Lancaster Law Blog : Lancaster PA Lawyer & Attorney : Russell Krafft & Gruber Law Firm : Pennsylvania : Lancaster's Legal Link

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These days, everyone is reacting to rising gas prices, including the Internal Revenue Service. Through Announcement 2008-63, the IRS is raising the optional standard mileage rate for operating a vehicle for business purposes from 50.5 cents to 58.5 cents per mile, effective July 1, 2008. 

The new rate applies to applies to qualifying expenses that are both incurred and reimbursed on or after July 1.

While there are generally no Pennsylvania laws requiring employers to use the IRS' rate, there may be some tax advantage for doing so. The IRS will deem employers who make qualifying reimbursements up to 58.5 cents per mile as meeting their accounting requirements, thus no income reporting or withholding is required for those reimbursements. However, employers need to make sure that their employees have provided adequate proof that the mileage was strictly for business use.

Qualifying employees who are not reimbursed for their business mileage will be able to deduct 58.5 cents per mile on their individual tax returns. However, it is important that the qualifying miles incurred between January 1, 2008 and June 30, 2008 are recorded separately from the miles accrued on and after July 1 because the old rate continues to apply to them

More information on this topic is available in section 5 of IRS Publication 15, although the Publication does not currently take into account the new rate.

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We have tackled a number of complex employment topics in our blog. Recently, feedback and questions have led us to "go back to the basics" and visit the topic of General Wage and Hour.

The Pennsylvania Department of Labor and Industry attempts to answer many questions about wages and hours in the FAQs section of their website. While the Department of Labor and Industry's site isn't an all inclusive legal resource, it does provide cursory answers to the questions asked most regularly.

• What is my legal responsibility to employees regarding breaks and meal periods?

The Pennsylvania Department of Labor and Industry states, "Pennsylvania employers are not required to provide breaks to employees age 18 and over.  If the employer permits break periods, and they last less than 20 minutes, the employee must be paid for the break.  If the employer allows meal periods, the employer is not required to pay the employee if the employee does not work during the meal period and it lasts more than 20 minutes.  Employers and employees may agree to different terms of the employment is governed by a collective bargaining agreement."

• Am I required to pay overtime wages, if so, to whom and who is excluded?

The laws and rules surrounding overtime are governed by the Fair Labor Standards Act.   The Act requires employers to pay employees one and half times their regular rate for all hours worked over 40 in a week.  However exemptions to the general rule exist.  An article featured on Inc.com, Who's Exempt From Overtime by Nancy Cooper, provides guidelines on properly classifying an employee. In some cases it is difficult to make the proper determination and it would be advisable to consult an attorney.

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 In a weakening economy, employers should pay attention to their vacation policy.   If you need to cut costs with lay offs, you could end up losing your shirt on pay outs for vacation pay. Employers need to decide and articulate whether vacation is paid if accrued and not taken. Limits should be placed on how much vacation can be accrued, that is, rolled over from year to year. There aren't requirements to pay accrued, but unused vacation pay unless that is your policy. Employers are free to specify that vacation is a benefit to be taken or used, and if not used, will not be paid. Please consider the following when determining how to handle unused vacation time:

• Considerations When Paying Accrued but Unused Vacation Pay

If you pay accrued but unused vacation, will you pay it in all circumstances? To the person you just fired for stealing? To the person who quit without notice and is setting up a competing business and taking a few of your key employees to work for him? 

 Your policy can provide that vacation pay will be paid to employees who are laid off but not those who are fired for willful misconduct or who voluntarily quit. This does make your job more complicated, however. Suddenly, at the termination of employment, you are acting as an unemployment compensation referee in making a determination as to the nature of the termination in order to decide whether to pay vacation benefits. 

• How not Paying Vacation Benefits Can Effect You

A decision against paying vacation benefits can come back to haunt you in a wage payment and collection claim. Vacation pay is considered wages if the employer's policy is to pay earned but unused vacation. Add the headaches and penalties and attorney fee liability, and that is no vacation. 

•  Managing Employee Expectations

Is your vacation policy clear? As prices rise, are you prepared to deal with employees who are coping by staying home and continuing to work expecting to be paid for their unused vacation? Also, if you are willing to pay have you considered your budget to pay employees 56 weeks in a year? If you are not planning to pay existing employees, even if they are working 52 weeks a year and take no vacation, be sure to communicate your policy to avoid a misunderstanding.

Also consider the sad situation where an employee hasn't taken a vacation in years, and you have no policy regarding rollover? If the employee's entitlement is four weeks a year, at year 13, they may be thinking that they are going to get a year off with pay. Crazy as it seems, you should be sure they understand that is not happening.