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News and Events
New Law Allows Stand-alone HRAs for Small Employers - December 2016
On Dec. 13, 2016, the 21st
Century Cures Act (Act) was signed into law. The Act allows small
employers that do not maintain group health plans to establish stand-alone
health reimbursement arrangements (HRAs), effective for plan years beginning on
or after Jan. 1, 2017. This new type of HRA is called a “qualified small employer HRA.”
Due to the Affordable Care Act (ACA), most stand-alone HRAs
have been prohibited since 2014. This new law creates a special exception for
small employers that are not subject to the ACA’s employer shared
responsibility rules. Instead of offering a group health plan, small businesses
may use a qualified small employer HRA to reimburse employees’ out-of-pocket
medical expenses, including their premiums for individual health insurance
coverage, on a tax-free basis.
Small employers that do not sponsor group health plans may want
to consider implementing a qualified small employer HRA to help their employees
pay for out-of-pocket medical expenses. Because there are specific design
requirements for these HRAs, including a maximum benefit limit and an employee
notice, small businesses should work with their advisors to make sure their
HRAs are compliant.
HRAs are employer-funded arrangements that reimburse
employees for certain medical care expenses on a tax-free basis, up to a
maximum dollar amount for a coverage period. The ACA includes market reforms
that limit the availability of HRAs, beginning in 2014. Under these reforms,
most stand-alone HRAs have been prohibited. A stand-alone HRA is an HRA that is
not offered in conjunction with a group health plan.
However, the Act creates an exception to this prohibition
for qualified small employer HRAs.
Qualified Small Employer
To be eligible to offer a qualified small employer HRA, an
employer must meet the following two requirements:
- The employer is not an
applicable large employer (ALE) that is subject to the ACA’s employer
shared responsibility rules. In general, this means that the employer must
have fewer than 50 full-time
employees, including full-time equivalents.
- The employer does not
maintain a group health plan for any of its employees.
HRA Design Requirements
Like all HRAs, a qualified small employer HRA must be funded
solely by the employer. Employees cannot make their own contributions to an
HRA, either directly or indirectly through salary reduction contributions. In
addition, the following requirements apply to qualified small employer HRAs:
An employer funding a qualified small employer HRA for any year
must provide a written notice to
each eligible employee. This notice must be provided within 90 days of the beginning of the year. For employees who
become eligible to participate in the HRA during the year, the notice must be
provided by the date on which the employee becomes eligible to participate.
The notice must include the following information:
- The employee’s maximum benefit under the HRA for the year;
- A statement that, if the employee is applying for advance
payment of the premium assistance tax credit, the employee should provide the
Exchange with information about the HRA’s maximum benefit; and
- A statement that, if the employee is not covered under
minimum essential coverage for any month, the employee may be subject to a
penalty under the ACA’s individual mandate and reimbursements under the HRA may
be includible in gross income.
If an employer fails to provide this notice for a reason
other than reasonable cause, the employer may be subject to a penalty of $50 per employee for each failure, up
to a maximum annual penalty of $2,500 for all notice failures during the year.
Monitoring PTO Amounts - November 2016
Many companies are now offering paid time off (PTO) as
opposed to traditional vacation and sick day policies. With a PTO policy,
employees can draw from their allotted bank of hours for a variety of reasons,
including vacation, doctor’s appointments or needing a day off for personal
reasons. To accrue this bank of hours, employers (usually HR) either credit the
year’s PTO allotment at the beginning of the year or deposit PTO hours each pay
However, HR’s involvement generally stops at distributing
hours to employees. For a PTO policy to be beneficial to both employees and
employers, in most cases, HR should monitor PTO usage and set PTO amounts.
The need for PTO monitoring is entirely dependent upon your
organization. If your organization does not have clear guidelines for PTO
usage, you may need to take a more hands-on approach to monitoring employees’
PTO. For example, you could require employees to give at least one week’s
notice before using PTO unless he or she is sick or there is an emergency in
order to reduce the risk of employees taking advantage of PTO.
If your organization has already established clear
directives for employees to follow when using PTO and your company culture is
designed to embrace PTO policies, you may not have to do much work monitoring
Asking “Why” and
It is up to your company to decide whether or not you should
require your employees to explain what they’re using their PTO for. Generally, employees
can use their PTO however they want to. As a result, many managers don’t feel
comfortable asking “why” when an employee submits a PTO request. However, it
sometimes makes sense to do so.
For example, if an employee asks off during a particularly
busy time and his or her absence will be significant, it makes sense to ask
what they are doing with their time off, and then, depending on their answer,
ask them if they could move it to either before or after the busy time at work.
Keep in mind that asking why too frequently or consistently
denying employees’ PTO requests may become problematic. PTO boosts employee
morale and productivity and is an attractive retention tool—denying PTO
requests often or appearing too intrusive may discourage employees from using
this benefit at all. While it is up to your company to create a policy on
asking questions about and denying PTO requests, it is generally better to
avoid doing either frequently.
Area of Concern:
Using or Saving All Accrued PTO
If your organization distributes an entire year’s worth of
PTO at the beginning of the year, you should be on the lookout for employees
who use up all of their PTO early in the year or save it all until December. If
employees use all of their PTO early in the year, they will have no safety net
for illness, injury or emergency days later on in the year. On the flipside, if
your company allows PTO to be rolled over to the next plan year, you might end
up with an employee who has an extensive amount of unused PTO and decides to
take a five-week vacation. If your company does not allow rollovers or caps
rollovers to a certain amount of hours, an employee who does not use any PTO will
lose all or a large portion of it at year’s end.
To prevent this from happening, you, as the HR professional,
need to be on the lookout for PTO misuse and speak with employees when you
notice it happening. Though it is ultimately the employees’ choice on how they choose
to use their PTO, notifying them of the potential impact of their choices may be
enough to remedy the issue.
Be Clear on
According to a study from Project: Time Off—a U.S. Travel
Association initiative to transform American attitudes and behaviors around
time off—management’s mixed messages surrounding vacation time contributed to
658 million unused vacation days in 2015. Mixed messages include denying PTO
requests too frequently or making employees feel guilty for taking time off
As previously mentioned, PTO is a valuable tool that can
lead to less burnout and improve employee morale, productivity and retention.
If you want your employees to reap the benefits of PTO, don’t discourage them
from using it by confusing the issue with mixed messages.
