by Jim Taylor | May 5, 2022 | Compliance, Employee Benefits
Health savings account (HSA) contribution limits will significantly increase in 2023 and will likely continue to rise in the near future. On April 29, the IRS announced that it would drastically increase contribution limits. The announcement was made in response to the recent surge in inflation, and provides employers sponsoring high-deductible health plans (HDHPs) sufficient preparation time before the approaching open enrollment season.
With the annual inflation-adjusted limit, the maximum contribution limit for a family HSA is now $7,750, up from $7300. This is an increase of 5.5 percent from 2022’s limit, where the increase for the previous year was a mere 1.4 percent. Self-only coverage HSA contributions will increase from $3,650 to $3,850 in 2023.
The IRS verified the projected 2023 HSA contribution limits and the maximum out-of-pocket expenses and minimum deductibles for the paired HDHPs in the Revenue Procedure 2022-24.
2023 Increase Is a “Significant Jump” Over Previous Years
As more employers weigh the benefits of making income-based contributions, the number interested in matching the HSA contributions of their employees has grown. Although this practice is similar to the those used to match 401(k) retirement plans, it is particularly beneficial to lower-paid employees who might require additional help with health care expenses under high-deductible plans.
HSA Bank’s Chief revenue officer, Kevin Robertson, claims the 2023 higher limits are “a significant jump” from previous annual increases. As employer contributions generally spur employees to assign a higher value to their health care benefit packages, he believes news of the increase can be used for a few purposes.
- Employers can use the open enrollment season to encourage employee contributions.
- Employers may be persuaded to contribute to HSAs where they had not previously.
- Employees may raise their rate of contribution or begin contributing to their personal or family accounts.
Even with small amounts, employer contributions add up and promote a more collaborative approach to the employee accounts and the perceived value of those accounts.
Inflation Results in Contribution Limit Adjustments
Generally, October heralds announcements regarding various tax-advantaged accounts’ contribution limits for the following year. Those concerning HSAs, however, are announced in late April or May.
Although the adjusted contribution amount is regulated by statute, the limits are adjusted annually for inflation using the Consumer Price Index for All Urban Consumers. They use data compiled from the 12 months ending on March 31 and round to the nearest $50 to arrive at the precise amount.
The Employers Council on Flexible Compensation (ECFC) represents the sponsors of various account-based benefits plans. Legislative and technical director of ECFC, William Sweetnam, explains that limit increases for HDHP and HSA are:
“released much earlier than other employee benefit limits so that insurance companies that offer high-deductible health plans—which participants must be enrolled in to make HSA contributions—can get their insurance products approved by state insurance regulators.”
Differing Limits for ACA
Based on the Affordable Care Act (ACA), there is more than one set of health plan out-of-pocket expenses annually determined by federal agencies. This can cause considerable confusion for the administrators of the plans.
Under an ACA-compliant plan, annual cost-sharing limits for basic health benefits are established by the Department of Health and Human Services (HHS). These out-of-pocket limits are higher than the maximum limits set by the IRS. For a plan to qualify as an HSA-compatible HDHP, however, they can not exceed the out-of-pocket maximum limit of the IRS.
Regardless of whether a person is enrolled in a family or self-only plan, the ACA’s cost-sharing limits apply to every person in a non-grandfathered health plan.
Maximum Limit for Excepted-Benefit HRAs
Additionally, Revenue Procedure 2022-24 raises the employer contribution maximum amount to an excepted-benefit health reimbursement arrangement (HRA) for year 2023. Excepted-benefit HRAs are restricted to paying only for dental and vision or comparable benefits that the employer’s primary plan doesn’t pay and are also not covered by the ACA. The HRA for 2023 is raised $150 higher from the 2022 amount of $1,800 to $1,950.
The Announcement Allows Employers to Plan Ahead
Sweetnam claims that, since employers often discuss health care choices and limits during the open enrollment season, the limits for 2023 are “good to know.” To plan ahead, employers should consider updating payroll to mitigate the coming year’s cost-of-living adjustments and incorporate the announced HSA limits.
by Carolyn Kick | Mar 2, 2022 | Compliance, Future of Work, Human Resources
Maintaining compliance in an ever-shifting, increasingly globalized world has its own peculiar challenges which will only grow more complex as time marches on. By understanding these top challenges, you can better situate yourself to take advantage of the opportunities they bring with them.
New Market Compliance
A 2016 study concluded that “87% of U.S. companies believe international expansion is a necessity for long-term growth.”
The Covid pandemic may have highlighted issues associated with increased globalization, but it also underlined its inevitability. We are more aware of the global supply chain than ever before, and practically anyone can interact with it in meaningful ways through the internet.
And with each new territory with which your business interacts there are a bevy of new laws and regulations – and the onus is on you, the owner, to successfully navigate them.
Tax calculations and regulations are documented in native languages, and the regulations surrounding labor vary widely within foreign markets. For instance, in Mexico, new hires must be registered with the government within a five-day window whereas in Spain such registration must be completed before employment begins.
Violations in this realm can incur immense costs.
While on-the-ground support is clearly the best scenario, it might not be scalable for your enterprise. Couple that with the rapidity with which businesses are expected to grow, and even the most experienced HR departments can feel the strain in grappling with international compliance.
