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Cybersecurity - DOL Guidance
Cybersecurity – DOL Guidance 1024 577 LaDonna Kearney

Cybersecurity – DOL Guidance

Department of Labor Weighs in on Cybersecurity:

The U.S. DOL has cybersecurity guidance for plan sponsors, fiduciaries, recordkeepers and participants. The guidance aims to help safeguard an estimated $9.3 trillion in plan assets and pertains to employer-sponsored plans regulated by the Employee Retirement Income Security Act (ERISA).

Since ERISA covers retirement plans and health and welfare plans, you may be wondering whether the DOL’s guidance applies only to retirement plans or to all ERISA-covered plans.

According to Groom Law Group, “notably, while some of the guidance package is framed in the context of retirement plans, the guidance appears to apply to all ERISA plans, including health and welfare plans, as the underlying fiduciary responsibilities and obligations are equally applicable in both contexts.”

Ultimately, the guidance confirms that ERISA requires plan fiduciaries to mitigate cybersecurity risks and offers best practices in three areas:

  1. Service provider selection.
  2. Cybersecurity programs.
  3. Online security.

1. Service provider selection

This part of the guidance provides tips for choosing service providers with strong cybersecurity practices in place.

For example, before hiring a retirement plan service provider:

  • Ask them about their established information security policies, procedures and standards.
  • Request to see their audit results and determine whether those results are in line with industry standards.
  • Inquire about their levels of security and whether they have insurance to cover potential losses caused by a cyberattack.
  • Find out whether they have suffered security breaches in the past. If so, what happened, and how did they respond?

For more information, see the DOL’s Tips for Hiring a Service Provider With Strong Cybersecurity Practices.

2. Cybersecurity programs

As stated, service providers should have a strong cybersecurity system. The second part of the DOL’s guidance helps plan fiduciaries understand the components of a strong cybersecurity system. They include:

  • A formal, properly documented cybersecurity program.
  • Annual risk assessments.
  • Annual third-party audits.
  • Periodic cybersecurity awareness training.
  • Robust access control procedures.
  • A program addressing business continuity, incident response and disaster recovery.
  • A chief information security officer to oversee the cybersecurity program.

For more information, see the DOL’s Cybersecurity Program Best Practices.

3. Online security

This part of the guidance helps plan participants and beneficiaries who use the internet to check their retirement plans to lower the risk of fraud and loss.

The guidance offers online security tips for the following:

  • Registering, setting up and monitoring an online account
  • Utilizing strong and unique passwords.
  • Applying multifactor authentication.
  • Keeping personal contact information updated.
  • Closing or deleting unused accounts.
  • Being cautious of free Wi-Fi.
  • Being wary of phishing attacks.
  • Installing antivirus software and keeping it current.
  • Knowing how to report cybersecurity incidents, including identity theft.

For more information, see the DOL’s Online Security Tips. Also, help your plan participants protect themselves by informing them of the DOL’s online security tips. Finally, note that this is just a summary of the major provisions. Consult qualified professionals and the original DOL guidance for essential details.

©2023

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Employee Protection - 7 laws that protect employees from retaliation and other forms of discrimination
7 Laws that Protect Employees From Retaliation 1024 577 LaDonna Kearney

7 Laws that Protect Employees From Retaliation

Employment law has evolved over the decades to help protect employees from retaliation and other forms of discrimination. Whether you are an employee or an employer, it is good to be aware of the following laws:

1. Title VII of the Civil Rights Act of 1964

Forbids employers from discriminating against job applicants and employees based on their race, color, national origin, sex or religion.

An employer cannot retaliate against an employee for objecting to discrimination under Title VII, reporting discrimination, filing a discrimination charge or participating in a discrimination legal proceeding. 

Employers with 15 or more employees must adhere to Title VII.

2. The Age Discrimination in Employment Act (ADEA)

Prohibits discrimination based on their age against job applicants and employees who are 40 years or older.

Under the ADEA, these individuals cannot be retaliated against for opposing the employer’s discriminatory actions, filing a discrimination charge or participating in a discrimination proceeding.

The ADEA covers employers with 20 or more employees.

3. The Americans with Disabilities Act (ADA)

Makes it illegal for employers to discriminate against job applicants and employees with disabilities.

Title V of the ADA prohibits employers from retaliating against qualified individuals who object to the employer’s unlawful practices or have “made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this chapter.”

The ADA applies to employers with 15 or more employees.

4. The Equal Pay Act (EPA)

Requires that employers compensate men and women equally for performing the same work at the same location.

