Volume 5 : Issue 1 TM
www.HRProfessionalsMagazine.com
Top
Employee
Has Your Benefits Broker Told You the Truth About
Benefits
Companies
“Wellness” Programs?
Lynn Ingmire, Comprehensive
Health Plan
Reduces Metabolic Syndrome
FLSA
Regulations Changes on the Way
SPHR Chair-Elect
KYSHRM
State Council
The Catch 22 of Obesity and Debt
JUST PUT IT ON THE COMPANY CARD…NOBODY WILL NOTICE.
YOU’RE REALLY SHOWING OFF YOUR BEST ASSETS TODAY.
THEY’RE WORRIED ABOUT OVERTIME. I’M JUST WORKING OFF THE CLOCK.
I NEVER WEAR THE SAFETY GOGGLES. THEY LEAVE A MARK.
What you don’t hear can still hurt you. The things employees say when you’re not around can cause legal troubles for you. Fisher & Phillips provides practical solutions to workplace legal problems. This includes helping you find and fix these kinds of employee issues before they make their way from the water cooler to the courthouse.
1715 Aaron Brenner Drive • Suite 312 • Memphis, TN 38120 • 901.526.0431 www.laborlawyers.com
ATLANTA BALTIMORE BOSTON CHARLOTTE CHICAGO CLEVELAND COLUMBIA
COLUMBUS DALLAS DENVER FORT LAUDERDALE GULFPORT HOUSTON IRVINE
KANSAS CITY LAS VEGAS LOS ANGELES LOUISVILLE MEMPHIS NEW ENGLAND NEW JERSEY
NEW ORLEANS ORLANDO PHILADELPHIA PHOENIX PORTLAND SAN ANTONIO SAN DIEGO
SAN FRANCISCO TAMPA WASHINGTON, D.C.
Bringing Human Resources & Management Expertise to You
33% of U.S. adults are obese according to the CDC
www.HRProfessionalsMagazine.com Editor
Cynthia Y. Thompson, MBA, SPHR Publisher
The Thompson HR Firm HR Consulting and Employee Development Art Direction
Park Avenue Design Contributing Writers
Craig A. Cowart Douglas P. Cropper Pepper Crutcher Chris Davis Harvey Deutschendorf Reagan Fromm Mimi Hurst Heidi Kahly-McMahon Gary Peeples Ren Pritchett Mark A. Rodrigues Renee Stolmeier Lynn Susser Robin B. Taylor Board of Advisors
Austin Baker Jonathan C. Hancock Ross Harris Diane M. Heyman, SPHR John E. Megley III, PhD 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. 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. ©2011 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.
Features 4 note from the editor 5 Profile: Lynn Ingmire, SPHR 12 The Catch 22 of Obesity and Debt 14 Top Employee Benefits Companies 16 House Sues President Over ACA Administration 18 Has Your Benefits Broker Told You the Truth About Wellness Programs? 20 Comprehensive Health Plan Reduces Metabolic Syndrome 22 Portfolio’s Lifestyle Model Options Simplifies Retirement Investment 29 Data Facts Named a Top 2014 Workplace
WEB EXCLUSIVES HTTP://HRProfessionalsMagazine.com /Exclusives
Departments 10 Wage and Hour: FLSA Regulations…Changes Are on the Way 16 Health Care Reform – House Sues President Over ACA Administration 24 Immigration: What HR Professionals Should Know About the New Immigration Initiatives 26 EEOC: Disparate Impact Discrimination 101 28 Highlights of the HRO Partners Holiday Breakfast Social 30 Highlights from the Memphis Bar Association Annual Labor and Employment Law Seminar 32 EQ: How to Really Welcome a New Employee 34 Employment Law: Quit or Fired? Performance Improvement Plans Are Not Enough to Show Constructive Discharge
Industry News 6 Highlights from KYSHRM Leadership Conference in Louisville 7 Highlights from WAHRA Leadership Conference in Fort Smith 8 TNSHRM Strategic Leadership Conference in Nashville
Next Issue Preview of 2015 TNSHRM Leadership Conference February 20 in Nashville Preview of 2015 MSSHRM Leaders Retreat February 14 in Biloxi www.HRProfessionalsMagazine.com
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a note from the Editor
Our focus this issue is employee benefits and we are pleased
We look forward to seeing our MSSHRM friends at the MSSHRM
to bring you corporate profiles of some of our sponsors who
Leaders Retreat at the Golden Nugget in Biloxi on February 14. I will also
help us keep you updated on cutting edge employee benefits
be speaking at this exciting event as we kick off the new year preparing
in this very important competency for HR professionals. We
SHRM leaders in Mississippi for their new roles in 2015. I will also be
hope you will enjoy reading about them on Page 14.
speaking at the TNSHRM Strategic Leadership Conference on February 20 in Nashville. I am presenting “Strategies for Developing a High
In our December issue we were honored to have an article
Performance Organization.”
by SHRM’s Kathleen Coulombe on HR Public Policy issues, and what we can expect from the 114th Congress. In our
Mark your calendar to join us January 20 at 2 PM for our monthly compli-
first issue of 2015, we have articles on three hot topics
mentary HRCI webinar sponsored by Data Facts. We extend heartfelt
impacting the HR community. Craig Cowart explains the
congratulations to Daphne Large and her staff on being named a Top 2014
upcoming changes to the Fair Labor Standards Act in his
Workplace for the second year in a row by the Memphis Commercial Appeal!
timely article on Page 10. You can read about the House
Watch your email for details about our January webinar.
lawsuit against the President concerning ACA administration on Page 16 by Pepper Crutcher. Lynn Susser
Best wishes for a happy and prosperous New Year!
discusses what you should know about the President’s new immigration initiatives on Page 24. I hope you enjoy the highlights from the WAHRA Leadership Conference in Fort Smith in October where we met NBA star, Sidney Moncrief. It was also a pleasure meeting NLRB General Counsel, Richard F. Griffin, Jr., who was a keynote speaker at the Labor and Employment Law Section of the Memphis Bar Association Annual Seminar at the Crescent Club in Memphis on December 5. We have highlights from
Cynthia Y. Thompson | Editor cynthia@HRprosMagazine.com www.HRProfessionalsMagazine.com
this excellent event on Page 30.
Sign up for our RSS News Feed to receive up to the minute HR Alerts on changing legislation affecting our workforce. www.HRProfessionalsMagazine.com. 4
www.HRProfessionalsMagazine.com
Lynn on the cover
INGMIRE
LYNN INGMIRE, SPHR Chair-Elect KYSHRM State Council
Lynn received her BS degree in Sociology from the University of Louisville and holds the designation of Senior Professional in Human Resources.
Lynn Ingmire, SPHR has over 30 years of human resource management experience. She has worked in various types of organizations including manufacturing, distribution/ transportation, food processing, education and not for profit associations, in small and large companies, in both union and non-union environments. Throughout her career, she has been responsible for the full range of human resource functions. In 2014, she founded her own consulting business, Essential HR Partners, LLC providing training and consulting in human resources and leadership. In addition to her corporate responsibilities, she has been a member of Louisville SHRM for over 30 years and began volunteering shortly after joining the chapter. She has worked on various committees and has held Director positions for Workforce Readiness; Special Activities (including SHRM Foundation fundraising efforts); Member Development and Certification, and served as President of Louisville SHRM in 2006. Her involvement with the KY SHRM state council began in 2006 when she was chapter President and continues today. She is serving as Chair-elect for 2014 and 2015 and will assume position of Chair for 2016 and 2017. Her volunteer efforts were recognized by KY SHRM in 2007 when she received the Lyle Hanna Volunteer Spirit Award. Lynn has taught on-line human resource classes for the National Rural Electric Cooperative Association (NRECA) headquartered in Arlington, Virginia and has been a speaker at their HR conferences. She facilitated study groups through her local SHRM chapter for HR professionals preparing for certification, as well as taught certification classes through continuing education program at Bellarmine University in Louisville. Lynn served for six years on HR advisory committee for National Rural Electric Cooperative Association in Arlington, Virginia and continues to serve on the HR committee for Boys and Girls Haven in Louisville, Kentucky. ď Ž
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KYSHRM 2014 Leadership Conference in Louisville December 3-5
Trish Candler, Lynn Ingmire, Jeff Nally, Susan Simmons. Jeff & Trish presented on How to Motivate Chapter Volunteers
Susan Simmons, Joe and Elizabeth Lacroix, and Lynn Ingmire
Joe and Elizabeth Lacroix sharing the RGB
KYSHRM attendees at the 2014 KYSHRM Leadership Conference
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WAHRA 2014 Leadership Conference
Campus of University of Arkansas – Fort Smith
Sidney Moncrief, legendary star of Razorback Basketball and the NBA was the Keynote Speaker. He spoke on Step Up Your Game to Greatness.
Dr. Kim Gordon, SPHR, UAFS Center for Business and Professional Development, spoke on Emotional Intelligence: Professional Skill.
Cynthia Y. Thompson, MBA, SPHR, The Thompson HR Firm, spoke in two concurrent sessions on How to Develop HR Policies for Your Organization and Topgrading – Strategies for Hiring “A” Players.
