Archive for the ‘U.S. Department of Labor’ Tag

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?

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Permissible Wage Deductions

Are you confused about what deductions can be taken out of an employee’s paycheck? Well, you are not alone! The Wage and Hour Division (WHD) of the Department of Labor completed 33,295 compliance actions and collected more than $224 million in back wages for more than 275,000 workers during the 2011 Fiscal Year (http://www.dol.gov/dol/budget/2013/bib.htm#whd). The WHD serves as the governing agency for Federal laws pertaining to minimum wage, overtime pay, recordkeeping and prevailing wages for government service and construction.  The WHD provides a general overview of permissible wage deductions, but most wage deduction requirements are dictated and outlined within State laws.

Under the Fair Labor Standards Act (FLSA), permissible deductions from minimum wage include wage meals, lodging and similar facilities, tax withholdings, court-ordered payments, and voluntary deductions/payments to assignees. Specifically, these wage deductions are among the most common deductions that can legally decrease an employee’s wages below the federal or state applicable minimum wage.

Meals, Lodging and Other Facilities

Employers can deduct the reasonable cost of providing meals, lodging, and similar facilities. Only the reasonable cost of these items can be deducted – not any amount attributable to an employer’s profit.

Tax Withholding

Employers are permitted to deduct taxes from an employee’s wages. These deductions are permitted for the employee’s share of Social Security taxes, as well as other federal, state and local taxes.

Court-Ordered Payments

The FLSA does not restrict court-ordered garnishments as long as neither the employer nor any person acting on its behalf derives any benefit from the transaction. However, federal and state garnishment laws can set limits on the amount of wages that can be garnished.

Voluntary Deductions/Payments to Assignees

An employer can deduct amounts the employee directs the employer to pay to third parties, including deductions for: U.S. savings bonds, union dues, employee accounts with merchants, charitable contributions and employee benefit plan premiums or contributions. However, these deductions are permitted only if the employee has voluntarily assigned such amounts to the third-party, and neither the employer nor any person acting on the employer’s behalf derives any profit from the transaction.

There are many other common and permissible deductions that are allowed as long as the employee’s wages do not fall below federal or state applicable minimum wage. It is important to stress that many of these deduction requirements are regulated by the state. For example, many retail employers look for ways to recover cash register shortages from their sales clerks. Many state wage payment laws, however, forbid deductions for this purpose. Listed below are common deductions employers take from employee wages:

    • Items Considered to Primarily Benefit or Convenience the Employer

Items such as uniforms, tools, damages to the employer’s property, financial losses due to customers not paying bills and theft of the employer’s property by the employee or other individuals.

    • Uniforms

The FLSA does not require that employees wear uniforms. However, if wearing a uniform is required for safety or is the nature of the business, the cost and maintenance of the uniform is considered to be a business expense of the employer. An employer may prorate deductions for the cost of the uniform over a period of paydays.

    • Advances or Loans

According to the Department of Labor, if an employer makes a loan or advance of wages to an employee, the principal can be deducted from the employee’s earnings even if the deductions cuts into the minimum wage or overtime pay due to the employee. However, an employer cannot deduct for administrative costs or charge any interest if it brings the employee below minimum wage. Additionally, some states may have rules governing how and when an employer can collect from the employee.

    • Wage Overpayments

Federal law does not prohibit employers from recouping wage overpayments. However, state laws should be reviewed prior to making these deductions as some states do not allow wage overpayments to be collected. It is considered an employer error that should not penalize the employee.

Requiring written authorization for deductions is common. Even if this is not mandated by federal or state laws, it is always an HR Best Practice to have an employee’s written authorization and documentation to make payroll deductions.

Employee or Independent Contractor: Employer Guidelines

Are you finding it difficult to differentiate between employees and independent contractors? Well accurately defining a worker’s classification status may be a more serious issue than you might have anticipated. The U.S. Department of Labor (DOL) released the 2012 proposed budget, which emphasized a strong focus on identifying employers who misclassify workers as independent contractors versus employees. The DOL requested an additional $46 million to support a multi-agency initiative with the Wage and Hour Division (WHD), the Office of Federal Contract Compliance Claims (OFCCP) and the Occupational Safety and Health Administration (OSHA) to combat employee misclassification. In recent years, the DOL has “cracked-down” on employers for intentionally misclassifying employees as a means to escape payment of employment taxes, overtime compensation, and benefits.

 An employee is an individual, who is employed by one employer that provides training and control on how duties are performed. However, independent contractors operate under their own business name and may employ other workers to work under their direction. When a worker is classified as an employee, the employer is responsible for paying payroll taxes and overtime compensation, as well as complying with Wage and Hour law requirements such as providing meal periods and rest breaks and reimbursing workers for business expenses. Additionally, employers must cover employees under their worker’s compensation insurance, and are liable for payment of unemployment insurance, disability insurance and social security.

There is no universal system to differentiate between employees and independent contractors.

The DOL recommends using the “Economic Realities” Test. Defining factors are based on :
  • Degree of control in regards to the way work is done and the nature of control
  • Opportunities for profit or loss
  • Investment in the facilities and equipment of the business
  • Permanency or length of relationship with business
  • Degree of skill need to perform their job
  • Impact work performed has on scope of business
IRS uses the common law test known as the “Right-to-Control” Test
  • Level of instruction
  • Amount of training
  • Degree of business integration
  • Extent of personal services
  • Control of assistants
  • Continuity of relationship
  • Flexibility of schedule
  • Demands for full-time work
  • Need for on-site services
  • Sequence of work
  • Requirements for reports
  • Method of payment
  • Payment of business or travel expenses
  • Provision of tools and materials
  • Investment in facilities
  • Realization of profit or loss
  • Work for multiple companies
 Consequences of Misclassification
  • Misclassification of an Employee – If the employer mistakenly classifies an employee as an independent contractor, the employee can recover back pay, liquidated damages and attorney’s fees. According to the Fair Labor Standard Act (FLSA), employers are required to pay employees at least minimum wage (currently $7.25) for each hour worked. Employees must receive overtime compensation for all hours worked exceeding 40 hours in a workweek, at a minimum of one and a half times the regular pay rate. Employees have up to two years to seek recovery of back pay or three years if there is proof of willful FLSA violation by the employer.
  • Misclassification of an Independent Contractor– Employers could encounter financial consequences if the worker is classified as an employee instead of independent contractor. Employers could be paying unnecessary income tax, Federal Insurance Contribution Act (FICA) tax and Federal Unemployment Tax (FUTA) as well as overtime compensation and excessive benefit charges.
HR Best Practices
  • Perform a Classification Audit – A well executed classification audit will reveal gap areas that can potentially lead to costly legal disputes and government fines. Classification audits also serve as good faith evidence for compliance with FLSA.
  • Use IRS Form in case of Confusion in Determining the Status – When the status of a worker is unclear, employers are encouraged to complete IRS Form SS-8  and submit the form to the Internal Revenue Service (IRS). The IRS will review the facts and circumstances and officially determine the worker’s status. This form may be filed by either the business or the worker.
  • Seek External Resources – It may be best to seek the assistance of legal counsel or consult an HR outsourcing provider if  classification of  an employee’s status becomes too complex.