Thriving in a
Down Economy

These are increasingly challenging times for ECPs than we have been accustom to and we all continue to be exacerbated by uncertainty regardless of who is our country's leader. At times like this, it's good to remind each other of that which we know, but perhaps because they are so simple and fundamental, we forget:

• Things are never as bad as they may appear, or the media make them seem. Economists and economic pundits that we listen to remind us that the markets will begin to improve soon.
• What you do in difficult times will result in greater rewards. History has proven that difficult times
  make or break businesses. Make your own success by focusing your practice on what is important, what you and your staff have to do. You will greatly benefit from being focused.
• The good times always follow the bad times. And as the old adage goes, "This too shall pass."

As a very good friend and coach reminds his players, "You gotta believe." Have confidence in yourself, visualize your success, and inspire others.

Hedley Lawson brings over 25 years of optical industry experience to Jobson Medical LLC. For over 10 years, he has been a contributing editor to VM, most recently as writer of the monthly column "Business Essentials." He is the Contributing Editor of VM's E-Newsletter Business Essentials. Contact Business Essentials with questions or comments.

Pending Green
Card Application

Q: Our practice hired someone with a pending green card application and a work permit. He says all we have to do to ensure continued work authorization is to write a letter to USCIS confirming his employment.
Is that true?

A: New laws allow individuals who are far along in their green card application to change jobs, but: 1) the new job must be in the same or similar occupation as the job described in the pending application; 2) the last stage application must have been pending for 180 days; 3) it's advisable that the second stage I-140 Petition be approved. Bottom line: "It ain't over till it's over." Until permanent residency is approved, there are many minefields that could derail the continued employment of these individuals.

Systems Check

Q: We have not done a very good job in periodically checking our computer system. What would you recommend we do to start the process?

A: Here are five great ways to get off to a stellar start.

1. Run a file backup.
Sign up for a remote online backup service, buy an external hard drive, burn your files onto CDs—you've got a number of increasingly affordable backup options these days. Even simply emailing your most important files to yourself is better than nothing.

2. Delete files you don't need.
Once you've run your backups and have stored your data on both an external hard drive and a stack of CDs or DVDs, you can delete them from your computer's hard drive. You'll free up a lot of storage and, with a newly de-cluttered desktop or documents folder, it will be easier to find the documents you need regularly.

3. Run a system scan and update your virus definitions.
Your antivirus product can only work if you run a full system scan and update your definitions. Many people fail to run full scans regularly because they tend to take up a lot of computing resources. Now is the time to get up to date and give your antivirus software a chance to actually work.

4. Change, consolidate, and protect your passwords.
You should change the passwords to your email, credit card, and bank accounts regularly. Keep track of the changed passwords and keep them all in one place instead of jotting them down on random Post-It notes. A method as simple as writing them down on a piece of paper and keeping them in a locked safe is very low-tech, but it's also virtually un-hackable.

5. Get a copy of your credit report.
It's important to check your credit report regularly to make sure the information is accurate and up-to-date. It's also one of the best ways to protect yourself from identity theft.

If you have a question or issue for one of our experts, contact Business Essentials.

—Hedley Lawson, Jr.

Is Your Practice Ready for HR Outsourcing?

There comes a time in the life of most successful ECPs when a decision has to be made as to whether certain HR tasks are best handled in-house or by Human Resources Outsourcing (HRO). Making the right call at the right time is neither quick nor easy. There are, however, key indicators or signals you can use to determine if it is the right time to seek outside assistance. Here are a few tips that can assist you in the decision-making process:

High or Escalating Costs:
Higher costs in payroll, benefit management and other key areas continue to be the primary driver for HR outsourcing. While cost reduction is not the only reason for using an HRO it is certainly a major consideration, along with other factors including efficiency, quality and speed.

Missed Cutoffs:
If a growing number of employees are complaining that critical documents, ranging from paychecks to W-2 forms, are arriving late, it is a sign that improvement is necessary. There is a good chance that the delays are being caused because staff may be stretched beyond their capabilities.

System Issues:
If business applications are beginning to overwhelm your internal IT resources, you should consider either investing in additional technology or outsourcing some of the workload over to a third party. HROs rely on their own IT systems, enabling in-house systems to focus on business and patient-related tasks.

Increasing Mistakes:
Increasing errors that affect your staff are another sign that people and systems are being stretched beyond their limits. Assigning non-patient essential work to an HRO can lower the pressure on staff, allowing them to devote valuable time to patient care and satisfaction. This is especially important in situations, such as payroll, where legal compliance is an issue.

