As any business leader knows, efficiently managing resources is a key to success. And the most critical resources are your employees. With a Professional Employer Organization, or PEO, employers can simplify their operations and maximize the potential of their team. A PEO will not only help save time and money; it will help with compliance,... [...]
As any business leader knows, efficiently managing resources is a key to success. And the most critical resources are your employees. With a Professional Employer Organization, or PEO, employers can simplify their operations and maximize the potential of their team. A PEO will not only help save time and money; it will help with compliance, retention, and productivity.
Common Employment Challenges
To be successful in today’s competitive and litigious environment, employers must attract the best employees and efficiently manage the entire range of employment responsibilities. In small and mid-sized operations these duties often fall on the owner or a manager. However, without adequate time, knowledge or training, even simple HR-related decisions can have dire consequences if mishandled.
Common HR challenges include:
Making daily employment decisions that comply with all state and federal laws;
Maintaining a safe and productive work environment;
Procuring and managing employee benefits programs;
Remaining compliant with Health Care Reform;
Tracking and verifying working hours;
Remitting employment taxes to the appropriate agencies.
Instead of pushing paperwork, most executives would rather spend their time focusing on strategic goals, such as expanding market-share, developing better products or services, and building customer service. Enter the PEO.
What is a PEO and How Does it Work?
A PEO is an organization that provides an integrated, cost-effective solution for managing employee administration and human resources functions. Business owners partner with a PEO for support while still maintaining full control of their operations. This allows them and their management team more time to focus on growing their enterprise and managing the productivity of their team. According to the most recent reports by the National Association of Professional Employer Organizations (NAPEO), it is estimated that between two and three million Americans are currently employed under a PEO arrangement.
The PEO takes on many of the administrative functions relating to employment. This includes:
Employee relations assistance;
Health Care Reform compliance;
Payroll processing and tax administration;
Safety and workers’ compensation insurance;
Safety and loss control strategies.
Benefits to the Employer
A PEO arrangement offers benefits to both the employer and the employee. For the employer, PEOs offer economies-of-scale by packaging insurance products, such as health insurance, voluntary benefits and workers’ compensation, under an umbrella policy. This results in increased buying power and lower insurance premiums. It also reduces the overall costs related to payroll and accounting expenditures.
Beyond savings, a PEO provides professional assistance with employment-related challenges. The PEO’s experienced human resources staff assists clients with:
Compliant hiring and termination practices;
Discrimination and harassment guidance;
Consistent employment policies;
Compliant management practices;
Health Care Reform administration;
If mismanaged, any one of these challenges can lead to employment lawsuits, penalties and fines. Under the PEO relationship, the employer is protected and receives guidance through the entire employment life-cycle.
Additionally, a PEO manages the cumbersome administrative tasks that are often fraught with errors and distract employers from focusing on their core, day-to-day business operations. PEOs oversee:
Payroll and tax administration;
Workers’ compensation claims and risks;
Workplace safety programs;
Unemployment and COBRA administration.
Benefits to the Employee
Working with a PEO not only helps the employer; it provides valuable benefits and services to the worksite employees as well. The PEO offers a comprehensive benefit package that would otherwise be out-of-reach for most small and mid-sized employers. Benefits available to employees through a PEO include:
Group Medical Insurance: HMO, POS and PPO plans
Dental, Vision, Life and Disability Insurance
401(k) Retirement Savings Plan
Pre-Tax Cafeteria 125 Plans
Training and development has become a top priority for employers looking to advance talent and improve productivity. PEOs offer broad training programs ranging from time management and customer service, to legally hiring, wage-and-hour compliance and documentation and record-keeping. Employers are encouraged to avail themselves of these opportunities.
Research has consistently shown that a healthy, balanced lifestyle in and out of the workplace makes a significant, positive impact on the productivity of employees (not to mention the cost of health insurance premiums). Many PEOs offer health and wellness incentives, work/life balance programs, and discounts to health clubs and gyms. Ultimately, these enhanced employee benefit programs make the PEO client’s workplace more attractive for job seekers, improves morale and productivity of the staff and reduces turnover.
