Volume 8 : Issue 11
TM
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Special Issue on Employee Benefits Planning and Compliance
Twisted in Knots Over Benefits Compliance
Another Take on Actuarial
Value
ACA is
Alive and Well
Stacey
Stewart, JD
Senior Advisor,
Are Employers Paying More for Employee
McGriff Insurance Services
Benefits?
Student Loan
Repayment
Programs
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86% of young workers would commit to their employer for 5 years if they helped to pay off student loans.
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Cynthia Y. Thompson, MBA, SHRM-SCP, SPHR Publisher
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Contributing Writers
Austin Baker Maddie Bradi Bruce E. Buchanan Mary E. Buckley Carlos Cano William Carmichael Meeta T. Dama Harvey Deutschendorf Tommy M. Eden III Robert S. Ellerbrock III Brad Federman Jeanne J. Fisher Alex Gramling Murray L. Harber Kim Lafevor Michael L. Mansfield Carolyn McNairy Jasmin Nuhic Susan Schaecher Sarah Smith Richard Works Board of Advisors
Austin Baker Jonathan C. Hancock Ross Harris Diane M. Heyman, SPHR Terri Murphy Susan Nieman Robert Pipkin Ed Rains Michael R. Ryan, PhD Contact HR Professionals Magazine: To submit a letter to the editor, suggest an idea for an article, notify us of a special event, promotion, announcement, new product or service, or obtain information on becoming a contributor, visit our website at www.hrprofessionalsmagazine. com. We do not accept unsolicited manuscripts or articles. All manuscripts and photos must be submitted by email to Cynthia@hrprosmagazine.com. Editorial content does not necessarily reflect the opinions of the publisher, nor can the publisher be held responsible for errors.
Features
4 note from the editor 5 Profile: Stacey Stewart, JD, Senior Advisor, McGriff Insurance Services
13 Get Onboard the HR Conference Cruise! 14 The Forgotten and Disengaged: How to Find More Skilled Workers 16 Be a Hiring Ham: Audit Your Hiring Process Now for 2019 Success 24 Creating “Win-Win” Cultures Through Effective Professional Development Programs 42 Book Look - Detonate: Why and How Corporations Must Blow Up Best Practices 50 9 Reasons to Hire a Military Veteran
Educational Opportunities for HR Professionals
21 WGU Tennessee Fully Aligned with SHRM’s HR Curriculum 39 Union University Honors Dr. John Carbonell 45 Next Online HRCI Certification Exam Prep Class Begins February 20 49 University of Memphis – the Only AACSBAccredited Academic Training in HR Management in the Memphis Metropolitan Area
Employee Benefits
12 Heading into 2019 the ACA is Alive and Well 20 Value Based Benefit Design
HR Professionals Magazine is published every month, 12 times a year by the Thompson HR Firm, LLC. Reproduction of any photographs, articles, artwork or copy prepared by the magazine or the contributors is strictly prohibited without prior written permission of the Publisher. All information is deemed to be reliable, but not guaranteed to be accurate, and subject to change without notice. HR Professionals Magazine, its contributors or advertisers within are not responsible for misinformation, misprints, omissions or typographical errors.
22 Student Loan Repayment Programs – The New Benefit Frontier
©2017 The Thompson HR Firm, LLC | This publication is pledged to the spirit and letter of Equal Opportunity Law. The following is general educational information only. It is not legal advice. You need to consult with legal counsel regarding all employment law matters. This information is subject to change without notice.
32 Twisted in Knots Over Benefits Compliance?
26 Another Take on Actuarial Value 31 How to Demonstrate a Commitment to the Health & Wellbeing to Your Employees
Employment Law
10 EEOC’s New Strategic Plan and What it Means for HR Professionals
17 Tennessee Workers’ Compensation Law and Practice 18 State Legalization of Marijuana and its Implications for Employers
28 Federal Appeals Court Overturns Decades of Precedent to Revive Workplace Discrimination Claims 30 Upcoming Supreme Court Workplace Issues
36 What Could Possibly Go Wrong? The Unwitting Consequences of Bonuses
37 Littler Event | 2018 Atlanta Fall Breakfast Briefing November 6 38 “Joint-Employer” Standard: Good News for Staffing in a Tight Labor Market
40 Same-Sex, Different Day – Seventh Circuit Upholds Same Sex Discrimination Claim 46 Immigration Compliance in the Health Care Field
Industry News
6 Highlights of the 2018 TN SHRM State Conference & Exposition in Sevierville September 19-21 8 Highlights of the ARSHRM ELLA Conference in Little Rock September 20-21
34 Highlights of ALSHRM Strategy in the Sand in Orange Beach September 28 48 Highlights of the 2nd Annual SHRM-Memphis Inclusive Diversity Conference October 5
December 2018 Issue Features Compensation Compliance and Performance Management Plus Employment Law Updates and Employee Benefits Deadline to reserve space November 15
44 Are Employers Paying More for Employee Benefits? www.HRProfessionalsMagazine.com
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a note from the editor
Charles and I caught a photo op with Maddie Bradin, Data Facts National Account Executive in Atlanta; and Stewart Gott, National Account Executive, in Nashville, at the Excellence Through Leadership Conference in LaGrange, GA, October 18-19 sponsored by Strategic HR Partners.
I’m so excited about our annual issue on employee benefits planning and compliance! We have some fantastic articles to help you through the maze of employee benefits and compliance issues. We have a very important article by Alex Gramling about actuarial value that you will find very educational. Robert Ellerbrock provides an update on the ACA. And yes, it is alive and well. Jeanne Fisher contributed an excellent article on a very hot topic to all HR professionals on student loan repayment programs. Don’t miss Carolyn McNairy’s important article on how to become compliant in employee benefits and stay compliant. What an honor to have Stacey Stewart on our November cover! Stacey is an employee benefits attorney and senior advisor with McGriff Insurance Services. She provides guidance primarily on health and welfare plan design and compliance, and is an expert in how the ACA, ERISA, HIPAA, COBRA and the IRC impact employers. Stacey can definitely help you through the employee benefits and compliance issues you face. I know you will enjoy reading about her on Page 5.
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This issue also includes coverage of many of the SHRM fall conferences from Alabama, Arkansas, and Tennessee. In addition to the conference highlights in this issue, you can find exclusive video interviews with the conference leadership, the keynote speakers, and some of the top concurrent speakers from each conference on our Facebook page, www.facebook/hrprofessionalsmagazine. com, and also on YouTube. Please Like us on Facebook, and follow me on YouTube at Cynthia Y. Thompson, MBA, SHRM-SCP, SPHR. When you Like our Facebook page, you will receive instant notifications of exciting interviews, important breaking news, and updates on HR events in your area. Our December issue will cover the latest compensation and performance management issues and solutions. Please mark your calendars and plan to join us November 29 for our monthly webinar on Strategic HR Leadership sponsored by Data Facts. Watch your email for your invitation. If you are not currently on our email distribution list, please visit our website and click on Subscribe.
Wishing you and your family a lovely Thanksgiving season.
cynthia@hrprosmagazine.com @cythomps on Twitter
Stacey on the cover
STEWART
STACEY STEWART, JD Senior Advisor, McGriff Insurance Services Stacey Stewart is an employee benefits attorney with over a decade of practical experience in the large law firm environment. Her expertise extends to the legal, administrative and practical considerations that may arise in health and welfare programs, qualified and non-qualified retirement plans and equity-based compensation arrangements. Stacey takes pride in her ability to provide practical, userfriendly advice. In her current role, Stacey provides guidance primarily on health and welfare plan design and compliance and is an expert in how the ACA, ERISA, HIPAA, COBRA and the IRC impact employers. She is an excellent public speaker and enjoys conducting seminars and training sessions. Given her broad experience, Stacey is often called in to consult on difficult, multi-faceted or unusual situations. Before joining McGriff Insurance Services in 2015, Stacey focused her law practice on helping employers design and maintain benefit plans and executive compensation arrangements that meet applicable goals and drive the employers’ vision. She regularly represented clients in regulatory inquires and plan audits and often assisted with the benefits side of mergers and acquisitions. Stacey received a BA from Vanderbilt University, a JD from Tulane University and an LLM in Tax Law from NYU. ď Ž
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HIGHLIGHTS
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1 Rebecca Harmon, SHRM-CP, PHR, Director of the TN SHRM State Council welcomes attendees. 2 2018 TN SHRM State Council 3 Laurie McIntosh, SHRM-SCP, CAE, SHRM Field Services Director for Tennessee. Laurie presented “SHRM – Recertification Importance” on Thursday.
4 4 2018 TN SHRM State Conference Committee (L-R) Conference Chair at podium, Rebecca Harmon; Joy Eargle, Mike Willard, Melanie Walsh, Brandon Morrow, Joanna Richardson, Debbie Light, Lori Ridings, Leneen Evans, Catherine Barnes. Not pictured are Jackie McClure and Stacy Myers.
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5 Dr. John Carbonell, SHRM-SCP, Associate VP for Human Resources at Union University, received the James House Williamson Award, which is Tennessee’s most prestigious Human Resources award. 6 Lori Ridings, TN SHRM State Council Awards Chair, presented the Tennessee HR Excellence Awards (L-R) Amy West, Jennifer Jones, Joy Eargle and Fred Bissinger, and Tiffany McGhee with Mercer, who sponsored the awards. (Winners not pictured are Debbie Harris and Jeffrey Jensen.)
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7 2018 TNSHRM Student Chapter Scholarship Recipients (L-R) Debbie Mackey, TN SHRM State Council College Relations Chair; Billy Spencer III, Haleigh Theele, and Tiffany McGhee with Mercer, who sponsored the awards. 8 Dr. Kim Estep, Chancellor of WGU Tennessee at Western Governors University. WGU was a platinum sponsor. 9 Amy West, 2019-2020 TNSHRM State Council Director-Elect, presented Rebecca Harmon, 2017-2018 TNSHRM State Council Director, a plaque of appreciation for her service and leadership.
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10 Mary Dee Allen, attorney with Wimberly Lawson, presented Social Media in the Workplace, during the Legal Day on Wednesday. Wimberly Lawson has offices in Knoxville, Morristown, Cookeville, and Nashville. Other attorneys from Wimberly Lawson who spoke were Fred Bissinger, Gerard Jabaley, Howard Jackson, and Ed Trent. 11 (L-R) State of Tennessee Department of Human Resources Commissioner Rebecca Hunter and State of Tennessee Department of Human Resources Chief Learning Officer Dr. Trish Holliday discussed “A Framework for Driving Performance Excellence: A Case Study of Success,” on Thursday. 12 (L-R) Dale Thomas and Robert Binkley Jr., attorneys with Rainey, Kizer, Reviere & Bell PLC with offices in Memphis, Jackson, Nashville, and Chattanooga.
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13 Jon Petz was the General Session opening speaker on Thursday. His topic was, “Significance in Simple Moments.” 14 Antone Davis discussed “Creating a Winning Culture in the Workplace.” Antone was a football player at the University of Tennessee and was the 8th overall draft pick in the first round to the Philadelphia Eagles. 15 Christopher L. Hinton, VP for Compensation and Benefits at TVA, and a member of the TVA Retirement Services Board, was the closing speaker. He spoke on “Maximizing HR’s Impact on the Business.”
16 Members of SHRM Chattanooga announced the 2019 TN SHRM Conference & Exposition that will be in Chattanooga September 18-20.
16 www.HRProfessionalsMagazine.com
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September 20-21, 2018 | Robinson Center | Little Rock, Arkansas
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1 Rick Roderick, director with Cross, Gunter, Witherspoon & Galchus, P.C., was the opening keynote speaker on Thursday. Rick presented, “Preventing Violence in the Workplace.” 2 Wayne Young, attorney with Friday, Eldredge & Clark, presented “Arkansas & Federal Legislative Update.” 3 “2018 Immigration Law Updates” was the topic of Misty Wilson Borkowski, attorney with Cross, Gunter, Witherspoon & Galchus, P.C. 4 Emily M. Dickens with SHRM was the luncheon keynote speaker on Thursday. She spoke on “SHRM Public Policy Initiatives.”
Thank you to our PRESENTING SPONSOR 5
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5 Janet Downs, J.D., Assistant Area VP, Compliance Counsel, with Arthur J. Gallagher & Co., discussed “Preparing for the Inevitable: Cybersecurity & Your Health Plan.” 6 “What’s New at the EEOC?” was Debra Finney’s topic. Debra is with the EEOC in Little Rock. 7 Stuart Jackson, Partner with Wright Lindsey Jennings, spoke “Medical Marijuana: Stumbling Toward 2019 (or Beyond.) 8 Arkansas Governor Asa Hutchinson was the closing keynote speaker on Friday. He provided an Arkansas Update.
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September 20-21, 2018 www.HRProfessionalsMagazine.com
| Robinson
Center
| Little
Rock, Arkansas
ARSHRM members attending the 2018 Arkansas Employment Law and Legislative Conference in Little Rock
Bradley Phillips (Phillips Management and Consulting Services), Gov. Asa Hutchinson, Thomas Dunlap (ARSHRM Government Affairs Director), Bill Phillips (Phillips Management and Consulting Services)
Jill Hilton (ARSHRM Federal Legislative Affairs Director), Susan Meadors (ARSHRM State Legislative Affairs Director), Gov. Asa Hutchinson, Thomas Dunlap (ARSHRM Government Affairs Director)
OUR EMPLOYEE BENEFITS ATTORNEYS ARE
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ARSHRM ELLA COMMITTEE 2018 - Ruth Anderson, Sheila Moss, Jill Hilton, Susan Meadors, Gov. Asa Hutchinson, Thomas Dunlap, Tara Mauk Arthur, Leeanne Kamps, Heather Smith, Michael Smith
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Rogers I Fayetteville I Little Rock
ELLA Committee Members with SHRM Chief of Staff – Michael Smith, Thomas Dunlap, Sheila Moss, Emily M. Dickens, Jill Hilton, Susan Meadors, Tim Orellano
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EEOC’s New Strategic Plan and What It Means for HR Professionals
In
By MEETA T. DAMA
February 2018, the U.S. Equal Employment Opportunity Commission (“EEOC”), which enforces federal employment anti-discrimination laws and works to advance equal opportunity in the workplace, released a four-year Strategic Plan for 2018-2022. The EEOC’s Strategic Plan contains several objectives and signals a shift in EEOC enforcement.
What is the EEOC Strategic Plan? First, you may be wondering what the EEOC Strategic Plan is. The Strategic Plan sets out a high-level overview of how the Agency will achieve its enforcement objectives and sets forth three strategic objectives. The EEOC’s Strategic Plan is distinct from the Strategic Enforcement Plan. The Strategic Enforcement Plan explains what priorities the EEOC will focus on during a given period. By contrast, the EEOC’s Strategic Plan serves as a framework for the EEOC’s enforcement, prevention, and education objectives for the next four years and provides guidance on how the Agency will implement its priorities.
The Three Strategic Objectives Set Forth in the EEOC’s 2018-2022 Strategic Plan The EEOC’s 2018-2022 Strategic Plan sets forth three strategic objectives: (1) to combat and prevent employment discrimination through the strategic application of EEOC’s law-enforcement authorities; (2) to prevent employment discrimination and promote inclusive workplaces through education and outreach efforts targeted at both employees and employers; and (3) to achieve internal organizational excellence. STRATEGIC OBJECTIVE #1: Combat and prevent employment discrimination through the strategic application of the EEOC’s law enforcement authorities. In connection with the EEOC’s effort to combat and prevent employment discrimination through the strategic application of its law enforcement authorities, the EEOC has identified two outcome goals. The first of these two goals is central to the EEOC’s core mission and is to stop and remedy discriminatory employment practices and provide meaningful relief to victims. The second outcome goal identified is to ensure that the exercise of the EEOC’s enforcement authority is done fairly, efficiently, and based on the circumstances of each charge or complaint. While the EEOC will continue to focus on charges and complaints where systemic discrimination appears to exist, it will increase the number of individual cases it takes in an effort to achieve a more balanced approach to its enforcement efforts. The Strategic Plan also states that the EEOC will continue to exercise its prosecutorial discretion “responsibly” which may signal a less aggressive approach in prosecuting cases and more measured in enforcement efforts. In addition, the EEOC announced that it will increase its resources and enforcement of discrimination in federal government employment. In connection with this objective, the Strategic Plan also addresses enforcement remedies. The Strategic Plan states that if an investigation has determined that there is reasonable cause to believe that unlawful employment discrimination occurred, the EEOC will increase its emphasis on non-monetary relief such as training for supervisors and employees, development of policies and practices to deter future discrimination, and external monitoring of employer actions. 10
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STRATEGIC OBJECTIVE #2: Prevent employment discrimination through education and outreach The second strategic objective in the Strategic Plan reflects the EEOC’s interest in engaging in proactive measures to deter employment discrimination before it occurs and to provide guidance to employers that are seeking to comply with EEO laws. In connection with the Agency’s proactive efforts to prevent employment discrimination through education and outreach, the EEOC identified two outcome goals. First, to help members of the public understand the law and their rights; and second, to work with employers, unions, and employment agencies to prevent discrimination, address EEO issues when they occur, and support a more inclusive workplace. The Strategic Plan states that the EEOC will target outreach to individuals who have historically been victims of employment discrimination, individuals who are new to the workforce – which includes younger workers and immigrants – and low-skilled workers. The Strategic Plan also indicates that the EEOC plans to broaden the use of technology to communicate with diverse employee populations and give its website a much-needed update. The Strategic Plan also outlines the EEOC’s outreach efforts to connect with employers. These efforts include providing technical assistance to small and new businesses to assist them with compliance. The Strategic Plan highlights the EEOC’s Small Business Task Force, which provides resources for small employers and notes that additional outreach efforts are necessary to reach new and smaller businesses. The EEOC’s commitment to employer-side outreach and education is consistent with its objective to combat workplace sexual harassment. The EEOC reported a 50% increase in the number of calls, emails, and complaints of sexual harassment it received in the past year. With the ongoing national conversation about sexual harassment and the significant increase of allegations of sexual harassment in the workplace, the EEOC’s outreach objectives are part of its effort to address the growing need for employer education and guidance. While the EEOC has brought two waves of harassment lawsuits this summer, it also seeks to play a larger role in prevention by providing resources, training, and education to employers. STRATEGIC OBJECTIVE #3: EEOC’s Management Objective of Organizational Excellence The final strategic objective contained in the Strategic Plan concerns the EEOC’s internal operating structure and achieving “organizational excellence.” The EEOC’s corresponding outcome goals include improving management functions and fostering a culture where staff members exemplify a culture of excellence, respect, and accountability, and effectively allocating resources to achieve the Agency’s goals.
