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Discrimination Harassment Illinois Department of Employment Security (IDES)

Legislative Update: Key Changes to the Illinois Human Rights Act New Employee Rights and New Requirements for Employers

Legislative Update: Key Changes to the Illinois Human Rights Act New Employee Rights and New Requirements for Employers

By Anthony J. Caruso Jr. of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Illinois Department of Employment Security (IDES) on Friday, January 25, 2019.

On June 8, 2018 and August 24, 2018 respectively, Governor Bruce Rauner signed into law a number of amendments to the Illinois Human Rights Act which in the State of Illinois regulates discrimination claims due to a protected category, disability or sexual harassment claims.

New Employee Rights

  • The time to file a charge before the Illinois Human Rights Department (IDHR) increased from 180 days to 300 days.
  • Employees have the right to opt out of the investigation process at the Illinois Department of Human Rights (IDHR) and sue in state court. The request for opt-out must be made within 60 days from notice by the IDHR and the IDHR has 10 business days to issue the notice of the right to sue.

New Employer Requirements

Employers must post the Illinois Department of Human Rights Sexual Harassment and Discrimination in the Workplace poster. Click here to download a copy of the poster.

Employers must also include the content of this notice in their employee handbook policies on sexual harassment and discrimination. This means that company sexual harassment and discrimination policies in employee handbooks must be amended to include information about reporting discrimination to the IDHR in filing a charge as well as information about the Sexual Harassment and Discrimination Help line number of 877-236-7703. Finally, employee handbooks must include a statement that employees may request a reasonable accommodation due to disability or pregnancy.

Questions? Need help re-working your employee handbooks to follow these new requirements? Contact attorney Tony Caruso in our St. Charles office at (630) 377-1554 or by e-mail at ancaruso@wesselssherman.com

Related Posts: Don’t Fall Asleep On One Of The Most Important Due Dates Regarding Your IDES Audit!, It’s Easier for Illinois Employers to Win Before the IDES on Cases involving Misconduct, Help! I Just Found Out I Am Going To Be Audited By The IDES! , Watch Out For Minefields in the IDES Worker Relationship Questionnaire: Proving Your Independent Contractors Are Not Misclassified

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Illinois Department of Employment Security (IDES)

Don’t Fall Asleep On One Of The Most Important Due Dates Regarding Your IDES Audit!

Don’t Fall Asleep On One Of The Most Important Due Dates Regarding Your IDES Audit!

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Illinois Department of Employment Security (IDES) on Thursday, December 13, 2018.

I’m writing this article because of a crucial due date that a new client of mine missed (prior to becoming my client).

This Illinois company was audited by the Illinois Department of Employment Security (IDES)-we were not their attorneys at that time. After auditing the Company, the IDES auditor reclassified the workers to employee status.

STRICT DUE DATE FOR PROTESTING TAX BILL: This Illinois company (while not yet my client) received the Notice of Determination & Assessment which is the multi-page tax bill that arrives in the mail weeks after the Company has been audited by the IDES.

The strict due date for protesting the Determination & Assessment is 20 days from the date of mailing of the Notice of Determination & Assessment. Unfortunately, that is not much time for the Company to swing into action if they wish to protest and go to a Hearing.

Routinely, when a Company calls me after receiving the Determination & Assessment, I immediately ask what the date of mailing of the Determination & Assessment is (because I want to make sure they get their protest in before the due date passes). The IDES does not accept excuses like the company was shut down for a week and didn’t get their mail or that the owner was away on vacation. No excuses are accepted. If the Company misses the due date, the opportunity to protest is gone!

This Company missed (unintentionally) the due date for protesting, and therefore I had to give them the bad news that the Assessment would therefore be considered final, due and owing.

PROTESTING IS EASY BUT IT MUST BE TIMELY: All that’s needed is a simple, quickly written protest, but it must be timely filed with the IDES. If the Company does not timely protest, the Company loses ALL RIGHTS OF PROTEST, and the Assessment by law becomes final, due and owing.

If the Company changes its mind in the future and decides it doesn’t want a hearing, the Company can always withdraw. So, if in doubt, protest. It is a quick and easy process.

IF COMPANY TIMELY PROTESTS, IT DOESN’T HAVE TO PAY (BUT BEWARE, INTEREST ACCUMULATES): When a Company timely protests the Assessment, the Company does not have to also pay the Assessment at that time. (Of course, the Company can choose to both protest and pay in full.)

However, interest does continue to pile up on any unpaid amount. The IDES interest rate is unfortunately a whopping 24% per year. This interest rate is set by law. If the Company loses at the eventual IDES Hearing, then the Company must pay the Assessment plus accumulated interest unless the Company wishes to protest further (called “filing Objections”-again, a relatively quick and easy process).

For assistance with IDES audits, hearings, and independent contractor agreements (or for consultations on limiting your liability in the use of independent contractors), contact Attorney Nancy E. Joerg, who enjoys a nationwide reputation in working with companies who use Independent Contractors of all types. Nancy Joerg can be reached at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

Related Posts: Legislative Update: Key Changes to the Illinois Human Rights Act New Employee Rights and New Requirements for Employers, It’s Easier for Illinois Employers to Win Before the IDES on Cases involving Misconduct, Help! I Just Found Out I Am Going To Be Audited By The IDES! , Watch Out For Minefields in the IDES Worker Relationship Questionnaire: Proving Your Independent Contractors Are Not Misclassified

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Illinois Department of Employment Security (IDES)

It’s Easier for Illinois Employers to Win Before the IDES on Cases involving Misconduct

It’s Easier for Illinois Employers to Win Before the IDES on Cases involving Misconduct

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Illinois Department of Employment Security (IDES) on Monday, August 13, 2018.

