Human Resource Consulting From The Business Viewpoint |
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Human Resource Update | November 2022 |
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Greetings,
We hope you had a wonderful Thanksgiving. A little housekeeping, we will be issuing our newsletter at the end of each calendar quarter in 2023. However, you may receive alerts to cover hot topics or new laws that develop throughout 2023.
Our November 2022 issue is packed with important information to name a few: NJ’s increasing minimum wage, pay transparency, changes to the ADA website and more. We hope you find this information valuable. Please feel free to share it with friends and coworkers.
Our 2023 plan limit cards have been mailed out! If you are in need of one, please let us know and we will gladly send one to you.
On behalf of everyone at MFYCO, we hope you, your family, coworkers, and friends all have a wonderful holiday season. We look forward to continuing to bring you important matters affecting employees and employers as we go through 2023. Please reach out if we can be of any assistance to you or your organization.
We wish you a happy and healthy holiday season and new year!
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If you find value in this newsletter please let us know. Feel free to call us with a comment and/or ask a question at any time (908-689-4200) or send an email (jgetz@mfyco.com). We offer this timely information as another benefit of your relationship with our company. If you feel a friend or colleague would benefit from receiving our newsletter, please feel free to forward a copy.
You can view all of our newsletters by clicking the 'newsletter archives' link at our company website www.mfyco.com.
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The Pandemic FSA Carryover Allowance Is Over: Here's What's Changed |
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The Internal Revenue Service has upped the contribution limit on flexible spending accounts to $3,050, allowing 20% of that amount, or $610, to carry over from 2023 into 2024. As tax-advantaged financial accounts, healthcare FSAs are typically used to pay for medical and dental expenses not covered by insurance with money an employee contributes from their paychecks throughout the year. Employers can choose to contribute as well.
The new changes for 2023 seem to be in response to inflation, as the contribution limit did increase by $200 rather than the average annual increase of $100. But it's important to note that FSA users will only be allowed to carry $570 into 2023, per the IRS's announcement at the end of 2021. Compared to the pandemic relief provided in 2020 and 2021, when employees could carry over their entire remaining balance.
The most important thing to remember is the relief provisions that allowed employers to offer full carryover of unused health independent care balances into the next year has expired. This means employees may have an extra large unused balances at the end of 2022 that they are in danger of forfeiting.
Take Away
Clearly communicate deadlines and carryover provisions if you have any and encourage employees to check their balances and provide information about the many expenses that can be paid for with FSA.
The Coronavirus Aid, Relief and Economic Security Act, or CARES Act, has permanently expanded what Americans can buy using their FSA. Eligible expenses now include over-the-counter medications like Tylenol or Motrin as well as menstrual hygiene products. If an individual has bought any over-the-counter medications or menstrual products since Jan. 1, 2020, they can be reimbursed through their FSA. Encourage FSA users to look at online marketplaces that only sell FSA-eligible products — Amazon even has an FSA store.
Employers get the word out so your employees can use up those account balances and not forfeit their funds.
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The legalization of cannabis has created numerous challenges for New Jersey employers who desire a drugfree workplace, particularly when they suspect an employee is under the influence of cannabis at work. The question most New Jersey employers have been asking - what may I do when I suspect someone is under the influence of cannabis on the job? - has been answered.
What CREAMMA Says About Cannabis Use by Employees
The Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMMA) legalized recreational cannabis in New Jersey for adults 21 years and older and established the Cannabis Regulatory Commission (CRC) to oversee New Jersey's medicinal and adult-use cannabis markets. CREAMMA contains several provisions addressing employment issues, such as drug testing and legal protections for employees who use cannabis outside the workplace.
Under CREAMMA, employers may still prohibit cannabis in the workplace, which includes prohibiting the possession and consumption of cannabis in the workplace, as well as intoxication during work hours.
