Posts Tagged ‘COBRA’

How to Fire an Employee and Stay Within the Law

Wednesday, May 30th, 2012

by Caron Beesley, SBA.govFiring An Employee

Several blog posts on offer plenty of advice on how to hire, mentor, and motivate employees. We also frequently tackle the issue of dealing with difficult or disruptive employees. But what happens when you find yourself at the end of the road with no choice but to terminate an employee?

What steps must you take? What does the law require? What are the employee’s rights? What should you do about employee benefits and continuing health care coverage?

Doing everything right won’t always protect you from a lawsuit, but it will show that the termination was justified, legitimate, and handled within the law.

This blog post explains six essential things you need to know about firing employees within the law:

1. Understand the Employment at Will Policy

Every state (except Montana) gives employers the option of adopting an “at-will” employment policy, meaning that an employer may terminate any employee at any time, for any reason, or for no reason at all. Sometimes employee agreements or contracts contradict the “at-will” policy, so check the wording to make sure where you stand.

2. Know When it’s Illegal to Fire an Employee

Your power to fire is not unlimited. Here are some things you can’t fire someone for:

  • Discrimination – Federal anti-discrimination law prevents employers from firing employees based on age, race, gender, religion or disability.
  • Whistleblowers – You can’t fire employees for complaining about any illegal activity, health and safety violations, or discrimination or harassment in the workplace. These statutes and laws vary by state, so check with a lawyer if, for example, you wish to fire someone who has complained or testified against you in court.
  • Exercising Legal Rights – You can’t fire employees for taking family or medical leave, military leave, time off to vote or serve on a jury.

3.       Be Sure to Document Performance Issues

Despite the “at-will” policy, you should document instances of poor performance and tardiness, and maintain good records of employee performance reviews and any previous disciplinary interventions. This will provide legitimacy to your actions and prevent any complaints, lawsuits or accusations that termination was discriminatory. Protect yourself by retaining these records, even after the employee has left, and have a cheat sheet of documented performance lapses on hand to refer to during the termination meeting.

4.  Understand Employee Rights – Benefits, Unemployment Insurance, 401ks

What benefits are your employees legally entitled to if they are fired or terminated? Here are the main benefits that employees may be entitled to if they are fired:

  • Continuation of Health Insurance CoverageCOBRA is a federal law that applies to employers with more than 20 employees. If these employers administer a group health plan, they are required to offer terminated employees, their spouses and dependents the option of temporary continuation of health coverage at group rates. If you have fewer than 20 employees, check with your state; some have comparable laws for smaller employers. Another caveat of COBRA is that terminated employees may be excluded from the plan if they were fired for “gross misconduct.” The law, however, doesn’t describe what is meant by “gross misconduct,” leaving it open to interpretation. This blog offers guidance on this matter: COBRA: What is “Gross Misconduct.”  As an employer, you can require individuals to pay the full cost of coverage, which can be significantly higher than group premiums.
  • How to Enroll Fired Employees in COBRA – You’ll need to notify your group health plan administrator within 30 days of firing or terminating your employee to kick start the COBRA process. You may even want to call in an outside HR firm to help you save time and confusion in the long term. also provides COBRA FAQs and more information here (scroll down).
  • Unemployment Insurance – It is your legal obligation to notify fired employees of their possible eligibility for unemployment insurance. By knowing their rights, employees are more likely to file a timely claim (and you can avoid being sued).
  • Vested Retirement Plans – Fired employees must remain eligible to receive vested 401(k), profit-sharing or pension benefits.

5.  The Final Paycheck

Employers are not required by federal law to immediately give former employees their final paycheck. Some states, however, may require immediate payment, and are specific about what should be included in the final paycheck, such as accrued or unused vacation days. Contact your State Labor Office for information on employer requirements in your state. The Department of Labor also provides a Last Paycheck guide that explains applicable laws and regulations.

6. What About Severance Pay?

There is no requirement in the Fair Labor Standards Act that you provide severance pay. This is a matter of agreement between an employer and an employee. Read more from on how to handle severance pay.

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Workplace Poster Requirements and Compliance Help

Monday, January 30th, 2012

Employment PostersSome of the statutes and regulations enforced by agencies within the Department of Labor require that posters or notices be posted in the workplace. The Department provides electronic copies of the required posters and some of the posters are available in languages other than English.

Please note that posting requirements vary by statute; that is, not all employers are covered by each of the Department’s statutes and thus may not be required to post a specific notice. For example, some small businesses may not be covered by the Family and Medical Leave Act and thus would not be subject to the Act’s posting requirements. For information on coverage, visit the Employment Laws Assistance for Workers and Small Business (elaws) Poster Advisor. You may also contact the Office of Small and Disadvantaged Business Utilization, for assistance with these notice requirements.

