Posts

Final Thoughts on 2016 and a Caution to Legislators and Employers for 2017

I will begin this by saying that some of this article is focused on California, while much can be applicable to the rest of the United States.  The San Joaquin Valley is a microcosm of what has taken place across this country.  The rural, farming and agriculture areas of this country are tired of being ignored.   And finally, they stood up in November and got the attention of the people that think that life is only lived in big cities.

California politicians are very good at double speak.  They say they are supportive of Agriculture, but none of them every actually come to the Valley to talk to business owners.  On the rare occasion they do come to the Valley it is to talk to the workers or to point at a High Speed Rail train that is not going to do anything for people here.

The fact is, California, and many State governments across the country, would prefer if Agriculture would just go away.  They would much rather we were all working in a state full of Silicone Valley businesses.  They are cleaner, there would be no fight over water, and we could just ignore it altogether.  In the past election, we did not get visits by Hillary (Trump dropped in quickly) and Kamala Harris (the new Senator) didn’t bother with and knows nothing about this side of California.  The Governor has only been to Fresno a few times in 6 years and that is never to learn about real issues (he knows it all I guess).

For the rest of the country, the story is similar.  President Obama flew over the rest of the US and only visited a few coastal states in 8 years in office.  He came to California almost monthly to San Francisco or Los Angeles to attend a fund raiser, but on the ONE occasion that he came to the valley to discuss the drought, he got off the plane, went to a dirt field for about 1 hour and then flew out because he had a golf date in Southern California (where they had water to make beautiful greens for his putting).  We never saw a thing done about the drought after that and still have not until last week when a bill (0pposed by outgoing Senator Barbara Boxer) was signed by the President to help us build dams.  This was not because of any work done by the President, but by the work of our Representatives from the Valley that finally got enough support from  enough people in both parties to get this to the President despite Barbara Boxer.

One of the most telling examples of how Legislators view business owners is how they write regulations.  Almost all regulations start with the assumption that most employers are bad.  In fact, many times it is actually written into the introduction and states that this bill must be passed to protect the workers, etc.  The reality is that most employers work very hard with their employees to create a family atmosphere.  The regulations get in the way of much of this.  Every time the government mandates a benefit that many people are already doing for their employees, they add cumbersome requirements, and many pages of fines and penalties if you do not do it exactly right.  In a more practical world, doing your best should count for something, but not according to our Legislators.  So, every time they add a benefit, many employers remove another benefit so they can afford the one the government wants.  There is only one pot of money, but Legislators think employers can just invent more money like Congress does and it just isn’t the case.

If there is one takeaway from the recent Presidential elections is that middle-America and rural areas are tired of being ignored or shoved aside by our representatives.  If you don’t visit and really listen to their issues, you run the chance of being replaced.  Not all issues affecting business and employees can be handled by looking out the window in Los Angeles or Sacramento or Washington, D.C.  I hope they pay attention or 2018 could be a very turbulent year as well.

BUT THERE IS A RESPONSIBILITY OF THE OWNER\EMPLOYER AS WELL:

In 1999, in California, Governor Gray Davis signed the labor bills establishing daily as well as weekly overtime rules.  It also established a 30 minute employee meal with stern regulations.  Here we are 17 years later and there are still a number of employers who ignore, or do not know of these laws, or simply choose to go their own way.  This affects all of us.  When an employer does not follow the simple laws and refuses to do things like installing a time clock and paying people for the hours they work, they give every employer a black eye and give every Legislator an easy excuse to add new laws and regulations.  In other words, a few stubborn bad employers are making business hard for everyone else.  Instead of just complaining about the State or the Federal government, if  you know an employer that is not following the law, talk to them and let them know they are a big part of the problem.

The easiest way to pay people with the least amount of work on your part is to pay people exactly what they work based on a time clock.  Anything else you are doing is why we keep getting more “wage theft” headlines.  Let’s all resolve in 2017 to pay people for what they work and hold them accountable for the job.  Spend your hard time enforcing your rules instead of working hard to explain a poor payroll practice.  With minimum wages going up and other regulations coming to many States, 2017 is a good year to get on board the right train.  HR Mobile Services, Inc. is there to help you do it, but you have to follow the program to make it successful.

Have a Happy and Prosperous New Year!!!

