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Updates for Payroll for October

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Here are our updates for October.  I pick one item from each of my newsletters to feature.  To receive all of our payroll news updates, please subscribe to my news update service.

October 19:

Unemployment Insurance 2023 Wage Bases and Rates:

  • New York: The taxable wage base for 2023 will be $12,300
  • Oklahoma: The unemployment taxable wage base will increase to $25,700.
  • Wisconsin: For 2023, Schedule D remains in effect
  • Wyoming: the 2023 unemployment taxable wage base will increase to $29,100.

October 15:

IRS has announced transportation fringe benefits for 2023.  They are:

Qualified transportation: For taxable years beginning in 2023, the monthly limitation under § 132(f)(2)(A) regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $300.  The monthly limitation under § 132(f)(2)(B) regarding the fringe benefit exclusion amount for qualified parking is $300.

October 14: 

Washington: the state has two items for today’s update. These are:

  1. The Seattle Office of Labor Standards has announced the 2023 minimum wage
    • For large employers (501 or more employees): $18.69 per
    • For small employers (500 or fewer employees) who do pay at least $2.19 per hour toward the employee’s medical benefits and/or where the employee does earn at least $2.19 per hour tips the rate will be $16.50 per hour, otherwise the minimum wage rate of $18.69 per hour would apply.
  2. The SeaTac minimum wage rate for hospitality and transportation industry employees working in and near SeaTac will increase to $19.06 per hour, effective January 1,

 

 

Wage and Hour Laws–They are Here, There and Everywhere Part 4

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In my first blog in this series, October 23, 2019, I started discussing the complexities of compliance with wage and hour laws.  Which apply…federal or state?  What areas are covered?  When these questions do arise, where do you find the answers? Can a payroll professional simply check the Fair Labor Standards Act (FLSA) to find the answer with a quick verification of any state requirement? Or is the state the main source to go to first with the FLSA as the fall back? The answer is not simple.  In this blog series I will be discussing 23 areas where payroll professionals need to ensure compliance by researching wage and hour laws. In Part 2, I covered the first six areas. In Part 3 I discussed the next four areas.  This time I am reviewing the next set of four areas that may require research to ensure compliance: which includes posting requirements, frequency of payments, methods of payments, and termination requirements.

11. Posting Requirements
Many states have posting requirements in addition to the ones required by the FLSA.  The state may have its own minimum wage poster.  It may require a payday notice or copies of the wage and hour laws be posted or given directly to the employee. State with payday notice regulations include California, Montana, Minnesota, Texas, Tennessee and New York For those states who have them, including California, Connecticut, Colorado, Massachusetts, New Jersey, and New York, wage orders are usually required to be posted as well.

 

 

12. Frequency of Payments
Federal laws do not specify when an employee must be paid, only that they must. However, most states have a requirement that not only must employees be paid but that they must be within a certain frequency, such as semi-monthly or weekly.  Arizona requires that the employer designate two or more days in each month to pay employees and the days cannot be more than 16 days apart.  New York bases its requirements on whether the employee is a manual worker, a clerical worker or other type of worker. Most states require either biweekly or semimonthly paydays.  These include California, Illinois and New Mexico. Other states permit monthly payrolls including Alaska, Delaware and Washington. Be sure when researching to also check into the amount of time permitted between closing the payroll (collecting the timesheets) and paying the employees.  States do have requirements on what can be called “payroll processing time” or “lag time”.

13. Method of Payment
There is no requirement under the FLSA as to the method to pay an employee. Almost all the states do address this issue. The common requirement is the employee be paid by U.S. currency or check.  The federal government does regulate the paying of employees via direct deposit under the Electronic Funds Transfer Act. The Act was recently updated to include the newest method of payment of employees—payroll debit cards. The states are updating their regulations for payroll debit cards.  The payroll professional must determine if the state allows this form of payment if it intends to begin a pay card payment program and what restrictions may be in place.  These restrictions include limiting fees and voluntary participation.

14. Termination Requirements

Again the FLSA is silent when it comes to requirements on paying an employee who terminates.  States that address this issue vary greatly. For some states it can even depend on whether or not the employee quit or was discharged.  For example, if an employee is discharge Colorado requires that the employee be paid immediately.  But if the employee quits the check is due on the next regular payday. As to whether or not vacation pay must be included with the final paycheck will be discussed in the next segment of this blog.

 

In Part 5 I will be covering the next four areas that may require research including vacation pay requirements, compensatory time off, reporting time or show up pay and call back pay.

