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What Is the Difference Between FSAs and HSAs
HR Question:
We’ve been fielding a lot of benefits questions from our employees and some are trying to choose between opting into an FSA or HSA. What’s a good way to describe the difference between FSAs and HSAs?
HR Answer:
HR professionals play an important role in helping employees understand their benefits options so they can make the best decisions for themselves and their families. When it comes to managing healthcare expenses, it’s important for employees to be aware of the various options available to them. Two popular options are Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs). Both accounts are designed to help individuals and families save money for medical expenses, but they have distinct features and eligibility criteria.
What are Flexible Spending Accounts (FSAs)?
A Flexible Spending Account (FSA) is a type of tax-advantaged savings account offered by many employers as part of their benefits package. FSAs allow an employee to set aside pre-tax dollars from their paycheck to cover eligible medical expenses. These expenses can include medical, dental, and vision costs that are not covered by their health insurance plan, such as co-payments, deductibles, prescription medications, and certain over-the-counter items.
One important characteristic of FSAs is the “use-it-or-lose-it” rule. This means that any funds contributed to an FSA must be used within the plan year, or the employee risks forfeiting the unused balance. Some plans offer a grace period or a limited rollover option, but these rules can vary, so be sure to explain your specific plan options.
Using FSAs for Dependent Care:
One noteworthy advantage of FSAs is their potential use for dependent care expenses, including childcare. If your organization offers a dependent care FSA, employees can contribute pre-tax dollars to cover eligible expenses related to the care of their children, disabled spouse, or elderly relatives who require care while they work or attend school. Eligible childcare expenses can include daycare services, after-school programs, summer day camps, and more. This feature can provide valuable financial relief for families with young children or dependents requiring care.
What are Health Savings Accounts (HSAs)?
A Health Savings Account (HSA) is another type of tax-advantaged account designed to help individuals save for qualified medical expenses. HSAs are typically paired with high-deductible health insurance plans. To be eligible for an HSA, the employee must be enrolled in a high-deductible health plan (HDHP) and cannot be covered by other health insurance, such as Medicare or another non-HDHP plan.
One significant advantage of HSAs is that the funds contributed are not subject to federal income tax, and they can grow tax-free over time. Unlike FSAs, there is no “use-it-or-lose-it” rule for HSAs. Any unused funds in an HSA can be carried over from year to year, allowing the employee to build up savings for future medical expenses or even retirement.
5 Key Differences Between FSAs and HSAs:
1. Eligibility
- FSAs: Generally available to employees regardless of their health insurance plan.
- HSAs: Available only to individuals with a qualified high-deductible health plan (HDHP).
2. Contribution Limits
- FSAs: The IRS sets annual contribution limits, and these limits can vary from year to year. The FSA contribution limits for 2023 are $3,050 with a maximum allowable carryover amount of $610.
- HSAs: The IRS also sets contribution limits for HSAs, and these limits are generally higher than those for FSAs. The limits may vary based on whether the employee has individual or family coverage. The HSA contribution limits for 2023 are $3,850 for self-only coverage and $7,750 for family coverage. Those 55 and older can contribute an additional $1,000 as a catch-up contribution.
3. Tax Treatment
- FSAs: Contributions are made with pre-tax dollars, reducing the employee’s taxable income.
- HSAs: Contributions are made with pre-tax dollars and can be invested, with earnings growing tax-free. Withdrawals for qualified medical expenses are also tax-free.
4. Rolling Over Funds
- FSAs: Typically have a “use-it-or-lose-it” rule, with limited exceptions for grace periods or rollovers. You should clarify your plan options to ensure your employees are correctly informed.
- HSAs: Funds can be carried over from year to year, and they remain available even if you change employers or health insurance plans.
5. Ownership
- FSAs: Generally owned by the employer, though employees can use the funds for eligible expenses.
- HSAs: Owned by the individual, allowing for more control over the account and its investments.
Choosing the Right Option:
When deciding between an FSA and an HSA, employees should consider their current health insurance plan, medical expenses, and financial goals. If an employee has a high-deductible health plan and wants the flexibility to save for future medical expenses, an HSA might be the better choice. On the other hand, if the employee prefers to use funds within a specific plan year and has a more traditional health insurance plan, an FSA could be more suitable.
Remind your employees that both FSAs and HSAs can provide valuable tax benefits and help them manage their healthcare costs more effectively. Encourage them to review the specific terms, contribution limits, and rules associated with each option before making a decision.
FSAs and HSAs are valuable tools for managing healthcare expenses, each with its own set of advantages and considerations. Understanding the key differences between these two accounts can empower employees to make a well-informed choice that aligns with their financial and medical needs.
Special thank you to Paula Alexander, MA, PHR, SHRM-CP, HR Business Advisor for contributing to this HR Question of the Week.
Do you find yourself without answers to tough Benefits and Compensation questions? Whether you need an analysis of your current benefit offerings, a review of your salary structure, or outsourced payroll/benefits administration, Clark Schaefer Strategic HR can do the job. Please visit our Benefits & Compensation page for more information or Contact Us.
HR’s Role During An Economic Crisis
High inflation, rising interest rates, record-low unemployment, and strong consumer spending seem to have economists scratching their heads. In today’s economic uncertainty, HR professionals are preparing to pivot to meet the needs of their organizations should the economy go into recession.
HR professionals are no strangers to navigating and leading through turbulent times. Throughout the pandemic, HR was and still remains on the front lines – leading change and creating a culture and space that supported a massive transition to remote work and pandemic-safe work environments. HR professionals demonstrated skills that had not been relied upon by many companies in the past, creating a focus on minimizing costs while engaging staff during challenging times.
HR professionals found themselves providing staffing insights to navigate difficult business decisions, offering creative problem-solving, and managing talent and culture, more than they ever have in the past. In this article, we will highlight several ways in which human resources professionals can continue to pivot and develop creative approaches to help their organizations weather the storm of the current economic crisis.
Assessing and Addressing Talent Needs
It may be expected that HR’s role during an economic crisis would center around talent. As companies make critical staffing decisions, the evaluation of talent and the use of that talent becomes paramount. During cost-saving conversations, significant efforts must be made to make effective use of staff. HR leaders can address these priorities through performance evaluations, development tools, succession plans, and cross-training initiatives.
Despite predictions, unemployment remains at historic lows and the Great Resignation could be seen as the beginning of a long-term shift in the labor market. For many businesses, growth has been slowed because of workforce shortages. Fortune indicates that the U.S. workforce participation rate has fallen to 62.3%, which is down from 67% in the late 1990s. More than ever before, HR professionals need to focus on strategies to help their organizations attract, retain, and develop high performers.
As organizations strive to meet their attraction and retention goals, they are also faced with the realities of the current economic conditions. The soaring cost of living has placed pressure on employers to increase salaries as paychecks are stretched by the significant increase in the prices of household goods. HR’s role is to help the business remain competitive in the job market by developing total compensation programs designed to motivate and reward high performance.
In addition to ensuring compensation and benefits are competitive, employers are challenged with meeting the needs and expectations of a multi-generational workforce. In our experience, the top reasons that job seekers across all generations choose to join a company besides salary are the ability to enjoy work-life balance and having growth and learning opportunities. HR can champion programs that motivate all generations of employees by offering ample paid time off, flexibility, and learning and professional development opportunities.
By taking a multifaceted approach, today’s HR leaders have the opportunity to create the workplace of the future that is designed with successful talent attraction and retention strategies built in.
Reskilling for the Future
As technology rapidly advances, one thing is certain – many businesses are finding a skills gap with current employees, and this gap is hindering growth. During times of an economic slowdown, HR can shift the focus to the future and find ways to fill skill gaps with current employees through training and development opportunities.
This can be a win-win situation as it helps the business to better meet its needs, and it addresses the desire of employees who are looking for growth and learning opportunities.
Managing the Mood
Difficult times become the most integral time to “manage the mood” of the company. Another component of HR’s role during an economic crisis is to partner with the leadership team to encourage and embrace a culture open to flexibility, evolution, and giving grace to others.
Particularly during times of economic downturns or layoffs, it can be hard to maintain the psychological safety of the team. This is the time to remain transparent in communications on what is happening in the organization, as well as recognizing what is left unknown. Employees left in the dark can become disengaged, putting your organization at risk of fostering a culture of quiet quitters.
Supporting Mental Health and Well-Being
Economic challenges always take a toll on employees in one way or another, and consideration must be made for the mental health and well-being of those that are at the heart of your organization to assure a thriving and productive environment. Promote your Employee Assistance Plans (EAPs), take advantage of the co-pay waiver of many health plans for mental health, and provide regular communication to staff on financial offers from local banks and community resources.
It’s no secret – HR’s role in this economic crisis has shifted and grown. The current economic crisis has put pressure on HR professionals and business leaders to do more with less. Businesses across the board are all looking for creative ways to engage their workforce, reinforce productive and positive behavior, and retain staff – all while allaying employee concerns and fears.
Human Resource professionals can and should take this unique opportunity to play a significant role in leading their organization through this national crisis. By showing their support of the business and its employees through appropriate economic-driven actions, they can support both the organization’s vision/mission and its employees’ health and wellbeing.
Special thanks to Colleen Mahoney, PHR, HR Business Advisor, for contributing to this article.
HR plays an integral role in optimizing your operations during challenging times. Clark Schaefer Strategic HR can help with your leadership and HR strategy. For more information, please visit our HR Strategy page, or simply contact us – we’d love to hear from you.
What is Equal Pay Day?
HR Question:
I keep seeing information about “Equal Pay Day” during Women’s History Month. What is Equal Pay Day, and how can I recognize it in my organization?
HR Answer:
Equal Pay Day is a symbolic day that puts into perspective the 23% pay gap between a woman and a man in the same role. Based on the current gap, a woman has to work one full year plus several additional weeks into the following year to make the same amount that her male counterpart made in one year alone.
In 2023, Equal Pay Day is March 14, representing the 2022 US Census Data showing women make 84 cents (all full-time workers) and 77 cents (all full-time, part-time, and seasonal earners) for every dollar paid to non-Hispanic, white men. This translates to an annual wage gap of $9,954. That gap is unfortunately even larger for most women of color, resulting in a gap of $.64 on the dollar for Black women, $.62 for mothers, $.61 for Native Hawaiian and Pacific Islanders, $.54 for Latina women, and $.51 for Native and Indigenous women.
Equal Pay Day was established in 1996 by the National Committee on Pay Equality (NCPE). The day is recognized annually, but not always on the same date due to the pay gap calculation. Even though Equal Pay Day has been around for 27 years, it is more widely recognized today, in part due to the stronger focus on eliminating the gap. Current initiatives, such as pay transparency and salary history ban laws, were introduced by individual cities and state-wide to address the pay gap.
Where are Equal Pay Laws in Place?
On January 1, 2023, three new states were added to the list of city and state governments that passed laws to protect applicants by banning employers from asking about prior salary history and/or requiring that companies list salary ranges in their job advertisements. Currently, the following governments have such laws:
States:
- California
- Colorado
- Connecticut
- Maryland
- Nevada
- Rhode Island
- Washington
Cities:
- Cincinnati, OH
- Ithaca, NY
- Jersey City, NJ
- New York City, NY
- Toledo, OH
- Westchester County, NY
According to the Society for Human Resource Management (SHRM), pay transparency is one of the top issues people managers will face in 2023. According to Monster’s 2022 poll, 98% of workers believe salaries should be disclosed, with another 53% of applicants refusing to apply for a position if the salary is not disclosed.
How Can I Support the Movement?
So how can employers address the gender gap and honor Equal Pay Day in their organizations? Some recommended ways include:
- Performing an Equal Pay Audit to review job classifications, salaries, and genders and take corrective actions if inequity is found.
- Reviewing compensation policies to remove gender bias.
- Removing managerial discretion on pay and sticking to a salary band of positions for new hires and for annual increases.
- Removing prior salary history from applications and interviews.
- Establishing fair scheduling practices to allow for caregiving.
For even more ways to contribute to awareness and celebrate Equal Pay Day you can visit equalpaytoday.org.
Thank you to Paula Alexander, MA, PHR, SHRM-CP, for contributing to this HR Question of the Week!
Performing an equal pay audit can be a complex, but necessary, step toward equal pay for all. Clark Schaefer Strategic HR is ready to assist you with any of your needs around Benefits and Compensation. We offer assistance with everything from job descriptions to policy development to help address your complex issues that impact employee compensation or benefits. Please visit our Benefits and Compensation page for more information on how we can assist you.
Could Sabbaticals Be Your Next Retention Tool?
HR Question:
In today’s fast-paced and high-pressure market, it’s difficult to truly disconnect from work. We’ve been trying to find ways to give our team a break to avoid burnout, but sometimes a week of vacation just isn’t enough. Could sabbaticals be the newest tool in our retention toolbox?
