The HRK Blog

What Employers and Human Resources Should Know About The Fiscal Cliff

As an HR Professional or employer, you may be watching the news and wondering how the "Fiscal Cliff" may affect your business. The term "fiscal cliff" describes a package of significant U.S. federal tax increases and spending cuts that are due to take effect in late 2012/early 2013. These measures are designed to reduce the federal budget deficit by $503 billion by the end of FY13. Although reducing the deficit is a high priority, the timing for these measures could not be worse. In the midst of a still uncertain economic recovery, many economists and political pundits believe that such significant tax hikes and budget cuts could cause a double-dip recession and a spike in unemployment in 2013.

The budget cuts are focused on the Defense Department as well as "discretionary" programs, which means that there could be cuts in U.S. infrastructure, schools, public health and homeland security programs. Social Security, Medicaid, supplemental security income, refundable tax credits, the children's health insurance program, the food stamp program and veterans' benefits are exempt from the planned budget cuts. In combination with impending tax increases, including the new Obamacare health care taxes, U.S. businesses could be on the precipice of an economic disaster.

Small businesses would be among the hardest hit, and according to a new survey by Wells Fargo and Gallup, small business owners are preparing for the worst. In fact, more than 20% of small business owners said they planned to reduce the size of their work force over the next 12 months. In addition to possible layoffs, many questions are waiting to be answered regarding employee benefits and taxes.

While Washington grapples with a plan to prevent the U.S. from going over the fiscal cliff, employers, HR and benefits professionals can prepare now for several potential changes in 2013.

Expiration of the payroll tax cuts

On December 31, 2012, the Bush-era tax cuts are set to expire, which will bring the tax system back to 2001 levels. At the same time, President Obama's temporary 2% payroll tax cut will expire, which lowered employees’ Social Security payroll taxes. If these tax cuts expire as planned, the average U.S. family of four earning $50,000 will see taxes increase by $1,040 a year. Although the increase is on employee contributions, it also affects an employer’s withholding obligations.

Similarly, a new 0.9% Medicare payroll tax increase applies (from 1.45% to 2.35%) under the Patient Protection and Affordable Care Act (PPACA) on wages over $250,000 for married taxpayers filing jointly and $200,000 for single taxpayers. Like the 2% payroll tax increase, the Medicare payroll tax increase is not an employer liability, but employers must be prepared to withhold the additional 0.9% from wages for any employee with wages over $200,000.

Adoption assistance

Another Bush tax cut set to expire at the end of 2012 is a one-time adoption tax credit that gave $12,650 in 2012 for expenses related to the adoption or attempted adoption of a child. Qualified adoption expenses include reasonable and necessary adoption fees, including court costs, attorney fees, traveling expenses and other direct adoption-related expenses. Unless Congress acts to extend this tax credit, beginning on Jan. 1, 2013, only parents who adopt special needs children from within the United States will be eligible for a $6,000 tax credit.

Flexible spending account contributions

Under the health care reform bill, flexible spending account (FSA) levels will be reduced to $2,500 per year for plan years beginning in 2013. At the same time, the threshold for claiming medical deductions will be increased from 7.5% to 10%. This new limit must be documented in a flexible benefits plan by Dec. 31, 2014, regardless of the fiscal year of the flexible benefits plan, and this change must be retroactive to the beginning of the 2013 plan year.

Educational assistance

The IRS allows an employer to reimburse an employee on a tax-free basis up to $5,250 for certain educational expenses. However, this $5,250 tax-free employer-provided educational benefit expires after 2012. Employers should note that they can still provide some type of educational reimbursements in a more limited basis if they qualify as a business expense and meet certain requirements.

While small business owners are left dangling over the edge of the abyss, Washington is working to intervene and could. In the meantime, employers should consider communicating with employees about the ambiguity surrounding potential benefit changes for 2013 and the possibility of a 2% payroll tax increase. 

HR Knowledge is a provider of integrated HR, payroll and benefits services.  Our offices are located in the Boston, MA metro area and we service companies throughout the United States.

NLRB Requires New Legal Poster by January 31, 2012 for Employers

Compiance with the National Labor Relations Board  entails keeping up to date with their posting requirements.  There is a new posting requirement for all employers regarding a notice about the National Labor Relations Act. The posting is for all employers, whether unionized or not.

