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New Legislation in 2013: The impact to Human Resources and Compensation
   

Presented by INTEGRATED Healthcare Strategies, as authored by
Debbie Weber, Vice President

The beginning of 2013 brings new government legislation that will affect human resource and payroll processes.  Following are some key highlights of the new legislation that Congress recently passed.


American Taxpayer Relief Act of 2012

On January 1, 2013 Congress passed the American Taxpayer Relief Act of 2012 (ATRA), and President Obama signed the bill into law on January 2, 2013.  The bill permanently extends a number of tax provisions and it revises tax rates for some.

ATRA impacts all citizens in some way, but the amendment to the H.R. 8 bill contains a number of provisions that are of significant importance to HR professionals.

Here’s what Healthcare HR executives should know:

  • The 2 percent payroll social security tax cut was not extended.
  • Employer-provided education assistance was permanently extended.  This allows an employee to exclude from income up to $5,250 per year in undergraduate and graduate education – regardless if the education is job related.
  • Permanently extends the increase in the monthly tax exclusion for transit and vanpool benefits.
  • If available in their benefit plans, permits participants in 401(k)s, 403(b)s and similar defined contribution requirement plans to elect to transfer amounts to a designated Roth 401(k) account, at any time, with the transfer treated as a taxable qualified rollover contribution.  Previously, unless the plan allowed in-service distributions, the plan had to be amended to specifically allow a distribution for the traditional 401(k) into the available Roth option.
  • Extends federal emergency unemployment benefits for one year.
  • Reinstates and extends the Work Opportunity Tax Credit through 2013.
  • Reverses a $600 deduction in the $3,000 credit for child and dependent care that was set to take effect January 1, 2013.
  • Resource:  ‘Fiscal Cliff’ Law Affects Payroll Tax Withholding and Employee Benefits by Stephen Miller, CEBS SHRM On-line, Jan. 2013

Additional changes to the laws are expected to be announced at the end of March 2013, when sequestration provisions require lawmakers to decide on further negotiations related to deficit reduction, and the extension of the debt limit or further borrowing authority.  INTEGRATED will provide further updates and analysis as it becomes available. 


Minimum Wage Increases

Ten U.S. states increased minimum wage between 10 and 35 cents.  The boost increases the income of approximately 1 million workers as of January 1, 2013. 

  • Arizona
  • Colorado
  • Missouri
  • Montana
  • Ohio
  • Oregon
  • Rhode Island
  • Vermont
  • Washington
  • Albuquerque, NM
  • Santa Fe, NM  - effective March 2013
  • San Francisco, CA
  • San Jose, CA – effective March 2013

While minimum wage increases are always viewed as a positive occurrence by the general workforce, they create issues for HR professionals that may initially go unforeseen.  A minimum wage increase frequently impacts entry-level staff employee wages by creating compression between the beginning of the non-exempt (hourly) pay structure and the current incumbents.

Another unintentional consequence of an increase to minimum wage is the resulting tendency for employers to inappropriately create an additional pay grade, eliminate the lowest entry level pay grade, or move entry level positions into the next pay grade in response to the increase.  While some of these options may work, they won’t necessarily be the most effective or best long-term solution for the organization.

If your healthcare organization is one of the ten states listed above where the minimum wage rate was increased, it is critical you review and assess your organization’s staff exempt and non-exempt compensation and payroll practices for compliance with the Fair Labor Standards Act (FLSA).


About the Author

Debbie Weber is a Vice President in the HR Consulting practice of INTEGRATED Healthcare Strategies. Ms. Weber may be contacted by calling 816-798-1947 or emailing debbie.weber@ihstrategies.com.


About INTEGRATED Healthcare Strategies

For more than 30 years, INTEGRATED Healthcare Strategies has provided  consultative human-capital services to clients across the healthcare spectrum, including community and children’s hospitals, academic medical centers, health networks, clinics, and other healthcare-related organizations. Our expert consultants and nationally recognized thought-leaders help organizations achieve their business goals by ensuring top talent is attracted, retained, and engaged while measuring and maximizing human and organizational performance. With tailored solutions that extend well beyond single services, INTEGRATED offers the knowledge, guidance, insights, and alignment that organizations need to not only survive the rapidly changing healthcare environment, but to succeed in it. Exclusive to Healthcare, Dedicated to People.(sm)

Visit INTEGRATED Healthcare Strategies online at www.INTEGRATEDHealthcareStrategies.com , or view our blog at http://www.INTEGRATEDHealthcareStrategies.com/blog.

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