Employers can also require random testing, or testing as part of a pre-employment screening, or regular screening of current employees to determine use during an employee's prescribed work hours. The statute also expressly provides that an employer may also require an employee to undergo drug testing if:
- The employer reasonably suspects the employee's usage of a cannabis item while engaged in the performance of the employee's work responsibilities;
- There are observable signs of intoxication related to usage of a cannabis item; or
- The drug test follows a work-related accident subject to investigation by the employer.
Employers can utilize the results of any such drug test when determining the appropriate employment action concerning the employee. However, an employee drug test must meet a heightened standard, which includes a scientifically reliable objective testing methods and procedures, such as testing of blood, urine, or saliva, and a physical evaluation in order to determine an employee's state of impairment. CREAMMA provides that the physical evaluation must be performed by a Workplace Impairment Recognition Expert (WIRE) certified by the CRC. However, the CRC has yet to propose rules for training and certifying WIREs.
CRC Guidance on Workplace Impairment
Though WIRE regulations are not yet in place, the CRC has issued interim Workplace Impairment Guidance (Guidance) to assist employers with handling employees suspected of being under the influence of cannabis at work. The Guidance emphasizes that a drug test indicating the presence of cannabinoid metabolites in the employee's bodily fluid alone is insufficient to support an adverse employment action. This is where the drug recognition process that balances the interests of the employee and workplace safety starts. The Guidance advises that a process that includes scientific testing combined with evidence-based documentation of physical signs and/or other evidence of impairment during an employee's prescribed work hours may be sufficient to support an adverse employment action. The CRC has also created a sample form, known as the “Reasonable Suspicion” Observation Report, that can be used to document the behavior, physical signs, and evidence that support the employer's determination that an employee is reasonably suspected of being under the influence during an employee's prescribed work hours.
In the Guidance the CRC also acknowledges that determining if employees are impaired by cannabis in the workplace is challenging because individuals can test positive for an extended period of time after consumption. "Although tests are improving in accuracy there is no perfect test for detecting present cannabis impairment," the Guidance states. "Therefore, best practice has been for employers to establish evidence-based protocols for documenting observed behavior and physical signs of impairment to develop reasonable suspicion, and then to utilize a drug test to verify whether or not an individual has used an impairing substance in recent history."
While CREAMMA provides that WIREs can be certified and assist in the documentation of the physical and behavioral signs of intoxication, the CRC notes that the statute does not impede the ability of employers to continue to utilize established protocols for developing reasonable suspicion of impairment and using that documentation, paired with other evidence, like a drug test, to make the determination that an individual violated a drug free workplace policy. Until WIRE standards are in place, employers must devise their own protocols, which should be informed by the Guidance.
The Guidance outlines how employers should document the physical signs or other evidence of impairment that support an adverse employment action against an employee for suspected cannabis use or impairment during work hours. For instance, the CRC advises employers to designate an interim staff member to assist with making determinations of suspected cannabis use during an employee's prescribed work hours, with such an employee sufficiently trained to determine impairment and qualified to complete the Reasonable Suspicion Observation Report.
The CRC also instructs employers to utilize the uniform "Reasonable Suspicion" Observation Report that documents the behavior, physical signs, and evidence that support the employer's determination that an employee is reasonably suspected of being under the influence during an employee's prescribed work hours. Additionally, the employer should establish a Standard Operating Procedure for completing such a report that includes: the employee's manager or supervisor or an employee at the manager or supervisor level; and an interim staff member that has been designated to assist with determining whether an employee is reasonably suspected of being impaired during an employee's prescribed work hours, or a second manager or supervisor.
The Guidance also provides that employers may also use a cognitive impairment test, a scientifically valid, objective, consistently repeatable, standardized automated test of an employee's impairment, and/or an ocular scan, as physical signs or evidence to establish reasonable suspicion of cannabis use or impairment at work.
Finally, the CRC warns that adverse employment actions may impact employees' protected rights under various laws including, but not limited to, state and federal anti-discrimination laws. The Guidance also provides that "when incorporating this guidance, employers should ensure compliance with all state and federal employment laws."
