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Montage Minute: Deal Reached to Boost California’s Minimum Wage to $15

Lawmakers and labor unions have struck a tentative deal to raise the statewide minimum wage to $10.50 an hour next year and then gradually to $15, averting a costly political campaign this fall and possibly putting California at the forefront of a national movement.

The deal was confirmed Saturday afternoon by sources close to the negotiations who would speak only on condition of anonymity until Gov. Jerry Brown makes a formal announcement as early as Monday.

The minimum wage compromise ends a long debate between the Democratic governor and some of the state’s most powerful labor unions. For Brown, it’s political pragmatism; numerous statewide polls have suggested voters would approve a minimum wage proposal – perhaps even a more sweeping version – if given the chance.

According to a document obtained by The Times, the negotiated deal would boost California’s statewide minimum wage from $10 an hour to $10.50 on Jan. 1, 2017, with a 50-cent increase in 2018 and then $1-per-year increases through 2022. Businesses with fewer than 25 employees would have an extra year to comply, delaying their workers receiving a $15 hourly wage until 2023.

View the full article here
Source: LA Times

Montage Minute: EEO-1 Filing Due 9/30

The EEO-1 Form is a report filed with the Equal Employment Opportunity Commission (EEOC), mandated by Title VII of the Civil Rights Act of 1967, as amended by the Equal Employment Opportunity Act of 1972. The Act mandates that employers report on the racial/ethnic and gender composition of their workforce by specific job categories.

All employers located in the 50 states and the District of Columbia who have at least 100 employees are required to file EEO-1 Survey annually with the EEOC. Federal government contractors and first-tier subcontractors with 50 or more employees and $50,000 contracts must file as well. The US EEOC has opened the report and is ready for employers to start filing them.  Important to note that reports must be filed by September 30th each year. Employment figures from any pay period in the third quarter, July through September, may be used.

View the entire reporting system. If you would like instructions, click here.

If employers have filed an EEO-1 form in previous years, information on the form is pre-filled from the previous year and you can enter through the login.

First-time filers can find a simple registration form online at the EEOC web site at this link.  When this is submitted, the EEOC will issue a company number to the company, and filers can log into the system.

Please do not hesitate to reach out to us should you have any questions on the subject!

Valerie Antillon,

Director of Human Resources
Please Note: This material is provided as general information and is not a substitute for legal or other professional advice.

Are you compliant with ERISA?

ERISA — the Employee Retirement Income Security Act of 1974 — was originally designed for the protection of individuals enrolled in pension plans, but today it affects almost all employers very broadly.

Smart Business spoke with Tobias Kennedyexecutive vice president at Montage Insurance Solutions, about how to adequately protect your company from ERISA regulations with ERISA Wrap.

What is ERISA’s history and the basics of how it works?

ERISA actually has a pretty interesting history. Back in the 1960s pension reform gained some momentum after the Studebaker Corporation, the automotive manufacturer, closed its plant. Due to a poorly funded program, thousands of people were left with no pensions at all and thousands more received lump sum settlement payments valued at a fraction of the proper amount.

The basics of the law require employers to meet certain standards for employee benefits programs and the responsibility really does extend beyond just the retirement piece.

To comply with all of the regulations that ERISA levies, employers need to take action on their benefits products as well, such as the group medical, dental, life insurance, etc.

Which employers are affected by these regulations?

While a lot employers know about ERISA broadly, many don’t realize that it is a federal law affecting almost all employers. It doesn’t matter what is the size of the company, or whether the plans are fully insured or self-funded. It impacts all employers including private sector, corporations and partnerships.

What else don’t employers realize about ERISA?

Additionally, not only are there a lot of employers who are a little under-informed, but the Department of Labor (DOL) also has been awarded funds to audit groups who may not be fully ERISA compliant by cross referencing retirement with the health and welfare.

It’s really a perfect storm where employers are being hit hard for thousands, sometime hundreds of thousands of dollars.

