Views: Mitigating COVID-19’s catastrophic impact on retirement readiness
As the coronavirus has placed many financial worries onto families, it has also placed a sense of worries for those that are planning for their retirement. Read this blog post to learn more.
It’s bad enough that more than 50 million Americans have filed claims for unemployment benefits since the start of the COVID-19 pandemic and lockdown. But in addition to the disruption, financial hardship, and uncertainty that unemployed Americans (and their families) are experiencing right now, this crisis also threatens their financial security during retirement.
As I have written many times before in this column, defined contribution plan participants will seriously diminish their retirement savings if they prematurely cash out all or part of their 401(k) savings account balances. According to our research, a hypothetical 30-year-old who cashes out a 401(k) account with $5,000 today would forfeit up to $52,000 in earnings they would have accrued by age 65, if we assume the account would have grown by 7% per year. In addition, the Employee Benefit Research Institute (EBRI) estimates that the average American worker will change employers 9.9 times over a 45-year period. With at least 33% and as many as 47% of plan participants cashing out their retirement savings following a job change, according to the Savings Preservation Working Group, that means workers switching jobs could cash out as many as four times over a working career, devastating their ability to fund a secure retirement.
Even before COVID-19 and “social distancing” became part of the national lexicon, cash-outs posed a huge problemto Americans’ retirement prospects. At the beginning of this year, EBRI estimated that the U.S. retirement system loses $92 billion in savings annually due to 401(k) cash-outs by plan participants after they change jobs.
These alarming trends were uncovered long prior to the pandemic and lockdown. Since the start of the COVID-19 outbreak, theCoronavirus Aid, Relief, and Economic Security (CARES) Act stimulus has temporarily eased limits, penalties, and taxes on early withdrawals from retirement savings accounts made by December 31, 2020. While the CARES Act measures are clearly well-intentioned, participants who take advantage of these provisions risk creating a long-term problem while resolving short-term liquidity needs.
Heightening the temptation to make 401(k) withdrawals is the recent expiration of another CARES Act provision—the extra $600 weekly payments to Americans who lost their jobs due to the COVID-19 pandemic. These additional federal unemployment benefits expired at the end of July, and as of this writing no deal to extend them has been reached in Congress. For Americans who had been relying on this benefit, or continue to experience financial hardship and stress about paying expenses, it is understandable that 401(k) savings could look like an attractive source of emergency liquidity.
However, given the long-term damage that cash-outs inflict on retirement outcomes, plan sponsors and recordkeepers should take this opportunity, as fiduciaries, to educate their current and terminated participants about the importance of tapping into their 401(k) savings only as an absolute last resort.
Institutionalizing portability can help
The lack of a seamless process for transporting 401(k) assets from job to job causes many participants to view cashing out as the most convenient option. And without an easy way to locate the mailing addresses of lost and missing terminated participants, sponsors and recordkeepers are unable to ensure holders of small accounts receive notifications about the status of their plan benefits.
Fortunately for participants, sponsors, and recordkeepers, technology solutions enabling the institutionalization of plan-to-plan asset portability have been live for three years. These innovations include auto portability, the routine, standardized, and automated movement of a retirement plan participant’s 401(k) savings account from their former employer’s plan to an active account in their current employer’s plan.
Auto portability is powered by “locate” technology and a “match” algorithm, which work together to find lost and missing participants, and initiate the process of moving assets into active accounts in their current-employer plans.
By adopting auto portability, sponsors and recordkeepers can not only discourage participants from cashing out, but also eliminate the need for automatic cash-outs. And these advantages come at a time when the hard-earned savings of tens of millions of Americans are at risk of being removed from the U.S. retirement system.
Before the COVID-19 pandemic, EBRI estimated that if all plan participants had access to auto portability, up to $1.5 trillion in savings, measured in today’s dollars, would be preserved in our country’s retirement system over a 40-year period. Now more than ever, the institutionalization of portability by sponsors and recordkeepers is essential for helping Americans achieve financial security in retirement.
SOURCE: Williams, S. (31 August 2020) "Mitigating COVID-19’s catastrophic impact on retirement readiness" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/how-to-mitigate-covid-19s-potentially-catastrophic-impact-on-retirement-readiness
How employers and the economy win with remote work
Employers have been highly affected by the situations that the coronavirus pandemic has brought upon them, but so has the economy. The coronavirus has seemed to bring in a dark cloud over most situations, but now it can be looked at as helping both employers and the economy with the remote working situations. Read this blog post to learn more.
As high profile employers such as Twitter and Slack announce that they will allow employees to work from home indefinitely, other organizations have also noticed the advantages of a remote work model.
