2017 Standard Mileage Rates Released

The IRS has released the 2017 optional standard mileage rates that employees, self-employed individuals, and other taxpayers can use to compute deductible costs of operating automobiles (including vans, pickups and panel trucks) for business, medical, moving and charitable purposes. The 2017 standard mileage rate has decreased to 53.5 cents per mile for business uses and 17 cents per mile for medical and moving uses. It remains at 14 cents per mile for charitable uses. For purposes of computing the allowance under an FAVR plan, the standard automobile cost may not exceed $27,900 ($31,300 for trucks and vans). The updated rates are effective for deductible transportation expenses paid or incurred on or after January 1, 2017, and for mileage allowances or reimbursements paid to, or transportation expenses paid or incurred by, an employee or a charitable volunteer on or after January 1, 2017. SOURCE: IRS News release IR-2016-169, December 13, 2016. Reposted with permission from Wolters Kluwer. Access CCHAnswersNow for more articles. (MEA Members...

N.J.-Pennsylvania Reciprocal Agreement Will NOT Be Ending

The tax reciprocal agreement between Pennsylvania and New Jersey will remain in place. New Jersey has chosen not to terminate the 40-year-old agreement. Pennsylvania residents who work in New Jersey will continue to be subject to the Pennsylvania personal income tax and have Pennsylvania personal income tax withheld from compensation received in New Jersey. Pennsylvania employers will continue to withhold New Jersey personal income tax on behalf of their New Jersey resident employees, and remit that tax to the State of New Jersey. The Pennsylvania Department of Revenue recently shared information with employers to help them prepare employees for the termination of the agreement. Since the agreement will continue, the state is advising employers to disregard that communication. (Pennsylvania Department of Revenue, http://www.revenue.pa.gov/Pages/default.aspx#.WDW5e1jnaM9, November 2016.) NewJerseyNews PennsylvaniaNews StateWithholdingReportingNews Reposted with permission from Wolters Kluwer. Access CCHAnswersNow for more articles. (MEA Members...

Workers’ Comp Rates for 2017 Will Increase Less Than One Percent

The average premium for workers’ comp coverage in Washington will go up less than one percent in 2017. On November 30, 2016, the state Department of Labor & Industries (L&I) announced the rate will rise by an average of 0.7 percent next year. The 2017 increase will cost employers on average about $10 more a year per employee. Most workers will not see an increase in what they pay. Employers and workers around Washington pay into the workers’ comp system so they’re covered if someone suffers a work-related injury or illness. Last year, L&I covered nearly 93,000 claims in the state. “We’ve improved the support we provide to injured workers, and I’m pleased to say we’re seeing tangible, positive results,” said L&I Director Joel Sacks. “Injured workers are able to stay at work or return to work faster, and the number of workers on long-term disability is dropping. That’s good for employees and employers, and it helps us hold down costs.” L&I sets rates every fall for the following year. Workers’ compensation premiums help pay for wage and disability benefits, as well as medical treatment of injuries and illnesses. They also provide a safety net to make sure the system is prepared for the unexpected. There are several factors that help determine rates, including expected workers’ compensation payouts, the size of the reserve fund, wage inflation and other financial indicators. Over the past six years, the average annual workers’ comp rate increase has been just over one percent. Helping workers recover and reducing costs Reducing costs of the workers’ comp system helps keep premium rates steady and predictable. Over...

Pennsylvania-New Jersey Reciprocal Agreement to End

New Jersey is ending a nearly 40-year-old tax reciprocal agreement with Pennsylvania. The agreement allowed workers to pay tax to their home state, rather than the state where they work. NJ’s decision means you may pay tax to both states. Beginning January 1, 2017: (1) Impacted workers may owe tax to Pennsylvania and New Jersey. (2) Some workers may have to make estimated quarterly payments. (3) Most workers will need to file a tax return in both states starting in 2018. (Pennsylvania Department of Revenue,End of the PA & NJ Tax Agreement, October 2016; http://www.revenue.pa.gov/Pages/default.aspx# .WA-VS1go7ct.) PAEmployerFlier.pdf – Click to Launch PA-NJ_tax_reciprocity_qa.pdf – Click to Launch PennsylvaniaNews NewJerseyNews StateWithholdingReportingNews Reposted with permission from Wolters Kluwer. Access CCHAnswersNow for more articles. (MEA Members...

