Employee Benefits Handbook by jennyyingdi

VIEWS: 10 PAGES: 121

									Employee Benefits Handbook

Choosing the Right Mix of Benefits
      For your Employees

     Printing Industries of America
          100 Daingerfield Rd.
         Alexandria, VA 22314

               April, 2003

The bottom line. That is what business is all about. Unfortunately, finding that bottom line and
controlling it are very difficult. As much as we want to help you find new business, PIA cannot
do much for you in that area. Where we feel we can help is in identifying ways to control and
enhance your bottom line by addressing cost issues. The Human Relations Department of PIA
knows that benefits represent three percent of your cost of operations. We also know that benefits
are one of the most rapid growing areas of employee costs.

The PIA Benefits Book is a small step toward helping you through a complex area. Very large
companies can afford specialists to design benefit plans to meet the needs of the company’s
employees at the best cost for the company. Smaller companies often lack the expertise or the
resources to explore these benefit options. This Benefits Book is designed to fill that gap for you.
It provides a brief explanation of common and not so common benefits. Some of these benefits
you will use; some you may have never heard of. In this one handbook, you can read in layman’s
terms how your company might design a plan that is just right for you and your employees.

Perhaps the best part of this book is the PIA benefit. This book comes to you at no charge other
than the dues you already pay. As a member of your local PIA affiliate, 13 percent of your dues
come to PIA. The majority of that 13 percent is devoted to the Government Affairs and Human
Relations Departments. Since you have already paid, we will not ask you to pay again.

We do ask, however, that you return the attached response form so we can inform you when
pages are updated. In that way, you can be sure that you have the most current information on
benefit options.

Thank you for being a PIA member. Let us know if we can answer any questions. Our staff –
also available to you at no additional charge for you questions – is here to help. Also, your local
PIA affiliate stands ready to assist you.

                                Table of Contents


      PIA Resources, Affilates and Website
      M anaged Benefits Inc.
      Ogletree, Deakins, et al.
      Utica Insurance

Health Insurance
       Cost Savings Strategies to Consider
       Types of M anaged Health Plans
              Health M aintenance Organization
              Point of Service Plan
              Preferred Provider Organization
       Choosing a Plan Outside M anaged Care
              M edical Savings Accounts
              Flexible Spending Accounts
              Discount Plans
       Other Insurance Coverage
              Prescription Drug Plans
              Dental Insurance
              Vision Insurance
       Relevant Insurance Laws
              COBRA – extended coverage for former employees and dependents
              HIPAA – pre-existing coverage requirements
       State Small Group Laws

Other Insurance
       Life Insurance
       Short and Long Term Disability

Workers’ Compensation

Wellness Programs

Pension/Retirement Plans

Stock Option and Stock Purchase Plans

Optional and Required Leave
      Sick days, vacation, personal and holiday leave
      Family and M edical Leave
      Bereavement leave, jury duty, voting,
      M ilitary Leave

Employee Assistance Programs
      Illegal substances
      Alcohol addiction
      Family Counseling

Legal Services

Financial Services

Training/Education Assistance

Flexible Schedules

Dress Policies


Relocation Services

Concierge Services

Resources for Further Information

                                   Your PIA Affiliate
PIA affiliates vary in size and services they provide. Often they can save you time and money by
assisting you directly or by advising you of purchasing arrangements and local experts. You will
find a current list of local affiliates at www.gain.net.

                              Your National PIA Office
You can contact the national PIA office for further information at 703/519-8158. We have two
Human Relations professionals who specialize in employment matters standing ready to help.
Also, please visit www.gain.net for various employment forms, posters, fact sheets, and articles
on employment related matters.

Also remember that we can assist you with union contract information, union avoidance, and
other labor-management matters.

                       Medical and Disability Insurance
For many employers, the challenge and time constraints of shopping and comparing benefits
products can be overwhelming. A broker can be an excellent resource in the benefit marketplace.
Employee benefits brokers work on your behalf and are not affiliated with one carrier in
particular. The job of an employee benefits broker is to review all options that are available to
your company and help you structure the program that best fits your needs and budget.

If you do not currently use a broker or would like to explore an alternative, you are welcomed to
contact M anaged Benefits, Inc., which provided the medical and disability insurance sections of
this book. Selected by the Virginia Chamber of Commerce as one of the “Fantastic 50” growing
companies for both 1999 and 2000, M anaged Benefits currently services over 200 employers with
employees located in over 30 states. They primarily work with employers headquartered in
M aryland, Virginia, and Washington DC. If you are not in one of these areas, M anaged Benefits
may be able to refer you to another firm that will be able to offer you assistance locally.

                                     M anaged Benefits, Inc.

       Joe Sears                                        Brenda Fogg
       M illersville, M aryland                         Richmond, Virginia
       (800) 462-1380                                   (800) 948-1709

                   Legal Counsel and Document Review
Ogletree, Deakins, Smoak, Nash & Stewart is one of the nation’s largest labor and employment
law firms, with lawyers strategically located in fourteen offices across the country. Serving as
advocates for management, the firm has a national reputation for legal excellence and responsive
client service. Ogletree Deakins' labor and employment practice is complemented and supported
by related practice groups in the areas of business immigration, litigation, employee benefits,
environmental law, occupational safety and health, and construction law. The firm represents
more than half of the nation's Fortune 50 companies.

Ogletree, Deakins provides human resources counsel to the Printing Industries of America by
advising PIA staff on issues of concern to its membership. In addition, Ogletree, Deakins
provided the leave and retirement plan sections of this book.

The firm has offices in the following locations:

Atlanta, GA                                         Houston, TX
Birmingham, AL                                      Indianapolis, IN
Charleston, SC                                      Nashville, TN
Chicago, IL                                         Raleigh, NC
Columbia, SC                                        San Antonio, TX
Dallas, TX                                          St. Thomas, VI
Greenville, SC                                      Washington, DC

To contact the firm or to learn more about it, go to www.ogletreedeakins.com or call
202/887-0855. Feel free to note that you learned about the firm from PIA.