Designed to eliminate gender-based wage discrimination, the EPA also forbids employers from retaliating against employees who exercise their rights under the act.

All employers must comply with the EPA.

5. The Fair Labor Standards Act (FLSA)

Establishes federal minimum wage, overtime, child labor and recordkeeping standards.

In addition, the FLSA protects employees who have filed FLSA-related complaints from retaliation. Among other things, an employer cannot retaliate against an employee for participating in a Department of Labor audit, testifying in a legal proceeding, filing a wage complaint or communicating with Wage and Hour Division investigators.

The FLSA covers most private-sector employers.

6. The Occupational Safety and Health Act (OSHA)

Sets federal health and safety standards to protect people on the job.

Per Section 11(c) of the OSHA, it is unlawful for employers to retaliate against employees who assert their rights under the act — such as by complaining about unsafe or unhealthy working conditions. OSHA also oversees more than 20 whistleblower protection laws.

Any employee can file a complaint with OSHA if he or she believes his or her employer violated a retaliation or whistleblower law that OSHA administers. 

7. The Family Medical and Leave Act (FMLA)

Requires covered employers to provide unpaid, job-protected leave to eligible employees.

Under the FMLA, employees cannot be punished for exercising their FMLA rights, including taking FMLA leave.

The FMLA applies to employers that have 50 or more employees during at least 20 weeks of the year.

Employers should consider other federal laws — such as the National Labor Relations Act and Title II of the Genetic Information Nondiscrimination Act (GINA) — plus any state laws that protect employees from retaliation. In fact, this is just a brief intro to a wide range of laws, and regulations are always changing. The bottom line? Work closely with legal and HR experts.

©2023

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Employee Identification Numbers - EIN
HR Insight: How Do Employer ID Numbers (EIN) Work? 1024 577 LaDonna Kearney

HR Insight: How Do Employer ID Numbers (EIN) Work?

If you have a company, you need an Employee Identification Number. There are various ways to apply for an EIN, including online at no cost. The online federal EIN application is in a question-and-answer format, with embedded help topics and hyperlinked keywords and definitions. It must be completed in one session — you won’t be able to save it and return later.

Once all validations are complete, you’ll get your EIN immediately. You can download, save and print your confirmation notice — a fast, free and user-friendly way to get your EIN. Beware of websites that charge for this free service. You can check your state to discover whether you need a state number or charter.

But let’s take a step back. When you apply for an EIN, it is presumed that your business structure is legal, so it’s best to be sure your organization was formed legally before you apply. The clock starts running on the three-year period if you fail to file a required return or notice.

When do you need a new EIN?

If you’re a sole proprietor, you will need a new EIN when there’s a change of ownership or structure, but not for a name change, a change in location, if you add other locations or if you operate multiple businesses. You’re required to obtain a new EIN as a sole proprietor if:

  • You’re subject to bankruptcy proceedings.
  • You incorporate.
  • You take on partners or operate as a partnership.
  • You purchase or inherit an existing business that you operate as a sole proprietorship.

If you incorporate, you’ll need to obtain a new EIN if:

  • Your corporation receives a new charter from the secretary of state.
  • You are or become a subsidiary of a corporation using the parent’s EIN.
  • You change to a partnership or a sole proprietorship.
  • A new corporation is created after a statutory merger.

You won’t need a new EIN as a corporation if:

  • You’re a division of another corporation.
  • The surviving corporation uses the existing EIN after a corporate merger.
  • Your corporation declares bankruptcy.
  • Your corporate name or location changes.
  • You choose to be taxed as an S corporation.
  • You reorganize your corporation and it changes only the identity or place.
  • Your business structure remains unchanged as conversion occurs at a state level.

If your company is a partnership, you’ll need a new EIN if:

  • You incorporate.
  • Your partnership is taken over by one of the partners and is operated as a sole proprietorship.
  • You end an old partnership and begin a new one.

You won’t need a new EIN as a partnership if:

  • Your partnership declares bankruptcy.
  • The partnership name changes.
  • You change the location of the partnership or add locations.
  • A new partnership is formed because of the termination of a partnership under IRC Section 708(b)(1)(B).
  • Fifty percent or more of the ownership of the partnership (measured by interests in capital and profits) changes hands within a 12-month period (terminated partnerships under Reg. 301.6109-1).

And if you’ve lost or misplaced your EIN and want to verify it, you can visit the online EIN site for instructions. You may also ask the IRS to search for your EIN by calling the Business and Specialty Tax Line at 800-829-4933 . The hours of operation are Monday through Friday, 7 a.m. to 7 p.m. local time.

