Amy Dison

Sunday, 24 February 2008 19:00

Capturing business

Do you spend afternoons in line at the bank? Do you know your bank tellers by name because you visit them every day? Do you stand in the line running through a list of things you could be doing at the office? If you answered “yes” to any of these questions, there is a way to avoid the lost time and frustration. Remote deposit capture is a tool business owners can use to deposit checks right from their office.

Remote deposit capture is an additional feature of online banking and cash management services. Businesses scan checks, creating electronic files to make a deposit, according to Maureen Murman, vice president of treasury management for FirstMerit Bank. For business owners, it provides a secure method of making a deposit to the bank, while saving time and adding convenience to their work day.

Smart Business spoke with Murman about the benefits of remote deposit capture and how to determine if the product is right for your company.

What is remote deposit capture?

Remote deposit capture (RDC) is a process used to scan checks into images in an electronic file to speed up the deposit process and increase overall productivity for companies. The business uses a specialized scanner to scan customer checks as they are received. The images are then combined in electronic files that are transmitted to the company’s bank. The bank uses the electronic images to process the checks through the banking system. The original checks never leave the business’s office and are destroyed when the processing is completed. The images, however, remain available to the company via an online system for future customer service inquiries and audits.

Who can utilize RDC?

Any company can use RDC. It may be more advantageous for companies who receive a large volume of checks or checks of large amounts. Business owners should meet with a treasury management banker to discuss the cash flow through their company in detail. It is crucial that the bank understands your business so that the banker can help you determine which services will be most beneficial for you. Finally, customers have to show that they are financially responsible. The bank has to have confidence in the financial integrity of the company.

How does utilizing RDC benefit the overall business?

Companies operate more efficiently: On the surface, it saves companies the time and expense of having to make a trip to the bank. This product frees the business owner and his or her employees to use their time more productively.

Consolidated banking: Many companies have more than one location. If RDC is used, then each location can scan the checks it receives to be deposited into a single account at one bank. This also means that the owner or accounts receivable manager at a home office can see all the images deposited into that account.

A company has a broader choice of banks: Because electronic files can be transferred to any banking location, a company can choose virtually any bank it wishes. This may allow the owner to negotiate better rates, loan terms and other deals that benefit his or her business.

Increased security: In some areas, it may not be safe for a person to leave the office with the checks and transport them to the bank. With RDC, the owner or employee doesn’t have to leave the office. It also may reduce the risk or company liability since the employees do not have to travel.

Time constraints are decreased: You can make deposits any time of the day. Most banks provide a longer banking day for RDC than branch office hours. Even after the extended RDC hours, you can make your deposit for posting the next day.

Errors are decreased: The RDC programs require that deposits balance before the process is completed. This decreases errors and makes audits less cumbersome as information is easily accessed.

Is there a risk of consumers’ personal information being compromised with this process?

A consumer’s checking account number is on the check whether the check is taken to a bank or scanned at a remote location. All programs are encrypted and password protected to ensure security and protection of information. The bank’s contract usually defines how the physical checks should be stored and then destroyed after a certain period of time.

Does utilizing RDC require a major financial investment?

The cost of scanners is similar to the cost of a modest PC or copier, and there are minimal increases in operating costs in most cases. The product can pay for itself very quickly by increasing productivity and decreasing transportation costs. The product also may speed up your cash inflow. It allows you to conveniently make deposits every day, providing you quicker access to money. This may reduce your borrowing costs or increase your interest income.

MAUREEN MURMAN is vice president of treasury management for FirstMerit Bank. Reach her at or (216) 694-5637.

Tuesday, 29 January 2008 19:00

Safe and sound

Workplace safety is an important issue because it’s in the best interest of both employers and employees. Protecting the safety and health of employees is a basic responsibility of any employer.

“Safety shouldn’t be an ‘add-on’ for a company,” says David M. Weir, president, UPMC Work Partners, which is part of the UPMC Insurance Services Division. “A safety policy should be incorporated into a company’s standard operating procedure.”

Creating a culture of safety requires a commitment to not only reduce accidents but to also actively promote safety throughout the year. Implementing workplace safety is not only the right thing to do, but it is also good business, both in terms of the health and productivity of employees and money saved on a reduction of accidents and related costs.

Smart Business talked with Weir about what employers need to know about workplace safety.

What are the most important things businesses need to do to implement good safety practices in the workplace?

Most companies have safety policies and plans, but for many of them, those documents are little more than dust collectors rather than a functional part of an organization’s operations. At many companies, the safety manager is an important person only when a major accident occurs. Companies need to understand this: The ‘right way’ to do business is the ‘safe way’ to do business. You need to do what you can to create a culture of safety within a company to prevent accidents, not just to respond when an accident occurs.

