Category Archives: Employment

FAQs on Employee Benefits–A Primer

As promised in my previous post, the following is a primer-like summary of employee benefits for the communicator who seeks the basics, or needs simply to brush up on the nuts and bolts of this topic. I believe that the Q&A approach is a good fit for these types of summaries, so here goes:

 

Q: What laws apply to employee benefits?

A:  Three major laws pertain and apply to employee benefits: ERISA (29 USC § 1001 et seq.), Internal Revenue Code (IRC) (26 USC § 1 et seq.), and the Age Discrimination in Employment Act, otherwise known as ADEA (29 USC § 621 et seq.).

The IRC determines how and when workers are taxed on employer-provided benefits. It also decides how and when employers can take deductions for benefits provided to employees. Also, this law is the source of the non-discrimination rules that apply to many employee plans.

ERISA is perhaps the most well-known law as employee benefits go. Part labor law, part tax law, ERISA sets a floor for standards governing plan participation and benefit requirements. As discussed in the previous post, ERISA also imposes fiduciary responsibilities on plan officials, and establishes rules for the enforcement of employee rights (gives employees a right to sue the employer for various causes of action).  In addition, it is indeed a tax law, containing several provisions actually incorporated into the IRC. ERISA includes special provisions for an insurance program for defined benefit (DB) plans, standards for continuation of healthcare coverage after detaching from employment (COBRA) and health-plan portability and access rules (HIPPA).

Finally, the ADEA applies to employee benefit plans, but primarily in theory. The impact of the ADEA on plans is currently being hashed out in courtrooms across the country. It’s worth noting that all three of these laws share duplicate provisions.

Q:  What plans are not subject to (exempt from) ERISA?

A:  Under ERISA § 4(b) and other sections, the following plans are generally exempt:

• plans sponsored by federal, state or local governments
• plans sponsored by churches
• workers’ compensation, unemployment compensation or disability insurance laws
• plans maintained outside the U.S. primarily for nonresident aliens
• unfunded executive compensation plans that provide additional benefits to
executives and other high-paid employees.
Note: Even though these governmental, church and executive compensation plans are not
subject to ERISA, IRC requirements continue to apply to these plans, and must be observed in order to preserve the tax-exempt treatment, where available, for plan participants.

Q:  Exactly what are “employee benefits?”

A:  At the risk of moving a few steps backward here, a clarification is probably important. Employers typically provide their workers with a variety of benefits in addition to wages and salaries. These are commonly called “fringe benefits.” Fringe benefits include all types perks, such as reduced fares on public transportation to club memberships and tuition reimbursement. They also include access to and contributions to pension and healthcare plans. Thus, pension and healthcare plans are a form of “fringe benefits” many employers choose to offer.

In general, when we hear the term “employee benefits,” we think only of the organized, managed and employer sponsored plans such as pension plans, 401(k) retirement savings plans and healthcare plans. Typically, the term refers to employer-sponsored plans subject to ERISA, and which have special rules as pertains to taxation.

Q:  When is a “plan” really “a plan” according to ERISA?

A:  Keeping in mind that ERISA generally only applies to employer-sponsored plans in the private sector, in order for a plan to be considered a “plan” under ERISA, an employer must a) intend to create a plan and b) be involved in the plan administration, among other factors. See Donovan v. Dillingham, 688 F2d 1367 (1982). An employer who simply allows access to a plan and somehow facilitates or assists in taking deductions from employees’ pay so they can participate has not actually established a plan under ERISA. The key point to take away from this is (and particularly from a legal perspective) is that some plans, while they appear to be a “plan” under ERISA, may not even be subject to ERISA after a thorough analysis of the facts.

Fact is, ERISA requires the employer (ER) to establish an ongoing administrative scheme for it to be a plan recognized/subject to ERISA. Further, the term “Plan” is not interchangeable with the plan documents, which enumerate and inform about the components of the plan itself. While this distinction may seem picky, most employee-benefit lawyers would heartily agree that this is indeed an important, basic difference.

