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New Child Labor Regulations Go Into Effect in July
The Department of Labor's (DOL) Wage and Hour Division has finalized regulations that, effective July 19, 2010, revise the child labor rules for non-agricultural work [75 FR 28403, 05/20/2010].
14- and 15-year-olds. 29 CFR 570.34 has been amended to allow 14- and 15-year-olds to perform work of an intellectual or artistic nature (e.g., advertising, banking, computer programming, drawing, and teaching). 29 CFR 570.37 has been amended to create a new work-study program for 14- and 15-year-old students who wish to use their school-supervised work experience as a means to realize their academic potential and obtain a college education.
29 CFR 570.33 has been amended to prohibit 14- and 15-year-olds from engaging in "youth peddling" activities or non-charitable door-to-door sales. "Youth peddling" includes the selling of goods or services to customers at locations other than the youth-employer's establishment, such as the customers' residences or places of business, or public places such as street corners and public transportation stations.
Workers under age 18. The final regulations prohibit workers under the age of 18 from working in certain industries such as construction, poultry slaughtering, and forest fire fighting.
"Today's regulations protect young employees from dangerous machines and tools, excessive work hours and other hazards at work," said Secretary of Labor Hilda L. Solis on May 19, 2010 (the day the final regs were issued). "These rules incorporate recommendations from the National Institute for Occupational Safety and Health and take a common sense approach to keeping young workers safe from harm."
DOL Increases Child Labor Penalties
The U.S. Department of Labor (DOL) has announced the implementation of stronger penalties against employers that illegally employ child workers [DOL News Release 10-0843-NAT, 6/16/10].
The Fair Labor Standards Act (FLSA) prohibits the employment of individuals under age 18 in hazardous nonagricultural occupations. Individuals under age 16 may work only limited hours outside of school hours. In addition, 14- and 15–year-olds may not work before 7 a.m. or later than 7 p.m. (9 p.m. from June 1 through Labor Day). For agricultural employment, individuals under age 12 may be employed with parental consent, but only on small farms not subject to the federal minimum wage requirements. Individuals ages 12 and 13 may be employed in agricultural work on the same farm as a parent, or with a parent's consent. In general, no hired farm worker under 16-years-old may perform hazardous work or be employed during school hours.
Under the new penalty structure, employers who illegally employ individuals ages 12 to 13 will face a penalty of at least $6,000 per violation. If a worker is under 12 and illegally employed, the penalty will be at least $8,000. Penalties for illegally employing workers under age 14 could be raised to $11,000 under certain conditions.
The DOL has online self-assessment tools to help employers in nonagricultural industries determine whether they are in compliance with the child labor laws. See the "YouthRules!" section of the DOL website for further information.
New child labor regulations go into effect in July. Secretary of Labor Hilda L. Solis believes that the "increased fines, coupled with important recent revisions to the child labor rules and reinvigorated enforcement by the Wage and Hour Division, will help ensure the safety of children."
USCIS Redesigns E-Verify Website
The E-Verify website has been redesigned.
E-Verify is an Internet-based system that compares information from an employee's Form I-9, Employment Eligibility Verification, to data from the U.S Department of Homeland Security (DHS) and Social Security Administration (SSA) records to confirm employment eligibility for new hires.
U.S. Citizenship and Immigration Services (USCIS) says that the redesigned website will "enhance E-Verify's usability, security, accuracy and efficiency." The new home page welcomes users by name, displays the user ID, and the last login date and time. The website now features simplified terms. For example, "Initiate (or run) a query" has been replaced with "Create a case." In addition, "Request additional verification" has been replaced with "Request name review," and "Resolve case" has been replaced with "Close case."
USCIS says that verifying an employee's employment eligibility with the redesigned E-Verify has never been easier. Most cases only require three steps. According to USCIS, the redesigned E-Verify website features can't-miss case results that are displayed prominently on the screen. Icons have also been added to clearly designate the status of a case (green check for authorized, a red sign for unauthorized, and a yellow warning indicator for a tentative nonconfirmation). The new design lets users pick the number of cases they want to be displayed per page, up to 100 cases. Cases may be sorted by several variables, except Social Security Number. When a user creates a case for an employee who presents a work authorization document with an expiration date, E-Verify will remind the user when the document is about to expire. The redesigned E-Verify allows program administrators to download their electronically signed Memorandum of Understanding (MOU).
There are two new "How to" videos on the E-Verify website, which demonstrate how to create a case and how to respond to a tentative nonconfirmation (TNC). A new video will be posted shortly to demonstrate how to enroll in the E-Verify program. User manuals and quick reference guides have also been updated.
Existing user IDs and passwords are still valid and all cases will still be there when users log into the new system. The first time users log in on or after June 13, they will be required to take a short tutorial to learn about the changes to the website.
