The HR Strategist: October 2015
In this issue:
- Department of Labor's Final Rule Upheld by DC Court of Appeals
- Managing Retirement Plan Participant's Reactions to Volatility
- "Right-Sizing" May Be Illegal Under ACA, ERISA
- Top Questions to Ask in a Stay Interview
- Did You Know?
The Department of Labor issued the Home Care Final Rule to extend minimum wage and overtime protections under the Fair Labor Standards Act (FLSA) to almost 2 million home care workers. The Home Care Final Rule had an effective date of January 1, 2015.
In June 2014, associations of home care companies filed a lawsuit in federal court challenging the Final Rule. On August 21, 2015, the Court of Appeals issued a unanimous opinion affirming the validity of the Final Rule and reversing previous district court's orders.
Under the final rule, third party employers such as home care staffing agencies are not entitled to claim either the FLSA's companionship services or live-in domestic service employee exemptions.
As discussed in a set of frequently asked questions, the final rule defines "companionship services" as the provision of fellowship and protection for an elderly person or person with an illness, injury, or disability who requires assistance in caring for himself or herself.
These services include provision of care "if the care is provided attendant to and in conjunction with the provision of fellowship and protection and if it does not exceed 20 percent of the total hours worked per person and per workweek."
According to the DOL, the final rule makes two significant changes:
- the tasks that comprise exempt "companionship services" are more narrowly defined
- the exemptions for companionship services and live-in domestic service employees may only be claimed by the individual, family, or household using the services rather than third party employers such as home health care agencies.
Earlier this summer, market volatility led to wild equity price swings as Greece declared bankruptcy and Chinese markets collapsed. When fluctuations like this do occur, it is critical for retirement plan sponsors and advisers to counsel participants to remain invested and level-headed.
Even though short-term volatility is an accepted risk of investing, wild swings in the investment markets can be unsettling. Before you or your participants react to market turbulence by changing your retirement planning strategy, consider these investment basics:
Dollar Cost Averaging
It may be tempting to reduce or suspend contributions to your retirement savings plan, but this could hurt in the long run. Contributing equal amounts on a regular basis – regardless of which way the investment markets move – can help reduce your overall average purchase price over time.
Get into the habit of regularly rebalancing your portfolio. Review your original asset allocation, and rebalance your assets to adjust for any recent market volatility. This may mean transferring money into asset classes and investment styles that have had relatively weak performance – out of those that have had better performance!
Making hasty investment decisions based on market volatility has often proven to be an unsuccessful investment strategy. Buying into funds after they have risen signification can mean "buying high." Transferring out of lower-performing funds may mean "locking in your losses," making it more likely that you will miss the upswing that sometimes follows a downturn.
Remember that saving and investing for retirement requires a long-term perspective. Most financial planning experts agree that the best way to weather volatile markets is to determine your long-term investing strategy – and then stay the course.
A new lawsuit may test the legality of "right-sizing" where the Affordable Care Act (ACA) and Employee Retirement Income Security Act (ERISA) intersect. The class-action lawsuit, Marin v. Dave and Buster's Inc., involves around 10,000 employees of Dave and Buster's who allege that their hours were reduced below the ACA 30-hour-per-week full-time threshold to ensure that Dave and Buster's would not be responsible for employer shared responsibility penalties for not offering those employees affordable health insurance.
Ms. Marin was employed by Dave & Buster's as a full-time employee, working approximately 30-45 hours a week at $15.00 per hour. As a full-time employee, Ms. Marin and others received health insurance coverage under Dave & Buster's insurance plan. In 2013, Dave & Buster's implemented an effort across all 50 of their establishments to 'right size' the number of full-time and part-time employees to escape the costs of providing insurance in compliance with the ACA. Ms. Marin and other employees attended a meeting held by the location's General Manager and Assistant General Manager in which they told their staff that compliance with the ACA would cost the franchise too much money, and announced that they planned to reduce the number of full-time employees at that location from 60 to 40. Ms. Marin was one of those employees who went from full-time to part time, with Dave & Buster's reducing her hours to less than 30 hours per week. This same meeting was held at many other Dave & Buster's locations throughout the country. Months later, Ms. Marin was notified by letter that she was no longer qualified for coverage under Dave & Buster's plan.
What This Means for Employers
The Dave & Buster's employees allege that the practice of "right-sizing" violates regulations that ban employers from discrimination regarding employee benefits. The employees also allege that they suffered a loss of wages and benefits due to the reduction in their hours, and seek equitable restitution.
Employee benefit laws and regulations are constantly changing. The ability to interpret contractual language and provide compliance solutions saves companies time and money, and provides value. HRi Subject Matter Experts stay up-to-date on all federal rules and regulations, state by state, so our clients can rest easy knowing their employee benefit plans are compliant.
We are closely watching the lawsuit as it may determine whether strategies like reducing hours or moving employees from full-time to part-time status are illegal in the post-ACA health insurance landscape.
People who have moved on from jobs are likely familiar with the "exit interview", a chance for an employer to learn what led to an employee's departure. And while it's important to understand why employees leave, it's just as important to understand why they stay. Stay interviews provide companies with a real chance to make necessary changes to help retain current employees.
Unlike a performance review, the stay interview is an opportunity for managers to have an informal one-on-one conversation with their employees to discuss what is working for them and what changes need to be made to keep them happy and productive in the job. Not only do stay interviews give the employer a chance to fix a problem that an employee might be experiencing, but in the event of an employee leaving, the employer has gained valuable insights into problems that might exist.
The focus here is to see how the job is going from the employee's perspective and so employers should engage their employees with a very open approach. Make sure they feel comfortable and be sure to separate the stay interview from other discussions about performance. Ask open-ended questions about the employee's career goals, the need for positive changes or problems that may need to be addressed, including:
- What makes for a great day at work?
- What are the things you like about your work?
- What keeps you motivated?
- What do you like best /least about the job?
- Is there something new you want to learn this year?
- What can be done differently to best help you?
- What would you like to change about your current job?
- Are there things you would like to change about your co-workers, group or department?
- Is there one thing that could make your job more enjoyable and rewarding?
- Is there anything causing you to consider leaving the company? How can we help to resolve it?
- What is your ideal job, and how can we help your progress towards it?
- Do you feel encouraged in your career goals? How can we help you achieve your goals?
- Do you feel you receive recognition in your job?
- What kind of recognition would be most relevant?
- If you quit today, what would you miss most about the job? What would you miss the least?
During and after the stay interview, it's important to be honest and admit that you might not be able to provide everything the employee wants, but that his/her feedback is valuable. Emphasize that as the manager, you can listen to his/her concerns, validate his/her feelings and assure him/her that you will do what you can to explore options to solve any issues within the workplace. It's important that you follow through with any issues and concerns discussed during the stay interview and keep the employee up-to-date with any progress being made.
Please meet Josh Sloane who has recently joined our Client Services department as one of our dedicated Client Services Specialists. Josh comes to us with a diverse background in payroll, benefits administration, and client relations. As the newest member of our team, he is currently getting up to speed on HRi's client list and is looking forward to working with a number of our clients directly.
Here is a little information to get to know Josh better:
- Favorite color: Blue
- Favorite book: The Sun Also Rises by Ernest Hemingway and Wild by Cheryl Strayed
- Favorite movie: Back to the Future 2
- Favorite sports team: Baltimore Ravens, Washington Capitals, University of Maryland Terps