Compensation Solutions Blog
Human Resources Outsourcing (HRO – PEO – ASO – Payroll – Agency)

New Jersey Increases Weekly State Benefits for 2012

New Jerseyhas announced the maximum weekly benefit rates for workers’ compensation, unemployment and disability for 2012.  The disability rate went down slightly last year, but all have gone up roughly 2% this year.

Beginning January 1, 2012, the maximum weekly unemployment insurance benefit increased from $598 to $611.  The worker’s compensation benefit has gone up from $792 to $ 810 per week, and the maximum weekly benefit for disability has increased from $559 to $572. 

The taxable wage has increased to $30,300, up from $29,600 last year.  The base week earnings amount is untouched and remains at $145, and the alternative earnings amount also remains steady at $7,300.

2012 Medicare Premium Hike Lower Than Predicted, and Some Will See a Savings

Obama Signs Bipartisan Jobs Bill for Veterans

In our economy today it is evident that there are challenges in finding employment. President Obama has initiated a $447 billion dollar jobs bill in an effort to alleviate hardship on unemployed Americans.  This bill focuses on unemployed veterans, some disabled or retired from there duties in the armed forces.

An estimated 1 million service members will disengage from the armed forces between 2011 and  2016. In response to the urgent need to boost job programs for veterans, President Obama signed a bill into law that repeals a requirement that federal, state and local governments begin withholding 3 percent of payments to contractors in 2013.

The measure includes a package of tax breaks for companies that hire unemployed veterans.

• The Returning Heroes Tax Credit provides businesses that hire unemployed veterans with a  credit of up to $5,600 per veteran, and the Wounded Warriors Tax Credit offers a credit of $9,600 per veteran for businesses that hire veterans with service-connected disabilities.

• Under the Recovery Act, employers who hired certain unemployed veterans were eligible for a tax credit of up to 40 percent of the first $6,000 of wages, for a maximum credit of $2,400 for veterans who had been unemployed at least four weeks. This credit expired at the end of 2010. For employers who hire veterans unemployed  for longer than six months, a new credit of 40 percent of the first $14,000 of wages, up to $5,600, will be applied.

• The Wounded Warrior Tax Credit will double the existing tax credit for long-term unemployed veterans with service-connected disabilities. A new credit of 40 percent of the first $24,000 of wages, up to $9,600, will apply for firms that hire veterans with service-connected disabilities who have been unemployed longer than six  months.

•  The tax credits for hiring veterans will be afforded by the government in the amount of $95 million and be paid for by extending a fee the Veterans Affairs Department charges on home loans.

• The existing Work Opportunity Tax Credit of up to $4,800 for veterans will remain for veterans
  with service connected disabilities.

With the help of  the Joining Forces campaign, initiated by the Department of Defense, more than 1,500 private-sector companies have stepped up so far to employ more than 18,000 veterans and spouses and have committed to hiring 135,000 veterans and spouses by the end of 2013.   JPMorgan Chase and about 15 other U.S. companies, including Cisco Systems Inc., Delta Air Lines Inc. and AT&T Inc. have pledged to hire 100,000 servicemen by 2020.

If you wish to participate in the veterans’ jobs program, click here.

Sources:

http://www.defense.gov/news/newsarticle.aspx?id=66181

http://thehill.com/blogs/on-the-money/801-economy/194849-obama-signs-bill-encouraging-hiring-of-veterans

https://www.nationalresourcedirectory.gov/home/instructions_for_employer_participation

Presenteeism – What It Is and How to Avoid It

“Presenteeism” is term used to describe a loss of productivity that can occur when employees come to work with  an illness and perform below standards.

Presenteeism can happen often in a workplace when an employee is not feeling well enough to work.  There exists the potential risk of infecting others with a contagious illness. Presenteeism, however, can also be used to describe more chronic conditions such as back pain, allergies, arthritis and other conditions that can impair work performance.