                              Workers’ Compensation
Utica National Insurance Group specializes in workers’ compensation, property, casualty, errors
and omissions coverage for the graphic arts industry. Utica National Insurance Group has been
insuring the graphic arts industry since 1914. For more information, please visit Utica National
Insurance Group at www.uticanational.com.

                                   Health Insurance

Before undertaking health insurance plans for your employees, it is important to understand the
basic legal framework that exists today. The following helps set the stage for determining
whether you should purchase a plan and how to decide what type of plan might work best in your

Are employers required to offer a health plan?
No. Neither federal nor state laws (except Hawaii) require an employer to offer a health plan.
However, once a plan is put in place, various federal and state laws will apply. See the attached
section on Relevant Legislation.

If you offer a health plan, do you have to pay for it?
In most cases, you must contribute to it. Health insurance carriers establish underwriting
guidelines that must be adhered to in order to enter into and maintain a contract for coverage.
Typically, carriers require a minimum contribution of 50 percent of the individual rate.
Employees would pay the other 50 percent and any additional cost to add dependents. Sometimes
state laws will set guidelines for small employer groups. (See chart.)

Do you have to offer coverage to all employees?
This depends on what your health insurance carrier and state requirements are.
Health insurance carriers will have minimum participation guidelines based on their own
definition of your “eligible” full-time employees.

Provided you satisfy those requirements, and unless your state prohibits it (typically only for
small employer groups), you as the employer will usually be able to set parameters around which
group(s) of employees coverage will be offered to. If you choose to limit coverage to a specific
class(es) of employees, you must be do so evenly and consistently.

Can you pay different amounts for different employees?
Yes. On certain conditions such as those that follow:

·   Non-discriminatory divisions of employees must be created such as salaried versus hourly
    employees, owners versus all others, etc.
·   The health insurance carrier’s minimum requirements for both contributions and participation
    are met.
·   Your state does not have laws disallowing this. (See chart.)

What are other graphic communications companies doing with
respect to health insurance coverage?

According to PIA’s 2002 compensation survey, types of health coverage vary greatly, as do the
amounts that employees are expected to contribute to their health plans. Below are some of the
statistics that might help you make decisions about your company’s health coverage.

                            Types of Health Coverage Offered

Firm Size                    1-10      11-20      21-50     51-100 101-250          251+
No plan offered                 2.7       0.6         0.0       0.0     0.0            0.9
Self-insured                    0.4       1.8         1.8       6.7    20.3           53.6
Private insurance carrier       4.2      11.2         7.8      10.5     7.8            7.1
HM O plan                      40.3      44.4        48.4      51.4    37.5           46.4
PPO plan                       35.0      32.0        46.1      41.9    53.1           53.6
Group insurance trust          11.0      14.8         7.4       5.7     4.7            0.0
Other                           6.1       8.9         8.8       5.7    18.8            7.1

Single coverage             $ 21.49    $ 31.35    $27.22     $ 35.60     $25.04     $22.66
Family coverage             119.09     152.46     177.29     193.53      133.55      90.92

Union firms relied most heavily on HMO (45.5%) and PPO (36.6%) arrangements. Employee
contributions in union firms were significantly lower at an average of $18.07 for single coverage
and $81.58 for family coverage.

                     Cost Savings Strategies to Consider
There are as many contribution strategies as there are companies. Each company has its own
ideas, and much of the strategy depends upon the company relationship with its employees.
Other factors that help decide a company’s strategy may be the competition for labor in its area or
the technical requirements for their labor.

At one time, companies paid for the entire cost of the benefit package for their employees.
Skyrocketing costs have eliminated this standard. However, most companies still pay for the
entire cost of a basic life insurance program and possibly a disability program (long term, short
term, or a combination). These programs are only offered to employees; dependents are not
included in this type of benefit.

When it comes to the other types of benefit plans – health, dental, vision – the first considerations
should be carrier limitations and any state regulations. Some carriers require a minimum
percentage of plans (e.g. 50 percent) to be paid by the company. Some states also regulate
minimum coverage.

Here are some common contribution strategies:

·   Company pays 100 percent of employee’s cost, 0 percent of dependent cost
·   Company pays 100 percent of employee’s cost, 50 percent of dependent cost
·   Company pays 75 percent of entire cost, regardless of level of coverage

Voluntary (employee pay all) programs are very common ways to offer additional benefits to
employees without employer contributions. Whereas standard group programs such as those
mentioned above normally require a high participation percentage (e.g. 75 percent), voluntary
programs generally do not require a high amount. These programs are generally offered to the
employee for the entire cost which can typically be paid pre-tax – see Flexible Benefits.
However, note that since there are no employer contributions, the rates are generally higher than
employer-paid programs since only those who need the program will buy it. Examples of
benefits that can be offered as voluntary benefits are:

·   Dental
·   Vision
·   Life (employee and dependent)
·   Disability (long and short term)
·   Long term care
·   Discount programs

                                Types of Health Plans
What is an HMO?
An HM O is a Health M aintenance Organization made up of health care providers in a given
location who enter into contracts designed to encourage the “maintenance” of good health and to
control the costs of health care delivery. For example, a primary care physician is selected for
each member. The PCP provides general care to HMO members and coordinates specialty care
when required. PCPs are paid by “capitation” (a set fee per HMO member per month) regardless
of the how often their services are used. Another notable way this type of health plan controls
costs is by only covering services rendered by contracted (or “in network”) providers.
(Exceptions are made for emergencies.)

Are all HMOs the same?
No. There are two basic kinds of HM Os: an Independent Practice M odel and a Staff M odel.
Variations of both exist.

In an Independent Practice M odel, contracts are entered into with independent physicians’
practices to be part of a network of providers for HMO members. HM O members often choose
providers who practice close to their homes or places of employment. If referrals to specialists
are required, there are usually several providers to choose from in a given geographical area.

A Staff M odel is comprised of a specific facility or facilities where all physicians are located and
all services performed. For example, a hospital may own an HM O and all services are provided
within the hospital and by physicians who work for that hospital. Another example would be an
HM O with several offices in a geographic area. All physician services must be accessed in one of
those offices. All physicians work for the HMO (not independent practices.) These models work
well for employees who live close to the facilities, but can be inconvenient for employees who
live further away.

