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The SESCO Report – December 2011

SESCO's 2011 Review and Predictions for 2012

A Look Back at Developments in 2011

The Americans With Disabilities Act As Amended (ADAAA) became effective May 24, 2011. As a result, the number of EEOC charges and lawsuits have and are expected to continue to increase, because more individuals with disabilities are covered. The definition of a disability has been defined much more broadly than in the original ADA law.
Now more than ever, employers must focus on reasonable accommodation and whether an individual with a physical or mental condition is otherwise qualified to perform the essential functions of the position, with or without reasonable accommodation.

It is imperative for employers to:

- Revise employee handbook policies to include EEO, job accommodation and FMLA.

- Review, revise and update job descriptions to ensure that they accurately reflect the position to include essential functions as well as the physical, sensory and mental requirements of the position.
- Train managers and human resource professionals to ensure that they understand these revisions.

The U.S. Department of Labor announced the launch of its first application for smartphones, a timesheet to help employees independently track the hours they work and determine the wages they are owed. As such, workers now can keep their own records and utilize this technology in filing complaints before the Department of Labor.

The U. S. Department of Labor announced that service managers, service writers, service advisors, and service salesmen are no longer eligible for the longstanding Automotive 13(b)(10) Exemption. However, service advisors and service writers can be exempted, from overtime only, under the Retail 7(i) Exemption if all requirements are met to include:

- At least 50% of the employee's total earnings are commissions, not salary or hourly rate.

- The employee averages at least time and one-half (1.5) the minimum wage (federal — $10.87 per hour) over a representative period of time for all hours worked. The representative period of time can be no less than 30 days. It can be longer.

The Department of Labor stated that under the Fluctuating Workweek Method of Payment employers cannot pay employees additional premium amounts such as incentive bonuses or other non-overtime premiums such as commissions. The Fluctuating Workweek Method of Payment remains a viable pay plan for any nonexempt employee which provides for a guaranteed salary with half-time (.5) for hours worked in excess of 40 hours per week. However, an employer cannot pay an employee additional non-discretionary payments such as incentive commissions or bonuses. An employer can provide completely discretionary bonuses such as Christmas or year-end thank you bonuses without violating this new provision.

Since passage of the Patient Protection and Affordable Care Act (PPACA — better known as "Obamacare") in March 2010, there have been several developments providing some relief for employers:

- Employers are no longer required to file 1099 forms for every business and individual that made payments in excess of $600.

- The PPACA provides that employers are required to report the cost of employer-provided health care coverage on the Form W-2. An IRS Notice in October 2010 made this requirement optional for employers for the 2011 Form W-2 (furnished to employees in January 2012). A subsequent IRS Notice (2011-28) provided further relief for small employers (those filing fewer than 250 W-2 forms) by making this requirement optional for them at least through the tax year 2012 as well. Furthermore, the notice stated that the optional treatment for smaller employers would be in effect until further guidance is issued from the IRS.

- In another development in the healthcare reform legislation, the Free Choice Voucher program has been repealed. The program would have required large employers (those with more than 50 full-time employees) to provide certain low-income workers who declined their employer's health care coverage with an employer-paid voucher to seek potentially cheaper plans in the health insurance exchanges. The amount of the voucher would have been the amount the employer would have contributed toward the employee's coverage. The Free Choice Voucher program was set to begin in 2014. The repeal simply means that the free choice voucher provision will no longer be a part of the Affordable Care Act, and large employers will not be required to provide free choice vouchers in 2014.

- In the most recent change to healthcare reform legislation, the U. S. Department of Health and Human Services announced on October 14, 2011 in a letter to Congress that the law's program to provide long-term care insurance through the workplace was unworkable and would not be implemented. The program had been expected to launch in 2013. The Community Living Assistance Services and Supports (CLASS) Act although sponsored by the government, was supposed to function as a self-sustaining voluntary insurance plan, open to working adults regardless of age or health. Workers would pay a monthly premium during their careers and could later use the money for services to help them with home care or nursing home bills. But a central design flaw dogged CLASS from the beginning. Unless large numbers of healthy people willingly signed up during their working years, soaring premiums driven by the needs of sick beneficiaries would destabilize it, eventually requiring a taxpayer bailout.

