Employee Recognition: Picking Up the Pieces
Here's an interesting article from The Society for Human Resource Management (SHRM) by David Kovacovich
As I enter my tenth year in the Human Capital Management space, I figured it would be beneficial to my readers to reflect on how our industry has (and has not) evolved over the last decade's time.
* The following scenarios are built on real life business engagements. The names have been changed to protect the innocent.
Case Study #1: A Story of Manipulation
Employee A (Let's call him Carl) had worked for Company X (let's call it Pied Piper) for a calendar year. After 3 failed endeavors at Bay Area start ups, Carl was looking for something more stable. He had a single motivating factor: MONEY!
Work at a Large Corporate Technology firm was different than the start-up world: Bureaucracy was thick, rule structure was more intense and cashing out was trumped by climbing the ladder. So how could he climb the ladder?
Achieving sales results did not come as easily in an Enterprise role at a large company and Carl struggled in this first year. The results weren't there so he needed another tool to help get him promoted. Then it hit him like a lightening bolt..... his company had announced the end of the annual performance review process to be replaced with a high touch performance management system (even large corporations cannot refute common sense). The performance management process was positioned as a pro-active measure to build the internal talent pool.
Carl's bargaining chip? Employee Recognition would be leveraged as part of the Performance Management system. Carl's job was simple, he sent an email to roughly 100 colleagues asking them to participate in an experiment (he even went-so-far as to title his email "An Experiment In Human Compassion"). Carl asked each of his colleagues to send him a recognition through their peer to peer system. He offered to return the gesture. Carl was a fun guy at happy hour so getting his peers to buy-in was no problem. Within a week, Carl shot to the top of Recognition Leaderboard. This flagged him as an 'up and comer' in the system and garnered him an opportunity to apply for a Management position.
Carl was promoted to Management, 8 employees left under his reign and he was fired less than a year later.
The company lost great performers and the recognition program was tarnished.
What's worse? The company was sued by an employee who was passed over for promotion sighting leadership development as a popularity contest. (Carl's "Human Compassion" email was submitted into evidence).
Lesson Learned: Using Recognition as a Performance Lever is Dangerous Business!
Case Study #2: A Shattered Cookie Cutter
The message was simple, "we need to cut costs so any programs that are not mission-critical are to be discontinued". The CEO was very clear in her directives so the formal recognition program was removed. This program had operated with over 90% adoption for nearly 10 years (CRM adoption hovered at about 38%).
With the program removed a caveat was dangled. Keeping our employees engaged is job one so we are reconstructing programs that will streamline appreciation:
1. Employees would go to dinner with their supervisor if they qualified as a top quarterly achiever.
2. Employees who hit a tenure milestone would receive a letter from the CEO and a gift card.
When Employee A (let's call her Nancy) hit her 20 year anniversary with the company, she received a form letter from the CEO and a $250 gift card. She tested the signature on the letter but it did not smudge. Then she pulled out her i-phone to use the calculator.
$1.73 a month. That's what her contribution to the organization was worth.
She flipped over the form letter, wrote two words on the back, grabbed a picture of her kids from her desk and headed out the door.....
I QUIT
Lesson Learned: No Recognition is Better than Thoughtless Recognition!
Case Study #3: Leadership Jumps on the Manipulation Train
The VP of HR sent out the annual employee survey at the tail end of the 7 paragraph diatribe. The message offered a proverbial laundry list of all of the "perks and benefits" of working at Company X. Benefits packages, non-guaranteed pay increases, company functions and education aid were all mentioned as the things that made Company X a "Great Place to Work". Mr. HR Guy included a mention of half day Fridays during the summer months if the company hit their revenue goal.
Filling out the survey was mandatory. Managers received bonuses for "5" rating across the board and were regulated for examination if any of their team dipped below last year's survey results.
The survey structure was based on the following:
1. Make the Great Place to Work list and Senior Managers receive a bonus.
2. Managers who average a "5" receive a bonus.
3. Managers whose average scores wavered were consulted by HR as to what to do to ensure employees "no longer seemed discontent".
The leader of the Human Engagement process allowed his greed to override a prime opportunity to receive feedback from the trenches. He did not receive his bonus.
Managers were subjected to adversarial relationships with employees: meeting with each of them to guess who used what comment to berate them while urging employees to keep their comments in-house.
The results of the survey were skewed. Employees who wished to stay in their managers good graces "marked 5 to survive". Those who saw through the hypocrisy of the exercise gave lower scores than they otherwise would have to mock Leadership's misunderstanding of workforce engagement!
Lesson Learned: Surveys Are an Opportunity to Identify Areas of Improvement not a Meter for Compensation!
The Recognition industry was built by fulfillment houses whose strengths lie in purchasing & distribution. Times have caught up with them. It's 2016 and systems of feedback and leadership development are far more important to today's employee than a logo-ed lamp.
