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FLSA Safe Harbor Provision

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Question:

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

Answer:

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

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

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

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

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

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Summary of Benefits Coverage

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Question:

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

Answer:

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

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

Well, not so fast.

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

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

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

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

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

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