Ben Shipley, JD, with Robertson, Beasley, Shipley & Redd, PLLC Law Firm, spoke on HR Trends: Legal Challenges in Human Resources.
Breakout Sessions Scott Foster, Wellco Corporation, Royal Oak, MI spoke on Benefit Design in the Post ADA Environment. Identity Theft 101 was presented by Stephen Svetz, Office of the Arkansas General in Littler Rock. He also presented Scamming Trends in Arkansas.
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STATE COUNCIL FOR HUMAN RESOURCES
TENNESSEE SHRM STRATEGIC LEADERSHIP CONFERENCE “STRATEGIC HR: PRACTICES THAT DRIVE ORGANIZATIONAL RESULTS”
FEBRUARY 20, 2015 AIRPORT MARRIOTT, NASHVILLE, TN 7:00 AM – 4:30 PM
This exclusive educational event is targeted to business leaders, volunteer leaders and senior level HR professionals with strategic leadership roles. This one-day conference will provide a focused, strategic approach to business and organizational strategy through educational sessions delivered by best-in-class business speakers and HR industry professionals. The conference will provide networking opportunities and participants can earn up to 4 Business Management and Strategy recertification credits.
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7:00 – 8:00
Registration, Networking, Continental Breakfast, Exhibitors
8:00 – 8:30
Welcome and Structured Networking Opportunity
8:30 – 10:00
Opening Keynote
10:00 – 10:30
Break
10:30 – 12:00
Concurrent Sessions
12:00 – 1:00
Lunch
1:15 – 2:45
Concurrent Sessions
2:45 – 3:00
Break
3:00 – 4:15
Closing Keynote
4:15 – 4:30
Grand Prize Drawing
4:30
Adjourn
www.HRProfessionalsMagazine.com
600 Marriott Drive Nashville, TN 37214 615-889-9300
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FLSA
Regulations…
Changes Are on the Way By CRAIG A. COWART
B
Back on March 13, 2014, President Obama directed the Secretary of the U.S. Department of Labor to prepare and propose new Fair Labor Standards Act (“FLSA”) regulations. The FLSA is the federal law that establishes minimum wage and overtime pay requirements. The new proposed regulations are to specifically address the rules for exemptions of certain employees from the FLSA overtime requirements. The anticipated changes are likely to reduce the number of employees who qualify for exempt status. As a result, the cost of doing business for employers will increase. This is an important issue that human resources professionals should be informed about and prepared to address.
Overview of FLSA Exemptions Under the FLSA, employers must pay employees at least the federal minimum wage and overtime at a rate of at least one and one-half times the employee’s regular rate for any hours worked over 40 in a week. However, there are several exemptions from the overtime requirement for employees who meet certain criteria. The most common exemptions from the FLSA overtime requirement are the executive, administrative, and professional exemptions (commonly referred to as the “white collar” exemptions). In general, employees qualify for these overtime exemptions if: (1) they are paid a fixed minimum salary for each workweek regardless of the number of hours they work of the quality or quantity of work they perform (the “salary basis” test); and, (2) they perform specific executive, administrative or professional job duties outlined by the current regulations (the “job duties” test). Many workers are included within these exemptions, and lawsuits challenging exempt status and seeking unpaid overtime are very common. President Obama’s executive memorandum directing the promulgation of new regulations indicates that the regulation changes will address the “white collar” exemptions. Because these exemptions are commonly applied by employers in a variety of industries, revisions to the regulations governing these exemptions will be significant for a very large number of employers. 10
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Delay After Delay When President Obama issued his executive memorandum in March 2014, there was no firm timetable or deadline for the proposed regulations to be released. In May 2014, there was some indication of a possible timetable when the Obama Administration released its required Semiannual Regulatory Agenda. The Agenda, which is not binding on the Department of Labor, indicated that the new rules for the “white collar” overtime exemptions would be proposed in November 2014. However, in October 2014, the DOL’s Solicitor of Labor, M. Patricia Smith, announced that the November 2014 deadline for a proposed rule would not be met. In October 2014, Ms. Smith offered that the DOL was “months away from a proposed regulation” and hoped to see it rolled out in early 2015. Here we are in early 2015, and revised regulations are likely a matter of when, not if. So, employers should be getting ready to reassess FLSA compliance under new regulations. This will be a large-scale project and process. So, the wise HR professional will start preparing now.
What Changes Can Employers Expect? First, any revised regulations would almost certainly include an increase of the $455 minimum weekly salary threshold for exempt workers. The current $455 threshold means that workers earning as little as $24,000 per year can currently meet the salary basis test. The Obama Administration has observed that only 12% of salaried workers now fall below this threshold, compared to 65% in 1975 when the regulations set a $250 per week minimum. Notably, some states, including California and New York already require higher thresholds for their versions of the salary basis test ($600 per week in New York, increasing to $675 per week by 2016; and, $720 per week in California, increasing to $800 per week by 2016). Additionally, new regulations would likely change the various job duties tests. When the FLSA regulations were last revised in 2004, the focus was on fairly subjective factors, such as “primary duties,” as opposed to the actual time spent by an employee on a particular duty. The current regulations define an employee’s “primary duty” as the employee’s principal, main, major, or most important duty, even if the employee performs “exempt duties” less than 50% of his or her working time. New regulations will likely require that an exempt executive, administrative, or professional employee perform “exempt duties” during more than 50% of the time.
What Changes Are Not Likely? The proposed regulations will probably not provide any real “safe harbor” provisions. Such provisions would provide a way for employers who were acting under a good-faith belief that they were complying with the FLSA to remedy identified wage or hour violations. However, commentators generally agree that such provisions are unlikely in the proposed regulations.
When Can Actual Changes to the FLSA Regulations Be Expected? Any proposed changes to the FLSA regulations are subject to the federal Administrative Procedure Act’s rulemaking process. This means that the administration would need to complete a number of time-consuming steps before any rule change could take effect. These steps include a required notice of proposed rulemaking and a public comment period. After those steps, the DOL would need to hear testimony, consider public comments, and have a final version of the revised regulations approved by the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA). Public comment periods typically last at least 30 days. Once final regulations are drafted after public comments, OIRA would then conduct a final review of the text and publish the new regulations in the Federal Register. Review of a draft regulation is limited by Executive Order to 90 days, with the possibility of just one 30-day extension. While there is no minimum period for review, the average review is typically about two months. So, even with a short 30-day public comment period and a quick turnaround on a final rule, several months will pass before new
regulations are effective. Additionally, there is the possibility of legal challenges to new revisions, which could potentially further delay implementation. While new regulations will not be effective tomorrow, action should be taken now. Employers should begin to plan for a complete review of all employee classifications under the FLSA. Determining how such a large-scale project will be organized and executed is a task that can start now. Changes are coming, and the time to prepare is now.
What Will all of this Mean for Employers? Whether the proposed regulations seek to raise the income threshold or tighten the duties requirements (or both), any such move will likely have a substantial impact on employers. Employers should start preparing now for a complete review of exempt classifications under new rules. This will be a large undertaking, and planning for the process should start now. The number and range of employees entitled to overtime is likely to increase significantly. Due to the increased cost of overtime labor, employers may need to reevaluate staffing levels to limit overtime. Employers should also evaluate their tracking of employee work hours to ensure that recordkeeping requirements are satisfied.
The number and range of employees entitled to overtime is likely to increase significantly. Due to the increased cost of overtime labor, employers may need to reevaluate staffing levels to limit overtime.
Regardless of the content of new regulations, change is coming. The change will require reassessment of all FLSA exemption classifications to ensure compliance. Even before the regulations are proposed, you can start planning how you will ensure compliance when new regulations are effective.