The Strategic Plan & the EEOC’s Enforcement Priorities As set forth above, the Strategic Plan states how the EEOC will achieve the enforcement priorities set forth in the Strategic Enforcement Plan. The EEOC’s 2017-2021 Strategic Enforcement Plan was approved by the EEOC before the last presidential election and may be revised. However, it is useful for employers to review the substantive areas which the EEOC has identified as priorities. These priorities include the protection of vulnerable workers, including immigrant and migrant workers; the removal of qualification standards and inflexible leave policies that discriminate against individuals with disabilities; accommodating pregnancy-related limitations; ensuring fairness in data-driven employment screening tools; and preserving access to the legal system by eliminating overbroad waivers, releases, and mandatory arbitration provisions; and ensuring equal pay protections.
In addition, the 2017-20121 Strategic Enforcement Plan addressed two new emerging enforcement priorities. One of these developing issues is “backlash discrimination” against “Muslims or Sikhs, or persons of Arab, Middle Eastern or South Asian descent . . . as tragic events in the United States and abroad have increased the likelihood of discrimination against these communities.” The second developing issue identified by the EEOC was clarifying the employment relationship and application of workplace civil rights protections in light of the rise of increasingly complex employment relationships and structures. This includes the rise in the use of temporary workers, independent contractors, and staffing agencies, as well as the increase in workers that are on-demand or work in the “gig” economy. Employers should be on the lookout for incidents that implicate these new enforcement priorities and consult with counsel to ensure their practices comply with the EEOC’s regulations and enforcement history if issues arise in these areas.
What Does the Strategic Plan Mean for Employers? The EEOC’s 2018-2022 Strategic Plan signals a few subtle shifts in the EEOC’s process to achieve its enforcement priorities. First, the Strategic Plan makes it clear that while the EEOC still plans to bring charges where systemic discrimination appears to exist, it also seeks to take a more balanced approach by pursuing more individual cases. While the number of sexual harassment cases and investigations are on the rise, the Strategic Plan’s reference to “responsible” prosecutorial discretion may signal a more measured approach to enforcement in other areas. In addition, the EEOC has indicated that it will pay more attention to discrimination in federal government employment. This shift could result in reduced scrutiny of private employment practices. Second, the Strategic Plan indicates a shift from monetary penalties to non-monetary remedies focused on preventing future violations such as training, policy development, and external monitoring where appropriate.
While employers may welcome lower fines, employers should seek legal advice before agreeing to external monitoring and other non-monetary relief which may be burdensome and time consuming and could ultimately be more expensive for employers. Finally, the EEOC’s efforts to provide employer-side outreach and support may signal increased empathy and leeway for employers, particularly small and new businesses. While these shifts may appear to be subtle, the Strategic Plan signals a shift towards employer education, guidance, and compliance. Nevertheless, the Strategic Plan makes it clear that the EEOC is still committed to enforcement and prevention to ensure that employers comply with obligations to treat employers fairly, accommodate disabled employees, and promote an inclusive workplace. Employers should review their EEO, harassment, reasonable accommodation, and anti-retaliation policies to ensure that they are up-to-date and develop a plan to ensure compliance if they encounter issues related to the EEOC’s emerging enforcement priorities or claims of sexual harassment. Employers should also engage all employees in regular, interactive trainings to confirm that managers, supervisors, and employees are aware of the company’s commitment to maintaining an inclusive work environment.
Meeta T. Dama, Attorney Martenson Hasbrouck & Simon LLP mdama@martensonlaw.com www.martensonlaw.com
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Heading into 2019, the ACA is Alive and Well By ROBERT S. ELLERBROCK III
Upcoming Employer Mandate Assessments As we approach the end of 2018, employers are starting to receive IRS assessments for any employer mandate taxes that accrued in January 2016. Remember that you may appeal any assessment received. Generally, the most common cause of incorrect assessments will be errors in Forms 1094-C and 1095-C. If an assessment letter is received, employers must decide whether to challenge the proposed assessment. This decision must be made rather quickly, as the IRS must receive a response within 30 days of the proposed assessment or it will assume that the information included in the proposed assessment (including penalties) is correct. Employers can request an extension by calling the phone number at the top of the Employer Shared Responsibility Payment (ESRP) Response form. Extensions have generally been granted for the 2015 proposed assessments. To prepare a proper response, an employer must review all documents relating to the proposed assessment that were filed with the IRS to ensure the accuracy of the information filed and that such information is properly reflected in the proposed assessment letter.
Be Mindful of Potential Retaliation Claims It is important for employers to have a process in place to protect themselves from retaliatory claims. Just how easily could this happen? In theory, you will be notified which employees received subsidies and if you later take adverse action against such employee, you may be exposed to an ACA retaliation charge. The best way to avoid retaliation liability is to keep the identity of employees receiving a subsidy (usually 12
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learned only through a specific IRS letter) away from employment decision makers. While appeals could be handled internally, it may be difficult to keep the information confidential. If any appeals are done internally, the best practice would be to carefully house the process within the benefits department (and away from employment decision makers). Another option to consider is outsourcing the appeals process, which would minimize exposure to retaliation claims if the subsidy recipients are later disciplined or discharged.
Cost Controls in 2019
together with offering or referring them to comprehensive, intensive behavioral interventions to help promote improvements in weight status. • Screening for preeclampsia in pregnant women with blood pressure measurements throughout pregnancy. • Vision screening at least once in all children ages three to five years to detect amblyopia or its risk factors • A revised immunization schedule for children and adolescents age 18 or younger, including revised rules for these vaccines:
The Department of Health and Human Services (HHS) announced the inflation adjusted out-of-pocket (OOP) limits for plan years beginning in 2019. Employeeonly coverage maximum OOP for employee only coverage will be $7,900, while family coverage OOP maximums will go up to $15,800. In addition, the IRS set the annual maximums for high deductible plans for 2019 at $6,750 for individual coverage and $13,500 for family coverage. While the 2019 annual contribution limit to a Health Savings Account (HSA) is $3,500 for an individual and $7,000 for family coverage.
o Hepatitis B vaccine
The Centers for Medicare and Medicaid Services (“CMS”) raised the threshold level for premium rate hikes that require review by state regulators from its current rate of 10 percent to 15 percent for 2019.
Earlier this year, the DOL issued the final rule regulating Association Health Plans (“AHP”s). The goal of the AHP rule is to create a path that will allow small businesses and self-employed individuals more insurance options. Basically, an AHP offers small businesses access health plans that are comparable to the plans made available to larger organizations. It does this by providing the buying power and risk sharing of a large company by allowing the group of small companies to share costs and spread risks. The final rule makes it considerably easier to be part of an association. It is believed that this will lead to the creation of additional associations. The following are a few examples of how the final rule is making coverage through an association easier:
Mandated Preventative Health Care Services Going into Effect in 2019 Section 2713 of the ACA requires health plans to provide coverage for a list of preventive care services without cost-sharing requirements (such as copayments, deductibles, or coinsurance requirements) for patients. This list of preventative services is subject to annual updates. The updates will come from the various governmental agencies tasked with ACA governance. These agencies will issue updates to their lists of recommended preventive services and these updates may require that plans be modified to reflect the updates. The following are some of the updates for 2019. • A daily supplement containing 0.4 to 0.8 mg of folic acid for all women planning to become pregnant or who are capable of pregnancy. • Screening for obesity in children and adolescents, six years and older,
o Poliomyelitis vaccine o Diphtheria and tetanus toxoids and acellular pertussis o Haemophilus influenza type B vaccine o Human papillomavirus vaccine o Influenza vaccine o Pneumococcal
Association Health Plans May be Adverse to the ACA
• Associations may now form for the primary purpose of offering health insurance • Associations can be made up of members who are in the same industry, line of business, or even simply have a principal place of business within the same geographical area; and • By expanding the ERISA definition of employer, the DOL has made it possible for an AHP to qualify for
large-group status and thus be exempt from many ACA requirements, including the 10 essential health benefits (e.g., hospitalization, maternity care, mental health and substance use services, and prescription drugs). These AHPs would be prohibited from discrimination based on a pre-existing condition, but would be exempt from other ACA non-discrimination protections, such as community rating restrictions
• The new commonality standard is insufficient to meet the necessary and established commonality test under ERISA. • There are other more general claims (e.g. final rule is in excess of statutory authority) found in the action. (You may find some of claims sound similar to those that were against the prior administration to prevent regulatory efforts in a variety of areas.)
Changes Coming in 2020
While AHP regulation largely falls under the Employee Retirement Income Security Act (ERISA), the final rule does provide that the states have limited authority to regulate AHPs and such authority varies depending on several factors including whether the AHP is fully-insured or self-insured. For example, states will retain the authority to regulate self-insured MEWAs, provided such state laws are “not inconsistent” with ERISA. In addition, states can regulate fully-insured MEWAs on a multitude of issues.
• Replace one or more EHB categories used in other states 2017 health plan year such as: drug coverage or hospitalization
Many view AHPs as yet another attack on the ACA. This belief has led to 11 states and the District of Columbia to file an action challenging the final rule on several issues including.
• A state may build their own set of benefits that could become their EHB benchmark plan subject to a certain scope of benefits requirements
• The final rules use of the same standards to large and small employers violates the provisions of the ACA, and the ACA’s overall structure, by allowing AHPs to be treated as “large employers” for some purposes, but not for purposes of the shared responsibility protection create a situation where a plan will not satisfy the ACA.
While there are many who have proclaimed the ACA dead or dying, the ACA is alive and well and continues to evolve. This article in intended to be both a reminder of the fact that the ACA is alive and to provide an update on a few items that are rapidly approaching.
• The treatment of self-employed individuals, with no other employees, as both an employer and an employee is contrary to ERISA.
CMS issued a new rule that provides individual states with some flexibility in how they determine the Essential Health Benefits benchmark. The rule provides states with several options when determining the benchmark. • Select from another states benchmark plan from the 2017 plan year
Robert S. Ellerbrock III, Of Counsel Ogletree Deakins Birmingham Office robert.ellerbrock@ogletree.com www.ogletree.com
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The Forgotten and Disengaged: How to Find More Skilled Workers By BRAD FEDERMAN
• In 2018, the number of Equal Employment Opportunity Commission (EEOC) sexual harassment suits jumped more than 50%. • Sexual harassment charges filed with the EEOC increased by more than 12% yearover-year. • The EEOC recovered $70 million for employees alleging sexual harassment, up from $47.5 million last year. • The number of hits to the agency's sexual harassment webpage also more than doubled in the past year. We are in a new era. Some worry about false sexual harassment accusations while others are glad women are finally speaking up. We can argue about those issues all day, but we are missing the point. We’ll come back to this shortly. In September 2018, our national unemployment rate dropped to 3.7 percent. That is a 30-year low and it’s expected to decrease even further. While a lower unemployment rate sounds great, it also creates challenges. Let’s just focus on one challenge – we have jobs, but not enough people. Companies are adding jobs to compete and take advantage of a strong economy. However, these same companies are struggling to leverage today’s current growth opportunities. According to the 2018 Conference Board CEO Study, CEO’s said the number one challenge they face today is the “failure to attract and retain” top talent. If we break that challenge down into two parts, we are left with retaining our current talent and attracting new talent.
Retaining Our People…Stay…Please Stay! Employee retention is always important. After all, we want to keep our best people and limit turnover cost. However, in today’s economy, retention is paramount because replacing people is increasingly difficult, and that trend is only expected to continue. A recent survey by SHRM and CareerJournal indicated that 56% of HR professionals expect turnover to rise. 14
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Every organization needs a plan to keep their best talent. Here are a few ideas to help you do just that: 1. Focus on your employees’ well being. During tumultuous times your associates can easily become stressed. Burnout becomes an issue, causing them to leave. This is a time to reduce distractions, set clear goals, and simplify your processes and structure. Most importantly, it is a time to prioritize. Everything cannot be equally important. In order to say “yes” to something and truly focus on it, you must be able to say no to other things. The best leaders and organizations focus on what is most important. Beyond focus, efficiency, and priortization, we need to help our employees cope with stress and anxiety. According to the American Institute of Stress, 69% of employees reported that work was a significant stress impacting their personal lives. American workers now have a choice of jobs, and many will choose their health in lieu of a prestigious but stressful role. Providing a welcoming environment, stress relievers, training on wellbeing, and wellness programs will continue to be key. 2. According to SHRM and CareerJournal, 53% of employees state they would leave their current jobs to seek better compensation. Make sure your compensation approach is competitive, transparent, and fits your organization’s culture. 3. Employee engagement is more important than ever. In the SHRM and CareerJournal Survey, 57% of employees stated they would leave their current jobs because they needed a new experience and were dissatisfied with career development opportunities. Employee development is fast becoming the number one issue when it comes to employee engagement. Take employee engagement seriously and make sure you are meeting the expected development needs of your team.
We must attract new employees! Now is the time to get your recruiting house in order. Most companies are not even hiring to fill new jobs; they’re too busy trying to backfill positions. We have entered a hiring crisis and it’s not just because of job creation. It is due largely to turnover. US employers hired 5.6 million people in January of 2018, but that is because 5.4 million people changed jobs during that same period. Employers have complained they have trouble finding people to take positions paying $75,000 with full benefits. What should you do? Get creative. Open up your recruiting pool. Consider women who took off time to raise children who want to transition back into the workforce.
The Forgotten Workforce Forty-three percent of highly skilled working women leave the workforce to raise children. And here’s the interesting part the majority of those talented women want to return to work. However, they face challenges. Think about it. If you’ve been out of the workforce, jumping back in can be kind of scary. All sorts of questions go through one’s head: • Will I be accepted? • Am I still relevant? • Am I an attractive candidate? • Will my age be a factor? • What skills do I bring to the table? • Will I be treated fairly? • How do I talk about my absence from the corporate world? • What am I passionate about? What do I want to do now? • How do I recreate myself? And there are many more. The fact is these women pick up many skills from other life experiences along the way. They are efficient, understand time management, and have resilience embedded in their DNA. Many of these women still work, but in their children’s schools as volunteers, on boards, with charity organizations, and more. The creativity and organizational skills to accomplish what they do is as impressive, or more so, than what can be accomplished in the corporate world with big budgets and a variety of resources.
Companies would do well to recruit, on-board and develop this forgotten workforce. It may take an investment and some creativity since some of these talented people have not worked in an office setting consistently in 15-18 years. Consider creating a program to help women reboot their career, where your company can help ease women back into the work environment, provide career placement services, help them identify their value and how to share it in a corporate setting. So how is the problem of sexual harassment and discrimination relevant to the “forgotten workforce”? How do employers expect to attract and retain women, especially women reentering the workforce, with this cloud hovering over corporate America? What woman would feel comfortable transitioning back to the workforce when they know women are paid less than their male counterparts, and when there have been highly publicized lawsuits regarding sexual harassment? Now is a good time to make sure your organization is prepared to treat and pay women as equals. It’s the right thing to do. But there is an even larger incentive. There are 4.6 million women in the civilian labor force, which means there are almost two million women sitting on the sidelines ready to come back to work. How many of your jobs would these women fill?
