Archive for April, 2010

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New FLSA Breast Feeding Break Requirement

Tuesday, April 27th, 2010

As lawyers, small businesses and employees struggle to understand the implications of the new health care regulations, there are certain laws they should certainly be aware of.  One of the immediately effective portions of the Health Care Reform Act was a requirement under the Fair Labor Standards Act (FLSA) that an employer provide breaks and a location for breast feeding of an infant up to one year of age. Section 4207 of the Patient Protection and Affordable Care Act of 2010 (PPACA) amends Section 7 of the FLSA to require employers to provide:

  1. “reasonable” breaks for employees to express breast milk;
  2. in a location free from intrusion in which to take those breaks (restrooms are specifically excluded as acceptable locations).

Employers with less than 50 employees who can demonstrate that they would experience “undue hardship” in the course of providing nursing mother breaks are exempt. Breaks taken during work hours do not have to be compensated, but employers are not free to dictate when or how long the breaks must be. CAVEAT: this federal requirement does not preempt any state or local requirement that may provide a more significant requirement.

If you are unclear as how the law may affect your workplace, please contact us and one of our Human Resources Consulting experts will be available to assist you.

Source: National Association of PEOs (NAPEO)

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What to Look For When Selecting HR Outsourcing Firm

Monday, April 26th, 2010

If you are at the stage of investigating if a PEO (Professional Employer Organization) or Human Resources Outsourcing firm is right for your company, there are several important factors to take into consideration. An outsourcing relationship can continue for many years, so selecting the right firm is a serious decision that should be given a great deal of thought.

Consider the following criteria when selecting a provider:

Years in Business
PEO firms, and many HR firms, are entrusted to pay payroll, taxes and insurance premiums. Look for a firm that has strong financial credentials, long-term banking relationships and the ability to prove taxes and insurance premiums have been paid timely.

Proven Service Track Record
Stable finances and longevity does not necessarily equate to good human resource practices or customer service. The HRO firm must have a strong team of licensed human resources professionals with a proven track record of assisting clients in all areas of regulatory compliance, safety and benefits.

Size and Diversity of Client Base
The ideal HRO firm will have a large and diverse client base, serving a wide range of industries. The diversification insulates the firm from fluctuations within a particular market and dilutes the risk over many industries. Diversification can take the form of industry, size of employee base, and geographic location. A large, diversified base of clients also adds to the depth of experience of the firm and their ability to service your particular business.

Local Market Presence
Many labor and tax laws vary from state to state. Look for a firm that has expertise in the state in which you do business, and has strong relationships with local vendors and insurance companies. For California employers, this is particularly critical as California regulations differ greatly from federal guidelines. Additionally, a local corporate office will ensure quicker response time and on-site presence.

Flexibility in Service Offering
Many HR firms take the “one size fits all” approach by requiring clients to take all the services offered, from payroll and insurance, to benefits and training. It is important to look for a vendor that is flexible in their offering and is able to customize an HR solution to match your company’s individual needs.

High-Touch Service Model
Many HRO firms follow a high-tech/low-touch approach with services provided primarily through on-line self-service platforms. While this is attractive to many employers, look for a firm that is also available for on-site appearances. It is crucial for the HRO firm to have a qualified team available to meet live with your staff, whether for benefits open enrollment, claims investigations, employee relations, or manager training seminars.

CPEhr: An HR Outsourcing leader for close to 30 years.

Headquartered in Los Angeles, Human Resources Outsourcing firm CPEhr is one of California’s leading Professional Employer Organizations. Founded in 1982, CPEhr has assisted hundreds of clients understand and comply with California’s complex regulatory and insurance systems.

CPEhr began as a small payroll and HR provider, with 10 corporate employees. Over the past two-and-a-half decades, CPEhr has grown to employ close to 90 corporate professionals in the areas of Employment Administration, Labor Law Compliance, Management Training, Safety and Risk Management, Employee Benefits, Retirement Planning, Payroll and Accounting. CPEhr services 15,000 employees at over 300 client locations nationwide.

CPEhr offers a flexible HR Outsourcing solution, wherein you can select from three programs, based on your company’s needs:

  • A PEO Solution offers the ultimate in employer service and protection. CPEhr creates a “Co-Employment” relationship in which they share the employment liability and administration with you.
  • An HRP Solution offers the complete range of services offered under the PEO, without creating a Co-Employment relationship.
  • The HRO Solution enables you to pick-and-chose the exact services needed, in a completely customized relationship.

If you are researching PEO or HRO vendors, contact CPEhr to request a quote for our services.

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Employee Wellness – A Key To Keeping Healthcare Costs Low

Tuesday, April 20th, 2010

Why are health care costs so high? This question has been asked by individuals and employers for many years, but over the past 6 months, the question of rising health care costs has stolen the spotlight away from almost every other domestic agenda topic.

Why are medical costs so high?

