Cyber Risks and Liabilities - Fourth Quarter 2019

3 Risks Associated With Removable Media Devices

Portable hard drives, USB flash drives, memory cards and other types of removable media are vital for the quick storage and transportation of data. For many businesses, removable media can be used as backup storage for critical digital files or even free up additional storage space for work computers.

While removable media is easy to use and has many business applications, it isn’t without its share of risks. The following are some considerations to keep in mind when using removable media at your organization:

  • Data security—Because removeable media devices are typically small and easy to transport, they can easily be lost or stolen. In fact, every time you allow an employee to use a USB flash drive or other small storage device, your organization’s critical or sensitive information could fall into the wrong hands. What’s more, even if you encrypt your removable storage devices, you will not be able to recover lost files once the USB flash drive or other device is lost.
  • Malware—Simply put, when employees use removable media devices, they can unknowingly spread malware between devices. This is because malicious software can easily be installed on USB flash drives and other storage devices. In addition, it just takes one infected device to infiltrate your company’s entire network.
  • Media failure—Despite its low cost and convenience, removable media is inherently risky. This is because many devices have short life spans and can fail without warning. As such, if a device fails and your organization doesn’t have the files backed up, you could lose key files and data.

Thankfully, there are ways to mitigate risks associated with removable media. To use these devices effectively while maintaining data security, consider doing the following:

  • Develop a policy for related to removable media use.
  • Install anti-virus software that scans removable media devices.
  • Ensure all removable media devices are encrypted. Passwords to these devices should never be shared.
  • Instruct employees to never use unapproved removable media in a computer.
  • Have employees keep personal and business data separate.
  • Establish a process for wiping all portable media devices when they are no longer needed.

Cloud Computing 101

There are many benefits to adopting cloud computing at your organization, such as reduced IT costs and increased scalability. However, it’s important to note that there are different cloud service and deployment models, each with their own benefits and risks. There is no single type of cloud computing that will work best for everyone, so it’s important to conduct research to determine the right fit for your organization.

Types of Cloud Computing Service Models

There are three distinct cloud computing service models: Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS).

The SaaS distribution model provides you with an application that is managed by the service provider and accessible through the internet. As such, SaaS applications need not be installed or updated on individual computers.

The PaaS model allows organizations to safely develop, test and deploy applications without needing to manage the underlying infrastructure. This provides flexibility that allows deployments to scale quickly.

The IaaS model provides organizations with a specified amount of cloud storage space to do with whatever they want. This allows the greatest amount of flexibility, as the organization is responsible for accessing, monitoring and managing their data that is stored in the cloud. In this case, the service provider typically only manages hardware, storage and networking, though other services may be provided at additional costs.

Types of Cloud Deployment Models

Just like with service models, there are various different ways that a cloud can be deployed. This includes a public cloud, which is cost-effective and efficient but means that your data may be stored on the same server as others’. A private cloud, however, allows your organization greater control over infrastructure and computational resources by having them located on private networks.

Lastly, a hybrid cloud combines on-site infrastructure with a cloud environment. This allows organizations to utilize different types of service providers based on what is ideal for each business requirement.

Best Practices for Contracting With Managed Service Providers (MSPs)

While working with a managed service provider (MSP) can be efficient and cost-effective, it’s important to carefully consider the organization that you plan on working with and get a holistic view of its operations and security. Because an MSP has direct access to sensitive systems and information, working with one is not to be taken lightly. While doing so puts your IT infrastructure in the hands of experts, it also comes with its own risks. For example, MSPs may be a target for cyber criminals, as compromising one MSP potentially compromises every organization that it works with.

To help keep your organization’s digital information and resources secure, there are a number of best practices and security considerations to keep in mind when contracting with managed service providers:

  • Perform a detailed risk assessment and enforce associated mitigations before working with a managed service provider. Some considerations include:
    • How a cloud service (if used) is implemented and managed
    • Who has access to data and how it is secured
    • The intended purpose of engaging with the managed service provider
    • Potential challenges that may arise during incident detection and response, such as the managed service provider’s availability during off hours

  • Keep operating systems and software up to date.
  • Ensure that an MSP follows organizational security, privacy and legislative requirements.
  • Find out how closely the MSP adheres to an IT security management framework.
  • Use secure computers with multifactor authentication, strong passwords, few access privileges and encrypted network traffic to administer the cloud service.
  • Do not provide the MSP with account credentials or access to systems outside of their responsibility.
  • Use cryptographic controls to protect data in transit to and from the MSP.
  • Consider full data encryption for critical information while at rest and while maintaining control of encryption keys.
  • Employ full hard-drive encryption to ensure data at rest on storage media is not recoverable should the MSP replace or upgrade physical hard drives.

