Tag: social security

Form I-9 Software: Avoiding Unlawful Discrimination When Selecting and Using I-9 and E-Verify Software Systems

A recent employer fact sheet from the U.S. Department of Justice (DOJ) and U.S. Department of Homeland Security (DHS) provides guidance for avoiding unlawful discrimination and other violations when using private software products to complete Forms I-9 and E-Verify cases.

Quick Hits

  • Employers are responsible for selecting and using software products that avoid unlawful discrimination and comply with Form I-9 and E-Verify requirements.
  • Employers must not use software products that violate Form I-9 and E-Verify requirements or involve system limitations that unlawfully discriminate among workers.
  • DOJ and DHS advise employers to train staff on Form I-9 and E-Verify requirements, and to provide access to published government guidance on Form I-9 and E-Verify requirements.

Employer Compliance With Form I-9 Software Products

The fact sheet reminds employers to use the current Form I-9 and properly complete the Form I-9 for each new hire after November 6, 1986, with any acceptable employee documents. Form I-9 systems must comply with requirements for electronic signatures and document storage including the ability to provide Form I-9 summary files containing all information fields on electronically stored Forms I-9. The fact sheet confirms required software capabilities and employer practices to properly complete the Form I-9 and avoid unlawful discrimination.

Employers must ensure that any software:

  • allows employees to leave form fields blank, if they’re not required fields (such as Social Security numbers, if not required on E-Verify cases);
  • allows workers with only one name to record “Unknown” in the first name field and to enter their names in the last name field on the Form I-9;
  • uniquely identifies “each person accessing, correcting, or changing a Form I-9”;
  • permits Form I-9 corrections in Section 1 and does not complete Section 1 corrections for workers, unless completing preparer/translator certifications in Supplement A;
  • retains all employee information and documents presented for form completion; and
  • permits Form I-9 corrections in Section 2 and allows completion of Supplement B reverifications with any acceptable employee documents.

Employer Compliance With E-Verify Software Products

The fact sheet reminds employers to comply with E-Verify program requirements when using software interfaces for E-Verify case completion. The fact sheet confirms required software capabilities and employer practices for completing E-Verify cases. Employers must still:

  • provide employees with current versions of Further Action Notices and Referral Date Confirmation letters in resolving Tentative Nonconfirmations (mismatches) in the E-Verify system;
  • provide English and non-English Further Action Notices and Referral Date Confirmation letters to employees with limited English proficiency;
  • display E-Verify notices confirming employer use of E-Verify;
  • “promptly notify employees in private” of E-Verify mismatches and provide Further Action Notices. If an employee who has been notified of a mismatch takes action to resolve the mismatch, provide the Referral Date Confirmation letter with case-specific information;
  • delay E-Verify case creation, when required. For example, when workers are awaiting Social Security numbers or have presented acceptable receipts for Form I-9 completion, employers must be able to delay E-Verify case creation; and
  • allow employees to resolve E-Verify mismatches prior to taking any adverse action, including suspensions or withholding pay.

Prohibited Employer Activity When Using Form I-9 Software

The fact sheet notes that an employer that uses private software products for Form I-9 or E-Verify compliance is prohibited from:

  • completing the Form I-9 on an employee’s behalf unless the employer is helping an employee complete Section 1 as a preparer or translator;
  • prepopulating employee information from other sources, providing auto-correct on employee inputs, or using predictive language for form completion;
  • requiring more or less information from employees for Form I-9 completion or preventing workers from using preparers/translators for form completion;
  • improperly correcting the Form I-9, improperly creating E-Verify cases, or failing to report corrections in the Form I-9 audit trail;
  • requesting more or different documentation than needed for Form I-9 completion, or failing to complete reverification in Supplement B of the Form I-9; and
  • imposing “unnecessary obstacles” in starting work or receiving pay, “such as by requiring a Social Security number to onboard or by not paying an employee who can complete the Form I-9 and is waiting for a Social Security number.” (Emphasis in the original.)

