March 2013
Welcome!
Spring is almost here! Take a moment to look ahead and see what is in the forecast for upcoming labor law developments and tips to ensure that your business is in compliance.
HR Alerts
Notice of Exchanges and Subsidies: Delayed. According to the original Health Care Reform Acts, effective March 1, 2013, employers of all sizes were required to provide each newly hired employee with a written notice of the existence of health insurance exchanges and potential subsidies available (Notice of Exchanges and Subsidies). This notice was, subsequently, required to be provided to all current employees. However, on January 24, 2013, the US Department of Labor (DOL) announced that it has delayed the compliance date for the delivery of this document. The DOL estimates that the notices (for both newly hired and current employees) will be mandated in either late summer or early fall of 2013. The DOL will publish and release a model notice prior to the new deadline. Please watch for future E-Alerts from the HR Support Center as the facts and timelines continue to evolve regarding the Health Care Reform Acts.
DOL Final Rule on AFCTCA. Effective March 8, 2013, the Department of Labor (DOL) has published a Final Rule implementing the changes to the Family and Medical Leave Act (FMLA) made by the Airline Flight Crew Technical Corrections Act (AFCTCA). The AFCTCA amended the FMLA to incorporate a special eligibility provision for airline flight crewmembers and flight attendants. The DOL clarifies how the FMLA applies to airline personnel and flight crews since those employees work in an industry with a unique system of setting work hours. The new rule explains how to calculate the required number of labor hours airline employees must fulfill within a 12-month period in order to be eligible for leave covered by the FMLA.
DOL Final Rule on FMLA Military Amendments. Effective March 8, 2013, the Department of Labor (DOL) published a Final Rule implementing the changes to the Family and Medical Leave Act (FMLA) made by the 2010 National Defense Authorization Act (NDAA). The 2010 NDAA, amended the FMLA’s military caregiver leave provision to permit eligible employees to take leave to care for certain veterans with a serious injury or illness incurred or aggravated in the line of duty, which manifested before or after the veteran left active duty. It also now allows military caregiver leave for current service members with a
serious injury or illness that existed prior to service and that was aggravated by service in the line of duty on active duty. In addition, the NDAA expanded the
qualifying exigency provision to permit eligible employees to take qualifying exigency leave for covered family members in the Regular Armed Forces and added a foreign
deployment requirement for qualifying exigency leave for all military members (National Guard, Reserves and Regular Armed Forces). For additional information on this subject, contact an HR Professional.
FMLA Forms Update. Effective March 8, 2013, employers should begin to utilize the updated Family Medical Leave Act (FMLA) forms (revised February 2013) released by the Department of Labor (DOL), when applicable. The updated forms are: FMLA Form WH-381 (Notice of Eligibility and Rights & Responsibilities), FMLA Form WH-384 (Certification of Qualifying Exigency for Military Family Leave), FMLA Form WH-385 (Certification for Serious Injury or Illness of Current Servicemember for Military Family Leave) and FMLA Form WH-385-V (Certification for Serious Injury or Illness of a Veteran for Military Caregiver Leave). The forms may be downloaded directly from the HR Support Center, HR Forms Section.
FMLA Notice Poster Update. Effective March 8, 2013, there are changes to the federal Family and Medical Leave Act (FMLA) requirements. All employers covered by FMLA must display the updated FMLA notice poster, “Employee Rights and Responsibilities under the Family and Medical Leave Act” (WHD Publication 1420, revised February 2013), in a conspicuous area easily visible to all employees and applicants for employment. The poster summarizes the major provisions of the FMLA. In addition, it must be displayed at all locations an employer conducts business, regardless if there are fewer than 50 employees employed within a 75-mile radius of the worksite. If the employer chooses to utilize electronic postings to satisfy the posting requirement, this method is permissible only if the requirements of the regulations are met. The new FMLA notice poster is available in the HR Support Center in a downloadable format.
HIPAA Regulations Updates. Effective March 26, 2013, updates to the Health Insurance Portability and Accountability Act (HIPAA) regulations may impact certain employers. These regulations are based on changes under the Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA) and the Genetic Information Nondiscrimination Act of 2008 (GINA). Although comprehensive, some key updates expand HIPAA security and privacy standards to business associates, shift the default format for patients to receive requested records from paper to electronic, reduce the paperwork necessary for patients to release health information to third parties, decrease the threshold for security breach notification, increase penalties for noncompliance, and prohibit the sale of protected health information for fundraising and marketing purposes. Note: Covered entities and business associates must generally comply with the applicable requirements of the final regulations by September 23, 2013.
The Employer Mandate
From an employer’s perspective, this is most likely the most feared aspect of Health Care Reform. In fact, the overwhelming majority of our Health Care Reform-related questions to date in 2013 have covered this topic. So the purpose of this article is to answer some of our most commonly asked questions surrounding the Employer Mandate in very clear terms.
