Employers must communicate with employees and recently terminated employees about the eligibility changes in the COBRA subsidy law, as mandated by the Temporary Extension Act of 2010. The subsidy law pays 65% of COBRA or state continuation health insurance premiums for employees who were involuntarily terminated between September 1, 2008 and February 28, 2010. The Extension Act moved that end date to March 31, 2010; but the U.S. Congress may extend it to December 31, 2010, with new legislation.

The subsidy also applies to employees whose hours were reduced between September 1, 2008 and March 31, 2010, and then were terminated involuntarily between March 2, 2010 and March 31, 2010. Eligibility for employees in this category is slightly different; in that their continuation of health insurance coverage through COBRA (and with the subsidy) begins on the day their hours were reduced, not the day of termination. These employees must be sent special notices within 60 days of the date of involuntary termination.

Another small, but important, detail of the Act is that employers are required to notify all employees terminated during the eligibility dates, regardless of whether employees agree with the voluntary or involuntary designation. Employees who disagree with that determination may request the U.S. Department of Labor to decide if the termination was voluntary or involuntary.

All employers will want to revise their HR procedures: COBRA notices should be updated with the time extension. Tracking systems should be modified to record accurately any changes for eligible former employees. Third-party COBRA administrators should be contacted to coordinate procedural and data revisions. The best source of information for employers is the U.S. Department of Labor Web site: dol.gov.

The Wall Street Compensation Reform Act of 2010 (S. 3149), introduced by Sen. Bill Nelson (D-FL), is meant to motivate “systemically significant” financial institutions to change their executive compensation policies. The incentive is their eligibility for tax deductions. The bill also attempts to protect the federal government, and ultimately taxpayers, from risky financial dealings by the largest financial corporations.

“Systemically significant” financial institutions are defined in the bill as those primarily in the business of finance, with more than $25 billion in assets. The bill would also apply to financial institutions with more than $10 billion in assets and more than a 20-to-1 debt-to-equity ratio.

The bill would affect the compensation of high-level executives and other employees, who earn more than $1 million if their work contributes to the financial institution’s exposure to risk. They could be exempt, however, if they provide information showing that their work is not significantly related to that risk.

The bill also includes provisions to change the tax-deductibility of executive compensation, relating to performance-based compensation, the use of personal hedging strategies, and what some would consider other loopholes in executive compensation policies of these financial institutions.

The move to a paperless society is gaining momentum, according to a study conducted by The Guardian Life Insurance Company of America. The proportion of employees that enroll in their employers’ benefit programs online has leaped 165% during the past five years.

The study also suggests that this is just one indication that Web-based technology in the workplace is quickly leading to even less use of paper and new operational efficiencies.

A spokesperson for the study stated that benefits enrollment would probably become totally paperless within 10 or 20 years, which is much faster than many experts have predicted. She says that older workers seem to be nearly as comfortable with online enrollment as younger workers.

Hewitt Associates, a human resources consulting and outsourcing services company, reports that as many as 80% of employers that stopped or reduced matching contributions to employees’ 401(k) programs will resume those contributions during 2010.

Although the report reveals that an average large U.S. company saved as much as $25 million a year by suspending 401(k) matches and improved cash flow, employers want to start contributing again because they are concerned employees are falling short of retirement goals.

Hewitt also discovered that companies are prepared to add retirement plan options that will help those employees reach their goals. One of those options is automatic portfolio rebalancing, which improves the likelihood of hitting asset allocation targets. Automatic contribution escalation is also being offered, which increases employees’ contribution rates. This also helps them save more of the money they need for retirement.

Vacation policy seems to be one component of managing a business that is more driven by free enterprise competition than government regulation and oversight. In fact, the U. S. is one of the few industrialized nations that don’t regulate employee benefits at private companies.

Employers, however, should be aware that once they have a vacation (or any employment) policy in place, the government can act as an advocate for employees to make sure they receive the vacation time and pay to which they are entitled.

You can be that your vacation policy will also be high on the list of benefits potential employees want. They’ll expect to find it explicitly described in your employee handbook. Failing to do so can provide employees with an opportunity to claim your policy is applied unevenly or unfairly, and can be the basis of lawsuits.

There are a few steps you should take, as an employer, to be sure your vacation policy is comprehensive and well written and presented in your employee handbook—and complies with your state’s labor laws for all parts of your vacation policy.

1. Determine who is eligible for vacation time and pay, according to their employment status: executive, full-time, part-time, etc.
2. Decide what method you’ll use for employees to accrue vacation time and pay. The two most common are length of service and pay period.
3. State your unused vacation policy. Some companies will limit how much vacation time can be moved to the next year. Some states, however, don’t allow a limit. Employers can, however, limit of vacation time accrued in any period.
4. Part of your unused vacation policy should also address terminated employees with accrued vacation time and pay. State laws also require that terminated employees are entitled to that time and pay and to receive it within a specific time period. Don’t even think of withholding vacation pay as a way to punish a terminated employee. The state could prosecute you or employees could file a civil suit.
5. Discrimination is a no-no in virtually all employment situations, which also includes vacation policy. There are many Federal laws that could support employee claims of vacation discrimination.

Your vacation policy could also violate various types of employee leaves that Federal and state laws protect, such as voting, jury duty, military assignment, family or medical situations, etc. In many cases, employees are not required to use vacation time for legitimate leaves.

Despite the current health care and health insurance crisis, most businesses still provide a basic health insurance plan for their employees. This benefits both employees and employers.

Employees can focus on their jobs because they don’t have worry about health insurance coverage for their families and themselves. Employees with health insurance coverage are more apt to seek medical care when needed, and even participate in wellness programs.

Employers experience better attendance and productivity. Plus, a healthy workforce projects a better image to the public and customers.

Although dental, maternity and life insurance have been provided to employees in the past, fewer receive those additional benefits today. Many employees have the opportunity to add dental, maternity and life insurance, but must pay the entire premium.

Some businesses in high-risk industries, such as construction, mining or public safety, may find it prudent to include life insurance as an employee benefit. Employers, with more than an average number of workers starting young families, have discovered that it’s important either to include maternity coverage or help employees find plans with affordable premiums.

In early 2009, President Obama signed the Lilly Ledbetter Fair Pay Act. The Act (based on a Supreme Court ruling) allows for the 180-day statute of limitations to file an equal-pay lawsuit, regarding pay discrimination, to begin again with each new discriminatory paycheck, instead of the date when the parties agreed to the wage amount.

Although widely covered in the media, many companies have not taken the proactive steps they should to protect themselves. The first step is to conduct an audit of your compensation system, including the job evaluation process, pay structure, performance management program and compensation guidelines. The second step is to analyze internal salary equity, including standard cohort analysis and regression analysis. The final step is to create a system to maintain pay equity.

As many as 18% of U.S. companies do not offer severance for regular non-executive employees, according to a new poll. A news release said the study by WorldatWork and Innovative Compensation and Benefits Concepts LLC (ICBC), an HR consulting firm, found that of those employers with a severance plan, 71% use years of service to figure the amount of severance payments. Nearly one-third of companies (31%) offer a week’s salary per year of service, while one out of every five employers (20%) provides two weeks of salary for every year.
 
Employers also consider an employee’s position (21%) and pay (17%), according to the announcement.
 
Of the companies paying severance, 42% offer a three-tiered structure focusing on the top executive, all other employees. The poll found that only 37% of surveyed companies have detailed severance plans and policies in writing.

Also, annual reviews of non-executive severance plans are rare. In fact, 69% of organizations have not reviewed their severance plans in at least the past year, while 13% reported having never reviewed their plans.

Study author Bob Jones asserted in the news release that annual reviews of an organization’s severance and change-in-control plans, especially because of the size and importance of these plans, should be conducted by Compensation Committees. “This is a best practice in general — in conjunction with a tally sheet analysis of the top executives’ Total Rewards — in order to ensure that plan costs are being prudently monitored,” said Jones. “This is best done by making this topic an agenda item that is covered on a regular, recurring basis.”

The Severance and Change-in-Control Practices 2007 survey was conducted in June 2007. Surveys were sent electronically to 4,590 WorldatWork members with a response rate of 11% (523 responses).

Wooing and hiring the best talent is becoming more difficult by the week. As employees entertain multiple opportunities and offers, sometimes you simply may run out of money. What to do when you’re short on cash but big on intention?

HiringRevolution.com offers these tips on putting together a more attractive package for quality applicants:

  Extra vacation days.Extra PTO is the first place to start, every time.
  Elevated title. If your firm is loose with titles anyway, no harm here.
  Eat the parking cost. The cost is generally nominal to a corporation but goes far in showing your genuine intention.

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Hewitt Associates has found the annual holiday bonus as a way to reward employees is losing favor as 63% of surveyed companies said they will not award holiday bonuses this year.

According to a news release from Hewitt, 90% of companies indicated they are relying on variable pay plans (performance-based bonuses that must be re-earned annually) to show appreciation for employees this year. In 2007, actual company spending on variable pay as a percentage of payroll is 11.8%, and spending on variable pay in 2008 is projected to remain strong at 11.6%, the release said.

The 2007 holiday study of more than 350 organizations revealed that more than half (53%) have never offered a holiday bonus, and 10% have discontinued their programs. Companies that discontinued their programs said they did so primarily due to cost (50%), development of pay-for-performance programs (37%), or difficulty in administering bonus programs (16%).

Of those companies that never offered a holiday bonus program, 54% said that all rewards are tied to performance, 34% said they never offered one due to cost, and 29% never considered such a program.

Of the 35% of companies that will offer a holiday bonus program in 2007, 42% said they will provide gift cards, 41% will award cash, 25% will give employees a gift of food, and 20% will give some type of catalog gift.

Reasons for providing holiday bonuses, according to the Hewitt survey, included:

• To say thank you and/or show appreciation (69%),
• To maintain tradition (11%), or
• To boost morale (16%).

More than two-thirds (70%) of companies surveyed who offer holiday bonuses said that all employee groups are eligible, while 17% said only full-time employees are eligible. Holiday bonus programs were most prevalent in the insurance industry (61%), followed by health care (50%), manufacturing (39%), retail (37%), financial services (16%), and the pharmaceutical industry (8%).

In addition, Hewitt found 70% of surveyed organizations plan to host a holiday party this year, up from 65% last year. Of these, 24% will spend $5,000 or less on their parties; 12% will pay between $5,000 and $10,000; and 27% will spend between $10,000 and $25,000. Fifty-six percent of companies said they hold holiday parties after work hours and 65% hold them at offsite locations.