What Should Employers Know About Distributing Holiday Bonuses?

With the holiday season approaching, many employers are starting to think about rewarding their employees with some type of bonus. It has been a difficult year, so many businesses may still want to reward their employees for persevering through a difficult time. There are options for employers to show their employees gratitude. Regardless of what an employer decides, there are some things they should be aware of before making any major decisions.

What is the Difference Between a Holiday and Year-End Bonus?

Many companies give out holiday bonuses and some give year-end bonuses. These two phrases are not interchangeable as both are two different types of bonuses. Holiday bonuses are more universal rewards given to all the employees of a company. They are an equal amount distributed amongst the employees and can range from monetary gifts to a company-specific gift. They could also include extra paid time off.

Year-end bonuses are more performance-based rewards to certain employees. An employer might tie the amount to a person’s performance for the year or their longevity with the company. These types of rewards are a good way to boost motivation among employees and provide more incentives for the upcoming year.

Some employees may come to expect holiday bonuses from their employers and may even feel discriminated against if there is not one. For those companies that offer both bonuses, they should ensure enough time between when the two are dispensed. For instance, many might choose to give out holiday bonuses around Thanksgiving or early December and the year-end bonuses in January.

How Should I Plan for a Bonus?

There are several steps that employers should consider when determining which bonuses to disburse this year. Some things to consider include:

If it fits the budget: It has been a difficult year for a lot of businesses, with many forced to shut down for extended periods. Some were able to press on by having employees work-from-home, but it has been difficult. As a result, finances have slowed down this year, so employers need to ensure they can afford some type of bonus.

Chose an amount that is fair and consistent: If an employer plans to give out a holiday bonus, it should be a similar amount to previous years. If it needs to change dramatically for whatever reason, the company should announce that ahead of time and explain that it is a one-time thing to employees.

Include everyone: Employers that elect to give out holiday bonuses must include everyone in the office, and they must all receive the same amount regardless of their time or employment status.

Give time: For those companies that find that they can not afford a monetary bonus this year, they might want to consider giving the gift of time. It could mean a few extra days from work outside of the usual vacation and holiday schedule.

What are the Tax Consequences of Giving a Bonus?

Employers who give out monetary bonuses must report it as taxable income on an employee’s W-2 form. In addition, if an hourly employee receives paid time off, it has the same tax consequences as if the person were working. Some employees elect to offer the bonus and pay off the tax consequences as well so the employee can fully enjoy the bonus.

What are Some Non-Monetary Bonus Options?

Given this year’s difficulty, monetary bonuses might not be in the budget for some firms. That is an unfortunate side effect of the past year. Despite difficulties, many employers may still want to show gratitude to employees for remaining with them throughout the past year. There are several non-monetary options for employers. Some possibilities are:

  • Time off
  • Party
  • Gift certificates
  • Company-themed gifts

By explaining to employees that due to the circumstances, the company cannot provide monetary bonuses, should help lessen the sting of the change. However, it should be something that only happens once, otherwise it will start to have a negative impact on employee morale.

If you have any questions or concerns regarding employment matters, call the legal team at MacMain Leinhauser. For an initial consultation, call 484-318-7106 or contact us online to speak to someone about your case. Located in West Chester, Pennsylvania, we serve clients throughout Philadelphia, Chester County, and New Jersey.

Can Misclassification of Workers Lead to Penalties?

Employers may be tempted to classify their workers as independent contractors in order to save costs on employment-related taxes. However, misclassification of workers as either independent contractors or employees can have severe consequences for both the employer and employee. The number of workers being misclassified has been dramatically increasing the past few years across all sectors, including professional services, sales, and management. There is also an increasing trend toward employing gig workers in the delivery and transportation business.

Protections for Employees

When a worker is classified as an employee, federal law protects their treatment at the workplace. Employment laws protect employees from harassment, discrimination, and many other workplace difficulties. Employees may also enjoy certain benefits, such as paid time off or holiday pay, as well as insurance benefits. Employees can also seek compensation when injured in the course of performing their duties. To provide for these benefits and protections, employers must pay employment-related taxes, Workers’ Compensation benefits, and insurance benefits that can be costly.

