HR Morning News, Page 6 Category

Despite receiving a staggering number of comments in the last week of the comment period alone, the DOL has opted not to extend the comment period for its proposed changes to the FLSA’s “white collar” overtime exemption rules. 

The agency was flooded with comments — roughly a quarter of a million — from employers looking to get their two cents in on the proposed rule changes. In the last week alone, the DOL received 50,000 comments.

But even with that flurry of last-minute activity, the DOL reported to the House and Senate that it would not extend the 60-day public comment period.

It said the standard 60-day period — combined with its outreach efforts prior to the proposal being published — was enough to “produce a quality regulation.”

Disproportionate impact

The problem, as you might expect, is not everyone agrees with that statement. Also not surprising is the fact that a significant number of the comments criticized the proposed rule, particularly the new salary threshold.

One of the top complaints: The increased salary threshold fails to take into account the specific circumstances of different industries and regions — a flaw former DOL administrator-turned-attorney Tammy McCutchen pointed out while testifying before the House Subcommittee on Workforce Protections shortly after the proposal was made public.

Under the DOL’s proposed rule changes, employees must earn $970 per week or $50,440 per year, figures based on the 40th percentile of weekly wages for full-time salaried workers, to be exempt from overtime. McCutchen said this would have a disproportionate impact on states with a lower cost of living. She said this would even dwarf the thresholds already established in high-cost-of-living states like California ($37,440) and New York ($34,124).

The current threshold is $455 per week or $23,660 per year.

Based on the DOL’s refusal to extend the comment period, employers should still plan on the new overtime rules taking effect as soon as early 2016.

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Just when we all thought the argument over which test to use to determine if someone’s an independent contractor or not was settled by the DOL, two more tests (one old, one new) enter the fray. 

Earlier this summer, we reported that the DOL had published an Administrator’s Interpretation letter aimed at settling once and for all which test employers should use to distinguish who’s an independent contractor and who’s an employee. The DOL said it wanted employers to use its six-factor economic realities test.

Then, within a matter of weeks, the IRS posted a fact sheet on its website entitled Payments to Independent Contractors. Here’s our report. This action subtly reminded employers to use it’s existing three “Common Law Rules” to determine whether someone’s an independent contractor.

NLRB has its say, too

And now employers have a real mess on their hands, as the National Labor Relations Board (NLRB) has created its own test for determining who’s an independent contractor and who isn’t.

The test was revealed in a board-issued decision involving the nonprofit organization Sisters Camelot, in which a group of canvassers filed an unfair labor practice charge against the nonprofit.

In the case, the board was tasked with determining whether the canvassers were employees who could attempt to organize into a labor union.

In it’s decision that the canvassers were, in fact, employees, the NLRB unveiled an 11-factor test it will use to determine employee/contractor status in future cases.

Here are the 11 factors:

1. Extent of control by employer.
2. Whether the individual is engaged in a distinct occupation or business.
3. Whether the work is usually done under the direction of the employer or by a specialist without supervision.
4. The skill required in the occupation.
5. Whether the employer or individual supplies the instruments, tools and place of work.
6. The length of time for which individual is employed.
7. The method of payment.
8. Whether the work is part of the regular business of the employer.
9. Whether the parties believe they are creating an independent-contractor relationship.
10. Whether the principal is or is not in the business.
11. Whether the evidence shows the individual is rendering services as an independent business.

As you can imagine, the test isn’t wholly different from the two issued by the DOL and the IRS. In fact, the NLRB’s test is actually very similar to the IRS’s test in that both hinge on how much control the employer has over the work being performed by an individual.

So what’s an employer to do with these three tests? Here’s the safest course of action: Run your classifications through each test. If they easily pass must with all three, there’s nothing that needs to be done. If they don’t, change work relationships so they do — or simply reclassify the workers in question as employees and compensate them as employees (with tax deductions, benefits, etc.).

With health insurance costs continuing to soar, employees are being asked to shoulder more of the financial load. But as a result, they have some demands of their own. 

