Benefits & Compensation Questions of the Week

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How Is The Tri-State Area Handling Unemployment Job Search Requirements?

HR Question:

I’ve heard that some states are opting out of federal unemployment programs and/or reinstating unemployment job search requirements. How are Ohio, Kentucky, and Indiana defining unemployment requirements in the Tri-State area?

HR Answer:

At the onset of the pandemic, states were given additional funding through the Families First Coronavirus Response Act to aid in providing workers financial relief in conjunction with their regular unemployment rate. As access to COVID-19 vaccines continues to grow, many states (including Ohio, Indiana, and Kentucky) have made the decision to end the relaxed requirements of unemployment relief. Although many federal programs extend until September 6 of this year, many states are implementing these changes in the hopes of increasing labor supply in the market.

So, what does this mean for job seekers?  Depending on state requirements, job seekers may be required to provide proof of work-search activities. Such activities could include attending a job fair, taking a resume-writing course, or applying to several jobs.

However, as with any requirement, there are exceptions to the rule!  When looking at our tri-state area, each state has taken a different approach.

Ohio

Ohio will begin to require job search activities for those seeking unemployment benefits as of May 23, 2021. Some workers are exempt from unemployment job search requirements including:

  • Those who are on a temporary layoff of 45 days
  • Workers in approved training
  • Members in good standing with a union hiring hall that refers its members to jobs
  • If unemployed individuals are in an approved school or training, their work-search requirement may be considered met if they are attending all classes and making satisfactory progress

Kentucky

As of May 9, 2021, Kentucky is requiring unemployed Kentuckians to include details of job search activities when filing for their benefits. The state’s exceptions to the unemployment job search requirements include:

  • The individual is a member of a trade union that finds work for you
  • The individual is a student in an approved training program
  • The individual has a definite recall date within 12 weeks of initial claim filing date
  • The individual is on a temporary leave of absence while still considered an employee
  • The individual’s employer filed a mass electronic claim (E-Claim) on their behalf

Indiana

Unemployed individuals will be required to engage in at least one work search activity each week beginning the week of June 6, 2021. The job search requirement may be waived if:

  • The individual is enrolled in training approved by the Indiana Department of Workforce Development (DWD)
  • The individual is a job-attached worker with a specific recall date that is not more than 60 days from the date of separation
  • The individual is a member in good standing of a DWD-authorized union hiring hall.

Many companies have gone full remote or chose a hybrid work model to accommodate for those who are skeptical about returning to the office full-time or for those whose home lives changed to only support a fully remote role. If you are still concerned or have any questions, reach out to your state unemployment office to discuss your status further.  

strategic HR inc. has the answers to all of your tough Benefits and Compensation-related questions. Please visit our Benefits & Compensation page for more information or contact us to troubleshoot today.

Do I Have to Pay Taxes On My Unemployment Benefits?

HR Question:

It’s tax season, and I’m a little confused about how to handle the unemployment benefits I received in 2020 – do I have to pay Federal and State taxes on this income?

HR Answer:

Millions of people impacted by the COVID-19 pandemic were able to receive some relief through unemployment benefits. As the nation navigates our annual tax season (a little later than normal, as the tax deadline was delayed until May 17), many are surprised to learn that income is actually taxable!

When it comes to federal income taxes, unemployment benefits are taxed as if they were wages. The American Rescue Plan, signed into law on March 11, 2021, includes a provision that makes the first $10,200 of unemployment nontaxable for each taxpayer who made less than $150,000 in 2020. If you are married, and your spouse also received unemployment, both of you can exclude $10,200.

However, when it comes to state income taxes, it depends on where you live.  Some don’t tax them at all, while others are making exceptions for 2020 and 2021 as a result of the pandemic. To help taxpayers understand how unemployment benefits are taxed on a state-by-state basis, Kiplinger created a comprehensive guide. Let’s take a look at the guidance for Ohio, Kentucky, and Indiana:

Ohio

Ohio remains aligned with the federal government exemption guidelines for unemployment income in 2020, meaning the individuals are not required to pay taxes on unemployment benefits up to $10,200. The IRS is expected to issue a refund for anyone who filed prior to the American Rescue Plan being enacted. More details to come.

Kentucky

Kentucky will not provide an exemption for up to $10,200 of unemployment compensation received in 2020. Kiplinger provided further guidance by highlighting that “[any] unemployment compensation excluded on a Kentucky resident’s federal income tax return must be added back on his or her Kentucky individual income tax return on Schedule M, Line 5, as an ‘Other Addition.’”

Indiana

Indiana is not currently allowing for an exemption for unemployment compensation, which means that “an amount excluded for federal income tax purposes has to be added back when filing your Indiana income tax return.” As Kiplinger pointed out, this could change depending on what the Indiana General Assembly decides in the coming months.

But a key point to note here is that there may be a part of unemployment benefits that are deductible (as Indiana considers unemployment benefits taxable). “The deductible amount depends on your federal adjusted gross income, how much unemployment compensation you receive, and your filing status,” Kiplinger reports. In order to calculate the exact amount of your deductions, Kiplinger also recommends completing the “Unemployment Compensation Worksheet” in the Form IT-40 instruction booklet.

For additional guidance on how unemployment benefits are taxed in your state, contact your tax advisor or get in touch with your state’s Tax and Information Assistance contact.

 

Thank you to strategic HR inc.’s Terry Salo, Senior HR Consultant, for contributing to this HR Question of the Week.

strategic HR inc. knows that keeping abreast of legal compliance issues can be daunting, especially when the laws keep changing. We can help you stay compliant by fielding your questions and offering resources to help you identify and mitigate compliance issues. Visit our Legal Compliance and Recordkeeping page to learn about our auditing services which can help you identify trouble spots in your HR function.

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Are Employee Gift Cards Considered Taxable Benefits?

HR Question:

To thank my employees for their extra efforts, I have provided them with a $50 gift card.  Accounting is telling me I have to report the value of the gift cards as taxable benefits.  Is that true?

HR Answer:

Yes, it’s true! According to the IRS, cash, gift certificates, and gift cards are considered taxable fringe benefits and must be reported as wages. But you may be relieved to know that this rule doesn’t apply to all gifts or perks that you may give to employees.

The IRS tells us that we can exclude the value of a “de minimis” benefit from an employee’s wages.  For those unfamiliar with a “de minimis” benefit, the IRS defines it as “any property or service you provide to an employee that has so little value (taking into account how frequently you provide similar benefits to your employees) that accounting for it would be unreasonable or administratively impracticable.” Most employers tend to categorize de minimis gifts in the under $50 range, but for some, it can go upward of $100.

In comparison to cash or cash equivalents which are always considered taxable benefits, small gifts have much more flexibility when it comes to tax responsibilities according to the IRS. But how organizations denote “small” is still up for negotiation. When deciding on a gift or fringe benefit for an employee, consider the value and the frequency of the gift or benefit. For example, purchasing a book for an employee for their birthday would be excluded. Purchasing a book every month for an employee would not be excluded due to the frequency of the gift, regardless of the value of the book.

Additional Examples of Tax-Exempt Benefits

Other examples of de minimis benefits include such things as some meals, occasional parties, occasional tickets for events (not season tickets), holiday or birthday gifts (other than cash or cash equivalents). Essentially, occasional gifts that can’t be redeemed for cash value can be considered as these exempted benefits.

There is also an exemption for achievement awards, which come with additional rules of their own. Examples of these gifts include gifts for achievements such as safety milestones or length of service or anniversary milestones. Certain achievement awards can be excluded from the employee’s wages if the awards are tangible personal property and meet certain requirements. Notable exceptions from The Tax Cuts and Jobs Act prohibit certain property as an employee achievement award, including vacations, lodging, stocks, bonds, and securities. Limitations are further detailed in the Act, including $400 maximum for non-plan awards and up to $1600 if you have a documented, non-discriminatory program surrounding the awards.

Additional requirements exist for these achievement awards. For example, length-of-service awards can’t be received during the employee’s first five years of employment or more often than every five years. Also, safety awards can’t be given to more than 10 percent of eligible employees during the same year.

Employee awards are an important part of employee engagement.  It is important, however, to make sure you don’t turn that $100 thank you gift card into a much more expensive “gift” by assuring you are properly handling the taxes accompanying such a gift.

strategic HR inc. knows that keeping abreast of legal compliance issues can be daunting, especially when the laws keep changing. We can help you stay compliant by fielding your questions and offering resources to help you identify and mitigate compliance issues. Visit our Legal Compliance Services to learn more.

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What Does the American Rescue Plan Act Mean for Me?

As of Thursday, March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021. The act provides a wide range of extensions, clarifications, and further avenues for funding for many businesses. We’ve summarized the major points below. 

New 100% COBRA Premium Subsidy: Beginning April 1, 2021, and ending September 30, 2021, employers with eligible employees (employees who have been involuntarily terminated or whose hours have been reduced due to COVID-19, back to November 2020) could be eligible for the subsidy, which covers the employees’ COBRA premiums. The subsidy will later be applied to the employers’ quarterly taxes.  

  • Keep in mind, the subsidy is available until the individual’s maximum COBRA coverage period ends, or Sept. 30, 2021 (whichever is earliest).
  • Employees must be notified if they are eligible for the subsidy. This includes notification to anyone impacted back to November 2020 – even if they did not elect COBRA coverage at the time. The Department of Labor will provide model notices within 30 days from the date of the enactment.
  • What can employers do now? Look for the model notices and connect with their COBRA vendor to review the changes and alert any former employees whose COBRA coverage extends into this six-month period.

Changes to Families First Coronavirus Response Act, including Sick and Family Leave: Tax credits for emergency paid sick leave and family leave have been extended through September 30, 2021.  As with the extension of this leave from January 1, 2021, to March 31, 2021 – this appears to be a VOLUNTARY election by employers.  It is not mandated.  Changes include:  

  • Wages covered by the family leave credits have been raised from $10,000 to $12,000.
  • The Act adds additional reasons employees can qualify for paid sick leave and family leave including obtaining an immunization related to COVID-19 or recovering from any injury, disability, illness, or condition related to such immunization.
  • The previous 80-hour per employee limit for paid sick leave will reset after March 31, 2021. Additionally, the previous 10-week per employee limit for paid family leave will reset after March 31, 2021.

Direct Stimulus Payments: A third round of payments will be issued. $1,400 direct payments to individuals making less than $75K, as well as a child tax credit of up to $3,600 depending on the age of the child.

Grants for Restaurants: A program has been established to grant financial support (i.e., to cover payroll costs) for eligible businesses based on decline in gross revenue over 2020.

Extended – The Employee Retention Tax Credit: Employers who have continued to pay wages throughout COVID-19-related closures, or those who have experienced reduced revenue due to the pandemic through December 31, 2021, may be eligible for an extended tax credit. 

The American Rescue Plan Act is one of the most wide-spread efforts by the U.S. Government to combat the devastating effects of the COVID-19 pandemic. For further COVID-19-related resources, check out our COVID-19 Employer Resources page or contact us for direct assistance. 

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Can My Employee Take a Vacation While on FMLA Leave?

HR Question:

I currently have an employee who is out on FMLA leave due to their own serious injury.  Multiple employees have come to me sharing the employee’s Facebook post where she is sitting on the beach – clearly on vacation. The employees are upset and demand that she be fired. Can my employee take a vacation while they’re on FMLA leave?  What rights do I have to discipline (or terminate) this employee who I allowed off for her injury – not a two-week vacation?

HR Answer:

Social media can create a myriad of difficult and awkward situations for the workplace, often when it relates to FMLA leave. If employees are friends on Facebook or Instagram, and they see their “recovering” coworker on vacation while they are left “covering” the employee’s workload, it’s easy to see how frustration may set in. As a result, employee trust and morale may fall while you try to determine what – if any – action can be taken.

The Family Medical Leave Act (FMLA) entitles eligible employees to take up to twelve weeks of leave during a twelve-month period due to a serious health condition rendering the employee unable to perform the functions of their position. What is important to note in this situation, however, is that the regulation does not limit the activities of the employee while they are out on the leave. The only requirement is that they stay within the restrictions stated by their physician for the leave and to fulfill the requirements of the company leave policy (documentation, communication, etc.).  So, what is an employer supposed to do in this circumstance?

The most important thing to do in this situation is for HR to determine if the employee’s conduct while on vacation violates the leave claim that has been filed. For example, consider an employee who applied for and was approved for FMLA leave due to their own knee surgery. The reason for the subsequent six weeks off after surgery is a result of their inability to stand for long periods of time and needed time for recovery. This employee could enjoy their recovery while sitting on a beach to the same extent they could be sitting in their living room watching TV. If, however, should pictures surface of the employee taking a jog down the beach or paddle boarding standing up, that is another issue. Employees can recuperate outside of their homes and still stay within the required restrictions. The bottom line is if the employee is meeting the restrictions stated on the approved FMLA leave, and they are not violating any of the company leave policies, then there is really no action that can be taken.

When faced with similar FMLA leave situations, remember to:

  1. Review the medical certification related to the employee’s leave, including treatment plans and restricted activity.
  2. Conduct a complete investigation of the alleged leave violations.
  3. Maintain open communication. Discuss the allegations with the employee to assure you have the entire picture.
  4. Review the policy and apply all policies consistently. Ask yourself:
    • Does your organization restrict travel on approved leaves? Remember – if the company limits travel during approved leaves, do so for EVERYONE, not just those on FMLA.
    • Is the employee following regular communication guidelines as stated in the leave policy?
    • Is the employee providing timely documentation for claim updates or recertifications as required by the policy?
  5. Determine if any action can be taken.

