If Health Insurance is Mandatory…Is it a Mandatory Deduction (for Garnishments)?

The Affordable Care Act has been in full swing for a couple of years now.  However, there appears to still be one more question that needs to be answered.  If health insurance is mandatory then does it now qualify as a mandatory deduction under garnishment rules? Both payroll professionals and employees have been tackling with this question so let’s see what the actual law requires.  The Consumer Credit Protection Act (CCPA) is the governing law when it comes to deducting for garnishments.  It is enforced by the federal Department of Labor. It states that the employer must take the gross wages and minus out all “mandated deductions” to arrive at the disposable pay. The garnishment percentage (such as 25% for a creditor garnishment) is then taken from this amount.  It states clearly that mandated deductions include taxes such as federal and state income tax, FICA taxes, local taxes, and mandated pension plans such as PERS (Public Employee Retirement System).  401(k)s etc. do not count.  So if I am required as an employee to have health insurance is that now mandated.  The answer is easy…NO.  The DOL has been asked by the APA Government Affairs Manager, Bill Dunn, if they planned to change the definition of mandated deductions to include health insurance.  The answer was no they are not.  Although it is mandated that a taxpayer have health insurance it is not mandated that they have the employer’s insurance. They could buy it through the open exchange and by-pass the employer altogether. So as far as the CCPA is concerned health insurance does not reduce the disposable income.

However, always remember that the states can always do less than the CCPA. It is possible that the state may permit the health insurance as a mandated deduction. Many state legislatures are looking at legislation that will adjust their requirements. It would appear on the garnishment you receive if the state permits the deduction.  You should also be aware that state tax levies might also permit the health insurance deduction. For example, Colorado and Virginia have added the deduction from state tax levies.

So to recap…the federal CCPA is not adding health insurance as a mandated deduction for garnishments.  However, the state legislature may or may not pass legislation to permit it as a mandated deduction, you need to check on each state requirements by reading the garnishment.

And the Battle Begins…On Overtime Rule Update

In my March 18th blog I discussed the latest on the “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees”. It has been submitted for executive  review with the Office of Management and Budget and we are hoping to hear something in 30 to 60 days. Well, the Republican lawmakers were also discussing this rule update on March 18th and they introduced legislation that would require the Labor Secretary to nullify this “controversial proposed rule.”  The bill, H.R. 4773 Protecting Workplace Advancement and Opportunity Act, was introduced by Senator Tim Scott (R-SC) and Representative Tim Walberg (R-Mich.).  The measure also would require the Secretary to conduct a specified economic analysis on employers before promulgating any substantially similar rule.  The bill has been referred to the House Committee on Education and the Workforce. So now the battle begins as to who will win out and what will the final ruling look like.  I will keep you posted.

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Heads Up! OT Rules May Be on the Move!

The long awaited overtime changes may finally be getting some movement.  It was hoped that we would hear something from the DOL by the first of summer.  But it appears that they are making their move now.  On March 14th the final overtime rule, known officially as “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees” was submitted for executive  review with the Office of Management and Budget.  Now, there is no official deadline for this review but a typical timeframe would result in the final rule being issued in approximately 30 to 90 days. We still don’t know if there will be any changes to the job duties tests at this time.  There is speculation that since the DOL took comments on it and published them last fall they may announce it at the same time or may then create a second ruling and issue that.  We are still waiting.

In the meantime, some practitioners have been getting restless and set up a petition on February 4th on whitehouse.gov “Tell the Department of Labor to move quickly on implementing the new overtime rule“. It currently has over 113,000 signatures. It even has its own hashtag, #TimeforOT”

WHD Gives Interpretation of “Who is an Independent Contractor”

The Wage and Hour Division (WHD) of the U.S. Department of Labor has issued an Administrator’s Interpretation 2015-1: The Application of the Fair Labor Standards Act’s “Suffer or Permit” Standard in the Identification of Employees Who Are Misclassified as Independent Contractors. This Interpretation explains in greater detail how the WHD would use the “Suffer or Permit to Work” standard in identifying employees who are misclassified as independent contractors. In addition, the WHD has discussed the same subject on its July 15, 2015 blog in less legalese but still illuminating.

