Hot Topics in Total Rewards

Small and midsize employers favor simpler incentives that are easily explained

By Stephen Miller, CEBS

New survey findings confirm what many U.S. workers have already learned: As annual salary raises have held steady at around 3 percent, annual bonuses tied to performance have become a bigger part of compensation.

While use of cash-based short-term incentives (STIs) is well-documented at large, publicly traded corporations, it is also becoming a common way to motivate and reward employees at private companies, especially at small and midsize firms as well as at nonprofit employers, new research shows.

WorldatWork, an association of total rewards professionals, recently surveyed incentive pay plans at privately held companies (those without publicly traded stock) and noted the findings in the report Incentive Pay Practices: Privately Held Companies. A companion report focused on nonprofit organizations and government agencies: Incentive Pay Practices: Nonprofit/Government. Both studies draw on polling of WorldatWork members (total rewards professionals mostly at large U.S. employers) in December 2017. Approximately 215 private, for-profit companies responded to the survey, as did more than 110 nonprofit and government organizations.

Private Companies' Incentives

To put the number of companies using short-term incentives in perspective, consider these numbers: There are more than 6 million privately held companies in the U.S. and more than 1.5 million nonprofit organizations. Fewer than 4,000 U.S. companies are publicly traded, according to government statistics.

"Spending on short-term incentives increased modestly at private companies from 2015 to 2017, which reflects the tight labor market and competition for talent," said Bonnie Schindler, partner and co-founder of Vivient Consulting, which partnered with WorldatWork on the research.

In 2017 versus 2015, among private companies responding to the WorldatWork survey:

• 96 percent had STI programs, up from 94 percent.
  
• Spending on short-term incentives increased to a median of 6 percent of operating profits, up from 5 percent.
  
• About 66 percent of nonexempt employees were eligible for annual incentives, up from 52 percent.
  

Nineteen percent of private companies used team or group incentive plans in 2017, a drop from 22 percent in 2015, perhaps in part because of concerns that such payments benefited workers who may not have put in as much effort as their colleagues.

"So-called free-riders can definitely be a problem with team/group incentives," Schindler said. "We did see an increase in spot awards and discretionary awards," which focus on individual efforts, she noted.

Most private-company respondents were cautious about giving managers discretion in granting annual incentive-plan awards, noting that the rationale for discretion was often poorly communicated, and its use tended to undermine the fairness and consistency of award payouts.

As used in the chart:

• Annual incentive plans, by far the most commonly awarded short-term incentive, are given to individuals based on achieving results identified at the beginning of the performance cycle.
  
• In discretionary bonus plans, management determines the size of the bonus pool, but these plans have no predetermined formula, and awards are not guaranteed.
  
• Spot awards recognize special contributions as they occur for a specific project or task.
  
• Profit sharing plans provide for employee participation in an organization's profits.
  
• Team/small-group incentives focus on the performance of a work team.
  

While long-term incentives based on meeting performance goals over a multiyear period are a common component of executive pay, they remain seldom used for nonexecutive employees. STI programs, however, are becoming more popular and are used for employees at all levels of an organization.

Median Target Annual Incentive Plan Awards At private companies, the median annual incentive plan award level for CEOs is 80 percent of salary, with targets decreasing by about half for each lower position level in the organization.
Position	Incentive Plan Awards as a Percent of Salary
CEO	80%
Other executives/officers	40%
Managers/supervisors	15%
Exempt salaried	10%
Nonexempt salaried and hourly	5%
Source: WorldatWork, 2018 Incentive Pay Practices: Privately Held Companies survey report.

Despite the growth of short-term incentives, most private-company respondents consider their annual incentive plans to be only moderately effective, with plan communication, the level of discretion, goal setting and the risk/reward trade-off noted as areas for improvement.

Simpler Incentives at Smaller Firms

"There continues to be focus on reducing the complexity of short-term incentive design and establishing a more rigorous process for setting company and individual performance goals," a recent report on executive compensation by consultancy Willis Towers Watson stated. Other research shows simplicity is especially valued when implementing broad-based employee incentives, particularly at smaller organizations.

"Most small and midsize companies lack a sophisticated compensation team to design, monitor and communicate complex incentive plans," said Michele Kvintus, client manager at PayScale, a Seattle-based pay consultancy.

Smaller organizations do less of every kind of variable pay except for profit sharing, where small and midsize organizations beat out their larger counterparts, PayScale's 2018 Variable Pay Playbook shows. The report draws on the firm's survey of 7,100 pay managers at companies of all sizes, conducted in November and December last year.

"Profit sharing incentive plans that deliver cash to employees based on company profitability are terrific for small and midsize companies because they don't require intensive design work. It's also easy to explain a profit sharing incentive plan to employees," Kvintus said.

These programs "provide a look back after the close of a business year and foster a 'we grow, you share in it' perspective," she added. "For small to midsize companies, a business-owner mentality among employees is frequently a key factor" for engagement.

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Source: Society for Human Resource Management (SHRM)

https://www.shrm.org/ResourcesAndTools/hr-topics/compensation/Pages/short-term-pay-incentives-at-private-and-smaller-companies.aspx?utm_source=SHRM%20Thursday%20-%20PublishThis_HRDaily__TEMPLATE%20(03.19.18%20DO%20NOT%20DELETE)%20(8)&utm_medium=email&utm_content=May%2024%2C%202018&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&SPCERT=&spMailingID=34424299&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1282772205&spReportId=MTI4Mjc3MjIwNQS2

Inquiry restrictions vary by state and municipality

By Melissa A. Silver, J.D., XpertHR Legal Editor May 24, 2018

From Hollywood to the White House, the issue of the gender wage gap is a hot topic. Although the Equal Pay Act has been around for decades, pay disparities persist. As a result, there is a renewed focus on equal pay on the state and local level, which has led to new laws and regulations promoting fair pay. 

One way in which some states and municipalities are seeking to close the wage gap is by enacting laws banning or restricting salary history questions during the hiring process. Connecticut became the latest state to ban such inquiries when Gov. Dannel Malloy signed a pay equity law on May 22.

According to the National Partnership for Women & Families, women in Oregon earn just 81 cents for every dollar paid to men. Oregon is another state that has passed a salary-history inquiry ban to create a path toward closing the gap between the wages of women and men.

In those locations, asking, "What's your current salary?" has been part and parcel of the hiring process for as long as employers have been hiring employees but may no longer be permitted.

The reasoning behind these laws is that if an employer relies on an applicant's salary history to determine compensation, it perpetuates the gender wage gap. These laws therefore restrict an employer's ability to seek salary history information in an effort to eliminate the differences between what men and women are paid for either equal or comparable work. A job applicant's skills and qualifications should determine salary and not compensation history.

With the new changes in legislation banning salary history questions, employers need to be aware of the laws in the states and municipalities where their employees are located.

