Tech Flex. Topics Covered in this Issue:

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1 May 2013, Issue V Tech Flex Topics Covered in this Issue: Benefits: Guidance Released on Required Exchange Notices COBRA Model Election Notice Modified SBC Guidance and Template Provided Further ACA Guidance Released Minimum Value Determinations Proposed Rules Issued IRS Releases 2014 HSA Limits Payroll: Revised Form 941-X and Instructions Released Updated Maximums for Employer-Provided Vehicles Issued by IRS Hawaii Amends Wage Statement Content Requirements Idaho Lowers State Tax Garnishment Withholding Limits Kentucky Enacts Student Loan Garnishment Legislation Arkansas Extends Garnishment Answer Timeline Leave: Colorado Extends Leave Rights Same-Sex Marriage Enacted in Rhode Island and Minnesota

2 GUIDANCE RELEASED ON REQUIRED EXCHANGE NOTICES On May 8th, 2013, the United States Department of Labor (DOL) issued via Technical Release (TR ) guidance to employers regarding the requirement created under the Affordable Care Act (ACA) that employers provide a notice to employees of coverage options available through the Health Insurance Marketplace. It is important to note that although TR uses the term Marketplace, the ACA statute utilizes the term Exchange. As background, under the ACA, individuals will be able to purchase health coverage through state or federally facilitated Health Insurance Marketplaces. Individuals will be able to enroll for coverage through the Marketplace beginning October 1, 2013, with initial coverage beginning effective January 1, The Technical Release provides needed guidance to employers regarding the notice requirement and provides Model Notices. In contrast to the ACA Employer Shared Responsibility provisions, which generally only apply to employers with at least 50 full-time employees and full-time equivalent employees, the Marketplace notice requirement applies to all employers that are subject to the Fair Labor Standards Act (FLSA). In general, the FLSA applies to employers with at least one employee and annual revenues of more than $500,000. TR includes two model Marketplace notices: one to be used by employers offering health coverage and one to be used by employers not offering coverage. Employers must provide the Marketplace Notice in writing to all existing employees no later than October 1, 2013, and to each new employee no later than 14 days following the employee s start date. Acceptable delivery methods include first-class mail, or electronically in a manner that meets the requirements of the DOL s electronic disclosure safe harbor rules at 29 CFR b-1(c). There can be no charge or costs to employees and such notices must include the following information: The existence of the Health Insurance Marketplace, a description of the services provided by the Marketplace and how to contact the Marketplace; That the employee may be eligible for a premium tax credit under Section 36B of the Internal Revenue Code (the Code) if the employee purchases a qualified health plan through the Marketplace; and If the employee purchases a qualified health plan through the Marketplace, the employee may lose any employer contribution to the employer-sponsored health 2

3 benefits plan, and that all or a portion of such contribution may be excludable from income for federal income tax purposes. Employers must provide the applicable Marketplace Notice to Employees of Coverage Options to all employees, regardless of their plan enrollment status or whether they are part-time or full-time. However, notices are not required for dependents or other individuals who may become eligible for coverage but are not employees. The Model Notices provided by the DOL feature general information in Part A, including the required information enumerated above. Part B advises the employee of information he or she will need to gather in order to apply for coverage through a Health Insurance Marketplace, including: Employer name and Federal Employer Identification Number. Employer s address and phone number. The name, phone number and address of an employer contact who can discuss employee health coverage with Marketplace officials. The following additional information only applies to employers who offer a health benefits plan to some or all employees: Information about any health coverage offered by the employer, including whether health coverage is offered to some or all employees, eligibility criteria, and availability of dependent coverage. Whether the employer coverage meets the minimum value standard, and whether the cost of this coverage to the employee is intended to meet one of the affordability tests. Employers are permitted to modify the model notices, provided that they meet the content requirements. For the DOL Technical Release and model notices, please see links below: DOL Technical Release No : Model Notice to Employees of Coverage Options (for employers who offer a health plan to some or all employees): 3