Between 2012 and 2014 the national association of the PEO industry, NAPEO, conducted a series of surveys and studies to determine the economic impact PEO arrangements have on employers. They compared business growth rates, administration costs, employee turnover and business survival rates to national data available from the Bureau of Labor Statistics (BLS). The findings were significant. Below are some of the highlights of their studies:
HR Administration costs, per employee:
Cost per employee (U.S. overall): $1500+
PEO Clients: $1187
Average differences in actual and expected employee turnover rates, PEO clients, 2012.
Expected turnover rate (U.S. overall): 41.6%
PEO clients: 13.5%
Average differences between actual and expected annual business failure rates:
Expected failure rate (U.S. overall): 8.0%
PEO clients: 4.1%
Percentage of workers participating in a retirement plan (10 – 49 employees):
All employers (U.S. overall): 23%
PEO clients: 52%
While many small and mid-sized employers may try ‘go at it alone’, engaging the services of a PEO offers significant competitive advantages. Reducing labor costs, minimizing employment risks, reducing workplace injuries and improving employee productivity are just a few benefits of engaging the services of PEO. If you are small or medium business struggling to get by in today’s competitive and dangerous environment, a PEO may just be the answer your business needs.Read Less...
Over the past two decades, great strides have been made against sexual harassment in the workplace. However, one in four women still report they have experienced some form of workplace harassment, and that number skyrockets to... [...]
Over the past two decades, great strides have been made against sexual harassment in the workplace. However, one in four women still report they have experienced some form of workplace harassment, and that number skyrockets to 70%, or more, in certain industries (such as food-service and hospitality). Lawroom.com released its Litigation Scorecard for 2014, and sexual harassment tops the list with 7 out of 10 employees winning their harassment lawsuits against their employers. The average win? $200,000!
So what can employers do to minimize inappropriate activities in their workplace and to reduce their risks of facing a harassment lawsuit?
In 1986, in Meritor Savings Bank v. Vinson, the United States Supreme Court first recognized sexual harassment as a violation of Title VII of the Civil Rights Act of 1964. Over the next 15 years, several landmark Supreme Court rulings further clarified the expectations of employers to educate and train their staff to remedy inappropriate harassment in the workplace.
The Equal Employment Opportunity Commission, or EEOC, is the federal agency that investigates claims of discrimination and harassment. It has explicitly stated that employers are expected to train workers, and document this training.
With respect to sexual harassment, the EEOC Guidelines state, “Prevention is the best tool to eliminate sexual harassment in the workplace from occurring. They should clearly communicate to employees that sexual harassment will not be tolerated. They can do so by providing sexual harassment training to their employees and by establishing an effective complaint or grievance process and taking immediate and appropriate action when an employee complains.”
The EEOC takes this one step further by stating employers are expected to have a clearly defined complaint/grievance process, accompanied by an immediate and appropriate response.
Anti-Harassment Training Best-Practices
While many states have mandatory sexual harassment training (such as California, Maine, New Jersey and Connecticut), there is currently no federal law mandating training. However, below are 3 best-practices to avoid a sexual harassment lawsuit:
1. Managers and employers cannot take a passive approach to education. Many companies have policies and simply hand them out at new-hire orientation. They don’t take the time to explain the policy or the avenues available to an individual if they wish to make a complaint. Additionally, managers are woefully unaware of their actual duties and responsibilities relative to accepting and responding to complaints. Simply telling an employee about a policy is not enough. Management must become pro-active in educating all employees and reinforcing an open-door policy.
2. One of the greatest vulnerabilities of management is failing to take complaints seriously and not responding in a timely fashion. Management must respond immediately to all inappropriate behavior in the workplace. They need to conduct a thorough and prompt investigation of ALL complaints, and appropriate action should then be taken.
If a manager is not adequately trained to conduct a legitimate investigation, they should take all complaints to Human Resources or a single designated Ethics Officer as soon as possible for the most effective and consistent resolution.
3. Employers may not be liable for punitive damages if they make “good faith efforts” to comply with anti-discrimination law. In other words, although employers may be liable for compensatory and economic damages, if it can be shown that a supervisor or manager acted against company policies, it is very possible that the employer will avoid punitive damages. These overall efforts include having a policy, training and immediate response. Documenting these policies and training sessions will further protect the employer in a lawsuit.