The DOL has the authority to assess penalties up to $1,100 per day, per line of insurance with no maximum cap and no statute of limitations, so non-compliance can be expensive!

How can employers best be aware of potential regulations and avoid these kinds of penalties?

You should consider looking into ERISA Wrap, because unfortunately master contracts, certificates and benefit summaries do not qualify as a written plan document. ERISA Wrap is an approved IRS solution because it includes all of the required information all in one place.

A good ERISA Wrap will gather things like the plan administrator’s name, how the plan is funded, eligibility requirements for employees, rules about protected health information, and required notifications such as Women’s Health and Cancer Rights Act enrollment, Newborn’s Acts, Michelle’s Law, information regarding COBRA administration and much more.

To make sure this is done properly, the easiest thing to do is simply call your broker.

But this isn’t just one document and then you’re good to go — it’s an annual upkeep, and you’ll want to be sure you’re working with a partner versed in the arena to ensure this gets completed after each renewal period.

Culture Is Far Reaching

“Culture is something that can be influenced by leadership. The extra things we do for our employees are far reaching,” says Danone Simpson, CEO of Montage Insurance Solutions. “Reaching beyond the normal sets you apart.”

Smart Business spoke with Simpson about her company’s culture and what she’s doing to improve it.

Can you provide an example of how leadership can improve a company’s culture?

Spending time at my niece’s home last May while her three month old had a major surgery inspired a kid’s camp in our office, which included the employee’s children.

I witnessed two young parents juggling their schedules so they could be home with the children as often as they could. The surgery allowed both the baby and her three-year-old, older brother to be at home for the week. As the time grew closer for me to leave and the children to go back to day care I saw the pain in my niece’s face.

On the flight home my thoughts shifted to my employees and their children. It was on that trip that I decided to have a kid’s summer camp at the office.

The first young lady we hired decided at the last minute to take another job, putting us in a bit of a bind. Luckily, another employee spoke up, ‘I have a friend whose sister may love a job like this.’

We asked the young lady to come in the next morning. She appeared at first glance a serious girl. I was a bit concerned since camp was starting the next day.

Taking a leap of faith like this drew a few internal questions; however I had committed to the employees and after reading “Lean In” by Sheryl Sandberg I knew this was a step in the right direction.

As it turned out the young lady’s first sentence to me during the interview was, “I was working on science projects last night and the play dough came out really good.” I hired her immediately.

How did Sheryl Sandberg’s book weigh into your decision?

In the story she wrote about being pregnant and running to the door for a meeting after parking far away. She was out of breath, and when she sat down Mark Zuckerberg asked her why they did not have closer parking for pregnant women.

She paused and realized that leadership needed to get back to thinking about some of the unique differences we enjoy as women and men.

We push to be the same, but the truth is in some ways we are not.

Today, parents equally share in caring for their children and I see in both our young fathers and mothers the gratitude in having their children experience their workplace if even for a day.

What was the result of your summer camp?

It was a fun-filled summer for the children. They spoke about what they had learned about their mother’s and father’s heritage, presenting boards filled with family photos to our employees.

Recently, we moved our offices and it was important to me that our culture remained intact as we transitioned from a homey office environment to a more modern one.

So, during the spring break we invited the employees’ kids (ages 6-11) to return once more.

This time they presented what they wanted to be when they grew up. I asked them to think beyond sports, art, singing and dancing and to think about these important talents along with a second career to take them even further out. Daniel wants to be a football player and a Paleontologist, studying fossils to determine organisms’ evolution and interactions. His younger brother wants to study the sea as an oceanographer.

They all stood proudly in front of the employees in our conference room presenting to our familiar faces smiling, cheering them on and asking them questions. It was a special bonding time for us all.

We impact our employees in many various ways, and when we include their families it leads to growing strong commitments, and less reduction in workforce, which creates a culture that lasts.

