The push for mandated sick leave has been intense in recent years. But it appears it is paying off for workers. According to today’s U.S. Department of Labor Blog, on July 22nd the Bureau of Labor Statistics released some very interesting news about sick leave. Over the past year, the share of private industry workers with access to at least one day of paid sick leave increased from 61 percent to 64 percent. This is the highest on record. Further, the increase between 2015 and 2016 was almost entirely due to an increase in access among workers in low-wage occupations, that is, workers in occupations with average wages in the bottom 25 percent. This is the result, it appears, of the national momentum on mandated paid sick leave that has taken place in states and in localities. For example, the biggest increase in access to paid sick days over the last year was in the Pacific Census Division, which includes Alaska, California, Hawaii, Oregon, and Washington state. In this set of states, the share of private industry workers with access to paid sick leave jumped up 12 percentage points – from 61 percent to 73 percent – between March 2015 and March 2016, the same period in which both California and Oregon implemented new statewide paid sick time laws.
Month: July 2016
$7.25 is Now 7 Years Old
An interesting fact, the current federal minimum wage of $7.25 turned seven years old on Sunday, July 24th. But how does our young one compare with the rest of its class? In other words, is it top of the class, bottom of the class, or floating around in the middle? According to CNN Money the U.S. was ranked 11th out of 27 developed countries that have a nationwide minimum wage. Australia comes in first, followed by Luxembourg, Belgium, Ireland, France, Netherlands, New Zealand, Germany, Canada and the United Kingdom. Interestingly enough, Finland, Sweden, Denmark, Norway, Iceland, Austria, Switzerland and Italy are not listed because they have no federal rules on minimum wages. That does not mean that their workers are low paid. In fact, many of these nations are known for paying relatively high wages because of the strength of unions. So the federal government does not feel the need to intervene to protect workers.
If we took into account the state or local minimum wage rates our ranking would increase since many states as well as local cities and counties have increased the minimum wage far above $7.25 per hour. But you would still have to take into account those states who have no minimum wage such as Alabama or Mississippi or those that are below the federal minimum wage such as Wyoming which is still at $5.15 per hour. So there are those who are calling for the federal minimum wage to be raised. Historically this is usually a bipartisan issue. Since 1938 when the minimum wage was created it has been raised 10 times under both republican and democratic presidents. It started out at $.25 per hour under FDR, rose to $1.00 per hour under Eisenhower in 1956, to $1.15 an hour under Kennedy, $1.60 an hour under Nixon, $3.35 an hour under Reagan, $3.80 an hour under George H.W. Bush, $5.85 an hour under George W. Bush and finally to its present level of $7.25 under Obama. But what is amazing is that its buying power has really varied over the years. For example, under Nixon it had the buying power of $9.28 in 1970 if comparing it to 2012 prices. But it has fallen over 25% since then.
So should we increase the minimum wage on the federal level or not? If yes, by how much? These are questions that will weigh heavy on the upcoming election. But there is wide-spread support. A Hart Research Associate poll in 2015 showed most Americans (75%) support an increase in the federal minimum wage up to $12.50 per hour. 53% of those in the poll identified themselves are registered republicans. In addition, according to the federal Department of Labor, support is high for increasing the minimum wage even among business owners. A survey of 1,000 executives was conducted by LuntzGlobal which is run by a republican pollster. The survey results were leaked to a liberal watchdog group called Center for Media and Democracy. It appears that 80% of respondents supported raising their state’s minimum wage.
So happy 7th birthday to our federal minimum wage! But will it see 10? Who knows?
I Am Voting…If I Can Get the Time Off
It is finally in full swing…the 2016 presidential election. One candidate is nominated and one is waiting to be nominated. Not only is this a presidential election year but also we are voting for the entire House and 1/3 of the Senate. So how does this affect payroll (other than we need to vote, just like anyone else)? Why time off to vote, of course. The questions always comes up each election cycle, do I have to give my employees time off to vote? If I do, then how much time? The answer falls under wage and hour laws. And as usually happens, it is left up to the individual state to make the regulations. It is amazing to me (a bit on my soapbox) that the largest democracy in the world does not have a federal law requiring employees time off work to vote. But we don’t, simple as that. So the employee’s right to have time off to vote depends on where they are voting, in what state. Some states do not address the issue or have no laws or provisions requiring that an employee get time off to vote. These include: District of Columbia, Delaware, Florida, Idaho, Indiana, Louisiana, Maine, Mississippi, Montana, North Carolina, New Hampshire, New Jersey, Oregon, Pennsylvania, Rhode Island, South Carolina, Virginia and Vermont. Connecticut currently does not have a provision but will have effect October 1, 2016.