While sexual harassment is unfortunately still far too common in the workplace, employers can take a few simple, proactive steps to significantly reduce the chance of a lawsuit and improve their overall workplace environment.Read Less...
In a stunning employment verdict, a California jury awarded $185 million in punitive damages and $873,000 in compensatory damages to a former AutoZone store manager who claimed the auto-parts retailer mistreated her based on her gender, demoted her after learning she was pregnant, and ultimately terminated her from employment based on her... [...]
In a stunning employment verdict, a California jury awarded $185 million in punitive damages and $873,000 in compensatory damages to a former AutoZone store manager who claimed the auto-parts retailer mistreated her based on her gender, demoted her after learning she was pregnant, and ultimately terminated her from employment based on her decision to challenge her demotion.
Rosario Juarez, the plaintiff, said she was demoted from the position of store manager at an AutoZone store after she became pregnant. Specifically, Juarez said that AutoZone treated her differently after she told a district manager in 2005 she had become pregnant. "Congratulations...I guess," Juarez claimed the manager said. He then added, "I feel sorry for you." Juarez said AutoZone started complaining about her performance shortly afterward, before demoting her in February 2006. Juarez filed a complaint to challenge her demotion on the belief it was related to her pregnancy, and claimed she was fired because of her complaint. In its defense, AutoZone argued that Juarez was fired for misplacing $400 in cash, and receiving a poor performance review. However, the store loss prevention officer, who led the investigation into Juarez's alleged misconduct, testified during trial she never suspected Juarez of wrongdoing and thought the company was targeting her. Even though the $185 million verdict that AutoZone plans to appeal may not survive, it underscores the import of training managers and human resources personnel about appropriate treatment of pregnant personnel.
Indeed, pregnancy discrimination is a special focus of the U.S. Equal Employment Opportunity Commission's (EEOC) Strategic Enforcement Plan. In July, the EEOC issued an Enforcement Guidance on Pregnancy Discrimination and Related Issues, with a question and answer document about the guidance and a Fact Sheet for Small Businesses. Besides addressing the Pregnancy Discrimination Act (PDA), the guidance also discusses the application of the Americans with Disabilities Act (ADA), to individuals who have pregnancy-related disabilities. The guidance reiterates the fundamental PDA requirements that an employer may not discriminate against an employee on the basis of pregnancy, childbirth or related medical conditions, and that women affected by pregnancy, childbirth or related medical conditions must be treated the same as other persons similar in their ability or inability to work. The guidance also explains how the ADA's definition of "disability" might apply to workers with impairments related to pregnancy.
Soon, even the Supreme Court of the United States will weigh in on this topic. The Court is scheduled to hear oral arguments on the case of Young v. UPS on December 3, 2014. The UPS case involves whether pregnant employees are entitled to reasonable accommodations for work restrictions under the PDA, similar to those that employers must provide to disabled employees under the ADA. By comparison to the ADA, the PDA does not directly address accommodations to pregnant workers, but the question might be resolved by the Supreme Court in UPS.
Meanwhile, Congress has introduced the Pregnant Workers Fairness Act, which would amend the existing law and require all employers to grant reasonable accommodation for work limitations due to pregnancy, childbirth or related medical conditions. If the Supreme Court fails to offer clarity, the Act, should it pass, might do so.Read Less...
In 2013, a federal paid sick leave proposal was presented to Congress as part of the Health Families Act, but failed to garner enough votes to pass. However, sick leave once again gained national attention when President Obama voiced his plans during the recent State of the Union address to create a national paid sick leave plan. The proposed... [...]
In 2013, a federal paid sick leave proposal was presented to Congress as part of the Health Families Act, but failed to garner enough votes to pass. However, sick leave once again gained national attention when President Obama voiced his plans during the recent State of the Union address to create a national paid sick leave plan. The proposed law would require employers to provide their employees a minimum seven days of paid sick leave per year.
