Tuesday, September 3, 2013

Practical next moves for CEOs on Obamacare

A quick journey to your Trash email folder and a search of “Affordable Care Act” or “Obamacare” will likely return dozens, if not hundreds, of headlines and information and scare tactics pounded into your inbox on a daily basis from every corner of the business world.

And yet, only a few months away from the ACA’s “go-live” date, the uncertainty and complexity of the new system is giving everyone fits - insurance companies, service providers, brokers, attorneys, business owners, and CFOs alike.

Take a deep breath. No one knows what exactly is going to happen even still. We offer up the following as a starting point for you and your business, to prepare for when more tangible information is available.

There are several key questions every business owner and CEO needs to be thinking about:

- What is the total cost differential to my business under the current system versus a potential move to utilizing the state insurance exchanges (hard costs such as employer portion of premiums or contributions to employees under an exchange model, outside service providers costs, and soft costs like internal time spent to administer either model)?

- Who are the key people I need to retain in my company and how will the Affordable Care Act affect them from a price/quality standpoint?

- What Executive Benefits can I offer to key employees in a compliant manner?

- What other personalized benefits and perks do my employees appreciate and/or desire?

- Can I create an employee attraction and retention advantage as an employer in areas other than offering health insurance (compensation, culture, career path, training and development, flex hours, perks, etc.)?

- Do I understand where medical insurance ranks in job satisfaction and retention of my employees?

- Will the exchanges actually have better options and pricing for some or all of my employees?

Making your healthcare strategy a process rather than a transaction is the key to effectively communicating the situation to employees.
A big part of strategically managing your Human Capital is communications. Like a PR campaign, you have to constantly be messaging and shaping the public's (employees') view of events. If you don't, you can bet that someone else will be shaping the perceptions without a thought as to the ramifications for your company.

We recommend navigating Obamacare through continuous communication, specifically: 

- Surveying your entire employee base to gain real information on the connection, if any, between medical insurance (and employee benefits in general) and job satisfaction, as well as identifying why people stay, and what other benefits they’d be interested in that aren’t currently offered.

- Make healthcare premiums and general plan information on claims, changes, expectations, etc. a part of your regular communication throughout the year. Even if you only have a few months before your next renewal, much can be accomplished in just a few meetings and informal conversations.

- Bring your broker or HR partner to one of your employee communications meetings to speak about the state of healthcare and the renewal environment. Outside sources help give you credibility on the issue.
- Have a presentation of all the things you have done in the last three years handy, such as plan redesign, changing carriers, offering different options, etc. and refer to it often in meetings and informal conversations with employees. Employees tend not to remember changes if those changes didn't affect them specifically, so you may need to remind them of all that you have done.
- Have the numbers that show what the company portion of premiums and all related increases were over the past three years handy as well. It is essential to remind employees over and over that the increases to premiums cost the company far more than any single employee EVEN IF THE INCREASES ARE PASSED ALONG PROPORTIONALLY TO BOTH THE COMPANY AND EMPLOYEES because the company's portion is so much larger than the employees’. We particularly recommend describing the increase of the company portion of premiums in terms of jobs, as in "this $75,000 annual premium increase is the same as hiring two new employees in the shop..."
- Make articles and video clips regarding the state of healthcare readily available to all employees, either by posting or email. 
- In your meetings, allow employees to voice their concerns. Take the opportunity to join in as the company is typically paying more of the premiums (and any increases in premiums) than all of the employees put together. Remember that the facts are on your side, and you don't have to apologize for the state of healthcare premiums in America. 
To contact NovationHR, please visit our website:

Friday, July 26, 2013

Ariana Vanegas joins NovationHR’s team of experts

NovationHR is pleased to announce the addition of Ariana Vanegas to its team of HR experts.

Ariana is a results-driven Human Resources professional with extensive knowledge in Employee Relations, Recruitment and Compensation, Risk Management, and Employee Training and Development.

Her experience includes the successful restructuring of HR departments by partnering with executive teams to align HR practices with current and future business needs. She has worked closely partner in implementing initiatives related to attracting, developing, and retaining a talented and committed workforce.

Ariana is a member of local and national HR organizations and has been a guest speaker for non-profit organizations such as ‘el Instituto Del Progreso Latino’ providing career counseling. Her passion is working at all levels of an organization to create a safe and high-performance work environment where all employees feel appreciated. 

to contact NovationHR, please visit our website  http://novationhr.com/

Monday, July 22, 2013

When Sales Take a Dip

3 basic HR tips for today’s CEO


If revenues have decreased recently, you, as CEO, have had to tighten the belt in a number of areas including asking your team to do more, while keeping wages the same or even reducing hours.

No one is certain as to when and how the ship will right itself, but it’s critical that business owners and CEOs be proactive when it comes to the way they manage internal people issues during this period.

