• New fee disclosure rules go into effect for calendar year plans on January 1, 2012 that require brokers to disclose all fees they receive for services related to your 401(k) plan.

• The Supreme Court will review the constitutionality of the Patient Protection and Affordable Care Act (PPACA) individual mandate.  The court will hear oral argument on the various challenges to the mandate.  The oral arguments could come as early as March, with a decision most likely in June 2012.  The Supreme Court will determine whether Congress has power under the Commerce Clause to order all citizens to obtain health insurance, and, if congress has that power, whether the rest of the PPACA may stand if the individual mandate is struck down.  This is a decision that will have a major impact on how businesses offer medical insurance to employees in the future.  Stay tuned!

• The National Labor Relations Board has delayed the implementation deadline until January 31, 2012 that will require private employers to post a notice that outlines employee rights under the National labor Relations Act.  This posting has been contested by many national business organizations. Don’t be surprised to see efforts at an injunction to stop the implementation as we get into January.

• The U.S. Department of Labor, Treasury and Health and Human Services announced they will not require sponsors of group health plans to comply with the PPACA requirement to create and distribute to employees a standardized “summary of benefits and coverage” (SBC) and uniform glossary by March 23, 2012, as they had originally proposed.  The departments received many critical comments on the proposed regulations.  Accordingly, the effective date has been pushed back and a final rule will be issued that takes into account the numerous stakeholder comments and feedback.  This is only a delay, and sponsors of fully insured plans should discuss with their insurer who will provide the SBC to group health plan participants and beneficiaries, and when they will provide that information.  Sponsors should also update plan documents and summary plan descriptions to reflect changes required by the health care reform law.

• The IRS has released their standard mileage rates for 2012.  Business mileage remain unchanged at 55.5 cents per mile; Medical and moving mileage rate is 23 cents per mile; the charitable mileage rate is 14 cents per mile for 2012.

• The end of each year is a good time to review your many compliance requirements with both the federal and state governments.  Review your sexual harassment policies to proactively maintain a positive work environment for all team members.  Take a good look at your safety program to make sure all team members are working with proper safety equipment and are aware of your safety guidelines.  Review your employee classifications to confirm team members are properly classified as exempt or non exempt.  Audit your Employer Sanctions files to confirm your have Form I-9’s and Colorado Affirmation forms for all team members and the forms are completed correctly.  The IRS, OSHA, Dept. of Labor and ICE all have active enforcement programs, so be proactive, have everything in order, and avoid potentially huge penalties.

The lighting of Christmas trees and Hanukkah menorahs brings family and friends together to celebrate our religious and social meanings of the Holiday season.  We wish you and your family and friends good times together and a happy and healthy 2012.  We will turn this economy around in 2012 by working together and supporting each other in our business activities.

• The Social Security Wage Base for 2012, beginning January 1, 2012 will increase for the first time in several years.  The wage base increases from $106,800 to $110,100.

• The maximum annual amount an employee can contribute to a 401(k) Plan during 2012 increases to $17,000.  Employees age 50 and above can contribute an additional “catch-up” contribution of $5,500, for a total maximum contribution of $22,500.

• The maximum annual amount an employee can contribute to a traditional IRA or a Roth IRA in 2012 is $5,000; employees age 50 and above can contribute up to $6,000.

• Simple IRA’s have a maximum annual contribution of $11,500 for employees in 2012; employees age 50 and above can contribute up to $14,000.

• Colorado’s Minimum Wage increases from $7.36 per hour to $7.64 per hour, effective January 1, 2012.  The Tipped Employee’s Minimum Wage increases to $4.62 per hour, also effective January 1, 2012.

• The 2012 IRS standard mileage rate has not been announced.  Please note that the 2011 IRS standard mileage rate changed at mid-year.  From January 1, 2011 to June 30, 2011 the rates were:  $0.51 cents per mile for business miles driven; $0.19 cents per mile for medical or moving purposes; and $0.14 cents per miles driven in service of charitable organizations.  Effective July 1, 2011 the business mileage rate increased to $0.555 cents per mile; medical rate increased to $0.215 per mile, and the charitable rate remained unchanged at $0.14 per mile.  Gasoline prices have been more exciting than a wild roller coaster ride, so look for changes in the standard rates during 2012.

