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4 Ways HR Helps Employees Plan for Economic Uncertainty

4 Ways HR Helps Employees Plan for Economic Uncertainty

Although most business professionals do prepare for future economic hard times, it is vital for HR to aggressively plan for the potential impacts of this uncertainty on their employees and, therefore, the company. The COVID-19 pandemic and ensuing global economic downturn have put the financial condition of the U.S. in a state of turbulence.

As experts attempt to anticipate whether or not the country can expect an official recession, people are struggling to afford the essentials. In addition to the nearly 10% price hike in necessities like food, fuel, and housing, employers are also seeing a substantial increase in healthcare costs. This rise has caused some corporations to consider methods to reduce expenses including tightening budgets and layoffs. The additional pressure on businesses to cut costs means that HR departments need to be more flexible and creative when it comes to helping their employees plan for economic uncertainty.

Here are four primary methods HR and benefits professionals can use to improve their employees’ financial well-being during uncertain economic times.

Communication and Transparency

HR departments are not just about hiring, firing, and benefits. They also provide safe spaces for employees to voice their concerns and get practical advice from experts in the field. With the global economy slowly recovering, HR departments need to help employees adjust their financial plans accordingly to avoid future problems.

Communication and transparency are critical for a business to thrive in an uncertain economy. Companies should have clear strategies to outline how they will communicate to their employees about important decisions involving their benefits, as well as the stability of the company. It should also have a plan for what to do in the event of a crisis.

Regular updates are often welcome, as they encourage employees to feel they are integral and valued members of the workplace. Open communication also allows them to make necessary decisions regarding their financial well-being in real-time. 

Help Managers Keep an Eye on the Big Picture

The role of an HR leader is to preserve the security of the employees, as well as the company. Although significant layoffs might seem to alleviate budgetary woes, they can result in long-term instability. They decrease the amount of institutional experience at the business, but they also destroy employee morale making it difficult to rebuild your workforce when the economy improves.

In fact, many companies that slashed their workforce during the recession in 2008 saw declining profitability. Another option is to offer programs like accident and illness insurance, identity theft protection, childcare benefits, pet insurance, etc. These provide value to the workers without really increasing company costs.

By keeping an eye on the big picture, managers can better tolerate the natural ebb and flow of the economy. 

Identify and Address Employee Mental Health Concerns

Although employee mental health is known to be affected by burnout, research indicates that over 40% of U.S. citizens are also negatively impacted by financial worries. This can result in a feeling of anxiety and overwhelm. Stress from money problems decreases workplace motivation and satisfaction, eventually leading to reduced levels of attendance and productivity. Plus, those individuals with existing financial issues will be even more vulnerable in times of economic uncertainty.

Companies should survey their employees to remain aware of their evolving priorities. They must prioritize their mental health and address economic concerns while providing them with a safe environment to voice the challenges they might be facing due to financial concerns. 

HR leaders can further build a community of encouragement including resource groups, recognition programs, and rewards.

Provide Resources to Promote Financial Literacy and Improve Retention

To prevent problems in productivity and improve employee satisfaction, companies can provide benefits that include money management coaching and financial planning workshops. Studies show that nearly 80% of workers dealing with money problems find themselves distracted while on the job. This can lead to a dip in productivity that results in further feelings of overwhelm and job dissatisfaction.

A financial planning program that provides access to financial advisors and education can help team members set realistic targets and save for the future at every stage of their careers. By connecting employees to resources, such as qualified coaches and peer groups, HR leaders can help employees navigate these tough times. 

HR Compliance Overview Regarding 2023 State Minimum Wage Rates

HR Compliance Overview Regarding 2023 State Minimum Wage Rates

 The United States minimum wage has been a topic of debate for decades. As the government continues to seek a way to reduce poverty and provide a living wage for the people of America, the new minimum wage limits for 2023 are set to be announced on January 1st

Although most people have opinions regarding minimum wage increases, many are unaware of how minimum wage is set in their state.  

Fair Labor Standards Act and Minimum Wage Rates

In 1938, Franklin D. Roosevelt’s New Deal legislation created the Fair Labor Standards Act (FLSA) to set rules governing employee compensation, among other things. Basically, the FLSA governs overtime pay, child labor, and record-keeping. It also sets the federal minimum wage. This was established to create a minimum standard rate of pay for the majority of the workforce.

Over the years, the FLSA has been periodically amended to increase the minimum wage and extend coverage to more workers.