Surprises:
1. Companies are still investing heavy dollars in catalog-driven Service Anniversary programs (because employees still like them).
2. Performance Management has not replaced Employee Recognition.
3. Social Recognition has proven effective for a limited time if there is not a reward within the process of participating.
4. Results compensation programs are up to 100x more-invested than Recognition programs in the majority of companies.
Opportunity:
1. Diversify budgets to create more high touch, immediate recognition opportunity
- I've beat this horse to death since 2006 and I'm not giving up.
2. Make recognition initiatives performance based.
- It's incredibly simple to program technology to reward mission critical behaviors instead of off-the-shelf catch phrases.
3. Use Social Recognition to attract employees to a platform that offers a variety of performance-based programs.
- Consolidation enhances engagement and saves significant dollars.
4. Replace revenue improvement incentives with behavior-based development programs.
- Compensating the bottom line is easy to measure and easier to manipulate. Creating programs that promote responsible behavior geared toward relationship development will strengthen long-term organizational stability and improve revenue.
I believe the Human Capital Management industry (or whatever you want to call it) has the greatest opportunity for growth of any:
- Human Resource professionals need to continue a Change Management focus.
- Vendors should shift from reward fulfillment to active behavior change consulting.
Don't Forget to Remember!
Dave
See the original article Here.
Source:
Kovacovich, D. (2016 September 27). Employee recognition: picking up the pieces. [Web blog post]. Retrieved from address https://blog.shrm.org/blog/employee-recognition-picking-up-the-pieces
What You Need To Know About The EEOC’s Updated Guidelines For Retaliation
Interesting article on EEOC guideline updates from, Employee Benefit Adviser by Bobbi Kloss
Did you know that under the U. S. Equal Employment Opportunity Commission, an employee who believes that they have been retaliated against by an employer for complaining against unlawful discrimination in the workplace can file a complaint with the EEOC under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), Title V of the Americans with Disabilities Act, Section 501 of the Rehabilitation Act, the Equal Pay Act (EPA), and/or Title II of the Genetic Information Nondiscrimination Act. It is worth noting, this is not an either or situation, meaning, an employee’s claim can cross over the various discrimination laws.
Employers with at least 15 employees — or 20 employees in age discrimination cases, including labor unions and employment agencies — are covered by EEOC laws. The EEOC is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person's race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability, or genetic information. A very important point to keep in mind: it’s illegal to discriminate against a person because the person complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit.
The EEOC laws apply to all types of work-related actions, including hiring, firing, promotions, harassment, training, wages and benefits. To put it all in perspective — and show just how large and widespread this issue is — here are some sobering statistics: charges of retaliation filed with the EEOC accounted for 44.5% of alleged basis of discrimination in FY2015 with more than 39,700 allegations filed and with monetary benefits awarded in the amount of $173.5 million (not including those paid through litigation), according to an EEOC report on litigation statistics: Retaliation-Based Charges FY 1997 - FY 2015. Compare today’s numbers to 1997, when 18,198 allegations were filed and $41.7 million in benefits were awarded. Retaliation complaints continue to be the most frequent form of alleged discrimination filed with the EEOC since 2009.
Final enforcement guidance
It is no wonder then that at the end of August the EEOC issued its final enforcement guidance on retaliation and related issues replacing its 1998 Compliance manual section on retaliation. The update also provides guidance for the “interference” (prohibiting coercion, threats or other acts that interference with exercise of rights) provision under the ADA.
The various topics explained in the new guidance include:
- The scope of employee activity protected by the law;
- Legal analysis to be used to determine if evidence supports a claim of retaliation;
- Remedies available for retaliation;
- Rules against interference with the exercise of rights under the ADA;
- Detailed examples of employer actions that may constitute retaliation.
The EEOC also released The Small Business Fact Sheet: Retaliation and Related Issues and a set of FAQs, Questions and Answers: Enforcement Guidance on Retaliation and Related Issues for clarification on main topic points for employers.
As a trusted benefit adviser, why should you be concerned about this update in the EEOC Compliance Manual? This is another opportunity to be in front of your clients and help guide them with their employment practices. Good business practices help attract and retain employees during these competitive times. Creating a culture free from employment discrimination can also create a motivated, stress free workforce leading to reduced benefit claims, reduced absenteeism, and turnover, which can allow for business growth.
What can your employers do now to ensure that their organization is proactively compliant with EEOC laws?
1) Make sure the Employee Handbook contains their EEOC policy statement and includes a process for an employee to file allegations of a complaint of workplace discrimination.
2) Train employees and supervisors on lawful and unlawful employment practices, including retaliatory behavior.
3) Take all complaints of discrimination seriously and ensure that a prompt and thorough investigation is conducted.
