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WFOA Conference 2017

Definition of Independent Contractor vs Employee

Updates Re: on-boarding a new employee

FLSA Defined Overtime

Calculating Appropriate OT

Federal Taxes – Payroll

DRS – Cash Outs and Retro Pay

Overview of Protected Leaves, FMLA, FLA, FCA, Pregnancy Disability Act, Spousal Military Leave, Domestic Violence Leave

IRS Common Law Rules

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does the job?

2. Financial: Are the business aspects of the worker’s job controlled by the payer? (how the worker is paid, whether expenses are reimbursed, does the worker use the employer’s tools and equipment and supplies)

1. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, vacation, insurance?)

2. Continued Relationship?: Will the relationship continue and is the work performed as a key aspect of the business?

Consider the entire relationship with the worker specific to the right of the employer to control the worker and the work being done by the worker.

No bright line to determine if the worker is a temporary or an independent contractor

Independent Worker – No distribution of usual or customary withholding – Federal, FICA, Unemployment

Temporary Worker – usual and customary withholding – Federal, FICA, Unemployment, and L & I

Caution: Verify insurance liability

o Employer is responsible for the determination of the employee’s eligibility for LEOFF or PERS

o Failure to do so may result in the EMPLOYER assuming the cost of any overpayment of retirement benefits distributed to the member

Retired PERS employee may return and work up to 867 hours per year without penalty depending on whether they agreed they would retired and not return for 5 years

LEOFF personnel are not able to resume a similar position from which they retired – if they would do so, their retirement would be suspended

An employee who worked for one month in a PERS eligible position before quitting would be entitled to PERS membership.

dshs.wa.gov/new hire

DSHS – Child Support – New Hiring Methods

All new hires must be reported to DSHS –RCW 26.23.040

Must report regardless of number of hours worked

Includes rehires – if separated > 60 days

Must report within 20 days of hire

Can file electronically – which is preferred

New Form – easier to use – lists all acceptable List C documents

New Form is labeled USCIS 07/17/17 N (bottom left corner)

Electronic version – www.uscis.gov/i-9-central/what’s-new

Verification – Now may use Form FS 240 –electronic verification of those individuals born abroad to American citizens

Effective September 18th – Must use Form

ssa.gov/employer/ssnv.htm

Submit verification to Social Security Administration (SSA)

Verification of up to 10 names/SSN at a time

Make sure the SSN being submitted states the name of the person as printed on the SS card

If rejected – the reason or rejection not stated

If rejected, recheck the information provided and submitted = must be exactly as printed on Social Security card

Notify the employee of the discrepancies and inability to verify

SSA provides a Sample Letter that may be used to notify the employee of the SSA rejection (no SSN identified)

FLSA rules require that most employees be paid minimum wages and overtime at time and one-half for all hours worked over 40 hours

Most jobs are covered by FLSA regulations –exceptions include farm workers and jobs with specific laws governing the industry, i.e. Railroad workers, some commercial truck drivers

How the worker is paid – salary or hourly

◦ Salary – has guaranteed minimum amount of money which can be counted on for any amount of work performed regardless of actual amount of hours worked

◦ Hourly – worker is paid for actual hours worked and thus paid overtime for hours worked over 40 hours

Employee is exempt or non-exempt, thus paid overtime for hours worked over 40 hours

Salary Threshold: Employee makes $455 or more per week is NOT eligible for overtime

Obama administration attempted to increase the threshold but it was stopped in late 2016

Receives predetermined salary w/o regard to quality/quantity of work

Primary duties must be include managing an enterprise, i.e., department/division, section

Must supervise more than two other employees

Must play a role employment decisions, i.e., hiring, firing, discipline (weight test)

Receives predetermined amount of salary w/o regard quality/quantity of work

Receives $455 or more per week

Primary duty consists of managing the general business of employer

Work includes exercise of discretion and independent judgment with respect to matters of significance

Receives a predetermined salary Generally any position that requires

“advanced degrees and advanced knowledge” in a field of science or learning

Can be a combination of academic and experience

Satisfy the wage test, i.e., >$455 or more per week

Examples: nurses, accountants, engineer, graphic design, computer

Salary range: over $455 per week for full-time employee NO Overtime

Highly compensated employee threshold is $100,000

FLSA defines overtime as hours worked (not hours compensated for) over 40 hours in a workweek (consistency is critical)