To obtain posters or for more information about poster requirements or other compliance assistance matters, you may contact the U.S. Department of Labor at 1-866-4-USA-DOL (1-866-487-2365).

You can maintain your own poster requirements and do it for free by following the instructions found in our past blog post, Employment Posters Made Easy.

Costco has a program which provides all Federal and State required posters along with updates for just $29.95 per year.  Find out more by clicking here.

The Department of Labor also has many other helpful articles that will keep your business in compliance:

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

New Benefits Tab Added to PCS HRAnswerLink

Wednesday, June 29th, 2011

PCS HRAnswerLinkHealth Care Reform has been top of mind within the benefits community and most small business owners are still quite confused with the ramifications of the reform bill.  In response, PCS HRAnswerLink has added a new benefits tab available to all users of the HR Support Center.  The tab provides vital information related to the following seven areas of focus:

  • Health Care Reform
  • Required Benefits
  • Core Benefits
  • Expanded Benefits
  • Leave Administration

Much like the existing Quickguides, these sub-topics feature a handy checklist, a tip section for critical items to take note of, and links to related templates and forms that can be downloaded for use within any company.

About PCS HRAnswerLink

PCS rolled out HRAnswerLink to our entire Client base in July of 2009 via an opt-out campaign over a period of six months.  The core functionality of the site centers on providing up-to-date tools and information related to human resources, employment law compliance and employee relationship issues.

Features include:

  • Essentials like an editable Employee Handbook, Policy Library, Job Description Library, HR Forms, Checklists, Guides, and Letters
  • Federal and State Alerts on new employment law
  • 3 Minute HR Audit
  • Knowledge Base complete with HR Casts, Q&A Database, Articles, News, HR Glossary and HR Advisor Newsletter archive
  • Quick Guides on Hiring, Performance Management and Termination
  • The NEW Benefits Tab mentioned above
  • The ability to customize the employment law alerts and other personalized settings

PCS has also rolled out new package pricing in 2011 which includes PCS HRAnswerLink at no additional fee.  If you’d like to compare your current pricing to the new package pricing, just contact your Client Account Manager, (CAM) and they’ll alert your Sales Representative to provide a no obligation quote.  Dependent upon your current service usage, you may find some savings and have the ability to create additional efficiencies with some of the new service offerings we’ve launched over the past year.

If you’re not sure if you currently have access to PCS HRAnswerLink, please inquire with your CAM, they will be happy to assist you in logging into your existing account, or activating a new account for you.  The cost outside of PCS package pricing is just $8.95 per month.  It’s a great, low cost way to stay on top of the ever-changing human resources and labor law landscape.

Submitted By:

The PCS Service & Sales Teams

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Automating HR and Benefits

Wednesday, May 25th, 2011

HR AutomationA White Paper By:
PCS Partner, Ascentis Corporation

How automating HR and benefits can lead to significant cost savings for your organization.

The role of the HR department has become increasingly complex in the past few years. Even in small to mid-sized businesses, the range of areas that the HR department is expected to cover has expanded significantly. With that increase in complexity and range has come a new problem – the need to contain costs. The areas that the HR department is now responsible for have become significant cost centers within the organization. As a result, it is important that the CFO becomes much more involved in what’s going on within HR, as it starts to have more of an impact on the company’s bottom line.

This paper focuses on the three main areas within the HR department where the need for cost containment can be easily identified and significant savings can be made.

  • Eradicating benefit errors
  • Managing attendance
  • Automating compliance

Eradicating benefit errors
The cost of providing benefits to employees has increased dramatically. To prevent these costs from spiraling out of control and start significantly affecting a company’s bottom line, it has become imperative that organizations put in place effective HR and benefits management systems. This will have the added payback of providing a more timely response to employees and will reduce the vast amount of errors that are currently an issue for benefits managers.

Managing benefits has traditionally been the role of the HR department. It’s a complex and time-consuming task, even in a relatively small company, and can soon require a disproportionate amount of the HR department’s available resources unless the right tools are made available to them.

Accurate enrollment
The amount of paperwork generated in traditional benefits management is staggering – both for the employer and the employee. Consider what happens during open enrollment in a 200 person company. If that company offers ten benefit plans and each of those plans involves just four documents, then the HR department has to deal with 8,000 documents in an accurate and timely fashion.

The question of accuracy is very important. If each of those documents is filled in by hand by the employee and then that data is transcribed and transmitted to the carrier by the HR department, the room for error is obvious. In smaller companies where an insurance broker is also involved in the picture, another layer of complication and room for error is added.

Despite the best of efforts, mistakes are made as insurance carriers enter benefits data from handwritten, photocopied, and faxed employee benefits enrollment forms. And, most HR departments don’t have the tools or the time to reconcile insurance carrier invoices against their own benefits information. Inaccuracies rapidly add up.

