Hot Topics in Total Rewards

  • 01 May 2017 1:38 PM | Bill Brewer (Administrator)

    Bill O'Reilly

    Companies must decide how much it's worth to put a controversy behind them

    By Stephen Miller, CEBS
    Apr 24, 2017

    When businesses pay severance packages to well-known company leaders or star talent accused of wrongdoing—or of just doing a bad job—are they getting their money's worth?

    Last week, the Fox News Channel announced that Bill O'Reilly, the anchor of its highest-rated prime-time show, "The O'Reilly Factor," would be parting ways following news reports that he and Fox had, over the past decade and a half, settled five sexual harassment allegations for about $13 million.

    O'Reilly has denied the accusers' claims.

    After the announcement, several media outlets, citing inside sources, reported that Fox would pay O'Reilly a severance package worth up to $25 million—about one year's pay under his recently renewed contract.

    Critics were outraged at Fox News over a deal giving O'Reilly almost twice as much as the women who said they were victimized by him received. That, in turn, was bad news for the network's corporate parent, 21st Century Fox, which shares common ownership with News Corp.

    Making matters worse, last year Fox News cut ties with its founding CEO Roger Ailes, reportedly paying him severance of $40 million amid allegations of sexual harassment and settlements with several female employees, including former anchorwoman Gretchen Carlson. Adding to the bad publicity, CNN reported that Ailes' "lifestyle isn't suffering. He recently bought a $36 million oceanfront home in Palm Beach, Fla."

    Generous severance packages are sometimes referred to as golden parachutes, although sticklers say that this phrase properly applies to payments triggered when an executive is terminated following a takeover or merger. Whatever the terminology, paying those accused of wrongdoing more money than their purported victims receive—and many times what lower-level employees will earn over their entire careers—is what public relations pros call "bad optics."

    The reason why scandal-plagued companies are willing to pay millions in severance to allegedly bad actors is because they believe it's the best way to put a crisis behind them and move on, explained Alan Johnson, managing director at Johnson Associates, an executive pay consultancy in New York City.

    The Best of a Bad Situation

    It's common for employment contracts with highly paid talent to have clauses allowing for dismissal without severance if the employee engages in unethical or criminal behavior, Johnson said.

    "But none of the allegations against O'Reilly have been proved in a court, and the settlements all stipulated that O'Reilly didn't admit to any wrongdoing. So Fox News had to consider that O'Reilly probably would have sued the company if it didn't pay him a substantial severance package, and that the suit, as it was litigated, would have continued to keep the scandal in the public eye"—and perhaps highlighted a perceived inattention toward sexual harassment at the company.

    Employers in this situation "have to balance their legal rights not to pay severance with the negative effects of a prolonged negotiation or trial," Johnson said.

    A key role for corporate risk managers and HR chiefs "is to make sure that the board of directors and the CEO are fully aware about the risks of losing litigation or from bad publicity, and that they are fully informed about what their choices are. The board shouldn't be asking, after the fact, 'Why did we give him $25 million, what's that all about?' "


    Fixing Fox’s Corporate Culture

    HR executives' responsibilities include preventing toxic corporate cultures that enable sexual harassment—or working to remedy bad cultures that are already in place. Following O'Reilly's dismissal, the Washington Post reported that:

    Fox has brought on a new human resources director, and all employees have now undergone “sensitivity training,” company officials said. And the New York-based news operation has assigned a human resources employee to work out of its large Washington bureau.

    Such moves could address workplace and financial concerns: Companies that spend large sums settling sexual-harassment complaints can draw the ire of shareholders.


    "After seeing what Fox went through, companies are now likely a bit more sensitive to the possible PR damage that a harassment claim can do," noted Tom Spiggle, principal at The Spiggle Law Firm in Washington, D.C.


    News-Making CEO Severance

    While O'Reilly's departure, like Ailes' before him, stemmed from allegations of unethical and possibly illegal conduct, headline-generating severance packages more typically involve CEOs let go because their companies have hit a rough patch, Johnson noted. For instance:

    In situations where terminations are not "for cause," such as unethical or illegal conduct but because "it's just time for a change," the issues faced by boards of directors—advised by pay consultants and, frequently, HR chiefs—involve how much severance the executive has a contractual right to, and whether that amount might be excessive, Johnson explained.

    "Sometimes the payouts are just too big, representing two or three years of pay," plus sweeteners such as full vesting in long-term incentive programs, deferred compensation and executive pension plans, he noted.

    "If you're in human resources, you should make sure that severance obligations don't become excessive. Look to filings of other public companies and make sure that your agreements or policies are competitive. If they're more generous than competitive, then everybody should know that and the reasons why."

    As with the termination of any employee, he added, the question is whether the severance is fair and reasonable. "Sometimes these agreements get put in place and people just don't pay enough attention to them," Johnson said. "Then you end up paying more than you should."

    When CEOs don't have contracts, "you're negotiating from a clean sheet of paper but, as with Bill O'Reilly, you don't want to have extended litigation and you don't want the ousted CEO to badmouth you, publicly or privately. You just want him or her to go away. You also want to set a precedent for other executives so they know that, even without contacts, if the arrangement ends they'll be treated fairly."

    Be Prepared

    To avoid bad situations becoming worse, Johnson recommended these preparations:

    • Do your analysis. "Look at what other CEOs and senior talent in similar situations received when they were terminated. Then you'll have data to back your offer, the CEO's lawyers will have their data to support the target they want, and usually you'll end up somewhere in the middle."

    • Have consistent, reasonable policies in place. To avoid getting mired in negotiations, have reasonable severance policies with stated dollar figures in place to start with, "then you can just say, 'Hey, that's the deal, that's all you're getting,' Johnson noted. "If you don't have that ahead of time, usually it ends up costing the company more because the terminated CEO may be in no hurry to settle, while the company wants to get this over and done with and get the new person off and running."

    • Review your policies from time to time. Make sure the dollar amounts are still reasonable and reflect the real word, "so when these unfortunate things happen, everybody is treated fairly and there's a minimum of hard feelings," advised Johnson, who compared it to putting in place "a prenuptial agreement in case of termination."

