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PROTECT YOURSELF BY PLANNING FOR DISABILITY AND RETIREMENT FUNDING

By Life and Health

Although retirement is a time we can count on happening someday, and disability is something we hope never happens, these two areas of financial preparation are closely related.

Both concern the maintaining of a standard of living, due to loss of income. Rent or mortgage payments, bills, taxes, insurance, and other living expenses, such as food and clothing, will need to be paid for. By planning carefully and being prepared well in advance to cover these costs whether retired or disabled, you will be able to replace your lost income, protect your family, and preserve your estate effectively.

Many people become disabled suddenly and realize that their monthly needs will not be met by their current assets. This is why Disability Income insurance is so important. This type of insurance protects your income by guaranteeing monthly payments after a defined waiting period, whereas social security can take months after you have applied to start receiving benefits assuming you qualify in the first place. Without Disability coverage, you would be forced to tap your retirement savings, which could jeopardize your future financial security. Those who are better prepared for events, such as retirement or disability, will be in far better control of their finances in each situation.

HELP HEIRS BY PURCHASING A SECOND–TO-DIE LIFE INSURANCE POLICY

By Life and Health

Many parents want to leave their children an inheritance to help provide for them and their families, but such a bequest can be a double-edged sword. Together with all that accumulated wealth comes the problem of having to pay substantial estate taxes. If heirs are forced to pay taxes from the estate proceeds, it will lower significantly the amount they ultimately receive. You can help your heirs to avoid this situation by purchasing a Second-to-Die Life insurance policy on you and your spouse. Such a policy, also referred to as Survivorship Life, can provide tax-free dollars (if owned outside of the estate) to pay estate taxes.

Federal tax law permits you to leave an unlimited amount of assets to your surviving spouse without taxation. Those assets then become part of your spouse’s estate and are taxed when he or she dies. If you purchase a Second-to-Die Life insurance policy insuring both you and your spouse, and you die first, the death benefit is paid to your beneficiaries upon your spouse’s death, thus providing the necessary funds to pay whatever estate taxes are owed. Consider these additional advantages to buying a Second-to-Die policy:

  • Survivorship Life costs less than a single insured Life insurance policy. The premium you pay for a Second-to-Die policy is calculated using the joint life expectancy of you and your spouse. Since the insurance company owes nothing until both of you die, the premium will be less.
  • Qualifying for this type of insurance is much easier than for single insured Life insurance. Since the death benefit isn’t paid until both insureds die, the insurance company isn’t as concerned if one of you is in poor health. Some insurers will even issue a policy when one of the insureds is deemed uninsurable by typical Life insurance standards.
  • Survivorship Life can add value to your estate. Second-to-Die Life insurance does more than protect your estate from taxes. The death benefit can ensure your beneficiaries receive a minimum amount of money, even if you spend through all your other assets during your lifetime.
  • The proceeds from a Second-to-Die policy can cover additional tax obligations, such as income taxes owed on any traditional individual retirement accounts (IRAs) and tax-deferred plans that the deceased owned.

Consult with one of our financial professionals to determine if Second-to-Die Life insurance should be a part of your estate planning.

WHAT HR EXECUTIVES ARE READING

By Your Employee Matters

Twice a year SHRM puts out its bookstore catalog. The subject matter relates to benefits, hiring, retention, team work, motivation, employee relations, global HR, health and safety, wellness, diversity, compliance, and so on. There are articles on HR competencies, HR strategies, HR benchmarks, HR scorecards, and other forms of measurement. We could go on, but the point is this: In order to be a good, maybe even great, HR executive must engage in constant learning. We encourage HR That Works members to look at the Special Report series, as well as the Strategic HR Tools that are easily downloadable from the site.

We also recommend you download the MP3s of the newsletters and webinars so you can listen to them in your car.

