The Hiring Incentives to Restore Employment (HIRE) Act was signed into law on March 18, 2010.  This provides incentives to companies who hire and retain unemployed employees.  This act provides for:

• the elimination of the 6.20% employer portion of Social Security tax through the end of 2010.
• up to a $1000 Retained Worker Tax Credit (RWTC) for employees who stay employed for 52 consecutive weeks.

To be eligible for the credit, employees must sign an affidavit stating that they have not been employed for over 40 hours in the last 60 days prior to employment.

Other provisions include:

• Eliglible employees must have been hired after Feburary 3, 2010 and before December 31, 2010.
• FICA tax credits apply for wages paid between March 19, 2010 and December 31, 2010.
• Eligible employees cannot be family members of the business owner
• Eligible employees cannot be hired to replace another employee, unless that employee was terminated either voluntarily or for cause.

The RWTC will equal the lesser of 6.20% of eligile employees' pay over the  52 week lookback period or $1000.

You may learn more about this act on the IRS web site.  Click here for the HIRE Act Q&A for employers.

It happens to nearly every company at some point... and for many, multiple times every year.  What is it?  Inclement weather that forces an office or plant closing.  In the North, the usual problem is snow or ice;  in coastal areas, it’s tropical storms;  in the Plains, floods and tornados.  Even in the relatively consistent climate of Southern California, there are occasional hazards such as torrential rain, mudslides and forest-fire smoke that can curtail business activity for some period.

Why is this a matter of concern for company management?  First, because unless ordered by a controlling governmental authority, senior management must make the call as to whether closing the office or plant is warranted, and for what interval of time.  This can be a gut-wrenching decision, and often must be made during what is normally personal time and on the basis of fairly sketchy information.

Second, having made the decision to close, you now face a thicket of regulations that govern pay practices in such circumstances.  Some of these are...

• If you close the office, you must pay exempt (salaried) employees for a full day of work;  but you are allowed to charge this time against their PTO bank.  However, if the business closes for a full workweek, exempts need not be paid at all (they are free to use vacation or other accrued time, if they have it). 
• If exempt employees cannot or are not willing to come to the office because of the weather, you are not required to pay them.  (As a practical matter, however, many employers pay them anyway, or allow employees to use available vacation or PTO to cover the absence.)  However, you are required to pay them for a full day if they show up for any portion of that day, even if you didn’t declare it to be a weather emergency. 
• You may dock the pay of hourly (non-exempt) employees for missed time, whether or not you had an emergency plant closing.

The confusion over exempt classification often leads to Department of Labor fines and class-action lawsuits.  Also, improper deductions from exempt employees’ pay – if not caught and reimbursed – can cause those employees to be reclassified as non-exempt, making them eligible for overtime pay ...including back pay for two or more years!

Your best defense is to ensure that your employees are correctly classified and that your company does nothing to jeopardize exempt employees’ status.  It’s also a good idea to review and publish your policies and practices, so that all of your employees understand how absences or closings due to bad weather will be handled from a payroll and attendance-tracking standpoint. 

Departures from routine – such as those caused by bad weather or other hazards – are an inescapable source of uncertainty and stress for employees and managers alike.  But with a bit of diligent care, you can minimize those effects and avoid unwanted collateral damage to your business.

There are new regulations impacting the E-Verify system for federal contractors. Federal contractors are obligated to utilize the E-Verify system to figure out if employees are eligible to legally work in the United States.

On or before September 8, 2009 it was not mandatory for employers to use the U.S. Citizenship and Immigration Services’ E-Verify system. Employers were able to use it for new hires on a voluntary basis, if they had for at least 120 days contracts valued more than $100,000. Effective after September 8, 2009, however, new and current employees who work on a contract must be reported through the new E-Verify system. 

Considerations for Employers:

• Get More Familiar. Learn about the new E-Verify system whether or not you currently have federal contracts to ensure more proficiency and efficiency.
• Know the Contracts. Make sure your point person with the HR role and responsibilities is aware of any federal contracts to help stay in compliance.
• Plan It Out. The entire staff may need to go through the E-verify system which can pose various administrative (i.e. time and costs) and employee morale issues.
• Conduct Regular Checks. Regularly track to ensure you have up-to-date employee I-9 information and that they meet current compliance standards.

It is unlawful if employers choose to ignore the new rules and regulations and not apply them consistently and fairly in their line of business. So, know if you have federal contracts, and be consistent with Form I-9 and other employment verification documentation practices to avoid misrepresentation and discrimination.

The Obama administration has proposed an extension to the COBRA premium subsidy in its fiscal year 2011 budget.  If adopoted into law, the subsidy would be availale to employees laid off from March 1, 2010 and December 31, 2010.  The subsidy would be provided for 12 months.

This would be the third extension of the COBRA subsidy plan.  In February of 2009 the subsidy was for 9 months, In December of 2009 the subsidy was extended to 15 months. 

For more information on this topic, see Stephen Miller's aricle on the Society for Human Resource Managment (SHRM) web site here.

With recent pandemic flu outbreaks, some employers have grown confused as to which types of employee absences from work may be protected by the federal Family Medical Leave of Absence Act (FMLA).