Q:  What are the primary types of plans?

A:  Under ERISA, a plan is either a “welfare plan” or a “pension plan” that covers at least one employee.

Q:  What is a “welfare plan?”

A:  No, it’s not free money handed out because someone demonstrated need. Under ERISA, a welfare plan is a plan that provides benefits for:

• medical, surgical or hospital care
• sickness, accident, disability or death
• unemployment benefits
• vacation benefits
• apprenticeship or training programs
• day care centers
• scholarship funds (if funded)
• prepaid legal services
• holiday and severance pay plans.

Q:  What is a “pension plan?”

A:  Under ERISA § 3(2)(A), a pension plan is a plan that:
• provides retirement income to employees, or
• results in the deferral of income until retirement or thereafter.
(ERISA excludes severance pay and supplemental pay plans from this category.)

If you have not dozed off or overdosed on caffeine while trying to read this, I’ll do my best to present related topics and answer Qs on this as they come in. Thanks for reading; hope this helps you in your own writing/drafting travels.

Employee Benefits for the (Non-Lawyer) Communicator

My 20-something years as a senior-level communicator serving large corporate clients have led me to some strange places indeed. There was the time I was hired to write the announcement speech for a secret product launch which was to include two “endings” so that the executive speaker could choose the one most appropriate, based on the audience’s (employees’) reaction. Then there was the time I was entrusted with drafting a series of “confidential” documents outlining a marketing strategy that would ultimately be vetted through no fewer than 43 people (not kidding), leaving me to wonder who didn’t know about this particular plan. In short, I’ve been fortunate in that I’ve not wanted for intrigue and interest during most of this journey so far.

There’s intrigue, and then there’s harsh complexity. That’s where the subject of employee benefits comes in. In the marketing communications arena, I’ve habitually viewed those communicators who can tackle this subject matter with even moderate fluency as the rock stars of our profession. Why? Employee benefits are like the second cousin of fixed income securities: they are complex, rarely intriguing, lack any hint of excitement and are almost always dry and loaded with tedium. Usually, only communicators with superior attention to detail and a solid grasp of the regulatory backdrop dare to tread on this subject, and with good reason.

After obtaining a law degree it occurred to me that my ability to swiftly and effectively communicate on this complex topic was supported by a more robust understanding of the regulatory environment that drives this arena. As such, the following is the first in a series of a few short articles for those non-lawyer communicators seeking a clear, simple roadmap to this rather annoyingly complicated landscape.

ERISA – What it Is

To know employee benefits you have to begin with ERISA. The Employee Retirement Income Security Act is a federal law, to be blunt, administered by the Employee Benefits Security Administration (EBSA). The provisions of Title I of ERISA cover most private sector employee benefit retirement plans. Such plans are voluntarily established, and maintained by the employer. Sometimes, they are maintained by more than one employers, or even an employee organization, for example. These plans include pension plans (defined contribution or defined benefit), simplified employee pension plans (SEPs) and 401(k) plans, as well as profit-sharing and stock-bonus plans, along with employee stock ownership plans, or ESOPs.

The most important thing to start with is that ERISA does NOT apply to plans established or maintained by government entities or churches for their employees. Plans maintained solely to comply with workers’ comp, unemployment or disability laws are also NOT subject to ERISA. Finally, ERISA does not cover plans maintained outside the U.S.

What it Does

What ERISA does is set uniform minimum standards to ensure that employee-benefit plans are established and maintained in a fair and financially sound manner. Think of it as a regulatory “floor.” Employers can deliver above and beyond what ERISA mandates, but not below the standards set forth in the law.

Here’s a general smattering of what ERISA does:

  • Requires plans to tell plan participants what’s going on with the plan, and on a regular basis.
  • Sets minimum standards for participation, vesting, benefit accrual and funding.
  • Requires plan fiduciaries to be accountable (more on that shortly).
  • Gives plan participants the right to a cause of action to sue for benefits and/or breaches of fiduciary duty. (For non-lawyers: you cannot sue unless federal law [or, if applicable, state law] unless there is a basis for the cause of action. Meaning–there has to be either a statutory or a case-law/common law basis for a cause of action. A cause of action is “Negligence,” “breach of contract,” or “breach of fiduciary duty,” or the like.)
  • Guarantees payment of certain benefits if a plan goes under, through the Pension Benefit Guaranty Corporation.

