Newsletters

Nonprofit Report - October 2017

Date: October 31, 2017

Foreign Workers in the Trump Era - Immigration Compliance and Managing Your Workforce
By: Peter D. Guattery

Originally published in Association TRENDS magazine.

On the campaign trail, now President Trump spoke of getting tough on immigration violators – both those unlawfully present in the U.S. and the employers who facilitate their presence here by hiring undocumented workers. Many articles followed as to precisely what this get tough attitude would mean with respect to worksite enforcement, including I-9 compliance, as well as to those employers who currently employ work authorized aliens in lawful status.

Since Jan. 20, 2017, the primary focus has been on the “travel ban,” which primarily affects nationals of six countries. Under the original order, lawful permanent residents could have found themselves barred from the U.S. if they traveled abroad, and nonimmigrant workers, in lawful status, could have found their visas revoked. Therefore, employers with workers who held citizenship from these six countries, would need to consider the possibility of the employee being unable to return to the U.S. if they traveled abroad, or having their lawful visa status cast into doubt. While the current travel ban is less extensive, a victory at the Supreme Court for the administration could open the door to broader restrictions.

There has also been a clear uptick in enforcement activity. Though, it is almost entirely at an individual level, with the official focus on alleged “criminal” aliens. This standard has been broadly read to include persons with outstanding orders of removal, and even DACA recipients (usually students who came to the U.S. when young), may have been granted deferred action to permit them to remain in the U.S. and obtain work authorization under the prior administration. It is too early to determine whether enforcement activity against employers has increased; however, given the doubling of fines last November, and a new mandatory I-9 form coming into effect in January, employers are urged to review their compliance policies immediately.

Other potential areas of concern include the H-1B program, which is the mechanism through which employers are able to hire foreign professional workers to offset shortages of such workers in the U.S. The administration has indicated an intent to increase scrutiny of H-1B petitions and to strengthen its fraud investigations. As of this writing, however, the only concrete actions have been the elimination of premium processing, ostensibly for backlog reduction purposes, and narrowing the eligibility of computer programming occupations for the visa category. Other changes, such as restriction the visa category to high paying occupations, have also been suggested.

Finally, consular offices have started to vet certain visa applicants more closely; part of the “extreme vetting” promised as part of the general election campaign. This vetting includes asking for social media handles, accounts, and other such information. A supplemental questionnaire came into effect on May 25, which is being used to obtain more detailed information from selected visa applicants. This program is currently temporary, and scheduled to expire in November, but it seems likely that it may be extended permanently. The net effect for employers is that they may encounter delays with the arrival or return of foreign workers whose home countries fall within the net of this new vetting procedure.

Overall, these changes reflect a fluid environment for immigration compliance, and association employers are well advised to keep abreast of new developments and understand how they may affect their current workforce.


The Frequently Neglected 403(B) Plan - Errors May Be Costly
By: Mary Claire Chesshire

Originally published in Association TRENDS magazine.

We previously discussed the differences between deferred compensation plans for tax-exempt employers, in particular; the tax attributes of Internal Revenue code Section 457(b) and 457(f) plans. (Mind Your B's and F's: A Primer on Deferred Compensation Plans for Tax Exempts, Association Trends, May/June 2015). However; participation in 457(b) and 457(f) programs is limited to a "select group of management or other highly compensated employees" and those arrangements generally serve as a supplement to the retirement programs available for all employees.

Until 1996, most tax exempt employers were limited to offering tax deferred annuity programs governed by Code Section 403(b) as the retirement plan for all employees.  Beginning in 1996, the more popular 401(k) plan was available for adoption by tax exempt organizations.  However, due to employee familiarity with the existing programs and investment options, many employers hesitated to convert to 401(k) plans and many 403(b) plans are still operational.  However, these plans traditionally have not received the same level of support from the recordkeepers and institutions that hold the contributed funds, particularly if the programs allow only for employee contributions.  

Association executives are frequently the named fiduciaries of 403(b) plans or are deemed to be fiduciaries due to their status as officers.  Accordingly, ensuring that the programs operate correctly should be on executives’ radar screens.  Following are frequent issues that arise with respect to plan operations and questions you should be asking:

  1. Do you have a plan document?  Surprisingly, many 403(b) plans continue to operate with no formal plan document.  Lack of a plan document jeopardizes the tax qualification of the plan and renders enforcement of the provisions difficult, if not impossible.
  2. Are all employees eligible to make deferrals on their date of hire?  While an hours requirement and a waiting period may apply for employer contributions, the “universal availability” rule for 403(b) plans requires that all employees be eligible to make deferrals immediately following their hire, with limited exceptions.  Any exceptions must be spelled out in the plan document – see Item 1. above.
  3. Do you transmit employees’ deferrals to the accounts in a timely manner?  A good rule of thumb is to transmit the deferrals as frequently as withholding taxes are transmitted.  
  4. If your plan allows loans, are the loan limits followed?  This rule may be difficult to administer if participants have multiple accounts with different vendors and is one of many issues that supports a recommendation to consolidate to one vendor.
  5. Are the investments made available to employees monitored regularly with the assistance of an investment professional?  Monitoring entails reviewing internal costs and investment return – the subject of frequent class litigation.  

This list is by no means complete, but is intended to alert executives to the common issues we encounter, usually after the issues become problems.