Posts made in October 2018

what’s a mep and why are you hearing so much about it?

Sheri A. Creger, CPFA  Ι  October 30, 2018





A MEP is a multiple employer plan. Simply put it is a type of retirement plan that pools contributions made by two or more unrelated employers. The benefit of this arrangement is that the employers can pool their resources to offer a retirement plan at a cost and level of risk that is not prohibitive. To benefit from the MEP structure, the plan must be treated as a single plan and thereby fit the ERISA definition of “employer”. If it does not fit the definition of ERISA it will be treated as a separate plan for each employer.

Because of the lack of retirement plan coverage for small businesses on August 31, 2018 President Trump issued an Executive Order 13847, that called for the Secretary of Labor to explore policies that would expand access to retirement plans for American workers. The Executive Order specifically called out the policies surrounding MEPs and if a business owner could sponsor or adopt a MEP.

Then on October 23, 2018 the Department of Labor published its proposed rule. The release proposes to change the definition of “employer” under ERISA §3(5) in a manner that would make MEPs more widely available. The definition would be changed so that groups or associations can offer a MEP without a common trade or line of business so long as employers have a place of business within the same state or metropolitan area. The proposal also states that professional employer organizations (PEO) as an entity that could sponsor a MEP. To do so, a MEP must provide substantial employment functions. PEOs can rely on 1 of 2 safer harbors to ensure the “substantial employment function” requirement is met. Working owners can qualify as both employer and employee for the purposes of participating in the MEP.

Under the proposed rule, a group or association can establish a MEP if:

  1. It has at least one substantial business purpose unrelated to providing employee benefits.
  2. It has a formal organizational structure.
  3. A commonality of interest exists between its employer members (now includes common geographic location).
  4. Each employer member of the group directly employs at least one employee covered under the plan.
  5. The plan is only available to employees and former employees of the employer members.
  6. Its functions and activities are controlled by its employer members, including the control of the plan.
  7. It is not a financial services firm (nor owned or controlled by one).

What the proposal does not include and can be further discussed is Open MEPs, does not relieve employers of ALL fiduciary responsibility and does not change the “One Bad Apple” rule.

How can business benefit from this proposed rule? The proposed rule could make it easier for employers to get together and provide employees access to a quality retirement plan.

Getting Ready for Year-End – Winter is Coming

Credit: iStock/egal

Ginger Galloway, SPHR | October 18, 2018

Part One of a Two-Part Series

We may be in the middle of autumn with cooler temperatures and Halloween decorations going up but in the HR world, this time of the year also means preparing for year-end activities.  Year-end activities can mean planning for performance reviews, calculating pay increases, bonus processing, open enrollment, and office parties.

Also, now is the time to prepare a project plan that can be used to manage these activities and identify who a task is assigned to and its due date.  Also make sure to build in a secondary review process to make sure nothing is missed.

HR manages so many things at year-end.  Therefore, this information is being brought to you in two articles.  The main areas we will cover will be planning, payroll, benefits, compensation, and compliance.

Below is a list of important year-end activities for planning and payroll that everyone should know.  All items may not pertain to you so use the ones that apply to your business.  Next week, we will cover benefits, compensation, and other compliance issues.

Year-End Activities

Credit: iStock/Michail_Petrov_96


  • Develop a strategy to address business needs such as retention, recruiting, and training.
  • Review HR expenses for the year and develop a budget for the new year.
  • Review all complaints made during the year to identify trends, training needs, and what policies may need clarification.
  • Review metrics for the year such as recruiting successes, turnover trends, and overtime.
  • Review policies and compare them to new laws and update the employee handbook as necessary.
  • Plan, schedule, and conduct performance reviews ensuring all employees have an in-person discussion.
  • Update job descriptions after performance reviews are completed.
  • Move prior year and 2018 records to storage making space for 2019 records.
  • Audit all terminated employee information to ensure it is separated from active employee information including I-9 and medical information.

Credit: iStock/Michail_Petrov-96

  • Obtain or develop a 2019 payroll calendar from your payroll processing vendor (or in-house payroll administrator) and make sure to include your company’s holidays.
  • Identify year-end processing dates and deadlines with your payroll processing vendor (or in-house payroll administrator) and communicate this necessary information to employees and supervisors.
  • Ask employees to verify their social security number, mailing addresses and dependent and emergency contact information.
  • Encourage employees to receive their W-2s electronically, if offered.
  • Remind employees they may want to submit new W-4s for 2019 before the first payroll. Provide deadline.
  • Process any deductions, expense reimbursement, group term life over $50K, and any other payouts or taxes owed as necessary before end of December.
  • Review and update ACA 1095 forms.
  • Compare and review with your accounting department how many 1099s will be filed.

The earlier you begin planning, the better your holiday season will be for you, your family and friends.  Once you get these administrative tasks under control, you won’t be as overwhelmed since the day-to-day HR work must still get done.  December will be here before you know it.  If you do fall behind, give us a call and we can support you in any way you want.


The ERISA-mandated Fidelity Bond is not the same thing as Fiduciary Insurance

Sheri A. Creger, CPFA  Ι October 9, 2018

As a fiduciary, it is your role to understand the difference between an ERISA Fidelity Bond and Fidelity Insurance and what and who is covered. If you do not understand this, you expose yourself and all fiduciaries to the plan to potential liability.

ERISA Fidelity Bond

The ERISA fidelity bond protects the plan, not the fiduciary from losses caused by fraud, dishonesty, misappropriation or embezzlement on the part of the plan official/fiduciaries. ERISA requires that every fiduciary of an employee benefit plan be bonded unless an exemption is available. This includes every administrator, officer and employee with the authority to send in deposits, request benefits to be paid out or transfer plan funds. The bond must be issued by a Corporate Surety Company that issues Federal Bonds under the authority granted by the Secretary of the Treasure.

