Category: Archive

A 1998 survey of 401(k) plan sponsors, conducted by Buck Consultants, shows that sponsors’ efforts to educate plan participants about 401(k) plans results in increased contributions and less conservative investments by the plan participants. Written communication remains the most widely used method of disseminating information to plan participants, although respondents consider personal communication to be more effective. The most commonly utilized written documents by plan sponsors are summary plan descriptions (SPDs), pamphlets and employee newsletters. Other non-personal communication methods include videotapes for group viewing and PC links to the Internet or company intranet. Personal communication methods include general seminars, one-on-one meetings and financial planning and pre-retirement planning seminars.

Typical 401(k) plan.
The typical 401(k) plan, according to Buck, has a participation rate of 77%, a 12-month waiting period for eligibility, employee matching contributions of $.50 per dollar up to 6% of employees’ salaries, six to nine investment options, a loan provision, and daily valuation. Almost nine-tenths of the sponsors match employee contributions. The average matching contribution rate varies by industry, ranging from a maximum of $0.88 per dollar for the mining industry to a minimum of $0.46 for service organizations. Nearly one-fourth of the 401(k) plan sponsors make discretionary nonmatching contributions, usually based upon profits.

New technologies in plan administration.
New technologies, cost considerations and expanded vendor services have brought forth dramatic changes in the way plans are administered, according to Buck. Seventy-two percent of plan sponsors are using daily valuations, compared to only 59% in 1996. Voice response systems allow sponsors to divert repetitive work and specialized work, such as plan interpretation, to outside vendors. The percentage of sponsors using voice response systems to communicate account balance information has risen to 85% compared to only 35% in 1993.

Buck analyzed survey responses from 765 organizations nationwide, of which 646 organizations currently sponsor 401(k) plans. The plans surveyed had total plan assets exceeding $142 billion, with 43% of the plans having assets of $50 million or more. Approximately one-third of the 401(k) plan sponsors surveyed also sponsor nonqualified defined contribution plans. The most common reasons for offering the nonqualified plans are to make up for the compensation limit and the 401(k) dollar limit.

Cite: The Buck survey is reported at CCH PENSION PLAN GUIDE 26,676.

SOURCE: CCH Incorporated is a leading provider of information and software for human resources, legal, accounting, health care and small business professionals. CCH offers human resource management, payroll, employment, benefits, and worker safety products and publications in print, CD, online and via the Internet. For more information and other updates on the latest HR news, check our Web site at http://hr.cch.com.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.

Issue: Domestic violence leads to absenteeism, increased health care costs, higher turnover and lower productivity at work. It occasionally brings violence right into the workplace. Can domestic violence problem be handled exclusively by law enforcement and social services agencies?

Answer: Not really. Many experts think the workplace can be an appropriate place to stop domestic violence in its tracks.

What should HR do?
Companies need to make a decision about how they will respond to domestic violence. At the least, employers should consider domestic violence as part of their general workplace violence policies. Employers must have a policy and plan in place to prevent and respond to workplace violence. Beyond that, employers can be involved in combating domestic violence in other ways. They can take additional steps to prevent domestic violence by building awareness, and they can create safety plans to assist employees coping with domestic violence.

Build awareness.
Educate the workforce about domestic violence by, for example, distributing fliers about domestic violence and participating in Work to End Domestic Violence Day on October 1. “Once you begin the education process, people will come forward, and you must be prepared,” advises Katherine B. Hazzard, manager of Work/Family Programs at John Hancock Mutual Life Insurance. She, therefore, advises employers to have their policies and procedures in place before they begin awareness activities.

Develop a domestic violence prevention program.
Hazzard advises employers to establish a corporate commitment that assures workers: We will provide a workplace free of threats, fear and violence; and we will respond to threats of potential violence. When developing the prevention program, she believes that managers should be informed that chronic absenteeism or tardiness could indicate a domestic violence problem, and that 30 percent of women are abused for the first time when they are pregnant. Also, there should be several methods for people to seek assistance to accommodate workers’ varying comfort levels.

