Displaying 59 category results for Employee Benefits.x

Washington initiative increases employee wages and benefits

By Stacey Mark
November 10, 2016

The passage of Initiative Measure 1433 in Washington means that minimum wage workers who are at least 18 years old will see their wages increase from $9.43 to $11 per hour, effective January 1, 2017.  Subsequent wage hikes each year will increase the minimum wage in Washington to $13.50 per hour by 2020, after which the minimum wage will be adjusted for inflation each year. Employers are precluded from counting any portion of tips or service charges toward the minimum wage.

In addition, beginning January 1, 2018, Washington employers will be required to provide paid sick leave to all employees.  Sick leave will accrue at a rate of not less than one hour for each 40 hours worked by employees, who are entitled to carry over at least 40 hours of unused sick leave to the following year.  Although employers are not required to pay out unused sick leave upon termination of employment, employees who terminate with sick leave on the books are entitled to have their unused balance restored if they return to work with the same employer within 12 months.  Employers may permit the use of paid sick leave for other purposes.  Consequently, an employer that provides more generous leave benefits may choose to modify its existing plan to cover paid sick leave obligations under the new law.

The New Endangered Species: Independent Contractors

By Leslie Bottomly
December 21, 2015

Last week the Oregon Supreme Court held that taxi cab drivers are employed by the cab company and are not independent contractors for purposes of the unemployment tax.    

In Broadway Cab LLC v. Employment Department, the Court first applied the Employment Department statute that defines "employment" as "service for an employer" that is "performed for remuneration." ORS 657.030(1). The Court held that the facts supported the conclusion that the cab company and drivers were in an employment relationship. First, although the drivers weren't required to drive any particular hours for the cab company, as a practical matter they had to drive in order to pay the large fees they owed for the privilege of driving. Second, although the passengers paid the drivers and not the cab company, the services were nonetheless performed for the cab company, not just for the passengers. The Court rejected the notion that pay must come directly from the employer, drawing a comparison to newspaper distributor arrangements that have been held to be employment despite the fact that subscribers, not the newspaper, paid the distributor. 

After concluding that the relationship was one of employment, the Court next analyzed whether the cab drivers fit within the independent contractor exemption under the Employment Department test. This test requires, among other elements, that the individual is customarily engaged in an independent business as shown by meeting three of five listed criteria.

The Court discussed only two of the criteria: whether the cab drivers maintained a separate business location, and whether they could hire and fire others to perform the services. The Court rejected the cab company's argument that the taxi cabs each consisted of the driver's separate business location. Instead, the Court held that the cab company was in the business of providing cab service and, therefore, the cabs were part of the cab company's business location, wherever they may be.  Next, the Court held that because each driver signed an agreement giving the cab company the authority to determine who drove the cab, the drivers did not have the required authority to hire and fire others.

Although the wording of the statute defining employment has not changed, the Oregon Supreme Court's decision is part of a trend among courts and administrative agencies to apply a narrow interpretation of the independent contractor classification.  

Supreme Court agrees with Ninth Circuit that drug company representatives are ‘salesmen’

By Shemia Fagan
June 26, 2012

Last week the Supreme Court affirmed a decision of the Ninth Circuit holding that pharmaceutical sales representatives are not entitled to overtime under the Fair Labor Standards Act because they are covered by the FLSA's "outside sales" exemption.  In Christopher v. SmithKline, the Court issued a 5-4 decision, with the majority reasoning that "[the representatives were] hired for their sales experience. They were trained to close each sales call by obtaining the maximum commitment possible from the physician. They worked away from the office, with minimal supervision, and they were rewarded for their efforts with incentive compensation.”

The dissent agreed with the Obama administration that the "outside sales" exemption does not apply to pharmaceutical sales representatives because the representatives do not actually sell the drugs.  Writing for the dissenters, Justice Stephen G. Breyer wrote, “At most [the sales representative] obtains from the doctor a ‘nonbinding commitment’ to advise his patient to take the drug (or perhaps a generic equivalent) as well as to write any necessary prescription.”

See our earlier coverage of Christoper v. SmithKline here.

IRS delays non-discrimination requirements for insured health plans

By John Walch
December 22, 2010

One of the many changes resulting from the Patient Protection and Affordable Care Act is that non-discrimination rules applicable to self-insured health plans for many years are to be extended to insured arrangements effective for plan years beginning after September 22, 2010.  However, the Act did not just add "insured health plans" to those rules.  No, the Act says that insured plans must comply with rules similar to those applied to self-insured plans.  And, since the IRS has not issued any regulations explaining which parts of the rules will be applied the same way and which ones won't, how are insured plans supposed to avoid the excise tax penalties and other sanctions imposed by the Act?

Fortunately, the IRS has issued Notice 2011-1 which delays compliance with the non-discrimination rules until regulations are issued related to this provision of the Act.  The Notice also solicits input on several topics regarding how the IRS should implement the statutory mandate, and provides that the other agencies potentially affected (Labor, HHS and Treasury) have all agreed with the IRS position. 

