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robintek

Apr 01
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BENEFITS AND THE SOCIAL CONTRACT

By Your Employee Matters

In his book Predictably Irrational, Dan Ariely provided two interesting observations related to employee benefits. First, he pointed out that benefits are more of a social contract than an economic one. The distinction between the two is very powerful. For example, if you have a department with 15 employees and someone walks in with a tray of 15 cookies and says that she baked cookies for the department today, under a social contract analysis, most employees would realize quickly that they should take one cookie each. However, if that was now turned into an economic arrangement in which the person stated that those cookies were baked for her child’s fundraiser, there would be no guilt or judgment associated with someone who proceeded to gobble up half the tray. Ariely reminds us that social contracts are much more powerful than economic ones.

Second, Ariely argues that asking employees to chip in for the payment of benefits or providing total compensation statements (something that we’ve recommended for years) diminishes the cohesiveness of the social contract.

These are provocative thoughts — and surveys about employee motivators mirror them to a certain degree. Although book after book after book talks about the “work experience,” in reality, most people go to work to be paid. The other motivational factors kick only after they feel they’re being paid a fair days’ wage. In today’s economy, employees rank benefits over compensation as their top concern. Benefits fulfill a security need more than does straight compensation. In a sense, the workforce is telling us that a dollar spent on benefits (which is a tax-free payment) is worth more than a dollar spent on straight compensation. Consider this if you’re considering a cut in benefits.

Apr 01
Love0

QUESTIONS FOR LEADERS

By Your Employee Matters

The quality of our lives and of our companies depends on the questions we ask and the challenges we set for ourselves. For example, you might ask yourself “Do I dare to be great?” That’s a good question. You can also ask yourself what kind of nonsense would get in the way of believing that you can be great. That’s a good question, too! With this spirit in mind, here are questions that could open you up to higher thoughts.

  1. How clear is the vision for your company? Does everyone at the company know what it is? Have you branded it in your employee literature, on your intranet, on your walls, and so on? Would I know it simply by walking into your place or visiting your website?
  2. Is your vision for your company a big, hairy, audacious one? It’s better to really go for it and succeed at 50% than to shoot for average — and end up average.
  3. Have you played the movie forward to the end? If you got everything you had hoped for, what would it look like? How would it feel? How would your life be different?
  4. What personal sacrifices are you willing to make to create a great company or career?
  5. What personal sacrifices are you willing to ask others to make to build a great company or career?
  6. What effort have you made to guarantee you bring the right people on every seat of the bus?
  7. How do you stimulate your workforce to think for itself?
  8. How do you create an employee suggestion system that works?
  9. What have you done to eliminate the possibility of people making unnecessary mistakes?
  10. What “one big thing” could wipe out your business tomorrow?
  11. How could your business die from a series of 1,000 cuts?
  12. Do you really want to do this anymore? If not, what would you rather be doing instead?
  13. How could you stay in your business/career and reinvent how you work in it?

Have fun with the answers!

Apr 01
Love0

HOW COMPANIES GET BUSTED FOR INDEPENDENT CONTRACTOR VIOLATIONS

By Your Employee Matters

Business owners love the idea of independent contractors. They afford flexibility, expertise, outside perspective, and of course, reduced insurance, benefit and tax burdens. Unfortunately, for these same owners, the Federal and state authorities are coming down big time on what they claim are independent contractor misclassification schemes. They don’t like the idea of you not collecting payroll taxes and not providing employees with Workers Comp, healthcare, and other benefits they might otherwise enjoy. Here are four of the more common ways employers get into trouble when they misclassify employees:

