Operational Gaze:
How to Run Payroll in Idaho?

Handling payroll in Idaho involves the process of compensating your workers. This process includes calculating how much they’ve earned, making deductions, and following Idaho’s specific rules about taxes related to payroll. It’s important to understand these unique state laws to manage payroll efficiently.

In this article, we offer a step-by-step guide designed to help Idaho businesses navigate each pay period accurately. Managing payroll isn’t just about giving employees their paychecks; it’s about taking care of your employees and following complex rules, which can be especially challenging for new businesses.

Our guide aims to provide direction in handling payroll processes. You’ll find helpful insights and instructions that are specific to Idaho. This ensures that your payroll runs smoothly and follows all the necessary rules, no matter how much experience you have in managing it.

This Article Covers

Laws That Affect Payroll Procedures in Idaho
Worker Classifications in Idaho
Payroll Forms and Relevant Bodies in Idaho
Applicable Taxes in Idaho
Key Pay Elements That Impact Payroll in Idaho
Step-by-Step Guide to Payroll in Idaho

Laws That Affect Payroll Procedures in Idaho

In Idaho, there are specific employment laws that impact various aspects of the workplace. These laws include wage regulations, labor conditions, and employee leave policies. 

Idaho Laws

Here are some of the key laws and regulations that affect employers and employees in Idaho:

  • Idaho Labor Code: The Idaho Labor Code addresses various employment-related matters, including wage practices, workplace conditions, and safety regulations. It’s important to note that many of these state laws align with federal laws like the Fair Labor Standards Act (FLSA) for certain aspects of employment.
  • Minimum Wage: Idaho has its minimum wage standards. Idaho employees are entitled to receive the federal minimum hourly wage of $7.25.
  • Overtime Pay: Idaho overtime laws are determined by federal guidelines. Non-exempt employees must be compensated at a rate of 1.5 times their regular wage for any hours worked beyond 40 hours in a workweek.
  • Leave Policies: Idaho may have regulations in place for various types of leave, such as family and medical leave. Employers should familiarize themselves with state-specific rules and also consider federal regulations, like the Family and Medical Leave Act (FMLA), for eligible employees.
  • Equal Pay: Idaho enforces laws against wage discrimination based on gender. Employers must ensure that employees receive equal pay for similar work, regardless of gender.
  • Meal and Rest Breaks: Employers in Idaho are not obligated to provide meal and rest breaks to employees.
  • Parental Leave: Idaho may offer provisions for parental leave, granting eligible employees job-protected, unpaid leave for reasons such as childbirth or adoption. Employers should be aware of any state-specific conditions.
  • Sick Leave: Idaho may have regulations governing sick leave, outlining whether employers are required to provide paid or unpaid sick leave and the rules for accruing and using sick leave.
  • Non-Compete Agreements: The state might have specific rules regarding non-compete agreements, which limit employees from working for competing employers. To be legally binding, these agreements must meet certain legal criteria.
  • Wage Theft Prevention: Idaho maintains regulations to prevent wage theft, including rules for wage disbursement, deductions, and timing of wage payments. Employers must adhere to state laws to ensure accurate wage payments and avoid legal issues.

Federal Laws

  • Fair Labor Standards Act (FLSA): The FLSA is a federal law that governs wage and overtime regulations, covering areas like child labor, employee categorization, and accurate record-keeping of employee work hours.
  • Family and Medical Leave Act (FMLA): The FMLA sets out provisions for leave entitlement. Eligible employees have the right to take up to 12 weeks of unpaid leave for events such as childbirth, adoption, or the care of a family member with a serious health condition.
  • Federal Insurance Contributions Act (FICA) Tax: The FICA tax are mandatory for both employers and employees. Contributions amount to 6.2 percent of earnings up to $132,900 for Social Security tax and 1.45 percent of annual income for Medicare tax. These rates can change annually per IRS guidelines, so staying informed is crucial.