Caution: OT is not required if the employee works over 8 hours unless referenced in CBA

FLSA has no provisions about how you schedule and does not require prior notice to employee if you change the schedule (use caution re: CBA)

Caution: Firefighter and police officers have a different workweek schedule

Define workweek and apply consistently

Caution: CBA, employer policies, or employee contracts can be more generous but not less generous

Work period may be from 7 consecutive days to 28 consecutive days in length

Overtime is required when the hours worked exceeds the number of hours that bears the same relationship to 212 hours (fire) or 171 hours (police) as the number of days bears to 28 days

For example, fire receives overtime after 106 hours during a 14 day period – police is 86 hours in the same period

For example, fire receives overtime after 106 hours during a 14 day period – police is 86 hours in the same period

Caution – Refer to CBA which are often more generous

Government employers may give fire and police compensatory time (same rate time and one-half times)

Police and fire may accrue up to 480 hours comp time (by law)

CBA or employer may cap compensatory time due to business impact

Generally an employee can work more hours in one day and flex or use those hours later in the week (within the same work week) without overtime coming into consideration.

Worked 9 hours on Monday in exchange for 7 hours on Friday (Caution: pay attention to when workweek – begins/ends)

Generally not governed by CBA – use caution as many CBAs limit the hours to work per day before overtime

For most, yearly salary/2080 hours x 1.5

For Police and Fire, hours may be different

For example, District A has bargained that yearly hours are 2596.

Base OT rate would be yearly salary/2596 x 1.5 (e.g. $64,900/2596 = $25 x 1.5 = $37.50 OT rate)

Be sure to check with your collective bargaining agreements for the right calculation

Overtime calculations need to include all payments made to an employee unless specifically excluded by the FLSA in Section 7(e). These exclusions may also be found in 29 CFR 778.

Items to include are:longevity

differential pay

education incentives, etc.

Items to exclude are:

holiday pay cash outs

stand by pay (unless there was work doneduring the standby hours)

pay for idle time (vacation, sick, etc.)

reasonable travel expenses, etc.

Example: Firefighter A gets $50 per month for an IV tech differential and 1% for longevity.

$50 mo x 12 mo = $600

$64,900 yearly salary x 1% = $649

$64,900 + $600 + $649 = $66,149

$66,149/2596 = $25.48 x 1.5 = $38.22

Base rate OT was $37.50. Adjusted OT rate is $38.22, or $0.72 per hour higher.

Must pay the $38.22 rate for overtime for the period that includes the IV tech and longevity.

If you’re not sure if a payment is included, contact the Federal or State Wage and Hour Division offices

Federal: 1-866-4USWAGE

State (L&I): 360-902-5800

Supplemental Pay Runs (retro pay, accrual cash outs, etc.) – must withhold a flat 25% in federal income taxes if run as a separate payroll

Draws – must withhold appropriate payroll taxes (federal income tax, FICA, etc.)

Protected Leaves are those absences from work that an employee may be eligible to take under certain conditions according to the federal and state laws.

An employee who satisfies the eligibility criteria specific to the appropriate protected leave regulations cannot be denied the leave.

An employer may not make reference to the employee’s protected leave in the performance evaluation document;

An employer may not discipline an employee for being on protected leave

Both are considered a form of retaliation

Family Medical Leave Act (FMLA) 29 CFR 825

◦ FMLA - Military

Family Care Act – RCW 49.12.265

Family Leave Act – RCW 49.78

◦ Pregnancy Disability (combo FMLA/FLA)

Spouse of Military Personnel RCW 49.77

Domestic Violence Leave – RCW 49.76

➢ Employer with 50+ employees in a 75 mile radius

➢ Employer may volunteer to adopt policy

➢Employers with <50 not required to adopt –however:

➢The employer must post FMLA poster

➢Be prepared to explain why the disgruntled employee is not receiving any of the FMLA benefits

