Below are three common employment scenarios that are often misunderstood which we would like to review:
1. Travel Expenses – Most states require employers to indemnify an employee for expenses incurred in the course of “discharging their duties” for their employers. This means that employers must reimburse for items such as mileage or reasonable travel expenses. The reimbursement is generally not taxable income, and can be paid through a company accounts payable department. Employers who reimburse employees for mileage at the IRS rate are deemed to have indemnified the employee for all expenses associated with using their car for work (gas, insurance, wear and tear, etc.). Therefore, we recommend employers adopt the IRS rate.
2. Tip Sharing – Occurs when a server shares the earned tips with “any employee who participates with the server in rendering some personal service to the patron.” Whether tip sharing is lawful and who may participate is determined by state law. Often, only those who are in the direct line of service may participate, and in other states, employees without direct service (e.g. cooks, dishwashers) may participate. Employers should carefully review their tip sharing practices, and determine if they are being applied in accordance with state law, as there have been many lawsuits regarding this issue recently.
3. Waiting Time – If an employee arrives to work, and is not put to work, but instead asked to wait until work is available, they are considered to be “under the control of the employer.” This means simply, they must be paid for the waiting time. If an employee is instead “on call”, where they are not required to report, and are free to engage in their own pursuits, but must be able to report within a certain time frame, they are generally not owed compensation.
If you have any questions regarding payroll, wages, IRS reimbursement or other employment-related issues, please do not hesitate to contact our Human Resources Consulting experts who will be happy to assist you.
Source: www.eplipro.com June 2010
Last month, Joshua Sable, Esq., CPEhr’s in-house General Counsel, conducted a webinar covering important changes to labor laws affecting small businesses. The “2010 Employment Law Updates” webinar covered a wide range of HR topics, including the HIRE Act, health care reform, disability discrimination, harassment claims, arbitration agreements, spying on employees, and trade secret protection.
According to the U.S. Government Accountability Office (GAO), the IRS claims to lose millions of dollars in uncollected taxes each year due to independent contractor misclassification by employers. As such, as part of a national research project on employment taxes, the IRS is scheduled to audit 6,000 randomly selected companies ranging from large to small firms and even non-profits. The goal of the program, which is scheduled to last from 2010 to 2012, is to create a scoring system for employment taxes. The audit will focus on the following items: failure to file, fringe benefit issues, executive compensation (including stock options) and employees misclassified as independent contractors.
If you are like most employers, the chances are you use Independent Contractors. Employers engage the services of Independent Contractors (IC’s) instead of employees for numerous reasons. Mostly, to save money on a range of employment costs, such as:
In our last post we reviewed some of the basic guidelines relating to wage and hour compliance, and how California law differs from Federal law. In this post we continue to review wage and hour laws, but move to bonuses.
Companies both large and small are finding themselves in legal battles against employees for not complying with overtime laws as outlined in the Fair Labor Standards Act of 1938 (FLSA). The complex regulations found in the FLSA code governing proper payment of wages is overseen by the Department of Labor and can result in hefty fines, or possibly prison time, for multiple violations. In this and subsequent posts, we will look at some of the potential pitfalls, guidelines and laws governing wages as outlined in the FLSA.