This is part 2 of a 12 part series courtesy of your regional Paychex representative, Rob Tiernan. This series identifies a dozen significant regulatory topics of importance to small businesses in 2012. Some of these issues will lead to legislative changes and others to simple rule modifications. Regardless of the level of government attention they receive, these initiatives could require employers to make significant adjustments to the way they manage their businesses. If you have any questions or comments please follow up with Rob by email at: firstname.lastname@example.org
2. Worker Classification
The misclassification of workers promises to receive continued scrutiny in 2012. Under the proposed Employee Misclassification Prevention Act (EMPA) (http:// www.govtrack.us/congress/bill.xpd?bill=h112-3178), reintroduced in Congress in October 2011, the Fair Labor Standards Act would be amended to prohibit worker misclassification. Employers who are found to have misclassified their workers as independent contractors would be subject to a special penalty.3 Employers would be required to keep records of wages and hours worked by non-employees and to provide notice to all workers of their status as either an employee or independent contractor. Employers would also be required to direct workers to the U.S. Department of Labor Web site for information about their rights. Employers in violation of this requirement could be subject to fines ranging from $1,000 to $5,000 per worker for each violation, with increased fines for repeated violations.
The IRS recently unveiled an opportunity for eligible employers to participate in a new program, the Voluntary Classification Settlement Program (VCSP), to voluntarily reclassify workers as employees in exchange for partial tax relief from past federal employment taxes. In late 2011, the U.S. Department of Labor agreed to work with the IRS, as well as several states, to share information and coordinate enforcement to ensure that employees receive protections they are entitled to under federal and state law. Legislation in several states to increase fines for worker misclassification may also affect employers in 2012.
Check back next week for part 3.