Payroll Compliance
While international compliance poses some obvious challenges, domestic compliance has issues all its own. Different regions and municipalities have their own laws which are being continually updated. Failure to comply with these tax deadlines can result in massive penalties and fines.
So how do you know where to focus your attention? The stakes with payroll compliance are high, and the particularities of the provinces vary.
Uruguay, Argentina, and Chile require employee signatures of pay-slips upon receipt. Overlooking this would leave you open to lawsuits for lost wages.
Italy requires an Italian bank account to pay monthly statutory tax returns. Ignorance of this fact would lead to a massive headache on the due date.
However, the legal aspect of compliance is just half the battle. Compliance failures can erode workforce morale in spectacularly short order. How long can an employee be expected to wait for their wages? A few hours? Days? Your reputation is at stake if you miscalculate.
One survey showed that 49% of American workers will be looking for a new job after just two payroll errors. Now you’re increasing recruitment allocations to fill existing positions.
Benefits
International benefits policy requires careful consideration.
First, acquaint yourself with the statutory requirements in each country. Bonus points if you’re fluent in the local language as many governments will detail these statutory minimums on their websites
Here is a prime opportunity to consider your current spending on benefits. Though the U.S. requires substantial coverage from large employers, most countries have some degree of state-provided healthcare coverage. Thus, offering prime, private health insurance to global workers may prove redundant and costly.
The demographics of your workforce can also significantly shift your benefits calculus. A senior director in the U.K. may need supplemental private healthcare for their family, whereas a single salesperson in France might opt for reduced healthcare coverage and opt instead for a richer profit-sharing package.
While gender inequality dominates the headlines, so too does the definition of family and the practice of family leave.
The U.S. design of shared parental leave is markedly different from the 52 weeks shared between parents in Denmark. Considering these differences complicates more than the compliance itself, it also complicates the allocations of resources in response to cultural relationships to regulations.
Liability Insurance
The liability insurance you provide your employees will vary from country to country. Most have different schedules of resources for such insurance. However, many global organizations have begun adopting private insurance protections even in nations with established plans. This does more than appease legal responsibilities, it also addresses ethical responsibilities.
An organization’s culture should promote the well-being of everyone involved, regardless of their geographic location. Assessing insurance liabilities is a basic way to address the effectiveness of your employee protections.
Termination Policies and Practices
There are only two certainties: death and taxes. With a particular lens, terminations can fall into both categories.
Incorrectly managed terminations can be unpleasant for all parties involved.
“At-will employment” exists only within the U.S., a streamlined termination function that is not to be found elsewhere around the world. Therefore, when considering terminations abroad, there are a multitude of procedures and processes that must be adhered to if you’re to maintain compliance.
Theft or other criminal acts are simpler to navigate during termination regardless of the geography. Laws are effective guidelines for proper behavior. The difficulty comes in issues tethered to employee performance or disagreements. Different places have different requirements for legal termination of employees based on performance. Most will require documentation and evidence, and in some places, it can take up to a full year to legally terminate an employee.
There are instances where a justification can be made, but there are still notice periods and severance pay mandates that require proper attention.
Retirement and Pension Plans
The U.S. workforce is aging rapidly. While the covid pandemic coaxed some people to accept retirement, Gen Xers and Baby Boomers still make up 58% of the workforce. With this concentration of older workers comes interesting resource planning – the pensions for an anticipated exodus.
There are no hard and fast international rules about retirement age, it is useful to consider how different countries approach retirement. France allows workers to claim retirement after reaching the age of 62, but who may also gain a higher pension by working to the full-rate retirement age of 67. The U.K. recently rewrote pension laws to require employers to contribute at least 3% into an employee’s private pension scheme.
This reflects a growing global trend – statutory requirements of private businesses to allocate resources to employee pension funds.
Global HR compliance is unavoidably challenging and complex. However, by facing it head-on, business owners may be able to take the advantages presented by shifting global sentiments, winning victories for themselves and for their increasingly global workforces.
Launchways is here to support you and help you navigate international workforce compliance issues.
by Carolyn Kick | Feb 15, 2022 | Diversity & Inclusion, Employee Benefits
The importance of workplace diversity, equity, and inclusion (DEI) has made steady progress over the last few decades, but 2021 was the year where many employers finally made DEI a priority in their organization. An enormous undertaking for even a modestly sized company, these initiatives require challenging introspection and analysis regarding topics like strategic goals, hiring practices, workplace environment, and yes, benefit offerings.
It is impractical to expect every company aiming to improve on DEI measures to succeed in a matter of just one or two years. For many, this is a transition that will take much longer to come to fruition in a meaningful and measurable way. While enthusiasm should be applauded, trying to bite off too much in too short of a space of time can be overwhelming and ultimately does a disservice to the importance of the project. Breaking this process down into smaller, more manageable goals is a far better strategy than tackling the entire thing at once and then becoming discouraged when results do not meet expectations.
A great place to get started on this journey is with the single largest non-salary employee expense: healthcare. In order to truly achieve a more equitable workplace, where inclusive benefit offerings lead to improved health outcomes, plans need to be tailored to the individual needs of all employees.
What does healthcare discrimination look like?
