SF 2152 (LSB 5919XS (2) 90)

SENATE FILE 2152

BY  DICKEY and KLIMESH

A BILL FOR

An Act relating to employer recordkeeping and auditing requirements for purposes of unemployment insurance and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 96.11, subsection 6, paragraph a, Code 2024, is amended to read as follows:
   a.  An employing unit shall keep true and accurate work records, containing information required by the department. The records shall be open to inspection and copying by an authorized representative of the department at any reasonable time and as often as necessary.  For each employee, the employing unit shall keep such records for three years after a calendar year in which remuneration that the records relate to was paid to the employee. If the employing unit did not pay remuneration, but remuneration was due, the employer shall keep such records for three years after the calendar year in which remuneration was due. An authorized representative of the department may require from an employing unit a sworn or unsworn report, with respect to individuals employed by the employing unit, which the department deems necessary for the effective administration of this chapter.
    Sec. 2.  NEW SECTION.  96.22  Employer field audits.
   1.  The department shall conduct field audits of employers by examining employer records to determine compliance with this chapter. Such audits shall be carried out by employer field auditors employed by the department. Procedures for such audits shall be in accordance with this section. The department may establish additional procedures for employer field audits consistent with this section by rule.
   2.  Prior to an employer field audit, the department shall give the employer reasonable notice of the intent to audit and conduct an in-person preaudit interview with the employer or a designated representative of the employer at the employer’s place of business or an alternative location mutually agreed upon by the employer and the department. The employer and the department may mutually agree to conduct the preaudit interview through alternative means, including but not limited to telephone, facsimile, electronic mail, or video conference.
   3.  Employer records subject to an employer field audit, if such records are maintained by the employer, may include individual pay records, federal internal revenue service forms W-2 and 1099, cash disbursement journals and check registers or the electronic equivalent thereof, federal and state tax returns, and other records required by this section.
   4.  To verify the correct business entity is listed in department files, the employer field auditor may examine business licenses of the employer or legal documents related to the initial establishment of the business entity or to any employee to whom the applicability of this chapter is in question.
   5.  To verify proper compliance by the employer with reporting requirements of the department, an employer field auditor shall conduct and document a detailed audit of check stubs, weekly time cards, the electronic equivalent of such documents, or other maintained source documents for at least one employee for at least one quarter. The detailed audit may be more comprehensive than provided in this subsection if the employer field auditor finds discrepancies in such records.
   6.  The department shall establish procedures for an employer to contest an employer field auditor’s decision regarding the applicability of this chapter to an employee. In any disputed case, the employer field auditor may, at the discretion of the presiding officer, be granted access to records to determine the remuneration paid for any calendar quarter at issue occurring within three years prior to the department’s issuance to the employer of a notice of intent to audit.
    Sec. 3.  APPLICABILITY.  The section of this Act enacting section 96.22 applies to audits conducted by the department of workforce development pursuant to chapter 96 commencing on or after the effective date of this Act.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to employer recordkeeping and auditing requirements for purposes of unemployment insurance under Code chapter 96. Current requirements for these matters are largely set out in rules of the department of workforce development.
   The bill requires that an employing unit keep records regarding an employee that are required for purposes of unemployment compensation for three years after a calendar year in which remuneration that the records relate to was paid to the employee. If the employing unit did not pay remuneration, but remuneration was due, the employer shall keep records regarding an employee that are required for purposes of unemployment compensation for three years after the calendar year in which remuneration was due.
   The bill requires the department to conduct field audits of employers by examining employer records to determine compliance with Code chapter 96 and establishes procedures for such audits. Such audits shall be carried out by employer field auditors employed by the department. The bill authorizes the department to establish additional procedures for employer field audits by rule.
   The bill requires the department to give the employer reasonable notice of the intent to audit and provides procedures for a preaudit interview with the employer.
   The bill provides that records that may be subject to audit include individual pay records, W-2 and 1099 forms, cash disbursement journals and check registers or the electronic equivalent thereof, federal and state tax returns, business licenses of the employer, and legal documents related to the initial establishment of the business entity or to any employee to whom the applicability of Code chapter 96 is in question.
   The bill requires an employer field auditor to conduct and document a detailed audit of check stubs, weekly time cards, the electronic equivalent of such documents, or other maintained source documents for at least one employee for at least one quarter. The detailed audit may be more comprehensive if the employer field auditor finds discrepancies in such records.
   The bill requires the department to establish procedures for an employer to contest an employer field auditor’s decision regarding the applicability of Code chapter 96 to an employee. The bill provides that in any disputed case, the employer field auditor may, at the discretion of the presiding officer, be granted access to records to determine the remuneration paid for any calendar quarter at issue occurring within three years prior to the department’s issuance to the employer of a notice of intent to audit.
   The provision of the bill relating to audits applies to audits conducted by the department of workforce development pursuant to Code chapter 96 commencing on or after the effective date of the bill.