Down to Business

Is Your Employees’ Financial Stress Affecting Your Business?

More and more employees are worrying about their financial situation. This, according to the American Psychological Association, comes at levels that are higher than what is deemed acceptable. Younger people, parents, and those living on an income of less than $50,000 experience the most financial stress. If the describes your employees — then it’s something you should be concerned about as it affects your bottom line.

Negative Impact on Health

Not surprisingly, financial stress has a negative impact on health. On top of the list of many employee concerns is that to in order to make ends meet, many people no longer prioritize their healthcare needs. Add this worry on top of medical conditions brought on by stress and it’s a self-feeding loop.

In a recent study, some have considered not seeing the doctor (9% of the respondents) when the need arises. The fact that a slightly higher number of people (12% of the respondents) have skipped going to the doctor altogether is even more alarming.

Stress also has repercussions on the social lives of people. In fact, 31% of adults with partners say that money is often a source of conflict in the relationship.

These numbers paint a telling picture. Despite recovery from economic recessions, many people still cite financial stress among their top concerns.

Income Gap Factor

Higher and lower-income households also experience a gap in the stress levels they experience. This is in stark contrast to stress levels a few years ago when there was nothing to suggest a significant gap was present.

But now, a clear gap has emerged with lower-income households citing higher stress levels compared to higher-income households.

Despite an overall reduction in stress levels, the average person still deals with higher levels of stress that is deemed healthy. This means otherwise productive members of the workforce may become a problem for businesses.

Negative Impact on Business

Beyond affecting their personal lives, financial stress on employees also have adverse effects on businesses. Among the negative implications are:

Absenteeism – Employees worrying about their finances tend to use more of their sick leave and don’t go to work as often.
Lack of focus – Despite being present at work, they spend more time on unrelated activities such as talking to creditors and exploring their options. Moreover, many lose their focus and think about their finances up to three hours per day.
Low productivity – Several studies point out that companies stand to lose as much as 20 hours of productivity a month for every affected employee. This translates to around $5,000 of added cost per employee per year.
Health issues – As mentioned earlier, financially-stressed employees forego their healthcare needs. In turn, this leads to health issues that affect productivity and quality of work. This also contributes to fatigue, sleeplessness and anger.
Higher insurance rates – Stress in general can cause serious medical issues such as heart disease, eating disorders and substance abuse among others. For this reason, it is quite common for insurance rates to go up for companies with employees experiencing stress-related illnesses.
Workplace conflicts – Employees who are stressed out are less able to contain their personal issues at work. This results in incomplete tasks, tardiness and even accidents.
Dependence on employee benefits – Because of financial trouble, a significant number of employees may turn to the company’s benefits programs to help with their needs. Increased borrowing and frequent requests for pay advances are some of the telling signs of this. In turn, this could drive up costs for the company.
High turn-over rates – Financially-stressed employees may seek employment with better pay. This forces companies to get new hires that may not have the same experience and expertise. High turn-over rates forces the company to adjust constantly preventing them from relating with their staff.
Lack of commitment – Regardless of how much they make, employees experiencing financial stress are less contented with their pay. This could lead to a lack of commitment to their work and dissatisfaction towards their employer.

Financial stress isn’t just a stress for your employee — it’s a stress on your bottom line as well. This issue should be dealt with sooner than later to improve their sense of well-being. An employee who feels secure tends to perform better and becomes a valuable asset to your company.

Business Interruption Insurance: The Basics

A windstorm causes major damage to your office roof. A fire destroys a portion of your warehouse. A flood reduces key pieces of your equipment to rubble. These and other disasters can strike your company at any time, preventing you from carrying on with business as usual. You now have a cash flow problem: you cannot sell goods or services until you’ve made necessary repairs and replacements, yet you still have to meet payroll and cover rent, taxes and other expenses. This is when you need business interruption insurance.

What is Business Interruption Insurance?

While your general business property insurance policy will cover the direct loss of property in the event of an accident or other disaster, it may not cover the income loss your business will experience while you’re making repairs and replacements. Business interruption insurance, on the other hand, will reimburse you for profits lost during a forced closing of your facilities.

