AB298AB298Associates Capstone in Associates Capstone in

AccountingAccounting

State and Federal Laws and Regulations on Business

CHAPTER 5 Unit 2Unit 2

SeminarSeminar

Many Laws that Affect Many Laws that Affect Personnel Personnel Fair Labor Standards Act (FLSA) Federal Insurance Contribution Act

(FICA)Income tax withholding laws

Federal, state and localUnemployment tax actsFair employment lawsOther federal lawsState minimum wage and maximum

hour laws and other state specific laws

Fair Labor Standards Act (FLSA)Fair Labor Standards Act (FLSA)

Federal Wage & Hour Law of 1938Minimum wage is $7.25/hourEqual pay for equal work provisions Sets law for companies involved

In interstate commerce or In production of goods/services for

interstate commerceRequires payroll records be maintained

Federal Insurance Federal Insurance Contributions Act (FICA)Contributions Act (FICA)Comprised of two taxes Both taxes paid by ER (employer) and EE

(employee)OASDI (Old Age, Survivors & Disability

Insurance)

6.2% with a cap that is cost-of-living indexedHI (Health Insurance Plan - Medicare)

1.45% with no cap

Income Tax Withholding LawsIncome Tax Withholding Laws

Federal income tax Levied on earnings of employees Income tax is withheld from paychecks

State and local income tax Income tax is withheld from paychecksDifferent in each stateNot all states have state income tax

Unemployment Tax ActsUnemployment Tax Acts FUTA (Federal Unemployment Tax Act)

ER tax – paid on $7,000 per EE per year Taxes used to pay state and federal

administrative expenses, not used to pay unemployment benefits

SUTA (State Unemployment Tax Act) Mandatory unemployment insurance – each

state is different SSA outlines standards that each state’s

unemployment compensation law must follow Used to pay unemployment benefits

Fair Employment LawsFair Employment Laws

Title VII of the Civil Rights Act of 1964 EEO (Equal Employment Opportunity)

Can’t discriminate in hiring, firing, promoting or compensating based on Color, race, religion, national origin or gender

Applies to all ERs who engage in an industry affecting commerce and employ 15 or more workers in each of 20 or more weeks

See http://www.eeoc.gov/ for more information

Age Discrimination in Age Discrimination in Employment Act Employment Act (ADEA)(ADEA)ADEA states employers cannot use age

to discriminate in hiring, firing or promoting Applies to employers with 20 or more

employeesProvides protection to workers over 40

with a few key exceptions

Americans with Americans with Disabilities Act (ADADisabilities Act (ADA))

Prevents employers with 15 or more employees from discriminating against qualified persons based upon disability

“Reasonable accommodation” must be provided - this is a very vague term and subject to court interpretation

FederalFederal Personal Personal Responsibility & Work Responsibility & Work Opportunity Reconciliation Opportunity Reconciliation ActActRequires employers to report

information on all new hires within 20 days to state agency Includes name, address and social security

number (submitting copy of W-4 suffices in many states)

Records coordinated through Office of Child Support Enforcement (OCSE)

Fines up to $25/hire levied for failure to report A few states now require same from

independent contractors

Immigration Reform Immigration Reform and Control Act (IRCA)and Control Act (IRCA)

Law that bars hiring and retaining aliens unauthorized to work in U.S.

Accomplished by employee completing I-9 (Employment Eligibility Verification) within three business days of employment

U.S. Citizenship & Immigration Services may audit and levy penaltiesCriminal penalties can apply if pattern of

discriminatory practices foundE-Verify is a system that allows ERs to

check employment eligibility of new hires

Family Medical Leave Act Family Medical Leave Act (FMLA)(FMLA) Covers companies with 50 or more EE within 75

mile radius Employee guaranteed 12 weeks unpaid leave for

Birth, adoption, critical care for child, spouse or parent Leave may be used all at once or at separate times –

within 12 months of qualifying event Employer continues health care coverage Right to return to same job or comparable when

family member is on active duty or up to 26 weeks fposition

FMLA expanded to include up to 12 weeks or line of duty injury/illness

Some states have paid family leave plans

Uniformed Services Uniformed Services Employment & Employment & Reemployment Rights ActReemployment Rights ActMilitary personnel given right to take

leaves of absences from civilian jobs Right to return to prior jobs with

seniority intactHealth benefits must be started without

a waiting periodDoesn’t apply if dishonorably discharged

Employee Retirement Employee Retirement Income Security Act Income Security Act (ERISA)(ERISA)

Trustees must monitor pension plans Vested 100% in 3-6 years

Example of a vesting plan

Years of % Vested in Service Pension Plan

2 50%

4 75%

5 100%

Provides for Pension Benefit Guaranty Corporation

A federal agency which guarantees benefits to EE

Stringent recordkeeping required

Current LegislationCurrent Legislation

Hiring Incentives to Restore Employment Act (HIRE) – 3/18/10Gives ER tax credits if pay wages to previously

unemployed new hireHealth Care and Education Reconciliation

Act (HCERA) – 3/30/10Most provisions effective 2014 Immediately ER must include cost of ER-provided

health coverage on EE’s Form W-2Patient Protection & Affordable Care Act –

3/23/10Offers tax credit to small ERs who offer health

insurance to EEs

State Laws State Laws Workers’ Compensation

Most states require employers to pay employees’ premiums Can self insure if state approvedDifferent premiums based upon job class

State Disability Benefit LawsFive states plus Puerto Rico have

established laws requiring employers to provide disability benefits

This applies even if the disability did not arise due to employment!

Human Resource SystemHuman Resource System

FLSA requires stringent personnel recordkeeping – embodied in the Human Resource (HR) SystemRequisition for Personnel notifies HR of need

for new employeesApplication for Employment completed by

person seeking employment No law prohibiting questions about religion, gender,

race, age or national origin - but must tie into ability to perform job (for example, bilingual capabilities) –these are allowed if they are qualifications for the job

If application asks age/birth date, should contain ADEA language notifying candidate of anti-discriminatory provisions

Human Resource SystemHuman Resource System Reference Inquiry conducted before

employment Due to amount of litigation in this area, respondents

should only verify facts and not offer subjective information

Really diminishes credibility of reference inquiries Prospective employer may require applicant to sign

Employment Reference Release Must notify employee if seeking investigative

consumer report Hiring Notice alerts payroll department to new

EE Employee History Record contains

performance evaluations, compensation adjustments, disciplinary issues, etc.

Critical area – employment related litigation is very expensive and often times avoidable

Unit 2 JournalUnit 2 JournalIn your journal please answer the following questions regarding your company:What information did the website contain on the first page?What are the mission, vision and values of the company?What products or services does your company provide?Explain what significant innovation(s), if any, the company will make to their products or services?Please list some significant accomplishments over the life of the corporation. Please list at least 3 major accomplishments.

Please make sure that your responses are in complete sentences and that you use correct grammar and punctuation.

Access the Journal tab at the top of the course page.

Unit 2 ProjectUnit 2 ProjectAssignment: You are a mid-level manager for a large firm. Your task is to hire 20 new employees for a new production line. Prior to execution, you must report to your district manager on what your plan is to work through the hiring process to ensure compliance with local, state, and Federal regulations on Equal Opportunity in the workplace. Your report should be in the form of a one-page memo/document that discusses the regulations, listing 3 of the regulations prohibiting employment discrimination and how they will apply to your hiring process.