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Form 1099 for Mexican Nationals

I have a small start up business in marketing, digital design, website design, and all other consulting services for small business owners. Services can be done remotely, by phone or email. There is no need for face to face in certain transactions. For example, I bought a logo for my company from a gentleman in Ireland, and a sketch from a London artist. My question is if I can recruit Mexican Nationals living in Mexico to solicit their trade as independent contractors for my business? There will be no office in Mexico initially, only in California. No necessary meetings will take place in California. It will all be conducted via email and/or phone, etc. Can I massively recruit consultants, giving them 1099 forms, even if they are Mexican nationals, from Mexico?

Businesses in the United States are permitted to hire Mexican Nationals living in Mexico. But, there are considerations in doing so.

It’s important that the individuals are properly classified as independent contractors. Basically, the employer has less control over an independent contractor. The employer controls only the end result of the work, not the specifics of how, when and where the work is completed. Plus, people who are in an independent trade, business or profession in which they offer their services to the general public are generally independent contractors, per the IRS. Feel free to review our previous posts regarding independent contractors versus employees or post a comment for more information on this.

Another consideration is your requirement to withhold taxes and report payments to the IRS. A foreign contractor who performs all work in his country does not have what is referred to as source income. Thus, there is no need to withhold taxes or report payments made.  Keep in mind, changes to your arrangement such as the foreign contractor conducting services in the U.S. even for a limited time will alter your withholding and reporting requirements.

Also, Form 1099 is used when a U.S. business hires an independent contractor who is a U.S citizen. Thus, the form wouldn’t apply in your case. The equivalent form for overseas contractors is Form W-8BEN. Though you may not have to report payments made to the foreign contractors at this time, this form establishes the individual’s status as a foreign person.

Due to the legal particulars in hiring a foreign contractor, it’s in your best interest to consult with an experienced lawyer. There are other things to consider that a lawyer can best advise you on including creating a solid contractor agreement that meets the requirements of both countries legal systems, complying with both countries tax laws, the best way to actually pay foreign contractors, and other helpful information to avoid legal issues. It may cost you some money up front but it will prevent costly issues in the future.


January 21st, 2017, 3:33 PM |  Posted in: Hiring and Staffing |
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Form I-9

From what I have read, waiting until the first day of actual employment is when a new hire should complete the I-9 and supply the ID. Does this go for employees who have been completely cleared to work, just waiting for their first day? Also, if the “new hire” paperwork is done at a different location then where they are working, in a multi-location business, are they still required to complete it on the first official day?

The United States Citizen and Immigration Services requires employees to complete Form I-9, specifically Section 1, on their first day of employment (the date work duties begin) or before their first day of hire as long as the individual has been offered and accepted the job. So, the new hires can complete their I-9s in advance of their start date.

Employers must complete Section 2 within 3 business days of the employee’s date of hire (the date work duties begin).


January 21st, 2017, 2:28 PM |  Posted in: Hiring and Staffing |
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Hours Worked in California

What is the rule in California if an employee wants to work more than 8 hours per day in order to get work done?

Neither California law nor federal Fair Labor Standards Act (FLSA) limits the number of hours per day or per week that an adult employee can work. However, under both laws nonexempt employees must be paid one and one half times their regular rate of pay for any hours worked over 40 hours in a workweek. California law further extends overtime pay requirements to include all hours worked over 8 hours in a workday.

An employee’s schedule and ability to work more hours is a matter of agreement between the employer and employee. Thus, if an employee wants to work more hours to accomplish his duties, it’s up to the employer to approve or deny the request. If the employer approves the extended work hours then a nonexempt employee must be compensated in accordance to the overtime provisions previously mentioned.


January 21st, 2017, 2:13 PM |  Posted in: Compensation, Labor Laws |
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Provider Not Filling Out Paperwork

I have an employee who has requested FMLA for an upcoming surgery. She completed her request form at which time a prepared and sent over the Certification form to her provider. I received a note back from her provider stating they would not complete the certification until the patient’s Post Op appointment (two weeks post op). What do you suggest we as the employer do in this circumstance? Does the doctor have the right to do that?