• Employers are required to comply with the following federal legislation (number of employees listed in parenthesis):

> Immigration Reform and Control Act (Form I-9) (1 or more employees)

> Colorado Affirmation form (1 or more employees)

> USERRA (1 or more employees)

> Fair Labor Standards Act (1 or more employees)

> Americans with Disabilities Act (15 or more employees)

> Age Discrimination in Employment Act (20 or more employees)

> Family and Medical Leave Act (50 or more employees)

> EEO-1 Reports (100 or more employees; 50 or more for federal contracts)

• Now that the price of gas is going down, the IRS has announced new Standard Mileage Rates for the second half of 2011.  Effective July 1 (this Friday), the standard mileage rate will increase from $0.51 per business mile to $0.55.5 per business mile.  This is an increase of 4.5 cents a mile.
• The Society for Human Resource Management reported in their 2011 Employee Benefits Survey a strong shift toward consumer-directed, account-based health plans in which employees are given a financial incentive to make cost-effective spending decisions.  Health Savings Accounts (HSA’s) are becoming more prevalent.  There has been a slight increase in the percentage of companies offering health care premium discounts for employees who had an annual health risk assessment, participated in a weight loss and/or a wellness program, or had not used tobacco products.  These are all important topics for you to discuss with your medical insurance broker this fall when most companies go through their annual renewal process.
• ICE continues to be active, along with the IRS and OSHA.  ICE issued 1,000 Notices of Inspection across the U.S. on June 15.  We continue to encourage you to use the E-Verify program to make sure your new hires are eligible to work in the United States.  Being proactive can help you avoid some unnecessary penalties.  Likewise, IRS is getting more active in the employee vs. independent contractor issue.  And OSHA is more active than ever in work-place safety enforcement.  If you have any questions about these compliance issues, please call us, sooner rather than later!  Be pro-active in these areas.
• If you operate in more than one state, be aware that 279 employment-related immigration measures were introduced in 44 states during the first quarter of 2011, and six states have passed new employment-related immigration bills: Alabama, Georgia, Indiana, Tennessee, Utah and Virginia.  The U.S. Supreme Court ruled last month that the Arizona law requiring employers to use E-Verify does not conflict with federal law and therefore is valid.

Frazier International sends the HR Alert to our business clients and colleagues to keep you informed of the latest developments in the HR world.  Please feel free to contact us if you have any questions about this latest HR Alert, or if we can assist you in any way with your Human Resource needs.

Best regards, Ned

So what happens to our employees who have survived this economic tsunami?  First, the bad news………

• Employees (and business owners too!) have been worn down by the recession;
• Economists are sending out mixed forecasts almost daily about the sustainability of the recovery;
• Many employees are feeling less connected to their employers after rounds of layoffs, salary reductions, budget cuts, and ongoing uncertainty;
• Employers have not rushed out to hire new workers for positions that were eliminated over the last 18 months.

BUT WAIT….there is good news!!…..

• Many of us have experienced recessions in the past, and we know that “This too shall pass.”
• Unemployment is beginning to stabilize, and some employers are actually beginning to hire again
• The Colorado job market may lead the nation in the recovery, which could be good news for employers and employees alike.

So what can we do now to prepare for the recovery, and retain our employees when the job market improves?  We have all been through some challenging times, and have retained some great people.  What can you do, without spending a lot of money you don’t have, to keep your valued employees as the recovery unfolds (fast, or ever-so-slowly, it will happen!):

• You need to be open and visible with your team members.  Keep them informed on the company’s financial condition and plans for the future. Even if you have to deliver bad news, employees appreciate the fact that a business owner took the time to communicate openly and honestly with all team members.  Younger employees need reassurance that downturns are survivable and that “we will get through this!”;
• Get employees involved by seeking their input on ways to improve the company’s products, customer service, and most important, the bottom line;
• Look for ways to provide individual recognition.  You just can’t beat face to face opportunities to say “thank you” to your team members.  Give praise to individuals at company meetings…you don’t have to spend money to make employees happy!  Give them a hand-written note to say “thanks” for a job well done, or present them with a small gift (it certainly does not have to be expensive) that is personal to your employee.
• Participate as a company in one of our many amazing non-profits in the South Metro area, like Project CURE.  Working side-by-side as a team to help others builds a strong sense of pride, and it does not cost a dime!
• Add a wellness program that encourages team building at the same time you are promoting a healthier lifestyle.  It fun, and we even have a chamber investor who can help you get organized.

