No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home Featured

Lessons from 2008 Apply Now, During the Pandemic

Risk Management of Compensation, Benefits and Retirement

by Elliot Dinkin
June 1, 2020
in Featured, HR Compliance
lessons learned in blue speech bubble

Amid the coronavirus pandemic, current events are reminiscent of the financial challenges of 2008. Those challenges imparted some important lessons for employers. Elliot Dinkin considers what employers did in 2008 that worked well and how they can apply takeaways to improve outcomes now.

Back in 2008, most companies took a piecemeal approach in attempting to save on cash outflow versus an overall total compensation perspective. Employers trimmed or eliminated matches to savings plans, froze retirement plans and implemented conversions of certain employer provided benefits to an employee-pay voluntary basis, and there it was: the desired savings. However, how did those actions affect long-term cost? The short answer is that medical costs continued to increase, turnover increased and frozen pension plans have been difficult to manage and are no longer of strategic interest.

Fast forward to 2020. It was only a short time ago that we were developing plans for retaining employees and considering a variety of ideas along those lines. Now, furloughs and layoffs are unfortunately inevitable. But for the remaining employees who are required to do more than before, how should we approach things differently? The status quo will no longer work.

What we saw after the 2008 fallout was certainly enlightening: The piecemeal approach did not provide longer-term rewards. If we truly want to emerge from the current COVID-19 pandemic in a better place, maybe the approach should reflect a fresh start and fresh approach. How we keep the lights on can be managed a bit differently, and some combined approach should be considered. A total compensation approach is key by creating and offering all-in packages that permit employee choices while operations continue to run smoothly.

Additionally, it is critical not to ignore risk management issues pertaining to benefits, compensation and retirement plans. Keep in mind: When things are going great, participants may ignore or not challenge certain practices. This does not happen when the market is in decline.

Consider the impact the following may produce:

FLSA Standards

It can be tempting to cut corners at this time, but this may result in longer-term costs. It is important to:

  • Know who is covered
  • Understand exempt and nonexempt
  • Review state laws
  • Display poster
  • Keep records

Pay Equity

Pay reductions, layoffs, furloughs and other strategies provide additional fuel if discriminatory pay practices continue or increase, as well as additional time for employees to take action. If you postponed a prior review, now because of time and attention, attempting to fix it will help close any ongoing risks. Pay equity considerations include:

  • Which protected classes do the equal pay laws protect?
  • What comparisons on types of work are required?
  • What are the permissible factors to explain pay differences?
  • Is reliance on geographic location to explain pay differences permitted?
  • May employers ask about salary history?

Cancellation of Previously Declared Bonuses, Incentives and Raises

This is understandable from a cash-flow perspective, but may cause unintended consequences for those who remain.

401(k) Operational Issues

Attend to any operational concerns immediately for problems that previously existed or might have been overlooked to limit risks going forward. Here are some scenarios and appropriate actions:

  • If you made changes to your plan document, inform everyone who services your plan of those changes and what the changes mean to your plan’s operation.
  • If you amend your plan document, you should also amend your summary plan description. If you materially modify your plan, you must give a summary of the material modifications to plan participants within 210 days after the end of the plan year in which you adopted the modification.
  • If you’ve changed the way you operate your plan, communicate those changes to everyone who provides service to your plan. You may need to reflect these changes to your plan document through a plan amendment.
  • If you’ve changed the plan trustees, you need to convey those changes and you may need to update your plan document and summary plan description.

Any changes in the ownership interests or business acquisitions may affect the nondiscrimination testing for the plan. Convey these changes to your plan service providers.

Monitor Disability Claims

claims rise from employees who have tried to work through their health problems but now are unable to do so for a variety of reasons. Others see this as an opportunity relating to anticipating potential job losses. Operationally, via internal or external processes, existing procedures should continue without regard to any personal opinions. The best advice is to follow the claim regulations like never before. The current rules have enough traps that failure to follow the guidelines can cause traps.

Avoid Temptation to Loosen Nonqualified Plan Rules

Hardship rules exist for qualified plans but not nonqualified plans. Careful adherence to the terms of these arrangements and Section 409A is vital.

Furloughs and Layoffs

Be certain to consider legal and related issues pertaining to these arrangements to avoid discrimination claims. Failure to send out required notices (WARN, PBGC reporting, etc.) and other related requirements could present legal issues and penalties.