Craig A. Cowart, Partner Fisher & Phillips LLP ccowart@laborlawyers.com www.laborlawyers.com www.HRProfessionalsMagazine.com
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The Catch-22 of Obesity and Debt By MARK RODRIGUES, REN PRITCHETT and REAGAN FROMM
It’s no secret that obesity is an epidemic. The most recent estimates suggest more than one-third of U.S. adults are obese, with $1,429 more in annual medical costs than those who are normal weight.1 Additionally, new research shows how obesity often extends beyond a person’s physical health—affecting their financial and psychological well-being. As compared to 1980, Americans today are 2.3 times more likely to be obese, and carry a debt load that is 2.6 times greater than their 1980 counterparts, according to the Federal Reserve Board and the Centers for Disease Control and Prevention. In fact, a University of Mainz study, which adjusted its findings for socioeconomic and education levels, found that an overweight person is twice as likely to be indebted as an individual in a healthy weight range. The study evaluated 9,000 Germans, of which 25 percent were both medically obese and in consumer debt. By comparison, only 11 percent of the non-indebted group was considered medically obese. The study also found that over- indebtedness was associated with a higher prevalence of depression and tobacco use. As research continues to uncover evidence of links between obesity, financial, and psychological health challenges, employers should better understand the issue so they can help address the problem in their own employee populations. The Evolution of a Problem While vast societal improvements have been made over the past few decades, new challenges have followed. For example, people today have less physically demanding jobs than in previous generations. The result is a sort of disconnection from their bodies and physical capabilities. Likewise, the evolution from a barter system to credit cards and checks, where an individual often never even sees or touches his or her money, has created a disconnection with their daily finances. Unfortunately, the more disconnected people are from their money, the more likely they are to spend it. Similarly, if an individual is disconnected from his or her body, it’s less likely he or she will care for it properly. This is referred to as psychological distance, which describes how psychologically removed individuals are from the impact and results of their actions. Obesity Drives Healthcare Costs According to the Centers for Disease Control and Prevention, from 1980 to 2010, obesity and the percentage of the workforce that has become disabled have both nearly tripled. 12
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Furthermore, obesity-related illnesses, including diabetes, depression, and cardiovascular disease make it difficult or impossible for some to work. For those who are able to remain in the workforce, their employers face considerable expenses associated with managing these illnesses. The Compounding Effect of Illness and Financial Distress General health issues, specifically obesity, can be so closely intertwined with financial troubles it can be hard to tell which came first. According to the 2012 Stress in America™ study by the American Psychological Association, money is a major stressor with 69 percent of people indicating that financial stress is their biggest stressor. Nearly two-thirds of Americans report having serious financial problems, and workers with financial distress report poorer overall health. Furthermore, debt can lead to stress and depression, both of which often can drive metabolic syndrome. An individual with metabolic syndrome has three or more of the following health risk factors:
w Blood pressure ≥ 130/85 mmHg w Waist circumference ≥40” for men or ≥ 35” for women, or a body mass index (BMI) ≥ 30 w Fasting glucose ≥ 100 mg/dL or nonfasting glucose ≥ 140 mg/dL w HDL cholesterol < 40 mg/dL for men or < 50 mg/ dL for women w Triglycerides ≥ 150 mg/dL
Correlation vs. Cause It is important to note that the findings referenced above are from studies that show correlation but not necessarily cause. Clearly, debt does not cause obesity or vice versa. However, there are many widely accepted studies linking lower socioeconomic status with obesity. Many postulate that debt leads to obesity because healthier, lower-calorie foods tend to cost more. While not all healthy foods are costly, it’s not difficult to see how fast food, with its dollar menus and supersize options, can seem a better “deal” for someone who is short on funds. There is a possibility that an individual’s mindset creates a link between debt and obesity. For instance, people who are willing to purchase something they cannot afford now and pay for it later may be just as willing to eat unhealthy food now and pay the “health price” for it later. Human beings, in general, are apt to avoid pain and focus on gaining pleasure. Most people will choose to avoid pain in the present, putting it off until the future, even if that means the pain will be greater. The inverse is also often true of pleasure. Shifting from Wellness to Well-Being This insight into the relationships between money, stress, and health risks is leading to an important but not surprising conclusion. Although physical health is important, an individual’s overall well-being is of utmost importance. True well-being means focusing on mind, body, and spirit as a whole.
So, how does stress contribute to health risks? Stress is a normal response to a threat, whether real or perceived. In this case, it could be stress related to a shortage of money. Normally, when the stressful situation passes, the response goes away, and the body goes back to normal. But when the stress is unrelenting, which could be the case when it comes to indebtedness, the body is overexposed to stress-related hormones, which puts an individual at risk for a variety of health issues: anxiety, depression, heart disease, and weight gain. Professor Eva Munster and her team also found that, “Over- indebtedness affects a series of risk factors for chronic diseases, such as leisure time activities as well as participation in social activities.” Munster connects the dots between an individual’s over-indebtedness and his or her social interactions. When someone is experiencing financial distress, he or she is less likely to participate in activities such as golf, tennis, going to the gym, and so on. Consequently, these individuals tend to be drawn to a more sedentary, isolated lifestyle. The combination of a desire for high-calorie foods during stressful times and a lack of physical and social activities are a recipe for weight gain that leads to being overweight or obesity.
According to Gallup and Healthway’s Well-Being Index, “By taking a more holistic approach and moving from a wellness strategy to one that includes all facets of an individual’s well- being, employers of all sizes have an opportunity to unlock additional value across their populations.” As more links are found among economic, social, and health issues, employers will need to embrace a “strategy with well- being at its core… to more effectively identify the root causes of issues that impact important business metrics such as health outcomes, healthcare costs, job performance, turnover, and absenteeism,” according to Gallup and Healthway. This is an important framework for addressing what may be a disconnection in company wellness programs. After all, employees do not live their lives in silos of financial issues, physical issues, and psychological issues. All of these factors combine to make an individual who he or she is. When an organization moves toward a culture of overall well-being that addresses all these facets of life, the result may very well be individuals who are able to reach their full potential, which in turn benefits their employers.
Ashley Pace
Lockton’s Memphis Office 901 757 6902 apace@lockton.com
Brad Owens
Lockton’s Memphis Office 901 757 6901 Bowens@lockton.com
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TOP
Employee Benefits Companies
Regions Insurance
Stephens Insurance, Inc.
Tom Hayes, RHU, REBC
Janie Warner
Brian Bush
John Denery
National Practice Leader | Employee Benefits Division
Senior HR Consultant Client Resources Team Leader
Executive Vice President Stephens Capital Management
Executive Vice President Stephens Insurance, LLC
Regions Insurance is entering a new era in employee benefits and property & casualty consulting with a focus on client-centric delivery of solutions, expertise and resources designed to positively impact all areas of risk management, compensation and human capital.
Founded in 1933, Stephens Inc. is a privately-held, independent financial services firm focused on building value for companies, state and local governments, institutions and high-net-worth investors. We are headquartered in Little Rock, Arkansas, with offices in leading cities across the country.
Gone are the days of traditional brokerage services where product and price were best practices in a commoditized world ruled by spreadsheets. In short, companies today are seeking true business partners, not product brokers, to help solve real business problems.
Specifically in the Employee Benefits space, Stephens offers a full range of retirement products and services and work with companies of all sizes. Our experienced benefits advisors craft custom-designed programs that help our clients recruit, retain and reward key employees. Our areas of expertise include:
Positioned to win in this rapidly changing industry, Regions Insurance supports its customers with more than 600 professionals in 28 offices in 10 states. Regions Insurance Group is a wholly owned subsidiary of Regions Financial Corp (NYSE, RF) and is ranked the 29th largest U.S. Insurance Broker and 3rd largest bank-affiliated agency by Business Insurance.
Lockton Companies
• Experienced Consulting
• Innovative Plan Design
• Plan Review and Auditing
• Expert Training & Communications
• Cutting-Edge Plan Management Technologies • Investment services for retirement plan sponsors and participants
Colonial Life Insurance
Blake Rogers
Chris Menard
Tennessee Territory Sales Manager
Kentucky Territory Sales Manager
Colonial Life is a market leader in providing benefits solutions in one
(L-R) Brad Owens, Producer, and Ashley Pace, Producer Lockton Memphis marries global benefits and risk management expertise with the personal touch of local service from the 19 associates in our Memphis office. While Lockton is the world's largest privately owned insurance brokerage firm, clients most frequently describe us as team members who partner with them to make their business better. We achieve this by improving your bottom line, managing your capital, attracting and retaining talent, as well as by protecting your people, your property and your reputation. We are passionate about serving our clients, developing our associates, and contributing to our communities. 14
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neat package: excellence in communications, enrollments, service, and personal insurance products and services that make benefits count for employers and their employees alike. For employees whose insurance plans leave them feeling vulnerable, Colonial Life can help restore peace of mind through personal insurance products that complete their coverage. Headquartered in Columbia, S.C, and founded in 1939, Colonial Life offers a broad line of personal insurance products including disability, accident, life, cancer, critical illness and hospital confinement indemnity coverage.
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Solving Problems for Businesses and Employers
Wimberly Lawson Wright Daves & Jones, PLLC is a full-service law firm that represents management, companies, insurers, and governmental entities exclusively in all areas of labor law, employment law, and defense of claims related to general liability and commercial litigation. We serve clients throughout the United States with prompt, diligent and cost-effective legal advice.
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Morristown 423-587-6870
Chattanooga 423-602-7300
A Littler Event – Wednesday, February 4, 2015 Misclassification, Collective Action, and Other Hot Topics Under the Fair Labor Standards Act Presented by: John Simmons and Matthew Gallagher
Breakfast Program
Afternoon Program & Happy Hour
Registration & Breakfast: 8:00 a.m. – 8:30 a.m. Program: 8:30 a.m. – 9:30 a.m.
OR
Registration: 3:45 p.m. – 4:00 p.m. Program: 4:00 p.m. – 5:00 p.m. Happy Hour: 5:00 p.m. – 5:30 p.m.
