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The number of states requiring private employers to use E-Verify — the federal web-based system used to verify employment eligibility — is expanding, as Florida’s governor signed Senate Bill 1718 on May 10, 2023. The legislation includes provisions impacting private employers with 25 or more employees. Some provisions of the expanded law go into effect July 1, 2023, while other provisions have different effective dates.

Currently under Florida Labor Statute XXXI, the state requires private employers to verify an individual’s eligibility for employment after an offer has been accepted, using either the E-Verify system or by requiring the employer to retain copies of the same documents presented to complete Form I-9. That statute, which took effect Jan. 1, 2021, also requires the use of the E-Verify system for all public employers, contractors, and subcontractors.

What Is E-Verify?

E-Verify is a federal government program available since the mid-1990s to employers to verify employment eligibility of newly hired employees. The system is designed to help mitigate the risk of hiring and employing individuals who are not authorized to work in the United States. Certain federal contractors are required to use the system, and since the 1990s and mostly in the past decade, 23 states and localities have adopted legislation that mandates the use of E-Verify for certain employers.

E-Verify is available, however, for any employer to utilize voluntarily.

The E-Verify system compares information from an employee’s completed Form I-9 with records available to the U.S. Department of Homeland Security and the Social Security Administration. Form I-9 — the federal form used to verify the identity and employment authorization of individuals hired to work in the U.S. — includes multiple sections. Employees must complete every field in Section I (bullets below), with the exception of their telephone number, email-address, and social security number.

• Name
• Address
• Date of birth

However, if the employer participates in E-Verify, employees must provide their social security number.

E-Verify is designed to provide real-time results that enable employers to know if an individual is eligible for employment in the United States. If there is information that does not match, the employer and employee are provided with details on how to resolve the situation.

States Requiring All or Most Employers To Use E-Verify

The states that require all or most employers in their state to use E-Verify are Alabama, Arizona, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, and Utah. Florida joins this list on July 1, 2023, when it will mandate the use of E-Verify for private employers with 25 or more employees.

While certain public and private employers and government contractor might be required to use the E-Verify system under applicable law, any business in any state may use the system to verify new hires voluntarily.

However, employers should discuss with legal counsel whether they would want to do so voluntarily.

Are Public Employers Required to Use E-Verify?

In addition to Florida, there are also some states, counties, and cities that require public employers and employers with government contracts to utilize E-Verify. Under a presidential Executive Order, certain federal contractors in every state, as well as their subcontractors, are required to use E-Verify under the Federal Acquisition Regulation (FAR). Exemptions and exceptions to this requirement can be found on the E-Verify website.

What Florida Employers Should Know About Senate Bill 1718

Employers covered under the new Florida law (SB 1718) must comply with the federal requirements of the E-Verify system for newly hired employees (not independent contractors) beginning July 1, 2023. Compliance with the E-Verify system prohibits employers from creating cases for employees hired before the employer enrolled in E-Verify.

The following, although not inclusive of every requirement, are just a few of the obligations employers have once an employee is hired. The E-Verify website has more details about your requirements.

• Employers have three days after the first day a new hire begins work to create a case in E-Verify to confirm the employee’s employment eligibility.
• If an employer is unable to gain access to the E-Verify system in those first three business days after a new hire, the employer must retain proof of inaccessibility (e.g., a screenshot of each day the system could not be accessed, an announcement that the system was unavailable).

Employers are also subject to recordkeeping obligations under Senate Bill 1718 that include retaining copies of the documentation presented by the newly hired employee when completing Form I-9 along with any official verification generated from the E-Verify process.

Additional employer compliance requirements under the Florida legislation include certification on its initial return each calendar year of the Re-employment Tax Return.

An employer who voluntarily uses E-Verify and wishes to document usage of the system may also make a certification on its first return each calendar year.

What Are the Penalties for Non-Compliance with Florida’s Senate Bill 1718?

Starting July 1, 2024, enforcement will begin for covered employers. If an employer fails to use the E-Verify system to verify the identity and work authorization of each new hire, the employer will be notified of a determination of noncompliance by the Department of Economic Opportunity and will have 30 days after notification to cure this noncompliance.

Penalties might be assessed for employers who fail to use the E-Verify system three times in any 24-month period. This:

• Might result in fines of up to $1,000 per day until sufficient proof of compliance is provided.
• Could result in suspension or revocation of licenses such as a franchise, permit, certification, registration, charter, or similar form of authorization required by law.
  • The number of days such licenses will be suspended varies with the number of unauthorized individuals employed.

