Human Resource Consulting From The Business Viewpoint
Human Resource Update | December 2020
I and everyone I know cannot wait until 2020 is over. It has been a difficult year, primarily due to the COVID-19 virus. With two, and soon three, vaccines being produced, hopes are high that the end of this misery is near.
 
While we have been cloistered for many months, devoid of any activity or entertainment that involves more than a few people, and subject to wearing masks and social distancing, most of us are towing the line and making the best of it. However, there are some who have been seriously affected by depression. Hopefully all of us will feel much better as things return to normal and businesses, particularly small businesses and restaurants, recover.
 
But what will be normal – a topic we covered in our newsletter some months ago. We have already talked with companies that are not only considering permitting continued work from home, but to make home the normal workplace. Indeed, I spoke with one organization today that has decided to do just that. The perceived, and possibly real benefits include less space to rent or own, increased productivity, and happier employees. In effect, employees also receive a hidden raise as they no longer have commuting or office dress expenses. The downside for the employer is how to truly measure productivity, how to enforce a set working schedule and the loss of comradery and team spirit. Companies should also review how employees are set-up to do work at home – will they need anything to permit them to work in an ergonomically friendly environment?
 
Will we still take precautions once the vaccines take hold? Will we tend to social distance or even wear a mask? Will the handshake permanently become a gesture of the past? Will we continue to wash hands thoroughly and/or use hand sanitizer?
 
What this has told us is that the healthier we are, the better we are able to fight COVID and perhaps any other virus that may come to the US from afar. Being healthy will also help us to lessen the chance of disease and other afflictions hurting us. I suggest that we promote healthier lifestyles, including diet, exercise and even meditation. Some employers have already done this through communications and health fairs, and I suggest all organizations promote some version of this combination of healthy lifestyle attributes.
 
A Happy and Healthy New Year to All!
Sincerely,
Michael F. Yates
President
If you find value in this newsletter please let us know. Feel free to call me with a comment and/or ask a question at any time (908-689-4200) or send me an email (myates@mfyco.com). We offer this timely information as another benefit of your relationship with our company. If you feel a friend or colleague would benefit from receiving our newsletter, please feel free to forward a copy. 

You can view all of our newsletters by clicking the 'newsletter archives' link at our company website www.mfyco.com.
OSHA Announces $2,851,533 in Coronavirus Violations
Since the start of the coronavirus pandemic through November 5, 2020, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) has issued 203 citations arising from inspections for violations relating to coronavirus, resulting in proposed penalties totaling $2,851,533. 

OSHA inspections have resulted in the agency citing employers for violations, including failures to:
  • Implement a written respiratory protection program (1910.134 - Respiratory Protection).
  • Provide a medical evaluation, respirator fit test, training on the proper use of a respirator and personal protective equipment.
  • Report (1904.39) an injury, illness or fatality.
  • Record an injury or illness on OSHA recordkeeping forms (1904.4 Recording Criteria); and
  • Comply with the General Duty Clause of the Occupational Safety and Health Act of 1970 (Sec. 5. Duties).
 
Released on 11/17/2020 number 20-2141-NAT
Unused Transit Benefits Due To Pandemic May Be Rolled Over Into A Parking Account - IRS Information Letter
The IRS has released an information letter responding to an employee that wanted to roll over unused transit benefits into a parking account. The employee stated he used to take public transportation to commute to work, but due to COVID-19, he now uses his personal vehicle to drive instead.

The IRS noted that the employee is not precluded from rolling over unused transit benefit amounts through the use of another qualified transportation fringe, such as qualified parking, to the extent it is offered by the employer’s plan and does not exceed the maximum monthly amount for the respective qualified transportation fringe benefit. The adjusted qualified parking maximum monthly excludable amount for 2020 is $270. There is a separate $270 monthly limitation for the combined total amounts of transportation in a commuter highway vehicle and transit passes.

Therefore, as long as the employee has made a valid compensation reduction election and their employment has not been terminated, the employee can begin using the compensation reduction amounts for commuting expenses in future months.

However, the IRS did caution that the qualified transportation plan rules do not allow refunds of qualified transportation fringe benefits that are provided through a compensation reduction agreement.

NOTE: (a) information letters provide general statements of well-defined law without applying them to a specific set of facts and are for informational purposes only; and (b) information letters are not a ruling and may not be relied on as such.
State Minimum Wage Increases for 2021
January 1 Increases   No Change   No Minimum Wage   Other Increase Dates
 
 
Minimum wage increases will affect numerous states across the country in January 2021. Under the Fair Labor Standards Act (FLSA), the current federal minimum wage is $7.25 per hour, but the FLSA does not supersede any state or local laws that are more favorable to employees. Therefore, if a state or municipality has a minimum wage that is higher than the federal minimum, employers subject to the state or local minimum wage law are obligated to pay the higher rate to employees working there. The minimum wage for federal contractors in 2021 is $10.95 per hour.
 
