Toobin: What does Arizona immigration ruling mean?

Courtesy of CNN.COM

A federal judge has granted an injunction blocking enforcement of parts of a controversial immigration law in Arizona that is scheduled to go into effect Thursday.

U.S. District Judge Susan R. Bolton ruled the federal government "is likely to succeed" in its challenge of the legality of one of the most controversial sections of the Arizona law. That provision required police to "make a reasonable attempt to determine the immigration status of a person stopped, detained or arrested" if the officer has a reasonable suspicion that the person is in the United States illegally.

Jeffrey Toobin, CNN’s senior legal analyst, spoke with T.J. Holmes on "CNN Newsroom" and offered his immediate reaction to the ruling and what it could mean for Arizona and other states.

What exactly did the judge rule?

The judge ruled that certain provisions are unconstitutional, but parts of the law she approved. The most controversial of which is the duty forced on law enforcement officers to determine if immigrants are people reasonably suspected of being illegal are in fact illegal. That has been struck down temporarily.

The judge said this – the requirement of law enforcement officials to essentially make all possibly illegal immigrants show their papers – is a violation of the separation of powers, a violation of federal sovereignty and federal control of immigration matters.

That argument was the one maintained by the Obama administration. Many civil rights groups argued it was simply discriminatory towards Hispanics.

The judge struck down the law on the ground that it was a violation of the federal control of immigration matters. That’s why the controversial provision at least for the time being will not go into effect.

So what happens now?

Some of it will have to do with the legal strategy followed by the state of Arizona here. The state of Arizona could ask the judge to revisit the issue after more fact-finding. They could also go directly to the Court of Appeals – which is the next up in the federal court structure.

I think this is a case very much destined for United States Supreme Court. It is the kind of big issue relating to the responsibilities of state versus federal government on a very important matter, so it’s likely, given how much attention this law received that other states will be passing similar laws. I think the Supreme Court will get involved probably next year. The issue that’s up in the air is will the law be in effect while the appeals process goes forward? At the moment the answer is no – at least this one provision. But certainly an appeals process will begin. If not immediately, then soon

Posted August 31st, 2010 by Jessica Spinks - Posted in Uncategorized | | 0 Comments

Caterpillar Ready to Ink $16.5M Fee Suit Settlement

November 9, 2009 (PLANSPONSOR.com) – Heavy equipment manufacturer Caterpillar Inc. has agreed to a $16.5-million settlement of an excessive fee lawsuit in federal court in Illinois.

A company newsletter said the September 2006 suit leveled the fiduciary breach charges against Caterpillar regarding its four 401(k) plans for workers and retirees.

According to the announcement, the net proceeds of the settlement will be allocated to participant accounts and former participants based generally upon the number of years a participant maintained an account balance in one or more of the plans.

This will happen after court-approved attorney’s fees and expenses of settlement administration have been deducted. Distributions would begin after U.S. District Judge Joe Billy McDade of the U.S. District Court for the Central District of Illinois grants final approval of the settlement, and all appeals have been pursued.

Even though one of the breach claims had to do with the actions of Caterpillar Investment Management Ltd. (CIML), formerly a Caterpillar subsidiary, the company said CIML was sold in 2006 before the suit was filed.  As a result, in May 2006, the Preferred Funds, advised by CIML, were replaced with other investment options, including separate accounts.

The suit also alleged Caterpillar kept too much cash in the company stock fund in the 401(k) plans.

Caterpillar contended in its statement that it had complied with the Employee Retirement Income Security Act (ERISA) and that it only agreed to the settlement because it thought the move would be in the best interests of the company and its shareholders.

The Web statement said the company will increase employee communication about 401(k) investment options and associated fees, and Evercore Trust Company will independently monitor the plans during a two-year settlement period.

Also, during the two-year period, Caterpillar will continue to limit its cash holdings in the company stock fund investment option, and will not include retail mutual funds as core investment options in the plans. The statement said that if service contracts come up for renewal, Caterpillar will undertake a request for proposal.

