2018 CHAMBER EMPLOYMENT LAW UPDATE

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1 2018 CHAMBER EMPLOYMENT LAW UPDATE Hawaii and Federal Legislative Developments: Looming Issues John L. Knorek

2 Trump Tax Reform: Tax Cuts and Jobs Act (TCJA) Payments for employees qualified transportation fringes generally effective for amounts incurred or paid after Dec. 31, No deduction is allowed for the expense of a qualified transportation fringe, as defined in Code Sec. 132(f), provided to an employee of the taxpayer. (Code Sec. 274(a)(4)) 1. Transportation in a commuter highway vehicle for travel between the employee's residence and place of employment; 2. Transit passes; 3. Qualified parking; and 4. Qualified bicycle commuting reimbursement. The TCJA also provides that no deduction is allowed for any expense incurred for providing any transportation, or any payment or reimbursement, to an employee of the taxpayer for travel between the employee's residence and place of employment, except as necessary for ensuring the employee's safety. (Code Sec. 274(l)(1)) However, this bar on deducting transportation expenses doesn't apply to any qualified bicycle commuting reimbursement, as described in Code Sec. 132(f)(5)(F) for amounts paid or incurred after Dec. 31, 2017, and before Jan. 1, (Code Sec. 274(l)(2))

3 Tax Credit for Paid Family Leave Section 45S of the Internal Revenue Code Up to 50% tax credit for employer paid family leave not mandated by state law; The credit will range from 12.5 percent to 25 percent of the cost of each hour of paid leave, depending on how much of a worker's regular earnings the benefit replaces. Employers will have to provide at least two weeks (up to 12) of leave and compensate workers at a minimum of 50 percent of their regular earnings and policy must be in writing. Has to be dedicated for reasons covered by FMLA even if Employer less than 50 employees Employee must make less than $72,000/year, been employed at least one year. prorated amount for part-time, employees Credit sunsets at the end of 2019

4 Tip pooling - Congressional Appropriations Act Employers who pay the full FLSA minimum wage are no longer prohibited from allowing employees who are not customarily and regularly tipped such as cooks and dishwashers to participate in tip pools. The FLSA still prohibits managers and supervisors from participating in tip pools, however, as the Act equates such participation with the employer s keeping the tips. DOL FIELD ASSISTANCE BULLETIN NO (4/6/18)

5 Paid Sick Leave HB 1727 SD 1 Covered Employer 50 employees Employee Eligibility 480 hours worked in a year Excludes employees paid a specified amount more than minimum wage Accrual: 1 hour for every 40 worked Exempt employees assumed to work 40 hours a week No obligation if existing sick leave satisfies accrual obligation No obligation No pay out on termination, or while collecting WC or TDI Use for self, HFL family or school closures Cannot require disclosure of details of medical condition

6 PAID FAMILY LEAVE SB 2990 HD 2 Paid Family Leave Special Fund Employee and Employer contributions permitted By January 1, 2020, the department of human services shall adopt rules, which shall be exempt from chapter 91, Hawaii Revised Statutes, that establish and codify paid family leave for all workers in the State. Rules adopted shall, at a minimum, establish a paid family leave program that includes: (1) A minimum of weeks paid leave; (2) Coverage for all employees of employers who employ one or more employees; (3) A system of progressive wage replacement to allow low-income workers to receive a higher percentage of their weekly earnings than average high-wage workers; and (4) Job protections to ensure use of paid family leave does not adversely impact employment. The paid family leave program shall begin to collect payments no later than July 1, 2021, and begin processing payments no later than July 1, 2022.

7 HB 2598 SD2 Expanded TDI All employees of all employers Progressive wage replacement Job protection DLIR establishes rules and start processing payments by July 1, 2022

8 EQUAL PAY SB 2351 The purpose of this Act is to: Disrupt the cycle of wage inequality for women and minorities by prohibiting prospective employers from requesting or considering a job applicant s prior wage or salary history in the job application process so that employers will set compensation offers based on skills and qualifications

9 Employers cannot Inquire into salary history Rely on salary history in setting compensation or benefits or in negotiating compensation Retaliate or discriminate against an employee for, nor prohibit an employee from, disclosing the employee s wages, discussing and inquiring about the wages of other employees, or aiding or encouraging other employees to exercise their rights under this section. EMPLOYERS MAY: Engage in voluntary discussions with an applicant for employment about the applicant s expectations with respect to salary, benefits, and other compensation, and verify such voluntarily disclosed compensation history

10 HB 2602 SD 1 UI Independent Contractor Adopts IRS test for Independent Contrcator status and eliminates ABC test; Three Categories of factors: Behavioral Control, financial control and type of relationship 12 factors

11 Workers Comp HB 2202 SD1 Requires IME doc to be duly qualified : Appropriately licensed; Possesses medical insurance; Owing same duty of care to worker as would be owed to a traditional patient

12 SB 2364, HD1 WC Presumption Requires payment of benefits even if claim is disputed; Prohibits use of investigation to deny coverage; Imposes fines and penalties for on employers who fail to negotiate in god faith Imposes liablity to reimburse on employee if claim eventually found noncompensable