October 8, 2013

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Industry Outlook: Human Resources

October 8, 2013

The interesting bright spot, I guess—if you like to perceive it that way—is that President Obama has legalized the children that effectively came over as minors being dragged by their parents. We’ve got about 300,000 folks across the country who have been legalized, so now they have temporary work permits for a two-year period of time.

That’s probably a template for what sort of legalization plan will come forward. We’ve got a Senate plan that cleared, and we’re waiting for the House to take action. There’s some pressure on them to do something about this problem. It’s very similar to the healthcare issue in that can Congress solve the major issues of our day in an objective, long-term thinking way?

NGATIKAURA: E-Verify has affected small businesses differently than large businesses. It’s not difficult to run the E-Verify process, especially if you’re a large employer; but if you’re a small employer, then it does take more time and you have to go through some trainings every now and again. If you haven’t run one for a while, I find that small businesses get more confused about the process than large business.

HERRING: The whole immigration issue is much broader than just HR. I’m not a big fan of regulating. I think you have to figure out solutions, be creative problem solvers, and I’m not confident the policymakers of our times can solve this. People will have to give on both sides of the aisle to find that solution. But business needs to be involved in that as well, because of the business implications for that segment of the potential workforce. We’ll have some big ramifications in how we deliver services.

NGATIKAURA: The Department of Homeland Security has started targeting employers, so now they’re going after businesses instead of individual employees and hitting immigration from that angle. They’re putting a lot more money behind the auditors than they ever have before.

TSAI: In terms of objective national stats, it’s about 2 to 3,000 federal/civil audits. We’ve got two agents in Salt Lake that are conducting about 50 audits of employers. We have federal prosecutors that are putting companies out of business and people in jail for folks who are undocumented.

That’s one side of this discussion from the HR component. The other side, of course, is you’ve got major employers—Goldman Sachs has a quarter of their workforce here in Salt Lake. So we’re seeing some of that diversification, not just racially, but internationally, in Utah’s workforce.

HERRING: In the university setting, we’re seeing more and more of the international recruitment into students, into faculty researchers. There’s a solution that we’ve got to get to at some point, because I don’t see us getting less diverse, I see us getting more diverse in our workforces.

Roger, you said the federal government is putting companies out of business?

TSAI: They are doing so in a very targeted fashion. Of those 2 to 3,000 audits that I talked about, most of them are for employers that are less than 50 employees. So small companies—construction or restaurants. But then also we were dealing with a large construction company that was part of that federal contract, the data center. Abercrombie & Fitch was fined $1 million, not because they had undocumented workers, but because their E-Verify/I-9 system didn’t meet the regulations. So there certainly can be liability, even if you don’t have a single undocumented worker.

ATWOOD: A lot of these employers with I-9 audits have combined them with E-Verify. And I have seen an increase of employers looking at some of the recordkeeping aspects of the I-9. Additionally, with some of those smaller employers at less than 50 thresholds, some of them are really wanting to do 1099s instead of the I-9. But then it’s helping them understand the impact from an FLSA standpoint that they may not meet those qualifications. You know, you can’t have a W-2 and 1099 within a year without raising a red flag for audit purposes.

Educating some of the employers on some of those compliance components has been an interesting additional dynamic. As I go and do those audits, they say, “Well, if I am raising flags, I don’t really want to run those existing workforces.” With E-Verify, you have an option. You can verify all or verify depending on those contracts. So I have seen kind of an educational component of strategizing and making sure they’re correctly classifying those individuals as it relates to those documents as well.

CRAGUN: GLO (General Land Office) is granting us their audits on contract employees, but I see that colliding some day with healthcare reform. Because at some point, individuals are going to have to have some type of coverage or be hit personally for tax purposes. When that happens, a lot of those contract workers that really should be employees are going to start pushing that point. And I wonder how that’s going to work. Because employers want to head that way, but audits are ramping up; and individuals are going to start self-disclosing, “Hey, I need benefits now. I’ve been an employee all along.” And they’re going to start bringing more cases, and those are going to collide someday.

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