The Government Formula for Regulatory Success: Endless Streams of Paperwork

If you’re a white-collar criminal, the last thing you want is to leave a paper trail. If you’re an owner of a business, the first thing you want is to leave an endless paper trail to avoid civil and criminal liability. Welcome to the new paperless society envisioned with the introduction of the personal computer.

Endlessness also entails thoroughness, however. What’s included—or neglected—in your paperwork could prove the turning point during a government audit or, heaven forbid, a court case brought by the government or a disgruntled employee. Therefore, your record-keeping should reflect solid personnel policies that honor the law, respect your employees’ rights, but also keep you in “CYA” mode for those nasty courtroom and regulatory dramas that are all too common in these days of a turbulent economy.

In many cases, especially involving discrimination, harassment and retaliation issues, the paperwork is not specified but left up to each business and its human resources people to create and then use to document workplace incidents and their results. Many times these documents might be verbatim transcripts of interviews with everyone involved as in, for instance, a race-based discrimination charge regarding a passed-over promotion. The government does not require any designated form or forms to be used in such matters, but if a company chooses to go record-less, it does so at its own peril. (In this case, documented could also mean maintained as a computer file ready to be printed out or shared electronically.)

In other matters, the government specifies forms to be used on a routine basis or releases model forms that companies can adapt if they seek additional information not on the model (but this additional information must not include legally protected personal information).
Leaving aside on-site audits by the Internal Revenue Service (which is currently launching a random inspection tour of 5,000 companies to see how they handle so-called independent contractors), at least two other government agencies are focusing on compliance with their forms as part of a broad crackdown that could lead to civil and criminal penalties.

The United States Citizenship and Immigration Service (USCIS) is using its Immigration and Customs Enforcement (ICE) unit to randomly audit businesses for compliance with its I-9 employment eligibility verification form for each new hire (new since 1986). When the Social Security or USCIS documents indicated on an employee’s I-9 do not match what’s on record in Washington, D.C., that’s called a “no match.” Under the Bush administration, the now-infamous “no match rule” provided employers a safe harbor if they fired workers within 90 days of their numbers’ not matching (provided they couldn’t subsequently produce valid documents). The Obama people officially dropped the “no match rule,” but that still leaves employers in a nether-nether world of what to do with “no match” employees. Firing those who cannot produce the proper documents still seems the best and only option, since employers who continue to retain undocumented workers on their payrolls face potential civil and criminal penalties. And those who maintain no records are absolutely at risk.

(It also should be noted that, beginning in 2009, USCIS issued a new form I-9 and restricted the documents that can be used to prove one’s legal status to work in the United States. Employers now are no longer allowed to accept expired documents as proof. In addition, the complementary E-Verify online employment eligibility system continues to loom large. The Sept. 8, 2009, implementation of the federal contractor E-Verify mandate gave new fangs to the system. Many municipalities and states are also requiring anyone doing business with them to use E-Verify, which works hand in hand with the form I-9 for record-keeping purposes by verifying new hires’ immigration-citizenship status as well as their Social Security numbers against national databases.)

The Occupational Safety and Health Administration (OSHA) is also on a rampage against firms that under-report illnesses and injuries on the annual OSHA Log 300. OSHA is sending the long arm of its inspectors out into the field to audit records and conduct interviews at businesses that report a “low rate” of injury and illness in industries that typically report a “high rate” such as nursing homes.

These injury-illness reports are compiled and tabulated annually by the Bureau of Labor Statistics (BLS), which produces nationwide, regional and industry-wide rate tables. OSHA is concerned that as many as 68 percent of firms under-report on Log 300. Fines, penalties and compliance mandates are in order for those found on the shy side in their record-keeping.

The Family and Medical Leave Act (FMLA), which human resources professionals maintain is their number-one headache, also requires certain forms for which it provides models that can be customized. When new FMLA regulations were issued in early 2009, two new forms were added because FMLA itself was expanded to include family members of those serving in the armed forces who can now take leave for various contingencies and emergencies (up to 26 weeks as opposed to 12 weeks under regular FMLA leave). Forms WH-384 (exigencies) and WH-385 (emergencies) are used for record-keeping purposes when military-related leave is granted.
 
For employee and family member FMLA leave, two forms were revised and issued, one a Designation of Leave Notice (WH-382) and the other a Notice of Rights and Responsibilities (WH-381). In addition, two forms were created to certify the underlying medical condition of the employee or family member that is triggering the request for leave. WH-380-E is used for verifying an employee’s medical condition while WH-380-F is used for a family member’s condition.

FMLA leave is regulated by the Wage and Hour Division (WHD) of the Department of Labor (DOL), and in cases where an employee contests a denial of FMLA leave or another adverse incident, these documents are a first line of defense for the employer. There’s room for error and abuse, however, if the forms are incompletely or haphazardly filled out or if the wrong persons request medical certification (it cannot be the immediate supervisor, for instance). Also, since the forms say they are “optional,” some companies may skimp and just jot down information here and there, which could lead to huge problems during an inspection or court hearing. Better to use the official forms or develop your own in accord with proper legal consultation.

The DOL and WHD have not announced any widespread audit of FMLA records or program compliance, but 250 WHD inspectors have been added to combat wage theft, which generally refers to the nonpayment of overtime or to the misclassification of employees as exempt from overtime when in fact they are not. Record-keeping for hourly employees often involves the tedious use of time clock management, computer log-in, or paper-based sign-in and sign-out forms. Some companies now even employ fingerprint verification so co-workers cannot log in and out for their friends. Lastly and worse, leaving everything to a supervisor’s eyeball record-keeping exposes you to he-said/she-said legal combat should an employee challenge his or her pay.

These are just some examples of the more common form-keeping requirements of government regulations. Keep in mind that many states throw in added paperwork or write laws that go beyond their federal counterparts that make these programs even more paper-intensive. Other government initiatives require written notifications to go along with their paperwork. The 2009-revised Children’s Health Insurance Program Reauthorization Act (CHIPRA) is rife with notifications, and states are sure to tack on reams of paperwork to go with implementation of the system. The American Recovery and Reinvestment Act (ARRA) included subsidies for COBRA health insurance continuation that added new notifications and forms to the old system, which itself was already paper-heavy.
 
The list goes on and on, and we haven’t even touched upon benefit plans or other routine human resource responsibilities, let alone laws like the Americans With Disabilities Act (ADA) and the Lilly Ledbetter Fair Pay Act. If health reform passes, that is sure to increase companies’ paperwork loads as well. In short, unless you plan on operating a family-only business that is exempt from federal regulation, you can count on becoming flooded with ever more piles and piles of new paper records from here on out. After all, what would a paperless society be like without reams and reams of paper on file until death do us part?

Employers, for those of you struggling with the implementation of FMLA, Personnel Concepts offers its easy-to-follow FMLA Regulatory Updates Compliance Kit. Our I-9 Compliance Kit will help you understand and follow the new rules for employee verification. Finally, our FLSA Salary Basis Compliance Kit will help you classify your employees correctly to avoid any charges of “wage theft.”

About the author:
Gary McCarty is a researcher and Web Content Manager for Personnel Concepts.

Note: The details in this white paper are provided for informational purposes solely. All answers are general in nature, not legal advice and not warranted or guaranteed. Readers are cautioned not to rely on this information. Because laws change over time and in different jurisdictions, it is imperative that you consult an attorney in your area regarding legal matters and an accountant regarding tax matters.