Why do I need Business Interruption Insurance?

Losses without this valuable insurance product can be quite substantial. According to one small business insurance provider, the average claim is $1.36 million. That’s enough to put many companies out of business! The Federal Emergency Management Agency (FEMA) agrees. Its data shows 40 percent of small business owners never reopen after a disaster.

However, companies with business interruption insurance coverage can survive on the supplemental income they receive until their operations are back to normal. They can use this income to cover everyday expenses and operational costs rather than draining their bank accounts and—potentially—still coming up short.

Additional business interruption insurance coverage is available for companies who want protection from the costs associated with reopening their business after the disaster (such as overtime and extra equipment) and those who worry about interruptions caused by their suppliers. Insurers generally label this add-on product as contingent business interruption coverage.

Where do I get Business Interruption Insurance?

If you purchase an insurance package that bundles business property insurance and general liability insurance together, your insurer may include business interruption insurance coverage. Confirm with your insurance agent that this is the case for your company. If not, or if you need more coverage than what your business insurance package currently provides, consider prioritizing this investment. It could be the only thing standing between your company and bankruptcy should a disaster cause an extended emergency shutdown.

Remember, whatever your business insurance needs, we’re here to help! Please don’t hesitate to call or email us your questions and concerns.

Add More Fun to Your Company Culture

You know that nurturing a positive company culture is good for business. Not only does it help to attract high quality job applicants when you need to fill an open position, it also keeps your current staff engaged in their work. This means fewer absences, greater productivity and less employee turnover. But here’s something you may not have known: it can do all of that while still being fun.

Successful companies such as Google—with its nap pods, video games, foosball, and ping-pong tables—have proven it. They’re the best in their business, consistently ranking among top places to work and attracting more than 2.5 million job applicants every year. If you’d like to join them, consider these ways to add more fun to your own company’s culture.

Office Challenges: Whether you divide employees into random teams or pit departments against each other, competitions and fun challenges are a great way to build team member relationships and give your workers a break from job stress. You can do organize everything from chili cook-offs and track-and-field days to board game tournaments and kickball matches. The best part? Most of these ideas won’t cost you a dime.

Daily Fitness Opportunities: According to a survey conducted by CareerBuilder, 55 percent of employees consider themselves overweight. Adding daily fitness activities to your company culture is a fun way to help them tackle the problem while showing that you care about their health and wellbeing. Suggestions include encouraging walking meetings, starting the day with group calisthenics, even working in teams to build enough strength for 50 push-ups. And again, all free!

Unique Celebrations: Sure, it’s nice that you recognize your employees’ birthdays with a card. However, wouldn’t your workers feel more special if you acknowledged their big occasions with a day off, paid lunch with the boss or personal token of appreciation? The same goes for holidays. Have a pumpkin carving party in October, host a company turkey trot run in November, and toast the first week of the New Year with champagne.

Make Time for Fun: While you don’t have to allow them to goof off at their desks, encourage your team to get away from their office, cube or workspace during their breaks and have a little fun. Equip the break room with toys and video games. Set up a basketball hoop or volleyball net outside. Your employees will return to work refreshed and with greater focus.

Get Out: Treat your workers to an occasional field trip. Interacting outside the office will help them to bond in new ways, strengthening departmental and company-wide relationships. You might organize an opportunity, go on a mid-week picnic or gather at the local watering hole for an early happy hour. Whatever you choose to do, getting out of the office is always exciting.

Policies Every Employee Handbook Should Cover

You wouldn’t expect a builder to create a structure without a blueprint. Nor would you expect your employees to succeed in their jobs without a clear picture of what you expect from them. Taking the time to ensure you’ve established a mutual understanding of expectations is actually essential if you want to employ workers who follow the rules of your establishment, get along with each other, and perform their jobs admirably.

Your employee handbook can support you in this endeavor—if you draft one that covers all the bases. Consider the following 10 policies every employee handbook should cover. Some will help your team perform at their best, while others will protect you should one of your workers ever file a claim against you.

The “At-Will” Employment Policy. This policy explains that you—or your worker—can terminate his or her employment with your company at any time and for any (lawful) reason.

