Archive for March, 2013

Worker Misclassification: A Tough Issue, and Getting Tougher Every Day

Tuesday, March 26th, 2013

This is a guest post from Diane Aull. Diane is the Website Manager for Acroprint Time Recorder Company and editor of their Time For Business blog. Acroprint offers a full range of workforce management products ranging from traditional punch clocks to cloud-based solutions and cutting edge facial recognition systems.

MisclassificaitonDoes your company employ or plan to employ temporary workers, consultants or independent contractors? Then listen up! The Department of Labor (DOL) is concerned that many such workers have been misclassified as independent contractors (ICs) when in fact they are actually employees under the law.

Of course, it’s perfectly legal to hire someone as a temporary or independent worker. However, some companies misuse the IC label to avoid paying payroll taxes, overtime, minimum wage and unemployment insurance for regular employees.

This is unfair — both to the employees themselves and to those companies that do play by the rules.

What is being done?

In 2011, the DOL launched a Misclassification Initiative. This program is designed to ensure fair pay for workers and a level playing field for law-abiding employers.

To kick off the program, the DOL signed “Memoranda of Understanding” with 10 states and the Internal Revenue Service (IRS) promising to share with each other information related to worker classification audits. Since then, four more states have signed on, the most recent being Iowa in January of 2013.

Since the launch of the initiative, the DOL has collected $9.5 million in back wages for more than 11,400 workers.

Why is this important?

How a worker is classified impacts many aspects of their employment:

  • Whether the worker is covered by minimum wage or overtime laws
  • Worker eligibility for Family Medical Leave Act time off, vacation, sick days and other benefits
  • The employer’s potential liability for negligent acts of the worker
  • The ability of the worker to sue for wrongful termination or discrimination
  • Availability of workman’s compensation and unemployment insurance for the worker
  • And more…

But classification is complicated and subject to different criteria, depending on which agency you’re talking to. The IRS has one set of rules, the DOL of has another, and your state labor board may well have a third.

It’s a real mess, and it only looks to get messier.

What are the consequences of misclassification?

You may be wondering if worker classification is really all that big of a deal. The answer, in a nutshell, is YES!

Let’s say the DOL audits your workforce and determines you’ve misclassified some workers. As the first consequence you may find — depending on how you calculated their compensation — you could owe these people back pay to comply with minimum wage laws.

Additionally, if the workers put in over 40 hours in a week, you will almost certainly be liable for time-and-a-half overtime pay for the extra time. (Side note: this is a good reason to track time for all workers, including temps and ICs. If you have their time documented, the courts will generally rely on your records. Otherwise, the court may simply accept the workers’ own recollections to determine overtime pay.)

As much as paying those back wages might hurt, it could represent only the tip of the iceberg.

You could also find yourself fending off the IRS and state officials, seeking back payroll taxes (including the employer’s share of FICA), unemployment taxes, and workers comp premiums — plus interest, penalties and fines.

Beyond that, the workers themselves could pursue legal claims, including possible class-action suits.

You might not even be able to get out from under these obligations by shutting down the business. In July of 2011, the DOL obtained a judgment against the former owners of 1st National Leasing, a defunct company in Tampa, Florida. They were assessed more than $34,000 in back wages owed to former employees who had been misclassified as ICs. Yes, the owners were held personally liable and had to pay the back wages out of their own pockets.

How can you protect yourself?

If you currently have any ICs or temps on staff, your first act should be to consult with your employment law advisor to ensure you’re not taking any unnecessary chances with your worker classification. They should be able to analyze the various criteria and help you compare your current situation with what’s required.

If it’s been awhile since you’ve conducted this sort of review, you may find you need to modify some of your policies and procedures related to ICs and temps in order to maintain their classification. Your supervisors and managers may also need a “refresher course” in what it takes to maintain proper IC classification to ensure they don’t inadvertently get your business in hot water.

You may wish to also create a questionnaire or checklist you can follow to help you assess any new hires to determine their proper classification. Keeping these completed checklists on hand can be evidence of “good faith effort” in the event of a DOL audit.

