Charge statements represent the states accounting of benefits paid to former employees and confirm the amount that has been charged to an employer’s unemployment account. They are sent to the employer on a monthly, quarterly or annual basis, depending on the state.  The employer then has the opportunity to dispute charges to its account within a specified time period.   

Believe it or not, the state can make mistakes like anyone else. An essential part of any employer’s unemployment cost management program should include a process for checking and verifying benefit charges.  A few common mistakes to look for include:

• A hearing decision reversing a determination previously in the claimant’s favor is received and the state does not issue credits due;
• Benefits are paid that should have been charged to a predecessor’s or successor’s account;
• The state has issued duplicate charges;
• Previous charges were protested and credits are due but the employer continues to be charged;
• The individual is working for the employer and has earnings during the same period for which benefits were paid.

Tammy Mullin

I-9/E-Verify

By: Dave Fowler

A recent Minnesota Public Radio (MPR) news story regarding a security breach at an E-Verify Designated Agent's (DA) website highlights the need for the Department of Homeland Security (DHS) to credential all E-Verify DAs. Such credentialing must confirm, among other things, that the DA is a real company, has security practices and technology in place to prevent unauthorized access to personal data, and delivers software and services that comply with the requirements of E-Verify. The story points out that there are more than 13,000 E-Verify DAs registered with DHS.

In addition to the MPR story, there are a number of other employers that could share their stories of security and compliance issues encountered with E-Verify DAs, their software, and services. Since these stories reflect poorly on E-Verify and those DAs providing secure and compliant services, it is up to the DAs to pressure DHS for a comprehensive DA credentialing program.

DHS is working on a credentialing program to verify that companies enrolling in E-Verify are legitimate. However, there needs to be a more rigorous process for DAs since they provide access to E-Verify for multiple employers. Now is the time for DHS to establish a DA credentialing program before E-Verify becomes required for the roughly 50 million employees hired annually in the United States by over 6 million employers.

Employers currently using or considering an electronic I-9/E-Verify service as well as performing E-Verify queries with a DA should carefully evaluate the security practices, procedures, and safeguards of the DA. At a minimum, DAs should be required to complete a security audit for the employer, provide privacy and security statements on their websites, and maintain a SAS 70 Type II certification. Employers should think long and hard about security before deciding to use or continue to use a DA that does not at least meet these minimum requirements or does not comply with the employer's corporate security standards.

NEW INFORMATION POST - December 14, 2009

The subject of the MPR report referred to above has responded by posting information on their website. There is also a follow-up story published on The Minnesota Independent website.

NEW INFORMATION POST - December 15, 2009

The subject of the MPR report filed suit against The State of Minnesota on December 10, 2009, but did not inform The State of Minnesota at the time the lawsuit was filed.

Word has spread and more stories and opinions are being posted such as:

http://maryturck.wordpress.com/2009/12/15/texas-firm-screwed-up-so-it-sues-minnesota/

http://www.zecurion.com/server-software-blog/2009/12/minnesota-employee-data-exposed-by-lookout-services/

http://www.secretsofthecity.com/mnspeak/how-dare-a-journalist-use-website-data

http://www.databreaches.net/?p=8844

http://www.databreaches.net/?p=8855

NEW INFORMATION POST - December 17, 2009

The saga continues. It is interesting that there are 13,649 E-Verify Designated Agents (DAs) and not one of them has been credentialed by DHS. As the number of DAs grows without any DHS credentialing process so does the potential that employee data will be compromised.

http://www.chron.com/disp/story.mpl/business/6774164.html

NEW INFORMATION POST - December 18, 2009

Others in Minnesota continue to weigh in on the importance of making sure an E-Verify Designated Agent has sufficient security safeguards in place to protect employee data. Minnesota State Legislative Auditor Jim Nobles raised 'significant concerns' in a June report about an E-Verify Designated Agent's ability to protect employee data. The company won the contract and now Nobles wants to determine if Minnesota officials were satisfied that the company had addressed those issues before the state signed a deal with the company in July. He also wants to know if state officials adequately responded in October to complaints that employee information -- including names, dates of birth and Social Security numbers -- was still at risk. The full text of the article that was the source of the information above can be found at:

http://minnesota.publicradio.org/display/web/2009/12/17/lookout-folo/

It seems employers would benefit greatly if DHS would credential every E-Verify Designated Agent (DA) to make sure security and privacy are properly addressed before certifying a company as an E-Verify Designated Agent. DHS should also publish the list of certified DAs on the DHS website.

I took some time off over the Thanksgiving holidays as I hope a lot of you were able to do but of course have been digging out over the last week.  Isn't that how it always goes?  So, I apologize for being neglectful with the blog recently. 