    "The key is don't make severance too generous," he added. "If it's not generous enough, the CEO or senior executive will always come back and try to negotiate some more." But if it's too generous, "you won't hear anything, but you'll have wasted a lot of money."

    Excessive severance also creates skepticism among customers, shareholders and the public about whether the termination was handled appropriately. "Even more important is how the deal is viewed by your employees," Johnson said. "You don't want their response to be, 'We're having a hard time here at X, Y and Z Corp., but did you hear what Mr. Big got on the way out?'"

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    Source: The Society for Human Resource Management (SHRM)

    https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/hr-lessons-from-bill-oreillys-25-million-severance-deal.aspx?utm_source=SHRM%20PublishThis_HRWeek_7.18.16%20(41)&utm_medium=email&utm_content=May%2001%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&restr_scanning=silver&spMailingID=28846577&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1040052233&spReportId=MTA0MDA1MjIzMwS2

  • 21 Apr 2017 1:35 PM | Bill Brewer (Administrator)

    The market for executive pay is more efficient today than it was decades ago, a pay consultant insists.

    RJ Bannister - Leader, North America executive compensation consulting, Willis Towers Watson

    April 21, 2017 | CFO.com | US

    Executive pay is just about right — for today, which assumes an efficient market. To suggest otherwise would imply that there is a market irregularity, such as a bubble or inefficiency, which causes an imbalance in executive pay.

    RJ Bannister

    RJ Bannister

    I submit that the market for executive pay is more efficient today than it was 20, 50, or even 100 years ago, driven by three primary forces; more information, more scrutiny/attention, and more employment liquidity.

    Let’s first discuss the issues of efficient markets and the influence of information. Markets are deemed to be efficient. Market clearing rates (MCRs) change with new information over time.

    Executive pay is no different. Perceptions of the value or worth of an MCR will always exist, whether it’s the value of a teacher, a piece of art, an NBA superstar, or an executive’s pay. Any observer can have a perception about the value or worth of a MCR. However, most observers have limited or no influence on the MCR. Usually only decision makers have this authority.

    New information over time creates an supply-and-demand imbalance in the decision makers and moves the market to a new MCR. Local counties and tax authorities (along with unions) determine teachers’ compensation, investors/collectors the price of a piece of art, and an NBA owner the compensation of a basketball star. For public companies, the decision makers who have the ultimate authority on executive pay are the company’s board of directors by way of the compensation committee.

    Of course, many external forces and constituents can influence executive pay, including the supply and demand of executives themselves, shareholders, shareholder advocates, legislation, regulations, pundits, and, yes, consultants. These influencers provide new information over time, which helps adjust the MCR accordingly and revise perceptions, both positively and negatively.

    Executives today are much more informed about pay levels than ever before. Public disclosure, search firms, and advocates (lawyers, tax advisors, private bankers, etc.) arm executives with more information on compensation MCRs and, thus, enable a better negotiating stance in an arms-length transaction.

    The government has also played a critical role, by elevating the amount of scrutiny and effort involved in looking at executive pay. Take a look at companies’ proxy statements from just 25 years ago and compare them to today’s. The striking contrast points to the breadth and depth of the information U.S. public companies are now required to provide.

    All of this information has raised the average investor’s consciousness of executive compensation, how much executives get paid, and how they receive that compensation.

    Today, managing the Compensation Discussion and Analysis section of a public company’s proxy statement has become an essential part of the compensation committee’s purview. While the U.S. governance wave seems to have crested, management of a company’s annual compensation cycle has become a full-time job that can have a significant impact on the company’s success and reputation.

    Finally, executives have more mobility today than ever before. Executives are likely to work for multiple firms over their careers, versus becoming a “lifer.” The continued decline of defined benefit retirement programs over the past 40 years and the reallocation of that money into total direct compensation have had a tremendous influence on the level of executive compensation and the increase in executive mobility. Executive search firms provide an active catalyst to inform executives of external opportunities and the potential compensation level.

    It’s often difficult for observers to grasp the full import of a revolution when they are living it. All employees, not just executives, will likely benefit from increasing digitization and technology. These factors will also drive more information, more scrutiny/attention, and more liquidity to lower-level workers as well.

    This will drive a platform for average workers (freedom of mobility, freelancing, the “gig” economy, personal branding, on-line job postings, etc.) to arm themselves with more information and hence a stronger bargaining position in the future.

    RJ Bannister leads Willis Towers Watson’s executive compensation consulting practice in North America.

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    Source: CFO.com

    http://ww2.cfo.com/compensation/2017/04/executive-compensation-right/?utm_campaign=CFODailyAlert&utm_nooverride=1&utm_source=CFO-email&utm_medium=email&utm_content=CFODailyAlert_Friday_2017-4-21&utm_term=compensation&mkt_tok=eyJpIjoiWVRrME5HWXhZV0psTkRVdyIsInQiOiJ4V0JIdnRMTGFxNUd0VjRvQUk3bmxtbnlJaXhXUW1BVG5ENityT29KK2x0V0xBZzBXaVpTdFA0K3FISldtUE1oczZPTnNQcUdBbWNLbFpkWVZIeklQOXQ0TW1ZZlwvbGd5eUtPWFlNODlLRmpialowZVpnblFocEVYS1Y5OHdpU00ifQ%3D%3D


  • 20 Apr 2017 9:58 AM | Bill Brewer (Administrator)



    By Lisa Nagele-Piazza, SHRM-SCP, J.D.
    Apr 20, 2017

    Remedying pay disparities between men and women has become a priority for businesses and lawmakers alike. How can HR professionals find out if unlawful pay discrepancies exist in their workplace?

    Data analytics can use an organization's employment information to identify wage disparities and, from there, companies can look at their hiring practices and other policies to resolve unwanted pay gaps, according to Zev Eigen, J.D., Ph.D., the global director of data analytics for law firm Littler Mendelson. He noted that some employers may not know that women in their workforce are earning less than their male counterparts until they conduct this type of analysis.

    Much of the information employers need for a pay audit is already housed in their human resource information system (HRIS) or other electronic systems, said Lara de Leon, an attorney with Ogletree Deakins in Orange County, Calif., and San Antonio.