HR Laws

  • New Hire Reporting: In Idaho, employers have a legal duty to report the hiring, recalling, or rehiring of a new employee within 20 days of hiring. This report should contain specific details about each newly hired, recalled, or rehired individual, including their full name, address, social security number, and the date they begin employment.
  • Posting Obligations: All businesses with employees must adhere to specific posting requirements. Employers are obligated to display labor law posters in the workplace. These posters cover a range of important topics, such as minimum wage regulations, health and safety guidelines, and other essential labor laws. This ensures that employees are aware of their rights and responsibilities under Idaho labor laws.

Worker Classifications in Idaho

Employees and Independent Contractors

In Idaho, it is of utmost importance for employers to accurately establish whether individuals offering their services to their company should be classified as independent contractors or employees. To qualify as an independent contractor, specific criteria must be met.

Right to Control Test

In Idaho, whether a person is classified as an employee or an independent contractor is determined by the “right to control” test. This test evaluates three key categories:

  • Behavior toward the worker: This entails how you interact with the worker. Are you in a supervisory role, dictating how, when, and where the work is performed? Do you set working hours, provide tools, offer training, monitor their performance, or implement disciplinary actions? If any of these factors are true, it indicates the treatment of the worker as an employee.
  • Financial arrangement with the worker: Independent contractors typically cover their business expenses, own their equipment, have multiple clients, and receive payment on a project basis.
  • Relationship with the worker: While having a written contract that designates the worker as an independent contractor is helpful, it’s not the sole determinant. If you provide benefits and the relationship appears to be more long-term or permanent, it’s more likely to be seen as an employer-employee relationship. Additionally, if you engage a contractor for essential business functions, it may also be considered an employer-employee relationship.

To learn more about the rights of salaried and hourly employees, you can read our guides on your rights as a salaried employee in Idaho, and your rights as an hourly employee in Idaho.

Payroll Forms and Relevant Bodies in Idaho

To handle payroll effectively in Idaho, employers must comply with several state and federal rules, which often include filling out necessary payroll forms. In this section, we’ll look at the important forms and the relevant authorities in Idoha that employers should know to stay compliant and manage payroll responsibilities well.

Idaho Payroll Forms

  • Form W-4: This form helps employers calculate employee tax withholding.
  • Form 967: This form is used to report the total wages subject to taxes and make sure the amount of Idaho taxes you withheld matches for the entire year.

Federal Payroll Forms

  • W-3 Form: This form compiles and presents a summary of the total compensation and taxes paid by all employees.
  • Form 940: It is used for reporting the unemployment taxes owed to the IRS.
  • Form 941: Employers use this form to report quarterly earnings and deductions for income and FICA taxes withheld from paychecks.
  • W-4 Form: This form aids employers in determining the accurate tax withholding for their employees.
  • W-2 Form: This form is designed to display each employee’s annual earnings.
  • Form 944: It is used for annual reporting of income and FICA taxes withheld from employee paychecks.
  • 1099 Forms: These forms provide contractors with the necessary information to calculate their IRS tax obligations based on their earnings.

Federal and Idaho Payroll/ Tax Bodies

  • Internal Revenue Service (IRS): The IRS oversees federal tax rules, including income tax, Social Security, and Medicare taxes. Employers must follow federal rules when handling payroll at the national level.
  • Department of Labor (DOL): The DOL enforces federal labor laws, such as minimum wage and overtime regulations, including those outlined in the Fair Labor Standards Act (FLSA).
  • Social Security Administration (SSA): The SSA manages Social Security and Medicare programs, handling payroll taxes linked to these programs.
  • Idaho State Tax Commission: The Idaho State Tax Commission administers and enforces state tax laws, covering income and sales taxes. Employers must comply with state tax withholding rules.
  • Idaho State Insurance Fund: The Idaho State Insurance Fund offers workers’ compensation insurance for Idaho businesses. Employers must have workers’ compensation coverage for their employees.
  • Idaho State Taxpayer Services: This department provides guidance and information on state tax issues, including income tax withholding and reporting.
  • Idaho Industrial Commission: The Idaho Industrial Commission manages various aspects of workplace safety and regulation in Idaho, encompassing workers’ compensation and occupational safety and health.

