Hot Topics in Total Rewards

  • 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)

  • 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)

  • 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)

  • 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):































    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.

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    Source: Society for Human Resource Management (SHRM)

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

    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. 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."

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    Source: Human Resource Executive® 

  • 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:


  • 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.

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    Source: National Human Resources Association (NHRA)

  • 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.

    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.

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    Source: National Human Resources Association (NHRA):

  • 27 Mar 2017 10:44 AM | Bill Brewer (Administrator)

    At the law firm of Fisher & Phillips in Irvine, Calif., Chris Boman enjoys a perk that sounds pretty awesome: He can take as many vacation days as he wants.

    So how much vacation did this labor attorney take in 2016?

    He estimates about two weeks.

    That doesn't sound like more time off than many employees get at companies that offer limited vacation. The difference? Should Boman ever leave his firm, he won't be compensated for any unused vacation days—because his firm's unlimited vacation policy means that it no longer accounts for vacation days on its financial books.

    While the concept of unlimited vacation sounds pretty generous, in practice, some argue that it benefits a company's bottom line more than it benefits the company's employees.

    "The upside of not having to pay out vested vacation days is undeniable," said Paula Brantner, senior advisor for Workplace Fairness, a nonprofit that provides legal information for workers and promotes pro-worker public policy. "I think some companies are genuine in that they want to foster a different kind of culture and some [employees] do take more vacation time than the norm, but it's hard to build that into the corporate culture."

    Unlimited Time Off Remains Rare

    Unlimited vacation first became popular at startups in Silicon Valley and then began to seep into other industries—typically those where employees work independently and can set their own hours. Companies that have embraced unlimited vacation include Netflix, Virgin America, The Motley Fool, Achievers, Jellyvision and General Electric, which offers the benefit to senior employees.

    Still, unlimited vacation policies remain rare in corporate America; just 1 percent to 2 percent of companies offer the benefit, according to the Society for Human Resource Management's (SHRM's) 2016 Employee Benefits report. Evren Esen, SHRM-SCP, SHRM's director of survey programs, said that statistic hasn't changed appreciably during the past five years.

    Leaders at companies that have adopted unlimited vacation laud the perk. They say there's no more pressure on workers to plan and save days. Meanwhile, they say, employers are freed from the administrative hassle of tracking time off and the financial burden of paying out unused vacation time.

    But not all employees view unlimited vacation as a perk. Tronc., which owns the Los Angeles Times, announced in November 2014 plans for a "discretionary time off" policy—in which employees would no longer have set vacation, holiday or sick days, but instead would consult with managers to determine their time off. Employees were suspicious and told media blogger Jim Romenesko that the policy "removed the monetary value of the vacation days that long-term staffers have accrued. Traditionally, staffers cashed those days out when they left the company." The company ended up rescinding the plan.

    So is a company's main motivation for introducing unlimited vacation to attract, keep and motivate talented workers? Or is it a way for companies to wash their books of unused vacation time that would have to be paid out when employees leave?

    "I think it's a little bit of both," said Michael Wahlander, an attorney in Seyfarth Shaw's San Francisco office.

    Unused and accrued vacation can be a liability on a company's balance sheet, he noted. And that liability can run into millions of dollars a year for some organizations. Research from the U.S. Travel Association's Project: Time Off initiative, conducted by the economic analysis firm Oxford Economics, looked at Securities and Exchange Commission filings for 114 public companies. It found that the average vacation liability per employee is $1,898, and that U.S. companies carried $65.6 billion in accrued paid-time-off costs forward on their books in 2014.

    Boman said he knows that "some employers are concerned about people not taking vacation and creating this giant liability of accrued vacation when they leave."

    But unlimited vacation, he said, is also about flexibility that can boost morale. He noted that he can take a spur-of-the-moment, four-day weekend, as long as his obligations are met.

    "Last week, I was skiing with my daughter; we skied for four days and I disconnected," he said.

    Said Brantner: "If it works like it's supposed to, then it can be a positive perk. If it's just a way to deprive employees of vacation and manipulate their behavior, then the workers are going to feel misled."

    Potential for Guilt and Resentment

    How employees view such a policy, she said, depends in large part on how senior leaders and HR enforce it, whether they take unlimited vacation themselves, and whether there's unspoken resentment for those who take advantage of unlimited time off.

    Wahlander notes that at many companies with unlimited vacation, managers encourage workers to take off "if their work is done."

    "But [work] is never really 'done' at these kinds of places," he said, noting that this can leave workers feeling guilty about taking days off.

    Some suspect the open-ended nature of unlimited vacation actually leads people to take less vacation, and to burn out faster. It was for that reason that Kickstarter, a crowdfunding startup based in New York City, decided to return to a traditional vacation policy after trying out unlimited vacation.

