The Ins and Outs of Firing

You might want to fire employees with bad attitudes, or those who are just plain lazy. The question is: Can you do it legally? Here are some guidelines to help structure your staff as you see fit, without running afoul of government rules and regulations.

The Ins and Outs of Firing

Know the laws before dismissing problem employees.

Working with a disgruntled employee is hard on management and coworkers alike. But can you fire someone simply because of a bad attitude? What about a lazy employee or a troublemaker?

The answer: Yes and no.

The issues involved in terminations are complex, but by handling them properly, you reduce the chance your company will have to spend a fortune in legal fees to defend itself.

Of course, before taking action, you should check with a labor attorney. And make sure the reasons for any termination are supported by documents and records. Here are some guidelines:

• In general, federal and state laws and regulations don’t restrict a company from dismissing employees for being negative or lazy if they are employed “at-will.” That is, you signed no contract with them or a representative union.
• But discrimination laws do require that you apply performance standards across the board. So you’re looking for trouble if you only fire employees with bad attitudes who are, say, over the age of 40.

 

Click here to read more.

New Guidelines for Mental Health Benefits

Five years ago, Congress passed a law to put mental health care on an even footing with standard health care. In the years since, the federal government has issued regulations to flesh out the bones of the Mental Health Parity and Addiction Equity Act. Recently, federal agencies sifted through thousands of public comments and issued new final regulations. Find out what the law requires and how it coordinates with the Affordable Care Act.

IRS Adds an Attractive Option to Flexible Spending Accounts

The IRS recently added new meaning to the term “flexible” when it comes to flexible spending accounts. This once rigidly controlled plan loosened up a few years ago. Now the IRS has added a new option, allowing the carryover of some unused funds. At first glance this may seem like a no-brainer choice, but it does come with a catch you need to be aware of. Keep reading for details.

IRS Adds an Attractive Option to Flexible Spending Accounts

Background: Ever since cafeteria plans, also called Section 125 plans, became available in 1978, employers have complained about the rigidity of these plans. Specifically, they were troubled by the fact that, when employees did not use all of the funds in their accounts by the end of the year, those funds had to be forfeited. The main concerns have been:
The restriction discourages participation, particularly among lower paid workers who could not abide the thought of throwing away hard-earned money if they failed to drain their health flexible spending accounts (FSAs) by the end of the year,
To avoid forfeiting their unused funds, employees rushed to incur unnecessary health services at the end of the year.
Plan administration could be simplified by easing the restriction.
Later, when health savings accounts became available, FSAs lost some of their appeal. This is because health savings accounts, in conjunction with high-deductible health plans, allow for long-term accumulation of savings for health expenditures, a feature which many employers found attractive.

Grace Period Option

In 2005, the IRS relented to these critics by allowing for a 2-1/2-month “grace period” after the end of the plan year, when employees could use up remaining FSA funds. For employers who made the election to allow the grace period, this added flexibility was welcome. Now, in another positive change, participants in FSA accounts will be able to carryover $500 of FSA funds, to the following year. This is effective currently, for 2013, but the carryover is not automatic, it must be elected.

Just Say No: Concrete Steps to Cut Healthcare Spending

It’s widely believed among experts that as much as one-third of spending on medical services is wasted and worthless. What if you could cut just half of this — about 17 percent — out of your healthcare spending on employees? These dollars could strengthen your bottom line or be invested in your business. Nearly 40 medical specialty organizations want to give you — and your employees — the inside scoop on how to make it happen.

 

Just Say No: Concrete Steps to Cut Healthcare Spending

Last year, the American Board of Internal Medicine Foundation and Consumer Reports teamed up to launch the “Choosing Wisely” campaign. Each of the 39 medical specialty societies has, within its arena, identified five specific medical screening or treatment procedures which are probably unnecessary under particular circumstances, but might be recommended by a physician eager to minimize personal liability and/or make more money from each patient.

The project also includes a set of articles on common medical situations or decision points which can help employees choose the right path.

Promoting Conversation

The purpose of Choosing Wisely is “to promote conversations between patients and physicians about tests which may be ineffective, unnecessary or needlessly risky,” according to a Consumer Reports website enumerating “Consumer Health Choices.”

The physicians behind the effort are just as concerned about unnecessary procedures and tests as those who pay for them. One reason is many procedures and tests carry medical risks which may not be worth the benefit of the diagnostic screening or medical procedure in question. Also, most patients themselves, whether they have financial skin in the game (as most do) or not, are not hypochondriacs with an unlimited appetite for visits to the doctor.

The only apparent tie-in to the Affordable Care Act (ACA) is that employers offering health benefits obliged to expand the scope of medical services to satisfy “minimum essential benefits” standards (including preventive medicine) may experience a surge in employee utilization of services, some necessary, others not.