Some strategic ways to address presenteeism and reduce costs associated with it includes providing sick days and wellness programs, improving co-payments for medical visits and prescriptions, allowing carryover of sick days and providing vaccinations such as flu shots.

In addition you may take these steps to avoid spreading the cold and flu virus:

• Cover your mouth and nose when you sneeze or cough;

• Clean your hands often;

• Avoid touching your eyes, nose or mouth;

• Stay home when you are sick and check with a health care  provider when needed;

• Practice other good health habits such as annual check  ups; and make healthy lifestyle choices such as eating right and exercising.

For more information, go to
the CDC’s website  at http://www.cdc.gov/germstopper/pdf/work.pdf

New Jersey Introduces Required Recordkeeping Workplace Poster

The New Jersey Department of Labor and Workforce Development has adopted new rules that require employers to conspicuously post a new notice of the employer’s obligation to maintain and report certain employment-related records. The must be posted in a conspicuous place immediately.

Detailed information about employers’ obligations to maintain and report records under each of these laws is provided on the poster:  Wage Payment Law, Wage and Hour Law, Prevailing Wage Act, Unemployment Compensation Law, Temporary Disability Benefits Law, Family Leave Insurance Law, Workers’ Compensation Law, and Gross Income Tax Act.  Contact information for each of the departments responsible for enforcing these provisions is also provided.

There are several additional provisions which require compliance:

1.  For employees hired after November 7, 2011, a written copy of the notice must be provided at the time of the employee’s hiring. 

2.  In addition, by December 7, 2011, every employee must be provided a written copy of the notice. 

NLRB Employee Rights Notice Must Be Posted By January 31, 2012

In September, we reported that the National Labor Relations Board (NLRB) issued a final rule requiring most private employers who fall under the NLRB, to post a notice for all employees regarding their rights under the National Labor Relations Act.   The notice will inform employees that they have a right to improve wages and working conditions, to form, join or assist a union, and to bargain collectively with an employer.  They may also refuse to exercise those rights. 

Originally the NLRB’s date for posting the notice was November 14, 2011.  The date has been pushed back, however, to January 31, 2012.  The poster must be 8” x 17”, but can also be printed in two pages.  The poster is also available in both sizes in Spanish. 

Failure to post the notice may be interpreted as an unfair labor practice under the National Labor Relations Act (NLRA).

$230 Cap Update: What You Need to Do

Please see below for an important notice from TransitChek:

“Dear Valued TransitChek® Customer,

On September 15th we sent you a communication about the impending reduction of the current pretax transit benefit cap from its current level of $230 per month to its previous level of $120 per month if Congress does not act before December 31, 2011.

TransitCenter is working to make these changes seamless for you and your employees. Below are the steps we are taking on November 30 to ensure a smooth transition to a new transit cap:

• For employees enrolled for the TransitChek Premium MetroCard® – No change
• For employees enrolled for CashBack and Vouchers, TransitCenter will automatically decrease monthly transit benefits higher than $120, down to $120 for the January benefit month.
• For employees enrolled for the TransitChek QuickPay® Prepaid Visa® Card, there is no change if their pretax benefit is $120 or less. If their pretax benefit is in excess of $120, TransitCenter will automatically decrease the pretax portion to $120 and create or increase the post-tax amount accordingly, to ensure the total contribution stays the same.

REMINDER: You will need to make the corresponding changes, if necessary, to the amounts you deduct from your employees’ paychecks on a pretax and post-tax basis starting with the January benefit month.

Please understand that if the pretax cap is reduced to $120, you may not deduct more than $120 pretax for the January benefit month even if that deduction is taken in 2011. The change in the cap does not affect the amount you may deduct on a post-tax basis.

Employees should not make any changes to their benefit amount due to changes in the pretax cap. TransitCenter will make all necessary changes automatically.

Please note that the $230 pretax parking benefit cap is not affected so no changes are required.