Employers should also make sure that their performance management process is documented and non-discriminately administered. If an employer needs to take corrective performance action — up to and including termination of employment — against any employee who has filed a complaint of discrimination, it is advised that they seek guidance from their Employment Law attorney before taking any action.
Lastly, discrimination in the workplace can be avoided by having a culture that promotes diversity, making employment decisions based upon performance, and maintains professionalism in all forms of communication.
See the original article Here.
Source:
Kloss, B. (2016 September 22). What you need to know about the EEOC's updated guidelines for retaliation. [Web blog post]. Retrieved from address: https://www.employeebenefitadviser.com/opinion/what-you-need-to-know-about-the-eeocs-updated-guidelines-for-retaliation
What Employers Can Learn From Millennials
Great read by Christina Folz on generational communication.
It's a tale as old as time: Middle-aged and older adults kvetch about the next generation and speculate on what this world is coming to. Business author and consultant Jamie Notter recently shared a reference to young adults' lack of respect for elders and poor work ethic—from the ancient Roman philosopher Cicero.
"Every 20 years, a new generation comes into the work world as adults, and we all freak out about it," says Notter, who co-wrote the book When Millennials Take Over (Idea Press, 2015). As the largest living generation, Millennials (those younger than 35) have perhaps borne more than their fair share of scorn.
"We are really mad about how many trophies they got," says Notter, who is a member of Generation X and founding partner of WorkXO LLC. "We're constantly saying they don't get it, they don't know how to work in the real world." In truth, however, they likely understand more about the future of business than others, given that they are shaping it. "They have a lot to teach us," Notter maintains. "We need to shift conversation away from complaining and more toward being curious."
For their book, Notter and co-author Maddie Grant researched organizations that had alignment with the Millennial approach to business. These companies tend to be:
Digital. This is about more than technology. It's a philosophy based on the concept that software must work for the user—by being customizable and constantly updated. "We need to bring that mindset into leadership and business," Notter says. The American Society for Surgery of the Hand, a Chicago-based organization with about 20 employees, shaped its whole enterprise around the needs of employees rather than management—by letting people wear what they want to work, for example—and the organization has experienced off-the-charts engagement as a result.
Clear. "It's not just transparency for transparency's sake," Notter says. "It's about making things visible in order to improve the quality of decisions that get made." Menlo Innovations, a technology firm in Ann Arbor, Mich., pairs two software designers at a single workstation; one comments on the code as the other is writing it, and each pair's tasks are posted on a wall so they know what is expected at all times. "They charge more than competitors and still have people lining up," Notter says. "The product is that good."
Fluid. The hierarchy is still there, but everyone is actively engaged in the organization's mission. At Quality Living Inc. in Omaha, Neb., a rehabilitation facility for people with brain and spinal cord injuries, there is a standing rule: No matter where a person is on the organization's hierarchy, he or she must connect decision-making to the hopes and dreams of the patient. "For this to work, you need to be crystal clear on what defines success," Notter says.
Fast. All the organizations Notter and Grant studied were agile and quick—in part because employees are trusted to make choices themselves. At Menlo Innovations, for example, "decisions get made without e-mail and boring status update meetings," Notter says.
Instead, employees communicate and resolve issues using something Notter referred to as "high-speed voice technology."
In other words, they talk to each other.
Read the original article posted on SHRM.org on July 27, 2016 Here.
Source:
Folz, C. (2016, July 27). What employers can learn from millennials [Web log post]. Retrieved from https://www.shrm.org/hr-today/news/hr-magazine/0716/pages/when-millennials-take-over.aspx
Report highlights employers’ biggest concerns: ACA, new bias claims and OT regs
What are your top concerns as an employer? See what others had to say in the article by Tim Gould.
What’s keeping C-level execs up at night? Just a few small concerns like the new overtime rules, a likely increase in bias claims based on sexual orientation, the Affordable Care Act and the threat of workplace violence.
Those are the takeaways from the 2016 Executive Employer Survey from Littler, the giant employment law firm. The fifth annual survey, completed by 844 in-house counsel, human resources professionals and C-suite executives from some of America’s largest companies, examines the key legal, economic and social issues impacting employers as the 2016 presidential election approaches.
Those pesky OT rules
As you well know, the Department of Labor (DOL) has advanced several regulatory initiatives that have brought the agency’s enforcement of federal employment laws to the forefront for employers. This concern is no doubt driven in large part by the recently finalized Fair Labor Standard Act overtime regs, which will dramatically increase the number of Americans who can qualify for overtime pay. Although respondents completed the survey in the weeks prior to the release of the final rule, 65% had already conducted audits to identify affected employees.
“Employers are clearly feeling the impact of the DOL’s increasingly aggressive regulatory agenda, most notably the new overtime regulations,” Littler attorneys Tammy McCutchen and Lee Schreter said in a joint statement.