While the future of a federally mandated paid sick leave policy remains uncertain, individual states and municipalities are jumping on the trend and are establishing their own sick leave laws.
“The longer the federal law sits, the more municipalities and states are moving to pass these laws,” says William Perkins, an attorney with Seyfarth Shaw.
California and Massachusetts recently became the second and third states, respectively, to guarantee paid sick leave to most employees in their state. The first state was Connecticut which enacted the law in July, 2011.
The California law provides that most employees who work for at least 30 days are entitled to paid sick leave, accruing at a rate of at least one hour for every 30 hours worked. An employer can cap an employee’s use of paid sick days to 3 days (24 work hours) per year.
The Massachusetts law requires employers with 11 or more employees to provide up to 40 hours of paid sick time to each employee per year. Employers with 10 or fewer employees are not required to offer paid sick leave under the law. The California and Massachusetts paid sick leave laws will take effect on July 1, 2015.
Several municipalities also enacted their own paid sick leave policies. Oakland joins fellow-California city San Francisco. Trenton and Montclair, New Jersey join a host of New Jersey cities with paid sick leave policies already in place: East Orange, Irvington, Jersey City, Newark, Passaic, and Paterson. Seattle, Washington, New York and Washington D.C. also have paid sick leave laws in effect.
The growing trend to require paid sick leave is certainly good news for employees, but may give employers big headaches if a federal law isn’t passed soon. Multiple state and municipal laws could pose problems to businesses that operate in locations with different laws. Ultimately they would have to provide employees with the most generous sick leave plan, or administer a hodgepodge of different policies.
Additionally, when put on local ballots, voters tend to vote in favor these kinds of laws. The Public Religion Research Institute conducted a survey in 2014 which revealed a whopping 81 percent of those surveyed support paid sick leave. So the longer a national plan is delayed, the more we can expect to see paid sick leave laws appear on local ballots.
It is important that employers are aware of the trend, and should review or modify existing paid sick leave policies to ensure compliance with all applicable state and local laws. If you have any questions, CPEhr is available to provide assistance and guidance in creating a compliant paid sick benefits policy.
The Department of Labor announced this week that it officially amended the Family and Medical Leave Act (FMLA) by revising the definition of “spouse” to include same-sex partners. This change grants same sex couples the same FMLA rights and protections as heterosexual couples. The amendment to the FMLA extends to all 50 states... [...]
The Department of Labor announced this week that it officially amended the Family and Medical Leave Act (FMLA) by revising the definition of “spouse” to include same-sex partners. This change grants same sex couples the same FMLA rights and protections as heterosexual couples. The amendment to the FMLA extends to all 50 states – even those that do not currently recognize same-sex marriage.
In September, 1996, the Defense of Marriage Act (DOMA) was enacted. This Act established the federal definition of marriage as a union between one man and one woman. DOMA also permitted states not to recognize same-sex marriages performed in other states. DOMA stood for seventeen years until the Supreme Court declared it to be unconstitutional in United States v. Windsor.
In 2014, the Department of Labor expanded the definition of “spouse” for certain employment laws to include same-sex marriages. This opened the door for employees to access certain benefits which previously were only enjoyed by partners in a traditional marriage.
While this sounds like a significant victory for the equality-in-marriage camp, it did not grant same sex couples the right under the FMLA to care for a spouse suffering from a serious medical condition. This right was only available to same sex couples in the 17 states where such marriages were recognized at the time.
Where Things Stand Now
Under the final rule published on February 25, 2015, the Department of Labor modified the definition of “spouse” to include legally recognized same-sex marriages regardless of the state in which the employee lives. Most significantly, under the revised definition, employees who legally entered a same-sex relationship will be able to claim their “place of celebration” (ie – marriage) to determine eligibility, not their “state of residence,” as previously codified.
Simply stated, employees who married in a state that recognizes same-sex marriage and then moved to a state that does not recognize the marriage, retain their rights and can now claim FMLA protections.
“The basic promise of the FMLA is that no one should have to choose between the job and income they need, and caring for a loved one,” said U.S. Secretary of Labor Thomas Perez. “With our action today, we extend that promise so that no matter who you love, you will receive the same rights and protections as everyone else.”
