Some Days There is Just Nothing...

There are some days that WRITERS BLOCK rears its ugly head. Today is one of those days. So, since you have nothing great to read from me, I suggest you go to my friend Jon Hyman's site and take a look at the compilation of blog posts he has read this week. I am flattered he put me in there. But there is alot of great stuff, most of it centered around compliance, that he has included. So check him out by clicking WIRTW #157 (the naughty or nice edition) Posted by Jon Hyman on Friday, December 17, 2010

Independent Contractor Alert: Pending Legislation

There are two pieces of legislation pending in Congress that have a high likelihood of passing before the end of this 2010 calendar year. Both of these pieces of legislation regard Independent Contractors and the way in which a company recognizes them and deals with them. If you are a company that deals with independent contractors you need to be prepared to deal with this legislation if it passes.


The first bill is The Fair Playing Field Act of 2010. This legislation will amend the Internal Revenue Code to eliminate a “loophole” that has allowed companies to avoid paying penalties for improper classification of independent contractors. The so-called loophole that the Fair Playing Field Act seeks to close is Section 530 of the Revenue Act of 1978. (You can read more about Section 530 by clicking here.)That law currently affords businesses a safe harbor to treat workers as independent contractors for employment tax purposes if the company has had a reasonable basis for such treatment and has consistently treated such employees as independent contractors by reporting their compensation on Form 1099s.

Going forward, the Fair Playing Field Act would eliminate the continued use of the Section 530 safe harbor. It would require the Treasury Secretary to issue regulations or other prospective guidance clarifying the employment status of individuals for federal employment tax purposes. The act would also prohibit the IRS from making retroactive assessments for past unpaid taxes in cases in which the business consistently treated the worker involved as an independent contractor and filed Form 1099s each year for the worker, unless the business had “no reasonable basis for not treating such individual as an employee.”

One major provision of the Act would require businesses who use independent contractors “on a regular and ongoing basis” to provide them with a written statement informing them of their federal tax obligations, notifying them of the employment law protections that do not apply to them, and telling them how they can seek a determination of their status from the IRS.

The second piece of pending legislation is Employee Misclassification Prevention Act. It would amend the Fair Labor Standards Act (FLSA), the federal law mandating the payment of minimum wage and overtime for employees who work more than 40 hours in a work week, creating a new labor law offense: misclassification of an employee as an independent contractor. EMPA would also impose strict record-keeping and notice requirements upon businesses with respect to workers treated as independent contractors, expose such businesses to fines of $1,100 to $5,000 per employee for each misclassification, and double the liquidated damages provisions under the FLSA for violations of the minimum wage or overtime provisions.

The paperwork burden and monetary fines associated with both these pieces of legislation can be significant. It is recommended that companies that use independent contractors make a concerted effort to reevaluate those relationships and determine how things might need to be changed.

Employment Law Compliance: It Is Not Your Father's USDOL

I know there have been some arguments amongst HR people calling for reform in the HR field to have "legal" handle compliance and let HR deal with "people/talent" issues. My reaction to that statement is that it works very well in a company that has "legal". However, far many more companies do not have an in-house legal department and to go to outside to legal counsel would be very expensive. So the HR practioner has to be the "compliance officer." And in today's world that is NOT a simple issue. As I have stated many times in this blog the world of employment compliance is much more complicated and dangerous. The USDOL has hired 250 more wage & hour investigators, another 200 or so OSHA investigators, another 100 or so contract compliance officers for the OFCCP, the IRS is putting on more people to investigate independent contractor situations, the EEOC has been given several million dollars to beef up its efforts, ICE is getting hot and bothered about I-9s and all of them say the fines will be increased heavily and they are looking for CRIMINAL cases not civil remedies. And State DOLs are jumping on the bandwagon too.

One well known "Co-Employer" or PEO, which used to advertise their services as a way to recruit and retain employees is now advertising using the phrases "Trampled by overpowering employment law", "steeper fines", "harsher penalties" and "choking on red tape". So people are starting to sit up and pay attention. You should too...

I borrowed from the old Oldsmobile commercial for my title. This is not the same USDOL from 20 years ago. This one has stated you as an employer are stealing from your workers and they are out to get you. So beware and remember this is the US DEPARTMENT OF LABOR, NOT THE US DEPARTMENT OF EMPLOYERS. Hone those compliance skills and keep up to date on the ever changing world of employment law.

And, by the way, you had better pay attention to the National Labor Relations Board too. They also are not on your side and may make rules changes that may make it much easier for someone to organize you employees. You make wake up one day and have a union in your lap.

