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Archive for March, 2010

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Healthcare Reform 2012 and Beyond

Wednesday, March 31st, 2010

Hopefully you have started your “to do list” to comply with the new healthcare bills-with setting up appointment with your accountant and insurance  broker/agent at the top of the list.   Once the immediate issues are taken care of you can start being proactive in  compliance with the changes in 2010 and beyond.

Thinking ahead to 2012…  there is a new requirement mandating employers to report on W-2 income statements distributed in 2012 the cost of employer-provided health care coverage and amending FSAs to cap employees’ pretax contributions at $2,500. Currently, there is no federally imposed limit on FSA contributions. 

 Thinking  further ahead…In 2014, waiting periods exceeding 90 days for coverage will be barred, pre-existing condition exclusions no longer will be allowed for any employee and annual dollar limits on covered expenses will have to be scrapped. Employers will face a $3,000 penalty for every employee whose premium contribution exceeds 9.5 percent of family income and the employee opts for coverage in state insurance exchanges that will begin operating that year.  And thinking way into the future… 

Thinking far into the future… health insurance premiums in 2018 exceeding $10,200 for individual coverage and $27,500 for family coverage will face a 40 percent excise tax, with the cost threshold triggering the tax slightly higher for plans covering retirees and employees in certain high-risk industries.

Join the conversation:  How will you stay on top of all the required changes to benefit plans and healthcare insurance for your company?

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Employer “To Do List” for Healthcare Reform Compliance

Tuesday, March 30th, 2010

Healthcare Reform is officially the law so you might as well get started on your “to do” list to comply.  Every employer is going to be impacted in one way or another.  Start your list with changes for 2011:

1) Take some time to review the  Patient Protection and Affordable Care Act of 2010,the bill as passed by the Senate, 60-39, on Dec. 24, 2009, and by the House, 219-212 on March 21, 2010 .  It was signed into law on March 23.    You can’t comply with what you don’t understand. Some great website for more information are-

The American Medical Association (which endorsed the final bill) has an FAQ for consumers here and a summary for practitioners  here.

The Kaiser Family Foundation has a tool for calculating health care subsidies under the new health reform laws.  Kaiser also has a good timeline of when key provisions of the laws take effect.

The New York Times published a handy interactive chart on March 21 showing how health reform will affect the insured and the uninsured.

2) Healthcare reform benefit compliance dates: If you have a calendar year benefit plan you will need to redesign your healthcare plan to extend coverage to adult children up to age 26, eliminate lifetime dollar limits and remove pre-existing condition exclusions, if any, for children up to age 19. The deadline for compliance  is January  1, 2011 so contact your broker or agent within the next month and start the process.  There will be additional regulations related to this provision so make sure your broker or agent is keeping you up to date.

3) If you provide an FSA (Flexible Spending Account)  you will have to narrow allowed spending from flexible spending accounts to bar reimbursement for nonprescription, over-the-counter drugs, an FSA feature that the Internal Revenue Service sanctioned in 2003. If you don’t have an FSA, consider adding this to your benefit program.

5) If you provide health care plans covering retirees age 55 to 64,  you have to determine how to assemble claims information to take advantage of a one-time, soon-to-start $5 billion federal reinsurance program set up by the legislation that will reimburse employers for 80 percent of each claim between $15,000 and $90,000.

5) If you provide prescription drug coverage that is at least equal to Medicare Part D to Medicare-eligible retirees. be aware that that  you are  about to lose the associated tax break,  effective in 2013. While the government-provided subsidies,  which can run more than $500 per retiree, will continue to be tax-free, employers collecting the cash no longer will be able to take a tax deduction for retiree prescription drug costs equal to the subsidy. Talk to your accountant as these changes must be reported immediately.

Tomorrow I’ll cover changes in 2012 and beyond.

Join the conversation:   What are you doing to comply with the new healthcare plan requirements?

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Should Every Employee Use A Timecard?

Monday, March 29th, 2010

If you don’t have all of your employees using timecards you might want to reconsider.  Many employers only use timecards for non-exempt employees- but it is a good idea to have all employees keep accurate records of their time.  Having everyone keep track of hours worked  provides for accurate  records of wage payments against time worked - which in today’s litigious society is alway a good idea- as long as the records reflect correct wage and hour practices on the employer’s part.  A couple of things to consider:

1)  As a rule of thumb don’t  make exempt employees use PTO for absences of less than a day.   Exempt employees can be expected to use available PTO for partial days absence but you cannot reduce their pay if they don’t have enough hours so what is the point really?

If the employee is taking more time off than expected treat as a disciplinary matter.