ERISA also sets forth requirements that obligate employers to provide promised benefits, and which guide employers when managing and administering private retirement and welfare plans.

Who’s The Boss?

EBSA, along with the Department of Treasury’s Internal Revenue Service (IRS), has the statutory and regulatory authority to ensure that workers receive the benefits they are promised. EBSA has principal jurisdiction over Title I of ERISA, which requires persons and entities that manage and control plan funds to do so according to various standards and duties. They must:

  • Manage plans for the exclusive benefit of participants and beneficiaries;
  • Execute duties prudently and refrain from any activity that constitutes a conflict of interest;
  • Comply with limitations on certain plans’ investments in employer securities and properties; 
  • Fund benefits in line with the law and plan rules;
  • Report and disclose plan info both to participants and to the government; and
  • Comply with investigations whenever necessary.

ERISA also sets forth standards and rules for plan fiduciaries. Individuals who exercise discretionary authority or control over plan management or disposition of plan assets are “fiduciaries” for the purposes of Title I of ERISA. The discharge of these duties must be executed solely in the interest of plan participants and beneys and for the exclusive purpose of providing benefits and mitigating reasonable expenses of administering the plan. In general, fiduciaries are required to “act prudently” and in accordance with plan documents. 

I hope this basic foray into ERISA can benefit at least some of you communicators out there faced with a project involving employee benefits. Next up in the series: FAQs on employee benefits – making sense of the offerings. Thanks for reading, and as always, comments/suggestions welcome!

 

 

Umm….

Most of us have heard claims that public speaking ranks second only to death as the thing people fear most.  It sounds feasible, because public speaking is perhaps our modern day equivalent to being thrown to the lions in a different type of coliseum – the corporate conference room, to name one. After all, it’s one thing to possess a solid body of knowledge on a given subject; It’s quite another to effectively convey that knowledge or information in a manner that captivates. In short, it’s not easy to get a group of strangers to not only listen to you but to also remember what you said.

A close friend recently asked me if I’d be daunted by the prospect of “pitching” ideas to various decision makers in the corporate sector on a select topic. I appreciated the question, because it forced me to take a step back and realize that public speaking really is something most people avoid, even when it involves smaller audiences, such as less than six or seven people, even. It also prompted me to don a more critical lens when watching speakers so as to better discern what makes a speaker successful, and what makes a speaker ineffective. As a result, over the last few weeks I’ve been more closely tracking my observations of live speakers as a way to help provide more clarity around this skill, and hopefully, help ease the panic so many feel when faced with a public-speaking obligation.

1. Ummm..No. — Let’s start with the simplest and easiest tip. I realize that “umm” and “uhh” can sometimes serve as useful tools when you are speaking under pressure, or particularly, when you are speaking in a public relations capacity or directly to the press. These “crutch words,” as I like to call them, can buy you time and help you stay focused. However, when you use “umm” in between each and every sentence in your speech, you sound like you are nervous and don’t know what you are talking about.

Relying on “um” and “uh” is nothing more than a habit. Before your presentation, practice your speech over and over and make a deliberate effort to not say “um,” even once. Record yourself practicing. You will hear how sounds like “um” diminish your authority and make you sound like you are struggling — even when you aren’t. Eliminate this from your presentation technique entirely. You can do it, because it can become as much of a habit not to say “um” 46 times in a five-minute presentation as it is a habit to reach for “um”  46 times in five minutes. You get the point.

