The Hiring Incentives to Restore Employment (HIRE) Act was signed into law on March 18, 2010.  This provides incentives to companies who hire and retain unemployed employees.  This act provides for:

• the elimination of the 6.20% employer portion of Social Security tax through the end of 2010.
• up to a $1000 Retained Worker Tax Credit (RWTC) for employees who stay employed for 52 consecutive weeks.

To be eligible for the credit, employees must sign an affidavit stating that they have not been employed for over 40 hours in the last 60 days prior to employment.

Other provisions include:

• Eliglible employees must have been hired after Feburary 3, 2010 and before December 31, 2010.
• FICA tax credits apply for wages paid between March 19, 2010 and December 31, 2010.
• Eligible employees cannot be family members of the business owner
• Eligible employees cannot be hired to replace another employee, unless that employee was terminated either voluntarily or for cause.

The RWTC will equal the lesser of 6.20% of eligile employees' pay over the  52 week lookback period or $1000.

You may learn more about this act on the IRS web site.  Click here for the HIRE Act Q&A for employers.

There are new regulations impacting the E-Verify system for federal contractors. Federal contractors are obligated to utilize the E-Verify system to figure out if employees are eligible to legally work in the United States.

On or before September 8, 2009 it was not mandatory for employers to use the U.S. Citizenship and Immigration Services’ E-Verify system. Employers were able to use it for new hires on a voluntary basis, if they had for at least 120 days contracts valued more than $100,000. Effective after September 8, 2009, however, new and current employees who work on a contract must be reported through the new E-Verify system. 

Considerations for Employers:

• Get More Familiar. Learn about the new E-Verify system whether or not you currently have federal contracts to ensure more proficiency and efficiency.
• Know the Contracts. Make sure your point person with the HR role and responsibilities is aware of any federal contracts to help stay in compliance.
• Plan It Out. The entire staff may need to go through the E-verify system which can pose various administrative (i.e. time and costs) and employee morale issues.
• Conduct Regular Checks. Regularly track to ensure you have up-to-date employee I-9 information and that they meet current compliance standards.

It is unlawful if employers choose to ignore the new rules and regulations and not apply them consistently and fairly in their line of business. So, know if you have federal contracts, and be consistent with Form I-9 and other employment verification documentation practices to avoid misrepresentation and discrimination.

The Obama administration has proposed an extension to the COBRA premium subsidy in its fiscal year 2011 budget.  If adopoted into law, the subsidy would be availale to employees laid off from March 1, 2010 and December 31, 2010.  The subsidy would be provided for 12 months.

This would be the third extension of the COBRA subsidy plan.  In February of 2009 the subsidy was for 9 months, In December of 2009 the subsidy was extended to 15 months. 

For more information on this topic, see Stephen Miller's aricle on the Society for Human Resource Managment (SHRM) web site here.

With recent pandemic flu outbreaks, some employers have grown confused as to which types of employee absences from work may be protected by the federal Family Medical Leave of Absence Act (FMLA).

First of all, FMLA protection is entitled to employees working for a covered employer and who have worked for their employer for at least 12 months, for at least 1,250 hours over the previous 12 months, and at a location where at least 50 employees are employed by the employer within 75 miles. Such employees are provided up to 12 weeks of job-protected, unpaid leave during a 12-month leave year for specified family and medical reasons, which may include the flu where complications may occur.

Employers should consider the following examples to avoid discriminatory practices:

• Employees who are infected.
• Employees who are not infected.
• Employees with certain family members who are infected.
• Enforced company policies.

As an employer, it is crucial to establish flexible sick leave policies that are non-discriminatory. Whether an absence should be paid or unpaid depends much on your company's relevant policies and employment contracts. If employees must miss work, you may provide alternative options such as telecommuting. In addition, consider contacting an HR professional regarding any state-specific regulations that may require stricter guidelines for pandemic sick leave circumstances.

If you’re following the continuing saga of the financial meltdown, you might be under the impression that many employers are doling out seven-figure bonuses like Goldman Sachs, Bank of America, AIG and the rest.

In reality (as has become crystal-clear over the past year or so), Main Street isn’t Wall Street, and operates on much more traditional principles.  So as you would expect, the number of employers that are still paying out bonuses during this recession has dropped substantially ...as has the relative size of the average bonus.  But there are still companies doing well enough to use this vehicle to reward their top employees;  and if yours is among them, we wanted to provide you with a cautionary note on the subject.

Most companies want to maximize the psychological impact on their bonus-eligible employees;  and some do so by skipping withholding Federal income tax on the bonus,
thereby making the take-home portion appear as large as possible.  It’s probably no surprise that Uncle Sam doesn’t much care for that approach.  Further, you risk putting your top employees in a serious crack come April 15th, when at best they may owe a penalty and at worst may be unable to pay their tax due.  Few wage workers have the discipline required to make an estimated payment, or minimally to sequester the sizable amount out of that windfall bonus that isn’t really theirs.