The tendency is for companies to hunker down and wait out the storm (“At least the employees have their jobs (for now), and when things get better we can look at doing something to improve their lot in life.”). While that kind of attitude may be prevalent, it is short sighted in that CEOs can’t assume that employees will even be able to maintain the current level of output indefinitely. Experiments on laboratory animals have proven that stress alone is enough to kill most animals, let alone the employees of your typical company. What can be done? Let’s look at some suggestions to de-escalate the stress levels at your company.

Communicate, Communicate, Communicate

In times of elevated pressure, rumors run rampant. News is always interpreted in the worst possible light, and employees can become sullen and uncommunicative amongst themselves and with customers. What is the state of your current communication with employees? Are you having regular meetings, sending out a newsletter, posting goals and objectives, and rewarding even modest achievements? Enthusiasm is infectious, and so is depression. Which one is spreading fastest at your company?

Show Appreciation

What has the company done to recognize the "above and beyond" contributions of the workforce? Employees that step up and pick up the slack created by reduced headcount and reduced budgets will respond to recognition for their efforts. Fostering a teamwork attitude with something as simple as lunch or gift cards can go a long way to bring employees together. Have your employees vote on an "Employee of the Year" and recognize the winner in a newsletter and with a prime parking space and an extra week of vacation. It doesn’t have to be expensive to be effective.

Lead With a Positive Attitude

Remember when your mother told you to smile and try to get along with people? That was great advice that applies to CEO leadership even today. The attitude from top management carries over into many parts of the company whether we want it to or not. Are your managers yelling and screaming to get things done? When upper management walks the aisles, is the atmosphere casual and relaxed or do employees know that someone is going to suffer when the walk around is over? Make sure that your employees know that everyone is in it together, and that the company will eventually prevail.

It's easy to focus on the day to day struggle and lose sight of how important the people that can make or break your business are. Until business normalizes and growth continues again, companies must find ways to keep employees engaged or they risk losing excessive time and money in a business environment that is as competitive as ever.

To contact NovationHR, please visit our website.  http://novationhr.com

Thursday, July 18, 2013

Small Business Regulatory Nightmare:

the IRS & DOL's focus on Independent Contractors

As an HR outsourcing and management firm, one of the liabilities we uncover most often relates to the use of 1099 Independent Contractors (ICs).

If you have relationships with vendors you consider ICs whom are later determined to be employees, you may be liable for back taxes, wages, benefits, penalties and interest. Additionally, an audit by the Department of Labor for IC issues may spill over to include an audit of Exempt/Non-Exempt Overtime practices, making an existing problem even worse. Let’s take a look at the issues, and also what gets employers into trouble.

Multiple Definitions Cause Confusion

Some of the confusing things about the law are the number of exceptions and lack of a clearly defined standard or reference that employers can turn to. Also, the Internal Revenue Service defines an Independent Contractor slightly differently than the Department of Labor.

From the Internal Revenue Service:

“The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.”

However, in Fact Sheet #13 from the US Department of Labor Wage and Hour Division we are told:

“The U.S. Supreme Court has on a number of occasions indicated that there is no single rule or test for determining whether an individual is an independent contractor or an employee for purposes of the FLSA. The Court has held that it is the total activity or situation which controls. Among the factors which the Court has considered significant are:

  1. The extent to which the services rendered are an integral part of the principal's business.
  2. The permanency of the relationship.
  3. The amount of the alleged contractor's investment in facilities and equipment.
  4. The nature and degree of control by the principal.
  5. The alleged contractor's opportunities for profit and loss.
  6. The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
  7. The degree of independent business organization and operation.

Further, the court has held that there are certain factors which are immaterial in determining whether there is an employment relationship. Such facts as the place where work is performed, the absence of a formal employment agreement, or whether an alleged IC is licensed by State/local government are not considered to have a bearing on determinations as to whether there is an employment relationship. Additionally, the Supreme Court has held that the time or mode of pay does not control the determination of employee status.”

Practical Concerns

In our experience, there is a large percentage of ICs that would likely be considered employees under the various Federal Labor laws.

Most employers fail the test under both standards with regard to the way they manage their ICs. Too many times, ICs are directed daily by Managers as to the specific aspects of their job such as work hours, work location, and other specific aspects that allow the supposed Independent Contractors little or no “independent” decision making or control.

It is also interesting that in the majority of cases, the reason that the problematic Independent Contractor situations occur is because the employer was trying to avoid providing a specific position or person benefits and/or paying the related payroll taxes associated with a full time employee, usually due to budgetary constraints.

If you are trying to avoid such expenses, creating an “Independent Contractor” position that may subsequently be challenged by the government is probably not the best solution.

Alternative Solutions

The alternative to an Independent Contractor in most cases is a full time employee.

However, we have also been able to provide satisfactory solutions in certain cases by using leased or temporary employees. In this case the payroll taxes and in some cases benefits are being paid, but under the Tax ID number of the Leasing or Staffing Firm, not the employer.

We strongly suggest that you review any Independent Contractors you have, especially if you are issuing a related 1099 using the seven DOL factors and the IRS definition mentioned above. The issues can be confusing, but the cost of non-compliance is high.

To contact NovationHR, please visit our website. http://www.novationhr.com