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How A Timecard Goof-Up Can Cost You $30,000

Restaurant Owner Owes $30,000 for a $30 Mistake
Bobbi Best owns Blondies’ Bistro in Grants Pass, Oregon. In December 2015, a man named Martin Robinson applied for a cook’s position. In the restaurant industry, it is customary for job seekers to exhibit cooking skill in a “working interview.” As Best had routinely done with previous job aspirants, she asked Robinson to sign a waiver in which he consented to an unpaid working interview.

Two chefs prepare meat dish in a professional kitchen at restaurant or hotel.

Two chefs prepare meat dish in a professional kitchen at restaurant or hotel.

Signed Waivers of Acceptance Don’t Supersede Labor Regulations
Evidently, Best did not understand that Oregon labor laws obligate payment of at least minimum wage for time spent in working interviews. At minimum wage, the working interview would have earned Robinson about $30. The following day, Robinson worked a standard shift but then declined the job in a text message to Best. Best paid him approximately $60 for the regular shift.

Ignoring It Won’t Make It Go Away
Robinson took Best to court where she was ordered to pay a fine for the violation. Best didn’t pay the initial fine which compounded to $4,400 in the early spring of 2016. As of October 31, 2016, she had paid over $13,000 in legal fees but still owed over $21,000 to Robinson and his lawyer.

There are numerous lessons to be learned from this story:

1. Employers need to keep accurate, comprehensive records to protect themselves in case of a labor dispute. Accurately track employee hours for working interviews, training, and regular shifts with TimeWorksTouch from SwipeClock. Customize settings to reflect state and industry-specific provisions.
2. Be aware that a or employee may exploit even a small infraction. Labor courts almost always favor the worker, even if they act rapidly to make amends.
3. Gain a comprehensive understanding of state and federal labor provisions, comply with them, and keep up with changes.
4. In the unfortunate event that you are fined, pay immediately before late penalties build up.

Are You at Risk?
Call 888.223.3450 today to see how TimeWorksTouch can guard you from a similar nightmare.

Source:
Based on an October 31, 2016 story written by Jeff Duewel for the Grants Pass Daily Courier, republished by the Medford, Oregon-based Mail Tribune. Jeff Duewel, “Working interview turns into nightmare for Grants Pass Bistro,” Mail Tribune, October 31, 2016, http://www.mailtribune.com/news/20161031/working-interview-turns-into-nightmare-for-grants-pass-bistro, accessed February 28, 2017

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Six Payroll and Benefits Steps After an Employee Dies

It’s an unsettling and emotional time when an employee unexpectedly passes away. From a personal standpoint, co-workers may be stunned and grief-stricken over the loss of a colleague. On the employer side, the business may have to quickly hire a replacement and train him or her to do the job. Frequently, productivity will suffer.

And that’s hardly the end of the story. A number of payroll and logistical issues also arise, including whether the employee is owed wages, how much tax should be withheld from those wages (if any) and how payments are to be made to the worker’s family. Employers must resolve these matters in a timely fashion.

Some of the critical questions to consider are:

  • Is payment due for services that have been performed but the employee hasn’t yet been compensated for? Are amounts owed for other unpaid accrued wages, vacation pay or sick time, fringe benefits, deferred compensation or other types of compensation?
  • Is payment due in the same year that the employee died or in a subsequent year?
  • Who has been designated as the employee’s executor or personal representative? Generally, this person is designated by the employee’s will or probate. If no executor or personal representative has been designated, state law will control.
  • What is the impact of applicable state laws on the payments the employer must make?

Be mindful that the rules can vary widely from state-to-state. For example, in California, the maximum wage an employer may pay to the survivor of a deceased employee before the estate has been administered is $15,000. In New York, the limit is $30,000 within 30 days of death; $15,000 from 31 days to six months; and $5,000 if more than six months after death.

Keeping that in mind, here are six steps to take in the event of the death of an employee.

