Human Resource Consulting From The Business Viewpoint |
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Human Resource Update | August 2022 |
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We hope you had a wonderful summer and that you get to relax and enjoy Labor Day. Labor Day pays tribute to the contributions and achievements of American workers. After a stressful and challenging year for many, you earned it!
As fall is quickly approaching, kids are back to school, and the final quarter of the year is near, we are reminded of a great quote from Dr. Seuss. “You’re off to great places, today is your day, your mountain is waiting, so get on your way!” Please reach out to MFYCO if we can assist you in climbing those mountains at work.
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Michael F. Yates
President
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If you find value in this newsletter please let us know. Feel free to call me with a comment and/or ask a question at any time (908-689-4200) or send me an email (myates@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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Health Care Cost Increases Return To Large Employer Plans |
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After experiencing no increase in actual health care costs from 2019 to 2020, large employers experienced a significant return to rising costs, with a median 2021 cost increase of 8.2 percent, according to recent research from the Business Group on Health. The 2023 Large Employers’ Health Care Strategy and Plan Design Survey noted that despite rising costs, large employers expect to cover 82 percent of the cost of employee coverage in 2022, up from 80 percent the year before.
The survey of 135 large employers found that cancer has overtaken musculoskeletal conditions as the top driver of large companies’ health care costs, but the top three conditions fueling cost increases remained the same as last year—cardiovascular disease, cancer, and musculoskeletal conditions.
“Survey findings function as a ‘collective snapshot’ that can guide employers as they determine how to maximize employee benefits,” said Ellen Kelsay, president and CEO of the Business Group on Health. “Employers shared that they are deeply concerned about unsustainable health care costs, the devastating effects of the pandemic on employee health, and the need to work creatively with their partners toward a more positive and sustainable health care experience, among other issues.”
The survey also found the following:
- Prescription drugs. Large employers overwhelmingly (99 percent) said they were concerned about prescription drug trend. In 2021, prescription drugs accounted for a median of 21 percent of employers’ health care costs, with more than half of pharmacy spend going to specialty medications.
- Mental health. Long-term mental health issues are the leading health-related impact of the pandemic. The Business Group found that 43 percent of large employers have already seen this trend, and another 39 percent anticipate such increases.
- Telehealth. While 74 percent of employers believe that virtual health will significantly impact future health care delivery, 84 percent said integrating virtual health and in-person care delivery is critical for success. Employers are interested in virtual primary care: 32 percent will offer these services in 2022, while 69 percent may do so by 2025.
- Wellness. Sixty-five percent of employers noted that health and wellbeing strategy continued to play an integral role in workforce strategy, up from 42 percent last year.
SOURCE: VitalLaw News, Employee Benefits Management Tracker, Wolters Kluwer, August 30, 2022
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Chipotle Agrees to Settle NYC Labor Charges |
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The chain restaurant Chipotle Mexican Grill signed a $20 million settlement with New York City employees over allegations of labor law violations, Mayor Eric Adams announced August 9. This is the largest fair workweek settlement in the nation and the biggest labor protection settlement in the city's history, Adams said.
The city's investigation found that Chipotle did not give employees advance notice of their work schedules, required employees to work extra time without their advance consent, did not properly compensate workers for schedule changes, did not offer available shifts to current employees before hiring new employees, and did not allow employees to use accrued sick leave, according to the city's Department of Consumer and Worker Protection Commissioner Vilda Vera Mayuga.
New York City law requires employers to give workers their schedules 14 days in advance and pay premiums for schedule changes or shifts with less than 11 hours of rest in between. It also requires large employers to offer 56 hours of paid leave each year. Chipotle capped workers at 24 hours of paid sick time, according to court filings.