This article is to remind Illinois employers about an important amendment to the Illinois Unemployment Insurance Act (which took effect over two years ago on January 3, 2016). The amendment broadened the misconduct definition by adding eight work-related behaviors which automatically disqualify the Claimant (i.e., ex-employee who filed for unemployment insurance benefits) from receiving unemployment insurance benefits due to misconduct.

In years past, there was only a strict definition of misconduct which required deliberate and willful behavior by the Claimant. Now, under these additional factors, employers have a better chance of winning.

DEFINITION OF MISCONDUCT: Under Section 602A of the Illinois Unemployment Insurance Act, the precise legal definition of misconduct is: “the deliberate and willful violation of a reasonable rule or policy of the employing unit, governing the individual’s behavior in performance of his work, provided such violation has harmed the employing unit or other employees or has been repeated by the individual despite a warning or other explicit instruction from the employing unit.” (Emphasis added)

These elements need to be convincingly proven by the company in order for unemployment insurance benefits to be blocked.

LISTING OF EIGHT DEFINITIONS OF MISCONDUCT: As a result of the amendment, the definition of “misconduct” now includes the following eight work-related behaviors that will result in a finding of misconduct for IDES purposes:

1. FALSIFICATION OF DOCUMENTATION: Falsification of an employment application, or any other documentation provided to the employer, to obtain employment through subterfuge.

Comment: Under this factor the employer has to prove the ex-employee obtained employment by falsifying a document. Note that this doesn’t require deliberate and willful behavior by the Claimant; all that it requires is the employer proves the falsification.

2. FAILURE TO MAINTAIN LICENSES: Failure to maintain licenses, registrations, and certifications reasonably required by the employer, or those that the individual is required to possess by law, to perform his or her regular job duties, unless the failure is not within the control of the individual.

Comment: The employer has to prove that the Claimant (ex-employee) failed to maintain licenses and the failure was within the Claimant’s control.

3. REPEATED VIOLATION OF ATTENDANCE POLICIES: Knowing, repeated violation of the attendance policies of the employer that are in compliance with State and federal law following a written warning (tip: put your attendance warnings in writing!) for an attendance violation, unless the individual can demonstrate that he or she has made a reasonable effort to remedy the reason or reasons for the violations or that the reason or reasons for the violations were out of the individual’s control. Attendance policies of the employer shall be reasonable and provided to the individual in writing, electronically, or via posting in the workplace (tip: put your attendance policies in writing!).

Comment: The attendance policy must be reasonable and provided to the Claimant in writing during employment.

4. DAMAGE TO EMPLOYER’S PROPERTY: Damaging the employer’s property through conduct that is grossly negligent.

Comment: This factor requires gross negligence on the part of the Claimant. In other words, the employer must prove that the Claimant should have been aware that the conduct would result in the harm sought to be prevented and the conduct constituted a substantial deviation from the standard of care a reasonable person would exercise in the situation.

5. REFUSAL TO OBEY REASONABLE INSTRUCTION: Refusal to obey an employer’s reasonable and lawful instruction, unless the refusal is due to the lack of ability, skills, or training for the individual required to obey the instruction or the instruction would result in an unsafe act.

Comment: Under this factor, the employer must have issued a reasonable and lawful instruction. The Claimant’s only defense is that he/she didn’t follow the instruction because it was due to his/her lack of ability, skills or training. Or that following the instruction would result in an unsafe act. Tip: document training!

6. ALCOHOL/DRUGS: Consuming alcohol or illegal or non-prescribed prescription drugs, or using an impairing substance in an off-label manner, on the employer’s premises during working hours in violation of the employer’s policies.

7. REPORTING TO WORK UNDER THE INFLUENCE: Reporting to work under the influence of alcohol, illegal or non-prescribed prescription drugs, or an impairing substance used in an off-label manner in violation of the employer’s policies, unless the individual is compelled to report to work by the employer outside of scheduled and on-call working hours and informs the employer that he or she is under the influence of alcohol, illegal or non-prescribed prescription drugs, or an impairing substance used in an off-label manner in violation of the employer’s policies.

Comment: This must be done in violation of the employer’s policies, so the employer must prove that the employer has such a policy and the Claimant violated it.

8. ENDANGERING SAFETY: Grossly negligent conduct endangering the safety of the individual or co-workers.

PRACTICE TIP FOR EMPLOYERS: The old misconduct definition (Section 602A) still remains, but these new eight work related behaviors are in addition to Section 602A.

Employers must be clear in disciplinary write-ups and the termination letter (if any) that the employee was terminated for one of these behaviors. Prior to termination, the employer should review these eight behaviors to see under which one the employer will terminate the employee (so that the misconduct argument is successful in blocking an unemployment insurance claim).

This is why it is important to have a strategic consultation with an attorney to identify the reasons for firing an employee prior to the employee being terminated. Then, in any documentation of the termination, the employer can use the correct “buzz words”.

If you think through your legal strategy prior to termination, your batting average at winning IDES misconduct claims and Hearings will go up dramatically.

