The Internal Revenue Service announced today that contribution limits for 401(k) plans and individual retirement accounts will increase due to cost-of-living adjustments. The maximum amount of contributions an employee can make to their 401(k) plan is determined each year by the IRS. "Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger the adjustment” according to a release from the Internal Revenue Service.
For the 2015 plan year, employees can contribute up to $18,000 as an elective payroll deduction to their 401(k) plan. In addition, if the employee is age 50 or older, they can contribute an additional ‘catch-up’ contribution of $6,000, resulting in a maximum contribution of $24,000 (if age 50 or older). This limit applies only to the employee’s contribution, and does not include any employer paid matching amounts. Employees wishing to contribute the maximum contribution allowed may find it easiest to break the annual limit into equal amounts per pay period, to ensure that they don’t contribute over the limit.
2015’s 401(k) limit of $18,000 applies to both Traditional and ROTH 401(k) plans. In a Traditional 401(k) plan, employees make tax-deductible (pre-tax) contributions. These contributions grow without being taxed on dividends or earnings until after the money is withdrawn for the employee’s retirement account. As those funds are withdrawn, they are then taxed at the employee’s income tax rate. In a ROTH 401(k) plan, employees make contributions with after-tax dollars. These contributions grow without being taxed and can be withdrawn at retirement without being taxed. The decision for which 401(k) plan to participate in is up to the employee – pay taxes up front with a ROTH 401(k) or at retirement with a Traditional 401(k).
Lawsuits filed under the Fair Labor Standards Act (FLSA) hit another record high in 2014, according to information from Seyfarth Shaw law firm. The number of federal wage-and-hour lawsuits for the period of April 1, 2013, to March 31, 2014 (the Federal Judicial Center’s reporting year) increased to 8,126. This is an increase of almost 5% from 2013 and a 438% from just 14 years ago in 2000.
The law firm Seyfarth Shaw LLP has a very telling chart that you can find here.
Employers need to be very careful examining their FLSA policies and should get professional assistance when making wage-and-hour determinations. Paying penalties, interest and back wages (including overtime hours) especially when not expecting these additional costs, can significantly hurt a company.
According the Colorado Division of Labor there is an updated Colorado Affirmation form to help ensure employees are legally eligible to work for both public and private businesses. You will need to update your pre-employment packet to include an updated form for Colorado Affirmation. This form is to fulfill the Employment Verification Law requirements in addition to the I-9. The previously used form expired on October 1, 2014. This is not a new document for your employment packet, just an updated version. This Colorado Affirmation form must be completed within 20 days of hire.
For a copy of the Colorado Affirmation form please click here.
For a complete copy of the pre-employee application packet with the updated form click here.
For more information about the Affirmation Form please visit www.colorado.gov/cdle/evr
California employers will have to provide paid sick leave to employees under a new statute signed by Gov. Jerry Brown. The bill, California Assembly Bill (AB) 1522 “Healthy Workplaces, Healthy Families Act of 2014” will go into effect July 1, 2015. California is the 2nd state in the nation, following Connecticut in implementing state-wide paid sick leave benefits for employees.
Beginning July 1, 2015 employers are required to begin accruing sick leave at a rate of “not less than one hour per every 30 hours worked.” up to a maximum of three days (24 hours) of paid sick leave per year. Sick leave is paid at the employee’s hourly wage. Employees are entitled to use their accrued sick leave starting the 90th day of employment, after the 90th day employees can use the sick leave as it is accrued. Employers are prohibited from discriminating or retaliating against employees who request to use their accrued sick leave, and cannot have any condition where an employee must find a replacement worker to cover their shifts. Accrual of paid sick leave does not begin until July 1, 2015 or the employee’s date of hire, whichever is later.
Employers are not required to provide additional sick leave, if the employer has a paid leave policy or paid time off policy already in place, and the employer makes an amount available of leave that may be used for the same purposes of: satisfies the accrual requirements of HB 1522, and provides no less than 24 hours or paid sick leave per each year of employment.
California employers must follow notice and posting requirements including: at time of hire provide written notice to employees of right to paid sick leave; on paydays notify employees of current accrued sick leave available balance; and display a poster informing employees of their paid sick leave rights. The Labor Commissioner is responsible for creating said poster.
Employers must retain 3 years of records documenting the hours worked and paid sick days accrued and used by each employee, and make those records available to the Labor Commissioner. The California Labor Commissioner is in charge of enforcing and administering AB 1522.
Please contact StaffScapes with any questions or if you would like any additional information regarding the Healthy Workplaces, Healthy Families Act of 2014.
The Consumer Price Index for Denver Boulder Greeley has increased by 2.9%, which means a new minimum wage rate for 2015. The minimum wage rule enacted in 2006 to the Colorado Constitution requires the state's minimum wage rate to be adjusted each year for inflation. The inflation adjustment is based on the US Bureau of Labor Statistics' Consumer Price Index for All Urban Consumers (CPI-U) for the Denver-Boulder-Greeley combined area. This adjustment is based on the difference between the CPI-U from the first half of the prior year and the first half of the current year. This adjustment will increase the 2015 minimum wage rate to an estimated $8.23 per hour, effective January 1, 2015.
The above quoted rate increase is an estimate based off of the CPI change. The state should officially announce the rate increase sometime late November or early December. StaffScapes will keep you updated once the state announces any additional details.
The Department of Labor has set forth six guidelines to determine if an internship at a for-profit organization can be paid or unpaid. All six guidelines must be met in order for an internship to qualify as being unpaid. The six guidelines from the Department of Labor are:
1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
Career centers at colleges across the nation help students acquire internships so they have some on-the-job experience. However, some schools now are declining positing company’s positions if it is unpaid due to the six guidelines coming into question. The Denver post recently posted an article about internships and how some companies still have not changed their internship positions even though these guidelines went into effect in 2010. Some interns have filed suit for wage disputes with companies that offered them unpaid internships.
For more information about the six guidelines please see this Department of Labor’s fact sheet.
Are you sure that you are completing the I-9 form correctly? There are a few common mistakes made on this required form that could end up being very costly. Fines on this form start at $110 per error and can climb to tens of thousands of dollars per mistake.
There are several common mistakes that employers make during the completion of the I9 form. One of the most common mistake is not knowing that this form must be completed in the first 3 days of employment. Other common I-9 documentation mistakes include, but are not limited to, incorrect dates, missing signatures, transposed information and incomplete check boxes. It is also possible for an employer to fail to complete an I-9 form altogether or misplace a completed form during filing.
Now that this form is 2 pages long it can be a bit confusing as to whom completes what on each page. The employer will not do anything with the first page of the I9, that page is completed by the employee unless you will need to translate the form for the employee. The only time that the employer would sign the first page is in the case of the employer providing translation services to the employee. After the employee has completed page 1 it is up to the employer to complete the rest.
The second page of the I -9 form is another common area for mistakes. There are 3 lists in which the employee can provide proper documentation to prove authorization for this form. If an employee can provide a document from the first list “List A” then that is all they have to provide, however if they don’t have anything from that list they must provide something from “List B” AND List C”. The document most common for List A is the Passport. The most common documentation from List B is a Driver License or State Identification card and the most common List C document is a Social Security Card or Certificate of Birth. Once you have seen these actual Identifications you will then complete the appropriate columns of which they were provided from. Once that is completed the person that witness the original ID’s will be the person that will sign and or certify that they were indeed legitimate and not expired and then sign the portion under the certification.
StaffScapes provides HR, risk management, payroll and employee benefit services to our clients, allowing them to focus on their core business. Let us help alleviate any of your employee documentation issues.
Of the many benefits offered by StaffScapes, one happens to be one of the most underutilized and most important. Short-term Disability Insurance (STDI) is often overlooked by employees when enrolling for their benefits. The reasons for this are varied, but a quick look at the numbers may convince you that you may be putting your future and financial well-being in jeopardy.
According to the U.S. Social Security Administration, 1 in 4 Americans who are 20 years old right now will become disabled for a month or longer before they are 65. That is 25%! In 2010, the Council for Disability Awareness conducted a study that concluded only 2% of Americans believe they will be unable to work for more than a month in their working years. At any given time, there are close to 20 million adults aged 20-64 years who are unable to work due to a disability. These numbers are staggering.
One of the main reasons for this disconnect between those who think they will be disabled and those who do not is that most people associate STDI with accidents. In fact, analysis of disability claims proves that illness accounts for 90% of all claims. An infection or condition could leave you unable to work with no income.
