FEDERAL COMPLIANCE UPDATES
FEDERAL COMPLIANCE UPDATES
IRS RELEASES FAQs REGARDING PAID FAMILY AND MEDICAL LEAVE
The Internal Revenue Service recently released the following answers to Frequently Asked Questions related to the employer credit for paid family and medical leave.
Q: What is the employer credit for paid family and medical leave?
A: This is a general business credit employers may claim, based on wages paid to qualifying employees while they are on family and medical leave, subject to certain conditions.
Q: Who may claim the employer credit for paid family and medical leave?
A: Employers must have a written policy in place that meets certain requirements, including providing:
1. At least two weeks of paid family and medical leave (annually) to all qualifying employees who work full time (prorated for employees who work part time), and
2. The paid leave is not less than 50 percent of the wages normally paid to the employee.
Q: Who is a qualifying employee?
A: A qualifying employee is any employee under the Fair Labor Standards Act who has been employed by the employer for one year or more and who, for the preceding year, had compensation of not more than a certain amount. For an employer claiming a credit for wages paid to an employee in 2018, the employee must not have earned more than $72,000 in 2017.
Q: What is “family and medical leave” for purposes of the paid family and medical leave credit?
A: This is leave for one or more of the following reasons:
1. Birth of an employee’s child and to care for the child.
2. Placement of a child with the employee for adoption or foster care.
3. To care for the employee’s spouse, child, or parent who has a serious health condition.
4. A serious health condition that makes the employee unable to perform the functions of his or her position.
5. Any qualifying exigency due to an employee’s spouse, child, or parent being on covered active duty (or having been notified of an impending call or order to covered active duty) in the Armed Forces.
6. To care for a service member who is the employee’s spouse, child, parent, or next of kin.
7. If an employer provides paid vacation leave, personal leave, or medical or sick leave (other than leave specifically for one or more of the purposes stated above), that paid leave is not considered family and medical leave. In addition, any leave paid by a State or local government or required by State or local law will not be taken into account in determining the amount of employer-provided paid family and medical leave.
Q: How is the paid family and medical leave credit calculated?
A: The credit is a percentage of the amount of wages paid to a qualifying employee while on family and medical leave for up to 12 weeks per taxable year. The minimum percentage is 12.5% and is increased by 0.25% for each percentage point by which the amount paid to a qualifying employee exceeds 50% of the employee’s wages, with a maximum of 25%. In certain cases, an additional limit may apply.
Q: How does the credit impact an employer’s deduction for the wages paid to an employee while on family and medical leave or claim for any other general business credits?
A: An employer must reduce its deduction for wages or salaries paid or incurred by the amount determined as a credit. Also, any wages taken into account in determining any other general business credit may not be used in determining this credit.
Q: What is the effective date of the paid family and medical leave credit?
A: The credit is generally effective for wages paid in taxable years of the employer beginning after December 31, 2017, and it is not available for wages paid in taxable years beginning after December 31, 2019.
Q: Will the IRS provide additional information on the credit?
A: The IRS expects that additional information will be provided that will address, for example, when the written policy must be in place, how paid “family and medical leave” relates to an employer’s other paid leave, how to determine whether an employee has been employed for “one year or more,” the impact of State and local leave requirements, and whether members of a controlled group of corporations and businesses under common control are treated as a single taxpayer in determining the credit.
Data Breach Security Law Takes Effect June 1
Effective on June 1, 2018, Act No. 2018-396 becomes one of the most stringent data security laws in the country. The Alabama law can be categorized into four obligations:
· All entities subject to the law (covered entities and third-party agents) must implement and maintain reasonable security measures to protect sensitive personally identifying information against a breach of security.
· A covered entity shall conduct a good faith and prompt investigation into a breach of security that has or may have occurred in relation to sensitive personally identifying information.
· A covered entity must notify each affected Alabama resident, and a third-party agent must notify the covered entity of a breach of security involving sensitive personally identifying information.
· A covered entity must notify the Alabama Attorney General and credit reporting agencies of a breach involving more than 1,000 Alabama residents.
Aside from the obligation to maintain reasonable security measures noted above, the other requirements of the Alabama law are triggered by a covered entity’s determination that “a breach of security has or may have occurred in relation to sensitive personally identifying information that is accessed, acquired, maintained, stored, utilized, or communicated by, or on behalf of, the covered entity.” A breach of security is defined as the “unauthorized acquisition of data in electronic form containing sensitive personally identifying information.”
Sensitive personally identifying information (“SPII”) includes an Alabama resident’s first name/first initial and last name in combination with one or more of the following:
· A non-truncated Social Security or tax-identification number.