With Higher Minimum Wages Can Come Higher Penalties

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As my Payroll 24/7 subscribers found out today, Illinois is increasing its minimum wage to $15.00 per hour by the 2025.  But the bill, Senate Bill 1, also increases the penalties for failure to follow

the new requirements.  One of blogs that I follow, Wage & Hour Insights has an excellent post on this very issue.  I urge you to take a moment to read Bill Pokorny’s blog on the new Illinois minimum wage violations penalties, Stiff New Employer Penalties Included in Illinois $15 Minimum Wage Law. It is an excellent source on the new requirements.

Election Day a National Holiday?

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Well it’s almost over, the 2018 election. Still having a few counts here and there with a runoff election still to come. But all in all, the 2018 election has come and gone. The only thing that remains, as it does after every election cycle here in the United States, is the discussion of making election day a national holiday. But what exactly does a “national holiday” mean here in the United States?

It appears to me that most people who discuss having election day designated as a national holiday don’t understand how holidays work here in this country. The United States does not have national holidays. It’s that simple. Yes, we have days that are designated as a holiday on the federal level. But these days are not official holidays for all employees in the country. They are, rather, the days that federal employees are given off with pay. I have stated this before, in other blogs, but will state once again. The United States is the only country that does not mandate that employees receive days off with pay in honor of national holidays. When I say other countries, I am speaking of course of industrialized countries. But this list of industrialized countries includes Chad, Peru, Slovenia and Sudan. So, we are not only talking about major European countries such as Germany or France. But if we were just looking at European countries let’s take Germany as an example. Germany has one national public holiday which is their German Unity Day, with the remaining 9 to 13 holidays being regulated by what they call their states even though some of them are held nationwide. Now this is in addition to 20 days of vacation as well as additional dates that the employer may give as a public holiday. Yet despite this they have a very strong economy. Yet here in the United States is not mandated for all employees to have the nation’s birthday, July 4th, off with pay.

Therefore, when local, regional, statewide, and national elected officials talk of having our election day as a national holiday it means nothing to the average worker if it were simply to be added to the holidays we already have. Yes, many employees may get Christmas off with pay, or Fourth of July off with pay, but not all employees are required to be given the day off with pay. It all depends on the company’s or employer’s policy. According to the Bureau of Labor Statistics workers in private industry in the United States receive an average of eight paid holidays per year based on the latest statistics in 2017. Workers in the manufacturing and information industries are more likely to receive paid holidays (97%). But workers in the leisure or hospitality industry only receive paid holidays 37% of the time. Not all workers receive the same holidays or the same number of holidays. For example, again the Bureau of Labor Statistics states that workers in manufacturing and financial activities receive an average of nine paid holidays per year while workers in leisure and hospitality receive an average of six paid holidays per year. For clarification, there are 10 annual federal holidays with Inauguration Day occurring only once every four years for a total of 11 days.

Before you start the discussion of employees who would not be able to have a day off due to their type of work such as first responders, hospitals and even restaurants, other countries have already addressed this issue quite easily.  It is usual for the employee who must work on a “mandated holiday” to have another day off with pay. So, if on a Monday holiday, I would have to work as a police officer, I might get Tuesday or Wednesday off with pay in addition to my normal days off.

My question to all the elected officials and others who advocate a national day off to vote is this:  Where would this national election day fall? Would it establish our first and only mandated national holiday? Or would it just simply be added to the calendar as another day to shop, BBQ or sleep in, if and only if, my employer decided to give me the day off with pay?

CA Adopts ABC Test for Independent Contractors

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On Monday, April 30, the California Supreme Court issued a landmark [Dynamex Operations West v. Superior Ct., Cal. Sup. Ct., Dkt. No. S222732, 4/30/18] decision basically stating that the “ABC Test” is to be used when determining whether a worker is an employee or independent contractor for purposes of California wage orders. Previous to this latest decision the court case of S.G. Borello & Sons, Inc. v. Department of Industrial Relations, Cal. Sup. Ct., 769 P.2d 399, 3/23/89) was used to determine employee status. In that case the principal test of an employment relationship was whether the person to whom services were rendered has the right to control the manner and means of accomplishing the result desired. Under Dynamex, the Court embraced a standard that presumes all workers are employees instead of contractors and places the burden on classifying an independent contractor under the ABC test.

For a detailed analysis of this case and how you might have to adjust your hiring decisions, I will refer you to the Labor & Employment Law Blog posted by Timothy Kim for the law firm of Sheppard Mullin.

ALEC Wins Another State Over!

