Sarasota-Manatee Human Resources Association

Tougher screening requirements for Florida workers who care for vulnerable populations went into effect on Aug. 1. House Bill 7069, signed by Gov. Charlie Crist earlier this year, requires employees to pass both a state and federal fingerprint screening equivalent to a level 2 background check before beginning work with children, the elderly, or people with disabilities in certain care settings. Health care employees working in residential or home care settings must have a level 2 screening before having contact with clients or having access to client property, funds, or living areas.

Under the law, all background screening requests must be submitted electronically through a vendor approved by the Florida Department of Law Enforcement. The legislation also requires that fingerprints be submitted in an electronic format to the Florida Department of Law Enforcement by July 1, 2012. For providers licensed by the Agency for Health Care Administration (AHCA) and the Department of Children and Families (DCF), electronic fingerprint requirements took effect Aug. 1, 2010.

“We are focused on helping providers hire the right staff quickly and efficiently to ensure they can provide necessary care to their clients,” said AHCA Secretary Thomas Arnold. “The electronic processing of fingerprints will expedite this process while providing important protections for those who need their services.”

The law also makes it harder for workers with criminal offenses to receive exemptions to work with vulnerable populations, including requiring some former felons to wait three years before applying for an exemption; giving authorities greater power to revoke or deny exemptions; and prohibiting exemptions for anyone designated as a sexual predator or offender.
To help care providers navigate the changes, DCF recently launched a website at www.dcfbackgroundscreening.com. AHCA also maintains a Web page detailing the changes at http://tiny.cc/ahca-screening.

HR professionals responsible for hiring decisions should be aware of the tax incentives provided by the Hiring Incentives to Restore Employment (HIRE) Act, according to Hal Coxson, an attorney with Ogletree Deakins in Washington, D.C. President Barack Obama signed the Hire Act on March 18, 2010, to provide tax relief to businesses that hire unemployed workers.

The HIRE Act essentially is a vehicle that Congress enacted to encourage employers to bring the unemployed into the workforce, Allan Friedland, an attorney with Jackson Lewis in Hartford, Conn., told SHRM Online.

By taking advantage of the HIRE Act’s tax incentives, “HR professionals can be a hero,” remarked Mark Sieke, an attorney with Mitchell Silberberg & Knupp in Los Angeles. The law “should increase the current cash flow of businesses making qualifying hires. Time will tell whether the tax benefits actually will stimulate employment.” He recommended that HR “take these subsidies into account when evaluating the economics of determining whether to hire.”

The tax incentives “should be of interest to all HR professionals because it is a way for HR to contribute to the organization’s bottom line,” remarked Brandon Edwards, president of the Tax Credit Co. in Los Angeles. He told SHRM Online that “benefits will range from $10,000 for a company hiring 20 people in 2010 to over $1 million for many midsize and large companies that are hiring thousands. Unlike other tax incentive programs that only apply to for-profit companies, the tax exemption applies to private, nonprofit organizations as well as public universities.”

It will be “up to HR and payroll to put the statutory provisions into operation,” Friedland noted. First, HR will need to determine whether new hires are qualified for HIRE Act relief.

Eligibility for Payroll Tax Exemption

The new law grants employers an exemption for their 6.2 percent Social Security—Federal Insurance Contributions Act (FICA)—payroll contribution for every new employee hired after Feb. 3, 2010, and before Jan. 1, 2011, up to the FICA wage cap of $106,800, Coxson explained. The payroll tax exemption does not apply to wages paid to an employee who is hired to replace an existing worker, unless the existing worker terminated employment voluntarily or was terminated for cause, he added.

This rule is “intended to prevent employers from terminating solely for the purpose of obtaining the availability of the tax credit,” Friedland remarked in a May 20, 2010, interview. “It’s more an anti-abuse rule than anything else.”