2) Automate your timekeeping process- there are any number of vendors and online programs that can make keeping accurate records easy for the employee and for the payroll department.

3) If you allow nonexempt employees to work from home, you still need to keep track of their comings and goings, just as you would if they were in the office. You need to be sure their time is being calculated correctly, that they’re not working unauthorized overtime, and that they’re not in fact on the clock (in the form of work-related e-mails, texts, or phone calls) when they should be off it.

4) Make sure that all employees are classifed correctly as exempt or non-exempt.  Salaried is not a classification related to overtime wage payment but rather a method for payment. Salaried employees can be non-exempt.  If you aren’t sure how to classify an employee check out the Department of Labor website or the KPA webinars -Essentials of Wage and Hour Law,  Advanced Wage and Hour Law or California Wage and Hour Law.

5) It is usually (there are some exceptions) illegal  to give non-exempt employees “comp time” instead of paying overtime.  However for the exempt employee who has been putting in 60 hour work weeks comp time can be a great moral booster- and having good records of all that hard work is just another reason to keep accurate time worked records.

Join the conversation: Do you require all employees to use a timecard of some type?

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What Does New Healthcare Bill Mean for Employers? Less Then You Might Think It Does

Wednesday, March 24th, 2010

Beyond personal or political preferences, what does health care reform mean for employers?  Not much for those with less than 50 employees and maybe even lower costs overall for employers with more than 50 employees.

  • Employer Responsibilities - The legislation would require an employer with more than 50 full-time employees to pay $2,000 per employee if the employer fails to offer health coverage and has at least one full-time employee receiving a premium assistance tax credit or cost-sharing reduction created by the legislation. The first 30 employees of the employer would be excluded from the calculation of the penalty.
  • Dependent Coverage - The legislation would also require health plans that provide dependent coverage to provide it up to age 26. This provision would apply to existing health plans in addition to new plans beginning six months after enactment. For coverage of these non-dependent children prior to 2014, the requirement on group health plans is limited to those adult children without an employer offer of coverage.
  • Breaks for Breastfeeding - The legislation would amend the Fair Labor Standards Act to require that employers provide unpaid breaks for employees to express breast milk. The legislation would also require that employers provide a private location for employees to have these breaks.
  • Tax on “Cadillac” Plans - Beginning in 2018, there would be an excise tax on any “excess benefit” of employer-sponsored coverage. The legislation defines “excess benefit” as one that exceeds $10,200 for individual coverage and $27,500 for family coverage. The thresholds would be indexed to inflation.
  • Automatic Enrollment - The legislation would require that employers with more than 200 employees automatically enroll full-time employees in health coverage. The legislation would allow employees to opt-out of the coverage after automatic enrollment.
  • Lower Costs - Congressional Budget Office estimated that the legislation would have a relatively small effect on premiums for employer-based healthcare insurance.  For employers with more than 50 employees, premiums could be as much as 3 percent lower under the legislation than they would be under current law in 2016, according to the CBO’s projections.

Several other provisions would affect employers as well, including the creation of state-based exchanges for purchasing health plans and incentives for small employers to offer healthcare coverage.

Join the conversation: what effect will healthcare reform have on your business?

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Posted in DOL, HR: Industry Updates | 1 Comment »

Tax Breaks for Hiring the Unemployed

Monday, March 22nd, 2010

Unless your business is a non-profit by design or simply losing money because of the economy you should be using tax credits to reduce your tax bill-unless you like paying higher than required taxes. On March 18, 2009, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act, (Public Law No. 111-147), which, among other things, provides a tax break for employers who hire employees who have been unemployed for the preceding 60 days. The law provides that private employers who hire previously unemployed workers between February 3, 2010 and December 31, 2010 may qualify for a 6.2% payroll tax incentive. Essentially, this incentive exempts employers from paying Social Security taxes on wages paid to these employees after March 18, 2010.  The law applies to businesses, agricultural employers, tax-exempt organizations and public colleges and universities. 

Employers must obtain an affidavit from each unemployed worker who is hired, stating that this person has not been employed for more than 40 hours during the 60-day period ending on the date the person begins employment. The IRS has indicated that it is developing a form employees can use to make the required statement.

Employees hired to fill existing vacancies qualify for the exemption as long as the employee the new hire is replacing separated from employment voluntarily or for cause. Family members and other relatives do not qualify.

Additionally, for 2011, employers can claim up to an additional $1,000 in general business tax credits for hiring unemployed workers for each previously unemployed worker they hire.

 The IRS has published “Two New Tax Benefits Aid Employers Who Hire and Retain Unemployed Workers,” available at: http://www.irs.gov/newsroom/article/0,,id=220326,00.html.