FLSA and Minimum Wage Basics

In the United States, the minimum wage is determined by individual states. Minimum wage rates vary from state to state, with some areas having a higher minimum wage than others. This is primarily to account for the cost of living discrepancies between different locations.

The federal minimum wage is $7.25 per hour and is set to increase annually with inflation. The federal law does not require states to increase their own minimum wages but most have done so to keep up with the cost of living and adequately provide for their residents.

Federal law also does not require employers to pay employees on commission or tips on top of their salary if they earn more than $30 per month in tips or commissions. Many employers, however, choose to do so voluntarily. This is done as an additional way of compensating employees who are providing good customer service or quality workmanship.

What’s New for 2023 State Minimum Wage Rates?

The minimum wage in the United States has been a topic of contention for years. This is unlikely to change. Regardless of personal opinions, however, employers are required to adhere to the regulated standards. 

The federal minimum wage is $7.25 per hour, but many states have their own minimum wage rates. As of January 1, 2023, there are 18 states with higher minimum wages than the federal rate. 

These include the following states that have announced new wage rates to begin in 2023:

  • Arizona
  • California
  • Colorado
  • Connecticut
  • Delaware
  • Florida
  • Illinois
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Missouri
  • Montana
  • Nevada
  • New Jersey
  • New Mexico
  • New York
  • Ohio
  • Oregon
  • Rhode Island
  • South Dakota
  • Virginia
  • Washington

In situations where both the federal and state minimum wage rates apply, employers are required to pay the higher rate. Therefore, as of January 1, 2023, there will be a higher minimum wage in every state in the country.

Launchways had produced an in-depth compliance bulletin with a chart of all minimum wage requirements state-by-state. DOWNLOAD THE COMPLIANCE BULLETIN.

The 7 Steps for FMLA Compliance

The 7 Steps for FMLA Compliance

When employees need to attend to their (or their family’s) medical needs, they may need to take time off from work. There are specific steps they and their employer need to follow to determine whether they will receive compensation when they aren’t working.

The Family and Medical Leave Act of 1993 (FMLA) provides unpaid, job-protected leave to eligible employees. The FMLA is a federal law that requires employers to provide up to 12 weeks of unpaid, job-protected leave per year for particular family and medical reasons.

Although the details may seem complicated, the process is fairly straightforward when both employer and employee adhere to the following steps.  

Determine Employer Obligation and Employee Eligibility

An employer has certain obligations towards their employees. They need to provide a safe and healthy work environment, pay them a wage that is at least equal to the minimum wage, provide them with meal breaks and rest periods, provide them with leave entitlements and notify them of changes to their employment terms.

Under the terms of FMLA, if they employ 50 or more employees who work within a 75-mile radius of the worksite, they are also required to offer paid leave.

With a qualifying reason, employees are eligible for these entitlements if they are employed on a full or part-time basis and have worked for the employer for at least 12 months.

Determine Whether there Is a Qualifying Reason

The next step is to determine whether the employee has a qualifying reason for requesting leave. A qualifying reason for FMLA includes when the employee is unable to work because of any of the following reasons:

  • Serious health condition
  • Employees must care for a family member with a significant health condition.
  • Qualifying exigency arising out of the military service of the employee or family member
  • Qualifying exigency arising from an employee’s spouse, child, or parent is on covered active duty (or has been notified of an impending call or order to covered active duty) in the Armed Forces.

If an employer denies FMLA benefits to an eligible employee, they must provide written notice. It must include the name and address of each person or organization denying leave and the specific reasons why the leave was denied.

Notify the Employee of Eligibility for FMLA

The Family and Medical Leave Act requires employers to notify employees of their eligibility for FMLA. Employers must let employees know if they are eligible to take leave under the FMLA within five business days of receiving a request for leave, or an employee’s first day of work, whichever is later. 

Employees must also be notified if they are not eligible for FMLA within five business days of the employer’s determination.

Request Medical Certification for Paid Leave

As per the company’s policy, employees must provide a medical certification for any paid leave. The company will not process any requests for paid leave without a valid medical certificate.

When possible, medical certifications should be submitted to the HR department at least ten days before the date of leave.

Notify the Employee of FMLA Approval or Rejection

If the medical certificate is complete, they will approve or reject the request based on the provided facts. If it is incomplete or unclear, additional information may be required before they make a determination. The employee should have at least seven days to submit the requested information.