Key Takeaway for NJ Employers
As demonstrated by the Guidance, New Jersey's cannabis regulations remain a work in progress. To protect your business from potential employment-related liability, we strongly encourage you work with experienced counsel when implementing workplace policies and procedures regarding cannabis.
Source: Wolters Kluwer, Vital Law News, HR Tracker, Expert Guidance, 11/09
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New York State enacted legislation, on November 21, 2022 that bans "no-fault" attendance policies. The new law, which will take effect in 90 days, prohibits employers from penalizing workers based on "use of any legally protected absence pursuant to federal, local, or state law," and clarifies that assessing attendance points (or taking similar actions such as issuing demerits/occurrences or deducting from a time bank) constitutes retaliation under the law. (Lawmakers' written justification for the law contends that no-fault attendance policies discourage workers from taking protected leave and fail to inform them of their rights.)
This development may come as a surprise to employers in industries where no-fault attendance policies are common, including in union settings. Such policies generally involve employees accruing "points" or "occurrences" when they are late or miss work, with certain exceptions for vacation, job-protected leave including under the Family and Medical Leave Act (FMLA) and Americans with Disabilities Act (ADA), and other approved time off. Such policies are simple for employers to administer and also reduce burdens on workers by eliminating the need to obtain doctor's notes and other documentation for absences.
As a reminder, attendance policies must treat FMLA leave absences comparable to other forms of leave. For example, under EEOC guidance, employers must generally modify no-fault attendance policies to provide employees additional leave when necessary to accommodate a disabled employee. However, while noting that certain exceptions are required, courts have generally upheld no-fault attendance policies as lawful.
New York's law goes further than the existing protections by declaring that the issuance of any attendance points (or equivalents) for protected absences constitutes retaliation, even when such points do not result in discipline or termination. Accordingly, New York employers must consider exceptions for any and all absences that result in attendance points to workers, and not only when they receive formal discipline as a result.
Whether in New York or elsewhere, employers with no-fault attendance policies should review their handbooks and consider applicable state or local laws that may conflict with such policies. Attendance policies that cover New York employees, including those who work remotely, must now clarify that no attendance points (or equivalents) will be issued when workers take protected leave under federal, state, or local law.
Source VitalLaw News, State Employment Law Tracker, Wolters Kluwer, November 30, 2022
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Companies Are Still Keeping Compensation A Secret Why That's Bad For Business |
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Despite an increased push for pay transparency across industries, states and cities, companies are still withholding compensation reports. But amid economic uncertainty and a challenging talent market, that may not be serving organizations' best interests after all.
Seventeen states, including New York and California have passed legislation requiring some level of pay transparency, according to a recent study conducted by employee analytics company Perceptyx. However, some of those regulations only go as far as allowing employees to freely discuss pay with colleagues without risking their jobs. Of the companies surveyed by Perceptyx, seven of 10 make salary ranges known to employees, but nine out of 10 acknowledged that those ranges are published only when required by law.
"Unless people are asking proactively, companies will keep that information in-house, and we know that certain segments of the employee population are less likely to ask that," says Emily Killham, director of research insights at Perceptyx, referencing women and BIPOC employees. "The domino effect of that is, certain people end up having information that other people do not have."
That's limiting career growth across populations, and creating retention issues for organizations, too: Perceptyx's research found that 40% of employees who have taken a new job in the last six months are earning the same or less than in their prior role. But companies that hesitate to share information, Killham says, are likely acting from a place of self-preservation rather than ill-intent.
"They aren't necessarily trying to create a lack of transparency, but they know there's a problem [with their pay structures] and they don't have a plan yet," she says. "There has been a bit of a misconception that if you pretend you are unaware of a pay gap then that data doesn't become discoverable. But if you've done a compensation study, the data's discoverable even if you don't publish it."
But compensation alone isn't the sole driver of turnover. Only 24% of surveyed employees cited their paycheck as a reason for leaving their previous job. Raises can boost an employee's perception of fairness by as much as 25%, but the data also shows that raises rarely impact an employee's willingness to stay at an organization.