Join the conversation: Do you use tax credits to reduce your tax bill?

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It’s not just about the lawsuits, the real cost of a discriminatory workplace

Tuesday, March 16th, 2010

I recently read an article by one of my favorite ethic experts, Steven Paskoff, Esq.  that hit home because of the recent high profile/high dollar settlements involving dealerships and associated business and discrimination lawsuits.  The premise was that while the fear of lawsuits, the cost and bad press associated with this type of lawsuit, the focus by the EEOC on enforcement and doing the “right thing” are important reasons not to allow discrimination in your workplace there is an even more important reason- discrimination hurts the bottom line of your business. Workplaces that allow discriminatory practices and rude, abusive leader have a higher percentage of disengaged staff—people who are not fully committed to their work— who lack a willingness to find new and better ways to improve the business, to speak up about risk and issues, to provide the highest quality service- instead you create a workforce that is treading water and waiting for the economy to turn when they can take their knowledge and skills to a better workplace. The problems caused by these conditions harm safety, quality, productivity, innovation, reputation and staff loyalty.
It’s not just about the lawsuits (although those will cost you money) – it’s also about having an engaged and productive workforce.
To read the full article and other articles about ethics in the workplace by Steven M Paskoff go to www.eliinc.com

Join the conversation: What do you think is the real cost of discrimination in the workplace?

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Does Diversity Training Work to Improve the Workplace and Reduce Lawsuits?

Monday, March 15th, 2010

 I’ve been in HR management for over 25 years and I’ve either taken or taught diversity training classes every one of those years- and chances are you have gone through some type of diversity training too.  It’s been popular in corporate America and touted by HR department for the past 30 years as a way to increase awareness and be sensitive to differences in culture, race, class, sexual orientation, religion and gender along with helping create an atmosphere of trust and acceptance; with the additional goal that it will decrease harassment and possible lawsuits.  The training run the gamut from multi day retreats to a short videos but the bottom line is that businesses in the United States spend billions on this type of training, that’s right- billions of dollars for diversity training.   However a recent article in the Boston Globe has reported that these programs are, at best, not very effective.   The article cites multiple studies by leading social science researchers that there is basically no empirical evidence that diversity training does much to change attitudes or make the workplace better for minorities. “Even with best practices, you’re not going to get much of an effect,” says Frank Dobbin, a Harvard University sociology professor “It doesn’t change what happens at work.”  Does anything really change our perceptions and bias?   Alexandra Kalev, a sociologist at the University of Arizona along with Dobbin and Erin Kelly of the University of Minnesota, set out to see what works. The researchers found that while diversity training was by far the most popular approach, it was also the least effective at getting companies to hire and promote women and minorities. Some training programs were more effective than others: Voluntary programs were better than mandatory ones, and those that focused on the threat of bias and harassment lawsuits were worse than those that did not.  Required training and legalistic training both make people resentful, the research suggest, and likely to rebel against what they’ve heard. What worked much better than even the best training, the researchers found, were more structural measures: minority mentoring programs, or designating an executive or a task force with specific responsibility to change promotion practices. The billion dollar business of diversity training isn’t going anywhere soon and harassment based on misunderstanding or prejudice isn’t going away either which means lawsuits or EEOC investigations will continue.  But if you are serious about making your workplace a good environment for minorities and reducing lawsuits related to harassment consider taking these additional steps:

 1)  Establish a minority outreach programs or even better a voluntary affirmative action programs that sets gender- and race-based promotion targets and making a very senior executive responsible for them.

 2) Create a mentor program

 3)  Review your diversity training program to make sure it matches the best practices discovered in recent research.

 Join the conversation:  What do you think about diversity programs?

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Yet another discrimination settlement with a dealership, but this time for disability discrimination.

Monday, March 8th, 2010

The number of lawsuits, claims and settlements’ involving dealerships and the EEOC continues to grow in 2010.  Beyond gender and age discrimination employees must also ensure that they do not discriminate against individuals with real or perceived disabilities.   Just this month a dealership in Hawaii settled a claim that included a $32,500 payment to a job applicant and a three year consent decree to remedy alleged disability discrimination.   The consent decree requires that the dealership implement an internal policy, procedures and staff training to safeguard against disability discrimination. The car dealership must also submit annual reports to the EEOC to track future complaints of disability bias and requests for disability-related accommodations during the hiring process.