State Minimum Wage Changes Effective December 31, 2020
 
New York State: $12.50 per hour. Annual indexing to continue increasing up to $15.00.

  • Fast food employees outside of New York City (in fast food establishments): $14.50 per hour. Increasing to $15.00 per hour on 7/1/21.
  • Fast food employees in New York City (in fast food establishments): $15.00 per hour.
  • Long Island and Westchester Counties: $14.00 per hour. Increasing to $15.00 on 12/31/21 and annual indexing after 2021.

State Minimum Wage Changes Effective January 1, 2021
 
Alaska: $10.34 per hour. Adjusted annually January 1.
 
Arizona: $12.15 per hour. Adjusted annually on January 1.
 
Arkansas: $11.00 per hour. Tipped employees must regularly earn at least $20 per month in tips.
 
California: $14.00 per hour with 26 employees or more; $13.00 per hour with fewer than 26 employees. Scheduled wage increases (if no increases are paused) for 26 employees or more: $15.00 per hour on 1/1/22, and then adjusted annually. For 25 employees or less: $14.00 per hour on 1/1/22; $15.00 per hour on 1/1/23, and then adjusted annually.
 
Colorado: $12.32 per hour. Adjusted annually on January 1.
 
Florida: $8.65 per hour. Increasing to $10.00 on 9/30/21; $11.00 on 9/30/22; $12.00 on 9/30/23; $13.00 on 9/30/24; $14.00 on 9/30/25; and $15.00 on 9/30/26.
 
Illinois: $11.00 per hour. Increasing to $12.00 per hour on 1/1/22.
 
Maine: $12.15 per hour. Adjusted annually on January 1.
 
Maryland: $11.75 for businesses with 15 or more employees and $11.60 for businesses with fewer than 15 employees.

  • For businesses with 15 or more employees, the rate will increase to $12.20 on 1/1/22; $13.25 on 1/1/23; $14.00 on 1/1/24; $15.00 on 1/1/25.
  • For businesses with fewer than 15 employees, the rate will increase to $12.20 on 1/1/22; $12.80 on 1/1/23; $13.40 on 1/1/24; $14.00 on 1/1/25; $14.60 on 1/1/26; and $15.00 7/1/26.

Massachusetts: $13.50 per hour on 1/1/21. Increasing to $14.25 per hour on 1/1/22 and $15.00 per hour on 1/1/25.
 
Michigan: $9.87 per hour. Adjusted annually on January 1.
 
Minnesota: $10.08 per hour for large employers (annual gross revenue $500,000 or more) and $8.21 per hour for small employers (annual gross revenue less than $500,000). Adjusted annually on January 1.
 
Missouri: $10.30 per hour. Increasing to $11.15 per hour on 1/1/22 and $12.00 per hour on 1/1/23. Adjusted annually on January 1.
 
Montana: $8.75 per hour. Adjusted annually on January 1.
 
New Jersey: $12.00 per hour for employers with more than 5 employees; $11.10 per hour for seasonal employers and/or small employers with 5 or fewer workers, and $10.44 per hour for agricultural employers.

  • For employers with more than 5 employees, the rate will increase to $13.00 on 1/1/22 and $14.00 on 1/1/23.
  • For seasonal and small employers, the rate will increase to $11.90 on 1/1/22; and $12.70 on 1/1/23.
  • For agricultural employers, the rate will increase to $10.90 on 1/1/22 and $11.70 on 1/1/23.
  • Adjusted annually on January 1.

New Mexico: $10.50 per hour. Increasing to $11.50 per hour on 1/1/22, and $12.00 per hour on 1/1/23.
 
Ohio: $8.80 per hour for gross receipts of $323,000 or more; $7.25 per hour for gross receipts under $323,000. Adjusted annually on January 1.
 
Rhode Island: $11.50 per hour.
 
South Dakota: $9.45 per hour. Adjusted annually on January 1.
 
Vermont: $11.75 per hour. Adjusted annually on January 1.
 
Washington: $13.69 per hour. Adjusted annually on January 1 after 1/1/21.
 
State Minimum Wage Changes Going into Effect After January 1, 2021
 
Connecticut: $13.00 per hour, effective 8/1/21. Increasing to $14.00 on 7/1/22; $15.00 on 6/1/23, and then adjusted annually on January 1.
 