For assistance with employee terminations and protesting unemployment insurance claims, as well as representation at IDES Hearings, contact Attorney Nancy E. Joerg who can be reached at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

Related Posts: Legislative Update: Key Changes to the Illinois Human Rights Act New Employee Rights and New Requirements for Employers, Don’t Fall Asleep On One Of The Most Important Due Dates Regarding Your IDES Audit!, Help! I Just Found Out I Am Going To Be Audited By The IDES! , Watch Out For Minefields in the IDES Worker Relationship Questionnaire: Proving Your Independent Contractors Are Not Misclassified

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Illinois Department of Employment Security (IDES)

Help! I Just Found Out I Am Going To Be Audited By The IDES!

Help! I Just Found Out I Am Going To Be Audited By The IDES!

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Illinois Department of Employment Security (IDES) on Wednesday, June 20, 2018.

What Should Our Company Do?!

As an attorney who has been helping Illinois companies with these kinds of sudden IDES audit notices for the last 30 years, I am well aware of the panic that often sets in when an Illinois company opens a letter from the Illinois Department of Employment Security (IDES), and it is a NOTICE OF IDES AUDIT.

The Notice of Audit letter is often the very first notification that the Company has that it is going to be audited by the IDES (the Illinois state agency that handles unemployment insurance claims, employer taxes called contributions, and unemployment insurance hearings).

The Notice of Audit letter introduces the audit by saying there is no suggestion of fault against the company to be audited. However, most Illinois companies are understandably upset and anxious when they find out they have been selected for audit.

FIRST PAGE OF NOTICE OF AUDIT LETTER: The first page of the Notice of Audit letter specifies the name of the auditor and auditor supervisor assigned as well as their full contact information.

There is a specific audit year indicated (never the current year, but routinely one or two years back). The IDES doesn’t audit the current year because it is not a complete payroll year and also because there are no 1099s issued yet for the current year (since 1099s are issued in the year following the services rendered).

The first page of the Notice of Audit letter also contains a day and time that the auditor wishes to begin the audit. Clients frequently ask me if they can request a continuance. And my response is that it is routine to ask for a continuance so that the Company can better prepare for the audit. I have never known an auditor to refuse just one request for a continuance to a later date to begin the audit.

SECOND PAGE OF NOTICE OF AUDIT LETTER: The second page is a Records Request which is a laundry list of the kinds of records that the auditor wishes to examine. At the bottom of that page, there is a statement that if the Illinois company doesn’t maintain certain records, you are not expected to create those records. In other words, whatever payroll and related records your company has for the specified year is what the auditor wants to see.

Very few companies have all the many types of records detailed on page 2 of the Notice of Audit letter. The IDES auditor does not expect the Company to have all the listed records. Further, the IDES auditor doesn’t expect the Company to be ready to hand over all the records on Day 1 of the audit. It is generally very acceptable for the Company to give the auditor some of the requested records on Day 1 of the audit and then follow up by sending other requested records electronically to the auditor.

AUDIT YEAR: An audit by the IDES always starts with one specific year. The Notice of Audit letter specifies which year the auditor will begin with.

The IDES is permitted by law to audit a company for up to four years but this is highly unusual. It is much more usual to see an IDES auditor audit one year, sometimes two years, and sometimes three years depending on the amount of the proposed assessment owed to the IDES. Although this standard changes from year to year, the IDES will generally not audit the company for a second year if the contributions owed as a result of the audit are less than $5,000. But this is not a hard and fast rule.

The IDES auditor will not mention whether he or she will extend the audit until the auditor has totally finished with the first year of the audit. Then the IDES auditor may announce that the auditor is extending the audit by asking the Company under audit for its 1099 forms for the prior year. In almost all cases, the IDES auditor will only go back in time (rather than coming forward towards the present year when auditing another year).

Often it is not the auditor, but rather the auditor’s supervisor, who makes the very important decision about whether the audit will be extended to a second year.

PREPARING FOR AN IDES AUDIT: You should be thoroughly prepared in the face of an IDES audit. The best way to prepare for an audit is to read over the records request on the second page of the Notice of Audit letter and see which records you can pull together to give to the auditor on the first day of the audit. If your company used independent contractors in the year being audited, start to make lists of the type of services the independent contractor provided and think of how you can prove that they themselves had their own independent businesses and were not your employees.

REFERRAL FEES: If payments to an individual were “mere referral fees” then explain that to the auditor. Mere referral fees are not considered services for which employee wages should have been paid.

CERTAIN WORKERS ARE EXEMPT: Also, certain kinds of workers are actually exempt from being employees (and therefore it was not necessary for the Company to classify the worker as an employee). An example would be “direct sellers” under certain facts and circumstances. See Sections 207 and 208 of the Illinois Unemployment Insurance Act.

UNEMPLOYMENT INSURANCE RATE: The IDES auditor will also check to see that you used the correct unemployment insurance rate when you sent in your contributions to the IDES on your declared employees. Sometimes a company actually overpaid and, as a result of the audit, will be credited for the overpayments that the Company made in error.

WORKER RELATIONSHIP QUESTIONNAIRE: The auditor will sometimes ask the Company to fill out the IDES Worker Relationship Questionnaire. There is a special Worker Relationship Questionnaire for truck drivers who are owner-operators. Always seek experienced legal counsel in filling out these complex Questionnaires.

