Facebook icon Twitter icon Forward icon

New Low-Cost Settlement Program Launched By IRS For Worker Classification Issues

In a program launched on September 21, 2011, employers can voluntarily reclassify their workers and come into compliance with the tax system at a low cost under a settlement program launched by the Internal Revenue Service (IRS).  Under the new initiative, employers who voluntarily offer to treat their workers prospectively as employees can make minimal payments to make up for past payroll tax obligations. This minimizes penalties and costs and avoids the IRS audit process.

To be eligible, an applicant must:

  • Consistently have treated the workers in the past as non-employees;
  • Have filed all required Forms 1099 for the workers for the previous three years; and
  • Not currently be under audit by the IRS, the Department of Labor, or a state agency concerning the classification of these workers.

DOL Aids Employees in Suing Employers

When workers with Fair Labor Standards Act (FLSA) or Family and Medical Leave Act (FMLA) claims are told that the Department of Labor's Wage and Hour Division (WHD) is not going to pursue their complaints, they will be given a number to contact the new American Bar Association (ABA)-Approved Attorney Referral System. If they call this number, they will be referred to ABA-approved attorney referral service providers in their area.  Additionally, if the WHD conducted an investigation into a worker’s complaint, it will now provide the complaining worker with information about its “determination regarding violations at issue and back wages owed.”

The WHD also announced that it has developed a special process that will allow complaining workers and their representing attorneys to “quickly obtain certain relevant case information and documents when available.”

Tax credit available for businesses that hire veterans

On December 1, 2011, President Obama signed the VOW to Hire Heroes Act, which allows a company to claim a tax credit if it hires veterans who have been looking for work for at least one month. The maximum credit is increased for hiring veterans who have been searching for work at least six months. And employers may be granted tax credit for hiring out-of-work veterans with service-related disabilities.

EEOC Claims Hit an All Time High

This month, the U.S. Equal Employment Opportunity Commission (EEOC), the federal agency responsible for investigating employment discrimination claims, reported that employee and job applicant complaints has hit an all-time high.  Accountable for hearing claims of discrimination based on age, race, nationality, gender, disability, equal pay, and other protected classifications, the EEOC has received nearly 100,000 claims during the 2011 year, the most filed in a single year in the agency's 46-year history. The agency also has obtained the greatest amount of monetary relief for alleged victims of job discrimination in a single year.

Access to “Incidental Information” under the Discrimination Laws

Ever wonder what happens when an employer gets too much information about their employees' personal lives through the Internet? 

The EEOC speculated, and it reached some conclusions.  Using the Genetic Information Non-Discrimination Act (GINA) as its template, the EEOC found that most employers unintentionally gain access to significant amounts of personal information about their employees.  Through the Internet and social media, moreover, many employers have access to employees’ Facebook pages, Twitter microblogs, and other sites offering details about employees’ personal lives, including information that could be used in discrimination claims.  The EEOC has determined that the receipt of such “incidental information” will not constitute basis for a discrimination claim, however, employers must be aware that

  1. The EEOC will assume that employers have access to this information; 
  2. Employers must heighten their sensitivity to such "incidental information;" and
  3. Employers must be especially careful about basing their decisions on legitimate, business-related grounds, not the "incidental information," which is inevitably available.