Volume 6 : Issue 9 TM
www.HRProfessionalsMagazine.com
Your HR Mobile Application Can Make Your Organization More Effective
Anniversary Issue 2016 TNSHRM Conference September 14-16
The Portal-to
-Portal Act
The DOL’s New
Fiduciary Rule:
10 Things
You Should Know
2016
ARSHRM ELLA
Conference
and the New
FLSA Regs
Tisch
McDaniel , President SHRM-Memphis
Continuing Benefits
After a Leave of Absence
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
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COULD ONE BENEFIT
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$6.5 MILLION That’s the average damage companies can expect from a data breach*. Your IT team is only human. You’re the one with the superpowers to mitigate risk and help your business recover quickly in the event of a breach. Identity Guard® Business Solutions offers a turn-key suite of services that give you and each employee frontline defense of every keystroke, corporate credit card transaction, and password—not to mention “black market” data monitoring and so much more. Then there’s our Dedicated Breach Team, who will be in your corner if the unthinkable ever happens. With us as your partne partner, you can quickly minimize losses, restore customer confidence, and help protect your brand against future damage.
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Bringing Human Resources & Management Expertise to You Penalties for hiring undocumented workers increased
25% for first offense August 1, 2016.
www.HRProfessionalsMagazine.com Editor
Cynthia Y. Thompson, MBA, SHRM-SCP, SPHR Publisher
The Thompson HR Firm, LLC HR Consulting and Employee Development Art Direction
Park Avenue Design Contributing Writers
Jon Von Arb Bruce E. Buchanan Jeremy Corapi Douglas Dahl II Harvey Deutschendorf Missy McJunkins Duke Herbert E. Gerson Murray L. Harber W. Chris Harrison Paula Hayes Julie Henderson Nancy Mann Jackson Jennifer S. Kiesewetter Dorothy Knapp Courtney Leyes Christy Showalter Clifford Stephan David Thornton 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. ©2016 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.
Guide to SHRM September Conferences 8 2016 TNSHRM State Conference Keynote Speakers and Schedule 24 2016 ARSHRM Employment Law and Legislative Affairs Conference Keynote Speakers and Schedule 28 2016 SHRMGA Conference Keynote Speakers and Schedule
WEB EXCLUSIVES HTTP://HRProfessionalsMagazine.com /Exclusive
Features
6 note from the editor 7 Profiles of HR Professionals 12 Your HR Mobile Application Can Make Your Organization More Efficient 16 SHRM Certification: Get Ready for a New Kind of HR Leader 34 9 Steps for Stress Free Hiring 35 Book Look: An Everyone Culture: Becoming a Deliberately Developmental Organization 36 7 Ways to Get Over Feeling Like an Imposter
Employee Benefits
Next Issue
14 Health Care Cost Control: Two Promising Trends for Employers and Health Care Providers 22 Continuing Benefits After a Leave of Absence 32 Looking Ahead to 2017: Health Plan Compliance Issues 40 Behind the Scenes: How a Revamped Compensation Strategy Created Sustainable Success 41 The Business of Health Care in Mississippi
Top Labor and Employment Attorneys – Articles and Ads due by September 10
Employment Law
10 It Could Happen to You: How to Develop an Emergency Plan for Your Workplace in a Gun-Friendly World 18 With the New FLSA Regs, Time to Dust Off the Portal-to-Portal Act 20 Beyond US Employment Law: Knowing the Global Employment Law Basics 26 Exempt or Non-Exempt? That is the Question Under DOL’s New Overtime Regulations 30 The DOL’s New Fiduciary Rule: 10 Things the HR Professionals Should Know 42 Fines for Immigration Related Violations Increased August 1, 2016
Industry News
17 Wimberly Lawson 37th Annual Labor Relations & Employment Law Update Conference in Knoxville November 3-4 37 SHRM-Memphis HR Compensation Forum in Memphis August 16 38 Highlights from FordHarrison’s Half-Day Wage Hour Workshop in Memphis August 4 www.HRProfessionalsMagazine.com
5
a note from the Editor
With this issue we are celebrating our Fifth anniversary! As I contemplate the past five years, my heart is full of gratitude for all our fine sponsors and contributors who have made our success possible. And what an honor to be the official media sponsor for the SHRM State Conferences in Tennessee, Georgia, Kentucky, Arkansas and Mississippi! It is a joy to work with the SHRM volunteers and HR professionals in each of these states as we travel throughout our footprint. I also want to thank the awesome SHRM Media Relations Team in Alexandria who are so gracious and work with us on the SHRM Annual Conference and the SHRM Legislative Conference each year. We salute two outstanding HR leaders this month on our September cover. Tisch McDaniel, President of SHRM-Memphis;
and Rushe Hudzinski, Director-Elect of SHRMGA. Tisch and her team are hosting the 2016 TNSHRM Conference in Memphis this year at the Memphis Convention Center September 14-16. A fun social event will be at the World’s Largest Bass Pro Shop located in Downtown Memphis with opportunities to explore the many attractions that the bluff city has to offer. The theme of the Conference is “Lead, Follow, or Get Out of the Way.” We are in Augusta September 18-20 for the 2016 SHRMGA Conference. Sally Roberts and her team have a fantastic Conference planned with six keynote speakers! Their theme is “HR and Business Superheroes Unite.”
Mike Aitken, is a keynote speaker. Arkansas political analysts, Bill Vickery and Jessica DeLoach Sabin, will discuss the political landscape from the Right and the Left. For your convenience, we have included profiles of the keynote speakers and a “conference at a glance” page for all three of these excellent Conferences. You can review them and plan your Conference in advance. We are also focusing on HR technology in this issue and you will find information and many innovative ideas to make your life easier from our sponsors and contributors.
See you at the Conference!
We are also covering the 2016 ARSHRM Employment Law and Legislative Conference in Little Rock September 14-15. This is one of my favorite annual Conferences because it is all about the latest employment law issues. SHRM VP of Government Affairs,
Thanks, Tisch Verso Corporation salutes Tisch McDaniel, Director of Pension, Benefits and Human Resources Information Systems, for her leadership, commitment and dedication to making our company a great place to work. Her extraordinary expertise and caring spirit are deeply appreciated by all! Verso Corporation 6775 Lenox Center Court Memphis, Tennessee 38115 versoco.com
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Tisch McDANIEL on the cover
TISCH McDANIEL, 2016-17 PRESIDENT SHRM-MEMPHIS
After spending many years at varying levels of HR functional and leadership positions, Tisch transitioned into the compensation and benefits niche. She has worked in the Manufacturing, Retail, Gaming and Construction industries. Focusing on Compensation & Benefits was complemented by her health/life insurance licenses in six different states. Tisch works on plan designs to maximize the benefit of the company’s expense and perceived value by the In her current position, Tisch is the Director of Pension, Benefits & HRIS for Verso Corporation, a leading North American
employee of those benefits. She was appointed to the Gerson Lehrman Group advisory panel in 1998, and is part of the largest membership network for one-on-one professional learning, comprising more than 425,000 thought leaders and practitioners, including business leaders, scientists, academics, former public sector leaders and the foremost subject matter specialists. She has also spent time on Capitol Hill working on Association Health Plans.
producer of printing papers, specialty papers and pulp, with approximately 5,000 employees. She has day-to-day responsibilities for three defined benefit plans,
Tisch is no stranger to SHRM, as she has been a member of national SHRM for quite a number of years, was a founding member of the Northwest Mississippi SHRM Chapter where she held various chapter officer positions including President, and because of a job change, which shifted most of her time in Memphis, she joined the SHRM-Memphis chapter, first as the Career Emphasis Group’s leader and then as Co-VP of Programs for the 2012 Tennessee
four defined contribution plans,
State Conference. She has gone on to hold Co-VP of Programs for the Memphis chapter,
a self-funded medical and dental
President-Elect and currently is the President of SHRM-Memphis, holding a two-year term.
plan, a multitude of other company-paid and employee-paid insurance products, and the
Tisch would like to personally invite everyone to visit the beautiful, exciting city of Memphis for the 2016 Tennessee State Conference, September 14 – 16, hosted by the SHRM-Memphis chapter. You will enjoy keynote speakers Ann Rhoades and Sam Glenn, the Legal Day hosted
systems that comprise the
by Baker Donelson, the social at Bass Pro, and of course all the learning sessions planned for
HRIS environment.
the conference. Hope to see you there!
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A Keynote Speakers you won’t want to miss! It’s not too late to register! https://tnshrmconf.com/ September 14 to 16, 2016 Ann is a dynamic and visionary Corporate Executive with over 25 years experience in a variety of service-based industries and is President of People Ink, her consulting company that helps organizations creat unique workplace cultures based on values and performance. She held the position of Vice President of the People Department for Southwest Airlines and Executive Vice President of Team Services for Promus Hotel Corporation and most recently, the Executive Vice President of People for JetBlue Airways. Ann has a respected reputation in the industry for her creative approach to creating customer-centric cultures and is a popular speaker on the subject of customer service and how to build a strong high- performing culture. Ann currently serves on the board at the Regis Corporation, NexPhase Capital, YScouts, Past- President of the University of New Mexico Alumni Association Board, Chairman for Safer New Mexico Now, and Board member of New Mexico Appleseed. Ann’s former boards include JetBlue Airways, P.F. Chang’s China Bistro, HireVue, Inc., Restoration Hardware, Executive Council, Brigham & Women’s Hospital Harvard Medical School Board, the University of New Mexico Health Sciences Center, the University of New Mexico-Robert O Anderson School of Business National Advisory Board, Accion New Mexico and Albuquerque Community Foundation. Ann has an MBA in Management from the University of New Mexico and her book “Built on Values” was released in January 2011.
Ann Rhoades
With Sam Glenn, “It’s all about attitude and it all starts with attitude!” Sam went from working nights as a janitor – negative, depressed and sleeping on the floor – to discovering renewed purpose, happiness and humor. Sam Glenn has been named Speaker of the Year on several occasions by meeting and event organizations and won two national awards for his training videos. Hundreds of organizations use Sam’s videos monthly to kick off their staff meetings. For the past 20 years, Sam Glenn has been traveling thecountry full time speaking to audiences from every industry and some crowds as large as 75,000 people. In addition, Sam is a gifted artist and author of 18 books. Sam and his wife and two girls currently reside in Carmel, Indiana, but are originally from Minnesota. Sam has a popular online newsletter – A Kick in the Attitude, which he gives away a large one of his large paintings every month to one of his subscribers. Sign up for a chance to win his artwork at www.SamGlenn.com.
A session you don’t want to miss!