Nevada: $9.75 per hour for employees without healthcare benefits; $8.75 per hour for employees with healthcare benefits. Effective on 7/1/21. Increasing to $10.50 per hour on 7/1/22 for employees without healthcare benefits and $9.50 per hour on 7/1/22 for employees with healthcare benefits.
 
Oregon: An employer’s location affects the minimum wage rate:

  • Within Portland’s urban growth boundary (metro area; including portions of Clackamas, Multnomah, and Washington counties): $14.00 per hour, effective on 7/1/21. Increasing to $14.75 per hour on 7/1/22.
  • Areas not in Portland’s urban growth boundary or one of the listed nonurban counties (urban counties; Benton, Clackamas, Clatsop, Columbia, Deschutes, Hood River, Jackson, Josephine, Lane, Lincoln, Linn, Marion, Multnomah, Polk, Tillamook, Wasco, Washington, and Yamhill counties): $12.75 per hour, effective on 7/1/21. Increasing to $13.50 per hour on 7/1/22.
  • The nonurban counties (rural counties; Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa, and Wheeler counties): $12.00 per hour, effective on 7/1/21. Increasing to $12.50 per hour on 7/1/22.

Virginia: $9.50 per hour, effective 5/1/21. Increasing to $11.00 per hour on 1/1/22 and $12.00 per hour on 1/1/23.
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FROM THE DOL
DOL Announces Registration Requirements For Pooled Plan Providers
WASHINGTON, DC – On November 12th, the U.S. Department of Labor announced a final rule establishing registration requirements for pooled plan providers. The rule implements the registration requirements for pooled plan providers pursuant to the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act).

The SECURE Act amended the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code to establish a new type of multiple employer plan (MEP) called a “pooled employer plan.” Pooled employer plans must be administered by a “pooled plan provider.”

“Pooled employer plans will give employers, especially small unrelated employers, a way of offering their employees a workplace retirement savings option with reduced burdens and costs,” said Acting Assistant Secretary of Labor for the Employee Benefits Security Administration Jeanne Klinefelter Wilson. “This final rule lays the groundwork for a sensible registration process so that providers can get pooled plans up and running.”

The SECURE Act allows pooled plan providers to start operating pooled employer plans beginning on Jan. 1, 2021, but requires that pooled plan providers register with the Secretary of Labor and the Secretary of the Treasury before they begin operations as a pooled plan provider.

The final rule establishes a straightforward electronic registration process for businesses that want to offer pooled employer plans. With the exception of Nov. 25, 2020 to Jan. 31, 2021, the process requires pooled plan providers to register at least 30 days before beginning operations. Plans must also submit supplemental filings regarding specific reportable events and a final filing after the provider’s last pooled employer plan has been terminated and ceased operations. For the period of Nov. 25, 2020 to Jan. 31, 2021, the requirement to register at least 30 days prior to operating a pooled employer plan is waived, provided registration occurs no later than the start of the plan.

The Treasury Department treats registration with the Department of Labor in accordance with the final regulation to satisfy the SECURE Act requirement to register with the Secretary of the Treasury.
Pooled plan providers must register by electronically submitting the new EBSA Form PR. The new electronic filing system became available on Nov. 25, 2020 at https://www.efast.dol.gov/.

Agency: Employee Benefits Security Administration
Date: November 12, 2020
Release Number: 20-2140-NAT
Contact: Eric Holland
Phone Number: 202-693-4676
Hazard Pay Must Be Included in Regular Rate for Overtime Purposes
According to the U.S. Department of Labor (DOL) recent guidance, employers must include COVID-19 incentive payments, such as hazard pay, in an employee’s regular rate for calculating overtime payments.

What New DOL Guidance Says
Employers may compensate nonexempt employees in a variety of ways. To calculate the amount of overtime pay, you must first determine the employee’s regular rate of pay. Generally, you find it by dividing total compensation for employment, less any statutory exclusions, by the total number of hours worked. The Fair Labor Standards Act (FLSA) provides an exhaustive list of payments you may exclude from the regular rate when calculating overtime payments.

The DOL’s recent guidance clarified that employer-paid incentive payments—including hazard pay for work performed during the COVID-19 emergency—do not meet any statutorily authorized exclusion and thus must be included in the regular rate used to compute employees’ overtime pay. The requirement applies to both private and state or local government employers that have opted to provide incentive payments to employees for working during the crisis. The guidance specifically delineates between:

  • Employer-provided incentive pay, which you must include in the regular rate used to calculate employees’ overtime pay; and
  • Incentive payments provided to employees by a state or local government, which you may exclude from the regular rate.