They added a sobering note: “While it is encouraging that the majority of respondents started to prepare before the rule was finalized, more than a quarter (28%) said they had taken no action given delays in the rulemaking process. Given that the reclassification process can take up to six months and the rule is unlikely to be blocked from going into effect on December 1, 2016, employers should move quickly to ensure compliance.”
And participants are pretty sure the DOL’s going to be aggressive about making the new rules stick: The vast majority of respondents to this year’s survey (82%) expect DOL enforcement to have an impact on their workplace over the next 12 months, with 31% anticipating a significant impact (up from 18% in the 2015 survey).
Where are the presidential candidates likely to land on employment policies? The majority of respondents (75%) said income inequality (e.g., overtime rules, state equal pay, minimum wage laws, etc.) would be a significant priority of the Democratic candidate. Only 4% felt income inequality would be a significant priority of the Republican candidate.
Top regulatory and legislative issues
With the National Labor Relations Board’s recent expansion of the definition of a “joint employer,” 70% of respondents to the Littler survey expect a rise in claims over the next year based on actions of subcontractors, staffing agencies and franchisees. Approximately half of respondents predicted higher costs (53%) and increased caution in entering into arrangements that might constitute joint employment (49%).
As was the case in the 2015 survey, 85% of employers said the Affordable Care Act (ACA) would have an impact on their workplace in the next 12 months. While two-thirds said they do not expect a repeal of the ACA if a Republican is elected president this fall, respondents saw a greater likelihood of changes to individual provisions. Fifty-three percent said a Republican administration could lead to a repeal of or changes to the Cadillac excise tax and 48% saw a likelihood for changes to the play-or-pay mandate.
Social issues come to the forefront
Today’s companies are increasingly experiencing the incursion of social issues into the workplace, the survey indicated.
In the largest year-over-year change in Littler’s survey results, 74% of respondents expect more discrimination claims over the next year related to the rights of LGBT workers (up from 31% in 2015) and 61% expect more claims based on equal pay (up from 34% in 2015).
This change is driven by LGBT discrimination and equal pay ranking among the top enforcement priorities for the Equal Employment Opportunity Commission (EEOC), but it also mirrors key focus areas for the Obama administration, government efforts at the state and federal levels, and increased public awareness.
Preventing workplace violence
In response to tragic mass shootings across the nation, companies are taking a range of actions to keep their employees safe, including updating or implementing a zero-tolerance workplace policy (52%), conducting pre-employment screenings (40%) and holding training programs (38%). Only 11% of respondents said they had not taken any action because violence is not a concern for their company.
“Putting policies in place to increase awareness of workplace violence and ensure that employees understand how to report threats in the workplace are steps that all employers would be advised to take,” said Littler’s Terri Solomon, who has extensive experience counseling employers on workplace violence prevention. “Unfortunately, even though workplace violence – and particularly active shooter instances – are statistically rare, no employer is truly immune.”
See the original article from HRMorning.com Here.
Source:
Gould, T. (2016, July 13). Report highlights employers' biggest concerns: ACA, new bias claims and OT regs [Web log post]. Retrieved from https://www.hrmorning.com/report-highlights-employers-biggest-concerns-aca-new-bias-claims-and-ot-regs/
5 Ways Employers Can Optimize the Value of Maternity Care for Employees
Original post benefitnews.com
For many employers, discussions with employees about pregnancy focus on one topic: maternity leave.
Yet, it is important to remember that length of maternity leave is only one of several important decisions made by an employee preparing for childbirth.
Expecting parents are highly engaged in selecting a provider and developing a birth plan — choices that will ultimately influence the cost and quality of care a mother and her child will receive. For younger employees, a pregnancy, whether their own or their spouse’s, may be the first significant contact he or she has had with the healthcare system, thus underscoring the weight attributed to each decision.
Maternity care is also an important issue for employers, as obstetric admissions are typically the single most common admission in commercial populations. Verisk Health’s normative database shows that on average, a maternity admission costs an employer upwards of $9,000, and pre-natal and post-natal care typically contribute another 20-30% of spend. When you consider that 6% of women between the ages of 19 and 44 have a child each year, the costs add up fast.
Given the importance of maternity care to both employees and employers, the question is how to optimize the value of the care your employees receive.
Understanding the value equation
High risk pregnancies and outlier cases aside, maternity care is a relatively homogenous condition category. However, there is substantial variability in cost. We have observed as high as 50% variation within costs in a single market for vaginal deliveries without complications.
Variations in utilization rates of certain procedures can also increase costs substantially without necessarily improving outcomes.
For example, here in Massachusetts, the Health Policy Commission found 50% variation in Cesarean section (C-section) rates among the top 10 hospitals (by number of discharges). This compounds the issue with hospital pricing, since C-sections can cost as much as 50% more than a vaginal delivery.
