Senate File 487 - Introduced SENATE FILE 487 BY COMMITTEE ON WORKFORCE (SUCCESSOR TO SSB 1165) A BILL FOR An Act relating to employer recordkeeping and auditing 1 requirements for purposes of unemployment insurance and 2 including applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1641SV (1) 91 je/js
S.F. 487 Section 1. Section 96.11, subsection 6, paragraph a, Code 1 2025, is amended to read as follows: 2 a. An employing unit shall keep true and accurate work 3 records, containing information required by the department. 4 The records shall be open to inspection and copying by an 5 authorized representative of the department at any reasonable 6 time and as often as necessary. For each employee, the 7 employing unit shall keep such records for three years after 8 a calendar year in which remuneration that the records relate 9 to was paid to the employee. If the employing unit did not 10 pay remuneration, but remuneration was due, the employer shall 11 keep such records for three years after the calendar year in 12 which remuneration was due. An authorized representative of 13 the department may require from an employing unit a sworn or 14 unsworn report, with respect to individuals employed by the 15 employing unit, which the department deems necessary for the 16 effective administration of this chapter . 17 Sec. 2. NEW SECTION . 96.22 Employer field audits. 18 1. The department shall conduct field audits of employers 19 by examining employer records to determine compliance with 20 this chapter. Such audits shall be carried out by employer 21 field auditors employed by the department. Procedures for 22 such audits shall be in accordance with this section. The 23 department may establish additional procedures for employer 24 field audits consistent with this section by rule. 25 2. Prior to an employer field audit, the department shall 26 give the employer reasonable notice of the intent to audit and 27 conduct an in-person preaudit interview with the employer or 28 a designated representative of the employer at the employers 29 place of business or an alternative location mutually agreed 30 upon by the employer and the department. The employer and 31 the department may mutually agree to conduct the preaudit 32 interview through alternative means, including but not limited 33 to telephone, facsimile, electronic mail, or video conference. 34 3. Employer records subject to an employer field audit, 35 -1- LSB 1641SV (1) 91 je/js 1/ 4
S.F. 487 if such records are maintained by the employer, may include 1 individual pay records, federal internal revenue service forms 2 W-2 and 1099, cash disbursement journals and check registers 3 or the electronic equivalent thereof, federal and state tax 4 returns, and other records required by this section. 5 4. To verify the correct business entity is listed in 6 department files, the employer field auditor may examine 7 business licenses of the employer or legal documents related 8 to the initial establishment of the business entity or to 9 any employee to whom the applicability of this chapter is in 10 question. 11 5. To verify proper compliance by the employer with 12 reporting requirements of the department, an employer field 13 auditor shall conduct and document a detailed audit of check 14 stubs, weekly time cards, the electronic equivalent of such 15 documents, or other maintained source documents for at least 16 one employee for at least one quarter. The detailed audit may 17 be more comprehensive than provided in this subsection if the 18 employer field auditor finds discrepancies in such records. 19 6. The department shall establish procedures for an 20 employer to contest an employer field auditors decision 21 regarding the applicability of this chapter to an employee. 22 In any disputed case, the employer field auditor may, at the 23 discretion of the presiding officer, be granted access to 24 records to determine the remuneration paid for any calendar 25 quarter at issue occurring within three years prior to the 26 departments issuance to the employer of a notice of intent to 27 audit. 28 Sec. 3. APPLICABILITY. The section of this Act enacting 29 section 96.22 applies to audits conducted by the department of 30 workforce development pursuant to chapter 96 commencing on or 31 after the effective date of this Act. 32 EXPLANATION 33 The inclusion of this explanation does not constitute agreement with 34 the explanations substance by the members of the general assembly. 35 -2- LSB 1641SV (1) 91 je/js 2/ 4
S.F. 487 This bill relates to employer recordkeeping and auditing 1 requirements for purposes of unemployment insurance under Code 2 chapter 96. Current requirements for these matters are largely 3 set out in rules of the department of workforce development. 4 The bill requires that an employing unit keep records 5 regarding an employee that are required for purposes of 6 unemployment compensation for three years after a calendar 7 year in which remuneration that the records relate to was 8 paid to the employee. If the employing unit did not pay 9 remuneration, but remuneration was due, the employer shall keep 10 records regarding an employee that are required for purposes of 11 unemployment compensation for three years after the calendar 12 year in which remuneration was due. 13 The bill requires the department to conduct field audits of 14 employers by examining employer records to determine compliance 15 with Code chapter 96 and establishes procedures for such 16 audits. Such audits shall be carried out by employer field 17 auditors employed by the department. The bill authorizes the 18 department to establish additional procedures for employer 19 field audits by rule. 20 The bill requires the department to give the employer 21 reasonable notice of the intent to audit and provides 22 procedures for a preaudit interview with the employer. 23 The bill provides that records that may be subject to audit 24 include individual pay records, W-2 and 1099 forms, cash 25 disbursement journals and check registers or the electronic 26 equivalent thereof, federal and state tax returns, business 27 licenses of the employer, and legal documents related to the 28 initial establishment of the business entity or to any employee 29 to whom the applicability of Code chapter 96 is in question. 30 The bill requires an employer field auditor to conduct 31 and document a detailed audit of check stubs, weekly time 32 cards, the electronic equivalent of such documents, or 33 other maintained source documents for at least one employee 34 for at least one quarter. The detailed audit may be more 35 -3- LSB 1641SV (1) 91 je/js 3/ 4
S.F. 487 comprehensive if the employer field auditor finds discrepancies 1 in such records. 2 The bill requires the department to establish procedures for 3 an employer to contest an employer field auditors decision 4 regarding the applicability of Code chapter 96 to an employee. 5 The bill provides that in any disputed case, the employer field 6 auditor may, at the discretion of the presiding officer, be 7 granted access to records to determine the remuneration paid 8 for any calendar quarter at issue occurring within three years 9 prior to the departments issuance to the employer of a notice 10 of intent to audit. 11 The provision of the bill relating to audits applies to 12 audits conducted by the department of workforce development 13 pursuant to Code chapter 96 commencing on or after the 14 effective date of the bill. 15 -4- LSB 1641SV (1) 91 je/js 4/ 4