If you are a business owner or are responsible for handling your organizations HR, you should readily have an answer when asked “What is your organizations human resource strategy?”

Alcott HR Group will be presenting this free, hour long webinar designed to help small and mid-sized organizations find their answer and help them get started in developing an HR strategy. With a properly executed HR strategy, you can expect to achieve:

• Better control of your employees
• Happier and more productive employees
• Better control of labor costs
• Substantially less exposure to risk
• More time to run your business

To register, simply click on the date(s) you wish to attend:

Tuesday, October 12^th @ 11am
Thursday, October 21^st @ 2pm

Presented by:

Bob Chanin, M.B.A.

Bob, a 26-year business and Human Resources professional, oversees Alcott’sbroad scope of HR programs and services on behalf of its over 350 client companies and their over 3,500 employees. He possesses in-depth expertise relating to employee compensation and benefits, recruitment and training, regulatory compliance organizational management and employee relations. During his career, he has had the opportunity to apply his skills to the small business community as well as large organizations.

Dawn Davidson-Drantch, Esq.,

Counsel for Alcott HR Group, Dawn advises senior management and Alcott’s Human Resources professionals on legislation, laws, regulations and rules, as well as employee relations issues, policy/procedural development, harassment/employee relations investigations and compliance with multi-state employment laws. She guides Alcott’s policy/procedural development as well as employment law compliance and training programs in more than 30 states.

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There was time in the mid-80s when employee leasing was very popular. It had its roots in the Tax Equity and Fiscal Responsibility Act better known as TEFRA. This legislation introduced significant tax benefits for companies to lease employees which gave birth to so-called employee leasing or contract staffing firms. When the TEFRA tax loophole closed, some thought it might be the end of employee leasing, but they were wrong. Instead, the concept evolved, expanded and grew into what is now the $63 billion Professional Employer Organization (PEO) industry.

Today, according to the National Association of Professional Employer Organizations (www.napeo.org), there are 400 member PEOs operating in 50 states. Among these PEOs are the most elite of the group, those who hold the prestigious Employers Services Assurance Corporation (ESAC, www.esacorp.org) certification attesting to their adherence to stringent financial, professional and ethical standards.

Currently, ESAC-accredited PEOs serve clients and employees whose combined annual wages equal $27 billion. One of those companies, Alcott HR Group (www.alcottgroup.com), has grown and expanded along with the PEO industry. The company, which was co-founded in 1987 by Alcott President Louis Basso and Executive Vice President Barry Shorten, has been at the forefront of the PEO industry helping to shape its form and destiny. Since its inception, Alcott has also been ranked on various fastest-growing companies.

Louis Basso, president of Alcott has held various leadership roles in the PEO industry. On the state level, he was elected President of NAPEO’s New York Chapter (a position he still holds) and is NAPEO Leadership Council Chair for New York State.  On the national level, he has served as NAPEO Vice President, President-Elect, President and Chairman of NAPEO’s Federal Legislation Committee. Today, Basso remains an active Member of the NAPEO Board of Directors and a Member of the Board of ESAC. In recognition of his leadership and contributions to the industry, in 1999, NAPEO awarded him its prestigious Michaeline A. Doyle Award.

Through the leadership of PEOs like Alcott, the industry gained more prominence and recognition as a major resource for small and growing businesses. In addition to handling payroll and tax administration, as well as employee benefits design and administration, the PEO’s role on behalf of its clients has extended to encompass regulatory compliance and extensive employee services ranging from Employee Assistance Program (EAP), college tuition and adoption assistance, to  employee discounts for shopping, transportation, travel and entertainment, fitness club memberships, etc, and various other value-added benefits such as on-site defensive driving courses and flu shots for employees and their families.

In effect, today’s PEOs serve as a total Human Resources (HR) management and consulting service. It’s like having your own HR department only better with the added advantages of broader services, more selection in benefit packages, scales of economy and numerous employee services that most small and growing businesses could not provide on their own.

Since today’s best PEOs are staffed by trained and qualified HR professionals – individuals with the highest HR credential such as the PHR certification awarded by the Human Resources Certification Institute affiliated with the Society for Human Resource Management (SHRM), and the Certified Payroll Professional (CPP) awarded by the American Payroll Association (San Antonio, TX) – there’s the added assurance that the highest level of HR competency and knowledge is being applied.