During a webinar introducing the new system for E-Verify users, it was noted that some initial glitches have been reported with the new system (particularly slowness) as a result of the new functionality, but improvements are already being seen. The DHS will continue to post status updates as they search for the root of the problem. The DHS is also actively seeking feedback and comments on the new site from users [USCIS website, E-Verify Redesign, 6/14/10].
Forms W-2/W-3 Update
There have been recent revisions to 2010 Forms W-2, W-3, and W-3c, and to the IRS publication that provides the general rules and specifications for substitute Forms W-2c and W-3c.
2010 Forms W-2, W-3, and W-3c. The IRS is reminding employers that downloaded 2010 Forms W-2, W-3, and W-3c, and their corresponding instructions, before April 23, 2010, that the forms and instructions have been revised to include the payroll tax exemption in the Hiring Incentives to Restore Employment Act (HIRE Act, P.L. 111-147). The Instructions for Employee on the back of Form W-2, Copy 2 have been revised to add code CC for HIRE exempt wages and tips to the list of codes for Box 12. On Forms W-3 and W-3c, Box 12 was split into Boxes 12a, Deferred compensation, and 12b, HIRE exempt wages and tips. No changes were made to the February 2009 version of Form W-2c, Corrected Wage and Tax Statement.
Substitute Forms W-2c and W-3c filing specifications. The IRS has posted a December 2009 version of IRS Publication 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c, on its website. The publication was last updated in March 2006. The publication is a reprint of Rev Proc 2009-48, 2009-51 IRB 864.
State Payroll Tax Update
New laws and developments are reported from the following states: CALIFORNIA Wage and Hour. The U.S. District Court for the Northern District of California has granted preliminary approval to a $4 million settlement of a class action lawsuit against Polo Ralph Lauren Corp. (Polo) by its former employees. The employees allege that Polo failed to pay them for the time they spent waiting for and undergoing loss prevention inspections (bag checks), failed to give them the rest breaks required by California law, misclassified certain employees and failed to pay for overtime, committed record-keeping violations, committed fraud, and took back wages that were previously paid. Polo denies all of the material allegations in the lawsuit [Otsuka v. Polo Ralph Lauren Corp., et al., DC CA, Dkt. No. 07-02780, preliminary approval granted 5/21/10; Otsuka, et al. v. Polo Ralph Lauren Corporation, et al. Class Action website].
COLORADO Unemployment. Colorado has created a voluntary work sharing program to provide an alternative to employee layoffs. Under the program, employees in a work group share the work remaining after a reduction in their normal weekly work hours. Participating employees are eligible to receive unemployment benefits if their work hours have been significantly reduced. Employers are required to submit a work sharing plan in writing to the State that meets certain requirements [L. 2010, S28].
CONNECTICUT Wage and Hour. The Connecticut Superior Court has ruled that an employee was covered under the Connecticut Family and Medical Leave Act (CAVAL), even though her employer had less than 75 employees working in Connecticut. The employer also had employees working in other states that put it over the employee threshold. The court reasoned that the intent of the employee threshold was to exempt small employers and was not meant to "skew the exemption in favor of entities that employ few Connecticut residents but have large numbers of personnel in other states" [Vales v. Mala fide, Conn. Sup. Ct., Dkt. No. CV 08-4017925S, 5/14/10].
Withholding. Under new legislation, effective July 1, 2010, the Department of Revenue Services (DRS) may require employers deducting and withholding taxes to remit by electronic funds transfer (EFT) if the amount of tax withheld is more than $2,000 (previously, more than $10,000) in the twelve-month period ending on the June 30 immediately preceding the quarterly period that establishes the EFT payment requirement. The DRS will base its determination on the taxes reported to be due on the employer's quarterly withholding tax returns for the period under examination. The legislation also requires any person, other than a return preparer, who is required to electronically file a return, statement, or other document, to pay any tax remitted by EFT [L. 2010, H5494].
FLORIDA Unemployment. The Florida Department of Revenue (DOR) has a new interactive tutorial on its website to help employers understand their unemployment tax responsibilities and complete Form UCT-6, Employer's Quarterly Report.
HAWAII Unemployment. Effective July 1, 2011, professional employer organizations (PEOs) must register with the Hawaii Department of Labor and Industrial Relations before entering into a PEO agreement with a client company in the State [L. 2009, S1062].
ILLINOIS
Withholding. Effective June 4, 2010, heavy duty truck manufacturers are now eligible for the Economic Development for a Growing Economy (EDGE) credit. The credit had only been previously available to certain motor vehicle manufacturers. The credit is an incentive for businesses to create or retain jobs in Illinois, rather than locating or transferring them to other states. Eligible companies may elect to claim the credit against their withholding tax obligations. Employers claiming the credit against their withholding tax liability must file returns with respect to those taxes [L. 2010, S3089].
KENTUCKY Unemployment. New legislation increases the taxable wage base from $8,000 to $9,000 in 2012, and then increases the taxable wage base by an additional $300 each year through 2022, until it reaches $12,000. The legislation also limits voluntary contributions by negative balance employers to every other year beginning in 2012. Claimants must serve a one-week waiting period before receiving unemployment benefits beginning with claims made after Dec. 31, 2011 [L. 2010, H5].