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CONFERENCE SCHEDULE
Memphis Cook Convention Center
September 14-16, 2016
Wednesday, September 14 7:30am-8:30am 8:30am 8:30am - 9:30am 9-30am - 9:45am 9:45am - 10:45am 11:00am - 12:00pm Noon - 1:00pm 1:00pm - 2:00pm 2:15pm - 3:15pm 3:15pm - 3:30pm 3:30pm - 5:00pm 5:00pm - 7:00pm 8:00pm - Midnight
Breakfast Opening Remarks General Session: FLSA OT Changes Panel Break / Networking Concurrent Sessions I Concurrent Sessions II Lunch Concurrent Sessions III Concurrent Sessions IV Break General Session: Overview of Labor and Employment Hot Topics Exhibitor Reception Hospitality Suite
Thursday, September 15 6:00am - 7:00am
Yoga
7:00am - 8:00am
Early Bird Session: Building an Innovative Pipeline for Strategic Staffing
7:30am - 4:00pm
Registration - All Day
7:30am - 5:00pm
Exhibit Hall Hours
7:30am - 8:15am
Breakfast
8:00am - 8:30am
Opening Remarks/SHRM Update
8:30am - 9:15am
Culture / Engagement
9:15am - 10:15am
Employee Financial Literacy
10:15am - 10:45am
Break
10:45am - 11:45am
Concurrent Sessions V: HR Professional Tool Kit
11:45am - 1:00pm
Lunch - Awards
1:15pm - 2:15pm
General Session: Employee Engagement - Positive Attitude
2:15pm - 2:45pm
Break
2:45pm - 3:45pm
Concurrent Sessions VI: Employee Engagement
4:00pm - 5:00pm 5:30pm - 8:00pm
Concurrent Sessions VII: HR as Engaged Business Partner Opening Night Reception
8:00pm - Midnight
Hospitality Suite
Friday, September 16 6:00am - 7:00am 7:30am - 9:00am 7:30am - 8:30am 8:30am - 8:45am 8:45am - 10:00am 10:00am - 11:00am 11:00am - 12:00pm 12:00pm - 12:15pm
Yoga Registration Breakfast Announcements General Session: Recruitment - How to Best Market to the Consumer-Minded Candidate Break General Session: Generational Communication Nashville Announcement / Closing Remarks
For a detailed conference schedule and to register, visit https://tnshrmconf.com/ www.HRProfessionalsMagazine.com
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It Could Happen to You: How to Develop an Emergency Plan for Your Workplace in a Gun-Friendly World In early January 2010, a shooting spree occurred at a power plant in St. Louis, Missouri. An employee, armed with multiple firearms, entered the plant, killing three and injuring five of his co-workers, before the police arrived. The reason behind this shooting? Apparently, the employee had been increasingly unhappy with his job, especially in light of some issues with the company’s pension plan. This event struck especially close to home for me, because my brother and his wife were employed by this company. In fact, they were supposed to be working on the day of the shooting, but at the last minute, switched shifts with someone else. Unfortunately, this is just one of many examples of workplace violence. Employers, especially those in Tennessee and Mississippi, are further confronted with the tension between maintaining a safe workplace and permitting their employees, per state law, to have guns (in locked containers) in their vehicles on work property. So what should you do? How can you minimize the chances of being the next headline in an active shooter situation? This article is designed to provide you with some ideas to minimize your risk of having workplace violence occur at your facility. Your Obligation as an Employer Under Federal and Common Law Let’s start with the basic obligations and duties you owe to your employees. Occupational Safety and Health Administration (OSHA) defines “workplace violence” as “any act or threat of physical violence, harassment, intimidation, or other threatening disruptive behavior that occurs at the work site. It ranges from threats and verbal abuse to physical assaults and even homicide.” Under federal OSHA law, you are obligated to provide a generally safe workplace for your employees. The law specifically states that “Each employer . . . shall furnish to each of his employees, employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.” 29 U.S.C. § 654, 5(a)(1). Likewise, under common law, we, as employers, owe a general duty of care to our employees. Workplace violence is one of those hazards we, as employers, must try to prevent. Develop a Plan How do you develop what OSHA calls a “violence prevention program?” OSHA claims that a well-written and implemented workplace violence prevention program, combined with a variety of controls and training, can help an organization reduce the incidents of workplace violence. Remember that one size does not fit all, so your program – which can be incorporated into your safety program, employee handbook or manual of standard operating procedures – should be tailored to the size and complexity of your organization and its unique potential risks. Additionally, you should not be tackling this daunting task alone. Notwithstanding your labor and employment counsel, there are a number of safety-consulting groups that can assist in both your risk analysis and implementation of any violence prevention program. So how would you go about developing this program? OSHA suggests, among other steps, that you: (1) conduct a worksite analysis to identify any potential risks; (2) identify ways to prevent and/or control hazards to develop your program; and (3) train your employees on these risks and what to do if an emergency arises. a. How to identify any potential risks reate a team of individuals, comprised of both management and employees, among others, to C help identify any potential risks. This team will need to assess the workplace to find existing or potential hazards that may lead to workplace violence. Your best resources for this assessment are your employees (via employee surveys), as they are your boots on the ground, and can provide 10
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By COURTNEY LEYES
you with valuable feedback, such as identifying the types of problems they face in their daily activities. In addition to obtaining feedback from your employees, you should review your records (which include medical, safety, specific health assessments, workers’ compensation, and insurance records); and review your procedures and operations for different jobs to identify potential risks specific to a particular job. b. Identify ways to prevent and/or control potential hazards and develop your plan fter identifying the potential hazards, OSHA A advises that you should take the appropriate steps to prevent and control these potential hazards. An example of a type of control you could implement is an engineering control, which can include: (1) using physical barriers to reduce exposure to a potential hazard; (2) installing a metal detector; (3) installing a panic button; (4) installing better and/or additional lighting; and (5) creating more accessible exits. In addition to engineering controls, you may want to implement administrative and work practice controls, which affect the way your employees perform jobs or tasks. Any plan should address an active shooter situation. My colleague, Joseph Gagnon, in his recent article, “How Employers Should Prep for Active Shooter Situations,” suggests that the following be present in any violence prevention program to address an active shooter situation: A system for how to notify people inside and outside your building when it is under siege and expectations on contacting law enforcement . . . . A roster of your people and accurate layouts of your facility, so law enforcement is best equipped to handle the incident upon arrival . . . . Steps on how to continue operations if your workplace is closed for days or weeks as a crime scene . . . . What counseling resources you immediately will make available to your workers within the hours following the shooting . . . . [and] A detailed description of your training program. c. Training your employees on these risks Once you have identified the potential hazards and created a plan and procedures to help minimize these
hazards, you should train all of your employees. OSHA recommends that every employee should come away from the training with the understanding of the concept of “universal precautions for violence.” This is the concept that violence should be expected but can be mitigated through preparation. OSHA further recommends that all of your employees understand having a culture of respect, dignity and mutual engagement in preventing workplace violence. Additionally, workers and supervisors should be able to recognize safety hazards and know how to minimize and/or reduce any risk associated with the safety hazard. Specific to active shooter situations, there are a number of training resources, such as the U.S. Department of Homeland Security’s video “Run. Hide. Fight.” You can also contact your local law enforcement to assist in training your workforce, as well as develop emergency protocol. Implement an Employee Assistance Program Using the St. Louis power plant as an example, a disgruntled employee (or ex-employee) might be one of the risks you identify above. Having an EAP in place for employees to use when dealing with personal issues may prevent them from spilling over into your workplace. Additionally, regularly having town hall meetings and/or gauging your employees’ temperatures via surveys will give you an idea as to how your employees view the organization, its culture, and any other changes on the horizon. By having your finger on the pulse of the organization, you will be able to be proactive and foresee potential employee issues.
Take Threats Seriously When I conduct trainings for clients, I remind them that maintaining the integrity of any reporting mechanisms is key to prevention. Think about it: If an employee reports something per your policy, and you do not do anything about it, that employee will be discouraged from reporting anything in the future. With that in mind, take all reports of any alarming behavior seriously. In most cases ending in violent acts, the aggressoremployee demonstrated disturbing behavior long before it culminated in a violent act. So take any reports seriously and act on them. Nothing in Life Is Guaranteed As you are well aware, nothing is liability-proof. However, you can and should take steps to reasonably prevent a potential tragedy from occurring. Putting a violence prevention plan in place and implementing it is a good start.
Strengthen Your Employee Handbook Do you have a Violence-Free Workplace Policy in your employee handbook? If you do not, you should consider establishing a zero-tolerance policy toward workplace violence that covers all employees, visitors and anyone else who may come in contact with your employees. Such a plan should have a reporting mechanism by which employees are encouraged to report any potentially violent behaviors. And, as mentioned above, your policies are only as good as how well your employees know about them. Therefore, you should regularly train your employees on these policies and encourage your employees to report any alarming behavior, including contacting HR in the event of domestic abuse.
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Courtney Leyes, Attorney Fisher Phillips cleyes@fisherphillips.com www.fisherphillips.com
8/18/16 10:2811 www.HRProfessionalsMagazine.com
Your HR Mobile Application Can Make Your Organization
MORE EFFICIENT By NANCY MANN JACKSON
HR
departments are regularly seeking the best ways to communicate with their workforce, and evidence suggests that for many workers, mobile is the preferred way. For instance, employees are 60 percent more likely to access pay information through an HR mobile
application than through a laptop or desktop computer, according to ADP Research Institute's Employee Self-Service and Mobile HR Applications white paper. Employees are also more likely to access information about benefits via a mobile app, as opposed to stationary internet access, the study showed. Mobile technology is changing the way people connect with each other and is reshaping the way organizations are formed, organized and operated. It provides fresh opportunities for organizations to reform and improve core functional HR processes to help boost productivity, improve employee satisfaction and communicate with key stakeholders instantly.
HR Mobile Application Uses Why are mobile users more engaged with HR content than stationary internet users? The answer may be because of the convenience of accessing information through a smart phone or tablet, available almost anywhere, or it may reflect decreased availability of laptop or desktop computers in the workplaces of many employees. Whatever the answer is, if your workforce is using mobile apps for other important tasks — such as online banking or scheduling shift work — they are very likely to be receptive to accessing HR information in the same way. An HR mobile application can group core HR processes, such as viewing pay statements, time entry, retirement accounts, vacation requests, benefits, work schedules, policies and organizational news, into one convenient and accessible place. An app of this type may be especially helpful for organizations that work in industries with fewer desk jobs, where employees have much easier access to mobile devices than computers. The ADP study showed that employees working in construction, natural resources and mining; manufacturing; trade, transportation and utilities; real estate and rental and leasing; education; and health services are more likely to access HR information through a mobile app:.
Benefits of Mobile-izing HR Processes When you incorporate mobile HR applications into your internal corporate functions, your organization can realize a number of the following benefits: 12
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CONVENIENCE An HR mobile app can reduce or eliminate the need for employees to access a desktop computer, to manually fill out paperwork or call or email HR representatives with questions. Instead, employees can access and adjust important HR information whenever they want, wherever they are.
SPEED Because of the real-time nature of mobile applications, an HR app enables real-time decision-making without waiting for paperwork or being physically tied to a home office.
PRODUCTIVITY Because mobile technology is so convenient, employees spend less time managing HR issues. HR professionals spend less time answering employee questions in person or via phone or email. Saving time allows employees and HR professionals to spend more hours focusing on tasks that generate value for the organization, reducing costs and improving the quality of HR services.
ACCURACY Because interactive mobile HR applications, such as time entry and vacation requests, usually include automated, streamlined, step-by-step processes, an overarching app reduces the chance of human error.
ENGAGEMENT The workforce has growing numbers of digital natives and workers who are very comfortable with mobile and social technologies. They appreciate and respect an organization that offers mobile technology, making it easier for them to do their jobs and manage their work-life balance. To stay relevant in a digital world, HR must pivot to reflect the needs of their employees and stay competitive in their industry. So you can kill two birds with one stone by offering a mobile application that makes employees' work lives easier and more efficient and leads to increased production and ease of communication for the organization as a whole. For more information on HR mobile applications, download the report: Employee Self-Service and Mobile HR Applications. As seen on Spark, powered by ADP www.adp.com/spark
Nancy Mann Jackson is an award-winning journalist and content marketing writer who specializes in writing about finance and economics, healthcare, small business and education. Her work appears in publications including CNBC.com, Fortune. com, Entrepreneur, Working Mother, CNNMoney.com, and DailyWorth, and she writes for brands including HSBC Bank, Capital One, American Express, HCA and a number of others.
# hellowork Snooze no more.
When work is something you look forward to, the alarm clock gets a whole lot friendlier.
Because when your employees look forward to their jobs, what they produce can be truly
inspiring. ADP’s workforce solutions help you craft a more engaged and efficient workplace. Visit adp.com/hellowork and see how we can provide a more human resource for your business.
ADP and the ADP logo are registered trademarks of ADP, LLC. ADP A more human resource. is a service mark of ADP, LLC. Copyright © 2016 ADP, LLC.
HR Solutions | Payroll | Good Job
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13
HEALTH CARE COST CONTROL:
Two Promising Trends for Employers and Health Care Providers By JOHN VON ARB
Year after year, benefits managers cringe as employee health care costs claw higher and higher. As soon as we can wrangle one sector of health spending, another rears its head. Inpatient admissions, elective surgeries, tobacco use, specialty drugs: they all contribute to a trend that affects employers across all industries. We often read about pay-per-performance reform and new government-mandated quality metrics in trade publications and the mainstream media, but judging by cost trends, these ideas don’t seem to be trickling down to health care providers, the ultimate source of health care expenditures. Fortunately, that is changing through the meaningful application of technology as well as physician engagement. In the Vanderbilt Health Affiliated Network, a physician-led network that spans the state of Tennessee, we are seeing encouraging signs from two major initiatives: a governmentfunded incentive program for providers called the Transforming Clinical Practice Initiative (TCPI), and a Health Information Exchange (HIE). The principles guiding these initiatives are part of what make high-performing networks different from traditional, fee-for-service networks. But first, a word about what health care looks like from the other side of the dollar. The truth is that many physicians don’t know what their services actually cost the end user. This is not because they are callous or indifferent; in many cases they lack access to data showing the true cost of their services. This is especially true for practices that lack Electronic Medical Record (EMR) systems or that don’t participate in quality improvement programs. And even when a physician, practice, or hospital does know the cost of care, they don’t know about a patient’s costs at other facilities just down the road. The result: the employer and the insurer are often the only parties who know a patient’s true cost of care, and they have the least power to do anything about it.
PRACTICE TRANSFORMATION: Support for Cost Control and Quality Improvement This is one reason why our network is helping to implement the Transforming Clinical Practice Initiative across our region. This program uses financial incentives and change management support to bring providers into the 21st century with respect to measuring and improving quality and cost of care. The benefit to employers is that as providers gain the ability to measure and understand their performance against key government metrics, they will be able to make better decisions at the point of care to lower costs. This is especially true in networks such as ours with a shared-savings model that delivers savings to health plan customers and providers. From a provider perspective, programs like TCPI can: • Help practices purchase and implement EMR systems • Measure performance against quality metrics for preventive and wellness issues such as regular screenings for breast cancer or colon cancer • Improve patient experience through more efficient medical record management and billing • Show how reducing costs for patients can benefit their own bottom line 14
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From an employer perspective, the end goal will be healthier employees and reduced costs for the health plan. Employers should be aware of what kinds of transformation efforts are happening in their health plan networks. If your network is not making systematic efforts to innovate and adapt to changing payment models, you should be asking why. To learn more about practice transformation programs in your region, visit innovation.cms.gov.
HEALTH INFORMATION EXCHANGE (HIE): Applying Technology for Coordinated, Less Costly Care The theory is simple: the HIE is a single interface that aggregates different sources of data into a unified, seamless whole. Think about how Google Flights or Expedia does this for different airlines’ reservation systems, or how your phone’s browser interprets various coding languages to load an interactive site or app. So why has this taken so long to come to health care? Two words: cost and incentives. The coding and infrastructure behind HIE technology is substantial and expensive. Before now, the only players who could afford this technology were state governments and large health care corporations with dozens if not hundreds of facilities. Which leads us to the incentive: why would competing health systems want to invest in a common platform that would give both access to the others’ data? In a fee-forservice world, there was nothing to gain. Today, with Medicare/Medicaid and private insurance pressure to improve quality and reduce costs, health systems are collaborating in new ways. In our network, 12 health systems and more than 3,500 providers work toward a common vision of better quality and cost control for health care across the region. Each participant remains independent, yet agrees to share quality and cost data. Data from these health systems and practices flows into the HIE, so when a provider logs in, he or she can see a patient’s total picture of care across the network. The benefits can include: • Optimally coordinated care from providers who are better informed about patients’ medical history and needs • Fewer duplicated or inefficient services • Less hassle in transferring records between providers • More effective decision-making for diagnosis of complex conditions • Integrated pharmacy data for true total cost of care insights • Predictive analytics to support early detection and treatment of progressive diseases
Previously, an insurer might have had pieces of the picture with respect to services, and the employer might have understood the cost. But the HIE combines many sources of data to deliver insight where it’s needed most: to the provider when the patient is in the room. It’s hard to overstate how meaningful that is for an employer whose employees receive care in such a system. Let’s say an employer notices that expenses for hospital readmissions are unusually high and growing. With the HIE, a care network can focus on the readmission events, as well as on the care that was given before and after. The network could identify that patients weren’t getting proper referrals to appropriate, lower-cost options such as post-acute care facilities, and take action to empower admitting providers in the hospital to make better-informed choices. In fact, this situation is very similar to a program our network has rolled out this year in one major hospital in an urban area.