In addition to increasing costs, C-section overutilization can also lead to poorer outcomes. According to the American College of Obstetricians and Gynecology, C-sections put the mother at greater risk of infection, heavy blood loss, and surgical complications while simultaneously increasing the newborn’s risk of infection, respiratory issues, and lower APGAR scores.
Elective deliveries and episiotomies are also areas of potential overuse, and their incidence rates can be tracked to gauge the quality of care delivered.
While the American College of Obstetricians and Gynecologists requires 39 weeks of gestation prior to elective delivery, research shows that more than one-third of elective repeat C-sections are not performed in accordance with this guideline. When these guidelines are not followed, newborns are more susceptible to respiratory distress syndrome, temperature regulation issues, high levels of bilirubin, and hearing, vision, and learning defects.
In addition to restricting elective pre-term deliveries, ACOG also recommends restricted use of episiotomies due to the increased risk of muscle tear, bleeding, and infection. However, data indicates that episiotomies are an often used routine obstetrical practice.
Other maternity quality measures reinforce evidence-based standards of care. To reduce a mother’s risk of pulmonary embolism after C-section, ACOG recommends the use of pneumatic compression devices or venous thrombus embolus (VTE) prophylaxis. Likewise, all newborns should be screened for early onset hyperbilirubinemia prior to discharge from the hospital.
Driving greater value: The agenda for employers
Maternity care presents an ideal starting point for value-based purchasing initiatives because it is high volume, clinically homogenous, and exhibits wide variety in cost and quality. While decisions in maternity care will always be driven by patient preferences, here are a few ways employers can help improve the value of care their employees receive:
1. Know the numbers. Analyze your claims data to identify the top hospitals that your employees use, the amount you spend at each facility, and differences in costs between the hospitals. Use the quality measures published in the Leapfrog Hospital Survey to benchmark performance against nationally recognized standards.
2. Spark dialogue with providers. Once you’ve assessed which hospitals provide the best value for maternity care, share your analysis with the most significant facilities. In our experience, several larger employers are using their data to enable more transparent, collaborative conversations. If your presence is smaller, work with a local purchasing group to make your voice heard.
3. Raise awareness among expectant parents. In parallel with sharing data with providers, develop a communication plan to educate your employees about their options. Developing a birth plan is one of the most actively researched healthcare decisions, especially for first time parents. However, the research can often be more focused on the amenities of the facility than quality and outcomes. Since patient engagement is so high for maternity care, it may be easier to drive behavioral change among expectant parents than it is for other health issues often targeted by employers (e.g., weight loss).
4. Champion payment reform. Several state Medicaid programs have adopted innovative episode-based payment systems to reward high-value maternity care. Forward-thinking employers can use model contract language from Catalyst for Payment Reform to help incorporate these types of strategies into their agreements with health plans. According to CPR, payment strategies such as bundled payment and blended payment (a single rate for any type of delivery) can help address the issues associated with overutilization in maternity care.
5. Consider reference pricing and incentives. Long term, employers may consider changing plan incentives to encourage high-value maternity care. For example, an employee might shoulder a greater share of the cost burden for an elective C-section if it is not medically necessary or physician advised. Since personal preference is such a factor in maternity care delivery, this concept will need to be handled with sensitivity.
In many ways, maternity care is a microcosm of the challenges in our healthcare system. We routinely perform “medical miracles,” particularly for neonatal care, and yet there is substantial room for improvement in routine care. By advancing value-based purchasing initiatives, employers can play a key role in helping improve the cost and quality of maternity care.
How Many Employers Could be Affected by the Cadillac Plan Tax?
Originally posted by Gary Claxton and Larry Levitt on August 25, 2015 on kff.org.
As fall approaches, we can expect to hear more about how employers are adapting their health plans for 2016 open enrollments. One topic likely to garner a good deal of attention is how the Affordable Care Act’s high-cost plan tax (HCPT), sometimes called the “Cadillac plan” tax, is affecting employer decisions about their health benefits. The tax takes effect in 2018.
The potential of facing an HCPT assessment as soon as 2018 is encouraging employers to assess their current health benefits and consider cost reductions to avoid triggering the tax. Some employers announced that they made changes in 2014 in anticipation of the HCPT, and more are likely to do so as the implementation date gets closer. By making modifications now, employers can phase-in changes to avoid a bigger disruption later on. Some of the things that employers can do to reduce costs under the tax include:
- Increasing deductibles and other cost sharing;
- Eliminating covered services;
- Capping or eliminating tax-preferred savings accounts like Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), or Health Reimbursement Arrangements (HRAs);
- Eliminating higher-cost health insurance options;
- Using less expensive (often narrower) provider networks; or
- Offering benefits through a private exchange (which can use all of these tools to cap the value of plan choices to stay under the thresholds).
For the most part these changes will result in employees paying for a greater share of their health care out-of-pocket.