Aside from increased productivity and improved mental health for employees, employers can save $11,000 per employee on office costs and even reduce their carbon emissions, says Moe Vela, chief transparency officer at TransparentBusiness, a company that provides a remote workforce management platform.
When it comes to remote work, ”everyone wins across the board,” he says. “Remote work should be viewed no differently than a healthcare insurance package, dental insurance, paid time off, sick leave, or family leave.”
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Vela shared his thoughts on why remote work is the new normal and how employers can use technology to ensure that the experience for their employees is seamless.
How does remote work benefit employers and employees?
Employers benefit tremendously. On average, an employer saves $11,000 per year per employee in a remote workforce model. They need less commercial office space, so their bottom line actually improves because they can cut down on their office expenses. If you have 500 people in an office setting, that's 500 people you need supplies, equipment and infrastructure for — those costs get dramatically reduced or go away completely.
The other benefit to the employer is that productivity goes up in a remote workforce model. There is less absenteeism, workers are happier and also healthier because you're not confined in an office space spreading germs.
Your work life balance is improved dramatically by a remote workforce model for employees. On average, an employee gets two to three hours of their day back into their life because they don't have to commute. That's two to three hours you can spend with your family, that you can engage in self care, that you can run your errands, whatever it is you choose to do.
What advantages does remote work have outside of work?
One beneficiary in a remote workforce model is the economy. When those employees get those two to three hours back, guess what they're doing: they're spending money that was not being put into the economy before.
Another beneficiary is the environment. During this pandemic, there are around 17% less carbon emissions being emitted into the atmosphere and the environment. Climate change is impacted and our environment is a winner in a remote workforce model.
How can employers ensure a seamless remote work experience?
There are three fundamental technologies on the marketplace that every employer should immediately start using. Number one, video conferencing. We're all using it, it works just fine, you’ve got a lot of options in the marketplace from Skype to Zoom, to Google. Number two, file sharing. You have all kinds of file sharing software and services out there in the marketplace. Number three, remote workforce management and coordination software. All you have to do is implement them, and the risk is mitigated almost to nothing.
How can an employee approach management about working from home permanently?
Don't be afraid to ask your employer. Communicate your request very succinctly and very clearly. Let your boss know that you've thought this through. Prove to them that you have the self-discipline, that you have the loyalty, that you're trustworthy, and that you have the environment at home to be effective at working remotely. Use the fact that you've already been doing it as an affirmation, to attest to the fact that it can be done seamlessly and productively.
6 steps to enhance your recruiting strategy
According to recent data from PwC, more and more potential employees are turning down job offers because of bad recruitment experiences. Often, when job candidates have a poor experience while applying for a job, they share the details of their encounter with friends, family and social media. Read this blog post for six steps employers can use to enhance their recruitment strategy.
Employers may be contributing to their organization’s bad reputation without even knowing it during the recruiting process
A strong labor market is presenting employees with more options, allowing them to weigh potential employers against each other, and eliminating the need to accept the first offer they get. Unique and inventive recruiting strategies are vital in attracting the right talent to your organization, but more potential employees are turning down job offers because of bad recruiting experiences, according to data from PwC.
Employers can develop some bad habits when it comes to recruiting, like dragging out the process and even ghosting candidates. When potential employees have a poor experience applying for a job with a company, they are going to share the details of that encounter with friends, family and the world at large thanks to social media.
“Job seekers today expect the hiring process to be streamlined, efficient and customized to their personal preferences, with effortless technology and sincere human interactions,” says Bhushan Sethi, a workforce strategy leader at PwC.
However, very few organizations are providing this experience, according to the PwC survey of 10,000 job seekers. Not only can a bad recruiting experience drive candidates away, it can also create lasting damage to an organization’s reputation as an employer.
“Leaders have an opportunity to gain an edge in the battle for talent by delivering a superior recruiting experience to every candidate, even those who don’t receive an offer,” Sethi says.
But there are ways to make a candidate’s recruiting experience more positive, even if they don’t ultimately get an offer. Here are six steps organizations can take to deliver a “first-rate” recruiting experience to potential candidates.
Find a balance between tech and human interaction
The human interactions candidates experience during the recruitment process makes a stronger impression than any digital experience, the survey shows. “Candidates want positive, direct human interaction throughout the recruiting process, whether that’s in person, over the phone or via email,” Sethi says. “Two-thirds of candidates said personalized initial outreach makes them more likely to apply for a position.”
