TOP 10 HR QUESTIONS FROM THE FIRST HALF OF 2014

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2 Through the first half of the year, the ThinkHR Live Hotline team has answered over 25,000 questions from HR professionals at over 70,000 businesses nationwide. We know first-hand what the most pressing issues are facing business of all sizes and across all industries. We ve gone through the data and compiled a list of the most urgent questions we ve answered over the first 6-months of 2014, along with insight from ThinkHR s Hotline team of expert HR professionals on exactly why this question made the list. These questions were determined combining various factors across frequency asked, magnitude of impact to the organization, current legislative updates, and more. If you work in or with the HR profession, these are questions you MUST know the answers to. If you d like to learn more about our suite of HR compliance tools, including our HR Hotline, Compliance Library, and Training Solutions, that quickly answer all these questions (and more) click here. What is the protocol for terminations done in any other way rather than face-to-face, if the employee is out of the office and the supervisor is on vacation? Our Take: One of the most difficult management practices is handling employee terminations successfully. Your goal is to treat the employee with respect while protecting the company from employment liability risks Most HR professionals agree that in-person terminations are the best practice and the preferred method. However, in-person terminations are not always the most feasible option. When immediate action is necessary, travel coordination may be challenging, forcing the manager to conduct the employment termination discussion using alternative methods. Terminations by video conferencing or phone are the next best options. Video conferencing will allow for all parties to see and understand verbal and nonverbal gestures, which is important when discussing such emotional topics as employment status. Video conferencing or phone terminations still allow for the employer to convey critical information and empathy, if applicable, while giving the employee an opportunity to ask questions and share his or her thoughts. An employer still needs to keep the following considerations in mind when using either one of these options: As with face-to-face terminations, consider the payment at the time of termination and severance pay. When you are not meeting face-to-face, you still need to make sure that you adhere to these laws either by overnighting paychecks or by paying by direct deposit. When possible, have another company representative present to witness the conversation. Let the employee know who is present during the conference or call. Be prepared to provide appropriate information to the employee (such as reason for termination, termination date, final paycheck and benefits) and to answer the employee s questions. (This does not mean the reason for termination is up for discussion. It s important to keep the call to a minimum whenever possible.) Plan to discuss issues such as work project briefings (e.g., project status), return of contact lists and return of organization equipment (e.g., laptop, cell phone, other electronic equipment). Tell the employee you will follow up with appropriate documents by mail. (Overnight package or same-day delivery are the

3 preferred options.) Discuss with the IT department technology-related issues such as shutting down passwords, database access and intranet access at the appropriate time. (It is generally considered to be a best practice to alert a confidential source in advance to ensure this is completed swiftly once the employee is informed of the employment termination.) The goal in any termination discussion, whether for cause or reduction in staff, is to exit the employee from the company while extending the greatest amount of integrity and respect possible. Offer the terminated employee the option to meet with you in person when you are back in the office if that seems appropriate. In addition, you will need to make arrangements to forward any private belongings to the employee with a documented list of all items being sent via proof of delivery as quickly as possible.) While this applies to the original inquiry, note that many of the tips can be leveraged in face to face conversations as well. What are the employer reporting requirements for the 2015 Employer Shared Responsibility Payment under Section 6056? Our Take: The Affordable Care Act generates more questions than any other single topic. From questions relating to provisions of the law, to the amendments to the Act and the regulatory guidance for implementation, staying on top of the latest requirements is a daunting task. As employers look towards the reporting requirements and complying with the employer mandates, questions like the one below are common. The Affordable Care Act (ACA) includes several new reporting requirements under the Internal Revenue Service (IRS) tax codes. Section 6056 requires employers to report information to the IRS about their compliance with the employer shared responsibility provisions, including the type of health care coverage offered to employees. Reporting includes: Information about the employer offering coverage (including contact information and the number of full-time employees). For each full-time employee, information about the coverage (if any) offered to the employee by month, including the lowest employee cost of self-only coverage offered. The regulations provide for each applicable large employer to file a Section 6056 return with respect to its full-time employees. The IRS Form 1095-C (employee statement) and a Form 1094-C (transmittal) are the proposed designated forms to be used for Section 6056 reporting. At this time, these forms are not available from the IRS, as the reporting takes effect for tax year Resources:

4 What are the transition rules for employers with more than 50 but less than 100 employees to be exempt from the Play or Pay mandate next year? Our Take: The Affordable Care Act s Employer Shared Responsibility provisions, often referred to as the Play or Pay rules, are important for large employers this year preparing to comply with this requirement in either 2015 or 2016 based on their size. The Affordable Care Act s employer shared responsibility provision often referred to as the employer mandate or play or pay applies only to employers with 50 or more full-time-equivalent employees. Starting in 2015, a Large Employer may be assessed a penalty for failure to offer health care coverage to its full-time employees. No penalties are assessed, however, unless at least one full-time employee purchases an individual policy from a public Marketplace (insurance exchange) and receives a premium tax credit (subsidy). The provision takes effect January 1, 2015, although certain midsize employers, and certain employers that sponsor non-calendar year group health plans, may take advantage of IRS transition relief to delay the effective date. For instance, the transition relief for a midsize employer (i.e., employed on average full-time employees, including FTEs, during 2014) exempts the employer from the play-or-pay coverage rules until the 2016 plan year if the employer meets the following conditions: Staffing Reductions: During the period beginning on February 9, 2014 and ending on December 31, 2014, the employer does not reduce its workforce size, or reduce hours of service of its workforce, to get under 100 FTEs, unless for bona fide business reasons. Coverage Reductions: During the period beginning on February 9, 2014 and ending on the last day of the 2015 plan year, the employer cannot eliminate or reduce the level of coverage, or narrow eligibility. The employer will not be treated as eliminating or materially reducing its health plan's coverage as long as: It continues to make an employer contribution toward the cost of employee-only coverage that is either (1) at least 95 percent of the dollar amount the employer was contributing on February 9, 2014; or (2) the same (or a higher) percentage of the total cost of coverage that the employer was contributing as of February 9, 2014; If the benefits provided under the employee-only coverage option are modified, the coverage provides minimum value after the change; and The plan is not amended to exclude or narrow any class of employees (or their dependents) to whom coverage was offered on February 9, Certification: The employer must certify, in writing, that it satisfies the requirements described above, and submit that certification to the IRS on the employer health coverage reporting form.

5 Outside of our Workers Compensation carrier, does our business need to track and report on workplace injuries? Our Take: Every employer, regardless of size, is responsible under federal and state mandates to provide a safe and healthy environment for employees, customers and visitors to the company. Maintaining safety compliance under OSHA is an important management responsibility. Protect your employees and your business by understanding the rules, notification, reporting and posting requirements. OSHA (the federal Occupational Safety and Health Administration) does require businesses to keep records of work-related illnesses and injuries, unless the business employs 10 or fewer workers and/or the business is in a low-hazard industry. Detailed information about the posting requirements and businesses excluded can be found on the OSHA website at Your state may also have additional safety requirements. For more information for your particular location, you can check the state laws on our resource portal or give us a call. You must report significant injuries or illnesses diagnosed by a physician or other licensed health care professional and any other work-related illnesses or injuries if they result in any of the following: death; days away from work; work restrictions or transfer to another job; medical treatment beyond first aid; or loss of consciousness. If you have any questions about whether an illness or injury is work-related, contact your broker or attorney. OSHA has three forms for illness/injury records that employers must maintain: 1. OSHA Form 300, Log of Work-Related Injuries and Illnesses (annual record of all injuries/illnesses); 2. OSHA Form 300A, Summary of Work-Related Injuries and Illnesses. This report is an annual summary and you must post a copy of this summary in a conspicuous place where notices to employees are customarily posted no later than February 1st of the year following the year covered by the records and keep it posted until April 30th; and 3. OSHA Form 301, Injury and Illness Incident Report (individual incident report of an employee s injury or illness on the job). These forms should be updated within seven calendar days of learning of a recordable incident and retained for five years after the end of the year in which the incident occurred. Do not post the Form 300 or the Form 301, as these records have information relating to each specific injured/ill employee and you want to protect the employee s personal health information. The only form that must be posted for public inspection is Form 300A, which summaries the incidents for the year.