The employee will be notified of the status within five business days of submitting a completed medical certificate. If the request is approved, they will be able to take a paid leave of absence, which will be counted against the FMLA benefits to which they are entitled.

​​Responsible Employee Leave Procedures

Implementing and adhering to Responsible Employee Leave Procedures is a way to ensure that the company is not negatively affected by an employee’s absence. Responsible leave procedures might include giving the employee information on what they need to do before they leave, including who needs to know about their leave, where to find important documents and how best to communicate with people while they’re on leave. 

They may also be required to periodically call in to provide updates on their status so the company can continue to plan for their absence without additional strain to the business or other employees.

Employee Reinstatement After FMLA Leave

Since the employee should have been periodically calling in to report their status, the company should be prepared for their imminent return. Plus, the employee on leave may have been kept up-to-date on any changes made to their job while they were gone.

If the employee requested leave for their own medical condition, they would have submitted a medical certificate. In this case, before the employee is allowed to return to work, a medical release from the doctor may be required.

In some circumstances, there may be mitigating circumstances that require additional documentation. Generally, by following these steps, an employee will be able handle their or their family’s medical issue without running the risk of further financial hardship or losing their job.

Five Top Tips for Solving HR Challenges In Manufacturing

Five Top Tips for Solving HR Challenges In Manufacturing

As manufacturing continues to change, companies face the challenge of evolving or being unable to keep up with their more adaptive competitors. To successfully solve these challenges, HR managers need to adapt to changes not only in technology, but in workforce demographics, as well as. Here are five top tips for solving some of manufacturing’s HR challenges:

Retrain Your Workforce to Retain Your Workforce

 Retraining is the key to ensuring that your workforce is equipped with the most current skills required for successful completion of their responsibilities. Keeping your employees happy and engaged is also an element in maintaining employee morale. This can be done by providing them with opportunities to learn new techniques. 

Some companies offer courses and workshops as part of their benefits package. This helps the company, but it also helps the employee. It provides an opportunity for them to gain new skills at work that can help them advance within the company.

Recruit New Talent to Expand Your Workforce

Recruiting new talent can be a difficult task. Although companies previously depended on want ads and word-of-mouth to find new workers, now, they must be a bit more creative to find qualified employees. 

Job placement platforms online can connect job searchers with recruiting companies. Another option is to promote hiring positions at high schools and colleges. Marketing your job openings in those two arenas will expand your applicant pool exponentially.

Train Supervisors to Respond to Worker Needs

Supervisors are often in charge of training their employees on their jobs. This is especially true for new hires. However, an increasing number of companies are realizing that this responsibility is not just the job of the supervisors. 

Instead, employees should be trained by the company as a whole to ensure that they are getting the most out of their time at work.

Companies can train supervisors to respond better to workers’ needs by giving them an overview of what it’s like for employees on a day-to-day basis and how they can help them with these challenges. 

It is important for supervisors to develop a strong relationship with workers. Company leadership and mentorship programs can assist with this.

Adjust to Evolving Laws for Workers Compensation and Leave

Staying current with evolving laws is a difficult process for any company. The greater number of on-the-job accidents requiring adequate leave and compensation for workers cause manufacturing companies to feel the challenges even more.

With the Americans With Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA), the federal government works to make it easier for employers to offer paid leave and workers’ compensation benefits. Companies need to balance the individual needs of the injured employee with those of the companies’ overall objectives. This affects several dynamics.

Skilled HR teams strive to achieve that balance to better benefit everyone involved.

Outsource Work to Help Your Company Adapt 

Although many tasks and responsibilities can be handled in-house, outsourcing work is a way for companies to adapt to changing markets and also cut costs. It is a strategy that many companies are employing to stay competitive in the global market.

Outsourcing work allows companies to assign some tasks to experts with the necessary skill sets while the onsite employees focus on the company’s core competencies. Not only can outsourcing be beneficial for companies by helping them save time, money, and resources, it also can be seen as a form of risk management because it helps companies adapt quickly to changes in the industry.

What’s New for HSAs and High-Deductible Health Plan Limits?

What’s New for HSAs and High-Deductible Health Plan Limits?

Health savings account (HSA) contribution limits will significantly increase in 2023 and will likely continue to rise in the near future. On April 29, the IRS announced that it would drastically increase contribution limits. The announcement was made in response to the recent surge in inflation, and provides employers sponsoring high-deductible health plans (HDHPs) sufficient preparation time before the approaching open enrollment season.