Health care reform ruled unconstitutional in part

By John Walch
December 13, 2010

A federal district court judge in Virginia has ruled that one of the centerpieces of the health care reform law enacted earlier this year is unconstitutional.  Judge Henry Hudson, in Virginia v. Sebelius, found illegal the part of the law mandating that every U.S. citizen maintain a minimum level of health insurance.  Although courts have ruled on standing issues in other cases challenging health care reform, this is the first decision addressing the substance of the law.

Several other cases are pending, including one brought by the attorney generals of some 20 states  challenging certain financial underpinnings of the law. 

The federal government will appeal the decision and it is nearly certain that, absent a legislative change to the challenged portions of the law (making the appeal moot), the Supreme Court will eventually decide the issue. 

The Judge severed the provisions he found to be unconstitutional and left in effect the remainder of the law, portions of which will become effective on January 1 for calendar year plans.  Employers should therefore continue to prepare for the law's various effective dates.

ISO and ESPP reporting deadline nears

By John Walch
November 21, 2010

We previously reported that for transactions in 2010 or later, the IRS requires employers to file information returns regarding their employees' exercise of Incentive Stock Options (ISOs) or purchases made under an Employee Stock Purchase Plan (ESPP).  The returns are filed using Form 3921 for ISOs and Form 3922 for ESPPs.  The general instructions include the filing deadlines and procedures, how to make corrections, information on distributing the employee statements, penalties, and other helpful information.  In addition to filing the returns with the IRS, companies are required to provide a copy of the return to employees (this requirement previously existed).


The deadlines to file Forms 3921 and 3922 with the IRS are February 28 for paper filers and March 31 for electronic filers.  The deadline for distributing the statements to employees is still January 31.  Even if employers file the returns with the IRS electronically, most will likely still distribute hardcopy statements to employees because the requirements to distribute the statements electronically are very difficult to satisfy. 

Electronic Filing

Employers are required to file Forms 3921 and 3922 electronically if they have at least 250 returns to file.  This is a per-form requirement, so if an employer has 251 Forms 3921 to file and only 249 Forms 3922, then it must file only the Forms 3921 electronically.  Likewise, if it has 249 of each to file, then it is not required to file either of the forms electronically.  However, employers may always file electronically on a voluntary basis since doing so extends the filing deadline.  If employers are eligible to file paper forms, they may complete the forms manually, as handwritten forms are acceptable (provided the writing is very neat and legible).  Additional instructions for electronic filing are available in IRS Publication 1220(a reprint of Rev. Proc. 2010-26).

Employers subject to mandatory electronic filing may eventually be able to request a waiver by filing Form 8508.  Unfortunately, the form does not yet include Forms 3921 and 3922.  The IRS may fix that in the near future.  Until then employers may want to use the assistance of an electronic filing vendor to help them file electronically.  The IRS posted a list of such providers in January of this year. 

Employers should continue planning for Health Care Reform

By John Walch
November 19, 2010
The Health Care Reform Acts adopted earlier this year remain in the news as several members of Congress have announced they intend to seek repeal some or all of the new laws.  However, even if the new Congress manages to pass such a repeal, it is uncertain whether there is enough support to overcome a likely Presidential veto. Employers and their health insurers should, therefore, move ahead with preparations to comply with the new laws' provisions, many of which become effective on January 1, 2011 for calendar year plans.  Ater Wynne's Health Care Reform Timeline lists some of the major provisions of the new laws and when they become effective.
Ater Wynne's December 9 Employment Law Seminar in Portland will include an overview of Health Care Reform provisions that become effective in 2011 and beyond.  Watch your e-mail for an invitation or see our website for details.

IRS delays reporting health care costs and releases new W-2 for 2011

By John Walch
October 28, 2010

The IRS recently released a draft version of the 2011 form W-2, used to report compensation paid to employees.  The draft form includes instructions for reporting the cost of health care coverage provided to employees (Box 12, using code DD).  That is a new requirement following the adoption of the health care reform bills last March.

The IRS recently made reporting the health care amount optional for 2011, delaying mandatory reporting until 2012.  Expect some IRS guidance on how to determine the cost of coverage and similar issues before then.  


Healthcare reform without the hype: What it means for your business

By Lori Irish Bauman
September 21, 2010
Join us on October 7, at Ater Wynne's Seattle office, for a seminar on the new healthcare reform law.  John Walch, chair of the firm's Employee Benefits Group, will talk about how the new law impacts employers.  See details here.

COBRA subsidy extended - again!

By John Walch
March 3, 2010

Last night, President Obama signed into law an extension of the COBRA subsidy period until March 31.  The extension allows employees who are involuntarily terminated between March 1 and March 31 to receive the 65% COBRA premium subsidy for up to 15 months.  The new law also broadens the definition of "assistance eligible individual" to include employees who lost coverage due to a reduction in hours, but did not elect COBRA then and were later terminated.  Under the original law, such employees were not eligible for the subsidy, since the involuntary termination did not cause the loss of coverage.

The new law is effective as of March 1, so employees who terminated after February 28 when the subsidy period expired are eligible for the extension.  Although the extension is for only the month of March, several pending bills would provide for much longer extensions.