Did you know that all states provide for the payment of unemployment benefits when underemployment reaches a certain level. In most states, a worker is partially unemployed during a week of less than full-time work if earnings from the regular employer (or odd-job earnings) are less than the weekly benefit amount (WBA).

Most states use the individual’s earnings to determine partial benefits and not the number of hours worked in a given week. Individuals may be found eligible for benefits in all states due to reduced hours or temporary layoffs of even just a couple days.

How Do States Determine Eligibility for Partial Unemployment?

Well, each state has a specific method of determining eligibility for Partial Unemployment. The calculations are typically based on the individual’s earnings, state-specific disregarded earnings, and the individual’s calculated WBA. The disregarded earnings are established by each state and may be a specific dollar amount, a portion of the individual’s earnings, or a portion of the individual’s WBA which gets disregarded from their actual income for that week.

The amount of benefits for a week of partial unemployment is usually the WBA less wages earned, after the earnings disregard.

Example:

In the state of Maryland the earnings disregarded in computing partial week benefits is $100. This means if an individual has an established WBA of $300, and they earn $275 during a partial week, the state will disregard the first $100 of their earnings. This leaves $175 of recognized income for that week. This $175 will be reduced from the WBA, leaving total a total benefit payment of $125.  

If you have employees collecting partial unemployment benefits, you can expect your state to request earnings information more frequently.  You also want to make sure you are checking your charge statements carefully to ensure you are not being charged the full WBA.

If you are interested in getting information specific to the states in which you do business, contact Sheila Gramann at sheila.gramann@talx.com or give her a call at (314) 214-7387.  Tell her you got her name off of Tammy's blog and she'll be happy to help.

Tammy Mullin

HR Service Matters: By: Mike Smith

The employee portal is the doorway to today’s HR services.  Most organizations have at least a first generation employee portal and many others have introduced (or they are well on their way) a second generation portal.  So, how do you show off what you have done to make your employee portal look easy and exciting to use?

That question made me think about the ways that employees and the management team learn about the variety of HR services available at their fingertips.  Let me challenge you to think creatively about how you show off what your team has done.  Making a big impression about ease-of-use and depth of services accessible is important if you want to increase adoption rates.  Also, having an astounding impact can be a big boon to the viral marketing of dazzling new capabilities.

I thought about the legendary product Shootouts that Bill Kutik has made famous at the HR Technology Conference.  There is a lot that HR service teams can learn from these Shootouts.  Reflecting on these demos reminds me that while demo skill is important, other tools can make a big difference in perception.  For example, in translating this perception goal to portals, consider taking the time to build a “movie” that shows off key features.  A simple video can help you drive excitement and hype about portal enhancements.

Looking over the reviews of the fall 2009 HR Technology Shootout reinforces the value of highlighting what you want your audience to see and engage.  Ron Hanscome’s blog (link below) shows some real insight into the power of a good demo.

http://tinyurl.com/ygb3m76

All of this makes you want to have a good repeatable demo that is engaging to watch.  Enhancing your demos might be a great place to start as you ready new HR service features.  And, next year when you attend the HR Technology Conference Shootout, consider viewing the alluring demos as a way to learn new ways to show off your own employee services.

I-9/E-Verify

By: Dave Fowler

ICE, the Immigration and Customs Enforcement division of DHS, has replaced raids with worksite enforcement actions. Instead of barging in on a work location, disrupting operations, validating work authorizations, and arresting illegal workers, ICE is now becoming more methodical by stepping up worksite enforcement audits. These audits are for the most part 'under the radar' as far as illegal workers are concerned. Auditors contact the employer and provide 72 hours notice before coming onsite and inspecting the employers Forms I-9s. Based on the results of the audit, any illegal workers are processed and the employer faces potential fines and other actions. In addition, ICE is likely to return and audit the employer again to make sure any corrective action has been taken.

In addition to the information below, ICE issued additional Notices of Inspection (NOIs) during Q4 2009 to 1,000 employers across the country associated with critical infrastructure or key resources. These NOIs let business owners know that ICE will audit their hiring records to determine compliance with employment eligibility verification laws. Results of these NOIs should be made available on the ICE website sometime in 2010.

The following information is from the ICE website at: http://www.ice.gov/pi/nr/0911/091119washingtondc2.htm

Protecting employment opportunities for the nation's lawful workforce and targeting employers who knowingly employ an illegal workforce are major ICE priorities, for which ICE employs all available civil and administrative tools, including audits. Audits may result in civil penalties and lay the groundwork for criminal prosecution of employers who knowingly violate the law.

