Archive for the ‘Employment Law’ Category

Amendments to the Family and Medical Leave Act

first aid kitThe U.S. Department of Labor (DOL) published a final rule that implements two major statuary expansions to the Family and Medical Leave Act (FMLA). The amended FMLA broadens military caregiver and qualifying exigency leave provisions set by the National Defense Authorization Act (NDAA) and the Airline Flight Crew Technical Corrections Act (AFCTCA), covering service members and their families. Employers with 50 or more employees are required to comply with the extended provisions as well as post the new FMLA poster and use the new Certification for Serious Injury or Illness of a Veteran for Military Caregiver Leave Form.

Military Caregiver Provisions

Veteran Caregiver Leave: A family member taking care of a veteran with a serious injury or illness incurred or aggravated in the line of duty is allowed up to 26 workweeks of FMLA Leave during a single 12-month period. Family members include spouse, son, daughter, parents and next of kin.

Health Care Providers: The list of health care providers who can provide a medical certification to support FMLA military caregiver leave was expanded to include non-military affiliated providers. However, medical certifications authorized by non-military affiliated providers are subject to a request for a second or third opinion if deemed necessary by the employer.

Qualifying Exigency Leave Provisions

Family Member Leave: An eligible employee whose spouse son, daughter, or parent is a member of the military can take up to 12 workweeks of leave for qualifying exigencies arising out of the military member’s active duty or call to active duty. Eligible family members are entitled to FMLA leave for qualifying exigencies in connection with the foreign deployment of a service member. A qualifying exigency consists of financial, legal or childcare issues related to the family member’s call-up or deployment. Prior to the FMLA amendments, this leave was only available to eligible employees of service members in the National Guard or Reserves but the final rule extends this provision to families with members of the regular Armed Forces.

Rest and Recuperation Leave: The amount of time an eligible employee can take to spend time with his or her covered family members during rest and recuperation leave was extended from five days to a maximum of 15 days.

Other Amendments to FMLA

The final rule also modifies FMLA leave qualifications for airline flight crew members. Under the amendment, an airline flight crew employee is eligible for FMLA leave if he or she has worked or been paid for not less than 60 percent of the applicable total monthly guarantee and has worked or been paid for not less than 504 hours during the previous 12 months. Airline employees who are not flight crew members will be covered under the general hours-of-service eligibility standard that requires 1,250 hours of service in the previous 12 months.

What impact do you think the amendments will have on employers?

New Jersey Pay Equality Poster and Notice

Employees only breakroomNew Jersey employers awaiting the release of the Pay Equality and Notice will have to wait a little while longer. On January 7th 2013, a notice of proposal containing a proposed version of the new poster was published by the New Jersey Register; but an error was discovered on the notification. The notice is currently undergoing revisions and will be reviewed again later this month.

Recap of the Pay Equality Poster and Notice Requirements

As of November 21st 2012, New Jersey employers with 50 or more employees are required to post and distribute the Pay Equality notice outlining gender equality in pay, compensation, benefits and other conditions of employment. This notice must be posted in English and Spanish as well as in any other languages predominantly spoken by the employee population. Employers must also distribute the notice to each employee along with an acknowledgement form to confirm the receipt of the notification.

The notice can be distributed by email, via printed material or through an internet or intranet platform that can only be accessed by employees. Once the notice is distributed, employees must return the signed acknowledgement within 30 days. Employers are required to provide this information:

(1) to all employees no later than 30 days after it is issued by the New Jersey Department of Labor (NJDOL);
(2) at the time of an employee’s hiring;
(3) to all employees annually on or before December 31st of each year; and
(4) at any time upon the first request of an employee to all employees.

The NJDOL has not released the Pay Equality poster or a template of the acknowledgement form. It would only be upon publication of the notice that the posting and distribution requirements become effective.

Posted January 25, 2013 by scicompanies in Employment Law

Minimum Wage Increases in 2013

wagesAlthough the Federal minimum wage will remain at $7.25 in 2013, the minimum wage in the followings States will increase for tipped and non-tipped employees, effective January 1st.   

