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New Jersey’s Temporary Workers’ Bill of Rights Takes Effect

Posted on Aug 14, 2023

A law signed earlier this year to protect temporary workers in New Jersey has fully taken effect on August 5th, 2023.

The legislation, known as the Temporary Workers’ Bill of Rights, expands the rights and protections to only very specific labor categories of temporary workers – allowing for greater oversight of temporary help service firms and third-party clients by the New Jersey Department of Labor and Workforce Development  and the Division of Consumer Affairs. It was enacted by Gov. Phil Murphy in February.

Some examples of those labor categories include:

  • Food preparation
  • Construction
  • Protective Services / Security

Some provisions of this law were effective May 7, 2023, while other provisions including record keeping and transportation were effective on August 5, 2023. The notice of rule proposal has been published on the NJ Department of Labor & Workforce Development.

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Make Hiring Summer Interns easy when you partner with a Third Party Payroll Provider

Posted on Jun 12, 2023

Bringing on summer interns is a great way for an organization to get help and mentor a student with a passion for the industry. It may also let managers take that much needed vacation. One consideration that companies don’t realize is that summer interns need to be paid a fair hourly wage according to federal and state payroll tax guidelines. Basically, interns must be treated as employees and added to a company’s full time staff payroll. You can’t get something for nothing.

Even when organizations realize that they have to pay to play, they still hesitate to use summer interns because they must now officially hire the employee and add to staff payroll. This reality can frustrate the CFO and Human Resources department due to the fact that summer interns who are directly employed will add to the overall company’s headcount. The employment of interns can also complicate monthly full time employee (FTE) census reports. The impact could cost throw off discrimination testing for retirement plans, add additional payroll processing costs, and simply just increase employee risks and exposure with regards to workers compensation insurance premiums.

A popular strategy to remove the employer and employee relationship is to refer the summer interns to an employment agency that specializes in third party payroll solutions. With this practice, the summer interns can still be on boarded, but they become the employee of the employment agency. The employee or intern is simply transferred to the employment agency and the agency takes on the official employer of record. The employment agency will also become the W-2 employer and deduct state and federal taxes as well as insure the employee (workers compensation and professional liability).

A responsible third party payroll solutions firm is aware of the compliance issues, co-employment loopholes, workers compensation insurance risks, and payroll laws. When selecting a third party payroll solutions partner, select a provider that is financially solvent. After all, the employment agency is extending payroll on your company’s behalf. They are required to pay the employee on a weekly payroll cycle no matter what happens. Also, inquire about the employment agency’s employee benefits offerings. Health benefits and 401(k) retirement plans will increase summer intern retention if applicable. Some employment agencies offer a 401(k) employer match. A great way to retain interns.

Overall, summer interns are a great way to maintain succession planning and office productivity. An easy way to get the payroll process going smoothly and quickly is to partner with an employment agency that specializes in third party payroll solutions. Why not let your trusted payroll specialist and advisor handle the compliance?

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What is 1099 Independent Contractor misclassification?

Posted on Apr 17, 2023

As an employment agency, our goal is to consult with companies to discuss how we can solve their human resources challenges in order to become a partner in their strategic staffing plan. Through these conversations, we sometimes discover that these potential clients currently utilize 1099 Independent Contractors incorrectly. They are technically misclassifying the status of the 1099 Independent Contractor.

1099s are self employed individuals who do not work for any company as an official employee. They do not report W-2 earnings, they are not listed on any company’s official payroll, and they are responsible for filing their own taxes. Unfortunately, in several cases, companies unknowingly retain workers as 1099s for almost any job title (e.g. customer service, receptionist, sales rep, office manager).

Companies that utilize 1099s are responsible for the compliance and controls. 1099 compliance refers to the process of following the Internal Revenue Service (IRS) regulations for reporting payments made to independent contractors or freelancers.

Businesses are required to issue 1099 forms to independent contractors and vendors if they paid them more than $600 in a tax year. The 1099 form details the amount paid to the contractor or vendor and is also reported to the IRS.

Failure to comply with 1099 regulations can result in penalties and fines from the IRS. Therefore, it’s important for businesses to understand the requirements and ensure they are accurately reporting all payments made to independent contractors and vendors.

To ensure 1099 misclassification compliance, businesses should keep detailed records of all payments made to independent contractors and vendors throughout the year, and issue 1099 forms to those who meet the payment threshold by the end of January of the following year. Additionally, businesses should keep copies of all 1099 forms issued and file them with the IRS by the appropriate deadlines.