Applicable Taxes in Idaho

Employer Contributions

Federal Unemployment Tax Act (FUTA): In Idaho, employers must comply with the Federal Unemployment Tax Act (FUTA) which currently sets a standard federal rate of 6.0% on the first $7,000 of each employee’s wages.

Withheld from Employee’s Wages

  • Idoha Income Taxes: In Idaho, income tax is at a flat rate of 5.8 percent. 
  • Workers’ Compensation in Idaho: Employers in Idaho are obligated to provide compensation for medical expenses and disability benefits to employees who sustain work-related injuries. In the unfortunate event of a work-related death, Workers’ Compensation mandates that the benefits of the deceased employee be given to their dependents.
  • Social Security (FICA) Withholding in Idaho: Employers in Idaho are required to comply with FICA, which necessitates withholding taxes for Social Security and Medicare from employees’ wages. They must also match these withholdings by contributing an equal amount for Social Security and Medicare. When it comes to the additional Medicare tax, employers are only responsible for withholding the employee’s portion, without any obligation to match it themselves.

Additional Relevant Subtractions to Withhold on Behalf of Employees

Idaho state complies with regulations set by the Fair Labor Standards Act (FLSA). The FLSA places restrictions on employers when it comes to making deductions from their employee’s paychecks, except in situations explicitly allowed by the law or when employees have given their clear consent. Here are instances where deductions are legally permissible:

  • Disciplinary Suspensions: Deductions are allowed for unpaid suspensions lasting one or more full days, issued as a disciplinary measure for violations of workplace rules, as long as they are implemented in good faith.
  • Jury and Witness Fees: Employers can deduct amounts to cover jury fees, witness fees, or pay for temporary military duty received by their employees.
  • Personal Absence: Employers can make deductions when employees are absent for personal reasons, spanning one or more full days, except in situations related to illness or disability.
  • Sickness or Disability: If employees are absent due to sickness or disability for one or more full days, deductions can be made, provided there is a legitimate plan or policy in place to compensate for the loss of pay due to illness.
  • Family and Medical Leave: Employers are well within their rights to make deductions for unpaid leave taken under the Federal Family and Medical Leave Act, which provides job-protected leave for specific family and medical reasons.
  • Safety Violations: Employers have the authority to impose penalties in good faith for significant violations of safety regulations, and these penalties may be recovered from employees’ wages.

Key Pay Elements That Impact Payroll in Idaho

Minimum Wage

Idaho’s minimum wage is set at $7.25 per hour for non-tipped employees, while employees who receive tips have a minimum wage of $3.35 per hour. Employers must stay informed on wage laws, as the minimum wage requirements may change.

Overtime

When it comes to overtime regulations, Idaho follows the overtime provisions specified in the federal FLSA. The key principle is that when an employee works more than 40 hours in a workweek, they are entitled to overtime pay at a rate equivalent to 1.5 times their regular hourly wage. With Idaho’s minimum wage currently at $7.25 per hour, this would result in an overtime rate of $10.88.

Workers’ Compensation Insurance

Idaho Workers’ Compensation laws, as outlined in Idaho Code Title 72, include regulations that address matters concerning workplace injuries and illnesses. These statutes define the eligibility criteria for individuals entitled to compensation in the event of work-related injuries or illnesses, the insurance obligations necessary to provide these benefits, the most appropriate methods for delivering such benefits to eligible employees, dispute resolution procedures among involved parties, and the rights and responsibilities of all participants within Idaho’s workers’ compensation framework.

Pay Stub Laws

Idaho complies with laws set by the FLSA that require employers to keep records of hours worked and wages paid to employees.

