Hot Topics in Total Rewards

  • 18 Jul 2017 10:14 AM | Bill Brewer (Administrator)


    Skipping preventive care can lead to greater expense later on

    By Stephen Miller, CEBS
    Jul 18, 2017

    One in 4 employees who have dental insurance say they haven't been to the dentist in the past 12 months for regular checkups and routine cleanings due to cost, a new study shows. This indicates that employees may lack adequate understanding about their dental benefits, because dental plans typically cover preventive care, outside of any deductible, the study authors said.

    While a majority of U.S. adults believe dental coverage is a "must-have" employee benefit, only half of employees feel that their employer provides enough information about what is covered under their plan, according to the 2017 dental research study by benefits provider Lincoln Financial Group, which received responses earlier this year from 1,000 adults across the U.S.

    "Consumers may not be taking full advantage of their dental benefits due to a simple lack of knowledge about their insurance plans," said Christopher Stevens, head of dental product management at Radnor, Pa.-based Lincoln Financial. "Often, dental insurance will fully cover the cost of preventive care such as annual or biannual dental checkups and cleanings. If one-quarter of these individuals—who indicated they have dental coverage—responded that they aren't going to the dentist because of cost, they're probably not making that connection."

    Among other survey findings:

    • 65 percent of consumers want their employer to provide general information about what's covered by their dental insurance plan.

    • 54 percent say they'd like their employer to provide a list of local in-network dentists.

    • 34 percent say they would appreciate ratings or rankings of in-network dentists.

    Older Workers Less Satisfied

    Overall, just over half (51 percent) of respondents agreed that their employer was a good resource when they needed to understand exactly what their dental benefits cover, which suggests that employers should step up their communication about their plans, Stevens noted.

    "The share of those satisfied with employer information declines steadily with age, in line with older workers' increased use of dental services," he pointed out. Among older Baby Boomers, for instance, just 34 percent agreed that their employer was a good resource for dental benefit information.

    Addressing Misperceptions

    "Sometimes people forget that they have dental coverage, or how imperative it is to go for regular treatment," said Scott Towers, president of the Eagan, Minn.-based dental division at Anthem, a national health insurance provider. "If you don't have a regular dentist that you see, you aren't getting those reminders that it's time for your next visit," he noted.

    While fear of the dentist—or "dental anxiety"—is one thing that prevents people from getting regular checkups, misperceptions about the cost of routine dental services is also a leading reason why so many go without care, Towers explained.

    For instance, employees facing higher deductibles on their medical plans may not realize that under most dental plans—well over 90 percent—diagnostic and preventive treatment are fully covered outside of a deductible, Towers said. (A similar issue affects medical plan use, with many enrollees not knowing that annual physicals and other preventive health services are fully covered outside of their health plan's deductible.)

    Higher Out-of-Pocket Costs

    While plan enrollees aren't taking advantage of diagnostic and preventive services covered outside the deductible, they are paying more out of pocket for nonpreventative dental services and for plan premiums, Towers acknowledged.

    For instance, while many employers formerly provided dental care as a fully employer-funded benefit, "We've seen an increase in dental insurance as a voluntary benefit, with coverage becoming either fully employee-paid or with employees paying at least 50 percent of the premium cost," Towers explained. A decade ago, a $25 individual deductible and a $1,000 annual maximum for a dental plan were common, but "today, the most frequent plans that we offer have a $50 individual deductible and a $1,500 annual maximum," he said.

    While some employees worry that a dental visit will reveal a need for treatment that they will then have to pay under the deductible, "appropriate preventative dental services ensure that less serious and invasive procedures are needed down the road, especially for adults running into periodontal issues," he said. Avoiding the dentist, in other words, can be expensive—a message that should be emphasized in dental benefit communications.

    Getting the Message Across

    "We're seeing the increasing use of interactive tools, including online apps and digital platforms, where information on dental coverage is provided along with contact links for in-network dentists," Towers said.

    For at-risk populations with chronic medical conditions, "health coaches can reach out to remind them of the impact that their oral health can have on their medical conditions," he noted. For instance, oral infections caused by periodontal disease can pose serious health risks for diabetics or those with chronic heart disease. Care managers can reach out and remind enrollees from at-risk populations when they haven't been to the dentist in six months.

    Under an integrated care management approach, medical, vision and dental insurance typically are still provided through separate plans, but "outreach and communications are coordinated to address care issues across the spectrum of health benefits," Towers said.

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    Source: The Society for Human Resource Management (SHRM)

    https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/dental-benefits-underused.aspx?utm_source=SHRM%20Tuesday%20-%20PublishThis_HRDaily_7.18.16%20(61)&utm_medium=email&utm_content=July%2018%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&spMailingID=29816718&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1082268634&spReportId=MTA4MjI2ODYzNAS2

  • 11 Jul 2017 9:21 PM | Bill Brewer (Administrator)


    By Lisa Nagele-Piazza, SHRM-SCP, J.D.
    Jun 28, 2017

    Navigating California's final pay laws can be tricky, and failing to promptly deliver all wages due to employees can lead to significant penalties. That's why HR professionals should make sure they understand the various requirements under state law.

    Employers that don't comply with final pay requirements will owe the employee waiting-time penalties equal to a day of pay for each day the employer is late—up to a maximum of 30 days.

    "That can be a lot of money," said Jason Barsanti, an attorney with Cozen O'Connor in San Diego. As an example, he said, if an employee was earning $15 an hour and working eight-hour days, that's nearly $4,000 in penalties.

    This situation can be avoided if the employer knows the rules. Additionally, Barsanti said, making employees feel like they are respected, even during the separation process, can reduce the chance of a lawsuit. "You should do everything you can to treat people fairly—be polite, shake their hand—let them know they are valued."

    [SHRM members-only toolkit: Managing Involuntary Employment Termination in California]

    Prompt Payment

    California employees who are fired need to get their final paychecks immediately. If an employee quits, however, the time requirement depends on how much notice the worker provided:

    • An employee who gives at least 72 hours of notice must receive a final paycheck at the time of separation.
    • An employee who doesn't give notice must receive the final paycheck within 72 hours.

    Employers should always err on the side of caution, Barsanti said, noting that issues with delivering a timely final paycheck typically arise when an employee is discharged in a hurry.

    If the termination must happen rapidly—for reasons like theft or violence—HR professionals should consult their legal department and ask what may be the best course of action, he said. The legal department may have an answer or may want to call outside counsel.

    In some situations, employers may want to offer a little extra severance pay to the worker in exchange for a waiver of certain legal claims, Barsanti noted.

    If an employer needs an extra day to get the paycheck cut, it should also give the employee a day's worth of waiting time penalties when the check is delivered. 