Employers may be tempted to save on costs by simply labeling the worker as an independent contractor. However, various federal and state laws conduct a fact-based analysis to test whether a worker is truly an employee or an independent contractor. Simply labeling one or the other is not sufficient to maintain that status. The Internal Revenue Service (IRS) will classify a worker as an independent contractor if the entity that is engaging their services does not control the specifics of the work or how it should be done.

Factors Used to Determine Classification

Courts look at the facts surrounding the employment to determine whether an individual has been correctly classified as an employee or an independent contractor. Often, these fall into broad categories of whether the employer has behavioral and financial control, as well as the type of relationship involved. Factors include:

  • The degree of control the employer exercises over the worker in terms of hours worked, where the work occurs, or how it is done. Independent contractors typically have more control of how they organize their hours, where they choose to work, or the method by which the work is accomplished.
  • If the employee is employed full-time; independent contractors work on a temporary or seasonal basis.
  • Whether the employer provides equipment and all the tools required to perform the job; if the worker is using their own equipment, workspace, and materials, they are independent contractors.
  • How a worker is paid for the services; an independent contractor would issue invoices when the project is completed or other payment basis.
  • Whether the worker only works for one entity; an independent contractor usually has several clients for whom services are provided.

Misclassification-Based Lawsuits

Workers may anonymously report to state institutions about employer misclassifications. However, employer misclassification issues often arise when an employee has been terminated or due to other adverse decisions, such as discrimination or harassment affecting a worker. In a lawsuit alleging such harassment or termination, the worker may also allege additional damages for misclassification. The worker may claim payment for violations of wage standards and overtime pay. An independent contractor would not be eligible for unemployment or Workers’ Compensation, however, by arguing misclassification, this worker can try to receive benefits that were denied to them.

In addition to these issues, a misclassified employee could open the employer to liability for unpaid overtime which carries its own set of penalties.

The legal team at MacMain Leinhauser provides a full suite of employment-related representation, including human resource counseling and labor relation matters. For more information, contact us online or call us at 484-318-7106. Located in Pennsylvania, we serve clients throughout Chester County, Philadelphia, and New Jersey.

What Defenses can Employers Use Regarding Unemployment Claims?

Upon termination of employment, an employee will most likely file for unemployment insurance compensation. The Pennsylvania Unemployment Compensation department will review each claim to determine eligibility. Upon evaluation, the department will send copies of its determination to both the former employee and employer. At this time, either party may appeal the decision.  Appeals can be filed via regular mail, fax, and/or the internet.  When filing an appeal, it is important to note that it is time sensitive and will generally allow only 15 days for the appeal to be filed, which may be reduced further depending on how quickly you receive the notification/determination.

Unemployment insurance is a means to provide temporary income to workers who experienced job loss through no fault of their own. The source of the benefit is based on the taxes imposed on employers to cover the cost of compensation.  States levy taxes on employers for unemployment compensation. An employer’s tax rate increases as the number of former employees receiving benefits increases. The experience rating affects employer’s tax liability; therefore, employers should carefully consider every claim for unemployment benefits for legitimacy.

Factors that Evaluate Whether a Claim is Warranted

Employees are not allowed to claim unemployment insurance if they leave the employment voluntarily or if they were at-fault. However, these rules have exceptions and nuances that should be considered.

Employee voluntarily left the job. When an employer gives an employee a choice between resigning or being fired, such a situation is considered a forced resignation. Also, if an employee quits because he or she was compelled to do so due to an employer’s illegal acts, their resignation is not voluntary. Additionally, an employee may have good cause to quit, which could involve disability or relocation. These circumstances may also not be considered voluntary.

Employee Misconduct. Employers can challenge an unemployment claim if it involves employee misconduct, such as:

  • Violation of company policies or rules. An employee’s violation of company policies or rules was intentional.
  • Excessive absenteeism or tardiness. An employer may not have a strong case if the employee’s absence was due to illness or disability.
  • Failure to follow instructions. An employer may not have a strong case if an employee’s failure is attributable to unclear, unreasonable, or unjustifiable instructions by the employer.
  • Failure to perform a job according to normal standards. An employer would have a strong case against an employee if their conduct was egregious and did not conform to reasonable standards, such as lying, stealing, abusing, fighting, coming to work under the influence of alcohol or drugs, or sleeping on the job.

