Posts Tagged ‘hiring employees’

HIRE Act Retention Credit

Tuesday, September 27th, 2011

HIRE Act Retention CreditTax Credits

After all of the dust settled on the March 18, 2010 Hiring Incentives to Restore Employment (HIRE) Act, many businesses are forgetting that the Act provided a second opportunity for tax savings based on retention of HIRE Act eligible employees.

The HIRE retention credit is a general business credit to encourage retention of new hires and will be claimed on the employer’s income tax return. The amount of the credit is the lesser of $1000 or 6.2 percent of wages (as defined for income tax withholding purposes) paid by the employer to the retained qualified employee during the 52 consecutive week period. The qualified employee’s wages for such employment during the last 26 weeks must equal at least 80% of wages for the first 26 weeks.  This credit cannot be carried back to years beginning before March 18, 2010, but may be carried forward. The credit will be claimed on the employer’s income tax return.
*PCS does not apply this credit as it is a credit on your business tax return.

HIRE Act: Questions and Answers for Employers

From IRS Website www.IRS.gov

Under the Hiring Incentives to Restore Employment (HIRE) Act, enacted March 18, 2010, two new tax benefits are available to employers who hire certain previously unemployed workers (“qualified employees”).

The first, referred to as the payroll tax exemption, provides employers with an exemption from the employer’s 6.2 percent share of social security tax on wages paid to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.

In addition, for each qualified employee retained for at least 52 consecutive weeks, businesses will also be eligible for a general business tax credit, referred to as the new hire retention credit, of 6.2 percent of wages paid to the qualified employee over the 52 week period, up to a maximum credit of $1,000.

Helpful Links

Business Credit for Retention of Certain Newly Hired Individuals in 2010

HIRE Act Flyer from IRS

Are You Missing Out? – PCS Blog Entry

Article Submitted By:

Bob Willbanks
VP of Sales & Marketing
Payroll Control Systems
763.746.1934 Direct
bwillbanks@pcspayroll.com

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Background Screening – Criminal Records 101

Friday, December 31st, 2010

Background Check - CautionBy:  Tony Lipinski
Sr. Solutions Consultant
12/16/2010

First off, I have been in the screening industry for 13 years and have a degree in Sociology with an emphasis in criminology. So hopefully, the information I’m providing will help you decide what is best for your enterprise. Please don’t construe this article as legal advice, it is simply a recap of best practices I have from my experience within the industry. You may also wish to review another related article which backs up my conclusions.

A National Background Check in the United States does not exist and is a misnomer. There is not any source currently; including the FBI NCIC, which has access to all records in the United States. The information is forwarded to the FBI from jurisdictions throughout the US.  In many cases, information is not forwarded properly which means it will not show up or can be incomplete.  For this reason, we highly suggest that the reporting jurisdiction is searched if an arrest record or incomplete / partial information is found.  This will help to ensure the accuracy of those records.

Best sources for “Best Practice” for a Due Diligence employment screening:

1) Fingerprinting – We can fingerprint and send the request for processing via the FBI NCIS database. However, it has to fall under a statute for processing. These checks run through Trusted Employees can take one to three weeks for complete results.

2) National Criminal SuperSearch – This is the database most screening companies, (Including Trusted Employees), access which contains information forwarded from jurisdictions throughout the United States. Each screening company may call this product something different like “national criminal records search”.  The limitations for this search are that it does not cover every jurisdiction in the U.S. and what is provided varies from state to state. We suggest using this search as a tool to locate records outside of the jurisdictions already searched. In addition, we suggest adding the originating jurisdiction where a record is located to ensure accuracy.  This is requirement in order to be compliant with the Fair Credit Reporting Act (FCRA) which all Reporting Agencies, including screening providers, must follow.  For Trusted Employees, this search is completed within minutes of submission.

Please note that the MN BCA statewide and Department of Corrections are the sources of information on the National Data base search with regard to MN records. The MN BCA is like the FBI NCIC search in that it is dependent upon the reporting of  jurisdictions within the state.  If a jurisdiction does not submit or submits incorrect information, the record will not show up or could be erroneous. Schools K-12 and Tenant screening in MN are required by law to conduct a MN BCA search.  Typically, over half the records do not show up on the statewide criminal search when compared to a full county by county criminal search.

