I have been hearing from a few clients that they are looking at hiring again as business has picked up for them.  I often remind them of the New HIRE Act and they usually look at me wide eyed with that glossy sheen over their eyes showing me they do not know what I am talking about.

So, I thought I would share with you just to let you know there are tax incentives out there for business owners who hire new workers.  Basically, if you hire a new employee who has not been employed 40 hours for 60 days before you hired them, you will be exempted from paying the 6.2% of their Social Security Tax.  That could add up to thousands of dollars per new  employee.

In addition, if the new hired employee is still employed with you for a year you will get a $1,000 retention credit per new hired worker. Not too bad.

Here are a few points and details to the plan.  You will have to have an employee fill out a W-11 Form.

• Employees must not be employed 40 hours for the previous 60 days from once you have hired them.
• Employee must be hired between February 3rd, 2010 and January 1, 2011.
• Cannot be someone related to you.
• You cannot terminate someone just to hire a new employee to take advantage of this program.

I have not been on here for awhile as I have been busy with new clients and also getting married.  Now that things are starting to get back to normal I invite all HR people and employers in the Des Moines Metro area to come to a Lunch and Learn hosted by the East and South Des Moines Chamber of Commerce.

I will be speaking on Health Reform, directed to business owners and HR professionals who would like to know more about what responsibilities they will have with the new Health Reform already in place and what to expect next year.

Great food catered by Christiani’s to all who attend.  Please see below for more details:

What: Joint East and South Des Moines Chamber Lunch and Learn

Topic: Health Reform by Carl Lingen of Employer Ease

When: Tuesday, July 20th  11:30 to 1:00pm

Where: 5711 SW 9th Street, Des Moines, IA Christ the King Parish
Hope to see you there for an informative meeting.

If you could create a more flexible work schedule, increase productivity, and decrease absenteeism, would you be interested?  Of course, but if I also told you that this new program went into effect in a county government office would you be surprised?

Listening to a NPR story, detailed the events of Hennepin County, in Minneapolis, Minnesota office that is doing just that. They have switched to what is called a “work results only environment” (ROWE).  In this environment employees make up their own schedule and do not have to ask for time off as long as their work is done by the deadline.

Does this work?

The county office, who handles public support cases says that their process used to take 2 ½ weeks and now they are down to 5 days or less. So impressive that rumors of layoffs were circulating in the office.

Here are some interesting things and challenges that come from ROWE:

1. All meetings are voluntary, but you are responsible for anything within a meeting. Eventually, people realize how many ineffective meetings they were holding.

2. Relearn how you communicate. Talking to someone next to you is completely different then having to communicate with two people who are at their homes.

3. Don’t have to ask for days off or early leave as long as the work is getting done, but could lead to employees building up massive amounts of vacation days.

To find out more information about this article please read it here.

There was an AP story in Foxnew.com talking about capping employee’s allowable contribution to health care flexible spending accounts (FSA).  The current proposed bills in the House and Senate have the pre-tax cap set at $2,500 a year that an employee could contribute to the plan.

The reason for the cap is to raise more than $13 billion over the next 10 years to help pay for health care legislation. (Which is now around $1.2 trillion right now.)

Two things are fundamentally wrong with doing this.  First, a flexible spending account is a great way to save pre-tax dollars and pay for items not covered by medical, dental, or vision insurance.  It holds the individual responsible for their own health, and it has been proven plans that drive a consumer to be accountable for where THEIR money is being allocated make better choices.

It seems that any plan that makes the individual responsible for their health insurance congress wants to destroy or significantly limit. These plans help customize care for individuals while keeping down the cost of insurance.

Second, if F.S.A.’s are going to be limited will Health Reimbursement Accounts (H.R.A’s) and Health Savings Accounts (H.S.A.’s) also be eliminated or limited as well?  An H.S.A. allows individuals to either themselves or their employer to put in pre-tax dollars into an account that can be carried over year after year to spend on medical care.  I do not see any other reason why congress would want to limit these types of plans unless they want to systematically eliminate any type of consumer driven healthcare.

My third point comes from a statement made in the AP article that the reason they are capping the F.S.A.’s is to help raise money for the new health bill.  Unfortunately, politicians think the average American is an idiot and do not think that if they cap one pre-tax vehicle that the average American will not put money into another type of pre-tax vehicle, such as an individual H.S.A., 401(k), or SEP IRA. The fundamental belief that they are going to raise all this money by simply capping one pre-tax vehicle is absurd.  People will find other ways to shield their money from taxes driving that $13 billion number considerably down.

I just attended a great seminar by Jesse Patton about what is happening in October on Capitol Hill. For insurance specialists such as myself, it is increasingly frustrating to hear what is proposed for a mandate.  Employers especially should be looking at what is going on as most of these upcoming bills affect every small business.  Sorry, no exceptions!

With so many polarizing comments being made by both sides, here are a few things I took away from the presentation.

1. I thought the purpose of Health Care Reform or Health Insurance Reform was to decrease the amount spent on health care. Consider that in 1965, government officials made unsound assurances by their lead actuary that Medicare Part A would grow to only $9 billion by 1990.  In 1990 Medicare Part A grew to $66 billion and continues to grow to this day.