For more risk management strategies related to cyber exposures, contact Hierl Insurance Inc. today.

Portable hard drives, USB flash drives, memory cards and other types of removable media are vital for the quick storage and transportation of data.

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Why 24/7 Work Culture is Causing Workers to Burn Out

Burnout was recently classified by the World Health Organization as an "occupational phenomenon" that is characterized by chronic work stress. Workplace cultures that encourage employees to be available 24/7 may be causing burnout, according to Dr. Michael Klein. Read the following blog post to learn more.


Workplace culture that encourages employees to be available 24/7 may be causing burnout and other mental health issues like anxiety and depression.

That’s according to business psychologist and workplace adviser Dr. Michael Klein, who says companies that encourage employees to work anytime and anywhere is making it more likely that burnout will occur.

“The problem now is when you have the ability to work from wherever you want,” he says. “It’s so important for general wellness to make time to exercise, time for family and to not check work email.”

In May, the World Health Organization classified burnout as an “occupational phenomenon” that is characterized by chronic work stress that is not successfully managed. Research shows that continued stress at work can lead to more serious mental health conditions like depression and anxiety.

As a result, Klein predicts the next few years will see an increased need for on-site mental healthcare which could be offered through employee assistance programs. Offering EAPs, flexible work options and family-friendly benefits like onsite childcare are just some of the ways employers can reduce stress for workers.

And HR may need to take the lead. Misty Guinn, director of benefits and wellness at Benefitfocus, says finding HR professionals that can handle difficult conversations around mental health may be key to addressing the problem. But many are not comfortable enough to have those kinds of conversations.

“Most have yet to achieve that level of comfort with conversations around mental health,” she says, noting that younger generations are often more comfortable talking about mental health issues. “We’ve got to enable people, especially within HR, benefits and management to have those conversations and be comfortable with them.”

Guinn also says that EAPs alone may not be enough to address mental health issues for workers because these programs are often scarcely utilized. Subsidizing mental health co-pays, work-life balance and PTO policies are benefit options employers to create a meaningful difference for workers mental health, she adds.

“Too often employers make the mistake of believing that offering an employee assistance program sufficiently checks off the mental health box in a complete benefits package,” she says. “In reality, these programs generally have low utilization because employees don’t have confidence in how confidential they are.”

Klein and Guinn agree that employers should consider more ways to support the total well-being of employees. Companies who prioritize their people will do better in the long term, Guinn adds.

“Employers need to take purposeful actions within their policies and programs to reinforce their support of total well-being for employees and their families,” she says.

SOURCE: Hroncich, Caroline. (June 10th, 2019) "Why 24/7 Work Culture is Causing Workers to Burn Out" (Web Blog Post) https://www.employeebenefitadviser.com/news/24-7-work-culture-is-causing-workers-to-burn-out


6 voluntary benefits your employees want

Today’s workforce is no longer finding the run-of-the-mill benefits plans adequate. This is making voluntary benefits more important than ever in this age of the multigenerational workforce and a tight labor market. Read the following blog post for six voluntary benefits employees want.


In this age of the multigenerational workforce and a tight labor market, a one-size-fits-all group benefits model with medical, prescription, dental, vision and a retirement plan just doesn’t cut it. A workforce with Baby Boomers, Gen X’ers, Millennials and Generation Z means that employees are going to find the run-of-the-mill benefits plan inadequate. Ditto for job seekers.

What follows is that voluntary benefits are more important than ever. Offering a range of voluntary benefits can help meet the needs of employees at all life stages.

Voluntary benefits add value to benefit plans and are typically easy to administer. They’re low-to-no-cost because employees pay for them, and maintenance is often handled through a payroll deduction. Many voluntary benefits also offer guaranteed acceptance at a lower rate than medical benefits, so even if a small group within your company chooses a particular benefit, they’ll be covered.

This landscape is changing quickly. Here are six trending voluntary benefits your employees want.

Student loan debt repayment assistance

Debt among college graduates has grown to nearly $1.6 trillion. It’s preventing the largest employee segment at most companies from buying houses or cars, saving for retirement, having kids and getting married. To help employees repay their student loan debt, some employers are helping employees pay down student loan debt through a direct payroll deduction.