According to the Fair Labor Standards Act (FLSA), employers in States with both Federal and State minimum wage laws must pay the higher minimum wage rate. Information related to minimum wage rate increases can be found on the Department of Labor’s (DOL) website: http://www.dol.gov/whd/minwage/america.htm, Federal Wage and Labor Law Institute (FWLLI) or through BNA – the Bureau of National Affairs, Inc. Employers can also access: http://www.dol.gov/whd/state/tipped.htm for resources related to tipped employees.

*The DOL will produce updated minimum wage tables approximately two to four weeks after the increases become effective in the respective states.

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W-2 Reporting of Health Care Contributions

401k eggThe induction of the Patient Protection and Affordable Care Act brings forth new guidelines for employers including those participating in a Professional Employer Organization (PEO) relationship. The Patient Protection and Affordable Care Act requires certain employers to report the aggregate value of employer-sponsored eligible health plans on Form W-2 (in Box 12, Code DD) starting January 2013. The aggregate value of an employer-sponsored plan includes both employer and employee contributions made during the year.  Costs incurred by Long – Term Care, Stand-alone Dental and Vision Plans and Archer Medical Savings Accounts are excluded from the new reporting requirement.

 Why is this Information Reported?

The intent for implementing reporting rules is to provide employees with information about the cost of their healthcare expenses. According to the Internal Revenue Service (IRS), the data is displayed for informational purposes only to illustrate the value of healthcare coverage. This information allows employees to easily compare healthcare pricing and understand costs.

What is recorded?

The reporting requirement includes both employer and employee contributions paid to healthcare vendors in 2012.  The types of plans covered include: 

  • Medical plans
  • Prescription drug plans
  • Executive Physicals
  • Onsite clinics (that provide more than superficial care)
  • Medicare Supplemental Plans

The IRS provides a detailed list of coverage options required for W-2 reporting along with exceptions on http://www.irs.gov/uac/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage.

 Type of Employers

 The reporting requirement applies to all private sector employers, federal, state, and local government entities, third-party employers (i.e. PEO), churches, and other religious organizations.  Employers with 250 employees or more are required to report health care costs. The employee count per employer is based on the number of W-2s issued in the prior year. Thus if an employer issued 250 W-2s in 2011, the employer must report costs on 2012 Form W-2s in 2013. Small businesses who filed fewer than 250 W- 2s for the proceeding calendar year have until January 2014 to seek compliance. Furthermore, Indian Tribal governments and  Tribally Chartered Corporations are also not subjected to the new reporting requirement until further guidelines are issued.   

Employers in a PEO Agreement

Although there is no direct answer for reporting requirements for PEOs, the current application of the Family Medical Leave Act (FMLA) and Title VII suggests how this requirement may be enforced. Both FMLA and Title VII are applied on a client – level instead of a PEO level. FMLA guidelines do not apply to PEO clients that employ fewer than 50 employees in a 75-mile radius in the calendar year, even if the PEO has more than 50 employees (at different clients) in the same 75- mile radius. The Equal Employment Opportunity Commission (EEOC) implements a similar structure in regards to Title VII. The EEOC does not have jurisdiction over a PEO client with fewer than 15 employees. Both of these legislations use the employer’s population as the deciding factor instead of viewing the PEO as a whole. If the reporting requirement follows this structure, employers with a small employee population will not have to report healthcare costs even if they belong to a PEO.  

 Another factor to consider is if the employer is involved in a single – employer plan or a multi -employer plan. A single employer plan is a type of pension plan that is sponsored by one employer or a group of employers under a common controlled structure. This means employee benefit plans are maintained by one employer. In a single – employer plan, employers that provide applicable – employer sponsored coverage during the calendar year are subjected to the reporting requirement. In contrast, a multi – employer plan is a pension plan structured by several employers, thus if an employee moves to another employer in the plan, the employee’s benefits are still covered. Employers who only contribute to multi – employer plans are excluded from the reporting requirement.

Penalties

 According to the IRS, failure to report the costs on Form W-2 for the 2012 tax year may result in a penalty of $200 per Form W-2, up to a maximum of $3 million. Liability may also arise for inaccurately reporting data on Form W-2, including but not limited to IRS penalties of $100.00 for each form containing incorrect information.

