2012 Compliance Guide

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We’ve developed an easy guide summarizing what your organization needs to know to stay compliant in 2012. The guide includes a summary of several regulations that take effect as well as important legal issues on the horizon.

Regulations that Take Effect

Below are several major regulations and initiatives will took effect during the first few months of 2012.

Legal/HR Issue

Description of Regulation

Effective Date

2012 Income Tax Withholding Tables

Provides income tax withholding tables for 2012 here.

Immediately

Unemployment Benefits

Extends unemployment benefits temporarily through February 29, 2012.

Immediately

Tax Cuts

Extends current tax cuts temporarily through February 29, 2012.

Payroll system changes must be made by January 31, 2012

Social Security Withholding

Continues reduction in withholding rate to 4.2% (from 6.2%) temporarily through February 29, 2012. If an employer over-withholds in January, they need to make offsetting adjustments to employees’ pay by March 31, 2012.

January 1, 2012

 

Social Security Wage Base

Increases the Social Security Old Age Survivor's and Disability Insurance (OASDI) taxable wage base for 2012 from $106,800 to $110,100.

January 1, 2012

Minimum Wage

 

Raises minimum wage in Ohio to $7.70 per hour for non-tipped employees and $3.85 per hour for tipped employees.

January 1, 2012

Mileage Rates

Continues standard mileage rate of 55.5 cents per mile for business miles driven and 14 cents per mile driven in service of charitable organizations. Raises standard mileage rate to 23 cents per mile for medical or moving purposes.

January 1, 2012

Retirement Plan Limits

Raises the 2012 limit on the exclusion for elective deferrals in 401(k), 403(b), and 457(e) plans to $17,000, up from $16,500. For changes to other pension plan limits, click here.

January 1, 2012

W-2 Benefits Reporting

 

Requires employers who have an employer-sponsored group health plan to report the cost of coverage under their plan. This requirement goes into effect for some employers this year.

January 1, 2012

Health Benefits Summaries

Requires group health plan sponsors to create and distribute a Uniform Summary of Benefits and Coverage and Uniform Glossary.

Extended from March 23, 2012; pending notice of new effective date

NLRB Posting Notice

Extends deadline for posting notice regarding employees rights under the National Labor Relations Act.

April 30, 2012

 

Legal Issues on the Horizon

The following table summarizes several major legal issues that could lead to greater scrutiny and more regulations for employers in 2012.

Legal/HR Issue

Description of Issue

Tax cuts and job creation

Congress will determine whether to extend tax cuts through the rest of 2012 by late February. These cuts, along with the Jobs Bill which has been proposed, will aim to expand job creation and support businesses.

Constitutionality of health care reform

In 2012, the Supreme Court will be ruling on whether the health care reform law is constitutional due to conflicting rulings from lower courts, which could affect a number of provisions that take effect in 2013 and 2014.

Protection of unemployed individuals

Bills have been proposed at both state and federal levels to protect unemployed individuals from discrimination in the hiring process, and may gain ground in 2012.

Protection from retaliation

There has been notable interest in ensuring that employees are protected from employer retaliation when they file a complaint or cooperate with an investigation under federal law.

Improving hiring of disabled workers

The government will continue proactive efforts and attempts to improve the hiring of disabled workers and reduce discrimination against the disabled.

Clarification on FLSA and classification

The government will seek revisions to the FLSA for certain jobs, most notably workers who provide in-home services to the elderly and infirm. It will also continue to regulate misclassification of employees.

Retirement plan reform

The government is interested in ensuring that employees are saving adequately for their retirement and are exploring a number of options including additional disclosures, making investment advice more available, implementing automatic contributions, and restructuring tax deductions.

Regulating use of cell phone while driving

This past fall, OSHA and the Department of Transportation began an initiative to combat the leading cause of worker fatalities – motor vehicle crashes – and reduce distracted driving. Condoning/incenting texting while driving is in violation of OSHA, and use of a cell phone while driving may soon be as well.

User-friendly applications

The Department of Labor is leading a number of efforts to create user-friendly applications, interfaces, and tools for employers, job seekers, and other users to more easily use the information it provides.

E-Verify

In 2012, more states will likely require the use of E-Verify to determine employment eligibility.

If your organization needs more assistance, guidance, or detail with regard to these or other compliance-related issues, here are several additional resources and services, provided by ERC, which you can consult:

  • HR University: A series of workshops for HR professionals which includes a session on Employment Law Fundamentals and compliance best practices.
  • Supervisory Series: A series of workshops for supervisors which includes a session on Employment Law that provides supervisors with tools to help them maintain compliance.
  • HR Help Desk: Contact hrhelp@yourerc.com to ask any HR or compliance-related question and receive answers, guidance, and research. Service offered to ERC members only.

12 Tips for the 2012 Workplace

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The new year is just a few short days away, and it brings with it a number of challenges and opportunities to enhance your workplace. Here are 12 things to consider as your business heads into 2012.

1. Proactively manage the legal landscape

The legal landscape is becoming more complicated to navigate and employers are increasingly being hit hard with expensive fines and discrimination charges, per a recent report which noted a record number of discrimination charges and fines filed by the EEOC. Discrimination against the unemployed and disabled as well age discrimination are just a few pressing issues the government will be targeting in 2012 that employers should note.

2. Change your hiring strategies

Can’t find the talent you need? The current skills shortage is not expected to change anytime soon, so consider rethinking how you’re hiring. Perhaps your skill and experience requirements may be inadvertently screening out potentially great top performers that fit your culture and have growth potential. Or, you may need to explore different sourcing and branding tactics to attract the talent you need.

3. Focus on top performance

Make creating a better performance management system and approach one of your strategic priorities in 2012. Additionally, build your managers’ abilities to execute results and manage/support employees’ performance. A solid approach to performance management will increase the likelihood that your organization has a successful year.

4. Develop leaders

2011 was a year in which many organizations focused their efforts on leadership and management development and 2012 will be no exception. Organizations are increasingly growing their internal talent, preparing them for their next roles, and ensuring that their businesses have appropriate succession in place.

5. Keep a watchful eye on employee benefits

Employee benefits regulations are changing – and not just surrounding health insurance. Changes to retirement plans, family leave, and sick time are all issues the government has explored in the past year and will continue to target in 2012. Make sure your organization is prepared for the trends that will affect employee benefits in the coming year.

6. Create a long-term wellness strategy

Health care costs will remain a major challenge for employers in 2012. One-off wellness initiatives or activities will not suffice in managing costs effectively, so it’s advisable to create a long-term wellness strategy, based on the needs of your workforce, that will help your organization better manage health care costs and usage for years down the road.

7. Leverage social media

In 2011, the use of social media rapidly rose in the workplace. If your HR department hasn’t started to leverage the power of social media tools yet, it may be missing out on opportunities to find exceptional talent and boost learning and development – not to mention help your own career. Mastery of social media is, without question, an HR competency you’ll need for future success.

8. Manage the effects of change

During the past few years, many organizations have moved towards leaner workforces and processes, but few have managed how those changes have adversely affected employees and their cultures. Use 2012 to deal with the effects that these changes have caused on the workforce, redefine your culture, and re-establish your organization’s direction.

9. Use HR analytics and technology

HR metrics, analytics, and technology have become the gateways to creating a more efficient and effective HR department. Relook at what your department is tracking and the systems it is using. Chances are that you can leverage open-source systems, cloud technology, and other tools to automate processes and improve internal customer service.

10. Enhance global competencies

Global competencies are a sought-after skill by employers as they expand their markets globally. Whether its managing expatriates and bilingual employees, identifying legal risks abroad, or determining what to pay your global employees, as your organization expands globally, it will be critical for HR to enhance its organization’s capacity to manage global talent in 2012.

11. Make retention and engagement of top people a priority

Hopefully your organization emerged from 2011 with its top talent intact and engaged. If not, use the beginning of 2012 to create a strategy to retain your workforce and ignite engagement. Nip the problem in the bud quickly, otherwise, you could face unintended consequences of disengaged employees and high turnover throughout the next year.

12. Do your part for the region

Whether it’s hiring an intern or a recent college grad from a local university, providing an opportunity to an unemployed individual, or giving back to one of our community’s non-profits, do your part to improve economic development in our region and support our local communities.

 

Additional Resources

Leadership & Management Development Training
ERC offers a variety of training programs for leaders at all levels of the organization, from executive to mid-level manager to first time managers and supervisors. Our leadership development programs help move leaders from the traditional command and control role of judging and evaluating, to one of ensuring accountability through creating a supportive and motivating work environment.

HR Consulting
For assistance with various HR projects in 2012, including but not limited to, performance management system design, organizational design and development, HR metrics, employee engagement surveys, succession planning, and more, please contact consulting@yourerc.com.

5 Pay Trends You Need to Know

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If your organization is in the process of determining compensation for the rest of 2011 and budgeting for 2012, here are 5 important pay trends that you should know related to salary increases and bonuses.

1. Employers are planning salary increases.

The percentage of employers planning salary freezes continues to decrease from 2009, and the number of organizations projecting salary increases continues to rise. In fact, research shows that 82% of employers are providing increases in 2011 and 89% are projecting increases for 2012. This compares to only 55% in 2009 and 59% in 2010 and is approaching 2008 levels when 90% of employers gave increases. These findings are consistent with other national studies which suggest that salary freezes are on the decline.

2. Average salary increases continue to be modest.

Although more employers are planning increases than in the past, they will be modest, hovering around 2.8%-2.9%, which are the average projected increases for 2011 and 2012 cited by numerous surveys. Nonetheless, increases are approaching 3% and some organizations are even exceeding 3%, although very few organizations are budgeting more than 4%. Most compensation experts, however, believe that 3% will be the new 4%. These projections and insights are common across not only our local findings, but also those of WorldatWork, Aon Hewitt, and Towers Watson.

3. Few organizations are recovering pay.

Another trend that has been consistent across numerous compensation budget studies is that few employers are reporting high recovery increases to boost employees’ pay to market levels in spite of their pay freezes over the past few years. Because of this trend, employers may be faced with challenges in retaining employees and especially top talent. This year, studies have shown an uptick in employees dissatisfied with their organization’s compensation practices, especially among those organizations that have not provided increases over the past few years.

4. Merit increases remain the most common.

Merit increases continue to be the most common type of increase provided by organizations, according to most compensation studies, and are differentiated by performance level (by approximately 1.5-2%). Top performers can typically expect increases of 4-5% on average; however, this varies widely by industry. Cost-of-living and across-the-board adjustments are less common, but still used by some employers.

5. There is a positive outlook for bonuses.

Not only are employers continuing to offer bonuses, but they also are more able to fund them. A study conducted by Towers Watson shows that many organizations are experiencing stronger performance in terms of profits and as a result, they expect that annual bonuses will be fully funded in 2011. Bonus trends for 2011 seem to be more positive for many organizations compared to the preceding years. Additionally, other pay for performance trends remain strong including differentiation of merit increases. 

Overall, many studies indicate that the outlook for pay is moving in a positive direction with fewer salary freezes, slightly higher pay increases, and more funding for bonuses. Nonetheless, market adjustments continue to be an area where many employers are lagging and should keep in mind the possible detrimental effects of not recovering pay from salary freezes.

View ERC's Wage & Salary Adjustment Survey Results

The survey reports data from Northeast Ohio organizations regarding their actual and projected wage and salary adjustments.

View the Results

Employers Project Pay Increases of 2.8% for 2012

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The results of the ERC Wage & Salary Adjustment Survey show that Northeast Ohio employers had projected pay increases of 2.8% for 2012. The survey also reports that employers provided actual pay increases of 2.8% in 2011.

Despite no change in the projected average pay increase from 2011, the results of the survey found that more local employers were projecting wage and salary increases than in the years following 2007. Specifically, 89% of the 129 employers surveyed reported projecting pay increases to at least one employee group, up from 55% in 2009 and 82% in 2011.

More employers also projected increases of 3.0% or higher in 2012 when compared to 2011. In the survey, 57% of organizations reported projecting increases of 3.0% or higher in 2012 for clerical, technical, supervisory, management, and professional employees compared to 50% of organizations in 2011. Non-manufacturing employers, in particular, were more likely to project increases of 3.0% or higher for 2012.

View ERC's Wage & Salary Adjustment Survey Results

The survey reports data from Northeast Ohio organizations regarding their actual and projected wage and salary adjustments.

View the Results