If an employer lays an employee off because of lack of work and later, when work picks up, hires a new employee, the payroll tax exemption applies to wages paid to the new employee as long as the new employee is a “qualified” employee (i.e., was employed no more than 40 hours during the prior 60 days). Family members and other relatives do not qualify, and household employers cannot claim this new tax benefit, Coxson noted.

Form 941

According to the Internal Revenue Service (IRS), the payment tax exemption is claimed on Form 941 (Employer’s Quarterly Federal Tax Return) beginning with the second quarter of 2010. “If the benefit is not claimed on a quarterly return, it is recommended to file a revised return for that quarter, claiming the benefit, rather than a make-up on the next quarter’s return,” according to Sieke.

There are new questions on line six asking for the number of employees, the wages earned by each employee and then a calculation of 0.062 times wages to determine the amount that does not have to be paid to the IRS, said Karen Field, principal with KPMG LLP’s Washington, D.C., national tax practice. She noted that the Form 941 does allow for adjustments during the year for an amount missed in a previous quarter but said that in certain instances an employer should use a Form 941X to correct previous quarters.

Coxson said that employers still may claim the COBRA premium assistance credit and the payroll tax exemption for the new hire on the same employment tax return. And an employer that wishes to claim the Work Opportunity Tax Credit with respect to a qualified employee may elect out of the payroll tax exemption for wages paid to that qualified employee.

The exemption will be applied to wages starting on March 19, 2010, he noted, but federal, state and local government employers other than public colleges and universities are not eligible for the exemption. Payroll taxes for the first quarter of 2010 will be treated as an advance payment of taxes owed for the second quarter of the year.

Affidavit

An employer may claim the payroll tax exemption after an eligible or “qualified” employee certifies in a signed affidavit, such as Form W-11, affirming the employee’s previous unemployed status, Coxson added. In order for the employer to take the payroll tax exemption, the newly hired employee must begin employment with the employer after Feb. 3, 2010, and before Jan. 1, 2011, and must have either been unemployed for at least 60 days prior to being hired or to have worked for no more than 40 hours for another employer during the previous 60 days.

The employee certifies under penalty of perjury on the affidavit form, Friedland noted. “The employer does not have to determine if the employee in fact meets the out-of-work requirement,” he added.

But HR really needs to “get the paperwork in order and keep copies of the Forms W-11,” Field said. “Also, it is a good idea to keep other information that supports the fact that the employee was not working for the previous period, if any exists,” she remarked.

New-Hire Retention Credit

Under the HIRE Act, employers receive a general business income tax break if the employer continues to employ the new hire for a continuous period of at least 52 weeks, Coxson explained. To qualify, the wages paid to the employee during the last 26 weeks must be at least 80 percent of wages paid for the first 26 weeks. This requirement prevents an employer from retaining an employee with minimal pay just to obtain the credit, Sieke noted.

The tax break is the lesser of $1,000 or 6.2 percent of wages paid to the new employee during the 52-week period. The tax reduction is to be taken on the employer’s income tax and, Coxson pointed out, the credit cannot be carried back but may be carried forward.

So for an employer to claim the full $1,000 retention tax credit, it must pay a new hire at least $16,129 during a 52-week period, Sieke remarked.

Tax Incentives Available for a Limited Time

HR should remind managers and employees that the HIRE Act tax incentives last only for new hires before Jan. 1, 2011, Coxson noted. So, employers must act quickly to qualify for its benefits.

“Most employees have been enthusiastic about participating in the screening process for the HIRE Act, especially if they are educated properly on the program and its purpose,” Edwards added. “HR professionals should take the time to learn about the program and communicate the rules and screening process effectively to stakeholders in the hiring process.”

Allen Smith, J.D., is SHRM’s manager of workplace law content.

Landmark legislation making major changes to health care insurance practices in the United States was enacted in March 2010. The law affects employers and HR professionals in a variety of ways, many of which are discussed briefly below. An interactive timeline that displays the effective dates of these provisions and includes links to detailed information will appear on the SHRM Health Care Reform Resources Page at www.shrm.org/healthcare.

