Commonwealth Candor

I know its been a while since my last post, but the month of March has given those of us in the employment and business services realm a great deal to think and be concerned about.

At a March 12, 2010 an address to the American Payroll Association’s 2010 Capital Summit in Washington DC, John Tuzynski, head of the Employment Tax Operations, Small Business/Self Employed Division of the IRS indicated that “For the first time in IRS history,” the agency will begin to make assessments of an employer’s share of employmenet taxes (Social Security, Medicare and Federal Unemployment Tax) for unreported tip income exceeding $20 and reported on IRS Form 4137 (Social Security and Medicare Tax on unreported Tip Income, usually attached to Form 1040). This signaled the IRS’ intent to comb their databases of filers of form 4137 and cross-reference those numbers with those reported by the employer to see if the employer had filed their share of the of the Social Security, Medicare and Federal Unemployment Tax on that unreported tip income. This was not an IRS practice until 2010, which should result in significant demands for payment by the employer by the IRS, although they indicated they would not assess penalties and interest to cooperating employers. This is building storm of liability for the hospitality industry and since it will represent unpaid income from many year’s past, and will be a significant problem for these employers who did not pay tax on that income. Read the rest >

So it seems my last post (timely as it was), which mused about the proposed HIRING Act of 2010 was trumped by an announcement that President Obama had decided to jump on the bandwagon with his own proposal.  In his proposal, The Small Business Jobs and Wages Tax Cut, outlined on Jan 29, 2010 is intented to kickstart new hiring by small businesses.  Under Obama’s plan, small businesses would receive a $5,000 tax credit for every new employer hired in 2010.  This would be capped at $500,000 per business and $250,000 for start-ups.  The credit would take the form of reimbursement for the increase in Social Security Taxes paid on real increases in their payrolls, creating what was referred to by the White House as a “de facto payroll tax holiday”.  Like the HIRING proposal I mentioned in my last post, this credit would be claimed on a quarterly basis but unlike the other proposal, explicitly states the method of renumeration. Read the rest >

By Cheryl Barbato

So you need to do some hiring.  You want to do it quickly, but at the same time you need full confidence that you are bringing the very best talent into your organization.  Recruiting should be viewed as a business strategy, not just an operational task.   I recommend taking a step back from the constant need to “put out the fires” and examine the engine you have in place for recruitment at your organization.

Increasingly, companies are turning towards a unique solution, particularly in these times of uncertainty.  Working as an extension of your company, an outsourced recruiting partner is quite valuable.  Whether you fully outsource or augment what you already have in place, they will get to know your culture, take the time to understand your business goals and help you to streamline your process to ensure optimal hiring.

A properly managed outsourced recruitment solution offers many benefits that can improve your business.

Decrease Time to Hire

Due to the efficiencies that are brought into the mix with an outsourced provider, you will save time.   You will avoid the need for hiring, training and retaining an internal team.  While streamlining your recruitment process, you will also see the development of best practices which will cut out time in the process, leading to less lost candidates and the ability to bring the most desired talent on board more quickly. Read the rest >

By Jeffrey Siegel

Employers doing business in New Hampshire must now be aware of a state law requiring employers to provide written notice to employees in advance of a mass layoff or plant closing. The New Hampshire Worker Adjustment and Retraining Notification Act (“NH WARN Act”), took effect on January 1, 2010. See RSA 275-F:1, et seq. The NH WARN Act is patterned after the Federal WARN Act; however, there are some important differences between the two laws. For example, the NH WARN Act applies to employers who employ 75 or more employees, whereas the Federal WARN Act applies to employers who employ 100 or more employees. Read the rest >

On January 13, 2010 a new bill was introduced to Congress, HR 4437, under the name Hiring Incentives to Reinvest and Incentivize New Growth Act of 2010, or HIRING Act of 2010. Intended as an addition to the same section of the IRS Code that provides credits to first-time homebuyers, its intent is to grant a 15% tax credit to any employer who expands their payroll by 3% in any calendar quarter of 2010 and a 10% tax credit to any employer who expands their payroll by 5% in any calendar quarter of 2011. The credit would be paid quarterly so benefits would accrue to businesses more quickly. The intent, of course, is to get businesses to hire more employees, restore or increase employee pay and increase employee hours.

According to the wording of the bill (see link in preceding paragraph), if my company’s total gross payroll in Q1 2009 was $100,000 (for easy number’s sake) and my total gross payroll in Q1 2010 was $110,000, then I would be eligible for a credit of $300.00 under the following formula:

* Wages Q1 ’10 $110,000 – Wages Q1 ’09 $100,000 = $10,000
* 3% of $10,000 = $300.00 Read the rest >

In my last entry, I pontificated about the pro’s and con’s of the Social Security Administration’s eVerify system. I solicited your commentary on the program, and whether you thought it was a good or bad thing for our employers, and our country.