When does an HMO make sense?
Because HM Os require all non-emergency services to be rendered inside their network of
providers, they are usually best suited in geographical areas where all employees will have easy
access to the physicians and facilities they need. A careful review of the provider directory will
help guide you in this decision for you and your employees.

If a reasonable number of providers are available, many employees enjoy the predictability of an
HM O. Knowing exactly what services will cost before pursuing health care and letting a family
doctor refer them to specialty services when necessary can offer a sense of security.

When might an HMO not make sense?
Depending on the models of HM Os available in your geographic location, the primary question
that usually arises from employees is the availability of doctors and hospitals in the areas closest
to their homes and jobs. If you have employees who live out of the HM O service area, coverage
for them may be difficult or unavailable.

Another concern employers face is employee “demand” for choice. Some industries deal with
this more than others. As the employer, you must determine if there are enough cost savings to
offset any unhappiness if employees are restricted by their health care plan.

What is a POS?
A POS, or Point of Service plan, usually functions like an HM O except that there is coverage
available if employees choose to go to a doctor or hospital that is not part of their health care
plan. Coverage outside the plan usually requires that a deductible be met first, then the plan pays
a percentage of services rendered (usually 50 to 80 percent.)

What is a PPO?
The least restrictive form of managed care is a preferred provider organization (PPO) made up of
health care providers who agree to provide services to members at a discounted or “negotiated”
rate. A financial incentive for members to use preferred (in-network) providers is the primary
method of cost control exercised by PPO plans.

What if you have employees who live outside of the network service
Some HM O plans have arrangements for employees who live too far from the service area to be
reasonably expected to access care from in-network providers. If so, there are usually
underwriting limits regarding the percentage of employees who will be part of an out of area plan.
POS and PPO plans will allow employees who live out of the network service area to receive care
at the out of network level of benefits.

A word of caution regarding POS and PPO plans
Before purchasing a POS or PPO plan, be sure to get a clear explanation of how benefits are paid
for providers who are not in the network. Although a plan may show that once a deductible is
paid, out-of-network benefits are through coinsurance (usually 50-80 percent coverage), this can
be deceiving.

Plans rarely pay the billed amount at the stated coinsurance percentage. Here are a couple of
common methods:

1) Coinsurance percentages are paid based on “usual, customary and reasonable charges” for the
geographical area in which services are rendered. This amount may be determined by the
insurance company’s own data or on information from a national database using the first three
digits of a zip code.

     Example – You purchase a plan with a 70 percent out-of-network benefit. Dr. Jones does
     not participate with ABC Health Care Plan. He charges $100 for an office visit. According
     to ABC Health Care Plan’s own data or from a national database, the average charge in your
     area is $80. ABC Health Care will pay 70 percent of $80, NOT 70 percent of $100. You,
     as the covered employee, are responsible to pay Dr. Jones the difference out of your own

2) Coinsurance percentages may be based on the “negotiated price” paid to providers in the
health plan’s network.

     Example – You purchase a plan with a 70 percent out-of-network benefit. ABC Health
     Care Plan pays a doctor in its network $20 to remove a hangnail. You go to a doctor outside
     the plan who charges $50. ABC Health Care will pay 70 percent of $20, NOT 70 percent of
     $50. You, as the covered employee, are responsible to pay the difference out of your own

                  Choosing a Plan Outside Managed Care
Traditional Indemnity/Deductible Plans
Before the days of HMOs, PPOs and the like, health insurance was usually comprised of an up-
front deductible, then coverage would be paid at 80 percent. Options like this still exist and are
usually referred to as traditional, indemnity or deductible plans.

The health insurance industry is beginning to see a return to these kinds of plans. Employers
facing large cost increases are exploring options that provide “catastrophic” coverage rather than
first dollar coverage for most services.

What to watch for…
First year rates may look very attractive for a plan with an up-front, fairly high deductible with a
flat percentage (usually 80 percent) paid after the deductible is met. If this is of interest to you, be
sure to ask about the following:

·    The credibility given to your own group’s “experience” – Usually traditional indemnity plans
     will count 100 percent of your own group’s claims experience when developing rates for
     renewal. If you have an exceptionally healthy group and/or a great year medically, this
     works to your advantage. The two prominent negatives are: 1) one major claim in the
     course of a year can have a significant, adverse impact on renewal rates and, 2) the same
     claim that resulted in an exorbitant rate increase may make you an undesirable risk for other
     insurance carriers.
·    Cost containment measures – Are there any restrictions or requirements within the plan to
     help control some of the costs? Second surgical opinions, requirements to “pre-certify” in-
     patient hospital stays, and/or dollar limitations on certain services are examples.
·    Exclusions and limitations – Because these plans are usually designed to protect against
     catastrophic loss, there may be limitations or exclusions on things that managed health care
     plans would typically cover. Be sure to review written information concerning coverage for
     routine physicals, maternity benefits, pre-existing condition limitations and all other limited
     or excluded services.

                             Medical Savings Accounts
In 1997, federal legislation referred to as HIPAA (see Relevant Legislation section) established a
four-year pilot program that would allow tax-exempt trust accounts to be set up for the purpose of
saving money toward future medical expenses. The accounts are called M edical Savings
Accounts. Conceptually, individuals purchase high deductible (catastrophic) medical insurance
and use the money from the M SA to pay for “claims” subject to the deductible.

The criteria for the high deductible plans are set by the IRS. For tax years beginning in 2000, the
minimum and maximum deductibles and out of pocket amounts are:

Type            Minimum Annual              Maximum Annual              Maximum Out of
Coverage        Deductible                  Deductible                  Pocket
Single          $1,550                      $2,350                      $3,100
Family          $3,100                      $4,650                      $5,700

Employees and employers can contribute toward the M SA up to a combined total of 65 percent of
the deductible amount for an individual and up to 75 percent of the deductible for employees with
family coverage.

These accounts are available to self-employed individuals and to small employers (employing 50
or fewer employees).