WHAT TRIGGERS AN AUDIT: Many IDES audits are truly random. In other words, the Company was randomly selected. Other IDES audits are triggered because an independent contractor filed for unemployment insurance benefits and, when the IDES became aware of this discrepancy, it listed the Company as an audit lead.

For assistance with IDES audits, hearings, and independent contractor agreements (or for consultations on limiting your liability in the use of independent contractors), contact Attorney Nancy E. Joerg, who enjoys a nationwide reputation in working with companies who use Independent Contractors of all types. Nancy Joerg can be reached at Wessels Sherman’s St. Charles, Illinois office: (630) 377-1554 or email her at najoerg@wesselssherman.com.

Related Posts: Legislative Update: Key Changes to the Illinois Human Rights Act New Employee Rights and New Requirements for Employers, Don’t Fall Asleep On One Of The Most Important Due Dates Regarding Your IDES Audit!, It’s Easier for Illinois Employers to Win Before the IDES on Cases involving Misconduct, Watch Out For Minefields in the IDES Worker Relationship Questionnaire: Proving Your Independent Contractors Are Not Misclassified

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Illinois Department of Employment Security (IDES) Independent Contractor

Watch Out For Minefields in the IDES Worker Relationship Questionnaire: Proving Your Independent Contractors Are Not Misclassified

Watch Out For Minefields in the IDES Worker Relationship Questionnaire: Proving Your Independent Contractors Are Not Misclassified

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Illinois Department of Employment Security (IDES) on Tuesday, October 24, 2017.

If your Company is audited by the Illinois Department of Employment Security (IDES) and you use independent contractors, you will (almost always!) be asked to complete the IDES Worker Relationship Questionnaire for each group or type of independent contractor.

PURPOSE OF QUESTIONNAIRE: The purpose of the Worker Relationship Questionnaire is to elicit enough factual responses from the Company that it becomes clear whether the independent contractors at issue are really independent contractors or employees.

Possibly the trickiest part of filling out the Worker Relationship Questionnaire is deciding how to describe the type of business the Company is in, and the type of business the independent contractor is in, and whether the Company and the independent contractor are in the same course or kind of business. Course or type of business is a crucial part of the IDES test for independent contractor status which is called Section 212(A), (B), and (C).

Remember that if the Company fails any one part of the three part test, then the independent contractor at issue will be found to be an employee for IDES purposes.

The Company is asked to select one representative independent contractor at issue-this is the “Worker” for purposes of the Worker Relationship Questionnaire. If there are 20 drywall installers, for example, the Company would fill out the Worker Relationship Questionnaire for one typical, representative drywall installer (i.e., Worker).

EXAMPLE OF A TRICKY QUESTION: One of the tricky questions on the Worker Relationship Questionnaire that gives particular trouble to my clients is the following question which is on page 2 under “Extent of Independent Status“:

Does the worker represent himself to the public as being in business to perform the same or similar services?

Then you have to check the box “yes” or “no.” If you say yes, you have to explain how the Worker represents himself to the public. “Yes” indicates independent contractor status.

What that question is really asking is if the Worker (for example, drywall installer) represents himself to the public (meaning advertising himself and his business) as being in business to perform the same or similar services (meaning his drywall installation services).

This is an extremely important question because it is asking if the independent contractor at issue really is self-employed and in business for himself. If he is really in business for himself, then he promotes his own drywall installer business. Examples would be having his business name on his truck, on t-shirts, and on promotional fliers that he hands out. He may advertise online or in the newspaper. He may send emails to local builders telling them about his services.

Many people innocently answer the question No-that the Worker does not represent himself to the public as being in business to perform the same or similar services. The reason they answer no is because they think the question is asking if the Worker does the same thing as the Company that is being audited.

This confusing question is just one of many confusing questions on the Worker Relationship Questionnaire. Have an attorney well versed in this area of the law assist you in filling out the Worker Relationship Questionnaire.

For assistance with an IDES audit, IDES Worker Relationship Questionnaire, and/or IDES Hearing or evaluating your use of Independent Contractors, contact Nancy Joerg at Wessels Sherman’s St. Charles, Illinois office: (630) 377-1554 or email her at najoerg@wesselssherman.com.

Related Posts: Legislative Update: Key Changes to the Illinois Human Rights Act New Employee Rights and New Requirements for Employers, Don’t Fall Asleep On One Of The Most Important Due Dates Regarding Your IDES Audit!, It’s Easier for Illinois Employers to Win Before the IDES on Cases involving Misconduct, Help! I Just Found Out I Am Going To Be Audited By The IDES!

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Categories
Illinois Department of Employment Security (IDES)

Did You Fire Them or Did They Resign?

Did You Fire Them or Did They Resign?

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Unemployment Insurance/Compensation on Wednesday, August 23, 2017.

It often happens that an employee tells the employer that the employee is quitting…but later the employee claims the employer really fired the employee.

How does this happen?

Let’s look at a typical fictional example. Steve, a machine operator, decides that he wants to quit to go to see his sick grandmother who lives in Alabama. Steve tells his employer that he is quitting, wishes everyone the very best, and leaves for Alabama.

VOLUNTARY QUIT TURNS INTO “LACK OF WORK”: Steve then files for unemployment insurance benefits and finds out to his dismay that he is not eligible for unemployment if he voluntarily quit. So, he changes his story. Now he says there was a “lack of work” forcing him to leave to because his employer told Steve they did not need Steve anymore because work is slow.

