We are very pleased to announce two new resources available on our website at www.psandeassociates.com for clients and friends: HR Insights and HR at Work Job Aids.

HR Insights is a publication that provides information, tips, and insights about HR best practices and new legislation and regulations. Our two newest issues are “10 HR Practices that Will Help Protect Your Business” and “FLSA Changes and Court Injunction – What Does This Mean for Your Business?” HR at Work Job Aids are quick reference tools that can be printed or kept on your desktop for easy access. The first HR at Work Job Aid provides a list of federal and state employment related laws and posting requirements by company size. The second is a one-pager on “Compensation and Benefits by the Numbers – 2017 Changes.” This Job Aid provides the current and 2017 minimum wage rates, Social Security taxable wage base, tax rates, Health Savings Accounts and High Deductible Health Plans thresholds, Affordable Care Act thresholds and penalties, flexible spending accounts and transportation benefits thresholds, and retirement benefits limits and thresholds. We will continue to build our library of HR at Work Job Aids over time.

To access the new resources, visit our website at www.psandeassociates.com and go to our Resources page.

If you are a small to mid-size company in Massachusetts, it can be challenging to keep track of and determine whether your company is subject to the many federal and state employment related laws. Pamela Sande & Associates has developed a summary of the laws organized by company size. The summary includes a brief description of the law, the website link where more information about the law can be found, the government agency responsible for enforcing the law, and the citation where the actual text of the law can be found. Let us know if you find this resource helpful. Visit our Resources page to access the summary.

The Department of Labor (DOL) recently revised both the FLSA (Fair Labor Standards Act) and EPPA (Employee Polygraph Protection Act) posters. Employers subject to these laws must post the revised posters as of August 1, 2016. Read more

EEOC has issued a sample notice and FAQs to help employers who have wellness programs comply with the recently issued Americans and Disabilities Act (ADA) rules. For a copy of the notice and the FAQs, go to our Resources page.

Employers offering wellness programs must provide the ADA notice the first day of the plan year beginning on or after January 1, 2017 (i.e., the first day of the plan year of the plan offering wellness incentives). However, the FAQs state that if employees already receive the HIPAA (Health Insurance Portability and Accountability Act) required notice that describes what information will be collected, who will receive it, how it will be used, and how it will be kept confidential, it is not necessary to provide the separate ADA notice unless the HIPAA notice does not include all of the ADA required information or unless the HIPAA notice is not easily understood.

Under the ADA rules, if a wellness program asks employees about their medical conditions or asks them to take a medical exam such as a test for high blood pressure, high cholesterol, or diabetes, an employer must ensure that:

  • The program is reasonably designed to promote health and prevent disease
  • The program is voluntary
  • Any medical information about the employee will be kept confidential

A wellness program may include limited financial and other incentives to encourage employees to participate in a wellness program. However, an employer cannot:

  • Require employees to participate in the program
  • Retaliate against or interfere with an employee who does not want to participate in the program
  • Coerce, threaten, intimidate, or harass an employee to participate in the program

For more details, refer to the Notice and the FAQs on our Resources page.

Development of a total rewards strategy and platform can be especially challenging for non-profit organizations.  Budgets are often limited, yet programs must be sufficiently competitive to attract and retain the talent required for the organization to succeed in delivering on its mission.  In the attached article, author Marc Kroll of 360Comp LLC, discusses the challenges non-profit organizations face when designing a total rewards program and the questions to ask in order to balance affordability and retention of a stable and talented workforce.

Pamela-Sande-DOLThe Department of Labor (DOL) has issued the long awaited final FLSA rules on the white collar exemptions from overtime. After hearing many comments from employers, professional associations such as the Society for Human Resources Management (SHRM), and others regarding the impact of the proposed rules on businesses, the final rules provide some relief as follows:

  • Minimum Salary Threshold: The final rules lower the minimum salary threshold from the proposed $970/week ($50,440/year) to $913/week ($47,476/year). Although the threshold is lower in the final rules, the new threshold is nevertheless a significant increase over the current threshold of $455/week ($23,660/year).
  • Automatic Salary Threshold Increases: Under the proposed rules, the minimum salary threshold would have increased annually. Under the final rules, the threshold will increase every three years. The automatic increases to the thresholds will start on January 1, 2020. The threshold will be set at a level equal to the 40th percentile of full-time salaried workers in the lowest-wage census region.
  • Effective Date: The final rules are effective December 1, 2016. Typically, the standard implementation timeframe is 60 days so the December effective date is good news in that it gives businesses more time to prepare for changes that may be required.

