Some rare good news from the IRS was that the requirement to report the value of health insurance on W-2s, as required by the Affordable Health Care Act, was postponed from 2011 until 2012. The reprieve was granted to allow more time for employers to put necessary payroll systems and procedures in place. Many, if not most, employers won’t have to worry about it until running their 2012 W-2s in time for distribution by January 31, 2013. There is a slight catch, however, in that employees who terminate during the year technically have the right to request their W-2 form within 30 days of termination. So employers may be on the hook to supply the information much sooner. As you plan for the coming calendar year, don’t procrastinate setting up a system to capture the information as early as possible in 2012 just in case.
Reporting premiums on 2011 W-2s remains optional. It’s a good tool to help educate employees on just how much the employer is paying in health insurance premiums on their behalf. Ordinarily, such “sticker shock” doesn’t hit unless and until an employee terminates without other health coverage options and needs to consider taking on the full cost of the employer’s health coverage through COBRA. At that point they are usually quite shocked and dismayed to learn the full cost of premiums.
The health insurance value reported on W-2s is excludable from income and thus not taxable and, purportedly, that won’t change. But the reporting will help the IRS monitor compliance with coverage mandates for large employers slated for 2014. And the information will help employers know whether their health plan offerings are headed toward being considered “Cadillac plans” which are scheduled to incur excise taxes in 2018.
Fox Searchlight Pictures, the maker of last year’s award winning film, Black Swan, is named as the defendant in a lawsuit filed by two former interns claiming multiple violations of the Fair Labor Standards Act (FLSA) and New York state labor law regarding recordkeeping, minimum wage and overtime violations. The suit seeks class action status that would potentially encompass up to 100 individuals who worked as assistants and interns and, it is alleged, were unpaid unlawfully. Of course the lawsuit has to unfold before wrongdoing or lawfulness can be pronounced; however, it noteworthy that this previously somewhat neglected category of FLSA violation is now being scrutinized with a high profile company. This Hollywood spotlight has strong potential to light the way for similar suits.
The difficult economy, lack of job openings and preponderance of students and others willing to accept unpaid internships can create a tempting situation for employers. But this lawsuit sends the message that it’s probably no longer safe for employers to reason, “everyone does it.” The Department of Labor has long had a six factor test for unpaid internships so if you’ve not already done so, and you have interns, you should become familiar with it immediately.
Here are a few additional tips:
Implement procedures that ensure the HR department is always in the loop and managers can never bring anyone on board without HR’s prior knowledge and approval;
If the internship is not tied to an academic program, your chances that it qualifies as unpaid go down;
If the intern is brought on board in lieu of a regular employee doing the work, the intern is actually an employee and the FLSA and state laws apply;
If HR determines the internship position does pass the DOL six factor test, supporting documentation should be kept on file;
Understand and document what interns are doing, how their work is overseen and by whom;
Check state laws as well to ensure both federal and state compliance;
The FLSA makes an exception for bona fide volunteers in the non-profit sector or for state or local government agencies.
The punishment for violating the FLSA can be severe and may include steep fines in addition to back regular pay and back overtime pay, back taxes, and attorneys’ fees for the opposing side. Even when companies prevail, lawsuits are generally costly. It will be interesting see how this version of the Black Swan story turns out.
Last week we discussed the Fair Labor Standards Act (FLSA) requirements regarding pay issues when a workplace is closed due to inclement weather or in relation to a natural disaster. It should be noted that some states have “reporting pay” laws that require a minimum amount of pay for employees when anticipated work is cancelled. If you operate within one or more of the following jurisdictions, you should know that you may have wage obligations that go beyond the FLSA: California, Connecticut, the District of Columbia, Massachusetts, New Hampshire, New Jersey, New York, Oregon, and Rhode Island.
Reporting pay laws vary a great deal among these states so it’s important to understand the details that apply to you. For instance, some states have exceptions for certain industries, some require that employees be scheduled for a minimum number of hours in order to qualify for reporting time pay, some have requirements that apply only to minors, and there are varying requirements regarding both the number of hours that must be compensated and at what rate.
Following is an illustration of how things work in the state of Massachusetts. The reporting time pay obligation under wage law there dictates that “when an employee who is scheduled to work three or more hours reports for duty at the time set by the employer, and that employee is not provided with the expected hours of work, the employee shall be paid for at least three hours on such day at no less than the basic minimum wage.”
So let’s say a store in Massachusetts has two employees earning $10 per hour both of whom start work at 9:00 a.m. Sally is scheduled to work two hours and Sean is scheduled for four. A snow storm has arrived with fury that morning so the store closes after being in operation only an hour and the employees are sent home. Under Massachusetts law all the employees must be paid at their regular rate, in this case $10, for the one hour they actually worked. But Sally would not get paid for her additionally scheduled but not worked hour since the law only covers those scheduled for three or more hours. Sean, on the other hand, must be paid at least $8 per hour, the prevailing minimum wage, for two additional hours, totally the minimum three hours of pay required to be compensated by Massachusetts state law.
