Why Do We Care
With all the demands on our attention, time and money and given the fact that Wage and Hour Rulings, Employee Misclassification issues and so on have been in existence for decades, it’s important for Business Owners/Execs and Office Management personnel to understand why it’s critical even now to get their HR ducks in a row.
First, we realize that, if a person has been managing people in a business for some time or filling out HR paperwork, that he/she has certainly gained a certain amount of valuable HR experience over this time. Second, chances are there are personnel in the business that have gained more formal HR knowledge through training or reading. The problem with past experience and knowledge is this: forms have changed; the rules for filling out them have changed; some of what before was not considered infraction or discriminatory now is; and many previously unenforceable items are now enforceable.
Let’s talk a bit about the changes being made. The current presidential administration ran on a platform of “Change”. The current Secretary of Labor, Thomas Perez, who came in office in 2013 was brought in to: facilitate that change in areas of increasing compensation and benefits for middle class America; reinforce discrimination protections; and increasing safety standards for workers. The regulations are being done, to a great extent, through paperwork, i.e. notice the increase in reporting for OSHA over the past 12 months. And it’s not just the DOL which are increasing regulations through papers. Take I-9’s (USCIS) which verifies identity and work authorization of all workers in America. The majority of violations are for technical mistakes in filling out the paperwork and for not using the appropriate non-discriminatory procedure, i.e. it’s now considered (and has been for a few years) discriminatory and punishable by fine to tell an employee to bring in a social security card and driver’s license for the I-9. But really, is anyone going to know? And isn’t this just another scare tactic? After all, I live in Podunk, MO, USA.
There’s very strong indication of government entities’ intention and ability to enforce infractions (which again, weren’t considered infractions in the past): an increase in training for employers; an increase in training and fact sheets for employees on IRS, DOL and USCIS websites; more hotlines for employees to make anonymous complaints on numerous department websites; hotlines & fillable online forms to make complaints about other businesses; and so on. See the following websites: http://labor.mo.gov/offthebooks, https://apps.labor.mo.gov/forms/misclassify/misclass_form.asp#. (More links provided upon request.)
In the past, there was a lesser fine for employers who committed infractions unknowingly. With all the resources out there, it’s now harder to claim “I didn’t know”. In fact, most employers probably would say it’s too overwhelming; there’s too much to keep track of and too many nuances to understand without really delving into it. Consider the 65 page instruction book for the three-page I-9 form covering every eventuality and a 1-1/2 hour training video for I-9, and an equivalent for the eVerify. And work authorization is just one item on your compliance platter.
What fines are we talking about, anyway? Following are some.
- In Missouri in 2014, 7,517 misclassified workers were identified. These workers were employed by 1,118 employers. Those employers owed an additional $1,370,272 (est) due to misclassification. (http://labor.mo.gov/offthebooks)
- I-9: $110 to $1100 per I-9 form; $375 to $16,000 per discrimination violation ; among others. (http://www.uscis.gov/i-9-central/penalties).
- In Fiscal Year 2014, WHD investigations resulted in more than $79 million in back wages for more than 109,000 workers in industries such as the janitorial, temporary help, food service, day care, hospitality and garment industries. http://www.dol.gov/whd/workers/misclassification/
- Exempt/non-exempt issues: Usually back pay plus liquidated damages (up to the equivalent of backpay), with a statue of limitations of two years for non willful violations and up to three years for willful violations.
In addition to the above, depending upon the situation, an employer may lose government contracts.
The value of getting HR ducks in a row is that it not only plugs up the biggest most obvious and expensive holes, but doing so also provides a solid foundation for a company’s growth, especially when it comes to being able to manage more employees or and increased number of subcontractors. In particular, we’re talking about:
- Reviewing and building (or tweaking) your current HR system with an eye to a potential inevitable audit, knowing in advance what items might be requested;
- Simultaneously bringing consistency into HR and HR-related processes, such as onboarding, terminations, prevailing wage filings, document retention, that are simultaneously labor law compliant and that allow you to build performing teams.
- Once your regular processes are compliant and effective, training a key person in HR who can serve as a point person to others while having an eye to what issues might trigger a request to evaluate a situation from an HR perspective, i.e. an employee with a pregnancy.
One last important point: HR processes should never hamstring the owner/exec/decision maker. This year executive advantage is celebrating 25 years of marrying practical HR that works for the business while keeping it (as much as possible) out of “hot water”. Contact Bob (573 819-2436; email@example.com) or Doris (573 819-0706); firstname.lastname@example.org.