HR Answer:
You’re not alone in considering sabbaticals as they seem to be gaining in popularity. According to a recent World at Work survey assessing US organizations ranging in size and industry, 10% of organizations offered paid sabbaticals (up from 7% in 2019), and 29% offered unpaid sabbaticals (up from 16% in 2019). Now, as we’re well into a period with many different names – the Great Reshuffle, the Great Resignation, the Great Re-Evaluation to name a few – sabbaticals may be the unsung hero that benefits both employers and employees alike when it comes to talent retention, supporting good mental health, and strengthening employee engagement and dedication to their work and your organization.
Time to Re-Charge, Re-Energize, and Reconnect
It’s no secret that the first beneficiary of a sabbatical is the employee. Unfortunately, those who do choose to take sabbaticals may often lack the opportunity to properly enjoy them. In fact, The Sabbatical Project reports that nearly two-thirds of those who do take a sabbatical are often forced into them due to traumatic circumstances out of their control – the loss of a family member, health issues, the need to navigate complex or dissolving relationships, etc. Not exactly the most relaxing setting for a rejuvenating and relaxing period of time.
Although a sabbatical can be used to address such issues, it could benefit organizations to promote them for a broader purpose. Employees should be encouraged to consider using a sabbatical as an opportunity to truly disconnect, re-energize, and re-focus if suffering from burnout or fatigue. They can also be used to discover new passions, chase hobbies, and gain the experiences that many may put off until after retirement.
Sabbaticals Benefit the Employer Too
And while a sabbatical, paid or unpaid, can seem like an intimidating amount of time away from the desk for both the employee and the employer, the benefit of a re-energized and re-engaged employee can pay back dividends. Interviews for a Charter and TIME article revealed employees who returned from a sabbatical found themselves more creative, felt greater feelings of loyalty and energy, and brought new ideas to the table.
When considering the cost of having to replace a long-term employee, along with their organizational knowledge, skills, and work relationships built over time, offering a sabbatical as an opportunity to renew and recharge may be far more cost-effective. In addition, offering sabbaticals as part of your benefits package is not only attractive to retain current employees, but can also be a valuable talent acquisition tool to attract new talent.
Your Team Will Benefit From Your Time Away
The longer nature of sabbaticals creates an opportunity for cross-training. As opposed to managing through vacations where you can push a project or a question off “just a few days” until a person returns, sabbaticals present a fantastic opportunity to engage other team members in new and different tasks, departments, and levels of the organization – providing the employer with a built-in opportunity for the career development and growth that ranks high on job seekers’ lists today.
Sabbaticals Don’t Come Without a Cost
It would be a win-win if sabbaticals came without a cost to the employer or employee, but unfortunately, that’s not the case. That’s why it’s important that employers establish their promises and expectations for sabbaticals. How often and for how long can employees be away? Do they need to serve a certain number of years to qualify? How much of their regular pay will they still receive, if any? How does a sabbatical tie into their PTO or other time off categories?
While the cost may not be a surprise, the money saved by creating an attractive workplace, providing necessary mental health benefits, and showing that you’re an organization committed to putting employees’ needs first may very well pay dividends in attracting and retaining valuable talent.
Special thanks to Samantha Kelly for contributing to this HR Question of the Week!
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. Clark Schaefer Strategic HR 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 today.
Are You Ready For These Top HR Trends in 2024?
As we transition into a new year, the world of Human Resources is poised to undergo several transformative trends that reflect the evolving landscape of work. Some transformations are already at work, such as the continued integration of technology in HR processes, with the adoption of artificial intelligence (AI), data analytics, and automation tools. These technologies are not only streamlining administrative tasks but also enhancing decision-making processes, enabling HR professionals to focus on more strategic and value-added activities.
Additionally, an emphasis on employee well-being is gaining momentum, with organizations recognizing the importance of creating a positive work environment that promotes mental health, work-life balance, and overall job satisfaction. Our team anticipates that remote and hybrid work arrangements will persist, prompting HR departments to refine policies and practices to accommodate diverse and flexible work setups that continue to support a diverse workforce with varying needs.
And finally, we expect diversity, equity, inclusion, and belonging initiatives will also remain at the forefront of the HR landscape, as companies strive to create more inclusive and equitable workplaces. DE&I efforts go hand in hand with employee well-being and employee satisfaction. As employers work to foster diverse and inclusive workplaces, they are also challenged to be highly transparent in their communications and actions and to build a high level of trust, which leads to employee satisfaction and retention.
So how do we expect to see these HR trends play out in the coming year?
Generative AI & Upskilling
In a June 2023 survey by Gartner, 81% of HR leaders have already begun to explore and implement AI solutions within their organizations, with 52% exploring potential use cases and opportunities for generative AI. Indeed, the Future of Jobs Report 2023 indicates that by 2027, 43% of work tasks will be automated.
The Future of Jobs Report also emphasizes the growing focus on cognitive skills within the workforce – skills like creative and analytical thinking, technology, literacy, and socio-emotional attributes such as curiosity, resilience, and lifelong learning.
Upskilling in the field of human resources is expected to become increasingly important in the coming years and will play out in a variety of ways:
1. Technology Integration
The HR field is becoming more technology-driven with the adoption of complex HRIS (Human Resource Information Systems), AI-driven tools, and data analytics. HR professionals will need to quickly upskill to effectively utilize these technologies and leverage artificial intelligence for HR tasks such as recruitment, employee engagement, and talent management and development.
As HR professionals explore ways to weave AI into their daily operations, it’s also important to understand the ethical and legal concerns of AI adoption.
2. Data-Driven Decision-Making
HR professionals are increasingly relying on data to make informed decisions in areas such as workforce analytics, recruiting, employee performance, and strategic planning – even more so with the rise of AI. Consider providing data analytics training opportunities to help employees successfully engage and understand the results these technologies can provide.
3. Soft Skills and Emotional Intelligence
With the rise of remote work and digital collaboration, the importance of soft skills and emotional intelligence will continue to be sought after. HR professionals need to be adept at interpersonal communication, empathy, and understanding diverse perspectives – especially when so much interpersonal context is lost from behind a screen. Upskilling in these areas will be vital for effective employee relations, conflict resolution, and fostering a positive workplace culture.
4. Continuous Learning Culture
HR professionals should model and promote a culture of continuous learning within organizations. Reevaluating learning and development strategies, assessing training methodologies, and implementing ideal learning technologies will be essential to support the professional as well as personal growth of employees.
In summary, learning to utilize AI in beneficial ways, as well as upskilling across organizations, will create a mix of technical, interpersonal, and leadership skills that help employees adapt to the evolving workplace landscape and allow HR leaders to contribute to the success of organizations in highly valued ways.
Employee Well-Being
Companies are increasingly recognizing the importance of employee well-being. The employee well-being umbrella includes mental health support, work-life balance and remote work initiatives, and wellness programs, in addition to providing meaningful work and opportunities for learning and development. The expectations of employers are growing by the minute!
The top 5 ways employers can support employee well-being in the upcoming year include a combination of physical, mental, and professional support:
1. Flexible Work Arrangements
Offer flexible work hours and remote work options to accommodate diverse employee needs. A flexible work environment allows employees to better balance their professional and personal lives, reducing stress and enhancing overall well-being. To learn more, check out Gallup’s article, “The Future of the Office Has Arrived: It’s Hybrid,” as well as Techopedia’s Remote Work Predictions for 2024.
2. Mental Health Programs and Resources
Prioritize mental health by providing access to counseling services, mental health workshops, and Employee Assistance Programs (EAPs). Promote a culture of openness and destigmatize mental health issues to encourage employees to seek help when needed.
3. Professional Development Opportunities
Invest in employees’ professional growth by offering training programs, workshops, and opportunities for skill development. Providing clear pathways for career advancement and continuous learning not only enhances employees’ job satisfaction but also contributes to their overall well-being.
4. Health and Wellness Initiatives
Implement comprehensive health and wellness programs that address physical well-being. This can include fitness classes, wellness challenges, health screenings, and initiatives that promote a healthy lifestyle. Consider providing wellness benefits such as gym memberships or wellness reimbursements.
5. Regular Check-ins and Feedback
Conduct regular one-on-one check-ins between managers and employees to discuss workloads, career goals, and any challenges they may be facing. Foster open communication and create a supportive environment where employees feel comfortable sharing their concerns.
Check-ins allow for the opportunity to course-correct, as needed, and to ensure that employees have the resources they need to do their jobs successfully. In addition, providing constructive feedback and recognition for accomplishments contribute to a positive work experience.
These strategies collectively address various aspects of employee well-being, creating a holistic approach that considers both personal and professional needs. Employers need to tailor these initiatives based on their workforce’s specific characteristics and preferences, promoting a culture that values and prioritizes the well-being of employees.
Diversity, Equity, Inclusion, and Belonging
Diversity, Equity, Inclusion, and Belonging (DEI&B) initiatives are more than passing HR trends, but rather, essential for creating a workplace that is welcoming, inclusive, and representative of all individuals. In 2024, employers can take several actions to support and enhance their DEI&B efforts:
1. Establish Clear DEI&B Goals and Metrics
Clearly define and communicate DEI&B goals that align with the organization’s values and mission. We recommend using a DEI&B roadmap as you build your diversity initiatives. Establish measurable metrics to track progress and hold the company accountable for achieving diversity, equity, and inclusion objectives. Regularly assess and report on these metrics to demonstrate transparency and commitment.
2. Cultivate an Inclusive Workplace Culture
Foster a culture of inclusivity where all employees feel valued, respected, and heard. Encourage open communication, apply inclusive decision-making principles, and create platforms for employees to share their experiences and perspectives. Implement training programs to raise awareness about unconscious bias, microaggressions, and other barriers to inclusivity.
3. Diverse Hiring Practices
Implement inclusive hiring practices to attract a diverse talent pool. This includes using diverse interview panels, removing bias from job descriptions, and actively seeking candidates from underrepresented groups. Consider partnerships with organizations focused on diversity recruitment and outreach to expand your talent network.
4. Professional Development and Mentorship Programs
Provide opportunities for professional development and mentorship, particularly for employees from underrepresented groups. Establish mentorship programs that connect employees with mentors who can guide and support their career growth. Ensure that these programs are accessible and inclusive.
5. Employee Resource Groups (ERGs)
Establish or enhance Employee Resource Groups that cater to specific communities within the organization. These groups provide a platform for employees to connect, share experiences, and contribute to the development of a more inclusive workplace. Support and actively engage with ERGs to ensure their success and impact.
6. Equitable Policies and Practices
Regularly review and update policies and practices to ensure they are equitable and unbiased. This includes performance evaluation processes, promotions, and compensation structures. Strive to eliminate systemic barriers that may disproportionately affect certain groups within the organization.
DEI&B initiatives require ongoing commitment and effort. Employers should listen to the needs and concerns of their employees, continuously educate themselves and their teams, and adapt their strategies based on feedback and evolving best practices. By taking a comprehensive and proactive approach, employers can contribute to building an inclusive workplace that reflects the diversity of the global workforce.
For ideas to enhance your DEI&B programs, the Society for Human Resource Management (SHRM) offers “4 Ways to Promote Authentic DE&I Practices.”
As we stand on the brink of a new year, the field of Human Resources is on the cusp of significant transformations, mirroring the dynamic nature of the modern workplace. Employers play a pivotal role in steering organizations toward a progressive and thriving future. Recognizing our employees as the cornerstone of success, we can aspire to cultivate environments that prioritize well-being, embrace diversity and inclusion, a new digital world, and adapt to the evolving needs of our workforce.
As we navigate these HR trends and challenges, let us collectively champion a workplace culture that not only reflects the spirit of the times but fosters growth, innovation, and lasting success for individuals and organizations alike.
Thank you to Collen Mahoney, PHR, and Cassie Whitehouse, M.Ed., for contributing to this HR Question of the Week!
Need help tackling your HR Strategy for 2024? Let our team of HR experts assist in building your plans for the new year. Please visit our HR Strategy page to learn more, or simply contact us – we’d love to hear from you.
How To Determine If A Home Office Injury Is Covered By Workers’ Compensation
HR Question:
Our company has agreed to allow employees to work a hybrid schedule, allowing them to work from home on multiple days during the week. Although this has been very well received by employees, we have seen an increase in the number of injuries from employees working from home. How do I know if a home office injury is covered by workers’ compensation, and how do I handle these claims?
HR Answer:
The Bureau of Labor Statistics announced that in 2020, private industry employers reported 2.7 million nonfatal workplace injuries and illnesses. Although down from 2.8 million in 2019, workplace injuries are still an expensive and difficult issue for employers, and with the increase in the number of employees telecommuting and working from home or alternate locations, this task has some additional unique challenges.
What is a compensable injury under workers’ compensation?
