Compliance

Anyone else have a whole folder dedicated to CYB? How about a whole company dedicated to doing that on your behalf? That’s basically what an Employer of Record (EOR) is.

Clients usually come to us with three main CYB dreams for payroll

1. Keep workers happy with on-time, accurate payroll.
2. Keep the government happy with accurate worker classification and compliant practices.
3. Keep our lawyers happy knowing numbers 1 and 2 are happening seamlessly and consistently.

Within those dreams lie many other goals

1. To be able to hire quickly without changing headcount
2. To be able to hire freelancers for special projects
3. To hand off the legal risks of payroll and compliance to someone with the tools to get the job done right
4. To be able to onboard quickly
5. To be able to do business in multiple states without having to know all the rules of each of them 

In order to accomplish all of these goals, companies without a highly specialized internal team (nearly everyone except the really big companies) outsources payroll with either an Employer of Record (EOR) or a Professional Employer Organization (PEO). 

What does an EOR do?

An EOR handles payroll and takes on the paperwork and associated legal risks of employing people. It also allows businesses to add workers without changing their headcount. While an employee performs work for your business, the EOR serves as an employer for tax purposes and handles all personnel functions, including payroll processing, taxes, contracts, benefits, employment termination, background checks, worker performance issues, Certificates of Insurance, workers’ compensation, data security, and more. 

What does a PEO do?

A PEO partners with a business as a co-employer to provide HR services and allows a company to outsource some of the HR load. The business still holds all related liabilities and responsibilities and is also still required to carry its own insurance. PEOs are a good option for companies that need to outsource some services without handing off legal liabilities. 

We are in the business of protecting your business. 

Payroll is very complex and is one of the riskiest aspects of doing business as a highly-specialized process of doing payroll in a timely, secure and compliant manner. Payroll is also really easy to mess up. Errors are not just inconvenient and embarrassing, they are sometimes also incredibly costly due to IRS fines and other costs associated with righting a wrong.

Outsourcing payroll means outsourcing risk and makes business sense to most organizations and keeps the company in good standing with the people on the front lines as well as government agencies. 

Ready to CYB with an EOR? Well, here we are! 

There’s a battle playing out in court over which workers can be classified as independent contractors versus employees. The legal wars demonstrate one important fact for employers: The IRS takes the practice of hiring independent contractors very seriously. That means you should, too.

Independent Contractors (ICs) are self-employed and hired to do a specific job. They receive payment only for the work performed. Unlike a regular employee, they pick their jobs and regularly move from client to client, business to business. Also referred to as freelancers, consultants and 1099’s, they report their own business income and pay self-employment taxes.

Hiring an IC is attractive to those companies looking for outside creative resources, and who want to outsource work that is not central to their main line of business. The work is project-oriented and is typically completed in a short amount of time. It’s also easier on the budget to pay your IC as a vendor, not as an employee.

Sounds nice, right? But there’s a big catch.

The IRS has very strict guidelines that define true business-to-business relationships. These guidelines are meant to prevent firms from misclassifying would-be employees, thereby avoiding a bounty of state and federal taxes.

Is your IC really an independent contractor?

This is a deceptively complex question. It’s important to confidently be able to answer “yes”, because the risk of facing an IRS audit has never been greater.

Best practices when working with an independent contractor:

• Contractor has an established business entity, with a business name and EIN
• Your contractor provides services to other businesses outside your firm
• IC provides certificates of insurance, including at the least coverage for general liability insurance and worker’s comp insurance
• You have a signed per-project agreement for services between your company and the contractor
• Independent contractors work for multiple clients
• Projects have a contract specifying project length, compensation and liability
• Independent contractor does not function as a division of your company

When working with your contractors:

• Do not train a contractor, direct their work responsibilities or define their work schedules
• Independent contractors should use their own equipment
• Do not provide any employment benefits, such as health insurance and corporate stock options
• Contract on a per-project basis
• Keep in mind that this is a business-to-business relationship

Prevent an audit with contractor payroll solutions

Audits are costly and time-consuming even for businesses that do everything by the book. How much are you willing to pay in time and hassle for employee misclassification? If you have any questions about independent contractor status, trust PayReel to help you make the determination.

We screen each employment situation carefully to assess the entire relationship to make sure you are in complete compliance.

Elizabeth Lewis is a client relationship manager. If you have a problem, she has a solution.

Before joining the team at PayReel, Elizabeth spent seven years working with a diverse set of clients and organizations at The Kimmel Center for the Performing Arts in Philadelphia. She has a natural passion for building relationships and spreading joy to those around her. This has become a cornerstone to her commitment to excellence in customer care.

A native of The Garden State, Elizabeth will grow things wherever she can find the space. She also loves animals, especially horses, and is looking forward to fishing in the mountains of Colorado.

Something else: Elizabeth thinks there’s nothing tastier than steaming hot fries dipped in a vanilla milkshake!

Give our client relationship team a call at 303-526-4900. Elizabeth or one of the other team members will help you find solutions for your worker classification or payroll challenges. Go ahead. Try us.