What are the potential pitfalls of MSAs?
Because legislation governing M SAs was set up on a trial basis, there is no guarantee that they
will be allowed to continue in the future. The sunset rule that would have required plans to cease
being set up after December 31, 2000 has been extended to an unspecified date. Some of the
managed care reform ideas being discussed in Congress could actually remove many restrictions
currently placed on M SAs and make them more readily available. Stay tuned to www.gain.org
for the latest information.

Currently, the underwriting guidelines many insurers are using for the high deductible plans that
go along with M SAs are stringent. In many cases, individuals can be denied coverage altogether.

A number of states will not allow M SAs.

It is imperative to review the stability of the carrier if you are considering offering an M SA
program to your employees.

An alternative is to consider a Flexible Spending Account.

What’s the difference between a Medical Savings Account and a
Flexible Spending Account?
In a Flexible Spending Account, any money not used by the end of the plan year is returned to the
employer. (See FSA definition below.) This is referred to as the “use it or lose it” rule. Funds in
an M SA may be carried over from year to year. If the employer contributes to the account, the
money is considered taxable income to the employee. An employee may also access the funds for
reasons other than medical expenses. (Penalties will apply if the money is used for other

What are graphic communications companies doing about MSAs and
A 2002 survey of PIA member companies showed that 17 percent of companies had either a
M edical Savings Account plan or a Flexible Spending Account plan. Some 25 percent indicated
that they did not have either, and 59 percent did not respond to the question. Plans were more
common among combination union/non-union shops. Very few union shops had M SAs or FSAs.

                           Flexible Spending Accounts
What is a flexible benefit plan?
A flexible benefit plan allows employees to pay for certain expenses with pre-tax dollars. This
saves the employee federal, state, and Social Security taxes on qualifying expenses. It also
lowers the employer’s tax bill by reducing the taxable gross wages, thus lowering the employer’s
matching FICA liability. These programs are also known as Section 125 plans.

What expenses can be paid through a flex plan?

·   Any medical expenses not covered by the participant’s insurance program, and
·   Dependent care for children up to age 13 and for relatives for whom you provide care.

Examples of medical expenses not covered may be deductibles, co-pays, or benefits not covered
by the company plan (e.g. glasses or laser vision). A listing of current eligible expenses follows
this section.

How does the program work for employees?
Plan participants must designate an amount prior to the beginning of the plan year that will be
taken out of their pay each pay period. This allows employees to use pre-tax dollars, thus
reducing their taxes. The maximum amount is set by the employer, but dependent care accounts
have a limit of $2500 for parents filing separately or $5000 per married couple filing jointly
(federal law). The participant may then file claims with the administrator to receive
reimbursement for the expenses. When filing a claim, a receipt must include the date of service,
amount, and the provider’s name.

Can participants ever receive more money than they have contributed?

On the medical expense side, yes they can. A participant may claim up to their election amount
at any time during the year regardless of the amount that has been withheld to date. In other
words, if an employee elects to contribute $1000 for the year, they may request reimbursement of
the entire $1000 during any time of the year regardless of how much has been withheld.

Dependent care accounts work differently in this instance. Participants may only be reimbursed
up to the amount that has been withheld to date.

What happens if employees do not use all the money in their account?
Participants are required to use all of the money in their account prior to the end of the year or
they forfeit that money. Employers may not give this money back to an individual employee
(federal law). Employers have two options with this money: keep it to offset expenses of the
plan or distribute it evenly among all employees eligible for the program.

                                  Qualifying Medical Expenses
                         (Only expenses not reimbursed by insurance can be claimed)

          Ambulance Hire                          Laboratory                       Surgeon

     Artificial Limbs and Teeth              Lip Reading Lessons                   Therapy

     Automobile Modifications              Medical Information Plans      Halfway House Residency

    Braille Books & Magazines                      Midwife                     Hearing Devices

              Crutches                               Nurse                      Hospital Bills

    Drugs and Medical Supplies                   Obstetrician             Iron Lung, Operating Costs

 Elastic Hose, Medically P rescribed                Oculist               Laetrile, Doctor P rescribed

     Eyeglasses/Contact Lenses                 Ophthalmologist                   Nursing Care

                Fees                               Optician                  Obstetrical Expense

            Acupuncture                          Optometrist            Operations, Related Treatment

            Anesthetist                          Oral Surgery                Oxygen Equipment

            Blood Donor                           Osteopath              Rental of Medical Equipment

            Chiropractor                         P ediatrician           Rental of Healing Equipment

         Christian Science                         P hysician          Retirement Home Fees, Allocable
           P ractitioners                                                       Medical Care

               Clinic                           P hysiotherapist               Seeing-Eye Dog

              Dentist                              P odiatrist                Special Education

             Diagnosis                          P ractical Nurse             T. V. Closed Caption

             Diathermy                           P sychiatrist           Support, Corrective Devices

       Examination, P hysical                   P sychoanalyst              Telephone for the Deaf

           Gynecologist                         P sychotherapist           Transportation Expense

          Healing Services                      Sex Therapist                       X-rays

    Smoking Cessation P rograms                    Specialist                     Wheelchair

The listing of eligible expenses is updated constantly, so check plan regulations for the most
complete listing.

                             Flexible Spending Accounts
                              Tax Savings Comparison
Here is an example of how contributing to a Flexible Spending Account could affect an
employee’s paycheck and spendable income:

Assume the employee earns $2500 per month and incurs the following monthly expenses:

·   Family medical expenses (deductible, co-pays, etc.)          $100 per month
·   Dependent care expenses (day care, summer camp, etc.)        $400 per month
·   Contributions to flex plan:                                  $500 per month

                                      Without Flex Plan                 With Flex Plan
Gross monthly salary                       $2500                          $2500
Less pre-tax contributions                      0                            500
Adjusted taxable salary                    $2500                           $2000
Less federal tax                              375                            300
Less state tax                                175                            140
Less FICA tax                                 191                            153
Less after-tax expenses                       500                              0
Monthly spending income                    $1259                           $1407

The employer would then pay matching FICA taxes on the lower adjustable taxable income. The
employee would then have an additional $148 per month in spending money.

