December 2009

COBRA Premium Subsidy Extended

On December 19, President Obama signed into law the Department of Defense (DOD) Appropriations Act, 2010 (Pub. L. No. 111-118), which includes provisions extending the COBRA premium subsidy that was enacted as part of the American Recovery and Reinvestment Act of 2009.

Under ARRA, individuals are eligible for the 65% COBRA premium subsidy for up to 9 months if they lose group health plan coverage because of an employee’s involuntary termination of employment between September 1, 2008, and December 31, 2009, elect COBRA coverage, and pay 35% of the full COBRA monthly premium.

The DOD Appropriations Act makes three important changes:

1. It extends the deadline for the involuntary termination of employment to February 28, 2010;
2. It clarifies that eligibility for the subsidy is based on the date of the qualifying event (i.e., employment termination), not the date the individual becomes eligible for COBRA continuation coverage; and
3. It extends the maximum eligibility period from 9 to 15 months, both for those who became or become eligible by December 31, 2009, and for those who become eligible by February 28, 2010.

The DOD Appropriations Act also includes transitional provisions protecting those individuals whose eligibility for the premium subsidy expired before the extension (e.g., individuals whose period of eligibility began on March 1 and ended on November 30) and requiring group health plan administrators to notify them of their retroactive eligibility for the subsidy.

Individuals whose eligibility for the premium subsidy expired before December 19 and would be extended by the DOD Appropriations Act changes can maintain their eligibility by paying 35% of the full COBRA premium by February 17, 2010 (60 days after the enactment date of the changes), or, if later, 30 days after being notified of the changes by their group health plan administrator. An individual who pays the full COBRA premium for the period after their original subsidy eligibility expired is entitled to a refund of 65% of the amount they paid.

For any individual who was eligible for the COBRA premium subsidy on or after October 31, 2009, or who loses group health plan coverage because of an employee’s involuntary termination of employment on or after that date, the group health plan administrator involved must provide notification to the individual of the DOD Appropriations Act changes by February 17, 2010. If the termination occurs after December 19, 2009, the additional notification language must be included as part of the regular COBRA continuation coverage notification provided to the individual.

In addition, for assistance eligible individuals who did not timely pay their COBRA premium once their eligibility for the subsidy expired or who paid the full COBRA premium for such periods, the group health plan administrator must provide such individuals with an additional notification containing information on the DOD Appropriations Act changes, including the right to make retroactive premium payments, within 60 days after the expiration of their original eligibility period.

For employers, the extensions of COBRA premium subsidy eligibility mean that they will be filing Forms 941 claiming the employment tax credit for the 65% subsidy past IRS’s originally expected end-point of the fourth quarter of 2010. Look for more details on the DOD Appropriations Act changes in the next issue of PAYROLL CURRENTLY, which will be e-mailed to you on January 8, 2010.

ICE Assistant Secretary John Morton announces 1,000 new workplace audits to hold employers accountable for their hiring practices

WASHINGTON-U.S. Immigration and Customs Enforcement (ICE) Assistant Secretary John Morton today announced the issuance of Notices of Inspection (NOIs) to 1,000 employers across the country associated with critical infrastructure-alerting business owners that ICE will audit their hiring records to determine compliance with employment eligibility verification laws.

"ICE is focused on finding and penalizing employers who believe they can unfairly get ahead by cultivating illegal workplaces," said Assistant Secretary Morton. "We are increasing criminal and civil enforcement of immigration-related employment laws and imposing smart, tough employer sanctions to even the playing field for employers who play by the rules."

The 1,000 businesses served with audit notices were selected for inspection as a result of investigative leads and intelligence and because of the business' connection to public safety and national security-for example, privately owned critical infrastructure and key resources. The names and locations of the businesses will not be released at this time due to the ongoing, law enforcement sensitive nature of these audits.

Audits involve a comprehensive review of Form I-9s, which employers are required to complete and retain for each individual hired in the United States. I-9 forms require employers to review and record each individual's identity and work eligibility document(s) and determine whether the document(s) reasonably appear to be genuine and related to that specific individual.

Protecting employment opportunities for the nation's lawful workforce and targeting employers who knowingly employ an illegal workforce are major ICE priorities, for which ICE employs all available civil and administrative tools, including audits. Audits may result in civil penalties and lay the groundwork for criminal prosecution of employers who knowingly violate the law.