HR should keep track of PTO amounts to avoid issues and make
the company’s PTO philosophy clear to employees in order for it to be
beneficial to both employees and employers.
Fair Employee Compensation - October 2016
Providing nondiscriminatory, fair employee compensation is a
top concern for employers across the country. Because HR specializes in areas
like recruiting and compensation packages, they are in the best position to
determine appropriate compensation plans, make acceptable initial salary
offers, establish guidelines for merit increases, suggest pay audits, and, if
necessary, help the company phase in compensation change.
Designing Compensation Plans
Having a well-designed compensation plan that ensures equity
should be a high priority for all employers. Yet, a compensation plan should
not be focused on the salary for a position. Compensation plans can, and
typically do, include things like commissions, bonuses or merit pay, stock
options and a comprehensive benefits package to complement a base salary.
Compensation will typically be perceived as fair if it is
designed with a system of components including job descriptions, job analyses
and evaluations, and pay structures. Ensuring that these elements are included
when determining compensation plans is essential to maintaining internal and
equity refers to employees’ perception of their pay in comparison to their
equity refers to employees’ perception of your company’s pay in comparison to
the pay of similar positions at other companies.
Defining and documenting the responsibilities, requirements,
duties, conditions, environment and other applicable aspects of a job is an
important element of a compensation system. Having well-written job
descriptions can help you set the parameters for fair salary offers and ranges
and help you appropriately group jobs. Additionally, it can help streamline the
recruiting process and ensure compliance with federal laws like the Americans
with Disabilities Act (ADA) and the Fair Labor Standards Act (FLSA), as well as
applicable state and local legislation.
Job Analyses and Evaluations
Analyzing and evaluating job elements like safety risks, job
stress, work schedule, autonomy and level of supervision are factors that play
into determining fair levels of compensation. Often, this task involves
comparing your company’s positions and evaluations with industry market data
and adjusting both the position itself, ranking levels of each position (entry
level, intermediate, senior) and pay grades, as necessary.
After deciding how many different levels (if any) of each
position your company wants to have, you must determine pricing and salary
structures for each. Be sure to set a minimum and maximum percent spread for
each salary range and pay grade.
It’s important to look at market trends for salary ranges of
each level and align them with company pay philosophy; or, in other words,
decide if you want to pay your employees at, below or above market salary
trends. Take your company’s industry and geographic location into account when
drawing comparisons and adjust accordingly.
Making an Appropriate Salary Offer
Perceived pay fairness begins with a new hire’s initial
salary offer. The offer should be placed within the current workforce’s
population and within market trends to maintain internal and external equity,
respectively. HR should document if salary negotiation occurs or if any unique
issues occur for future reference, if needed.
Be mindful of the perceived market value of a specific
position, but also remember that it’s not all about the monetary offer. Company
culture and benefits offerings play a role in an employee’s perception of
whether or not they are being paid fairly for their work.
Guidelines for Merit Increases
Merit increases, also known as merit bonuses, are a great
way to reward employees, but without set guidelines, there is no real way to
ensure that these incentives are being awarded fairly. It may be beneficial to
develop a standardized, objective method for evaluating employees.
Consider the following suggestions when establishing and
implementing merit increase procedures:
to managers which accomplishments and behaviors will warrant a reward.
performance-management training for all managers to ensure all managers are
capable of conducting performance reviews to your company’s standards.
transparent with employees about how your company’s bonus structure works.
opportunities for employee feedback.
your merit increase program regularly.
Suggesting Pay Audits
As previously mentioned, because HR deals with employee
compensation directly, they are in the best position to bring up the topic
of—and, in some cases, to conduct—a pay audit. HR will be instrumental in
gathering the necessary paperwork for a legal counsel to conduct a pay audit
and will likely be responsible for explaining differences in pay among
employees based on the job descriptions, which exacerbates the importance of
having proper job descriptions written for each position at your company.
If a pay audit is needed at your company and your company
uses legal counsel to conduct the audit, remember to discuss the terms of
attorney-client privilege with them so that you do not put your company at risk
of losing it.
If a pay audit reveals that compensation changes need to be
made in order to comply with fair employee compensation legislation, HR will be
responsible for helping implement them. A large part of their role will involve
communicating these changes to employees and managing any issues that may arise
following these changes.
Taking a thoughtful approach is often the best way to phase
in compensation changes for both the employer and the employee.
The Importance of
If your company’s employee compensation is fair, it can be a
useful tool to help you recruit and retain talent, increase employee morale and
reward or encourage high performance. Employees are coming to expect fair
compensation as well. If your company does not offer compensation that is
deemed “fair” by potential and current employees or state and federal
governments, it may find itself in trouble in the near future.
It is in your company’s best interest to ensure you abide by
federal and local fair pay regulations. Be proactive and look at your employee
compensation data today.
Employment Decisions and the Fair Credit Reporting Act - September 2016
As an employer,
you obviously want to make careful, educated hiring and promotion decisions.
One resource you may use in making those choices is a consumer report. Basing
employment decisions on information found in a consumer report is legally
acceptable, as long as you comply with the Fair Credit Reporting Act (FCRA).
The FCRA is
designed primarily to protect the privacy of consumer report information and to
guarantee that the information supplied by consumer reporting agencies is as
accurate as possible. Employers who use consumer reports must ensure that
individuals are aware that consumer reports may be used for employment purposes
and agree to such use, and individuals are notified promptly if information in
a consumer report may result in a negative employment decision.
report contains information about an individual’s personal and credit
characteristics, character, general reputation and lifestyle. To be covered by
the FCRA, a report must be prepared by a legitimate consumer reporting agency
(CRA). Employers often do background checks on applicants and get consumer
reports during their employment. Some employers only want an applicant's or
employee's credit payment records; others want driving records and criminal
For sensitive positions, it's not unusual for
employers to order investigative consumer reports—reports that include
interviews with an applicant's or employee's friends, neighbors and
associates. Credit background, references, past employment, social security,
work habits, education, drug testing, judgments and liens, sex offender lists,
criminal backgrounds, driving records, and military records are all consumer
reports if they are obtained from a CRA.
often asked to give references. Whether verifying such references is covered by
the FCRA depends on who does the verification. A reference verified by the
employer is not covered by the Act; a reference verified by an employment or reference
checking agency (or other CRA) is covered. Section 603(o) of the FCRA provides
special procedures for reference checking; otherwise, checking references may
constitute an investigative consumer report subject to additional FCRA
Before you can
get a consumer report for employment purposes, you must notify the individual
in writing—in a document consisting solely of this notice—that a report may be
Employers also must get the person's written authorization
before requesting from the consumer reporting
special authorizations apply to California, Minnesota and Oklahoma residents.