In addition, under the final rules, the highly compensated employee (HCE) exemption level is now $134,004 per year.  This level is higher than expected.  The HCE exemption level will be set at the 90th percentile of full-time salaried workers nationally. Are you ready for the FLSA changes?

Have you determined how the changes may impact your business? To prepare for the changes:

  • Identify which of your current salaried employees will not meet the new minimum salary threshold.
  • Determine whether you will increase salaries to the new minimum salary threshold or not increase them and reclassify the individuals and pay overtime.
  • And, very important – you’ll need to think through your strategy for talking with employees impacted by the changes.  For example, if you decide to reclassify employees to nonexempt, the employees must report their time like any other hourly paid employee.  This may be perceived by some employees as not being treated as a professional.  On the other hand, if you decide to increase employees’ salary to satisfy the minimum salary threshold, it will be important to explain the increase to the employee.

If you need assistance with determining financial impact, alternatives to consider, and your employee communication strategy, please contact Pamela Sande at 774-205-4018.

To view the final FLSA rules, see our Resources page.

Tuesday, May 3rd
“A How to Guide: Total Rewards Program”

Presented by: Joe Asencio – AON Hewitt, Michael Dimenstein – Yale New Haven Health System, Pam Sande – Pamela Sande & Associates, and Tom Wilson – Wilson Group

Hyatt Regency

1 Goat Island

Newport, RI

Register at: http://www.tristatehrm.com/

numbers-time-watch-white (2)A little over a year ago, President Obama signed a Presidential Memorandum directing the Department of Labor (DOL) to update the Fair Labor Standards Act (FLSA) regulations that define the conditions under which white collar workers are exempt from having to be paid overtime. The DOL published the proposed rules on July 6, 2015. It was expected that the DOL would publish the final rules in July 2016, but we have been hearing that they may be published earlier than July.

The proposed rules would increase the minimum salary thresholds required for white collar workers to be treated as exempt from overtime requirements. The table below compares the current thresholds to the new proposed thresholds.

Threshold DescriptionCurrent ThresholdProposed Threshold
Standard salary level required for a white collar worker to be treated as exempt$455 per week ($23,660 a year)Level equal to 40th percentile of weekly earnings for full-time workers ($970 per week or $50,440 a year for 2016)
Total annual compensation required to treat highly compensated employees (HCEs) as exempt$100,000Level equal to annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148)

The proposed salary threshold required for a white collar worker to be treated as exempt represents a significant increase in the current threshold. In addition, the proposed rules provide for annual automatic increases in the threshold levels. The proposed threshold and annual automatic increases in the threshold is of significant concern to many businesses.

In the meantime, a new bill was introduced in the Senate on March 17th that would not allow the DOL to enforce the proposed rules (or final rules if published before the new law is passed) unless the DOL meets certain conditions, including:

  • Conducting a full and complete economic analysis with improved economic data on small businesses, nonprofits, and all other employers
  • Minimizing the impact on employers before publishing any similar rules
  • Providing a rule of construction regarding the salary threshold exemption under the FLSA and for other purposes

The bill, however, does not prevent the DOL from moving forward with final rules, and the process for passing a new law can take time.

Is your business ready for the potential changes? Have you determined the impact of the potential changes on your business? Here are some steps you can take to help determine the impact on your business:

  • Compile a report listing all positions and employees paid on a salaried basis below $50,400
  • For positions paid less than $50,400, determine if they would be correctly classified as exempt if the salary was increased to meet the threshold requirement
  • For positions that pass as exempt if the salary was increased, determine what the cost of increasing the salary to the minimum threshold would be versus making the position nonexempt and eligible for overtime
  • Be sure to look at whether you have employees in the same jobs with some paid less than the proposed threshold and some paid more and determine the potential impact
  • When modeling the financial impact, factor in automatic increases in minimum salary thresholds (Examples: Determine the cost impact for three year period, determine cost impact for increases required because of compression issues, etc.)
  • Based on your financial analysis, develop a strategy for addressing the impact of potential changes
  • Based on your strategy, determine if any system and process changes will be required and the timing and resources that will be required to do the work involved

To view the FLSA proposed rules and the new bill introduced in the Senate, see our Resources page. We will also post the DOL final regulations on our Resources page as soon as they are available.

