2013 HR Compliance Guide

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We’ve developed an easy guide summarizing what your organization needs to know to stay compliant as it begins the New Year. 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 take effect during the first few months of 2013.

Legal/HR Issue Description of Regulation Effective Date
2013 Income Tax Withholding Tables Provides income tax withholding tables for 2013 here. Immediately
Unemployment Benefits Extends unemployment benefits for one year. Immediately
Tax Changes Extends current tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000. Increases top tax rate to 39.6% and tax rate on capital gains and dividends to 20% for individuals and couples earning more than these thresholds. Permanently indexes AMT (alternative minimum tax) for inflation. For 2012, the exemption amounts are $78,750 for married taxpayers filing jointly and $50,600 for single filers Immediately
HR-Related Tax Credits The employer-provided benefit tax credits for educational assistance and child care credits are now permanent. Several other tax credits are extended through 2013, including an employer wage credit for employees who are active duty members of the uniformed services. Immediately
Social Security Withholding Re-sets withholding rates at 6.2%. January 1, 2013
Social Security Wage Base Increases the Social Security Old Age Survivor's and Disability Insurance (OASDI) taxable wage base for 2013 from $110,100 to $113,700. January 1, 2013
Minimum Wage Raises minimum wage in Ohio to $7.85 per hour for non-tipped employees and $3.93 per hour for tipped employees. January 1, 2013
Mileage Rates Increases standard mileage rate to 56.5 cents per mile for business miles driven and 24 cents per mile for medical or moving purposes. Continues 14 cents per mile driven in service of charitable organizations. January 1, 2013
Retirement Plan Limits Raises the 2012 limit on the exclusion for elective deferrals in 401(k), 403(b), and 457(e) plans to $17,500, up from $17,000. For changes to other pension plan limits, click here. January 1, 2013
W-2 Benefits Reporting Requires employers who have an employer-sponsored group health plan to report the cost of coverage under their plan on employees' W-2s unless they are filing fewer than 250 forms. January 1, 2013
Contribution Limit for FSAs Limits an employee’s annual pre-tax salary reduction contributions to a health flexible spending account (FSA) to $2,500. January 1, 2013
Medicare Tax Increases Medicare Part A (hospital insurance) tax rate by 0.9 percent (from 1.45 percent to 2.35 percent) on earned income over $200,000 for an individual taxpayers and $250,000 for married couples filing jointly; also includes a 3.8 percent tax on unearned income in the case of individual taxpayers earning over $200,000 and $250,000 for married couples filing jointly). January 1, 2013
Fair Credit Reporting Act Notices Requires that employers must update their Fair Credit Reporting Act (FCRA) notices and forms because enforcement of the FCRA is now under the Consumer Financial Protection Bureau. January 1, 2013
Notice of Health Insurance Exchanges Requires that employers provide all new hires and current employees with a written notice about the future availability of health insurance exchanges in their state. March 1, 2013

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 2013.

Legal/HR Issue Description of Issue
Implementation of health care reform In 2012, the Supreme Court ruled that the health care reform law is constitutional. As a result, employers will need to keep pace with preparing for and complying with health care reform provisions, including those set to go into effect in 2013.
Jobs/job-related training Both federal and state governments will be focused on jobs and job-related training/workforce readiness in 2013, which may lead to tax incentives, grants for training, and other initiatives that assist employers with hiring and training efforts.
Social media in the workplace The federal government, some state governments, and the National Labor Relations Board (NLRB) are scrutinizing employers' social media policies and use of social media in the hiring, selection, and pre-screening process.
Background screening The Equal Employment Opportunity Commission (EEOC) released guidance this past year on background check practices, particularly as it relates to enhancing opportunities for those with criminal backgrounds. Ohio recently passed a law which reduces employment barriers for residents with misdemeanor or felony convictions.
Expansion of NLRB The National Labor Relations Board (NLRB) has expanded its influence throughout 2012, providing guidance on issues such as social media, at-will statements, and concerted activity. Expect this growing influence to continue.
Protection of unemployed individuals Bills were proposed at both state and federal levels to protect unemployed individuals from discrimination in the hiring process in 2012, and may gain further ground in 2013.
Targeted enforcement of  discrimination The EEOC will continue to focus its efforts on issues of systemic discrimination, intentional hiring discrimination, pregnancy discrimination, and transgender bias.
Increased wage and hour enforcement Wage and hour lawsuits filed under the Fair Labor Standards Act (FLSA) are dramatically rising, and the Department of Labor's (DOL) enforcement of the law has also increased. Misclassification also continues to be a focus of the DOL. Additionally, employers can expect that addressing equal pay may also be a priority for the federal government.
Workplace leave Both state and federal governments have shown interest in expanding workplace leave and enhancing the availability of flexible or alternative work arrangements.
Reduction of barriers for disabled workers The DOL continues to increase resources allocated to reducing barriers in employment for individuals with disabilities, including improving access to opportunities, increasing accessibility of accommodations, and changing perceptions regarding hiring people with disabilities.
Retirement plan reform The government continues to be interested in ensuring that employees are saving adequately for their retirement and is exploring a number of options.

