Legal

Travel Expenses
Travel Expenses: What You Need to Know 1024 577 LaDonna Kearney

Travel Expenses: What You Need to Know

Travel Expense Reports Are a Dreary Task

What is reasonable when it comes to expensing travel? Research from Certify, a company that tracks travel and expense claims, revealed some provocative items: One marketing department actually approved an employee renting a llama for $150 to accommodate a photographer’s request; one employee boarded a pet snake for $30 a day; and one salesperson transporting pungent garlic samples requested (but was denied) a separate $85 room for the samples. So, what’s considered reasonable?

What will and won’t raise eyebrows?

Employers can circumvent the issue of legitimate expenses by following a predetermined per diem amount for travel. It serves as an alternative to expense reports or can be used in combination with them. Short-term temps or substitutes, like teachers, may also file expense reports.

Companies follow different guidelines for establishing their per diem allowances. Private firms can structure them in line with federal mandates for government employees — typically, the General Services Administration for domestic rates and the U.S. Department of State for international travel. Per diem rates consider varying costs among locations; for example, it is more expensive to eat out in San Francisco than in Wichita, Kansas. Also, industries have varying expectations for business expenses. The time of year is another factor, as seasonal rates range widely.

Whether included in a per diem allowance or charged separately, the following expenses are normally acceptable, within reason:

  • Lodging (hotels, Airbnbs, private rentals, short-term apartments).
  • Gas and tolls for driving.
  • Taxis to and from airports, stations, conferences, lunches or client offices.
  • Internet access on flights or in hotels.
  • Printing and copying services when away from home.
  • Laundry and dry cleaning.
  • Checking luggage.
  • Meals, including room service.
  • Tips.
  • Visa fees.
  • Travel accident or travel medical insurance.

The following are generally out of bounds:

  • Museums and personal entertainment.
  • Alcohol (unless entertaining clients).
  • Flight upgrades.
  • Child care or pet sitting.
  • Parking tickets.
  • Lost luggage.
  • Late/cancellation fees.

There is a key distinction between an employee’s daily commute and a journey to a different city. Business travel may include meeting clients or partners, attending events or conferences, visiting the company’s other offices, conducting research or making presentations.

When expenses do not fit into standard formats, companies may resort to out-of-pocket reimbursements.

Per diems versus itemized expenses

Per diems make life easier for companies and employees. Busy workers are thankful not to have to sort out receipts and document each outlay. They also offer predictability and flexibility, as employees themselves make spending choices. Plus, a generous expense account creates loyalty and attracts talent.

On the company’s side, per diems simplify expense tracking, which consumes time and effort when vetting expenditures and requires paperwork. They may help control costs by encouraging employees to be more frugal than if using plastic — it is too easy to pull out a credit card. They are also usually tax deductible for the employer, but be sure to have your accountant review any questionable matters.

Sometimes partial per diems can apply when traveling workers spend some of the first or last day in the office. And this story has an important buried lead: Employees normally do not need to return unused per diems!

Specify the process

Spell out guidelines and procedures in a policy document for all employees. In addition, create an expense form for them to fill out.

You can tackle common concerns up front. For example, do executives travel in business class? How much luggage can they take? (One regular suitcase and one carry-on are customary.) Do employees need approval to book their own transportation? Can they use their own noncompany-issued credit cards? If possible, specify amounts appropriate for different destinations. Can they bring an extra person, like a spouse? (Often yes, if it incurs no extra expense.)

Address the company’s policy for group entertainment. Normally, the senior executive pays for meals. Be clear about deadlines for required reimbursement requests and submissions of receipts.

The goal is to strike a balance between paying what the company can afford and satisfying your employees’ expectations.

©2023

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HR Employment Law FMLA
HR Insight: 30 Years of FMLA 940 788 LaDonna Kearney

HR Insight: 30 Years of FMLA

FMLA Celebrates 30 Years of Providing Employees with Guaranteed Medical Leave. Here’s What You Need to Know.

Ever since it was put into action, the FMLA has made it possible for working Americans to receive a guaranteed 12 weeks of unpaid leave in the event they need to recover from an illness, care for a family member under specific circumstances or stay home with a newborn, all without fearing that they will lose their job as a result. However, keep in mind that employees are usually required to submit a request to take FMLA leave in advance of taking FMLA-related time off.