· A non-truncated driver’s license, passport, or other government identification number.
· A financial account number combined with security/access code, password, PIN, or expiration date necessary to access or enter into a transaction that will credit or debit the account.
· An individual’s medical history, mental/physical condition, medical treatment/diagnosis by a health care professional, health insurance policy/subscriber number, or other insurance identifier.
· A user name or email address combined with a password or security question/answer permitting access to an online account affiliated with the covered entity that is reasonably likely to contain or is used to obtain SPII.
Limitations Period for Unpaid Wage Claims Clarified
In the recent ruling of the case Hernandez v. Domenico Farms, Inc., the Colorado Supreme Court held that a terminated employee’s right to seek unpaid wages or compensation at termination is subject to the two- or three-year statute of limitations under the Colorado Wage Claim Act (“CWCA”). The court also clarified that the statute of limitations begins to run when the wages or compensation first become due and payable.
The Supreme Court agreed with the plaintiff that Section 109 of CWCA allows employees to seek wages and compensation that (1) “only become due and payable” when an employee terminates his or her employment, and (2) “had previously become due and payable.” The court further held that the statute of limitations for those wages begins to run on the date that each set of wages first became due and payable — not on the date of separation.
Idaho Legislature Repeals 2016 Changes to Non-Compete Law
Recently-passed Senate Bill 1287 has repealed the provision in Idaho’s 2016 non-compete law that shifted the burden to key employees and independent contractors to prove that they have no ability to adversely affect the employer’s legitimate business interests as a result of their competitive employment.
New Harassment Training Requirements
Maine recently amended its sexual harassment training law to now require that employers use a checklist prepared by the Maine Department of Labor (“MDOL”) to develop their sexual harassment training programs. To download the MDOL training checklist, click here.
The MDOL’s document provides a summary of the training that employers with 15 or more employees must provide, including the requirement for additional training for supervisory and managerial employees within one year of being hired or promoted into a supervisory or managerial position. Employers are also now required to keep records of the sexual harassment training conducted and to maintain these training records for at least three years.
Pregnant Workers Fairness Act Guidance Issued
The Massachusetts Commission against Discrimination (“MCAD”) recently issued questions and answers to provide additional guidance about the Massachusetts Pregnant Workers Fairness Act (“PWFA”) that went into effect on April 1, 2018.
The PWFA requires that employers with 6 or more employees notify all employees of their rights under the Act by April 1, 2018, at hire thereafter, and within 10 days of an employee’s notice to the employer of pregnancy. The MCAD guidance document provides sample language to satisfy the employer’s notice requirement. For more information click here: MCAD Guidance
Preemption Law to Cover Job Interview Limitations Expanded
Effective June 24, 2018, Public Act 84 prohibits local governments from regulating the information employers can request from prospective employees during the interview process. The act also restricts a local government’s ability to implement “ban-the-box” ordinances that prohibit employers from inquiring about an applicant’s criminal conviction history.
The act is in response to municipalities passing ordinances that prohibit employers from seeking salary information from applicants.
Breach Notification Law Enacted
Under recently-enacted SB 62, businesses must disclose a breach of system security to any resident of South Dakota whose computerized personal or protected information was acquired by an unauthorized person.
Furthermore, if the breach exceeds 250 South Dakota residents, the state attorney general must also be informed. These notices must be provided within 60 days after the breach is discovered, unless a law enforcement agency determines that the notification will impede a criminal investigation.
A failure to comply with the notice requirement would be considered a “deceptive act” under South Dakota’s unfair trade practices law, which can trigger criminal as well as civil enforcement.
Personal Liability for Unpaid Wages Now Limited to Company Officers
The Utah Payment of Wages Act (“UPWA”) was recently amended under HB 364 to limit personal liability for unpaid wages only to officer-level employees. The UPWA previously applied personal liability for unpaid wages claims to an employer’s control group, including all those who have power to hire or fire, supervise work, determine the rate and method of pay, and maintain employment records.
Ban-the-Box Law Limits Criminal Background Inquiries
Effective June 6, 2018, Washington will be the next state to implement “ban the box” legislation restricting employers from inquiring about a job applicant’s criminal background during the initial stages of the application process.
The Washington Fair Chance Act (“WFCA”) prohibits inquiries regarding applicants’ conviction histories until the employer has determined the applicant is “otherwise qualified” for the position. Once the employer has initially determined that the applicant is otherwise qualified, the employer may make further inquiry.