RESULTS: Real-World Cost Savings Our approach to health care is working for more than 70 employers and more than 100,000 employees throughout Tennessee and surrounding states. Through practice transformation and engagement, deep analytics capabilities, and a tiered network structure, we have been able to deliver sustained, substantial cost control to employers. For example, our pediatric
… our pediatric program has delivered savings four years running, beating the market by 17% in 2014.
program has delivered savings four years running, beating the market by 17% in 2014. We have consistently delivered savings across all areas of care, saving more than $10 million for employer customers in 2014 (the most recent year for which data is available). Our HIE is operational, and we are adding more facilities and providers constantly. To date, we have enrolled more than 2,500 providers in the TCPI program to support next-generation quality and cost improvements. Many other organizations nationwide are adapting similar measures. At the end of the day, we are employers, too: the employees of many of the health systems in our network are covered under our network’s plan. We demand nothing less than the most innovative practices in the industry, and so should you. If your health plan’s network is not engaged in advanced data sharing and practice transformation, you may want to reevaluate your options and seek a high-performing network partner in your region that is applying these principles in meaningful ways.
John Von Arb, Vice President of Corporate Health and Employer Services Vanderbilt Health Affiliated Network John Von Arb oversees corporate health initiatives and employer services for the Vanderbilt Health Affiliated Network. He has more than 30 years’ experience in HR leadership, management, and consulting with companies including Nissan North America, LifePoint Health, HCA Healthcare, and Willis Towers Watson. The Vanderbilt Health Affiliated Network is an alliance of 12 health systems, more than 50 hospitals, and more than 3,500 clinicians across Tennessee and surrounding states with a common vision of excellence in health care. The network improves the health of families and communities by partnering with patients and employers to offer benefits and services that are accessible, cost-effective, and coordinated. Learn more at VHAN.com.
Health care done differently. We understand how hard it is to give your employees and their families top-notch, cost-effective health care — because we’re employers, too.
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15
Certification: The future ofSHRM HR is here
Get Ready for A New Kind of HR Leader! (and it’s SHRM-certified)
each competency is broken down into expected proficiencies for each of four different career stages. Check out the expectations at your level and what is needed to grow to the next level. And then get busy! Use the SHRM online tools and resources, the SHRM Store, your local chapter’s sessions, educational seminars, and national and state conferences to help you strengthen your skill set. You are the manager of your professional development and this is your opportunity to gain mastery where you need it. Be mindful of your plan and target the approach that fits your needs. By DOROTHY KNAPP
N
owJointhat the SHRM Certification (SHRM-CP, Exam applicationsSHRM-SCP) now being accepted!has the 85,000+ SHRM-certified HR professionals to drive business results been in theready marketplace for almostSPRING two years, it is time to take EXAM WINDOW: through practice and experience. Demonstrate May 1 – July 15, 2016 a your look and ofsee how behavioral well it has done, and, more important, application the universal competencies and technical knowledge DEADLINE: what the future could look like forAPPLICATION those lucky enough to be essential for effective HR job performance. March 25 Validate not only what you knowfor but also how interested in attaining it! SHRM-certified and those you can apply that knowledge on the job.
LATE APPLICATION DEADLINE: April 15
First a few facts – over 96,000 HR professionals currently have the SHRM-CP or the SHRM-SCP. OurAPPLY path to business success is clearly TODAY! defined; it is now up to us toshrmcertifi “get on it”! There are over 1700 organizations cation.org/apply/hrpro providing competency based education. There are over 275 colleges and universities aligned with SHRM to offer courses supporting certification. Certified professionals already have the HR technical expertise; we now need to extend ourselves to include experiences and cross-functional opportunities in other areas of our organization to enhance our leadership and business skills. We need to learn to apply knowledge and experience, critical analysis and, yes, innovative thinking to find effective solutions for now and into the rapidly changing future. What, you say?!! Step out of our HR role and take on a new view – one we may not have the technical expertise for? Or one that requires a new and different way to look at the problem? We need to be transported into situations where we are “out of our element”, where we experience the uneasiness of the unknown solution - having to weigh significant, perhaps untested or radically different ideas. Thought leaders tell us to become a leader who sees the business “through an HR lens.” We know our employees, we know the law, we know the policies and practices of our organization. We need to question those as we anticipate changes taking place in the business world, use situation-based scenarios and lead the needed changes to make our business more competitive, more socially responsible, or more in concert with diverse solutions. How can we make changes needed to carry our organization forward in a world so rapidly changing? How do we challenge a new generation of workers to come up with our next innovative product? How can we motivate and retain in light of more competition globally and yet more restrictions on our budgets?? How can we convince other business leaders to adopt changes we know are so needed for the future? Much of this boils down to our skill at applying the competencies identified in the SHRM Body of Competency and Knowledge – leadership and navigation, relationship management, business acumen, ethical practice, consultation, critical evaluation, global and cultural effectiveness, and communication. And to the discipline it requires to figure out what we need and develop these! SHRM has online tools to help you assess your strengths and identify your areas for growth in each competency. If you haven’t put yourself through this assessment, I highly recommend it. It’s a great first step in identifying where you are on your competencies “path”. Then look at the competencies model on the SHRM website and how 16
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It is a very exciting time for HR as we see change and look at how we will contribute to our organization into the future. Trending demographics, technology, regulation, skills gaps, and the changing nature of work will push us to explore our own ability to lead through constant shifts, to innovate, to develop and maintain relationships, to influence and to convince. We have a huge job ahead of us – use SHRM as your partner, your ally, your teacher – to help you to reach the power and potential you have within to make a lasting contribution to your business, to your HR career and to your success!
Dorothy Knapp, SHRM-SCP SHRM Field Services Director dorothy.knapp@shrm.org www.shrm.org
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With the New FLSA Regulations, It’s Time To Dust Off the Portal-to-Portal Act By W. CHRIS HARRISON
D
vocabulary is the Portal-to-Portal Act and its FLSA exemptions.
785.37. But the preceding commute to the airport or train station and back home is not. 29 C.F.R. § 785.39 (appropriately) calls travel which keeps an employee away from home overnight “travel away from home,” and such travel time is compensable if it occurs on regular working days during normal working hours. Travel away from home is also compensable during corresponding hours on nonworking days (such as between 9:00-5:00 on the weekends). Travel time outside regular working hours as a passenger on an airplane, train, boat, bus, or automobile is usually not compensable unless the employee performs productive work during that travel.
The Fair Labor Standards Act
Meeting and Training Time
ecember 1, 2016 will be here before you know it. As the effective date for the new overtime regulations under the Fair Labor Standards Act (FLSA) looms, employers everywhere are busy changing salaried-exempt employees to non-exempt, hourly employees and completing their audit checklists. Now
is the time to review your pay practices, job descriptions, and employee duties. As you think through this process, one regulation you likely need to add back to your
The FLSA divides workers into exempt-salaried employees and non-exempt, hourly employees. If an employee is designated as non-exempt hourly, the employee is eligible for overtime pay and must be paid at time-and-one-half for hours worked over forty per week. To qualify as exempt, an employee must 1) have a salary above the minimum salary threshold, 2) be paid on a salary basis; and 3) perform duties that qualify for an exemption. Effective December 1, 2016, the minimum salary will more than double increased from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). This minimum salary can include up to 10% in non-discretionary bonuses and commissions. With this large increase, many employers will change their employees’ status from to non-exempt hourly, rendering these employees eligible for overtime pay.
But What Exactly Are Hours Worked? Unfortunately, Congress failed to define “work” when it passed the FLSA many years ago, resulting in quite a bit of litigation over the compensability of time spent on activities before and after employees’ regular work schedules. Tasks such as changing clothes or travel time presented a challenge for employers trying to comply with the new wage law. In response, Congress passed the Portal-to-Portal Act (“P2P”) in 1947. The P2P removes from FLSA coverage certain activities performed before or after an employee’s principal activities, making these activities non-compensable. For example, time spent by an employee 1) “walking, riding, traveling to and from the actual place of performance of the principal activity or activities” or 2) on activity performed before or after the principal activities in a workday are not compensable unless they are integral and indispensable to the principal activities. These fringe tasks are typically called “preliminary” and “postliminary” activities. Additionally, the P2P provides that some activities which might otherwise be work need not be compensated if the time spent on them is de minimis.
Is Travel Time Compensable? Most of us know that the ordinary commute from home to work is not counted as hours worked. But what about an emergency call after a full day’s work? Under 29 C.F.R. § 785.36, substantial travel to perform an emergency job for a customer is compensable, but a second trip to the office and back in the employee’s own vehicle is likely not. Special one-day assignments in another city are compensable, including the travel to and from that city under 29 C.F.R. § 18
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In most cases, time spent in training or meetings is compensable. 29 C.F.R. § 785.27 states that “[a]ttendance at lectures, meetings, training programs, and similar activities need not be counted as working time if the following four criteria are met:
1) Attendance is outside of the employee’s regular working hours; 2) Attendance is in fact voluntary; 3) The course, lecture, or meeting is not directly related to the employee’s job; and 4) The employee does not perform any productive work during such attendance.” However, all four criteria must be met for the time to be non-compensable—a tough hurdle. In most cases, employers require these training and meetings, so they will not meet all four criteria. The voluntary factor is often the most difficult to satisfy, as attendance is not voluntary if employees believe that failure to attend would adversely affect their working conditions or employment.
Waiting in Lines and Passing Security Checkpoints Typically, waiting in line to get into a facility, or walking from your car to the building, is not compensable time. But what about passing through security integral and indispensable to an employee’s principal work activities? In 2014, the U.S. Supreme Court held in the Integrity Staffing Solutions, Inc. v. Busk decision that hourly employees who worked in the Amazon.com warehouse were not entitled to overtime compensation for time spent undergoing security screening before leaving the warehouse. The Court pointed out that the company did not employ its workers to undergo security screening, but instead to retrieve and package products. The screening process, which can take up to 25 minutes per day, was “not an intrinsic element of retrieving products from warehouse shelves or packaging for shipment.” To the contrary, the company “could have eliminated the screenings altogether without impairing the employees’ ability to complete their work.”
Donning, Doffing, and Changing Clothes Not just funny-sounding words for employment lawyers, “donning and doffing” mean putting on and taking off certain specialized clothing—a daily ritual for some employees which can be compensable time. In Steiner v. Mitchell, the U.S. Supreme Court clarified that “activities performed either before or after the regular work shift, on or off the production line, are compensable . . . if those activities are an integral and indispensable part of the principle activities” for which the workers are employed—a similar standard to the Busk case above. In this battery factory, the employees had to change clothes and shower in state-law-required facilities due to their work with dangerous materials. The Court held that “it would be difficult to conjure up an instance where changing clothes and showering are more clearly an integral and indispensable part of the principal activity of the employment than in the case of these employees.” The Court distinguished this circumstance from changing clothes and showering under normal conditions such as employee convenience, which would not be compensable.
What’s Next? For the second time, the DOL indicated on its annual regulatory agenda that it intends to publish a “Request for Information on the Impact of the Use of Electric Devices by Nonexempt Employees on Hours Worked Issues.” The agency states that it intends to seek information on “employees’ use of electronic devices to perform work outside of regularly scheduled work hours and away from the workplace.” It will also seek “information regarding ‘last minute’ scheduling practices being utilized by some employers that are made possible in large part by employees’ use of these devices.” This agenda item states that the DOL may issue the RFI later this summer, after which the agency could ultimately propose rulemaking on the topics. This agenda item seems to indicate the DOL’s desire to render compensable the time related to ubiquitous smartphone use (as well as tablets and
laptops), which we all know and love (or love to hate). Litigation is already ramping up to seek payment for the time spent outside of the workday on these devices. Furthermore, fluctuating and unpredictable work schedules are gaining more negative attention, with employee-friendly cities such as San Francisco advancing ordinances aimed at requiring predictable schedules or eliminating on-call shifts.
What Should You Do As An Employer? In light of the recent regulatory activity and the looming reclassification of many employees as non-exempt hourly, it is likely not enough to rely on a standard 9:00-5:00 schedule or punch times from a clock when adding up work hours. Time spent on many activities outside the company’s facility and outside normal hours can be compensable, whether donning a fireresistant apron, sitting at home taking computer training, traveling to another city, or using a smartphone to answer emails. Employers should review company policies, employee work flows, position requirements, and timekeeping practices. Make sure you identify employees likely to be affected by the new rules and whether the P2P exceptions apply. Audit the positions and timekeeping practices to keep problem areas in check. And don’t forget to communicate and collaborate with the operations employees to refine your strategies on how to implement your best practices. The P2P exemptions can be a helpful tool in your toolbox, but understanding how to use them is the key.
W. Chris Harrison, Attorney Ogletree, Deakins, Nash, Smoak & Stewart, P.C. chris.harrison@ogletreedeakins.com www.ogletreedeakins.com
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BEYOND U.S. EMPLOYMENT LAW: Knowing the Global Employment Law Basics By HERBERT E. GERSON and JEREMY CORAPI
U.S. human resource (“HR”) and employment law professionals must be mindful that U.S. employment laws can be quite different from those of most foreign jurisdictions. Local employment laws and customs will govern virtually every aspect of an employment action taken in another country. Recognizing these differences is essential to ensuring that U.S.based HR departments correctly manage employment relationships abroad. This article highlights some of these key differences to help avoid legal pitfalls.
Hiring an Employee: Offer Letters vs. Employment Agreements Most U.S. employees are employed at-will and typically are given only a brief offer letter when hired. However, the concept of at-will employment is largely inapplicable to the employee/ employer relationship abroad, and offer letters are sporadically used. Instead, most foreign jurisdictions require employees be given a written employment agreement providing a detailed description of the employee’s terms and conditions of employment. Required terms will vary depending on the jurisdiction involved, but usually will include things such as the identity of the parties, place and nature of work, the date of commencement, amount of paid leave and other benefits, and any local work rules. Employment agreements may also have to be in the local language of the country where the employee is employed and signed with an original wet ink signature. Moreover, unlike in the U.S. where the employer can unilaterally change the terms and conditions of at-will employees, in most foreign jurisdictions the employer must obtain the employee’s consent and provide additional consideration before altering the terms of an employment agreement. Thus, foreign employment agreements must be carefully worded at the outset as they often cannot easily be changed.
