The U.S. Immigration and Customs Enforcement is pressing ahead with its I-9 inspection campaign. Last week, 180 companies in five states got inspection notices from ICE — the first employers to be targeted in 2010.

The most recent targets are in the states of Alabama, Arkansas, Louisiana, Mississippi and Tennessee. ICE had already done some 1,600 inspections in the second half of 2009 and issued fines ranging from $100 to $1,100 per violation. A Notice of Inspection requires employers to allow ICE to inspect their I-9 forms to determine compliance with the law.

ICE released a statement warning that the inspections are “a first step in ICE’s long-term strategy to address and deter illegal employment.”

Companies that receive a Notice of Inspection will have three days to prepare for a meeting with federal officials in which the company’s Form I-9 records will be reviewed, possibly including payroll documentation.

The E-Verify system is supposed to tell employers if an applicant is authorized to work in the United States. An independent study shows the system has more misses than hits when it comes to fake IDs.

The Department of Homeland Security commissioned Westat to do the study to determine where the holes are in the system.

One big hole: Westat reported that the program often couldn’t confirm whether information workers were presenting was their own. According to researchers,  “Many unauthorized workers obtain employment by committing identity fraud that cannot be detected by E-Verify.”

The researchers put the inaccuracy rate at 54%. That doesn’t mean that 54% of all workers who get the “approved” stamp by E-Verify have committed fraud. Rather, it means the system didn’t correctly assess the ID info of illegal workers 54% of the time.

DHS has responded by saying it plans to improve the system by expanding the data bases, introducing a photo screening and funding a special unit to investigate identity fraud.

The report is troubling for a number of reasons:

• Some states, such as Arizona, have mandated that employers in those states use the system to verify eligibility for employment.
• The system is increasing in popularity among employers. In 2006, fewer than 5 million employers used E-Verify. According to Westat, that number will probably grow to about 28 million this year.
• Federal contractors must use the system to verify the employment eligibility of their workers.

Go here for a synopsis of the Weststat report.

President Obama couldn’t convince Republicans to take up his health reform proposals, but he has vowed to plow ahead anyway. Here’s where he’s going  with the latest plan.

• Elimination of the special deal for Nebraska calling for the federal government to pay the full cost of a Medicaid expansion for that state. Instead, the President proposed that  federal government help all states absorb the cost of the Medicaid expansion from 2014 until 2017.
• Delaying the excise tax on so-called “Cadillac plans” until 2018 for all taxpayers, not just union members. Still, the excise tax remains a key part of the proposal.
• No “public option.” There is no attempt to revive the idea of a government-backed insurance plan to compete with the private sector.
• Less restrictive language on abortion. The proposal drops the “Stupak amendment,” which would bar insurers from offering abortion coverage to anyone buying a policy with a federal subsidy.
• Keeping the tax on upper-income individuals and families. The Obama approach supprts the increase in Medicare payroll tax for individuals earning more than $200,000 a year and couples earning more than $250,000.
• State-based insurance exchanges. That’s different from the House proposal for a national exchange.
• Lower eligibility for Medicaid. The figure released in the meeting with Republicans set eligibility at 133% of the federal poverty level, instead of the House proposal of 150% of the poverty level.
• Limiting health-premium costs according to income. Under the plan, a family earning about $88,000 a year would pay no more than 9.5% of income toward annual health insurance premiums. Out-of-pocket costs, such as co-payments or deductibles, would have to be paid separately and wouldn’t be included in the 9.5%.

Go the the White House Web site to see the full plan.

When the Equal Employment Opportunity Commission recently sued a company for harassment, the case came to a strange and extraordinary ending.

The case involved an Iowa-based trucking company, CRST Van Expedited, Inc. A female driver with the company filed a complaint about the company’s permitting of sexual harassment by male drivers. The EEOC picked up the complaint and filed a suit against CRST in federal district court.

This time, the EEOC picked the wrong judge.

U.S. District Judge Linda Reade rejected the EEOC’s claims, threw out the charges and accused the EEOC lawyers of taking a “sue first, ask questions later” approach.