The Internal Revenue Service (IRS), and Department of Labor are focusing on independent contractors to determine whether or not independent contractors are being treated compliantly under DOL and IRS regulations or whether or not they are being utilized non-compliantly and thus, should be run across payroll for minimum wage, overtime and, most importantly, tax purposes. Because there is such wide-spread misuse of independent contractors, the IRS issued a special Voluntary Classification Settlement Program (VCSP) to provide employers a voluntary compliance program providing for substantial relief from federal payroll taxes.

In 2011, Wage and Hour continued to be the number one financial liability for employers. Wage and Hour investigations and lawsuits continue to be on the rise and SESCO continues to find that most employers are not fully aware of and comply with all Wage and Hour regulations, thus have financial liability.

What Employers Can Expect in 2012 and Beyond

The National Labor Relations Board (NLRB) announced it is postponing until January 31, 2012 the implementation date for the new poster describing employee rights to join a union. The NLRB had originally required employers to display the poster in their workplaces by November 14, 2011. Business groups including the U. S. Chamber of Commerce and the National Federation of Independent Business have filed lawsuits seeking to block implementation of the poster requirement. They contend the NLRB overstepped its authority by mandating what the groups say is a blatantly pro-union message.

Tennessee has joined an increasing number of states attempting to curtail the employment of unauthorized aliens by passing its own employment eligibility verification law. The Tennessee Lawful Employment Act requires employers to use the E-verify program, with exceptions, as soon as January 1, 2012. Governmental entities and private employers with at least 500 employees must comply with the law beginning January 1, 2012. Private employers with 200-499 employees must comply beginning July 1, 2012. Any employer with 5-199 employees must comply beginning January 1, 2013.

Perhaps the most anticipated development in 2012 will be the U.S. Supreme Court's decision regarding the individual mandate requirement of the Affordable Care Act. Several states have filed lawsuits, claiming this provision of the healthcare reform legislation is unconstitutional. The Act would require individuals to purchase health insurance or be subject to a fine. The Supreme Court has agreed to hear the case this Spring and a decision is expected to be announced in June. A ruling that the individual mandate is unconstitutional could have the practical effect of negating the healthcare reform legislation.

Employers can expect continuing scrutiny from external regulatory agencies such as the EEOC, the Wage and Hour Division of the U. S. Department of Labor, and OSHA. Employers report that regulatory investigations are at a four-year high.

Wellness programs will become more prevalent as a way for employers to control health care costs and increase productivity and retention. With no let-up in sight for rising health care costs, employers are increasingly seeing the value of workplace wellness programs as a way to control premium increases and claims costs. Ranging from health screening tools to online nurse services, wellness-related offerings are becoming a bigger part of benefit providers' value-added services.

Statistics of Interest

Business Spending — Growth up 8% this year and about 6% in 2012
Trade Deficit — Rising to $605 billion in 2012, up 10% from 2011
Energy - Oil trading between $90 and $95/bbl.
Housing Sales — A long road back
Retail - 10% growth in 2012, up from 8% in 2011
U. S. Gross Domestic Product (GDP) Growth around 2% in 2011; about the same in 2012
Interest Rates — 10-year Treasuries near 2% through mid-2012
Inflation Slipping back to 2% in 2012 after hitting 3.3% in 2011
Unemployment — Weak employment growth in 2012; unemployment likely to be stuck at about 9% through 2012, edging downward to 8.5% by 2013
Healthcare Benefit Costs — Employers' health care benefit costs for 2012 are projected to increase 5.4% to 7.0%, compared to an average increase of 9% in 2011
Salary Increases — Base salary increases for 2012 are projected to be 3%, slightly above this year's average

"The 8 Dimensions of Leadership"

(Buy the Book, Get a Free Profile)

We all approach leadership from a unique starting point based upon our own psychological make-up, intelligence, training and experience. Since childhood, we have observed parents, coaches, teachers, scout leaders, etc. and formed our own ideas of what it means to be a leader. Leadership, in many ways, is a learn-by-doing art form, therefore we have been bombarded with books proposing the latest and greatest way to lead. And yet, so many leaders are not prepared.

Most aspiring leaders begin by being rewarded for their work, doing what management wants to see and standing out above the rest. Eventually promoted to a leadership role, they continue to do what they have been doing, but soon learn that no longer works. In spite of the education and preparation to get here, they did not take the time to reflect on the art of leadership.

