The SESCO Report – September 2010
Preparing for Healthcare Reform — 5 Things SESCO Clients Should Be Doing To Prepare
There is a lot of information about the new healthcare bill and unfortunately, in the end, there are no concrete answers on what employers as well as employees need to do or can expect. Information will be available as the marketplace absorbs the bill and develops strategies to not only comply, but also provide affordable healthcare to employees. Additionally, there are several states filing lawsuits which may nullify or alter the legislation. However, even with all of the uncertainties, SESCO recommends that businesses begin to prepare now for healthcare reform. SESCO clients should consider:
1. Decide about coverage.
Employers with fewer than 100 employees should begin in 2011 to analyze whether or not they will maintain their employee health plans after 2013 or just continue their plans in favor of employees obtaining coverage through the federally mandated insurance exchange. While there may be a tax penalty for discontinuing plans, the penalty could end up being less costly than providing insurance.
Companies should also analyze all fringe benefits and determine those that may need to be dropped or discontinued to free up funds to apply to healthcare coverage. This would require a very thoughtful and in-depth review of all offerings. Additionally, compensation practices must be reviewed as labor costs including employee benefits must be managed and monitored closely.
As organizations consider benefit offerings, SESCO strongly suggests open communication with management and employees alike to include:
• Involving employees early on in the assessment phase to include surveying employees to determine what benefits are important. Organizations also need to be open with employees to include the realities of healthcare reform and bottom line costs. "Open book" management may return to include frank and honest communications related to the reality of doing business.
• We are finding employees of clients are asking questions about the new healthcare reform bill. Employers should communicate with employees. SESCO has prepared a communications program to assist our clients in this endeavor. Communication pieces are contained in our healthcare white paper or can be obtained by contacting SESCO.
2. Read the small print.
One thing some small businesses can stop doing is to try and qualify for the Small Business Tax Credit. The tax credit is one portion of the law that is the most understood. That is due to the fact the credit begins to phase out at certain thresholds based on the number of employees and average salaries paid by the company.
The credit begins to phase out at 10 employees and $25,000 of average wages. Thus, if an employer has 19 employees, the credit is reduced by 60%. If the average wage is $35,000, there is an additional credit reduction of 40%. So an employer of 19 employees with an average wage of $35,000 will receive no credit even though they were within the "eligible small employer" definition.
3. Prepare for 2011.
While a number of provisions won't have a major impact on employers until 2014, a few require action for the upcoming year. This includes:
• Employers need to begin making changes in their plans to provide coverage for children up to age 26.
• Any lifetime benefits must be removed and annual benefit limits are eliminated on a graduated scale over the next three (3) years.
• Starting in January 2011, W-2 forms must reflect the value of the healthcare benefit to be reported by employees with their 2010 tax returns.
4. Update your plans.
There are several changes that will be required to existing healthcare plans. There will be no more recisions of health coverage based upon post-health claim investigations except in the case of international fraud, which is difficult to prove.
In addition, for those who grandfather their health insurance plan from 2010 under the new laws, employers' hands are somewhat tied as to any changes that can be made, including limitations on changes and co-pays, premiums and benefit structures.
Because there are so many changes, we suggest contacting SESCO Insurance Group or your provider to receive the latest advice to ensure that your plan is compliant.
5. Consider creating a new position.
While most of our clients are currently trying to save and/or eliminate jobs vs. creating new ones, some suggest that it might not be a bad idea to add a new position to simply handle and process all the changes with healthcare reform. It is most unfortunate, but the regulations are such that it may require someone totally dedicated to staying abreast of the healthcare reform bill, ensuring that benefit plans are compliant as well as someone to constantly monitor, assess and rebalance all benefit and compensation offerings to ensure affordability.
SESCO will continue to monitor and analyze developments and inform our clients. However, as previously stated, the reality may be that solutions will be developed as the law becomes reality and the marketplace adjusts. In the meantime, SESCO Insurance Group will be providing consulting services to clients to include management and employee communication programs. Feel free to contact SESCO Insurance Group at the following:
Jason Stevens
SESCO Insurance Group
2118 Euclid Avenue
Bristol, VA 24201
Phone: 276-644-9130
Cell: 423-366-2821
Email: jstevens@sescoinsurancegroup.com
Supreme Court Reluctantly Guides Employers With Electronic Media
With breakneck pace of innovation in electronic media, not even the Supreme Court is ready to clearly map out boundaries of employees' views or expectations of privacy in employer-provided equipment such as pagers and other mobile devices: "The judiciary risks error by elaborating too fully on the Fourth Amendment implications of emerging technology before its role in society has become clear." Justice Kennedy – City of Ontario vs. Quon
Nonetheless, there is much to be gleaned by public and private employers alike from the Quon decision, which was made on the narrower grounds of the reasonableness of a public employer search of an employee's text messages.