 

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NV Min Wage Stays the Same for 2015

The minimum wage and daily overtime requirements for Nevada will not change for the new year beginning July 1, 2015 according to the state Labor Commissioner’s annual bulletin.  The minimum wage rates will remain $7.25 per hour with qualified health benefits and $8.25 without qualified health benefits.  The overtime rates will remain $10.875 for employees who receive health benefits and $12.375 for employees who do not.  Employees who earn less than $12.375 per hour who do not receive qualified health benefits must be paid overtime whenever they work more than 8 hours in a 24-hour period in addition to the over 40 hours in a workweek.

WV Clarifies Timing of Payment of Wages

West Virginia has clarified when wages must be paid with the passage of S.B. 318.  Employers must pay employees at least twice each month.  The paydays can be no more than 19 days apart unless there is a special agreement.  The law does not apply to railroad companies and takes effect 90 days from March 14, 2015.

SD Adds Youth Minimum Wage

South Dakota Governor Daugaard has signed into law S.B. 177 which allows employers to pay employees under the age of 18 a reduced minimum wage of $7.50.  This amount is not subject to the annual minimum wage adjustment.  The new law takes effect on July 1.  It also prohibits employers from displacing any employee, including a partial displacement through a reduction in hours, wages or employment benefits, in order to hire an employee at the reduced youth rate.

IL Roth Mandate on Hold

The landmark legislation pass in Illinois making it the first state to mandate that employers automatically enroll their employees in a qualified retirement plan is under review by the federal Department of Labor (DOL).  This, however, was actually part of the legislation.  The Illinois legislators were uncertain of the potential for federal “uncertainty” especially when it came to the responsibilities under ERISA so they required that it be reviewed by the DOL prior to implementing the law which is suppose to take effect on June 1, 2017.  It will be in my blog as soon as the ruling comes down from the DOL.

Reference Book Recommendation

I am constantly asked for recommendations for products from webinar attendees and even through e-mails.  These range from reference guides to entire payroll systems. Normally I never recommend products or books or really anything including payroll systems and software. Why don’t I you might ask? Its very simple… I am not paid to do so, so why should I.   That sounds harsh I know.  But I also think it kind of cheapens a recommendation when it is given if that person constantly keeps recommending everything from soup to nuts because they are paid to do so. Though the money would be nice, if I am being honest, but no one has approached me with a check to recommend their product or book or system so I don’t, it’s that simple. Even with that in mind, there is one area that I am asked repeatedly for the same recommendation. This area is  California wage and hour law. I am constantly asked by webinar attendees and others if I know of a good, reliable source on California wage and hour law. Especially lately because of the the new sick leave law that is now effective. The answer is always, yes I do.  So I am going to break one of my little rules and make a recommendation for this one topic…free of charge.  For a top-notch reference on California wage and hour law I recommend the Wage and Hour Manual for California Employers by Richard J. Simmons. The 18th edition has just come out which covers the new California sick leave law and I have already bought my copy (I paid full price like everyone else).  I have used this manual since the early 90s and it has been a staple in my reference library.  If I get a question on California wage and hour law it is the one source I go to.  For full disclosure I do know Richard Simmons on a first name basis to say hello to but that is all.  We have served as speakers for the same conferences and I attend his personal wage and hour law seminars every couple of years to update my knowledge on this difficult subject.  But he has never approached me for a recommendation on his books.  I just use them and I want to pass this along to other payroll professionals who may need a reference guide in this area.

WY Adjusts Term Pay Deadline

Wyoming employers must pay an employee who quits service or is discharged, in lawful U.S. money or by check or draft which can be cashed at a bank, no later than the employer’s usual practice on regularly scheduled payroll dates.  The previous requirement was within five (5) working days of the date of termination of employment. The change is due to the passage of H.B. 127 and is effective March 4, 2015. The employer may offset from any monies due the employee as wages, any sums due the employer from the employee which have been incurred by the employee during his employment. The law does not apply to the earnings of a sales agent employed on a commission basis and having custody of accounts, money or goods of his principal where the net amount due the agent may not be determinable except after an audit or verification of sales, accounts, funds or stocks.