Legislative Updates

NLRB Employee Rights Posting Requirement Delay

12/23/11 The National Labor Relations Board (NLRB) employee rights posting requirement has been delayed until April 30, 2012. This move was made as a result of the lawsuit filed by the National Association of Manufacturers on the validity of the rule.

Paid Sick Leave Bill Becomes Law In Philadelphia

Governor Tom Corbett signed Act 6 of 2011 Unemployment Compensation Reform into law. What does it mean for your business?

The Act 6, Unemployment Reform bill was signed into law by Governor Tom Corbett in an effort to continue Unemployment Compensation benefits for approximately 45,000 unemployed Pennsylvanians, allowing them a 13-week extension of benefits.

In addition Act 6 is an important first step toward reforming PA unemployment compensation law and addressing UC fund solvency issues. Pennsylvania owes the Federal government over $3 billion dollars borrowed to meet claims by the jobless for benefits. It will save Pennsylvania’s unemployment compensation fund an estimated $133 million annually. The bill reforms and updates obsolete provisions in the Unemployment Compensation law. The most important include:

• Increases the amount of wages needed to earn a credit week for benefits, last adjusted in 1980.

• Requires unemployed workers to prove they are actively searching for work via Pennsylvania’s CareerLink in order to qualify for UC benefits.

• Requires those with large severance packages to tap into them before receiving UC benefits.

• Slows benefit growth by changing the way the maximum weekly benefit is calculated.

• Creates a new voluntary shared-work program similar to those in 21 other states allowing employers to avoid mass layoffs. Employees and the employer may agree to reduce hours instead of reducing the workforce. The employee is allowed to receive pro-rated UC benefits for those lost work hours.

For additional information please contact us at 215-453-1978 or info@mccloskeypartners.com.

Act 6 Unemployment Compensation Reform

October 28, 2011

PHILADELPHIA (CBS) - Mayor Michael Nutter didn’t sign it, but he didn’t veto it and now a bill that forces a small number of businesses in the city to offer their workers paid sick leave is the law in Philadelphia.

Mayor Nutter last spring vetoed a bill that would have required all businesses in the city to offer earned sick leave. This fall Council passed a limited version, putting the requirement only on companies that have government contracts.

"The impact will be minimal," said Councilman Wilson Goode, who sponsored the bill. "In addition, what we’re doing is setting a standard only for those businesses that choose to do business with the city."

IRS Announces Increase in Optional Standard Mileage Rates

6/23/2011 The Internal Revenue Service announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes. The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51. In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011.

Act 32 Certificate of Residency

Ex Governor Ed Rendell signed into law Act 32 in 2008. It is taking effect starting on July 1st of this year. All employers must obtain from all employees a signed and completed Certificate of Residency form to support the withholding of Earned Income Tax. Starting in 2012 each employee will be taxed based on where he lives, not where he works. This means that if your employer is located in a township that does not have an Earned Income Tax, but you as an employee do live in a township that imposes such a tax, then your employer must withhold that tax from your wage and submit it to your township of residence.

Starting in 2012, every PA employer must require each employee to complete a Certificate of Residency form. This form is an addendum to the Federal Employee's Withholding Allowance Certificate (Form W-4). An employer shall require any employee who changes his or her address to complete a new Certificate of Residency form. Employers located in taxing districts that chose to implement the new law early (such as the Lebanon and Chester County Districts) must begin using the Certificates of Residency in 2011.

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FEDS Consider Increase in FUTA Tax

Payroll departments need to be aware that the administration’s budget proposal for 2012 includes an increase in the Federal Unemployment Tax. The proposed budget would more than double the taxable wage cap from the current $7,000 to $15,000 by 2014 thus increasing the amount Federal unemployment tax collected. This increase is to help offset the shortfall in funds collected to support the unemployment insurance system.

