2 human resources questions answered by the experts

July 21, 2010
Tim Twigg and Rebecca Crane answer questions about tax reporting for employee group medical coverage and tax issues to consider with student interns.

Q: I understand that in 2011 the Health Care Bill will require me to report the cost I incur for employee group medical coverage as taxable income on each employee's W-2 form. This would have a huge impact on my employees, but I understand the new reporting is mandatory. Is this correct?

A: Our research indicates that although the medical cost must indeed be reported on W-2 forms effective 2011, it is for informational purposes and will not be considered taxable income.

Q. We plan to have an unpaid student intern working with us in the near future. What issues should we take into consideration?

A. Exercise care since the federal government and many states are scrutinizing such relationships very closely. The federal Department of Labor (DOL) has issued a new fact sheet on this topic, and its regulators caution for-profit employers that valid internships are unlikely because the Fair Labor Standards Act's (FLSA) definition of work is so broad. The following DOL criteria must be met:

  1. The internship must be similar to training that is given in an educational environment.
  2. The intern must not displace regular employees but does work under the supervision of existing staff.
  3. The benefit of the internship is for the intern, not the employer.
  4. The employer derives no immediate advantage from the internship and, occasionally, the employer's operations may be impeded.
  5. The intern is not necessarily entitled to a job at the conclusion of the internship.
  6. The written agreement between the employer, the school, and the intern should clarify that the intern is not entitled to compensation in the form of wages or benefits.

The opinions expressed above are based on the writer’s comprehensive background as a human resources professional and the policies in our Bent Ericksen & Associates products having been reviewed by legal counsel. The writer is not an attorney and the advice provided in this message should not be construed as a legal opinion. If you have legal questions after considering the advice and reading any materials referenced, it is recommended that you consult with your attorney.

Author bio
Tim Twigg is the president of Bent Ericksen & Associates, and Rebecca Crane is a human resource compliance consultant with Bent Ericksen & Associates. For 30 years, the company has been a leading authority in human resource and personnel issues, helping dentists successfully deal with the ever-changing and complex labor laws. To receive a complimentary copy of the company’s quarterly newsletter or to learn more about its services, call (800) 679-2760 or visit the Web site at www.bentericksen.com.