    Reporting-Time Pay

    California law requires employers to provide reporting-time pay in certain situations, even if an employee isn't put to work. If a nonexempt employee is sent home before working at least half of a regularly scheduled shift, the employer typically must pay the employee for half of the shift (but for no less than two hours and no more than four hours). This rule doesn't apply in some emergency situations—for example, if there was an earthquake or a public utilities failure and employees were sent home.

    "If the employee is scheduled for eight hours, you must pay four hours," explained Katherine Catlos, an attorney with Kaufman Dolowich & Voluck in San Francisco.

    So, if an employee shows up for a regularly scheduled eight-hour shift and is immediately brought into an exit interview, the final paycheck needs to include four hours of reporting-time pay for that day.

    "If you call an employee in on a nonscheduled day, you should add two hours of reporting-time pay to the final check," Barsanti said.

    Payroll Deductions

    Employers must be careful about what deductions they make from workers' paychecks throughout the entire employment relationship—including at the time of separation. The California Department of Industrial Relations says employers may make payroll deductions that are:

    • Required of the employer by federal or state law, such as income taxes or garnishments.
    • Expressly authorized in writing by the employee to cover insurance premiums, hospital or medical dues, or other deductions not amounting to a rebate or deduction from the wage paid to the employee.
    • Authorized by a collective bargaining or wage agreement, specifically to cover health and welfare or pension payments.

    Employers can't make wage deductions for a cash shortage, a breakage or loss of company property that resulted from an employee's mistake, an accident, or because of simple negligence (as opposed to a willful or grossly negligent act). These are part of the employer's cost of doing business.

    An employee can be disciplined or fired for such mistakes, but employers will get into trouble if they deduct the cost from wages.

    Catlos said employers shouldn't deduct money from a worker's final paycheck for the cost of unreturned uniforms, laptops or other company property.  "Instead, the employer must file in small claims court."

    If the employer provided a worker with a loan or vacation advance, the employer can't deduct the owed amounts from an employee's final wages, said Steve Hernández, an attorney with Barnes & Thornburg in Los Angeles. "The employer would need to recover those amounts from the employee separately from the final paycheck."

    Employers must also ensure that all accrued but unused vacation time or paid time off is included in the final paycheck and is calculated at the employee's final rate of pay.

    Hernández noted that commissions, bonuses or other wages—like severance pay—that are agreed upon in an employment agreement or other policy could also be considered wages earned. 

    Hand-Delivered?

    California law says that an "employee who quits must be paid at the office or agency of the employer in the county where the employee worked." In some circumstances, however, employees who quit can request that their paycheck be delivered by mail or direct deposit.

    If an employee is fired, the final payment must be made at "the place of termination."

    In most situations, the employee's separation will happen at the company's office, so these rules won't present much of an issue, Barsanti said. But there are situations—particularly for remote workers in California—where the termination may need to be done over the phone.

    In those cases, Catlos said, employers can deliver the final paycheck via messenger.

    They could also send the check by overnight delivery. "The cost of overnight mail is worth the ability to track and confirm delivery of the final paycheck," Hernández said.

    Barsanti and Hernández both recommend adding an additional day of pay to cover waiting-time penalties if the check is sent by overnight mail on the day of the termination or if there is any doubt that the final paycheck will be delivered on time.

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    Source: The Society for Human Resource Management (SHRM)

    https://www.shrm.org/ResourcesAndTools/legal-and-compliance/state-and-local-updates/Pages/California-Employers-Final-Pay-Rules.aspx?utm_source=SHRM%20PublishThis_CaliforniaHR_7.18.16%20(18)&utm_medium=email&utm_content=July%2011%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&spMailingID=29730040&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1081403470&spReportId=MTA4MTQwMzQ3MAS2

  • 10 Jul 2017 8:40 AM | Bill Brewer (Administrator)


    Other metrics challenge shareholder return for determining incentive rewards

    By Stephen Miller, CEBS
    Jul 10, 2017

    The value of CEO pay packages has steadily risen as companies shift away from discretionary bonuses and stock options toward more-rigorous approaches to pay for performance, new research finds.

    CEO Pay Trends 2017, the most recent report by Equilar, a Redwood City, Calif.-based compensation research firm, looks at CEO pay at Equilar 500 companies—the 500 largest U.S.-based publicly traded companies measured by revenue—from 2011 through 2016. Top executive pay at these corporations rose an average of 6.1 percent from 2015 to 2016 to a median $11 million—the biggest annual gain since 2013, the researchers found.

    "Median CEO pay packages consistently climbed each year over the five-year study period examined for this report," said Matthew Goforth, Equilar research manager and lead author of the study. "At the same time, boards continue to tweak incentive pay to align CEO interests with both company strategy and shareholder returns over the long term."

    Over the study period, a growing number of companies started granting performance-based long-term incentives (LTI) to their chief executives, reaching 81.5 percent of Equilar 500 companies in 2016. Meanwhile, the prevalence of CEOs receiving time-based stock options fell to a five-year low of 50 percent in 2016.

    Performance-based incentives are awarded on the achievement of predetermined performance goals, whereas restricted stock typically vests over a certain period of time. Stock options mix tenure and performance incentives, in that they allow the options holder to buy company shares at a predetermined price after a specified vesting period; if the stock goes up in value, the options holder can buy it at a discount.

    But increasingly active shareholder groups have opposed using stock options as a long-term incentive, viewing them as too loosely linked to an executive's performance since macroeconomic trends can lift stock prices across the board, irrespective of an executive's leadership.

    "There is no doubt that proxy advisors and large institutional investors have influenced pay design, particularly with respect to the growing use of performance-based equity plans and a continued shift away from stock options, in both prevalence of usage and weight," said Virginia Rhodes, lead consultant at the Atlanta office of Meridian Compensation Partners, a pay consultancy. "These factors, coupled with the expense associated with options, have many companies opting for time-based restricted stock to provide the retentive element in their programs, as needed."

    Among other key findings from the report:

    • The health care sector reported the largest CEO pay packages in 2016 at a median $13.3 million.

    • Median value of stock awards climbed more than 9 percent between 2015 and 2016, and 43 percent since 2012.

    • On average, CEOs received about 32 percent of total reported compensation in cash, 65 percent in equity and 3 percent in other compensation in 2016.

    • Nearly 55 percent of reported LTI mix was performance-based in 2016 at the median, up from 49.9 percent in 2012.

    Companies that filed a proxy statement or disclosed compensation information in an amended 10-K filing by May 1, 2017, were included in the fiscal 2016 year. Only CEOs who served at least one full fiscal year were included in the sample size.

    Executive Performance Metrics

    Another recent Equilar report shows that relative total shareholder return (rTSR) continues to be the most popular measurement tying CEO pay to performance in S&P 500 companies—a sampling of 500 of the largest U.S. companies across a range of industries.

