Wednesday, November 19, 2014

Seven Ways in Which the Illinois Department of Employment Security (IDES) has Recently Made its Audits Much More Punishing!

November 2014
By: Nancy Joerg, Esq.



Over the 25 years in which I have represented hundreds of Illinois business clients faced with IDES audits, I have seen many significant changes in IDES audit policy. Some those changes brought welcome relief to my clients; some increased the pain.
Recently, however, the IDES audit division has instituted audit policies which penalize Illinois business owners tapped for audit by the IDES. Illinois business owners, their accountants, controllers, business managers et al should be hyper-alert to these radical and recent changes. Here are what I consider to be the “top seven”:

  1. IDES audit leads appear to be coming from an “outside source” (and based on the number of 1099 forms issued!). 
  2. IDES auditors are vigorously warning business owners about their potential “personal liability”!

  3. IDES auditors are warning companies being audited about potential FRAUD PENALTIES for repeated and intentional worker misclassification. Note: I have one of these cases right now – 60% fraud penalty piled on top of the audit assessment!

  4. IDES auditors now frequently start the audit two years back (this creates DOUBLE the interest! IDES interest rate is 24% a year).

  5. IDES auditors will usually audit a second year if the first year audited yields more than $2,000 in contributions owed to the IDES!

  6. IDES auditors will sometimes audit a third year if the second year audited yields more than $2,000 in contributions owed to the IDES!

  7. IDES auditors more frequently ask for records to be sent to them electronically and
    offer to skip any and all face-to-face meetings. (Bad idea – meet with the auditor and discuss all issues and concerns. Build a cooperative relationship.)

Remember, an IDES audit can result in a very large monetary assessment. Take it seriously. Plan all aspects of how you will approach the IDES audit and the auditor. Review your legal vulnerabilities before you meet with the IDES auditor, especially if you use independent contractors.

For assistance and strategic planning with IDES audits, hearings, and independent contractor agreements (or for consultations on limiting your liability in the use of independent contractors), contact Attorney Nancy E. Joerg, who enjoys a nationwide reputation in working with companies who use Independent Contractors of all types. Nancy Joerg can be reached at Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

Areas of Practice: Nancy Joerg represents employers in administrative actions, hearings, and audits before the Illinois Department of Employment Security, the Illinois Department of Human Rights, the Equal Employment Opportunity Commission, the Cook County Commission on Human Rights, the Illinois Department of Labor, and the U.S. Department of Labor.

She represents employers in all types of unemployment insurance (IDES) audits and hearings, independent contractor matters, discrimination charges, Employee Classification Act complaints, employee termination issues, and wage & hour issues (including exempt/non-exempt status for overtime, deductions from wages, and state and federal wage claims). Nancy Joerg effectively counsels and advises clients concerning preventive efforts such as the preparation and review of severance and release agreements, independent contractor owner-operator agreements, independent contractor-based manuals and websites, employee handbooks and personnel policies, anti-harassment training, sex harassment investigations, and the development of strategies to help ensure exemptions from overtime.

Nancy Joerg is the Managing Shareholder of the St. Charles, Illinois office of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. She has the highest rating--10.0 SUPERB - from Avvo, the largest and most widely used interactive attorney-client information directory in the nation.  She has been honored by her peers as a "Leading Lawyer," a distinction earned by fewer than five percent of lawyers who are licensed to practice in the State of Illinois. She has also been recognized in the National Law Journal for "excellence and achievements by the legal community.” Nancy was also selected (by other lawyers in Illinois) as Top Lawyer in labor and employment law in the Western Suburbs of Chicago as featured in the March/April 2013 issue of West Suburban Living Magazine. Nancy Joerg was named as one of the Top Ten Women Attorneys in Kane, Kendall & DeKalb counties, as published in the April 2014 issue of Law & Lawyers magazine. In June 2014, she was honored by Legal Leaders as a “Top Rated Lawyer in Labor and Employment Law,” based on her standing as an AV preeminent attorney.