Fred Schneyer
editors@plansponsor.com

Posted August 16th, 2010 by Jessica Spinks - Posted in Uncategorized | | 0 Comments

Federal judge blocks parts of Arizona immigration law

CNN.com

Phoenix, Arizona (CNN) — A federal judge has blocked one of the most controversial sections of a tough Arizona immigration law, granting a preliminary injunction Wednesday that prevents police from questioning people about their immigration status.

That provision of the law requires police to "make a reasonable attempt to determine the immigration status of a person stopped, detained or arrested" if the officer has a reasonable suspicion that the person is in the United States illegally.

U.S. District Judge Susan Bolton’s ruling, in response to a motion filed by the federal government, came with scant hours to go before the law goes into effect.

She also blocked provisions of the law making it a crime to fail to apply for or carry alien registration papers or "for an unauthorized alien to solicit, apply for, or perform work," and a provision "authorizing the warrantless arrest of a person" if there is reason to believe that person might be subject to deportation.

Seven lawsuits are seeking to block implementation of the law, signed by Arizona Gov. Jan Brewer in April. The law, which also targets those who hire illegal immigrant laborers or knowingly transport them, is to go into effect Thursday.

CNN senior analyst Jeffrey Toobin said the ruling reflects the government’s argument that immigration enforcement should be dealt with at the federal level.

"Arizona may have good intentions, they may be trying to make up for where the us government has failed, but what the judge is saying is this is not the way to do it."

"I think this a case very much destined for the Supreme Court," as other states pass similar laws, Toobin said.

The Court of Appeals could take up the case in a matter of days, but the earliest the Supreme Court could look at it would be October because the high court is in summer recess.

Arizona Gov. Jan Brewer said she was disappointed by the ruling and that Arizona will file an expedited appeal to the 9th Circuit Court of Appeals.

"This fight is far from over. In fact, it is just the beginning, and at the end of what is certain to be a long legal struggle, Arizona will prevail in its right to protect our citizens," she said in a statement. "I am deeply grateful for the overwhelming support we have received from across our nation in our efforts to defend against the failures of the federal government."

She emphasized that Wednesday’s action was a temporary injunction, and that many other parts of the bill will go into effect as planned.

For instance, a ban on so-called sanctuary cities stands, as does making it a crime to pick up day laborers who are illegal immigrants. The parts of the law dealing with sanctions for the hiring of illegal immigrants also goes into effect Thursday.

Another supporter of the law, Maricopa County Sheriff Joe Arpaio, said that he and his crusade against illegal immigration will not be deterred.

" I am not really dissapointed about the judges decision," Arpaio said. "I know what my policies are and we are going to continue doing what we have been doing."

The Center for Immigration Studies, which advocates immigration reduction, was disappointed but not surprised by the ruling, said executive director Mark Krikorian.

"If the opponents hadn’t turned it into this bogey man it would have been a useful, if modest, tool for the police," said Krikorian.

He argues the Arizona law wasn’t intended to usurp federal authority.

"Arizona does not have its own immigration policy, even with the law. They are buttressing federal law," Krikorian said.

President Barack Obama, a critic of the Arizona law, was not expected to comment on the ruling Wednesday.

The Justice Department issued a statement saying the court "ruled correctly."

"While we understand the frustration of Arizonans with the broken immigration system, a patchwork of state and local policies would seriously disrupt federal immigration enforcement and would ultimately be counterproductive," the statement said. "States can and do play a role in cooperating with the federal government in its enforcement of the immigration laws, but they must do so within our constitutional framework."

The Department of Homeland Security also weighed in, saying that the injunction "affirms the federal government’s responsibilities in enforcing our nation’s immigration laws."

Meanwhile, the president of the Mexican American Legal Defense and Educational Fund, Thomas A. Saenz, said, "I think it’s a great victory for the Constitution. I think all the provisions she has blocked from implementation were the most egregious."

Reaction was not limited to the United States.

Applause erupted at a protest outside the U.S. embassy in Mexico City when a speaker announced the judge’s decision.

"I think it is a big victory, and it is the start of many more," said Sergio de Alba, president of the National Confederation of Workers and Farmers Organizations.