    This metric measures the relative performance of different companies' stocks and shares over time, combining share price appreciation and dividends paid to shareholders.

    However, Executive Long-Term Incentive Plans: Pay for Performance Trends shows that return on capital (ROC) and earnings per share (EPS) saw a bump while rTSR flattened in fiscal 2015—the most recent year for which comprehensive pay data is available for this group of companies.

    "Both compensation committees and shareholders are looking for the best links between pay and performance," Goforth said. "Though rTSR helps balance executive pay with shareholder returns, profits and return on company investments have emerged as consensus picks for tying day-to-day operations to long-term value creation."

    "Many companies are challenged with defining how to measure their success, and who they will measure themselves against, as peer groups are not always easily defined based solely on size or industry sector," added Craig Rubino, director of corporate services for E*Trade Financial Corporate Services in Atlanta. "Similarly, the time period for tracking rTSR can produce varying results, which creates additional complexities to consider."

    For these reasons, companies often include more than one metric, "allowing them to also track performance based on goals like internal restructuring, product growth or other business line measurements," he said.

    Among other performance metric trends cited in the report:

    • Only ROC consistently increased as a CEO-pay metric every year over the study period, rising from 26.1 percent in 2011 to 30.6 percent in 2015.

    • While EPS declined each year between 2011 and 2014, use of this metric in 2015 increased from 27.3 percent of companies to 29.2 percent, though still below its high in 2011 of 34.6 percent.

    When ROC or EPS were included as a performance award metric, they were most commonly weighted 100 percent—in other words, receipt of the award was fully dependent on meeting goals tied to those particular measurements.

    "Most compensation committees want to design clear and understandable incentives, so linking one or two performance metrics to a single award is common," Goforth said.

    Public companies in the U.S. will be required to disclose the ratio of CEO pay to median employee pay in their 2018 proxy statements—reporting on fiscal year 2017—and many are already working through the calculations involved.

    Higher CFO Pay Spurred by Bigger Bonuses and LTI Grants

    Median total direct compensation for chief financial officers (CFOs) at 80 companies in the S&P 500 grew to $4 million in 2016, a new study by HR consultancy Mercer shows. Median long-term incentives (LTIs) increased to $2.2 million and bonuses were paid out at 119 percent of target in 2016, a notable increase over payouts in 2015 of 108 percent.

    Base salary constitutes a smaller percentage of CFO pay while LTIs account for more. "It's not just the CEO whose compensation is being weighted towards variable elements," said Ted Jarvis, Mercer's global director of executive rewards data, research and publications. "All members of the C-suite have basically followed the same trajectory, and we don't see any indication that this trend will reverse."

    Base salary accounted for 21 percent of total direct compensation for CFOs in 2012; by 2016, it had shrunk to 18 percent. Over the same time period, LTIs increased from 57 percent to 59 percent of total pay.

    The CFO to CEO pay ratio, which has hovered around one-third over the past few years, did not change in 2016. However, the range is wide. At the 10th percentile, CFOs earned 24 percent of the CEO's compensation and tended to be more heavily weighted toward base salary. At the 90th percentile, they earned 47 percent of the CEO's compensation.

    "We suspect some of this differential may be related to industry or corporate size," Jarvis said.


    Source: The Society for Human Resource Management (SHRM

    https://www.shrm.org/ResourcesAndTools/hr-topics/compensation/Pages/CEO-pay-packages.aspx?utm_source=SHRM%20Monday%20-%20PublishThis_HRDaily_7.18.16%20(50)&utm_medium=email&utm_content=July%2010%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&spMailingID=29707324&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1081222223&spReportId=MTA4MTIyMjIyMwS2

  • 29 Jun 2017 8:02 AM | Bill Brewer (Administrator)


    Meanwhile, men who won’t disclose compensation earn more than men who do

    By Dana Wilkie
    Jun 29, 2017

    Women who are asked about their salary history during a job interview and who decline to reveal it tend to earn 1.8 percent less on average than women who do disclose their compensation, according to a new survey by PayScale.

    And if men decline to disclose their earnings? They tend to get paid 1.2 percent more on average than men who reveal their compensation.   

    "What we expected was that revealing salary history would have a negative impact for women, but we didn't find that. Instead, refusing had a negative impact," said Lydia Frank, vice president of content strategy at PayScale, which provides compensation data and software. "There's a lot of research out there around unconscious bias that shows that we expect women to be cooperative and collaborative, so when a woman refuses to answer that question, it could rub people the wrong way."

    At least six states or cities have banned—or are considering banning—employers from asking salary history questions: Delaware (effective December 2017); Massachusetts (effective January 2018); New York City (effective October 2017); Oregon (effective January 2024); Philadelphia (effective May 2017, but delayed pending litigation); and Puerto Rico (effective March 2017). California is considering similar legislation.

    By forbidding the question in the first place, women won't be put in the position of having to refuse to answer, Frank said.

    "That's absolutely the advice we're giving to employers: Don't ask the question and put candidates in an awkward position of having to decide whether to answer. It's easy enough to switch to 'salary expectations,' and that's really what the employer and candidate should be talking about anyway—the market rate for the position, not an individual's salary history. If salary history does manage to influence the offer, [that could] lead to internal pay inequities and employee turnover."

    Kris Meade, a partner and chair of the Labor and Employment practice at Crowell & Moring in Washington, D.C., said she's not surprised by the finding.

    "It may provide another piece to the pay equity puzzle," Meade said. "The research shows that women negotiate pay less frequently than men. As a corollary to that, I would expect that women who do disclose, and then negotiate, salary fare better than women who either fail to disclose or actually disclose but don't negotiate. Being prepared to negotiate pay is the key, whether one discloses prior pay or not."

    Joe Schmitt, a shareholder with Nilan Johnson Lewis in Minneapolis, said that although there is social science data suggesting that women can be held to different standards than men when it comes to pay, there is also social science research suggesting that forcing a discussion about compensation is actually helpful to women.

    "The suggestion that compensation is negotiable tends to reduce disparities in starting salaries between men and women, because it makes women more likely to negotiate," he said.  "I believe Payscale's findings reflect that women who disclose their compensation are more likely to negotiate, which in turn is more likely to reduce pay disparities."

    Job Group, Job Title, Industry and Age Influence Candidate Responses

    Between April and June, PayScale interviewed 15,413 respondents who had pursued jobs. The survey asked the following question: At any point in the interview process, did you disclose your pay at previous jobs?

    The available responses were:

    1. No, and they did not ask.
    2. No, but they asked.
    3. Yes, they asked about my salary history.
    4. Yes, I volunteered information about my salary history.
    5. I do not recall.

    PayScale analyzed the responses by industry, job title, job group, job level, gender, age and income bracket.

    When it came to job groups, the most likely candidates to disclose salary history during an interview were those applying for positions in human resources (44 percent), marketing and advertising (43 percent), and accounting and finance (40 percent), the survey found.