Location: Littler Memphis 3725 Champion Hills Drive, Suite 3000 Memphis, TN 38125
For direct registration, special accommodations and questions, please contact Kellie Nurko at knurko@littler.com or 973.848.4752.
littler.com 3725 Champion Hills Drive, Suite 3000 | Memphis, TN 38125 | 901.795.6695 333 Commerce Street, Suite 1450 | Nashville, TN 37201 | 615.383.3033
House Sues President Over ACA Administration By PEPPER CRUTCHER
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The U.S. House of Representatives filed its threatened lawsuit on Friday, November 21, in the D.C. federal district court. Defendants are the HHS Secretary, HHS, the Treasury Secretary and the Treasury Department. The House challenges the Presidentâ&#x20AC;&#x2122;s authority, acting through them, to make payments to insurance companies without Congressional funding authorization and to delay and reduce the employer mandate taxes imposed by Congress. Here's how the Complaint frames the spending dispute: "ACA Cost-Sharing Reductions are . . . not contingent upon the receipt by Insurers of any offsetting payments from the government. Rather, Insurers [must] provide Cost-Sharing Reductions to Beneficiaries as a condition of being permitted to offer insurance policies through an ACA health insurance marketplace exchange." "The . . . government is authorized to make direct payments to Insurers to offset costs that Insurers incur in providing Cost-Sharing Reductions to Beneficiaries (. . . the 'Section 1402 Offset Program')." "Congress has not . . . appropriated any funds . . . to make any Section 1402 Offset Program payments to Insurers." "In contrast, Congress has appropriated funds for section 1401 of the ACA. That provision authorizes refundable tax credits to be paid for qualified individuals to reduce the cost of their health insurance premiums (referred to herein as the "Section 1401 Refundable Tax Credit Program") through the standing permanent appropriation for refunds due under the Internal Revenue Code." "Notwithstanding the lack of any congressional appropriation for Section 1402 Offset Program payments, defendants Lew and the Treasury Department, at the direction of defendants Burwell and HHS, began making Section 1402 Offset Program payments to Insurers in January 2014, and, upon information and belief, continues to make such payments. The Office of Management and Budget ("OMB") has reported that Section 1402 Offset Program payments to Insurers for Fiscal Year 2014 were estimated to be $3.978 billion." "In its Fiscal Year 2015 budget submission . . . the Administration dramatically and conspicuously changed course. The Administration's request for a temporary appropriation to CMS to enable it to make Section 1402 Offset Program payments to Insurers disappeared, and was replaced with a single line item in the Internal Revenue Service ("IRS") section of the budget, lumping together Section 1401 Refundable Tax Credit Program payments - funding for which is permanently appropriated through the IRC - with Section 1402 Offset Program payments which are not funded through the IRC." The employer mandate tax dispute is simply that the President refused to assess employer mandate taxes that accrued during 2014 and that he exempted certain employers exposed to such taxes in 2015. The Complaint asks the court to invalidate and enjoin these two initiatives as unconstitutional abuses of Presidential power. The Complaint is signed by George Washington University Law Professor Jonathan Turley, whose February 2014 House testimony made basically the same points. We expect defense counsel to move to dismiss the suit because the House of Representatives is not a proper party to make the arguments advanced in the Complaint.
R. Pepper Crutcher, Jr., Partner Balch & Bingham, LLP pcrutcher@balch.com www.balch.com www.HRProfessionalsMagazine.com
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Has your Benefits Broker told you the truth about “wellness” programs? By CHRIS DAVIS
How it started off wrong: Since the turn of the century, workplace wellness programs have become routine in corporate America. The majority of US employers with 50 or more employees now offer some form of wellness program. The increase in the use of these programs is attributable to two occurrences. First, a largely scientifically-flawed meta-analysis was published in 2010 that appeared to be highly favorable to the existence and use of wellness programs. The flaw that was readily dismissed by brokers, wellness advocates and benefits leadership was based around the fact that the study, led by Harvard School of Public Health Professor Katherine Baicker, seemingly averaged the results of studies that met academically rigorous scrutiny with other lower-quality studies that were not conducted with a highdegree of scientific scrutiny. Academically strong studies cannot be compared to weak ones, and then have the competing results averaged for an accurate answer. Secondly, Safeway, a grocery chain, caught lightning in a bottle and produced a corporate wellness “success” story that had results so strong that it even led to the “Safeway Amendment” in the Affordable Care Act (ACA). This provision allows employers to tie a substantial and increasing share of employee insurance premiums to health status/behaviors, and subsidizes such program implementation by smaller employers. The assumption was that improved employee health would reduce the employer burden of health care costs. Soon after, the Safeway program was discredited because the wellness program showed a 0% medical trend three years before the program even existed, with this error not being acknowledged until several years later. Simply stated, a company can’t show positive results of a program before the program is implemented, and due to a lack of oversight and scrutiny from the medical, scientific and insurance community, this narrative of “success” became the norm – not checking for mathematical or scientific plausibility. Now, more than four years into the ACA, it is concluded that these programs actually increase employer spending on health care with no net health benefit. The programs also cause overutilization of screening and check-ups in generally healthy working age adult populations, put undue stress on employees, and incentivize unhealthy forms of weight-loss. For the uninitiated, those are programs – that perhaps 90 million Americans are subject to – in which human resources executives hire vendors to ask employees intrusive questions, conduct broad-based blood draws, send them for checkups, and use incentives/penalties to change negative behaviors through 18
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health coaching. These incentives/penalties have increased to $594 per member per year since 2008. Recently the Equal Employment Opportunity Commission (EEOC) has been filing suits against companies, most recently Honeywell, that allegedly give employees (and sometimes their spouses) an ultimatum: submit to our medical tests or pay fines up to $4000. Mandatory medical examinations violate the Americans with Disabilities Act, which the EEOC enforces.
But wellness is justified because it saves money by reversing illness and prevents subsidizing the sick, right?: Wrong. Data compiled by the Health Care Cost and Utilization Project (HCUP) shows that only 8 percent of hospitalizations are primarycoded for the wellness-sensitive medical event diagnoses. To determine whether it is possible to save money, an employer would have to tally its spending on wellness-sensitive events. That represents the theoretical savings when multiplied by cost per admissions. The analysis would compare that figure to the incentive cost (now averaging $594) and the cost of the wellness program, screenings, doctor visits, follow-ups recommended by the doctor, benefits consultant fees, and program management time. For example, if spending per covered person were $6,000 and hospitalizations were half of a company’s cost ($3,000), potential savings per person from eliminating 8 percent of hospitalizations would be $240, which is not enough to cover a typical incentive payment, even if every relevant hospitalization were eliminated. Second, there is no clinical evidence to support the conclusion that the basis of outcomes based wellness programs – annual workplace screenings, annual checkups for all participants and health coaching programs– are cost-effective. The United States Preventive Services Task Force (USPSTF) recommends that only blood pressure be screened annually on everyone. For other biometric values, the benefits of annual screening (as all wellness programs require) may not exceed the harms of potential false positives or of over-diagnosis and overtreatment, and/or only a subset of high-risk people should be screened, as with glucose. Likewise, most literature finds that annual checkups confer no net health benefit for the asymptomatic non-diagnosed population. Note that in both cases, harms are compared to benefits, without considering the economics. Even if harms roughly equal benefits, adding screening costs to the equation creates a negative return.
If wellness doesn’t save us money as advertised, what will?: Due to the fact that wellness programs actually act as a smokescreen for cost-shifting to employees, it increases costs to both the employer and employee, and may lead to additional costs related to medical false-positives and over diagnosis. Regions Insurance generally avoids advising clients to use the “three P” wellness method: Pry about health habits, Poke members with screenings and Prod for sensitive information. Focusing on medical quality, care coordination and disease management, and creating a healthy workforce by augmenting company infrastructure and culture provide a much more streamlined and measurable outcome towards a company’s health benefit offerings.
Chris Davis Director of Health Management & Claims Informatics Regions Insurance, Inc. James.C.Davis@Regions.com www.regionsinsurance.com
SETTING YOU ON THE RIGHT PATH
FOR SUCCESSFUL BENEFITS MANAGEMENT Monitoring changes with today’s employee benefit laws can be overwhelming for even the most seasoned HR professionals. And, with more than 50 categories of regulations, nearly every aspect of the employer-employee relationship is impacted. Regions Insurance is able to assist you each step of the way in navigating today’s benefits rules, while helping you manage and protect your organization’s growth, profitability and people.
WE SEE THE BIG PICTURE.
Tom Hayes Employee Benefits Practice Leader tom.hayes@regions.com 479-684-5259
Katrina McKinney Sales & Marketing Coordinator katrina.mckinney@regions.com 205-264-7177
Find Regions Insurance offices in these states: Alabama, Arkansas, Florida, Georgia, Indiana, Louisiana, Mississippi, South Carolina, Tennessee and Texas
Comprehensive Employee Health Plan Reduces Metabolic Syndrome
By H EIDI KAHLY-MCMAHON, DOUGLAS CROPPER and RENEE STOLMEIER
INTRODUCTION This report looks at the 5 year experience of Genesis Health System, a large, self-funded employer which in partnership with its insurance broker and benefits consultant, Holmes Murphy of Dallas and Des Moines, has deployed a comprehensive employee health plan designed to achieve the following: • Engagement of its employees in their own health status
• As measured by participation rate, how have employees accepted the health plan, which requires significant engagement on their part? • As measured by cost of care per employee, as compared to other employers, how well has the health plan controlled annual cost increases? • As measured by prevalence of metabolic syndrome, how much did the health plan improve the health status of the program participants? • And how sustainable were those improvements?
