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The IRS allows S-corporations to pay for (and deduct) the medical expenses of their shareholders, but only under certain stipulations. First, the employee or owner must be a more-than-two-percent shareholder of the corporation. Second, the insurance premiums paid on behalf of (or reimbursed to) a shareholder-employee must be reported by the S- Corporation as wages on the shareholder-employee’s Form W-2. These benefits are not subject to Social Security or Medicare (FICA) or Unemployment (FUTA) taxes….

As a related note, the IRS has reconfirmed earlier guidance that prohibits companies who do not establish individual health care plans from reimbursing employees for health insurance premiums or paying for them with employees’ pre-tax dollars (not including them in taxable income). Per Notice 2013-54, the penalty can be up to $100 per employee, per day, which amounts to $36,500 per employee, per year. The IRS guidance to this specific question is as follows: After-tax arrangements…

On September 30, Marathon HR celebrated its tenth anniversary, and we are proud to say that we were surrounded by many of the clients who have been with us over the years. We would like to take a moment to thank all of our clients, friends and supporters! We hope to provide you with many, many more years of excellent service. Many thanks to our friends and customers in the Athens Referral Factory Front row…

We recently learned of a situation where a business hired a background screening firm that, in the terms of the paperwork it had applicants sign, stated a requirement that was illegal. Specifically, the vendor stated that by signing the background check authorization form, the applicant was agreeing to hold the vendor and its client harmless from any activity relating to the background check or the information obtained through the process. Illegal Language on Background Check…

Small businesses are already required to submit a significant amount of paperwork each year, without suffering the inconvenience of a legal “discovery” request. One of our clients recently received such a notice, in which she was asked to provide all relevant documents and information pertaining to a terminated employee. Because she was a client of Marathon HR, we were able to provide all the available documents and verify that what we sent constituted all the…

We recently learned of a case, filed by the U.S. Department of Labor (USDOL) against North Jackson Specialty Steel in Ohio, where an employee reporting safety concerns was terminated within days of his complaint. The USDOL alleges that the company fired the employee—a furnace operator—specifically for reporting unsafe conditions after he learned that a safety device had intentionally been disabled. When any company receives such a complaint, it should investigate the problem. It then can take positive…

On September 2, 2014, ERISA—the Employment Retirement Income Security Act—turned 40 years old. Implemented at a time when companies were able to go out of business and take their employee’s pensions with them, ERISA changed the face of retirement forever. Today, it continues to protect employees in many ways, including protecting some $7.5 trillion in assets for 141 million workers. The impetus for ERISA began when Studebaker Corporation went bankrupt, and its poorly funded pension plan…

We’ve all heard of “summer reading lists” for lazy days spent on vacation, but how about a Labor Day reading list? In honor of the holiday, the Department of Labor added 10 new titles to its Books that Shaped Work in America. This list now encompasses 110 tomes, ranging from a delightful young people’s favorite (The Little Engine that Could; Watty Piper) to an insightful analysis of the corporate model (The Concept of the Corporation; Peter…

In July 2014, when Ross Harris left his 22-month-old son, Cooper, locked in a car while he went to work at Home Depot, the entire community—if not the nation—mourned the death of an innocent child. And, while Cooper’s death was certainly tragic, the case raises concerns for business owners that go beyond child safety. In leaving Cooper in the car, Harris engaged in unlawful activity on company property. Even if the child had not been injured by…

In honor of the start of football season, we wanted to remind our customer that successfully running a business, like coaching a football team, requires leading the team with a well-defined set of rules and responsibilities. And, as with football, for every play you run, all players should know and embrace their roles and carry a shared goal of success. In small companies where everyone pitches in, this analogy may be not be fully relevant….