Employment At-Will vs. Termination With or Without Cause While a U.S. employer typically can terminate its employees at any time, for any lawful reason, with or without notice, this is largely not the case for employers operating abroad. Rather, many foreign jurisdictions require that an employer have a statutorily prescribed basis (or “cause”) for terminating an employee before proceeding with a termination. Often, even where cause exists, the employer must provide counseling and the opportunity to improve before terminating an employee for performance issues. Furthermore, many foreign jurisdictions impose a mandatory notice period before an employee can be terminated. This often applies regardless of whether the employee is terminated for cause. The employee generally will continue to work and receive his or her normal salary during this period. Some jurisdictions allow the employer to pay the employee in lieu of notice, although this varies by jurisdiction. Additionally, unlike in the U.S. where severance generally is not required when terminating an at-will employee, many foreign jurisdictions require a statutory or contractual severance payment to an employee who is terminated without cause (and sometimes even when terminated with cause). Likewise, most foreign jurisdictions apply special rules when employees are terminated based on business needs (commonly referred to as “redundancies”). Depending on the number of employees being made redundant, employers often must engage in a strictly regulated selection and employee consultation process before proceeding with the termination(s). Additionally, employee(s) being made redundant usually are entitled to severance compensation.
Employment Issues in Buying and Selling a Business Abroad A U.S.-based HR department must also be aware that complicated foreign employment laws are typically triggered when the company’s non-U.S. entity transfers all or part of its business to another non-U.S. entity. For example, in many foreign jurisdictions employees are represented by “works councils.” These are bodies of employee representatives who represent the various 20
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departments of an applicable workforce or business unit. In most foreign jurisdictions, a business transfer cannot proceed until the applicable works council, if any, has been consulted on the transfer and rendered an opinion on the sale. While the transfer can proceed even if the works council advises against it, the transfer cannot take place until after the consultation has occurred and the opinion has been issued. Similarly, under business transfer legislation that has been enacted in multiple international jurisdictions (e.g., the European Union, Brazil, South Korea, Japan), many types of business transfers are subject to strict regulations that significantly protect employees. Generally, these regulations prohibit discharging or changing the terms and conditions of employees impacted by the sale of a business or business unit merely because a sale has taken place. That is, usually the employees of the selling employer must be retained by the purchasing employer under the same terms and conditions as they had under the seller. While some jurisdictions permit a purchasing employer to dismiss a limited number of employees because the purchaser’s business needs render them redundant, this process is heavily regulated and often requires lengthy collective consultations with the transferring employees (or their representatives). Employees ultimately made redundant are typically entitled to severance payments. Cross-border international business transfers give rise to a whole host of issues that do not otherwise arise when dealing with a purely U.S. business sale. U.S.based HR departments should be aware of these issues and be prepared to deal with them at the outset of any contemplated international business transaction.
Conclusion In sum, understanding some of the basic differences between key areas of U.S. employment law and global employment law will help ensure that appropriate employment practices are implemented abroad, thereby reducing exposure to potentially substantial additional costs and other HR-related issues. For a more in-depth discussion of these and other issues impacting multinational employers, please join authors Herb Gerson, FordHarrison co-managing partner and chair of the Ius Laboris Americas Committee, and Jeremy Corapi, a member of FordHarrison’s Global Employment Services team, at the “Americas Labor & Employment Law Conference: Managing a workforce across the Americas and Beyond.” To register for the December 8 – 9 program in Miami visit www.fordharrison.com/Miami2016.
Herbert E. Gerson, Partner FordHarrison Memphis & Atlanta hgerson@fordharrison.com www.fordharrison.com
Jeremy Corapi, Senior Associate FordHarrison New York jcorapi@fordharrison.com www.fordharrison.com
LOOKING FOR A TOP INVESTMENT ADVISOR? Jonathan Lyons
Financial Advisor and Founder of the Lyons Group of Raymond James Founded in 2010, The Lyons Group of Raymond James believes integrity and passion are key tenets to the success of their clients. The team provides investment management advice and services to families, 401(k) consulting, endowments, and institutions throughout the United States and Canada. He began his career in the financial services industry in 2001 at Morgan Keegan which became part of Raymond James in 2012. A former professional baseball player, Jonathan brings passion, teamwork and a diligent work ethic to working with families and institutions to attain their financial goals. Jonathan holds the Series 7, 66, and 33 licenses and received the Executive Certificate in Financial Planning from Christian Brothers University. He has also earned the Accredited Investment Fiduciary® professional designation, awarded by the Center for Fiduciary Studies as well as completed the Investment Management Consultant internal designation at Raymond James. He graduated Cum Laude with a degree in Finance from the University of Memphis. Jonathan went on to play for the Boston Red Sox minor league system from 1996-2000 after completing his college career. Active in the community, Jonathan has served on boards of numerous civic and charitable organizations, including the Blue Streak Scholarship Fund and the St. Louis Parish Council. He has served as President of the Christian Brothers High School Alumni Board and The University of Memphis M Club. A lifelong resident of Memphis, Jonathan and his wife, Kristie, have three children, Jackson, Trenton and Susanna. Most of Jonathan's spare time over the years has been spent coaching his children in baseball, football, and basketball.
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Continuing Benefits During a Leave of Absence
“ No good deed goes unpunished.”
By CHRISTY SHOWALTER
While this is certainly not the golden rule I live by in my personal life, in the world of human resources, sometimes “just being nice” can sadly prove this outlook true. I have seen this play out time and time again as an employer inadvertently put itself at risk by not having – or inconsistently applying – an established policy to determine how long to continue benefits during an employee’s leave of absence (LOA). Without an established LOA policy, it’s difficult to tell an employee that benefits are being terminated in the middle of a leave – especially when the leave is due to the health condition of the employee or a loved one. It’s easy to make an emotional decision rather than a sound business decision, but good intentions can lead to significant financial exposure and increased risk of complaints of discriminatory treatment. Employers should consider not only the needs of the employee, but also the interplay of carrier contractual provisions, federal and state benefit regulations and the employer’s own policies. It’s critical that companies proactively establish a LOA policy – before a question arises. Has yours?
Carrier Contractual Provisions Arguably, the most important consideration in developing a LOA policy is the determination of how long your insurance carrier has agreed to continue benefits when an employee is either on leave or not actively working full-time hours. Whether fully-insured or self-funded, you want to be certain that the employee remains eligible under the terms of the contract or plan document before continuing coverage during a leave. It is becoming more common for carriers to request documentation relating to an employee’s leave, particularly when there has been a large claim. If the carrier determines that the employee was ineligible for continued benefits, the employer could unexpectedly find itself financially responsible for claims incurred during or even after the leave. Check your plan’s eligibility and termination conditions to determine whether your plan document or contract with your insurance (or reinsurance) carrier specifies the maximum period of time coverage can be continued during an approved leave. Keep in mind that periods of coverage may vary from plan to plan (i.e., medical, life, disability) and for each type of leave (i.e., FMLA versus non-FMLA leave, and leave due to the employee’s own illness versus leave for other reasons). Work closely with your benefits advisor to make sure these contractual provisions not only mirror your HR policies and intentions, but also comply with the regulatory requirements outlined below to avoid unintentional financial and legal exposure.
Federal and State Leave Regulations A related consideration is whether the employee’s leave is protected by the FMLA or other state leave regulation. If yes, then the FMLA generally requires that the employee’s health benefits be continued for the duration of the protected leave, up to 12 (or 26) weeks. State leave laws may require an even longer extension of coverage. For example, the Tennessee Human Rights Act requires that certain employers offer up to 16 weeks of leave related to adoption, pregnancy or childbirth. Failure to provide benefits in compliance with these federal and state regulations could result in legal exposure. 22
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You should work closely with your benefits advisor to determine if your plan documents provide for continued coverage in compliance with all applicable federal and state leave regulations. You don’t want to be in a position where your plan document requires termination of coverage following 12 weeks of FMLA leave, while state law requires 16 weeks of benefits. It is also important to classify and document leaves of absence in a timely manner. Documentation may be important to prove compliance with the law’s notification requirements or explain why coverage was continued while an employee was not actively working full-time hours.
The ACA and Stability Periods Additionally, if you are an employer subject to the ACA, your choice of measurement method (monthly or look-back) may be a consideration in how long to continue benefits during a LOA. Eligibility for coverage under the monthly method is determined by current hours worked on a month-by-month basis and may be influenced by a LOA. Eligibility under the look-back method, however, is dependent on historical hours worked during a measurement period and is not generally impacted by a LOA (at least until the subsequent stability period). When an employee is classified as full-time during a stability period, coverage should continue to be offered through the end of the stability period, regardless of the number of hours worked (unless, of course, employment is terminated). This is, again, where it’s important to work closely with your benefits advisor to ensure your plan documents have been updated to reflect your practices, including your measurement method and any applicable stability periods. Otherwise, the document’s contractual terms and limits on continuation of coverage during a leave could force you to terminate coverage early – before the end of the stability period - potentially resulting in penalties under the ACA.
Employer Policies and Precedents After considering the above issues, what if there’s still no clear answer to how long benefits should be continued during a LOA? In this case, the decision may be left to the discretion of the employer, and internal policies or prior precedents will be determinative. To minimize risk and ensure consistency, it’s even more important to have a policy in place that clearly addresses the maximum length of time an employee may be covered while on leave before COBRA is offered due to the reduction in hours worked. In developing this policy, keep in mind any contractual restrictions imposed by the carrier, regulatory mandates and ACA compliance. Thinking through these questions before an employee goes on leave will help avoid emotional decisions related to benefits during the leave. And that will help ensure your good deeds are rewarded rather than punished.
Christy Showalter, JD, MBA Certified PPACA Professional Senior Human Resource Consultant Regions Insurance, Inc. christy.showalter@regions.com
Growth doesn’t just happen. You have to be doing something right. Always committed to providing the coverage you need and the guidance you trust SM, Regions Insurance is proud to be one of the ten fastest growing employee benefit brokers in the U.S. with $10 – $50 million in large-group revenue, as presented by Employee Benefit News in partnership with business data analytics firm miEdge. EBN ranks Regions Insurance as one of the 10 fastest growing employee benefit brokers in the U.S. – May 2016
Tom Hayes Employee Benefits Practice Leader tom.hayes@regions.com 479-684-5259 www.regionsinsurance.com
The Coverage You Need. The Guidance You Trust.
Find Regions Insurance offices in Alabama, Arkansas, Florida, Georgia, Indiana, Louisiana, Mississippi, South Carolina, Tennessee and Texas ©2016 Regions. Regions Insurance is an affiliate of Regions Bank. Products and services are offered by Regions Insurance, Inc., and underwritten by unaffiliated insurance companies.
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• 2016 ELLA CONFERENCE AT-A-GLANCE • Thursday, September 15, 2016 7:00 - 10:00 a.m.
Registration - 2nd Floor Lobby
7:00 - 8:00 a.m.
Continental Breakfast - Ballroom/ Salon D
8:00- 8:15 a.m.
Opening Remarks - Ballroom/ Salon D
8:15 - 9:30 a.m.
Keynote Speaker- Ballroom/ Salon D The Washington Outlook: HR’s Public Policy Agenda Mike Aitken—SHRM
9:45 - 10:45 a.m.
Concurrent Sessions: Unemployment Essentials—Pamela Vance/ DOL Fiduciary Rule—Scott Steves OSHA Recordkeeping Update—Abtin Mehdizadegan The New Laws for Non-Compete Agreements & Trade Secrets—Brian Vandiver & Melanie McClure
11:00 - 12 Noon
Concurrent Sessions: Unemployment Essentials—Pamela Vance/ DOL Fiduciary Rule—Scott Steves LGBTQ and the Law—Michelle Kaemmerling The New Laws for Non-Compete Agreements & Trade Secrets—Brian Vandiver & Melanie McClure 12:15 - 2:00 p.m. Lunch- Ballroom/ Salon D When Work Works Award & HR Friend of the Profession Award Presentation Arkansas SHRM Medical Marijuana: Ballot Initiative & Affect on the Workplace State of Arkansas Surgeon General Dr. Greg Bledsoe 2:15 - 3:15 p.m. Concurrent Sessions: Affordable Health Care Act Update—Janet Downs Hang on to Your Compensation Hats—Tim Orellano Personal Liability for Managers—Wayne Young LGBTQ and the Law—Michelle Kaemmerling
3:30 - 5:00 p.m.
General Session Workplace Bullying Frank Mulcahy– The Workplace Bullying Institute
5:00 p.m.
Adjourn & Dinner On Your Own
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• 2016 ELLA CONFERENCE AT-A-GLANCE • Friday, September 16, 2016 7:00 - 8:00 a.m.
Continental Breakfast - Ballroom/ Salon D
8:00 - 8:15 a.m.
Welcome & Announcements - Ballroom/ Salon D
8:15 - 9:30 a.m.
Keynote Speaker- Ballroom/ Salon D Arkansas Political Landscape from the Right and the Left Political Analysts, Bill Vickery & Jessica DeLoach Sabin with Blake Eddins, moderator
9:45 - 10:45 a.m.
Concurrent Sessions: Affordable Health Care Act Update Janet Downs EEOC Update & Strategic Enforcement Plan Bill Cash OT Regulations: Preparing for the Change Neemah Esmaeilpour The NLRB and Employer Policy & Practices Rick Roderick
11:00 - 12 Noon
Concurrent Sessions: Personal Liability for Managers Wayne Young EEOC Update & Strategic Enforcement Plan Bill Cash OT Regulations: Preparing for the Change Neemah Esmaeilpour The NLRB and Employer Policy & Practices Rick Roderick
12:00 Noon
Conference Programs, Speakers, Times Subject to Change
Adjourn
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25
EXEMPT or NON-EXEMPT?
