On the positive side, voluntary benefits cost employers next to nothing, yet boost employees’ morale and benefits satisfaction. An Aon survey found 77% of organizations offer at least one voluntary benefit.

What happens if there’s a legal dispute between one or more of your employees and the vendor?  In some cases, employers unwittingly get dragged into court. The vendor could potentially argue that the plan is covered by ERISA, and the employee’s lawsuit should instead be filed against his or her employer.

If the court agrees, the legal burden would shift to the employer.  Some courts have, in fact, ruled that a voluntary benefits may be covered under ERISA, even if it wasn’t an employer’s intention to formally “sponsor” the plan.

If push comes to shove, vendors will protect themselves. In fact, some attorneys warn that a voluntary plan insurer’s first move if sued by one of your employees will be to try to get the legal burden shifted from itself to you.

Two seemingly innocent things that can be turned against you in court:

• the written announcement to tell employees about the new voluntary benefit, and
• getting involved if there’s a dispute between an employee and the plan vendor.

Be careful with announcements
When you offer a new voluntary benefit, the natural tendency is to try to get employees pumped up to participate. But you can get in trouble if people get the impression the firm endorses the plan. Helpful practices:

• Don’t put the announcement on organizational letterhead
• Put a disclaimer on the description
•  either exclude your voluntary offerings from employees’ benefits manuals or list them separately, and
• hold open enrollment at a different time than for ERISA plans (401(k), main health plan, etc.).

Also, if the vendor offering the voluntary plan has competitors, you may want to remind employees the vendor of the voluntary plan isn’t the only game in town. Some firms pass along lists of competing vendors.

Avoid involvement in disputes
As with your ERISA plans, chances are employees will come to you when they have a problem with a voluntary plan. Your first inclination is to help.

But many experts warn it’s better to stay out. Reason: Courts see this as the action of a plan sponsor. But you can steer someone in the right direction (e.g., giving a contact name to call) while remaining neutral in the dispute.

Good intentions gone bad

 From an ERISA standpoint, the most dangerous voluntary plan design is one that is partially paid by the company, even if employees pay the bulk of the cost.

In a major ruling a few years ago (Burgess v. Cigna Life Insurance), a U.S. district court ruled against an employer with a voluntary supplemental disability plan in which the firm paid a portion of premiums on behalf of its lower-paid employees.

While most employees paid the entire premium — and firm made clear to  people the plan was a voluntary benefit –the court said it didn’t matter. The act of contributing to some employees’ premiums made it an ERISA plan.

In times like these, it’s crucial for colleagues to share their concerns, experiences suggestions. A few weeks ago, HRBenefitsAlert.com ran a special report on calming employees’ 401(k) fears. The reader comments revealed that many benefits pros were just as afraid as employees, and people’s frustration led to some unfortunate carping back and forth between several readers.

The purpose of the comments section, apart from giving people the opportunity to react to the story, is to provide a forum for benefits managers to interact. It’s my hope that we can generate an exchange ideas that have (and have not) been working at readers’ companies during the current situation. Specifically:

• What are you doing to manage health benefits costs as budgets are either frozen or shrink?
• Have you noticed a dip in morale or productivity with all the doom-and-gloom in the news?
• How is your company trying to calm employees’ fears about salary freezes or layoffs, 401(k) losses, health cost shifting and other issues that get a lot of mainstream media focus?
• What are you saying to employees to deliver the news they need to know but also keep morale high?

Thank you in advance for your willingness to share your expertise and personal experiences. Everyone benefits in the long run.

 Just as importantly, how can you hold vendors accountable if you’re not getting what you paid for?

Here’s one proven way: Create a vendor scorecard. Scorecards alone won’t bring down your healthcare costs. But they’ll at least help make sure your company – and employees – get everything you’re paying for.

The tool can help you measure plan performance with greater precision – and identify specific areas that need improvement. Best of all, any company can adopt the technique to fit their needs. Here’s how it works.