The Impact to Employers
So what are the key take-aways for employers? Below are some important points to keep in mind:
To access FMLA protections, employees are still required to be legally married, whether in traditional or same-sex marriages. “Civil unions” and “domestic partnerships” do not constitute marriage and are not impacted by the law.
The amended law is actually expected to help employers that operate in multiple states, or have employees that move between states. It will ease the administrative burden of tracking the various states’ marriage rules as employers no longer need to heed the employee’s state of residency to determine FMLA eligibility.
Employers should update all FMLA policies and procedures to include the new definition of “spouse”.
All managers and supervisors should be informed of the new guidelines and employers must ensure they understand the impact of the law on their employees.
The new guidelines go into effect on March 27, 2015.
Since 1982, HR outsourcing firm CPEhr has assisted hundreds of small and mid-sized employers manage their FMLA responsibilities, representing tens-of-thousands of employees across the country. From policy audit and creation, to employee relations and compliance support, CPEhr can help you understand the impact of these new guidelines and implement any aspects of the law. Contact CPEhr today and one our trained employment experts will be happy to assist you.
Conflict Resolution in the Workplace
Conflict in the workplace is inevitable. Problems often begin with simple misunderstandings, poor communication or lack of knowledge about the role and job responsibilities of another. If managed properly,... [...]
Conflict Resolution in the Workplace
Conflict in the workplace is inevitable. Problems often begin with simple misunderstandings, poor communication or lack of knowledge about the role and job responsibilities of another. If managed properly, conflict can actually strengthen a company and its employees. It must be positively channeled into friendly competition or an activity that redirects the participants focus away from disagreement and towards a common denominator, typically the success of the company. Constructive conflict can actually result in cooperation, greater engagement, collective focus on problem-solving and a focus on the issues, NOT personalities.
Unfortunately most of the time it tends to unravel and deteriorate. If ignored or mishandled, conflict at work can escalate quickly. It will poison morale, disrupt teams, lower productivity, drive good employees out the door and lead to grievances and possibly even violence.
Causes of Conflict
Conflicts occur for many reasons:
Some specific behavior such as anti-social behavior would include gossiping, ostracizing or ignoring other workers, or unprofessional behavior. This is not to be tolerated. How individuals get along with each other is part of every job performance and they must understand their accountability for cooperation. Since everyone on a team is unique, they are going to have different approaches. This is where the leader must develop the appreciation of diversity in the individual team members.
To perform effectively, a team needs to operate as a unified group and these causes of conflict must be identified and eliminated as quickly as possible.
What Is Conflict Resolution?
Supervisors and human resources are expected to have the skills to intervene at times when employees can’t or won’t resolve issues themselves. These issues may be major disruptions or petty disagreements. It is not uncommon for management to step in and begin to take a micromanaging, parental approach towards the employees. While this may temporarily resolve the issue in the short-term, it doesn’t solve the problem in the long-term.
Management’s goal is to eliminate the root cause of the conflict. The right solutions take time and attention and the ultimate goal is to resolve and eliminate future conflicts and create a positive, cooperative work environment.
When Management Must Step In
Managers must step in if it becomes apparent that employees are having issues and not taking steps to resolve the problems. When problems spill over into the work environment, everyone becomes affected and productivity and service may be compromised. Conflict between employees can severely impact the perception of vendors and customers, influencing their desire to do business with the company.
Of course, if at any time a manager becomes aware that unlawful or sexual harassment is occurring, they must immediately notify Human Resources.
The Necessary Management Skills
If a manager intends to effectively resolve conflict, they will need to possess four key skills.
1. Interpersonal skills.
Interpersonal skills are the foundation of professional relationships at work. How one manages their emotions directly corresponds to how others perceive their leadership capabilities. This is called EQ, or Emotional Quotient. Where IQ measures a person’s ability to solve problems, EQ measures an individual’s ability to manage emotions. To be effective, managers must have the ability to effectively express their emotions and feelings towards others in a socially adept manner and learn how to apply the most positive and professional interpersonal skills possible.