➢May result in complaints of discrimination, favoritism,

Verifying if the employer has 50+ employees?◦ In current or previous calendar year◦ Or, 50+ employees on the payroll during

each workday for 20+ weeks (minimum) Includes part-time Includes seasonal employees Includes employees on leave Includes temporary employees even if

from a temporary agency

Does Not Include Elected Officials Does Not Include Volunteer Firefighters

Who Receive a Stipend

Employee must have worked for the employer 1250 hours in the last 12 months

◦ Time off does not count, even if that time off is compensated time (vacation, sick leave)

Employees must have 49 colleagues within 75 miles radius of his/her location (unless policy exists)

FMLA is UNPAID LEAVE

An employee may substitute unpaid leave with accrued paid leave, i.e., sick leave, vacation, comp time

The employer may require the employee to use accrued leave concurrent with FMLA unless the employer doesn’t have a FMLA policy requiring such

If no policy – employer has to invite the employee to use accrued with unpaid

12 weeks or 90 Days (UNPAID)

Within 12 Month Period

Select Calculating Leave Period

Fixed Period – all employees on same FMLA year◦Calendar Year (Jan. thru Dec.)◦Fiscal Year (Oct. to Oct.)◦Fixed same 12 month period for everyone◦Anniversary date – unique FMLA for each eligible employee

12 Weeks Per Calendar Year

Jan. 1 Dec 31st

12 Weeks per Fiscal Year

Oct 1, 2015 Oct 1, 2016

12 Weeks Per Anniversary Year

June 15, 2015 June 15, 2016

Rolling Forward Period – all employees on all different FMLA years

12 month period starts on first day of first use of FMLA

Rolling Backward -12 month period, measured backward from the date the employee last used FMLA

Variable time period measured forward from the date the employee’s first FMLA leave begins

12 weeks with year beginning on first day of FMLA

First Use Second FMLA

4-1-2015 4-1-2016 7-15-2016 7-15-2017

First Use FMLA End of FMLA Year 2nd Use FMLA End of FMLA

Variable time period is measured backward immediately preceding the first day of FMLA

IF the employee has not used FMLA in the 12 months prior to that specific day – then they may be eligible

Employee can take advantage of whatever measurement is most beneficial to him/her

Complicated process is likely result in problems keeping accurate records, increased complaints and questions

Supervisors will manage the leaves differently which adds to the confusion

When selecting a leave period – give 60 days notice of the process for calculating or changing the calculation process

Will need to negotiate any changes with the unions if the decision is to change the calculating period

Birth of child (mother or father)

Placement of a child by foster care of adoption (mother or father)

Employee has serious health condition

Employee has parent, spouse, child with serious health condition

Any overnight stay in medical facility

Three (3) calendar or consecutive days of incapacity (too ill to attend work), plus

➢ Two visits to medical provider

Both visits must occur within 30 days of initial incapacity

➢One visit to medical provider, plus continued care or treatment

First visit must occur within 7 days of initial capacity

Prescription medication is continued treatment (for specific treatment – not all prescription medications)

Any days of incapacity due to a chronic or long-term medical condition, regardless of treatment

◦ Must have 2 visits to health care provider per year

◦ Any days of incapacity related to pregnancy or prenatal care

◦ Any days of absence to receive treatment or surgery

For example - chemotherapy

Licensed doctor or medicine or osteopathy

Dentists or Oral Surgeon Clinical Psychologist Optometrists Naturopath Chiropractors Clinical Social Worker Nurse Practitioners or Physician Assistant

After receiving certification or other information verifying a qualifying event

◦ Send employee designation notice WH 381

◦ Medical certification WH 380 (not required but recommended)

◦ Within 5 days

◦ Begin to continue to track use of Family Medical Leave

◦ Deduct leave from accrued leave bank if required under policy

FMLA Eligibility and Medical Certification

Notify of approved FMLA leave (WH 382)

Begin tracking and deducting FMLA leave

Begin deducting from accrued leave balance

◦ Caution – Verify the employer has a policy stating the employee must use accrued leave concurrent with FMLA

◦ IF no policy exists – it’s the employee’s choice

◦ The employee may choose to use FMLA and accrued leave consecutively

Employee responsible to arrange appointments/treatment so not to not disrupt the continuation of work

