Soup of the Day. HR Alphabet FLSA ACA IRS DOL

Transcription

1 DOL IRS ACA Oh My

2 Soup of the Day HR Alphabet ACA FLSA IRS DOL

3 This presentation is intended to provide a summary of information and resources available from Department of Labor, Internal Revenue Service and Society of Human Resource Management. This material is not legal advice or a recommendation for a course of action. This information also does not identify any course of action any IN- ABC Member may or may not have taken or are considering. This presentation is also not meant to represent any support or disagreement with any current or future elected or appointed official. IN-ABC members should review resources and guidelines and consult with attorney, accountant, insurance and other professional resources to make final decisions.

4 CONTRACTOR or EMPLOYEE? Responsibility for classifying a worker is with the employer. IRS, DOL (Department of Labor), Workers Compensation and Unemployment entities all have similar but different framework to determine contractor vs. employee. State of Indiana Independent Contractors (from Worker s Compensation Board of Indiana) Indiana Code (b)(7) states that : A person is an independent contractor and not an employee under IC if the person is an independent contractor under the guidelines of the United States Internal Revenue Service.

5 Factors to consider (DOL Wage and Hour Division Fact Sheet #13) The extent to which the work performed is an integral part of the employer s business is the work performed by a worker is integral to the employer s business it is more likely that the worker is economically dependent on the employer and less likely in business for themselves. Whether the worker s managerial skills affect his/her opportunity for profit and loss. The relative investments in facilities and equipment by the worker and the employer. The worker s skill and initiative. The permanency of the worker s relationship with the employer. The nature and degree of control by the employer who sets pay amounts and work hours and how the work is performed worker s control of their own hours or working from home or off-site is not indicative of independent contractor status employer may exercise substantial control over the working relationship even if it exercises less day-to-day control. Fact Sheet #13 also states that an agreement stating that the worker is an independent contractor is not controlling because of the reality of the working relationship not the label given is determinative. Likewise licensure by a state agency or mode of pay does not determine employee status alone.

6 Consideration from IRS evidence of the degree of control and independence 1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job? 2. Financial: Are the business aspects of the worker s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.) 3. Type of Relationships: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business? Employer - IRS has a SS-8 form where you can ask the IRS to review may take up to 6 months. Worker if they believe they have been misclassified they can file a form with Social Security.

7 Legal Ramifications of Misclassification Tax consequences Employee Benefits Workers Compensation Unemployment Compensation (if the unemployment agency believe the worker is misclassified) Wage and Hour liability Other liability

8 Chart taken from an ADP webinar

9 Definitions from ADP ACA: Glossary of Terms Full Time Employee (for the purposes of the Shared Responsibility provision of the ACA) * An employee who is reasonably expected to work fulltime at time of hire, or an employee who has worked, on average, at least 30 Hours of Service per week (or 130 Hours of Service per month) during the employer s Measurement Period. Full Time Equivalent Employee This concept applies only for determining an employer s status as an Applicable Large Employer (ALE) for purposes of the Shared Responsibility provision. To determine the number of Full-Time Equivalents for a month, add the number of all Full-Time Employees to the number derived by taking all of the Hours of Service (up to 120 per employee) of all part-time employees (those working less than 30 hours per week) and dividing by 120. The total for each month is then added together and divided by 12 for each year to determine the number of Full-Time Equivalent Employees in a year. This is another area where contractor vs. employee impacts what course of action the business takes. In addition to deciding about offering employee benefits, you will also need to consider how you will manage compliance and required IRS filing (i.e C)

10 Department of Labor Proposed Changes to FLSA Overtime Rules (FLSA Fair Labor Standards Act) Timeline of Proposed FLSA Overtime Rules March, 2014 President Obama signed a Presidential Memorandum directing the DOL to update regulations defining which white collar workers are protected by the FLSA s minimum wage and overtime standards. June 30, 2015 DOL released proposed regulations. July 6, 2015 proposed regulations were published in the Federal Register. March 14, 2016 DOL rules sent to Office of Management and Budget (OMB). March 17, 2016 S.2707 and HR 4773 (Protecting Workplace Advancement and Opportunity Act) was introduced.

11 Current: Must meet all 3 tests: Salary Basis Test pay is predetermined and cannot be altered due to variations in quality or quantity Salary Level Test earning less than $455/week ($23,660/year) is nonexempt entitled to overtime for working over 40 hours in a workweek regardless if they were paid hourly or salaried. Duties Test specific duties per type of job, i.e. Administrative, Executive, Professional, Outside Sales Professional performance of work requiring advanced knowledge, predominantly intellectual in character, in a field of science or learning, knowledge customarily acquired by a prolonged course of specialized intellectual instruction. Proposed Changes: Salary Basis Test no proposed changes Salary Level Test increase the standard salary level to $921/week ($47,892/year) based on 2013 data with a mechanism to annually update the minimum salary level one of the proposed mechanism would make the 2016 salary requirement at $970/week or $50,440/year. Duties Test the DOL did not propose any specific changes to the regulations, they did accept comments as to whether the duties tests should be updated.

12 Word on the Street DOL regulatory agenda pegged July 2016 as the release date Timing of the Congressional Review Act gives Congress 60 legislative days to in effect veto (via resolution) any regulation following OMB review (before May 16, 2016 not to have to face 2017 Congress/President) only used once successfully for an OSHA rule on workplace ergonomics. Odds of litigation over the rule are pretty close to 100% attorney in a DC law firm

13 RESOURCES Department of Labor Wage and Hour Division Internal Revenue Service Small Business and Self-Employed Tax Center Society of Human Resource Management Some resources are public some resources require membership Membership is at the professional level (not company) $190/year