For more information, visit: www.alcottgroup.com

1. Was there a rule, order, procedure or known performance behavior expectation (a “workplace rule or order”)?
2. Was the employee aware of the workplace rule or order?
3. Has the workplace rule or order been enforced in the past?
4. Was the employee forewarned of possible consequences of his/her conduct?
5. Before administering discipline, was an effort made to discover whether the employee did, in fact, violate or disobey the workplace rule or order?
6. Was the investigation conducted fairly and objectively?
7. In the investigation, was sufficient evidence obtained against the employee to prove “guilt”?
8. Has the workplace rule or order been enforced consistently and without discrimination?
9. Is the workplace rule or order reasonably related to the operation of business? Is the penalty appropriate to the offense?
10. Are there other employees with records of worse offenses who are on a lower level of the disciplinary process?

The answer to all questions except number 10 must be “YES” and the answer to number 10 must be “NO” before one disciplines an employee. In fact, if an employee, or ex-employee as the case may be, should file for unemployment or a fair employment practices charge with a state or federal agency, these are the questions that the government officials will ask to determine the validity of the employer’s defense.

It’s best to be prepared and follow these guidelines as a matter of course.  Not only will you achieve treating all your employees fairly and consistently, but your employees will be happier in a workplace where they are able to anticipate the potential consequences for their actions.

Part of this article was reprinted with permission of Portnoy, Messinger, Pearl & Associates, Inc.

1. Discuss the reason(s) for the employee’s departure
2. Ask for a letter of resignation with the date of departure and signature (typically, a  2 week notice is given depending on position type)
3. Prepare termination paperwork and submit with letter of resignation
4. Setup date and perform an exit interview
5. Analyze the exit interview to see if there are any improvements that you can make within your organization

A few things to remember:

It is extremely important to document the employee’s resignation. I have stressed the importance of documentation before, but it is even more crucial when an employee resigns.  After you are informed, it is critical to receive a signed letter of resignation or at minimum an acknowledgement in an email. The reason for this is simple-if the employee applies for unemployment insurance, a voluntary resignation of employment most likely will result in a denial of benefits. This in turn helps reduce the ever-increasing costs of unemployment insurance and reduces the rate that we must pay.

Second, it is also important to find out the reason as to why your employee is leaving as minimizing turnover is beneficial to your business.  An exit interview can provide a window into how employees perceive your organization and may bring to light risks that you are not aware of.  Often, an employee may not be totally candid as they are uncomfortable in telling you the reasons.

So remember, when you learn that an employee is leaving, find out why and then ask for it in writing.

Bob Chanin is the director of HR for Alcott HR Group, a leading Professional Employer organization (PEO) providing HR support and employer services to small and mid-sized organizations.

Recently we asked Alcott Senior Human Resources Representative Jeanne Anderson (JA) to share her insights regarding 401(k) plans.

What advice would you give employers regarding the importance of internal communications to employees relating to their 401(k) plan?

JA – Internal communications plays an important role in promoting understanding of the Plan and its benefits, as well as encouraging participation in the Plan. Employees who hear about the Plan from their managers will know that their employer feels it is an important benefit. It’s easy for employees to get wrapped up in their day-to-day responsibilities and forget to enroll in the Plan or review their current elections to determine if any changes are warranted. This type of inertia prevents employees from saving and preparing for retirement. Internal communications can help prevent this from occurring.

What would constitute a good method of communicating information about 401(k) plans to employees?

JA – Communications should be two-fold: written and verbal. With written communications, employers can provide employees with documentation for them to reach and keep as a reference. Verbal communication, through employee meetings, can provide a forum for the employees to ask questions as well as to hear answers posed by others that might not have occurred to them.

From the employees’ side, what should they be doing to gain the most from their company’s 401(k) plan?

JA – Those individuals whose employers provide a company match should be contributing at least up to the amount that the employers will match in order to gain full advantage. All employees should be increasing their contributions on a yearly basis as their salaries increase.