Further, the judge decided, the EEOC must pay the employer $4.5 million to cover legal fees and other costs associated with the case because the agency “acted unreasonably” and failed to conduct a “proper investigation.”

Cite: EEOC v. CRST Van Expedited, Inc.

President Obama wants legislation passed that would require all businesses to offer automatic retirement accounts. The devil’s in the details.

The plan, part of a tax package aimed at middle- income Americans,  would let employees automatically enroll in direct-deposit IRA accounts and expand matching tax credits.

The White House released the plan accompanied by a Government Accountability Office  estimate that about 80 million Americans don’t have retirement accounts through their employers and 63% of low-income workers have little or no savings at retirement. Here are the details of the plan:

• Workers who don’t opt-out would automatically enroll in a retirement savings account probably through payroll deductions into one of several investments including what’s known as a “stable-value fund” consisting of special U.S. savings bonds and a “target-date fund” that automatically shifts investments from more aggressive assets to more conservative ones as a worker gets closer to retirement.
• The accounts would be the same as Roth IRAs where taxes are paid upfront.
• The accounts would have the same annual investment limits as traditional IRAs: $5,000 for employees under the age of 50 and $6,000 for those 50 and over.
• Employers would have access to a government Web site that would help them find a bank, brokerage firm or mutual fund company to administer the accounts.
• Contract employees would be eligible for the plan.
• Workers who join the plan would get a tax credit that matches 50% of the first $1,000 of contributions by families earning as much as $65,000; families that earn up to $85,000 would get some fraction of that credit.

The National Small Business Association, which represents 150,000 members, has already issued statements opposing the plan. Among the NSBA’s reasons for opposition:

• The plan would create another layer of administrative burdens on owners.
• Many small businesses that don’t use a payroll contractor or have direct-deposit would find the plan impractical to run.

Democrats in the House and Senate say the plan could be enacted before the end of the year.

A few surprises for employers are lurking in the President’s newly released Fiscal Year 2011 budget proposal.

Here’s a look at six that affect HR and Payroll:

1. Extend COBRA health insurance premium assistance. The proposal would extend the eligibility period by allowing qualifying individuals who suffer an involuntary termination prior to 1/1/11 to qualify for assistance. Premium assistance that results from an involuntary termination after 2/28/10 would be 12 months. If the proposal isn’t enacted before March 2010, there are provisions for individuals who become qualified as a result of an involuntary termination after 2/28/10.
2. Remove cell phones from listed property. This means there’d no longer be strict substantiation requirements for the use and the limitation on depreciation deductions on cell phones and other similar telecommunications equipment (e.g., Blackberrys). The fair market value of personal use of a cell phone provided primarily for business purposes would be excluded from an employee’s gross income. The proposal would be effective for taxable years ending after the date of enactment – so, as early as 2010. The suggested change comes because substantiation requirements for listed property are burdensome for employers, employees and the IRS. Plus, there’s been a significant drop in the cost of service since cell phones were first classified as listed property – so now the cost of accounting for personal use often exceeds the amount of any resulting income.
3. Make the ‘temporary’ 0.2% FUTA surtax permanent. Extending the surtax will support continued solvency of the federal unemployment trust funds.
4. Begin automatic enrollment in retirement plans. Employers in business at least two years and with more than 10 employees would be required to offer an automatic IRA option to employees. Regular contributions would be made to an IRA on a payroll-deduction basis. However, companies are off the hook for this requirement if they sponsored a qualified retirement plan, SEP or SIMPLE plan. Employers that do offer automatic IRAs would inform employees about the program with a standard notice and election form – and allow them to opt out. In return, employers offering a program could claim a tax credit for making automatic payroll-deposit IRAs available to employees. The credit amount? $25 per enrolled employee, up to $250. The credit would be available for two years. This proposal would become effective 1/1/12.
5. Make it easier to properly classify independent contractors. IRS would be permitted to require prospective reclassification of workers who are currently misclassified, and whose reclassification is prohibited under current law. The Department of the Treasury and IRS would also be permitted to issue new guidance on the proper classification of workers under common law standards – allowing companies to properly classify workers with much less concern about future IRS examinations. Also, IRS would be allowed to give the Department of Labor info about service recipients whose workers are reclassified. Changes afoot for employers, too: Independent contractors receiving payments totaling $600 or more in a calendar year from a service recipient would be permitted to require withholding for federal tax purposes a flat-rate percentage of their gross payments, with the amount being selected by the contractor.
6. Reinstate previous tax brackets. The President proposes reinstating after 2010 the 36% tax rate for those with taxable income above the following:
   – $250,000 less the standard deduction and two personal exemptions, indexed from 2009, for married taxpayers filing jointly, and
   – $200,000 less the standard deduction and one personal exemption, indexed for inflation from 2009, for single filers.
   The 28% tax bracket would be expanded so that taxpayers earning less than these amounts wouldn’t see their taxes rise as a result of the new brackets.

