Got Overtime? Make Sure You’re Handling It Correctly.

When it comes to payroll mishaps, there’s a lot at stake. Costly fines, penalties, and litigation can do serious damage to your company.  

Even if your payroll mistake is accidental and relatively small, it can quickly balloon into a large financial burden. One company’s $608 overtime mistake ended up costing them nearly $45,000 when it was all said and done.

And if that’s not enough to worry about, payroll mistakes can also lead to unhappy employees, low workplace morale, class action lawsuits, and negative press. All of which are bad for business.

Where are businesses going wrong?

Payroll can be a nuanced and complicated processes, changing with every new law, regulation, and employee that comes along. If you’re not on top of it constantly, things can go bad quickly.

Here are some common payroll mistakes companies make:

  • Misclassifying employees
  • Using inaccurate time tracking methods
  • Keeping poor records
  • Missing deadlines
  • Being uniformed

Often, the problem is as simple as poor communication. Deadlines get missed. Hours are worked but not reported. Employees and managers have different expectations about what is and isn’t acceptable.

It’s all about the details

Even employees with the best intentions can put their employers at risk. Motivated staff may actually want to skip breaks and/or put in extra hours without expectations of pay. But even if these employees don’t expect to get paid for those extra hours, employers are still on the hook for following and enforcing all wage and hour laws.

Some companies will take advantage of employees like this by looking the other way and hoping they don’t get caught, but many companies are truly unaware that their employees are working off hours.

Technology plays a role here as well. Cell phones, laptops, and remote work options make it very easy for employees to log additional time off the clock without anyone knowing. Often, these employees themselves don’t realize they are doing anything wrong. But small overtime mistakes can add up to big trouble.

Keys to effective overtime management

1. Make compliance a priority

It all starts with knowing your responsibilities as an employer— and staying in compliance. Unfortunately, this isn’t something you can do one time and trust that it will take you into the future. Compliance is an ongoing process that requires constant attention.

2. Invest in your HR and payroll systems

If your payroll person is also your HR person, your accountant, and your receptionist, you’re just asking for a wage and hour violation. Invest in strengthening your internal HR team or consider partnering with an outside payroll company to help. Whoever is in charge of these things needs to have the bandwidth, knowledge, and experience to get them done correctly.  

3. Classify employees correctly

Misclassification of employees is one of the most common causes of labor lawsuits. Pay close attention to the rules for classifying contractors, exempt, and non-exempt employees— and follow them to the letter. If you’re feeling uncertain, this is another area you can ask a payroll expert for help.

4. Communicate with your team

You’ve gone through the trouble to learn the ins and outs of wage and hour law, but do your employees know what they need to do? Spell out the details of what is and isn’t acceptable when it comes to overtime and hours worked and let them know what will happen if they don’t follow the rules.

5. Keep accurate time

If your time tracking system isn’t accurate, your payroll system won’t be either. It’s as simple as that. Find a system that is consistent, precise, secure, and easy to use. Then, make sure you get your money’s worth by clearly explaining how it works and requiring everyone to use it. 

Play it safe

Effectively managing overtime will help protect your company from payroll and compliance violations, wage and hour fines, and class action lawsuits. This alone should be more than enough motivation to keep you on the right side of wage and hour compliance, but it doesn’t end there.

Avoiding payroll mistakes will save you time, money, and headaches. It will also keep your employees happier— which means they’ll keep clocking in for years to come.


Content provided by Q4iNetwork and partners 

Photo by ViDi Studio

The How and What of Employee Handbooks

An effectively written employee handbook protects the both the employee and the employer by providing clear, concise terms and expectations on both sides. When done right, this useful HR tool can serve several important functions.

Here are some key things a well-written employee handbook can do for your business:

  • Clarify organizational policy
  • Answer common employee questions
  • Save your HR staff time and headaches
  • Highlight your employee benefits and perks
  • Address legal obligations and employee rights
  • Help make sure your company is in compliance
  • Reinforce company values, mission, and culture
  • Properly set employer and employee expectations
  • Provide a common set of rules and accountability for everyone
  • Make new team members feel good about joining your organization

Who wouldn’t want to put together a document that can do all this?

Plenty of people, actually. It’s not that they don’t want to do it. It’s just that many people aren’t sure how to make it happen, so they get stuck.