Employers are required to post by January 31, 2012 a notice regarding employee rights under the NLRB's NLRA (National Labor Relations Act.)

As with other required postings, this notice should be placed in a conspicuous location with the other labor and employment law posters.  The NLRB provides a template on their website which is available for download, at no charge.

For more information and a link to the required notice, please see http://www.gordonrees.com/publications/viewPublication.cfm?contentID=2265. Although a number of organizations are challenging the rule, at this point such challenges have only postponed, but not have not eliminated, the poster requirement. We will notify HELPLINE users if there is a change; until such time all affected employers should comply no later than January 31 of next year.

The poster is available for download at http://www.nlrb.gov/poster

This article was written by Jeffrey C. Garr, CEO of HR Knowledge, Inc. at www.hrknowledge.com.  For more information please contact us!

HR Knowledge is a provider of integrated HR, payroll and benefits services.  Our offices are located in the Boston, MA metro area and we service companies throughout the United States.

NLRB Required Job Posting 1/1/31 for Employers

New Posting Requirement for Employers

Employers: Are you prepared?  There is a new posting requirement by the National Labor Relations Board.  This new rule affects all employers, regardless of union or non-union. 

By January 31, 2012, employers are now required to post a new notice about employee rights under the National Labor Relations Act. 

As with other labor and employment law posters,  the information must be posted in a conspicuous location. For information about size and content, and to download a template free of charge you can visit the NLRB website.

A number of organizations are challenging the rule, however at this point such challenges have only postponed, but not have not eliminated, the poster requirement. We will notify HR Knowledge, Inc. clients if there is a change; until such time all affected employers should comply no later than January 31 of next year.

The poster is available for download at http://www.nlrb.gov/poster and HR Knowledge will be providing all full-service clients with one at no charge. 

For more information about this posting requirement, to keep updated on other laws and regulations that can effect an employer, and tips to stay in compliance, please contact us.

HR Knowledge is a provider of integrated HR, payroll and benefits services.  Our offices are located in the Boston, MA metro area and we service companies throughout the United States.

Open Enrollment, What to do?

Q:  It's that time of year again - Open Enrollment. 

How can employees better determine the benefits coverage they need to protect themselves and their families?

A:  This is a great question.  Far too often, employees make mistakes in their benefits coverage decisions which can cost them a lot more money in the long run or even influence their health care decisions when their coverage is insufficient.  Two of the most common mistakes are not meeting deductible amounts and failing to contribute enough to their flexible spending accounts.

Typically, when it comes to health insurance, employees rarely have a thorough understanding of what their policy covers.  A benefits consultant or broker, who not only has a thorough understanding of the various providers and plans, but knows the most common mistakes employees make, can help employees better navigate the insurance selection process. 

Communication is key.  Employees cannot be expected to make informed decisions about insurance when overwhelmed with information during the hiring process or at open enrollment.  A benefits consultant or broker will take the time to understand the needs and preferences of employees and advise them accordingly.  Not only will employees be able to make an educated decision about their benefits coverage, but ultimately, they will be well-protected and more satisfied overall with their benefits coverage.

FSA's can be either very complicated to understand or if explained properly can be easily understood.  We recommend an Open Enrollment Meeting for all employees to help them better understand all of their options with benefits.

For more comprehensive guidance, contact HR Knowledge, Inc.at Sales@hrknowledge.com or call at 508-339-1300

HR Knowledge is a provider of integrated HR, payroll and benefits services.  Our offices are located in the Boston, MA metro area and we service companies throughout the United States.

Company Fraud are there signs?

Can You Spot Someone Committing Fraud at Your Company?

Believe it or not, someone committing corporate fraud, or "cooking the books" is not that difficult to spot, once you know what to look for.  According to the study "Who is a Typical Fraudster?" developed and based on analysis of corporate fraud by KPMG International’s member firms, "fraudsters"  typically meet the following critera:

• 36-45 year old male in finance related role
• 10+ years longevity with the company
• Rarely takes vacations
• May only want to work with certain vendors
• Stressed-out most of the time

Also, their behavior is suspect:

• They cut corners
• They may have poor performance or make mistakes
• They tend to hire "Yes men" who will go along with whatever they say or do
• They seem to live well beyond their means
• They may exhibit signs of alcohol or substance abuse

Although this information is designed to give you an overview of someone most likely to commit fraud, it's imperative that you refrain from profiling.   HR execs must take measures to protect not only the company, but the employee.