1. Choose specific rating areas

Benefit pros who’ve successfully adopted the scorecard system recommend grading vendors on five to 10 measurable areas, like:

• Claims processing. Are employees’ medical claims turned around in a timely fashion? Are you hearing complaints that the explanations of benefits (EOBs) are slow to arrive or hard to understand?
• Disputed and resolved claims. Do employee questions and complaints about denied or still-pending claims get answered quickly and thoroughly? How often are you forced to go to bat for employees?
• Accessibility. Are plan reps quick to answer phone calls? Do they attend regularly scheduled meetings?
• Reports. Do you receive timely paid claim and utilization reports?
• Open enrollment. Did you receive effective support preparing for and conducting open enrollment events?
• Employee education. Do your employees find the written and/or one-on-one services provided through the plan helpful in answering questions about managing specific chronic conditions (such as diabetes or depression)? Do you receive support in educating your employees to make healthy lifestyle choices, such as smoking cessation?

2. Choose a workable rating scale

There are two schools of thought when it comes to picking a rating method: subjective or objective. Many benefit pros – especially those from smaller firms – use a simple pass/fail or 1 to 5 score to rate their satisfaction.

Others develop more elaborate, statistic-based ratings. One method: take the vendor’s guarantees (e.g., addressing disputed claims within 3-5 business days) and then measure by percentage how often these objectives are met. These rating data can be obtained through quarterly performance reports, employee surveys, issue and complaint files and, for larger plans, external audits.

3. Feedback triggers improvement

It’s good practice to share your scorecard system with the vendor before meeting to review the results. Reason: This lets you iron out any vendor questions about the review categories and scoring system.

Once that’s settled, you can meet to go over the numbers and prioritize the areas that need improvement. Many firms then add a new scorecard category – vendors’ followup.

Reason: Employees “vote” for such plans with their own wallets. Here are the voluntary plans employees ask for and enroll in most often, according to one survey.

Long-term care insurance is one the most asked-for voluntary benefit at firms not already offering it. About one-quarter (26.3%) of firms cited it as the most in-demand benefit at their firm. Top runners-up:

• retiree medical. Some 19.3% of benefits pros have seen a big jump
  in people’s interest in Medicare supplements and similar plans, and
• supplemental disability. It’s  the third-highest in demand at 14%.

Implication: With enrollment in long-term care and retiree medical often skewed toward older employees, Baby Boomer employees are the most willing group to sacrifice pay for greater benefits security.

Among younger employees, the fastest-growing demand (10.5%) and enrollment (14%) is in homeowners and/or auto insurance plans.

The two biggest duds are both “small niche” benefits:

• identity theft coverage. Despite widespread publicity about the rising crime of benefits theft,  only 3% of firms offer such plans, and
• pet insurance. While it’s in-demand among a small percentage of employees (8.8%), only about 4% of firms offer the coverage.

Are your policy and procedure manuals a lawsuit waiting to happen?

There’s no law that require you provide employees a benefits handbook or manual. But best practice is to have one, so long as you follow some basic rules for what needs to be in there, and what should never be in there. Three sections to review immediately:

• pay policies (especially overtime)
• FMLA, and
• paid leave.

Your choice of wording in these sections could make or break your company’s case if an employee sues. Following are three of the biggest red flags that many firms ignore.

Handbook Taboo #1: Overtime policy violates FLSA

Many handbooks contain the following dangerous statement: “Authorized overtime is paid at 1.5 times the hourly rate.”

From a legal standpoint, that’s the same as saying “Our organization is non-compliant with FLSA’s wage and hour laws.” Under FLSA, if a non-exempt employee works overtime – whether it’s authorized or not – you must pay the overtime rate. No exceptions.

What’s legal is to create policies designed to prevent unwanted OT before employees work it. For example, it’s fine for a hanbook to say, “All overtime must be authorized by your supervisor.”

For such a policy to be effective, however, it’s necessary to have formal procedures for OT-authorization. Your handbook must describe these steps (e.g., written permission from a supervisor), as well as any disciplinary procedures for breaking the rules.

But once the hours are worked, it’s too late not to pay for it. Even if you pay for OT (whether authorized or unauthorized), the mere suggestion in the handbook that you may be withholding pay for unapproved OT could get you sued under FLSA.

Taboo #2 : Vague language on FMLA coordination

Writing FMLA policies in your manuals is one the toughest challenges in creating a compliant handbook.
Federal law says that if you have a benefits manual, you must describe how FMLA overlaps with other company benefits.

Example: Do you require people to use available paid leave and FMLA concurrently? If so, you must include this info in the FMLA section of the handbook.

Otherwise, the employee is entitled to “save up” their 12 weeks of FMLA until after paid time is used up. The result is your organization’s benefits manual accidentally gives away extra family or medical leave that is now protected by the law.