Here are examples of advice which came out of the Choosing Wisely campaign, with regard to some common tests and procedures from various medical specialty organizations. Each statement below can be found on this webpage along with an explanation, plus research citations to support the findings.

 

Read more […]

Supreme Court to Decide Contested Payroll Tax Issue

The U.S. Supreme Court has finally agreed to resolve a matter that has perplexed payroll managers for years. In the case, involving a large retail chain, the Sixth Circuit Court of Appeals held that severance payments should not be treated as wages for payroll tax purposes, but the ruling conflicts with other federal courts. Now, the nation’s top court has granted certiorari to review this matter.

 

Supreme Court to Decide Contested Payroll Tax Issue

At long last, the U.S. Supreme Court has agreed to resolve a matter that has perplexed payroll managers for the last few years. In the controversial Quality Stores case, the Sixth Circuit Court of Appeals ruled in 2012 that severance payments should not be treated as wages for payroll tax purposes, a conflicting decision with other federal courts. However, the IRS refused to throw in the towel.

Now, the nation’s top court has granted certiorari to review this matter. It is expected to provide a clear path to follow in the future (U.S. v. Quality Stores, CA- 6 09/07/2012, 110 AFTR2d 2012-5827, cert. granted 10/01/13).

Background Information

Federal payroll taxes are a requirement for both employees and employers. For 2013, an employee must pay FICA tax of 6.2 percent for Social Security and 1.45 percent for Medicare on wages up to the “Social Security wage base” of $113,700. (For 2014, the amount is $117,000.) Once an employee reaches the wage base, he or she must only pay 1.45 percent because there is no limit for Medicare tax. The employer must also pay its corresponding share of these payroll taxes. The wage base is indexed annually.

How to Turn a Poor Performer Around

“What can I do to get an employee to improve her or her performance?” It’s a typical question asked by employers about a staff member whose performance has deteriorated over the past year. For a five-step approach to a solution, continue reading.

 

How to Turn a Poor Performer Around

An employer who is troubled because an employee’s “not doing her job up to par” asks this question:
Q. This employee is dragging her feet, just not doing her job up to par. Other employees are having to pick up some of the load and they’re unhappy about it. She’s been with us 15 years and until about a year ago she was doing good work. But in the last year she’s really been slacking off. I’ve talked to her about this but it hasn’t done any good. What can I do to get her to do her job like she used to?

A. What’s kept you from knowing the cause or causes of her poor performance? You say you’ve talked to her. But have you talked with her? Have you clearly described to her the way or ways her performance is sub-par? Have you asked her to explain what she feels or believes is causing the change? Has she developed poor health challenges? Is she on medication that affects her performance? Is she having personal pressures in her private life that preoccupy her at work?

Until you have answers to questions like these, until you listen to her, you can’t hope to make the best decisions about her future with you.

1. Document in writing her under-performance. Write down, with exact or approximate dates, specific examples and descriptions of her behavior that is sub-par or where she is falling short of expected performance.
2. Meet with her in a friendly, non-confrontational manner. Tell her clearly what you have written out about her performance. Encourage her to talk with you about what she believes or feels could be causing this.

 

Read more […]

 

Time to SHOP for a Health Plan? IRS Fine Tunes the Tax Credit

The IRS recently issued proposed regulations fine-tuning the rules governing the healthcare tax credit available to certain small employers, beginning in 2014. The Affordable Care Act contains a credit of up to 50 percent of premiums for eligible employers. Keep reading to learn what the new proposed regulations add to the mix.

Time to SHOP for a Health Plan? IRS Fine Tunes the Tax Credit

The Affordable Care Act (ACA) contains a tax incentive for certain small employers to offer their employees a health insurance plan, and pay for at least half the cost. Employers eligible to take advantage of this provision are under the 50-worker “employer mandate” threshold, and thus not compelled by the ACA to “pay or play.”

Tax Credit Basics

For tax years 2010 to 2013, there is a maximum tax credit of 35 percent of premiums paid by qualified small business employers (25 percent of premiums for small tax-exempt organizations).

There are changes to the tax credit for 2014. The IRS recently proposed regulations updating and fine-tuning the original Section 45R rules governing the credit, beginning next year. In addition, the tax break will be more valuable to eligible employers starting in 2014.

In order to qualify for the full tax credit, employers cannot have more than 10 full-time employees or the equivalent with part-timers factored in. The tax credit decreases if an employer has between 10 and 24 full-time equivalent employees or pays average wages of between $25,000 and $50,000. It is unavailable for employers with 25 or more employees and average wages above $50,000.

 

Read More […]

Avoid Charges of Illegal Snooping

 Avoid Charges of Illegal Snooping…..What if an employer looks in an employee’s desk drawer? The employee learns of this and is upset. The incident raises questions such as: Do employees have a right to privacy? What does an employer need to know about privacy rights? Keep reading for answers.