For starters, nearly nine in 10 employees say they expect more decision-making tools and support when they’re making their benefits selections during open enrollment.

That’s according to a series of annually recurring workforce surveys conducted by Aflac.

What else do employees want now that they’re paying more than ever for coverage?

• Brand name options — 87% said a brand name or a good reputation is at least somewhat important to them when selection insurance options (49% said it’s extremely important).
• More engagement in the decision process — 35% of employees agreed when asked if they needed to be more engaged in health insurance coverage decisions (that’s a 21% increase from 2014).

Price-focus driving some to make mistakes

What’s the No. 1 factor employees consider when selecting their insurance plan? More employees selected price (30%) than any other factor.

Of course, HR pros get that more should go into the equation than just costs — like the extent and the quality of the insurance coverage being provided, for example.

That’s something some employees may not be fully grasping, judging on these findings from the survey: A great deal of survey takers expressed remorse over choosing a high-deductible health plan (HDHP) because of its lower premium without fully grasping the specifics of what they were signing up for.

Specifically:

• 52% of those who selected an HDHP agreed when asked if they regretted choosing the plan.
• 59% said their HDHP was at least somewhat detrimental for themselves and/or their family
• 48% said they didn’t understand how an HDHP really works.

Fortunately, organizations can prevent the costs associated with poor hiring decisions by recognizing the challenges at key steps of the talent acquisition process. Data from workforce analytics can help optimize the performance and potential of individuals, teams, and organizations and help managers avoid these seven common mistakes that can lead to a bad hire.

Learn more!  

The ACA’s “Cadillac” tax on high-value health plans (soon to be average-value health plans if things keep trending the way they are) is under heavy fire from both Republicans and Democrats. 

Does this mean the excise tax — which is expected to affect most plans not long after it takes effect in 2018 — will never see the light of day? That’s a question still very much up in the air.

But three things are certain:

• Employers don’t like it.
• Business groups don’t like it.
• Some unions aren’t a fan of it either.

The tax’s biggest fans: Those on Capitol Hill desperate to find a way to pay for the ACA. But those people appear to be dwindling as it starts to become clearer what the effects of the tax will be.

Several new pieces of legislation have been introduced to repeal the Cadillac tax, and the bills have the backing of both Republicans and Democrats.

The most recent bill was introduced by Independent Senator Bernie Sanders (VT) and seven Democrat senators, including notable ACA-supporter Chris Murphy (D-CT).

A separate bill was recently introduced by Senators Dean Heller (R-NV) and Martin Heinrich (D-NM), along with similar legislation in the House by Rep. Joe Courtney (D-CT).

In addition to the repeal bills, a group of more than two dozen public and private employers, insurers and unions, have been pressuring Congress to kill the excise tax. The group is called Alliance to Fight the 40; a reference to the 40% Cadillac tax.

Under the ACA’s Cadillac tax provision, employers will be required to pay a 40% excise tax on the value of any healthcare coverage that exceeds $10,200 for single coverage or $27,500 for families in premium costs starting in 2018.

The biggest problem opponents of the tax have with it: With healthcare costs rising far more rapidly than inflation — which the tax’s health plan value limits are chained to — the tax will swallow up more and more plans year after year until, eventually, all but the cheapest health plans are taxed.

A new analysis of how many U.S. workers are actually taking FMLA leave at any given time — and why they’re taking it — clearly illustrates why administering this type of leave has become such a huge pain in the butt. 

FMLASource is a third-party FMLA administration program offered by ComPsych Corporation, an EAP provider. ComPsych provides services to more than 29,000 organizations covering 78 million people. As a result, it has a wealth of employee data on its hands.

Recently, it put that data to use looking for FMLA-usage trends and benchmarks — and what it found was staggering: At any given time, 10.7% of the U.S. workforce is on FMLA leave.