6 Can an employee use Family and Medical Leave Act (FMLA) time for bonding after the child is born when a surrogate is used? Our Take: Next to the Affordable Care Act, issues relating to Family and Medical Leave Act (FMLA) leaves are the next hottest topic. When special leave issues arise, such as bonding with children that does not follow pregnancy disability, employers need to understand that the FMLA law provides protections for new parents in those circumstances. Bonding time as a leave is an eligible event under the Family and Medical Leave Act (FMLA) for cases such as adoption, foster placement, and birth, regardless of whether a surrogate was or was not involved. Both parents are entitled to FMLA leave to be with the new child (i.e., bonding time) during the 12-month period beginning on the date of the baby s birth or date of placement in the employee s care. What is the correct method for counting Family and Medical Leave Act leave and workers compensation leave? Our business practice is to run FMLA concurrently with workers compensation leave, however, there has been some pushback from employees. Our Take: Another important question relating to FMLA is how work-related injuries or illnesses are classified and tracked with FMLA leave. In most cases, work-related injuries or illnesses may provide FMLA designation for protection to both parties. An employee s FMLA leave may run concurrently with a workers compensation absence when the injury is one that meets the criteria for a serious health condition under the FMLA. Thus, an employee could receive workers compensation benefits to replace lost wages and medical attention for the workplace injury or illness, while at the same time continue general health benefits and job protection for up to 12 weeks in a 12-month period maintained under the FMLA rules. In these types of cases, the employer will just need to be sure to designate the leave as FMLA-qualifying to begin the FMLA countdown for the 12 weeks of benefits and job-protected leave. The employer must give notice of the leave designation to the employee. Failure to designate this leave as FMLA leave may be a violation of the FMLA, and the employee may still be entitled to FMLA leave once the workers compensation absence has ended. In situations where both the FMLA and workers compensation laws apply, employers must provide leave under whichever law provides the greater rights and benefits to employees. Therefore, employers cannot require a worker to take time off under FMLA instead of workers compensation if the person s injury makes them eligible to the benefits of workers compensation. Online Resource:

7 Does an employer need to pay a group of non-exempt employees who attended an optional training over the weekend? Can the employer offer them comp time if pay is not required? Our Take: Paying employees correctly is a top management concern. The rules differ between pay for employees exempt from the Fair Labor Standards Act (FLSA) rules and those classified as non-exempt (eligible for overtime pay). Mandatory training is considered compensable time for your employees. It is important to know the payroll rules to be in compliance with the law. Training programs conducted during regular working hours constitute work time and must be compensated as such, according to the federal Fair Labor Standards Act. After-hours training need not be compensated if: Attendance is entirely outside normal working hours and is voluntary (attendance will not be found voluntary if the employee is led to believe that attending is critical to his or her job.) The training is not directly related to the employee s present job. The employee does not do any productive work during the program. A training program is considered directly related to the job if the training is designed to help the employee handle the present job more effectively (but voluntary attendance at school outside the workplace, after hours is not work time, even if it is related to the employee s present job). Time spent in training for a new job or in the development of new skills is less likely to be classified as compensable work time. If the training these non-exempt employees attended met the above criteria so that regular pay is not required, the employer could pay the employees extra or offer comp time to recognize the effort the employees make to increase knowledge and be more valuable to the company. However, if the training does not meet the above guidelines, and the employer is required to pay for time spent training, then overtime rules would apply and the employer would not be allowed to offer comp time instead of paying the overtime. For additional information, visit: We closed one of our offices for a day last week due to the weather. Our employees working in another office in a part of the country not affected by the weather are now asking for a free vacation day in order to be fair. My initial response is to deny it. Are we required to provide all employees with the exact same time off (but for different reasons)? Our Take: Mother Nature can be unpredictable and disrupt company operations. Knowing how to manage employee issues and the compliance requirements that result in unplanned work situations arising from inclement weather or other natural disasters can be a management challenge.