The Nondiscrimination and Harassment Policy. It’s important that your employee handbook takes a zero tolerance stance on discrimination and harassment. It should state that management will always take such complaints seriously and will never retaliate against the reporting parting. Don’t forget to describe options for reporting violations and consequences should an employee violate the policy.

Immigration Law Policy. Include wording in your handbook regarding your company’s commitment to only hire individuals who can legally work in the U.S. Outline the employment eligibility verification rules your organization follows.

Employment Classification Policy. Whether workers are defined as full- or part-time, exempt or nonexempt, determines their eligibility for overtime pay and some company benefits (such as employer-sponsored health insurance). Define these categories of workers within your employee handbook.

Time Off and Employee Leave Policy. Describe the rules for accruing and using vacation time and sick time. List any holidays for which your employees will receive pay. Clearly outline the steps your workers need to take to request time off as well as note whether unused time will carry over from year to year.

Meal and Break Policy. If an employee works more than a certain number of hours, employment laws dictate they must receive breaks and meal periods. Make sure your employee handbook covers these details as well as any related restrictions.

Timekeeping and Payday Policy. Your employee handbook should describe the rules and methods for recording time worked. It should also cover paydays, ways in which employees can receive their pay (check, direct deposit, etc.), and how final pay will be handled should you need to terminate an employee.

Safety Policy. Whether you’re running a small office or a large warehouse, your employee handbook should cover important safety and emergency procedures as well as the rules your workers must follow regarding reporting on-the-job injuries and accidents.

Attendance Policy. It will be difficult to reprimand an employee for tardiness, early departure or missed days of work if your employee handbook doesn’t cover your policies on attendance and punctuality. It may also be helpful to clearly define “excessive absenteeism” and the steps a worker must take to report a possible late arrival or unscheduled day away.

Employee Conduct Policy. Outline the standard of conduct you expect from your workers when it comes to drug and alcohol use/abuse, workplace violence, confidentiality, conflicts of interest and other common issues.

A comprehensive employee handbook will cover these essential topics (and more). If you’d like assistance drafting one—or want a third-party review of the employee handbook you’ve already created—we’re here to help.

Lose Fewer New Hires with an Improved Onboarding Process

According to the Society for Human Resource Management (SHRM), 50 percent of our nation’s hourly workers will leave a new job within the first four months. Half of outside hires placed in senior positions fail at their jobs within 18 months. Both statistics describe costly situations; a review of related studies conducted by the Center for American Progress found it costs a business an average of 20 percent of the worker’s salary to replace an employee who earns $75,000 or less a year.

Fortunately, the right onboarding process—starting before that first day on the job—can decrease expensive turnover as well as improve the satisfaction, commitment and performance of any new employee. Consider the following ways to improve onboarding at your organization.

Post an accurate job description. If the description you’ve advertised for the job is inaccurate—e.g. missing details on skills required or performance expected—you may be setting any new hire up for failure. Before you even begin interviewing candidates for an advertised position, make sure you’ve covered all the bases and have a very clear picture of the professional most likely to succeed in the role.

Brief your current employees. Prepare your team before the new hire’s first day. Describe his background, determine areas in which he may need training, and assign workers to facilitate the orientation and training process. Remember, few experiences feel as awkward as showing up for your first day on the job to discover no one knows who you are or what to do with you.

Set up a workspace. Even if your new hire will be in training for a while, she needs a place of her own. Prepare her computer and phone. Set up her email account. Stock her desk with necessary supplies, and provide her with any essential safety gear. If she’s replacing an exiting employee and you don’t yet have a desk available, make sure she still has a place to store her personal belongings in the interim.

Provide a warm welcome. Whenever possible, you should be on hand to welcome new workers on their first day. If you’re not available, choose another supervisor or senior team member to do so. Walk the new employee around the office or jobsite and introduce him to the rest of your workers while also showing him where he can find the break room, rest room and important offices.

Follow an onboarding plan. Provide your new worker—and anyone else involved—with an itinerary for the first week. Include human resources-related tasks such as completing required documentation and enrolling in benefits as well as orientation and training activities. Set up daily meetings with the new employee throughout the week so you can check in and answer any questions or address concerns as they arise.