    She said that the first step in the analysis is for employers to make sure they have all the data they need and that the information is up to date and accurate. Some key data fields are:

    • Basic employment status and historical employment information.
    • Demographic information on gender, race and other categories.
    • Job title, job level, overtime exemption status, full-time or part-time status, and base pay. 
    • Geographic work location and business unit information. 
    • Quantity or quality of work, other performance measures, or a seniority system.

    De Leon said it's also helpful to have pay ranges and any other compensation data on hand when it comes time to analyze the results.

    Complex Analysis

    A statistical analysis can help employers find out if pay differences are random or caused by some other factor, Eigen said. He noted, however, that not all intentional pay discrepancies are discriminatory. There are justifiable reasons for paying one worker more than another in the same job grouping—such as seniority, education level or years of experience.

    Data can help employers figure out the root cause of a pay discrepancy, he said, noting that such an evaluation may be easier for smaller employers that have fewer factors and job groupings to consider.

    Large employers may want to perform a multiple regression analysis, which is a statistical method that can account for a variety of factors that influence pay. Employers can build a model that looks at workers' geographic location, performance ratings, time at the job, seniority with the company, education and certification data, and other factors that may be relevant for the particular workplace or job grouping.

    Although education can be a factor that justifies a pay discrepancy, Eigen cautioned that it isn't always relevant to the job. For example, he said, having a Ph.D. in molecular gastronomy might make sense for a scientist in a food research lab, but it might not matter for a fast-food chain manager.

    It's also important for employers to identify objective measures of skills, effort and accountability for each job, he noted. "If sales people need to be good communicators, how is that measured objectively?"

    Some employees may earn a higher salary because they have more direct reports or interact with more team members and business partners. These factors should also be identified.

    "It takes a little bit of work on the front end to make sure you're measuring the right groupings and comparing apples to apples," Eigen said.

    After the appropriate variables are identified and taken into consideration, the analysis will point to whether a difference in pay may be justified.

    That's why employers need to be sure the data in their systems are accurate and updated. "As with anything, if your data is not sound, your results won't be accurate," de Leon said. "An audit with a significant amount of data inconsistencies could yield erroneous results—either fail to uncover an issue, or indicate that there is an issue where one really does not exist."

    Outside Help

    Eigen urged employers to avoid assigning the analysis to someone within the company, unless that employee has experience with this type of statistical evaluation and knowledge of the relevant pay equity laws that apply to the employer's workforce.

    "You could pull a tooth out yourself, but there are obvious advantages to going to a dentist," he said.

    Multiple regression analyses are complex, and many employers do not have someone in-house who can perform them, de Leon said. "You will want to work with legal counsel and, most likely, an external consultant or statistician to help complete the work."

    De Leon and Eigen both noted that conducting the analysis under attorney-client privilege can potentially protect the information from discovery during a lawsuit.

    HR's Role

    HR professionals should understand that a multiple regression analysis is different than other analyses performed for pay reporting or auditing obligations—such as for the new EEO-1 reporting requirements, de Leon said.

    Since different analyses can yield different results, employers should perform a separate audit specifically to address potential pay discrimination. However, businesses shouldn't conduct an audit unless they are prepared to correct any unjustifiable disparities that are discovered.

    Some fixes might be costly, but others could be as simple as reclassifying a star employee. "If Joe is earning more than other employees in his workgroup, it's possible that Joe isn't correctly assigned to that group," Eigen said. "Maybe he is doing a lot of other tasks that he took over as people left the company and a change to his job title and reporting structure is appropriate."

    It's better to fix those discrepancies before a claim is filed, he added. If the change is made after litigation commences, it might look like the employer is just trying to escape liability.

    It's also a good practice for employers to implement policies that address pay discrimination and establish guidelines that set forth their compensation philosophy, de Leon said. For example, employer guidelines should say whether compensation decisions are based on tenure, the quantity or quality of work, or other factors. 

    "Employers should also look at how they set starting pay and implement guidelines for that," she noted. Some states have recently passed laws restricting inquiries into a job applicant's salary history—and more states are expected to follow suit.

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    Source: Society for Human Resource Management (SHRM)

    https://www.shrm.org/ResourcesAndTools/legal-and-compliance/employment-law/Pages/Data-Close-the-Gender-Wage-Gap.aspx?utm_source=SHRM%20Thursday%20-%20PublishThis_HRDaily_7.18.16%20(49)&utm_medium=email&utm_content=April%2020%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&restr_scanning=silver&spMailingID=28732793&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1022902902&spReportId=MTAyMjkwMjkwMgS2

  • 14 Apr 2017 8:24 AM | Bill Brewer (Administrator)

    Be prepared for unexpected shocks that can affect benefit programs

    By Joanne Sammer
    Apr 14, 2017

    HR benefits managers face a world of change and adjustment. Economic pressures, industry challenges and new compliance burdens can severely disrupt employee benefit programs, requiring new offerings or rendering existing benefits too expensive for an organization's bottom line.

    "The key to managing employee benefit plans during a period of uncertainty is to plan ahead," said Rosemary Hughes, a principal with EPIC Insurance Brokers and Consultants in Stamford, Conn. If developments could result in a loss of jobs—perhaps a merger is in the works—or if an economic downturn would depress the organization's revenues, it could be time to negotiate with vendors to allow your company to end the contract early.

    Uncertainty may also result from legislative or regulatory changes—as when the Affordable Care Act (ACA) expanded employee health coverage or with state and municipal lawmakers trying to mandate paid leave. New laws on pay equity also may affect benefit plans tied to salary levels, such as stock options and retirement plans.

    Employers will need to "think through the potential impact on their programs while still complying with current law," Hughes said. Organizations should create contingency plans to upgrade HR or benefits management software and should postpone altering any affected employee benefit plans until there is more certainty about what will happen.

    In most cases, "employees will be concerned, so it may be helpful to let them know the company is keeping an eye on the situation and will keep them posted as to the next steps," she advised.

    Building a Framework for Uncertainty

    Employers can develop a framework for responding to uncertainty, keeping these considerations in mind:

    Know where you are going. For the most part, employers cannot control what's happening outside the organization. What they can control is how they deal with it. That is why is important for employers to have an overarching philosophy about employee benefits. With a set of guiding principles in place, organizations can make decisions based on those guidelines.

