Some quick hits this week on the employment front for manufacturers:

U.S. Supreme Court Rules Severance Pay Is Taxable

The U.S. Supreme Court ruled this week that employers must pay Social Security and Medicare taxes on severance packages given to workers who were laid off involuntarily.  In a unanimous decision, the Court ruled 8-0 that retailer Quality Stores Inc. was not allowed to receive a tax refund for the payments made to 1,850 former employees let go after the company filed for bankruptcy and reverses prior lower court rulings which found that severance payments were not considered taxable wages.  Justice Elena Kagan did not take part in the decision.

This decision is a victory for the Obama administration.  Had the Court decided differently, the government could have faced more than $1 billion in tax refund claims from other employers.

 Connecticut Minimum Wage Hike On The Horizon

Connecticut’s Senate recently approved a minimum wage bill raising the rate to $10.10 an hour, the highest state rate in the nation.  Connecticut’s minimum wage is currently at $8.70 per hour, and, if the bill is approved by the House, the higher rate would phase in to $10.10 over three years. Under current law, Connecticut’s minimum wage was already scheduled to climb by 30 cents to $9 on Jan. 1, 2015.  Under this bill, it would instead increase to $9.15 an hour on January 1, 2015, to  $9.60 on Jan. 1, 2016 and to $10.10 on Jan. 1, 2017.

The fate of this bill is in the hands of Connecticut’s House, controlled by Democrats, and likely to pass along party lines.  While supporters of the wage hike argue that this move will stimulate the economy, opponents maintain just the opposite. 

Employee Background Checks

While employers are permitted, under certain circumstances, to rely on the information obtained about an applicant or employee from a criminal history and/or consumer report in making employment decisions, there are state and federal laws governing the use of such background checks in employment decisions.  The Equal Employment Opportunity Commission and the Federal Trade Commission recently published a handy new guide, Background Checks: What Employers Need to Know that may be downloaded here.