President Obama Issues Executive Orders to Curb “Pay Secrecy Policies” At the Workplace
“Pay Secrecy” refers to workplace policies that prohibit employees from discussing how much money they make. A survey of private-sector employers from 2001 found that more than one-third of companies had specific policies that banned workers from discussing their compensation with their co-workers.
In April 2014, President Obama announced two executive orders designed to create more transparency in the rate of pay at work and close the gender wage gap. The first Executive Order directs the Department of Labor to collect more information on what federal contractors pay their employees. The second Executive Order prohibits federal contractors from retaliating against employees who talk about their salaries or other compensation information.
Even before President Obama’s Executive Order of 2014, protections already existed to prohibit federal contractors from retaliating against employees who talked about their salaries or other compensation information. Under the National Labor Relations Act enacted in 1935, an employer who wrongly terminated an employee for discussing compensation with other employees could be made to pay back pay to the wrongfully terminated employee and to offer that employee back their old job. President Obama’s Executive Order is intended to create greater visibility for that already existing labor law. Additionally, the Executive Order provides additional penalties that go beyond the National Labor Board’s punishments by providing that companies who retaliate against employees for talking about pay could lose a federal contract.
Businesses that contract with the federal government should take caution not to institute “pay secrecy” policies at the risk of losing valuable government business.
Under The Affordable Care Act, Employers Can Take Advantage of Eligibility Formulas to Classify Employees as “Variable-Hour Employees” To Exclude Employees from Company-Sponsored Health Coverage
About sixty-eight percent of United States employers have “variable-hour employees” according to a survey done by consulting firm, Mercer LLC. “Variable-hour employees” are those employees whose hours change on a weekly or seasonal basis.
The effect of classifying an employee as “variable-hour” under the Affordable Care Act, is to make that worker ineligible for employer-sponsored health care and benefits and force that employee to seek health insurance on the public exchanges.
The compliance deadline for the Affordable Care Act is January 1, 2015 for employers. The IRS allows companies to use a “look-back” period of three to twelve months to calculate an employee’s average weekly hours. Employers can then lock in that status for six months to a year. According to a March 2014 report done by Mercer LLC, fifty-five percent of employers with variable workers say they will use the twelve month look-back.
Businesses should carefully consider the cost benefit that classifying employees as “variable-hour employees” can have on operations, along with any possible negative impact that loss of employee benefits may have on retaining or attracting new employees.
MyRA Plans Offer New Retirement Savings Options for Workers Without Access to Employer-Sponsored Plans.
In January 2014, President Obama announced a new type of retirement saving account dubbed ” myRA”. These myRA accounts function as retirement savings accounts for employees who do not have access to employer-sponsored retirement plans such as a 401(k). According to data collected by the Employee Benefit Research Institute in November 2013, only forty-nine percent of all workers and only thirty percent of part-time, full-year workers have access to a retirement savings plan through work.
The myRA accounts operate much like traditional Roth IRA accounts. myRA accounts are open to individuals earning less than $129,000 and couples earning less than $191,000, and there is an annual contribution limit of $5,500. Unlike the Roth IRA accounts, the myRA accounts offer a single investment option of a government savings bond. Thus, the principal in a myRA is guaranteed by the government, making this a safe choice for conservative investors. The average rate of return for government savings bonds from 2003 through 2012 was 3.61%. Additionally, unlike traditional retirement accounts, there are no penalties for early withdrawals.
Although employers will not administer myRA accounts or contribute to them, employers will have to set up automatic payroll deductions to accommodate employees. An employee can open a myRA account with twenty-five dollars and make subsequent contributions of “after tax” dollars via payroll deductions as small as five dollars.
Companies Should Consider Purchasing Insurance for Computer Network Operations and Data and Privacy Breaches Not Covered by General Liability Policies.
A 2012 survey conducted by Towers Watson indicated that seventy-two percent of companies surveyed had not purchased insurance coverage for computer network operations, or data or privacy breaches. Business owners should take care to carefully review their insurance policies because this type of cyber coverage is typically not included with general liability coverage and must be purchased as an additional rider or endorsement for electronic data liability.
A typical CGL policy covers only “property damage” to “tangible property.” Many of these CGL policies will write out coverage for electronic data by including language such that electronic data is not considered to be tangible property. Even policies that do not specifically write out coverage for electronically stored data may disclaim coverage for damage done by third-party hackers, because damage done by these third-party hackers is not covered by the policy.
Cyber Security Liability Coverage can be purchased as an additional rider to cover loss of digital assets caused by (1) accidental damage or destruction, (2) administrative or operational mistakes, and (3) computer crimes and computer attacks. In this computer-driven business age, businesses should review their current insurance coverage and consider obtaining additional coverage to protect against hackers and destruction of electronic data.