What are some of the factors that can work against the establishment of a good work-place safety program?

The first would be not being specific in spelling out the roles and responsibilities in terms of safety for everyone, from the top of an organization down to the employee level. Second, in too many cases, a company’s work safety plan is not an actual working document and that can result in a lack of enforcement of the proper safety procedures. To create a safe workplace, a company has to elevate employee safety as a core value of the company, make a real commitment to it, and demonstrate visible support of that value.

To make sure safety programs are being implemented properly, employers should ask the following: Is safety talked about at management meetings? Are managers evaluated in part by the safety record of their departments? Is safety included as part of new-hire orientation? Is there specific training for more hazardous work environments? Is there adequate support in terms of staffing, equipment and training time for safety initiatives? All of these things need to be in place and should be measured.

Is some kind of punishment necessary in order for safety practices to be properly enforced in a workplace?

Disciplinary action for safety violations should be handled in a similar fashion as the company manages other policy violations. Typically, a progressive disciplinary action is used. However, any blatant disregard for safety practices should be dealt with quickly and with significant consequences and/or possible termination.

Does a company face liability issues when it comes to workplace safety?

Yes. Many companies may have sufficient policies and procedures in place, but that does not excuse them from all liability. For example, were the policy and procedures in place, but never really enforced? If that is the case and an accident occurs as a result, that could be legally damaging. Was a hazardous situation identified but never addressed? Again, if that were the case and an accident were to be the result, the company could have potential criminal liability.

Where should employers start when implementing workplace safety?

First, they need to be aware of all the regulatory agencies — local, state and federal — that have jurisdiction over their business. These would include such agencies as the Occupational Safety and Health Administration (OSHA), Department of Transportation (DOT) and agencies that oversee specific industries like the Mine Safety and Health Administration (MSHA).

Employers should also know that if they need help with safety issues, they can find resources online from a number of federal and state agencies, such as OSHA and the National Institute for Occupational Safety and Health (NIOSH). In addition, a company’s insurance broker and insurer should be good sources of information on this subject.

DAVID M. WEIR is the president of UPMC Work Partners. Reach him at (412) 454-8720 or

Friday, 26 October 2007 20:00

HSA advantages

Companies are constantly looking to reduce expenses. A Health Savings Account (HSA) is a cost-saving approach that business owners should consider. A wellness program paired with an HSA can help your company save money on health care costs, according to Sally Stephens, president of Spectrum Health Systems.

Prevention should be a key component of any initiative by providing greater information to consumers because, without an action plan of how to live a healthier lifestyle, information doesn’t improve health outcomes.

An HSA is a high-deductible medical insurance plan bundled with a savings account. Cash contributions made to an HSA are tax-deductible, as are qualified medical expenses. HSA plans have two components: a lower cost, high-deductible health insurance plan and a tax-favored health savings account, says Stephens.

Smart Business spoke with Stephens about how HSAs are utilized and the benefits and details of such accounts.

Why are businesses deciding to use HSAs?

By implementing an HSA, employers are encouraging employees to take control of their own health care decisions. A particularly appealing aspect of the HSA is that it encourages participants to stay healthy. Any money that is not used for medical expenses is the employee’s to keep. The premise is that individuals who use HSAs will shop around for the best value, which will encourage competitive pricing among providers.

This model provides financial incentives for consumers to reduce unnecessary health care utilization by increasing their financial risk. HSAs are designed to give the plan member complete control over health care spending and save for future health care costs with tax-free interest until retirement.

What advantages do HSAs offer employees?

HSA dollars grow tax-deferred and can be withdrawn tax-free to help pay deductibles or other qualified health care expenses like prescriptions, vision or dental care. What is not used will continue to accumulate year after year and is transferable if the participant changes jobs.

You can use the HSA to cover a spouse. It requires that the participant be married at the time the service was received or at the time the service was paid for. You can pay for dependents’ medical expenses as long as they are a qualifying child or a qualifying relative and are a U.S. citizen.

How can employers ensure employees receive the best coverage possible?

One key decision employers face when implementing HSAs is whether to contribute money to employee accounts. While contributions might appear to increase costs, this may not be the case. In dual-option cases, employer contributions can drive enrollment away from the higher-premium PPO or HMO, resulting in client savings. In a full-replacement scenario, employer contributions ease the cultural evolution from paternalism to shared responsibility, encourage employees to open accounts, encourage contributions by employees and enhance the benefit plan to remain competitive.

