Employment Regulation

The area of employment regulation promises to be an active one for the duration of the current administration. Paychex is closely monitoring developments and trends associated with this area at the national, state, and local levels. Two employment regulation topics of current interest are:

Background Checks

In April 2012, the U.S. Equal Employment Opportunity Commission (EEOC) released enforcement guidance regarding the use of arrest and conviction records by employers when making employment decisions. Specifically, the guidance indicates that an employer’s use of an individual’s criminal history in making employment decisions may, in some instances, violate the prohibition against employment discrimination under Title VII of the Civil Rights Act of 1964, as amended. Based on the Strategic Enforcement Plan finalized by the EEOC at the end of 2012, we expect they will continue their focus on the enforcement of laws related to hiring practices throughout 2013, and more than likely the release of federal enforcement guidance on the use of credit checks. In addition to activity on the federal level, we have also seen several states and localities pass legislation restricting the use of criminal histories and/or credit checks, and anticipate continued activity at both the state and local level. This activity may require employers to use caution when including background checks as part of their hiring process.

Worker Misclassification

There continues to be an increase in enforcement efforts from and between the Internal Revenue Service (IRS) and the U.S. Department of Labor (DOL) with regard to the misclassification of workers as independent contractors. There is pending legislation at the state and federal levels, as well as executive orders at the state level establishing task forces to look at this issue. Industries in low-wage sectors such as hospitality and construction have been targets of national and regional enforcement efforts this year.