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March 2011
2011 Workforce Forecast: We are pleased to report that HR Experts On Demand celebrated its fifth anniversary this month! Many thanks to all the clients we have had the pleasure to serve, all those who have sent us referrals, and all the business associates with whom we have had the opportunity to collaborate. More. In this edition of HR News You Can Use, we focus on the 2011 Workforce Forecast, published by the Society of Human Resource Management; payment to summer interns; the final rules issued with respect to the Americans With Disabilities Amendment Act and new requirements for retirement plans. Our continuing series, Spotlight on Healthcare, addresses the need for employers to carefully consider all scenarios and impact to their businesses when developing their health care strategies. HR Experts On Demand is poised to help small business and nonprofit organizations meet the challenges they will surely face in 2011 and beyond. Visit our website at HRExpertsOnDemand.com. Society of Human Resource Management Americans with Disabilities Act Amendments Act (ADAAA) Rules Issued DOL Increases Scrutiny on Retirement Plans’ Fees. Many US Employers Likely to Pass Along Health Benefit Cost Increases to Workers
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Society of Human Resource Management Issues 2011 Workforce Forecast
An emphasis on economic issues, especially the ongoing influence of the “Great Recession,” as well as the importance of political developments and new legislation mark the main differences between the 2011 findings and those of previous years.
HR Experts On Demand is poised to help small businesses stay on top of and compliant with the growing complexity of HR-related legislation, regulations and court rulings, as well as implementing programs to maximize employee engagement and productivity. |
The Society of Human Resources Management, which has over 245,000 members, has issued its bi-annual Workforce Forecast. Ongoing themes throughout the years include:
As the 2010-2011 school year comes to an end, many high school and college students are seeking summer internships. The Department of Labor has issued rules which guide whether the internship must be paid. The Fair Labor Standards Act defines the term “employ” very broadly as including to “suffer or permit to work.” Individuals who are “suffered or permitted” to work must be compensated under the law for the services they employ for an employer. Internships in the “for-profit” private sector will most often be viewed as employment unless a test related to trainees is met. Interns in the “for-profit” private sector who qualify as employees must be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek.
There are some circumstances under which individuals who participate in the “for-profit” private sector internships or training programs may do so without compensation. The Supreme Court has held that the term “suffer or permit to work” cannot be interpreted so as to make a person whose work serves only his or her own interest an employee of another who provides aid or instruction. As an example, HR Experts On Demand is hosting an intern from Pakistan through the international exchange student program sponsored by the U.S. State Department and administered by Greenville Technical College. The intern is being trained to develop job descriptions, performance appraisals and employee handbooks. He will take this new knowledge back to his own company in Pakistan.
The determination of whether an internship or training program meets this exclusion depends upon all of the facts and circumstances of each such program. The following six criteria must be applied when making this determination:
- The internship, even though it includes the actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under the close supervision of existing staff;
- The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
The U.S. Department of Labor Wage and Hour Division has published Internship Programs Under The Fair Labor Standards Act, which expounds on some of the criteria listed above.
Americans with Disabilities Act Amendments Act (ADAAA) Rules Issued
The U.S. Equal Employment Opportunity Commission (EEOC) published the final rule implementing the Americans with Disabilities Act Amendments Act (ADAAA) on March 25, 2011. The final rule is scaled back from the proposed rule in several respects, including the definition of “disability.”
The final regulations provided nine rules of construction to guide the analysis of what constitutes a disability. Applying these rules of construction, the EEOC provided examples of impairments that should easily be concluded to be disabilities.
The nine rules of construction are:
1. The term “substantially limits” shall be construed broadly in favor of expansive coverage, to the maximum extent permitted by the terms of the Americans with Disabilities Act (ADA). “Substantially limits” is not meant to be a demanding standard.
2. An impairment is a disability if it substantially limits the ability of an individual to perform a major life activity as compared to most people in the general population. An impairment need not prevent, or significantly or severely restrict, the individual from performing a major life activity in order to be considered substantially limiting. But not every impairment will constitute a disability.