The amount of time wasted in clearing up noticed errors is a problem in itself, but it pales in comparison to the issues involved if an employee or an employee’s family member ends up without coverage due to an HR error. The potential liability is huge.

The answer to this problem is to provide employees with an online benefits enrollment system. The employee can use their computer, either at work or at home, to compare and contrast different benefit plans and fill out their personal information. This data can then be electronically submitted to the insurance carrier upon HR approval. The process will be the same for a new hire or for making changes due to life events.

The HR department maintains control of the process by monitoring an employee’s whereabouts within the enrollment process and can define communications templates that encourage employees to complete processes and to ask questions.

Managing attendance
While attendance management may seem like the most basic and simple of HR tasks, it presents more problems than are initially obvious. Relying on all managers to consistently log employees’ sick or vacation time is an ideal situation, but does not always happen. This creates accruing liabilities that affect a company’s bottom line.

The main areas that can benefit from automation are time clock management and vacation, sick, and other time-off policies. Many employees don’t keep track of how many vacation days and sick days they are entitled to or have taken and consistently ask the HR department how much time they have available currently and in the future. This equates to time and effort wasted on mundane tasks executed by highly-paid HR professionals. If an employee could log onto a secure HR system and simply look up the information they need and even view the amount of leave taken and then make an online leave request, this would eliminate the time the HR department would spend on these type of questions and would allow them to devote more time to strategic development.

From a departmental manager’s standpoint, an HRIS can provide the following scenario:

  1. An employee makes a request for vacation.
  2. The employee’s manager receives an email from the employee requesting time off. If the manager happens to be out of the office or unable to acknowledge the request, the email will automatically be forwarded to another decision maker.
  3. Once the request is received, the manager can use a calendar view to check whether the request will clash with other department members’ absence.
  4. The manager can also verify at this time that the employee is titled to the time off.
  5. Then the manager can simply accept/reject the time off request accordingly.
  6. If the vacation or medical leave request is approved, every system from HR, to payroll, to benefits, will automatically be updated.

Calculation of vacation time is often a contentious issue. If it is sloppily managed, employees can take more paid vacation time than they are entitled to because it can’t be proven that they haven’t already taken it. Online leave request ensures that leave is taken and that leave requests are accounted for.

When terminating an employee, companies typically pay a salary for leftover vacation. If proof of what has been taken is clearly available, it can make the termination process run quickly and efficiently. If absenteeism is becoming a problem, automating the reporting and managing and logging sick days is a good way to track and control whether there is an issue. A good attendance management system should be largely self-managing.

Once a company has defined unique business rules, the HR department should have to expend little or no effort in ensuring that it is running smoothly. In addition, having a single, electronic access point, directly integrated to the payroll system offers an easy solution to these issues.

Automating compliance
Compliance is a current hot topic. It isn’t necessary to be willfully negligent to be confronted with serious and expensive problems. Even the most compliance conscientious employer who meets the variant interpretations of specific regulations may encounter unexpected litigation and find their efforts fruitless. Many companies presume that they are adhering to strict regulation guidelines when in fact they’re at fault for violating a compliance specification located somewhere in the fine print.

For instance, an average of 450 employment lawsuits are filed in the U.S. each day and 57% of companies have been named as defendants in at least one employment related lawsuit in past years. Lawsuits by disgruntled employees are one problem. But nowadays, a company can face suits from candidates who were never hired, as well as from former employees months after termination.

Compliance with federal and state regulations involves a mind-boggling array of topics, most of which fall within the purview of the HR department. OSHA, FLSA, COBRA, EEO, VETS, SOX and EDA all have minutely detailed requirements, many of which are open to individual interpretation and they all have severe penalties for infraction. It is a never-ending, full-time task to keep up with these requirements, ensure corporate compliance and follow the required reporting procedures.

Human error is seldom seen as an acceptable defense in cases of compliance infraction. Nor is it sufficient for management to simply pay lip service to compliance issues such as OSHA. It’s now essential that an entire company, from the employee on the factory floor to senior management, understand the ramifications of non-compliance.

Compliance management comes in several forms

  • Managing company documentation to define a set of policies and procedures. Ensuring that every new employee has read the company guidelines and understood the expectation to comply with those guidelines along with state and federal regulations.
  • Training staff to maintain a code of conduct, ethics and expected behavior.
  • Setting processes in place and ensuring careful documentation and monitoring of every step.

