Vision Payroll

While many employers have implemented English-only workplace policies, employers need to apply their rules appropriately in ways that avoid unfair discrimination claims.

Tennessee has enacted a new state law authorizing employers to impose an English-only workplace policy as long as it’s justified by a legitimate business purpose. The statute says that such a policy is not discriminatory under Tennessee law. Federal courts and the US Equal Employment Opportunity Commission (EEOC) have found such policies to be unlawfully discriminatory on the federal level. There are some situations in which the EEOC has said that business necessity justifies an English-only policy.

To learn more about these situations, which businesses are impacted, and steps employers should take before implementing an English-only policy, be sure to listen to English Language in the Workplace in this month’s HRCast, a recording provided by our team of HR Pros and available exclusively on MyHRSupportCenter.

Visit MyHRSupportCenter regularly, not only for our HRCasts, but also to get late-breaking compliance alerts, best practices to implement, and HR tools to use every day. If you haven’t yet signed up and would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

The New Hampshire Department of Employment Security has announced an increase in the taxable wage base for 2011. The wage base will increase from $10,000 for 2010 to $12,000 for 2011. The taxable wage base will also increase to $14,000 for 2012. Contact Vision Payroll if you have any questions on New Hampshire unemployment taxable wage base or visit our Unemployment Taxable Wage Base page.

The office of Massachusetts Attorney General Martha Coakley recently announced a settlement with FedEx Ground over claims that FedEx Ground misclassified drivers as independent contractors rather than employees. As a result, it was alleged that FedEx Ground underpaid payroll taxes, workers’ compensation and unemployment assistance.

“We have made enforcement against employer misclassification a priority because employers who misclassify workers are gaining an unfair advantage over their competitors and unfairly depriving the Commonwealth of tax and other revenues,” AG Coakley said. “With today’s agreement, we have recovered $3 million owed to taxpayers and taken a step to level the playing field for businesses. I want to thank Governor Patrick and his Executive Office of Labor and Workforce Development and the Department of Revenue for assisting in the investigation and resolution of this matter.”

In 2007, the Attorney General’s Office cited FedEx Ground for violation of the Independent Contractor Law, by misclassifying its drivers, failing to provide a proper paystub, failing to provide workers’ compensation, not paying overtime to certain drivers, and neglecting to deduct and withhold state income taxes. FedEx Ground appealed the matter to the Division of Administrative Law Appeals (DALA). The Attorney General’s Office citations against Fed Ex Ground included penalties of more than $190,000.

While FedEx Ground’s appeal was pending before DALA, the Attorney General’s Office coordinated further investigation with the Executive Office of Labor and Workforce Development and the Department of Revenue into FedEx Ground’s business practices. The joint investigation revealed that FedEx Ground’s misclassification of employees had resulted in significant underpayments to the Department of Revenue, Division of Industrial Accidents and Department of Unemployment Assistance.

The settlement amount includes these significant underpayments. The settlement also provides for a payment for the 13 drivers named in the Attorney General’s citation. FedEx Ground drivers in Massachusetts have brought their own lawsuit against FedEx Ground that remains pending and is not affected by this settlement. FedEx Ground denies liability in the settlement.

Massachusetts uses a three-factor test to determine if service providers should be considered employees or independent contractors. Due to increased enforcement and significant penalties for misclassification, Vision Payroll strongly recommends employers consult with a competent labor law attorney to help determine status of workers as employees or independent contractors.

The Washington Employment Security Department has announced an increase in the taxable wage base for 2011. The wage base will increase from $36,800 for 2010 to $37,300 for 2011. Contact Vision Payroll if you have any questions on the Washington unemployment taxable wage base or visit our Unemployment Taxable Wage Base page.

New Jersey Governor Chris Christie recently signed into law S-1813, which reduces the unemployment tax rates that employers would have otherwise had to pay during the 2011 rate year (July 1, 2010 through June 30, 2011). During the 2010 rate year (July 1, 2009 through June 30, 2010), rates for employers in New Jersey were determined based on the rates in column B of the tax table. Without the passage of S-1813, employers would have had their rates for 2011 determined by column E of the tax table. Additionally, a 10% surcharge would have applied to all employers. Under S-1813, rates in 2011 will be determined by reference to column C of the tax table.

Additionally, the new law establishes three levels of misconduct, (misconduct, severe misconduct, and gross misconduct), which either prohibit payment of unemployment benefits or extend the waiting period before benefits can be paid.

Finally, the bill creates an Unemployment Insurance Fund Task Force to study and assess, among other things, the current unemployment crisis and recommend how the state can restore the trust fund to solvency in a way that balances the interests of workers, employers and the overall economy.

Contact Vision Payroll if you have any further questions on S-1813.