Commit to creating individual workplace safety plans.
What can employers interested in creating safety plans do? They could protect employees from batterers, help employees find shelter, give employees paid time off for court appearances and provide salary advances to enable employees to move away. Hazzard advises employers to consider these action steps:

• Save any threatening e-mail or voice mail messages.
• Involve security officers in the plan, and review parking and escort options.
• Relocate workspaces.
• Assist in obtaining restraining orders.
• Obtain a picture of the perpetrator for reception areas or security checkpoints.
• Identify an emergency contact person.

Be aware of law and resources.

Extensive information is available concerning domestic violence in the workplace. Here is a very small sample:

State law. All 50 states have enacted antistalking or antiharassment laws that prevent individuals from stalking or harassing others, including in the workplace. Protective orders may be obtained based on these stalking or harassment laws. A few states include the forms in the statutes and do not require a filing fee. Four states (California, Florida, Minnesota and Washington) have enacted laws specifically dealing with workplace violence.

Organizations. Employers Against Domestic Violence creates workplace prevention and awareness programs for employers. The organization can be contacted at (617) 348-3027. The Family Violence Prevention Fund (http://www.igc.org) created the Work to End Domestic Violence Day.

Federal programs. The federal government’s domestic violence prevention, supported by Vice President Gore, can be seen at the website operated by the Office of Personnel Management (http://www.opm.gov). It contains a form that gives employees telephone numbers that they can use when they need help.

In an effort to eliminate the red tape that can come between protecting victims of domestic violence from their abusers, the Social Security Administration (SSA) has made it easier for victims to change their Social Security numbers (and their identity) after confirmation by a third party, such as a local shelter, treating physician or law enforcement official. The SSA has posted on its Web site (http://www.ssa.gov) the steps victims need to take to change their Social Security numbers.

Source: CCH Incorporated is a leading provider of information and software for human resources, legal, accounting, health care and small business professionals. CCH offers human resource management, payroll, employment, benefits, and worker safety products and publications in print, CD, online and via the Internet. For more information and other updates on the latest HR news, check our Web site at http://hr.cch.com.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.

Long hours and long days in lightless cubicles don’t spark a lot of creativity. Consider these daring ideas:

• Convert a small room in your office into a think tank.

Cover the walls with paper to write on. Provide comfy chairs and small conversation pits. Stock it with magazines and snacks.

• Paint several office walls wild colors.

Paint a mural that describes your company’s vision.

• Rent abstract art.

To begin a meeting, ask people what it means to them. It will get their creative juices flowing.

• Create an “internal relations” program.

For example, the computer distributor MicroAge of Tempe, AZ developed a “Drive for Five” campaign that created an internal racing environment (road signs, checkered flags, etc.) geared toward reaching $5 billion in sales.

SOURCE:

Janet Jackim, the michael HARRIS group, inc., March 12, 1999.

Here are some ways to ease employees’ transition to an overseas assignment:

• Help them understand the benefits. What do they expect from an international assignment? Don t focus solely on the financial benefits, but consider how this move will help them achieve their career goals. Determine whether this experience will make them more valuable to the company in the long run.

• Remain visible. Make sure they stay in the loop by coming back for important meetings and reporting regularly on their projects.

• Get them a mentor. Assign a mentor from senior management at headquarters. Discussing with their mentor the new challenges they’ll be facing will make the mentor aware of their skills and accomplishments, which will help them sell their value once home.

• Have them think long term. Prepare for their return by determining how they can use their new skills to their advantage. Make sure they are updating skills while overseas to mesh with changes in the company occurring back home.

• Make sure they’re on the mailing lists. Magazines, newsletters, e-mail broadcasts, and other communications can help them keep up on goings-on in your field.

Source: Personnel Decisions International (PDI), Minneapolis, June 24, 1999.

An employer may not, generally, defer compensation for an employee under a 401(k) plan without some positive action by an employee authorizing the deferral. However, employers looking to increase participation in their plans are increasingly implementing “negative” or “automatic” elections (or enrollment). With a negative or automatic election, the employer unilaterally—and without an affirmative election by an employee—deducts a stipulated percentage of compensation from the employee’s paycheck, but gives the employee the opportunity to make an election to discontinue the deferral at any time. The employer may treat an employee’s failure to make the election not to participate in the plan and to discontinue deferrals as consent to the salary reduction.

