AZ - Special Assessment on Taxable Wages Paid in 2011 and 2012

"...Arizona Revised Statutes § 23-730.01 imposes a Special Assessment (SA) on taxable wages paid in 2011 and 2012. This is necessary to meet federally imposed unemployment trust fund obligations. The Department of Economic Security (DES) Unemployment Insurance (UI) Tax Section is responsible for collecting the SA along with employers’ regular quarterly UI taxes (reported on Line 7, Part C of the Unemployment Tax and Wage Report, form UC-018)..."

Read the full release: https://www.azdes.gov/main.aspx?menu=316&id=6767

MI - Repayment of Michigan’s $3.2 billion Unemployment Trust Fund balance to the U.S. Treasury:

Because the transaction was completed before year end 2011, the State and its business community will experience significant interest savings, FUTA tax credits will be restored, future tax penalties will be avoided and the solvency tax on Michigan employers will be eliminated.

Read the full release: http://www.michigan.gov/treasury/0,4679,7-121-1755_1963-268192--,00.html

South Carolina's Immigration Law Now In Effect:

"...What is in effect as of this week, a requirement for businesses to use E-Verify, an online program that allows employers to input information from required I-9 hiring forms and find out a new employee’s legal work status..."

Read full article:  http://bit.ly/vue6kB

New Jersey Tax Update:

Effective in January 2012, the combined employee payroll tax rate for New Jersey employees is reduced to .00705 from .00985 in 2011.  This means a savings of $87 per worker.  This equals approximately $190 million in direct tax relief to New Jersey employees.

FUTA Credit Reduction Update:

21 States will be added to the FUTA credit reduction list due to failure to pay back on loans from the federal government to continue paying unemployment benefits.  After a state has had an outstanding Title XII loan balance for two consecutive years on January 1, employers in that state face a 0.30% reduction in the FUTA credit if the loan is not paid back by November 10 of that same year.

http://www.treasurydirect.gov/govt/reports/tfmp/tfmp_advactivitiessched.htm

from the Sierra Sun Times:

Federal Unemployment Tax Act (FUTA) Credit Reduction

The U.S. Department of Labor has notified the Internal Revenue Service (IRS) and the California Employment Development Department that California is now a credit reduction state as a result of its outstanding loan balances. Per the IRS website:

"Credit reduction state. A state that has not repaid money it borrowed from the federal government to pay unemployment benefits is a “credit reduction state.” The Department of Labor determines these states. If an employer pays wages that are subject to the unemployment tax laws of a credit reduction state, that employer must pay additional federal unemployment tax when filing its Form 940."

Due to California carrying an outstanding loan balance for two consecutive years, the FUTA credit will decrease from 5.4 percent to 5.1 percent on January 1, 2012. In essence, California employers will incur a 0.3% FUTA credit reduction. Employers will use IRS Schedule A (Form 940), Part 2, to calculate the FUTA tax.

If you have questions on the FUTA credit reduction, Form 940, or Publication 15(2011) (Circular E) Employer’s Tax Guide, please contact the IRS at http://www.irs.gov/.

Current Updates Related to Immigration & State Laws That Could Affect Staffing Businesses

On August 15, 2011 U.S. Citizenship and Immigration Services (USCIS) announced E-Verify Self Check is now available in a Spanish-Language version and now accessible to residents in 16 additional states. E-Verify Self Check is a voluntary, fast, free and secure online service that allows U.S. workers to check their employment eligibility and/or data inaccuracies. Now available in 21 states and USCIS will continue to evaluate and improve the Self Check service, which intends to expand nationwide by spring 2012.

Currently Available to Residents in the Following States:

Federal Action on Immigration:

H.R. 2164 Legal Workforce Act

On June 14, 2011, Rep. Lamar Smith (R-TX) introduced H.R. 2164, The Legal Workforce Act,
which would create a new employment verification system, the Employment Eligibility
Verification System (EEVS), mandating compliance for nationwide within 2 years.