Communicating with workers about these plans is essential. Health care transparency or the availability of good information on provider cost and quality is critical to the HSA success.

How does one use an HSA?

In 2007, you can contribute up to $2,850 for individual coverage or $5,650 for families (people age 55 and older can make an extra catch-up contribution of $800 in 2007). Legislation approved by Congress on Dec. 9, 2007, will allow you to contribute up to these limits even if your insurance deductible is less. The employer, employee or any other person can make contributions to the HSA.

HSAs pay for ‘qualified medical expenses.’ What is considered a qualified medical expense?

Qualified medical expenses are those that are the cost of diagnosis, cure, mitigation, treatment or prevention of disease, and the cost for treatments affecting the function of the body. They include the cost of equipment, supplies and diagnostic devises needed for these purposes. Medical care expenses are those that are primarily used to alleviate or prevent a physical or mental defect or illness.

HSAs can also be used to pay for other qualified expenses that may not otherwise be covered by the traditional health plan. These include: dental; mental health therapy; physical therapy; aromatherapy or acupuncture; transportation and lodging expenses relative to health care; preventive health programs, such as vaccines; nonprescription medications, such as aspirin or cough syrup; maternity expenses; and insurance premiums.

SALLY STEPHENS is president of Spectrum Health Systems. Reach her at

Tuesday, 25 September 2007 20:00

Behind the scenes of WC insurance

The 2003 workers’ compensation (WC) reforms created an extremely competitive workers’ compensation market in California. Numerous new insurance carriers emerged on the scene and a fierce competition among them has been pushing the rates down to new, unprecedented levels. Many businesses enjoy rates as low as 50 percent of the prereform levels.

Business owners noticed the extremely competitive market and are actively shopping their workers’ compensation insurance for lower rates. There is a catch, however, says Elizabeth Lisek, CIC, a commercial insurance broker with Westland Insurance Brokers.

“While lowering the rates is extremely important for any business owner and should be taken seriously, there is a hidden factor that may affect the business’s long-term savings a lot more than just a lower rate. That factor, often misunderstood by business people, is called Experience Modification (X-MOD) and is calculated by the Workers’ Compensation Insurance Rating Bureau (WCIRB),” says Lisek. “In order to truly save money on the WC insurance for the long term, one needs to have a basic understanding of the X-MOD to make wise decisions about their WC insurance and be proactive in the business’ safety and accident prevention program.”

Smart Business spoke with Lisek about the role of Experience Modification in the workers’ compensation package and how business owners can take an active role in lowering their workers’ compensation costs.

What is the Experience Modification (XMOD) factor?

The X-MOD is calculated from loss information that insurance companies are required to submit to the WCIRB on an annual basis. The WCIRB calculates an XMOD for each employer — provided the business meets a required premium threshold to qualify for an X-MOD. The formula takes into account reported paid losses, claim loss reserves and payroll amounts. It uses data of the past three years, but the most recently completed policy year is excluded. For example, an X-MOD effective in 2007 would use policy data from the policies effective in 2003, 2004 and 2005. The data from the 2006 policy would not be used until the 2008 X-MOD, when the data from 2003 would drop off.

Why is the topic of Experience Modification often overlooked by business owners and how does X-MOD affect businesses’ workers’ compensation premium?

While employers commonly realize that a lower X-MOD is somehow a good thing, many don’t make the connection between this number and their premium costs. Let me illustrate the tremendous savings a business may utilize by keeping its X-MOD at a low level. Let’s assume that an unmodified premium is $100,000. An X-MOD of 100 would be neutral as the premium would still be $100,000. With an X-MOD of 1.25, the rate is surcharged by 25 percent (the rate used by the workers’ compensation carrier is now multiplied by 1.25). The new premium would be $125,000. On the other hand, if the X-MOD is .75, there is effectively a 25 percent discount applied, so the $100,000 premium would now become $75,000.

It’s easy to see the tremendous surcharge, or savings, realized by the business depending on its X-MOD; in this illustration, the difference between the two factors translated into the $50,000 difference in premium. Such savings are hard, if not impossible, to realize just by cutting the rate.

What can a business owner do to effectively lower the X-MOD?

As I mentioned earlier, the X-MOD looks at the past loss history of the business. An employer may become more sensitive to the safety issues by creating safety programs and even monetary incentives to reward accident free teams/workers. Being that the number reported to the WCIRB is not just paid claims, but also all the reserves, it is extremely important to monitor the claims and close them as soon as possible, as well as make sure that the amounts reserved are kept at a reasonable level. In addition, since the X-MOD is calculated based on data reported to the WCIRB by an employer’s past insurers, incorrect or incomplete information can cause incorrect X-MODs. It may be worthwhile for employers to review the X-MOD calculations to make sure they are complete and accurate.

