Mark Twain and Payroll – Essential Payroll Series 2014

 

Have you ever read “The Notorious Jumping Frog of Calaveras County”?

The humor of Mark Twain is both simple and complex, I suppose the mark of a fantastic writer and thinker. I just completed the short story “The Notorious Jumping Frog of Calaveras County”. If you have not had time to read this humorous classic then it is worth your attention.

In the story there is one main character, Jim Smiley who likes to gamble. Without giving too much of the story away, Jim will bet on anything including his pet frog Dan’l Webster. Of course developments surrounding Dan’l Webster and Jim wagering with a stranger on whose frog can jump the longest distance is the climax of the story. The real humor is how the stranger out wit’s Jim in his haste to wager with the stranger. Believe me; Twains use of the southern dialect is impeccable and hilarious.

One aspect of Twains magic is, while the stories he tells are hilarious and the characters eternal, there is application to the story in today’s world. In “The Notorious Jumping Frog of Calaveras County” one of my thoughts had to do with the continual taking of unnecessary risks. In the story Jim is always looking for the next wager or chance, and most of the time he comes out the winner, but sooner or later everybody who gambles loses. Life is full of risks, some we control and some we cannot, but to continually take an unnecessary risk can be costly.

I am often asked, what are the odds our company will be audited by the IRS or Wage and Hour Division? I always say the same thing; it is 100% when we receive the letter notifying us of an audit. I do know this, some company is getting a letter today, I do not know who, but I know somebody is. It could by us tomorrow. We must always be conscious of the risks we take. In general we have to know the extent of the risk and can we “pay up” if we lose.

Most companies diligently work to stay up to date and in compliance with payroll regulations. The issue is that compliance with the regulations is mandated and if we make an innocent mistake we are penalize just as much as if we made the mistake intentionally.

Take the company in Cincinnati that contracted with the cable company to provide installation. The Wage and Hour Division has found them out of compliance for improperly classifying installers as independent contractors, they should have been paid as employees. After the reclassification the WHD divided the compensation the installers received by the number of hours they worked and is now requiring the company to pay over 1 million dollars in back wage for not paying minimum wage.

I believe we have to give the company the benefit of the doubt. My guess is they were not intentionally treating employees as independent contractors, they thought they were in compliance. In Twains story Jim loses the bet, but life goes on and he lives to bet again. The company in Cincinnati they may not be able to absorb a 1 million dollar hit.

Yea, some risks just come with life, but others we can manage.

If you want to feel confident your independent contractors qualify or if you have questions about a specific payroll law contact The Payroll Answer Guy – Gary Garner at 615-542-1919 or gary@illuminaregroupinc.com

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