The IRS is limiting EIN issuance to one per responsible party per day. The responsible party is the person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage or direct the entity and the disposition of its funds and assets.

When you apply for an EIN with the IRS assistance tool, your nine-digit federal tax ID becomes available immediately upon verification.

Note that this is just a summary; the rules can change over time. Your best bet is to work with a qualified tax adviser.

©2023

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Time Off To Volunteer as an Employee Benefit 1024 577 LaDonna Kearney

Time Off To Volunteer as an Employee Benefit

“To prosper over time,” Laurence Fink, CEO of BlackRock, once wrote in a public letter, “every company must not only deliver financial performance but also show how it makes a positive contribution to society.” Employee volunteer programs help you align with your corporate vision by offering such opportunities to your employees and nonprofit partners. Thoughtful planning and execution are essential to having an impact on company culture and making a difference for your team and in your community.

Paid time off for volunteering is one of the few employee benefits that’s increased significantly over the past five years. Among the benefits of well-designed company volunteer programs are boosting productivity and increasing employee engagement.

Working together to tackle community issues in different settings tests employees’ adaptability and problem-solving abilities. More than 80% of professionals surveyed pointed to volunteer programs as helping them develop leadership skills. Volunteering promotes trust and camaraderie by building a sense of community among employees as they work toward common goals. Service to the community builds teamwork internally — 79% said that volunteer service improved their communication skills.

Programs that prioritize meaning and give employees a belief that their efforts contribute in important ways are successful. You can create an initiative and give employees active roles in shaping their focus and features or provide the basic scaffolding for volunteering and allow workers to create and build specific opportunities that fit the company’s vision and appeal to their personal passions.

Employees are motivated to volunteer by intrinsic factors: self-esteem and recognition. Younger talent consider volunteer programs a significant priority when evaluating potential jobs. Nearly two-thirds of young professionals say they’d prefer to work for a firm that provides opportunities to serve the community with their skills.

Benefits to the bottom line

Corporate service can build brand awareness, affinity, trust and loyalty among customers. A good reputation is increasingly linked to bottom-line benefits such as improved sales and employee productivity. Stronger communities result in more robust markets and a deeper pool of workforce talent.

The types of opportunities and incentives you offer your workers — along with the technology and communications you employ to facilitate, track and promote these opportunities — contribute to your program’s success and impact.

You’re empowering employees to be change agents in the community. Encourage employee ownership, and enlist the right partners. Your program will help you and your workers create meaningful impact. What kind of impact is your volunteer program having? Your firm should prioritize meaning, balance top-down structure with bottom-up passion and seek to involve a variety of stakeholders. Even in trying times, there are good reasons to preserve well-run programs.

Volunteers tend to be better citizens at work, helping others and voicing ideas. Among the established benefits of volunteering are a sense of well-being and purpose and better physical and mental health. Your program should be tailored to your firm size as well as customer and investor expectations.

But watch out for these pitfalls:

  • Imitating other companies’ programs.
  • Prioritizing your own pet project.
  • Lacking flexibility in allowing employees to suggest volunteering opportunities.
  • Making volunteering mandatory, diminishing intrinsic motivation and satisfaction. You don’t want employees who participate just to make a good impression on co-workers and supervisors.

Successful volunteer programs serve to recruit top talent, increase team member satisfaction and retention, focus on employee wellness, and develop skills. Is your volunteer program aligning with your employees’ skills and your own company values?

Volunteerism can play an important role in engaging employees, serving stakeholders, meeting social impact goals and ensuring your company’s sustainability, while also having a positive impact on your community. A study discovered that employee loyalty increased not only among those who volunteered but also among those who didn’t, prompting comments like “It’s great that my company offers volunteer programs” and “I’m happy that volunteering is available at my company.”

©2023

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micromanaging
How to Avoid Micromanaging 1024 678 LaDonna Kearney

How to Avoid Micromanaging

According to Leadershipexcellencenow.com, “Micromanagement is a business management style where the boss or manager controls every aspect, no matter how small, of the work done by his or her employees.”

Micromanagement can make employees feel as though their boss does not trust them to do the job they were hired for. Feeling demoralized, these employees may end up leaving the company for a healthier work environment.

Employees want a collaborative workplace culture. Per a 2019 report by Kimble, 74% of surveyed U.S. workers say they prefer collaboration, and only 21% say they prefer the boss to make most of the decisions. Further, 72% of workers say they want to take on more responsibility. They do not want their boss hovering over them or ordering them around. Instead, they want their boss to motivate and inspire them.

