September 2014 issue by Cynthia Thompson

Volume 4 : Issue 9 TM

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Third Anniversary Issue 2014 KY SHRM State Conference & Expo Louisville

2014 TN SHRM

State Conference & Expo Sevierville

EEOC

Training Seminar Hot Springs

2014 AR SHRM ELLA Conference Little Rock

Jeff Ginsburg,

SPHR 2014 Chair of the TN SHRM Conference & Expo

2014 When Work Works Awards in Workplace Effectiveness and Flexibility

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Bringing Human Resources & Management Expertise to You

13%

of all Title VII suits filed in 2013 were pregnancy-related www.HRProfessionalsMagazine.com Editor

Cynthia Y. Thompson, MBA, SPHR Publisher

The Thompson HR Firm HR Consulting and Employee Development Art Direction

Park Avenue Design Contributing Writers

Charles Auerbach Bruce E. Buchanan Brian Bush Craig A. Cowart Harvey Deutschendorf Elisabeth Doehring Michael Gnatek Jimmy Hinton Lisa Horn Timothy W. Lindsay Michael Moschel Ricky Reynolds Blake Rogers Stephanie A. Roth Christy Showalter Charles Sims, Jr. William H. West Board of Advisors

Austin Baker Jonathan C. Hancock Ross Harris Diane M. Heyman, SPHR John E. Megley III, PhD Terri Murphy Susan Nieman Robert Pipkin Michael R. Ryan, PhD Contact HR Professionals Magazine: To submit a letter to the editor, suggest an idea for an article, notify us of a special event, promotion, announcement, new product or service, or obtain information on becoming a contributor, visit our website at www.hrprofessionalsmagazine. com. We do not accept unsolicited manuscripts or articles. All manuscripts and photos must be submitted by email to Cynthia@hrprosmagazine.com. Editorial content does not necessarily reflect the opinions of the publisher, nor can the publisher be held responsible for errors. HR Professionals Magazine is published every month, 12 times a year by the Thompson HR Firm, LLC. Reproduction of any photographs, articles, artwork or copy prepared by the magazine or the contributors is strictly prohibited without prior written permission of the Publisher. All information is deemed to be reliable, but not guaranteed to be accurate, and subject to change without notice. HR Professionals Magazine, its contributors or advertisers within are not responsible for misinformation, misprints, omissions or typographical errors. ©2011 The Thompson HR Firm, LLC | This publication is pledged to the spirit and letter of Equal Opportunity Law. The following is general educational information only. It is not legal advice. You need to consult with legal counsel regarding all employment law matters. This information is subject to change without notice.

Features 4 note from the editor 5 Profile: Jeff Ginsburg, SPHR 6 2014 TN SHRM State Council 12 EEOC Training Seminar in Hot Springs July 22 14 Wellness Programs: The Positive Impact on Worker’s Compensation 16 2014 When Work Works Awards 20 To Do: Update the Employee Handbook 26 Countless Reasons to Add Voluntary Accident Insurance to Your Benefits 28 A Lower Cost Better Performing Alternative to the Typical 401(k) Plan

WEB EXCLUSIVES

HTTP://HRProfessionalsMagazine.com /Exclusives How to Increase Accountability in Your Organization by Cynthia Y. Thompson

Departments 10 Employment Law: Anti-Bullying Laws… The New Frontier 18 Mississippi Employment Law: Mississippi Strengthens Right to Work Status 22 Benefits: Using a Health Savings Account to Build Wealth 24 Retirement Planning: The Paradigm Shift in Retirement Plan Consulting 27 Wellness: Wellness Southern Style Part 1 30 The Evolving Nature of Worksite Wellness: Contingent Incentives Move to the Leading Edge 32 EQ: 6 Must Dos When Delivering Bad News 34 Buyer Beware: Successorship Liability 38 Immigration: What has OCAHO Been Doing the 1st Half of 2014?

Industry News 4 13th Annual Employment Law & Legislative Affairs Conference Agenda in Little Rock 8 30th Annual KY SHRM State Conference in Louisville 37 Highlights from the SHRM-Memphis Job Fair

Next Issue Highlights from the 2014 TN SHRM State Conference & Expo in Sevierville and The 13th Annual Employment Law & Legislative Affairs Conference Agenda and The 2014 KY SHRM State Conference www.HRProfessionalsMagazine.com

a note from the Editor

his month we are celebrating our Third Anniversary and we extend a heartfelt thank you to our sponsors, contributors, Advisory Board, and subscribers for making this possible! It is such a pleasure working with the HR community and the sponsors who have made this publication possible for the past three years. Perhaps the most rewarding of all is traveling throughout our footprint and meeting with the SHRM volunteers from the State Councils and the individual chapters in Tennessee, Arkansas, and Mississippi. And with this issue, we are pleased to welcome the 13 Chapters of the Kentucky SHRM State Council to our footprint! It is our pleasure to include the entire 2014 TN SHRM State Conference & Expo Program in this issue for those attending the annual conference in Sevierville. Please enjoy this issue as you browse through the Program. Meet Jeff Ginsburg, SPHR, and Chair of this year’s Conference on Page 5. Then take a moment to meet the members of the 2014 TN SHRM State Council on Page 6-7. We look forward to seeing our TN SHRM friends in the beautiful setting of the Smoky Mountains September 17-19. We will also travel to Little Rock for the 13th Annual Employment Law & Legislative Affairs Conference September 18-19 at the Doubletree Hotel. You still have time to register for this annual event, which features a Handbook Workshop, Sexual Harassment Mock Trial, and of course the ever changing regulations from the DOL, EEOC, OFCCP, NLRB… Hope you will join us in Little Rock for one of our favorite annual events!

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Meet us in Louisville September 24-26 for the 30th Annual Kentucky SHRM Conference. See Page 8 for details. It will be great seeing Bob Carragher, Senior State Affairs Advisor for SHRM, at the Conference. He will be speaking about the SHRM Advocacy Team: Shaping HR Public Policy. Also Cathy Fyock, CSP, SPHR, will be presenting a Preconference Workshop on strategic consulting skills for HR Business Partners. You can earn 7 business management and strategic credit hours by attending! September is a fantastic month and we look forward to seeing you at the Conferences. If you are unable to attend, please follow me on Twitter @ cythomps and on Facebook as I bring you coverage from the events. We will also bring you highlights of all the events in the October issue. Did you know you can now download the latest HR White Papers free on our website? (www.hrprofessionalsmagazine.com) And don’t forget to join us September 22 for our monthly complimentary HRCI webinar sponsored by Data Facts. Enjoy the conferences!

Cynthia Y. Thompson | Editor cynthia@HRprosMagazine.com www.HRProfessionalsMagazine.com

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Jeff

on the cover

GINSBURG

JEFF GINSBURG, SPHR 2014 SHRM State Conference Chairman 2014 TVHRA President Jeff Ginsburg is the Vice-President of Human Resources for LeGacy Resource Corporation, a Government contractor in Oak Ridge, TN. Reporting to the President/CEO, Jeff develops, implements, and administers all HR functions for LeGacy’s employees, including the 210 LeGacy employees serving DOE and NASA Clients on Client Sites in 17 locations nationwide. Jeff has more than 25 years of progressive Human Resources Management experience serving Government Contractors in Oak Ridge. Jeff ’s HR expertise includes Recruiting/Selection, HR Policy Development, Labor Relations, Compensation and Benefits Administration, Affirmative Action/EEO, and Training. He is an expert in complying with Federal and State employment laws such as FLSA, ADAAA, FMLA, EEO, affirmative action, and workers compensation and is often sought after for his advice and knowledge in these areas. Previously as the Director of HR for Pinkerton Government Services, Inc. (PGS) Oak Ridge, TN., he directed HR activities for all of the PGS classified security services contracts with over 3600 employees in 32 states. He currently serves in multiple leadership roles in both his local SHRM chapter as well as TN SHRM State Council. He is the current President of the Tennessee Valley Human Resources Association (TVHRA)., He has served as the Legislative/Legal Chair and the Communications Chair and currently serves as the State Conference Chair with the TN SHRM State Council. Jeff also serves as an Ombudsman with the Employer Support for the Guard and Reserve (ESGR). Previously he has served as the President of the Oak Ridge Human Resource Association (ORHRA), President of the Oak Ridge Chamber of Commerce and member of the Oak Ridge City Council. Jeff received the Tennessee Human Resources Excellence in Management Award in 2003, and was named the ESGR Ombudsman of the Year for 2014. He is known for his “can do” attitude and sense of humor. Jeff was born in Oak Ridge and has worked there his entire career. Prior to entering the HR field, Jeff owned a retail camera store called The Camera’s Eye. He earned his Bachelor of Science degree from Tusculum College and holds a SPHR Certification. In his spare time, he enjoys playing guitar with his band of 30 years, Boys’ Night Out. 

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2014 TN SHRM State Council

State Director Sheryl Ransom

Director-Elect Valerie Gifford

Past Director Kellie Conn

Treasurer Shawn Pellington

Secretary Suzie Armstrong

District Director West Janice Shipman

District Director Middle Tara Brown

District Director East Susan Deaton

State Confer. Chair Jeff Ginsburg

Membership Chair Rebecca Harmon

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8/15/14 3:50 PM

2014 TN SHRM State Council

At-Large Chair Jill Hidaji

Communication Chair Sharon-Kaye Miller

Legislative/Legal Chair Mary Dee Allen

Certification Chair Lori Ridings

Partnering with You Diversity Dennis Stull

College Relations Chair Kathy Tuberville

SHRM Foundation Chair Michelle Thompson

Awards & Scholarships Chair Bill Cooper

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Workforce Readiness Chair Donna Gwaltney

Professional Development Chair Trish Holliday

(not pictured) Young Professional Chair Paresh Patel

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presented by

30th Annual Kentucky SHRM Conference | September 24-26, 2014 | Louisville, Ky.

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Keynote Speakers

Bob Carragher

Sam Glenn

Bob Marino

Keith Pataluna

Garett Jackson

Senior State Affairs Advisor, Society for Human Resource Management

The Attitude Guy

CEO and Director CaféPress Inc.

VP of Operations CaféPress Inc.

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SHRM Advocacy Team: Shaping HR Public Policy

The Gift of Attitude

CaféPress – Creating a Culture of Success

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Other States

By C RAIG A. COWART

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Ant i

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Did you ever have your milk money stolen by a bully when you were in elementary school? While bullies in elementary school can be a serious issue, adult bullies in the workplace are a serious concern for employers. The issue of bullying in the workplace has received a lot of attention in recent months. A driving force in the heightened attention on workplace bullying has been the introduction of anti-bullying legislation in several states.

The Healthy Workplace Bill The Workplace Bullying Institute has crafted model legislation for states entitled the Healthy Workplace Bill. According to the Institute, 28 states have introduced antibullying legislation.