Worker classification is a complicated issue, and one fraught with peril in today’s lawsuit-prone environment. You owe it to yourself and your business to be aware and take all due precautions.

If you need an accurate, flexible solution to track work hours for independent contractors or regular employees, contact Acroprint at 1-800-334-7190 or online at

Photo Source: Victor1558

Are You Aware of the Regulatory and Legal Changes Affecting N.C. Employers in 2013?

Thursday, March 21st, 2013

2013ELLU-Flash 2012 brought a number of federal and state employment law changes that will affect North Carolina employers this year. Agencies, such as the U.S. Immigration and Customs Enforcement (ICE) and the U.S. Department of Labor (USDOL), are giving employers more challenges by increasing their scrutiny on compliance. North Carolina also has restructured its unemployment insurance system to deal with the state’s federal debt, as well as make the NC Division of Employment Security (DES) more efficient.

Please join us for the 2013 Employment and Labor Law Update at Raleigh’s McKimmon Center on May 22 and May 23. The experienced attorneys of Ogletree Deakins will update you on the latest developments and inform you on what they mean to N.C. employers and how they will specifically affect your organization.

Ogletree Deakins’ knowledgeable attorneys will cover several topics pertinent to employers, including:



Workplace Violence Prevention

Employee Handbooks

N.C. Legislature



Healthcare Reform


Challenges with New Technology

Compensation Systems



Unemployment Insurance Reform

Affordable Care Act


Whistleblower Claims


Brian Hayes, former NLRB member and voice of management on the board for more than two years, will present at this year’s conference. Brian’s term on the NLRB Board may have ended in December 2012, but he’ll share his view on the board’s recent rulings and help you prepare for the new challenges facing employers. Conference favorite Dennis Davis also will share with attendees a special presentation on preventing workplace violence.

If you want to understand how the latest developments in state and federal employment laws and regulations affect your organization, attend this conference. In addition to all the compliance information you’ll receive, you’ll have a number of opportunities to network with leading employment law attorneys and more than 350 HR executives and company leaders.

Please visit to review the event’s full agenda, descriptions about the presentations and to register. Feel free to call 919-878-9222 or 336-668-7746 with any questions.

The Top 10 Healthcare Industry Issues Of 2013 – How They Will Affect Employers?

Tuesday, March 19th, 2013

The post below is a guest blog from Ellen Tucker who serves as Principal, Health & Welfare Consultant  for CAI’s employee benefits partner, HCW Employee Benefit Services.

healthcare_industry_issues This year it is crucial for employers to have a clear understanding of the timeline of each of the components in healthcare reform and a defined strategy around them. It is evident that, while there is change on the horizon, even more change will occur as employers, insurance carriers and members react to the new options and requirements at hand.

 As employers are considering these issues, PricewaterhouseCoopers has released its annual list of the top 10 issues for the healthcare industry, and the topics include a few items of particular importance for employers. This is the list, followed by the implications for employers:

 1)      States on the frontlines of the implementation of the Affordable Care Act (ACA). State officials will decide how to run insurance exchanges, whether to expand Medicaid coverage and what type of insurance market regulation is needed. The biggest challenge facing state governments over the next year is information technology, as most must conduct significant upgrades to existing systems.

 2)      Caring for the nation’s most vulnerable: Dual eligible. Dual eligibles (individuals eligible for both Medicare and Medicaid coverage) are among the nation’s sickest and poorest and often fall through the cracks of two programs not designed to work together. The result is a lack of coordination that often leads to poor quality, inefficiency and avoidable costs. With the ACA set to add 16 million people to Medicaid by 2019, the number of dual eligibles is certain to increase.

 3)      Bigger than benefits: Employers rethink their role in healthcare. Employers have never had a better opportunity to re-examine their long-term role in providing healthcare coverage for their employees. This year will likely be the turning point for how healthcare benefits evolve over the next decade.

