Managing Human Resource Requirements
for Texas ASC Society
Presented by:
Donna Meek, Staff One Director of Business Development
PPACA Certified Professional
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HR Compliance
• Companies face more rules concerning the
employer/employee relationship than in any time in
history. Every aspect of workplace life seems to be covered by
one law or another – or, to make things even more
complicated, multiple overlapping statutes.
• Under Obama care there are 854 new regulations. ... it
contains provisions that could have a significant impact on
nearly every business .
Non-Exempt vs. Exempt
• Definition of non-exempt employee
Most employees are entitled to overtime pay under the Fair Labor
Standards Act. They are called non-exempt employees. Employers must
pay them one-and-a-half times their regular rate of pay when they work
more than 40 hours in a week. The biggest problem most employers have
with nonexempt employees is miscalculating how much overtime workers
are owed.
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Definition of exempt employee
The Fair Labor Standards Act contains dozens of exemptions under which
specific categories of employers and employees are exempted from overtime
requirements. The most common exemptions are the white-collar exemptions
for administrative, executive, and professional employees, computer
professionals, and outside sales employees. There is a also a lesser known
exemption for certain retail or service organizations. The primary advantages
of classifying employees as exempt are that you don’t have to track their hours
or pay them overtime, no matter how many hours they work.
Tracking Exempt Duties
1. Current detailed records of day to day activities of exempt
employees
2. Performance appraisals that ask employees to describe and
assess their own performance.
3. Detailed job descriptions with responsibilities defined.
Allowable Deductions for Exempt
Employees
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Proportional deductions for whole-day absences due to personal reasons other than sickness
or disability.
Proportional deductions for whole-day absences due to sickness or disability (including workrelated accidents) if this is done in accordance with a bona fide plan, policy or practice
providing compensation for salary loss due to such sickness or disability.
Offsets against the salary for any amounts received by the employee as jury fees, witness
fees or military pay for the particular workweek.
Salary deductions made as penalties imposed in good faith for infractions of safety rules of
major significance.
Salary deductions made for unpaid disciplinary suspensions of one or more full days imposed
in good faith for infractions of workplace conduct rules. This encompasses suspensions
imposed under written policies applicable to all employees regarding serious work-related
misconduct such as sexual harassment, violence, drug or alcohol violations or violations of
the law.
Paying a proportionate part of the employee’s full salary for the time actually worked in the
first workweek of employment or in the last workweek of employment.
Paying a proportionate part of the employee’s full salary for the time actually worked in the
workweek when the employee takes unpaid leave under the federal Family and Medical
Leave Act.
Independent Contractors
Some of the factors courts will consider when deciding
whether someone is an independent contractor or
employee :
– who controls the manner in which the job is done?
– Who sets the worker’s hours?
– Whether the work is performed on the employer’s property
during regular business hours?
– How long the company’s relationship with the worker lasts?
– The method of payment?
– Is the work part of a company’s regular business?
– Who provides the tools necessary to perform the job?
Misclassifying Workers
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Misclassifying workers
Incorrectly classifying workers as independent contractors can be a costly mistake. If a court
decides they’re really regular employees, a company can incur significant liabilities. Misclassified
workers are entitled to the benefits they would have received if they had been classified correctly.
This could include health insurance, retirement benefits, and stock options.
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Discrimination and harassment
Employees, unlike independent contractors, are protected by discrimination and harassment laws,
including an employer’s duty to accommodate any disabilities. But, if a company’s employees
harass or discriminate against an independent contractor because of his race, the company can be
liable under Section 1981 of the Civil Rights Act of 1866 (yes, 1866). The law protects minorities’
right to enter contracts, including an independent contractor’s agreement to perform work for a
company.
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Overtime and minimum wage
Employers might also have to reimburse misclassified workers for wages they should have paid
them under the Fair Labor Standards Act (FLSA). That includes overtime and minimum wage.
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Tax ramifications for misclassifying workers
If an independent contractor turns out to be an employee, the company might have to pay back
taxes and/or penalties for federal and state income taxes, FICA, and unemployment
Misclassifying Workers
•
Misclassifying workers
Incorrectly classifying workers as independent contractors can be a costly mistake. If a court
decides they’re really regular employees, a company can incur significant liabilities. Misclassified
workers are entitled to the benefits they would have received if they had been classified correctly.
This could include health insurance, retirement benefits, and stock options.
•
Discrimination and harassment
Employees, unlike independent contractors, are protected by discrimination and harassment laws,
including an employer’s duty to accommodate any disabilities. But, if a company’s employees
harass or discriminate against an independent contractor because of his race, the company can be
liable under Section 1981 of the Civil Rights Act of 1866 (yes, 1866). The law protects minorities’
right to enter contracts, including an independent contractor’s agreement to perform work for a
company.
•
Overtime and minimum wage
Employers might also have to reimburse misclassified workers for wages they should have paid
them under the Fair Labor Standards Act (FLSA). That includes overtime and minimum wage.