4 Model Notice to Employees of Coverage Options (for employers who do not offer a health plan): Additional information for employers regarding the Affordable Care Act is available at and The guidance contained in Technical Release will remain in effect until the DOL issues new regulations or other guidance. Future regulations or other guidance on these issues are expected to provide adequate time to comply with any additional or modified requirements. The guidance contained in Technical Release will remain in effect until the DOL issues new regulations or other guidance. Future regulations or other guidance on these issues are expected to provide adequate time to comply with any additional or modified requirements. COBRA MODEL ELECTION NOTICE MODIFIED As noted in the previous article, the United States Department of Labor (DOL) issued Technical Release (TR ) which provides guidance regarding the obligation created under the Affordable Care Act (Act) requiring employers to provide a notice to its employees advising employees of the coverage options available through Health Insurance Marketplace. As background, ACA provides that individuals will be able to purchase health coverage through state or federally facilitated Health Insurance Marketplaces. Individuals will be afforded an opportunity to enroll for coverage through the Marketplace beginning October 1, 2013 with the actual effective date of initial coverage being January 1, UPDATED MODEL COBRA ELECTION NOTICE As part of the TR guidance, the DOL has provided an updated model Consolidated Omnibus Budget Reconciliation Act (COBRA) election notice that reflects changes necessitated by the ACA and the expiration of the Health Care Tax Credit Program under the Trade Assistance Act. The DOL has not issued a revised model regarding the general COBRA notice at this time. In general, employers subject to COBRA are required to provide a COBRA Election Notice to covered employees (and their spouses and dependents) upon the occurrence of a qualifying event which entitles them to elect COBRA continuation coverage. Recognizing that the Marketplace will provide another option to COBRA qualified 4

5 beneficiaries, TR also provides an updated COBRA Continuation Coverage Election Notice that includes revisions reflecting these choices and the availability of subsidies in the Marketplace for eligible individuals. The updated COBRA Continuation Coverage Election Notice also reflects changes mandated by the ACA s prohibition on preexisting condition exclusions and eliminates the prior model language relating to the Health Coverage Tax Credit, which will expire as of January 1, Although TR did not provide a date by which the updated COBRA model notice must be utilized, ADP will be utilizing the language in the updated model notice in a timely manner to appropriately notify COBRA qualified beneficiaries of their coverage options under the Marketplace. For a copy of a clean revised model notice, please click on the link provided below. For a copy of a redline version of the revised model notice showing the changes to the current model notice, please click on the link provided below. SBC GUIDANCE AND TEMPLATE PROVIDED On April 23, 2013 the United States Departments of Labor, Health and Human Services, and Treasury (the Departments ) released the fourteenth installment of their Frequently Asked Questions (FAQs) on issues related to the Affordable Care Act (ACA). These releases are intended to provide guidance and clarification for employers and others as they implement the ACA s various requirements. This set of FAQs addressed the Summary of Benefits and Coverage (SBC) requirement. The Departments previously released final regulations on the ACA s Summary of Benefits and Coverage (SBC) requirement in February Under the SBC rule, health insurance carriers and employers that sponsor group health plans are required to distribute a standardized eight-page summary of the plan s covered services and relevant cost-sharing provisions, generally starting with the open enrollment period for the 2013 plan year. Also in February 2012, the Departments released templates, instructions, and related materials intended to assist employers and health insurance carriers in fulfilling their SBC obligations. Subsequently in 2012, the Departments also issued three sets of FAQs addressing the SBC requirement. The materials released in February 2012 were intended for use with disclosures concerning coverage beginning before January 1, 2014 (i.e., the first year the SBC rule is applied). 5

6 The new SBC FAQ contains an updated SBC template and a sample completed SBC, which are intended for use with plan or policy years beginning in 2014 (future guidance is expected to address SBCs for plan or policy years beginning in 2015). The FAQ contains relatively few changes to the SBC template for Specifically, the new SBC model template includes a statement as to whether the plan provides minimum essential coverage (MEC), which is the level of coverage necessary for an individual to satisfy the ACA s individual mandate. The new template also includes a certification as to whether the plan meets the ACA s minimum value requirement (i.e., whether the plan is designed to pay or reimburse, on average, at least 60 percent of participants covered medical expenses). The coverage examples and commentary contained in the last two pages of the SBC remain unchanged from prior guidance. The FAQ also includes guidance on how plans and issuers may modify the SBC to reflect the elimination of annual limits on essential health benefits. The SBC FAQs also provides that the Departments will not take enforcement action against a plan or insurance carrier for not amending an SBC for the MEC and minimum value disclosures with respect to plan or policy years beginning in 2014 provided that the SBC is furnished with a cover letter or similar disclosure stating whether the plan satisfies the MEC requirement and whether the plan provides minimum value (the Departments have provided model language for these separate disclosures). All other safe harbors and enforcement relief provided by the Departments relating to the SBC requirement remain in effect for plan years beginning prior to January 1, 2015 (e.g., relief for expatriate plans and closed blocks of business, and more permissive electronic disclosure rules). In general, the Departments will continue to assist (rather than impose penalties on) plans and insurance carriers that are working diligently and in good faith to comply with the SBC rules. For a copy of the SBC FAQ and templates, please click on the link provided below. FAQs: SBC Template: Sample Completed SBC: 6