If you are requesting medical information, the individual’s authorization must
specifically state his or her consent to release such information.
a credit report from a consumer reporting agency, you must certify that you will
inform the individual of his or her rights under the FCRA and agree not to use
the information in violation of state or federal employment laws.
When you receive
a credit report from a CRA, you are not required to release the report to the
employee unless the report prompts you to make an "adverse action"—denying
a job application, reassigning or terminating an employee, denying a promotion
or access to company benefits, or other discipline. Before you take the adverse
action, you must first give the individual a disclosure that includes a copy of
the individual's consumer report and a copy of "A Summary of Your Rights
Under the Fair Credit Reporting Act"—a document prescribed by the Federal
Trade Commission. The CRA that furnishes the individual's report will give you
the summary of consumer rights.
taken an adverse action, employers must give the individual notice—orally, in
writing or electronically—that the action has been taken in an adverse action notice.
The notice must contain the name, address and phone number of the CRA that
supplied the report; a statement that the CRA that supplied the report did not
make the decision to take the adverse action and cannot give specific reasons
for it; and a notice of the individual's right to dispute the accuracy or
completeness of any information the agency furnished, as well as his or her
right to an additional free consumer report from the agency upon request within
An individual can request a
copy of his or her credit report from the consumer
reporting agency within 60 days of any adverse employment action based on the
report at no cost. An individual can dispute the information if they disagree
with the report. Employers should notify individuals of their rights to dispute
the information contained in the credit report. CRAs must reinvestigate the
accuracy of the disputed information within 30 days of the dispute without cost
to the individual. If an applicant or employee notifies the employer that he or
she is challenging information in the report, the employer should not make a
final decision on the employment status of the applicant or employee until
after that person has had a reasonable opportunity to address the information
contained in the report. Employers must also make sure that they properly
dispose of all “consumer information” obtained from consumer reports. See www.business.ftc.gov/documents/alt152-disposing-consumer-report-information-rule-tells-how
for more information on disposal procedures.
o You advertise
vacancies for a position and receive 100 applications. You want credit reports
on each applicant because you plan to eliminate those with poor credit
histories. What are your obligations?
- You can get credit
reports—one type of consumer report—if you notify each applicant in writing
that a credit report may be requested and if you receive the applicant's
written consent. Before you reject an applicant based on credit report
information, you must make a pre-adverse action disclosure that includes a copy
of the credit report and the summary of consumer rights under the FCRA. Once
you've rejected an applicant, you must provide an adverse action notice if
credit report information affected your decision.
o You are considering
a number of your employees for a major promotion. You want to check their
consumer reports to ensure that only responsible individuals are considered for
the position. What are your obligations?
- You cannot get
consumer reports unless the employees have been notified that reports may be
obtained and have given their written permission. If the employees gave you
written permission in the past, you need only make sure that the employees
receive or have received a "separate document" notice that reports
may be obtained during the course of their employment—no more notice or
permission is required. If your employees have not received notice or given you
permission, you must notify the employees and get their written permission
before you get their reports. In each case where information in the report
influences your decision to deny promotion, you must provide the employee with
a pre-adverse action disclosure. The employee also must receive an adverse
action notice once you have selected another individual for the job.
o A job applicant
gives you the okay to get a consumer report. Although the credit history is
poor and that's a negative factor, the applicant's lack of relevant experience
carries more weight in your decision not to hire. What's your responsibility?
- In any case where
information in a consumer report is a factor in your decision—even if the
report information is not a major consideration—you must follow the procedures
mandated by the FCRA. In this case, you would be required to provide the
applicant a pre-adverse action disclosure before you reject his or her
application. When you formally reject the applicant, you would be required to
provide an adverse action notice.
is in Your Best Interest
There are legal
consequences for employers who fail to get an applicant’s permission before
requesting a consumer report or who fail to provide pre-adverse action
disclosures and adverse action notices to unsuccessful job applicants. The FCRA
allows individuals to sue employers for damages in federal court. A person who
successfully sues is entitled to recover court costs and reasonable legal fees.
The law also allows individuals to seek punitive damages for deliberate
violations. In addition, the Federal Trade Commission, other federal agencies
and individual states may sue employers for noncompliance and obtain civil
from the Federal Trade Commission’s Using
Consumer Reports: What Employers Need to Know
Should Employees Be Allowed to Play Fantasy Sports at Work? - August 2016
sports have exploded in popularity over the past decade, with one of the most prevalent
being fantasy football. Fantasy sports allow individuals to draft virtual teams
of professional players and compete against other players in their leagues.
More than 56
million Americans play fantasy football—37 million of which are employed full
time. Studies estimate that fantasy football costs more than $16 billion in
lost productivity each
year. This figure assumes that players spend one hour a week at work managing
their teams over the course of the 17-week football season.
Benefits of Fantasy Sports
employers may be concerned about these statistics, there are many benefits that
can be achieved by allowing employees to play fantasy sports in moderation at work:
- Increase employee morale—Fantasy sports can be a great
way for co-workers to bond in the break room or at the water cooler. Even
if your company does not have its own office league, employees can discuss
their performance in other leagues with their colleagues.
- Promote interdepartmental
an office fantasy league can help people from others departments get to
know each other. In order to promote participation, consider making entry
to the league free so a wider group of employees will participate.
- Increase productivity in the
has shown that short breaks throughout the day can boost creativity and
increase productivity in the long run.
Allowing your employees to manage their fantasy teams in moderation
during work may boost your company’s bottom line.
Risks of Fantasy Sports
these benefits, there are some risks that employers should be aware of when
considering whether to allow fantasy sports in the workplace, including:
discrimination—Creating an office fantasy sports league could open
the door to future lawsuits. While more women are beginning to play fantasy
sports, the majority of players are male. Female employees who are
- mocked for not playing may bring claims alleging a hostile workplace.
