New Levels of Compliance in 2012
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Transcript of New Levels of Compliance in 2012
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IAPD/IPRA Conference
Soaring to New Heights
&
New Levels of Compliance in 2012
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Class Action and Retaliation – Beware! Recent Court Cases HR Best Practices – Some practical advice
for the new year Questions & Answers-Sharing stories from
the front lines
2
Overview of topics covered
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Showed what can happen when class actions become too large
Recent Court Cases Wal-Mart V. Dukes
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Big case which brings the subject of retaliation and anti-discrimination laws and their interpretation to the front burner.
Thompson V. North American Stainless
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
In this case the courts ruled that employers may not discharge any employee that has filed any complaint.
Kasten V. St.-Gobain
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
We learned about the “Cat’s Paw” Theory here….
Proctor Hospital
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Google Ad: “How to start a union” Beefing up regional offices to help
employees who report unfair labor practices committed during union organizing campaigns.
Giselle order Complaint against Boeing
National Labor Relations Board
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Payroll and Compensation Under Fire: What you Need to Know
Agencies (DOL, IRS) continue to focus on:
• Employee Classification
• Overtime Payment
• Independent Contractors
• Interns
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
FLSA Compliance DOL has added new investigators for wage and
hour
DOL is expected to be “very active”
DOL collections of back wages are up dramatically over the past decade
Class action cases have increased four fold since 1997
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
At least 75% of employers are not in compliance with the Fair Labor Standards Act – might actually be closer to 95%
FLSA Compliance
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Employee Misclassification
U.S. Government Accountability Office reports there are at least 10 million workers in the U.S. who are classified as independent contractors
Labor Department estimates up to 30% of companies nationwide have misclassified employees
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Employee Misclassification Employers are liable for:
• Payment of back taxes• Unpaid Social Security/Medicare
contributions• Unpaid unemployment insurance• Unpaid workers compensation
premiums• Penalties and interest
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
State Level Initiatives 11 states have signed on with the DOL
• Goal is to prevent, detect and remedy employee misclassification
• Illinois is one of the 11 states
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
DOL/IRS to Coordinate on Employee Misclassification
IRS and DOL sign Memorandum of Understanding
Result = increased number of employment tax audits = boost in compliance and increase in revenues
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
IRS Voluntary Classification Settlement Program
Initiative allows businesses to become compliant with worker classification requirements at significantly reduced penalty rates
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
IRS Voluntary Classification Settlement Program – Eligibility Employer must have consistently treated a group of
workers as non-employees in the past and filed appropriate 1099 forms for those workers during past 3 years
No current dispute between employer and IRS or applicable state agency
Going forward, employers must agree to treat as employees any workers they previously misclassified as independent contractors
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
IRS Voluntary Classification Settlement Program - Benefits
Employer will pay only 10% of employment tax liability
Employer is not required to pay interest or penalties
Employer will not be subject to employment tax audit regarding worker classification issues
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
IRS Voluntary Classification Settlement Program – Risks of not
Participating
IRS can force non-compliant employers to pay the appropriate employment taxes in full for several years
Significant interest and monetary penalties
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Participation in IRS Voluntary Settlement Program
Submit an application (Form 8952) to the IRS at least 60 days from the date on which employer wants to begin treating misclassified workers as employees
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Why you Need to be Concerned
Fair Labor Standards Act
Illinois Minimum Wage Act
Illinois Wage Payment and Collection Act
Immigration Regulation and Control Act
Lilly Ledbetter Fair Pay Act
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Exempt vs. Non-Exempt Hourly pay equals non-exempt
Responsibilities determine status
Title/payment type don’t determine status
Duties test
• Relative importance of exempt duties
• Amount of time spent performing exempt work
• Relative freedom from direct supervision
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Independent Contractors
Tests for Independent contractors include:
• Behavioral control
• Financial control
• Type of relationship
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Independent Contractors Make decisions re: how work is done
Not required to abide by organization’s policies/procedures
Can hire/fire their own employees
Do not work on the organization’s premises; make own schedules
Use own tools/equipment/materials
Engaged by many firms
Cannot be disciplined or dismissed
Paid per contractual arrangement
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Unpaid Interns Must be a structured educational
experience
For the benefit of the intern
No promise of a job
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Records Retention At least three years
• Payroll records• Collective bargaining agreements• Sales/purchase records
At least two years• Wage computation records
Records must be available for inspection
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Four Most Common Mistakes
Failure to have a good system in place
Failure to properly record hours worked
Falling down on technical issues
Failure to calculate overtime properly
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
To Do List Ensure you are following specific record keeping
requirements for non-exempt employees
Have job descriptions for all positions for classification purposes
Have a process for classifying positions and follow it consistently
Maintain accurate pay records
Watch for improperly docked pay
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
To Do List
Make sure you are paying overtime correctly
Don’t allow non-exempt employees to work through lunch periods
Maintain all time records for NE employees
Have safe harbor policies in place
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Allows employees to keep track of their own time
Calculates overate DOL will allow it as evidence in
claim cases
Smartphone App now available
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Expands the definition of “disability” Gives the EEOC more power to
define the terms related to “disability” Eliminates the reference to those with
disabilities as a minority
ADA/ADAAA
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Bending
Speaking
Learning
Reading
Concentrating
Thinking
Communicating
Working
Definitions of Disability“Major Life Activities”
Seeing
Hearing
Eating
Walking
Standing
Lifting
Caring for oneself
Concentrating
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Circulatory system Reproductive system Immune system Bowel Cell growth Neurological system
Major Bodily Functions
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Cerebral Palsy Cancer MS HIV/AIDS Depression Diabetes Autism
EEOC Identified Impairments
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Document good faith efforts
Update job descriptions
Update employment applications relative to essential job functions
Interactive Dialogue
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Make sure your applications are up to date. Do you have the latest forms available? (W-2s, I-
9s etc.) Review your current offer letters for seasonal help Are your orientation checklists ready? Are your employee handbooks up to date? Are your training manuals ready? Do you have a performance appraisal tool in
place for your summer help?
Summer Hiring
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Questions?
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Certified Public Accountants & Business Advisors
© 2012 Sikich LLP. All rights reserved.
Useful References
www.dol.gov – Department of Labor Website
www.state.il.us/agency/idol/ - Illinois Department of Labor
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Get Up to Date Breaking HR News and Alerts on Twitter!
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• HR Alerts• HR Hot Topics• Articles• Breaking News
So visit www.twitter.com/sikich_hr and start following us today!
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Contact Information:
Julie StrahlGovernment SpecialistSikich Human Resource ConsultingPhone: (630) 566-8453Email: [email protected]