The trouble instead comes down to transparency, Killham explains. Employees are less fixated on an organization's specific pay gap, and more interested in an organization's willingness to talk openly about the issue, even before a plan may be in place to fix it. "What employees are asking employers for at this point is to do two things: build transparency and then build their trust," Killham says. "Employees want their employers to just say, 'We know we have a problem and here are the steps we're taking to fix it.'"
Still, employers are understandably fearful of pointing out pay discrepancies within their organizations: What happens if compensation data is published and it's below market? How damaging might that be on employee trust?
Killham suggests enhancing other aspects of the company's culture, while maintaining a frank and honest conversation about compensation. For example, 54% of employees cited a lack of career development as the reason they left their previous company — more than twice as many that cited compensation as the culprit. Healthcare, retirement benefits and company stability also ranked ahead of compensation on employees' list of priorities. Creating more intentional career paths and educational opportunities, or finding ways to enhance benefits, may boost an organization's appeal while giving employers the space and time to work with employees to solve pay discrepancies.
"The truth is that when it comes to employees signing on with an organization, [compensation] takes a lower piece of the pie," Killham says. "When it comes to signing on and staying, it's about things like, did I have a career path that made some sense? Do I get to grow and learn more and become more important and become more knowledgeable and have new experiences and opportunities?"
By Paola Peralta, Associate Editor
Taken Fron Employee Benefit News (September 22, 2022)
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New and Improved U.S. Department of Justice ADA Website |
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The U.S. Department of Justice has launched a new and improved version of its Americans with Disabilities Act website, ada.gov. The updated version of the website is designed to more effectively serve the public and help expand access for people with disabilities. The website works well with mobile devices, includes easy-to-use navigation tools, and is written in plain language. More information is available here. To find out more about the ADA, visit ada.gov or call the Justice Department's toll-free ADA information line at 1-800-514-0301 (voice) or 1-833-610-1264 (TDD).
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New Jersey’s Minimum Wage to Increase to $14.13/Hour
for Most Employees on January 1st
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New Jersey’s statewide minimum wage will increase by $1.13 to $14.13 per hour for most employees, effective January 1, 2023. Up 13 cents per hour from the original planned increase.
Annual increases in the minimum wage are due to legislation signed by Governor Murphy in February 2019 that raises the wage floor to $15 per hour by 2024 for most employees. Under the law, the minimum wage increases by $1 per hour – or more if warranted because of significant increases in the Consumer Price Index (CPI), as happened this year.
Under the law, seasonal and small employers were given until 2026 to pay their workers $15 per hour to lessen the impact on their businesses. The minimum hourly wage for these employees will increase to $12.93/hour on January 1, up from $11.90.
Agricultural workers are guided by a separate minimum wage timetable and were given until 2027 to reach the $15/hour minimum wage. Employees who work on a farm for an hourly or piece-rate wage will see their minimum hourly wage increase to $12.01, up from $11.05. Additionally, long-term care facility direct care staff will see their minimum wage rise by $1.13, to $17.13.
Tipped workers’ cash wage will increase to $5.26/hour, with employers able to claim an $8.87 tip credit, an increase in the maximum allowable tip credit of $1.00. If the minimum cash wage plus an employee’s tips do not equal at least the state minimum wage, then the employer must pay the employee the difference.
www.nj.gov/labor/lwdhome
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What Would You Like To See In A Future Issue? |
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Which Countries Have The Best Salary Transparency? |
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As more states and cities adopt salary transparency laws, it's becoming clear that workers expect a fair shot at equitable, competitive wages. But the U.S. is still a long ways away from nationwide transparency.
Seventeen states have salary transparency laws in place, and New York is one of the latest cities to join the movement. As of September, New York City employers must reveal the minimum and maximum hourly or salary compensation for any job, promotion or transfer opportunity. While this law impacts four million workers, many Americans are still in the dark.