Which businesses qualify for FMLA-related time off?

Now, the stipulations of the Family Medical Leave Act apply only to businesses that employ more than 50 workers, meaning employees who work at very small businesses often don’t qualify for FMLA leave. If your company meets the size requirement, has employees who have worked within a 75-mile radius and said employees have worked for you for at least 20 workweeks over the course of the current or previous calendar year, then you will be recognized as an employer that can offer FMLA leave.

Requirements of the employees

Any requests made by employees for FMLA leave are expected to be made no fewer than 30 days in advance of the employee’s intended first day of leave. While a 30-day notice is the minimum, employees should notify their employers of their desire to take FMLA leave as soon as possible. After doing so, employees are also required to provide their employer with medical documentation relevant to the FMLA leave request within 15 days of the start of their leave.

Requirements of the employers

On the employer side of things, an employer has to notify the employee who is requesting FMLA leave about the status of their request within five business days. If the employer denies the employee’s request for FMLA leave, the employer must provide the employee with a valid reason as to why their request was not approved.

Employees who take FMLA leave are allowed to use the time all at once or in increments. Whether your FMLA leave is taken consecutively or intermittently will depend on the needs of the employer as well as the specifics of the need for FMLA leave. The FMLA allows employees to take their leave in either 12- or 26-week increments over the course of 12 months, but ultimately it’s up to the employers to decide what they prefer their employees do.

For a lot of employers, the FMLA is preferred to be enacted on a rolling basis to ensure their employees do not take 12 weeks of FMLA leave at the end of December followed by 12 more weeks at the beginning of January. And to clarify, even though FMLA leave is unpaid time that employees take off work, their jobs are protected and the employee will still be employed when the FMLA leave period comes to an end.

For some small businesses, their workforces fluctuate and have fewer than 50 workers at times. So what does this mean in terms of their ability to provide their employees with the option of FMLA leave? Essentially, these businesses still qualify for FMLA leave coverage as long as the business employed at least 50 workers for 20 weeks in either the current or previous year.  

Now, are part-time employees eligible for FMLA leave? Such employees can receive up to 12 weeks’ worth of unpaid leave for both family reasons and medical purposes as long as the employees have worked a minimum of 1,250 hours, though this does not include paid nor unpaid time that was taken in the previous 12 months.

In other words, part-time workers are eligible for FMLA leave if they work approximately 24 hours per week over the course of 52 weeks. Although FMLA leave is unpaid, businesses must maintain the existing group health care benefits that were in place prior to the employees’ FMLA leave. Likewise, employers must restore either the same position or an equivalent role for the employee once their leave is over.

According to Entrepreneur magazine, FMLA leave, like intermittent leave, can be taken in separate and multiple blocks of time. However, there are two main circumstances that must be present if FMLA leave is to be taken: The employee is requesting FMLA leave for a medical reason or to focus on a “serious condition.”

Back in 2009, new regulations were put in place in order to define what a serious condition meant in the context of FMLA leave. Since then, a serious condition is recognized as three consecutive days’ worth of incapacity in addition to two visits to a health care provider. These two visits are required to have taken place within 30 days of the incident that caused the serious condition.

The flip side

While FMLA leave is a highly appreciated option for many working Americans, the law still places workers who cannot afford to take unpaid time off work at a disadvantage. Countless other workers who either do not qualify for FMLA leave or cannot take unpaid leave for economic reasons do not yield many benefits from FMLA leave, if any at all. In fact, according to Fortune, upward of millions of employees refuse to take FMLA leave even if they want to simply because the leave is unpaid.

Please note that there are many states in the U.S. that offer paid family leave programs that allow employees to take time off from work for qualifying reasons. Keep in mind that state-regulated programs such as these are not controlled by the federal government nor are they part of the federal FMLA program.

Look into the options in your state and review the requirements to see whether paid family leave or paid medical leave is an option available to you. As always, protect yourself and ensure your options are in compliance with the FMLA by speaking with a legal adviser. Professionals can assist you in the process of mitigating any legal repercussions that may arise and can also help you understand how the FMLA may apply to your specific situation.