• Celebrate successes! If you sign a major contract, bring in some pizza and announce the good news to everyone.

And while we have to be realistic about our business conditions, always remember good ole Norman Vincent Peal and his Power of Positive Thinking!

Much has been written about the upcoming changes in our healthcare delivery system as a result of the Health Care Reform signed back in March.  So much so, that we run the risk of forgetting about the numerous federal laws that are already in place that each business owner and HR professional needs to be complying with.  Here is a snapshot of the major laws already in place.  I have arranged them according to the number of employees required:

 Less than 15 Employees:

• FICA (1935)
• Fair Labor Standards Act- 1938
• Equal Pay Act- 1963
• Consumer Credit Protection Act- 1968
• OSHA- 1970
• ERISA- 1974
• Uniform Guidelines of Employee Selection Procedures- 1978
• Immigration Reform & Control Act- 1986, and related Colorado Affirmation- 2007
• Employee Polygraph Protection Act- 1988
• Uniform Services Employment & Re-employment Rights Act- 1994 and amended 2008

 If you have between 15 and 19 employees, you need to comply with all of the above laws, plus the following:

• Title VII, civil rights Act, 1964 and 1991
• Fair Credit Reporting Act- 1970
• Pregnancy discrimination Act- 1978
• Title 1, Americans with disabilities Act- 1990
• Fair and Accurate Credit Transactions Act- 2003

 On top of all of these, once you grow to between 20 and 49 employees, you have to comply with these laws as well:

• Age Discrimination in Employment Act- 1967
• COBRA- 1985

 And when you have more than 49 employees you must comply with all of the above laws, plus:

• Family and Medical Leave Act (FMLA)- 1993

 You will be bombarded with new healthcare laws and compliance reporting, particularly as we go into 2011 and 2012, but don’t take your eye off of all of the other existing laws.  Jumping out the window is not an option……….take a deep breath and call us if we can help you navigate through these murky waters.

HR Alert- Paycheck Fairness Act

The lame duck session of Congress starts on November 15.  The U.S. Senate is scheduled to vote as early as November 17th on the “Paycheck Fairness Act (S. 3772).”  The House passed the PFA back in January.  Here is what this bill will do to employers:

1. Significantly restrict the factors HR professionals use to compensate employees.  It would prohibit employers from using many legitimate factors such as professional experience, education, training, shift differentials and profitability of the company when making compensation decisions.
2. Authorize EEOC and the Department of Labor to collect wage information from employers and would effectively encourage employees to publicize their co-workers’ wages by preventing employer retaliation against an individual who publically discloses the wages of other employees.

I have been an active member of the Society for Human Resource Management for many years.  This is the largest professional HR group in the world.  SHRM is strongly opposed to this measure.  I urge you to please contact our two U.S. senators now and tell them to vote against S. 3772, the Paycheck Fairness Act.  The vote may come up as early as Wednesday, November 17, so your phone call or email is urgently requested.  Let Senator Bennet (202-224-5852, bennet.senate.gov.) and Senator Udall (202-224-5941, markudall.senate.gov) know how you feel today!  Employers need to be focused on creating more jobs rather than complying with more bureaucracy!

The IRS and the Treasury Department determined that the delay will provide employers with additional time to make any necessary changes to their payroll systems or procedures.

The delay only forestalls the inevitable.  Employers will need to coordinate with their HR and payroll service to 1) identify each of the benefit costs that need to be tracked, 2) develop  a process within your payroll system to accurately account for the costs for each employee’s benefits, and 3) test this process during the last part of 2011 to be sure the system is working.

The IRS stated the W-2 reporting of benefits is intended for informational purposes only to provide employees with greater transparency into overall health costs, and that the amounts reportable are not taxable.  Many employers have been providing employees with Benefits Statements (the hidden paycheck) for years on a voluntary basis without government requirements.  PPACA also has a requirement for employers to complete 1099’s for every business expense over $600 a year.  This is scheduled to start in 2012.

Stay tuned as the details and reporting requirements under PPACA unfold.  Our “educated guess” is that many of these reporting requirements will come under greater scrutiny by the new Congress and there may be a more employer-friendly approach to this process.   We will keep you current on any new developments.

Frazier International sends the HR Alert to our business clients and colleagues to keep you informed of the latest developments in the Human Resource world.  Please feel free to contact us if you have any questions about this latest HR Alert, or if we can assist you in any way with your Human Resource needs.