 

Avoid Charges of Illegal Snooping
Q. One of my employees is upset because I looked in his desk drawer. He’s claiming I invaded his privacy. What exactly does this mean? What do I need to know about the privacy rights of my employees?

A. Employees have the right to be protected from unreasonable intrusions into their private affairs.

The questions here are, what is unreasonable and what is private? The meaning of “unreasonable” is up for grabs because it often means whatever a court says it means. And what is “private,” at least in some instances, amounts to what ever the employee’s expectation of privacy is. And, answering the questions of what is unreasonable and what is private is further complicated by specific provisions of some federal laws, by some state constitutional provisions and by some state laws.

Here are some examples of specific employee privacy issues.

Applicant Interviews. Applicants have a right not to answer questions about and reveal personal information about topics which could lead to an employer illegally discriminating in hiring. Therefore, in the interviewing and hiring process, the employer must avoid topics (such as the applicant’s marital and family status or the applicant’s nationality) which might result in a discriminatory hiring decision.

Applicant Testing. Under the Americans with Disabilities ACT and similar state laws, applicants have a right not to be required to undergo any testing or examinations that might reveal physical or mental conditions that could result in an employer illegally discriminating on the basis of a real or perceived disability.

See more examples.

New Report Explains Health Care Law Penalties for Employers

Before you know it, the January 1, 2014 effective date for many of the controversial provisions of the Patient Protection and Affordable Care Act (the ACA) will arrive. A recent report issued by the Congressional Research Service (CRS) examines the payroll penalties employers may face for failing to provide health insurance coverage to employees. Click Here to see penalties.

New Report Explains Health Care Law Penalties for Employers

Before you know it, the effective date for many of the controversial provisions of the Patient Protection and Affordable Care Act (the ACA) will arrive. A recent report issued by the Congressional Research Service (CRS) examines the payroll penalties employers may face for failing to provide health insurance coverage to employees.

Background: The goal of the ACA is to provide affordable health care coverage for employees, as well as private individuals, by increasing access to health insurance plans, expanding the health insurance market and requiring creation of state-run health insurance exchanges.

To ensure that employers continue to provide some level of coverage, the ACA includes a provision for “shared responsibility” by employers. Although this shared responsibility provision doesn’t specifically mandate employers to offer insurance to employees, the ACA imposes penalties on large employers if at least one of their full-time employees obtains a premium credit through an exchange.

The CRS report notes there is a two-part calculation for determining liability under this provision:

1. Is the firm a “large” employer subject to the penalty? Only a large employer that employed an average of at least 50 full-time equivalent employees (FTEs) is subject to penalties.
2. Does the penalty apply to a worker at the company?

Because the treatment of part-time and seasonal workers differs under the two parts of this calculation, there is considerable confusion among policymakers and employers. For example, part-time employees are included in the calculation for determining if an employer has at least 50 FTEs, thus being treated as a large employer for this purpose. However, if the penalty is triggered, it actually only applies to full-time employees, who are defined as employees working at least 30 hours a week on average.

The CRS report discusses these definitions and the calculation of the employer penalties. Click here to read some of the highlights.

A Useful Guide for Enforcement Policies from the EEOC

You don’t have to intentionally discriminate against employees and job applicants to get yourself in hot water with the Equal Employment Opportunity Commission (EEOC). Practices that have a discriminatory impact, or even hint at inadvertent discrimination, can drag you into considerable expense and aggravation defending your company. The EEOC has recently spelled out its enforcement areas of special focus for the next four years. The list can help you prioritize your own review of employment practices that might put you in the EEOC’s cross-hairs. Continue Reading …

 

A Useful Guide for Enforcement Policies from the EEOC

he EEOC laid out its enforcement game plan in a detailed announcement last month. “What leaps off the page,” says Fisher & Philips partner Randy Coffey, “is that the EEOC is going to be expanding its efforts and is re-energized for the second term of the Obama Administration.” While cases brought against large employers often make a big splash in the news media, that should not lull small employers into thinking they can fly under the EEOC’s radar.

Cases are generally brought to the EEOC by employees, former employees and rejected job applications who believe they are discrimination victims.

Sometimes such employees are recruited by attorneys sniffing out litigation opportunities. Filing a complaint is not an onerous task.

If the EEOC investigates the complaint and concludes that a particular employment practice pattern would allow the Commission to make an example out of the company involved and thus deter the discriminatory practice more broadly), it will do so.

Inadvertent Discrimination

How might you inadvertently trigger an EEOC complaint? Coffey offers some illustrations. Under the heading of barriers in recruitment and hiring, a practice “that would tend to suggest that particular individuals are being channeled into particular jobs” would be a big red flag. Example: Hispanic job applicants who come to a company inquiring about any job openings are encouraged to apply for positions in the maintenance department, without apparent consideration of other jobs for which they might qualify

 

Read more […]