Copyright 2013 * Andere Seminars, LLC * www.andereseminars.com

Employee or Independent Contractor Checklist

Description of the work to be performed:

Worker’s Name:

ABC TEST YES NO

A. Control or Direction of Work: YES = Possible Employee

Company provides training to worker

Company provides detailed instructions and guidance

Company supervises worker's job

Worker has regular work hours

Company establishes schedule for worker

Company provides tools, supplies, equipment

Worker assumes little financial risk

Company maintains occupational licenses for worker

Company has ability to fire worker for failure to obey instructions

Worker is salaried

Company sets rate of pay

B. Outside Service: YES = Possible Contractor

The work performed is completely outside the usual course of your business

The work performed is not at the usual location of your business activities

** Many states have taken the position that answering NO to either of the B items will constitute an automatic employee relationship. Many others will allow YES answers if BOTH A & C are satisfied to a large extent.

C. Independent Business or Trade: YES = Possible Contractor

Worker and employer have contract for services or products

Worker has responsibility to hire others as needed to complete a task

Worker and employer have a clear short-term work relationship

Worker provides liability and WC insurance and produces certificates

Worker advertises and performs similar projects for other companies on a regular basis

Worker pays all employment and income taxes on self and assistants

Worker has separate business location

Worker has proper business license or article of incorporation

CIRCLE APPROPRIATE OUTCOME:

Section A: Employee Indicated Contractor Indicated

Section B: Employee Indicated Contractor Indicated

Section C: Employee Indicated Contractor Indicated

5 Keys for Managing the One Person Payroll Office

I. Keep Up-to-Date Records

When you hire a new employee, an employee's status changes, an employee takes a

paid vacation or terminates and must receive a final paycheck you must input this

information before processing payroll.

An efficient data entry and filing system is key to maintaining organization. Make good

use of pre-made packets of on-boarding forms.

When a new employee comes aboard complete a packet containing at minimum an

application for employment, W-4, and I-9. You may also have insurance forms and

confidentiality agreements. Possibly an offer letter will be signed and kept on file.

Be sure all documents with sensitive information are kept in locked file cabinets or

password protected/encrypted software programs.

Review the guidelines for the retention windows of various forms. Keep for the

mandatory time and then destroy as allowed.

II. Review Time Sheets

Collect time sheets 3-5 days prior to issuing paychecks. This allows you to review time

sheets to make sure they have properly been completed before entering information into

your payroll software.

Check the time sheets against your records of when employees should have clocked in

and out to make sure hours are reported accurately.

If you find a discrepancy, talk to the employee to determine who made the error.

Correct time sheets if needed before signing off on them.

But, never “roll back” hours. If the employee insists the hours are bona fide, allow them

to be paid and be very careful on future pay periods to monitor time in and out.

FLSA violations are very serious and refusing to pay an employee for “hours worked” is

a hard claim to defend.

III. Enter Information

Enter each employee's information into your payroll system.

List how many regular hours the employee worked and how many overtime hours, if any.

Hopefully, your payroll system came equipped with the benefits codes and exemptions

to withholding and you have this set for each employee.

The payroll system should calculate each employee's paycheck amount and how much

to withhold for taxes. No manual calculation should be needed.

It is always a good idea to occasionally check the math to be sure your system is set

correctly and no calculation errors are possibly occurring.

If you have elected to use a service for payroll, check their math on occasion to be sure

all is well. Hiring a service does not exempt you from the liability of making sure your

payroll is handled correctly.

IV. Make Payments

When you have the paychecks ready, put them into security envelopes, and provide

each employee with his check on payday.

If you choose to use direct deposit consult your bank for direction.

Provide checks in person whenever possible to avoid confusion over whether an

employee received payment.

Transfer the amount of money withheld from each employee's paycheck for taxes into an

escrow account.

You must pay payroll taxes four times a year. (Quarterly)

When you pay taxes, you must also pay the employer's share.

Planning for employer’s portion each pay period will be helpful in making sure you have

no unpleasant surprises at tax time.

Be sure and download IRS publications 15,15A, and 15B every January. You will receive

excellent guidance of any changes in tax rates.

V. Internal Auditing Procedures

Make sure quarterly internal auditing procedures are a part of your routine.

Each payroll you will also conduct some routine checks and balances.

Some of the audits you will conduct will be W-4, 941, I-9, employee classification, W-9,

exempt qualification, review of policies and procedures, and job descriptions.

Internal-Audit: Employee Handbook

1. Does your handbook clearly state that it is not to be considered a contract in any way and that you reserve the right to

change it at any time?