For employers who conducted furloughs, layoffs or perhaps reductions in work hours, consider the following:

  • Review plan eligibility provisions when considering reductions in hours, extended leaves of absence, alternative work arrangements, temporary layoffs, etc. and how these changes impact employee eligibility under the plan. Employers should be careful about changing eligibility rules in response to the COVID-19 pandemic without consulting with carriers, stop-loss insurers, third-party administrators and legal counsel.
  • Employees may not have a method to pay their share of benefit plan premiums through payroll deductions. There are several options to prevent termination of coverage for nonpayment, including permitting employees to pay via check or establishing a repayment schedule once operations return to normal.
  • For benefits tied to compensation, consider the impact of temporary reductions in pay on benefit levels — for example, if a disability benefit is a percentage of pay or a pension plan is a percentage of final average pay.
  • Employers should carefully review the terms of the vendor contracts that they have in place. It is crucial that all material provisions and terms are understood prior to implementing benefit plan changes. For example, vendor contracts may often state that if an employer reduces the number of covered lives by a certain defined percentage, the vendor may re-rate the policy.

Regardless of recent legislative activity, including the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief and Economic Security (CARES) Act, there are many opportunities employers can take advantage of now. This will help to achieve a positive outcome for their businesses to prosper and be better prepared in the future should we encounter such economic turmoil again.


Tags: COVID-19Fair Labor Standards Act (FLSA)Financial Crisis
Previous Post

Passing the COVID-19 Stress Test: Best Practices for Ethics & Compliance Programs

Next Post

OSHA Walks Back Guidance on Recordable COVID-19 Cases

Elliot Dinkin

Elliot Dinkin

Elliot Dinkin is President and CEO at Cowden Associates, Inc., specializing in helping corporate clients find the best solutions, both for the enterprise and its employees, with regard to compensation, health care benefits, retirement and pension issues, and Taft-Hartley fund consulting. Elliot provides leadership to position the company at the forefront of the industry. He earned his MBA in Finance and Accounting from the University of Pittsburgh and a BA in Economics (Cum Laude) from Dickinson College.

Related Posts

uvalde crosses

Will 2023 Bring More ‘Permacrisis’ Culture?

by Lisa Schor Babin
January 4, 2023

While 2022 had no shortage of chaotic events, ethics columnist Lisa Schor Babin shares her hopes for 2023 — and...

Hidden Threat? They Know There’s a Problem, But Companies Are Still Failing to Intercept Real-World Dangers

Hidden Threat? They Know There’s a Problem, But Companies Are Still Failing to Intercept Real-World Dangers

by Staff and Wire Reports
August 17, 2022

From climate change to the Covid-19 pandemic to hateful political rhetoric — modern society poses risks not only to the...

Eventus Awards

Eventus Named Best Market Surveillance Provider, Adding to Recent List of Honors

by Corporate Compliance Insights
August 4, 2022

Trade surveillance and market risk solution platform Eventus won its fourth major award in the past month, as its Validus...

worker anxiety

Fighting the Employee Anxiety Pandemic Requires More Than Quick Fixes

by Lisa Schor Babin
August 3, 2022

Long before anybody had heard of Covid-19, a workplace crisis was brewing: People were becoming overworked and overstressed. The pandemic...

Next Post
coronavirus particle in office cubicle

OSHA Walks Back Guidance on Recordable COVID-19 Cases

Compliance Job Interview Q&A

Jump to a Topic

AML Anti-Bribery Anti-Corruption Artificial Intelligence (AI) Automation Banking Board of Directors Board Risk Oversight Business Continuity Planning California Consumer Privacy Act (CCPA) Code of Conduct Communications Management Corporate Culture COVID-19 Cryptocurrency Culture of Ethics Cybercrime Cyber Risk Data Analytics Data Breach Data Governance DOJ Download Due Diligence Enterprise Risk Management (ERM) ESG FCPA Enforcement Actions Financial Crime Financial Crimes Enforcement Network (FinCEN) GDPR HIPAA Know Your Customer (KYC) Machine Learning Monitoring RegTech Reputation Risk Risk Assessment SEC Social Media Risk Supply Chain Technology Third Party Risk Management Tone at the Top Training Whistleblowing
No Result
View All Result

Privacy Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2022 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe

© 2022 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT