Archive for May, 2016

OSHA Gets Tough on Audits and Penalties May Apply Earlier than Expected

OSHA inspection

Those higher fines that federal OSHA plans on implementing Aug. 1, can actually start applying to any workplace safety violations that were cited in inspections as early as February of this year.

That’s because OSHA can take as long as six months after an inspection to issue citations and the penalties it proposes for the employer. This sobering news comes as OSHA finalizes new regulations regarding electronic reporting of injuries and has started conducting more probing investigations than it has in the past.

Under the federal budget for 2016, fines for the most common violations – serious and other-than-serious – fines are expected to rise to $12,471 from the current $7,000. Also, willful and repeat violations will rise to a maximum of $124,709 on Aug. 1.

The final penalties have yet to be set and pundits say that the Labor Department has until July 1 to publish the new interim final rules. OSHA may choose to set a lower figure if it concludes that the new maximums would have a negative economic impact or that the social costs would outweigh the benefits.

The higher penalties are also coming as OSHA has revised its requirements for recording and submitting records of workplace injuries and illnesses. Once the new rule takes effect, you will be required to electronically submit the recorded information for posting on the OSHA website if you have 250 or more workers.

This new rule will also cover those establishments with 20 to 249 employees that are classified in 67 specific industries which have historically high rates of occupational injury and illness. These businesses must also electronically submit information from their 2016 OSHA 300A Summaries to OSHA by July 1, 2017. Beginning in 2019, the submission deadline will be changed from July 1 to March 2 for the previous year.

In addition, OSHA is set to approach inspections differently, trading frequency for rigor, which could mean that once a company is being inspected there’s a chance it will incur multiple penalties.

Specifically, it will switch from trying to reach a certain number of inspections per year to conducting more rigorous inspections. That could mean more penalties per company because more can be uncovered during longer inspections.

More detailed inspections will likely mean more employee interviews by OSHA investigators, providing the time to wait for sample results and make return visits, and generally diving deeper. That can mean more citations and bigger penalties.

 

What you can do now

Companies that want to ensure they’re in compliance should consider getting a hazard assessment.

You can also arrange for a compliance audit that will identify any gaps and create an action plan to close them.

Companies should also look at a trend analysis of the most common injury types that happen with their employees and create safety activities around those, which is a step toward mitigating or eliminating accident occurrences.

Those activities combined should keep you from popping up on OSHA’s radar.

A Guide to The DOL’s New Overtime Regulations

Overtime

The Department of Labor has more than doubled the salary threshold for exempt employees to $47,476, which means anyone earning less than that must be eligible for overtime if they work more than 40 hours a week.

The increase equates to a minimum salary of $913 per week, compared to the current $455 per week – or $23,660 a year.

This means if you employ someone who is currently an exempt manager and they earn less than $47,476, they will be non-exempt starting Dec. 1, unless you give them a raise. If they work more than 40 hours a week, regardless of their duties, you will be required to pay them overtime.

The move by the DOL means that you’ll have to change your payroll systems to comport with the new standard or risk breaching wage and hour laws at a time when lawsuits for these types of violations have been on a steep rise.

The DOL estimates that some 4.2 million workers will become eligible for overtime under the new regulations.

The last time adjustments were made to the white-collar overtime exemption, in 2004, there was a surge in wage and hour litigation.

Experts say that these changes will likely see a similar rise due to employers making mistakes about the way time is kept or misunderstandings among employees about how bonuses are calculated (see below). It is therefore imperative that you as an employer adjust your payroll systems so that they comply with the new regulations when they take effect in December.

Here’s what you need to know about the new regulations:

 

  • Inclusion of bonuses

The final rule allows employers to include any bonuses and commissions (up to 10% of the salary) when calculating the salary figures.

 

  • Duties test unchanged

The new regulation does not change the “duties test,” which specifies what kind of employees can be classified as exempt. This will still include:

Executive, whose primary duty is managing an enterprise, or managing a customarily recognized department or subdivision of the enterprise

Administrative, whose primary duty is the “performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers”

Professional, whose work requires advanced knowledge, defined by the DOL as “work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment”

Outside sales, whose primary duty must be making sales or obtaining orders or contracts.

Creative professional, whose primary duty is the “performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.”

 

  • Increase in salary for “highly compensated employees”

The new regulations also set the total annual compensation requirement for highly compensated employees subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally, which is $134,004. That’s up from the current $100,00.