States that do address the issue usually allow between two and four hours to vote. The employee usually has to give advance notice to the employer. However, usually if the employee has sufficient period of time to vote in their off hours, they then do not need to get time off to vote during working hours. For example Illinois states that “the employee is to get up to two hours if the employee’s working hours begin less than two hours after the polls open and end less than two hours after the polls close”.
There are many websites that give voting rights information but I found one that concentrates just on time off to vote laws. Check out FindLaw at http://www.findlaw.com/voting-rights-law.html for all the latest info on giving employees time off to vote. I decided to blog on this today so my followers will have time to begin research and preparing their voting time procedures for the fall. We will, of course, be providing a white paper on this topic in the fall to be sure to catch all the latest updates to the time-off rules for the November election.
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FLSA & Independent Contractors: DOL Provides Handy Tool
The subject of who is an employee and who can be classified as an independent contractor is a hot topic right now. Both the IRS and the Department of Labor (DOL) are actively auditing employers to locate misclassified employees. But how do you know if you are doing it correctly, when you classify a worker as an independent contractor? The IRS has, of course, their 3 factor control tests that you can apply. They also have the Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. Employers can use this form to help themselves determine worker status or even submit it to the IRS and let them make the determination (not usually anyone’s first choice!). But what about the DOL and the FLSA? What do they offer to help determine a worker’s classification?
elaws is the main assistance program that helps employers navigate the complexities of the Fair Labor Standards Act requirements. These interactive web pages answer various questions on things such as calculating overtime and who should be exempt. Now the DOL has a elaws on Independent Contractors that give some simple but efficient information to help employers determine if the worker should be an employee or not. It explains the background of how the determinations are made as well as the six areas that are investigated to determine the worker’s status. Though a simple one-page elaws it does provide good information for employers.
Forms W-2 2016 Due Dates Update
Earlier this year the IRS announced that the due date for the copy of the Form W-2 required to be filed with the Social Security Administration changed. Instead of being due by the last day in February for paper filers or March 31st for electronic filers, all filers must submit the form by January 31st. The change was made in an attempt to curtail excess fraud schemes that had cropped up around filing fraudulent 1040 forms and requesting nonexistent refunds. The states, suffering from the same type of fraud, also began changing due dates as well. Our white paper this time is a recap of the changes and lists the current due dates for the forms by state. This list is current as of July 14th. Of course, as legislatures return in the fall, we may expect more changes. We will publish a final due date list in late December.
We hope you find the information useful. white paper forms w-2 due dates 2016
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History Is On President Obama’s Side
We all knew that when President Obama called for changes to the exempt rules under the FLSA and the Department of Labor began the process of implementing those changes that there would be challenges by Congress. The “Overtime Reform and Enhancement Act” was introduced on Friday, July 15th. The bill requires the salary level changes be done in increments and does away with the automatic updates. But does Congress have history on their side to actually challenge the new rules? If we look at history, the answer is no. History is on President Obama’s side, even for the automatic updates, which have been proposed in the past several times. Changes of the nature being done (raising the salary level) have always been under the purview of Presidents, their Secretaries of Labor and their Administrators for the Wage and Hour Division. They have however, been few and far between. The first level was set at $30 per week in 1938 under President Franklin Roosevelt and his Administrator Elmer F. Andrews. It slowly raised up over the course of the years, often with professional and administrative employees being paid more. It was increased to $55/$75 per week in 1949 under President Truman and his Administrator William R. McComb; to $80/$95 per week in 1959 under President Eisenhower and his Administrator Clarence Lundquist; to $100 per week for executives and administrative, $115 per week for professional in 1963 under President Kennedy and his Administrator Clarence Lundquist. In 1969 hearings were held again to increase the salary level. This time they would increase to $125 per week for executive and administrative and $140 for professional employees beginning in early 1970 under President Johnson and his Administrator Robert D. Moran. During the hearings it was suggested by union leaders that there be a mechanism put in place to increase the salary level automatically to eliminate the lengthy periods which normally occur between revisions, thus keeping the salaries current and meaningful. But this was not incorporated. Amazingly enough there were only two changes to the salary level since 1970. First under President Ford (begun under President Nixon) in 1975 and then again under President George W. Bush in 2004. Under Ford and Administrator Betty Southard Murphy they were raised to $155 per week for executive and administrative employees and $170 for professionals effective April 1975. Again at this time Murphy pointed out that the thresholds had last been updated in 1970 and were increasingly out of date. She referenced that the Consumer Price Index may be utilized as the basis for updating the levels but did not include it in the final proposal. The salary level remained at those rates for the next 29 years.