3) County Criminal Search – Trusted Employees suggests conducting a County Criminal Search to ensure our customers are doing thorough due diligence. The county courts hold the records of any broken state law in the county where the infraction occurred. At Trusted Employees we provide all of the counties in MN as one search as we have access to all 87 counties. We have the same capability in about 20 other states which have a similar comprehensive search available. In states like Illinois and California that do not have a comprehensive search available, we search the counties of residence. For example, if someone is from Chicago, we search Cook County, IL.   For Minnesota and most of the Midwest, Trusted Employees completes County Criminal Searches within 12-24 hours. The rest of the U.S. may take two to three business days.

4) Statewide Criminal Search – In most cases, including MN, Statewide criminal searches are a repository of information from the county to the state. If the county does not forward the information to the state repository, it will not be reported. In addition, not all statewide criminal searches are available to non-criminal justice agencies. Trusted Employees completes this search within minutes for Minnesota.  Other States may require special forms can take up to several weeks.

5) Federal Criminal Records Search – Federal criminal records include breaking a Federal Law such as money laundering, drug trafficking, internet crimes, bank robbery, crimes crossing a state line and crimes on Federal property. There are 94 Federal Districts in the US and these districts do not report to the States or counties and the States and counties do not forward to the Federal Court system. Trusted Employees searches the Federal districts within the state of residence. For example, Minnesota has one Federal District so we search that Federal District Court,  Wisconsin has 2 Federal Districts so we research both districts, and so on.  Trusted Employees typically completes this search within one to three business days.

The National Criminal SuperSearch, County Criminal, Statewide Criminal and Federal Criminal are all searched by name and cross-referenced with date of birth. We may also cross-reference driver’s license, address, and physical description if the name is common. The record will be located under the name of the arrest.  Social Security Number is not on any criminal records as the records are public.

Social Security Trace – This is a tool we use to locate any additional possible names or addresses as reported to credit agencies. If someone has a record to hide, they may not provide all names used or addresses on their application / release so this is a good tool to locate additional information which is returned instantly via Trusted Employees.

Our goal at Trusted Employees is providing our customers with the best search for their business at the best possible price. Our suggestions for those of you wishing to implement a cost effective background screening program within your enterprise are as follows:

  • Social Security Trace – Locates additional names and addresses not provided
  • Criminal Search – Searches counties of residence for records
  • National Criminal SuperSearch – National criminal records database search of 400 million various state and local agencies
  • National Sexual Offense History – we search all 50 states + DC for reported sex offenders

For Financial / Professional positions, we recommend adding a Federal Criminal Search.

I hope this information is useful as you review your internal policies and screening providers. Feel free to contact me if you have any other questions about National Criminal searches or conducting background screening in general.

Tony Lipinski
Sr. Solutions Consultant
Trusted Employees
10505 Wayzata Blvd, Suite 200
Minnetonka, MN 55305-1502
www.trustedemployees.com
tlipinski@trustedemployees.com
PH 952 259-3019 / 888 389-4023
FAX 952 545-3973 / 888 389-4024

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Are You Missing Out?

Sunday, October 31st, 2010

HIRE ActThroughout the week, we’re in contact with many prospects and customers of PCS and we have the opportunity to ask them if they’ve been taking advantage of the HIRE Act.  In almost every case, we’re met with a blank stare and the response, HIRE Act?  What’s that?

The HIRE Act is arguably the highest POSITIVE impact legislation for business launched in 2010.  Eligible new hires are EXEMPT from Employer Social Security Tax for the 2010 tax year (for wages paid after March 18th of 2010) – a savings of 6.2% of eligible employee taxable wages.

However, most businesses aren’t aware the “holiday” on this tax is available.  Indeed, even though PCS has sent out multiple notifications, only 25% of our customers have taken the steps necessary to take advantage of the savings which can be as much as $7,621.60 per eligible employee.

THE DETAILS

On March 18, 2010 President Obama signed into law the Hiring Incentives to Restore Employment (HIRE) Act .  The HIRE Act provides tax credits for employers willing to expand their workforce by hiring individuals who are unemployed or only working part time. This law provides two opportunities for tax savings:

  • Social Security Tax Holiday – Employers who hire unemployed workers this year (after February 3, 2010 and through December 31, 2010) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010. This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. The employer and employees’ shares of Medicare taxes would also still apply to these wages.
  • General Business Tax Credit* – In addition, for each worker retained for at least a year, businesses may claim a general business tax credit, up to $1,000 per worker, when they file their 2011 corporate income tax returns.  The employee must be hired after February 3, 2010 and be employed for at least 52 consecutive weeks. Wages during the last 26 weeks must be at least 80 percent of the wages paid for the first 26 weeks.
    *PCS does not apply this credit as it is a credit on your business tax return.