Why is it important to choose the right insurance broker to obtain the long-term savings on the workers’ compensation insurance?

The right broker can make a huge difference in the final cost of the business’s WC insurance. The broker should monitor all the outstanding WC claims and make sure claims are closed as soon as possible. If a claim stays open, the broker needs to discuss the reserves with the adjusters. The right broker can be successful in getting the reserves lowered, as well as in closing the claims.

The right insurance broker should not only be able to find you the best rate among different carriers, but should choose the company that will handle your claims quickly and efficiently and should also stay involved in monitoring your claims on your behalf.

ELIZABETH LISEK, CIC, is a commercial insurance broker with Westland Insurance Brokers. Reach her at (949) 553-9700 or

Sunday, 26 August 2007 20:00

Staying informed

The move to improve transparency in health care has had an impact on both consumers and providers. From the consumers’ perspective, transparency can provide the price and quality information they need to make informed choices among health care providers, says William McCarthy, director of large market sales with UPMC Health Plan.

For providers, transparency represents their ability to access the information they need to get a comprehensive view of their patients’ condition so they can offer a well-informed treatment plan. The challenge for both consumers and providers seeking transparency is the lack of detailed, standardized reporting, says McCarthy.

Smart Business spoke with McCarthy about transparency and consumerism and their effects on health care.

How can transparency be used to drive down health care costs?

Consumers can use information on price, quality and effectiveness to improve the value they receive for their health care dollars. This requires consumers to have access to resources designed to help them make those complex decisions.

Technology that allows providers to have a more comprehensive view of a patient’s condition can improve efficiency by eliminating duplication of services and prescriptions and reducing administrative costs.

Transparency in the form of standardized provider reporting improves quality. Studies have consistently proven that higher quality health care translates into lower costs. Health plans are currently using quality measurements that can help to identify providers that are employing best practices and using this information to improve quality among all providers.

How can cost information help consumers of health insurance?

Cost information, quality and outcomes information and alternatives can be very effective tools in helping consumers make health care related decisions.

Pharmacy leads the way in terms of transparency. Most health plans have a wealth of information available to consumers in terms of cost, effectiveness and alternatives so that they can make informed decisions regarding which types or brands of drugs they should consider. This information has been around long enough that conversations between doctors and their patients about it are commonplace.

Fewer resources are available to consumers when it comes to comparing doctors and hospitals. The information available today is fragmented, and there has been no industrywide standard.

Health plans also offer provider comparison tools, like Health Advisor, that can help consumers choose a hospital based on factors they find important, such as cost, outcomes, etc. However, consumers may find these tools to be confusing or misleading. Within the next few years, we will see the standardization of provider information that should make it easier to understand.

What should business owners know about a health care plan before they purchase?

Business owners should ask the following questions before choosing a plan:

  • How does your health plan report quality, and how do you measure up to your competitors?

  • What types of decision-support tools do you have to help my employees make informed decisions about how to improve their health and how best to spend their health care dollars?

  • What strategies do you have available to improve the health and productivity of my employees?

  • How will you engage my employees and their families in programs to improve their health?

  • Do you have examples of your success in improving the health and productivity of an employee population?

How do transparency and consumerism benefit business owners?

Business owners and executive leadership must lead the way in creating a culture of health within their organizations. They must support the introduction of tools and programs designed to engage employees and offer them the information and incentives that get them to change. If they are successful, they can reap the rewards of a healthier, more productive work force.

The term ‘consumerism’ as it relates to health care benefits is often tied to high-deductible health plans (HDHPs); however, introducing consumerism does not necessarily mean introducing HDHPs. Consumerism can be introduced in the form of cost information, decision-support tools and health promotion strategies that reward employees for improving their health. This can be introduced with HDHPs or more traditional plan designs.

How does it benefit employees?

Employees continue to share in the cost of health care increases through employer cost sharing, so they have a financial interest in getting the most value they can for their health care dollar. Employees also continually seek out strategies to improve their health, and offering the resources they need helps employees take steps to improve their quality of life and their satisfaction with their health care program.

How does it benefit health care providers?

Providers are looking for ways to deliver their care more effectively and efficiently. Improving transparency through standardizing and streamlining reporting, storage and access to medical records will help them be proactive in their treatment.

WILLIAM MCCARTHY is director of large market sales with UPMC Health Plan. Reach him at or (412) 454-5102.

Monday, 26 March 2007 20:00

Are you secure?

