PENALTIES ARE SEVERE
There has been a rash of police investigations of restaurant workers with phony social security numbers. Not obtaining a social security number from anyone you hire could result in very costly penalties. The Michigan Unemployment Office issues a $500 penalty per quarter for missing or incorrect social security numbers and continues the penalty until the error is corrected. There is no waiver on this penalty, and if it is not corrected (an employee leaves and cannot be reached) the penalty would be assessed each quarter resulting in potentially thousands of dollars in penalties. The IRS also issues W-2 penalties for missing social security numbers.
- Never hand out a paycheck unless you have all the employee information.
- Make sure the payroll service has correct employee information before they cut a check.
- Create a file for every employee you hire containing at a minimum the W-4 form and I-9 form.
- Require photo ID for everyone you hire including a driver’s license and social security card or passport. This is more than just a recommendation. This is the law and needed to complete Form I-9.
- Photocopy all ID presented to you and keep it in the employee file.