The “Employer Mandate” is the provision in the Patient Protection and Affordable Care Act (PPACA) that requires “large” employers to provide health insurance to their full- time employees (those working 30 or more hours per week) or face a penalty. A “large” employer is defined as one that has an average of 50 or more “full time equivalent” employees on business days during the preceding calendar year. To calculate whether your organization is covered by the employer mandate, you must look at the twelve months of the preceding calendar year to determine the average number of full-time equivalents you employed over those months. Part time employees are considered fractions of full time employees for the purpose of the employer mandate calculation. Lastly, seasonal workers are excluded unless they work for the employer for more than 120 days.
The formula for determining full time equivalent employees is:
Part-time Employee Equivalents (Total Monthly Part-Time Hours/120) + Full-time Employees (30 hours/week or more) – Owners (Sole proprietors, Partners in a Partnership, Members of LLCs Taxed as a Partnership, and Shareholders who own two percent or more in an S Corporation) = Full Time Equivalent Employees.
Should you determine that your organization will average less than 50 full-time equivalent employees in 2013 (using the above calculation), you are not required to offer health insurance to employees in 2014, and, if you do offer health insurance, the federal law does not require that you offer any minimum employer contribution amount. It is important to note, however, that your state law or your insurance carrier may have minimum employer contribution requirements in order to participate in group health
plans, but these are unrelated to the federal Health Care Reform laws.
Should you determine that your organization will average at least 50 full-time equivalent employees in 2013 (using the above calculation), you will be required to
offer “minimum essential health insurance coverage” at an “affordable rate” to all full time employees (those working at least 30 hours per week) in 2014. While part time employees are included fractionally in the calculation, the federal law does not require the employer to offer health coverage to part-time employees. So what is “minimum
essential coverage?” And what is an “affordable rate?”
“Minimum essential coverage” refers exclusively to the health insurance plan design, not how much the employer contributes to the plan. In order to offer minimum essential coverage under the federal law, the health insurance carrier must pay for at least 60% of treatment costs, commonly referred to as a health plan with a 60% actuarial minimum value. In the coming months, you will probably hear this level of plan referred to as a “bronze level” plan.
On the other hand, “affordable” coverage has everything to do with how much the employer contributes to the plan. It is a common misconception that a large employer is required to contribute a specific percentage to each employee’s health insurance plan (such as 50%, 60% or 75%). Rather, the federal law requires that the company contribute enough so that the employee’s portion of the premium for employee-only coverage of the bronze level or richer plan is no more 9.5% of the employee’s total household income. Since employers generally do not know an employee’s total household income, there is a safe harbor in place for 2014 stating that employees have access to “affordable coverage” as long as the employee’s portion of the premium for single coverage for the bronze level plan is equal to or less than 9.5% of the employee’s W-2 wages.
It is certainly time to calculate your organization’s projected full time equivalent employees in 2013 to determine if your business will be subject to the employer mandate in 2014. Remember, your Human Resources Professional, your Health Insurance Broker and your Accounting Professional are all great resources for your questions in this regard.
Question & Answer
Workplace Flair and Required Uniforms: Who Pays for Damages?
Q: How should employers handle uniforms? Can employees be required to pay for them at the time of hire and can the costs for lost or damaged uniforms be deducted from an employee’s wages?
A: Under the Fair Labor Standards Act (FLSA), an employer may prorate deductions for the cost of the uniform over a period of paydays provided the prorated deductions do not reduce the employee’s wages below the required minimum wage or overtime compensation in any workweek. Uniforms or other items which are considered to be for the benefit or convenience of the employer may not be included as wages. Additionally, the FLSA does not require that employees wear uniforms. If this is a business requirement, the cost and maintenance of the uniform is considered to be an expense of the employer. If an employee damages or fails to return a uniform to an employer, the employee may not be required to pay for any of its costs if such a reduction would result in the employee’s wages being reduced to below the required minimum wage plus overtime, if applicable. This provision is effective even if the economic loss to the employer is due to the employee’s negligence. The information here is simply a summary of the federal law regarding wage deductions for employee uniforms. Many states have more restrictive, state-specific laws in place.
Helping Employees find the Greener Pasture: Your Side of the Fence
In the past few years, many companies have had to tighten their budgets in lieu of further downsizing their employee headcount as a result of the economic recession that fell onto the US during the last quarter of 2007. Consequently, organizational strategy focused on lean workforce’s with employees often juggling multiple roles without seeing an increase in pay or promotion in job title. Due to the fact that most companies were not hiring during those troubled years, workers simply put up with the burgeoning workloads in their current jobs. Morale often suffered, but it went by the wayside as employers struggled to keep afloat and employees realized all too well that there were few alternatives in the job market.
As the economy has seen a rebirth of job creation in many sectors, employers have been hiring again but also focusing on the damage of the past few years. Many employees who were exemplary performers often did not receive financial incentives during the recession years. These workers may now be seeking opportunities outside of the organization, especially if they continue to feel unappreciated, overburdened and if they have not yet seen a significant upturn in their compensation.