    "With HR, if you've been on the other side of the table discussing compensation with candidates, where salary history is something you asked of candidates, being asked yourself might feel pretty typical," Frank said.

    The job candidates least likely to be asked about their salaries were those applying for jobs in values-driven industries such as social services (67 percent weren't asked) and nonprofits and education (61 percent).

    When it came to job level, those most likely to be asked about their salary history—but also among the least likely to disclose it—were people applying for C-suite jobs. Forty percent said they were asked about their compensation (compared, for instance, with 32 percent of individual contributors who were asked), while 26 percent refused to answer the question (compared with 9 percent of individual contributors). Moreover, when these job candidates did refuse to say what they earned, they tended to earn more than those who revealed their salaries.

    "When it comes to higher-paying positions, an employer doesn't want to waste anyone's time—theirs or yours," Frank said. "So making sure you really understand salary expectations for those roles makes a ton of sense."

    As for executive-level candidates' tendency to sidestep the question, "that has to do with confidence," she said.

    "If you know your skills are sought after and you're at a level in your career where you're in a highly paid role, you probably know your value and are more confident in saying, 'Hey I don't really want to talk about my salary; I want to talk about the position and what the role is worth.' "

    In addition, compensation for C-suite employees often encompasses more than base salary and standard benefits—such as a company car, for instance, or equity with the company. Employers may want to know if they can match that compensation before they seriously pursue the candidate, said Elizabeth Washko, co-chair of the Pay Equity Practice Group at Ogletree Deakins in Nashville, Tenn.

    "A candidate with a compensation package that the employer cannot possibly match may not be worth pursuing," she said.

    When it came to industry, those most likely to be asked about their salaries were people applying for jobs in finance and insurance (45 percent).

    "Finance is a pretty compensation-driven and results-driven field," Frank said. "These are people who typically earn commissions and bonuses that [reflect performance]. Knowing a candidate's past [compensation] package helps to determine how high of a performer they are."

    Meanwhile, 49 percent of people applying for such jobs revealed their compensation.

    "If you're a high-performer, you want to brag about that, right?" Frank said. "You want to make it clear that you're valuable."

    The older the survey respondent, the more likely they were to refuse to disclose what they earned: 28 percent of Baby Boomers refused to disclose their salary histories when asked, 22 percent of members of Generation X refused and 18 percent of Millennials refused.

    "Think back on your own career," Frank said. "Essentially, [the interview involves] a power dynamic. The employer's asking you a question and you want to please and you want a job there, so as a young person you don't even question whether you're supposed to answer or not. It's not until over time, after you feel this may have negatively impacted you, do you even think to question whether to reveal" your compensation.

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    Source: Society for Human Resource Management (SHRM)

    https://www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/banning-salary-questions.aspx

  • 23 Jun 2017 10:29 AM | Bill Brewer (Administrator)


    Balance flexibility and fairness when employees ask to tailor benefits to their personal needs

    By Stephen Miller, CEBS
    Jun 23, 2017

    Employees often try to negotiate with their employers arrangements that take into account their individual needs—such as asking for more-flexible work hours, a reduced workload, more pay or special training. These arrangements—known as "idiosyncratic deals," or "i-deals"—are sometimes in the interest of both the employee and employer, especially if such deals make employees more motivated and committed to their jobs.

    But they also can create jealousy, envy and conflict in the workplace, a recent study found.

    The research, published in the January 2017 issue of the Journal of Business Ethics, examined how co-workers view i-deals and looked at practical considerations for managers and HR professionals. The study was conducted in Belgium with responses from nearly 2,000 employees.

    "More and more people want to be treated as individuals with their own special needs, desires and expectations," said study co-author Elise Marescaux, an assistant professor in human resources management at IÉSEG School of Management in Lille, France. "But this can create jealousy, envy and conflict in the workplace."

    In general, i-deals involving financial compensation were viewed to be the most unfair, followed by flexible hours and reduced workloads, the study found.

    The researchers said co-workers are more likely to understand when a company grants nonfinancial benefits because of an employee's personal needs (such as a single parent who has to pick up her children at a certain hour, or an employee who needs to take care of his sick wife). Justifying financial rewards, however, is more difficult, they noted.

    The researchers were surprised to find that a reduced workload was considered the most fair benefit—more so than flexible hours—even though this would presumably mean more work for the team. A possible explanation, they suggested, is that reduced workloads are often granted to address serious health, stress or caregiving issues, while flexible hours are often requested to accommodate routine schedule conflicts or an employee's preference to start and leave earlier or to start and leave later.

    A Fair—and Transparent—Workplace

    "What's behind the results is that it's very important why a person gets an i-deal," Marescaux said. "If employees understand why it's necessary to give someone a specific deal, then they will be much more understanding."

    She warned against trying to keep special arrangements under wraps, especially since i-deal benefits such as a flexible schedule or special training would soon become obvious to fellow employees. "Secrets don't stay secret," Marescaux said. As evidence, she cited the case of a manager who privately—and falsely—told various team members that they were earning more than their co-workers. "It blew up in his face. Everyone found out … and it led to huge distrust toward the manager."

    Practical Considerations

    A manager who offers an employee a special benefit should consider the effect on that person's co-workers, especially when team members depend on one another to get their work done, Marescaux advised.

    "When working in a team environment, giving people special deals is going to be a struggle," she said. One suggestion for managers is to cede decision-making powers about special arrangements—such as flexible hours or a reduced workload—to the group. "If the team gets to decide, then the team will consider it more fair because they made the decision," she noted. In doing so, however, "you lose your power as a manager, which is a tricky thing."

    Barring allowing the group to make the decision, Marescaux recommended that managers:

    • Communicate to the team when benefit accommodations are being made.

    • Justify special arrangements as objectively as possible.

    • Find solutions to practical problems that the deal might create, such as coordination issues among co-workers.

    ***** ***** ***** ***** ***** 

    Source: Society for Human Resource Management (SHRM)

    https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/special-benefit-arrangements.aspx?utm_source=SHRM%20Friday%20-%20PublishThis_HRDaily_7.18.16%20(52)&utm_medium=email&utm_content=June%2023%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&spMailingID=29507344&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1062952067&spReportId=MTA2Mjk1MjA2NwS2

  • 23 Jun 2017 9:53 AM | Bill Brewer (Administrator)


    Annual employer reporting would remain but would be less burdensome

    By Stephen Miller, CEBS
    Jun 23, 2017

    The health care bill released by the Senate this week closely hews to the bill that was narrowly approved by the House, at least with regard to employer-sponsored group health plans.