The issue was not ignored by subsequent presidents it just never made it out of the regulatory agenda to fruition. It was proposed in 1979 under President Carter but tabled in 1985 under President Reagan. Under President Clinton it was put forth with a target date of September, 1993 but no action was ever taken on it. It remained on the agenda but no timetable was ever set. Then under President George W. Bush and his Administrator Tammy McCutchen, a major overhaul of all the requirements for exempt employees, including the salary level tests, were implemented. The salary level was raised to $455 per week for all exempt employees and a new category was added for the highly compensated. This category had a salary level of $100,000 per year. It was during this last update that Congress actually attempted to block the new regulations. Several amendments were added to various bills calling for defunding of the Department of Labor in an effort to stop the regulations from taking place. It was not the levels that were in dispute but the overall changes made to the jobs duties tests that caused the outcry from Congress. It was felt that too many employees would lose overtime protection under the new regulations. Stand alone bills were introduced as well as hearings conducting in both the house and senate. But in the end the regulations were implemented in April of 2004. This was the final update to the salary level until the new rules scheduled to take effect on December 1, 2016.
So the new proposed legislation of the “Overtime Reform and Enhancement Act” which is attempting to delay the implementation of the new salary levels does not have history on its side. Congress normally does not and generally cannot interfere with this type of regulation. But you never know in this day and age. We will just have to wait to see which side wins. But if history is any indicator, my money is on the DOL.
Minimum Wage: Local vs. State–OH Style
Local efforts for higher minimum wages are causing lots of concern to state legislatures and governing entities. The latest round in this battle is in Ohio. Hamilton County, which includes Cincinnati wants to increase the local minimum wage to $12.20 per hour by a ballot initiative this year. However, the Ohio Attorney General Mike DeWine states that local minimum wage ordinances violate the state’s constitution and are not permitted. The current minimum wage in the state is $8.10 per hour. The group that is seeking the ballot initiative, Cincinnatians for a Stronger Economy plans to see further legal advice. But it isn’t just Cinncinnati that is looking to increase local minimum wages. Cleveland, as well, has already announced plans to put a minimum wage increase on the November ballot. DeWine’s opinion is not binding but it could be used to bolster legal challenges if the voters approve the measure in November. Employers simply need to wait and see.
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Back Issues Now Available
Due to the popularity of our white papers, we have decided to post the back issues on our website. One week after each white paper is released for requesting on our website it will be posted to our white paper page on our website. All of our previous white papers are now posted on our website ready to download if you missed any issues.
You may have noticed that this current white paper was provided as a file for download in our last blog rather than your having to go to our website and request it. We want to make it more convenient for our followers to access each white paper. Each new white paper will be announced in the blog, as usual, and then the link to it will be provided if you decide you would like to download it. Remember if you missed any back white papers you may download them from our website.
White Paper: If I use the gym is it taxable?
Our latest white paper deals with athletic facilities. It is very common for employers to offer wellness programs to get or keep employees fit and healthy. Employers may offer the use of an onsite athletic facility or they may purchase gym memberships outright or subsidize a portion of the annual fee. No matter what is offered the taxability has to be determined to ensure compliance. It basically boils down to is the gym onsite or off. Onsite athletic facilities are normally nontaxable if the employee can use it before work, during work or after work. Memberships purchased outright or even subsidized are generally taxable income to the employee.
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