                                       Discount Plans
Offering benefits in today’s competitive employment market is a requirement of doing business.
Though not required by law (in most cases), employees have grown to expect that their employer
will provide some sort of coverage for them. The ever-changing economy may not always allow
you to offer the level of benefits that you may provide today.

For this reason, there has been a dramatic increase in the use of discount benefit programs during
the past few years. These discount programs allow employers to offer a benefit to employees by
accessing large preferred provider networks nationwide.

Discount programs can be designed to offer:

·   M edical provider discounts
·   Prescription drug discounts
·   Dental provider discounts
·   Vision provider discounts

Generally, discounts in the range of 20 to 50 percent can be realized by using these programs.
Employee contributions are eligible for Section 125 consideration.

Under this type of program, enrollment is typically quite simple. There are no medical
questionnaires, state-by-state restrictions, or pre-existing condition limitations since these are not
insured programs. All new hires are guaranteed enrollment and there are no age limits or usage
limitations (e.g. maximum benefits).

                                  Prescription Drugs
Prescription costs are currently rising at an estimated three times the rate of inflation.
Prescription coverage can make up 22 to 27 percent of health insurance premiums. M ost
employees consider prescription coverage to be extremely important.

Are there ways to reduce the cost of prescription drugs?
Unfortunately, claims are claims and the only way to reduce the costs of prescription drugs is
through lower costs from the manufacturers. Carriers can shift some of the costs to plan
participants through plan design: deductibles, co-pays, and co-insurance levels.

How are drug prices determined for generic and brand-name
Carriers usually pre-determine which drugs will be listed on their “formulary” – their preferred
listing of drugs. M ost generic drugs will be included, but some brand-name drugs might not be if
generic drugs that offer the same medical benefit are available. If no generic drug exists, the
brand-name drug is usually covered by the carrier. This saves the carrier money, which in turn
saves the employer and employee money.

Can prescription coverage be removed from a health insurance plan
Traditional indemnity and PPO plans are usually able to have prescription coverage removed if
requested. Due to heavier regulatory requirements placed on HM Os, they usually cannot. Some
states are beginning to address this.

Are there other alternatives?
Discount programs are becoming very popular nationwide. By joining a discount program, you
have access to prescription drugs at the same low cost that insurers receive. These plans are not
insurance programs, however, and the patient would be required to pay the entire discounted cost
of the drug. (See section on Discount Programs.)

                                     Dental Insurance
What types of dental plans are available?
There are several types of dental programs available. They vary in cost depending upon the
benefit level and flexibility of coverage, but are generally very consistent from carrier to carrier.
The availability of dental plans is much more limited that other types of coverage.

Traditional dental programs separate coverage into four types: Preventive care, basic care,
major care, and orthodontia. M ost traditional plans cover the first three, but may not include
orthodontia. A typical plan would offer benefits such as this:

          Preventive care                 100 percent coverage, no deductible
          Basic care                      80 percent coverage after a deductible
          M ajor care                     50 percent coverage after a deductible

A deductible for this type of plan is normally set at $25 or $50 (annually) per person. In the case
of family coverage, most plans will only require three family members to satisfy their

Preventive care generally covers such expenses as your normal twice-annual exam and cleaning,
along with any x-rays required.

Basic care normally covers fillings, root canals, and other “non-major” treatment.

M ajor care generally covers dentures, crowns, and bridges.

M ost traditional plans have an annual maximum benefit of $1000 - $1500 per person.

If orthodontia coverage is included under the Dental program, it is generally covered at 50
percent, with a lifetime maximum benefit of $1000 or $1500 per person.

In some cases, a preferred providers listing may be included. If so, the benefits may be slightly
higher for using preferred providers.

Dental HMO programs are lower-cost programs that may not be available in all areas. Quite
often, these programs are offered only on a regional basis. Under Dental HM O programs, a
participant chooses a primary care dentist and receives care from this provider. The participant
will be required to pay co-payments for each service rendered. Obviously, the lower the co-pays,
the higher the premium for the program. The primary care dentist will refer participants to in-
network specialists for specialty care.

Dental HM O programs require all services to be rendered by network providers. There are some
programs available, however, that may offer a limited reimbursement level for utilization of non-
network providers.

Discount programs are a third type of dental program. This type of program will offer
discounts for using in-network providers. Generally, these discounts are much greater for routine
(preventive) care than for major care. M ost programs will offer discounts of as much as 50
percent for routine care and 15 to 25 percent for other services.

Do other graphic communications companies provide dental benefits?
According to PIA’s 2002 compensation surveying, 54 percent of respondents provide dental care
as part of their benefits package. Among companies with 1-10 employees, 40 percent offered
health benefits, with the percentage growing as companies increased in employee size.

                                     Vision Insurance
Is vision coverage included in health insurance plans?
Injuries to eyes or actual medical problems with one’s eyes are covered under most health
insurance plans. However, a routine eye exam, along with glasses and contact lenses, are
normally not covered under most health insurance plans. (Some health carriers will offer limited
benefits or discounts for the eye exam, but this is on a carrier-by-carrier basis.

There are many companies that offer vision programs as an insured program. These programs
will generally cover a routine exam each year and offer coverage for glasses and contact lenses.
Just like other benefit plans, the level of care and maximum dollar amounts depends upon the
level of the plan purchased.

What about laser vision correction?
The goal of laser vision surgery – and it is considered surgery and should be viewed as such – is
that the patient will no longer need to wear glasses or contacts. M any of the vision programs
available offer discounts on this treatment, but it is still not a benefit under most health insurance

How do vision flex plans work?
Since most expenses for vision are not covered unless a true vision program is offered, a flex plan
is a good idea. Under a flex program the expenses may be taken out of employees’ paychecks on
a pre-tax basis, so the actual costs of the services are somewhat reduced. See the section on
Flexible Benefits for more information.

Are vision discount programs available?
Just like dental and prescription drug programs, there are discount programs available that will
offer 20 to 50 percent discounts on vision expenses. These programs are generally much lower in

What are other graphic communications companies doing about
vision coverage?
Roughly 31 percent of respondents to the 2002 PIA compensation survey indicated that they
provide vision care to employees. The percentage of firms with 1-10 employees offering
coverage was 23 percent, and the numbers increased with size of company.

