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