7 FURTHER ACA GUIDANCE RELEASED On April 29, 2013, the United States Departments of Labor, Health and Human Services, and Treasury (the Departments ) released the fifteenth installment of their Frequently Asked Questions (FAQs) on issues related to the Affordable Care Act (ACA). The purpose of the release is to provide guidance and clarification for employers and others as they implement the ACA s various requirements. This set of FAQs addresses issues surrounding the expiration of annual limit waivers, provider nondiscrimination and coverage for individuals participating in approved clinical trials. Expiration of Annual Limit Waivers Certain employers and health insurance carriers applied for, and were granted, waivers from the ACA s annual limit requirements. Waivers were approved based on the plan year or policy year in effect when the initial application was submitted. The April 29 FAQ clarifies that waiver recipients who change their plan or policy years will not extend the expiration date of their waivers, which generally expire at the end of the plan or policy year beginning in Provider Nondiscrimination For plan or policy years beginning on or after January 1, 2014, the ACA prohibits a health insurance issuer or non-grandfathered group health plan from discriminating with respect to plan participation or coverage against any healthcare provider who is acting within the scope of that provider's license or certification under applicable state law. Note that this does not mean that a plan or carrier must contract with a particular provider, nor does it govern provider reimbursement rates, which may be subject to quality, performance, or market standards and considerations. The April 29 FAQ clarifies that the Departments will not, at least in the near future, issue regulations implementing this rule and that plans and issuers should use a good faith, reasonable interpretation of the law. Coverage for Individuals Participating in Approved Clinical Trials For plan or policy years beginning on or after 2014, the ACA prohibits nongrandfathered individual and group health plans from: (1) denying a qualified participant coverage for an approved clinical trial with respect to the treatment of cancer or another life-threatening disease or condition; (2) denying (or limiting/conditioning) coverage for routine patient costs for items and services furnished in connection with participation in the trial; and (3) discriminating against such participant due to the individual s participation in the trial. 7

8 Generally, a qualified participant is one who is eligible to participate in an approved clinical trial according to the trial protocol with respect to the treatment of cancer or another life-threatening disease or condition; and either: (1) the referring physician is an in-network provider and has concluded that the individual's participation in such trial would be appropriate; or (2) the participant provides medical and scientific information establishing that the individual's participation in such trial would be appropriate. Similar to the provider nondiscrimination rule, the Departments do not expect to issue implementing regulations in the near future. Until further guidance is issued, group health plans and health insurance carriers are expected to implement these requirements using a good faith, reasonable interpretation of the law. For a copy of the fifteenth FAQ installment, please click on the link provided below: MINIMUM VALUE DETERMINATIONS PROPOSED RULES ISSUED The Internal Revenue Service (IRS) in the May 3, 2013 Federal Register published proposed rules which address the determination of minimum value of eligible employersponsored plans for purposes of the premium tax credit and employer shared responsibility provisions under the Affordable Care Act (ACA). Under the ACA, an employer with 50 or more full-time employees and full-time equivalent employees may be subject to a penalty if any full-time employee receives a premium tax credit to purchase health insurance through a health care exchange. However, an individual will generally not be eligible to receive a premium tax credit if the individual is eligible to receive coverage under an employer-sponsored plan that is both affordable and provides minimum value. An employer-sponsored plan is considered to provide minimum value if the plan s share of the total allowed costs of benefits is 60 percent or more of such costs. A plan is considered affordable if the cost of the plan to the employee is 9.5 percent or less of the employee s household income. The proposed IRS rules describe how minimum value and affordability are determined for employer-sponsored plan, including the treatment of health savings account (HSA) and health reimbursement arrangements (HRA) contributions as well as incentives under a wellness program. In addition, the proposed rules provide for designed-based safe harbors for minimum value determinations. 8