2. Communication skills
When management must address issues or problems at work, they must adopt a clear, courteous and direct communication style. To successfully reduce conflict and misunderstandings, employees should be encouraged to communication professionally at all times, and their supervisor should be the role model.
Leadership sets the tone and teaching through example is a powerful educational tool. Supervisors and managers would be well-served to create a "communication tool kit" which would include several sentences to start difficult conversations and several open-ended questions to use during conversations to draw out information, encourage participation and develop deeper understandings.
3. Problem Solving Skills
When presented with a problem or a conflict, it is common to ask, "What should I do?" This typically places the supervisor in the middle of the chaos and their ability to objectively view the situation see is compromised. Instead of asking, "What should I do?" ask "What is going on here?" By taking this approach they have extracted themselves from the chaos and are now an outside observer. This enables them more rapidly prioritize and act.
4. Empathy skills
Empathy is not about FEELING the same way another person feels. It is about UNDERSTANDING why that individual, from their perspective, feels the way they do. This is the social competence portion of EQ. When an individual believes their manager understands what drives them, they are more inclined to be open to guidance. Being empathetic means that while the manager may not have those same feelings, they recognize they are important to the employee. This is the basis of respect and a good foundation for improved communication, increased cooperation and a willingness to solve problems.
When Must managers step in
Managers must step in if it becomes apparent that employees are having issues and not taking steps to resolve the problems. When problems spill over into the work environment, everyone becomes affected and productivity and service are clearly compromised. Conflict between employees can severely impact the perception of vendors and customers, obviously influencing their desire to do business with the company.
Of course, if at anytime a manager becomes aware that unlawful or sexual harassment is occurring, they must immediately notify Human Resources.
In fact, for those of you in California, a bill known as AB2053 was passed and will go into effect in January of 2015. It now requires that "Abusive Conduct" as defined by the state be included in the mandatory sexual harassment training. This bill does not make bullying at work illegal, but as trainers we are now required to put management and employees on notice through training, that this behavior should NOT be tolerated by the employer, no matter who is the perpetrator. In other words, there is a much stronger push towards professionalism at work. This would certainly include how employees cooperate with each other and how conflict is managed at work.
This approach works best when applied to conflicts that are spontaneous, emotionally-charged, demand quick, often "out-in-the open" solutions
You may only have a few moments to assess the situation, so you want to observe, listen carefully and do not judge. Ask that question "What’s going on here"? Take the participants to your office, do not hash this out in public.
No matter what the cause of the conflict, explain clearly why you have called them into the office. State exactly what the problem behavior is (arguing in public for instance) and how it affects the performance of each of them as well as all the others.
Lay out the ground rules: you are the manager and a neutral 3rd party. Tell them that. Clearly explain that no one is allowed to blame or accuse the other, you want a discussion about the issue not a brawl. No yelling, profanity or shouting. When one individual is talking you expect the other to listen respectfully, no interruptions. Each will have an opportunity to speak. The solution, and there will be one, must be a mutually cooperative one. In other words, you are the moderator of this debate if you will
Through open-ended questions determine specifically what brought about this conflict.
Ask each how they feel about that situation and why. It is reasonable for them to say they re angry, but we will not tolerate outbursts. You may tell an individual you understand they are angry but avoid expressing agreement or disagreement about those feelings because that will appear as if you are taking sides
Make your suggestions about alternate behavior specific. For example: I would like you both to reach a solution that most effectively meets the goals of the company with little to no arguing. I expect professional demeanor at all times in the future"
Be very clear about the consequences if this unacceptable behavior continues. This could include disciplinary action up to and including termination. There is zero tolerance for unprofessional, uncooperative behavior at work.
Ask each what conditions they feel must change to accommodate their goals and interests. Get from each, what they envision as a solution. Let them know if you feel the solutions are reasonable and consistent with the spirit of cooperation and problem solving you are expecting from each of them. Let them know if the solutions supports the needs of the company.
We want each person to participate, this is a must and that means each must be given an opportunity to state the case, voice opinions, make suggestions and fully understand what is being stated.