How to get started

Putting together a top-notch employee manual may sound overwhelming, but it might not be as hard as you think.

If you have a current handbook, start there. Revisit the content to see what information is outdated and what parts are still a good fit with your current processes, systems, culture, and vision. As you evaluate your existing content, keep an eye out for anything that is missing or needs to be added.

If you don’t have a current handbook, there are resources to help. Employee handbook builders can be a great way to get started. If you don’t know where to find these kinds of tools, talk with your employee benefits broker, commercial insurance agent, or employment law attorney. Anyone in your circle of trusted business advisors should be able to point you in the right direction.

What should be included

What kinds of things should you be looking out for? Here’s a list of common things to include in an employee handbook:

  • Code of conduct and behavior expectations
  • Compensation, timekeeping, and payroll
  • Attendance and remote work
  • Employee benefits and perks
  • Paid holidays, vacation, and time off
  • FMLA and employee leave
  • EEO and anti-discrimination
  • Anti-harassment and anti-retaliation
  • Workplace safety and security
  • Technology
  • Social media
  • Data privacy
  • Employee wellbeing and/or assistance
  • Dress code and appearance standards
  • At-will disclaimers (as applicable)
  • Acknowledgement of receipt (signature page)

Because every organization is different, you will want to base your exact content on your own unique business model and situation. To make sure all of your bases are covered, have an attorney review your manual before you consider it complete. 

Keys to employee handbook success

Your employee handbook can be a powerful document in your business tool box. To maximize its effectiveness, you’ll want to follow a few basic guidelines.

Stay true to your brand – Your employee manual should be consistent with your company voice and values.

Stay away from industry jargon – Use language that is clear and easy to understand.

Pay attention to spelling, punctuation and grammar – Don’t leave any room for confusion.

Format your handbook for easy reading – Use plenty of section headers, bullet points, and paragraph breaks.

Keep it simple – Your employees don’t want to read a novel, and you don’t want them skimming over important information.

Keep it up to date – Set aside time each year to review and update your employee handbook.

Ask an expert – Have your attorney look over the final draft to make sure it has everything that needs to be included and nothing that shouldn’t be.

Once you’ve put together an employee handbook you are proud of, don’t just admire your work of art. Make sure it gets in the hands of everyone on your team so it can fulfill its many missions. Your organizational leaders, your HR department, and your happy employees will all appreciate it.


Content provided by Q4iNetwork and partners

Photo by OoddySmile Studio


Ask the Experts: Medical Loss Ratio (MLR) Rebates

Guest blog content provided to Q4iNetwork Consultants by Think HR thinkhr logo.png

Question: Our company received a rebate check from our health insurance carrier. As the employer, we pay the bulk of premiums, although employees who enroll for coverage do pay a portion of the cost. Are there restrictions on how we can use the rebate money?

Answer: Yes, there are restrictions on using the rebate. The details depend on a few factors.

Health insurers, including HMOs, are required to spend the majority of the premiums they collect on actual health benefits, excluding administration, marketing, and profit. The percentage of premium spent on claim payments and other benefits is called the medical loss ratio (MLR). The MLR standard is 80 percent in the small group market or 85 percent in the large group market (or the percentage set by state law).

Insurers that fail to meet the MLR standard are required to rebate (refund) the excess premium back to their policyholders.

Health plans sponsored by private-sector employers are subject to the Employee Retirement Income Security Act (ERISA), which imposes rules on the use of plan assets. In most cases, at least a portion of the rebate is a plan asset, so the ERISA rules apply. The Department of Labor (DOL) provides guidance to employers who receive MLR rebates.

First, the DOL guidance indicates that the employer may retain the rebate to use at its discretion, but only if the plan’s governing documents state that:

  • A rebate is an employer asset and is not a plan asset; and
  • The amount of the rebate is less than the employer’s total contribution during the relevant period.

Next, many plan documents and SPDs do not include the necessary language allowing the employer to retain the rebate. In that case, the DOL guidance requires the plan sponsor (employer) to use all or some of any rebate for the sole benefit of plan participants (employees, COBRA beneficiaries) based on the percentage of premium attributed to participant contributions.

