HR Morning News, Page 24 Category

Meet Miguel Castro, 44, of Uniontown, OH. He was just sentenced to 33 months in prison after being found guilty of charges resulting from investigations by the Department of Homeland Security and the Department of Labor. 

Castro was sentenced for “his role in a conspiracy to hire undocumented workers,” according to a news release from the U.S. Attorney’s Office in Cleveland.

He was also charged with:

• failing to pay workers at least the minimum wage
• conspiracy to commit mail fraud, and
• mail fraud.

Castro was the majority owner of a chain of seven Mexican restaurants in Ohio called “Mariachi Locos” and “Mariachi Cocos.”

In addition to his prison sentence, Castro was also ordered to forfeit $100,000 and pay $7,792 in restitution.

The attorney’s office said Castro, along with his wife Monica (a partial owner of the restaurants), hired undocumented workers who were illegally present in the U.S. and tried to shield them from discovery by:

• paying them in cash
• excluding them from the restaurants’ payrolls
• leasing housing for them, and
• aiding them in obtaining fraudulent work documentation.

In some cases, Castro and his wife only paid the workers in tips, according to the attorney’s office. They also were found guilty of submitting false wage reports to the state of Ohio.

For her role in the actions, Castro’s wife was sentenced to three months in prison and five months of home detention.

According to Cleveland.com, U.S. District Judge Sara Lioi, who levied the sentences against the Castros, said that someone needed to care for the couples’ children, two of whom are under 18. As a result, Lioi ordered that the Castros serve their prison sentences one after the other.

The new releases from the attorney’s office went on to say:

The defendants’ employment practices enabled them to enrich themselves because they paid the undocumented workers less than minimum wage and did not pay these workers for overtime hours worked. In some cases, the defendants paid these workers only the tips that the workers received from their customers, according to court documents.

Both Castros will be on supervised release for three years following their prison sentences.

All but one of their restaurants are now closed, according to Cleveland.com.

The calendar hasn’t turned to June yet, but the IRS is already gearing up for 2016 with its latest release. 

Revenue Procedure 2015-30, which was just published, puts forth the 2016 inflation-adjusted HSA contribution limits, HDHP required deductibles and HDHP out-of-pocket maximums.

The changes from 2015 have been highlighted in red for quick reference. The amounts below are effective for calendar year 2016.

HSA contribution maximums (employee & employer combined)

• Individual: $3,350
• Family: $6,750 (up $100 from 2015)

(Note: Catch-up contributions for those 55 and older aren’t tied to any automatic-escalators — like the Consumer Price Index or inflation — and will remain at $1,000 unless a statutory change is made.)

HDHP minimum deductibles

• Individual: $1,300
• Family: $2,600

HDHP out-of-pocket maximums

• Individual: $6,550 (up $100 from 2015)
• Family: $13,100 (up $200 from 2015)

(Note: Out-of-pocket expenses include deductibles, co-pays and co-insurance — but not premiums.)

Whether it’s money for the advice offered or payments for pushing certain providers’ investment products, the DOL has long contended that investment advisors are in danger of having a conflict of interest regarding the advice they provide retirement plans.  

So the agency just released a 120-page set of proposed rules (the first on this subject since 2010) in the hopes of remedying this situation.

Here are some of the major highlights (so you don’t have to sift through the fed’s document):

Key protections, ‘Carve outs’

The DOL claims theses rules will save billions of dollars over the next decade by:

Expanding what type of retirement advice is covered by fiduciary protections. Under the updated definition, any individual receiving compensation for providing advice that is individualized or specifically tailored to a plan sponsor for making an investment decision will be considered a fiduciary.

The proposed rules also aim to create greater transparency about plan fees by forcing adviser to: “clearly and prominently (disclose) any conflicts of interest, like hidden fees … that might prevent the adviser from providing advice in the client’s best interest.”

This could result in practices like revenue-sharing being greatly altered or eliminated altogether.

Carving out any investment advice that’s provide as general education on retirement savings from fiduciary status.

Carving out “order taking” as a fiduciary activity. In other words, if an advisor simply executes a transaction without providing any advice, it wouldn’t count as a fiduciary activity.

Carving out sales pitches to plan fiduciaries with financial expertise. So, in certain situations, if a plan fiduciary with this expertise from an advisor receives compensation for that advice, it wouldn’t be considered fiduciary activity.

Put yourself in this employer’s shoes: You’re searching the Web to see what people are saying about your company and you come across this … 

… a post on the question-and-answer site Quora in which a candidate you recently offered a job to is asking whether or not he should accept the position.

In the post, the candidate compares your firm to another, stating the biggest reason he’s hesitant to accept the position at your company is that it wouldn’t generate as much “buzz” on his resume as the other firm competing for his services.

What would you do?

CEO wasn’t happy

Here’s what Zenefits CEO Parker Conrad did when he saw the post: He withdrew his company’s job offer in a reply to the question.

On Quora, members can post questions and have them answered by other site members.

Here’s what the unnamed prospective engineer posted:

“What is the best way to start my career: Uber or Zenefits?”