Employers also may exclude any indirect state or local government incentive payments that use employers as an intermediary to facilitate the transactions, unless you have agreed to treat the government-provided payments as compensation for employment. Upon any express or implicit agreement between an employer and its employees to treat government-provided incentive payments for work performed during COVID-19 as compensation for their efforts, the employer must include the amounts in calculating the regular rate.

Bottom Line
If you have provided incentive payments, including hazard pay, to employees for work during the coronavirus emergency, be sure to include the amounts in the regular rate when calculating any overtime compensation owed to them. If you have questions about the calculations, contact experienced counsel.

Taken from HR Daily Advisor’s HR Management & Compliance e-newsletter
8 Tips for Successful Conference Calls
business-cellphone-woman.jpg
1. Breathe. Rather than jump right in, lead everyone in a few deep breaths. By starting the meeting this way, distractions will fade away and you will have everyone’s attention.

2. Invite movement. Do not wait until everyone’s antsy to start moving around. In addition to starting the call with deep breaths, try stretching breaks throughout. Jumping jacks halfway through if it’s a long call is a great way to get the blood flowing. Encourage water breaks.

3. Ask questions and involve the quieter members. If some team members tend to dominate the conversation, steer questions toward the quieter members, who may not be as comfortable talking on screen.

4. Use breakout groups strategically. Break people up into teams for an exercise or portion of the call. When everyone returns to the larger group, ask what they came up.

5. Use engaging visuals. Signs, props, and a presentation or video on the screen might help keep people involved.

6. Add a group theme. Have fun with different backgrounds. Wear silly hats or ugly ties.

7. Show empathy. Reach out to participants ahead of time to inquire about special needs they may have such as hearing disabilities, language barriers and assistance with technologies.

8. Bring a prop. Playfulness can put you and your team at ease and in a more relaxed and creative mode.
What Would You Like To See In A Future Issue?
IRS Updates Life Expectancy and Distribution Periods
for Minimum Distributions
The IRS has issued final regulations that replace the life expectancy tables under the Required Minimum Distribution (RMD) rules of IRC 401(a)(9). These tables are used to calculate the required distributions payable from 401(k) and profit sharing plans, as well as IRA’s, SEP’s, 403(b)’s and eligible deferred compensation plans.          

The new tables can be found here.

  • The first table is referred to as the “Single Life Table,” and shows the average life expectancy for individuals (male/female combined). After the participant’s death, it is used to calculate the payout period at the qualifying beneficiary’s age. For example, at age 75, the Life Expectancy is 14.8 years.

  • The second table is the “Uniform Lifetime Table,” which gives the Distribution Period for the participant’s payout. If the participant has a spouse who is not more than 10 years younger, this table is also used for the payouts during their lifetimes while both are still alive, as well as for the period following the spouse’s death. If the participant dies first, the spouse would then switch over to the Single Life Table for the remaining payments.

  • The third table is the “Joint and Last Survivor Table,” which is used when the participant’s spouse is more than 10 years younger. This table involves a lot of scrolling, but for example, at participant’s age 80 in the leftmost column and spouse’s age 65 along the top, joint life expectancy is 23.8 years. The same rule as above applies if the Participant dies before the spouse.

BACKGROUND
The concept of RMD’s did not originate with ERISA, as one might have thought. Instead, the origins pre-date ERISA, all the way back to 1962. The addition of Section 401(a)(9) was part of the Self Employed Individuals Retirement Act of 1962 (the landmark “Keogh” bill), but still it only applied to a relatively small population. When ERISA was passed twelve years later in 1974, it contained no mention of RMD’s. However, after the Reagan tax cuts of 1981 made huge cuts in government tax revenue, Congress began desperately searching for ways to get the taxes flowing again.

The result was the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), in which the RMD concept was expanded to all qualified plans. By requiring plans to have a sharply defined cutoff point to begin payout of taxable benefits, taxes were projected to increase, and it worked very well. It worked so well, in fact, that in 1986, the Tax Reform Act (TRA 86) made further changes to clarify intent and make the provisions more workable.

Because of its success in increasing tax revenue, Sec. 401(a)(9) has become one of Congress’s favorite playgrounds for legislation. This, as would be expected, has resulted in a very large body of rules and regulations that must be followed by taxpayers and plan administrators.
 
NEW LIFE EXPECTANCY TABLES FOR MINIMUM DISTRIBUTIONS
The new tables apply to distributions payable in 2022 and thereafter. Along with the new tables, a couple of new rules resulting from the SECURE act as well as the CARES act also apply.  