9 Employer HSA and HRA Contributions: Under the IRS proposed rules, all amounts contributed by an employer to an HSA for the current year would be taken into account when determining the minimum value percentage. Employer contributions to an integrated HRA for the current year would be treated as follows: Amounts in an HRA that may be used only for cost-sharing (but not for paying premiums) would be taken into account in determining the minimum value percentage. Amounts in an HRA that may be used for paying premiums would be taken into account in determining a plan s affordability, but not for determining its minimum value percentage. An HRA is considered integrated if the employer offers primary group health insurance coverage that alone satisfies Section 2711of the Public Health Services Act (PHS Act) and the HRA is only made available to those employees who are enrolled in the primary group health plan coverage. Section 2711 of the PHS Act, as added by the ACA, generally prohibits plans and issuers from imposing lifetime or annual limits on the dollar value of essential health benefits. Wellness Incentives: Under the proposed rules, nondiscriminatory wellness program incentives offered by an eligible employer sponsored plan that affect deductibles, copayments, or other cost sharing are treated as earned in determining the plan s minimum value percentage ONLY to the extent the incentives relate to prevention or reduction in tobacco use. Incentives provided under wellness programs for purposes other than tobacco prevention or reduction would not be taken into account for purposes of determining the minimum value percentage or the plan s affordability. Transition Relief: The IRS proposed rules provide that for plan years commencing prior to January 1, 2015, an employer will not be subject to a shared responsibility penalty under Code section 4980H(b) for not providing affordable or minimum value coverage with respect to an employee who received a premium tax credit if the coverage would have been affordable and provided minimum value taking into account wellness incentives including those not addressing tobacco use. It is important to note that in order the qualify for the transition relief, the amount of the incentive and the terms of the 9

10 wellness program incentive must have been in place as of May 3, 2013 and only applies to categories of employees who were eligible for the incentive as of that date. COBRA and Retiree Coverage: The proposed rules provide that former employees who may enroll in continuation coverage required under federal or state law that provides comparable continuation coverage is eligible for minimum essential coverage only for months that the individual is enrolled in the coverage. Minimum Value Determinations: The IRS proposed rules adhering to previous guidance stipulate that minimum value determinations may be done utilizing the MV Calculator made available by the IRS and Health and Human Services at Taxpayers must use the MV Calculator to measure standard plan features (unless a safe harbor applies), but the percentage may be adjusted based on an actuarial analysis of plan features that are outside the parameters of the calculator. Proposed Safe Harbor Plan Designs: Although the proposed rules did not provide safe harbor plan designs, the preamble to the proposed rules stated plan designs meeting the following specifications are proposed as safe harbors for determining MV if the plans cover all of the benefits included in the MV Calculator: (1) A plan with a $3,500 integrated medical and drug deductible, 80 percent plan cost-sharing, and a $6,000 maximum out-of-pocket limit for employee cost sharing. (2) A plan with a $4,500 integrated medical and drug deductible, 70 percent plan cost-sharing, a $6,400 maximum out-of-pocket limit, and a $500 employer contribution to an HSA. (3) A plan with a $3,500 medical deductible, $0 drug deductible, 60 percent plan medical expense cost-sharing, 75 percent plan drug cost-sharing, a $6,400 maximum out-of-pocket limit, and drug co-pays of $10/$20/$50 for the first, second and third drug tiers, with 75 percent coinsurance for specialty drugs. For a copy of May 3, 2013 Federal Register containing the proposed rules, please click on the link provided below. 10

11 IRS RELEASES 2014 HSA LIMITS On May 2, 2013, the Internal Revenue Service (IRS) via Revenue Procedure , released inflation-adjusted health savings account (HSA) contributions and highdeductible health plan (HDHP) limitations for calendar-year These limits are indexed for inflation and released annually by June 1 for the following year as established under the Tax Relief and Health Care Act of annual HSA contribution limits: Self-only HDHP coverage: $3,300 (up $50 from 2013) Family HDHP coverage: $6,550 (up $100 from 2013) 2014 annual HDHP minimum deductibles: Self-only coverage: $1,250 (no change from 2013) Family coverage: $2,500 (no change from 2013) 2014 annual HDHP maximum out-of-pocket: Self-only coverage: $6,350 (up $100 from 2013) Family coverage: $12,700 (up $200 from 2013) Catch up contributions for individuals who are age 55 or older increased will remain at $1,000 for For a copy of Revenue Procedure please click on the link provided below. 11