How Your Business is Impacted by New ACA Reporting Requirements

The Affordable Care Act (ACA) has created a few new reporting requirements, and many employers have questions. They want to know what reporting they need to do, when it has to be done and whether fees are involved.

“Companies need to be sure their team understands what is required to satisfy these new ACA regulations,” says Tobias Kennedy, executive vice president at Montage Insurance Solutions.
Smart Business spoke with Kennedy so he could clear up the overwhelming amount of disparate information on ACA reporting and its related fees.

What are Patient Centered Outcomes Research Institute fees?

Patient Centered Outcomes Research Institute fees are also known as PCOR, PICORI, PCORI or CERF fees. This is a relatively small fee that fully insured companies don’t need to worry about — their carrier handles it automatically. But companies who are self-funded and companies who have a Health Reimbursement Account (HRA) are responsible for it themselves.

If your company is self-funded, has an HRA or is unsure, ask your broker, other consultant or CPA about the second quarter Form 720, which is due by July 31.
Depending on the plan anniversary, the fee is either $1 per year per covered life or $2 per year per covered life with most companies using a ‘snapshot average’ method of calculating the figure of lives covered in the fee — although there are a few different safe harbors.

How does the reinsurance fee work?
The reinsurance fee is also calculated off of the number of covered lives but at a substantially higher amount.

The fee for 2014 was $63 per year per covered life and can be paid in two installments. The first installment of $52.50 was already due by Jan. 15, 2015, and the second installment of $10.50 per covered life will be due no later than Nov. 15, 2015.

The 2015 fee will be $44 and can be paid at once, of course, or you also can pay it in two installments of $33 and $11 respectively.
The proposed amount for 2016 is $27 per member per year.

The calculation for the number of covered lives has to be submitted to the Department of Health and Human Services. Similar to the PCOR fees, fully insured groups will have this done for them by their carriers, whereas self-funded companies need to take action.

Also, similar to the PCOR fees, there are a few different safe harbors. Companies will want to work with their consultants to correctly apply for the one they deem most suitable.
Within 30 days of submitting the count to the department, companies will be notified of the amount they owe, and that payment will be due back within 30 days of the company’s receipt of notice.

What do employers need to know about Forms 6055 and 6056?

Forms 6055 and 6056 are also new reporting measures. The first time this comes into play is in 2016 for the 2015 health plan year, so companies have a little more time on this.
Form 6055 is to be used by insurance carriers and self-funded companies to report all of the people they cover. It deals with the individual mandate. Basically, it is a resource for the government to double check that people who claim to have satisfied the individual mandate are indeed covered.

Form 6056 is a report where companies list the employees that are offered coverage to help the government track subsidies. This is required by all applicable large employers — fully insured or self-funded — because subsidies are only available to people not otherwise offered affordable coverage. Form 6056 also helps to track those who might be applying for subsidies but who are actually ineligible because of their employer’s offering.

How HR plays a vital role in change management

Human resources is at the heart of the company, touching all employees and helping spread the message of the C-suite. However, many times these employees are the last to know about upcoming business changes, instead of the first.

Smart Business spoke with Danone Simpson, CEO of Montage Insurance Solutions about business change and HR’s role in shepherding it along successfully.

Why is HR the last to know about business change?

By working with many human resource leaders, I have often found their common statement is that they are ‘the last to know.’ They are the last to know when change is coming, whether that’s layoffs, mergers, acquisitions, financial difficulties and/or business decisions that can alter a company’s culture.

To begin with the end goal in mind is noble and important along with the understanding that ‘the most well-designed departmental communication program will not tear down silos unless the people who created those silos want them torn down,’ Patrick Lencioni says in his book, ‘The Advantage: Why Organizational Health Trumps Everything Else In Business.’

The well-developed HR professional understands this, because they are the change agent. Along with ensuring compliance measures are met, employee management and communication is critical.

What’s one of the biggest problems with change management?

