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The Families First Coronavirus Response Act + A Churchillian Quote

Since my last blog on March 16, thanks to the coronavirus pandemic, much has changed in the world, let alone Iowa. Listing the changes here would be futile, so I will not attempt to do so.

I will, however, share new federal legislation. The Families First Coronavirus Response Act (FFCRA) that was signed into law on March 18, provides paid emergency family leave in limited circumstances, in addition to paid sick leave for people affected by COVID-19.

According to the Kaiser Family Foundation, the relatively quick overview of the FFCRA includes the following:

  • The emergency paid-leave provision applies to businesses with fewer than 500 employees. However, there are some exceptions available for small organizations that employ health care workers. These provisions take effect April 2 and are set to expire on December 31.
  • As for Paid Family Leave, the legislation updates the Family and Medical Leave Act (FMLA) to provide employees with up to 12 weeks of job-protected leave when they cannot work – either onsite or remotely – because their minor son’s or daughter’s school or child care service is closed due to a public health emergency.
  • The first 10 days of leave can be unpaid. It appears, however, than an employee can opt to substitute accrued vacation, personal or sick leave during this time, but an employer may not require an employee to do so.
  • For the remaining 10 weeks, eligible employees must receive two-thirds of their regular rate of pay, which is capped at $200 a day – $10,000 total.
  • For Paid Sick Leave, many employers will have to provide up to 80 hours of paid sick-leave benefits if an employee:
    1. Has been ordered by the government to quarantine or isolate because of COVID-19.
    2. Has been advised by a healthcare provider to self-quarantine because of COVID-19.
    3. Has symptoms of COVID-19 and is seeking a medical diagnosis.
    4. Is caring for someone who is subject to a government quarantine or isolation order or has been advised by a healthcare provider to quarantine or self-isolate.
    5. Needs to care for a son or daughter whose school or child care service is closed due to COVID-19 precautions.
    6. Is experiencing substantially similar conditions as specified by the secretary of health and human services, in consultation with the secretaries of labor and treasury.
  • Paid Sick Leave must be paid at the employee’s regular rate-of-pay, or minimum wage, whichever is greater, for leaves taken for reasons 1-3 above.
  • Employees taking leave for reasons 4-6 may be compensated at two-thirds their regular pay rate, or minimum wage, whichever is greater.
  • Part-time employees are eligible to take the number of hours they would normally work during a two-week period.

It is important to note that employers cannot:

  • Require an employee to use other paid leave before using the paid sick time provided by this new legislation.
  • Require an employee to find a replacement to cover his or her scheduled work hours.
  • Retaliate against any employee who takes leave in accordance with the act.
  • Retaliate against an employee who files a complaint or participates in a proceeding related to the act – including a proceeding that seeks to enforce the act.

The Department of Labor issued guidance on this new law, which can be found here.

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Since our blog this past week, a handful of organizations responded to our invitation to share their workplace practices due to the COVID-19 pandemic.  A quick summary follows:

“As with others, CV-19 has wiped out a robust schedule of events and programs we had planned over the next 30 days. A small workplace of six employees, four were offered the option of working from home, with the other two “splitting time” in the office to cover business. Closed the office physically, but still working in it, and remotely. Our priorities in order are to: 1) Protect the staff’s well-being, 2) Protect our donor well-being (many being in the 65 and over category), and 3) Preserve the Foundation’s resources.” 

  • A healthcare & social services organization shared the following:
    1. We have carefully assessed which administrative employees are able to telework and still provide essential business function support. These employees were engaged in telework effective March 16 (2020).
    2. For those administrative employees who are not able to provide essential business function support from home, they continue to work in one of our administrative locations, practicing strict social distancing, hygiene, and workplace cleanliness guidelines.
    3. All administrative locations have been closed to unscheduled guests.
    4. All team meetings have either been cancelled, postponed, or moved to a virtual environment.
    5. All non-essential travel has been cancelled through April 30.
    6. Visitor restrictions at our service locations have been put in place.
    7. Daytime services have been closed per governor’s order.
    8. Active task force groups have been implemented for problem solving and strategic action moving forward with all information funneled for review by our Executive Leadership Team.
    9. Regularly updated inward-facing and outward-facing communications have been put in place.
  • A few other organizations mentioned similar protocols to those mentioned above.

Because organizations are now a week or two into the changes being made due to the COVID-19 pandemic, and measures taken have been shared through local and national media, we will discontinue our invitation to share the practices of Iowa organizations. Thank you to each organization that shared their practices with us!

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This past week, my Mom (age 88) emailed her numerous grandchildren sharing her experiences growing up during the Great Depression and the hardships that she and others encountered. She ended her message with the following:

“Now we are faced with another crisis. You/we have tasted a good life and now you/we are experiencing some of the difficult times that we (my generation) have experienced many years ago. This is what life is all about, and by working together like a family, we too, shall conquer!”

Mom, Winston Churchill could not have framed our ‘new world’ any better than you have.

To each of you, be safe during this unprecedented and challenging time.

To stay abreast of employee benefits, we invite you to subscribe to our blog.

Overtime Pay Regulation Can Impact Employee Benefits

Cat and Mouse GameSir Isaac Newton’s third law of motion may apply to the latest final rule issued on May 18 by the Department of Labor (DOL) regarding overtime pay. The rule will significantly alter employee pay structures, which will consequently push employers to evaluate their ‘total awards’ approach to the workplace. Newton’s third law is simply:

For every action, there is an equal and opposite reaction.