©2023

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HR insight noncompete agreements
HR Insight: Are Noncompete Agreements Enforceable? 940 788 LaDonna Kearney

HR Insight: Are Noncompete Agreements Enforceable?

HR Insight – Will My Noncompete Agreements Hold Water?

You may want to require employees to sign noncompete agreements to keep them from working for rival companies. Will these protect the business? The answer is … maybe. Over time, courts have become less willing to uphold strict provisions. Indeed, President Biden has issued an executive order for the Federal Trade Commission to examine abusive noncompete agreements. That order will have little direct impact, but it indicates which way the wind is blowing — toward a more employee-friendly approach. Although no current laws have changed, employers are likely to face more scrutiny.

One size does not fit all.

In many states, noncompete agreements are unenforceable. Period. In at least one jurisdiction, the District of Columbia, laws not only ban noncompete agreements but even grant people the right to work simultaneously for multiple employers.

Some states are also distinguishing between higher- and lower-paid staff, acknowledging that it may not be fair to curtail the job opportunities of rank-and-file employees such as those of upper management.

Where noncompetes are permissible, however, similar principles apply:

  • Is it necessary to protect an employer’s legitimate business interest?
  • Does it cause undue hardship for an employee? Courts do not want employees to be utterly blocked from finding new work.
  • Is a public interest involved? Certain industries such as medicine and education are so important that public policy supports them.
  • How long and how far does an agreement extend?

With a variety of industries and firms operating across the board, you must drill down into the provisions regarding each situation. The broader the time span and geographic area at stake, the less likely the agreement is to be enforceable. Reasonable duration and scope may differ greatly from one company to another. It may be excessive to demand national or global restrictions for a local, in-state business. Many noncompetes are typically drafted to remain in force for one or two years — indeed, judges tend to frown on lifelong prohibitions.

The crux is an employer’s legitimate interests. The object is to prevent employees from harming their employers by introducing their best customers to a competitor, sacrificing hard-earned goodwill or disseminating confidential knowledge and trade secrets. The former boss does not want their employees to start their own breakaway company or develop competing products, let alone recruit other former coworkers to a new rival venture.

Consider consideration

Contract law generally requires a quid pro quo to validate an agreement, and noncompetes are no exception. A legitimate contract requires something of value to which the other party is not already entitled.

Although a job offer may be contingent on a prospective employee signing a noncompete, how about those employees you are already employing? If you want them to sign new noncompetes, they need something extra now to count as consideration. That something can take diverse forms, from more money or new job responsibilities to a fancier title or increased benefits such as vacation time. It need not be very valuable, but it must be concrete.

A short checklist for business owners

Watch out for common pitfalls when you are structuring and maintaining your noncompete agreements.

  • Enforce your agreements evenhandedly and without exception across your workforce to avoid any discrimination charges.
  • If you operate in multiple states, be careful about conflicting state laws.
  • As a buyer or seller of a business, be sure to receive noncompetes from the other side for relevant employees.
  • In case your noncompetes eventually get struck down, use confidentiality agreements for additional backup.
  • Include noncompete language in employment contracts to cover fired employees.
  • Tactfully remind any departing employees about any noncompetes they may have signed.

The law of noncompete agreements depends on a host of specific conditions and circumstances. Be sure to consult with industry experts for advice in drafting or interpreting your agreements. Reach out to PeepTek Solutions for further HR Insight: noncompete agreements and other topics.

©2023

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HR Insight - ERC Plans Scam Alert
HR Insight: ERC Plans Scam Alert 640 480 LaDonna Kearney

HR Insight: ERC Plans Scam Alert

HR Insight: Scam Alert -Watch Out for Fake ERC Plans.

You may be aware of widely circulated promotions — ads on radio and the internet — touting refunds involving Employee Retention Credits. The IRS says these are a blatant attempt to con ineligible people to claim the ERC credit. The problem is widespread enough to make the IRS’s annual “Dirty Dozen” list.

The promotions are mostly based on inaccurate information related to eligibility for and computation of the credit. The aggressive marketing by promoters is misleading people and businesses into thinking they can claim these credits. However, there are very specific guidelines around the pandemic-era credits that provided a financial lifeline to millions of businesses.

