Human Resource Consulting From The Business Viewpoint |
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Human Resource Update | October 2022 |
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2023 Retirement Plan Limits
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
2023 Limits on Benefits and Compensation are out! Every year we provide our clients, associates and friends with the above Plan Limit Card. If you have never received one and would like to, please let us know and we will add you to our list. They are currently at the printers and we expect to have them out in the next few weeks.
Due to inflation, we are seeing unprecedented changes across the board. See below for information about changes in tax brackets for 2023 and also an article with ideas on how to cope with the effects of inflation on employee benefits. Please reach out if MFYCO can be of any assistance in helping you navigate these upcoming changes.
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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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Virtually all California employers with five or more employees are covered by the Fair Employment and Housing Act (FEHA), the state's most noteworthy civil rights law. FEHA protects and safeguards the right and opportunity of all persons to seek, obtain, and hold employment free from discrimination by establishing a comprehensive scheme to combat employment discrimination.
It currently prohibits covered employers from discriminating against any person with respect to nearly all terms, conditions, and privileges of employment on the basis of any of the following: race, religious creed, color, national origin, ancestry, physical or mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status.
With the passage of Assembly Bill 2188, which adds Section 12954 to the Government Code, California lawmakers have included another protected category to that list—off-duty and off-site cannabis use. In addition, the new law amends FEHA to prohibit employers from taking action based upon traditional drug screening methods.
In the new law, the Legislature finds and declares that tetrahydrocannabinol (THC)—the psychoactive chemical compound in cannabis—is stored in the body as a non-psychoactive cannabis metabolite after it is metabolized. The law further states that these metabolites do not indicate impairment, but only that an individual has consumed cannabis in the last few weeks.
Presently, according to the Legislature, the intent of employment-related drug tests is to identify employees who may be impaired or under the influence of THC at a worksite. However, most cannabis drug tests tend to only show the presence of the non-psychoactive cannabis metabolites that have no correlation to present impairment. Further, the Legislature observed that because the science has improved, alternative drug tests that better correlate to impairment are more readily available and do not rely upon the presence of non-psychoactive cannabis metabolites to identify the presence of recently consumed THC.
AB 2188 aims to address that perceived disconnect. In particular, the bill amends FEHA to make it unlawful for an employer to discriminate against a person in hiring, termination, or any term or condition of employment, or otherwise penalize a person, if the discrimination is based upon the person’s “use of cannabis off the job and away from the workplace.” But, that rule would not prohibit an employer from discriminating in hiring or any term of employment based on a “scientifically valid preemployment drug screening conducted through methods that do not screen for non-psychoactive cannabis metabolites.”
In addition, FEHA will now prohibit discrimination in hiring or any term of employment based upon an employer-required drug screening test that has found the person to have non-psychoactive cannabis metabolites in their hair or bodily fluids.
In all events, Government Code Section 12954 does nothing to permit an employee to possess, be impaired by, or use cannabis on the job, or affects the rights or obligations of an employer to maintain a drug and alcohol-free workplace.
The new portion of FEHA created by AB 2188 does not apply to (1) employees in the “building and construction trades” or (2) applicants or individuals hired for positions that require a federal government background investigation or security clearance. The new law also does not preempt any state or federal laws requiring individuals to be tested for controlled substances or as a condition related to federal funding or licensing-related benefits.
AB 2188’s changes to FEHA are effective as January 1, 2024. Once in effect, they will substantially alter how and when employers can drug test employees for cannabis, and what they can do with those results. Employers may want to consider reviewing existing employment hiring, discipline, and termination policies and practices now to ensure they are in compliance upon the law taking effect. And, employers who utilize pre-employment drug screening will need to identify and source compliant testing methods in order to continue pre-employment screenings consistent with the new requirements. Employers should consult with their labor and employment counsel to ensure that they are ready, able, and prepared to comply with the new law once it takes effect.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Article Written By: Tyler Z. Bernstein, Sheppard Mullin Richter & Hampton
Taken From: VitalLaw News, Wolterskluwer.com,
HR Tracker, Expert Guidance (09/21/2022)
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2023 Federal Income Tax Bracket Changes |
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On October 18, the IRS released adjustments that will raise the top amounts of all seven federal income tax brackets for 2023 and thereby increase the paychecks of many employees by taxing more of their earnings at lower rates. The IRS announced the adjustments for tax year 2023 in Revenue Procedure 2022-38.
