Tag: Human Resources

Get out of jail free card

man-in-prison-behind-bars-jailWell, not jail exactly.

Many employers prefer to classify employees as contractors to avoid paying payroll taxes and employee benefits.  If the IRS , state employment agency, or the Department of Labor (DOL) audits a taxpayer and determines that employees have been miss classified as contractors, the employer may have to pay the employees’ shares of taxes, including estimated income tax, plus the employer share of payroll taxes, interest, and penalties.  In addition there is a special six year statute of limitations rather than the normal three year limit as to how far back the IRS can asses additional tax.

The IRS Voluntary Classification Settlement Program (VCSP) as described  in Announcement 2012-45 offers employers the opportunity to reclassify their contractors as employees  and limit exposure to additions to tax, penalties and interest.  Announcement 2012-46 temporarily expands the VCSP through June 30, 2013, to employers that failed to file Forms 1099 for their contractors.

Here’s a good article about the VCSP:  Get Your Worker Reclassification Relief While It Lasts

The new water cooler

water-cooler

But in a series of recent rulings and advisories, labor regulators have declared many such blanket restrictions illegal. TheNational Labor Relations Board says workers have a right to discuss work conditions freely and without fear of retribution, whether the discussion takes place at the office or on Facebook.

Read more of the article by Steven Greenhouse
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Don’t throw good money after bad

Austin Talk Radio Batters Metrorail

Not a real headline but the discussion was a good reminder of how to NOT make a decision to abandon a project.

Investors are notoriously emotionally involved in decisions that they have made.  It is almost impossible to divorce ourselves from the consequences of important decisions that we have made.  This is called  Loss Aversion.

When we have made a decision such as investing $65 million  in a Metrorail or $5000 in WholeFoods and watch the trains operate at a loss or our stock decline by half of its value, our loss aversion and emotions keep us from correctly considering our original investment as a sunk cost.  Sunk costs are non recoverable costs that force us to admit that we have made a bad decision.

Some decisions require that we abandon our prior investment and invest additional funds that will correct the decision.  One example is abandoning a website that is too expense to maintain but that cost $15,000 for a $1000 out of the box website that works great.

Other decisions require that we look at future operations but on a cash flow basis.  If an operation, perhaps a commuter train, is cash flowing, consideration of the original investment is irrelevant to the decision as to whether to continue or stop the train.  The relevant costs to compare with income from the project are the costs that will end if operations are ceased.

Finally, we might need to consider selling assets that we can’t afford to pay for even though we would lose our investment, especially if we can pay off any debt associated with the property.  Continuing to own an asset with operating losses due to mortagage payments that could be sold is also an example of loss aversion.

Children’s Health Insurance (CHIPRA)

There are new notice and disclosure requirements associated with CHIPRA.   Employers must notify all employees of their potential eligibility for the subsidies under Medicaid or CHIP.  Model notices have been developed by the Department of Labor and the Department of Health and Human Services.  Employers are not required to provide these  notices until the first plan year after the model notices are issued by he first day of the plan year after February 4, 2010 or  by May 1, 2010, whichever is later.
Find the model notice here.

To friend or not to friend, that is the question

Therapists and many other independent professionals need to keep a clear line between their professional relationship with clients, not stepping over the line into being friends.

Many therapists are asking how to draw the line on dual relationships when they are also active on social media, and a client sends them a friend request.

For a great resource on how to respond when clients send a “friend request” on Facebook, MySpace, LInkedIn, Twitter, or other social networking sites go to   http://www.zurinstitute.com/facebook_clinicalupdate.html.

Thanks to Pat Wicklund of Leading Your Organization of One for the notice.

Three Steps to Protect Data from Rogue Employees

Robert Grapes, Chief Technologist of Cloakware, Vienna, Va., posted these tips at Business Week’s, Today’s Tip:

1. Know who has access to privileged information. Assess who has access to what data so you can understand and manage access as appropriate.

2. Apply appropriate policies to protect sensitive information. Create an actionable plan and put it into place, applying privileged passwords and access management controls throughout each level of information.

3. Update security and access credentials regularly to monitor and maintain control. Implement a regimented program to automatically update access management and passwords so you can ensure that the right people have the right amount of control over critical information.

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Labor Day

Labor Day was established to honor American workers.  The form for the celebration of Labor Day was outlined in the first proposal of the holiday: A street parade to exhibit to the public “the strength and esprit de corps of the trade and labor organizations,” followed by a festival for the workers and their families.

whd-bannerThe US Department of Labor Wage and Hour Division works to promote and achieve compliance with labor standards to protect and enhance the welfare of the of the nation’s workforce.  The FLSA establishes minimum wage, overtime pay, record keeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. Covered nonexempt workers are entitled to a minimum wage of not less than $7.25 per hour effective July 24, 2009. Overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek.

Independent Contractor or Employee?

The IRS has compiled the following top ten list of things every business owner should know before classifying a worker as either an employee or independent contractor  (IRS Summertime Tax Tip 2009-20, 8/21/09) :

(1) Three characteristics are used by the IRS to determine the relationship between businesses and workers: behavioral control, financial control, and the type of relationship.
(2) Behavioral control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training, or other means.
(3) Financial control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job.
(4) The type of relationship factor relates to how the workers and the business owner perceive their relationship.
(5) If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.
(6) If you can direct or control only the result of the work done — and not the means and methods of accomplishing the result — then your workers are probably independent contractors.
(7) Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.
(8) Workers can avoid higher tax bills and lost benefits if they know their proper status.
(9) Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.
(10) You can learn more about the critical determination of a worker’s status as an independent contractor or employee at the Small Business/Self Employed Tax Center on the IRS website at http://www.irs.gov/businesses/small/index.html. Additional resources include IRS Publication 15-A (http://www.irs.gov/pub/irs-pdf/p15a.pdf), IRS Publication 1779 (http://www.irs.gov/pub/irs-pdf/p1779.pdf), and IRS Publication 1976 (http://www.irs.gov/pub/irs-pdf/p1976.pdf).
  1. Three characteristics are used by the IRS to determine the relationship between businesses and workers: behavioral control, financial control, and the type of relationship.
  2. Behavioral control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training, or other means.
  3. Financial control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job.
  4. The type of relationship factor relates to how the workers and the business owner perceive their relationship.
  5. If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.
  6. If you can direct or control only the result of the work done — and not the means and methods of accomplishing the result — then your workers are probably independent contractors.
  7. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.
  8. Workers can avoid higher tax bills and lost benefits if they know their proper status.
  9. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.
  10. You can learn more about the critical determination of a worker’s status as an independent contractor or employee at the Small Business/Self Employed Tax Center on the IRS website   Additional resources include IRS Publication 15-A , IRS Publication 1779 , and IRS Publication 1976 .