According to the IRS, when properly claimed, the ERC is a refundable tax credit designed for businesses that continued paying employees while shut down due to the COVID-19 pandemic, or that had a significant decline in gross receipts during the eligibility periods. The credit is not available to individuals.

Nevertheless, there are websites and advertisements touting how easy it is to qualify for the ERC, lending an air of legitimacy to abusive claims for refunds. Tax professionals are reporting that they’re receiving undue pressure from clients to participate and claim the ERC, even when the tax professional believes the client isn’t entitled to the credit.

Limited-time offer only

ERCs were only valid during the pandemic and for a limited group of businesses. As always, you are ultimately responsible for the accuracy of the information on your tax return. Willful filing of false information and fraudulent tax forms can lead to serious civil and criminal penalties.

You should think twice before filing a claim for ERCs — the IRS is actively auditing and conducting criminal investigations related to these false claims. Don’t get caught up in them, IRS commissioners urge — the agency is stepping up ERC enforcement action. The IRS Small Business/Self-Employed division has trained auditors to examine this type of claim and the IRS Criminal Investigation Division is seeking out promoters of these fraudulent claims.

The IRS encourages tax professionals to continue to advise clients not to file ERC claims when the professionals believe the potential applicants don’t qualify. In fact, the agency’s Office of Professional Responsibility sent a special bulletin to accountants outlining core responsibilities for ERC claims.

How the con works

Shady promoters make broad arguments suggesting that all employers are eligible without evaluating an employer’s individual circumstances. Actually, only recovery startup businesses were eligible for the ERC in the fourth quarter of 2021. Third parties don’t inform employers that they can’t claim the ERC on wages that were reported as payroll costs in obtaining Paycheck Protection Program loan forgiveness.

Some ERC advertisements exist solely to collect your personally identifiable information in exchange for false promises. Scammers use the data for identity theft. Protect yourself and your business against ERC scams and identity theft. You are urged to report instances of fraud and IRS-related phishing schemes to the IRS at phishing@irs.gov and to the Treasury Inspector General for Tax Administration, a federal office affording IRS oversight, at 800-366-4484.

©2023

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Employee Protection - 7 laws that protect employees from retaliation and other forms of discrimination
7 Laws that Protect Employees From Retaliation 1024 577 LaDonna Kearney

7 Laws that Protect Employees From Retaliation

Employment law has evolved over the decades to help protect employees from retaliation and other forms of discrimination. Whether you are an employee or an employer, it is good to be aware of the following laws:

1. Title VII of the Civil Rights Act of 1964

Forbids employers from discriminating against job applicants and employees based on their race, color, national origin, sex or religion.

An employer cannot retaliate against an employee for objecting to discrimination under Title VII, reporting discrimination, filing a discrimination charge or participating in a discrimination legal proceeding. 

Employers with 15 or more employees must adhere to Title VII.

2. The Age Discrimination in Employment Act (ADEA)

Prohibits discrimination based on their age against job applicants and employees who are 40 years or older.

Under the ADEA, these individuals cannot be retaliated against for opposing the employer’s discriminatory actions, filing a discrimination charge or participating in a discrimination proceeding.

The ADEA covers employers with 20 or more employees.

3. The Americans with Disabilities Act (ADA)

Makes it illegal for employers to discriminate against job applicants and employees with disabilities.

Title V of the ADA prohibits employers from retaliating against qualified individuals who object to the employer’s unlawful practices or have “made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this chapter.”

The ADA applies to employers with 15 or more employees.

4. The Equal Pay Act (EPA)

Requires that employers compensate men and women equally for performing the same work at the same location.

Designed to eliminate gender-based wage discrimination, the EPA also forbids employers from retaliating against employees who exercise their rights under the act.

All employers must comply with the EPA.

5. The Fair Labor Standards Act (FLSA)

Establishes federal minimum wage, overtime, child labor and recordkeeping standards.

In addition, the FLSA protects employees who have filed FLSA-related complaints from retaliation. Among other things, an employer cannot retaliate against an employee for participating in a Department of Labor audit, testifying in a legal proceeding, filing a wage complaint or communicating with Wage and Hour Division investigators.

The FLSA covers most private-sector employers.

6. The Occupational Safety and Health Act (OSHA)

Sets federal health and safety standards to protect people on the job.