At least 12 jurisdictions have passed laws banning employers from asking job applicants about their past or current salary, and this trend will likely continue.

States with salary-history inquiry bans thus far include:

• California.
  
• Connecticut (effective Jan. 1, 2019).
  
• Delaware.
  
• Massachusetts (effective July 1).
  
• Oregon.
  
• Vermont (effective July 1).
  

In addition, Albany County, N.Y.; New York City; Westchester County, N.Y. (effective July 9); Puerto Rico; and San Francisco (effective July 1) have enacted salary inquiry laws. Philadelphia's ban was slated to take effect in 2017, but a federal judge halted part of the ordinance, finding that a law prohibiting employers from asking candidates to reveal their past salaries violates the First Amendment's free-speech clause. However, the judge said that the city is allowed to stop employers from using past salary information to set pay rates.

Some jurisdictions, such as New Jersey, New York and New Orleans, prohibit certain public employers from asking about salary history.

While all of these laws aim to eliminate the pay gap between men and women for performing the same or comparable work, each law places different restrictions on employers. For example, in Delaware, an employer may seek an applicant's salary information for the sole purpose of confirming it, only after it extends a job offer with the terms of compensation that the applicant has accepted. Some laws, such as in San Francisco, permit an employer to consider or verify an applicant's salary history if he or she voluntarily discloses it without prompting or provides written authorization.

Although there are variations among these salary-history inquiry laws, in most cases, an employer may ask a job applicant about his or her salary expectations. According to Cheryl Pinarchick, an attorney with Fisher Phillips in Boston, asking salary expectations is within bounds. "It's a good way to figure out if you should continue a conversation with an applicant. Are they in the right ballpark for what the job is going to pay?"

Further, objective measures of productivity, such as sales history or billable hours, could be a legal justification to pay people differently. In fact, the New York City law excludes an objective measure of productivity, such as revenue sales or other production reports from the definition of salary history.

However, employers should use caution with respect to searching public records for a job applicant's salary history information. Whether it is allowed, Pinarchick said, "all depends on what state you're in and what state they're in, or what city you're in and what city they're in."

Regardless, Pinarchick recommends that employers avoid doing so. Even if an employer is not prohibited from looking it up, an employer may or may not be able to use that information under the broader pay equity law. An applicant could come back and claim the employer did not hire him or her or that the applicant is paid less because of that salary information, which may be illegal under the law.

It seems likely that laws banning salary history inquiries will continue to gain traction across the country. Employers should therefore ensure compliance with these laws through smart planning by training managers, supervisors and HR personnel involved in the hiring process, particularly those individuals conducting interviews, and update job applications and other documents that seek this information. With more salary-history inquiry bans on the horizon, employers should also be vigilant in tracking these developments to ensure compliance.

Melissa A. Silver, J.D., is a legal editor with XpertHR.

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Source: Society for Human Resource Management (SHRM)

https://www.shrm.org/ResourcesAndTools/legal-and-compliance/state-and-local-updates/Pages/States-Wage-Gap-Salary-Question-Bans-.aspx?utm_source=SHRM%20Thursday%20-%20PublishThis_HRDaily__TEMPLATE%20(03.19.18%20DO%20NOT%20DELETE)%20(8)&utm_medium=email&utm_content=May%2024%2C%202018&SPMID=00330610&SPJD=07%2F25%2F1996&SPED=04%2F30%2F2018&SPSEG=&SPCERT=&spMailingID=34424299&spUserID=ODM1OTI0MDgxMjMS1&spJobID=1282772205&spReportId=MTI4Mjc3MjIwNQS2

Health savings account contribution caps up $50 for self-only and $100 for family coverage

By Stephen Miller, CEBS  May 11, 2018

After a tumultuous year of changes in the 2018 annual contribution limits for health savings accounts (HSAs)—they weren't finalized until well into the current year—health plan sponsors should have plenty of time to prepare for the 2019 HSA contribution caps, announced by the IRS on May 10.

Next year, allowable HSA contributions for participants with self-only health coverage will rise by $50. For HSAs linked to family coverage, the 2019 contribution limit will rise by $100 above the family cap set for 2018.

The IRS recalculated the family cap downward in March after Congress revised the inflation adjustment for many employer benefit rates. In April, the IRS granted relief that restored the family cap back to the original 2018 level.

In Revenue Procedure 2018-30, the IRS has provided the inflation-adjusted HSA contribution limits effective for calendar year 2019, along with minimum deductible and maximum out-of-pocket expenses for the high-deductible health plans (HDHPs) that HSAs must be coupled with.

2019 vs. 2018 HSA Contribution Limits

Contribution and Out-of-Pocket Limits  for Health Savings Accounts and High-Deductible Health Plans
	2019	2018	Change
HSA contribution limit(employer + employee)	Self-only: $3,500  Family: $7,000	Self-only: $3,450  Family: $6,900*	Self-only: +$50  Family: +$100
HSA catch-up contributions (age 55 or older)	$1,000	$1,000	No change
HDHP minimum deductibles	Self-only: $1,350  Family: $2,700	Self-only: $1,350  Family: $2,700	No change  No change
HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums)	Self-only: $6,750  Family: $13,500	Self-only: $6,650  Family: $13,300	Self-only: +$100  Family: +$200
*The IRS originally set at $6,900 then recalculated to $6,850, but subsequently provided relief to effectively restore the original limit. Source: IRS, Revenue Procedure 2018-30.

Reliable Guidance

"The contribution limits for various tax-advantaged accounts for the following year are usually announced in October, except for HSAs, which come out in the latter part of April or early May," explained Harry Sit, CEBS, who writes The Financial Buff blog.

"While we saw an unprecedented adjustment to previously announced 2018 limits, followed by another adjustment, we have no reason to think 2019 limits will fluctuate," said Harrison Stone, general counsel at ConnectYourCare, a Baltimore-based HSA services provider. The IRS announcement "makes clear the new limits and should be reliable guidance," as the IRS "is apt to avoid additional complications, given the confusion in contributions amounts earlier in the year," he noted.

"We're increasingly seeing HSAs function as a critical resource for Americans to fund their care today, tomorrow, and in retirement," Stone added. "Annual contribution limit increases allow HSAs to maintain their value and further grow their role as a key retirement planning building block."

"Employers should consider these limits when planning for the [upcoming] benefit plan year and should review plan communications to ensure that the appropriate limits are reflected," advised Damian A. Myers, a labor and employee benefits attorney with Proskauer in Washington, D.C.

Important Details

Benefit managers should be aware of some of the fine points regarding annual HSA contributions and spending, especially when answering participants' questions or communicating the new limits for the forthcoming year:

• Catch-up contributions can be made anytime during the year by HSA-eligible participants who will be age 55 or older by the end of the year. Unlike other limits, the $1,000 catch-up amount does not vary from year to year.
  