Advantages of negative elections.
The potential advantage of negative enrollment for an employer is that it may increase participation in its 401(k) plan, especially among lower-paid rank and file employees. As a result, negative enrollment may help the plan satisfy the applicable nondiscrimination requirements, because the employer will no longer be required to treat employees who don’t make affirmative deferral elections as having a deferral percentage of zero.

IRS approves negative elections.
The IRS has approved a negative election scenario under which the compensation of newly hired employees, who do not affirmatively elect to receive cash or have a specified amount contributed to the employer’s 401(k) plan, is automatically reduced by three percent. That amount is contributed on a pre-tax basis to the plan.

Employees are provided with a notice, at the time of hire, explaining the automatic compensation reduction election and their right to elect at any time not to have compensation reduction contributions made to the plan or to contribute a percentage other than 3 percent. In addition, employees are notified annually of their compensation reduction percentages and told about their right to modify the percentage.

Employees must have an “effective opportunity” to elect cash.
The IRS emphasizes that a negative election may not be executed unless employees are allowed an “effective opportunity” to elect to receive in cash an amount that would otherwise be deferred. An employee has an effective opportunity to elect to receive an amount in cash if the employee receives notice of the availability of the election and is allowed a reasonable period to make the election before the date on which the cash is currently available.

Notification of employees.
Employers that implement negative enrollment must also be certain to clearly inform employees of the fact that the salary reduction is being made, identify the percentage of compensation that is being deferred, and indicate whether the contributions will be made pre-tax or on an after-tax basis. Most especially, employees should be informed of their right to elect to discontinue the deferrals and the procedures for executing the election, including the time period during which elections must be made.

Employers should seek determination letters from IRS regarding negative enrollment features.
Negative elections may prove to be very beneficial to an employer, as well as to employees who may be forced into saving for retirement. However, negative elections are relatively new and may be difficult to implement in practice. Accordingly, an employer would be well advised to seek a determination letter from the IRS for approval of negative enrollment features contained in its 401(k) plan.

Cite: Rev. Rul. 98-30, I.R.B. 1998-24, 6-22-98.

Source: CCH Incorporated is a leading provider of information and software for human resources, legal, accounting, health care and small business professionals. CCH offers human resource management, payroll, employment, benefits, and worker safety products and publications in print, CD, online and via the Internet. For more information and other updates on the latest HR news, check our Web site at http://hr.cch.com.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.

Do you really know what motivates your employees?

The only way to know for sure is to ask. Have them list four or five things that really motivate them. This can be done in a staff meeting, by e-mail, or one on one.

What if you don’t have employees? Decide on the four or five things that motivate you. Take them to your manager–he or she may be in the dark about what fires you up, just like you may be in the dark about your own employees.

Source: “101 Ways to Have a Great Day @ Work,” Stephanie Goddard Davidson, 1998.

Issue: A bartender quit her job after she was allegedly grabbed and slapped on the buttocks by a company official (who was also the brother of the principal owner of the restaurant) and was told to “let it go” when she appealed to her manager for help. She claimed that the attack and the restaurant’s inadequate response constituted unlawful sexual harassment. The company responded that she was required to submit such claims to binding arbitration according to a predispute agreement. Raises, promotions and transfers were conditioned upon an employee signing the agreement. Part of the agreement stipulated that both sides agreed to resolve any claims pursuant to the company’s rules and procedures governing alternative dispute resolution. Employees were given five days to accept or reject the agreement, but no employee was given a copy of the rules and procedures.

The company filed suit to compel arbitration. The bartender argued that the agreement was unenforceable. Could the company compel arbitration?

Answer: No, because the company itself was found to have breached the agreement by drafting “egregiously unfair” arbitration rules. A number of federal appellate courts have upheld companies’ mandatory predispute arbitration agreements, but this case demonstrates that arbitration procedures must meet minimum due process standards. Here, procedures heavily weighed in the company’s favor were not accepted by the court.