Steve changed his status from an employee who quit to an employee who was discharged due to lack of work.

EMPLOYER PROTESTS NOTICE OF CLAIM: Once Steve files for unemployment insurance benefits, a Notice of Claim is sent to the employer (Smith Manufacturing).

When Smith Manufacturing receives the Notice of Claim, the reason given is “lack of work.” Smith Manufacturing may think this is a typographical error. But, it is actually the new reason Steve has decided caused his separation from employment.

Smith Manufacturing knows there wasn’t a lack of work. In fact, Steve’s leaving put them in a bind because Smith Manufacturing had to quickly hire someone else who was inexperienced and untrained to fill Steve’s position. When Smith Manufacturing protests the Notice of Claim, Smith Manufacturing does its best to explain the circumstances under which Steve left.

LOCAL OFFICE DETERMINATION FINDING THE QUIT WAS DUE TO LACK OF WORK: Smith Manufacturing is upset when it receives a Local Office Determination finding that Steve quit due to lack of work. Smith Manufacturing is angry and protests because now Steve is getting unemployment insurance benefits even though he clearly quit.

KEY ISSUE FOR TELEPHONE HEARING: A telephone Hearing is then scheduled in which Smith Manufacturing will now have to convince the Hearing Officer that Steve voluntarily quit for his own personal reasons and not for “lack of work.”

In my experience, the key issue under this fact pattern is this question: Could Steve have remained in employment if he wished?

Steve will try to convince the Hearing Officer that he could not have remained in employment. He may even introduce as evidence statements by others in the Company that business is slow, we need to cut down on the number of machine operators, etc.

Smith Manufacturing will want witnesses at the Hearing who hopefully heard Steve say he had to quit because his grandmother was sick, that Steve’s leaving put the Company in a bind, etc.

The Hearing will boil down to who can present the most persuasive facts on the key question of could Steve have remained in employment. Did Steve cause the separation or did the employer cause the separation from employment?

It is important at an IDES Hearing for the employer to have well prepared witnesses who can convincingly testify to the key legal issues.

For assistance with employee terminations and protesting unemployment insurance claims, as well as representation at IDES Hearings, contact Attorney Nancy E. Joerg who can be reached at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

Related Posts: Absenteeism And Proof Of “Misconduct”, Minnesota Supreme Court holds that Employee Discharged for Lying on her Job Application was Ineligible for Unemployment Benefits due to “Misconduct”, Court Clarifies “Misconduct” and Attendance, Proving Misconduct: Winning IDES Hearings

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Illinois Department of Employment Security (IDES)

IDES Notice of Determination & Assessment: Five Top Questions Illinois Companies Ask About Protesting it!

IDES Notice of Determination & Assessment: Five Top Questions Illinois Companies Ask About Protesting it!

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Illinois Department of Employment Security (IDES) on Friday, July 21, 2017.

Once an Illinois company is audited by the Illinois Department of Employment Security (IDES), the IDES auditor will send his/her findings to another division of the IDES that is in charge of putting together the tax bill from the audit. The tax bill is known as the Notice of Determination & Assessment (commonly referred to as “D&A”).

If the audited company had a “clean audit” and therefore owes no additional money to the IDES, then there will be no Notice of Determination & Assessment.

The Notice of Determination & Assessment arrives in the mail several weeks after the audit is completed. From over the many years in which I have represented clients in IDES audits, below are the five top questions that I receive from clients about the Notice of Determination & Assessment:

1. QUESTION: What exactly is the Notice of Determination & Assessment?

ANSWER: It is essentially a tax bill. It contains the contributions owed as a result of the audit. “Contributions” is a fancy word for monies that should have been paid to the IDES (usually because the Company misclassified workers as independent contractors when they should have been, at least in the mind of the IDES auditor, employees).

2. QUESTION: Why doesn’t the IDES auditor tell the Company after the audit is completed the exact amount that the Company will owe as a result of the audit?

ANSWER: The IDES auditor never tells the Company what they will owe as a result of the audit. One reason is because often the auditor does not know what the exact dollar amount will be. There is another division within the IDES who actually calculates the amount owed based on the Company’s unemployment insurance rate for the audit year in question and interest accumulated.

3. QUESTION: How can the Company protest the Notice of Determination & Assessment?

ANSWER: The Notice of Determination & Assessment includes instructions for how to protest that document. There is a strict deadline — the protest must be submitted to the IDES within 20 days of the date printed on the Notice of Determination & Assessment. If the protest is even one day late, the Company loses all rights to appeal and the Determination & Assessment becomes final, due and owing.

4. QUESTION: How much is the interest on the Notice of Determination & Assessment?

ANSWER: The interest is 2% per month, basically 24% per year. This sky high interest rate is not subject to negotiations with the auditor or the Hearing Officer. If the auditor audits a year that is three years back from the current year, the interest will be significant. I see many IDES Notices of Determination & Assessment where the interest is close to equaling the amount owed in contributions!

5. QUESTION: If I decided to pay the Determination & Assessment in order to stop the 24% interest per year from piling up, can I still protest?

ANSWER: Yes, the Company can pay the Determination & Assessment and protest. It is very common for an audited company to protest the Determination & Assessment in order to stop the interest from piling up. Note: At a certain point in time, the interest caps.