ANALYTICS We were pleased that the data we needed to answer these questions was still available, because of the long-term relationships we enjoy with our benefits consultant, claims administrator and wellness vendor. De-identified patientspecific data were acquired from our claims administrator and biometric screening vendor, and were analyzed by the Holmes Murphy team. Individual patients had been given assigned code numbers which were not shared with us as employer. Importantly, these member-specific codes were maintained throughout the 5 year period, allowing the analysis to be truly longitudinal. Plan participation rates were provided by Genesis. Cost of care data, which included prescription drug costs, were based on the claims administrator’s paid amounts, which are not affected by patient copays and deductibles. Benchmark cost of care inflation rates were obtained from AON Hewitt’s annual survey of large employers. Results of the analysis are presented below.
ENGAGEMENT Participation in the wellness program, expressed as a percent of plan members, was 82% in 2009, 75% in 2010, 70% in 2011 and 2012, and 72% in 2013. During this period the premium differential for a single employee was increased from $400 to $780, or 95%. The table summarizes the premium differentials and participation rates for years 2009-2013.
• Decrease in their total health costs • An improvement in the health status of both employees and dependents The components of the health plan – benefit design, a wellness program focused on metabolic syndrome, and premium discounts – are designed to work in synergy to achieve these goals. Metabolic syndrome is a collection of risk factors long known to predict subsequent diabetes and cardiovascular disease, both of which can lead to increased morbidity and health care costs in a population. Since Holmes Murphy has experience in mitigating these risks, metabolic syndrome was chosen as the focus of the wellness program. Patients are placed in the metabolic syndrome wellness program if they meet 3 or more of the following criteria (criteria for women, if different, are in parentheses): HDL cholesterol <40 mg% (50); triglycerides >=150 mg%; waist circumference >= 40 in (35); blood pressure >=135/80; and fasting glucose >100. To encourage participation in the wellness program, we discounted employee health care premiums if covered members met two requirements: 1) adult members underwent biometric screening designed to find metabolic syndrome; and 2) those members who met the criteria for metabolic syndrome were successful in decreasing the number of their risk factors by at least one during the plan year.
IN-DEPTH STUDY As our health care “cost curve” flattened and the prevalence of metabolic syndrome decreased, we found ourselves fielding questions from other HR professionals about our “keys to success.” This prompted us and our benefits consultants to look at our experience more formally by posing the following questions. 20
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COST OF CARE Cost of care per covered employee, with the percent increase from the preceding year shown in parentheses, is as follows: 2009, $7,442 (0.4%); 2010, $7,864 (5.6%); 2011, $8,020 (1.9%); 2012, $8,336 (3.9%); and 2013, $8,435 (1.1%). The benchmark cost of care and percent increases for this time period for large employers is as follows: 2009, $8,703 (5.0%); 2010, $9,246 (6.2%); 2011, $10,034 (8.5%); 2012, $10,522 (4.9%); and 2013, $11,188, (6.3%). The employer and benchmark cost trends are displayed in the “Cost Curve” graph.
IMPROVING EMPLOYEE HEALTH In 2008, the prevalence of metabolic syndrome in health plan participants was 26%. In 2009, after wellness participants from 2008 who had metabolic syndrome completed lifestyle modification education, the prevalence of metabolic syndrome among them decreased to 21%, while spouses participating for the first time were found to have a prevalence of 34%. The blended prevalence of metabolic syndrome for all 2009 participants was 27%. The prevalence of metabolic syndrome among wellness program participants for subsequent years is as follows: 2010, 22%; 2011, 20%; 2012, 16%; and 2013, 16%. The “Improving Health” graph summarizes these trends, and breaks out the prevalence by employee and spouse.
Third, we have demonstrated a sustained reduction in the prevalence of metabolic syndrome, going from 27% in 2008 to 16% in 2013. This remarkable achievement is likely due to a focus on health lifestyles by the employees, as well as the initiation of medical treatment for conditions such as hypertension or diabetes. Furthermore, the cohort of 255 members who were first diagnosed with metabolic syndrome in 2008 has shown a sustained decrease not only in the prevalence of metabolic syndrome, but in the combination of serious risk factors of elevated waist size and fasting blood glucose. Finally, we believe our 5 year experience demonstrates that an employerbased health plan, when coupled with thoughtful benefit design and significant premium differential, can lead to sustained high participation rates, slowing of increases in cost of care, and decreases in clinical risk factors.
Heidi Kahly-McMahon Vice President, Human Resources Genesis Health System mcmahonh@genesishealth.com www.genesishealth.com
Douglas P. Cropper President & Chief Executive Officer Genesis Health System cropperd@genesishealth.com www.genesishealth.com
SUSTAINABLE RISK REDUCTION Perhaps the most impressive result of our efforts has been the sustainability of the decrease in metabolic syndrome we saw over the 5 years. There is a cohort of 255 employees who were found to have metabolic syndrome with the first screening in 2008, and who have participated in the health plan continually through 2013. By definition, 100% of them had metabolic syndrome in 2008, but in 2013 only 42% of them did, a 58% reduction in prevalence.
Renee Stolmeier Director, Compensation & Benefits Genesis Health System stolmeierr@genesishealth.com www.genesishealth.com
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IMMIGRATION LAWYERS LESSONS LEARNED Having 5 years of longitudinal data, collected and stored in a consistent format, allows for some real reflection about “what really works” in benefits management. Here is what we have learned: First, Genesis was able to achieve sustained participation levels of nearly three quarters of the covered members in the health plan. As expected, the entry of the spouses in 2009 led to a slight decrease in participation, but overall the participation remains high.
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Second, the observed annual costs of care and percent increases for Genesis were significantly less than those of the benchmark group in 4 out of the 5 years from 2009 to 2013. As described above, cost of care as measured in this report is independent of employee contributions, and so represents a true decrease in costs. It is clear that the combination of strategies we employed was effective. www.HRProfessionalsMagazine.com
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Portfolio’s Lifestyle Model Options Simplifies Retirement Investment Interview by CHIP TAULBEE
Mimi Hurst is a Senior Vice President of Little Rock Arkansas’ Stephens Inc. She is the Chairperson of the StephensChoice Investment Committee and the Stephens Allocation Strategies Investment Committee. Additionally, she manages the day-to-day operations of the investments components of StephensChoice platform and the State of Arkansas Deferred Compensation. Mrs. Hurst explains the importance of asset allocation’s role as
high” of individual securities but having a broad diversification of asset classes allocated properly. Our role as the investment advisor to the plan sponsor and trustees is to determine the asset classes needed in an investment lineup and select one appropriate actively managed mutual fund to represent that asset class, for participants to use in the retirement plan sponsored by their company. After selection, we monitor the investment options and make recommendations for any changes as needed. StephensChoice’s investment lineup offers an array of options in various asset classes with actively managed mutual funds for the participants to choose to develop their own asset allocation, a do-it-yourself approach, or participants can choose one of the five risk-based asset allocation models.
So this frees individual investors from making some tough investment decisions? We choose and monitor the actively managed mutual funds that represent the chosen asset classes in the investment lineup and oversee the composition of the five models. And if we see underperformance or other reasons for a removal of a fund, it is our role to make recommendations to the plan sponsor or the trustees to make a switch of funds. Also, with the models we may realign the allocation percentages of their components. For example, there may be a time when a new asset class needs to be added to the list of investment choices and ultimately to the StephensChoice models. If any of these recommendations are approved by the plan sponsors or trustees, those changes will be communicated to plan participants. With one fund representing each asset class, it lessens the participant’s worry of choosing between funds trying to achieve the same objective, and there is professional investment oversight of the investment options. Also, since most participants are not investment professionals and might not fully appreciate what diversification can do for performance, the StephensChoice models are a good choice. It is very difficult to be invested in the highest performing asset classes year in and year out, so an investor needs diversification that one of our models potentially gives a participant with exposure to a many asset classes.
a determinate in the long-term success of investment performance and how the StephensChoice Asset Allocation Models can help simplify asset allocation decisions for investors. She describes why a turnkey program, like StephensChoice, is so attractive to retirement plan sponsors and participants alike.
How does StephensChoice add value to an individual’s retirement investments? Studies show that almost 90 percent of investment performance is attributable to the asset allocation strategy. We agree and think that asset allocation is such an important part to of an investment account’s performance, not necessarily “buying low and selling 22
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What selections do individual participants have to make? Of course the first key decision participants should make to determine their asset allocation is to know their risk tolerance and their time horizon. Once the risk tolerance and time horizon are known, a participant can develop his or her own asset allocation model by selecting from the mutual funds in the investment lineup and setting a percentage allocation to the each fund chosen, or he or she can choose a predetermined StephensChoice Allocation Model. With the enrollment materials, investment fact sheets will be provided for all investment components, like the different mutual funds.
Typically in enrollment meetings or whenever a participant is enrolling, there will be materials to help participants determine the risk tolerance and time horizon. A risk quiz will help a participants determine their risk tolerance by the quiz score. That score will help a participant determine if he or she is a moderate investor, aggressive investor or conservative investor and what type of StephensChoice Lifestyle Model would be appropriate. A participant’s time horizon is looking at how many years a person has before retirement age or how long the account can be invested before taking distributions. Also, participants should consider how long they might live in retirement, which is important in terms of thinking about how long your investment choices can be invested in the market. We use in enrollment meetings educational tools like quick worksheets that help a participant understand the amount needed to save to build a retirement account, as well as retirement calculators.