2. If your handbook lists offenses warranting discipline, including discharge, does it make clear that your list is not

exhaustive?

3. Does your handbook encourage employees to bring their complaints to their union or to management?

4. Does your handbook make clear that harassment of any type is not tolerated?

5. Does it clearly provide specific procedures for addressing complaints of harassment?

6. Do the benefits policies contained in the handbook comply with federal and state laws?

7. Do all employees receive copies of the handbook each time it is revised?

8. Do you employees sign a receipt or acknowledgement when they receive the handbook or any revisions?

9. Is your handbook up to date in all areas?

10. Do you submit the handbook to attorney review regularly to confirm it does not conflict with federal and state laws

or local regulations?

11. Is the handbook written in plain English understandable by all levels of education present in your organization?

12. Is the language respectful of employees?

13. Are the rules described in the handbook enforced without bias?

14. Do you make sure that your employees read the handbook?

15. Is the handbook free of political statements, including the organization’s opinions regarding labor organizing?

If you answered “No” to any of these questions, you should have an attorney review your handbook as soon as possible.

EMPLOYEE CLASSIFICATION AUDIT EXEMPT or NON-EXEMPT CHECKLIST

To be considered exempt from overtime, an employee must generally:

a. Be paid on a fixed salary basis

b. Perform only administrative, clerical, management duties – no ‘hands on’ managers

c. Be paid no less than $455 per week

d. Job duties must meet the D.O.L.’s standards for one of the six exemption categories.

REMEMBER

1. Job title is not a factor in determining exemption.

2. The job duties decide whether the employee qualifies for the exemption from minimum wage and

or overtime guidelines.

3. Job descriptions are not an option for your exempt employees. They are mandatory. Be sure you

have them on file. They must be updated annually.

Executive Exempt Employee

1. Is the employee’s primary duty managing the enterprise or a department or subdivision of the enterprise? ________

2. Does the employee customarily direct the work 2 or more employees meeting at least 80 man-hours per week? _______

3. Does the employee have the authority to hire or fire, and do their recommendations carry significant weight if

unauthorized to make the final decision? ________

4. Is the employee paid the equivalent of at least $455 per week on a salary basis? _______

** If the employee is at least a 20 percent owner of the business and meets requirements #1 and #2 above, the salary

requirement in #4 and the authority requirement in #3 need not be met.

Administrative Exempt Employee

1. Is the employee’s primary duty performing office or non-manual work directly related to the management or general

business operations of the employer or the employer’s customers? __________

2. Does the employee exercise discretion and independent judgment with respect to matters of significance?

For example, does he evaluate and compare possible courses of action and then make a decision or recommendation after

considering the various possibilities? __________

3. Is the employee paid the equivalent of at least $455 per week on a salary basis? _________

** This is frequently a person who is viewed by the staff as management even though they are technically not a

manager or supervisor. Perhaps this is the person who is the single member HR office. It must be an individual

who touches matters of significance in the organization on a regular basis and is not performing routing

secretarial-style duties which may be repetitive in nature.**

Learned Professional Employee

1. Is the employee’s primary duty to perform work requiring knowledge of an advanced type in a field of science or

learning customarily acquired by a prolonged course of specialized intellectual instruction? __________

2. Is the advanced knowledge obtained by completing an academic course of study resulting in a four-year college degree

or leading to certification? __________

3. Is the employee paid the equivalent of at least $455 per week on a salary basis? __________

Exceptions to the Rules:

Those who’ve completed the educational requirements for a law or medical degree need not meet the minimum salary

requirement. Also, teachers need not be certified or meet the minimum salary requirement to qualify as learned professionals.

Creative Professional Employee

1. Is the employee’s primary duty to perform work requiring invention, originality or talent in a recognized field of artistic

endeavor such as music, writing, acting, and the graphic arts? ________________

2. Does the work require an actual talent more than intelligence, diligence and accuracy? __________

3. Is the employee paid the equivalent of at least $455 per week on a salary or fee basis? ___________

Computer Professional

1. Is the employee paid at least $455 per week on a salary or fee basis or, if paid hourly, at a rate of not less than $27.63 per

hour? ___________

2. Is the employee’s primary duty:

• Application of system analysis techniques and procedures, including consulting with users, to determine hardware,

software or system functional specifications; or

• Design, development, documentation, analysis, creation, testing or modification of computer systems or programs,

including prototypes, based on and related to user or system design specifications; or

• Design, testing, documentation, creation or modification of computer programs related to machine operating systems; or

• A combination of the aforementioned duties requiring the same level of skills?