In many instances, it is easy to determine if an injury is covered by workers’ compensation. The key words in determining coverage under workers’ compensation are: “arising out of (what they were doing) and in the course of (where were they – time, place, etc.) employment.” Cutting your finger opening a box at work is an easy example of a covered injury. Injuries from a home office are not always as easy to determine coverage. Overall, injuries and illnesses that occur while an employee is working at home are considered work-related (and thus compensable) if the illness or injury occurs while the employee is performing work for pay in the home or alternate workspace and the injury or illness is directly related to the performance of work. If the employee is completing a work task and they can prove they were working in the interest of their employer when they got hurt or injured, it is typically a covered event.
One important note is that employers must also consider the “personal comfort doctrine.” This legal term states that certain personal activities for the employee’s comfort (bathroom breaks, eating/drinking) are deemed necessary and are considered part of an employee’s work activity. According to the personal comfort doctrine, tripping over the dog and breaking your leg while walking to the bathroom at home during work hours could be covered under workers’ compensation. This doctrine, along with the overall lack of witnesses and the inability to control the work environment, can lead to frustration regarding workers’ compensation claims outside of the traditional workplace.
For additional support, OSHA provides instruction on compliance and guidance on interpreting the work-relatedness of injuries resulting from telecommuting.
What can employers do to protect your organization and your employees?
We recommend taking the following steps to establish expectations for safe remote work environments, as well as what to do if you receive an injury claim from a remote worker:
- Create a work-from-home policy that includes the requirement to maintain a professional, well-kept, and safe work environment. Include home safety audits.
- Require employees to report any work-related injuries or illness immediately to their manager or safety official.
- If an injury occurs, obtain a report of the accident and be sure to include a written statement from the employee. The report should include exactly what the person was doing at the time of the injury. How, when, and where the injury occurred should be detailed in the report. Cumulative injuries and slips, trips, and falls are the most commonly reported home injuries, therefore, getting these details is important.
- Ask the employee to take pictures of the work area where the injury occurred as well as of their injury, if possible.
- Provide all of the pertinent information to your workers’ compensation carrier or administrator, and let them make the assessment as to work-relatedness. Include legal counsel if necessary.
Overall, treat all workplace injuries the same, regardless of where they occurred. Claims must be actively managed from the time they are reported. Employee safety and health should be a priority for all employers, regardless of an employee’s work location. Actively managing these claims is one step in assuring their well-being and the well-being of the company.
Thank you to Patti Dunham, MBA, MA, SPHR, SHRM-SCP, Director of HR Solutions for contributing to this HR Question of the Week.
Strategic HR understands your concerns with the well-being of your employees as well as your organization. We offer expertise in health, safety, and security to cover any need you may have ranging from creating workplace safety policies to developing a business resumption plan for handling unexpected emergencies. Please visit our Health, Safety & Security page for more information.
What is HR’s Role in the Mergers & Acquisitions Process?
Mergers & Acquisitions (M&A) are a complicated process affecting every facet of an organization – most importantly, its people. Because employees are the key to ensuring the success of any organization, it is critical to develop a thoughtful and strategic human resources-focused approach in the M&A process. This requires HR leaders to be involved from the beginning – as Forbes reminded us of several notable failed M&A attempts when employees were not factored into the process from the start. Through early and ongoing inclusion in the M&A evaluation, planning, and integration process, human resources can play an important role in strategic planning, change management, effective internal communication, and cultivating/transitioning culture.
HR’s Role in the Five Phases of M&A
We have found that most mergers and acquisitions include the following five phases, and we have identified how HR professionals can and should play a role in each phase to result in a successful merger.
Phase 1: M&A Evaluation
The first step in the M&A process is for the interested parties to start discussing the possible merger or acquisition. The name of the game here is discretion. Due to the sensitive nature of M&As and the data that will be shared, both parties will need to sign non-disclosure agreements (NDAs) to ensure that no information is leaked before the appropriate time.
These preliminary talks are often highly secretive because they may/may not lead to a merger, so there is no need to cause alarm. Although the level of confidentiality that’s needed can vary, its importance is heightened if either party is publicly traded. It’s critical for HR to be involved early to understand the HR landscape at a high level, including information such as the number of employees and managers, locations, whether or not a union will be involved, etc.
Phase 2: Third Party Engagement
Third parties help both the buyer and seller navigate the process. These third parties are usually lawyers, accountants, investment bankers, financial planners, business coaches, or M&A advisors. These individuals will be involved in the development of the structure and content of the legal agreement.
A merger or acquisition can happen quickly or take months. Although the timing varies, it is not too early for HR to start looking into what management changes need to take place when this deal closes, potential cultural problems, redundancy issues, and what key employees need to be retained. Having thought through these issues early in the process will improve the outcome.
Phase 3: Prep Time and Due Diligence
In this preparatory phase, HR should become even more involved. Initially, as an HR expert, you will want to get as much information as you can from the seller to begin your analysis. This information is usually provided in a secure data room and may be provided in general terms without any names, but it will give you an idea of the “HR side” of the organization. This could include:
- Leadership compensation
- Organization chart
- NDAs
- Employment agreements
- Payroll records
- Benefits that are offered, including 401k/retirement, compliance with ERISA, carriers for the plans, costs, last 2 years’ data
- Pending legal issues
- Financial documentation
At this point, the parties will sign a letter of intent signaling that they are all in agreement with the business framework for the deal. Now the due diligence begins. All documents are carefully reviewed by HR and finance to ensure that there are no unexpected surprises that could derail the deal.
Phase 4: The Agreement
In this phase, the finer details and price become the top focus. There are books written about how valuation is calculated in various industries, so we won’t go into that here. The most important thing is that both parties will come to an agreement on the price and legal documents will be drawn up. Be aware that negotiating the finer details of the acquisition may take longer than you would think.
Once the agreement is reached, there are some filings that need to be completed including with the secretary of state, tax documents, workers’ compensation, and other government bodies who will need to be notified of the event. At this point, the information will soon be public, and you should have a communication plan ready.
Once everything is signed, the integration of the two entities begins and management and HR must now bring the two workforces together.
Phase 5: Integration
HR is now tasked with ensuring the new company is fully integrated. The integration phase includes:
- Communication strategy
- Combining the organizations and cultures
- Determining redundancies
- Formulating strategy
- Ensuring the retention of staff
The “people” side of the acquisition is extremely critical at this point. HR must find ways to retain key employees and keep employees engaged.
How HR Can Ensure Successful Integration
To weave together a new organization, HR will need to keep an eye on many different threads – first among those is culture. Cultural compatibility issues often arise when bringing together two or more organizations in the M&A process. The M&A integration always has a degree of misalignment, regardless of the perceived similarity between the two organizations. Cultural alignment has been identified as the top challenge in M&A transactions, therefore we recommend HR professionals be prepared to address it early on.
Additional areas of focus, as reflected in the diagram below, include combining policies and procedures, identifying and retaining key employees, conducting talent assessments, combining compensation and benefits, and implementing a well-developed communication strategy.
Identifying and Retaining Key Employees
Retention of key employees will be critical to the success of the M&A. To retain key talent that will help make the new organization successful, HR and/or management should communicate its intentions to the “star performers” as early in the process as is legally possible to help ensure retention. This will involve requesting access to conduct confidential interviews with key employees in advance of the actual closing date.
HR should advise management to be very careful not to under-commit to these key employees, or they will consider other employment options. Star performers know who they are and understand their personal and professional marketability.
Combining Policies and Procedures
HR will need to look at the policies of both organizations and consider how to handle the differences. You may choose to retain only the buyer’s or seller’s policies or combine the best pieces from both organizations. You will also need to determine how to handle any changes that would cause employees to have less than what they currently have (i.e., PTO, cell phone, etc.). In the end, you may decide to grandfather those items or provide compensation.
Conducting Talent Assessments
HR will need to identify and manage redundancies and reductions. Be prepared to allocate a significant amount of time to assess employee knowledge, skills, and abilities (KSAs) to determine which individuals will be retained and who will be let go. Your strategy may include terminations, early retirements, and a longer-term plan to simply not fill certain positions as they are vacated. A careful strategic approach will be key here – the ways in which these talent management decisions are made will be as important as the actual decisions themselves, as they’ll communicate a great deal about the new organization’s values.
Tips on how to approach talent assessments:
Go through your organizational chart and identify key people. Don’t limit yourself. Consider everyone, not just management. For example, are there key people in your hourly staff?
For each key employee provide:
- A short summary of their main responsibilities
- Years of service, specific experience, and retention risk estimate
- Criticality of the role/employee for the continuation of business and operations
- Any specific agreements with the employee not included in the data provided (i.e., education, training, bonus, perks)
- Development ambition/potential for next steps or succession candidate for other roles within the company
- Other comments to be highlighted by management
You may find a 9-box tool to be helpful in this analysis.
Combining Compensation & Benefits
Depending on the circumstances of the deal – and the compensation policies of the combining companies – HR will likely be called on to splice disparate payment plans into a compensation program that fits the new organization.
It goes without saying that all employees, new and old, will be concerned about what is happening with their pay. Be sure to provide full and early disclosure about the changes being considered to put their minds to rest. Also, members of the senior management team will be anxious to see what types of special arrangements (i.e., stock options, special retirement provisions, severance agreements) will be offered to them given the high-profile nature of the new positions.
In addition to developing compensation programs, HR will likely be required to assess and make recommendations on employee benefits. You can follow a similar process to how you combined policies and procedures for the organization by retaining only the buyer’s or seller’s benefits or combining the best pieces from both organizations. You should also decide if there are any options for which you choose to grandfather in or compensate.
Similar to compensation, employees are sure to be concerned about possible changes to their employee benefits coverage and will want to be informed about “the new package” as soon as that information is available.
Implementing a Well-Developed Communication Strategy
Having a well-planned communication strategy in place is critical throughout the M&A process. It is important to control the message, delivery, and timing, especially when it comes to who gets the information first (i.e., employees, clients, media, investors). When preparing your communication strategy for employees, HR and company leaders should use a concise people-related strategy.
You should include:
- The shared vision for the new company
- The nature and progress of the integration and the anticipated benefits
- The outcomes and rough timelines for future decisions
- Compensation and benefits
- Key policies, rules, and guidelines to govern employee behavior and related workplace expectations (i.e., attendance, time off, harassment, drug testing, privacy, etc.)
Communicating clear, consistent, and up-to-date information not only will give employees from both organizations a sense of control by keeping them informed, but it also can increase the coping abilities of employees and minimize the impact of the integration on performance.
Five Tips for a Successful Communication Program:
- Establish multiple routes of communication (i.e., one-on-one meetings, group sessions, newsletters, intranet updates).
- Focus on the themes of change and progress by highlighting projects that are going well and action items that are being delivered on time.
- Repeat the common themes of the M&A to increase employee understanding of the rationale behind the transaction.
- Provide opportunities for employee involvement and feedback.
- Ensure that employees understand there will be problems, but give a commitment that the problems will be identified and addressed as early as possible.
The Importance of Transparency and Compassion
The success of your integration hinges on how your restructuring is implemented. As a result, the highest priority for the acquiring company is to be transparent and straightforward about what is happening and what is planned. Even when the news is bad, the one thing employees of newly acquired companies appreciate most is the truth. This includes being able to say “we don’t know” about certain areas or “we have not yet decided” about others. Being honest also includes sharing information about when and by what process a decision is expected to be reached.
Once decisions are made about functions and people, HR and company leaders must treat those employees who will be negatively affected by the transaction with dignity, respect, and support. Not only is this approach the humane thing to do, but it also is a powerful way to show those who remain what kind of company they are now working for and can help them to begin to develop positive feelings toward the new organization.
Thank you to Cecilia Vocke, MS, SHRM-SCP, SPHR, for sharing her expertise in this article.
Ensuring that your HR Strategy aligns with your Company Strategy is critical to the success of your organization. Clark Schaefer Strategic HR has years of experience helping clients develop and implement their HR strategy and goals. Visit our HR Strategy Services to learn more about how we can help to assess your organizational design and HR processes to effectively plan for the future.
As Open Enrollment Season Approaches, What Are Best Practices to Improve Benefits and Remain Compliant?
HR Question:
It’s almost that time again – open enrollment season is quickly approaching! I want to be prepared this year and avoid any last-minute decisions or chaos. Can you recommend any best practices for reviewing, improving, and staying compliant with our employees’ health and well-being?
HR Answer:
It can be an intimidating feeling to see Open Enrollment season coming up on the calendar. Health insurance carriers typically provide an annual renewal timeframe and a deadline for brokers and employers to decide on which health insurance carrier will be utilized for the following year. Mapping out your strategy with this deadline in mind guarantees you have ample time to review your options and make effective decisions. In this article, we will walk you through key considerations you should consider as you review your employee benefits package to ensure you are well prepared and compliant with your open enrollment.
Timing of Open Enrollment
For those employer groups that renew their health insurance on January 1, 2023, the beginning of September is the time to start the review process. If you are a smaller employer, important questions to ask yourself are:
- How will my employees complete the application process?
- Could they use an online application program like Survey Methods, Google Forms, FormFire, or Easy Apps Online?
- When can employees start the process of completing their applications?