- Section By Section Summary
- Brief Workforce Act Summary

Some of the specifics for this Act:

• E-Verify mandatory for all businesses, will have a 2 year phase in. Beginning six months after enactment, employer participation is phased in from large to small employers (including those with one employee). Entities that recruit and refer must use the system 12 months after enactment.
• Prescreening of employment eligibility. Unlike current law, which requires employers to use E-Verify after hire, the Legal Workforce Act allows employers use the EEVS before hire.
• Reverification of current workers' employment eligibility. Reverification of the current workforce is required for critical infrastructure employers; workers assigned to a federal or state contract; federal, state and local government employees; and workers with expiring employment authorization.
• Limits documents to prove employment eligibility and identity. Makes many documents currently accepted to prove employment eligibility and identity no longer acceptable.
• Employer Safe Harbors
• State Preemption. Preempts states and localities from passing employer sanctions and employment eligibility verification laws, but allows states to use businesses licensing and similar laws to penalize employers for not using the EEVS

• Mandatory after one year for all employers - One year after the bill is enacted all U.S. employers would be required to use an E-Verify-type EEVS to verify employment eligibility.
• Allows the Secretary to require "critical employers" to use it immediately.
• Allows employers to use E-Verify before a person is hired, if the applicant consents
• Reduces the liability that employers face if they participate in E-Verify when it involves the wrongful termination of an individual.
• Reverification of existing employees - The bill would require re-verification of the existing workforce's employment eligibility within 3 years of enactment.

- Senate Bill Summary


Recent State Action:

• Alabama Mandatory E-Verify & Immigration Act signed into law June 9, 2011. All Alabama employers, both public and private, must begin using E-Verify when hiring new employees no later than April 2012. Alabama's law is similar to an Arizona law requiring employers to use E-Verify, which the U.S. Supreme Court recently upheld.
• GA Illegal Immigration Reform and Enforcement Act of 2011 takes effect July 1, 2011: Georgia law will require all employers with more than ten employees to verify the work eligibility of new employees with E-Verify. The GA law phases-in between January 1, 2012 for employers with 500 or more employees and July 1, 2013 for employers with 11 or more employees.
• Tennessee Lawful Employment Act (SB 1669, HB 1378), signed June 7, 2011: Tennessee recently enacted an E-Verify mandate on government entities and private employers. Similar to GA law, the TN will phase-in implementation between January 1, 2012 and January 1, 2013 depending on employer size. Governmental entities and private employers with at least 500 employees must comply with the law beginning January 1, 2012. Private employers with 200-499 employees must comply beginning July 1, 2012. Any employer with 5-199 employees must comply beginning January 1, 2013. (http://www.tn.gov/sos/acts/107/pub/pc0436.pdf)
• Louisiana Passes E-Verify Bills Covering State Contractors and Private Employers, July 8, 2011: Louisiana Governor signed two pieces of legislation into law that will require or encourage businesses to use E-Verify. HB342 requires all state and local contractors to use E-Verify, while HB646 requires all private businesses to verify the legal status of their new hires by providing employers that use it a safe harbor against sanctions.
  
  

Current states requiring all employers to use E-Verify:

Alabama
Arizona
Georgia
Mississippi
South Carolina
Tennessee
Utah

Other State Issues/Concerns

Oregon Senate Bill 610 aims to regulate staffing firms - SB 610 would mandate an additional 30 percent surcharge on the wages of each temporary employee payable in wages or benefits. The bill would bar fees charged to clients of temp agencies that cover temp-to-hire placements, costs of training and prohibit all charges for providing transportation or cashing checks.

Massachusetts House Bill 139, sometimes referred to as the Reform the Employment Agency Law (REAL) or the Temp Workers' Right to Know bill, would largely prohibit staffing firms from charging placement and conversion fees for certain workers, require providing temporary workers with information on temp assignments, potentially require staffing firms placing workers in Massachusetts to have in-state offices, and potentially prohibit staffing firms from sending candidate resumes to clients.