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Archive for December, 2013

The Family Act: Could Paid Family Medical Leave Become US Law?

Currently, the United States is the only industrialized nation not to offer paid maternity leave. The Family and Medical Insurance Leave Act, or FAMILY Act, is new legislation that would guarantee all workers would receive paid family and medical leave. The bill was introduced on 12/12/13 by Sen. Kirsten Gillibrand (D-NY) and Rep. Rosa DeLauro (D-CT).

 The Family and Medical Insurance Leave Act would build upon the 1993 Family and Medical Leave Act, or FMLA, which currently provides workers with 12 weeks of unpaid leave to recover from serious illnesses, care for new children, or care for seriously ill spouses, parents, or children.  FMLA only covers organizations with 50 or more employees and employees must have worked for the same employer for at least 12 months consisting of at least 1,250 hours to be eligible.  The FAMILY Act would cover all workers, including part-time and contingent workers in any size company and self-employed workers. 

 The FAMILY Act would provide up to 12 weeks of paid leave each year to qualifying workers for birth or adoption, the worker’s serious illness, the serious illness of an immediate family member including domestic partner and particular military caregiving. Workers would be eligible to collect benefits equal to 66 percent of their regular or average monthly wages up to a maximum of $1,000 per week. It would be funded by employee and employer contributions of 0.2 percent of wages each to create a self-sufficient program which would be administered through a new Office of Paid Family and Medical Leave within the Social Security Administration. Payroll contributions would cover both insurance benefits and administrative costs. As is the case with Social Security, workers must have been employed and must have paid into the system in order to collect benefits.  It is also affordable.  Wages are only taxed up to a cap of $113,700, so the maximum contribution for a high-wage earner would be only $227.40 per year.

 The FAMILY Act is patterned after family and medical leave insurance programs such as family leave insurance or SDI, which have existed in California since 2004 and in New Jersey since 2009, and will begin in Rhode Island in 2014.  The FAMILY Act is backed by groups such as the Center for American Progress, which proposed a similar measure in 2009, and the National Partnership for Women and Families, which wrote and helped pass the FMLA.  This Act may have an uphill battle to become law, but because it will not put significant pressures on the federal budget or employers, and more than 400 groups across the nation are urging members of Congress to pass this bill and to live up to the promise of offering more support to families, it’s time may have come. We will monitor its progress in Congress during 2014.

 WageWatch salary surveys provide data tools and report statistics for analysts of all experience levels. Please contact WageWatch if you need assistance with interpretation the statistics reported, help building custom reports, or have a need for our wide range of consulting services. For more information on our services and surveys please call WageWatch at 888-330-9243 or contact us online.

Posted in Uncategorized on December 19th, 2013 · Comments Off on The Family Act: Could Paid Family Medical Leave Become US Law?

Future of the Minimum Wage

The minimum wage has been making headlines again with President Obama and Congressional Democrats pushing legislation to increase the wage from its current $7.25 to $10.10, in three 95 cent steps. After the third step increase, the minimum wage would be linked to a cost of living index. The legislation would also gradually increase the federal tipped wage to 70 percentage of the regular minimum wage. This proposal is much higher than the $9.00 per hour the President mentioned in his State of the Union Address last February. The federal minimum wage has been $7.25 since July 2009 as part of a three step increase signed into law in 2007. The tipped wage has been $2.13 since 1991.

For 2014, 21 states and DC will have minimum wages that are above the federal of which 10 states have their wage linked to cost of living index. Washington State has the highest minimum wage at $9.19 per hour effective Jan 1, 2014. WageWatch has posted a minimum wage chart in the Resources section for quick reference.

The idea of a living wage has received front page attention thanks to the national efforts of union organizers in the fast-food industry who have been campaigning for a $15.00 per hour minimum wage for their “quick service” workers. During this past Black Friday shopping week, Wal-Mart workers protested stores with similar demands.

Opposition groups and business leaders contend that such a wage increase could backfire by reducing employment opportunities claiming most franchises operate on small margins and would have to reduce their workforce and cut back on workers’ hours. The restaurant industry responded similarly to new healthcare mandates. Some economists predict that a $15 per hour wage could reduce the country’s 2.5 million fast-food workers by 20%.

 Some municipalities have gone beyond their state minimum wages by enacting their own. Last month, the town of SeaTac, WA, known for its major airport, narrowly approved a wage hike to $15.00 which affected approximately 6,500 workers. This past week, the District of Colombia is looking to create an $11.50 min wage with regional support nearby suburbs. The region has over 2.5 million residents. The final vote for this increase is in early 2014. The city of San Francesco has the highest min wage in the country at $10.74 and Santa Fe is second with $10.51.