The level of income subject to a higher tax bracket can influence a number of employee decisions, such as paycheck withholding amounts and quarterly estimated tax payments to the IRS. Other employee choices that could be affected by the tax bracket adjustments include how much salary to defer into a traditional 401(k) plan or into a health savings account, which reduces taxable income for a given year by the amount contributed and is a step people often take to keep income from passing into a higher tax bracket. Employees can also choose whether to participate in a nonqualified deferred income plan if that option is available through their employer.
Click on the Revenue Procedure above for the tax rate chats. Revenue Procedure 2022-38 also stated that among tax deduction and exemption changes for 2023:
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The standard deduction for single taxpayers and for married taxpayers filing separately will rise by $900 to $13,850, up from $12,950.
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The standard deduction for married taxpayers filing joint returns will rise by $1,800 to $27,700, up from $25,900.
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The standard deduction for heads of households will rise by $1,400 to $20,800, up from $19,400.
The IRS Tax Withholding Estimator, also available in Spanish, can help employees determine if they have too much federal income tax withheld, reducing their take-home pay. In other cases, it can help employees with additional income sources to see if they should withhold more or make an estimated tax payment to avoid a tax bill when they file their tax return.
SHRM.org
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IDEAS ON COPING WITH THE EFFECTS OF INFLATION
ON EMPLOYEE BENEFITS
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As the inflation rate continues to increase, employers are becoming more concerned about rising employee benefit plan costs and how their businesses should be planning for future increases.
Most current discussion is regarding employee medical plans. What alternatives are available to employers to replace some or all of the traditional plan designs currently being used with plans that give covered employees more choice while simultaneously lowering employer expense?
The article below briefly summarizes some of the current thinking on these topics:
The Impact Of Inflation On Your Business’ Benefits
This year continues to produce the highest year-over-year inflation rates since 1981, and the staggering jump in prices is rippling through every industry. So how is it affecting healthcare and benefits compensation packages for employers and employees?
The “Great Resignation” is causing employers to take on more costs.
Typically, during an inflationary period, employers and employees share cost increases, but this has not been the case during the Great Resignation. Current job market pressures are causing employers to increase their portion of the cost of health insurance, especially toward family coverage, in order to recruit and retain employees.
According to a recent LinkedIn report, compensation and benefits remain top priorities for employees searching for a job—second only to work-life balance. What’s more, a recent Gallup report discovered employees are less likely to search for a new job and experience burnout if they believe their organization cares about them.
Unfortunately, the same study found only 24% of U.S. employees feel that their employer cares about their well-being—the lowest percentage in nearly a decade. Providing a variety of key benefits, especially health insurance, at a low cost can help employees feel they’re being valued and prioritized.
The onus is on employers to discover what benefits employees actually want and clearly communicate those offerings to employees. Even if the plans provided fit employees’ needs, organizations could still fall victim to attrition if employees are unaware of what is available to them and their families.
Healthcare and benefit costs are on the rise.
Though the medical premium year-over-year increase was less than that of inflation, employers and employees should still prepare for a benefits price hike.
According to an EASE recent report, which utilizes data from thousands of agencies, the average company saw an increase in individual medical premiums of nearly 6.3%, pacing just below the rate of inflation. On the family side, medical premiums rose at just over half that rate—3.35% on average.
Additionally, Kaiser Health News speculates that by requiring insurers to pay for Covid-19 testing, vaccine administration and treatment over the past two years, these costs may be passed along to customers through premium increases into 2023.
One reason the cost of benefits currently seems stable compared to the price of inflation is medical contracts. These contracts were already in place but, once renewed, will likely feature higher prices corresponding to the increase in inflation. Rates are locked in at different times depending on the state, but all renewals will take place well before the end of the year.
To complicate matters further, increasing consumer prices lead to overall raises for healthcare workers. The Wall Street Journal notes that “some hospitals grappling with rising nurse salaries are seeking to raise prices by up to 15%.” This is likely to lead to contract disputes with health insurers and businesses, and the situation threatens to contribute to the rise in premiums.
I believe that these combined factors will likely lead to an increase in medical premiums down the line and push higher insurance and benefits rates for employers. As planning commences for the upcoming open enrollment period and budgeting for the next fiscal period begins, organizations need to factor in inflation costs even if they aren’t currently appearing in the market.
Businesses need to consider financial benefits, voluntary benefits and ICHRAs.
To keep costs low for themselves and to satiate employees, businesses should consider other benefits options—namely financial benefits, voluntary benefits and individual coverage health reimbursement arrangements (ICHRAs). Because while benefits are crucial to retaining employees, their costs can strain small-business budgets.