The candidate then listed some of the pros of each position he was offered, for example:

• Uber “has people with amazing credentials … “
• At Zenefits, “I really enjoyed talking to the people. They are people I think I would be more happy to work with”
• “Uber has a really good reputation. I think that working at Uber will really help me move to companies like Google and Apple, which is something that I want to do in the distant future.”
• “Zenefits seems to be really aggressive in trying to keep me. They have tried really hard to make me choose them over Uber. And they are paying me a better salary by about 15k (where Uber completely refused to negotiate)”

Now onto the cons the candidate posted, which included:

• Uber’s attitude towards him so far has been “we don’t really need you. but here is your offer”.
• Zenefits isn’t “a buzzword like Uber. Most people won’t know what Zenefits is (or so I think). I think that this isn’t as exciting a brand name to have on your resume when applying to the likes of Google.”

Hesitation was a deal breaker

As you can see, it’s not like the candidate was badmouthing Zenefits. His reluctance to take the job seemed to stem from the fact that it may not propel him to his dream job as quickly as working at Uber would.

But therein lies the problem for the Zenefits CEO.

Parker said he rescinded the job offer for two reasons:

• “We really value people who ‘get’ what we do and who *want* to work here, specifically. … One of our company values is to have a bias towards action — which means that when people are hesitating / going back and forth about whether they want to work here, we usually view that as a bad sign.”
• “We don’t have terribly high regard for ppl who would choose where to work based on “buzzwords” and how big a brand it is … “

Parker did, however, offer one piece of advice to the candidate in his reply: Apply to Google.

He said if that candidate could pass Zenefits’ engineering interview, he should be able to do the same at Google.

No word yet on whether the candidate’s taken that advice.

Quick tip: Employers who categorize jobs as “men’s work” and “women’s work” are likely to put a frown on the faces of our friends at the EEOC.  

For that and other bias law violations, Chicago-area staffing agency will pay $800,000 under a consent decree resolving two discrimination lawsuits filed by the U.S. Equal Employment Opportunity Commission (EEOC).

In two separate lawsuits, the EEOC charged that Source One Staffing, Inc:.

1. assigned female employees to a known hostile work environment
2.  retaliated against two female employees who reported that their supervisor was making sexual advances toward them
3. categorized jobs as “men’s work” or “women’s work” and assigned employees accordingly
4. asked impermissible pre-employment medical questions in violation of the ADA, and
5. failed or refused to assign employees to certain jobs because of their race and/or national origin.

The EEOC filed the suits federal district court in Illinois, after first attempting to reach a pre-litigation settlement through its conciliation process in both cases.

$730k for assignment bias

The consent decree settling the suits provides $800,000 in monetary relief.  Of that, $70,000 will go to the sexual harassment and retali­ation victims. The remaining $730,000 will be distributed evenly to a class of female employees who were not considered for certain work on the basis of their sex.

The decree also requires Source One to take the following affirmative steps:

1. train its employees on employees’ rights under Title VII and the ADA
2. report complaints of discrimination during the decree’s three-year term
3. change its employment policies and practices to conform to federal bias law, and
4. post a notice of the decree at all of its locations.

The settlement won’t mean the EEOC is going away, officials were quick to point out. “While the consent decree puts an end to four-years of litigation between EEOC and Source One, the matter is far from over,” said John Hendrickson, regional attorney for the EEOC’s Chicago District.  “The EEOC — through the appointment of an independent monitor — will keep a watchful eye on Source One to make sure it fulfills all of its obligations under the decree for the next three years.  If Source One fails to adhere to the decree, the EEOC will do everything in its power to ensure compliance.”

Even if you use a third-party administrator for your retirement plan, you need to pay attention to what the IRS just published. 

Employee Plan News is a somewhat bare-bones newsletter the IRS uses to provide guidance and news to plan sponsors and administrators, and in its April 1, 2015 issue, it said that recent audits have revealed that retirement plan administrators are making some mistakes.

As a result, the IRS tried to clarify some recordkeeping, hardship distribution and plan loan rules.

A warning to plan sponsors

To kickoff the newsletter, the IRS said that using a third-party administrator won’t protect plan sponsors if mistakes are made in the administration of their plans.

Bottom line: Plan sponsors are ultimately responsible for how their plans are run.

So plan sponsors will want to make sure the following requirements are being met.

Hardship documentation

When it comes to hardship loans, the IRS said plans must retain these records for examination, should an audit need to be conducted (it’s not sufficient for plan participants, alone, to retain these records):

• documentation of the hardship request, review and approval
• financial information and documentation that substantiates the employee’s immediate and heavy financial need
• documentation to support that the hardship distribution was properly made in accordance with the applicable plan provisions and the Internal Revenue Code, and
• proof of the actual distribution made and related Forms 1099-R.

Self-certification is not enough

The IRS went on to say that audits have revealed some administrators are mistakenly allowing plan participants to self-certify that they satisfy the criteria to receive a hardship distribution.