This third law can also be analogous to a ‘cat and mouse game,’ whereby, the ‘cat,’ in this case, the DOL, is attempting to secure a definitive victory over the ‘mouse,’ played routinely (and reluctantly) by employers, both small and large. As the game is generally told, the cat attempts to catch the mouse, while the mouse runs away to avoid capture (and become a meal!). The mouse is usually unable to defeat the cat, but is able to find ways to ‘survive’ and live for another day. In fact, in most cases, the contest is never-ending – and often futile for both. Most everyone will acknowledge this game is a huge drain on energy and resources for both players. Nonetheless, the game is played.

The DOL’s intent to raise workers’ earnings will assuredly cause many employers to react differently than intended by the DOL. One logical ‘survival’ method for employers is to lower base salaries to help offset the potential cost of having to pay overtime to certain employees. Another reaction is to reclassify salaried workers to become hourly, or preclude newly nonexempt salaried employees from working over 40 hours per week to avoid paying overtime. The compensation system for white-collar employees may require a complete overhaul, with employees having to learn to record their time. Employers, like mice, look to find survival methods to escape the next regulatory ‘pounce.’

Are employee benefits immune from this new regulation? We are too early in the game to know for sure. However, we can surmise that previously-exempt employees who are converted to nonexempt status may possibly lose additional benefits that are only reserved for exempt employees. Eligibility for benefits such as medical, dental and vision, which typically flow through a Section 125 cafeteria plan, would most likely not affect employees who are nonexempt (hourly) or exempt (salaried), due largely to nondiscrimination rules. Qualified retirement plans also have stringent nondiscrimination testing requirements.

With other benefit offerings, however, it may get very interesting. Some organizations offer additional benefits to salaried and exempt employees, such as richer paid-time-off (PTO) days, including vacation. Under this scenario, it may be advisable to offer paid leave components on the basis of tenure and job level – rather than using exempt and nonexempt status. Seeking legal council is advisable.

As we have observed through our annual Iowa Employer Benefits Study©, certain budget-challenged industries (e.g. construction, hospitality and retail, etc.) may likely offer employer-paid group life and disability coverages only to salaried employees. Employees that lose salaried status could very well lose eligibility for these types of benefits. Another possibility is that such benefits may no longer be employer-paid, but rather, become completely voluntary benefits (employee pays all).

Similar to the mouse, employers must find new approaches to comply with the game dictated by the cat. Balancing the cost component of pay and benefits against reduced morale and high turnover is very delicate, and making this new transition will require newly-considered approaches with a different mindset.

What is your culture and how can it be leveraged in the future? In addition to avoiding the cat, watch out for any traps around the corner!

To stay abreast of employee benefits and other tangential issues, we invite you to subscribe to this blog.

Higher Employer Payroll Costs
Welcome to the ‘New Normal’

Timesheet for OvertimeLocal and national headlines continue to vie for our attention regarding the minimum wage that hourly workers receive. In addition to the federal level, many states and local statutes have raised their own minimum wages.

But a May 18 release of the final federal Fair Labor Standards Act (FLSA) overtime regulations will affect employers regardless of location.

In July 2015, DOL draft regulations were released asking for comments to their revised regulations governing which executive, professional and administrative employees (white collar workers) are entitled to FLSA’s overtime pay protections. Since last updating these regulations in 2004, the current salary cap for exemption (from overtime pay) is above $455 weekly, or $23,660 per year.

The final rule will increase the salary level for full-time salaried workers to the 40th percentile of weekly earnings (taken from the lowest-wage region – the South), or $47,476, for the next three years, beginning December 1, 2016. The final rule also has changes to the exemption for highly-compensated employees (HCE). Presently, to qualify for this exemption, employees must earn at least $100,000 per year. The new exemption threshold for HCE’s would be tied to the 90th percentile level of earnings for full-time salaried employees – or $134,004 in 2016. Like the standard salary level, the HCE level will increase every three years, beginning January 1, 2020. The DOL Q&A on the final regulations is helpful.

The DOL projects that 4.2 million employees who are exempt during the current regulation (due to earning at least $23,660 per year) will become non-exempt due the proposed higher-salary threshold. Because this expected new regulation will become reality on December 1, employers will need to act soon to minimize a major impact to their bottom line. In Iowa, 44,000 workers are expected to become eligible for overtime pay under the new rules.

At the bare minimum, employers are advised to conduct a wage and hours audit to assess whether employee classifications will continue to be correct based on the new salary thresholds. In addition, analyzing employee duties will be extremely important, especially those who are affected by the changes in their compensation limits. A DOL general guidance to private employers was also released on May 18.

When assessing how to react to the new regulations, employers may consider each of the following three options:

  1. Boost the salary for those who are currently earning amounts that are close to the new minimum threshold so that they will now be over this new threshold amount. By doing this, the employee will remain exempt from overtime pay.
  2. Convert salaried employees to hourly and implement a new workplace policy that they cannot work more than 40 hours per week.
  3. Shift salaried employees to hourly and pay overtime – which is 1.5 times their normal hourly rate.

Without question, there will be pain points for BOTH employers and employees. Some employees will be happy with the pay increase, while others may perceive the changes to be a demotion or a possible obstruction to ‘climbing the ladder.’ In addition, organizations will need to evaluate the eligibility for benefits with any changes being made for hourly-paid employees, etc.

To comply, organizations will need to act quickly – even BEFORE the dust settles.

Regulations can be successful if properly planned and implemented, but the cost of regulations may be detrimental to the health of the economy – and possibly to its’ workers.

And so it goes…welcome to the employment world’s ‘new normal.’

To stay abreast of employee benefits and other tangential issues, we invite you to subscribe to this blog.