THAT IS THE QUESTION UNDER DOL’S NEW OVERTIME REGULATIONS
E
By MISSY McJUNKINS DUKE
mployers are slowly recovering from the sticker shock of the U.S. Department of Labor’s (DOL) revisions to the overtime exemption rules for “white collar” workers under the Fair Labor Standards Act (FLSA), which raised the minimum salary threshold from $23,660 per year to $47,476 per year. This marked increase in the salary basis test presents employers with obvious fiscal challenges: businesses will either need to raise salaries for some workers or otherwise reclassify workers and begin paying overtime wages to employees who perform more than forty hours of work per week. Perhaps less obvious, however, is the intangible human impact that reclassifying large swaths of workers will have on workplace morale. The simple truth is that employers will have no choice but to reclassify some workers who have long been exempt and salaried, have never had to punch a time clock, and frequently work after hours. These workers, who make less than the required $47,476 per year must now be considered non-exempt and thus subject to the overtime regulations. With FLSA litigation at an all-time high, and because of pro-employee Supreme Court decisions interpreting FLSA collective actions, employers will need to be vigilant in navigating the fiscal, psychological, and practical aspects of the regulations. Without question, HR professionals across the United States will be busy this summer preparing for the DOL’s changes. This article provides guidance on how to navigate some of the practical challenges presented by these complex issues.
BACKGROUND
The most significant change made by the DOL’s Final Rule is the increase in the minimum salary level (i.e., the “salary basis test”) for white collar workers—executive, administrative, and professional—under the FLSA from $455 per week ($23,660 per year) to $913 per week ($47,476 per year). As of December 1, 2016, an individual earning below that threshold will not meet the salary basis test of the white collar exemptions and will therefore lose his or her exempt status—becoming entitled to overtime pay. Importantly, employers will for the first time be able to use additional compensation that affected employees receive, such as bonuses and commissions, to satisfy up to ten percent of the minimum salary level, so long as the payments are paid on at least a quarterly basis. In addition to increasing the salary basis test for white collar workers, DOL also raised the minimum salary threshold for highly compensated employees, from $100,000 per year to $134,004 per year. The DOL also modified the FLSA regulations to account for automatic increases every three years, the first occurring on January 1, 2020.
BECOMING COMPLIANT
While the DOL’s Final Rule does not become effective until December 1, 2016, employers should not hesitate to begin analyzing how it will impact employee classifications. HR professionals should engage central management to form a plan to achieve compliance. Early conversations among CEOs, CFOs, and HR managers will be critical, and a transition team with appropriate decision-making authority should be appointed to lead this process. Early conversations will beget several pragmatic questions, such as whether the employer will reduce hours to avoid overtime, 26
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whether hiring new workers will be necessary to make up for potential overtime, how to address employee morale, and how to educate employees affected by any changes the employer implements. To begin addressing these issues, the first step an employer should take is to engage internal or external counsel to undertake a wage and hour audit to review wage and hour practices in preparation for systemic, employer-wide changes that comply with the new rules. Specifically, employers should determine how many employees make less than the minimum salary amount, how many employees are close to the minimum salary amount, whether employees near the $47,476 threshold should be afforded salary increases to maintain the exemption or whether they should be converted to non-exempt status. From a strategic perspective, wage and hour audits may disclose other misclassification issues, and employers should correct any misclassification at the same time all other changes under the Final Rule will be made. From a budget perspective, the employer may consider reducing the non-exempt employee’s pay rate so that, with overtime compensation, the total compensation will be equivalent to the employee’s former salary. For instance, if an exempt employee normally works 50 hours per week and earns a weekly salary of $800 ($41,600 per year and $16.00 per hour), converting that employee to non-exempt without changing the compensation rate would result in the employee receiving a weekly amount of $880 ($45,760 per year) after being paid overtime for the ten overtime hours worked each week. However, if the employer reduces the employee’s hourly rate to $14.55 per hour, the employee’s total weekly compensation with overtime would be $800.25 ($41,613 per year). From a budget perspective, CEOs and CFOs may prefer this option. Employee morale, however, may suffer. To ease employee morale issues, the employer should consider whether to pay non-exempt employees on an hourly basis, or to continue to pay employees on a salary basis plus overtime. Even after the new rule becomes effective, employers can continue to pay non-exempt employees a set salary, but that salary must be supplemented with overtime pay (or compensatory time for public employers) if the employee works over forty hours in a workweek. This method of compensation may reduce the impact on employee morale, but will increase administrative burdens for HR and payroll departments. If the employer chooses to pay non-exempt workers a salary plus overtime, the salary acts as a minimum compensation amount for normally scheduled hours, with hours worked over forty being paid at a half-time rate, and hours paid over the normal schedule are paid at a rate of one and a half times the regular rate of pay. Employers may also pay workers whose work hours fluctuate by using the fluctuating workweek method, where hours worked over forty are paid at a half-time rate. Again, there are administrative burdens to undertake this process, and employers must nevertheless keep accurate time records of all hours worked for their non-exempt employees.
Once the transition team identifies the regulatory changes affecting the employer, and how the employer will move forward with its proposed changes, HR should develop a plan for implementation. The plan should include a process to communicate policies for tracking hours worked and reducing off-the-clock exposure. For instance, employers may need to remove access to work emails on personal telephones and tablets, remove remote login access to work computer systems, and prohibit non-exempt employees from working through lunches or taking meal breaks at their desks. Similarly, employees who have long-been exempt should be given specific training on how to use the employer’s timekeeping platform. Managers and supervisors, too, should receive wage and hour training so that employees are not permitted to work off-the-clock.
BREAKING THE NEWS
Well before the deadline to comply with the Final Rule—December 1, 2016—employers should begin conversations with affected employees. Beginning the dialogue now will reduce the element of surprise and provide an explanation to the employee of why the changes are necessary. These interactions will help soften the impact of the reclassification decision and help affected employees understand that the compensation change is not a reflection on their performance and do not constitute a demotion. In this respect, one message that should also be communicated to affected employees is that they will now be compensated for overtime. Most employers have policies that require overtime approval in advance, so any employee training should include an overview of any restrictions on overtime. On the same token, managers and supervisors should be advised that even if overtime is not approved, if it is worked it must be paid, and the employee should be counseled as to the company policy instead of being denied compensation for such overtime hours worked.
Additionally, employers should document their interactions with affected employees. Despite having a clear message, some employees may nevertheless feel like they were targeted because of some protected characteristic or in retaliation for engaging in protected activity. Maintaining meeting records, and what was discussed with each employee, will help the employer defend against potential charges of discrimination, unfair labor practices charges or subsequent litigation. Also, be sure to inform supervisors and managers that the employers cannot require employees to keep information about pay confidential.
CONCLUSION
The DOL’s revised overtime regulations will impact employers differently, but the fiscal, psychological, and practical issues attendant with compliance under the DOL’s Final Rule cannot be overstated. Some industries, and particularly small businesses, will be disproportionately affected. Employers will need to carefully consider the impact of these regulatory changes on the financial bottom-line. Against all this, employers must balance employee morale and turnover. There is a degree of prestige that affected employees will lose as a result of reclassification, and short of potentially doubling their salaries, there is only so much an employer can do to mitigate the impact on morale. As employers across the country brace for the impact of the DOL’s new rule, strategic planning with highlevel management and employment law counsel will be critical to chart an appropriate course.
Missy McJunkins Duke, Director Cross, Gunter, Witherspoon & Galchus, P.C. mduke@cgwg.com www.cgwg.com
A TrA diTion of
Thinking Forward In order to be successful in today’s increasingly regulated workplace, employers must stay one step ahead. Let us put our history of thinking forward to work for you. Burch, Porter & Johnson, PLLC 130 North Court Avenue | Memphis, TN 38103 901-524-5000 | bpjlaw.com
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Schedule At-A-Glance
Pre-Conference and Conference Kickoff Sunday, September 18, 2016 11:00am – 4pm
Registration
Plaza Lobby
Noon – 2pm
SHRM Georgia State Council Board Meeting
Estes
2:00 – 4:15
Certification Lounge and Headshots
Heathcote
2:30 – 4pm
Pre-Conference Sessions Business Strategy Live From SHRM Georgia: It’s the HR Analytics Show! Don Everett, CEO, Workforce Interactive
Hamilton
Preserving Human Capital: A Tactical Guide to Active Shooters and Minimizing Loss of Life Rushe Hudzinski, SHRM-SCP, SPHR
4:30 – 6:00pm
Conference Kick Off Oglethorpe Ballroom Brand Name HR, Steve Browne, SHRM-SCP, SPHR Executive Director of HR for LaRosa’s Inc.
6:00pm – 7:30
Welcome Reception and Exhibit Showcase Meet your peers, presenters and conference partners. Enter your name for door prizes.
Walsh
Plaza
Monday, September 19, 2016
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7am – 4pm
Registration
Plaza Lobby
7:15am – 8:30
Breakfast
Plaza
7:15am – 8:15
Early Riser Sessions Talent Acquisition and Retention Not Your Parents’ Justice League: Developing a Culture for All Generations Greg Criste, SHRM Georgia State Council
Lamar AB
Business Acumen and Strategy Retirement Plans: Friend or Foe? Aaron Johnson, CPA, Senior Manager, Elliott Davis
8:30 – 9:30
General Session Oglethorpe Ballroom The Current Legal Landscape, Marty Martenson, Managing Partner, Martenson, Hasbrouk& Simon
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Lamar C
9:45 – 10:45
Breakout Sessions
11am – noon
Breakout Sessions
12:05 – 1:50
Lunch and General Session Oglethorpe Ballroom Superheroes Sail On Seven Seas, Col. Lee Ellis, President, Leadership Freedom LLC
2:00 – 3:30pm
SUPER Sessions
3:30 – 4pm
BREAK
4:00 – 5:00
General Session Oglethorpe Ballroom Let the Force Be With You: Jedi Training for Professionals, Dethra Giles Executive Coach, HR Strategist, Author and Chief Bridge Architect at ExecuPrep
5:00 – 6:00
Exhibitor Showcase Open
6:00 – 8:00
Superhero Soiree Olmstead Porte Join us for drinks, food and dancing. Cochere Costumes encouraged but optional
Plaza
Plaza
Tuesday, September 20, 2016 7am – 8:30
Registration
Plaza Lobby
7:15am – 8:30
Breakfast
Plaza
7:15am – 8:15
Early Riser Sessions Talent Acquisition and Retention Employee Engagement the Biltmore Way, Chris Maslin, SHRM-SCP, SPHR, Director of Staffing and Training, Biltmore Center for Professional Development
8:30 – 9:30
Oglethorpe Ballroom General Session The Washington Outlook, Mike Aitken, Vice President of Government Affairs, The Society of Human Resource Management
9:45 – 10:45
Breakout Sessions
11am – noon
Breakout Sessions
12:05 – 2:00
Lunch and Closing Session Oglethorpe Ballroom Sam Olens, Attorney General of Georgia
Employment Law and Legislation How to Conduct and Internal Investigation, Maisha Shaw, Associate Counsel, Aflac
Lamar AB
Lamar C
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The DOL’s New Fiduciary Rule: Ten Things the HR Professional Should Know By DOUGLAS DAHL II and DAVID THORNTON
T
his year may well be known as the year of the ERISA fiduciary. On April 6, 2016, the U.S. Department of Labor (DOL) released its much anticipated and for some, dreaded, final rule on when a person is treated as a fiduciary under the Employee Retirement Income Security Act of 1974 (ERISA) as a result of providing investment advice. Putting Affordable Care Act regulations aside, the DOL’s final fiduciary rule has been and will likely continue to be the most talked about regulatory change affecting employee benefit plans and individual retirement accounts (IRAs) in the last decade. Since the rule’s issuance in April, numerous lawsuits have been filed against the DOL, many arguing that the DOL exceeded its rule-making authority and some even arguing that the rule violates investment professionals’ freedom of speech under the First Amendment. Legislation to repeal the final rule has been passed by the House and the Senate and vetoed by the President. With all of the press, articles and seminars discussing the DOL’s final rule, which is both comprehensive and complex, many constituent groups are left wondering: “Which aspects of the final rule are most important for my position and my company?” “Could I ever be treated as a fiduciary under the new rule?” “What parts of the final rule should I be knowledgeable and conversant about?” This article lays out the top ten aspects of the final rule that human resource and employee benefit professionals should know. By way of background, the statutory definition of “fiduciary” and the DOL’s interpretation of when a person is considered an investment fiduciary are nearly four decades old. When justifying its comprehensive regulatory changes, the DOL pointed out that: (a) 401(k) plans did not even exist when the rules on retirement investment advice were established; and (b) no “meaningful changes” to the rules have been made since then. The DOL and current administration are concerned that the interests of ERISA plans, plan participants and IRA owners are misaligned with the financial interests (think, investment fees and kickbacks) of investment professionals. The final rule is intended to realign these interests and expand the application of ERISA’s fiduciary duties.
1 How Does the Final Rule Change the Definition of Investment Fiduciary? In essence, the final rule expands the definition of “investment advice” and thereby expands the group of people who could be considered investment fiduciaries. Prior to the final rule, a person became a fiduciary with respect to an employee benefit plan to the extent the person rendered individualized investment advice on a regular basis, pursuant to an agreement with the plan, for a fee, and with the understanding that the advice would serve as the primary basis for investment decision. Unless all of those elements were met, a person rendering investment advice to a plan or a participant could avoid fiduciary status and ERISA’s strict conflict of interest rules. For example, prior to the final rule, a person providing investment advice to a plan on a sporadic and irregular basis would not be considered an investment fiduciary and could advise a specific course of investment action that, although not in the best interests of the plan, financially benefitted the person. Under the final rule, however, neither the frequency of the advice nor whether the advice is expected to be the primary basis for investment decision is a requirement. A person will now be deemed an investment fiduciary if such person provides to a 30
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plan, plan participant, beneficiary or IRA owner a recommendation with respect to the advisability of taking certain actions with respect to investments (i.e., buying, selling, holding etc.); a recommendation involving the management of investments (i.e., investment policies and strategies); or a recommendation with respect to rollovers, transfers or distributions from a plan or IRA.