If the leave is being properly used and restrictions are being followed (to the best of your knowledge), there is typically no violation. If they are violating those restrictions and appear to be abusing the leave policy, a full investigation should be launched, possibly by a third party to eliminate bias. Keep in mind that even with pictures, it may be difficult to prove an inappropriate use of the leave. Finally, remember that any decision to take action must be done so with a careful investigation into the alleged activities while taking into consideration all of the medical information as well as the timing of the vacation as it relates to the leave.

Thank you to Patti Dunham, MBA, MA, SPHR, SHRM-SCP for contributing to this edition of our HR Question of the Week!

strategic HR inc. has the answers to all of your tough Benefits and Compensation-related questions. Please visit our Benefits & Compensation page for more information or contact us to troubleshoot today.

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Am I Able to Make Changes to My FSA Due to COVID-19?

Thank you to Shelly Hodges-Konys, CBC, Director of Compliance with HORAN for her contribution to this HR Question of the Week!

HR Question:

I have heard that I am able to make changes to my Flexible Spending Account (FSA) mid-year due to COVID-19?  Is this true and what are the requirements of such a change?

HR Answer:

There is a saying about change by William Arthur Ward that I once read, “The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.”   If there is one thing that we can count on from a regulatory perspective, it is that we need to learn to adjust the sails and do so quickly.  We have received numerous questions from clients over the past few weeks about the changes an employee may make to benefits received through Section 125 pre-tax plans. It has been difficult to respond because none of the guidance up to this point has provided any clear relief for flexible spending accounts, dependent care accounts, or pre-tax benefit elections.  However, yesterday the IRS issued two notices – Notice 2020-29 and Notice 2020-33 that provide welcome flexibility for employers.

The IRS rules generally require elections made under Section 125 plans to be irrevocable during the plan year, unless an employee experiences a qualifying mid-year change event (e.g., a change in status that results in a corresponding change in eligibility).  IRS Notice 2020-29 permits employers during the 2020 calendar year to amend their plans to allow for some additional mid-year changes that are not permitted under normal circumstances.  The new guidance permits plans to allow employees to make the following changes on a prospective basis:

  • Make a new election for health benefits if the employee initially declined the employer plan;
  • Change an existing election for health benefits including changing plans offered by the employer and changing coverage level (for example, an employee may change from an HDHP plan to PPO coverage offered by the employer or change from employee only to family coverage);
  • Drop coverage if the employee attests that they intend to enroll in other group health insurance coverage;
  • Change or revoke a health care flexible spending account election; and/or
  • Change or revoke a dependent care flexible spending account election.

Further, elections made for flexible spending accounts, are generally use-it or lose-it.  If account balances are not used by the end of the plan year (or grace period for plans that provide for a 2.5 month grace period), the money is forfeited by the participant and retained by the plan and applied to the costs of administering the plan.  The new guidance also provides flexibility for employers to allow employees an additional period of time to use unspent flexible spending account balances.   This relief applies only to non-calendar year plan years ending in 2020 or plan years ending in 2019 that have a grace period that extends into 2020.   These plans may be amended to allow a participant to use funds that otherwise would have been forfeited during the 2020 calendar year for expenses incurred through December 31, 2020.

This relief is available to all health and dependent care flexible spending account plans, including those health flexible spending accounts that are limited purpose or health savings account compatible.

IRS Notice 2020-33, provides additional relief for health care flexible spending account plans that have a carryover feature.  A carryover feature allows participants to carryover up to $500 from the previous plan year into the subsequent plan year. For plan years beginning in 2020, the maximum amount of carryover a plan can allow has been increased from $500 to $550. This amount will now be indexed for inflation on an ongoing basis.

For employers that sponsor high deductible health plans, be aware that this relief did not change the rules regarding the interaction of flexible spending accounts and health savings accounts (HSAs).  Employees that participate in a flexible spending account with a rollover provision,  a 2 ½ grace period, or are offered an extended coverage period are ineligible to make HSA contributions for the duration of the coverage period (unless the flexible spending account is HSA compatible or amended to be HSA compatible).

All of the relief offered by the guidance is completely optional.  Employers may choose whether to adopt some of the provisions, all of the provisions, or none of the provisions.  Employers who wish to provide this flexibility to plan participants will need to amend their plans and have until December 31, 2021, to do so.  Plan amendments may be adopted retroactively to January 1, 2020, as long as plan participants are informed of the changes and the plan is operated in accordance with those changes.

Thank you to HORAN for providing the content for our Question of the Week. HORAN serves as a trusted advisor on employee benefits, wealth management and life and disability insurance. To learn more about HORAN, please contact HORAN for additional information.

Visit our COVID-19 Employer Resources to find the information, links, and tools you need to move your business forward in these uncertain times.

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Do I Need to Adjust My COBRA Process Due to COVID-19?

HR Question:

I’ve seen several changes in employee benefits and programs as a result of the pandemic. Do I need to adjust my COBRA process due to COVID-19?

HR Answer:

Yes, due to COVID-19, there have been many changes to group health plans, pension plans, and other welfare plans, such as COBRA, FMLA, and more. As businesses and leaders have scrambled to meet the fluctuating needs of this time, many of our federal agencies have done the same.

Specifically, as it relates to COBRA, the Department of Labor and the Internal Revenue Service have published information and updates on COBRA deadlines during the pandemic, providing relief to those impacted by the virus.

As you may know, the Consolidated Omnibus Budget Reconciliation Act (COBRA) is a program that provides for the continuation of group health coverage for some employees and their families when they experience a job loss or reduction of hours. Your normal, already established COBRA processes may be altered or adjusted as new and unique situations continue to crop up as a result of COVID-19. Not only will your processes adjust, but the way that you communicate these benefits and processes will as well.

The revisions outlined in the released statement requires group health plans, disability and other welfare plans, and employee pension benefit plans to extend their timelines by a period of time they designate as the “Outbreak Period”.  The Outbreak Period is from March 1, 2020 until 60 days after the end of the declared National Emergency.  The ending date, obviously, is an unknown date at this time.  Simply stated, employers must exclude the time during the Outbreak Period when determining deadlines for COBRA.  This would include deadlines for notification as well as election.

As an example, COBRA elections must be typically made within 60 days of the notice.  Under this extension, the Outbreak Period is ignored so if the qualifying event occurs during the Outbreak Period, the election period deadline will extend to 60 days after the end of the Outbreak Period.  What does that mean?  Someone you sent a notice to last week will have 60 days after the end of the Outbreak Period (unknown at this time) to elect coverage.

Another pertinent example is with COBRA Payments.  Typically COBRA provides a 45-day premium period with a 30-day grace period.  Under this extension, the Outbreak Period is ignored in determining the deadline for premium payments under COBRA.  It is noted that claims do not have to be paid during this non-payment time, but they must be paid immediately upon resumption of the benefits after the premium is paid.

Other areas of COBRA that are impacted by these adjustments include:

  • HIPAA Special Enrollment Rights
  • Employee Notice of a Qualifying Event or of Disability
  • Deadline for Participants to Make an Initial Claim
  • Deadline for Appeal of a Denied Claim
  • Interim Claims Procedures Deadlines

Additional details on all of these items can be found on the Federal Register.

As an HR professional, keep in mind these extension periods and review deadlines before terminating coverages or not allowing enrollment due to deadline considerations.  Better to be safe during this time of change!

strategic HR inc. has the answers to all of your tough Benefits and Compensation-related questions, particularly when addressing the new challenges that COVID-19 has presented. Please visit our Benefits & Compensation page for more information or our Employer’s Resource Guide to Coronavirus for more resources.

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What Unemployment Benefits Are My Employees Eligible for Given the Changes Due to the Coronavirus?

HR Question:

What unemployment benefits are my employees eligible for given the changes due to the  coronavirus?

HR Answer:

As the Coronavirus (COVID-19) outbreak continues to evolve, businesses are evaluating how to continue operations amidst a myriad of challenges. Strategies such as implementing telecommuting programs, enforcing fully remote workspaces, eliminating business travel and limiting visitors are all efforts to protect employees and limit the spread of the virus while still conducting business.  However, some employers are facing significant financial hardships causing them to reduce work hours, eliminate shifts, or permanently lay-off workers to ease their financial burdens.  In light of these challenging times, it’s important to know what benefits may be available through unemployment benefits.

State of Ohio – Unemployment Benefits Overview

Eligibility for Unemployment Benefits

According to the Ohio Department of Job and Family Services (ODJFS), to qualify for unemployment benefits, the following four key factors must be met:

  • You are “totally” or “partially” unemployed at the time you file your application.
    • Totally Unemployed – You performed no services for your employer, and no earnings or income are payable to you during the week you apply for benefits.
    • Partially Unemployed – Your employer let you go before the end of your usual work week, or reduced your work hours to less than your full-time work week AND you earn less than the unemployment weekly benefit amount.
  • You worked enough weeks and earned enough money in “covered” employment during the “base period” of your claim.
  • You are unemployed through no fault of your own.
  • If you had a prior benefit account, you reestablished yourself as a worker by performing enough work since the prior account began.

Minimum Number of Weeks

You must have worked at least 20 weeks in covered employment during the base period. If you worked for more than one covered employer during the base period, you may still be eligible.

Minimum Earnings

If an application is filed in 2020, you must have an average weekly wage (before taxes or other deductions) of at least $269.00 during the base period.

Filing Requirements

Claimants must file for a week of unemployment benefits no later than three weeks (21 days) after the Sunday date of the week being claimed. Claims for benefits filed beyond this time limit will be disallowed unless you can establish that the late filing was for reasons beyond your control.

Coronavirus – State of Ohio Emergency Declaration

An executive order issued by Governor DeWine expands flexibility for Ohioans to receive unemployment benefits during Ohio’s emergency declaration period.

Temporary Shut-Down of Business

The emergency declaration expands flexibility for employees to receive unemployment benefits should the COVID-19 result in a temporary shut-down of an employer’s business. Additionally, benefits will be available for eligible individuals who are requested by a medical professional, local health authority, or employer to be isolated or quarantined as a consequence of COVID-19, even if they are not actually diagnosed with COVID-19. In addition, the waiting period for eligible Ohioans to receive unemployment benefits (generally one week) will be waived.

Reduced Work Schedules/Partial Unemployment

If COVID-19 results in a reduced work schedule to less than your full-time work week AND you earn less than the unemployment weekly benefit amount, you may be eligible for benefits.  All income including payments other than wages (severance pay, vacation pay, workers compensation, among others) would be deducted from the weekly unemployment benefit.

Permanent Layoff

If an employer lays off employees due to the loss of production caused by the coronavirus, employees will be eligible for unemployment insurance benefits if the employees are otherwise eligible. An executive order issued by Governor DeWine expands flexibility for Ohioans to receive unemployment benefits during Ohio’s emergency declaration period.

Employees Facing Mandatory Quarantines

If an employee is in mandatory quarantine because of suspicion of having the coronavirus, the executive order issued by Governor Dewine states that employees who are quarantined are considered to be unemployed, and therefore may be eligible to receive unemployment benefits.

Employee Imposes a Self-Quarantine

If an asymptomatic employee imposes a self-quarantine because of the coronavirus, in most cases they will be ineligible for unemployment benefits.  Unemployment benefits are available to individuals who are totally or partially unemployed due to no fault of their own. In this example, the individual – not the employer – is choosing not to work and, therefore, would be ineligible. However, the facts of each circumstance are important. If the employer allowed this individual to telework, they would not qualify for benefits because they would not be unemployed. If the employer required the individual to stay home but did not offer telework, the individual might be eligible for benefits if they meet the monetary and weekly eligibility criteria.

How to Apply

In Ohio according to ODJFS, there are two ways to file an application for Unemployment Insurance Benefits:

  1. Online: File online at http://unemployment.ohio.gov, 24 hours/day, 7 days/week.
  2. Telephone: Call toll-free 1-877-644-6562 or TTY 1-614-387-8408, (excluding holidays) Monday through Friday 8 AM – 5 PM.

NOTE: The Ohio Department of Job and Family Services (ODJFS) is instructing Ohio employers planning layoffs or shutdowns as a result the coronavirus (COVID-19) pandemic to share the following mass lay-off number with their employees to speed the processing of unemployment benefits: 2000180. The agency also is providing instructions for employers to share with their employees about how to apply for benefits.

To stay on top of updates to the evolving decisions surrounding unemployment benefits related to COVID-19, visit the ODJFS Coronavirus and Unemployment Insurance Benefits FAQs.

State of Kentucky – Unemployment Benefits

Similar to Ohio, Kentucky provides weekly unemployment benefits ranging from $39 to $552 per week dependent upon a claimant’s past wages.  Governor Andy Beshear is adjusting some of the rules to unemployment benefits in light of the COVID-19 pandemic and the state of emergency he declared on March 6, 2020. Some of the changes include:

  • Waiving the seven-day waiting period to obtain unemployment insurance benefits
  • Waiving work search requirements while the state of emergency is in effect

Employees who have been laid off because of the new coronavirus or whose hours have been cut are also encouraged to apply for benefits. Those quarantined may also be eligible. If approved, the first payment would be for 14 days of benefits, an increase from the usual one week.

Per Kentucky state law, those who qualify for unemployment benefits are not given them for the first week of their eligibility, but Governor Beshear’s order waves that provision according to the Louisville Courier Journal.