1. If the employee has been issued a paycheck but died before cashing it, the check must be canceled and reissued in the same net amount, based on the same withholding. Payment should be made to the employee’s beneficiary, executor or personal representative. In addition, the employer should obtain a statement from the employee’s representative that payment has been made for this purpose.

2. Typically, a deceased employee will be owed wages that haven’t yet been paid. In that case, the employer should issue a check to the beneficiary or estate of the deceased employee. Have the executor or personal representative complete Form W-9. (If no executor or personal representative has been designated, wages can’t be paid until the will is probated and the estate has been issued a tax identification number.) Note that wages paid in the year of death aren’t subject to income tax withholding, but the employer must still withhold employment taxes such as FICA and FUTA.

3. Due to delays caused by probate and other timing issues, payment for wages owed to an employee may not be made until the year following the year of death in some cases. If that occurs, payment isn’t subject to employment taxes that must be withheld for payments made in the year of death. The employer pays the amount due to the employee’s estate.

4. Determine the beneficiaries for all other employer-provided benefits (for example, life insurance coverage) as soon as possible. When appropriate, schedule a meeting with the beneficiaries or personal representative to discuss the benefits that are available and the methodology for administering claims.

5. The employer must pay out other types of compensation due to the employee, including accrued vacation pay, sick time or personal leave time. Again, state law will dictate the treatment. If state law doesn’t apply, refer to the employer manual.

6. Finally, an employer should terminate the employee’s health insurance as of the date of death. In some instances, beneficiaries may have rights to amounts in a health care flexible spending account or some other health reimbursement plan. If a spouse or dependents were covered by the employee’s health insurance plan, they must be notified of their rights to continue coverage under COBRA, when applicable.

There are other potential non-payroll matters to address such as returning the employee’s personal property and collecting keys and other proprietary items. Handle these issues with understanding and sensitivity.

The sudden death of an employee can turn a business upside-down. Rely on your payroll and employee benefits advisers to help right the ship.

 

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TIGTA: Potential underreported tax not being addressed

The Treasury Inspector General for Tax Administration (TIGTA) found that billions of dollars of potential underreported taxes were not being addressed by the Combined Annual Wage Reporting (CAWR) Program because most discrepancy cases were not being worked. TIGTA initiated the audit to evaluate whether the IRS-CAWR Program’s document-matching process accurately identified and selected the most productive cases and found that the IRS worked only 17 percent of the discrepancy cases found. The remaining 114,088 (83 percent) discrepancy cases had a potential tax-calculatorunderreported tax difference of more than $7 billion. In addition, discrepancy case selection processes did not ensure that priority was given to working discrepancy cases with the highest potential tax assessment.

TIGTA recommended, among other things, that the IRS: (1) evaluate the current agreement and workload processes with the Social Security Administration to determine if changes could be made; and (2) revise its case selection criteria to include auto-generated cases with the highest potential tax assessment. The IRS agreed with six of the seven recommendations but did not agree to include prior-year discrepancy cases when current-year discrepancy cases were selected for the same employer. (TIGTA Report: Case Selection Processes Result in Billions of Dollars in Potential Employer Underreported Tax Not Being Addressed (Reference Number: 2017-40-038).)

August 8, 2017 by 

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IRS begins issuing notices to taxpayers whose ITINs will expire in 2017

The IRS began mailing letters this month to more than 1 million taxpayers with expiring Individual Taxitinpayer Identification Numbers and urges recipients to renew them as quickly as possible to avoid tax refund and processing delays. ITINs with middle digits 70, 71, 72 or 80 are set to expire at the end of 2017. The notice being mailed — CP-48 Notices, You must renew your Individual Taxpayer Identification Number (ITIN) tofile your U.S. tax return — explains the steps taxpayers need to take to renew the ITIN if it will be included on a U.S. tax return filed in 2018. The notices will be issued over a five-week period beginning in early August. Taxpayers who receive the notice but have acted to renew their ITIN do not need to take further steps unless another family member is affected. (IRS News Release, IR-2017-128, Aug. 8, 2017.)

