When to Break the Rules - Oregon Unemployment Tax and HR Best Practices

Each state has its own unemployment tax system and each are slightly different but they generally operate within a similar framework.  Employers are assessed a tax that goes into a fund that is used to pay for unemployment claims.  The tax rate each business is assigned varies according to two primary elements.  First, how much your former employees take out of the general fund in the form of unemployment insurance (UI) benefits.  The second is the ratio of those UI benefit costs compared to the level of payroll.  In Oregon, the State Unemployment Insurance tax rate is based on a rolling three year average (link to formula).  Thus the UI benefits that have been paid to former employees are charged against your tax rate for three years.

The state of Oregon has specific rules on granting or denying unemployment benefits.  Broadly these rules mirror the best practices of progressive discipline that HR professionals recommend to discipline or terminate an employee.  For example, an employee will be awarded unemployment if they made a one-time mistake and did not know they would be let go for that issue.  But if that same employee had been disciplined before, and been warned that if they do it again they will be terminated, then UI benefits would not be awarded. In the vast majority of cases it is best to mirror these Oregon Administrative Rules under Eligibility Factors (link).  Progressive discipline is a useful tool as your goal should be to get the desired outcome from an employee to benefit your business.

Progressive discipline is based on consistently applying the same steps and standards on all employees.  However each situation should be evaluated independently and there are exceptions to every rule.  Sometimes it is best to skip progressive discipline altogether and terminate an employee.   A great example of when to skip right to termination is workplace violence.  I remember an unemployment hearing where an employee had been in a fight with another employee in front of the employer’s front gate.  The judge seemed to be going down the road that ‘this was one-time mistake’ and asked about previous warnings.  There were no previous warnings but unbeknownst to me the client volunteered that he had to fire this employee in the past for bad behavior.  Then the client insisted that the former employee answer as to why he was fired.  The judge was unhappy that she was losing control of the hearing until the former employee admitted to biting the head off of a pigeon at work.  Regardless of whether you win or lose an unemployment claim you do not need a person on your crew who has moved from committing violence against animals to committing violence against people. 

Winning an unemployment claim should not be your only goal.  There are many variables to consider beyond your UI tax rate.  In my role as Risk Manager I have often heard,” I was just going to let that person go before they filed a WC claim, call OSHA, claim discrimination, file a BOLI suit, etc.”  I am not suggesting that employees be terminated before they exercise their legal rights.  Nor am I suggesting that termination is always the answer. What I do suggest is that if you have an issue, address it immediately so that the employee has a resolution and an outlet when being asked to change behavior (contact Cardinal for guidance).  An employer should be proactive with progressive discipline but maintain a holistic approach to mitigate all potential risks.

Arin J. Carmack

New OSHA Hazard Communication Rules

There are changes coming to the hazard communication rules.  These changes focus on how risks associated with chemical hazards in the workplace are conveyed to employees.  The new communication standard is based on the Globally Harmonized System (GHS).  As the name indicates, GHS is meant to be universally adopted to simplify hazard communication.  These changes go into effect for employers on December 1^st, 2013.

OSHA's training on the upcoming changes are broken down into three categories: safety labels, pictograms and Safety Data Sheets (training located on this link).  The new safety label standard was devised as a consistent manner in which to quickly inform employees as to the types of hazards, as well as any required precautions, when working with a chemical.  Pictograms were created to replace the multiple methods used to communicate types of hazards (click here to download pictograms). These pictograms are meant to allow an employee, with just a quick glance, to understand which hazard is associated with what chemical. For example, the pictogram of a gas cylinder lets an employee know they are handling a gas under pressure. Finally, the Material and Safety Data Sheets (MSDS) have been reformatted and renamed Safety Data Sheets (SDS).  The new SDSs are laid out in a more coherent outline as the old MSDSs were inconsistent between manufacturers and often required several minutes for an employee to find a piece of information.  In an emergency, time is very important when trying to locate the section discussing how best to administer first aid.

Available training:

There is an interactive online course from SAIF on Oregon OSHA's website (click here). Additionally, Oregon OSHA is putting on two classes in December.  These are in Eugene on 12/10/2013 and Milwaukee on 12/12/2013.  To register, click this link.

What to do:

Train your employees on the new standards as well as provide a refresher on the old standards.   Some manufacturers will be rolling out SDSs in 2013 while others will still use MSDSs through 2014 and even into 2015. Use the online course, go over some examples of new labels and SDSs then review the pictograms. The rest of your hazard communication plan will remain the same. Be sure to document what you covered in the training and who was trained.  If you need assistance with the new standards please contact me.

