Zenefits pays $3.4M to misclassified employees

Human resources startup Zenefits will pay $3.4 million to 743 current and former employees the company misclassified as exempt from overtime and minimum wage rules, the U.S. Department of Labor said Tuesday.

An investigation by the Labor Department’s Wage and Hour Division found Zenefits incorrectly paid account executives and sales representatives a flat salary. The employees worked in San Francisco and two now-shuttered offices in Arizona.

Zenefits also entered into an “enhanced compliance agreement” with the labor department, which includes monitoring to avoid future misclassification violations. A copy of the document wasn’t immediately disclosed.

“This case allows us to level the playing field for all of the employers who play by the rules,” said Ruben Rosalez, the Wage and Hour Division’s regional administrator in San Francisco. “We are dedicated to protecting both workers and employers.”

Jessica Hoffman, vice president for communications at Zenefits, said in an email the company, which creates software that manages businesses’ payrolls, insurance offerings and other benefits, is “happy to have this issue behind us.”

“We are pleased that after the Department of Labor’s review regarding classification of two jobs at Zenefits, there were no penalties, fines or damages,” she said.

Allegations of missed payments and worker misclassification at Zenefits go back to 2015, when the company offered former employees payouts of approximately $5,000 if they gave up their rights to file claims over unpaid time-off and overtime, The Wall Street Journal reported.

In November, Zenefits agreed to pay up to $7 million to settle claims by California regulators that the company had sold insurance policies without obtaining the necessary licenses for their employees first. Two months ago, the state of New York fined Zenefits $1.2 million for allowing unlicensed insurance brokers to sell policies.

The company in February announced that it had laid off about 45 percent of its workforce in an effort to cut costs.

Originally published on The Recorder. All rights reserved.

Americans Want Congress to Proceed Cautiously in Repealing the ACA

Americans Want Congress to Proceed Cautiously in Repealing the ACA

As President Donald Trump and Congressional lawmakers make plans for the future of the Affordable Care Act (ACA), the results of a recent survey by the Kaiser Family Foundation suggest that a majority of Americans either do not want the ACA to be fully repealed, or want Congress to refrain from repealing it until a replacement plan is ready.

The survey of 1,204 adults was conducted on December 13-19, 2016. When asked whether Congress should repeal the ACA, 47% said they think Congress should not vote to repeal the law; 28% said Congress should repeal the ACA, but not until the details of a replacement plan have been announced; and 20% said that Congress should vote to repeal the law immediately, and work out the details of a replacement plan later.

The findings also indicated that repealing the ACA falls behind other health care priorities the respondents believe President Trump and the Congress should act on. When asked to name their top priorities in the area of health care, 67% of respondents cited lowering the amount individuals pay for health care, 61% said lowering the cost of prescription drugs, and 45% cited dealing with the prescription painkiller addiction epidemic. By contrast, just 37% of respondents named repealing the ACA as a top priority. Even smaller shares said that decreasing how much the Federal government spends on health care over time (35%) and decreasing the role of the Federal government in health care (35%) should be top priorities.

When presented with two general approaches to the future of health care in the U.S., 62% of survey respondents said they prefer “guaranteeing a certain level of health coverage and financial help for seniors and lower-income Americans, even if it means more Federal health spending and a larger role for the Federal government;” while 31% of respondents said they prefer the approach of “limiting Federal health spending, decreasing the Federal government’s role, and giving state governments and individuals more control over health insurance, even if this means some seniors and lower-income Americans would get less financial help than they do today.”

The survey also asked respondents to predict how their health care will change if the ACA is repealed. More than half of the adults polled said they believe the quality of their own health care (57%) and their own ability to get and keep health insurance (55%) will stay about the same if the law is repealed, while a smaller share (43%) said they believe the cost of health care for both them and their family will stay about the same if the ACA is repealed. Of those respondents who said they anticipate changes, around half said they believe their situation will get better, while the other half said they believe their situation will get worse.

Of the respondents who reported that someone in their household has a pre-existing health condition (56% of the sample), 33% said they believe the cost of health care for them and their family will rise if the ACA is repealed, compared to about 22% of the respondents who said they do not have a family member with a pre-existing condition. The respondents with a pre-existing condition in their family were also more likely than those not affected by a pre-existing condition to say they believe their ability to get and keep health insurance will deteriorate (24% vs. 17%), and that the quality of their own health care will get worse (21% vs. 15%).

From Benefit Trends Newsletter, Volume 60, Issue 3

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

Employers Report Concerns about Overtime and Other Regulatory Changes

Employers Report Concerns about Overtime and Other Regulatory Changes

The vast majority of U.S. employers believe that recent Federal regulatory initiatives, including changes made to overtime regulations, will affect their workplace, according to the results of an annual survey conducted by employment law practice Littler.

The survey, completed in April and May 2016 by 844 in-house counsel, human resources professionals, and C-suite executives from some of America’s largest companies, examined the key legal, economic, and social issues affecting employers as the 2016 presidential election approaches.