You can read the Treasury’s “General Explanations of the Administration’s Fiscal Year 2011 Revenue Proposals” (also known as “The Green Book”) here.

A recent Harris poll asked people who was at fault for their financial problems. The usual suspects popped up — Wall St., Congress, the President — and one surprise.

The poll also showed about three out of every 10 who responded said their employer was to blame for their financial problems. Many saw HR as the face and voice of the employer, since HR was perceived as the source of many policies that affect pay and benefits — and ultimately personal finances.

Clearly, there’s an anger out there that sometimes isn’t rational and that leads to finger pointing and blame.  Consider these statistics from the same poll:

• The number of people who blame their employer is about the same as those who blame themselves for poorly managing their finances. That is, employees are as likely to blame you as they are to take responsibility for their own problems.
• People are more likely to blame their employer than they are to blame their family for wasteful spending or failure to save. The lesson is that it’s easier to put responsibility on outside forces than those in your own living room.

What to do? Explanations that the downturn has hit everyone else hard, too, are unlikely to change attitudes. Few people take comfort in what’s happening with “everyone else.”

The best HR can do is to fully explain the reasons behind company decisions that affect employee finances — for instance, cuts in benefits, pay or hours; pay-raise freezes; and furloughs. The worst approach, with regard to employee attitudes, is to say nothing. That’s seen as dictatorial and uncaring.

Interesting footnote from the survey: People under the age of 33 are more likely to blame themselves than their employers.

Go here to see some raw data from the survey.

When Congress passed the so-called Ledbetter Act, employers braced for an onslaught of wage-discrimination claims and big payouts. It hasn’t happened quite that way.

First, let’s do a quick review of the Lily Ledbetter Fair Pay Restoration Act. The Act was written and passed specifically to overturn the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co.

In that case, the Supreme Court held that where an employee challenges a discriminatory pay practice, such as a charge that an employer pays women less than similarly employed men, the period to file a charge with the Equal Employment Opportunity Commission isn’t refreshed with each paycheck. Instead, the claim must be filed within 180 or 300 days of the first paycheck when the alleged discrimination took place. In other words, the clock started running the day the employee’s first “unfair” paycheck was issued.

The Ledbetter Act essentially overturned that decision and said a new period for filing a complaint kicks in with every new paycheck. With that, employers got ready for a tidal wave of complaints. However, according to employment-law attorneys Mark Batten, Steven Hurd and Brian Gershengorn, writing for Law.com, few complaints have met the Ledbetter standard, and employers are successfully defending themselves against most recent complaints, or having the complaints dismissed without a trial.

Here’s why employers are usually on the winning side. Courts are demanding that employees who file “Ledbetter” complaints must show:

• That the employer was using a wage system designed to discriminate. In other words, if there was an inadvertent, rare error in pay classification, that doesn’t meet the standard for a Ledbetter violation.
• That the complaint really falls under wage discrimination. Courts have said that employees can’t just throw any discrimination charge against the wall, call it a Ledbetter complaint, and hope to make it stick. Not all discrimination is pay discrimination.
• Strong evidence that there was a violation. Even with the new law, the bar for proving a complaint remains as high as it ever was.

A recent court case shows the worst blunders a company can make when a union tries to organize workers.

The case involved a Wisconsin firm that was confronted with a labor union’s efforts to get workers to join. Management at the company reacted by taking three stern steps:

1. Requiring that employees get approval from the company before posting any union material on company bulletin boards.
2. Telling union advocates they violated company policy in distributing pro-union flyers in the company parking lot.
3. Telling union advocates that passing out union buttons in the workplace and leaving buttons near a time clock violated company policy.

