Compensation Force

Approved Stimulus Bill Includes Employer Subsidy for COBRA Premiums

The stimulus bill approved Friday evening and now headed to President Obama for approval includes a provision for a nine-month 65% subsidy for COBRA premiums for people who lost/lose their jobs between September 1, 2008 and December 31, 2009.

More from Mike Haberman at HR Observations:

The bill is available to anyone involuntarily terminated since September 1, 2008.  If someone did not elect to have COBRA at that time they will be given a 60 day opt-in period.

The ex-employee would pay their portion to the employer or insurer and the employer would make up the remainder. The employer would then apply that amount as a deduction against payroll taxes. If that is insufficient to cover the COBRA expense then the U.S. Treasury would pay the remaining amount. This payment would continue for a period of 12 months, rather than the 18 months of COBRA. They would cease if someone became covered by other insurance, including Medicaid.

For more information, go to Mike's post and to this article at Workforce.com.

Postscript:  The purpose of this post was to alert my readers to this provision, not to provide a lot of detail on how COBRA works under this new provision.  In response to some of the more detailed questions I am receiving in the comment stream here, I'd like to provide a couple of links for those of you seeking more information.  If anybody can suggest other good links, let me know and I'll add them here.

Dear Workforce:  How Does the Stimulus Bill Change COBRA Provisions?

Premium Assistance for COBRA Benefits as part of the Stimulus Legislation at the Pennsylvania Labor & Employment Blog

COBRA Provisions within Stimulus Package at the Business Chatt Blog

The Department of Labor's FAQs for COBRA

 

What Message is YOUR Reward Program Sending: Hunker Down... or Embrace the Future?

These are tough times.  I know this, my clients know this and so do my readers. 

But it is in tough times that new ideas are most critical.  It is through innovation, not hunkering down and waiting out the storm, that our organizations will create a better future - for everyone whose lives are tied to them.

And reward plans play an important role in this, in pointing employees - and their efforts - toward the future.

Nobody makes this point better than Paul Hebert in his post today on Incentive Intelligence.

Creating a program to reward creative thinking and new ideas focuses employees on something other than the negative stuff in the press.

Rewarding employees for thinking about the next thing means you will HAVE a next thing.  If everyone focuses on today - that's all you'll have.  Companies must find a way to reward employees (and channel partners) that are paying attention to customer needs and finding ways to do things more efficiently and more effectively.  These are the important things today - not just reducing costs and increasing next quarters P/L statement.

Engaging your employees in future discussions and future plans communicates you think there will be a future.  Talking about today's troubles and last weeks layoffs (or next weeks layoffs) communicates to your employee base that you don't know what the future holds.  Talk about scary.

Right now the only reward most employees have is if they don't do anything to get noticed, they MIGHT keep their job.  Now that's a workforce that's gonna change the world (feel the sarcasm baby.)

Click over and read the rest.  Really.  Do it now.  Then let's take Paul's advice to heart and make sure that our reward programs are driving the right investment in our future.  Our future may depend on it.

Are We Looking at a Job Evaluation Revival in '09?

I know.  In many places, for many organizations, job evaluation - of the traditional factor-based type - has kept its place as a cornerstone of the base salary program.  In most organizations, however, the dominant method of valuing jobs has been a market-based approach. 

A WorldatWork poll, conducted in 2005 (the most recent research I've been able to find on the subject), confirms what I have found to be true in my own travels.  The responding 450 member organizations identified their "dominant" job evaluation method as:

• Market pricing - 61.0%

• Point factor - 23.0%

• Whole job (e.g., ranking or classification) - 8.8%

• Job component - 3.8%

• Do not use (formal) job evaluation - 3.4%

I've written about the choice of market versus factor-based (or internal job content based) job evaluation approaches before, and have done some hypothesizing of my own as to our strong preference (at least in the past decade or so) for the former over the latter:

Why is market trumping internal job content as a job evaluation approach in most organizations today?  Primarily because most organizations today do not have the same luxury of disregarding, or giving "second fiddle" status to the labor market in setting employee pay that they may have had in the past. 

Job evaluation approaches which focus on internal job content (like point factor plans, of which the Hay Group had the brand name product for many years) came into prominence in an era when people stayed with the same employer for years, often their entire career.  Most hiring was done at the entry level, after which employees typically progressed through the internal hierarchy as talent and opportunity permitted.  Sourcing and recruiting talent from the outside, while certainly important, was not nearly as widespread or critical as it is for today's organization. For these reasons, the most important pay relationships were the ones between jobs inside the organization and there was little risk if the internal job hierarchy that developed was out of sync with the external labor market.

So ... market pricing appears to dominate today.  I wonder, though, if that might be about to change.

Pay equity is becoming an increasingly hot issue, with Lily Ledbetter having been signed into law recently and the Paycheck Fairness Act still on deck in the Senate.  And many of the approaches touted for assessing the degree to which pay differences are influenced by protected class membership rely on internal-relative-comparison methods which strongly resemble traditional factor-based job evaluation.

Does this mean that the tide is about to turn?  Will pay equity pressure serve to unseat market-based job evaluation from the top spot and put factor-based job evaluation in its place?