The findings indicated that employers are largely aware that the U.S. Department of Labor (DOL) has recently advanced several regulatory initiatives that will affect the enforcement of Federal employment laws. The survey showed that 82% of respondents expect DOL enforcement to have an impact on their workplace over the next 12 months, with 31% anticipating a significant impact; up from 18% in the 2015 survey. Researchers noted that this concern is likely driven in large part by the recently finalized Fair Labor Standard Act “white collar” overtime regulations, which drastically increase the number of workers who can qualify for overtime pay. They added that although the respondents completed the survey in the weeks prior to the release of the final rule, 65% had already conducted audits to identify affected employees.

The survey also found that following the National Labor Relations Board’s recent expansion of the definition of a “joint employer,” 70% of respondents expect an increase in claims over the next year based on actions of subcontractors, staffing agencies, and franchisees; 53% predict higher costs; and 49% anticipate exercising increased caution in entering into arrangements that might constitute joint employment. By contrast, just 2% said the expanded definition of a joint employer will have no impact on their workplace.

The results further showed that 85% of respondents anticipate that the Affordable Care Act (ACA), will have an impact on their workplace in the next 12 months. While two-thirds said they do not expect a repeal of the ACA if a Republican is elected president this November, respondents said they see a greater likelihood of changes to individual provisions, with 52% saying a Republican administration could lead to a repeal of or changes to the Cadillac excise tax, and 48% saying they see a likelihood of changes being made to the play-or-pay mandate.

The findings also suggested that employers are increasingly concerned about their exposure to discrimination claims. In the largest year-over-year change in the survey’s results, 74% of respondents said they expect to face more discrimination claims over the next year related to the rights of LGBT workers, up from 31% in 2015; and 61% said they expect an increase in claims based on equal pay, up from 34% in 2015.

Finally, the survey showed that in response to tragic mass shootings across the nation, companies are taking a range of actions to keep their employees safe, including updating or implementing a zero-tolerance workplace policy (52%), conducting pre-employment screenings (40%), and holding training programs (38%). Researchers pointed out that only 11% of respondents reported they had not taken any action because violence is not a concern for their company.

From Benefit Trends Newsletter, Volume 59, Issue 8

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.

Social Security Family Benefits Have Failed To Keep Pace with Changes In Women’s Roles

Social Security Family Benefits Have Failed To Keep Pace with Changes In Women’s Roles

Social Security’s spousal and survivor benefits, which were designed in the 1930s for a one-earner married couple, no longer meet the needs of very large shares of American women, and especially of single mothers, a study published by the Center for Retirement Research (CRR) at Boston College concluded.

The article, “How Work & Marriage Trends Affect Social Security’s Family Benefits,” was written by research economist Steven A. Sass, and was published as a CRR issue brief in June 2016. Sass pointed out that when the Social Security program was created in the 1930s, it included spousal and survivor benefits, or “family benefits” designed primarily to ensure that a woman who had been a homemaker and a mother for most of her life would have a basic old-age income. However, Sass observed, the family unit today has changed dramatically in two important ways relevant to spousal and survivor benefit design: first, most married women have significant wage employment and earn Social Security benefits on their own earnings record; and second, many women have children but never marry, and divorce rates are high among those who do marry.

Sass reviewed studies by the Social Security Administration’s Retirement Research Consortium to assess the implications of these changing work and marriage patterns on Social Security’s effectiveness in providing families a basic old-age income. His analysis showed that in recent years, increased employment of married women sharply reduced the contribution of spousal and survivor benefits as a source of household retirement income.

The report cited research showing that more than half of all women born in the early years of the Depression (1931-35), who became eligible for benefits in the mid-1990s, were entitled to a family benefit when they first claimed; whereas less than one-third of early boomer (born 1948-53) women, who became eligible for benefits between 2010 and 2015, were entitled to a family benefit, and the benefit amounts they received replaced a smaller share of their pre-retirement earnings. Sass also noted that projections have shown that only two-thirds of generation X (born 1966-75) widows will be entitled to a survivor benefit, down from 82% of war baby (born 1942-47) widows.

In addition, Sass cited projections indicating that by the time women with children of generation X reach age 70, 10% will have never been married, while another 5% will have been married for less than 10 years, and will thus fail to qualify for spousal benefits. He pointed out that these single mothers often find it harder to earn an adequate Social Security benefit on their own, as their work opportunities are constrained by their childrearing duties. Sass cited one recent study showing that women aged 65 to 74 who spent at least 10 years as a single mother were 55% more likely to be poor than continuously married mothers of similar education and ethnicity.

Finally, Sass observed that policy experts have suggested ways to strengthen benefits for divorced and never-married mothers who are not well-served by the current spousal and survivor benefit design, including eliminating spousal and survivor benefits and replacing them with a system of earnings sharing among married couples that would be more advantageous for divorced spouses, or with a system of caregiving credits based on childrearing responsibilities rather than on marital status.

From Benefit Trends Newsletter, Volume 59, Issue 8

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.