The settlement covered violations of scheduling and sick leave laws from late November 2017 to late April 2022 and may impact as many as 13,000 Chipotle employees. Under the settlement, hourly employees of Chipotle in New York City will receive $50 for each week that they worked during that period. The city filed an initial legal complaint in the case in September 2019, involving a handful of Chipotle stores, then expanded the case last year to include locations across the city.
www.SHRM.org
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Can the U.S. Embrace a Four-day Workweek? |
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With the pandemic-fueled demand for more workplace flexibility, could the four-day workweek become the norm in American business? Three Wharton experts don’t hold out hope for change.
When Wharton management professor Matthew Bidwell first came to the United States from England in the 1990s, he was struck by the dogged American work ethic. “It was a culture that was much more organized around work than in the U.K. When I was growing up, there wasn’t quite the same heroism about long hours,” he recalled, adding that workaholics in Britain were regarded as people who needed to get their priorities in order.
“Work gives us a sense of meaning and accomplishment, and more of our identity is tied to work. But it also crowds out a lot of other things we’d like to be doing,” Bidwell said.
That desire to do other things is why more than 3,300 employees across 70 companies in the U.K. are participating in a pilot program to work four days a week in exchange for the same productivity and pay. Launched in June, the six-month experiment led by the nonprofit 4 Day Week Global relies on previous research that finds employees are happier, healthier, and more efficient with reduced working hours. Forty companies in the U.S. and Canada have joined the pilot program, with another 60 signed up for a second phase in October. While 100 companies are a propitious start, the number is hardly enough to shift the zeitgeist in America, where coming into the office before breakfast, working through lunch, and answering emails after dinner are de rigueur.
With the pandemic-fueled demand for more flexibility in the workplace, could the four-day workweek grow beyond the experiment to become the standard in American business? Three Wharton experts, including Bidwell, said it’s a nice idea that could take root in small pockets of industry, but they don’t hold out hope for widespread change.
“Never say never. But I’m not anticipating it happening anytime soon,” Bidwell said. “I don’t think there’s a huge clamor for it. We are a bit of a workaholic nation, and we don’t even take very much holiday.”
From Six Days to Five Days
The four-day workweek is a relatively new concept in the history of human toil. In 1956, Vice President Richard Nixon floated it as part of an “unbelievably prosperous” future under Republican leadership. His proposal was revolutionary at the time, considering that 100 hours over six or seven days a week was the norm for manufacturing and labor in the 1800s. The 40-hour week wasn’t the law of the land until 1940, when Congress amended the Fair Labor Standards Act.
Nearly a century later, advocates are now arguing that 40 hours or more is mind-numbing excess that brings no additional productivity to the table while robbing people of precious work-life balance. Although that argument has come and gone over the decades, it’s enjoying a revival thanks to the COVID-19 pandemic, which has prompted the Great Resignation, a tight labor market, and what seems like an inflection point for millions of workers around the world.
Earlier this year, California-based Bolt became the first fintech unicorn to switch to a four-day workweek, a move that founder Ryan Breslow proudly touted in a company blog post that ran beneath a photo of relaxed, casually dressed employees. “Work is changing and the biggest obstacle we have to face is burnout,” Breslow wrote. “Here’s what many of us know but can be tough to admit: Work will fill the space you give to it. My bet is that we’re going to become vastly more efficient from Monday to Thursday.”
Wharton assistant management professor Lindsey Cameron said it’s generally easier for tech firms to make the switch because they have nimble operations with employees who work in front of a computer screen, but she doesn’t think enough employers will follow in the footsteps of CEOs like Breslow to mandate such a drastic change.
“I honestly don’t believe our employers are going to believe that you can get as much work done in four days as in five. We see the subtle pressure they are exerting to get their employees to get back into the office now,” she said. “There is a continuum with flexibility, and spatial flexibility is easier to handle than this temporal flexibility.”
Bidwell agrees that the rising demand for remote work is “surprisingly sticky” compared with the four-day week, which most employers don’t have an appetite for. He also thinks employers don’t buy into the promise of equal productivity on reduced hours, despite evidence from the experiment and several scientific studies. “Ultimately, pay does partly reflect how much value we create for our employers. So, economy wide, can we continue to receive the same pay for four-day weeks? I’m skeptical,” he said.