Some insurers allow for applications to be dated within 120 days of their renewal date. That means employees could begin the application process as early as September 1, 2022. If your employees are not filling out applications, now is the time to do a quick survey. Getting a pulse from your employees will help to determine what options you need to keep in place and what adjustments you need to make to the health and well-being package.
Cost of Benefits
Cost for the employer and the employee can be a major deciding factor. The type of program may provide discounts, returns of claim funds, or additional benefits. For example, chambers of commerce or associations may offer discounts or additional plan benefits for smaller businesses that can’t afford the discounts that larger organizations have access to. Some plans offer savings to employees for participating in wellness programs. These are all options that you should inquire about at your renewal.
The health insurance plan design you select is as important as the insurance company you choose to provide your benefits. Consider plans that may meet your employees’ immediate needs more readily, such as split-dollar co-payments for office visits, personal nurse benefits, or plans that offer telemedicine at no cost. Carefully review the prescription drug plans available to you, as well. Implementing a tiered deductible network, deductible for brand-name prescriptions, a $0 copayment for emergency room visits (subject to the deductible), or selecting a plan with higher copayments for brand-name drugs and specialty medications can all result in a reduction in premium. Bundling your ancillary benefits like dental, vision, life, LTD, and STD insurance may result in more favorable pricing and/or a multi-year rate guarantee without sacrificing quality.
Maintaining Compliance
Make time to review any compliance requirements. The DOL has a self-compliance tool for employers to use as a guide. Keep in mind the IRS updates guidelines as well, such as HSA contributions limits and the ACA affordability requirement. Therefore, before determining the contribution breakdown between you and your employees, do a quick calculation to ensure the amounts will be within the published guidelines.
There are a lot of factors to consider as you review your health and well-being offerings in your open enrollment process. Setting a timeline for a complete review will help keep the renewal process on track. Considering all your different options will ensure your employees receive the best possible benefits at the best possible price. Educating your employees on their new benefits will give them time to prepare. Wishing you well in this renewal season!
Thank you to Gina Kocevar with LS Benefits Group for contributing to this edition of our HR Question of the Week!
Clark Schaefer Strategic HR have 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 can do the job. Please visit our Benefits & Compensation page for more information.
What Are Non-Qualified Bonus Grant Programs?
HR Question:
Like any organization, I have a handful of key employees – my “rockstars,” for lack of a better term. If any of them left, it would be difficult to replace them – not to mention the impact it would have on our company’s success. But I’m struggling to keep up with the pay increases that other companies can afford. I need to find a way to retain and compensate these key employees and someone suggested non-qualified bonus grant programs. What are those?
HR Answer:
This is a great question. Not every company can afford to meet the wage increases of 10, 15, or even 20% that seem to be commonplace in today’s competition for talent. It might even seem like competitors are able to pay whatever it takes to recruit key employees away from their current employer. Or if employees are willing to forego a higher salary for other benefits, like stocks or buying into company ownership, but that’s not an available option, what are employers to do? One way that employers can financially reward essential employees over a longer time period (and thus, encourage retention) is through Non-Qualified Bonus Grant Programs.
What are Non-Qualified Bonus Grant Programs?
Non-Qualified Bonus Grant (NQBG) programs were specifically built for employers in need of long-term incentives for key employees when other financial benefits (like stocks, ownership, or commissions) aren’t available. By establishing a vesting period, employers are able to set up key employees to receive additional compensation should they stay employed and perform well over that period of time.
At the end of each year, the employer reviews how the company and employees have performed. From there, a bonus amount for the employee is determined. The amount that is credited is fully discretionary and controlled by the employer, meaning that should an employee not perform as agreed upon during a given year, the bonus amount can reflect that.
What are the Benefits of an NQBG Program?
This can be a fantastic retention tool in more ways than one. First, this program allows employees to defer compensation, creating guaranteed income for the future.
Second, this gives employers an opportunity to reward those can’t-do-without employees for their loyalty. The year-end review also provides employers a chance to review this benefit with the employee and have a tangible result of the employer’s appreciation. NQBGs provide additional benefits to employers in that they are:
- Simple to execute
- Inexpensive
- Flexible based on the business’s needs
Additionally, these programs, along with other non-qualified deferred compensation plans, aren’t covered under the Employee Retirement Income Security Act, meaning that there are no regulations when it comes to who the employer can or has to include in the program’s benefits.
NQBG plans can benefit the bottom line, as the compensation that employees are earning now isn’t payable until the future. The only drawback for the employer is that the funds aren’t tax-deductible for the organization until they are paid out.
It is no secret that employers are having to navigate through a competitive labor market making it even harder to retain their most critical talent. There’s no better time to look for creative and financially viable ways to reward and retain your essential employees. It may be worth exploring if a Non-Qualified Bonus Grant Program could be a valuable retention tool for your organization.
Special thanks to Brian Leen of LS Benefits for sharing his expertise on popular retention tools like NQBG programs!
Strategic HR offers assistance with a variety of Benefits and Compensation needs, including understanding how recruitment trends affect your business and helping you to craft competitive compensation plans. Please visit our Benefits and Compensation page for more information.
Do Our Remote, Out-of-State Employees Qualify for FMLA?
HR Question:
Our company has employees located in Ohio who all qualify for the protections covered under the Family Medical Leave Act (FMLA), but we also have employees working remotely in other states. Do our remote, out-of-state employees qualify for our FMLA policy?
HR Answer:
Great question. Even if the employees don’t fall within the 75-mile radius that the FMLA takes into account when counting employees towards the requirements, employers are still required to provide FMLA benefits to their employees who work remotely and out-of-state.
Why Does FMLA Compliance Matter?
What happens if those same benefits aren’t extended properly? Well, a lack of FMLA compliance can result in impressive fines. For example, not completing the notice can cost several hundred dollars alone, not to mention the millions in fines that can result from a mishandled claim or wrongful termination, such as the situation this Massachusetts company found itself in.
Even before the COVID-19 pandemic struck, some companies were beginning to branch out of their home states and hire individuals with the necessary talent, but not necessarily the ideal location. Many of these organizations were pioneering the process, working through the requirements and laws as they could. Now that remote work has become such a staple in the business community, it’s easier for any organization to run into this issue, as it’s often the case that many remote employees may be the first or only employee in a particular state.
How to Determine if Remote Employees Qualify for FMLA
There have been no changes to what is defined as “covered employers” as defined by the Department of Labor (DOL), as a “covered employer may be a private-sector employer (with 50+ employees within a 75-mile radius in 20 or more workweeks in the current or previous calendar year), a public agency, or a school.” Employers that fall under this category are required to provide FMLA benefits and protections to eligible employees while also complying with additional responsibilities required under the FMLA.
An eligible employee is one who:
- Works for a covered employer,
- Has worked for the employer for at least 12 months as of the date the FMLA leave is to start,
- Has at least 1,250 hours of service for the employer during the 12-month period immediately before the date the FMLA leave is to start (a different hours of service requirement applies to airline flight crew employees), and
- Works at a location where the employer employs at least 50 employees within 75 miles of that worksite as of the date when the employee gives notice of the need for leave.
So why does this rule extend to those employees who fall outside of the 75-mile radius and the 50+ employee count? It’s because the DOL determines their FMLA status based on the office or location that delivers their assignments or that they report to. The purpose of this is to protect the employees’ jobs should they have the need to focus on their own or their family’s health.
If you assume that you don’t have to meet FMLA guidelines for a remote employee, be sure to double-check the Department of Labor’s regulations, as well as your own internal reporting system, before skipping this important requirement.
Special thanks to Alisa Fedders, MA, SPHR, and Samantha Kelly for contributing to this edition of our HR Question of the Week!
FMLA, ADA, and other labor laws can be difficult to understand – let alone enforce. That’s where Strategic HR 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 HR Compliance & Recordkeeping page to learn more.
What are the Newest Benefit Trends?
HR Question:
We’re trying to review our benefit offerings to make sure that we’re meeting each of our employees’ needs. We’re able to offer the basics – health, dental, vision – but are there offerings we haven’t considered yet to keep up with benefit trends?
HR Answer:
In today’s market, it’s as important to retain the talent that you have as it is to recruit the right talent. The conversation around retention has offered employees a greater opportunity to be more vocal about their individual needs. So, what innovative employee benefits trends are employers implementing to retain their workforce and catch the eye of necessary talent? How can employers structure their benefits package with offerings that are appealing and beneficial to each employee?
Now more than ever, employees consider benefit offerings as an essential part of their compensation packages. While it’s obvious that employers can’t offer the sun, moon, and stars, employers can survey their teams to understand the benefits that would truly make a positive impact in their lives (and hopefully retain these employees longer). The results may surprise you, as it’s possible only a few adjustments need to be made to meet the wants and needs of your workforce.
For example, consider these four trending areas to enhance benefits and voluntary options to accommodate employee wants and needs: mental health, policies to support neurodiverse employees, support for life-changing diagnoses, and financial assistance.
Mental Health
Mental health remains one of the most talked-about and pressing benefit trends of this year. Even though the COVID-19 pandemic has receded to levels that allow for a partial return to normal, the impact on mental health remains. Many employers are turning to partnerships with apps like Calm or Headspace, while others (such as Clark Schaefer Hackett) have taken the opportunity to extend their Employee Assistance Programs (EAPs) to cover their employees’ extended family members, such as siblings and in-laws.
Policies to Support Neurodiverse Employees
It has been proven that diverse workforces naturally perform better. But diversity goes beyond race, gender, or age – it can also apply to thinking styles, abilities, and problem-solving practices (also known as neurodiversity). By creating inclusive policies and benefits for neurodiverse individuals – such as people with autism – organizations can open their doors to additional talent, unique perspectives, and innovative individuals, creating even greater diversity and inclusion in their workplace.
Support for Life-Changing Moments
As the conversation around work/life balance ebbs and flows between a balance and an integration, many would agree that personal life priorities impact performance, focus, and success at work. Offering support for moments such as cancer diagnoses and care programs (such as cancer insurance or critical illness insurance) or addressing the needs of female health (such as time and flexible work hours to deal with symptoms of menopause or fertility needs), miscarriages, or adoption needs can go a long way in addressing the work/life needs of your employees.
Financial Assistance
According to Schwab Retirement Plan Service’s annual survey, 48% of participants found themselves more likely to save more in general due to the pandemic, with over 85% listing a 401(k) plan as a “must-have” benefit. If 401(k) plans fall outside of what your organization can provide, consider offering smaller but still impactful benefits such as reimbursements for work-at-home expenses, stipends for child-care support, or programs to support emergency savings, debt management, and budgeting.
While healthcare costs continue to rise amongst the “Great Resignation” waves, employers are not without ways to attract and retain a larger percentage of their employees – starting with their benefit offerings.
Thanks to Janine Cummings, SPHR, SHRM-SCP for contributing to this edition of our HR Question of the Week.
Strategic HR 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 Give Performance Bonuses to Employees on FMLA Leave?
HR Question:
It’s almost time for quarterly performance bonuses, but one of my employees has been out on approved FMLA leave for the past six weeks. I don’t want to penalize the employee for being out, but it doesn’t seem fair to my other employees if I give this individual their full bonus even if they weren’t here. What should I do?
HR Answer:
It’s understandable that you don’t want to negatively impact your present employees or punish the team member out on leave. That being said, it’s important that however you approach this situation, you do so in a fair, equitable, and repeatable manner. You’re correct that the Family Medical Leave Act (FMLA) does provide benefit and job leave protection for leaves. However, there are some areas of total compensation that can be impacted as long as the reduction is due to the quantity of work and not the quality of work being done. That means that performance-based bonuses can potentially be impacted (i.e., reduced or not paid at all) according to the Department of Labor.
The FMLA is a federal leave law that applies to all companies with 50 or more employees; public agencies; and all public and private elementary and secondary schools. Under the FMLA, eligible employees can receive up to twelve (12) workweeks of unpaid leave during a 12-month period. It also requires group health benefits to be maintained during the leave as if employees continued to work instead of taking leave. Employees are entitled to return to their same or an equivalent job at the end of their FMLA leave. To be safe, many employers lean on the side of “no changes” when their employees return, but in this instance, you do have a right to adjust the bonus the employee would typically be eligible to receive.
According to the Department of Labor, an employer may deny a bonus that is based upon productivity goals as long as the calculation is applied equally to those who would be taking a non-FMLA-protected leave. For example, if you have an employee who is on a leave of absence for approved personal reasons and you prorate their bonus based on actual “time at work,” you could do the same for the employee on FMLA-approved leave.
The Department of Labor goes on to clarify that an employer could deny (or reduce) any bonus based on achieving a goal as long as they are treating employees in similar situations the same. That could be due to attendance, safety, and even productivity. A recent article from the Society for Human Resource Management (SHRM) cited a Second Circuit Court ruling that affirmed that such a proration was “allowed,” so long as employees on FMLA-approved leave are treated like others and not penalized in ways that others are not.
