faces
                     ...from the HR Perspective
New MFYCO
Human Resource Update

June 2016 


Wage Issues

 
 
Monday is the Fourth of July, and we hope you and your family have a wonderful time on that great day!
 
All of our businesses have or soon will be affected by wage related issues that one might not have expected just a few years ago. Leading the pack of actual and potential changes are the new overtime rules, minimum wage, independent contractor rules, paid sick time, mandatory state sponsored retirement plans, paid family or pregnancy leave, and joint employer responsibility. Additionally, nearly all businesses have already felt the impact of the Affordable Care Act (ACA) on both premiums and benefits and will continue to do so.
 
What all of these well-intentioned laws, regulations and rules have attempted to do is to improve the life of the average employee. However, all of them have hurt many employees and will continue to do so. Past newsletters have dealt with most of these issues and can be found in our newsletter archives.
 
One of the articles in this newsletter deals with the new overtime rules. Again, a well-intentioned rule that will cause some significant changes in how many hours an employee works and how many employees a company employs. The ACA has taken a toll on the number of hours employees work with companies reducing the regularly scheduled work week to 28 or so hours. In speaking with some companies, one of the solutions to the new overtime rules is to cut jobs in half so that no one exceeds the overtime threshold. This may also have the benefit of relieving the ACA threat. What this does is to reduce the number of full-time jobs available and the pay of those who formerly had full-time jobs.
 
I was in the UK for some meetings last month. A regional fast food chain there is dealing with relatively new minimum wage rules by automating parts of their back kitchen operations, and in some cases reducing the number of employees from approximately twelve to four or so. Is this what we want to see here?
 
I urge you to express your views on these subjects to you Congresspersons. The following links will help you to get your message to them:
 
 
All of the challenges mentioned above will have an impact on our businesses. We have to determine how to best deal with them. We would be pleased to assist you in your quest for solutions!
    
Sincerely,   
    
Michael F. Yates
President 
 

If you find value in this newsletter please let us know. Feel free to call me with a comment and/or ask a question at any time (908-689-4200) or send me an email (myates@mfyco.com). We offer this timely information as another benefit of your relationship with our company. If you feel a friend or colleague would benefit from receiving our newsletter, please feel free to forward a copy. 


You can view all of our newsletters by clicking the 'newsletter archives' link at our company website www.mfyco.com.

 
In This Issue
It's Up to Plan Sponsors to Track Loans, Hardship Distributions
MFYCO Facebook
Form 1095-C and Government Filing 1094-C
DOL Publishes Final Rule Revising Overtime Regulations
Millennials - What they seek when Job Hunting
What to Review When Updating your Employee Handbook
eLaws Quick Link
2016 Retirement Plan Limits
Track Government Spending
Terms of Use
From the IRS

It's Up to Plan Sponsors to Track Loans, Hardship Distributions

Even if you use a third party administrator (TPA) to handle participant transactions, you're still ultimately responsible for the proper administration of your retirement plan. Make sure you're keeping up with the recordkeeping requirements.
Keep documentation for hardship distributions
The plan sponsor must obtain and keep hardship distribution records. Failure to have these records available for examination is a qualification failure that should be corrected using the Employee Plans Compliance Resolution System (EPCRS). The plan sponsor should retain these records in paper or electronic format:

1. Documentation of the hardship request, review and approval;
2. Financial information and documentation that substantiates the employee's immediate and heavy financial need;
3. Documentation to support that the hardship distribution was properly made in accordance with the applicable plan provisions and the Internal Revenue Code; and
4. Proof of the actual distribution made and related Forms 1099-R.

It's not sufficient for plan participants to keep their own records of hardship distributions. Participants may leave employment or fail to keep copies of hardship documentation, making their records inaccessible in an IRS audit. Also, electronic self-certification is not sufficient documentation of the nature of a participant's hardship. IRS audits show that some TPAs allow participants to electronically self-certify that they satisfy the criteria to receive a hardship distribution.

While self-certification is permitted to show that a distribution was the sole way to alleviate a hardship, self-certification is not allowed to show the nature of a hardship. (See Treasury Regulation §§1.401(k)-1(d)(3)(iv)(C) and (D)). You must request and retain additional documentation to show the nature of the hardship.