Others are offering a new, IRS-allowable retirement plan match swap where an employer can opt to increase its defined contribution match, enabling employees to reduce their retirement match and contribute funds to repaying student loans instead.

Interest in this benefit continues to grow. Employers looking to offer student loan debt repayment should be aware that not all platforms are created equal. Look out for high per-employee, per-month fees.

Individual long-term care

A growing number of people are beginning to understand the value of long-term care insurance because they have taken care of or currently care for a friend or relative who needs round-the-clock care. Long-term care insurance covers home or institutional care if a person is no longer able to perform at least two activities of daily living--eating, bathing, dressing, moving from a bed to a chair or using a toilet.

Employees are interested in buying long-term care insurance through their employer because they can offer better rates for simplified issue plans. If you plan to offer long-term care as an employer-sponsored benefit, I recommended rolling it out with a strategic project plan and a benefit counselor or a technology platform capable of providing decision-making tools for a smooth application process.

Executive reimbursement plans

Employee retention — especially executive retention — is on the minds of many employers in the midst of this thriving economy. Filling gaps in medical and prescription coverage is one way to provide executive teams with premium benefits they may be looking for.

Executive reimbursement plans provide reimbursement for out-of-pocket expenses, access to facilities and level of service not normally covered under most group health plans. Rather than simply increasing compensation to help cover out-of-pocket expenses, premiums for these plans are tax-deductible for the employer, and benefits are non-taxable for employees.

Executive individual disability insurance

Traditional employer-sponsored long-term disability (LTD) is likely not enough coverage for highly-compensated employees or some sales staff who depends heavily on commission and bonuses. Normally, LTD pays employees 50-70% of their salary up to a certain amount.

Employers can carve out additional coverage for employees based on their management level, performance or tenure. Individual disability insurance plans can protect employees until they turn 65; they can also protect job titles or levels until employees are well enough to return to work. Executive individual disability insurance, like executive reimbursement, can be offered as a form of compensation, or a form of financial asset protection for higher incomes.

Telemedicine

The rise of consumer-driven health plans has led to the need for telemedicine. Telemedicine provides a way for employees to see a physician or provider by video and get a diagnosis and/or prescription quickly. The success of telemedicine is leading some carriers to integrate it within their plan. However, standalones still exist and can provide employees with an easy way to get care faster and cheaper than before.

Pet Insurance

Pet parents spend nearly $70 billion on veterinarian costs for their pets, but just 10% of dogs and 5% of cats are covered by medical insurance. As pets begin to play a larger role in our lives, more employers are offering pet insurance to their employees to help defray the cost of unexpected medical expenses.

There are a number of plan options, and setting up a plan for employees’ pets is simple. However, it’s vital that employers do their research to ensure the veterinarian network includes the best vets.

As part of a voluntary benefit offering, be sure to develop a rollout strategy and communications plan so employees are thoroughly educated and you meet group minimums.

SOURCE: Park, N. (25 September 2019) "6 voluntary benefits your employees want" (Web Blog Post). Retrieved from https://www.benefitnews.com/list/6-voluntary-benefits-your-employees-want


‘Eye’ spy a savings opportunity for health and vision benefits

Traditionally, vision benefits were offered as an elective, with coverage is focusing on vision tests or discounts for corrective eyewear, but this often can result in inadequate coverage for employees and their dependents. Read this blog post to learn more about vision benefits.


Sixty-one million adults are at high risk for serious vision loss, according to the National Eye Institute, but most U.S. employers don’t include eye care as part of their benefits package. Vision benefits have traditionally been offered as an elective, where coverage is focused on vision tests or discounts for corrective eyewear.

This often results in inadequate coverage for employees and dependents, which can result in unrecognized and untreated issues that impact employee health and productivity, as well as an employer’s bottom line.

Comprehensive eye exams are recommended for adults under the age of 65 at least every two years, according to the American Optometric Association (AOA). These exams are the only way a doctor can detect signs and symptoms of serious conditions without cutting into or scanning body parts.

The total economic burden of eye disorders and vision loss in the U.S. was $139 billion in 2013, which includes $65 billion in direct medical costs strictly due to eye disorders and low vision. Loss of vision among workers results in $48 billion in lost productivity per year.