2 What is an Investment “Recommendation?” Many opponents of the final rule object to the DOL’s use of the term “recommendation” on the basis that it inappropriately expands the type of investment advice that triggers fiduciary status. Keep in mind, under the prior rule, a person became an investment fiduciary only if, among other things, that person rendered personalized investment advice with the understanding that the advice would serve as the primary basis for the recipient’s investment decision. Under the final rule, however, a person can become a fiduciary even if that person does not render personalized investment advice and irrespective of whether the advice is expected to be relied upon. Under the final rule, a recommendation means a communication that “would reasonably be viewed as a suggestion that the advice recipient engage in or refrain from taking a particular course of action.” A suggestion! That being said, the DOL points out that the more tailored a communication is to a particular recipient the more likely the communication would be viewed as a recommendation.
3 C ould an HR or Benefit Professional Become an Investment Fiduciary? Most likely not. The DOL’s final rule does not alter prior DOL guidance that a plan sponsor’s human resources personnel and benefit professionals should not be considered investment fiduciaries, provided that such individuals perform purely administrative functions within a framework of policies and procedures established by another party and do not have discretionary control over management or disposition of plan assets. Furthermore, the final rule includes a specific exception for employees of plan sponsors, plans and plan fiduciaries. Under this exception, employees working in a company’s payroll, human resources and financial departments will not become investment fiduciaries merely by developing or otherwise preparing reports for use by the plan
sponsor or other named plan fiduciaries, provided the employees receive no additional compensation for the advice-related activities that is above and beyond their normal salary.
4 Is Investment Education Considered Advice? No. Many individuals, including some HR and benefit professionals, are involved with educating plan participants on investment options available under the plans, the benefits of a diversified retirement portfolio, and other general financial, investment and retirement information. Under the final rule, this type of investment education is not treated as a “recommendation” and thus, does not trigger fiduciary status, as long as the education does not include recommendations with respect to specific investment products or securities.
5 Does the Final Rule Apply to My Company’s Health and Welfare Plans? Generally, no. The DOL has made clear that the final rule does not apply to recommendations with respect to health, life or disability policies to the extent the policies do not contain an investment component. HR and benefit professionals who work with these policies may need to confirm with the vendors that no investment components exist. However, keep in mind that health savings accounts (HSAs) are treated by the DOL as containing an investment component. Therefore, vendors advising on HSAs may be treated as investment fiduciaries under the final rule.
6 Will this Change My Relationship with Plan Service Providers? Possibly. Suffice it to say that plan service providers who may now be treated as investment fiduciaries under the final rule are not happy about the final rule’s expansion of investment fiduciary status. Plan sponsors and plans will need to engage with every service provider to determine whether that provider is providing investment advice covered by the final rule. HR and benefit professionals may be involved in these discussions. If a provider is covered by the final rule, the provider’s service agreement will likely need to be amended in order to be in full compliance.
9 What Should I Know About the Final Rule and IRAs? Although many HR and employee benefit professionals do not regularly deal with IRAs, it is important to know that the final rule greatly impacts rollovers from your company’s retirement plan to IRAs. Prior to the final rule, IRA advisors and brokers who were not already providing services to a related ERISA plan could advise plan participants with respect to rollovers into and investments under IRAs without being subject to ERISA’s fiduciary duties. As a result of the final rule, such advisors and brokers may now be treated as fiduciaries to the plan participants and compliance with the BIC Exemption (discussed above) may be required.
10 When Does the Final Rule Become Effective? Although it was expected that the final rule would become effective at the beginning of 2017, the regulations provide that the final rule has a delayed applicability date of April 10, 2017. This gives investment fiduciaries and other individuals and entities an additional three months to prepare for full compliance. In the case of the best interest contract exemption, special relief delays some of the exemption’s requirements until January 1, 2018.
Douglas Dahl II, Counsel Bass, Berry & Sims PLC - Nashville ddahl@bassberry.com www.bassberry.com
David Thornton, Member Bass, Berry & Sims PLC – Memphis dthornton@bassberry.com www.bassberry.com
7 W hat is the Best Interest Contract Exemption That I Keep Hearing About? The best interest contract exemption (BIC Exemption) is a special exemption that permits certain investment fiduciaries (and related parties) to receive compensation from plans, plan participants or IRAs that varies based upon the advice given. Absent this or another exemption, receipt by an investment adviser of compensation such as commissions, 12b-1 fees or revenue sharing, would violate certain prohibited transaction provisions of ERISA, which prohibit a fiduciary from receiving compensation for his own personal account from another party involved in a transaction with the plan. Compliance with the BIC Exemption requires a whole host of items, including entering into a new contract and/or receiving statements from the investment advisor that the advisor agrees to fiduciary status and agrees to provide advice only in the “best interests” of the plan, plan participant or IRA. However, there is a special exception for advisors who provide advice to independent plan fiduciaries that have responsibility for managing at least $50 million in assets. This is a broad exception that was certainly lauded by the financial industry.
GO CONFIDENTLY. Bass, Berry & Sims listens and responds with creative yet practical counsel. We stay on pace with your company’s growth, connecting your dynamic human resources needs to affirmative strategies. Relationships, reliability, and respect – at the center of our Labor and
8 What Should I Do If My Company is in the Financial Service Industry?
Employee Benefits practices.
If your company provides financial services or is otherwise involved in the financial service industry, chances are that company management is already analyzing how the final rule may impact the products or services that your company offers to its customers. It is possible that some but not all of your company’s services or products will be affected. Being generally knowledgeable about the final rule and why it is significant should put you in a better position to react to changes decided by company management. www.HRProfessionalsMagazine.com
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LOOKING AHEAD to 2017:
HEALTH PLAN
COMPLIANCE ISSUES By JENNIFER S. KIESEWETTER
As we enter the fall of 2016, business owners and health plan sponsors should be aware of Affordable Care Act (ACA) changes taking place in 2017, and how these changes may impact their businesses and health plans. The Department of Labor (DOL) began auditing group health plans in 2012 for compliance with ACA along with other standing federal laws such as the Employee Retirement Income Security Act of 1974 (ERISA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Consolidated Omnibus Budget Reconciliation Act (COBRA), among other federal laws, and continues to do so. The Internal Revenue Service (IRS) launched its full ACA audit enforcement this year. In its Fiscal Year 2016 Budget, released on February 2, 2015, the budget included a specific provision proposing the hiring of over 400 full-time employees to enforce ACA statutory requirements. Thus, compliance with the ACA should be at the forefront of business planning for not only the remaining 2016 calendar year but as we plan for 2017 and beyond.
Here are 4 top compliance issues to consider for 2017: Complying with the EEOC’s Final Rules on Employer Wellness Programs On May 17, 2016, the Equal Employment Opportunity Commission (EEOC) issued final rules describing how the American with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) apply to employer-offered wellness plans. Many employers offer wellness programs to encourage employees to maintain a healthy lifestyle. As a part of these programs, employers use questionnaires, risk assessments, or biometric screenings to determine an employee’s health risk factors. Some programs then offer financial or other incentives for employees to participate in the wellness program or to achieve certain health outcomes or milestones. Generally, both the ADA and GINA prohibit employers from obtaining and using information about the employee’s health conditions or about the health conditions of the employee’s family members. However, under the final rules, 32
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for purposes of the ADA, wellness programs that are a part of a group health plan and that inquire about an employee’s health or include medical examinations may offer incentives of up to 30% of the total cost of self-only coverage. For purposes of GINA, the value of the maximum incentive attributable to the spouse’s participation may not exceed 30% of the total of self-only coverage, the same allowed for the employee. No incentives are allowed in exchange for health status information for the employee’s children or in exchange for specific genetic information of an employee, the employee’s spouse or children. These final rules go into effect for wellness programs as of the first day of the first plan year that begins on or after January 1, 2017, for the health plan that is used to determine the level of incentives permitted under these new rules. Plan sponsors should analyze their wellness plans, questionnaires, risk assessments, biometric screenings, communication methods, policies and procedures, incentives, among other issues, for compliance with the EEOC final regulations. Additionally, plan sponsors should verify that their wellness programs still meet compliance standards with HIPAA. Complying with the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) prevents group health plans and health insurance issuers that provide mental health or substance use disorder benefits from imposing less favorable limitations on those benefits than on medical or surgical benefits. Limitations include both “financial requirements,” including deductibles, copayments, coinsurance, and other out of pocket expenses, and “treatment limitations,” including limits on the number of visits or limits on the scope of treatment. The Departments of the Treasury, Labor and Health and Human Services jointly published a final rule on the MHPAEA on November 13, 2013, effective January 13, 2014, and applicable to plan years, or policy years, beginning on or after July 1, 2014. The final rule applies to non-federal governmental plans with more than 50 employees, and to private group health plans with more than 50 employees. Additionally, the rule is applicable to individual health policies. Among other issues, the final rule addresses classifications of benefits, financial requirements, claims processing (including external review decisions), coverage for treatment facilities, disclosure of certain claims, and quantitative and nonquantitative treatment limitations. The DOL has increased its audits on MHPAEA compliance over the past year, as the MHPAEA falls under Part 7 of ERISA. Additionally, HHS has had an increase in audits with respect to MHPAEA; however, HHS usually targets insurers and audits across the insurers book of business for compliance. Plan sponsors should analyze their plan documents and other related plan materials to confirm compliance with MHPAEA. Additionally, plan sponsors should analyze plan documents and other related materials to confirm compliance with all federal laws falling under Part 7 of ERISA so that they are “audit ready.” Assessing Fiduciary Liability Impacting Health Savings Accounts (HSAs) On April 6, 2016, the Department of Labor (DOL) publicly announced its final conflict of interest rule, or the “fiduciary rule,” as more often referenced, and published the rule in the Federal Register two (2) days later, on April 8, 2016. Under this new re-proposed definition, more investment advisors would be subject to the ERISA investment advice fiduciary rules, thus subjecting these advisors to a heightened ERISA fiduciary status. ERISA fiduciary standards are considered the highest in the industry, where advisors must act prudently, must act in the best interests of the participants and beneficiaries, and must disclose all conflicts of interests. The Fiduciary Rule impacts more than just ERISA retirement plans. It also impacts health savings accounts (HSAs). The Fiduciary Rule does not cover welfare plans, such as health plans, disability plans and term life insurance plans to the extent that they do not include an investment component. However, if these plans do contain an investment component, such as universal or whole life insurance policies, then those plans would be covered by the Fiduciary Rule as well.
The Fiduciary Rule goes into effect on April 10, 2017. However, with respect to the Best Interest Contract Exemption, which provides relief to advisors providing non-discretionary advice while earning commissions on such advice, only part of the exemption goes into effect next April. Advisors will be required next April to comply with acknowledging their fiduciary status, adhering to the best interest standard, and making basic disclosure of conflicts and interest. The remainder of the rule will go into full effect on January 1, 2018. If a plan sponsor offers a health savings account, or has a welfare plan that has an investment component, then that plan sponsor needs to examine whether the adviser of broker associated with that HSA or welfare plan meets the definition of a fiduciary under the new fiduciary rule. Such process should be documented to show prudence on the part of the plan sponsor. Prohibiting Discrimination under the ACA Beginning on or after January 1, 2017, the ACA prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in a health program or activity that receives Federal financial assistance from HHS (such as hospitals that accept Medicare or doctors that accept Medicaid), in the Health Insurance Marketplaces and issuers that participate in the Marketplaces (including both Federally-facilitated and Stated-based Marketplaces), or in any health program administered by HHS. Under the final regulations, which were published on May 18, 2016, a covered entity cannot deny, cancel, limit, or refuse to issue or renew a health-related insurance policy or other health-related coverage; deny or limit coverage of a claim, or impose additional cost sharing or other limitations or restrictions; or employ marketing practices or benefit designs that discriminate on the basis of race, color, national origin, sex, age, or disability. For example, with respect to sex discrimination, the final regulations require that women be treated equally with men in the health care they
receive. Thus, the ACA prohibits insurance companies from charging women higher premiums and other cost-sharing measures for their health insurance as opposed to men. The ACA further requires covered entities to provide for coverage of maternity services, birth control, and breastfeeding supports. The final regulations require covered entities with fifteen (15) or more employees to have a grievance procedure and a compliance coordinator. HHS’s Office for Civil Rights (OCR) has provided a model grievance procedure. Entities with fewer than fifteen (15) employees are not required to have a grievance procedure or a compliance coordinator. Additionally, the final regulations require covered entities to post notices of nondiscrimination and taglines that alert individuals with limited English proficiency to the availability or language assistance services. To help covered entities comply, the OCR has translated a sample notice and taglines into 64 languages. With the effective date quickly approaching, covered entities that may be impacted by the ACA’s nondiscrimination rule and its final regulations should analyze their plans, insurance documents, communication methods, policies and procedures, among other issues, for compliance with the nondiscrimination final regulations. Further, and simply, covered entities must make sure that they have been in compliance since 2010. Any changes that may be required now are imposed by the final regulations. However, the nondiscrimination rule has been effective, and compliance has been required, since 2010. The health plan world is moving quickly. Plan sponsors should implement a strategic game plan to keep up with the changing tide of laws, regulations, and interpretative guidance, all while being “audit ready.” Staying proactive is key.
Jennifer S. Kiesewetter, Esq. Kiesewetter Law Firm, PLLC jkiesewetter@kiesewetterfirm.com www.kiesewetterfirm.com
When it comes to labor & employment cases, we sweat the small stuff. Like all of our practice areas, labor & employment issues can be complicated and time-consuming. We have a dedicated team with the experience and industry knowledge to handle your case with an eye on both the big picture and the details. From discrimination issues to workers’ compensation to immigration to wage issues, our diverse team can help you get the best result.
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STEPS for Stress Free Hiring By JULIE HENDERSON
HR professionals would rarely describe their positions as “low-stress” or “chilled out.” The mere amounts of tasks and responsibilities required of them is hair raising and Tums requiring. However, a normally burdensome task can be lightened with a little attention and a few simple tweaks. We are talking about the hiring process. With the economic climate changes and Millennials flooding the workforce, HR professionals must re-think, revise, and re-new the way they choose and administer all hiring tools. Don’t let this be cause to pull your hair out! Here are nine smart steps HR professionals can take to ensure theirs is a compliant background screening policy that produces stress-free, productive hiring.
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: Be in the know.