    A Kickstarter spokesperson told BuzzFeed in September 2015 that the company decided to cap vacation at 25 days a year. Kickstarter's HR team felt that with a cap, employees would have a better idea of how much leisure time they should take each year.

    Sahara Pynes, an attorney in Fox Rothschild's Century City, Calif., office, has clients for whom unlimited vacation has worked well, and others who toyed with the idea, then thought better of it.

    "I have a gaming company in Los Angeles that adopted it for their senior management team as those employees frequently worked weekends and after hours to get the job done," Pynes said. "It was also attractive from an administrative standpoint. There was no tracking and no carrying accrued but unused vacation over each year on the books as a payout liability."

    On the other hand, she said that a small, creative agency in Los Angeles that had planned to roll out an unlimited vacation policy "because it was trendy and sounded like a good idea" later changed its mind.

    "When they realized they would have a hard time denying time-off requests with an unlimited policy and a small, specialized staff, they ultimately determined it wasn't for their culture and workflow," she said.

    Brantner noted that such policies also won't work at companies "that tolerate gossip or poor evaluations for those who take the time the policy permits." Managers can't encourage unlimited time off, she said, and then allow resentment to fester when someone actually takes advantage of the perk.

    Wahlander noted that another downside to unlimited vacation is that very conscientious employees may not take a lot of time off, while less conscientious ones may abuse the privilege.

    "There are definitely people I know who work way too hard and don't take time off, and they should," he said. But in practice, he noted, "a lot of employers are going to encourage [conscientious] workers to take time off because it benefits them. The employee is refreshed."

    By Dana Wilkie   Mar 20, 2017

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    Source: The Society for Human Resource Management (SHRM):

  • 23 Mar 2017 5:57 PM | Bill Brewer (Administrator)

    Following one of the most contentious presidential elections in U.S. history, it is easy to overlook that Donald Trump and Hillary Clinton agreed on one important workplace issue: For the first time, both the Democratic and Republican candidates put forth proposals supporting national paid family leave. 

    Perhaps that’s a reflection of the fact that most Americans—regardless of where they fall on the political spectrum—favor a paid and universally mandated family-leave law, according to the National Partnership for Women and Families. Currently, the United States is the only developed country in the world that doesn’t guarantee time off for parents and other caregivers at the federal level. 

    Until recently, states and cities generally didn’t offer paid parental leave either, but that has been changing. New York passed the most generous state-backed family-leave policy to date in 2016. The law allows for up to 12 weeks of paid time off for new parents to bond with their child (including an adopted or foster child) and permits the same leave to anyone who needs to care for a family member with a serious medical condition or to handle responsibilities for a spouse, child or parent called to active military service.

    California, New Jersey, Rhode Island and Minnesota have paid-family-leave policies as well, as do San Francisco and Montgomery County, Md. In addition, legislators in Washington, D.C., passed a generous paid-leave law in December 2016.

    women27% of women have quit a job due to familial responsibilities. Source: Pew Research Center.

    At the same time, quite a few large companies, including American Express, Deloitte, EY (formerly Ernst & Young), Campbell’s and Etsy, among others, recently rolled out or expanded their paid-leave plans—by extending the time people are allowed to take off, increasing the number of eligible individuals or expanding the scenarios included in the coverage. 

    Given the recent momentum toward more-generous family-leave policies in both the public and private sectors, it’s reasonable to ask: Is the U.S. finally moving toward a workplace that is more supportive of caregiving? 

    Maybe—but change won’t happen overnight. After all, several family-leave bills introduced in Congress over recent years stalled due to the costs associated with them or because they were deemed unfriendly to employers. Most legal experts expect President Trump’s proposal to meet a similar fate. 

    And despite widespread public interest—particularly from younger workers in the 

    fathers7 in 10 fathers who used paternity leave availed themselves of only 10 days or less. Source: Department of Labor policy brief.millennial generation—in evolving leave models to support caregiving, only 17 percent of employers offered paid parental leave in 2016, according to 2016 Employee Benefits, a research report from the Society for Human Resource Management (SHRM). 

    “I think we are in the beginning stages of [a shift toward paid leave], but America still has a long way to go compared to countries in Europe,” saysAlionna Gardner, an HR generalist/consultant withKiwi Partners Inc., an HR consulting firm in New York City with 50 employees. “Employers are starting to realize the importance of the working family and the significance of accommodating their needs.”

    The President's Plan

    Trump campaigned on the promise to bring six weeks of paid maternity leave to working mothers. Under Trump’s policy, new moms would receive 46 percent of their salary during the time off, paid for by reducing waste and abuse, such as overpayments, from within the unemployment insurance system. The plan would apply only to women who have undergone childbirth. 

    While Trump’s proposal has been criticized for excluding adoptive parents and fathers, even its opponents concede that it is a step in the right direction. 

