Vision Payroll

This week’s question comes from Frank, a company controller. I heard that the EEOC published its final regulations concerning the ADAAA. What is the impact of the final ADAAA regulations? Answer: The US Equal Employment Opportunity Commission (EEOC) issued final regulations on the ADA Amendments Act of 2008 (ADAAA), which were published in the Federal Register on March 25, 2011.

ADAAA Expanded Definition of Disability

Congress overturned several Supreme Court decisions that Congress believed had interpreted the definition of “disability” too narrowly, resulting in a denial of protection for many individuals with impairments such as cancer, diabetes, and epilepsy. The ADAAA states that the definition of disability should be interpreted in favor of broad coverage of individuals.

EEOC Regulations Implement the ADAAA by Changing Interpretations of Terms

The regulations keep the ADA’s definition of the term “disability” as a physical or mental impairment that substantially limits one or more major life activities; a record (or history) of such an impairment; or being regarded as having a disability. But the regulations implement the significant changes that Congress made regarding how those terms should be interpreted.

EEOC Regulations Adopt “Rules of Construction”

The regulations implement Congress’s intent to set forth predictable, consistent, and workable standards by adopting “rules of construction” to use when determining if an individual is substantially limited in performing a major life activity. These rules of construction are derived directly from the statute and legislative history and include the following:

• The term “substantially limits” requires a lower degree of functional limitation than the standard previously applied by the courts. An impairment does not need to prevent or severely or significantly restrict a major life activity to be considered “substantially limiting.” Nonetheless, not every impairment will constitute a disability.
• The term “substantially limits” is to be construed broadly in favor of expansive coverage, to the maximum extent permitted by the terms of the ADA.
• The determination of whether an impairment substantially limits a major life activity requires an individualized assessment, as was true prior to the ADAAA.
• With one exception (“ordinary eyeglasses or contact lenses”), the determination of whether an impairment substantially limits a major life activity shall be made without regard to the ameliorative effects of mitigating measures, such as medication or hearing aids.
• An impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.
• In keeping with Congress’s direction that the primary focus of the ADA is on whether discrimination occurred, the determination of disability should not require extensive analysis.

EEOC Regulations Change Focus To How a Person Has Been Treated

As required by the ADAAA, the regulations also make it easier for individuals to establish coverage under the “regarded as” part of the definition of “disability.” Because of court interpretations, it had become difficult for individuals to establish coverage under the “regarded as” prong. Under the ADAAA, the focus for establishing coverage is on how a person has been treated because of a physical or mental impairment (that is not transitory and minor), rather than on what an employer may have believed about the nature of the person’s impairment.

EEOC Regulations Provide New Clarification

The regulations clarify, however, that an individual must be covered under the first prong (“actual disability”) or second prong (“record of disability”) in order to qualify for a reasonable accommodation . The regulations clarify that it is generally not necessary to proceed under the first or second prong if an individual is not challenging an employer’s failure to provide a reasonable accommodation.

EEOC Regulations Differ from the NPRM

The final regulations differ from the NPRM in a number of ways. The final regulations modify or remove language that groups representing employer or disability interests had found confusing or had interpreted in a manner not intended by the EEOC. For example:

• Instead of providing a list of impairments that would “consistently,” “sometimes,” or “usually not” be disabilities (as had been done in the NPRM), the final regulations provide the nine rules of construction to guide the analysis and explain that by applying those principles, there will be some impairments that virtually always constitute a disability. The regulations also provide examples of impairments that should easily be concluded to be disabilities, including epilepsy, diabetes, cancer, HIV infection, and bipolar disorder.
• Language in the NPRM describing how to demonstrate that an individual is substantially limited in “working” has been deleted from the final regulations and moved to the appendix (consistent with how other major life activities are addressed). The final regulations also retain the existing familiar language of “class or broad range of jobs” rather than introducing a new term, and they provide examples of individuals who could be considered substantially limited in working.
• The final regulations retain the concepts of “condition, manner, or duration” that the NPRM had proposed to delete and explain that while consideration of these factors may be unnecessary to determine whether an impairment substantially limits a major life activity, they may be relevant in certain cases.

