Frequently Asked Questions
The following are questions commonly asked about the Right To Know Payroll Form.
"I don't want to lose valuable staff time calculating these costs each pay period. Doesn't this require a lot of work?"
Answer: Not at all. Most of the employer's costs should be calculated only once per year, unless there is a significant change in employment, and all the remaining deductions are already calculated!
For example, to estimate the costs of tax administration, determine how many full-time equivalent employees are required to perform the job, multiply that number by their average compensation costs, and add the costs of other resources required (data processing, office space, etc.). Then, divide this total cost by the number of employees, and divide again by the number of pay periods. This will yield the amount shown on the Right To Know Payroll Form as the cost of tax administration. It need only be calculated once per year based on estimated costs, unless there is a significant change in the resources required.
The same procedure is used to calculate the costs of mandated program administration. For workers' compensation and unemployment insurance, these direct costs are available from the company accountant, should be estimated once per year, and divided by the number of employees and the number of pay periods to produce the payroll form amount.
Your company is already calculating the remaining amounts each pay period as required by federal, state, and local withholding laws.
"I want to implement the Right To Know Payroll Form, but my company's payroll is handled by an outside payroll firm. Help!"
Answer: The Mackinac Center for Public Policy is working with a number of payroll firms to encourage them to provide the Right To Know Payroll Form as a service to their customers. If you need this service, please call the Mackinac Center for more information -- (989) 631-0900.
"How important is it to use the words "Government cost" and "Government tax" on the form?"
Answer: Very important. Many employees are not aware that unemployment insurance and workers' compensation are mandated by government, and the same is true of cryptic acronyms such as FICA (Federal Insurance Contributions Act), which is another term for Social Security. Not clearly identifying the public policy implications of these programs defeats the purpose of the Right To Know Payroll Form.