12 REVISED FORM 941-X AND INSTRUCTIONS RELEASED The Internal Revenue Service has released revised versions of Form 941-X ( Adjusted Employer s Quarterly Federal Tax Return or Claim for Refund ) and Form 941-X Instructions. Form 941-X is used to correct errors on a Form 941 previously filed. The Form 941 is used by employers to report wages, including tips employees have reported to the employer, federal income tax withheld, social security and Medicare taxes withheld, the employer s share of social security and Medicare taxes, and advance earned income credit payments on a quarterly basis. Form 941-X should be used to correct information filed on Form 941 for the erroneous reporting of: Wages, tips, and other compensation; Income tax withheld from wages, tips, and other compensation; Taxable social security wages; Taxable social security tips; Taxable Medicare wages and tips; Taxable wages and tips subject to Additional Medicare Tax withholding; Advance earned income credit (EIC) payments made to employees (for quarters ending before January 1, 2011); Credits for COBRA premium assistance payments; Credits for qualified employer's share of social security tax on wages/tips paid to qualified employees March 19 31, 2010 (second quarter 2010 only); and Exemptions for qualified employer's share of social security tax on wages/tips paid to qualified employees (for quarters ending after March 31, 2010, and before January 1, 2011). Below are excerpts from the instructions to the Form 941 X noting changes/reminders: Correcting wages and tips subject to Additional Medicare Tax withholding. Beginning with the first quarter of 2013, wages and tips subject to Additional Medicare Tax withholding are reported on Form 941, line 5d. Any errors discovered on a previously filed Form 941 are corrected on Form 941-X, line 11. Social security tax rate for The employee social security tax rate is 6.2% and the employer social security tax rate is 6.2% (12.4% total). In 2011 and 2012, the employee social security tax rate was 4.2% and the employer social security tax rate was 6.2% (10.4% total). Be sure to use the correct rate when reporting correct amounts on lines 8 and 9. 12

13 Retroactive increase in excludible transit benefits. The American Taxpayer Relief Act (ATRA) increased the monthly transit benefit exclusion from $125 per participating employee to $240 per participating employee for the period of January 1, 2012, through December 31, Employers were provided instructions on how to correct the social security and Medicare taxes on the excess transit benefits in Notice , I.R.B. 486, available at Section 3121(q) Notice and Demand Tax due on unreported tips. An employer enters the amount of social security and Medicare taxes on unreported tips shown on the Section 3121(q) Notice and Demand on line 5f (line 5e for quarters ending before January 1, 2013) of the employer's Form 941 for the calendar quarter corresponding to the Date of Notice and Demand. Any errors discovered on a previously filed Form 941 for these taxes are corrected on Form 941-X, line 12. In addition, any errors relating to Section 3121(q) Notice and Demand amounts reported on Form 941, line 7c (for quarters ending before January 1, 2011) should be corrected on Form 941-X, line 12. Qualified employer's social security tax exemption expired. The qualified employer's exemption for their share (6.2%) of social security tax on wages/tips paid to qualified employees expired on December 31, Any errors discovered on a previously filed Form 941 (for quarters ending after March 31, 2010, and before January 1, 2011) for this exemption are corrected on Form 941-X, lines 13a 13c. Qualified employer's social security tax credit. Qualified employers were allowed a credit for their share (6.2%) of social security tax on wages/tips paid to qualified employees after March 18, 2010, and before April 1, Any errors discovered on a previously filed Form 941 for the second quarter of 2010 for this credit are corrected on Form 941-X, lines 20c and 20d. Advance payment of earned income credit (EIC). The option of receiving advance payroll payments of EIC expired on December 31, Any errors discovered on a previously filed Form 941 for this credit are corrected on Form 941-X, line 19. COBRA premium assistance payments. Employers who make COBRA premium assistance payments for assistance eligible individuals are allowed a credit for the payments on Form 941. Any errors discovered on a previously filed Form 941 for this credit are corrected on Form 941-X, lines 20a and 20b. For a copy of the revised Form 941-X, please click on the link provided below: 13

