Combating Absenteeism

The zombie apocalypse is upon us. It’s real, and according to recent studies it costs employers billions. But the zombies aren’t taking the form of the undead rising from the grave in a quest to consume the living. Instead, they take the form of exhausted, sick, injured, or demoralized employees showing up to work yet not performing to their full potential.

That’s the conclusion of a new study out of Brigham Young University, which determined that when it comes to damage to employers, the cost ratio of presenteeism versus absenteeism is three to one.

Researchers found that presenteeism was highly correlated with outside factors, including poor health, poor eating habits, financial stress, relationship problems, and other emotional problems originating outside the company. Workers become stressed and distracted and, because they are only human, their problems spill over into the workplace.

According to its chief researcher, the study looked at more than 20,000 workers. Among its findings:

  • Those with bad diets were 66% more susceptible to presenteeism than those with healthy diets.
  • Smokers reported productivity losses 28% more often than nonsmokers.
  • Regular exercisers were 50% less likely than those who only exercised “occasionally” to succumb to presenteeism.

Contributing Factors
In addition to the normal litany of unavoidable minor issues, such as sick children at home or minor financial matters, employee problems can arise if management shuts down important stress valves:

Putting too much emphasis on attendance in workplace performance reviews
Disciplining or stigmatizing workers who call in sick on short notice
Expending managers’ valuable time “verifying” illnesses (a cost sink in itself!)

The Solution
The authors of the study concluded that the use of the cat-o’-nine-tails to improve workplace morale is probably suboptimal. Instead, they suggested some basic leadership and resourcing measures, such as helping managers and workers prioritize what is important and providing “sufficient technological support.” Other suggestions included implementing targeted wellness programs designed to address employees’ specific stressors. For example, where employees may be struggling with financial stressors, distracting them from their work, make financial-planning services available. If health issues are paramount, establish programs to help workers stop smoking, improve eating habits, and address physical and mental health issues.

Lowering presenteeism will require that employers have realistic expectations of workers, help workers prioritize, and provide sufficient technological support. Financial stress and concerns may warrant financial planning services. Health-promotion interventions aimed at improving physical and mental health also may contribute to reducing presenteeism.

Other ideas include sponsoring a workplace flu vaccination program, sending sick workers home immediately, and implementing a “no questions asked” PTO policy, as opposed to segregating sick days and personal-leave days. Leaders can also reward and encourage midline managers who are creative in allowing staffers flexible work arrangements — though care should still be taken to comply with wage and hour laws.

At Cleary, we know how important a comprehensive benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your business objectives, takes into account state and federal laws, and capitalizes on incentives and innovative solutions now being offered.

Update to Federal Service Contracts

The Department of Labor’s Wage and Hour Division has issued a final rule to implement Executive Order 13495, Nondisplacement of Qualified Workers Under Service Contracts. This final rule will be effective once the Federal Acquisition Regulatory Council (FARC) issues regulations for the inclusion of the nondisplacement contract clause in covered federal solicitations and contracts, as required by the Executive Order.

In our last newsletter we told you that this order and final rule requires contractors and subcontractors that are awarded a federal service contract to provide the same or similar services at the same location to, in most circumstances, offer employment to the predecessor contractor’s employees in positions for which they are qualified. Successor contractors are allowed to reduce the size of the workforce and to give first preference to their current employees.

You can follow all the other provisions of this rule under the Federal Register, 29 CFR Part 9. Hopefully this rule will become finalized before year end, as it has been discussed extensively for the past four years.

Questions regarding the order may be addressed to Timothy Helm, Chief, Branch of Government Contracts Enforcement, Wage and Hour Division, U.S. Department of Labor, Washington, DC 20210; telephone number (202) 693-0064.

ALL AGENCY MEMORANDUM NUMBER 211 Reminder

Changes to the 2012 Service Contract Act Health and Welfare Fringe Benefit rates were disclosed on June 11, 2012. The new SCA health and welfare benefits were increased to $3.71 per hour and are posted on the Wage Determination Online (www.wdol.gov) and Wage and Hour Division (WHD) (www.dol.gov/whd) websites.

The HISTORY, Solicitation/Contracts Affected and Wage Determinations for the State of Hawaii on this memorandum are basically the same as the previous memorandums issued by the Department of Labor covering this subject.

Go to www.wdol.gov and click on the Library page for a copy of this memorandum.

Remember, as in the past, do not provide your Service Contract Act employees this change until it has been modified into your contract by the Contracting Activity, which is usually on the anniversary date of your contract.

Types of Wage Determinations

In addition to the basic four types of wage determinations (Area Standard, Nonstandard, Collective Bargaining Agreements, and Contract-Specific), there have been some questions pertaining to other types of wage determinations.

Nationwide wage determinations and hourly day rate (usually for captains of vessels) wage determinations do not specify the odd or even health and welfare rates. On these you should go to the section of the wage determinations that specifies what health and welfare benefit rates apply. Those are the rates to utilize.