The credit is available for eligible new hires made between February 3, 2010 and December 31, 2010. All credits must be applied to 2010 check dates. The maximum credit for each employee is $6,621.60 (Social Security wage max $106,800 x 6.2%).

An employee is eligible if he/she:

  • Begins employment between February 3, 2010 and December 31, 2010. Additionally, only the wages earned with a check date of March 19, 2010 to December 31, 2010 are eligible for the credit.
  • Has not been employed for more than 40 hours during the previous 60 days. The individual must sign a W-11 Form Affidavit of Employment, under penalty of perjury, attesting to the employer this fact. To get the W-11 form, click here.
  • Is not hired to replace another employee unless the previous employee was separated from employment voluntarily or for cause. Additional restrictions may apply for seasonal employment.
  • Is not related to the employer in one of the following ways: son, daughter, or descendant of either; stepson or stepdaughter; brother, sister, stepbrother, stepsister; father, mother, or ancestor of either; stepfather or stepmother; niece or nephew; aunt or uncle; or the following in-laws: son, daughter, father, mother, brother, or sister.

Businesses, agricultural employers, tax-exempt organizations, tribal governments and public colleges and universities all qualify to claim the payroll tax exemption for eligible newly-hired employees. Household employers and federal, state and local government employers, other than public colleges and universities, are not eligible.

WHAT YOU NEED TO DO

1.      Ask all new hires if they have worked for anyone more than 40 hours during the 60 day period ending on the day they began employment with you.  If they have not worked during this time frame, have them sign the affidavit Form W-11 and keep it on file.

2.      Look back at all new hires since February 3rd of 2010 that have received payroll checks dated after March 18th, 2010.  Find out if they would qualify based on the above criteria and if so, have them complete the Form W-11.  If you find that you have eligible employees, but have not been taking advantage of the HIRE Act, you will need to amend the affected 941 returns filed to date.

HOW TO CLAIM THE TAX EXEMPTION

If you are a PCS Client: Contact your Client Account Manager, they will guide you through the process.

If you are not a PCS Client: Form 941, Employer’s QUARTERLY Federal Tax Return, revised for use beginning with the second calendar quarter of 2010, will be filed by most employers claiming the payroll tax exemption for wages paid to qualified employees. The HIRE Act does not allow employers to claim the exemption for wages paid in the first quarter but provides for a credit in the second quarter. The instructions for the new Form 941 explain how this credit for wages paid from March 19 through March 31 can be claimed on the second quarter return.

The HIRE Act requires that employers get a signed statement from each eligible new hire, certifying under penalties of perjury, that he or she was not employed for more than 40 hours during the 60 days before beginning employment with that employer. Employers can use new Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, released last month, to meet this requirement. Though employers need this certification to claim both the payroll tax exemption and the new hire retention credit, they do not file these statements with the IRS. Instead, they must retain them along with other payroll and income tax records.

These two tax benefits are especially helpful to employers who are adding positions to their payrolls. New hires filling existing positions also qualify as long as they are replacing workers who left voluntarily or who were terminated for cause and otherwise are qualified employees. Family members and other relatives do not qualify for either of these tax benefits.

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

DHS Issues Final Rule Amending Electronic Storage Rules for Form I-9

Tuesday, September 28th, 2010

Paper BlobBy: Kevin M. Mosher, Esq.

On July 22 the Department of Homeland Security (DHS) issued a long awaited final rule to its 2006 regulations regarding electronic storage options for the Form I-9. In the end, this final rule slightly amended the 2006 regulations to favor employer’s use of an electronic storage system for the I-9s.

In 2006, DHS issued a set of interim guidelines setting forth an employer’s ability to store its Forms I-9 electronically. Prior to this, federal law required that all employers maintain the original or a microfiche/microfilm version of the Form I-9 for the statutorily required retention period. For larger companies and businesses with high turnover this created a significant amount of paperwork. Recognizing the digital age, DHS set out a series of requirements that employers could follow to avoid this paper, film or fiche storage obligation. The 2006 rules created a framework by which employers could store the Form I-9 electronically and use electronic signatures.