We will continue to keep you informed of any cap changes. If you have any questions or need help with your order, please contact Administrator Support at 1.866.550.CHEK (2435). To learn more about the $230 transit benefit cap, visit www.commuterbenefitsworkforus.com .

Thank you for your continued participation in the TransitChek program and for supporting your employees’ daily commute.”

IRS Offers Voluntary Settlement Program for Classification of Employees

Classification of workers has been a hot topic over the past few years, and the penalties and fines assessed against employers for misclassifying workers as independent contractors as opposed to W-2 employees has been a significant revenue generator for government agencies.  The Internal Revenue Service (“IRS”) has issued guidance on whether a worker should be classified as an independent contractor or a W-2 employee, generally focusing on the extent of control and direction the contractor of services has over the individual performing the work.  Employers who are found to have misclassified workers have been subject to hefty fines and penalties and the threat of future audits.

Now, the IRS has announced a new program, the Voluntary Classification Settlement Program (VCSP), for businesses who have misclassified workers as independent contractors.  Effective September 21, 2011, the program gives employers an opportunity to proactively reclassify their workers as W-2 employees.

To be eligible, the employer must meet certain criteria:

• They must have consistently treated the workers as non-employees;
• They must have filed 1099s for the workers for the previous three pears;
• Cannot already be under an audit by the IRS or other government agency regarding classification of workers.  If an employer had been previously audited, they may participate in this program only if they have complied with the results of that audit.

If the taxpayer meets the criteria, they may participate in the VCSP by agreeing to the following:

• They must pay 10% of the employment tax liability that would have been due on compensation paid to the workers for the most recent tax year;
• They will not have to pay interest and penalties on it;
• They will not be subject to audit of the reclassified workers for prior years; and
• They will agree to extend the statute of limitations on assessment of employment taxes from three to six years.

When considering whether to participate in the program, employers should be aware that while the VCSP protects employers from the IRS, it does not offer protection from state initiatives or from claims for the noncompliance during the past time periods.  For example, there may be prior state or local taxes or unemployment or workers’ compensation insurance now due or the worker could have been entitled to leave, participation in benefit programs or been denied minimum wage or overtime wages.

Employer should do a thorough risk-benefit analysis with competent professionals prior to deciding whether to participate in VCSP.  Anyone who wishes to do so must submit Form 8952, Application for Voluntary Classification Settlement Program (VCSP) at least sixty (60) days before they wish to begin the process.  If eligible, the IRS will contact the employer.

For more information, see:

http://www.duanemorris.com/alerts/irs_announces_new_voluntary_worker_classification_settlement_program_4226.html

http://www.irs.gov/pub/irs-drop/a-11-64.pdf

http://www.nixonpeabody.com/publications_detail3.asp?ID=4053

Introducing $230 Cap Coalition Website

Please see below for an important notice from TransitChek:

“Dear Valued TransitChek Customer,

As I mentioned in our last $230 Cap update, TransitCenter along with a coalition of firms that support commuter benefits, and commuter advocates, have united in an effort to protect the cap. Without Congressional action, the current $230 per month pretax transit benefit will be reduced to $120 per month.

Today, I am pleased to announce the launch of a new website – http://www.commuterbenefitsworkforus.com - enabling you to show your support for maintaining the current $230 per month transit benefit cap. We’re asking you to add your name to the tens of thousands of others urging their Members of Congress to enact legislation that will maintain the transit benefit at its current level. Your support will help ensure that you and your employees continue to receive the maximum amount of savings commuter benefits currently offer.

Commuter benefits have joined health, retirement and disability at the top of the list of important voluntary benefits offered by companies. Since millions of Americans who participate in a commuter benefit program will be affected, Congress needs to act now.

Thank you for your support. We will continue to bring you updates on the status of the $230 Cap and what actions, if any, you need to take.”