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DOL’s prohibition on employers retaining tips is invalid

August 1, 2017 by 

The Department of Labor (DOL) exceeded its authority when it implemented a regulation categorically prohibiting employers from retaining tips regardless of whether they avail themselves of the tip credit, the Tenth Circuit held. The underlying suit was brought by a catering employee whose employer pocketed the gratuities added by customers when paying the final bill after catering events. Because the caterer did not take the tip credit-in fact, the server earned well above the minimum wage-the tip-credit provision did not apply. The bottom line: “An employer that pays its employees a set wage greater than the minimum wage does not violate the FLSA when it retains tips paid by customers,” the appeals court wrote, affirming a district court’s grant of judgment on the pleadings to her employer. The Department of Justice (DOJ) had filed an amicus brief in the case to defend the DOL regulation, to no avail.
The caterer paid its servers a base wage of $12 an hour ($18 an hour for overtime). Catering customers typically added gratuities when paying their final bill at the end of events, and the caterer retained those gratuities rather than pass them on to the servers. Contending that the FLSA requires the caterer to turn over at least a share of those tips, one of the servers filed suit, asserting a cause of action based on the FLSA’s tip-credit provision. She also cited the DOL’s regulation, which mandates that employers may not retain employees’ tips, regardless of whether those employees earn at least the $7.25 federal hourly minimum wage. However, neither entitled her to relief. The tip-credit provision did not apply, since the caterer didn’t take the tip credit. And the 2011 regulatory interpretation of the tip-credit provision was an overreach on the DOL’s part.

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Chef Andy Husbands will be featured on Chopped Grill Masters

chopped-grill-masters-collage

Competitive cooking shows are everybody’s not-so-guilty pleasure these days, and what better place to watch than in the restaurant of one of the contestants? Chef Andy Husbands, owner and pit-master at TheSmoke Shop in Cambridge and Tremont 647 in the South End, is competing on Chopped Grill Masters on Tuesday, August 1st, and his team back home is showing their support by tuning all nine TVs to the Food Network to cheer him on. From 9:30-11:00pm the sound will be on, and the ribs will be tender as you root for the hometown hero. The event is free, but reservations are highly recommended. To book yours, call 617.577.RIBS or click here to reserve a ticket.

Published by BostonChefs.com

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Senate Rejects Efforts to Repeal the ACA

16469639-eatxcvulOVERVIEW

In the early morning hours of July 28, 2017, members of the U.S. Senate voted 49-51 to reject a “skinny” version of a bill to repeal and replace the Affordable Care Act (ACA), called the Health Care Freedom Act (HCFA).

This was the final vote of the Senate’s 20-hour debate period, and effectively ends the Republicans’ current efforts to repeal and replace the ACA. However, the skinny repeal bill may be reintroduced at some point in the future.

IMPACT ON EMPLOYERS

Because the Senate was unable to pass any ACA repeal or replacement bill, the ACA remains current law, and employers must continue to comply with all applicable ACA provisions.

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Social Security Annual Report

Social security annual report projects $130,500 wage basedollar-e031b00d2c_180

The Social Security Board of Trustees has released its annual report on the long-term financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance and the Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2034, the same as projected last year. The DI Trust Fund will become depleted in 2028, extended from last year’s estimate of 2023, with 93% of benefits still payable. The 2018 wage base is projected to be $130,500. The Board of Trustees usually comprises six members. Four serve by virtue of their positions with the federal government: Steven T. Mnuchin, Secretary of the Treasury and Managing Trustee; Nancy A. Berryhill, Acting Commissioner of Social Security; Thomas E. Price, M.D., Secretary of Health and Human Services; and R. Alexander Acosta, Secretary of Labor. The two public trustee positions are currently vacant. View the 2017 Trustees Report at www.socialsecurity.gov/OACT/TR/2017/.

(The 2017 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, July 13, 2017.)

July 27, 2017 by 

 

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