First of all, FMLA protection is entitled to employees working for a covered employer and who have worked for their employer for at least 12 months, for at least 1,250 hours over the previous 12 months, and at a location where at least 50 employees are employed by the employer within 75 miles. Such employees are provided up to 12 weeks of job-protected, unpaid leave during a 12-month leave year for specified family and medical reasons, which may include the flu where complications may occur.

Employers should consider the following examples to avoid discriminatory practices:

• Employees who are infected.
• Employees who are not infected.
• Employees with certain family members who are infected.
• Enforced company policies.

As an employer, it is crucial to establish flexible sick leave policies that are non-discriminatory. Whether an absence should be paid or unpaid depends much on your company's relevant policies and employment contracts. If employees must miss work, you may provide alternative options such as telecommuting. In addition, consider contacting an HR professional regarding any state-specific regulations that may require stricter guidelines for pandemic sick leave circumstances.

If you’re following the continuing saga of the financial meltdown, you might be under the impression that many employers are doling out seven-figure bonuses like Goldman Sachs, Bank of America, AIG and the rest.

In reality (as has become crystal-clear over the past year or so), Main Street isn’t Wall Street, and operates on much more traditional principles.  So as you would expect, the number of employers that are still paying out bonuses during this recession has dropped substantially ...as has the relative size of the average bonus.  But there are still companies doing well enough to use this vehicle to reward their top employees;  and if yours is among them, we wanted to provide you with a cautionary note on the subject.

Most companies want to maximize the psychological impact on their bonus-eligible employees;  and some do so by skipping withholding Federal income tax on the bonus,
thereby making the take-home portion appear as large as possible.  It’s probably no surprise that Uncle Sam doesn’t much care for that approach.  Further, you risk putting your top employees in a serious crack come April 15th, when at best they may owe a penalty and at worst may be unable to pay their tax due.  Few wage workers have the discipline required to make an estimated payment, or minimally to sequester the sizable amount out of that windfall bonus that isn’t really theirs.

The right way
What you should do is withhold Federal income tax from bonuses at the supplemental tax rate of 25.00% (in fact, 35% for those fortunate enough to be receiving a 7-digit bonus);  or else the withholding should be calculated as if the latest pay check and the bonus were on the same paycheck.

It doesn't provide employees with quite as big a holiday surprise, but it also doesn’t set them up for a potential shortfall in April.  And in fact, come April they’ll probably get yet another nice surprise ...because in all likelihood they’ll be over-withheld, and will thus get a nice “mini-bonus” in the form of their Federal tax refund.

Businesses which sometimes overlook procedures (especially if written) may sometimes face a U.S. and / or state Department of Labor (DOL) notification for an audit. Is this a time to panic?  No. It is a time stay calm and be organized.

If managed effectively, DOL audits provide a productive opportunity for employers to review and analyze past practices and improve on future practices. Audits involve financial operations, employment law compliance, and evaluation of operational efficiencies. In fact, periodic (internal or external) audits are integral to the needs of management and it's the company's business processes.

To best prepare, consider the following items:

1. Determine which division of the U.S. or state DOL is investigating your business.
2. Contact an HR professional or attorney specializing in employment law to discuss the audit and to get information about your rights and responsibilities.
3. Contact the DOL to confirm or reschedule the appointment.
4. Determine which member(s) of your management team will participate in the initial meeting with the auditor.
5. If the notification letter requests documents, be sure to make copies for your records, since the auditor may take the original records off-site.
6. Meet with the auditor in a confidential, quiet area.
7. If the auditor requests to interview employees, be prepared to provide a private room for such interviews.
8. Respond only to questions that the auditor directly asks. Do not offer additional information unless requested to do so.
9. Stick closely to any follow-up requests and / or deadlines required by the auditor.

While maintaining respect and cooperation with the auditor, you may discover important resolutions critical to the continued success of your business.

Most employees, and even many business owners, are under the impression that a company has great latitude in deciding whom it will designate as salaried employees.

Well, the US Department of Labor would beg to differ ...and of course, its opinion is what really matters.  The Department’s concern - arising from the Fair Labor Standards Act (FLSA), first enacted in 1938 - is rooted in the issue of overtime pay.  Salaried employees are exempt from the requirement that overtime pay be fairly compensated ...which is why they are also referred to as “exempt” employees.  Apparently the New Dealers believed that – absent this law – every employer would classify all of its employees as exempt, and thus never pay overtime ...although that logic overlooks the fact that you need to pay a salaried employee for a full day if they work even one hour.

The Labor Department has very specific regulations as to who can be a salaried (or exempt) employee;  and it draws that distinction on the basis of the characteristics or duties of the jobs themselves ...not, as many believe, from the job title or employee’s education.  Under their rules, a position may be classified as exempt if it: 

• is directly related to the management of the employer's business; or
• is directly related to the general business operations of the employer or the employer's clients; or 
• requires specialized academic training for entry into a professional field; or 
• is in the computer field and paid at least $27.63 per hour; or 
• requires making sales away from the employer's place of business; or 
• is in a recognized field of artistic or creative endeavor.

