Woody Allen once quipped “confidence is what you have before you understand the problem.”

The 10 words sum up what many businesses, including middle-market and small companies, are starting to feel as 2013 brings in broader workplace requirements for employers and hard-line enforcement by government agencies.

A few news items to think about:

§ The U.S. Equal Employment Opportunity Commission (EEOC) stated last year that it had secured $365.4 million in monetary damages against employers — a $700,000 increase over the previous year and the highest level of monetary relief that the agency has ever reported.

§ In 2012, the Immigration and Customs Enforcement (ICE) assessed $13 million in fines, and arrested more than 200 employers accused of criminal violations related to employment.

§ Since September 2011, the Wage and Hour Division has collected more than $9.5 million in back wages, primarily for minimum wage and overtime violations under the Fair Labor Standards Act, which resulted from more than 11,400 workers being misclassified as independent contractors or otherwise not properly treated as employees.

“In this climate, all companies should pay close attention to regulation changes, especially in the health-care area,” said Mary Beth DiBacco, assistant vice president, specialty manager at the Chubb Group of Insurance Companies office in Rochester and expert in Employment Practices Liability Insurance.

To avoid becoming part of the fiscal year 2013 statistics, DiBacco said, employers should carefully reexamine their HR policies, procedures, and practices. The good news (sort of) is that agencies like the EEOC have made it easy to prioritize compliance efforts for 2013 and beyond.

The EEOC’s new strategic enforcement plan points to hiring, pay, and harassment as three areas of focus. Armed with this guidance, employers of all sizes should consider conducting an HR audit to ensure that their policies and practices are not creating liabilities for their companies.

What is an HR audit?

Used optimally, a human-resource audit provides senior management with an analysis of how well the company is complying with government regulations and specifically identifies gaps in compliance. An audit uncovers exposures and defines an action plan for addressing them.

Below is a short list of 2013 “hot topics” that should be part of any HR audit:

Health-care reform

A number of Affordable Care Act deadlines are upon us:

§ One is the requirements that employers notify employees this summer of the availability of state and federal health exchanges, which are required to be ready for open enrollment later this year.

§ Large employers (those who issued 250 or more W-2s in 2011) were required in January 2013 to disclose the annual cost of their group health-insurance coverage to employees on the 2012 W-2 forms. All employers will be required to disclose this information on 2013 W-2 forms.

§ A major change set for 2014 is the mandate that employers with 50 or more full-time equivalent employees provide affordable, minimum value health insurance or pay a tax penalty.

Independent contractors

§ The U.S. government loses approximately $3 billion a year on taxes for misclassified workers. In 2011, the IRS vowed to be more vigilant in finding employers who improperly classify workers as independent contractors.

§ Adding to the confusion for small firms is that an employer’s view of who is an independent contractor may not align with the government’s definition. The guidelines defining independent contractors can be difficult to interpret.

§ The stakes are higher than ever for employers, particularly those who have close to 50 full-time employees. Worker misclassification can trigger the health-care employer mandate. This could result in having to pay back taxes in addition to potential penalties associated with the health-care law, should the revised classification push the firm’s employee headcount over the threshold.

Background checks

§ The EEOC has issued updated guidelines on employers’ use of arrest and conviction records in employment decisions. Policies or practices that exclude candidates with any criminal record will not satisfy the EEOC’s requirements.

Form I-9 compliance

§ The seemingly simple, one-page, I-9 form is accompanied by a manual of almost 70 pages of instructions and frequently asked questions. Failure to execute the Form I-9 or comply with its complex requirements has resulted in millions of dollars of sanctions against employers.

§ Even when filed, employers may be fined for errors found on the Form I-9. Fines for substantive violations and uncorrected technical violations range from $110 to $1,100 per violation.

The “other” reasons for doing an HR audit

If staying on the right side of the law and reducing legal exposure are not enough incentive to launch an audit, there are a few more reasons to consider: cost savings and strategy.

More often than not, small to mid-size companies find audits yield immediate benefits. Correcting benefit premium errors and overpayments, for example, can generate many thousands of dollars in savings. Audits also can be used to identify opportunities to outsource areas within human resources that offer little value to the company.

It’s important to remember that HR can serve a strategic purpose — one that has proven to be a competitive advantage and a boost to the bottom line. Companies that complete a thorough HR audit for compliance and cost reasons can also use the gained insight to ensure that HR practices are linked to and play a vital role in the company’s strategic planning and execution.

Candace Walters is president of HR Works, Inc. (www.hrworks-inc.com/), a human-resource outsourcing and consulting services firm, which is based in Fairport and also has a DeWitt office. To reach HR Works, contact Director of Business Development Adam Dusseault at (315) 299-6982 or email: Dusseault@hrworks-inc.com.