Technology does have an important role to play in the recruiting process. However, recruiting technology is typically designed with the enterprise, not the candidate, in mind, Sethi says. Employers should look to utilize technology that streamlines routine tasks or makes the hiring process easier for job applicants. About 44% of those surveyed by PwC say they’re open to using automation and technology options for routine touchpoints and to get information during the recruiting process. Another 65% said they would like if an organization had an application dashboard so they could track their progress.
Communicate often and keep the process quick
More than half of job seekers (56%) said they would discourage someone else from applying for a job with a company where they had a bad recruiting experience, according to PwC data. A majority of job seekers (92%) said they’ve experienced poor recruiting practices at some point in their career. Candidates pointed out the two most frustrating behaviors by recruiters: dragging out the process by more than a month and recruiters who withdraw communication with no explanation.
“These practices are rampant: 61% of candidates said they’ve simply stopped hearing from an organization during the hiring process,” Sethi says. “And 67% gave up pursuing a role because the recruiting process took too long.”
Ask for social media details
About 50% of job seekers said they’d be willing to share their social media data with potential employers if it helps to determine a better job and organizational fit. Checking out a potential employee’s social media allows HR to understand more about the candidate. But candidates are only willing to share their social media data if the right privacy measures are in place. Recruiters can gain candidate’s trust by being transparent. About 78% of those surveyed by PwC said they expect the recruiting process to be clear on how personal data is used. About 77% of candidates said they wouldn’t apply for a job if they felt their privacy and information wasn’t protected.
Highlight the rewards potential employees most desire
Upskilling, personal flexibility and inclusion are three key aspects of workplace culture that have become more desirable among candidates than salary, according to PWC. Additionally, candidates are willing to give up 11.7% of their salary for more flexibility and training.
Give candidates a way to experience the company’s culture first hand
Today’s candidates are looking for more than a job, the PwC survey notes. They want an employee experience that provides a sense of purpose and pride.
“Culture is so meaningful that 33% of C-suite-level candidates said they’d take a pay cut to work for a mission-driven company that aligns with their ideals,” Sethi says.
It can be challenging for recruiters to provide an accurate sense of a company’s culture. Recruiters can help candidates experience this firsthand by holding networking and other social events.
Always be mindful of your reputation
When candidates have a bad recruiting experience it does more damage than recruiters realize. “It can cause lasting reputational harm and even hurt your chances of hiring the workers who are hardest to find,” Sethi says.
Almost half of candidates (49%) working in high-demand sectors like tech, banking and energy say they would be more likely to turn down a job due to a bad recruiting experience. Of those surveyed by PwC 71% say working for a company with a good reputation as an employer is more important than working for a well-known customer brand.
“That’s good news for small brands jockeying for talent with big-name competitors,” Sethi says. “You can gain an edge by cultivating and promoting a strong, positive reputation. It’s also a call to action for bigger brands: you can’t rely on name alone to attract talent.”
SOURCE: Schiavo, A. (9 December 2019) "6 steps to enhance your recruiting strategy" (Web Blog Post). Retrieved from 6 steps to enhance your recruiting strategy
Putting Humanity into HR Compliance: 3 Steps to Active Listening
How is your HR department communicating with your employees? One of the most common complaints people hear about HR professionals is that they don't listen. Read this blog post from SHRM for three practices of active listening.
When I work with executives and managers, a common complaint I hear about HR professionals is "They don't listen. They just tell."
So when I work with HR professionals, I encourage them to adopt three practices of active listening:
- The period-to-question-mark ratio.
- The EAAR listening method.
- Confront, then question.
The Period-to-Question-Mark Ratio
When you're engaged in a conversation, what's the ratio of your sentences that end with periods to those that end with question marks? If you're like most people, the ratio is overwhelmingly tilted toward sentences that end with periods. This could show that you are telling people what to do more often than you are looking for consensus on how to solve a problem. When you engage in a discussion with an executive, manager or employee, keep the ratio in mind. Strive to correct the imbalance by making yourself ask questions. The fact that you ask matters more than what the question is.
People I've coached have found that keeping the ratio in mind acts as a self-regulating device to ask more questions.
The EAAR Listening Method
E: Explore
A: Acknowledge
A: Apply
R: Response
It's a sequence. Begin the discussion with an exploratory, open-ended question: "Ms. Manager, what are the reasons that led you to conclude Mr. Employee should be fired?" "Tell me more." "Please share some examples." "Help me understand."
Once you've explored the other person's position and reasons for it, move to acknowledgment. Get the person to acknowledge that you understand his or her point. "So, Ms. Manager, if I understand you correctly, you believe Mr. Employee should be terminated because of the following reasons… Is that correct?
