Business Under Assault: Increased Regulations and Enforcement Proposed

by Michael Haberman on February 24, 2010 · 0 comments


If you are a business owner, business manager and especially a Human Resources Manager you should feel like you have a target plastered on you because you do. It is an unfortunate circumstance of our government today they are compelled to pass more legislation and enact more regulation. Unfortunately this ends up making for more work for the small business owner or for the HR manager if the business is fortunate enough to have one.

The bulk of the increase regulation and rule making is coming from the Department of Labor. They have proposed some 90 new regulatory increases. These include:

  • Changes to the FLSA to increase amount of payroll records that have to be kept and also made available to the employee every payday in the name of “transparency.”
  • Changes to labor laws, also in the name of “transparency”, that will require employers to fully inform employees about their rights to unionize the employer. They will also require the employer to divulge all monies spent trying to prevent union formation.
  • They will “encourage” employers to offer more retirement options to employees that include annuity payments, much like pension plans. Apparently lump sum payments are not going to be acceptable because people “run out of money.”
  • They are also proposing changes in the regulations for the Office of Federal Contract Compliance Programs (OFCCP); Occupational Safety and Health Act (OSHA) including hazard communication, recordkeeping; Mine Safey and Health Act (MSHA); and Visas.

To this end the DOL has increased the number of Wage and Hour investigators (News Release) and the number of OSHA inspectors. If you would like to see Secretary Solis’ statement then you can view her video here. The full regulartory plan has been published in the Federal Register.

If you read it will see frequent statements about the “middle class.” Keeping people in the middle class, getting people to the middle class, “finding a path to the middle class”, getting “good jobs for everyone, including vulnerable workers” and more. There is certainly a social agenda in these proposals. Hence the need for more regulations.

The DOL, in conjuction with the IRS, is also going to crack down on Independent Contractor usage by businesses. The DOL estimates that over the next 10 years misclassified workers will cost the US Treasury $7 Billlion. And they want that money. So there will be alot more scrutiny of workers labeled independent contractors. You can read more here from The World at Work Law Blog.

So what do you do to protect yourself from this increase inspection, investigation and scrutiny? Here are my suggestions:

  1. Understand the FLSA and make sure you are paying people correctly, have them classified correctly and that your recordkeeping is up to date. And train your managers! And document. As I mentioned in my post The Top 5 HR Mistakes That Small Business Makes documentation is very important.
  2. Understand the IRS rules on independent contractors. You can get some help here by reading the guidance provided by the IRS, Independent Contractor (Self-Employed) or Employee?
  3. If you are in a Target Industry, make sure you understand ALL of the regulations that apply to you and correct any deficiencies you have.

If you are overwhelmed by the prospect of doing this, then seek help. A good HR consultant can be worth their weight in gold. (BTW, I just happen to know one ). Or seek help from an employment attorney. The rest of the regulations we will have to sort out as they come, so stay tuned to HR Observations by subscibing in a reader, found on this page. I will be covering them as they develop.

And for everyone that thinks this stuff is boring, you try keeping up with this crap. This is where companies can lose big $$$$ and if you are saving it you will be golden.

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