STRENGTHENING BRANDS
Brad Federman, Chief Operating Officer F&H Solutions Group bfederman@fhsolutionsgroup.com www.fhsolutionsgroup.com
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71%, increase profit by about 12%, and increase sales by about 65%.
lower turnover by about
THROUGH CULTURE, LEADERSHIP & PEOPLE Executive Compensation Leadership and Coaching Career Development Customer Engagement Employee Engagement Diversity and Inclusion Recruiting and Onboarding Compensation Strategy Human Resources Labor Relations
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BE A HIRING HAM: Audit Your Hiring Process Now for 2019 Success
By MADDIE BRADIN
Nobody wants to be a turkey. That’s why Human Resource professionals must maintain diligence and consistency to create the most relevant, efficient hiring process possible. In short, they want to be a hiring ham! With Thanksgiving coming up, we couldn’t resist the little play on food for this article. That doesn’t mean it’s any less serious. Low unemployment rates make it more challenging than ever to attract, recruit, hire, and retain highperforming A-players. HR is tasked with the important feat of beating out the competition for the best employees. Failing to do this can cost the company big. Mediocre employees and high turnover can cause low productivity and sliding profitability. Since 2018 is closing out, HR Pros should take the time to audit hiring processes now and make changes that drive 2019 success. Here are 7 questions to ask to make sure you’re a hiring ham.
How is your candidate experience? A good place to begin your audit is by measuring your candidate experience. When have you updated the way you treat applicants? If you don’t know, this exercise is already uncovering important ways to improve. Applicants expect to be treated well during the interview and application process. If they find your experience lacking, they will share their negative experience across review websites and social media platforms. Negative posts weaken your employer brand and may discourage future A-players from even sending you a CV! TAKE ACTION: Create tangible ways for hiring managers to connect and communicate with all applicants, not just the ones they want. Accessibility and authenticity are key in creating a positive candidate experience.
Are your recruiting efforts updated? If you haven’t freshened up the way you attract job candidates, it’s time to do it. What actions are your company taking to engage with new talent? Are you leveraging your employer brand and company culture effectively? If not, add information about both into your recruiting materials. Are you focusing only on external recruiting? If so, you are probably missing some great talent! Current happy employees are goldmines for recommending high-quality new employees, especially passive candidates who aren’t actively looking for a job. TAKE ACTION: Make certain your organization is using all the channels available for reaching potential applicants. Employ multiple job sites, social media, and happy employees to maximize the depth of your hiring pool. 16
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What do your HR metrics tell you? Numbers don’t lie, so use them to paint a picture of your hiring process’s success. What is the average time it takes to fill a position? How many open jobs does your company currently hold? Is there a significant number of complaints about your hiring process? These are concrete stats that show you the strengths and weaknesses of your current hiring process. Turnover is another key metric. Is it increasing? If so, dig into why this is happening. TAKE ACTION: Monitor these numbers consistently and take steps to improve them. Whether it’s additional hiring people on staff, cutting out current extraneous steps within the hiring process, or re-training the hiring staff on how to communicate with job seekers, make it a priority for these numbers to tell a positive story.
Is your background screening process performing? In today’s competitive environment, companies that wait for several days on a background check might miss out on A-player candidates. While you’re waiting on a background check, a competitor might make them an offer they can’t refuse! Closely examine how you screen each job applicant. Are the background checks necessary and relevant to the position they are applying to fill? How long is your current vendor taking to return these to you? TAKE ACTION: If you’re waiting more than a few days to receive
a background check report, you need to start a conversation with the background check company to see how you can expedite the process. For example, the company may need authorizations or additional information to hasten the screening process (this happens frequently with employment and education verifications). By making sure your background screener is responsive and agile, you proactively cut the risk that this part of the process will cause you to lose out on your first-choice hire.
Is everyone involved in hiring educated and informed? Discrimination and negligent hiring are still big deals. It’s critical for everyone involved directly or indirectly in the hiring process to be wellversed and attentive to the rules. When’s the last time the hiring team was trained on the specifics of the process? If you can’t remember, chances are good the process has gotten lax. Lapses in attention to detail and consistency set up your company for costly and embarrassing lawsuits regarding discrimination. TAKE ACTION: If you don't already have a consistent training program in place for your hiring staff, set one up. Include regular meetings and written rules and regulations. Put a timeline in place for any new hiring staff to get up and running with the compliant process. BOTTOM LINE: DON’T BE A HIRING TURKEY! A poor hiring experience, lags in communication, and a background screening process that drags on and on won’t land you the A-players you need to maintain a productive and competitive workforce. By auditing the hiring process now, HR puts their company ahead of the curve for a successful recruiting and hiring season in 2019!
Maddie Bradin, National Account Executive Data Facts, Inc. mbradin@datafacts.com www.datafacts.com
Dear all, We invite you to learn more about our Firm’s legal and claims management expertise in
Tennessee Workers’ Compensation Law and Practice The Tennessee workers' compensation lawyers of Wimberly Lawson Wright Daves & Jones, PLLC, advise our business clients how to defend against their workers' compensation claims. Our attorneys always remain abreast of the latest developments in Tennessee's workers' compensation law, allowing the firm to provide our clients with sound legal advice. At Wimberly Lawson, our Tennessee workers' compensation lawyers work exclusively with employers and Human Resources managers to develop creative solutions to their workers' compensation related issues, such as: ● Cost Reduction Programs ● Work Comp Supervisory Training ● Litigation Defense
● Retaliatory Discharge ● Subrogation ● Mediation
The Firm also authors the Tennessee Workers’ Compensation Handbook, 10th Edition, published by M. Lee Smith, which is the essential desk reference for Tennessee attorneys and workers’ compensation claims professionals. Wimberly Lawson Wright Daves & Jones, PLLC, is the exclusive Tennessee member of the NATIONAL WORKERS’ COMPENSATION DEFENSE NETWORK, a nationwide network of AV-rated law firms providing employers and insurers with access to the highest quality representation, education, expertise, counsel and advice in workers’ compensation and related employer liability fields.
The Tennessee workers' compensation lawyers of Wimberly Lawson understand the challenges an employer faces in a workers' compensation claim. Our attorneys provide aggressive representation, and our reputation for integrity, coupled with our concern for your bottom line, ensures your best interests will be protected. Respectfully,
Fredrick R. Baker Fredrick R. Baker Member Knoxville 865-546-1000
Cookeville Nashville 931-372-9123 615-727-1000 www.wimberlylawson.com
Morristown 423-587-6870
State Legalization of Marijuana and Its Implications for Employers:
‘Weeding Out’ HR Policies & Staffing Strategies By KIM LAFEVOR and TOMMY M. EDEN III
Marijuana as a Staffing Problem As we move into an era of full, and in some cases, negative unemployment in the United States, there is an increasing challenge for HR professionals to secure the needed talent to appropriately staff their core business operations. While employers compete for the best talent as a competitive advantage, many organizations have instead found themselves conciliating goals and making various concessions to meet their human resource quotas in today’s employment climate. Ultimately, this has all the tell-tale signs of an “employee market” where candidates are in the driver’s seat in prescribing conditions of their employment relationship, including working conditions, and high to market compensation and benefit packages. This is in stark difference to recent decades where company recruiters and hiring managers enjoyed the luxury of an “employer market” where the employer could be both highly discerning in selecting the very best from the labor pool (or recruiting them away from a competitor), as well as negotiate employment agreements that left more money on the table for employer reinvestment. While this war on talent acquisition is a significant issue to grapple with by itself, there is an even more troubling side to these staffing challenges. American businesses have a drug problem, and that drug problem is having a profound effect on staffing. While Opioid painkillers, such as OxyContin and Percocet are some of the biggest culprits, the recent spite in the use of marijuana as reported by the U.S Department of Health and Human Services has become a force necessitating our attention. In light of the recent regulatory trends to decriminalize its use, state laws now conflict in many cases with federal laws, leaving the employer in the haze in considering this pool of pot users for hire or standing firm with zero tolerance policies that exclude their hire or lead to more exacting consequences, including dismissal. Of all unlikely malefactors, marijuana use has become a staffing issue. What are we to do about it? How do we navigate this landmine to not only have access to today’s needed labor pool, maintain a safe working environment, but at the same time remain compliant in a regulatory environment that offers such conflicting messages and legal pot holes when dealing with medical marijuana cardholders in the 14 states with cardholder protection laws? The Legal Maze and Employer Response: Marijuana is Illegal---Yes or No? There are a growing number of states that have legalized the use of marijuana for recreational and/ or medicinal use. In fact, according to Politico, public support for marijuana legalization has risen to an all-time high of 64%, compared to only a 30% approval rating in 2000. Much of this favorable change in support of marijuana use is due to wider acceptance for medicinal use, although there are other more controversial reasons including societal acceptance for recreational use and employers need to expand their potential labor pool to fill positions where there are labor shortages. However, it is important that employer agents understand the interplay between federal and state law. Given a growing body of case law, employers can no longer safely take the position that marijuana is an illegal Schedule 1 drug under federal law and employees can be prohibited from using marijuana and that no accommodation is necessary without risk of potential litigation. See Coats v. Dish Network LLC. Marijuana use has been associated with mounting injuries, strains, sprains, and upwards of $400 billion annually in increased crime, negative health effects and lost productivity. Studies by the U.S. Department Labor show that marijuana users are 75% more likely to be absent from work compared to non-users. Furthermore, the National Institute on Drug Abuse (NIDA) reported this year that employees who tested positive for marijuana were more than 55% more likely to be involved in workplace mishaps and 85% resulting in critical injury. The Center for Disease Control (CDC) maintains such effects of marijuana which include respiratory and memory retention problems are the contributing cause. 18
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Perhaps surprisingly, many employers have decided to avoid drug testing to avoid employment-related litigation and hiring restrictions. An HR Magazine article published this year titled, “Are Employer Drug-Testing Programs Obsolete?” revealed that many employers do not see the return on investment when they weigh the costs of random and pre-employment testing against the results. Instead, the report found employers found such testing destructive to morale and scatter applicants looking elsewhere. The latter position presents an obvious slippery slope, both ethically and calculated business tolerance for risk. Currently, 77% of employers report they use either pre-employment drug tests or random/for cause screenings during employment. Therefore, there are conflicting messages about employer position relative to drug testing providing a desirable ROI. The Interplay of Federal and State Law To best prescribe an appropriate course of employment action in hiring, retaining, or terminating employees who use marijuana, it is necessary to understand the distinction between federal regulatory mandates and how these mandates conflict with an emerging patchwork of state laws decriminalizing this controlled substance, with some states passing medical marijuana cardholder protection laws. There are four federal laws/regulations that govern the use of marijuana that can also be applied to workplace applications. These include: 1) The Controlled Substances Act, 2) DOT Regulations, 3) The Drug Free Workplace Act, and 4) American with Disabilities Act. Since marijuana remains a Schedule I controlled substance under the Federal Controlled Substances Act of 1970, which prohibits possession, ingestion, growing, manufacture, import, distribution or sales of any quantity, state action to legalize it only limits individual protections, but does not make its use legal by federal actors. The Department of Transportation (DOT) regulations dictate that employers in the trucking, aviation, maritime, railroad, transit, and pipeline industries must test urine samples of employees in “safety sensitive” positions for the presence of cocaine, opiates, amphetamines, phencyclidine, and marijuana. Also, part of these legal mandates, The Drug Free Workplace Act of 1988 (DFWA) requires employers with a grant or any single government contract valued at $100,000 or more (and does not engage in the acquisition of commercial goods through procurement contracts or purchase orders) to ensure there is a drug-free workplace and the possession and use of controlled substances is strictly prohibited. Also entering into the legal equation is that current illegal drug use is not a covered disability under the ADA. Marijuana users may be protected under its provisions if the employee or applicant was discriminated against as the result of being perceived as a past drug abuser and not the current use of marijuana.
Emerging State Laws and Protections While there is a strong framework of federal laws that discourage its use, there are laws across these 14 states that offer medical marijuana cardholder safe harbor protections: Arizona, Arkansas, Connecticut, Delaware, Illinois, Maine, Massachusetts, Michigan, Minnesota, Nevada, New York, Oklahoma, Pennsylvania, and Rhode Island. Still, business leaders can face legal liability if an employee who tests positive for marijuana causes an accident resulting in injury or death. In 2014, in the case Coats v. Dish Network LLC, the Colorado Supreme Court ruled in favor of the employer holding that nothing illegal under federal law can be legal under the Lawful Off-Duty Activities Statute which was originally passed to protect cigarette smokers from being fired. Much has changed since then with a trio of 2017 decisions favorable to medical marijuana cardholders in Connecticut, Rhode Island and Massachusetts. However, a recent 2018 decision in the non-medical marijuana cardholder protection State of New Jersey is an affirming lesson for employers wishing to stand firm.
3. Update job descriptions to include “ability to work in a constant state of alertness and safe manner” for all employees classified in safety sensitive positions 4. Teach supervisors the ADA reasonable accommodation dance steps when a medical marijuana cardholder comes forward in one of the 14 protective states 5. Choose wisely employer legal and medical experts to help navigate through hazy decisions and implications Employers cannot alone solve the nation’s problems and challenges associated with drug-abuse. However, with effective detection strategies (including those at pre-hire, random and post- accident), employee assistance programs, disciplinary policies and healthcare treatment options, employers can still stand firm against workplace opioid and marijuana abuse while navigating the employer legal minefields and workplace drug testing obligations.
What Five Steps Can Employers Take to Reduce Legal Risks? Employers can mitigate the potential risk and liability by employing a five-step process that can be used to “weed-out” job candidates, while reducing the legal risks especially in medical marijuana cardholder protection states. These include: 1. Ensure drug free policy language is updated to survive a medical marijuana cardholder protection state challenge by including notice of how to a request a reasonable accommodation 2. For employees in safety-sensitive positions, include a pre-duty disclosure of impairing effects medicines, including medical marijuana, as a safety rule
Dr. Kim LaFevor, DBA, SHRM-SCP, SPHR Dean, College of Business Athens State University General Motors Labor Relations (ret) kim.lafevor@athens.edu
Tommy M. Eden III, Partner Constangy, Brooks, Smith & Prophete, LLP Opelika, AL & West Point, GA Offices teden@constangy.com www.constangy.com
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EMPLOYEE INCENTIVES
WORK WHEN DONE THE RIGHT WAY By MURRAY L. HARBER
The concept of incentives is not new and has been around for many years in multiple industries. As HR Professionals, we use incentives in a variety of areas such as total compensation – salary, benefits, and perks – as ways to attract and retain top talent for the positions within the organization. For many years now, incentives and disincentives have been used in the workplace to encourage participation in appropriate health care services as part of an employer’s health plan and wellness programs. There are many models and examples of using such incentives with varying results. Research on the use of incentives in heath care has grown drastically over the past few years testing the use and effectiveness for the desired outcome – participation, health improvement, and cost mitigation to name a few. It is reported that 65% - 85% of employers are using such incentives where the larger incentives garner the greatest participation; however, new behavioral economic research is showing that a blended approach of short-term and long-term incentives can and
VALUE-BASED BENEFIT DESIGN Value-Based Benefit Design (VBBD) is a growing area of study and application in the employee benefits arena. Research from the University of Michigan’s VBBD Institute shows improved consumer adherence with high-valued services, and lower out-of-pocket costs with no increase in total spending by the plans. Some examples of VBBD include the following: • Cash or cash equivalents, i.e. gift cards, reduced or eliminated copayments for clinical services and/or pharmacy treatments • Reduced deductibles or premium for participation in a specific program or system of actions such as health risk assessments, annual physical exams, and individual plans of care. • Time Off for participation in annual physical exams or systems of actions as mentioned above. The Patient Protection and Affordable Care Act allows employer-based health plans to offer incentives of up 30% of individual coverage for wellness programs which must meet specific guidelines and, in some cases, up to 50% for smoking cessation. Recent legal challenges by the EEOC to these rules have altered the opportunities incentives whereby those programs that are outcomes based are being phased out and those that are participatory in nature are allowable. Having incentives which are also way below the 30% ceiling- De Minimis - are also recommended to assist in not being challenged by the recent ruling. INTRINSIC or EXTRINSIC MOTIVATION
will engage participation and change behavior. It has also been shown that leadership and organizational supports can enhance participation with lower valued incentives which reflects the importance of culture and environments as key levers to change. INCENTIVES BOOST ENGAGEMENT Southern Farm Bureau Life Insurance Company in Jackson, Mississippi has been recognized as the Healthiest Workplace in Mississippi for many years and has used a strategic mix of incentives for various activities and continues to expand to other areas of the company besides wellness and health plan participation. Currently they are exploring the use of incentives for those that best show competency and engagement into behaviors and actions that align with the corporate values. “We provide our employees with a variety of initiatives and include incentives to build interest and engagement in those initiatives. We reward employees for participating in our health and wellbeing programs as well as those who participate in community well-being activities. In our health plan, we offer a no-copay incentive for our onsite Vigilant Health Clinic and a premium discount for participating in a specific set of activities which is managed by the Nurse Navigator in our clinic. These initiatives have a great impact on our attracting, engaging, developing, and retaining employees. Joyce Plunkett, VP of Human Resources, Southern Farm Bureau Life Insurance Company 20
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At the individual level, employees and health plan members, need nudging towards specific actions and behaviors as the status quo is natural. The goal is to have people move toward intrinsic motivators verses the extrinsic motivators such as incentives. As humans, if we are intrinsic, we do it for ourselves and do not need to be nudged. For example, I choose not to participate in one of my company’s health incentive programs because I am already doing the behaviors that they want me to do. The time spent documenting and tracking is a waste of my time since I am already intrinsically motivated towards those behaviors. “I am aware that some employees engage in the premium discount only for the cost savings. However, as a provider, the importance of engagement is worth far more. What price can be put on early detection of high blood pressure or diabetes? As the Nurse Practitioner Navigator for this health plan, the most important tool that we use to combat acute and chronic illness is the Premium Discount Incentive. It not only saves plan members money but has also created proactive participants into their own health and health care!” Laura Nail, Chief Nursing Officer/Nurse Practitioner Navigator, Vigilant Health Helping employees by nudging them towards the behaviors you desire including living the corporate values, practicing healthy habits, or utilizing high valued services will not go away soon. In fact, it is becoming more common place. As HR Professionals it is in your best interest to continue to learn about incentives and how other organization are implementing them to motivate and engage the workforce and their families. There are many lessons to be learned from behavioral economics, health behavior change, and corporate culture as they all play a role in the engagement of the next generation workforce.
