New Levels of Compliance in 2012

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IAPD/IPRA Conference Soaring to New Heights presentation for Human Resource professionals. Topics include: HR Best Practices; Class Action and Retaliation; Recent Court Cases; and HR Stories from the front lines.

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  • New Levels of Compliance in 2012

    1. 1. IAPD/IPRA Conference Soaring to New Heights &New Levels of Compliance in 2012
    2. 2. Certified Public Accountants & Business Advisors Overview of topics covered  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 lines2 © 2012 Sikich LLP. All rights reserved.
    3. 3. Certified Public Accountants & Business Advisors Recent Court Cases Wal-Mart V. Dukes Showed what can happen when class actions become too large © 2012 Sikich LLP. All rights reserved.
    4. 4. Certified Public Accountants & Business Advisors Thompson V. North American Stainless Big case which brings the subject of retaliation and anti-discrimination laws and their interpretation to the front burner. © 2012 Sikich LLP. All rights reserved.
    5. 5. Certified Public Accountants & Business Advisors Kasten V. St.-Gobain In this case the courts ruled that employers may not discharge any employee that has filed any complaint. © 2012 Sikich LLP. All rights reserved.
    6. 6. Certified Public Accountants & Business Advisors Proctor Hospital We learned about the “Cat’s Paw” Theory here…. © 2012 Sikich LLP. All rights reserved.
    7. 7. Certified Public Accountants & Business Advisors National Labor Relations Board 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 © 2012 Sikich LLP. All rights reserved.
    8. 8. Certified Public Accountants & Business AdvisorsPayroll and Compensation Under Fire: What you Need to Know Agencies (DOL, IRS) continue to focus on: • Employee Classification • Overtime Payment • Independent Contractors • Interns © 2012 Sikich LLP. All rights reserved.
    9. 9. Certified Public Accountants & Business Advisors 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 © 2012 Sikich LLP. All rights reserved.
    10. 10. Certified Public Accountants & Business Advisors FLSA Compliance At least 75% of employers are not in compliance with the Fair Labor Standards Act – might actually be closer to 95% © 2012 Sikich LLP. All rights reserved.
    11. 11. Certified Public Accountants & Business Advisors 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 © 2012 Sikich LLP. All rights reserved.
    12. 12. Certified Public Accountants & Business Advisors 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 © 2012 Sikich LLP. All rights reserved.
    13. 13. Certified Public Accountants & Business Advisors 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 © 2012 Sikich LLP. All rights reserved.
    14. 14. Certified Public Accountants & Business Advisors 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 © 2012 Sikich LLP. All rights reserved.
    15. 15. Certified Public Accountants & Business Advisors IRS Voluntary Classification Settlement Program Initiative allows businesses to become compliant with worker classification requirements at significantly reduced penalty rates © 2012 Sikich LLP. All rights reserved.
    16. 16. Certified Public Accountants & Business Advisors IRS Voluntary ClassificationSettlement 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 © 2012 Sikich LLP. All rights reserved.
    17. 17. Certified Public Accountants & Business Advisors IRS Voluntary ClassificationSettlement 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 © 2012 Sikich LLP. All rights reserved.
    18. 18. Certified Public Accountants & Business Advisors IRS Voluntary ClassificationSettlement 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 © 2012 Sikich LLP. All rights reserved.
    19. 19. Certified Public Accountants & Business Advisors 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 © 2012 Sikich LLP. All rights reserved.
    20. 20. Certified Public Accountants & Business AdvisorsWhy 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 © 2012 Sikich LLP. All rights reserved.
    21. 21. Certified Public Accountants & Business Advisors 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 © 2012 Sikich LLP. All rights reserved.
    22. 22. Certified Public Accountants & Business Advisors Independent Contractors Tests for Independent contractors include: • Behavioral control • Financial control • Type of relationship © 2012 Sikich LLP. All rights reserved.
    23. 23. Certified Public Accountants & Business Advisors 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 © 2012 Sikich LLP. All rights reserved.
    24. 24. Certified Public Accountants & Business Advisors Unpaid Interns Must be a structured educational experience For the benefit of the intern No promise of a job © 2012 Sikich LLP. All rights reserved.
    25. 25. Certified Public Accountants & Business Advisors 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 © 2012 Sikich LLP. All rights reserved.
    26. 26. Certified Public Accountants & Business Advisors 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 © 2012 Sikich LLP. All rights reserved.
    27. 27. Certified Public Accountants & Business Advisors 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 © 2012 Sikich LLP. All rights reserved.
    28. 28. Certified Public Accountants & Business Advisors 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 © 2012 Sikich LLP. All rights reserved.
    29. 29. Certified Public Accountants & Business Advisors Smartphone App now available Allows employees to keep track of their own time Calculates overate DOL will allow it as evidence in claim cases © 2012 Sikich LLP. All rights reserved.
    30. 30. Certified Public Accountants & Business Advisors ADA/ADAAA 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 © 2012 Sikich LLP. All rights reserved.
    31. 31. Certified Public Accountants & Business Advisors Definitions of Disability “Major Life Activities”  Seeing Bending  Hearing Speaking  Eating Learning  Walking Reading  Standing Concentrating  Lifting Thinking  Caring for oneself Communicating  Concentrating Working © 2012 Sikich LLP. All rights reserved.
    32. 32. Certified Public Accountants & Business Advisors Major Bodily Functions Circulatory system Reproductive system Immune system Bowel Cell growth Neurological system © 2012 Sikich LLP. All rights reserved.
    33. 33. Certified Public Accountants & Business AdvisorsEEOC Identified Impairments Cerebral Palsy Cancer MS HIV/AIDS Depression Diabetes Autism © 2012 Sikich LLP. All rights reserved.
    34. 34. Certified Public Accountants & Business Advisors Interactive Dialogue Document good faith efforts Update job descriptions Update employment applications relative to essential job functions © 2012 Sikich LLP. All rights reserved.
    35. 35. Certified Public Accountants & Business Advisors Summer Hiring 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? © 2012 Sikich LLP. All rights reserved.
    36. 36. Certified Public Accountants & Business AdvisorsQuestions? © 2012 Sikich LLP. All rights reserved.
    37. 37. Certified Public Accountants & Business Advisors Useful References www.dol.gov – Department of Labor Website www.state.il.us/agency/idol/ - Illinois Department of Labor © 2012 Sikich LLP. All rights reserved.
    38. 38. Get Up to Date Breaking HR News and Alerts on Twitter!Receive instant communications on:• HR Alerts• HR Hot Topics• Articles• Breaking NewsSo visit www.twitter.com/sikich_hr and start following us today!
    39. 39. Contact Information:Julie StrahlGovernment SpecialistSikich Human Resource ConsultingPhone: (630) 566-8453Email: jstrahl@sikich.com

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