Although critical, the acknowledge step is often overlooked. Instead of confirming the understanding, the listener makes an assumption, which often proves erroneous and leads to unnecessary conflict. The EAAR method eliminates this possibility. If the person says, "No, that's not my position," simply go back to the exploration step: "I'm sorry. Please explain what I missed."
In your response, apply portions of what the person said, even actual words the person used. Even if your response isn't substantively what the person originally sought, this approach creates optimal conditions for acceptance.
"Ms. Manager, I agree with you that Mr. Employee's behavior is unacceptable. What you described [list the employee's actions] makes a compelling case. However, because of the following reasons, I think termination now would be premature and present undue legal risk.
"Nevertheless, I'm happy to work with you on an intervention strategy. If Mr. Employee is willing and able to close the gap in your legitimate management expectations, he will do so. If not, we will be in a much stronger position to terminate his employment, and I will support you."
Many HR professionals have told me that when they've used the EAAR method, conversations they feared would turn ugly became positive. Instead of a clash of wills and arguments, the discussion became collaborative and solution-oriented.
Confront, Then Question
What if you are the bearer of bad news? You must deliver a message you know won't make the recipient happy.
The approach here is to confront, then question. Make a short opening statement. State your position succinctly and without elaboration. Next, switch to question mode.
You can think of this approach as beginning the EAAR method with a short opening response to frame the conversation.
"Mr. Executive, based on our investigation, we found that Mr. Employee in your department engaged in actions that violate our anti-harassment policy. Although we understand he has been with the company for a long time and is one of your best performers, given the seriousness of the misconduct, we believe the appropriate action is termination of his employment."
Next, go to question mode: "What do you think?" "What questions do you have?" "How do you see things at this point?"
Assuming the executive doesn't respond by saying "Great idea! Go for it!" and wants to argue his or her point, pivot to exploration and start the EAAR process at that point. "I want to make sure I understand you, so please tell me what you agree with, what you disagree with and your reasons."
After that comes your acknowledgment: "Let me make sure I understand you. You agree that Mr. Employee's behavior was unacceptable and violated policy. However, you disagree that the proper remedy is termination. Instead, you recommend a suspension and written warning for these reasons. [List the reasons.] Is that accurate?"
Now you're ready to apply. From what the executive said, extract what you can use in your response.
"I appreciate the fact that you support our investigation and finding of misconduct. Our only disagreement is the appropriate remedy. Your points about Mr. Employee's long service and stellar performance are valid. Yet for these reasons [list them], I still believe termination is called for. How do you suggest we resolve our differing views? For example, should we present them to the CEO and let her decide?"
These types of conversations can go in all sorts of directions, including ones you don't anticipate. That's OK, so long as you don't lose sight of the value of questions during a dispute.
Avoid cross-examination questions, such as "Isn't it true that … ?" Your questions should not state or imply your view. They should be curiosity-based, as you're genuinely trying to find out what the other person thinks.
The confront-then-question approach allows you to go directly to the heart of the matter. Even if you sense rising tension and hostility, the negative emotions will soon be arrested by your open-ended, exploratory questions.
When HR professionals make a commitment to active listening, executives, managers and employees become their biggest fans instead of being their biggest critics.
SOURCE: Janove, J. (9 October 2019) "Putting Humanity into HR Compliance: 3 Steps to Active Listening" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/putting-humanity-into-hr-compliance-active-listening-.aspx
What Employers Need to Know About Successful Second Chance Hiring
With today's unemployment rate at the lowest it's ever been, many companies are beginning to explore untapped talent pools and unlikely candidates. Continue reading this blog post from SHRM to learn more.
Between the First Step Act bill being passed and SHRM's efforts towards Getting talent back to work, there are a lot of discussions opening up around second chance hiring. Before, it was pretty standard to assume that if you checked that box of "have you been convicted of a felony," you weren't going to get the job.
Today, our unemployment rate is the lowest it's ever been - forcing companies to explore untapped talent pools and unlikely candidates. As the Founder of a staffing agency for second chances, this makes me very excited. But it also frightens me.
I have worked with inmates, felons, and people in recovery over the past five years by helping them find their passion and meaningful employment. It is not as simple as making a decision to hire people with a criminal background. With this being such a hot topic, I thought I'd give a few tips for those considering hiring people with a criminal background.
1. Non-violent drug charges aren't always the safest bet.
I hear it all the time. And usually people who have never been arrested or spent time in prison. They talk about just hiring people who have non-violent drug charges. In my personal experience, those are usually some of my more difficult cases. A lot of people with non-violent drug charges have one of two addictions: 1. making fast money OR 2. doing drugs. Relapse for either of these are more likely if an individual isn't seeking proper treatment or counseling. A job opportunity alone isn't always enough to keep someone on the right path. I have noticed that my best employees are the most unlikely and most overlooked: Those who lost the most. AKA: People who spent time in prison for harsher charges such as assault, robbery or murder.
