Mandated Paid Safe Days

Protect employeesThere are many unanticipated, unfair reasons why employees miss work and suffer lost pay, lost opportunities, and even disciplinary action. There are an equal number of emotionally compelling reasons to protect employees in these instances. But does that mean employers should be required to provide protection?

In the cases of serious health conditions for immediate family members, employee disabilities, and society’s military needs, for example, the question has been answered in the affirmative. We have national laws (and in many instances state laws) to address these situations. But what about mandated paid leave for something perhaps more difficult to determine with particularity: instances of domestic violence?

The Seattle City Council has passed a new ordinance requiring among other things that businesses operating within the City and that have 5 or more employees provide paid “safe days” to employees in the City who are victims of domestic violence. The ordinance goes into effect in September 2012.

The amount of paid leave is set on a scale depending on an employer’s size. Smaller employers with 5 to 249 employees are required to grant 56 hours of paid leave. Employers with 250 or more employees must provide 72 hours of paid leave. An employer’s employees are counted for purposes of determining eligibility whether or not the employees work within the City.

An employer with leave policies that provide at least the requisite levels of paid leave generally will satisfy the ordinance if the employer permits use of the leave for instances of domestic violence.

Other urban municipalities are expected to follow Seattle’s lead. But as goes the West Coast, so goes the rest of the nation? Doubtful.

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An Example of Administrative Exemption Error

Administrative ExemptionA few posts below, we discussed employer’s periodic over-reliance on the overtime exemption for administrative employees under the Fair Labor Standards Act. As noted, among the four primary exemptions under that act, we have found that employers most frequently misapply this exemption.

A recent federal appeals court decision highlights this point. In Whalen v. J.P. Morgan Chase & Co., the U.S. Court of Appeals for the Second Circuit held that a loan underwriter at J. P. Morgan Chase was not exempt from overtime entitlement under the administrative exemption.

J.P. Morgan Chase maintained that its loan underwriters were covered by this exemption because they met the minimum salary requirement, performed office work directly related to the general business operations, and exercised the requisite discretion and independent judgement. The trial court agreed, but the appeals court reversed that decision.

Central to the appeals court’s decision, the loan underwriter performed his duties according to detailed guidelines provided by the employer. He had no meaningful discretion to depart from those guidelines on his own. Thus, the appeals court said that the loan underwriter exercised no real independent judgment and discretion, which are key components of the exemption. Instead, the appeals court concluded that he was primarily involved in the “production” of the employer.

An employee primarily involved in the employer’s production of goods or its provision of the services it offers, in most cases, will not meet the requirements of the administrative exemption.

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The Military Spouse’s Residency Relief Act

Military SpousesThe new Military Spouse’s Residency Relief Act may raise questions for many employers about the tax treatment of wages for the spouses of active duty military personnel. The MSRRA could have a particularly notable impact in military heavy states like Virginia.

In short, the MSRRA exempts from state income tax the wages of the spouses of military personnel who move into a state to be with their service member spouse, even if that state otherwise would impose an income tax on the employee. The wages the employee earns will be exempt from state withholding. Additionally, even if the military spouse is outside the United States, the employee’s earnings are exempt from state withholding so long as the service member’s absence is in compliance with military orders.

The Act, as we understand it, is effective for any state or local income tax return beginning with a tax year that covers November 11, 2009.

(To ensure compliance with IRS requirements, readers are advised that any tax advice contained in this overview of the MSRRA was not intended to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or applicable laws, or promoting, marketing or recommending to another party any matter addressed herein.)

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