Recordkeeping Questions of the Week

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What Do I Have to Know Before Filing My EEO-1 Report?

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HR Question:

What is an EEO-1 Report and how do I know if I am required to file one?

HR Answer:

As defined by the Equal Employment Opportunity Commission (EEOC), the EEO-1 Report is an annual mandatory data collection of demographic workforce data, such as race/ethnicity, gender, and job categories. The window for the 2022 data collection will open in mid-July 2023.

Am I Supposed to File an EEO-1 Report?

Great question to start with! Not every employer is required to file an EEO-1 report. That being said, there are a few questions to ask yourself to understand if you need to file:

  • Do you have 100 or more employees?
  • Are you a federal contractor?
  • Are you a first-tier subcontractor with 50 or more employees and at least $50,000 in contracts?

If you answered “yes” to any of the above questions, then you need to file an EEO-1 report annually. Employers also must file if the organization is any of the following:

  • Owned by or affiliated with another company and the entire enterprise has 100 or more employees.
  • Serving as a depository of government funds for any amount.
  • A financial institution that is an issuing and paying agent for US Savings Bonds and Notes.

There are some organizations that are exempt, such as State and local governments, public primary and secondary school systems, institutions of higher education, American Indian or Alaska Native tribes, and tax-exempt private membership clubs other than labor organizations.

What Should I Know Before I File?

It always pays to be prepared! Before you start gathering the data yourself, here are a few tips to help you be better prepared to file your EEO-1 Report.

First, research and understand the requirements for filing. While these requirements don’t change frequently, it’s best practice to double-check the most up-to-date requirements, which can be found on the EEOC‘s website. If you have additional questions, the Message Center provides an outlet to reach out to the EEOC for guidance. This page will open in mid-July as the window for 2022 data collection opens.

Gathering the data yourself can be difficult. While this may not be an immediate solution, investing in an HRIS or a payroll system can be a great resource. Some software includes an HR solution that provides an efficient and accurate way to access the employee data needed to complete the report accurately.

If you do not have an HRIS or payroll software solution, you can have each employee complete an EEO Self-Identification Form. This form is voluntary, however; if an employee declines to identify, the federal government requires you to determine this information by visual survey and/or other available information. Although there is not a specific form that you are required to use for self-identification, here is a sample EEO Self-Identification Form from our Virtual HR Support Center.

How Do I File?

If your company has never filed an EEO-1 Report before, let’s start with the basics – creating an online account. Visit the EEOC Data page, select “Create an Account,” then log in to the EEO-1 Component 1. At that point, new users can link their individual user account to a company record by selecting “Add Company to List” on the Your Company List page and entering your company’s EIN. After you register, you will receive your Company ID and PIN.

You will need the following information to complete the report:

  • Company ID and PIN
  • Company EIN and NAICS code
  • Company DUNS Number (if the company is a federal contractor)
  • Establishment address(es) – for a single-establishment, submit only one EEO-1 data report; for a multi-establishment company, submit a separate report for each location.
  • A count of all full-time and part-time employees during the specified pay period you have selected (for 2022 reporting in 2023, you can select October, November, or December of 2022)
  • Gender and race/ethnicity of all employees
  • Job categories for all employees
  • Employment data from one pay period in October, November, or December of 2022

Once the report is finished, it needs to be certified and submitted. Don’t forget to click the “certify report” button; otherwise, the EEOC will not receive your report.

Thank you to Sherri Hume, SHRM-CP, HR Business Advisor, for contributing to this edition of our HR Question of the Week. 

Recordkeeping is one of the more mundane tasks associated with Human Resources, but it is extremely important and can get you into hot water (i.e., incurring fines) if not done properly. Keeping the right files easily accessible and up-to-date is vital. Need some help? Visit our HR Compliance & Recordkeeping page to learn more.

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Why Is It Important To Get An Employee’s Signature?

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Have you ever had an employee question an employment agreement or say they didn’t mean to agree to a term of their employment? Why is it so important to get an employee’s signature?

This is a critical question for all employers, and the answer applies to more than just employment agreements! At its root, a signature is used to show the intent of an individual to bind oneself to a contract or make a written representation.

Why is an Employee’s Signature Important?

In the case of a new hire’s employment agreement, the signature here binds both the employee-to-be and the company to the agreed-upon terms such as salary, benefits, schedule, etc. – all items you don’t want to have to argue over after the employee has already started.

There are other instances where having an employee’s signature can help to protect your organization beyond the employment agreement. For example, when memorializing a performance conversation, it may be important to have an employee make a written representation of the fact that they were there, they understand the conversation, and they’ve agreed to any future action discussed during the meeting.

Obtaining an employee’s signature on documents such as these not only helps to clarify expectations, but it can also be an important part of your organization’s risk mitigation.

Employee Signature Best Practices

These signed documents are used should the agreement, the conversation, or actions be called into question, whether that’s internally or in a court of law. To eliminate additional confusion, there are best practices when gathering employee signatures.

A signature in ink is recognized as the standard for executing documents. However, should in-person not be an option (as many organizations have experienced a significant increase in remote workers), other legally recognized methods of signing are effective. These may include a scanned PDF of a signed document with an original signature or obtaining an electronic signature using software that is legally recognized, such as DocuSign, Adobe, certain payroll services, etc.

All in all, it goes back to showing intent to sign should anyone ever question that an agreement was created.

What Doesn’t Count as a Signature?

What you want to avoid is a question of fraud or whether an individual intended to enter into the agreement. Just typing a name using script font instead of using an original signature is typically not sufficient because it is easier to claim that it was created by someone other than the named party.

Additionally, simply cutting and pasting a picture of a person’s original signature into a document, as is sometimes done on letters, isn’t recommended because it can be more easily used to create counterfeited documents (or alleged to be counterfeit by a party not wanting to be bound by the agreement). Having said that, it is slightly better than typing in script font.

In the end, it is important to protect both parties – the employee and the company – with original or well-documented signatures in the case of disagreements or audits. By taking a little bit of additional time upfront to ensure that you’ve gathered an employee’s signature correctly, you can prevent a significant amount of wasted time and money later down the path.

Special thank you to Emily Smith, JD, General Counsel for Clark Schaefer Hackett, and Sammie Kelly for contributing to this Emerging Issues in HR.

Although maintaining proper recordkeeping practices may not be everyone’s forte, it is a critical piece to help protect both your organization and your employees. But don’t worry, Clark Schaefer Strategic HR are here to help! We can conduct an HR Audit to review your HR policies, procedures, documentation, and systems to identify any areas for improvement or enhancement in your HR function. To learn more, visit our HR Audit page or Request an HR Audit Quote.

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How Do I Write and Deliver a Written Warning?

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HR Question:

I have an employee who is not following company policy. I have given them several verbal warnings, and I know my next step is a written warning. How do I write and deliver a written warning?

HR Answer:

Disciplining employees can be uncomfortable. That’s why most companies have a Progressive Disciplinary Policy, clearly stating the steps employees need to take to modify unacceptable behavior and achieve the expectations of their role within the company. This can take the burden of deciding the next steps or consequences off of the manager and help them maintain an unbiased disciplinary process.

In order for the Progressive Disciplinary Policy to work as designed, it’s important that managers and supervisors document incidents appropriately. By following this policy and documenting incidents accordingly, companies can make a case for discipline or termination. However, without the appropriate documentation, taking disciplinary action can be potentially risky.

How Do Progressive Disciplinary Policies Start?

Most Progressive Disciplinary Policies start with a verbal warning. It’s important to make sure the employee is aware of what policy they are not following, as sometimes it’s simply a case of not being aware. It’s the “human” part of “human resources” – sometimes, employees make honest mistakes when they aren’t aware that they’re not in compliance. A verbal warning here can do the trick. However, sometimes it takes more than a verbal warning. That is when a written warning comes into play.

What’s Next? A Written Warning.

A written warning is a more formal step in the disciplinary process. A written warning should include:

  • Employee Name
  • Position
  • Expectations
  • Details of failed expectations
  • Consequences of failing to improve
  • Employee comment section
  • Manager signature/date
  • Employee acknowledgment

It’s important to include factual information should the process or the disciplinary action ever be called into question. Additionally, any emotion or opinions should be kept out of the written warning and subsequent documentation.

The Do’s and Don’ts of Writing a Warning

Susan Heathfield, a writer for Balanced Careers, shares the following excellent examples of the right and wrong ways to document an attendance issue in The Importance of Documentation in Human Resources:

Wrong:

“Mark is usually late for work. Mark misses too much work.”

In this example, the documentation lacks specific examples, dates, and times, and includes the supervisor’s opinion, making a poor case against the employee and a strong case for discrimination or targeting by the supervisor.

Right:

“April 1: Mark called in sick and missed eight hours of work.”
“April 4: Mark arrived at work at 10 a.m., two hours late from his scheduled start time.”
“April 6: Mark scheduled a doctor’s appointment and then, stayed home to have a new furnace installed.”
“April 12: Mark called in sick and missed eight hours of work.”

See how the documentation relies on dates, times, and the amount of work missed? It also details the specific reasons the employee was missing work, rather than letting those facts be forgotten or muddled when recalled later.