• An HSA is in an individual account holder's name, even when used by a spouse or dependents with family coverage to pay medical expenses. When both spouses have self-only coverage, each spouse may contribute up to the annual HSA self-only limit in their own HSA.
  

• While a married couple under a family HDHP share one family HSA contribution limit, they can contribute up to that shared limit in separate accounts and, if both are age 55 or older, each make a separate $1,000 catch-up contribution to an account in their own name.

• While the Affordable Care Act (ACA) allows parents to add their adult children who have not reached age 26 to their health plans, the tax laws regarding HSAs have not changed and children ages 19 until age 26 must be considered a tax dependent in order for an adult child’s medical expenses to qualify for payment from a parent’s HSA.
  

• Contributions for a given year may be made until the individual's federal tax return due date for that year (generally April 15), without extensions. The HSA administrator must indicate that such contributions are attributed to the prior calendar year.
  

• HSA holders who lose their eligibility during the year must pro-rate their annual contribution based on the number of months during which they were HSA-eligible on the first day of the month.
  

• Under the last-month rule, those covered by an HSA-eligible health plan on Dec. 1 are eligible individuals for the entire year and may contribute the entire year's contribution to their HSA instead of making pro rata contributions by month. Partial-year HDHP enrollees who take advantage of the last-month rule must remain eligible individuals covered by an HDHP through Dec. 1 of the following year or risk tax assessments and penalties on their prior-year HSA contributions.
  

• The self-only annual limit on HDHP out-of-pocket expenses applies to each covered individual, regardless of whether the individual is enrolled in self-only coverage or family coverage.
  

New Inflation Gauge

Annual HSA and HDHP limits reflect cost-of-living adjustments and rounding rules under Internal Revenue Code Section 223. However, the Tax Cuts and Jobs Act enacted last December applied the so-called chained consumer price index (chained CPI) to increases in HSA and several other employee benefits—such as health flexible spending accounts, commuter plans and adoption assistance benefits.

As an inflationary measure, chained CPI rises at a slower rate than the more traditionally used CPI, since the chained CPI allows for consumer substitution among the goods and services that make up the index. For this reason, despite an uptick in the inflation rate this year, the increase for self-only coverage for 2019 was the same as for 2018 (up $50), and the increase for family coverage was smaller than was set for 2018 (up $150).

ACA's Limits Differ

There are two sets of limits on out-of-pocket expenses for HDHPs determined annually by federal agencies, which can be a source of confusion for plan administrators.

The Department of Health and Human Services (HHS) establishes annual out-of-pocket or cost-sharing limits under the ACA, applied to essential health benefits covered by a plan, excluding grandfathered plans.

The HHS's annual out-of-pocket HDHP maximums have been slightly higher than those set by the IRS due to different methodologies, but to qualify as an HSA-compatible HDHP, a plan must not exceed the IRS's lower out-of-pocket maximum.

HHS published its 2019 ACA out-of-pocket limits in the Federal Register on April 17, 2018, in its Notice of Benefit and Payment Parameters for 2019 final rule.

Below is a comparison of the two sets of limits.

	2019	2018
Out-of-pocket limits for ACA-compliant plans (set by HHS)	Self-only: $7,900 Family: $15,800	Self-only: $7,350 Family: $14,700
Out-of-pocket limits for HSA-qualified HDHPs (set by IRS)	Self-only: $6,750 Family: $13,500	Self-only: $6,650 Family: $13,300

Coverage Restrictions

Besides a high deductible, an HDHP can't reimburse providers in whole or part for any health services other than preventive care before those covered by the plan meet their annual deductible.

For instance, if the plan provides coverage in the following areas before the individual or family satisfies their deductible, it is not HSA-eligible.

• Prescription drugs. Plans may not cover nonpreventive prescription drugs with only a co-pay before an individual or family meets the annual deductible.
  
  
• Office visits. Excluding preventive care such as physical checkups or immunizations, plans may not cover office visits with only a co-pay, without having to meet the annual deductible first.
  
  
• Emergency. Plans may not cover emergency services with a co-pay outside the deductible.
  

Under an HSA-compliant HDHP, some prescription drugs are coverable as preventive care in some circumstances (Caremark's 2018 list is here), but patients typically must pay out-of-pocket to treat ongoing chronic conditions until they satisfy their deductible.

"As lawmakers seek to reduce health care costs and encourage consumerism, proposals to repeal restrictions on the use of, and limits on contributions to, HSAs are likely to receive consideration," said Chatrane Birbal, senior advisor of government relations at SHRM and co-author of the 2018 SHRM Guide to Public Policy Issues.

The recently introduced Chronic Disease Management Act, for instance, would amend the tax code so that HDHPs paired with HSAs could cover chronic disease treatment on a pre-deductible basis.

"Employers want to be able to offer the best consumer‐directed options possible, but some of the rules surrounding HSAs and high‐deductible plans should be updated to match the needs of a modern workforce," Birbal said.

HSAs and Medicare

Under current law, individuals enrolled in Medicare may not contribute to an HSA, although HSA funds contributed earlier may be used to pay for qualified medical expenses on a tax-free basis.

As the nonprofit Medicare Rights Center explains, if individuals age 65 or older are employed and covered by an employer-sponsored HDHP, whether they can continue contributing to their HSA depends on these circumstances:

• If they work for an employer with fewer than 20 employees, they may need Medicare in order to have primary insurance, even though they will lose the ability to contribute to their HSA. This is because health care coverage from employers with fewer than 20 employees pays secondary to Medicare.
  

• If they work for an employer with 20 or more employees, then their employer-sponsored health care coverage pays primary to Medicare, so they may choose to delay Medicare enrollment and continue contributing funds to their HSA.
  

Those who delayed enrolling in Medicare should stop contributing to their HSA at least six months before they plan to enroll in Medicare, the Medicare Rights Center advises. This is because those newly enrolled in Medicare Part A receive up to six months of retroactive coverage, so those who don't stop making HSA contributions at least six months before Medicare enrollment may incur a tax penalty.

A Popular Benefit

Source: SHRM's forthcoming 2018 Employee Benefits report (June 2018).

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Source: The Society For Human Resource Management (SHRM) 

https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/2019-hsa-contribution-limits-rise-irs-says.aspx

Despite the scammers, most medical leave requests are for real needs

By Jeff Nowak © Franczek Radelet P.C. May 16, 2018

When it comes to administering leave under the Family and Medical Leave Act (FMLA), I'll admit I've grown cynical and hardened about employee scams. It's not just the "medical leave" that turns out to require a beach vacation. Caring for your dying mother when, in reality, you need leave to serve a 60-day jail sentence for DUI? Yep, heard that one before.