Understanding inequities in the healthcare system begins with examining the underlying factors that impact health outcomes, known as the social determinants of health (SDOH). SDOH encompasses aspects of a person’s environment that have a major impact on their health, wellbeing, and quality of life. The unfortunate reality is that differences in socioeconomic status, geographic location, and racial background often result in substantial disparities in health outcomes. For example: if people don’t have access to grocery stores with healthy foods, they are less likely to have good nutrition, increasing their risk for a variety of health conditions like obesity, heart disease, and diabetes.
How are employees affected by discrimination in the health care system?
Employees can be left vulnerable to increased health risks either by lack of access to quality health care or by lack of adequate education about the resources that are available to them. Data from a recent Harris Poll survey of more than 2,000 adult Americans showed that 54% have delayed care in the past year due to cost. The 2020 Health Insurance Literacy Study from Policy Genius found that only 32% of Americans can define the terms deductible, copay, and premium. Whatever the cause, many employees lack the resources necessary to take care of their physical and mental well-being, which could potentially result in long-term health issues.
How can employers make the health care system more equitable?
Recognizing that there is no universal strategy to improving employee well-being allows you to diagnose the specific gaps and obstacles that your employees experience in their access to healthcare. The importance of personalizing clinical and wellness offerings to the needs of the individual is a factor that is often overlooked when administering healthcare benefits. That being said, here are some common barriers and strategies to address:
- Add wellness programs to your overall benefits package that take into consideration how your employees’ diverse backgrounds and experiences impact their health. Wellness subsidization has the dual benefit of promoting healthy behavior while also lowering the employee’s financial burden.
- Ensure your health plan uses clear and accessible language. 36% of Americans making less than $75,000 annually reported that they have avoided care due to uncertainty over what their health insurance covered. Inaccessible language can prevent even the most carefully designed benefit package from providing equitable healthcare access.
- Provide first-dollar coverage and improved cost certainty. High prices, lack of cost certainty, and high deductibles are the most commonly cited reasons for skipping or postponing medical care. 44% of American adults don’t have $400 in savings, leading to a disproportionate impact on lower-income individuals and families.
In a recent survey, 7 in 10 employers said that they plan to bolster DEI-related aspects of their benefit packages in the next few years. While most organizations have their employees’ wellbeing in mind, few are truly aware of how these decisions impact their overall health. These investments are also good for the bottom line, as the fewer medical procedures and doctor visits your employees require, the fewer claims are submitted. A survey from Monster indicated that 86% of job candidates say DEI initiatives in the workplace are important to them, demonstrating the impact these programs can have on recruitment and retention.
From personalized benefit offerings to proper benefits education and improved cost certainty, there are many options available for employers to work toward providing equitable health plans. This is an important project that will likely take years to bring to fruition, but it is the right thing to do not only for your employees but also for your organization itself, and it is never too early to get started.
by Carolyn Kick | Jan 13, 2022 | Compliance, Human Resources
Human Resource managers are vital to the success of an organization. They communicate with every level of an organization and consistently impact business activities – from recruitment and retention to continued training and compliance.
While HR is primarily concerned with the “human” aspect of a company, it is also necessarily interested in the ways team members relate with organizational, state, and federal regulations which govern the business’ operations.
Navigating these requirements is a complex undertaking often relegated to legal entities and compliance committees. But because of the wide-reaching applications of regulations, HR is particularly well-suited to positively affect compliance outcomes.
Effective compliance begins with people, policies, training, and communication, which is exactly what HR deals with daily.
HR’s Role in Compliance
Successful compliance begins and ends with the functions of Human Resources
So, what is it?
HR Compliance is the process of defining and implementing policies concerning current laws and regulations. From there, it is the insurance that employees acknowledge, understand, and comply with these policies.
While it might deal primarily with employment laws, most compliance regulations revolve around people’s behaviors.
Crucial in Corporate Compliance
HR managers are a protecting force against the wide and varied threats to doing business. Beyond safeguarding employees through adherence to federal law, they also spearhead company efforts to mitigate risk at every turn.
HR is a far-reaching department, and thus communicates with employees at every level. Being responsible for hiring and training makes HR the best place to be for building an organizational culture of compliance.
Common Issues:
HR’s compliance management generally falls into three common categories:
1) Employment Law: This is the acronym department, featuring laws and regulations that apply specifically to Human Resources which include Family Medical and Leave Act (FMLA), hour and wage laws (Fair Labor Standards Act), anti-discrimination laws [Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act, Age Discrimination in Employment Act (ADEA)], and anti-harassment laws.
2) Employee Health and Safety (OSHA): While having traditionally covered hazards, HR has recently played a larger role in employee health and wellness. Research continues to show the benefits of healthy employees, resulting largely in higher rates of productivity, reduced benefits costs, and fewer sick days.
3) Hiring/ Firing Processes: While traditionally focused on labor relations and unions, this now includes a greater focus on immigration laws. Severing relationships with employees in such a way that does not invite problems or lawsuits have long been a primary function of HR.
Implementation of HR Compliance Best Practices
With the multitude of functions carried out by HR departments, how might HR managers most directly influence their company’s compliance efforts?
Let the Right Ones In
In other words, “hire the right people.” This is perhaps the most obvious answer to the question, but it is the most significant challenge in growing a business. But how do you define what the right person for the job looks like?
