The State Department has published the new prevailing wage data for international diplomatic staff who sponsor G-5 or A-3 domestic staff effective 7/1/2011.
The prevailing wage is the functional equivalent of the minimum hourly wage that a G-5 or A-3 domestic must be paid for work performed in the United States. Contractually the sponsor of the foreign domestic must pay no less than the prevailing wage or the state minimum wage, which ever is higher, effective July 1, 2011. Typically when the rate is increased, the sponsor is required to make retroactive wage adjustments to be in compliance with State Department rules.
Sponsor records, including wage and tax statements, are subject to review by their sponsoring organization (the World Bank as an example), and additionally by the State Department's consular staff when the domestic's visa is subject to renewal. Compliance with the minimum prevailing wage, as well as Federal and State employment tax laws, is reviewed by consular staff when determining eligibility for visa issuance or renewal for the G-5 or A-3 domestic.
Sponsors are futher advised that minor revisions have been made to the U.S. Department of State Foreign Affairs Manual Volume 9 41.22 Notes. Of particular note is that an earlier memorandum advising that NO deductions for housing provided by the sponsor to the G-5 or A-3 domestic may be made from the domestic is specifically stated in the 9 FAM 41.22 notes. As a practical matter, most sponsoring organizations abolished this many years ago and memoralized in their respective Codes of Conduct and pro-forma employment contracts. The ONLY allowed deduction from the G-5 or A-3 payroll is for meals as defined and agreed in the original employment contract. Items such as medical insurance, uniforms, and such may not be deducted from payroll.
Employers who sponsor B-1 domestics during their short term postings to the United States are subject to the same prevailing wage guidelines as the G-5 and A-3 sponsors.
HomeWork Solutions publishes a free G-5 Payroll Quick Start Guide to assist the sponsoring diplomat in US payroll tax compliance matters. We work with hundreds of G-4 and A-1 sponsors, particularly in Metropolitan Washington DC and New York providing payroll and payroll tax compliance services. Don't hesitate to contact our staff at 800.626.4829 if you would like to outsource this paperwork.