14 For a copy of the revised Form 941-X Instructions, please click on the link provided below: UPDATED MAXIMUMS FOR EMPLOYER-PROVIDED VEHICLES ISSUED BY IRS On April 29, 2013, the Internal Revenue Service in Internal Revenue Bulletin has issued new figures for the maximum value of employer-provided vehicles under the cents-per-mile valuation rule and fleet-average valuation rule. These rules can be used to determine the value of an employee s personal use of an employer-provided vehicle. The maximum value of employer-provided vehicles first made available to an employee for personal use in calendar year 2013 for which the vehicle cents-per-mile valuation rules provided under section (e) of the income tax regulations may apply is $16,000 for a passenger automobile and $17,000 for a truck or van. The maximum value of employer-provided vehicles first made available to an employee for personal use in calendar year 2013 for which the fleet-average valuation rule provided under section (d) of the regulations may apply is $21,200 for a passenger automobile and $22,300 for a truck or van. For a copy of Internal Revenue Bulletin please click on the link provided below. 14

15 HAWAII AMENDS WAGE STATEMENT CONTENT REQUIREMENTS On April 30, 2013, the Governor of Hawaii signed into law Senate Bill 332 which modifies HRS (c) which stipulates the required content of employee wage statements. Effective January 1, 2014, every employer shall furnish each employee at every pay period a legible printed, typewritten, or handwritten record showing the following: The name of the employee; The name of the employer; The address and telephone number of the employer; The employee's total hours worked; The employee's regular and overtime hours; The employee's straight-time compensation; The employee's overtime compensation; Any other compensation, including allowances, if any, claimed as part of the minimum wage; The employee's total gross compensation; The amount and purpose of each deduction; The employee's total net compensation; The date of payment; The pay period covered; and The rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or other basis, including overtime rate or rates of pay. For employees paid a piece rate, the record shall indicate the applicable piece rate or rates of pay, and the number of pieces completed at each piece rate; provided that in lieu of the printed, typewritten, or handwritten record required by this subsection and upon receipt of written authorization from the employee, the employer may provide an electronic record that may be electronically accessed by the employee. Currently, HRS (c) reads as follows: (c) Every employer shall furnish each employee at every pay period a legible printed, typewritten, or handwritten notice showing the employee's: 15

16 (1) Total hours worked; (2) Overtime hours; (3) Straight-time compensation; (4) Overtime compensation; (5) Other compensation; (6) Total gross compensation; (7) Amount and purpose of each deduction; (8) Total net compensation; (9) Date of payment; and (10) Pay period covered; provided that in lieu of the printed, typewritten, or handwritten notice required by this subsection and upon receipt of written authorization from the employee, the employer may provide an electronic notice that may be electronically accessed by the employee. In addition, SB 332 amends the payroll recordkeeping requirements under HRS (a) to require the employer to maintain a contemporaneous, true and accurate record of the rate or rates of pay for each employee regardless of the basis of payment, e.g. hour, shift, commission, salary, etc. For a copy of SB 332, please click on the link provided below: IDAHO LOWERS STATE TAX GARNISHMENT WITHHOLDING LIMITS As result of the enactment of Idaho Senate Bill 1047 (S.B. 1047), effective July 1, 2013, the maximum amount of an employee s gross earnings that can be garnished for an Idaho state tax liability is 25%. HOWEVER, the 25% is reduced to 10% if the federal government is also garnishing the employee s wages. Under S.B. 1047, the execution and the garnishment are continuous and the employer must withhold until the levy is released by the Idaho State Tax Commission or until the debt is discharged or satisfied in full. Idaho S.B added a new section to the Idaho Code titled A which reads in part as follows: A. CONTINUOUS EXECUTION ON INDIVIDUAL EARNINGS. Where an execution or garnishment against earnings for a state tax liability is served upon any person or upon the state of Idaho, and there is in possession of such person or the state of Idaho any such earnings of the individual debtor, the execution and the garnishment shall operate continuously and shall require such person or the state of Idaho to withhold the nonexempt portion of earnings at each succeeding earnings disbursement interval until released by the state tax commission or until the dollar amount specifically set forth on the record of assessment, identified in section A, Idaho Code, and subject to garnishment as of the date the tax warrant is issued, is discharged or satisfied in full. The proportion of earnings subject to garnishment pursuant to this section, 16