Wage Garnishment

Wage garnishment laws in Idaho are guided by a combination of federal and state rules:

  • Federal regulations, outlined in the Consumer Credit Protection Act (CCPA), place a limit on the maximum portion that can be garnished from an individual’s earnings, typically capping it at 25% of disposable income.
  • Several types of debts are susceptible to garnishment, encompassing child support, alimony, student loans, and unpaid taxes. However, for other debts like credit cards or medical debt, a court judgment is typically required before garnishment can occur.
  • Idoha’s regulations are in in with federal wage garnishment guidelines and safeguard employees against being terminated due to a single wage garnishment, although this protection doesn’t extend to multiple wage garnishments.
  • Before garnishing wages, creditors are obligated to provide notice to the debtor, who retains the right to dispute the debt or request a hearing.
  • State laws address the hierarchy of different debt types and govern the garnishment process.

Final Paycheck

In Idaho, the law mandates that when an employee resigns, is fired, or is laid off, any outstanding wages they are owed must be paid either on the next regular payday or within 10 days of their departure (excluding weekends and holidays). If the employee submits a written request for earlier payment after their departure, the employer must ensure payment within 48 hours of receiving the written request, excluding weekends and holidays.

Step-by-Step Guide to Payroll in Idaho

Understanding the specific regulations that apply to Idaho in terms of payroll is important. In this guide, we will break down the payroll process into clear and practical steps:

  1. Identify Relevant Payroll Rules for Your Business: Before you begin payroll procedures in Idaho, it’s crucial to understand the payroll regulations that apply to your company. It’s essential to become familiar with Idaho labor laws and federal payroll regulations, as well as other factors that affect payroll operations.
  2. Obtain an Employer Identification Number (EIN): An Employer Identification Number (EIN), issued by the IRS, is a unique identifier for tax-related purposes. To fulfill your employment tax and other tax obligations in Idaho, obtaining an EIN is necessary. The application process is straightforward and can be done online through the IRS website. This unique number is crucial for tax reporting and identification.
  3. Register with the Idaho Department of Labor: Employers in Idaho must register with the Idaho Department of Labor for unemployment insurance purposes. This registration is essential for accurate reporting and remittance of unemployment taxes to the state. The registration process can typically be completed online through the Idaho Department of Labor’s website.
  4. Employee Classification: In Idaho, it’s important to correctly determine whether your workers are employees or independent contractors, as this decision has significant implications for tax and wage reporting. Incorrect classification can have legal consequences. Idaho relies on the Common Law Test to make this determination.
  5. Collect Employee Payroll Paperwork: Make sure to gather important payroll documents from your employees in Idaho, including W-4 Forms for federal income tax withholding and I-9 Forms for employment eligibility verification.
  6. Track Time and Attendance: Precise record-keeping of employee work hours, breaks, overtime, and leave is a fundamental aspect of accurate payroll management. Compliance with Idaho’s specific regulations on overtime pay and minimum wage rates requires meticulous record-keeping. Employers may benefit from using tools like timesheet applications and leave trackers.
  7. Establish a Regular Payroll Schedule: Idaho requires the establishment of a consistent payroll cycle to comply with state regulations. The frequency of payroll disbursements may vary, but it should be consistent and communicated to employees to keep them informed about their pay schedule.
  8. Calculate Gross Earnings: Accurate calculation of gross earnings is essential in Idaho, where specific wage and overtime regulations apply. These calculations should include various components, such as commissions, bonuses, overtime pay, and expense reimbursements, in accordance with state laws.
  9. Federal Payroll Tax Compliance in Idaho: Follow IRS guidelines for depositing employment taxes according to the prescribed schedule, which is applicable not only in Idaho but also in other states.
  10. Maintain Payroll Records: In Idaho, keeping accurate employee payroll records, including work hours, pay statements, tax forms, and other relevant paperwork, is crucial. State and federal laws require retaining these records for a minimum of three years to comply with audit regulations and address potential inquiries from tax authorities.
  11. Annual Payroll Reporting: Ensure the completion of essential annual government reports, such as W-2 and 1099 forms, which should be provided to employees by January 31 of the following year.

Final Thoughts

Managing payroll in Idaho can be challenging. Employees must ensure they adhere to Idaho’s payroll regulations. To simplify the process of managing payroll, consider exploring our list of the top 6 applications tailored to streamline payroll responsibilities in the United States. If you’ve already established a payroll system, we’ve provided ten tips to enhance your payroll procedure within the United States.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.