DOL ISSUES OPINION LETTER ON HOURS WORKED UNDER FLSA

By Your Employee Matters

A recent opinion letter from the U.S. Department of Labor (DOL) addressed the issues of missed meal breaks, overtime, and rounding off time under the Fair Labor Standards Act (FLSA). In responding to an employer’s questions about its break and meal policy, the DOL offered these guidelines:

  • No additional compensation is due if an employee misses an unpaid meal break but still works fewer than 40 hours in the workweek, as long as “the employee’s total wages for the workweek divided by the compensable hours worked equal or exceed the applicable minimum wage.”
  • If an employee works more than 40 hours as a result of missing an unpaid meal break, the time worked during the missed meal break must be counted for purposes of determining overtime pay. As the DOL observed, “Before an employee can be said to be paid statutory overtime compensation due, the employee must first be paid all straight time wages due for all hours worked … ”
  • If an employee begins work before or finishes after their regularly scheduled hours but works less than 40 hours in the workweek, the employee is not entitled to additional compensation as long as “the employee’s total wages for the workweek divided by the compensable hours worked equal or exceed the applicable minimum wage.”
  • If an employee receives certain types of overtime premium pay (e.g., for work in excess of specified daily or weekly work periods, or for working certain special days), the extra compensation does not need to be included in the employee’s regular rate of pay for purposes of calculating overtime pay. Furthermore, the extra compensation may be credited toward any required overtime payments.
  • An employer may round off time to the nearest five minutes, tenth of an hour, or even quarter of an hour, as long as over a period of time the employee is compensated properly for all time actually worked.

The DOL uses its Web site to publish these opinion letters, which offer the department’s interpretation of the FLSA on particular situations. We expect this opinion letter to appear there soon.

Download a PDF version of the letter here.

(Courtesy of Shaw and Rosenthal of the Worklaw® Network)

EEOC COMPLAINTS SPIKE

By Your Employee Matters

According to a recent article in Lawyers USA, discrimination charges filed with the EEOC increased 9% during the past year. The commission reviewed more than 4,000 retaliation charges seen by the EEOC in 2007, an increase of 18%. Race is the most popular complaint filed, with retaliation being the second. Race, age, disability, and pregnancy charges all increased significantly. Although experts can’t explain these increases, there have been numerous reductions-in-force, together with heightened employee awareness about discrimination. Finally, the EEOC announced that it recovered approximately $345 million in monetary relief, up 26% from the previous year. Don’t wait until you get sued to investigate EEOC problems. To get an investigation right, please see the Form of the Month.

WHAT DOES IT TAKE TO HAVE A GREAT HR CAREER?

By Your Employee Matters

Last month we asked “What do you really want from HR”? This month we examine a recent SHRM survey that generated the report, “2008 Managing Your HR Career Survey.” The key findings should come as no surprise:

  • The most important factor in HR success is the ability to communicate. The HR executive is often viewed as the point person between the executives and the rank and file. Interpersonal communication skills are essential when it comes to leading strategic initiatives, as well as avoiding employee drama.
  • Having driving ambition was cited as the second most important factor (61%). In the real world, many HR people aren’t highly motivated or ambitious, partly because they don’t feel they will have upper-level support or get paid for making a difference. One of the greatest challenges for business owners and executives is to light a fire under the HR department.
  • The third tier of importance includes reputation in the organization, strategic/critical thinking skills, experience, and leadership skills. Of course, the most important aspect of your reputation is the ability to be trusted because you have the skills and character that people can trust. Strategic or critical thinking skills are also important whether you’re at a workforce with 1,000 employees or only 25, and you’re wearing three hats, one of which is HR. HR That Works users are encouraged to look at the Strategic HR Tools portion of the Web site. Of course, experience is only important if it produces results. Ask yourself: What have you done differently over the last week to improve your HR career or department? What result has it generated?
  • Finally, there’s the general concept of leadership. In our experience, most owners and executives want HR folks to grab the bull by the horns. Don’t wait to be told what to do, just start doing it! Our favorite example of an HR executive with tremendous leadership skills is Colleen Barrett, the CEO of Southwest Airlines.