With the annual inflation-adjusted limit, the maximum contribution limit for a family HSA is now $7,750, up from $7300. This is an increase of 5.5 percent from 2022’s limit, where the increase for the previous year was a mere 1.4 percent. Self-only coverage HSA contributions will increase from $3,650 to $3,850 in 2023.

The IRS verified the projected 2023 HSA contribution limits and the maximum out-of-pocket expenses and minimum deductibles for the paired HDHPs in the Revenue Procedure 2022-24.

2023 Increase Is a “Significant Jump” Over Previous Years

As more employers weigh the benefits of making income-based contributions, the number interested in matching the HSA contributions of their employees has grown. Although this practice is similar to the those used to match 401(k) retirement plans, it is particularly beneficial to lower-paid employees who might require additional help with health care expenses under high-deductible plans.

HSA Bank’s Chief revenue officer, Kevin Robertson, claims the 2023 higher limits are “a significant jump” from previous annual increases. As employer contributions generally spur employees to assign a higher value to their health care benefit packages, he believes news of the increase can be used for a few purposes. 

  • Employers can use the open enrollment season to encourage employee contributions.
  • Employers may be persuaded to contribute to HSAs where they had not previously.
  • Employees may raise their rate of contribution or begin contributing to their personal or family accounts. 

Even with small amounts, employer contributions add up and promote a more collaborative approach to the employee accounts and the perceived value of those accounts. 

Inflation Results in Contribution Limit Adjustments

Generally, October heralds announcements regarding various tax-advantaged accounts’ contribution limits for the following year. Those concerning HSAs, however, are announced in late April or May. 

Although the adjusted contribution amount is regulated by statute, the limits are adjusted annually for inflation using the Consumer Price Index for All Urban Consumers. They use data compiled from the 12 months ending on March 31 and round to the nearest $50 to arrive at the precise amount.

The Employers Council on Flexible Compensation (ECFC) represents the sponsors of various account-based benefits plans. Legislative and technical director of ECFC, William Sweetnam, explains that limit increases for HDHP and HSA are: 

“released much earlier than other employee benefit limits so that insurance companies that offer high-deductible health plans—which participants must be enrolled in to make HSA contributions—can get their insurance products approved by state insurance regulators.”

Differing Limits for ACA

Based on the Affordable Care Act (ACA), there is more than one set of health plan out-of-pocket expenses annually determined by federal agencies. This can cause considerable confusion for the administrators of the plans.

Under an ACA-compliant plan, annual cost-sharing limits for basic health benefits are established by the Department of Health and Human Services (HHS). These out-of-pocket limits are higher than the maximum limits set by the IRS. For a plan to qualify as an HSA-compatible HDHP, however, they can not exceed the out-of-pocket maximum limit of the IRS.

Regardless of whether a person is enrolled in a family or self-only plan, the ACA’s cost-sharing limits apply to every person in a non-grandfathered health plan.

Maximum Limit for Excepted-Benefit HRAs 

Additionally, Revenue Procedure 2022-24 raises the employer contribution maximum amount to an excepted-benefit health reimbursement arrangement (HRA) for year 2023. Excepted-benefit HRAs are restricted to paying only for dental and vision or comparable benefits that the employer’s primary plan doesn’t pay and are also not covered by the ACA. The HRA for 2023 is raised $150 higher from the 2022 amount of $1,800 to $1,950. 

The Announcement Allows Employers to Plan Ahead

Sweetnam claims that, since employers often discuss health care choices and limits during the open enrollment season, the limits for 2023 are “good to know.” To plan ahead, employers should consider updating payroll to mitigate the coming year’s cost-of-living adjustments and incorporate the announced HSA limits.

How to Navigate HR Compliance With An International Workforce

How to Navigate HR Compliance With An International Workforce

Maintaining compliance in an ever-shifting, increasingly globalized world has its own peculiar challenges which will only grow more complex as time marches on. By understanding these top challenges, you can better situate yourself to take advantage of the opportunities they bring with them.

New Market Compliance 

A 2016 study concluded that “87% of U.S. companies believe international expansion is a necessity for long-term growth.”

The Covid pandemic may have highlighted issues associated with increased globalization, but it also underlined its inevitability. We are more aware of the global supply chain than ever before, and practically anyone can interact with it in meaningful ways through the internet.

And with each new territory with which your business interacts there are a bevy of new laws and regulations – and the onus is on you, the owner, to successfully navigate them.