Many reasons are given, but ultimately, the “wellness” of an employee population will have the greatest impact over time on the premiums an employer will pay. Reasons for the rising cost of health insurance include:

  • Prescription drug spending increased from $216.7 billion in 2006 to $515.7 billion in 2017, a 138% increase.
  • Increased utilization: consumers are more aware of new procedures and technology, and are using them at record rates.
  • New medical technology for the early detection of disease, new treatments, and medications for acute illness has increased.
  • Demographics: the population continues to age
  • Population health status continues to deteriorate
  • Impact of the recession on medical costs:

- Aging workforce: 33% of workers age 55-64 postponed retirement
- Unemployment March 2009: age 20-24 increased 14%, 55+ increased 6.2%
- California Unemployment increased 62% in the last year.
- COBRA Subsidy: enrollment increased from 19% to 38% of eligible
- COBRA Utilization: 150% of premium
- Consumer anxiety increases utilization

The Deteriorating Health of the U.S. Population

Over the past half century, there has been a clear and significant decline in the level of health amongst the population. Consider the following shocking obesity and diabetes statistics:

Obesity trends from 1985 to 2008: In 1985, only 8 states showed 15% of the population suffered from obesity. By 2008, over 25% of the population in 50 states was over the obesity level!

Diabetes: only two million workers suffered from diabetes in 1958. By 2006, the number had increased to 17.5 million.

The Cost to Employers

According to the Mercer 2006 Employer Annual Survey, healthcare costs to employers are estimated at $13,500 per year, per employee. That is made up of only $3400 in direct health care costs, while $10,100 is estimated in productivity loss. Specifically in the area of smoking, smokers cost employers over $4000 per year, compared to only $1700 for non smokers. The total of lost productivity is estimated at $80 billion per year.

Ultimately, an unhealthy workforce will lead to higher premiums for the employer. According to the 13th National Business Group on Health/Watson Wyatt report 2008, healthy companies experience an average annual health cost increase of 1%, compared to 10% by “unhealthy” companies.

It is clear that a healthy employee population will not only impact an employers direct insurance costs, but will also lead to increased productivity and reduced absenteeism.

The Role of Wellness

87% of health care costs are due to lifestyle choices. Overall, there is a very positive attitude of employees towards wellness programs at work:

Of employees polled:

Would Work with a Health Coach           49%
Would Enroll in a Weight-Management  53%
Would Get On-site Health Screenings      55%
Would Use Work Site Fitness Centers     59%

It’s time to improve the wellness of your organization.

According to the PBP 2010 Executive Report, The New Healthcare Law – What Every Employer Must Know, a priority of employers in light of the upcoming changes to healthcare delivery should be improving the health of their employees. Indeed, the new law offers incentives for employers who wish to offer gym memberships, smoking cessation classes, or similar health-oriented programs (details will be covered in a future post).

Considering the positive wellness attitude mentioned above, companies should implement the following six areas to improve the lifestyle of their employees and the overall health of their organization:

  • Develop a Strategic Plan
  • Ensure that you have the right mix of interventions
  • Develop a communication plan to maximize engagement
  • Use incentives to engage members
  • Provide the right tools to make good health care decisions
  • Use on-site wellness programs to increase awareness

CPEhr provides on-site benefits consulting and can assist in creating and implementing a Wellness Program for your company. Contact your Employee Benefits representative for more information.

Source: Peter Duncan, Sidles Duncan Insurance, Value Based Employee Benefit Management, March 2010 Webinar

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Maintaining Employee Benefit & Health Files – What You Need To Know.

Wednesday, April 14th, 2010

In our previous post, we discussed the importance of maintaining accurate employee files. A myriad of state and federal agencies  govern the maintenance of employee files, often with overlapping or contradictory requirements. In this post we will focus on employee benefit and health information.

Employee Benefits Data

The Employee Retirement Income Security Act, or ERISA, governs retirement and other employee benefits, and requires employers to keep records relevant to these benefit plans. For example, employers must keep all records supporting the data in summary plan descriptions, or SPDs. In addition, employers must retain annual reports for all benefits plans, including pension reports. Records should generally be retained for six years under ERISA, although records needed to determine eligibility for benefits should be kept as long as relevant.

The following documents must be kept for SIX years:

  • Cobra notices
  • Summary plan descriptions and earnings
  • Beneficiary designations
  • ERISA

The Family and Medical Leave Act

The Family and Medical Leave Act, or FMLA, allows eligible employees up to 12 weeks of unpaid leave in a 12-month period for qualifying medical and family reasons. FMLA has several recordkeeping requirements. FMLA can present an interesting scenario where we have files crossing over. If an employee requests reasonable accommodations or leave under the FMLA or CFRA regulations, documentation of that request should go in the personnel files. However, anything revealing specifics regarding the need must be kept separate in the employee health records. For example: if an individual has been absent due to an illness for 4 days and is returns to work, it is not uncommon to require a physician’s release. If the doctor’s note simply states “this individual is released to return to work with no restrictions” it can go into the personnel file. If however, it includes any diagnosis or indication of the medical health of the individual, it must go into the medical or health files.

As stated, employee medical or health records must be kept separately and confidentially in compliance with the requirements of the Americans with Disabilities Act for a period of FOUR years. Records may be kept on computer as long as they are available for transcription or copying

  • FMLA/CFRA
  • General documentation of requests go to personnel files
  • Specifics of medical need and reasons for requests including diagnosis should go to employee medical or health file

In our next post on the topic of record keeping, we will cover the complicated scenario of overlapping documentation requirements.