 

  • Regular increases

The new threshold will be updated every three years to make sure it stays at the 40th percentile of full-time salaries in the lowest income region of the country. Based on wage growth projections, that means the overtime threshold could rise to $51,000 by 2020, according to estimates from the White House.

 

Take action

There will be a lot to do and the deadlines for compliance may be tight. For example, to make cost-effective salary determinations for your company, you may need to take a close look at employee hours. To get a head start on the work, the law firm of Frankfurt Kurnit Klein & Selz recommends that employers consider the following steps now:

  1. Audit current classifications of employees as exempt or non-exempt and correct any misclassifications.
  2. Audit the hours worked by any current exempt employees who may fall beneath the proposed salary limit. If you do this, once the final rules are published, you will be in position to decide whether, for example, to increase certain employee salaries to a point at or above the new threshold – or to pay those employees overtime moving forward. If you decide to keep certain employees above the new salary limit (and not pay overtime), you may need to provide annual raises as the salary limit threshold changes.
  3. Determine how to best communicate changes to employees to maintain morale and reduce the risk of litigation.

 

 

Lawsuit defense

If you have not done so you should seriously consider purchasing employment practices liability insurance. This coverage can provide legal defense coverage and settlement and award coverage for actions taken by your employees over wage and hour and other human resources decisions or actions, such as alleged discrimina

FMLA, FLSA Lawsuits Surge, Exposing Employers to Large Awards

lawsuit

The number of employee lawsuits against employers for Family Medical Leave Act (FMLA) and wage and hour violations has skyrocketed in the last five years and your firm could be the next target even for a small misstep, which can be costly.

The Department of Labor has increased its budget and the number of investigators pursuing employers who violate the Fair Labor Standards Act (FLSA), which covers wage and hour complaints, including exempt and non-exempt employee violations, overtime violations and similar issues.

Employment law attorneys say that the surge in FMLA complaints is a result of more people knowing about the law as the DOL has expanded its reach and publicized the act in press releases about actions it has taken against various employers.

Also, they say, the term “serious health condition” is broadly defined, making it easy for employees to satisfy.

Here we take a look at the problem and what you can do to avoid being sued.

 

FLSA

Wage and hour lawsuits are typically filed under the Fair Labor Standards Act, and they’ve been creeping up, a trend employment lawyers attribute to more people working from home and technology, which has blurred the lines between when workers are on or off the clock.

 

FLSA cases filed:

Fiscal 2015: 8,160

Fiscal 2014: 7,500

 

Notable FLSA settlements from last decade:

Walgreens – $23 million

Wells Fargo – $15 million

Roto-Rooter – $14.2 million

 

What you need to know:

  • There are four main areas you need to be concerned with: minimum wage, overtime pay, record-keeping and youth employment.
  • Make sure you properly classify your employees as non-exempt or exempt (the minimum salary to be classified as exempt is currently $47,476 a year).
  • There are six exempt positions: executive, administrative, learned professional, creative professional, computer professional and outside sales staff.
  • Track exempt employees’ hours just in case.
  • Compute overtime properly.
  • Telecommuting can expose you to FLSA liability when employees work or send work-related e-mails outside normal working hours.
  • Employees must be compensated for time spent answering e-mails during off hours, including vacation.

 

FMLA

Qualifying reasons for FMLA leave, according to the DOL, include: birth of a child; a serious health condition that makes the employee unable to perform their work functions; and to care for a spouse, child or parent with a serious health condition.

The rapid rise in FMLA lawsuits is a direct result of the law becoming increasingly complex for employers to navigate, and its increased enforcement. The number of FMLA cases filed last year hit 1,108, almost a fourfold increase from the 280 that were filed in 2012.

 

FLMA cases filed:

2014: 1,108

2013: 877

 

Notable settlements or awards:

Staples Inc. – $275,000

Solvay Chemical – $1.5 million

Christ Hospital and Medical Center – $11.6 million

 

What you need to know

  • Post and distribute information about employees’ FMLA rights and include it in your employee handbook.
  • Don’t retaliate against someone seeking FMLA leave.
  • Develop an internal process for employees to use when applying for FMLA leave.
  • Make sure managers and supervisors apply your FMLA process consistently.
  • Be careful to balance any pushback against the employee, but you have the right to ask for more information from the employee and their doctor. And you can monitor the use of FMLA days.

Pay Extra Attention to Safety for Teen Workers

portrait of a salesgirl working  in  gift box store

Summer is coming and many employers take on additional staff, including teenagers who are new to the workforce.