Don’t forget history, culture and their place in the organization. There is a reason these professionals chose to work for your company—and it may have had little to do with pay. Teach them more about the history and mission of your business as well as your office culture and vision for the future. Remind them that you hired them to help you achieve that vision, and describe the ways in which they can use their skills to do so.

Set expectations early. Make sure your new worker knows what you expect of her, both during the first week and the months that follow. Review and discuss the job description. Talk about individual goals and objectives. Consider monthly performance evaluations rather than a 90-day or six-month evaluation; they’ll enable you to resolve issues earlier.

Payroll Tax Mistakes to Avoid

Running a business—whether large or small—comes with a lot of responsibilities. Not least among them is the duty to deal correctly with payroll taxes—from withholding federal and state income taxes when paying employees to contributing your share of FICA and ensuring unemployment taxes are paid. Unfortunately, it’s rather easy to make mistakes, and the penalties for missteps can be quite great. Here are a few of the most common payroll tax errors you should avoid.

Misclassification of Workers

Most businesses want to minimize their costs, and payroll taxes and employee benefits expenses can take a real bite out of the bottom line. This can make it tempting to classify some employees as independent contractors—even if they don’t actually meet the definition. If you have control over when, where or how they complete their work (requiring them to work out of your office or work set hours, for example), they are not independent contractors. You can learn more about worker classification on the IRS website.

Reimbursements Without an Accountable Plan

If you regularly reimburse employees for travel, tools or other costs related to your business and their work, an “accountable plan” is the only way to avoid wasting employment tax dollars. It allows you to deduct these expenses from your business taxes while avoiding paying payroll taxes on the reimbursements. Your employees won’t pay taxes on them either. You can learn more about the requirements of these formal reimbursement plans on the IRS website.

Incomplete Payroll Records

Every business with employees—or that uses independent contractors—must maintain payroll records. This usually includes time sheets and payroll tax documentation as well as copies of W-2s and I-9s. You must store these records for at least four years and be ready to present them for IRS inspection should the need arise. You can learn more about maintaining payroll records on the NOLO website.

Using Withholdings to Pay Other Bills

It doesn’t matter if your business is incorporated or is legally classified as a limited liability company; as the business owner, you are liable for the money withheld from your employees’ wages for the payment of their state, federal and FICA taxes. You should never use these funds to pay rent, utilities or any other business expenses—even if your company is in a dire financial situation. If you do so, you will incur the Trust Fund Recovery Penalty. Learn more about it on the IRS website.

Skimping on Payroll Company Oversight

Sure, hiring an outside payroll company to handle all the details of withholdings and payroll taxes can help you save time. However, should the company you enlist make an accidental or deliberate error, you’re still the liable party. For the best protection review your payroll account monthly and monitor tax payments to ensure the company has made them in a timely manner and for the correct amount.

Satisfy your responsibilities as a business owner and you’ll avoid penalties while minimizing costs. For further information and assistance on payroll taxes or other business topics, please don’t hesitate to contact us.

Importance of Wellbeing in the Workplace

When you think of employee “wellbeing,” what comes to mind? Many employers associate the word with physical health, i.e. how many sick days their employees take, how much they have to pay for their healthcare, and how both of those factors impact the bottom line. But wellbeing actually encompasses a whole lot more. According to Dictionary.com, it means “A good or satisfactory condition of existence; a state characterized by health, happiness and prosperity.”

Some organizations have begun to recognize the difference and are capitalizing on it. A recent article on the topic quoted Tom Rath, co-author of the bestselling book “Wellbeing.” “The most successful organizations are now turning their attention to employee wellbeing as a way to gain emotional, financial and competitive advantage,” he said. While physical wellness is one aspect of wellbeing, these organizations are focusing on myriad factors including the cognitive and psychological needs of their workforce.

If you’d like to improve total wellbeing in your organization, consider these six dimensions as well as how you can design a program to address them.