As an employer, you can create policies and precedent that would clear up any potential confusion in the future. For example, you could create a policy that specifies employees must actively be working for the entire month to be eligible for performance bonuses. Another option would be to create a policy that allows for partial payments prorated on the number of days an employee worked in the month. These are two very different options that could be used, as long as FMLA-qualified and non-FMLA-qualified individuals on leave are treated the same.
Finally, be sure that you understand that you cannot discipline an employee for non-performance or for not meeting established productivity goals while out on leave. As an employer, you can maintain work standards, but the quantity of the standard may need to be adjusted as it is directly impacted by the employee’s ability to be present at work – which is protected under FMLA.
Strategic HR 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.
How Can I Use Salary Benchmarking As a Recruitment Strategy?
HR Question:
Like many companies, we’re struggling with recruiting right now. I’ve been tasked with doing salary benchmarking to see if compensation is part of the problem, but I’m not sure how to go about doing it. Can you advise me on how to tackle the benchmarking process?
HR Answer:
Attracting and hiring talent is one of the most challenging yet critical processes for any organization. Descriptions of a welcoming work environment, rich benefit offerings, and career growth are frequently at the top of the most attractive attributes that organizations tout in their job ads, but one feature stands out among the rest – salary. If you are struggling to hire the talent that you need and your organization has not assessed the market pay rates for your positions, or if it has been a while since you’ve done this analysis, then it will be very beneficial to gather salary benchmarking data to ensure that you’re offering a competitive and attractive salary, particularly in a candidate’s market.
What is Salary Benchmarking?
Salary benchmarking is a process in which companies compare their internal salaries to those of other competitive companies to understand the market average. This allows them to create compensation structures and programs that can meet (if not beat) other competitors in the industry and attract top talent.
But beyond attracting talent, salary benchmarking can also take steps towards reducing costs, rather than just increasing them. Consider the average amount of time and money that goes into hiring, onboarding, training, and equipping new employees. Then, picture your bottom line should a candidate leave soon after joining the team for a higher, more competitive salary – one you had the ability to offer in the first place. And now, the process has to start all over again due to a more competitive offer. So how can organizations reduce the frequency of these situations through salary benchmarking?
How to Begin Salary Benchmarking
First, determine the roles you want to benchmark and create descriptions for each of them. The descriptions should include key job responsibilities, skills, education, and experience criteria. Next, determine the market criteria you want to compare against. Factors to consider are companies within the same industry, geography, organizations of similar size, and cost of living.
After you have established your criteria, conduct external research and compile salary data by comparing your roles against similar roles in the market(s) you’ve identified. Salary data can be found through several sources including the U.S. Bureau of Labor Statistics (BLS), online salary surveys, job posting websites, compensation reports, and third-party providers. Keep in mind, when using free online resources, be sure to reference several sources as the data may not be up to date or completely accurate.
Once you’ve compiled external salary data for each job, establish an internal pay range that aligns closely with the external market. Salary ranges should include a minimum and maximum pay range, and a mid-point that lies within 50% of the range. Once you understand what your organization is able to pay, use the salary range to create a compensation and recruitment strategy for your organization. For example, are you able to pay “at market”, meaning your pay is at a level that matches the market average salary for a specific job? Alternatively, you may opt to pay ‘above market’ and offer a higher rate of pay than other companies in the market. Company and employee performance, the company’s financial ability to pay, and overall business strategy should drive the compensation philosophy you adopt.
I Have My Compensation Strategy… Now What?
Adhere to your compensation strategy and salary ranges to maintain both internal and external salary equity for your employees. In other words, internal employees within the same job classification and similar experience levels should be paid similarly to their internal counterparts. New hires should be paid within the established pay range of the position and their pay should be commensurate with their level of experience. An employee’s placement in the salary range should align with their overall experience level and tenure. Entry-level hires should be paid toward the lower 25% percentile of the range while more experienced employees should be paid between the 50% mid-point or 75% percentile of the range.
What About My Current Staff?
What happens when the candidates you’re recruiting for all have higher salary demands than the salaries of your current staff? It could mean your salary structure is out of date and lagging behind what the market is offering. Or, there may be dynamic forces in place which have drastically shifted salaries – such as inflation, increased competition, or a major market event.
In either case – it’s best to research, validate, and adjust the starting salaries for the positions you’re recruiting for rather than continue to offer below-market wages. These lower wages can not only hurt your recruitment efforts but also compound any “below-market” compensation issue you’re experiencing. Instead, conduct an internal analysis of positions and/or employees who are being underpaid and develop a strategy to bring pay up in line with the marketplace. This may require an immediate adjustment to salaries or, a long-term plan which brings salaries up over time.
Lastly, in addition to starting rates and salaries, hiring managers and HR professionals should also benchmark what other perks are being offered to attract talent. Sign-on bonuses, flexible work hours, and enhanced time-off benefits are just a few of the perks offered by employers today to help attract staff and retain staff.
Special thanks to Terry Salo for contributing to this HR Question of the Week.
Need assistance in benchmarking your organization’s salaries? Strategic HR can help! Contact us to get started.
Bonus Grants: A Creative Way to Retain and Reward Key Employees
HR Question:
I’ve been asked to look into how we can use bonus grants as part of our retention strategy. Can you help?
HR Answer:
Changes in the economy – as well as clashing generations in the workforce – have altered the employment landscape. Gone are the days of someone retiring after 40 years with the same company. Job hopping has become the norm, and in the war for talent, top performers are regularly being courted by the competition.
Organizations need to implement new and creative ways to keep their key employees – and keep them happy. While salaries are generally staying level, more employers are focusing on bonuses as a way of rewarding employees. But traditional bonus programs may not be good enough anymore. Enter: The bonus grant.
Bonus grants are different than conventional bonuses in that they are a commitment that the company makes to key employees. Instead of earning raises and/or bonuses that are paid out annually, key employees accrue larger bonuses over a longer period of time. The company also has the option of tailoring the program to the individual employee to provide the most appropriate benefit.
While there are many advantages associated with implementing a bonus grant program, the following are the three most significant:
Retention
Most bonus programs are paid in the year they are earned. While this may immediately inspire feelings of gratitude and loyalty, the effect quickly wears off. With bonus grants, key employees are credited a certain bonus amount each year, but they are not fully vested until a specific date determined by the employer (usually 5-10 years). This is a terrific way to help ensure retention because if an employee leaves the company, they are walking away from the bonus account that was set up for them.
Flexibility
Unlike salary raises that commit employers to funds that they may not be able to spare in the future, bonus grants provide companies the flexibility to determine how much – if any – money is given to a specific employee based on their individual performance, as well as the company’s performance that year. Employers can set a different percentage or flat rate for each employee in the program, and these numbers can vary from year to year at the employer’s discretion.
Simplicity
There are different types of retention tools and tactics in the marketplace, but most are complicated and difficult to understand – for both employers and employees. A bonus grant program can be very straightforward. By keeping it simple, key employees will easily understand the value of the benefit being offered, and the company leadership will understand what they are committing to.
Is a bonus grant program right for your company?
Here are some questions to ask when deciding whether a bonus plan is right for your company:
- Are you having issues recruiting and retaining key employees, or competing with larger companies for employees at the executive level?
- Do you wish to provide specialized forms of compensation to key executives or employees in lieu of making them partners or part owners in the business?
- Is your ability to offer a more robust benefits package to high-performing employees hindered by your business’ lack of free cash flow?
If you answered “yes” to any of these questions, a bonus grant program is worth exploring.
Thank you to our CSH colleagues, Bill Edwards and Lance Drummond, for contributing to this HR Question of the Week.
There is some strategic planning involved in setting up a bonus grant program, but our skilled colleagues at Clark Schaefer Hackett can help your organization set up and administer one. If you’re looking for a creative way to hold onto your best employees, a bonus grant program may be something that sets your company apart from the competition. For more information, please contact us.
What Are Total Compensation Statements?
HR Question:
Can you explain Total Compensation Statements … What are they? What should they include? When should we use them?
HR Answer:
Total Compensation Statements convey the total value of your compensation and benefits offerings as they include an employee’s direct and indirect compensation. They are a great tool to show not only how much an employee earned in base salary or hourly wages and bonuses in a given time period (often a year), but they also share the hidden costs of employee benefits and perks. Employers prepare and distribute Total Compensation Statements to employees typically once a year, often at the end of the year or with their W-2.
Total Compensation Statements should include the employer’s cost for the following:
- Social Security & Medicare taxes
- Workers’ compensation
- Unemployment tax
- ALL insurance packages (health, dental, vision, life, short- & long-term disability, long term, etc.)
- HSA, FSA, HRA contribution
- Retirement contributions
- Paid time off (vacation, sick, holidays, personal, bereavement, jury duty)
- EAP, wellness, or financial health programs
- Relocation
- Parking
- Tuition reimbursement & education assistance
- Professional memberships
- Professional development and training (internal and external)
- Company vehicle or equipment use
- Company events, lunches, celebrations
How to use Total Compensation Statements to RETAIN your employees
Although you are not required to provide them, we highly recommend that you distribute Total Compensation Statements to your employees. If you are not using them as an essential retention tool, you are missing out on the benefits of sharing the secret value of your employees’ “total” paycheck with them. Most employees have no idea how much it costs to employ someone and have an expectation of benefits without understanding the cost. Seeing these numbers is where the real aha moments come for employees!
Consider providing a Total Compensation Statement to your employees at the end of this year, or maybe even more than once a year. The statement provides a great reminder of the many benefits and the additional dollars you are investing in them beyond what they see in their paycheck, especially if they are thinking about joining the “Great Resignation.” As employees quit their jobs in record numbers, according to USA Today, this Total Compensation Statement may be the message that conveys that you, their employer, care about them and provide benefits that go beyond the organization’s front door to provide for their health, education, retirement, etc.
How to use them to RECRUIT new employees
I recently attended a local event where Sheetz, a ‘new to our area’ gas station/convenience store/fast food restaurant, was handing out free cookies, drawing in the crowd with sugar, and recruiting fliers. What caught my eye was not another flyer for another job, rather a flyer showcasing what you could earn working at the company in terms of Total Compensation. That total number was big and bold right at the top and included their base pay, benefits, and retirement contributions. The flier also showed how an employee could progress through their four employment levels and each level showed the total compensation in bold at the top. You immediately saw that you could earn $31,166 per year (rather than $10.60 an hour base pay). What a great way to stand out and catch the eye of job seekers!
Thank you to Lorrie Diaz, Senior HR Consultant with Strategic HR, for contributing to this HR Question of the Week.
Need assistance in creating a Total Compensation Statement? Strategic HR will work with your organization to develop a great strategy for using Total Compensation to recruit and retain your talent and even create the statements for you. Contact us to get started!
What Role Should HR Play in Benefits Open Enrollment to Ensure Success?
HR Question:
I recently took on the responsibility of overseeing our company’s benefits. Can you offer advice on the role HR should play in benefits open enrollment to ensure its success?
HR Answer:
As many employers, like yourself, are in the midst of planning for benefits open enrollment, it takes me back to the early days in my HR career. During one of my first HR positions, I assumed that my employee benefits broker could effortlessly pull off a stellar enrollment while I worked on other HR priorities. That’s when I learned – the hard way – that a broker cannot work autonomously to assemble and communicate your benefits program.
There’s no doubt that employee benefits brokers play a vital role in any benefits enrollment process. They know what benefits programs are available, which vendors can provide them, and how benefits are priced. An experienced employee benefits broker will also take the time to understand your organization and develop a customized employee benefits plan to meet your workforce’s needs. However, they cannot operate effectively without an HR professional taking a leadership role in the process. Having learned this lesson firsthand, I can share the following suggestions on the role HR should play in making your benefits open enrollment successful.
Identify benefits that give your company a competitive advantage.
Can a well-stocked benefits plan make your company the lead horse in the race for talent or help improve your retention? You bet! In their August 2021 survey, PwC revealed that employers underestimate the value of benefits in retaining employees despite the fact that benefits were identified as the number two reason employees were looking for new jobs. Employers who present both employees and candidates with a mix of competitive pay AND an enticing selection of health, retirement, and financial benefits can put themselves on the “employer of choice” A-list.
Plan for benefits that fit with workplace changes.
You may have more employees who now work remotely, either full-time or for some days of the week. Their family members are likely also dealing with workplace, school, or daycare changes. Consider benefits plan enhancements that address their needs, such as supplemental child care or elder care support. In addition, a recent SHRM article shared insight from Doug Ramsthel, executive vice president and partner at Burnham Benefits, explaining that employers “are likely to see an increase in spouse enrollment, as labor statistics indicate more spouses have elected to stay at home instead of work and will need coverage now, through the working spouse.”
Additional considerations for your benefits plan design include:
- Many employees may have a greater awareness of the need for both short-term and long-term disability benefits and mental health support.