That’s right, according to FMLASource’s analysis, one in every 10 employees is taking FMLA leave right now. And that’s the average — in some industries the number is far greater.

For example, in health care organizations and call centers, the number of people on FMLA leave at a given time is as much as 30%.

Breaking down the numbers

The analysis also looked into the types of FMLA leave employees are taking, the average duration and the top qualifying reasons.

The findings:

• 63.6% of employees are on continuous FMLA leave
• 34.9% are on intermittent leave
• 1.5% are on a reduced work schedule.

The average duration of leave: 14.2 days.

The top reasons for leave:

• 64.1% of the time it’s due to employees’ own health conditions (see below for a breakdown of what these conditions are)
• 17% of the time it’s to provide care for a loved one
• 9.1% of the time it’s due to pregnancy
• 6.8% of the time it’s to care for a new child.
• The remaining 3% was attributed to “other.”

The medical conditions for which employees are taking leave:

• Surgery — 36%
• Pregnancy (no complications) — 13%
• Bonding — 10%
• Cancer — 7%
• Knee surgery — 5%
• Hospitalization — 5%
• Pregnancy (complications) — 4%
• Depression/anxiety — 4%
• Broken bone — 3%
• Back injury — 3%
• Migraine — 2%
• Back surgery — 2%
• Asthma/COPD — 2%
• Heart surgery — 2%
• Accident — 2%

Finally, FMLASource dug into the top reasons employees’ leave requests were denied:

1. Employee’s supporting documentation wasn’t received in the allotted amount of time.
2. Employee’s requested dates weren’t certified by a physician.
3. Documentation for leave wasn’t received at all.
4. Employee was ineligible for FMLA leave.
5. Employee had exhausted his or her allotted amount of leave time. ***

*** It’s important to mention that just because someone’s exhausted his or her 12 weeks of leave under the FMLA, the employee may still be eligible for additional leave under the ADA.

This has been a point of emphasis for the DOL over the past year. Here’s our breakdown of why, how and when you must grant leave under the ADA.

For a visual representation of all the data outlined above, check out ComPsych/FMLASource’s latest infographic “FMLA By The Numbers.”

Background checks have come under heavy scrutiny from the EEOC in recent years, and knowing when they should and shouldn’t be used isn’t always easy. But car maker BMW should’ve known better in this case. 

What did it do? It asked some of its existing workers — who seemed to be working out just fine — to submit to the same criminal background screening that new hires were being subjected to.

In the EEOC’s eyes, that was a problem.

Incumbent workers tested, too

Here’s the full story:

The EEOC recently sued BMW Manufacturing Co., claiming the company discriminated against African-Americans.

When BMW switched which contractor was handling logistics at its Spartanburg, SC, facility, it required the new contractor to perform a criminal background check on both new applicants for logistics positions and all existing logistics employees who re-applied to keep their current positions.

BMW’s strict hiring guidelines at the time excluded from employment all persons with convictions in certain categories of crime, regardless of how long ago the crime was committed. And as a result of sending existing logistics workers through the screening process, including some of whom had been with the company for several years, 100 incumbent workers were denied re-employment.

The EEOC claims these actions had a disproportionate impact on African-American workers. Specifically, it claimed that 80% of those affected were African-American.

Was there a business necessity? No

The Civil Rights Act stipulates that when a background screening disproportionately affects one group of employees (i.e., African-Americans, Latinos, etc.), and there’s no business necessity tied to the screening, it’s illegal.

Since it was likely hard for BMW to argue there was a business necessity for excluding the incumbent workers — after all, they seemed to be doing their jobs just fine up until this point — the EEOC declared the screening a big no-no.

The agency then sued on behalf of the majority of the African-American workers who lost their jobs.

The result? BMW has since changed its guidelines, and it has consented to pay $1.6M and provide job opportunities to the victims of the alleged racial discrimination to avoid litigation. In addition, BMW agreed to offer employment opportunities to up to 90 African-American applicants who were denied employment as a result of the previous conviction guidelines.