Compensation Budgets Expected to Stay Flat Despite Stronger Job Market, According to Aon Research

Despite competition for top talent heating up, new research from Aon Hewitt shows U.S. employers aren’t planning to spend more on compensation budgets for 2017—which may likely create a stumbling block for employers when it comes to attracting and retaining high performers. The 2016 U.S. Salary Increase Survey of 1,074 U.S. companies, projects base pay is expected to be 3.0 percent in 2017, up slightly from 2.8 percent in 2016. Spending on variable pay is expected to be 12.8 percent of payroll—unchanged from 2016. “Challenging business conditions and strong global competition this year means many companies are holding the line on compensation spending in the year ahead,” explained Ken Abosch, broad-based compensation leader at Aon Hewitt. “However, as the job market continues to improve, stagnant compensation spending could leave many companies in a difficult position in the war for top talent. Organizations may need to either re-think their compensation strategy, or emphasize the other benefits and perks they provide as a way to attract and retain the best workers.” According to a separate Aon Hewitt report, more than half (52 percent) of U.S. workers said they are open to new job opportunities and 44 percent are actively looking for a new job. One of the main drivers of job-seekers is lackluster compensation. Just 38 percent of workers feel they are fairly paid, yet 62 percent said ‘better-than-average pay and benefits’ is a leading workplace differentiator. More companies freeze pay in 2016. Financial challenges were also reflected in the number of companies that froze salaries in 2016. Aon Hewitt’s research showed 10 percent of organizations froze salaries, up significantly from...

New Worldatwork Research Shows Increase in Employee Promotional Activity

WorldatWork released new research revealing 9.3 percent of employees received a promotion in the past year, a small increase from 9 percent in 2014, but a significant increase from 7 percent in 2010. The report, Promotional Guidelines Survey, focused on various practices and policies surrounding promotions. “The upward trend in both the number of promotions as well as the size of promotional pay increases is a positive sign that organizations are feeling more comfortable with allowing pay levels to increase,” commented Kerry Chou, CCP, senior practice leader at WorldatWork. “Whether this optimism spills over to employers raising their overall annual pay increase budgets to levels closer to pre-recession levels remains to be seen.” The report also showed a dramatic decrease in the use of a separate budget for promotional increases from years past, with only 33 percent funding promotions through this method, versus 44 percent in 2010. Promotions are increasingly being funded through vacancy savings, merit budgets and salary savings. “It also caught my attention that marketing promotional opportunities as an attraction tool is an area that is not being taken advantage of,” Chou continued. “The results in this survey show that a full 64 percent of organizations do not market promotional opportunities as a key benefit when recruiting for new talent.” Other notable findings include: There has been a dramatic increase of promotional increases that is not limited by organizational policy (47 percent in 2016 versus 35 percent in 2014). There is no limit as to how many grades, bands or levels an employee is permitted to move in a single promotion for a majority of the respondents...