Keep documentation on plan loans
A plan sponsor should retain these records, in paper or electronic format, for each plan loan granted to a participant:

1. Evidence of the loan application, review and approval process;
2. An executed plan loan note;
3. If applicable, documentation verifying that the loan proceeds were used to purchase or construct a primary residence;
4. Evidence of loan repayments; and
5. Evidence of collection activities associated with loans in default and the related Forms 1099-R, if applicable.

If a participant requests a loan with a repayment period in excess of five years for the purpose of purchasing or constructing a primary residence, the plan sponsor must obtain documentation of the home purchase before the loan is approved. IRS audits have found that some plan administrators impermissibly allowed participants to self-certify their eligibility for these loans.
IRS Retirement Plans Newsletter
 


 
Invitation to MFYCO Facebook
facebook 

Form 1095-C and Government Filing 1094-C

Michael F. Yates & Company, Inc. has the capability of printing and distributing forms 1095-C to your employees and submitting your 1095-Cs to the IRS using form 1094-C. If you would like to revisit your processes for the 2017 filing, please give us a call.

Join Our Mailing List

DOL Publishes Final Rule Revising Overtime Regulations



On May 23, 2106, The Department of Labor (DOL) published its Final Overtime Rule, "Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees". (81 Fed. Reg. 32391, May 23, 2016).

The Fair Labor Standards Act (FLSA) requires that most employees be paid at least the federal minimum wage for all hours worked, plus overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. However, Section 13(a)(1) of the FLSA exempted from both the minimum wage and overtime pay requirements certain employees. The exemptions included Executive, Administrative, Professional (sometimes referred to as "EAP" or "white collar" employees), outside sales employees, and under Sections 13(a)(1) and 13(a)(17) certain computer employees.

The Department's Rulemaking was in response to a Presidential Memorandum to the Secretary of Labor signed by President Obama on March 13, 2014. The Memorandum, ("Updating and Modernizing Overtime Regulations", 79 Fed. Reg. 15209, March 18, 2014), declared that regulations under the FLSA regarding exemptions "... particularly for executive, administrative, and professional employees (often referred to as "white collar" exemptions...") were outdated, and directed the Secretary to propose revisions modernizing existing overtime regulations.

The Final Rule updates regulations which determine whether "white-collar" salaried employees are exempt from FLSA's wage and overtime pay protections, and will go into effect on December 1, 2016.

The Final Rule increases the standard salary threshold from $455.00 a week ($23,660.00 a year) to $913.00 a week ($47,476 a year). But an employee meeting the standard salary level will still be entitled to overtime pay unless the employee is exempt under the "duties test".

The Final Rule also updates the total annual compensation for a highly compensated employee ("HCE") from $100,000.00 to $134,004. Those employees must still be paid at least the standard weekly salary level of $913.00 a week on a salary or fee basis, but the Rule allows nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of that standard salary level.

The Final Rule will also allow up to 10 percent of the salary threshold for non-HCE employees to be met by nondiscretionary bonuses, incentive pay, or commissions, but these payments must be made on at least a quarterly basis.

The Final Rule also provides for an automatic update of the salary threshold every three years, beginning January 1, 2020.

The Final Rule is already under attack in Congress. U.S. Senator Lamar Alexander, joined by 44 cosponsors, introduced a Joint Resolution under the Congressional Review Act on June 7, 2016, providing for congressional disapproval of the Rule. S.J. Res. 34 - 114th Congress (2015-2016). The Resolution was referred to the Committee on Health, Education, Labor and Pensions.

While legislative efforts to nullify the Final Rule, not to mention court actions, are certainly in the works, HR Professionals need to get ready and be in compliance by December 1, 2016, the Final Rule's effective date. 
 
   

We invite you to share our newsletter. 
(It's a lot to think about!) 
 
 


Millennials - What They Seek When Job Hunting

According to Employee Benefit News, the top five wants of millennials are:
  1. Flexible work schedule;
  2. Eco friendly work environment;
  3. Well stocked lunch/break room;
  4. Perks such as free lunch, on-site gym, in office neck massage; lastly,
  5. A strong relationship with their direct boss along with consistent feedback which sparks motivation.
   


