February 2015 Newsletter
Welcome to February! As the days get longer and things settle down from the chaos of January, now is a great time to start evaluating the resources available to your employees. Everything from handbooks to wellness programs can have an impact on the effectiveness of your work place. The Professionals at Granite Insurance Brokers are here to provide helpful suggestions to make your organization a great place to work.
Increase in Minimum Wage for Federal Contractors Under New Contracts While the general federal minimum wage remains unchanged at $7.25 per hour, as of January 1, 2015 the minimum wage for federal contractors increased to $10.10 per hour. This increase is pursuant to an Executive Order signed by President Obama and applies to all employers covered by the Service Contract Act or any employer who handles concessions and services in connection with Federal property or lands. The initial scope of this Order, however, will be limited; it only applies to employees employed under new and replacement federal contracts and who would otherwise make under $10.10 an hour. Contracts that were in place prior to January 1, 2015 are not affected. In addition to the increase in the minimum wage for federal contractors, 20 states have statewide minimum wage increases that went into effect on January 1, 2015. The states that saw increases in the new year are: Arizona, Arkansas, Colorado, Connecticut, Florida, Hawaii, Maryland, Massachusetts, Missouri, Montana, Nebraska, New Jersey, New York, Ohio, Oregon, Rhode Island, South Dakota, Vermont, Washington, and West Virginia.
Employer Mandate and Health Coverage Reporting Requirements Two requirements of health care reform that affect employers went into effect on January 1, 2015. First, after much debate and delay, the first phase of the Employer Mandate (or “Play or Pay” Provision) began. Once it is fully implemented, this provision of the Affordable Care Act will require all employers with 50 or more full time equivalent (FTE) employees to offer a certain level of health insurance coverage at an affordable rate to all full-time employees or face a possible penalty. For 2015, only non-compliant large employers (those with 100 or more FTE employees) will face penalties. Midsized employers (those with 50-99 FTE employees) will have an additional year of reprieve (until 2016) so long as the organization did not (1) reduce its workforce or workers’ hours to get below the 99 employee threshold without a bona fide reason or (2) materially reduce its health care plan as it existed on February 9, 2014. Employer Mandate penalties are incurred on a monthly basis, but paid annually.
With the implementation of the Employer Mandate comes new IRS reporting requirements. Employers with 50 or more FTE employees must begin Section 6056 (Employer Mandate) reporting for the 2015 tax year. These forms will be filed with the IRS and provided to employees in early 2016. Although the actual reporting will not be performed until early 2016, some of the data included in the reporting must be classified by month. So now is the time to begin tracking this data. The IRS draft samples for both required reporting forms (1094-C and 1095-C) are available in your HR Support Center.
A Brief Introduction to Wage and Hour Classifications
Did you know that just because you are paying an employee on a salary basis, it does not immediately make that employee ineligible for overtime? The crucial distinction is whether the employee is exempt or non-exempt from wage regulations that cover overtime. The employer’s method of payment such as hourly, salary, or commission, is only one element of the exempt classification. To be considered exempt, an employee’s actual job duties must meet very specific criteria. Most white collar or office job exemption criteria include the requirement that the employee be paid a minimum salary of not less than $455 a week (note that it is higher in some states). That predetermined salary cannot be reduced because of variations in the quality or quantity of the employee’s work except in specific situations. This is another part of the complex landscape employers must navigate when thinking about wage and hour classifications. You might be asking “why do employers need to figure this out?” The Fair Labor Standards Act, or the FLSA, established federal minimum wage and federal overtime pay requirements for employees throughout the country. It also defines different kinds of employment relationships, imposes regulations on record keeping, and limits the employment of minors. The FLSA covers almost all employers and is enforced by the Wage and Hour Division of the Department of Labor (“DOL”). The FLSA was passed by Congress in 1938 and has been amended several times over the years. Many expect updated exempt classification regulations will be developed or in effect by 2016. However, many states haven’t waited for the Federal Government to update their regulations and have instead passed wage and hour laws that require employers to comply with higher standards. For example, many states have their own minimum wage, additional overtime laws, or more stringent criteria for exempt classifications. Many states also have wage regulations on subjects not covered under the FLSA such as reporting time, paid sick leave, or split shift pay. Keep in mind, these regulations are applicable to the employee and employer relationship. The FLSA does not apply to non-employment relationships such as independent contractors, interns, and in certain circumstances volunteers. However, in order for the FLSA to not apply, those relationships must follow very strict guidelines; if you have questions about this topic contact an HR Professional.