The July 22 regulation finalizes the 2006 interim rule and amends it slightly in the following ways:

  • Clarifies that employers can use any combination of storage mechanisms – paper or electronic storage.
  • Clarifies that employers have 3 business days (not calendar days) in which to complete the Form I-9. This clarification was made in the general Form I-9 changes in 2007, but has now been amended with regard to these electronic storage regulations.
  • States employers may change electronic storage systems so long as the new system satisfies the regulatory requirements.
  • States employers using an electronic storage system need not retain audit trails each time the Form I-9 is viewed, but only when it is created, completed, updated, modified, altered or corrected.
  • Requires that employers provide transaction receipts to employees, but only upon the employee’s request.

Overall, the final rule offers a handful of nice clarification points for employers. The opt-in nature of the transaction receipt in particular may prove to be a significant paper and time-saving change for high-volume employers such as staffing agencies and large companies; and no longer having to retain audit trails except with certain major events is a good change. Otherwise, the changes are not incredibly substantial from the 2006 interim regulations.

If you have any questions regarding these changes or the electronic storage of the Forms I-9, please contact Kevin Mosher at kemosher@wesselssherman.com.

Submitted By:

Kevin Mosher, Esq.
Wessels Sherman Joerg Liszka Laverty Seneczko P.C.
952.746.1700 Office
www.wesselssherman.com

For more information on the 2006 interim regulations, click here.

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney or an HR Professional.

The Dollars and Sense of Employment Screening

Tuesday, June 29th, 2010

Background CheckAs businesses and government agencies are streamlining their budgets, more and more emphasis is being placed on Return-On-Investment or ROI. The burden of ROI proof initially fell to the operations side, but now even hard-to-quantify business areas like Human Resources are asked to prove the value of their stated best practices.

Employment background screening is widely recognized as a necessary process designed to help find the applicants who fit your employment criteria, but it also represents an expense. The question is, what dollar value does a background screening program deliver?

Here are some basic statistics:

  • 1 out of 3 applicants provide false, inaccurate, misleading or incomplete information on their resume or application.
  • 1 in 20 job applicants falsify their name, Social Security Number or Driver’s License Number to hide a conviction or other problem.
  • The average fraud scheme in a small to mid-sized business will result in $105,000 in losses.
  • The United States Department of Commerce reports that 30% of all business failures result from theft or embezzlement.
  • So, the primary areas in which companies are adversely affected by hiring the wrong employee can be prevented by reducing these areas of concern by implementing a quality employment background screening program.

    The three primary areas are:

  • Turnover
  • Occupational Fraud
  • Catastrophic Events
  • TURNOVER – is defined as the ratio of the number of workers that have to be replaced in a given time period divided by the average total number of workers employed during the same period.  Turnover ranges vary widely depending upon the industry and employment level. For example, the Aberdeen Group states the following annual turnover rates for hourly workers:

  • Hotel Chains: 51.7%
  • Specialty stores: 104%
  • Fast food chains: More than 200%
  • In addition, a study done in 2004 by The Employment Policy Foundation estimated that the average cost of turnover for businesses is 25% of the replacement salary.

    OCCUPATIONAL FRAUD – consists of asset misappropriations, corruption schemes, theft of property and fraudulent statements.  According to the Association of Certified Fraud Examiners’ 2010 Report to the Nations on Occupational Fraud and Abuse, the median fraud loss over 1,021 cases studied was $105,000.

    CATASTROPHIC EVENTS - include workplace violence, sexual harassment, and accidents that occur due to falsified qualifications or alcohol/drug use. Compounding these events are the resultant law suits and negligent hiring litigation that tend to follow.  The Workplace Violence Research Institute estimates the annual cost of workplace violence at $36 billion, while the Substance Abuse and Mental Health Services Administration (SAMHSA) says that alcohol and drug abuse costs U.S. businesses about $81 billion each year; totaling $117 billion/year.

    What is the Final ROI?
    The US Small Business Administration states for every dollar an employer invests in employment screening, the return on investment ranges from $5-16.  The savings are a result of improved productivity, reduced absenteeism, lower turnover, and decreased employer liability.

    Visit the PCS website for more information on background checks.

    Contributed by:

    Tony Lipinski
    Trusted Employees
    952.259.3019
    tlipinski@trustedemployees.com
    Trusted Employees Website

    Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney or an HR Professional.