If you’re a small-sized general contracting company (or even a larger-sized company) responsible for the day-to-day oversight of building projects and employing many other contractors and vendors, there are a few regulatory changes on their way this year that you are going to want to pay attention to.
General contractors are often pressed for time moving from one project to another, and are used to relying on temporarily employed individuals to provide work when it’s needed. Although extremely important, employee management, compliance and human resources often get put on the backburner.
2013 presents itself with some areas you can’t ignore; if you do, you could find yourself in trouble with the IRS, Department of Labor, or the U.S. Immigration and Customs Enforcement (ICE), facing some hefty fines and compliance violations.
1. Worker Misclassification: Worker misclassification has always been a bit of a gray area for business owners within the construction industry. It is estimated that in 2009 misclassification across all industries cost the government 2.7 billion in underpaid federal taxes, workers comp and unemployment insurance and it is estimated that up to 30% of companies may still be incorrectly classifying workers as independent contractors rather than employees.
The IRS and Department of Labor are working harder this year to correct misclassification amongst all industries. If your company is not in compliance, and select contractors should instead be classified as employees, you may face even harsher penalties than you would have in the past. Legislative reform may impose stricter compliance violation fines in the upcoming year.
2. Underreporting: The IRS has invested heavily to identify underreporting employers and “find” all taxes owed to the government. IRS examiners are looking for violations of compliance, and have powerful technological resources for triggering an audit.
3. Immigration Reform: Immigration reform continues to remain a top priority for congress. What is your Company’s illegal immigration compliance strategy? Do you utilize E-Verify before hiring someone? Do you conduct background checks? Do you have a written policy for employment verification? Do you conduct your own additional audits of I-9 documents? Employee verification can be a timely task within itself.
Professional Employer Organizations specialize in the above 3 areas, and many are very familiar with the general contracting industry and the regulatory issues that business owners face. If your PEO is not currently assisting your company with worker classification, reporting, and employee verifications, OR you do not currently work with a PEO and have questions about your company’s compliance, contact PEO Advantage today.