California has long had a day of rest requirement. In fact it has existed long before overtime and minimum wage. It guarantees an employee “one day’s rest therefrom in seven”. But which employees and what exactly is one day in seven? This was really never litigated before the current case of Mendoza v. Nordstrom in which the ruling was just handed down on May 8th. Rather than my trying to explain the entire court case in a blog, I will, instead, urge you to read the recap of the case as presented by Sheppart Mullin Richter & Hampton’s Brian S. Fong for the Mondaq News Update Service. It is an in-depth look at the ruling and the impact on employers.
Got a great blog post yesterday from Bill Pokorny, with Wage & Hour Insights concerning paying employees for charity work. During this time of the year this question comes up a lot for payroll professionals. In his June 7th blog he has given a clear and concise answer on when charity work could be considered hours worked. Check out his blog today.
Yesterday the California Senate passed SB 562, The Healthy California Act. This bill would create the Healthy California Program to provide comprehensive universal single-payer health care coverage and a healthcare cost control system for the benefit of all residents of the state of California. It would be funded by a combination of employer and employee payroll taxes. Of the 33 developed nations in the world 32 of them have what is known as universal healthcare. The lone exception to this, of course, is the United States. Universal healthcare, however is not defined as government only healthcare, but can include both public and private insurance and medical providers. So if this bill actually passes the assembly and the financial aspects are resolved it would put California on the list of countries with universal healthcare. This would be a very unique situation. One of our states has universal health care but the country does not. But I think the bigger question for this blog is: “why don’t businesses embrace universal health care?”
And I’m not the only one questioning this. Warren Buffett has stated that other countries have gained a five or six point advantage over the United States because of healthcare spending by employers. The National Federation of Independent Business conducted a survey of small business priorities and problems and found that the cost of health insurance is the most severe problem facing American small business today. In fact 52% of small business owners identified it as a critical issue. The Bureau of Labor Statistics (BLS) puts the cost of healthcare in 2016 for employers with more than 500 workers at $4.28 per hour or 9% of the total compensation costs. For employers with 100 to 499 employees the insurance costs are $2.77 per hour worked or 8.5% of total compensation. Now some will say that this cost is due to the Affordable Care Act. But the increase under the Affordable Care Act for employers with more than 500 employees as compared with the cost in 2006 was 1%. For those employers with under 500 employees it was 2.5%. However this statistic does not reflect that many of the employers with under 500 employees did not offer health insurance in 2006. So why do we continue to put this burden on employers and why do they continue to fight to keep it?
Using the 2006 figures so that we do not factor in Obama care, if I were to propose an 8% tax on all employers with over 500 employees there would be riots in the streets. Yet that’s what employers were paying for healthcare. So if we were to take this 8% as a payment from each employer and add in the cost the employee paid could this be the beginning of universal healthcare for the United States. Think about it for a minute. Employers would no longer need to contact insurance companies, negotiate costs, and have someone in the company to oversee the program (an additional cost of a salary) nor have someone in Accounts Payable pay the bill. Would it have to be a federal program? Most countries that have universal healthcare have a combination of national and municipalities handling the programs. The tax would be on the federal level but the healthcare itself is provided on the local level since those are the ones that usually understand what the community requirements are.
Would this help us become more competitive in the world? Would it help employers become more financially solvent? Would it get health care for all the citizens of the United States? The answers to those questions, of course, remained unanswered as of today. But unless we begin to look into shifting the costs of health care away from employers we will never know.
Wage theft is getting a lot of attention lately. In my May 30th blog I discussed an EPI report that went into detail concerning wage theft in the United States. But is wage theft even more rampant than that report indicated? A recent article in the New York Times concerns how Uber is just discovering they have been miscalculating the commissions paid their drivers and are getting ready to pay tens of millions in back payments. But a driver’s advocacy group in New York is indicating that the company is also making its drivers swallow the per cab ride tax burden imposed by New York. This practice, according to the New York Taxi Workers Alliance amounts to wage theft. It all boils down to how the contracts are interpreted and only the courts will decide in the end. But it is food for thought. Are major corporations guilty of wage theft as a matter of business practice? This is a disturbing questions that must be answered.
