Chapter 31

Consolidated Omnibus Budget Reconciliation Act (COBRA)

A 1985 federal law that permits employees of private employers and their beneficiaries to continue their group health insurance after the voluntary or involuntary termination of a worker's employment or the loss of coverage due to certain qualifying events defined in the law. The employer must notify covered employees and their beneficiaries of their rights under COBRA. To continue coverage, a person must pay the required group rate premium. Under most circumstances, COBRA coverage is available for 18 months after employment has ended. Government employees are subject to similar provisions found in the Public Health Service Act.

Employee Retirement Income Security Act (ERISA)

A complex, federal act designed to prevent fraud and other abuses associated with private pension funds. Employers are not required to establish pension plans for their employees. If they do, however, they are subject to the record-keeping, disclosure, fiduciary duty, and other requirements of ERISA. Federal, state, and local government pension funds are exempt from its coverage. ERISA is administrated by the department of labor. ERISA requires pension plans to be in writing and to name a pension fund manager. The pension fund manger pwes a fiduciary duty to act as a "prudent person" in managing the fund and investing its assets. No more than 10 percent of a pension fund's assets can be invested in the securities of the sponsoring employer. Vesting occurs when an employee has a non-forfeitable right to receive pension benefits. First, ERISA provides for immediate vesting of each employee's own contributions to the plan. Second, it requires employer's contributions to be either (1) totally vested after 5 years (cliff vesting) or (2) gradually vested over a seven-year period and completely vested after that time. (?)

Occupational Safety and Health Act

A federal act enacted by congress in 1970 that promotes safety in the workplace. Almost all private employers are within the scope of the act, but federal, state, and local governments are exempt. Industries regulated by other federal safety legislation are also exempt. The act also established OSHA. The act imposes record keeping and reporting requirements on employers and requires them to post notices in the workplace, to inform employees of their rights under the act.

Fair Labor Standards Act (FLSA)

A federal act enacted in 1938 to protect workers. It prohibits child labor and spells out minimum wage and overtime pay requirements. Applies to private employers and employees engaged in the production of goods for interstate commerce. The US Department of Labor is empowered to enforce the FLSA. Private civil actions are also permitted under the FLSA.

Family and Medical Leave Act (FMLA)

A federal act that guarantees workers up to 12 weeks of unpaid leave in a 12-month period to attend to family and medical emergencies and other specified situations. The act, which applies to companies with 50 or more workers as well as federal, state, and local governments, covers about half of the nation's workforce. To be covered by the act, an employee must have worked for an employer for at least one year and must have performed more than 1,250 hours of service during the previous 12-month period. Covered employees are required to provide up to 12 weeks of unpaid leave during any 1`2-month period due to the following: 1. The birth of and care for a child 2. The placement of a child with an employee for adoption or foster care 3. A serious health condition that makes the employee unable to perform his or her dutues 4. Care for a spouse, child, or parent with a serious health problem Leave because of the birth of a child or the placement of a child for adoption or foster cannot be taken intermittently unless the employer agrees to such an arrangement. Other leaves may be taken on an intermittent basis. The employer may require medical proof of claimed serious health conditions. An eligible employee who takes leave must, on returning to work, be restored to either the same or equivalent position with equivalent employment benefits and pay. The restored employee is not entitled to the accrual of seniority during the leave period, however. A covered employer may deny restoration to a salaried employee who is among the highest-paid 10 percent of that employer's employees if the denial is necessary to prevent "substantial and grievous economic injury" to the employer's operations.

Occupational Safety and Health Administration (OSHA)

A federal administrative agency within the Department of Labor that is empowered to enforce the Occupational Safety and Health Act. Empowered to adopt rules and regulations to interpret and enforce the Occupational Safety and Health Act. OSHA has adopted thousands of regulations to enforce the safety standards established by the act.

US Citizenship and Immigration Services (USCIS)

A federal agency empowered to enforce US immigration laws. In 1921, the US enacted an immigration quota that established limits on the number of immigrants that could be admitted to the US for each foreign country each year. During different times, the quotas for each foreign country have been raised or lowered, depending on the world situation. The immigration laws of this country are administered by the US Citizen and Immigration Services (USCIS), which is part of the US Department of Homeland Security. The USCIS processes immigrant visa and naturalization petitions. Foreign nationals who qualify and have met the requirements to do so may become citizens of the US. During their swearing-in ceremony, they must swear the Oath of Citizenship. The US has also established work visas that permit foreign nationals to work in this country if they meet certain qualifications. Two major forms of foreign guest worker visas are the H-1B and the EB-1 visas.