 What would you like to see in a future issue?

Contact our office with your suggestions.

  email: info@mfyco.com
 

What to Review When Updating your Employee Handbook

 

It seems as HR professionals we are in flux with the constantly evolving Federal, State and Municipal laws, regulations and statutes whether they be newly created or revised and so are our employee handbooks. We must be diligent in our attempts to maintain them with the most pertinent information in a clear and concise manner that spells out in detail what the employee must do and what the employer will do to meet the requirements of these ever changing laws.

These are just a few policy areas that HR Professionals should revisit when looking to update their employee handbook.
  1. Protect your employees' free speech rights, to include watercooler conversations, discussions on social media about pay, working conditions and not so liked bosses, who are protected by Collective bargaining. Handbooks can prohibit employees from revealing confidential business information but the text should avoid any language that could be interpreted as infringing on speech and actions that the National Labor Relations Act (NLRA) protects.
  2. Social Media and data privacy becomes a blur when employees begin to use their personal equipment for business. Handbooks must make it clear that employees have no right to privacy while accessing social media at work or on company-owned equipment. Handbooks should state that workers cannot disclose any proprietary information-with exception of speech protected by the NLRA (1 above). Make sure it is clear that employees are not to download apps or click on links in unsolicited e-mails when using employer equipment. Remember to warn employees about leaving employer equipment in unattended vehicles and report them lost or stolen immediately. Lastly state that upon termination any devices can be wiped clean of the employer's data.
  3. Include in your Reasonable Accommodations policy the circumstances when an employee is entitled to a reasonable accommodation and that the employee needs to make a clear statement requesting one. Your handbook should spell out the legal basis for the accommodations and what your company intends to do to comply to a request. Also, managers must be put on notice that, if a worker mentions a condition that might qualify, they should ask if the employee is seeking an accommodation. Clearly state, when, in what circumstance and to whom requests for accommodations should be made.
  4. Under your retaliation policy make a statement on how you will treat a witness and others who participate in an investigation of a retaliation claim. Also make a statement that you cannot promise confidentiality for the retaliation claimant but identities will be revealed only on a need-to-know basis. The process must be fair to both the claimant and the accused.
  5. State the ramifications of unauthorized overtime and how you will make a good-faith effort to correct improper deductions from workers' pay when alerted in our wages and payroll policy.
  6. Review and stay abreast with State specific laws. Update your handbook annually to incorporate any laws that impact your worksites.
  7. Examine leave benefits trends within your market or competition.
  8. Be aware of employees who do not qualify for or have exhausted FMLA leave, these employees may qualify for ADA leave. Your handbook should note that a person may qualify for leave under the ADA as a reasonable accommodation. Keep in mind in many cases the ADA trumps FMLA when an employee's own medical condition requires an accommodation, regardless of whether the accommodation is needed on the employee's first day of employment or once they are covered by FMLA. Be sure your policy outlines the accommodation procedures and provisions for how things like benefit premium payments are handled while employee is on leave.
  9. Do not address not smoking as a generality, be specific such as electronic cigarettes (e-cigarettes), chewing tobacco and cigarettes. Specify any restrictions on where tobacco products can be used. Research your state laws on medicinal marijuana and be clear when addressing the limits of marijuana usage and the actions of the company if your employee has a positive test result.
  10. The EEOC has asserted that gender identity is included within Title VII of the Civil Rights Act of 1964; therefore, reread your handbook for any discriminatory language toward same-sex married couples, and members of the lesbian, gay, bisexual and transgender (LGBT) community.
Be concise. Be original. Be careful. Have your handbook reviewed by legal counsel. Also, for multistate employers you may want to include all state and local variations in topical sections or tailor each book to the company location or put state specific issues as an addendum.

If you need assistance updating your employee handbook please call us.
   