3. The primary object of attention in cases brought under the ADA should be whether covered entities have complied with their obligations and whether discrimination has occurred, not whether an individual’s impairment substantially limits a major life activity. Accordingly, the threshold issue of whether an impairment “substantially limits” a major life activity should not demand extensive analysis.
4. The determination of whether an impairment substantially limits a major life activity requires an individualized assessment. However, in making this assessment, the term “substantially limits” shall be interpreted and applied to require a degree of functional limitation that is lower than the standard for “substantially limits” applied prior to the ADAAA.
5. The comparison of an individual’s performance of a major life activity to the performance of the same major life activity by most people in the general population usually will not require scientific, medical or statistical analysis. However, nothing prohibits the presentation of scientific, medical or statistical evidence to make such a comparison where appropriate.
6. The determination of whether an impairment substantially limits a major life activity shall be made without regard to the ameliorative effects of mitigating measures. But the ameliorative effects of ordinary eyeglasses or contact lenses shall be considered in determining whether an impairment substantially limits a major life activity.
7. An impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.
8. An impairment that substantially limits one major life activity need not substantially limit other major life activities in order to be considered a substantially limiting impairment.
9. The six-month “transitory” part of the “transitory and minor” exception to “regarded as” coverage does not apply to the definition of an actual disability. The effects of an impairment lasting or expected to last fewer than six months can be substantially limiting.
In addition, the final regulations state that major life activities include the operation of major bodily functions, including functions of the immune system, special sense organs and skin, normal cell growth, digestive, genitourinary, bowel, bladder, neurological, brain, respiratory, circulatory, cardiovascular, endocrine, hemic, lymphatic, musculoskeletal and reproductive functions. The final rule states that major bodily functions include the operation of an individual organ within a body system, such as the operation of the kidney, liver or pancreas. As a result of the ADAAA’s recognition of major bodily functions as major life activities, it will be easier to find that individuals with certain types of impairments have a disability.
The final rule retains the existing familiar language of “class or broad range of jobs” and retains the concepts of “condition, manner or duration.” Assessing the condition, manner or duration under which a major life activity can be performed may include consideration of the difficulty, effort or time required to perform a major life activity; pain experienced when performing a major life activity; the length of time a major life activity can be performed; and/or the way an impairment affects the operation of a major bodily function. But the commission added that with respect to many impairments, including those that should easily be concluded to be disabilities, it may be unnecessary to consider the condition, manner or duration to determine whether an impairment substantially limits a major life activity.
DOL Increases Scrutiny on Retirement Plans’ Fees.
Are You Ready?
By: Matt Van Name, Client Services Manager, ASE Wealth Advisors
If you are in charge of running your company’s retirement plan (401k, SIMPLE IRA, Pension plan, etc.) than you’ve probably heard about the upcoming changes in disclosure regulations known in the financial industry as 408 (b) 2 regulations. What you may not have been aware of is that the Department of Labor simultaneously has employed 1,000 new agents and has budgeted over $150 million during the first year of these regulations to review the effectiveness of these regulations and to conduct compliance reviews to ensure that everyone’s following the new rules. This means that starting in January 2012 you could get an unannounced visit from the Department of Labor, and they won’t be stopping by just for a friendly chat.
These new regulations were put into place to primarily eliminate hidden fees, conflicts of interests, and indirect compensation that plan providers were not required to disclose previously. Another major change coming with these regulations is the transparency of all fees charged to a participant’s account. Every penny that is charged by the plan provider, investment advisor, mutual fund company, record keeper, broker/dealer, or anyone else involved with the plan will now be disclosed to each participant right on their statement. If you don’t want to field questions from angry or confused employees as to why all of the sudden they are having possibly hundreds of dollars charged in fees to their accounts, we’d suggest educating your employees prior to this change taking place. Many participants are not aware that mutual funds have embedded fees or have any idea what sort of fee is charged by their plan provider per participant. Those fees will now be staring them in the face on their statements, and while the fees have always been there it will no doubt cause many participants to start questioning the person who chose their retirement plan.
