IRS Announces 2011 Standard Mileage Rates

The Internal Revenue Service has announced the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are:

51 cents per mile for business miles driven
19 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously. The IRS is requesting public comments on whether taxpayers should be allowed to use the business standard mileage rate in this circumstance.

Other Changes Regarding Standard Mileage Rates in 2011

Beginning in 2011, a taxpayer may use the business standard mileage rate for vehicles used for hire, such as taxicabs.

Also beginning in 2011, the standard mileage rates are announced in a separate notice, which also provides the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate and the maximum standard automobile cost for automobiles under a fixed and variable rate (FAVR) allowance. The IRS plans to discontinue publishing the standard mileage rate revenue procedure annually but will publish modifications as required.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

For Additional Information

Revenue Procedure 2010-51 and Notice 2010-88 contain additional details regarding the standard mileage rates.

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Health Care Reform Checklist for 2011

The Patient Protection and Affordable Care Act (PPACA) contains comprehensive health insurance reforms that require compliance by employer-sponsored group health plans. Many of these reforms apply to plan years beginning on or after September 23, 2010. The following general checklist is designed to help employers review their plan’s compliance with the major health care reform requirements implemented in 2010, as well as prepare for changes ahead in 2011.

Please note that this list is for general reference purposes only and is not all-inclusive. This list is also subject to change based on new government requirements or directives. Additionally, your group plan may be exempt from certain requirements described below. If you have any questions regarding your
obligations with respect to health care reform, you should consult with a knowledgeable employment law attorney and your carrier for specific guidance.

1. Determine Grandfathered or Non-Grandfathered Status of Plan

Note: A grandfathered plan is one that was in effect on March 23, 2010. If a plan loses its grandfathered
status, it may no longer be exempt from certain PPACA requirements.

Evaluate whether any changes made to the group health plan with respect to benefits,
costs, or other changes result in
loss of grandfathered status.
To maintain grandfathered status, a plan must include a statement, whenever a summary of benefits
under the plan is provided to participants and beneficiaries, that the plan believes it is a grandfathered
health plan according to the Affordable Care Act and must provide contact information for questions and
complaints (model notice available here).

2. Review Plan Documents for Required Changes

Note: Unless otherwise noted, plan documents should be amended to reflect changes effective as of the
first day of the first plan year beginning on or after September 23, 2010. Please consult with your
carrier for additional details or if you have questions regarding these amendments.

If the plan offers dependent coverage, the coverage is available until a child reaches the age of 26.
(Prior to 2014, grandfathered plans do not have to comply with this requirement for adult children who have another offer of employer-based coverage.)
Lifetime dollar limits on “essential health benefits” have been eliminated.
Annual limits on “essential health benefits” are being phased out according to the limits set by law (no lower
than $750,000 for plans issued or renewed beginning Sept. 23, 2010). Some plans may be eligible for a
waiver from the rules concerning annual dollar limits.
Any pre-existing condition exclusions for children under age 19 have been eliminated.
Effective Jan. 1, 2011, reimbursements for over-the-counter drugs from HSAs, Archer MSAs, FSAs or HRAs qualify
only if the medication is purchased with a prescription (except insulin). An increased penalty of 20% applies for nonqualified distributions from a HSA or Archer MSA.
Except for grandfathered plans, coverage of recommended preventive services is provided with no cost-sharing requirements, such as co-payments or deductibles.
Except for grandfathered plans, patient protections related to choosing a primary care provider, access to OB/GYN care, and coverage of emergency services are included as appropriate.
Except for grandfathered plans, an effective internal and external appeals process for coverage determinations and claims is in place.

3. Implement Special Enrollment Opportunities

Note: The following special enrollment opportunities must be provided, and coverage must take effect,
not later than the first day of the first plan year beginning on or after September 23, 2010.

30-day special enrollment opportunity for individuals whose coverage ended, or who were denied coverage (or were not eligible for coverage), because the availability of dependent coverage of children ended before attainment of age 26.
30-day special enrollment opportunity for individuals whose coverage ended by reason of reaching a lifetime limit under the plan.