For a free worksheet on how the interest “caps”, or for assistance with an IDES audit and/or Hearing or evaluating your use of Independent Contractors, contact Nancy Joerg at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

Related Posts: Legislative Update: Key Changes to the Illinois Human Rights Act New Employee Rights and New Requirements for Employers, Don’t Fall Asleep On One Of The Most Important Due Dates Regarding Your IDES Audit!, It’s Easier for Illinois Employers to Win Before the IDES on Cases involving Misconduct, Help! I Just Found Out I Am Going To Be Audited By The IDES!

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Illinois Department of Employment Security (IDES)

IDES Audits Can Catch You With Your Guard Down

IDES Audits Can Catch You With Your Guard Down

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Illinois Department of Employment Security (IDES) on Friday, April 21, 2017.

This article is being written as a cautionary tale for readers who are interested in how to have a good outcome in an Illinois Department of Employment Security (IDES) audit, especially where independent contractors (1099 workers) are at issue.

I have been helping Illinois companies to defend against IDES audits for almost 30 years, and I have seen many unexpected problems in dealing with these IDES audits.

Companies often feel confident initially that they are “ready” for an IDES audit because they have consulted with me over the years and have delegated tasks on the many strategy tips that I have offered to them (in order to keep their risk down in using independent contractors).

SUGGESTIONS WERE NEVER IMPLEMENTED: As my client prepares for the IDES audit, they suddenly realize, to their bitter disappointment, that the internal people in their company that they “trusted” with the important task of implementing my suggestions about lowering liability in using independent contractors have simply dropped the ball.

For example, under Section 212.1 (the part of the Illinois Unemployment Insurance Act pertaining to truck owner-operators), there are certain specific legal requirements that a trucking company MUST DO to pass an IDES audit.

One of these strict requirements under Section 212.1 of the Illinois Unemployment Insurance Act is that all of the owner-operators who are independent contractors must have their business name and business address on their trucks. The placement of the owner-operator’s business name and business address on the truck is not important for IDES purposes. The size and color of the business name and business address on the truck is also not important for IDES purposes. The IDES regulations for 212.1 are silent on this. It is simply the legal requirement of Section 212.1 that the owner-operators have their business name and business address-somewhere-anywhere-on their trucks.

What many of my trucking clients find is that the individual who was in charge of making sure this happened dropped the ball. The individual never gave the owner-operator a deadline by which they must put their business name and business address on their truck, or the individual never took pictures of the business name and business addresses on the trucks, and therefore, there is no way for the company to prove to the IDES auditor that in the audit year the owner-operators at issue actually had their business name and business address on their truck. The IDES auditor will usually ask for proof of this. Therefore, the trucking company should take and carefully store photos of all of the owner-operators’ trucks, showing the business name and business address of the owner-operator.

DON’T BE LEFT DEFENSELESS: Of course this cautionary tale applies not only to trucking companies but to any industry or business in Illinois which is left defenseless against an IDES audit on the issue of independent contractor status (because the company inadvertently failed to follow through on simple suggestions for lowering its risk in using independent contractors).

GIVE DEADLINES TO THE INDEPENDENT CONTRACTORS TO PROVIDE PROOF OF SELF-EMPLOYMENT: If a company wants to make sure all of the independent contractors have business names, give the independent contractors a deadline by which they give you their business name, and then write checks to their business names and issue IRS Form 1099s to their business names.

If your goal is to have all your independent contractors give you advertising in their business name, give them a deadline and make sure you get the ads from each independent contractor. Take this seriously. Make sure it happens!

IDES CONTINUES ITS AGGRESSIVE AUDITING AND MORE THAN HALF OF IDES AUDITS ARE RANDOM: The IDES is continuing its aggressive auditing at a fast pace . The IDES itself proudly announces to the public that it has raised more money through its audits than any other state in the United States. This means that Illinois businesses have to take special care to protect themselves in the face of a potential IDES audit. More than half of IDES audits are purely random so there is no way of knowing if you will be audited. Now there are also many “follow up” IDES audits.

We have a free checklist of the kinds of documents that should go into an independent contractor file. For a free copy of that checklist and for assistance with an IDES audit or evaluating your use of Independent Contractors, contact Nancy Joerg at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

Related Posts: Legislative Update: Key Changes to the Illinois Human Rights Act New Employee Rights and New Requirements for Employers, Don’t Fall Asleep On One Of The Most Important Due Dates Regarding Your IDES Audit!, It’s Easier for Illinois Employers to Win Before the IDES on Cases involving Misconduct, Help! I Just Found Out I Am Going To Be Audited By The IDES!

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Categories
Illinois Department of Employment Security (IDES)

IDES Audits – Ten Questions Employers Ask

IDES Audits – Ten Questions Employers Ask

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Illinois Department of Employment Security (IDES) on Monday, March 27, 2017.

Over the many years during which I have helped Illinois companies with their use of independent contractors, the most urgent call I get is from Illinois companies who have just found out they are going to be audited by the Illinois Department of Employment Security (IDES).

Receiving a letter in the mail from the IDES announcing that the IDES is going to do an audit (in the next few days or weeks!) can cause understandable panic for the recipient of the letter, especially if the company has never before been audited by the IDES.

This article is devoted to answering ten of the most common questions that I receive from such callers:

QUESTION #1: Why is the IDES auditing me?

ANSWER #1: Many callers are sure that a competitor has turned them in to the IDES. I have never found that an IDES audit was triggered because a competitor turned the company in.