Are there special caveats you advise employers if their workforce consists of many older employees? Younger employees?

JA – If the Plan is not a safe harbor plan then the make-up of the workforce can make a difference in the outcome of the company’s annual plan testing.  Those clients with a larger population of older employees may be looking at a decrease in participation as these employees retire.  They will need to ensure communications to newer employees to encourage their participation.  Those with a large population of younger employees may struggle to gain employees’ interest in joining the 401(k) plan as younger employees generally are at a lower pay scale.  To both of these groups, I would encourage auto-enrollment as a means to get younger workers into the Plan. Communication is also important to ensure that all of the employees understand the importance as well as the benefits of enrolling in a 401(k) Plan.

As we approach year-end, what are some of the steps employers should advise their employees to take regarding their monitoring and maximizing of their 401(k) benefits?

JA – Employees should make sure that they contribute the maximum that they can. If they can reach the annual IRS maximum for the year ($16,500 for 2010) and their employer matches a portion of their contributions each pay period, they should make sure that they do not reach the maximum too early in the year or else they will miss out on employer contributions.   For example, if an employer matches 100% of the first 3% that the employee contributes, the employee can reach the annual limit of $16,500 at the end of  November and will not receive the employer matching contribution for any paycheck in December.  Employees in this situation should level their contributions so that they are spread evenly over all paychecks.

Are there any tax regulations which impact 401(k) plans that employers and/or employees should know? 

JA – The Pension Protection Act (PPA) of 2006 made a number of changes to 401(k) Plans that included making permanent many of the EGTRRA provisions that were scheduled to sunset in 2010. These changes are:

• Increasing the 401(a)(17) limit for participant’s annual compensation ($245,000 in 2009 and 2010)
• Increasing the 401(g) elective deferral limit ($16,500 in 2009 and 2010)
• Providing for catch-up contributions up to $5,500 for those who are 50 or older
• Providing the availability of Roth accounts under 401(k) plans
• Providing for a maximum 6-year vesting scheduled for employer matching contributions

The PPA also created a pre-emption to any state law that may prohibit or otherwise conflict with an automatic enrollment feature in a 401(k) Plan thereby allowing Plan Sponsors to add this feature to their Plan without fear of legal issues.

All tax-qualified defined contribution plans must provide participants with diversification rights with respect to amounts invested in publicly-traded employer securities.  This diversification rule requires participant notification, and varies according to the employee’s years of service with the company, as well as the type of contributions in the plan (i.e., employee, employer, etc.). Note: This does not apply to the Alcott HR Group 401(k) Plan as there are no employer securities in our Plan.

Additionally, a new distribution rule allows non-spousal beneficiaries to directly roll over money from tax-qualified retirement plans, tax-sheltered annuities and government Section 457 Plans to an IRA.

Any other comments?

JA – If you are a client of Alcott HR Group and feel your employees are not maximizing their participation in our Plan, they should contact Alcott HR Group and speak with me (Jeanne Anderson) to learn how they can more fully utilize the Plan.

To help mitigate your risks, Employment Practices Liability Insurance (EPLI) has become a major element of small businesses’ insurance needs.  EPLI generally covers your company for:  wrongful termination, sexual harassment, discrimination and workplace torts.

Here are the top ten reasons EPLI is a must for small businesses:

1. Employee lawsuits and discrimination charges are excluded under standard general liability policies
2. Every employer, large or small, can be the target of legal action from past, present, and prospective employees
3. Employee lawsuits are 1,000 times more likely to occur than a fire
4. Employees file over 90,000 charges  per year with the U.S. Equal Employment Opportunity Commission
5. Employees can easily file lawsuits at no cost, with no risk to them
6. Employees win 70% of jury trials
7. Many jury awards can exceed $1,000,000
8. Employer defense costs can easily exceed $200,000
9. Owners’, directors’ and officers’ personal assets can be at risk
10. Midsize businesses with 15 to 250 employees are sued more frequently than larger businesses, often due to:
    • Inadequate HR/employment law management;
    • Ineffective loss prevention programs; and
    • Valuable unprotected assets to target.

