As 2013 draws to a close and we prepare for 2014, it is a perfect time to take the temperature of your employment compliance. Here is a summary of four major changes.
It is important to note that the Equal Employment Opportunity Commission (EEOC) has stepped up enforcement in several areas. These include age and disability discrimination, largely the result of the Baby Boomer generation getting older. Also included are genetic information proscriptions enacted in the Genetic Information Non-discrimination Act (GINA) and heightened scrutiny of the use of criminal background checks. While it may seem fairly obvious that employers should not rely upon genetic information to make employment-related decisions, the EEOC’s enforcement posture on background checks is a little more troubling. In essence, EEOC takes the position that you cannot use criminal background as the basis for not hiring someone unless you can demonstrate a clear correlation between the job and the crime. Note that you should never rely upon arrest information alone.
Don’t ignore the elephant in the room — the Affordable Care Act, aka ACA, aka Obamacare. Although the IRS announced employers will not pay a penalty for failure to provide minimum essential coverage that is affordable and meets minimum value until January 1, 2015, the law specifically states employers need to implement coverage by January 1, 2014. This provision applies to “large” employers, defined to mean employers with at least 50 full-time (FTE) and full-time-equivalent (FTEE) employees. Remember the ACA counts anyone who works 30 hours per week as an FTE. To determine how many equivalents you have, add up all the hours worked by non-FTEs and divide the total by 120. The whole number remainder is the number of FTEEs. If that, plus the FTEs, exceeds 50, you’re covered.
Now make the “pay or play” decision: Are you going to provide healthcare coverage that meets the law’s requirements (“play”), or are you going to pay the penalty for not doing so? If you haven’t already talked to your broker to obtain rates on your health insurance coverage, you need to do so ASAP. This is necessary so you can decide which option makes the most business sense. Remember also that you only pay a penalty for not offering coverage to FTEs.
If you are a federal contractor or subcontractor you may run into the new affirmative action requirements in 2014. Next spring, new requirements regarding utilization of disabled and Vietnam-era veterans kick in. In essence, the Office of Federal Contract Compliance Programs (OFCCP) will require that you strive to reach 7 percent utilization of these categories. The new rules also create a lot of paperwork and reporting obligations. You will certainly want to review your affirmative action plan to ensure that you are in compliance with these new rules.
The misclassification issue is still an active (and expensive) area. Tax collectors at the state and federal levels are looking for income they missed during the economic downturn. That comes from finding employers who have been treating workers as independent contractors — rather than employees — in order to avoid paying withholding, Social Security, Medicare, etc. Today, states are much more aggressive auditing employer payrolls and practices. The concrete industry is especially vulnerable because government agencies believe that use of “1099” labor is rampant, particularly among smaller employers. Of more concern is the fact that at least 17 states have entered into arrangements with the federal government to share information. This means if you are audited at either the state or federal level and found to have misclassified workers, the other level will soon be knocking on your door.
Finally, be aware there are other things happening out there: The National Labor Resource Board continues to chip away at employer policies. . . OSHA is issuing new regulations. . . Immigration reform remains an uncertainty. . . Wage and hour litigation continues unabated. . . Restrictive covenants can still help you. . . You still don’t want to hire LUZIRS (Lazy, Undisciplined, Zero-interest, Irresponsible, Rude, Slackers) . . . and above all, stay alert. Why? Because Lerts live longer!