Help develop a plan that will be reasonable to all parties and that will eliminate future conflicts. Obtain an agreement, put it in writing if you feel that is necessary and set up a date in the near future to evaluate and assess the effectiveness of the plan. It is important that both parties, if possible, must feel like a co-author in this solution.
Now continue on, asking each to suggest solutions and methods to overcome the differences. Ask them to develop a plan that will avoid this type of conflict in the future. Clearly this isn’t a twenty minute meeting, but the long term benefits are well worth the invested time. This should also be agreed upon, documented and yes, I feel each should sign this agreement.
As you are facilitating these meetings watch the behavior. Are the parties genuinely trying or providing token service? Does it appear that one or both are holding back and fully opening up? Body language will provide a great deal of insight at this time. Using your open-ended questions, tap into any areas you feel may not be genuine and try to elicit sincere and honest commitments. Clarify, work with both and always remain neutral with the goals of the company the foremost priority.Read Less...
10 Health Care Reform Questions Every Employer Needs to Know
Q: What is a “Health Benefit Exchange”?
Each state can establish, as a governmental agency or nonprofit entity, an American Health Benefit Exchange. These Exchanges have two functions:
10 Health Care Reform Questions Every Employer Needs to Know
Q: What is a “Health Benefit Exchange”?
Each state can establish, as a governmental agency or nonprofit entity, an American Health Benefit Exchange. These Exchanges have two functions:
To facilitate the purchase of qualified health plans
To provide for the establishment of a Small Business Health Options Program (referred to as a “SHOP Exchange”). A SHOP Exchange will assist employers in enrolling employees in small group qualified health benefits plans. States may establish a single Exchange that performs both functions, or create separate Exchanges.
Grants will be made available to states by the Department of Health and Human Services (HHS) for planning and establishing an Exchange. However, by 2015, Exchanges must be self-sustaining and may generate revenue through assessments or fees. The HHS will also provide technical assistance to states on facilitating participation of small employers in SHOP exchanges.
Q: What are “Employer Vouchers? How are they used?
A: An employer who offers minimum essential coverage and pays any portion of the premium must provide free choice vouchers to each qualified employee. A qualified employee is defined as an employee:
Whose required contribution to the employer plan, for self-only coverage, is greater than 8% and less than 9.8% of the employee’s household income for the taxable year
whose household income is not greater than 400% of the FPL for the relevant family size
who does not participate in the plan offered by the employer.
The voucher will be equal to the monthly amount that the employer would have contributed toward the plan for which the employer pays the largest portion of plan costs, for either the employee or, if elected by the employee, family coverage.
An Exchange will credit the amount of a voucher to the monthly premium of an exchange plan in which the qualified employee is enrolled, and the employer will pay the exchange the credited amount.
If the amount of the voucher exceeds the premium, the excess will be paid to the employee.
An individual receiving a free choice voucher will not be eligible for the exchange premium credits or cost-sharing subsidies. No penalty will be imposed on an employer with respect to any employee who is provided with a voucher.
Q: What are the penalties for employers who do not offer coverage?
A: Beginning in 2014, an employer with more than 50 employees that does not offer coverage will be subject to a penalty. The monthly penalty per employee will be equal to the number of full-time employees minus 30 multiplied by one-twelfth of $2,000 ($166.66) for any applicable month.
For example, an employer with 80 employees will be subject to a penalty of $8333 per month (80-30 = 50 X $166.66). After 2014, the penalty payment amount would be indexed by the premium adjustment percentage for the calendar year.
Q: What is being suggested for employers that do not have health care plans in place to do at this time to prepare for the upcoming changes?
A: Each employer should begin collecting the necessary information to determine if they have 50 or more full time equivalent (FTE) employees. If an employer has fewer than 50 full time employees, the law does not require the employer to offer coverage. If the employer has 50 or more FTE’s than there are several parts of PPACA that need to be evaluated to determine the impact to the employer. It is recommended to consult with a professional familiar with the law and its implications to the business.
Q: What is the meaning of "affordable insurance” with respect to an employer’s obligation to provide “affordable health insurance”?
A: Affordable coverage means the plan has an actuarial value of at least 60% of required health care covered expenses and the employee cost is less than 9.5% of household income.