Instead, administrators must request and retain documentation to show the existence and the nature of the hardship — such as a principal residence purchase agreement or receipts for medical care or funeral expenses.

The IRS did, however, say that self-certification is permissible for a participant to show that a hardship distribution is the sole way to alleviate a hardship.

Plan loan documentation

When it comes to plan loans, the IRS said plan sponsors must retain these records:

• evidence of the loan application, review and approval process
• an executed plan loan note
• documentation, if applicable, verifying that the loan proceeds were used to purchase or construct a primary residence
• evidence of loan repayments, and
• evidence of collection activities associated with loans in default and the related Forms 1099-R, if applicable.

Loans in excess of five years

If a participant requests a loan with a repayment period in excess of five years for the purpose of purchasing or constructing a primary residence, the IRS says the plan sponsor must obtain documentation of the home purchase before the loan is approved.

What about self-certification?

Much like with hardship distributions, the IRS says allowing participants to self-certify their eligibility for these loans is impermissible.

Don’t say you weren’t warned: There’s good chance these new laws are precursors to legislation you may soon see in your state or city. 

The ink is still wet on these laws, which may help shape widespread employment law changes in this country:

Stop Credit Discrimination in Employment Act

Where: New York City.

When: Becomes effective September 2015.

What: The law prohibits most employers from using credit reports or bankruptcies to disqualify job candidates or when making employment decisions regarding current employees. It also gives aggrieved applicants and employees the right to sue employers for using their credit history in employment decisions.

Note: It’s one of the broadest credit check laws in the country, as its definition of “credit history” includes any information obtained from applicants or employees relating to their credit history, including info on credit accounts, late or missed payments, charged-off debts, items in collections, credit limit and prior credit inquiries.

The law applies to all city employers with at least four employees. Limited exceptions include:

• law enforcement personnel
• financial services workers
• employees with signatory power over assets of $10,000 or more, and
• workers with access to trade secrets or national security info.

Clean Air Bill: Act 19 (HB 940)

Where: Hawaii.

When: Becomes effective January 2016.

What: The law bans the use of electronic smoking devices — such as e-cigarettes, e-cigars, e-pipes and any smoking device that needs a cartridge to operate — in existing smoke-free zones, namely enclosed or partially enclosed workplaces.

Note: Hawaii joins North Dakota, New Jersey and Utah in passing legislation banning the use of electronic smoking devices in smoke-free zones. There is still much debate over the potential health risks of electronic cigarettes, and the manufacturing process for the products isn’t as heavily regulated as that of cigarettes. In other words, there’s still a lot we don’t know about the products. As a result, governing bodies are starting to take proactive steps to protect workers should the products prove to be unhealthy.

Pregnant Workers Fairness Act: LB627

Where: Nebraska.

When: September 2015.

What: The law amends the state’s Nebraska Fair Employment Practice Act, and requires employers with 15 or more employees to make reasonable accommodations for employees with known physical limitations resulting from pregnancy or childbirth, unless it would cause an undue hardship.

Note: The law represents an expansion from federal discrimination law in that it requires employees to accommodate any employee experiencing medical problems related to pregnancy or childbirth so long as it is reasonable to do so. Employers would have to prove an accommodation would “require great difficulty or expense” to deny providing one. Under federal law, employers are required to provide pregnant employees with a reasonable accommodation, as long as they accommodate other employees who are similar in their ability or inability to work.

Should an employer have the right to know where an employee is 24 hours a day?  

That’s the central question in a recent lawsuit filed in California state court, in which a salesperson claims she was fired for removing an app from her cellphone that would have allowed her boss to learn her whereabouts 24/7. The sales exec says the company was guilty of violating privacy and California labor laws, unfair business practices, and wrongful termination.

Myrna Arias was working for NetSpend Corporation when she was recruited by a former colleague, John Stubits, to work for the wire-transfer company Intermex as a sales manager and account manager in Intermex’s Bakersfield office.

Because she was worried about some health issues, Arias asked to be allowed to continue to work for NetSpend so she could continue coverage during Intermex’s three-month waiting period for health benefits. Her request was granted.

Under the microscope, 24/7

A few weeks into Arias’ tenure at Intermex, Stubits, now Intermex’s regional VP of sales and Arias’ boss, instructed employees to download an app called Xora to their smartphones. Arias did a a little research and discovered that Xora contained a global positioning system (GPS) function that could track the precise location of each employee.

Arias and other employees asked if Intermex would be monitoring their off-duty movements. Stubits said yes, adding that when she was driving, the app could even tell him who fast she was going.

He also ordered salespeople to have their phones on continuously in case a customer called.

Arias said she didn’t mind her movements being monitored during work hours, but considered off-hours surveillance an invasion of privacy.  She likened the app to a prisoner’s ankle bracelet.

Her arguments, however, fell on deaf ears, and a few weeks later, Arias de-installed the app.

A few weeks after that, Arias was fired from Intermex. To add insult to injury, she claims, an exec from Intermex called NetSpend and got her fired from that organization.

The case was filed in California Superior Court in early May. We’ll keep you posted.