    "Without this, things become more complicated and company leaders may not be on the same page" when it comes time to make decisions, said Jackie Breslin, director of human capital services with TriNet, a HR consulting firm, in San Francisco.

    "As federal regulations are weakened and rolled back, state laws may compensate to protect the workforce," Breslin said. That could bring greater uncertainty for organizations with operations in multiple states as they try to comply with a wide range of different laws and regulations.

    Having a strong benefits philosophy can help guide multistate employers in this situation. Such a philosophy, for example, could call for consistent treatment for the full workforce no matter where employees reside. That, in turn, could lead the organization to adhere to the requirements of the most generous state in each circumstance.

    Know where the organization stands. An internal audit of benefit plans can show exactly what the organization is offering, to whom and at what cost. "When it comes time to make a decision, having this information allows employers to react faster to new developments because they already know where they are," Breslin said.

    Know when to act. Most employers will want to avoid concrete action until a given change is certain. "There needs to be a balance," Hughes said. "Most employers cannot afford to spend resources planning for everything that could occur, so they need to consider the probability of something happening." If that probability is high, HR and benefit executives can spend some time and energy sketching out a "Plan B" for how to react.

    For instance, if a company is in danger of losing its largest and most important customer, Plan B could include a checklist of steps the company could take to mitigate the financial damage, including potential actions involving benefit plans.

    Get the executive team involved. Uncertain situations are times when having close working relationships in place between HR executives and other departments can pay big dividends. The CEO, general counsel, finance and operations executives will all have important input to provide when planning for uncertainty. The CEO can lead overall policy discussions, the CFO can clarify financial implications, operations executives can help front-line managers and employees understand the changes, and the general counsel can disclose the legal requirements and ramifications.

    Communicate with employees. Communicating with employees about potential changes is crucial. Even if a a situation is uncertain, such as with possible repeal of the ACA, employees may still have related questions and concerns. "They will want to know, 'what does this mean for me?'" Hughes said. "Employers need to have a communication strategy to deal with this and ways to make sure front-line managers have the information necessary to help employees."

    Joanne Sammer is a New Jersey-based business and financial writer.

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    Source: The Society for Human Resource Management (SHRM) 

    https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/managing-benefits-uncertainty.aspx?utm_source=SHRM%20Friday%20-%20PublishThis_HRDaily_7.18.16%20(42)&utm_medium=email&utm_content=April%2014%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&restr_scanning=silver&spMailingID=28658556&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1022096825&spReportId=MTAyMjA5NjgyNQS2

  • 14 Apr 2017 8:20 AM | Bill Brewer (Administrator)

    Employers are offering larger incentives to participate in health-promoting programs

    A growing percentage of companies are expanding their employee well-being programs beyond health and wellness to include employee financial security and community volunteering opportunities, new research shows.

    Eighty-four percent of surveyed employers now offer their workers financial security programs, such as access to debt management tools or student loan counseling, up from 76 percent last year, according to the 8th annual survey on corporate health and well-being from Fidelity Investments, a benefits provider, and the nonprofit National Business Group on Health, an employers' association.

    The survey, fielded during November and December 2016, includes responses from 141 large and midsize organizations throughout the U.S. Respondents were asked about their benefit programs for 2017.

    "The concept behind holistic well-being is to enable employees to meet their goals rather than tell them what they need to do," said Brian Marcotte, president and CEO of the National Business Group on Health. "Financial well-being is an important well-being pillar, as it's hard to engage employees on addressing health needs if they are struggling with putting food on the table or managing debt."

    Wellness Program Incentives

    Ninety-five percent of surveyed employers are offering physical wellness programs this year, and 87 percent are providing emotional health benefits, such as mental health counseling through an employee assistance program.

    Employee incentives continue to be a critical part of health-promoting programs. The survey found that:

    • 74 percent of respondents include employee incentives within their wellness initiatives.
    • The average employee incentive amount was $742 this year, up from $651 in 2016 and $521 in 2013.
    • Employers are increasing incentives for spouses and domestic partners to participate in wellness offerings, with the average annual spouse/domestic partner incentive at $694, up 47 percent over the 2016 average of $471.

    "As these programs evolve, employers are embracing a broader definition of well-being to increase participation and engagement among their workforce," said Adam Stavisky, senior vice president at Fidelity Benefits Consulting. "Today's programs take more of a 'health meets wealth' approach and reflect a blend of financial, physical and social/emotional programs to provide maximum support for members."

    Among the most popular financial security programs are:

    • Seminars and "lunch-and-learn" programs (offered by 82 percent of employers).
    • Access to tools to support key financial decisions such as those regarding mortgages, wills and income protection (74 percent).
    • Tools and resources to support emergency savings, debt management and budgeting (71 percent).
    • Student loan counseling or repayment assistance (25 percent).
    • The most popular physical well-being programs continue to be:
    • Smoking cessation (91 percent).
    • Physical activities/challenges (86 percent).
    • Weight management (79 percent).

    Ergonomic Desks and Healthier Food Options

    Fifty-five percent of companies surveyed offer a "sit-or-stand" ergonomic desk or treadmill workstation option, up from 43 percent last year.

    Employers are recognizing the impact of fitness wearables on employee health—30 percent will offer subsidies or discounts on these devices in 2017.

    Companies are also focusing on healthy onsite food options for their workforce—48 percent have policies regarding healthy food options in their cafeteria, vending machines and catering services, and 28 percent of organizations offer discounts or price differentials on healthy food options in the cafeteria.

    Giving and Volunteering Opportunities

    The percentage of employers that provide opportunities for employees to volunteer for community projects increased from 67 percent to 79 percent this year, while the percentage of employers offering a matching program to support employees' charitable giving increased from 65 percent to 71 percent.

    Employers are adding cause-based collection drives, with the percentage of companies offering these programs increasing to 88 percent from 77 percent last year.

    "Over the years, employers across the country have bolstered benefits that contribute to employee well-being. … One of these benefits particularly touches the heart and soul of employees: volunteering," Henry G. ("Hank") Jackson, president and CEO of the Society for Human Resource Management, recently wrote.