  1. They get hurt on the job — Guess what? Since these people are not considered employees, your Workers Comp policy doesn’t cover them; which means they can sue you directly for negligence, expanding their recovery potential dramatically. What’s more, you might face a fine for not treating them as employees and providing them with Work Comp coverage.
  2. They file for unemployment — A number of HR That Works Members have told us that because one person filed for unemployment, the authorities are trying to attack their independent contractor relationship with dozens of people. If a company in this situation comes out on the wrong side of a misclassification judgment, it could go out of business. Part of the thinking involved is that you can somehow “control” employees, but not independent contractors. For example, when I hire an independent contractor to paint my house, I pay them to get the job done and I don’t tell them how to apply the paint.
  3. They didn’t pay self-employment taxes — When the IRS comes knocking on an independent contractor’s door and asks them about their tax payments and the work they did, they tend to conclude that they were an employee and you should have been withholding that 14% annually. If they can’t collect this from the independent contractor, they’ll try to collect it from you — not to mention fines and penalties. Some states, such as California, have kicked this up a notch and are making it a criminal offense to engage in intentional misclassification. Unsurprisingly, these bills are introduced into the legislature by the plaintiffs’ bar, which makes sure that the legislation includes handsome attorneys’ fees for enforcement.
  4. Finally, the NLRB is getting interested too — Independent contractors don’t have the ability to organize the workplace, only employees do. This means that the National Labor Relations Board, which is very pro-union, doesn’t like it when you classify folks as independent contractors. Recently, because of one or two disgruntled employees, they ruled that independent contractors from a small orchestra were really employees, which will probably end up shutting down that business. I wrote an article about this called “The Day the Music Died.”

The bottom line: This fight is not about common sense or economics. It’s about political power, plain and simple. The pendulum has swung and employers have been pushed up against a wall. The problem is that they’re powerless to do anything about this situation and have to change the way they do business, even when they don’t think it makes sense to do so. That’s the beauty of living in a democracy.

Apr 01
Love0

I-9 EMPLOYER HANDBOOK

By Your Employee Matters

The government has an excellent publication covering everything about I-9s that all employers should know about. Here’s what it covers:

  • Obtaining Forms and Updates
  • Part One — Why Employers Must Verify Employment Authorization and Identity of New Employees
  • Part Two — Completing Form I-9
  • Part Three — Photocopying and Retaining Form I-9
  • Part Four — Unlawful Discrimination and Penalties for Prohibited Practices
  • Part Five — Instructions for Recruiters and Referrers for a Fee
  • Part Six — E-Verify: The Web-based Verification Companion to Form I-9
  • Part Seven–Some Questions You May Have About Form I-9

Click here to access the handbook.

Apr 01
Love0

EDITOR’S COLUMN: PODCAST LEARNING

By Your Employee Matters

I’m a big fan of podcast learning. During the past four years, I’ve educated myself on a wide variety of subjects from business to personal growth, financial matters, and spiritual ones.

I would encourage all businesses to make their managers and employees podcast learners. For starters, your HR person should be listening to our monthly podcast. It’s not as fancy as the big guys’ podcast, but the information is there. I would then make sure all my managers listen to the Harvard Business Review podcasts, which provide an MBA-level education. They’re excellent — and they’re free. I would encourage you to consider TED videos and audios, which are outstanding. Pick out a few you think might apply to your business and encourage your team to watch them. They are 15 minutes long. Start one of your business meetings with one of them (maybe even every business meeting).

I also like the Stanford Entrepreneurial School podcasts. The Stanford graduate network has started more entrepreneurial businesses than anywhere else. Tap into this wisdom, even if you have a 50-year-old business. Podcast learning can stimulate thought and innovation at any company.

I’m most familiar with iTunes. Go there and check out all of their free podcasts. You can hire a high school intern to download about 20 podcasts each into a $50 player, so your employees can listen to them in their cars or at the gym. In the end, they will thank you for it.

Here are the links to the podcasts:

P.S. You can also develop a comprehensive leadership training program by taking advantage of the more than a dozen leadership webinars and podcasts stored on HR That Works. If you haven’t checked these out yet, do yourself a favor.

Apr 01
Love0

ARE YOU COVERED FOR CRITICAL ILLNESSES?

By Life and Health

Many people aren’t aware that Critical Illness insurance exists. The reason behind this is because Critical Illness coverage is fairly new to the United States market. Policy sales began in 1996. It’s also sold by brokers who are usually more focused on selling Life insurance. In addition to this, the coverage is aimed toward people who are between the ages of 30 and 55, which is a large group of people who aren’t as eager about purchasing Life insurance as they should be. Critical Illness insurance is affordable and simple. It is a supplement to a Health policy. If a person experiences a bout with cancer, a heart attack or a stroke, Critical Illness insurance contributes to financial stability during the experience.