Obviously, you need to monitor your employees’ performance. But you must also ensure that you’re not micromanaging in the process.

Tips to Avoid Micromanaging

Learn to delegate responsibilities instead of thinking you have to do everything yourself. Research by Gallup found that companies with CEOs who delegate effectively had greater overall business growth than those with CEOs who are not strong delegators.

Hire the right people, and trust that they can do the job. You hired them because you believed in their capabilities. Unless they prove otherwise, there’s no reason to doubt them.  

Clearly communicate your expectations for the job to the employees. Let them know the required outcomes, and give them adequate resources to achieve those results. Make sure they know how to obtain help if they need it along the way. Then provide them with enough freedom to do the job on their own. Resist the urge to incessantly loom over their shoulders, whether physically or electronically.

Establish project milestones, and check in with the employees as those milestones approach.

Ask the employees to show you portions of their work at intervals (such as a few pages out of a whole document) instead of requiring exhaustive updates at every turn.

Offer constructive feedback, and do not get caught up in trivial details. If the work is truly not up to par, let the employees know what they need to do to fix it.

Determine which projects and employees need to be managed more closely than others. For example, high-level projects typically demand more managerial input than low-level tasks do, and employees with less experience may require more oversight.

HR coaching can help some micromanagers

According to a Society for Human Resource Management article, some micromanagers are simply built that way and may be resistant to change. Others, however, can improve through coaching by Human Resources staff.

HR coaching may be ideal for:

  • Managers who don’t realize that they are micromanaging and just want to help their employees succeed.
  • Managers who micromanage because they were mentored by micromanagers or have worked only for micromanagers.
  • Managers who are afraid their employees will fail and consequently micromanage in an effort to achieve the desired results.

In summary, leaders should know the damaging effects of micromanagement and steer clear of this management style.

©2023

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worker classification
How to classify your workers 1024 577 LaDonna Kearney

How to classify your workers

When you hire someone to work for you, the worker will likely be considered either an employee or an independent contractor. Usually, you will decide whether you want to onboard an employee or simply hire a contractor prior to advertising for the available position. That way, whoever comes across your job post will know whether they can expect employment or a contract job prior to applying for the position.

Properly classifying your workers is important because misclassification of those who work for you can lead to very impactful tax penalties. Thankfully, these are avoidable as long as you are in compliance with the rules and regulations. Furthermore, you absolutely must comply with requirements regarding tax contributions and how much you withhold in the context of employees, not contractors.

As you seek to accurately classify your workers, you will likely come across the terms exempt and nonexempt, but what do these words mean? And where do they fit into the conversation? Let’s explore the answers to these questions and more.

Exempt vs. nonexempt

Exempt employees are not required to be paid overtime. However, that said, you might decide to offer some form of compensation to exempt employees who work extra hours, which should be well defined within the employee’s benefits package.

On the other hand, nonexempt employees will either receive a predetermined hourly wage or earn an annual salary. From there, nonexempt employees will be entitled to a minimum wage, namely if they earn an hourly wage, as well as overtime pay in situations where they work more than 40 hours per week as determined by the Fair Labor Standards Act. The FLSA is a federal law that not only determines the federal minimum wage but also the requirements for overtime pay and standards.

Information from the FLSA and Department of Labor regarding classification of employees

In the words of the FLSA, all employers are required to pay their nonexempt employees time and a half for every hour the employees work beyond 40 hours per week. Time and a half is calculated based on the employee’s regular pay rate. For instance, if you earn an hourly wage of $15 per hour, then your overtime pay would be $22.50, which is calculated by dividing 15 by two and adding that value to $15.

If you have nonexempt employees who are not paid hourly, then the employee’s hourly rate can still be determined by taking the amount of money your employee earned and dividing it by the total number of hours the employee worked. However, do not include vacation time, official holidays or sick days when you are calculating the employee’s pay.

The DOL has official guidelines regarding who is and is not eligible to receive overtime pay. There are certain situations where employees can be considered exempt.

These include whether your employees are paid an annual salary, whether they earn $684 per week at a minimum, whether they earn at least $35,568 per year and whether they perform the job duties of someone who works in an administrative or executive role. Also, employees who are highly compensated, meaning they earn approximately $107,432 or more per year, are not eligible for overtime in the way that other employees are.

The amount of money an employee earns, whether on an annual or hourly basis, is not the only determining factor when it comes to whether an individual is considered exempt versus nonexempt. Even so, their pay rate can play a role in the context of workplace policies.