The Supreme Court ruled in Quon that even if the SWAT officer had a reasonable expectation of privacy in text messages he had sent from his work pager, the City did not violate the officer's Fourth Amendment rights by obtaining and reviewing transcripts of his text messages because the search was reasonable.
So what does the decision in Quon mean for employers and employees trying to negotiate on a daily basis the confusing legal maze of rapidly developing electronic media in the workplace?
Favorable holding for employers – The decision is obviously favorable to employers because it confirms that whether or not an employee has a reasonable expectation of privacy, the employer can lawfully conduct a search as long as it is reasonable.
Should employers view privacy policies differently? Quon validates existing best practices monitoring employee communications using employer issued equipment. The Court opinion acknowledges that employer policies are important in shaping employee expectations about workplace privacy. Employers should ensure that they have clear policies about monitoring employee communications.
Furthermore, employers should place electronic communication and internet policies in their handbooks and other policy documents that make abundantly clear that employees have no right to privacy in their employer-owned devices, whether it be a pager, telephone, computer, smart phone, etc.
Finally, it is recommended that an employer disseminate its policy very clearly to include employee communications, Q&A memos/open communications and ensuring that employees acknowledge in writing that they have not only read but also understand policies.
Best practices for employees. Employees need to understand that any message they write, or any communication they make on a company-provided pager, smart phone, text device, computer, etc. is simply not private. Employees should understand that they should not write anything on Facebook, Twitter, in text messages, text messaging that you would not want to see on the front of a newspaper or have to testify about in court. Keep private communications on employee-owned devices and try to keep your workplace equipment separate from what you use at home for personal reasons. It may be impossible not to have any personal communications while at work, but employees need to keep such private communications very limited, never discussing intimate or personal details.
Similarly, employees who wish to keep contents of their personal communications private should use personally-owned devices and accounts to send and receive those messages.
In summary, the Quon decision is very favorable for employers as long as employers develop, implement and clearly communicate policies and practices as relates to all company-owned communication devices. In addition, it would behoove employers to clearly communicate employees' reasonable right of privacy, or lack thereof, and provide suggestions to employees on how to protect personal communications.
SESCO has developed and suggests thorough policies and procedures and if your employee handbook does not contain such communication policies, feel free to contact us for a review and update of your employee handbook.
Job Descriptions – An Essential Tool
Job descriptions are a very common tool developed and implemented by most employers. However, in the wake of ADAAA as well as the necessity of developing and implementing successful and affordable compensation systems to include performance management, the job description must be thorough, well developed and become an active and useful tool with managers and employees alike.
Job descriptions should:
• Be the basic building block of an effective compensation system.
• Summarize in detail the most important features of a position.
• Detail employee characteristics required for performance.
• Defend job worth.
• Play an important role in performance management, recruiting and succession planning.
• Ensure legal compliance to include ADAAA and EEO.
Some basic elements of the job description should include:
• Job title
• Exemption status
• Reporting relationships
• General summary
• Principle duties and responsibilities including:
Essential functions of a job
Duties and responsibilities in some rank order of importance
Duties that account for more than 5% of the employee's time or are critical to the successful performance of the job
Standards of performance
• Job specifications
• Working conditions
• Disclaimers
Although there is no specific format used for job descriptions, the previous items as stated are found on most job descriptions. The key to a good job description is to identify the essential job functions and the minimum standards of the job. Ensure that job descriptions are up to date and accurate. Many job descriptions will contain a performance appraisal built-in which duals as a job description and performance appraisal document.
In our consulting practice, we have found over the years that those organizations who continually challenge, update, revise and keep active job descriptions, that they become an effective and essential tool. Other clients develop job descriptions and find them gathering dust in personnel files or in binders. Job descriptions can and should be an essential tool in the daily management of your most valued asset.
Contact SESCO should you wish to discuss the development of job descriptions to include criteria-based.
Special Thanks to SESCO Clients!
Forest Meadows Funeral Home
Gainesville, FL
Austin Sales/Virginia Drilling
Vansant, VA
Rural Health Services Consortium, Inc.
Rogersville, TN
Rural Medical Services
Newport, TN
SESCO Client Inquiry – Staff Response
Question: Are we required to offer benefits to part-time employees?
Answer: Certain benefits such as unemployment and workers compensation are mandated by state law and apply to all employees.
However, eligibility for voluntary benefits such as vacation, sick leave, medical insurance, life insurance, etc. is at the discretion of the employer. Eligibility for benefits is often tied to employees' normal work schedule. For example, persons working less than 32 hours in the workweek might not be eligible for benefits, or they might be eligible for certain prorated benefits. Employers should be certain that their policy is clear on what benefits are offered to full-time and part-time employees and the eligibility requirements for these benefits.
One exception is under the Employee Retirement Income Security Act (ERISA) with the "1,000 hour rule". Employees who have completed 1,000 hours of service in a period of 12 consecutive months are eligible to participate in any company pension or profit-sharing plan that is offered to other employees. This requirement applies to both full-time and part-time employees.
