Help Wanted: Disclosing tips to employer
A facialist at a day spa must now begin disclosing weekly tips to the facialist’s employer for tax reasons — and it’s legal. IRS rules require employers to have staff report tips when those are over $20 per month. (Oct. 21, 2011) Credit: Nancy Borowick
-- Taxing Question
Here is what the IRS said:
"If you receive $20 or more in cash tips in any one month, you must report your tips for that month to your employer. Your employer is required to withhold federal income, Social Security and Medicare taxes on the reported tips."
-- Excessive PTO
"We don't normally allow employers to do this. An advance can't be recouped from a final paycheck. If the person were to file a complaint, we would investigate."
So what are your options? You can ask the former employee to reimburse you, or you can sue. Hopefully, the former will prevent the latter.
-- Legal Policy?
Under Medicare law, employers with 20 or more employees generally must offer the same primary group health-plan coverage to employees who are 65 and older that they offer to younger workers and their spouses, said attorney Melissa K. Ostrower, who works in Jackson Lewis' Manhattan office. The same holds true for the employees' spouses who are 65 and older, even if the employees are younger, she said.
Those employees can then decide whether to opt for primary or secondary coverage through Medicare.
"Employees who are eligible for Medicare may choose to reject the employer group health-plan coverage if they would like to enroll in Medicare as their primary coverage while still employed," she said.
The primary coverage pays benefits first and is known as the primary payer, which is followed by the secondary payer.
Employees can't legally be coerced or enticed to forgo the company health plan for primary coverage in favor of Medicare.
"The Medicare secondary-payer rules prohibit employers from offering financial or other benefits as incentives for employees to elect out of participation in the employer's health plan," Ostrower said.
By the way, you're not alone in dealing with this issue.
"This is a very common question as employers try to develop lawful ways to reduce health care costs, particularly in the current high-cost environment," Ostrower said.For more on federal tax laws and reporting tips go to http://1.usa.gov/1aIfmP0
For more on state labor laws and wage deductions go to http://bit.ly/11CMa9u
'It's personal to me' The law would require businesses to have proper state licensing, prove that their employees are paid and ban staff from living at the spas or sleeping there overnight. Repeat offenders could face penalties up to $25,000. NewsdayTV's Shari Einhorn has more.