4. Provide Participant Notices

Note: Unless otherwise noted, the following notices should be provided to plan participants no later than the first day of the first plan year beginning on or after September 23, 2010.

Opportunity to enroll in connection with extension of dependent coverage to age 26 (model notice available here).
Lifetime limit no longer applies and opportunity to enroll (model notice available here).
Notice of patient protections, if applicable (model notice available here). Distribute whenever a participant is
provided with a summary plan description or other similar description of benefits under the plan, and no later than the
first day of the plan year starting on or after Sept. 23, 2010.
Notice of available internal and external appeals processes and the availability of any consumer assistance with respect to such processes, if applicable.
It is also prudent to provide participants notice of the new restrictions on reimbursement of costs for over-the-counter drugs in relation to HSAs, Archer MSAs, FSAs and HRAs, prior to Jan. 1, 2011.

5. Other Considerations

Review and amend Section 125 (cafeteria plan) documents as necessary to reflect any changes. If eligible, consider whether your company could benefit from establishing a simple cafeteria plan.
Determine whether your company qualifies for the small business health care tax credit.
Maintain compliance with the break time requirement for nursing mothers, if applicable.
Consider necessary changes to your payroll system in preparation for compliance with the requirement to report employer-provided health coverage on Form W-2. Reporting by employers is optional in 2011.*
Be prepared for compliance requirements to change. Stay up-to-date on the latest information regarding health care reform by visiting
HealthCare.gov.

Please note that employers in some states may be required to report the cost of employer-provided health benefit coverage for adult children on the employee’s Form W-2 in 2011 for state income tax purposes. Employers should contact their state revenue department for reporting requirements related to coverage for adult children.

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Dancing with the D.O.L.

ABC’s Dancing with the Stars has awakened new interest in ballroom dancing while creating an entertainment phenomenon.

It sometimes feels like conducting business in the marketplace is a dance partnering employers and employees in moves designed to bring mutual success to both parties. Sometimes the dance is a wonderfully choreographed drama of precise dips and turns that ignites passion and productivity. Sometimes it’s a chaotic jitterbug where once you stop spinning you wonder how work got done and business conducted.

Lately, there seem to be a number of partners trying to cut in on the marketplace dance floor to separate employers from their employees. The Department of Labor’s (DOL) Wage and Hour Division (WHD) has stepped up enforcement activities to ensure that workers are properly paid and appropriately classified while the plaintiff’s bar has moved in to aggressively pursue class action labor lawsuits in many states across the country.

Perform a Google search on the words “wage and hour lawsuits” and one of the first listings is a Wal-Mart settlement for hundreds of millions of dollars. An even newer suit was filed in October on behalf of Walmart’s janitors. Lower down on the same results page are dire warnings that should strike fear in the hearts of our nation’s employers. “The multitude of wage and hour claims and lawsuits that workers have filed under the Fair Labor Standards Act (“FLSA”), and its state law counterparts, have made wage and hour law the nation’s fastest growing type of litigation”, says the Epstein Becker Green Wage & Hour Defense Blog. Kiplinger warns that “wage and hour lawsuits are rising, outpacing all other types of workplace class actions” in a February, 2010 article titled “Wage and Hour Lawsuits Costing Employer’s Millions”.

While the headlines provoke fear (and so they should, as these lawsuits are on the rise), level-headed thinking and planning will help you avoid potentially costly litigation. Using an automated time and attendance solution will accurately gather employee time data for the precise calculation of payroll, as well as document this data for your own protection.

Other advantages of automating time and attendance are the consistent application of payroll policies like meal break rules and enforced schedules as well as time savings from eliminating manual processes. It also provides a reliable record of your employees’ time data should you ever be audited by the DOL or be named as a party in a wage and hour lawsuit.

To ensure success in the marketplace, employers must have supporting infrastructure. Effective HR & Payroll personnel, policies and efficient workforce management tools help employers navigate the congested dance floor while leading their employee dance partners through the original dance of conducting business, without any slip ups or wardrobe malfunctions.