If you answered “No” to #1 or were unable to answer “Yes” to any parts under #2, you may have misclassified the

worker as an exempt computer professional.

Outside Sales Employee

1. Is the worker’s primary duty making outside sales? _________

2. Does he regularly work away from the company’s place of business? ___________

3. Does the worker sell tangible or intangible items, such as goods, insurance, stocks, bonds or real estate, or obtain orders

or contracts for services or the use of facilities? __________

4. Does the worker have the ability to ‘call the shot, slash the price, and make the deal”? _________

Copyright 2013 * Andere Seminars, LLC * www.andereseminars.com

I-9 AUDIT CHECKLIST

Section 1

1. Does name match the name in the personnel files and on the INS documents? _________

2. Is the address, DOB and Social Security filled out completely? ____________ (SS# only required for E-Verify participants.)

*Email address and phone number boxes are optional.

3. Is the attestation with the citizenship status boxes filled out completely with appropriate document numbers, by the

employee? ___________

4. Did the employee sign and date in the appropriate area? __________________

5. Is the Preparer/Translator’s Certification filled out and signed if applicable? __________

6. Is the 3D Barcode space left blank? ______

7. Is all writing in ink and legible? _________

8. Will the document copy well, if required? _________

Section 2

9. Was employee’s full name carried over to Section 2 as required? ________

10. Has the employer examined one document from List A OR one document from List B AND one document from List C?

___________ *It is not appropriate to examine one from List A and one from List B or C, since List A alone is sufficient.

It is likewise incorrect to examine only one document from List B or C. However, the document MUST BE a true List

A, B or C document and writing “SEE ATTACHED COPY” is not allowed.

11. If multiple documents are required to satisfy List A requirements, are all documents listed completely and in the

appropriate order as per instructions? ___________

12. Are all documents original and UNEXPIRED? ___________ . A certified copy of a birth certificate is the only exception.

13. If the List C document presented was a Social Security Card, did it contain either the Notation: “NOT VALID FOR

EMPLOYMENT” or “VALID ONLY WITH INS AUTHORIZATION”, it is NOT a valid List C document. If it says “NOT VALID

FOR EMPLOYMENT” it is completely unacceptable. If it says “VALID ONLY WITH INS AUTHORIZATION” then the person

responsible for I-9 verification can ask for another INS-issued employment authorization document such as the I-797

H1B approval notice – without committing document abuse.

14. It must be company policy that employees NEVER be required to present specific documents. They must be given the

list of acceptable documents with the instructions for the I-9. __________

15. Are all document titles written out in full or abbreviated using ‘commonly accepted abbreviations’? ______________

16. Is the Employer Certification filled out completely and signed, including name, title and company name & date?

_________

17. Was the I-9 completed within 3 days of hire? ____________

18. Is the date of hire the first day the employee came in for pay or was placed in a job pool at a temp agency?____________

Section 3

19. Was the I-9 re-verified on or before the date the work authorization expired? _________________________

Note: The “90-day rule” for acceptance of receipts in lieu of missing, lost or expired documents only applies to individuals

who are already work-authorized. Thus an alien who is applying for his or her initial INS Employment Authorization

Document (EAD), would not come within the 90-day rule, while an alien applying for a replacement EAD would come

within the rule. Likewise, an alien applying for extension of H1B or L1B status would come under the rule, while an alien

applying for initial H1B or L1B status would not, except in the case of H1B portability.

Note: Although it is counterintuitive, the employer may not require the employee to produce any specific INS-issued

document when re-verifying employment eligibility, just as at the time of original hire. For example, if initially the

employee presented a List A document, at re-verification he can present one from B and one from C and the employer

must accept them if they are valid documents.

20. Has the final attestation been signed and dated? ____________

Mergers and Acquisitions

In the case where one company acquires another company, the purchaser does not have to fill out new I-9’s for

the acquired entity’s employees; however the new owner becomes responsible for all the I-9’s and may want to

consider an audit.

Consistency

Whatever procedures are adopted with regard to keeping document copies and attaching them to the I-9 or

using Section 3 to re-verify vs. filling out a new I-9 should be consistent throughout the company.

Copies are optional, but strongly recommended by the ICE inspectors.

Appropriate Form I-9 Version

The current version of the I-9 is dated 3/8/2013 and expires 3/31/2016.

The version prior to the 3/8/2013 was dated 8/07/2009 and expired 8/31/2012.

When correcting errors found on the 2009 form, make the appropriate changes on the 2013 version and staple

to the original I-9. It is also acceptable to ask the employee to complete the new form to correct the errors.