    "This benefit is important to many workers, particularly Millennials, who view participating in community service as part of being a whole person," he noted.

    By Stephen Miller, CEBS
    Apr 14, 2017

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    Source: The Society for Human Resource Management (SHRM)

    https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/wellness-financial-volunteering.aspx?utm_source=SHRM%20Friday%20-%20PublishThis_HRDaily_7.18.16%20(42)&utm_medium=email&utm_content=April%2014%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&restr_scanning=silver&spMailingID=28658556&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1022096825&spReportId=MTAyMjA5NjgyNQS2

  • 10 Apr 2017 8:24 AM | Bill Brewer (Administrator)


    California Lawmakers Aim to Implement Overtime Rule Despite Federal Delay

    By Lisa Nagele-Piazza, SHRM-SCP, J.D.
    Apr 10, 2017

    Lawmakers in California have proposed legislation to increase the salary threshold for employees who are exempt from overtime pay to $47,476—the same threshold that was blocked last year at the federal level.

    California's exempt salary threshold is calculated by doubling the minimum wage, so it increases with every minimum wage hike. Currently, businesses with 26 or more employees must:

    • Pay nonexempt workers at least $10.50 an hour.
    • Pay exempt executive, administrative and professional workers at least $3,640 per month ($43,680 annualized).

    Employers with 25 or fewer workers must:

    • Pay nonexempt workers at least $10 an hour.
    • Pay exempt executive, administrative and professional workers at least $3,467 per month ($41,600 annualized).

    A.B. 1565 would increase the exempt salary threshold to the greater of $3,956 per month ($47,476 annualized) or double the minimum wage, explained Michael Kalt, an attorney with Wilson Turner Kosmo in San Diego.

    The proposed legislation presumably would take effect on Jan. 1, 2018, if enacted, he said. "It is presently scheduled to be heard in the Assembly's Labor and Employment Committee on April 19, so we will get an early test of its likelihood of passage."

    Employers may be wondering what the reasoning is behind the proposed legislation, especially since the state's exempt salary threshold is already scheduled to exceed $47,476 for all employers by 2020.

    "It is more symbolic than anything," said James McDonald Jr., an attorney with Fisher Phillips in Irvine, Calif. "California's Legislature is so opposed to the current administration in Washington that it will likely try to put back for employees whatever the federal government takes away."

    [SHRM members-only HR Q&A: What is the difference between California overtime exemption requirements and federal overtime exemption requirements?

    Planned Minimum Wage Increases

    The state minimum wage and exempt salary threshold are scheduled to rise incrementally over the next few years as follows for businesses with at least 26 employees (smaller employers have an extra year to comply with each increase):

    Year

    Hourly

    Weekly

    Monthly

    Annually

    2018

    $11

    $880

    $3,813.33

    $45,760

    2019

    $12

    $960

    $4,160

    $49,920

    2020

    $13

    $1,040

    $4,506.67

    $54,080

    2021

    $14

    $1,120

    $4,853.33

    $58,240

    2022

    $15

    $1,200

    $5,200

    $62,400

    In its current form, A.B. 1565 doesn't distinguish between large and small employers. If enacted, it would raise the exempt salary threshold to meet the now-blocked federal overtime rule one year before it was set to go beyond it for larger employers and two years early for smaller employers in California, Kalt explained.

    New Law, Same Analysis

    If the proposed legislation is approved, employers will essentially have to go through the same analysis as they did in 2016 when they thought the federal threshold would be raised, Kalt said.

    "Just as when the U.S. Department of Labor proposed such an increased salary threshold, if this legislation passes employers will need to consider how to treat those employees being paid a monthly salary between the current threshold and the new $3,956 minimum," McDonald said. "If they are switched to hourly pay and they work considerable overtime, it may be less expensive simply to raise their salary to the new minimum."

    He added that controls would have to be in place for employees who are paid on an hourly basis to ensure that they do not work unauthorized overtime.

    "But such limits might make it difficult for them to get the job done," he said. "It will require a job-by-job analysis."

    It's important to note that a higher salary threshold may not result in a raise for exempt employees who are currently earning below the proposed minimum.

    "Some employers will not be able to afford paying a higher salary and may simply eliminate the position or reduce the number of positions available," McDonald said. "This in turn will limit career opportunities for those looking for entry-level management jobs."

    Kalt said he thinks the bill will pass the Legislature, but Gov. Jerry Brown could veto it.

    The minimum wage was just raised with a two-tier system that takes small businesses into account, he said. If this is enacted, all employers would have to reach a higher standard in less time and Brown could say that's too much, too soon, he added.

    Democrats have a supermajority in both chambers of the state Legislature, so that means they could override a veto. This would be a big test to see how pro-business Democrats react, Kalt said.

    ***** ***** ***** ***** ***** 

    Source: Society for Human Resource Management (SHRM)

    https://www.shrm.org/ResourcesAndTools/legal-and-compliance/state-and-local-updates/Pages/California-Lawmakers-Aim-to-Implement-Overtime-Rule.aspx?utm_source=SHRM%20Monday%20-%20PublishThis_HRDaily_7.18.16%20(39)&utm_medium=email&utm_content=April%2010%2C%202017&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2017&SPSEG=&restr_scanning=silver&spMailingID=28590095&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1021466710&spReportId=MTAyMTQ2NjcxMAS2

  • 04 Apr 2017 11:25 AM | Bill Brewer (Administrator)

    http://magdata.lrp.com/MAGDATA/servlet/DataServlet?fname=ThinkstockPhotos-522777828HoneywellL.jpg

    Pulling the Plug on Lifetime Benefits

    After a court ruled that Honeywell wrongly denied lifetime healthcare benefits to some retirees, experts say employers should think twice before attempting to end similar programs.

    By Maura C. Ciccarelli

    Thursday, March 30, 2017

    Last month, a federal judge ruled that approximately 500 Honeywell International retirees from a Greenville, Ohio, plant were entitled to lifetime healthcare benefits, rejecting an attempt by the company to discontinue the coverage.