Best Practices for Written Warnings

Like most processes in business, there are best practices when it comes to delivering written warnings. First, it’s important to be consistent and timely. Avoid waiting days or weeks to write up an employee for an issue, as the impact of the warning (as well as the clarity of each person’s memory) can fade with time. Additionally, if you write up one employee for an attendance issue, be prepared to write up others who have the same issue. This consistency can help prevent claims of discrimination or favoritism.

At the end of the day, it’s important to provide feedback to your team members to help them succeed. If the employee has improved, be sure to acknowledge their effort. If the employee has not improved in the time allowed, continue to follow your Progressive Disciplinary Policy.

Special thanks to Sherri Hume, SHRM-CP and Samantha Kelly for contributing to this HR Question of the Week. 

Employment recordkeeping does not rank high on the list of favorite human resources responsibilities, but it can get you into hot water if not done properly. Keeping appropriate disciplinary documentation is vital to proving your processes are compliant.  Avoid the fines and minimize your stress level by having Strategic HR assist with your recordkeeping compliance. Visit our HR Compliance and Recordkeeping page to learn more about our services.

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Can We Verify Form I-9 Documents Virtually for Remote Employees?

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HR Question:

As we continue to hire more employees to work remotely, can we use virtual methods to verify Form I-9 documents for our remote employees? If so, is the option for virtual I-9 verification going to end?

HR Answer:

The U.S. Immigration and Customs Enforcement (ICE) has extended its temporary policy allowing employers to inspect Form I-9 documents virtually through April 30, 2022.

How to Verify Form I-9 Documents for Remote Employees

The policy to allow virtual verification was first issued in March 2020 due to the COVID-19 pandemic, and it has been extended 12 times – it is unknown at this time if this date will be extended again. Employees hired on or after April 1, 2021, working exclusively in a remote setting, are temporarily exempt from the physical inspection requirements associated with the Form I-9. Employers may examine documents remotely via e-mail, fax, video link, secure upload, etc., and complete the Form I-9 with appropriate annotations. Originally this only applied to companies that were completely operating remotely due to the pandemic. However, since April 2021, ICE stated that employers can use remote Form I-9 verification procedures for new hires working remotely, even if other employees are working onsite.

Starting May 1, Employers Cannot Accept Expired List B Documents

It is important to note that the Department of Homeland Security (DHS) is ending the COVID-19 Temporary Policy for List B Identity Documents. Beginning May 1, employers will no longer be able to accept expired List B documents.

The temporary policy that is coming to an end was previously enacted by DHS in response to the difficulties many individuals experienced with renewing documents during the COVID-19 pandemic. According to DHS, “Now that document-issuing authorities have reopened and/or provided alternatives to in-person renewals, DHS will end this flexibility. Starting May 1, 2022, employers must only accept unexpired List B documents.”

If an employer is presented with an expired List B document between May 1, 2020, and April 30, 2022, they are required to update their Forms I-9 by July 31, 2022. See this table to ensure compliance with the updated requirements.

Have I-9 Completion Timelines Changed?

The normal timelines for I-9 completion remain in effect. Section 1 of the form must be completed by the employee’s start date, and Section 2 must be completed within three business days of the start date. Employers taking advantage of the relaxed procedures must provide written documentation of their remote onboarding and telework policy to each employee.

I-9 completion can be done with a paper form or by completing an online fillable Form I-9. You will still have to print the completed form for signatures and can then scan it for storage.

Since we don’t know yet when the temporary extension of virtual document inspection will end, another option is to consider sending information, along with the Form I-9, to new hires requiring them to present their original supporting documentation to a Designated Agent who will verify their identity and complete section 2. After this is completed, they can mail the original Form I-9 to HR.

Can Form I-9s be Stored Electronically?

You can complete and store your employees’ Form I-9s electronically. According to U.S. Citizenship and Immigration Services, you may maintain the forms either electronically or on paper as long as you follow the established requirements. To ensure that you are storing your Form I-9s properly and for the required duration of time, see our article about electronic storage of I-9s.

Thank you to Alisa Fedders, MA, SPHR, Senior HR Advisor for contributing to this edition of the HR Question of the week.

strategic HR inc. knows that keeping abreast of HR Compliance issues can be daunting, especially when regulations continue to change. We can help you stay compliant by fielding your questions and offering resources to help you identify and mitigate compliance issues. Visit our HR Compliance and Recordkeeping page to learn more about how we can help or contact us for immediate support. 

 

 

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What to do if the IRS notifies you of Affordable Care Act (ACA) penalty fees

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HR Question:

How do I know if my company needs to submit Affordable Care Act (ACA) reporting to the IRS? What are the potential ACA penalty fees if we do it wrong?

HR Answer:

Any employer with self-insured medical benefits or with 50 total Full-Time and Full-Time Equivalent employees is required to report to the IRS. (Not sure if you have 50 Full-Time Equivalent employees? Here’s a guide to do the math.) Failure to report to the IRS could result in two different types of penalty notices, Section 4980H(a) and Section 4980H(b) penalties.

Employers have reported receiving two types of penalty notices

The first type of penalty notice assesses penalty fees for employers who filed in an audited year, but based on the information provided, the IRS does not believe that the employer offered the minimum essential coverage with minimum value to all full-time employees. This could mean that the smallest benefit plan offered to employees was too expensive when compared to their pay. If employers fail to meet this threshold of minimum essential coverage, they could be assessed penalty fees.

The second type of penalty notice that employers have received is a notification that they should have filed as an Applicable Large Employer (ALE), based on their W2s of that year. This means that the company reached the threshold of 50 (or the equivalent of) full-time employees, which triggers a new level of required filings and regulations. This most likely means they should have filed specific forms (the 1094-C and 1095-C), and if they failed to do so, they are being assessed large penalties.

So, what can employers do to potentially reduce the assessed penalties and stop further ACA penalty fees from piling up?

Respond Immediately to ACA Penalty Fees Notifications

The first step – respond without delay! As soon as any notices are received, immediately reach out to the operations manager listed on the notice to let them know that you are actively researching the issue. It is imperative that you do not set this concern to the side. There is nothing more important to take care of in that given moment in terms of cost to your company.

The reason for the urgency in your response time is because the fees will increase exponentially the longer you wait, and they can increase day by day, incurring an astronomical fee. Some employers have seen fees up to $20,000 for missing one form for three years. These fees are typically estimated in the penalty letters, which can be alarming for small employers.

Gather Your Team & Take Action

The second step is to connect with your tax department, tax attorney, and your HR team to begin to gather the information necessary to file any 1094-C and 1095-C forms. If you do believe you should have filed and did not, ask for an extension as soon as possible. This will reduce the ongoing daily penalties. If you don’t respond and ask for an extension, it’s possible that a levy may be filed against your organization after thirty days.

If you did not have an HRIS provider filing for you at the time, it can be convoluted to pull the information necessary. These forms often require enrollment data, benefit waivers, and historical work hours, which is why it’s best to include your HR department while tackling this process.

It’s worth noting that if your organization crossed over the fifty-employee threshold mid-year and filed appropriately in the years following, we would encourage you to work with your tax department or attorney to determine if you qualify for transition relief. It is possible to reduce fees if you qualify and file for the missed year.

As organizations continue to implement and interpret the Affordable Care Act, there may be bumps in the road. Be sure to partner with your HR department and attorney to ensure your organization is following guidelines, filing appropriately, and quickly addressing any notices from the IRS.

Special thanks to Mary Mitchell, Sr. HR Business Advisor and Certified Healthcare Reform Specialist, for sharing her ACA expertise and contributing to this HR Question of the Week.

Keeping up with ever-changing ACA regulations can feel like an insurmountable task when you have so many other things on your HR plate. If you are unsure if your company should be reporting for ACA, Strategic HR can help to assess your employee calculations to determine if it is needed. We can also help you to stay on top of regulations relevant to your company, assist with your recordkeeping, and advise you on when to seek legal counsel. Learn more about our HR Compliance & Recordkeeping Services or contact us today!

 

This article does not, and is not intended to, constitute legal advice. Information and content presented herein is for general informational purposes only and readers are strongly encouraged to contact their attorney to obtain advice with respect to any legal matter. Only your individual attorney can provide assurances that the information contained herein is applicable or appropriate to your particular situation or legal jurisdiction.

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Can I Ask if My Employees Are Vaccinated?

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Can we ask if our employees are vaccinated? Isn’t this a HIPAA violation or an illegal inquiry under the ADA or somehow confidential information?

Employers can ask for proof of vaccination unless there is a state or local law or order to the contrary.*

When an employer is requesting or reviewing medical information in its capacity as an employer, as it would be when asking about an employee’s vaccination status, it is considered to be an employment record. In such cases, HIPAA would not apply to the employer. The Americans with Disabilities Act (ADA) will govern the collection and storage of this information.

The Equal Employment Opportunity Commission (EEOC), which enforces the ADA, has stated that asking about vaccination is not a disability-related inquiry, though it could turn into one if you ask follow-up questions about why the employee is not vaccinated. Asking a yes or no question, or requesting to see the employee’s vaccination card, does not violate any federal laws or require proof that the inquiry is job-related.

Finally, just because employees think that something is or should be private or confidential doesn’t mean they can’t be required to share it with their employer. Social Security numbers, birth dates, and home addresses are all pieces of information an employee may not want to advertise, but sharing is necessary and required for work. Vaccination status is similar. However, all of this information, once gathered, should not be shared by the employer with third parties, except on a need-to-know basis.

