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War of the Wages

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“Wage theft” was coined by the Interfaith Worker Justice, a network of people advocating for improved wages, benefits and conditions of workers. It is an epidemic sweeping across industries, regions and firms of all sizes. Wages should warrant the work put in on the job, and yet many employees are finding out that their pay is not so fair after all.

Crime against wage discrimination has perplexed employers for years, but recently, thanks to the testimony of a few individuals, the topic is being brought to the forefront. Cases involving wage theft – whether intentional or unintentional – are knocking down government doors, as Fair Labor Standards Act (FLSA) claims have increased by nearly 600 percent in the last 25 years.

Who is affected?

Wage theft isn’t discriminatory and although pay violations most often affect low-income individuals, no one is immune. In recent years, large employers especially in the fast-food industry have been targets to wage theft settlements. Violations of wage and hour laws don’t just affect the fast-food industry; in fact, a survey by the Department of Labor reported that violations were committed in 50 percent of restaurants in Pittsburgh, 74 percent of day cares in Georgia, 50 percent of nursing homes in St. Louis, 38 percent of hotels and motels in Reno and 42 percent of adult family homes in Seattle.

What does an offense look like?

According to the federal FLSA, state wage and hour violations include

  • Paying insufficient overtime – this is often due to misclassifying exempt and nonexempt positions),
  • Violating minimum wage rules,
  • Off-the-clock claims,
  • Misclassifying workers as exempt instead of nonexempt,
  • Retaliation and
  • Misclassifying workers as independent contractors rather than as employees.

Where do we go from here?

Wage theft is a crime and we need advocates in businesses across multiple industries to bring it to a halt. According to Ken Pinnock, a member of the Society for Human Resources Management’s Ethics/Corporate Social Responsibility and Sustainability Special Expertise Panel, HR can be that advocate. HR professionals tend to wear many hats, but when it comes down to it, the most important role we play is being an advocate for the people, the employees. In instances like these, where employees are being mistreated, HR professionals are vital in mitigating future risks involving wage discrimination. To avoid consequences, HR professionals should consider addressing the issue by:

  1. Raising Awareness – Holding annual training for management and employees alike regarding organizational wage and hour policies is a step in the right direction. Also consider establishing an open door policy with HR staff members and the rest of the organization so that employees can express their concerns without it turning into a potentially ugly dispute.
  2. Reviewing job descriptions and duties – Misclassification errors that result in pay violations tend to happen to a small group of employees. Exempt positions generally take more discretion in judgment than nonexempt positions. By monitoring job duties and randomly interviewing employees you can spot problems before they get out of hand. When interviewing employees find out what their daily job duties include and use caution when you find positions that contain a lot of task-based duties.
  3. Watch for position misclassifications – Wanting to keep payroll costs down is a legitimate concern, but be warned that turning to volunteers and interns can create heightened risk. You can keep payroll costs down but you still have to comply with the law. Be sure employees are not being misclassified.
  4. Throw out the flag – If you see or notice a violation address it immediately. Pride yourself on ethical practices and ensure organizational members at all levels follow the policy.
  5. Conduct an audit – Have an HR consultant or employment lawyer conduct an audit of wage and hour practices. Each audit should be catered to the organization and reflect industry-specific wage and hour risks. Be sure to then follow up on these audits to ensure practices are in line with the law and appropriate changes are addressed.

Become the advocate in your organization and help end this endemic from spreading. Remember you aren’t in this alone, for additional resources, make sure your current HR and payroll provider has the tools available to help you run better reports, keep track of employees’ time and attendance and ensure policies are reviewed and signed to keep your organization compliant.



Author Bio: As a Human Resource Professional with over 20 years of experience, Jenny has extensive experience in management, mentoring, policy development and recruiting. Jenny's team player mentality and leadership abilities make her an elite HR Director who is always on top of the latest HR trends. She relentlessly directs associates and executives to achieve their maximum potential for both themselves and their companies.

IRS Continues to Enforce Affordable Care Act

IRS Continues to Enforce Affordable Care Act

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The IRS recently released an information letter indicating that the IRS continues to enforce the Affordable Care Act (ACA).

Dated June 30, Letter 2017-0010 was sent to a member of Congress who reached out to the IRS at the request of a constituent, a tax-exempt entity concerned it may owe an employer shared responsibility payment (ESRP) because it did not comply with the ACA rules on offering health insurance to its employees, for both financial and religious reasons.

The letter first provides a brief summary of the circumstances that might lead to a large employer owing an ESRP, and notes that there is no provision in the ACA that provides for the waiver of an ESRP.

The letter then addresses the effect of the president’s Jan. 20 executive order on the enforcement of the ACA. Titled “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal,” the order directed federal agencies to exercise discretion permitted to them by law to reduce potential burdens imposed by the ACA.

However, it did not change the health care law. The legislative provisions of the ACA are still in force until changed by Congress; therefore, taxpayers remain required to follow the law and pay what they may owe.

For more information on the executive order and the current tax filing season, visit https://www.irs.gov/tax-professionals/aca-information-center-for-tax-professionals.

What This Means for Employers

Since Congress has not yet passed a bill that would repeal the ACA, and Republicans have struggled to draft a bill that would receive majority support, employers should use caution and plan to comply with the law’s requirements unless and until the ACA is repealed and any new law’s provisions actually go into effect. Continued compliance may be required for a transition period, following passage of an ACA repeal bill, depending on the language of that legislation.