- The use of telemedicine has increased significantly as a result of the pandemic. More employees are now comfortable with receiving virtual care.
- Some employees may want help with financial concerns, like how to best preserve their retirement benefits while balancing financial cash flow needs.
If you’re not sure of what benefits your employees would value most – ask them! Taking the pulse of your employees’ preferences will help you to identify the benefits that they value the most, and perhaps shine a light on benefits that may no longer hold the value they once did.
Leverage the most effective ways to communicate with employees.
You know how to best deliver important messages to your employee audience. Differences in employee ages and life stages, locations (office, manufacturing facility, remote, etc.), and comfort levels with technology have likely driven different communications approaches. Handing out a benefits enrollment form and brochure or mailing it to employees’ homes may be useful for some, but it is only the start of the communications process. HR can play a critical role in making your benefits open enrollment successful by using additional communication tools that speak to broader communication preferences including:
- Text messages. Although email is universally used, could text messaging be a helpful tool for your employees? You know that many of your employees, regardless of age, use texting as a way to get updates. It can also be a great communication tool for employees who work on the road or don’t have consistent access to a computer in their work day. You can use texts to provide prompters, deadlines, or answer questions. You can also use texts to remind employees about underutilized benefits to drive participation.
- Website / Mobile App. Consider providing employees with enrollment information through an online benefits website or mobile app that can be accessed 24/7. This site can be updated throughout the enrollment period with FAQ’s, details of new benefit offerings, and deadline reminders. Contact information may include a chat feature or texting options for questions. You can also add events to make the enrollment process both fun and enlightening, such as quizzes, benefit enrollment scavenger hunts, polls, videos, and infographics.
- Webinars and virtual meetings. Video-based webinars, town hall meetings, and “ask me anything” sessions with members of the benefits team or broker can be effective approaches. Employees may have varying shifts or conflicting schedules, or they may want a family member or significant other to attend a meeting, so you may want to host multiple sessions over different time zones to maximize the number of participants who can participate in a live session. These webinars should also be recorded, posted on the company employee site, and include the opportunity to email or text in questions for employees who cannot attend a live event.
Take it from me. Your active participation in the benefits enrollment planning and communication process is a vital part for success!
Thank you to Strategic HR’s Terry Wilson, SPHR, SHRM-SCP, Senior HR Consultant, for contributing to this HR Question of the Week.
Do you need help in determining the benefits that best fit your organization? Or could you use help in developing Total Compensation Statements? Learn more about our Benefits and Compensation Services or contact us today.
What is the Employee Retention Tax Credit (ERTC)?
HR Question:
What is the Employee Retention Tax Credit (ERTC) and how can I take advantage of this program?
HR Answer:
As an incentive to employers of all sizes to keep employees on payroll, the Employee Retention Tax Credit (ERTC) was created to help employers navigate the unprecedented impact of COVID-19. The ERTC is a refundable tax credit formed within the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and further extended/expanded under the Consolidated Appropriations Act (CAA) and American Rescue Plan Act (ARPA).
Originally, to be eligible for the credit as of March 2020, an employer must actively carry on a trade or business during the calendar year 2020 and meet either of the following:
- Full/Partial Suspension Test: If an eligible employer experiences a calendar quarter in which trade or business is fully or partially suspended due to an order of government authority restricting commerce, travel or group meetings (this includes but is not limited to commercial, social and religious purposes) due to the COVID-19 pandemic.
- Gross Receipts Test: If an eligible employer experiences a significant decrease in gross receipts (AKA revenue) resulting in more than a 50% drop when compared to the same quarter in the previous year. (Until gross receipts exceed 80% of gross receipts in the prior quarter).
Originally, the credit was worth 50% of “qualified wages” – including health care benefits – up to $10,000 per eligible employee from March 13, 2020 – December 31, 2020. In other words, the maximum benefit for 2020 resulted in credit of up to $5,000 per employee. Companies can STILL do this today.
CAA Changes
In December 2020, Congress revised the provision resulting in the Consolidated Appropriations Act (CAA), extending the credit for eligible employers that continue to pay wages during COVID-19 closures or recorded reduced revenue through June 30, 2021. The CCA also:
- Increased the amount of the credit to 70% of qualified wages, beginning January 1, 2021, and raised the limit on per-employee qualified wages from $10,000 per year to $10,000 per quarter. In other words, you can obtain a credit as high as $7,000 per quarter per employee.
- Expanded eligibility by reducing the requisite year-over-year gross receipt reduction from 50% to only 20%. And it raised the threshold for determining whether a business is a “large employer” — and therefore subject to a stricter standard when computing the qualified wage base — from 100 to 500 employees.
- Provided that employers who receive PPP loans still qualify for the ERTC for qualified wages not paid with forgiven PPP funds. (This provides an incentive for PPP borrowers to maximize the nonpayroll costs for which they claim loan forgiveness.)
ARPA Changes
The American Rescue Plan Act (ARPA) was created to increase the speed of recovery to the economic and health struggles faced by COVID-19. The new law extended the ERTC through the end of 2021 and expands the pool of employers who can take advantage of the credit by including so-called “recovery startup businesses.” A recovery startup business generally is an employer that:
- Began operating after February 15, 2020, and
- Has average annual gross receipts of less than or equal to $1 million.
While these employers can claim the credit without suspended operations or reduced receipts, it’s limited to $50,000 total per quarter.
The ARPA also targets extra relief at “severely financially distressed employers,” meaning those with less than 10% of gross receipts for 2021 when compared to the same period in 2019. Such employers can count as qualified wages any wages paid to an employee during any calendar quarter — regardless of employer size. Otherwise, the ARPA continues to distinguish between large employers and small employers for purposes of determining qualified wages.
Note that the ARPA extends the statute of limitations for the IRS to evaluate ERC claims. The IRS will have five years, as opposed to the typical three years, from the date the original return for the calendar quarter for which the credit is computed is deemed filed.
Additional IRS Guidance
Prior to the passage of the ARPA, the IRS issued additional guidance on the ERTC that helps determine whether operations were partially suspended because of a COVID-19 related government order.
The IRS has previously stated that “more than a nominal portion” of operations had to be suspended, meaning:
- Gross receipts from the suspended operations are 10% or more of total gross receipts,
- Hours of service performed by employees in the suspended operations are 10% or more of total hours of service, or
- Modifications to operations result in a reduction of 10% or more of the employer’s ability to provide goods or services.
How can my company claim the ERTC?
The ERTC is a payroll tax credit to be reported on Form 941 and may be up to a total of $33,000 per employee for 2020/2021 depending on facts. Any eligible employer can claim ERTC in either/both 2020 and 2021. Special care should be taken when calculating and claiming the credit, especially if the business also received a PPP loan, or other government funding since COVID-19, as IRS rules required an analysis to avoid any “double-dipping.”
Every business is unique and the amount of your ERTC will vary depending on the time period, number of employees, and other factors. To effectively position your business with the benefits of the ERTC, it is encouraged to partner with a tax consultant who knows your industry and the tax laws. To have a discussion about the potential of ERTC during calendar years 2020 and 2021, reach out to Clark Schaefer Hackett consultant Phil Hurak (pshurak@cshco.com) today.
Special thanks to Phil Hurak for writing this edition of our HR Question of the Week!
For additional information regarding the ERTC, please visit the CSH COVID Resource Center containing articles on ERTC, PPP, FFCRA, and other benefits potentially available to your business.
Strategic HR knows that keeping abreast of HR 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 HR Compliance page to learn about our auditing services which can help you identify trouble spots in your HR function.
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’s Terry Salo, Senior HR Consultant, for contributing to this HR Question of the Week.
Strategic HR knows that keeping abreast of HR 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 HR Compliance and Recordkeeping page to learn about our auditing services which can help you identify trouble spots in your HR function.
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 knows that keeping abreast of HR 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 HR Compliance Services to learn more.
Mental Health Concerns in the Workplace
In today’s chaotic environment, many American workers have been searching for ways to cope with the “new normal.” Between the pandemic, civil unrest, a divisive and contentious election, and frequent changes in their day to day life, it’s no surprise that mental health concerns in the workplace are on the rise. What impact can your employees’ mental health have on your organization?
In a recent study of 12,000 employees conducted by the Boston Consulting Group, individuals with better mental health were about two times more likely to maintain or improve their productivity when compared to those who were experiencing worse mental health during the pandemic. When surveyed about their mental health needs, TELUS International found that roughly 80% of workers would quit their current role if a new position provided more support for their mental health needs.
In this unique moment of increased remote work, additional challenges have presented themselves. In that same study, four out of every five workers indicated that they found it difficult to separate their work life and home life when working remotely due to the pandemic. Between the longer days and later hours resulting from a lack of structure when working from home, the mental strain led to an inability to maintain a positive work-life balance. This trend can be very difficult to sustain on a long-term basis, eventually impacting employee productivity and the quality of their work.
So how can HR and business leaders partner together in this remote/hybrid work environment? The same TELUS survey allowed employees to voice the changes they would most like to see implemented.
Encouraging the Use of PTO
Roughly 97% of those surveyed believed that taking vacation days is important to their mental health. In fact, over half of those surveyed have taken a “mental health day” since the pandemic began. Without the ability to travel or get away for vacation, employees may find themselves hesitant to take time off. Leaders should encourage the use of available PTO to disconnect, recharge, and relax – even if it’s within their own backyard.
Creating Flexible Scheduling (Without the Extra Hours)
Nearly nine out of every ten respondents agreed that a flexible work schedule would positively impact their mental health. This would allow employees to take mental breaks during the day, catering to children’s school schedules and family needs while reducing the guilt associated with “not being available.” When implemented correctly, this gives employees a feeling of control, reduces turnover, and boosts morale.
Provide Professional and Personal Interaction
Many employees would benefit from additional coaching or “reach outs” through the week from their managers or leaders. By connecting up and down the ladder and across departments, these unstructured check-ins can allow employees to fill the social gaps they lack from the isolation that naturally comes with remote work. In fact, many businesses have also implemented virtual “happy hours” to have their team gather for social interaction. Be sure to strike a careful balance here to avoid “Zoom Fatigue” by bombarding each other with video calls and check-ins.
Implement Telehealth Initiatives
There has been an increased demand for remote counselors or therapy sessions. In fact, the American Psychology Association has indicated that telehealth counseling can be just as effective as in-person counseling especially for younger generations that are used to using technology. It also allows for easier scheduling, lower costs, and a more private environment than the traditional face-to-face setting. Connecting employees to resources that provide this kind of remote support can allow individuals to work through their stress and develop coping mechanisms with trained professionals.
The COVID-19 pandemic has increased the ongoing conversation around mental health and highlighted the importance of taking care of ourselves, both in mind and in body. HR professionals and business leaders have an opportunity to make a positive impact on their lives and the health of their employees by building bridges for interaction, implementing mental health initiatives, and guiding employees to utilize the resources they have at hand. Strategic HR created this extensive compilation of mental health resources as an easy-to-use reference for employers to support the mental wellbeing of their employees. By encouraging frequent conversations, utilizing available resources without attaching stigma, and establishing positive practices surrounding mental health, businesses can see themselves and their employees through these uncertain times with success.
Special thanks to Mike Coltrane, Talent Acquisition Consultant, for contributing to the Emerging Issues in HR!
Your employees face challenges every day. We can help you to ensure that your company policies and benefits best support your employees’ overall well-being. Visit our Benefits and Compensation page or our Health, Safety, & Security page to learn more. Or, better yet, contact us.
What Should I Consider Before Doing a Reduction in Force?
HR Question:
I may need to restructure my workforce as a result of the downturn in business activity. What should I consider from a fairness and legal standpoint?
HR Answer:
Determining the need for a Reduction in Force (RIF) is a challenging decision to make, but it is sometimes necessary to keep the business running in a positive way. According to the Society for Human Resource Management (SHRM), the definition of a RIF “occurs when changing priorities, budgetary constraints, or other business conditions require a company to abolish positions.”
Before moving forward with a RIF, we recommend that you thoroughly consider all of your options. Some states offer assistance to employers that may help them avert layoffs or receive early intervention to help the workforce impacted by a RIF. For example, Ohio Job and Family Services’ Office of Workforce Development offers a Rapid Response (RR) program that is funded by the U.S. Department of Labor. Services may include customized workshops, training, up-skilling, retooling, certifications or skill matching.
If you determine that your organization needs to move forward with a reduction in force, you should use a carefully planned approach. You will need to be aware of and adhere to state and federal regulations to ensure compliance throughout your process. This will help to protect your organization against employment litigation. It is also important to train your management staff on what they can and cannot do in the RIF process. This is a time to go back to the basics when it comes to managing your human resources and protecting your business.
8 Recommended Steps to Follow When Considering a Reduction in Force
1. Select the Employees for the Layoff
It’s important to determine an objective criteria process for your selection process. Consider factors such as criticality of the position to the business, seniority, performance review scores and any corrective action documents that may have been issued. This is the time that accurate and timely employee documentation throughout the year is important as it will play a big part in your selection process.
