The Innovative Workplace
More ways agents and brokers can help clients by understanding HR best practices and encouraging clients to adopt them
Helping small and medium-sized businesses (SMBs) with human resources challenges is an important role for agents and brokers. SMBs need to get human resources issues right, but they often lack staff and other resources larger businesses may possess to keep them on top of the ever-changing employment landscape.
So they turn to insurance advisors for help. And advisors can help them respond, if they understand the issues. Last month we looked at two HR challenges and identified best practices to help clients address them. This month we’ll look at three more.
HR Challenge #3: Wage and Hour
One of the most common questions businesses of all sizes ask is how to correctly classify and pay employees. The Department of Labor has increased its focus on this topic and last year proposed a steep salary threshold change that could make some currently overtime-exempt employees eligible for overtime, increasing costs to businesses. With the change of administrations this change was temporarily halted and is currently under review. Employers with lower-compensated supervisors and managers who currently are not being paid overtime need to stay on top of the administration’s next moves.
Without a productive and engaged workforce, no organization
can thrive. Yet even the most gung-ho, purposeful workforce needs direction, training,
and occasionally discipline.
Another worker classification issue that is important to SMBs is whether someone is an independent contractor or an employee. The cost of getting it wrong is high. Just ask Uber, which is facing some potentially costly employment-related actions.
Other wage-related issues include:
- Minimum wages—Although the federal minimum wage has not changed this year, several such changes took place at the state level, with many local jurisdictions setting their own rates. The potential consequences of violating minimum wage laws can be costly, and they are avoidable. For SMBs with multiple locations, keeping track of wage changes can be daunting.
- Overtime—Overtime rules vary among states, and it is important to ensure that scheduling is managed to control additional payroll costs.
- Work scheduling/hiring minors—In addition to overtime considerations, SMBs must know the laws that govern providing time off for employees’ personal needs, as well as work permits and schedules for minors.
- Meals and rest beaks—The rules for meal breaks and rest periods vary by state. Violation of these rules can result in additional overtime pay and penalties for not providing adequate rest breaks. Another issue is understanding the laws that provide mothers break time for lactation.
Because of the complexity of pay rules at the state and local levels, businesses need access to resources that help them stay on top of the current requirements relating to those rules. Best practices include:
- Evaluate jobs to ensure that those who are not being paid overtime (exempt) are correctly classified based on IRS criteria.
- If the business engages independent contractors, review contracts and job duties to ensure that the job meets the IRS definitions for independent contractor status.
- Audit work schedules periodically to ensure compliance with the law, including how meal and rest breaks are scheduled.
- Periodically audit overtime records.
- Review practices for granting employees time off for jury duty, sick leave, school leave, voting time, medical leave, military leave, and other kinds of leave.
HR Challenge #4: Benefits
To compete for talent, most SMBs recognize the value of offering benefits to their employees. The challenges of providing benefits include rising insurance premiums, administration, and compliance with changing rules, especially as they relate to healthcare benefits.
Uncertainty is the biggest issue today for businesses that provide health insurance. As part of his political platform as a candidate, President Trump vowed to eliminate and replace the Affordable Care Act (ACA). While politicians wrestle with the ACA “repeal and replace” legislation currently in Congress, some aspects of the ACA have been dismantled, whereas other parts of the law remain in force unless Congress changes them.
For example, for businesses with multiple locations that meet the requirements for an applicable large business subject to the employer mandate, known as the “Play or Pay” rules that required those businesses to offer ACA-compliant coverage to eligible full-time employees or pay a penalty, the proposed legislation would eliminate the penalty but would keep the 1094/1095 reporting requirements in place. This is just one example that shows how knowing which rules apply now is a daunting task for most businesses and why it’s important to have trusted advisors to ensure compliance.