Preparing for the Appeal

Once the appeal is filed, it may take several weeks for a hearing to be scheduled with a Pennsylvania Unemployment Compensation Referee.  During the ongoing COVID-19 pandemic, all hearings are presently held via conference call.  The Referee’s office will send detailed instructions for the hearing along with the notification.  Once you receive notice of the hearing date, it is important to note that any documents you intend to use to support your case must be email to the Referee’s office at least five (5) days prior to the hearing.  The Referees are strict and will not allow a party to use documents submitted within five (5) days of the hearing. 

In preparing for the hearing, employers should review every unemployment claim filed by former employers to determine if the claim is legitimate, which includes verifying employee information. Temporary staff and independent contractors are not eligible. For independent contractors, you should be prepared to demonstrate how the contractor was free from your direction and control, and how he or she held themselves out as an independent contractor in an independently established trade, custom or practice.  It is also necessary to verify whether the employee has been with the employer long enough to qualify. If their status changed from full-time to part-time and their wages were reduced, they may be able to seek benefits.

Additionally, employers should verify information regarding the employee’s income, dates of employment, and vacation pay information for accuracy.  Employers should also gather employee records, such as resignation letters, attendance records, termination records, and disciplinary actions or other documentation that proves employee misconduct. Employers may also have to identify witnesses to prepare for the appeal and hearing.

Finally, with regard to an independent contractor, other documents to consider submitting for the hearing include any contracts/agreements, W-9, 1099, insurance information, and any other document demonstrating the relationship between the parties.

The legal team at MacMain Leinhauser provides legal services geared to defending employers, including appeals of unemployment claims. For an initial consultation, contact us online or call us at 484-318-7106.  Located in West Chester, Pennsylvania, we serve clients throughout Philadelphia, Chester County, and New Jersey.

When Should Small Businesses Engage an Attorney?

Small business owners often have limited financial resources. Start-up costs can be overwhelming, and owners must weigh competing priorities in which they invest their limited resources. It may be tempting for owners to forego seeking legal advice or retaining an attorney. However, legal counsel can provide critical advice on many key aspects, including business formation, trademark registration, securing patents, contract negotiations, employment contracts, business immigration, and employment law issues.

Considerations for Small Businesses

Small business owners should evaluate the nature of their businesses to determine whether legal counsel is necessary. For example, if the business is a sole proprietorship, an attorney may not be necessary for all matters, but it is vital to determine the issues that need legal attention. For the formation of an LLC or a partnership, the Secretary of State will have the necessary forms available to form the business organization desired. If one needs to determine which business formation is best suited for the business and its goals, it is advisable to consult an attorney to determine the type of entity that should be created. The formation of a corporation is more complicated and requires additional steps to maintain legal status in which legal counsel is advisable.

Small business owners must also determine how to comply with government regulations, wage and hour requirements, and to monetize their know-how.  Consulting with counsel prior to making decisions can avoid larger legal bills for the company down the line and provide piece of mind for business owners.  There are many legal considerations for small business owners to navigate in order to run a successful business. Many of the following legal issues may require an attorney:

Business Formation: When a business requires investments from several investors or has multiple partners, the business structure and formation will be more complicated than a straightforward sole proprietorship or partnership. An attorney can draft and negotiate investor and partnership agreements. Additionally, an attorney can evaluate the needs of the owners against the pros and cons of each type of corporate structure.

There are advantages and disadvantages to each, as one type of formation does not suit all business needs; some may offer more protection from liability. In exchange for protection from liability, corporations require adherence to formalities. If a business fails to fulfill the required formalities, the corporate veil that protects it from liability can be pierced causing legal exposure to the owners. An attorney can help business owners navigate the corporate formalities to avoid the risk of exposure.

Contract Negotiations: In order to conduct business, owners need to engage in relationships with investors, partners, clients, customers, employees, and third parties, such as vendors and suppliers. All relationships need to be governed by contracts. An attorney can draft and negotiate various contracts a business owner needs.

Contracts must be written with clarity, outline expected conduct from each party, and lay out terms of the contract so that each party is certain of what is required. Often, contracts may not lay out the specific issues a business will face. An attorney can evaluate the unique needs and challenges of the business to ensure that the contract terms adequately meet those needs.