You will need to remind managers of the importance of using objective criteria in the selection process and not to make decisions based on who they like or dislike. You may also consider having a “no backfill for one year” rule to ensure the RIF is truly necessary and not a way for managers to “clean house.”
Once you have an initial list of employees to be laid off, you should apply steps 2 – 5 below to ensure that you are in compliance with state and federal regulations.
2. Avoid Adverse / Disparate Impact
According to SHRM, adverse or disparate impact refers to “employment practices that appear neutral but have a discriminatory effect on a protected group. Adverse impact may occur in hiring, promotion, training and development, transfer, layoff, and even performance appraisals.” For help in understanding and navigating this, check out SHRM’s toolkit to avoid adverse impact in employment practices.
3. Review Federal and State WARN Regulations
If an organization is contemplating a RIF or a layoff, there are several factors to take into consideration such as reviewing state and federal statutes, including the Worker Adjustment and Retraining Notification Act (WARN). WARN offers protection to workers and even communities by requiring employers to provide a 60-day notice in advance of a plant closing or what they deem as a mass layoff. This Act is only applicable to employers with 100 or more employees.
4. Review ADEA and OWBPA Regulations
You will need to comply with two federal regulations that offer protections based on age: ADEA and OWBPA.
The Age Discrimination in Employment Act (ADEA), protects employees 40 years of age and older from discrimination on the basis of age in hiring, promotion, discharge, compensation, or terms, conditions or privileges of employment.
The Older Workers Benefit Protection Act (OWBPA) is an Act that amends the ADEA to clarify the protections given to older individuals in regard to employee benefit plans, and for other purposes.
5. Determine Severance Packages, Benefits Coverage, and Additional Services (if any)
As you develop severance packages, benefits coverage, and any other services that you will offer, you should review the Employee Retirement Income Security Act (ERISA) to ensure compliance. ERISA is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.
6. Train Supervisors and Managers
These individuals are your first-line of defense (and many times your biggest legal threat) when it comes to employees’ perception of company policies, procedures, and decisions. Although human resources would always like to be the ones to address employee concerns, your front-line managers and supervisors are doing it on a daily basis whether they want to be or not. They should be properly trained on how to handle employee concerns.
Some suggestions for supervisor/manager training include:
- Basic Discrimination Laws: Be sure supervisors and managers are aware of basic discrimination laws. Assist them with increased communication and employee relation skills so they are able to respectfully support company decisions and communicate with employees regarding their concerns or issues.
- Staying Compliant and Consistent: Ensure managers and supervisors are clearly aware of what they can and cannot do from a legal perspective. Those involved in the employment process should know and document the process used when restructuring or selecting employees for layoff, and then use it – consistently. A clear legally defendable (non-discriminatory) reason when selecting those who will be let go is the most important aspect of restructuring. In addition, managers and supervisors should be guided by human resources to ensure an appropriate message is being delivered when HR isn’t delivering it.
- How to Maintain Good Documentation:We all know that documentation is essential for a good legal defense, but also remember it can hurt as well. Train your staff on what good documentation looks like and what to avoid. Remind them that everything is subject to review in a lawsuit – employee warnings, performance evaluations, and even those simple notes we write down on a sticky note and throw in their file. Be aware of what you are putting down into writing and make sure it is objective and defendable.
7. Prepare for Reduction in Force Meetings
As you prepare for your layoff meetings, have a clear plan of what is going to be communicated, who is responsible for communicating the message, and how the message will be delivered both to those who are being directly impacted and those who will remain. It can be helpful to think through your anticipated frequently asked questions and prepare answers prior to your meetings.
8. Inform Your Workforce of the Layoffs
As you deliver the news of your reduction in force, remember that the golden rule still stands in employment – treat your employees the way you would like to be treated. Think about how you would prefer to be treated during these tough times when decisions are so difficult. Treat your employees with dignity and respect at all times. Provide notice of the layoff if it is reasonable, and provide some type of outplacement if you are able.
Be sure to listen to your employees as well. Employees are more likely to file a claim against employers when they feel like they are ignored or that their concerns are not addressed. Although your message may not always be what they want to hear – allow them to be heard and feel a part of the process.
Remember also, the RIF not only effects the person being released from his/her job, but also the remaining employees. There can be an emotional toll on those who remain, in addition to the impact it may have on their job duties as well. Be prepared to provide the resources and tools necessary to help your staff to stay engaged and do well through this difficult time of transition.
How to Handle Changes to Job Responsibilities
Moving forward, your next consideration is to have a plan about who will absorb each exited person’s job tasks. You should determine if this situation requires a long term solution or if you foresee returning to the prior structure again when the budget allows. Job descriptions for those positions affected by the lay-off will need to be reviewed to reflect changes to the responsibilities and functions of the position. Sometimes you may find the change has actually improved the position making it more efficient.
You may also want to consider a salary review for the positions affected. Since some individuals are now performing the functions of multiple positions, is a pay increase warranted and feasible?
Remember, the job description is based upon the position itself, not the individual performing the job. Make sure to get input from all relevant parties – supervisor and employee – when determining the final role of an impacted position.
In addition, we recommend that you consider cross-training employees on job tasks to be ready for these unforeseen times and to have coverage in the absence of employees when they are out of the office for personal reasons.
To ensure your compliance with all federal and state laws and regulations in the process of a reduction in force, we encourage you to consult with your attorney to review your plans before implementation. Be prepared with a plan and look at the strengths and weaknesses of your team so you are not caught off guard!
If your business is considering a reduction in force, the team at Strategic HR is available to help coach you through the process and decisions that will need to be made. We are here to help you through the tough times – just contact us.
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 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 can do the job. Please visit our Benefits & Compensation page for more information or Contact Us to discuss your needs.
What Should Ohio Employers Know About Marijuana in the Workplace?
Question:
As an Ohio employer, can you help me understand how marijuana legalization fits into our employment policies?
Answer:
You are not alone in trying to navigate the everchanging state of marijuana legalization. A growing number of states have either passed laws, or are considering legislation, to ease restrictions on employees’ use of marijuana for medicinal or recreational reasons. So, employers that need or want to continue testing or disciplining for marijuana use must know the applicable state and federal laws, including the court decisions that interpret those rules.
Medical marijuana was legalized in Ohio in September 2016, and retail sales began on January 16, 2019, when the first four licensed dispensaries opened for business. As of February 1, 2020, OHDispensaries.com reports 48 of the 57 licensed dispensaries are operating. So, it is important that you know your rights as an Ohio employer regarding medical marijuana.
Below, we will walk you through some commonly held perceptions and workplace scenarios to help your Ohio-based company evaluate how marijuana legalization impacts your employment policies.
True or False: Medical marijuana users have job protections in Ohio due to state disability discrimination laws.
Answer: False. Presently, there is nothing in Ohio’s medical marijuana law that prohibits or limits an employer’s right to drug test employees for marijuana, require a drug free workplace, or impose discipline or discharge an employee violating an employer’s policies The law protects the employer’s right to fire or discipline any employee found to be using medical marijuana. The statute also states that it will not interfere “with any federal restrictions on employment” related to the use of medical marijuana in the workplace. All marijuana use, whether for medical or recreational use, is still illegal under federal law. It is listed as a Schedule I drug under the Controlled Substances Act, which means that it is deemed to have no medical value and a high potential for abuse.
True or False: If an employee has a medical condition that requires the use of medical marijuana, I must accommodate the employee.
Answer: False. In outlining employers’ rights, Ohio’s Revised Code 3796.28 states that an employee has no specific protections. Under the law, you do not have to accommodate an employee’s need to use the substance. An employer has the right to not hire an employee based on medical marijuana use, possession, or distribution. The law does not allow a cause of action against an employer if an employee believes he or she was discriminated against due to medical marijuana use. An employer is allowed to have a zero-tolerance drug free policy in place, with or without special accommodations for those who use medical marijuana.
True or False: My company has its headquarters in Ohio but has locations in other states. Even if the laws in those states provide workplace protections for medical marijuana users, our employees in those states who use medical marijuana may be disciplined, fired, or not hired.
Answer: False. Thirty-three states and Washington, D.C., have legalized medical marijuana use, and 10 states have approved both medical and recreational use. Registered medicinal users—or “cardholders”—in some states other than Ohio may have job protections. For example, beginning in 2020, employers in Nevada and New York City cannot consider positive pre-employment marijuana screens. However, some exceptions apply, particularly for safety-sensitive positions. Consider research published last year by the National Institute on Drug Abuse where they found that employees who tested positive for cannabis had: 55 percent more industrial incidents, 85 percent more injuries and 75 percent greater absenteeism compared to those who tested negative.
State statutes with nondiscrimination provisions for medicinal use typically exclude jobs that require drug testing under federal law. For example, certain commercial motor vehicle operators would be excluded from job protections because the Department of Transportation requires them to pass drug and alcohol screens.
While Ohio law provides employers with employment rights on the topic of medical marijuana use, HR professionals must remain vigilant to ensure that your company does not act irresponsibly or apply policies in a discriminatory manner. Make sure that your drug-testing practices and drug-free workplace policy fall within the parameters of the laws in the states in which your company operates. You may find it helpful to consult your legal counsel to ensure that you understand and comply with the federal, state and local laws that may apply to your organization.
Strategic HR knows that keeping abreast of workplace compliance issues and deadlines can be daunting, especially when the laws keep changing. We can help you by offering resources to help you identify and mitigate compliance issues and by making sure you are informed of changes and reacting in a timely manner. Our HR Audit will help your organization identify trouble spots in your HR function. Visit our HR Audit page to learn more about this helpful service.
Do I Need HR?
HR Question:
As a business owner, how do I know when I should engage someone to help me with our human resources needs?
HR Answer:
The quick answer is the typical rule of thumb is to have one HR professional for every 100 employees. However, depending on the scope of the role and how proactive your organization is, this number may be more like 1.5 HR professionals per every 100 employees (Bloomberg Report).
But not all businesses have over 100 employees, and you can’t wait until you are at 100 employees to address human resources in your business. When you hire one new employee beyond yourself, your journey down the human resources lane begins. It doesn’t necessarily mean you are ready to hire a full-time HR person; but rather, you need to do some basics to get your business in shape to have employees such as:
- Setting up workers compensation
- Obtaining a payroll solution
- Posting mandated posters
- Creating employee files
- Developing a recruiting process
- Creating an onboarding program and required forms
- Setting up how an employee will be paid in compliance with various laws
- Identifying benefits–not just health, but also holidays, PTO, and programs
- Setting expectations for employees through policies in an employee handbook
Once you have your HR function set up, you may be comfortable handling your human resources function internally yourself, through your management team, or even an office manager. But, be sure you have a lifeline to an HR consultant and/or attorney to help you, should an issue arise.
As your business grows, you will also see other triggers that may tell you it’s time to get more formalized help with your HR function such as:
- Business growth
- Employee turnover
- The need for more formal policies and procedures
- Gaining or maintaining a competitive edge
- Change that is impacting your employees
- Conflict with responsibilities
- Compliance
Compliance with federal, state, and local laws is critical for you to stay on top of as your business grows, which again is why it’s important to at least have a lifeline to an HR consultant and/or attorney. Check out this general list of the federal labor laws by the number of employees you have on your team. This list links to details on the actual law. But, there are also many unique state and local laws that may apply to your business too.
Too often, we see businesses wait until a problem occurs: if it isn’t broken, why fix it? When it comes to HR, you are better to be proactive than reactive to avoid losing key employees, receiving penalties for violating a law, or litigation.
Strategic HR can help you with any of your human resources needs, whether you are hiring your first employee or your 1,000th. With our customized, a-la-carte approach, we can support exactly what you need. We can conduct an analysis of your HR function, establish your HR function, become your HR function, or help with key components of HR. Want to learn more? Request a Free HR Consultation.
Work-Life Balance Has Become Work-Life Integration
Let’s begin with the understanding that some people are going to hate this idea. Work-life integration? Work seeping into all areas of your life at all hours of the day sounds awful, right? Isn’t it already happening? It is likely that most of you thought about an upcoming deadline, had a great idea on that report you needed to finish, or thought about how to approach a coworker about an issue while binge-watching Netflix, right?
Work-life integration is happening whether you like it or not, and it has become a very important work style that allows us to successfully manage our workloads and our home. The key is embracing it correctly and managing it well, resulting in increased engagement and productivity for all involved.
What is Work-Life Integration?
So what is work-life integration? In the past, we commonly referred to work-life balance and stressed to employees the need to separate the two and maintain a balanced life. The idea ties closely to Dolly Parton’s “9 to 5” work reference where the buzzer rings at 5 p.m. and we go home. No work. No email checking. No after-hours phone calls. This was your time for friends and family. You work from 9 a.m. to 5 p.m. and check out for the evening.
