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The Supreme Court Made it Much Harder to Sue Your Employer as a Group

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This week’s U.S. Supreme Court decision holding that private-sector employees may no longer unite to bring class or collective actions against an employer has shaken the historical ground that workers’ rights stand on.

Some of the nation’s 126 million private-sector workers fear what they see as a reversion to 1920’s and ‘30s “yellow dog” contracts that offered take-it-or-leave-it arbitration agreements during one of our nation’s toughest times for the working class.

Differing views on decision

The decision came on Monday, the vote 5-4, with Justice Neil Gorsuch, who joined the Supreme Court last year, writing for the majority.

While some view the decision as a victory for employers, others see it as a further weakening of the ability to fight for fair employment standards in an economic climate where many Americans are living paycheck to paycheck.

In her dissent, Justice Ruth Bader Ginsburg called the decision “egregiously wrong.”

This ruling comes a year after the 10 largest settlements in employment-related categories reached a record high $2.72 billion, according to the 14th annual edition of the Workplace Class Action Litigation Report by Seyfarth Shaw LLP, a Chicago-based law firm. The aggregate settlements of the top 10 are almost $1 billion more than they were in 2016, despite 2017 being a more favorable year overall for employer rather than employee victories, the 2018 report notes.

“I think it’s going to potentially reduce a lot of very costly litigation for employers,” said

Suzanne Boy, an employment law attorney with Henderson Franklin Attorneys at Law in Fort Myers, Fla. “While it certainly does not erase the employees right to bring a claim, it just limits the potential for them to bring them as a group essentially.”

Attorney Benjamin Yormak, who represents employees and is a board-certified expert in labor and employment law, noted that the point of a class or collective action is to streamline the litigation for consistency in the results and to save on costs.

“But the ruling from the Supreme Court does the exact opposite,” said Yormak, an attorney based in Bonita Springs, Fla., who often represents employees with wage and hour disputes.

While Yormak said he believes wage and hour litigation will be the hardest hit, other workplace conditions could become more difficult to fight as well.

Some members of Congress and candidates for office voiced their concerns this week on social media.

What’s changed?

The Federal Arbitration Act, enacted in 1925, specifies that agreed-upon individual arbitration contracts must be enforced, unless that agreement violates another federal law, which, according to those on the dissenting side, is the National Labor Relations Act, which was enacted 10 years later.

The NLRA provides “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

In what Yormak calls an “epic case,” the problem is that the NLRA and the FAA “are not in harmony with one another on this issue.”

Both sides were looking for direction from the Supreme Court, but the outcome was not what he and employees such as those he represents had hoped for, Yormak says.

Who’s affected by the ruling?

Expect a dramatic increase in the number of employers who require arbitration agreements to be signed by their employees, both Boy and Yormak said.

The Economic Policy Institute, a Washington, D.C., nonprofit think tank, notes: “For over eighty years, the National Labor Relations Act has guaranteed workers’ right to stand together for ‘mutual aid and protection’ when seeking to improve their wages and working conditions. However, today’s decision clears the way for employers to require workers to waive that right as a condition of employment.”

According to the EPI, 56.2 percent of private sector employees are already subject to arbitration proceedings that are laid out by their employer, and of those employers, 30 percent include a class-action waiver.

With this new ruling and the number of employers who require such agreements projected to rise sharply, the ways they might implement them could be less-than-transparent, such as the blanket take-it-or-leave-it policies emailed to employees that sparked the three cases that were consolidated by the Court and that served as the basis for the decision.

What you can do

The EPI is asking Congress to ban mandatory arbitration agreements and class and collective action waivers.

“Workers depend on collective and class actions to combat race and sex discrimination and enforce wage and hour standards,”Celine McNicholas, Director of Labor Law and Policy for the EPI said in a statement. “It is essential to both our democracy and a fair economy that workers have the right to engage in collective action.”

For employees, attorneys recommend having awareness and taking a few steps, such as these:

  • Watch out for class-action waiver. “If an employee is presented with an arbitration agreement, he or she should certainly look closely as to whether or not one of these waivers is in there, because they may not be,” said Boy. She adds that if an employee refuses to sign it, an employer can rescind the job offer.
  • Find out the financial ramifications. Boy advises employees to look at the ramifications from a cost perspective, such as how the cost shifting is defined and if it’s split in half between employer and employee.
  • Pay attention to other provisions. Determine if there is a jury trial waiver or what kind of confidentiality is included in the arbitration agreement.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kat Khoury
Kat Khoury |

Kat Khoury is a writer at MagnifyMoney. You can email Kat here

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Tax

Where Most People DIY Their Taxes and Tips for Last Minute Returns

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

A new MagnifyMoney analysis found that 45% of Americans file their taxes without paid help, while the other 55% rely on a paid tax preparer. The analysis is based on IRS statements of income data for returns filed Jan. 1, 2012 – Dec. 31, 2016.