In addition to these practices, many organizations are now choosing to automate as many of their compliance maintenance procedures as possible. For instance, if HR has both benefits management and payroll automated and linked, it is an obvious move to add in COBRA compliance to this mix. This particular piece of automation offers the added benefit of preserving privacy – an important HIPAA compliance requirement. Forms and templates necessary to maintaining compliance can be built-into many parts of a corporate intranet, making it easy for employees and managers to adhere to reporting requirements and understand the regulations that pertain to their particular activity or sector of the company.

Compliance automation plays a critical role in both preventing violations by ensuring that requirements are automatically monitored and fulfilled, and in defending alleged compliance violations. The best defense against an alleged violation is a watertight reporting system and automatic documentation of everything related to a specific case. For instance, in a case of proving OSHA compliance, an updated, organized on-line injury reporting system in the factory is going to carry more weight than the standard illegible notebook.

In addition, some compliance authorities, such as VETS-100 and COBRA will waive strict reporting requirements if it can be proved that appropriate data-collection and tracking systems are being used.

This paper has determined three areas where automating HR and benefits management processes can provide demonstrable and direct benefits to the corporate bottom line. Eradicating benefit errors managing attendance and automating compliance will provide significant time savings and reduce costly errors and liability.

A more subtle benefit is the amount of mundane, repetitive work that will be alleviated from the HR department. By automating the minute tasks that use a significant amount of time, HR personnel will be available to focus on more complex and needed planning and management tasks that will benefit the long-term growth of the organization.

HR automation should be a simple operation. A good solution will allow HR managers to use processes straight out of the box that mirror or improve their current way of working, without requiring months of set-up time and complex customization processes. HR managers should be able to customize and control each individual process intuitively, with minimal training and without extensive IT knowledge. The HR system should offer seamless connectivity between all parts of the organization – everything from benefits, to time and attendance and payroll with just a single point of entry from a single individual.

By putting good business processes in place, those processes will largely manage themselves. Employee morale and conduct will improve throughout the organization with clear, defined guidelines, easy places to access information and fewer inaccuracies in matters that are truly important to their well-being. The bottom line is this will save your organization money and time – both immediately and in the future.

PCS Ascentis specializes in automating HR and payroll processes for mid-sized organization with integrated and powerful – yet easy-to-use and learn – HRIS, payroll and timekeeping software solutions. PCS Ascentis understands the critical requirements of reporting, and how to create a virtually paperless open enrollment period using employee self-service.

Call your PCS Sales Representative to find out more about how an HRIS system saves money and time and more importantly increase the engagement of your employees.

SOURCE:  White Papers prepared by Ascentis Corporation.

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

HIRE Act and COBRA Update

Wednesday, May 26th, 2010

Health CareThe IRS has released a number of updates over the past month including additional clarification on the HIRE Act and COBRA extension. It contains details on how to receive the credit for wages/tips paid to qualified employees after March 18th and before April 1st, 941 filing instructions and additional information on the COBRA premium assistance and extension.

Qualified employer’s social security tax credit.  Qualified employers are allowed a credit in the second quarter of 2010 for their share (6.2%) of social security tax on wages/tips paid to their qualified employees after March 18, 2010 and before April 1, 2010.  The credit will be taken on lines 12c through 12e on the 941 where the employer will enter the number of qualified employees for the period, the exempt wages/tips and compute the social security tax exemption for the period of March 19-31, 2010.  This amount will be treated as a deposit of taxes on April 1, 2010 and must not be used to adjust line 17 (Tax Liability for Quarter) or Schedule B (Report of Tax Liability for Semiweekly Schedule Depositors).

Qualified employer’s social security tax exemption.  Qualified employers are allowed an exemption for their share (6.2%) of social security tax on wages/tips paid to qualified employees after March 31, 2010 and before January 1, 2011.  The exemption is taken on lines 6a through 6d on the 941 where the employer will enter the number of qualified employees first paid exempt wages/tips in the quarter, the total number of qualified employees paid exempt wages/tips in the quarter, the exempt wages/tips paid during the quarter, and the social security tax exemption.  The tax exemption listed on line 6d will directly impact the total taxes before adjustments listed on line 6e of the 941 return.

Payroll Control Systems (PCS) has been following the updates from the IRS closely with regard to the HIRE Act.  We have the systems and procedures in place to assist our customers with receiving this credit.  If you are not a PCS customer and would like further assistance, please call 763.513.5951 or email us at  If you are a current customer and have further questions, please contact your Client Account Manager directly.  To access our prior releases on the HIRE Act which include a wizard for determining new hire eligibility and the W-11 form the employee must sign, click here.

COBRA premium assistance credit extended.  The credit for COBRA premium assistance payments has been extended.  It now applies to premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months.  Congress may take additional legislative action that extends the credit further.  Stay tuned for further updates from PCS or you can monitor the progress at the IRS website, enter keyword COBRA.

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney or an HR Professional.