2. Stop Questioning Everything — There’s a disturbing trend nowadays that has unfortunately become so prevalent, people do it all the time, even on television. Tragically, it’s a trend that more women seem to have embraced than men. (I’ll explain why I believe this is tragic shortly.) It’s the tendency for speakers to raise their pitch at the end of every sentence so it sounds like a question, even when it’s a statement. I attended a college-planning seminar at our local high school, and the three women presenting on the topic seemed knowledgeable, but their credibility (at least for me) was immediately diminished by the fact that virtually every statement they made sounded like a question.

I don’t know where this comes from, but it should be returned promptly with a sharp word to the originator. It’s a terrible delivery choice, because everyone using it almost instantly sounds like a teenager who is unsure of him/herself and searching for validation. Unless you are striving to sound desperate or like Sally Field delivering her Oscar-acceptance speech (“You like me, you really like me?”), stop doing this.

If you are unconvinced, imagine former Secretary of Defense Donald Rumsfeld or General Colin Powell speaking and using this technique. “It is the job of the Department of State to recommend additional security measures at U.S. embassies, worldwide? Then, the Department of Defense executes those requests?” And so on. Ridiculous.

I find this trend tragic as it relates to women, because in a world where women still make less than a similarly situated male doing the same job, and where we continue to fight for credibility in male-dominated professions, women are choosing to voluntarily give away their assertiveness, authority and credibility through this awful delivery technique.

Once again, record your own voice delivering a presentation. Stop posing every sentence as a question unless it’s a question. By “asking” everything you state rather then asserting a statement with strength, you run the risk of sounding like you are asking the audience to maybe, do you think, agree that this statement is okay…? You get the point.

3. Easy There — Above all, slow down. One speaker I heard recently was sharp and clearly an expert in his field, but because he was firing off his information so quickly, I had to check my program to see if perhaps I’d stumbled into the wrong room and was listening to an auction instead. Slow down. Words over a microphone do need to be paced differently from when they are delivered face-to-face, one-on-one.

If you’re faced with a time crunch — a lot of points to get across in a small window of time — boil your points down to sound bytes. Every detail is not necessary (always) to inform your audience. Further, concise points are easier to remember than ones that drone on and on with additional layers of detail.

If your speed-delivery problem is due to nerves, let’s attack that common problem head-on.

4. I’m Scared! — I’m convinced that with the exception of Donald Trump and a few high-profile politicians, no one really loves getting up in front of a crowd to deliver a speech. Most of us don’t live for the sound of our own voices, especially in a public setting. So if you’re feeling anxious or apprehensive about public speaking, you are not abnormal – you are among the majority of humans alive today.

Once you accept that nerves are a normal and expected part of public speaking, it’s time to make the nervousness work in your favor. There are a few ways to do this. First, you can learn to channel the nervous energy into simply energy. Rather than “listen” to your wavering voice and shaky tones, focus on using the nervousness to add flavor and flair to your speech. After all, we’ve all attended monotone speakers’ presentations, and that’s no fun either. I remember working with a portfolio manager who was so learned and intelligent, he’d bring most MIT professors to their intellectual knees. However, his presentations skills brought him the nickname “Toe Tag.”  Use nerves to bring life to your speech, and to make it interesting. No one expects you to be completely calm, because the members of the audience themselves are sitting there, in awe of you, because they a) admire that you are up there, and b) are eternally grateful they are not up there.

Another way you can put nerves to work for you is to break your own “ice” right away. I remember presenting at a room of about 400-500 people on the subject of insurance marketing in the dawn of compliance crack-downs. In lieu of throwing up, I chose to start my presentation with a quick scan over the crowd of sales people and corporate heads with, “Well, thank God this isn’t intimidating or anything.” The laughter alone helped establish that the audience recognized this was a scary prospect, and that they empathized with me. Right away, the line between me and the audience blurred just enough to ease the panic.

I’ve never personally tried to “imagine the audience members in their underwear,” a recommendation from times past. I have, however, reminded myself that I must have something to offer or no one would have requested that I speak or put me on the program. You’re up there because you have something important to convey. Focus on that — your role as messenger, authority, teacher, whatever it is you bring — and aim to do a good job. As you get steeped in your objective, the nerves will have to take a back seat.