Well, indirectly the SSA has chimed in. In a January 18 article published in the Washington Times, an audit conducted by the Inspector General concluded that during 2008 and 2009, the Social Security Administration itself did not eVerify its nearly 20% of its own prospective and new hires. It also failed to eVerify another 18% within the three days of hire allotted time frame by the program.

What makes this so bad is that all government agencies are supposed to run their new hires through this system, and the SSA is the agency responsible for the program. It seems to be a classic example of “Do as I say, not as I do”. I am not sure this is the kind of Government role modeling the Department of Homeland Security had in mind when it launched the program. They either 1. Believe they are above the very regulation they are tasked with implementing or 2. Are so procedurally inept that they cannot comply with their own mandate. You be the judge. Read the rest >

It used to be that when you hired an employee, you relied on the information they provided with their I9 as proof that they had the right to work in the United States. This proof took the form of various sources of identification issued by the federal government, like a passport, a driver’s license or a social security card. In other words, if they could meet the criteria of the I9 that would be enough for the employer to have “done their part”. In reality what this meant was that you could hire an employee in January who provided you with his or her “proof”. If you were in compliance, you would then retain copies of the W2 and I9 (as well as copies of the identifiication), report this information to your payroll provider and they in turn would report the employee to the State in which the employee was working, to meet that State’s (and this is the case in all 50 states) New Hire Reporting requirement. The chief purpose of the State’s New Hire Reporting requirement was to track down deadbeat parents who have not fulfilled their child support duties, and other individuals whom the state and federal government. Read the rest >

By Mark Burak

The number of employment-related lawsuits continues to rise, and new theories of liability are always emerging. Even something as innocuous as reimbursement of expenses can result in costly litigation.

Two real-world examples prove the point.

In Tedesco v. Innovo Group, Inc. , Michael Tedesco was the vice-president of sales and marketing for Innovo. After Innovo terminated Tedesco’s employment, he filed suit for, among other things, the reimbursement of expenses he claimed were due. Specifically, after he was fired, Tedesco turned in receipts and claimed entitlement to $31,038 in reimbursements. In defending the claim, Innovo presented evidence to “suggest” that some of Tedesco’s expenses were personal rather than business expenses. For example, there was evidence that Tedesco arranged a trip to visit a friend and that some of the expenses were “questionable.” Nevertheless, Innovo’s evidence was insufficient, the jury awarded Tedesco $27,000 in expenses, and the Texas Court of Appeals upheld the jury verdict. Had Innovo’s controls on expense reimbursements been better, it probably could have avoided both the $27,000 and the legal fees associated with defending the claim. Read the rest >

by Michael Rodgers

Did your company’s healthcare expenses rise last year? If the answer is YES, there may be some good news on the horizon.

Really? What is it?

Today, there is new technology available to you and your benefits professionals that is rapidly changing the way companies manage their healthcare program costs. These changes, if implemented correctly, can have a material impact on your company’s bottom line. Predominantly available in the Midwest and West coast markets for over 10 years, this technology is now available in the Northeast and its use is earning vast praise by financial and HR executives who identify its value.

The technology is based on the concept of data-mining a company’s claims utilization information. The executive consults a professional to decipher the data and assist him/her with the successful negotiation of lower renewal premiums. This method is vastly different from the conventional, i.e. less transparent, approach used by most carriers when developing renewals for their customers because it offers your own independent evaluation and record of the claims utilization which, for groups over 100 employees, is what directly drives the increased cost of the medical program renewals, regardless of whether the plan is fully insured or partially self-funded. Read the rest >

To survive and thrive in this economic environment, companies more often are seeking to control expenses by focusing on efficiency. One way this is happening with larger organizations is by turning to strategic outsourcing arrangements to maximize cost-saving opportunities and reduce the burden of noncritical activities. According to the latest study by Towers Perrin on HR outsourcing (HRO), cost reduction was the top goal driving HRO for 73% of the companies polled in 2009. While this poll was primarily of companies large enough to have HR departments in the first place, it is a lesson not only applicable to the small and medium marketplace but even more vital to their survival or success.

Many clients in the SMB marketplace are of 20-100 employees and often do not have a resident HR team. More likely, the “HR” responsibilities are being handled by an administrator, finance professional or often by the business owner themselves. This means that not only are HR activities being handled by someone who may not be fully fluent with State and Federal regulation surrounding employment, but who may not be focused enough on it (due to their other job duties or “hats” that they may wear) to stay current, who may, as a result, often make decisions based on hearsay, and draw incorrect conclusions drawn from experience and not necessarily what is legal or right. Read the rest >