If a worker is misclassified as an independent contractor when they should have been classified as an employee, there can be penalties for both the employer and the worker. Here are some of the penalties that could apply:

For Business / Employers:

  • Fines: Employers can be fined for misclassifying workers. The amount of the fine varies depending on the severity of the violation, but can be up to $1,000 per misclassified worker for a first offense and up to $5,000 per worker for repeat offenders.
  • Back Taxes: Employers can be required to pay back taxes and penalties for failing to withhold income taxes, Social Security, and Medicare from the worker’s paychecks that should have been W-2 employees.
  • Legal Costs: Employers may also face legal costs if the misclassified worker takes legal action against them.

For Workers / Employees:

  • Loss of Benefits: Misclassified workers may not be eligible for benefits that are available to employees, such as health insurance, retirement benefits, and workers’ compensation.
  • Unpaid Taxes: If the employer did not withhold income taxes, Social Security, and Medicare from the worker’s paychecks, the worker may be required to pay these taxes themselves.

In addition to these penalties, 1099 Independent Contractor misclassification can also have other negative consequences for both the employer and the worker, such as damaging the employer’s reputation and harming the worker’s ability to obtain future employment. It’s important for employers to properly classify their workers to avoid these penalties and protect their workers’ rights.

A remedy to the 1099 misclassification problem is to legally classify the worker as a W-2 employee. When that happens, the employer-employee relationship has been documented and taxes and wages are reported to both the state and federal revenue agencies.

Companies can simply convert the 1099 to an employee or use a third party payroll solution. In either case, the 1099 misclassification and potential penalties have been eliminated.

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New Jersey Employees Will See Minimum Wage and Disability Changes in 2023

Posted on Jan 27, 2023

Effective Jan 1, 2023, employees working in the state of New Jersey will see some positive changes with regards to higher pay and lower payroll deductions such as no temporary disability insurance.

At the beginning of this year, the statewide minimum wage increased by $1.13 to $14.13 per hour for most employees.

The increase is part of legislation signed by Governor Murphy in 2019 that raises the minimum wage to $15 per hour by 2024 for most employees. In 2018, the state’s minimum wage was $8.60 per hour. Under a law signed in 2019, the minimum wage increases by $1 per hour each year because of significant increases in the Consumer Price Index (CPI).

The New Jersey Department of Labor and Workforce Development (NJDOL) sets the minimum wage for the coming year using the rate specified in the law or a calculation based on the CPI, whichever is higher. Once the minimum wage reaches $15 per hour, the State Constitution specifies that it continue to increase annually based on any increase in the CPI.

Agricultural employees are guided by a separate minimum wage timetable and were given until 2027 to reach the $15/hour minimum wage. Employees who work on a farm for an hourly will see their minimum hourly wage increase to $12.01, up from $11.05.

Additionally, to qualify for Unemployment, Temporary Disability, or Family Leave benefits in 2023, an applicant must earn at least $260 per week for 20 base weeks, or alternatively, earn at least $13,000.

The NJDOL announced a reduction in employee contribution rates for 2023, with Temporary Disability dropping to zero percent, from .14 percent, and Family Leave decreasing by more than half, to .06 percent, from .14 percent. In practical terms, employees who work in the state of New Jersey will save an average of $56.25 in Temporary Disability contributions and $55.25 in Family Leave contributions in 2023. 

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Holiday Best Practices regarding Temps when it comes to Holiday Parties and Gifts

Posted on Dec 22, 2022

It’s going to be an arctic blast holiday, but that won’t scare away Santa and those potential holiday office celebrations. Let the games continue, but Human Resources departments should check with their employment agencies on best practices when it comes to inviting the temporary (temp) employees to the party.

The answer can be confusing, but the important factor is the messaging or branding behind the purpose of the company holiday party. The issue that HR managers contemplate is the concept of “co-employment.”  Co-employment is defined as “a relationship between two or more employers in which each has actual or potential legal rights and duties with respect to the same employee.” 

So who is the employer?  Temps or Contract/Contingent employees are employees of the temp agency, employment agency, or staffing firm (we all like to have different company nicknames). Temps are not classified as employees of the company who is hiring the temp on assignment.

Many companies and healthcare organizations now rely on temporary employees or contractors. As the scope of a project grows, the temporary employee stays longer than originally intended and begins to assimilate into the office culture. Temps attend company functions and, in some cases, travel on behalf of the client. 

Original staffing augmentation assignments can get extended several times. After some time, the distinction between the temp and the full-time in-house employee is blurred.  Before one realizes, a “temp” has been with the company on assignment longer than most employees.