    “I’m happy that he’s talking about it because traditionally Republicans haven’t,” says Aparna Mathur, a resident scholar of economic policy studies at the American Enterprise Institute, a nonpartisan think tank based in Washington, D.C. 

    However, Trump’s suggested funding source—using monies freed up by reducing waste—is not sustainable, Mathur says, because there are likely only a limited number of areas where expenditures can be reduced in the unemployment insurance system. 

    ‘Employers are starting to realize the importance of the working family and the significance of accommodating their needs.’
    —Alionna Gardner, Kiwi Partners Inc.

    It’s important to structure any government-mandated benefit in a way that is not a burden on businesses, particularly small companies, according to Mathur. One possible funding mechanism could be via a minimum increase on employee payroll taxes, she says. Another might be to cut spending elsewhere or to reduce inefficiencies in other government programs. 

    Trump’s proposal will likely be discussed, negotiated and updated among lawmakers, yet chances are it will ultimately stall, just as the Democrats’ Family and Medical Insurance Leave Act did four years ago. That plan would have provided partial income to workers taking family leave.

    “I don’t think [Trump’s plan] is going to be approved as is,” Mathur says. “I don’t think he has thought through a lot of the policy. The real sticking point will be how he convinces Republicans to go along with it.”

    Most legal experts share that assessment. “There is practically no chance for bipartisan support of a paid-leave law coming out of Congress,” predicts Mark Kisicki, an attorney with Ogletree Deakins in Phoenix. “The only paid leave House Republicans might support would be an amendment to the FLSA [Fair Labor Standards Act] that would allow some type of compensatory time that employees could earn—at 1.5 times their regular hourly rate [for example]—by working overtime but electing to not be paid and, instead, banking those hours for future use as paid family leave.”

    Changing Family Dynamics

    Fathers may have something to say about Trump’s moms-only parental-leave plan. Recent Pew data indicate that roughly 2 million men in the United States are stay-at-home dads. 

    Yet leave options haven’t kept pace with shifting family dynamics. Seven in 10 fathers who used paternity leave availed themselves of only 10 days or less, typically for economic reasons, a gap in policy or an unsupportive work culture, according to a recent Department of Labor policy brief titled "Paternity Leave: Why Parental Leave for Fathers Is So Important for Working Families.”

    Moreover, at companies that provide paid leave to new parents, mothers still receive nearly twice as many days as fathers (41 versus 22, respectively), according to SHRM’s 2016 Employee Benefits report, indicating that paid leave remains built around the assumption that women will take on most of the child care duties in the first weeks of parenthood. 

    There’s a generational component shaping employees’ evolving expectations as well. “Millennials and Baby Boomers are our largest living generations. Millennials and Generation Z are said to value work/life balance and flexibility just as much as, if not more than, health care,” says Jennifer Thornton, director of human resources at Terakeet, a Syracuse, N.Y.-based company with 165 employees that focuses on engagement marketing technology. 

    buildingOnly 17% of employers offered paid parental leave in 2016. Source: SHRM 2016 Employee Benefits research report.

    At the same time, the aging of the massive Baby Boomer generation is also driving change—and redefining the scope of what family leave entails, as more workers look to take paid time off to provide elder care or to recover from their own illnesses.

    Indeed, when Deloitte announced its 16-week paid-family-leave plan in September 2016, it made headlines for its decision to cover a broad array of caregiving scenarios, ranging from bonding with an infant to caring for an infirm spouse, significant other or parent.

    “I think employers should place a greater importance on the things that are important to their people,” Thornton says. “That may vary based on demographics, culture, etc., but the need for leave to focus on caregiving seems to be a recurring theme among Americans.”

    Creating a Caregiving Culture

    At the state level, job protection isn’t written into existing family-leave laws. That means many low- and middle-income workers in easily replaceable positions worry that they will be let go if they take the full leave the government provides, Mathur says.

    “Some people feel that they have to get back to work sooner because their career depends on it,” says Laura Kerekes, chief knowledge officer at ThinkHR, a company with a staff of 100 that offers HR software platforms. Headquartered in Pleasanton, Calif., ThinkHR consults with organizations of all sizes, from those with fewer than five employees to those with thousands. 

    This may be where HR professionals can make a real difference. They not only can encourage their companies to consider offering paid leave but also can work to create cultures that embrace caregiving. After all, it ultimately makes no difference whether a company offers time off if employees are too scared to use it, experts say.

    “HR has to be the leader in the evolution of parental leave in America,” Gardner says. “We are the glue that holds businesses together and, more importantly, the catalyst that invokes change in policy and organizational development. Offering paid leave is a strategic move that allows businesses to become increasingly competitive.”

    briefcase48% of men working full time reported that job demands interfered with family life. Source: Pew Research Center.