For example, let’s assume the employer paid 80 percent of premium costs while the total of employee payroll deductions and COBRA payments represented the other 20 percent. That means that 20 percent of the rebate is an ERISA plan asset and must be used for the participants’ sole benefit, while the employer can use the other 80 percent as it chooses.

Here are a few options for using plan assets appropriately:

  • Provide additional plan benefits, such as reducing deductibles or copays.
  • Reduce future participant contributions, such as reducing future payroll deduction amounts and COBRA premiums or granting a premium holiday.

As an alternative, cash refunds can be made to the plan’s participants. Cash refunds are not advisable, however, due to tax consequences (unless the same participants had originally contributed the premium on an after-tax basis).

Note that rebates, or at least the portion that is a plan asset, should be used within three months of receiving the funds from the insurer. ERISA requires plan assets to be held in trust, but this requirement can be avoided by using the asset within three months.

Lastly, in special cases, such as plans sponsored by governmental employers or policies that are in the name of a plan or trust, the employer should review its options with legal counsel.


Photo by Ion Chiosea 


District Court Judge in Texas Strikes Down the ACA – But Law Remains In Effect for Now

Content provided to Q4iNetwork Consultants by Marathas Barrow Weatherhead Lent LLP.  MBWL_logo_1

On Friday, December 14, a federal judge in Texas issued a partial ruling that strikes down the entire Affordable Care Act (ACA) as unconstitutional. The White House has stated that the law will remain in place, however, pending the appeal process. The case, Texas v. U.S., will be appealed to the U.S. Court of Appeals for the Fifth Circuit in New Orleans, and then likely to the U.S. Supreme Court. 

The plaintiffs in Texas (a coalition of twenty states) argue that since the Tax Cuts and Jobs Act zeroed out the individual mandate penalty, it can no longer be considered a tax. Accordingly, because the U.S. Supreme Court upheld the ACA in 2012 by saying the individual mandate was a legitimate use of Congress’s taxing power, eliminating the tax penalty imposed by the mandate renders the individual mandate unconstitutional. Further, the individual mandate is not severable from the ACA in its entirety. Thus, the ACA should be found unconstitutional and struck down.

The court in Texas agreed, finding that the individual mandate can no longer be fairly read as an exercise of Congress’s Tax Power and is still impermissible under the Interstate Commerce Clause—meaning it is unconstitutional. Also, the court found the individual mandate is essential to and inseverable from the remainder of the ACA, which would include not only the patient protections (no annual limits, coverage of pre-existing conditions) but the premium tax credits, Medicaid expansion, and of course the employer mandate and ACA reporting.

Several states such as Massachusetts, New York and California have since intervened to defend the law. They argue that, if Congress wanted to repeal the law it would have done so. The Congressional record makes it clear Congress was voting only to eliminate the individual mandate penalty in 2019; the record indicates that they did not intend to strike down the entire ACA. 

It is worth noting that the Trump administration filed a brief early in 2018 encouraging the court to uphold the ACA but strike down the provisions relating to guaranteed issue and community rating. 

The ACA has largely survived more than 70 repeal attempts and two visits to the U.S. Supreme Court. We anticipate it will survive this one too, in time. While the Supreme Court lineup has changed, all five justices who upheld the ACA in 2012 are still on the bench. Moreover, the Supreme Court may be reluctant to strike down a federal law as expansive as the ACA, particularly when it has been in place for nearly nine years and affects millions of people. Notably, the Supreme Court was not required to rule on the “severability” issue in 2012.

Given a strong tradition of the Supreme Court to avoid, if possible, broad rulings of unconstitutionality in established laws, it is not unlikely that the current Court, if this case makes it that far, will find a way to hold that even if the Court’s 2012 logic with respect to the individual mandate is no longer applicable, the rest of the law is severable and saved, thus avoiding once again a broad ruling on the ACA’s constitutional soundness. The bottom line: employers should continue to comply with the ACA, as its provisions (including the employer mandate and associated reporting) remain the law for the foreseeable future.

Photo by feverpitched

This alert was prepared for Q4iNetwork Consultants by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. 

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients.  This is not legal advice.  No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2018 Marathas Barrow Weatherhead Lent LLP. All Rights Reserved.