If your workers fail to meet the requirements of the FLSA duties test, earn no more than $684 weekly, make less than $35,568 annually or claim specific deductions in regard to their take-home pay, then those employees might be eligible for overtime pay. That said, certain industries, such as agricultural businesses, movie theaters and railroad companies, hire hourly workers who are not entitled to overtime pay.

All your employees, whether they work full or part time, must fill out an IRS-backed Form W-4 and then give it to you as their employer prior to working for you. Independent contractors, on the other hand, must fill out a different form, the W-9.

Now, if you are not sure how to classify any of your workers, take the time to fill out Form SS-8, which is the Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. Once you fill it out, send it to the IRS for processing.

You might find it easier to pay your employees on a salaried basis because it ensures that the payroll process is simplified altogether while keeping things consistent. This is because salaried employees receive the same amount of money on a monthly basis no matter how many hours they work per week or month.

In order for an employee to be salaried, they must uphold the duties of their position while also adhering to the requirements set forth by the DOL. At the same time, paying employees an hourly wage instead of a salary can make more sense in certain situations, as hourly workers provide managers with greater flexibility when they sit down to make the schedules every week.

This can be significantly beneficial for job roles that do not necessarily come with the need for consistent schedules. Failing to properly identify exempt employees and classify them differently than your nonexempt employees can affect your business in drastic ways, as can the act of misclassifying workers, even if you do so by accident.

The misclassification of your workers can result in any of the following:

  • Enforcement of proper classification and disciplinary action.
  • Costly fines and business-related penalties.
  • Lawsuits from employees who worked overtime that went unpaid.
  • Responsibility of the costs for remedying the misclassification.

While misclassification is never acceptable, especially when it is intentional, there are instances in which reclassification is necessary. For example, a nonexempt employee might need to be reclassified as an exempt employee or vice versa.

Similarly, you might initially hire someone as a contractor, but as time goes on there might be a conversation about onboarding the contract worker as a long-term employee. Likewise, an exempt employee who is reclassified as a nonexempt employee might perceive the exempt-to-nonexempt transition as a demotion in terms of prestige.

Regardless of the specifics, make sure you explain the law to your employees, especially those who might feel slighted by changes in classification or employment status. Try to stress that the reclassification is in no way indicative of the employee’s performance or any work-related issues so that your employees do not take the change as a personal attack.

©2023

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On-call employees
On-Call Pay: The Rules are Complex 1024 577 LaDonna Kearney

On-Call Pay: The Rules are Complex

Under the Fair Labor Standards Act, whether employees should receive on-call pay depends on whether the time spent on call qualifies as “hours worked.” If so, employees must receive at least the federal minimum wage for each hour spent on call, plus overtime for all work hours over 40 for the week. 

Whether on-call time qualifies as hours worked should be determined on a case-by-case basis. That said, there are some general guidelines on the topic — and it boils down to whether the employee is “engaged to wait” or “waiting to be engaged.”

Employees who are ‘engaged to wait’ must be paid for on-call time. 
The FLSA regulations at 29 C.F.R. §785.15 explains what it means to be “engaged to wait.” Basically, if employees are required to remain at the work site while on call, or if they do not have the freedom to engage in personal activities while on call, then they are “engaged to wait” — meaning on duty — and must be paid for the time spent on call. 

For example, an employee who is permitted to watch television, sleep or read a book while on call, but is not allowed to leave the work site, must receive on-call pay. Even if the employee is allowed to leave the work site but has to frequently take calls from the employer, on-call pay is likely due — since the calls do not allow the employee to effectively conduct personal activities.

Employees who are ‘waiting to be engaged’ do not have to be paid for on-call time. 
If the employee is “waiting to be engaged,” then he/she is off duty and does not need to be paid for on-call time. FLSA regulations at 29 C.F.R. §785.16 offers the following example:

“If the truck driver is sent from Washington, D.C., to New York City, leaving at 6:00 a.m. and arriving at 12 noon, and is completely and specifically relieved from all duty until 6 p.m. when he again goes on duty for the return trip the idle time is not working time. He is waiting to be engaged.”

Here, the employee has the freedom to use the idle time effectively for personal activities, and therefore does not need to receive on-call pay.

Note that under the FLSA, on-call pay applies to employees who are paid according to hours worked. This means you do not need to provide on-call pay to exempt employees who are paid on a salary basis, as these employees must receive a set salary that is not based on hours worked. 

This is just a general summary. The issue of on-call pay has many subtleties and gray areas and, depending on your location, may include state requirements. Seek legal advice to gain a full understanding of your on-call pay responsibilities.

©2023

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