There are multiple laws and regulations regarding onboarding, from the Fair Labor Standards Act to minimum wage and overtime rules. The ADA protects against disability discrimination, and the Age Discrimination in Employment Act protects those over 40 from similar discrimination. Thus, it is important to understand what regulations surround the onboarding process.
Beyond legal considerations, another primary concern for HR is bringing in recruits who pose the least risk regarding continued HR compliance. Ethical red flags from previous employers can be multiplied in high-liability industries or roles.
The entire recruiting/hiring/onboarding process is in the purview of HR and sets a tone for an employee’s career at a company. It exerts a major influence on overall workplace culture, and culture is an effective measure of a company’s compliance.
Consistently Update Employee Handbook and Policies
There are a wide array of approaches to handbooks and individual policies. Some companies use a single handbook for the entire enterprise, others opt for department or individual-specific policies. Whatever the preferred method, HR usually has a hand in the writing and conveyance of these policies.
All too often these policies are thoughtfully created, then cast aside and neglected in day-to-day operations. In practice, they should be living documents, constantly adapting and changing. While the core might remain the same, the details will shift. When framed this way, these policy guidelines can have a real impact on an organization. Effective management should change and grow with regulations to ensure continued compliance
Regular reviews and revisions of policies come to nothing, however, if they are not shared with and lived by the teams they directly impact.
The Necessity of Two-Way Communication
Of course, communicating these constantly shifting expectations and policies can be points of friction. Impressing the importance of new policies is one thing, but making them resonant in day-to-day interactions can be another thing entirely.
This is where communicative leadership is vital. Consistent, clear communication from leadership will help increase employee buy-in and convey a sense of top-to-bottom accountability. Still, effective communication from leadership is only one facet.
Communication must also flow honestly and unimpeded from employees to leadership. Some employees may be able to address concerns with management directly, but others may prefer a less direct avenue of recourse. An anonymous whistleblower hotline is a fine example of a formal mechanism that solves this problem. But it cannot function without the informal aspect of HR and their willingness to hear individual concerns. Safety and processes need constant attention, and so addressing issues surrounding these concerns must be done promptly and effectively. If left unchecked, trust begins to erode between employee and employer.
Transparent communication is one of the highest goals for an organization. A hazard-free flow of communication with administrative bodies, as well as accountability in all offices has multiplying effects on regulatory compliance as well as workplace satisfaction. Win/win.
Train On Compliance Regularly
It is tempting to host one extravagant, day-long training on sexual harassment or diversity, have employees sign an attendance sheet, and leave it at that for another year. It seems simple and to the point, but if there is not a direct link to your company’s core values, this grand show might fall on deaf ears and blind eyes.
Instead, consider shorter, more personal online pieces of training that coincide with policy updates or general reviews.
Compliance should complement your core values. By personalizing messaging and making it a consistent pursuit, you increase the likelihood that your employees will internalize the training. Practicality and consistency are fundamental to this success.
In short, the integration of meaningful compliance training into your training schedule can have an immense impact on workplace culture; indeed, it should be a vital part of it.
Audit HR and Compliance Regularly
The other side of meaningful compliance training is the insurance of that training’s effectiveness. Enter the audit. Essentially, this is when HR teams look at hard data relating to regulations they interact with directly – dispute documentation, hiring processes, employee surveys, policy manuals, etc.
The aim is to diagnose issues before they turn into problems. It can shine a light on what is working, and what is not. Once a general landscape of current practices is illuminated, the organization can strategize ways to reach compliance, maintain it, or more effectively imbed it in their culture.
Of course, this type of audit requires a thorough understanding of applicable laws and industry best practices. It also comes with a non-insignificant time-cost alongside other day-to-day human resources compliance tasks. However, it is tremendously valuable in the continued legal successes of a business.
Get Started
Sounds good, right? What could be better than ensuring regulatory compliance and increasing a positive workplace culture at the same time?
Then again, desire and action are not the same things. It can be taxing work, and oftentimes those most concerned with these issues are already wearing more than one hat in their organization. Luckily, there are steps you can take without attempting a full-fledged HR compliance audit yourself. You can educate yourself first. You can evaluate the state of your current HR policies and measure them alongside current regulations. You can seek third-party guidance through these issues. This is exactly what we do here at Launchways – we work alongside our clients to navigate the complexities of regulatory compliance. And we do much more than that too! Contact us to learn how else we can help.
by Carolyn Kick | Nov 12, 2021 | COVID-19 Resources
On November 4th, 2021, OSHA released its high-anticipated emergency temporary standard (ETS), commonly referred to in the press as the vaccine mandate. The general aim of this new standard has been known for some time, but, with the specific details finally available, employers are rushing to ensure that they are prepared to meet its requirements. The foundational argument of the ETS is that OSHA considers COVID-19 infection to be a grave danger to employees, so they’re establishing minimum vaccination, testing, and face covering requirements to address this.
Unsurprisingly, this new standard has been met with several legal challenges, but employers cannot afford to wait for an order from the court of appeals to begin preparing for compliance. Here’s what you need to know:
Key Deadlines
The ETS technically went into effect immediately upon its publication in the Federal Register on November 4th, however, enforcement of the standard doesn’t begin until December 6th, 2021. On that day, all provisions of the ETS come into effect except for the testing requirement (more on this below). The testing requirement will be enforced on January 4th, 60 days after publication.