Nevertheless, there truly is a need for federal and state leave laws, as many employees are dealing with legitimate medical conditions that render them unable to perform their job—and these people are counting on HR leave managers to help them.

Each spring, I'm reminded of this at the Disability Management Employer Coalition's (DMEC's)FMLA/ADA Compliance Conference, where FMLA and Americans with Disabilities Act (ADA) nerds convene to discuss leave and accommodation issues. This year, I co-presented an overview of key FMLA and ADA cases from the past 12 months (here's the PowerPoint).

For several days, we put cynicism aside and focused on practical and meaningful ways employers can support their employees when they or their loved ones deal with medical issues that keep the employee away from work—all while keeping business operations humming.

Here are few insights that I took from the conference:

1. Recognize that the far majority of our employees use FMLA leave appropriately and for real medical needs.
This should be our frame of reference when we are faced with an employee's request for medical leave or workplace accommodation. When you approach the situation with a level of sincerity rather than cynicism, you are more likely to be met with sincerity in return. To that end, let's not assume without any basis in fact that our employee is trying to misuse their leave of absence.

2. Be empathetic; the words, "How can I help you?" can go a long way.
When you communicate with employees, use words that show that you're on the same side. You want to help them take the time they need to get better and then return to work. Let your communications reflect this sincerity and empathy.

3. Treat all requests for leave as a request for a reasonable accommodation as well.
Each time an employee requests leave from the job because of a medical condition, the request should be analyzed through the lens of both the FMLA and ADA. Where employees need leave from work because of a serious medical condition, use it as an opportunity to engage with them to determine how to best address their situation to keep them engaged and at work. A leave of absence is only one tool to help maintain a productive and healthy workforce.

4. Train managers to help you achieve the kind of workplace you're trying to cultivate.

At the conference, FMLA Branch Chief for the Department of Labor, Helen Applewhaite, identified several compliance problems that pop up regularly during DOL investigations. She noted that frontline managers often fail to recognize when an employee may need a leave of absence protected by the FMLA. Even worse, some make derogatory comments about an employee's use of FMLA leave.

Indeed, many frontline managers simply are not properly trained to recognize when an employee has provided sufficient facts to trigger the FMLA and to take appropriate steps to respond to the employee's request. In my experience, this is perhaps the single biggest problem for employers, as it creates easy liability.

There are far too many examples of employers who have paid out a lot of money because their manager said something foolish about FMLA, did not properly handle an absence covered by FMLA or did not follow FMLA regulations. Managers at all levels drastically increase your liability when it comes to FMLA when they are not trained in the FMLA. Training them now will immediately reduce your risk of liability—both in court and as a result of a DOL investigation.

Every once in a while we need this simple reminder: Be sincere, be empathetic and FMLA and ADA compliance will follow. Look at it as your Kumbaya moment.

Jeff Nowakis a Chicago-based partner and co-chair of the labor and employment practice at Franczek Radelet P.C. and author of the FMLA Insights blog, where an unabridged version of this article originally appeared. © 2018 Franczek Radelet P.C. All rights reserved. Republished with permission.

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Source: The Society For Human Resource Management (SHRM) 

https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/manage-fmla-with-sincerity-and-empathy.aspx

Proposed guidance clarifies how mental-health parity rules apply to benefit limits

By Julia Zuckerman and Lysle Laderman © ConduentMay 16, 2018

The Departments of Labor (DOL), Treasury, and Health and Human Services (HHS) recently issued guidance that clarifies how mental-health parity rules apply to benefit limits, such as pre-authorization and medical-management techniques, with specific examples of parity standards for experimental or investigative treatment limits, drug-formulary design and provider networks.

The guidance package, which the departments issued on April 23, was comprised of:

• Proposed FAQs (with comments due June 22, 2018).
  
• A revised disclosure template.
  
• A self-compliance tool.
  
• An enforcement fact sheet.
  
• DOL's 2018 report to Congress, Pathway to Full Parity.
  
• HHS's action plan.
  

Background

The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) generally prohibits group health plans that provide mental health or substance-use disorder (MH/SUD) benefits from imposing less favorable conditions or more stringent limits on those benefits than they do on the same classification of medical and surgical benefits. This federal law requires parity in financial requirements (like deductibles or co-payments) and quantitative treatment limits (such as number of covered visits). It also requires parity in nonquantitative treatment limits, which are non-numerical limits on the scope or duration of benefits, such as a pre-authorization requirement or a medical-management technique.

MHPAEA does not require a plan to cover any specific MH/SUD conditions; rather, it requires that if it covers an MH/SUD condition, it covers it in parity with medical/surgical benefits. Also, MHPAEA does not apply to retiree-only plans or to excepted benefits.

Participants, beneficiaries, and the DOL may file claims for payment of mental health benefits under the law's civil enforcement provisions. Failure to comply with MHPAEA also may trigger an excise tax of $100 per day for each individual to whom a failure relates, under Internal Revenue Code Section 4980D.

As part of its 2017 MHPAEA enforcement efforts, the DOL reviewed 187 group health plans and identified 92 MHPAEA violations. Additionally, it answered over 127 public inquiries in 2017 relating to MHPAEA.

[SHRM members-only: Managing Employee Assistance Programs]

Proposed FAQs

The proposed FAQs identify certain plan features as nonquantitative treatment limits that violate (and, in a few cases, do not violate) parity requirements. For instance, a plan may not unconditionally exclude all experimental or investigative treatments for MH/SUD conditions while covering certain experimental or investigative treatments for medical and surgical conditions on a treatment-by-treatment basis.

It's unusual for subregulatory guidance like FAQs to be proposed for notice and comment, a process typically reserved for proposed regulations. The departments may have chosen this approach to retain the flexibility of subregulatory guidance while incorporating specific stakeholder feedback.

Revised Disclosure Template

The proposed disclosure template is designed to help participants and beneficiaries request information on any limitations that may affect their MH/SUD benefits, with the idea of enabling them to evaluate parity. The draft form, which participants and beneficiaries can use to request information from plans even though it has not yet been finalized, gives the plan 30 days to respond to these requests.

Self-Compliance Tool

The self-compliance tool, which the DOL intends to update every two years to reflect any additional MHPAEA guidance, is designed to assist plan sponsors in determining whether their plans comply with MHPAEA requirements. Plan sponsors can use the tool to review plan terms and policies, and to monitor those of vendors or carriers to confirm MHPAEA compliance.

Focus on Enforcement

The guidance suggests that, a decade after MHPAEA's enactment, enforcement is now a stronger priority than ever.

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Source: The Society For Human Resource Management (SHRM) 

https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/regulators-ramp-up-mental-health-parity-enforcement.aspx

Look for news from the Labor Department by 2019

By Lisa Nagele-Piazza, SHRM-SCP, J.D. May 11, 2018

An update to the overtime rule is coming, though probably not as soon as most observers had anticipated.