Social Security

A federal system that provides limited retirement and death benefits to covered employees and their dependents.The Social Security system is administered by the Social Security Administration. Today, social security benefits include (1) retirement benefits, (2) survivors' benefits to family members of diseased workers, (3) disability benefits, and (4) medical and hospitalization benefits (Medicare). Under the Federal Insurance Contributions Act (FICA), employees must make contributions (pay taxes) into the Social Security fund. An employee's employer must pay a matching amount. Social Security does not operate like a savings account. Instead, current contributions are used to fund current claims. The employer is responsible for deducting employees' portions from their wages and remitting the entire payment to the federal government (?) Under the Self-Employment Contributions Act, self-employed individuals must pay Social Security contributions too. The amount of tax self-employed individuals must pay is equal to the combined employer-employee amount. Failure to submit Social Security taxes subject the violator to interest payments, penalties, and possible criminal liability. Social Security taxes may be changed by act of Congress.

H1-B Visa

A visa that allows US employers to employ in the US foreign nationals who are skilled in special occupations. These workers are called foreign guest workers. The number of H-1B visas is limited, usually to fewer than 100,000 per year, so the competition is fierce to obtain such visas. H-1B holders are allowed to bring their immediate family members (spouse and children under 21) to the US under the H4 visa category as dependents. An H4 visa holder may remain in the US as long as he or she remains in legal status. An H4 visa holder is not eligible to work in the US. The duration of stay for a worker on an H-1B visa is three years, and this can be extended another three years. During this time, an employer may sponsor and H-1B holder for a green card, which, if issued, permits the foreign national to eventually obtain US citizenship. If the employer does not apply for a green card for the foreign national or if the foreign national is denied a green card, he or she must leave the country after six years from the time of employment. Workers from India make up more than 25% of all workers employed under H-1B visas. Most of these jobs are in technology and engineering fields.

EB-1 Visa

A visa that allows US employers to employ in the US foreign nationals who possess exceptional qualifications for certain types of employment. The three categories of workers who can qualify are (1) persons who can demonstrate extraordinary ability the sciences, art, education, business, or athletics through sustained national or international acclaim; (2) outstanding professors and researchers who can demonstrate demonstrate international recognition for outstanding achievements in a particular academic field; and (3) multinational managers or executives employed by a firm outside the US who seek to continue to work for that firm in the US. Employers must file for the visas of workers in categories (2) and (3), while applicants in category (1) can file for the visa themselves. Fewer than 50,000 EB-1 visas are granted each year. The USCIS determines EB-1 eligibility. Persons who are granted an EB-1 visa may become US citizens, usually in five years.

General Duty Standard

An OSHA standard that requires an employer to provide employment and a work environment free from recognized hazards that are causing or are likely to cause death or serious physical harm to employees. This general standard is a catchall provision that applies even if no specific workplace regulation addresses the situation. OSHA is empowered to inspect places of employment for health hazards and safety violations. If a violation is found, OSHA can issue a written citation that requires the employer to abate or correct the situation. Contested citations are reviewed by the Occupational Safety and Health Review Commission. Its decision is appealable to the Court of Appeals for the Federal Circuit. Employers who violate the act, OSHA rules and regulations, or OSHA citations are subject to both civil and criminal penalties.

Employment-Related Injury

An compensable injury to an employee that arises out of and in the course of employment. In addition to covering physical injuries, workers' compensation insurance covers stress and mental illness that are employment related.

Learned Professional Exemption

Applies to employees compensated on a salary or fee basis that perform work that is predominantly intellectual in character, who possess advanced knowledge in a field of science or learning, and whose advanced knowledge was acquired through a prolonged course of specialized intellectual instruction.

Computer Employee Exemption

Applies to employees who are compensated either on a salary or fee basis; who are employed as computer systems analysts, computer programmers, software engineers, or other similarly skilled workers in the computer field; and who are engaged in the design, development, documentation, creation, testing, or modification of computer systems or programs.

Administrative Employee Exemption

Applies to employees who are compensated on a salary or fee basis, whose primary duty is the performance of office or non-manual work, and whose work includes the exercise of discretion and independent judgement with respect to matters of significance.

Highly Compensated Employee Exemption

Applies to employees who are paid annual compensation of $100,000 or more; perform office or nonmannual work; and regularly perform at least one of the duties of an exempt executive, administrative, or professional employee.

Outside Sales Representative Exemption

Applies to employees who are paid by the client or customer, whose primary duty is making sales or obtaining orders or contracts for services, and who are customarily and regularly engaged away from the employer's place of business.

Executive Exemption

Applies to executives who are compensated on a salary basis, who engage in management who have authority to hire employees, and who regularly direct two or more employees

Unemployment Compensation

Compensation that is paid to workers who are temporarily unemployed. Under the Federal Unemployment Tax Act (FUTA) and state laws enacted to implement the program, employers are required to pay unemployment contributions (taxes). The tax rate and unemployment wage level are subject to change. Employees do not pay unemployment taxes. State governments administer unemployment compensation programs under general guidelines set by the federal government. Each state establishes its own eligibility requirements and the amount and duration of the benefits. To accept benefits, applicants must be able to work and be available for work and seeking employment. Workers who have been let go because of bad conduct (illegal activity, drug use on the job) or who voluntarily quit work without just causes are not eligible to receive unemployment benefits.