Mandated Benefits: Beginning six months after the law’s enactment, all existing health insurance plans must:

•Prohibit lifetime limits.
•Prohibit rescissions.
•Restrict annual limits.
•Include limitations on excessive waiting periods.
•Include a requirement to provide coverage for non-dependent children up to age 26; before 2014, this requirement is limited to non-dependent children who do not have an employer offer of coverage.
Beginning in 2014, group health plans must prohibit pre-existing condition exclusions and must prohibit annual limits.

Health Care Exchanges: The law requires states to create and maintain health care “exchanges” in which health insurance providers compete for customers on equal terms. The exchanges will be open to anyone without employer-provided coverage who wants to purchase a health insurance plan. If a state does not create an exchange, the federal government will create one for it.

Employer Penalty for Not Offering Coverage: The law will not require employers to offer health insurance; however, beginning in 2014, employers with more than 50 full-time employees that do not offer coverage will have to pay a penalty of $2,000 per full-time equivalent employee for all full-time employees in excess of 30 if even one employee receives a federal government subsidy and purchases coverage in an exchange.

Employer Penalty for Unaffordable Coverage: If an employee opts out of an employer plan because coverage is “unaffordable”—that is, if the premium exceeds 9.5 percent of family income—the employer must pay a $3,000 penalty for each full-time employee who receives a government subsidy and purchases coverage through an exchange.

Employer Penalty for Low-Value Plans: Employer health care coverage must have an actuarial value of at least 60 percent. If it does not, penalties will be assessed.

No Penalty for Waiting Periods: Employers will not be required to pay a penalty for employees during a waiting period that is required before an employee can enroll in an employer-provided health insurance plan. Beginning in 2014, however, a waiting period cannot exceed 90 days.

Employer-Provided Free Choice Vouchers: Employers that offer coverage must provide a free choice voucher to employees with incomes less than 400 percent of the federal poverty level whose share of the premium exceeds 8 percent but is less than 9.8 percent of their income and who choose to enroll in a plan in the exchange. The voucher amount must be equal to what the employer would have paid to provide coverage to the employee under the employer’s plan. Employers providing free choice vouchers will not be subject to penalties for employees that receive premium credits in the exchange.

Automatic Enrollment Procedure: The law will require employers with more than 200 employees to enroll employees automatically into health insurance plans offered by the employer, allowing for an employee opt-out. The law is silent as to the effective date of this requirement.

Restrictions on Cafeteria Plans: The law caps flexible spending account (FSA) contributions at $2,500 and excludes over-the-counter medications without a doctor’s prescription as reimbursable expenses under FSAs, health reimbursement accounts, medical spending accounts (MSA) and health savings accounts (HSA). Penalties on nonmedical HSA and MSA distributions are increased to 20 percent.

Incentives for Wellness: The law allows employers to offer premium discounts and other financial incentives for up to 30 percent of the total premium to individuals who satisfy a health standard. It includes provisions designed to ensure that discriminatory practices do not occur. The secretary of Health and Human Services has the authority to issue regulations to allow financial incentives up to 50 percent. The law provides for grants for up to five years to small employers that establish wellness programs.

Tax on High-Value Plans: Beginning in 2018, there will be a 40 percent excise tax on insurance companies and plan administrators for group health coverage that exceeds a threshold of $10,200 for single coverage and $27,500 for families, not counting stand-alone dental and vision plans. For retirees above age 55 and for plans that cover employees in high-risk professions, the thresholds are $11,850 for single coverage and $30,950 for families. The tax will apply to the amount of the premium that is in excess of the threshold. Beginning in 2019, the thresholds will be indexed to the rate of general inflation plus 1 percentage point.

Required W-2 Reporting: Beginning in 2011, employers will be required to report the value of employees’ health benefits on W-2 forms.