Tennessee’s Healthy Workplace Act On June 17, Tennessee Gov. Bill Haslam signed the Healthy Workplace Act into law. While Tennessee became the first state to enact a law related to bullying, the Tennessee law is not as broad as the model legislation being promoted by the Workplace Bullying Institute. The Tennessee law only applies to state and local government agencies. Private employers are not affected. The Tennessee law defines “harassment, intimidation or bullying” as any act that “substantially interferes with a person’s work performance or creates an intimidating, hostile or offensive work environment.” While federal laws prohibit workplace discrimination based on race, color, religion, sex, and other protected classes, they do not outlaw behavior that is not based on one of the protected classes. The Tennessee law does not create an express cause of action for bullying, but it does instruct the Tennessee Advisory Commission on Intergovernmental Relations to create a model anti-bullying policy for public (governmental) employers by next March. While government agencies will have the option to either adopt the model policy or not, public employers deciding to enact the policy will be immune from claims arising from bullying behavior. While the Tennessee law only applies to public (governmental employers) and only provides for the creation of a model policy that will be discretionary for public employers, passage of the law is significant. As the first bullying related legislation passed by a state, the Tennessee law may be an indication that policymakers at the state level are serious about addressing the issue. The passage of the Healthy Workplace Act in Tennessee may evidence momentum toward a new frontier of anti-bullying legislation. 10

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While anti-bullying legislation has been introduced in many states, some of those bills have been vetoed by governors. During the past several months, the governors of both New Hampshire and Puerto Rico vetoed anti-bullying bills after they were passed by the legislatures. Opponents of anti-bullying legislation often find the proposed laws unworkable. Concerns are often expressed about opening up routine workplace interactions to lawsuits. For example, concerns have been expressed about employees being able to file a lawsuit alleging bullying if they believe they have unreasonable workloads or perceive constructive criticism from supervisors as bullying. Critics of anti-bullying legislation have also expressed the belief that such laws would cause a dramatic increase in lawsuits and harm overall productivity.

What Are Employers to Do? Employers should take note of the increased attention on workplace bullying. Even though the Tennessee law does not create an express cause of action and only applies to public (governmental) employers, private employers should be aware that workplace bullying can adversely affect their business. Even if anti-bullying legislation is not passed in other states, employees can still file claims related to bullying by attempting to classify the complaints as violations under existing anti-harassment laws. Bullying conduct can also impact productivity in the workplace. Individuals who are bullied may become disconnected and have higher absenteeism and decreased job performance.

Consider Adopting an Anti-Bullying Policy Adopting a solid written anti-bullying policy may be the best way to combat unwanted behavior. For some employers, this could mean a specific policy dedicated solely to prohibiting workplace bullying. In other cases, employers might choose to add a requirement of professional conduct to a strong policy prohibiting harassment. A difficulty in crafting policies prohibiting bullying is defining exactly what constitutes “bullying” behavior. The National Labor Relations Board has recently found policies demanding civility in the workplace to be too broad and an interference with employee rights under the National Labor Relations Act. One option to avoid problems with the NLRB may be to utilize language from some of the proposed state anti-bullying statutes. For example, one proposed statute defines “abusive conduct” as:

Acts, omissions, or both, that a reasonable person would find abusive, based on the severity, nature and frequency of the conduct, including, but not limited to: repeated verbal abuse such as the use of derogatory remarks, insults, and epithets; verbal, non-verbal, or physical conduct of a threatening, intimidating, or humiliating nature; or the sabotage or undermining of an employee’s work performance. It shall be considered an aggravating factor if the conduct exploited an employee’s known psychological or physical illness or disability. A single act normally shall not constitute abusive conduct, but an especially severe and egregious act may meet this standard.

It is also worthwhile for an anti-bullying policy to include specific examples of the kinds of behavior that are unacceptable. It may also be useful for a policy to explain what does not constitute bullying – for example, a supervisor who insists that employees show up on time or corrects bad performance. Another important aspect of an anti-bullying policy is a workable reporting mechanism. Employees who wish to report bullying should be given options besides just going to their direct supervisor, in case the supervisor is the problem. Finally, the policy should lay out the consequences for violations.

Take Complaints Seriously With or without an anti-bullying policy, failing to investigate employee complaints of bullying can lead to serious problems. Even though some complaints may amount to nothing more than a petty conflict between co-workers, thorough investigations should be conducted to ensure there are not more serious problems and risks. Even if there is no law prohibiting bullying, employees could still bring a lawsuit for claims like harassment, infliction of emotional distress, or assault. Moreover, an employee might complain about “bullying” when the real issue is unlawful harassment or discrimination. If an employee complains of being bullied, but they are really being harassed because of their race, age, sex, etc., an investigation can allow the employer to take steps to remedy the problem and put itself in a better position to defend against potential claims.

Separate training for employees and managers on anti-bullying is advisable. Training for employees should ensure understanding of the policy, prohibited behavior, how to report problems, and potential consequences for unacceptable behavior. When managers are trained, they should be given the tools to recognize bullying and act early to avoid escalation of problems.

Get the Company Culture Right Even with a solid anti-bullying policy and good training, employers will still have problems if management at the highest level is not on board with ensuring a “bully free” environment. If management displays bad behavior, the culture will trickle down. Having top officials not only voice opposition to workplace bullying, but also model the behavior that is expected and refuse to tolerate anything less is essential. The example of top management will show that the employer is serious about not tolerating bullying.

Navigating the New Frontier Regardless of whether anti-bullying laws are passed and become more common, employers should take the issue of workplace bullying seriously. By taking stock of company culture and taking steps to effectively address potential bullying, employers will be better protecting themselves regardless of the landscape of the new frontier.

Train Employees No policy can correct bad behavior if employees do not know about or understand the policy. Training employees about policies prohibiting bullying demonstrates that the employer takes the matter seriously and helps employees understand what behavior is expected.

Craig A. Cowart, Partner Fisher & Phillips LLP ccowart@laborlawyers.com www.laborlawyers.com

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He is also the Chair of the Commission's Immigrant Worker Team. This group is tasked with strengthening and coordinating EEOC's enforcement and outreach on employment discrimination issues affecting immigrant and other vulnerable workers.

EEOC Training Seminar In Hot Springs July 22

In 2014, the National Law Journal named Mr. Lopez as one of "America's 50 Outstanding General Counsel." In 2011, Hispanic Business named Mr. Lopez to its list of 100 Influentials in the Hispanic community. David Lopez EEOC General Counsel David Lopez was sworn in as General Counsel of the U.S. Equal Employment Opportunity Commission (EEOC) on April 8, 2010. He was nominated by President Barack Obama and was confirmed by the Senate on December 22, 2010. Mr. Lopez is the first EEOC field trial attorney to be appointed as the agency's General Counsel. He has served at the Commission in various capacities for the past 20 years, including as Supervisory Trial Attorney in the Phoenix District Office and Special Assistant to then-Chairman Gilbert F. Casellas. As General Counsel, Mr. Lopez runs the Commission's litigation program, overseeing the agency's 15 Regional Attorneys and a staff of more than 325 lawyers and legal professionals who conduct or support Commission litigation in district and appellate courts across the country. During his tenure, Mr. Lopez has cultivated "one national law enforcement agency," encouraging the EEOC's litigators nationwide to operate more collaboratively and cohesively with each other and other internal partners. During Mr. Lopez's tenure as General Counsel, the EEOC's trial program has been extremely successful; in fiscal year 2013 the EEOC won 9 out of 11 of its trials, including significant verdicts involving race discrimination. As General Counsel, Mr. Lopez served as Co-Chair of the committee that developed the Commission's Strategic Enforcement Plan for 2013 to 2016.

Mr. Lopez graduated from Harvard Law School in 1988 and graduated magna cum laude from Arizona State University in 1985, with a B.S. in Political Science.

The EEOC’s Strategic Enforcement Plan The keynote topic was, “The EEOC’s Top Ten Litigation Developments.” General Counsel Lopez discussed the EEOC’s Strategic Enforcement Plan adopted in December 2012. The purpose of the Plan is to focus and coordinate EEOC programs and to have a sustainable impact in reducing and deterring discrimination. The commission uses an integrated enforcement approach and has the flexibility to investigate and litigate non-SEP issues. The six priorities include: u Eliminating Barriers in Recruitment and Hiring v Protecting Immigrant, Migrant and OtherVulnerable Workers w Addressing Emerging and Developing Issues x Enforcing Equal Pay Laws y Preserving Access to the Legal System z Preventing Harassment through Systemic Enforcement and Targeted Outreach

The EEOC’s Top Ten Litigation Developments General Counsel Lopez also discussed some of the most significant events that have impacted the EEOC; President Lyndon Johnson’s signing of the Civil Rights Act of 1964, President George Bush signing of the ADA in 1990, George W. Bush signing the ADAAA in 2008, and President Barack Obama signing the Lilly Ledbetter Act in 2009. Here are the top ten litigation developments at the EEOC presented by Mr. Lopez. In a tie for first place are EEOC v. Mach Mining, systemic sex hiring case, which will be heard by the Supreme Court next term on the question of whether EEOC’s satisfaction of it’s pre-suit requirements is subject to judicial review and EEOC v. Henry’s Turkey Service, the highest verdict in EEOC’s history and the second highest in U.S. history under federal antidiscrimination laws. Background screening cases came in at #3. Coming in at #4 are reasonable accommodation cases. The importance of juries came in at #5, and discrimination against immigrant, migrant, and other vulnerable workers is #6 in the top ten. EEOC and success in the Fifth Circuit ranked #7. The EEOC and preservation of access to the legal system came in as #8, and religious discrimination cases are #9. Sex hiring/pay challenges complete the top ten list coming in at #10.

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The EEOC Training Seminar also included six workshops on the EEOC’s Strategic Enforcement Plan, Bullying and Harassment, Tricky HR Situations, a Legal Update, Pregnancy Discrimination, and Employment Eligibility Hiring Mistakes. The speakers at the seminar and workshops were Katharine W. Kores, district Director for the EEOC Memphis District; Shirley Richardson, Deputy Director of the EEOC Memphis District; Rodney Klein, Outreach & Education Manager, from the EEOC Dallas District; William A. Cash, Jr., Area Director for the EEOC in Little Rock; Dan Herrington, Attorney with Friday, Eldredge & Clark Law Firm; Cynthia Nance, Professor and Dean Emeritus, from the University of Arkansas Fayetteville Law School; Faye A. Williams, Regional Attorney; Pamela Dixon, Senior Trial Attorney for the EEOC Little Rock Area Office; Virginia Pollard, Enforcement Supervisor for the EEOC Little Rock Area Office; C. Sebastian Aloot, Special Litigation Counsel Office of Special Counsel for Immigration Related Unfair Employment Practices Dept. of Justice in Washington, D.C.; Wayne Sanders, Special Agent for the Department of Homeland Security Investigations in Little Rock.

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Wellness Programs: The Positive Impact on Workers’ Compensation By MICHAEL GNATEK

Rising healthcare premiums have become an accepted cost of doing business in today’s market. Many companies are shifting not only the burden of those increases to employees, but also the responsibility for reducing medical claims by overlaying incentive-based wellness programs to promote a healthier workforce. While the benefits of a robust corporate wellness initiative are well-known to human resources departments, risk management is starting to sit up and take notice as evidence mounts that those wellness programs not only reduce the duration of workers’ compensation claims, but could also potentially prevent those claims from occurring in the first place. Comorbidities are preexisting health conditions Multiple studies conducted by various organizations illustrate health risk factors known as comorbidities are coming to light as influencing factors on workers’ compensation claims.

that in addition to a workers’ compensation injury or occupational disease could hinder an employee’s recovery.