Final Rule Gives 7 Days of Paid Sick Leave to Federal Contractors’ Employees

The Department of Labor has released its final rule implementing Executive Order 13706, “Establishing Paid Sick Leave for Federal Contractors,” signed by President Barack Obama on September 7, 2015. The final rule implements the requirement in EO 13706 that certain parties contracting with the federal government provide employees up to seven days of paid sick leave annually. Employees will earn one hour of paid sick leave for every 30 hours worked that may be taken if they are sick, need to care for a sick family member, or must see a doctor or take a family member to a medical appointment. Paid sick leave may also be taken for reasons related to domestic violence, sexual assault, or stalking. The final rule is scheduled for publication in the Federal Register on September 30, 2016. The final rule “reflects leading practices by major employers, states, and localities throughout the country,” according to a White House fact sheet. The Labor Department noted that five states—California, Connecticut, Massachusetts, Oregon, and Vermont—and more than two dozen cities, counties, and towns have paid sick time laws requiring employers to permit leave for short-term health needs and preventive care. The White House estimates that the final rule will extend paid sick leave to 1.15 million people working on federal contracts, including nearly 600,000 employees who currently lack even one day of paid sick leave. The new regulation applies to all covered contracts solicited and awarded on or after January 1, 2017. Announcing the final rule, the DOL highlighted these aspects of its requirements: Provides up to 56 hours of paid sick leave per year to an...

Bill to Delay Final OT Rule’s Implementation for 6 Months Clears House

With a 246-177 vote on September 28, the House passed a measure that would delay for six months the implementation of the Labor Department’s final overtime rule. Five Democratic lawmakers voted in favor of Regulatory Relief for Small Businesses, Schools, and Nonprofits Act (H.R. 6094). The measure was introduced the day after a group of 21 states and a business coalition filed separate lawsuits in federal court in Texas to enjoin implementation of the controversial rule (see Bill would delay DOL overtime rule’s effective date for 6 months, September 22, 2016). Opponents of the new overtime rule point to the fact that it would double the salary threshold for overtime eligibility to $47,476 per year and requires automatic adjustments every three years. Moreover, the DOL will implement the rule on December 1, 2016, giving workplaces, schools, and organizations across the country just six months to make significant changes required by the rule. Concerns have also been expressed that the final rule will stifle workplace flexibility and opportunity, impose significant burdens on small businesses, jeopardize crucial nonprofit services, and increase the cost of higher education. The Regulatory Relief for Small Businesses, Schools, and Nonprofits Act, by delaying implementation of the final overtime rule for six months, would give workers, small businesses, nonprofits, and colleges and universities more time to prepare for what the bill’s sponsors called “dramatic changes” resulting from the rule. Representative Tim Walberg (R-MI), chairman of the Subcommittee on Workforce Protections, who introduced the Regulatory Relief for Small Businesses, Schools, and Nonprofits Act, said in a statement: “We all agree we need to modernize our nation’s overtime rules,...

New Jersey Minimum Wage Will Increase to $8.44 in 2017

The minimum wage in New Jersey will increase from $8.38 per hour to $8.44 per hour effective on January 1, 2017, according to the New Jersey Department of Labor and Workforce Development, the Division of Wage and Hour Compliance, in a “Notice of Administrative Changes” published on September 30, 2016. New Jersey Administrative Code 12:56-3.1 is amended to reflect the cost-of-living increase. N.J.A.C. 12:56-3.1 provides that, on an annual basis, on or about September 30, the Department is to revise the minimum hourly wage rate “based on any percentage increase during the one-year period of August of the prior year through August of the current year of the consumer price index (CPI) for all urban wage earners and clerical workers (CPI-W, U.S. City Average), as released by the United States Department of Labor, Bureau of Labor Statistics.” The rule further provides that the Department shall, annually, (1) through a public notice published in the New Jersey Register, provide the newly adjusted minimum wage rate, and (2) no later than September 30 of each year, publish the public notice on the Department’s website. The change for 2017 is based on a 0.66% increase in the cost of living for the period August 2015 through August 2016. That is, the CPI-W, U.S. City Average, in August 2015 was 233.366, and in August 2016 it was 234.909. Consequently, the change in the index over the one-year period equals 1.543, or an increase of 0.66 percent (1.543/233.366×100). Using as a base for the calculation the current New Jersey minimum hourly wage rate of $8.38 (since as of this date, $8.38 is greater than...