Which Employers are Impacted?
The standard applies to all U.S. employers with 100 or more employees. OSHA’s rationale for the 100-employee threshold is that larger employers “have the administrative capability to implement the standard’s requirements promptly” but are less confident that smaller employers can do so without disruption. This means that two-thirds of all private sector workers in the nation, including those working in the nation’s largest facilities where the deadliest outbreaks occur, will be better protected from infection.
The only 100+ employee workplaces exempted from this policy are those already complying with one of two similar standards: 1) the Safer Federal Workforce Task Force COVID-19 Workplace Safety: Guidance for Federal Contractors and Subcontractors, or 2) the Healthcare Emergency Temporary Standard.
Some individual employees at these companies may be exempt, however. This includes employees that don’t report to a workplace where coworkers or customers are present, as well as employees who exclusively work from home or outdoors.
Employer Vaccination Policies
All employers are required to develop and implement a policy that either requires all existing and new employees to be fully vaccinated, or allows each employee to choose between vaccination or providing proof of weekly testing and wearing a face covering.
Employers are also required to determine the vaccination status of every employee and keep “an acceptable proof of vaccination and roster of each employee’s vaccination status”. These records must be kept and considered as employee medical records for the time that the ETS is in effect.
OSHA has provided sample policies on its website for reference.
What Counts as “Acceptable Proof of Vaccination”?
Here is the list provided by OSHA:
- Record of immunization from a health care provider or pharmacy
- Copy of US CDC COVID-19 vaccination record card
- Copy of medical records documenting the vaccination
- Copy of immunization records from a public health, state, or tribal immunization information system
- Copy of other official documentation containing type of vaccine, date(s) of administration, and name of health care professional or clinic administering the vaccine
- Signed and dated attestation ONLY where employee has lost or is otherwise unable to produce other acceptable proof
What are the Requirements for Unvaccinated Employees?
Employers that opt to implement a policy with a testing option must require each non-exempt employee who is not fully vaccinated to (1) be tested at least once every 7 days, and (2) provide proof of test results to the employer no later than 7 days after they last provided a test result.
In some instances, an employee might be away from the workplace for longer than a week, and they are not required to provide test results during that time. However, they must be tested within a week of returning to the workplace and must provide the results of that test upon return.
Employer Support for Vaccination and Testing
The ETS requires employers to provide employees up to four hours of paid time off to receive each vaccination dose, as well as reasonable time and paid sick leave to recover from any side effects experienced.
Under the ETS, employers are not, however, required to pay for any costs associated with testing, although they are not prohibited from doing so.
Exemption from Testing
The only instance provided by the ETS where an unvaccinated non-exempt employee will actually be exempt from complying with their company’s testing policy would be if they test positive for COVID-19 or are positively diagnosed by a licensed health care provider. In that situation the employee would be exempt from regular testing for 90 days.
Can State or Local Laws Overrule the ETS?
Barring a permanent injunction or Supreme Court ruling, the ETS is written specifically such that it preempts any state or local laws.
by Carolyn Kick | Oct 8, 2021 | Employee Benefits
What if I told you that there is a hidden crisis affecting 1 in 5 Americans, causing millions to leave the workforce earlier than expected, hindering productivity, all while most employers remain out of touch with what is happening? That is precisely the conclusion of a report by Homethrive on the results of their 2021 survey investigating the impact and difficulties of employee caregiving.
Employees are engaged in a precarious juggling act, balancing the pressures of work, finances, healthcare, childcare, and, for 53 million Americans, the care of their aging loved ones. As a culture we have come to tacitly accept that, fairly or not, the burden of elderly caregiving falls entirely upon the individual. As a result, affected employees are left to make an impossible choice between their career aspirations and being there for their loved ones when they need them the most. This is a problem that is expected to grow, as 72 million baby boomers approach the average age of an elderly care recipient at 70 years old.
Homethrive surveyed hundreds of adult caregivers to take a closer look at the impact this is having on their employment. While individual employees may always bear the brunt of the responsibility, companies are also suffering losses in productivity and higher turnover as a result. 43% of respondents said that they are distracted, worried, or focused on caregiving – and not their jobs – at least 5 hours each workweek, while 20% reported experiencing this for 9 hours or more each week. 1 in 3 reported that their supervisors had noticed an impact on their job performance either from changing work habits or from being noticeably stressed. Finding a way to support these caregivers is the compassionate thing to do, but it also makes a lot of business sense.
Perhaps the most surprising finding from Homethrive’s report was how out of touch employers seem to be in the face of this crisis. More than half of respondents said that their supervisor is not as supportive as needed regarding their outside-of-work caregiving responsibilities. One reason employers aren’t seeing the impact here is that they aren’t looking, as 40% reported that their supervisor wasn’t even aware of these additional obligations.
Most employers care, they just need to do more to understand this need among their workforce and provide benefits that support them. While the vast majority of caregivers are receptive to the idea of their employer offering a benefit to help address this challenge, most companies are not yet offering anything in terms of resources, guidance, or support for caregiving. Choosing the right caregiver benefit should be near the top of the priority list when considering the “must-haves” in a modern benefits portfolio.
