GDP Blog

ACA COMPLIANCE UPDATE: CONGRESS PASSES HEALTHCARE LEGISLATION

Posted by Seth Denson

May 4, 2017 3:59:37 PM


Earlier today in a bi-partisan vote the US House of Representatives passed the American Health Care Act (AHCA) in a 217-213 vote.  With 20 Republican legislators voting against the bill, the AHCA passed by the slimmest of margins.  The bill will now go to the Senate for consideration.

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Topics: Compliance, ACA

Risk report: identifying uninsurable risk

Posted by Seth Denson

Mar 10, 2016 3:51:53 PM


We say it to clients and prospects all the time...there are two types of risk that all companies face:

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Topics: Risk Management, Culture, Strategy, Compliance

Active Shooter Insurance Program

Posted by John Powter

Feb 7, 2016 4:19:50 AM

 The active shooter insurance program will provide a solution to US Education facilities,  Those institutions face an alarming risk and potential coverage gap in the General liability and Terrorism insurance policies they currently have. 

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Topics: Compliance, Active Shooter

The Risk Report Video: aca reporting under section 6055&6056

Posted by Seth Denson

Jan 19, 2016 2:57:04 PM

 

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Topics: Compliance

the risk report: aca reporting under section 6055&6056

Posted by Seth Denson

Jan 18, 2016 1:23:35 PM

 

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Topics: Compliance

Separate Section 6055 Reporting may be Required for some HRAs

Posted by John Powter

Sep 5, 2015 9:59:07 AM

In this constantly evolving world of compliance we have changes, on August 14th we wrote about the Draft Instructions for 6056 and 6055 forms.    Today we have an update about HRA's.

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Topics: Compliance

You thought a Cadillac was just a car think again it's a tax

Posted by John Powter

Aug 8, 2015 7:02:10 AM

Quick Facts:

     The IRS issued Notice 2015-52 to continue implementation of the Cadillac tax for 2018.
•     Proposed or final regulations have not yet been issued on the Cadillac tax provision.
•     Notice 2015-52 provides additional information on issues under the Cadillac tax that were not previously addressed.
•     Taxpayers may not rely on this notice.cadillac

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Topics: Compliance

Telemedicine Rocks Find Out Why

Posted by John Powter

Aug 1, 2015 6:13:07 AM

GDP Advisors provides telemedicine as part of our national health insurance programs.  It is one of the highest rated services that is part of GDP Advocate. There are legal battles trying to stop this valuable service just recently a judge in Texas blocked the restrictiontelemedicine

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Topics: Compliance

Make sure you are classifying your employees correctly or you could be at risk

Posted by John Powter

Jul 26, 2015 7:38:12 AM

Quick Facts:
  • On July 15, 2015, the DOL issued guidance on determining whether a worker is an employee or an independent contractor.
  • Workers who are employees are entitled to legal protections under federal law.    
    The DOL uses the “economic realities test” to classify workers
  • The DOL’s guidance provides clarification on the six factors of the economic realities test. 

On July 15, 2015, the U.S. Department of Labor (DOL) issued an administrative interpretation to clarify how to determine whether a worker is an employee or an independent contractor.IC

Employee misclassification is a growing concern for the DOL. An increasing number of U.S. workplaces are restructuring their business organizations, creating a higher risk of misclassifying employees as independent contractors.

Employer misclassification has a direct impact on employee eligibility for benefits, legal protections (such as minimum wage and overtime rights) and taxation.

Worker Classification Tests

Several tests exist to determine whether a worker is an employee or an independent contractor. The most common tests include the common law or agency test, the economic realities test, the hybrid test and the IRS test.  

Traditionally, the DOL has favored using the six-factor economic realities test because this test seeks to determine whether a worker is economically dependent on his or her employer or whether the worker is in business for him- or herself. The DOL’s rationale is that if the worker is economically dependent on the employer, the worker should be classified as an employee and protected by employment laws, including the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA).