As with all other areas of your practice, HRO is another important area to consider for your office, allowing you and your staff to do what you do best—provide exceptional quality and care to your patients.

Back to Top

Strategies to Control Compensation Costs in 2009

Results from an October 2008 Culpepper Pay Practices & Policies Survey highlight strategies companies plan to use over the next year to control the costs of base salaries, short-term incentives, and long-term incentives. Also included in the report are hiring strategies companies will use to manage compensation costs in 2009.

Base Salaries
Seventy-two percent of respondents indicated that they have a plan for controlling fixed base salary costs in 2009. The most common strategy companies plan to use to control base pay is to give smaller base salary increases to poor performers, non-key employees, and employees in non-critical jobs.

Other strategies companies plan to use to manage salaries include paying below-market salaries, freezing salaries, and delaying salary increases to a later date. Surprisingly, 3 percent of companies plan to cut salaries in 2009.

Fifteen percent of companies remain undecided on how they will control base salary costs in 2009.

Due to the economic downturn and budget cuts, many participants indicated that they are reining in costs by giving greater scrutiny to salary increases, promotions, and restricting out-of-cycle increases. Additionally, numerous participants indicated that they are holding down base salary increase budgets by shifting more employees to variable, performance-driven awards.

Short-Term Incentives
Fifty-one percent of respondents indicated that they have a plan for controlling variable, short-term cash incentive costs in 2009. The most common strategies companies plan to use to manage short-term incentives include giving smaller incentives to poor performers, raising performance targets, reducing the size of short-term incentives, and reducing the number of employees eligible for short-term incentives. Surprisingly, 3 percent of companies plan to eliminate short-term cash incentives in 2009.

Fifteen percent of companies were undecided on how they will control short-term incentive costs in 2009. Short-term incentives include bonuses, commissions, cash profit sharing, and other variable cash payments earned within a one-year period.

Sales Compensation
The most common strategy companies plan to use to control sales compensation in 2009 is setting larger quotas and sales targets.

Additional methods reported by participants to manage sales compensation costs include windfall policies on commissions earned through little effort, restricting certain accounts from commissions, lowering commissions, implementing flat maximums on earnings from a single contract or sale, changing the pay mix to have a lower base with a higher variable component, increasing sales thresholds before commissions are paid, increasing sales hurdles before higher commission rates are paid, and lowering commission multipliers.

Sixteen percent of companies were undecided on how they will control sales compensation costs in 2009.

Long-Term Incentives
The most common strategies companies plan to use to control long-term incentives include reducing the number of employees eligible for long-term incentives and giving smaller awards to poor performers and non-key employees. Other strategies companies plan to use to control long-term incentives include raising performance targets and reducing the size of long-term incentive awards. Only 2 percent of companies plan to eliminate long-term incentives in 2009.

Sixteen percent of companies were undecided on how they will control long-term incentive costs in 2009.

Control Compensation Costs Wisely
In this time of economic uncertainty, it is critical to attract top talent and retain star performers who will drive your organization’s success in difficult market conditions. You cannot afford to guess about compensation rates of key employees or make "across the board" salary increases or freezes. A modest investment in current market data will help you allocate your compensation dollars wisely and in the right places.

Source: October 2008 Culpepper Pay Practices & Policies Survey

Back to Top

Cafeteria Health Plan Design vs. Nondiscrimination Testing

When do employee benefit plans potentially conflict with IRS Section 125 nondiscrimination requirements? This article addresses two common situations and suggests alternatives to consider.

The two scenarios are a) A contributory health care plan for all employees except it's non-contributory for the senior management staff; and b) A health care plan with a one-month waiting period for all employees except the hourly employees, who have a three-month waiting period.

Cafeteria Plan Section 1.125-7 describes the nondiscrimination rules and safe harbor provisions related to Highly Compensated individuals as defined in 1.125-7(a)(3) and 414(q)(1)(B). Therefore, discrimination depends on how the Highly Compensated individuals are situated in the above two scenarios. In general, a Cafeteria Plan may not discriminate in favor of Highly Compensated individuals with regard to eligibility to participate in the plan, or in regard to contributions, and availability or election of benefits. Note, a discriminatory plan is not illegal but there are tax consequences for the Highly Compensated individuals. However, an employer who knowingly operates a discriminatory plan and does nothing about it could lead to plan disqualification.

