Covid-19 is changing employee benefits and retention strategies

Employee benefits and perks have always had a dual mandate of sorts- a benefit for the employee, and as a part of a larger strategy of employee retention for the company. Many benefits come with tax breaks or incentives as well, an added win for the company should they offer the perk. Enter the Covid-19 pandemic, business shutdowns, lockdowns, school closures, Zoom, etc., and the past year and a half was a whirlwind not just for employers, but for employees. How did all this pandemic mess impact employee benefits and perks?

Besides the growing calls from employees at all levels for greater flexibility in how and when to return to indoor office environments, the shift has been towards employee wellness. Many companies are now asking themselves- How can we support our employees’ well-being during this crisis? A recent study by SHRM showed that 42% of employers had improved support for employee health and well-being over the past six months, with mental health options topping the list. A new report published by LexisNexis® Risk Solutions Health Care, the 2021 COVID-19 Mental Health Impact Report, verifies that mental health telehealth visits increased during the pandemic. What is surprising is the dramatic spike of 6,500% in one year. Companies have been adding telehealth services to their group health plans both as a cost-savings measure and to improve employee wellness.

With so many employers offering remote or hybrid work-from-home opportunities, many are splurging on home office upgrade reimbursements for their employees. Everything from new stand-up desks, laptops, and comfortable chairs to faster internet service. Anything that will help employees maintain their productivity from home and benefit the company as a result.

Companies forced to have their employees work remotely coupled with the closure of schools in response to the pandemic forced the government’s hands in passing legislation to accommodate this new environment. Federal leave policies were expanded to smaller companies and covered employees who had to care for a child or close family member battling the Coronavirus. Many firms are now carrying over this additional paid time off policies from the pandemic to the new normal- whatever that may be. They are finding that offering greater flexibility to their employees to deal with these personal matters is endearing the employee to the company and improving their retention rates.

In an unpredictable world, companies are leveraging their employee benefit dollars to contribute to employee wellness and mental health, make them productive wherever they may have to work, and give them the flexibility and time off required to deal with the myriad of challenges brought on by this pandemic.

MiapayrollcenterCovid-19 is changing employee benefits and retention strategies
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Open Enrollment Guide & Resources

Companies are preparing to kick off open enrollment for their employees to choose their workplace benefits. Health, vision, dental, life insurance … even pet insurance may be up for grabs.

How can HR professionals best communicate with employees about their choices, when many workers are unfamiliar with the language and concepts of benefits offerings? What’s the best way to help employees through open enrollment season?

To continue reading, click here.

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How much ‘Paid Time Off’ should your company offer employees?

As summer draws to a close, have your employees taken advantage of all the paid vacation time available to them? Workers who don’t take sufficient time off can suffer from stress and burnout, making them less effective at their jobs. Yet a survey by employee scheduling and time tracking software provider TSheets reports that many U.S. employees don’t take advantage of employee paid time off (PTO). Here’s a closer look at what the survey found.

Continue reading here.

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6 Tips to Get Employees Off Their Phones

No matter where you go, it seems like people are constantly staring at their phone screens these days.

At the office. At dinner. During meetings. While walking down the street. On dates. In bed. (You’re probably only half-paying attention to this article right now as you attempt to multi-task between priorities and the alluring draw of your phone.)

Maybe it’s the new normal but the need to obsessively check your phone for social media updates, emails and text messages seems a bit out of control. Think about yourself for a second – what’s your first response when you hear your smartphone “ring”, “ding” or “vibrate”? Be honest. If you are like most people, your first reaction is to check your phone as quickly as you possibly can – no matter where you are or what you are doing.

Okay, so maybe I am overstating this issue a bit.  But think about this for a second. Recent research suggests that close to 40% of the US population is fearful and anxious to be without their phones for any amount of time. And consider that even the average user touches their smartphone approximately 2,600 times a day. Ask yourself – how much time do you spend a day on your phone? Where is your phone right now? Where is your phone when you go to sleep at night? (Probably right next to you if you are like most people.)

Time spent on your phone can have an impact on your focus and engagement, in both your personal and professional life. So how do you know if you are you are too connected to your phone? Consider whether you ever experienced the following symptoms:

  • Do you feel anxious when you do not have your phone in your possession or your phone’s battery is about to die?
  • Do you constantly check your phone for new texts, emails, social media updates and newsfeeds, no matter where you are at or what you are doing?
  • Do you ever experience phantom phone notification syndrome – thinking your phone is “ringing” or “beeping” when it really isn’t?
  • Do you not hear what people are saying to you or even realize that people are talking to you sometimes because you are looking at your phone?

If any of these symptoms describe you, don’t feel bad. But you should consider doing something about it. Here are some simple things to think about that can help:

  • Put the phone away. Really. Try it. Try 10 minutes. Then 30 minutes. Next time you go out for dinner, leave it in the car. Build your capacity slowly but surely. You might be surprised how this enhances your enjoyment of other things.
  • Stop checking your phone before you go to bed or first thing when you wake up in the morning. Break up your connection and dependency with your phone. It may be weird at first but you quality of sleep will improve. (If you’re thinking “wait, my phone is my alarm clock”, then buy an alarm clock and leave the phone in the other room)
  • Get an App. There are lots of Apps on the market now to help people keep track of their phone time and remind them when they are spending too much time on their phone. Look them up on your App Store
  • Smartphone use during work time. If you are a manager and concerned that your staff is always on their phone during team meetings, consider a phone ban for meetings or encourage team members to minimize their phone time in order to be more focused.
  • Proactively use your Employee Assistance Program (EAP) for assistance with issues like this that can have a negative impact on your life. Encourage your employees to do the same if you think their smartphone obsession is impacting their productivity. EAPs are set up to address and resolve these type of employee issues so you, as the employer, don’t have to. EAPs provide 24/7 hotline support and short-term counseling options.
  • Don’t have an EAP? Consider setting one up. The investment may be as low as a few hundred dollars a month and you’ll be providing your employees with the support they need while protecting your bottom line.

Like I always tell my teenage son, there’s a big world out there. So get off your phone and enjoy it.

Miami Payroll Center partners with CCA, Inc, a national EAP provider that has administered these programs for over 30 years. If you have questions about this article or want more information about how to set up an EAP at your company, call us to et up an informational call or meeting.

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Employees have issues…And it’s impacting your business!

Do your employees ever bring their personal drama into the office? Do their personal issues ever impact their focus and productivity? Do you sometimes have to be their “therapist” in the office? If you answered “yes” to any of these questions, then this article is for you.

Mental Health in the workplace. Yes, I know. Not the most comfortable topic to discuss, but maybe it should be. When you look at some of the recent numbers related to Mental Health in this country, it’s pretty staggering and a bit scary. Consider the magnitude of some of the trends:

  • Anxiety disorders are the most common mental illness in the U.S., affecting almost 40 million adults in the United States age 18 and older (18% of the population).
  • An estimated 44% of all Americans feel more stressed out today than they did five years ago.
  • An estimated 20.2 million adults (8.4% of the population) have a substance use disorder.
  • An estimated 15.7 million adults aged 18 or older in the United States have had at least one major depressive episode in the past year (6.7% of all U.S. adults).
  • Psychiatric disorders have now surpassed other disorders such as cardiovascular diseases and cancer as the number one cause of disability.
  • Suicide in the United States has surged to the highest levels in nearly 30 years with increases in every age group except older adults.

Obviously, these are pretty alarming numbers, but what does all this mean for your workplace? It actually means a lot. Whether you know it or not, your employees’ issues are having a significant impact on your bottom line. Consider the following:

  • An estimated one million workers miss work each day because of stress, costing companies an estimated $602 per employee per year.
  • Over 10% of employees state that mental health issues like depression and anxiety limit their work productivity.
  • Depression leads to 200 million lost workdays each year, resulting in an estimated cost of more than $23 billion in lost productivity annually.
  • Lost work productivity (including absenteeism and poor job performance) associated with substance abuse costs employers an estimated $197 billion a year.