Because information can be a company’s largest and most important asset, managers and employees need to dedicate time, effort and money to ensure such assets are properly protected. With the increased complexity and interconnectivity of networks, corporate infrastructure boundaries have virtually disappeared. As a result, information security requirements have grown almost exponentially.

With a wide variety of — and constantly changing — threats, a comprehensive, layered security approach is needed. A solution based solely on technology is not enough. An overall strategy for enterprise security needs to include not only hardware and software but appropriate policies, procedures and organizational structure to provide a sufficient level of security. The requirements are identified by a thorough assessment of security risks, says Steve Korb, senior security systems engineer with Premier Technologies.

Maintaining a security infrastructure is a continuous process. Regular assessments are useful to understand progress that has been made and to help prioritize what steps are needed to further mitigate potential threats to your business, says Korb.

Smart Business spoke with Korb about how security measures should be placed and implemented.

What are the elements of an effective security assessment?

Assessments need to be done in a methodical manner in order to produce results that are repeatable and easily compared against prior assessments. The goal of an assessment is to identify and understand corporate risks and what steps can be taken to eliminate or reduce the risks. Their impact on the organization should also be quantified. The final part of the assessment should provide potential remediation steps.

Companies should utilize such assessments to protect services, hardware and revenue. An assessment of a company’s Internet-accessible devices may reveal that a particular host is vulnerable due to a missing patch on the server. The impact depends on the services being provided by the application on the host, but problems could result in loss of revenue. In this case, the immediate remediation would be to patch the server. Long-term remediation also should be evaluated. Depending on the potential lost revenue, this could indicate the need for providing a more resilient environment with built-in redundancy and disaster-recovery plans.

What standards exist for doing security assessments?

A standard-based approach like the ISO 17799 should be utilized. ISO is the International Organization for Standardization and the 17799 standard is a comprehensive set of controls for information security. The standard contains a set of 39 key control objectives.

ISO 27001 is a closely related standard that provides specifications for the requirements of an information security management system (ISMS). A standard approach to assessing security provides a consistent method to understand the security posture of an organization.

With a full understanding of the risks and exposures an organization faces, a comprehensive security plan can be developed. The plan should include technical solutions as well as aspects such as a disaster-recovery plan and business continuity planning. A standard assessment approach can also help to stay in compliance with government regulations like Sarbanes-Oxley, HIPAA, GLBA and others.

How often should an assessment be done?

Once a strategy for corporate security is implemented, you cannot forget about it and assume assets will continue to be secure. An initial assessment will help prioritize and balance the plan against potential risks and expenditures, but the landscape is constantly changing so a security plan needs to be adaptable to evolve with those changes. Periodic assessments should address changes that might affect the company’s overall security posture.

The best practice is to assess on an annual basis. In some cases, regulatory requirements may mandate annual assessments. In addition to a regular schedule of assessments, significant changes to the environment require assessments to be done.

Security such as disaster recovery and business continuity plans should also be tested on a regular basis. Finding out that a redundant firewall is not working when the primary goes down is not an ideal situation. Procedures need to be tested so in the event of a real emergency, business can be back to normal as quickly as possible.

Change is inevitable with technology, and new vulnerabilities are discovered every day. The goal is to be vigilant about understanding the potential threats, understanding the impact they will have on business and minimizing the effect of these risks.

Should all identified risks be fully mitigated?

They need to be weighed against the potential impact to the business. Before a solution is implemented to mitigate any risk, there needs to be an analysis of the impact. There are acceptable risks. The potential impact of the vulnerability may be outweighed by the gain associated with providing a particular service to clients or end-users. You don’t want to implement a $50,000 solution for a $5,000 problem.

STEVE KORB is the senior security systems engineer with Premier Technologies. Reach him at

Monday, 26 March 2007 20:00

Forging IT leadership

Today’s business owners are not only requiring their IT staff to be highly skilled in their technical trade, but are asking them to take on a more collaborative approach to management and business operations, and to become more business savvy.

Fifty percent of chief information officers (CIOs) say they are actively preparing IT staff for leadership roles at their companies, according to a recent survey by Robert Half Technology, a leading provider of IT professionals on a project and full-time basis. Commonly cited tactics include mentoring programs (43 percent), management training (42 percent) and soft-skills training (35 percent). The national poll includes responses from more than 1,400 CIOs from a stratified random sample of U.S. companies.

One problem companies could face is that experienced IT employees might be preparing for retirement — all at once. These individuals are often tenured leaders who have helped a company grow and develop over the years. Business owners struggle as they try to figure out how to replace these influential members, says John Paul Demirdjian, branch manager of Robert Half Technology in Chicago.