To learn more about Kentucky unemployment benefits or to apply, visit the website at www.kcc.ky.gov or call (502) 875-0442.

 

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How Can We Address Pay Compression?

HR Question:

To remain competitive in the marketplace, our company’s upper management decided to raise our minimum rate of pay. Unfortunately, HR was not included in this decision that has now led to salary compression and angry seasoned workers. How do you recommend for our human resources team to handle this?

HR Answer:

This is a challenging situation that you find yourself in, and you’re not alone in this struggle. In the tight labor market that we’re experiencing, many companies are struggling to find qualified workers to fill their open positions. As a result, many organizations have had to reevaluate their employer value proposition in order to attract and retain the best employees. Evaluating salary competitiveness is an important component in this process to ensure that you’re meeting candidates’ expectations. However, in doing so, it’s important to also consider the pay rates of your current workforce and how changes might impact them. Otherwise, an organization could risk dealing with salary compression issues just as you are.

What is pay compression?

For those who may not be familiar with the term, pay or salary compression occurs when the pay of newer or lower-skilled workers approaches the pay of your more seasoned and/or experienced workers. Pay compression can lead to disharmony and lessen engagement in the workplace as the more tenured workers feel less valued for the contributions they have made and continue to make to the company.  We are seeing this happen more frequently as the competition for talent remains at a consistent and long-term high, many companies are finding it necessary to raise starting pay to attract the workers that they need. However, at the end of the day, pay and pay equity matters not just to those you are trying to recruit, but also those who are part of your existing workforce.

If you’re wondering how employees found out about the salary discrepancies, let’s face it – employees talk. Even though your company may frown upon it, this activity is protected under the rules of the National Labor Relations Board (NLRB) which enforces the National Labor Relations Act (NLRA). The NLRA protects employees’ rights to discuss conditions of employment, such as safety and pay, even if you’re a non-union employer. The NLRB considers these discussions “protected concerted activity” and defines them as when employees “take action for their mutual aid or protection regarding terms and conditions of employment.”

How can you repair the damage of salary compression?

It’s unfortunate that HR wasn’t brought into the decision-making process prior to implementing the new salary changes. On the surface, it probably seemed that raising the company’s minimum pay rate could only lead to positive results. It probably did make a positive impact on your talent acquisition efforts. However, it may lead to a serious retention issue for your experienced workers if it goes unaddressed.

Our best advice at this point is to be honest with your employees. Provide them with the explanation that probably should have come before the new starting salary changes were implemented.

Here are some things to consider and/or information to address with your workforce:

  • Be transparent. Help them to appreciate the reasoning behind the decisions that were made. Understanding the “why” goes a long way with accepting the outcome.
  • Help them to understand the reality of the labor market and how difficult it has been for you to fill open positions.
  • Share all of the other actions you have taken to attract new workers prior to (or in addition to) raising the starting salary.
  • Remind them that you realize the longer positions are open, the longer the burden of work is spread across fewer hands. It is in their best interest that the open positions are filled as well.
  • Let them know that you hear their concerns and share what you plan to do to address them.

If you are open about the decisions that have been made and why they were made, your employees will be able to see how you had to take action in order to attract the workforce that you need to keep your organization moving forward. Some may not like what they’re hearing, but it can help them to respect it.

To address the pay equity concerns that have been raised, you may want to do an analysis of your compensation structure and salary ranges to identify inconsistencies and to ensure you are in line with market trends, internal needs, and your company goals. For additional help, HR Daily Advisor has outlined steps you can take to address pay compression in your organization.

For organizations that are navigating through today’s difficult labor market and looking for ways to be more competitive, we urge you to involve human resources in your strategic planning. HR can help to assess the potential impact of decisions on your workforce and develop an appropriate communication plan to ensure a smooth implementation.

 

strategic HR inc. has the answers to all of your tough Benefits and Compensation related questions. Whether you need a job analysis of your positions or need to update (or write) job descriptions, strategic HR inc. can do the job. Please visit our Benefits & Compensation page for more information or Contact Us to discuss your needs.

 

 

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Low Cost Benefit Ideas

Question:

We are a small business trying to attract and retain staff in this competitive job market.  We can only offer so much in compensation. Are there any low-cost benefit ideas you can recommend?

Answer:     

With unemployment levels at a record low, attracting and retaining talent is extremely hard regardless of the size of your business.  But, you are on the right path to be thinking about the benefits you offer in addition to compensation. In a recent Workforce Report by AFLAC, over half of employees (55%) say they are at least somewhat likely to take a job with slightly lower pay but a more robust benefits package.

Many people often think of the traditional medical, dental, vision, and retirement plans as the cornerstones of benefits offerings, but your benefits can reach far beyond this list. To stimulate your brainstorming process of benefit opportunities, take a look at our article featuring the Top 10 Benefits of 2019. Some of the most popular lower-cost options that we found in our research included:

  • Flexible Working Options – This can include working remotely and flexible scheduling.
  • Professional and Career Development – This can be accomplished through reimbursement of professional development memberships and offering internal and external training and mentorship opportunities.
  • Unlimited PTO – This could allow employees to take as many vacation, sick, and mental-health days as they need, as long as they meet their performance goals.
  • Free Food and Beverages – These on-site perks encourage mingling and an easy way to refuel and recharge.
  • Ancillary Benefits – Some examples include Teledoc, employee assistance programs, legal assistance, and identity theft protection.
  • Health & Wellness – These can range from options that support physical wellness (i.e., gym membership reimbursements, on-site exercise classes, coordinating company teams for 5K run/walk, etc.) to ensuring financial wellness (i.e., financial planning training and support).

So, what benefits should your organization offer? The secret answer to your question is…”Ask your employees.”  Every organization is different, and what works in one organization doesn’t necessarily work in the next.  Just because a particular benefit works for Disney, Southwest Airlines, Zappos, or the company next door, it doesn’t mean it will work for your organization. Far too often, employers assume they know what employees want, but their assumptions could not be further from the truth.

Your best way to determine the perceived value of your benefits is to simply ask your employees.  Gathering employee feedback can be done in many ways, ranging from having a casual conversation with your employees to conducting focus groups or a formal survey. You’ll want to choose the method that fits your organization best.

Questions to consider asking include:

  • How satisfied are you with each of the company benefits?
  • Which of our benefits are most important to you?
  • Which of our benefits are least important to you?
  • How satisfied are you with our current benefits?
  • Are there benefits you’d like to see implemented?
  • How do you consider our benefits compared to those offered by other companies?
  • How interested would you be in the following benefits? (Provide a list of new options for which you’d like to gauge interest.)

With some of the questions above, you’ll want to include a list of your current benefits and provide a Likert scale for your employees to rate their answers.  You may find some of the benefits you think your employees love are not important to them at all and are costing you quite a bit of money. Having this knowledge gives you the opportunity to reallocate your dollars toward benefits that will help you to both attract and retain talent.

As you review your benefits with your employees, you may find not all of them know what you offer.  By simply asking your employees, it gives you an opportunity to market your benefits to your employees. To ensure that your employees have a solid understanding of the benefits that you offer, we recommend that you provide the following:

Benefits Summary:

If you don’t already have one, consider creating a benefits summary that lists each of your benefits, eligibility, and cost.  This tool can be shared with employees and used as a recruitment tool during your hiring process.

Total Compensation Statements:

Develop total compensation statements for your employees that include all of the costs that your organization covers on behalf of the employees,  such as compensation, bonuses, employer contributions on premiums, retirement match, taxes, etc.

Benefits Marketing:

Your job doesn’t end by identifying and setting up the benefits for your employees.  You will need to regularly update employees on your benefits. What tools do you already have that you can take advantage of (i.e., employee newsletter, bulletin board, company-wide meetings, huddles, etc.)? We do not recommend a one and done approach, rather, you will need to continually share information to keep your organization’s benefits top of mind for your employees.

As a smaller business, you may not have the funds to lead the market in compensation or provide 100% employer-paid health. However, if you know what your employees want, the funds you are able to afford can be better allocated to the benefits your current and future employees want.

 

Providing adequate Benefits and Compensation for your employees is key to the recruitment and retention of a well performing workforce, and having the right policies in place can make or break a company. strategic HR inc. understands this critical need and can conduct a benefits analysis of your current offerings and make recommendations to help you to meet today’s competitive market. Please visit our Benefits and Compensation page for more information on how we can help get you competitive today.

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Student Loan Repayment Benefits

Question:

We have recently heard that Student Loan Repayment is a benefit that some employers are offering their employees. What is Student Loan Repayment? How does it differ from tuition assistance? What are the main benefits of student loan repayment for the employer?

Answer:

No doubt about it, millennials are graduating college with a staggering amount of student loan debt. This debt causes a lot of strain on young graduates just beginning their careers. According to The Institute for College & Success’ September 2019 Report, the average college student graduates with upwards of $29,000 of student loan debt. Having these large loans so early in life has caused the millennial workforce to value employer benefits differently than with past generations.

What is student loan repayment?

There are many ways companies are choosing to address the student loan debt issue facing their workforce. Although it is a relatively new benefit offering, the Society for Human Resource Management (SHRM) reports that in 2019, 8% of employers are now offering student loan repayment assistance. This can be done in a variety of ways:

  • Paid time off (PTO) trades-this type of program would allow employees to exchange the money they would have earned taking time off work, to instead pay down a student loan. Unum will be beginning this program in 2020, allowing for employees who would normally carry over up to 40 hours of unused PTO time to allocate the dollars into a payment for their student loans instead.
  • Student loan repayment plans-employers can elect to make contributions, typically on a monthly or annual basis, to the employee’s student loan servicer. In 2017, Aetna began offering this benefit to its employees contributing up to $2,000 per year to the loan servicer, with a maximum benefit of $10,000 per employee.
  • Contributions to an employee’s 401(k)-the idea is that if the employee pays a certain percentage of their salary towards their student loans, the employer “matches” a percentage of that and contributes funds to the employee’s 401(k) program. This enables the employee to pay off their student loans while still saving for retirement, which often gets put on hold until student loans are paid off. Abbott’s Freedom 2 Save program offers full and part time employees who are paying at least 2% of their income towards student loans to receive the company’s “match” deposited into their 401(k). This is an interesting option to consider due to the tax benefits 401(k) contributions receive and considering that the other options are, at least for the moment, considered taxable income.

How does student loan repayment differ from the traditional tuition assistance?

Traditional Tuition Reimbursement (or Educational Assistance) programs differ from student loan repayment programs, because they require the employee to be actively taking courses. Whereas, student loan repayment focuses on helping employees pay back loans for a degree or schooling they have already completed. Unlike student loan repayment, tuition reimbursement is not considered taxable income under Section 127 of the federal tax code and allows for employers to reimburse employees up to $5,250 per year, as long as the program meets requirements as detailed by IRS Regulations.

What are the main benefits of student loan repayment programs for the employer?

Right now, the main benefit this provides to employers is the potential attraction of top talent to the organization. If a college grad is deciding between two opportunities, and you offer Student Loan Repayment, the chances of the candidate choosing you increases exponentially!

Also, according to SHRM, legislation was reintroduced in February that would enable employers to award tax free student loan repayment assistance for up to $5,250 a year per employee. This would match the tuition assistance amounts that are currently in place and enable employers to claim deductions for these payments as well.

Bottom line: In a fight for talent, any additional benefit like student loan repayment that you can offer your employees is potentially the tipping point to attract talented workers and retain them!

Providing adequate Benefits and Compensation for your employees is key to the recruitment and retention of a well performing workforce, and having the right policies in place can make or break a company. strategic HR inc. understands this critical need and can help you structure your benefit and compensation system to meet today’s competitive market. Please visit our Benefits and Compensation page for more information on how we can help get you competitive today.

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ERISA’s Summary Plan Description Requirements

(By Diane Cross, Compliance Analyst at HORAN. Reposted from HORAN’s Health Benefits Compliance Blog).

Question:

Are you in compliance with ERISA’s rules regarding Summary Plan Descriptions?

Answer:

The Employee Retirement Income Security Act (ERISA) sets minimum standards for employee benefit plans, providing several rules for private-sector employer sponsored group health plans (governmental and church plans are exempt from ERISA). Among ERISA’s many rules is the requirement to provide each participant with a Summary Plan Description (SPD). We often discover that many employers mistakenly believe they are compliant with this requirement when they are not, as discussed further below. The good news is, there are tools available to help achieve compliance.

The SPD is a document that communicates plan rights and obligations in a way that is easily understood, explaining the plan’s benefits, claim review procedures, and the participant’s ERISA rights. And, it must be distributed to participants at certain times. A common misunderstanding for employers is that the plan’s certificate of insurance/benefit booklet provided by an insurance carrier or third-party administrator (TPA) meets ERISA’s SPD requirement. Most often, this is not the case. The group health plan sponsor will need to provide additional information that may not be contained within the booklet created by the insurer to meet this requirement. For example, ERISA requires SPDs to include certain types of information such as plan number and plan year, employer’s tax ID number, name and address for the plan administrator, and plan contribution structure – which is typically not included in the certificate of insurance provided by a carrier.

To meet the SPD requirement, an employer can use a wrap document (SPD wrap) that includes the ERISA-required information that the certificate or booklet prepared by the insurer or TPA may not include. This document is called a wrap document because it essentially “wraps around” the insurance certificate or benefit booklet to fill in the missing ERISA-required provisions. In this scenario, the wrap SPD and the insurance certificate/booklet, together, make up the plan’s SPD.