In April, DHS issued updated worksite enforcement guidance emphasizing ICE's major enforcement priorities-specifically focusing on dangerous criminal aliens and employers who cultivate illegal workplaces by breaking the country's laws and knowingly hiring illegal workers. In this strategy, ICE identified form I-9 audits as the most important administrative tool in building criminal cases and bringing employers into compliance with the law.

Statistics since implementation of new ICE worksite enforcement strategy on April 30:

• 45 businesses and 47 individuals debarred;
  • 0 businesses and 1 individual were debarred during same period in FY 2008.
• 142 Notices of Intent to Fine (NIF) totaling $15,865,181;
  • ICE issued 32 NIFs totaling $2,355,330 in all of FY 2008.
• 45 Final Orders totaling $798,179;
  • ICE issued eight Final Orders totaling $196,523 during the same period in FY 2008.
• 1,897 cases initiated;
  • ICE initiated 605 cases during the same period in FY 2008.
• 1,069 Form I-9 Inspections;
  • ICE initiated 503 Form I-9 Inspections in all of FY 2008.

In July, ICE issued 654 NOIs to businesses nationwide in the largest operation of its kind before today - part of ICE's effort to audit businesses suspected of using illegal labor.

Statistics resulting from the 654 audits announced in July:

• ICE agents reviewed more than 85,000 Form I-9s and identified more than 14,000 suspect documents - approximately 16 percent of the total number reviewed.
• To date, 61 NIFs have been issued, resulting in $2,310,255 in fines. In addition, 267 cases are currently being considered for Notices of Intent to Fine (NIFs).
• ICE closed 326 cases after businesses were found to be in compliance with employment laws or after businesses were served with a Warning Notice in expectation of future compliance.

For more information, visit http://www.ice.gov/.

This week I saw an interesting article published by Harvard Business Review that considered the emotional drives or needs of employees (link to read the executive summary: http://tinyurl.com/yhlw7om ).  Using surveys from over 300 Fortune 500 companies the researchers were attempting to answer the question—how do you increase employees’ overall motivation?

The synthesis of their research suggested that there are four underlying emotional drives that guide people at work and impact their motivation.  These four drivers also have a distinct organizational influence that can help meet the needs of the driver; Acquire—Reward System, Bond—Culture, Comprehend—Job Design, and Defend—Performance Management.

The "Bond" driver seemed to be the most likely driver where employee services could actually provide a practical and tool to increase organizational Bond through the culture—that feeling of pride in belonging to the organization.  Specific actions where I believe HR services can have a big impact on the culture include:

* Fostering mutual reliance and coworker friendships—Consider what components of social media make sense for your organization and how to connect people through HR service facilities

* Value collaboration and friendship—Show the results of collaboration and how people are working together by giving them the opportunity to share their successes in the marketplace

* Encourage sharing of best practices—Get more visibility on the employee portal for best practices across the organization

The article does point out that the supervisors have just as much importance as the overall organization’s polices and actions.  However, keep in mind that HR services are a powerful tool that can provide a quick way to begin to impact employee motivation.

Mike Smith

I-9/E-Verify

By: Dave Fowler

On November 19, 2009 I attended a DHS symposium in D.C. with about 120 other attendees. The purpose of the symposium was for DHS Secretary Janet Napolitano, along with John Morton, Assistant Secretary of ICE, and Alejandro Mayorkas, Director of USCIS, to announce the new 'I E-Verify' program and to provide updates on immigration-related topics including enforcement efforts and the Form I-9 and E-Verify. Below is the new 'I E-Verify' logo to be used by emloyers to let consumers know that the company uses E-Verify to ensure a legal workforce. DHS considers the 'I E-Verify' program to be good business.

A public service announcement promoting the 'I E-Verify' campaign was also shown.

USCIS provided the following statistics regarding E-Verify and the FAR rule:

• There are currently 170,000 companies enrolled in E-Verify.
• Nearly 2,000 companies per week are enrolling in E-Verify. (Most of this increase is attributed to the FAR rule that requires federal contractors to use E-Verify.)
• To date 9,000 federal contracts have been issued with the FAR E-Verify clause, which represents 1,800 federal contractors.
• E-Verify has processed 8.5 million queries in FY2009.
• 96.9% of E-Verify queries are confirmed as employment authorized.
• 2.8% of E-Verify queries are not confirmed as employment authorized.
• .3% of Tentative Nonconfirmation queries are untimately confirmed as employment authorized.