These new workers need special attention and training in workplace safety as they have no experience on the job. Every year about 70 teenagers die while working in the U.S., while another 100,000 are injured seriously enough to require emergency room treatment.

Keep in mind there’s a lot you can do to prevent injuries to your teen workers, and the measures you take to keep them safe will help protect all employees.

The first thing is that you need to know the law and OSHA workplace safety and health regulations. Check your compliance and make sure teens are not assigned work schedules that violate the law, or given prohibited tasks like operating heavy equipment or using power tools. Make sure they have their work permits if under 18.

Make sure also that your supervisors who give teens their job assignments know the law. Encourage supervisors to set a good example, as they are in the best position to influence teen attitudes and work habits.

Ensure that all jobs and work areas are free of hazards. The law requires you to provide a safe and healthy workplace. Involve every worker in your Injury and Illness Prevention Program.

Train teens to put safety first. Give clear instructions for each task, show them what safety precautions to take and point out possible hazards. Prepare teens for emergencies, accidents, fires and violent situations. Show them escape routes and explain where to go if they need medical treatment.

Your teen employees are the next generation of workers. You will help them develop personal skills that make them more likely to go on to further their education and succeed in life.

As you hire these young people, know that you do make a difference.

Educating them about professional standards, workplace health and safety, rights on the job, and how to communicate effectively will shape the workplaces of the future, as well as keep your business running smoothly.

High-deductible Plans Gain Favor, but PPOs Still Tops

health plans

More employees than ever are opting for high-deductible health plans (HDHPs), but preferred provider organizations (PPOs) are still the most popular among group health plans, a new study has found.

Thirty-four percent of employees selected an HDHP for 2016 when it was offered alongside a traditional health plan, with millennial employees over age 26 the most likely to choose the option at 40%, according to a report by benefits management technology provider Benefitfocus Inc.

The company analyzed enrollment data from 2,400 midsize employers using its technology platform.

The study found that 87% of midsize employers offer traditional plans – health maintenance organizations (HMOs) and PPOs.

Forty-three percent of employees opted to enroll in a PPO plan, and 14% chose an HMO, the study showed.

And while HDHPs are popular since they have low up-front costs in terms of premiums but high out-of-pocket expenses, only 13% of midsize employers offer them.

For employees enrolled in HDHPs, the average deductible for individual coverage was $2,382 last year for individual coverage and $4,889 for family coverage, the study found.

The average deductible in PPOs was $1,415 for individual coverage and $3,403 for family coverage. Interestingly, that qualifies the average PPO as an HDHP since the IRS defines an HDHP as a plan that has a deductible of $1,300 for single coverage and $2,600 for families.

The study also found that health savings accounts (HSAs) and flexible spending accounts (FSAs) are quite underutilized, which means many employees are leaving thousands of tax-free dollars on the table.

With out-of-pocket responsibility so high across all health plans, many employees might not be able to pay for unexpected medical costs. If you are not already doing so, you should consider offering either an HSA or FSA to help your employees set aside pre-tax funds to pay for medical expenses.

When copays and coinsurance are considered, employees are actually paying out much more for their health care. Across HDHPs and PPOs, the average out-of-pocket maximum ranges from 1.8 to 2.7 times its corresponding deductible amount.

 

Cadillac tax surprise

One issue that has received plenty of attention is the concern of many employers that their plans will be subject to the excise tax on health plans known as the “Cadillac” tax.

Although under current regulations the tax will not take effect until 2020, the 40% levy will apply to any portion of a health plan premium that is more than the threshold amount: $10,200 for individual plans and $27,500 for family plans.

That said, most plans are currently well below those thresholds. Average total premiums (the combination of what the employer and employee pay together) across all plans this year was $6,016 for individual plans and $14,885 for family plans.

However, some midsize employers may still be at risk of triggering the tax. Health care costs are projected to increase anywhere from 6% to 8% over the next few years. This would far outpace the rate of inflation, to which the Cadillac tax thresholds will be indexed.

As such, the cost cushion could be much thinner by 2020.

Accident Insurance Can Save Your Workers from Financial Ruin

Mountain Biker has a painful looking crash with his bike

Even if you are providing your staff with health benefits, they could be left under great financial pressure if one of them has a major accident off the job that leaves them debilitated and unable to work.

Millions of working Americans struggle with managing out-of-pocket expenses for non-medical and medical expenses after suffering an unexpected event such as an accident.