Although the population is generally uninformed about this valuable type of coverage, it is similar to Long-Term Care coverage in the respect that it is becoming more necessary as our society changes. Since the population is living longer, the need for Long-Term Care insurance is increasing. In a similar fashion, the need for Critical Illness insurance is increasing because people are more likely to survive a heart attack, stroke or cancer today than they were several years ago. The chance of surviving cancer today is more than 60% for both men and women.

Since many bankruptcies result from extensive medical bills, it’s important to recognize how valuable Critical Illness coverage is. This type of insurance is designed to pay for the expenses that regular Health insurance won’t cover. Out-of-town care, copay fees, non-medical expenses, alternative treatments, deductibles and non-covered prescription drugs are a few examples of items that are covered under a Critical Illness policy. The coverage might also provide some compensation that Disability coverage offered by employers doesn’t cover. Benefits are paid in one lump sum. The sum is paid even if full recovery is expected. There are some policies that offer multiple payments.

Critical Illness coverage is a valuable investment for those who want to financially survive a critical illness. Treatment and recovery can become extremely expensive without insurance. Keep in mind that regular Health policies have limited coverage for the recovery period following the onset of a critical illness. The biggest issue is deciding how much coverage to buy. Since each person’s situation differs, there is no specific amount that every individual should buy. It’s best to contact our office to learn how this coverage works, how much will be enough to stay afloat financially and what steps must be taken to obtain proper coverage. Keep in mind that these policies are only for genuine critical illnesses. Skin cancer that can be removed or chest pain that doesn’t result in a heart attack are situations that would not be covered.

Apr 01
Love0

WHY EVERYONE WINS WITH LIFE INSURANCE

By Life and Health

People who are considering Life insurance usually debate whether they need it or not. If anyone will suffer financially after a person’s death, that person should have Life insurance. This death benefit is meant to help surviving family members or dependents cope with the financial difficulties of losing the deceased’s income and paying for final expenses. Life insurance isn’t subject to federal income tax.

In order to determine how much Life insurance to buy, it’s important to consider what surviving loved ones would need if death occurred suddenly. Be sure to consider monthly living expenses, debts and final expenses when calculating costs. These are the essentials. There are also several more considerations. For example, college money for surviving children is a beneficial addition to a Life insurance funding plan. Long-term financial goals, a surviving spouse’s retirement and several other factors must also be considered. It’s best to speak with one of our qualified agents to discuss individual needs and determine what amount is sufficient. There are several aspects to consider with purchasing Life insurance.

Married Individuals. Many couples who get married don’t think they need to purchase Life insurance coverage until they have children. However, it’s important to know that the debts of one spouse must be paid by the surviving spouse in most situations. For example, if one of the individuals earns the sole income and has sufficient debt, the surviving spouse with the lesser income would face many serious struggles by inheriting such debt.

Parents with Young Children. Whether parents are single or married, it’s important to have enough Life insurance to cover the costs of child care and care. If one spouse stays at home and cares for the children, it’s important to be sure that they will all have enough money to live on. It’s also important to have Life insurance for the spouse who stays at home to care for the children. Without that spouse in the picture, the cost of transporting and caring for the children will be an issue. It might also be necessary to pay for housekeeping services. Single parents should always make sure that their children will have enough money to survive on. If possible, it’s best to leave extra money to contribute toward their college education.

Parents with Grown Children. It’s best for parents with grown children to make sure they leave enough money that their children will be able to pay their final expenses. Married parents with grown children must still consider the needs of their spouses.

Single Individuals. Although many singles think they don’t need Life insurance, this coverage is beneficial to have. Surviving parents, siblings or other acquaintances might benefit from the money. Aging parents might need extra money for health care. For example, parents who inherit this benefit might be able to afford a private room instead of a shared room in a nursing home.