Job search site Adzuna examined 80 million job posts worldwide, noting which countries had the highest percentage of salary disclosure. The U.S. placed second to last, with just under 3% of job posts containing clear salary information. "There is a culture of salary secrecy in the U.S. and shifting this to a more transparent culture is no easy feat," says Paul Lewis, chief customer officer at Adzuna. "But we believe that pay transparency is an important way of leveling the playing field, especially in today's market, where there are huge salary gaps based on race and nationality, gender and health."
In September, Adzuna launched the #MakeSalariesMandatory campaign while petitioning the federal government to enforce nationwide salary disclosure on job posts. Lewis underlines that the culture of salary secrecy makes it easier for employees to waste their time applying for jobs that are later revealed to pay too little — and if an employee takes the job, they will likely find themselves underpaid for their labor. In fact, Adzuna found that U.S. workers have wasted over 480 million hours applying for jobs with the wrong salary.
Nationwide transparency is possible. For example, in the U.K., which ranked number one on Aduzna's list, nearly 60% of its job posts contained salary information. Lewis is hopeful that the U.S. will see more federal movement on this issue as well as more employers making a commitment to salary transparency in the new year.
Here are the best and worst countries for salary transparency based on the number of job posts with pay clarity, compiled by Adzuna.
UK - 58.5%
Singapore - 50.3%
Mexico - 47.8%
Switzerland - 36.1%
South Africa - 26.2%
Brazil - 22.2%
France - 16.7%
Australia - 16%
Austria - 14.4%
Netherlands - 13.7%
New Zealand - 11.9%
Italy - 11.1%
Spain - 7.1%
Poland - 6.5%
Belgium - 4.5%
Germany - 4.2%
Canada - 4.2%
U.S. - 2.9%
India - 2.3%
Taken From EBN (November 23, 2022)
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New York City Joins Pay Transparency Trend |
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On November 1st covered New York City employers began to comply with the New York City pay transparency law. This legislation requires disclosure of salary ranges in advertisements, rather than in offer letters or upon request from applicants or employees. The city law is like enactments in other jurisdictions, such as California, Colorado, and Washington.
New York State employers also need to be aware of state pay transparency legislation, Senate Bill 9427, which has been passed by the legislature, but has not yet been sent to Gov. Kathy Hochul. It would go into effect 270 days after being signed into law.
The state legislative language is minimal. Employers with at least four employees and employment agencies (except for temporary help firms as defined by Section 619 of the Labor Law) must include in any advertisement for a job, promotion, or transfer opportunity the minimum and maximum annual salary or hourly range of compensation that the employer in good faith believes to be accurate at the time of the posting.
For a commission-only position, the disclosure obligation is satisfied by making a general statement that compensation will be based on commission. Covered entities also must disclose the applicable job description if one exists. Significantly, the measure contains an anti-retaliation provision.
The state Commissioner of Labor is empowered to issue regulations, and such guidance is needed to clarify the obligations of covered entities.
By Stacey A. Bastone, K. Joy Chin, Richard I. Greenberg and Michael Jakowsky
Jackson Lewis October 18, 2022
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Improve Retirement Readiness By Avoiding Cash-outs and Consolidating 401(k)s |
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Retired baby boomers who are saving for retirement through defined contribution (DC) plans like 401(k)s are drawing down their savings faster than their counterparts in previous generations who had pensions and other defined benefit (DB) plans, according to recent industry research. On top of that, baby boomers who may be relying solely on their DC plans may wind up with less savings for retirement than their counterparts who waited longer to withdraw savings from their defined benefit plans — and could, therefore, outlive their assets.
A July 2022 report from the Center for Retirement Research at Boston College found that, while most households whose heads were born between 1920 and 1940 had access to a defined benefit plan such as a pension, the youngest boomers, who were born in 1965, have almost no access to these types of plans. Instead, nearly all of them have access to DC plans, which are predominantly 401(k)s.
The report notes that the 1920 to 1940 generation drew down their wealth at a much slower rate in retirement. There are multiple factors influencing this trend, such as the tendency for previous generations to preserve their savings for bequests and precautionary savings like medical expenses rather than financing their living and consumption expenses.