What do you think? Is wage theft a serious problem in the U.S.? Take our poll or leave a comment.
I get a lot of questions on whether or not a payroll professional should get certified and if they should then which certification should they try for first. Should they go right into the CPP exam? Or start off with the FPC and work up to the CPP? Many payroll professionals are even confused as to which certification they could qualify for. In their blog, Payroll News, Symmetry Software has done a very nice and quick comparison of the two certifications offered by the APA. If you are looking to certify but aren’t sure which test to try for, take time to check out the blog today.
A report released on May 10, 2017 by the Economic Policy Institute (EPI) assesses the prevalence and magnitude of one form of wage theft—minimum wage violations. Minimum wage violations is defined in the report as paying a worker an effective hourly rate that is below the legal or binding minimum wage, either state or federal law. The report looked at the 10 most populous U.S. states: California, Florida, Georgia, Illinois, Michigan, New York, North Carolina, Ohio, Pennsylvania, and Texas. These states were chosen to limit the focus of the report so EPI could carefully account for each state’s individual minimum wage policies and state-specific exemptions to wage and hour laws. Two of the states chosen, California and New York, actually have anti-wage theft laws on the books. The data for these states provides adequate ample sizes and the total workforce in these states accounts for more than half of the entire U.S. workforce. The results of the study are a bit alarming even if you take into account that the measuring of wage theft is challenging and suitable public data sources are limited. The key findings of the report are that:
In the 10 most populous states in the country, each year 2.4 million workers covered by state or federal minimum wage laws report being paid less than the applicable minimum wage in their state—approximately 17 percent of the eligible low-wage workforce.
The total underpayment of wages to these workers amounts to over $8 billion annually. If the findings for these states are representative for the rest of the country, they suggest that the total wages stolen from workers due to minimum wage violations exceeds $15 billion each year.
Workers suffering minimum wage violations are underpaid an average of $64 per week, nearly one-quarter of their weekly earnings. This means that a victim who works year-round is losing, on average, $3,300 per year and receiving only $10,500 in annual wages.
Young workers, women, people of color, and immigrant workers are more likely than other workers to report being paid less than the minimum wage, but this is primarily because they are also more likely than other workers to be in low-wage jobs. In general, low-wage workers experience minimum wage violations at high rates across demographic categories. In fact, the majority of workers with reported wages below the minimum wage are over 25 and are native-born U.S. citizens, nearly half are white, more than a quarter have children, and just over half work full time.
In the 10 most populous states, workers are most likely to be paid less than the minimum wage in Florida (7.3 percent), Ohio (5.5 percent), and New York (5.0 percent). However, the severity of underpayment is the worst in Pennsylvania and Texas, where the average victim of a minimum wage violation is cheated out of over 30 percent of earned pay.
The poverty rate among workers paid less than the minimum wage in these 10 states is over 21 percent—three times the poverty rate for minimum-wage-eligible workers overall. Assuming no change in work hours, if these workers were paid the full wages to which they are entitled, less than 15 percent would be in poverty.
The report gives a full explanation of the background and previous research into the problems.
A recent article from RIA told of the following problem:
Mike McGuire from IRS Modernized e-File (MeF) told listeners to the May 4 payroll industry telephone conference call that the IRS has been rejecting “tens of thousands” of 2017 first quarter electronically-filed Forms 941, Schedule B (Report of Tax Liability for Semiweekly Schedule Depositors) because the total tax liability on Schedule B does not agree with the total tax liability on Form 941, line 12 (Total taxes after adjustments and credits). Prior to the 2017 tax year, the total tax liability on Schedule B had to agree with Form 941, line 10 (Total taxes after adjustments), or the IRS would reject it. However, the IRS revised some of the line numbers on Form 941, beginning with the 2017 tax year, to take into account that “qualified small businesses” may now elect to claim a portion of their research credit as a payroll tax credit against their employer FICA tax liability, rather than against their income tax liability. Beginning with the 2017 tax year, the total tax liability on Schedule B must agree with Form 941, line 12 (Total taxes after adjustments and credits) rather than line 10. Some electronic filers have not adjusted their programs to take this change into account. Rejected returns have to be resubmitted to the IRS.