In April, DHS issued updated worksite enforcement guidance emphasizing ICE's major enforcement priorities-specifically focusing on dangerous criminal aliens and employers who cultivate illegal workplaces by breaking the country's laws and knowingly hiring illegal workers. In this strategy, ICE identified form I-9 audits as the most important administrative tool in building criminal cases and bringing employers into compliance with the law.

Statistics since implementation of new ICE worksite enforcement strategy on April 30:

• 45 businesses and 47 individuals debarred;
• 0 businesses and 1 individual were debarred during same period in FY 2008.
• 142 Notices of Intent to Fine (NIF) totaling $15,865,181;
• ICE issued 32 NIFs totaling $2,355,330 in all of FY 2008.
• 45 Final Orders totaling $798,179;
• ICE issued eight Final Orders totaling $196,523 during the same period in FY 2008.
• 1,897 cases initiated;
• ICE initiated 605 cases during the same period in FY 2008.
• 1,069 Form I-9 Inspections;
• ICE initiated 503 Form I-9 Inspections in all of FY 2008.

In July, ICE issued 654 NOIs to businesses nationwide in the largest operation of its kind before today - part of ICE's effort to audit businesses suspected of using illegal labor.

Statistics resulting from the 654 audits announced in July:

• ICE agents reviewed more than 85,000 Form I-9s and identified more than 14,000 suspect documents - approximately 16 percent of the total number reviewed.
• To date, 61 NIFs have been issued, resulting in $2,310,255 in fines. In addition, 267 cases are currently being considered for Notices of Intent to Fine (NIFs).
• ICE closed 326 cases after businesses were found to be in compliance with employment laws or after businesses were served with a Warning Notice in expectation of future compliance.

The "Ex Threat" to Information Security

Access to internal company data should cease immediately upon an employee's termination.

While this may seem obvious, many employers overlook the steps necessary to prevent access to sensitive information.

Commonly stolen data includes passwords, client lists, financial reports and research and development plans.

An ex-employee can wreak havoc on a company's network or share intelligence with rivals, threatening an organization's competitive advantage.

Companies should protect themselves against the "Ex Threat" by:

1. Changing and managing strong passwords every 90 days or less;
2. Logging and monitoring network access;
3. Limiting viewing and saving privileges of classified files (both electronic and physical); and
4. Removing remote access immediately upon termination.

Interested in developing a sound and easy-to-manage termination policy? Find out how by calling 770.248.0401 or sending an e-mail to bdteam@laihr.com today.

This year's "Getting Paid In America" survey, which garnered nearly 40,000 responses over a four-month span leading up to and including NPW, featured some interesting results:

• 55.1% of respondents cited higher wages as more important than better health benefits.
• A staggering 92% of respondents receive their pay via direct deposit, compared to 7.7% from paper check and 0.3% via paycard.

Schedule a no obligation consultation and online overview of our services, including compensation planning and payroll management.

Bill to Ban Sexual Bias Delayed

The Employment Non-Discrimination Act (ENDA) prohibiting discrimination based on sexual orientation and gender identity has slowly made its way to Congress.

However, neither the House nor the Senate will vote on legislation to bar workplace sexual bias discrimination before the end of 2009.

Efforts to pass the bill will be renewed in 2010 after Congress returns from a holiday recess.

Prepare your business for new labor laws by ensuring your interview practices and company culture do not conflict with current and probable federal and state regulations.

Contact our business development team at bdteam@laihr.com or 770.248.0401 to learn more about hiring, team building and socializing new employees.

Labor Department Sets Goals for 2010

The Department of Labor will seek to enact an array of 90 rules and regulations in 2010.

The new rules will ensure that workers are paid a fair wage, have a voice in the workplace, are provided a safe workplace and have a secure retirement.

Stay ahead of the game with Lowden & Associates' safety audits, compensation design services and employee recognition programs. Call 770.248.0401 today!" 

More HR News

The subsidy unemployed Americans receive to help pay for their health care coverage began running out for many on Dec. 1, 2009. And unless the law changes, workers who lose their jobs after Dec. 31, 2009, will not be eligible for the program, which pays 65 percent of the monthly premium for COBRA-provided coverage.