MARYLAND Wage Payment. The Maryland Court of Appeals has ruled that conditionally granted unvested stock options given to an employee did not constitute "wages" under the State's wage payment and collection law. The employee had agreed to remain employed for a specific period of time for the options to vest and become exercisable, but he did not meet that condition prior to leaving employment. As a result, he wasn't entitled to receive the stock options as part of his compensation package [Catalyst Health Solutions, Inc. f/k/a Healthextras, Inc. v. Magill, Md. Ct. App., Dkt. No. 80, 6/2/10].
NEVADA Unemployment. A spokesperson for the Nevada Employment Security Division has communicated that the taxable wage base will decrease from $27,000 to $26,600 in 2011.
NEW HAMPSHIRE Unemployment. New legislation allows for the payment of partial unemployment benefits to workers whose hours are reduced as part of a work-sharing plan aimed at avoiding layoffs. The State will approve or reject a work-sharing plan in writing no later than 15 business days after its receipt. Employers participating in a work-sharing plan are required to continue providing workers with their full health insurance coverage and to contribute to other benefit plans on the basis of hours worked. Employees whose weekly hours have been reduced by 10% to 50% are eligible to receive unemployment benefits for up to 26 weeks in an amount equal to their regular benefits multiplied by the percentage reduction in their normal hours [L. 2009, S501].
NEW MEXICO Withholding. A tax amnesty program is in effect through Sept. 30, 2010. The program provides relief from interest and penalties associated with unreported State taxes (including withholding taxes and workers' compensation) that were due prior to Jan. 1, 2010 [New Mexico Taxation and Revenue Department, About The Program, 6/7/10].
NEW YORK Employer Payroll Tax. The Department of Taxation and Finance (DTF) has issued a new publication called "Specifications for Reproduction of Metropolitan Commuter Transportation Mobility Tax Forms." The DTF reserves the right to reject any reproduced form that does not meet the specifications set forth in the publication. The publication includes scannable form requirements, paper and font size specifications, form ID numbers, and other pertinent information [New York Department of Taxation & Finance Publication 67, 06/01/2010].
NORTH DAKOTA Unemployment/Workers' Compensation. Job Service North Dakota (JSND) has issued a table that summarizes the tax treatment of certain payments for unemployment tax and workers' compensation insurance purposes. The table reflects State law as of June 1, 2010 [JSND INFOLINK UI Employer Newsletter, June 2010].
OHIO Withholding. New legislation, effective June 13, 2010, authorizes regional water and sewer districts, and regional transit authorities, to offer additional deferred compensation plans to their employees; and provides that the deferred income is not included in computing any Federal and State income taxes withheld on behalf of the employees [L. 2010, S181].
OREGON Identity Theft. The Oregon Court of Appeals has ruled that a worker who provided a false Social Security Number (SSN) on Form I-9 in order to obtain employment could be convicted for identity theft under the "intent to defraud" section of Oregon's identity theft criminal statute. However, the conviction was reversed and remanded for other unrelated reasons [Oregon v. Alvarez-Amador, Ore. Ct. App., Dkt. No. A136807, 6/2/10].
VERMONT New Hire Reporting. Effective July 1, 2010, new hire reports must be submitted to the Vermont Department of Labor within 10 days (previously, 20 days) of the first date of employment. The report must include the newly hired employee's first date of employment [L. 2010, H792].
Unemployment. From July 1, 2010 to June 30, 2011, contribution rates for experienced employers will be determined under Schedule V with tax rates ranging between 1.3% and 8.4%. New employers will pay 1%, other than new, out-of-state corporations with the following North American Industry Classification System (NAICS) codes: (1) NAICS code 236 (Construction Building) — 4.1% rate, (2) NAICS code 237 (Heavy/Civil Engineering Construction) — 6.4% rate, and (3) NAICS code 238 (Specialty Trades Foreign Construction Corporation) — 5.0% rate [Vermont Web U.I. Bulletin 515, 6/2/10].
Unemployment. New legislation, effective July 1, 2010, increases the penalty for failing to file a quarterly contribution tax contribution report from $35 to $100 for each report that is not received by the filing deadline. The legislation also allows the State to impose a $5,000 penalty against employers on each worker that they misclassify (i.e., employee vs. independent contractor) [L. 2009, H647].
Withholding. Effective July 1, 2010 the Vermont Department of Taxes may require withholding tax returns to be filed electronically [L. 2010, H792].
WASHINGTON Unemployment. The Washington Employment Security Department (ESD) has announced that the taxable wage base will increase from $36,800 to $37,300 in 2011. Also, weekly unemployment benefits will range from $135 to $570, effective for new unemployment benefit claims filed after July 3, 2010. Currently, weekly benefits range from $133 to $560 [ESD News Release, 6/17/10].
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