Murray L. Harber, Executive Director Mississippi Business Group on Health mharber@msbgh.org www.msbgh.org
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Student Loan Repayment Programs –
The New Benefit Frontier By JEANNE J. FISHER
The daunting accumulation of student debt, now estimated at $1.5 trillion by the Federal Reserve, has quickly become the talk of the town. Economists across the country are weighing in on when this bubble will “pop”. To put it into perspective, the total outstanding student debt is 1 ½ times what the nation owes on credit cards ($977 billion). Fidelity researched the effect of debt on employee total wellness at great length. Of all the variables studied, debt has the strongest correlation to poor health, poor sleep and higher levels of anxiety. Millennials, in particular, are drawing attention for high turnover. An article by Amy Adkins, published in Gallop, labeled millennials the “job hopping generation” and found that 60% are open to a different job opportunity. Adkins sites low engagement in the workplace as a potential cause of discontent. As a Certified Financial Planner and millennial myself, I’m particularly in tune with the financial challenges my peers face. The shocking statistic from an NBC News/GenForward survey is that 72% of all millennials have debt. Unfortunately, these loans are not collateralized with an asset. Student loans and credit cards are the primary culprits with just 20% of millennials having a mortgage or home loan. It is widely documented that our generation is delaying major life events like marriage, first time home purchase and children until we become more financially solvent.
According to an internal survey, of young workers would commit to their employer for five years if they helped pay off student loans.
86% 22
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American University’s Kogod School of Business leads an interesting research project called “Millennial Index”. The project, centered in Washington DC, surveys millennials on a variety of topics to better understand how millennials choose where to live and where to work. 60% of millennials surveyed – even those earning between $100k-$150k/year – say they are living paycheck to paycheck. The high cost of living in DC certainly contributes to the financial strain, but large monthly payments towards student debt are cited second. What we have is a generation with more debt than any other, but still subject to “starter” salaries. I don’t believe it is merely a lack of engagement that causes incredibly high turnover. I believe the degree of financial stress felt by our generation is a major motivator in millennial restlessness. Whereas before employees may be hesitant to make a major move for a small increase in salary, twenty-somethings today welcome even the smallest degree of financial relief. Generations aside, any young person (yes, even the boomers when they were 25 years old) is more motivated by instant gratification. Retirement plans, like 401(k)s and pension plans, are so far down the road, we place little value on them. How can you be more concerned about saving enough for retirement, 45 years from now, when you owe $50,000 today? Human Resource Departments across the nation have proposed a variety of incentives and Student Loan Repayment Programs to address these issues. According to SHRM’s 2017 Employee Benefits Report, only 4% of companies offered assistance in repaying student loans, but nearly everyone thought a program would be beneficial for morale, retention rates, and recruiting. The beauty of these programs lies in their flexibility. Companies can name their own eligibility and tenure requirements. They can also determine exactly how much they are willing to contribute to each person and even cap it if necessary. Recruiters are offering ‘sign on’ bonuses in the form of student loan payoffs to attract top talent. Other companies offer periodic student loan payments as a service reward and to encourage retention. Finally, others treat repayment
programs more like a match. For example, they will match the loan payment dollar-for-dollar up to $100, every month. There is one major theme with all the programs mentioned above. Whatever benefit the employer offers is taxable to the employee. We have a great retirement savings infrastructure and favorable tax treatment within our tax code. There must be a way to incorporate the two…right? One company asked that exact question. In August, the IRS released a Private Letter Ruling they had issued to an unnamed company earlier in the year. The company wanted to create a program whereby employees who contributed 2% of their income towards student debt would be eligible for a 5% company match into the 401k. The assumption is that younger employees are so burdened by student debt they cannot contribute to the retirement programs. However, the employer still wanted them to benefit from the match. The IRS responded positively. By doing so, they have effectively tied a student loan repayment program to a tax-deferred savings vehicle. Voila! I have to reiterate that this is a private letter ruling intended for one company; however, the IRS’s decision to release the letter to the public is a sign that there may be more to come. The Retirement Plan Industry is ready. They already have the systems and technology in place to process deferrals from employee paychecks and deploy the funds to different accounts. Thus, they are well-positioned to provide student loan repayment programs also.
40%
In late 2017, Fidelity launched their “Student Debt Employer Contribution Program”. Currently the program only facilitates the after-tax payments directly to the loan company. However, the administrative support and operational efficiencies are impressive. They saw a need for such a program, and to my knowledge, are the first large company to market with a solution. They implemented their own program internally and were pleased with the results. According to an internal survey, 86% of young workers would commit to their employer for five years if they helped pay off student loans. More than two thirds of their recruiters felt the program helped build interest in open positions. There is a real appetite for addressing the student loan bubble via employer benefits. Employees find these benefits valuable and attractive. Research shows that these programs can help recruit and retain top talent. Finally, the favorable private letter ruling and significant investments by companies like Fidelity are bringing student loan repayment programs more in line with our existing retirement plan infrastructure. We are just starting to build a benefits offering around student loans, and I’m excited to watch the ideas grow and evolve.
Jeanne J. Fisher, CFP,® CPFA, MBA Senior Financial Advisor JeanneFisher@argi.net www.agri.net
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Creating “Win-Win” Cultures Through Effective Professional Development Programs BY JASMIN NUHIC
In a booming US economy with unemployment rates down to near 49-year lows, yet with even greater business challenges, it is becoming increasingly important that both employers and employees are in a “Win-Win Relationship”. “Win-Win Relationships” are best manifested by active employee engagement and businesses’ ability to retain its employees. Both of these factors are being measured – and in many cases, carefully managed. At the same time, both of them are in jeopardy, more than ever before. It is not a secret that, collectively, engagement and retention cost the US economy between $450 - $550 billion in lost productivity per year (Gallup). It is also not a secret that most companies have little to no success in improving their engagement and retention with the same processes and initiatives they have utilized for the past 20 years.
PROBLEM The Gallup Organization, an American research-based, global performance-management consulting company known for its public opinion polls conducted worldwide, reported in 2017, that a staggering 87% of employees worldwide are not engaged. Even more concerning, according to the same ongoing research lasting 30 years with more than 30 million employees, is that many companies are experiencing a crisis of engagement and they are not even aware of it. It is important to mention that the companies included in this research represent a vast number of industries and employees from all levels within each respective organization. Furthermore, it is interesting to note that from both groups of employees - those that were highly engaged and those that were disengaged, did not discriminate their responses based on their company's benefits. With the employees’ engagement low, it is expected to see something else that is also low – employees’ retention. In fact, the Bureau of Labor Statistics issued a report on September 20th, 2018 stating that the median number of years that wage and salary workers had been with their current employer was 4.2 years. This rising trend, especially in the younger workforce, is bound to create problems for many businesses, regardless of their size, industry, or geographical location.
SOLUTION What is the one thing that differentiates the employees are that highly engaged from those that are not engaged? Gallup research reports that the answer is: professional development. This seems to be the single most important differentiator, across the board, regardless if the employees are individual contributors, project managers, or people leaders. Furthermore, in January 2018, LinkedIn published their own research report stating that the second most common reason for employees leaving their employers is lack of professional development. This is a big jump knowing that just a year before, the same research reported 24
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that the professional development was 8th overall reason for employees leaving their employers.
“ When Memphis Mayor Jim Strickland took office in January 2016, he believed tax breaks were the most important part of the city’s economic development. But, in the years since he was elected mayor, he discovered that wasn’t the case. It’s the workforce.” ~MBJ For those businesses that want to increase engagement and improve retention, the solution is very simple – help your employees create and execute their EXECUTABLE Professional Development Plans (eIDP). Businesses should actively implement or improve programs, by internal or external subject matter experts, to help them drive and act on the results of those personalized development plans.
RESULTS When companies have effective programs in place that help their employees create and execute their EXECUTABLE Individual Development Plans (eIDP), it is then when they experience higher engagement and retention than their competitors. In those cases, the employees truly feel that they can reach their full potential and achieve their career objectives by working for those employers, significantly and consistently improving their individual and team-based work output. As a matter of fact, the businesses with highly engaged workforces outperform their peers by 147% in earnings per share, all while maintaining higher retention (Gallup.) On top of that, they experience higher morale, better recruitment, and an overall improved business brand.
NEXT Think about it, you can spend your dollars on anything from communication skills to management techniques or you can spend them on developing your employees – your greatest assets. By doing so, businesses will not only have workforces that are highly engaged and retained, but also those that deliver business results 147% higher than otherwise.
“ We cannot solve our problems with the same thinking we used when we created them.” ~Albert Einstein Through continuous improvement, businesses will furthermore be able to solve the problems that they may not know exist yet. They will be able to prevent those that their competitors will experience in their future. As a leader in business (and any organization for that matter), it is your responsibility to act now – to assess your current professional development program, find ways to improve it, and most importantly, enable your employees to create and execute their EXECUTABLE Individual Development Plans so that they can reach their full potential and achieve their career objectives (without leaving!).
CONCLUSION Businesses (and organizations of any kind), are having a staggering problem that is costing them money, productivity, morale, and valuable brand potential. The problem is well known – lack of engagement and retention of their employees (especially high potential employees). While there are many ways these organizations are trying to solve this problem, the research from Gallup and LinkedIn shows that the most promising solution lies in effective employee professional development programs. These programs truly motivate employees to create and execute plans that will help them reach their full potential and achieve their career objectives - and by extension improve the business results. This creates the “Win-Win” situation for both employers and employees at any level.
About the Author Jasmin NUHIC is an international speaker, coach, and consultant that focused on improving engagement and retention through effective professional development programs. He authored the book, "It Starts and Ends with eIDP - Create your professional development plan; No one else should!". His talks and presentations have been heard by organizations such as American Society for Quality, Project Management Institute, Medtronic, Chambers of Commerce, and many others. He provides coaching to individual contributors (SMEs), project managers, and people leaders, while at the same time consults businesses and organization on establishing and improving talent development programs. Jasmin holds undergraduate degree in science and holds master’s degree in Business and master’s degree in Executive Leadership as well as is certified in Coaching, Ethical Leadership, and Cross-Cultural Intelligence. Together, as a part of the “HRO Partners” team, his goal is to help others reach their full potential and achieve their career objectives – and, by extension, for the businesses to deliver successful results hro-partners.com company/hro-partners
hropartners @hropartners
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Another Take on Actuarial Value By ALEX GRAMLING
Employer sponsored health insurance can take on a spectrum of designs which often leave HR professionals and benefits sponsors with a nebulous notion regarding the attractiveness (or “richness”) of the benefits offered. Luckily, there is a standardized mathematical calculation, known as “actuarial value” (AV), which can provide a general barometer of a health plan’s value relative to the expenses incurred. AV is a simple concept from a high-level perspective, but more granular understanding can provide better insight into how this number can play into benefit attractiveness, plan financials, and annual renewal planning.
Background Healthcare.gov defines actuarial value as “the percentage of total average costs for covered benefits that a plan will cover”. For example, a plan with an 80% actuarial value is expected to pay for 80% of the total cost of covered benefits, and the remaining 20% would be the responsibility of the member through cost sharing in the form of deductibles, copayments, or coinsurance, as applicable. This definition is simple enough, but it doesn’t explicitly state that this calculation is for the average cost using a standard population. In other words, individual members of the health plan may see wildly different values using their own incurred expenses. A member who did not meet their deductible would pay 100% of their expenses, while a high cost claimant might pay <1% of all expenses they incur. The value provided in the calculation simply does not explain what will happen on a claimant by claimant basis.
Small Employers and Individuals – AV in the Spotlight In attempts to standardize health insurance offerings, the Affordable Care Act (ACA) created “metallic” tiers used in small group (definition depends on state) and individual plan rating. These metallic plans used actuarial value as the determination for the classification, thrusting AV into the everyday vernacular of benefits and HR professionals. From inception, metallic tiers used a ±2% de minimis variation for classification. In other words, 58-62% actuarial value yielded a bronze plan, 68-72% silver, 78-82% gold, and 88-92% platinum. There is also a catastrophic tier (<60%) in the individual market, but it has stringent requirements and has been omitted from this group-focused perspective on AV. The regulated metallic ranges were relaxed in 2018, yielding the following ranges, by tier: 56-65% bronze, 66-72% silver, 76-82% gold, 86-92% platinum. These new guidelines allow more variation within each metallic tier so that consumers and small groups have more options at the expense of less standardization.
This is where actuarial value becomes a paramount figure in benefits planning. Knowing the actuarial value of a health plan can allow decision makers to benchmark offerings against competitor or general market plan designs, understand the cost impact of plan design changes, or simply understand the expected cost burden on employees (premium/contributions + cost sharing). Considering these various uses can transition this calculation from a singular data point to one which can help inform decisions as a key metric.
Are All Valuations Created Equal? No, calculations can differ slightly from source to source since the underlying continuance tables may differ. However, Benefits and HR professionals usually have access to only a few actuarial value calculations which limits the potential for confounding calculations: 1) The Centers for Medicare and Medicaid Services (CMS) releases both an actuarial value calculator and minimum value calculator meant to be used across the entire country. These calculators are different in nature, but at their core both produce a plan valuation which only considers services which are essential health benefits, and only at the in-network benefit levels. This calculator will only give the AV of a single plan, and isn’t detailed enough to produce relative values leaving the end-user to approximate the value difference using simple comparisons. 2) TPAs and insured carriers rarely distribute the actuarial value of a plan, but consultants can typically give a general approximation of a plans valuation using in-depth calculators available to them through large data aggregators or internal actuarial resources. These calculators have various complexities, and may yield only a relativity from the existing plan design. Either way, the additional sophistication of these calculators should help to better approximate the value of a plan versus the CMS calculator. These calculators do not generally include any assessment of network composition, ACOs, drug formularies, or other cost containment initiatives. These other parameters may need to be analyzed separately to adequately position the calculation in the context of all available data.
Summary Depending on the size of your health plan, utilizing an actuarial value calculation may provide a good measuring stick for where your plan sits in the grand scheme of available benefit designs. It is advisable to take the time to have an actuarial value or relative value calculation performed so that both short and long term planning can be advised through a quantifiable data point. Whether decision makers are looking to stay in a competitive hiring position, manage plan expenses, or simply stay compliant, actuarial value or benefit relativities should be a prominent feature of strategic planning.
Large Employer and Self-Funded Plans: AV as a Key Consideration Fortunately for large employers (>100 employees) and self-funded plans, the metallic design requirements are not applicable. Plans in this size range are free to design a health benefits package in a manner of their choosing, so long as it meets minimum value (>60% AV) and stays within the other ACA-mandated requirements such as the caps on out-of-pocket limits. 26
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Alex Gramling, Account Executive McGriff Insurance Services Alex.gramling@mcgriffinsurance.com www.mcgriffinsurance.com
McGriff Insurance Services: Employee Benefits Consulting, Property & Casualty, and Business Insurance
BEYOND TRADITIONAL
At McGriff Insurance Services, we go beyond traditional employee benefits consulting. Our specialized, knowledge-based teams provide data-driven solutions for the complex problems employers face today. With senior-level experienced data analysts, actuaries, and underwriting consultants, we help you manage today’s risks while anticipating tomorrow’s needs. Tom Hayes Chief Growth Officer - Employee Benefits Tom.Hayes@McGriffInsurance.com 479.684.5259
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© 2018, McGriff Insurance Services, Inc. All rights reserved. Insurance products are offered through McGriff Insurance Services, Inc., a subsidiary of BB&T Insurance Holdings, Inc., and are not a deposit, not FDIC insured, not guaranteed by the bank, not insured by any federal government agency, and may be subject to investment risk.
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Federal Appeals Court Overturns Decades of Precedent to Revive Workplace Discrimination Claims By SUSAN SCHAECHER
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Overturning 40 years of precedent, the 10th Circuit Court of Appeals has just ruled that an employee’s failure to file an EEOC charge does not necessarily bar consideration of a private discrimination lawsuit. By concluding that an Equal Employment Opportunity Commission (EEOC) charge is not a jurisdictional prerequisite to suit, the federal appeals court’s August 17 decision provides a new lifeline for disgruntled employees and former employees to bring suit against their employers (Lincoln v. BNSF Railway Company, Inc.).