Fidelity Bond Basics

Plan Officials handling qualifying assets must be bonded for at least 10% of the amount of plan assets handled, with a minimum bond limit of $1,000 and maximum bond limit of $500,000. Plans that hold employer securities (ESOP) require a maximum bond limit of $1,000,000. Non-qualifying assets require 100% bonding.

In addition:

  • the plan fiduciaries cannot have any control or interest in the surety or reinsurer;
  • the bond must cover criminal losses (as described under ERISA); and
  • the bond cannot have a deductible.

The employer is required to furnish information regarding this bond on its Form 5500. Without a fidelity bond in place, the fiduciary will be made to come out of pocket for any plan losses.

Fiduciary Insurance

Not like the mandated ERISA fidelity bond, fiduciary insurance is optional. Fiduciary insurance personally protects the fiduciary. Fiduciary Liability Insurance pays on behalf of the insured, the legal liability arising from claims from alleged failure to prudently act within the meaning of the Pension Reform Act of 1974. A plan fiduciary may not understand and I often find that they don’t realize that he/she can get sued personally or the extent of their personal assets at risk. Plaintiffs’ lawyers can try to recover specifically from each and every fiduciary to a plan (jointly and severally) for breaches of their duties to oversee the ERISA retirement plan.

Something to Consider

Sometimes employers think their “errors and omissions” or “directors’ and officers’ coverage will satisfy the ERISA fidelity bond requirement. You must read your coverages closely and understand what they cover. E&O or D&O insurance is not the same as a fidelity bond and those policies exclude fiduciary liability exposure as well as those exposures pertaining to the Employee Retirement Income Security Act.  Again, you must understand what polices you have/need and what is covered and not covered.  As a fiduciary it is your job to ensure you have a large enough bond to protect your retirement plan and not leave yourself and your fiduciaries exposed to possible liability.

BFF® can help! Let us review your policies/coverage and help you determine if your are properly covered.

Employee Benefits Security Administration (EBSA) restores over $1.1 Billion to Employee Benefit Plans, Participants and Beneficiaries

Sheri A. Creger, CPFA Ι October 11, 2018

You don’t want to be part of this statistic! Blind reliance is inappropriate. Plan sponsors and other fiduciaries have a responsibility to protect the interests of workers and retirees in their benefit plans.

According to the DOL Fact sheet for 2017 the EBSA’s oversight authority extends to nearly 681,000 retirement plans, approximately 2.3 million health plans, and a similar number of other welfare benefit plans, such as those providing life and disability insurance. These plans cover about 143 million workers and their dependents and include assets of over $8.7 trillion (as of October 2, 2015). In FY 2017, EBSA recovered $1.1 billion in direct payment to plans, participants and beneficiaries.

Read the full article in the link below.

Sexual Harassment Claims Filed and California Requirements

Ginger Galloway, MBA, SPHR  Ι  October 9, 2018

The Equal Employment Opportunity Commission’s (EEOC) announced on October 4, 2018, with its release of What You Should Know: EEOC Leads the Way in Preventing Workplace Harassment, that its preliminary data for Fiscal Year (FY) 2018 shows a more than 50 percent increase in sexual harassment lawsuits filed by the agency and a more than 12 percent increase in the number of charges it received over FY 2017.

This increase should not be a surprise as the Harvey Weinstein scandal pushed sexual harassment into the spotlight and it fueled the #MeToo movement. This increase should also be a notice to employers that it is more important now than ever to continue the move in workplace culture with continued and ongoing real dialogue and real action. We all need to continue education guiding and leading appropriate and professional workplace behavior and ensuring people know when and how to report sexual harassment. Those people, whether supervisors or non-supervisors, that receive complaints need to know how to take timely action and ensure claims are investigated.

Preliminary data for 2018 from the EEOC include the following statistics:

  • The agency filed 66 harassment lawsuits, including 41 that contained allegations of sexual harassment. These filings reflect more than a 50 percent increase over Fiscal Year 2017 in sexual harassment suits.
  • Charges filed with the EEOC alleging sexual harassment increased by more than 12 percent from FY 2017.
  • EEOC recovered nearly $70 million for sexual harassment victims through litigation and administrative enforcement in FY 2018, up from $47.5 million in FY 2017.
  • Hits on the sexual harassment page of the EEOC’s website more than doubled this past year, as many individuals and employers looked for workplace harassment information.

In California effective January 1, 2019, employers with five or more employees, or independent contractors, must provide sexual harassment training to all employees. This training must be completed in one year by January 1, 2020. Other key information you need to know is follows below:

  • Supervisory employees must receive two-hours of training.
  • Non-supervisory employees must receive one-hour of training.
  • After this initial training, employers must provide this training every two years.
  • New hires must receive training within six months of hire or placement.
  • Beginning January 1, 2020, seasonal and temporary employees working less than six months must receive training within 30 days of being hired (or within 100 hours worked).
  • Training for temporary employees must be provided by the temporary agency.
  • The training must include a section on preventing harassment and abuse in the workplace.
  • The training must include information on harassment based on gender identity, gender expression and sexual orientation.
  • Training must be an effective interactive program and can be completed in shorter segments as long as the total two-hour requirement is met by the deadline.

Though these requirements seem time-consuming for management and employees, the alternative of a devastating sexual harassment claim can cost the employer some real dollars. Therefore, ensure your employees, team leaders, supervisors and management team promote and contribute to respect everyone in the workplace.

BFF® HR can provide you with supervisor and employee training that meets the California requirements.