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 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.
  • BNA HR Essentials & Tools: An online tool that houses notices, posters, sample policies, forms, federal and state law summaries, and local wage and tax information. Accessible in the ERC Member Center at www.yourERC.com. Resource offered to ERC members only.

Benefits Compliance: 3 Areas to Focus On

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Courtesy of Fisher & Phillips LLC

2013 marks not just the start of a new calendar year, but also compliance obligation deadlines for some employee benefit plans. We have outlined a number of key provisions impacting welfare and retirement plans, as well as changes to your payroll system, to help you be prepared. Let me know if you have any questions,

Medical Plans

  • A Summary of Benefits and Coverage (SBC) must be provided to all group medical plan enrollees by the first day of the first annual open enrollment period beginning on and after September 23, 2012. This means if your medical plan is operated on a calendar year basis, you must provide SBCs to enrollees as part of your upcoming annual open enrollment period for coverage that takes effect January 1, 2013.
  • Health FSAs must be redesigned for the 2013 plan year to limit annual account balances to $2,500. Make sure to update your plan document as well.
  • Ensure that your group health plan SPDs have been properly amended to reflect any applicable changes under the Patient Protection and Affordable Care Act of 2010 (PPACA).
  • Claims’ correspondence (claims and appeals responses) must use “culturally and linguistically appropriate language” when 10%+ or more of employees reside in a county literate only in the same non-English language. The HHS website provides a list of all U.S. counties which meet or exceed the 10% threshold.   If you send a claims or appeals response to an address in a county that meets the 10% threshold, you must include a one-sentence statement in the relevant non-English language indicating how to access language services. You must also provide oral language services (such as a telephone customer assistance hotline) and, upon request, a notice in any applicable non-English language.
  • The Women’s Health and Cancer Rights Act of 1998 (WHCRA) requires group medical plans to provide an annual written notice to participants and beneficiaries of the availability of medical and surgical benefits under the plan with respect to mastectomy and breast reconstruction. Including the WHCRA notice as part of your open enrollment materials is one way to fulfill your annual notice obligations.
  • Sponsors of group medical plans must notify employees annually concerning the availability of state premium assistance through Medicaid or CHIP.  The Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) imposes this notice requirement, which can be met by including the DOL’s model “Employer CHIP Notice” as part of your annual open enrollment materials.  For calendar year plans, the Employer CHIP Notice must be provided no later than January 1, 2013.
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Compliance and Tracking are Key FMLA Challenges

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According to the 2012 ERC/CareWorks FMLA Practices Survey, Northeast Ohio employers face numerous challenges associated with administering employee leave under the Family Medical Leave Act (FMLA). The survey cites that the biggest challenges employers face when administering leave under the Family Medical Leave Act (FMLA) are tracking leave, determining the overall costs associated with FMLA absences, and overall legal compliance. Determining what constitutes a serious health condition and meeting paperwork deadlines designated by the Department of Labor (DOL) were also cited as challenges, but were less common.

Additionally, 56% of respondents said they believe they are capturing all situations at their organization which should be designated as FMLA, further suggesting that several employers are experiencing challenges with tracking and administering the law.