This week’s question comes from Julia, a business-owner. We have employees who work in more than one state. I understand how to determine which state’s income tax to withhold, but I don’t know what to do about unemployment tax. Where do I pay unemployment tax for employees who work in more than one state? Answer: The general rule for employees who work in more than one state is that employees should be covered by only one state to prevent employers from paying tax in two or more states for the same employee. To determine which state, employers should look at four factors, in the following order:

1. Localization of Services
2. Base of Operations
3. Place of Direction or Control
4. Place of Residence

The employee is covered by the state under which that employee first qualifies using these factors. For example, if an employee is determined to be covered by a state under the Localization of Services test, the results of the remaining tests are irrelevant. Only if a determination cannot be made under the Localization of Services test does the employer consider the Base of Operations test.

Contact Vision Payroll if you have further questions.

According to the US Department of Labor, in the week ending July 10, the advance figure for seasonally adjusted initial claims was 429,000, a decrease of 29,000 from the previous week’s revised figure of 458,000. The 4-week moving average was 455,250, a decrease of 11,750 from the previous week’s revised average of 467,000.

The advance seasonally adjusted insured unemployment rate was 3.7% for the week ending July 3, an increase of 0.2 percentage points from the prior week’s revised rate of 3.5%.

The advance number for seasonally adjusted insured unemployment during the week ending July 3 was 4,681,000, an increase of 247,000 from the preceding week’s revised level of 4,434,000. The 4-week moving average was 4,581,250, an increase of 22,000 from the preceding week’s revised average of 4,559,250.

The fiscal year-to-date average of seasonally adjusted weekly insured unemployment, which corresponds to the appropriated AWIU trigger, was 5.056 million.

The Internal Revenue Service (IRS) recently released Information Letter 2010-0146, which answers “several questions about the tax consequences of certain employer-provided transportation benefits.” Among the issues the IRS addressed are the ability to perform, and the repercussions of, rollovers of unused benefits on smartcards, limits on the amounts of rollovers or accumulations, the definition of a commuter, the requirement to use transit passes only for commuting and only by employees, as well as several other guideline questions. Vision Payroll recommends that employers providing such benefits review their plans and procedures with their attorney to ensure compliance with the latest guidance.

According to the office of Rod J. Rosenstein, US Attorney for the District of Maryland, George Anagnostou has pleaded guilty to harboring twenty-four illegal aliens who were employed at Timbuktu restaurant in Hanover, Maryland and By the Docks restaurant in Middle River, Maryland. Also participating in the announcement were Special Agent in Charge William Winter of US Immigration and Customs Enforcement and Anne Arundel County Police Chief James Teare, Sr.

“Employers who take advantage of illegal labor to gain a competitive advantage for their own profit should take note of today’s guilty plea,” said William Winter, Special Agent in Charge for US Immigration and Customs Enforcement (ICE) in Baltimore. “ICE is committed to investigating companies who engage in illegal employment schemes and targeting the profits that motivate them.”

According to the announcement, Anagnostou did not prepare a Form I-9, Employment Eligibility Verification, for several employees. When he received “no-match” letters from the Social Security Administration, he made no effort to investigate further and continued to employ those workers identified.

Anagnostou also provided housing to several of the illegal alien employees and in many cases he “deducted rental payments from the overtime owed to the illegal alien employees, many of who regularly worked up to 80 hours a week and were routinely paid in cash to avoid their tax liability. Anagnostou did not claim the rental income on his tax returns, nor did he withhold FICA taxes from these overtime payments, as he was legally required to do.”

In addition to facing up to ten years in prison, “Anagnostou is required to forfeit $378,386.21 from five bank accounts; $99,890 seized from the restaurants and Anagnostou’s home on March 11, 2010; an additional $256,696.67, also believed to be proceeds of the crime and payable by check to Immigration and Customs Enforcement upon sentencing; and a 2009 Harley Davidson.”

Vision Payroll recommends that employers familiarize themselves with Form I-9 and its requirements so that they may be prepared and filed for each new hire. Also, employers may not ignore obviously fake or fraudulent identification documentation and must make an effort to verify social security numbers that have been reported as mismatched.

In Medical Practice Solutions, LLC, et al., v. Commissioner, TC Memo 2010-98, the Tax Court ruled that an individual and her single-member LLC are not distinct taxpayers and thus she is personally liable for unpaid payroll taxes assessed against the LLC. Carolyn Britton was the sole member of Medical Practice Solutions, LLC (the LLC) in Beverly, Massachusetts. The Internal Revenue Service (IRS) assessed liabilities for unpaid employment taxes reported by the LLC on three different Forms 941. The IRS proceeded with collection proceedings against Ms. Britton when it was unable to collect the taxes from the LLC. According to the Tax Court, “Ms. Britton [made] several related arguments that [challenged] her liability, and they all [rested] on her insistence that she and the LLC [were] distinct taxpayers with distinct liabilities and the right to distinct notices and filings. This premise, however, is flawed both as a matter of law and as a matter of fact.” The court ruled that Ms. Britton and the LLC were a single taxpayer and she was personally responsible for the unpaid taxes. Vision Payroll recommends taxpayers review their rights and responsibilities as LLC members with their attorney to help ensure compliance with tax laws.