All employers in Washington will be prohibited from:
· Advertising openings in a way that excludes people with arrest or conviction records from applying, such as using advertisements that state “no felons,” “no criminal background,” or that otherwise convey similar messages;
· Including any question in an employment application, inquiring orally or in writing, receiving information through a criminal history background check, or otherwise obtaining information about an applicant’s arrest or conviction record, until after the employer has initially determined that the applicant is otherwise qualified for the position;
· Having automatic disqualifiers or categorically disqualifying an individual based a criminal record before initially determining the person is otherwise qualified for the position; or
· Rejecting or disqualifying an applicant for failure to disclose a criminal record prior to initially determining the applicant is otherwise qualified for the position.
Exceptions to the law include:
· Any employer hiring a person who will or may have unsupervised access to children under the age of 18 or a vulnerable adult or person, as defined by Washington law;
· Any employer, including a financial institution, who is expressly permitted or required under any federal or state law to inquire into, consider, or rely on information about an applicant’s or employee’s criminal record for employment purposes;
· Various law enforcement agencies or criminal justice agencies in Washington;
· Any employer seeking a nonemployee volunteer; or
· Any entity required to comply with the rules or regulations of a self-regulatory organization, as defined by the Securities Exchange Act.
The statewide WFCA does not preempt Washington municipalities from enforcing their own ban-the-box ordinances. Current related local ordinances in place include Seattle’s Fair Chance Employment Ordinance and Spokane’s Fair Chance Hiring Act.
Employment Discrimination Protections Expanded to Cover Victims of Domestic Violence
Effective June 7, 2018, House Bill 2661 provides job applicants and employees in Washington who are survivors of domestic violence, sexual assault, or stalking new protections against employment discrimination and adds a new section requiring reasonable safety accommodations.
Under the Act, all employers in Washington State will be prohibited from:
· Refusing to hire a qualified individual because he or she is an actual or perceived victim of domestic violence, sexual assault, or stalking;
· Discharging, threatening to discharge, demoting, suspending, or in any way discriminating or retaliating against an individual because he or she is an actual or perceived victim of domestic violence, sexual assault, or stalking; and
· Refusing to make a reasonable safety accommodation requested by a victim of domestic violence, sexual assault, or stalking, unless such an accommodation would pose an undue hardship on the operation of the employer’s business.
The Act offers examples of a “reasonable safety accommodation”:
· Transfer or reassignment;
· Modified job schedule;
· Change in work telephone number, email address, or workstation;
· Installed locks;
· Implementing safety procedures; or
· Any other adjustment to a job structure, workplace facility, or work requirement in response to an actual or threatened domestic violence, sexual assault, or stalking.
An employer may require verification for an employee’s request for leave or a reasonable safety accommodation under the Act.
Equal Pay Opportunity Act Amends Equal Pay Act
Effective June 7, 2018, the Equal Pay Opportunity Act (“EPOA”) amends Washington’s 1943 Equal Pay Act.
The EPOA amends the existing private cause of action for pay equity complaints, prohibits wage secrecy policies, provides an administrative remedy, prohibits gender-based barriers to career development opportunities, and prohibits employer retaliation for complaints of unequal pay or other protected conduct. Further, the EPOA updates language from “sex” to “gender,” consistent with Washington’s other anti-discrimination laws.
While the original act allowed an employer to assert a “good faith” defense, the updated EPOA goes further and lists the factors a court may consider in an employer’s “good faith” defense. “Good faith” factors include, but are not limited to, business necessity education, training, experience, seniority, merit, and regional differences. An employee may recover reasonable attorneys’ fees in a successful private action.
The EPOA also prohibits an employer from using wage secrecy measures such as requiring nondisclosure of wages as a condition of employment or requiring employees to contractually agree to nondisclosure. Further, an employer may not discharge or retaliate against employees who discuss or compare wage information.
Employers Cannot Prohibit Guns in Vehicles
Effective June 8, 2018, the Business Liability and Protection Act (House Bill 4187) limits a West Virginia employer’s ability to prohibit the lawful possession of firearms locked in vehicles parked in company parking lots. Previously, employers and other property owners in West Virginia had the ability to prohibit the carrying or concealing of firearms on any property “under his or her domain,” including parking areas.
Under the new law, employers may not prohibit any customer, employee or other person lawfully on the premises from storing a lawfully possessed firearm inside of a privately-owned vehicle in a company parking lot, as long as the firearm is out of view and locked inside the vehicle.
Further, employers are prohibited from asking about the presence of a firearm locked inside a vehicle or performing an actual search for a firearm within a vehicle on a company parking lot and from conditioning employment on an employee’s agreement not to keep a firearm locked inside his or her vehicle or on whether an employee holds a concealed-carry license.
The act applies only to privately-owned vehicles and does not apply to vehicles owned, rented or leased by the employer.