Further, the company discouraged employees from talking about the union during working hours, and told shift leaders they were classified as “supervisors”  and so were prohibited from participating in union activities.

The NLRB found that the company violated the National Labor Relation Act, and a court affirmed the finding.

What should have been done

So, where did the company go wrong?

Bulletin boards. Courts have ruled that employees don’t have open access to employer bulletin boards. Why, then, couldn’t the company stop employees from posting union messages on the boards? The short answer is that the company had no bulletin-board policy, but all of a sudden instituted one when employees tried to post union material. That, the court said, was clear evidence that union-organizing was being singled out.

Distribution of union material. Again, courts recognize that employers have property rights and the right to limit distribution of material during working hours and in the workplace.  However, the court ruled that the company crossed a legal line when it banned such activities as placing flyers on employees’ vehicles in the company parking lot. The bottom line is that employers have strong rights in the workplace and during duty hours. Those rights weaken when the employee leaves the building and is no longer on duty — even if the activity takes place in a company-owned parking lot. The company ban on leaving union buttons near time clocks similarly was ruled illegal, since it didn’t interfere with work and wasn’t a work-time activity. Note: The court saw through the company’s attempt to characterize the ban as an “anti-clutter” policy.

Reclassifying “supervisors.” The shift leaders, who were reclassified as supervisors and barred from union activity, did not have the authority to transfer or direct employees or to recommend rewards. The court ruled that the sudden reclassification of the shift leaders — without substantially changing their duties and responsibilities — was a clearly illegal attempt to stifle pro-union activity.

Cite: Loparex LLC v. NLRB.

Congress and various federal agencies are enacting a dozen new rules and procedures that will affect how you do business in 2010.

1. Extension of the COBRA subsidy. Employees who are involuntarily separated will continue to have rights to a COBRA subsidy — and you’ll continue to have to do the paperwork and notifications. Expect it: now.
2. New regs requiring your company disclose all retirement plan fees and and expenses to participants. These regs are in the “final rule” stage, meaning it’s almost a done deal. Expect it: September 2010.
3. More Family Medical Leave Act (FMLA) changes. Yes, your firm just had to account for new changes to the FMLA when it comes to military personnel. But the Feds aren’t done yet – they’ve vowed to review both those changes and the FMLA overhaul from Jan. ’09. No timetable yet.
4. Changes to the Health Insurance Portability and Accountability Act (HIPAA). This major (and costly-to-comply-with) rule isn’t immune from new scrutiny, either. Expect to make changes in HIPAA provisions covering: access, portability and renewability. Expect it: September 2010.
5. Updated recordkeeping regs for the Fair Labor Standards Act (FLSA). Plan on having to keep more thorough records on how you pay your people – you guessed it – in the name of “greater transparency.” No timetable yet.
6. An increase in wage-hour audits. Be sure your entire payroll papertrail is in order. DOL just hired 250 new investigators to enforce wage-hour laws. Expect it: Early 2010.
7. A spotlight on foreign workers. Firms that use workers with H-2B visas can expect more scrutiny – the Employment and Training Administration is proposing rules regarding labor certification for these folks. Expect it: after a February rule on agricultural workers.
8. A new definition of “temporary” workers. Along the same lines, the DOL wants to ensure people who are hired as temporary actually are. No timetable yet.
9. Greater accountability on affirmative action. Current regs will be revised to ensure your company complies with affirmative action reqs, particularly as it concerns veterans. Expect it: November 2010.
10. New rules for union info disclosure. Companies with unionized employees will soon have to go to greater lengths to report on the arrangements they make to persuade folks to join or not join a union. Expect it: November 2010.
11. A new standard on slip, trip and fall hazards. Beware: The Occupational Safety and Health Administration promises the rule will cover “every nonconstruction worker in the U.S.” Expect it: March 2010.
12. The return of an old recordkeeping task. Prepare to resurrect those logs your company had to check when recording musculoskeletal disorders. OSHA’s bringing it back. Expect it: January 2010.