In addition to raising revenue to fund the cost of coverage expansion under the ACA, the HCPT was intended to discourage employers from offering overly-generous benefit plans and help to contain health care spending. Health benefits offered through work are not taxed like other compensation, with the result that employees may receive tax benefits worth thousands of dollars if they get their health insurance at work. Economists have long argued that providing such tax benefits without a limit encourages employers to offer more generous benefit plans than they otherwise would because employees prefer to receive additional benefits (which are not taxed) in lieu of wages (which are). Employees with generous plans use more health care because they face fewer out-of-pocket costs, and that contributes to the growth in health care costs.
The HCPT taxes plans that exceed certain cost thresholds beginning in 2018. The 2018 thresholds are $10,200 for self-only (single) coverage and $27,500 for other than self-only coverage, and after that they generally increase annually with inflation. The amount of the tax is 40 percent of the difference between the total cost of health benefits for an employee in a year and the threshold amount for that year.
While the HCPT is often described as a tax on generous health insurance plans, it actually is calculated with respect to each employee based on the combination of health benefits received by that employee, and can be different for different employees at the same employer and even for different employees enrolled in the same health insurance plan. While final regulations have not yet been issued, the cost for each employee generally will include:
- The average cost for the health insurance plan (whether insured or self-funded);
- Employer contributions to an (HSA), Archer medical spending account or HRA;
- Contributions (including employee-elected payroll deductions and non-elective employer contributions) to an FSA;
- The value of coverage in certain on-site medical clinics; and
- The cost for certain limited-benefit plans if they are provided on a tax-preferred basis.
The inclusion of FSAs here is important. FSAs generally are structured to allow employees the opportunity to divert some of their pay to pretax health benefits, which means that they can avoid payroll and income taxes on money they expect to use for health care. Employees often are permitted to elect any amount of contribution up to a cap (which is $2,550 in 2015), which means that the amount of benefits for an employee subject to the HCPT in a year could vary depending on their FSA election.
The amount and structure of the HCPT provide a strong incentive for employers to avoid hitting the thresholds. The tax rate of 40 percent is high relative to the tax that many employees would pay if the benefits were merely taxed like other compensation, and the ACA does not allow the taxpayers (e.g., the employer) to deduct the tax as a cost of doing business, which can significantly increase the tax incidence for for-profit companies. Further, to avoid the perception that this was a new tax on employees, the HCPT was structured as a tax on the service providers of the health benefit plans providing benefits an employee: insurers in the case of insured health benefit plans; employers in the case of HSAs and Archer MSAs; and the person that administers the benefits, such as third party administrators, in the case of other health benefits. While it is generally expected that insurers and service providers will pass the cost of the tax back to the employer, doing so may not always be straightforward. Because there can be numerous service providers with respect to an employee, the excess amount must be allocated across providers. In some cases, it may not be possible to know whether or not the benefits provided to an employee will exceed the threshold amount until after the end of a year (for example, in the case of an experience-rated health insurance plan), which means that service providers may need to bill the employer retroactively for the cost of the tax they must pay. Amounts that employers provide to reimburse service providers for the HCPT create taxable income for the service provider, which the parties will want to account for in the transaction. The IRS has requested comments on potential methods for determining tax liability among benefit administrators, including a way that could assign the responsibility to the employer in cases other that insured benefit plans. The proposed approach could simplify administration of the tax.
To read the full story go to the Kaiser Family Foundation website at kff.org.
What Employers Need to Know About Court’s Gay-Marriage Ruling
Originally posted by Rachel Emma Silverman on June 30, 2015 on wsj.com.
The Supreme Court on Friday ruled that same-sex couples have a constitutional right to marry, meaning that same-sex marriages must be recognized nationwide. The ruling will have vast implications for employers, which until now have been operating under a patchwork of different state and federal laws governing the legal and tax treatment of same-sex unions.
Here’s what businesses should keep in mind as they navigate the new landscape.
If an employer offers spousal health-insurance benefits, do they need to offer them to all married employees, gay or straight?
In general, yes.
Companies that offer spousal health benefits and use a separate insurance company to fund their benefits will now be required to cover both gay and straight spouses. “Based on the court’s ruling. there is simply one type of spouse,” says Todd Solomon, a law partner in the employee-benefits practice group at McDermott Will & Emery in Chicago, who has been tracking same-sex employee benefits for nearly two decades.
But companies that are self-insured, which means they assume the insurance risks for their own employees, a common practice among large companies, aren’t under the same legal constraints. “There is technically no legal requirement that a self-insured company has to include a same-sex spouse,” Mr. Solomon says. As a result, self insurance “is where we are going to see a lot of activity and a lot of litigation.”
Companies should think twice about self-insuring but denying benefits to gay spouses because they will be vulnerable to discrimination suits, he says.