Within the lodging industry, the national average wages for entry level positions are almost always above minimum wage. According to the 2013 WageWatch Hospitality Compensation Survey of over 5,000 properties nationwide, the average rate for full service hotel Front Desk Agents is $12.57 and $11.52 for Housekeepers. For the smaller select service hotels the average pay for a Front Desk Agent is $10.05 and $9.08 for Housekeepers, all well above the $7.25 federal minimum. These rates do not include tips or gratuities which would push the total cash compensation even higher.

WageWatch salary surveys provide data tools and report statistics for analysts of all experience levels. Please contact WageWatch if you need assistance with interpretation the statistics reported, help building custom reports, or have a need for our wide range of consulting services. For more information on our services and surveys please call WageWatch at 888-330-9243 or contact us online.

Posted in Uncategorized on December 12th, 2013 · Comments Off on Future of the Minimum Wage

Dealing With The ACA Employer Mandate

ACA (aka Obamacare) continues to be the topic du jour in most hotel and restaurant management companies. Given all of the problems that ACA continues to experience with its website roll out to date, and the premium shock many individual plan buyers are receiving over the healthcare insurance exchanges in the last couple of months; many hotel and restaurant managers and owners are extremely worried about the havoc that the federally mandated regulation of employer plans beginning in December 2014 may have on their operations.

 The “Employer Mandate” is one such policy, which could change the structure of the American workforce if ACA is not soon amended by Congress. Essentially, the Employer Mandate will require employers with 50 or more full time equivalent employees to provide “Affordable Healthcare” to all employees who work 30 or more hours a week. The implementation was delayed a year in order to give the employers, insurance companies and the regulators time to work out the details, but will go into effect late next year.

 Beginning in 2015, all plans will have to fully comply with ACA guidelines. The market and the public will not likely fully grasp the premium increases this will require until next summer when more insurance companies publish their ACA compliant plans and rates. Based on some of the early plans that have been published, there is little doubt that premiums will increase dramatically for healthy employees. In an effort to control costs, many employers will pass most of the costs on to employees. Employers who can reduce their fulltime equivalent to less than 50 and avoid the Employer Mandate are already making the change.

 There has been much press of late reporting on employers already increasing the number of part time employees in order to get under this 30 hour requirement. The impact this is having on the workforce is unclear. So far, this trend is mostly anecdotal with no statistical evidence that complying with ACA is driving the growth in part time employment we have seen over the last couple of years in the workforce. However, it is very likely that the trend of part time employment will accelerate further next year; and we will begin to see statistical evidence that will support the structural change from a focus on full time to a part time workforce in the United States.  

 However, adjusting the hours of employees can be complicated. This is best supported by an example in the hospitality industry.  This is a real life situation in Phoenix, Arizona that I recently encountered. A small fast foods store owner/operator has four stores, each is owned in a separate LLC with on average 20 employees per store.  Ten are full time employees and ten are part time working approximately 25 hours a week. Of the ten full time employees, four are salaried and have health insurance.  Six are hourly employees, and even with the employer paying 60% of the premiums, they cannot afford the insurance and none avail themselves of it.

 he four stores must be consolidated as if one entity under ACA regulations, which means the owner, has 40 full time and 40 part time employees. It appears he is under the requirement of 50 full time employees; unfortunately first impressions are not always correct. The 40 part time employees each work 100 hours a month.  Under ACA regulations the total of 4,000 hours a month is divided by 120 hours (30 hour per week) to yields 33 full time equivalent employees. For purposes of the Employer Mandate, this employer has 73 full time equivalent employees and must provide insurance for the 24 full time hourly employees (6 per store) not currently covered. The penalties for the employer can be quite severe for not complying.

 In order to avoid the penalties, this owner/operator will need to reduce the 24 full time hourly employees to less than 30 hours a week. This means he will have to hire additional part time employees to cover the working hours of the stores. He will need to add three to four part time employees per store.  In summary, instead of 40 full time employees and 40 part time employees, he would have 16 full time employees and 76 part time employees.

WageWatch salary surveys provide data tools and report statistics for analysts of all experience levels. Please contact WageWatch if you need assistance with interpretation the statistics reported, help building custom reports, or have a need for our wide range of consulting services. For more information on our services and surveys please call WageWatch at 888-330-9243 or contact us online .

Posted in Uncategorized on December 4th, 2013 · Comments Off on Dealing With The ACA Employer Mandate