Long-Term-Care Enrollment Procedures: The law creates a national social insurance program that provides limited long-term-care coverage for active employees through the workplace. All premium costs can be charged to employees. Beginning in 2011, employers must have in place automatic enrollment procedures that allow workers to opt out or procedures that allow workers to initiate enrollment.

Breaks for Nursing Mothers: A provision in the law amends the Fair Labor Standards Act to require employers, with some exceptions, to furnish “reasonable break time for an employee to express breast milk for her nursing child” for one year after the child’s birth. It requires employers to provide a place, other than a bathroom, that is shielded from view and free from intrusion from co-workers and the public, that may be used by an employee to express breast milk. (Courtesy of SHRM on line staff)

The U.S. Department of Labor (DOL) said it is still on schedule to propose regulations interpreting new qualifying exigency and military caregiver leave provisions and new airline flight crew rules under the Family and Medical Leave Act (FMLA) by this November.

The department is reviewing and may also issue “other revisions of the current regulations,” according to DOL’s semiannual regulatory agenda, released in late April.

The agency declined requests for comment about what “other revisions” may be made. But DOL may have provided a hint when it answered a question during a web chat April 27 about whether it would try to re-establish clear penalties on employers for failing to inform employees about their FMLA leave status. The agency pointed the questioner to the Wage and Hour Division’s scheduled November 2010 regulatory proposal.

The question referred to the case of Ragsdale v. Wolverine World Wide Inc., in which the Supreme Court, among other actions, invalidated penalties imposed by a pre-January 2009 DOL regulation (29 C.F.R. §825.700(a), which has since been rewritten) on employers that fail to notify their employees about their FMLA rights. The Ragsdale decision was the first federal FMLA case reviewed by the high court (Ragsdale v. Wolverine World Wide Inc., 535 U.S. 81 (U.S. 2002)).

What's New
DOL still plans to release for public comment regulations interpreting two new FMLA provisions passed last year.
The first, the National Defense Authorization Act for Fiscal Year 2010, P.L. 111-84, signed into law in October 2009, expanded qualifying exigency and military caregiver leave to include not just current members of the armed forces, National Guard and Reserve, but veterans within five years of the date they started getting medical services.

Aggravated or existing injuries sustained during the line of duty were also granted FMLA coverage. Before the latest legislation, only injuries incurred in the line of duty were protected. Eligibility for qualifying exigency and military caregiver leave was extended beyond just the families of the Guard and Reserve to include all members of the regular armed forces deployed to foreign countries.

The second, the Airline Flight Crews Technical Corrections Act, P.L. 111-119, helps make pilots, flight attendants and other airline workers eligible for unpaid, federally protected FMLA leave.

Due to the way work hours are calculated in the airline industry, many of the industry’s estimated 50,000 workers were unable to reach the FMLA's 1,250 hours over 12 months eligibility threshold and qualify for leave.

Now, flight crews are credited for FMLA purposes for the hours they are paid, rather than just the hours worked in-flight. Crews meet the hours-of-service threshold if they have a) worked or been paid for at least 504 hours during the 12 months preceding a leave request, and b) worked or been paid for at least 60 percent of the minimum number of hours for which their employer scheduled them in any given month.

Once DOL releases its proposed regulations in November, there will be a public comment period for employers, employees and other interested parties before a final rule is written and adopted.

Contributed by Thompson Publishing Group Inc. Republished with permission. © 2010 Thompson Publishing Group Inc. All Rights Reserved. For more analysis, see the Family and Medical Leave Act Handbook. Courtesy of SHRM

The Florida Legislature recently passed Senate Bill 1752, an economic development and job creation bill championed by Gov. Charlie Crist, who planned to sign it. “The recovery and long-term health of Florida’s economy is closely tied to the ability to attract and retain high-wage jobs and innovative industries in Florida,” Gov. Crist said. “I applaud the Florida Legislature for supporting a bill that provides high-wage jobs for Floridians and aids in the diversification of Florida’s economy.”

