The payroll obligations of employers are much more extensive than withholding taxes from paychecks. There are myriad complex rules to navigate — and failing to comply with requirements may result in significant penalties. Recent action in three areas highlights the range of employer responsibilities.
Employing immigrant workers remains a hot-button issue in the United States. Recently, the Department of Homeland Security (DHS) increased the civil penalties imposed for employing aliens who aren’t authorized to work in this country.
The first is for hiring-related violations. If you knowingly hire, recruit or refer an authorized alien for a fee — or continue to employ an unauthorized worker — you may receive an order to cease and desist. Effective April 6, 2019, the civil fines are:
- Between $573 and $4,586 (previously, $559 – $4,473) per unauthorized alien for the first offense,
- Between $4,586 and $11,463 (previously, $4,473 – $11,181) per unauthorized alien for the second offense, and
- Between $6,878 and $22,927 (previously, $6,709 – $22,363) per unauthorized alien for each subsequent offense.
Penalties may also be levied for I-9 paperwork violations. The I-9 Form is used to verify the identity of individuals hired for employment in the United States. Employers are subject to civil, but not criminal violations. Penalty amounts have increased slightly to between $230 and $2,292 (previously $224 – $2,236).
Employers could further be fined for document fraud. They and referral agencies can incur civil penalties for knowingly forging, obtaining, using, accepting or preparing a fraudulent document to satisfy employment requirements. The fines are:
- Between $473 and $3,788, (previously, $461 – $3,695) per document for the first offense, and
- Between $3,788 and $9,472 (previously, $3,695 – $9,239) for each subsequent offense.
Similarly, the penalty for failing to cease and desist from activities related to document fraud are now:
- Between $400 and $3,195 (previously, $390 – $3,116) per document for the first offense, and
- Between $3,195 and $7,987 (previously, $3,116 – $7,791) per document for each subsequent offense.
- H-2B Visas
The DHS and Department of Labor (DOL) have published a joint temporary final rule authorizing an additional 30,000 H-2B temporary nonagricultural worker visas for fiscal year 2019. The H-2B visa program allows U.S. employers to temporarily hire foreign workers if qualified U.S. workers aren’t available and the employment doesn’t adversely affect the wages and working conditions of U.S. workers.
Additional H-2B visas are only available to returning workers who received an H-2B visa — or were otherwise granted H-2B status — during one of the last three fiscal years. Businesses that would suffer irreparable harm without hiring additional workers are given priority.
Eligible employers should file Form I-129 (Petition for a Nonimmigrant Worker) to hire additional H-2B workers with employment start dates before October 1, 2019. You must submit a supplemental attestation on Form ETA 9142-B-CAA-3 with your petition. The U.S. Citizenship and Immigration Services has stated that it will stop accepting petitions under the increase on September 16, 2019 or when the cap is reached, whichever comes first.
Note that this joint temporary final rule doesn’t apply to petitions exempted from the H-2B cap (for example, certain cannery employers). Those petitions may still be filed under the normal rules.
- Shared Responsibility Payments
The individual requirement for obtaining minimal health care insurance coverage under the Affordable Care Act (ACA) has been repealed, but “shared responsibility” for employers remains. The IRS has adjusted penalty amounts for 2020.
The ACA requires an employer with 50 or more full-time employees, including full-time equivalent (FTE) employees, in the previous year to offer affordable minimum essential coverage to employees and their dependents. An “applicable large employer” could be assessed a penalty for a calendar month in which it doesn’t satisfy two rules:
- The employer fails to offer at least 95% of its full-time employees the opportunity to enroll in minimum essential coverage (MEC) under an eligible employer-sponsored plan and one of its full-time employees receives a premium tax credit for coverage purchased through a government Health Insurance Marketplace.
- The employer does offer at least 95% of its full-time employees the opportunity to enroll in MEC that’s affordable and provides minimum value, but one or more of its full-time employees purchases Marketplace coverage and receives a premium tax credit.
Penalties for failing to satisfy the first rule will be $2,570 per full-time employee in 2020. Noncompliance with the second rule will result in a penalty of $3,860 per full-time employee.
Stay in Touch
Complying with these federal rules is essential if you want to avoid penalties. Stay in touch with your payroll advisors concerning new developments that may affect your organization.