Does Your Employee Handbook Need a Midyear Checkup?

By Lisa Nagele-Piazza, SHRM-SCP, J.D.
May 8, 2017

handbookNew workplace laws on minimum wage, paid sick leave, criminal background investigations and more are popping up all the time—and they don’t always take effect at the beginning of a new year. HR professionals need to communicate these changes with their workforce as the laws become effective, but how often should you revise your employee handbook? Employment attorneys told SHRM Online that the answer depends on a few factors.

The frequency of handbook reviews may depend on how big the employer is and how many states it operates in, said Lucas Asper, an attorney with Ogletree Deakins in Greenville, S.C.

HR professionals should also consider the purpose that the handbook serves for the organization—which varies from employer to employer, he noted. Some businesses just want to cover the minimum that is required by law. Others might use the handbook as a summary of all the applicable workplace laws that the HR and management teams rely on when providing guidance. If that’s the case, they’ll want to be extra careful about making sure the information is accurate and up-to-date, Asper said.

“Updates should be considered at a minimum on an annual basis,” said Stephanie Peet and Timothy McCarthy, attorneys with Jackson Lewis in Philadelphia, in an e-mail to SHRM Online. “However, sometimes there are drastic changes in applicable laws that necessitate an immediate change.”

As an example, they said, if Congress were to amend Title VII of the Civil Rights Act of 1964 to expressly include sexual orientation as a protected characteristic, employers would need to ensure that sexual orientation is covered in their equal employment opportunity policy and make revisions if needed.

That’s why a midyear review is a good idea. “Employers should make an effort to stay abreast of changes in applicable labor and employment laws on an ongoing basis,” Peet and McCarthy suggested.

If there are any significant changes to the laws that affect a particular employer’s workforce, the handbook should be reviewed to ensure that the company’s policies are in line with those changes.

Notice Is Key

When a new law takes effect, it is vital to give employees notice, Asper said. But that notice doesn’t always have to be provided through a formal handbook update.

For midyear changes in the law, employers may want to consider stand-alone notifications or policy revisions, he added.

Asper said that in many situations, a state-specific addendum will make sense for multistate employers. The employer can send an addendum to the applicable workers in California or Wisconsin, for example, instead of rolling out an entirely new handbook. “That’s the best way to capture state and local changes,” he said.

Peet and McCarthy noted that handbook updates and stand-alone policies should be distributed with an acknowledgment that employees should sign and date. The acknowledgment should clearly identify the version of the handbook or policy that it relates to, they said.

“In addition, providing digital access to handbooks and policies, where feasible, is advantageous to both employees and employers,” they added. “Employees are inevitably becoming more tech-savvy and will be more likely to review and utilize a digitally accessible handbook.”

Electronic handbooks also make it easier for employers to update, edit and distribute critical information.

Changes to Watch

If an employer hasn’t updated its handbook in more than a year, it’s probably time to do a full-blown review with the assistance of counsel, Asper said.

That’s because there have been a number of developments in workplace law recently. At the federal level, for example, there were many National Labor Relations Board decisions that affected employment policies.

Employers also should track the ongoing status of the now-halted federal overtime rule, which would have raised the salary threshold for exempt white-collar workers.

Employers can use a midyear handbook review as an opportunity to look at job descriptions and corresponding Fair Labor Standards Act designations, Peet and McCarthy said.

At the state and local level, employers need to look for new minimum wage, paid-family-leave and paid-sick-leave laws, to name a few.

Not a lot of federal action is anticipated in the next few years, so a lot of the big policy modifications will likely be based on state and local changes, Asper said.

Philadelphia and other jurisdictions throughout the country have been considering and enacting legislation banning employer inquiries into applicants’ salary histories. These laws are significant because they will require many employers to change the way they engage in the recruiting process from the application stage forward, Peet and McCarthy said.

“State and local ‘ban-the-box’ laws that restrict the extent to which criminal backgrounds may be considered in the hiring process are also cropping up rapidly,” they added.

 

Affordable Care Act Compliance: IRS Releases Draft 2016 Employer Reporting Forms and Instructions

August 18, 2016 – Amy Gordon 

ACAOn August 2, the Internal Revenue Service (IRS) released revised draft Forms 1094-C and 1095-C, and draft instructions for completing these forms for the 2016 reporting year (see here). Although these are not final versions, it is important for employers to review the updates and changes from the 2015 forms and instructions as they prepare for the 2016 filings.