Also consider that nearly 50% of workers do not save any of their income, and that 68% do not have any savings earmarked for catastrophic emergencies. Furthermore, just about 60% of all bankruptcies filed in the United States every year have a medical condition as a contributing factor.
This being said, you should ask yourself a few questions:
• Could your savings keep you afloat for 6 months if you were to fall ill or were injured?
• Is your ability to earn an income independent of your overall long term financial security?
• Are you immune to illness or accident?
If you answered “No” to any or all of these questions, you may be putting yourself at risk for undue hardship. StaffScapes has a comprehensive STDI plan with Humana which has flexible elimination periods, competitive rates, and a simplified claims process. For more information on this plan, please contact the StaffScapes Benefits Specialist for STDI plan costs, enrollment timelines, and any other questions you may have.
The Employee Retirement Income Security Act of 1974 (ERISA) was signed into law on Labor Day, September 2, 1974 by President Gerald Ford. This federal law provides protection to participating employees in employer sponsored health and retirement plans.
Forty years ago many employers offered employees retirement packages and pensions. Where an employee would work for many years at a company, get the symbolic gold watch and a monthly pension check for the remainder of their lives. These pensions are known as defined benefit (DB) plans.
Before ERISA, if the business closed or filed bankruptcy, what would happen to the pensions? They would go away with no way for the employee to afford to retire. That’s where ERISA stepped in, to ensure that employees have retirement plans that they can count on without worrying if their next monthly pension check would arrive in their mailbox.
In today’s economy, corporations very rarely offer the golden goose defined benefit (DB) pensions, and it now falls on the employee’s shoulders to prepare for retirement through retirement plans, like IRA’s and 401(k)’s. These plans are where the employee defers a percentage or fixed amount per paycheck into a retirement account, and the employer may offer a matching percentage of each payroll deferral. These plans are known as defined contribution (DC) plans, and are also governed by ERISA.
ERISA shortened vesting periods (maximum of 5 years for vesting schedules), protecting participating employee’s rights to collect retirement benefits they had earned, without having to work for decades to have a financially secure retirement. ERISA also created the Pension Benefit Guaranty Corporation as a safety net in case a pension plan sponsor failed.
ERISA provides a set of rules and guidelines for employers and plan sponsors, replacing a vast array of state and federal laws that were insufficient to provide guidance and protection. That set of rules encouraged growth in defined benefit (DB) plans that occurred in the decades after ERISA's enactment. ERISA also provided a clear outline of fiduciary responsibilities for employers and plan sponsors for both defined benefit (DB) and defined contribution (DC) plans.
StaffScapes has partnered with MassMutual’s Retire SMART to assist both employers and employees with retirement planning. StaffScapes can help employers with ERISA compliance and employees plan and prepare for retirement through our 401(k) plans. Please contact us so that we can assist you in all of your benefit compliance needs.
Pennsylvania Senator Mike Stack has proposed a new state bill to punish Pennsylvania employers who misclassify independent contractors. These employers are wrongfully avoiding paying overtime, taxes and workers compensation premiums, and excluding these workers from employer sponsored benefits. His bill (PA Senate Bill 1454) would allow local DA’s to prosecute these employers with punishments including substantial fines and jail time. Pennsylvania already has a law, as do many other states, including the US Department of Labor, which provides civil/financial penalties to employers who misclassify.
The State of Colorado has also joined the effort by becoming the 11th state in the nation to join the Department of Labor’s Misclassification Initiative in 2011, by participating in a Partnership Agreement to clean up employee misclassification. This partnership allows the agencies to notify each other about potential employer violations of each agency’s statutes, perform investigations and enforce violations. Colorado employers found in violation of employee misclassification could find themselves facing substantial financial penalties.
In addition to the Agreement with the US Department of Labor, the State of Colorado has HB09-1310. This state law’s penalty will cost employers $5,000 for the first misclassified employee, and for the second and subsequent misclassified employees an employer can be fined up to $25,000 per misclassification.
If you wish to find out more about Independent Contractors, please read my blog article.
Please contact StaffScapes if you have questions regarding how you are classifying independent contractors at (303) 466-7864, or you can find additional information at the Colorado Division of Labor and Employment.Read More