 4)      Consumer revolution in health coverage. More Americans will be shopping for their health insurance. As a result, consumers want convenience in how they purchase coverage and transparency in comparing their options. Nearly 40 percent of consumers surveyed by PricewaterhouseCoopers’ Health Research Institute (HRI) said they would purchase insurance at a private insurance company retail store. Consequently, an increase in the use of retail clinics is expected as consumers seek lower cost options for minor ailments.

 5)      Consumer experience hits the pocketbooks of healthcare companies. The Medicare Advantage Star Quality rating system relies on consumer input to generate penalties and bonuses for hospitals and insurers. This could mean a bonus payout of more than $3 billion for insurers and a holdback of $850 million for providers in 2013 based on the impact of the results. Hospitals and health systems are feeling the pinch, as nearly a third of the federal government’s value payment program connects to consumer experience and satisfaction. Moreover, customers support the trend.

 6)      Goodbye cost reduction, hello transformation. With more than 40 percent of consumers postponing care because of costs, hospitals must be competitive. Organizations are making full-scale transformations of their care delivery models, including how and by whom care is delivered. To maintain high quality while implementing sustainable cost reductions, health systems are involving clinicians, staff and patients in redesigning the delivery of care.

 7)      The building blocks of population health management. Population health management shows promise for better health at a lower cost by creating an integrated system of care. Expect to see more partnerships between providers as companies build their population health infrastructure to include shared responsibility for patient outcomes and satisfaction, data collection and analysis, member education and engagement, and a focus on at-risk populations.

 8)      Bring your own device: Convenience at a cost. Only 46 percent of hospitals have a security strategy regulating the use of mobile devices. With more hospitals permitting clinicians to access electronic health records on their personal devices, privacy and security concerns need to be addressed.

 9)      Meeting the new expectations of pharma value. Interest is growing among insurers to partner with pharmaceutical companies to determine unmet medical needs, and improve medication adherence and clinical outcomes. In a recent HRI insurer survey, 43 percent of insurers agreed that they would benefit from a data sharing partnership with pharma companies.

 10)   Medtech industry braces for excise tax impact. The 2.3 percent excise tax on medical devices effective this year could prompt consolidation in a $308 billion global industry consisting mainly of small start-ups with lean product portfolios. Federal bank accounts stand to gain $29.1 billion over the next 10 years from this tax included in the ACA.

 HCW Viewpoint

 Since employers spend a considerable amount of money on healthcare coverage for their employees, health industry issues are of key interest. With the most impactful year regarding healthcare reform implementation quickly approaching, employers are even more eager for information. The decisions facing them are significant, and mistakes could prove costly. 

 Employers have been watching as states decided whether to have a state run exchange, state/federal partnership or a federal run exchange, and whether to implement the Medicaid expansion. For some employers, the Medicaid expansion would provide coverage to additional employees, lowering their possible play or pay penalties effective beginning in 2014. Additionally, employers are determining who they will be required to offer coverage to, whether their benefits are rich enough and whether they meet the affordability requirement. 

 Employers will need to make decisions regarding if they intend to offer coverage to employees in 2014 and beyond, or send their employees to the exchange and pay the penalty. More information regarding the exchanges is emerging, and there may be hundreds of plan designs offered among the four coverage levels. While sending employees to the exchange may sound like the cheapest and easiest option, doing the math generally supports continuing to offer coverage. HCW has developed a “Play or Pay Calculator” that can assist employers in making an objective decision regarding what is otherwise a subjective, reactive one.

 New delivery systems such as accountable care organizations and tiered networks can provide additional options for employers to provide appropriate, cost-effective care over the next few years. These should be part of the overall strategy regarding what actions to take in 2014 and beyond. Staying abreast of health industry issues is critical for employers as decisions are being made. Employers need a custom strategy that is updated with emerging information to allow them to successfully navigate healthcare reform.

 HCW will continue to track these issues throughout 2013, as well as additional emerging information regarding healthcare reform. HCW offers one-hour meetings to walk employers headquartered in North Carolina through a Reform Readiness Plan. To take advantage of this guidance, call 919-403-1986 today and schedule a meeting with on of our experts.