 

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Posted in ACA, Blog, Featured

Erin Maxwell

by Erin Maxwell


Author Bio: As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.

Missouri minimum wage

Missouri Minimum Wage to Decrease from $10 to $7.70

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An overwhelming trend in the U.S. is cities and states increasing the minimum wage employers must pay their employees. However, St. Louis, Missouri is bucking this trend – although not willingly – by decreasing its minimum wage from $10 to $7.70, effective Aug. 28.

Court Battle

In 2015, St. Louis passed an ordinance raising its minimum wage to $10, with an automatic increase to $11 scheduled for January 2018. This prompted the Missouri legislature to pass legislation to pre-empt the ordinance from taking effect. The legislation was quickly enjoined in a lawsuit that went all the way to the Missouri Supreme Court.

In May of this year, St. Louis prevailed in the lawsuit and the minimum wage increased to $10. However, three months after the $10 minimum wage was implemented, the Missouri legislature passed another law disallowing any city in the state from having a higher minimum wage than the state, which is currently $7.70, this forcing St. Louis to reverse.

States vs. Cities

State governments dictating cities’ minimum wages is not altogether uncommon. In 2016, Alabama’s legislature shut down the Birmingham City Council’s efforts to raise its minimum wage. Similar efforts were undertaken by Ohio to block the City of Cleveland.

Other states have preemptively prohibited localities from passing minimum-wage ordinances – even before cities have commenced such efforts. Some of these states include:

  • Colorado
  • Idaho
  • Indiana
  • Kansas
  • Kentucky
  • Michigan
  • North Carolina
  • Oklahoma
  • South Carolina
  • Tennessee
  • Texas
  • Wisconsin

 

Although the St. Louis minimum wage decrease runs counter to the national trend, state legislatures prohibiting local increases is not uncommon. As more cities begin to adopt higher minimum wages, expect some state legislatures to push back.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

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Posted in Blog, Featured, Payroll

Jason Hines

by Jason Hines


Author Bio: Jason Hines is a Paycom compliance attorney. With more than five years’ experience in the legal field, he monitors developments in human resource laws, rules and regulations to ensure any changes are promptly updated in Paycom’s system for our clients. Previously, he was an attorney at the Oklahoma City law firm Elias, Books, Brown & Nelson. Hines earned a bachelor’s degree from the University of Central Oklahoma and his juris doctor degree from the Oklahoma City University School of Law, where he graduated cum laude. A fan of the Oklahoma City Thunder, Hines also enjoys exploring the great outdoors with his wife and daughter.

WOTC Tax Credits

What Tax Credits Are You Leaving on the Table?

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Federal tax credits for businesses are far from easy if you aren’t familiar with the program, and business leaders may find themselves in unfamiliar territory when it comes to their company’s eligibility for tax credits. As a leading provider of comprehensive human capital management software, we have found that the Work Opportunity Tax Credit (WOTC) is one Federal tax credit many leaders underutilize, meaning that they are leaving money on the table when it comes time to do their taxes.

In fact, one Paycom client in the fast-food industry found $447,000 in government-appropriated funds available once they took full advantage of the tax credits available to them. Read more about this client’s experience in our recent case study.

Is your organization is leaving money on the table?

The Purpose of WOTC

WOTC was designed to encourage employers to hire people from segments of the general population who have “consistently faced barriers to employment.”

On average, one in eight new hires potentially qualifies for the WOTC, and that number increases when it comes to the fast-food industry, in which one in four new hires is potentially eligible for the credit.

What WOTC Means for Your Company

Depending on which target group your new hire represents, the number of hours they work and the wages they earn determine the amount of the credit, you can receive up to $9,600 for each eligible new hire.

Like the client in our case study, you may find, that many of the people in your hiring pool are already eligible for the tax credit. They received an average of $1,128 per certified employee.

Who You Can Hire

Qualifying new hires can be full- or part-time workers. They must belong to specific “target groups” designated by the U.S. Department of Labor. These target groups are populations of people who are able and willing to work, but have found barriers to employment for a variety of reasons. Target groups include:

  • veterans
  • Temporary Assistance for Needy Families recipients
  • SNAP recipients
  • designated community residents (living in empowerment zones or rural renewal counties)
  • summer youth employees living in designated communities
  • long-term unemployed

 

 How You Can Receive These Tax Credits

To receive these tax credits, 8850 and 9061 forms must be completed on or before the job offer and sent to your state employment agency within 28 days of the employee’s first day of work. The client in our case study was able to save 75 hours (nearly two weeks of work!) by working with Paycom to process their available tax credits.

If you’re intimidated by or unaware of Work Opportunity Tax Credits, you’re not alone. But you might be missing out by leaving money on the table. Paycom clients using its tax credits service pay nothing for the search if they are found to have eligible employees. Want to learn more about WOTC? Sign up for our August 3 webinar “What’s New With WOTC” to learn the most up-to-date information on WOTC and ask questions specific to your business.

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Posted in Blog, Compliance, Featured, Franchises, Hospitality, Restaurant

Rich Stupansky

by Rich Stupansky


Author Bio: Rich came to Paycom in January of 2010 from Cleveland Ohio and is the Director of Tax Credits at Paycom. Rich was instrumental in developing and creating our tax credits program. Rich has more than 12 years’ experience with federal tax credits and an extensive background in working with companies of all sizes to maximize their full tax credit potential.

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