    On June 22, the Senate made public the Better Care Reconciliation Act (BCRA), its measure to repeal and replace key sections of the Affordable Care Act (ACA). The House passed its version of a replacement bill, the American Health Care Act (AHCA), on May 4. If the Senate approves its bill, which is not expected to receive any Democratic support, the Senate and House versions would need to be reconciled by a joint committee.

    "The Senate proposal largely mirrors the House measure with some significant differences," said Ben Conley, a partner with law firm Seyfarth Shaw in Chicago and a faculty member of the nonprofit Health Care Reform Center and Policy Center. For instance, both bills would:

    • Eliminate employer mandate penalties and ease employee tracking/reporting requirements. Under the ACA, employers with 50 or more full-time employees or full-time equivalent employees are required to provide ACA-compliant health insurance or pay a penalty. Both the House and Senate bills would reduce the penalty to zero for failure to provide minimum essential coverage. Without these penalties, follow-up regulatory changes could reduce reporting and notification requirements, benefit attorneys said.

    • Eliminate individual mandate penalties. Under current law, most individuals are required to purchase health insurance or pay a penalty. The bill reduces the penalty to zero for failure to maintain minimum essential coverage.

    • Keep but delay the "Cadillac tax," and eliminate other levies. The ACA imposed a 40-percent excise tax on the value of employer-sponsored health plans exceeding $10,200 for individual coverage and $27,500 for family coverage, indexed for inflation. Both the House and Senate bills would delay the excise tax, now set to take effect in 2020, until 2026 and end all other ACA taxes on employers.

    • Raise health savings account (HSA) contributions. The Senate bill, like its House counterpart, would nearly double annual HSA contribution limits above the current limits (for 2017: $3,400 for self-only coverage and $6,750 for family coverage), making the cap equal to the out-of-pocket maximums that apply to high-deductible health plans (for 2018: $6,650 for self-only coverage and $13,300 for family coverage).

    • Repeal tax increases on HSAs. The ACA imposed a 20-percent tax on distributions that are not used for qualified medical expenses. The House and Senate bills lower the tax rate to 10 percent and allow individuals to use HSA funds for over-the-counter medical items.

    • Repeal the limit on contributions to health flexible spending accounts (FSAs). The ACA limited the amount an employee may contribute to a health FSA to $2,500 indexed for inflation, with the 2017 limit set at $2,600. This BCRA, like the AHCA, would repeal these annual limits and allow FSAs to reimburse over-the-counter medications.

    Essential Health Benefits

    Like the House bill, "The Senate bill allows states to repeal essential health benefits mandated by the ACA, including things like maternal care and mental health care," said Shan Fowler, senior director of product strategy at Benefitfocus, a Charleston, S.C.-based provider of cloud-based benefits software. He noted that a poll released last fall by the International Foundation of Employee Benefit Plans showed that nearly 3 in 4 employee-benefits professionals support essential health benefits, and more than 4 in 5 support mental health benefits in particular.

    Differences from the House Bill

    In the House version of the bill, health care subsidies were tied to age, so the older a person is, the more assistance he or she would receive in paying for health insurance. In the Senate version of the bill, subsidies would be tied to income, as they are in the ACA.

    While largely maintaining the ACA's premium subsidies structure, the Senate bill would tighten the eligibility criteria starting in 2020. "Maintaining the income-based subsidy structure may keep costs lower than under the House plan but it limits subsidies to those making 350 percent of the federal poverty level, as opposed to the ACA's 400 percent," Fowler said.

    The Senate also backs away from the House bill's provision that would allow states to opt out of requiring health plans to provide equal access to those with pre-existing conditions.

    ACA Reporting Requirements

    The Senate bill "doesn't appear to differ from the House bill with respect to annual ACA information-reporting by employers," Conley said. As with the House's American Health Care Act, "even in the absence of an individual or employer mandate, if there is a tax credit and that tax credit is conditioned, in part, on whether your employer has offered you qualified health insurance coverage, the IRS needs to know whether the employer offered you qualifying health insurance coverage," he explained.

    However, eliminating the individual and employer mandate penalties would allow federal agencies to simplify employer reporting. For instance, "there would be a reduced burden in that you no longer have to track full-time staff for purposes of offering coverage to individuals working 30 or more hours a week; that piece would drop off." He further noted, "there likely will be no [Form 1095] Line 16 reporting for the employer mandate safe harbor, given that the employer mandate penalty would be zeroed out."

    After 2019, when the new provisions would take effect, "presumably, the IRS could move to modify employers' reporting requirements, and they could even do so before 2019," Conley said.

    Cadillac Tax Persists

    The Senate bill "fully repeals every other tax imposed by the Affordable Care Act, and the same must be done for the Cadillac tax to avoid harming the 1 out of 2 Americans who receive health coverage through their employer," said a statement by the Alliance to Fight the 40, which advocates repeal of the tax.

    Boost for HSAs

    "The language and updates to the Senate bill regarding health savings accounts have carried over, unchanged, from the House bill," Fowler said. "It would change the annual HSA contributions to line up with maximum out-of-pocket amounts. This change is positive for the growing number of employees and individuals with high-deductible health plans and HSAs," as it will help them save more today to prepare to manage future health care expenses.

    ACA Market Reforms Kept

    "Popular ACA market reforms would remain in place," said Robert Projansky, a partner with law firm Proskauer in New York City. "These include, among other things, mandated dependent coverage to age 26, first-dollar coverage of preventive care, prohibition on annual and lifetime dollar limits, and prohibition on preexisting condition exclusions."

    While both the House' and Senate bills repeal the ACA's individual mandate penalties, "the AHCA included a premium surcharge to be applied on insurance purchased on the individual market following a break in coverage of more than 63 days," Projansky noted. "This, at least, provided some financial incentive for individuals to maintain insurance coverage. The BCRA does not provide any financial incentive to maintain continuous insurance coverage."

    Next Steps

    The Senate bill will shortly be "scored" by the Congressional Budget Office (CBO), which will estimate how many additional Americans would go without health insurance under the plan and how passage would affect federal spending. After the CBO score, the Senate will vote on the bill. If the bill passes, it would go to joint committee where the House and Senate versions would be reconciled. That final bill, depending on the scope of its changes, may again need to be approved by the House and Senate.

    "With 52 seats in the majority party, Senate leadership can only afford to lose two Republicans, with Vice President Mike Pence breaking the tie," said Chatrane Birbal, senior advisor for government relations at the Society for Human Resource Management.

    SHRM "has not yet taken a formal position on the Senate's proposal as we are still reviewing the full legislative text," Birbal said. Similarly, SHRM did not formally take a position on the House-passed bill, "as we remain concerned about its potential implications on employer-sponsored coverage, and the health care coverage these plans provide to over 177 million Americans. SHRM does support the reduction of the employer mandate penalty and looks forward to working with Congress to repeal the mandated employer coverage and reporting requirements, which are an administrative and financial burden to employers."