"Employers spend a significant amount of time administering FMLA, but continue to struggle with compliance.  Every step of the FMLA administration process requires a substantial amount of detail, so an employer needs someone who is highly trained on the FMLA regulations and can stay on top of each claim on a daily basis," says Holly Moyer, Senior Disability Management Consultant at CareWorks. Holly adds, "The legal exposure for FMLA is on the rise, therefore it is critical for employers to have a well governed FMLA Administration program in place that focuses on compliance and consistent claim handling."

To download the full results of the survey, please click here. Or, to learn more about CareWorks and the services they can provide for ERC members as a Preferred Partner, please click here.

ERC Preferred Partner CareWorks provides Absence Management and FMLA Administration. ERC Members save 5% off per EE per month fee or a $500 discount off Initial Set-up Fee

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.

Wrapping Up 2011: A Year-End Checklist for HR

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We've compiled a checklist of common year-end HR tasks spanning compliance, benefits, payroll, salary administration, and general HR planning to prepare for 2012. 

Compliance

  • Review your policies and procedures and make sure they still apply and/or comply with changes to laws and regulations that occurred throughout the year.
  • Conduct an HR audit, preferably with a third-party. Make sure your HR and filing systems are in compliance.
  • Review record retention guidelines and dispose of appropriate records before the new year.
  • Review job titles and revise job descriptions for employees whose jobs, duties, or roles have changed within the course of the year. Be sure to also check FLSA exemption statuses to make sure these are still accurate.
  • Add critical HR filing and reporting deadlines to your calendar. 
  • Prepare for any regulatory updates that go into effect January 1.

Benefits

  • Make sure that new disclosure requirements and summary plan descriptions for retirement and health plans have been incorporated.
  • Revise benefits levels per IRS 2012 limits for defined contribution and benefit plans.
  • Review limitations on deferred compensation and check for excess contributions to qualified plans, especially for your highly compensated employees.
  • Determine which employees have life insurance over $50,000 to report taxable imputed income for taxable group term life insurance.
  • Check social security withheld to determine if an employee exceeded the 2011 limit. If so, make an adjustment or refund.
  • Re-evaluate your benefits package, including disability, life, and health insurance policies and obtain competitive bids.
  • Remind employees to spend the remaining balances on their flexible spending accounts before the end of the year so that their leftover money is not forfeited. You may consider reminding employees of reimbursable expenses. For a list of these, click here.
  • Send COBRA rate increase notifications to COBRA participants, if applicable.

Payroll/Salary Administration

  • Make sure employees review their W4s if they have changed their status during the year or anything else that would change payroll withholding.
  • Review taxable fringe benefits for W2 reporting, as these must be reflected in payroll for W2 reporting.
  • Distribute W2s by the end of January 2012.
  • Update employee address, demographic, and emergency information, including municipal information for local tax filing.
  • Have salary conversations with each of your employees and provide expected 2012 compensation in writing.
  • Issue final year-end paychecks which include year-end bonuses and holiday/overtime pay.
  • Adjust payroll to reflect changes in salary/wage adjustments, merit increases, minimum wage increases (note: Ohio minimum wage will increase January 1), and changes to benefits withholding.
  • Integrate new federal and state withholding tables. Remember that the temporary payroll changes which went into effect in 2011 are set to expire unless the federal government decides otherwise.

Planning

  • Distribute vacation and attendance calendars/planners to your supervisors and managers.
  • Determine your organization's 2012 holiday schedule and post or communicate it to employees. 
  • Plan, update, and post any critical  company activities or events for 2012.
  • Ask supervisors to assess current staffing levels in their departments/teams and submit job requisitions. Also take note of pending retirements, terminations, and expected turnover.
  • Conduct a training needs assessment and establish employee training and development plans for 2012. 
  • Review employee performance reviews and determine which employees...
    • are eligible for promotion
    • need additional training or skill development
    • require a performance improvement plan
    • should be terminated
  • Schedule recently promoted supervisors or managers for new supervisor training.
  • Plan your most critical projects for 2012. If you don't know what you should focus on, consider conducting an employee engagement survey in the first quarter to uncover areas of the workplace your department could improve.