Work-life integration on the other hand allows for an integration of work into your “life” activities and vice versa. For example, you could work from home from 6 a.m. until 8 a.m. at which time you stop and run the kids to school. You arrive at the office around 9 a.m. and work till Noon when you hit the gym for your spin class. Come back to the office around 2 p.m. and eat lunch at your desk. Pick up the kids from school at 4 p.m., run an errand, and cook dinner. Hop back on your laptop at 9 p.m. to finish up your work and check missed email. That is integration at its peak. According to UC Berkeley’s Haas School of Business, work-life integration is “an approach that creates more synergies between all areas that define ‘life’: work, home/family, community, personal well-being, and health.”
Today, the boundaries between work and home are incredibly blurry. It’s impossible to think that work doesn’t happen outside of 9 a.m. to 5 p.m. and that “life” doesn’t happen during the hours of 9 a.m. to 5 p.m. To that end, integrating and blending the two worlds seems the most logical solution. But is it really doable? Not only is it doable, it is essential. In 2018, the Harvard Business Review conducted a study on workplace flexibility. In that study, 96% of employees said they need flexibility, yet only 47% reported having access to the types of flexibility they need — a gap of 53%.
Factors to Consider When Implementing Work-Life Integration
There are obviously many factors to consider in engaging in this type of culture and implementing such a program but here are some of the most important factors to consider:
- The job. The most important factor is if the job can allow for such a privilege. Work-life integration is not an option for some positions with limited flexibility. Nursing and those on machine assembly lines for example may not be viable candidates for this type of work style. Don’t just assume, however, that it won’t work. Be creative… even traditional 9 a.m. to 5 p.m. jobs may be able to be adapted.
- Company culture. If your company has never supported this type of integrated work style this may be a challenge. The best approach in combating this is showing the positive impact and letting the company know this kind of flexibility is worth the trouble. Flexibility in work is viewed as one of the top employee perks you can offer. Metlife’s Employee Benefit Trend Survey boasts that 31% of employees interested in “gig work” are interested because of the flexible schedule it offers. Offering an environment that mimics that type of schedule may meet a need for your staff. The results? Increases in productivity, retention, and the happiness factor!
- Managing the expectations. In many instances, management sees these types of programs as a potential for huge areas of abuse. We have all seen situations where this has occurred and the employee who takes advantage of flexible schedules. They are never available, delayed in returning calls and emails, and are more away than at work. For success, management must MANAGE this! Supervisors must keep an eye on performance and actively manage an individual’s work to make this successful. It may take some time to earn the trust but if the manager is keenly aware of the requirements of the job, active performance management will keep this in check. Don’t be afraid to discipline or tighten an employee’s schedule if the program isn’t working. Be clear that it is not a refusal to allow a flexible schedule, but rather their inability to complete work tasks that is the source of the change and try to correct the course. The benefit is a privilege, remind folks of that.
Successful work-life integration allows us to focus on more of a balance and smoothly transition from one to the other. Conference calls in the car during half-time of the game are doable. A vacation away while conferencing in for a client call can be done. No one enjoys the thought of returning from vacation with 300+ emails waiting for us. Integration will allow us to blend these essential parts of our lives and enjoy work and our home life without isolation. Embrace these ideas of integration to meet your company and personal needs.
The Importance of Boundaries
As with all great ideas, there are always words of caution. With work-life integration, it will be essential to maintain boundaries. Boundaries with integration? Isn’t that an oxymoron? Sort of. Always keep in mind that it can be very easy to allow work to creep into everything. It’s important to prioritize and look realistically at expectations and maintain boundaries. Turn the notifications off on your phone during certain hours. Allow the integration, but also allow the downtime. Work already bleeds into your home life in one way or another. Technology has allowed that. Our own desire for instant gratification and responses feed that. Allow it and take advantage of it by allowing yourself some ‘me’ time as well and truly turning off once in a while. Your body and mind will thank you.
Thank you to Patti Dunham, Director, HR Solutions and Lisa Degaro, HR Consultant, both with Strategic HR, for sharing their insights on work-life integration. If you have any questions or would like to share your comments, contact us at info@strategicHRinc.com.
In order to be competitive in both attracting and retaining top talent, organizations have to understand and be responsive to the needs of employees. Clark Schaefer Strategic HR can help you to survey your employees’ needs and put programs and policies in place that promote healthy, productive work environments. To learn more, visit our Employee Relations page.
Does My Company Need an AED?
Question:
AED’s have been mentioned in safety demos and tutorials that I have attended. Does my company need one of these devices? If so, what type of training is needed in order to use it?
Answer:
The safety and well-being of your employees and anyone who visits your place of employment should be top of mind for all organizations. There are many tools and resources that can help with your organization’s first-aid and emergency preparedness, including an AED.
What is an AED?
An AED is an Automated External Defibrillator, which is a portable device that measures the heart’s activity and can deliver an electric shock in order to correct the rhythm of the heart. It can also restore a heartbeat if the heart suddenly stops. An AED is meant to be placed in high traffic locations, and it is designed to be extremely simple for users to operate in times of an emergency.
According to the American Heart Association, there are roughly 350,000 cardiac arrests outside of a hospital setting each year. Cardiac arrest is when a person’s heart stops beating, and blood will stop flowing to the brain, lungs, and other important parts of the body. The person will typically lose consciousness very quickly, and they will die if normal heart function is not restored. Time is crucial in these instances since permanent tissue damage can occur within three to five minutes of loss of blood flow. For every minute the body goes without oxygen, the chances of death increase by 10%. Over 90% of patients that receive a shock from an AED within the first minute of arrest survive.
A study recently published by JAMA Surgery showed that the average response time for emergency medical personnel was roughly seven minutes. This time could increase up to 14 minutes for rural areas. This study drives home the fact that the general public can play a critical role in saving lives if they are trained on the basic skills and tools to help those in their community until medical professionals can arrive. Having an AED in your workplace can play an important role in your company’s emergency preparedness and saving lives.
Where can I find an AED?
There are multiple resources that can help a company pick out the best plan for their AED purchase, placement, maintenance, and training. Make sure to ask the manufacturer or seller about the intended use, storage options, maintenance and training requirements for any AED being considered for purchase. Contact multiple reputable vendors to find the best option for your company.
What type of training does my team need for an AED?
AEDs are designed to be as simple and user-friendly as possible. They often have voice and visual aides to help in their function. Although emergency training is not required in many states, it is encouraged. AED storage and display is also an important factor to consider. According to the American Heart Association, over half of employees do not know where they can find an AED in their workplace. Create an awareness plan to ensure employees know where to find the AED in the case of an emergency. It is commonly recommended to place the AED near the entrance of your building so employees, as well as non-employees, see the device when they enter the building. It is a best practice to have the device marked with a brightly colored “AED” sign.
There are multiple national nonprofit organizations, including the Red Cross and the American Heart Association, that provide online and onsite training to prepare your employees for how to use AED devices. Many local first responder organizations, like fire departments and police departments, can help provide training as well. Be sure to reach out and find the best fit for your organization. Also consider factors such as the size of the company, the costs of the training, the timing of training, and how to create an ongoing training program to keep people up to date in the future.
Strategic HR understands your concerns with the well-being of your employees. We offer expertise in health, safety and security to cover any need you may have from analyzing your safety programs to making sure you are OSHA compliant to proactively ensuring employee wellness. Please visit our Health, Safety & Security page for more information on any of these services.
Do I Have To Pay Employees for the Company Holiday Party?
HR Question:
Our organization is hosting our annual holiday party, and we’re trying to answer a question – do we have to pay our employees to attend?
HR Answer:
It’s that time of year again – the holiday season is here! And with this season come parties and events designed to celebrate this festive time of year, show appreciation for employees and their contributions, and build team camaraderie by gathering together. Plus, in a labor market where employee retention is a primary concern, holiday parties can be a way to provide levity to a stressful time, show an organization’s thanks and commitment, and engage employees (and potentially, their families). But just because it’s a work-sponsored event, does that mean employers have to compensate their employees for time spent at the party?
Do I Have to Pay Employees for the Holiday Party?
In general, employers are not required to pay employees if the company holiday party is considered voluntary and takes place outside of regular working hours. Holiday parties scheduled during the regular workday should be compensated. If the employer requires all employees to attend an event outside of regular working hours, then it may be considered work time and employees should be compensated for attendance. Be sure to follow applicable FLSA requirements as well as any internal policies that you have established.
How Should I Pay Employees for the Company Holiday Party?
If an employee is exempt, their salary covers all work obligations. Non-exempt employees, however, need to be paid for attending in the following situations:
- If attendance is mandatory, non-exempt employees should be paid for the extra time and travel to and from the party (if it’s not held at the regular work location).
- If the holiday party includes work-related activities, such as a meeting and/or team-building exercises, non-exempt employees should be compensated.
- If a non-exempt employee is working at the event including set-up, clean-up, serving, and/or representing the company (i.e., wearing a mascot costume), they should be paid, even if they are working voluntarily. Want to keep internal costs down and avoid placing additional stress on your team? Don’t ask or permit non-exempt employees to work the holiday party.
It’s important to note some employment contracts or collective bargaining agreements may have provisions that require employers to pay employees for attending certain events, including holiday parties. Be sure to keep those agreements in mind when scheduling or factoring in potential costs for a holiday party.
What Else Should I Consider?
As always, whenever there’s alcohol involved, it’s important to keep some of the legal considerations in mind. For example, do you have a plan for handling alcohol? Will there be drink tickets or a cash bar? Do you plan to enforce a drink limit to help avoid DUIs and other potential risks? These and several others are good questions to ask to determine ways to limit the organization’s liability for this event.
In the end, it’s important for employers to communicate clearly about whether attendance is voluntary, and whether employees will be compensated for their time. The goal of a holiday party is to celebrate, relieve some stress, and enjoy spending time with your team – not to force people to gather if it’s not how they want to spend their time.
Thank you to Becky Foster, Senior HR Business Strategist, and Samantha Kelly, Senior Sales and Marketing Strategist, for contributing to this HR Question of the Week.
Do you find yourself without answers to tough Benefits and Compensation questions? Whether you need an analysis of your current benefit offerings, a review of your salary structure, or outsourced payroll/benefits administration, Strategic HR Business Advisors can do the job. Please visit our Benefits & Compensation page for more information or Contact Us.
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 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.
Who’s Using Your EAP
Question:
We just implemented an Employee Assistance Program. What do I need to know about EAP use in order to better share this new resource with employees?
Answer:
Although depression is a primary reason employees call their Employee Assistance Program (EAP), many other services are available. In addition to personal and family counseling, most programs cover substance abuse, grief support, child care, elder care, financial education and legal assistance.
ComPsych, a leading provider in Employee Assistance Programs, recently analyzed data from the millions of calls they handle each year. The published results were quite interesting.
The top four types of EAP calls were:
- Psychological (mental and emotional) 41.7%
- Partner/relationships 19.9%
- Family/child (behavioral issues) 14.3%
- Stress/anxiety 10.5%
Though women callers still outnumber men (61 versus 39 percent), the percentage of men accessing EAP and work-life services has gradually but steadily risen over the past decade. Though fewer men call assistance lines, more men called for help with relationship issues than women (22 versus 18 percent). Furthermore, men were almost five times as likely to call about alcohol and chemical dependency issues.
Why are these statistics important? Because most employees won’t even think to use your EAP until they are in the middle of a crisis. By understanding your audience and their concerns, you can tailor your communications to meet their particular needs. Ask your provider for data on the EAP services most used by your employees. Then create a targeted, year-round communications plan to help employees understand the types of support they can receive and how to take action when they are ready.
How can you promote your EAP?
- Display posters promoting the most-used services, focusing on one issue at a time. If possible, ask your provider to use images of people who reflect your audience. For example, are they blue-collar workers? What’s their age range and ethnicity? Always highlight the phone number and website so employees know where to go for help. And be sure to change the posters frequently, since different services are needed at different times.
- Dedicate a portion of your benefits website to your EAP. List all the services available (putting the most-used at the top of the list) and provide simple instructions on how to get help. Emphasize that all services are provided by a third party who protects their privacy and never shares personal information with the company.
- Promote your benefits website through a direct link on the home page of your intranet.
- Cross-promote EAP services by featuring a variety of stories in your company newsletter, enrollment materials or postcards. Remember, spouses and other family members may not realize assistance is available, so include EAP information in materials sent to homes.
- If a location suffers a natural disaster, such as a hurricane or tornado, actively promote your EAP services. If possible, have representatives from your provider available on site to assist employees and their families through the aftermath.
Statistics show both men and women are taking advantage of a variety of valuable EAP services. By understanding who’s using your EAP and why, you can create a targeted, year-round communications plan that increases awareness, acceptance and usage of your plan.
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.
Strategic HR understands your concerns with the well-being of your employees. We offer expertise in health, safety and security to cover any need you may have from analyzing your safety programs to making sure you are OSHA compliant to proactively ensuring employee wellness. Please visit our Health, Safety & Security page for more information on any of these services.