Robin Hood is a heroic, English outlaw known for robbing from the rich and giving to the poor. He and his merry band of rogues discomfited the unscrupulous sheriff of Nottinghamshire, who had dispossessed Robin of his property. The myth has persisted for more than 800 years.

Horatio Alger, Jr. wrote more than 100 books designed for young, working-class men, which are best described as rags-to-riches stories. His first book appeared shortly after the Civil War. His novels portrayed young men who led exemplary lives, rising from poverty and other adversities. The protagonists realized the “American Dream” based on honesty, thrift, self-reliance, and industry.

Which myth persists today? Both.

Robin Hood and his merry band currently reside at 1600 Pennsylvania Ave. They are still focused on extracting the earnings of the “rich” and redistributing them to the less fortunate. The wealthy “1 percent” continues to suppress the less fortunate, inhibiting their social mobility and smothering fairness, defined as “economic inequality.” Government is now the sheriff, and the welfare state is the mechanism for righting this evil.

Horatio Alger lives in the breasts of entrepreneurs. America is enjoying an explosion of dreamers who imagine a new product or service and who are willing to risk time, talent, and treasure to pursue their dreams. Thousands are still drawn to our shores as immigrants, seeking a society based on meritocracy and the opportunity for social mobility.

Which myth best propels U.S. economic growth — economic inequality or social mobility? America has long opted for social mobility as long as economic advancement is a realistic goal and capitalism does not become a caste system. Supporters of both myths agree that education is a critical benchmark to achieve mobility. What is too often overlooked is another benchmark — marriage.

The breakdown of marriage has spawned the rise of the single-parent household. In 1980, about 18 percent of births were to unmarried women; by 2009, the number had escalated to 41 percent. The increase among whites rose from 11 percent to 36 percent; among blacks, the number jumped from 56 percent to 72 percent; and Hispanic numbers increased from 37 percent to 53 percent. Concomitantly, the number of children living with two parents has dropped since 1970 from 82 percent to 63 percent. On average, children in single-parent homes have lower grades, do more drugs, and have higher arrest rates.

The drop in marriage rates exacerbates income inequality of those in the lowest income quintile, creating a fault line separating economic classes. Fifty years ago, marriage rates for the most- and least-educated adults were identical. Today, two-thirds of college graduates are married, compared with less than half of those with a high-school diploma or those who did not graduate. The numbers also tell us that those with less education are both more likely to cohabit and are quicker to divorce.

The fault line is also widened by who marries whom. Fifty years ago, it was not uncommon for the boss to marry his secretary, who probably came from a different economic strata and level of education. Today, marriage is largely between those with equal education: I met my spouse in med school or law school. The couple then most likely resides in a clustered community of like-educated couples, further segregating economic classes

The numbers are important because a strong determinant of educational achievement is being raised in a stable, two-parent home. By age 12, two-thirds of children born to cohabiting parents will see them split up, compared with just a quarter of children born to parents who are married. Educational achievement, in turn, usually determines lifetime income. The result: fewer marriages mean more economic inequality.

Which brings us to men in the lowest income quintile. For them, it is most difficult to find employment, because they are undereducated and have adjusted poorly to a marketplace requiring more office work and less factory work, construction, and transportation. This, in turn, marginalizes them as prospective marriage partners. Our stagnant economy exacerbates the situation, causing many to simply drop out of the labor market. In March, the U.S. Labor Department reported that 496,000 people had exited the labor force. The data shows a direct correlation between falling earnings of poorly educated men and declining marriage rates. It also suggests that the implosion of stable families costs taxpayers $112 billion annually.

Economic mobility, then, is a family enterprise. But, it’s also an individual enterprise. We all marvel at immigrants who arrive penniless in America, unable to speak the language, and in a few years, many create thriving enterprises and their children are the class valedictorians who go on to professional careers. The family culture stresses education and the Horatio Alger attributes of thrift, self-reliance, and hard work. Clearly, America is still a land of opportunity for those who don’t buy into the Robin Hood concept based on envy and resentment.

The multicultural dogma tells us that all cultures are equal. Put that in the baloney column. Horatio Alger may be a myth, but cultures built on Alger’s principles nurture real rags-to-riches stories.

The biggest obstacle to mobility in our society is the growing stratification of the lowest economic quintile. The best answer is to promote stable, two-parent families. Marriage matters.

Norman Poltenson is publisher of The Central New York Business Journal. Contact him at npoltenson@cnybj.com