Employment & Environment: Employee Welfare

Question 1

Employment & Environment
Employee Welfare
Social Security

Answer 1

Purpose: provide partial replacement of earnings upon retirement
Mechanism: monthly benefits are paid to retired worker form age 62 onwards
Fully Insured worker: entitled to some benefits
- 10 years of contributions
- benefits
- survivor benefits for widow/widower and dependents
- disability benefits for worker and family
- old age retirement benefits for worker and dependents
- reduced by early retirement before age 65
- lump-sum death benefits
Currently Insured worker
- limited survivor benefits
- benefits for disabled worker and dependents
- lump-sum death benefits
Medicare
- portion of medical for 65 or older
Disability Benefits
- severe physical or mental impairment causing them to not work for a year or more
- must be total
- after 24 months of disability, medicare is made available

Question 2

Employment & Environment
Employee Welfare
Federal Insurance Contributions Act

Answer 2

Taxed: Employees, employers, and self-employed
Applied: only to wages
Features of FICA: 
- same rate
- rates change often
- income cap on amount paid
  - after max paid, not taxed until next year
  - work 2 jobs = refund
  - 0.9% additional medicare tax
- funds medicare

Question 3

Employment & Environment
Employee Welfare
Federal Insurance Contributions Act
Employers Contributions
Employer's Rights

Answer 3

Employers Contributions
- pay own share
- withhold employee’s share and remit
- pay employee’s share if failure to withhold
- furnish employee with written statement of wages paid and contributions withheld
- Supply taxpayer Identification Number
Employer’s Rights
- collect employee’s share from employee
- deduct as business expense contributions made on its own behalf

Question 4

Employment & Environment
Employee Welfare
Payroll Tax Liability

Answer 4

Intro
- certain corporate taxes are treated as “trust fund” and must be remitted to tax authorities
“Responsible Person”
- imposed on any person required to pay tax who doesn’t
- seven factors: officer/director, owner, active in management, ability to hire/fire, discretion to decide order debts are paid, control over bank accounts, check-signing authority
- actual authority/ability given their role
- accountants not responsible when: bookkeepers and not officers, part time but had check writing ability, only signed checks at request of officer, preventing double payment, controller but needed co-signer
“Willful failure”
- not accidental or inadvertent
- need not include intent to defraud
- awareness of obligation and a conscious and voluntary payment of someone else with funds that should have gone to government

Question 5

Employment & Environment
Employee Welfare
Missed

Answer 5

• Employee must request FMLA leave
• Fiduciaries must invest funds in accordance with the “prudent person” standard.
• Church benefit plans are excluded from coverage.
• FMLA Leave: Jill will be eligible for FMLA leave if she has worked for her employer “for at least 12 months and for at least 1,250 hours during the previous 12 months.”
• ERISA does NOT apply to government pension plans
• Edna might “participate” in a breach of fiduciary duty by one who is, indeed, a fiduciary.
• Edna might participate in an illicit transaction between the plan and a “party in interest.”
• Dan will have to pay all the premiums himself.
• layoff 18 months, disability 29 months