The bill makes the following enhancements to existing Florida incentives:

*Dedicates $15 million to the Quick Action Closing Fund (QAC) to support new and expanding high-impact businesses. In fiscal year 2008–09, QAC projects helped create or retain 25,610 jobs paying an average of $51,503 per year.

*Enhances Qualified Target Industry (QTI) tax refunds, providing additional per-job tax refunds for high-impact businesses, for businesses receiving exceptional support from a local government, and for businesses that increase exports of goods through Florida seaports or airports. In fiscal year 2008–09, QTI projects created 8,382 new jobs at an average salary of $51,257.

*Provides $3 million of local government matching grant funds for projects that attract and retain businesses in Florida. Areas with pervasive poverty or extreme economic distress will be given higher priority. Individual grants may be up to $50,000.

*Provides $4 million in Defense Infrastructure Grant funds to support Florida’s military installations. Florida’s defense economy contributes approximately $60 billion to Florida’s gross state product and employs nearly 725,000 Floridians.

*Adjusts the High Impact Performance Incentive Grant program, lowering the eligibility threshold for potential grant recipients from a $100 million investment and 100 jobs for high impact sector businesses to $50 million and 50 new full-time jobs. The qualifying amount required for research and development facilities also drops from $75 million and 75 jobs to $25 million and 25 new full-time jobs.

In addition, the legislation includes $10 million in Jobs for the Unemployed Tax Credits, which offer $1,000 tax credits to qualified employers for hiring unemployed workers. To qualify, workers must:

*Have been out of work at least 30 days before being hired by the eligible business.

*Be hired on or after July 1, 2010.

*Not have been previously employed by the business.

*Work full-time for the business for an average of 36 hours per week and for at least 12 months before the eligible business owner files for the tax credit.

*Not have been previously claimed by the eligible business for a tax credit under this program.

The legislation also provides $11.9 million in assistance to small businesses and $19.8 million to Space Florida to diversify and expand commercial aerospace in the state, as well as a 5-year, $242 million transferable tax credit incentive program for Florida’s film and entertainment industry.

For the full text of Senate Bill 1752, visit http://tiny.cc/w9yg3.

Contributed by BLR, Inc. Courtesy of SHRM

Obligations of Federal Contractors to Notify Employees of Their Rights under Federal Labor Laws

Pursuant to Executive Order 13496 and its implementing regulations, 29 C.F.R. Part 471, Federal contractors and subcontractors, beginning on June 21, 2010, must notify employees about their rights under the National Labor Relations Act (NLRA).
OLMS Fact Sheet
Employee Rights Poster

March 23, 2010, President Obama signed into law H.R. 3590, the Patient Protection and Affordable Care Act. This sweeping reform law includes many provisions that will impact both employers and employees.

· Employer Requirement – Penalties would be assessed on employers with 50 or more employees who fail to offer coverage to employees. The penalty would be assessed if even one employee receives a subsidy to purchase coverage through a health insurance exchange. Employers would also incur penalties if the coverage they offer is considered “unaffordable” to the employee or if the health plan has an actuarial value of less than 60 percent or pays less than 60 percent of covered health care expenses.

· Individual Requirement – The new law requires individuals to purchase health insurance coverage or pay a tax penalty beginning in 2014. The penalty, which is phased in, starts at $95 or 0.5% of income per individual in 2014 and increases to $750 or 2% of income in 2016. The penalties for families would be capped at $2,250. Religious and hardship exemptions are available.

· Excise Tax on High - Value Health Plans (“Cadillac” tax) – Employers offering health plans that exceed a certain cost (the total employee and employer cost) would be subject to an excise tax on the amount above that value. For individual coverage, the threshold would be $8,500; for family coverage, the threshold would be $23,000. These thresholds would be indexed at Consumer Price Index plus one percentage point. Certain high-risk provisions would have a higher cost threshold.