What happens under these circumstances if you terminate an employee for attendance policy violations? Assuming that the excessive leave was the reason for termination, the chances are that court will look at what’s written in your manual and rule in the worker’s favor. 

Taboo #3: Unclear paid time-off policies

Whether you have separate sick time and vacation policies or a single paid time off bank, your manual should be crystal clear on how leave is accumulated, and when and how it may be taken. 

Example: If you expect employees to file written vacation requests signed by a supervisor, but your manual only says “written request” and neglects the need for supervisor approval, a request denied for lack of a supervisor signature may not hold up if the employee challenges it.

When reviewing your paid leave policies, make sure the manual is clear on its descriptions of:

• Eligibility. Do part-timers and/or temps qualify? If so, when?
• Accrual. How do you calculate the banks (e.g., one year of service = 18 PTO days per year)?
• Use. How soon can an employee take leave? Do unused days roll over to the next year or are they calculated on a use-it-or-lose-it basis?

Policies versus procedures

In re-reading any section of your manual, ask yourself, “Is this a policy or is it a procedure?”

Here’s the difference: A policy is where your company stands on a certain issue, such as a policy banning employees from smoking. A procedure is how you get things done. Example: Employees who participate in a smoking cessation program must submit for reimbursement through your Payroll department.

The sections in your manual that describe policies must contain:

• specific descriptions, such as, “Employees may not wear shorts to work,” and
• enforcement details, such as what will happen if an employee violates the dress code?

Meanwhile, sections describing procedures should also be as specific as possible.

For example, compare these two handbook statements for requesting family leave:

1. “If an employee is aware of a need for family leave 15 days or more before it is to begin, the worker must file a request for leave within 15 days of the start date.”
2. “If there’s a foreseeable need for leave, the leave request must be filed ahead of leave within a reasonable time. ”

The first statement is clear and protects your firm if the manual is challenged in court. The latter is open to debate – and possibly lawsuits.

Right now, there’s no bigger threat to employees’ salary satisfaction than the sky-high prices at the gas pump. Here are five ways companies are helping employees cope.

1. Tax-free transit benefits 

Now’s a good time to look into the pre-tax and de minimus transportation benefits allowed by the IRS. As gas prices soar above $4 per gallon, interest in such plans is at an all-time high. 

The pre-tax benefit works much like a cafeteria plan although, legally, it must be set up as a separate type of flex account. In 2009, the monthly tax-free contribution for qualified parking has increased to $220. The one for public transit or vanpool passes increased to $115. 

Employees can either pay through a pre-paid debit card — three of the more popular options on the market are Transitchek, eTRAC and TransLink – or submit receipts and get reimbursed.

The biggest advantage of the transit benefit is that it has the same effect as a small pay raise, without an actual salary increase. An employee earning $45,000 per year, who incurs $115 per month in mass transit expenses, lifts take-home pay by approximately $492. That’s equivalent to a 1.70% raise.

On a very limited basis, the IRS also allows employers to reimburse employees directly for transportation expenses without imposing taxes. In order to meet the de minimus requirement, the reimbursements must be of small value and given irregularly. For instance, if you reimburse the occasional transit fare to an employee working overtime, you’re in the clear.

Unfortunately, the feds consider gasoline gift cards  a taxable fringe benefit. Nevertheless, they can make for excellent incentives and recognition awards, especially for employees who drive long distances to work. 

2. Carpooling subsidies

A handful of companies — about 5%, according to the Society for Human Resource Management — currently offer subsidies to employees who carpool to work. A small fraction (less than 1%) offer a gas subsidy to employees.

One way to make such benefits less costly: Tie a subsidy to a pay-for-performance compensation plan. That way, you’re rewarding only the most deserving employees and giving average performers incentive to pick up the pace.

3. Telecommuting and flex-time

It’s not always possible or desireable to offer employees the option of telecommuting or flexing their schedules to come into work at off-peak travel hours. But if you do have such programs, plug the heck out of them not only as a work-life perk, but also a financial incentive for employees to lower their gas costs.

Remember: Employees are much more likely to notice the relationship between their commuting times and the extra money in their wallets if you connect the dots for them. The more you promote your existing benefits to your own employees, the higher their satisfaction with their current pay. 