Maximum time charged is closest to the actual time taken

Minimum increment – whatever the employer typically uses in timekeeping/record keeping

In this situation – the employer may transfer the employee to a comparable position (same pay) that can better accommodate the scheduling limitation

Employer continues to pay the employer portion of the health care insurance for 12 weeks

The employee can use COBRA to continue receiving health insurance for unpaid leaves extending beyond 12 weeks (employee paid)

If the employee is able to return to work at the conclusion of 12 weeks because:

Chooses to not do so, OR

Employee returns for less than 30 days

At the conclusion of the 12 week period (FMLA) the employee is restored to former job or comparable job in pay, benefits, and responsibility

If employee doesn’t return – the employer may replace the employee

Job restoration is not required if

◦ Employee would have been laid-off or let go regardless of the leave issue

◦ Employee gives notice they don’t intend to return

◦ Employee is not able to return for reasons not related to employee’s own health (may need to consider an accommodation under disability)

An employer may remove an employee identified as “key employee”

◦Key employee status must be identified prior to the leave◦Must notify employee notice prior to replacing ◦Key employee absence must substantially injury the employer’s operations

Provide as much advanced notice as possible

Employee may give verbal notice (written notice is usually a better practice) – give to HR and supervisor

◦ Employee needs to state the need for leave – reason

◦An estimate of the time needed off and when it is to begin

Employee must give reasonable notice ◦Usually 30 days notice◦ Employer can require the employee to delay the leave if not sufficient notice ◦Unforeseeable/emergency leave As much notice as possible Either same day or next business day

Employer may ask for explanation for failure to give notice

Employee must cooperate if asked to provide certification from medical provider

◦Certification to be provided by medical provider

◦Must provide medical certification with 15 days

◦ If certification is not adequate – employer may require additional information

◦Employee has 7 days to comply

Management, HR, leave administrator (safety officer) may require addition information

NOT IMMEIDATE SUPERVISOR Must limit the request for additional information to the medical condition identified in original incident

Employer can request recertification

◦When original certification expires

◦ At six month intervals

◦When a new FMLA year begins for the employee

◦When there is a change in condition or circumstances but warrants recertification

◦ Reduced work schedule or intermittent leave

Employer may seek a second opinion from another medical provider if the employer disputes the existence of a serious medical condition

Employer must pay for the second opinion

If the first and second opinion are in dispute – a third opinion from another medical provider

Third opinion at employer’s expense

Third opinion is mutually agreed on

Third opinion is binding and the final determination

The employee’s health care provider has released the employee to return to duty, BUT the employer doesn’t feel the employee has is fit for duty.

◦Employer is responsible for returning the employee to work

HOWEVER – the employer may require an additional exam by a medical provider (employer expense) to determine if the employer can accommodate the on-going medical condition

If employer wants an employee to complete a fitness for duty before returning to work:

Employer needs to have a uniform policy, OR

Indicate on the FMLA designation form that a fit-for-duty must be passed before returning to duty (WH-382)

Provide the medical provider with a job description that includes the essential functions of the job

Employee’s health care provider completes the fit-for-duty assessment

This assessment is at the employee’s expense

No second or third opinion allowed

When safety concerns exist –employee may take reduced work schedule

Employer can require the employee to participate in a fit-for-duty every 30 days intervals to ensure the employee is safe in performing the essential functions

If employer wants an employee to complete a fitness for duty before returning to work:

Employer needs to have a uniform policy, OR

Indicate on the FMLA designation form that a fit-for-duty must be passed before returning to duty (WH-382)

Provide the medical provider with a job description that includes the essential functions of the job

Employee’s health care provider completes the fit-for-duty assessment

This assessment is at the employee’s expense

No second or third opinion allowed

Qualifying Relative◦ Spouse◦ Registered domestic partner NOT under FMLA, but yes under Washington FLA(state law)◦Minor child (step – foster) ◦ Adult child unable to care for one’s self◦ Parent (check policy as grandparent is sometimes included)◦ Employee is responsible for care of relative

FMLA – child, parent, spouse (Federal Law)

FLA – registered domestic partner, spouse, child, parent (RCW 49.78.010

Family Care Act – child, parent, spouse, registered domestic partner, parents-in-law, and grandparents

Paid Sick Leave (PSL) (Resolution 1433) all of the above PLUS grandchild and sibling

Employee must be responsible for providing care for relative

Requirements for notification, certification, designation, etc., is same as employee with serious medical conditions

If the employee is unable to get certification – then the FMLA may be denied

Employer may require employee to provide certification from medical provider that the serious medical condition of the relative requires the employee’s support and care

If employee is unable or unwilling –the FMLA may be denied

Employee cannot be placed on FMLA until after they have used all of their sick leave

False An employer can require an employee to use

their sick leave and FMLA concurrently if the reason for sick leave is a qualifying event

Verify the employer’s policy

If an employee is unable to return to work at the conclusion of the FMLA – the employer may replace the employee and the employee may be terminated

The exception is if the employee is on leave for a condition that qualifies as employee “disability”

FLA Adopted in 1989, RCW 49.12.033 (unpaid leave)

Employer must have 50+ employees

FLA superseded by FMLA

Exception: Pregnant/new mother may receive both FMLA and FLA up to 12 weeks

To qualify the employee must:◦have been employed with the employer for one year ◦worked 1250 hours in the last year◦need leave to care for an immediate family member or self with a serious medical condition

12 weeks in 12 month period

To care for a newborn of the employee or care for the child (not the pregnancy or recovery from)

To care for an adopted child just placed in the home

Leave to care for a family member with a serious medical condition

To care of their own serious medical condition

Employee is unpaid unless the employee uses accrued time, i.e., sick leave, vacation

The rights of the employee cannot be diminished by a collective bargaining agreement

The employee does not continue to accrue leave while on unpaid status

FLA, in most cases, does not cover maternity or pregnancy leave, but pregnancy leave is covered by FMLA

Once the employee is no longer disable due to pregnancy, they may ask for FLA (employer not required to notify of eligibility)

An employer may require the woman to provide a doctor’s certification that she is no longer disabled due to pregnancy

FLA and pregnancy do not run concurrent

Once the disability has ended, the women is eligible to take FLA up to 12 weeks

The father is only eligible for FLA

If medically certified as being needed, the women can take up to 12 weeks for FMLA for her own medical condition (complicated pregnancy)

Usual time for pregnancy is 6-8 weeks after delivery

After she is no longer disabled, she may take up to 12 weeks of FLA to care for, and bond with her new baby

A father may take FLA to care for his pregnant wife, her recovery from the delivery and bond with the new born, up to 12 weeks

An employee with and adult daughter may not take FLA to care for her daughter during pregnancy unless the daughter is unable to care for herself when she isn’t pregnant

Half-time employees

New hires

Employees of small businesses

Before and after period of sickness/temporary disability - FMLA

Police officers, firefighters, laborers that cannot perform the position due to the physical demands or threat of health of fetus

Employer must treat the employee as any other disabled employee by offering◦ Light duty

◦ Modified duty

◦ Unpaid leave of absence (FMLA)

Eligible to take 12 weeks of FLA (unless mother works for same employer)

Leave is unpaid – may use accrued paid leave

Employer pays health premiums to same extent as prior to leave

May take intermittent leave – with approval within one year of child’s arrival

Job restoration to same position

When both parents work for the same employer, they must split the 12 weeks of FLA when the baby arrives.

Each employee – both mother and father would take 6 weeks at that time

Each parent would have a remaining 6 weeks to take due to their own serious illness or that of a relative later on as long the 6 weeks is within the original 12 month period

The employer is required to allow a breast feeding mother time to express her milk or breast feed the child

Expressing the milks is to be done when needed

The employer is responsible for providing a sanitary place for her to express the milk and a place that allows for clean up

Employer with 8+ employees must return the employer to the same job

Employer with less than < 8 employee is not required to hold the job

Family Care Act (FCA) RCW 49.12.265 (Washington State Law)

Employee may use all earned or accrued leave to care for a sick family member

Family member is defined as child, spouse, registered domestic partner, parent, parent-in-law, or grandparent

No employer size Applies to all employers who provide a

paid leave benefit (sick leave, vacation time, PTO)

Caregiver Leave Up to 26 weeks of leave in single 12

month period Care of spouse, child, parent, or “next of

kin” (nearest blood relative) to care of a member of armed forces◦ Wounded on active duty◦ Physically or mentally◦ Unfit to perform military duties◦ Undergoing medical treatment,

recuperation, therapy◦ Inpatient or outpatient◦ Temporary disability retirement list

Caregiver Leave applied on per service member, per injury basis

Must use forward rolling period to determine FMLA year

Maximum of 26 weeks in a 12 month period regardless of the number of qualifying events

Applies to all employers

Eligible employee must work at a minimum 20 hours a week

Employee who has a spouse in the military may take up to 15 days leave per deployment prior to the deployment or when the spouse is on leave from deployment

Unpaid leave - employee may use accrued leave

Applies to all employees, regardless of the size of the employer

Employer is required to provide a “reasonable amount” of time from work (unpaid – may use accrued)

No specific amount of time “reasonable amount” start with the FMLA/FLA of 12 weeks guidelines

Health benefits are maintained by employer

Employee or relative of employee that is a victim of domestic violence, sexual assault, or stalking

Employee may use Domestic Violence Leave to care for a family member that is a victim of DV (as described above)

Family member is defined as: child, spouse, parent, parent-in-law, grandparent, or person the employee is dating

Applies to all employers – no size limit

Employee may take unpaid leave or work limited schedule as a DV, Sexual Assault, or Stalking victim or to assist family member who is a DV or Stalking victim

◦ Seek legal assistance/attend legal proceedings

◦ Seek medical or psychological treatment

◦ Seek services of DV shelter or rape clinic

◦Obtain counseling

◦ Participate in safety planning or relocation

An employer may require verification from an employee who is requesting leave. The types of verification that may be provided:

A police report identifying the victim and the incident of DV

A court order of providing protection to the victim

Documentation from a health care provider, advocate, clergy, or attorney

The employee may submit a written statement

Labor and Industries is administering the implementation of this Resolution (WAC and RCW)

Still waiting for procedures and guidelines to be published

Sign up for news update at L&I’s Employment Standards LISTSERV

Resolution may have very limited impact on public employers since PSL is usual practice

No change or impact through the duration of a current Collective Bargaining Agreement as long as sick leave accumulation and use is covered under the CBA

What we know:

Employee is paid one hour of sick leave (PSL) for every 40 hrs. worked at usual compensation

Employee is eligible to use PSL after 90 days of employment

Employee may carry over 40 hours of unused PSL to the next year

PSL may be used for an employee’s illness or the illness of family

Family is defined as child (adopted or other), spouse, registered domestic partner, grandparent, grandchild, sibling

This law covers the gaps in FMLA & FLA specific to what qualifies as family

PSL may be used if work or school shuts down due to a public health concern, i.e., disease outbreak

PSL may be used concurrent with Domestic Violence Leave

Absent a policy or CBA that states differently, an employer is not required to compensate or cash out the unused sick leave, HOWEVER

If the employee returns to employment within 12 months –regardless of the position – the employer must reinstate the full sick leave balance

If the current policy or CBA allows for cash-out, it will negate this new law

No retaliation

No reference to use of PSL in performance evaluation

No discipline for use of PSL

For now, it doesn’t look like anything in the new law prevents an employer from issuing discipline if employee is abusing sick or taking numerous unscheduled absences that reflects a pattern of use sick – consult an attorney

www.dol.gov/dol/benefits-leave/fmla.htm

FLSA/FMLA www.dol.gov 206.398.8039

FLA – Labor and Industries –◦ www.Lni.wa.gov/WorkplaceRights/Leave

◦ L & I phone number 360-902-4930

Pregnancy Leave – www.hum.wa.gov

www.irs.gov/publication Publication 15 –Circular E

Janice Corbin and Becky Hazart

Sound Employment Solutions, LLC

sescorbin@msn.com

206.334.5003

Nothing in this instructional manual constitutes legal advice.