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NOVEMBER
2001
MINIMUM
WAGE INCREASE: As part of an earlier statute, California's
minimum wage will increase to $6.75 per hour on January
1, 2002.
MILEAGE
REIMBURSEMENT RATE INCREASE: Effective January 1, 2002,
the IRS is raising the mileage reimbursement rate for businesses
to use in deducting automobile costs from 34.5 cents to
36.5 centers per mile.
U.S.
SUPREME COURT TO REVIEW DISABILITY CASE: The U.S. Supreme
Court will review the Ninth Circuit's decision in Echazabal
v. Chevron USA, Inc. Waag and Co. previously reported
this case at page 6 of the November 2000 edition of The
Strategic Employer (you
can download this newsletter in PDF format by clicking
here). In this case, an applicant was offered a position
in Chevron's refinery that would have necessarily exposed
him to certain chemicals. His pre-employment medical exam
revealed a medical condition that would have caused him
to suffer severe liver damage if he were exposed to the
workplace chemicals. Because of this imminent threat of
serious harm to the applicant if he were placed in the
job, Chevron withdrew the job offer.
The
applicant sued for disability discrimination. Chevron contended
that the Americans with Disabilities Act did not require
placing a person into a position that posed a direct threat
to a person's safety. A "direct threat" would be
where there was a significant risk of grave injury or death.
The Ninth Circuit held that this exception only applied where
there was a direct threat to the safety of third persons
- not to the individual with the disability. The Court's
concern was that employers should not be paternalistic and
assume that individuals with disabilities cannot decide personal
risks for themselves.
The
U.S. Supreme Court accepted this case for review, expressing
concern about the position in which such a ruling would place
employers. Specifically, an employer would have to choose
between an expensive lawsuit or placing a person into a job
knowing that the person is likely to suffer grave harm. Waag
and Co. will report on any developments.
INCENTIVE
STOCK OPTIONS SUBJECT TO PAYROLL TAX: The Internal
Revenue Service issued regulations last week requiring
companies and employees to pay the 15.3 percent payroll
tax on the exercise of incentive stock options and proceeds
from employee stock purchase plans. While the proposed
rules exempt companies from withholding income taxes on
such transactions, the burden of collecting payroll taxes
from current and former employees may force some employers
to drop their stock option programs. The payroll tax would
apply on the difference between the exercise price of an
incentive stock option and the fair market value. For employee
stock purchase plans, the payroll tax would be applied
to the 15 percent discount employees are given when they
purchase the stock. It is the first time in 30 years payroll
taxes will be assessed on incentive stock options and employee
stock purchase plans. The payroll tax consists of a 12.4
percent tax used to fund Social Security and a 2.9 percent
tax used to fund Medicare, with both portions split evenly
between employer and employee. Critics say the costs of
keeping track of exercised incentive stock options when
employees make purchases in stock purchase plans would
be equal or greater to the actual outlay for the employer
share of Social Security and Medicare taxes.
E-MAIL
O.K. FOR W-2 FORMS: Employers can use e-mail to deliver
2001 W-2 forms to employees according to IRS official George
Blaine. Blaine pointed out that, under the regulations,
employers can provide all W-2's electronically to employees,
regardless of the employee's consent. While the regulations
require employers to provide a paper copy to employees
who do not consent to receiving their W-2 electronically,
nothing in the regulations prevents an employer from also
making the forms available electronically as long as the
security provisions of the regulations are observed.
MILITARY
SERVICE MEMBERS ELIGIBLE FOR NEW SAVINGS PLAN: The
federal government's Thrift Savings Plan, a 401(k)-type
program previously available only to federal civil service
and postal workers, will now be open to uniformed members
of the armed services while on active duty and to reservists
while on military-pay status. A special enrollment period
runs through January 31, 2002. More information is available
at www.tsp.gov.
DOWNSIZING: The
last two weeks brought a very long list of downsizing companies,
including Maytag, RadioShack, SBC Communications, and Hershey's
(which, in a sign of the times, will now be outsourcing the
making of cocoa powder.) The type of involvement of HR departments
in these layoffs varies from company to company of course,
but the common denominator is that HR is busy.
Electronic
Arts, the world's top developer and publisher of video games,
is laying off several hundred people who work on Internet
projects. The video-game industry is actually quite hot,
but revenues are low in this one division of Electronic Arts. "We
just focused on those products that would generate the greatest
revenue in the near- and mid-term, and focused our workforce
there," says spokesman Jeff Brown. "This led to
some cutbacks in other areas. HR is deeply integrated into
these workforce decisions. Actually, HR is deeply integrated
into all aspects of the business. They're providing guidance
for managers on the restructuring, and how to handle the
cutbacks on an interpersonal basis. And they continue to
recruit and hire for our PC and console businesses."
Kodak
says it's cutting 3,500-4,000 jobs in addition to the 3,500
jobs targeted a few months ago. "When we do a downsizing,
it's not top down, it's bottom up," says Kodak spokesman
Paul Allen. "HR is really in an oversight role. Individual
company units take the responsibility of reviewing their
own individual business cases and determining what's appropriate
in the way of reducing costs. We don't go for an across-the-board
10% cut or things like that. It has to make sense for that
particular unit."
Sears
is cutting 4,900 jobs as it overhauls its 860 stores. The
company, which has won awards for its strong HR department,
will be spending more energy selling expensive appliances,
and will make other departments, such as the shoe department,
into self- service or quick-service areas. "We'll be
really making sure employees who are selling big-ticket items
have the expertise to do a really good sell to the customers," says
Sears spokeswoman Peggy Palter. "That will require training.
And we'll be offering a different type of customer service.
We need people who are experts in cashiering to move people
in and out as quickly as possible, because that's what she
-- the customer -- wants. HR is up to its eyeballs right
now."
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