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401(k) Eligibility
Benefits & Compensation
401(k) Eligibility
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
We have a department that hires new employees off the payroll books (1099) for a week pending background checks; they get processed into the system once they are cleared, however their hire date they
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Forums » Topic Forums » Benefits & Compensation » 401(k) Eligibility
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401(k) Eligibility
posted at 6/22/2010 7:35 AM EDT
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Posts: 1
First: 6/22/2010 Last: 6/22/2010 |
We have a department that hires new employees off the payroll books (1099) for a week pending background checks; they get processed into the system once they are cleared, however their hire date they use is second week not the week they actually started. I'm not sure how this affects our retirement plan. Eligibility for the Plan states employees be 21 yrs old and have 30 days of service. Employees hired in this department are shorted a week of service since the first work week is not counted on the payroll. I can't seem to find anything on this specific situation. Our plan also has profit sharing, which is based on hours of service. Help! |
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401(k) Eligibility
posted at 6/22/2010 7:40 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
It's going to depend on how your 401k plan is written and how/if other related service is counted.
That said, I would be MUCH MORE concerned over changing a person from a 1099- /> employee with the only difference being a BG check....I assume they will be doing all the same duties. This does NOT pass the smell test and could get you in just as much (OR MORE) trouble than the issue that you see with eligibility under your 401k plan. |
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401(k) Eligibility
posted at 7/7/2010 9:10 AM EDT
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Posts: 3
First: 12/2/2003 Last: 7/7/2010 |
You infer other departments do not follow this practice. Do they not do BG checks, or hire them pending the results? I agree with rrupert, you have more issues with your hiring practices than your 401(k). Your plan document will determine eligibility. |
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401(k) Eligibility
posted at 7/7/2010 9:27 AM EDT
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Posts: 1
First: 7/7/2010 Last: 7/7/2010 |
I agree that there are more issues related to hiring someone under 1099 circumstances for a week. A few years ago our company did the same thing. The "contractor" was injured on the job. He did not carry workers comp insurance on himself and he was not an employee, so he wasn't covered here either. Needless to say, we no longer hire them as 1099's or "temps" and we don't have someone start a job until their BG check is completed. Why does only 1 department do it this way? That's a little odd. |
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401(k) Eligibility
posted at 7/8/2010 4:14 AM EDT
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Posts: 1
First: 7/8/2010 Last: 7/8/2010 |
Absolutely agree with the comments offered. 1099 has specific guidelines regarding that status. If the employees are able to pass the 1099 requirements, why turn them into employees EVER? If the background check is that instrumental, then I recommend you altering your hiring timeline with the manager and bring the employees on board after all is completed. |
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401(k) Eligibility
posted at 7/8/2010 4:20 AM EDT
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Posts: 1
First: 7/8/2010 Last: 7/8/2010 |
This is an unusual way to operate. The person who brought up the workers comp is an example of what can happen. They probably are not eligible as indepedent contractor 1099 employees under the IRS laws. If you are that anxious to get them on board, have your HR Dept get off its butt and do the BG checks, or be like everyone else and do the checks and then extend the offer. What do you do about folks who have to quit a job to come to work with you and then you decide you don't like their BG? Do you fire them? Isn't there some liabilty here? Call my lawyer. |
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