Highlights from CAI’s 2013 HR Management Conference

Thursday, March 14th, 2013

Click to enlarge

CAI’s 2013 HR Management Conference was an event to remember. Nearly 450 HR professionals and company executives attended the two-day event at the McKimmon Center in Raleigh. Themed The Talent Puzzle: Putting the Pieces Together, the conference provided attendees with pertinent information for finding, engaging and retaining high-performing talent for their companies.

Keynote speaker Daniel Pink opened the first day of the conference with a great presentation. A New York Times best-selling author for his book Drive, Daniel Pink informed the audience that management is a system designed to get people to do what you want them to do and keep them engaged. However, being controlled while managed doesn’t engage employees. He also shared three elements that can motivate your workforce: autonomy, mastery and purpose.

In addition to Daniel Pink, three other speakers provided great keynote presentations. Dr. James Johnson from the UNC Kenan-Flagler Business School ended day one with an engaging and informative presentation. He shared in-depth research on the effect of demographic changes on the US workplace. Author of the international best-selling book The Energy Bus, Jon Gordon caught the audience’s attention with his message of positivity and optimism to overcome life and work obstacles. The conference’s final keynote speaker, David Rendall used comedy to get his message across: all characteristics that your employees have are strengths and weaknesses at the same time.

Conference participants also had the opportunity to attend a number of breakout sessions. Here are some of the topics speakers covered:

-High-Value HR: Aligning with Business Strategy

-The New Normal: Managing a Remote Workforce

-On the Job Coaching, Off the Charts Results

-From the Clouds to the Ground: Translating Your Mission into Employee Actions

Your Employees Have Quit, They Just Haven’t Left!

-Strategies for Developing and Changing the Leadership Culture

CAI also announced the winners of the 2013 Ovation Awards for HR Excellence. The awards honor companies that implemented strong people practices to affect business and company culture positively. WingSwept won the small company category for its Pay-for-Performance system. Eisai’s Competence-Based Training and Development program took the mid-size employer category. The large company award went to BlueCross and BlueShield of North Carolina for its Proper Recognition of Personal Success or PROPS initiative.

If you are interested in attending CAI’s next HR Management Conference in 2014, please contact an Account Manager at 919-878-9222 or 336-668-7746.

5 Updates to North Carolina’s Unemployment System You Need to Know

Tuesday, March 12th, 2013

George PortsCAI’s Senior HR Advisor and Government Relations Specialist George Ports explains the five major changes to North Carolina’s Unemployment System now that Governor Pat McCrory signed House Bill 4, UI Fund Solvency & Program Changes on February 19, 2013.

House Bill 4, UI Fund Solvency & Program Changes was drafted in efforts to address the $2.8 billion debt owed to the federal government and to improve efficiency at the North Carolina Division of Employment Security (DES).

Highlights of the five changes to North Carolina’s Unemployment System are:

  • Near elimination of “attached claims”
  • Elimination of “Substantial Fault”
  • Higher taxes at the state and federal levels
  • Elimination of most “good cause” reasons
  • Reductions in benefit amounts and duration

The effective date for most of these changes is July 1st, 2013 with the exception of new employer contribution rates, which will be effective January 1st, 2014

Let’s breakdown the three changes that are receiving most of the attention: reduction in benefit amounts, reduction in the duration of benefits and near elimination of “attached claims”

Reduction in benefit amounts

Currently the maximum weekly unemployment benefit is $535.00.  This maximum benefit, under current law, is indexed annually based upon North Carolina’s average weekly insured wage (AWIW).  So if the AWIW increases, so does the maximum weekly benefit.  The new law’s purpose in reducing the weekly benefit to $350.00 is to bring North Carolina’s maximum weekly unemployment benefit in line with neighbor states that are as follows:

  • Florida –$275       
  • Georgia–$330
  • South Carolina–$326
  • Tennessee–$275
  • Virginia–$378

In addition to the reduction in benefits, the maximum weekly will no longer be indexed annually; adjustments will require legislative action by the North Carolina General Assembly.