1.    New Required Beginning Date (RBD). The SECURE act changed the date that the benefit must commence. The previous rule required that the first payment must commence no later than the April 1 in the calendar year immediately following attainment of age 70 ½ (with exception for non 5% owners). However, for those turning 70 ½ on or after 1-1-2020, the SECURE act changes the RBD to the April 1 in the calendar year immediately following attainment of age 72 (with exception for non 5% owners). 

2.    Restriction on Some Surviving Beneficiary Payout Periods. The SECURE act made changes to the payout periods for certain groups of beneficiaries after the participant’s death, effective 1-1-2020.

3.    For those defined contribution plan participants who would normally have to receive an RMD for 2020, the CARES act grants a one-year waiver for 2020.

EXAMPLES
Some elementary examples, including effects of SECURE and CARES acts, are as follows:

Example 1. Former 401(k) Participant with DOB 8-1-1948. Date attained age 70 ½ = 2-1-2019
Required Beginning Date = 4-1-2020  
Assume:
  • Account Balance at 12-31-19 = $100,000
  • Uniform Lifetime Table used for 2019 distributions, so Distribution Period = 27.4
Then:
  • RMD at 4-1-2020 = 100,000/27.4 = $3,650. (However, waived to $0.00 by CARES act)
  • RMD at 12-31-20 =100,000/26.5 = $3,774 (However, waived to $0.00 by CARES act)
  • RMD at 12-31-21 =100,000/25.6 = $3,906 
  • RMD at 12-31-22 = 96,094/26.5  = $3,626 (Using New Life Expectancy Table for 2022)

Example 2. Former 401(k) Participant with DOB 9-1-1949. Date attained age 70 ½ = 3-1-2020
Assume:
  • Account Balance at 12-31-2020 = $100,000 
  • Required Beginning Date = 4-1-2022 (4-1 following attainment of age 72, per SECURE act)
Then:
  • RMD at 4-1-2022 = 100,000/27.4 = $3,650 (Using New Life Expectancy Table for 2022)
  • RMD at 12-31-22 =  96,350/26.5  = $3,636
Final Regulations Issued on Income Tax Withholding on Certain Periodic Retirement and Annuity Payments
The Treasury Department and the IRS issued final regulations updating the federal income tax withholding rules for certain periodic retirement and annuity payments made after Dec. 31, 2020. The final regulation provides guidance for 2021 and future calendar years and specifies that the Treasury Department and the IRS will provide the rules and procedures for determining the default rate of withholding on periodic payments in applicable forms, instructions, publications and other guidance.
 
In July 2020, the IRS released a draft of a redesigned 2021 Form W-4P and instructions intended to align with the redesigned Form W-4, Employee's Withholding Certificate. The draft 2021 Form W-4P also proposed a new default rate of withholding on periodic payments that begin after Dec. 31, 2020. Based on comments received on the draft Form W-4P, regarding the time required by payors to implement the new form and a new default rate of withholding, the IRS will postpone issuance of the redesigned form. Instead, the 2021 Form W-4P will be similar to the 2020 Form W-4P.
 
The IRS also intends to provide in the instructions to the 2021 Form W-4P and related publications that the default rate of withholding on periodic payments will continue to be determined by treating the taxpayer as a married individual claiming three withholding allowances.

The Treasury and IRS will continue working closely with the tax community on the redesign of Form W 4P, with the intention of making the withholding system more accurate and transparent for taxpayers. For more information about this and other TCJA provisions, visit IRS.gov/taxreform.
IRS Announces 2021 Retirement Plan Limits – Several Limits Remain Unchanged
All limits are based on the calendar year.
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About MFYCO
  • Michael F. Yates & Company, Inc. can help you with a variety of services ranging from retirement plans to providing results-oriented survey instruments, training and development programs for your employees. Our products and services are intended to help you maximize the effectiveness of your Human Resources function.
  • These products and services incorporate our years of experience so that you receive rapid results and exceptional value. From onsite consulting, to strategic business integration, to Web enablement, we understand how Human Resources can be applied to solve your problems and achieve your goals. As a result, we can help you get the most out of your investment and turn your most precious resource into a competitive advantage.
  • We offer Consulting, Retirement Planning, Pension and 401(K) both qualified and non qualified Plans, Welfare Plans, Communications, Computer Systems, Executive Plans, Compensation, Mergers, Acquisitions, Divestitures and Other Services. 
  • We offer a true and honest, Client Partnership.
Our staff and firm are proud members of the following professional organizations: 

Society of Actuaries

American Society of Pension Professionals & Actuaries

Society for Human Resource Management
(Sussex-Warren NJ Chapter)

GAPS (Global Association Pension Services)

WorldatWork

 American Management Association
National Federation of Independent Business

Better Business Bureau
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P.O. Box 7
Washington, NJ 07882-0007
908-689-4200
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