Best Practices for Employers 

  • Identify the employer-sponsored health coverage benefits subjected to the reporting requirement.
  • Calculate the aggregate cost of employer –sponsored plan for all applicable employees who received health insurance during 2012.  
  • If an employee worked for a portion of the year, report the total premium paid for that applicable timeframe only.
  • Consult your healthcare vendor to understand how preparations for compliance will be handled.

Completing Form I-9

Employers are required by the Department of Homeland Security (DHS) to complete a Form I-9 for newly hired or rehired workers within three days of employment. The purpose of this form is to document that each employee hired is authorized to work in the United States. Verification of employment must be presented by both Citizens and Non-Citizens. It is the employer’s responsibility to examine the documents an employee provides to determine the authenticity of the paperwork and record the information accurately on the form. If an employer representative is not available to review the original documents and sign the form, these documents must be presented to a Public Notary for verification.

Form I-9 consists of three sections:

Section 1 – Employee Information and Verification

Completing the Employee Section

Section one consists of the employee information including name, maiden name, address, date of birth, Social Security Number (SSN) and work authorization status. This section can be completed by the employee or by a translator on his/her behalf. However, the employee must personally sign the form. Newly hired employees must complete and sign section one no later than the first day of employment.  Section one should not be completed before the employee has accepted a job offer.

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 Name Fields: Include full legal name, first name and middle initials. For employees with two last names or a hyphenated last name, include both names in the Last Name field. The employee can include their maiden name or other legally recognized name in the Other Name Used field. If another legal name is not required, write N/A in the field.

Address Fields: Include the current resident address including street number and name, apartment number (if applicable), city, state, and zip code. P.O. Box addresses are invalid and only border commuters from Canada and Mexico may provide an international address. 

Date of Birth Field: Format the date of birth as mm/dd/yyyy.

U.S. Social Security Number Field: Include your 9-digit social security number if your employer participates in E-verify.

Email Address and Telephone Fields (Optional): Include your email address and telephone or write N/A if you choose not to include this information. The Department of Homeland Security may use this information to contact you in case there is a discrepancy between the information provided and government records.

  • Citizenship or Immigration Status Fields: Select the classification status that applies. View http://www.uscis.gov/files/form/i-9.pdf for a description of each classification status. Note: Employees who select the “An Alien Authorized to Work Until…” field and have an I-94 card must list the foreign passport number and country of issuance.        
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Parents or legal guardians assisting minors (individuals under the age of 18) and certain employees with disabilities can review the Handbook for Employers: Instructions for Completing Form I-9 (M-274) on http://www.uscis.gov/files/form/m-274.pdf for guidelines about special procedures for establishing identity for these individuals.

The employer must examine the form to ensure all the required fields are filled and verify that the form is signed and properly dated by the employee. The authorized professional who is responsible for examining the documents should also sign section two.

Section 2 – Employer Review and Verification

Documents for Verifying Identity and Employment Authorization

Section two consists of fields related to verifying the authenticity of the documents presented to confirm employment eligibility and establish identification.

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In the Introduction fields, the employer must enter the employee’s last name, first name, and middle initial to help identify the pages of the form in case they are misplaced.

In the fields directly following, the employer should record the employee’s identification and employment authorization document(s). Employees can choose to provide a document from section List A; or from section List B and List C. List A contains documents to confirm both identity and employment authorization; while, List B documents relate to identity only and List C documents verify employment authorization only. Employers cannot specify which document(s) an employee can use to complete the form and both parties must be physically present during the examination of the documents.

Generally, only unexpired, original documentation is acceptable. Exceptions to this rule include the use of a certified copy of a birth certificate and documents with extended expiration dates.

If the employee cannot provide un-expired versions of the required documents, an acceptable receipt can be provided in lieu of the documents listed in List A or List B and List C. The employee must present valid receipts within three business days of the employment or in cases of re-verification. However, receipts indicating an application for an initial grant of employment authorization or for a renewal of employment authorization are not acceptable.

Completing the Employer Section

The employer must physically examine these documents to ensure the requirements for List A or List B and List C are satisfied.