Federal OSHA’s summary and FAQs:

https://www.osha.gov/dsg/hazcom/index.html

Arin J. Carmack

Should Your Small Business Offer Health Insurance in 2014

For a good part of 2013 I have been speaking to small businesses about the Affordable Care Act (ACA).  At those speaking engagements employers have expressed concern about what should they do in 2014.  Should they provide health insurance, can they afford it or is it better to just wait and see what happens in the latter part of 2013 before making a decision?  There is no easy answer.  The answers to these questions vary depending on each small business owner’s situation.  In creating the ACA there was no stick to entice small business owners into offering health insurance but there is a carrot.  The stick in getting employers to provide coverage is directed at large employers. Small employers are not subject to an employer mandate tax/penalty of $2000 if they do not provide health insurance (see article here).   A carrot in the form of a tax credit was extended to small businesses with less than 25 employees.  These businesses may qualify for a tax credit on the health insurance premium paid by the business (see article here).  If you currently offer coverage then avail yourself of the tax credit.  If you do not offer coverage but are reviewing your options consider how an employer plan may affect your employees.  When offering an employer group plan, any Federal tax benefits (subsidies) for employees may no longer be available.  Individuals (employees shopping in the individual health care exchange market) may be eligible for a subsidy of some sort, like a tax credit, which is dependent on income level and family size.  By taking into consideration your employee’s ability, and maybe your own, to obtain a tax subsidy you can better quantify the subsidy benefits vs. a small business tax credit coupled with a tax deduction for premiums (most health insurance is a tax write off but verify this with your CPA). Unfortunately the tool to determine a possible tax credit subsidy is one of the major problems the Oregon and Federal health insurance exchange websites are experiencing (links below).  Hopefully that problem will soon be fixed and with that information it will allow you to make a more fully informed decision.

Oregon Health Insurance Exchange

www.coveroregon.com

Federal Health Insurance Exchange

www.healthcare.gov/

Navigating the Exchange for Small Business Owners and Employees

Many small employers do not offer health insurance and are wondering what to do for themselves and their employees before January 1^st, 2014 rolls around.  Small businesses (fewer than 50 employees) are not subject to the employer mandate and thus do not receive a penalty for not offering health insurance.  However small businesses owners and employees are considered individuals and thus are subject to the individual mandate (see my article on this topic in the first link below).  If either of the aforementioned individuals do not obtain health insurance the following penalties apply.

2014 - $95.00 or 1.0% of income whichever is greater

2015 - $325.00 or 2.0% of income whichever is greater

2016 - $695.00 or 2.5% of income whichever is greater

2017 on – Increases with inflation

To avoid this penalty an individual must purchase insurance that meets the minimum standard value.  These plans are available through a state or the federal health insurance exchange.  To see if you should go to a state or federal exchange use this link: https://www.healthcare.gov/  For an individual purchasing health insurance who does not currently have coverage and is not offered a plan through their employer, the website will walk you through several questions to determine if you qualify for a subsidy for all or some family members.  You can apply online and obtain a quote for a variety of plans.  There are three basic levels of coverage (see article on the options and pricing available in Oregon below).  Then simply enroll online.    Well, maybe it is not that simple for everyone. Because of the complexity of the new law you may choose to access the health insurance exchange with the help of a navigator (or community partner). The idea behind a navigator is that sometimes it is better to have a human walking you through your options.  You can connect with a navigator in your area by going to this website. https://localhelp.healthcare.gov/  Another option is an insurance agent. Many insurance agents have been through training and can help guide an individual with the enrollment process.   There are other ways to obtain assistance like calling the health insurance exchange’s toll free number and asking questions while shopping online.

Health insurance plans went on sale as of October 1^st, 2013. The first day of coverage can begin is January 1^st, 2014.  If you are going to buy coverage you need to buy a plan before March 31^st, 2014 when open enrollment ends.  After that date I should note that in most cases, without a qualifying event, you cannot buy health insurance until open enrollment begins again on October 15, 2014. 

Individual Mandate

http://cardinalservices.blogspot.com/2013/05/employer-mandate-vs-individual-mandate.html

Oregon Health Insurance Plans

http://cardinalservices.blogspot.com/2013/07/health-insurance-rates-have-been.html

Arin J. Carmack

Replace Oregon Workers’ Compensation with a single payer health insurance system?

I remember when the Affordable Care Act (ACA) became law and one of the questions that came up was, ‘Would the ACA replace workers’ compensation?’  The logic behind the question was if everyone has health insurance, then they really do not need medical benefits from workers’ compensation.  Similar logic was raised in a version of a recent bill in Oregon’s last legislative session, HB 2922.  The bill states, “SECTION 26.  { + (1) The Affordable Health Care for All Oregon Plan shall be the primary payer of reimbursement for health services provided through the plan, including but not limited to compensable medical expenses covered by workers' compensation insurance.”  This bill did not pass but a study was funded by HB 3260 to see if a single payer system is advisable for Oregon. (see links to these bills below)

When considering any changes to our workers’ compensation system one should step back and take a look at the larger picture. It seems that employers in Oregon have been subjected to frequent double digit rises in health insurance premiums almost as long as Oregon’s workers’ compensation rates have been stable.  Oregon’s workers’ compensation system is the envy of many states with its stable rates and the balance it strikes between employers and employees.  When business and labor interests hammered out a framework in the late 1980’s, our workers compensation system became a model that other states and nations emulate.  This balanced system is not perfect but is far better than most other states. 

When you contrast the two systems you cannot help but see the disparity between the unpredictable rise in health insurance costs and predicable workers’ compensation rates.  There are signs that the rise in health insurance rates is abating but it is ill advised to substitute something that has been so unstable for so long in place of our workers’ compensation system.  A far better solution is to table this part of the discussion until much later. 

HB 2922

http://www.leg.state.or.us/13reg/measures/hb2900.dir/hb2922.intro.html

HB 3260

http://landru.leg.state.or.us/13reg/measures/hb3200.dir/hb3260.en.html

Arin J. Carmack