#8 Federal Laws & Regulations Flashcards
(30 cards)
What are the general ERISA rules for private employer retirement plans?
ERISA sets standards for employers who voluntarily provide pension and retirement plans, aiming to protect employee benefits.
Key rules:
1 - ERISA regulates both retirement (e.g., 401(k)) and welfare benefit plans.
2 - Employee contributions must vest immediately; employer contributions must vest within a reasonable time (usually 5 years).
3 - Plan assets must be remitted to and managed by an independent trustee acting in the best interest of participants.
What are the key rules of Chapter 11 bankruptcy reorganization?
Chapter 11 allows a debtor to reorganize its debts and operations while continuing to run the business.
Key rules:
1 - Voluntary or involuntary: The case may be filed voluntarily by the debtor or involuntarily by creditors.
2 - Debtor in possession: The debtor usually continues operating the business; a trustee is not always required.
3 - Plan deadline: The debtor generally has up to 18 months to file a reorganization plan before creditors may file one.
4 - Creditor approval: The plan must be approved by two-thirds of the dollar amount and one-half of the number of claims.
5 - Court confirmation and release: Once confirmed by the court, the debtor is released from bankruptcy and continues operations under the** new debt structure.**
What are the key rules of the Federal Unemployment Tax Act (FUTA)?
FUTA imposes a federal payroll tax on employers to fund unemployment compensation for workers who lose their jobs.
Key rules:
1 - Employer-funded only: FUTA is paid entirely by the employer — it is not withheld from employee wages.
2 - Wage threshold: Applies when the employer pays at least $1,500 in wages in a calendar quarter or has at least one employee for 20+ weeks in a year.
3 - Wage base: The FUTA tax applies to the first $7,000 of each employee’s annual wages.
4 - State tax credit: Employers can receive a credit against the federal tax for state unemployment tax payments.
5 - Constructive payment counts: Applies whether wages are actually or constructively paid.
What are the rules for filing an involuntary petition in bankruptcy under Chapter 11?
To file an involuntary bankruptcy petition under Chapter 11, certain creditor requirements must be met.
Key rules:
1 - Minimum claim threshold: Petitioning creditors must hold unsecured claims totaling at least $18,600 in the aggregate.
2 - Number of creditors rule:
- If the debtor has 12 or more unsecured creditors, the petition must be signed by at least 3 creditors.
- If the debtor has fewer than 12 unsecured creditors, only 1 creditor is required.
3 - Debtor’s default requirement: The debtor must be failing to pay debts as they come due.
4 - Applies to both Chapter 7 and Chapter 11: These rules apply regardless of whether the petition is for liquidation (Chapter 7) or reorganization (Chapter 11).
What is the effect of a court’s final decree in a Chapter 11 bankruptcy?
Key rules:
1 - The debtor is discharged from all debts and liabilities that arose before plan confirmation, as long as they were listed for discharge.
2 - The final decree marks the point at which the reorganization plan becomes binding.
3 - Some debts may not be discharged, such as those excluded by law or not listed in the plan.
4 - The debtor remains liable for any nondischargeable debts, even after the plan is confirmed.
Are unemployment and workers’ compensation insurance deducted from an employee’s wages?
No.
1 - Unemployment insurance (FUTA) is paid entirely by the employer.
2 - Workers’ compensation is also fully employer-funded.
Employees do not pay either through payroll deductions.
What is the effect of filing an involuntary bankruptcy petition under the Bankruptcy Code?
Filing an involuntary petition stops all creditor collection efforts, including:
1 - Judgment liens on property in the bankruptcy estate
2 - Foreclosure or repossession of property assets
3 - Preserves estate property for equal distribution
Key takeaway:
The filing of bankruptcy creates an automatic stay, preventing individual creditors from seizing property.
Under the Fair Labor Standards Act (FLSA), what pay types may be used to compensate nonexempt employees who earn at least minimum wage?
Any of the following pay bases are allowed, as long as the effective hourly rate meets or exceeds the federal minimum wage:
1 - Hourly
2 - Weekly
3 - Monthly
Key takeaway:
The FLSA does not restrict pay frequency. Any pay base is allowed if the average hourly rate meets or exceeds the federal minimum wage.
What is the general liability rule for employers under workers’ compensation laws?
no1 - Employers are held strictly liable for job-related injuries or illnesses.
2 - Fault is not required for the employee to receive compensation.
3 - Employers cannot use defenses like contributory negligence or assumption of risk.
4 - Compensation may still be denied if:
Injury is not job-related
Intoxication is involved
Injury is self-inflicted
Key rule:
Workers’ compensation guarantees coverage for job-related injuries regardless of employer fault. Common-law defenses like negligence or assumption of risk do not apply.
Who qualifies for workers’ compensation benefits?
1 - Only employees are eligible (not independent contractors).
2 - Injury must occur within the scope of employment — not during commuting or personal tasks.
3 - Location doesn’t matter if the employee is performing job duties.
4 - Benefits include medical expenses, lost wages, and payments to survivors.
5 - Employee cannot sue under tort liability (e.g., negligence) — workers’ comp is the exclusive remedy.
What are the key factors in determining whether a worker is an employee or an independent contractor?
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1 - Behavioral control: Degree of supervision, instruction, training, and evaluation provided by the company.
2 - Financial control: Who provides equipment, how payment is made, reimbursement of expenses, and ability to earn profit/loss.
3 - Relationship: Existence of contracts, permanency, benefits, and how essential the worker’s services are to the business.
4 - Employees are paid regularly (e.g., weekly) and are subject to more control — indicating employee status.
5 - Independent contractors typically work with less oversight and often own their own tools and control their schedules.