The HR field offers enormous opportunity. This is the least developed aspect of many organizations and has been gaining professional status during the last 10 years. We encourage every HR executive to really go for it — and make sure you have fun and get paid in the process!

RETURN TO WORK AND THE ADA

By Your Employee Matters

Under many Workers Comp systems, once an employee has reached a light duty, permanent, and stationary phase, the employer will often have the opportunity to provide them with modified work, alternative work, or ultimately, vocational rehabilitation. Many employers will gloss over the concurrent obligation to engage in a good faith interactive process with the employee to determine effective reasonable accommodations under the ADA — to do the job they were hired for!

So, for example, although they may limit the employee’s ability to return to work until 100% fit for duty under Workers Comp, this is not the law under the ADA. For example, if a worker is 85% fit for duty, you have to search out a reasonable accommodation that might allow them to be 100% effective. In too many cases, the employer simply evaluates the modified alternative work option without engaging in a dialogue with the employee to do the job they were hired for.

We encourage HR That Works users to look at the Training Module: Managing Employees Who Can’t or Won’t Come to Work, which discusses the intersection of work comp light duty, the FMLA, and ADA.

ARE YOUR PURCHASING AGENTS EXEMPT EMPLOYEES?

By Your Employee Matters

The U.S. Department of Labor recently issued an opinion letter on the exempt status of a purchasing agent and whether they qualify for the administrative exemption under the FLSA. The letter held that these employees are, in fact, exempt. Remember, in order to be an exempt, an administrative employee must be paid at least $455 per week, perform work “directly related to the management or general business operations of the employer,” and “includes the exercise of discretion and independent judgment with respect to matters of significance.” In analyzing purchasing agents, the letter indicated that they definitely work in the performance of management or general business operations and they exercise discretion and independent judgment. These PAs have the authority to place purchase orders less than $25,000 without management approval.

The company requesting this opinion letter now has the comfort of knowing that they’re doing things properly. Opinion letters are usually forwarded by a company’s attorneys. If you ever seek such an opinion letter, please contact one of the members at the Worklaw® Network.

Read the opinion letter here.

TAKE FMLA MEDICAL CERTIFICATIONS SERIOUSLY

By Your Employee Matters

Human resource executives feel that many employees abuse FMLA leave. As with many types of absences, the facts or excuses provided defy logic. Employees will seek FMLA leave for concerns far from “serious.” Hangovers, colds, and sore backs don’t count. The healthcare provider is often lackadaisical about any medical certification and will simply ask an employee how much time off they want.

Here’s the point: There’s a lot of abuse in the system and HR executives should not take employee requests on face value. If you don’t feel the medical certification (which should always be required) is accurate, you may request clarification. In fact, recent amendments to the FMLA will allow you to contact their healthcare provider directly.

Many HR folks don’t contest or further examine requests for leave either because they’re intimidated by the medical certification process or they don’t want to be viewed as someone who doesn’t care. Neither justification will do. The recent case of Taylor & Taylor v. Ameritech Services points out just how difficult it can be to rein in employee abuse of FMLA leave. In this case, the court granted a summary judgment for Ameritech against FMLA claims brought by a couple who failed to deliver their certifications in a proper and timely fashion and then to cure any deficiencies in them. It’s a relatively short read that’s well worth your time to understand how the court views medical certifications.

Some of the points made in the case are:

  • “While a company is not permitted to interfere with the ability to obtain a medical certification, a constant extending of the submittal deadline is not required of the employer. As stated, all the employer is required to do is provide the employee with a ‘reasonable opportunity’ to cure the deficiency; no more was required.”
  • “Employers may also require that completed certifications be faxed or mailed by the doctor rather than permitting the applicant to do the sending.”
  • “Nothing in the statute forbids an employer to adopt reasonable, non-burdensome measures for preventing fraud.”