Questions about this should be addressed to the Contracting Activity of the Department of Labor in Washington, DC.

Service Contract Act Training Courses

The Professional Services Council (PSC) is offering its two-day Service Contract Act training in Arlington, VA, on October 31–November 1, 2012, in conjunction with the DOL and DOD panels that will be present. If interested, go to www.pscouncil.org or call PSC at 703-875-8059.

At Cleary, we know how important a comprehensive benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your fringe-benefit obligations and provides your employees with valuable benefits.

Protecting Your 401K

If you’re changing employers, one of the many transitions you’ll face is what to do with the money you’ve accumulated in your 401(k). Making the right choice can keep you on track for a financially secure retirement, but making the wrong choice can wind up costing you plenty. Let’s take a look at your options.

Cashing Out

Unless you’re facing a financial emergency that leaves you no other option, it’s usually a bad idea to cash out your 401(k). Why? For starters, tapping your retirement funds early accelerates tax liability and can subject you to stiff penalties.

You’ll owe federal income taxes – and, depending on where you live, maybe state and local income taxes as well – on any cash you withdraw, as well as an additional federal penalty of 10% if you’re younger than age 59 . (One exception: If you’re older than age 55 when you leave your job, you may be exempt from this penalty. Ask your tax adviser.) Bear in mind that your employer also is generally required to withhold 20% of your distribution as a down payment on your federal income tax bill.

In addition, by withdrawing funds you’ll not only reduce the size of your nest egg but also lose its tax-deferred growth potential. The combined effect of significant tax penalties and lost appreciation potential can be enormous.

Leaving Your 401(k) or Other Qualified Plan Account Alone

As long as your account has at least $5,000 in it, by law you can’t be forced out of the plan, and your simplest option may be to do nothing and maintain your existing qualified-plan account.

There can be many reasons to choose this option. For example, your old plan may offer a particularly good lineup of investment choices. Or perhaps your new employer’s plan is significantly inferior to your current one, or restricts eligibility for participation to employees with at least one year of service.

Whatever the reason, if you’re happy with your old 401(k) account, you may not want to change a thing.

Rolling Your Account Over

Although you can keep your old 401(k) account active, you won’t be able to make additional contributions to it after you switch jobs. If you wish to streamline the number of accounts you own, consider rolling over your 401(k) savings into your new employer’s 401(k) plan – or into an IRA.

Which is better? It depends on your particular needs. Even though there aren’t major differences between the two options, both have their benefits and drawbacks.

If you’re planning to participate in your new employer’s 401(k) and you don’t already have an IRA, rolling over to the new 401(k) may be the more streamlined option because you’ll have only one account to keep track of.

But an IRA offers an important advantage: It can provide you with more flexibility. If you want to own a specific mutual fund or security in your retirement account, you can find an IRA custodian that will allow you to do so.

A 401(k), by contrast, limits you to the options your employer chooses to make available to you. Some plans offer a broadly diversified collection of strong-performing funds. Others are limited to only a few funds with middling track records. If you’re not sure about the quality of your new plan, your financial adviser can help you evaluate it.

Keep in mind that IRAs can have their downsides, too. For one, they typically charge investors modest administrative fees, while employers typically pick up the costs involved with a 401(k) plan. Also, IRAs can’t allow loans, while some 401(k) plans do. (Ask your 401(k) administrator about the specific benefits available to you.) On the other hand, IRAs offer more opportunities for penalty-free withdrawals before age 59 .

Go Direct

Whichever option you choose, a direct rollover is usually best. For instance, a rollover IRA into platinum or any other precious metal for that matter could act as an inflation hedge. With a direct rollover, you never take formal possession of your funds. The administrator of your old 401(k) plan transfers your assets directly to your new 401(k) administrator or IRA custodian. In some cases, the check will first be sent to you to hand over to your new administrator. As long as the check isn’t made out to you personally, this is still considered a direct rollover.

An indirect rollover is when you take personal possession of your assets before ultimately rolling them over. In this case, if you don’t redeposit the funds within 60 days, it’s considered a distribution, and you’ll owe income taxes and, generally, an additional 10% early-withdrawal penalty.

Your former employer also will be required to withhold 20% of your account value for federal income taxes, even though you’re then doing a tax-free rollover. Generally, this option doesn’t make sense. If you wind up having withholding, don’t forget to replace this amount when you roll over the funds within 60 days to avoid additional taxes and penalties.

Keep Saving

The good news is that changing jobs doesn’t have to mean interrupting your retirement savings plan. Avoid the expensive trap of cashing out your 401(k), and you can continue to make progress toward your long-term financial goals.

Presented by John Steiger, ChFC, AEP Certified Financial Planner

At Cleary, we are committed to a holistic approach of protecting and preserving our clients’ financial assets. Give us a call today at 617-723-0700 and let us know how we can help you.

Newsletter Sign Up


By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Posts

Archives

Categories