· Insurance Market Reforms – The new law requires insurance plans to provide coverage to any individual who requests insurance. It also includes a prohibition on pre-existing condition restrictions in the individual and small group health care market. Health insurance premiums would be allowed to vary based only on tobacco use, age, family composition, and geographic location. Large employers that purchase coverage through a health care exchange would be eligible for the above insurance protections. Both self-insured and fully-insured plans are required to provide dependent coverage for children up to age 26. Health plans are also prohibited from establishing annual and lifetime dollar limits on coverage.

· Wellness Programs – Employers can offer increased incentives or rewards to employees for participation in a wellness program or for meeting certain health status targets beginning in 2014. Rewards or premium reductions up to 30 percent of the cost of coverage are now permissible.

· Free Choice Vouchers – Employers offering coverage are required to provide “free choice vouchers” to qualified employees to purchase insurance through the exchanges. To be eligible for a voucher, an employee’s contribution under the employer’s plan would be between 8 percent and 9.8 percent of income, and the employee’s income would be at or below 400 percent of the Federal Poverty Level.

· Flexible Spending Accounts (FSAs) – Contributions to health FSAs would be capped at $2,500 beginning in 2011 and over-the-counter medicines would only qualify for reimbursement with a doctor’s prescription.

· Medicare Hospital Insurance Tax – Beginning in 2013, an additional Medicare tax of 0.9 percent is imposed on individuals with income in excess of $250,000 for joint filers or $200,000 for single filers.

While the new health care legislation was signed into law just this week, some additional changes are expected to be made in the coming days as part of what is called budget reconciliation. These changes, which include several of the effective dates and requirements outlined above, are being made as part of the agreement negotiated between the House and Senate to approve the overall health care reform package.

To review a side-by-side chart of the new health care law and the anticipated changes to it contained in the budget reconciliation bill, click HERE.

On Saturday, December 19, 2009, the U.S. Senate passed the Fiscal Year 2010 Department of Defense (DOD) Appropriations Act by a vote of 88-10. This federal spending bill included important provisions to both

1. Extend and expand the COBRA subsidy program that was enacted under the American Recovery and Reinvestment Act (ARRA) and

The House also passed this same spending bill on December 16, 2009 by a vote of 395-34. President Obama immediately signed this bill into law (P.L. No: 111-118) after Senate passage on December 19, 2009.

· Change the end date for eligibility for the subsidy from December 31, 2009, to February 28, 2010

· Provide a retroactive period of 60 days (commences upon enactment) for payment of premiums for eligible individuals whose subsidy period expired on November 30, 2009

· Require a special notice outlining these changes within 60 days to all eligible individuals on COBRA on or after October 31, 2009, or those who are terminated after this date

· Clarify the original COBRA subsidy program, noting that eligibility and notice are based on the timing of the qualifying event

The DOD bill also provides an extension and expansion of unemployment insurance benefits. These changes are outlined below.

· The period during which individuals may file applications for Federal Emergency Unemployment Compensation (EUC) is extended from the current end date of December 31, 2009 to February 28, 2010 and the period during which individuals may claim and be paid EUC is extended from May 31, 2010 to July 31, 2010.

· The period during which individuals may qualify for the Federal Additional Compensation (FAC), the extra $25 weekly benefit amount on state and federal unemployment compensation, is extended from the current end date of January 1, 2010 to February 28, 2010 with weekly payment provided during the phase out period for weeks ending June 30, 2010 to August 31, 2010.

· The period during which 100% federal reimbursement for weeks of regular federal extended benefit payments for states opting to trigger federal extended benefits based on the Total Unemployment Rate is extended from the current end date of January 1, 2010 to February 28, 2010, with the state option to continue the extended period from May 30, 2010 to July 31, 2010.