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Is it legal to set a deadline for expense vouchers?

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Linda J. LernerIs it legal to set a deadline for expense vouchers?
By Linda J. Lerner  |  November 2, 2008clock

Q. My husband started working for a company two-and-a-half months ago. He recently signed its new employee handbook in which it states the company policy is to not reimburse any expenses submitted more than 30 days after the last day of travel. Is this legal? My husband has just submitted several thousand dollars worth of expenses past this 30-day limit. Can they withhold this reimbursement? Does my husband have any recourse if they refuse to pay?
A. Many employers have policies regarding business expenses that include a time limit for submitting expenses. Some of these are guidelines to encourage employees to submit expenses regularly and others are strict policies that are consistently followed. Businesses set time frames with the goal of managing their budget plans and their accounting closing dates, especially at the end of a fiscal year.
I have also seen these policies created in response to a few employees who have saved up receipts for many months and then expect the company to pay out a very large sum of money that it had not anticipated owing to employees.
The two questions that I would focus on in your husband's situation are:
*  How reasonable is the 30-day rule given the nature of his job? Generally, employers have the right to impose a requirement if in fact it is a reasonable one. In this case, it may not be deemed reasonable from a legal point of view because the time frame may be too short.
*  How new is this handbook, and was it in effect when he has hired? How was the policy communicated to him and when did he learn about it?
You may find that given the newness of his job that he will not have any problem collecting the expenses he has submitted and he may just receive a reminder of the policy. If the company insists on the rule and declines to pay your husband after his attempt to appeal the new policy, he could consult with a lawyer.

Pointers for finding disability coverage
Q. I am the office manager of a small-but-growing company, and I handle the administration of our employee benefit programs. The insurance that we offer our 24 employees are health and dental insurance. The owner has asked me to look into getting a long-term disability insurance policy for the employees. Frankly, I know almost nothing about what to look for and which features of such a policy are critical and which are optional. Also, does long-term disability insurance cover everyone who works here or only the full-time employees?
A. One of the first things to consider when purchasing and offering long-term disability insurance is who will pay for the benefit. When an employer pays the full cost for this coverage and an employee becomes disabled and receives payments, this benefit is taxed at the ordinary income tax rate. So while the employee is receiving a benefit at no cost, the amount of claim dollars they receive is slightly diminished. The key phrase here is: "employer pays." If, on the other hand, the employee pays the premium, then when they receive benefit payments, they do not pay taxes on them. This is usually done through payroll deduction and appears on each pay stub. If the employees are asked to pay the premiums, the benefit must then be considered "voluntary" and an employee can waive that benefit.
Long-term disability is a relatively low cost insurance when a group plan is purchased. Most employers pay the full cost of the benefit and then all eligible employees are covered.
The actual cost of LTD is based on the demographics of the company and its industry. The insurance carrier will need to know the average age of the employees, how many women and men are employed, and at what salaries. Industries are rated according to risk and therefore there will be an obvious cost difference between an accounting firm and a manufacturing plant. The premiums tend to be relatively low and therefore almost everyone usually takes the coverage.
After health insurance, disability insurance is often considered one of the most important benefits an employer can provide. The economic consequences of being sick or hurt and unable to earn an income can be devastating. According to a recent study, 70 percent of Americans can not go four weeks without a paycheck.
It is important to keep in mind that disability insurance comes in an assortment of types, and plans can vary in cost. Although most employers offer LTD coverage to full-time employees, this coverage can generally be extended to any employee working 20 hours a week or more.
As to the group long-term disability contract options and factors to consider, Chris Allen of Jim Morradian and Associates Inc., a disability insurance consulting firm, says there are three main factors to consider.
First, what type of earnings are you looking to cover, and to what level? Most plans have a 60-percent replacement formula and cover base salary only up to a maximum amount such as $10,000 a month. This base salary coverage excludes commissions, bonuses, incentive award payments and the like. Second, as described above, is the company going to pay the premiums or is the employee? Third, some insurance carriers offer value-added options such as Employee Assistance Programs and/or travel assistance programs with their LTD plans, without additional cost, so evaluating the marketplace is important in your analysis.
Most LTD plans define disability in terms of whether or not, or the degree to which, the employee can perform their job, commonly referred to as their "own occupation," or whether he or she can perform work in other types of jobs, often referred to as "any occupation."
Allen adds that LTD plans have a waiting, or elimination, period which can vary in time but is often 90 days. During the elimination period the employee must be disabled before they are eligible to receive benefits.
Whatever type of program you end up with, you will have provided the employees of your company with an important benefit. Of the different things we consider insuring in life, insuring our income may be one of the most important when an illness or injury occurs.

Maximum 401(k) contribution boosted
Q. I heard from a friend at work that the maximum we can contribute to our 401(k) plan has increased. Is that accurate, and what is the amount of the increase? Does every employer have to allow employees to contribute up to the maximum amount? Will the same increase apply to my husband who works for a nonprofit organization and therefore has a 403(b) plan instead of a 401(k) retirement account? Have other tax related maximums been increased?
A. Yes, effective Jan. 1, 2009, the Internal Revenue Service has increased the maximum amount that an individual employee can contribute to his 401(k) plan. This increase over the 2008 maximum also applies to 403(b) contributions as well.
The increase is $1,000 more than you could contribute this year. Therefore the new maximum, sometimes referred to as 2009 limit, is $16,500 per year. If you are age 50 or older then the IRS allows for an additional "catch-up contribution." The catch-up limit has increased from $5,000 to $5,500, or to an annual maximum of $22,000 per year for those 50 and over.
In addition, the IRS has increased the FICA wage base from the current $102,000 to $106,800 for calendar year 2009. This means that people who this year stopped having FICA taxes taken out of their pay at $102,000 will continue to be taxed until they reach $106,800.
Other limits have also changed and are determined by a formula method set by federal law for a variety of tax related accounts. The details of these changes can be found on the IRS website.
Linda J. Lerner is an executive coach and a human resources consultant to small businesses and to individuals. You can Contact Linda Here.

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Last Updated on Tuesday, 10 November 2009 12:57