*It appears that some governors may attempt to prevent certain entities from requiring “immunity passports” (e.g., proof of vaccination) through an executive order (EO), though as of July 31, none of the EOs already issued appear to apply to private businesses and their employees. Also note that if there is a law in place that prevents treating vaccinated and unvaccinated employees differently (like in Montana), you may be able to ask, but not take any action based on the response.

Should we keep a record of who is vaccinated or make copies of vaccination cards? If we do, how long should we keep that information?

If you’re asking about vaccination status, you’ll want to keep some kind of record (so you don’t have to ask multiple times), but how you do this is up to you, unless state or local law has imposed specific recordkeeping requirements. You may want to keep something simple like a spreadsheet with the employee’s name and a simple “yes” or “no” in the vaccination column. If you’d prefer to make a copy of their vaccination card, that should be kept with other employee medical information, separate from their personnel file. Per OSHA, these records should be kept for 30 years.

If we keep a record of who is vaccinated, can we share it with managers who will be required to enforce policies based on that information, such as masking and social distancing?

Yes. We recommend not sharing this information any more widely than necessary. While anonymized information is okay to share (e.g., “80% of our employees are vaccinated”), each employee’s vaccination status should be treated as confidential, even if the fact that they are wearing a mask to work seems to reveal their status publicly. Obviously, managers will need this information if they are expected to enforce vaccination-dependent policies, and employers should train them on how they should be enforcing the policies and how and when to escalate issues to HR or a higher level of management.

Special thanks to the HR Support Center for providing this edition of our HR Question of the Week. 

For further COVID-19-related resources, check out our COVID-19 Employer Resources page or contact us for direct assistance. 

This article does not, and is not intended to, constitute legal advice.  Information and content presented herein is for general informational purposes only and readers are strongly encouraged to contact their attorney to obtain advice with respect to any legal matter.  Only your individual attorney can provide assurances that the information contained herein is applicable or appropriate to your particular situation or legal jurisdiction.

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Do I Have to Pay Taxes On My Unemployment Benefits?

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HR Question:

It’s tax season, and I’m a little confused about how to handle the unemployment benefits I received in 2020 – do I have to pay Federal and State taxes on this income?

HR Answer:

Millions of people impacted by the COVID-19 pandemic were able to receive some relief through unemployment benefits. As the nation navigates our annual tax season (a little later than normal, as the tax deadline was delayed until May 17), many are surprised to learn that income is actually taxable!

When it comes to federal income taxes, unemployment benefits are taxed as if they were wages. The American Rescue Plan, signed into law on March 11, 2021, includes a provision that makes the first $10,200 of unemployment nontaxable for each taxpayer who made less than $150,000 in 2020. If you are married, and your spouse also received unemployment, both of you can exclude $10,200.

However, when it comes to state income taxes, it depends on where you live.  Some don’t tax them at all, while others are making exceptions for 2020 and 2021 as a result of the pandemic. To help taxpayers understand how unemployment benefits are taxed on a state-by-state basis, Kiplinger created a comprehensive guide. Let’s take a look at the guidance for Ohio, Kentucky, and Indiana:

Ohio

Ohio remains aligned with the federal government exemption guidelines for unemployment income in 2020, meaning the individuals are not required to pay taxes on unemployment benefits up to $10,200. The IRS is expected to issue a refund for anyone who filed prior to the American Rescue Plan being enacted. More details to come.

Kentucky

Kentucky will not provide an exemption for up to $10,200 of unemployment compensation received in 2020. Kiplinger provided further guidance by highlighting that “[any] unemployment compensation excluded on a Kentucky resident’s federal income tax return must be added back on his or her Kentucky individual income tax return on Schedule M, Line 5, as an ‘Other Addition.’”

Indiana

Indiana is not currently allowing for an exemption for unemployment compensation, which means that “an amount excluded for federal income tax purposes has to be added back when filing your Indiana income tax return.” As Kiplinger pointed out, this could change depending on what the Indiana General Assembly decides in the coming months.

But a key point to note here is that there may be a part of unemployment benefits that are deductible (as Indiana considers unemployment benefits taxable). “The deductible amount depends on your federal adjusted gross income, how much unemployment compensation you receive, and your filing status,” Kiplinger reports. In order to calculate the exact amount of your deductions, Kiplinger also recommends completing the “Unemployment Compensation Worksheet” in the Form IT-40 instruction booklet.

For additional guidance on how unemployment benefits are taxed in your state, contact your tax advisor or get in touch with your state’s Tax and Information Assistance contact.

 

Thank you to Strategic HR’s Terry Salo, Senior HR Consultant, for contributing to this HR Question of the Week.

Strategic HR knows that keeping abreast of HR Compliance issues can be daunting, especially when the laws keep changing. We can help you stay compliant by fielding your questions and offering resources to help you identify and mitigate compliance issues. Visit our HR Compliance and Recordkeeping page to learn about our auditing services which can help you identify trouble spots in your HR function.

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Employee Time Cards

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Question:

How long should you keep employee time cards?

Answer:

Under the Fair Labor Standards Act, you are required to keep such records for at least three years from time of creation. However, we recommend that personnel records, including payroll records and employee time cards, be kept for seven years from the date the record is made or the date of termination, whichever is longer. That way, if you are subject to an IRS audit (which could go back seven years), you have this supporting documentation available upon request.

If you’re currently using a paper timekeeping system and you don’t want to store that much paper around the office for seven years, you can scan paper documents for electronic storage. Just make sure you have a reliable and secure method for storing this sensitive information and are able to access it as needed.

Thank you to the HR Pros on our HR Support Center for this question of the week.

 

Recordkeeping can be a daunting task, especially when you are trying to clean out old records and keep handy the pertinent ones. Keeping track of all the paper is extremely challenging. Strategic HR understands your frustration and has many tried-and-trusted tips on recordkeeping. Visit our Recordkeeping page to learn more about getting your employment records in order.

 

 

 

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An Employee Died Suddenly But Had Not Updated Their Beneficiary

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Question:

We recently have had a long time employee with the company die suddenly.  I have never had to handle death benefits before and learned that this employee did not update his beneficiary after his divorce and remarriage.  His ex-wife is still listed as the beneficiary.  His current wife is highly upset with me because of this.  Is there something I can do to let our life insurance carrier know he was divorced and remarried so his current wife can get the benefit?  Did I fail in my duties somehow by not having this updated?

Answer:

Assuming that this was against the deceased employee’s wishes, it is quite an unfortunate situation.  As the employer, there is nothing you can do about a beneficiary form that has not been updated.  Beneficiary forms are the responsibility of the employee and if an employee fails to complete one, update one, or completes it incorrectly, that is their responsibility, not yours.  Some employees balk at making the change, indicating their will is up to date; however, employees should not assume that state law will revoke early beneficiary designations for company plans and allow a will to prevail.  This is because in the instances of company health and welfare plans, the plans are governed by ERISA.  The Employee Retirement Income Security Act dictates that the plan administrator of these plans must turn over the funds to the beneficiary listed on the forms, no matter if they were remarried or what is listed in the employee’s will.  Many such instances have ended up in court but honestly, there is nothing the employer can do in these situations.

The Department of Labor issued a document for employers on best practices surrounding beneficiary designations in ERISA sponsored plans.  Although the document is dated (2012), it still contains some best practices on maintaining beneficiary information. This may be helpful for you to help your employees to avoid future situations.

Any financial professional will tell you, it is essential for you to keep your beneficiary information on file and up to date, even for work provided benefits. This would include plans such as company paid life insurance, deferred compensation, and/or retirement accounts through an IRA, a 401(k), or a pension plan.  It is essential for employers to have employees complete a beneficiary form for all of their accounts.  Employers/benefit administrators typically have employees complete these forms upon eligibility but they are never mentioned again.  Employers are encouraged to remind employees during the open enrollment process to make sure their beneficiaries are up to date.  Marriage, Divorce, and Births occur during the employment cycle and many employees forget to update their beneficiary to reflect those changes.  In addition, as a plan administrator, you must also remember to get updated beneficiary forms when you change providers.  Many employers shop around for benefits and make carrier changes.  It is essential that employees complete new beneficiary forms during such changes.

No one wants to deliver the news to a grieving spouse that the employee never updated their beneficiary.  No, it is not an employer’s responsibility BUT if we see our job as assisting in the health and welfare of our employees, reminding them to update their beneficiary is an easy way to do that and to avoid such a situation.

Employment recordkeeping does not rank high on the list of favorite human resources functions, and is one of the more mundane tasks associated with Human Resources. However, it is extremely important and can get you into hot water if not done properly. Keeping appropriate recruiting and hiring documentation is vital to proving, if needed, your employment processes are compliant. Strategic HR has a great online tool that’s affordable, easily downloaded and ready for immediate use. Another one of our resources is our Recordkeeping Desktop Reference which has everything you need in regards to recordkeeping requirements mandated by law. Avoid the fines and minimize your stress level by having Strategic HR assist with your recordkeeping compliance. Visit our Recordkeeping page to learn more about our services.

