1. AB298 Associates Capstone in Accounting State and Federal Laws and Regulations on Business Unit 2 CHAPTER 5 Unit 2 Seminar Seminar

2. Many Laws that Affect Personnel  Fair Labor Standards Act (FLSA)  Federal Insurance Contribution Act (FICA)  Income tax withholding laws  Federal, state and local  Unemployment tax acts  Fair employment laws  Other federal laws  State minimum wage and maximum hour laws and other state specific laws

3. Fair Labor Standards Act (FLSA)  Federal Wage & Hour Law of 1938  Minimum wage is $7.25/hour  Equal pay for equal work provisions  Sets law for companies involved  In interstate commerce or  In production of goods/services for interstate commerce  Requires payroll records be maintained

4. Federal Insurance Contributions Act (FICA)  Comprised of two taxes  Both taxes paid by ER (employer) and EE (employee)  OASDI (Old Age, Survivors & Disability Insurance)  6.2% with a cap that is cost-of-living indexed  HI (Health Insurance Plan - Medicare)  1.45% with no cap

5. Income Tax Withholding Laws  Federal income tax  Levied on earnings of employees  Income tax is withheld from paychecks  State and local income tax  Income tax is withheld from paychecks  Different in each state  Not all states have state income tax

6. Unemployment Tax Acts  FUTA (Federal Unemployment Tax Act)  ER tax – paid on $7,000 per EE per year  Taxes used to pay state and federal administrative expenses, not used to pay unemployment benefits  SUTA (State Unemployment Tax Act)  Mandatory unemployment insurance – each state is different  SSA outlines standards that each state’s unemployment compensation law must follow  Used to pay unemployment benefits

7. Fair Employment Laws  Title VII of the Civil Rights Act of 1964  EEO (Equal Employment Opportunity)  Can’t discriminate in hiring, firing, promoting or compensating based on  Color, race, religion, national origin or gender  Applies to all ERs who engage in an industry affecting commerce and employ 15 or more workers in each of 20 or more weeks See http://www.eeoc.gov/ for more information

8. Age Discrimination in Employment Act (ADEA)  ADEA states employers cannot use age to discriminate in hiring, firing or promoting  Applies to employers with 20 or more employees  Provides protection to workers over 40 with a few key exceptions

9. Americans with Disabilities Act (ADA )  Prevents employers with 15 or more employees from discriminating against qualified persons based upon disability  “Reasonable accommodation” must be provided - this is a very vague term and subject to court interpretation

10. Federal Personal Responsibility & Work Opportunity Reconciliation Act  Requires employers to report information on all new hires within 20 days to state agency  Includes name, address and social security number (submitting copy of W-4 suffices in many states)  Records coordinated through Office of Child Support Enforcement (OCSE)  Fines up to $25/hire levied for failure to report  A few states now require same from independent contractors

11. Immigration Reform and Control Act (IRCA) Immigration Reform and Control Act (IRCA)  Law that bars hiring and retaining aliens unauthorized to work in U.S.  Accomplished by employee completing I-9 (Employment Eligibility Verification) within three business days of employment  U.S. Citizenship & Immigration Services may audit and levy penalties  Criminal penalties can apply if pattern of discriminatory practices found  E-Verify is a system that allows ERs to check employment eligibility of new hires

12. Family Medical Leave Act (FMLA) Family Medical Leave Act (FMLA)  Covers companies with 50 or more EE within 75 mile radius  Employee guaranteed 12 weeks unpaid leave for  Birth, adoption, critical care for child, spouse or parent  Leave may be used all at once or at separate times – within 12 months of qualifying event  Employer continues health care coverage  Right to return to same job or comparable when family member is on active duty or up to 26 weeks f position  FMLA expanded to include up to 12 weeks or line of duty injury/illness  Some states have paid family leave plans

13. Uniformed Services Employment & Reemployment Rights Act Uniformed Services Employment & Reemployment Rights Act  Military personnel given right to take leaves of absences from civilian jobs  Right to return to prior jobs with seniority intact  Health benefits must be started without a waiting period  Doesn’t apply if dishonorably discharged

14. Employee Retirement Income Security Act (ERISA) Employee Retirement Income Security Act (ERISA)  Trustees must monitor pension plans  Vested 100% in 3-6 years  Example of a vesting plan Years of % Vested in ServicePension Plan 2 50% 4 75% 5 100%  Provides for Pension Benefit Guaranty Corporation  A federal agency which guarantees benefits to EE  Stringent recordkeeping required

15. Current Legislation  Hiring Incentives to Restore Employment Act (HIRE) – 3/18/10  Gives ER tax credits if pay wages to previously unemployed new hire  Health Care and Education Reconciliation Act (HCERA) – 3/30/10  Most provisions effective 2014  Immediately ER must include cost of ER-provided health coverage on EE’s Form W-2  Patient Protection & Affordable Care Act – 3/23/10  Offers tax credit to small ERs who offer health insurance to EEs

16. State Laws  Workers’ Compensation  Most states require employers to pay employees’ premiums  Can self insure if state approved  Different premiums based upon job class  State Disability Benefit Laws  Five states plus Puerto Rico have established laws requiring employers to provide disability benefits  This applies even if the disability did not arise due to employment!

17. Human Resource System  FLSA requires stringent personnel recordkeeping – embodied in the Human Resource (HR) System  Requisition for Personnel notifies HR of need for new employees  Application for Employment completed by person seeking employment  No law prohibiting questions about religion, gender, race, age or national origin - but must tie into ability to perform job (for example, bilingual capabilities) –these are allowed if they are qualifications for the job  If application asks age/birth date, should contain ADEA language notifying candidate of anti-discriminatory provisions

18. Human Resource System Human Resource System  Reference Inquiry conducted before employment  Due to amount of litigation in this area, respondents should only verify facts and not offer subjective information  Really diminishes credibility of reference inquiries  Prospective employer may require applicant to sign Employment Reference Release  Must notify employee if seeking investigative consumer report  Hiring Notice alerts payroll department to new EE  Employee History Record contains performance evaluations, compensation adjustments, disciplinary issues, etc. Critical area – employment related litigation is very expensive and often times avoidable