During the hiring process please make sure you perform a background check on the people you hire, often times there can be a history in their past that might demonstrate some or all of the following:

• Criminal activity in the past
• Financial trouble for late payments to vendors
• Bankruptcy
• Employer Lawsuits for Workers' Compensation or an Employment Practice Lawsuit for Wrongful Termination

Checks and Balances in the workplace are vital to assist in prevention of fraud.  Always have a different person reviewing and balancing the checking accounts and monitor all cash and check writing capabilities.

For more comprehensive guidance on all things HR, contact HR Knowledge, Inc. at Sales@hrknowledge.com or call at 508-339-1300.

HR Knowledge is a provider of integrated HR, payroll and benefits services.  Our offices are located in the Boston, MA metro area and we service companies throughout the United States.

Age Discrimination and Compliance (ADEA)

Age Discrimination and Compliance (ADEA)

The current economy and the changing roles of older family members are just a couple of reasons why older Americans are re-entering or remaining in the workforce.  Because of this, it's imperative that those who are hiring have a good understanding of age discrimination.  The Age Discrimination in Employment Act (ADEA) prohibits age discrimination in employment with respect to hiring, firing, layoff, promotion, transfers, compensation, benefits, job assignments and training of anyone age 40 or older.

Age discrimination includes:

-Hiring only younger workers.

-Providing younger workers with better employment terms or conditions.

-Younger workers are the only ones promoted or offered better job opportunities.

-New training intiatives exclude older workers.

-During layoffs or restructuring, younger workers are retained while older workers are not.

During the interview process, be aware of questions that are potentially discriminatory, such as:

-How old are you?

-What year did you graduate from high school?

-Are you a Social Security recipient?

Older workers will more than likely have more experience and/or education than their younger counterparts.  How do you address the "overqualified" during the interview process to ensure that the person would be a good hire?  Questions that are "safe" to ask may include:

“How will you be challenged in this role?” and “What are your salary expectations?”

For more information about hiring, compensation or benefits please feel free to contact Jeff Garr, CEO at HR Knowledge www.hrknowledge.com or Call 508-339-1300.

HR Knowledge is a provider of integrated HR, payroll and benefits services.  Our offices are located in the Boston, MA metro area and we service companies throughout the United States.

Hiring Employees with I-9 Compliance

Our most recent hire worked for almost a full week before it was discovered that she failed to meet I-9 eligibility criteria.  How are we supposed to pay her?

It is a challenge to pay someone for work performed when there is no proper documentation, but she must be paid, period.

The Department of Labor’s (DOL) states “work not requested but suffered or permitted to be performed is work time that must be paid for by the employer…The reason is immaterial. The hours are work time and are compensable.”

And, regardless of her I-9 status, the Internal Revenue Service (IRS) expects you to withhold payroll taxes.

There's really only one way to avoid this type of situation and that is by planning carefully.  Here are some tips to follow in order to ensure there is no violation of the Fair Labor Standards Act or IRS rules:

• Pay the employee to ensure you fulfill the requirements of DOL and IRS.  You may pay the wages owed the employee in cash or by check (via the company's payroll system) minus the amount deducted for taxes.
• When hiring, be sure to require work authorization PRIOR to the commencement of work
• Obtain and complete ALL paperwork on new employees BEFORE any work is performed, which of course includes the I-9.  And, be sure Payroll has a copy of the employee's Social Security card on file

For more comprehensive guidance, contact HR Knowledge, Inc. at Sales@hrknowledge.com or call at 508-339-1300.

HR Knowledge is a provider of integrated HR, payroll and benefits services.  Our offices are located in the Boston, MA metro area and we service companies throughout the United States.