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Key Areas of Recordkeeping to Keep Up to Date in the New Year

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Question:

As the new year begins, what specific tasks should I be thinking about to ensure we have our Recordkeeping up to date and accurate for the new year?

Answer:

Kudos to you for thinking proactively.  As you close out last year and dive into the new year, there are a few key areas of Recordkeeping that you should take a look at to be sure you get a fresh start for the new year:

  • Review your employee files!
    • Is your filing caught up? Don’t let the pile continue into the new year. File it today!
    • Have you removed terminated employee files from your active files?
    • Randomly review a few employee files to ensure the right documents are being retained – nothing is missing and nothing needs removed. Depending on your findings, you may decide to audit all employee files.
  • Audit your I-9 documents.
    • Do you have one for every current employee?
    • Are they completed accurately and in full?
    • Have you separated your terminated employees from active?
    • What I-9s can now be destroyed?
  • Ask your employees to review their employee information!
    • Do you have the most up to date mailing address to ensure timely distribution of W2s?
    • Are their emergency contacts and contact information accurate?
    • Any changes to their dependents’ information?
    • Any changes needed for Federal and State tax allowances?
  • Reconcile your employees’ Paid Time Off (vacation and sick days).
    • Do your employees have time that will carry over into the new year?
    • Is any time forfeited that was not used?
  • Ensure up to date benefits information.
    • Have you distributed new benefit cards (i.e. medical, dental, vision) to your employees?
    • Do you have the right benefits information posted online or on bulletin boards as the new year begins?
    • If you have Flexible Spending Accounts, remind employees of important deadlines to submit their FSA claims so they don’t lose money that’s been set aside.
    • Is your employee salary information up to date with disability and life insurance policies?
  • Review your employee handbook.
    • Are there any policies that should be added or changed in your handbook?
  • Update State and Federal Mandated Posters.
    • Many states have new minimum wage requirements. Be sure your posters are displayed and showing up to date information.
  • Create a calendar for the new year.
    • Identify key requirements (i.e. W2 distribution, OSHA Logs, ACA Reporting, EEO-1 Reports)
    • Note key events (i.e. performance review periods, merit increases)
    • Plan your own development (i.e. conferences, events).

The list is not all inclusive, but it is meant to be a good starting point so you can add other things that you may think of to create your checklist.

Have you taken Strategic HR’s HR Checkup to make sure you are ready? For more information on the HR Checkup, contact Robin at 513-697-9855 or robin@strategichrinc.com to learn more.

 

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Does A Hospital Overnight Stay Qualify for FMLA?

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HR Question:

We have an employee that was admitted to the hospital overnight for a reaction to a medication.  The condition does not meet the parameters of a serious health condition. He was only ill for two days and had no follow-up with the doctor.  Does this hospital overnight stay qualify for FMLA?

HR Answer:

FMLA is one of the more challenging tasks that we have as HR professionals because each case is unique. The fact that you are reviewing this situation for FMLA, hopefully, means you know your organization qualifies (50 employees in a 75-mile radius). Secondly, does the employee qualify for FMLA? An employee must have been employed for one year and worked 1,250 hours in that year.

Assuming the answers to both of these are yes, then we consider if the circumstances qualify for FMLA.  For a condition to qualify for FMLA, there are several things to consider:

  • Was there an overnight stay in the hospital?
  • Was the employee or family member “incapacitated for more than three consecutive days and requiring ongoing medical treatments (either multiple appointments with a healthcare provider or a single appointment and follow-up care, such as prescription medication)”?
  • Is this a chronic condition causing occasional periods when the employee or family member are incapacitated and require treatment by a healthcare provider at least twice a year?
  • Is the employee or family member pregnant?

For more details and a fabulous guide to FMLA, check out The Employee’s Guide to the Family and Medical Leave Act.

Based on these considerations, yes, if there is an overnight stay in the hospital, even if the condition may not qualify as serious, the absence qualifies as FMLA.

Navigating the Family Medical Leave Act can be daunting for even the best HR professional. Strategic HR’s team of HR professionals can help your organization manage the FMLA process and ensure the exposure to liability is mitigated. To discuss your FMLA needs, contact us.  Plus, you can visit our Recordkeeping page to learn more about our other related services.

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How to Conduct an I-9 Audit and Correct Form I-9 Mistakes

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HR Question:

I’m doing an internal audit of our I-9 Forms, and I want to make sure I’m doing it right. So far, I’ve run into some problems. Some forms are incomplete, I don’t have an I-9 for all employees, and I think that a document provided for one of them is fake. What should I do when I find Form I-9 mistakes?

HR Answer:

There aren’t always easy answers for how to handle situations that arise during internal I-9 audits. There is a lot of information to be captured, and there are portions on the I-9 forms that are easily missed. However, conducting regular audits of your I-9 forms and correcting them appropriately can significantly reduce financial and legal risks and keep you in compliance. We will share recommendations to help you through an I-9 audit and the correction process when you discover Form I-9 mistakes.

What to look for during an Internal I-9 Audit

As you review your I-9 Forms, it’s important to know what a fully completed form looks like. You should ensure the following in your review:

  • The information on the form is clear, legible, and easy to read.
  • The Employee section (section 1) is completely filled out either prior to the start date (but after an offer of employment has been made) or on the first day of employment. Ensure that the employee has dated and signed section 1.
  • The Employer section (section 2) is filled out within 3 days of the employee starting.
    • Documents are listed in appropriate sections (Either A only or B and C).
    • Date of hire is completed in the Certification section at the bottom of the form and matches the date in the payroll records.
    • Signature, date, and address of the company has been completed.
  • Highlighting marks, hole punches and staples do not interfere with an authorized official’s ability to read the information on the form.
  • Copies of the documentation retained with Form I-9 are legible if copies of documentation are made.
  • Abbreviations used are widely understood. Do not use an abbreviation that is not widely known.
  • All applicable sections of the form are completed.
  • The current version of the Form I-9 is used.  To determine whether you are using the correct version of Form I-9, look at the revision date printed on the bottom left corner of the form, and not the expiration date printed at the top of the form.  For your convenience, here is a link to the current version of the Form I-9.
  • The English version of the form should be completed unless the form is being completed in Puerto Rico. The Spanish version is approved for use only in Puerto Rico.

How to Make I-9 Corrections

If you come across Form I-9 mistakes, the USCIS (United States Citizenship and Immigration Services) has the following recommendations in making corrections:

Employers may only correct mistakes made in Section 2 or Section 3 of Form I-9, Employment Eligibility Verification. If you discover a mistake in the Employee section (section 1), you should ask your employee to make the correction.

To correct the Form I-9:

  • Draw a line through the incorrect information.
  • Enter the correct information.
  • Initial and date the correction.

To correct multiple recording errors on the form, you may redo the section on a new Form I-9 and attach it to the old form. A new Form I-9 can also be completed if major errors need to be corrected, such as entire sections being left blank or Section 2 being completed based on unacceptable documents. A note should be included in the file regarding the reason you made changes to an existing Form I-9 or completed a new Form I-9.

If you discover a document that clearly looks fraudulent, or like it does not identify the correct individual, you should talk with the employee about it and ask them to provide alternate documentation from the list of acceptable documents.

On the other hand, if you only find a copy of a document that is hard to read, unclear, or confusing to you, no action may be required. The US Immigration and Customs Enforcement (ICE) guidance related to internal I-9 audits specifically states that an employer “should recognize that it may not be able to definitively determine the genuineness of Form I-9 documentation based on photocopies of the documentation. An employer should not request documentation from an employee solely because photocopies of documents are unclear.”

Rest assured – there are a number of resources available to help you with completing the Form I-9 correctly, and by conducting internal audits, you can make sure there are no Form I-9 mistakes. The U.S. Immigration Customs and Enforcement and the Immigrant and Employee Rights Section (IER) have provided joint guidance to help employers perform internal audits. Learn more about Guidance for Employers Conducting Internal Employment Eligibility Verification Form I-9 Audits.

The USCIS also has an “I-9 Central” section of their website. You can find in-depth information on how to complete the form, make corrections, review descriptions of acceptable documents, and much more.

 

Employment recordkeeping does not rank high on the list of favorite human resources functions, but it is vitally important. Take the I-9 Form for example. Failure to complete this form on a new employee could result in a series of fines. Avoid the fines and minimize your stress level by having Strategic HR assist with your recordkeeping compliance. Visit our HR Compliance & Recordkeeping Services to learn more, or Contact Us today.

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Medicare Part D Creditable Coverage Disclosure – Which Companies Must Comply?

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Question:

Medicare Part D Creditable Coverage Disclosure is due by March 1st.  How do I determine if this is something my company needs to comply with?

