IAPD/IPRA Conference Soaring to New Heights & New Levels of Compliance in 2012

IAPD/IPRA Conference
Soaring to New Heights
&
New Levels of Compliance in 2012

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 lines

2 © 2012 Sikich LLP. All rights reserved.


Recent Court Cases
Wal-Mart V. Dukes
 Showed what can happen when class
actions become too large

© 2012 Sikich LLP. All rights reserved.


Thompson V.
North American Stainless
 Big case which brings the subject of
retaliation and anti-discrimination
laws and their interpretation to the
front burner.



Kasten V. St.-Gobain

 In this case the courts ruled that
employers may not discharge any
employee that has filed any
complaint.



Proctor Hospital

 We learned about the “Cat’s Paw”
Theory here….



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



Payroll and Compensation Under Fire:
What you Need to Know
 Agencies (DOL, IRS) continue to focus on:

• Employee Classification

• Overtime Payment

• Independent Contractors

• Interns


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


FLSA Compliance
 At least 75% of employers are not in
compliance with the Fair Labor
Standards Act – might actually be
closer to 95%



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



 Employers are liable for:
• Payment of back taxes
• Unpaid Social Security/Medicare
contributions
• Unpaid unemployment insurance
• Unpaid workers compensation
premiums
• Penalties and interest



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



DOL/IRS to Coordinate on
 IRS and DOL sign Memorandum of
Understanding

 Result = increased number of
employment tax audits = boost in
compliance and increase in revenues



IRS Voluntary Classification
Settlement Program
 Initiative allows businesses to become
compliant with worker classification
requirements at significantly reduced
penalty rates



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


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



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



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



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



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


Independent Contractors
 Tests for Independent contractors include:

• Behavioral control

• Financial control

• Type of relationship



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


Unpaid Interns
 Must be a structured educational
experience

 For the benefit of the intern

 No promise of a job



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



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



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


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



Smartphone App
now available
 Allows employees to keep track of
their own time
 Calculates overate
 DOL will allow it as evidence in
claim cases



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



Definitions of Disability
“Major Life Activities”
 Seeing
 Bending
 Hearing
 Speaking
 Eating
 Learning
 Walking
 Reading
 Standing
 Concentrating
 Lifting
 Thinking
 Caring for oneself
 Communicating
 Concentrating
 Working


Major Bodily Functions

 Circulatory system
 Reproductive system
 Immune system
 Bowel
 Cell growth
 Neurological system



EEOC Identified Impairments
 Cerebral Palsy
 Cancer
 MS
 HIV/AIDS
 Depression
 Diabetes
 Autism



Interactive Dialogue

 Document good faith efforts

 Update job descriptions

 Update employment applications
relative to essential job functions



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?



Questions?



Useful References

 www.dol.gov – Department of Labor
Website
 www.state.il.us/agency/idol/ - Illinois
Department of Labor


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Contact Information:

Julie Strahl
Government Specialist
Sikich Human Resource Consulting
Phone: (630) 566-8453
Email: jstrahl@sikich.com

IAPD/IPRA Conference Soaring to New Heights & New Levels of Compliance in 2012

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