2. People who spent time in prison are great manipulators.
Manipulation is a skill best learned in prison. Inmates are very resourceful and know how to get what they want. This is why the formerly incarcerated individuals who are reformed make amazing sales people, debt collectors or call center representatives. But we won't always have a reformed person with a change of heart sitting across from us as we are interviewing for a position. Even your greatest "people-reading" employee can be tricked into making the wrong hire if they are not educated on what to look for and what to ask in the interviewing process. Making the right second chance hire can grow your business tremendously but only if you make strategic hires and give the right second chances to the right people. Not everyone wants to change and we have to accept that as a possibility for responsible hiring.
3. Second chance hiring isn't charity.
When people talk about giving a second chance, it always sounds very charity or philanthropy-like. While I'm glad these discussions are happening, I'm disappointed people speak about second chance hiring like it's a favor to someone. It's actually a favor to your company to bring in a hungry, hard-working, loyal employee that will be grateful you gave them a chance. Growing a team of second chance employees can literally grow your business faster. Your second chance hires will go the extra mile, stay late and come in early. Not for a raise or recognition, but to help grow the company that helped grow them. An organic tea company came to us to make their first official second chance hire a year ago. Today, they've hired 70 people who have a criminal background.
When I first started my company, a for-profit staffing agency for second chances, people thought I was crazy. (I am, proudly) But it seemed like a far-fetched goal to bank on the success of felons. I knew how effective second chance hiring would be, so instead of starting a non-profit and spending my time raising money, I wanted to raise men and women through meaningful job placements. I have seen first-hand the successes and failures when it comes to helping people coming out of prison find employment. My biggest fear is that we are going to successfully create an awareness for second chance hiring and see poor results because of lack of education or tools. This could hurt the reputation of what we are trying to do and hurt the reputation of people who really do deserve real opportunities and have transformed their lives.
SOURCE: Garcia, C. (4 April 2019) "What Employers Need to Know About Successful Second Chance Hiring" (Web Blog Post). Retrieved from https://blog.shrm.org/blog/what-employers-need-to-know-about-successful-second-chance-hiring
This post is the first in a series for Second Chance Month, which highlights the need to improve re-entry for citizens returning to society and reduce recidivism. One of the primary ways to do this is by providing an opportunity for gainful employment. To sign the pledge and access the toolkit with information on how to create second chances at your company, visit GettingTalentBacktoWork.org.
Making the Case for Pay Transparency
Is your organization increasing pay transparency? According to this article from SHRM, pay transparency is a strategic move that delivers measurable business benefits. Read this blog post to learn more.
Recommending to senior leadership that your organization increase pay transparency can be a difficult sell for HR professionals. However, pay transparency is a strategic move that delivers measurable business benefits – and it’s an issue on which HR should lead.
It is important to understand that most executives in America today rose through organizational ranks that viewed compensation as a private matter. Few within organizations had access to salary information, and even fewer talked about it. As a result, many leaders still believe it is appropriate to dissuade or prohibit employees from discussing their own compensation with other employees.
Yet we now understand these outdated cultural norms have contributed to the wage gap for women and minorities, among other negative outcomes. Pay transparency can help close those gaps and produce benefits for both employers and employees.
For example, providing employees with pay ranges for their current position and those positions in their career path sets realistic expectations. This is crucial, as many employees hold unrealistic expectations based on internet salary searches for job titles that often do not account for or accurately reflect important factors such as experience level, geography, company size, actual tasks and responsibilities, or other types of compensation. These unrealistic salary expectations create serious challenges, including employee disengagement, low morale and retention problems.
Clearly communicating your company’s pay ranges facilitates an open dialogue about how those ranges are set, when and why they change, and how employees can move up within them. These discussions in turn increase mutual trust and engagement and foster productive compensation communication — all of which help retain employees, which is especially important in today’s tight labor market.
Increasing pay transparency also helps businesses attract and retain a more diverse workforce, which numerous studies have demonstrated translates into better business results. Sharing compensation data advances this effort by ensuring women and minorities have a clearer picture of the going rate for their skill sets, education, experience and performance. While many factors contribute to pay gaps, women and minority groups may have accepted lower compensation in the past because they could not access the information necessary to determine what they should be making based on what they bring to the table.