So what does all this mean for your specific company or office? Not to treat the issue lightly, but in today’s workplace, your employees do have “issues”. Your employees have them more than ever in the past. And smart employers are beginning to understand that they should invest in programs and services that promote a psychologically healthy workplace as healthy employees produce healthy businesses. What are some easy things that you can do to start addressing these issues in your office? Consider the following tips:

  1. Look for and recognize warning signs. When one of your employees is dealing with an issue, there are always early indicators such as missed work time or diminished performance.
  2. Don’t play therapist. Set a professional boundary with your employees. You can show concern and empathy for their issues but don’t turn work time into a therapy session. If you get too involved, it will make it harder to performance manage them later.
  3. Proactively encourage professional help and use resources like your Employee Assistance Program (EAP). Let your employees know you recognize there is an issue and, because you are concerned for their well-being, that they should utilize resources available to them to help address stress and mental health related problems. Small issues can turn into big office challenges so get involved early. Encourage employees to take care of themselves and refer to your EAP, if you have one. EAPs are set up to address and resolve these type of employee issues so you, as the employer, don’t have to. EAPs provide 24/7 hotline support and short-term counseling options.
  4. Don’t have an EAP? Consider setting one up. The investment may be as low as a few hundred dollars a month and you’ll be providing your employees with the support they need while protecting your bottom line.

Miami Payroll Center partners with CCA, Inc, a national EAP provider that has administered these programs for over 30 years. If you have questions about this article or want more information about how to set up an EAP at your company, contact our team at (305) 273-4066 or via email at info@miamipayrollcenter.com.

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Are Your Employees Eligible for Loan Forgiveness?

Last month LendEDU reported that almost half of all college students surveyed believe they will be entitled to student loan forgiveness.  Most of them will be disappointed to find out that this isn’t true. Public Service Loan Forgiveness (PSLF) was designed only for those employed in certain professions. Generally, employment with the following types of organizations qualifies for PSLF:

  • Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
  • Government organizations at any level (federal, state, local, or tribal)
  • Other types of not-for-profit organizations that provide certain types of qualifying public services

Forgive-student-loan-debtContrary to popular belief, this program doesn’t simply wipe out college loan debt. The PSLF was designed to forgive the remaining balance on Direct Loans after 120 qualifying monthly payments have been made while working full-time for a qualifying employer.

If you’re a non-profit and a qualifying employer, you need to be prepared to assist your employees and understand the information being requested. If you’re not a qualifying employer, you also need to be prepared to share this information with your employees as the misconception about who is eligible seems, at least according to this recent survey, to be overwhelming!

The process for borrowers begins with employer certification. If you’re like many employers, you have not yet prepared to handle employee requests for loan forgiveness. October of 2017 is the date when the first borrowers will become eligible for PSLF, but many employees are submitting requests ahead of time to find out how close they are to qualifying.

At minimum, we suggest a few simple steps to prepare for employee requests related to the PSLF:

  1. Develop a written process that outlines how you will handle employee requests.
  2. Make sure your payroll and HR staff are familiar with the employment certification form which can be found here.
  3. Designate a person responsible for the completion of the forms and determine who is permitted to sign as the employer’s “authorized official.”

PSFL Program is not new, but this is the first year that employees can begin receiving loan forgiveness. Don’t wait until October, when the Program is sure to receive increased media attention, to consider how you will respond to employee requests!

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Are Your Employees Eligible for Loan Forgiveness?

Last month LendEDU reported that almost half of all college students surveyed believe they will be entitled to student loan forgiveness.  Most of them will be disappointed to find out that this isn’t true. Public Service Loan Forgiveness (PSLF) was designed only for those employed in certain professions. Generally, employment with the following types of organizations qualifies for PSLF:

  • Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
  • Government organizations at any level (federal, state, local, or tribal)
  • Other types of not-for-profit organizations that provide certain types of qualifying public services

Contrary to popular belief, this program doesn’t simply wipe out college loan debt. The PSLF was designed to forgive the remaining balance on Direct Loans after 120 qualifying monthly payments have been made while working full-time for a qualifying employer.