Per Section 11(c) of the OSHA, it is unlawful for employers to retaliate against employees who assert their rights under the act — such as by complaining about unsafe or unhealthy working conditions. OSHA also oversees more than 20 whistleblower protection laws.

Any employee can file a complaint with OSHA if he or she believes his or her employer violated a retaliation or whistleblower law that OSHA administers. 

7. The Family Medical and Leave Act (FMLA)

Requires covered employers to provide unpaid, job-protected leave to eligible employees.

Under the FMLA, employees cannot be punished for exercising their FMLA rights, including taking FMLA leave.

The FMLA applies to employers that have 50 or more employees during at least 20 weeks of the year.

Employers should consider other federal laws — such as the National Labor Relations Act and Title II of the Genetic Information Nondiscrimination Act (GINA) — plus any state laws that protect employees from retaliation. In fact, this is just a brief intro to a wide range of laws, and regulations are always changing. The bottom line? Work closely with legal and HR experts.

©2023

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Employee Identification Numbers - EIN
HR Insight: How Do Employer ID Numbers (EIN) Work? 1024 577 LaDonna Kearney

HR Insight: How Do Employer ID Numbers (EIN) Work?

If you have a company, you need an Employee Identification Number. There are various ways to apply for an EIN, including online at no cost. The online federal EIN application is in a question-and-answer format, with embedded help topics and hyperlinked keywords and definitions. It must be completed in one session — you won’t be able to save it and return later.

Once all validations are complete, you’ll get your EIN immediately. You can download, save and print your confirmation notice — a fast, free and user-friendly way to get your EIN. Beware of websites that charge for this free service. You can check your state to discover whether you need a state number or charter.

But let’s take a step back. When you apply for an EIN, it is presumed that your business structure is legal, so it’s best to be sure your organization was formed legally before you apply. The clock starts running on the three-year period if you fail to file a required return or notice.

When do you need a new EIN?

If you’re a sole proprietor, you will need a new EIN when there’s a change of ownership or structure, but not for a name change, a change in location, if you add other locations or if you operate multiple businesses. You’re required to obtain a new EIN as a sole proprietor if:

  • You’re subject to bankruptcy proceedings.
  • You incorporate.
  • You take on partners or operate as a partnership.
  • You purchase or inherit an existing business that you operate as a sole proprietorship.

If you incorporate, you’ll need to obtain a new EIN if:

  • Your corporation receives a new charter from the secretary of state.
  • You are or become a subsidiary of a corporation using the parent’s EIN.
  • You change to a partnership or a sole proprietorship.
  • A new corporation is created after a statutory merger.

You won’t need a new EIN as a corporation if:

  • You’re a division of another corporation.
  • The surviving corporation uses the existing EIN after a corporate merger.
  • Your corporation declares bankruptcy.
  • Your corporate name or location changes.
  • You choose to be taxed as an S corporation.
  • You reorganize your corporation and it changes only the identity or place.
  • Your business structure remains unchanged as conversion occurs at a state level.

If your company is a partnership, you’ll need a new EIN if:

  • You incorporate.
  • Your partnership is taken over by one of the partners and is operated as a sole proprietorship.
  • You end an old partnership and begin a new one.

You won’t need a new EIN as a partnership if:

  • Your partnership declares bankruptcy.
  • The partnership name changes.
  • You change the location of the partnership or add locations.
  • A new partnership is formed because of the termination of a partnership under IRC Section 708(b)(1)(B).
  • Fifty percent or more of the ownership of the partnership (measured by interests in capital and profits) changes hands within a 12-month period (terminated partnerships under Reg. 301.6109-1).

And if you’ve lost or misplaced your EIN and want to verify it, you can visit the online EIN site for instructions. You may also ask the IRS to search for your EIN by calling the Business and Specialty Tax Line at 800-829-4933 . The hours of operation are Monday through Friday, 7 a.m. to 7 p.m. local time.

The IRS is limiting EIN issuance to one per responsible party per day. The responsible party is the person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage or direct the entity and the disposition of its funds and assets.

When you apply for an EIN with the IRS assistance tool, your nine-digit federal tax ID becomes available immediately upon verification.

Note that this is just a summary; the rules can change over time. Your best bet is to work with a qualified tax adviser.

©2023

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