Ruling Shows Limits of Attorney-Client Privilege
The attorney-client privilege isn't without limits, including limits on when adverse lower court rulings on privilege may be appealed, Justice Sonia Sotomayor's first decision on the U.S. Supreme Court showed.

In a unanimous judgment, the court rejected a company's appeal of a lower court order that it compel information about a fired employee's meeting with a company's attorney.

Supreme Court Sides with Union in Railway Labor Act Arbitration Dispute
On Dec. 8, 2009, the U.S. Supreme Court sided with a union's challenge of National Railway Adjustment Board decisions dismissing employee claims in five nearly identical decisions "for lack of jurisdiction."

Supreme Court to Examine Privacy of Workers' Texts
The U.S. Supreme Court has agreed to hear a case raising the question of whether text messages sent by public employees on company-provided equipment are entitled to constitutional privacy protections.

High Court Will Also Hear Third-Party Retaliation Case
The U.S. Supreme announced it will review whether a third party is protected by the anti-retaliation provision of Title VII, based solely on his association with an employee who has engaged in protected activity.

IRS Releases 2010 Federal Percentage Method Income Tax Withholding Tables
Advance copies of the 2010 federal percentage method withholding tables have been released by the IRS. The tables are effective for wages paid in 2010.

The withholding allowance amounts by payroll period have not changed for 2010 because the value of the personal exemption for 2010 remains at $3,650.

The IRS has also issued the percentage method tables for determining advance earned income credit (EIC) amounts. These tables are based on gross wages and do not require the deduction for withholding allowances.

Advance EIC payments apply only to employees eligible for advance payments of the credit who have a current Form W-5 on file with their employer.

Pension Plan Limits Will Remain the Same in 2010. The IRS has announced the cost-of-living adjustments applicable to dollar limits on benefits and contributions under qualified retirement plans, as well as other items, for tax year 2010. While the cost-of-living index actually decreased from 9-30-08 to 9-30-09, the IRS said that the 2010 limits will be the same as those in effect for 2009. IR 2009-094.

DHS Rescinds Its Employee Name/SSN No-Match Rule. The Department of Homeland Security has issued final regulations rescinding its No-Match Rule, relating to procedures that employers may take to take advantage of a safe harbor after receiving employee name/social security number No-Match letters.

In the preamble to the new regulations, DHS explains that it has decided to focus its enforcement efforts related to the employment of unauthorized aliens on increased compliance through improved verification.

Social Security Wage Base Remains at $106,800 in 2010. The Social Security Administration Announced, that the 2010 social security wage base will be unchanged at $106,800. The maximum social security tax employees and employers will each pay in 2010 is also unchanged at $6,621.60.

IRS Will Conduct 6,000 Random Employment Tax Audits for National Research Program. The IRS will begin an employment tax National Research Program component in February 2010. The IRS has advised the APA that it will involve audits of 6,000 employers over three years – 2,000 per year. Employers will be randomly selected for these intensified audits, which are used to compile statistical data.

Standard deduction and personal exemption
The standard deduction amounts for 2010 remain unchanged at $11,400 for married couples filing jointly or surviving spouses and $5,700 for single taxpayers and married taxpayers filing separately, while increasing to $8,400 for heads of households ($8,350 in 2009). The personal exemption amount for 2010 is $3,650, unchanged from 2009.

Qualified transportation fringes
The amounts that may be excluded from gross income for employer-provided "qualified transportation fringe benefits" for 2010 are as follows: $230 per month for "transportation in a commuter highway vehicle and any transit pass" (unchanged from 2009), and $230 per month for "qualified parking" (unchanged).

Earned income credit
For 2010, the Earned Income Credit for employees with one qualifying (dependent) child is 34% of the first $8,970 of earned income, for a maximum of $3,050 ($3,043 in 2009). For employees with two qualifying children, the EIC is 40% of the first $12,590 of earned income, for a maximum of $5,036 ($5,028 in 2009).

For employees with three or more qualifying children, the EIC is 45% of the first $12,590 of earned income, for a maximum of $5,666 ($5,657 in 2009), and for employees with no qualifying children, the EIC is 7.65% of $5,980, for a maximum of $457 (unchanged from 2009).

Married employees filing jointly who earn less than $40,545 in 2010 ($35,535 for single employees) and who have at least one qualifying child can receive advance payments of their EIC of up to $1,830 ($1,826 in 2009) spread out over their pay periods during the year.