In addition, those who choose not to play for religious reasons could also
bring a discrimination suit if they feel excluded or ridiculed.
- Gambling risks—Office leagues that require an
entry fee may violate state and local gambling laws. Some states make an
exemption for “social gambling,” but often place limits on how much money
can be awarded. If you have employees playing in offices in different
states, this could also pose a legal risk. Recently, some states have
taken action against fantasy sports companies like DraftKings and FanDuel,
so it is important to keep an eye on future legislative changes and
Best Practices for Fantasy Sports in the Workplace
tips below to prepare your business for fantasy football season:
- Create a clear policy outlining what kind of gambling is allowed in
the workplace and include it in your employee handbook.
- Require employees to ask HR for approval before setting up a fantasy
sports league in the office.
- If you choose to set up a league, explain to employees early on that
this does not give them permission to neglect their work. Outline the
extent to which employees can manage their fantasy teams during work and
if they can use company property (work laptops, email, etc.).
- Train supervisors to identify any possible issues of exclusion
relating to fantasy sports in order to avoid issues down the road.
For more information on how to manage office distractions and improve
productivity, contact CMR Risk & Insurance Services, Inc. today.
Examining Narrow Provider Networks - July 2016
In recent years, narrow networks have gained popularity.
Narrow networks are health plans that offer their subscribers a limited choice in
health care providers. Health plans contract with a small group of doctors,
specialists and hospitals, and those entities are then considered in-network.
Because all plan participants are directed toward certain facilities and physicians, these providers can then reduce the cost for each visit and service—operating under the idea of “buying in bulk.” This, in turn, results in lower premiums for the consumer and cost savings for insurers.
Why are narrow networks becoming more popular?
networks have been around long before the Affordable Care Act (ACA). In fact,
23 percent of employer-sponsored health plans offered narrow networks in 2012. However,
their popularity has accelerated since the ACA was signed into law and the Health
Insurance Marketplace was created.
insurers can no longer compete to cover the healthiest group of individuals or raise
deductibles past the ACA’s limits, some have turned to narrow networks as a way
to manage expenses. According to a study by McKinsey & Co., a consulting
firm, 70 percent of the plans sold on the Marketplace in 2014 featured a
limited network. Premiums for those plans were 17 percent cheaper than those
with wider networks. In this study, narrow networks were considered those that had
at least 30 percent of the 20 largest hospitals in the region not participating
in the plan.
Benefits of Narrow Networks
above, lower premiums are one of the major benefits of narrow networks. The
following are other potential benefits:
- Lower Costs—There is huge variation in
health care prices in the United States. A hip surgery at one hospital can
cost $8,000, but at another hospital in the area it may cost $15,000. By
narrowing networks and only signing contracts with select providers, employers
can direct employees to providers in the $8,000 range and reduce expenses.
- Improve the care
relationship—Narrow networks allow doctors to get to know their
patients better. These doctors may all use the same electronic medical record system—allowing for the quick sharing of important medical
information among health care providers. This can enhance care
coordination and improve outcomes.
- Greater consumer awareness—As health care consumerism
continues to grow, narrow networks offer individuals the opportunity to
take control of their health care. It allows employees to better understand
and budget for their health care expenses.
Disadvantages of Narrow Networks
these benefits, many people have concerns about narrow networks and their
long-term success. Below are a few disadvantages of offering plans with a
- Inadequate access—Narrow networks have been
criticized for being too restrictive. For instance, some employees may
have been going to the same primary care doctor for years, but all of a
sudden, they have to change doctors and find a new in-network provider. In
addition, some narrow networks exclude children’s hospitals and cancer treatment
centers due to their high costs, which may cause employee dissatisfaction.
- Surprise out-of-network bills—Despite their efforts to lower
costs, oftentimes individuals in narrow network plans are left with
surprise out-of-network bills. This can be due to a multitude of reasons,
such as out-of-date provider directories or patients getting inaccurate
information about a doctor’s in-network status when making an appointment
or scheduling a surgery. Furthermore, many hospitals contract out for
emergency physicians, radiologists and anesthesiologists. So while a
hospital may be in-network, the doctors performing a certain surgery may
not be, resulting in huge out-of-network bills that can blindside your
- Similarity to health maintenance
organizations (HMOs)—Some experts have compared narrow network plans to HMOs, which resulted
in employee backlash in the 1990s. While HMOs are still around, they have fallen
in popularity due to their perceived care limitations. Some experts
believe that narrow network plans will follow a similar course.
- Rural care—Narrow networks may not be as effective
in rural areas. Oftentimes there are not enough in-network providers,
resulting in long wait times or employees having to drive a long way to
see an in-network doctor. For instance, Montana’s insurance commissioner
urged insurers to sell plans that included at least 80 percent of
providers in its state, since the 30 percent federal standard could result
in patients having to travel 400 miles away for in-network care.
- Legal issues—While state and local laws on
narrow networks vary and remain vague, the potential for future legal
repercussions remains. Several hospitals are suing insurers over
allegations of being wrongly excluded from their state’s marketplace. In
addition, some states are considering legislation regarding limiting
surprise out-of-network bills and network restrictions.
What to Consider
you’re thinking about switching to a narrow network, communication and
education will be key. The challenge is to overcome the perception that a
narrow network means less access to
care and lower quality services. Instead, you must stress that it is a way to
empower employees and improve care management. One way to do this is to highlight
providers in your network who are high-performers or who have won distinguished
In addition, educating your employees about network
restrictions is imperative. Provider directories must be kept up to date, and
employees should have an easy and convenient way to access this information.
Transparency about access and costs is key, since failing to provide accurate
information could result in surprise out-of-network bills. Employees that are
stressed about their health and finances are more likely to miss work, be less
productive and make mistakes on the job.
For more information about managing your health care costs,
contact [B_Officialname] today.
The Importance of Sleep - June 2016
As employees struggle to balance work, family and social
obligations, one thing that is often neglected is sleep. The Centers for
Disease Control and Prevention (CDC) recommends that adults get seven to eight
hours of sleep on average; however, most Americans fail to meet this
According to a study from Virgin Pulse, 76 percent of
employees reported feeling tired most days of the week. Fatigue and exhaustion
can be a serious problem for your business. Fatigued employees are less likely
to be productive and focused on the job. This lack of focus can lead to more
mistakes, procrastination and a negative work environment.