There are several reasons for any person to purchase Life insurance. Even those who have no family members and few friends still have values that are important to them. In these cases, it’s helpful and satisfying to set up a Life insurance benefit amount to go to a preferred charity. To learn more about Life insurance and what options are best, speak with one of our agents.

Apr 01
Love0

MORE ATTRACTIVE DISABILITY INSURANCE RATES

By Life and Health

Disability coverage replaces lost wages for people who are unable to work. In recent years, Disability insurance was the industry’s biggest eyesore. Due to suspicious payouts for claims of stress and nerves, companies that sold this coverage suffered major losses during the 1990s.

After suspicion rose for these claims, an investigation by insurance commissioners in several different states began. The investigation showed that some of the nation’s largest insurers delayed and blocked legitimate benefits payments. In addition to this, the insurers committed various other trust breaches. A series of lawsuits led to the end of many companies selling individual policies. Insurers that remained in the business had to raise their rates for new buyers and restrict underwriting rules, which made it much more difficult to obtain adequate coverage.

Disability insurance is regaining its reputation now. This means that it is easier today to find a policy than it has been in many years, which is the top reason why it is a good time to buy. Another reason why it is a good time to buy a policy is that insurers are showing more flexibility about who can obtain coverage. For example, if a person who is diagnosed with depression but it is controlled by medication, they may not be rejected now. In the past, those who started new businesses were not eligible for coverage for up to one or two years after the start of their business venture. Many insurers today take new business owners immediately if they can show proof of five years of successful employment with a business prior to beginning their own venture. In addition to this, they require that people stay in the same industry and show proof of business contracts for the immediate future.

How Much Is Needed? To determine how much Disability coverage is needed or whether it is best to add existing coverage, add monthly living expenses together. It is important to determine how much money is needed for living expenses if disability becomes a reality. Keep in mind that transportation costs may be lower or higher depending on whether a car is owned or not. Subtract any benefits from a workplace plan. Since workplace benefits end at about 60% of pretax income, employer group benefits are not nearly enough to live on. Although it is not possible to replace every dollar of current income, it is possible to find a policy that allows a disabled person to live comfortably. Discuss the different available policies with our agents to learn more about their details. Keep in mind that premiums vary with gender, age and occupation.

Choosing a Policy. The most comprehensive policy choices are own-occupation policies that offer benefits if members are unable to perform the substantial and material duties of their own occupations. This means that they receive benefits even if they can do other types of work. For example, a construction worker who becomes disabled would receive benefits even if he or she could perform office duties for lower pay. It is ideal for skilled professionals who are unable to perform the work they were trained to do but are physically able obtain lower-paying jobs that are related to their industry. Some policies have a modified version of own-occupation policies. To understand the differences, discuss them with our agents.

Coverage That Stays Current. One of the disadvantages of paying for any amount that is less than full coverage is receiving a smaller amount each month if disability becomes a reality. Many disabled people regret not paying for full coverage because their income provides more flexibility with complete coverage. In addition to lost salary, there are retirement shortfalls to consider. These are the most overlooked aspect of such policies. One of the best solutions for this problem is purchasing a rider for the policy, which makes retirement savings contributions up to 401(k) maximums for the duration of the disability. To learn how much these policies will add each year, discuss personal details and options with our agents.

Apr 01
Love0

STATE MINIMUM AUTO LIABILITY: IS IT ENOUGH?

By Personal Perspective

State minimum insurance requirements are minimal. Most states demand less than $100,000 for bodily injuries and $50,000 for property damage. Some states require only $10,000 for property damage coverage.

How many cars valued at greater than $10,000 travel the highways? How many trucks carrying cargo are worth more than $10,000? $50,000? $100,000?

According to the 2010 census, the median family net worth exceeded $200,000. That amount includes houses, cars, savings, retirement funds, cash in the bank, college savings, and furniture and personal effects. Half the families are worth more, half have assets less than $200,000; all of it is hard earned.

If the family is underinsured for liability, their net worth is vulnerable to be seized in a lawsuit based on injuries or property damage caused by any family member driving a vehicle. The car owner and the car driver become parties to the suit.

