The Retail EmployerJune 2008

• Medical Conditions and Ability to Work
• Retention Tips to Keep Your Workforce Strong
• Many Nonprescription Drugs are Tax Exempt

Medical Conditions and Ability to Work

by David E. Nagle

I am reminded that one of the most complex and confusing issues confronted by small employers arises when a medical condition impacts an employee’s ability to work.  While managing your business when employees are unexpectedly absent presents a challenge, your natural inclination is to sympathize with those who are unable to work due to an illness or injury.  Add to that mix the burden of compliance with up to three overlapping laws—the Americans with Disabilities Act (ADA), the Family and Medical Leave Act (FMLA), and workers’ compensation—and you have entered the Bermuda Triangle of employment law.

A quick reminder on the relevant considerations under each of the three bodies of law may be helpful.

Workers’ compensation benefits are provided pursuant to state law to an employee who is unable to work due to an illness or injury that arose out of and in the course of employment.  The focus of the law is to provide benefits—lost wages and coverage of medical expenses—for employees who are out of work for a covered illness or injury.  While an employer cannot discharge an employee because the employee’s out on a workers’ compensation claim, the statute doesn’t protect an employee’s job for a specific period of time.  An employer is not required to hold an employee’s job, and is not required to create a light-duty position in order to put the employee back to work. 

The Family and Medical Leave Act is a federal statute which provides up to 12 weeks of leave to an employee for medical conditions which render the employee unable to work, or for certain covered family obligations (e.g., the birth or adoption of a child, to care for a family member, or related to a family member’s military service).  The focus of the law is to provide job protection to employees who are out of work for a covered reason.  The law does not apply to small employers (less than 50 employees), and compliance is very complex.  Don’t wait until an employee has been out for three months to consider your duties and obligations under this statute.

The Americans with Disabilities Act is a federal statute that protects individuals with disabilities from discrimination in employment.  The focus of the law is to prohibit discrimination against and provide reasonable accommodations to those who have disabilities but who can work.  Not all medical conditions which render an employee unable to work are disabilities, but accommodating a disability may require some modification of job duties or the work environment. 

An employee may suffer from a medical condition that brings all or none of these laws into play.  It is unwise, and dangerous, to delay consideration of the applicable laws until an employee has been out of work for an extended period of time.  Under each body of law, your duties as an employer commence when the medical condition first impacts an employee’s ability to work.  The law in this area is extremely complex, so if you need some guidance, get it early.

David E. Nagle has advised employers with respect to legal issues in the workplace for over 25 years. He is a partner in the Richmond office of Jackson Lewis, a law firm devoted exclusively to the representation of employers in labor, employment, employee benefits and immigration law matters. Jackson Lewis has over 450 attorneys in 34 cities across the nation. David may be contacted at (804) 648-4077, or at nagled@jacksonlewis.com.

Calls requesting information on the Employment Law Information Program should be directed to Preston Perrin with the Retail Merchants Association at 804-662-5500.

Retention Tips to Keep Your Workforce Strong

Whether or not the experts will agree on if a recession is truly upon us, it’s clear that times are shaky for many businesses and consumers facing the rising costs of living and doing business. With an uncertain economy, many workers worry about the threat of losing a job, and businesses worry about how to cut expenses and salvage the bottom line. But, despite the layoffs that occur in some markets, industries, and organizations, the opposite pressure—to retain staff—is just as strong in others.

In fact, a recent report by Workforce.com showed that despite the economy, 64% of companies plan to keep staffing budgets steady, 87% do not plan to change compensation budgets, and 93% are not looking to instate salary freezes. But despite these plans, many employers find it difficult to simply retain the staff they have.

Given that turnover can cost anywhere from one to three times the cost of an employee’s salary, losing key staff is even more difficult to afford when times are tight. So, what can you do to retain employees in light of current conditions? These ideas can help you retain your highly valuable and skilled workforce.

