The Revenue Ruling discusses the assessment of employer FICA taxes on tips, including the application of section 3121(q) of the Internal Revenue Code (the “Code”) and the application of the credit allowed under section 45B of the Code, but warns that it is first necessary to determine whether a payment is actually a “tip” for these purposes, noting that it makes no difference what the payment might be called. Even though described as a “tip,” a payment that constitutes a “service charge” is wages, and is subject to withholding and reporting as such.
Executive Summary: A federal trial court in New Jersey has dismissed a lawsuit brought under the federal Fair Labor Standards Act (FLSA) by a group of drivers against a trucking company, holding that the drivers are not employees but independent contractors. Luxama v. Ironbound Express, Inc. et al., Civil Action No. 2:11-cv-02224 (D.N.J. June 28, 2012).
Today, in a 5-4 decision, the U.S. Supreme Court upheld the individual mandate provision of the 2010 Patient Protection and Affordable Care Act (PPACA) as a valid tax, imposed within Congress’ taxing power. See Nat’l Federation of Independent Businesses v. Sebelius (No. 11-393, June 28, 2012). The Court held that the individual mandate (which requires most Americans to purchase insurance or face an IRS tax) is not a penalty because the only consequence of not complying with the mandate is the requirement to pay the tax. Although the Court also held that Congress exceeded the power granted to it under the Commerce Clause when it enacted the individual mandate, the provision is nevertheless valid under Congress’ taxing authority. The Court also held that the Anti-Injunction Act does not preclude the Court from ruling on the issue because the PPACA does not require that the penalty for failing to comply with the individual mandate be treated as a tax for the purposes of the Anti-Injunction Act. Chief Justice Roberts authored the majority opinion.
The key takeaway for employers from the Supreme Court’s ruling yesterday on Arizona’s controversial Senate Bill (SB) 1070 law is that states cannot make criminals out of those in their jurisdiction who work or seek employment while unlawfully in the United States. The 5-3 decision, written by Justice Anthony Kennedy, held that Congress already has “decided it would be inappropriate to impose criminal penalties on aliens who seek or engage in unauthorized employment.” Thus, Section 5 of SB 1070, the only provision dealing directly with the employment of undocumented aliens, will never go into effect.
The Obama Administration chose to offer immigration protection to younger undocumented immigrants through the “Deferred Action Process for Young People” program. What could this potentially mean for your company?
Calling the SEIU’s “aggressive use of power to collect fees from nonmembers indefensible,” the U.S. Supreme Court, in a 7-2 decision, has held that the union violated the First Amendment by not sending a new Hudson notice when it levied a special assessment to meet expenses that were not disclosed when the amount of the regular assessment was set.
The Wage and Hour Division of the Department of Labor (DOL) has announced that it will host a free webinar on June 27, 2012 at 2:00 pm EST to help workers and employers understand the Family and Medical Leave Act (FMLA). According to the DOL, participants will have the opportunity to submit questions that will be answered by an FMLA expert from the department. Those who wish to participate can register on the agency’s web site at: http://www.dol.gov/whd/fmla/ (click on the FMLA Webinar Page).
The Obama Administration’s recently issued policy directives and the issuance of new guidance documents by the Equal Employment Opportunity Commission (EEOC) suggest increased scrutiny on the part of the EEOC when it comes to the hiring and employment of veterans, particularly those who may be disabled.
The U.S. Supreme Court held today that pharmaceutical sales representatives qualify as “outside salesmen” and, accordingly, are exempt from the overtime requirements of the federal Fair Labor Standards Act (FLSA). See Christopher v. SmithKline Beecham Corp. (No. 11-204, U.S. June 18, 2012). Importantly, the Court also refused to give controlling deference to the Department of Labor’s (DOL) change of position in interpreting the regulation to exclude these employees, which was first announced in amicus briefs filed in court litigation. The Court noted that where, as here, an agency’s announcement of its interpretation is preceded by a lengthy period of conspicuous inaction, “the potential for unfair surprise is acute.”
Frito-Lay Inc. has been involved in litigation with the Office of Federal Contract Compliance Programs (OFCCP) over the agency’s ability to obtain data after the date of the compliance review scheduling letter. The Company prevailed before the ALJ but on May 8, the Administrative Review Board (ARB) reversed the ALJ decision and ruled in favor of the OFCCP. On June 5, 2012, the Company filed suit against the OFCCP in Texas federal district court in light of the ARB ruling.
In an effort to reduce on-the-job injuries, many employers have implemented, or are considering implementing, pre-employment strength tests.
The potential hike in the federal minimum wage rate may not be the most significant legislation considered by the Democrat-controlled Congress this year. While the proposed minimum wage increase (an increase in stages over a two-year period, resulting in a $7.25 per hour minimum wage) will likely impact many employers, especially small businesses, employers should be more concerned about the so-called “Employee Free Choice Act,” which was introduced in 2005. Read More…