Background

The Affordable Care Act (ACA) created new reporting requirements under Sections 6055 and 6056 of the Internal Revenue Code (Code). The new rules require an applicable large employer (ALE) to report, on IRS Forms 1094-C and 1095-C, information about offers of health insurance coverage to full-time employees (FTEs) and the provision of minimum essential coverage (MEC). The Form 1094-C is also referred to as the “authoritative transmittal.” For 2016, an ALE is generally an employer with 50 or more FTE equivalents. Under Code Section 6056, an ALE must annually file with the IRS a report listing the offers of coverage made to its FTEs during the reporting year. In addition, ALEs must furnish a related statement of coverage information to FTEs. Under Code Section 6055, employers (including ALEs) who provide MEC under self-insured plans must also report MEC information for each individual covered under the employer’s self-insured plan. ALE status is determined on a controlled group basis, and each member of the controlled group is an “ALE Member” with an independent responsibility to file a Form 1094-C and Form 1095-Cs. Generally, the reporting is required at the employer identification number (EIN) level.

Under Code Section 6055, employers that are not ALEs must report MEC information on Forms 1094-B and 1095-B. Although these forms were also revised recently, draft instructions for completing these forms have not yet been released.

Highlights of Changes

While the draft 2016 Forms 1094-C and 1095-C and related instructions are similar to the 2015 forms and instructions, there are several notable changes, including the following:

  • Forms 1094-C/Authoritative Transmittal: The draft instructions clarify that each ALE Member should only file one authoritative transmittal, even if multiple Forms 1094-C are filed by the ALE Member. The draft instructions contain examples illustrating this requirement. An authoritative transmittal should not be filed on behalf of an aggregated group of ALE Members. An ALE Member’s contact person on the Form 1094-C may be different than the contact information on the Form 1095-C.
  • Required Form 1094-C and Form 1095-C Corrections: The draft instructions revise the list of items requiring a corrected Form 1094-C and 1095-C. Under the list in the draft instructions, an ALE Member must file a corrected Form 1094-C authoritative transmittal if the original transmittal contained an error in the name or EIN of other ALE Members of the ALE controlled group, and changes the requirement that a corrected Form 1095-C be filed due to an error in premium amount on the original Form 1095-C to a requirement that a corrected Form 1095-C be filed due to an error in the “Employee Required Contribution” on the original.
  • Employee Required Contribution: The draft instructions include the new term “Employee Required Contribution,” defined as the employee’s share of the monthly cost for the lowest-cost self-only minimum essential coverage providing minimum value that is offered to the employee by the ALE Member. The instructions further clarify that the employee share is the portion of the monthly cost that would be paid by the employee for self-only coverage, whether paid through salary reduction or otherwise.
  • Transition Relief: In 2015, “Section 4980H Transition Relief” exempted ALE Members with non-calendar year plans and 50-99 FTE equivalents from penalties under Code Section 4980H, and for ALE Members with 100 or more FTE equivalents, decreased the requirement to offer health coverage to FTEs from 95 percent of FTEs to 70 percent of FTEs. For 2016, this transition relief only applies for non-calendar year plans, and only for months in 2016 that fall within the plan year that commences in 2015. The Qualifying Offer Method Transition Relief is not applicable in 2016 under the draft instructions. Therefore, an employer may only use the Qualifying Offer Method in 2016 if the FTE had an offer of affordable, minimum value MEC for all 12 months of the plan year using the rate of pay affordability safe harbor.
  • Calculating FTE Count: The draft instructions provide additional guidance for calculating an ALE Member’s number of FTEs for purposes of completing Form 1094-C. Specifically, the instructions provide that an employee should be counted as an FTE for a month if the employee satisfied the definition of FTE under the monthly measurement period (if applicable) on any day of the month. If the ALE Member uses the look-back measurement method to determine FTE status, the ALE Member must include as FTEs individuals in stability periods during which the individual is to be treated as an FTE. The instructions also clarify that an ALE Member should use the Code Section 4980H definition of “full-time employee” to determine the number of FTEs for a month and not any other definition of the term used by the employer.
  • Form 1095-C Coding Changes: Various changes or clarifications were made to the Codes used on the Form 1095-C. For example, the draft instructions add new Code 1J and 1K for Line 14 to reflect “conditional offers of spousal coverage”, which are offers subject to one or more reasonable, objective conditions, including an offer to cover an employee’s spouse only if the spouse is not eligible for coverage under Medicare or a group health plan sponsored by another employer. 
  • Reporting COBRA Coverage: The draft instructions provide new guidance for reporting COBRA continuation coverage information on Form 1095-C. For employees who remain employed by an ALE Member after a reduction in hours, offers of COBRA coverage should continue to be reported as in 2015. For employees who terminate employment, coverage should be reported on the Form 1095-C as “no offer” (Code 1H) on Line 14 for each month the offer of COBRA coverage applies, and “employee not employed” (Code 2A) on Line 16.
  • Reporting Post-Employment (Non-COBRA) Coverage: The draft instructions provide that an offer of post-employment coverage to a former employee (or the former employee’s spouse or dependents) for coverage effective after the employee’s termination of employment should not be reported as an offer of coverage on Line 14. If the ALE Member is required to file a Form 1095-C for the former employee because the individual terminated in 2016 but was employed during one or more months in 2016, Code 1H should be used on Line 14, and Code 2A on Line 16 should be used for any month in which the post-employment offer of coverage applies.
  • Multiemployer Plans: The draft instructions continue for 2016 the multiemployer plan interim guidance from the 2015 reporting year. Employers with employees subject to a collective bargaining agreement can treat those employees as having received an offer of health coverage if under the agreement the employer is obligated to contribute to a multiemployer plan, and coverage under the multiemployer plan is affordable, has minimum value and offers dependent coverage>.