When it comes to benefit management priorities employers often focus more on chronic condition management. Yet, eye health is often linked to common chronic conditions including diabetes and hypertension. Without early detection of eye and vision health issues, employees cannot properly manage these conditions. Delaying medical treatment can lead to increased absenteeism and reduced productivity, eventually resulting in treatment that comes too late, and at a much higher price tag for employers, employees and family members.

About 68% of Americans with diabetes have been diagnosed with eye complications, many of which could have been prevented through a comprehensive eye exam. Diabetes is the leading cause of blindness among adults, according to the National Institutes of Health. Its prevalence is increasing as one in 10 people worldwide may be affected by 2040, according to research from the International Diabetes Federation.

Nearly half of Americans don’t know that diabetic eye diseases have visible symptoms, according to a 2018 AOA survey. More than one-third of respondents didn’t know a comprehensive eye exam is the only way to determine if a person’s diabetes will cause blindness. These exams, considered the gold standard in clinical vision care, should be covered under the employees’ medical benefits.

Three years ago the Midwest Business Group on Health began a collaboration with the AOA to better understand how employers think about and implement eye health and vision benefits. As part of this partnership, a no-cost eye care benefits toolkit was developed to support employers in evaluating their current eye health and vision care benefits to:

  • Understand the importance of early detection so that employees can effectively manage chronic and more serious conditions
  • Recognize how to integrate primary and preventive eye care into an overall medical benefit design
  • Educate employees on the importance of periodic eye examinations

It’s important that employers better understand the impact of vision care benefits, including lower costs, better employee health, improved job satisfaction, better employee quality of life, and work productivity.

SOURCE: Larson, C. (20 September 2019) "‘Eye’ spy a savings opportunity for health and vision benefits" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/vision-loss-resulting-in-billions-in-lost-productivity


Simple Open-Enrollment Tips That Can Make a Big Difference

Thirty-three percent of employees stated their primary emotions when thinking about open enrollment season as annoyance and dread. Read this blog post from SHRM for a few simple tips that can make a big difference this open enrollment season.


Trepidation is what comes to mind for many employees when asked their feelings about open enrollment, the annual period when they select employer-provided benefits for the coming year.

According to a nationally representative sample of 1,000 employees polled earlier this year, 33 percent cited "annoyance" or "dread" as their primary emotions when they thought about open enrollment and just 10 percent of workers said they were "confident" in the benefits choices they made when the enrollment process was over, according to VSP Vision Care's annual Open Talk about Open Enrollment survey.

In another survey, HR software company Namely found that 31 percent of employees give their employer a "C" or lower when it comes to open enrollment.

Here are some tips from benefits experts that will help you raise your grade this open-enrollment season.

What to Do, and Not to Do

Jennifer Benz, national practice leader at benefits communications firm Segal Benz, shared three bad HR practices that undermine open enrollment and three best practices for doing open enrollment the right way.

  • Don't hide vital information from employees. Benz recalls how one company sent out its benefits materials but didn't include monthly costs. "A group of enterprising employees crunched the numbers and came up with estimates and circulated a rogue spreadsheet. Dealing with this communications fiasco took more work" than being upfront about costs, she noted.

Best practice: Be transparent and share the reasons you are making benefits changes. Break down the details and do the work for the employees. Provide scenarios so employees can better understand their options and cost breakdowns for different life situations.

  • Don't cram in every benefit at once. Some companies hand out pages and pages of text, jamming a year's worth of communications into a few weeks, and figure they have done what they need to do. "What they have done is confused their employees," Benz said.

Best practices: Communicate the technical details of your various benefits over time. "Don't assume employees will weed through all your materials to make sense of the benefits offered to them," Benz said. Also make full use of visual aids. "Photos, icons, infographics, memes, charts, graphics and more—they all help to attract, and more importantly hold, people's attention," noted Amber Riley, a communications consultant to Segal Benz. "Whether you're driving an open-enrollment campaign, creating a new benefits guide or promoting a wellness program, when you increase the visual pleasure of what you are communicating, your people are more likely to engage, learn, understand and ultimately take action."

  • Don't give employees too little time to process their open-enrollment choices. While many people wait until the last day to fill out the health care selection forms, they may have been considering their options with family members for weeks, so giving them just a few days to make decisions is not going to be enough.

Best practice: Build in a time frame that gives HR staff and employees the time they need. Benz recommended three weeks.