Answer:

It’s that time of year for many employers to disclose Medicare Part D Creditable Coverage status to the Centers for Medicare & Medicaid Services (CMS).  As a reminder, there are two disclosures required annually for certain employers related to Medicare Part D.  Employers with plans providing prescription drug coverage to individuals that are eligible for Medicare Part D must disclose whether their drug benefit is equal to or better than (also known as “creditable”) the Part D program to (1) individuals eligible for Medicare Part D and (2) to CMS.  The disclosure to CMS is due by March 1st for calendar-year plans.  At a minimum, disclosure to CMS must be made at the following times:

  • Within 60 days after the beginning of the plan year
  • Within 30 days after the termination of the prescription drug coverage
  • Within 30 days after any change in the creditable coverage status of the prescription drug plan

There are a few exceptions to the employer’s requirement to disclose Medicare D status to CMS, such as:

  • Employers not offering prescription benefits to any Medicare D eligible individuals on the beginning date of the plan year are not required to complete a disclosure to CMS form for that plan year.
  • Employers and unions that have applied and been approved for the Retiree Drug Subsidy (RDS) are exempt from filing the form. The exemption applies only to the covered members and plan options for which the employer is claiming the RDS. The plan sponsor’s RDS application will serve as disclosure to CMS.

Employers must provide the following Information on the disclosure to CMS:

  • Name of Entity
  • Federal Tax Identification Number (EIN)
  • Entity geographical information
  • Phone number of entity
  • Type of coverage
  • Creditable coverage status
  • Identify “authorized individual” of the entity

Disclosure must be made online via form CMS-10198. Further guidance and instructions for disclosure is found at CMS Creditable Coverage.

THANK YOU to HORAN for providing the content for this Question of the Week. HORAN serves as a trusted advisor on employee benefits, wealth management and life and disability insurance.  To learn more about HORAN,  please contact your  HORAN for additional information.

 

Employment recordkeeping does not rank high on the list of favorite human resources functions, but it is vitally important. What you keep can be as detrimental as what you don’t keep in some instances. Avoid the fines and minimize your stress level by having Strategic HR assist with your recordkeeping compliance. Visit our Recordkeeping page to learn more about our services.

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Avoid Penalties: Maintain a Legal Hiring Process

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Question:

We are continuously chasing paperwork for employees that a manager may have hired but didn’t include HR in the hiring process.  What problems does this present that we can share with the hiring managers?

Answer:

​It is important to make sure HR is included in the hiring process to assure all items are completed and proper documentation on the process is maintained.  If steps are skipped or documents missed, it can come back to haunt the employer in the future.  Some of the items that are essential for HR review includes the following.

  1. ​I-9 Forms. ​ Legally, the I-9 form must be completed within 3 days of date of hire.  ​Not completing the form timely can result in hefty penalties for employers (https://www.uscis.gov/i-9-central/penalties​)​
  2. ​New Hire Reporting.  ​In Ohio, new hires must be reported to the state within 20 days ​ of hire​.  Each state has a different process or requirements for this. So, if you are in other states, check those requirements.
  3. ​Consistent Hiring Process. ​ Consistency can lead to legal issue​s​ as well.  For example, you run a risk that Manager A is not following the same procedure as Manager B for the similar role, which could be seen as discriminatory even if it isn’t intentional. This could be with regards to the interview process, background checks, drug screens, references, etc.
  4. ​ Timely Benefit Enrollment. ​ If new employee​s​ do not receive ​benefit enrollment paperwork in a timely manner, they may miss the window to enroll.  For example, ​a client company offers Long Term Disability to ​their employees.  If the form is not completed and employee enrolled in 30 days, they have to do a full physical​ and could be turned down for coverage​.  
  5. Consistent compensation allocations. ​ Inconsistent compensation can lead to potential discrimination claims or just create internal equity issues.  If a manager does not check with HR or Finance before an offer is made, it could completely upset the compensation structure within the company and even cause inequity issues.
  6. Communicating employer policies.  If a new hire starts and is not provided the employee handbook and violates a policy, they could claim they never received the handbook​, leading to ​(potentially) ​a wrongful termination. ​ Employees must receive policy information and sign off on that receipt. ​
  7. ​Complete onboarding process. ​ In today’s job market finding candidates and keeping them is a challenge.  If new employees are not properly onboard​ed, ​from legally required paperwork to details about their job and the company, it could create a higher turnover rate.

​As you can see, some of these items are legal and some can result in fines for the employers.  Let HR “in the loop” on all hires before they happen and to make sure these problems don’t come back to haunt.

 

Employment recordkeeping does not rank high on the list of favorite human resources functions, but it is vitally important. Take the I-9 Form for example. Failure to complete this form on a new employee could result in a series of fines. Avoid the fines and minimize your stress level by having Strategic HR assist with your recordkeeping compliance. Visit our Recordkeeping page to learn more about our services.

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When Does An Employee’s I-9 Form Need Updated?

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HR Question:

I have an employee who was recently married and changed her name.  Does she need to complete a new I-9 form with her new name?

HR Answer:

When an employee changes their name (legally) employers are not required to complete a new I-9 form.  The US Citizenship and Immigration Services recommends that employers note the name change in Section 3 of the form.  To make sure your records are in order, here are the points to consider:

  • It is not necessary to document the new forms of identification but most employers, for payroll purposes (not for the I-9 form), will require a copy of the new social security card.
  • It is important for employers to make sure payments are made to the legal name on an individual’s social security card to ensure their W-2 is correct and there are no mismatches.
  • For purposes of the I-9 form, an employer must make a reasonable attempt to ensure the name change is appropriate by requesting a copy of a marriage license or a divorce decree or even a letter from the employee’s religious representative if necessary.

If you have more questions concerning I-9 forms, visit the U.S. Citizenship and Immigration Services (USCIS) Employers Handbook for completing Form I-9.

 

Employment recordkeeping does not rank high on the list of favorite human resources functions, but it is vitally important. Take the I-9 Form for example. Failure to complete this form on a new employee could result in a series of fines. Avoid the fines and minimize your stress level by having Strategic HR assist with your recordkeeping compliance. Visit our Recordkeeping page to learn more about our services.

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Federal Employment Poster Requirements for On-Site and Remote Workers

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Penalty notice warning sign if you don't post federal employment posters.

HR Question:

I keep receiving notices that I need to order new posters to meet federal employment poster requirements. Many of my employees aren’t in the office regularly and those that are don’t look at the posters or any of the compliance documents we are required to distribute. What’s the risk if we don’t post these posters or distribute the annual notifications to employees? Eliminating this task would save me and the company a lot of time and money.

HR Answer:

Even if you feel employees are not reviewing the posters, there’s still a compelling reason to provide them. The Department of Labor (DOL), the Equal Employment Opportunity Commission (EEOC), and the Employee Retirement Income Security Act (ERISA) require these employment postings and notices.  And organizations that don’t comply with the requirements can be fined.

To save time, you can purchase a package of posters from a reputable vendor. This can be an easy, but potentially costly, way to fulfill the necessary poster requirements. However, if you would like a more cost-conscious solution, the DOL has a great option. Their Workplace Posters Overview provides a list of the necessary posters, along with links to downloadable posters in multiple languages.

Did you know that poster requirements can vary by company size and industry? If you’re not sure what federal posters your organization is required to provide, the DOL created the FirstStep Poster Advisor as an interactive, step-by-step guide to help you with poster compliance.

How to Meet Remote Employee Poster Requirements

As many employers have shifted their workforce to a remote or hybrid work model, these employers have to shift their typical in-office practices to meet the Department of Labor’s requirements for their remote employees. To remain in compliance, the DOL requires employers to post labor posters electronically in a file that is accessible by everyone. Also, the file should not be password protected.

Employees must be able to find employment posters for their organization regardless of their work location. So if employers have a hybrid work model, a best practice is to have posters physically posted at the worksite while also including the electronic version of the posters on an accessible intranet.

Penalties For Not Following Federal Employment Poster Requirements

If you are still asking yourself if it’s worth the hassle and expense, consider the potential penalties for non-compliance. In January 2022, the penalties for failure to post and/or provide notifications increased. Although some of the fines may not seem significant, they can add up quickly. According to the Federal Register, here is a sampling of the new maximum penalties for violating the following posting requirements:

  • $189 — Family and Medical Leave Act (FMLA)
  • $14,502 — Job Safety and Health: It’s the Law (OSHA)
  • $23,011 — Employee Polygraph Protection Act (EPPA)

For notifications, the Employee Retirement Income Security Act (ERISA) has significant fines for:

  • Failure to provide the Summary of Benefits and Coverage (SBC) Plan Description ($1,362 per failure)
  • Failure to provide an automatic enrollment notice for your 401(k) plan ($2,046 per day per person)

The Federal Register Poster Fine Reference provides details for all the fines you can incur for failure to comply.

Don’t Forget About State-Mandated Posters

In addition to federal posters, you may also be required to provide state posters. Here are links to posters required by Ohio, Kentucky, Indiana, and all other states. We recommend consulting with your legal counsel to ensure that you provide all of the posters that are appropriate for your organization.

As you can see, there could be several employment posters that your organization is required to post. So, if you think you are going to save time and money by not posting these materials, you may want to reconsider the potential fines and penalties that could result from non-compliance. Is it worth the risk?

Thank you to Patti Dunham, MBA, MA, SPHR, SHRM-SCP, Director of HR Solutions for contributing to this HR Question of the Week.

Recordkeeping is one of the more mundane tasks associated with Human Resources, but it is extremely important and can get you into hot water if not done properly. Learn how Clark Schaefer Strategic HR can help with your HR Compliance and Recordkeeping needs. Feel free to Contact Us with any specific questions you may have.

 

 

 

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When To Complete an I9 for a Rehired Employee?