Who qualifies for workers’ compensation benefits?
1 - Only employees are eligible — independent contractors are excluded.
2 - Injury must occur within the scope of employment (not just on company premises).
3 - Location doesn’t matter — the key issue is whether the employee was performing job duties.
4 - Injuries during commuting or personal use of company vehicles are generally not covered.
5 - Covered benefits include medical expenses, lost wages, and survivor payments.
Which debts are not discharged in Chapter 7 bankruptcy?
1 - Child support and alimony are never discharged.
2 - Recent tax debts (incurred within 3 years of filing) are not discharged.
3 - Debts from fraud, embezzlement, or willful misconduct are excluded from discharge.
4 - Debts not listed in the bankruptcy petition won’t be discharged.
5 - Secured debts may be discharged only if no assets remain after liquidation and priority claims are paid.
Who cannot file for Chapter 11 bankruptcy?
1 - Stockbrokers are prohibited from filing under Chapter 11.
2 - Banks, savings and loans, and insurance companies also cannot file for Chapter 11.
3 - Individuals and most entities (e.g., corporations, LLCs) are allowed to file.
4 - Prohibited entities are typically regulated under separate federal or state insolvency procedures.
5 - Stockbrokers may only file under Chapter 7 bankruptcy.
What do Workers’ Compensation Acts require from employers?
1 - Provide coverage for all eligible employees who suffer job-related injuries or illnesses.
2 - Employer pays the full cost of coverage — no deductions from employee wages.
3 - Coverage applies to employees only, not independent contractors.
4 - Employers are not required to pay the difference if disability benefits are less than full salary.
5 - There is no federal workers’ comp fund — benefits are regulated at the state level.
Who is prohibited from filing under Chapter 11 bankruptcy?
1 - Insurance companies are not allowed to reorganize under Chapter 11.
2 - Banks, savings and loans, and stockbrokers are also barred from Chapter 11.
3 - These entities are regulated by other government agencies with separate insolvency procedures.
4 - Individuals and all other entities (unless specifically prohibited) may file Chapter 11.
Can an injured employee receive workers’ compensation and sue their employer for negligence?
1 - Yes, the employee can receive workers’ compensation benefits for job-related injuries.
2 - No, the employee cannot sue the employer under tort law due to the exclusive remedy rule.
3 - However, the employee can sue third parties (like a product manufacturer) for negligence.
4 - Workers’ compensation imposes strict liability on employers and covers medical expenses, lost wages, and survivor payments.
What does the Federal Unemployment Tax Act (FUTA) do?
1 - FUTA is paid entirely by employers—employees do not contribute.
2 - It provides benefits for workers who are temporarily unemployed.
3 - FUTA is administered by individual states using their own employment laws.
4 - Employees qualify only if terminated through no fault of their own.
5 - Voluntary resignation or refusal to accept equivalent work disqualifies a person from FUTA benefits.
How is a judgment creditor’s claim treated in Chapter 7 bankruptcy?
1 - A debt to a judgment creditor is dischargeable in Chapter 7.
2 - The trustee sells available assets and pays creditors in order of priority.
3 - If no assets exist, the debtor is still relieved of personal liability for the claim.
4 - The creditor cannot enforce a statutory lien or require a liquidated payment after discharge.
Can spouses file a voluntary bankruptcy petition jointly?
1 - Yes, spouses may file jointly to reduce filing costs and streamline the process.
2 - Filing jointly may affect the total income used to determine eligibility and dischargeable debts.
3 - Only the filing spouse’s debts are discharged — the nonfiling spouse remains liable.
4 - There is no debt minimum or insolvency requirement for voluntary bankruptcy.
Who is exempt from an involuntary bankruptcy petition under the Bankruptcy Code?
1 - Farmers and nonprofit organizations are exempt from involuntary bankruptcy.
2 - Involuntary bankruptcy may be filed against any party eligible for voluntary bankruptcy, unless specifically excluded.
3 - Stockbrokers, postal workers, and railroad employees can be subject to involuntary bankruptcy, depending on the chapter and circumstances.
4 - Insurance companies, banks, and credit unions are also excluded from both voluntary and involuntary bankruptcy under special regulatory procedures.
What does ERISA require regarding private employer pension plans?
1 - Employers are not required to establish pension plans — offering a plan is optional.
2 - If a plan is offered, ERISA requires it to be managed by an independent trustee with no ties to the employer.
3 - The trustee must act in the best interest of participants and manage assets prudently.
4 - Employees are not required to be plan managers, nor are employers required to include them as such.
5 - ERISA ensures transparency, participation, vesting standards, and funding oversight — but only if a plan is provided.
What conditions must a debtor meet to file a voluntary Chapter 7 bankruptcy?
1 - No insolvency requirement — the debtor does not need to show that liabilities exceed assets.
2 - No minimum number of creditors — even a debtor with only one creditor may file.
3 - Voluntary bankruptcy is initiated by the debtor, not the creditors.
4 - Involuntary petitions, by contrast, require three or more creditors if the debtor has 12 or more unsecured creditors.
5 - Once filed voluntarily, an automatic order of relief is issued, halting all collection actions.
What are the eligibility requirements for a voluntary Chapter 7 bankruptcy?
1 - No insolvency requirement — the debtor is not required to show liabilities exceed assets.
2 - No minimum number of creditors — the debtor can file with one or many creditors.
3 - The debtor voluntarily files the petition to stop creditor collections.
4 - Three-creditor rule applies only to involuntary bankruptcies, not voluntary filings.
5 - Once filed, an automatic order of relief is entered halting collections immediately.