"People are always talking about learning from the best practices and success stories, but you can also learn a lot from other companies' mistakes," she noted. "When you prepare for enrollment in advance and anticipate issues—including those you and others have experienced in the past—you are better-equipped to avoid missteps. Your employees will notice and appreciate the extra effort."

Help Employees Ace Open Enrollment

"Open enrollment is often time-consuming and confusing for employees, but these choices can make a huge financial impact," said Julie Stich, CEBS, vice president of content at the International Foundation of Employee Benefit Plans, an association of benefit plan sponsors. She suggested that HR share the following advice with employees to help prepare them for the upcoming enrollment season:

  • Take your time. Take time to really read through the enrollment materials you receive. If you are invited to a face-to-face meeting, make time to attend. It's possible you'll be offered different plan options and coverages this year. The better you understand the changes, the better decisions you'll make.
  • Look ahead. Consider what the next year will look like for you and your family. Are you planning to have a baby? Knee replacement surgery? A root canal? Does someone need braces? New glasses? Keep this in mind as you look at your coverage options.
  • Dive into the details. It's important to note whether the plans' provider networks have changed. Make sure your doctors are still in-network. Is your chiropractor also covered? Does the plan cover orthodontics? Is your spouse's daily prescription drug covered, and did the coverage change? Also consider areas of need like access to specialists, mental health care, therapies, complementary and alternative medicine, and chronic care. Look at the options offered in all plans, including health, dental, vision and disability.
  • Get out your calculator. Add up the amount you'll need to pay toward your health premium plus deductibles, co-payments (flat-dollar amounts) for prescriptions and doctor office visits, and co-insurance (a percentage of the cost you'll pay) for services. Understand what you'll be asked to pay if you seek care outside your network. This will give you a clearer picture of how much you're likely to spend. The plan that looks to be the cheapest option may not really be the cheapest for you.
  • Determine what's right for you. Consider your comfort level with risk. If you want your family to be covered for every eventuality, a more traditional plan, if one is offered, might be right for you. If you're comfortable taking on some upfront costs, a high-deductible plan with a lower premium ight be your plan of choice.
  • Take advantage of extras. Your employer may offer the option to reduce your health premiums in exchange for your participation in a wellness program or health-risk assessment. It may match some or all of the money you save in your 401(k) plan. It might let you set aside tax-deferred money into a health savings account or flexible spending account. Also, check with your employer to see if it offers voluntary insurance with a group discount and payroll deduction for premiums—like critical-illness, pet, auto and homeowners coverage. If these options work for your situation, sign up.
  • Ask questions. Don't be shy about asking your HR or benefits department to explain something if you're not sure. They're there to help and want you to make the best decisions for your situation.

"Taking the time upfront to carefully choose the best options will help employees better manage their finances throughout the year, alleviating stress and promoting productivity," Stich said.

SOURCE: Miller, S. (24 September 2019) "Simple Open-Enrollment Tips That Can Make a Big Difference" (Web Blog Post). Retrieved from https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/simple-open-enrollment-tips-make-a-big-difference.aspx


Health insurance surpass $20,000 per year, hitting a record

An annual survey of employers recently revealed that the cost of family health coverage has now surpassed $20,000, a record high. The survey also revealed that while most employers pay most of the costs of coverage, workers' average contribution for a family plan is now $6,000. Read this blog post from Employee Benefit News to learn more.


The cost of family health coverage in the U.S. now tops $20,000, an annual survey of employers found, a record high that has pushed an increasing number of American workers into plans that cover less or cost more, or force them out of the insurance market entirely.

“It’s as much as buying a basic economy car,” said Drew Altman, chief executive officer of the Kaiser Family Foundation, “but buying it every year.” The nonprofit health research group conducts the yearly survey of coverage that people get through work, the main source of insurance in the U.S. for people under age 65.

While employers pay most of the costs of coverage, according to the survey, workers’ average contribution is now $6,000 for a family plan. That’s just their share of upfront premiums, and doesn’t include co-payments, deductibles and other forms of cost-sharing once they need care.

The seemingly inexorable rise of costs has led to deep frustration with U.S. healthcare, prompting questions about whether a system where coverage is tied to a job can survive. As premiums and deductibles have increased in the last two decades, the percentage of workers covered has slipped as employers dropped coverage and some workers chose not to enroll. Fewer Americans under 65 had employer coverage in 2017 than in 1999, according to a separate Kaiser Family Foundation analysis of federal data. That’s despite the fact that the U.S. economy employed 17 million more people in 2017 than in 1999.