The U.S. Department of Labor (DOL) intends to issue a Notice of Proposed Rulemaking to announce a new proposed salary threshold for the Fair Labor Standard Act's (FLSA's) white-collar exemption from overtime pay—but likely not until January 2019.

A halted 2016 rule would have doubled the salary threshold, but the new proposal is expected to be less sweeping. The new rule will likely be more accepted by the business community, said Eric Magnus, an attorney with Jackson Lewis in Atlanta.

The DOL said its decision will be informed by the comments the department received from its July 2017 request for information that solicited input from the public.

"The department will consider the information it received through the request for information, and it is my hope that there will be a recognition that asking employers to make changes to compensation levels is a complicated process," said Lee Schreter, an attorney with Littler in Atlanta. She hopes the DOL will give employers plenty of notice so that they have time to comply.

The Notice of Proposed Rulemaking was expected by October 2018, but the department recently said it will issue the proposal by January 2019. "Proposed regulatory actions are often delayed, so it would not be shocking for additional delay to occur," said Jennifer Betts, an attorney with Ogletree Deakins in Pittsburgh.

"More delays are always possible, but I am hoping that DOL will meet that date so we can see a final rule early in 2020," said Tammy McCutchen, an attorney with Littler in Washington, D.C.

So what will the new proposal look like? It's hard to predict. It would be difficult for employers to prepare extensively right now, given how uncertain things are, Betts said. However, it would be wise over the next few months for employers to identify any employees who are classified as exempt but are paid below the $40,000 mark. "These are the individuals who will most likely be impacted by any change," she said.

Because the new proposed salary threshold will be lower than the Obama administration's, there will be a narrower group of jobs affected, Magnus noted.

Controversial Rule

Under the FLSA, employees must be paid at least 1.5 times their regular rate for any hours worked beyond 40 in a week, unless they are properly classified as exempt. Among other requirements, the FLSA's administrative, executive and professional (white-collar) exemptions set a minimum salary that employees must earn.

President Barack Obama's administration finalized a rule in 2016 that would have raised the threshold to $47,476 from $23,660. However, a federal judge blocked the rule from taking effect and ultimately held that it was invalid. The decision left intact the $23,660 threshold, which has been in effect since 2004. An appeal of the permanent injunction is stayed but is still pending in the 5th U.S. Circuit Court of Appeals.

The $23,660 threshold "certainly needs to be updated," Secretary of Labor Alexander Acosta said at the American Bar Association's 11th Annual Labor and Employment Law Conference last year. But the $47,476 threshold "created a shock to the system, so we put out a request for information and are looking at the comments that were submitted," he said.

The Society for Human Resource Management supports an increase to the exempt salary threshold but has said that the Obama administration's rule raises it by too much, too fast. The 2016 rule "would have presented particular challenges for employers whose salaries tend to be lower, such as small employers, nonprofits, employers in certain industries and employers in certain geographic regions of the country that tend to have lower costs of living," according to SHRM.

The Society also opposes automatic increases to the salary threshold, which were a part of the 2016 rule. "Such increases ignore economic variations of industry and location and make it hard for HR to manage merit increases for employees near the salary level," SHRM said.

The DOL also announced that it will "clarify, update, and define regular rate requirements" under the FLSA. A Notice of Proposed Rulemaking is expected on this issue by September, but Magnus noted that it is unclear at this point what the proposal will entail.

Opportunity to Comment

Once the Notice of Proposed Rulemaking is issued, the public will be able to submit comments about the proposal. Employers can make their views are known by providing comments either directly or through their professional associations. "Telling the department about the dollars and cents impact is important," Schreter said.

Acosta has made a point to have "listening sessions" with many different stakeholders, including employees and employers. Hopefully the DOL will weigh everyone's input and arrive at something that is workable for employers and also recognizes a need to raise the salary threshold to some extent, Schreter added.

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Source: The Society For Human Resource Management (SHRM) 

https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/federal-overtime-rule-changes-are-coming.aspx

By Jennifer Mora

May 8, 2018

California is rife with regulation of how employers may obtain and consider background check information for use in hiring and personnel decisions. The relatively new California ban-the-box law (effective Jan. 1, 2018) and the older Los Angeles and San Francisco ordinances and amendments to the California Labor Code set strict rules on when and how employers can consider criminal and credit histories in employment.

Before 2014, when San Francisco enacted a city-wide ban-the-box law, criminal history background checks were largely unregulated in California, except for a handful of Labor Code provisions that barred consideration of certain types of criminal records. And California employers were stripped of their ability to use credit checks for hiring and other personnel decisions in 2012, by amendments to the Labor Code that restricted the use of credit checks to very narrow circumstances. Los Angeles and the State of California have now joined San Francisco with their own ban-the-box laws, which markedly differ from San Francisco's.

As the number of class actions alleging Fair Credit Reporting Act (FCRA) violations continues to skyrocket, it is critical that California employers understand the basics of all laws affecting employment screening programs and determine what changes to policies, forms and practices will ensure compliance and reduce the risk of claims.

FCRA Basics

Generally speaking, before an employer may obtain a consumer report (aka a "background check report")—which may include criminal or credit history, from a third-party background check company ("consumer reporting agency" or "CRA")—the employer must make a clear and conspicuous written disclosure to the individual, in a document that consists "solely" of the disclosure, that a background check may be done. California's fair credit reporting statute also requires a separate, stand-alone disclosure, which cannot be combined with the FCRA disclosure. The applicant or employee must provide written consent for the employer to obtain a background check report.

Before an employer relies in whole or in part on a background check report to take an "adverse action" (e.g., rescinding a conditional job offer or discharging an employee), the employer must provide the individual a "pre-adverse action" notice, and include with it a copy of the report and the Consumer Financial Protection Bureau's Summary of Rights. This notice gives the individual an opportunity to discuss the report with the employer before the employer takes adverse action.

Once the employer is prepared to take the adverse action, it must then give the individual an "adverse action" notice, containing certain FCRA-mandated text.

California employers that rely on criminal and credit history information for employment purposes must also consider state and local laws that impose additional compliance obligations, regardless of whether the information is obtained from a CRA.

California's State and Local Ban-the-Box Laws Restrict Use of Criminal History

California's statewide ban-the-box law, as of Jan. 1, 2018, requires employers with five or more employees (subject to few exceptions) to follow certain procedures when requesting and using criminal history information for pre-hire purposes. Specifically, regardless of the source of the criminal history information, employers must:

• Wait until after a conditional offer of employment to inquire about criminal history, which means asking applicants directly whether they have been convicted of a crime, ordering a criminal history background check, or making any other inquiry about an applicant's criminal history.
  
• Conduct an individualized assessment of an applicant's conviction to determine whether it has a "direct and adverse relationship with the specific duties of the job that justify denying the applicant the position." Unlike the Los Angeles ban-the-box ordinance (discussed below), the California law does not require employers to provide the applicant with their assessment.
  
• Notify the applicant of any potential adverse action based on the conviction history. The notice must identify the conviction, include a copy of any conviction history report (regardless of the source), and state the deadline for the applicant to provide additional information, such as evidence of inaccuracy, rehabilitation or other mitigating circumstances.
  
• After waiting the requisite time period, notify the applicant of any final adverse action, of any existing procedure the applicant has to challenge the decision or request reconsideration, and of the applicant's right to file a complaint with the Department of Fair Employment and Housing.
  

In contrast to the FCRA pre-adverse and adverse action notices—required only if the adverse decision is based on information obtained from a background check report from a CRA—the California notices are required even if the employer doesn't order criminal background check reports from a CRA, but learns of the criminal history from a different source (such as an applicant self-disclosure).

Substantively, a wide range of criminal records are off-limits to California employers (unless the employer qualifies for very narrow exceptions identified in the Labor Code). Records that cannot be used are:

• Arrests that did not lead to a conviction.
  
• Nonfelony marijuana convictions that are older than two years.
  
• Juvenile records.
  
• Diversions and deferrals.
  

Although complying with California law can be challenging, employers that hire in the cities of Los Angeles and San Francisco must also look to the ban-the-box ordinances in these jurisdictions, which exceed the requirements found in the FCRA and the California ban-the-box law.

The Los Angeles Fair Chance Initiative for Hiring Ordinance

The Los Angeles ordinance, effective Jan. 22, 2017, applies to any employer located or doing business in the City of Los Angeles and employs 10 or more employees. An employee is any person who performs at least two hours of work on average each week in the City of Los Angeles and who is covered by California's minimum wage law. The ordinance also applies to job placement and referral agencies and is broad enough to cover other types of work, including temporary and seasonal workers and independent contractors.

The L.A. ordinance goes beyond California-imposed requirements by imposing the following onerous steps on employers when considering criminal history (regardless of the source):

• Perform a written assessment that "effectively links the specific aspects of the applicant's criminal history with risks inherent in the duties of the employment position sought by the applicant." The assessment form that contains the relevant factors can be found on the city's website.
  
• Provide the applicant a "Fair Chance Process"—giving the applicant an opportunity to provide information or documentation the employer should consider before making a final decision, including evidence that the criminal record is inaccurate, or evidence of rehabilitation or other mitigating factors. As part of this process, the employer must include with the pre-adverse action notice a copy of the written assessment and any other information supporting the employer's proposed adverse action.
  
• Wait at least five business days to take adverse action or fill the position. If the applicant provides additional information or documentation, the employer must consider the new information and perform a written reassessment, which is at the bottom of the form mentioned above. If the employer still decides to take adverse action against the applicant, the employer must notify the candidate and attach a copy of the reassessment with the adverse action notice.
  

Los Angeles also states that all solicitations and advertisements for Los Angeles opportunities must state that the employer will consider qualified candidates with criminal histories in a manner consistent with the law.

Moreover, employers must post, in a conspicuous workplace that applicants visit, a notice that informs candidates of the Los Angeles ordinance. Copies of the notice must be sent to each labor union or representative of workers that has a collective bargaining agreement or other agreement applicable to employees in Los Angeles. This notice can be found on the City's website.

San Francisco's Fair Chance Ordinance

San Francisco, as of Aug. 13, 2014, became California's first city to enact a ban-the-box law. Because the new California ban-the-box law provided greater protections to job applicants, the City and County of San Francisco Board of Supervisors (on April 3, 2018) amended the Fair Chance Ordinance (Article 49) to align (in some respects) with the California law. However, employers with five or more employees working in San Francisco that intend to inquire about and consider criminal history (regardless of the source) also must:

• Provide the applicant or employee with a copy of the Office of Labor Standards Enforcement's (OLSE) Fair Chance Act Notice before inquiring about criminal history or ordering a criminal history background check.
  
• Post the OLSE Notice "in a conspicuous place at every workplace, job site, or other location in San Francisco under the employer's control frequently visited by their employees or applicants," and "send a copy of this notice to each labor union or representative of workers with which they have a collective bargaining agreement or other agreement or understanding, that is applicable to employees in San Francisco." The posted notice must be in English, Spanish, Chinese, and any language spoken by at least 5 percent of the employees at the workplace, job site, or other location at which it is posted. The notice currently is on the OLSE website.
  

Covered San Francisco employers are barred from considering the following types of criminal records (even though these records are not off-limits in other California cities), subject to narrow exceptions:

• Infractions.
  
• Convictions that are older than seven years (measured from the date of sentencing).
  
• Any conviction that arises out of conduct that has been decriminalized since the date of the conviction, measured from the date of sentencing (which would include convictions for certain marijuana and cannabis offenses).
  

California Workplace Solutions

Class actions against employers for failing to follow hyper-technical requirements for background checks have come to dominate the news. Employers in California and elsewhere will want to conduct (privileged) assessments to strengthen their compliance with the myriad laws that regulate use of an individual's criminal and credit history. Suggested next steps include:

• Assess coverage under the California, Los Angeles, and San Francisco ban-the-box laws, and California's law restricting use of credit reports.
  
• Review job advertisements and postings both for unlawful and mandatory language regarding criminal history.
  
• Review job application and related forms for unlawful inquiries regarding criminal history.
  
• Train employees who conduct job interviews and make or influence hiring and personnel decisions, regarding inquiries into, and uses of, credit and criminal history, including best practices for documentation and record retention.
  
• Review the hiring process to ensure compliance, including the timing of criminal history background checks, the distribution of mandatory notices, and the application of necessary waiting periods.

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Source: Society for Human Resource Management (SHRM)

https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/background-checks-employment-screening-california.aspx

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Leanna Garfield

  Apr. 25, 2018, 10:31 AM
 

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• Estée Lauder Companies is expanding its parental-leave policy in the US.
• The expanded benefits package now includes 20 weeks of paid leave, $10,000 toward adoption, and a back-to-work transition program — regardless of sex, gender, and sexual orientation. The company will also continue to offer $20,000 toward fertility treatments as well as in-home child care and elder care at a reduced rate.
• The new program is on par with many major tech companies, like IBM, Twitter, and Amazon.
• Estée Lauder's Executive Director of Global Benefits told Business Insider that the company realizes that no one family looks the same, which is why it wants to give employees multiple benefits options if they choose to have a child.

Starting May 1, Estée Lauder employees in the US who choose to have, foster, or adopt a child will get 20 weeks of paid leave— regardless of sex, gender, and sexual orientation. And if they conceive of that child themselves, they will receive an additional six to eight weeks of paid time off.