While recommending greater pay transparency to senior leadership in your organization may seem daunting, it is an important discussion to have and a compelling case for HR professionals to make. In a highly competitive labor market, businesses that make the right strategic move of increasing pay transparency will ultimately attract and retain the best talent and come out ahead of those that do not.
SOURCE: Ponder, L. (4 April 2019) "Making the Case for Pay Transparency" (Web Blog Post). Retrieved from https://blog.shrm.org/blog/making-the-case-for-pay-transparency-0
DOL Focuses on ‘Joint Employer’ Definition
On April 1, the U.S. Department of Labor (DOL) announced a proposed rule that narrows the definition of "joint employer" under the Fair Labor Standards Act (FLSA). Read this blog post from SHRM to learn more about this proposed rule.
The U.S. Department of Labor (DOL) announced on April 1 a proposed rule that would narrow the definition of "joint employer" under the Fair Labor Standards Act (FLSA).
The proposed rule would align the FLSA's definition of joint-employer status to be consistent with the National Labor Relations Board's proposed rule and update the DOL's definition, which was adopted more than 60 years ago.
Four-Factor Test
The proposal addresses the circumstances under which businesses can be held jointly responsible for certain wage violations by contractors or franchisees—such as failing to pay minimum wage or overtime. A four-factor test would be used to analyze whether a potential joint employer exercises the power to:
- Hire or fire an employee.
- Supervise and control an employee's work schedules or employment conditions.
- Determine an employee's rate and method of pay.
- Maintain a worker's employment records.
The department's proposal offers guidance on how to apply the test and what additional factors should and shouldn't be considered to determine joint-employer status.
"This proposal would ensure employers and joint employers clearly understand their responsibilities to pay at least the federal minimum wage for all hours worked and overtime for all hours worked over 40 in a workweek," according to the DOL.
In 2017, the department withdrew an interpretation that had been issued by former President Barack Obama's administration that broadly defined "joint employer."
The Obama-era interpretation was expansive and could be taken to apply to many companies based on the nature of their business and relationships with other companies—even when those relationships are not generally understood to create a joint-employment relationship, said Mark Kisicki, an attorney with Ogletree Deakins in Phoenix.
The proposed test aligns with a more modern view of the workplace, said Marty Heller, an attorney with Fisher Phillips in Atlanta. The test is a modified version of the standard that some federal courts already apply, he noted.
Additional Clarity
Significantly, the proposed rule would remove the threat of businesses being deemed joint employers based on the mere possibility that they could exercise control over a worker's employment conditions, Heller said. A business may have the contractual right under a staffing-agency or franchise agreement to exercise control over employment conditions, but that's not the same as doing so.
The proposal focuses on the actual exercise of control, rather than potential (or reserved) but unexercised control, Kisicki explained.
The rule would also clarify that the following factors don't influence the joint-employer analysis:
- Having a franchisor business model.
- Providing a sample employee handbook to a franchisee.
- Allowing an employer to operate a facility on the company's grounds.
- Jointly participating with an employer in an apprenticeship program.
- Offering an association health or retirement plan to an employer or participating in a plan with the employer.
- Requiring a business partner to establish minimum wages and workplace-safety, sexual-harassment-prevention and other policies.
"The proposed changes are designed to reduce uncertainty over joint employer status and clarify for workers who is responsible for their employment protections, promote greater uniformity among court decisions, reduce litigation and encourage innovation in the economy," according to the DOL.
The proposal provides a lot of examples that are important in the #MeToo era, said Tammy McCutchen, an attorney with Littler in Washington, D.C., and the former head of the DOL's Wage and Hour Division under President George W. Bush.
Importantly, companies would not be deemed joint employers simply because they ask or require their business partners to maintain anti-harassment policies, provide safety training or otherwise ensure that their business partners are good corporate citizens, she said.
Review Policies and Practices
Employers and other interested parties will have 60 days to comment on the proposed rule once it is published in the Federal Register. The DOL will review the comments before drafting a final rule—which will be sent to the Office of Management and Budget for review before it is published.
"Now is the time to review the proposal and decide if you want to submit a comment," Heller said. Employers that wish to comment on the proposal may do so by visiting www.regulations.gov.
"Take a look at what's been proposed, look at the examples in the fact sheet and the FAQs," McCutchen said. Employers may want to comment on any aspects of the examples that are confusing or don't address a company's particular circumstances. "Start thinking about your current business relationships and any adjustments that ought to be made," she said, noting that the DOL might make some changes to the rule before it is finalized.
"The proposed rule will not be adopted in the immediate future and will be challenged at various steps by worker-advocacy groups, so it will be quite some time before there is a tested, final rule that employers can safely rely upon," Kisicki said.