“What we’ve been seeing is a slow, slow kind of drip-drip erosion in employer coverage,” Altman said.

Employees’ costs for healthcare are rising more quickly than wages or overall economy-wide prices, and the working poor have been particularly hard-hit. In firms where more than 35% of employees earn less than $25,000 a year, workers would have to contribute more than $7,000 for a family health plan. It’s an expense that Altman calls “just flat-out not affordable.” Only one-third of employees at such firms are on their employer’s health plans, compared with 63% at higher-wage firms, according to the Kaiser Family Foundation’s data.

The survey is based on responses from more than 2,000 randomly selected employers with at least three workers, including private firms and non-federal public employers.

Deductibles are rising even faster than premiums, meaning that patients are on the hook for more of their medical costs upfront. For a single person, the average deductible in 2019 was $1,396, up from $533 in 2009. A typical household with employer health coverage spends about $800 a year in out-of-pocket costs, not counting premiums, according to research from the Commonwealth Fund. At the high end of the range, those costs can top $5,000 a year.

While raising deductibles can moderate premiums, it also increases costs for people with an illness or who gets hurt. “Cost-sharing is a tax on the sick,” said Mark Fendrick, director of the Center for Value-Based Insurance Design at the University of Michigan.

Under the Affordable Care Act, insurance plans must cover certain preventive services such as immunizations and annual wellness visits without patient cost-sharing. But patients still have to pay out-of-pocket for other essential care, such as medication for chronic conditions like diabetes or high blood pressure, until they meet their deductibles.

Many Americans aren’t prepared for the risks that deductibles transfer to patients. Almost 40% of adults can’t pay an unexpected $400 expense without borrowing or selling an asset, according to a Federal Reserve survey from May.

That’s a problem, Fendrick said. “My patient should not have to have a bake sale to afford her insulin,” he said.

After years of pushing healthcare costs onto workers, some employers are pressing pause. Delta Air Lines Inc. recently froze employees’ contributions to premiums for two years, Chief Executive Officer Ed Bastian said in an interview at Bloomberg’s headquarters in New York last week.

“We said we’re not going to raise them. We're going to absorb the cost because we need to make certain people know that their benefits structure is real important,” Bastian said. He said the company’s healthcare costs are growing by double-digits. The Atlanta-based company has more than 80,000 employees around the globe.

Some large employers have reversed course on asking workers to take on more costs, according to a separate survey from the National Business Group on Health. In 2020, fewer companies will limit employees to so-called “consumer-directed health plans,” which pair high-deductible coverage with savings accounts for medical spending funded by workers and employers, according to the survey. That will be the only plan available at 25% of large employers in the survey, down from 39% in 2018.

Employers have to balance their desire to control costs with their need to attract and keep workers, said Kaiser’s Altman. That leaves them less inclined to make aggressive moves to tackle underlying medical costs, such as by cutting high-cost hospitals out of their networks. In recent years employers’ healthcare costs have remained steady as a share of their total compensation expenses.

“There’s a lot of gnashing of teeth,” Altman said, “but if you look at what they do, not what they say, it’s reasonably vanilla.”

SOURCE: Tozzi, J. (25 September 2019) "Health insurance surpass $20,000 per year, hitting a record" (Web Blog Post). Retrieved from https://www.benefitnews.com/articles/health-insurance-costs-surpass-20-000-per-year


DOL issues finalized overtime regulation

The Department of Labor (DOL) released a new, finalized overtime rule recently. This new rule raises the minimum salary level to $35,568 per year for a full-year worker to earn overtime wages. Read this blog post from Employee Benefit News to learn more about this new rule.


The DOL on Tuesday released its highly anticipated finalized overtime rule, raising the minimum salary level to $35,568 per year for a full-year worker to earn overtime wages.

“Today’s rule is a thoughtful product informed by public comment, listening sessions and long-standing calculations,” Wage and Hour Division Administrator Cheryl Stanton says in a statement. “The DOL’s wage and hour division now turns to help employers comply and ensure that workers will be receiving their overtime pay.”

The final rule, effective Jan. 1, 2020, updates the earnings thresholds necessary to exempt executive, administrative or professional employees from the FLSA’s minimum wage and overtime pay requirements, and allows employers to count a portion of certain bonuses (and commissions) toward meeting the salary level.