A Professional Employer Organization (PEO) can help you navigate through many of the HR issues that prompt suits and charges. While there is nothing that will guarantee that you won’t be sued by a disgruntled employee, a PEO can go a long way in decreasing the likelihood. The PEO has a staff of trained and certified HR professionals who will guide you through employee relations and other compliance issues thereby greatly reducing your risk.

Unfortunately, even with proper guidance, employees are free to sue and that is where EPLI comes in to provide a defense and indemnification for covered matters.  A complete PEO program generally offers some kind of EPLI coverage as either part of its package (see Alcott HR Group’s Constellation Package) or as an add-on.  These days, being without a solid HR staff and/or EPLI is simply not a good idea.

While the nation’s legislators continue to fine tune the health care reform legislation signed into law by President Obama on March 23, 2010, one thing is already clear. The Patient Protection and Affordable Care Act (“the Act”) is certain to have a major impact on businesses. Some of the requirements introduced by the new law are expected to weigh especially heavy on small businesses as administration increases and premiums rise. They include:

• Effective for plan years beginning after 9/23/10, all health plans are prohibited from establishing lifetime limits on benefits. Additionally, beginning 9/23/10 through 2014, all plans may only establish a restricted annual limit on the dollar value of benefits relating to the scope of essential health benefits. Effective in 2014, any limits on the dollar value of benefits will be prohibited.

• Effective for plan renewals after 9/23/10, dependent coverage will be extended up to age 26 regardless of whether the dependent is married and/or a student. Prior to 2014, grandfathered plans will only have to extend coverage to dependents that are not eligible for group health coverage under another employer sponsored plan.

• Effective 9/23/10, there will no longer be exclusions for preexisting conditions for plan enrollees up to age 19. In 2014 preexisting condition exclusions will be prohibited for plan enrollees of any age.

• Effective in 2014, plans will no longer be able to establish eligibility requirements based on factors such as claims experience, medical history, genetic information, disabilities, etc.

Under the Act, an estimated 32 million Americans who previously did not have health coverage will now be covered. Much of that coverage will come from employers who will be required by the Act to provide affordable health insurance to their workers.

In a White House report titled, “The Economic Effects of Health Care Reform on Small Businesses and Their Employees,” it was reported that in 2008 only 49% of firms with 3 to 9 workers and 78% of firms with 10 to 24 workers offered any form of health insurance to their employees. This is in stark contrast to the 99% of companies with more than 200 employees who reported that they t offered employee health insurance. Under the Act large employers with more than 50 employees who do not offer the required minimum health insurance face penalties of up to $2,000 per uninsured employee.  The Act also provides that small businesses with no more than 100 employees meeting certain criteria will be able to purchase their employees’ health insurance through an “insurance exchange”. Through this exchange, small businesses would be given plan choices offered at better costs than available through what the report referred to as the “current small group market.” Additionally, companies whose employees have average wages that fall below a certain level (yet to be clarified) would receive a small business tax credit intended to offset their “disproportionately higher costs.” It should be noted that individuals, whose employers do not provide health insurance would be able to utilize the insurance exchanges to obtain their lower-cost insurance.

Other important requirements of the Act could lead to more prudent utilization of health care and better health/wellness practices which, in turn, could lead to a reduction in unnecessary health care consumption and related costs. These requirements include:

• Effective for plan years beginning after 1/1/14, the ability to offer premium discounts and incentives for individuals who participate in wellness programs that meet certain conditions (e.g., if the wellness program is likely to improve health or prevent disease among participants, if the wellness program is offered at least once annually, etc.);

• Effective for plans years beginning after 9/23/12, the Act requires that plans provide a clear, accurate explanation of benefits and coverage. This explanation must encompass a four page or less summary of benefits and coverage and be presented in plain language that the average plan enrollee can understand.

Alcott HR Group is committed to helping its clients fully understand and comply with the new legislation with the least burden and lowest cost implications. If you have any questions about health care reform and how best to meet your obligations, please feel free to contact Alcott HR Group at: 888-4-ALCOTT.