Plaintiffs’ Late Lawsuit Seemingly Dooms Their Chances… Plaintiffs Larry Lincoln and Brad Mosbrucker were injured while working for BNSF Railway Company when a tank car sprung a leak and exposed them to 2-chlorobenzyl chloride. As a result of their injuries, their doctors advised them to no longer work outdoors, which barred them from returning to their former positions. Between 2010 and 2014, each plaintiff submitted more than 20 applications for other positions at BNSF, but the company did not select either of them for any of these jobs. Meanwhile, in February 2013, each plaintiff filed an EEOC charge alleging workplace discrimination for failure to place them in new positions; in May 2015, Mosbrucker filed a second charge. The EEOC eventually issued Lincoln a letter dismissing his charge but stating he had the right to bring suit; the agency issued similar “right-to-sue” letters to Mosbrucker in July and September 2015. Plaintiffs filed a joint lawsuit alleging disability discrimination and a failure to accommodate in violation of the Americans with Disabilities Act (ADA). They also raised claims under the Federal Railroad Safety Act (FRSA) and Occupational Safety and Health Act (OSHA). 28
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BNSF asked the court to dismiss the ADA and FRSA claims under a theory that the workers failed to exhaust their administrative remedies. Under federal anti-discrimination laws, plaintiffs are required to file charges of discrimination with the EEOC or the applicable state anti-discrimination agency within 300 days of the date the discrimination occurred. Under clear 10th Circuit precedent, the plaintiffs’ failure to file charges seemingly deprived the court of the authority to hear these claims. The company contended that the court should reject any chance for Lincoln to rely on alleged employment actions that occurred more than 300 days before he filed his charge and actions that occurred after he filed his charge. Similarly, it argued that Mosbrucker failed to exhaust his administrative remedies for actions that occurred between the filing of his first charge and 300 days before he filed his second charge. Applying precedent, the trial court held that the court lacked jurisdiction of these claims and entered judgment for BNSF. The workers appealed their case to the 10th Circuit Court of Appeals, which just overturned the lower court ruling, rejected 40 years of precedent, and ruled in favor of the workers.
… But Appeals Court Breathes New Life Into Claims The 10th Circuit Court of Appeals—which hears federal cases arising from Colorado, Kansas, New Mexico, Oklahoma, Utah, and Wyoming—held that the provision of the statute authorizing federal courts to take jurisdiction over ADA claims did not require a plaintiff to exhaust administrative remedies before filing suit. The August 17 decision
concluded that a court was permitted to hear the claims and make a ruling on them despite 40 years of precedent which otherwise led the employer to think it was safe. The court of appeals did say that a defendant employer could raise failure to exhaust administrative remedies as an affirmative defense. The practical difference between having a court conclude that administrative exhaustion is a wholesale prerequisite to jurisdiction versus concluding that is simply an affirmative defense is significant. An affirmative defense is subject to counterarguments from plaintiffs, such as waiver, estoppel, and equitable tolling. In the BNSF case, in fact, the plaintiffs argued that BNSF waived the defense, which they claim should permit them to proceed with their claim all the way to a jury trial. They pointed to the fact that BNSF filed a motion to dismiss raising an administrative exhaustion argument once the lawsuit was first filed, but that the parties soon agreed to put this argument on ice and litigate the rest of the case before asking a court to resolve this specific issue. The partiesâ&#x20AC;&#x2122; stipulation agreed that the plaintiffs had exhausted administrative remedies for claims for employment actions that occurred after April 16, 2012. The plaintiffs argued that BNSF waived its exhaustion defense as to employment actions that occurred after that date by entering into this stipulation and could not now argue differently. The 10th Circuit agreed the language of the stipulation was unambiguous and remanded the case to the trial court to decide whether to enforce its terms against BNSF.
What Does This Decision Mean For Employers? The decision in this case affects not only disability claims under the ADA but also claims for discrimination based on sex, race, color, national origin, and religion under Title VII of the Civil Rights Act of 1964, age under the Age Discrimination in Employment Act (ADEA), and genetic information under the Genetic Information Nondisclosure Act (GINA). From now on, in any such federal case arising in courts under the 10th Circuitâ&#x20AC;&#x2122;s jurisdiction, plaintiffs do not need to prove that they exhausted their administrative remedies in order for the court to hear the claims. Rather, defendants must prove that plaintiffs failed to exhaust administrative remedies, and must stand ready to defeat arguments by plaintiffs that they somehow waived the defense or took some other action that estops them from raising the defense or that tolls the running of the time period for exhausting administrative remedies. This might impact the way you litigate and defend claims but could also affect your internal investigations or other personnel decisions.
Susan Schaecher, Partner Fisher Phillips Denver Office schaecher@fisherphillips.com www.fisherphillips.com
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A Preview of Upcoming Supreme Court Workplace Issues By SARAH SMITH
Although there are no blockbuster employment cases on the horizon, the 2018-2019 Supreme Court term nevertheless contains some interesting cases that could alter the landscape of who can bring an employment action and where they may bring it. Unsurprisingly, the cases to be decided include several in a string of decisions expanding the scope of the Federal Arbitration Act (FAA). The question of the FAA’s application to categories of litigants will reappear in several cases. Also on review this year is a case considering the definition of an “employer” under the Age Discrimination in Employment Act (ADEA). This brief overview will preview some of the important cases facing the Court this term that may affect employers. The outcome of these cases will provide an insightful preview of the direction the Court will move in matters involving labor and employment and in interpreting arbitration agreements generally. Finally, this term will be the first for Justice Brett Kavanaugh, who many observers expect to vote with the Court’s conservative majority but whose views on certain employment-related issues are currently unknown. I. What Constitutes an Employer under the ADEA?
The Court has already heard argument in Mount Lemmon Fire District v. John Guido, et al., No. 17-587, to consider whether the term “employer” in the ADEA applies to all political subdivisions (i.e., state and local agencies) or only those with 20 or more employees, as it applies to the private sector. Two firefighters in the state of Arizona were terminated at ages 46 and 54, and, at the time of their termination, were the two oldest full-time employees of the Mount Lemmon Fire Department. The firefighters filed age discrimination charges with the EEOC, alleging their terminations violated the ADEA. The district court agreed with the Mount Lemmon Fire District that it was not a covered “employer” under the ADEA because it did not have 20 or more employees. Disagreeing, the U.S. Court of Appeals for the Ninth Circuit concluded that, unlike private entities, a political subdivision need not have 20 or more employees to qualify as an “employer” under the ADEA. This decision created a circuit split with four other circuits that have reached the opposite conclusion.
and (2) whether Section 1, which applies only to “contracts of employment,” includes independent contractor agreements. At different times, Oliveira worked both as an independent contractor and as an employee of New Prime as an interstate truck driver. After filing suit against New Prime for violations of the Fair Labor Standards Act and other state law claims, New Prime sought to enforce an arbitration agreement in Oliveira’s contract under the FAA. Oliveira opposed, arguing that Section 1 exempts him from the FAA. The district court determined that the applicability of Section 1 to Oliveira was a question for the court and concluded that “contracts of employment of transportation workers” does not include independent contractors. Ultimately, however, the district court determined Oliveira was not truly an independent contractor and did not enforce the arbitration agreement. The U.S. Court of Appeals for the First Circuit affirmed the district court’s order denying the motion to compel arbitration—finding it to be a threshold question for the court, not an arbitrator. The First Circuit panel, however, held that Section 1 applies to independent contractor agreements. The Court will consider both the threshold question and whether the Section 1 exemptions apply to independent contractor agreements.
The Court continues to hear cases considering the breadth of the FAA, potentially chipping away at employee challenges to the enforceability of comprehensive mandatory arbitration agreements. In the past decade, the Court has repeatedly held that the FAA has an expansive scope and, for that reason, supplants federal and state laws that purport to restrict the availability of arbitration.
In another case considering the district court’s role in determining the arbitrability of a dispute, Henry Schein, Inc., et al. v. Archer & White Sales, Inc., No. 17-1272, the Court will review whether the FAA permits a court to decline to enforce an arbitration agreement that delegates any questions of arbitrability to the arbitrator where the district court concludes the claim of arbitrability is “wholly groundless.” Although not an employeremployee suit, this case could reach many arbitration agreements in the employment sector. The district court concluded that a dental equipment manufacturer (Schein) could not enforce an arbitration agreement against a distributor (Archer & White) because the agreement expressly excluded from arbitration suits that involved a request for injunctive relief. The court determined that the question of arbitrability was “wholly groundless” and thus within the jurisdiction of the district court.
Section 1 of the Federal Arbitration Act provides that the FAA does not apply “to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. In a matter involving the scope of this exemption from the FAA, New Prime Inc. v. Dominic Oliveira, No. 17-340, the Court will review two issues: (1) whether the applicability of the Section 1 exemption is a question for a court or an arbitrator;
The Fifth Circuit affirmed, noting that “in almost all cases,” where parties “clearly and unmistakably” had an intent to delegate questions of arbitrability to the arbitrator, the court should grant a motion to compel
The Court will consider whether the exception carved for the private sector under the ADEA should apply to public political subdivisions. The Department of Justice submitted an amicus curiae brief on behalf of the firefighters, arguing that the ADEA was intended to encompass political subdivisions of all sizes. Mount Lemmon Fire Department argues that the plain-text interpretation argued for by the firefighters “would have devastating effects” on the financial security of small state agencies and government subdivisions. This case involves a deep dive into statutory construction and the plain language of the ADEA, but the practical implications of the decision could encompass some federalist principles involving the interests of state and local agencies versus the federal government. II. The Expanding Scope of the Federal Arbitration Act
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arbitration. However, the Fifth Circuit concluded that where the question of whether the issue is arbitrable is “wholly groundless,” the district court was within its bounds to decide the gateway question of arbitrability. Should the Court affirm the Fifth Circuit, this case puts some limited power back into the hands of the trial courts on the threshold question of arbitrability that is typically delegated to an arbitrator. Finally, perhaps the most interesting case this term will interpret the FAA and its interaction with state law. In Lamps Plus, Inc., et al. v. Frank Varela, No. 17-988, a case on appeal from the Ninth Circuit Court of Appeals, the Court will consider whether the Federal Arbitration Act forecloses a state-law interpretation of an arbitration agreement that would authorize class arbitration based solely on general language commonly used in arbitration agreements. Lamps Plus, which was the subject of a wide-spread phishing scam disclosing employee information, sought to enforce individual arbitration against its employee, Varela, after he filed a class action complaint for negligence, privacy, and breach of contract based on the personal information released. The district court interpreted the arbitration agreement as ambiguous on the question of whether it authorized class arbitration. It construed that ambiguity against Lamps Plus and concluded the agreement authorized class arbitration. The U.S. Court of Appeals for the Ninth Circuit affirmed, applying California law to construe the ambiguity in the contract against its drafter. The Ninth Circuit concluded it was a reasonable interpretation of the agreement that the contract covered individual and collective action. The ultimate issue is whether the Court will enforce class arbitration in an agreement that does not include any language authorizing class or collective arbitration or whether it will
foreclose this state-law based interpretation of the contract. This case could continue to consider the balance between state-based interpretations of contracts and the broad enforceability of the FAA. III. Effects on Employers
To reiterate, there are no blockbuster employment cases pending before the Court. Nevertheless, depending on the outcome of the cases discussed above, employers could see a continued trend of expanded rights to enforce mandatory arbitration agreements in employee contracts. Employers that do not have arbitration agreements in their employee and independent contractor agreements may wish to consider to include them. Those that have existing arbitration agreements may wish to expand their applicability. Should these cases go the way of last term’s employment matters, employers can anticipate more and more potential litigation falling within the scope of valid arbitration agreements. The application of Mount Lemmon Fire District is more limited to smaller state agencies—but significant for understanding how the makeup of the current Court may interpret the plain language of civil rights legislation in conjunction with the financial burdens of imposing such requirements on smaller agencies and businesses. As always, the best course of action is to pay attention to what the Court does.
Sarah Smith, Associate Attorney Burch, Porter & Johnson, PLLC ssmith@bpjlaw.com www.bpjlaw.com
How does a company demonstrate a commitment to the health and wellbeing of its employees?
By creating a corporate culture that encourages everyone to take an active role in managing his or her health. HealthMed uses state-of-the-art technology to collect accurate and meaningful health information for the company and each employee through biometric testing.
CUSTOMIZABLE WELLNESS PROGRAM ONSITE VISITS
RUYA health coaches come onsite quarterly to monitor participants progress as well as to encourage and empower them. Onsite visits set us apart from other wellbeing programs and allow us to get to know our clients on a more personal level. Available onsite activities include body composition, blood pressure checks, flexibility and balance, health presentations and coaching.
HEALTH COACHING
At HealthMed, we believe in personal relationships. Participants will set up appointments with the same health coach so they can develop a relationship over time. Whether clients need help with weight loss, smoking cessation, exercise, diet or accountability, their health coach will navigate them on their journey to wellbeing.
CUSTOMIZABLE INCENTIVE PROGRAMS
Our programs are designed to fit your needs. Whether you are looking for someone to just conduct screenings or you want to implement a comprehensive wellbeing program that includes a platform that tracks activity and provides challenges and incentives, we can custom design a program that works for you. RUYA will make your wellbeing vision into a reality.
BIOMETRIC SCREENINGS
HealthMed’s business is rooted in prevention and early detection of health risks before they turn into significant medical expenses. We use state-of-the-art technology to collect health information and provide immediate coaching for individual results.
Contact Us
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Understand your plans.
over benefits compliance? By CAROLYN MCNAIRY
It’s no secret: Human Resource leaders are stretched thin when it comes to managing day-to-day business operations and need to find time to focus on critical areas pertaining to engagement, retention and attraction of new employees in an increasingly tight job market. In addition, that same HR leader often needs to keep well-informed of ever-changing government
Which employee benefits are you currently offering to employees and their dependents? Do you have one resource for distributing important information? Every employee benefit you offer requires some sort of notice or disclosure that must be distributed or posted by a specific deadline in order to remain compliant. However, many employers utilize separate vendors for different services. Specifics of each benefit plan, enrollee information and the needed notices and disclosures may not be stored in one place, making overlooking information more likely and the risk for non-compliance to climb. Understanding key requirements and deadlines for compliance is a very important part of your business.
regulations and respond appropriately to mitigate risk and ensure the organization remains compliant. Compliance is not a should do–it’s a must do–yet studies continually show a majority of employers are non-compliant in one or more areas of their business! Regulators like the Department of Labor, Internal Revenue Service, and Health and Human Services also recognize this fact and are capitalizing on these deficiencies. So how do you become (and stay) compliant to avoid costly penalties?
Know your numbers. How many full-time (or full-time equivalent) employees does your business currently employ? Does this number fluctuate throughout the year? This information is important to know and track because certain compliance regulations depend on the size of your organization. For example:
Respond promptly. Have you received a notice or penalty letter from the DOL, IRS or HHS? If you have it is important to respond promptly, whether you agree or disagree with their assessment. If you disagree or unknowingly violated a requirement, but do not respond before the deadline (or at all) you are indicating that you choose to ignore their penalty and fines will most likely be higher. As an example, penalties for violation of HIPAA can range from $100 to $50,000 depending on intent: • Unknowingly violating HIPAA is $100 per violation. • Reasonable cause for violating HIPAA is $1,000 per violation.
• ACA - Employer Shared Responsibility Mandate applies to Applicable Large Employers (ALE) who employ an average of at least 50 full-time employees during the preceding calendar year.
• Willful neglect of HIPAA, but the violation is corrected within a given time period, is $10,000 per violation.
• COBRA applies to employers with 20 or more employees working more than 50% of the typical business days of the previous calendar year.
• Willful neglect of HIPAA, and the violation remains uncorrected, is $50,000 per violation.
• ERISA applies to every private sector employer offering benefits to two or more employees. It requires employers to have formal written plan documents, Summary Plan Descriptions (SPD), Summary of Material Modifications (SMM) and annual notices disclosed to participants in a timely manner. Annual reporting is required to the government for employers with 100+ participants or hold monies in a trust on any one or more benefits plans.
If you have not received a penalty letter from one of these agencies, it does not mean that you are in the clear. New regulations and penalty letters seem to be the new constant. Beginning in late 2017 and continuing well into 2018, over 100,000 penalty letters were sent to employers who failed to meet certain provisions under the Affordable Care Act. And those penalties were just for the 2015 reporting year alone! Before the end of 2018, another round targeting the 2016 reporting year is expected to begin.
• FMLA applies to private sector employers with 50 or more employees in 20 or more workweeks in the current or preceding calendar year, as well as all public agencies and all public and private elementary and secondary schools. • HIPAA applies to any employer that has one or more employees and sponsors a selfinsured group health plan, such as a self-funded medical, dental, vision, wellness and including a healthcare FSA and or a HRA plan and uses a third party, like TASC, to administer the plan. 32
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It is no wonder employers are twisted in knots over these benefit regulations. To ensure you stay ahead of the risk you should….
Partner with a professional. Unless you are absolutely confident you have the right documents to distribute to your employees and are certain of the deadlines to file with the federal government–you need an expert in compliance. Consider partnering with a professional to assist. Even better, ease your burden and ensure peace of mind by empowering a single partner to deliver your compliance solutions.
Know how employees feel about benefits. A recent Thomsons Online Benefits Global Employee Benefits Watch report surveyed more than 2,000 employees from global multinational organizations and found 81% of employees who can easily access their benefits feel loyal to their employer. Furthermore, this study demonstrates that “easy access” translates to employees having pride and advocacy for an organization. While employee loyalty and engagement is a complex matter, engaged employees can, and do, increase productivity for their company.