Question and Answer Documents Are Now Available

The EEOC has released two Question-and-Answer documents about the regulations to aid the public and employers – including small business – in understanding the law and new regulations. The ADAAA regulations and accompanying Question and Answer documents are available on VisionPayroll.com by clicking Questions and Answers on the Final Rule Implementing the ADA Amendments Act of 2008 and Questions and Answers for Small Businesses: The Final Rule Implementing the ADA Amendments Act of 2008.

This week’s question comes from Colton, an HR manager. I know that the new ADA regulations took effect recently. What is the impact of new ADA accessibility regulations? Answer: Effective March 15, 2011, the US Department of Justice’s Final Rule revised and expanded the regulations regarding the Americans with Disabilities Act (ADA).

Amended Regulations Adopt New Standards

The amended regulations adopt the 2010 ADA Standards for Accessible Design, which implement new accessibility guidelines for government facilities and commercial places of public accommodation.

Appendices Include Analysis and Responses To Comments

The revised regulations amend the Department’s title II regulation, 28 CFR Part 35, and the title III regulation, 28 CFR Part 36. Appendix A to each regulation includes a section-by-section analysis of the rule and responses to public comments on the proposed rule. Appendix B to the title III regulation discusses major changes in the ADA Standards for Accessible Design and responds to public comments received on the proposed rules.

Contact Vision Payroll Today

Contact Vision Payroll if you have further questions on the new ADA accessibility regulations.

This week’s question comes from Stan, an HR manager. We just received our Notice of Employers Unemployment Insurance Contribution Rate Statement of Account Balance from the Massachusetts Division of Unemployment Assistance (DUA). A solvency assessment was subtracted from our account balance. What is the solvency assessment in Massachusetts? Answer: The solvency assessment is used to pay benefits that are not assigned to an individual employer.

Three Main Charges To the Solvency Assessment Account

The solvency account has three main charges as follows:

1. Dependency allowances
2. State-funded extended benefits, and
3. Benefits paid when claimants are in DUA approved training programs.

Solvency Assessment Is not Paid Directly, but Reduces the Employer’s Account Balance

The solvency assessment is not paid through the DUA QUEST system, but is applied to the account balance when calculating the employer’s new rate. The solvency assessment rate of 1.22% for 2010 (1.71% for 2011) is multiplied by the employer’s taxable wages for the period to determine the total solvency assessment to be applied to each account.

More Questions on the Massachusetts Solvency Assessment?

Contact Vision Payroll if you have further questions on the Massachusetts solvency assessment.

This week’s question comes from Charlie, a manufacturing plant manager. We have a third shift that works from 11 pm to 7 am the following day. Some of the workers will work this Saturday night into Sunday. Do we need to pay for eight hours of work because of the switch to Daylight Saving Time? Answer: Since Daylight Saving Time begins in most parts of the country at 2 am, Sunday, March 13, 2011 many workers on a third shift will only work seven hours. At 2 am on that day, clocks are turned ahead to 3 am.

FLSA Does Not Require Pay for Hour When Clocks Are Turned Ahead

The Fair Labor Standards Act (FLSA) does not require employers to pay employees for the hour not worked. When Daylight Saving Time ends on November 6, 2011, employers will need to pay an extra hour since clocks are turned back.

Contact Vision Payroll for More Information

Contact Vision Payroll if you have any further questions on the switch to Daylight Saving Time.

This week’s question comes from April, an office manager. I’ve read that the taxable wage base has increased in New Hampshire for 2011, but I’m not sure of the impact. What is a taxable wage base? Answer: The taxable wage base is the amount of income that will be taxed in a particular year.

New Hampshire Taxable Wage Base Is $12,000

For 2011, the New Hampshire taxable wage base is $12,000. Therefore, all subject wages earned during 2011 by an employee up to $12,000 will be taxed for New Hampshire unemployment purposes. Once $12,000 of wages have been taxed for New Hampshire unemployment purposes, no additional New Hampshire unemployment tax will be due for that employee for the rest of 2011.