Taking the DIY approach to taxes is most popular in these metro areas: Austin, Texas (62%); Virginia Beach, Va. (61%), Seattle, Wash. (59%), San Antonio, Texas (58%), Richmond, Va. (58%), and Portland, Ore. (56%).

For those taking their taxes into their own hands, using tax preparer software is a perfectly fine alternative. The IRS expects 155 million tax returns to be filed this year and 70% of tax filers are expected to receive refunds. However, missing even one simple detail on your return could make a big difference in your refund.

At the very least, to avoid errors, the IRS recommends e-filing for DIY preparers. It takes out some of the risk for human error, especially since most e-filing programs can help spot mistakes. If you’re comfortable preparing your own taxes, there are some last-minute tax tips to follow as you near the April 17 deadline.

DIY vs. PRO: Which is best for you?

The DIY approach is smart for people with simple personal taxes, where you basically can copy and paste information into the return, said Eric Nisall, founder of accountlancer.com, which provides accounting and bookkeeping for freelancers. For example, if simply have a W-2 from your employer and you don’t itemize deductions or have investments, you could definitely do it yourself.

Online programs continue to offer new features to help customers comprehend their taxes as they go, such as prompts nudging them to fill out missing information, or explaining why certain information is needed

A DIY approach also works if you keep organized throughout the year with receipts and statements, and if you are comfortable going through those details to correctly enter your taxes.

On the flip side, you should probably consider hiring a paid preparer if you are concerned about the difficulty of filing a tax return, have complicated financial information or want to develop a long-term accounting strategy.

Where to find help

There isn’t just one catch-all category for tax preparers today. Preparers include enrolled agents, attorneys and CPAs.

If you’re simply looking for someone to crunch the numbers for you and make sure your taxes are submitted accurately and on time, a basic tax preparer or an IRS-enrolled agent is a perfectly fine solution. They will usually charge a flat rate for filing your taxes (it will vary by location).

If you are looking for a more well-rounded tax preparer who can also offer long-term guidance on your tax strategy, you should seek out a certified public accountant.

“A good CPA won’t just fill in the forms,” said Steve Osiason, a certified public accountant and member of the Florida Institute of CPAs. “A good CPA will give you advice going forward about what you should be doing to save money.”

If you do decide to hire a professional, make sure it’s a reputable preparer who is transparent about their pricing, Nisall said.

He said some tax preparers will charge on such arbitrary basis as per-form completed (some of which take just a few check boxes to complete), or based on what you made in the previous year.

Ask for a list of their qualifications, proof of licensing and if they keep up with changes by taking continuing education classes. At the very least, ask for referrals from trusted friends, family or work colleagues. Some firms may even have Yelp review pages where you can see how past customers have rated their service.

The IRS also has a helpful tool you can use here: Directory of Federal Tax Return Preparers.

Don’t rush

Rushing through a meticulous task like filing taxes can mean a smaller return or no return at all.

“That’s where people make the biggest mistakes,” said Nisall.

If you do feel like you’re crunched for time and may not finish by the deadline, Nisall recommends filing for an extension early. He warns not to confuse the automatic extension to file (Form 4868) with an extension to pay; you are still required to pay an estimate by the deadline.

However, if you still don’t have enough time to pay, there’s more good news.

“If you owe money, you can also ask the IRS for an installment agreement when you file your taxes,” said Lisa Greene-Lewis, a CPA with TurboTax. “The installment agreement will allow you to pay your tax debt over six years.”

 

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kat Khoury
Kat Khoury |

Kat Khoury is a writer at MagnifyMoney. You can email Kat here

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What to Know Before You Sign Up for a Payday Advance Program

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

 

states raising minimum wage 2018
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At a time when the economy is booming and yet, 46% of U.S. adults still say they can’t cover a $400 emergency, it’s clear many Americans are living paycheck to paycheck. In the past, when money was tight and credit cards were maxed out, people could turn to payday lenders and pawn shops for quick access to cash, often paying exorbitant fees in the process.

Now, several companies have rolled out new services that let workers access their paycheck early through mobile banking apps in order to make ends meet. These services can provide much-needed relief to cash-strapped workers. But we wanted to take a closer look at what they have to offer and whether or not they’re the best option for fast cash.