Increased Health Care Costs
Fatigue can also lead to increased medical costs. Exhausted
employees are more likely to miss work and incur medical costs for conditions
related to high blood pressure, cholesterol and stress. In addition, fatigued
employees are more likely to have an accident at work, which can lead to more
workers’ compensation claims.
Individuals with undiagnosed or poorly managed sleep
disorders can also take a toll on your company’s bottom line. A study from
Harvard Medical School found that one employee with insomnia results in 11 lost
days of productivity each year—costing the U.S. economy $63.2 billion a year.
Other common sleep disorders include sleep apnea and restless leg syndrome, both
of which can interfere with employees’ ability to go to work well-rested.
5 Solutions for Promoting Sleep at Your Company
Below are five strategies to help employees get a better
flexible scheduling—Flexible scheduling
requires employees to be available within core hours during the day (for
example, from 10 a.m. to 2 p.m.), but allows them to vary their start and end
times. This allows employees to better manage their work, family
and personal obligations, and find more time for sleep in their daily
- Allowing telecommuting—Allowing employees to work remotely can
be a great way to promote a healthier sleep cycle. If your company is
located in a city, this may be especially valuable, as employees will likely
have longer and more stressful commutes. Instead of spending 30 minutes in
the car, employees can spend this extra time sleeping so they are
refreshed when they begin their day.
- Installing nap rooms—Several high-profile companies like
Google, Zappos and Ben & Jerrys have installed nap rooms in their
offices in recent years. Studies have shown that taking a short nap can
boost creativity, improve alertness and enhance performance. Not only can
nap rooms reduce on-the-job fatigue, but they can be a valuable
recruitment and retention tool.
- Hiring temporary help during high workloads—High workloads can
stress out employees and make them feel like they should stay later at the
office. While output may increase, employees are much more likely to make
costly mistakes when they are overworked and tired. If workloads are high,
consider hiring temporary employees to alleviate stress and make workloads
- Offering screening and education—Consider offering screening
for sleep disorders at your health fair or as part of your workplace
wellness program. In addition, consider providing educational articles
about the importance of sleep and how employees can improve their sleep.
By identifying those who may be at risk of having a sleeping disorder and
providing education, you can help reduce employee fatigue.
The strategies above may not be conducive to every office. When
evaluating these options, it is important to evaluate your workplace
environment and the needs of your employees. Consider surveying employees about
their current workloads and sleep habits to see what strategies may resonate
most with your employees. Ask employees to rank or provide input on how valuable
they would find telecommuting, flexible scheduling and nap room options.
In addition, when installing nap rooms or implementing telecommuting
and remote work programs, make sure to have clear policies in place to prevent
abuse or misuse. Monitoring these programs will be key to ensuring they produce
a healthy return on investment.
For more information on workplace wellness, contact
DOL Issues New Overtime Payment Rules - May 2016
On May 18, 2016,
the U.S. Department of Labor (DOL) announced a final rule regarding
overtime wage payment qualifications for the “white collar exemptions” under
the Fair Labor Standards Act (FLSA).
The final rule increases the salary an employee must be paid
in order to qualify for a white collar exemption. The required salary level is
increased to $47,476 per year and
will be automatically updated every three years. The final rule does not
modify the duties test employees must meet to qualify for a white collar
Employers will need to comply with this rule by Dec. 1, 2016.
- Employers must become familiar with the new rule
and identify which employees will be affected. Employers should reclassify
employees as exempt or non-exempt, as necessary, by Dec. 1, 2016.
- Employers should also consider communicating any
work schedule changes to affected employees before the date mentioned above.
- Finally, employers should evaluate whether
implementing new timekeeping practices and training for managers and
supervisors on the new requirements is necessary.
The FLSA establishes minimum and overtime wage payment
protections for most workers in the United States. However, the FLSA also
offers a range of minimum wage and overtime exemptions for certain workers. The
white collar exemptions are minimum wage and overtime pay exemptions available
to certain administrative, professional, outside sales, computer and highly
To qualify for the white collar exemption, an employee must
meet a salary basis test, a salary level test and a duties test. An employee must meet all
three tests in order to be exempt from FLSA minimum wage or overtime pay
- The salary basis test is used to make sure the
employee is paid a predetermined and fixed salary that is not subject to
reduction due to variations in the quality or quantity of work.
- The salary level test is used to ensure that the
employee meets a minimum specified amount to qualify for the exemption. This
salary threshold provides employers with an objective and efficient way to
determine whether an employee qualifies for a white collar exemption.
- The duties test requires that the employee’s job
duties conform to executive, administrative or professional duties, as defined
by law. This analysis requires a more thorough evaluation of whether an
employee can be classified in one of the categories mentioned above
(administrative, professional, outside sales, computer and highly compensated
Salary Threshold Requirement
The final rule increases the minimum salary level of $455
per week ($23,660 per year) to $913 per
week or $47,476 per year. The new salary level represents the 40th
percentile of wages earned by workers in the lowest-wage census region in the
United States (currently the South) for a full-year worker.
The final rule also increases the $100,000 salary level for
highly compensated individuals to $134,004
per year—the 90th percentile of wages earned by full-time workers across
the entire United States.
These higher salary levels will be updated every three years
to maintain the salary level at their corresponding 40th or 90th percentiles.
The first automatic rate update is expected by Jan. 1, 2020. The DOL will
publish updated rates in the Federal
Register and on the Wage and Hour Division’s website at least 150 days before their
Administrative, Executive and Professional Employees
The final rule will allow, for the first time,
non-discretionary bonuses and incentive payments (including commissions) to be
used to satisfy up to 10 percent of an employee’s standard salary level. This
may include the payment of non-discretionary incentive bonuses tied to productivity
and profitability. Non-discretionary bonuses and incentive payments may be used
if they are paid on a quarterly basis, but more frequent payments are
acceptable. However, the DOL will allow employers to make some “catch-up
The DOL will also allow employers to use significantly large
bonuses toward 10 percent of the required salary amount.
Highly Compensated Employees
Under the final rule, highly compensated employees qualify
for an overtime exception if they meet the new salary level of $134,004 per
year. However these individuals must receive at least the full standard salary
amount each pay period (i.e., $913 per week, $1,826 bi-weekly or $3,956.33 per
month) on a salary or fee basis (not counting non-discretionary bonuses and
The remainder of a highly compensated employee’s wages may
be calculated by including the full amount of non-discretionary bonuses and
incentive payments (including commissions).