    It’s that kind of thinking that led EY, which has more than 230,000 global employees, to boost its U.S. paid parental leave to cover 16 weeks for new moms and dads, including time off for birth, adoption, surrogacy or legal guardianship, according to Nancy Altobello, the consultancy’s global vice chair of talent.

    That coverage is up from 12 weeks for new birth mothers and six weeks for dads and adoptive parents. The London-based company also increased its benefits for fertility treatments, surrogacy and adoption to make it easier for employees to manage their family needs. “I think we were a trendsetter here. We were out in front. Our policy was bold,” Altobello says. “We are all looking for the same great talent.” 

    Leaders at EY decided to improve the organization’s family-leave offerings after conducting surveys among its mostly Millennial workforce, while also reviewing and sponsoring studies on the benefits of offering paid parental leave.

    “We did analysis, we built a business case, and we built support,” Altobello explains. “We did what we did based on what people want. Everyone needs to do what works for them.”

    Terakeet took a similar approach. As a result of studying what its employees value most, the company recently adopted a policy that covers any employee eligible for job-protected leave under the Family and Medical Leave Act (FMLA). The plan includes up to eight weeks at full salary and an additional four weeks at 50 percent pay, with the option to supplement the difference with traditional paid time off.

    The company’s leaders monitor workers’ needs continuously to create what Thornton calls a “culture of feedback,” enabling them to nimbly adjust offerings accordingly. “We send out surveys; we conduct ‘ask-me-anything’ sessions facilitated by all levels of leadership; we meet regularly with midlevel managers to solicit feedback; we ask what is working and what is not,” Thornton says. 

    “Of course, we hope that the dollar value of employee retention and engagement outweighs the cost of the benefit, but, more importantly, we want to demonstrate to our team, in tangible and relevant ways, that their values are our values,” she adds. 

    ‘[Small employers] have the ability to offer flexibility to their workforce in ways that perhaps some larger companies cannot.’ 
    —Gerri Burruel, McKesson Corp.

    Kronos, a Chelmsford, Mass.-based company that specializes in workforce management, recently rolled out a policy providing paid maternity leave for 12 weeks, paid paternity leave for up to four weeks, adoption leave for four weeks plus up to $3,000 per child in adoption assistance, and up to $750 for child care financial assistance for some employees. 

    “The American workplace is placing a greater importance on people,” says Dave Almeda, chief people officer at Kronos, which has over 5,000 employees. “One of the ways that is showing up is in the area of caregiving and other benefits. I don’t think this [allows for] a one-size-fits-all approach. The benefits that companies choose to add will be directly related to the personas that they are trying to attract, engage and retain.”

    Options for Small Businesses

    The changes across the large-business landscape are undeniable. What’s less certain is what all this means for small and midsize companies. They also need to attract and retain top talent, but most lack the resources to roll out comprehensive leave plans. For many, offering unpaid time off to new parents is challenging enough, let alone footing the bill for it. 

    Fortunately, leaders in these companies need not make an either/or choice between offering a robust leave plan or doing nothing. The key for small businesses, workplace experts agree, is to build balance into their cultures.

    “The smaller companies with lesser financial resources can find ways to be flexible and support their families in a way that works for them,” says Gerri Burruel, vice president of health and wellness for McKesson Corp., a health care services and information technology company headquartered in San Francisco. 

    While McKesson is not small—it has 70,000 employees worldwide—Burruel believes that modestly sized employers can take advantage of the adaptability that often comes with smaller staff sizes. “It may not be in a formalized family- or parental-leave policy,” she says, “but [small employers] have the ability to offer flexibility to their workforce in ways that perhaps some larger companies cannot.” 

    That might include novel approaches to telecommuting and other flexible schedules such as working longer but fewer days. “Some of our smaller clients are really getting more creative about allowing employees to flex their time and schedules to be supportive of their needs,” Kerekes says. 

    A good place for small-business owners to start is to conduct an analysis comparing the cost of various flexibility and leave options against that of turnover. The median cost to replace a worker is roughly 21 percent of his or her annual salary, according to a 2015 report from the Department of Labor titled "The Cost of Doing Nothing: The Price We All Pay Without Paid Leave Policies to Support America’s 21st Century Working Families." 

    Smart workforce planning is also key. “I explain to … my clients that paid leave only becomes an additional cost if we need to hire someone to replace the person while on leave,” Gardner says. “However, if the employee and the employer both take the proper steps and plan, the workload can be divided and projects can be scheduled according to someone’s leave of absence. Many small businesses [that] take the right steps can then absorb the effects of a few weeks of leave.”  

    Who’s Paying for What

    A sampling of companies offering generous paid leave to new parents:

    Dawn Onley is a freelance writer based in Washington, D.C.  Illustration by David Vogin for HR Magazine.

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    Source: The Society for Human Resource Management (SHRM): 

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