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?

Medicare Tax 1.45%

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.

Social Security Tax 6.20%

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 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.

Scott Buchanan is the president and CEO of Human Resources, Inc. (HRI), a professional employer organization (PEO) based in St. Petersburg and licensed in multiple states. HRI is one of only 30 PEOs in the nation and the only PEO in central Florida accredited by the Employer Services Assurance Corporation. Contact http://www.humresources.com for human resource management, payroll, PEO services in Florida & Georgia.

Workers 'job' many questions about the job or not. However, leaders at all levels regularly ask yourself this question: Are you involved in managing staff?
An employee "strong" effort to meet leaders of many non-interventions, leaving only the workers if they are not required. But this is due to ship drift, and a writer Bruce Tulga management called epidemic. "

It is true that workers get their superiors what they want and need in the workplace for waiting. Such a manager that the employee needs a strong, Tulga discover that his new book, which is well owners in these eight steps:

Daily management: "special circumstances" to ride every day like the only option for the management. Start time each day to remove, before it's all good, bad or indifferent. Workers to focus on a daily basis. The purpose of these sessions minute routine, a small, simple, straightforward and all you need is to focus 15.

Good to talk about people actually work to build relationships with Method: Learning workers' productivity coach to talk about. Most leaders say effectively, because power and a friendly and helpful and patient as a disciplined, demanding.

Such training to talk about performance. In particular:
·         Individual work focusing on specific cases.
·         Describe the employee's performance fairly and effectively.
·         Develop specific follow-up.
·         Problems long before the start of the coaching staff to wait to get started.
Take one person at a time: options "to manage one size fits all" good for everyone to have some basic questions, as always, make paying workers to adjust your approach to each of Please. "I talked to this guy how I can talk to the man can"

Staff members told their leaders to monitor their activities, a fair and timely process believe and practice will combine real results: Making a real responsibility.

Make sure employees know their efforts closely and frequently have to explain. Focus on concrete actions to control the workers directly. Personal relationships with their employees in a different role as a leader.

For people to do and how, what workers to meet and exceed the expectations were less hesitant to tell if any of them clearly and simply explains what is expected of them specific instructions to manage have not been able to? Targets and timetables.

Employees to think out loud, ask how you can solve the problem.
·         Ask: "What do you need me"
·         Ask questions: "How is it, what's next"
·         Ask for a brief and specific: "as long as everyone in the Control Panel, move: how?

It is simply a repetition of the bad guy is a great thing to learn is not true. The best way to practice staff on standard operating procedures in the workplace are encouraged to adopt best practices. They move as far as possible personal supervision, to provide step. Control, monitor and control more.

See the results at each stage: Knowledge is power: the more you, the easier it is to follow. It details your reputation forever, most people distribute information to you and answer your questions fully and honestly does.

Monitoring and measurement of the final document, good, bad, and how all workers at all levels.

Some less than others for additional options: you can not do everything for everyone. Why?

Generous and flexible time and address. Expand your repertoire of awards and all the resources, which should lead to greater productivity and start using.

This is a discussion of the best people know what they really want or need to make the point. To protect and encourage people to express what they need at each stage of the road.

To solve small problems before they become major problems: a regular weekly or daily conversations, they have a physical location in the regular assessment and feedback, good, bad or indifferent is to provide its employees. Thus, the problem is hard to avoid debate. Most of these problems disappear over time increases, does not.

However, regular consultation and feedback, small problems can be solved quickly. When a bit in trouble constantly feels like really speak productivity growth.

Human Resources Inc. Is an hr consulting and profession PEO services providing since 1997. We offer HR Management Services, Payroll Services, Employee Benefits & Reduction of Administrative Procedures and Paperwork in Florida & Georgia. HRI is your employee leasing specialist. If you have any query or question feel free to contact at http://www.humresources.com/ or call for 727-895-4700.

A Human Resources Executive as a member of top management moldiness resolve what policies, programs, practices, and approaches give contribute most to the actualization of the organization objectives. This way that in his new portrayal his moldiness be responsible for initiating and implementing-at all levels of management-the most efficient utilization of the hominine assets.

The direct utility of the manlike resources situation is to pee a stellar Endeavour to the processing and recognition of the organization short-term and long-range objectives while enabling apiece employee to educate to the fullest extent of his potential. This requires an accelerator and enterprise effectualness HR consultant as contrasted with the tralatitious role of the section supervisor.

With these thoughts in remember, the position of the vice-president-human resources power be settled in this way. He reports to the chair. His latitudinarian suffice is to hypothecate, advocate, and complete policies, procedures, and plans to declare the most telling thinking, accomplishment, activity, utilization, motivation, exercise, and correction of the administration HR management; lead to the process and action of the methodicalness long-range and short-term objectives by initiating and implementing employee relations practices which will enable and encourage apiece employee to see his private goals while maximizing his try to sector affectivity; provide for the closure of management problems and the fruition of opportunities finished groundbreaking approaches to human resources management.

The principal responsibilities of the human resources executive are these:

•          Develop and urge hominine resource objectives for inclusion in the structure boiler suit objectives.
•          Refer the potential endeavor of discriminating imperfect ingeniousness management to organizational objectives.
•          Refer management problems that can be resolute and opportunities that can be realized through restored effectiveness in earthborn imagination direction.
•          Speculate, propose, and oblige employee relations policies designed to modify someone fecundity, job spirit, and profit.
•          Hit managers awake of their replete responsibilities in the direction of the frail resources entrusted to them.
•          Render the needed tools, techniques, and methods which nurture the evolution of a commercialism climate conducive to employee innovation and development.
•          Create the indispensable procedures and practices for imperfect ingenuity planning, recruitment, pick, utilization, need, exercise, and rectification. Warrant that these are incorporated into every manager job performance assessment.
•          Educate and staff the employee relations duty to piddle stock for innovational approaches to grind and union relations, organization practices and services, preparation and processing, act, dominion relations, good contrive use and administration, and problem finding.
•          Process as a catalyst and acting effectualness consultant in initiating and implementing new approaches to hominine resources management.

This attitude can hold a tremendous affect on performing results. Thence, a few text penury to be said about apiece corpus obligation.

Honorable as distinguished as mart opinion, study body, acquisition on finance, and gain are system Human resources. Thus its objectives staleness reflects this organization of standing.

Human Resources Inc. Is an hr consulting and profession PEO services providing since 1997. We offer HR Management Services, Payroll Services, Employee Benefits & Reduction of Administrative Procedures and Paperwork in Florida & Georgia. HRI is your employee leasing specialist. If you have any query or question feel free to contact at http://www.humresources.com/ or call for 727-895-4700.