The Economic Realities Test

The six factors for the economic realities test are:

  1.     Whether the worker’s job is an integral part of the employer’s business;
  2.     Whether the worker’s managerial skill affects his or her opportunity for profit or loss;
  3.     Whether the worker’s and the employer’s investments are comparable;
  4.     Whether the work performed requires special skills and initiative;
  5.     Whether the relationship between the worker and the employer is permanent or indefinite; and
  6.     An analysis of the nature and degree of the employer’s control over the worker.

In the administrative interpretation, the DOL emphasized repeatedly that no one factor is determinative and that the factors should not be applied in a mechanical fashion. Rather, the DOL encourages employers to use the six factors as a guide in their efforts to classify workers correctly.

The DOL further explains that the six factors should be interpreted within the context of the FLSA’s definition of employment. The FLSA defines “to employ” as to suffer or permit someone to work. The DOL explains that this broad definition of employment was “specifically designed to ensure as broad of a scope of statutory coverage as possible.” This “suffer or permit” standard prevents employers from using agents to evade labor and employment responsibilities. According to the DOL, under the economic realities test, most workers will be considered employees subject to the FLSA. 

An Integral Part of the Employer’s Business

A worker that performs activities that are an integral part of the employer’s business is more likely to be dependent on the employer, and, therefore, should be classified as an employee.

The administrative interpretation states that the courts have found the “integral” factor to be compelling even when the activity in question is just one component of the business or is performed by hundreds or thousands of other workers. For example, the DOL states, “a worker answering calls at a call center along with hundreds of others is performing work that is integral to the call center’s business, even if that work is the same as, and interchangeable with, many others’ work.”

The DOL also mentioned that work can be integral to an employers’ business even if it is performed away from the employer’s premises, at the worker’s home or even on the premises of the employers’ customers.

Managerial Skill

The focus of this factor is whether the worker’s managerial skill can affect his or her opportunity for profit or loss. To determine profit or loss opportunities, employers should look beyond the job at hand and determine whether the worker’s skills can lead to additional business from other parties or reduce the opportunities for future work.

When evaluating this factor, employers should consider a worker’s decision to hire others, purchase materials and equipment, advertise, rent space and manage timetables.

The DOL specifically mentions that a worker’s ability to work more hours and the amount of work available from the employer have “nothing to do with the worker’s managerial skills and do little to separate employees from independent contractors.” This is because both are likely to earn more if they work more and if there is more work available.

Comparable Investments

To determine whether the employer and worker investments are comparable, employers should look at the nature and the extent of the investments.

An independent contractor should make some investment and undertake at least some risk of loss if he or she is in business for him- or herself. The investment should support a business beyond any particular job. These types of investments include furthering the business’ capacity to expand, reducing business cost structure and extending the reach of the independent contractor’s market.

However, a worker’s investments should not be considered in isolation. They should be compared to the employer’s investment. If the worker’s investment is relatively minor, the employer and the worker may not be on the same footing and the worker may be economically dependent on the employer.

Finally, investing in tools and equipment is not an automatic indication of significant investment or that the worker is an independent contractor. This type of investment must be compared to the worker’s investment in his or her overall business and to the employer’s investment in the project and perhaps in its overall activities.

Special Skills and Initiative

A worker’s skills and initiative can be an indicator of economic independence. However, when considering a worker’s skill, employers should consider the worker’s business skills, judgement and initiative, rather than his or her technical skills, which are often required to perform the work. Special skills and initiative are indicators of economic independence when the worker can use them in an independent way, such as demonstrating business-like initiative.

The DOL provides the following illustrative examples:

Example 1

A highly skilled carpenter provides carpentry services for a construction firm; however, such skills are not exercised in an independent manner. For example, the carpenter does not make any independent judgments at the job site beyond the work that he is doing for that job; he does not determine the sequence of work, order additional materials, or think about bidding the next job, but rather is told what work to perform where. In this scenario, the carpenter, although highly-skilled technically, is not demonstrating the skill and initiative of an independent contractor (such as managerial and business skills). He is simply providing his skilled labor.