    She added, "SHRM applauds the inclusion of a six-year delay of the ACA excise tax on health care plans but will continue to advocate to fully repeal the tax. Furthermore, SHRM fully supports the repeal of the restrictions on the use and limitations on contributions to health savings accounts and flexible spending accounts."

    ***** ***** ***** ***** *****

    Source: Society for Human Resource Management (SHRM)

    https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/Senate-BCRA-mandates-reporting-taxes.aspx?utm_source=SHRM%20Friday%20-%20PublishThis_HRDaily_7.18.16%20(52)&utm_medium=email&utm_content=June%2023%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&spMailingID=29507344&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1062952067&spReportId=MTA2Mjk1MjA2NwS2

  • 13 Jun 2017 9:29 PM | Bill Brewer (Administrator)


    Adoption rate of loan repayment benefits still low, despite much attention

    By Stephen Miller, CEBS
    Jun 14, 2017

    Although employers that help repay their workers' student loans report that it boosts morale and productivity—and that this aid is especially valued by Millennials—only 4 percent of Society for Human Resource Management (SHRM) members say that their organizations offered this benefit in 2017, the same percentage that provided this assistance a year earlier and just one percentage point more than offered it in 2015.

    17-0752 student loan graph 1-2.jpg

    (Click on graphic to view in a separate window.)

    The SHRM 2017 Employee Benefits survey report will be released June 19. The findings are based on a January/February poll of randomly selected SHRM members, with 3,227 HR professionals responding.

    "Sometimes when big companies offer certain benefits, it gets a lot of media coverage, but that doesn't mean it's actually changing in overall prevalence," said SHRM researcher Tanya Mulvey, the survey project leader.

    "Employer-provided loan repayment assistance is still relatively new and it can be a high-cost benefit for employers," said Evren Esen, director of SHRM's survey programs. However, "it is especially attractive to younger workers with highly valued skills." Over time, she believes, "this benefit could see future growth."

    There are 44 million Americans with student loan debt, bringing the total U.S. student debt burden to more than $1.3 trillion, the federal government estimates. "Early evidence has shown that employer repayment assistance can reduce the time needed to retire an average student loan balance by four years," noted Scott Thompson, CEO of Tuition.io, a student loan contribution platform.

    Mostly a Mega-Corporation Benefit?

    A January 2017 survey report by WorldatWork, an organization of total rewards professionals, also showed that 4 percent of employers overall provided a loan-repayment benefit but that the largest of the corporate giants were the most likely to do so.

    17-0752 student loan graph 2-2.jpg

    The WorldatWork survey was conducted in August 2016 with 730 responses from total rewards professionals, predominantly at large North American firms.

    Tax Hurdle

    An obstacle to providing student loan repayment assistance is that, at present, employers can't claim a deduction for these payments, which also are taxable income for the recipients.

    "For employers considering a student loan repayment benefit option, they will need to remember that this is considered taxable income to the employee, unlike the familiar tuition reimbursement that provides employers with a deduction up to $5,250 paid on behalf of the employee," advised Bobbi Kloss, HR director at Benefit Advisors Network (BAN), a consortium of health and welfare benefit brokers across the U.S.

    Proposed legislation now before Congress would allow employers to provide loan repayment assistance with pretax dollars. SHRM supports the bipartisan Employer Participation in Student Loan Assistance Act (H.R. 795), which would amend Section 127 of the Internal Revenue Code, introduced Feb. 1 in the House with 23 co-sponsors.

    Aiding Recruitment

    Loan-repayment aid seems most likely to be offered by businesses facing difficulty in recruiting employees with in-demand skills, whether that be nurses, financial analysts or software designers, and by those that want to differentiate themselves as attractive to recent graduates and younger workers. "This may be a benefit that certain organizations are using if they are having a difficult time recruiting certain types of talent, for whom this would be a lucrative benefit," Mulvey said.

    For the class of 2017, "nearly 70 percent of college graduates will be strapped with student loan debt, with the average undergraduate student facing $30,100 in loans," said Tim DeMello, CEO of Gradifi, an employee-benefit student loan repayment platform. "This generation is made up of tech-savvy and hard-working people who want to work for companies that are passionate about what they do, and who also care about their employees."

    Millennials and Others

    Older workers also are financially overstretched by student debt, shows a recent survey of 909 people 35 and older who have a student loan. According to the survey by IonTuition, a firm that helps borrowers manage these loans:

    • Over 37 percent of respondents had fallen behind on their student loan payments.

    • 43 percent reported being unable to prepare properly for retirement due to their student loans,

    • 36 percent would prefer student loan repayment benefits, such as contribution matching or automatic payroll deductions, over a 401(k).

    • 29 percent would prefer student loan repayment benefits over health benefits.

    "The impact of student loan debt on Millennials is widely discussed, but we were interested in exploring how student loan debt affects the financial wellness of older generations," said IonTuition CEO Balaji Rajan. "Businesses have a unique opportunity to help workers of all ages."

    Respondents taking out or cosigning student loans for others are also struggling. "Nearly half of Gen Xers and Baby Boomers who cosigned for loans are concerned that the borrower may not pay back their loans," he added.

    Tuition Assistance Dips

    While SHRM found that more employers are providing financial advice, training and tools to employees, direct financial assistance with graduate and post-graduate education has declined. 

    Educational Assistance Benefits

     


    2013

    2015

    2017

    Undergraduate educational assistance

    61%

    56%

    53%

    Graduate educational assistance

    59%

    52%

    50%

    529 plan payroll deduction

    14%

    11%

    11%

    Educational scholarships for members of employees' families

    --

    11%

    11%

    Employer-provided student loan repayment

    --

    3%

    4%

    Employer contribution or match for 529 plan

    --

    --

    2%

    Source: Society for Human Resource Management, 2017 Employee Benefits report.

     


    Organizations that decreased their benefits offerings in the past 12 months most commonly did so to remain financially stable when facing rising costs of benefits, economic pressures or poor organizational performance, SHRM's report noted.

    However, given the employee skills gap confronting employers, seeking to cut costs by reducing educational benefits may be short sighted and even counterproductive. "Investing in employees' tuition isn't a benefit cost but rather a valuable investment that positively impacts organizations' bottom line," said Jamie Merisotis, president and CEO of Lumina Foundation, a nonprofit that focuses on increasing the share of Americans with degrees, certificates and other credentials.

    The foundation partnered on a recent study of health insurer Cigna's education reimbursement program that showed each dollar the company spent on tuition assistance generated an additional $1.29 in savings—a 129 percent return on investment—due to reduced turnover and lower hiring costs.

    ***** ***** ***** ***** *****

    Source: The Society for Human Resource Management (SHRM)

    https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/student-loan-assistance-benefit.aspx

  • 31 May 2017 8:18 AM | Bill Brewer (Administrator)


    Economic growth is picking up, but will wages keep pace?