What are these lifestyle StephensChoice Models comprised of? Lifestyle StephensChoice Models are comprised of the funds offered in the investment lineup. The investment lineup will have investment options in the big three asset classes: cash and cash equivalents, bonds or fixed income, and stocks or equities. The asset classes further divide into sub-classes to achieve better diversification. There are really two levels of divisions needed with asset classes to achieve diversification. First is the mix between stocks and bonds and cash, and second within the classes, such as large-cap, mid-cap, small-cap types of stock, then international and domestic stocks. There is further diversification in bonds as well: short bonds, high-yield bonds, international bonds, intermediate bonds. There’s a lot of variety in bonds as well as equities. The Lifestyle StephensChoice Models are a risk-based model that is a mix of allocation percentages of the mutual funds for the asset classes in the lineup.
What are the benefits of actively managed funds, like those in your lifestyle StephensChoice Models, versus passively managed funds, like index funds? Active managers and therefore actively managed funds, of course, are trying to outperform the appropriate benchmark for the investment objective of the fund, and if they outperform the benchmark, that added performance over time can be meaningful to the returns of the StephensChoice Models. With our rigorous monitoring process, funds can be replaced, and that helps the investment lineup have the potential of having “best of breed” of actively managed funds. Studies have shown there are some asset classes where additional alpha is typically more easily obtained by active managers than other asset classes, such as small-cap equity asset classes, as well as international equity and certain classes of bonds, such as high-yield bonds.
In meeting with employees and employers, what kind of retirement benefit trends are you seeing of late? From an employee provider standpoint, I think plan sponsors think that auto enrollment is becoming a popular feature to have in a retirement plan. Certainly a participant can opt out but one of the important aspects of education is
understanding how important it is to build for your retirement. And while everybody wants every dollar in their paycheck, to go ahead and have auto enrollment, employees have something put into a retirement account and they may not really miss that contribution from paycheck auto enrollment can help. Also, that contribution is on a pre-tax basis.
For a plan sponsor or trustee, starting a retirement plan or moving one sounds daunting. How does Stephens make the transition easier? It certainly is a process to begin or convert an existing plan, but both are worthwhile for the benefit to employees of having a well-run retirement plan. We will work closely with the chosen new administration firm, if there is an existing plan, to make the conversion process from the prior provider as smooth as possible. Regardless of if it a new retirement plan or conversion of an existing plan, we will work closely with the employer to have meetings so that employees understand what changes are being made or if a new plan is to begin. We help the employees understand about the new website, what the new administrator’s role will be and what their investment options are. If reenrollment meetings are involved, we will conduct those meetings too. If reenrollment meetings are needed, it can be an advantageous time for participants to really look at their plan account and review everything from investment choices to beneficiaries, and if those choices still fit their current circumstances. So a change in providers can be positive as your employee base and your participant base reassess their investment choices, their retirement plan account and participation in the plan.
What should plan sponsors or trustees be looking for in an investment advisor? From an investment standpoint – and that’s our role, as an investment advisors – plan sponsors or trustees want to know that their investment advisors are recommending an investment lineup for the plan that has adequate diversification but not so many choices that the participant can be confused. Plan sponsors or trustees want to know they are meeting their fiduciary duties, and if their investment advisor is serving as a co-fiduciary. They would want to have a quarterly report or review on the investment components that are being offered and understand the performance of them. Their investment advisor should be readily accessible and available to answer any investment or market related questions that the plan sponsor or trustee should have.
Mimi Hurst is a Senior Vice President of Stephens Inc in Little Rock, Arkansas. She works in the Stephens Capital Management division and is the Chairperson of the StephensChoice Investment Committee and the Stephens Allocation Strategies Investment Committee.
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Cindy Momchilov/Camera Work, Inc.
How are retirement plan participants aided in making their lifestyle model selections?
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What HR Professionals should know about the President’s Immigration Initiatives
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By LYNN SUSSER
Whatever your view of the President’s recent executive actions on immigration (and everyone has a view), human resource professionals need to be familiar with the changes that will be coming to the US immigration system. The changes will roll out over many months and most – even the ones considered controversial are likely to survive court challenges. Here is a quick summary of measures included in President Obama’s recent executive actions that are most likely to affect businesses: 1. Deferred Action: The headline changes in the program relate to expanding the pool of individuals eligible for the DACA program for those who entered as children before the age of 16 and also a new program called DAPA for parents of US citizen and permanent resident children. Four to five million individuals are going to be eligible for temporary work cards. HR professionals need to be prepared for dealing with their own employees who end up applying in the program and for understanding how to verify employment authorization for new workers. For industries that rely on lower skilled workers where shortages are persistent, this could dramatically improve their situations. 2. Extended Optional Practical Training OPT for foreign students graduating from American Universities. Upon graduation foreign students receive 1 year of work authorization. Graduates in the STEM fields with jobs in companies registered with E-Verify can get a 17-month extension. The President has instructed USCIS to look at how the list of STEM professions can be expanded and how the 17 months can be made longer. 3. Pre-Registration for foreign workers with approved I-140’s: Foreign workers with approved PERM and I-140’s are currently waiting anywhere from 5-12 years to file adjustment of status applications (the final stage in the employment-based green card process) because of long visa backlogs. 24
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This change will allow employees and their families to file an adjustment application upon I-140 approval. Final approval will still have to wait until a visa is available. However, the benefits of a pending adjustment application include: work authorization for spouses and children, temporary travel documents for individuals now limited to 1-year visas, immaterial changes in jobs will no longer require the company to start the process all over, and more. Estimated to benefit 410,000 foreign workers. 4. Update of the PERM process: PERM or Labor Certification is the first step in the “green card” process for employers sponsoring foreign employees. The Department of Labor has been instructed to review the 10 year old PERM program to modernize it and make it more responsive to changes in the national workforce. Most importantly, DOL has been instructed to look at ways to speed up processing (including starting a premium processing program) and to recommend ways to avoid denials for nonmaterial errors. 5. Work Authorization for H-4 dependents: The administration announced earlier this year that work authorization for H-4 spouses of H-1B professionals is coming but still has not started accepting applications. The president has instructed USCIS to issue instructions for these applications by January 2015. 6. The long awaited L-1B memo on “specialized knowledge” will be released. The current L-1 intra-company transfer program provides vague guidance and inconsistent interpretation of the term “specialized knowledge.” The new memo is intended to provide clear, consolidated guidance on the meaning of the term in order to improve consistence in adjudications and enhance companies’ confidence in the program. This is very important for company’s using the L program because USCIS denies more L1B petitions than it approves these past couple years. 7. Issuance of a Memo providing Additional Guidance on AC21 Portability: USCIS is to issue a policy memo that provides additional guidance in green card adjustment of status portability cases where workers are moving to new jobs within the same company or to new employers they claim are in the “same or similar” occupations. The intent is to remove unnecessary restrictions to natural career progression and give workers increased flexibility and stability. This will allow companies to promote workers that already have approved
I-140’s or move them to a new location without having to start the process over. 8. Visa modernization: The President issued a Presidential Memorandum directing the State Department and USCIS to study modernizing the visa system in two specific ways: First, to consider removing the derivative family members from being counted against the quota which will have the effect of both tripling the employmentbased green card numbers and eliminating the backlog from several of the green card categories current. And second, determining how the unused visa numbers from past years can be recaptured. Each year there are available visa numbers that are not allocated due to outdated systems and this change could free up to 300,000 green cards. 9. Expansion of the National Interest Waiver green card program: The already existing green card category for people doing work deemed to benefit the US national interest will be expanded to include entrepreneurs who raise capital and create jobs for U.S. workers. 10. Certain Entrepreneurs: At present our work visa structure does not allow for investors to self-sponsor for a work visa unless they are citizens of one of the countries with whom the US has such a treaty in place. The result is that the majority of entrepreneurs cannot get a visa to work in the U.S. A regulation will now be promulgated pursuant to the “significant public benefit” parole authority already authorized by the INA which will allow USCIS to grant parole status, on a case-by-case basis, to inventors, researchers, and founders of start-up enterprises who may not yet qualify for a national interest waiver green card but who have been awarded substantial US investor financing or otherwise hold the promise of innovation and job creation through the development of new technologies or the pursuit of cutting-edge research. These measures will not take effect immediately but rather over the course of the next 6-12 months as USCIS, the Department of Labor, and the State Department issue regulations and guidance. If, in the meantime, Congress passes a comprehensive immigration reform bill like the one approved by the Senate last year, it is likely that many of these measures would be included.
Lynn Susser, Attorney Siskind Susser PC lsusser@visalaw.com www.visalaw.com
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Working Together in Mississippi Ogletree Deakins lawyers in Jackson, Mississippi work closely with Human Resource Ogletree Deakins in Jackson, professionals, businesslawyers executives, and inMississippi worktoclosely with Human Resource house counsel anticipate, prevent and professionals, business executives, and Our inresolve legal issues in the workplace. experience and knowledge of prevent our clients’ house counsel to anticipate, and industries and legal enable usOur to resolve legal issueschallenges in the workplace. serve their interests effectively and efficiently. experience and knowledge of our clients’ industries and legal challenges enable us to serve their interests effectively and efficiently.