If you’re a non-profit and a qualifying employer, you need to be prepared to assist your employees and understand the information being requested. If you’re not a qualifying employer, you also need to be prepared to share this information with your employees as the misconception about who is eligible seems, at least according to this recent survey, to be overwhelming!

The process for borrowers begins with employer certification. If you’re like many employers, you have not yet prepared to handle employee requests for loan forgiveness. October of 2017 is the date when the first borrowers will become eligible for PSLF, but many employees are submitting requests ahead of time to find out how close they are to qualifying.

At minimum, we suggest a few simple steps to prepare for employee requests related to the PSLF:

  1. Develop a written process that outlines how you will handle employee requests.
  2. Make sure your payroll and HR staff are familiar with the employment certification form which can be found here.
  3. Designate a person responsible for the completion of the forms and determine who is permitted to sign as the employer’s “authorized official.”

PSFL Program is not new, but this is the first year that employees can begin receiving loan forgiveness. Don’t wait until October, when the Program is sure to receive increased media attention, to consider how you will respond to employee requests!

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Fiduciary Rule Delayed

Unless you’re a benefits or retirement manager, you probably have not paid much attention to the Department of Labor’s Fiduciary Rule announced last April. One of the rule’s goals was to put an end to the billions of dollars a year that investors are estimated to waste paying exorbitant fees. According to InvestmentNews.com, “The idea is that the regulation will stop advisers from putting their own interests in earning high commissions and fees over clients’ interests in obtaining the best investments at the lowest prices.”

DOLIn short, the DOL’s definition of a fiduciary requires that financial advisors, salespersons, planners, agents and brokers act in the best interests of their clients, put their clients’ interests above their own and clearly disclose all fees and commissions in dollar form. The rule creates a much greater level of accountability than salespersons and others have seen in the past and would have had a significant impact on those who rely on commission based sales. Retirement planning for defined contribution plans (401(k), 403(b), employee stock ownership), defined benefits plans (pension plans) and IRA’s could have seen significant changes.

On February 3, 2017, President Trump signed an Executive Order delaying the rule’s implementation by 180 days (6 months). This order includes instructions for the DOL to carry out an “economic and legal analysis” on the rule’s potential impact. The memo also stated that if the DOL concludes that the regulation hurts investors or firms, it can propose a rule “rescinding or revising” the regulation. Acting U.S. Secretary of Labor Ed Hugler issued a statement following the release of President Trump’s memorandum on the Department of Labor’s Fiduciary Rule that said only “The Department of Labor will now consider its legal options to delay the applicability date as we comply with the President’s memorandum.”

For now, this means that retirement investments and planning will continue as is. Although the battle to implement the rule took six years, it will come as no surprise if it is rescinded in less than six months’ time. A potential win for the financial services industry, a potential loss for retirement investors.

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Forget the Holiday Party, We’ve Got Human Resources Issues to Discuss!

It’s late November and the expectations placed on a human resources blogger this time of year usually aren’t very high. Social norms dictate that we come up with a list of the “Top Ten Things” we’re thankful for in the office or some sage advice on how to throw a fun holiday party that doesn’t end in litigation or termination. But this year is different. This year the news is a little too big to focus on best practices to prevent HR headaches after the office festivities.

We just elected a new president. Chances are you’re either still celebrating or still in shock. President-Elect Trump made many campaign promises and, while we don’t know yet which ones he will deliver on, several key promises will directly affect employers. Among the safe predictions are a focus on immigration worksite enforcement and sweeping changes and/or a total repeal of the Affordable Care Act. Another prediction is lifting the new payroll threshold for overtime.[1] It’s this last item that has caused many to breath of sigh of relief. But don’t breathe too deeply!

According to SHRM, President-elect Trump can’t do much about the “December 1st effective date of the new overtime rule, which doubles the exempt salary threshold under the Fair Labor Standards Act (FLSA) to $47,476.[2]” Even if it was a top priority of the new administration, changes would take a very long time thanks to the notice-and-comment period required by law.