While these regulations are intended to be a benefit to plan trustees and participants alike, it now also requires plan trustees to document why they’ve chosen a certain provider and be able to justify that the provider “charges a reasonable fee for a reasonable level of service”. The DOL does not define what they consider reasonable, but they’re going to want to hear your definition if they show up next Spring. Now that they are requiring more transparency by providers, it will become the plan trustee’s job to sort through all of that information and determine if the fees charged are reasonable for the services provided. This can be quite a task if you’ve never researched other providers and don’t know where your fees stack up against other companies.
If you do run your company’s retirement plan, or are part of a group that does so, and you weren’t aware of these upcoming changes, it’s probably best to start gathering information and checking to see how your plan will be affected. The good news is that there is help available! More and more companies are seeking out Financial Advisors to assist not only with investment selections, but also with fiduciary responsibilities (which is a whole other topic) and ensuring their plan is compliant with the Department of Labor and ERISA. At ASE Wealth Advisors, we seek to add value to your retirement plan and specialize in working with plan trustees. For a complimentary analysis of your current plan and fiduciary liability issues or for information on how to get a plan started, give ASE Wealth Advisors a call at 864-254-0032.
Spotlight on Healthcare:
Many US Employers Likely to Pass Along Health Benefit Cost Increases to Workers
A report by the not-for-profit Employee Benefit Research Institute (EBRI) shows that many U.S. employers are likely to pass along further health benefit cost increases to workers, including those related to expanded coverage requirements under the health care reform law. And many workers are expecting such cost increases.
Specifically, more than 40 percent of employers say they are likely to pass along cost increases to workers, and about half of workers expect their health benefit costs to go up whether related directly or indirectly to the Patient Protection and Affordable Care Act, according to the report Employer and Employee Reactions to Health Care, published in the January 2011 EBRI Notes. However, a majority of employers and workers admit that they are not very knowledgeable about the new law.
“This new legislation brings a degree of uncertainty to both employers and workers about their health plans,” said Paul Fronstin, director of EBRI’s Health Research and Education Program and author of the report. “For employers, it is how their plans will be administered. For workers, it is how much of the costs will be passed on to them.”
The findings primarily come from the 2010 EBRI/MGA Consumer Engagement in Health Care Survey (CEHCS), fielded in August 2010. In addition, EBRI's analysis uses data from the Society for Human Resource Management's Organizations’ Response to Health Care Reform poll, fielded from July 22-Aug. 3, 2010.
EBRI reports that employers are more likely to pass along cost increases than cost decreases:
- While 41 percent say they were likely to pass along cost increases, only 30 percent were likely to pass along any cost decreases that were related directly or indirectly to health reform.
- While 23 percent were highly likely to pass along cost increases, only 10 percent were highly likely to pass along cost decreases.
Looking at the future of employment-based health coverage, EBRI reports that:
- 31 percent of workers with private insurance expect their health care coverage to decline, while 34 percent expect their benefits to be unchanged. A minority foresee improved health benefits.
- 32 percent of workers think that their employer is likely to continue offering health benefits after 2014, and another 23 percent think that their employer is very likely to continue offering employment-based health plans.
However, despite employees' pessimism, few employers had decided to drop health care coverage: Less than 1 percent have conducted an analysis and decided to drop coverage, and less than 1 percent have decided to drop coverage without conducting an analysis, according to the report.
DISCLAIMER: Any information, recommendations, advice and opinions provided are based on general human resource management fundamentals, practices and principles, and are not legal opinions or guaranteed outcomes. We recommend, as part of a team approach to management, that you consider consulting with your legal counsel to address any legal concerns related to significant human resources issues and binding contracts.
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