Most small business owners want to do things correctly. But it's difficult to create momentum for their business through sales and marketing, manage operations so they deliver on their promises, and keep track of things like labor laws, tax laws, and other government rules and regulations. The smart owners surround themselves with specialists who can help keep an eye on those things so that they can keep their eyes on their customers.
So, in doing these audits, I find many organizations make the same errors. Here's a few:
1. Exempt/Non-exempt - in the second half of last year everyone was scrambling to make sure they had a plan for the new overtime rules. Unfortunately for many, the procrastinators were the winners as a judge put a halt on the rules at the 11th hour. Furthermore, the election results cast doubt on the rules' future. However, the audits I performed during that time revealed that many employers were misclassifying employees based on the duties test (not the salary test) and many remain misclassified today. The courts put the new salary test on hold, but the duties tests still apply. Just because you're paying that employee more than $24k doesn't mean he or she is legally exempt.
2. Use of 1099 Contractor Status - I have many clients and receive 1099s from quite a few of them. I invoice those clients through a corporate entity that maintains its own insurance. No auditor from the departments of labor or revenue is going to question the legitimacy of those 1099s - I meet the standard. But that guy you have working for you 40 hours per week, driving your truck, wearing your uniform, using your tools and working when you tell him to...not so much. That same agency representative is going to have heartburn over that guy and it could turn out to be very expensive for you. And you're probably shifting a lot less risk than you think you are.
3. Forms I-9 and e-verify - I'm still surprised at how many small companies are not using e-verify. The penalties for hiring unauthorized workers or failing to properly document work authorization through an I-9 are significant (see here). E-verify is required for all employers in NC with 25+ employees (see FAQ here), and is required for all employers in SC, but is only required for certain government agencies and contractors in VA. However, even though it is not always required in VA, the system is free and is a useful supplement to form I-9 - I recommend that my VA clients use it voluntarily.
If you haven't had a fresh set of eyes on your HR compliance platform recently, contact The Davidson Group for a free consultation.
2. Use of 1099 Contractor Status - I have many clients and receive 1099s from quite a few of them. I invoice those clients through a corporate entity that maintains its own insurance. No auditor from the departments of labor or revenue is going to question the legitimacy of those 1099s - I meet the standard. But that guy you have working for you 40 hours per week, driving your truck, wearing your uniform, using your tools and working when you tell him to...not so much. That same agency representative is going to have heartburn over that guy and it could turn out to be very expensive for you. And you're probably shifting a lot less risk than you think you are.
3. Forms I-9 and e-verify - I'm still surprised at how many small companies are not using e-verify. The penalties for hiring unauthorized workers or failing to properly document work authorization through an I-9 are significant (see here). E-verify is required for all employers in NC with 25+ employees (see FAQ here), and is required for all employers in SC, but is only required for certain government agencies and contractors in VA. However, even though it is not always required in VA, the system is free and is a useful supplement to form I-9 - I recommend that my VA clients use it voluntarily.
If you haven't had a fresh set of eyes on your HR compliance platform recently, contact The Davidson Group for a free consultation.
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