer 10 tips to optimize your payroll processes in the US.
Important Cautionary Note
When making this guide we have tried to make it accurate but we do not give any guarantee that the information provided is correct or up-to-date. We therefore strongly advise you seek advice from qualified professionals before acting on any information provided in this guide. We do not accept any liability for any damages or risks incurred for use of this guide.