Oh, yes... and the position generally must pay no less than $455 per week on a salary basis.

You’ll note that some of the criteria (e.g., the first two points above) are rather broad and open to interpretation.  This of course has the effect of enabling the government to bust you, even though you believed you were in the clear;  and it also helps sustain a thriving cottage industry of employment law – which you are well advised to make use of, should you have jobs with any possibility of going either way.

Should you elect to proceed without legal counsel, your government as usual is there to help:  the Overtime Security Advisor is a guided website provided by the DOL that will help you properly classify each jobspec you may be uncertain about.  (A snapshot overview of the law is also available.)  If those tools don’t quite do it, you can also get personalized assistance by calling 1-866-4USWAGE. 

As if this weren’t enough... most of the states also have analogous laws, which will supercede the Federal law to the extent that they are more beneficial to the employee;  so you’ll also need to be aware of those for each state in which you have facilities.
 
In case you’re tempted to take this matter less than seriously, thinking "Hey, who’s to know?" ...well, there are a couple of ways for classification errors to come to light:

• One of your employees might file a complaint under the Act (the instructions are right there on DOL’s website) ...as some 23,000 employees did in 2008. 
• The DOL could single out your company for inclusion in one of its future audits ...especially since it has announced it is hiring 250 more investigators to look for overtime pay, minimum wage or other violations (per a recent Management Moxie, the newsletter of Foley & Foley PC, Workplace Attorneys).

You may be thinking, - OK, so I might get caught;  but it would only be a wrist-slap, right? - Actually, if you are found to have incorrectly classified someone as salaried, you may have to pay that person overtime back to when (s)he started in your employ ...along with everyone else who is found to be misclassified, also.  Clearly that could be quite a sizable number, and that’s before talking about possible fines.

The DOL estimates that 70% of US businesses are in some way out of compliance with its regulations, and hence subject to its enforcement actions.  That’s definitely not the group you want your company to be in.

The Deparment of Labor is staffing up for its push for wage and hour compliance.  In a recent budget discussion, U.S. Secretary of Labor Hilda L. Solis says that the Wage and Hour division plans to hire 250 additional field investigators in 2010.  They will concentrate primarily on Fair Labor Standards Act minimum wage, overtime, and child-labor violations.

Seems like it’s in the news every couple of weeks... some company fesses up to having "lost" or compromised a mind-boggling amount of personal information about individuals ...sadly, most often its customers.  Usually what follows some time later is news of a class-action settlement running well into the millions of dollars.  You see these stories and think, “Boy, am I glad we’re not in banking or retail or any of those industries that have to collect personal information.

• And now for the bad news:  other than a matter of scale, you are in one of those industries ...as long as you have employees.  Why?  Because personal information (PI) is defined as an individual’s name, in combination with any of the following:
• social security number 
• state-issued ID number (such as a driver’s license number) 
• financial account number
• credit/debit card number

You’re required to collect and maintain several of those items for tax and other reasons;  and if you offer payroll direct deposit, then you have bank-account information as well.

Making matters worse... if you employ Massachusetts residents, you now have more to worry about than a class-action lawsuit from your employees.  A new Massachusetts law aimed at combating identity theft requires strict protection of personal information for residents of MA.  The law especially targets electronic information, but covers paper documents as well.  If your business holds, licenses, stores or maintains PI on any MA resident, it is covered under the law.  For HR, this includes I-9s and W-4s, plus insurance, retirement plan and direct deposit information.

Unlike many business regulations, this law has teeth!  Both civil and criminal penalties are provided for.  Civil penalties may include $5,000 per violation, and up to $50,000 for improper disposal of PI (old hard drives or paper documents).

What you need to do
The law’s compliance deadline was recently pushed back two months to March 1, 2010 ...but that will be upon us before we know it.  Here are the steps you need to take: 

• Develop and maintain a Written Information Security Plan (WISP). 
• Train employees;  define consequences for employees who do not adhere to the plan.
• Don't share passwords, and don't make them simplistic. 
• Encrypt any portable devices that contain personal information (laptops, PDAs, external hard drives, backup tapes, etc). 
• Don't transmit or receive data via unprotected email, websites or wireless. 
• Limit access to PI to people within your company with a genuine need to know. Keep written PI in locked file cabinets.

The WISP referenced in the first bullet above must address... 

• the measures adopted to safeguard information;
• designation of at least one person to manage the security program; 
• disciplinary measures imposed for violations of the program;
• how it will prevent terminated employees from accessing information;
• monitoring of electronic records for unauthorized access and security risks;
• documentation of incidents involving breach and resulting corrective actions;
• use of user ID / password protocols for electronic PI documents;
• access restriction to electronically stored information; and 
• upgraded safeguards and protection (firewalls, encryption software) as needed.

If 3rd parties that you do business with have access to your PI, "the new regulations require companies to take reasonable steps to ensure that their third-party service providers are capable of maintaining appropriate security measures," according to Management Moxie, a newsletter from Foley & Foley, PC.

Even if your company doesn’t employ Massachusetts residents, it’s probably a good idea to get out ahead of the curve on this issue;  because it’s fairly likely that your state(s) will implement similar regulations in the relatively near future.