Taking a broader view, Cameron said it’s highly unlikely that Congress would shorten the work week again, the way it did in 1940. There are simply too many competing interests and arguments for the federal government to direct all companies across all industries to do so.
“We’ve seen other sorts of regulations that haven’t been able to get as much widespread support at the national level, so there’s not going to be enough political power to push it through,” she said.
Wharton assistant management professor Michael Parke agrees with his colleagues that a four-day week has a slim chance of becoming standard, but he wants to see the idea further explored. He mentioned Gravity Payments founder Dan Price, who famously set the minimum salary of all his employees at $70,000 and tweeted about the benefits of going and staying remote. “I do think you’re seeing a lot of different arrangements of work, so why not do this?” Parke said. “Whether people want to work 80% and four days a week or 10-hour days or whatever the math is – why not?”
Parke said the demands for flexibility are trickling down to younger generations that are rejecting the live-to-work ethos of the generations before them. In his classes, many conversations with students turn to their concerns over work-life balance. They want to be investment bankers, for example, but they worry about the 80-plus-hour weeks that notoriously come with the job.
“There are really salient, existential threats that are happening where people are questioning the ideal worker prototype of ‘do your job, be loyal, work hard.’ There is a belief that businesses are set up to exploit employees,” he said. Still, there’s only so much counterculture that students can afford. “At the end of the day, you need to make money. You have to support your financial security goals first, and that’s sometimes the trade-off people make,” Parke said.
The Privileged Office Worker
Although the pilot program in Britain cuts across different sectors, the professors draw a sharp line of distinction when it comes to who is most eligible for a four-day workweek. It’s office workers.
For restaurants, retail, hospitals, manufacturing, law enforcement, and any other profession that operates almost continuously, coverage is essential. A four-day week would require managers to hire more personnel to ensure all the necessary work gets done. “It seems ridiculous that a restaurant owner can entertain this conversation when they can’t even hire enough workers to do six days a week,” Cameron said. “This conversation is for one type of audience, and it’s hard to see how to include frontline and service workers in the United States.”
Parke agreed, saying the COVID-19 pandemic created a huge disparity between frontline workers who had to be on site, risking their own health and safety in the service of others, and knowledge workers who had office jobs with the option of working from home. Shifting to a four-day week will only widen the divide, and it risks deepening the wealth gap between rich and poor.
“Cynically, it feels like the gap between these workers is already so vast that it’s hard to make things worse,” Bidwell said, adding that pay is often commensurate with hours. “Historically, what you’ve seen is at a certain point, professional managerial workers work substantially longer hours, and they get paid vastly more.”
A Culture of Busyness
Despite the lack of traction, the conversation about a four-day workweek persists. Wharton management and psychology professor Adam Grant, who has long advocated the four-day week, even hosted a panel discussion about it at the Davos World Economic Forum in June. In his opening remarks, Grant mentioned how American automaker Henry Ford boldly switched his workers from six days to five days a week in the 1920s because he knew it would improve morale, loyalty, and productivity. “We could start to wonder, well, why are we now stuck on five days?” Grant said to the panel. “Was that ordained from on high, or is this, in fact, a human intervention that deserves to be rethought?”
One of the panelists was Ohood Bint Khalfan Al Roumi, a government minister with the United Arab Emirates, which implemented a four-and-a-half-day workweek this year for all government employees and agencies, including schools and hospitals. Al Roumi said that the result has been a 55% reduction in absenteeism, 70% of employees reporting greater efficiency at work while spending more time with their families, and 50% of private companies operating in the UAE following suit.
But the UAE is not the U.S., where a culture of busyness is deeply ingrained. Cameron, who has lived in Egypt, Mali, Algeria, Germany, and other places during her previous work in U.S. intelligence, notes that the American work ethic “is our most successful cultural export” because it has influenced so many other nations. She thinks Europe, especially Scandinavian countries, offers a much healthier work-life balance than the U.S.