Despite the common belief that 50% of all new businesses fail in the first year and 95% fail within five years, the latest statistics from the Small Business Administration show that two-thirds of all new businesses survive for at least two years, and 44% of them survive at least four years. The reasons cited for businesses failures are all preventable with the right foresight and planning. To succeed, the motivation should stem from something deeper such as believing your product/service will meet an important need and having the drive and belief in your business.

Another reason for business failure is not having sufficient capital. It is important to know what the company’s ongoing expenses will be and have the financial resources to meet these obligations.  Business difficulties can often be attributed to inadequate management; that is a failure to secure individuals with the right expertise in key operational areas (i.e., finance, human resources, quality controls, customer service, sales and marketing, etc.). Not recognizing the importance of having a well-developed sales and marketing plan also can contribute to a business’ downfall. It is important to know one’s target markets and use sound marketing strategies and tools (i.e., direct and Internet marketing, website, public relations, advertising, social networking, etc.) to raise awareness and position products/services effectively. Similarly, running a business without a business plan can lead to uncontrolled growth, missed opportunities, inability to meet contractual obligations, loss of customers and ultimately a business failure.  Seek out an experienced strategic planner to assist in the development of an intelligent business plan that can be implemented and followed.

There are many valuable resources to help small businesses in a variety of areas. Some of the organizations are small business advocates offering support and troubleshooting, others are sources of financing, while still others provide information and resources in very specific areas. It is a good idea to create and maintain relationships with these organizations. Some of these groups are membership-based organizations where one will gain the greatest benefits by establishing membership. Following are some national business organizations offering valuable support and services. There are also many state and regional organizations, as well as industry-specific trade associations that should be explored.

-National Federation of Independent Business, the nation’s largest small business advocacy group

-National Business Incubation Association, the world’s leading organization advancing business incubation and entrepreneurship

-S.C.O.R.E. – Service Corps of Retired Executives, an organization of volunteers providing free, confidential counseling to entrepreneurs

-National Association of Small Business Investment Company, an association dedicated to helping self-employed and small businesses

-U.S. Small Business Administration

In addition to the recordkeeping, the proposed law would also require employers to provide workers with a “notice” which identifies a worker’s classification and states “Your rights to wage, hour, and other labor protections depend upon your proper classification as an employee or non-employee. If you have any questions or concerns about how you have been classified or suspect that you may have been misclassified, contact the U.S. Department of Labor.” Along with these statements, the notice would be required to include: 1) a Department of Labor website, which has not yet been developed and which would contain a link for online complaints; 2) a Department of Labor contact; and 3) and other pertinent information for workers.

The legislation also directs the DOL to perform targeted audits focusing on employers in industries that frequently misclassify employees and increases penalties on employers for failure to pay minimum wage and overtime ranging from $1,100 per employee for first time violators up to $5,000 per employee for repeat or willful violators.  It further allows for double liquidated damages for employers that fail to accurately classify an individual as an employee and violate the minimum wage or overtime provisions of FLSA. According to estimates, the U.S. Treasury Department is expected to lose over $7 billion in payroll tax revenues over the next decade because of employers’ misclassification of employees as independent contractors. Working jointly, the Department of Labor and the Treasury Department developed a $25 million initiative giving each department greater abilities to penalize employers who misclassify workers. Under this initiative, 100 new enforcement personnel would be hired by the United States Department of Labor “DOL”) to target worker misclassification and information on violations would be shared by the DOL’s Wage and Hour Division with other DOL divisions, as well as the IRS.

The states would benefit from grants intended to help them address the problem and increase penalties at the state level.  Under the legislation the states would also be required to report quarterly to the DOL the results of state auditing and investigative procedures with respect to identifying employers that may have excluded employees from unemployment compensation coverage.

Let’s start off by saying the decision to partner with a Professional Employer Organization (PEO) is one not to be taken lightly. There are many factors that must be questioned and considered before you even consider entering into a co-employment relationship. But when it’s time to make your final decision, the remaining question should not be whether or not the PEO model is a good one, but rather if it’s a good one for you. There are a number of misconceptions about co-employment that can muddy the water when the concept is first presented and it is our experience that if something is ambiguous and/or contradictory, business owners quickly steer clear of it. However, when properly explained, co-employment is understood to be a common sense approach that allows business owners to move past their concerns and on to a fair comparison between the PEO program and their current business strategy.