TWISTED IN KNOTS VER COMpLIANCE?
o
Yes, this costs money, but if you think the cost of partnering with a professional to help with compliance is expensive—try non-compliance. An experienced third party administrator will help you determine if your benefit plans are compliant. If there is an area that needs attention or improvement they will work with you to determine what solution will best fit your needs. When you shift these administrative responsibilities to an industry expert, you free-up time to focus on other important areas of your business.
Employees want seamless communication and easy access to benefits. In a world where technology has transformed the way we receive information and manage our lives, it is important to consider the experience employees are having when interacting with their benefits programs. In the same study, over 50% of employees said they were unsatisfied with the current access options available to them. As we approach a new year, now is the time to review your internal procedures and consider outsourcing your employee benefit and compliance needs to an expert. Even better, considering looking for a third party administrator that can handle all of your employee benefit and compliance needs. The less vendors and information systems involved with managing your plan will help reduce errors, redundancy and money spent—helping you become (and stay) compliant.
The demands on your time, attention and resources can be overwhelming. Instead of providing value by implementing, driving enrollment and making sure your company follows the rules—it feels like you are twisting and bending through endless hoops. TASC's new Universal Benefit Account is a smart, easy and connected way to manage benefits.
---What if…there was a single, unified solution for employer benefits and compliance? A smart and intuitive way to manage benefits. An easy way to integrate into people’s lives with technology they already use. A connected way that unites account offerings with one website, one card and one mobile application. Let’s make benefits feel like a true benefit again. Is this methodology and single experience really out there? Contact me and we can discuss.
Carolyn McNairy Compliance Services Vice President of Sales Total Administrative Services Corporation (TASC) Carolyn.McNairy@tasconline.com www.tasconline.com
OUR COMPLIANCE SERVICES OFFER A HOLD HARMLESS GUARANTEE
Find out how you can spend less time getting more. Call today for special pricing.
iwantTASC@tasconline.com tasconline.com 844-468-2721 (844-GOTASC1)
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HIGHLIGHTS
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1 Melissa DeVore, SHRM-SCP, SPHR, 2018 Director of the ALSHRM State Council, welcomes attendees to the conference. 2 (L-R) Kelli Powers, CFO for Huntsville Hospital Health System. Kelli was the opening keynote speaker. Her topic was “Everything Your CFO Wants You to Understand About Accounting and Finance.” See our Facebook Live interview with Kelli at www.facebook.com/HRProfessionalsMagazine. 3 Ellen Didier, President of Red Sage Communications was also a keynote speaker at the conference. Ellen presented “Why Marketing Matters.” See our Facebook Live interview with Ellen at www. facebook.com/HRProfessionalsMagazine. 4 Jim America, VP at Carpenter Technology Corporation, was the closing keynote speaker at the conference. Jim discussed, “Leveraging Lean Manufacturing Principles.” See our Facebook Live interview with Jim at www.facebook.com/HRProfessionalsMagazine.
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5 (L-R) Sherry Johnson, SHRM-SCP, CAE, SHRM Field Services Director for Alabama with Jeff Luttrell, SPHR, SHRM Southeast Region MAC Representative 6 (L-R) Kelli Powers, CFO for Huntsville Hospital Health System, and Mary Ila Ward, Director-Elect of the ALSHRM State Council. 7 Attendees at the ALSHRM Strategy in the Sand Conference 8 The conference was held at the beautiful Perdido Beach Resort in Orange Beach, AL.
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35
What Could Possibly Go Wrong?
The Unwitting Consequences of Bonuses
By MARY E. BUCKLEY
A company wants to increase productivity so it introduces a new incentive bonus for non-exempt employees on a quarterly basis. Employees are excited and happy about the bonus plan. Now, flash forward to the next quarter, production is the highest the company has seen in years, and the employees who met the production goal received bonus checks. Employees are happy and thankful. The company’s production has increased. All appears well. So, what could possibly go wrong? Always Start with the Cranberries.
At the first Thanksgiving, it is likely that instead of turkey, the Pilgrims shared deer, corn, shellfish, and a crushed cranberry dish. In other words, the tradition of serving some type of cranberry dish predates the tradition of serving turkey for Thanksgiving. Today the two have become inseparable, and while some people will skip the turkey altogether, the cranberries always seem to be present. With that in mind, imagine an incentive bonus as the turkey on a Thanksgiving dinner table, center of the meal, juicy, and warm. Now if the turkey is the bonus, then the venerable cranberries stand for the federal Fair Labor Standards Act (FLSA). At Thanksgiving, you cannot forget the cranberries, even if you only want to eat the turkey. This analogy is important to keep in mind when it comes to understanding what could possibly go wrong with providing incentive bonuses to employees, as in the above example, because just like with Thanksgiving, if you forget the cranberries at dinner, someone will surely bring it up.
is non-discretionary. According to FLSA guidance, "[f ] ew bonuses are discretionary under the FLSA, allowing exclusion from the regular rate." With these definitions in mind, the most obvious concern is how to determine whether a bonus is truly discretionary. While the facts associated with each bonus scenario are unique, as a general rule, when the employer offers a bonus on a regular basis and employees are reasonably expecting payment, the bonus is likely non-discretionary. For example, if an employee receives a commission for every item sold or a bonus for producing twenty widgets ever fifteen minutes, in both of these examples, the employee is reasonably expecting payment once the sale is made or the widgets were timely produced. Pass the Cranberry Sauce, Please.
Non-discretionary bonuses must be added to weekly gross pay for hourly employees and for exempt employees who are eligible for overtime. To accomplish this you need to know the total bonus amount, number of weeks in the bonus period, number of hours worked in each week, and the amount of overtime worked each week. Now you take all of that information and get out the calculator to do some math. Let’s say an employee's weekly pay, including the non-discretionary bonus, is $750, and the employee worked 5 hours of overtime in that week. The employee's regular rate of pay is $16.67. The overtime premium is 50% or $8.33 per hour. The total overtime premium for the 5 overtime hours is $41.65, which is added to the regular pay for a total of $791.65. This is a significant increase for one week of pay, especially if almost all of the employees worked overtime each week and their rates of pay were not recalculated based on the bonuses.
The FLSA requires that overtime pay be calculated based on an employee's "regular rate" of pay, which includes all compensation earned during a workweek. While certain earnings like discretionary bonuses may be excluded from the regular rate-of-pay calculation, other payments, such as non-discretionary bonuses and commission, must be included in total compensation. Bonuses can be discretionary (at the discretion of the employer) or non-discretionary. It's important to know the difference because non-discretionary bonuses may need to be included in overtime pay calculations.
As you can see, calculating overtime pay when bonuses are involved can get complicated. Of course, most companies today use payroll software to make these calculations on the front end. However, failure to monitor the payroll calculations may lead to a costly oversight, including federal Department of Labor (DOL) audits and fines as well as individual or class litigation.
The key to correctly calculating an employee’s “regular rate” of pay is identifying which bonus payments are discretionary versus non-discretionary. A discretionary bonus is an unexpected, unannounced payment that is made at the sole discretion of the employer. This kind of bonus is generally made in recognition of excellent service over the year or an unanticipated year-end bonus based on company profits, as opposed to an individual employee's work performance per pay period or quarter. If you give an employee a performance bonus at the end of a year, but not every year, it would likely be classified as a discretionary bonus. The only exception is for holiday bonuses, which the IRS says holiday bonuses can be discretionary, even if they are given every year.
Consider several other twists to the overtime pay adjustment rules. Employers often provide bonus plans that provide for bonus pay as a percentage of employees’ total earnings in a particular period, and which do not require any re-computation of employees’ rates of pay so long as the total earnings include both straight time hours worked and overtime hours worked, if any. In addition, the FLSA exempts genuine gifts to employees, profit-sharing, thrift and savings plans, and other irrevocable contributions to bona fide benefit plans. Each of these exemptions is governed by various FLSA regulations.
A non-discretionary bonus, on the other hand, is a promised or predictable payment made on the basis of the employee meeting a certain quality, quantity, or efficiency of production. In that vein, non-discretionary bonuses are also those provided by the employer based on a union contract or an employment contract, or other bonuses that employees would reasonably expect based on the employer’s promise (except for the holiday bonus). A signing bonus (for signing a contract or accepting a position) 36
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Did You Bring a Gift for Your Thanksgiving Host?
As stated above, gifts also are not included in the regular rate. But, “gifts” must be true gifts. This means that the gift must be totally discretionary and gratuitous. A true gift from an employer is most akin to being an audience
member on Oprah’s show during her Christmas episode, wherein she gives free items to all audience members. “You get a gift!” It is someone randomly and unexpectedly handing out cash. The DOL considers holiday gifts, including cash, as a gift, even when the employer has a regular practice of giving holiday gifts. However, if the “gift” is not unexpected and gratuitous, but instead is tied to or intended to reward conduct, production, or any employee specific incentive contribution, then it will not be deemed a gift. For instance, if to get the holiday gift, you have to meet a production goal, like canning fifteen cans of cranberries in fifteen minutes, then it is not a unexpected and gratuitous gift. If not a gift, then as with a non-directionally bonus, it must be factored into overtime pay. The Host Forgot the Cranberries!
Overtime pay adjustment rules are an often overlooked and misunderstood area of wage and hour law. However, correctly calculating bonus pay adjustments is not optional! Failure to re-calculate and pay overtime wages to non-exempt employees at the proper regular rate of pay is a violation of the FLSA. The stakes become even higher when you consider that plaintiffs’ attorneys are aware of overlooked bonus pay rate adjustments, and are eager to exploit the unintentional oversights of an employer’s calculations. Further, the FLSA allows recovery of unpaid wages plus liquidated damages (doubling up those damages). In addition, some states have state wage and hour laws, which usually closely mirror the FLSA, and for which many state wage and hour laws allow for additional damages, up to and including triple damages. Such recovery is a very bountiful thanksgiving for an employee or plaintiff and a not so very happy Thanksgiving for the employer or company. Giving Thanks with Cranberries, Turkey, and all the Other Trimmings.
The benefits of offering non-discretionary bonuses to employees are numerous. However, before cutting the turkey and passing it out to all gathered at your table, employers must conduct a fact-specific analysis to confirm whether a bonus is
discretionary or not, regardless of whether it is an annual, longevity, production, retention, or sign-on bonus. Failure to both properly categorize this variable compensation and properly calculate the regular rate for the purpose of overtime payments could lead to costly litigation. As is with eating too much on Thanksgiving, ignoring the issue does not make it go away. If you are an employer that offers bonuses (or other forms of compensation, such as commissions or retention bonuses) to non-exempt employees, make sure you are doing so correctly. If you are an employer thinking about starting a new bonus program, make sure you understand the facts and implications of such a program before taking the next step. In conclusion, prudent employers will consider the purposes for which they propose to provide a bonus, commission, or gift, if any, and evaluate the impact such may have on employees’ overall compensation. A bonus or commission utilized correctly may be a boost for your company’s overall performance, but ignoring the obligations imposed by such bonuses under the FLSA, however, may end up creating many other unintended consequences and spilt gravy.
Mary E. Buckley, Associate Cross, Gunter Witherspoon & Galchus, P.C. mbuckley@cgwg.com www.cgwg.com
Littler Event | 2018 Atlanta Fall Breakfast Briefing What Managers Can Do to Mitigate Litigation Risk (and What You Can Do to Help Them)
Tuesday, November 6, 2018 Registration & Breakfast: 8:00 a.m. — 8:30 a.m. | Program: 8:30 a.m. — 10:00 a.m. Location: The Buckhead Club | 3344 Peachtree Road | Atlanta, GA 30326 For registration, please contact Shea Geyer at sgeyer@littler.com. 3344 Peachtree Road NE | Suite 1500 Atlanta, GA 30326 www.HRProfessionalsMagazine.com
37
“Joint-Employer” Standard: NLRB Proposes New
As
Good News for Staffing in a Tight Labor Market By CARLOS CANO
the labor pool continues to tighten, companies are increasingly fighting to find and keep qualified workers. HR and recruiting professionals know these pains all too well. A great ally in this effort are third party staffing partners who can provide relief and expertise in this area. However, a concern that has lingered over this relationship between companies and their staffing partners is the likelihood of both partners being considered “joint employers” by the National Labor Relations Board (“NLRB” or “Board”). HR professionals should be keenly aware of what such a finding could mean for their company. Joint employers can be compelled to collectively bargain with the union representing the jointly-employed workers; they may be found jointly or severally liable for unfair labor practices committed by the other; they share wage and hour liability regardless of which entity directly pays the workers; and they can be both subject to employment discrimination claims by a jointly-employed worker. In short, being joint employers is not good news for either partner. Besides increasing exposure, it stands in the way of their relationship as it has the potential of pitting both companies against each other. While the National Labor Relations Act (NLRA) defines the terms “employer” and “employee,” it does not mention the term “joint employer.” However, for about 30 years the Board consistently held that two businesses were joint employers if they shared direct control over the employees’ essential terms and conditions of employment. Notably, indirect control was never enough. This all changed in 2015 with the Board’s decision in Browning-Ferris Industries, 362 NLRB No. 186 (Aug. 27, 2015). In Browning-Ferris, a Democratic-controlled Board departed from 30 years of precedent and dramatically broadened the definition of a joint-employer. Under the current Browning-Ferris standard, two businesses are considered joint employers if one of them has at least indirect control over the other’s employees. Even a reservation of such control, without actually exercising it, would make the company a joint employer. Unsurprisingly, this standard significantly expanded the universe of potential joint employers. In 2017, the Board tried to reverse Browning-Ferris in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (Dec. 14, 2017), but after only two months, it vacated that decision finding that one of the members should have recused himself. However, the NLRB recently signaled its intent to conclusively narrow the standard again, which should be welcome news for employers and the staffing industry. On September 14, 2018, the Board published a proposed new regulation that would roll back the current BrowningFerris standard. Under the Board’s new proposed rule, a company would be found to be a joint-employer of another company’s employees only if it “possess[es] and actually exercise[s] substantial direct and immediate control over the employees’ essential terms and conditions 38
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of employment in a manner that is not limited and routine.” Those terms and conditions of employment include “hiring, firing, discipline, supervision, and direction.” Thus, if the proposed rule is adopted, a company’s indirect influence over its staffing partner’s employees, or a contractual reservation of authority (without actually exercising it), would no longer be sufficient to deem it a joint employer and compel it to sit at the bargaining table with the union representing the staffing partner’s employees. The proposed rule would limit the number of companies that may be found to be a joint-employer. The Board noted the important difference between businesses which necessarily exert some indirect influence over each other, versus a scenario where one company actually exercises direct and immediate control over another’s employees. While the latter justifies jointemployment status, the former arguably should not. The Board’s reasoning appears consistent with what happens in the industry. As HR professionals know, both partners in a staffing relationship inevitably exert at least some level of influence over each other’s operations and workforce, particularly if they are to be aligned during the completion of a project. The Board cited precedent acknowledging this reality of our labor market: “An employer receiving contracted labor services will of necessity exercise sufficient control over the operations of the contractor at its facility so that it will be in a position to take action to prevent disruption of its own operations or to see that it is obtaining the services it contracted for. It follows that the existence of such control, is not in and of itself, sufficient justification for finding that the customer-employer is a joint employer of its contractor’s employees.” Southern California Gas Co., 302 NLRB 456, 461 (1991). The Board reasoned that the NLRA’s purposes of promoting collective bargaining and minimizing industrial strife are best served by a jointemployer doctrine that imposes obligations only on entities which have played an active role in determining the workers’ terms and conditions of employment, as opposed to dragging into the collective-bargaining relationship a third party which has not been actively involved in these decisions. In explaining the proposed standard, the Board offered several hypotheticals illustrating how it would apply it. Among the scenarios discussed were the following:
1.
Company A supplies labor to Company B. If the contract between the parties is a “cost-plus” arrangement whereby Company B reimburses Company A for expenses but Company A remains free to set the wages and benefits of its workers, then the companies are not joint-employers because Company B does not possess and has not exercised direct and immediate
control over the wages and benefits of Company A’s employees. However, if the contract between the companies were to dictate the wages that Company A must pay its employees, leaving company A without discretion to depart from those rates, then the companies would be joint employers because Company B has possessed and exercised direct and immediate control over the wages of Company A’s employees.
2.
ompany A supplies line workers and first-line C supervisors to Company B at a manufacturing plant. If Company B’s managers complain to Company A’s supervisors about defective products coming off the assembly line, and in response, Company A’s supervisors reassign line workers or switch up their tasks, the companies are not joint employers because Company B has not exercised direct and immediate control over the essential terms and conditions of Company A’s line workers. However, if Company B’s supervisors were to relay detailed instructions to Company A’s supervisors regarding how line workers are to perform their work, then the companies would be joint employers because Company B possesses and exercises direct and immediate control over Company A’s line workers.