So for the time being, we all need to be prepared to follow the overtime rule as written. It does appear that Trump is open to the idea of calling for a small-business exemption to the rule after he takes office in January, but by then businesses will have already made a lot of changes to comply with the rule.

It’s also possible that Trump will decide to leave the rule stand as-is. While Trump did say in a brief interview on the campaign trail that he favored a small-business exemption, any changes to the current rule could negatively impact some of his supporters, many of whom could earn more once the rule is in place.[3]

There are many HR regulations that could see sweeping changes under a Trump administration: Minimum Wage, FLSA, Pay Equity, Family Medical Leave and Health Insurance just to name a few. All were things discussed on the campaign trail at one point or another…but will they all be changed? Much like this election, it’s nearly impossible to predict!

Our job will require something much harder than predictions. As HR Professionals, we will need to determine what the changes mean to our own organizations and which will mandate action. If we’ve already reclassified employees based on the overtime rule, will be reclassify them again if the rule is changed? Sure, it would be allowed by law, but would it be the best thing for our organization? What is legal and what is right are not always one in the same.

Don’t think about it too much… or that fourth drink at the office party will seem completely reasonable!

What potential HR changes are you looking forward to under the new administration? We’d love to hear from you. Post your comments below.

 


 

[1] http://www.hreonline.com/HRE/view/story.jhtml?id=534361418

[2] https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/trump-overtime-rule.aspx

[3] http://www.hreonline.com/HRE/view/story.jhtml?id=534361495

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The Latest Corporate Benefit: the 529 Plan

The 529 plan is coming to the workplace.

529 college savings planTo make it easier for employees to save money for college, more companies are adding 529-plan perks to workplace-benefits packages. Some employers allow workers to fund these college-savings vehicles automatically via payroll. Others kick in matching contributions. The goal is to make saving for college akin to saving for retirement by providing some of the same incentives that encourage workers to contribute to 401(k) accounts.

“We have absolutely seen an uptick in both interest and numbers of employers offering college-savings plans in the workplace, says Kris Spazafumo, a vice president at American Funds, whose CollegeAmerica 529 plan is the country’s largest by assets under management, according to Morningstar.

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Hire Top Talent Without Breaking the Budget? Think Remote!

Few small businesses have the budget necessary to compete with the biggest companies when it comes to hiring top talent. But money isn’t everything! Offering a flexible work environment that increases work-life balance could be worth its weight in gold.

Let’s face it – the days when 100% of the workforce actually went in to the office every day to work are long gone. Thanks to advances in technology, and a shift in employee priorities as the Millennials joined the workforce, our culture is rapidly changing to one that favors working remotely.

w-l-balanceBy offering a flexible work environment where employees can work one or more days outside the office, you can send a message that not only are you aware of your employees’ need for a better work-life balance, but that you trust them and believe in their professionalism. South Florida is rife with traffic jams, long commutes and terrible drivers. Imagine what reducing an employee’s commute would do for their morale, their wallet and their level of happiness! One less day of gas and tolls, one less day of a frustrating commute that can save an hour or two of time, one less day of professional attire to be dry cleaned.

The results of a 2015 US Department of Labor survey showed that 23% of employed Americans did some or all of their work from home in 2014.  While we don’t have a new report yet this year, it’s a safe assumption that this number has risen to more than 25% of employed Americans. Data from the 2015 report also shows that, on the days they worked, 39% of employed people age 25+ with a bachelor’s degree or higher did some or all of their work at home.

Few companies have a business model that could support a completely remote workforce. However, providing the option to work from home even one day a week might be enough to retain or recruit top talent to your organization.

Have you been successful in offering remote work options for your employees? We’d love to hear what’s been working for you. Post your comments below.

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The Never Ending Discussion of Wages

It’s almost impossible to watch the news or follow social media without hearing at least one side of the debate for raising wages. Last year The Wall Street Journal and Vistage International conducted a survey of 728 small business owners across the U.S., from a range of industries, and found that small business owners were evenly split in their opinion of raising the minimum wage, with about 49% of respondents saying the federal minimum wage should be raised, while 49% disagreed.