ACAPresident Obama signed into law the Consolidated Appropriations Act on December 18, 2015, which among other things delayed the effective date of the Cadillac tax on high-cost employer sponsored health plans from 2018 to 2020.

The Affordable Care Act (ACA) imposed a 40 percent excise tax (commonly known as the Cadillac tax) on employer sponsored “excess benefits.” For purposes of determining “excess benefits,” all employer sponsored health plans must be aggregated, including not only insured and self-insured group health plans but also most wellness programs, FSAs, employer and employee pre-tax contributions to HSAs, HRAs, on-site medical clinics, executive physical programs, retiree health coverage, and other specified types of coverage. If the aggregated coverage exceeds specified thresholds, Cadillac taxes must be paid on the amount that exceeds the thresholds. The thresholds are currently $10,200 for self-only coverage and $27,500 for family coverage. These thresholds will be updated before the tax takes effect in 2020 and indexed for inflation in the years that follow.

Another important change is that the Consolidated Appropriations Act made the Cadillac taxes when paid deductible for federal tax purposes. Before, the taxes were not deductible.

Although the delay and making the Cadillac tax deductible are great news, the Cadillac tax continues to be of considerable concern in that some employers may decide to reduce the value of the health benefits they currently provide employees in order to avoid paying the taxes. Making the taxes deductible could help mitigate some of this concern, however.

desk-office-workspace-coworkingThe Department of Labor (DOL) published final rules on April 8, 2016, that define who is a fiduciary of an ERISA employee benefit plan as a result of giving investment advice to a plan or its participants or beneficiaries.

The purpose of the final rules is to protect investors by requiring anyone who gives retirement “investment advice” to plans to comply with a “fiduciary” standard that “puts their clients’ best interest before their own profits.” The rules define investment advice as a recommendation to a plan, plan fiduciary, direct or indirect, on whether to buy, hold, sell, or exchange securities or other investments, including recommendations after investments are rolled over or distributed from a plan or IRA. In addition, investment advice includes recommendations regarding the management of investments, investment policies, portfolio composition, selection of individuals or firms to provide investment advice, selection of investment account arrangements, or recommendations regarding rollovers, transfers, or distributions from a plan or IRA. Education and general communications are not considered to be fiduciary investment advice.

Certain types of relationships must exist for recommendations to give rise to fiduciary investment advice responsibilities. These relationships include persons who, in exchange for a fee or other compensation:

  • Acknowledge they are acting as a fiduciary
  • Give advice based on the particular investment needs of a recipient pursuant to a written or verbal agreement, arrangement, or understanding
  • Provide the advice to a specific recipient or recipients regarding a particular investment or management decision concerning securities or other investment vehicles of the plan or IRA

The final rules provide an exemption referred to as the “Best Interest Contract Exemption” (BICE). This provision allows investment advisors to continue to receive commission-based compensation as long as specific conditions are met. To meet the conditions, a financial institution must:

  • Acknowledge it and its advisors are a fiduciary
  • Comply with basic standards of impartial conduct
  • Have policies and procedures designed to mitigate harmful conflicts of interest and disclose basic information about their conflicts of interest and cost of advice

Although the effective date of the regulations is June 7, 2016, compliance with the final rules is not required until the “applicability date,” which is April 10, 2017. The DOL explained that “in light of the importance of the final rule’s changes, an applicability date of one year after publication of the final rule is appropriate and gives adequate time for plans and their affected financial services and other service providers to adjust to the change from non-fiduciary to fiduciary status.”

If your business provides retirement benefits, we recommend that you discuss the rules with your administrator, broker, and others providing services to the plan and assess the impact of the rules on your current arrangements.

For a copy of the DOL’s Final Rules and Fact Sheet, go to our Resource page.