                             Relevant Insurance Laws

Employers who had fewer than 20 employees on a “typical business day” in the preceding year
may be exempt from having to offer COBRA. COBRA requires most employers who offer
medical, prescription drug, vision or dental coverage to employees and their dependents to
continue to offer the coverage to an employee after he or she leaves the company. Former
employees are responsible for the cost of the coverage, but employers must administer their
participation (see below).

All employers with more than 20 employees are covered by COBRA. A “typical” day is
determined by 50 percent of the working days in the previous calendar year. Employees counted
are full-time and part-time. In some cases, temporary workers may need to be counted as well as
non-resident aliens. COBRA does not apply to plans sponsored by the federal government and
certain church related organizations.

What notification is required?
Initial notification describing COBRA rights must be given to covered beneficiaries and their
spouses when a “qualifying event” occurs. When a qualifying event occurs, the responsibility of
notification falls on employers, plan administrators and qualified beneficiaries.

“Qualifying events” are specific events that would cause the loss of health coverage.
For employees, qualifying events are voluntary or involuntary termination of employment for
reasons other than gross misconduct or reduction in the number of hours of employment.

Spouses’ qualifying events are voluntary or involuntary termination of the employee’s
employment for reasons other than gross misconduct, reduction in the number of the employee’s
hours of employment, the covered employee’s becoming entitled to M edicare, divorce or legal
separation of the covered employee, or death of the employee.

Dependent children’s qualifying events are the same as spouses’ with the addition of loss of
“dependent child” status under the plan rules.

If the qualifying event is an employee’s death, termination of employment, reduction in hours of
employment or entitlement to M edicare, the employer must notify the plan administrator of the
event within 30 days. The plan administrator then has 14 days to notify the qualified
beneficiaries, either in person or by first class mail, of their right to elect COBRA coverage. If
the employer functions as the plan administrator (administers COBRA internally), the employer
has 14 days to notify qualified beneficiaries.

When the qualifying event is divorce, legal separation, or a child ceasing to be covered as a
dependent under plan rules, the qualified beneficiary must notify the plan administrator within 60
days after the event.

Who is covered by COBRA?
As a general rule, COBRA must be offered to an employee, employee’s spouse, and/or
employee’s dependent children who were covered under the group’s health plan on the day before
the qualifying event occurred.

How long is coverage extended?
Depending on the qualifying event (see above), coverage may be extended from 18 to 36 months.
If the qualifying event is an employee’s termination of employment or reduction in hours, the
employee, employee’s spouse, and/or dependent children may elect COBRA for a period of 18
months. In the event of an employee becoming disabled as defined by the Social Security
Administration’s definition, extending an additional 11 months of COBRA may be required (for a
total of 29 months.)

When divorce, legal separation, death of the employee, or the employee’s becoming eligible for
M edicare is the qualifying event, spouses and dependent children may have COBRA coverage for
36 months. Losing “dependent child” status allows the dependent child to enroll in COBRA
coverage for 36 months.

Who pays for COBRA?
Employers may require COBRA beneficiaries to pay 100 percent of the cost plus an additional 2
percent for administrative costs. If a beneficiary is receiving the 11-month extension as a result
of disability, employers may require 150 percent of the cost for the additional 11-month period.

Initial payment in the amount covering the period from the date coverage was lost is due within
45 days after COBRA has been elected. Subsequent payments are due on the date stated by the
plan (typically the first day of the coverage period). While a 30-day grace period is required, the
plan has the option of canceling coverage until payment is received and then reinstating coverage
retroactively to the beginning of that coverage period.

Where can I find more information about COBRA?
M ore information is available on PIA’s website under Human Resources at: www.gain.org.
Also, your PIA affiliate is well-versed in insurance matters such as COBRA (see affiliate listing).

M anaged Benefits Inc., which has helped with the development of this resource document, has
more information at www.managedbenefits.com.

The Department of Labor produces materials that are helpful for employers and employees.
M any questions can be answered by visiting DOL’s website: www.dol.gov/dol/pwba


 Health Insurance Portability and Accountability Act (HIPAA)

What are the major areas of impact by HIPAA?
HIPAA is best known for its protection of employees who have pre-existing medical conditions,
who change jobs, and for improving the availability of health insurance for small employers (2 to
50 employees). It also governs the privacy of individuals’ health information (use, storage and

HIPAA guarantees access to health coverage for small employers. Generally, no insurer can
exclude a worker or family member from employer-sponsored coverage based on health status.
Insurers are required to renew coverage to all groups, regardless of the health status of any

If you purchase group health insurance coverage, your insurer should be able to handle HIPAA
information collection activities and certificate issuance for you. Talk to your insurer to find out
how you can work out the process-related issues together. Alternatively, you can contract out
these new certification responsibilities.

How does HIPAA affect pre-existing condition exclusions?
A pre-existing condition is typically defined as “any condition for which you sought or received
treatment, prescription coverage, or medical consultation or for which a prudent person would
have sought treatment within the last _____ months.” (The number in the blank varies from one
insurance carrier to another.) Usually a condition that meets the definition of “pre-existing” will
be excluded from coverage for the first 12 months of the contract.

Under HIPAA, individuals must be given credit for the number of months that the individual had
prior coverage when determining the pre-existing conditions waiting period as long as the
individual did not have more than a 63 day break in creditable coverage during the previous 12

Pregnancy cannot be treated as a pre-existing condition. Pre-existing condition limitations cannot
be applied to newborns or newly adopted children provided that coverage is requested within 30
days from birth/adoption.

The definition of a pre-existing condition is limited to a condition for which medical advice,
diagnosis, care, or treatment was recommended or received within the 6-months prior to an
individual’s enrollment date.

Coverage for pre-existing conditions cannot be limited or excluded for more than 12 months for
individuals who sign up for a group health plan when they first become eligible or immediately
following a qualifying event (see What is a Qualifying Event under COBRA). For late enrollees,
exclusions for pre-existing conditions cannot exceed 18 months.

Does prior individual coverage count as “creditable coverage”?
No. Prior creditable coverage must have been under a group policy.