So far I have only seen measures in the bills proposed that help with access to care, not curbing our current cost of healthcare.  When has the government ever implemented anything and have been on budget? Currently the proposed health care bills are being scored by the Congressional Budget Office to be around $900 billion.  Most of that money is being raised by excise taxes, fees on premiums, and medical supplies.

If you are a company that offers an employment based benefit package or you are a company that manufactures any type of healthcare product you will want to pay attention to this legislation. Now, if you tell a manufacturing company they now have to come up with a $200 million tax, sorry I mean fee, who do you think is really going to pay for that? Of course, the cost will be passed down to the consumer, which is why congress can use the word fee instead of tax, because it is not directly imposed onto the people.

2. What is the end result we really want our health care outcome to be? For the past several years we have had around 15% of Americans uninsured.  It has not gone down or up.  For the past several years the percentage of people eligible for Medicaid who actually take it is only 50%.

I would hate to spend a trillion dollars to still have around 15% of Americans remaining uninsured, while raising premiums of those who are.  The writing that is in the bill currently is weak for mandating you buy medical insurance.  If the current bill has a weak mandate then your healthy individuals who currently do not want to get insurance still will not get it, yet you need these individuals in the pool to help offset the risky individuals.

If you are an employer you will probably be subject to employer mandates. Most employers provide some type of medical coverage to their employees, but usually have the employee pay for dependents. With the proposed legislation, a small business would be required to pay 72.5% of full-time employee benefit cost and 65% of family benefit cost. Part-time employees will be included with this, but pro-rated to be defined by a new insurance commission. For example, take a restaurant that has five full-time employees, but twenty part-time employees.  That owner would have to provide insurance for all of those employees or pay a fine for each infraction.  I know a lot of my clients will have a hard time covering this cost.

3. Keep a watch out for anything in a bill that mentions “Cadillac Tax”. This Cadillac Tax poses a penalty on people who pay premiums over $8,000 a year for single and $21,000 a year for family.  Politicians think this is for executives with rich benefit plans, but there are people out there almost to this limit who are your typical blue or white collar job class. If they fall in this category then they would have to pay a 40% excise tax.  An excise tax is a tax that cannot be deducted from your overall tax liability.  For people to counter the cost of premiums and avoid the tax, they would have to get on a worse plan, for example – a $3000 deductible instead of a $1000 deductible.

I am all for health reform, but am not seeing anything that is addressing rising healthcare costs or malpractice law reform. I have a hard time supporting a bill that creates a disparate impact upon small business owners.

If you have been living underneath a rock or you have your head stuck in the sand trying to get away from this economy then you may have not heard of E-Verify.  E-Verify is an online system that allows you to determine employment eligibility of new hires.

The federal court has ruled that federal contractors with contracts of $100,000 or more awarded on or after September 8, 2009 must use E-Verify. E-Verify is pretty straight forward and is included as part of our services with Employer Ease Payroll. However, I am not going to talk about E-Verify, but discuss some of the ramifications that will probably come out of it and liability issues that employers may face.

Remember, that this is a national database using information from the Social Security Administration.  They themselves acknowledge that they have an error rate of over 12%. If someone has more than one first or last name, that error rate goes up to 40%.  Remember that not all cultures and ethnic groups have the same name format as others.  Simply put, you could be disqualifying someone due to an error.  Make sure if you are an employer you understand the laws of reporting mismatches.

E-Verify could turn into a discrimination tool without meaning too. What does that mean? If there are certain cultures or ethnic groups that have two first or last names or hyphenated names, could create a disparate impact to certain ethnic groups only because of inadequate technology not because they are ineligible.  We will see how this plays out in the next few months.

If you have questions with this or need help please give Employer Ease a call and we can help.

That is the comment that the defendant is claiming after the EEOC is filing suit against Hilton Hotel, in Naperville Illinois, for hostile work environment towards Hispanics under Title VII.  This is an interesting case only because it raises the question, “If it is an industry norm to do something a certain way, can it still be illegal?”

In this case the chef and hotel are defending that he was no worse or better to any other group of people that worked under him.  He is an equal opportunity jerk.  If you have ever watched any of the cooking shows like Hell’s Kitchen you get an idea that everyone underneath the executive chef is worthless and treated as such.  Anyone working in a kitchen at a fine dinning establishment can probably verify that as well. But if that is the norm and everyone does it, is it still illegal?

That is what the EEOC will be deciding in the coming months.  It is not a question of whether this guy is right or wrong, I think most of us can answer the moral question of that, but whether this chef directly created a disparate impact towards a certain race or origin compared to everyone else in the kitchen.
I am not one for puns, such as “If you can’t take the heat get out of the kitchen.” but I am glad the EEOC is taking this harassment suit up because it has been long overdue of shedding some light as to how kitchen staff, who have predominate Hispanic populations, are treated. Just because it is the norm doesn’t make it acceptable or legal, but we will wait to see what the EEOC rules on this case.

Flickr phot by scratchandsniff