If you are already offering your employees health insurance coverage, you can help fill the gap by also offering voluntary accident insurance, which can pay for:

  • Lost wages,
  • Deductibles and other medical expenses not covered by their insurance plan,
  • Transportation to and from hospitals or physical rehabilitation sessions, and
  • Home modifications.

 

Why your workers need accident insurance

According to a survey by Prudential Insurance Co.:

  • Two-thirds of Americans say it would be very or somewhat difficult to meet their current financial obligations if their next paycheck were delayed for just one week.
  • Half of all households say they have less than $10,000 in liquid assets available for use in an emergency.

 

Why they need coverage:

  • Health insurance only covers a portion of expenses, but only after the employee has paid their deductible and copay.
  • Employees sometimes have to pay other out-of-pocket medical expenses for medicines, medical equipment, and visits to out-of-network physicians.
  • Employees have to pay out of pocket for travel to appointments, home accommodations, caregiving and housekeeping if they cannot do those things on their own after an accident.
  • Lost wages are a sometimes overlooked cost of illness or injury. Lost wages can be an issue not only for the employees directly impacted by illness or injury, but also for family members who are providing care for them.

 

Types of accident insurance

There are two types of accident insurance:

Traditional treatment-based plans. These pay benefits based on the occurrence of an accidental injury and the type of treatment or procedure required to treat an injury. The injured individual will often submit a separate claim for each service they receive related to the accident. For example, if the individual was in a car accident in which they broke both legs, they would file individual claims for:

  • The costs not covered by health insurance for each service to treat the injury.
  • The cost of paying for transportation to doctor’s visits and physical therapy sessions.
  • Each time a home caregiver visits them to provide care.

 

Incident-based plans. These pay benefits based upon the incident and type of injury. This can simplify the claims process by reducing the number of claims that must be submitted. In the case of the car accident victim with broken legs above, they would likely be required to submit evidence only for the fracture itself and for their hospital stay to be reimbursed.

 

Benefits to the employer

  • A more robust benefits package. Offering voluntary accident insurance paid for by employees allows you to provide a more robust benefits package that can improve employees’ satisfaction with their jobs.
  • A smoother transition to high-deductible health plans. Employers replacing traditional medical insurance with an HDHP may find the transition more readily accepted by employees if it is accompanied by an offer of a voluntary accident insurance plan.
  • Potential for improved productivity. Employees under financial pressure may be less productive than those who are not, and knowing they have accident insurance can put many of their fears to rest. This is important considering that 39% of employees surveyed by Prudential said they spend three hours or more each week thinking about or dealing with issues related to their personal finances.
  • Lost cost and administrative burden. Most employers offer voluntary accident insurance that is paid for by the employee, meaning there is little or no cost to the organization.

 

 

Getting around the Question of Spousal Coverage

Valentine Couple. Portrait of Smiling Beauty Girl and her Handsome Boyfriend making shape of Heart by their Hands. Happy Joyful Family. Love Concept. Heart Sign. Laughing Happy Lovers. Valentines Day

While the Affordable Care Act requires employers to offer coverage for employees’ adult children until the age of 26, it does not require them to offer coverage to their workers’ spouses.

As employers try to balance the costs of offering health coverage, spousal coverage is often on the table for cutting when making cost decisions. Many employers view offering spousal coverage as a way to keep up morale and serve as a recruitment and retention tool, but others consider the option a burden.

Cutting it out completely though is often a bitter pill for many employees to swallow, particularly if their spouse’s employer doesn’t offer coverage or if they don’t work. And if they are forced to go to a public insurance exchange, their bitterness could deepen further. What’s required is a diplomatic solution.

Instead of cutting it out completely, employee benefits experts suggest one of two ways to deal with the spousal coverage dilemma and reduce costs at the same time: a spousal carve-out or a spousal surcharge.

 

  1. Spousal carve-out

With this approach, the employer defines plan eligibility so that spouses are ineligible to participate if they are eligible for coverage at their own employer. As an employer, you need to consider the following if this is the way you want to go:

  • Will eligibility for any type of employer-sponsored coverage make the spouse ineligible? What if the spouse is only eligible for an employer-sponsored “mini-med” plan or other limited plan coverage?
  • Is the cost of the other employer-sponsored coverage a factor in determining eligibility? One common approach is to make the spouse ineligible for the plan only if the spouse’s cost of the other employer-sponsored coverage is less than a certain dollar amount.