Sometimes a Lack of Regulation Creates Problems

Guest blog content provided to Q4iNetwork Consultants by National Association of Health Underwriters (NAHU)

Typically, when the federal government announces that it won’t be seeking regulatory action any time soon, both brokers and employer group plan sponsors rejoice.

However, in this case, a lack of federal regulatory activity may cause headaches for companies that offer certain kinds of wellness programs and their advisors.

Two federal wellness program regulations from the Equal Employment Opportunity Commission (EEOC) are being vacated as of January 1, 2019.

The EEOC just announced that rather than replace them in October of 2018, as initially planned, new regulations will not come until the summer of 2019 at the earliest. That means many group wellness plans offered in 2019 will need to make some compliance decisions and many brokers will need to help them.

Last year, a federal judge ordered the EEOC to revise two regulations originally crafted to give employers a clear safe harbor to operate voluntary wellness programs that didn’t conflict with the Americans with Disabilities Act (ADA) or the Genetic Information Nondiscrimination Act (GINA). These rules apply to any wellness program that requires participation in a medical service and/or the provision of medical history information to get a wellness incentive.

The judge deemed the incentive limits in the rules arbitrary and asked the EEOC to act quickly to revise them. When the EEOC announced that they didn’t plan on revising the regulations until 2021, the judge issued an order vacating them on January 1, 2019.

In the order, the Judge strongly suggested that the EEOC revise both regulations and their incentive limits before the New Year, so as to not cause problems for group health plan administrators. However, they failed to act, so employers no longer have a wellness program compliance safe harbor to protect them, should a participant claim an ADA or GINA violation. Furthermore, since the court ruled that the incentive limits in the current EEOC rules lack a sound legal footing, the absence of new regulations will make it difficult for wellness plan sponsors to set the value of their program awards in 2019.

Employers offering wellness programs that are subject to the EEOC rules have a few different options for 2019, all of which have their potential pitfalls.

The most dramatic choice a company could make would be to discontinue the group wellness program until the EEOC issues new regulations. Doing so would offer a business complete legal protection, but it would deprive both the employer and the employees the benefits of a group wellness plan.

Another safe and relatively simple choice would be to amend the group wellness program criteria so that no participant has to share medical history data or obtain medical services to get a reward. Lots of group wellness plans already operate under these parameters, so there are many existing program models to follow. However, this option would require a restructuring of the employer’s existing plan, with all of the work and headaches that come along with that.

If an employer group decides to keep asking for medical history information or requiring participants to receive a medical service to get a program reward, then the group will need to make decisions about how they will structure their awards in the year ahead. Whatever choice the employer makes will include some legal risk.

One option would be to continue the 2018 program reward structure into 2019, continuing to follow the old EEOC rules regarding award amounts. These rules limited award values to no more than 30% of the total single employee premium, even if the participant enrolled in family coverage. Participating spouses incented to give a medical history could also earn an award valued up to 30% of the single premium. If the wellness program included a smoking cessation program with medical testing, then the total award value could not exceed 50% of the single employee premium.

Keeping the old reward structure might seem like an appealing choice. It would require no changes and, if challenged, the employer could claim that they were acting in good faith by continuing to follow the old rules in the absence of new ones. However, since the federal judge vacated these rules and declared this incentive formula invalid, employers who follow this path will need to be prepared to make incentive changes if someone files a complaint, and they also risk potential enforcement action for ADA and or GINA violations.

The other possibility is abandoning the EEOC rules and applying the longstanding HIPAA/ACA wellness requirements concerning award value if they are relevant. The ACA/HIPAA incentive value rules only impact health-contingent wellness programs that ask participants to meet a health goal before they get an award. Unlike the EEOC rules, the ACA/HIPAA requirements do not apply to participatory programs, and their limits apply to the overall premium a person pays for coverage, rather than the single premium rate, making it possible for reward values to be much higher for participants with family coverage.

Employers that elect this course of action also would be operating in good faith, but since there is no longer a legal safe harbor, their program could be subject to a legal challenge about potential violations of the ADA and/GINA. The group health plans that follow this path will also have to be prepared to make program incentive changes at some point, assuming that the EEOC will eventually adopt revised requirements.

No matter what choice an employer makes, they should make sure their ERISA plan documents reflect any changes they make to their group wellness plan and stay alert to any new regulatory action by the EEOC during 2019. 


Photo by lightwise