Tax calculations and regulations are documented in native languages, and the regulations surrounding labor vary widely within foreign markets. For instance, in Mexico, new hires must be registered with the government within a five-day window whereas in Spain such registration must be completed before employment begins.

Violations in this realm can incur immense costs.

While on-the-ground support is clearly the best scenario, it might not be scalable for your enterprise. Couple that with the rapidity with which businesses are expected to grow, and even the most experienced HR departments can feel the strain in grappling with international compliance.

Payroll Compliance

While international compliance poses some obvious challenges, domestic compliance has issues all its own. Different regions and municipalities have their own laws which are being continually updated. Failure to comply with these tax deadlines can result in massive penalties and fines.

So how do you know where to focus your attention? The stakes with payroll compliance are high, and the particularities of the provinces vary.

Uruguay, Argentina, and Chile require employee signatures of pay-slips upon receipt. Overlooking this would leave you open to lawsuits for lost wages.

Italy requires an Italian bank account to pay monthly statutory tax returns. Ignorance of this fact would lead to a massive headache on the due date.

However, the legal aspect of compliance is just half the battle. Compliance failures can erode workforce morale in spectacularly short order. How long can an employee be expected to wait for their wages? A few hours? Days? Your reputation is at stake if you miscalculate.

One survey showed that 49% of American workers will be looking for a new job after just two payroll errors. Now you’re increasing recruitment allocations to fill existing positions.

Benefits

International benefits policy requires careful consideration.

First, acquaint yourself with the statutory requirements in each country. Bonus points if you’re fluent in the local language as many governments will detail these statutory minimums on their websites

Here is a prime opportunity to consider your current spending on benefits. Though the U.S. requires substantial coverage from large employers, most countries have some degree of state-provided healthcare coverage. Thus, offering prime, private health insurance to global workers may prove redundant and costly.

The demographics of your workforce can also significantly shift your benefits calculus. A senior director in the U.K. may need supplemental private healthcare for their family, whereas a single salesperson in France might opt for reduced healthcare coverage and opt instead for a richer profit-sharing package.

While gender inequality dominates the headlines, so too does the definition of family and the practice of family leave. 

The U.S. design of shared parental leave is markedly different from the 52 weeks shared between parents in Denmark. Considering these differences complicates more than the compliance itself, it also complicates the allocations of resources in response to cultural relationships to regulations. 

Liability Insurance

The liability insurance you provide your employees will vary from country to country. Most have different schedules of resources for such insurance. However, many global organizations have begun adopting private insurance protections even in nations with established plans. This does more than appease legal responsibilities, it also addresses ethical responsibilities.

An organization’s culture should promote the well-being of everyone involved, regardless of their geographic location. Assessing insurance liabilities is a basic way to address the effectiveness of your employee protections.

Termination Policies and Practices

There are only two certainties: death and taxes. With a particular lens, terminations can fall into both categories.

Incorrectly managed terminations can be unpleasant for all parties involved.

“At-will employment” exists only within the U.S., a streamlined termination function that is not to be found elsewhere around the world. Therefore, when considering terminations abroad, there are a multitude of procedures and processes that must be adhered to if you’re to maintain compliance.

Theft or other criminal acts are simpler to navigate during termination regardless of the geography. Laws are effective guidelines for proper behavior. The difficulty comes in issues tethered to employee performance or disagreements. Different places have different requirements for legal termination of employees based on performance. Most will require documentation and evidence, and in some places, it can take up to a full year to legally terminate an employee.

There are instances where a justification can be made, but there are still notice periods and severance pay mandates that require proper attention.

Retirement and Pension Plans

The U.S. workforce is aging rapidly. While the covid pandemic coaxed some people to accept retirement, Gen Xers and Baby Boomers still make up 58% of the workforce. With this concentration of older workers comes interesting resource planning – the pensions for an anticipated exodus.

There are no hard and fast international rules about retirement age, it is useful to consider how different countries approach retirement. France allows workers to claim retirement after reaching the age of 62, but who may also gain a higher pension by working to the full-rate retirement age of 67. The U.K. recently rewrote pension laws to require employers to contribute at least 3% into an employee’s private pension scheme.

This reflects a growing global trend – statutory requirements of private businesses to allocate resources to employee pension funds.

Global HR compliance is unavoidably challenging and complex. However, by facing it head-on, business owners may be able to take the advantages presented by shifting global sentiments, winning victories for themselves and for their increasingly global workforces.

Launchways is here to support you and help you navigate international workforce compliance issues.