Question & Answer
Q. One of our employees has inquired about FMLA leave following the birth of his child. He and the baby's mother are not married. Would FMLA still apply to his situation? A. FMLA applies to all new parents, regardless of marital status. One of the permissible reasons for leave under the FMLA is for “the birth of a child and to bond with the newborn child within one year of birth. Both mothers and fathers have the same right to take FMLA leave for the birth of a child.” So, regardless of the fact that your employee and his girlfriend are not married, he will be eligible to take leave under the FMLA for the birth and baby bonding so long as he meets the other requirements. Those requirements include having worked for your organization for at least 12 months, having worked at least 1250 hours in the last year, and having worked at a location with at least 50 employees of your organization or within 75 miles of such a location. Depending on whether he has taken any other FMLA leave recently, he may be able to take up to 12 weeks should he so choose. Finally, you should also be aware that many states have additional lea ve laws. You will need to ensure that you are in compliance with the law that is most generous to your employee.
8 Reasons Your Organization Should Have an Employee Handbook
1) Introduces Employees to the Organization’s Culture, Mission, and Values
Perhaps the most important aspect of your Employee Handbook is the introduction of new employees to your corporate culture and how they will fit in. This helps to foster a sense of pride and belonging, which studies show will help employees become more productive in a shorter period of time. The introduction section of an Employee Handbook will answer these questions: “What do we do that sets us apart?” “How did the company get here?” “What are we passionate about?” “How can I, as a new hire, become a part of this culture?” The introduction section sets the standard for the employment relationship in general, and provides a guidepost for the remaining policies communicated in the handbook
2) Communicates to Employees What is Expected of Them
A well-written handbook provides employees with a clear understanding of their responsibilities. The handbook also serves as a compass for the organization’s policies and procedures. For example, it advises employees what the procedures are for requesting time off or a vacation. It advises employees whom they should contact when they have an unscheduled absence (and what the timing should be). It tells employees whom to go to if they have questions about any of the specific policies in the handbook. The handbook also communicates an employee’s general responsibilities regarding safety, timekeeping, reporting, and so on. By providing this clear, accessible information, handbooks ensure companies continue moving in the right direction.
3) Educates Employees About What They Can Expect From Management and Leadership
An employee handbook clarifies company objectives and leadership styles, as well as management best practices, to foster healthy management-employee relationships. It also outlines logistics, such as timekeeping requirements, hours of work, pay periods, and so on. Further, a complete employee handbook advises employees of their various entitlements to federal and state leaves, such as FMLA or Jury Service Leave. These clearly communicated policies help to eliminate confusion and inconsistencies that result when handbooks are silent on these topics.
4) Helps Ensure Key Company Policies are Clearly and Consistently Communicated
No policy is effective if it is practiced inconsistently. A handbook will accurately communicate your organization’s policies regarding employment, conduct and behavior, compensation, and other policies and procedures your organization follows. Most importantly, managers can refer to the handbook when answering questions or making decisions regarding your policies, and ensure their answers and actions are consistent with your policies and best practices.
5) Showcases the Benefits the Organization Offers
Does your organization offer vacations, 401k, health insurance, paid parental leave, or other benefits to employees? Make sure they know about these policies and the eligibility requirements by communicating them in the handbook. A robust benefits package can help you retain your best and brightest employees, so be sure they know about your full suite of offerings by communicating these in the handbook.
6) Ensures Compliance with Federal and State Laws
No matter what state you do business in, or how many employees you have, you will be subject to state and federal employment laws. Your handbook not only communicates these various entitlements and obligations to employees, but is useful in demonstrating that your organization strives to be compliant with these regulations. For example, if your employee is called away to active-duty military service, you will want to be sure they understand their rights and obligations when communicating their need for leave to you. Your Military Leave Policy should clearly define these parameters to the employee. Similar policies should communicate rights and obligations regarding state disability leaves, federal FMLA leave, and other government mandates
7) Helps Defend Against Employee Claims
Unfortunately, employers should consider it a matter when, and not if, they will face a lawsuit or similar challenge from a current or former employee. When this happens, one of the most useful documents you can provide your attorney or third party investigator will be a copy of your handbook. A thorough and compliant employee handbook will help to show that the organization exercised “reasonable care” towards its employees. The employee’s signed acknowledgement page will show that the employee had an opportunity to familiarize themselves with the organization’s policies, a chance to ask related questions, knew whom they could turn to for help within the organization, and agreed to follow the terms and conditions of employment set forth by the organization.
8) Lets Employees Know Where to Turn for Help
Ultimately, you want employees to feel comfortable turning to a trusted member of management for help when they want to report workplace violations, get workplace-related assistance, and get answers to any other questions they may have. The alternative is for them to turn to an outside third party, like the EEOC or DOL, which could trigger a costly and time-consuming investigation. When a handbook not only outlines one or two management individuals for an employee to turn to in these situations, but also designates another individual to turn to in the event the employee disagrees with the first decision, they are more likely to keep their complaints in-house, and this is a good thing for employers