In its lawsuit (EEOC v. Valley Isle Motors, Ltd., Case No. CV09-0053 HG KSC), the EEOC asserted that the car dealership reneged on an offer to hire a job applicant as a salesperson only after a urine test revealed he was taking prescribed medication. Valley Isle Motors then erroneously perceived the applicant as too disabled to do the job despite normal medical test results and medical authorization to the contrary, the EEOC said.    The EEOC press release quoted Anna Y. Parks, regional attorney for the EEOC’s Los Angeles District Office. “Employers cannot make assumptions about a prospective employee’s ability to work… the ADA expressly prohibits that stereotypes of this nature weigh into the decision to hire or deny hire to an individual.” Timothy Riera, director of the EEOC’s Honolulu Local Office, added “Employers should heed the lesson learned by Valley Isle Motors and be mindful to judge a candidate by his or her qualifications, not some ill-informed presumption. Communication with prospective employees is the key in determining whether one’s actual or perceived condition will interfere with work. Businesses should take advantage of appropriate training opportunities that are available to learn how to appropriately engage in that interactive process.”

The bottom line is that employers cannot make an assumption about the candidate’s ability to perform the work and must make certain that all hiring practices are in  accordance with the Americans with Disabilities Act. Here are five simple steps that will help toward ensuring that you are not discriminatory toward individuals with real or perceived disabilities.

1) Have a clear, complete and detailed job description for every position so that you can objectively judge a candidate’s ability to do the job against the actual requirements.

2) Confirm with a medical expert that the applicant can do the job with reasonable accommodations or that the perceived disability is even real.  A medical exam may be necessary and your expert should have experience in Occupational or Workplace Health.

3) Consider that individuals with disabilities often make high quality and loyal employees.  Tax credits may be available to assist companies with making reasonable accommodation and for hiring individuals with disabilities.

4) Take advantage of the tools and training available through your state or federal office of the Department of Labor including the excellent information on the EEOC website.  http://www.eeoc.gov/laws/types/disability.cfm

5) Consult with qualified legal hiring prior to not hiring any individual with a disability.

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Did you get a letter from OSHA?

Thursday, March 4th, 2010

Last month, OSHA has identified and sent letters to approximately 15,000 workplaces with the highest occupational injury and illness rates and is urging the employers to take action to remove hazards causing the high rates. The employers are those whose establishments are covered by Federal OSHA and reported the highest “Days Away from work, Restricted work or job Transfer injury and illness” (DART) rate to OSHA in a survey of 2008 injury and illness data.

The letter encourages employers to consider hiring an outside safety and health consultant, talking with their insurance carrier, or contacting the workers’ compensation agency in their state for advice.

Did you receive one of these letters? How are you going to respond to this letter? Let us know.

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Does Background Screening Really Reduce Risk?

Tuesday, March 2nd, 2010

  If you haven’t already reviewed your screening and hiring policies on applicants with criminal records put it on your “to do list” for 2010.   Highly published and expensive lawsuits related to negligent hiring make it seem that background screening is necessary step in your hiring process- but is it?   With experience both as a HR Director and working for a leading background screening vendor, my answer is maybe- it can be an important step and will reduce risk but only if done in accordance with best practices and within the state and federal regulations.  

 The Employment Opportunity Commission (EEOC) and the federal courts will soon require evidence-based screening and hiring policies. Within the next 12 to 18 months, employers can expect to see the EEOC issue new guidelines that require empirical evidence for the “business necessity” defense in racial discrimination cases that arise from screening and hiring practices.  Employers will benefit from having clarity in what is permissible.  If you now use the common five-year, seven-year, 10-year or lifetime employment bars for people with criminal records you need to think about how you can validate this information and show business necessity for the specific employment bar.  Most screening vendors claim that criminal checks reduce workplace violence, theft and fraud, but  don’t have any meaningful empirical evidence- with the expected EEOC guidelines and recent lawsuits on discrimination based on background screening they should be working to produce this information over the next several months.   If you current vendor can’t help you will need to consider a new vendor.  Employers may also look to the work of social scientists such as Alfred Blumstein and Shawn Bushway.  Blumstein published a major study in 2009 that actuarially identifies the point at which an individual with a criminal record is at no greater risk of committing a crime than other individuals of the same age. 

 The bottom line is that employers should not use background screening as the only criteria for hiring or screening applicants.  Behavioral interviewing and assessment testing along with reference checking are also important tools.  If  you are using background screening having job-specific hiring policies and a case by case review of all background screening results is recommended- and don’t forget two time tested HR practices for mitigating risk:  proper supervision and effective performance management.

Join the conversation: Do you use background screening in your hiring process and do you believe it reduces the risk of a bad hire or a negligent hiring lawsuit? 

 

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