Quick Hits - March 7, 2018 - American Society of Employers - ASE Staff

Quick Hits - March 7, 2018

Time Change coming up March 11th: Set your clocks forward one hour Sunday morning (March 11). Daylight Saving Time was first proposed by George Vernon Hudson in 1895, and its use in the U.S. was first mandated during World War I. It was subsequently used on and off for years by various countries and U.S. states. Since the 1970s, however, it has mostly remained in effect in the U.S. and Europe. The salaries of exempt employees are not affected by Daylight Savings Time. As for non-exempt employees, employers will have to decide whether to pay those employees who are at work when the clock is set forward for this “lost” hour. They do not have to be paid for it since they did not actually work it. The employer may also have to decide whether the lost hour, if paid, will count toward overtime or not (it does not have to). However, an employer must also determine if the hour counts towards leave accrual. To get a copy of a poster, click here.  

Michigan updates its tax code:  Michigan has passed a bill amending the Michigan Income Tax Act. The bill deletes the reference in the Act to the number of exemptions allowable on a Federal tax return. Instead, the number of personal and dependency exemptions allowed must be determined as follows:  Each taxpayer may claim one personal exemption; however, if the taxpayer and his or her spouse do not make a joint return, the taxpayer may claim a personal exemption for the spouse if the spouse, for the calendar year in which the taxpayer's taxable year begins, does not have any gross income and is not the dependent of another taxpayer.  A taxpayer may claim a dependency exemption for each individual who is a dependent of the taxpayer for the tax year. The bill repealed Section 30e of the Act, which defined "dependent" as an individual for whom the taxpayer could claim a dependent exemption on the taxpayer's Federal income tax return under the Code. Under the bill, "dependent" means a dependent as defined in Section 152 of the Code, which is a "qualifying child" or a "qualifying relative", as those terms are defined in that section.  Source:  CCH 3/5/18

New U.S. tax law disallows deductions for payments made for employment violations etc.: Starting December 22, 2017, effective date of the Tax Cuts and Jobs Act (TCJA), the TCJA amends the introduction to § 162(f) so that it now reads:  “Except as provided in the following paragraphs of this subsection, no deduction otherwise allowable shall be allowed under this chapter for any amount paid or incurred (whether by suit, agreement, or otherwise) to, or at the direction of, a government or governmental entity in relation to the violation of any law or the investigation or inquiry by such government or entity into the potential violation of any law.”  Accordingly, this deduction disallowance rule goes beyond the mere payment of penalties and fines. It now includes any payment made in relation to the violation of any law (except for certain restitution payments), or inquiry into the potential violation of any law, whether the payments are made to the agency or to a third party at the direction of the agency. For example, if a state employment agency or the EEOC or Wage and Hour or OFCCP requires the payment of non-restitution damages to workers to settle a probe, such as training costs, the payment/costs would not be deductible.  Source: Greenberg Traurig LLP 2/27/18

When diversity efforts backfire:  YouTube last year stopped hiring white and Asian males for technical positions because they didn’t help the world’s largest video site achieve its goals for improving diversity, according to a civil lawsuit filed by a former employee. Last spring, YouTube recruiters were allegedly instructed to cancel interviews with applicants who weren’t female, black, or Hispanic, and to “purge entirely” the applications of people who didn’t fit those categories, the lawsuit claims. People familiar with YouTube’s and Google’s hiring practices in interviews corroborated some of the lawsuit’s allegations, including the hiring freeze of white and Asian technical employees, and YouTube’s use of quotas. Recruiters used what was known internally as a “diversity tracker,” to track minority hiring, the people familiar with hiring practices at YouTube and Google said. For the week of March 20, 2017, for example, the team tracked a year-to-date goal of 21 African-American hires, with one actually hired in that period, according to an internal YouTube email attached as an exhibit to the lawsuit.  Google denied the allegations.  Source:  The Wall Street Journal 3/1/18

Do you have missing eligible participants for your qualified retirement plan? Missing participants continue to be an issue faced by plan sponsors of qualified retirement plans. Fortunately, the IRS has indicated that if a plan has taken the steps set forth below to locate a missing participant or beneficiary, IRS examiners are directed not to challenge a qualified plan for violation of the RMD (required minimum distribution) requirements. The steps include:  searched plan and related plan, sponsor, and publicly available records or directories for alternative contact information; used any of these search methods including a commercial locator service, a credit reporting agency, or a proprietary internet search tool for locating individuals; and attempted contact via U.S. Postal Service certified mail to the last known mailing address and through appropriate means for any address or contact information (including email addresses and telephone numbers).  In light of the IRS and Department of Labor’s increased focus on missing participants, plan sponsors and administrators may want to consider reviewing their current administrative practices for locating missing participants, especially with respect to participants approaching their RMD dates.  Source: Drinker Biddle & Reath LLP 2/12/18

Expunged records cannot be considered in background checks in Wisconsin:  The Wisconsin Fair Employment Act prohibits employers from taking adverse employment action against an applicant or employee because of the individual’s conviction record, unless the conviction is “substantially related” to the position sought or held. Wisconsin law permits certain offenders who commit crimes before they reach the age of 25 to have their convictions expunged. The Wisconsin Labor and Industry Review Commission recently decided that employers cannot rely on expunged convictions even if the individual’s conviction record is substantially related to a job. They also should not be used in Michigan. Source: Ogletree Deakins 2/27/18

Massachusetts published guidance on its pay equity law:  The Massachusetts Attorney General’s office published its long-awaited guidance on Massachusetts’ new pay equity law, which is effective July 1, 2018.  The guidance addresses a number of frequently asked questions and further provides guidance for employers on conducting “self-evaluations” of pay practices.  A link to the Attorney General’s guidance is found here.  Source:  Jackson Lewis 3/1/18 

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