Often the C-suite of small and midsize companies creates the plan, and then hands it off to HR to implement. Some even give it to supervisors who discuss it with staff members — a handoff that may have started above the C-suite level.

Lencioni, however, states that the success of top-down communication starts with building a cohesive leadership team and creating clarity. ‘Without these,’ he says, ‘no amount of communication is going to be effective.’

Every CEO could agree they have had plans thwarted due to breakdowns in the message — either it was not clear enough or the subculture of important departments did not accept the change because they were not a part of it.

How can the C-suite ensure the message is clear?

Lencioni shares his philosophy of the thematic goal. He recommends ‘every organization that wants to create a sense of alignment and focus must have a single top priority within a given period of time.’

This tight focus should be scheduled for three months to one year. Then, the leadership team has clarity around how to spend its time, energy and resources. ‘The thematic goal must become the responsibility of the leadership team,’ Lencioni says.

Where does HR fit into this focused way of doing business and making changes?

HR is the heartbeat of the company.

At a recent HR organization meeting with roundtable discussions, one person stated, ‘I need advice on how to help my CEO, and other executives, understand I can’t be the last to know about layoffs and other decisions that impact employees.’

Another HR executive/consultant shared how she found the same thing in her startup company, so she asked the leadership team to agree to read one article per week, or month, that she would send them. They agreed, and she sent an article about poor employment decisions similar to ones her leaders handed down to her. It was results based, stating facts of court cases and liability payouts for poor decisions. Another article was on employee engagement or team building exercises to help promote better communications down to the trenches. Her method worked, and now she is on the executive team.

Anita Gorino, owner of Creative Resources, says of HR executives, ‘First of all, don’t be the police. Ask good questions of your executives and then come up with a few key ideas that may lead to a deeper brainstorming session. Be a part of the strategy. Don’t find one million ways why new plans and ideas will not work.’

HR executives are needed to help create and implement employee management strategies, beginning with the ‘why.’ No longer can they be the last to know.

The 2015 Affordable Care Act transitional guidance — in laymen’s terms

The 2015 Affordable Care Act transitional guidance — in laymen’s terms

“As we head into 2015, I’m encountering several employer groups who are coming to me to make sure they know what needs to be done to stay compliant with the latest Affordable Care Act regulations,” says Tobias Kennedy, executive vice president at Montage Insurance Solutions.

Let’s assume you already know the broad strokes of the legislation. You understand the Employer Shared Responsibility (ESR) provision, which says if you add the total of your full-time employees plus your full-time equivalent employees and that equals 50 or more, you need to offer insurance — good insurance that doesn’t make your employees pay too much for coverage.

Your biggest questions now may concern clarifying some of the transitional pieces of the legislation.

Smart Business spoke with Kennedy to get a high-level look at the employer who is trying to pin down his or her needs for the rest of 2014 and the beginning of 2015.

What’s the first step to understanding transitional relief?

The transitional relief you get depends on your employee size, so it’s important to calculate that correctly. If you are unsure, there are good resources available, but you basically average the month-by-month totals for your full-time employees and add your full-time equivalents.

The good news is that 2014 has some ‘one time only’ relief where you can pick any continuous six months for the determination. In other words, you can do the calculation based on data from January through June, and take the remaining few months of 2014 to plan for what you need to do next year.

Once you’ve calculated your size, what are the rules?

If you have less than 50 employees, don’t worry at all — the ESR provision doesn’t apply to you.

If you have 100 or more employees, the rules begin for you in 2015, so be sure you’re offering affordable coverage. If you are offering coverage to at least 70 percent of your eligible employees, you’ll be considered compliant for 2015.

What about employers with between 50 and 99 employees?

This is really the most complex piece of the transitional guidance. Basically, if you meet a few conditions, you don’t have to worry about the ESR provision until your first renewal in 2016. Those conditions are related to your workforce size and benefits.