SOURCE: Nagele-Piazza, L. (1 April 2019) "DOL Focuses on ‘Joint Employer’ Definition" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/labor-department-seeks-to-revise-joint-employer-rule.aspx
The HR tech disconnect: Are there too many digital tools?
According to a new survey of more than 500 HR employees, 87 percent of HR professionals reported that having tools that integrate with existing technology is key. Continue reading this blog post from Employee Benefit Advisor to learn more.
Investing in new technology that combines with current systems looks to be a priority for HR departments.
That’s according to a new survey of more than 500 HR employees from Reward Gateway, which found that 87% of HR professionals say having tools that integrate into their existing technology is key.
That priority is likely due to the fact that HR technology is siloed, the employee engagement technology company found. Many employers use separate platforms for tasks relating to employee communication, recognition, applicant tracking, onboarding and performance management.
More than a fifth of companies use 10 or more different systems and applications at work, and roughly 60% are using more than five systems every day. In addition, HR professionals spent 512 hours a year, nearly two hours a day, manually checking, responding to and keeping up with multiple HR applications, Reward Gateway says.
“Many companies have systems-of-record in place with up-to-date details on their employees,” says Will Tracz, chief technology officer at Reward Gateway. “Creating and maintaining data in other systems, outside of this, often takes time and is prone to error, particularly in fast-moving businesses.”
The new survey echoes similar findings, which indicate that while employers may be increasingly using HR tech, they may not be doing so efficiently. For instance, research from the Association of Executive Search and Leadership Consultants found that HR departments could be dropping the ball when it comes to using HR technology.
Karen Greenbaum, president and CEO of AESC told Employee Benefit News in November that total digital transformation is about more than just implementing new tech in the office.
“It’s not just, ‘Do they understand what artificial intelligence means,’ or what augmented reality means,” she says. “[It’s] ‘Do you really have an organization that can adapt to a new world?’”
Still, HR leaders are turning to tech solutions. Data from global talent acquisition and management firm Randstad Sourceright found that HR departments are going on a tech “buying spree.” The vast majority (92%) of those in the Randstad survey of more than 800 C-suite and HR leaders and 1,700 professionals believe that technology enhances the attraction, engagement and retention of talent.
Reward Gateway received similar responses. HR teams are hoping new tech will not only integrate with existing systems, but also help them achieve their goals, which include higher employee engagement, increased productivity and attracting talent.
SOURCE: Hroncich, C. (29 March 2019) "The HR tech disconnect: Are there too many digital tools?" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/news/hr-tech-disconnect-are-there-too-many-digital-tools?brief=00000152-146e-d1cc-a5fa-7cff8fee0000
DOL proposes new rule clarifying, updating regular rate of pay
The Department of Labor (DOL) recently released a proposal that defines and updates what forms of payment employers can include and exclude in the time-and-one-half calculation when determining overtime rates. Read this blog post to learn more.
For the first time in 50 years, the Department of Labor has proposed changing the definition of the regular rate of pay.
The proposal, announced Thursday, “defines and updates” what forms of payment employers include and exclude in the time-and-one-half calculation when determining workers’ overtime rates, according to the DOL.
The regulations the DOL is proposing to revise govern how employers must calculate the regular rate and overtime pay rate, including the types of compensation that must be included and may be excluded from the overtime pay calculation, says Tammy McCutchen, a principal at Littler Mendelson and former administrator of the Department of Labor’s Wage and Hour Division.
The regular rate of pay is not just an employee’s hourly rate, she says, but rather includes “all remuneration for employment” — unless specifically excluded by section 7(e) of the FLSA.
Under current rules, employers are discouraged from offering more perks to their employees as it may be unclear whether those perks must be included in the calculation of an employees’ regular rate of pay, the DOL says. The proposed rule focuses primarily on clarifying whether certain kinds of perks, benefits or other miscellaneous items must be included in the regular rate.
The DOL proposes that employers may exclude the following from an employee’s regular rate of pay:
- The cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes and employee discounts on retail goods and services;
- Payments for unused paid leave, including paid sick leave;
- Reimbursed expenses, even if not incurred solely for the employer’s benefit;
- Reimbursed travel expenses that do not exceed the maximum travel reimbursement permitted under the Federal Travel Regulation System regulations and that satisfy other regulatory requirements;
- Discretionary bonuses;
- Benefit plans, including accident, unemployment, and legal services; and
- Tuition programs, such as reimbursement programs or repayment of educational debt.
The proposed rule also includes additional clarification about other forms of compensation, including payment for meal periods and call back pay.