Reduction in duration of benefits

Under current North Carolina law, the maximum duration of benefits is 13 to 26 weeks based upon an individual’s work history.  The new law provides that benefit duration is based upon a sliding scale determined by unemployment rates and an individual’s work history.  An example of this sliding scale is as follows:

UI Rate is 5.5%:  12 weeks max. (5-12)

UI Rate is 9.5%:  20 weeks max. (13-20)

Each calendar year there will be two unemployment rates that will affect duration.  One of the rates will be announced in January by the Bureau of Labor Statistics (BLS).  The BLS, although a federal agency, announces the unemployment rate reported by North Carolina. This rate is actually the rate from the previous October.  The second rate will be announced by the BLS July 1st (North Carolina’s rate from the previous April).  In other words, if a claimant files in March the duration would be determined by the January rate.  If a claimant files in September the duration of benefits would be determined by the rate announced in July.

Near Elimination of “attached claims”

Employers are currently able to file attached claims for employees to receive UI benefits during periods of work slowdowns or temporary layoffs.  If the employer provides less than 60% of an employee’s regularly scheduled workweek, attached claims are filed and employees are not separated from the company.

The new law, for the most part, repeals the use of “attached claims” with some exceptions.  The attached claims provision will be available if the employer has a positive credit balance and submits payment to cover cost of benefits.  The payments are to be made at the time the claims are filed and will be credited to the employer’s account.  The logic here is to ensure that the employer’s account does not go into a negative balance.  This provision is limited to one time per employee per calendar year for a maximum of six weeks (Employers with a debit balance can utilize as above if they make an additional payment that would bring their account to at least zero).

CAI/ECNC (Employers Coalition for North Carolina) helped to fund an independent study conducted by a national organization specializing in unemployment and workers’ compensation system. Recommendations from the study were based on an analysis of North Carolina’s current debt/system issues and comparisons with other state systems. CAI/ECNC voiced concerns regarding the total repeal of the “attached claims” provision, which resulted in the limited exceptions included in the legislation as noted above. One of the main sponsors of House Bill 4 testified in a legislative committee that benefits paid out for “attached claims” accounted for nearly half of North Carolina’s $2.8 debt to the federal government.

This new law has pain points for both claimants and employers.  However, the passage of the legislation was necessary to pay off the $2.8 billion unemployment debt owed to the federal government, bringing solvency back and repairing North Carolina’s broken Unemployment System. 

The Employers Coalition of North Carolina (ECNC) is committed to improving the business climate of North Carolina through political advocacy at the legislative and administrative levels of government. For more information about ECNC, please visit


Don’t Lose Productivity When You Lose an Hour

Thursday, March 7th, 2013

effective time managementDaylight Saving Time is quickly approaching and will officially arrive at 2 a.m. this Sunday. To add daylight to our evenings and afternoons, we must lose an hour. For most of us who think there are already too few hours in the day, one less hour of sunlight could have a negative effect on productivity.

Don’t let the loss of time weaken your performance or increase your stress.  Try incorporating some time management strategies into your daily routine to stay productive. Effective time management isn’t an easy skill to maintain, but once you do, a number of benefits will emerge. Meeting deadlines will be easy. You’ll eliminate mistakes caused by rushing. Free time outside of work will increase because you were efficient with your time in the workplace.

Use the time management tips below, and the added daylight will only be a reminder that spring is near:

Treat yourself well

A good start to effective time management is practicing a healthy lifestyle. Poor concentration skills are often a result of not treating your body well. Help yourself focus by eating nutritious meals, exercising several times per week and getting plenty of sleep each night.

Plan your attack

Start each work day with a specific mission. Whether that mission is in the form of a to-do list or several reminders on your outlook calendar know what you want to accomplish. Being specific about what you want to get done will help you stay on track and avoid getting distracted.