ABOUT PAYREEL:

At PayReel, we minimize the time and effort it takes to get you ready for your project. Rely on PayReel to assume all of the risks associated with worker classification and get back to the business at hand. We make sure everyone gets paid quickly and easily and have Client Relationship Managers on call around the clock to answer your questions. All you have to do is call 303-526-4900 or email us. The PayReel team makes video production, live events, media, and entertainment payroll easier, faster, and seamless

As children, we learn to keep our valuables under close watch when we are in public. In the cyberworld, it’s harder to keep our most valuable assets protected. Unlike a wallet, our identity, data, and customers’ personally identifiable information (PII) are not tangible items that we can keep in our sight, knowing that as long as it’s in our hands, it’s not in someone else’s. Cybersecurity then, requires a different approach.

It seems every week, a major company, city, or hospital experiences an alarming security breach. The breaches may compromise privacy (hacked laptop/phone cameras, for example), data, or PII. Credit monitoring companies, phones, hospitals, and even entire cities have been compromised or even taken hostage. Last week, it was Zoom, which left cameras vulnerable to being activated without permission (more about that problem as well as the fix here). This NPR piece offers a terrifying read on the fifth domain (after land, air, water, and space) of the cyberworld.

Businesses and consumers increasingly rely on apps and software to get their everyday work done. For companies, this comes with a responsibility to protect customers, employees and sometimes patient information. So what’s a company to do?

Okay, so it’s a real problem. Now what?

We’re not here to scare you without offering solutions. While we’re talking about what businesses can do, we would be remiss not to address one important aspect of how you can protect yourself on a personal level. You can freeze your credit as well as that of your minor-aged kids. Here’s an article from the USA Today with more about how and why to take this step.

Customers trust companies with priceless personal information and sensitive company data daily and since that’s our main focus, here are some business-oriented tips. 

Password management: There are tools that offer super-secure ways to make sure your company passwords are accessible only to whom you want them to be. If you’ve ever tried to access a company account after the person who managed it is no longer with the company, you see the value here. Aside from the convenience, it’s a way to keep information super secure.

Policies and procedures: Make sure you have policies and procedures in place to prevent attacks. Train employees on good security etiquette. For most organizations, human error is by far the most likely source of mistakes that lead to breaches.

Insurance coverage: Should you experience a breach, having solid insurance coverage in place can make it a lot less painful by covering the financial loss. This article provides a lawyer’s guide to cybersecurity insurance coverage.

Penetration tests: Have third parties perform monthly security checks and an annual penetration test. 

Customer encryption: Encrypt all information at multiple levels. Encryption scrambles data so that it’s unreadable without the encryption key. This article on business cybersecurity says: 

“There are three ways to encrypt data: at rest, in motion and in use. Small businesses should be encrypting customer data at all three points, especially if those companies have e-commerce capabilities. Some of this is simple, like making sure your website is set up to allow only HTTPS transactions, a protocol that activates encryption. Other forms of encryption require expertise or support from a company that provides point-to-point encryption and tokenization technology, like Elavon.”

Conclusion

Any investment in your security is a wise investment indeed.

Immigration is one of the hottest topics in politics and much of the White House’s rhetoric on the subject (including the latest announcement) centers around employment. While employers may not make the policies, they do carry a great deal of responsibility in ensuring their employees are eligible to work in the United States.  

Let’s start with The Immigration Reform and Control Act (IRCA):

This is the foundation for the rest of the article. I-9 and E-Verify are simply tools to support compliance with the IRCA. Read the government info for the definitive legalese, but in a nutshell, this act prohibits employers from:

• Knowingly hiring unauthorized employees
• Keeping an unauthorized person employed once they know
• Knowingly falsifying an unauthorized individual’s paperwork
• Knowingly accepting falsified documents
• Discriminating against authorized workers due to national origin or citizenship status
• Refusing to honor appropriate documents

According to the U.S, Customs Control and Immigration, penalties for knowingly hiring or continuing to employ an unauthorized foreign national range from $375 to $16,000 per violation. 

Notably, these sanctions, as well as the burden to supply an I-9, do not apply to independent contractors (ICs). Since inappropriately classing workers as IC’s can lead to hidden immigration risks, we’ll do our customary shout-out to proper worker classification here.   

Form I-9

Form I-9 is a federal mandate for all employers. “Mandate” is short for: we’ll make you sorry if you don’t comply. An employer must submit the I-9 in accordance with the government’s guidelines. 

It has three sections. In the first, the employee confirms that he or she is authorized to work in the U.S. 

The second section is where employers confirm that they’ve examined the required documents to verify the employee’s identity and eligibility and that the documents appear genuine. This employer must be complete and sign this section within three days of the employee’s start date. 

Employers complete the third section if they need to reverify an employee’s work authorization status or if an employee is rehired within three years of when the Form I-­9 was originally completed.

Additionally, forms must be meticulously completed. Any inaccuracy can cause a fine. And yes, there are I-9 audits and they are on the rise.