What if an employer has a religious objection to gay marriage?
They have limited options.
Companies could choose not to offer benefits to spouses altogether. Or they could self-insure and attempt to offer benefits to only straight spouses, but they run a high risk of discrimination suits, Mr. Solomon says.
Now that same-sex marriage is legal, will it add a lot of people to employers’ benefits plans? Will this be expensive for employers?
It could, but it depends on what type of plan a company already had.
If a company already covered unmarried same-sex domestic partners, it could be cheaper because covering spouses doesn’t have negative tax implications and is easier to administer than most domestic partnership benefits, Mr. Solomon says.
But if a company only offered spousal benefits, the ruling will add new couples that previously weren't allowed to marry.
Will the Supreme Court ruling lead to fewer employers offering spousal benefits?
Yes—that has been the trend, and the ruling might exacerbate it.
Employers have been cutting spousal benefits to save money, either dropping spousal coverage or imposing surcharges on spouses who can obtain health insurance elsewhere. A survey from consulting firm Mercer of more than 1,100 large employers found that 17% either excluded spouses with other coverage available or imposed a surcharge in 2014, compared with 12% in 2012.
The Supreme Court ruling might spur some employers who were already inclined to cut spousal benefits to do so, Mr. Solomon says.
What are the tax implications?
It equalizes the tax treatment of gay and straight married couples.
Until the ruling, there were a patchwork of state and federal tax laws governing same-sex couples. Employers, depending on the state, sometimes faced additional payroll taxes for same-sex employees, and workers sometimes faced additional income taxes.
Now, for both federal and state tax purposes, companies and employees won't face different tax treatment for gay and straight married couples. That will make benefits easier for companies to administer, Mr. Solomon says.
What does this mean for domestic partnership benefits?
This is a particularly complicated issue for employers.
Over the past decade, a growing number of companies offered “domestic partnership” coverage for gay employees and their partners as a way to provide equal benefits for couples who couldn’t legally wed. Others companies offer coverage more broadly to unmarried domestic partners, regardless of sexual orientation, recognizing that some employees simply prefer not to marry.
Companies that offer unmarried partnership benefits to both gay and straight couples will likely continue to do so.
But companies that offer partnership benefits just to gay couples may begin to phase them out because now all their employees can legally marry. Offering domestic partnership benefits just to gay couples but not straight ones might make firms vulnerable to reverse discrimination lawsuits, lawyers say.
On the other hand, firms may choose to keep domestic partnership benefits to help protect gay employees from discrimination. The majority of U.S. states lack anti-discrimination protection for gay employees, so workers can be fired for their sexuality. Because marriage certificates are public, forcing employees to get married for spousal benefits may end up “outing” an employee, while domestic partnerships are typically private matters, gay advocates say.
Here are 5 things every employer needs to know about the millennials in their workforce
Source: Property Casualty 360
At the 2015 Property/Casualty Insurance Joint Industry Forum on January 15 a panel of six chief executive officers agreed that the “millennial question” is a big one for 2015 and beyond.
According to The New York Times, the total number of millennials—those born between 1981 and 1997—will reach 75.3 million this year, surpassing baby boomers (those born between 1946 and 1964) as the largest living generation in the U.S.
There are many myths and stereotypes about millennials, but here are the five factors the the panel CEOs said are the most accurate about this generation as employees.
Paula Downey, president and CEO of CSAA Insurance Group, said that millennials make up about 25% of her company’s work force. “We need a cultural change to retain them,” she added. “They’re looking for a diverse, collaborative culture."
Steven D. Linkous, president and CEO of The Harford Mutual Insurance Companies observed that millennials are attracted to the mutual insurance structure of companies like his, where they can engage the community to “make a difference.”
This generation is composed of overachievers and has a constant need for reinforcement, said Thomas A. Lawson, president and CEO of FM Global. They’ve lived with hovering “helicopter parents” who praised their every step, which makes it important to them to know when a boss approves of their work. That approval brings out their best.
“The millennial approach to work-life balance often differs from that of other generations,” noted Christopher J. Swift, chairman and CEO of The Hartford. “They’re also interested in more time off and in working in urban areas with mass transit and reasonable commutes,” he said.
This generation has been raised with a strong sense of volunteerism and “giving back” to the community, according to the panel. “Millennials are also more likely to embrace corporate efforts in social responsibility,” Swift said. That’s one reason you’ll see many groups from insurance companies helping out organizations such as Habitat for Humanity or participating in cancer walks.
The efforts to understand millennials are worthwhile, said Lawson, because properly motivated millennials can be valuable employees.
House passes bill offering smaller employers relief from ACA coverage mandate
Originally posted January 7, 2015 by Jerry Geisel on Business Insurance
More small employers would be shielded from a health care reform law provision that requires employers to offer coverage or be liable for a stiff financial penalty under veterans-related legislation approved by the House of Representatives.