The Change Process in HR and Proper Communication

HR professionals play an essential role in organization's change process.   Whether the change is of a more "positive" nature, such as in an expansion, or a "less than positive" nature (which is what we're seeing more often in today's economy) and the result of acquisition, workforce reduction or dissolution, change initiatives must be communicated well so that employees understand their role and how it relates to the company's objectives.

HR professionals are the educators and communicators of any change plan.  Employees NEED to know the details - when and why the change is taking place and how they will be affected. 

Since management is going to concentrate on the business aspects of the change, it's the job of HR to focus on the human aspects by bringing employees up to speed and keeping them informed in order to avoid misconceptions, alleviate fears and preserve morale.

HR must take these important steps:

• Strive to create an understanding among employees that management will share information as it becomes available, but that during the change process, the future may be just as uncertain for them as it is for employees.
• Work with senior management to hold employee meetings where employee questions are encouraged and management provides honest, straightforward responses.
• Present any information regarding changes in employee benefits or compensation in an easy-to-understand manner.
• It's imperative that management maintain a high level of trust among employees.  It's HR's responsibility to help cultivate that trust.

Organizational change is a very emotive event for all involved.  It's the role of HR to act as the organzation's "quarterback", facilitating communication between management and employees and successfully leading the team through the change process.

For questions or more information about HR Outsourcing and its value please contact www.hrknowledge.com or 508-339-1300

 

HR Knowledge is a provider of integrated HR, payroll and benefits services.  Our offices are located in the Boston, MA metro area and we service companies throughout the United States.

How do you incentivize sales people and compensate them correctly?

Compensating your Sales people correctly can be a great challenge to the average business manager/owner.  If you don’t compensate them correctly or adequately, your sales people's production may suffer, which will directly affect business growth and profit.  If you do incentivize them correctly but pay them too much, it could create future problems related to growth and or profitability of your business.

Below are 7 key points to building a strong sales team:

1. Consider a Compensation Model prior to targeting and hiring sales people.  It helps to have a good understanding of what makes some people "tick", yet not others.  Maslow’s Hierarchy of Needs states that there are a number of aspects that generate needs for any person, some of which may be of more interest to one person and less interest to another.  Once you understand which aspect(s) motivate people, you can create a better environment to help create greater success.  According to Malsow, people are motivated by need, from the most basic biological/ physical needs (food, shelter, sleep, etc.) and safety needs (security, protection, stability) to the more emotional needs of belongingness (relationships, work group) and esteem needs (achievement and reputation) to self-actualization needs (personal growth and fulfillment).  For example, someone who is unemployed would be motivated through the fulfillment of the more basic physical and safety needs, whereas a person who already has job security, would be more motivated through promised fulfillment of esteem or self-actualization needs.

2. Hire the right team of sales people.  Before hiring, understand the type of sales person you need and then target them.  Are you looking for an “order taker”? This is a person who can call on existing accounts and build great relationship with the client.  Are you looking for a sales person who can “make it rain”?  This person has the ability to create and generate business.  If they are able to "find" business then they are the “hunter”. Understand what type of sales person you need and then target them in recruiting.

3. Adhere to the "Three A's" when hiring.  Once you understand the type of sales person you are looking for, remember the "Three A’s" when hiring for a sales position in your company.  The first and most important "A" is Attitude. The right attitude is everything when hiring people.  If they have the right attitude they will go through the wall for you to close business and follow the direction of the company.  Attitude is vital and without it, you have the wrong person on your team. The second "A" is Aptitude.  Ask yourself if s/he has the aptitude for the position of the company. Webster Dictionary defines aptitude as “capability; ability; innate or acquired capacity for something; talent".  If they don’t have the aptitude or capability or ability to take the sales position, then s/he is the wrong person for the company as well.  The final "A" is Altitude, meaning, how high can they go? How high do you need them to go? Will they plateau at a certain point and coast?

4. Beware of complacency.  The next concern when hiring sales people and thus managing them is complacency.  Most sales people will reach a point of complacency and then coast in the job.  Less work and more play becomes their mantra. The key challenge for management is to do all you can do to prevent complacency by your sales people.  Most people become satisfied (and have obtained fulfillment of Maslow's higher level of emotional needs) once they attain job satisfaction or reach a particular level of income or status.  With sales people, the challenge is to prevent this from happening.