How will an employer know if a new hire has prior creditable
A new employee can obtain a “HIPAA Certificate” from the health insurance carrier(s) that
provided prior coverage. Some insurance companies automatically issue these certificates when a
person’s coverage terminates; others may require that the person desiring the certificate call in to
request it.

Internet Resources
See www.gain.org and/or www.managedbenefits.com.

                               State Small Group Laws

In addition to federal laws like COBRA and HIPAA, many states have enacted their own special
laws for smaller employers offering health coverage for their employees. M any areas of interest
have been included in these laws, such as:

·   Restrictions on premiums charged by insurers,
·   Restrictions on cancellation of coverage (to protect the small employer),
·   Pre-existing conditions,
·   M inimum benefit levels, and
·   M inimum benefits for mental or nervous conditions and substance abuse.

The next page reflects the most recent listing of states and their requirements (if any). This listing
should be used as a general guideline; each state utilizes different rules for determining the size of
an employer, definition of employees, and other restrictions. Self-employed individuals also have
special guidelines in some states.

Contact your PIA affiliate or your insurance carrier for more state-specific guidance.

            State-by-State Small Group Laws
                                           Provisions for
State   Small Group Size   Premiums   Cancellation        Pre-Existing Conditions
 AL           2-50
                             P            P                         P
 AK           2-50
 AZ            ---
                             P            P
 AR           2-25
                             P            P                         P
 CA           3-50
 CO           2-50
                             P            P                         P
 CT           2-50
                             P            P                         P
 DE           2-50
                                          P                         P
 DC           2-50
                             P            P                         P
 FL           2-50
                             P                                      P
 GA           2-50
  HI           ---
                             P            P                         P
  ID          2-50
  IL          2-25
                             P            P                         P
  IN          2-50
                             P            P                         P
  IA          2-50
 KS           2-50
 KY            ---
                             P            P
 LA           3-35
                             P            P
 ME           2-50
                             P            P                         P
 MD           2-50
                             P            P                         P
 MA           2-25
 MI            ---
                             P            P                         P
 MN           2-49
 MS           2-25
                             P            P                         P
 MO           3-25
                             P            P                         P
 MT           2-50
                             P            P                         P
 NE           2-50
                             P            P                         P
 NV           2-50
                             P            P                         P
 NH          2-100
                             P            P                         P
 NJ           2-49
                             P            P                         P
 NM           2-50
 NY            ---
 NC           2-49
                             P            P                         P
 ND           3-25
                             P            P                         P
 OH           2-25
                             P            P                         P
 OK           2-50
                             P            P                         P
 OR           3-25
 PA            ---
                             P            P                         P
  RI          2-50
                             P            P                         P
 SC           2-50
 SD           2-50
                             P            P                         P
 TN           3-25
                             P            P                         P
 TX           2-50
                             P            P                         P
 UT           2-50
                             P                                      P
 VT           2-50
                             P            P                         P
 VA           2-25
 WA           2-25
                             P            P                         P
 WV           2-50
                             P                                      P
 WI           2-50
                             P            P                         P
 WY           2-50

                                       Life Insurance
What is group term life insurance?
Life insurance is a benefit purchased to provide financially for a beneficiary in the event of an
employee’s death.

Group term life insurance is exactly what the name implies. It is a life insurance contract issued
on a group of employees for a specified time period.

Is it available to all group sizes?
Generally, yes. However, strict underwriting guidelines may apply. For example, it is not
uncommon for carriers to require individual medical questionnaires to be completed for groups
with 10 or fewer employees. In most cases, carriers will offer a “guarantee issue” amount.

Are premiums tax deductible for employers who offer this benefit?
Yes. As long as the employer is not the beneficiary of the policy (directly or indirectly), the
employer’s cost for purchasing the plan may be considered deductible as an “ordinary and
necessary” business expense.

Are there tax implications for employees if group term life insurance is
Only for amounts in excess of $50,000. Employees are allowed to have up to $50,000 in
employer paid life insurance with no tax implications. For amounts in excess of $50,000, the
“cost” (as determined by Table I under the IRS Code Section 79 – not the actual premium
amount) must be added to employees’ gross income amounts. This is commonly referred to as
imputed income. Your life insurance carrier should have a copy of this table readily available to

How much does it cost?
Comparatively speaking, group term life coverage is very affordable. While the cost will be
determined according to the specific demographics (age and gender composition) of your group,
the cost per $1,000 of coverage is usually quite reasonable.

What coverage do most small employers offer?
Typically, $10,000 - $15,000 in coverage is offered by employers with 20 or fewer employees.
As group size increases, coverage amounts also tend to increase. Amounts over $50,000 are not
often seen due to the inconvenience of having to calculate imputed income. For employers who
wish to offer more coverage while keeping costs at a minimum, voluntary (employee-pay-all) life

coverage may be sponsored so that employees can purchase desired amounts over and above what
is paid for by the employer.

What do other graphic communications companies offer?
According to PIA’s 2002 compensation survey, 67 percent of companies offered life insurance,
with the average amount being $21,500. Of small firms, 24 percent offered life insurance, with
the average amount being $12,000.

What is accidental death & dismemberment insurance?
If AD&D is purchased along with group term life insurance, it provides a “double indemnity”
feature in the event that the covered employee dies as the result of an accident. So, if you
purchase a flat $15,000 for each of your employees and one of them dies in an accident, the
beneficiary will receive $30,000. The accidental dismemberment feature sets a schedule of
amounts that are paid in the event of the specified losses.

Noteworthy contract provisions
Some enhanced provisions that may be available to you at no additional cost include:

·   Accelerated death benefits – Allows employees to access a set percentage of the basic term
    life amount in the event of terminal illness. Usually carriers will require the employer to
    purchase a stated minimum of basic term life insurance on employees. The minimum will
    vary from carrier to carrier; $20,000 is common.
·   Conversion – The option for an employee to convert to an individual whole life policy
    without showing evidence of insurability when he or she will no longer be covered under the
    company group term life policy.
·   Waiver of premium – Allows premium amounts to be waived for employees who become
    disabled while under the group term life contract.