Great way to start a week huh?....

So You Think Compliance Knowledge is not Important in HR... Well

In the ongoing debates in the HR blogsphere on the Death of HR ( Laurie Ruettimann, Mike Van Dervort and mine) there were a number of comments about necessary changes in the field to make it viable or more up-to-date. One of the areas mentioned with some regularity was that HR needed to get out of the compliance arena. Leave that to the lawyers the critics say.

My reaction?   BULLS**T!

To me, where the "rubber meets the road" * in HR is in Employee Relations. The interactions between employees and management. That is where great things get done and where major mistakes get made. And these mistakes center on violations of the laws, accidental or meant, it makes no difference. And because of this, in my opinion, HR people in ER need to know the laws. They have to be compliance people. This is different than attorneys knowing the law. No chapter and verse, court case quoting here. Just what is the law and how does it apply to my company. The practical application of the law. And there is alot of it.

And there is more coming. The Obama administration is trying to make its mark in labor and employment law. They have already passed the Lily Ledbetter Act and four presidential Executive Orders have been passed. AND there are THIRTEEN pieces of legislation pending mid-term. The one with the most press coverage is the Employee Free Choice Act (EFCA) but there are a dozen more. Here is the list of 2009 Mid-Term Federal Legislation pending. Thanks to the folks at World at Work and blog buddy Eric B. Meyer for the heads up.

* To my non-American readers click the link for a definition of this idiom.

GINA: "She" Is Moving In On Nov. 21 and NEVER Going Away

Ever have someone come to see you that you were not all that thrilled with and you knew would do nothing but cause you problems? Well GINA is that family member and she is just going to be annoying. GINA in my analogy stands for Genetic Information Nondiscrimination Act. It has two Titles. Title I deals with insurance companies and prohibits group health plans from adjusting premiums or contribution amounts for the group covered by the plan on the basis of genetic information. It also prohibits a group health plan from requesting or requiring a genetic test or discriminating based on a genetic test. This title goes into effect on January 1, 2010 for calendar year health insurance plans or on the renewal date for plans that are renewed after that date. The big issue for HR professionals here is to make sure that their insurance carrier is complying with GINA and also observing HIPAA regulations about protected information.

Title II, the employment provisions, is the part of this new law that will potentially be the bigger headache. How so you ask? After all you don't collect genetic information on employees.... or do you? Before I answer that question, here is a little background on GINA:

• Private employers with 15 or more employees must comply, as well as all governments, private and public employment agencies and labor organizations.


• Employers may not make employment decisions based on genetic information about an employee, an applicant, or a family member of an employee or applicant.


• Employers may not retaliate against an employee or applicant who complains about a violation of GINA.


• Employers may not require employees, applicants or their family members to provide genetic information.


• Employers may not purchase genetic information about employees, applicants, or family members.


• There are some exceptions but any information received MUST be treated as a confidential medical record and it cannot be used in employment decisions.


• Only disparate treatment claims can be made, not disparate impact claims.

Now back to the question of whether or not you actually collect information and the potential impact of that information. Ever had an employee who has had a family member pass away and in your conversation you asked them if they had been ill. The answer given is "She passed away from breast cancer." BINGO! You just collected genetic information! Do you have employees fill out medical questionnaires or Health Risk Assessments? If the answer is "Yes" you are collecting genetic information.

So what impact does this have on your organization? Well all employees are potential plaintiffs, since we all have some genes that can cause medical conditions, i.e., cancer, heart problems, diabetes, etc. etc. etc. Employees and applicants will now have one more potential reason to sue you for discrimination.

What do you have to do as an employer? Here is a list of things to consider:

1. Alter your anti-discrimination policy to reflect this change.


2. Probably put up posters (which I am sure you will be able to download from the EEOC).


3. Teach your supervisors to NOT inquire about family medical conditions or the reasons for death of a family information.


4. Make sure you have NO form, such as a bereavement request, that asks for cause of death.


5. Make sure that any information received is kept in a confidential record, the same place you keep all the ADA information.


6. Even be guarded in asking for, or allowing for, collections to charitable groups that support a disease because "Fred's son little Johnny has leukemia."

That last one is a tough one. It has the potential of making HR stand for "heartless response." But if at some point in the future Fred is laid-off he may decide to attribute that layoff not to his job but to the fact that his son has a major impact on the insurance policy. So there has to be some measure in protecting the company.

EEOC was supposed to have final regulations out in plenty of time for companies to have better direction on compliance, however, to date I have not found them. If you have let me know. In the meantime here is a link, on Q & A about GINA.