Every person involved in the hiring process must be well-versed on EEOC guidance, as well as applicable state and federal laws. Take some time to review the legislation in your state in regard to hiring. For example, certain states have recently passed laws regarding issues such as "Ban the Box,” while other states have no legislation on the topic. A top priority that lends itself to stress free hiring processes is for HR professionals and their hiring managers understand the requirements of the state they are based in, as well as any additional states where they conduct hiring. Create a comprehensive, consistent program to train and prepare them to be qualified to implement and follow all relevant policies and procedures. Revisit this periodically to make certain everyone involved stays accountable and knowledgeable.
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: Precision is everything.
It’s smart to edit current background screening processes so they are more narrowly tailored and clearly explain how each background screening component is used during the hiring process. Leaving an aspect of the process vague 34
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or fuzzy leaves it open to interpretation, which can veer a compliant policy off course and course serious issues. Nail down each aspect in black and white.
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: Document everything.
Retain documentation of all consultations and research that went into crafting the specific policy and procedures. An individual must make a hiring claim within two years after learning about the violation. If the violation is not discovered within five years of the violation date, then there is no recourse. HR professionals can protect their company by storing all hiring documents for five years. If the company is ever subject to a hiring lawsuit, this information will be critical in building a solid defense.
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: Be thorough.
Slapping a national database search through the system and marking an applicant "screened" is, say it with me, Bad! Bad! BAD! Not only is such a search a mere tip of the iceberg of information that could be lurking in a potential hire's background, it doesn't cover your company legally in case the employee is a danger to co-workers or clients. These events can cause huge amounts of stress! Commit to thoroughly screening your job candidates by ordering the proper county, state, and database searches, as well as other verifications of employment and education.
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: Be fair.
Before you declare "I will order every background check under the sun," hold your horses and think about the position. Recent EEOC guidance advises the screening be fair and relevant to the position. For example, you don't really need to pull a credit report for a stockroom clerk, but you probably need one if you are hiring a bank teller. Practice fair hiring and craft your screening process via each position.
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:C hoose the right background screening partner.
Do you expect a hot dog stand to sell you a select cut of premium steak? NO? Then please don't expect a fly-by-night cheapo background screening provider to return accurate information. Just missing one significant conviction or failing to catch one job falsification can cost your company big in terms of litigation, client loss, and reputation tarnishment. Do business with a reputable, NAPBS certified background screening vendor that has been in business a long time. Ask them what procedures they have in place to ensure the information they return is accurate. If you get a blank stare, mark them off your list.
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:P ractice PCP (perfect compliance processes).
Never has compliance been more important than NOW. Employment lawsuits are on the rise, and employers must cover themselves with compliant processes that will hold up in court. Make certain every single applicant signs an authorization before you check their backgrounds, and follow adverse action procedures if you decide in whole or part not to hire a person. Vigilantly pursue compliance perfection.
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:A dvocate proper hiring standards.
While you may be the superstar of compliant, thorough, relevant hiring, all hiring managers need to be in the game, too. Just one errant person failing to follow the rules can derail background screening process. Offer consistent, written and verbal education to every employee involved in the hiring process, and make certain they understand the importance of following the company's best practices.
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: Do it all over again.
Decide who to screen, what information is needed about each job applicant, and which tests or verifications that will be employed on each person. Avoid screening one person thoroughly and then not screening the next one because you “have a good feeling” about him or her. Everyone should commit to the same screening standards, all the time, every time. HR professionals must maintain a written policy that outlines this plan. Hiring is always going to be a challenge. However, by employing these nine key steps, HR professionals will maximize the company's chances of making the best hiring decisions, reduce the chance of negligent hiring litigation, and mitigate disastrous new employee situations. An effective, low stress pre-employment screening policy is an integral part of a safe and successful hiring process. It’s important to have a set standard in place, and revisit the policy periodically to maintain its positive impact on the workplace. A set background screening policy in place is a strong stepping stone toward a productive, safe, and secure workplace. And THAT helps keep your company compliant, your hires high quality, and your job stress-free!
Julie Henderson, National Account Executive Data Facts, Inc. jhenderson@datafacts.com www.datafacts.com
AN EVERYONE CULTURE: Becoming a Deliberately Developmental Organization By PAULA HAYES
Robert Kegan and Lisa Laskow Lahey are the co-authors of the exceptional book, An Everyone Culture: Becoming a Deliberately Developmental Organization. This is an exciting, breakthrough look at three highly productive companies—Decurion, Bridgewater, and Next Jump—and how these companies are trying out a radical and novel new idea of creating an organizational culture that will recognize the rise of “new incomes.” What is the concept of “new incomes” you may be asking? Good question! I asked it too! Kegan and Lahey describe how presently there are “seismic shifts” as we move from a society focused on economic satisfaction to that of a society that focuses more than ever before on internal rewards— “Gone are the days when payoffs to Economic man alone—to the material self, to greater agency in the external world—were enough. In those days, conventional incomes, such as paychecks, health benefits, and limits in the workweek—sufficed.” But not so anymore. As Kegan and Lahey explain, “Now we’re seeing the pursuit of new incomes: personal satisfaction, meaningfulness, and happiness. These are payoffs to the Psychological Person, to the intangible self, to fulfillment in the interior world.” This does not mean that the financial side is not still of consideration; clearly, it is and remains so. However, if companies persist in operating under the mythical notion that materiality alone is sufficient to retain talent, companies may be missing the signs of a changing time—“The rise of the new incomes may represent the biggest shift in the work-reward equation since the emergence of the labor movement in the nineteenth century. That whole countries, and even the United Nations, are now exploring the development of measures like GNH (gross national happiness, a qualitatively different way of measuring success) as well as GNP is evidence of the robustness of the new incomes.” If socially, the GNP is no longer the real litmus test, while the GNH is fast becoming the new test for success, how should companies respond? Kegan and Lahey refer to companies that recognize the need to develop the interiority of talent as DDOs, or deliberately developmental organizations. What is it that specifically sets DDOs apart from competitors? Chiefly, it is that DDOs are working to train talent in ways that align and connect to the “process of human development.” DDOs do not perceive their talent as being static; instead, they make efforts to study the organic and intrinsic relationship between working within the realm of one’s natural abilities and that of a person’s wellbeing, happiness and satisfaction. Noting the Greek definition of happiness, eudaemonia, the authors theorize that authentic satisfaction derived from work “includes an experience of meaning and engagement but in relation to the satisfaction of experiencing one’s own growth and unfolding, becoming more of the person one was meant to be, bringing more of oneself into the world.” A key section to this book is the chapter, “A Conceptual Tour of the DDO,” because in it Kegan and Lahey outline the twelve essential ingredients that cause a DDO to work as a model for human development. Let’s look briefly at three of the decisive shifts comprising a DDO. 1. “ Adults can grow.” Here, the shift is from perceiving adults as static and essentially fixed in their thinking to a more holistic understanding that adults need human development far more than they require career development. The question becomes for a company, is the company more focused on defining happiness and success as career development, advancement, career achievement, or does a company define happiness and success as human development, human advancement, and human achievement? A DDO recognizes that the two are not mutually exclusive, and that it is not entirely “an either/or” problem to solve; rather it is a matter of reprioritizing and realigning. If human development is placed first, it will allow for more fluidity in career advancement.
2. “ Weakness is a potential asset; error is an opportunity.” This point is not quite as self-evident as it might appear to be on the surface; as Kegan and Lahey conjecture, a company’s talent is engaged in a highly wasteful and non-productive activity, that of hiding one’s own insecurities. Kegan and Lahey call this inner impulse to hide insecurities and weaknesses from others “the second job that no one is paying” people to do. The authors call attention to the fact that “To manage others’ perceptions of us (at the expense of managing the responsibilities and opportunities of our work), we constantly seek to cover up possible weaknesses and promote our greatest assets. If the vulnerable, less-than-perfect, or even less-thanadequate self has any chosen expression in our work life it is in rare moments.” Here is where the DDO tunes in and pays attention to social psychology and growth mindset. 3. “ D estabilization can be constructive.” The underlying premise is that if an employee can perform all (not just one, two, or a few, but all) job tasks at a high level, it is time to move that employee to another area; this may seem counter-intuitive, counter-productive, and perhaps even appear as inefficient. After all, it would seem as though if an employee is a higher performer at a given set of tasks, that should be an indication that the employee will be productive and efficient with those tasks; but, not entirely so according to Kegan and Lahey. An example that is given is how the company, Decurion, believes that, “over-identification of a person with a narrow role” can lead to over-confidence and stagnation. Remember, the goal is personal growth and human growth, and one good way to ensure talent continues to do both is to remove talent, at strategic times, outside of their comfort zone; Kegan and Lahey note how the three companies they researched hold similar beliefs about interior pain as it relates to personal self-growth. Why would a company want talent to experience some inner pain? Kegan and Lahey believe it is because of “what the pain leads to—their [employees’] own fuller self-realization.” Kegan and Lahey observe how Decurion, Bridgewater, and Next Jump, make a key distinction between “destructive pain and ‘labor pains,’ with the latter—however excruciating—leading to a new life.” Going through the ‘labor pains’ leads ultimately to changed mindsets and growth mindsets. I must admit that reading An Everyone Culture was a pleasure, and it was truly one of the best arguments I have encountered for growth mindset. Yet, Kegan and Lahey’s research and theorizations takes growth mindset to a new level applying it to the recreation of organizational structures. Who should read this book? Anyone invested in their personal growth. Who else? Leadership that is invested in the personal growth of its talent.
Paula Hayes, Ph.D paulapoet1@gmail www.drpaulhayesenglish.org www.HRProfessionalsMagazine.com
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MAKE A LIST OF OUR ACCOMPLISHMENTS
We often overlook how far we have come in our lives by taking what we have accomplished for granted. When we sit down and seriously go over our lives, we begin to realize we have overcome many obstacles. Place any and many examples of your wins in plain sight so you are reminded of them regularly. Even successes like getting our driver’s licence are important. While they don’t seem like a big deal now, they were at the time. Many people spend more time looking at their failures than focusing on their successes. Remind yourself every day of the things that have gone well for you in your life.
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RESIST COMPARING YOURSELF TO OTHERS, BUT REMIND YOURSELF HOW FAR YOU’VE COME
W Ways ays to Get over Feeling like an Imposter By HARVEY DEUTSCHENDORF
After pushing through your comfort zone, struggling, overcoming obstacles and persisting; you finally arrive. You’ve accomplished something of great significance, something very rewarding and desirable by your measurement; and by many others. By all accounts you should feel fantastic, on top of the world! Instead you have a strange feeling that you don’t belong, that you will be found out and everyone will know that you are a fraud. It’s called the “imposter syndrome” and you are far from alone in this feeling. The fact is that many well- known successful people from all walks of life have had the same experience. To fully experience the joys and reap the rewards of our successes, we need to find ways to tame the monster whispering in our minds telling us that we aren’t for real. Fortunately there are techniques we can use to slay this beast of negativity. REALIZE WE ARE IN GOOD COMPANY
By finding out that many of us have experienced the same feelings, we normalize the experience and this helps to take away some of the power the imposter syndrome has hold on us. Actress Jodie Foster, upon receiving an Oscar for best actress in “The Accused”, said after that she had fears that someone would come to her home and tell her that she had been awarded the prize by mistake. Author and poet Maya Angelou talked about her fear of being found out even after she had eleven books published. If we look hard enough, we will likely find someone we admire and look up to that had feelings of unworthiness after reaching a pinnacle of success in their lives. SHARE YOUR FEELINGS WITH THOSE YOU KNOW WILL BE SUPPORTIVE
Naming something, talking about it to those you trust and are close to you helps to lessen the grip that this paradigm has over us. Confiding in close people who know you will be supportive and help you come to terms with your perceptions. Often they will share an experience in which they had similar experiences, which will help you realize how common it is and feelings of being all alone with your fears. Chose who you share your feelings with wisely, as there will be those who will be jealous and envious of your success who will relish the opportunity to take their frustrations at their own lack of achievement out on you. ASK FOR FEEDBACK ON OUR STRENGTHS AND ACHIEVEMENTS
We are often our own worst enemy and the last ones to recognize and acknowledge ourselves for our strengths and abilities. This often stems from ideas programmed into us that it is wrong to talk about our achievements, lest we are perceived as bragging. Others who we are close to us and want what is best for us are a good source of inspiration and giving us feedback on what we are capable of; how they experience us. 36
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Comparing yourself to others is a futile exercise. There will always be people who are ahead of you and behind you. Everyone’s journey is different and yours is uniquely yours. Instead of looking at someone else’s accomplishments, focus on how far you’ve come and strive for continuous improvement over your former self. DON’T TAKE YOURSELF TOO SERIOUSLY
“Do not take yourself too seriously. You will never get out of it alive!” - Elbert Hubbard. Having a great sense of humor and being able to laugh at ourselves, makes everything in life go smoother and easier. It helps keep us from feeling overwhelmed by our achievements and keeps our disappointments in perspective. REMIND YOURSELF THAT YOU ARE NOT PERFECT, AND NEITHER IS ANYONE ELSE
People who are perfectionists set themselves up for continuous frustration as they will never able to master this unachievable level. Look at life as a journey, with ups and downs, successes and failures. Remind yourself that even the most successful people have failed in their lives, many of them numerous times. Strive to be gentle with yourself and surround yourself with people who are as well. Consider a ‘failure’ as a learning opportunity and I doubt you’ll repeat the error.
Harvey Deutschendorf
is an emotional intelligence expert, internationally published author and speaker. To take the EI Quiz go to theotherkindofsmart.com. His book THE OTHER KIND OF SMART, Simple Ways to Boost Your Emotional Intelligence for Greater Personal Effectiveness and Success has been published in 4 languages. Harvey writes for FAST COMPANY and has a monthly column with HRPROFESSIONALS MAGAZINE. You can follow him on Twitter @theeiguy.
and HR COMPENSATION FORUM at
The Crescent Club August 16
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1 Christy Showalter, JD, MBA, SR HR Consultant with Regions Insurance, presented “ACA’s Impact on Benefit Compensation Practices. She also provided a checklist of 12 Steps Toward ACA Compliance. 2 Jeff Weintraub, Regional Managing Partner with Fisher Phillips’ Memphis Office, spoke on “New Overtime Rules for the Fair Labor Standards Act: Exemption Changes and Challenges.” Fisher Phillips was the breakfast sponsor. 3 Frank Weightman, PhD, AIF, with Radian Partners, explained “The New DOL Fiduciary Rule.”