    In the Fletcher v. Honeywell International decision, Judge Walter H. Rice of the U.S. District Court for the Southern District of Ohio wrote, "It is inconceivable that nearly half the union employees at the Greenville plant would agree to voluntarily retire based solely on a promise that they would continue to receive health care benefits until May 22, 2014, when the expired."

    The plaintiffs successfully argued that Honeywell had been paying retirees healthcare benefits based on prior CBAs since the early 2000s, a factor that lent credence to the lifetime benefit interpretation. It was only after the Supreme Court's 2015 decision in the M&G Polymers USA v. Tackett case that Honeywell reassessed its obligation to continue lifetime healthcare benefits, Rice wrote.

    In a written statement to Human Resource Executive magazine, a Honeywell spokesman said, "Honeywell disagrees with the court's decision and will be filing an appeal with the Sixth Circuit."

    In the Tackett case, the Supreme Court seemed to open the door to eliminating lifetime healthcare benefits by ruling that CBA language should be held to the same standards of interpretation as ordinary contract principles. This rejected longstanding CBA-language interpretation established by a 1983 Sixth Circuit ruling in International Union v. Yard-Man, Inc. The resulting "Yard-Man inferences" said that CBAs intend to vest retirees with a lifetime healthcare benefit, when there is no specific contract provision or other evidence to the contrary.

    http://magdata.lrp.com/MAGDATA/servlet/DataServlet?fname=ThinkstockPhotos-522777828HoneywellL.jpgThe rub in the 2015 Tackett ruling was noted in the concurring agreement written by Justice Ruth Bader Ginsburg: when faced with ambiguous CBA language, the courts should also consider all external evidence, including documents and testimony about what the parties intended, rather than just the contract language itself.

    "I think it was a correct ruling and stands for the proposition that Tackett does not mean that employers don't have to honor contract language in CBAs," says Bill Wertheimer, a private practice attorney based in Bingham Farms, Michigan, who represented some of the plaintiffs who were covered under United Auto Workers contracts with Honeywell dating back to 2003. The judge also found the language to be "ambiguous," Wertheimer says, because the lifetime benefit was promised to surviving spouses and children but didn't address retirees.

    "With Honeywell, we have a poorly drafted agreement, which led to a finding of lifetime vested benefit for retirees," says Amanda Wingfield Goldman, of counsel in the labor and employment and litigation sections of Coats Rose in New Orleans. "I wouldn't advise employers to be alarmed, but I would advise them to look at their CBA and talk with their labor lawyers before they freak out."

    Goldman says Tackett "won't always be a win for employers. The courts will no longer be able to infer an intent [based on Yard-Man] but they can still use the CBA language and relevant external evidence to find such benefits."

    "It's a reminder that courts are going to be looking at what the parties intended and that the [Tackett] Supreme Court decision is not a ticket to strategically discontinuing healthcare coverage to retirees," says Ruairi McDonnell, an attorney with Feinstein Doyle Payne & Kravec, based in Pittsburgh, whose firm represents retiree plaintiffs.

    In addition to the Greenville case, retirees from two other Honeywell plants -- one in Boyne City, Mich., and the other in Stratford, Conn. -- won their challenges to the plan to discontinue their healthcare benefits but retirees from a Fostoria, Ohio, did not win their case.

    Stewart Schwab, the Jonathan and Ruby Zhu Professor of Law at Cornell Law School, in Ithaca, N.Y., noted that when companies and unions find it difficult to reach a consensus on benefits for retirees, "sometimes the parties almost intentionally don't resolve it in an airtight way, which makes it especially difficult to figure out what the parties originally intended. Often they almost can't reach agreement on this particular issue and just leave it to be resolved by . . . the courts."

    Privacy Policy

    David Rosenfeld, lecturer at the University of California-Berkeley, and a partner at Weinberg, Roger & Rosenfeld in Alameda, Calif., says employers without CBAs should be aware that they may be vulnerable to lifetime benefit challenges based on language in their summary plan descriptions.

    If companies are considering eliminating lifetime benefit guarantees in future negotiations or employee benefit plans, there are other HR-related implications to consider beside costs, especially in light of recent changes proposed to Medicare and the former Affordable Care Act programs, says Terese Connolly, partner and employment specialist for Culhane Meadow based in the firm's Chicago office.

    "We all know it's not just about what the law says but also about how you manage your employee morale," she says.

    HR plays a role in talking to company leaders not just about cost impacts of retaining or eliminating lifetime healthcare benefits, but also in reminding leaders about the human side of the issue. Connelly recommends carefully designing CBA and benefit plan summary language to promote flexibility and affordability for both sides. That way, companies can change the programs if needed "in a way that doesn't completely destroy employee morale," she says.

    Finally, Connelly warns that companies need to watch what they do about retiree benefits and how they do it because millennial generation employees are watching.

    "As we know, millennials are more likely to jump ship if you start doing things that don't sound right to them," she adds. Developing a balanced employee retiree program is "really about trying to attract people who are going to stay with you for the long haul."


    ***** ***** ***** ***** ***** 

    Source: Human Resource Executive®

    http://www.hreonline.com/HRE/view/story.jhtml?id=534362137 

  • 31 Mar 2017 2:33 PM | Bill Brewer (Administrator)


    The New U.S. Pay Equity Laws: Answering the Biggest Questions Created by Seyfarth’s Pay Equity Group

    Download their PDF brochure at:

    PayEquityBrochure.pdf



  • 30 Mar 2017 3:54 PM | Bill Brewer (Administrator)


    The U.S. Supreme Court settled the issue of same-sex marriages several years ago. The marriages are legal throughout the country and all spouses, regardless of gender, are treated the same under federal and state laws affecting benefit plans. Less clear, however, is the issue of domestic partners, civil unions, and other unmarried relationships. Employers often have questions about whether they are required to extend health coverage to unmarried partners and how to administer their plans if coverage is extended.

    Following are the top seven questions we receive from employers about domestic partner health coverage.