In summary, the best practice for a company that wishes to open its holiday party to both internal employees and temps is to brand its holiday party as a “Company holiday party.”  HR managers should try to refrain from using the phrase “employee holiday party” in messaging.  Companies can also invite vendors, suppliers, and family members to further make the distinction.  Keep the internal and external communications consistent across all channels.  Another good strategy is to inform the temp agency of the holiday party so they can also have the opportunity to invite their full-time employees to the holiday party.

When it comes to gifts, it depends on the gift. Any gift with cash value may have to be declared as W-2 compensation. It’s always best practice for HR managers to check with their payroll and accounting departments when it comes to offering gifts to temps and full-time employees. Either way one goes, the holiday spirit is on. Enjoy!

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1099 Misclassification Reported by Uber in the State of New Jersey

Posted on Sep 23, 2022

There are very clear differences in the official working relationship and financial responsibilities between employers, employees, and 1099 independent contractors.

W2 vs. 1099 refers to the difference in official IRS tax forms. Employees receive W-2 forms from their employer and independent contractors are required to fill out the 1099 form. According to taxing authorities, whether or not the working relationship is consistent with how each type of worker is classified dictates compliance. W-2 employees have payroll taxes deducted by their employer, who pays the government on the employee’s behalf. 1099 Independent Contractors are responsible for their own payroll taxes and expected to submit their own payments to the government.

Sometimes companies (employers) utilize or retain 1099 Independent Contractors, but don’t realize or officially comply with the IRS guidelines of the worker classification. In the recent case of Uber and the state of New Jersey, Uber, the enormous ride sharing company, agreed to pay the state of New Jersey $100 million in back taxes after the state said the company had misclassified its huge number of drivers as 1099 independent contractors.

An audit by New Jersey’s Department of Labor and Workforce Development found that Uber owed four years of back taxes because they had classified drivers in the state as 1099s rather than W-2 legal employees. In summary, Uber was directly managing these workers (sometimes exclusively) and consequently required to pay these drivers as W-2 employees. That reclassification would provide mandatory employee and employer payroll taxes to the state of New Jersey.

UNIFORCE Staffing Solutions offers 1099 Independent Contractor worker compliance through its third party payroll solutions. Companies that are concerned with failing the 1099 Independent Contractor test can rely on UNIFORCE to legally classify those workers as W-2 employees in multiple states.

Additionally, for more information on the Uber case with the state of New Jersey, read the full story from the New York Times.

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Compliance is the key to a Staffing Temp Agency

Posted on Aug 03, 2022

Staffing Agencies have become an integral partner in the overall hiring process for most organizations. Talent Acquisition departments at these companies utilize staffing or temp agencies to supplement or augment their full time workforce for a variety of strategic objectives. When partnering with a temp agency, it is highly advantageous to select a staffing temp agency vendor that implements strong workforce compliance in the areas of employee on-boarding, payroll processing procedures, insurance requirements, and pre-employment background checks.

When a staffing agency hires an employee for a temp or contract assignment, that temp agency must adhere to the same policies and procedures as any direct employer. A temp agency should manage worker compliance by following all state and federal employment laws and policies such as the Fair Labor Standards Act (FLSA) or paid sick leave laws such as those in New Jersey and California. Temp agencies must also comply with state employment discrimination laws. For example, an employment application cannot ask questions pertaining to a previous rate of pay or an admission of previous criminal convictions.

Additionally, staffing agencies must comply with all federal I-9 form procedures implemented by the Department of Homeland Security. The purpose of the I-9 form is to verify the identity and employment authorization of individuals hired for employment in the United States.  An employer or temp agency is required to inspect acceptable documents that validate employment authorization furnished by the employee. A temp agency that values full compliance should consider utilizing the E-Verify database, a division of the Department of Homeland Security, to verify work authorization. When using E-Verify, an employer is required to submit an employee record DHS verification within three days of the employee start date.

In order to complete the I-9 form accurately, an employer must, physically in person, verify those acceptable documents presented by the employee. Since the pandemic, the DHS has been somewhat flexible in the employer examination and certification of those documents. At times, they accept I-9 Notary forms where a licensed notary validates those acceptable documents. Some temp agencies, such as UNIFORCE Staffing Solutions, utilize a web-based electronic on boarding system that handle the processing of I-9 acceptable document verification remotely. Candidates can take photos of their acceptable documents (IDs) and upload them directly through the tool with a mobile phone. At the same time, a friend or family member can verify the I-9 documents in person. IP Addresses of both parties get recorded with the I-9 to comply with I-9 verification guidelines.