Of course union contracts, other employment contracts, or an organization’s own personnel policies may obligate an employer further as well so it’s a good idea to get up to speed on all of your wage obligations before inclement weather hits and be sure payroll staff are properly trained in advance.
On the heels of several natural disasters across the nation and with winter weather just around the corner, at least for folks in northern climes, now’s a good time to prepare for the inevitable questions related to time off that inclement weather inevitably brings. Of course it’s vital to avoid running afoul of the Fair Labor Standards Act (FLSA) so bear in mind the disparate legal requirements related to exempt vs. non-exempt employees.
Staff should always be considered non-exempt unless they meet a series of salary and duties tests for one of the exemptions laid out under the FLSA. More information is available on the US Department of Labor (DOL) Wage and Hour Division’s compliance page. Nonexempt employee protections under the FLSA include being paid at least at the prevailing federal or state minimum wage rate, whichever is higher, as well as being paid at an overtime rate of one and one half times the regular rate of pay for any work hours that exceed 40 in one workweek.
But keep in mind that the FLSA does not require employers to provide paid sick, vacation, holiday or personal leave. Of course if you do have policies providing such leave, you need to follow them. There’s nothing worse for an employer than having policies and not following them. That said, for nonexempt staff, the FLSA says that an employer is not precluded from lowering an employee’s hourly rate, provided the rate paid is at least the minimum wage, or from reducing the number of hours the employee is scheduled to work. And the FLSA does not require employers to pay non-exempt staff for hours they have not worked.
So, when inclement weather hits and you close your workplace, you are permitted under the law (assuming you don’t have a policy in place to the contrary) to deduct pay from non-exempt employees’ paychecks commensurate with the reduced work time. Likewise, if you keep your workplace open but a non-exempt staff person does not make it in due to the weather, you are allowed by law to deduct those hours not worked from their pay, again personnel policy to the contrary notwithstanding. Note that if you do make such deductions from pay, be sure to apply them to non-exempt staff across the board to avoid discrimination claims. And there’s one more caveat: in today’s plugged in world, employees often perform work remotely from personal computers and electronic devices such as smartphones. Even if they are just checking email, you must count such work done remotely as time worked.
The paragraph above outlines what is permitted under the FLSA, but there may be lots of reasons for employers to choose to be more generous and pay non-exempt employees for time off related to a disaster or inclement weather, especially if the loss of work hours is based on the employer’s decision or on severe and unusual circumstances beyond employees’ control. Important issues to consider include employee morale, retention, loyalty and engagement as well as the culture, core values and mission of your organization.
What about exempt staff? You are not permitted to reduce an exempt employee’s predetermined weekly pay without jeopardizing their exempt status except under limited circumstances. However, you are permitted to reduce their accrued sick, vacation or other leave bank, even if the reduction is less than a full day and even if the absence is directed by the employer due to lack of work; however, the exempt employee must still be paid their predetermined weekly salary in any week in which any work is performed. Note that the full salary must be paid: even if the leave bank is exhausted; if it becomes or goes further into the negative; even if the employer does not have a bona fide benefits plan at all; and even when the leave is required by the employer due to inclement weather according the the DOL Wage and Hour Division Opinion Letter FLSA2005-41.
So take some time now to establish the leave policies your organization needs or to review those you already have in place, including inclement weather and disaster policies. Make sure they are in compliance with the FLSA and that they support your culture, goals and mission.
The new poster, required for most private employers that engage in interstate commerce covered by the National Labor Relations Act (the Act,) is available now for free download from the National Labor Relations Board (NLRB) web site or may be obtained from any NLRB regional office. (Note that HRSentry® subscribers may download all state and federal legally required posters for free from HRSentry’s poster kit as well. ) The Act applies to most private employers and the poster informs employees of their rights under the Act. Specifically exempted from the Act are federal, state, and local government employers as well as those in the agriculture, railway and airline industries.
If your organization is subject to this posting requirement, please note the following:
The poster must be displayed in at least an 11 x 17 inch format. If you cannot download to that size, there is an 8 1/2 X 11 inch version available for printing on two pieces of paper to be attached to one another to create the correct size. The poster is available in both color and in black and white.
If you normally post notices to employees regarding personnel rules or policies on an internet or intranet site, you will be required to post the NLRB’s notice or a link to the NLRB’s web site on those sites as well. The link must read, “Employee Rights under the National Labor Relations Act.” You do not have to notify employees via email, Twitter, or other electronic methods.
If 20% or more of your workforce speaks a specific foreign language as their first language, you must also display a poster in that language. If 20% or more of your workforce is made up of two or more groups of speakers of other languages, the poster must be displayed in the language of the largest group. For other groups it is the employer’s option to display posters in additional languages or to provide translated copies to those employees. Electronic notification is subject to the translation requirement as well. Translated versions of the posters and electronic links are available from the NLRB upon request.