17 as compared to total gross taxable earnings, shall be limited to twenty-five percent (25%), except if the federal government is also garnishing the earnings of such person then the garnishment shall be limited to ten percent (10%). All garnishment or execution against earnings for the payments of any tax owed to the state of Idaho shall be governed by this section. For purposes of this section, earnings are gross taxable earnings from sources identified in section (1), Idaho Code. Idaho Code Section (1) defines earnings as follows: "Earnings" means compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, and includes periodic payments pursuant to a pension or retirement program. Under current Idaho law, the wage garnishment limit for a state tax debt is 100% of an employee s wages up to the amount of the outstanding tax debt and is withheld once per service. For a copy of S.B. 1047, please click on the link provided below: KENTUCKY ENACTS STUDENT LOAN GARNISHMENT LEGISLATION As a result of the enactment of Kentucky House Bill 49 (HB 49), effective June 25, 2013, the Kentucky Higher Education Student Loan Corporation (Corporation) is allowed to establish an administrative garnishment process for the collection of defaulted education process. Under HB 49, the garnishment process may commence not earlier than 180 days as measured from the date when the student loan borrower fails to make the required payments on the outstanding debt. The garnishment amount is limited to 10% of employee s disposable pay defined as the amount remaining of a borrower s employment earning after the deduction of all amounts withheld as required by law. HB 49 modifies KRS 164A.240 in part as follows: In addition to the authority granted by KRS 164A.010 to 164A.240, the Corporation is authorized to: Establish an administrative garnishment process for the collection of defaulted educational loans and promulgate regulations pursuant to KRS Chapter 13A pertaining 17

18 to the process. The process shall begin no sooner than one hundred eighty (180) days after the borrower fails to make payments on the debt that has been due and owing. The process shall limit garnishment to no more than ten percent (10%) of the disposable pay of the defaulted borrower and ensure that the borrower's due process rights are protected. For a copy of HB 49, please click on the link provided below: ARKANSAS EXTENDS GARNISHMENT ANSWER TIMELINE Effective July 1, 2013 and as a result of the enactment of Arkansas House Bill (H.B. 1264), employers will have 30 days to file an answer in a garnishment proceeding. Currently, employers only have 20 days. Failure to timely answer the interrogatories will result in the court entering a judgment against the employer and the employer becoming liable for the amount of the non-exempt wages owed by the employee on the date the writ was served. H.B amends Arkansas Code (a)(2) in part to read: (B) Notice to Employer Garnishee Failure to answer this writ within days or failure or refusal to answer the interrogatories attached hereto shall result in the court entering a judgment against you and you becoming personally liable for the amount of the nonexempt wages owed by the debtor-employee on the date you were served this writ as provided by Arkansas Code Annotated For a copy of H.B. 1264, please click on the link provided below. 18

19 COLORADO EXTENDS LEAVE RIGHTS On May 3, 2013, Colorado Governor John Hickenlooper signed into law HB which expands the circle of individuals for whom Colorado employees are entitled to take leave from work. The law will be effective August 7, Under HB , an employee in Colorado is entitled to leave to care for a person who has a serious health condition as defined under the federal Family Medical Leave Act (FMLA) if the person is the employee's partner in a civil union or is the employee's domestic partner and (1) has registered the domestic partnership with the municipality in which the person resides or with the state, if applicable; or (2) is recognized by the employer as the employee's domestic partner. The same reasonable documentation and certification requirements apply as they would under the federal FMLA. As background, the Colorado Civil Union Act (S. 11, L. 2013) was signed into law on March 21, 2013 stipulating effective May 1, 2013 civil unions were authorized in the state. Under the enacted legislation, a civil union means a relationship established by two eligible persons that entitles them to receive the benefits and protections and be subject to the responsibilities of spouses. A party to a civil union is included in any definition or use of the terms dependent, family, heir, immediate family, next of kin, spouse, and any other term that denotes the familial or spousal relationship, as those terms are used throughout the Colorado Revised Statutes. Rights, benefits, protections, duties, obligations, responsibilities, and other incidents under law as are granted to or imposed upon spouses that apply in like manner to parties to a civil union under this section, include, specifically, family leave benefits. HB in part stated as follows: Family and medical leave - state requirements. (1) In addition to the leave to which an employee is entitled under the FMLA, an employee, in this state is entitled to FMLA leave to care for a person who has a serious health condition, as that term is defined in the FMLA, if the person: (a) Is the employee s partner in a civil union, as defined in Section (5), C.R.S.; or (b) Is the employee s domestic partner and: (I) has registered the domestic partner with the municipality in which the person resides or with the state, if applicable; or (II) Is recognized by the employer as the employee s domestic partner. (2) (a) For purposes of confirming an employee s relationship to a person described in subsection (1) of this section for whom the employee is requesting FMLA leave, the employer may require the employee to provide reasonable 19