When must an SPD be provided to a plan participant?
Participants must receive an SPD:

•Within 120 days of the plan becoming subject to ERISA;
•Within 90 days of enrollment for new participants;
•Every 5 years if material modifications are made during that period; or
•Every 10 years if no amendments occur.

Are all group health plans required to provide participants with an SPD?
All group health plans subject to ERISA must provide participants with an SPD, regardless of size. Both insured and self-funded group health plans must comply with the federal laws governing SPDs. While ERISA contains an exception for group health plans with less than 100 plan participants, that exception only applies to reporting requirements (e.g., 5500 filings).

Employers subject to ERISA should revisit their plan documentation to make sure they are compliant with ERISA’s SPD requirement, as not having an SPD can be costly for employers. For example, if an employer fails to provide an SPD within 30 days of a participant’s request, fines of $110 per day can accrue.  Without an SPD, it is difficult for an employer to respond to such request.  For more information on the SPD requirement, its required content, or how to utilize an SPD wrap document – contact your HORAN representative.

Thank you to HORAN for providing the content for our Question of the Week. HORAN serves as a trusted advisor on employee benefits, wealth management and life and disability insurance. To learn more about HORAN, please contact HORAN for additional information.

It’s never ending. Just when you thought you had a handle on recent regulatory changes something new crops up. There isn’t enough time in the day to keep on top of everything! That’s where strategic HR inc. can help. We stay on top of the changes so you don’t have to. Ask us for assistance with any of your benefits, compensation or other regulatory needs. Please visit our Benefits & Compensation page for more information on any of these services.

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Who Is Responsible to Provide COBRA Coverage to M&A Qualified Beneficiaries?

(By Diane Cross, Compliance Analyst at HORAN. Reposted from HORAN’s Health Benefits Compliance Blog)

HR Question:

Business reorganizations, such as mergers and acquisitions (M&A), directly impact employee benefits administration – and one consideration is COBRA responsibility. What is our COBRA responsibility as a result of our business sale (or purchase)? is a common question we receive from employers.

HR Answer:

The short answer is, it depends on the circumstances, discussed further below.

Who is Responsible to Provide COBRA Coverage to M&A Qualified Beneficiaries?
A seller and buyer may contractually allocate COBRA responsibility as part of the transaction. If that is the case, COBRA responsibility will be outlined by the terms of the contract. In absence of contracted terms, or if the party who was contractually responsible for providing COBRA fails to do so, the IRS provides guidelines that outlines who has COBRA responsibility. Generally, if the seller maintains any group health plan after the transaction, the seller bears responsibility for providing COBRA coverage to the M&A qualified beneficiaries. 

Who are M&A qualified beneficiaries?
For the purposes of COBRA, M&A qualified beneficiaries include (1) individuals who are receiving COBRA coverage under the seller’s group health plan at the time of the transaction; and (2) individuals who experience a loss of coverage due to a qualifying event in connection with the transaction.

If the seller does not maintain any group health plan after the sale, who bears COBRA responsibility will depend on the structure of the transaction. In a stock purchase (the buyer assumes the role of the seller and generally assumes responsibility for all the seller’s employee benefit plans as a matter of law), the buyer is responsible for providing COBRA coverage to M&A qualified beneficiaries. However, in an asset purchase (buyer usually does not assume any plans or plan liabilities unless a buyer affirmatively adopts or continues the seller’s plans), buyer is responsible for providing COBRA coverage to M&A qualified beneficiaries only if the buyer maintains a group health plan and is considered a successor employer.

When is a buyer a successor employer?
A buyer is a successor employer if it continues the operations of the business without substantial change or interruption, and the seller does not provide any group health plan after the transaction.

Why is this Important?
Aside from employers understanding their COBRA responsibility generally, the impact of COBRA liability for M&A beneficiaries could be significant. For example, a buyer assuming COBRA liability could result in a negative impact to the buyer’s premiums; for a self-funded plan, a buyer assuming COBRA liability can impact the plan’s finances especially if M&A beneficiaries have high claims expenses. Such issues, if determined early enough in the process, could be factored into negotiations (through the purchase price or handled another way by agreement).

When negotiating the purchase or sale of a business, employers should be mindful to include COBRA considerations early in its due diligence and discuss with counsel to understand any potential responsibility. Please contact your HORAN representative with questions.

Thank you to HORAN for providing the content for our Question of the Week. HORAN serves as a trusted advisor on employee benefits, wealth management and life and disability insurance. To learn more about HORAN, please contact HORAN for additional information.

strategic HR inc. is ready to assist you with any of your challenging situations around Benefits and Compensation. We offer assistance with everything from job descriptions to policy development to help address your difficult issues that impact employee compensation or benefits. Please visit our Benefits and Compensation page for more information on how we can assist you.

 

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Medicare: Health Insurance for Employees Over 65

Question:

My employee is turning 65 but continuing to work. What do I tell them about Medicare?

Answer:

There is a lot of misinformation out there regarding retirement health insurance and steps individuals need to take. Let’s clear it up!

Typically, if an individual is on a creditable employer health plan and they decide to work past age 65, they can wait until they retire to enroll in Medicare. In this circumstance, these individuals will have a Special Enrollment Period when they eventually choose to retire or leave their group coverage.

If your organization has more than 20 employees, there is no need for someone who is over 65 and still working to enroll in Medicare Part B (Medical Insurance) yet. This is because the employer plan covers this.

Many people choose to enroll in Medicare Part A (Hospital Insurance) when they turn 65. Individuals pay taxes on this coverage if they or their spouse worked 40 quarters throughout their lives, so there is typically no cost associated with it in retirement. Your employees should be aware, though, that they are no longer able to contribute to their Health Savings Account (HSA) once they enroll in Medicare Part A.

Your employees should also note whether their health insurance plan is both Medicare Part B and Part D creditable. This means that their coverage is at least as good as the Medicare plan they enroll in.

Thank you to RetireMEDiQ for sharing their expertise on Medicare. RetireMEDiQ is an independent health plan advisory service that offers trusted guidance to individuals in need of insurance options upon retirement. If you have any questions about this article or for RetireMEDiQ, you can view their website here or contact Marisa O’Neill at moneill@retiremediq.com.

 

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Employee Failure to Pay Premiums Under FMLA Protected Leave

Question:  

An employee on FMLA protected leave of absence has stopped paying for their health insurance premiums, is it safe to terminate their health coverage?

Answer:

If the employee is on FMLA protected leave, absent any written policy that provides a longer grace period, the regulations require an employee receive a 30-day grace period to pay for benefit premiums before health coverage can be terminated. In addition, employers are required to provide the employee a written notice at least 15-days prior to the end of the grace period informing the employee that benefits will be terminated if payment isn’t received. It’s recommended the written notice be sent via certified mail as well as in an electronic format (if the employee has communicated via email in the past). Over Communication, in this case, is beneficial.

If the employee is not on FMLA protected leave – the existing policy, practice or precedent for how similar situations have been handled (non-FMLA related leaves) should dictate how to proceed as practices should be consistent. For ease of administration, it may be beneficial to handle the non-payment of benefit premiums for non-FMLA protected leaves in the same fashion – even if by doing so is more than is legally required.  

For someone who is not yet on a formal leave of absence but may be out due to medical reasons, a formal memo should be sent to the employee. The memo should outline the employee’s requirement to notify the employer of the reason behind their absence, documentation to support the need for a medical leave (if applicable), and what accommodations (if any) may be needed. The memo should also outline the employee’s responsibilities for payment of health insurance premiums. Once again, prior to terminating health insurance, the memo should be provided to the employee, a minimum of 15 days prior to terminating health coverage.

For additional information, visit  https://webapps.dol.gov/elaws/whd/fmla/9d3.aspx

strategic HR inc. is ready to assist you with any of your challenging situations around Benefits and Compensation. We offer assistance with everything from job descriptions to policy development to help address your difficult issues that impact employee compensation or benefits. Please visit our Benefits & Compensation page for more information on how we can assist you.

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Can Employers Prohibit Wage Discussions Between Employees?

Question:

We’ve been hearing a lot about the issue on wage discussions. Can I prohibit our employees from talking about their salary and benefits with each other?

Answer:

Employers may not discourage or prohibit wage discussions between employees. Likewise, employers may not in any way discipline or retaliate against an employee for discussing their wages or other terms and conditions of employment. Prohibitions of this nature infringe upon employees’ protected rights under Section 7 the National Labor Relations Act (NLRA).

The NLRA grants all employees (not just those in unions) the right to organize and engage in “concerted activity . . . for the purpose of mutual aid or protection.” This includes discussions about wages, benefits, managers, facilities, safety issues, and just about anything else that two or more employees might have a stake in, or opinion about. As a result, the protections provided by the NLRA are broad. Here are a few examples of protected activity:

  • Employees discussing how much they are being paid, whether via email, break room chat, or a conversation on someone’s Facebook wall;
  • Individual employee complaints regarding wages or employment conditions, if they reflect general workforce discontent or are attempting to elicit the support of co-employees to correct a problem;
  • Employees discussing improving working conditions with other employees;
  • Circulating a petition asking for better hours;
  • Participating in a concerted refusal to work in unsafe conditions;
  • Employees joining with co-workers to talk directly to the employer, to a government agency, or to the media about problems in the workplace.

The National Labor Relations Board (NLRB), which rules on cases related to NLRA violations, has been saying loud and clear – since the 80’s – that discussion of wages is an absolutely protected right. Distributing or enforcing a policy to the contrary is akin to having a policy that says the employer doesn’t pay minimum wage or overtime. We strongly recommend that employers immediately eliminate any written or unwritten policy telling employees that discussion of wages is discouraged or prohibited, or that wages are confidential, and also discontinue any written or unwritten policy of disciplining or terminating employees for this behavior.

THANK YOU to the HR Support Center for providing the content for this Question of the Week. The Virtual HR Support Center is a do-it-yourself, always ready, at your fingertips resource for everything Human Resources. This cloud-based product provides 24/7 access to exclusive, industry-leading HR tools and resources. From employee handbooks, job descriptions and other commonly used HR documents, to up-to-the-minute law alerts, state and federal law libraries, and unique training videos, the Virtual HR Support Center will help you effectively manage your HR compliance and employee relations needs. Contact Us to learn how the Virtual HR Support Center can put all the DIY HR tools you need at your fingertips.

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Can I Do a Mid-Year Election Change to my Section 125 Plan?

Question:

I just went through open enrollment and now I want to change my election.  Can I?

Answer:

This question, or some similar variation, is all too common for employers to hear after the open enrollment period has ended. A response is not always a quick yes or no – per Section 125, which provides the rules for administrating a Section 125 plan (commonly referred to as a “cafeteria plan”), participant elections are generally irrevocable for the plan year. In other words, participants ordinarily may not change an election mid-year. As with many rules, there are applicable exceptions, discussed below.

If certain conditions are met, a plan may allow for a mid-year election change – that is, a change requested outside of open enrollment. In order for a participant to change an election mid-year, the change must be (1) allowed by the plan and (2) one of the IRS recognizes permitted election change events. While plans do not have to allow for employees to change their elections, most do.

For a mid-year election change to be allowed, the cafeteria plan must permit it in the written Section 125 plan document. While allowing a mid-year election change is a matter of plan design, the plan can only allow a mid-year election change as permitted by the IRS. Those permitted election change events include:

  • Change in marital status
  • Change in the number of dependents
  • Change in employment status
  • A dependent satisfying or ceasing to satisfy dependent eligibility requirements
  • Change in residence
  • Commencement or termination of adoption proceedings
  • Significant cost changes
  • Significant curtailment (or reduction) of coverage
  • Addition or improvement of benefit package option
  • Change in coverage of spouse or dependent under another employer plan
  • Loss of certain other health coverage (such as government provided coverage, e.g. Medicaid)
  • HIPAA special enrollment rights (contains requirements for HIPAA subject plans)
  • COBRA qualifying event
  • Judgment, decrees, or orders
  • Entitlement to Medicare or Medicaid
  • Family Medical Leave Act (FMLA) leave
  • Pre-tax health savings account (HSA) contributions (employees are free to change their HSA contributions whenever they wish, in accordance with the their payroll/accounting department process)
  • Reduction of hours
  • Exchange/Marketplace enrollment

While a cafeteria plan does not have to allow for all of the permitted election change events as listed above, it cannot be more generous than the IRS permits. When an employee experiences a mid-year election change event as recognized by the IRS and allowed by the plan, the change must be effective prospectively (with the exception for retroactive changes permissible under HIPAA special enrollment events such as birth or adoption). In addition, the requested change must be consistent with the event – an election change must correspond with requested change in status. For example, if an employee requests to change elections due to a divorce, the employee may drop coverage for the former spouse.

Employers should reference their Section 125 plan document to not only determine what is permitted when an employee asks about a mid-year change, but confirm that the plan allows for mid-year changes as intended.  Please contact your HORAN representative with any questions.

THANK YOU to HORAN for providing the content for this Question of the Week. HORAN serves as a trusted advisor on employee benefits, wealth management and life and disability insurance.  To learn more about HORAN, please contact your HORAN for additional information.

 

strategic HR inc. is ready to assist you with any of your challenging situations around Benefits and Compensation. We offer assistance with everything from job descriptions to policy development to help address your difficult issues that impact employee compensation or benefits. Please visit our Benefits and Compensation page for more information on how we can assist you.

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Do you know if you need to pay an intern or not?

Question:

I read a notice that there are new requirements that must be met to consider someone an unpaid intern. What are the requirements and how do I make sure our company needs to pay an intern or not?