Social Media Recruiting: A Word of Caution

More and more, social media is playing an important role in the workplace. From establishing brands, to extending them, to offering customers discounts and specials via a tweet or Facebook update, or for maintaining a great public customer service profile, social media has its feet planted firmly inside the world wide web and it’s not going anywhere.

Likewise, social media has established itself as an important player in finding a job, or ferreting out the perfect applicant for your job opportunity. According to an August 2010 study by Harris Interactive on behalf of CareerBuilder.Com it was revealed by workers that they look for specific things via social media when researching employers. 35% of respondents specifically look for job listings, 26% want facts about the company, 16% want to see that the employer is fun, and 9% want to see company awards and research that the company has conducted. See more the study results here. There is no harm in potential employees researching your company for a possible job opening. There are no discriminatory laws that govern future employees researching you.

Conversely, the opposite is true of employers (or recruiters) researching potential employees via social media. As soon as companies, recruiters, and human resource professionals start using social networks to make decisions about potential hires they open themselves up to a wide variety of possible discrimination claims. The sheer quantity of potential employees available to your digital fingertips is empowering. With just a few clicks you could know more about a potential fit than you might during a screening call or even that first face to face interview. What is so simple and yet so scary is that you could also possibly access all the information that you should never have accessed to begin with, and that in doing so you potentially open up both yourself and your company to claims of discriminatory practices.

The areas of information that recruiters can access via social media that could impact their hiring decisions are (to name just a few): drug and alcohol photos, poor communication skills (grammar problems), “offensive” photos, and a misleading job history or qualifications. It’s both easy and exciting to have this information at your fingertips. However, the most imperative thing to keep in mind is that in having access to this information you MAY legally by violating the Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment and Executive Order 11246. Considering that the two theories of employment discrimination revolve around “disparate impact” and “disparate treatment”, let’s look at how using social media as a recruiting tool could potentially harm you.

If recruiting managers do not have a standing recruiting process in place, and evaluate some applicants through social media and others through another process, the employer could be threatened with claims of disparate treatment. Disparate impact comes into play when you ONLY consider applicants who use social media, will only consider applicants who showcase specific information on their profiles, or when you give preference to job seekers who have a higher status type ranking (the most contacts, followers or friends).
Additionally, other problematic areas related to protected information you might find when using social media for recruiting purposes are:

Using social media to qualify application or reference information
Using photographs of “off time” activities as a basis for a final decision
Accessing information related to protected class status

Federal anti-discrimination regulations oblige you to preserve specific employment related records. And Title VII specifically requires employers to maintain all records related to hiring for a period of two years. If you use profiles on any social networking site, these too, must be kept for two years.

Does any of this scare you? It should. But it’s not something that a carefully crafted, followed, and maintained recruiting policy and procedures guide can’t handle. With millions of potential job candidates using social networking you must use this tool in order to best use social media to find the perfect fit for your employment opening.

Rapid Learning Institute wrote a great post on how to reduce your potential exposure to hiring discrimination claims by establishing a strong social media recruiting policy. The key points are (and we couldn’t agree more):

Screening should be uniform. Create a list of social media to be searched for every applicant, and also list the legal information you’re looking for. It’s legal to screen for indications of such things as illegal drug use, poor work habits, bad writing skills and discriminatory tendencies.
A non-hiring party should do the search. Designate an employee or employees who are not in a decision-making position to do applicant social media searches. These employees function as “cutouts,” filtering out information about race, age, disability, religion, etc. that can’t be used in the hiring decision. What hiring managers don’t know can’t be used against them.
Don’t get “friendly.” Organization representatives shouldn’t “friend” applicants to access their nonpublic profiles.
Document the decision. If you make a hiring decision based on a social media search/screen, be sure to have documented nondiscriminatory reasons for your action.

Also, check out these other great links this topic:

Twitter for Sourcing and Recruiting

Top 5 reasons to use social media for recruiting

Social Media Hiring Webinar

Ascentis Blog

Information to help HR and payroll managers, recruiters, and compliance officers become more effective.

Category Archives: HR legislation

IRS Announces 2011 Standard Mileage Rates

Health Care Reform Checklist for 2011

Dancing with the D.O.L.