Under the Patient Protection and Affordable Care Act, employers with at least 100 full-time employees must offer coverage or be liable for a $2,000 per employee penalty, starting this year. In 2016, the 100-employee threshold for the so-called employer mandate drops to 50 employees and remains at that level in succeeding years.
Under the legislation, H.R. 22, introduced by Rep. Rodney Davis, R-Ill., and passed on a 412-0 vote Tuesday, employees who due to their military service receive health care coverage from the U.S. Department of Veterans Affairs or the federal Tricare program would not be counted in calculating whether their employers hit the employment count threshold that triggers the ACA employer coverage mandate.
Passage of the legislation will give smaller employers an additional incentive to hire veterans, Rep. Davis said in a statement.
A companion bill was introduced in the Senate on Wednesday by Sen. Roy Blunt, R-Mo.
The House last year passed an identical bill, but it was not taken up by the Senate.
OSHA’s New Reporting and Recordkeeping Rule Goes into Effect on January 1, 2015
Source: ThinkHR.com
On September 11, 2014, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) announced a final rule which updates the reporting and recordkeeping requirements for injuries and illnesses, found at 29 C.F.R. 1904. The rule goes into effect on January 1, 2015.
Changes to recordkeeping requirements
Under OSHA’s recordkeeping regulation, certain covered employers are required to prepare and maintain records of serious occupational injuries and illnesses using the OSHA 300 Log. However, there are two classes of employers that are partially exempt from routinely keeping injury and illness records:
- Employers with 10 or fewer employees at all times during the previous calendar year; and
- Establishments in certain low-hazard industries.
The new rule maintains the exemption for employers with fewer than 10 employees. However, the new rule has an updated list of industries that will be partially exempt from keeping OSHA records. The previous list of partially exempt industries was based on the old Standard Industrial Classification (SIC) system and injury and illness data from the Bureau of Labor Statistics (BLS) from 1996, 1997, and 1998. The new list of partially exempt industries in the updated rule is based on the North American Industry Classification System (NAICS) and injury and illness data from the Bureau of Labor Statistics (BLS) from 2007, 2008, and 2009. As a result, many employers who were once exempted from OSHA’s recordkeeping requirements are now required to keep records. A list of newly covered industries can be found at www.osha.gov/recordkeeping2014/reporting_industries.html.
Changes to the reporting requirements
In addition to revising the recordkeeping requirements, the new rule expands the list of severe injuries and illnesses that employers must report to OSHA. Under the previous rule, employers were required to report the following events to OSHA:
- All work-related fatalities.
- All work-related hospitalizations of three or more employees.
Under the new rule, employers must report the following events to OSHA:
- All work-related fatalities.
- All work-related in-patient hospitalizations of one or more employees.
- All work-related amputations.
- All work-related losses of an eye.
For any fatality that occurs within 30 days of a work-related incident, employers must report the event within eight hours of finding out about it.
For any in-patient hospitalization, amputation, or eye loss that occurs within 24 hours of a work-related incident, employers must report the event within 24 hours of learning about it.
Employers do not have to report an event if the event:
- Resulted from a motor vehicle accident on a public street or highway, except in a construction work zone; employers must report the event if it happened in a construction work zone.
- Occurred on a commercial or public transportation system (airplane, subway, bus, ferry, street car, light rail, train).
- Occurred more than 30 days after the work-related incident in the case of a fatality or more than 24 hours after the work-related incident in the case of an in-patient hospitalization, amputation, or loss of an eye.
Employers do not have to report an in-patient hospitalization if it was for diagnostic testing or observation only. An in-patient hospitalizationis a formal admission to the in-patient service of a hospital or clinic for care or treatment.
Employers do have to report an in-patient hospitalization due to a heart attack, if the heart attack resulted from a work-related incident.
What to report
Employers reporting a fatality, inpatient hospitalization, amputation, or loss of an eye to OSHA must report all of the following information:
- The name of the establishment.
- The location of the work-related incident.
- The time of the work-related incident.
- The type of reportable event (i.e., fatality, inpatient hospitalization, amputation, or loss of an eye).
- The number of employees who suffered the event.
- The names of the employees who suffered the event.
- The contact person and his or her phone number.
- A brief description of the work-related incident.
How to report
Employers can use the following three options to report an event:
- Call the nearest OSHA Area Office during normal business hours.
- Call the 24-hour OSHA hotline (800-321-OSHA or 800-321-6742).
- Report an incident electronically (OSHA is developing a new means of reporting events electronically, which will be released soon and will be accessible on OSHA’s website).
Conclusion
It is recommended that employers familiarize themselves with the final rule and train personnel accordingly. All employers under OSHA jurisdiction, even those who are exempt from maintaining injury and illness records, are required to comply with the new severe injury and illness reporting requirements.