The right way
What you should do is withhold Federal income tax from bonuses at the supplemental tax rate of 25.00% (in fact, 35% for those fortunate enough to be receiving a 7-digit bonus);  or else the withholding should be calculated as if the latest pay check and the bonus were on the same paycheck.

It doesn't provide employees with quite as big a holiday surprise, but it also doesn’t set them up for a potential shortfall in April.  And in fact, come April they’ll probably get yet another nice surprise ...because in all likelihood they’ll be over-withheld, and will thus get a nice “mini-bonus” in the form of their Federal tax refund.

Businesses which sometimes overlook procedures (especially if written) may sometimes face a U.S. and / or state Department of Labor (DOL) notification for an audit. Is this a time to panic?  No. It is a time stay calm and be organized.

If managed effectively, DOL audits provide a productive opportunity for employers to review and analyze past practices and improve on future practices. Audits involve financial operations, employment law compliance, and evaluation of operational efficiencies. In fact, periodic (internal or external) audits are integral to the needs of management and it's the company's business processes.

To best prepare, consider the following items:

1. Determine which division of the U.S. or state DOL is investigating your business.
2. Contact an HR professional or attorney specializing in employment law to discuss the audit and to get information about your rights and responsibilities.
3. Contact the DOL to confirm or reschedule the appointment.
4. Determine which member(s) of your management team will participate in the initial meeting with the auditor.
5. If the notification letter requests documents, be sure to make copies for your records, since the auditor may take the original records off-site.
6. Meet with the auditor in a confidential, quiet area.
7. If the auditor requests to interview employees, be prepared to provide a private room for such interviews.
8. Respond only to questions that the auditor directly asks. Do not offer additional information unless requested to do so.
9. Stick closely to any follow-up requests and / or deadlines required by the auditor.

While maintaining respect and cooperation with the auditor, you may discover important resolutions critical to the continued success of your business.

The Deparment of Labor is staffing up for its push for wage and hour compliance.  In a recent budget discussion, U.S. Secretary of Labor Hilda L. Solis says that the Wage and Hour division plans to hire 250 additional field investigators in 2010.  They will concentrate primarily on Fair Labor Standards Act minimum wage, overtime, and child-labor violations.

Seems like it’s in the news every couple of weeks... some company fesses up to having "lost" or compromised a mind-boggling amount of personal information about individuals ...sadly, most often its customers.  Usually what follows some time later is news of a class-action settlement running well into the millions of dollars.  You see these stories and think, “Boy, am I glad we’re not in banking or retail or any of those industries that have to collect personal information.

• And now for the bad news:  other than a matter of scale, you are in one of those industries ...as long as you have employees.  Why?  Because personal information (PI) is defined as an individual’s name, in combination with any of the following:
• social security number 
• state-issued ID number (such as a driver’s license number) 
• financial account number
• credit/debit card number

You’re required to collect and maintain several of those items for tax and other reasons;  and if you offer payroll direct deposit, then you have bank-account information as well.

Making matters worse... if you employ Massachusetts residents, you now have more to worry about than a class-action lawsuit from your employees.  A new Massachusetts law aimed at combating identity theft requires strict protection of personal information for residents of MA.  The law especially targets electronic information, but covers paper documents as well.  If your business holds, licenses, stores or maintains PI on any MA resident, it is covered under the law.  For HR, this includes I-9s and W-4s, plus insurance, retirement plan and direct deposit information.

Unlike many business regulations, this law has teeth!  Both civil and criminal penalties are provided for.  Civil penalties may include $5,000 per violation, and up to $50,000 for improper disposal of PI (old hard drives or paper documents).

What you need to do
The law’s compliance deadline was recently pushed back two months to March 1, 2010 ...but that will be upon us before we know it.  Here are the steps you need to take: 

• Develop and maintain a Written Information Security Plan (WISP). 
• Train employees;  define consequences for employees who do not adhere to the plan.
• Don't share passwords, and don't make them simplistic. 
• Encrypt any portable devices that contain personal information (laptops, PDAs, external hard drives, backup tapes, etc). 
• Don't transmit or receive data via unprotected email, websites or wireless. 
• Limit access to PI to people within your company with a genuine need to know. Keep written PI in locked file cabinets.

The WISP referenced in the first bullet above must address... 

• the measures adopted to safeguard information;
• designation of at least one person to manage the security program; 
• disciplinary measures imposed for violations of the program;
• how it will prevent terminated employees from accessing information;
• monitoring of electronic records for unauthorized access and security risks;
• documentation of incidents involving breach and resulting corrective actions;
• use of user ID / password protocols for electronic PI documents;
• access restriction to electronically stored information; and 
• upgraded safeguards and protection (firewalls, encryption software) as needed.

If 3rd parties that you do business with have access to your PI, "the new regulations require companies to take reasonable steps to ensure that their third-party service providers are capable of maintaining appropriate security measures," according to Management Moxie, a newsletter from Foley & Foley, PC.