The current landscape has led many broker agencies to anticipate their groups wanting more insurance options. For the upcoming enrollment season, even as prices go up, organizations should keep in mind that inflation and recession-related worries continue to be key stressors for employees across the country.
A study from Reward Gateway found that 61% of employees say stress from cost-of-living increases negatively impacts their work. Providing financial benefits options such as 401K matching, student loan repayment, childcare and financial planning resources can assuage worries and retain employees.
To keep costs low, small- to medium-sized businesses can expand their offerings through voluntary benefits and ICHRAs. Voluntary benefits allow employers to offer more to their employees without significantly increasing their own costs. Additionally, ICHRAs allow employers to come out with a defined contribution to health plans instead of allowing employees to choose from the two or three plans they have available.
There are a number of other innovative solutions for SMBs that are often difficult to understand without a professional advisor but should not be ignored. Level funding, for example, allows an employer who is passionate about employee wellness to design a plan in a way that lowers premium costs if employees engage in health and wellness initiatives. With traditional plans under the Affordable Care Act, even if an employer group is the epitome of health and has zero health care claims, they are not allowed to capture the benefits of their hard work. With a level-funded plan, that same group can enjoy significant premium reductions. Organizations should consult with an advisor, typically a local insurance broker, for advice on these innovative solutions.
Collaborate now to prepare for the future.
Inflation will inevitably cause an increase in benefits prices; however, employers can begin to prepare now by examining their current offerings and looking into options that will help lower costs while still providing employees with ample choice in an evolving market.
My last advice includes involving your employees in the decision-making process and making the appropriate adjustments now in order to attract and retain top talent in today’s climate.
This article was written by David Reid, CEO and cofounder of Ease
COUNCIL POST| Membership (fee-based)
Jul 15, 2022,08:30am EDT
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Mandatory Federal Labor Law Posting Update
EEOC Know Your Rights Poster
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The U.S. Equal Employment Opportunity Commission (EEOC) has released the new "Know Your Rights: Workplace Discrimination is Illegal" poster. This poster updates and replaces the previous “EEO is the Law” poster. Covered employers are required by federal law to prominently display the poster at their work sites.
The law requires an employer to post a notice describing the Federal laws prohibiting job discrimination based on race, color, sex (including pregnancy and related conditions, sexual orientation, or gender identity), national origin, religion, age (40 and older), equal pay, disability or genetic information (including family medical history or genetic tests or services), and retaliation for filing a charge, reasonably opposing discrimination, or participating in a discrimination lawsuit, investigation, or proceeding.
The “Know Your Rights: Workplace Discrimination is Illegal” poster, prepared by the U.S. Equal Employment Opportunity Commission (EEOC), summarizes these laws and explains how employees or applicants can file a complaint if they believe that they have experienced discrimination.
Click here to view the updated poster and for directions on where and how it must be distributed.
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What Would You Like To See In A Future Issue? |
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This past July, the Council of the District of Columbia amended its statutory requirements for Universal Paid Leave through the Universal Paid Leave Emergency Amendment Act of 2022 (the "Act"). The amendments made to the D.C. paid leave program by the Act, among other things, increase the maximum duration of paid leave benefits, decrease the employer payroll tax contribution rates, and eliminate the one-week waiting period for individuals to receive benefit payments. The changes were justified by a surplus in the District's Universal Paid Leave Fund.
As a result of the Act, effective October 1, 2022, the maximum duration for each type of paid leave within a 52-workweek period is as follows:
- 12 workweeks of qualifying parental leave (increased from 8 weeks)
- 12 workweeks of qualifying family leave (increased from 6 weeks)
- 12 workweeks of qualifying medical leave (increased from 6 weeks)
- 2 workweeks of qualifying pre-natal leave (no change)
In addition, as noted above, the Act eliminated the one-week waiting period that had been in effect since the D.C. Universal Paid Leave program was established.
The changes will also provide some benefit to employers in the form of lower contribution rates. The employer contribution rate to fund leave benefits will decrease from 0.62% to 0.26% of gross wages effective for the quarter beginning July 1, 2022.
Employers should be prepared for the expansion in paid leave benefits, revisit their leave policies, and if necessary, update them to reflect the amendments to D.C.'s Universal Paid Leave law.
Article by Guy Brenner, Laura Fant and Caroline Libby of Proskauer Rose LLP
Taken From: VitalLaw News, Wolterskluwer, HR Tracker,
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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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Terms of Use
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