As reports of more auditors in the field from the U.S. Department of Labor circulate the industry, advisers are increasingly concerned about compliance for their employer clients. Research from the employment and labor law firm Littler Mendelson confirms another good reason that advisers should be offering compliance help: Its a top concern for employers.
In the firms third annual Executive Employer Survey, 56% of responding employers say theyre troubled by rulemaking and aggressive enforcement from federal agencies. The report, released Tuesday, identified President Barack Obamas focus on changing workplace policies and the divided government as the cause of the increased scrutiny and pressure on employers to meet demands from federal agencies.
In addition to DOL audits, employers are also worried about the Equal Employment Opportunity Commission. One Littler attorney explains: As employers grapple with more aggressive enforcement and workplace reforms from several federal agencies, the Department of Labors pursuit of President Obamas income inequality agenda was a particular concern for employers, says Michael Lotito, co-chair of Littlers Workplace Policy Institute. Twenty-nine percent indicated concern with measures to raise the minimum wage and expand overtime pay, both of which will have a significant impact on the employers bottom-line.
Advisers looking to expand their services to help employers with these types of compliance issues should also be careful about how they structure their offerings, said Julie L. Hulsey, a partner at Insurance Professionals and Zynia Business Solutions in Amarillo, Texas, at last weeks National Association of Health Underwriters conference in Scottsdale, Ariz. In her discussion, called Compliance and HR Consulting, she said adviser services in this area should not be free.
If you add services and expertise, charge a consulting fee, she said. Weve got to start thinking outside the box to survive in this business.
Fifty-three percent of the Littler survey respondents also fear that whistleblowers are increasingly inclined to report compliance issues to federal regulators and as such, 56% have developed stronger internal compliance programs, the report states.
Health care reform
While compliance with the Affordable Care Act remains a concern for employers, the level of distress about the topic has actually decreased this year, according to Littlers survey. Forty-one percent of responding employers say health care reform is the regulatory issue expected to most impact the workplace over the next year, down from 57% of respondents who said the same in the 2013 survey.
Steven Friedman, co-chair of Littlers Employee Benefits Practice, says this doesnt mean employers are no longer concerned about the health law, but it could signal that theyve taken steps this year to mitigate the concerns they had last year. For example, In response, 58% said they have engaged employee benefits attorneys or consultants to help track changing deadlines and upcoming compliance obligations, Friedman says.
Elliot N. Dinkin, president and CEO of Pittsburgh-based Cowden Associates Inc., also told a gathering of NAHU annual conference attendees last week that 15,000 auditors have been hired by the DOL in the last year to get the nearly 75% of employer-sponsored plans that are subject to another compliance issue, ERISA. He thinks the DOL is not out to make money off of these audits, despite the potential for $1,000-a-day penalties. Instead, he thinks, the auditors generally want to help the employers that want to comply in good faith to get corrected.
See related: Why worry about ERISA?
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