Quick Hits - June 7, 2023 - American Society of Employers - ASE Staff

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Quick Hits - June 7, 2023

Does FMLA cover holidays? A recent opinion letter by Wage and Hour Division (WHD) explains that, under the Family and Medical Leave Act, the employee’s normal workweek is the basis of the employee’s leave entitlement. If a holiday occurs during an employee’s workweek, and the employee works for part of the week and uses FMLA leave for part of the week, the holiday does not reduce the amount of the employee’s FMLA leave entitlement unless the employee was required to report for work on the holiday. Therefore, if the employee was not expected or scheduled to work on the holiday, the fraction of the workweek of leave used would be the amount of FMLA leave taken (which would not include the holiday) divided by the total workweek (which would include the holiday).  However, when a holiday falls during a week that an employee is taking a full workweek of FMLA leave, the entire week is counted. Thus, for example, an employee who works Monday through Friday and takes leave for a week that includes the Fourth of July on Thursday would use one week of leave and not 4/5 of a week.  Source:  WHD 5/23/23

Can we exclude co-ops and interns from 401K participation? The answer is generally yes.  An employer may exclude certain job titles from participating in its 401(k) plan. For example, a 401(k) plan could be written to exclude all employees whose job title is “forklift operator” or “claims adjuster.” If the categorical exclusion is tied to service, such as with exclusions of seasonal or temporary employees, then the exclusion will generally not be permissible unless specific “fail-safe” language is also included. If an exclusion could be considered a “minimum service requirement,” the plan must include fail-safe language that provides, at a minimum that, notwithstanding the exclusion:  Any employee in the excluded class who completes at least 1,000 hours of service in an eligibility computation period will be eligible to participate; and any employee in the excluded class who completes 500 hours during each of three consecutive 12-month periods will be eligible to make deferral contributions.  The fail-safe language prevents a plan from impermissibly excluding an employee who has completed a year of service.  Therefore, the recommendation is to review the language of the 401K to ensure that students would not be covered or there may be liability on behalf of the employer.  Source: Haynes and Boone LLP 5/25/23

Is the “Great Resignation” coming to an end? After two years of record-high quits, the “great resignation” could be fizzling out.   In 2022, more than 50 million U.S. workers left their jobs, the highest number of quits since the government started keeping track in 2000, according to federal data.  Abundant job opportunities, labor shortages and significant pay increases for workers who changed jobs all fed this historic quitting wave — now, however, these dynamics are abating, and the great resignation is looking like “a thing of the past,” says Nela Richardson, the chief economist at ADP.  Fewer people are quitting their jobs so far in 2023: In March, the number of quits decreased to about 3.9 million, the lowest level since May 2021, according to the Labor Department’s latest Job Openings and Labor Turnover survey.  This may benefit employers since many were still in the mode for certain that the labor market was pre-pandemic and could be lower than market rates for the skills.  Another sign is that job satisfaction rate is at it’s highest in many years.  Source:  CNBC 5/19/23

Generation X appear to have no retirement savings:  Gen Xers — the generation of people born roughly between the mid-1960s and the early 1980s —do not have enough in retirement savings. New data from investment bank Natixis reveals that, with average median retirement savings of $81,000, Gen Xers are nowhere near on track for what they think they'll need for a comfortable retirement (estimated at $1.2 million.) The rule of thumb, per Fidelity, is to "aim to save at least 15% of your pre-tax income each year for retirement, which includes any employer match."   To be facing their definition of a comfortable, happy retirement at 65, Gen Xers would now need to put away, on average, a massive $59,000 each year. For example, if you’re 57 years old with a pot of $81,000, and you manage to invest $500 a month for 10 years until you retire, you could still generate a decent sum. Younger Gen Xers still have some time on their side and can generate more over time.  But overall, employers should consider providing retirement planning, even though the next generations are far from it. It would assist with financial security in their future and be a no-expense benefit to the employees.   Source:  Kiplinger 5/23/23

Good news and bad news poll for Generative AI:  Generative AI has in increasing effect on the way organizations do business and it is already impacting the workforce. In fact, 72% of respondents in a 225 U.S. executives survey, conducted by KPMG LLP, said that generative AI could play an important role in increasing productivity. In addition, 66% of the respondents felt that there would be a change in the way people work in the future, while 62% also felt that it could end up encouraging innovation and help in creating more products and services.  However, with the implementation of generative AI, survey participants are mindful of potential negative implications, with 47% expecting decreased job security, and 41% being concerned with reduced opportunities for overall development. Almost two-fifths (39%) also believe that there could be an increased antisocial behavior in the office setup as they expect generative AI to reduce social interactions.  Source:  KPMG 5/23/23


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