Minutes earlier, he had called on Mexicans to boycott products from the United States in protest.

Protesters attached signs to a gate in front of the embassy, with one slogan saying, "Boycott Against Arizona-Nazizona, home of hunting migrants and the Ku Klux Klan."

Opponents say the law will lead to racial profiling, which is illegal.

Supporters point out that the law prohibits racial profiling and people cannot be stopped and asked for proof of legal residence based solely on their looks.

In addition to the U.S. Justice Department, the American Civil Liberties Union, the National Coalition of Latino Clergy, the Christian Leaders League of United Latin American Citizens and other individuals or groups have asked the judge to halt the law, commonly known as SB 1070. Bolton heard arguments in the case last week from the Justice Department and the ACLU.

The separate hearings were held in Phoenix, where Bolton sits on the U.S. District Court for the District of Arizona.

Bolton’s courtroom was packed during the two July 22 hearings and protesters chanted outside throughout the afternoon.

Seven protesters were arrested on civil disobedience charges, according to the National Day Laborer Organizing Network.

The legal arguments revolved around a range of issues, including racial profiling, effective enforcement and possible harm to Arizona’s citizens.

Attorneys from the Obama administration presented their case at the second hearing. The administration’s challenge contends Arizona’s law would usurp federal supremacy on immigration.

Brewer attended the hearing.

Arizona has argued that the federal government has not done a good job of securing the border.

"A law unenforced is no law at all," said state attorney John Bouma.

The American Civil Liberties Union and a coalition of civil rights groups argued earlier in the day that the controversial law amounts to racial profiling and will have a profound effect if it goes into effect.

"It treats people of color as suspects first, rather than citizens," attorney Karen Tumlin said after the hearing.

Bouma said the law would not treat people unfairly.

"These are hypothetical arguments. Local police are enforcing immigration laws all over the country," he told Bolton.

Those in favor of the law say SB 1070 is consistent with federal law. They say the law explicitly prohibits racial profiling and they are challenging the legal standing of many of the groups opposed.

They also contend opponents of the law have not been able to show there will be any harm from its implementation.

During the first hearing, Bolton said the law has a section allowing parts to still take effect even if other parts are struck down, according to CNN affiliate KNXV.

Tumlin, managing attorney for the National Immigration Law Center, and other lawyers and foes of SB 1070 repeated assertions that Arizona’s law should be rejected.

"We are here to defend the rights of those who cannot stand up for themselves," said Terri Leon, CEO of the Friendly House, which supports the legal challenge by the American Civil Liberties Union.

Bolton heard a challenge to SB 1070 by an Arizona police officer the previous week.

Posted July 28th, 2010 by Jessica Spinks - Posted in Uncategorized | | 0 Comments

Arizona immigration law faces 1st court hearing today

A federal judge heard arguments on Thursday morning over whether Arizona’s new immigration law should take effect at the end of the month, marking the first major hearing in one of seven challenges to the strict law.

U.S. District Judge Susan Bolton also is considering Gov. Jan Brewer’s request to dismiss the challenge filed by Phoenix police Officer David Salgado and the statewide nonprofit group Chicanos Por La Causa.

Bolton began by quickly dismissing Brewer as an individual defendant to the lawsuit, a motion unopposed by Salgado’s lawyer. She then began considering whether to dismiss the case.

Bolton said last week that she may not rule on the officer’s request to block the law before it takes effect July 29.

Hearings on the six other lawsuits, including one filed by the federal government, are set for next week.

The large ceremonial courtroom at the main federal courthouse in Phoenix was packed with more than 100 spectators as the hearing began. More than a dozen lawyers were in place along two L-shaped tables, evenly divided between each side. The jury box was filled with law clerks for judges who work in the building who came to observe.

Protesters and supporters of the law gathered outside the courthouse amid heavy security.

About two dozen supporters of the law, many dressed in red, white and blue, held up signs praising Maricopa County Sheriff Joe Arpaio, a major backer of the crackdown on illegal immigrants, and one said "American Pride."