  • The employer should record the following: document title, issuing authority, document number and expiration date(s) (if applicable).
  • If the employee is a student or exchange visitor who presents a foreign passport with a Form I-94, the employer should enter the Student and Exchange Visitor Information System (SEVIS) number and program end date from Form I-20 or DS-2019.
  • In the field directly following entitled Certification, the employer should provide the date the employee begins work and the name of the authorized representative completing the form, along with his/her title, the date and the name and address of the organization.
  • In cases of re-verification, the employer must record the document title in section two under the section titled List A, List B, or List C as applicable. In the Document Number field, write the word “receipt” along with the document number. The Expiration Date field should include the last day the receipt is valid.
  • Once the receipt validation period expires, cross out the word “receipt”, the accompanying document number and expiration date. Record the number and other required information from the actual document presented. The changes must be authorized with initials and current date.   
  • Photocopies of the supporting documents are not required but if made they must be created for all new hires or re-verifications and retained. Employers must still complete section two even if photocopies are kept on file. Photocopies cannot be used in place of completing Form I-9.  

Find a List of Acceptable Documents located on USICS website.

 Section 3 –Updating and Re-Verification
Re-Verification Process

Employers are required to complete section three when updating and/or re-verifying Form I-9. Section three does not apply to employees who are U.S. Citizens or Permanent Residents. This section is completed when the employee indicates that he or she is an alien authorized to work until a certain date listed in section one of the form. Employers should reconfirm the employment authorization of every employee who has presented evidence of work authorization that contains an expiration date. Re-verification can be completed in section three of a new Form I-9 or section three of the original copy. If a new Form I-9 is completed, attach the new form to the original copy.

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Block A: Record the employee’s new name if it is different from the name that appears in the previous sections.

Block B: Record the date of hire if the employee is rehired within three years of when the form was originally completed and the employee is authorized to work under the same basis as indicated previously.

Block C: Complete Block C if the employee’s previous grant of work authorization has expired, or if the employee is rehired within three years of the date this form was originally completed. Examine either items from List A or List C provided by the employee to verify work authorization. Record the document title, document number and expiration date (if applicable).

Authorization Block: Sign and date to attest that the employee is authorized to work in the U.S. based on the documents provided.

 
 
Storing and Retaining Form I-9

Employers must retain each employee’s completed Form I-9 throughout the individual’s employment. Once an individual’s employment ends, the employer must retain Form I-9 for either three years after the date of hire or for one year after employment is terminated. Form I-9 must be stored in a secure location to safeguard employee information. Typically, Form I-9 and the accompanying documents are stored via electronic means, micro-film format or hard-copy method. Regardless of the format, the U.S. Citizenship and Immigration Services (USCIS) recommends separating Form I-9 from other employee records in case of an inspection request. Before an inspection takes place, the employer will receive a written notice three days in advance to provide the documents.

Penalties

Violations for inaccurately completing or not completing Form I-9 can lead to civil fines, criminal penalties and debarment from government contracts. Civil violations include but are not limited to knowingly hiring or continuing to employ an unauthorized worker, failing to comply with Form I-9 requirements, committing or participating in document fraud, committing document abuse and accepting funds from employees as a guarantee for authorized status. In contrast, criminal violations are based on an employer’s pattern or practice of repeated violations. A list of monetary fines placed on each violation can be found on www.uscis.gov.

 

California Meal and Rest Period Requirements

A surge in class-action lawsuits for inadequate employee meal and rest periods has sparked debate and questions for the past few years. Confusion about whether an employer is required to make meal periods available to employees or whether the employer is required to ensure employees actually take breaks has created a sense of ambiguity for employers, employees and law-makers. For employers in California the answers to these questions came in the form of a ruling in the case Brinker Restaurant Corporation v. Superior Court. According to the Brinker case, Employers have a duty to provide meal and rest periods but are not required to ensure work is not performed during that time.

According to the requirements of the California Labor Code and Wage Orders, Employer obligations regarding meal and rest breaks are:

  •  Meal Breaks: Employers must provide non-exempt employees with a thirty (30) minute uninterrupted meal break after five (5) hours of work (unless the employee’s workday is completed within six (6) hours). A second meal period of 30 minutes can be provided if an employee works more than ten (10) hours per day. The second meal period may be waived by mutual consent of the employer and employee only if the first meal period was not waived. 
  • Rest Break: Employees are entitled to 10 minutes of a rest period for shifts three and one-half (3 ½) to six (6) hours in length, 20 minutes break for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours and so on.
  • On duty Meal Period: An “on duty” meal period is permitted only when the nature of the work prevents an employee from taking a break. Unless an employee is relived of all duties during the 30 minute break period, the period is considered to be “on-duty”. Both parties must sign an agreement stating the employee has the right to revoke the “on-duty” arrangement at any time and will receive compensation for the hour worked. The test to determine whether a job requires “on-duty” meal periods is based on objective factors (i.e. the employee is the sole worker on site). Examples of jobs that meet these criteria include a security guard stationed alone at a remote site or a sales clerk in an all-night convenience store.  
  • Payment for On-duty Meal periods: When an “on –duty” meal period is implemented, the employer must pay for the additional hour of work at the employee’s regular rate of pay. The additional hour is not included in the total hour worked for purposes of overtime calculations.
  • Break Areas: Employers must provide employees with a suitable place designated as the rest/eating area when requested to take meal breaks on Company premise. This area must contain adequate supply of potable water, cleaning materials (i.e. soap), and single use towels for hand washing. Employers in industries such as onsite construction, drilling, logging and mining are excluded from compliance with this requirement.
  • Meal Period Timing: Employers are required to secure hot food and drinks or equipment for heating food and providing a suitable location designated for eating meals, if the meal period occurs on a shift beginning or ending at or between hours of 10:00pm and 6:00am.

Best Practices

The following Best Practices are geared to assist Employers seeking compliance with meals and rest period obligations:

  • Relieve employees of all duties by relinquishing control over their activities and allowing a reasonable opportunity to take an uninterrupted 30-minute break (in which they are free to come and go as they please).
  • Do not impede or discourage employees from taking their meal periods. Educate Managers/Supervisors on the provisions of the law to discourage interference with the employee meals and rest breaks. 
  • Establish a written policy for meal and rest periods that outlines the scheduling procedure. 
  • Develop an Employee Time maintenance system to track when Employees leave for and return from breaks. The Time Maintenance system can serve as evidence for demonstrating a good faith effort in compliance during litigation.
  • Investigate all complaints from Employees in a timely manner and apply the appropriate policy uniformly.

The New 401(k) Fee Disclosure Rules: From A Small Business Perspective

As of July 1st 2012, the Department of Labor (DOL) requires service providers to disclose all direct and indirect fees associated with the management of 401 (K) retirement plans. The DOL’s intent for the implementation of the fee disclosure rules is to provide investors (employees) with a breakdown of fees as well as to encourage employers who sponsor these plans to “shop” around for service providers and compare costs.

The Employee Benefits Security Administration (EBSA, a division of the DOL responsible for overseeing protection of employee rights regarding pension plans) first proposed the new disclosure rules as part of the Employee Retirement Income Security Act (ERISA). The EBSA recognized the need for transparency of fees and expenses in employer-sponsored 401 (k) plans following the recession and decline in retirement investment in 2010. Efforts to make fees and expenses transparent heightened after a series of class-action lawsuits were filed against large employers, alleging violation of fiduciary duties for undisclosed fees and excessive charges. As a result, the DOL enacted the new disclosure rules in April 2012, but decided to postpone the implementation date to July 2012 to allow service providers time to seek compliance.

Service providers must furnish documentation on:

  • Administrative fees and expenses;
  • Individual fees and expenses;
  • Performance data;
  • Comparison of each investment product available; and
  • Deducted fees and expenses in a dollar amount.

Investors will receive an initial disclosure detailing their investment, record-keeping expenses, and other fees deducted from their 401(k) plan by August 30, 2012 and can anticipate receiving the first quarterly statement listing fees by November 14, 2012.

What does this Mean for Small Business Employers?

 Since the new disclosure rules expose deducted fees and miscellaneous expenses, employers will have the resources they need to evaluate the price of their plans and they can “shop” around for the best service providers. According to Cerulli Associates, there are approximately 500,000 small and mid-size businesses that offer a 401(k) plan. About 10% of the businesses with fewer than 100 employees have a plan and 99% of companies with greater than 50 employees have a plan.  In general, small to midsize employer plans receive less attractive pricing in comparison to large company plans. The new disclosure rules allow employers to view the exact cost of the plan so that they may compare plan options.

 401(k) Fee Disclosure Rules Resource:

http://www.dol.gov/ebsa/newsroom/fsparticipantfeerule.html