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Question:  

We are starting to gear up for seasonal hiring for the summer.  If I rehire seasonal workers from last year, do I need to have them complete a new I9 form?

Answer:  

According to the United States Citizenship and Immigration Services, if an employee is rehired within three (3) years of the date that a previous Form I-9 was completed there are two options:  

  1. The employer may complete a new Form I-9 for the worker.
  2. Complete Section 3 of the previously completed Form I-9.

Recordkeeping can be a daunting task, especially once you get behind in filing. Keeping some documents accessible, but confidential is extremely important. Strategic HR has an easy to use desktop reference to assist with managing employee documentation and record retention. Visit our HR Store page to learn more about this handy tool. 

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I-9 Forms for Seasonal Employees

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Question:

We have many employees who return to work for us each summer as seasonal employees.  Do I need to complete a new I9 for them each year or just use their old form?

Answer:

According to the US Citizenship and Immigration Service website, if the seasonal worker is continuing in his or her employment and has a reasonable expectation of employment at all times, his or her return to work would not be considered a new hire, so a new Form I-9 is not required. If the worker is not considered to be continuing in his or her employment, then the old form may still be sufficient to meet the verification requirements if the worker’s return to work is a rehire within 3 years from the date the old Form I-9 was completed. The employer can complete Section 3 of the old form or use Section 3 of a new form and attach it to the previous form. If re-verification is not necessary, provide the rehire date and complete the attestation portion of Section 3.

However, the employer should ensure that any necessary re-verification has been completed timely. The employer should complete the rehire date, re-verification and attestation fields if work authorization has since expired. If re-verification is necessary and there is a new version of the Form I-9, Section 3 of the new version must be completed and attached to the previous form.

For additional information, click here.

Recordkeeping can be a daunting task, especially when you are trying to clean out old records and keep handy the pertinent ones. Keeping track of all the paper is extremely challenging. Strategic HR understands your frustration and has many tried-and-trusted tips on recordkeeping. Visit our Recordkeeping page to learn different ways Strategic HR can help you with your recordkeeping. 

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Electronic Pay Stubs

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Question:

How to be legally smart when providing electronic pay stubs to employees when their checks are direct-deposited?

Answer:

Many companies are switching over to paperless solutions for payroll for a variety of reasons; cost reductions, employee requests, time savings, and more.  This may seem like an easy solution, and it can be.  However, there are different laws that employers should be aware of when it comes to providing these electronically.

On a federal level, employers are not required to provide pay statements.  However, many states (41) require that employers provide employees with this statement of earnings…and each state is different in how and what needs to be included.  When it comes to electronic pay stubs, only a few states have addressed electronic delivery.   It appears that every state allows electronic paystubs as long as certain conditions are met…the most important being that the employee has the ability to print the pay stub on their own.  Some other states require “opting-in” to the program.

In summary, electronic pay stubs are permitted, but must comply with state law mandates.  Each state’s laws are different, so the best option is to check your individual state’s laws and your payroll provider to ensure compliance.

Recordkeeping is full of “if this, then that” situations. You will often hear us say “it depends” when asking about personnel files and recordkeeping. Keep the guesswork out of keeping your files in order and up-to-date. Strategic HR has a handy desktop reference ready to guide you on the documents you can keep together in an employee file and how long you need to keep them. Visit our HR Store to request a copy of our Recordkeeping reference.

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Hiring Foreign Nationals

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Question:

What should I know about hiring foreign nationals and how can I avoid discrimination claims in the hiring process?

Answer:

It is important for employers to understand the federal laws and regulations regarding immigration status and national origin discrimination.  Discrimination may be happening without the employer even knowing, but guess what?  It’s still illegal and employers who participate in discriminatory behavior can be required to pay civil penalties and also backpay to any injured parties.

So, how can this be avoided? The U.S. Department of Justice, Office of Special Counsel offers some scenarios in which employers have violated discrimination laws.  Below are a couple of the major “don’ts” when it comes to hiring without discrimination.

  • Do not request additional documentation from non-US citizens that are lawfully authorized to work in the US. If non-US citizens are legally allowed to work in the US and they have supplied appropriate documents such as valid driver’s license or unrestricted social security card, they do not need to provide any other additional documentation.  They should be treated no differently than US citizens going through the same process.
  • Do not reject work authorization documents from non-US citizens but accept the same documents from US citizens.
  • Do not immediately rule out applicants that receive a Tentative Nonconfirmation (TNC) on E-Verify, as there could be many reasons why that notice was received.
  • Do not use E-Verify on a selective basis to rule out “foreign” candidates.
  • Do not reject applicants that “look or sound” foreign. If an employer is refusing to hire any applicants solely based on the fact that they look or appear foreign, this is an obvious violation of discrimination laws.   

Recordkeeping can be a challenge, especially when there are files everywhere! Keeping a handle on what is where is vital to staying compliant with the law and out of hot water. Know what to keep, where to keep it and for how long with our handy-dandy Recordkeeping Desktop Reference. It’s affordable, downloadable for immediate use, and only from Strategic HR Visit our Desktop Reference page to get your copy today.

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Keeping Electronic Recruiting Correspondence

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Question:

Much of our recruiting is now done online and via email. Do I need to keep the emails generated from our last round of hiring? Does it matter if the candidate followed through with a response or not?

Answer:

You need to keep any records from the search for one year – those that you were considering AND those that you were not (even those that applied but may not have followed through with a response to your email). Keeping them in an electronic file is great – date it and pitch it next year. The U.S. Equal Employment Opportunity Commission (EEOC) requires employers to keep employment records for one year. After that time, employers can either discard the record or archive it, provided they maintain the confidentiality of information contained in each record. Suppose you have a resume, cover letter, list of references and brief notes from a telephone screening, yet you decided to select other candidates for in-person interviews. The records generated, including electronically, during the course of the preliminary screening are, in fact, hiring records. They must be kept for one year, pursuant to EEOC regulations.

Another important reason to keep hiring records on file even if the applicant wasn’t hired is so applicants don’t have possible recourse if they are rejected during the hiring process. Applicants who claim they weren’t hired based on factors not related to the job (i.e, race, sex, national origin, age or religion) have up to one year to file a formal discrimination charge with the EEOC. Should the EEOC decide to investigate the applicant’s complaint, the agency can ask employers to produce records used during the hiring process. The company’s hiring practices don’t look favorable if the employer can’t comply with the request because it has discarded the hiring materials.

Employment recordkeeping does not rank high on the list of favorite human resources functions, but it is vitally important. What you keep can be as detrimental as what you don’t keep in some instances. Avoid the fines and minimize your stress level by having Strategic HR assist with your recordkeeping compliance. Visit our Recordkeeping page to learn more about our services.

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Electronic Recordkeeping Checklist

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HR Question:

What do I need to consider when moving to an electronic filing system?

HR Answer:

Electronic communication and recordkeeping is a great way to save space and allow quick access to files. But it takes some effort to get the systems set up properly and to convert paper to e-files. In considering what type of system will work best for your organization, there are many items that must be kept in mind during the transition. The following pre-implementation checklist will help to reduce potential risks associated with electronic recordkeeping systems.

  • Validation – Recordkeeping system must be validated to ensure that the documents are truly valid (i.e. accurate, reliable, non-altered documents).
  • Readability – Must be able to print an accurate, legible, readable copy of the record.
  • Access – Must take measures to protect items from unauthorized access.
  • Protection/Confidentiality – Must contain legally acceptable means to protect records.
  • Retrievable – Must provide a means for easily accessible files and retrieval.
  • Audit Trail – Must use secure, computer-generated, time-stamped audit trails to independently record the date and time of operator entries to assist with validation.
  • Back Ups – Provide a process for the electronic storage including procedures for labeling of electronically maintained records and a secure storage environment, including an off-site storage location.
  • Quality Assurance Program – Regular review of the electronic recordkeeping system, including periodic checks of the records.
  • Disposal of Originals – Properly dispose of the originals after they are transferred to an electronic recordkeeping system. Documents which have legal significance or inherent value as original records (i.e. notarized documents, sealed documents) should be maintained as originals.
  • Record Retention – “Cleaning house” presents new challenges for electronic recordkeeping if your files are not stored accurately or with enough detail to evaluate destroy dates. One consideration when storing files would be to store records via functional area, similar to how you store files today. Also, pull potential audit or legislative issues in a separate file for frequent evaluation.

With some forethought and planning moving from paper-based to electronic files will reward you greatly with time, and ultimately cost, savings.

Recordkeeping is one of the more mundane tasks associated with Human Resources, but is extremely important and can get you into hot water if not done properly. Keeping the right files easily accessible and up-to-date is vital. We have years of experience maintaining HR documentation and knowing what to keep and what to pitch. Need some help? Visit our Recordkeeping page to learn more.

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How To Organize Employee Records And Remain Compliant

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Managers Maintaining Personnel Files

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Question:

One of our Department Managers wants to keep his own set of personnel files for his employees at his desk. Is there a legal reason for him not to do this?

Answer:

There is no law forbidding your manager from maintaining separate personnel files (i.e., “desk files”) for their employees. However, there are many laws that govern which documents an employer must keep, how they should be maintained, how long they are kept and in what manner they are to be destroyed. It is important that HR ensures that managers understand this responsibility if they want to keep their own files. In fact, just these requirements alone may make it impractical for many employers to allow separate desk files.