Most of all, public speaking is like ice skating. You have to practice, practice, practice to get good at it, and it’s the first spin around the ice that hurts the most. Keep at it. Over time, you’ll have fewer “bottom landings” on the ice and many more moments in which you’ll soar.

Job Hunting Down the Rabbit Hole

As a consultant, I am privileged to serve clients from all walks of work life, although the majority of my clients are the very corporate professionals that now sit in the seat I once held, on “the inside.” While these clients often express similar frustrations, concerns, and even victories, the past several years have revealed a single theme that is unerring in its consistency: the problem of what it’s like to look for a corporate position amidst a surge of layoffs, cutbacks and raging unemployment levels on the macro level.

There are few things as upsetting, unsettling and unnerving as a job hunt. Uncertainty reigns, outcomes evade, and the “dance” of interviewing for a position seems more like a death march over a threadbare rope strung carelessly over the River Scylla. Hiring managers will ask you to become available for an initial interview almost immediately (“Can you conduct a short interview right now? Just tell the pilot to hold the plane, we are hoping to make a final decision in the next five days…”), but will languish lazily when it comes to getting back to you once you do invest time in an introductory interview. You will be asked to rely on a printed job description for information, but when you request greater clarity on that description, the human resources person (now known as ” a recruiter”) will not be familiar enough with that description to answer your questions. It’s maddening, but if for nothing else, at least consistent; These are a few of the aspects of job-hunting that have pretty much remained static up until about four-to-five years ago. That’s when the whole job-hunting experience, in my opinion, ambled crazily down the rabbit hole.

What’s changed? Aside from the dismal labor market overall, which is far worse than government reports are ready or willing to disclose, there have been a few significant shifts in what it means to look for work if you are a corporate professional.

1. Human Resources to the Forefront — Gone are the days when a hiring manager on the line was able to select, interview and prepare an offer to the most qualified candidate, only to contact “HR” at the back end to ask them to handle the requisite paperwork and seal the deal. Today, the human resources professional, or “internal recruiter,” holds firm at the front line. What happened? First, with scads of applicants vying for each rare opening, HR is now necessary to the corporate entity on the front lines as a mere screener. In short, HR’s first order of business is to find reasons to weed out applicants, not consider their merits or what they might bring to the table. The sheer numbers of unemployeds seeking a shot at the same position has been a driving force in this trend.

Another reason why HR is now holding the keys to the entrance gate is partially remedial. Line managers of all levels–Assistant VPs to Executive VPs, and everywhere in between–have across the board demonstrated that selection and hiring isn’t always neutral, or merit-based. Think of the co-worker who you discovered was the granddaughter of the firm’s top sales person, and you’ll have that “aha” moment. That’s why she was taking up space in a job for which she was ill-suited, making your life and your other co-workers’ lives miserable. She was a bargaining chip in much larger favors, from which you would never benefit. In this respect, corporate leaders had no choice but to at least attempt to neutralize the cronyism that crippled efficiencies and decimated morale.

A third possible cause is the increasingly complex and burdensome regulatory backdrop encircling corporate entities today. Line managers just don’t have the support, time or training to comprehend these ever-changing rules, much less comply with them during the charged process of selecting and hiring candidates. Human resources management has become a multi-faceted labyrinth, and amidst an increasingly litigious culture, you better believe companies have pushed HR to the forefront.

Notwithstanding these reasons, having to clear HR as your first hurdle to getting an interview is no fun. Many of these professionals don’t know as much about the position as they’d like you to think; they are often relying on a printed job description prepared by the line manager him/herself. Second, the HR recruiter today is jumping off a springboard of a very different nature than in years past: he or she is looking for reasons to eliminate each candidate, rather than reasons to give a candidate that green light to move to the next stage. Finally, the presence of HR at the outset of the job-hunting process nearly ensures that qualified candidates may never get a crack at their ideal position. This is because HR begins with set, standardized criteria, raw numbers and even hiring quotas–a set of tools that couldn’t be more impersonal, basically disregarding you as an individual job candidate.