 

Creative approach: Create a spousal carve-out program with an escape hatch that allows the spouse to remain on your plan if the price the spouse would have to pay for coverage under his or her own employer’s plan exceeds a specified threshold.

 

 

  1. Spousal surcharge

Charging a surcharge for spouses who are eligible for coverage at their own employer provides an incentive for spouses to choose to enroll in the other coverage, while still allowing eligibility in the employer’s plan for those who need it.

That said, this approach is an extra level of complexity in the communication and administration of benefits and payroll.

 

Creative approach: You can use a carrot instead of a stick. That is, give a monetary award to employees whose spouses switch from your plan to the spouse’s employer’s plan.

 

Verification

There are three ways to verify if a spouse has coverage through their employer:

  • Employee affidavit. Your employee signs a statement certifying that his or her spouse is ineligible for other employer-sponsored coverage.
  • Certification from the spouse’s employer. Have the spouse’s employer provide a letter stating that they are ineligible for health coverage. This approach may be difficult if the employer is not cooperative.
  • Eligibility audits. You can do spot-checking of employee spouses’ lack of access to coverage by randomly picking staff members and contacting each spouse’s employer, rather than seeking verification in every case.

Have Plans in Place as Mega-quake Threat Level Is Raised

earthquake

The risk for a massive earthquake of magnitude 8.0 or greater has increased, according to the U.S. Geological Survey.

The risk of that kind of mega-quake occurring in the next three decades is now 7%, according to the survey, which just last year released a report that increased the threat level from 4.7%.

It has raised the threat level again due to a better understanding that quakes are not limited to separate faults and that one can start on one fault and jump to others, resulting in a multiple faults snapping at once in a giant mega-quake.

The report says that past models generally assumed that earthquakes were confined to separate faults, or that long faults like the San Andreas ruptured in separate segments.

This newly discovered phenomenon has significantly increased the likelihood of a massive quake. Quakes dating back in the last 30 years reflect the new discovery.

  • 1987 The Whittier Narrows earthquake

Magnitude 5.9

Fallout: Three days later a 5.6 magnitude aftershock hit on a different fault. Damage reported in Whittier, Pico Rivera, Los Angeles and Alhambra.

  • 2010 California-Mexico border quake

Magnitude 7.2

Fallout: Scientists said the border quake directed tectonic stress toward and its aftershocks triggered movement on at least six faults, including the Elsinore and San Jacinto faults, which run close to heavily populated areas in eastern Los Angeles County and the Inland Empire.

  • 2011 Tohoku Japan earthquake

Magnitude 9.0

Fallout: The initial quake spread through multiple faults, resulting in two tectonic plates sliding against each other and moving the sea floor an astounding 165 feet westward, creating a massive tsunami that killed 15,000 people.

 

Another study released by a California State University at Northridge professional of geophysics, Julian Lozos, predicts the high likelihood that a major quake could start on the San Jacinto fault and continue on the San Andreas fault, California’s longest and most dangerous fault line.

 

Earthquakes and your business

Business owners must consider the potential impact of earthquakes and related hazards on buildings, employees and operations.

Planning for how you will respond during and after an earthquake, and taking steps now to reduce potential damage, is crucial to a successful and speedy recovery.

Here are some tips:

  • Develop a business continuity plan.
  • Conduct an audit of general earthquake vulnerability and a hazards risk assessment.
  • Establish an operations contingency plan.
  • Conduct a non-structural assessment of your business, including inventory.
  • Hold regular drop, cover and hold on drills for employee safety.
  • Encourage employees to have family plans and emergency kits.
  • Seismically retrofit buildings or occupy/rent buildings that are built to earthquake code.
  • When looking for a new site for your business, consider risks of liquefaction and proximity to faults, transportation, power and water.

 

Insurance

If your business is operating in an area that is at risk of a quake, you should seriously consider earthquake insurance. Currently, premiums for coverage are the lowest they’ve been in years, while the risk of earthquakes has increased.

Earthquake coverage is purchased as an endorsement to the standard business owner’s policy. The endorsement covers damage caused by shaking during an earthquake, including structural damage and the damage to property.

Depending on the policy, lost business income caused by an earthquake may also be covered.

Coverage only begins when damage has exceeded your policy’s deductible – the amount you pay out of pocket before your insurance kicks in.

Earthquake insurance policies often have high deductibles – ranging from 2% to as high as 20% of the value of your building, depending on its location, age and condition.