Additional provisions and penalties can be found in the legislation.

If you hire employees, you want their employment to be a positive experience. However, an applicant, or current or former employee may take legal action against your company that could put the company at risk. To help mitigate your exposure from costly claims, employment practices liability insurance can offer some protection. Learn more about EPL insurance, how it compares to other common types of business insurance policies, costs associated with such a policy, and how EPLI can help protect your business.

What Is EPLI?

Employment practices liability insurance, commonly referred to as EPLI or EPL insurance, is a type of business insurance policy that helps cover company losses associated with certain employment claims alleging violations of the rights of an employee or applicant for employment. If a job applicant, or current or former employee takes legal action against your business, EPLI may help cover defense costs and damages, regardless of the outcome of the action. Learn more about what may be covered under EPLI policies.

EPLI may be purchased as a standalone business policy. It's also common to bundle this coverage as part of a business owner's policy or general liability policy.

What Is the Difference Between EPLI and Workers' Compensation Insurance?

EPLI and workers' compensation insurance are separate types of coverage. EPLI helps protect the company against certain employment-related claims including wrongful employment practices. Although there is no legal requirement to carry this coverage, it may be a good business decision for any company hiring employees. Workers' compensation insurance policies, on the other hand, cover medical expenses and lost wages for employees who experience a work-related injury or illness. Workers' compensation insurance is mandatory for most employers in most states.

Is EPLI the Same As Errors and Omissions Coverage?

No, EPLI and Errors and Omissions (E&O) insurance are distinct coverages. Generally, EPLI provides protection from certain employment-related claims, while E&O covers liabilities stemming from customer or client claims. For example, errors and omissions would help cover court costs and settlements if a customer were to file a lawsuit alleging negligent actions in your professional services. A common claim errors and omissions might cover is a suit for breach of contract. E&O policies often cover the business owner and employees.

What Is the Difference Between EPLI and Directors and Officers (D&O) coverage?

D&O coverage is a form of professional liability insurance that protects the personal assets of company executives, officers, and board members in the event they are sued for alleged wrongful acts in managing a company. It can provide coverage for employment issues (but only for covered individuals, i.e., directors and officers) and can also cover things like breaches of fiduciary duty. Additionally, any business with a board of directors, including small companies, can have a D&O insurance policy. While EPLI can also be beneficial for businesses of any size, the policy’s aim is to protect the company from allegations from applicants and current or former employees. Whereas D&O insurance provides liability protection for claims brought by people outside of a company, such as dissatisfied clients or investors.

EPLI Claims Examples

Employment-related claims can result in significant negative impacts to a business's bottom line, reputation, and productivity. Common EPLI claims may include:

• Wrongful termination: While many employees are employed at-will (meaning that the employee or employer can terminate the employment relationship for any reason or no reason at any time except where prohibited by state law or public policy), employees may claim that they were wrongfully terminated.
• Charges of workplace harassment: An alleged harasser can be the victim's supervisor, a supervisor in another area, a co-worker, a subcontractor, or someone outside the company, such as a delivery person or vendor. Harassment victims may include any individuals affected by the offensive conduct, not just the person targeted by the harasser.

Who Needs Employment Practices Liability Insurance Coverage?

With the number of employment-related claims filed with the EEOC, given the steep costs associated with employment related claims, nearly any business with a workforce can benefit from EPLI coverage and mitigate their financial exposure. While no industry is immune from employment-related risk, a few examples of industries that could particularly benefit from EPLI coverage include:

• Retail, an industry known for high turnover rates, may be susceptible to claims alleging age discrimination, harassment, or wrongful termination.
• Hospitality, which could experience claims of harassment.
• Professional services, in which businesses may have to handle claims around issues such as harassment, gender and age discrimination, failure to promote, and wrongful termination.
• Manufacturing and construction, where ebbs and flows in the amount of work a business has can lead to layoffs which increases the chances that employees will claim they were wrongfully terminated.
• Healthcare, where employees may allege experiencing harassment.

How Much Does EPLI Cost?

The cost of EPLI insurance policies will vary, and depend on your industry, employee count, the jurisdiction where you operate, whether your business has any history of similar employment-related litigation, and if you have established and consistently enforced employment policies, often documented in an employee handbook, in place. Often, an EPLI policy covers legal defense fees and settlement costs or damages (up to your policy's limit), whether you win, settle, or lose a case.