Exemptions from Minimum Wage and Overtime Pay Requirements

Executive exemption, administrative employee exemption, learned professional exemption, highly compensated employee exemption, computer employee exemption, and outside sales representative exemption Sometimes employers give employees the title of manager to avoid the minimum wage and overtime requirements of the FLSA.

Workers' Compensation Insurance

Insurance that employers obtain and purchase from private insurance companies state funds, or from government-sponsored programs. Some states permit employers to self-insure if they demonstrate that they have the ability to pay workers' compensation claims. Many large companies self-insure

Undocumented Workers

Many persons enter the US without permission, and once in the country, many of these persons seek employment in the US. The Immigration Reform and Control Act (IRCA) of 1986, which is administered by USCIS, requires employers to verify whether perspective employees are either US citizens or otherwise authorized to work in the country (Have proper work visas) Employers are required to have prospective employees complete Form I-9 Employment Eligibility Verification. Employers must obtain a completed For I-9 for every employee, regardless of citizenship or national origin. Employers must examine evidence of prospective employee's identity and employment eligibility. A state-issued driver's license is not sufficient. Employers must review other documents, such as social security cards, birth certificates, and so on, to establish eligibility. Employers must maintain records and post in the workplace notices of the contents of the law. The IRCA imposes criminal and financial penalties on employers who knowingly hire undocumented workers.

Workers' Compensation

Many types of employment are dangerous and many workers are injured on the job each year. Under common law, employees who were injured on the job could sue their employers for negligence. This time-consuming process placed the employee at odds with his or her employer. IN addition, there was no guarantee that the employee would win the case. Ultimately, many were left uncompensated. Workers' compensation acts were enacted by state legislatures in response to the unfairness of that result. They create an administrative procedure for workers to receive workers compensation for injuries that occur on the job. An injured worker files a claim with the appropriate government agency (often called the workers' compensation board or workers' compensation commission). Next, the entity determines the legitimacy of the claim. If the worker disagrees with the agency's findings, he or she may appeal the decision through the state court system. Workers compensation benefits are usually paid according to preset limits established by statute or regulation and vary from state to state.

Specific Duty Standards

OSHA standards that set safety rules for specific equipment, procedures, types of work, unique work conditions, and so on. Ex: OSHA standards establish safety requirements for safety guards on saws, set maximum exposure levels for hazardous chemicals, and regulate the location of machinery in the workplace.

Minimum Wage

The FLSA establishes minimum wage and overtime pay requirements for workers. Managerial, administrative, and professionals are exempt from the act's wage and hour provisions. The FLSA requires that most employees in the US be paid at least the federal minimum wage for all hours worked. The federal minimum wage is set by congress and can be changed. As of 2014, it was set at $7.25 per hour. The Department of Labor permits employers to pay less than the minimum wage to students and apprentices. An employer may reduce the minimum wage by an amount equal to the reasonable cost of food and lodging provided to employees. There is a special minimum wage rule for tipped employees.An employee who earns tips can be paid $2.13 an hour by an employer if that amount plus the tips received equals at least the minimum wage. If an employee's tips and direct employer payment does not equal the minimum wage, the employer must make up the difference. Over half of the states have enacted minimum wage laws that set minimum wages at a rate higher than the federal rate. Some cities have enacted minimum wage requirements, usually called living wage laws, which also set higher minimum wage rates than the federal level.

Child Labor

The FLSA forbids the use of oppressive child labor and makes it un lawful to ship[ goods produced by businesses that use oppressive child labor. The Department of Labor has adopted the following regulations that define lawful child labor: (1) Children under the age of 14 cannot work except as newspaper deliverers, (2) children ages 14 and 15 may work limited hours in nonhazardous jobs approved by the Department of Labor (restaurants), and (3) children ages 16 and 17 may work unlimited hours in nonhazardous jobs. The Department of Labor determines which occupations are hazardous (mining, roofing, working with explosives). Children who work in agricultural employment and child actors and performers are exempt from these restrictions. Persons age 18 and older may work at any job, whether it is hazardous or not.

Overtime Pay

Under the FLSA, an employer cannot require nonexempt employees to work more than 40 hours per week unless they are paid overtime pay of one-and-a-half times their regular pay for each hour worked in excess of 40 hours that week. Each week is treated separately.

Government Programs that Provide Benefits to Workers and their Dependants

Unemployment compensation and social security

Exclusive Remedy

Workers' compensation is an exclusive remedy. Thus, workers cannot both receive workers' compensation and sue their employers in court for damages. Workers' compensation laws make a tradeoff: an injured worker qualifies for workers' compensation benefits and does not have to spend time and money to sue his employer, which comes with a possible risk of not winning. The employer has to pay workers' compensation insurance but does not have to incur the expense and risk of a lawsuit. Workers' compensation acts do not bar injured workers from suing responsible third parties to recover damages. Workers can sue an employer in court to recover damages for employment-related injuries if the employer does not carry workers' compensation insurance or does not self-insure if permitted to do so. If an employer intentionally injures a worker, the worker can collect workers' compensation benefits and can also sue the employer.