Storage and Retention

While USCIS does not require separation from personnel files, field representatives are asking businesses to

follow a few simple guidelines. 1) Keep I-9s and supporting documents in a separate, locked file cabinet.

2) Allow only 2 or 3 employees access to the file on a ‘need to know’ basis. 3) Some states may also guide

storage of I-9 and other HR related files.

Retaining Form I-9

Employers must have a completed Form I-9, Employment Eligibility Verification, on file for each person on

their payroll (or otherwise receiving remuneration) who is required to complete the form. Employers must

also keep completed Forms I-9 for a certain amount of time after their employees stop working for them.

Once an employee no longer works for the employer, the employer must determine how much longer to keep

the employee’s Form I-9.

To calculate how long to keep an employee’s Form I-9, enter the following:

1. Date the employee began work for pay 1. ________________________

A. Add three years to the date on line 1. A. ______________________

2. The date employment was terminated 2. _______________________

B. Add one year to the date on line 2. B. _____________________

3. Which date is later; A or B? 3. _______________________

C. Enter the later date. C. _____________________

The employer must retain Form I-9 until the date on Line C.

The employer is required to retain the page of the form on which the employer and the employee entered data.

If copies of documents presented by your employees are made, those too should be kept with Forms I-9.

You may also retain the instructions and Lists of Acceptable Documents pages. Forms I-9 may be stored on

paper, microfilm, microfiche or electronically.

Corrections

Employers may only correct errors made in Section 2 or Section 3 of Form I-9.

If you discover an error in Section 1 of an employee’s Form I-9, you should ask your employee to correct the error.

The best way to correct the form is to:

Draw a line through the incorrect information.

Enter the correct information.

Initial and date the correction.

To correct multiple, recording errors on the form, you may redo the section on a new Form I-9 and attach it to the old form. A new Form I-9 can be completed if major errors (such as entire sections being left blank or Section 2 being completed based on unacceptable documents) need to be corrected. A note should be included in the file regarding the reason you made changes to an existing Form I-9 or completed a new Form I-9.

Be sure NOT to conceal any changes made on the form (other than simple notation errors when copying document information). Doing so may lead to increased liability under federal immigration law.

If you have made any changes on Form I-9, we recommend you attach a signed and dated note to the corrected Form I-9 explaining what happened.

Inspection Checklist

If contacted for an inspection, ICE may require the following immediately or within 3 Days:

1. List of current employees.

2. List of terminated employees (3yrs)

3. Quarterly wage and hour reports (3yrs)

4. 941s (3yrs)

5. E-verify information

6. Full information on business, owners, partners. (including all EINs, SSNs, addresses, phone, email, etc)

7. SOP or Policies and Procedures on hiring new employees.

8. Organizational chart of company management.

9. All contractors and sun-contractors. (3yrs)

10. List of all recruiters for a fee. (3yrs)

11. List of all temp agencies. (3yrs)

12. All I-9s for current employees and terminated employees in the retention window.

Copyright 2013 * Andere Seminars, LLC * www.andereseminars.com

W 4 AUDIT CHECKLIST

1. Are the employee’s name, address, and social security number clearly printed and legible? ________

If not, employee must complete a new form.

2. Has the employee clearly designated a number of exemptions? _______

If not, employee must complete a new form.

3. Are there any strike-outs or other corrections? ________

If so, employee must complete a new form.

4. Has the employee chosen Exempt status and listed a number of deductions? _______

If so, employee must complete a new form.

5. Does every employee have a W4 on file? __________

6. Are all W4s being retained for 4 years from date of last use? ___________

*Do not shred an old form when a new one comes in. All forms must be kept for the 4 year from last use window.

7. Do we have a written policy against advising employees on W4 completion? _________

*You should have a SOP for all procedures. State what you do and what you DO NOT do.

8. Are all exempt status employees supplying a new W4 on or before February 15th of each year? ________

*After Feb 15th, you must return to single/zero. When the employee comes in to question the taxation on the next

paycheck the W4 will be updated. If they ask for a refund, the answer is NO per IRS.

9. Does our policy clearly explain the implementation of a new W4 given by an employee? ___________

*When will your employee see the change they have made to their W4? Most employers implement at the next payroll. You are allowed to hold the W4 30 days from the date of the change and then implement on that payroll.

10. Do we keep our W4s and any supporting copies of the SSC in a locked paper file or a secured e-file? ___________

*No matter how you store your W4s, be sure your files are locked and secure.

Copyright 2013 * Andere Seminars, LLC * www.andereseminars.com