Meeting the requirements of Form I-9 makes up the lion’s share of the administrative work when onboarding new or returning employees.

How does E-Verify work?

E-Verify is an additional tool to support employers with IRCA compliance. For certain federal contractors, using E-Verify is mandatory, but employers outside these parameters may choose to use E-Verify voluntarily in conjunction with Form I-9. 

E-Verify allows employers to enter information into an online system and then compares the employee’s identification with government databases including the Department of Homeland Security and the Social Security Administration. 

When everything matches, the employee gets confirmed. If something doesn’t match, it comes back with a tentative non-confirmation (TNC). From there, the employee can follow a process to update the information that caused the mismatch. Even when everything checks out, there is a formalized process to update everything within the government records. If something doesn’t check out, it can trigger loss of employment or an immigration event. 

What are the challenges of using E-Verify?

Employers who choose to use E-Verify should know it increases the administrative burden within the company. Appropriate company representatives must be very knowledgeable and pass a test before implementing it in the workplace. Once implemented, it must be used consistently across all employees. This burden was particularly notable during the government shutdown, when E-Verify was inoperational, causing additional delays and headaches. 

Additionally, President Trump expressed concern that it may be too tough for some employers. On a Fox interview (around the 5-minute mark) on Sunday, he discussed the possibility of using E-Verify as part of his immigration plan, but said, “The one problem is E-Verify is so tough that in some cases, like farmers, they’re not – they’re not equipped for E-Verify. […] I used it when I built the hotel down the road on Pennsylvania Avenue. I use a very strong E-Verify system. And we would go through 28 people – 29, 30 people before we found one that qualified.”

Employers aren’t the only ones affected, this Washington Post article claims E-Verify may hurt legal workers. Here at PayReel, we’ve seen legal workers end up with a mismatch through the system. It takes at least one live visit to the Social Security Administration to clear it up. 

What now?

As long as we have people entering the country, we’ll be discussing the economics and ethics around immigration. 

Employers must develop an effective compliance program to minimize liability or hire a partner to take on the liability. 

About PayReel:

At PayReel, we minimize the time and effort it takes to get you ready for your project. Rely on PayReel to assume all of the risk associated with contingent workforce management and get back to the business at hand. We make sure everyone gets paid quickly and easily and have Client Relationship Managers on call around the clock to answer your questions. All you have to do is call 303-526-4900 or email us. The PayReel team makes live event, corporate media, and brand management payroll easier, faster, and seamless.

Who needs workers’ compensation? Anyone with employees, it turns out. Workers’ compensation provides wage replacement and medical benefits to employees injured in the course of employment. Just like any other insurance, it’s one you hope you’ll never need. Still, if you do need it, you’ll be so glad you have it. Employers that ensure worker safety and implement best practices before they need them are in the best position to protect employees, keep claims manageable, and maybe even keep premiums down.

Four ways to mitigate workers’ compensation risk

Prevent the need for claims:

Chase prevention like you would chase the crisis or you’ll certainly end up chasing a crisis. Make regular safety meetings, ongoing education, and performance metrics standard procedure. If you don’t have the budget to implement every possible safety measure, you don’t have the budget for the project. The best workers’ comp claim is the one that never happens.

Implement and/or refine your claims management process:

Instead of scrambling to figure out how you’ll handle a claim if it comes up, take steps ahead of time. Make sure that reserves are accurate. Have a standard operating procedure. Decide who will talk to the adjuster and within what time frame. Taking the time to lay out your processes while your brain isn’t in crisis mode means sounder decisions. The added benefit is that it will reassure your adjuster that you’re engaged and motivated to reach a speedy resolution.

Implement a return to work program:

Have a plan for injured workers who have been cleared for modified duty. These measures reassure insurance companies while demonstrating professionalism to employees.

Invest in accurate worker classification:

An independent contractor filing a workers’ comp claim can easily land a well-intentioned company on IRS and DOL radar screens. This happens with surprising frequency despite the logical assumption that an independent contractor should understand the implications of a business-to-business relationship. One key aspect of a true B2B relationship is that a worker’s business activity exists independent of the employer. Preventing misclassification and communicating clearly with workers is a worthwhile preventative investment.

What’s ahead

Analysts anticipate changes for the workers’ compensation industry ahead. They expect “value-based care, political party changes in several states, and a more holistic view of patient injuries” to affect coverage in 2019. Workers’ compensation carriers may face declining profits and escalating claims costs and operating expenses. Companies that address the subject proactively will be in the best position to ensure minimal premium increases. Aside from cost, keeping employees safe is forever a worthwhile investment.

About PayReel:

At PayReel, we minimize the time and effort it takes to get you ready for your project. Rely on PayReel to assume all of the risk associated with worker classification and get back to the business at hand. We make sure everyone gets paid quickly and easily and have Client Relationship Managers on call around the clock to answer your questions. All you have to do is call 303-526-4900 or email us. The PayReel team makes live event, corporate media, and brand management payroll easier, faster, and seamless.