Answer:

This month, the Department of Labor (DOL) adopted a new test for determining if a company needs to pay an intern. When categorizing interns, employers should use this test—called the Primary Beneficiary Test—when determining if a worker can be properly classified as an unpaid intern or if they need to be classified as an employee and paid minimum wage and overtime. The DOL’s switch to the Primary Beneficiary Test creates a nationwide standard.

Previously, the DOL was using a six-question all-or-nothing test. An employer needed to be able to say “yes, the internship does that” to all six questions or else classify the worker as an employee. The new test is a balancing (or factors) test and has seven questions. No single question will disqualify the worker from being classified as an unpaid intern. Instead, the employer may look at the answers as a whole.

The new questions overlap significantly with the old questions. The major element missing from the new test is a focus on whether the intern is providing tangible benefit to the employer. The old test indicated that the employer should receive little to no benefit from the services of an unpaid intern, with the exception of goodwill and a qualified future applicant. The new test doesn’t ask if the employer is receiving a benefit.

In place of questions about whether the employer receives any benefits, the new test places more emphasis on the internship being academically focused. Only one of six questions in the old test asked about the training and educational aspects of the job, whereas four of seven do in the new test. Employers are free to look at factors outside of these seven, but should be careful about stretching to find new questions if these seven lead to an answer of “paid employee.”

Under the Primary Beneficiary Test, employers should consider the following when deciding if they need to pay an intern or not:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

A link to the new fact sheet and additional information can be found on the Department of Labor Wage and Hour Division website.

 

strategic HR inc. offers assistance with a variety of Benefits and Compensation needs, including understanding how DOL regulations affect your business and helping craft creative compensation plans. Please visit our Benefits and Compensation page for more information.

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Analyzing Your Employee Benefits

Question:

We’re taking a closer look at the benefits that we offer to make sure we are getting the best bang for our buck.  What are some things we should consider as we are analyzing our employee benefits to help us attract and retain top talent?

Answer:

Kudos to you for recognizing the need to analyze your employee benefits and the value of employee benefits in attracting new talent and keeping the talent you have.  A 2015 Glassdoor survey found that 60% of people find benefits and perks to be a major factor when considering a job offer.  They also found that 80% of employees would choose a strong benefits package over higher pay.  Our unscientific findings, through our own recruiting experience, tend to show that we can overcome about 20% in salary with desirable benefits and perks.

So often, as we hear about unique perks that companies such as Google, Twitter, Apple, and Zappos are offering,  a smaller organization may feel that they just can’t compete.  Consider this, you don’t have to! Your best analysis of your employee benefits starts with your employees. Ask and listen to your employees to learn what would be of value to them.  A recent survey by Fractl found that while health insurance still ranks highest, other areas that employees place value don’t have to come at a high price tag to the company.  Fractl spoke to 2,000 U.S. employees ranging from 18 to 81 in age.  These employees were asked to rank 17 benefits when deciding between a higher paying position or a lower paying position with more perks.

Harvard Business Review, The Most Desirable Employee Benefits, 2/15/17

For smaller organizations, getting creative in perks can improve a work environment.  Could a flexible schedule work for your organization?  There may be solid business reasons why it may not, i.e. phones come on at 8:30 am, but if there is not a solid reason, avoid the logic of, “We’ve always done it this way.”  That little bit of flexibility can make a world of difference for employees juggling getting a family out the door in the morning.  Sometimes it’s as simple as stocking employees’ preferred drinks and snacks in the kitchen.  This shows the employee you are paying attention and you care about them.  These seemingly small perks can also make a difference in the employee’s grocery bill.

In analyzing your employee benefits,  start by looking at usage.  Are your employees actually using the benefits you offer?  Make sure you’re putting your resources towards benefits and perks where employees see value.

Keeping an eye on budget, conduct a benefits survey with your employees to find out where they place value.  The categories noted above are a good place to start, making any needed adjustments for your culture and what might be reasonable for your company.  A benefit is only a benefit if it’s perceived that way by employees.  Don’t be afraid to think outside the box a little.  Often flexibility with time off or schedule is very attractive.  For some employees, assistance repaying student loans can be of huge value, while for others additional 401k match may be more appealing.  Does professional development or membership in a professional organization come into play?

With a little creative thinking you can offer attractive benefits, within your budget, that will make a difference for your current employees and in the quest to attract new ones.

 

Providing adequate Benefits and Compensation for your employees is key to the recruitment and retention of a well performing workforce, and having the right policies in place can make or break a company.  Strategic HR, inc. understands this critical need and can help you analyze your benefit and compensation system to meet today’s competitive market.  Please visit our Benefits and Compensation page for more information on how we can help get you competitive today.

 

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Are Wellness Program Incentives Taxable?

Question:

Is it true that employees have to pay taxes on wellness program incentives?

Answer:

With wellness programs on the rise, there is plenty of opportunity for employees to receive various incentives – from t-shirts and event tickets to gift cards and cash.  As employers consider wellness program design and how to incentivize employees (if at all), they should keep in mind that many wellness program incentives are not excluded from income tax.  Does that gift card Johnny received for participating in a wellness program need to be included in his gross income?  Per the IRS, yes.  

Cash and non-cash incentives, rewards, and payments paid through an employer wellness program are not excluded from an employee’s taxable income (see IRS Memorandum 20162031) and should be included on the employee’s W-2 and subject to federal tax withholdings.  For example, non-cash incentives subject to taxation include discounts on products/services and certain merchandise prizes.  More specifically, the employee’s gross income includes:

  • Employer-provided cash rewards and nonmedical care benefits for participation in a wellness program; and
  • Reimbursements of premiums for participating in a wellness program if the premiums were originally made by salary reduction through a Section 125 plan.  

Note that employer contributions to an HSA, reduced major medical plan premiums, and benefits and services that are medical care (e.g., biometric screenings, smoking cessation programs, and health risk assessments) are generally excluded from an employee’s gross income and are not subject to taxation.  Also, certain benefits may fall into an exception through the “de minimus” rule, defined as the value being so small as to cause accounting of it to be unreasonable or impracticable.  However, employers should note that cash rewards are never considered “de minimis”.  A practical example of a wellness reward that would be considered “de minimis” is a t-shirt.

Special consideration should be given to the incentives provided as part of your wellness program.  Failure to report wellness cash and cash-equivalent incentives can cause significant penalties, including reporting penalties assessed per employee per W-2.  In addition, employee relations issues could result as the IRS can pursue employees who received, but never paid taxes on, such incentives.

THANK YOU to HORAN for providing the content for this Question of the Week. HORAN assists clients in wellness programs and incentive design. Please contact your Benefits Account Manager or HORAN for additional information.

strategic HR inc. has the answers to all of your tough Benefits and Compensation related questions. Please visit our Benefits & Compensation page for more information.

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What are the Advantages of Financial Wellness Programs?

Question:

I’ve been hearing a lot about employers offering financial wellness programs as a benefit for employees in 2017.  What is a financial wellness program and what are the advantages of offering this benefit to my employees?

Answer:

Financial wellness programs are becoming increasingly popular as an employee benefit.  A 2016 Aon Hewitt report found that 55% of employers are offering at least one kind of benefit that is related to financial well-being.  By the end of 2017, that number is expected to grow to 77%.

Financial wellness programs are offered through financial planning companies, and even some local banks.  Employers partner with these companies to provide personalized financial support to their employees.  By doing this, you’re giving your employees the personalized tools they need to build a strong financial foundation, reduce debt, or plan for future expenses like their children’s college tuition or buying a home.

Unfortunately, finances play a leading role in elevating stress levels for about 52% of employees, according to a 2016 PwC Employee Wellness Survey.  To help alleviate that stress, employers are beginning to offer these programs.  For employees, personalized financial planning could lower stress levels, increase productivity at work, and provide the ability to create a solid financial foundation for them.  For employers, financial wellness programs could decrease turnover, improve employee job satisfaction, and lower healthcare costs.

Employees who thrive at home, thrive at work… and employers are starting to notice.   

 

Providing adequate employee Benefits and Compensation are key to recruitment and retention of employees and having the right polices can make or break a company. Strategic HR, inc. understands this critical need and can help you with any of your tough benefit and compensation questions. Please visit our Benefits & Compensation page for more information on how we can assist you with creating a strong Benefits or Compensation package.

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What Are the Benefits of Total Compensation Statements?

Question:

What are total compensation statements and why should I consider them for my employees?

Answer:

Most of the time, an employee’s pay and benefits spread far beyond the base pay.  A total compensation statement can be anything from a simple, computer-generated spreadsheet to an elaborate, in-depth analysis with charts or graphs.  Providing total compensation statements is an easy way to share with employees how much the company has invested in them.

Total compensation statements typically include, but are not limited to:

  • Base pay, bonuses and commission
  • Paid leaves, PTO
  • Car/phone allowance
  • Employer contributions for Medical, Dental, and Vision coverage
  • Employer contribution for Flexible Spending, Retirement, etc.
  • Employer contribution for Life Insurance and Short-Term and Long-Term Disability Insurance
  • Stock options
  • Tuition assistance
  • Training and development opportunities
  • Travel expenses
  • Company discounts
  • On-site child care

Why should an employer consider total compensation statements?

The use of total compensation statements has proven that an extremely high percentage of employees now have a greater appreciation for the value of their employer paid benefits.  This boosts employee satisfaction, which in turn, leads to retention.  

Tips:

  • Include a letter from the president of the company or Human Resources.  By doing this, you are creating a message with a purpose.
  • Highlight benefits or programs that are often forgotten by many employees.
  • Be available for questions from employees or hold a meeting to address these questions.

strategic HR inc. offers assistance with a variety of Benefits and Compensation needs including total compensation statements.  Contact us now for more information and to talk about how we can help you create total compensation statements.

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Unemployment Voluntary Contribution

Question:

We just received the Unemployment Tax Notification.  Should I pay the voluntary payment to reduce my rate? How do I calculate if a voluntary payment is beneficial?

Answer:

A voluntary payment to reduce your annual unemployment tax rate can be a great option for tax contributing employers. It gives you the opportunity to make a onetime payment to Job and Family Services to lower your annual unemployment rate.

To calculate the benefit take the difference between your current rate and the optional reduced rate and multiply it by your taxable wage base. If the number is higher than the voluntary payment, it is a good idea to seriously consider making a voluntary payment.

Example: Your 2017 Total Contribution Rate is 2.5%, if you pay $962 you can reduce your rate to 2.3%. Your taxable wage base has been increasing and last year’s (07/01/2015 through 06/30/2016) was $234,761

2.5% – 2.3% = .2% x $234,761 = $469.52 which is LESS than the $962 cost to buy down. In this scenario a voluntary contribution would not be recommended unless the taxable wage base is expected to increase to over $481,000 (voluntary contribution/difference in rate = $962/.002= $481,000).

Additional things to consider:

  • Is your taxable wage base increasing or decreasing? This will impact your savings. The higher your taxable wage base, the higher potential savings
  • Have you looked at Common Rating? If you have more than one unemployment account number, Common Rating may provide even further savings
  • What states are you located in? Unemployment discount opportunities vary state by state—voluntary contributions and Common Rating may or may not be good options in your state

If you have any further questions or would like a free analysis of your tax rate notice(s), please contact Katie Jones at 513.351.1222 or kjones@matrixtpa.com. Most states require you to take action before December 31.

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Health Insurance – Premium Only Plan

Question:

Our company has a Section 125 – Premium Only Plan – so we can take employee’s health insurance contributions out on a pre-tax basis.  Do all employees have the ability to elect that their premiums come out pre-tax or only certain groups?

Answer:

Employees of regular corporations, S corporations, limited liability companies (LLCs), partnerships, sole proprietors, and non-profits can participate in a Section 125 POP.  The Code does prohibit sole proprietors, partners, members of an LLC, and individuals owning more than 2% of an S corporation from participating.  Each person electing to participate must sign off on the election (typically during open enrollment) and must keep that election for the entire year, unless there is a qualifying event.

Regardless of who can participate, these plans are a great opportunity for employees to save up to 40% on their federal income taxes and employers benefit by reducing their tax liability.  A plus for both employees and companies!

Remember that to have an eligible plan, the company must have a plan document and summary plan description in place.  These documents must be kept on file with the employer.

Strategic HR, inc. is ready to assist you with any of your challenging situations around Benefits and Compensation. We offer assistance with everything from job descriptions to policy development to help address your difficult issues that impact employee compensation or benefits. Please visit our Benefits and Compensation for more information on how we can assist you.

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Notice of Creditable Coverage

Question:

My husband just received a “Notice of Creditable Coverage” at home from his employer.  As a Human Resources professional, I’m not sure what this is and I am wondering if I am supposed to be distributing something to my employees?

Answer:

Yes!  The Medicare Modernization Act requires entities, employers with prescription drug coverage, to notify Medicare eligible policyholders annually as to whether their prescription drug coverage is creditable coverage.  Basically, we must tell those covered if the company plan is “as good as” the standard Medicare prescription drug coverage. There are two disclosure requirements:

  1. The first disclosure requirement is to provide a written disclosure notice to all Medicare eligible individuals annually who are covered under its prescription drug plan, prior to October 15th each year.  There are other times when notification is necessary (such as upon joining the plan) but the 10/15 deadline is important because open enrollment begins for Medicare eligible individuals.
  2. The second disclosure requirement is for entities to complete the Online Disclosure to CMS Form to report the creditable coverage status of their prescription drug plan. The Disclosure should be completed annually no later than 60 days from the beginning of a plan year.