Taxable Wage Bases Range from $7,000 to $37,300

For 2011, the federal taxable wage base is $7,000. Three states, Arizona, California, Florida and Puerto Rico all have the lowest taxable wage base of $7,000. Washington has the highest taxable wage base at $37,300.

Find Out the Wage Base for All States by Visiting the Vision Payroll Unemployment Taxable Wage Base Page

Contact Vision Payroll if you have any further questions or visit our Unemployment Taxable Wage Base page.

This week’s question comes from Trevor, a company president. Some of our employees use our company aircraft for personal purposes. We need to value this and include it income for those employees. What are the updated Standard Industry Fare Level Rates? Answer: The United States Department of Transportation (DOT) recently released updated Standard Industry Fare Level (SIFL) rates, which are used to value employee personal use of company aircraft.

Revised Rates Are Effective January 1, 2011 To June 30, 2011

The revised SIFL rates are 22.37¢ per mile for 500 or fewer miles traveled, 17.06¢ per mile for greater than 500 miles traveled and up to 1,500 miles traveled, and 16.40¢ per mile for greater than 1,500 miles traveled. The terminal charge is $40.90. These rates apply to the period from January 1, 2011 to June 30, 2011.

Contact Vision Payroll for Updated SIFL Rates

Contact Vision Payroll if you have any questions on SIFL changes.

This week’s question comes from Jennifer, an office manager. One of the users in our company tried to login using the new multi-factor authentication and received an error message. Why did an employee receive an error message trying to logon to VisionPayroll.com? Answer: Error messages are generated for a variety of situations. Below is a list of error codes that explain the errors and the steps needed to resolve them:

Error Code/Message	Description	Resolution
600	Inactive User	Instruct employee to click on “Create an account now” to set up a login.
610	Locked Out User	Payroll Administrator should reset lock out and employee can then change forgotten password by using the Forgot Password link.
620	User Access Denied	Payroll Administrator should contact Vision Payroll.
700	User locked out for failing to answer Challenge Questions correctly	Payroll Administrator should contact Vision Payroll.
800	User locked out for failing to correctly enter password	Payroll Administrator should reset lock out and employee can then change forgotten password by using the Forgot Password link.
900	User Not Found	Instruct employee to click on “Create an account now” to set up a login.
910	Inactive User	Instruct employee to click on “Create an account now” to set up a login.
920	Locked Out User	Payroll Administrator should reset lock out and employee can then change forgotten password by using the Forgot Password link.
eFraud Network Match	eFraud Network Match	Payroll Administrator should contact Vision Payroll.

Contact Vision Payroll for Further Assistance with Logon Errors

Contact Vision Payroll if you cannot resolve your errors using the above table.

This week’s question comes from Myrtle, a retired bookkeeper. I thought the income tax cuts were extended, but now the federal income tax withholding on my pension has increased. Why did my withholding Increase on my pension? Answer: The Internal Revenue Service (IRS) gave a detailed answer to this question in Special Edition Tax Tip 2011-01. The answer follows:

Why Employees and Retirees May See Changes in 2011 Payments and Withholding

The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, enacted on December 17, 2010, included several changes impacting workers’ take-home pay and retirees’ net pension checks for 2011. The Tax Relief Act extended for two years the income tax rates that were scheduled to expire at the end of 2010; that extension prevented a large increase in federal income tax withholding.

However, the new law did not extend the Making Work Pay (MWP) credit that had been available for tax years 2009 and 2010. While most workers qualified for the maximum MWP credit, pension recipients did not qualify for any MWP credit unless they also had wages or other earned income.

In December 2010, the IRS published new federal income tax withholding information to reflect the impact of the Tax Relief Act. The fact that the MWP credit expired, by itself, would have resulted in increased withholding for most taxpayers. However, under the Tax Relief Act, withholding for social security tax for all wage earners was reduced from 6.2% to 4.2% (withholding for Medicare, at 1.45%, did not change). For most employees, the net effect of these two changes will result in less total tax being withheld from their checks. The social security tax reduction does not affect pension payments.