The new thresholds account for growth in employee earnings since the currently enforced thresholds were set in 2004. In the final rule, the department is:

  • Raising the standard salary level from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker);
  • Raising the total annual compensation level for highly compensated employees from the currently-enforced level of $100,000 to $107,432 per year;
  • Allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices; and
  • Revising the special salary levels for workers in U.S. territories and in the motion picture industry.

This finalized rule is a shift from the previous administration's proposed rule, which would have doubled the salary threshold.

Under the Obama administration, the Labor Department in 2016 raised the minimum salary to roughly $47,000, extending mandatory overtime pay to nearly 4 million U.S. employees. But the following year, a federal judge in Texas ruled that the ceiling was set so high that it could sweep in some management workers who are supposed to be exempt from overtime pay protections. Business groups and 21 Republican-led states then sued, challenging the rule.

The overturning of the 2016 rule that increased the salary level from the 2004 level has created a lot of uncertainty, says Susan Harthill, a partner with Morgan Lewis. The best way to create certainty is to issue a new regulation, which is what the administration's done, Harthill adds.

While the final rule largely tracks the draft, there are two changes that should be noted: the salary level is $5 higher and the highly compensated employee salary level is dramatically reduced from the proposed level, she says.

“This is an effort to find a middle ground, and while it may be challenged by either or maybe both sides, the DOL’s salary test sets a clear dividing line between employees who must be paid overtime if they work more than 40 hours per week and employees whose eligibility for overtime varies based on their job duties,” Harthill adds.

The DOL estimates 1.3 million employees could now be eligible for overtime pay under this rule (employees who earn between $23,600 and $35,368 no longer qualify for the exemption).

A majority of business groups were critical of Obama’s overtime rule, citing the burdens it placed particularly on small businesses that would be forced to roll out new systems for tracking hours, recordkeeping and reporting.

SHRM, for example, expressed it's opposition to the rule, noting it would have fundamentally changed the rules for employee classification, dramatically increased the salary under which employees are eligible for overtime and provided for automatic increases in the salary level without employer input.

“Today’s announcement finalizing DOL’s overtime rule provides much-needed clarity for workplaces," SHRM says in a statement. "This rule marks the first increase to the salary threshold since 2004 and gives employers more flexibility to plan for the future. We appreciate DOL’s willingness to work with SHRM, other organizations and America’s workers to enact an overtime rule that benefits both employers and their employees.”

But the finalized rule still will have implications for employers.

“Education and health services, wholesale and retail trade, and professional and business services, are the most impacted industries, according to DOL, but all industries are potentially impacted,” Harthill, also former DOL deputy solicitor of labor for national operations, adds. “Also often overlooked is the impact on nonprofits and state and local governments, which are subject to the FLSA and often have lower salaries.”

All companies should be taking a close look at their employees to make sure workers are properly classified, but what they do after that will depend entirely on individual business needs, she says. “Some will hire additional employees to reduce the amount of overtime, while others will just pay overtime if their workers in this salary bracket spend more than 40 hours a week on the job.”

Employers who haven’t already reviewed their exempt workforce should do so now, before the Jan. 1 effective date, Harthill advises.

“They can opt to pay overtime, raise salary levels above $35,368, or review and tighten policies to ensure employees do not work more than 40 hours per week,” she says. “There could be job positions that need to be reclassified and that might have a knock-on effect for employees who earn above the new salary level.”

Many employers increased their salaries when DOL issued the 2016 rule, and some states have higher salary levels, so not all businesses will need to make an adjustment. “But even those employers should review their highly compensated employees — they may still be exempt even if they earn less than $107,432 but the analysis will be more complicated,” she adds.

“We did not hear any objections from employers when these rules were initially proposed," adds Jason Hammersla, vice president of communications at the American Benefits Council. "That said, aside from the obvious compensation and payroll tax implications, this rulemaking is significant for employers who include overtime compensation in the formula for retirement plan contributions as it could increase any required employer contributions."

"The change could also affect plans that exclude overtime pay from the plan’s definition of compensation if the new overtime pay causes the plan to become discriminatory in favor of highly compensated employees," he adds.

SOURCE: Otto, N. (24 September 2019) "DOL issues finalized overtime regulation" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/dol-issues-finalized-overtime-regulation


Susan's Perfect Fall Chili

Welcome to our monthly Dish segment. This month, we asked Susan Henderson to provide us with her favorite Dine In and Dine Out choices. Check them out below and let us know if you give them a try!