2. Let’s Talk Money — In the past, salary was not even a discussion until an offer was at or near the table. Now, as a candidate, on the first contact with HR, you will be asked about your “salary expectations.” Considering that the HR recruiter’s primary task is to evaluate you based on static, impersonal criteria and to eliminate candidates, consider this question a potential disqualifier.

I’ve had HR-affiliated acquaintances admit this to me, so while it may not apply across the board to all job searches, it does come into play, so be prepared. Frankly, I believe this question is unfair, regardless of the HR recruiter’s motives, because what a candidate “expects” in salary from the position is irrelevant. HR, and you, know full well that what matters most is the salary range that the company pre-designated for the position long ago.

How in the name of Alfonso are you supposed to answer this trick question? A recent conversation I had over dinner with a good friend (who is seeking a position) culminated in the following suggestion. When asked about your salary expectations (and you haven’t yet met a single human being in-person as part of the interview process), try this: “I appreciate your asking about compensation. However, we both know that since the onset of the Great Recession, a virtual reset button has been pressed insofar as salaries in most all industry sectors. This has made my last corporate salary somewhat irrelevant as a benchmark. What matters most is what your firm has allocated for this position. What has your firm set for the salary range for this job? I would appreciate your candor. For me to just suggest a ‘number’ without any sense of what your firm pays for this position might inadvertently disqualify me, and I am very interested in this opportunity.”

If that is met with stony silence or resistance, you could say, “I understand you need to report some feedback from me on this important question. I’ll tell you that I made $Xk annually in my last corporate position, and I do know that today, many firms are paying $Y to $Zk for a similar level of responsibility, in our industry. Now, given that, and in the spirit of openness, what is the salary range for this position? I will be forthcoming and tell you if it’s within a range that I’d be happy with.” Etc.

3. The Instant Interview – This one I love, because as we addressed earlier, it can take weeks for HR — or anyone — to get back to a candidate on the outcome of the hiring decision. However, the new wave of job-hunting protocal calls for you, the candidate, to be ready on a dime to speak to HR to get that first screening-out call completed. I heard of one story wherein an HR person called the applicant, and on the spot, requested that she make herself available to talk within 45 minutes. It’s beyond crazy, but actually, it’s solid evidence leading to the reasonble inference that they are merely looking to weed people out of the running.

If this happens, and you can’t possibly accommodate the request, try this: “I can appreciate your sense of urgency in speaking to me; That indicates that filling this position is a high priority for your firm, and that’s a good thing. However, something this important deserves adequate preparation. In addition, I’m tied up honoring prior commitments that I pledged to complete on time and on budget. I could, however, make myself fully available to you starting on Monday at 9am. Would you have time then?” Etc.

4. The Sounds of Silence – Alas, silence is indeed golden in many circumstances, but when you are anxiously awaiting word from the firm to which you devoted countless in-person interviews and stressful hours of travel, preparation and nervous energy, silence is most decidedly not golden. It’s rusty corrosion, actually. And rude.

However, get used to it: The new wave of hiring practices has brought out the very worst infractions when it comes to basic courtesy, and this is perhaps the harshest among them. You will have to assume if you don’t hear anything within two weeks, there’s no action. I’d recommend strongly that you don’t let any HR or line manager hang up or leave the room until you have a business card in hand, and even just a weak sense of when they expect to make a decision. Mark that date on your calendar, and if you’re still hearing the sound of silence by that date, call or email.

While this next point has little to do with the way companies hire now, it’s worth including, in my opinion. I talk to a lot of clients, former clients, friends, associates, and people in other settings about this topic, and if there’s one thing that the majority of them say, it’s that job hunting can be hazardous to your emotional health, but getting out among people and talking about the process helps. If for nothing else, you will feel less alone, and you might even pick up some helpful suggestions on coping. Hang in there. There will come a day when you won’t have to be “screened” at the outset by an HR recruiter, so until then, stand firm and do your part to bring courtesy and decorum back to this arduous process.