The new offerings are part of the company's expanded family-benefits program. Employees at Estée Lauder can now also seek up to $10,000 for adoption fees.

Both hourly and salaried employees are eligible, as long as they work at least 30 hours per week and have been with the company at least three months. Before the change, Estée Lauder offered 12 weeks of paid parental leave. The company will continue to offer up to $20,000 per year toward fertility treatments, as well as child or elder care at a reduced rate to eligible workers.

In addition, the company is launching a back-to-work transition program for new parents. As part of this six-week program, Estée will give parents flexibility on where and when they work. For example, a new mom could work from home a few days per week if she chooses, or a dad could adjust his schedule in that he comes in earlier and leaves earlier than the usual 9 to 5. And those who qualify for Estée's new childcare/eldercare program expend a co-pay of $8 an hour.

The new parental-leave program is a generous policy for a company as big as Estée Lauder. In the US, many parental-leave programs prioritize birth mothers— and therefore offer limited benefitsto fathers, adoptive parents, foster parents, or LGBT parents. Hourly workers are also less likely to receive an extensive amount of paid leave, even though they are more likely to not be able to affordnewborn child care.

It's also fairly unusual to offer such a large reimbursement toward adoption, which costs between $34,093 and $39,966 on average for American parents. In recent years, a growing number of large American companies have started including adoption reimbursement as part of their benefits packages. American Express, for example, will give up to $35,000 per adoption to eligible, salaried and hourly employees.

One reason for Estée's expanded policy was to stay competitive when prospective employees are considering benefits packages from other companies, according to Latricia Parker, Estée Lauder's Executive Director of Global Benefits. Approximately 84% of Estée's American workforce are also women, who tend to take more parental leave than men.

Estée's expanded benefits package seeks to acknowledge that families are diverse as well. Its employees might want to adopt regardless of whether they're able to physically conceive. Fathers may be the lead parent and need some extra time off.

"We're seeing a general shift away from focusing on more traditional benefits, like medical and dental," Parker told BI. "Now, it's all about the individual, rather than employers dictating what's right for them. Employees want to understand the options available to them ... We [Estée Lauder] don't want to dictate what their families should look like."

The cosmetics giant is following several other major corporations that have recently made similar changes to their family-leave policies in the US. As of February 2018, the nation's 20 largest employers now offer paid parental leave to at least some of their workers. Out of these, IBM offers the most extensive family-leave program for hourly and salaried employees: 20 weeks of paid leave for birth mothers and 12 weeks for other types of parents. As an outlier, Netflix announced in 2015that it gives parents up to a year of paid time off.

All three companies offer many more weeks of paid parental leave than the national maternity-leave average: 2.8 weeks for women on a typical salary. According to a 2017 report, more than 114 million Americans do not have any form of paid parental leave.

The Family Medical Leave Act currently gives women 12 weeks of job-protected unpaid leave, but many workers don't qualify. In addition, only 6% of people working low-wage jobs have access to any paid family leave.

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Source: Business Insider

http://www.businessinsider.com/estee-lauder-parental-maternity-leave-policy-2018-4

New regulations would apply to more advisors than the DOL’s stalled rule

By Stephen Miller, CEBS Apr 26, 2018

The Securities and Exchange Commission (SEC) on April 18 issued its own proposals to enhance the quality and transparency of investors' relationships with advisors and brokers.

The SEC's move comes at a time when the Department of Labor (DOL) struggles over implementing the Obama administration's fiduciary rule requiring retirement plan advisors to offer only advice that's in the best interest of plan participants regardless of fees or commissions—and holding plan sponsors liable for seeing that they do.

This move by the SEC comes after a March 2018 ruling by the 5th Circuit that squashed enforcement of the DOL's 2016 fiduciary rule, putting the guidelines in limbo, in what John Ryan, a partner in law firm Seward & Kissel's employee benefits group in New York City, calls the "Kafkaesque saga of the fiduciary advice rule."

The DOL faces an April 30 deadline to appeal the 5th Circuit decision, Ryan noted. If the DOL chooses not to appeal, the court's decision will take effect on May 7, vacating the DOL's rule. That could pave the way for the SEC to be the key regulator of investment advice.

Among the documents the SEC issued last week were:

• A proposed best-interest regulation for brokers, requiring that they act in the best interest of customers when recommending any securities transaction or investment strategy.
  

• A proposed investment advisor interpretation that clarifies the fiduciary duty an investment advisor owes clients, including advice about an investment strategy and recommendations to roll over assets from an employer-sponsored retirement plan to an individual retirement account.
  

• A proposed rule on standardized descriptions of services that requires advisors and brokers to provide a new short-form document highlighting services offered, the fees a customer might pay and conflicts of interest that may exist.
  

• An overview of the proposed standards of conduct for investment professionals.
  

The public comment period will remain open for 90 days following the documents' forthcoming publication in the Federal Register.

SEC's Broader Reach

The DOL's fiduciary rule, proposed in 2015 and finalized in 2016, applied to some—but not all—financial advisors and brokers. The DOL can regulate services provided to retirement accounts but (unlike the SEC) lacks jurisdiction over taxable brokerage accounts.

Excluding some types of annuities, the SEC's rule would apply uniformly across all types of investment accounts, "which is arguably a significant improvement from the DOL's fiduciary rule that was limited to 'just' retirement accounts," blogged financial writer Michael Kitces.

Some states, including Nevada and Connecticut, have also adopted their own fiduciary rules, which can be more expansive than the DOL's rulemaking, Kitces pointed out.

No Right to Sue

While the SEC proposal calls for a best-interest standard for investment professionals, it does not provide for a private right of action giving investors the right to sue, which was a controversial component of the DOL's fiduciary rule.

"The law should unambiguously require investment professionals to act in the best interests of their customers, who entrust them with their hard-earned money," said Dennis Kelleher, president and CEO of Better Markets, a nonprofit that supports financial reform. The SEC proposal "appears to fall well short of that standard, relying too heavily on disclosure. While some provisions may offer modest benefits to investors, the SEC appears to have missed a historic opportunity to finally establish a strong, clear, enforceable best-interest standard for all advisors."

However, regardless of the status of its fiduciary rule, "the DOL has the authority to use its resources to investigate and discipline any plan fiduciary who breaches their fiduciary duties, and can initiate action based on complaints from plan participants who have been harmed," said Barry Kozak, a Chicago-based retirement planning advisor with October Three Consulting. "Similarly, the SEC has the authority to investigate and discipline any broker-dealer or investment advisor who violates their rules of conduct, and can initiate action based on complaints from the general public," he added.

