FEDERAL TAX UPDATE
- Bloomberg Government reports - Kudlow: 15% Middle Class Tax Rate Sounds Like `a Good Idea': A 15% tax rate for the American middle class "sounds like a pretty good idea to me," though any new tax policy would be many months away, White House economic adviser Larry Kudlow tells CNBC in response to question about a Washington Post report; Adds that he doesn’t know if a 15% rate will be achieved.
- Kudlow says President Trump has asked him to explore what he calls "tax cuts 2.0" and that he will have to consult with a lot of people and get the president’s sign off before anything is finalized; It’s "way too soon" to commit to anything specific.
- NOTE: Washington Post reports some of Trump’s economic advisers are exploring a 15% tax rate for the middle class, with some seeing the idea as a simple way of selling Republicans’ economic agenda ahead of the 2020 election; It’s not known whether Trump has approved the idea himself, the Post says.
- Separately, Kudlow says he believes the U.S. doesn’t need to go to negative interest rates because the economy is in "very good shape"; Kudlow says he doesn’t know if Trump actually wants to go negative
- Kudlow also says while it is possible tariff adjustments may be part of phase one of the U.S.-China trade deal, there won’t be any rollbacks before the agreement is completed.
- Bloomberg Government reports - Denny’s Server Files Second Nationwide Tip-Credit Class Action: A server filed her second lawsuit against hundreds of Denny’s corporate-owned restaurants, this time in Florida federal court, alleging that the 24-hour diner chain intentionally underpays thousands of tipped employees in violation of the Fair Labor Standards Act. Lindsay Rafferty filed a putative collective action Nov. 13, individually and on behalf of other Denny’s Corp. servers across the country, in the U.S. District Court for the Southern District of Florida. Rafferty, a server at a Denny’s restaurant in Akron, Ohio, previously filed an identical suit in the Northern District of Ohio. That court allowed her tip-credit claims to move forward in July, but limited the potential class to Ohio-based Denny’s servers. The court denied Rafferty’s subsequent motion to transfer the case to the Southern District of Florida, and she voluntarily dismissed the suit in September.
- Denny’s runs its corporate-owned restaurants “virtually identically” and uniformly uses tip-credit wage practices that violate the FLSA, Rafferty alleges in her latest complaint. The FLSA allows employers to pay tipped employees $2.13 in direct hourly wages, as long as the employee receives enough in tips so that their hourly wage at least equals $7.25 per hour, the federal minimum wage; otherwise, the employer must make up the difference. Before they can use the tip credit, though, the FLSA mandates employers to provide tipped employees certain information. But Denny’s doesn’t tell servers crucial information like the amount of tip-credit it claims, that it can’t claim a higher tip credit than what servers receive, or that servers must retain all tips if there’s no valid tip pool arrangement, Rafferty says, which makes it ineligible to claim tip-credits under the FLSA.
- Denny’s also requires servers to perform tasks tasks like working the cash register, prepping takeout and delivery orders, and answering the phone, but improperly pays servers tip-credited wages for performing these unrelated work that doesn’t elicit tips, Rafferty alleges.
- U.S. Department Of Labor Announces Proposal To Expand Access To Bonuses For America’s Workers: The U.S. Department of Labor's Wage and Hour Division (WHD) today announced a Notice of Proposed Rulemaking (NPRM) that would allow job creators to offer bonuses or other incentive-based pay to employees whose hours vary from week to week. The proposal would revise the regulation for computing overtime compensation for salaried, non-exempt employees who work hours that vary each week (i.e., a fluctuating workweek) under the Fair Labor Standards Act (FLSA). It also clarifies that bonus and premium payments on top of fixed salaries are compatible with the fluctuating workweek method of compensation, and that supplemental payments must be included when calculating the regular rate of pay as appropriate under the FLSA. The proposal includes examples and minor revisions to make the rule easier to understand. Read the press release from DOL here.
- U.S. Department of Labor schedules two additional webinars on the Fair Labor Standards Act’s overtime final rule: The final rule updates the earnings thresholds necessary to exempt executive, administrative and professional employees from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime pay requirements, and allows employers to count a portion of certain bonuses and commissions towards meeting the salary level. The new thresholds account for growth in employee earnings since the thresholds were last updated in 2004. Due to the overwhelming response received for the overtime final rule webinar on November 4, the Wage and Hour Division has scheduled two additional webinars to provide compliance assistance on the final rule on:
- Provisions of the final rule so that employers can comply with the changes and inform workers and their advocates of their rights.
- Specific changes that the final rule will make when it becomes effective on January 1, 2020
- Detailed information about new materials and resources available on the overtime final rule website
Throughout the webinar, participants will have the opportunity to submit questions. Wage and Hour Division hosts will answer as many of those questions as possible following the presentation. The webinar will be presented on November 12, 2019, at 1:00 p.m. Eastern Time and on November 19, 2019, at 1:00 p.m. Eastern Time. After registering, you will receive an email with detailed log-in information for the webinar.