    1. What are domestic partnerships and civil unions?

    A domestic partnership or civil union generally refers to two adults, unrelated by blood and neither of whom is married, who are in a committed relationship and assume responsibility for each other’s financial and emotional needs. Although not recognized under federal law, some states have established definitions for “registered domestic partnerships,” “domestic partnerships,” and “civil unions” to extend specific rights and responsibilities under various state laws. There also are several municipalities and local jurisdictions that extend rights to unmarried couples that meet the criteria developed by the jurisdiction. Further, many employers have voluntarily adopted broad definitions of domestic partners to extend eligibility under their group health plans.


    2. Must employers that offer group health coverage to spouses also cover domestic partners?


    Employers may choose to extend eligibility to domestic partners, but it is not required unless mandated by a state’s insurance law. Most states have no requirements while others, such as New Jersey, merely require group health carriers to offer the employer the option of including domestic partners as dependents. California, on the other hand, has the strictest requirement: any group policy that covers spouses must extend eligibility to “registered domestic partners (RDPs).” The California Family Code defines RDPs and the California Secretary of State provides a registration system.

    Employers that purchase group health insurance receive specific information from the carrier about any applicable state insurance laws. Self-funded (uninsured) plans are not affected since they are exempt from state insurance mandates.

    Note: Public-sector employers, such as cities, counties, and public schools and universities, and private-sector employers that contract with public agencies, may be subject to additional requirements under local laws. Specific information typically is provided to the parties by the government agency.

    3. Is special tax reporting required for domestic partner health coverage?

    Yes, in most cases. Although group health coverage provided to the employee, spouse, and children under age 27 (and some older children) is tax-free, the value of any employer-paid coverage for a domestic partner is taxable. The employer must report the fair market value of the coverage, minus any after-tax contributions paid by the employee, as imputed income on the employee’s Form W-2 for federal and state/local tax purposes. There are two exceptions:

    • Federal: Coverage is tax-free if the domestic partner meets the following conditions under § 152 of the Internal Revenue Code:
      • Shares the same principal residence as the employee;
      • Receives more than half of his or her support from the employee;
      • Is a citizen, national, or legal resident of the United States, or resident of Canada or Mexico; and
      • Is not a qualifying child of a taxpayer.
    • State/Local: The majority of state and local tax laws conform to federal law, so taxes do not apply if the domestic partner is the employee’s tax dependent under § 152. (Non-conforming states, however, may impose state and/or local taxes.) Alternatively, several states specifically exempt certain categories of domestic partners from state or local taxes, even though federal taxes apply. For instance, California does not tax the value of employer-paid coverage for registered domestic partners (RDPs) as defined by state law.

    Employers that offer health coverage to domestic partners should refer to their payroll vendor for specific information about the state and local tax withholding and reporting rules in the locations where their employees live and work. 

    4. Can employees pay for domestic partner health coverage on a pretax basis?


    Cafeteria plans allow employees to make pretax contributions for group health coverage, but only for employees and their tax dependents (i.e., spouse, children, and § 152 dependents). Most domestic partners do not meet the financial dependency criteria to qualify under § 152, so contributions for their coverage would have to be made on an after-tax basis. IRS regulations permit an accommodation, however, for the employer’s convenience in administering payroll. That is, the cafeteria plan may allow pretax contributions for the domestic partner’s health coverage, provided that the full market value of the coverage is reported as the employee’s imputed income. For instance, assume the market value of the partner’s coverage is $200, the employee contributes $50 on a pretax basis, and the employer contributes the remaining $150. In that case, the employee’s taxable income is reduced by $50, but $200 of imputed income is reported on the employee’s W-2. 

    5. Can employees make midyear enrollment changes to add or drop their domestic partner?

    Special enrollment rules under the Health Insurance Portability and Accountability Act (HIPAA) allow employees to add coverage midyear for a new spouse, but not for a domestic partner (since no marriage has occurred). On the other hand, the HIPAA rule for a midyear enrollment in the event a dependent losing his or her coverage under another plan does apply to domestic partners (if eligible for the employer’s plan).

    Cafeteria plans may allow midyear changes in accordance with IRS regulations for permitted election changes. Although not required, employers that extend health plan eligibility to domestic partners also often provide for midyear enrollment changes under their cafeteria plans.

    Beware of discrepancies between the group health insurance policy and the cafeteria plan document. Carriers are required to include the mandatory HIPAA special enrollment rules in group policies, but they often omit the optional cafeteria plan provisions. Always check all documents and policies before allowing an employee to make a midyear change. Self-funded employers should ensure that any stop-loss insurance protection applies with respect to all persons who are eligible under the group plan.


    6. Are domestic partners eligible for other health-related benefits, such as FSAs, HRAs, or HSAs?


    In most cases, no. Reimbursements from health flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), and health savings accounts (HSAs) are limited to eligible health care expenses for the employee and his or her tax dependents. Domestic partners are not tax dependents, unless the domestic partner qualifies under § 152, which usually is not the case.

    7. Are domestic partners eligible for COBRA?

    Federal law defines COBRA-qualified beneficiaries as the employee (or former employee), spouse, and children if covered under the group health plan at the time of the qualifying event. A domestic partner, therefore, is not a COBRA-qualified beneficiary in his or her own right. The employee, however, may elect COBRA for his or her domestic partner, if the group health plan extends eligibility to domestic partners, since COBRA beneficiaries have the same enrollment options as active employees.

    Separately, many states have enacted coverage continuation provisions under their state insurance laws. These often are referred to as “mini-COBRA” laws. Certain states that provide protections for domestic partnerships or civil unions may also extend their mini-COBRA provisions. California is one example; Cal-COBRA (the state’s mini-COBRA law) extends to registered domestic partners (RDPs) as defined by state law. Mini-COBRA provisions, if any, will be described in the carrier’s group policy.

    In summary, employers that choose to extend group health plan eligibility to domestic partners, or who purchase group policies that include state-mandated domestic partner provisions, are encouraged to work with carriers, benefit advisors, and payroll vendors to develop and administer appropriate procedures. All plan materials should contain consistent definitions of eligibility, communications should encourage employees to consult their tax advisors regarding federal and state tax laws, and payroll vendors should ensure accurate W-2 reporting.