•
Tax ramifications for misclassifying workers
If an independent contractor turns out to be an employee, the company might have to pay back
taxes and/or penalties for federal and state income taxes, FICA, and unemployment
Health Care Reform Compliance
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#1 Communication Strategy
• Summary of Benefits and Coverage (SBC)
Required for any renewal since September 23, 2012. Penalties
and fines can be $1000 per employee.
• Exchange notice
Deadline October 1, 2013. You must provide current employees
with notice describing the availability of Exchange coverage.
• W-2 Requirements
Employers must report the value of employer-sponsored health
coverage on the employee's W-2 excluding salary reduction
amounts to health flexible savings accounts (FSAs), health spending
accounts (HSAs), and medical savings accounts (MSAs).
#2 Record Keeping Requirement
• Optimize labor management so you can
maintain record keeping requirements
Track actual hours paid (including worked and
non-worked)
Report total hours paid by date range
Determine who will be considered Full-time
Consult with your tax accountant or CPA for timing
and how often to track information for their
records.
#3 Plan Administration
• Understanding how to properly administer,
document and tax Medical Loss Ratio
(MLR)Rebates.
• Non-discrimination Testing on your plan
• Compliance and efficiency methods for
administering benefit administration
• Utilize technology (including mobile) to
increase education and support.
#4 Financial Implications to Evaluate
• Current Plan Design
Renewal Date, Eligibility Period (can not exceed 90
days), Out of Pocket Maximum, Deductible,
Grandfathered Status)
• Participation and Contribution Amounts
• Medical Cost Calculators
• Small Business Tax Credits
#5 What Will Impact Health Cost?
• Community Rating
– Gender is no longer a criteria
– Age Rating
• 3:1 Ratio
– Tobacco Use
• 1.5:1 Ratio
• Composite Rates VS Age Banded Rates
• Grandfathered Plans
• Self Insured Plans
Additional Changes
• Individual Mandate (Not Delayed)
Penalty Amount:
– Greater of $ amount or a % of income
• 2014 = $95 or 1% (cap for bronze plan)
• 2015 = $325 or 2%
• 2016 = $695 or 2.5%
#6 Develop High Value Benefits
Strategy
• Current Carrier Renewal Date Strategies
• Change plan design
• ERISA Fully funded Plans
• Defined Contribution Plans
#6 Develop High Value Benefits
Strategy (Continued)
Questions to Consider:
• Should I renew my group on 12/1/2013 or 1/1/2014?
• How will my carrier look at participation in 2014?
– (Nondiscrimination 105h)
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Does making my plan unaffordable help my employees?
Does the current method of premium sharing with my
employees still work?
Who will educate my employees on the exchange, subsidy
and enrollment choices?
Change plan design?
Frequently Asked Questions
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2.
How will Healthcare Reform impact our budget over the next 1-3 years?
What changes have we made to the new hire on-boarding process due
to HCR?
3. What are the financial effects of our lower paid workers leaving our
Health Plan for the public exchange?
4. Have we determined the consequence to our plan for waivers coming
back to our benefits?
5. Are the plans we offer “grandfathered”?
6. Will our plan be subject to community rating?
7. Is our plan design considered Minimum Essential Coverage?
8. Does our current contribution strategy protect us from penalties?
9. When do we have to begin reporting the value of the benefits to our
employees on the W-2 form?
10. What process are we going to use to communicate the availability of the
public exchange and the individual mandate penalty to our employees?
Are You Ready for an Audit?
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Human Resource Audit Checklist
Compensation and Benefits
During an HR audit of compensation and benefits, how pay for each
position is determined and whether pay is consistent among
employees in the same position are important. The quality and price
of the benefits plan, as well as which employees qualify for it, may
also be evaluated. Paid time off for vacation and illness and
appropriate compensation for overtime work are other issues to
evaluate.
Recruiting and hiring
Job descriptions for each position should be evaluated for clarity and
currency. Interviewing practices and policies can also be reviewed.
Other practices that may be evaluated are whether all job applicants
submit the same required materials such as resumes and application
forms, whether references and backgrounds are checked before hiring
and whether all applicants are interviewed equally and appropriately.
The application itself may be evaluated for clarity, thoroughness and
its appropriateness to the position
Human Resource Audit Checklist
Performance Evaluation
The current performance evaluation system should be reviewed,
including how evaluation criteria are determined, whether they are
appropriate for each position and how often employees are evaluated.
Disciplinary actions for poor performance can also be reviewed for
effectiveness and fairness.
Education and Training
The amount and type of training given, as well as how the education
program is managed, are important factors in an audit. Are staff
development and education programs developed and held on-site, or
outsourced? Do only employees in certain positions receive training or
do all employees receive the same development opportunities?
Overall, what does the education and training plan achieve and how
might it be improved?
Human Resource Audit Checklist
HR Departmental Practices
In addition to auditing specific areas of your human resources
department, review the HR function in its totality and in relationship to
other departments.
-Employee Records such as benefit files, I-9’s, Compliance
notices, etc.
If you have any questions or would like to inquire about outsourcing
your HR compliance, payroll, benefit administration including PPACA
compliance and risk management please contact Donna Meek 405-8300115