About 50 feet away a group opposed to the law held up signs calling for repeal of the law.

The groups competed with each other using bullhorns.

"We demand an injunction. We demand a federal intervention," opponent Sandra Castro of Phoenix, 22, yelled into a bullhorn.

The law requires police, while enforcing other laws, to question a person’s immigration status if officers have a reasonable suspicion that the person is in the country illegally.

Supporters say the law was needed because the federal government hasn’t adequately confronted illegal immigration in Arizona, the busiest illegal gateway for immigrants into the United States. Opponents say the law would lead to racial profiling and distract from police officers’ traditional roles in combating crimes in their communities.

Since Bgned the measure into law April 23, it has inspired rallies in Arizona and elsewhere by advocates on both sides of the immigration debate. Some opponents have advocated a tourism boycott of Arizona.

It also led an unknown number of illegal immigrants to leave Arizona for other American states or their home countries and prompted the Obama administration to file a lawsuit seeking to invalidate the law.

Salgado’s attorneys argue the judge should block the law before it takes effect because it would require an officer to use race as a primary factor in enforcing the law and because the state law is trumped by federal immigration law.

Attorneys for Brewer asked that the officer’s lawsuit be thrown out because Salgado doesn’t allege a real threat of harm from enforcing the new law and instead bases his claim on speculation. They also said the state law prohibits racial profiling and that it isn’t trumped by federal immigration law because it doesn’t attempt to regulate the conditions under which people can enter and leave the country.

The other challenges to the law were filed by the U.S. Department of Justice, civil rights organizations, clergy groups, a researcher from Washington and a Tucson police officer.

Bolton plans to hold similar hearings July 22 in the lawsuits filed by the federal government and civil rights groups.

—— Associated Press Writers Paul Davenport and Michelle Price contributed to this report.

Read more: http://www.azcentral.com/news/election/azelections/articles/2010/07/15/20100715arizona-immigration-law-court-hearing15-ON.html#ixzz0tmAE4Udh

Posted July 15th, 2010 by Jessica Spinks - Posted in Uncategorized | | 0 Comments

Answers to tricky HR questions: Could asking DOL for advice put us in jeopardy?

The team of experts at HR Morning field real-life, everyday questions from HR managers and gives practical answers that can be applied by any HR pro in the same situation. Today’s question: Will asking the DOL for guidance on classifying workers trigger an investigation?

Question:

We’re working with some independent contractors, but we’re not entirely confident in how they’re classified. Is there a risk in calling the local Department of Labor (DOL) office for advice? Or will that trigger an automatic audit?

Answer:

The DOL will try to help and won’t start an enforcement action, according to employment lawyer Carol Bernick of the firm Davis Wright Tremaine.

The problem is, DOL personnel probably won’t give you a lot of time — so they probably won’t be helpful if your question falls into a gray area and would require real research. In other words, you may not get the best-quality advice by calling the DOL office.

Better bet: Contact your own lawyer before talking with anybody at the DOL.

Posted July 14th, 2010 by Jessica Spinks - Posted in Uncategorized | | 0 Comments

Not Just Cheaper

Courtesy of entrepreneur.com

From processing payroll to integrating IT, outsourcing certain functions can mean better talent at lower costs.

Despite the stigma often associated with it, outsourcing is widely used for a variety of business functions–and it’s not always about finding the cheapest solution. The smartest small businesses farm out the functions that aren’t their core expertise, which adds value and saves money.

"What they keep in-house is the competitive differentiator," says Jagdish Dalal, managing director of thought leadership for the International Association of Outsourcing Professionals and president of JDalal Associates, an IT and business process outsourcing company in Hartford, Conn. "Amazon immediately thought about using UPS for distribution. Dell kept its marketing and design in-house and the rest was outsourced."

Here’s a look at functions that any small business should consider outsourcing at various points in their evolution.

C-level talent: As your business grows and you need more assistance with marketing and financial services, consider contracting with a for-hire chief marketing officer or an accounting team that can act as your off-site CFO. Doing so can help you get high-priced strategies without the high price.