Additional Resources

HR Project Assistance
For assistance conducting HR and FLSA audits, revising and auditing job descriptions, workforce planning, employee engagement surveys, and a variety of other HR projects, please contact consulting@yourerc.com.

Benefit Plan Audit
Do you have 100 or more employees enrolled in your defined contribution plan(s)? Your plan is required to be audited, and must accompany your 5500 filing. Now is the time to save! ERC members receive a No-Cost 2011 Benefit Plan Audit, and can lock in your 2010 rate for the next five years, through our exclusive partnership with Skoda Minotti. Click here for details!

Employee Handbook Service
As you revise your policies and procedures, keep in mind that ERC and Employer Risk Solutions Company (ERSco) offer a unique and innovative service exclusive to ERC members that provides an employee handbook for private employers that is easy, legally compliant, customized and affordable. For more information about this service, click here.

Training
Schedule your employees for training sooner than later! For a list of training topics offered by ERC, which can be customized to your organization's needs, click here. Or, to register your employee(s) or yourself for an upcoming public training event in 2012 offered in our Workplace Center, click here.

How to Get Sued (In 3 Easy Steps)

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The stock market and economic indicators such as the unemployment rate, hiring projects, and consumer confidence have shown some consistent modest improvements over the years, causing many employers to consider doing something they haven’t done en masse in years: hire more people. Keeping in mind that your organization and the managers and other staff members responsible for hiring those people may be a little rusty in this area, we present you with an easy three-step guide to how you can significantly increase the likelihood your business gets sued.

Please note that ERC actually strongly encourages you to do the exact OPPOSITE of the steps outlined below.

1. Ask inappropriate and illegal questions during interviews.

Follow the lead of fellow employers highlighted in case studies and articles like this article published in Fortune Magazine, and make sure those involved in the interview process have absolutely no idea what kind of questions they can and should ask job candidates. Ensure the questions are vague and have little (if any) connection to providing you relevant information to help you determine if the person is the right fit for the job. Also, encourage your staff to ask lots of questions about the personal background of candidates including their age, number of kids, religious beliefs, national origin, genetic history, disability status, and race. Actually, don’t encourage your staff to do anything at all. Better to leave them to their own devices and let them figure this stuff out themselves.

2. Conduct your own Internet background check.

Make sure that every candidate undergoes a thorough background check during which all those involved in the hiring process “Google” the person’s name and search the Internet for any blog postings, images, tweets, YouTube videos, Facebook wall posts, LinkedIn groups, or affiliations that would render that candidate as being a “less than ideal” fit for the culture of your organization. While you’re at it, make sure that everyone on your hiring team views at least one picture of each candidate that can clearly identify him or her as a part of a protected class, and just to have all your bases covered, be sure to read some kind of profile that provides personal information about each candidate such as age, race, and marital status. Finally, base your hiring decision solely on the information you find during this background check.

3. Rely on your gut. Always.

Spend as little time as possible collecting and analyzing empirical data about job candidates that can aide you in selecting the best person for the job. Never use tools like behavioral interviewing techniques or assessments that measure personality, cognitive abilities, or skills. Base all your decisions on hunches: the look in a candidate’s eyes…the color suit he or she did or didn’t wear…the way in which he or she grabbed his or her water glass and placed it back on the coaster on the table. These are the tried-and-true, time-tested, fail-safe techniques that you and all your staff involved in the hiring process should rely on explicitly.

If you’re venturing into the unfamiliar world of recruiting and hiring for the first time in a long time, and you’re committed to doing everything you can to land your employer in court, just follow the three easy steps outlined above and we can almost guarantee that you’ll increase the risk of litigation for your organization exponentially.

However, if you’re not so crazy about the idea of getting sued by job candidates, PLEASE do the exact opposite.

Additional Resources

Interviewing Skills for Managers & Supervisors
This interactive program will review the employment process, including: legal issues facing interviewers; effective questions that provide the interviewer with information relevant to the position; and strategies to effectively plan, conduct, evaluate and follow up on an interview. For more information about this workshop click here.