EPL Insurance Can Help Protect Your Business

Employment practice claims have become one of the fastest-growing sources of litigation. Make sure your business is prepared to mitigate the cost of these claims with protection through employment practices liability insurance. You may also want to learn more about how you can manage overall risk with our comprehensive guide on business insurance basics.

A compensation plan includes a company’s set of guidelines for delivering employees’ base pay, bonuses, and equity. A well-designed plan may also provide strategy for future company goals around employee compensation.

Having a compensation plan is a major component of your business. An employee's compensation and benefit options may significantly affect the quality of your workforce and your company's ability to attract and retain talent. A comprehensive compensation plan not only sets the value of what you’re paying, but also defines roles, levels, and outlines how performance will be evaluated.

Your business compensation costs, however, are more than simply an expense.

A compensation plan can play an important role in an organization’s overall budgeting and planning process. It can assist an organization in setting their budgets for employment-related expenses. Employers may also use a compensation plan to document benefits for employees to qualify for federal or state tax incentives. A documented compensation plan can establish guidelines and assist in complying with state and local pay transparency laws.

Compensation plans should comply with applicable state, federal, and local laws while striving to achieve internal fairness among similarly situated employees. It is important to note that where a state or local law provides a higher protection or benefit to the employee than exists under federal law, employers usually must comply with the more generous state or local statute. It’s always a great idea to have the compensation plan reviewed by an HR professional or outside counsel to help ensure competitiveness and compliance.

The Importance of a Compensation Strategy and Its Benefits

Generally, a compensation strategy includes the goal of attracting, motivating, and retaining top talent for the organization.

A compensation strategy should align with the company's values and objectives along with an explanation of how the plan will be implemented. The strategy should support the company's overall mission, vision, corporate culture, and strategy.

In developing a compensation strategy, the organization should determine whether they will set compensation at, above, or below market values and the degree to which employee benefits should complement the compensation package.

A company should also be aware of external factors (comparison of your pay practices within an industry), pay transparency laws, and internal factors (how you pay your existing employees versus each other and as compared to new employees).

Having a comprehensive and documented compensation strategy helps when an organization is looking to hire and retain talent. With a solid strategy in place, an employer can:

• Set pay ranges that can be used to assist in planning and budgeting
• Show employees how their compensation is tied to company values and the strategic plan for success
• Guide compensation decisions for newly created positions within the company
• Implement a methodology that helps to ensure that employees with similar knowledge, experience, and job duties are paid in a fair and consistent manner

When based on a solid strategy, a compensation plan can provide the following benefits to employers:

• Helps the company attract and retain talent
• Improves job engagement and job satisfaction for existing employees
• Sets parameters around compensation spending and provides a resource employers can use to evaluate their compensation practices against the industry standards
• Assists with compliance with pay transparency laws

What Is an Employee Total Compensation Package?

An employee's total compensation summary can be described as an employee’s direct compensation plus the benefits and incentives your organization offers. An employee total compensation package stretches beyond an employee’s rate of pay and often includes things such as benefits, bonuses, stock options, and non-monetary perks.

What's Included in a Total Employee Compensation Package?

When negotiating compensation with an employee or prospective employee, they may ask for certain items, such as a retirement savings plan, or a performance-based bonus, depending on what is most important to them.

A Total Employee Compensation Package will generally detail how the employer intends to pay the employee for their services (e.g., per-hour, weekly salary, etc.). If the employee is eligible for commissions or bonus programs, they should also be included. In addition to direct payments, compensation packages may outline indirect pay such as benefits plan options available and non-financial perks.

Additionally, the employer may opt to include a statement of other, nonfinancial items associated with employment, such as an in-house fitness center, career development programs, or employee recognition awards.

To attract top talent, Total Employee Compensation Packages should align with industry benchmarks and the relevant job market. Employers should audit their benefits packages regularly to ensure the total compensation they're offering is cost-effective and a good fit for employees.

Types of Compensation

A compensation plan typically identifies the different types of compensation offered to employees. There are two categories of compensation: Direct Compensation and Indirect Compensation.

Direct Compensation

Direct compensation is the monetary amount given directly to an employee. This amount is typically based on an annual salary amount, hourly rate, piece rate or a commission percentage and is included in the paycheck. Monetary bonuses and other financial incentives are also included in direct compensation.