Due to increased demand, many States are realizing significant shortfalls and have been raising payroll unemployment tax rates as well as wage limits. The budget proposes a moratorium on the interest payment States are paying to the Feds for funds they have borrowed to shore up State trust funds. It also proposes a suspension of the FUTA tax credit States utilize. The idea is this will help States keep rates lower than would normally be required to meet these obligations. This in turn will mean that States do not have to pass on these payroll costs to businesses, thus ostensibly improving the employment environment.

The 2012 budget also proposes a restructuring of the Federal wage reporting system requiring employers to submit quarterly wage reports to the Social Security Administration along with annual reports. Currently payroll departments just file an annual wage report to the SSA. The administration suggests this plan would enhance management of Social Security funds and administration of SSA programs.

This change in Social Security tax reporting has been proposed in budgets for at least the past 5 years and continues to meet legislative resistance.

Department of Labor Announces new IPhone App to help hourly employee keep track of hours worked

The Department of Labor and Apple have teamed up with a new app for the I-Phone to keep track of hours and pay. According to the Itunes website, the app is described as follows: "This is a timesheet to record the hours that you work and calculate the amount you may be owed by your employer. It also includes overtime pay calculations at a rate of one and one-half times (1.5) the regular rate of pay for all hours you work over 40 in a workweek. " There is a link on the Itunes app page to the DOL Wage and Hour Division webpage. The app is free.

Our Thoughts: Of course, it is too early to tell if this will result in an increase, in an already busy area of the law, in claims filed for overtime. Our initial feeling is that the app is only as good as the user: if accurate time is entered, the app will be useful. Unfortunately, oftentimes, information kept by employees is not always accurate. This app will make it more difficult to dispute the hours employees claim they work. Now is a good time for employers to review their time keeping devices to make sure they are used by everyone, and review their policies and procedures about clocking in and clocking out.

W-2 Reporting of Health Coverage

Guidance on the new W-2 Reporting Requirement enacted March 29, 2011

• Employers who issue fewer than 250 Forms W-2 for the 2012 tax year are not required to report the cost of coverage on their 2012 W-2s; these employers will not be required to report the cost of coverage until the 2013 tax year.

• Employers are not required to issue a Form W-2 to individuals they are not otherwise required to provide a W-2 for, such as a retiree or former employee receiving no compensation.

• Employers are not required to report the cost of coverage on any W-2 issued before January 2013.

• Detailed information on what coverage is included in the cost of coverage and how to calculate the aggregate cost of coverage.

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ADAAA Update- Effective 3/24/2011

The EEOC's issued final rules covering the Americans with Disabilities Act — and as expected, the revised regulations smooth the way for employees to claim they meet the legal definition of disabled.

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Facebook and an Employer's Right to put policies in place

Employers can put limits on what employees can post on social media sites, according to a new federal appeals court ruling.

The decision comes on the heels of the National Labor Relations Board’s charge that a company violated labor laws after firing an employee who posted negative comments about her supervisor on Facebook.

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PA's Way to Work Initiative

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Is Dependent to Age 26 Coverage a Tax-Free Benefit

In general, coverage provided to dependents under the dependent to age 26 coverage provisions of the health care reform are exempt from taxes. Employers with section 125 cafeteria plans may permit employees to immediately make pre-tax salary reduction contributions to provide coverage for children under age 27, even if the cafeteria plan has not yet been amended to cover these individuals. Employers, Plan Sponsors, have until the end of 2010 to amend their plan documents to account for this change.

Definition of a Dependent
The IRS defines a child to include a son, daughter, stepchild, adopted child or eligible foster child. The child does not need to qualify as a dependent for tax purposes as long as they fall into one of the above categories. Employees who have children who will not have reached age 27 by the end of the 2010 are eligible for this new tax benefit from March 30, 2010, if the dependent is able to be covered. The dependent will be included in the 'family' rate as any other eligible dependent would be covered as a covered dependent.

For a more detailed overview of this benefit, see the recently released IRS Notice 2010-38.