    ***** ***** ***** **** **** 

    Source: National Human Resources Association (NHRA)

    http://pages.myhrworkplace.com/Domestic-Partners.html?mkt_tok=eyJpIjoiTkRNMFpEazFNV1JsTnpVMCIsInQiOiJLMXJXVXNGVWd6aXdJMjNVb2FUdWxvbkRWNWdhMXljZTRqa3M2UXVoYUZQd28rdXNCUitEVjgxRW16dmRQOEFLR0tJcHJzSzZPY0s0RmJvSVNjQ3VnUitNeGM1enh2eWdud0c4QW84cFZ2NXIyUWtDYmhCbXJZdGk3OHByY0ROUiJ9

  • 30 Mar 2017 3:51 PM | Bill Brewer (Administrator)



    The U.S. Department of Homeland Security, U.S. Citizenship and Immigration Services (USCIS) implemented a new Form I-9, Employment Eligibility Verification, which employers are now required to use. The new form, dated November 14, 2016, was effective as of January 22, 2017 and will remain in effect until August 31, 2019.

    The revised Form I-9 is easier to complete on a computer. Enhancements include drop-down lists and calendars for filling in dates, on-screen instructions for each field, easy access to the full instructions, and an option to clear the form and start over. When the employer prints the completed form, a quick response (QR) code is automatically generated, which can be read by most QR readers. In addition, the new form:

    • Asks for “other last names used” rather than “other names used.”
    • Includes prompts to ensure information is entered correctly.
    • Includes a dedicated area for including additional information.
    • Allows users to enter information about multiple preparers and translators and includes a supplemental page for the preparer/translator.

    Below are some frequently asked questions about the Form I-9. 

    Frequently Asked Questions

    What is the Form I-9?

    Since November 7, 1986, U.S. employers have been required to verify the identity and work eligibility of every new hire, citizen and non-citizen. Form I-9 helps employers do this. The form is updated periodically and employers must ensure they provide new employees the complete and most up-to-date forms. 

    Who must complete Form I-9?

    Both employers and employees are responsible for completing their respective portions of Form I-9. New employees must complete the form with accurate information and provide supporting documentation to the employer establishing their identity and their ability to work in the United States. Employers must ensure the form is properly completed, corrected (as necessary), and supporting documentation is provided. However, pursuant to § 7 of the Privacy Act (8 U.S.C.A. § 552a), providing a Social Security number on the Form I-9 is voluntary for all employees unless the employer participates in the E-Verify Program, which requires an employee’s Social Security number for employment eligibility verification. Both parties must sign the completed form either by hand or electronically. 
    When must the Form I-9 be completed?

    Employees must complete Form I-9 any time between the time they accept an offer of employment and the end of the work day on their first day of work. An employer must complete its portion of the form no later than the close of business on the employee’s third day of work. If an employee is hired for less than three business days, then Sections 1 and 2 of the form must be fully completed at the time of the hire, when the employee begins work.

    What type of supporting documentation is required?

    Form I-9 provides very specific supporting documentation that may be used to establish identity and ability to work. Some documents alone satisfy both the identity and ability to work criteria. These are documents found in List A of the form. Documents in List B only establish an employee’s identity, while documents in List C only establish an employee’s eligibility for employment. Therefore, an employee must provide one document from each list (B and C) if he or she does not provide a document from List A. 
    Employers cannot specify which documents must be provided, except that employers who participate in the USCIS E-Verify program may only accept List B documents that have a photograph. 

    Employers must accept any unexpired document(s) (from the List of Acceptable Documents) presented by the individual, which reasonably appear on their face to be genuine and to relate to the person presenting them. Employers are not required to make copies of the documents; however, employers may attach photocopies of documentation to the employee’s Form I-9. Employers who make and attach photocopies must do so consistently for every employee without regard to citizenship or national origin.
    Employers must also comply with specified document retention requirements for completed Form I-9 and detailed reverification procedures for current employees.

    What if an employee fails to provide documentation?

    Employers should terminate an employee who fails to produce the required documents for employment within three business days of the date employment begins.

    An employee may present a receipt for a replacement document (in the case of lost, stolen, or destroyed documents) as a temporary solution. However, if an employee has presented a receipt for a replacement document, the employee must produce the actual document within 90 days of the start of employment. Employers must apply these practices uniformly to all employees.

    Are there penalties for failure to comply?

    Failure to comply with employment eligibility verification requirements can result in both civil and criminal penalties for an employer. For example:
    • Employers who fail to properly complete, retain and/or make Form I-9’s available for inspection may incur civil penalties between $216 and $2,156 for each employee for which the form was incorrect.
    • Employers who knowingly hire unauthorized aliens or continue to employ aliens who become unauthorized to work may be ordered to cease and desist and pay a penalty between $539 and $21,562 for each unauthorized alien, depending on the number of prior offenses.
    • Employers engaging in a pattern or practice of knowingly employing unauthorized workers may face criminal penalties of up to $3,000 in fines and imprisonment of up to six months.
    Civil and/or criminal penalties may also be imposed on employees in certain circumstances.

    Summary
    While this article highlights key areas of compliance, there other necessary requirements employers must follow for verifying and employee’s identity and eligibility for employment to remain compliant. Failure to comply can result in significant penalties. Employers are encouraged to ensure they are using the most up-to-date 
    Form I-9 for all new hires and to review the form instructions and the U.S. Citizenship and Immigration Services Handbook for Employers. Employers should consistently review and audit their processes and work with counsel or other trusted advisors to ensure compliance.


    ***** ***** ***** ***** ***** 

    Source: National Human Resources Association (NHRA): 

    http://pages.myhrworkplace.com/0317-Employers-Must-Use-New-Form-I-9.html?mkt_tok=eyJpIjoiTkRNMFpEazFNV1JsTnpVMCIsInQiOiJLMXJXVXNGVWd6aXdJMjNVb2FUdWxvbkRWNWdhMXljZTRqa3M2UXVoYUZQd28rdXNCUitEVjgxRW16dmRQOEFLR0tJcHJzSzZPY0s0RmJvSVNjQ3VnUitNeGM1enh2eWdud0c4QW84cFZ2NXIyUWtDYmhCbXJZdGk3OHByY0ROUiJ9

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