If you do decide to allow your managers to maintain their own files, here are some general guidelines:

Items you CAN have in a Desk File:

  • Observations about the employee’s job performance
  • Examples of the employee’s job performance and documents establishing the employee’s goals
  • Commendations and/or performance improvement documentation
  • Performance reviews
  • Attendance records and time-off requests

Items you CANNOT have in Desk File:

  • Doctor’s notes or any other medical documentation
  • Workers’ compensation claim documents, including the supervisor’s report on the injury
  • Any formal or informal legal claim by or about the employee
  • Employee’s Form I-9
  • Any workplace investigation materials regarding the employee
  • Background investigation reports
  • Personality or other test results
  • Any non-job-related information, e.g., personal information about the employee

It’s easy to understand why a manager would like to keep his own records close at hand. But it is imperative that HR properly trains managers in what they can and cannot keep and instructs them in the reasons why these rules are in place. It’s a good idea to conduct an occasional audit of separate files to make sure managers are in compliance with your policies on recordkeeping.

Recordkeeping can be a challenge, especially when there are files everywhere! Keeping a handle on what is where is vital to staying compliant with the law and out of hot water. Know what to keep, where to keep it and for how long with our handy-dandy Recordkeeping Desktop Reference. It’s affordable, downloadable for immediate use, and only from Strategic HR Visit our Desktop Reference page to get your copy today.

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Disposing of Old Records

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Question:

What is the proper way to dispose of old employment records?

Answer:

Recycling is good for the environment, but it’s not the best way to dispose of your old employment records. While there are no hard-and-fast rules for “how” to dispose of such documents there are some other examples we can look to for guidance.

Turning to the government, in 2005 the Fair and Accurate Credit Transactions Act (FACT Act) created the Disposal Rule to provide direction for the proper disposal of information or documents derived from a consumer report obtained for business use. While the rule applies only to items derived from a consumer report, in many instances employment records contain such information typically gathered via background or credit checks. The Disposal Rule states that businesses must take “reasonable measures” to protect against unauthorized use of such information during and after its disposal. Failure to dispose of such information in a proper manner can result in substantial fines (up to $1,000 plus costs and attorneys fees), however, there are no specific guidelines for HOW to dispose of such items.

Which leads us to the healthcare industry. Known for handling enormous amounts of sensitive health-related information on a daily basis, the healthcare industry takes meticulous care with similarly private and personal information, including measures for it’s destruction. Document disposal guidelines in medical facilities often include:

  • Keeping a schedule of destruction activities – to know when certain documents are eligible for disposal.
  • Maintaining a log of the documents being destroyed.
  • Destroying documents on company grounds (versus sending them off-site for destruction by shredding or incineration).
  • Having two employees responsible for the document destruction to ensure proper disposal and to acknowledge that the destruction took place.
  • Using the same method of destruction each time.

Taking into consideration the number of documents you need to destroy and your budget, the method of destruction is really up to you. There are document companies that will come to your location and under your supervision destroy (usually by shredding) documents and then send them off for recycling.

Recordkeeping can be a daunting task, especially when you are trying to clean out old records and keep handy the pertinent ones. Keeping track of all the documents created in an employment situation is extremely challenging. Strategic HR understands your frustration and has many tried-and-trusted tips on Employment Recordkeeping. Visit our Recordkeeping page to learn more about getting your employment records in order.

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Performance Review Copies

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HR Question:

Am I required to provide my employees with a copy of their performance reviews?

HR Answer:

We consider it a best practice to give employees a copy of their performance review since it is being discussed with them, it can affect your/management’s decisions regarding their compensation, and it is a signed document. However, no law mandates that you provide it to the employee.  See below for an excerpt from Nolo on State Laws on Access to your Personnel File:

While many states now have some type of law regulating personnel files…most of these laws control not the content of the files, but, rather:

• Whether and how employees and former employees can get access to their personnel files,

• Whether employees are entitled to copies of the documents in them, and

• How employees can contest and correct erroneous information in their files.

In some states, [employees] have a right to see those files only if they are related to a lawsuit [the employee] filed against [his/her] employer or former employer. Even then, [he/she] might be in for a legal battle over what portions of the files are relevant to the case. But, in many states, [employees] have the right to see the contents of [their] personnel file—or at least some of the documents in it—without filing a lawsuit.

In Ohio, for example, “there is no law in Ohio that requires an employer to grant an employee access to his or her personnel file. There are, however, two key exceptions: medical records and wage and hour records” (Source).

Let Strategic HR help you navigate the employment law minefield. Ask us for assistance with any of your HR Compliance needs. Please visit our Compliance page for more information on any of these services.

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How do I handle missing or incorrect I-9 Forms?

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HR Question:

My company recently began to review our I-9s and found that we are missing some I-9 forms, and some are incomplete. Can we ask the affected employees to fill out another I-9 if it is missing? If so, how do we do it correctly? And if it was incomplete, can we update it on the old form? Please help!

HR Answer:

First, it’s important to understand that there are two types of I-9 errors: (1) technical and procedural errors and (2) substantive errors. Technical and procedural errors can be corrected. An example is forgetting to record a document title, which can easily be fixed, and fines are discretionary. A substantive error cannot be corrected. If audited, your company will likely face a fine if the statute of limitations has not been met. Examples of substantive errors include failing to complete I-9 paperwork or not signing or dating Section 2 of the form.

What to do if you have Substantive I-9 Errors (i.e., missing I-9s or incomplete I-9s)

The Immigration and Nationality Act (INA) was intended to relieve employers of liability for certain minor and unintentional violations but wouldn’t act as a shield to avoid its basic requirements. When an I-9 form isn’t properly kept or completed, the violation is considered substantive and therefore uncorrectable.

If an I-9 form is lost, destroyed, or not maintained as required by the INA’s retention requirements, the appropriate action is to come into compliance with the law as quickly as possible. Once identified, a missing I-9 form should be completed by the employer and the affected employee immediately along with the current date. This won’t correct the error, but it does demonstrate a good-faith effort to comply with the law, which may be considered if penalties are assessed. A note should also be included with the I-9 regarding the reason you had to complete a new I-9.

To Correct an Existing I-9 Form Error

  • Draw a line through the incorrect information
  • Enter the correct information
  • Initial and date the correction

To correct multiple errors on the form, you may redo the section on a new I-9 form and attach it to the old form. A new I-9 can also be completed if major errors (such as entire sections being left blank or Section 2 being completed based on unacceptable documents) need to be corrected. A note should be included in the file regarding the reason you made changes to an existing I-9 or completed a new I-9.

Be sure not to conceal any changes made on the form. Doing so may lead to increased liability under federal immigration law. If you have made changes on an I-9 using correction fluid, it is recommended that you attach a signed and dated note to the corrected I-9 explaining why.

Never Backdate an I-9 Form

Employers that make false statements or attestations to satisfy the employment eligibility verification requirements may be fined, imprisoned for up to five years, or both (and this could be higher in certain fraud cases). If an investigation reveals that an individual knowingly committed or participated in acts relating to document fraud, additional (and substantial) fines may be imposed.

Penalties for I-9 Violations

Failure to comply with I-9 verification and document retention requirements could result in a penalty. Most recently, the minimum penalty for a first offense is $252 per I-9; the maximum penalty is $2,507 per I-9 for a first offense. These penalties are adjusted for inflation each year, so you should review the Federal Register’s Civil Monetary Penalty Adjustments for future updates. It’s also important to note that fines can increase significantly for second or subsequent violations.

Penalties are assessed based on several factors, including:

  1. The size of the employer
  2. Any good-faith efforts that were undertaken by the employer
  3. The seriousness of the violation
  4. Whether the individual involved is an unauthorized alien
  5. Any history of previous violations by the employer

The statute doesn’t require that equal weight be given to each factor, nor does it rule out consideration of additional factors.

Maintaining Compliance – How to Conduct an I-9 Audit

To reduce your risk, it is recommended to conduct regular internal I-9 audits and correct any mistakes appropriately. If you are unfamiliar with the process, see our article on how to conduct an I-9 audit.  Additionally, the U.S. Immigration Customs and Enforcement and the Immigrant and Employee Rights Section (IER) have provided joint guidance to help employers perform internal audits which can be found in this handy downloadable guide.

It is also important that you continue to be aware of any reporting or process changes, such as the ending of the I-9 verification flexibilities, to ensure that you are maintaining your records properly.

Bottom Line…

It’s best to always ensure compliance within the appropriate three-day verification period from the employee’s date of hire to when the I-9 form is completed and signed by both parties. If you discover an error, you should take corrective action immediately. While substantive violations are not correctable, every effort should be made to ensure good-faith compliance when a discrepancy is uncovered. If a discrepancy is discovered, you are at risk of incurring substantial fines in the event of an audit. For additional support, you may want to contact an I-9 expert or legal counsel for guidance. We also recommend correcting any internal practices that led to the discrepancies so they are not repeated.

Thank you to Cassie Whitehouse, M.Ed., Senior HR Business Advisor, for updating this HR Question of the Week.

