FEATURE STORIES

Workers' Compensation
Task Force Focuses on Tax and Insurance Fraud in the Construction Industry

The Employee Misclassification Advisory Task Force was assembled in July 2011 to study and make recommendations to the Tennessee legislature on employee misclassification in the construction industry.  Employee misclassification occurs when an employer classifies employees as independent contractors or pays the employees “off the books” or in cash.  This practice is prevalent in the construction industry.

Based on estimates using 2006 data there were between 21,990 and 36,680 misclassified and unreported construction industry workers.  In Tennessee, misclassified and unreported workers are estimated to range from 11 to 22% of all workers in the construction industry.

In its recommendations to Tennessee legislators, the task force report suggested authorizing administrative penalties and expanding the authority of the Commissioner of Labor and Workforce Development to issue stop-work orders directed at noncompliant employers. Additionally, it recommended four additional investigators to work each section of the state.

Employers are encouraged to read the full report at the task force’s Internet site at /www.tn.gov/labor-wfd/EMEEF/ or participate in the task force’s public meetings, which are posted at www.tn.gov/labor-wfd/public_notices/public_notices.htm  

Those wishing to report suspected misclassification in the construction industry may contact the Fraud Tip Line at 1.888.243.7283.

Federal Tax Incentive
New Tax Credits to Help Put Veterans Back to Work
The Vow to Hire Heroes Act of 2011 amends and expands definitions of the veteran target groups for employers hiring veterans through the Work Opportunity Tax Credit program. Employers who hire veterans from one of five target groups can receive a tax credit against their income tax – as much as $9,600 when hiring a veteran who has received unemployment benefits for at least six months and has a service-connected disability. The certification process requires the employer to complete two forms within 28 days of the employee’s start-to-work date. For more information, contact Roger Littlejohn, state WOTC coordinator, at Roger.Littlejohn@tn.gov or (615) 253-6664.

EMPLOYMENT SECURITY
UPDATES

Reporting newly hired employees helps ensure employers assessed proper tax rate

Employers can help prevent fraud in the unemployment insurance program by filing New Hire Reports with the Tennessee Department of Human Services as soon as a new employee is hired. In fact, Tennessee Law §36-5-1101 to §36-5-1108 states employers must report their newly hired or rehired employees within 20 days of the date they are hired. See instructions for new hire reporting on the Department of Human Services Web site at https://www.tnnewhire.com/.

The most common cause of unemployment insurance fraud is employees’ working and not reporting their wages while collecting unemployment benefits. When employers promptly report new hires, fraudulent unemployment payments are reduced or prevented, thereby protecting the integrity of the unemployment insurance trust fund.

Reporting employees’ wages accurately is critical

We want to emphasize to employers the importance of promptly and accurately reporting each of your employee's wages to our department each quarter. Accurate wage item reporting will ensure your workers receive full credit for their wages earned in the event they file a claim for unemployment benefits. Accurate wage reporting on the part of all employers will also help make certain each employer's reserve account is charged for only those benefits for which his account should be charged.

One of the best ways to accomplish wage item accuracy is by reporting your employees' wages on electronic media, such as on disk, or by filing your quarterly wage and premium reports online at https://tdlwd.tn.gov/tnpaws/. It's now possible to 'upload' a wage file to "TNPAWS," making it quicker and easier than ever to file online. Reminder: Employers reporting 250 or more employees are actually required by law to report via electronic media or by filing online.

Workers' Compensation
Drug Free Workplace Program Underutilized by TN Employers

Tennessee employers can receive a 5% premium credit on workers’ compensation insurance when they adopt a drug-free workplace policy, and now employers who are self-insured for workers' compensation coverage can also benefit from enrolling in the Drug-Free Workplace Program of the Department of Labor & Workforce Development.

For all employers enrolled in the program – including those who are self-insured – the burden of proof when an employee tests positive for drugs or alcohol is now shifted to the employee to show “clear and convincing evidence” that drugs did not contribute to the cause of an accident.

An additional benefit is that if an enrolled employer refuses to hire a job applicant who is found in violation of his (the employer’s) drug free workplace policy or the employer disciplines an employee in violation, the action is considered done for cause.

Thousands of Tennessee employers have established drug-free workplace programs since the Department of Labor & Workforce Development certified the first worker in April 1998. Currently, close to 11,000 employers are signed up for the program, but only 5,000 of those are active – an important distinction.

“Employers must renew their applications to the Drug-Free Workplace Program annually to receive the premium credit and additional benefits for each subsequent policy year,” said Lance Wheaton, coordinator for the program. “The renewal process is easy. Employers just go online, complete and print the application, and mail it to us. We do not have a system in place right now to alert employers to renew their applications in the Drug-Free Workplace Program, but we suggest they look into it at the time they renew their workers’ comp insurance.”

To be eligible for the Drug-Free Workplace Program and its accompanying benefits, employers must have Tennessee Workers’ Compensation Insurance. Once employers establish proof-of-coverage, they can apply for or renew program participation at www.tn.gov/labor-wfd/forms/dfapp.pdf; print and mail the application to

Tennessee Department of Labor & Workforce Development
Division of Workers’ Compensation
Drug-Free Workplace Program
220 French Landing Drive
Nashville, TN 37243-1002

For more information on the Drug-Free Workplace Program visit the department’s Web site at www.tn.gov/labor-wfd/dfwp.html or e-mail program coordinator Lance Wheaton at Lance.Wheaton@tn.gov; (615) 532-1321.