In recent years, IDES audits are most frequently triggered by:

  • random selection,
  • a follow-up IDES audit because the company was previously audited years ago by the IDES (this is a recent trend),
  • one of the independent contractors filed for unemployment insurance benefits with the IDES, or
  • a lead from the IRS because the company has issued “many 1099s” (this is a recent trend).

QUESTION #2: Do I have to actively cooperate with the IDES auditor?

ANSWER #2: It is wise to cooperate with the IDES auditor. If you interact with the auditor in a cooperative fashion, you will learn what actually concerns the IDES auditor, and you will be able to address those issues.

QUESTION #3: What is the IDES auditor looking for?

ANSWER #3: The IDES auditor is going to audit you for a particular year (for example, 2015). The auditor will see if you accurately paid in all contributions (i.e., unemployment insurance taxes that the company must pay).

QUESTION #4: Where should I have the IDES audit?

ANSWER #4: Usually the IDES auditor will come to your workplace. However, if you do not have a convenient place to meet, you can suggest that the audit be in your accountant’s or attorney’s office. Sometimes the auditor will suggest that you bring the records to the auditor’s office. In recent years, I have heard that some auditors suggest that the company simply send its records electronically to the auditor, thereby eliminating the need to meet at all!

QUESTION #5: Will this be just a one year audit?

ANSWER #5: I have found that all IDES audits start with just one designated year. The year is clearly noted on page 2 of the Notice of Audit letter. The auditor will extend the audit to an additional year if the amount owed to the IDES (because of mistakes made by the company) is over $5,000, or if there are many (for example, more than 10) independent contractors found to be misclassified. Sometimes the audit will extend to a third year. This is somewhat rare.

QUESTION #6: How long will the audit last?

ANSWER #6: Some auditors meet with the company and spend many hours questioning the company and looking through records. Other auditors come in and get the records, and then quickly leave and thereafter communicate with the company representative through emails and by phone. There is no standard way that these audits are handled. I have found over the years that even the same auditor might vary his/her approach from one audit to the next.

QUESTION #7: What is the significance of the four page IDES Worker Relationship Questionnaire that the auditor gave me to complete?

ANSWER #7: The Worker Relationship Questionnaire is a tricky document. You should have an attorney well versed in the right and wrong answers review your responses carefully. It is easy to inadvertently make a mistake. You need to understand the unique legal angle that the IDES is taking in asking the questions.

QUESTION #8: Will the auditor tell me how much I will owe the IDES at the end of the audit?

ANSWER #8: There will be an “exit interview” at the end of the audit. It may occur in person or by phone. The auditor will tell the company what the auditor’s findings are in terms of what mistakes, if any, the company made. The auditor doesn’t know what the full tax bill (known as Notice of Determination and Assessment) will be in terms of dollars and cents. However, the auditor will have a rough idea of how much money the company will owe.

QUESTION #9: Can I negotiate with the IDES auditor during the audit if I’m starting to feel I have made some mistakes and I want to correct them right then and there?

ANSWER #9: No, the IDES auditor does not have the legal authority to negotiate with the company being audited.

QUESTION #10: How will I know exactly what I owe as a result of the audit?

ANSWER #10: A few weeks after the audit is completed, the IDES will mail you a Notice of Determination & Assessment which is the actual tax bill. You have only 20 days from the date on the Determination & Assessment to protest. If you miss the 20 day deadline, you will lose all rights of appeal and the money that the IDES says you owe will become a final judgment and it is due and owing.

In my opinion, it is almost always worthwhile to protest. By timely protesting the Determination & Assessment (tax bill), the company has the opportunity for a Hearing before an Administrative Law Judge. The Administrative Law Judge is a lawyer and also an employee of the IDES, but the Administrative Law Judge is charged with the legal responsibility of fairly evaluating the issues involved in the audit and making an independent and unbiased decision. It is not unusual for the Administrative Law Judge to exercise this independence and make a decision contrary to the decision of the IDES auditor.

For assistance with an IDES audit and/or Hearing or evaluating your use of Independent Contractors, contact Nancy Joerg at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

Related Posts: Legislative Update: Key Changes to the Illinois Human Rights Act New Employee Rights and New Requirements for Employers, Don’t Fall Asleep On One Of The Most Important Due Dates Regarding Your IDES Audit!, It’s Easier for Illinois Employers to Win Before the IDES on Cases involving Misconduct, Help! I Just Found Out I Am Going To Be Audited By The IDES!

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Categories
Hiring/Firing Illinois Department of Employment Security (IDES) Unemployment Insurance/Compensation

Proving Misconduct: Winning IDES Hearings

Proving Misconduct: Winning IDES Hearings

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Illinois Department of Employment Security (IDES) on Thursday, February 23, 2017.

There are many good reasons for which a company fires one of its employees. Some of these reasons are:

  1. Theft by the employee;
  2. The employee is not performing well;
  3. The employee is deliberately violating company rules and policies; and/or
  4. The employee is insubordinate.

But, strangely, not all good reasons for firing an employee lead to a finding by the Illinois Department of Employment Security (IDES) of “misconduct.” Surprising to many clients, many bad employees are fired and are then successful in getting unemployment insurance benefits. Many clients are stunned and very upset!

So, how can an employer prove that the fired employee was guilty of misconduct under Section 602A1 – 8 of the Illinois Unemployment Insurance Act?