In late 2017, Walmart announced a new partnership with two Silicon Valley start-ups aimed at giving 1.4 million workers access to financial planning tools.

The first app Walmart workers can access for now is called Even, which, similar to apps like Instant and Earnin, allows users to be paid early for hours they’ve worked.

With Instant, you connect the app with a card given to you by your employer. Once verified you can receive your daily tips and wages, deposited straight to your Instant account, which you can use to check your balance, use ATMs, review wages, and even transfer money to another bank account. The only fee is an easy-to-avoid, 90-day inactivity fee.

Similarly, Earnin allows access to up to $100 per day of your earned pay and works on a tip basis with no fees or interest. You simply connect your bank and employment information, and then you can choose how much of your paycheck to deposit to your bank account, and that amount is debited back when payday arrives.

In Walmart’s deal with Even, workers can use Even’s “instapay” option to receive a portion of the wages they earned before the scheduled paycheck (within the typical two-week pay period) up to eight times per year for free. If your employer doesn’t cover the cost of the app, it’s $2.99 per month after a free 60-day trial, and if you subscribe to Even Plus, there are additional fees that are dependent on what your employer covers for you. Walmart employees monthly costs are covered by the company and they can take advances on hours they’ve already worked before the two-week pay period is over.

Walmart is certainly one of the biggest retailers to announce such an offering, but it isn’t the first. Instant has clients across the U.S. and Canada, including McDonald’s, Outback Steakhouse, and Dunkin’ Donuts, according to a company spokesman.

José Alcoff, director of the Stop the Debt Trap coalition at Americans for Financial Reform, says there are many employer-based loan and paycheck advance programs across the country, many of them offering the service at no interest. Although it’s a nice gesture for workers who are living paycheck to paycheck, it’s not a long-lasting solution for chronic financial insecurity, he warns.

“A payday advance program may or may not be a responsible lending solution, but it is not a solution to poverty and to the kinds of financial crunch that a lot of low-income workers have on a daily basis,” Alcoff said.

An alternative to payday loans and overdraft fees

A payroll advance program can be a good alternative to higher-cost options like payday loans or title loans that provide small-dollar loans. Small-dollar loans are often the best option to help manage financial gaps or unexpected expenses, says Dennis Shaul, CEO of the Community Financial Services Association of America, a Virginia-based organization that represents nonbank lenders and service providers.

Payday loans from a store, bank or website are packaged as two-week, flat-fee products but in reality, have unaffordable lump-sum repayment requirements, according to The Pew Charitable Trust’s “Payday Lending in America” series.

According to Pew, 12 million American adults used payday loans in 2010, with the average borrower taking out eight loans of $375 each and spending $520 on interest. The borrower is actually being indebted for five months out of the year.
The troubling thing about payday loans is that for a product that can so quickly become a debt trap, the reasons people use them are typically to cover day-to-day expenses.

According to Pew, 69% of borrowers use their payday loans for everyday expenses like food, utilities and rent, and 16% for unexpected car and medical expenses.

Companies offering payday advances seek to help their employees avoid paying interest on payday loans.

Other benefits for employees who have access to payroll advance apps include tools to help budget and plan ahead to pay bills, which can help people avoid late fees and overdrafts from their bank account. Employees, especially in occupations like the restaurant industry where pay varies depending on the season and shift, also would know in real time how much money they have to spend.

The risks of using a payday advance program

While it may seem like the easiest way to manage your financial stress, getting an advance on your pay could potentially push you into a cycle of debt if you’re not careful.

“Most borrowing involves multiple renewals following an initial loan, rather than multiple distinct borrowing episodes separated by more than 14 days,” according to the Consumer Finance Protection Bureau.

While this refers to payday loans, the same principle applies to payday advances. Some companies offer access to a payday advance program as a benefit at no extra cost, but once you go beyond the basic benefit, you could face an additional charge (like the $3 per pay period subscription to Even Plus).

Alcoff says a living wage and full benefits package that allows workers to live with dignity is the only solution to many low-income workers’ financial woes.

“The more workers are stuck in pay loans and to debt-trap loans, the harder it is for them emotionally and their health and their abilities to make ends meet for their children,” he said, “and the more that that comes back to haunt employers, who are often the ones who see lower productivity and more stress in the workplace.”

Any individual interested in their employer’s payday advance programs should read the fine print. For example, look to see if you are relinquishing access to your bank account to your employer.

“Don’t take it for granted that your company has your best interests at heart,” Alcoff said.

 

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kat Khoury
Kat Khoury |

Kat Khoury is a writer at MagnifyMoney. You can email Kat here

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