Due to the late enactment of these tax law changes, the IRS asked employers and plan administrators to adjust their systems as soon as possible but not later than January 31, 2011. This means employees and pension recipients may not have seen the full impact of these changes until their first paycheck in February, 2011.

Once employers implement the changes, there will be a net increase in take-home pay for most employees (excluding the impact of any other withholding amounts, such as withholding for health insurance, state income taxes, etc.).

Once pension plan administrators implement the 2011 changes, the retirement check payments for some pensioners may be lower depending upon the method that their plan administrators used to calculate withholding in 2010. Because the MWP credit did not apply to pensioners, the IRS published a table for 2009 and 2010 giving plan administrators the option of increasing withholding for their pension recipients. Not all plan administrators made the optional adjustment and instead allowed pensioners to make the adjustment when they filed their tax returns. Since the 2011 withholding tables do not reflect the expired credit, pension recipients in this situation are likely to see the withholding for their 2011 pension payments increase by approximately $7 to $50 per payment, depending on filing status, the amount of the payment, and how often the payment is made.

IRS encourages both employees and pensioners to review their withholding every year using the withholding calculator on IRS.gov and, if necessary, fill out a new W-4 or W-4P form and give it to their employer or pension plan administrator.

Contact Vision Payroll for Further Information

Contact Vision Payroll if you have any further questions on the changes in federal withholding.

This week’s question comes from Christina, an HR director. We use Publication 1494 to determine the amount of wages exempt from levy. Publication 1494 is usually available in December for the following year. When will the 2011 Publication 1494 be released? Answer: Publication 1494, Tables for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income (Forms 668-W(ACS), 668-W(c)(DO) and 668-W(ICS)), is used to calculate the amount of wages and other income exempt from levies for delinquent taxes and was recently released by the Internal Revenue Service (IRS).

Use New Publication 1494 for Levies Issued in 2011

In addition to levies issued in 2011, employers use the revised amounts to calculate the exempt amount if the employee should provide a revised statement showing a change in filing status or exemptions. The amounts have increased slightly over the amounts used for levies issued in 2010.

Vision Payroll Can Assist in Publication 1494 Calculations

Contact Vision Payroll for assistance in automating the calculation of the exemption and levy amounts on employees’ paychecks.

This week’s question comes from Jordan, a company controller. For most employees in our company, the Massachusetts wages reported on the Form W-2 equal the federal wages on the Form W-2. My Massachusetts wages, however, are higher than my federal wages. Why don’t my Massachusetts wages equal my federal wages on my W-2? Answer: There may be several reasons why Massachusetts wages don’t equal federal wages on a Form W-2.

Differences Between Federal Wages and Massachusetts Wages on Form W-2

Although Massachusetts generally follows federal law on income taxation of wage benefits, certain items may increase or decrease Massachusetts wages as compared to federal wages. Among the differences are the following:

1. Employee and employer contributions to Massachusetts governmental unit §414(h) retirement plans are taxable for Massachusetts purposes and not for federal purposes,
2. The value of an employer-provided monthly transit pass in excess of $120 and not in excess of $230 per month is taxable for Massachusetts purposes and not for federal purposes,
3. Imputed income from cost of health insurance coverage of former spouses and non-dependent children as required under Massachusetts law is taxable for federal purposes and not for Massachusetts purposes (prior to the change included in the Patient Protection and Affordable Care Act),
4. Employee contributions to cafeteria plans for the benefit of a same-sex spouse and that spouse’s children when the same-sex spouse or that spouse’s children do not qualify as a dependent of the employee are taxable for federal purposes and not for Massachusetts purposes,
5. Qualified tuition reduction that an educational organization provides to the same-sex spouse of an employee is taxable for federal purposes and not for Massachusetts purposes, and
6. Employer contributions to an accident or health insurance plan for the benefit of a same-sex spouse and that spouse’s children when the same-sex spouse or that spouse’s children do not qualify as a dependent of the employee are taxable for federal purposes and not for Massachusetts purposes.

Contact Vision Payroll Now

Contact Vision Payroll if you have further questions on the differences between federal wages and Massachusetts wages on Form W-2.