A project conducted by the University of Michigan Health Management Research Center found that employees with high health risks tended to have the highest workers’ compensation costs. Michigan focused Xerox Corporation, one of the earliest adopters of corporate wellness initiatives, and found that over their four-year study workers’ compensation costs increased for those employees whose health risks were increasing or high already (e.g., smoking, physical inactivity, hypertension, high cholesterol, and life/ job dissatisfaction) as identified in a standard health risk assessment (HRA). A 2010 study by the National Council on Compensation Insurance (NCCI) entitled, “Comorbidities in Workers’ Compensation” showed that workers’ compensation claims that included the obesity comorbidity diagnosis incurred significantly higher medical costs than comparable claims without the high health risk. NCCI also discovered that claims for employees identified as “obese” almost tripled from 2000 to 2009 from 2.4 percent to 6.6 percent. A recent NCCI project, “Indemnity Benefit Duration and Obesity,” posited that the lost-time duration of obese claimants is a multiple of non-obese claimants. According to their findings obese claimants incurred medical costs 6.8 times higher than non-obese (as defined by body mass index), were twice as likely to file a claim and an indemnity duration that averaged about 13 times higher.

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Obese claimants incurred medical costs 6.8 times higher than non-obese.

So what can insureds do? 1. Proactively engage Human Resources and Employee Benefits to better understand the scope and breadth of existing corporate wellness initiatives, as well as how the organization is tracking the effectiveness of those programs. 2. Determine how your insurer and/or third party administrator (TPA) is capturing data on comorbid factors in workers’ compensation claim files and how that information can be incorporated into effective analytics. 3. Collaborate with internal safety, health, and environment professionals (if applicable) to discover how best to integrate employee wellness with workplace safety. 4. Consult with Lockton or your current broker on how best to capitalize on synergies between employee wellness and workers’ compensation. Once thought to be the exclusive “touchy feely” domain of Employee Benefits, effective corporate

wellness initiatives have shown to be successful in not only reducing the duration of lost-time workers’ compensation claims, but also promoting healthy behaviors that potentially inhibit unsafe or inattentive workplace behavior. Risk managers and claims professionals should be adding employee wellness to the available arsenal of weapons to combat increasing claims.

Ashley Pace

Lockton’s Memphis Office 901 757 6902 apace@lockton.com

Brad Owens

Lockton’s Memphis Office 901 757 6901 Bowens@lockton.com

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Back to School

with Workplace Flexibility

ith summer behind us masses of working parents, including me, are transitioning from the chess game of piecing together summer camp opportunities amidst the family vacations to the back-to-school routine of drop offs, activities, and everything in between. It’s a jungle – I mean a juggle for us all! While a new school year can be a relief for many of us parents, it is also the start of the day-to-day demands of weaving together work, personal, and family responsibilities. Of course work-life fit is important to all employees, but working parents in particular often have unique challenges with managing it all. Between doctor’s appointments, extracurricular activities and practices, homework, and parent-teacher conferences, many working parents struggle to effectively manage the ever increasing work-life load. In the struggle to manage it all, many working parents may see their careers suffer. According to the Pew Research Center, working parents with children under 18 say it is harder to advance in their career and some parents, especially women, choose to opt-out of working all together. I am one of the lucky ones because at SHRM, I have access to a number of flexible work arrangements that make navigating the demands of work, family and life, well – easier. I have access to compressed workweeks, schedule flexibility, paid time off, and telecommuting opportunities to enable me to be a great Mom and a great SHRM employee. SHRM has

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By LISA HORN

embraced workplace flexibility as a business strategy, which has helped the organization reduce turnover, improve employee engagement, and allow for business continuity in the face of inclement weather. I’m proud to say that SHRM not only supports an effective and flexible workplace for its workforce, but is actively working to transform workplaces across the country to help them better meet employees’ work-life demands by leveraging workplace flexibility strategies. Through When Work Works, a nationwide initiative to bring research on workplace effectiveness and flexibility into community and business practice, SHRM and the Families and Work Institute (FWI) seek to unveil workflex best practices through its annual When Work Works Award (formerly the Sloan Awards for Workplace Effectiveness and Flexibility). SHRM and FWI recently revealed 284 employers that have won the prestigious 2014 When Work Works Award. These organizations are model employers that have created effective workplaces that support employees’ need for flexibility while achieving extraordinary business results. Below are two When Work Works Award winning organizations with exemplary workplace flexibility strategies with a special focus on family responsibilities. At International Scholarship and Tuition Services, Inc. (ISTS) in Nashville, Tenn., a corporate code of “family first” informs workplace policies at this company that provides scholarship and tuition program management. The ISTS president and CEO leads by example and expects her executive level and managerial employees to fit the culture as well. Remote offices have been set up to enable sales team members to work from a variety of locations and be near their families. Employees use video conferencing and online meeting software to stay connected with those outside of the office. Leaders have found that by maintaining a flexible work environment, employees are more loyal to the company, which results in lower turnover rates and better service for customers. At Cross, Gunter, Witherspoon & Galchus, P.C., a law firm in Little Rock, Ark., goals and budgets are developed with the importance of making work “work” for their employees' careers and family lives. To that end, seasoned employees are able to adjust their schedules to fit their work-life needs and new employees are given extensive support to succeed. Employees are required to work defined core times during the week that result in a three-day weekend every other week. Employees can also flex their start and end work times in order to manage needs outside of the office, and they can also elect to work from home when necessary. Nearly half of employees have been with the law firm since its inception sixteen years ago. It is clear these winning organizations have fostered a culture of workplace flexibility and effectiveness that contributes to both business results and employee goals ultimately, giving them a competitive advantage. To learn more about leveraging effective workplace flexibility strategies at your organization, visit www.whenworkworks.org.

Lisa Horn, Director Congressional Affairs and Workplace Flexibility Initiative lisa.horn@shrm.org www.shrm.org Twitter@SHRMLobbystLisa 16

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P E R F EC T A L I G N M E N T. Relationship. Reliability. Respect. At the center of Bass, Berry & Sims' Employee Benefits and Labor and Employment practices. We listen, and we respond with creative yet practical counsel. Connecting your dynamic human resources needs to affirmative strategies. • Day-to-day employment counseling and litigation support • Employee benefit plans and compensation arrangements • Training and auditing programs • Traditional labor law Offering a constant source of information and insight through our blog: tennesseelabortalk.com

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Mississippi Strengthens

“RIGHT-TO-WORK” STATUS

By TIMOTHY W. LINDSAY

Mississippi has been a “right-to-work” state for years. It is one of 23 states in the country that still preserves an employee’s right to form, join, or assist labor organizations or to refrain from such activities. Miss. Code Ann. §71-1-47. Simply put, an employee in a right-to-work state cannot be forced to join a union or to pay union dues even if a union is elected as the bargaining representative at the employer’s business. On April 16, 2014, Mississippi Governor Phil Bryant added muscle to Mississippi’s right-to-work status by signing three bills passed by the state legislature. Upon signing, Governor Bryant noted that Mississippi’s right-to-work status is “a competitive benefit for the state” and further observed that “these bills send a message that [Mississippi] will not tolerate efforts like intimidation.” All three laws became effective and in force on July 1, 2014.

1. Prohibition Against Intimidation Act (“PAIA”) - SB 2473 PAIA provides that no person, corporation, union, or other entity shall “[d]amage, harm, injure or threaten to injure or coerce a business, or any employee or representative of the business with the intent to unlawfully intimidate the business or its employees from exercising their rights” or “[r]estrict a business, a union, or the owners or employees of a business from exercising their rights” in order to obtain “something of value.” The phrase “something of value” is defined to include, but is not limited to, “a neutrality agreement, card check agreement, recognition or other objective that is motivating such activities.” PAIA also prohibits a person, corporation, union, or other entity from conspiring “with another, for the purpose of disrupting lawful commerce in places of business, where such activity constitutes an assault or causes physical injury to any individual, located in or around the place of business.” Finally, any person, union or entity that “intentionally or recklessly” causes damage to the property of a business shall be liable for damages along with anyone who “aids or abets” in such activities. Aside from the obvious protection afforded the employer and its property, it is clear that PAIA likewise gives non-union employees muscle to combat those situations where pro-union activist or agents threaten a non-union member behind closed doors in order to force him or her to sign a card, vote for the union, or otherwise participate in pro-union activities. Under the PAIA, an action may be brought against the violator for the same damages available under claims for assault, personal injury or as otherwise authorized by law.

2. Mississippi Employment Fairness Act (“MEFA”) - SB 2797 MEFA is based on the premise that a “neutrality” or “labor peace” agreement is unfair to employers and employees. A “neutrality agreement” between 18

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the union and employer simply means what the label suggests. Under a typical neutrality agreement, the union is given access to employees and the employer agrees not to “campaign” against the union or express its reasons for not having a union. MEFA provides that such agreements are unfair since they are “used as a tool to pressure company ownership and management to agree to union demands before the union approaches or involves affected employees.” Under MEFA, the Mississippi Legislature retains the “exclusive authority” to require an employer “to accept or otherwise agree to any provisions of a labor peace agreement.” For public-sector employers, the legislature retains the “exclusive authority” to require the employer to enter into a project labor agreement or collective bargaining agreement that establishes terms and conditions of employment for a specific construction project before employees are hired. Any agreement contrary to MEFA is deemed “unlawful, null and void, and of no effect.” Put another way, MEFA literally requires an act of Congress before a union can push neutrality on an employer or a collective bargaining agreement on an employer under a state construction project.

3. Mass Picketing or Mass Demonstrations - SB 2653 Senate Bill No. 2653 does not provide a title. Its purpose, however, is clear. The law prohibits unions from engaging in mass picketing or demonstrations “in such a manner that obstruct or unreasonably interfere with the free ingress and egress” of any person to and from any place of business or residence. Conduct that has “the effect of obstructing or unreasonably interfering with free use of business entryways, streets, sidewalks or right-of-ways” is likewise prohibited. Employers are often compelled to seek judicial relief to put an end to unlawful picketing. In past cases, an employer had to prove irreparable harm before obtaining an injunction against the union or pro-union activist. However, under the new law, the business or property owner is now entitled to injunctive relief without the showing of irreparable harm if the picketing or demonstration involves a labor dispute. Further, violators are guilty of a misdemeanor and can be fined up to $500.00, imprisonment up to six months, or both.

Conclusion Mississippi has one of the nation’s lowest union membership rates among employed workers and the number continues to decline according to the U.S. Bureau of Labor Statistics, from 4.3% in 2012 to 3.7% in 2013. It is impossible to guess the role Mississippi’s “right-to-work” law has played in this trend, if any. Nevertheless, an employee’s freedom of choice is a fundamental right worth protecting and not a privilege that a third party should be allowed to use as a negotiation tactic. As of this writing, no pending matter could be found applying one or more of the new laws. However, based on experience, it is certain that opportunities will arise as unions become more desperate to stop the downward spiral in membership and increase their revenue with dues. When applied, you can rest assured that labor organizations from across the country will descend on Mississippi to challenge the applicability and enforceability of Mississippi’s new laws in view of existing federal labor laws. In the interim, Mississippi employers and employees should be prepared to take full advantage of the added muscle recently given to the state’s right-to-work law.