To learn more about the impact of elderly caregiving on employment, check out Homethrive’s report here.
by Carolyn Kick | Sep 27, 2021 | Compensation
It’s never been a good idea to allow your organization’s compensation strategy to go stale, but today’s economic upheaval has made this subject a focal point in a historically competitive job market.
If your organization hasn’t already felt the effects of the current labor shortage, you’ve certainly heard about it. Resignations are currently at the highest rate ever recorded, up 13% compared to pre-pandemic levels. According to the Labor Department, most industries across the nation currently have more job openings than there are people with prior experience in that sector.
At the end of the day, employees often weigh their level of compensation above any other factor in their employment decisions. An organization can have an incredible culture, mission, and benefits package, and still hemorrhage talent if pay isn’t keeping pace with the market. Most employers think their employees are fairly compensated (73% of them according to data from PayScale). Meanwhile, 64% of employees report that they’re being paid below average market value. It isn’t enough to trust your gut on this.
Aside from staying competitive through this economic turmoil, there are a myriad reasons for organizations to clear off that dust, reasons that have been with us for a while. Poorly maintained compensation strategies can leave even the most well-meaning of organizations susceptible to fines and/or lawsuits if they’re found to be discriminating in pay on the basis of race, gender, or any other protected class (intentionally or not). Productivity can suffer from poorly devised or outdated incentive programs. Inefficiencies in timekeeping can reduce revenue. The list goes on and on, and they can all add up to impact engagement, retention, and ultimately your bottom line.
Organizations are often reluctant to dive into these potential issues because they’re overwhelmed by the number and complexity of things that need to be taken into consideration. What’s needed is a little clarity and guidance.
We’ve taken the time to put together a Compensation Strategy Checklist that breaks all of this down into its component parts: policies, strategy, management, and compliance. This checklist will allow you to quickly assess your situation so that you can either act on areas of weakness, or rest easy knowing that everything is good to go.
Download the Complete Compensation Strategy Checklist Today!
by Carolyn Kick | Sep 13, 2021 | Compliance, COVID-19 Resources, Return to Work
- Ensure that 100% of their workforce is vaccinated against the COVID-19 virus, with any of the emergency or fully FDA-approved vaccines; OR
- Receive a weekly negative COVID-19 test result from all unvaccinated employees prior to coming to work.
In addition to this vaccination and/or weekly testing requirement, employers must also provide paid-time off benefits for the time needed to get tested and post-vaccination recovery, if necessary. OHSA should release its ETS in the coming weeks, outlining the specifics of this new ruling and how to comply with its requirements, including information on payment responsibility for vaccinations and testing and the timeline for implementation.
There are many compliance concerns raised by this plan under ERISA, HIPAA, certain wellness program rules, and other regulations that will need to be contemplated by employers. Upon OSHA’s issuance of the ETS, we will provide further guidance and information on compliance with the requirements. We also recommend you reach out to your legal counsel for assistance. If you are a large employer and would like to discuss the above requirement in more detail or if you are a healthcare entity, federal contractor, or federal government employer and would like information on how the other pieces of this plan apply to you, please visit https://www.whitehouse.gov/covidplan/ or contact Launchways directly for additional HR and compliance support.
by Carolyn Kick | Jul 21, 2021 | Compliance, Diversity & Inclusion, Human Resources
In observance of LGBTQ+ Pride Month and the one-year anniversary of the landmark Supreme Court ruling over Bostock vs. Clayton County, the U.S. Employment Opportunity Commission (EEOC) has announced new resources to help employers understand the protection of applicants and workers against discrimination regarding sexual orientation and gender identity. Along with a new landing page summarizing information pertaining to sexual orientation and gender identity discrimination, they’ve released a new technical assistance document to “help educate employees, applicants and employers about the rights of all employees, including lesbian, gay, bisexual and transgender workers, to be free from sexual orientation and gender identity discrimination in employment.”
The EEOC’s new resources taken together with the Bostock ruling present wide-ranging implications for employers across the U.S. Before we dive into the key points of these changes, we need to take a closer look at how we got here.
Bostock v. Clayton County, a Brief Overview
The significance of the EEOC’s new guidance documents cannot be fully appreciated without understanding the consequences of last June’s Bostock v. Clayton County Supreme Court ruling. That 6-3 decision added discrimination on the basis of sexual orientation and gender identity to the list of practices deemed in violation of Title VII of the Civil Rights Act of 1964.
The Supreme Court consolidated 3 separate cases into this historic decision: two centered upon the firing of gay men due to their sexual orientation (Bostock v. Clayton County and Altitude Express Inc. v. Zarda) and another on the firing of a transgender woman due to her gender identity (R.G. & G.R. Harris Funeral Homes Inc. v. Equal Employment and Opportunity Commission). The question at hand was “whether an employer can fire someone simply for being homosexual or transgender.” The opinion of the court, authored by Justice Neil Gorsuch, was unambiguous: “An employer who fires an individual merely for being gay or transgender defies the law”. Gorsuch also noted that various caveats regarding religious liberty issues stemming from the First Amendment, exemptions provided to religious employers in Title VII, and the Religious Freedom Restoration Act were not addressed.
Bostock v. Clayton County has since been interpreted by the EEOC and other courts to prohibit all forms of harassment and discrimination based on sexual orientation and gender identity.