A temp agency that is licensed and operating as an employer in multiple states needs to manage payroll compliance with regards to state and federal employment laws. Some states like New Jersey, New York, and California require Paid Sick Leave Pay. These same 3 states also require mandatory state disability insurance paid by the employee or employer. Since the pandemic, California also requires COVID Sick Leave Pay. Many states require different minimum hourly wage pay rates. Additionally, some states like Utah require payment of the last paycheck immediately after the temp assignment ends. Also, some states like Arizona require the use of the E-Verify system.

Employer Insurance coverage is also a key element to a staffing agency’s compliance strategy. A temp agency should obtain the necessary commercial insurance policies to manage its own internal risk while protecting its clients by clearly and legally separating the lines of co-employment as well as the employer-employee relationship. Staffing agencies should consider obtaining:

  • General Liability Insurance
  • Professional Liability Insurance
  • Umbrella Liability Insurance
  • Workers Compensation Insurance
  • Crime Insurance
  • Cyber Liability Insurance
  • EPLI Insurance
  • Commercial Automobile Liability Insurance

A temp agency should also be able to provide its clients with an official Certificate of Insurance (COI) as evidence of insurance coverage.

Many temp agency healthcare clients, as part of their own compliance efforts, require pre-employment and occupational medicine testing for licensed medical professionals. In this case, the temp agency is required to run the following background checks in order to hire an employee to work on assignment at a hospital or medical office practice. Such background checks include:

  • 7 year criminal background check
  • 10 panel drug test
  • OIG Sanction Search
  • Education Verification
  • Proof of an annual TB test
  • Proof of Titers / Immunization
  • Proof of MMR Vaccination
  • Proof of COVID Vaccination
  • Proof of an Annual Physical Examination from a Physician
  • Education verification
  • Employee references

Some staffing agencies value compliance so much that they have their own internal compliance department to manage all these back office procedures. It’s also a good idea for a temp agency to obtain an electronic web-based on boarding software to digitally store employment applications and background check test results. A temp agency never knows when an audit can be requested by the DHS, a client, or insurance provider.

In summary, any reputable temp agency should operate its own internal risk management policy and maintain a clear and communicative direct relationship with its employees. The idea behind a strong compliance strategy is to protect the staffing relationship between the temp agency and the client while complying with all state and federal employee and payroll laws.

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New Jersey Minimum Wage increases in 2022

Posted on Dec 23, 2021

The minimum wage for employees who work in the state of New Jersey is set to increase to $13 per hour starting next year, Jan. 1, 2022. The minimum wage will also increase to $15 per hour by 2024.

The current nationwide minimum wage has been $7.25 per hour since 2009.

New Jersey Governor Phil Murphy campaigned in 2017 on increasing the state’s minimum wage to $15 an hour when it was just $8.60 an hour, as national momentum for the uptick picked up.

Under the wage increase that Murphy signed in 2019, over a year before the onset of the pandemic, the increases are incrementally phased in, so as to allow employers more time to adapt to the added costs.

Refer to the New Jersey Department of Labor and Workforce Development Statutory Minimum Wage Notice.

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New Employee Payroll Changes for Social Security next year

Posted on Oct 15, 2021

Next year, in 2022, the federal government is encouraging retirement savings through increase Social Security payroll tax contributions. The good news will be an increase in Social Security earnings upon retirement. The bad news may be less net wages or dollars in your paycheck.

Seniors and other Americans receiving Social Security benefits in 2022 will see the largest increase in their payments in four decades, reflecting surging inflation during the pandemic.

Next year’s cost-of-living adjustment, or COLA, will be 5.9%, the Social Security Administration said Wednesday. The increase will translate to an addition of $92 to retirees’ average monthly benefit next year, bringing the amount to $1,657, the agency estimates.

Henceforth, the maximum amount of an individual’s taxable earnings in 2022 subject to Social Security tax will be $147,000, the Social Security Administration (SSA) announced this week.

An increase of $4,2000 from $142,800 for 2021, the wage base limit applies to earnings subject to the tax, known officially as the old age, survivors, and disability insurance (OASDI) tax.

The growth of the Social Security wage cap from $127,200 in 2017 to $147,000 in 2022 represents a more than 15.5 percent increase over the past five years.

By the start of the new year, U.S. employers will need to adjust their payroll systems to account for the higher taxable wage base under the Social Security payroll tax and notify affected employees that more of their pay will be subject to payroll withholding.