3.
taffing Agency supplies temporary workers to S Company to cover a temporary staffing need. Over time, Company hires its own employees, which decreases its need for temporary workers from Staffing Agency and results in fewer temporary workers supplied to Company. Company and Staffing Agency are not joint employers because Company has not exercised direct and immediate control over the temporary workers’ essential terms and conditions of employment. Now consider the same scenario, but assume Company’s manager reviewed resumes of the temporary workers and participated in the interviews of those candidates, and together with Staffing Agency’s manager selected for hire the best candidates based on their experience and skills. In such case, both entities would be joint employers because Company has exercised direct and immediate control over the essential terms and conditions of employment of the temporary workers.
4.
ompany and Contractor have a contract which C reserves a right to Company to discipline Contractor’s employees for misconduct or poor performance. Company has never actually exercised its authority under this provision of the contract. In such scenario, Company has not exercised direct and immediate control over the terms and conditions of Contractor’s employees. Now consider the same scenario, but assume Company did exercise its right under the contract in one limited occasion. As a result of an employee of Contractor engaging in serious misconduct
consisting of severe sexual harassment of a coworker in Company’s property, Company informed Contractor that the offending employee is no longer permitted on its premises. Company has not exercised direct and immediate control over the offending employee’s terms and conditions of employment in a manner that is not limited and routine.
Though somewhat simplified, these hypotheticals provide insight into how the Board may view a specific relationship between a company and its staffing partner, as well as helpful guidance to HR and recruiting professionals on how to structure such relationships without risking a joint-employer finding. Notably, the Board opted to advance the new proposed regulation through its “rule-making” authority under Section 6 of the NLRA, as opposed to an adjudicatory decision. A rule advanced through this process is considered stronger than a Board’s decision, which— as evidenced by Browning-Ferris and Hy-Brand—is subject to reversal depending on what political party is in control. As part of the rulemaking process, the proposed rule will be open for public comments for 60 days (until November 13, 2018). Following the comment period, the Board will promulgate a final rule.
Carlos Cano www.kullmanlaw.com
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Same-Sex, Different Day – SEVENTH CIRCUIT UPHOLDS SAME-SEX DISCRIMINATION CLAIM IN Smith v. Rosebud Farm, Inc. By MICHAEL L. MANSFIELD
In
Smith v. Rosebud Farm, Inc. d/b/a Rosebud Farmstand, 898 F.3d 747 (7th Cir. 2018), the court was faced with a case in which a Chicago, Illinois jury awarded a male former butcher in a small grocery store $2.4 million in compensatory and punitive damages for what the court described as “consistent, if not constant” aggressive sexual contact from his male co-workers. The alleged contact included other male
employees grabbing plaintiff’s genitals, slapping his buttocks, simulating sex acts on him, and, on at least one occasion, propositioning him to go to a nearby motel for sex. Although the court ultimately reduced the award to a total of $477,500 based upon a variety of factors, the court had no difficulty upholding the jury’s finding of liability on the issues of sexual discrimination and retaliation for filing an EEOC charge under Title VII and 42 U.S.C. § 1981. A “culture of sexual roughhousing” is no defense In Rosebud, the male employee began working for minimum wage in the meat department of the employer’s grocery store in 2003. The employee was African-American and most of his 14-15 male co-workers in the meat department were Hispanic. Although the store also had female employees, none of them were ever assigned to work in the meat department. Consequently, the employer argued on appeal that no reasonable jury could find the employer liable under Title VII for sexual discrimination, as the conduct of the other employees described above amounted only to “sexual roughhousing,” which other courts have found is not actionable under Title VII. The employer actually buttressed this part of its argument by pointing out that the alleged harassers often did the same acts of which the plaintiff complained to each other, resulting in a “culture” of this alleged “sexual roughhousing.” While the court acknowledged that the Seventh Circuit had previously refused to impose liability on an employer under Title VII in male-on-male harassment cases in which the alleged harasser also treated women as badly as other men and in which a male employee complained only of “juvenile behavior” with “sexual overtones,” the court nevertheless found that the male employees in the meat department in Rosebud regularly interacted with female employees from other departments, such that the store was a “mixed-sex workplace.” This finding was critically important, as the court observed that if the employee had “worked in an all-male environment, the fact that only men were touched and groped would not raise an inference of sex discrimination.” In that regard, the court observed that even though same-sex employees may harass each other in numerous ways, including sexually, there must be some aspect of discrimination involved with the harassment in order for the behavior to be actionable under Title VII. As the court stated, “Title VII is an anti-discrimination statute, not an anti-harassment statute.” Because there was no evidence that any female employee was ever subjected to the type of treatment that the plaintiff in Rosebud endured, the court affirmed the jury’s finding of sexual discrimination under Title VII. 40
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A culture change should be a good thing Also, according to the court, the plaintiff continued to work for the employer for approximately five years despite the ongoing sexual harassment prevalent in the meat department before he ultimately filed an EEOC charge. While the plaintiff asserted that he had complained to his supervisor on numerous occasions about the ongoing sexual and racial harassment that he was suffering, the plaintiff alleged that the supervisor failed to act and even participated in the harassment at least a couple of times. Nevertheless, after the EEOC charge was filed, the plaintiff’s supervisor told the offending employees to “stop ‘goofing off” and to “quit the ‘horseplay.’” The plaintiff testified that after this admonishment, “[his] coworkers changed their behavior . . . but not for the better,” which ultimately led to him quitting his job. The jury believed the plaintiff’s testimony that he only quit his job due to the retaliation from his coworkers arising from his filing the EEOC charge and awarded the plaintiff compensatory and punitive damages as a result. In an effort to overturn the jury’s award on the plaintiff’s retaliation claim, the employer attempted to argue on appeal that the supervisor never actually told the offending employees about the EEOC charge or why they should change their behavior, such that the plaintiff’s coworkers could not have been retaliating against him for filing an EEOC charge. The court, however, found that the employer had failed to present that argument to the trial court in its motion for new trial and had thus waived the argument. The court then found that the jury was justified in accrediting the plaintiff’s testimony that soon after he filed the EEOC charge, the offending employees began “bang[ing] their cleavers menacingly at him and passed by him with large knives pointing out of the meat trays that they carried.” The plaintiff also found his car tires slashed and his windshield broken, although he parked in a gated, employee-only lot. The plaintiff testified that he became fearful of going to work because of these incidents, which was the ultimate reason that he left his job. In
response to the employer’s argument in its motion for new trial that “’it is inconceivable that any rational jury could believe what Smith testified happened at work for a period of five years . . . and did not quit much earlier,” the court stated pointedly, “[t]hat is undoubtedly a question that many victims of sexual harassment and workplace abuse have faced. . . . To say that this conclusion is irrational is to deeply misunderstand these complicated dynamics.” Smith v. Rosebud Farmstand, Inc., et al., No. 11-CV-9147, 2017 WL 3008095 at *8 n. 4 (N.D. Ill., July 14, 2017). Uncommon plaintiff, familiar rules While a plaintiff’s victory in a same-sex discrimination case brought under Title VII is rare, the ultimate failures within the employer’s management in this same-sex discrimination case are familiar. Although the Seventh Circuit had to view all facts favorably to the plaintiff in its opinion given that the jury had found the facts in plaintiff’s favor, the court found that the plaintiff endured “consistent, if not constant” harassment of a sexual nature and complained to management about the harassment numerous times over a period of years. Nevertheless, management did not take any steps to stop the harassment and the plaintiff’s direct supervisor actually joined in with the “sexual horseplay” on at least one occasion, presumably because the supervisor believed that “sexual roughhousing” in one all-male department of a mixed-sex workplace was acceptable since the women in other departments who interacted with his employees were not subjected to similar behavior. Then, after being informed that the plaintiff had filed an EEOC charge, the supervisor failed to protect the plaintiff from the retaliatory actions of the other employees, which the plaintiff described as pervasive and sometimes dangerous. At a minimum, management’s lackadaisical response to the plaintiff’s complaints subjected the employer to significant liability. Even if management’s response was possibly due in part to the fact that the case involved male-on-male harassment, this response led to a jury trial in which the employer was truly on the defensive from the outset. These failures were costly for the employer, because even though the “headline number” of the $2.4 million verdict was ultimately reduced to $477,500.00 on a motion for new trial/for remittitur, the plaintiff’s attorney in Rosebud ultimately recovered fees and expenses of $615,257.21 in addition to the final damages award. Smith v. Rosebud Farms, Inc. d/b/a Rosebud Farmstand, No. 11-CV-9147, 2018 WL 4030591, at *17 (N.D. Ill. August 23, 2018). As always, employers should have policies in place that address how supervisors should respond to any complaints of harassment or discrimination in the workplace and should follow those policies closely in response to any allegation of sexual harassment or discrimination, regardless whether the complaint fits a pre-conceived template of who can be a victim or what type of activity qualifies as unlawful. No employer wants to receive such a complaint, but employers must handle such complaints properly and objectively. Employers must also ensure that employees are protected from retaliation after submitting an EEOC charge or otherwise engaging in protected activity. If not, as in Rosebud, the employer may be subject to a future jury trial with devastating results.
Legal Challenges are Coming at HR Professionals from Every Direction
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41
Detonate:
Why-And How-Corporations Must
Blow Up Best Practices By WILLIAM CARMICHAEL
Recently, I was given the opportunity to work with an organization that wanted to redesign its management training program. This was certainly something I felt very comfortable in doing and accepted the assignment. Once at the customer’s headquarters I asked what I thought to be a routine question; “Can you provide me a copy of your organization chart? However, the response I received was anything but routine; “We have one but we don’t use it anymore!” Anticipating my confusion my contact continued, “We found that org charts limited us as an organization and our potential therefore we stopped using them.” I soon came to find out how unique and effective this unconventional approach was for them. In essence, his company ‘detonated’ an established paradigm and became better for it. This true example becomes the perfect introduction to Detonate: Why-And How- Corporations Must Blow Up Best Practices (And Bring A Beginner’s Mind) To Survive, by Geoff Tuff and Steven Goldbach. I also came to appreciate the reasoning behind this book’s cathartic title and you will to!
Detonate the business . . . really? Metaphorically, yes! My opening example of eliminating the organization chart, as ridiculous as it may sound, is not that implausible of an option when you come to realize the impact of digitalization upon business and the rapid change organizations now must embrace. As the authors state, “The primary purpose of Detonate is to help you begin to spot traditional business activities that need to be questioned because of changes in the world today – and then to help you find different ways of doing things.” And help us they do. As seasoned strategists, Tuff and Goldbach bring a great deal of global credibility with them within business and industry as they advise their clients not to break the rules, but rather, break with convention. 42
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A simple example is warranted. Consider a department’s standardized policies and procedures. Necessary, right? Most will argue that for all intents and purposes this mainstay for businesses has significant logic and reason. Here, our authors might agree but they certainly will pose the question, for whose benefit? Tuff and Goldbach are not attempting to orchestrate a revolt against this traditional fare but rather encourage us to question its legitimacy for the long-term. Nor are they recommending changing every process for the sake of change or throwing traditional practices out. Detonate questions existing business paradigms in several key areas and to quote the authors, “It’s not a question of whether to try on some of the principles and enable the detonation, but where to start and to what extent.” A transformation to accept a “Detonate mindset” when reviewing current policies, procedures, protocols, processes, playbooks and the traditional “we’ve always done it that way” mindset. And when you think about it, there is always an inherent danger when we just blindly follow best practices for the sake of convenient complacency. The aforementioned principles, which the authors refer to as the four Detonate Principles, create the basis for this transformation:
1. Focus your activities on understanding and driving human behavior 2. Bring a “beginner’s mind” to all that you do 3. Embrace impermanence 4. Build minimally viable moves to test and learn There is a startling veracity to each principle and readers will appreciate how grounded each principle is in reality. Through empirical research, Detonate: Why-And How- Corporations Must Blow Up Best Practices (And Bring A Beginner’s Mind) To Survive identifies seven “normal operating procedures” that businesses should discontinue and replace with new practices.
1. F inancial forecasting and budgeting too often optimizes for a spreadsheet outcome rather than a coherent business outcome. 2. The underlying purpose of strategic planning gets lost as the process becomes templatized and routinized around an annual calendar. 3. Syndicated data give us insights that are readily available to our competitors and fools us into thinking we have an advantage. 4. Traditional insight generation relies too much on information that is prone to selfreporting bias. 5. Most risk management systems, and in particular, stage-gate systems have lost sight of their purpose in favor of process adherence.
6. Somehow along the way some notions about not just risk tolerance but celebrating failure have taken root. 7. Org charts and career paths have created the perception of permanence- one of the critical enablers of best-practice orthodoxy. True enough, not every one of these is flawed as the authors validate. But just as I did in reading Detonate, readers will also agree that most companies are not going to want to “dramatically change” every process they have in place. Instead, the authors challenge us to question orthodoxy and “ask why things are done the way they are.”
Who Will Benefit Most from This Book? Senior Managers & Organizational Leaders, Senior HR Management
ABOUT THE AUTHORS:
Structure and Layout Readers will discover there is an interesting dichotomy at work here with Detonate’s style. Structured as a front to back read, it serves this purpose well. Its thirteen short chapters written in three descriptive parts (Part 1- Light the Fuse, 2- Blow Up Your Playbooks, & 3- Build Something Better), provide ample real-world examples and more than adequate logic and reasoning for the recommendations it makes. Ordinarily, this linear approach would be my recommendation but not so here! My eyes were immediately drawn to Part 3 and the final three chapters. From there, I read in reverse order and was not disappointed as each chapter stands on its own in clarity and depth. Regardless of how you approach it, a common element exists within each chapter. That before any process should be eliminated, we first must analyze the individual behavior behind it. I could not agree more! Add this to your favorite’s list!
Geoff Tuff
Steven Goldbach
Geoff Tuff is a Principal with Deloitte. He is a senior leader of the firm’s Innovation and Applied Design Practices. Steven Goldbach is a Principle with Deloitte. He is the Chief Strategy Officer of Deloitte US and a member of the firm’s Executive Leadership Team.
William Carmichael, Ed.D Professor | Strayer University william.carmichael@strayer.edu www.strayer.edu
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Are Employers Paying More for Employee Benefits? By RICHARD WORKS
In our current economy, are employers paying more for employee benefits? How has the current shortage affected employee benefits? In this article, we will attempt to address these two questions. The data that we will use for this analysis come from the Bureau of Labor Statisticsâ&#x20AC;&#x2122; National Compensation Survey. This is a quarterly survey of employers and produces outputs such as the Employment Cost Index (ECI), the estimates for Employer Cost for Employee Compensation (ECEC), and the Employee Benefits publication. The analysis in this article may not reflect the views of the Bureau of Labor Statistics, and may only represent the authorâ&#x20AC;&#x2122;s opinion. To address the first question, we can get a sense of how cost for employee benefits are changing by looking at the ECI. According to the published data, the employer cost for providing benefits to their employees has increased over time. The ECI chart in this article is of the seasonally adjusted current dollar trend. As we can see from the chart, there is a clearly defined linear relationship between time as a factor and the seasonally adjusted current dollar index. Using a simple linear regression, we see that this particular index increases by a value of 0.008 each year. At the time of this article, the currently most recent data release is for the June 2018 quarter, and this release shows that this specific index number is 132.7. Therefore, the regression analysis suggest that the values for the next four quarters may increase from 134 to 137. However, with margins of error, it is impossible to project what the actual index number will be in the future. On the other hand, this may provide us with some expectations. Using this information, we will investigate the benefit types to locate a factor behind the increased cost.
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The benefits that employees are mostly concerned with include health insurance and retirement. According to the ECEC estimates, both health insurance and retirement costs have increased over time. However, health insurance appears to have a greater increase when compared to retirement cost. As with the employment cost index for benefits, the ECEC numbers also show a linear relation with time. According to a simple regression, health increase cost would increase by 0.0002 each year and the retirement cost would increase by 0.0001 each year. Keep in mind that these cost numbers are the cost per hour for each hour the employee works. In addition, these ECEC numbers are highly aggregated numbers that include all employee, regardless of access or participation status. Looking at these data with respect to access and participation further sheds light on any trends. Access rate means that employees are considered to have access to a benefit plan if it is available for their use. For example, if an employee is permitted to participate in a medical plan offered by the employer, but the employee declines to do so, he or she is placed in a category with those having access to medical care benefits. Participation means that employees in contributory plans are considered participants if they have paid required contributions and fulfilled any applicable service requirements. Employees in noncontributory plans are counted as participating regardless of whether they have fulfilled the service requirements. Using these two rates to calculate a single metric, the take-up rate is an estimate of the percentage of workers with access to a plan who participate in the plan.
The ECEC chart gives us an overall view of employer cost. For example, according to the published data, the employer cost for health insurance increased from $1.53 per employee hour worked in March 2004 to $2.56 per employee hour worked in June 2018. According to the regression analysis, these costs are expected to continue this trend of increase. The regression coefficient suggests that these rates will increase for the next four quarters from $2.64 to $2.69. However, again this is just an elementary projection and should not be used for financial decisionmaking purposes due to the margins of error. Additionally, the Health category in this chart includes all health insurance plans, meaning that it includes medical, dental, and vision. The following will further narrow down on medical insurance only. As mentioned previously, the take-up rate is the percentage of employees with access to a benefit that participate in a benefit. The take up rate is a ratio of the participation rate in the numerator and the access rate in the denominator. The next chart shows the take-up rates for medical care and retirement.