• Be flexible. According to the Families and Work Institute’s newly released “2008 National Study of Employers,” employers are more likely to retain workers if they offer flexibility in the workplace. Flexible work programs offer more than simply a leg-up on the competition in recruitment efforts. They are a way to retain staff despite major life-altering changes that have traditionally meant an exodus from the workplace, such as parenthood or reaching retirement age. Flexible work schedules are also of great appeal to younger workers who are willing to job hop in favor of a more contemporary work environment.
• Retain training programs. Though they’re often the first thing to get cut, it’s important to continue offering training and development programs when times get tight. Economic pressures often trickle down, causing demands for higher productivity levels from employees. In order for workers to do this, you must equip them with increased skills and knowledge. Employees who feel pressured to do more will be tempted to seek other employment if they feel the company isn’t doing its part to help their work improve.
• Consider telecommuting. Though telecommuting programs are not an option for every employer, many organizations are getting creative on how they can utilize telecommuting to retain their workforce. Not only does allowing employees to telecommute help them save money on gas, recent reports have highlighted the success and satisfaction of employees putting in 40 hours a week for an employer from an at-home office. Other employers are opting for a different approach, allowing at-home work for part of the week and requiring in-office time for face-to-face meetings or collaboration. However telecommuting programs are structured, this option appeals widely to employees who have to travel long distances to work or those who have needs to attend to at home.
• Boost bonuses. It may seem contradictory to businesses seeking to cut back, but increasing pay incentives is a great way to not only retain but also motivate key staff. Experts recommend that this approach be tied directly to individual efforts that boost sales, production or performance. The logic behind this retention technique is simply “you help me, I’ll help you.” Plus, bonuses can help employees weather tough economic times themselves and place you at the level of a preferred place to work. If your business can’t afford to budget for raises, a bonus initiative may be a great option to help retain staff members who may otherwise search for richer pastures.

Experts say that in the past 60 years, economic downturns have lasted from 11–18 months, proving that keeping your skilled, trained workforce is an important factor in the long-term success of your company. These ideas can help you retain the staff you have as you ride out whatever the economy brings.

This article is reprinted with permission of www.ExpressPersonnel.com. Contact Ms. Lorraine Alexander at 804-550-0200 or lorraine.alexander@expresspersonnel.com if you would like to be added to their distribution list. Express Personnel now offers RMA members a Retail Staffing Program. More information is available online through www.retailmerchants.com.

Many Nonprescription Drugs are Tax Exempt

As a reminder to retail stores, pharmacies and employees, many nonprescription drugs are tax exempt as outlined in the following Virginia Department of Taxation bulletin:

Virginia Department of Taxation

May 15, 1998

Retail Sales and Use Tax: Exemption for Nonprescription Drugs
and Proprietary Medicines

Effective July 1, 1998, nonprescription drugs and proprietary medicines will be exempt from the retail sales and use tax. "Nonprescription drugs" include any substances or mixture of substances containing medicines or drugs for which no prescription is required and which are generally sold for internal or topical use in the cure, mitigation, treatment, or prevention of disease in human beings. This exemption is also applicable to "proprietary medicines" which is any nonprescription drug sold to the general public under the brand name or trade name of the manufacturer and which does not contain any controlled substance or marijuana.

The exemption for nonprescription drugs and proprietary medicines does not apply to:

1. cosmetics—articles applied to the body for cleansing, beautifying, promoting attractiveness or altering the appearance (includes makeup, body lotions, cold creams, and hair restoration products);
2. toilet articles—articles advertised or held out for sale for grooming purposes (includes soaps, toothpastes, hair sprays, shaving products, colognes, deodorants, and mouthwashes);
3. food products and supplements—including those classified as such by the Federal Food and Drug Administration (includes herbal teas, drinks, pills, or supplements, diet aids, and weight control preparations);
4. vitamins and mineral concentrates sold as dietary supplements or adjuncts (except when sold pursuant to a written prescription by a licensed physician, nurse practitioner, or physician's assistant); and
5. devices—includes contraceptive items, birth control preparations, and testing kits. Diabetic testing kits will continue to be exempt under a separate exemption for specific medical equipment.

This exemption is applicable regardless of the nature of the purchaser. Thus, nonprescription drugs and proprietary medicines may be purchased tax exempt by individuals, physicians, medical facilities, and all other entities. Retail dealers making sales of nonprescription drugs and proprietary medicines must keep records segregating purchases and sales of exempt items.

In addition, effective July 1, 1998, samples of nonprescription drugs and proprietary medicines distributed free of charge by the manufacturer are exempt from the sales and use tax. Currently, pharmaceutical manufacturers are subject to the use tax, based on the cost price, of samples distributed in Virginia by their salespersons.

Tax Status of Various Types of Nonprescription Drugs and Proprietary Medicines

Examples of taxable and exempt nonprescription drugs and proprietary medicines are listed below. This list is intended as a guide and is not intended to be all inclusive.