Smart Business spoke with Demirdjian about what steps should be taken to prepare IT employees for leadership roles, what factors are important to consider when choosing a candidate and how rein-vesting in current employees is the best investment for companies.

How are companies preparing members of their IT staff for leadership roles?

Some companies are early adapters and have already begun succession planning for the future of their company. These companies have identified potential candidates and have invested time and money into training programs so they can develop future leaders. This may include defined mentor programs where people work with or shadow current leaders. Others hold less formal quarterly meetings where employees and leaders meet to examine new trends, set expectations for the future and address changes within the industry.

Soft skills such as communication, delegation, business skills, public speaking and management are now top requirements for IT personnel. Training programs can be used to help IT individuals develop these skills. IT has become a ‘team sport’ and is a critical moving part of the entire business, rather than a segmented department within a company. In today’s technical world, a company’s success will be severely limited without a highly integrated, well-oiled IT operation.

Why is engaging in succession planning a good financial investment?

It can be more expensive to replace an employee than it is to invest in his or her retention. It is no longer appropriate to assign employees to a single task with no room for advancement; a career path must be created and clearly outlined for the retention of such employees. This outline motivates IT staff members to stay loyal to the company and provides strong leadership opportunity.

The trend of reinvesting in employees will continue as people realize that overall business will improve from the standpoint of retention, productivity and profit. Major amounts of time are saved by training current employees, and any time you can save time, you are saving money.

Leveraging an employee’s institutional knowledge is extremely valuable, and investing in their future allows you to retain that critical and often undocumented knowledge within the company. Owners and managers look for the most predictable result; therefore, investing in an employee already on staff is much more reliable and predictable than starting fresh with a new employee.

How can managers predict where employees belong in the future?

This process varies, depending on the industry and size of the business. Generally, managers are looking for consistent performers and employees who are willing to take the extra step without being asked. Employers who review employees’ abilities find these people through regular evaluations. To be successful, leaders need to get to know their employees and be present to see what happens in day-to-day operations.

Employers also look for people who can stretch their skills and take on new tasks. This process does not have to be complicated but can be a great test of a person’s ability to take on leadership roles down the road.

What type of training is the most beneficial and what can employees do if training is not offered within a company?

Balance is the key to the best training possible. An IT department that can leverage multiple streams of training and implement informal and formal company-sponsored events with desk-side coaching will see the greatest returns. There are numerous ways in which individuals can obtain such skills outside of the workplace. Professional organizations, industry associations and technology user-groups are designed to help develop an individual’s soft skills.

Additionally, many classes are available online, at community colleges, and at business organizations dedicated to such training. These courses can be customized and developed to the exacting needs of an organization or an individual.

JOHN PAUL DEMIRDJIAN is the branch manager of Robert Half Technology in Chicago. You can reach him at

Wednesday, 31 January 2007 19:00

Avoiding liability

An employee with lung cancer can cost a company thousands of dollars, increasing each employee’s insurance premiums. The U.S. Center for Disease Control reports that more than 75 percent of health care dollars are spent on chronic diseases such as diabetes and cardiovascular diseases. While some conditions cannot be prevented, employers are working to implement wellness programs to improve overall employee health and increase productivity.

Studies show that every dollar spent on wellness programs saves three dollars in health care costs, says Patricia Diulus-Myers, partner in the Pittsburgh office of Jackson Lewis LLP. Investing in wellness programs reduces short-term sick leave and increases productivity. More employers than ever are sponsoring such programs for their companies because of their proven return on investment, says Diulus-Myers. These programs are beneficial but must be implemented carefully to avoid legal problems.

Smart Business spoke with Diulus-Myers about wellness programs, potential pitfalls and the guidelines employers can use to avoid violation.

What common pitfalls do employers experience when trying to introduce wellness programs?

As with any new idea, there are people who do not view wellness programs as beneficial or necessary. These people do not believe employers should use wellness programs to inject themselves into employees’ personal lives. Wellness programs touch on very personal aspects of an individual’s life, such as family medical history, habits and lifestyle choices. It is important for employers to look at the big picture and determine where to draw the line to avoid intrusion into their employees’ private lives.

The Americans with Disabilities Act was designed to avoid biases against employees with disabilities, which can arise with paternalistic policies. Employers need to be aware of violating this law when implementing wellness programs. This act prohibits making inquiries into employees’ medical history without showing that it is job-related and consistent with business necessity, the very type of information that wellness programs tend to elicit and monitor for the best results. Therefore, foregoing medical questions and focusing on behavior is advised so as not to be considered unlawful.