Authenticity – To have true wellbeing, employees need to be free to be themselves. Within the workplace, this may mean allowing self-expression in regards to dress or office/cubicle décor.
Belonging – You can foster wellbeing in your workplace by making employees feel like they belong. Encourage them to form professional and personal connections with their coworkers by engaging in team projects and fun after-work activities. Include contractors and remote workers as well.
Meaning – Wellbeing requires work with meaning. Make sure your employees know that what they do for the company really matters. Share business goals and the progress you are making towards them.
Mindfulness – Distractions detract from wellbeing. Ensure your employees have a quiet space to work where they can concentrate on their tasks. Some workers do well in open spaces, but others will require walls for focus.
Optimism – Employees who are positive about their work and the future enjoy more wellbeing. Praise and encourage them often. Allow them to use their imagination and try new approaches to old tasks.
Vitality – Good physical health is essential for sharp thinking and creativity. Encourage your workers to exercise regularly by offering a gym membership or on-site workout space. Take walking meetings whenever possible. You may even want to gift your workers with step trackers and have contests for total distance covered.

You don’t have to make huge, sweeping changes to your workplace to promote these essential dimensions of wellbeing. Even small adjustments can have a big impact on job satisfaction, employee retention, productivity and physical health. If you’d like additional information or assistance, contact me today.

Five Big Causes of Employee Disengagement

Engaged employees are enthusiastic about their work. They do their best to contribute positively to their employer’s reputation and the achievement of company goals. They don’t make excuses, take excessive time away from the office, or often say, “That’s not my job.” Unfortunately, engaged employees are also fairly rare. According to a study conducted by Dale Carnegie Training, 71 percent of employees are not fully engaged. Employment experts consider the following the five biggest causes.

1. Loss of Job Security

Since the Great Recession, many employees feel they no longer have job security. They’ve seen staff cuts, and their managers have asked them to work harder to compensate—generally without any additional earnings. There is a sense that their employer is holding all of the cards, and they have little to no room to bargain for what they want. They may jump ship to a competitor for a minimal increase in pay or decrease in workload as a result.

2. Loss of Trust

According to a study by Towers Watson, less than 40 percent of employees have any confidence in the senior leadership at their employing organization. Executives have told them too many lies (such as “our company is doing great” right before mass layoffs), and they have developed a wait and see attitude as a result. It’s difficult to feel engaged in the future of the company when you no longer trust or believe in the individuals leading it.

3. Changing Demographics

Today’s workplaces are in the midst of a demographic shift. Baby Boomers are retiring, Generation X employees are struggling to balance their work and home life under increasing pressures, and Millennials are moving in. They’re bringing their impatience with them. Many Millennials expect to move up the corporate ladder quickly, and they will move on if an employer does not meet this expectation. In fact, they spend an average of only 3.2 years in any one job.

4. Top-Down Hierarchies

Corporate organization has changed little since the 1950s. Most of the decision-making still happens at the top—with the c-suite executives and company owners—and employees on the ground floor rarely have any control over the way the business runs. When an employee who has an idea for improving workflow or another aspect of the company feels powerless to affect change—or sometimes even get their idea to someone who can—it easily leads to disengagement.

5. Lack of Work-Life Balance

Many companies operate with a 24/7/365 mindset. Their employees are always on the job and never quite feel like they can shut down to unwind. This increases stress, affects their health, undermines their relationships and basically obliterates any work-life balance they could have. It also causes them to feel disengaged. In one study, 80 percent of employees said that a flexible work schedule is essential to achieving a positive work-life balance.

Disengagement costs employers $11 billion dollars every year. If you’d like to turn the tide—and enjoying more enthusiastic, inspired, empowered and confident employees as a result—contact your benefits professional for information on improving employee engagement at your organization.

The High Costs of Employee Misclassification

You hire a graphic designer to work in your office on a short-term project and pay him as an independent contractor rather than a temporary employee. Your bookkeeper—whose workflow you also direct and control—asks to work from home, so you pay her as a freelancer. You’re now guilty of employee misclassification—whether you intended to break labor laws or not.

Since the onset of the Great Recession, the Department of Labor (DOL) and the Internal Revenue Service (IRS) have seen a surge in worker misclassification. With the rollout of the employer-sponsored insurance mandate under the Affordable Care Act (ACA), they expect to see even more—as companies deliberately misclassify employees as independent, temporary or contingent workers in order to come in under the full-time employee limit requiring coverage.