Nevertheless, the Center for Retirement Research's study found that by age 70, retirement savers with pensions who entered retirement with $200,000 in savings had, on average, $28,000 more in assets at age 70 than retirement savers with the same amount of savings, but who had no DB plan. And, the older cohort had $86,000 more in assets by ages 75 and 80 than their counterparts without DB plan coverage. The Center for Retirement Research predicts that at this rate, Baby Boomers could run out of retirement savings by age 85.
These findings underscore the importance of encouraging and enabling plan participants to maximize their retirement savings. The easiest ways for participants to improve retirement outcomes are to consolidate 401(k) savings accounts as they change employers and avoid making any premature cash-outs.
Our research shows that a hypothetical 30-year-old plan participant who cashes out a 401(k) account with under $5,000 today would wind up forfeiting up to $52,000 in retirement savings that the balance would have accrued by age 65, if the account grew by 7% annually. Furthermore, a previous study from the Boston College's Center for Retirement Research reported that cash-outs reduce participants' income in retirement by 25% on average.
Meanwhile, other industry research has found that leaving even one 401(k) account behind in a former-employer plan after changing jobs can cause participants to lose up to $7,000 in fees over the long term. Besides the fees from multiple accounts, consolidating 401(k) accounts in their current, active accounts as they move from employer to employer can also help participants protect themselves and their hard-earned savings from cyber criminals. Having all of their retirement savings in a single, active account in their current employers' 401(k) plans is safer than trying to keep track of many accounts in different locations.
Sponsors can also help participants save more for retirement, so they don't outlive their savings, by adopting auto portability, which makes it easy for them to take their 401(k) savings with them, and consolidate them in their new-employer plans, at the point of job-change. Auto portability is the routine, standardized and automated movement of an inactive participant's retirement savings account with under $5,000 from a former employer's retirement plan to an active account in their new employer's plan.
The Employee Benefit Research Institute estimates that up to $2 trillion (measured in today's dollars) would be preserved in the U.S. retirement system if auto portability is widely adopted by sponsors over a 40-year period. This additional savings would include about $191 billion for approximately 21 million Black Americans and $619 billion for all minority participants.
The Advancing Auto Portability Act of 2022 is the latest milestone achievement in a partnership between the private and public sectors to expand access to 401(k) plan-to-plan asset portability. Implementing auto portability, while also discouraging cash-outs from 401(k) accounts (including withdrawals to pay expenses during down markets), can help more participants increase the income they have in retirement.
Every dollar counts when saving for retirement, especially now.
President And CEO, Retirement Clearinghouse
Taken From: Employee Benefit News (11/28/2022)
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Quick Benefit Facts for 2023 Limits on Benefits and Compensation
All limits are based on the calendar year.
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*Life Annuity at age 65
** Individuals with earned income over $200,000 pay an additional 0.9% in Medicare taxes
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Michael F. Yates & Company, Inc. can help you with a variety of services ranging from retirement plans to providing results-oriented survey instruments, training and development programs for your employees. Our products and services are intended to help you maximize the effectiveness of your Human Resources function.
- These products and services incorporate our years of experience so that you receive rapid results and exceptional value. From onsite consulting, to strategic business integration, to Web enablement, we understand how Human Resources can be applied to solve your problems and achieve your goals. As a result, we can help you get the most out of your investment and turn your most precious resource into a competitive advantage.
- We offer Consulting, Retirement Planning, Pension and 401(K) both qualified and non qualified Plans, Welfare Plans, Communications, Computer Systems, Executive Plans, Compensation, Mergers, Acquisitions, Divestitures and Other Services.
- We offer a true and honest, Client Partnership.
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Our staff and firm are proud members of the following professional organizations:
Society of Actuaries
American Society of Pension Professionals & Actuaries
Society for Human Resource Management
(Sussex-Warren NJ Chapter)
GAPS (Global Association Pension Services)
WorldatWork
American Management Association
National Federation of Independent Business
Better Business Bureau
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101 Belvidere Avenue
P.O. Box 7
Washington, NJ 07882-0007
908-689-4200
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