    By Stephen Miller, CEBS
    May 31, 2017

    In the U.S., salary increase budgets are expected to grow by 3.2 percent in 2018, up from a 3.1 percent increase in 2017 and 3.0 percent in 2016, according to a May forecast.

    Salary budgets represent funds that employers are planning to spend on employee compensation but do not necessarily represent the average salary or wage increase that workers will receive.

    The 2018 pay projections were reported in Planning Global Compensation Budgets for 2018 by ERI Economic Research Institute, a compensation analytics firm in Irvine, Calif. The firm's projections are based on data from over 20,000 companies and analysis of government statistics, such as the following:

    • Gross domestic product in the U.S. is expected to increase by 2.5 percent next year, up from 2.3 percent in 2017 and 1.6 percent in 2016—an improvement but below the Trump administration's goal of 3 percent growth for the economy.

    • Inflation is forecast to slow to 2.4 percent, down from 2.7 percent this year but higher than the 1.3 percent reported for 2016.

    • The unemployment rate is predicted to fall slightly to 4.6 percent, down from 4.7 percent this year and 4.9 percent in 2016.

    17-0704 economic forecast 2.jpg


    Investing in Workers

    "The 2018 projections indicate salary increase budgets throughout the majority of the world between 2 percent and 5 percent," said Linda Cox, CCP, global total rewards expert at ERI Economic Research Institute. "The global economy seems to be gaining momentum," she noted, and the U.S. economy is expected to expand due to the current administration's eased fiscal policy, among other factors.

    However, wages haven't kept up with rising productivity in the U.S. and elsewhere, while technology has driven the decline in labor's share of national income, Cox pointed out. (For a different viewpoint, see the box below.)

    For employers, the economic recovery provides "an opportunity to look at their total rewards strategies and practices" to ensure fair distribution of rewards based on performance for all employee groups, Cox said.

    Employers should also ask whether they are preparing their workforce for technological advances, such as artificial intelligence, that will continue to displace jobs.

    "A breakthrough in technology fundamentally changing the way people work also requires an investment in human capital to prepare employees for the future," Cox noted.

    Wage Growth Is Low but So Are Inflation and Productivity

    Forecasts based on economic data are subject to interpretation, and different economists will judge differently whether the glass is half full or half empty.

    Over the last 24 months through March, for instance, U.S. inflation has been pegged at 1.4 percent a year and productivity growth at 0.6 percent, Neil Irwin, senior economics correspondent for The New York Timesrecently reported.

    "Those are very low numbers," Irwin noted, and "you may expect average worker wages to have risen only 2 percent." However, "the average hourly earnings for nonmanagerial private-sector workers rose 2.4 percent a year in that period," which is "more than we might have expected, with inflation and productivity so weak."

    "If anything," Irwin wrote, "the numbers show that workers are capturing more than their share of the spoils from a growing economy."


    Source: Society for Human Resource Management (SHRM

    https://www.shrm.org/ResourcesAndTools/hr-topics/compensation/Pages/2018-salary-budget-forecast.aspx?utm_source=SHRM%20Wednesday%20-%20PublishThis_HRDaily_7.18.16%20(54)&utm_medium=email&utm_content=May%2031%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&spMailingID=29205464&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1044136149&spReportId=MTA0NDEzNjE0OQS2


  • 27 May 2017 6:52 AM | Bill Brewer (Administrator)


    Plan sponsors could be liable for advice that is not in participants' best interest

    By Stephen Miller, CEBS
    May 25, 2017

    In the wake of Labor Secretary Alexander Acosta's announcement this week that the Department of Labor won't further delay the Obama administration's controversial fiduciary rule, retirement plan sponsors should ensure that any investment advice they help plan participants receive isn't conflicted due to advisor fees.

    Last month, the DOL put a 60-day hold on implementing the rule, delaying the date by which retirement advisors must act as fiduciaries from April 10 to June 9, 2017. The DOL also delayed parts of the regulation related to the best interest contract (BIC) exemption, which allows so-called conflicted compensation to be paid under certain conditions, until Jan. 1, 2018. Commissions and revenue-sharing payments are examples of conflicted compensation.

    In a May 23 Wall Street Journal op-ed (posted online the evening of May 22), Acosta wrote that the fiduciary rule will take effect as presently scheduled but that the DOL will seek public input on subsequently revising it.

    Many financial service providers had called for a further delay of the rule, saying its requirements are overly burdensome on advisors, increase the likelihood of participant lawsuits, and will require participants or plan sponsors to pay higher flat fees for advice.

    Acosta, however, wrote, "We have carefully considered the record in this case, and the requirements of the Administrative Procedure Act, and have found no principled legal basis to change the June 9 date while we seek public input. Respect for the rule of law leads us to the conclusion that this date cannot be postponed."

    He added, "Trust in Americans' ability to decide what is best for them and their families leads us to the conclusion that we should seek public comment on how to revise this rule."

    At the same time, the DOL issued two new pieces of guidance:

    • The Temporary Enforcement Policy on Fiduciary Duty Rule states that during the phased implementation period ending on Jan. 1, 2018, the DOL won't pursue claims against fiduciaries "who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions."

    • Conflict of Interest FAQs (Transition Period) is a new set of frequently asked questions (FAQs) and answers to help financial services firms implement the rule.

    "While the June 9 applicability date is firm, it is not beyond the realm of possibility that the date on which the transition period ends, Jan. 1, 2018, could be delayed," said Marcia Wagner, managing director of Boston-based Wagner Law Group. "The FAQs indicated that the DOL is still conducting the review of the fiduciary rule mandated by the White House and that the DOL intends to issue a new Request for Information regarding possible changes to the fiduciary rule."

    HR's Role—and Risks

    Plan sponsors that arrange for participants to receive advice that is conflicted or otherwise not in their best interest could face class-action lawsuits, benefits attorneys said. "Most retirement plan sponsors have a hazy understanding about what a fiduciary is and if their advisor is acting as one," warned Robert Lawton, president of Lawton Retirement Plan Consultants in Milwaukee. "The HR person will have to look at the fees and the new contracts" from their financial services vendors and ensure that they meet the new standard, Wagner advised.

    The fiduciary standard requires that an advice provider act in the best interest of plan participants, receive only reasonable compensation and refrain from making misleading statements, said Erin Sweeney, a benefits attorney with Miller & Chevalier in Washington, D.C. "Notably, the DOL advised that the agency would not enforce the impartial conduct standards until after Jan. 1, 2018, provided the advice providers are 'working diligently and in good faith to comply,' " she noted.

    The DOL also clarified that until Jan. 1, "as long as advice providers adhere to the impartial conduct standards in making recommendations, that the advice providers would not violate existing exemptions even if new compensation systems are not yet implemented," Sweeney said.