DEFINITION OF MISCONDUCT: Under Section 602A of the Illinois Unemployment Insurance Act, the precise legal definition of misconduct is: “the deliberate and willful violation of a reasonable rule or policy of the employing unit, governing the individual’s behavior in performance of his work, provided such violation has harmed the employing unit or other employees or has been repeated by the individual despite a warning or other explicit instruction from the employing unit.” (Emphasis added)

You will note that the simple legal elements of Section 602A require deliberate and willful behavior, and it must have caused actual harm to the company. (These elements need to be convincingly proven by the company in order for unemployment insurance benefits to be blocked.)

LISTING OF EIGHT DEFINITIONS OF MISCONDUCT: As of January 3, 2016, there are also eight legal (and very helpful to employers!) definitions of misconduct for IDES purposes:

  1. FALSIFICATION OF DOCUMENTATION: Falsification of an employment application, or any other documentation provided to the employer, to obtain employment through subterfuge.
  2. FAILURE TO MAINTAIN LICENSES: Failure to maintain licenses, registrations, and certifications reasonably required by the employer, or those that the individual is required to possess by law, to perform his or her regular job duties, unless the failure is not within the control of the individual.
  3. REPEATED VIOLATION OF ATTENDANCE POLICIES: Knowing, repeated violation of the attendance policies of the employer that are in compliance with State and federal law following a written warning (tip: put your attendance warnings in writing!)for an attendance violation, unless the individual can demonstrate that he or she has made a reasonable effort to remedy the reason or reasons for the violations or that the reason or reasons for the violations were out of the individual’s control. Attendance policies of the employer shall be reasonable and provided to the individual in writing, electronically, or via posting in the workplace (tip: put your attendance policies in writing!).
  4. DAMAGE TO EMPLOYER’S PROPERTY: Damaging the employer’s property through conduct that is grossly negligent.
  5. REFUSAL TO OBEY REASONABLE INSTRUCTION: Refusal to obey an employer’s reasonable and lawful instruction, unless the refusal is due to the lack of ability, skills, or training (tip: document training) for the individual required to obey the instruction or the instruction would result in an unsafe act.
  6. ALCOHOL/DRUGS: Consuming alcohol or illegal or non-prescribed prescription drugs, or using an impairing substance in an off-label manner, on the employer’s premises during working hours in violation of the employer’s policies.
  7. REPORTING TO WORK UNDER THE INFLUENCE: Reporting to work under the influence of alcohol, illegal or non-prescribed prescription drugs, or an impairing substance used in an off-label manner in violation of the employer’s policies, unless the individual is compelled to report to work by the employer outside of scheduled and on-call working hours and informs the employer that he or she is under the influence of alcohol, illegal or non-prescribed prescription drugs, or an impairing substance used in an off-label manner in violation of the employer’s policies.
  8. ENDANGERING SAFETY: Grossly negligent conduct endangering the safety of the individual or co-workers.

GROSS NEGLIGENCE DEFINED: For purposes of paragraphs 4 and 8, conduct is “grossly negligent” when the individual is, or reasonably should be, aware of a substantial risk that the conduct will result in the harm sought to be prevented and the conduct constitutes a substantial deviation from the standard of care a reasonable person would exercise in the situation.

RECENT WINNING CASE: I recently represented an accounting firm in protesting an IDES claim for unemployment insurance benefits filed by a former employee (i.e., the Claimant).

The unemployment insurance Claimant was a bookkeeper who had previously demonstrated (early in her work history) the ability to properly and timely prepare the payroll tax reports for the firm’s clients.

In the incident that led to the Claimant’s termination, the owner discovered (to her horror) that the Claimant was making serious errors and was very far behind in completing the tax reports. The owner reasonably asked the Claimant for daily progress reports as to the Claimant’s progress on completion of these time sensitive tax documents. The Claimant deliberately misled the owner into believing that the requested documents were nearly done. At the IDES phone hearing, the accounting firm proved that the Claimant did not obey the reasonable instruction of providing accurate and truthful progress reports and put her employer in jeopardy.

The IDES Decision found that “the Claimant is disqualified from benefits under Section 602A5” (which is refusal to obey an employer’s reasonable and lawful instruction, unless the refusal is due to the lack of ability, skills, or training for the individual required to obey the instruction or the instruction would result in an unsafe act). So, misconduct was proven under Section 602A5 and the Claimant was denied unemployment insurance.

PRACTICE TIP FOR EMPLOYERS: The eight definitions of misconduct for IDES purposes can be very helpful when the facts fit neatly into one or more of the categories. This is why it is important to have a strategic consultation to discuss the reasons for firing an employee prior to the employee being terminated. Then, in any documentation of the termination, the employer can use the “buzz words” as found in the eight legal definitions of misconduct.

If you think through these issues thoroughly prior to termination, your batting average at winning IDES misconduct claims and Hearings will go up dramatically.

For assistance with employee terminations and protesting unemployment insurance claims, as well as representation at IDES Hearings, contact Attorney Nancy E. Joerg who can be reached at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

Related Posts: Legislative Update: Key Changes to the Illinois Human Rights Act New Employee Rights and New Requirements for Employers, Don’t Fall Asleep On One Of The Most Important Due Dates Regarding Your IDES Audit!, It’s Easier for Illinois Employers to Win Before the IDES on Cases involving Misconduct, Help! I Just Found Out I Am Going To Be Audited By The IDES!

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