Staff Training and Technical Support

The fact sheet warns employers against using software products that do not provide technical support to workers, and it notes that employers are required to provide training to staff on Form I-9 and E-Verify compliance. Resources for staff members using software products for Form I-9 and E-Verify case completion include I-9 Central, the Handbook for Employers M-274, the M-775, E-Verify User Manual, and DOJ publications.

© 2024, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more on Form I-9, visit the NLR Immigration section.

DOL Announces New Independent Contractor Rule

On January 9, 2024, the United States Department of Labor (“DOL”) announced a new rule, effective March 11, 2024, that could impact countless businesses that use independent contractors. The new rule establishes a six-factor analysis to determine whether independent contractors are deemed to be “employees” of those businesses, and thus imposes obligations on those businesses relating to those workers including:  maintaining detailed records of their compensation and hours worked; paying them regular and overtime wages; and addressing payroll withholdings and payments, such as those mandated by the Federal Insurance Contributions Act (“FICA” for Social Security and Medicare), the Federal Unemployment Tax Act (“FUTA”), and federal income tax laws. Further, workers claiming employee status under this rule may claim entitlement to coverage under the businesses’ group health insurance, 401(k), and other benefits programs.

The DOL’s new rule applies to the federal Fair Labor Standards Act (“FLSA”) which sets forth federally established standards for the protection of workers with respect to minimum wage, overtime pay, recordkeeping, and child labor. In its prefatory statement that accompanied the new rule’s publication in the Federal Register, the DOL noted that because the FLSA applies only to “employees” and not to “independent contractors,” employees misclassified as independent contractors are denied the FLSA’s “basic protections.”

Accordingly, when the new rule goes into effect on March 11, 2024, the DOL will use its new, multi-factor test to determine whether, as a matter of “economic reality,” a worker is truly in business for themself (and is, therefore, an independent contractor), or whether the worker is economically dependent on the employer for work (and is, therefore, an employee).

While the DOL advises that additional factors may be considered under appropriate circumstances, it states that the rule’s six, primary factors are: (1) whether the work performed provides the worker with an opportunity to earn profits or suffer losses depending on the worker’s managerial skill; (2) the relative investments made by the worker and the potential employer and whether those made by the worker are to grow and expand their own business; (3) the degree of permanence of the work relationship between the worker and the potential employer; (4) the nature and degree of control by the potential employer; (5) the extent to which the work performed is an integral part of the potential employer’s business; and (6) whether the worker uses specialized skills and initiative to perform the work.

In its announcement, the DOL emphasized that, unlike its earlier independent contractor test which accorded extra weight to certain factors, the new rule’s six primary factors are to be assessed equally. Nevertheless, the breadth and impreciseness of the factors’ wording, along with the fact that each factor is itself assessed through numerous sub-factors, make the rule’s application very fact-specific. For example, through a Fact Sheet the DOL recently issued for the new rule, it explains that the first factor – opportunity for profit or loss depending on managerial skill – primarily looks at whether a worker can earn profits or suffer losses through their own independent effort and decision making, which will be influenced by the presence of such factors as whether the worker: (i) determines or meaningfully negotiates their compensation; (ii) decides whether to accept or decline work or has power over work scheduling; (iii) advertises their business, or engages in other efforts to expand business or secure more work; and (iv) makes decisions as to hiring their own workers, purchasing materials, or renting space. Similar sub-factors exist with respect to the rule’s other primary factors and are explained in the DOL’s Fact Sheet.

The rule will likely face legal challenges by business groups. Further, according to the online newsletter of the U.S. Senate Health, Education, Labor and Pensions Committee, its ranking member, Senator Bill Cassidy, has indicated that he will seek to repeal the rule. Also, in the coming months, the United States Supreme Court is expected to decide two cases that could significantly weaken the regulations issued by federal agencies like the DOL’s new independent contractor rule, Loper Bright Enterprises v. Raimondo and Relentless Inc. v. U.S. Dept. of Commerce. We will continue to monitor these developments.1

In the meantime, we recommend that businesses engaging or about to engage independent contractors take heed. Incorrect worker classification exposes employers to the FLSA’s significant statutory liabilities, including back pay, liquidated damages, attorneys’ fees to prevailing plaintiffs, and in some case, fines and criminal penalties. Moreover, a finding that an independent contractor has “employee” status under the FLSA may be considered persuasive evidence of employee status under other laws, such as discrimination laws. Additionally, existing state law tests for determining employee versus independent contractor status must also be considered.