Other benefits issues include:
Paid sick leave—Like minimum wage and healthcare laws, paid sick leave is an area where the laws are currently in flux. Paid sick leave requirements vary widely by location, and this requires businesses to pay careful attention to ensure they are enforcing the applicable rules for their location. For example, four state/local paid sick leave laws went into effect on July 1, 2017. These new laws generally apply to small employers and require additional recordkeeping and employee notification.
Family and Medical Leave Act (FMLA) and state “mini-FMLA” leaves—Employers must make appropriate notification of eligibility for leaves, designate the time off, determine whether the leave time will be unpaid or covered with the employee’s accrued time off, manage medical certifications and benefits communications, and ensure compliance with federal and state FMLA laws. The newer paid sick leave and parental leave rules add even more complexity to these challenges.
Employee Retirement Income Security Act (ERISA)—ERISA is a federal law that sets standards that protect benefit plan participants. It has stringent requirements for plan documentation, participant notification, and reporting for employers of all sizes that offer retirement and health and welfare plans.
Consolidated Omnibus Budget Reconciliation Act (COBRA) and state “mini-COBRAs”—COBRA gives terminated workers and their dependents who lose health benefits the option to continue coverage for a certain time period. Companies must comply with the federal and state COBRA regulations.
Here are some benefits-related best practices for employers to consider—and for agents and brokers to support:
- Work with health insurance brokers and payroll providers to ensure that employees are appropriately enrolled in benefits plans and receive the necessary benefits notifications.
- Establish systems and practices to ensure that employee time off is correctly recorded for benefits reporting and leave/ time off tracking is in place.
- Review benefits programs, eligibility requirements, and processes annually. Ensure that all ERISA and IRS tax-deferred plans are appropriately documented.
- Establish new-hire and termination processes to ensure that employees receive the necessary benefits enrollment and COBRA notifications.
- Review and communicate all benefits offered, including health, life and disability insurance, wellness programs, employee discounts, employee recognition programs, and so on to ensure that clients are maximizing the value of the benefits they offer.
- Survey clients’ employees about the benefits that are most valuable to them and work with benefits plan providers to create a benefits program that gives your clients the biggest return on their investment.
HR Challenge #5: Employee Management
Employees are the lifeblood of every organization. Without a productive and engaged workforce, no organization can thrive. Yet even the most gung-ho, purposeful workforce needs direction, training, and occasionally discipline.
An organization that focuses on the relationship between management and employees as well as interactions among peers will have positive employee relations. Good employee relations promote positive morale and improved work performance, resulting in increased production and better customer service, allowing the company to focus on the business at hand rather than dealing with personnel-related problems.
Employee management includes:
- Managing performance
- Employee training
- Discipline
- Termination of employment
- Here are some employee management best practices:
- Work with your employer clients to ensure adoption.
- Establish measurable work performance objectives for each job, and make sure that these objectives are clear to employees.
- Provide regular performance feedback (daily, weekly, monthly) and correct performance issues early. Establish action plans to get problem performance on track. Document performance for rewards, recognition, and job changes.
- Create recognition programs to highlight key behaviors that support company values, and reward employees who meet those standards.
- Provide career coaching and development opportunities to enhance employee productivity, engagement, and retention.
- Train supervisors and managers to understand not only their compliance obligations (for safety, nondiscrimination, employment law rules) but also their role in coaching and communications. Multiple surveys have indicated that a top reason employees leave companies is the supervisor. Don’t allow that to be the case in your clients’ organizations.
- Ensure that work rules and employment actions are based on objective business reasons to mitigate the risk of charges of unfair treatment.
- Review disciplinary processes and ensure that employment termination decisions are carefully considered and reviewed by employment counsel.
The author
Laura Kerekes is ThinkHR Corporation’s Chief Knowledge Officer and leads the human resources service delivery, customer success and content teams. She earned master’s and bachelor’s degrees in business management along with post-graduate executive certification in human resources and holds the SPHR and SHRM-SCP HR certifications. She writes management, human resources and business articles and presents regularly to management groups regarding human resources best practices.
