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Smart HR Practices
By: Kathy Goodin-Mitchell, BA, MS, SPHR
Issue: 2009nov
As the government cracks down, keeping information in order and on hand is key.
The year has come and gone with massive changes in government: healthcare bills abound, a new judge rules and the recession’s pull is lessening. While we try to keep up with the latest news coming from state and federal capitols, let me tell you about what was presented earlier this year to a group of employers, agencies and business executives at the Spring TE/GE (Tax Exempt/Governmental Entities) meeting I attended.
We learned the Internal Revenue Service (IRS) is planning to initiate audits similar to those endured by universities and hospitals during the past two years and it has added 60 new employees to help. Also, the National Resource Program (NRP) is set to implement a three-year program to review up to 2,000 returns from large, small, for-profit and nonprofit businesses. Internationally focused nonprofits, foundations, churches and charities, which traditionally have been kindly treated, will be especially hard hit.
The Government Is Buckling Down
The key element for these actions points directly back to Wall Street issues. The IRS believes top business execs are cashing in while denying benefits and adequate compensation to labor. Any oddity in employers’ tax reports could bring the IRS knocking.
Universities and hospitals have already had their returns audited, with adjusted salary ranges firmly suggested for a few. As the IRS representative warned, all companies will face such scrutiny in the future—not just certain targeted industry organizations. While the IRS representative spoke directly to the tax-exempt business world, the same issues will be met in the for-profit sector as well.
New monies must be found for the current administration to build the vehicles desired to run healthcare and approved bailout programs. As Sonal Shah, deputy assistant to the president and director of the office of social innovation and civic participation, advised during our meeting, the president’s initiatives for all divisions started as creating better policy methods and funding streams.
Finding those funding streams is what every governmental office and division will be doing in the coming months. Auditing, fees and fines are most likely the easiest methods to finding the funds outside of tax hikes. Ultimately, even raising taxes on businesses and individuals may be passed to make the pending changes work. You can stay aware of what is happening through www.ppailaw.org.
In a supporting role to the TE/GE meeting, our government has stepped up audit strategies to review employers at all levels. California, Florida, Illinois, Massachusetts, New York, New Jersey, Pennsylvania and Texas were targeted states with the most Fair Labor Standards Act (FLSA) lawsuits, according to a study by Seyfarth Shaw LLC. It’s easy to claim that more liberal states saw the most impact, but Florida and Texas are classified as conservative in most business areas. This may become a trend throughout the nation as the Department of Labor (DOL), IRS, OSHA and other federal departments pick up the pace.
While former trends cause some to think their state or region is less visible in the nation’s interior, this may no longer be the case entirely. The increased agency case load and claims being filed by government entities tell us business is once again going to be a hot target for easy money streams.
Do Your Part
Take a look at your company’s pay structure. Have a strategy in place that supports what you are actually doing concerning pay and benefits for every level in the organization. This includes making an FSLA check on all positions. If you have jobs at the non-exempt status, those employees should be eligible for overtime. Check with the DOL for FSLA rulings at www.dol.gov/compliance/laws/comp-flsa.htm.
Timecards and pay records are always at great risk. When possible, audit your pay records ensuring all employees who are non-exempt are turning in signed timecards. Failure in this area can result in back-pay with severe penalties.
Ensure your organization’s HR professionals are auditing company HR files for I-9s, attendance records, performance records and W-4s specifically. Take special care when it comes to pay records and I-9s. Incorrect or out-of-date information can be major issues for businesses because the documents are not always renewed as required. If you have individuals who are working under a green card or visa, take special care with the audits. If you have to help employees complete the I-9, be sure to note the assistance. Accuracy is vital.
Audit your files to be sure personal medical information is kept separate from work records. Typically you will have three HR file sections:
1. Personnel files
2. I-9s
3. Benefits and medical records
Each set of files should be kept in separate drawers, color folders and/or separate file cabinets. By taking these precautions, when agencies come to call you can pull the needed file without putting the other documents into play.
The governmental agencies are in place to make us all more diligent in our processes and procedures. However, errors, ignorance, mistakes and negligence will no doubt generate additional funds our government will use in many new ways, and our businesses will pay the price.
Kathy Goodin-Mitchell, BA, MS, SPHR, is director of human resources for PPAI.
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