Indirect Compensation

On the other hand, indirect compensation is the non-monetary amount given to an employee. For example, benefit programs, profit sharing plans, or other incentives that are not paid directly to the employee. Paid time off, the employer's contributions to benefit plans, and other benefits such as student loan assistance are considered indirect forms of compensation as well.

Indirect compensation may also include non-monetary perks with values that are more difficult to measure. Flex time or remote work arrangements, career development programs such as in-house mentorship, and employee recognition awards are examples of non-financial compensation that can provide value to employees.

Incorporating the Different Types of Compensation Into an Overall Plan

Within an overall compensation plan, different types of compensation are used to attract and retain employees. These types of compensation may be non-financial, benefits or direct monetary payments.

Direct compensation can be calculated using an employee's base pay, variable pay, or a combination of both.

Base pay is typically paid to an employee for performing specific job responsibilities. It can be paid as a salary or hourly amount.

When building a compensation plan, each position and its associated responsibilities should be reviewed to determine the appropriate base pay for the position.

In addition to base pay, employers may choose to offer variable-based monetary compensation in the form of bonuses for example. Variable pay can be used to incentivize employees toward achievements that help the company meet or exceed its overall strategic goals. Variable-based pay may include things like performance-based bonuses, profit sharing programs, employee recognition bonuses or safety bonuses.

Employee Compensation Plan FAQs

What Are the Top Employer Costs Related to Employee Compensation?

Employer costs for compensation may include the following items:

• Base Pay
• Overtime
• Payroll taxes
• Employer's share of benefit plan costs
• Bonuses
• Wellness programs
• Tuition reimbursement
• Student loan assistance
• Expenses related to the use of a company car
• Employee stock purchase or stock option plans

What Is Total Compensation?

Current and prospective employees often make career decisions based on the concept of total compensation. Some prospective hires may be willing to trade a lower salary for a richer benefit plan or more flexible work hours. Presenting employees with their total compensation from all sources, not just their base pay, can help the organization increase their ability to attract top talent and will better assist prospective employees with weighing career decisions.

How Do You Structure a Total Employee Compensation Package?

Employers can create a standard template listing all elements of compensation and fill in the line items as they apply to each individual employee. The compensation package template can be used to create offer letters and annual compensation reports for employees. Total Employee Compensation Packages may include the following items:

• Base pay, such as an hourly rate, weekly salary, or annual salary
• Variable pay, such as bonus or commission
• Value of benefits offered to employee
• Additional rewards such as flex-time options that can be described in non-monetary terms, or quantified, if possible

How Do You Calculate the Cost of a Total Employee Compensation Package?

On an annual basis, total employee compensation can be calculated based on the direct and indirect payments made throughout the year. The payments should include any compensation given to the employee in connection with fulfilling their job duties.

What Are Total Compensation and Total Reward Statements?

To increase employee understanding of how they are being paid and the cost of benefits being offered by the organization, employers may consider providing a total compensation or total rewards statement to employees. Both statements explain to employees how they are compensated or incentivized for their work.

Total compensation statements typically cover the amounts included in a compensation package: pay, bonus, commissions, and employee benefits.

In comparison, a total reward statement generally includes the components of a total compensation statement plus additional items. Job perks that are more difficult to measure on a cost basis but still make an impact on employees may be found on a total rewards statement. This may include (but is not limited to):

• Service or recognition awards
• Career development services available to employees
• Vacation and Leave benefits
• Retirement benefits such as pensions and/or 401(k) matches
• Health Care Benefits
• Child or Elder Care
• Legal Assistance
• Tuition Reimbursements

Ultimately, it's up to the employer to decide which statement option works best and when they should be distributed. A system such as Paychex Flex^® Analytics and Reports Center can be used to generate a Compensation Summary Report at any time during the year. This type of report provides employees with access to their total compensation, including monetary earnings, bonuses, and medical and retirement benefits, providing an increased level of transparency.

Stay Competitive With a Well-Developed Compensation Plan

Solid data and analytics are the building blocks of a fair, competitive compensation plan. In addition to broader compensation studies and benchmarking reports, in-house data gathered in systems such as Paychex Flex Analytics and Reports Center can provide information needed to help create a competitive compensation plan.

If you're creating or revising your company's compensation policies, the HR professionals at Paychex's HR Consulting Services can offer guidance and support. We can work with you to create a benchmarking report. We'll also help by making recommendations to boost your recruiting and retention efforts.