If you can check off each of the bullet points below, and you’re in this size range, you can hold off on being ESR compliance until your 2016 plan renewal:

  • You did not reduce workforce just to qualify. You can reduce workforce for other reasons, but you need to be able to justify the reduction.
  • You keep your in-force coverage the same or similar to what you had on Feb. 9, 2014, the day before they released this news. By ‘the same or similar’ they mean that when you look at the employee only tier of your benefits on Feb. 9, 2014, you either cover the same percentage of the cost or cover 95 percent of the same dollar amount. You can change the benefits themselves, such as co-pays, deductibles, carrier, etc. The government just wants you to keep the premium split in line and be sure that if any changes are made, the new plans are still above a 60 percent actuarial value.

Assuming you can check these boxes, it’s business as usual until your 2016 plan renewal without fear of penalties levied from the ESR compliance.

Insights Business Insurance is brought to you by Montage Insurance Solutions

http://www.sbnonline.com/article/2015-affordable-care-act-transitional-guidance-laymens-terms/

Spread the culture: What the C-suite needs from HR

CEOs, CFOs and COOs all require specific things from their HR department.

The CEO develops the mission, vision and direction of the company, fine-tuning the key words that express “why” you do what you do and for whom, and then where you are going as a company.

CFOs then have to budget and balance the dreams, and COOs create action plans with every department.

So while the C-suite is busy creating their 20 Mile Marches, per Jim Collins in his book “Great by Choice,” how does all of this truly get to the most important person in the company — the employee?

You don’t want CEOs just espousing this message from their office without ensuring the employees are a part of the planning, whether that’s in an intimate forum for a smaller office or throughout the world for large companies.

Beyond the C-suite, the answer is one of the most important departments — HR, the heart of the company.

Smart Business spoke with Danone Simpson, CEO of Montage Insurance Solutions, about getting your team involved in company planning and ensuring they understand and are committed to the plan, via HR.

Why is employee buy-in important?

Every employee has to understand the mission, purpose and values of the company. They have to want to be a part of the journey.

Zappos.com Inc. CEO Tony Hsieh identifies employees who are not on the same track with his mission and literally pays them to quit. Now, others have joined in such as Jeff Bezos, CEO of Amazon, who offers $2,000 to any new employee that wants to leave, and up to $5,000 for more veteran employees who would prefer to seek employment elsewhere, according to a Huffington Post article.

Even here at Montage Insurance Solutions, employees know that we want to retain people who want to be a part of the team, and they should feel free to move on if that is where they feel they’d be more successful.

Companies today cannot afford to have employees who don’t care or show up just for the paycheck.

So, is creating the right culture the key?

Hsieh understood culture was where he had to start and created an internationally recognized three-day culture boot camp to train other CEOs how he did it. When Zappos was first started, it sounded strange to think of women buying shoes online. Yet today he not only proved the naysayers wrong, he built a profoundly successful business.

In 2011, Jamie Naughton, Zappos’ speaker of the house, spoke at the Pepperdine University Graziadio School of Business and Management, where she shared the Zappos value proposition that, “Zappos is committed to WOWing every customer.” At that time they had over 10 million customers to wow.

Naughton clearly understood what Hsieh needed, and she became the courier of that message. She spoke at universities and HR organizations worldwide, ultimately becoming the company’s chief culture ambassador. This is what CEOs, presidents and business owners want and need.

How do you recommend HR help spread the culture?

The HR team should begin with this end in mind and hold no hostages — either the employee joins in or doesn’t.

HR executives who partner with their C-suite are the ones that work to ensure the company’s mission and vision are communicated consistently, from the first interview and continuing often thereafter.

It takes first wanting to be a part of that culture yourself, and then spreading it like wildfire. A company can be dry without a cohesive culture. It takes both ingredients, vision and culture, to create a company that can make a difference in this world — and is on the lips of its employees and customers.