Employment: Business owners need to be cognizant of laws protecting the fair treatment of their employees. There are laws dictating fair pay for overtime work, equal treatment, occupational safety, and payment of employment-related taxes. Employees need to be properly classified; an owner may not misclassify an employee as an independent contractor. An employer should also consult with an attorney when terminating an employee to ensure that they have appropriate policy statements and employment contracts that cover issues related to protecting business confidentiality, competition, and ownership rights.

Owners may also need to hire foreign employees with special expertise. An attorney experienced in business immigration and employer sponsorship of foreign workers can provide counsel regarding the work visas required and help with filing applications on behalf of the owners.

Securing Intellectual Property Rights: A company has intellectual property rights that can be trademarked. A business may be developing a product that may be entitled to a patent. Often, a business may be developing a product that may already be patented by a competitor. Knowing that another company already has rights to the product or technology before investing time and money in development can save costs. A business can instead try to license the right to manufacture or develop the product.

There are also copyright laws in all expressions, literature, and other material that a business produces. There may be trade secrets in recipes or other methods. An attorney can advise the owners by helping them identify all the sources of intellectual property the business has to leverage and protect them. Also, an attorney can help a business identify whether it is violating another company’s intellectual property rights so that the owners can limit or eliminate exposure.

Litigation: When faced with a lawsuit, it is important to consult an attorney immediately. When served with a complaint, there are limited time periods in which to respond. Failure to respond on time can severely affect one’s rights. If owners already have an attorney that has been handling their daily business operations or working with them, that attorney will be better prepared to handle the litigation.

Cultivate Relationships with the Legal Community

Small business owners should not underestimate the serviceability of loyal and dependable counsel to enhance their business. Your legal counsel should understand your business, work to enhance its operations, and guide you to avoid pitfalls as your business grows.  Along with accountants, insurance providers, and tax consultants, businesses should retain and cultivate relationships with legal professionals.  An attorney that works with the business from the start has a greater understanding and institutional knowledge that can be invaluable when it comes to negotiating on its behalf, as well as identifying risks and opportunities.

The small business attorneys at MacMain Leinhauser provide well-rounded representation. Our experienced attorneys understand the special needs of small business owners and will take the time to listen and offer practical advice in a cost-effective manner. For an initial consultation, contact us online or call us at 484-318-7106. Located in West Chester, Pennsylvania, we provide legal services throughout Philadelphia, Chester County, and New Jersey.

Supreme Court Rules that Title VII Protections Extend to LGBTQ Workers

Cases have grappled with the scope of Title VII of the Civil Rights Act of 1964.  Since its passage, many administrative agency and litigation cases have tackled the question of whether Title VII applies to workers who are lesbian, gay, bisexual, transgender, or queer (LGBTQ).  On June 15, 2020, the U.S. Supreme Court, in a 6-3 opinion, ruled that the prohibition against discrimination on the basis of sex includes discrimination on the basis of gender identity and sexual orientation.

The landmark ruling confirms that individuals may bring suit against an employer if an employer fires or otherwise discriminates against them because of their sexual orientation or gender identity. If the employment decision about the worker was based, in part, on sexual orientation or gender identity, that in itself is enough legal justification for the employee to file a claim.

Justice Neil Gorsuch, writing for the court, stated that from the time of Title VII’s adoption, “a straightforward rule emerges: An employer violates Title VII when it intentionally fires an individual employee based in part on sex.”  Applying this rule, the Court stated “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.”

Effects of the Supreme Court Ruling for Employers

The effects of this ruling for employers will be most impactful in states that do not have statutes protecting LGBTQ workers. The Williams Institute of the UCLA School of Law estimates that nearly half of the 8.1 million LGBTQ workers in America currently reside in states that lack such protections. New Jersey has some of the strongest anti-discrimination laws in the country. The New Jersey Law Against Discrimination (NJLAD) already protects workers who are transgender or who do not appear traditionally feminine or masculine. Pennsylvania’s laws are not as broadly written, but the state Human Relations Commission issued guidance years ago that aligns with, but pre-dates today’s Supreme Court ruling.  The ruling by the Supreme Court will likely be somewhat more significant on employers in the Keystone state, but the ultimate message to employers is that discrimination on the basis of sex, sexual orientation, or gender identity are prohibited.