A wellness program can give rise to termination discrimination. Employees may point to the program upon termination and claim that they were let go unlawfully because the company simply was looking to find healthier employees. The claims likely would attack the reason for termination as being a pretext for the real reason of weeding out perceived ‘unhealthy’ employees.

How do employers implement wellness programs without violating the law?

As long as the employer does not require participation and does not penalize employees who do not participate, wellness programs can pass legal muster. The Equal Employment Opportunity Commission (EEOC) specifies that such programs are acceptable if participation is voluntary, if the information obtained is maintained in a confidential manner and is not used to discriminate.

The EEOC cautions that providing a monetary incentive to successfully participate in the program may render it involuntary. Also, where an employer decreases its share of health insurance premiums and increases the employee’s share if one does not participate or does not meet the criteria of the program, the program may not be voluntary.

To avoid state discrimination claims based on lifestyles, employers can set up bona fide wellness programs under ERISA. If the program qualifies under ERISA, state law discrimination claims generally will be pre-empted.

Can employers provide incentives in wellness programs and avoid group health coverage discrimination?

As long as the nondiscrimination regulations provided by the Health Insurance Portability and Accountability Act (HIPAA) under ERISA, the Department of Labor and the IRS to design bona fide wellness programs are followed, there should be no violation. That is true even if the group health plan establishes discounts or rebates or modifies co-payments in return for adherence to bona fide wellness programs.

HIPAA guidelines state that the total reward for participation must be limited, and they cite 10 percent to 20 percent of employee total coverage cost. Also, such programs must be designed to promote good health; the reward must be available to all similarly situated individuals; and the availability of a reasonable alternative must be disclosed for individuals unable to comply because of an outstanding medical condition.

How can employers create wellness programs that are not viewed as an attempt to control an employee’s personal life?

Employers should communicate their intent. Educational programs should be utilized through open forums so employees feel comfortable asking questions. Advance notice also is important so employees can prepare for changes.

PATRICIA DIULUS-MYERS is a partner in the Pittsburgh office of Jackson Lewis LLP. Reach her at or (412) 232-0180.

Wednesday, 31 January 2007 19:00

Land issues

Eminent domain became a hot issue in 2005 when the U.S. Supreme Court ruled in Kelo vs. New London that property could be obtained from private owners and provided to private developers, expanding the concept of a public use. Eminent domain was originally created to enhance blighted areas and was not thought of as a tool to enhance local tax revenue by elevating the use of a given parcel of land, says Larry Vanore, director with Sommer Barnard PC.

Eminent domain laws do not simply allow taking homes away from people, says Vanore. The law should be used to better a community. But under Indiana’s new eminent domain statutes, that cannot be done by displacing current residents. With the new regulations, relocating costs may need to be paid even if an area qualifies for eminent domain.

Smart Business spoke with Vanore about the requirements of eminent domain and how it can create new business and the steps that need to be taken to protect existing businesses.

How do eminent domain regulations benefit commercial businesses?

If people are willing to purchase houses in a blighted area at low cost to renovate them, then there is likely to be a new inflow of people. It also becomes a good business investment for developers. With the inflow of new people, there will also be a need for more jobs and more services that commercial businesses can provide.

Developers can also investigate and locate areas that the city has deemed blighted. Most cities do not have the time, money and manpower needed to redo all the areas that need renovation. Private developers should look for such areas and work with local governments to rebuild. This creates new jobs and renews the housing stock.

How can businesses move into areas that are growing because of eminent domain without violating new regulations?

Activity spurred by eminent domain can be very positive by creating a focus on developing the boundary areas between the more affluent areas and the depressed areas. Businesses must be aware of other regulations such as zoning laws that restrict land uses. For example, businesses might be able to move into locations on the edge of previously renovated areas under eminent domain regulations to provide services to the new residents. These businesses will attract consumers and workers and help an area grow even faster.

As housing developments are revitalized and property values increase, neighborhoods become more attractive. Businesses may be able to work with a community to use eminent domain to acquire inexpensive property while making a large investment for the future of their company. It is important for business owners to work with a team of people, including local government officials, to determine the economic potential of an area and the potential benefits for the business.

What steps must developers and businesses owners complete to take advantage of eminent domain regulations?

Developers and business owners should show how the proposed development will benefit the larger community and not merely be intended to increase tax revenue. Rezoning determinations may be needed so a business meets local regulations.

To be prepared, businesses should study the government’s comprehensive or master plan to know how their plans coincide with the plan of the city.

Demographic research should also be completed before attempting to move into an area. Go to the area, drive around and talk to people.