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DISPARATE IMPACT DISCRIMINATION By GARY PEEPLES
Despite some observers’ predictions that disparate impact discrimination cases might recede in importance after a 2009 Supreme Court decision involving a Connecticut fire department and its promotions policy, the Equal Employment Opportunity Commission (EEOC) and private plaintiffs have continued to file headline-grabbing suits alleging disparate impact discrimination. But what is disparate impact discrimination and why should employers care? These questions are discussed in detail below.
A. HISTORICAL BACKGROUND The disparate impact theory of discrimination was first addressed by the Supreme Court in a 1971 case called Griggs v. Duke Power Co. In Griggs, a group of African-American workers at a North Carolina power plant alleged that their employer’s practice of requiring a high-school diploma and the successful completion of two aptitude tests as prerequisites for promotions discriminated on the basis of race. The Supreme Court, in a unanimous decision, held that the employer’s practice was unlawful under Title VII of the Civil Rights Act of 1964 (Title VII) because the practice was “discriminatory in operation” and had no “demonstrable relationship to [the] successful performance of the jobs for which it was used.” In other words, although the employer might not have intended to engage in discrimination against African-Americans, the absence of a discriminatory motive did not save the employer from liability under Title VII because the practice had a statistically significant negative impact on African-American employees as a whole. The disparate impact theory continued to be refined in the years after Griggs. For example, in Albemarle Paper Co. v. Moody (a 1975 case), the Supreme Court confronted the question of how employers can demonstrate that their written examinations are sufficiently job-related to pass muster under Title VII. The Supreme Court in Albemarle Paper concluded that such tests, if they have a disparate impact on one or more protected classes, are “impermissible unless shown, by profes26
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sionally acceptable methods, to be predictive of or significantly correlated with important elements of work behavior which comprise . . . the job or jobs for which candidates are being evaluated.”’ In the wake of these Supreme Court decisions, the EEOC issued the Uniform Guidelines on Employee Selection Procedures. These guidelines explain that the use of any facially neutral selection procedure by an employer that has a disparate impact on any race, sex, or ethnic group will be presumed unlawful unless the selection procedure has been formally validated. The guidelines also set forth the 80% rule of thumb. This rule of thumb dictates that a selection rate for any protected class (i.e., race, sex, or ethnicity) that is less than 80% of the highest rate for any class will generally be regarded as evidence of disparate impact. Congress later codified the disparate impact theory of discrimination when it enacted the Civil Rights Act of 1991. The Supreme Court subsequently clarified in a 2005 case (Smith v. City of Jackson) that the disparate impact theory applies in the context of the Age Discrimination in Employment Act. And most recently, the Supreme Court in 2009 (Ricci v. DeStefano) held that an employer’s efforts to avoid disparate impact liability against one protected class might violate Title VII’s prohibition on intentional discrimination against another protected class.
B. TYPICAL DISPARATE IMPACT CASES
D. SUMMARY
Many disparate impact cases over the past 30 years have involved challenges to the testing and promotions policies of fire departments, police departments, and other municipal agencies. For example, in Isabel v. City of Memphis (a 2005 case), a group of African-American sergeants in the Memphis Police Department filed suit against the City of Memphis, alleging that the department’s written test governing promotions to lieutenant had a racially disparate impact. The dispute arose after the industrial psychologist who had designed the test used a cutoff score to determine which sergeants were eligible to proceed to the next step of the promotions process. That cutoff score resulted in several African-American sergeants being excluded from the pool of promotion-eligible candidates. The district court, noting that the industrial psychologist’s use of the cutoff score was “arbitrary,” held for the plaintiffs and ordered that the plaintiffs receive promotions and back pay. This decision was affirmed on appeal by the Sixth Circuit.
The law of disparate impact discrimination continues to evolve. Although many early cases were confined to the testing and promotions policies of municipal employers, the EEOC has demonstrated that its renewed focus on disparate impact discrimination will affect private employers. Private employers who currently utilize tests in the hiring or promotions process should accordingly monitor the results of those tests carefully to ascertain whether the tests have a disparate impact on any protected class. And employers should be able to show that the tests have been validated and that they are job-related and consistent with business necessity. Finally, although the use of pre-employment background checks is not unlawful, private employers should be thoughtful in their use of such checks and tailor the checks to the requirements of the positions for which they are hiring.
In another typical disparate impact case involving a municipality, the Department of Justice (DOJ) and the EEOC brought federal lawsuits against the Jacksonville (Florida) Fire and Rescue Department and the firefighters’ union in 2012. The DOJ and the EEOC alleged that the written examinations used by the department (and approved by the union) for promotions had a disparate impact on African American candidates. Specifically, the agencies alleged, among other things, that AfricanAmerican candidates passed the exams at statistically significant lower rates than Caucasian candidates. The agencies further contended that the content of the exams was not sufficiently job related, nor was it consistent with business necessity.
C. DISPARATE IMPACT CLAIMS ARE NOT LIMITED TO PUBLIC EMPLOYERS Not every disparate impact case, however, involves a public employer. In one prominent case implicating a private employer’s practices, the EEOC alleged that a private employer’s use of a pre employment strength test had a disparate impact on women (EEOC v. Dial Corp. a 2006 case). The employer in Dial, which owned and operated a meatpacking factory in Iowa, had instituted a policy by which applicants were required to carry a 35-pound bar and to load and lift that bar onto frames that were between three and five feet off the floor. After the policy was adopted, the number of new female hires dropped from 46% of the total new hires to 15%. The EEOC and the employer offered competing expert testimony on the policy at trial. After receiving all of the evidence, the district court concluded that the policy had a disparate impact on female applicants and that the employer had failed to show that the policy was a business necessity or a statistically valid way of measuring the likelihood of on-the-job injuries. The Eighth Circuit affirmed the district court’s findings and its award of back pay and benefits to nine female applicants who had been rejected by the company. Another area of increased enforcement activity against private employers in the disparate impact context involves private employers’ use of pre-employment criminal background checks and credit reports. The EEOC in 2012 issued enforcement guidance in this area. According to the EEOC, the use of such background checks has a disparate impact on some minority applicants, including African-Americans and persons of Hispanic origin. The EEOC accordingly encourages employers in most instances to perform an individualized assessment for each applicant who is disqualified as a result of a background check. Such an assessment might include (but is not necessarily limited to) consideration of the facts and circumstances of the prior conviction, any evidence of rehabilitation, and the applicant’s character references. Not all courts have been deferential to the EEOC’s latest efforts to combat the alleged overuse of background checks. In a widely publicized 2014 decision (EEOC v. Kaplan Higher Education Corp.), the Sixth Circuit rejected the EEOC’s contention that a for-profit college’s use of pre-employment credit checks resulted in a disparate impact on African-American applicants. The Sixth Circuit emphasized two facts in its decision. First, the EEOC had “sued the defendants for using same type of background check that the EEOC itself uses.” The second key fact was that the EEOC had failed to offer any evidence that its expert witness’s methodology, which consisted of identifying the race of persons based on the drivers’ license photos, was scientifically valid. Accordingly, the Sixth Circuit held that the district court correctly rejected the EEOC’s evidence and affirmed the judgment in favor of the employer.
Gary Peeples, Associate Burch, Porter, & Johnson PLLC gpeeples@bpjlaw.com www.bpjlaw.com
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Data Facts Named
TOP WORKPLACE
Legal Challenges are Coming at HR Professionals from Every Direction
Second Year In A Row Memphis TN: Data Facts, Inc.-a nationwide provider of background screening and mortgage lending solutions-is pleased to announce they have been selected as one of The Commercial Appeal’s Top Workplaces for 2014. “Being named as one of the top workplaces in Memphis for the second year in a row is a tremendous distinction, and one we are proud to celebrate,” comments Data Facts’ CEO, Daphne Large. “This recognition is shared by all Data Facts employees. Throughout our 25 years in business, our company culture has always been to acknowledge our professional and personal accomplishments together, and motivate each other to achieve the extraordinary.” Several important factors contributed to Data Facts ranking as a Top Workplace. Among them were employee engagement and retention (the average Data Facts employee has a tenure of over 7 years), a strong work/life balance, and a generous compensation package. Data Facts employee benefits package includes full health, dental, and vision insurance, a 401(k) with an employer match, and a generous vacation package, as well as a strong incentive bonus plan. The Top Workplaces are determined solely on employee feedback. The employee survey is conducted by WorkplaceDynamics, LLP, a leading research firm on organizational health and employee engagement. WorkplaceDynamics conducts regional Top Workplaces programs with 40 major publishing partners across the United States. Over the past year, more than 5,000 organizations and 1 in every 88
That’s Why Rainey Kizer Makes Your Business Our Concern As the issues facing HR executives become more frequent, challenging, and complex each year, you need a law firm that provides advice individualized for your specific needs. This is why you should know the employment-law attorneys at Rainey, Kizer, Reviere & Bell PLC. For over 30 years, our AV-rated firm has advised businesses, nonprofit organizations, and government agencies on all aspects of employment law. To learn more, please call.
employees in the U.S. have turned to WorkplaceDynamics to better understand what’s on the minds of their employees. Through its workplace improvement offerings, WorkplaceDynamics provides solutions, training and tools to help clients improve their workplace. Data Facts ranked in the top 50, placing on the list for the second year in a row. The Commercial Appeal published the complete list of Top Workplaces on December 7th. For more information about the Top Workplaces lists and WorkplaceDynamics, please visit www.topworkplaces.com and www.workplacedy-
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Memphis Bar Association Labor & Employment Law Section
Annual Seminar
December 5 at the Crescent Club in Memphis
Kim Koratsky, Section Chair, welcomed everyone to the annual event. Koratsky is Senior Assistant County Attorney for Shelby County Government.