Some Unintended Consequences of Not Having a Will

There is a common misconception that when one spouse dies without a will, the entire estate passes automatically to the other. Here is an example of a case I recently handled that illustrates how to avoid the unintended consequences of failing to think and plan ahead. I have changed some of the details in order to illustrate a point.of the details in order to illustrate a point.

Bob and Barbara are in their late 40′s and have been married for 12 years. They have no children. Barbara’s parents are alive and well, but Bob’s widowed mother has been living in a nursing home for about three years. Both Bob and Barbara have good jobs and have managed their finances well. Each has a 401(k) plan. They have savings and investments, some in joint names and some individually. About five years ago, they purchased their dream house and are carrying a large mortgage, which they could afford because there are two incomes. Life was good, until Bob began to have headaches. To make a long story short, Bob has brain cancer. Surgery at a leading hospital was not successful, and he is now on hospice.

Barbara came to me because she and Bob had done no estate planning. She realized that Bob needs to sign a power of attorney so that she can handle the finances without burdening him as his health declines. She said she wanted to execute a will because she will soon own all of the assets she and Bob have accumulated and wants to make sure that her affairs are in order if the unthinkable should happen to her. She believed a will for Bob would not be critical because she assumed that all of his assets would pass to her automatically upon his death. Fortunately, she acted in time, because she was wrong in her assumption about Bob’s lack of a will, and the results would have been financially devastating.

Let’s look at the finances. The house, which they bought for $600,000, is now worth about $450,000. It is subject to a $400,000 mortgage. The payments are almost $3,000 per month. With her income and Bob’s disability benefits, they are still able to make the payments. After Bob dies, however, it will be a struggle to keep up financially. Bob has savings and investments in his own name of about $400,000. Barbara’s savings and investments are only about $100,000 because she put up most of the down payment on the house. The 401(k) plans are worth about $300,000 each. The joint savings and investments are worth about $200,000.

Under New Jersey law, if a person dies intestate (without a will), the persons who inherit his estate depend on his marital status and the existence of children and parents. If he leaves a surviving spouse, no children and a surviving parent, the intestate assets (those held in the decedent’s name – - not assets owned jointly or with a beneficiary designation) will pass as follows:

(a) The first 25%, but not less than $50,000 or more than $200,000, goes to the surviving spouse;

(b) The balance of the estate is divided 75% to the surviving spouse and 25% to the surviving parent(s).

Here is what would happen if Bob dies without a will. We don’t count the house and the joint savings and investment accounts because those assets will pass automatically to Barbara. We also don’t count the 401(k) plan because Barbara is the beneficiary. Actually, we averted another potential disaster. During my meeting with Barbara, I learned that, before he and Barbara were married, Bob had designated his mother as beneficiary of his 401(k) plan. Her savings are running out because of the enormous cost of nursing home care. It is anticipated that she will have to apply for Medicaid benefits early next year. Bob never got around to changing the 401(k) beneficiary to Barbara, that is, not until a few days after I met with Barbara.

Upon Bob’s death, then, his intestate estate would be $400,000, the value of his personal savings and investment accounts. Had they done nothing, Barbara would have received $100,000 – - the first 25% of the intestate assets. The remaining 75% of those assets – - $300,000 would be divided $225,000 (75%) to Barbara, and $75,000 (25%) to Bob’s mother. The inheritance of $75,000 would delay Medicaid eligibility for Bob’s mother for about nine months, until she spent the entire amount on nursing home care.

By preparing a simple will for Bob, in which he leaves everything to Barbara, and by changing the 401(k) beneficiary designation, we were able to preserve all of the marital assets for Barbara. She now has some options about how to deal with her finances and her own estate after Bob is gone. Although the preparation of an estate plan does not ease the pain Barbara faces as her husband’s life ebbs away, at least she can now devote her efforts to making him as comfortable as possible during his last months.

- Michael Rudolph, Esq., www.ElderLawAnswers.com