Timothy Lindsay, Managing Partner Ogletree Deakins Timothy.lindsay@ogletreedeakins.com www.ogletreedeakins.com

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To Do List: Review the Employee Handbook! By CHRISTY SHOWALTER

a human resources manager, one project that was always on my list of things-to-do was updating our employee handbook. There always seemed to be another new or amended employment-related regulation to update. (what? They amended FMLA again?) or there was an unanticipated, or even unbelievable, employee relations policy to address. (Surely a current policy already prohibits “mooning” others out of a car window in the company parking lot?!) It was a never-ending process, and I never had enough time! In light of recent guidance and enforcement efforts by governmental agencies, now is the time to ensure that your handbook is current by moving that handbook review back to the top of your list and asking yourself the following questions: • Are your policies still legally compliant? • Do they reflect the way your business is actually handled? • Have you unintentionally created additional contractual rights for your employees? Done correctly, your handbook can help protect your organization from liability, while providing employees with clear expectations as well as valuable information about your working environment. Done incorrectly, however, your handbook can create unintended risk. Having reviewed dozens of employee handbooks, the following are several common mistakes that may need your attention: Lack of At-Will Disclaimer: Have you prominently stated the at-will nature of your employment relationship at the beginning of your employee handbook, affirming that both you and the employee have the right to terminate employment at any time, with or without notice and with or without cause? Do employees further acknowledge this relationship in a handbook receipt, agreeing that nothing in the handbook should be construed as a contract or a guarantee of continued employment? Does your progressive discipline policy or other handbook content contradict this at-will relationship? While some employers are hesitant to spotlight at-will employment for fear of offending employees, this policy is critical in retaining the organizational discretion needed to make employment decisions for your business. Overly Broad Confidentiality Policies: Does your handbook include a policy restricting employees from discussing their salaries? Or maybe it contains a broad confidentiality provision prohibiting the communication of “personnel” or “financial” information? Did you know that the National Labor Relations Act (NLRA) gives all employees – both union and non-union – a protected right to communicate with each other regarding wages, salaries and other terms or benefits of employment? Policies interfering with these rights violate the NLRA. 20

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Outdated or Vague Family and Medical Leave Act Policies: The FMLA has been updated numerous times since it was enacted over twenty years ago. Changes include the addition of military caregiver and exigency leave in 2008, which was further refined in March 2013. Even more recently, guidance has been issued defining spousal leave in same-sex marriages. Has your policy been updated in the past year to reflect these changes? Does your policy clearly define how the 12-month measurement period is calculated and which eligibility criteria are required to qualify for leave? Is your policy clear on the interplay of FMLA and other paid or unpaid leave policies, such as vacation or workers’ compensation leave? Missing or vague terms in an FMLA policy must generally be interpreted in favor of an employee and may create unintentional liability on behalf of an employer, including leave for otherwise ineligible employees. Maximum Cap on Medical Leaves of Absence: Does your medical leave policy provide for automatic termination of employment if an employee fails to return to work within a specified period of time or without restrictions? Such policies have recently become targets of the EEOC as potential violations of the Americans with Disabilities Act (ADA). Under the ADA, employers may be required to permit an employee with a disability to take time off, including an extended leave of absence beyond FMLA, if doing so will help the employee recover and return to work. Fixed leave policies, by definition, limit the opportunity to engage in an interactive process to determine whether leave is a reasonable accommodation and may violate the ADA by requiring the automatic termination of a disabled employee who reaches a rigid, inflexible leave limit. While the idea of individualized assessments goes against every instinct we have as HR professionals – “be consistent” has been drilled into our DNA – the ADA requires us to reevaluate these policies. Unnecessary Probationary Periods: Does your probationary period serve a legitimate business purpose? Probationary policies are arguably unnecessary for at-will employers, where employment can already be terminated at any time, for any lawful reason, with or without notice. Have you clearly stated that satisfactory completion of the probationary or introductory period does not guarantee continued employment and that employment remains at-will or have you unintentionally created an expectation of “permanent” employment? Narrowly Defined Anti-Harassment Policy: Most employers have, as expected, a policy prohibiting harassment based on sex. We all know this policy is a critical element in developing an affirmative defense against a claim of sexual harassment based on the landmark cases of Faragher/Ellerth. But did you know that many courts have expanded this requirement to other forms of harassment? Does your policy encompass all forms of unwelcome conduct, based on any protected characteristic, such as race, national origin, age, disability and religion? Are your reporting procedures clearly defined, requiring employees to notify trained managers of any unwelcome conduct, thereby enabling the organization to respond before the conduct rises to the level of unlawful harassment? Does your policy protect employees from retaliation for making a complaint or participating in an investigation? While these are a few of the common issues I see in handbooks, you may have other policies creating additional risk for your organization – concerns such as impermissible deductions from pay, overly broad social media policies, failure to adapt policies to accommodate variations in state-specific laws and more. So, are you ready to review that handbook? If you would like help jumpstarting your handbook review, the ARSHRM Employment Law and Legislative Affairs (ELLA) Conference (www.arshrm.com/ ella2014) being held in Little Rock on September 18-19 may be a great place to start. The conference features workshops on handbooks, including policies on compensation, discipline, FMLA and social media. Before you know it, you will be able to cross “Handbook Review” off of your list of things-to-do – at least until the next update to FMLA or until you find yourself needing to write a “no public urination” policy (don’t ask!).

Christy Showalter, JD, MBA Senior Human Resource Consultant Regions Insurance, Inc. christy.showalter@regions.com

SETTING YOU ON THE RIGHT PATH

FOR SUCCESSFUL BENEFITS MANAGEMENT Monitoring changes with today’s employee benefit laws can be overwhelming for even the most seasoned HR professionals. And, with more than 50 categories of regulations, nearly every aspect of the employer-employee relationship is impacted. Regions Insurance is able to assist you each step of the way in navigating today’s benefits rules, while helping you manage and protect your organization’s growth, profitability and people.

WE SEE THE BIG PICTURE.

Tom Hayes Employee Benefits Practice Leader tom.hayes@regions.com 479-684-5259

Katrina McKinney Sales & Marketing Coordinator katrina.mckinney@regions.com 205-264-7177

Find Regions Insurance offices in these states: Alabama, Arkansas, Georgia, Indiana, Louisiana, Mississippi, South Carolina and Tennessee

Using a Health Savings Account to Build Wealth

By CHARLES SIMS, JR.

Health Savings Accounts are an excellent way to build wealth. These tax-favored accounts, which have only been available since January of 2004, can be opened by anyone with a qualifying high-deductible health insurance plan. Once you open an HSA account, you can place tax-deductible contributions into it, which grow tax-deferred like an IRA. You may withdraw money tax-free to pay for medical expenses at any time.

Health Savings Accounts: A Tax-free Medical Investment Fund and Additional Retirement Account The biggest reason more people don't retire before age 65 is lack of health insurance, and many Americans reach age 65 woefully unprepared for the medical expenses they'll face once they do retire. One of the most important long-term reasons for establishing an HSA is to build up some money for medical expenses incurred during retirement. Health Savings Accounts are, without exception, the best way to build up money to pay for medical expenses during retirement. You should not contribute any money to your traditional IRA, 401 (k), or any other savings account until you have maximized your contribution to your HSA. This is because only health savings accounts allow you to make withdrawals tax-free to pay for medical expenses. You can take these distributions any time before or after age 65. Your HSA contributions won't affect your IRA limits -- $3,000 per year or $3,600 for those over 55. It's just another tax-deferred way to save for retirement, with the added advantage being that you can withdraw funds tax-free if they are used to pay for medical expenses. For early retirees who are healthy, a health savings account can also be a smart option to help lower their health insurance costs while they wait for their Medicare coverage. The older someone is, the more they can save with an HSA plan. For many people in their 50's and 60's who are not yet eligible for Medicare, Health Savings Accounts are by far the most affordable option.

How Much Can You Save with an HSA? Any money you deposit in your health savings account is 100% tax-deductible, and the money in the account grows tax-deferred like an IRA. The maximum contribution for a single person is $3,300. For families, the maximum contribution is $6,550. If you're 55 and older, you can put in an extra $1,000 catch-up contribution.

Future Value of Your HSA Account How much you accumulate in your HSA will depend on how much you contribute each year, the number of years you contribute, the investment return you get, and how long you go before withdrawing money from the account. If you regularly fund your HSA, and are fortunate enough to be healthy and not use a lot of medical care, a substantial amount of wealth can build up in your account.

HSA Investment Options Health savings accounts are self-directed, meaning that you have almost total control over where you invest your funds. There are numerous Financial Institutions that can act as your 22

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HSA administrator. Some offer only savings accounts, while others offer mutual funds or access to a fullservice brokerage where you may place your money in stocks, bonds, mutual funds, or any number of investment vehicles.

How Tax-deferred Growth Accelerates Your Retirement Account Growth One of the biggest advantages of retirement accounts like Health Savings Accounts are that the funds are allowed to grow without being taxed each year. This can dramatically increase your return. For example, if you are in the 33% tax bracket, you would need a 15% return on a taxable investment to match a tax-deferred yield of only 10%. As another example, if you are in a 33% tax bracket and were to invest $5,950 each year in a taxable investment that yielded a 15% return, you would have $414,893 after 20 years. If you put that same money in a tax-deferred investment vehicle like an HSA, you would have $798,351 - nearly $400,000 more.

Strategies to Maximize your HSA Account Growth If your objective is to maximize the growth of your HSA in order to build up additional funds for your retirement, there are three important strategies you should implement.

1 2

Strategy #1: place your money in mutual funds or other investments that have growth potential. Though this is riskier than placing your money in an FDICinsured savings account, it is the only way to really take advantage of the tax-deferred growth opportunity that an HSA provides. Strategy #2: delay withdrawals from your account as long as possible. Though you may withdraw money from your HSA tax-free at any time to pay for qualified medical expenses, you do have the option of leaving the money in the HSA so that it continues to grow tax-free. As long as you save your receipts, you can make medical withdrawals from your account tax-free at any future date to reimburse yourself for medical expenses incurred today.

Strategy #3: make the maximum allowable deposit to your HSA at the beginning of each year. Even though you are allowed until April 15 of the following year to make deposits to your HSA, you should take advantage of the tax-free growth in your account by funding it as soon as possible. The extra interest you can earn by contributing to your account on January 1 of each year rather than the next April 15 can amount to over $40,000 in a 20 year period, and over $100,000 in 30 years.

Charles Sims, Jr., President/CEO csims@SimsFinancialGroup.com The Sims Financial Group, Inc. www.SimsFinancialGroup.com

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The in Retirement Plan Consulting

By CHARLES AUERBACH, CFP ®

mployers who currently sponsor defined contribution 401(k) and profit sharing plans have choices to make. The landscape is changing. Since its inception in 1981, 401(k) plans have evolved from employer directed accounts housed in one large pool of investments to individual employee directed accounts with varied and complex investment options. This has placed a great deal of administrative and record-keeping burden on the employer and related service providers. Similarly, the burden of selecting and managing investments has now shifted to the participant employees.

Who is an ERISA Fiduciary and Why Should I Care? As the primary regulator of qualified plans, the Department of Labor (DOL) is largely responsible for monitoring compliance under the Employment Retirement Income Security Act (ERISA) of 1974. ERISA governs the rules employers need to follow in operating retirement plans. One rule stipulates that the employer who creates or sponsors the plan is, by law, a fiduciary. Fiduciaries are required to operate the plan in a prudent and reasonable manner exclusively for the benefit of the employee participants and their beneficiaries. All too often plan sponsors lack the confidence and expertise to determine what is right for the plan. Regardless of individual circumstances, neglecting your fiduciary duties is a serious offense. Ultimately, the employer can be held personally liable for any fines, criminal penalties or damages as a result of errors, omissions, or regulatory action taken against the plan. The key word here is personal liability. And there is no practical manner to insure or eliminate that liability. Fortunately, there are ways that a prudent employer plan sponsor can mitigate that liability. How? By delegating responsibilities to prudent experts and ensuring those service providers are diligently managing those responsibilities.

Why Should I Review My Service Contracts? All service providers, whether they are third party administrators, auditors, record-keepers, custodians, investment managers or investment advisors, issue service contracts outlining their roles and responsibilities. The devil is in the details of those contracts—it pays to consider what degree of protection is provided to the employer. Most provider contracts do a good job of describing all of the services provided, along with compensation required. However, in many instances, those contracts also detail the terms and conditions under which the service provider will not be liable. When carefully scrutinized, the employer will discover that the liability is indeed personal and significant. The exception occurs when the service provider declares in writing that they are willing to act as a co-fiduciary. This has to be a declarative statement. By doing so, the service provider is acknowledging their legal responsibilities to serve the plan and a willingness to accept financial liability, along with the employer.

Which Fiduciary is Right for me and my Plan? Currently we are witnessing an evolution of service providers who are now willing and able to declare themselves as fiduciaries. The definition of fiduciary is covered in a few different sections of ERISA Code. Employers will want to pay special attention to Sections 3(21), 3(38), and 3(16). Sections 3(21) and 3(38) relate to investment advisors and Section 3(16) to record-keepers, third party administrators, etc. 24

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Keep in mind that services providers, especially those who are rendering investment advice, are moving towards a fee-for-service model as opposed to the existing commission compensation arrangement. The payment of commissions for investment services is still the prevailing arrangement in the smaller plan market place. This is a market that has been traditionally served by insurance agents and securities brokerage registered representatives. In order for someone to provide investment advice to a retirement plan and charge a fee for services, that individual must be registered as an Investment Adviser Representative (IAR) with a State or SEC Registered Investment Adviser (RIA) firm.

How Do I Meet the 408(b)2 Fee Requirements? According to ERISA Regulation 408(b) 2 made effective July 1, 2012, the employer is now responsible for receipt of a detailed annual breakdown of all fees being charged to the plan by all service providers. In addition, the employer must review those fees to determine if they are "reasonable" in light of the services being rendered. The DOL does not specifically define the term "reasonable fees". This is subjective criteria and will vary based upon the facts and circumstances of each case. The good news is that employers can go a long way towards meeting this responsibility by conducting an independent benchmarking of their plan fees. This is done by comparing your plan fees with a universe of fees being charged to plans of similar size (participants and assets), and in similar industry categories. Fortunately, there are now objective consulting services that have access to databases where all of this information is stored and analyzed. We recommend that employers do this benchmarking on an annual basis. It’s important to keep appropriate documentation of the findings in the employer files. Don’t forget to document any action steps taken in response to the findings.

Have a Look under the Hood of Your Plan Employers who come to terms with their fiduciary responsibilities have a distinct advantage when the DOL auditors come knocking. Many of these responsibilities can and should be delegated to prudent third party experts. It is now "best practices" to ask if those prudent experts are willing to assume co-fiduciary status in writing. If not, it may be time to review your current service provider agreements and determine their contractual obligations to your plan.

Charles Auerbach, CFP, ChFC, CLU, EA Wealth Strategies Group Charlie.auerbach@lpl.com www.WealthStrategiesGroupTN.com

Legal Challenges are Coming at HR Professionals from Every Direction

Thatâ&#x20AC;&#x2122;s Why Rainey Kizer Makes Your Business Our Concern The issues facing Human Resources executives are becoming more frequent, more challenging, and more complex each year. Whether you are navigating the Affordable Care Act, tracking changes in the Family Medical Leave Act, or staying current with the latest revisions in workersâ&#x20AC;&#x2122; compensation law, trusted attorneys are invaluable. This is why you need to get to know the employment-law attorneys at Rainey, Kizer, Reviere & Bell PLC. At Rainey Kizer, we make your business our concern. For more than 30 years, our AV-rated firm has advised businesses, non-profit organizations, and government agencies on all aspects of employment law; and represented our clients in state and federal courts and before state and federal regulatory agencies. If you would like to discuss how we can help you, please call.

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Countless Reasons to Add Voluntary Accident Insurance to Your Benefits Rising medical costs, affordability and guaranteed issue are just a few. By B LAKE ROGERS, JIMMY HINTON and RICKY REYNOLDS

ummer is over, and many families are slowly getting back into the swing of the school year. Your company’s employees are busier than ever making lunches, attending school functions, helping with homework and driving the children from one activity to another. Some of those activities – from football and soccer to dance and cross country – can involve accidents and injuries. And so can all of the driving to and from activities. When accidents happen, they’re often followed by a series of bills. Even with good health insurance, your employees can have out-of-pocket expenses including co-pays or co-insurance, ambulance charges and emergency room fees. One quick example: A man bought an accident policy for his family of four. Since both of his sons played football, he felt the purchase made good, practical sense. In the three years since he bought the policy, his family has filed four claims due to various injuries sustained by the sons — none of which were caused by football. He figures the policy has paid for itself a couple of times over by now. Stories like this one are not unusual. Voluntary accident insurance helps provide America’s workers with valuable financial protection. If you haven’t added this product to your benefits package yet, there’s no better time than now. Let us give you some of the best reasons to consider adding accident insurance to your benefits. Accidents happen. Help your employees prepare. The • National Safety Council reported in 2012 that every 10 minutes, more than 700 Americans suffer an injury severe enough to seek medical help. Although you can’t always prevent accidents, you can certainly be prepared in the event one occurs. Accident insurance helps provide your employees with the financial protection they need if an accidental injury happens to them or their covered family members. Accident insurance isn’t subject to health care reform • legislation. Because accident insurance isn’t considered medical coverage, it isn’t subject to the recent changes in health care legislation. That means no headaches for you, and no complicated rules or regulations to remember. 26

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• A ccident insurance offers your employees affordable protection. Workers can purchase accident insurance at their jobs for reasonable rates. For example, a basic employee-only accident policy (off-job) with a health screening benefit costs less than $5 per week (costs may vary by state). A two-parent family can purchase this same coverage for less than $8 weekly. If the premiums are paid through payroll deduction on a pretax basis, the weekly deduction can be even less. Accident insurance helps offset today’s rising • deductibles and out-of-pocket medical costs. There’s no question employees pay more in deductibles and out-of-pocket costs for their medical care today. In fact, the number of employees with deductibles of $1,000 or more in their health plans has tripled in the past six years (Kaiser/ HRET Survey, 2006-2012). Accident insurance provides lump-sum and daily benefits for covered accidents that can help pay the medical and nonmedical costs not covered by major medical insurance. This coverage can be used to cover lost income from not being able to work, rehabilitation services, caregiver fees, travel costs, deductibles and coinsurance. Benefits are paid directly to insureds, unless they specify otherwise, regardless of any other insurance they have. Accident insurance offers guaranteed coverage for • your employees. Most accident plans offer guaranteed coverage for employees, spouses and their eligible dependents without having to answer health questions. Everyone qualifies. You’ll love the simplicity of this product.

Need we say more? There are countless reasons to add voluntary accident insurance to your company’s benefits package — there’s just no good reason to wait. Take a look at how accident insurance can help you offer your employees valuable, affordable financial protection.

Blake Rogers Tennessee territory sales manager, Colonial Life & Accident Insurance Company tblakerogers@coloniallife.com or 615-696-6672

Jimmy Hinton Mississippi territory sales manager, Colonial Life & Accident Insurance Company jhhinton@coloniallife.com or 601-326-2954

Ricky Reynolds Arkansas/Oklahoma territory sales manager, Colonial Life & Accident Insurance Company rcreynolds@coloniallife.com or 501-246-8979

Wellness Southern Style

By ELISABETH A. DOEHRING

This is Part 1 of 3 articles on health and wellness trends in Tennessee, Mississippi, and Arkansas.

Human Resources on the Move

Deep fried in the Delta. Battered catfish in Hot Springs. Barbecue splattered football finery in the Grove. Fayetteville, Oxford or Knoxville. You name it. Times are changing for ways of eating and nutrition in the South. More studies show medical costs and disease statistics on the rise, and Mississippi along with neighboring Arkansas and Tennessee human resources (HR) professionals are taking note. Healthcare rates mount annually, and forward-thinking HR practitioners are seeking out best practices. HR is embracing and becoming more proactive in developing new approaches for employee wellbeing. The shift is on to build healthier workforces and more engagement. In turn employees are developing new approaches of how to take ownership for their own health and wellness.

Food Cost Trends

A newly released May 2014 report from RAND Health is eye opening. Research shows that Americans now have the cheapest food in history---this when measured as a fraction of disposable income. During the 1930s, Americans spent about one-quarter of their disposable income on food, dropping to one-fifth during the 1950s. Today, however, the numbers are more telling. Americans only spend about one-tenth of their disposable income on food. Instead of consuming less calories like their parents and grandparents, Americans are spending their smaller disposable income on faster prepared foods. Fast foods for faster times are laden with higher calories.

The Good Doctor Is In

Dr. Ann Kulze is on a mission. The South Carolina native is a physician, best-selling author, and renowned authority in the areas of nutrition, healthy lifestyles, and disease prevention. Dr. Ann has been featured on Dr. Oz Show, Oprah and Friends Radio, Time Magazine, NPR, WebMD, and CNN Radio. HR professionals along with their wellness team counterparts are seeking out Dr. Ann’s information and insight as they design healthier nutritional workforces. “Confusion on the nutrition front is at an all-time high,” she says. Dr. Ann avoids dwelling on and focusing on the negatives – heart attacks, strokes, type 2 diabetes, and obesity. Instead she strives to include all employees in wellness initiatives with a laser focus on high-risk individuals. Explains Dr. Ann, “ROI is highest with those at most risk.” People today don’t know how to prepare healthy food. The seventh generation Southern physician and trained nutritionist relates that employees have asked with a blank stare ‘How do I cook a vegetable if I don’t fry it?” Dr. Ann’s answer is simple: bring in a local chef to host healthy cooking demonstrations. Lunch and learns also provide employee teams with healthy eating habits and new recipes. “Free” also fits into Dr. Ann’s guidebook. For nutrition training she advocates bringing in a qualified expert into the workplace. This includes health care providers, county health department personnel, or educators provided by a company’s health insurer---many deliver at no cost to employers. Dr. Ann also advocates that employees as well as other family members be included in company cooking and education programs. In any family unit there is a always a “nutritional gatekeeper”. This is the person designated to cook and buy groceries for the group. “Nutritional gatekeepers” are ultimately responsible for around 70% of the foods consumed by family members.

“Let Food Be Thy Medicine”

Drilling down Dr. Ann looks at workplace environmental changes. Simple ideas make longstanding changes. A supportive and motivating worksite generates big dividends. HR professionals look now to food vendors and cafeterias/canteens to limit unhealthy foods like deep fried and hot dogs. Companies are following Dr. Ann’s guide of employee affordability and nutrition. She recommends offering healthy choices and pricing these food selections at a weekly discount. Salad bars make an ideal center point of a company’s eating area. “Pushing the positives---for example a simple sign that reads ‘Did you know that darky leafy greens are the healthiest food on the planet?’ is a plus,” says Dr. Ann. Healthy eating is contagious. Dr. Ann points to a recent study conducted in a public school cafeteria. Serving line staff set up two identical trays of carrots. A sign was placed on the first batch that read x-ray vision carrots. The second batch had no sign. Students gobbled up 40% more carrots from the first x-ray batch. “Those are the gems!” she explains. In addition instead of eating out the

good doctor advocates more “farm to table” and “farm to business” cooking at home for healthier employees and workplaces.

Link Between Nutrition and Health

According to Healthy Workforce 2010 Report published by Partnership for Prevention, workplace health enhancement initiatives that concentrate on healthy behavior changes have been shown to yield a $3 to $6 ROI for each dollar invested over 2 to 5 years. Nutritional education is one of the most effective and lowest cost interventions. Solid data from WELCOA demonstrates that worksite health promotion improves health behaviors, decreases health risks, and provides a positive return on investment. Diet-related chronic diseases are the single greatest cause of adult morbidity and mortality. Obesity is the single biggest driver of healthcare costs. Most employees are largely in the dark about what comprises a healthy diet based on the latest science. Confusion on nutritional eating and in the media is at an all-time high. Dr. Ann notes three key areas in which HR professionals will make the fastest and most significant impact for increased productivity, employee health, and wellness. One is a focus on education. Two is adopt an environmental change---such as removing all sodas from vending machines. Third is to create a policy. This equates to a significant shift and change in how companies shape and motivate their employees. By making health and wellness part of actual company policy the program becomes etched in stone. It is now a vital part of the work culture. Policy also would specify that company-related gatherings and outings include healthy food choices.

Arkansas, Mississippi and Tennessee By The Numbers

According to the American Journal of Health Promotion in 2013, obese employees cost companies $2,700 more in direct medical costs per year. Numbers for the Deep South are more telling. Mississippi health obesity rates are high. According to Trust for America’s Health in 2011 Mississippi ranked 51st in the nation for obesity. In addition the same source conducted research on “State-by-State Adult Obesity Rate Projections for 2030”. Results are staggering. Mississippi projections rank #1 at 66.7%. Tennessee projections rank it at #4 at 63.6%. Arkansas comes in projected at #10 at 60.6%.

Elisabeth A. Doehring, CWWPM,GPHR, PHR President, North American Center for Worksite Wellness™ nacworkwell@gmail.com www.HRProfessionalsMagazine.com

A Lower Better

Cost,

Performing Alternative to the Typical

401(k) Plan Interview by CHIP TAULBEE

The best advice to give someone about managing his or her 401(k): don’t. A poorly performing 401(k) is often the result of bad management by its owner. Throw in the high fees that accompany many plans, and the result is that many employees become so dissatisfied they choose not to participate, often limiting the amount other employees can save and resulting in a rewarding employee incentive that goes unused. Brian Bush, Executive Vice President Portfolio Manager at Little Rock, Ark.,’s Stephens Capital Management (a wholly owned subsidiary of Stephens Inc.) offers some innovative strategies for helping employees make the most of their 401(k)s.

How did employees come to bear so much responsibility for their retirement investment strategies? Over the last 30 years the U.S. has migrated from a defined benefit to a defined contribution nation, and we essentially took the responsibility for managing individuals’ retirement out of the hands of trustees, plan sponsors and professional money managers, and transferred it into the hands of the average worker. And we did that without adequate training, without adequate disclosure. The result is that 30 years later we have scores of people who simply are not prepared in any way for their retirement.

Are employees capable of managing their 401(k)s? Originally many 401(k)s simply offered a menu of different investment options, and individuals were left to their own devices to allocate or select among that menu. But studies show that participants don’t have the knowledge, don’t have the desire and don’t wish to try to make those decisions. They’re overwhelmed by the idea of trying to pick an emerging markets fund or a government bond fund, for example. They don’t even know what they are. As a result of the confusion, participation levels have not been what employers would like. To improve participation employers tried giving employees more investment options. But what we’ve seen is the more options you give people, the more confused they become and the lower the participation rate.

So why not just educate employees on how to manage their 401(k)s? Many companies have tried that. They invest in websites and other educational tools. 28

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But what we found is employees spend more time planning their summer vacation than they do managing their 401(k). What good are those tools if they simply don’t have the interest, time or knowledge. They don’t want to do it, and usually when they do it they don’t do it correctly.

What common mistakes do people make in managing their 401(k)s? The most common mistakes are not allocating their assets properly. The average plan participant right now invests in about five asset classes. You can’t adequately diversify an investment portfolio using five asset classes. So number one, they’re not properly diversified. The other thing is because they’re uninformed or not confident in what they’re doing, during periods of extreme market volatility they often panic and cash out. They don’t know what they’re invested in. They don’t know why it’s going down. They just know it’s going down. So they get out. Then they inadvertently make matters worse by trying to get back into the market, often when it is at a peak. Their timing of the market is really poor. Also, most plans offer participants the opportunity to rebalance their portfolios automatically, but they don’t know it and they don’t do it. They may make an asset allocation decision and then put it on autopilot, and as the market changes and some assets outperform others, pretty soon their asset allocation is out of whack.

So if employees can’t effectively manage their 401(k)s, and they don’t want to be overburdened with information and choices, then what? The next step in the evolution of the 401k was to give employees some asset allocation portfolios to choose from. Those might be conservative, moderately conservative, aggressive, very aggressive and so on. And that’s been an improvement.

But you still have employees making independent, perhaps uninformed decisions about their 401(k)s. Are there any improvements that could be made to that model? What we’ve done is take it one step further. We’re offering 10 different asset allocation portfolios, but our staff actively manages these asset allocation portfolios. We manage the composition of those portfolios throughout time. The employee makes the decision about how much risk and volatility they can withstand, but they’re not in a position – nor do they want to be – to decide that if, say, interest rates are likely to rise they need to shorten up the duration of their fixed income portfolio. They have no idea what that means or how to do it, and in our actively managed portfolios we’ll do that for them. It’s a managed risk-based portfolio as opposed to what might be a static portfolio.

What assets comprise these portfolios? Within those portfolios there could be as many as 13 different asset classes that we’re allocating to across equity, fixed income and we can even add alternative asset classes (gold, for example) if we thought they were appropriate. We adjust the portfolios over time based on the market outlook and the macro outlook that we have developed.

How do employees choose which options are right for them? The risk profile for each employee is established through two means. A risk-based questionnaire asks them a series of questions such as how many years they have until retirement and how much volatility they can stand. We can get a pretty good idea what their time horizon is, how much risk they can stand and how much volatility.

We are also available to meet with the individual employee. In that meeting we can ask them questions about their personal financial situation, like where they are in their kids’ college planning, what are they thinking they’re going to do in their career. We can get down to a very personalized discussion in helping them select a model that’s right for them.

So there’s a personalized, human element to this. Right. We give people who might not be able to access our investment management individually – because they don’t have the assets outside their 401(k) plans – access to professional money management inside their 401(k). You could have a factory employee who is getting the same management in his or her 401(k) that we’re providing to very high net worth clients for whom we manage separate account portfolios. That’s what we’ve tried to design in our Spectrum product, a way to really open up that access to everyone and not just to truly highly net worth individuals.

Most 401(k)s are invested in actively managed mutual funds. Are there any better alternatives? The statistics show that index funds outperform 80 percent of all actively managed mutual funds. An index fund is a portfolio of stocks or bonds constructed to match or track the components of a market index, such as the Standard & Poor’s 500 Index. They offer better performance,diversification, low operating and trading expenses, and exposure to specific asset classes.

What should human resources managers and other executives consider when deciding on a 401(k) sponsor? They want to find the most cost efficient 401(k) platform possible. The big concern that plan sponsors are addressing now is fees and expenses. One of the ways we’ve addressed that in our Spectrum product is we are using exclusively low-cost index funds. On average, index funds are going to have approximately 20 basis points (0.2 percent) of

fees and expenses. That versus the average actively managed alternative in a 401(k) plan that has about 60 basis points (0.6 percent) of fees and expenses. So we have a lower-cost investment solution that we believe provides better performance than what’s currently available in most of the plans that are out there. From an employer’s perspective, we’re addressing the fee issue. And we’re also giving them better performing investments. Then we use our asset allocation approach to build better portfolios than the individuals could build for themselves.

Are there any other considerations? Education is also important. And education is not handing employees prospectuses and directing them to a website. That’s been too much of what’s happened in the past because employers were worried about fiduciary responsibility. They didn’t want to be in a position where they were advising employees because if things didn’t work out they might have liability. What they’ve realized is that is not a successful approach. Employees need more advice, and that’s where we can help. We think the two things that matter most are cost and professional advice. We’re trying to bring professional management to the 401(k) market much in the same way professional management exists in the defined benefit market. Brian Bush is a FINRA Registered Representative (Series 7 & 63), a General Securities Principal (Series 24), a General Securities Sales Supervisor (Series 9 & 10), and a Registered Investment Advisor Representative (Series 65). He has been with Stephens since 1989.

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The Evolving Nature of Worksite Wellness: Contingent Incentives Move to the

By WILLIAM H. WEST, M.D., CHAIRMAN, the PREVENTION GROUP

or over three decades, U.S. employers have made a significant investment in worksite wellness. Progressive CEOs have championed wellness as a foundational value of their corporate culture. Wellness program directors have deployed health risk questionnaires, biometric testing, smoking cessation programs, weight management groups and fitness challenges – all now familiar components of the workplace environment. There are fundamental reasons that corporate America has found worksite wellness compelling: 1) healthcare costs continue to escalate; 2) lifestyle choices are responsible for a staggering 70% of our healthcare costs; 3) holistic employee wellness is a fundamental corporate asset; and 4) employees spend many of their waking hours at work. Hopefully a culture of wellness at work is destined to have a favorable impact on lifestyle choices at home. Given these arguments for worksite wellness, erosion of employer-based insurance might threaten one of the most effective battlefronts in the confrontation of health cost fundamentals. Despite the strong rationale for traditional wellness, there is an ongoing debate regarding its actual return on investment (ROI). Most Americans know firsthand that health behavior change is a daunting task. While many of us aspire to healthier lifestyles, forces of nature push back against our best intentions. Health risks gather with age, fueled in part by the weight gain associated with the aging process. Health risks percolate within the genome, reflecting familial propensities for the development of abnormal lipids and elevated blood pressure. While a culture of wellness might delay or even prevent the development of health risks in a significant percentage of the population, another sizeable percentage of employees are slowly and surely developing chronic diseases. This problem is compounded by the fact that wellness and healthcare live in separate silos. The average wellness director and the typical primary care provider have minimal understanding of their counterpart’s activities and role. 30

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Leading Edge

Enter Contingent Wellness: “From Know your Numbers” to “Own and Manage Your Numbers” While a culture of wellness remains the mainstay of wellness programs, the rise of “contingent” or “results-based” incentives is a rational response to the realities of individual health risk. This movement has its roots in the tobacco surcharge. Given the well-documented disastrous impact of smoking on diverse aspects of health, many employers decided decades ago that employees who smoke should pay a larger share of their health insurance cost. Efforts to discourage tobacco use have included the premium surcharge, steadily rising taxes on tobacco products and a pervasive cultural shift that has made smoking illegal in public spaces and politically incorrect in every corner of society. The percentage of Americans who smoke has declined from more than 45% of U.S. adults in 1945 to 18-20% today. Now a new component of the healthcare law permits the tobacco surcharge concept to be applied to indicators of general health status. While a focus on "weight loss,” is giving way to a focus on “weight maintenance” or "weight management,” the health impact and increased medical costs associated with morbid obesity are clear and the tendency for weight gain to accelerate with age is well known. One in three Americans are pre-diabetic and destined over time to develop full-blown diabetes. One in three Americans has unhealthy blood lipids and another significant proportion of the population is living with dangerous elevations of blood pressure. The cumulative impact of our overall health status suggests an undeniable bottom line: Americans must own and manage their fundamental health risk to control our healthcare destiny. “Contingent” or “results-based” incentives are rapidly moving to the wellness front line because they provide a new roadmap for a system in desperate need of both individual accountability and population health risk management.

Controversy and Compromise: The HERO Consensus Statement and ACA Regulations of June 2013 Signed into law on March 23, 2010, Section 2705 of the Patient Protection and Affordable Care Act allows employers to charge lower health plan premiums or provide other financial incentives to employees who meet health targets or participate in health promotion programs to improve their health. This component of the healthcare law was quickly embraced by progressive employers who saw contingent incentives as the missing component of the wellness landscape. At the same time, patient advocacy groups signaled their alarm: would premium differentials based on health status impact the poor or disadvantaged? Would patients with established heart disease or cancer pay a disproportionate price? These concerns led to a consensus conference where all sides shared their perspective. Proponents of contingent wellness expressed their optimism that the mechanism was finally at hand to focus the workforce on the fundamental importance of blood pressure, blood glucose, cholesterol and other health parameters. Skeptics expressed their concern that the concept would land unequally on a culturally diverse workforce. Thoughtful commentary argued for “reasonable alternatives” including provider-designed progress goals. Fortunately this debate resulted in consensus. Final wellness regulations were published in June, 2013. The basic regulations have been broadly publicized: the reward pool is limited to 30% of the individual premium as of 2014 (30% of the employee/spouse premium if spouses participate; although, many employers are selecting reward pools well below the maximum allowed percentage). An additional reward pool amounting to 20% of the individual premium can be attributed to tobacco status. Opportunities for testing must be offered on an annual basis. There must be a well-publicized mechanism for appeals and participants must be offered well-“reasonable alternative standards” (see below). Rewards must be available to all similarly situated individuals. Many employees are now familiar with the contingent incentive process. Employers typically begin by choosing health parameters and specific targets for each parameter and scheduling a worksite screening. Independent third-party incentive managers translate screening results into reward values and communicate the outcome to employees. Employees failing to meet targets have a 30-day period to appeal the results and a 6 month window to demonstrate progress. The entire process recycles on an annual basis. While occasional employee populations have objected to this process as an unwarranted invasion of privacy, most employees recognize that a minority of employees with self-induced health risks trigger higher rates for the entire company workforce. The American workforce is ready to see each coworker take responsibility for their health and pay their fair share.

if potential owners are given new roadmaps to understand and perfect their ownership. Screening and immunization can deliver a huge dividend, but only if screenings and vaccinations are widely available and efficiently delivered. Health behavior change can prevent the need for chronic medication, but only if lifestyle changes can be sensibly converted into long-term habits. Prescription management can avoid or alleviate the ravages of chronic disease, but only if prescriptions are affordable and available. Americans’ healthcare future requires a coordinated combination of all of the above with every citizen recognizing the important rule he or she can play in each part of the process. Employers can make a major contribution through the judicious embrace of health-promoting incentives – and by asking more of their incentive vendors than the simple manipulation of health premium data.

William H. West, M.D., Chairman, the Prevention Group

Contingent incentives are on the move: the proportion of companies with 500 or more employees deploying contingent incentives has increased from 11% to 24% between 2011 and 2013, and an additional large proportion of employers are considering adopting the strategy within the next few years. Contingent wellness will face the same challenge currently facing traditional programs: can resultsbased incentives impact medical claims? Will there be an ROI? This new incentive strategy will come to naught if it only results in a shift in healthcare costs with no impact on overall health. Will differential premiums motivate employees to focus on their individual health status? Much more importantly, will they motivate at risk employees to take steps to improve their health? There are significant roadblocks between the premium shift and health improvement, not the least of which is the human affinity for procrastination and denial. Inefficient and expensive access to care only reinforces this human inclination to postpone and delay. No busy employee relishes the thought of spending non-productive time away from work in a provider waiting room. Even more concerning is the fact that half of all Americans have no established primary care provider. Responsible vendors of contingent incentives must do more than maintain a spreadsheet of health outcomes. They must do more than report premium shifts and refer at risk employees to third party web sites. Quality incentive programs must be primary care savvy, helping at risk participants efficiently navigate the healthcare system while giving those same participants the resources to help themselves. We are in the midst of a multifaceted reengineering of our healthcare system and the emerging system must embrace a simple truth: we are short on providers, long on lifestyle risk and quickly reaching the point where individuals must take ownership of their health. At the very same time, many Americans lack the skills and resources to become effective health risk owners. Americans who decline ownership -- who persistently do nothing -- will be asked to pay more. That may be rational and fair – but only

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6 Must Do’s when Delivering

By HARVEY DEUTSCHENDORF

Bad News

“Bad news isn’t wine. It doesn’t improve with age.” ~ Colin Powell ~ The Penn State Sandusky Sex Scandal is just one of many examples of organizations handling bad news the wrong way. From scandals to business closures and layoffs it seems that delivering bad news is one of the most difficult things to do for an organization. There are moral and ethical implications of how companies handle difficult situations that can forever paint organizations in either a positive or negative light. While it is never pleasant, there are guidelines that when followed will help keep a bad situation from getting worse.

Get in front of the story immediately Delays in reporting bad news almost always make the situation worse. Social media picks up the story and the rumor mills spin their own version of events. The situation inevitably gets uglier. The organization is then playing the role of catch up, reacting to and defending against accusations that may not have taken hold had they been the first to put out the news. Getting the story out first gives the people delivering it an opportunity to come out with a well thought out response, instead of reacting to the inevitable fallout after they are caught playing catch up. If someone else breaks the story first, the organization will lose credibility and there will be a lack of trust in anything they put out afterwards as it will be viewed as an attempt to cover up and limit the damage. The best defense in this case is always a good offense. Get the story out first.

Face the truth head on and prepare beforehand The bearer of bad news is never welcomed. As a result many people in organizations fail to report situations that are deteriorating to their superiors. This leaves the people in charge in the dark until the actual crisis strikes. Organizations can do a better job of encouraging people to keep their superiors informed by publicly stating they want to know what is going on, even if it isn’t good news and rewarding staff that keep them in the loop. Having pending notice of a bad news situation gives those in charge crucial time to prepare in advance.

Tell the whole story Often, out of fear or an attempt to minimize damage, the initial story leaves out crucial facts. In almost all cases these missing pieces are found out, making the party that released the story look at worst like they are hiding something, and at best as being incompetent. This will leave the organization in the position of having to deal with the additional burden of explaining why they didn’t release all the information. This only compounds the problems facing them. Releasing all the information at the onset will keep the story’s newsworthiness amount of time to a minimum. Nothing keeps a story going like the suspicion there is more to it that is not being told.

Demonstrate accountability and take responsibility Often when bad news breaks there is a great deal of fear that someone will be scapegoated to take the blame in order to avoid damage to the overall organization. Whether myth or reality, this person is often perceived to be someone of lower rank who is sacrificed to save the reputations and jobs of those above them. This causes serious breakdowns in trust and morale amongst those working in organizations and a culture of everyone watching their backs and looking out for themselves. The organization gains a reputation of not standing behind their staff which will have negative implications for their ability to attract and retain good people. Social media and the rumor mills thrive on scapegoating stories and will keep bad news going much longer than if the organization takes full responsibility. 32

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Show respect and dignity to everyone involved A crisis situation effects many people apart from those directly impacted. While every organization pays lip service to treating their people with dignity and respect, their walk often is out of step with their talk. The people who are left behind will be watching very closely to see how staff that are laid off are treated. This will impact their motivation on the job and loyalty to the company. This will also have a negative impact on the organization’s ability to attract quality people who want to work for them in the future. Customers and clients will also be aware of how people are treated in the organization, which will impact whether they choose to do business with them in the future. Not only is treating people fairly and respectfully the right thing to do, it is good, in the long term, for the business.

Communicate positives, solutions and follow up Important questions need to be answered; to completely identify what the problem is, how it came about and what is going to be done about it? Is there anything planned in the future to keep it from happening again? Is there an upside to the situation that can be brought up? What is being done to help the people that have been negatively affected? Are there lessons that have been learned from this that will make things better in the future? When promising changes, it is important to set timelines and followed up on with regular progress reports. If an employee makes an honest mistake, are they treated fairly and given another chance because they often become an ambassador for the organization. The reputation of the organization will be positively elevated in the eyes of their own people, stakeholders and the public.

Harvey Deutschendorf Emotional Intelligence Expert, Speaker, and Author of The Other Kind of Smart Harvey.eiguy@shaw.ca www.theotherkindofsmart.com Twitter@theeiguy

EMPLOYERS LAWYERS

Working Together in Mississippi Ogletree Deakins lawyers in Jackson, Mississippi work closely with Human Resource professionals, business executives, and inhouse counsel to anticipate, prevent and resolve legal issues in the workplace. Our experience and knowledge of our clients’ industries and legal challenges enable us to serve their interests effectively and efficiently.

We remain committed to providing our clients with an insider’s view of the workplace issues of the day. With more than 650 attorneys in more than 40 offices located in the United States and Europe, the firm combines local knowledge and strength with national resources.

Jackson office attorneys L-R: Timothy Lindsay, Robin Banck Taylor, Kristi Haskins Johnson, Bert Ehrhardt 100 Renaissance • 1022 Highland Colony Parkway, Suite 200 • Ridgeland, MS 39157 • 601.360.0995 www.ogletreedeakins.com LAW FIRM OF THE YEAR Litigation – Labor & Employment LAW FIRM OF THE YEAR Employment Law - Management

BUYER

BEWARE: ASSET PURCHASERS MAY FACE LIABILITY FOR SELLERS’ LABOR AND EMPLOYMENT LAW VIOLATIONS By M ICHAEL S. MOSCHEL and STEPHANIE A. ROTH

or years, conventional wisdom has held that buyers of a business are protected from the sellers' liabilities if the sale is structured as an

asset purchase. Unless the buyer specifically agrees to assume a liability, the liability remains with the seller. This limit on liability is, in fact, one of the key benefits to an asset purchase transaction as compared with a stock sale. As a result, time spent on due diligence – undertaking a comprehensive review of the target company with an eye to assessing its assets and liabilities – is oftentimes given short shrift in an asset purchase. Increasingly, courts are applying the equitable doctrine of “successor liability” to asset purchasers and are holding buyers responsible for the sellers’ liabilities under federal labor and employment law. Thus, HR professionals should not assume the seller will automatically retain liability in an asset purchase, and they should actively engage in due diligence matters as part of an asset purchase transaction. Successor liability for employment law violations has been in the news again recently. Two U.S. Courts of Appeals have recently applied the doctrine of successor liability to claims brought under the Fair Labor Standards Act. These decisions have real-world consequences for HR professionals who participate (or should) in diligence inquiries in anticipation of corporate acquisitions. As employers continue to reshape their workforces using a variety of employment and contractor relationships, the extension of successor liability to FLSA claims raises the stakes for HR professionals asked to consult on the potential risks associated with acquisitions. Labor and employment issues rarely drive deals, but they can put the brakes on them. Recognizing a potentially misclassified workforce – or any labor and employment issue - early in a deal provides the parties time to address the issue, assess their interest in the deal, set the sales price, and consider a specific indemnification.

FEDERAL COMMON LAW DOCTRINE OF SUCCESSOR LIABILITY Federal labor and employment law seeks to foster labor peace and to protect workers’ rights. The federal common law doctrine of successor liability developed to ensure those purposes are not thwarted by the sale of a business, over which employees have little influence and control. Underlying the doctrine is the assumption that labor and employment liabilities should be addressed in negotiations over the purchase price. In the absence of the doctrine, a target company could sell at an artificially-high purchase price that does not account for employment-related liabilities, then quickly dissolve the corporate entity so as to avoid those liabilities, leaving the employees with no practical alternatives for recovery. Successor liability incentivizes the buyer to ferret out potential liabilities and negotiate either a lower sales price or an agreement by the seller to indemnify the buyer against such liabilities. 34

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Successor liability is an equitable doctrine; it arises from an interest in fairness. The federal common law doctrine of successor liability was initially applied by the National Labor Relations Board when it required asset purchasers to recognize and bargain with unions representing the seller’s employees. The NLRB and courts extended the doctrine to hold asset purchasers liable to remedy sellers’ unfair labor practices. Subsequently, courts extended the successor liability doctrine into the employment law arena, including Title VII, the ADEA, and the FMLA, among other laws.

FACTORS CONSIDERED WHEN ASSESSING SUCCESSOR LIABILITY Courts apply a multi-factor test to determine whether an asset purchaser should be found liable as a successor. Courts generally apply factors such as the following when evaluating successor liability: (1) the purchaser’s notice of the liability; (2) the ability of the seller to provide relief; (3) whether there has been a substantial continuity of business operations; (4) whether the buyer continues to utilize the same plant or facility; (5) whether the buyer continues to employ substantially the same workforce; (6) whether the buyer continues to use substantially the same supervisory personnel; (7) whether the same jobs remain under substantially similar conditions; (8) whether the employer continues to use the same machinery, equipment and methods of production; and (9) whether the purchaser continues to produce the same products or provide the same services.

No single factor is necessarily dispositive, but notice to the buyer of the potential liability is a crucial factor. Without notice, the successor cannot make an informed decision about whether to enter into a purchase agreement and, if so, how to structure the purchase agreement. Be aware that notice need not be actual; constructive notice can be imputed when a buyer hires a member of seller’s management with knowledge of a claim or when the buyer fails to perform reasonable due diligence. Unlike other liabilities in an asset purchase, the buyer cannot disclaim successor liability for claims brought under most federal labor and employment statutes, a fact highlighted in the Seventh Circuit case that extended successor liability to FLSA claims. The terms of the asset purchase at issue in that case specifically provided: (1) the transfer of assets was to be free and clear of all liabilities the buyer had not assumed; and (2) the buyer would not assume any liabilities the seller might incur in a pending FLSA suit. Nonetheless, the court held the buyer was liable for the seller’s FLSA violations because there was continuity of operations between the buyer and the seller and the buyer had notice of the potential liability.

HR PROFESSIONALS ARE WELLPOSITIONED TO IDENTIFY AND ASSESS POTENTIAL LIABILITY HR professionals are in a strategic position to identify potential diligence issues before those issues risk derailing a deal. For example, the inclusion of FLSA claims among those subject to the federal common law doctrine of successor liability means it is increasingly difficult for buyers to avoid liability for sellers’ improper classification of workers as exempt or as independent contractors. As an HR professional, your voice is critical in the diligence process. If you and your team are conducting diligence inquiries, be certain FLSA issues are on your checklist. Ask the target to identify each independent contractor and exempt employee. If you have questions or concerns about any position, follow up with a request for supporting data, such as contractor and consulting agreements, compensation information, job duties, and necessary qualifications for the position. If you are not conducting diligence yourself, keep these issues in front of those persons tasked with diligence. Not only will you save yourself the potential headaches of addressing misclassification issues on the ground as you attempt to integrate – and possibly reclassify - workers following the sale, but you will also alert management to potential red flags in the deal that might change their understanding of the attractiveness of the deal or the terms under which they will agree to it.

Michael S. Moschel, Member Bass, Berry & Sims PLC Nashville mmoschel@bassberry.com www.bassberry.com

The Kullman Firm has engaged in the practice of labor and employment law on behalf of management since 1946. Upcoming Seminars (Please check our web site for more information) 09/18/14 Jackson, MS Labor & Employment Seminar

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Offices in Louisiana, Mississippi and Alabama. Stephanie A. Roth, Associate Bass, Berry & Sims PLC Nashville sroth@bassberry.com www.bassberry.com

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JOB FAIR

1 Line forming outside Benjamin L. Hooks Central Library in Memphis for Job Fair 2 Steve Rimmer, PwC, with SHRM-Memphis Volunteers 3 Pat Myers, Workforce Investment Network; and Julieanna Walker, Graduate Memphis 4 Pat Myers, Workforce Investment Network; National Guard representatives, and Steve Rimmer, PwC 5 Job Fair attendees in staging area completing paperwork 6 Chip Holliday, Pat Myers, Workforce Investment Network, and Audrey May 7 Job Fair attendees visiting employer booths 8 Job fair attendees completing job applications 9 Job fair attendees visiting employer booths

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What has OCAHO been doing in the First Half of 2014?

Reduction in Penalties The main reason for the reduction in penalties was OCAHO’s finding that the penalties were excessive. This finding was made in at least five cases. Of those cases, OCAHO cited the Small Business Regulatory Enforcement Fairness Act as a determining factor in finding the penalties excessive in two cases, New Outlook Homecare and Crescent City Meat Company. Other factors in lowering the penalties were inability to pay and the “principle of proportionality.”

By BRUCE E. BUCHANAN

The first thing that stands out about the decisions issued by the Office of Chief Administrative Hearing Officer (OCAHO) from January through July 2014 are the significantly fewer number of decisions compared to 2013. To date, there have been only nine decisions issued against employers in I-9 penalty cases while in 2013, there were 30 decisions. (A few employers had two or more decisions rendered on the same matter, which is counted as a single decision for purposes of this article.) However, in 2012, there were only 11 decisions.

2014 OCAHO Decisions The following decisions have been issued in 2014 along with penalties sought by ICE and penalties assessed by OCAHO: Name

Penalty Sought By ICE

Two for Seven d/b/a/Black and Blue Restaurant

OCAHO’s Decision

$264,605

$88,700

Minerva Indian Cuisine

$77,000

New Outlook Homecare

$21,000

$9,450

M&D Masonry

$332,813

$228,300

Golf International d/b/a Desert Canyon Golf

$113,742

$57,650

Crescent City Meat Company

$14,025

$6,750

Century Hotel Corp. d/b/a Scottsdale Thunderbird Suites

$55,000

$25,500

Senox Corp.

$67,000

$44,800

Jalisco’s Bar and Grill

$26,668

$13,000

As the above chart demonstrates, OCAHO lowered ICE’s proposed penalties on average by 43.3%, which is similar to the reductions in 2013 and 2012. Every case but Minerva Indian Cuisine saw a substantial reduction in these penalties. The industries involved in these decisions were hospitality – five; food preparation/manufacturing – two; construction – one; and health care – one. The most common industries to be inspected by ICE are hospitality, construction and manufacturing. It is interesting to note that six of the nine employers involved in the OCAHO decisions were classified as small employers – usually defined as under 100 employees. The only medium to large employers were M&D Masonry, Century Hotel Corp, and Senox Corp.

Common Types of I-9 Form Errors In seven out of nine cases, the employer failed to prepare or timely prepare I-9 forms for the employees. This is usually the most common error committed by employers in cases litigated before OCAHO. In six out of the nine decisions, the employer failed to properly ensure completion of Section 1 and/or failed to complete Section 2 of the I-9 form. These errors included: failure to ensure the status was checked in Section 1; failure to ensure Section 1 is signed; failure to ensure the alien number was provided; failure of the employer to sign Section 2; failure to provide a document number and/or issuing authority in Section 2; failure to list documents from List B and/or C; and failure to complete any information in Section 2. In one case, Jalisco’s Bar and Grill, OCAHO found the employer to have “knowingly” employed an unauthorized worker because that employee told his employer that he was unauthorized. However, in two cases, Jalisco’s Bar and Grill and Minerva Indian Cuisine, OCAHO found the circumstances suggested the employers knowingly employed undocumented workers but the facts did not conclusively prove such. 38

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Significant Holdings There were a few significant holdings in the cases. Notably, OCAHO confirmed, in Black and Blue Restaurant, that employers will not normally be held responsible for having I-9 forms for employees working three days or less. Second, OCAHO holds ICE to a fairly high standard in proving an employer “knowingly” employed undocumented workers. This was established in Jalisco’s Bar and Grill, where OCAHO would not accept evidence that the employer knew the brother of an undocumented worker was undocumented just because it was aware of such on the other brother. Third, also in Jalisco’s Bar and Grill, OCAHO confirmed the fact that when an employer’s I-9 forms are destroyed or damaged, the employer should promptly draft a memorandum on the applicable circumstances and should not backdate the I-9 forms that are completed to substitute for the damaged/destroyed I-9 forms. Lastly, OCAHO stated, in M&D Masonry, that the pre-signing of I-9 forms by the employer in Section 2 is wrong since the employer is not verifying the accuracy of the information in Section 2.

Takeaway As I have stated in prior articles, it is important for all employers, large and small, to conduct annual self-audits under the direction of an immigration compliance attorney, and have a written I-9 Compliance Policy. If employers take both of these actions, their chances of liability for I-9 form violations will be significantly reduced.

Bruce E. Buchanan, Attorney Siskind Susser P.C. bbuchanan@visalaw.com www.visalaw.com