While reasonable arguments can be found on both sides of the fence, one thing that is certain is that businesses must revisit the issue of wages in their overall workforce strategy. In our last post, we mentioned that our employees can’t help comparing what they’re making to what their peers are making, both inside the organization and out. Last week, Costco announced that it will be raising wages for both new and current entry-level workers in the U.S. This means that Costco will be paying workers at least $13 an hour. Even those who don’t work in retail will be comparing their pay to that of Costco. Analysts suggest that, as the economy adds jobs, retailers will have to start paying their front-line employees more if they want to retain them.

Couple the Costco wage increase news with the increase Walmart announced a few months back, and it is easy to predict that the U.S. labor market might be tightening. February’s Department of Labor monthly report showed strong hiring in the U.S. economy as evidenced by the addition of 242,000 jobs and a steady unemployment rate of 4.9%. The U.S. economy has been adding jobs 72 months in a row. As the economy improves and job openings become more plentiful, it is safe to assume that workers will have more opportunities to jump from job to job in search of the best wages.

According to The Atlantic, many businesses are reporting that the competition for low-wage workers is growing and it’s harder to find employees to fill vacant positions. The Wall Street Journal reports that one third of small firms stated that they had lost workers due to higher wage offers by competitors or other businesses.

Of course, it’s not always feasible to adjust wage scales. If this is the case, then it’s time to revisit other ways to keep your employees motivated, productive and loyal. In terms of keeping your employees happy, money isn’t everything. But it helps.

Do you think wage increases outside of your industry will have any impact on your workforce? Weigh in by commenting below.

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Are you Paying Too Much – Or Too Little?

Choosing how much to pay your employees can be difficult. Are you paying too much? Too little? How much is enough to keep your best and brightest employed within your organization? Being fair to all employees while also showing that they’re valued takes more than a standard pay scale. While the ability to hire a great candidate is often reliant on salary, retaining a great employee may require a little more than just dollars and cents.

Fairness in compensation within your organization, otherwise known as internal equity, is somewhat of a preoccupation in today’s workplace. Our employees can’t help comparing what they’re making to what their peers are making, both inside the organization and out. While we try to keep salary information confidential, the information is easily obtained, sometimes by word of mouth and by information found online. Creating internal equity can help create and maintain the loyalty of your employees.

Looking at the balance between internal and external salary equity is a great place to start. However, no matter how complex and complete your compensation formulas are in reality (assuming all related laws are considered), it is how they are perceived that can truly impact employee loyalty and happiness. If employees perceive that they are not being paid fairly in comparison to their coworkers, they may not feel valued and may leave. If the employee perceives that they do more work than their peers but are paid the same, this may create a similar outcome.

Wages should not be based on job title alone. The tasks completed are more important than the titles. Similar tasks should earn similar wages. Of course, beyond job tasks it is certainly acceptable to consider an employee’s education and prior experience.

More and more employers are creating compensation plans built on the idea of transparency, which helps them to explain why compensation decisions were made. Explaining the factors that led to a compensation decision will allow employees to understand your exact reasoning, which can result in the perception of being paid fairly. The employee’s perception of being paid a fair wage is just as important as the wage itself.

If you haven’t reviewed your pay or internal equity structure recently, now is the time. Your best employees are probably already aware of how much their peers are making and how much they could be making elsewhere.

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Attendance at the Holiday Party is Optional…. But We EXPECT you to be there!

Are you ready for the annual holiday party? In today’s multicultural, highly litigious workplace, some employers have chosen not to celebrate the holidays at the office at all. Trying to figure out how to celebrate Christmas, Hanukkah, Kwanzaa, Ramadan, and Bodhi Day in one event is reason enough to consider pulling the plug on holiday celebrations altogether. Still, it’s hard to break a habit and many businesses still revere the party as a time honored tradition to be upheld. Not all employees, however, may be eager to attend.