OFCCP Announces Final Rule to Prohibit ‘Pay Secrecy’

The OFCCP will publish its final rule on Friday, September 11 to implement Executive Order 13665, signed by President Obama in April 2014, which prohibits federal contractors from retaliating against employees who choose to discuss their compensation. EO 13665 amends EO 11246, which already prohibits discrimination based on race, color, religion, sex, sexual orientation, gender identity, and national origin. The final rule, which takes effect on January 11, 2016, amends the OFCCP’s regulations at 41 CFR Section 60-1 that implement EO 11246. It applies to all federal contractors with contracts entered into or modified on or after the effective date of the rule that exceed $10,000 in value. No more secrets. Under the rule, federal contractors and subcontractors may not fire or discriminate against employees for discussing, disclosing, or inquiring about their own pay or that of their coworkers. The rule also protects pay discussions by job applicants. It allows job applicants and employees of federal contractors and subcontractors to file a discrimination complaint with OFCCP if they believe that their employer fired or otherwise discriminated against them for discussing, inquiring about, or disclosing their own compensation or that of others. “Pay secrecy practices will no longer facilitate the pay discrimination that is too often perpetrated against women and people of color in the workplace,” said OFCCP Director Patricia Shiu in a statement announcing the rules. “Indeed, forward-thinking companies that have embraced greater transparency find that it benefits them and their workforce by helping them attract and retain talented workers. And research suggests these approaches have a substantially positive impact on society, workers, the workforce, and the economy as...

The 2016 Overtime Upsurge … Are You Ready?

Michael G. Trachtman Powell Trachtman Logan Carrle & Lombardo, P.C. MEA General Counsel mtrachtman@poweltrachtman.com In three very significant ways, the scope of an employer’s obligation to pay overtime will be substantially expanded in 2016 and, for many companies, the changes will be a budget buster.  Advance planning can blunt some of the effects these changes will cause, but employers will have to work overtime now to minimize their overtime obligations later. The Incredible Shrinking “White Collar” Exemption For decades, the law has exempted certain so-called “white collar” employees from overtime requirements – the exemption includes not only top-level management, but also lower-level managers, supervisors and administrative employees who have significant management and discretionary authority or who are independently responsible for important administrative functions. In June 2015, the Department of Labor announced a new rule which, when finalized over the next few months, will convert many of these exempt employees into non-exempt employees.  For some companies, this will be a jarring cultural and financial change:  currently exempt managers, supervisors and administrators  – employees who are expected to put in whatever time is necessary to get the job done — will soon have to keep time, and will be entitled to overtime for all hours worked in excess of 40 hours per week. The exempt/non-exempt distinction will pivot on the amount of annual compensation paid.  Now, in order to be treated as an exempt employee, managers, supervisors and administrators must make at least $23,660 a year.  Under the new rule, that threshold is slated to jump to $50,440 per year.  In other words, employers will be required to pay overtime to...

Goals of a Wage and Salary Administration Program

In the broadest sense, the purpose of a wage and salary administration program is to create order where there is the potential for a whole lot of chaos. A poorly administered wage and salary program has the potential for creating chaos in a company’s workplace by generating discontent among employees. It also has the potential for creating the kind of chaos companies must endure when they run afoul of pay-related laws, rules and regulations enforced and administered by numerous state and federal agencies. Perhaps the best way to figure out what the goals of a good wage and salary administration program should be is to look at some of the things that will be happening if an effective one is in place. In an effective wage and salary administration program: employees will perceive their pay to be equitable; the pay program will provide incentives for employees; the people in the best position to make decisions about employees’ pay increases will actually make those decisions; the owners of the company will be protected against paying employees too much; the pay program will be as easy as possible to administer; the pay program will be as easy as possible for employees to understand; and the pay program will ensure that the company is complying with government regulations pertaining to employee compensation. Perception of equity. A company’s pay program should be “equitable” to employees in several ways. First, employees should feel that they are being paid fairly in relation to what others in the company, doing the same job, are being paid. In addition, they should feel they are being fairly paid in...