Bodily injuries sustained in car wrecks devastate lives. People unable to work, the high cost of medical treatment, rehabilitation expenses, and the pain and suffering can only be compensated with money. The money comes from the insurance company or the liable party’s personal wealth.

Not convinced you need higher limits? Not all liabilities are released in bankruptcy. Many states have specific legislation disallowing debt reduction for certain accidents, most notably driving while intoxicated. Wage plans reduce take home pay by as much as 33%. Many employers do not tolerate either bankruptcy or wage garnishments.

Still not convinced? How about a selfish motivation?

Other drivers are either uninsured or underinsured. Most insurance companies will not provide uninsured motorist coverage in limits greater than the liability limits of the policy.

Uninsured and underinsured motorist coverage from your policy pays on behalf of the driver who hits you if they are poorly insured. In a classic exercise of the golden rule, insurance companies only sell limits commensurate with the protection you offer others.

Proper limits of liability allow you to protect yourself from the improper coverage other people maintain.

So how much coverage is enough? What are reasonable limits of liability?

Ask our insurance professionals. And consider this:

Your assets are your excess insurance coverage. This means that when the limits of your policy are reached, your assets are at risk. Excess insurance – Umbrella policies, for example – is available in $1 million layers over your Automobile and Homeowners liability limits if those limits qualify – are high enough. Protect yourself against underinsured drivers by increasing your uninsured motorist coverage.

Apr 01
Love0

UNDERSTANDING THE PAYMENT PROCESS

By Personal Perspective

An insurance adjuster is responsible for inspecting damage to a home following a claim. These individuals are also responsible for offering a specific sum of money that is to be used by the policyholder for necessary repairs. As a general rule, the first check received from the insurance company is meant as an advance toward the total amount of the settlement. It’s important to remember that it’s not the final payment. Separate checks are issued for each category of damage. Checks to cover living expenses are usually also sent separately. Individuals who are offered a settlement amount on the spot might choose to accept the money. If further damage is identified later, it’s possible to reopen the claim to request more money. Keep in mind that most policies require all claims to be filed within one year of the disaster’s occurrence. It’s best to check with one of our agents to learn about rules pertaining to individual state insurance departments.

People who have mortgages on their homes will receive a check for repairs that is payable to them and their lenders. This is because lenders usually require that their names be placed on the Homeowners policy, which means they’ll also be named on any checks for claims. Since the lender has a vested interest in the property for as long as it’s under a mortgage, they have equal rights to the checks issued by Homeowners insurance companies. When a lender’s name is on the check, the document must be endorsed by the lender before it can be cashed. As a general rule, lenders place the funds in an escrow account. They use the money to pay for the repairs until the work is completed. Borrowers must communicate with their lenders to ensure the repairs are done quickly and efficiently. After receiving a bid from a contractor, show it to the lender. Let them know how much money the contractor requires up front to start working. Keep in mind that a lender might want to have the work inspected before releasing enough funds to pay the rest of the bill.

There are some construction companies that require customers to sign a form that permits their Homeowners insurance company to pay the company directly. If this is the case, it’s important to be sure the final work product is acceptable before telling the insurance company to complete the final payment. There are specific guidelines that lenders must follow after a disaster occurs. To learn about these rules, contact our office.

The first step to take after a disaster occurs is to total up the cost of all personal belongings. Use photos, videos and any other means necessary to prove ownership or show the condition of items that were destroyed. If there are receipts or sales records of any items, be sure to save them. Homeowners who have a replacement cost policy will receive reimbursement for the purchase of new items. Cash value policies provide reimbursement minus the cost of depreciation. Most companies require policyholders to purchase new items before they offer reimbursement for the destroyed items.

Checks for additional living expenses are made payable to the policyholder. Since the lender has nothing to do with these expenses, they don’t receive any of the money. Those whose homes have been destroyed have several options. They may rebuild on the same site. If this option is chosen, the amount of money awarded to rebuild will depend on the type of policy purchased and the amount specified under the declarations section. Some homeowners might decide to rebuild elsewhere. If this option is chosen, the amount awarded will be determined by state law, policy provisions and court rulings. If you are considering either option, contact us before making a decision.

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