When to File

In general, employers must file Forms 1094-C and 1095-C by February 28 (March 31 if filing electronically) of the year following the calendar year to which the return relates. For the 2016 calendar year, the forms are required to be filed by February 28, 2017, or March 31, 2017, if filing electronically.

An ALE Member must furnish a Form 1095-C to each of its FTEs by January 31 of the year following to which the return applies. Forms 1095-C for the 2016 calendar year must be furnished by January 31, 2017.  

Next Steps

The 2016 forms are draft versions only and should not be filed with the IRS or relied upon for filing. Employers should review the updates and changes from 2015 instructions as they prepare for the 2016 filings.

All Benefits are Voluntary Benefits


(Employee Benefit Adviser, August 25, 2016)  Something big has changed in benefits. Employees today view their benefits much differently than their employers. And, for employers and their benefit advisers, how employees understand benefits should change everything about benefit plan design.

Almost all employers — and their advisers — continue to keep widely separated, each in its own labeled box, “core” and “voluntary” benefits, if voluntary is even offered. By voluntary, I mean what I call “enhanced” benefits: supplemental health plans — accident, critical illness, cancer and hospital indemnity — short-term disability, and permanent (whole & universal) life insurance …the most popular and widely-utilized voluntary benefits.

But thanks to the ACA and industry trends such as high-deductible plans, employees today wouldn’t understand the distinction between “core” and “voluntary.” Let’s ignore the labels and take a look at the benefits themselves and how they work together to protect employees’ financial security.

Major medical is designed to keep you from going bankrupt if you get seriously sick or hurt. But benefit advisers know better than anyone that employees face huge financial risk from illness and accident. That’s why supplemental health plans like critical illness and cancer are so popular. Although very different plan designs, both protect employees’ finances when they’re very sick by paying out-of-pocket medical expenses.

Similarly, accident plans put cash in the employee’s hand to pay all or most of the out-of-pocket expenses due to an accident. Hospitalization insurance pays employees cash to cover their share of the hospital bill when they are hospitalized.

Disability insurance is the same. Whether long-term or short-term disability, to employees these are simply ways to insure their paycheck when illness or an accident keeps them from working. And, employees view group term life and permanent life plans as life insurance they can get at work.

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Clinton win could pressure GOP to heal, not repeal, Affordable Care Act

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(Bloomberg) — Republicans in Congress have insisted the only way to fix the Affordable Care Act — Obamacare — is to repeal it. But with Barack Obama about to leave the White House, several Republicans sound willing to tweak it rather than kill it.

These Republicans suggest that a Hillary Clinton presidency could shift the debate over the ACA just enough to work on improvements with someone who isn’t the law’s namesake.

And it’s not just politics: Last week’s decision by one of the nation’s largest insurers, Aetna Inc., to withdraw almost entirely from the program’s insurance exchanges is the latest warning sign that Washington may have to act to prevent the law from unraveling. Many of the areas most affected by a potential loss of coverage are represented by Republicans.

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The Next Innovation in Controlling Healthcare Costs

shotFour decades ago, PPOs were hailed as the “silver bullet” to control healthcare costs. Participating providers were contractually obligated to accept discounted fees, which seemed like an obvious solution to out-of-control increases in healthcare costs. Self-funded plan sponsors readily adopted this approach to gain access to network discounts and lower their healthcare costs. In fact, some self-funded plan sponsors still periodically conduct a re-pricing analysis or another method of comparing which PPO yields the best discounts for their specific group.

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