Holiday_PartyWhile employers don’t normally require their employees to attend a holiday party, many strongly encourage it, creating an expectation of attendance. If you’re one of those organizations, we suggest you reconsider the message on your holiday party invitation for two reasons. The first is related to liability and the second is related to wage and hour laws.

As an employer, your liability for something that happens at a holiday party is going to depend primarily on whether the party can be considered within the course and scope of employment. If employees are required or expected to attend, then it’s a safe bet that the party is within the course and scope of employment. If an employee is injured at your party it could be compensable under your workers’ compensation policy. If an employee hurts someone who is not an employee, you could be legally responsible for their negligence.

If there is no expectation of party attendance, then the party may not be in the course and scope of employment, which may relieve you of some of these liabilities as an employer (Of course, an employer can always be held liable for harm resulting from negligence).

No one expects to pay employees an hourly rate for attending a party, but if non-exempt employees are required or expected to attend then, by law, you should pay them for the hours they attended the party. If those party hours, on top of their normal work hours, put their weekly hours over 40, you could find yourself paying overtime for party attendance.

If there is no expectation of party attendance then you shouldn’t have to pay for the party time unless the employee performed actual work. Two months ago we posted about meal breaks, and the same concepts apply here.  If you have your staff working at the party to register party-goers, hand out name tags or table numbers, decorate or perform any other duties that you assign to them then, legally, they should be paid for their time.

So make your holiday party optional…the fun people will attend regardless and you will have two fewer headaches to worry about!

Merry Christmas everyone.

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Understanding the Reporting Requirements of the Affordable Care Act

2016 is just a few short months away, and with it will come new responsibilities related to the Affordable Care Act (ACA). Do you have a plan for collecting the data required to complete IRS forms 1094-C and 1095-C?

aca-healthcare-reformThese Forms are to be filed by employers who are required to offer health insurance coverage to their employees under the ACA and who are recognized as an Applicable Large Employer (ALE). An ALE is an employer who has 50 or more full-time employees or 50 or more full time equivalent employees. Filing in early 2016 for the 2015 calendar year is actually based on the size of your company in 2014. Confused yet? Maybe this will help:

If your business had 100 or more full time employees in 2014: In 2015 you must comply with the ACA mandate of offering health coverage to 100% of your full time employees and their dependents (until age 26) and report this information on IRS forms 1094-C and 1095-C in 2016.

  • If your business had between 50 and 99 full time employees in 2014: In 2015 you must comply with the ACA mandate unless you qualified for transition relief. If you did qualify for transition relief, please note that the ACA mandate will apply to you for the 2016 plan year (reported in 2017).
  • If your business had less than 50 full time employees in 2014: You are not an ALE and are not required to comply with the ACA mandate.

Merely counting your full time employees will not help, however. The IRS qualifies employers as ALE’s based on full time employees and full time equivalent employees. So how many full timers do you really have? Based on the definition related to the reporting requirement, a FT employee works an average of 30+ hours per week or 130 hours per calendar month and at least 120 days per year. That’s the easy part. The next piece is a little more tricky.

The hours of part time employees are added together to equal those of a full time employee and are then used to calculate whether the mandate applies to your business. So two part time staff each working 15 hours per week can be the equivalent of one full time staff member who works 30 hours per week. The folks at Healthcare.gov know this is confusing, so they have a Full-time Equivalent (FTE) Employee Calculator available on their site to help.

So why are there two forms and what will the information be used for? The 1095-C provides information about health insurance and is sent to the IRS and to your employees. The 1094-C acts as a cover page for the 1095-C and is only sent to the IRS. The IRS will then use the data to identify employees who are eligible for subsidies to purchase coverage through the Exchange, employees who are without Minimum Essential Coverage (MEC) and who may be subject to an Individual Shared Responsibility Penalty, employers who are failing to offer Minimum Essential Coverage (MEC) to full-time employees and employers who fail to offer Minimum Value Affordable Coverage to full-time employees. Employers who are failing to offer coverage may be subject to penalties.

If you’re still unsure about what these requirements mean to your organization, we encourage you to contact our offices today.

popdevteamUnderstanding the Reporting Requirements of the Affordable Care Act
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