Human resources: Healthcare packages and employee benefits are constantly changing. A benefits firm can help you find the best and most affordable packages for your situation. "You need to find someone flexible enough to adapt to you and have the products and services for you as you become a larger organization," says Mark Perlberg, president and CEO of Oasis Outsourcing, which provides outsourced HR services nationwide.

Legal: Small businesses should outsource this function. Law firms are adept at circumventing local, state and federal laws and will save you from excessive legal headaches.

IT: Much of the offshore outsourcing industry caters to IT services–but because of increasing costs and concerns with quality control, many companies are bringing the function back onshore. "Rates onshore have dropped because of offshore outsourcing," says Bill Hayduk, president of professional services firm RTTS in New York, which provides off-site software services. "Over the last 10 years, there have also been infrastructure problems offshore with power outages, quality of skill sets, finite resources and sometimes software quality."

Website strategy: The most effective way to create a well-designed, easy-to-navigate website–complete with the most appropriate search engine optimization tools and other marketing functions–is by leaving it to the experts. Check out local web design compa
nies that will work with you to custom develop your site.

Posted July 6th, 2010 by Jessica Spinks - Posted in Uncategorized | | 0 Comments

Arizona immigration law may increase Phoenix foreclosures

 www.azcentral.com

 The impact of Arizona’s tough new immigration law is rippling through the state, six weeks before the law is scheduled to go into effect.

One area where SB 1070 could hurt Arizona, but take many months to manifest, is metropolitan Phoenix’s housing market.

An exodus of people - both legal and illegal residents - could be one more drag on a housing-market recovery. Departures from a state where growth is the economic foundation could add to the number of foreclosures and vacant houses and apartments, all of which will hurt the housing industry just as signs of recovery are starting to appear.

Driving illegal immigrants out of Arizona is one stated purpose of the new immigration law. But the law, experts say, could also drive out legal residents and deter potential new residents - people who are afraid of what might happen to them or who simply object to the law.

Real-estate analysts and economists are watching for signs that both illegal and legal residents are moving from the state, while also tracking the number of newcomers to Arizona. After the immigration law goes into effect July 29, it may become one more factor in real-estate forecasts for the region.

"Estimates are that there are several hundred thousand undocumented aliens residing in Arizona," said Phoenix housing analyst Mike Orr, publisher of the Cromford Report, a daily housing-research report. "If the law has the intended effect and these people do leave, then both population and demand for housing will probably decline."

Homeowners

There’s a misconception among some Arizona residents that illegal immigrants don’t own homes in the state. Housing advocates say thousands if not tens of thousands of people who are not legal residents have purchased houses here.

Before the real-estate crash, it was much easier for everyone, including illegal immigrants, to obtain mortgages to buy Phoenix-area homes.

In some cases, lenders eager to make loans did not check for documentation. In others, there may have been fake documentation.

"Many people in real estate operated with a ‘don’t ask, don’t tell’ policy when it came to certain homebuyers and borrowers. We didn’t feel like it was our job to be an enforcement agency," said Margie O’Campo de Castillo, a Phoenix real-estate agent. "I always tell people if they aren’t legally here, it may not be in their best interest to buy a home. But it’s not my decision."

She is trying to help a friend who owns a small business and who had a Phoenix home but is not a legal U.S. resident.

"He never missed a payment, but his business has slowed down," O’Campo said. "He found a buyer to do a short sale on his home, but his lender wouldn’t work with him because he isn’t here legally. He lost his house to foreclosure."

Since the state’s employer-sanctions law passed in 2007, O’Campo said she’s seen many undocumented homeowners lose homes to foreclosure, either because their lenders won’t work with them or because they can’t sell and want to leave the state. The 2007 law makes it illegal to knowingly hire undocumented workers in the state.

Housing experts believe the employer-sanctions law did have a negative effect on the housing market, though by how much is difficult to say because of the overall recession.

A report from the Department of Homeland Security found that more than 100,000 illegal immigrants left Arizona in 2008, more than any other state. Metro Phoenix foreclosures and apartment vacancies both jumped that year.

Vacant homes

Signs of SB 1070 putting more pressure on the housing market would emerge in several places.

The most obvious and immediate sign would likely be more empty homes and apartments in areas of metro Phoenix heavily populated by Hispanics.

Housing experts say the employer-sanctions law had a negative effect in south and west Phoenix, Maryvale and Avondale. Those areas still have some of the highest foreclosure rates in the region.

During the past few months, the overall number of foreclosures in the Phoenix area has dropped. So any significant increases in foreclosures within communities with high Hispanic populations could be attributed to SB 1070.

Another place where signs of damage to the housing market might appear, housing analysts say, is in foreclosure filings. Large numbers of homes falling into foreclosure, with owners who have Hispanic last names, could also be a sign SB 1070 has pushed more homeowners out of the state. Within days of Gov. Jan Brewer signing SB 1070 into law on April 23, owners of small apartment complexes in parts of metro Phoenix that were home to large Hispanic populations started seeing tenants move out. The same thing happened after the employer-sanctions law.

Metro Phoenix apartment vacancies dropped last month. An increase in specific neighborhoods could be attributed to the new law.

"The immigration law creates a difficult situation for both legal and illegal residents," said Jay Butler, director of realty studies at Arizona State University. "Some illegal residents may have planned on leaving the Valley anyway because they can’t find jobs. But I have talked to young Hispanics who are residents and so are their parents and grandparents. And those Hispanics plan on moving to other states because they don’t want to be perceived as second-class citizens."

Homebuyers

The immigration law’s impact on homebuyers is the biggest unknown.

Butler said it is hard to project how the law will impact the decisions of people from out of state who had planned to move to Arizona or buy investment, second or retirement homes here.

A loss of Hispanic homeowners and renters could be offset if more people who support the immigration law, or don’t care about it, move to the Phoenix area and buy and fill the empty homes.

Despite the many boycotts of Arizona by major cities and organizations because of the immigration law, some recent polls show residents of other states, including Nevada, would back similar legislation.

Arizona housing analyst RL Brown said the main issue for some homebuyers is to feel safe, and the immigration law appeals to some of those people.

"I talk to a lot of potential homebuyers from around the country. So far, no one is really foaming at the mouth about Arizona’s immigration law," he said. "But we’ll see. If home sales fall off the cliff, then we have to look at the law as a factor."

Some market watchers see the immigration law as one more problem that Phoenix’s economy and housing market don’t need now.

"The immigration law just piles onto our problems," said Brett Barry, a Phoenix real-estate agent with HomeSmart. "We are already struggling to find the jobs and keep the schools open to entice new residents."

Orr, the housing analyst, said people from outside Arizona considering buying a vacation or investment home here may change their minds, not to boycott the state but out of concern the law will negatively impact the housing market and home values.

Out-of-state buyers can be tracked through property records. A significant drop or increase in homebuyers from outside Arizona during the next few months would be another indicator of how people are reacting to the state’s immigration law and how it’s going to impact the housing market.

Posted June 14th, 2010 by Jessica Spinks - Posted in Uncategorized | | 0 Comments

Policies for Telecommuting

 The Benefits and Drawbacks of Telecommuting

Telecommuting has quickly become a hot trend in the business world today.  It cuts costs and makes our virtual world seem more connected. Some businesses are solely virtual and do not even have an actual office. If this is something new to you and a tactic you might want to try, having the  proper HR practices put into place is vital to its effectiveness.

According to Keith Regan of the Dayton Business Journal " A good telecommuting policy covers everything from hours that an employee working remotely is expected to be available ( and when those hours will take place) to details on how technological connections will be made-whether workers will have company computers or supply their own and how they will access company data- and even details on the work spaces employees are expected to maintain at home. "

Prudential Financial Inc. ran a pilot program for their telecommuting system. Now 60% of their employees practice telecommuting successfully.

If a company can successfully implement this type of work environment it can have many benefits. These include a good retention and recruitment tool and keeping productivity going in case of emergencies or pandemics. One of the drawback that has been reported is social interactions between employees in the office are limited and at times non existent. To avoid this a company could offer part time telecommuting. There are risks associated with isolated employees.

If you decide to go through with implementing this vastly popular work tool, make sure  the program has clear guideline so can avoid problems. For tips on how to adjust and amend your HR policies to accommodate telecommuting or any other HR concerns call CBR at 602 200 8500.

Posted May 24th, 2010 by Jessica Spinks - Posted in Uncategorized | | 0 Comments

Two HR issues you can’t Ignore

By Scott Buchanan

Significant liabilities reside with the HR side of any business, yet the HR area is often overlooked or operates with few resources. This article will present the current view of 2 significant HR threats/challenges.

Employee versus Independent Contractor

Yes, you have certainly heard about this one before, but did you know that the Obama administration plans to hire 100 more enforcement personnel to focus on this issue and that the IRS is planning to audit approximately 6,000 companies to examine compliance with the law?

When a worker is properly classified as an employee, the employer must pay social security tax of 6.20% and Medicare tax of 1.45% of gross wages. The employer is generally obligated to also pay workers’ compensation insurance and federal and state unemployment tax (generally 3.5% for a new employer in Florida). Assuming that the workers’ comp premiums are 3% of gross wages, the total burden rate is 14.15% of gross wages, before applying the cost of employee benefits.  It’s no wonder that so many employers are attempting to classify workers as independent contractors, especially in our current economic environment. However, the consequences of improper classification can be significant and potentially retroactive for the employer.

The initial determination of whether a worker is an employee or an independent contractor comes down to whether the company directs and controls the worker. If the answer is yes, then most likely that worker is an employee. The IRS developed a 20 factor “test” to assist companies in determining the proper classification of a worker, which includes such topics as the level of instruction and training provided by the company, the flexibility or lack of flexibility of the worker’s schedule, and a company’s demand for full-time work. The IRS also allows a company or a worker to file Form SS-8 for an IRS determination of worker classification. The IRS believes that workers often file an SS-8 to challenge their own treatment as an independent contractor by a company.  This action has costly ramifications.

If a regulatory agency reclassifies an independent contractor as an employee, a number of issues and questions are presented. At a minimum, the IRS will charge an employer for back taxes, including the associated interest and penalties. The interest and penalties can be significant, especially since the taxes should have been paid on a quarterly basis in a prior year or years. If the reclassification determination is retroactive to a prior year, the question comes up regarding whether the employee should have been covered by the company health and retirement plans. What if the employee experienced a significant illness while previously classified as an independent contractor and was therefore not covered by the company’s health insurance plan? Can that employee now file a claim for reimbursement?  What about the employer’s matching contributions in the company’s 401(k) plan that the employee would have been entitled to receive in prior years?

Unemployment Claim Administration

Many employers were shocked when they opened their 2010 unemployment rate notice in December and found out that their company was maximum-rated at 5.40%. Even though recent legislation in Tallahassee has temporarily reduced some employers’ rates, most employers still experienced a noticeable increase over 2009 rates after the revised rate notices were prepared by the state.

Proper unemployment claims administration can achieve significant cost savings and should focus on the following three areas: 1) the actual claim that may result when an employee is terminated, 2) the information on the quarterly benefit statements and 3) the information on the annual rate notice.

The unemployment system was established to provide a cushion to those employees who are laid off through no fault of their own. Claims resulting from a lay-off or business closing generally cannot be challenged; however, claims resulting from termination for cause generally may be challenged by an employer, especially if the employer maintains good documentation and has a witness available to testify at a hearing.  For instance, if an employee has violated company policy and such violation was witnessed by another employee, the employer should consider challenging any claim made by the terminated employee for unemployment benefits. The employer may also want to challenge similar claims even if a witness is not available if strong documentation is available.  Most of the initial hearings are now handled by phone, so the employer’s representatives generally don’t even need to leave their office to participate in the hearing. Each claim approved by the state increases the employer’s unemployment tax rate since the system is experience rated. For instance, a 40 employee company with a 5.40% unemployment tax rate will pay additional taxes of $12,320 versus that same company with a 1% rate. Accordingly, it is in the best interest of the employer to review each claim.