Future DOL Guidance

If it doesn't appeal the 5th Circuit case and its fiduciary rule is vacated, "the DOL still could provide additional guidance that complements the SEC proposal," Ryan said. "Such guidance could require clear disclosure of the level of advice being offered"—for instance, whether it meets the Employee Retirement Income Security Act's fiduciary standard and is for participants' exclusive benefit—"that will provide plan fiduciaries with a clear understanding of the relationship they are entering into, the obligations of the financial institution, as well as the fees they are paying for those services," he explained.

Similarly, "It is likely—at least in my view—that the DOL will follow suit and issue a proposed regulation re-defining fiduciary advice" that is less expansive than the DOL's fiduciary rule,blogged attorney Fred Reish, a partner in the Los Angeles office of Drinker Biddle & Reath. "The DOL will also need to issue prohibited transaction exemptions," he noted, adding, "I suspect that the DOL exemptions will, for the most part, follow the SEC's disclosure requirements, but perhaps adding additional protections for retirement investors."

No Going Back

While the future of the DOL's fiduciary rule remains uncertain, and the SEC's regulations governing the conduct of broker-dealers and investment advisors have been published only in proposed form, pending public comments, "business models are most likely being realigned right now" at financial services firms, Kozak said. Financial firms "are trying to project short-term and long-term compliance solutions with these possibly competing rules in a manner that is least disruptive to their bottom lines, which generally could mean the elimination of certain undisclosed compensation bonuses and rewards for the purchase of certain investment options over others."

He added, "If the industry becomes more forthcoming with how compensation is actually determined, then, with informed consumers, there will be less chance of a violation of trust."

Although the Society for Human Resource Management (SHRM) has not taken a position on the SEC's efforts, "SHRM believes that a bedrock of sound fiscal and savings policy is ensuring that every U.S. employee has the opportunity to save and plan for retirement and protect his or her family's health," and that "public-policy efforts at both the federal and state levels should focus on expansion of and access to benefits, including retirement accounts," according to SHRM's 2018 Guide to Public Policy Issues.

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Source: Society for Human Resource Management (SHRM) 

https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/sec-investment-advice-proposal.aspx

Many employers can design plans to reduce addiction risks

By Stephen Miller, CEBS Apr 24, 2018

Surgeon General Jerome Adams called on employers to "step up" to combat the opioid epidemic.

"As employers, you already understand that the health of your employees has an impact on your bottom line," said Adams, an anesthesiologist who was confirmed by the Senate as the 20th U.S. surgeon general last August. "My challenge to you is to think about how you can impact health beyond the walls of your office, beyond the factory."

Adams spoke April 19 in Washington, D.C., at Business Health Agenda 2018, a conference sponsored by the National Business Group on Health (NBGH), an association of large employers.

Addiction is a public health crisis, Adams noted, with an estimated 2.1 million people in the U.S. struggling with an opioid-use condition. "There's a person dying of an opioid overdose every 12 and a half minutes," he said. "Four out of five people who use heroin started with a prescription opioid."

While these drugs can be helpful for a short time, they pose serious addiction risks. "For most people, frankly, the risks outweigh the benefits," Adams said.

More than a third of people with an opioid prescription don't realize they're taking an opioid to treat pain, he pointed out. Common opioids are OxyContin (a brand of oxycodone), Vicodin (which contains hydrocodone), morphine and methadone.

"There are levers that you, as employers, have through your plan administration to help people understand what an opioid is. You have control over a lot of prescribing, and you can say [to health providers], 'If you're going to prescribe opioids to my employees, you better tell them that they're taking an opioid and let them know what the dangers are.' "

Turn Off the Spigot

Employers, especially large self-insured organizations, can ensure that health providers are following Centers for Disease Control and Prevention (CDC) guidelines, Adams said. "Use your levers on the health care deliver side."

Dental prescriptions for opioids is the first step for many toward addiction, he pointed out. "If you tell your employees and their families that you're not going to pay for more than 10 pills if they go to the dentist, that will have a quicker impact than anything I can do as surgeon general to educate the prescribers in the community."

Or, implement a three-day limit on opioid prescriptions for initial pain treatment, given that the CDC found that the probability of addiction increases on day four. A three-day limit on opioids has just become the law in Florida.

Promote Best Practices

"It's important that you know what successful treatment programs look like," Adams said. For instance, best-practice providers are offering:

• Personalized diagnosis, assessment and treatment planning.
  

• Access to Food and Drug Administration-approved non-opioid medications.
  

• Behavioral health interventions delivered by trained professionals.
  

• Long-term disease management coaching.
  

• Coordinated care for co-existing diseases and disorders.
  

• Support services such as mutual-aid groups that can provide emotional and practical support for recovery.
  

"I've heard feedback from employers that don't want to pay for fly-by-night programs that are not evidence-based. We're working to help you understand what is evidence-based, and I'm asking that you work with me to make sure once you know the criteria that you pay for [effective treatments] for your employees," Adams said.

Also, identify pain-management centers of excellence and "reward people for doing the right thing by incentivizing providers to accept those best practices for alternatives to opioids, such as physical therapy, music therapy and acupuncture, and other modalities that many plans aren't paying for and that aren't packaged in a way that makes them easily accessible," he said.

Reach Out

"Each and every one of you who is an HR director should know someone at your county or state health department, because they're the ones who know what's going on in your communities," Adams said. "They know the risks as well as the programs that can help reverse those trends beyond the levers that you have on the workplace wellness site."

In addition, large employers can help small and medium-size businesses in their communities by sharing practices around what's working and what's not. "Share your data so they understand they can have an impact," Adams said. "Bring them to the table with local social-services providers."

April 28 is National Prescription Drug Take-Back Day, "and we want you to be a part of it and to help promote it" through employee communications, Adams said. "We want to get these medications off of shelves in homes; we want to get rid of the killer that's in your medicine cabinet."

Stepping Up

NBGH's Large Employers' 2018 Health Care Strategy and Plan Design Survey found that the vast majority of big employers (80 percent) are concerned about abuse of prescription opioids and that many are taking steps to address the opioid epidemic. The survey was conducted last year from May 22 to June 2.

(Click on graphic to view in a separate window.)

"The opioid crisis is a growing concern among large employers, and with good reason," said Brian Marcotte, NBGH president and CEO. "The misuse and abuse of opioids could negatively impact employee productivity, workplace costs, the availability of labor, absenteeism and disability costs, workers' compensation claims, as well as overall medical expenses."

"Companies incur significant financial and legal risks, such as an increased use of ER services, hospitalizations, related medical costs, and more workers' comp claims," due to opioid use, Linda Keller, employee benefits practice leader for Hub International, a Chicago-based benefits and insurance broker, wrote last October on The SHRM Blog. "The cost per claim as a result of opioid abuse continues to grow, as well as the number of painkillers per claim."

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Source: Society for Human Resource Management (SHRM) 

https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/surgeon-general-wants-employers-to-combat-opioid-epidemic.aspx