Many business owners, when presented with an outsourced HR option will instinctively resist it, often based on preconceived notions about outsourcing in general. At first glance it’s easy to see the PEO model as being radically different from what you’re doing now.  The fact is most small businesses already outsource several of their HR functions (ie., payroll, benefits, workers’ compensation, retirement plan), and spend a considerable amount of time managing these individual vendor relationships. Vendor consolidation, therefore, is a better way of doing what you’re doing now – it’s more efficient.  It’s also comforting to know that the different departments are talking to each other and that employment information is securely housed in one system.

When partnering with a Professional Employer Organization, the PEO becomes the “administrative employer of record” for the client’s employees. The PEO therefore assumes responsibility and accountability for the seemingly endless array of tasks that are critical yet unproductive to the company’s core business. The term most often used to describe this type of employment arrangement is “co-employment”.  Co-employment, as it relates to the PEO industry, means that the employees are working for two employers, one that takes care of the administrative tasks (the PEO) and one that directs and controls the worksite employees (the client). It is this concept of co-employment where the waters begin to become muddy.

Without question, the biggest misconception based upon the co-employment model is that there will be a loss of control.  This is an important misconception as business owners want to and should remain in control – it’s why they own a business in the first place.  The reality is that while business owners are in control of the hours they work, the products or services they sell, the prices they charge and so on, lawmakers, taxing and regulatory authorities (Congress, IRS, state and federal Departments of Labor, Workers’ Compensation Board, etc.) are in control of much having to do with their employees.  Essentially, business owners have become unpaid collectors of taxes and providers of benefits and must perform these duties exactly as specified in order to remain in compliance with the rules set in place by the regulatory and taxing authorities. If they don’t, they leave themselves open to fines and lawsuits that rob their company of financial resources and time.

The best way for business owners to control this environment is to have someone (person or entity) that understands all of the rules and can act on their behalf to ensure everything is taken care of properly.  Absent an outside confidant with proper training, the business is left to fend for itself, usually by shifting these tasks to higher level staff that lack training, resources or time to deal with employee issues.  In many cases, this leads to a company making costly mistakes – a sure sign of lack of control.

When evaluating your current HR situation, consider whether or not you are really currently in “control”.  Can you quantify how much time and money HR activity is costing your company?  Are you 100% confident that you have everything covered?  Do you know if you are on firm compliant footing when dealing with employee relations issues?  Have you analyzed your HR processes such as hiring, terminations, performance management and so on?  Do you have a up-to-date, legally reviewed employee handbook with carefully crafted policies that project your company culture while at the same time protecting your company’s assets?  In other words, do you have a strategy for HR or does it “just happen”?  If it’s just happening then you are definitely not in control.

We’ve heard the concern over control expressed in many different ways including:

“But our company name won’t be on the paychecks and w-2s”

– This is true and your name won’t be on the state’s payroll tax enforcement list either.

“I don’t want our private information in the hands of strangers”

– You’re already outsourcing to multiple vendors (payroll, benefits, workers’ compensation, 401(k) etc.).  These companies already know your employees’ names, dates of birth, salary, social security numbers, marital status, number of children as well as many details about your business.   In a PEO arrangement, all of that is under one roof, with far fewer hands and eyes having access to this information.

“I don’t want a third party telling me how to handle my employees”

– If you need to have employees, accept the fact that the PEO is not the one making the rules and neither are you . The PEO can only help you understand all of your options with regard to a given situation so you have the information you need to make informed choices.  However, be aware that the PEO does share liability on many issues and will expect you to comply with the law.

“My employees will think we sold the company”

–The employees will understand that this is strictly an administrative arrangement and that it greatly benefits them in terms of benefits and services because these concepts will be explained to them by the PEO.

So, in conclusion, the PEO co-employment arrangement is all about giving control back to the employer – not taking it away.  It’s a unique arrangement whereby you have control of your employees without having to deal with the enormous degree of detail required in a traditional employment arrangement.  When you look at the in-house hours that go unaccounted for and the risks you incur, you’ll realize that co-employment actually helps you regain control and is a better way of doing business.