Given the significant increase in the salary level
requirement, employers will need to increase employee salaries, or re-classify
certain employees as either exempt or non-exempt, solely based on their salary
level. The DOL estimates that this final rule extends overtime protections to
approximately 4.2 million workers who are currently exempt under the white
collar rules and clarifies overtime compensation eligibility for another 5.7
million white collar workers and 3.2 million salaried blue collar workers whose
entitlement to overtime pay will no longer rely on the application of the
In addition, because of the short implementation deadline,
employers should not delay becoming familiar with the new requirements and
implementing any necessary changes into their timekeeping and payroll systems.
Employers should also determine whether additional training on modifications is
necessary for their managers and supervisors.
Finally, employers should also consider communicating with
employees to inform them of how their wages, hours of work and timekeeping
practices will be affected.
Employers that fail to comply with the final rule may be
subject to a variety of overtime wage payment enforcement mechanisms, including
the ones listed below.
- Private employee lawsuits: These lawsuits can be
initiated by employees either individually or through collective action to
recover back pay, interest, attorneys’ fees and court costs.
- Administrative injunctions: These injunctions
may include a prohibition on the shipment of goods in interstate commerce if
the goods were produced in violation of the FLSA (including overtime wage
- Civil fines for willful and repeated violations
(up to $1,100 per violation).
- Criminal charges for willful violations (up to
$10,000 in fines, imprisonment for up to six months or both).
Please contact CMR Risk & Insurance Services, Inc. for
more information on the FLSA and other wage and hour laws.
Overview of Proposed Changes to FLSA White Collar Exemption Rules - April 2016
On June 30, 2015, the U.S. Department of Labor (DOL)
released a proposed rule that would overhaul overtime wage payment in the
United States. The new rule would more than double the salary threshold that
employees must meet to qualify for overtime wage payment exemption—a change
that could affect 11 million workers across the United States.
The FLSA requires that eligible employees be paid time and a
half for all hours worked over 40 hours in a workweek. However, overtime rules
do not apply to certain “white collar” workers, like executive, administrative,
professional, outside sales, computer employees and some highly compensated
individuals—these are known as the white collar exemptions.
Currently, the salary threshold (salary level test) for
overtime pay eligibility under the white collar exemptions is $23,660 a year or
$455 per week. The proposed rule would more than double the salary threshold to
$50,440 per year or $970 a week. It would also increase the $100,000 salary
level for highly compensated individuals to $122,148 per year—the 90th
percentile of wages earned by workers in 2013. This figure is expected to
increase by the time the final rule is implemented.
this affect employers?
The proposed rule has been controversial because, if
implemented, it would require employers to review employees’ exempt status,
update overtime policies, notify employees of changes and adjust payroll
systems. According to the Obama administration, the new rule could cost
employers between $240 million and $255 million per year. Business leaders,
though, believe the costs could be even higher.
Given the potential impact of this rule, it is important to
start preparing now for potential changes to overtime regulations. The
following are some strategies employers can adopt:
an internal audit. It is estimated that more than 50 percent of all
employer groups have misclassified their employees under the FLSA, although many
do not realize it. An audit can help identify misclassifications and determine
who will be eligible for overtime if the proposed rule is implemented.
raises to employees who are close to the salary threshold. For instance, if
an employee makes $49,000 a year and regularly works overtime, you could bump
up the employee’s pay to $51,000 to avoid incurring overtime expenses.
more stringent overtime pay policies. Consider sending employees home after
exactly eight hours, so you do not have to pay overtime costs. This policy can
help encourage a healthier work-life balance among employees; however, output
may decrease as a result.
- Reduce or
cut benefits to make up for increased payroll expenses. While this method
will protect your bottom line, it may decrease employee morale, lower
productivity and result in higher turnover.
A final rule is expected by July 2016. The last time the
FLSA overtime requirements were updated was in the 2004, and the DOL gave
employers 120 days to comply. This time, employers may only have 30 to 60 days
to make necessary changes (depending on the time between the release of the
final rule and its effective date).
While it is possible that the 2016 elections could change
some aspects of the new rule, it is highly likely that overtime pay changes
will be implemented in some fashion. If employers fail to respond to overtime
changes, they can face various penalties prescribed by the FLSA, including
lawsuits, criminal charges, fines and restrictions in commerce.
For more information on how the new white collar exemptions
will affect your business and what you can do to minimize overtime pay, contact
Preventive Care - March 2016
Once an underused component of the health care world that benefits both
employees’ health and employers’ health care spending, preventive care is now a
mandatory part of any health benefits package.
Preventive care consists of measures taken to prevent diseases, rather
than curing them or treating their symptoms.
There is significant research demonstrating that increased use of
effective preventive services will result in less suffering from ailments that
could have been prevented had they been detected and treated early on.
Preventive care is often more cost-effective than treating diseases once
symptoms appear. Some care services even save more money than it costs to
Under the Affordable Care Act (ACA), private insurers—except for plans
that have been grandfathered—are required to cover certain preventive services
without any cost to the patient. Medical services such as immunizations,
screening tests, medications and any other services that would prevent disease,
injury and premature death fall under the umbrella of preventive care.
Preventive care should be incorporated into employer-sponsored health
plans to lessen the cost and number of future medical claims by helping
employees and their families stay healthy, while also complying with the
provisions of the ACA.
Preventive Care for Adults
The following types of preventive care are available to all adults
within specified age ranges or risk groups.
Abdominal aortic aneurysm
screening: A one‐time screening for abdominal aortic aneurysm by
ultrasonography in men ages 65 to 75 who have ever smoked
Alcohol misuse screening and
counseling: A risk assessment available for all adults and voluntary
counseling for those who are found to have a substance abuse problem
Many do not realize that their alcohol use is excessive and contributes
to other health and lifestyle problems.