Impact on Religious Institutions

The court declined to address what impact the ruling would have on religious institutions.  The Court did state that the ruling of the Court today was not directed at religious institutions since the question was not raised.  Additionally, the Court acknowledged the existence of the Religious Freedom Restoration Act and its prohibition on the federal government from burdening a person’s free exercise of religion unless there exists a compelling governmental interest.  The Court stated that “because the RFRA operates as a kind of super statute, displacing the normal operation of other federal laws, it might supersede Title VII’s command in appropriate cases.”   Courts in the past have upheld the decisions of religious institutions to follow the dictates of their beliefs when making employment decisions, even if the decision would otherwise be considered discriminatory on the basis of sex.  Today’s decision, however, does not make a ruling on that issue.

If you are an employer or religious institution with concerns about the latest Supreme Court decision regarding Title VII of the Civil Rights Act of 1964, contact the legal team at MacMain Leinhauser. We have experience guiding employers in all aspects of employment law, including discrimination and harassment. For an initial consultation, call us at 484-318-7106 or fill out our online contact form. We gladly assist employers throughout Pennsylvania and New Jersey from our office in West Chester, Pennsylvania.

What Should I Know About My Public Employees’ Social Media Use?

Social media sites, such as Facebook, Instagram, and Twitter, have changed the way we communicate as a society. Now more than ever, we have a unique glimpse into the private lives of our acquaintances, friends, colleagues, and even employees. While we are endowed with free speech in this country, public sector employers should still be cautious about just how much their employees reveal in their online posts. If an employee works for a public school, government office, or law enforcement agency in New Jersey, they can get in trouble for a social media post, especially if it reflects poorly on their workplace.

New Jersey Law and Public Workers’ Social Media Use

New Jersey Public Law 2013, Chapter 155, addresses the interests of the public employer and the rights of the employee acting as a free citizen utilizing social media. The law prohibits the employer from seeking access to employees’ social media accounts, but it does not prevent them from viewing public posts or posts brought to their attention. Under the law, a public sector employer has the following rights when it comes to reviewing employee social media posts:

  • A requirement to comply with state and federal laws.
  • Enforcement of policies regarding the use of electronic communication during working hours on their devices or made for business purposes at any time.
  • Ability to investigate issues of compliance with applicable regulations and laws brought to their attention as a result of social media activity and any unauthorized transfer of confidential information to a personal account.
  • View, access, and use any information posted by a potential or current employee on public social media accounts.

Bad Social Media Use

Social media is important to both the employer and the employee. According to a 2018 CareerBuilder survey, about 43 percent of employers use social media to check on current employees. The following are social media behaviors that left employers with a bad impression:

  • Provocative or inappropriate information
  • Drinking or drug use
  • Discriminatory comments
  • Poor communication skills
  • Bad-mouthing previous employers
  • Sharing confidential information from previous employers
  • Lying about an absence
  • Posting too frequently

An employer can act on public posts that contradict the values of the public school, office, or department where the employee works; an employee does not have to give them access. If an employee retaliates and uses slander against the institution, they may be penalized under the law. An experienced employment lawyer can best explain your rights.

When it comes using social media, finding out where to draw the line at free speech is not always simple. At MacMain Leinhauser, our skilled West Chester employment lawyers handle complex legal issues facing public sector employers. To learn more about our services, call 484-318-7106 or use the online form to contact us today. Located in West Chester, Pennsylvania, we represent clients throughout Philadelphia, Chester County, and New Jersey.

Equal Employment Opportunity Laws During COVID-19

The United States Equal Employment Opportunity Commission (EEOC) recently updated their technical assistance publication. This update addresses commonly asked questions about the Federal Equal Employment Opportunity Laws in accordance to the COVID-19 pandemic. The new publication entitled, “What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws,” discusses the previous publication about the Americans with Disabilities Act (ADA) and the Rehabilitation Act, as well as including a question and answer section.

The question and answer section of the updated publication addresses concerns regarding returning to work, appropriate accommodations being made, and the current harassment protocol. Answers to common questions include:

  • How much information may an employer request from an employee who calls in sick to protect its workforce during the COVID-19 pandemic?
  • When may an ADA-covered employer take the body temperature of employees during the COVID-19 pandemic?
  • Does the ADA allow employees to stay home if they have symptoms of the COVID-19?
  • May an employer disclose the name of an employee to a public health agency if they have COVID-19?
  • If an employer is hiring, may it screen applicants for symptoms of COVID-19?

This publication also provides the public with resources on issues related to the current COVID-19 pandemic. The EEOC will continue to provide updates and assistance to the community during this public health crisis. To read the question and answer section, click here.

The main goal of the EEOC is to advance the opportunity of employees in the workplace and develop laws that prohibit employment discrimination. This includes discriminating against a job applicant or employee on the basis of sex, race, color, religion, age, or disability. Those who engage in discriminatory acts could face legal charges. Employers with at least 15 employees are covered under EEOC laws, as well as most labor unions. For more information on the EEOC, click here.

The experienced labor and employment attorneys at MacMain Leinhauser are available to answer any questions you have about the new employment laws and the effects COVID-19 has on workers in the United States. We are taking client inquiries over phone or video conference to maintain the health and safety within our staff and clients. Contact us online or call us today at 484-318-7106 for an initial consultation. Located in West Chester, Pennsylvania, we serve clients throughout Philadelphia and Chester County, Pennsylvania, as well as New Jersey.

Are Your Workers Misclassified?

Today’s businesses rely on temporary staffing, independent contractors, and outside consulting firms opposed to hiring employees to meet their needs. However, employers may be liable when they incorrectly classify these workers as independent contractors. It is important to classify workers appropriately or risk facing stiff penalties from the Internal Revenue Service (IRS) and the Department of Labor.

Businesses may be tempted to classify workers as independent contractors due to cost savings from not having to pay social security and employment taxes. Independent contractors are not covered under unemployment or Workers’ Compensation insurance, and they are not eligible for health care and leave of absence benefits. Their taxes are also not withheld by the company. However, employers are simply not aware of the nuances of employee classification and mistakenly believe that they correctly classified them as an independent contractor.

How Does Misclassification Occur?

A misclassification occurs when an employer classifies a worker as an independent contractor when they should be classified as an employee.   Both intentional and unintentional misclassifications carry penalties for employers from the IRS and Department of Labor. When the misclassification is intentional, the employer may be liable for 100 percent of the worker’s taxes.  Employers may be liable for almost 40 percent of the workers taxes when their misclassification is unintentional.

Governments lose considerable amounts of tax revenue due to employer misclassification of workers prompting a recent crackdown and increased scrutiny of employer classifications of their workers. Employment taxes withheld cause revenue losses for the Social Security Administration, Medicare, state unemployment, and workers compensation funds.  Because of the losses incurred, government agencies, such as the IRS and Department of Labor, have an incentive to monitor and audit employers for misclassification. Furthermore, the Department of Labor wants to protect workers so that they receive all that they are entitled to as employees and prevent employer abuse.

Worker Classification

Classification of workers as independent contractors may trigger audits by the IRS. When determining whether a worker is an independent contractor, the IRS looks at several factors to determine the degree of independence and control the independent contractor exerts in their work. The following considerations are used to determine the appropriate worker classification:

Behavior Factors: Behavioral factors include the degree of control the company has over the worker. Does the employer provide training, guidelines, equipment, and tools? Are the functions provided executive and managerial in nature?

Financial Factors: Financial factors look at how the worker is compensated. A true independent contractor would provide invoices that account for profits and losses. An employee is paid a steady amount on a periodic basis.

Our team of attorneys at MacMain Leinhauser provide human resource counseling, as well as employment-related services. It is not worth triggering an audit and risking penalties from the IRS or Department of Labor. Call us today at 484-318-7106 or contact us online for an initial consultation. Located in West Chester, Pennsylvania, we serve clients throughout Philadelphia and Chester County.

Employee Appreciation During the Holidays

The holiday season can be a hectic time of the year for all. On the home front, employees must get holiday shopping, travel plans, and child-care sorted out. On the work front, there are deadlines to be met while more staff is taking paid time off and fewer business working days. Also, there may be a lack of motivation to work due to the distractions and demands of the holidays. As employers, it is important to keep employees motivated and focused during the holidays. Employers must work harder to balance creating a festive workplace while also getting work done.

Plan Early

It is important to plan before the holidays hit to make sure deadlines are met. To fulfill business obligations, it is important to recognize that the holidays will create shortages in staff as they take more vacation time, there are fewer business working days and more social demands on employees. It is important to include employees’ needs and considerations during the holidays when creating project plans and deadlines. Project planning should consider the special issues presented during the holidays so that crucial work is completed before the holidays arrive.