Exempt item

• Acne products
• Alcohol, rubbing
• Alcohol swabs
• Allergy relief products
• Analgesics
• Anesthetics
• Antacids
• Antibiotic ointments
• Antifungals
• Antihistamines
• Antimalarials
• Antinauseants
• Antiseptics
• Aspirin
• Asthma preparations
• Baby powder (medicated)
• Bee sting relievers
• Benzoin
• Boric acid ointment
• Burn remedies
• Calamine lotion
• Camphor
• Castor oil
• Cathartics
• Cod liver oil
• Cold capsules and remedies
• Cold/canker sore preparations
• Contact lens lubricating and wetting solutions
• Cough and cold items, cough drops, cough syrups
• Dandruff and seborrhea preparations
• Decongestants
• Diarrhea aids and remedies
• Digestive aids
• Disinfectant (for use in humans)
• Diuretics
• Earache/earwax removal preparations
• Eczema preparations
• Epsom salts
• Expectorants
• Eye drops, lotions, ointments and washes for healing, treatment or therapeutic use
• Fever blister aids
• First aid healing agents, cleaners
• Fluoride rinses and antiseptic dental washes
• Foot care products for treatment of infections (callous removers, medicated corn plasters, ingrown toenail preparations, athlete's foot treatments)
• Fungicides (for use on humans)
• Glucose tablets
• Glycerine products intended for medical use
• Hay fever aid products
• Headache relief aid products
• Hemorrhoidal treatments
• Hydrogen peroxide
• Ibuprofen
• Insect bite and sting preparations
• Iodine, tincture of
• Itch, rash relievers
• Laxatives
• Lice products used to kill lice that infect humans
• Liniments
• Lip balms, ices and salves (medicated)
• Lotions (medicated)
• Menstrual cramp relievers
• Mercurochrome
• Milk of Magnesia
• Mineral oil
• Motion sickness remedies
• Mouthwashes (antiseptic)
• Muscle ache relievers
• Nasal drops and sprays
• Nicotine supplements (that treat nicotine withdrawal symptoms)
• Oil of wintergreen
• Pain relievers (oral or topical)
• Parasiticides (for humans)
• Peroxide (medicinal)
• Poison ivy and oak preparations
• Powder (medicated)
• Rectal preparations
• Shampoos (medicated)
• Shaving products (medicated)
• Sinus relievers
• Sitz bath solutions
• Skin irritation relievers (medicated)
• Sleep aids (inducers)
• Soap - germicidal, surgical, therapeutic (used for medical treatment)
• Styptic pencils
• Sunburn lotions
• Sunscreen (containing SPF protection)
• Suppositories, except contraceptives
• Teething preparations
• Throat lozenges (medicated)
• Tooth desensitizers
• Toothache relievers
• Upset stomach relievers
• Vaginal infection remedies
• Wart removers
• Witch hazel
• Worming treatments (humans)
• Zinc oxide ointments

Taxable item

• Adhesive bandages, dressings and cotton
• Adhesive removers
• Adhesive tape
• Appetite suppressants
• Bath crystals, milks, oils, and powder
• Birth control preparations
• Breath fresheners and sweeteners
• Bubble bath
• Bunions, corn pads (nonmedicated)
• Cleaning creams and lotions
• Contact lens cleaning solutions and disinfectants
• Cosmetics
• Cotton applicators, rolls, balls and swabs
• Cuticle softener, removers
• Denture adhesives, cleaners, preparations
• Deodorants, antiperspirants
• Depilatories
• Dental floss
• Diet aids
• Dietary foods, supplements and substitutes
• Distilled water
• Exfoliants
• Hair restoration products
• Herbal teas, drinks, pills, or powder supplements
• Household disinfectants and insecticides
• Infant formula
• Mouthwashes (other than antiseptic)
• Pet medical supplies
• Pet medicines
• Petroleum jelly
• Prophylactics
• Pumice powder
• Saline solution
• Sanitary napkins, tampons and similar items
• Shampoos (nonmedicated)
• Shaving products (nonmedicated)
• Skin bleaches
• Soaps, generally
• Stimulants
• Suntan lotion (without SPF protection)
• Talcum powder
• Testing kits (except diabetic test kits)
• Thermometers
• Toothpastes, polishes, powders, whiteners
• Vitamins and mineral supplements
• Wax
• Weight control preparations
• Wrinkle removing and concealing preparations

Background

The 1990 General Assembly passed Senate Bill 317 (Chapter 117, 1990 Acts of Assembly) to provide an exemption from the sales and use tax for nonprescription drugs and proprietary medicines purchased for the cure, mitigation, treatment, or prevention of disease in human beings. The exemption was originally to be effective July 1, 1992. However, the effective date has been deferred every two years since 1992, with the last action passed in 1996, when the exemption's effective date was deferred to July 1, 1998. Subsequently, no action has been taken by the General Assembly to defer the effective date again; therefore, the exemption is effective July 1, 1998.

The 1997 General Assembly passed House Bill 1665 (Chapter 696, 1997 Acts of Assembly) which expanded this exemption to samples of nonprescription drugs and proprietary medicines distributed free of charge by the manufacturer, including packaging materials and constituent elements and ingredients. The effective date of this exemption coincides with the effective date of the exemption for nonprescription drugs and proprietary medicines.

For additional information: If there are any questions about whether or not a particular item qualifies for exemption, please contact the Office of Customer Services, Virginia Department of Taxation,  (804) 367-8037.
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