The regulations will benefit employees, primarily, ensuring that employers can continue to provide benefits that employees’ value — tuition reimbursements, student loan repayment, employee discounts, payout of unused paid leave and gym memberships, McCutchen says.
“Remember, there is no law that employers must provide employees these types of benefits,” she adds. “Employers will not provide such benefits if doing so creates risk of massive overtime liability.”
Knowing when employers must pay overtime on these types of benefits, how to calculate the value of those benefits and overtime pay are all difficult questions, she adds. “Unintentional mistakes by good faith employers providing valued benefits to employees is easy. With this proposed rule, the DOL is embracing the philosophy that good deeds should not be punished.”
She notes the proposal does not include any specific examples of what reimbursements may be excluded from the regular rate.
“One big open question is whether employers must pay overtime when they provide employees with subsidies to take public transportation to work — as the federal government does for many of its own employees — I think around $260 per month in the DC Metro area,” she adds.
The DOL earlier this month proposed to increase the salary threshold for overtime eligibility to $35,308 up from the current $23,660. If finalized, the rule would expand overtime eligibility to more than a million additional U.S. workers, far fewer than an Obama administration rule that was struck down by a federal judge in 2017.
Employers are expected to challenge the new rule as well, based on similar complaints of administrative burdens, but a legal challenge might be more difficult to pass this time around.
SOURCE: Otto, N. (28 March 2019) "DOL proposes new rule clarifying, updating regular rate of pay" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/dol-proposes-new-rule-on-regular-rate-of-pay-calculation?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001
To check or not to check: Managing blood sugar in diabetic employees
There's been a growing prevalence of Type 2 diabetes in the U.S. over the last 20 years. This chronic condition significantly impacts employees, their family members and even employers clinically and financially. Read this blog post to learn more.
Over the last 20 years, there’s been a growing prevalence in the U.S. of Type 2 diabetes, a chronic condition that significantly impacts employers, their employees and family members clinically, financially and through quality of life. With that comes an increase in the use of insulin for people with Type 2 diabetes to better control blood sugar to reduce long-term complications, which includes eye, kidney and cardiac disease, as well as neuropathic complications.
Most of these patients manage their condition with oral medicines versus insulin, and it’s estimated that 75% of patients with Type 2 diabetes regularly test their blood sugar, even though doing so may not be needed. Blood sugar testing is an important tool in managing diabetes as it can help a patient be more aware of their disease and potentially control it better. But it also can be painful, inconvenient and costly.
Blood sugar testing can be an important tool in managing diabetes, and there are two types of tests. The first is a test conducted at home by the patient that shows the blood sugar at a specific point in time. The second type is called HA1c (a measure of long-term blood sugar control) that shows the average blood sugar over the last two to three months. The value of at-home testing is now thought to be questionable.
In 2012, the Patient-Centered Outcomes Research Institute began a study to evaluate the value of daily blood sugar testing for people with Type 2 diabetes not taking insulin. The endpoint for the study was whether there was a difference in HA1c levels for those who did daily testing and those that did not. The conclusion of the study found that there were no significant differences between those two populations.
In response to these findings, the institute developed an initiative called Rethink the Strip that involves stakeholders including primary care practices, healthcare providers, patients, health plans, coalitions and employers. Given the cost for test strips and monitors for patients with Type 2 diabetes who test their blood sugar daily, it’s important to adopt an evidence-based patient-centered approach around the need for and frequency of self-monitoring of blood glucose.
As employees and employers cope with the costs associated with blood sugar testing, there are several strategies that should be considered to better manage this issue. They include:
1. Support shared decision-making. Like all interventions within healthcare, it’s important to weigh both the benefits and the risks of daily blood sugar testing in a thoughtful manner between the patient and their provider.
2. Managed benefit design. Employers should pay for daily blood sugar test strips in cases where it brings value (e.g., Type 1 and Type 2 patients who are taking insulin as well as patients that are either newly diagnosed or are going through a transition period, for example, post hospitalization or beginning a new medication regimen).
3. Involve vendors. To ensure alignment in all messaging to plan members, ask health systems and/or health plans and third-party vendors to align their communication, measurement and provider feedback strategies on when it’s appropriate for daily blood sugar testing.
These strategies can help employees with diabetes understand how their daily activities (nutrition, exercise and stress) and medications impact their condition. This benefits the employee in reaching treatment goals and feeling their best, while also helping employers and employees reduce the need for unnecessary and costly test strips.
SOURCE: Berger, J. (14 March 2019) "To check or not to check: Managing blood sugar in diabetic employees" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/managing-blood-sugar-in-diabetic-employees?brief=00000152-146e-d1cc-a5fa-7cff8fee0000