For sample, creditable coverage notices and model language, refer to the Centers for Medicare & Medicaid Services.

 

Providing adequate employee Benefits and Compensation are key to recruitment and retention of employees and having the right polices can make or break a company. strategic HR inc. understands this critical need and can help you with any of your tough benefit and compensation questions. Please visit our Benefits & Compensation page for more information on how we can assist you with creating a strong Benefits or Compensation package.

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Exempt or Non-Exempt? A Loaded (and potentially costly!) Question

Question:

With all the hype over the DOL changes to FLSA, I’m trying to evaluate our staff.  What is the difference between exempt and non-exempt? Is it the same as hourly and salary?

Answer:

You are right, the Department of Labor has released the changes to the Fair Labor Standards Act (FLSA) that is having a huge impact on the exemption status of employees.  The biggest change is that an employee cannot be “exempt”; if their salary is less than $47,476 (a few exceptions – i.e. outside sales).

FLSA provides details on an exemption analysis you can do to determine if an employee is exempt from compliance with the law.  Details about each exemption are provided on the FLSA government website.  The exemptions are based on the duties the individual performs.  The second test that has to be done is a salary test.  In the past, a salary of less than $23,660 had to be non-exempt regardless of whether the job role met any of the exemptions.  Now this threshold has been moved to $47,476.

An employee can be paid hourly or salary and be classified as non-exempt and any hours the employee works over 40 per week must be paid as overtime.  An exempt employee can only be paid a salary and is not entitled to overtime based on the FLSA as long as they meet the job duties and salary test mentioned above. This is a big change for many organization that have had employees (i.e. managers) making less than $47,476 but paid as salaried exempt.  You’ll want to review all your exempt employees to see who may be impacted by this change.  There are many ways to “fix” but the basics are moving the employee to non-exempt and begin paying them overtime for hours over 40 OR keep them as exempt and raise their salary above $47,476.

It’s never ending. Just when you thought you had a handle on recent regulatory changes something new crops up. There isn’t enough time in the day to keep on top of everything! That’s where strategic HR inc. can help. We stay on top of the changes so you don’t have to. Ask us for assistance with any of your benefits, compensation or other regulatory needs.

Please visit our Benefits & Compensation page for more information on any of these services.

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Pre-tax and Post-tax on Benefits

Question:

I have always taken my employee’s premiums for benefits out of their pay check on a ‘pre-tax’ basis.  It was my understanding that was something I was allowed to do.  Recently, I was told I am not technically allowed to do that.  Is that true?

Answer:

You ARE allowed to take premiums out of an employee’s check pre-tax, assuming it meets the required criteria.  Pre-tax benefit premiums are a great benefit to employees and employers.  HOWEVER…employers need to remember that in order to offer their benefit pre-tax (no Social Security, Medicare, Federal, or State withholding), a plan document must be in place so you are able to take the deduction pre-tax.  That document / plan is a Section 125 plan.  Without that plan in place, you are not technically able to deduct employee premiums, pre-tax. The most common deductions take pre-tax with the document are: Group health, dental, vision, flexible spending accounts, dependent care accounts, and health savings accounts.

Strategic HR, inc. offers assistance with a variety of Benefits and Compensation needs, including understanding how DOL regulations affect your business and helping craft creative compensation plans. Please visit our Benefits and Compensation page for more information.

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Do I Have to Allow Employees to “Opt Out” of Pre-Tax Deductions?

Question:

If I have an employer that has a premium only (pre-tax / IRS Section 125a premium deduction plan) – do I have to allow employees the opportunity to “opt out” of the pre-tax deduction?  In other words, they want the premium to come out post-tax….do I have to allow that?

Answer:

Yes, employees must be given the option to participate in the pre-tax deduction and may elect to opt-out of this annually.  Depending on who you have your plan with, many offer an election form that should be completed annually opting “in” or “out” of the program.  If not, be sure employees put the request in writing so it cannot be questioned later.

Strategic HR, inc. is ready to assist you with any of your challenging situations around Benefits and Compensation. We offer assistance with everything from job descriptions to policy development to help address your difficult issues that impact employee compensation or benefits. Please visit our Benefits and Compensation for more information on how we can assist you.

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Department of Labor’s Wage and Hour Divisions Email Service

Question:

At a recent HR meeting we were encouraged to sign up for the Department of Labor’s Wage and Hour Divisions email service. Why would we want to do this?

Answer:

The DOL provides the opportunity to receive free e-mail notices when new information is available on the website that includes over 100 different topics, in 17 categories, including Wage and Hour. The website www.dol.gov/dol/email.htm allows users to select notifications relevant to their interests.

As all HR professionals know, one of the challenges we face is keeping current on legislative changes, findings, and interpretations. Often the communications are sent in the form of opinion letters, or interpretations of the rules, by various DOL officials as they address issues brought up by other companies. These opinion letters do not provide legal guidance in administering DOL rules, but use court decisions as the basis for the opinion. They provide insight into how the officials think about a particular section of regulation or statue and sometimes even mirror some of the issues you may have at your worksite.  In a climate where legislative changes seem to be occurring daily, receiving a regular “heads-up” can only help our efforts to stay on top of it all.

Strategic HR, inc. offers assistance with a variety of Benefits and Compensation needs, including understanding how DOL regulations affect your business and helping craft creative compensation plans. Please visit our Benefits and Compensation page for more information.

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Paying to Get Ready for Work

Question:

I have an employee telling me that I should be paying them for the time it takes them to go to their locker and get ready for work.  Is that true?

Answer:

Paying employees for the time they work seems pretty straight forward, however, the activities that they perform before or after their shift to ‘get ready for work’ can create a lot of question as to whether or not the time spent must be paid time by the employer.  The Fair Labor Standards Act (FLSA) provides guidance but the topic is still very murky and in some instances require a consult with your attorney to make sure you get it right.

The ‘go-to’ document to provide you guidance is the Portal to Portal Act and verbiage around compensation for all time spent within a continuous workday.  The topic that becomes most questionable is what activities are deemed “integral and indispensable” for the job and it is verbiage that many times is interpreted by the court and is specific to the industry and even sometimes the job.  Those activities that are deemed integral and indispensable are those that must be paid time for the employee.  As an example, if the employee is REQUIRED to wear certain clothes or certain equipment, the time spent in putting those items on must be paid time.  If it is something they prefer to wear, it is not necessarily work time or time that is paid.

As an employer, you need to look carefully at what employees do before or after they clock in or clock out for the day.  If they cannot perform their jobs without wearing certain items or equipment, it should be paid.  Dive in deeper to determine what it is that they are doing and then make a determination on whether or not it should be paid or not.  And as always…keep in mind that outside of the legal requirements, payment for such activities may just be “the right thing to do” in your workplace.

Are you hesitant when it comes to navigating FLSA and other federally mandated rules and regulations? strategic HR inc. understands your uncertainty. Ask us for assistance for any of your benefits and compensation needs including evaluating the exemption status of your jobs relative to the proposed changes. Please visit our Benefits & Compensation page for more information on any of these services.

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Are you familiar with the Portal-to-Portal Act?

Question:

If I need to send an employee to “cover” at a worksite other than where they are regularly schedule to work, am I required to pay them for the time it takes them to get there?

Answer:

It depends! Luckily, the Fair Labor Standards Act (FLSA) addresses this issue specifically. Section 29 CFR § 785.38 (Portal-to-Portal Act) tells us that time spent traveling to work before the start of the workday or home from work after the workday is over is not considered hours worked or paid time. However, it does also tell us that the time an employee spends traveling from one worksite to another during the same workday, it is considered hours worked and thus they should be paid for the travel time. In your question, it would depend on when they were sent to the other site. For example, an employee arrives at their normal work location on Monday morning only to discover that they are being asked to cover at another location because they are short staffed. Because the employee already arrived at their assigned work location and you are asking them to go to another location after their arrival, the time spent traveling to the other worksite would be hours worked. IF you called that employee before they left their home and asked them to go straight to the different location, that would NOT be hours worked but rather considered time traveling to work under the Portal-to-Portal Act. For more information on travel time during the work day, visit www.dol.gov. The site also has a great resource, a fact sheet that provides information about hours worked. It can be found at : http://www.dol.gov/whd/regs/compliance/whdfs22.pdf 

It’s tough having to navigate the ever-changing FLSA laws and other federally mandated rules and regulations. Strategic HR, inc. can help. Ask us for assistance with any of your benefits and compensation needs. Please visit our Benefits & Compensation page for more information on any of these services.

Smartphone Usage After Hours

Question:

Many of our employees have smartphones. Do we have to pay them for every time they use it outside of regular working hours?  I tell them not to respond until work hours but many of them still respond to emails and texts outside of work hours.  What do I do?

Answer:

This issue has exploded as of late!  Most employers and employees use smartphones, an ideal tool to improve efficiency, productivity, and accessibility for their employees.  It does, however, become an issue, because non-exempt employees must be paid for all hours worked…this includes hours responding to emails, phone calls, and texts outside of “regular” work hours.  This is probably one of the most common violations that Wage and Hour auditors are finding.

So what to do?  As an employer, you need to have a policy in place requiring tracking of smartphone usage, even restricting use outside of regular business hours, and make sure to tie it into your overtime policy.   That being said, managers then cannot email employees during those off times, and expect an immediate response, or even a response first thing in the morning.  IF you find out employees are replying outside of regular work hours you need to (1) address the issue in terms of performance and (2) make sure you pay them!

For exempt employees, smartphone usage can be less of an issue, however, it can pose a problem.  If these employees are working any part of the workweek, they must be paid for the entire week.  Some companies make it a policy that employees must relinquish all smart devices (smartphones, laptops, tablets, etc.) when they are going to be off but honestly, this can be somewhat unreasonable if you need to touch base on a client issue or a “quick question”.

Consider these issues when you create policy and determine how you will handle such issues with  employees – whether exempt or non-exempt.  The Department of Labor website, www.dol.gov offers guidance for managing these types of concerns and making sure you are paying employees for actual hours worked.

Strategic HR, inc. has the answers to all of your tough Benefits and Compensation related questions. Whether you need an audit of your exemption statuses or a job analysis of your positions, strategic HR inc. can do the job. Please visit our Benefits & Compensation page for more information.

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Fiduciary

Question:

What is a fiduciary and is it possible that I could be one for our 401(k) plan?

Answer:

If you “touch” the 401(k) plan, you may very well be!  Even someone who enters or send the information in for a new hire into the 401(k) plan could be a fiduciary.  A plan fiduciary is someone who has any type of control over the plan’s operations or administration or they exercise discretion.  Whether it is the trustee of the account, the investment advisor, or a plan administrator…any one of these individuals can be a plan fiduciary based on their professional responsibilities.  All plan documents must designate a fiduciary for the plan, however, even if the plan doesn’t name you one, your true status is based on what you do for the plan…not just your title.  It is important to note that attorneys, accountants, and actuaries are generally not fiduciaries when acting solely in their professional capacities.  The key is determining whether or not they are exercising discretion or control over the plan.

So I’m a fiduciary, does it matter?  Absolutely!  As a fiduciary, YOU can become personally liable for actions taken within the plan.  The Employee Retirement Income Security Act (ERISA) requires plan fiduciaries to act prudently and solely in the interest of the plan’s participants and beneficiaries.  It prohibits self-dealing and as noted above, provides legal relief when violations of the standards cause harm to plans. Fiduciaries have important responsibilities because they are acting on behalf of participants in the plan and must be sure to act in the best interest of those beneficiaries.

If you are looking for more information on your responsibility as a plan fiduciary, the Department of Labor has a great reference tool.  The tool can be found at:  http://www.dol.gov/ebsa/publications/fiduciaryresponsibility.html

Strategic HR, inc. offers assistance with a variety of Benefits and Compensation needs, including understanding how DOL regulations affect your business and helping craft creative compensation plans. Please visit our Benefits and Compensation page for more information.

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FLSA Safe Harbor Provision

Question:

I keep hearing people reference the “safe harbor” provision of the Fair Labor Standards Act and that I should have language included in my handbook about it.  What is the FLSA Safe Harbor Provision?

Answer:

Under the old FLSA provisions (pre-2004), if an employer made an improper deduction from an exempt employee’s salary, the employee would lose their exempt status and the employer would be required to treat not only the impacted employee but EVERYONE with the same title as though they are non-exempt.  Under the current FLSA rules, if an employer makes an improper deduction but follows the safe harbor provisions, they can correct the error but the employee and those with the same title DO NOT lose their exempt status.

To meet the requirements of the safe harbor provisions, the employer must do the following:

  • Establish a clearly communicated policy prohibiting improper deductions and including a complaint mechanism;
  • Reimburse employees for any improper deductions in a reasonable time frame; and
  • Make a good-faith commitment to comply in the future.

This does not protect employers who are frequent abusers but does allow a safety net to those who made the deduction in error.  Employers should create a safe harbor policy and communicate it to employees through the employee handbook.  For additional information, go to the Department of Labor website and review their safe harbor policies on the FLSA page.

It’s tough having to navigate the ever-changing FLSA laws and other federally mandated rules and regulations. Strategic HR, inc. can help. Ask us for assistance with any of your benefits and compensation needs. Please visit our Benefits & Compensation page for more information on any of these services.

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Paying for Smartphone Usage

Question:

Many of our employees have smartphones. Do we have to pay them for every time they use it outside of regular working hours?