Aspirin use: Counseling on
the use of aspirin for men ages 45 to 79 and women ages 55 to 79, when the
potential benefit due to a reduction in myocardial infarctions outweighs the
potential harm due to an increase in gastrointestinal hemorrhage
Blood pressure screening:
Routine measurements of adult blood pressure and treatment with
anti-hypertension medication to prevent cardiovascular disease
Hypertension and related complications account for $100 billion in
medical costs every year, yet only 1 in 3 people with hypertension actually
Screenings for lipid disorders in men over 35 and women over 45, and treatment
with lipid-lowering medications to prevent cardiovascular disease
One out of 4 adults with high cholesterol will suffer a heart attack,
and 1 in 3 adults will die from coronary heart disease. Screening to detect
high cholesterol is effective in identifying those who need medication to
control cholesterol levels.
Colorectal cancer screening:
Screenings for colorectal cancer using fecal occult blood testing,
sigmoidoscopy or colonoscopy, beginning at age 50 and continuing until age 75
The risks and benefits of these screening methods vary. About 19,000
diagnoses could be prevented annually if people get screened, yet only
one-third of adults actually have regular screenings.
Screenings for depression when staff-assisted depression care supports are in
place to ensure accurate diagnosis and effective treatment and follow-up
Screening for Type 2 diabetes in asymptomatic adults with sustained blood
pressure greater than 135/80 mmHg (either treated or untreated)
Diet counseling: Intensive
behavioral dietary counseling for adult patients with hyperlipidemia and other
known risk factors for cardiovascular and diet‐related chronic disease.
Intensive counseling can be delivered by primary care clinicians or by referral
to other specialists, such as nutritionists or dietitians.
HIV screenings: Screenings
for everyone ages 15 to 65 and other ages at increased risk
Obesity screening and
counseling: Screening for all adults; clinicians should offer or refer
patients with a body mass index (BMI) of 30 or higher to intensive,
multi-component behavioral interventions
Sexually transmitted infection
(STI) prevention counseling: Counseling for adults at higher risk
Screenings for adults at greater risk
Tobacco use screening:
Screenings for adults at higher risk; tobacco users may receive intervention
and cessation support
A comprehensive, effective smoking cessation program usually costs less
than 50 cents per member per month, or less than $6 per member per year. You
can save an average of $210 on yearly health care costs for each smoker who
Vaccinations: Shots for
hepatitis A, hepatitis B, herpes zoster, human papillomavirus (HPV), influenza,
measles, mumps, rubella, meningitis, pneumococcal disease, tetanus, diphtheria,
pertussis and varicella; doses, recommended ages and populations vary
Preventive Care for Women
In addition to the services listed above, the ACA also mandates
coverage for the following preventive services for adult women as part of all
non-grandfathered health plans.
Anemia screening: Screenings
for iron deficiency in pregnant women
Breast cancer genetic test
counseling (BRCA): Screenings designed to identify women with increased
risk of developing breast cancer due to family history. Women with positive
screening results should receive genetic counseling and, if indicated after
counseling, BRCA testing.
Breast cancer mammography
screening: Mammograms for women age 40 or over every one to two years, with
or without clinical breast examination
Breast cancer chemoprevention:
Discussions with clinicians about benefits, risks and adverse effects of
chemoprevention for women at high risk of developing breast cancer
Breastfeeding support and
counseling: Guidance from trained providers and access to breastfeeding
supplies for pregnant and nursing women
Cervical cancer screening:
Screenings for cervical cancer in women ages 21 to 65 with a Pap smear every
three years; for women who want to lengthen the screening interval, screenings
with a combination of Pap smear and HPV testing every five years, for women
ages 30 to 65
Chlamydia infection screening:
Screenings for chlamydial infection in all sexually active nonpregnant young
women age 24 years and younger and for older nonpregnant women who are at
Contraception: U.S. Food and
Drug Administration-approved contraceptive methods, sterilization procedures,
and patient education and counseling, as prescribed by a health care provider
for women with reproductive capacity. It does not include abortifacient drugs.
This does not apply to health plans sponsored by certain exempt “religious
Domestic and interpersonal
violence screening and counseling: Screenings for women of childbearing age
for intimate partner violence, such as domestic violence, and provision of or
referral to intervention services
Folic acid supplements: A
supplement for women who are pregnant or planning to become pregnant
Gestational diabetes screening:
Screenings for women 24 to 28 weeks pregnant and those at high risk of
developing gestational diabetes
Screenings for all sexually active women, including those who are pregnant, for
gonorrhea infection if they are at increased risk
Hepatitis B screening:
Screenings for pregnant women at first prenatal visit
Human papillomavirus (HPV) DNA
test: Screenings every three years for women with normal Pap smear results
who are 30 or older; for women who want to lengthen the screening interval,
screenings with a combination of Pap smear and HPV testing every five years for
women ages 30 to 65
Screenings for women at high risk of developing osteoporosis starting at age
60, and for all women beginning at age 65
RH incompatibility screening:
Testing for pregnant women at their first doctor visit after becoming pregnant
and again at 24 to 28 weeks
Urinary tract or other infection
screening: Screenings for pregnant women
Well-woman visits: Annual
visits for adult women to obtain the recommended preventive services, including
preconception and prenatal care
Preventive Care for Children
Most health plans must also cover a set of preventive health services
for children. These services must be provided at no cost to beneficiaries if
they are requested from and delivered by an in-network provider.