Leadership requires making tough decisions. And that gets messy when people are involved. You are now dealing with a variety of needs, wants, interests and behaviors. Your leadership energy will have to be focused in a new direction, and this will sometimes be a stretch for you. You may need to develop your analytical side, increase your competencies and be able to rally the troops when energy is lagging. The important thing is that you need a broad perspective on the range of behaviors that are required to be a truly effective leader.

The multidimensional leader understands that great leadership necessitates a wide range of competencies and relationship skills. While no person manifests all of these dimensions, every effective leader must be able to use each dimension at various points in his or her career. The key leadership dimensions are:


The 8 Dimensions of Leadership Model is based on the DiSC model. You will note in the model above that the eight (8) dimensions form a circle. The circular relationship of these eight (8) dimensions was determined mathematically, so this isn't a coincidence. The dimensions are nonhierarchical and nonsequential. As a leader, you will have a natural home on the circle, but will be able to move to an adjacent or opposite style depending on the situation or role. Mastering these 8 Dimensions of Leadership will help you reduce how often you jump to conclusions, make poor judgment calls, and project your own motivations onto others. Our goals is to expand your perspective and help you shape your leadership style to match your current situation.

The 8 Dimensions of Leadership will help you do this by the following process:

Discover your primary leadership dimension.
Learn about the psychological drivers, motivations, and "blind spots" typical of leaders with your style.
Reflect on what really matters most in your leadership development right now.
Once you identify the dimension(s) in which you'd like to grow, learn leadership lessons to help you get there.

Change is inevitable. What works for you today may not work next year. The 8 Dimensions of Leadership will give you a flexible framework that you can take with you through these changes. The goal is to lead like you, only better.

Contact SESCO today by phone 423-764-4127 or email to order your copy of "The 8 Dimensions of Leadership" guide for $12.00 and receive a free assessment to determine your primary leadership dimension and how you can stretch beyond that dimension.

SESCO Client Inquiry — Staff Response

Question: If an employee admits that he or she has been drinking while working, can we terminate the individual's employment?

Answer: Yes. An employer may require that employees shall not be under the influence of alcohol or illegal drugs in the workplace. The Americans with Disabilities Act As Amended (ADAAA) does not restrict the ability of employers to discharge employees who report to work under the influence of drugs or alcohol.

However, under ADAAA regulations, employees who volunteer that they have an addiction problem, but who are not active drug or alcohol users should be given the same consideration as those employees who suffer from other disabilities. An employer should make every effort to accommodate an employee's disability. For example, the employer should allow the employee time off to attend counseling sessions or a drug rehabilitation program. The employer can document that successful completion of a rehabilitation program is a condition of employment and any future violation of the company's substance abuse policy with result in immediate termination.

Special Thanks to SESCO Clients!

Americare Healthcare
Harrisonburg, VA

Dempewolf Ford, Inc.
Henderson, KY

The Health Wagon
Clintwood, VA

FAA Federal Credit Union
Memphis, TN

SESCO Client Feedback

"Employee/Management Satisfaction Survey — "The summary was very helpful. I would recommend the survey to any business. SESCO is professional, customer-oriented, attentive to the issues. I think that Bill Ford and the SESCO staff did an outstanding job. This service exceeded all of my expectations." ~ Bob Bennett — BTL Industries

"Just a quick note to thank you for your efforts in helping us become a better organization. I very much enjoyed meeting and working with Bill Ford and was pleased with how well the process went. Your positive attitude, professionalism and friendliness contributed greatly to this project's success." ~ Chris Slone — Mountain Mission School

"I had never written an AAP, Brenda was very helpful and took care of everything. I have never had a problem with anyone at SESCO — great group! Best value and best service!" ~ Beverly Stephens, Human Resources, Vice President — United Southeast Federal Credit Union

The Christmas Gift of Knowing You

The Christmas season fills our hearts with joy;
Bright, happy days bring special kinds of pleasure.
We're wrapped in the excitement of it all,
The sights, the sounds, the smells, the tastes we treasure.
Yet when we have some quiet time to think
About our finest blessings all year through,
We focus on our family and our friends,
And appreciate the gift of knowing you!

The SESCO Staff joins me in wishing you and yours a very Merry Christmas and Happy New Year!

William E. Ford
President & CEO