The federal Family and Medical Leave Act (FMLA) entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons.

Employers may require employees to submit a certification from a health care provider to support the employee’s need for FMLA leave to care for a covered family member with a serious health condition or for the employee’s own serious health condition. Requesting a certification for leave to bond with a newborn or newly placed child is not permitted.

Most health care providers complete certifications in a timely fashion since they understand the importance of the FMLA and its impact on an employee’s job. Some providers prefer to wait to complete the certification until after a procedure is performed. Unfortunately, this seems to becoming more common due to financial reasons. It’s really a matter of preference by the provider. Providers can’t be forced to complete the certification.

When providers prefer to complete the FMLA certification after a procedure is performed it leaves HR in a bind. The point of the certification is to provide the employer with enough information to determine if the employee’s absence is for a FMLA qualifying reason. It’s hard to make that determination without the appropriate information. Plus, employees are generally required to submit the certification within 15 calendar days after the employer’s request. This can be impossible if the provider is refusing to complete the paperwork in advance.

Still, the employee has informed you that he/she is having a procedure done and hopefully the employee has provided enough information for you to know whether the procedure is covered under the FMLA. Thus, the absence shouldn’t be counted as unexcused and the employee shouldn’t be denied FMLA or disciplined for the absences.

The best practice is to ask the employee for a letter from the provider confirming he/she is scheduled for a procedure on a specified date and the FMLA paperwork will be submitted after the procedure, which it sounds like you may already have.

The FMLA allows a leave to be designated as FMLA leave without medical certification as long as the employer has sufficient information to do so. So, as long as you have the provider’s letter and sufficient information from the employee to determine the leave will be for a FMLA qualifying event then the time can be designated as FMLA leave now. Keep in mind, this should only be done when you have confidence the leave will be for a FMLA qualifying event.


January 20th, 2017, 2:56 PM |  Posted in: Labor Laws |
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BOD’s Access to Employee Payroll Checks

Is there a problem with disclosing individual employee payroll check amounts in the check register which is part of the financial reports reviewed each month by the BOD of a small non-profit corporation?

The confidentiality of payroll information is important mainly due to the sensitive nature of the data contained on employees’ paystubs such as the employee’s name and address, direct deposit information, and company financial data. All of this information can be used for fraudulent activity. Thus, employees’ paystubs should remain confidential.

It sounds like the Board of Directors (BOD) is just interested in the payroll amounts. In this case, the main concerns are will the employees’ names be listed as well, who will have access to the information, and what is the purpose of sharing the information.

Basically, the role of a BOD is to provide oversight and management of the company’s operations to ensure their alignment with the company’s missions and objectives. In doing so, the BOD is responsible for the financial resources of the company, including ensuring the prudent use of all its assets (i.e. employees).

Usually, the salary scales of each position are provided to the BOD for review as needed and the total amount spent on employees’ salaries (sometimes by department/division) are provided as part of the annual budget analysis. The BOD or its HR Committee may occasionally request a full list of employees’ names and salaries to ensure employees are being paid fairly and appropriately, and to be certain the salaries are within the budget limitations. It’s not common to provide employees’ names and salaries monthly to the entire BOD.

There may not be any legal issues with disclosing the employees’ salaries to the BOD on a regular basis but it still may not be a good idea.

Consider the risk of the information being disclosed to a third party who then shares it with an employee or two. Now employees know how much each other are getting paid. This may cause resentment among some employees, not only because someone may be paid higher than another in the same position but also because most employees feel their salaries are private.

Is there a legitimate business need for the information on a monthly basis? If not, don’t do it. If the information is really needed, then consider providing it but just without employees’ names.


January 20th, 2017, 2:06 PM |  Posted in: Human Resources Management |
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