Autism screening: Behavioral
screenings for children at 18 to 24 months
Screenings for children at the following ages: 0 to 11 months, 1 to 4 years, 5
to 10 years, 11 to 14 years and 15 to 17 years
Blood pressure screening:
Testing for children at the following ages: 0 to 11 months, 1 to 4 years, 5 to
10 years, 11 to 14 years and 15 to 17 years
Cervical dysplasia screening:
Testing for sexually active females
Assessments for adolescents
Learning assessments for children under age 3
Dyslipidemia screening: Testing
for children at higher risk of lipid disorders at the following ages: 1 to 4
years, 5 to 10 years, 11 to 14 years and 15 to 17 years
supplements: Supplements for children without fluoride in their water
Gonorrhea preventive medication:
Medication for newborns to prevent conjunctivitis caused by gonorrheal bacteria
Screenings for all newborns
Height, weight and body mass
index: Measurements for children at the following ages: 0 to 11 months, 1
to 4 years, 5 to 10 years, 11 to 14 years and 15 to 17 years
Hematocrit or hemoglobin
screening: Testing for anemia for all children
HIV screening: Testing for
Testing for underactive thyroid for newborns
Supplements for children ages 6 to 12 months at risk for anemia
Lead screening: Testing for
children at risk of exposure
Obesity screening and
counseling: Screening for children beginning at age 6, and referral to
comprehensive, intensive behavioral interventions to promote improvement in
Oral health risk assessment:
Screening for young children ages 0 to 11 months, 1 to 4 years and 5 to 10
Phenylketonuria (PKU) screening:
Testing for this genetic disorder in newborns
STI prevention counseling and
screening: Screening for high-risk adolescents
Screening for children at higher risk of tuberculosis at the following ages: 0
to 11 months, 1 to 4 years, 5 to 10 years, 11 to 14 years and 15 to 17 years
Vaccinations: Shots for
diphtheria, tetanus, pertussis, Haemophilus influenzae type B, hepatitis A,
hepatitis B, HPV, polio, flu, measles, mumps, rubella, meningitis, pneumococcal
disease, rotavirus and varicella; doses, recommended ages and recommended
Vision screening: Screenings
for all children
In addition to mandated no-cost preventive care, there are other
existing preventive services that may be included by an insurer as part of a
health group plan. These include things like adult vision and hearing
screenings and vitamin and mineral supplements. Check with your insurer to see
if additional preventive services are available for your plan’s recipients.
Maximizing Your Health Plan
How can you take advantage of the cost-saving potential of some of
these preventive care services? Here are some ways that you can maximize your
health care investment:
• Educate your employees on the preventive care services that your
health plan offers, their potential risk factors and the benefits of preventive
• Find ways to make preventive care more convenient for your employees
by working with nearby clinics, developing an on-site clinic or hosting a
mobile van for vaccinations and screenings.
• Educate your employees on preventable health conditions. Your CMR
Risk & Insurance Services, Inc. representative can provide you with payroll
stuffers, flyers and postings to help educate your employees.
Initiatives for Stress Management - February 2016
Stress is a leading contributor to many health problems, and
the workplace can often be a major source of stress. Lowering stress can lower
the risk of medical conditions and can help employees feel better on a
day-to-day basis. You can implement various activities to help reduce employee
stress, which can improve health and morale—and productivity.
Managing Workplace Stress
- As an employer, you can take several steps to ensure that
the workplace is not contributing unduly to employees’ stress levels.
- Make sure
that workloads are appropriate.
managers meet regularly with employees to facilitate communication.
negative and illegal actions in the workplace immediately—do not tolerate
bullying, discrimination or any other similar behaviors.
and celebrate employees’ successes. This contributes to morale and decreases
Activities to Relieve Employee Stress
Aside from addressing job-related issues, you can implement
a variety of activities and initiatives to help reduce stress. Some suggestions
include the following:
chair massages once per week, bi-weekly or monthly. It is quite common for
massage therapists to travel to local businesses, offering 15-minute (or
shorter) chair massages for a reduced rate to employees. Typically the massage
therapist sets up a chair in a quiet area, and the employees pay for the
massage out of their own pockets—usually costing around $15. A short massage
can equate to a whopping 85 percent reduction in stress, according to studies,
and this is often at no cost to the employer.
- Provide a
designated space where employees can sit quietly and use meditation or prayer
to alleviate their stress.
exercise classes—exercise is a great way to relieve and even prevent stress. Offer
a variety of class times (before and after work, during lunch, etc.), as well
as various types of classes—such as yoga and kickboxing.
employees with the education and tools to manage time and tasks, to cope with
daily stressors and to prevent stress from damaging their health. You can
present a stress management class or provide educational materials.
- Host a
comedy day—you can’t worry and laugh at the same time! Bring in a stand-up
comedian, show old black-and-white comedies or hold a contest for the funniest
home videos or jokes.
your company logo or a funny joke on stress-relieving squeeze balls and give
them to employees, or use them as inexpensive prizes for wellness contest
winners and participants.
the number of paid vacation or personal days that you give to employees, and
encourage employees to take the vacation days available to them each year.
Stress can originate at home or in the workplace. Avoid
adding to employee stress with inefficient and frustrating policies or
overwhelming workloads, and use the above suggestions to cultivate a positive
and supportive workplace culture.
Educating Employees on Voluntary Benefits - January 2016
Offering voluntary benefits is a
great way to enhance your benefits package, differentiate from competitors and
increase employee satisfaction—all with little impact on your budget. But while
employers may choose to offer numerous types of voluntary benefits that can
deliver convenience and value for employees, many employees do not understand
the advantages of these voluntary benefit options or are unclear how they work.
Educate your employees on the advantages of these voluntary benefits so that
you both reap the rewards.
Demonstrate the Value
When compared to
employer-sponsored benefits, many employees may fail to see the value of
voluntary benefits that they must personally finance. For example, one perk to
voluntary benefits is that purchasing insurance through an employer group is
often cheaper than buying individually, yet research shows that few employees
are aware of this. When promoting your voluntary benefit options, discuss the
benefits of having coverage, the risks of going without, and emphasize the
convenience and value of purchasing through the company and paying through
important that employees fully understand their policy so that a misunderstanding
does not lead to resentment toward the employer. For instance, if a consumer
does not completely understand the nuances of property-casualty insurance and
believes herself to be covered, it will come as a shock and possibly with
misdirected frustration in the event of a major loss.
offering any benefit option, employer-paid or voluntary, you should be sure
your employees understand exactly how the coverage works. Here are a few ways
to make sure your employees are sufficiently educated about their benefits:
- Invite current employees to the monthly or quarterly benefits
meetings provided for newly hired individuals.
- Many voluntary benefits providers are willing to send a
representative to discuss their coverage with employees.
- While most benefits administrators don’t have time to meet
individually with employees, consider scheduling small-group meetings with
a few employees who have questions.
- Enhance your existing benefits communication program with social
media. Social media provides a convenient and effective way to reach out
to your employees with educational information, tips and reminders
In addition to boosting participation in your voluntary
benefits programs, providing this meaningful education can position you as a
valuable source of knowledge and strengthen employee satisfaction and loyalty
to your company.
Talk to your CMR Risk & Insurance Services, Inc.
representative to learn more about available social media and employee benefit
Offering voluntary benefits is a
great way to enhance your benefits package, differentiate from competitors and
increase employee satisfaction—all with little impact on your budget. ________________________________________________________________________________________________________________________________________________________________________________________