Jan 09, 2011

Tax Cuts, Credit Discrimination, and More

Happy New Year! While I was busy finishing my new book (Employment Law: The Essential HR Desk Reference, available soon and described here in our Winter 2011 catalog), there were a handful of interesting developments in the field, starting with that giant tax cut bill.

  • Payroll tax cuts. The amount employers are required to withhold from employee paychecks to fund Social Security will be temporarily reduced from 6.2% to 4.2%. (Employer contributions will remain at 6.2%; withholding for Medicare will also stay the same, at 1.45% each for employees and employers.) This is an extra $20 in your paycheck for every $1,000 you earn. Employers are required to start withholding the new lower amount by January 31, 2011, and to adjust employee paychecks by March 31, 2011, to make up for any amount improperly withheld in January. (You can find the official IRS notice about the cuts, which includes withholding tables, here.)
  • Unemployment benefits extended. The law reinstates the Emergency Unemployment Compensation (EUC) program, which lapsed temporarily on November 30, 2010. Most states offer an initial 26 weeks of unemployment benefits. For those who haven't found a job when these benefits run out, the EUC program provides another 34 to 53 weeks of benefits, depending on the state's unemployment rate. A separate federal-state program, the Extended Benefits Program, provides another 13 to 20 weeks of benefits to employees who exhaust their EUC benefits. (For details on how long benefits last under these programs, check out Nolo's article Unemployment Benefits: How Much Will You Get and For How Long?) With the EUC program reinstated through the end of 2011, employees are once again eligible for a maximum of 99 weeks of benefits in some states; the "99ers" -- those who have already used their 99 weeks -- aren't helped by the new law.
  • Extended tax credits and deductions. The law extends a number of popular tax breaks that were set to expire at the end of this year, from deductions for education expenses to credits for certain energy efficient home improvements. In a move popular among employers and employees alike, Congress extended the tuition tax break, which allows employees to exclude from their taxable income up to $5,250 per year in tuition assistance provided by their employers.
  • EEOC focuses on credit discrimination. The EEOC has long taken the position that relying on an applicant's credit history in making employment decisions can have a disparate impact on women and people of color. This has become a more pressing issue as the economy continues to struggle. In October of 2010, the Commission signaled renewed interest in this area by holding a public meeting and taking testimony from a panel of experts about the effect of relying on credit reports in employment. A couple of weeks ago, the EEOC took the issue on squarely by filing a pattern or practice lawsuit against Kaplan Higher Education Corporation. The EEOC argues that the company's practice of denying employment based on credit history had a disparate impact on black applicants, and is not justified by business necessity.
  • National Labor Relations Board (NLRB) proposes posting requirement. The NLRB issued a proposed rule that would require all private employers subject to the National Labor Relations Act (NLRA) to post a notice of employee rights under the law, similar to the notices currently required for wage and hour laws and discrimination laws. Employers that communicate with their employees primarily in electronic form would also have to provide the notice electronically. The rule would apply not just to unionized workplaces, but to all employers covered by the NLRA. Failure to post would constitute an unfair labor practice.