US Dept of Labor Issuing new Rules for Salary Exemptions

Below is a release from the US Department of Labor.   Many states take their labor rules directly from the US  DOL but many others have their own rules under which employees are eligible for overtime pay.  For instance in California, a salaried person must be paid twice the minimum wage and be in a largely administrative position not doing the same work as the hourly employees.  They must exercise independent thought and actions and this is a pretty high standard to be exempt from overtime requirements.  Further, if you have salaried people, you better have a written agreement of what the salary covers as far as expected hours of work each day\week and if there is any overtime figured into the salary.  Otherwise, it is not considered as covering overtime due.  Check with your own state for their rules on overtime, but here is the statement from the US Department of Labor:

 Wage and Hour Division (WHD)

Notice of Proposed Rulemaking: Overtime

President Obama signing the memorandumToday the Department of Labor has announced a proposed rule that would extend overtime protections to nearly 5 million white collar workers within the first year of its implementation. Failure to update the overtime regulations has left an exception to overtime eligibility originally meant for highly-compensated executive, administrative, and professional employees now applying to workers earning as little as $23,660 a year. For example, a convenience store manager, fast food assistant manager, or some office workers may be expected to work 50 or 60 hours a week or more, making less than the poverty level for a family of four, and not receive a dime of overtime pay. Today’s proposed regulation is a critical first step toward ensuring that hard-working Americans are compensated fairly and have a chance to get ahead.

On March 13, 2014, President Obama signed a Presidential Memorandum directing the Department to update the regulations defining which white collar workers are protected by the FLSA’s minimum wage and overtime standards. Consistent with the President’s goal of ensuring workers are paid a fair day’s pay for a fair day’s work, the memorandum instructed the Department to look for ways to modernize and simplify the regulations while ensuring that the FLSA’s intended overtime protections are fully implemented.

Following issuance of the memorandum, the Department embarked on an extensive outreach program, conducting listening sessions in Washington, DC, and several other locations, as well as by conference call. The listening sessions were attended by a wide range of stakeholders: employees, employers, business associations, non-profit organizations, employee advocates, unions, state and local government representatives, tribal representatives, and small businesses. In these sessions the Department asked stakeholders to address, among other issues: (1) What is the appropriate salary level for exemption; (2) what, if any, changes should be made to the duties tests; and (3) how the regulations could be simplified. The Department’s extensive outreach helped in shaping a proposed rule that is intended to be responsive to concerns raised by the regulated community.

The Notice of Proposed Rulemaking (NPRM) was published on July 6, 2015, in the Federal Register (80 FR 38515) and invited interested parties to submit written comments on the proposed rule at www.regulations.gov by September 4, 2015. Only comments received during the comment period identified in the Federal Register published version of the NPRM will be considered part of the rulemaking record.

Written comments received during the comment period will be helpful in shaping any final rule. Based on past experience and extensive work with the regulated community on other FLSA-related matters, we believe a 60-day comment period provides sufficient time for interested parties to submit substantial comment. Equally important, a comment period of this length, coupled with the feedback already received during the initial outreach sessions, will meet the goal described above of ensuring the Department has the level of insight from the public needed to produce a quality regulation. For these reasons we will not be extending the comment period.

Additional Information

 

   

Starting July 1, 2015, Obamacare will punish businesses who help employees with health care

Blog writer’s note: The following is an article Posted By Eric Boehm On July 1, 2015 @ 4:00 am at Watchdog.org.  More information can be obtained at the end of this article. While this article may affect some of our readers, we caution you not to overreact to its contents. Instead, we suggest you contact your tax professional or accountant to inquire about your possible exposure to this issue.

By Eric Boehm | Watchdog.org

Employers who reimburse their workers for health care costs will face massive tax penalties beginning Wednesday.

Prior to the passage of the Affordable Care Act, with its mandate that all Americans purchase insurance and requirement for businesses to offer employees insurance plans, many small companies provided coverage by directly reimbursing medical costs or for the cost of private insurance plans. Businesses do it because that’s a less complicated process than dealing with an official health insurance plan, but continuing to do so after July 1 could cost them hundreds of dollars in fines each day.

IF YOU LIKE YOUR INSURANCE…: Businesses that offer reimbursement for health care costs could face massive IRS penalties beginning on Wednesday. Business groups say many small businesses might be unaware of the risk.

Business groups are calling attention to what they say is an obscure part of Obamacare that could crush small businesses who are unaware of it.

“It’s the biggest penalty that no one is talking about,” said Kevin Kuhlman, policy director for the National Federation of Independent Businesses, on Tuesday.

The penalties will only affect businesses with less than 50 employees. Those with more than 50 employees are already required to offer a health insurance plan.