Recordkeeping is one of the more mundane tasks associated with Human Resources, but is extremely important and can get you into hot water if not done properly. If you’re concerned about your I-9 compliance, you should conduct an internal I-9 audit. If you don’t have the time or the expertise to do this properly, one of our expert HR Advisors at Strategic HR would be glad to help. Contact us for assistance with your I-9 audit or other recordkeeping needs. You may also be interested in learning more about our HR Compliance and Recordkeeping Services.  

 

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Employee Files

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Question:

I’m a new HR assistant in a company that hasn’t had an HR presence before. The secretary previously handled all of the personnel paperwork and the files are a mess. What’s the first thing I should do?

Answer:

Keeping employee files “clean” are a very important part of human resources. If you have inherited a mess we would recommend taking the time to review each file for completeness as well as ensuring all of the paperwork is in its appropriate place. The following is a guideline of documents that should be included in employment files as well as “where” they should be housed.

In general, a minimum of 2 files should be maintained for each employee. However, that number may increase based upon the number of actions for an employee. You will probably have an Employee Main File and an Employee Medical/Benefits File (i.e., benefit enrollment forms, profit sharing, 401(k), insurance claim forms, COBRA letter). In addition, separate files should be maintained for such documents as: Child Support Orders, EEO charges, Exit Interview, I-9 Forms, litigation documents, Workers Compensation claims, and Affirmative Action; however, a separate file isn’tnecessary for each employee.

Review your files and ensure the information is stored properly toavoid compliance concerns in the future.

What can go into the main personnel file?

• Application
• Offer Letter
• W-4 Form
• Nondisclosure Agreement
• Orientation and/or Termination Checklists
• Performance Appraisals
• Salary Information
• Official Performance Information (i.e., letters or memos)
• Payroll Data
• Tuition Reimbursement Information
• Copies of Credentials (i.e., certificates, license, diplomas)
• Sign off sheets / Policy acknowledgement forms
• Training information

What cannot go into a personnel file?

• Information related to medical, injuries, and disabilities
• Information disclosing affirmative action identification
• Applications that include non-job related information
• I-9 Form
• Subjective documentation and/or performance appraisals

What records can/cannot be kept together?
Typically, the following files are all kept separate:

• Employee File
• Employee Medical File
• Child Support
• EEO Charges
• Exit Interview Form
• I-9 Form
• Litigation Documents
• Workers Compensation Claims
• Affirmative Action

Recordkeeping can be a daunting task, especially once you get behind in filing. Keeping some documents accessible, but confidential is extremely important. Strategic HR has an easy to use desktop reference to assist with managing employee documentation and record retention. Visit our HR Store page to learn more about this handy tool.

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How Long Should We Keep Resumes and Applications?

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HR Question:

We’ve received a lot of resumes recently – some have been for positions we’ve posted, and some are unsolicited. Do we have to keep all of these resumes, and if so, how long do we need to keep the resumes and applications?

HR Answer:

First, let’s address what to do with unsolicited resumes. You are not obligated to store unsolicited resumes; however, it is important to be consistent with your approach. If there are any unsolicited resumes that you have kept for further consideration, your best approach is to keep all unsolicited resumes for the same duration of time that you retain your solicited resumes.

For resumes and applications that you have received in relation to a job opening, there are a few federal laws that require employers to retain employment applications and related documents ranging for a period of one to two years from the date of the hiring decision (the date the position was filled, not posted). Employers are responsible for following the federal laws under which they are covered as well as any contractual requirements that they may have (i.e., union contracts) that may require additional time to maintain records.

Another important item to note regarding applicant recordkeeping is that you are required to maintain not only employment applications for a position, but the entire hiring record. Hiring records could include such things as applications, resumes, screening tools and assessments, background checks, and reference checks. Anything that you use in assisting you with an employment decision is considered part of your hiring records.

Major federal laws that address employment records retention requirements include:

  • Age Discrimination in Employment Act – Requires employers to retain employment applications for one year. There is language, however, that indicates if you are aware the applicant is over age 40, you should retain it for as long as two years.
  • Americans with Disabilities Act – Requires employers to retain job applications and documents for one year. There is some variation based upon whether or not the applications are solicited or unsolicited, but the maximum retention is two years.
  • Executive Order 11246 – If you are a government contractor and have less than 150 employees or a contract of at least $150,000 you must retain these records for one year. If you have at least 150 employees or more and a contract of $150,000, you are required to keep the records for two years. If you have a resume on hand from a previous search and decide to consider it for a new position months down the road, you will need to keep that resume or application for the time required based on the last viewing of the document (i.e., 1-2 years past the fill date of the second position).

A word of caution – if there is a discrimination charge or unlawful employment practice brought against the employer, employment applications must be retained until the matter reaches a resolution. This can get tricky if someone claims discrimination because they did not get a promotion; the employer is then required to keep all the applications received for that promotion until the claim is resolved. With a lengthy lawsuit and litigation, this could be an extended amount of time.

Generally speaking, good practice is to keep resumes and applications of non-hired individuals for two years following the date the hiring process is completed for a position (i.e., from the time the new employee starts working). Remember to consult state laws in addition to federal regulations when determining how long to keep employee records.

Recordkeeping can be a daunting task, especially when you are trying to clean out old records and maintain the pertinent ones to remain compliant. Strategic HR understands your frustration and has many tried-and-trusted tips on recordkeeping – including a handy Recordkeeping Desktop Reference to help you decide what to keep and what to toss. Visit our HR Compliance & Recordkeeping Services to learn more about ways we can help you to get your employment records in order.

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Requiring Employee Contact Information

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Question:

Can my company require our employees to provide their personal cell phone number and home email address?

Answer:

A  follow up question to you might be, why do you need them? If it is for emergency notifications, that is one thing, however if it is for working purposes, you would be better off providing them with a work email or cell phone. With email, it is best to make sure that any work related communications are managed in the secure environment of your company server. Also keep in mind that email or phone calls made outside of work hours to non-exempt employees count as “time worked”. Make sure you are tracking that time and paying overtime accordingly.

Today’s employees are on a constant search for work/life balance; it is a key factor in choosing an employer and, sometimes, the decision to leave. As a job requirement you could most likely require them to provide you with two ways to reach them and then suggest they provide a cell phone number and home email address; but requiring it might be a stretch. As long as they give you a way to reach them during off hours that should suffice.

Recordkeeping is one of the more mundane tasks associated with Human Resources, but is extremely important. Keeping documentation of corrective actions, counseling sessions and performance appraisals are vital to making sure you are being consistent with your disciplinary and performance policies. Strategic HR has a great online tool that’s affordable, easily downloaded and ready for immediate use. Our Coaching and Counseling toolkit has sample policies and forms to help you with your Counseling needs. Visit our Communications page to learn more.

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What to Include in a Written Warning

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Question:

I was told that I should give a written warning to a problem employee to create documentation. What should the written warning include?

Answer:

First make sure you are following your established disciplinary policy and procedures. Do you have any steps prior to a written warning that need to take place (i.e. counseling, verbal warning, etc.)? Assuming that giving a written warning follows your typical disciplinary procedures, you’ll want to create a record of discussion and document the following:

  • Employee and Supervisor’s Name
  • Date of the written warning / disciplinary action
  • Description of the performance issue being addressed
  • Corrective action required by employee
  • Resources available to assist the employee (if applicable)
  • Consequences of not improving performance
  • Date for follow up discussion
  • Acknowledgement of the warning by employee and supervisor

A copy of this document should be placed in the employee file. Be sure to follow up on the documented date to follow through with the disciplinary procedure.

Recordkeeping is one of the more mundane tasks associated with Human Resources, but is extremely important. Keeping documentation of corrective actions, counseling sessions and performance appraisals are vital to making sure you are being consistent with your disciplinary and performance policies. Strategic HR has a great online tool that’s affordable, easily downloaded and ready for immediate use. Our Coaching and Counseling toolkit has sample policies and forms to help you with your Counseling needs. Visit our Recordkeeping page to learn more.

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Filing Employee Paperwork

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Question:

I am new to HR and there is currently no system for filing employee paperwork. Where do I even start to go through the piles?

Answer:

Once you get organized, employee documentation can actually be quite easy to maintain. To start, you will need a minimum of three files: a personnel file, a confidential medical file and a confidential, non-medical file. It is important to separate medical information from non-medical information due to HIPAA privacy requirements. Using the three folder method, each should include:

Personnel File: Applications for employment, resumes, certifications, most pre-employment and new hire paperwork (see below for exceptions), payroll information, attendance records, discipline documentation, performance evaluations, training needs, and documents relating to employment decisions (promotion, demotion, transfer, layoff, termination).

Confidential Medical File: Benefits enrollment paperwork, doctor’s excuses, FMLA or any other type of medical leave documents, disability documentation, Workers’ Compensation documents, injury reports, drug and alcohol testing, and any other form containing medical information.

Non-Medical Confidential File: Criminal or Credit Background checks, garnishments, EEO related charges or investigation documents, litigation documents, and 401k enrollment forms.

Some employers may also choose to have a separate folder for compensation or performance related matters. I-9 forms should be kept together for all employees in one binder.

Recordkeeping can be a daunting task, especially once you get behind in filing. Keeping some documents accessible, but confidential is extremely important. Strategic HR has an easy to use desktop reference to assist with managing employee documentation and record retention. Visit our HR Store page to learn more about this handy tool.