“I think 20% of the workforce, the most elite, are going to get more flexibility like unlimited vacation time and some of these things we’ve asked for,” she said. “For the remainder of the American workforce, it’s going to stay mostly as it is.”
Taken from KNOWLEDGE at WHARTON - A business journal from the Wharton School of the University of Pennsylvania
(Published August 22, 2022)
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New Jersey Required Posters |
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On August 1, 2022, the New Jersey Division on Civil Rights (DCR) adopted new and amended regulations concerning the “Display of Official Posters of the Division on Civil Rights,” which require employers, housing providers, and places of public accommodation to prominently display “in places easily visible” to those who would be affected by violations of these laws, posters created by DCR to better inform individuals and covered entities of their rights and obligations under the New Jersey Law Against Discrimination (NJLAD) and Family Leave Act (NJFLA). (N.J.A.C. 13:8-1.2, 1.3, 1.4, 1.5 and 2.2). Failure to display the required posters can result in fines up to $10,000.
The DCR has issued a Poster Regulations FAQ (Poster Regulations FAQ) to assist employers in determining which posters they are required to display.
All official posters of the Division are available for downloading and printing below, or at any of the Division’s offices. Any poster printed from the Division’s website shall be printed on no smaller than letter size paper (8½ x 11) and contain text that is fully legible and large enough to be easily read. Click here for the full regulations. To guide you in understanding which poster(s) apply, please view the flow charts.
Flowcharts:
Posters:
Mental Health Facilities Poster - Including, rehabilitation or treatment facilities, state or local psychiatric hospitals, and harm reduction service providers.
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What Would You Like To See In A Future Issue? |
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Prohibited Transaction Class Exemption |
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The Employee Benefits Security Administration of the U.S. Department of Labor (EBSA) has issued a Proposed Amendment to Prohibited Transaction Class Exemption 84-14 (the QPAM Exemption)
Key Takeaways:
The EBSA is proposing an amendment to the Qualified Professional Asset Manager (“QPAM”) Exemption of 1984. The amendment (among other things) would:
- expand the types of misconduct that can result in a QPAM's ineligibility to rely on the QPAM exemption;
- significantly increase the asset management and equity thresholds for QPAMs;
- impose new reporting and recordkeeping requirements on QPAMs; and
- require amendments to existing QPAM investment management agreements.
Background
Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA), broadly prohibits transactions between plans and “parties in interest”—in general, people or entities closely connected to the plans. Title II of ERISA, codified in the Internal Revenue Code, as amended (the Code), includes parallel prohibitions applicable to tax-qualified plans and “disqualified persons.” Absent an exemption, ERISA section 406(a)(1)(A) through (D) and Code section 4975(c)(1)(A) through (D) prohibit, among other things, sales, leases, loans, and the provision of services between these parties. Congress enacted these prohibitions to protect plans, their participants and beneficiaries (including beneficiaries of IRAs), and IRA owners from the potential for abuse that arises when plans and IRAs engage in transactions with closely connected parties. Title I of ERISA and the Code include statutory exemptions from the prohibited transaction provisions, and the Department has authority to grant additional administrative prohibited transaction exemptions on an individual or class basis under ERISA section 408(a) and Code section 4975(c)(2). Before granting an administrative exemption, these provisions require the Secretary of Labor to find that the exemption is: (i) administratively feasible, (ii) in the interests of the plans and their participants and beneficiaries and IRA owners, and (iii) protective of the rights of plan participants and beneficiaries and IRA owners.
