Tag Archives: 6th Circuit

En Banc 6th Circuit Overturns Voter-Mandated Affirmative Action Ban in Michigan

An en banc federal appeals court has struck down a voter-approved ban on affirmative action in Michigan as a violation of the equal protection clause.

The Cincinnati-based 6th U.S. Circuit Court of Appeals said the ban on affirmative action in university admissions placed an unfair burden on supporters of racial preferences, whose only option would be to amend the state constitution. The New York Times, the Detroit News, the Detroit Free Press and Education Week have stories on the decision.

Unlike supporters of affirmative action, a student who wants alumni connections considered in admissions has a wide variety of options, including lobbying admissions committees and petitioning university leaders, the court majority said in the 8-7 decision PDF. The affirmative action ban undermines the right of citizens to “have equal access to the tools of political change,” according to the majority.

Michigan is among eight states that ban universities from considering race in admissions, according to the Times. The San Francisco-based 9th U.S. Circuit Court of Appeals has upheld California’s ban.

The 6th Circuit decision is Coalition to Defend Affirmative Action v. University of Michigan. The ruling comes as the U.S. Supreme Court is considering a university’s use of affirmative action in Fisher v. University of Texas at Austin. The Fisher case revisits the Supreme Court’s 2003 holding in Grutter v. Bollinger, in which the Supreme Court held 5-4 that universities may use race as a factor in admissions.

via En Banc 6th Circuit Overturns Voter-Mandated Affirmative Action Ban in Michigan – News – ABA Journal.

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Severance Payments Held to be Exempt From FICA Taxes; Creates Split in the Circuits

In a recent case, United States v. Quality Stores, the Sixth Circuit ruled that certain severance payments paid to involuntarily terminated employees pursuant to an employer’s reduction in workforce are not “wages” for FICA tax purposes. This decision creates a conflict in the circuits, as the Federal Circuit, in CSX Corp. v. United States, 518 F.3d 1328, 1344 Fed. Cir. 2008, previously held in favor of the government’s position that such payments are “wages” subject to FICA taxes. The government is likely to request a rehearing or petition for certiorari to the Supreme Court.

The payments at issue were “supplemental unemployment compensation benefits” SUB payments, which are defined in the Internal Revenue Code as payments that are i paid to an employee, ii paid pursuant to an employer plan, iii paid as the result of an employee’s involuntary separation from employment, iv paid as the result of a reduction in force, the discontinuance of a plant or operation, or other similar conditions, and v includible in the employee’s gross income. For income tax withholding purposes, SUB payments are not treated as “wages,” but nevertheless are made subject to income tax withholding. However, for FICA tax purposes, the Internal Revenue Code does not explicitly address whether SUB payments are “wages” or are otherwise subject to FICA taxes.

Although employers outside the Sixth Circuit should continue to withhold FICA taxes from similar SUB payments, they may be advised to consider filing protective claims for refunds of the FICA taxes withheld to preserve the statute of limitations.

via Labor Employment Law Blog: Severance Payments Held to be Exempt From FICA Taxes; Creates Split in the Circuits.

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Filed under employment, legal decision, wage