1 The DOL’s independent contractor rule is not the only new federal agency rule being challenged. On January 12, 2024, the U.S. House of Representatives voted to repeal the NLRB’s recently announced joint-employer rule, which we discussed in our Client Alert of November 10, 2023.

Eric Moreno contributed to this article.

© Copyright 2024 Sills Cummis & Gross P.C.
For more on the Independent Contractor Rule, visit the NLR Labor & Employment section.

Take Note: Social Security and Medicare Benefits Changing in 2016

Claiming Social Security Twice is Eliminated

Prior to 2016, some married individuals who were 62 or older had claimed Social Security retirement benefits twice. Previously, a person whose spouse was at full retirement age and was herself or himself at an early retirement age, age 62 to 65, could claim spousal payments and then switch to payments based on their own work, which would then be higher because they were claiming it at an older age.

As of this year, however, workers who turn 62 in 2016 or later will not be able to claim both types of payments, but instead one or the other. However, the younger spouse can still claim spousal benefits when he or she turns 66, and those individuals will continue to contribute to their own Social Security Retirement benefit until age 70, thereby receiving a higher benefit when they begin to receive their full retirement benefits 4 years later.

Stricter Rules for Suspended Payment of Benefits

In May 2016, the rules have changed for suspending your Social Security Retirement benefits until a later date when they would be higher, and this process will no longer be permitted. Previously, spouses and dependent children could claim payments based on your work record while your benefits were suspended and continued to grow.

This option is no longer available, however, as of May 2016. You will no longer be allowed to “file and suspend.” If the retired worker’s benefits are suspended, spousal and dependent benefits will not be paid.

Higher Medicare Part B Premiums for some Social Security Recipients

Most Social Security recipients will pay the same Medicare Part B premium in 2016, as they did in 2015. That amount is $104.90 per month. Increases in Medicare Part B premiums are tied to increases in Social Security benefits due to cost-of-living adjustments which did not occur this year. However, those individuals who are enrolling for the first time in Medicare Part B this year will pay a higher premium of $121.80 per month.

Article By Leslie A. Mitnick of Stark & Stark

COPYRIGHT © 2016, STARK & STARK

 

Where do Social Security Payments Made by Undocumented Workers Go?

Greenberg Traurig Law firm

Many employers are familiar with the following scenario: You hire someone, put them on payroll and deduct taxes from their checks automatically – just like you do with all employees. You then find out through an audit by U.S. Immigration Customs and Enforcement (ICE) or by the employee coming clean that he or she is using a fake social security number. You consequently terminate employment on the grounds that they violated the company’s “honesty policy” or simply because he or she is not authorized to work in the United States. So what does Social Security do with the payments that the employee has made?

According to the Social Security Administration (SSA) unauthorized workers are paying an estimated $13 billion per year in social security taxes and are receiving about $1 billion in return. During an interview, Stephen Goss, the chief actuary of the SSA, estimated that there are approximately 11 million undocumented people in the United States and about 7 million of these people are working illegally. Further, out of these 7 million undocumented workers, approximately 3.1 million people are using fake or expired social security numbers. Goss noted that undocumented workers have paid around $100 billion in social security taxes over the last decade, which the SSA has treated as a positive cash flow without a home. Goss indicated that the $100 billion in unclaimed social security created by undocumented workers has been a key factor in allowing the SSA “to be paying benefits for as long as it now can.”

So, and in answering the headline question, the SSA puts all of these “homeless” contributions into the Social Security Trust Fund for Old-Age and Survivors Insurance (OSAI). This fund is used to ultimately pay out social security benefits to U.S. workers and retirees.

ARTICLE BY

Ian R. Macdonald
OF
Greenberg Traurig, LLP