 
 
   
2016 Retirement Plan Limits
All limits are based on the calendar year.  
   
 
2016
2015
2014
Maximum Annual Defined Benefit
$210,000
$210,000
$210,000
Maximum DC Annual Addition ($$)
$ 53,000
$ 53,000
$ 52,000
Maximum 401(k) Deferrals
$ 18,000
$ 18,000
$ 17,500
Older EE Catch-Up Contribution
$   6,000
$   6,000
$   5,500
Maximum Plan Compensation
$265,000
$265,000
$260,000
Highly Compensated Threshold
$120,000
$120,000
$115,000
Key Employee in a Top-Heavy Plan
$170,000
$170,000
$170,000
Income Subject to Social Security Tax
$118,500
$118,500
$117,000
PBGC Maximum Monthly Guarantee*
$5,011.33
$5,011.33
$4,943.18
Maximum DC Annual Addition (%)
100%
100%
100%
Social Security Tax - Employee
6.2%
6.2%
6.2%
Social Security Tax - Employer
6.2%
6.2%
6.2%
Medicare Tax**
1.45%
1.45%
1.45%
DC Plan Deduction Limit
25%
25%
25%
Definition of Compensation for DC   Plan Deduction Limit
Includes
Deferrals
Includes
Deferrals
Includes Deferrals
*Life Annuity at age 65
** Individuals with earned income over $200,000 pay an additional 0.9% in Medicare taxes
 
 
 
 
If you have not received our business card with these numbers printed on it and would like one, please let us know! We would be happy to mail you one (or a few to share!)
   

 
about MFYCO ... 

  • Michael F. Yates & Company, Inc. can help you with a variety of services ranging from retirement plans to providing results-oriented survey instruments, training and development programs for your employees. Our products and services are intended to help you maximize the effectiveness of your Human Resources function.
     
  • These products and services incorporate our years of experience so that you receive rapid results and exceptional value. From onsite consulting, to strategic business integration, to Web enablement, we understand how Human Resources can be applied to solve your problems and achieve your goals. As a result, we can help you get the most out of your investment and turn your most precious resource into a competitive advantage.
     
  • We offer Consulting, Retirement Planning, Pension and 401(K) both qualified and non qualified Plans, Welfare Plans, Communications, Computer Systems, Executive Plans, Compensation, Mergers, Acquisitions, Divestitures and Other Services. 
     
  • We offer a true and honest, Client Partnership.
     

Take the Michael F. Yates & Company, Inc. challenge!

Call us today ... 908-689-4200 

 

 
mh group
 How to Track Government Recovery Spending

 

"The Board shall establish and maintain...a user-friendly, public-facing website to foster greater accountability and transparency in the use of covered funds. The website...shall be a portal or gateway to key information relating to the Act and provide connections to other government websites with related information." 

 
 
Michael F. Yates & Company, Inc. 
_________________
 
 
101 Belvidere Avenue
P.O. Box 7
Washington, NJ 07882-0007 
 
908-689-4200

fax: 908-689-6300
 
email: info@mfyco.com

 

 

 
Our staff and firm are proud members
of the following professional organizations:

Society of Actuaries
 
American Society of Pension Professionals & Actuaries

Society for Human Resource Management
  
GAPS (Global Association Pension Services)

WorldatWork

 American Management Association

 

National Federation of Independent Business

Better Business Bureau

 

 

  
Terms of Use 
COP
  
The site ("from the HR perspective" hence herein referred to as MFYCO.com) is made available by Michael F. Yates & Company Incorporated. All content, information and software provided on and through 'from the HR perspective' and MFYCO.com ("Content") may be used solely under the following terms and conditions ("Terms of Use".) 
 
 
YOUR USE OF THIS WEBSITE CONSTITUTES YOUR AGREEMENT TO BE BOUND BY THESE TERMS AND CONDITIONS. IF YOU DO NOT AGREE TO THESE TERMS, YOU SHOULD IMMEDIATELY DISCONTINUE YOUR USE OF THIS SITE.  
 
 
Mike's Best Friend 
 
"Human Resources  provides the leadership, supportive services, guiding principles, policies, structures and standards needed for a quality organization to survive in today's business environment."
 
 MFYCO PRIVACY POLICY

 
Michael F. Yates & Company, Inc. 
believes strongly in protecting the privacy of its users.


 

Concluding Note

As always, any statements regarding federal tax law contained herein are not intended or written to be used, and cannot be used, for the purposes of avoiding penalties that may be imposed under federal tax law or to market any entity, investment plan or arrangement.