The new rule is the result of an Internal Revenue Service interpretation of part of the ACA. It seems intended to force employers to offer a group health insurance plan (or leave their employees to fend for themselves on the health insurance exchanges).

The IRS says those reimbursements — technically known as “employer payment plans” [2] — are “considered to be group health plans subject to the market reforms, including the prohibition on annual limits for essential health benefits and the requirement to provide certain preventive care without cost sharing.”

The end result?

“Such an arrangement fails to satisfy the market reforms and may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee) under section 4980D of the Internal Revenue Code [3],” according to the taxmen.

Business groups say the punishment doesn’t fit the crime.

Even though the total fine is capped at $500,000 per year, that’s still miles ahead of the $2,000 fine that could be waiting for larger companies (those with more than 50 employees) that fail to comply with the individual mandate part of the ACA.

The NFIB says 14 percent of their members do not provide health insurance plans, but instead offer reimbursement.

The owner of a Minnesota-based company with 17 employees told NFIB [4] the new rules would require health benefits to go through the payroll process. That means it is subject to taxes, which reduces employees’ benefits and increases the business’ costs.

“Reimbursing employees for the cost of insurance or medical services is a way for small businesses to help their workers without the administrative headache of setting up a costly group plan,” said Kuhlman. “Most small employers don’t have HR departments or benefits specialists, so this is a simpler, easier way to help their employees.”

The prohibition on employer reimbursement was supposed to start last year, but the IRS postponed implementing it until July 1.

There has been bipartisan support [5] in Congress [6] for eliminating the harsh penalty on small businesses, but bills have not advanced.

“This would be devastating to small businesses and impose hardships on their employees,” said U.S. Sen. Chuck Grassley, R-Iowa, in January, referring to the potential $100-per-employee-per-day fine. “Congress has to fix this problem. [7]”

Note from HR Mobile Services, Inc.

Article printed from Watchdog.org: https://watchdog.org  If you would like more information about this organization or about the author or article, please visit their website .

 

URL to article: https://watchdog.org/226796/obamacare-punishes-small-businesses/

OBAMA EXECUTVE ORDERS AND YOUR BUSINESS

We have been fielding a number of calls lately regarding Executive Orders signed by President Obama.  You must first understand that an Executive Order only affects Federal Laws and the interpretation of regulations for Federal workers and those who have contracts with the Federal government.  Private businesses are, for the most part, exempt from these orders.  So, your minimum wage will not be affected by an Executive Order unless your state takes all of their labor law from the Federal Department of Labor.

The same applies to the order regarding overtime.  If your company is in California, for example, you already have a series of Wage Orders and Labor Regulations that further define exempt and non-exempt status of employees.  The Federal Law is not as defining of work status in regards to overtime law.  Many States follow Federal Labor law but institute their own standards for overtime and minimum wages. In general, the rule is the law that is more favorable to the employee is the prevailing law.  Sometimes, this can create a conflict.

For instance, is an employee better served by a law that allows them to work four 10 hour days instead of requiring only 8 hours in a day or they incur overtime.  Is the employee better off working 4 days vs 5 days for the same amount of hours?

The take-away from this message is that these Executive Orders do not affect most of you, but beware that States are following what is happening on a Federal level and often adjust in accordance.

Employer Mandate Pushed Back AGAIN!!!

Some good news for a change for mid-sized employers:

Another day, another Obamacare delay. Once again, the employer mandate, which in theory requires businesses with 50 or more employees to provide qualifying health coverage for employees, is the target.

Last summer, the administration put the requirement on hold for an extra year. Now it’s tweaking the provision even further. Businesses with between 50 and 99 employees will not be subject to the employer mandate until 2016. The administration says it will require employers participating in the delay to certify that they aren’t cutting back on jobs strictly to fall under the 100-employee threshold.

The administration is also tweaking the coverage rules for larger businesses. Employers with 100 or more employees will now only have to provide coverage for 70 percent of their workers through 2016. Previously, those firms had been required to give coverage to 95 percent of their workers to meet the requirement.

This is an evolving situation that will not be resolved with this latest executive order.  In fact, there is serious debate on whether the President is overreaching his authority.  Other conversations surround eliminating the employer mandate in part or entirely.  The President insists it is not a penalty on employers, but a way to “make everyone share the burden of the cost” of healthcare for all.  A fee, a tax, a penalty, it is all money out of your business.  We will keep monitoring the situation.