5. Utilize your Compensation Model.  It is vital to keep sales people motivated and “in the game”.  From a managerial standpoint, it is far easier to compensate sales people and steer them in the direction the company wants them to go than it is to create compensation models to drive operations people, where you have to rely on coaching and management techniques.  Sales people are experts in understanding compensation models and how they can maximize their income in the quickest time frame.  They are usually very highly motivated and understand how the game works. This being the case, it is imperative that you find a compensation model to drive the sales team to do what you want them to do.

6. Understand what your company’s objectives are and then create the compensation model to attain those objectives.  For example, if your interest is to expand and grow your client base, then the compensation model needs to reward your sales team for new business and retention. You can create additional incentives to ensure that a large portion of their pay will be derived from new business acquisition.  If it is imperative that your sales team be involved in the retention of clients, then you need to find a compensation model which will reward them for retaining and maintaining great relationships with clients. If they lose clientele, you must ensure that this will affect their compensation. This is a delicate area because if your operations team is not equally committed to retaining clients and the service or product you are delivering is not up to standard, then the sales team has no chance to retain the business no matter how great their relationship is with that client.

7. Do all that you can to ensure that the product or service you deliver is “remarkable!"  Make sure that your company is setting the tone and the barometer in the marketplace for what you do. This will allow your sales people to confidently and comfortably sell your product or service. Without this, no sales person of any quality can survive and thrive in today’s business environment.  Make sure that your operations team are as committed and passionate about clients as your sales team.

For more information about compensation, HR and or benefits please feel free to contact Jeff Garr, CEO at HR Knowledge or 508-339-1300 www.hrknowledge.com

 

HR Knowledge is a provider of integrated HR, payroll and benefits services.  Our offices are located in the Boston, MA metro area and we service companies throughout the United States.

Top Reasons Companies are Struggling with Staffing

How are companies going to handle the increased demand for qualified candidates when so many companies are struggling with staffing now?  Why are these companies struggling?  Here are the top reasons:

Feast.  With the economic downturn, employers have been faced with a deluge of job applicants and the vast majority of these applicants are not suited to those job positions. 

Famine.  Skilled people are still hard to find, even in this economy. Many positions go unfilled simply for a lack of qualified candidates, particularly in many skilled trades.

Fewer “job changers”.  Many people are risk averse in today’s economy and would rather play it safe and stay with a current employer than risk a job move.

Benefits costs are soaring.  An increasing number of employers are deciding to put off hiring or rely on temporary workers to avoid such uncertainty.

Reluctance to fill vacant positions causing increased employee stress.  With companies reluctant to hire, the workload of existing employees, with regard to the scope of responsibilities and total number of hours worked, is increasing noticeably. 

Increase in litigation by the unemployed.  When faced with the loss of employment and income, people are much more apt to seek legal redress than when jobs are plentiful. 

Low levels of employee commitment and productivity.  Studies suggest that employee loyalty is at an all time low, due largely in part to the prevalance of downsizing.   Such feelings generally result in decreased productivity; reduced attention to the quality of work and increased risk for customer dissatisfaction.

Perhaps the answer to the staffing challenges of feast or famine lies in retained searches.  These days, retained searches are typically conducted for only the highest levels of staff, namely the CEO, CIO and CTO.  There seems to be a reluctance to use retained searches for non-senior staff.  The argument being that qualified applicants may be found by employee referral or via Craigslist and similar mediums. 

Or, maybe less technology, more “hands on” is the answer.  Could it be that the candidate selection process depends too much on technology and companies are inadvertently eliminating qualified candidates solely on the basis of not having enough “key terms” listed in their electronically submitted resumés?

Thankfully, a few of the staffing problems we mentioned should resolve on their own in time as the economy improves.  We should start to see an improvement in employee productivity and loyalty; people who are more willing to change jobs and a decrease in employee stress as vacancies are filled and the workload is redistributed.

By Jeff Garr, CEO and Frank Zych, Director of HR Services, HR Knowledge, Inc.

To read more, visit http://www.busex.com/article/operations-human-resources.HR Knowledge is a provider of integrated HR, payroll and benefits services.  Our offices are located in the Boston, MA metro area and we service companies throughout the United States.