Answer:

This is becoming a much bigger issue, as more companies are using smartphones as a tool to improve efficiency, productivity, and accessibility for their employees. When talking about nominal usage outside of regular working hours, i.e., a few minutes a couple of times a week or month, it’s not an issue. However, typically, smartphone usage outside of regular business hours can extend well beyond that. You’ll want to carefully consider who really needs to have a smartphone or similar device for business purposes. If there is not a valid reason, reconsider issuing one to avoid potential problems.

Non-Exempt Employees – yes, you have to pay them for that time. This is probably one of the most common violations that Wage and Hour auditors are finding. To avoid a problem be sure to have a policy in place requiring tracking of smartphone usage, even restricting use outside of regular business hours, and make sure to tie it into to your overtime policy. That being said, remember that managers then cannot email employees during those off times, and expect an immediate response, or even a response first thing in the morning. Be sure to explicitly state this policy and remind your managers.

Exempt Employees – smartphone usage can be less of an issue, however, if the individual is off work or considered on leave, they must be restricted from working. For salary exempt employees, if they work any part of the workweek, they must be paid for the entire week.  Some companies make it a policy that employees must relinquish all smart devices (smartphones, laptops, tablets, etc.) when they are going to be off work. This can be especially problematic when an employee is still expected to be available for contact while on FMLA leave. If you are contacting them for work related reasons, it cannot be counted as FMLA leave, and they must be paid for the time.

Strategic HR, inc. offers assistance with a variety of Benefits and Compensation needs, including understanding how DOL regulations affect your business and helping craft creative compensation plans. Please visit our Benefits and Compensation page for more information.

 

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Volunteer Time

Question:

Can my employee volunteer time to my non-profit organization or an event sponsored by the employer?

Answer:

For an exempt employee, ABSOLUTELY! There are no concerns regarding payment for an exempt employee under the FLSA, and they can actually be required to assist as part of their job, if it is part of their position.

For non-exempt employees….MAYBE. Under the FLSA, a non-exempt employee must generally (depending upon your State) be paid time and one half their regular hourly rate for hours worked in excess of forty in a workweek. The question becomes, does time spent by an employee volunteering their time to their organization (or event) count as hours worked?

In Opinion Letters issued by the Department of Labor some general guidelines were issued to eliminate the confusion of payment for “bona fide volunteer efforts for charitable purposes”. In general, volunteer status can be met when the following criteria is met:

  • Designation of “volunteer” status is not done unilaterally by the employer and it is truly a voluntary act with no coercion by the employer in an attempt to avoid minimum wage or overtime requirements;
  • The volunteer time must be for a civic, charitable, or humanitarian purpose without any promise, expectation or receipt of compensation by the employee (though a nominal fee may be provided);
  • The employee’s volunteer activities cannot not be similar to the job they perform as part of their regular employment; and
  • The volunteering must be performed outside the employee’s normal work hours.

IF a non-exempt employees meets this criteria and are willing to volunteer it may be best to have them sign a volunteer agreement – just so there are no concerns down the line.  Remember…that employee may be happy to do it now but when they get mad later, you could have quite a mess on your hands, even if it was determined to be voluntary.

** Be sure to wish Robin a Happy Anniversary – May starts our 20th year providing outsourced HR Solutions **

Strategic HR, inc. has the answers to all of your tough Benefits and Compensation related questions. Whether you need an audit of your exemption statuses, a job analysis of your positions or just need help defining your comp and benefit policies and procedures, strategic HR inc. can do the job. Please visit our Benefits & Compensation page for more information. 

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Snow Storm Pay

Question:

What do you pay when a snow storm hits?

Answer:

This winter has been one for the record books, and with nearly two months of winter left to go there is a good chance that companies will be faced with this question. Fortunately, two Labor Department opinion letters help clarify the confusing issue of how to treat the hours that EXEMPT employees miss because of inclement weather. It is important to note that while opinion letters don’t carry the weight of law, courts are deferential to them and they provide an idea of how the Labor Department might rule in similar circumstances.

If the Workplace Remains Open

If the workplace is OPEN during inclement weather and an exempt employee misses work for his own (non-illness) reason, a full-day deduction from the employee’s salary can be taken. Additionally, the employer can require the employee to use vacation time or other accrued leave to cover the time off.

NOTE:  You can deduct only full-day absences from exempt employees’ salaries. Docking pay for partial-day absences could destroy the person’s exemption. An exempt employee who shows up for part of the day should be paid for a full day, regardless of how long employee is there.

If the Workplace Is Closed

Organizations always have the option of closing their doors during inclement weather. If the workplace is CLOSED, exempt employees can be required to take vacation time or use other leave, but you can’t insist on leave without pay.

NOTE: The Fair Labor Standards Act (FLSA) doesn’t require employers to provide vacation time. Employers are free to administer leave programs in any nondiscriminatory way they see fit. Employers may charge time off as leave even in amounts less than a day as long as the employee’s salary remains the same. The key is that the employee’s salary can’t be affected.

What about non-exempt employees?

Of course, the rules are different for non-exempt (hourly) employees. Generally, if a non-exempt employee does not come to work for whatever reason, the employer does not need to pay the employee. If the workplace is closed an entire day due to inclement weather (or other emergency), the employer does not have to pay the non-exempt employees. However, in this situation employees are missing work for reasons that are not their fault. Employers should consider paying employees for the day or part of the day. This gesture cements relationships and communicates effectively that the employer is committed to its employees’ well being.

If an employer closes the company mid-way through a day, employees must be paid for hours worked. In some States, an employer must pay employees a minimum number of hours if they have reported for work – be sure to check the regulations for your particular State.

It is wise for employers to develop a policy that covers handling employee work hours and pay in the event of bad weather or other emergencies. An inclement weather policy should cover:

  • What constitutes an inclement weather day,
  • How employees will be paid,
  • How work responsibilities will be covered,
  • How employees will be notified, and
  • Guidelines for when an employee cannot make it to work because of bad weather.

A good policy makes the facts known so that employees know what to expect when inclement weather or other emergencies occur. It also provides managers who must make the decision whether or not to close for inclement weather, guidance for their decision making.

Are you hesitant when it comes to navigating FLSA and other federally mandated rules and regulations? Strategic HR, inc. understands your uncertainty. Ask us for assistance for any of your benefits and compensation needs. Please visit our Benefits & Compensations page for more information about our services.

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Voluntary Classification Settlement Program

Question:

What is the new Voluntary Classification Settlement Program (VCSP) and what, if anything, does my company need to do?

Answer:

The new Voluntary Classification Settlement Program (VCSP) was developed by the IRS to provide payroll tax relief to employers that reclassify their workers (as employees) for future tax periods. Part of the Fresh Start initiative created by the IRS, this program aims to increase compliance and reduce the tax burden for employers. Under the VCSP employers will pay 10 percent of the employment taxes that would have been due for the most recent tax year on the workers being reclassified. Employers also avoid interest and penalties on the payment and will not undergo an audit for tax purposes in prior years.

To take part employees in question must have previously been treated as independent contractors or other non-employees. Employers need to file an application with the IRS at least 60 days before beginning the treatment of these workers as employees. Employers will be notified whether or not they are eligible to participate and in doing so, the IRS will not share the reclassification with the Department of Labor.

It’s never ending. Just when you thought you had a handle on recent regulatory changes something new crops up. There isn’t enough time in the day to keep on top of everything! That’s where strategic HR inc. can help. We stay on top of the changes so you don’t have to. Ask us for assistance with any of your benefits, compensation or other regulatory needs. Please visit our Benefits & Compensation page for more information on any of these services.

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Tip Credit Regulations

Question:

What can you tell me about the tip credit regulation issued by the Department of Labor in 2011?

Answer:

The Wage and Hour Division of the Department of Labor states that, effective May 5, 2011, a tip is the sole property of the tipped employee regardless of whether the employer takes a tip credit.  The difference between the hourly rate paid by the employer and the standard federal minimum wage is what we call a tip credit.  Further, the employer is prohibited from using an employee’s tips, whether or not it has taken a tip credit, except as a credit against its minimum wage obligations to the employee, or in furtherance of a valid tip pool. This amendment results in major changes to the existing tip-credit-notice regulations, specifically in regards to the ownership of employee tips, pooling tip arrangements, and required communications to employees.  The tip credit provision was originally created through the 1966 amendments to the Fair Labor Standards Act, and specifically permitted employers to credit a portion of their employees’ tips against their minimum wage obligations.  Under the Fair Labor Standards Act, employers are allowed to pay their servers below minimum wage as long as their tipped employees receive tips that amount to at least $30 a month.

The sudden change to tip credit requirements caught the restaurant industry by surprise. The major industry trade groups requested a 90 day delay for implementing the new rules, but the DOL did not acquiesce to this appeal.  They felt that the amendment came at an inopportune time due to the weak economy paired with rising commodity costs.  The National Restaurant Association, The Council of State Restaurants, and the National Federation of Independent Business sued the Department of Labor in June 2011 because the agency did not allow restaurants to comment before the provision went into effect.  The NRA also noted that the DOL only gave restaurants 30 days to communicate the changes to employees comply with the new regulations.  The DOL counters that there was plenty of forewarning through the 2008 release of original regulations, and the agency felt that the amendment needed to be put in place as soon as possible due to the sheer number of alleged violations and lawsuits.

Strategic HR, inc. has the answers to all of your tough Benefits and Compensation related questions. Whether you need a job analysis of your positions or need to update (or write) job descriptions, strategic HR inc. can do the job. Please visit our Benefits & Compensation page for more information.

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What is a Fiduciary?

Question:

What is all this talk about being a “fiduciary” to a 401(k) or 403(b) plan? What is it? Am I one?

Answer:

A fiduciary is any individual or entity that has, or exercises discretionary control over the management of the ERISA 401(k) or 403(b) plan or the plan’s assets. Fiduciaries should always be named in the plan document or in a committee charter. These individuals are owners, board members, human resources employees, attorneys, accountants, advisors, etc.

Fiduciaries must:

  • Act solely in the interest of the plan participants,
  • Be prudent when acting on behalf of the plan,
  • Be prudent when selecting investments and take appropriate consideration,
  • Follow the terms of the plan document,
  • Diversify Plan investments,
  • Appoint appropriate trustees and fiduciaries and review performance at reasonable intervals,
  • Comply with all ERISA Reports and disclosures, and
  • Carry a fidelity Bond(s).

A compliant plan and its fiduciaries will have all documents to the plan organized and up-to-date in a “Fiduciary File”. Use this checklist Organizing Your Fiduciary File to help prepare your file.

A special thanks to Joanna Hankey, CFP®, REBC®, RHU®, Senior Account Executive for Investment/Retirement Plan Consulting with HORAN, for sharing her expertise with us. You can contact her with questions at JoannaH@horanwealth.com or 513-745-0707.

 

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When to Offer a Part-Time Employee Company Benefits

Question:

How quickly do we need to offer benefits once a part-time employee is working 40 or more hours per week? The employee is regularly scheduled to work 30 hours per week and is ineligible for coverage. However, the employee is currently working on a major project where the hours worked tend to often exceed the full-time threshold. Our company policy manual states there may be periods when a part-time employee is permitted to work more than 40 hours but does not alter an employee’s part-time status.

Answer:

This situation can be looked at in many ways. Depending on how you’ve handled it in the past and what’s in your summary plan description or company policies really determines what you need to do.

In a nutshell, the individual is a part-time employee regularly scheduled 30 hours per week and, according to your plan, is ineligible for insurance. There are occasions when the individual is asked to work 40 hours, but as long as it is not a ‘regular’ occurrence, it does not change the employee’s eligibility for benefits.

Your company has the task of defining the term ‘regularly’. If the employee is not pursuing the issue of not receiving benefits, there really is no “hours policy” trying to determine whether the employee is eligible or not. One suggestion is that your company take a stance that, for example, an employee who works 40 hours or more per week for over 50% of the weeks in the previous year, would be deemed eligible for benefits coverage.

Keep in mind that there may be a problem if, or when, the employee comes back and DOES have an issue because benefits were not offered but the employee feels like he/she should be eligible. If that is not the case right now, it would be wise to take action and define what you consider to be ‘regularly.’ If you do start working the employee for 40+ hours regularly, then make that employee full time. It’s the right thing to do. And when the Healthcare Reform is active in 2014, the answer will be entirely different.

Strategic HR, inc. has the answers to all of your tough Benefits and Compensation related questions. Whether you need an audit of your exemption statuses or a job analysis of your positions, strategic HR inc. can do the job. Please visit our Benefits & Compensation page for more information.

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Am I Required to Offer COBRA?

Question:

How do I determine if I have to offer COBRA to our employees for their health insurance? We are ‘on the bubble’ with 21 employees this year, but some are part time. 

Answer:

According to the Department of Labor, group health plans for employers with 20 or more employees on more than 50 percent of its typical business days in the previous calendar year are subject to COBRA. Both full and part-time employees are counted to determine whether a plan is subject to COBRA. Each part-time employee counts as a fraction of an employee, with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must work to be considered full-time.

Providing adequate Benefits and Compensation for your employees is key to the recruitment and retention of a well performing workforce, and having the right policies in place can make or break a company. Strategic HR, inc. understands this critical need and can help you structure your benefit and compensation system to meet today’s competitive market. Please visit our Benefits and Compensation page for more information on how we can help get you competitive today.

 

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Equal Pay Day

Question:

What is Equal Pay Day?

Answer:

Equal Pay Day symbolizes the point in the year that the average woman would have to work for her salary to catch up to the average man’s salary from that previous calendar year. Equal Pay Day in 2013 is on Tuesday, April 9th.