Generally, the QPAM Exemption permits an investment fund holding assets of plans and IRAs that is managed by a “qualified professional asset manager” (QPAM) to engage in transactions with “parties in interest” or “disqualified persons” to a plan or an IRA, subject to protective conditions. The proposed amendment would modify Section I(g) of the exemption, a provision under which a QPAM may become ineligible to rely on the QPAM Exemption for a period of 10 years if the QPAM, various affiliates, or five percent or more owners of the QPAM are convicted of certain crimes. The proposed amendment would: (1) require a one-time notice to the Department that a QPAM is relying upon the exemption, (2) require up-front terms in a written management agreement that apply in the event of ineligibility, (3) update the list of crimes in current Section I(g) to explicitly include foreign crimes that are substantially equivalent to the listed crimes, (4) expand the circumstances that may lead to ineligibility, and (5) provide a one-year winding-down period to help plans and IRAs avoid or minimize possible negative impacts of terminating or switching QPAMs or adjusting asset management arrangements when a QPAM becomes ineligible. The proposed amendment would also: (1) provide clarifying updates to Section I(c) regarding a QPAM's authority over investment decisions, (2) adjust the asset management and equity thresholds in the QPAM definition in Section VI(a), and (3) add a new recordkeeping provision in Section VI(t). The amendment would affect participants and beneficiaries of plans, owners of IRAs, the sponsoring employers of such plans or IRAs (if applicable), QPAMs, and counterparties engaging in transactions covered under the QPAM Exemption.
The Proposed "QPAM Amendment"
The proposed amendment, which is intended to protect Plans against the effects of consolidation and globalization in the financial services industry, would expand the types of misconduct for which a QPAM can become ineligible for the QPAM Exemption (in part by including foreign crimes and misconduct by affiliates). However, the proposed amendment would affect all managers relying on the QPAM Exemption because (as described in greater detail below), it would require all QPAMs to revise existing management agreements with Plan clients, satisfy new recordkeeping and notice requirements, and meet increased asset management and equity thresholds.
The EBSA's proposed amendment to the QPAM Exemption is extensive. If finalized in its current form, the proposed amendment would make the following changes to the QPAM Exemption.
- Reporting to the Department
- Expand the List of Crimes and Prohibited Misconduct
- Increase Asset Management and Equity Thresholds
- Expand the Required Provisions for Written Management Agreements; Indemnification Obligations
- Impose New Recordkeeping Requirements
- Create a One-Time EBSA Notice Requirement for all QPAMs
- Establish a One-Year Winding-Down Period and Related Notice Requirements
- Clarify the Scope of the QPAM Exemption
Next Steps
The period for submitting comments on the proposed amendment ends on September 26, 2022. If finalized, the proposed amendment would become effective 60 days after publication of the final amendment in the Federal Register.
QPAMs who would not satisfy the increased asset management or equity thresholds under the proposed amendment, or who would prefer not to comply with the requirements of the proposed amendment, should consider the availability of other prohibited transaction exemptions, including ERISA's statutory exemption for reasonable contracts or arrangements with service providers who are parties in interest to client Plans.
Source: VitalLaw News, Wolters Kluwer, Employee Benefits Management Tracker, Expert Insights, Aug. 30, 2022
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2022 Retirement Plan Limits
All limits are based on the calendar year.
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If you have not received our business card with these numbers printed on it and would like one, please let us know! We would be happy to mail you one (or a few to share!) |
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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
The site ("from the HR perspective" hence herein referred to as MFYCO.com) is made available by Michael F. Yates & Company Incorporated. All content, information and software provided on and through 'from the HR perspective' and MFYCO.com ("Content") may be used solely under the following terms and conditions ("Terms of Use".) YOUR USE OF THIS WEBSITE CONSTITUTES YOUR AGREEMENT TO BE BOUND BY THESE TERMS AND CONDITIONS. IF YOU DO NOT AGREE TO THESE TERMS, YOU SHOULD IMMEDIATELY DISCONTINUE YOUR USE OF THIS SITE.
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As always, any statements regarding federal tax law contained herein are not intended or written to be used, and cannot be used, for the purposes of avoiding penalties that may be imposed under federal tax law or to market any entity, investment plan or arrangement.
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