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4 Roger Walker, Investment Advisor Representative with Radian Partners, discussed “The Pension Protection Act of 2006.” 5 Julie Henderson, FCRA, National Account Executive with Data Facts, Inc., spoke on “The Cost of Negligent Hiring.” 6 Michelle Tolle High, Partner with Wyatt, Tarrant & Combs LLP, presented “The NLRB and Joint Employer Issues.” 7 Cynthia Y. Thompson, MBA, SHRM-SCP, SPHR, spoke on “Reinventing the Performance Appraisal.”
Wine and Cheese Reception
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Half-Day Wage and Hour Workshop at the Hilton Memphis August 4
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1 Louis Britt, Office Managing Partner, Memphis, welcomed HR professionals to the workshop and introduced the speakers. 2 Robbin Hutton, Partner, Memphis, presented a summary of the new DOL overtime rule changes. She also discussed the impact of the new regulations on the workforce and payroll. 3 Russell Jackson, Counsel, Memphis, discussed the overtime exemption rule including administrative, professional, executive, and computer related jobs. He also covered employer obligations managing the increased record keeping burdens.
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4 and 5 Sal Simao, Partner, Berkeley Heights (NJ) and Tiffany Downs, Partner, Atlanta, presented options for compliance and cost effective strategies including reclassification, restructuring workforce to maximize exemptions and minimize salary compression, and benefits issues that arise from reclassification. Sal also discussed creating a communication plan for your organization and the long term impact. 6 Greg Grisham, Partner, Nashville, covered state and local minimum wage developments including the regular rate, bonus and other compensation, independent contractors, travel time and portable work devices.
A networking reception followed the question and answer session. 38
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Behind the Scenes: How a Revamped Compensation Strategy Created Sustainable Success
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By CLIFFORD STEPHAN
Companies gearing up for an IPO are exciting places to be—they’re growing fast, hiring aggressively, and planning big. But if even all the vital signs are positive, serious threats to a company’s ongoing success and stability can still sap critical energy and resources. That was precisely the situation when a client came to meet looking for a review of their compensation strategy. Initially, it looked like everything was fine. In fact, the software company was a straight-up success story. They had hired over five hundred employees in less than ten years, carved out a strong position in a highly competitive industry, and were enjoying all the fun a vibrant company culture has to offer. They were looking to aggressively hire some of the brightest software engineers and critical leadership to ensure a well-executed IPO. On top of that, they also needed to attract the best employees and retain key talent to support their business during the transition from a private to public company. But appearances can be deceiving—and a peek behind the curtain showed that the company’s success wasn’t sustainable. The head of Human Resources shared with us that the company was in “compensation chaos.” There was no integrity or consistency with their approach to paying their employees. Their compensation plan was a collection of incomplete guidelines and arbitrary decisions. Human Resources had tried to facilitate a system that would pay fairly and according to market, but there wasn’t any real agreement about the rationale for paying talent. The VP of HR and CEO knew that a good IPO depended on their employees—and without a transparent and competitive pay program, they would be risking the engagement and trust of their employees. They had to fix their compensation fast, and it needed to fit the kind of company they were going to be—publicly traded, competitive, and a positive player.
Rebuilding from the Ground Up We knew we needed to design a compensation plan that was aligned with the company’s needs, culture, and identity. First things first, we met with VP of HR and the CFO to get their take. They told us that they had created an organization with five distinct business groups, and a new compensation plan should continue to reinforce the unique dynamics of each group while still incentivizing collaboration across the different teams. With a good understanding of the company’s internal workings, we wanted to get a better idea of the playing field. We started gathering information from the best survey sources based on the company’s location and market segment. We also included some custom reports to really drill down on comparable data from direct peer competitors in the software industry. With a big picture strategy for the company’s compensation plan set, we began working closely with the leadership to better define jobs within the company. Over the course of a few months, we mapped the structure of job families, analyzed how jobs linked to one another, and compared them to industry benchmarks.
Ready, Set, IPO! After five months, the company was ready to rock with a completely updated compensation system. No more one-off titles and misinformed decisions about pay—for the first time, the company had a clear pay strategy that was fully integrated with their total rewards strategy. Their managers were excited to have an easy system for making decisions about salary and promotions, employees got the transparency they wanted, and the executive team felt confident about the upcoming IPO. 40
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In the final stages, we partnered closely with management and rolled out the newly designed program for the main business groups to ensure understanding and acceptance. Overwhelmingly, the response was positive and generated an excited buzz within the company. As a result of our work, the company could make better and faster decisions about their employees’ pay, something that they had struggled with for years. Our client now had a competitive pay structure that was unique to their needs and goals. More importantly, we worked together to implement the plan and inform their employees about what was happening—with a plan in place and everyone on board, our client now had the leverage needed to make their IPO as successful as possible. At the end of the day, it was important to build a framework that was fair, easy to manage, and based on common-sense principles. What’s more, cleaning up compensation meant that other critical programs could now be put into place in earnest, including an important stock refresh program. This program initially was delayed because there was a lack of confidence and concern with administering this program until a more thorough compensation plan was in place. Now that they were on solid ground, they had the confidence and ability to supercharge their performance and occupy a stronger position in the market. For a company with over 500 employees spending tens of millions in payroll, taking the time and money to figure out the best use of their budget proved to be a great investment, ultimately saving them millions in payroll and turnover rates. With the right information to make the best decisions, they now have maximum efficiency with their largest expense—today, their attrition rates are below market standards, which now has had a big impact on their business and their overall success.
What’s in Your Comp Plan? Tackling a new comp plan can be overwhelming— a lot of companies just don’t have the time, resources, expertise, or hours to dedicate to a project like this. But the payoff for investing in a compensation plan can continue to impact your organization in positive ways for years. So have you taken a look under the hood of your company lately? If your organization has been dealing with: • Big plans for growth • Unclear pay guidelines • Restructuring or department reorganization • High turnover • One-off salary decisions it’s definitely time for a tune-up. Be proactive when it comes to your compensation strategy—fix it now, or risk a break down later.
Clifford Stephan, Principal One Compensation Clifford@onecompensation.com www.onecompensation.com
THE BUSINESS OF HEALTH CARE IN MISSISSIPPI By MURRAY L. HARBER
The business of health care affects Mississippi companies, health providers, health insurers, and government entities alike. Each stakeholder group is looking at a variety of ways to improve their systems and processes as rising costs, reduced payments, questions about quality, and consumer demands are changing. Understanding the steps in the process and methods needing improvement are vital to making a better system for each stakeholder. For seven years, the Mississippi Business Group on Health and the Mississippi College School of Business have partnered to offer the Mississippi Health Care Summit, bringing together the state’s business and health care leaders to discuss current trends and issues with the business of health care. National experts along with regional and local leaders share their thoughts and strategies to improve cost and quality while improving health.
The Annual MSBGH Health Summit, in partnership with Mississippi College, is an outstanding event. It brings leaders from across the state to network, exchange ideas and share visions of how to improve both the health of their employees and cost of providing health insurance. It also addresses many of the challenges of treating and delivering health care to create a value based outcome, balancing quality and cost. Billy Sims, VP of Human Resources, Southern Farm Bureau Life Insurance
Health plans, health systems, and health providers are working hard in Mississippi to improve their own care delivery and population health management. We have assembled two great panels, a physician panel and a health care administrator panel, to have them share their approaches to the changing landscape of health care delivery and payment systems. Valuebased care and benefits will be discussed in detail and how these groups believe they will make a different in the near term and future. Other speakers will discuss mental health and health care quality rating systems. Cristie Travis, the Executive Director of the Memphis Business Group on Health and who serves on the board of Leapfrog Group, a leading hospital quality reporting organization, will discuss the difference and importance of the rating system.
MSBGH and MC School of Business present the 6th Annual
H E A LT H C A R E Summit THE BUSINESS OF HEALTHCARE COST • MANAGEMENT • PLANNING
The latest issue effecting employer-based plans are specialty pharmacy costs. In fact, industry experts predict that by 2020, specialty drugs will make up 40% of total pharmacy spend, whereas it made up 17% in 2013. This increase is a of special concern to employers as they are wanting to keep the richness of their current plans and will need to make adjustments to plan design to accommodate these specific cost drivers. Dr. Randy Vogenberg, PhD, RPh, a national expert, will share his thoughts on these concerns and discuss solutions that employers across the country are considering when managing employer Populations.
~ Save the Date ~
T U E S D AY, O C T O B E R 2 5 , 2 0 16 8:30 AM - 3:00 PM MISSISSIPPI COLLEGE
Clinton Campus Anderson Hall
The Mississippi Healthcare Reform Summit brings together national healthcare experts and key state leaders in government and business to address the most
Think about the turf battles underway today among the middleman in healthcare that have driven inefficiency and half of the cost for health care today. Specialty drugs are now an integral part of medical care requiring a shift in thinking about how and where health services are delivered—and by whom. Dr. Randy Vogenberg, PhD., RPh. Several of Mississippi’s leading employers were recognized as the state’s Healthiest Workplaces last month, including Ingalls Shipbuilding, Hol-Mac Corporation, and the Mississippi Hospital Association. These employers will share their approach to employer health management and the strategies that helped them produce results. Human Resources professionals are spending more time on health benefits and promoting the value of consumerism, healthy lifestyles, and effective disease management to their employees and their families. Attendees of the event will leave with great ideas on effective strategies which can make a difference.
pressing topics businesses face in managing healthcare programs and costs. Summit participants will hear directly from our state’s policy makers, medical leaders and corporate professionals on the leading edge of the changes sweeping through our state’s healthcare system.
This year’s event has a great line up of speakers and panelist. Employers, Providers, and Health Care Administrators can all learn meaningful information about the current business of health care in Mississippi. To learn more, register, and/or sponsor the event, please visit http://business. mc.edu/health-care-summit/. We hope to see you there!
Murray L. Harber, Executive Director Mississippi Business Group on Health mharber@msbgh.org www.msbgh.org www.HRProfessionalsMagazine.com
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Fines for Immigration-Related Violations Increased August 1, 2016
g!!!!!!!!!!!!h g!!!!!!!!!!!!h By BRUCE E. BUCHANAN
Effective August 1, 2016, the penalties for a number of immigration-related violations before Immigration and Customs Enforcement (ICE), within the Department of Homeland Security, and the Office of Special Counsel for ImmigrationRelated Unfair Employment Practices (OSC), within the Department of Justice, have significantly increased through a new regulation. The new regulation applies to violations that took place after November 2, 2015.
Paperwork Violations
Document Fraud Violations
The DOJ regulation increases “paperwork violations” (substantive or uncorrected technical violations) related to I-9 forms from a maximum of $1,100 to $2,156. The minimum penalty per violation increases from $110 to $216. The penalties will also increase for those violations which had been between $275 and $935 depending on the percentage of I-9 forms with substantive errors, including the failure to prepare an I-9 form for an employee.
For document fraud violations, the increases are substantial. For a first offense, the minimum penalty increases from $375 to $445 while maximum penalty is up from $3,200 to $3,563. For subsequent orders, the minimum penalty increases to $3,563 while maximum penalty is $8,908.
Unlawful Employment of Undocumented Immigrants Under the new rule, the minimum penalty for the unlawful employment of undocumented immigrants jumps from $375 to $539, while the maximum goes from $3,200 to $4,313. And that’s just for a first order. For a second order, minimum penalty for the unlawful employment of immigrants increases from $3200 to $4313, while the maximum goes from $6,500 to $10,781. Employees who receive three or more orders face a new minimum penalty of $6,469 and maximum penalty of $21,563 for unlawfully employing undocumented immigrants.
OSC Violations For unfair immigration-related employment practices, those cases enforced by the OSC, a first order will cost a new top penalty of $3,563 per person discriminated against, up from $3,200. The minimum penalty increased from $375 to $445. For second orders, the minimum penalty increases from $3,200 to $3,563 while maximum penalty is $8,908. For subsequent orders, the minimum penalty increases to $5,345 while maximum penalty is $17,816.
Document Abuse OSC also enforces the law related to document abuse. These penalties were also increased. The minimum penalty per violation increased from $110 to $178 while the maximum penalty increased from $1,100 to $1,782. 42
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Meaning to Employers – Less Employment of Undocumented Workers?
Will the increase in penalties for knowingly employing undocumented workers result in employers employing less undocumented workers? This seems unlikely as the penalties for a first offense for this violation is only increasing by about 25%, which seems unlikely to deter employers. On the other hand, the maximum penalty of $17,816 for three or more violations in knowingly employing undocumented workers may be enough to act as a deterrent. Only time will tell.
Meaning to Employers – More OCAHO Litigation
Meaning to Employers – Internal I-9 Audits So what does this mean to employers besides greater liability for immigration-related violations? One is the importance of an internal I-9 audit to locate and correct errors before ICE and/or OSC come knocking on your door. If the potential liability for an employer is going to drastically increase, then employers should be more willing to engage in internal I-9 audits. As I discussed in a previous article, ICE and OSC issued guidance on how to conduct an internal I-9 audit. This guidance is even more important now with liability increasing for violations located by the government agencies. And in conducting such an internal audit, it is important to be guided, conducted or supervised by experienced employer immigration counsel who knows what violations to look for and how to properly correct them.
I would anticipate the substantial increase in the fines to lead to significantly more OCAHO litigation since historically OCAHO reduces the penalties by between 30 and 45% from the penalties assessed by ICE. More litigation before OCAHO will put a great strain on OCAHO as they do not have any permanent Administrative Law Judges after one retired and the other transferred to another government agency. This will likely lead to a lengthier period between the issuance of a Complaint and a decision. This leads to an interesting question – will ICE and OCAHO legal counsel be more willing to compromise on the penalties in order to avoid lengthy delays in litigation. And will their supervisors put more pressure on them to reach these negotiated settlements in order to avoid clogging the court docket. Again, only time will tell on these situations.
Bruce E. Buchanan, Attorney Siskind Susser PC bbuchanan@visalaw.com www.visalaw.com
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