Richard F. Griffin, Jr., NLRB General Counsel, with Tanja L. Thompson, Shareholder with Littler, discussed recent NLRB cases and activities.
David Rudolph with Bourland Heflin Alvarez Minor & Matthews provided a review of significant labor and employment law decisions and jury verdicts in the Western District in 2014.
(L-R) Billy Ryan with Donati Law, Hon. Bernice Donald with Sixth Circuit Court of Appeals, and Tom Henderson with Ogletree Deakins gave a Supreme Court and Sixth Circuit Update.
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(L-R) Katharine Kores, Director , Memphis District of the EEOC and EEOC Commissioner Victoria A. Lipnic, EEOC Commissioner, provided an update from the EEOC.
(L-R) Dylan King with Ford Harrison; Kim Koratsky with Shelby County Government, Mary Hamm with Burch Porter & Johnson, and Imad Abdullah with Regional One Health.
Attendees at the Memphis Bar Association Labor & Employment Law Section Annual Seminar.
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How To Really Welcome a New Employee to the Workplace By HARVEY DEUTSCHENDORF
“ Always treat your employees exactly as you want them to treat your best customers.” ~ Stephen R. Covey ~
W
hen most employers think of "on boarding" new employees, they typically have a list of to do’s focused on paperwork, meeting the staff, an office tour, vision statement and other tasks. What is usually left to last or totally ignored is a plan that focuses on making the employee feel welcome, appreciated and part of the organization’s culture as soon as possible. While most organizations have thought out and mastered the technical part, few do the appreciation and welcome part very well. An organization only has one chance to make a good first impression with the new hire and the first few days will leave a lasting impression. By taking the time, effort and planning to get it right at the onset an organization can decrease their chances of losing valuable people because they started off on the wrong foot with them. Organizations such as Southwest Airlines excel at making new employees feel welcome, which is reflected in their high stats of employee loyalty and retention. This is also reflected in the bottom line. Here are 5 things an organization can do to make a new hire feel welcome and appreciated:
Have a welcome strategy in place From management down, everyone directly involved with a new hire could have a role in making the new person feel welcome. Everyone should be asked these questions, “What was it like for you on your first day, your first week? What could others have done to make you feel more comfortable, accepted and appreciated?" Use these questions to brainstorm and come up with a detailed plan for bringing a new person into your organization. Once the plan is developed and in writing, have everyone involved and implement the plan whenever a new employee arrives. Having a written plan reminds staff of the importance of first impressions and doing a good job of "on boarding". Doing this also points out that everyone has an important role to play. You could even go so far as having onboarding as part of everyone’s job description.
Have a personal collage of all immediate staff One of the concerns that creates anxiety for a new employee is wondering how they will fit in. On the first day they will likely meet a lot of new people and have trouble remembering their names. Instead of handing them a sterile organizational chart with names and titles, how about a collage with photos and personal information of the staff the newbie will be working with. This could include photos of supervisors/coworkers and some information on their personal lives such as family, pets, hobbies, favorite travel destinations or favorite sayings; whatever the employee felt comfortable sharing. That would take the pressure off the new person to remember the many faces that he/she met the first day. By doing this the organization would be sending the message that they are interested in their employees as whole people that have lives outside of work. This would also put a human face on the organization and make a newcomer feel like they are joining a family. 32
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Have a mentor or buddy system Whenever a new person is brought on board, have someone assigned to spend time with them to teach how things work, go for lunch together and offer support and guidance when needed. This could be one person or be rotated amongst staff on the work unit who volunteer and have a natural affinity to be supportive. It is often easier for a newcomer to ask questions of a supportive colleague than to go to their direct supervisor, as they may fear appearing too needy or foolish for asking questions that they feel might be obvious. While the mentor or buddy would have the main role, other employees would also be encouraged to jump in and do their part to do small things to make the newcomer feel welcome. Learn as much as possible about the new person.
A genuine interest in the new employee as a person Knowing whether a person is auditory, kinesthetic or visual will tell us how they prefer to be appreciated. For an auditory person, being given a verbal compliment is better than a hand written note, whereas the visual person will prefer the note. A kinesthetic person will appreciate handshakes and solid eye contact. While it is not always possible to have this information about new people at work, it is very helpful to find out. If we don’t know or are unsure, do all three to ensure there will be one way the person will truly appreciate. The more we know about a new employee the more we are able to personalize the welcome, heighten their experience and this gesture will be appreciated and remembered.
Immerse them in the company culture as soon as possible Immersing a new employee into the organizational culture quickly is the best way to make them feel they are a valuable part of the team. Assign them roles and ask for their input in all the areas they are involved. Encourage them to come up with their own personal plan for what they want to do or accomplish in the future. Make a point of involving them in all of the social and fun activities around the workplace. When in meetings make a point of asking for their input and actively listen to what they have to say.
Harvey Deutschendorf Emotional Intelligence Expert, Speaker, and Author of The Other Kind of Smart Harvey.eiguy@shaw.ca www.theotherkindofsmart.com Twitter@theeiguy
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Quit or Fired?
An
Performance Improvement Plans are not enough to show constructive discharge. By ROBIN B. TAYLOR
essential element of most employment discrimination claims is that the employee suffered an adverse
but Nationwide withheld Perret’s bonus because he was on a PIP.” Pierre took disability leave “[a]lmost immediately after being placed on the PIP,” and resigned two months later. A jury found that Nationwide imposed the coaching plans and PIPs, and constructively discharged the plaintiffs, because of Perret’s age and Pierre’s age and race. The jury also found that “Nationwide proved it would have placed Perret and Pierre on coaching plans and PIPs even if it had not considered age or race.” “This mixed motives verdict precluded [p]laintiffs from receiving monetary damages” under Texas law. The district court denied their motion for attorney’s fees. It also denied Nationwide’s motion for judgment as a matter of law. Both sides appealed. Mr. Pierre died after the case was appealed. A three-judge panel of the 5th Circuit held there was no evidence to support the two plaintiffs’ discrimination charges. “Plaintiffs contend that Perret and Pierre were pre-selected for termination because of their age and/ or race, that Nationwide did not fairly evaluate their compliance with the coaching plans and PIPs, and that the result of the coaching plans and PIPs was intended to be and would inevitably have been termination.” The court found that “[t]here is no evidence of demotion, reassignment, reduction in responsibilities, harassment, or humiliation, and no evidence that any supervisor or manager ever advised plaintiffs to resign or asked them whether they would resign.” The Fifth Circuit reversed the District Court’s denial of Nationwide’s motion for judgment as a matter of law.
employment action. An employee who resigns often has difficulty making out a prima facie case of discrimination. An exception to this general rule is where the
employee suffers a constructive discharge. Where the employee can prove that the employer made the work conditions so intolerable because of the employee’s protected category that a reasonable person would feel compelled to resign, a resignation may constitute an adverse employment action. The threshold for proving a claim of constructive discharge is high.
A recent case from the Fifth Circuit exemplifies this high standard. Perret et al. v. Nationwide Mutual Insurance Company. The Fifth Circuit overturned a jury verdict, finding that Nationwide Mutual Insurance Co. is not liable for age and race discrimination charges arising
This case is a reminder of the high standard for constructive discharge. The takeaway from this case is that to establish a constructive discharge claim, merely placement of the employee on a performance improvement plan, even with a bonus denial, is insufficient to establish a constructive discharge. However, the employer had to incur much expense and time to reach that determination on appeal. Another lesson from this case is that juries may be suspicious of employee PIPs that arguably lack concrete objective criteria for evaluating employee performance. Employers can minimize jury suspicion by placing employees on PIPs that contain measurable objective goals.
from its termination of two sales managers. Parker Perret and Melvin Pierre sued Nationwide Mutual for discriminatory terminations. The two men filed separate lawsuits that were later combined in U.S. District Court in Sherman, Texas. Mr. Perret claimed age discrimination, while Mr. Pierre, who was black, charged the insurer with both age and race discrimination. More specifically, they alleged that the terminations were constructive discharges: both resigned after being placed on coaching plans, then performance improvement plans (PIP). PIPs were allegedly “the final stage in Nationwide’s process for terminating employees.” While Perret was on the PIP, he “qualified for a sales bonus for meeting his first quarter sales goals, 34
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Robin B. Taylor, Attorney Ogletree Deakins robin.taylor@ogletreedeakins.com www.ogletreedeakins.com