Every year employers face the possibility of hundreds to even millions of dollars’ worth of employment penalties. And the stress of avoiding these penalties weighs on a large swath of America’s HR employees and business leaders. According to a 2017 study by the Guardian Life Insurance Company of America, over 60 percent of employers are overwhelmed by increased demands and complexity of managing their company’s benefits programs.
Even bigger companies, with a more considerable of available resources, struggle with issues related to compliance. Per the same study, 69 percent of respondents from large employers, admitted to struggling issues associated with rolling out new coverage, changing insurers, conducting open enrollment, and communicating with employees.
If you’re one of the firms having trouble ensuring your firm is compliant, keep reading. In this article, we’ll tell you the five things you can do today, to improve and maintain your company’s compliance.
1. Know the Importance of Your Employee Handbook
According to the U.S. Bureau of Labor Statistics, only one in 4 small businesses has an updated employee handbook. While these handbooks aren’t legally mandated, it’s vital for companies a detailed employee handbook to clearly define your workplace benefits, rules, and policies.
For example, your handbook must include such statutes as zero tolerance for violence, substance abuse, and harassment or discrimination. Similarly, your handbook should include how to document and report violent acts or types of harassment. Clear anti-violence and anti-harassment policies are necessary to maintain a safe and productive workplace.
Additionally, your handbook should detail policies and procedures surrounding hiring, employee discipline, and termination. Attendance expectations, including what constitutes misconduct, should also be outlined in the handbook. Finally, your handbook should include an employment-at-will statement and equal opportunity statement to protect your business from potential lawsuits.
2. Understand Employment Law
There are a plethora of employment laws you and/or your HR team needs to understand to maintain your organization’s compliance. For example, under the Affordable Care Act (ACA), companies must offer affordable health coverage if they have a certain number of full-time and full-time equivalent (FTE) employees. Additionally, your company needs to know how the following laws impact employment decisions:
- Title VII of the Civil Rights Act of 1964
- The Equal Pay Act of 1963
- The Civil Rights Act of 1966
- The Immigration Reform and Control Act of 1986
- The Americans with Disabilities Act of 1990
- The Bankruptcy Code
- Equal Employment Opportunity Act of 1972
- The Age of Discrimination in Employment Act
3. Confirm Employee Benefits are ACA and ERISA Compliant
Your company, depending on its size, may have to adhere to specific benefits rules included in the Affordable Care Act (ACA) and the Employment Retirement Income Security Act (ERISA). Each of these laws details particular rules or regulations your benefits must meet to stay compliant. For example, organizations with 50 or more FTE workers must offer health insurance that covers mental health services.
Employee benefits can be a confusing, timely subject. And, if your benefits plan isn’t 100 percent compliant, it can also be extremely costly. A “no offer” penalty from a qualified employer costs $208 per month multiplied by the number of the employer’s full-time employees (minus 30 such employees). Make sure you, or your benefits broker, stays on top of your benefits plan compliance to ensure you don’t face such stiff penalties.
4. Make Sure Communications are Timely and Accurate
Multiple federal laws, such as ERISA and the ACA, require plan sponsors to provide various disclosures and communications to employees and other plan participants. As an employer, you must prepare and distribute these communications with the utmost care. Failure to do so can result in:
- Potential taxes, penalties, and participant lawsuits
- The inability to enforce a benefits plan change
- The inability to reduce and/or eliminate benefits
These issues can quickly become both costly and burdensome if left unchecked. To avoid these potential issues, your company should follow a compliance calendar that lists exactly when each communication should be sent. Similarly, make sure your firm has a process in place complete and review these communications are both accurate and timely.
5. Document Employee Performance
Some of the trickiest employer compliance topics are hiring, firing, promotion, and disciplinary decisions. Your company must develop an effective record-keeping system to document all employee issues as they arise. And these records should include what your firm did to resolve those issues.
Documentation provides evidence of what performance issues were discussed when they were, and how they were resolved. In cases of termination and discipline, these records provide evidence that supports your decision and prove the employee was terminated or disciplined for legal reasons.
Nobody likes to pay penalties or fees, especially the more substantial they are. And, while compliance penalties and employment lawsuits aren’t new, their associated costs are increasing. According to the Equal Employment Opportunity Commission (EEOC), the average total claim cost in 2017 was $460,000. Similarly, settlement payments and defense costs averaged $160,000 and $300,000 respectively. So, use the advice above to improve and maintain your company’s compliance. And, if you need additional help, contact The Olson Group’s compliance expert, Roxy Kolev, at [email protected] or [email protected].