Why is eminent domain a concern for existing business owners?

Current owners may be concerned with new developers coming in and working through the system to find ways to obtain the land for private development.

Local government and zoning ordinances can be used by current owners to protect against private developers obtaining their land. Local ordinances can have their own definition of economic development zones that better suit the community. Specific areas can be determined as eminent domain zones through the comprehensive plan to encourage eminent domain in appropriate areas and discourage it in other areas.

City and local governments may ‘grandfather’ existing businesses to provide a greater level of protection. Government can justify such actions by stating that the purpose of eminent domain within their land development planning is to solve problems.

What is the appeals process if local government determines a business’s property would be better utilized for public use?

Under the new statutes, if the government would like to take your property to give to another private business, it is required to give you prior notice and give you a good faith offer. A business owner can reject the offer and go to court to challenge the determination. Typically, it is argued in court that the new use of the land will not fit the definitions of public use. If a business owner is successful, he or she gets to keep the land and local government is required to pay any attorney fees.

LARRY VANORE is a director at Sommer Barnard PC. Reach him at

Wednesday, 31 January 2007 19:00

Recruitment and retention

Today’s job market is more competitive than ever. With a growing economy, there is a shrinking candidate pool from which employers can choose employees. As a result, employers are offering benefits and incentives to make their company more appealing than their competitors’. Specialized staffing firm Robert Half International polled chief financial officers throughout the country to see what employees considered the most important factors when choosing a company for which to work. The survey concluded that salary and company stability were the top two factors.

“Currently, there is a strong demand for accounting and finance professionals in the Chicago area,” says Dan Eick, vice president of the Chicago Region of Robert Half International. “CFOs are not only working hard to attract new employees, but also to retain current employees.”

Smart Business spoke with Eick about current recruiting challenges, approaches used to overcome such challenges, and retention practices.

What recruiting challenges are companies facing?

Companies are having difficulty finding skilled candidates to fill positions, especially in the finance and accounting industry. There are shortages for in-demand positions such as staff accountants and internal auditors.

Economic factors such as higher gas prices are also influencing employment decisions because candidates are more reluctant to accept positions that call for a lengthier commute. If there is a long commute, candidates are more likely to negotiate a higher salary or incentives to compensate.

For accounting and finance positions, there is a correlation between the lower number of students enrolled in such majors in universities and the low number of candidates. These majors were once overflowing with students but now are lacking. Combined with the mass exodus of baby boomers from the job market, this has intensified the need for strong candidates.

How can companies overcome these challenges?

Recruitment and retention should be a year-round focus so companies are not left with insufficient staffing levels. Strategic staffing is key. Employers need to develop a plan for their staffing needs so they are not scrambling when an employee leaves the company, retires or gets promoted. Companies may want to consider working with a staffing firm to overcome recruiting challenges.

Strategically, recruiters can help employers find the best talent for their needs. It is beneficial to work with a specialized staffing firm that is an expert in your industry. It is also good to look for a national or international recruiting firm. Not only does this give employers a larger pool to choose from, but it also helps a company looking to expand to new markets.

What are some incentives that employers are using to retain their top people?

While compensation is key, it is also important to develop programs and incentives that give employees the recognition they deserve. Offering flexible schedules, raises and performance-based bonuses are other common retention strategies. Few employees are apt to leave a work environment of supportive colleagues for higher compensation alone.

Simple things such as an employee’s relationship with his or her manager are often overlooked. It is important for managers to take a sincere interest in the people who work for them and the events taking place in their lives. If a manager is working to help an employee reach long-term career goals, employees are more likely to feel appreciated and stay loyal to a company.

Employers can check out the Robert Half International 2007 Salary Guide for recommended salary ranges for all levels of finance and accounting professionals. These types of resources can be used to compensate employees accordingly. This makes employees feel valued and decreases the chance they will leave a company for the competition.

What are key practices for a successful recruiting process?

Recruiting and retention should be a year-round focus. Strategic staffing is key to a successful business so that a company is never scrambling if an employee leaves the business or is promoted to a different position. A staffing plan should be developed and modified by business owners as they monitor company performance and set future goals.

Seasonal workloads should be tracked and monitored by employers to help project when new employees will be needed. If a company is planning to start new projects, staffing should be reviewed to determine what additional resources will be needed to staff new ventures successfully.

Planning is crucial when staffing. If a workload becomes too much for current employees, it can increase employee stress, decrease productivity and increase employee turnover, which in turn affects the overall productivity of a business.

DAN EICK is vice president of the Chicago Region of Robert Half International. Reach him at or (847) 882-7866.