It is important to create open communication with employees. Encourage employees to communicate early about their personal obligations so that everyone is aware of the workload remaining and progress of the project.  By staying in constant communication, employers can avoid surprises during the holidays when they will be short staffed. By frequently checking in with project leaders and staff regarding the status of the projects, employers can stay on top of the deadlines and avoid any mishaps.

Vacation Planning

Encourage employees to turn in their vacation requests early to be approved in a timely fashion. Urge them to talk with their peers and team members regarding the vacation time they wish to take so that everyone is not on vacation at the same time. Create incentives for them to work together to cover one another while one is on vacation. Recognize those employees who pitched in extra hours during the holiday crunch time to compensate for those who were on vacation. Allow them to take time off when deadlines have been met or projects have been completed.

Reward Employees with a Bonus

Sometimes promising a bonus if a project is completed before the holidays is a great way to motivate employees. Employees may appreciate the extra cash during the holidays and may be motivated to finish the project to take the vacation they have planned. Make sure the project expectations are reasonable so that it can be completed in time. Otherwise, unreasonable expectations may create more stress for everyone.

The holidays are a time for everyone to focus on family and social activities.  Recognizing that your employees benefit from having healthy social lives, allowing them to relax during the holidays, and supporting them with time off from work will increase employee productivity.  It is important for employers to create a work-life balance so that employees do not experience burnout and stay productive.

For legal advice on workplace issues, contact the employment and labor lawyers at MacMain Leinhauser. From our office in West Chester, Pennsylvania, we serve clients throughout Philadelphia and Chester County. Call our office at 484-318-7106 or contact us online today for an initial consultation.

What Do I Need to Know When Distributing Holiday Bonuses?

The holidays are a great time to show gratitude toward employees. They will value gifts from employers at this time as this can boost morale at the office and create a positive work environment. A way to show appreciation that is not monetary in nature may be to grant days off during the holidays so employees can spend more time with their families. However, if the office budget allows, a holiday gift in the form of a cash bonus may be the most valued, as it may ease employees’ financial stress from holiday shopping and travel.

When choosing to give a monetary bonus, employers should be cognizant of tax implications and federal labor laws to avoid tax liability, labor law violations, and anti-discrimination lawsuits.

IRS Regulations

Most employer gifts have tax implications and need to be reported.  However, in limited circumstances, a gift may qualify as a de minimis fringe benefit. To qualify as such, it must be one for which, considering its value and frequency with which it is provided, is so small as to make accounting for it unreasonable or impractical.

The Internal Revenue Service’s (IRS) definition does not provide any dollar limits for the de minimis gifts exception. A qualifying gift does not require reporting. Even when the gift is of limited dollar value, it should be given infrequently, if it is given on a regular basis, then it will not qualify as a de minimis benefit and will have to be reported. It is prudent to consult with a qualified lawyer to determine whether the bonus qualifies as a de minimis gift.

Fair Labor Standards Act

According to the Federal Labor Standards Act (FLSA), nonexempt employees are entitled to overtime pay when they work over 40 hours in a workweek. The overtime rate is based on the regular rate of pay. The regular rate of pay is determined by dividing the total pay in the workweek by the total number of hours an employee has worked. When calculating the overtime rate, it is important to consider whether the bonus is also included in determining the rate as certain bonuses should be used to calculate the rate of pay. Failure to do so will expose employers to labor law disputes and violations.

Bonuses that are discretionary and classified as gifts are not used to calculate the rate of pay to determine an employee’s overtime rate. Sums paid as gifts and payments in the nature of gifts made at Christmas time or other special occasions are excluded from determining the rate of pay. Therefore, to qualify as a gift, it must not be related to the hours worked.   These payments must be discretionary, not part of any employment contract or agreement, and the employee must not expect such payments regularly. A one-time holiday payment that is based on an employee’s two-week salary is considered a discretionary bonus if it was not already part of the employee’s contract, according to the Department of Labor’s regulations.

For legal advice on distributing holiday bonuses to your employees, consult the lawyers at MacMain Leinhauser. For an initial consultation, contact us online or call us at 484-318-7106. Located in West Chester, Pennsylvania, we serve clients throughout Philadelphia and Chester County.