The EEOC’s New Guidance Explained
The new resources provided by the EEOC consolidate critical information concerning sexual orientation and gender identity discrimination along with links to fact sheets regarding recent EEOC litigation on this topic. Also included is a new Technical Assistance Document explaining the implications of the Bostock decision and reiterating that employers cannot:
- Discriminate against individuals based on sexual orientation or gender identity with respect to terms, conditions, or privileges of employment, including hiring, firing, furloughs, reductions in force, promotions, demotions, discipline, training, work assignments, pay, overtime, other compensation, or fringe benefits.
- Create or tolerate harassment based on sexual orientation or gender identity, including harassment by customers or clients. This may include intentionally and repeatedly using the wrong name and pronouns to refer to a transgender employee.
- Use customer preference to fire, refuse to hire, or assign work.
- Discriminate because an individual does not conform to a sex-based stereotype about feminine or masculine behavior (whether or not an employer knows the individual’s sexual orientation or gender identity).
- Require a transgender employee to dress or use a bathroom in accordance with the employee’s sex assigned at birth. However, employers may have separate bathrooms, locker rooms, and showers for men and women, or may have unisex or single-use bathrooms, locker rooms, and showers.
- Retaliate against any employee for opposing employment discrimination that the employee reasonably believes is unlawful; filing an EEOC charge or complaint; or participating in any investigation, hearing, or other proceeding connected to Title VII enforcement.
The Technical Assistance Document also notes that employers are prohibited from creating, or tolerating, harassment, or discriminating against straight or cisgender (those who identify with the sex assigned at birth) individuals. Additionally, the EEOC addresses the tension between protections provided to employers and employees with sincerely held religious beliefs and LGBTQ+ applicants and employees by noting, “Courts and the EEOC consider and apply, on a case by case basis, any religious defenses to discrimination claims, under Title VII and other applicable laws.”
5 Key Points for Employers
Title VII of the Civil Rights Act of 1964 now prohibits discrimination on the basis of sexual orientation or gender identity nationally, regardless of state and local laws. Many recurring questions regarding protections for LGBTQ+ employees have been clarified by the EEOC’s new guidance, and here are the 5 key points for U.S. employers to take away:
- Discriminatory action cannot be justified by customer or client preferences. “An employer covered by Title VII is not allowed to fire, refuse to hire, or take assignments away from someone (or discriminate in any other way) because customers or clients would prefer to work with people who have a different sexual orientation or gender identity.”
- Whether or not an employer knows an employee’s sexual orientation or gender identity, employers are not permitted to discriminate against an employee because that employee does not conform to sex-based stereotypes about traditional feminine or masculine behavior.
- Employers requiring transgender employees to dress in accordance with the employee’s sex assigned at birth constitutes sex discrimination.
- Employers may have separate bathrooms, locker rooms, and showers for men and women. However, “all men (including transgender men) should be allowed to use the men’s facilities and all women (including transgender women) should be allowed to use the women’s facilities.” Because the Supreme Court left this issue unaddressed in the Bostock ruling, stating: “Under Title VII… we do not purport to address bathrooms, locker rooms, or anything else of the kind,” this is a controversial issue that is still developing.
- Accidental misuse of a transgendered employee’s preferred name and pronouns does not violate Title VII. However, “intentionally and repeatedly using the wrong name and pronouns to refer to a transgender employee could contribute to an unlawful hostile work environment.”
The implications of the Bostock ruling and the EEOC’s new guidance are far-reaching and consequential, and they make it clear that any discrimination on the basis of sexual orientation or gender identity is now prohibited under Title VII. However, some matters remain unresolved, such as gendered bathrooms/locker rooms and potential conflicts with protections provided to private employers and employees with sincerely held religious beliefs. It is paramount for all U.S. employers to review the EEOC resources, assess their policies and practices to ensure that they are in compliance, and remain attentive to further developments regarding LGBTQ+ workplace discrimination law.
by Guest Author | Jul 14, 2021 | CFOs Managing HR Series
“What are the most important SaaS Metrics for my business?”
A quick search of this phrase will bring up a variety of different answers, each varying slightly, none necessarily conclusive and specific to your own business. Chances are you’ve probably spent some time in a search surrounding this exact phrase. Jumping from site to site, you’re likely to find a variety of answers, each pointing to different answers, different opinions, and different priorities. Which one is correct? How can all these SaaS finance experts have divergent views?
As we like to say, there is no one Golden Metric. You have to find the right combination of metrics to best and most accurately tell the story of your business. Insufficient or inaccurate metrics can give your faulty projections and unreliable timelines, of course. However, even squeaky-clean metrics that don’t relate well to your business can cause confusion and add little value to your finance strategy.
That being said, as a finance team working specifically in the SaaS industry every day, we’d like to offer what we believe to be some of the most important metrics for your SaaS business to track. We’ve broken these down into four categories:
- Customer Metrics—Customer Count, Customer Churn
- Recurring Revenue Metrics—MRR/ARR, Gross Revenue Churn, Net Revenue Churn
- Cashflow Metrics—Cash Burn, Days Sales Outstanding
- Customer Economic Unit Metrics—LTV, CAC, LTV:CAC, Magic Number
The benefit to categorizing these metrics is to provide context as to what piece of your company’s story can be told by each individual metric.
Customer Metrics
Customer metrics help you understand the habits and trends of your customer base.
Your customer count, of course, will tell you how many of each type of customer you serve. Knowing how many of each segment (for example, enterprise and SMB customers) will give you insight into the types of resources needed to best serve each type of customer. These counts can include opening customers (# at the start of the year,) churned customers, new customers, and net new customers (your new less churned customers). All of these counts will be instrumental in evaluating your performance of sales, marketing, and customer success teams.
Customer churn is another important customer metric that shows you the number of clients leaving your business. This metric illustrates how well you are able to retain your customer base, and allows you to make adjustments and improvements based on performance.
Note: While nobody ever likes to see customers churn, this is an example of how important context is in your metrics. Losing 10 customers in one year can mean very different things depending on what type of customer they are—it doesn’t tell you much at face value. Perhaps those 10 logos were of low contract value, or companies that took up most of your support team’s time. In either case, it might not be the worst thing that they churned! Of course, if you’re losing ten high-value customers, it may be time to kick your retention strategy into higher gear.
Knowing your average revenue per account (see below) will not only aid you in analyzing the impact of your churned customers, but also tell if your remaining accounts are growing over time. It’s great to have retained your customer base—however, it’s important to take measures to increase the amount of revenue each customer on average contributes to your business through upsells, seat increases, etc. Remember: not every customer is the same—make sure you track how performance varies with each plan or product type for your business.
Recurring Revenue Metrics
One of the greatest benefits to the SaaS business model is Recurring Revenue. Instead of traditional one-time purchases, recurring revenue gives you predictable, repeatable revenue that allows you to help you identify your company’s value long-term. This is measured in MRR (Monthly Recurring Revenue) or ARR (Annual Recurring Revenue). MRR/ARR detail how much revenue you are expected to receive in a given time period and allows you to make future business decisions based on this expected revenue. You can also use this metric to evaluate the health of your business—either looking at the growth rate or as a factor in other metrics (many of them are calculated using MRR/ARR).
Understanding the revenue you have and will generate will also put certain numbers into perspective. It’s important to know which specific metrics best tell the story of your business. For example, if you take a look at your Gross Revenue Churn, you’re only seeing the amount of revenue you’ve lost in a time period. That likely won’t feel too great, and won’t paint an accurate picture of your overall performance. However, if you also consider Net Revenue Churn, you’re able to see how expansion and upsell revenue offset the revenue that has churned.
Your existing customer base may be putting your net revenue churn closer to zero, or even negative churn. If that’s the case, you may not need to focus too much on revenue that has left your business when your existing business may be earning those dollars back. Once again, using the metrics that tell the appropriate story of your business are what are really going to help you in the long run. You can also take a more detailed look into the different types of churn here.
Knowing your different churn metrics lets you focus on improving your recurring revenue not only by shrinking churn, but also by increasing the number of opportunities to expand and upsell your existing, loyal customer base.
Cashflow Metrics
Cash is king. Knowing where it’s going and why can help you optimize flows and assess efficiency. Cash burn keeps track of how much money your company spends in a given time period. Not only does it show you the rate at which your company is using revenue, but it also lets you know how much time you have before you run out of cash—something every company wants to be clued into. You can use cash burn to analyze the efficiency of your spending.
Your Days Sales Outstanding is another cashflow metric that is crucial to both you and your (if applicable) investors. It measures how long it takes your customers to pay you for your service, or, in other words, how long it takes to convert your sale into cash. If your customers are late on their payments, you might be in trouble when attempting to pay your own expenses with cash you haven’t yet received! Lowering your DSO will optimize your cash flow.
Customer Unit Economics Metrics
Customer Unit Economics Metrics help you understand the value, behavior, and cost of each average individual customer (or “unit”). They act to answer very important questions about your business, such as:
- How much revenue does one of my customers generate in their lifetime? (LTV)
- How much does it cost my business to acquire each customer? (CAC)
- How profitable are my customers to my business? Am I spending too much in relation to how much revenue they generate? (LTV:CAC) You can view a video about that here.
These metrics are crucial to understanding the value of each average customer. By understanding the above metrics, you can optimize your customer’s value to your business by either lowering your acquisition costs or taking measures to increase the amount of revenue they generate for you.
Another important metric to consider is the SaaS Magic Number. This is a unique metric that measures the efficiency of your Sales and Marketing efforts. It measures how much revenue growth is earned for each dollar spent in Sales and Marketing. From there, you can analyze if you’re spending too much, or whether you could afford to spend more to get an ever greater return. Combined with other Customer Unit Economics metrics, the Magic Number paints a picture of the efforts, benefits, and lifespan of each customer going in and out of your business.
Overall, any online search can give you a list of metrics that are crucial to your SaaS business. However, to understand which are important for you to know, you need to understand the context and importance of each metric. Before incorporating any into your strategy, make sure you think about which ones will best tell the story and answer the relevant questions for your company. Only then can you begin to better understand and optimize your business.
This is Guest Post by Mandy Leavell of KIP Sense.
KPI Sense is the CFO platform for SaaS businesses. Tech-enabled automation paired with SaaS expertise at one low monthly cost. Learn more at kpisense.com.