4. Tie commuter benefits to recruiting and retention

A great way to get more bang for the recruiting and retention buck from any of the aforementioned programs is to participate in the Best Workplaces for Commuters program. The non-profit Best Workplaces organization provides qualified employers with national publicity and an “elite employer” designation for offering innovative programs.

Even if you don’t participate, the Best Workplaces site has a slew of free resources for employers, including interactive calculators for doing a cost-benefit analysis of offering commuter benefits, ideas for innovative but low-cost programs, and employee education tools which you can adapt to your own organization’s needs.

5. Sharing money-saving tips

Many people don’t realize the power of simply passing along useful information to employees. For instance, one cynical radio commentator recently suggested that employers who post articles about cutting gas costs on their employee bulletin board are doing “a whole lot of nothing.”

In reality, however, concerned employees notice and appreciate your effort to help them save a few bucks on their own. Some useful pointers that make for good bulletin-board fodder:

• Car sense 101. Even if you’re no auto expert, you can pass along easy-to-use strategies to greatly improve gas mileage. One of our readers e-mailed employees this online checklist of proven ways to get better gas mileage. Here’s another one from an auto parts retailer that’s in a little more bulletin-board friendly format.
• Cheap gas finders. Free sites such as Gasbuddy.com are a great way for employees to locate the cheapest gas at stations near work or their homes.
• The dollars and sense of carpooling. Runzheimer International showed how employees can save up to $1,800 a year in gas money by carpooling. The calculation is based on an average 20 work days per month, a four-employee carpool, a $4.00 per gallon gas price, a standard four-door sedan that gets 20 miles per gallon and a round-trip commute of 50 miles.

Do employees really pay attention to this sort of information? That’s up to them. But at the very least, folks realize that managers go through the same type of aggravation every time they pay $45 or more to fill their own gas tank.

For most firms, voluntary benefits are a win-win arrangement. But there can be hidden risks.

 On the positive side, voluntary benefits cost employers next to nothing, yet boost employees’ morale and benefits satisfaction. An Aon survey found 77% of organizations offer at least one voluntary benefit.

But what happens if there’s a legal dispute between one or more of your employees and the vendor? 

In many cases, employers unwittingly get dragged into court. The vendor may argue that the plan is covered by ERISA, and the employee’s lawsuit should instead be filed against his or her employer.

If the court agrees, the legal burden shifts.  Some courts have ruled that a voluntary benefits may be covered under ERISA, even if it wasn’t an employer’s intention to formally “sponsor” the plan.

If push comes to shove, the vendors will protect themselves. In fact, some attorneys warn that a voluntary plan insurer’s first move if sued by one of your employees will be to try to get the legal burden shifted from itself to you.

Two seemingly innocent things that can be turned against you in court:

• the written announcement to tell employees about the new voluntary benefit, and
• getting involved if there’s a dispute between an employee and the plan vendor.

Be careful with announcements
When you offer a new voluntary benefit, the natural tendency is to try to get employees pumped up to participate. But you can get in trouble if people get the impression the firm endorses the plan. Helpful practices:

• Don’t put the announcement on organizational letterhead
• Put a disclaimer on the description
•  either exclude your voluntary offerings from employees’ benefits manuals or list them separately, and
• hold open enrollment at a different time than for ERISA plans (401(k), main health plan, etc.).

Also, if the vendor offering the voluntary plan has competitors, you may want to remind employees the vendor of the voluntary plan isn’t the only game in town. Some firms pass along lists of competing vendors.

Avoid involvement in disputes
As with your ERISA plans, chances are employees will come to you when they have a problem with a voluntary plan. Your first inclination is to help.

But many experts warn it’s better to stay out. Reason: Courts see this as the action of a plan sponsor. But you can steer someone in the right direction (e.g., giving a contact name to call) while remaining neutral in the dispute.

Good intentions gone bad

 From an ERISA standpoint, the most dangerous voluntary plan design is one that is partially paid by the company, even if employees pay the bulk of the cost.

In a major ruling a few years ago (Burgess v. Cigna Life Insurance), a U.S. district court ruled against an employer with a voluntary supplemental disability plan in which the firm paid a portion of premiums on behalf of its lower-paid employees.

While most employees paid the entire premium — and firm made clear to  people the plan was a voluntary benefit –the court said it didn’t matter. The act of contributing to some employees’ premiums made it an ERISA plan.