A Little Bit About Susan

Susan is the current Vice President of Operations and Human Resources at Hierl Insurance, Inc.

Susan has significant years of experience as a human resource generalist. She can provide your organization with a variety of services for both your employee benefits coverage as well as human resource consulting solutions.

Her knowledge, motivation to assist local businesses, and professional personality provide you with an excellent resource, only a phone call away.


Black Bean & Sweet Potato Chili

Susan’s favorite recipe to enjoy with her family is Black Bean & Sweet Potato Chili. This recipe makes a great fall dish!

Ingredients

  • 2 T Canola Oil
  • 1 medium yellow onion, chopped
  • 6-8 medium garlic cloves, finely chopped
  • 4 tsp chili powder
  • 2 tsp cumin
  • 1 chipotle in adobe, stem and seeds discarded, chopped (about 2 tsp)
  • 1 28 can diced tomatoes
  • 4 c water or low sodium chicken broth
  • 1 ½ lbs sweet potatoes, diced (about 3 cups)
  • 2 – 15 ounce cans black beans
  • For garnish:  chopped green onion, crumbled feta cheese, lime, tortilla chips

Directions

  1. Heat oil in a large heavy bottomed Dutch oven or pot over medium high heat.  When it shimmers, add the onion, season with salt and cook until softened and onion is translucent, about 5 minutes. Stir in the garlic, chili powder, cumin and chipotle and cook until fragrant, about 2 minutes.   Add the tomatoes, water/broth, and sweet potatoes and bring to a boil over high heat, about 5 minutes.
  2. Reduce the heat to medium-low and stir in the beans.  Simmer, partially covered, until the liquid is slightly thickened and the potatoes are cooked through (about 30 minutes).
  3. Garnish with scallions, cheese, lime as desired. Serve with tortilla chips.


When It’s a Great Time to Go Out

Susan loves eating out at The Ruby Owl Tap Room.

Learn more about The Ruby Owl Tap Room on the restaurant’s website.

The Ruby Owl Tap Room is rated 4.5 stars on Trip Advisor.

Thank-you for joining us for this month’s Dish! Don’t forget to come back next month for a new one.


How to Save Your Business with Cyber Liability Insurance

In recent years, the risk of cyberattacks has become a common, high-level threat to organizations. This means that both time and money need to be invested in order to take precautionary measures and implement damage control before and after an attack happens. As a result, cyber liability insurance is now the recommended measure for risk management.

According to our expert, Cathleen C. Christenson, VP of Property & Casualty at Hierl Insurance, there are two main reasons why Cyber Liability Insurance is the best way to protect your company’s cyber assets: the all-in costs of a data breach and the protection of customers and employees. Since the world will never be free of cyber risks, the right thing to do is to protect your business with Cyber Liability Insurance.

Why Cyber Liability Insurance?

When cyberattacks occur, they often result in devastating damage to an organization’s important data. This results in business disruptions related to lost revenue, restorative actions and public relations. Not being able to accurately measure business costs of cyber risk means organizations are unable to make decisions about resource allocation, technology investments and threat prioritization. According to research published by Ponemon Institute, the cost of a data breach has increased to around $150 per document lost.

While the average breach involves around 25,000 files, this could round up to nearly $3.9 million dollars. It is important to remember no organization is immune to the impact of cybercrime. Insurance will help protect your organization’s information, facilitate timely recovery of business functions, and minimize loss of revenue, customers and data.

Coverage Options

If the worst should happen and your company suffers a data breach or similar attack, you should have a business continuity plan in place. Data is generally worth more than physical assets and keeping your data safe from cyber risks requires constant attention to ensure an attack never happens. Hierl Insurance has the resources and know-how to help you identify potential risks and keep your business running smoothly in the event of an attack. Cyber liability insurance policies are tailored to meet your company’s specific needs Benefits include data breach coverage, business interruption loss reimbursement, cyber extortion defense, forensic and legal support.

Why Hierl?

At Hierl Insurance, we love what we do, and this includes a partnership with you in mind. We understand the demands of each client are unique, so we craft your options to fit your business perfectly, creating a different story for each client. We stand by waiting to greet you with a warm welcome to devise a blueprint to turn your company’s dreams into reality. Supplementing your insurance with cyber coverage can provide peace of mind that your organization’s financial and reputational well-being is protected.

To speak with Cathleen, contact her today at 920.921.5921 or by email at cchristensen@hierl.com.