The chart shows that the take-up rate to retirement benefits has decreased since 2008. Likewise, the take-up rate with medical care has slightly decreased. However, this may only provide broad information. As shown in the chart, the take-up relationship with the time factor is not a linear function, but has a logarithmic nature. Also, the take-up rate will change as the access and participation rates change. Employers could change the access that they offer for these benefits, but employees may also modify their participation in the benefits. Therefore, neither access nor participation may provide a complete picture solely.
The take-up rate in conjunction with access and participation may provide additional insights to how benefits are being received by the workforce, and thus how employer costs may fluctuate. There have been other articles written that showcased access and participation rates, however, take-up rates are not a generally discussed topic. However, this rate may be helpful is giving us a more accurate cost that employers are paying for these benefits. Early February 2016, an article was published from the Bureau of Labor Statistics regarding the trends in employer costs for defined benefit plans. This article made specialized calculations using the benefit cost (ECEC) divided by the access cost, and this calculation was termed access cost. In like manner, the following section will analyze a specialized calculation using the benefit cost data (ECEC) divided by the take-up rate. These numbers will provide us with the per hour cost that employers pay for these benefits with respect to those with access that are participating. However, these concepts may still need further development for academic research purposes before being implemented for business decision-making, but they will suffice for the purpose of our analysis.
According to the calculations, the employer’s take-up cost for retirement plans has barely changed since 2008, but the employer’s take-up cost for medical insurance has increased. The regression analysis shows that medical care and retirement both have a linear relation with respect to time. The simple linear analysis suggest that the employer’s take-up cost for medical care will increase by 0.0003 each year. This value seems very small, but this overall amount is an hourly rate for each employee that is included in the take-up rate (those with access that are participating). Keep in mind that not all employee with access may be participating in the benefit, but rest assure that every employee that is participating does have access to the benefit.
This analysis is unable to determine how a shortage may influence employer costs for these benefits because the data collected through the National Compensation Survey include access and participation, from which the take-up rate is calculated. If there is a shortage, this might be offset in the take-up rate by a corresponding change with another variable. However, if we assume that the shortage is apparent within the access and participation, and thus the take-up rate, then we see that a trend exists in that the employer’s hourly cost for health insurance has increased and may continue to increase at a larger rate than retirement. Similar to how the term Health in the beginning of this article included medical, vision, and dental, the term Retirement includes both defined benefit pension plans and defined contribution plans, such as a 401k. Examining these different retirement plans separately may also be helpful for further research.
Dr. Richard Works, Economist Bureau of Labor Statistics – Washington, D.C. works.richard@bls.gov. www.bls.gov
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Immigration Compliance in the Health Care Field By BRUCE E. BUCHANAN
The importance of immigration compliance continues to grow as more companies, including medical providers, realize the negative consequences of violating the Immigration Reform and Control Act (IRCA) for I-9 form violations and/or hiring/ employing unauthorized workers, the Immigration and Nationality Act (INA) for citizenship or national origin discrimination or document abuse, and state immigration laws. It is especially important for health care employers because they tend to have a number of employees on non-immigrant visas, such as H-1Bs, and one must be cognizant of their unique requirements for employment. I-9 form As all employers know, IRCA requires employers to have all employees, U.S. citizens and foreign nationals, hired after November 6, 1986 to complete I-9 verification paperwork. Although the I-9 form is only two pages, there are often an incredible number of errors, most unintentional, committed by employees and employers. Some of the most common errors by employees are: not completing Section 1 by the first day of employment; failing to checkoff where U.S. citizen, lawful permanent resident, work authorized, or U.S. national; failing to record Alien (“A”) and expiration of work authorization; failing to sign and/or date the I-9 form. Common errors by employees in Section 2 are: not completing Section 2 within three days of first day on job; employer representative failing to timely sign; and failing to list any information in Lists A, B, or C, or listing only partial information in Lists A, B, or C. Section 3 potentially could cause many health care employers difficulties if they do not timely re-verify certain groups of employees, such as H-1B visa holders. Failure to re-verify an employee whose employment authorization has expired means the employer is “knowingly” employing an undocumented worker, which subjects the employer to costly penalties. 46
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I-9 form recordkeeping requirements Employers must keep I-9 forms for all current employees, though the I-9 forms of certain terminated employees can be destroyed after one year from termination or three years from hire, whichever is longer. Retaining copies of the supporting documents is voluntary. Employers can retain copies of documents and, if one does so, the copies must be kept with the specific Form I-9. While some would argue that maintaining copies of documents leaves an unnecessary paper trail for government inspectors, it is also true that maintaining documentation could provide a good faith defense for an employer in showing that it had reason to believe an employee was authorized even if the paperwork was not properly completed. Additionally, if copies are retained and some data is missing in List A, B or C, such as the issuing authority, it is only a technical error, not a substantive one, for which the company will be given 10 days by Immigration and Customs Enforcement (ICE) to fix.
Self-Audit of Company’s I-9 Forms A medical provider should develop an immigration compliance program, including a self-audit of your I-9 forms, training for applicable management, and drafting and implementing immigration compliance policies. I recommend an I-9 audit be conducted or overseen by an immigration compliance attorney. There are acceptable and unacceptable methods for making these corrections. Mistakes in self-audits have resulted in fines for companies. If unacceptable methods are used, it will result in additional penalties for companies.
Immigration Compliance Policy A written immigration compliance policy should cover the following: who is in charge of immigration compliance; training requirements, including how often, for those HR and other personnel who are in charge of completing the Forms I-9; a zero-tolerance policy for the employment of individuals who cannot comply with IRCA’s employment verification rules; will the company retain supporting documents for the I-9 forms; will the company utilize an Electronic I-9 system; retention policy - former employees’ I-9s must be maintained for the longer of 3 years from date of hire, or 1 year after employee's employment ends; there should be two files, active employees and former employees; will the company use E-Verify; is E-Verify required under state law or federal law (FAR E-Verify); how will the company handle remote hires; what type of “tickler system” will be set up to remind employees who need to re-verify their work authorization; rules for working with outside contractors; and determine what kind of questions can be asked about national origin and citizenship status before a job offer.
ICE Audits/Inspections ICE has the authority to inspect an employer’s I-9 forms. When this occurs, ICE serves a Notice of Inspection
(NOI)/subpoena on the employer, requesting all I-9 forms with supporting documentation as well as many other documents within three business days. Other records that will normally be subpoenaed include: copy of payroll, list of current employees, list of former employees for past one to three years; Social Security Administration documents; IRS Form 940 and 940 employment tax documents; business licenses; and list of companies who were contracted work. ICE has the right to receive and inspect the originals of the I-9 forms. The employer should copy all documents turned over to ICE. Once the employer provides the documents, an ICE auditor inspects the I-9 forms to determine whether they comply with the law. The ICE auditor is checking for substantive violations, such as incomplete or missing forms, and technical violations, which an employer will be given 10 days to remedy.
Department of Labor Audits The Department of Labor (DOL) also has the authority to conduct H-1B investigations in much the same manner as ICE has the authority to conduct I-9 inspections/audits. During these investigations, DOL will be demanding the health care institution or other employer produce the public access file as well as the other documents described below. Additionally, the DOL will demand all I-129 USCIS petitions and H Supplements as well as approval notices. Other records requested include any records on a change in corporate structure, any “single employer” entities, whether the employer is “H-1B dependent”, a past “willful violator”, and liquidated damages or penalties sought or collected from H-1B workers. The DOL also has the authority to determine whether an employer engaged in benching (failure to pay an H-1B employee who is ready and available for work).
Public Access Files and Other Records
Anti-Discrimination Provisions Enforced? While employers need to be diligent about complying with IRCA’s employment verification rules, they should not be so overzealous that they end up penalizing qualified employees. IRCA has anti-discrimination rules that can result in an employer facing stiff sanctions. Employers of more than three employees are covered by the IRCA anti-discrimination rules (as opposed to the 15 or more employees covered by Title VII). IRCA protects most U.S. citizens, permanent residents, temporary residents or asylees and refugees from discrimination on the basis of national origin or citizenship status if the person is authorized to work. Aliens illegally in the U.S. are not protected. The Immigrant and Employee Rights (IER) Section of the Department of Justice (formerly OSC) is responsible for enforcing the anti-discrimination provisions of IRCA, which prohibits citizenship and national origin status discrimination in hiring, firing and recruitment or referral for a fee, as well as document abuse (discriminatory I-9 form and E-Verify practices). If a company becomes overzealous in making sure all employees are authorized to work in the United States by requesting more documentation or certain documentation for non-citizens, it could be in violation of the anti-discrimination provision.
Bruce E. Buchanan, Attorney Siskind Susser PC bbuchanan@visalaw.com www.visalaw.com
SISKIND SUSSER PC
Due to the employment of H-1B visa holders, health care institutions must maintain a public access file, which must be made available to any member of the public upon request. The file should be maintained at the employer's principal place of business, or at the location where the employee is employed. The following must be kept in the public access file: Labor Condition Application (LCA) - signed ETA Form 9035; Wage Rate Statement - statement of the actual current rate of pay for the H-1B worker; Prevailing Wage Determination (PWD) – includes a description of the source and methodology for the prevailing wage (PW); Actual Wage Memorandum - memorandum explaining how the employee’s wage was determined; LCA Addendum - A form indicating that the H-1B position has been posted at the site where the employee will work. If the employee moves to a new location at the employer's company, the employee’s job must again be posted; and Benefits Summary - A description of the benefits that are offered to employees of the company, including an explanation of any eligibility requirements for particular benefits. Additionally, the employer must post a Notice of Filing Labor Condition Application. The posting is to inform all employees of the company that an LCA has been or will be filed for an H-1B worker. The notice must include the following information: job title; salary; begin date; end date; and work location. This notice must be posted for 10 business days at work locations.
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47
2nd Annual Inclusive Diversity Conference
At the University of Memphis | October 5, 2018
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1 Charles Henderson “ The Power of the Unconscious Mind” 2 (R-L)Tori Black, Student Session Speaker, with U of M student, Jalisia 3 Tisch McDaniel, SHRM-Memphis Past President, at LaunchPad table 4 Event attendees (L-R) Sonja Mustiful, Essence of Coaching Founder and President; and Carol Casey, HR professional
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5 Sheila Vinczeller, Chief Diversity Officer & VP Talent at IP, spoke on “Employee Engagement through Inclusion” and “Making an intentional Effort” 6 Andrea Bowles, SHRM-Memphis VP of Communication, and ID Shield, vendor 7 Panel Experts (L-R) Randy Irving, Manager of Diversity and Inclusion FedEx Services; Victor Charles, retired Service Master VP of Diversity and Inclusion, and VP of Service Master Franchise Resource Groups; Tracie Montgomery, Diversity Strategist for Randstad Source Right and RPO at BASF Attendees 8 “Are We Naturally Inclusive? The Behavioral Roots of Inclusion” was the keynote topic presented by John Daniel, EVP, Chief Human Resources Officer – First Horizon Financial Corporation.
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9 Verlinda Henning, President of SHRM-Memphis, welcomed attendees. 10 “Avoiding Legal Pitfalls in Reducing Compliance Disruptions Through Diversity” was his topic. Jeff Weintraub is an attorney with Fisher Phillips Memphis office. 11 SHRM-Memphis members and attendees 12 Vendors 48
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University of Memphis The Department of Management in the Fogelman College of Business and Economics at the University of Memphis offers AACSB-accredited training in human resource (HR) management and organizational behavior. The following faculty have an expertise in these areas: Chuck Pierce, Laura Alderson, Carol Danehower, Kelly Mollica, Kristen Jones, and Kathy Tuberville. They offer undergraduate courses on HR topics such as introduction to human resource management, compensation & performance appraisal, employee relations, staffing organizations, and employee training & development. The University of Memphis offers MBA and executive MBA courses on topics such as managing human resources and strategic human capital management. They also offer a doctoral research seminar on human resource management. In addition, they have a student chapter of the Society for Human Resource Management (SHRM). Finally, they have an undergraduate concentration in HR management. For more information, please contact Dr. Chuck Pierce, Chair of the Dept of Management (capierce@memphis.edu; http://www.memphis.edu/management). The University of Memphis SHRM Student Chapter is open to all Memphis college students.
Fogelman College Department of Management
Dr. Charles A. (Chuck) Pierce, Ph.D, Professor of Human Resource Management
Laura Alderson, Ed.D., Instructor, Department of Management
Carol Danehower, DBA, Associate Professor
Kelly Mollica, Ph.D, Instructor
Kristen P. Jones, Ph.D, Assistant Professor
Kathy Tuberville, Ed.D, Instructor www.HRProfessionalsMagazine.com
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9 Reasons to Hire a Military Veteran
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By HARVEY DEUTSCHENDORF
mericans do a lot to celebrate and show appreciation to veterans after they return home from active service. However, the picture for them returning to employment after leaving the service has not been nearly as rosy. With a hot economy, the employment rate for veterans declined to 3.7% in 2017 according to the Bureau of Labor Statistics. However, that still leaves a lot of unemployed veterans. Many Americans outside of the military are unaware of the many skills and experiences that veterans acquire while in service. Their only information comes from movies and the news. Misconceptions about what sort of skills one picks up while in military service abound and some employers mistakenly believe that the skills that veterans have are not transferable outside of the military world. Adam G. Gonzales, a service veteran, started https://silentprofessionals.org. to help connect veterans with employers as well as to educate employers on what veterans have to offer. Here are 9 reasons for organizations to hire veterans: Leadership and Followership Capabilities From the time they enter service, veterans have been groomed to both become good followers and be ready to take on leadership responsibilities. In field situations military people have to be ready, willing and able to make quick decisions in the face of physical dangers and ever changing and uncertain situations. The need to think on their feet and adapt quickly to a changing environment makes them well suited to a working in a rapidly changing work environment. Teamwork Ability Military veterans are the ultimate team players, as this is something ingrained in them from the first moment and day they enter service. They are accustomed to thinking in terms of what is best for their team and what they can do to strengthen and improve the teams they are part of. As most of what is accomplished in the working world is based on working as part of a team, veterans are already well ahead of the learning curve when it comes to teaching teamwork. Ability to Perform Under Pressure Military personnel are trained and expected to be able to perform under pressure, deadlines and trying conditions. They are used to having to judge priorities and accomplish goals under tight deadlines. Staying with a goal until it is completed is something they are used to carrying out and firmly believe in. This is a quality that is highly useful in any job requiring tight deadlines, and a skill that resonates well with employers.
Persistence and Determination The ability to stick with a problem or situation for a period of time when no immediate solution appears at hand is an attribute that is taught in the military. This requires the ability to endure, change direction when necessary and stick with a course of action over the long haul until results are achieved. The ability to forego immediate gratification for long term benefit is an attribute that veterans accept and are used to. Attention to Detail While learning to always be aware of the big picture, the military teaches the importance of paying attention to detail. This detail focus can be difficult to find in the general population and can pay big dividends for organizations that require people who are detail oriented. Conscientious and Safety Orientation Safety is a major concern for all organizations and the military ensures that safety is constantly focused on and regulations adhered to. Following rules and regulations has become second nature to veterans and they easily adapt to and become highly aware of any dangers inherent in their new environment. Adaptable, Coachable and Trainable The military environment is one in which learning, adapting to an environment in which situations change rapidly and the ability to improvise is a constant necessity. Members are expected to be constantly learning and prove their ability to take initiative and be accountable for their actions.
Experience Working Within a Diverse Group Veterans have served alongside people of various backgrounds, races and ethnic origins. In order to accomplish their goals and missions they have learned to trust and rely upon one another regardless of their backgrounds. They fit in and work well within a workplace that is becoming increasingly more diverse. Goal Focus and Orientation Veterans are used to making timely assessments of situations and coming up with plans of action. After actions are taken they typically debrief and look at the actions taken, look at what worked and what didnâ&#x20AC;&#x2122;t and come up with ways to improve in the future. This ongoing form of continuous improvement focus is what all successful organizations strive for. Veterans already have the mindset and ability to carry this out. 50
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Harvey Deutschendorf is an emotional intelligence expert, internationally published author and speaker. To take the EI Quiz go to theotherkindofsmart.com. His book THE OTHER KIND OF SMART, Simple Ways to Boost Your Emotional Intelligence for Greater Personal Effectiveness and Success has been published in 4 languages. Harvey writes for FAST COMPANY and has a monthly column with HRPROFESSIONALS MAGAZINE. You can follow him on Twitter @theeiguy.
Compliance with Compassion… … using your head, your heart, and your hands to nurture your employees. TEAM FOSTER HR STRATEGY provides comprehensive human resources consulting services for small to mid-size businesses. Offering turnkey solutions for clients, Team Foster is committed to compliance with compassion. With 30 years of industry experience, LeeAnn excels at relationship management, conflict resolution, and employee engagement. Team Foster works with you to motivate and manage HR issues from the inside out – supporting your existing human resources team and coaching your staff to solve problems with an integrated approach. Team Foster HR helps you build a collaborative corporate culture to further your business goals and strengthen your performance.
LeeAnn B. Foster | Head Coach Leadership & HR Consultant +1 865-719-1177 mobile WWW.TEAMFOSTERHRSTRATEGY.COM
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