Insights Business Insurance is brought to you by Montage Insurance Solutions

http://www.sbnonline.com/article/spread-culture-c-suite-needs-hr/

Hiring the Right People: A Strategic Approach

The process used for the selection of key positions is likely to impact the organization’s goals and objectives. The costs associated with an ineffective process not only result in increased expenses, but can also damage company culture. The loss of members who don’t fit consume time and money in terms of search, training, development, and disruption to the system.  In addition, an inappropriate set of hires can lead the organization in a direction different than that which it had intended.

Consider your process—you probably gather a set of applications/resumes, find a way to sort out candidates, narrow the pool to 3-5 individuals, invite them for interviews, and then select the person who best meets the criteria.  Although this approach appears to be the standard method, there is no guarantee of success. A question to reflect—“are you pleased with the process you are using?”   The purpose of this article is to propose a more sophisticated method for assessing the extent to which candidates are right for the company from a cultural perspective.

My guess is that during the selection process, at least one-member of the decision team asks whether a job candidate is a cultural fit for the organization. The effectiveness of this approach depends on whether the decision maker(s) has a clear sense of their own company culture along with being able to decipher the style of the candidate. In most cases the decision is based on gut feel rather than an objective measure.

An alternative is to start with a framework that objectively assesses organizational culture to determine the key ingredients of the culture that lead to success (or identify what’s lacking in the culture that keeps the organization from being successful).  Once clarity is reached regarding the key cultural components either present or desired the first piece of the selection puzzle is in place. The next step requires the design of a survey an applicant would complete that mirrors the organization’s most significant cultural components. Using this model can provide a more advanced means of selection.

The initial step is to determine the organization’s culture. The 7-dimensions of the Integrated Cultural Framework (ICF) offers a useful model to measure corporate culture (See endnote citation).  The 35-item ICF survey is designed to assess the following set of cultural components:

Ability to Influence: The extent to which organization members have an opportunity to influence decisions

Comfort with Ambiguity: The extent to which the members of the organization for comfortable with uncertainty and risk taking

Achievement Orientation: The extent to which members are assertive, goal directed and achievement oriented.

Individualism vs. Collectivism: The extent to which individual versus group loyalty exists

Egalitarianism: The extent to which equal opportunity exists for advancement

Time Orientation: The extent to which the organization’s goals/mission is focused on values from the past, present or future.

Space Orientation: The extent to which physical layout of the organization is public, private or a mix of both.

It is important to recognize that “right/wrong, good/bad” are not appropriate in assessing culture.  The focus should be what is.  That is, there isn’t a one-best culture. Each organization, based on its goals, mission and vision, is likely to identify a culture unique to its objectives.  Therefore, the results of the ICF survey provides a “picture” of the organization’s culture from the perspective of the members who complete the questionnaire.  To absorb a deeper understanding, however, it is necessary to interview a cross-section of the respondents.  Doing so allows a more substantive recognition of the underlying elements of the 7-dimensions.

It is likely that 3-5 of the ICF dimensions will “jump out” as most significant in terms of describing critical aspects of the culture.  Using these elements the organization can prepare a short questionnaire to be given to job candidates.  The purpose of the questionnaire is to measure the extent to which the candidate fits the critical elements identified in the ICF analysis. For example, if Ability of Influence is identified as an important part of the culture, then in the job candidate survey and interview the focus would be on evaluating the extent to which the candidate is comfortable and capable of taking on a decision making role. It is recommended, however, that the candidate survey be validated by current organization members before using it with prospective employees. That is, asking the organization’s strong performers to complete the job candidate survey will allow the organization to revise the measure where needed before including it in the selection process.

The advantage of incorporating a more rigorous method of selection, particularly one that focuses on organizational culture, is that it will likely result in not only a more effective, less costly process, but it may offer an effective way of ensuring cultural sustainability.

Citation Endnote:
Mark Mallinger, “Recognizing Organizational Culture in Managing Change,” Graziadio Business Review. 2009 (co-authors D. Goodwin & T. Ohara)