Employee engagement is a challenge that many companies are currently facing as a result of the recession’s aftermath. Organizations seeking to retain top talent and to recruit employees who will remain loyal to the organization must incorporate employee recognition programs that will motivate workers to highly perform as well as encourage loyalty to the organization. For this reason, employers must enact a strategic program to increase workplace morale.
When managers openly and effectively acknowledge the efforts made by their staff and communicate their appreciation of employees’ hard work, it showcases to personnel that their productivity has been noticed and valued by the employer. Organizations that have integrated employee recognition programs into practice are more likely to utilize the programs in recognizing workers for their accomplishments.
By partnering with Human Resources professionals, the management team will be able to execute an employee recognition program that will promote accolades to staff members for their dedication, as well as motivate others to strive toward excellence in their roles.
Employers, historically, have been challenged with employee retention. Today’s hurdles are magnified by the low employee morale facing many organizations as well as the
resurfacing business market. The combination of these two factors leaves many organizations vulnerable to losing top talent and appropriate, thoughtful processes must
be put into place in order to infuse the company’s culture with a positive, motivating program that will encourage employee loyalty.
Replacing top performers is difficult, expensive and time consuming. As many companies are still feeling the effects of the recent recession, focusing on budgets is still a priority within the operating costs of a majority of organizations, large and small. With careful planning and implementation, an employee recognition program will build and increase worker morale as well as help alleviate an exodus of valuable personnel as hiring begins to increase again. Organizations that remain ahead of the curve and
prepare for future hiring trends by incorporating employee recognition programs to enhance employee morale and make employees feel valued by the employer will help reduce the number of employees that may have otherwise left the company in search of greener pastures.
Tool of the Month:
IRS Independent Contractor Checklist
Misclassification of an employee as an Independent Contractor may result in significant fines and penalties. The Internal Revenue Service (IRS) uses 20 factors to determine
whether or not an employer has enough control over a worker for that individual to be classified as an employee. Designed only as a guideline, this checklist can help
determine:
- Behavioral control (factors pertaining to job instructions, training, etc.)
- Financial control (factors pertaining to investment, expenses, profit/loss opportunities, etc.)
- Relationship of the parties (employee benefits, written contracts, etc.)
To download the IRS Independent Contractor Checklist, refer to your HR Support Center Essential tab.
HRCast of the Month
Making $1.00 Equal $1.00; Celebrating Women’s History Month
March is Women’s History Month. Originating in 1981, this heritage month is a time to pay tribute to the generations of women whose contributions have proved invaluable to society and contributed toward paying women and men equally in the workplace. The Equal Pay Act requires that men and women in the same workplace be given equal pay for equal work.
On March 15th, be sure to visit the HR Support Center, and listen to this month’s HRCast to learn more about this topic.
HR Tip of the Month
Categorizing Jobs in the Workplace Before Overtime Questions Arise
It is important to ensure that jobs are appropriately categorized. The Fair Labor Standards Act (FLSA) Non-exempt Status applies to employees who are typically paid at an
hourly rate and are paid for the number of hours of labor performed. Non-exempt employees are eligible for overtime pay. The federal rate of overtime pay is 1.5 times
the employee’s hourly rate of pay for all hours worked in excess of forty (40) in the predefined seven-day workweek. All states adhere to the federal overtime rate and some
have more restrictive, state-specific overtime pay laws in place.
Did You Know?
39%
According to the “Most Wanted Office Perks and What Motivates Workers to Stay With Companies” survey conducted by Harris Interactive on behalf of CareerBuilder, 39% of employers are concerned that they will lose their top performers in 2013 due to a variety of reasons. Data collected from the survey revealed that increasing salaries and/or employee benefits are the best incentives to boost employee retention.
Quote of the Month
“I have found no greater satisfaction than achieving success through honest dealing and strict adherence to the view that, for you to gain, those you deal with should gain as
well.” –Alan Greenspan
A Look Ahead
March: (monthly)
Women’s History Month
National Nutrition Month
Red Cross Month
Social Workers Month
March 1: Employee Appreciation Day
March 1: National Salesperson Day
March 8: International Women’s Day
March 10: Daylight Saving Time Begins (clocks move forward one hour at 2:00 am, local
time)
March 17: St. Patrick’s Day
March 20: International Earth Day
March 20: Spring Begins
March 25: Passover Begins
March 31: Cesar Chavez Day
March 31: Easter Sunday
Contact Us
Paragon Business Services, Inc.
7610 N Stemmons Frwy
Suite 600
Dallas, TX 75247
Additional Contacts
Phone: 866-444-4615
Fax: 214-951-1920
Legal Disclaimer: This message does not and is not intended to contain legal advice, and its contents do not constitute the practice of law or provision of legal counsel. The sender cannot be held legally accountable for actions related to its receipt.
Paragon Business Services, Inc 