Here are some simple considerations:

1. Review the Cafeteria Plan based on its facts and circumstances to determine whether the safe harbor provisions are satisfied; then determine an appropriate course of action.
2. Make all benefits, waiting periods, and contributions the same for all employees. Some employers may provide senior executives with a taxable Expense Reimbursement package in lieu of other fringe benefit perks.
3. Exclude the Highly Compensated individuals from the Cafeteria Plan, or expand the class to include a sufficient number of employees to satisfy the safe harbor provisions.
4. In the case of different waiting periods, the Highly Compensated individuals can be asked to commence their pre-tax payroll deductions, if any, to coincide with the longer waiting period for all other employees.
5. Appropriate taxable income can be included for the Highly Compensated individuals, in the event the Cafeteria Plan is discriminatory.
6. Some employers may wish to take the ‘business risk’ of doing nothing beyond what they are already doing because they believe the matter is inconsequential. However, an employer who knowingly operates a discriminatory plan and does nothing about it could be required to retroactively adjust W-2s, payroll tax calculations, and possibly pay tax penalties.

The intent of this article is to draw attention to potential concerns and taxable events related to designing and administering Cafeteria Plans. It is not intended to provide legal advice, nor should this article be used as legal advice.

Source: Victor Deksnys, area executive vice president, Gallagher Benefit Services, Inc.

Health Plan Changes for 2009

Percentage of firms reporting that they are very likely or somewhat likely to make health plan changes in 2009:

The Satisfaction Meter for Health Plans

Percentage of participants reporting they are extremely satisfied  or very satisfied with their overall health plan, 2006 – 2008:

Note: Traditional = Plan with deductible <$1,000 individual, <$2,000 family
HDHP = Deductible $1,000+ individual, $2,000+ family, no account
CDHP = Deductible $1,000+ individual, $2,000+ family, with account

Source: Employee Benefit Research Institute

It's Your Business
Thriving in a
Down Economy

From the Top
Is Your Practice
Ready for HR Outsourcing?

Ask the Experts
Pending Green
Card Application

Systems Check

People
Management
Strategies to
Control Compensation
Costs in 2009

Health Matters
Health Plan
Changes for 2009

The Satisfaction
Meter for
Health Plans

Rules and Regulations
Cafeteria Health
Health Plan Design
vs. Non-
discrimination Testing

Money Matters
President Obama
Signs the Lilly
Ledbetter Fair Pay
Act Into Law

Resource Corner
Links to Important
Resources

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President Obama
Signs the Lilly
Ledbetter Fair Pay
Act Into Law

On Jan. 29, 2009, President Barack Obama signed into law the Lilly Ledbetter Fair Pay Act (P.L. 111-01). The legislation, which the Senate and House have approved, becomes the first bill signed into law by President Obama.

The Ledbetter Act overrules the U.S. Supreme Court May 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co. In that case, the Court held that the 180-day time limit for filing a charge under Title VII of the Civil Rights Act starts after the alleged unlawful employment action, and does not re-start upon receipt of each successive paycheck.

Key provisions of the Lilly Ledbetter Fair Pay Act include:

Changes application of statute of limitations.
The Ledbetter Act will make the issuance of a paycheck a discriminatory action. By making the time clock re-start each time an employee receives a paycheck, and potentially even when a retiree receives an annuity check, the Ledbetter Act will allow individuals to bring discrimination claims potentially many years after an alleged act of discrimination occurred. Employers will be liable for earlier management decisions for which there may be no records.

Expands plaintiff field. The Ledbetter Act will allow, not just an employee who was discriminated against, but other individuals who were “affected” by an act of pay discrimination to file claims. Thus, the new law may allow family members, including spouses and children, and potentially others to become plaintiffs in discrimination suits over an employee’s pay.

Amends other civil rights statutes. The Ledbetter Act will extend the statute of limitations for filing claims for all protected classes of employment law, including gender, age, color, disability, race, religion and national origin.

Most business and HR organizations opposed the Ledbetter bill because it went far beyond a simple reversal of the Ledbetter decision. Business leaders believe the legislation would eliminate the uniform statute of limitations under current law and expose employers to interminable liability.

Easy-reference to Web resources about human resource policies and rules

Cafeteria Plan Section
1.125-7

Culpepper Pay
Practices &
Policies Survey

Employee Benefit Research Institute

Gallagher Benefit
Services, Inc.

Human Resources Outsourcing (HRO)

I-140 Petition

IRS Section 125 Nondiscrimination Requirements

SHRM Online

The Pension Protection
Act of 2006 (PPA)