What did the employer do wrong?
Under the agreement, the employer had complete control over the dispute resolution process. It set the rules and reserved the right to modify them whenever it chose, without notice to the employee. Nothing in the rules even prohibited the employer from changing them in the middle of an arbitration proceeding. The rules provided:

• The employee must provide notice of a claim, including the nature of the claim and the specific acts that form the basis of the claim. The employer, however, is not required to respond or to provide notice of its defenses.
• The employee must provide a list of all fact witnesses, but the employer need not.
• The employer provides the list of arbitrators from which the employee may choose. There are no limitations whatsoever on whom the employer can put on the list—it could even name its own managers. Nothing restricts the employer from punishing arbitrators who rule against it by removing them from the list. This ensured a “biased decision-maker.”
• The employer can expand the scope of arbitration to any matter—whether related to the employee’s claim or not—but the employee cannot.
• The employer is permitted to move for summary dismissal; the employee cannot.
• The employer, but not the employee, may record the arbitration hearing.
• The employer, but not the employee, may bring suit in court to vacate or modify an award that was rendered in excess of the arbitrators’ authority.
• The employer, but not the employee, may cancel the agreement to arbitrate with 30 days notice.

“Egregiously unfair.”
By drafting an agreement so “egregiously unfair,” the employer was in “complete default of its contractual obligation to draft arbitration rules and to do so in good faith,” said the court. Even a senior vice president of the American Arbitration Association testified that the company’s arbitration system was so unfair that the Association would refuse to arbitrate under the company’s rules.

Employer’s obligations.
Going forward, this employer will need to amend its rules and procedures to conform to minimal standards of due process, such as adopting the due process standards set forth by the American Arbitration Association. All employers that have mandatory arbitration agreements should thoroughly review the procedures and rules implementing the agreement to ensure they conform to minimum due process standards.

Cite: Hooters of America, Inc v. Phillips (4thCir 1999) 75 EPD 45,822, No. 98-1459.

Source: CCH Incorporated is a leading provider of information and software for human resources, legal, accounting, health care and small business professionals. CCH offers human resource management, payroll, employment, benefits, and worker safety products and publications in print, CD, online and via the Internet. For more information and other updates on the latest HR news, check our Web site at http://hr.cch.com.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.

Storytelling can be a very effective way of getting a point across in the business world. Here are some hints for doing so—using the word “Plot” (the first letters of the words Plain, Light, Obvious and Tight) as a memory aid:

• Plain. Keep the story simple, colorful, personal, and clear.
• Light. Don’t upset or confuse people. There’s no need to shock them to get their attention and keep it.
• Obvious. Remember the theme to your story, and they will too.
• Tight: Keep it short and to the point. Remove the unnecessary parts.

Source: Executive Communications Group, April 1999.

Issue: You are asked to give a job reference to a prospective employer of one of your former employees. For years your company has refused to provide any information other than dates of employment and final salary. However, you are aware that state legislatures have been passing laws that provide a measure of protection to employers that provide job reference information. Should you suggest a change in policy, and if so, what liability concerns would you face for providing job reference information?

Answer: Although the answer depends on several factors, including employee workplace privacy rights, defamation, qualified privilege for employers, union activity protections and discrimination, state law is increasingly coming into play. States are addressing employer concerns and writing laws to provide protection for employers from liability when providing job references for current or former employees.

Specific laws vary, but these laws generally protect:

• former or current employers;
• who provide information about “job performance” (which may be defined by law to include work-related characteristics and abilities, reason for separation from employment, etc.);
• to prospective employers (sometimes limited to a request by the employee; a few states require the request to be in writing).

The laws generally provide a presumption that information provided in such circumstances is given in good faith and is immune from civil liability.

Legal protections can be lost, however, if there is a showing that:

• the information given was false;
• it was provided with knowledge of its falsity or recklessly or maliciously.

A minority of states also will not protect information given in violation of a nondisclosure agreement or otherwise confidential by law, or in violation of any civil right protected by that state’s laws.

Does your state provide immunity?

The following states have job reference immunity statutes of general application:

Alaska, Arizona, Arkansas, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Montana, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Wisconsin, Wyoming

SOURCE: CCH Incorporated is a leading provider of information and software for human resources, legal, accounting, health care and small business professionals. CCH offers human resource management, payroll, employment, benefits, and worker safety products and publications in print, CD, online and via the Internet. For more information and other updates on the latest HR news, check our Web site at http://hr.cch.com.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.