According to the National Employment Law Project, 10 to 30 percent of employers—possibly even more—misclassified employees as independent contractors in 2012. This is equal to millions of misclassifications and billions of dollars in lost tax revenue for state and federal governments. They want that money back, and they’ve stepped up their litigation and enforcement efforts as a result. But that’s not all; in addition to various federal and state penalties an employer may have to pay, there is the potential for expensive individual and class action lawsuits.

Consider the case of Vizcaino v. Microsoft. Initially, the IRS discovered that Microsoft was misclassifying temporary employees as independent contractors and ordered them to correct this error. Microsoft complied, reclassifying its workers according to the law—and in some cases, assigning them to temporary staffing agencies. The term “temporary” implies a short duration of time. However, many of these so-called temps had worked with the organization for years. They decided to sue Microsoft for equal treatment with the “permanent” employees—including the benefit plan with stock purchase options. Microsoft ended up settling the case for $97 million dollars. This was in addition to the millions they had to pay in back payroll taxes.

How can you avoid a similar situation? Experts recommend the following:

Seek legal or other professional assistance to ensure your employees are properly classified.
Stay current on federal, state and local agency standards for employment status.
Limit the length of any “temporary” assignments.
If you regularly use the same temporary workers, require a period of non-employment between assignments.
Ensure your employee handbook addresses the issue of contingent employees
Ensure your benefits information is specific about which workers are not covered by the employee benefits plan.

Would you like additional insight on classifying your employees, or to learn more about the ACA’s employer-sponsored insurance mandate? Contact me today!

Tips for Reducing Workers Compensation Claims

According to the National Council on Compensation Insurance, the frequency of workers compensation lost-time claims saw a 2 percent decline in accident year 2013 when compared to 2012. However, these claims still create a financial burden for employers. In fact, according to the National Academy of Social Insurance, workers comp insurance paid out $60.2 billion in total benefits in 2011—and total costs to employers reached $77.1 billion. While workers compensation insurance laws vary by state, most require business owners with employees to purchase coverage. Fortunately, there are actions you can take to reduce the chances that your own workers will file costly claims.

1. Start by making safety a priority.

If you have not yet done so, develop a comprehensive written safety program. When you improve the safety of your workplace, fewer accidents will occur. This means there will be fewer claims increasing your workers compensation insurance rate.

Your program should include regularly scheduled safety meetings, periodic retraining plans and a clear description of the disciplinary actions you will take if employees violate the workplace safety rules. It’s essential that your managers and supervisors commit to enforcing the program and reinforcing its importance with your employees.

2. Take immediate action.

If one of your employees sustains an injury on the job, complete an accident report as soon as possible. Include as much detail as you can, including photographs of the scene and witness accounts. Send this report to your workers comp insurance agency within 24 business hours.

Consider asking the employee to submit to a drug test as well. While a positive test may not result in claim denial in most states, it can help your case. Random drug testing of all employees is another option. If you clearly communicate this as a requirement for employment, it should result in fewer potentially drug-related accidents and claims.

3. Look out for fraud.

If you suspect an employee has filed a fraudulent workers compensation claim, notify your insurance company as soon as possible. While these do not always indicate fraud is occurring, potential warning signs include:

Alleged accidents taking place on Monday mornings
Monday reporting of alleged accidents that occurred Friday afternoon
Discrepancies between the employee’s description of the accident and the medical report for the injury
Refusal to submit to diagnostic procedures to confirm the extent of the injury
Alleged accidents that occur immediately before or after job terminations, layoffs or strikes
Alleged accidents that occur without witnesses present
An employee who has made previous workers compensation claims

4. Add accident or disability insurance to your voluntary benefits.

According to the Aflac Workers Compensation Report, employers who provided their workers with access to accident or disability insurance experience declines in workers compensation claims. Among large companies, 55 percent reported a decline, followed by a 34 percent decline in claims at small- and mid-sized companies.

Whether you’d like more information about reducing workers compensation claims, want to review your insurance policy, or need assistance creating a workplace safety program, contact your insurance agent or workplace safety advisor today.