Page 173 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
employee must also be included in the employee’s W-2 form. The only
case in which these costs are not included on an employee’s W-2 form
is when the company is the beneficiary of the policy, rather than the
employee. The opposite situation arises if the company is providing life
insurance only to a few key employees, rather than to all employees; in

this case, the entire cost of the insurance must be reported on the
employee’s W-2 form as taxable income.

Leaves of Absence

The Family and Medical Leave Act (FLMA) entitles employees at com-
panies with 50 or more employees to take up to 12 weeks of unpaid
leave (which may be taken sporadically) each year for a specified list of
family and medical reasons. Only those employees who have worked for

the employer for a total of at least 12 months,and for at least 1,250 hours
in the last 12 months, are covered by the act.A further restriction is that
an employee must work at a company location where at least 50 employ-
ees are employed within a 75-mile radius of the facility.Valid reasons for
taking the leave of absence include the birth of a child, serious illness,
or caring for a family member with a serious illness.
During their absence, an employer must continue to provide med-
ical insurance coverage if it had been taken by the employee prior to
the leave of absence, though the employee can be charged for that por-

tion of the expense that had been deducted from his or her pay prior
to the leave. If the employee does not pay this portion of the expense
within 30 days, the insurance can be cancelled for the remainder of the
leave (though 15 days written notice must be provided), but it must be
restored once the employee returns to work. If the terms of the med-
ical insurance plan are changed by the company during the leave of
absence, then the new terms will apply to the person who is on leave.

Only medical insurance is subject to these provisions; other types of

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