Stay tuned, I guess.

Image: Creative Commons Photo "Measuring Time" by aussiegall

Life After Ledbetter

The Lily Ledbetter Fair Pay Act of 2009 was signed into law by President Obama on January 29.

After some reading and research over the past few days, here's my quick summary and initial thoughts on what this new law means for HR and reward professionals.

The Act overturns the Supreme Court's ruling in Ledbetter vs. Goodyear Tire & Rubber, which held that employees must file a discrimination claim within 6 months of the act of discrimination.  The new law's main purpose is to extend that statute of limitations so that the clock doesn't begin ticking, in effect, until 180 days (300 days*) after an employee receives either a final paycheck or a final benefit payment (e.g., pension check) that can be traced back to a discriminatory decision or practice.  The net impact of the new law is to effectively remove any time limits on pay discrimination claims - a claim can now be brought years, even many years, after the discriminatory action allegedly took place.

What does this mean for HR and reward professionals?

To state the obvious, our first step should be to ensure that there are no problems to begin with.  All pay-related decisions - and this includes but is not limited to job evaluation, performance appraisal, merit and other salary increases, market salary adjustments, promotions, etc. - must be made based on clear and objective guidelines which are consistently applied.  Job titling, definition and documentation must be accurate and up-to-date.  Supervisors and managers must be trained and held accountable for the important role they play in all these regards, and for clear and meticulous communication with employees.   

These are the things that should have been happening all along, of course.  What changes now is our responsibility for documentation and recordkeeping.  With the possibility of a lookback for discrimination claims that could go back years - even decades - we must assume that neither the HR or reward professional nor the decision making manager involved will be around to rely on for personal recollection or documents if a pay related decision is challenged.  Instead, it will be imperative to establish formal and comprehensive recordkeeping practices, as far backward as can be managed and certainly going forward from today.

*If the discrimination charge is filed in a state with its own equal employment opportunity agency.

Postscript:  Here is a link to a CNNMoney article highlighting, in particular, what the Ledbetter Fair Pay Act means to small businesses, who may not have or be in a position to afford the access to legal and human resource talent that big businesses have to help them with compliance.  The list of recommended steps near the end are particularly good.  Hat tip to Laurie Ruettimann for the link.

How Do *YOU* Feel About Pay Transparency?

How much pay transparency would you like to see at your employer?

Pay transparency is a big issue these days, particularly in connection with recently passed and pending pay equity legislation.

Communications guru Frank Roche has created a brief survey over at his blog Know HR.  Take a minute, click through and share your thoughts. 

I am looking forward to the results - how about you?

The Carnival of HR is Up!

Ladies and gentlemen, boys and girls, step right up - er - over to the latest edition of the Carnival of HR. 

Our host, Wally Bock of the Three Star Leadership Blog has gathered a collection of HR blog posts that will shock, amaze, educate and entertain you.

Check it out!

Image:  Creative Commons Photo "Arlington County Fair 2008" by Cliff

An Intriguing Look at the Intersection of 2009 Salary and Variable Pay Plans

Earlier this week, I shared new 2009 salary planning information from WorldatWork's Special Update survey report (which features the responses of 1,033 member organizations). 

The following table, drawn from that same Special Update report, captures what I thought was an interesting combination of data.

 

Here are a few of the conclusions I draw from these statistics -

• There is a greater emphasis on salary budget decreases and salary freezes at the officer/executive level than at lower levels of the organization (particularly in comparison to hourly employees).  This would indicate that executive are bearing more of the pain of tight salary budgets, which is both appropriate and important.  You could make the argument that the scales should be tipped at a greater angle than is indicated here, but at least they are tipped in the right direction.

• Variable pay budgets are being held relative stable - and even increased for nonexempt staff.  Hopefully this is an indication that employers are viewing and using incentive as a way to strengthen partnership with employees and sharing the rewards of pulling through the tough times together.

What's your take?

The State of Salary Increase Budgets: A Special Update

As the economic crisis continues, WorldatWork releases today a special update to its annual salary budget survey.  Results from the updated study, reflecting data compiled in December 2008, show that (across all employee categories, industries and regions) employers plan to lower their original salary increase projections by 0.8%.  This means that salary budget increases this year are now expected to be 3.1% on average, compared to 3.9% when the survey was originally completed in April 2008.

Following is a breakout by major U.S. metropolitan area, comparing original and updated 2009 projections:

              

Other key findings from the updated study:

• 77% of employees can expect a 2009 pay raise.This is an expected drop from what WorldatWork reported for 2008 (that 91% of employees were expected to receive a salary increase), but it is higher than I would have anticipated.  What it shows, I think, is that after any layoffs and staff reductions are completed, employers are committed to rewarding the employees that remain.

• Half of participating organizations (51%) made changes to their original 2009 salary increase budget projections.  Those that lowered increase budgets did so by an average of 1.6%. (Remember that the 0.8% reduction reported overall includes all organizations - those who changed their budgets as well as those who did not.)  Among those reducing increase budgets, 19% to 33% are cutting their salary increase budgets to zero.