List of Low Cost Rewards and Recognition

At a 1998 meeting of the Human Resource Management Association of Chicago’s Total Rewards interest group, members set out to generate a list of 50 practical low-cost ideas for attracting, motivating and retaining employees. Exceeding their numerical goal, here’s what they came up with: Development Attending external work-related seminars Company-sponsored language classes Corporate training programs (soft skills and technical skills) Distance learning (taking satellite classes over the internet) New and varied work assignments Traveling to and experiencing different corporate locations Tuition reimbursement Employee participation Employee-planned parties Employee referral gift certificates Gathering employee feedback and using it Monthly teleconferences or town hall meetings in which corporate leadership addresses employee questions Quarterly bonuses for meeting specified targets Suggestion programs Financial lifecycle Brownbag lunches with discussions of financial topics Investment seminars Loans for computers Providing financial modeling software Retirement planning/counseling Scholarships for the children of employees Health Aerobics or yoga classes Company-organized lunch walks Corporate fitness center or company-sponsored health club membership Flu shots Massages on the premises Smoking cessation programs Wellness “lunch and learn” (a brownbag discussion of various health issues) Recognition Award certificates Birthday or holiday cards from executive staff Celebrations of diversity (e.g. Mexican day) Day off with pay Employee of the month Free lunches Gift certificates Monthly use of a nearby parking space Parties, special events Personal thank you Public acknowledgement Thank-you notes or letters Work environment/culture Afternoon popcorn breaks Attractive corporate grounds (e.g. swans in a pond) Casual dress Company-paid uniforms for hourly associates Corporate sports teams, clubs Deep discounts on company products Free coffee and soda Free turkeys for Thanksgiving Hot lunches in the cafeteria Informal...

Harnessing the Power of Salary Surveys

The old adage “knowledge is power” holds true for any business.  In making both tactical, or day-to-day decisions, as well as formulating and executing on a long-term strategy for growth, the more information you have at your fingertips, the better your decisions will be. In the HR world, there are many sources of data on our employees, which if collected and analyzed, can add value to your business by identifying marketplace trends and managing workforce needs: Employee demographic data (e.g., age, tenure) Performance data (e.g., employee performance, sales performance) Turnover, headcount Safety records And today, more than ever, access to reliable and diversified data is easy.  Technologies are able to generate and capture more information in today’s world, and employees are more savvy than ever in using data available to them.  However, the amount of available data can be overwhelming, and making meaning of this data can be challenging and time consuming. A key element of data collection that must not be overlooked is establishing a competitive pay philosophy and determining desired market position for total rewards.  Using salary surveys to understand your current market position – especially if you’ve never done it before – can give you a baseline of valuable information upon which to make pay decisions.  In deciding whether to do a competitive market assessment, questions to ask yourself include: How do we know if we are competitive in the marketplace in terms of salary and benefits? How does my business stack up – relative to competitors – in terms of compensation and benefit levels as well as the total rewards package? Who is our competition...

Tips for Using Salary Data

More than 80 percent of business managers and HR professionals said their companies either participate in or purchase at least one salary survey each year according to Salary.com. Why use salary surveys? Paying employees fairly is just good business practice.  Underpay employees and you might lose them as they look elsewhere for a better offer. Overpay employees and your payroll costs may skyrocket and profitability will suffer. Salary data provides a robust foundation for making sound decisions on pay levels/pay practices; both domestic and global data are available in surveys. Comparisons to salary data allow you to establish pay levels armed with information on what your competitors are doing. Survey data can be used to identify market trends – is your company’s pay keeping pace with the market? Best Practices Conduct a full-blown market study every 3-4 years for all jobs. In between major studies, focus on new jobs, hard-to-recruit jobs and jobs with “hot” skill sets. Consider the total compensation package – having information on salary, variable pay, commission and benefits allows for better comparisons and may prevent one from making incorrect assumptions about salary level.  For example, some companies are more generous with their benefits package, which could justify lower base salaries. Use multiple reputable survey sources unless there is only one data source available or when there is an ideal source that provides precise market data. If you have never benchmarked your organization’s salary and benefit levels before… Start simple – don’t bite off more than you can chew – evaluate just a few key benchmarks initially to get an idea of market positioning. Rotate job...