According to the National Committee on Pay Equity and their most recent findings:

Women’s earnings were 77.0 percent of men’s in 2011, compared to 77.4 percent in 2010, according to Census statistics released September 12, 2012 based on the median earnings of all full-time, year-round workers. Men’s earning in 2011 were $48,202 and women’s were $37,118, a difference of $11,084.

Additionally, the National Women’s Law Center reports:

  • The wage gap persists at all levels of education. In 2011, the typical woman in the United States with a high school diploma working full time, year round was paid only 74 cents for every dollar paid to her male counterpart. Among people with a bachelor’s degree, the figure was also 74 cents. In fact, the typical woman who has received an associate’s degree still isn’t paid as much as the typical man who only graduated from high school.
  • A typical woman who worked full time, year round would lose $443,360 in a 40-year period due to the wage gap. A woman would have to work almost 12 years longer to make up this gap. A typical woman working full time, year round who starts, but does not finish, high school would lose $372,400 over a 40-year period, an enormous amount of money for women who are typically paid $21,113 a year. A woman would have to work over seventeen years longer to make up this gap.

Providing adequate employee Benefits and Compensation are key to recruitment and retention of employees and having the right policies in place can make or break a company. Strategic HR, inc. understands this critical need and can help you with any of your tough benefit and compensation questions. Please visit our Benefits & Compensation page for more information on how we can assist you with creating a strong and competitive Benefits or Compensation package.

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FMLA Expiration and COBRA

Question:

We have an employee who is on FMLA to receive an organ donation and the leave is expiring soon. At what point do we offer the employee COBRA, and for how long?

Answer:

It is generally required by employers to offer health care coverage under COBRA law when the employee is:

  • No longer eligible to receive benefits of employer-provided group health plan
  • No longer protected by federal or state leave laws

It is common for employee coverage eligibility to expire after 12 weeks of leave under FMLA and any additional leave where the employer is reasonably accommodating the employee under the Americans with Disabilities Act.

Strategic HR, inc. has the answers to all of your tough Benefits and Compensation related questions. Whether you need an analysis of your current benefit offerings or are looking to create a cost-effective recognition and rewards program, strategic HR inc. can do the job. Please visit our Benefits & Compensation page for more information.

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Can I backdate FMLA paperwork?

Question:

Can I backdate FMLA paperwork to the date at which the employee went on Workers’ Compensation?

Answer:

In a word, “no” – FMLA cannot be backdated. That’s why it is so critical that HR is on top of any types of absences that may qualify for FMLA. If an injury that falls under Workers’ Compensation also qualifies as a “serious medical condition” under the Family and Medical Leave Act, any time missed can be counted against the 12 week leave allotment an FMLA qualified employee is entitled to receive. When such an event occurs, send the appropriate notifications (found on www.dol.gov), and make sure you document that you have done so.  Then follow up appropriately for the certifications. The clock does not start ticking on FMLA until the notifications have been sent – whether it is immediately after the incident, or two months later. Keep in mind, if an employee returns to work on light duty, from a Workers’ Comp injury, that is no longer time counted against Family Medical Leave.

The world of employee leave is a complex one, often involving Family Medical Leave, Workers’ Compensation and the Americans with Disabilities Act. Many times, the different types of leaves overlap. Make sure you consider all appropriate legislation when an employee is absent from work before taking any type of adverse employment action.

FMLA, the ADAAA and other labor laws can be difficult to interpret, let alone enforce. That’s where strategic HR inc. has you covered. We bring years of experience and know-how to the table. We can assist you with your tough compliance issues and help you sleep more soundly at night. Visit our Compliance page to learn more.

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Co-op and Intern Exemption Status

Question:

We would like to add a co-op student to our staff this year. Are Co-ops and Interns considered exempt or non-exempt? How do you determine this?

Answer:

According to the Department of Labor (DOL), it appears that interns who work in for-profit companies in the private sector are typically considered non-exempt: http://www.dol.gov/whd/regs/compliance/whdfs71.htm.

However, whether or not student interns are covered under the Fair Labor Standards Act (FSLA) depends on the circumstances of the activities. If the work activity that the intern is to perform is an extension of the student’s academic programs, then the student might not be considered an employee.

To help determine if a student’s work is an extension of their academic program, these six criteria must be met:

1.     The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;

2.     The training is for the benefit of the trainee;

3.     The trainees do not displace regular employees, but work under close observation;

4.     The employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion the employer’s operations may actually be impeded;

5.     The trainees are not necessarily entitled to a job at the completion of the training period; and

6.     The employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.

If all six of these criteria are met, the intern may not be considered an employee to the employer requiring compliance with FLSA or even pay. For more details, visit http://www.dol.gov/whd/regs/compliance/whdfs71.htm.

It’s tough having to navigate the ever-changing FLSA laws and other federally mandated rules and regulations. Strategic HR, inc. can help. Ask us for assistance with any of your benefits and compensation needs. Please visit our Benefits & Compensation page for more information on any of these services.

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Payroll Recordkeeping

Question:

I recently received a letter from my payroll provider reminding me to download my payroll records from last year before they were purged. I thought payroll records had to be retained for a certain number of years?

Answer:

You are correct – payroll records need to be maintained for at least 5 years following termination. However, it is the employer’s responsibility to maintain these records and not the payroll provider. We have heard various accounts of the length of time a third party payroll company will keep such records. To be safe, check with your provider to learn their policy on keeping records and don’t assume they are following the federal guidelines – they are not legally required to do so. Then make sure you are keeping sufficient copies of these records in accordance with federal law.

We asked our payroll provider – Think Pay – how they handle payroll recordkeeping.  Think Pay confirmed that they are not required by law to maintain records for clients beyond one year. However, they have not purged any client records in the 10 years that they’ve been in business. Plus, they send clients a CD at the end of each year containing all records for the year (including quarterly reports, tax filings, and W2s).

Recordkeeping is full of “if this, then that” situations. You will often hear us say “it depends” when asking about personnel files and recordkeeping. Keep the guesswork out of keeping your files in order and up-to-date. Strategic HR, inc. has a handy desktop reference ready to guide you on the documents you can keep together in an employee file and how long you need to keep them. Visit our HR Store to request a copy of our Recordkeeping reference.

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Annual Enrollment Communications

Question:

As we prepare for our annual enrollment materials, how should we plan to communicate in order for our efforts to be successful?

Answer:

A recent study conducted by the Guardian Life Insurance Company of America shows that you better use more than one form of communication. Guardian’s study, Benefits & Behavior: Spotlight on the Benefits of an Employee-Centric Enrollment Experience found the following:

  • 70 percent of employees who could receive enrollment information in their preferred channel said they were confident in their benefit selections versus 57 percent of those who did not.
  • Workers want to receive benefits communications through multiple channels. In fact, 20 percent would like six or more options.
  • 80 percent seek the ease and convenience of online enrollment so they can enroll where and when they choose. Nine in 10 workers who enrolled online were very satisfied with the experience.
  • Employees who could get information and enroll through the channel they prefer are more likely to make more informed enrollment decisions, have a higher perceived value of their benefits and ultimately feel more satisfied with their benefits.
  • Benefits satisfaction leads to greater loyalty and retention.

What can you do to ensure adequate communication?

  • Use multiple channels to deliver your enrollment messages (e.g. online, email, text messages, manager speaking points, electronic message boards, video, group meetings, posters, home mailings, webinars, apps and social media). You have a lot of options at your fingertips. Think outside the box and get creative. Be sure to include channels that will reach the spouse, a key decision maker during enrollment.
  • Make sure your enrollment messaging is clear, concise and consistent across all channels. Stick with three key points that you want to get across and hit them in every communication.
  • If you do not have a benefits site on the internet, create one so the information is accessible by computer, smartphones or tablets. We’ve designed sites that house the annual enrollment information as well as a customized plan comparison tool. Once employees are prepared, they simply click on a link to take them to the enrollment transaction site. The benefits site is then updated and used throughout the year for new hires.
  • Ask your employees which channels they prefer. You can add this question to your post-enrollment surveys.

Sadly, the Guardian study found that 63 percent of employers think their benefit communications are ineffective and 6 in 10 workers agree. What would your employees say? Remember, you may be the employer, but employees hold the remote in today’s multimedia world. Use multiple channels and your messages will get through.

A special thanks to Elizabeth Borton, President of Write On Target, for sharing her expertise with us.  Sign-up on her website to receive future communication blogs at www.writetarget.com. Or, you can contact her with questions at EBorton@WriteTarget.com or  937.436.4565 at extension 28.

Nothing is more important to your employees than their Benefits. Make sure your employees get the information they need in a timely, concise and complete manner by communicating effectively. Strategic HR, inc. has years of experience writing for a targeted audience and creating communication plans that aim to accommodate a variety of communication styles. Visit our Communications page to learn how we can assist you with various communication-based projects.

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Summary of Benefits Coverage

Question:

It sounds like the Health Care Reform is requiring employers to distribute Summary of Benefits Coverage documents for plan years beginning September 23. What do I need to know?

Answer:

You are right!  Starting September 23, the Accountable Care Act (aka Health Care Reform) requires employers to distribute the new Summary of Benefits Coverage (SBC’s) documents.

At first glance, the SBC’s seem like an easy task to check off your to-do list. Most health care vendors are filling in the government-designed templates for their clients. All you have to do is hang them on your site or mail to employees. Easy, right?

Well, not so fast.

Since we create and maintain Summary Plan Descriptions for our clients, many have asked us to review the SBC documents sent to them by their vendors. We have found some vendors are providing base documents, but are not including the specific nuances designed into the plans.

When you get your SBC’s, closely check some of the following areas:

  • Penalties: If you have penalty fees, e.g. for not pre-certifying a hospital stay, the fees need to be in the Limits and Exceptions box on the same line where the coverage is listed.
  • Limitations: If your plan has unique limitation amounts, e.g. for speech and physical therapy or home health and hospice service, make sure they are listed correctly, again on the same line where the coverage is listed.
  • Prescription carve outs: If your prescription coverage is carved out from your medical plan, your medical vendor probably won’t complete that section. You will need to complete that part of the template and ask your prescription vendor to review it for accuracy.

For the initial year, the Department of Labor has indicated it wants to work with plans to get to compliance and is not focusing on imposing penalties. Therefore, you might not be concerned about meeting every regulation spelled out in the government’s 15-page instructions. However, keep in mind that you will probably pick up the same document next year, so it would probably be worth the time and effort to get it as accurate and complete as possible. As is true with most benefits and HR communications, the devil is in the details.

A special thanks to Elizabeth Borton, President of Write On Target, for sharing her expertise with us.  Sign-up on her website at to receive future communication blogs at www.writetarget.com. Or, you can contact her with questions at EBorton@WriteTarget.com or  937.436.4565 at extension 28.

Are you hesitant when it comes to navigating federally mandated rules and regulations? Strategic HR, inc. understands your uncertainty. Ask us for assistance for any of your benefits and compensation needs. Please visit our Benefits & Compensation page for more information on any of these services.

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Improve Employee Communication

Question:

It seems like employees don’t listen to us when we communicate. What can we do to improve our communications to employees?

Answer:

Back in the late 70’s, my first boss at an ad agency used to refer to the “95% Factor,” meaning that 95% of the time when you are communicating with people, they are only thinking of how the information will impact them. Today, folks refer to it as WIIFM or “what’s in it for me.”

Makes sense. You’re probably thinking that same question right now.

So here’s my HR communication tip for the week: use the 95% Factor to get results by doing the following:

  • Use the second person, not third. Don’t speak from the company’s perspective; take the employee’s point of view. Talk about how “you” can access and use your benefits or how “your” performance impacts your pay.
  • Be specific. Focus your communications more on the “what” and “how” and not so much on the “why.” The more specific you are about the actions you want employees to take, the better results you’ll get. It also helps if you can target your communications to specific audiences so folks only get the messages that apply to them. (The last thing you want to do is make people work to figure it out.) Plus, if you can be specific about the personal impact to employees, they will pay closer attention. For example, instead of saying “you can save thousands by switching to this plan,” create versions based on current plan enrollment to say “what would you do with an extra $2,050?”. Believe me, the second version will get more attention.
  • Keep it simple. Not only should you write from the employee’s point of view, you should speak their language. Avoid acronyms and other benefits “geek speak.” Try to write on about a 5th to 7th grade level by keeping sentences short and avoiding words with multiple syllables. Not because your audience isn’t smart enough to understand higher reading levels, but because they only have seconds to scan for the 95% Factor information.
  • Make it relatable. People make decisions based on emotions, then justify with facts. To make an emotional connection, your communications need to be relatable. Use photos or images of folks like your employees. If they are blue collar, don’t use the infamous conference room shot of a bunch of models in slick suits. Show folks who get their hands dirty. When you are trying to explain a complex issue, use examples or stories to illustrate your point. People relate much better to stories of “people like me” than they do to charts.

When creating your HR communications, keep this in mind: whenever employees see or hear any message, all they want to know is three things:

  1. What’s this about?
  2. How’s it impact me?
  3. What do I have to do?

Answer those questions, and you’ll have met the 95% Factor 100% of the time.

Note to AP Stylebook geeks: I realize percent is supposed to be spelled out. I used the symbol on purpose.

A special thanks to Elizabeth Borton, President of Write on Target, for sharing her expertise with us.  Sign-up on her website at to receive future communication blogs at www.writetarget.com.  Or, you can contact her with questions at EBorton@WriteTarget.com or  937.436.4565, ext 28.