Editor's Note - Dawn Of A New Era
As President Obama settles into the White House and the general public grapples with stimulus packages, tax breaks and cuts, foreclosures and myriad economic woes, employers should be aware that change is afoot on the Human Resources scene too.
In fact, the change to a Democratic president is shifting focus to quite a few adjustments to laws governing labor and employee benefits.
One of the first acts of the Obama Administration was to issue a memorandum to all federal agency heads directing them to suspend or withdraw all proposed or final regulations not yet published and to postpone the effective date of any regulations published but not yet effective.
Despite what we proclaimed in the last newsletter, the Employee Free Choice Act was not the first bit of legislation to pass the president’s desk (Sorry, Mr. Palazzolo).
Instead, employers should be brushing up on employment discrimination, paid sick days, FMLA guidelines, contract negotiations and employment eligibility. An article in today's edition touches on all of these subjects and is worth the time it takes to read.
This newsletter also examines a number of court cases that will have an impact on employers either right now or in the immediate future. As HR professionals, you should become familiar with such subjects as associational retaliation, Medicare disclosure obligations, the WARN Act and retirement plan beneficiary designations.
Fortunately, we cover all that and more in today's newsletter.
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I Was Wondering
Q: Does the value of a gift card given to employees for an achievement or for their years of service have to be added to the employees’ wages for purposes of calculating overtime?
A: Probably not. The Fair Standards Labor Act allows employers to exclude discretionary bonuses and gifts from employees’ wages when calculating overtime. In order to meet this exception, the bonus or gift must truly be discretionary in both availability and amount and must not be part of an agreement or promise the employer made to the employee. So, an employer cannot pay an employee a lower wage but promise the employee that he or she will receive a large Christmas bonus to compensate them, without triggering overtime obligations. On the flip side, an employer can reward an employee for an achievement for years of service with the company, provided the bonus or gift is not based on hours of work, production or efficiency. This exclusion applies only to overtime, and does not affect the taxable basis of this income.
Q: We have heard that you need to send COBRA letters certified so you can keep track of them, but someone else told us that we could just make a copy of the postage on the envelope and that is enough verification that the item was sent in the appropriate amount of time.
A: It is the plan administrator's obligation to provide the required COBRA notice to the individual’s last known address in a manner reasonably calculated to ensure actual receipt. There are a number of permissible methods for providing COBRA notices — certified mail, first class mail, 2nd or 3rd class mail with return postage guaranteed, hand delivery, electronic delivery (in certain circumstances). If questions arise, the plan administrator must be able to show that a notice was properly sent but does not need to prove that it was actually received. We generally recommend that a COBRA notice be sent by first class mail and that a post office certificate of mailing be obtained to prove that it was actually deposited in the U.S. mail. A copy of the COBRA notice should be attached to the certificate of mailing and kept in the individual's file. We do not generally recommend that the notice be sent by certified mail return receipt requested since, if the return receipt is not returned or is not signed by the addressee, then questions may be raised and arguments may exist that the plan administrator should have done more.
"I Was Wondering . . .' gives readers an opportunity to ask questions of our HR attorneys. Not all questions will be answered publicly. To submit a question, please send it by e-mail to Sharon Sprague at firstname.lastname@example.org.