    However, "As DOL acknowledged, its enforcement policy does not bar participant lawsuits during the transition period," explained Julia Zuckerman, J.D., a director at Conduent HR Services, and Marjorie Martin, a principal at Conduent's Knowledge Resource Center. "This means that, as of June 9, 2017, participants can bring class-action lawsuits against fiduciaries under the final rule for breaches that occur on or after that date."

    In crafting the rule, "the DOL aimed to broaden the scope of fiduciary investment advice and thereby make it easier for it, and participants, to establish fiduciary liability," they added. "Although the DOL's focus on compliance assistance during this transition period is helpful, plan sponsors may still face litigation risk via participant lawsuits."

    "With the fiduciary rule's applicability date now locked in, sponsors should understand the effect of the rule on everyday interactions with plan participants," said Dominic DeMatties, a partner at Alston & Bird in Washington, D.C. "In addition, sponsors should keep an eye on, and may wish to be involved in, the continuing regulatory review and process associated with the rule at the Department of Labor for additional changes, in particular as the next enforcement deadline, Jan, 1, 2018, approaches."


    Contrasting Views on the Fiduciary Rule

    "Access to retirement products and services will decrease, retirement services will become more expensive [and] investment choices and options will be limited" if the fiduciary rule takes effect, the U.S. Chamber of Commerce contended. The chamber referenced a 2017 survey by the National Association of Insurance and Financial Advisors that found "nearly 90 percent of financial professionals believe consumers will pay more for professional advice services" with the rule in place.

    But "the rule would expand the fiduciary duty standard to cover brokers advising people seeking advice about retirement investments, which currently allows them to steer clients toward the products that make themselves more money at the expense of their clients' needs," argued ThinkProgress, which advocates for liberal public policies. The group cited Obama administration claims that "Americans lose an estimated $17 billion a year to this conflicted advice every year." 


    Source: Society for Human Resource Management (SHRM)

    https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/fiduciary-rule-acosta-no-delay.aspx

  • 23 May 2017 8:07 AM | Bill Brewer (Administrator)


    A small percentage of employers might drop health care coverage altogether

    By Allen Smith, J.D.
    May 23, 2017

    Approximately 1 in 5 employers (20 percent) anticipate modifying eligibility requirements for health care coverage if the Affordable Care Act (ACA) is repealed, according to the results of a health care and employment law survey released by Littler.

    The survey recorded responses from 1,220 in-house counsel, HR professionals and C-suite executives from a range of industries who answered questions about health care reform and state and local law changes that affect employers.

    The ACA broadened the base of employees covered by health care, mandating that those who work 30 hours or more a week be offered coverage, noted Steven Friedman, an attorney with Littler in New York City. If the ACA is repealed, "I would be very surprised if employers didn't cut back on eligibility to where they were before the ACA," he said. Before the ACA, "many employers set the bar far higher than 30 hours a week to be considered full-timers," he noted; 40 hours was much more common.

    The survey also found that if the ACA is repealed:

    • 28 percent of respondents would not be affected, as they did not offer coverage to additional employees as a result of the law.
    • 18 percent would allow more employees to work over 30 hours per week given that it would not trigger a requirement to offer health insurance.
    • 17 percent would increase premiums or cost-sharing.
    • 4 percent would drop health insurance coverage for some full-time employees.

    "Even though employers would save money if they cut back on coverage, there is the question of how such a change would impact employee morale and employee relations," Friedman said.

    In the version of the American Health Care Act that passed the House of Representatives May 4, "the number of people who may be eligible for some subsidy may be greater than those entitled to a subsidy under the ACA," he added. "Overall, employees may receive less money but over a wider swath of the population," he explained, noting that there could be tax credits that phase out at incomes between $75,000 and $115,000. This "could make employers think about whether they should continue to provide a subsidy to employees when the government provides it," he said. However, he added, "Employers still feel heavily invested in providing health care to employees."

    State Pre-Emption Laws on the Rise

    Businesses have been challenged by the multitude of local laws imposing higher minimum wages, banning questions on job applications inquiring about criminal history and mandating paid sick leave, among other requirements.

    "With the Trump administration working to overturn labor and employment rules and to reduce regulations at the federal level, employers can expect a continued increase in new regulations impacting the workplace at the state and local levels," said Michael Lotito, an attorney with Littler in San Francisco and co-chair of the Workplace Policy Institute.

    "If there is any hope for more consistency, it may emanate from the recent surge of pre-emption bills under consideration in various states," according to the survey report. "At least half of the states have already passed measures precluding localities from imposing various types of additional requirements on private-sector employers; at least a dozen new pre-emption measures are currently pending."

    These pre-emption laws typically are being enacted in states with Republican Houses and Senates as well as governors but that also have progressive cities, Lotito said. He expects to continue to see this type of pre-emption.

    The survey report noted that due to changes in state and local laws impacting employers:

    • 85 percent of employers updated their policies, handbooks and HR procedures.
    • 54 percent provided additional training to supervisors and employees.
    • 50 percent conducted internal audits.
    • 10 percent reduced working hours for staff.
    • 7 percent made no change.
    • 4 percent considered moving the business from its current location.

    While some states are pre-empting local laws, other states are adding employment law requirements. The survey found that the following percentages of employers had laws at the state or local level that impacted their businesses:

    • 59 percent had paid-leave mandates.
    • 48 percent had "ban-the-box" and other laws restricting employer use of criminal and credit history.
    • 47 percent had minimum-wage increases.
    • 36 percent had legalization of marijuana provisions.
    • 24 percent had gender pay equity measures.
    • 18 percent had employee scheduling laws, requiring advance notice of schedule changes.

    Trump Priorities

    Survey respondents said they expected the following developments under the Trump administration:

    • Health care reform would be a priority during the administration's first year (89 percent).
    • Immigration reform would be emphasized (85 percent).
    • Reducing the outsourcing of jobs from America would be prioritized (51 percent).
    • Income equality measures, such as raising the minimum wage and overtime pay, could be opposed (35 percent).
    • National Labor Relations Board (NLRB) decisions would be challenged (33 percent).
    • Regulations and enforcement around the use of independent contractors would be eased (23 percent).

    Survey respondents said they hoped for the following:

    ***** ***** ***** ***** *****

    Source: Society for Human Resource Management (SHRM)

    https://www.shrm.org/ResourcesAndTools/legal-and-compliance/employment-law/Pages/compliance-survey-2017.aspx?utm_source=SHRM%20Tuesday%20-%20PublishThis_HRDaily_7.18.16%20(54)&utm_medium=email&utm_content=May%2023%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&restr_scanning=silver&spMailingID=29110116&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1043087006&spReportId=MTA0MzA4NzAwNgS2 

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