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The American Legislative Exchange Council, or as it is commonly known ALEC, according to their website, is “America’s largest nonpartisan, voluntary membership organization of state legislatures dedicated to the principles of limited government”.  It’s current legislative agenda is to try to stop increases in the minimum wage and the mandatory sick leave movement as it sees it as having a negative effect on workers.  But in order to keep the minimum wage low or as ALEC describes it; “Maximizing the freedom of businesses and employees to negotiate their own wages” they not only have to convince state legislatures not to raise the minimum wage or provide mandated sick leave, but have to convince all local governments as well.  This is a tough job as there are thousands of local entities such as cities and counties that could decide to raise the minimum wage or enforce mandatory sick leave.  So ALEC takes the approach to tackle this from the head down by convincing state legislatures that they need to pass laws that prohibit any local entity from passing any type of minimum wage or benefit increase that does not equal the state level.  At this task they are making headway.  The latest state to buy into ALEC and bar local governments from passing a minimum wage or benefits ordinance is Wisconsin.

New legislation, A748,  prohibits counties, cities, and towns from enacting ordinances that: (1) establish or mandate local hour and overtime requirements, including scheduling employee work hours or shifts; and (2) require employers to provide employment benefits, including a retirement, pension, profit sharing, insurance, or leave benefit. The legislation does allow prospective employers to solicit salary information from previous employers and preempts counties, cities, and towns from prohibiting such solicitation.  The bill is effective as of March 30, 2018.

Court Case on CA’s Day of Rest…Finally Rested

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California has long had a day of rest requirement.  In fact it has existed long before overtime and minimum wage. It guarantees an employee “one day’s rest therefrom in seven”.  But  which employees and what exactly is one day in seven?  This was really never litigated before the current case of Mendoza v. Nordstrom in which the ruling was just handed down on May 8th.  Rather than my trying to explain the entire court case in a blog, I will, instead, urge you to read the recap of the case as presented by Sheppart Mullin Richter & Hampton’s Brian S. Fong for the Mondaq News Update Service. It is an in-depth look at the ruling and the impact on employers.

 

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Comma Placement Matters, Especially in Wage Hour Law

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As many of us who use Facebook know, the grammar police are constantly posting memes about the proper use of commas. Recently the placing of a comma came into play which cause one employer to have to pay back wages for overtime. The U.S. Court of Appeals for the First Circuit has overturned a federal district court opinion and ruled that dairy company delivery drivers are eligible to receive overtime under Maine’s overtime laws. At issue was Maine Rev. State. Ann. §664(3)(F), which provides an exemption from overtime for those involved in the “canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution” of perishable food. The drivers did not dispute that they handled perishable foods, but said that they do not engage in “packing” them, and therefore are eligible to receive overtime. The employer argued that the above provision actually refers to two distinct exempt activities (“packing for shipment,” and ”distribution”), and therefore the exemption from overtime applies to the drivers. The appellate court sided with the drivers. It said that the exemption would have applied to the drivers if the statute had read “packing for shipment, or distribution” rather than “packing for shipment or distribution.” Since the drivers did not pack items for either shipment or distribution, their activities did not come under the statutory exemption [O’Connor v. Oakhurst Dairy, CA1, Dkt. No. 16-1901, 3/13/17].

So watch out for where the commas are placed if you want to avoid penalties!

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State vs. Cities: The Wage Hour Fight Continues

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Localities such as cities or counties have been enacting their own wage and hour requirements for quite a few years now.  Dozens of cities in California and New Jersey have their own sick leave laws as well as higher than state minimum wages.  New Mexico has local minimum wages as does Washington.  But it seems the state legislators are starting to fight back.  With the assistance of groups such as the American Legislative Exchange Council (ALEC) model bills (draft legislation that legislators may customize and introduce) have passed in several states.  The latest states to pass such legislation are Arkansas and Iowa.  These bill basically forbid the local governments from passing any type of law relating to minimum wage, living minimum rates, employment leave or benefits, hiring practices or any condition of employment that is more generous than the federal or state law.  Whether cities will fight back in the courts, or if they even can, remains to be seen. Miami Beach recently tried to establish its own minimum wage despite Florida having passed its own version of the ALEC legislation.  The court struck down the Miami Beach ordinance. So the fight continues.  Payroll professionals need to monitor local minimum wage and sick leave ordinances to ensure compliance but remember these ordinances can be fleeting if the state has passed the ALEC-style legislation.

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School Employees & Overtime: The Latest Blog from Wage and Hour Insights

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In addition to my own blog I like to make sure I follow other  well written and accurate blogs that discuss wage and hour law or other payroll related items.  The Wage & Hour Insights blog is one such blog.  I have shared several of them in the past months.  This time the blog addresses a unique situation but still one that is relevant to all payroll professionals.  Do school employees get overtime for occasional extra duty?  Why relevant to all payroll professionals?  Because though the law does give a limited exception to state and local government employers it does not to private sector employers.  So check out today’s blog from Bill Pokorny for government employees.  But also check out his previous blog on the subject for private sector employers. 

 

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