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Employee Personnel Files – What To Keep and For How Long?

Monday, April 12th, 2010

Record keeping plays an important role in the administration of any organization. It assists in managing human resources and helps prove compliance with government regulations. It also provides the documentation to defend—and even drive—employment decisions. Employers are well aware that various laws require them to keep records covering employment decisions and actions, but how long they are to be kept varies and can be confusing.

Who Should Have Access?

Retention can range depending on the documents from 1 to 30 years, but good judgment and sound business practice may suggest that certain records should be retained longer.

Records should be stored in a safe and secure place so that only authorized personnel have access to them. Just because someone is a supervisor or a manager does NOT mean they should have access to all documents.  In addition, certain files must be separate from personnel files, such as payroll and medical records.  Especially sensitive documents, such as disciplinary actions and investigation information regarding any unlawful or sexual harassment complaints, should be kept secured and apart from normal personnel files with very restrictive access.

Since many employment records contain personal or confidential information about employees and the organization, they need to be discarded properly. Paper records should be shredded or burned and computer files completely erased.

New Hire Applications and Paperwork

When a company seeks to hire an applicant, specific state and federal laws apply to the hiring process. In fact, multiple governmental agencies such as Title VII, FEHA, ADA, and ADEA drive the requirements for handling hiring records. If you specifically advertise for a position, online, in the paper or internally, you must keep copies of ALL ads run, all applications and resumes received in response to the ads whether they are paper or electronic form, and all evaluations of each interview for a period of 2 years.

If you do not hire the individual, all these records must be kept in an applicant file.  The easiest filing format is by month and year.  This way, as the two-year demarcation point passes, you can pull the entire month and shred it. If you do hire the individual, this information should go to the individual’s personnel file.

Personnel files

Employee personnel files contain generic information about the individual, the job and all associated trainings, and interactions in the life cycle of the employee. It is not uncommon that different areas of record keeping overlap, such as a request for reasonable accommodation under the Americans with Disabilities Act. Never keep details regarding the request in the personnel files, but rather reserve the detailed information for the employee’s medical or health files. We will discuss overlapping record keeping in future posts.

The following records must be kept for a period of TWO years:
•    Hiring Records
•    Applications, resumes
•    Pre-employment tests, reference checks
•    Evaluations of interviews
•    Ads for open positions (external)
•    Internal postings of open positions
•    Job orders submitted to employment agencies
•    Applicant file or personnel files

Again, there are state and federal agencies including Title VII, FEHA, ADA, and ADEA that drive these requirements. The personnel files must be kept for a period of TWO years after the end of the employment relationship in a very secured location.

•    Employee Personnel Files
•    Job title, description and classification
•    Offer letter
•    Promotions, demotions, and performance evaluations
•    Training, testing including certificates
•    Disciplinary notices, attendance records
•    Discharge, transfer, lay-off and recall files
•    Acknowledgments of policy, handbook
•    Request for reasonable accommodations

If you have any questions or concerns regarding your employee files record keeping, feel free to contact us. CPEhr’s Human Resources Consulting team is available to work on-site to conduct a complete audit of your documentation and record keeping practices.

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What is a PEO (Professional Employer Organization), Really?

Wednesday, April 7th, 2010

If you are familiar with different HR trends in the marketplace, you may have come across a Professional Employer Organization, or PEO.  If your company hasn’t worked with one in the past, or you are not an employee whose company worked with a PEO, chances are you really don’t know what they are, or what they do.

What is a PEO?

Simply put, a PEO is a niche industry in the broader Human Resources Outsourcing field, and creates a “co-employment” relationship with its clients to provide HR consulting support, employee benefits, workers’ compensation insurance and payroll/tax services.

From the NAPEO (the PEO’s National Association) Website:

Professional employer organizations (PEOs) enable clients to cost-effectively outsource the management of human resources, employee benefits, payroll and workers’ compensation. PEO clients focus on their core competencies to maintain and grow their bottom line.

Businesses today need help managing increasingly complex employee related matters such as health benefits, workers’ compensation claims, payroll, payroll tax compliance, and unemployment insurance claims. They contract with a PEO to assume these responsibilities and provide expertise in human resources management. This allows the PEO client to concentrate on the operational and revenue-producing side of its operations.

A PEO provides integrated services to effectively manage critical human resource responsibilities and employer risks for clients. A PEO delivers these services by establishing and maintaining an employer relationship with the employees at the client’s worksite and by contractually assuming certain employer rights, responsibilities, and risk.

Businesses across America have discovered the incredible value of PEOs because they provide:

  • Relief from the burden of employment administration.
  • A wide range of personnel management solutions through a team of professionals.
  • Improved employment practices, compliance and risk management to reduce liabilities.
  • Access to a comprehensive employee benefits package, allowing clients to be competitive in the labor market.
  • Assistance to improve productivity and profitability.

Contact CPEhr if you think a PEO may be a good fit for your organization.

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