Compensation
Salary Budgets Decrease
Although preliminary findings of the 2002/2003 Compensation Planning Surveys
estimated pay increases for 2003 between 3.8% and 4.0% for all employee groups,
it appears that many salary budgets have been decreased to a range between 3.6%
and 3.8%. Have you made changes to your salary increase budget?
Proposed Changes for FLSA
Under a bill proposed by U.S. Rep. Judy Biggert, R-Ill, the Family Time Flexibility
Act (H.R. 1119) would amend the FLSA allowing employees to accrue overtime hours
as compensatory or family time. When agreed to by employer and employee, union
and employer, the employee can bank up to 160 hours to be used at a later time
as paid time off. The comp time would accrue at the same rate as overtime.
The bill, introduced on March 6 and approved by the House Committee on Education
and the Workforce on April 9, was scheduled for a vote by the House on June 6.
The vote has been postponed with no new date announced.
In March, John A. Dantico, testified at the subcommittee hearing on behalf
of SHRM. To view this article, go to http://www.shrm.org/hrnews_published/CMS_003876.asp.
Proxies Report Executive Pay Shifts in 2002
A study of 350 of the largest public companies in the U.S. shows that there
are significant shifts to link executive pay more closely to business results.
The relationship between annual pay and performance shows a strong correlation
between increases in net income and the increase in annual bonus. How does your
management incentive plan compare?
Biggest Compensation Problem
What is the biggest compensation problem you've faced in the last 18 months?
When asked this question, HR managers responded with the following: salary compression,
hot skills, pay ranges and no money.
Benefits
Consumer Driven Health Plans/HRAs:
Helping to Slow Health Care Costs
In an important ruling by the Internal Revenue Service, employers have a green
light to create innovative health care plan designs and provide employees with
the opportunity to select lower cost coverage during a time when significant
contribution increases are expected for traditional managed care options.
With health care costs rising at double-digit rates and HMO premiums expected
to increase by 22.0%, recently issued guidance from the IRS focuses on an emerging
type of health plan similar to MSA's (Medical Savings Accounts) used by the self-employed.
The new guidelines include a high deductible medical plan plus a health care
reimbursement arrangement (HRA) used by employees to pay for medical expenses.
These accounts provide employees with the ability to build their account balance
over time.
Employers are allowed to fund HRAs in which unused balances will roll over
from year to year for employees electing the specific coverage option. The accounts
must be funded entirely with employer money and may not be funded through salary
reduction. The accounts are used to reimburse out-of-pocket medical expenses
for active and former employees, including retirees.
Unlike current Section 125
flexible spending arrangements (FSAs), HRA accounts can be used to reimburse
premiums for other health coverage, including COBRA premiums. HRA is structured
so that it is not available for reimbursements covered by the FSA.
What changes are you making to help control health care costs?
Employees Put More in Flexible Spending Accounts
A recent study conducted by Fidelity Investments found that participation in
FSAs increased 15% during the first quarter of this year compared to 2002. In
addition, annual contributions overall increased 7%. The growth is attributed
to employees picking up a higher percentage of the health care tab as health
care costs continue to rise.
Proposed 401(k) Incentives
Leading House Ways & Means Committee members have introduced legislation
to increase caps on 401(k) and IRA savings to $15,000 effective January 1, 2004
rather than 2006. In addition, the bill would create "fiduciary safe harbors" for
default selections in 401(k) automatic enrollment arrangements; allow employees
to pay for retirement planning services with FSA-like pre-tax salary reduction
arrangements, and allow employees to contribute up to $500 in unused FSA amounts
to their 401(k) plans, subject to existing law plan limits.
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in the work place
John A. Dantico
The HR Group
"Maximizing the Value of Your Human Assets"
847/559-1388
847/559-1389 fax
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