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Social Security Max Goes Up In 2017

Posted by & filed under BLOG, Social Security.

The maximum amount of earnings subject to the Social Security payroll tax will climb to $127,200 an increase of $8,700 from 2016.  the Social Security Administration (SSA) announced on Oct. 18. 12 million workers will increase their contribution.

This adjustment, which takes effect Jan. 1, is based on the government’s estimate of real wage growth in the recent past. The 2017 jump in the taxable-earnings cap is the largest one-year increase since 1983, in part because federal law kept the taxable maximum unchanged for 2016 due to a lack of cost-of-living increase in Social Security benefits.

By Jan. 1 of each year, U.S. employers must adjust their payroll systems to account for the higher taxable wage base under the Social Security payroll tax—and should notify affected employees that more of their paychecks will be subject to payroll withholding. Those whose compensation exceeds the previous $118,500 maximum will see a decrease in net take-home pay if they don’t receive an annual raise that makes up for the payroll tax’s bigger bite.

 

FICA Rates Set by Law

Social Security and Medicare payroll taxes are collected together as the Federal Insurance Contributions Act (FICA) tax. FICA tax rates are statutorily set and therefore require new tax legislation to be changed.

For employers and employees, the Medicare payroll tax rate is a matching 1.45 percent on all earnings, bringing the total Social Security and Medicare payroll withholding rate for employers and employees to 7.65 percent each—with only the Social Security portion (6.2 percent) limited to the $127,200 taxable-maximum amount.

 

I-9 form has been updated.

Posted by & filed under BLOG, Immigration.

On Aug. 25, the Office of Management and Budget (OMB) approved a revised Form I-9, Employment Eligibility Verification. USCIS must publish a revised form by Nov. 22, 2016. Employers may continue using the current version of Form I-9.  See below.

Form I-9 Instructions  03/08/13 N
The form expiration date can be found at the top right section of the first page.  See below.
USCIS
Form I-9
OMB No. 1615 – 0047
Expires 03/31/2016
After Jan. 21, 2017, all previous versions of Form I-9 will be invalid.  This current version of the form continues to be effective even though the Office of Management and Budget control number expiration date of March 31, 2016, has passed.

Governor Brown signed three employment-related​ bills.

Posted by & filed under BLOG, Human Resources, Wage and Hour Compliance.

  • AB 1066 by Assemblymember Lorena Gonzalez (D-San Diego) – Agricultural workers: wages, hours, and working conditions

Existing law sets wage, hour, meal break requirements, and other working conditions for employees and requires an employer to pay overtime wages as specified to an employee who works in excess of a workday or workweek, as defined, and imposes criminal penalties for the violation of these requirements. Existing law exempts agricultural employees from these requirements. Under existing law, the function of the Department of Industrial Relations is to, among other things, foster, promote, and develop the welfare of the wage earners of California, to improve their working conditions, and to advance their opportunities for profitable employment.

This bill would remove the exemption for agricultural employees regarding hours, meal breaks, and other working conditions, including specified wage requirements, and would create a schedule that would phase in overtime requirements for agricultural workers, as defined, over the course of 4 years, from 2019 to 2022, inclusive. Beginning January 1, 2022, the bill would require any work performed by a person, employed in an agricultural occupation, in excess of 12 hours in one day to be compensated at the rate of no less than twice the employee’s regular rate of pay. The bill would provide employers who employ 25 or fewer employees an additional 3 years to comply with the phasing in of these overtime requirements. The bill would authorize the Governor to delay the implementation of these overtime pay provisions if the Governor also suspends the implementation of a scheduled state minimum wage increase, as specified. The bill would require the Department of Industrial Relations to update a specified wage order for consistency with these provisions, as specified.

The bill would create a state-mandated local program by including agricultural employees as a class of employees protected by criminal penalties under existing law.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

  • AB 2230 by Assemblymember Kansen Chu (D-San Jose) – Overtime compensation: private elementary or secondary academic institutions: teachers

Existing law provides that 8 hours of labor constitutes a day’s work. Under existing law, any work in excess of 8 hours in one workday and any work in excess of 40 hours in any one workweek, and the first 8 hours worked on the 7th day of work in any one workweek, is required to be compensated at the rate of no less than 11/2 times the regular rate of pay for an employee. Existing law also provides that hours worked in excess of 12 hours in one day as well as hours worked in excess of 8 hours on any 7th day of work are to be compensated at the rate of no less than twice the regular rate of pay of an employee. Existing law exempts from these provisions an individual employed as a teacher at a private elementary or secondary academic institution if specified requirements are met, including, among others, that the employee earns a monthly salary equivalent to no less than 2 times the state minimum wage for full-time employment.

This bill would suspend that earnings standard until July 1, 2017. On and after that date, the bill would prescribe a revised earnings standard for exemption from the overtime provisions described above that would require the employee to earn no less than the lowest salary offered by any school district or the equivalent of no less than 70% of the lowest schedule salary offered by the school district or county in which the private elementary or secondary institution is located, as specified.

  • SB 1015 by Senator Connie M. Leyva (D-Chino) – Domestic work employees: labor standards

Existing law regulates the wages, hours, and working conditions of any man, woman, or minor employed in any occupation, trade, or industry, whether the amount of compensation is measured by time, piece, or otherwise, except as specified. An existing order of the Industrial Welfare Commission regulates wages, hours, and working conditions for household occupations. Existing law makes violations of certain of these provisions and this order a misdemeanor.

Existing law, the Domestic Worker Bill of Rights, regulates the hours of work of domestic work employees who are personal attendants and provides an overtime compensation rate for those employees. The Domestic Worker Bill of Rights defines terms for its purposes and requires the Governor to convene a committee to study and report to the Governor on the effects of its provisions on personal attendants and their employers. Existing law repeals the Domestic Worker Bill of Rights as of January 1, 2017.

This bill would delete the repeal date. By extending the effect of the Domestic Worker Bill of Rights, the violation of which is a misdemeanor, this bill would expand the definition of a crime, which would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

 

Are Your Paystubs Correct?

Posted by & filed under BLOG, Human Resources, Wage and Hour Compliance.

Common mistakes failing to provide the correct full legal name of the employer, Not providing the employer’s address, not listing the beginning and the end of the pay period, not providing the total hours worked, regular and overtime.  The penalty for failure to follow California Labor Code 226, failure carries a civil penalty of $50 for the first violation and $100 per pay period for each subsequent violation up to a total of $4,000 per employee. The reason pay stub violations are big business are class action lawsuits Plaintiff’s Attorney chase because all paystubs will be wrong not just one or two employees.

Pursuant to of Labor Code §226:

“Every employer shall provide a paystub to employees with each paycheck. Employers need to get them right. The new piece-rate rules just increase the chances your paystub is not correct:

https://www.dir.ca.gov/dlse/PayStub.pdf

  1. Gross wages earned,
  2. Total hours worked by the employee, except for any employee whose compensation is solely based on a salary and who is exempt from overtime under Labor Code Section 515(a), or any applicable order of the Industrial Welfare Commission,
  3. All deductions provided that all deductions made on written orders of the employee may be aggregated and shown as one item,
  4. Net wages earned,
  5. The inclusive dates of the period for which the employee is paid,
  6. The name of the employee and the last four digits of his or her social security number, or an employee identification number other than a social security number,
  7. The name and address of the legal entity that is the employer,
  8. All applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee;
  9. The amount of accrued paid sick leave; AND
  10. If applicable, the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis.

In addition to getting the right data on the pay stub, they open the door to overtime violations and missed meal periods or meal periods not provided in compliance with the wage order. This can become problematic for any employer who misclassifies an employee as exempt from FSLA because the exempt paystub does not track hours or meal periods.

Employers need to audit their payroll practices and ensure their paystubs have all the information required.

EQUAL PAY EQUAL PAY DAY

Posted by & filed under BLOG, Human Resources.

California took a major step Tuesday toward closing the lingering wage gap between men and women, as Gov. Jerry Brown signed one of the toughest pay equity laws in the nation.

Women in California who work full time are paid substantially less — a median 84 cents for every dollar — than men, according to a U.S Census Bureau report this year.

The governor called the measure, which will give employees more grounds for challenging perceived discrimination, “a very important milestone.”

 

New Overtime Pay Rules

Posted by & filed under BLOG, Human Resources.

The Department announced a Final Rule focused primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. For more information, see http://www.dol.gov/whd/overtime/final2016/.

The primary change raises the salary test to a weekly salary of $913.00 or an annual salary of $47,476. The salary test in CA currently is $800.00 per week or $41,600 per year. Because of changes in the minimum over the next 5 years, employers in CA have to be focused on both the Federal rule as well as the state and city. The new rule takes place starting in December 2016 and will result in a 13% increase in pay to maintain their exempt status. https://www.dol.gov/featured/overtime/

Key Provisions of the Final Rule

The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:

Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.
Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

What does it mean to you?

Audit exempt level employee for compliance with the New Salary test.
Two choices reclassify as non-exempt. Increase pay to meet the new salary level.
Does your exempt level employees meet both the salary test and the duties?
Develop a communication strategy for employees.
Some Exempt employees will be reclassified to non-exempt and will be subject to the FSLA and must start completing timesheets and be paid overtime.
Develop policies and procedures to controls cost.
Employer in CA should keep in mind that the minimum wage increases annually until it reaches $15.00 an hour. The salary test in CA is two times minimum wage. Eventually CA standard will be higher than the Feds. In addition, be aware of Cities that have passed higher minimum wages and the rates to be exempt will be higher in that city. For example, San Francisco the weekly salary to be exempt is $1040 a week effective July 1, 2016.

 

Effective Date Minimum Wage Weekly Salary Monthly Salary Annual Salary
January 1, 2017 $10.50 $840 $3,640 $43,680
January 1, 2018 $11.00 $880 $3,813.33 $45,760
January 1, 2019 $12.00 $960 $4,160 $49,920
January 1, 2020 $13.00 $1,040 $4,506.67 $54,080
January 1, 2021 $14.00 $1,120 $4,853.33 $58,240
January 1, 2022 $15.00 $1,200 $5,200 $62,400

New Overtime Pay Rules

Posted by & filed under BLOG, Fair Labor Standards Act, Human Resources, Wage and Hour Compliance.

The Department announced a Final Rule focused primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. For more information, see  http://www.dol.gov/whd/overtime/final2016/.

The primary change raises the salary test to a weekly salary of $913.00 or an annual salary of $47,476. The salary test in CA currently is $800.00 per week or $41,600 per year. Because of changes in the minimum over the next 5 years, employers in CA have to be focused on both the Federal rule as well as the state and city. The new rule takes place starting in December 2016 and will result in a 13% increase in pay to maintain their exempt status. https://www.dol.gov/featured/overtime/

Key Provisions of the Final Rule

The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:

  1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
  2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
  3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

What does it mean to you?

  • Audit exempt level employee for compliance with New Salary test.  
  • Two choices reclassify as non-exempt. Increase pay to meet the new salary level.
  • Does your exempt level employees meet both the salary test and the duties?
  • Develop a communication strategy for employees.
  • Some Exempt employees will be reclassified to non-exempt and will be subject to the FSLA and must start completing timesheets and be paid overtime.
  • Develop policies and procedures to controls cost.

An employer in CA should keep in mind that the minimum wage increases annually until it reaches $15.00 an hour. The salary test in CA is two times the minimum wage.  Eventually, the CA standard will be higher than the Feds. In addition, be aware of Cities that have passed higher minimum wages and the rates to be exempt will be higher in that city. For example, San Francisco the weekly salary to be exempt is $1040 a week effective July 1, 2016.

Effective Date Minimum Wage Weekly Salary Monthly Salary Annual Salary
January 1, 2017 $10.50 $840 $3,640 $43,680
January 1, 2018 $11.00 $880 $3,813.33 $45,760
January 1, 2019 $12.00 $960 $4,160 $49,920
January 1, 2020 $13.00 $1,040 $4,506.67 $54,080
January 1, 2021 $14.00 $1,120 $4,853.33 $58,240
January 1, 2022 $15.00 $1,200 $5,200 $62,400

 

Sex Harassment Discrimination I-9

Posted by & filed under BLOG, Rights in the Workplace.

There are a number of changes that employers in CA. Employers need to redistribute their Discrimination And Harassment policy after making some changes. Employers must provide employees with a copy of the written policy. It can be provided via email if a tracking system ensures employees read and acknowledge the policy. Employers can discuss the policy at hire or during a new hire orientation session. If an employee brings a claim of harassment, discrimination or retaliation, an employer may be subject to damages for failure to maintain a compliant policy. Employers with five or more employees in California must comply with the PDL requirements of posting a new posters.

While FEHA was making changes the current I-9 Form expires on the 31st of this month. They released an extension today for 30-day notice in the Federal Register (FR) inviting public comment on proposed changes to Form I-9, Employment Eligibility Verification. The public may provide comments on the proposed changes for 30 days, until April 27, 2016.

Two other noteworthy changes Pasadena and Santa Monica have passed local ordinances to increase minimum wages in their cities. Starting in July the minimum will go to 10.50 an hour. The City and County of Los Angeles have also adopted the accelerated minimum wage.