One of the easiest ways to potentially lower an employer’s rate is to review the quarterly benefit notices to determine if each claim charged to an employer’s account was actually from a former employee of that employer. Erroneous claims from employees of other employers can mistakenly be charged to your account and increase your tax rate. Performing this review each quarter is a best practice for any employer.

The third step all employers should take is to simply check the annual rate notice which typically arrives in December of each year and includes the tax rate which will become effective on January 1 of the next year. Another best practice is to confirm all the data contained in the notice and to recalculate the tax rate shown. If errors were noted on the quarterly benefit statements pursuant to step 2 above, were those errors corrected before the annual rate notice was prepared? If an error is noted on the annual rate notice, an employer typically has about 10 calendar days to notify the state of such error, so this review should begin as soon as the notice is received.

How does an employer prevent or mitigate these HR threats/challenges?  Consider using a Professional Employer Organization (PEO).  PEOs provide comprehensive HR outsourcing including payroll, human resources, benefits administration and risk management.  The PEO you choose should be active in its industry association, the National Association of Professional Employer Organizations (www.napeo.org), and accredited by the Employer Services Assurance Corporation (ESAC) (www.esacorp.org).  ESAC provides independent financial and compliance assurances for covered clients and employees through surety bonds in the unlikely event of a failure of an accredited PEO, a similar concept as the FDIC for banks.  The PEO you choose should have staff that is accredited by the American Payroll Association (APA) as well as Professionals in Human Resources (PHR) accredited by the Society for Human Resource Management (SHRM).  Alternatively, both the APA and SHRM offer payroll and human resource training classes. Another option is to establish a relationship with an HR consulting firm.  Consulting engagements are flexible and can be tailored to your specific needs.

These few suggestions should help to keep your HR department, no matter how large or small, on the path to compliance. 
 

Posted May 17th, 2010 by Jessica Spinks - Posted in Uncategorized | | 0 Comments

Opposition to Arizona Immigration Law: It’s About Pro-Diversity

Posted on May 12, 2010 by Robert C. Seiger

While the business community has largely attempted to stay out of the debate surrounding Arizona’s Support Our Law Enforcement and Safe Neighborhoods Act (Senate Bill 1070), professional basketball team Phoenix Suns jumps to the center of the debate over the Bill with the team’s decision to wear “Los Suns” jerseys during its playoff game against the San Antonio Spurs on Cinco de Mayo. Suns’ owner, Robert Sarver, announced his disagreement with the Bill, describing it as “mean-spirited.” All of the Sun’s players were reportedly in favor of the decision to wear the jerseys.

Sarver was quoted as saying, “I thought we need to go on record that we honor our diversity in our team, in the NBA, and we need to show support for that. As for the political part of that, that’s my statement." The Suns currently have three foreign-born players on the team.

Groups opposing the Bill have looked to sports teams and leagues to influence the discussion. Some have called on Major League Baseball to move its 2011 All-Star game from Phoenix – just as the Super Bowl was moved 20 years ago when Arizona refused to recognize Martin Luther King, Jr. Day as a state holiday. Recent efforts have prompted Arizona Governor Jan Brewer to write ESPN on responding to the sports boycott requests, which she labeled as “misguided.”

Sports in America have become increasingly international, with players coming from around the globe. In fact, it is international players that dominate the roster of some of our major professional sports teams. The National Hockey League, for example, is made up of 80 percent of players who were born and raised outside of the United States. On the University level, a significant number of our colleges and universities actively seek international talent to gain a competitive edge. While these players may initially come to the United States either as a student-athlete or on a P-visa (a visa designated by immigration as a visa for professional athletes), these same athletes often seek permanent residence or citizenship to remain in the United States at the conclusion of their careers. As a result, we may see professional athletes and their teams play a significant role in shaping the immigration debate.

Posted May 12th, 2010 by Jessica Spinks - Posted in Uncategorized | | 0 Comments