Signature Issues - HR
HR and administration departments at mid-size U.S. firms commonly encounter issues involving a failure to sign tax forms, employee agreements, employee handbooks, I-9 forms, and nondisclosure agreements (NDAs) on time. These issues can cause firms to incur financial penalties and/or criminal charges.
To build upon the previous Wonder research that was done about common issues that HR and administration departments at mid-size US firms encounter when employees do not sign documents on time, we searched business websites such as the IRS site, Chron, The Balance Careers, and CBiz for more information on the rules regarding tax forms, employment agreements, employee handbooks, I-9 forms, and NDAs.
We have also defined mid-sized firms as small and/or medium firms since the firms mentioned in the sources we found are not exclusively categorized as mid-size.
According to the CBiz website, all businesses in the U.S. are required to have new employees sign IRS form W-4. The IRS website reveals that if employee-signed W-4 forms are not submitted, employers "must withhold federal income taxes from his or her wages as if he or she were single and claiming no withholding allowances."
Businesses should also have employees sign W-2 forms with the Social Security Administration, according to CBiz. Hard copies of W-2 forms must be filed by the last day of February while electronic versions must be filed by April 2nd. Mid-size businesses face a penalty of $75,000 annually if signed W-2 forms are submitted less than one month late, $200,000 annually if submitted by August 1st, and $500,000 if submitted after August 1st, according to the Chron website. The CBiz website reveals that employers can incur between 2-15% of underpayment and 0.5% in late fees per month up to 25% for failure to deposit Medicare, Social Security taxes, or federal unemployment taxes.
According to The Balance Careers website, businesses must have all employees complete and sign a Form I-9, Employment Eligibility Verification, "which is a requirement of the Department of Homeland Security-U.S. Citizenship and Immigration Services (USCIS)." The signing process of the I-9 Form must be done in the presence of employers, which "verifies and confirms that the employee is eligible to work in the country." According to The Balance Careers website, a lack of signed I-9 forms can result in "criminal charges levied on managers, owners, and HR staff members", while the Entrepreneur website reveals that a lack of signed I-9 forms can incur fines ranging from "$110 to $1,100 for each violation and $216 to $2,156 for each error or omission."
Non-Disclosure Agreement (NDA)
Mid-size U.S. firms are not required by law to have employees sign NDAs, but employers are encouraged to include an NDA or similar clause in their employee contracts because employers can only file a lawsuit against an employee who breaches the confidentiality of company operations if they possess a signed NDA, according to The Balance Careers website.
According to the Rocket Lawyer website, an employee handbook is meant to outline company policies, rules, procedures, and code of conduct. The employee handbook should cover topics such as Harassment & Discrimination, Safety & Security, Wages & Working Hours, and Behavior & Conduct.
The Florida Labor Lawyer website reveals that an employee handbook is not required, but can be helpful because a signed employee handbook/contract can "serve as evidence in a lawsuit depending on the offense that is committed, but only if it is signed by the employee." A signed employee handbook gives employers the legal right to justify which offenses are terminable offenses.
According to the Small Business Bonfire website, mid-size U.S. firms often make the mistake of not making their formal employment agreement in written form. The lack of a signed written employment agreement makes firms susceptible to wrongful termination lawsuits. Employment agreements also prevent employees from competing against their former employer.