In 2010, E-Verify will begin verifying companies enrolling in E-Verify and near the end of 2010 E-Verify should be adding passport photographs to the Photo Tool. The Photo Tool will become available to E-Verify service providers (i.e., Designated Agents) by the end of 2009. DAs will have 6 months to implement the Photo Tool.

The USCIS Compliance, Tracking, and Monitoring group, CTMS, will monitor such E-Verify behavior such as:

• The same SSN being submitted multiple times in E-Verify (this may indicate identity fraud/theft)
• No referrals being processed for Tentative Nonconfirmations (this may indicate pre-screening)
• E-Verify queries being initiated more than 3 days after the employment date

USCIS will send letters to employers when such behavior is detected. Through Q4 of FY2009 USCIS has sent 1,000 such letters.

In Spring 2010 USCIS anticipates providing duplicate SSN detection on the E-Verify website.

In Summer 2010 USCIS anticipates rolling out a new user interface for the E-Verify website and will add features such as reverification notices to employers.

There was spirited discussion throughout the afternoon between the presenters and attendees. Some of the other points of interest that came out during the discussions included:

• 16% of E-Verify users did not complete the tutorial (password sharing)
• 16% of E-Verify users pre-screen applicants (illegal activity)
• 20% of employers took adverse action on a Tentative Nonconfirmation (TNC)
• 9% of employers don't give the TNC notice to the employee
• 7% of employers encourage employee not to contest a TNC
• SSA can put an E-Verify case in continuance for up to 120 days (new information)
• ICE has 26 Special Agent offices in the U.S.
• 85 employers are currently in the IMAGE program
• ICE sent 654 Notices of Inspection (NOI) in July 2009
  • 326 employers are in compliance
  • 61 employers received a Notice of intent to Fine (NOF) totalling more than $2 million
  • 200 employer cases are pending
• ICE is sending 1,000 more NOIs on businesses in the following categories (categories are further defined in the Homeland Security Act):
  • Critical infrastructure
  • Key resources
• There are very few cases of ICE penalizing an employer over document fraud
• ICE will re-inspect employers after an audit to confirm behavior correction

The PowerPoints from the symposium will be posted on www.dhs.gov/e-verify.

HAPPY THANKSGIVING!!!

This was sent to our clients this week. We wanted to share it with others who may not have received it.

Situation

The beginning of a calendar year is a popular time for employers to implement a reorganization, merger, acquisition or divestiture. While transactions occurring at the beginning of a year may minimize certain employment issues such as wage base restarts and multiple Forms W-2, it is critical to consider other employment tax impacts and to ensure transactions are properly reported. Listed below are a few of the common employment tax compliance, payroll systems integration, and general issues that a payroll department encounters with most mergers, acquisitions, or reorganizations. Other factors may also need to be addressed depending on specific circumstances.

Solution

Employment Tax Compliance Considerations

• Registration for new state income tax (“SIT”) withholding, local income tax (“LIT”) withholding, and state unemployment tax (“SUI”) accounts
• Required status updates to state workforce agencies related to transfers of employees, unemployment experience and common control provisions
• Account closures for inactive SIT, LIT, and SUI tax accounts

Payroll Systems Integration Considerations

• Potentially new Forms W-4 required from transferring employees (including state and local equivalents) due to change of employers
• Integration of potentially different pay cycles on employment tax liability/deposit dates

Other General Employment Tax Considerations

• Pre-acquisition activity to take advantage of available planning options; to identify potential refunds; to avoid the unintentional assumption of liabilities; and to develop an appropriate transaction integration plan
• Third party payroll provider requirements and constraints (timing, additional forms, powers of attorneys, etc.)
• Review payroll policies and procedures for consistency and consolidation; develop "best practices" (i.e. nonresident withholding, third party sick pay, fringe benefits, etc.)

Additional Employment Tax Considerations When Transaction Occurs Mid-Year

• Impact of transaction type (stock, asset, and/or merger) on reporting Forms W-2, 941, and 940.
• Successor status provisions associated with Social Security, federal unemployment ("FUTA"), and SUI regarding impacts on taxable wage bases
• Required tax account reconciliations to match deposits to liabilities reported on Forms W-2 for certain mid-year transactions at federal, state and local levels

Value

Proper compliance with federal, state and local employment tax laws is critical regardless of the effective date of a transaction. For more information on compliance requirements and planning options, please contact your tax consultant or Pete Krieshok at (314) 214-7325 or pkrieshok@talx.com.

We make this information available to our clients regularly, but thought others may be interested as well.  Benefit amounts for the states in which you do business are important to understand when developing an unemployment cost management plan and can help you focus on where you can get the biggest bang for the buck.

Tammy Mullin