8 You can certainly follow your instincts and deny the request for extra time off for those employees not impacted by the inclement weather. There is no federal or state regulation that would require you to offer any of your employees an extra or free vacation day. In fact, there is no law that requires employers to provide vacation days at all for employees. With that said, under the Fair Labor Standards Act (FLSA), employers are only required to pay non-exempt employees for actual hours in which they perform work. Under the FLSA, an employer is not obligated to pay a non-exempt employee for time in which he or she performs no work, even if the employee was scheduled to work and was sent home early. This means that if a business decides to shut down and send employees home in the middle of the shift, the employer is permitted to pay non-exempt employees only for the time spent working. Exempt employees, however, almost always must be paid. The FLSA has an exclusive list of the instances in which an employer is permitted to dock exempt employee pay, and business closures are not one of these permitted deductions. If an employer sends exempt employees home (or keeps them home) because of inclement weather, an employer is obligated to pay them for the entire day under federal law. If an employer decides to close for an entire day because of the weather, an employer is still required to pay the exempt employee for the full day. The only instance in which an employer is not required to pay an exempt employee is when a business closes for an entire week, and exempt employees perform no work during that week. The bottom line is that for the non-exempt employees who were told to stay home due to the weather, you are not obligated to pay them for this time, and you are not obligated to provide additional paid time off to employees in other locations because you had to close one office for the day. For your employees who could not work that day, you can deduct from both exempt and nonexempt employees accrued time off banks, and for nonexempt employees with no accrued time available, the time off can be without pay. What type of conduct would be considered gross misconduct when it comes to COBRA eligibility? Would an involuntary termination of an employee who did not call in or show up to work for several days be considered gross misconduct? Our Take: When an employee is terminated for cause, some managers may believe that the former employee would not be eligible for any company-provided benefits post-termination, especially in situations where management believes that gross misconduct or negligence has occurred. Termination of employment for a no call/no show scenario is generally not considered to be the type of gross misconduct that would trigger a denial of health continuation benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA) regulations. The term gross misconduct, however, is not defined either in COBRA or in the law s implementing regulations. Courts generally have interpreted this term to require a high degree of misconduct before a plan sponsor may deny continuation coverage. In addition, courts typically have found that the plan sponsor must have evidence of the gross misconduct before denying COBRA benefits, not just a good faith belief that an employee engaged in gross misconduct (such as court findings and conviction of embezzlement charges).

9 Be aware that there are substantial penalties for COBRA violations (including fines of up to $110 a day per violation, actual damages such as medical costs, and attorneys fees) as well as personal liability for the Plan administrator Please consult with your benefits or legal advisors before denying employee benefits, including COBRA continuation coverage. What are the employer requirements for Form 5500 filing with less than 100 participants? Our Take: Navigating the sea of ERISA rules, including the disclosure and reporting requirements, is an important task for plan sponsors. Understanding the annual Form 5500 filing requirements for ERISA plans is a critical compliance action. In general, Form 5500 is not required for a welfare benefit plan that is unfunded, fully insured, or a combination of unfunded and insured, if there are fewer than 100 participants. In some cases, Form 5500-SF may be used instead of Form 5500 for certain small pension and welfare benefit plans. In the filing instructions (links provided below), there is additional guidance to determine whether the plan covers fewer than 100 participants for purposes of these filing exemptions for insured and unfunded welfare plans. Instructions for lines 5 and 6 on counting participants in a welfare plan include the following: Line 5: Total number of participants at the beginning of the plan year. Line 6 (a-h) asks for: Number of participants as of the end of the plan year (welfare plans complete only lines 6a, 6b, 6c, and 6d). For reporting purposes, the IRS recommends using the Participant Rule that states If the number of participants reported on line 5 is between 80 and 120, and a Form 5500 annual return/report was filed for the prior plan year, you may elect to complete the return/report in the same category ( large plan or small plan ) as was filed for the prior return/report. Thus, if a Form 5500-SF or a Form 5500 annual return/report was filed for the 2012 plan year as a small plan, including the Schedule I if applicable, and the number entered on line 5 of the 2013 Form 5500 is 120 or less, you may elect to complete the 2013 Form 5500 and schedules in accordance with the instructions for a small plan, including for eligible filers, filing the Form 5500-SF instead of the Form Your benefits broker can be a great source of information regarding your benefits filing requirements, so please contact them for additional information about your plans. Guidance to assist you in determining if your plans are subject to filing requirements include the following: Troubleshooter s Guide to Filing the ERISA Annual Report (Form 5500 and Form 5500-SF) available at

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