Divide and conquer

 Not all of your projects have the same weight, so don’t treat them like they do. Small tasks are easy to accomplish, but ignoring big projects can cause stress when you’re racing to meet a deadline. Break up your massive project into smaller pieces to prevent yourself from becoming overwhelmed. Work on a part of it each day of the week, and voilá, you’ll finish before expected!

Don’t do everything

You don’t have to do everything, and you shouldn’t. Utilize help from your coworkers if you have items that can be completed quicker with teamwork, and reciprocate the favor when they come looking for extra hands. Additionally, if you don’t have time to do something, say no. Piling assignments onto your plate may get you that raise or promotion, but if you’re not able to handle the large workload, you’ll crash and burn from stress.

For additional tips to effectively manage time and increase your productivity, consider participating in CAI’s Time Mastery: Taking Control of Your Time course.

Photo Source: JogiBaer2

3 Actions Marissa Mayer Could Have Taken to Fix Yahoo’s Remote Work Problem

Tuesday, March 5th, 2013

Marissa MayerBy now, many professionals are aware of CEO Marissa Mayer’s decision to end workplace flexibility at Yahoo. Several business experts have given their opinion on the decision by the technology company’s top management. Some agreed with her actions, saying it was necessary to turn around a failing company. Others have said her actions don’t align with positive business practices of today.

CEO is no easy role. Turning a company around is no easy task. Time will tell if Mayer’s decision will help Yahoo or hurt the progress she’s helped the company achieve. Instead of deciding whether her decision was the right one, I’d like to offer Yahoo’s CEO another way to handle the situation. In my opinion, blanket decisions are never the best way to address employee performance issues. The email blast sent from Yahoo’s HR chief is not usually an effective way to deal with a sensitive people issue.

Maybe Mayer wants people to leave without firing them. Maybe she wants to figure out who’s working and who’s not. Maybe she wants to change Yahoo’s current culture. There aren’t a lot of details so we can speculate a long-list of reasons. However, whatever her reason was, this people decision could have been handled better.

Here are three actions Mayer and her team could have made (and can still make) that will help Yahoo address its remote work problem, making the company more productive and successful. These three steps show that businesses can improve without ignoring the needs and wants of your employees.

Revaluate Policies

Many ex-Yahoo employees have come to Mayer’s defense, saying that the company’s remote work policy was too lax. Well, if it’s too lax, management should give it more structure. Company policies should not be set in stone. Make an effort to review your policies on an annual basis. When they are no longer serving their purpose or being ignored by employees, it’s up to the people in charge to update policies and announce the changes through several forms of communication. Some examples include an internal newsletter, a staff meeting or a manager-direct report meeting.

Identify Top and Weak Performers

All employees should not be treated equally. Your top performers should never be lumped into the same group as your weak ones. So one-size-fits-all solutions, like the one that Yahoo’s HR chief sent out, to address poor performers can have a pretty negative effect on the morale of your employees who are always delivering stellar work. Managers, don’t punish your good employees because of the behavior from your bad ones. Instead, look at each employee’s performance individually. If they aren’t doing their work, they don’t get to work remotely—simple as that. An underperformer doesn’t deserve the same perks as one who always overachieves.

Check Progress

Reading the different reports on the situation at Yahoo leads me to believe the company has an accountability problem. How were employees allowed to begin start-up companies while working remotely? Why were people not making their deadlines or delivering on their goals? This is not just an employee performance issue; it’s also a management issue. Leaders do not have to be micromanagers, but they are responsible for ensuring that their direct reports are doing their jobs. Weekly phone calls or meetings to review progress on different projects are integral for keeping your employees engaged and productive. Weekly meetings are also a great way to share your appreciation for your employees, so they won’t feel that their efforts aren’t important, leading them to start a new business on their own.

If you’re having employee performance problems at your organization and need help finding a solution, please call a member of CAI’s Advice and Counsel Team at 919-878-9222 or 336-668-7746.

Photo Source: Jolieodell