 

Example 2

In contrast, a highly skilled carpenter who provides a specialized service for a variety of area construction companies, for example, custom, handcrafted cabinets that are made-to-order, may be demonstrating the skill and initiative of an independent contractor if the carpenter markets his services, determines when to order materials and the quantity of materials to order, and determines which orders to fill.

Permanent or Indefinite Employment

Employment that is permanent or indefinite in character suggests that the worker is an employee. Most independent contractors will avoid permanent or indefinite work relationships and are usually hired to work until a job or a project is complete (even if this takes several months or years). Moreover, once a job or project is complete, the independent contractor does not necessarily continue to provide his or her services to the employer.

Employers should consider a worker’s reasons for intermittent, seasonal, permanent or indefinite employment. Neither working for others nor having multiple sources of income transforms a worker into an independent contractor. The key is to determine “whether the lack of permanence or indefiniteness is due to operational characteristics intrinsic to the industry (such as employers that hire part-time workers or use staffing agencies) or the worker’s own business initiative.”

For seasonal employment, the proper test to determine permanency is whether the employees worked for the entire operative period of a particular season, not whether the worker returns from season to season.

Nature and Degree of Employer Control

An independent contractor controls meaningful aspects of the work he or she performs. This type of control should lead objective observers to conclude that the worker is conducting his or her own business.

Control over meaningful aspects of the work may extend beyond controlling working hours and could include work schedules, dress code and task prioritization.

The DOL asserts that this control cannot be theoretical and explains that what counts is not what the worker could have done, but what the worker actually does.

Finally, the DOL warns that the control factor should not “play an oversized role” and dwarf other factors in the economic realities test when determining whether a worker is an employee or an independent contractor.

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Topics: Compliance

Top Questions Our Compliance Department Had In June

Posted by John Powter

Jul 18, 2015 10:09:00 AM

Our compliance department fields hundreds of calls from business owners all over the country. This service is available to our customers. For more information please contact your GDP Advisor. HR

Q: With a lot of publicity around overtime rules and potential changes in the law, our company is  considering an email curfew. is this a good idea?

A: An email curfew is a fairly new concept. In an effort to eliminate the need to pay overtime to non-exempt employees in this era of technology, companies are looking at ways to forbid employees from checking emails after business hours and then claiming hours for such “work”. Companies may put an email curfew in place that says emails can only be checked between the company work hours of, for example, 8:00 AM to 5:00 PM. It can be done, but it may be more difficult to track than you might think. If the employee has a cell phone, tablet or computer where they are able to log in to the company email systems, they may or may not tell the company they are doing so and may not accurately report hours actually worked. In order to truly ensure employees are not checking email outside of work hours, it would be up to the company to turn off the email system at a certain time each day. Another solution, if it does not disrupt the operations of the company, is to not provide employees the ability to access emails remotely. Another important issue to consider with regard to the email curfew is proper classification of employees now and, if and when, the new regulations are passed. Make sure that if your company is
classifying an employee as exempt that they truly meet the requirements under the Fair Labor Standards Act (FLSA) to be exempt.
On the other hand, if you have non-exempt employees at higher hourly rates, and they are expected to work or are working after hours, make sure they are paid for any hours worked.

Q: Can our company institute a policy of not hiring individuals who smoke?

A: There are 29 states and the District of Columbia that have laws prohibiting employers from requiring, as a condition of employment, that employees or prospective employees not use tobacco products outside the course of employment. In many of the states where such a law has been passed, employers are allowed to put smoking restrictions in place when it relates to a bona fide occupational requirement and are related to the employment responsibilities and activities of a particular employee or a particular group of employees and not all employees. Most laws will require employees follow the policies that the employer has instituted with regard to the use of tobacco while the employee is working or on company property. The following is a list of where such laws have been enacted:

California Colorado Connecticut District of Columbia Illinois Indiana Kentucky Louisiana
Maine Minnesota Mississippi Missouri Montana Nevada New Hampshire New Jersey
New Mexico New York North Carolina North Dakota Oklahoma Oregon Rhode Island South Carolina South Dakota Tennessee Virginia West Virginia Wisconsin Wyoming

 

 

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Topics: Compliance

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