Be alert for several significant changes or events during 2012:

• 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.

 2012 Contribution Limits

• 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)

Summer tends to be a quiet time as far as “late-breaking” HR news is concerned.  We have listed several pieces of new information that you may find of interest for you and your company:

• 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