Q: What is a “Cadillac Health Plan”?
A: The PPACA imposes a 40 percent excise tax on “Cadillac” health insurance plans. This new tax will apply to health plans valued in excess of $10,200 for individuals and $27,500 for families. Those thresholds will grow annually by inflation plus 1 percent. The tax takes effect in 2018 and is projected to raise $32 billion by 2019.
Q: Not only does the cost of a health plan need to be affordable ... don’t maximum deductibles and out of pockets apply too?
A: Yes, PPACA requires small group plans limit deductibles to $2,000 per individual and $4,000 per family. These amounts will be indexed to health care premium inflation.
Q: If Governor Romney is elected, what are the chances of repeal being successful?
A: If states opt out of the Medicaid expansion they will not receive the federal funds available to pay for the expansion. Funding will be a significant impact to any state budget and economy. Romney will need the Senate to support any repeal effort.
Q: How does Healthcare Reform affect COBRA elections and cost to the employee?
A: This is not clear at this time. COBRA may no longer be need if individual have access to coverage through the state exchanges. However, if the state exchanges are higher cost the employee may elect COBRA.
Q: What happens to a person that is unemployed and cannot afford the penalty/coverage?
A: The individual would likely be eligible for premium subsides or the expanded eligibility for Medicaid.Read Less...
California’s Newest Employment Law: Mandatory Paid Sick Leave for all Workers
Big news came out of Sacramento yesterday as California Governor Jerry Brown signed Assembly Bill 1522 into law. AB 1522, also known as the Healthy Workplaces, Healthy Families Act of 2014, requires all California-based employers to... [...]
California’s Newest Employment Law: Mandatory Paid Sick Leave for all Workers
Big news came out of Sacramento yesterday as California Governor Jerry Brown signed Assembly Bill 1522 into law. AB 1522, also known as the Healthy Workplaces, Healthy Families Act of 2014, requires all California-based employers to provide employees with up to three days of paid sick leave per year, beginning on July 1, 2015.
Under the new law, aside for a few limited exceptions, all employees working in California will earn a minimum of one hour of paid sick leave for every 30 hours worked. Governor Brown’s office estimates that the new law will provide sick benefits to about 6.5 million employees, or 40 percent of California's workforce, who do not currently receive paid sick leave.
The new law also requires that once the hours are accrued, up to 24 hours (or three days) of paid sick leave per year, they can carry over to the next calendar year. Employers are allowed to limit, or “cap,” the total accrual of paid sick leave to six days (48 hours).
The law in this regard is not dissimilar to vacation accrual caps that are permitted under existing California law. That is, if an employee reaches their 48 hour paid sick time cap and has not used any of it, they will stop accruing additional hours until they used some of the accrued time. Employers, at their discretion, may set a higher maximum limit to the amount of hours that may be accrued.
It should be noted that an employer is not required to provide any additional paid sick time to its employees if its existing policy already meets the law’s minimum requirements.
As would be expected, the reaction to the new law is split. Governor Brown’s office issued the following statement:
"Whether you're a dishwasher in San Diego or a store clerk in Oakland, this bill frees you of having to choose between your family's health and your job. Make no mistake, California is putting its workers first."
And House Democratic Leader Nancy Pelosi had this to say:
"Paid sick leave is essential for the health of our families, the strength of our workers, and the success of the middle class. California's Healthy Workplaces, Healthy Families Act will help lower health care costs, reduce employee turnover, prevent the spread of illnesses, and support both women and men caring for their families. In order to jumpstart the middle class, Congress must now follow California's lead and guarantee paid sick leave for workers across the entire country."
On the other side of the aisle, conservative business advocates argue that the new law will add more financial strain on already burdened employers and will damage the state's business climate.
John Kabateck, the executive director of the National Federation of Independent Business in California stated:
"Our small business owners, who make up more than 99 percent of the employer community in California, already face an increase in minimum wage, among the highest taxes and more regulations than any other state."
If you have any questions about this newest California employment law, CPEhr is available to provide assistance and guidance in creating a compliant paid sick benefits policy.Read Less...
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