20 documentation or a written statement of family relationship, in accordance with the FMLA. (b) An employer may require an employee seeking FMLA leave for a person described in subsection (1) of this section to submit the same certification as the employer may require under the FMLA. (3) FMLA leave taken by the employee pursuant to this section runs concurrently with leave taken under the FMLA, and this section does not: (a) Increase the total amount of leave to which an employee is entitled during a twelve-month period under the FMLA, this section, or both; and (b) Preclude an employer from granting an employee an amount of leave that exceeds the total amount of leave to which the employee is entitled during a twelve-month period under the FMLA. For a copy of HB , please paste the following link into your browser. AEE0057BDE7?Open&file=1222_enr.pdf SAME-SEX MARRIAGE ENACTED IN RHODE ISLAND AND MINNESOTA Rhode Island and Minnesota are the latest two states to allow same-sex marriage joining Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, New Hampshire, New York, Vermont, Washington as well as the District of Columbia to enact such legislation. Rhode Island: On May 2, 2013, Rhode Island Governor Lincoln Chafee signed into law H 5015B which legalizes same-sex marriage in Rhode Island effective August 1, H 5015B states in part the following: no person who is recognized under the laws of this state shall be denied benefits that are otherwise available to spouses under Rhode Island law Consequently, employees with same sex spouses in Rhode Island will be entitled to the state leave protections afforded under the Rhode Island Parental and Family Medical Leave Act (Act) as codified under R.I. Gen. Laws and which 20

21 provides that every employee who has been employed by the same employer for twelve (12) consecutive months shall be entitled, upon advance notice to his or her employer, to thirteen (13) consecutive work weeks of parental leave or family leave in any two (2) calendar years. Under the Act, "family leave" means leave by reason of the serious illness of a family member and "family member" means a parent, spouse, child, mother-in-law, father-inlaw, or the employee himself or herself. For a copy of H 5015B, please click on the link provided below. Minnesota: On May 14, 2013, Minnesota Governor Mark Dayton signed into law HF 1054 which allows same-sex marriages in Minnesota effective August 1, The enacted legislation amends the current statute, which states that a marriage is a contract between a man and a woman, replacing it with language stating instead that it is between two persons. It also deletes language stating that lawful marriage can be contracted only between persons of the opposite sex. HF 1054 amends Minnesota Statutes as follows: MARRIAGE A CIVIL CONTRACT. Marriage, so far as its validity in law is concerned, is a civil contract between a man and a woman two persons, to which the consent of the parties, capable in law of contracting, is essential. Lawful marriage may be contracted only between persons of the opposite sex and only when a license has been obtained as provided by law and when the marriage is contracted in the presence of two witnesses and solemnized by one authorized, or whom one or both of the parties in good faith believe to be authorized, so to do. Marriages subsequent to April 26, 1941, not so contracted shall be null and void. In addition Minnesota Statutes is amended to add the following language: When necessary to implement the rights and responsibilities of spouses or parents in a civil marriage between persons of the same sex under the laws of this state, including those that establish parentage presumptions based on a civil marriage, gender-specific terminology, such as "husband," "wife," "mother," "father," "widow," "widower," or similar terms, must be construed in a neutral manner to refer to a person of either gender. 21

22 Consequently, as same-sex spouses are entitled to the same benefits under state law as opposite-sex spouses, employees would be entitled to Minnesota state leave laws including leave to attend a criminal proceeding with respect to a crime the partner was a victim and leave to care for a partner who was injured while on active military duty. For a copy of HF 1054, please click on the link provided below. ession_year=2013&session_number=0 Please contact ADP National Account Services for further information at: th Ave. West Suite 600 Lynnwood, WA Phone: (425) Fax: (425) ADP National Account Services does not make any representation or warranty that the information contained in this newsletter, when used in a specific and actual situation, meets applicable legal requirements. This newsletter is provided solely as a courtesy and should not be construed as legal advice. The information in this newsletter represents informational highlights and should not be considered a comprehensive review of legal and compliance activity. Your legal counsel should be consulted for updates on law and guidance that may have an impact on your organization and the specific facts related to your business. **Please note that the information provided in this document is current as of the date it is originally published.** 22