Even if your company doesn’t employ Massachusetts residents, it’s probably a good idea to get out ahead of the curve on this issue;  because it’s fairly likely that your state(s) will implement similar regulations in the relatively near future.

Effective November 21, 2009, the Genetic Information Nondiscrimination Act of 2008 (GINA) was enacted in recognition of developments in the field of genetics. Genetic tests now exist that can indicate whether individuals may be at risk for developing a specific disease or disorder. The concerns focus on whether employees may be at risk of losing access to health coverage or employment if insurers or employers have their genetic information.

To address these concerns, GINA prohibits discrimination based on genetic information and restricts acquisition and disclosure of such information. Genetic information includes information about an individual's genetic tests, genetic tests of a family member, and family medical history. Genetic information does not include information about the sex or age of an individual, the individual's family members, information that an individual currently has a disease or disorder, and tests for alcohol or drug use.

GINA includes Title I and Title II amendments:

• Title I amends portions of the Employee Retirement Income Security Act (ERISA), the Public Health Service Act, and the Internal Revenue Code, and addresses the use of genetic information in health insurance.
• Title II applies to private, state, and local government employers with 15 or more employees, employment agencies, labor unions, and joint labor-management training programs. Title II also prohibits use of genetic information in making decisions related to any terms, conditions, or privileges of employment, prohibits covered entities from intentionally acquiring genetic information about applicants and employees, requires confidentiality with respect to genetic information (with limited exceptions), and prohibits retaliation.

"Covered entities" (subject to Title II as noted above) may not use genetic information in making employment decisions under any circumstances. The general rule states that covered entities may not request, require, or purchase genetic information with respect to an employee/applicant or family member of an employee/applicant. Covered entities in possession of genetic information about applicants or employees must treat it the same way they generally treat medical information. (Note: GINA also amends the privacy provisions of HIPAA to include genetic information in the definition of protected health information.) Covered entities also must keep the information confidential and, if the information is in writing, they must keep it apart from other personnel information in separate medical files. Employers need to exercise caution when it comes to the GINA law to avoid penalties.
 

In a down economy like the present one, everyone does a little belt-tightening.  Unable to grow revenue easily (if at all), most businesses seek to maintain profitability as long as possible by shaving costs wherever possible.

In that spirit, here are 7 simple things that small businesses can do to save money...

• Switch your phone service to Voice over IP.  After a few dicey years when VOIP was a challenge even for bleeding-edge pioneers, it’s now well tested and works largely as promised.  And it’s far cheaper than wireless or traditional landline.
• Utilize open source software to eliminate license-purchase payments and ongoing update fees to traditional software vendors.  Open Office (from OpenOffice.org) and Google Docs are good examples that both provide word processing, spreadsheets and presentation software.  They maybe don’t have all the bells and whistles of Microsoft Office, but more often than not they do what you need them to do ...and they’re free.
• Use Software as a Service (SaaS) wherever possible.  SaaS is advantageous because you can get the productivity of top-level software, better than what you could probably afford to buy flat-out.  The SaaS model provides access to traditional software over the Internet for a monthly fee.  Popular examples are Salesforce.com and Netsuite.  Clients do need servers, up-front licensing and system knowledge.  But the vendor maintains the software and performs all the system maintenance, reducing your need for costly in-house IT support.
• Switch to a free email service from AOL or other traditional provider.  There are enough free choices around these days (Yahoo! Mail, Gmail from Google, etc.) that it’s essentially become a commodity.  If you have a website, of course, your developer can easily set you up with email capability on your own www.mybusiness.com domain;  that may not make it quite free, but at least it will be painlessly bundled with other substantial value ...and probably still less than the subscription services.
• Consider bartering some of your products or services for those of similar value that your business requires.  Of course, this gimmick doesn’t save real economic value (your people are tied up producing the good that’s being bartered), but it does husband cash.  And if it happens to come at a time when some of those people are less than fully loaded with client work, it may save them from unpaid “holidays” or even a layoff. 
• Seek out blanket discounts on everything possible.  Your Chamber of Commerce is an excellent information source for member-to-member discounts on insurance, workers' compensation and similar deals offered by other members.  Your business category or ownership makeup may make you eligible for still more discounts or subsidies that are essentially “hiding in plain sight” ...but you will need to flush them out.

And last, but perhaps most substantial...

• Switch to an payroll service provider.  We spilled a bit of ink on this subject in our recent post, “Top nine reasons to go with an online payroll service”, so we’ll mention only those that directly impact cost here...
  • You will typically pay less than you would for either a traditional batch-oriented service or for acquiring commercial application software.  (Compared to the latter, it could save you the cost of an in-house IT department!)
  • You should have the option of printing checks locally (generally not available with a traditional service), thus saving on shipping expense.
  • Because the system is truly online, you should be able to preview your entire payroll before actually running it;  this can eliminate re-runs, which most traditional service vendors charge for.

By implementing these hints, your business may not only weather this recession intact;  you may be able to continue funding marketing and product development to a level that will enable you to leapfrog your competitors, once we all come out on the other side.