Latest Employee Perk: Paying Down Student Loans

The 2016 election campaign has highlighted a huge problem in the United States: student loan debt.  Experts estimate that there is an outstanding $1.2 trillion in school debt hanging over young workers like an ominous cloud.  Some progressive employers are coming to the rescue. For example, according to a recent Fortune Magazine article, financial services firm Natixis Global Asset Management identified that only 1 in 4 Americans were contributing to 401(k) or other sponsored retirement programs.  Their deeper research revealed the primary reason for this phenomenon was that workers were using any excess disposable income to pay down student loans instead of contributing to retirement programs.  Natixis decided to do something about it.  They established a company-wide program which pays $5,000 towards student loans for employees who work at the company for five years.  An additional $1,000 annually is available for an additional five years.

According to the Society of Human Resource Management (SHRM), a meager 3% of employers had formal student loan reimbursement programs, but that figure is expected to grow.

Given that federal social security is completely unsustainable with no solution even on the table, there is an increased cry by politicians for employees to participate in company-sponsored plans. Yet Congress has failed act on this issue.  The 2016 presidential election campaign has spotlighted the issue that the U.S. needs to better support higher education rather than force students to go deeply into debt to acquire an education that ultimately benefits society as well as the individual.

Interestingly, some employers are using their student loan reimbursement program as a competitive advantage.  For example, when PwC (one of the “Big 4” accounting firms) conducts college recruiting, it underscores the fact that it pays employees’ student loans. Not surprisingly, it has found this perk to be a tremendous differentiator in attracting talent, particularly millennial talent.

The current tax laws pose a challenge because when an employer contributes towards paying off student debt, it is considered taxable income to the employee.  Many argue, such as Natixis, that it is long overdue that Congress step up and at least make these loan reimbursements tax-exempt.  Currently, there is a pending bill in Congress, sponsored by Republican Rodney Davis of Illinois and Democratic Senator Mark Warner of Virginia, which would extend the tax exclusion currently applicable to employer- paid tuition assistance to loan reimbursements.  This would at least provide up to $5,250 per year in non-taxable student debt relief under reimbursement programs.

Significance

This new kind of perk points out several considerations for employers.  Employee concerns and issues are evolving, particularly for millennials.  Innovative perks such as student debt relief, which shows a deeper understanding of the challenges faced by talented millennial workers, can be turned into a competitive advantage these workers find most attractive.  Many employers believe that Congress should act and the government should better support education.  In the meantime, progressive employers can step in and fill the void if they wish to attract and retain the best and the brightest in the ever competitive market for talent.

By: Paul Finkle, CMC, SPHR – President

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services

Top 5 Employee Handbook Updates for 2016

The first calendar quarter of 2016 is almost over. If you are like most employers, your Employee Handbook still has 2015 date on it – or even an older one.  Keeping an employee handbook up to date is challenging, particularly if you have employees working in multiple states. Nevertheless, an employee handbook is one of the most important documents to communicate policies and to protect against employment liability.  If your revised handbook is “still in progress” here are the top 5 employee handbook updates to consider for 2016 for California.

1. Expanded Rights for LGBT Community

More than 20 states and municipalities have recently expanded their anti-discrimination protections to include trans-gender individuals. In addition, the EEOC has asserted that gender identity is included within Title VII of the Civil Rights Act of 1964. In 2015 a Florida company paid $150,000 to settle one of the first two lawsuits ever filed by the U.S. Equal Employment Opportunity Commission (EEOC) alleging sex discrimination against a transgender individual.  In addition, in 2015, The United States Supreme Court held that same-sex marriage is legal in all 50 U.S. states. Same-sex spouses are now entitled to receive the same benefits that opposite-sex spouses receive, including spousal benefits under the Family and Medical Leave Act (FMLA) and dependent coverage under an employer’s group health plan.

2. Smoking and Marijuana Use

While possession of marijuana remains a federal crime, state laws on marijuana vary widely and court interpretations of such laws lag far behind, leaving employers in unclear territory.  Some states now prohibit employers from firing an employee based on a positive test for marijuana if the employee holds a valid medical marijuana registration. Other states limit disciplinary action if there is no evidence of work-related impairment, even though the employee tests positive for the drug.  Finally, if your handbook does not address e-cigarettes, it’s time to revise your policies treating e-cigarettes like any other tobacco product.

3. Discrimination, Retaliation and Whistleblower protections

In California, AB 1509 amended Labor Code sections 98.6, 1102.5, 2810.3 and 6310, expanding whistleblower and anti-retaliation protections to an employee who is a family member of a person engaged in protected conduct or who makes a complaint protected by the state Labor Code. The law also extends joint employer liability, expanding the definition of “employer” to include “client employers” (i.e. companies who contract for labor). Furthermore, AB 987 now prohibits employers from discriminating or retaliating against employees who request an accommodation for a disability or religion, regardless of whether the request was granted. The law clarifies that the act of making the request is protected conduct and is actionable, separate and apart from the protected-class status of the employee.

4. California Fair Pay Act

The California Fair Pay Act (CFPA), SB 358, seeks to remedy gender-based wage differentials and is considered one of the strictest pay equity laws in the country.  Before 1/1/2016, the California (like the federal statute) required comparable pay for the “same” job, with the “same” skill, effort and responsibility. The new standard requires employers to pay wages without gender or other discrimination to workers performing “substantially similar work”, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions”.  Further, employers now bear the burden of proof on these claims and must “affirmatively demonstrate” that a disparity is based entirely on one or more valid factors, e.g., a seniority system, a merit system, a system that measures earnings by quantity, or quality of production, or a bona fide factor other than sex.

5. California Wage & Hour

New California Labor Code section 226.2 provides that employers must pay piece-rate employees separately for rest periods and “non-productive” time. For rest periods, piece-rate employees must be compensated at “a regular hourly rate that is no less than the higher of” minimum wage or the employees’ “average hourly rate.” For “non-productive” time, i.e., time under the employer’s control not related to the activity being compensated (and exclusive of rest periods), employees must be compensated at an hourly rate that is no less than minimum wage. This payment must be in addition to the employee’s piece-rate compensation. Employers must also provide additional information on every piece-rate employee’s pay stub, including but not limited to, the total hours of compensable rest and recovery periods and the rate of compensation.

Significance

Updating an employee handbook is required in order to properly fulfill HR’s role to protect the company.  Many laws require employee notification of rights and a current employee handbook, supported by a current signature, is the only way most employers can accomplish this. In 2000 SharedHR launched its unique multi-state handbook system which provides employers a simple and efficient way to update employee handbooks.  SharedHR provides full service, multi-state employee handbook development and support.  To learn more, contact us at info@sharedhr.com.

By Saul Macias, MBA, PHR – VP of Professional Services

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services