                         Short and Long Term Disability
What is a disability plan?

A disability plan, sometimes referred to as a disability income plan, provides income replacement
for employees who are unable to work due to accident or illness. The level of benefit is based on
the employee’s pre-disability earnings.

What does a typical short term disability (STD) plan look like?
The most common STD plans provide coverage for 13 or 26 weeks. STD plans usually
incorporate elimination periods (waiting periods) from the date of the disabling event until
benefits begin being paid. Elimination periods may be the same for disabilities caused by
accidental injury and illnesses or they may differ. Common elimination periods are 7 or 14 days.
Some plans have a 0 day elimination period for accidents or may include “first day hospital”
language, which simply means that benefits will begin being paid on the first day (thus overriding
an elimination period if one is in place) if the disabling event requires hospitalization.

Using examples from above, the least expensive combination would be a 15/15/13 contract. This

·   Benefits would begin being paid for an accidental injury on day 15
·   Benefits for illnesses would also begin on day 15
·   STD coverage would be exhausted 13 weeks from the date of the disabling event

The cost for a 1/8/26 or a 8/8/26 with first day hospital would be significantly higher. In the first

·   Benefits would begin being paid for an accidental injury on day 1
·   Benefits for illnesses would begin being paid on day 8
·   STD coverage would be exhausted 26 weeks from the date of the disabling event

In the second arrangement:
· Benefits would begin being paid for an accidental injury on day 8 unless the injury resulted in
    hospitalization. In that case, benefits would begin on the hospital admission date (usually
    meaning day 1)
· Benefits for illnesses would begin being paid on day 8 unless the illness resulted in
    hospitalization. In that case, benefits would begin on the hospital admission date (usually
    meaning day 1)
· STD coverage would be exhausted 26 weeks from the date of the disabling event

Why do benefits usually end after 13 or 26 weeks?
Because short term disability insurance tends to be more expensive than long term disability
insurance, often employers will purchase an LTD plan that begins after 90 or 180 days (picking

up where STD leaves off). Some carriers may offer short term disability programs that extend for
a longer period, but the cost would likely be excessive.

What should an employer ask about a long term disability (LTD) plan?
Key questions to ask when considering an LTD contract would include:

·   How long will benefits be paid?
·   How long does an employee have to wait before collecting benefits under the disability plan?
·   Does s/he have to be totally disabled during this time?
·   How is disability defined?
·   What if an employee is only capable of working part-time? Is that still considered “disabled”
    under the contract?
·   Are there any provisions to motivate an employee to return to work if possible?
·   Are there exclusions for pre-existing conditions?

When reviewing an LTD plan, what terms should an employer pay
attention to?
M any insurance carriers use their own jargon for things that may make deciphering a contract
difficult for someone who doesn’t deal with them regularly. Here are some of the most common
terms that respond to the questions listed above.

Duration of Benefits – This defines how long benefits will be paid. Older contracts typically
cover disabled employees to age 65. Because retirement age, as defined by the Social Security
Administration, varies according to the year of birth, it is very important to have a contract cover
a disabled person until Social Security normal retirement age.

Elimination Period – The period of time from the date of the disabling event to the date
benefits begin being paid. The most common are 90 days or 180 days. Unless otherwise stated,
the employee must be totally disabled, as defined elsewhere in the contract, for the entire
elimination period.

Zero Day Residual – If included, this means that the elimination period (above) may be
satisfied by a combination of days totally disabled and partially disabled. (This is a good example
of a term that is commonly disguised in a carrier’s internal jargon.)

Own Occupation Period – The length of time that “disability” is defined as being unable to
perform the duties of one’s own job. After that, the “any occupation period” begins. This defines
disability as being unable to perform any job for which one is reasonably suited by education,
training or experience.

Partial Disability Benefit – Allows benefits to be paid to an employee who is permanently,
partially disabled (usually defined as being unable to perform some, but not all, of the material
duties of one’s own job and/or earning less than 80 percent of pre-disability income) after s/he
has been eligible for and receiving LTD benefits.

Work Incentive – M any LTD plans will build in incentives to encourage an employee to return
to productive work as soon as possible. Commonly, a work incentive benefit will allow an
employee who returns to work part-time to earn a combined total (disability benefit plus earnings
from work) of 100 percent of pre-disability income during the first 12 to 24 months of disability.
This is another example of something that can be dis guised in a carrier’s own jargon.

Rehabilitation Benefit – M ost LTD contracts will encourage an employee to return to work by
providing a benefit for rehabilitation services. Some contracts have mandatory rehab provisions
that cut off benefits if an employee, in the carrier’s evaluation, is an eligible candidate for rehab
but refuses to try.

How much does LTD cost?
Costs vary according to industry, age, and the amount of income being protected. Relatively
speaking, long term disability coverage will be much less expensive than short term disability. It
is important to note that the cost of a strong, solid LTD contract is usually within pennies of a
weak contract.

What is a typical level of coverage?
The most common plans would cover 60 percent of an employee’s monthly pre-disability income
up to a set maximum. A good place to start when determining the appropriate maximum may be
to consider the income amounts of the top three to five wage earners in a company or to simply
look at the average income in the group.

Does it matter who pays for disability benefits?
Because disability programs insure income, taxes are a consideration. If an employee pays for the
premiums (with after tax money), the benefit would not be taxable. If the employer pays for the
premium, the benefit will be taxable to the employee as regular income.

What are most employers doing about disability premiums?
As the costs of benefits in general continue to climb, it is becoming increasingly more difficult to
answer that question. Employers must look at their unique circumstances and determine which
option makes the most sense for them. See chart below.

Plan                         Pros                             Cons
Employer-paid                · Offers the least               · Employers under budget
Long-term Disability            expensive “rate”.               constraints may not be
                                                                willing to purchase LTD
Employer-Paid (Voluntary)    ·   The “rate” will be less      · Insurance carriers have
Group Long-term Disability       than if purchasing             minimum participation
(Employees pay some or all       individual LTD                 requirements. If enough
of the premiums)                 coverage.                      employees do not sign
                             ·   Premiums may be                up, coverage will not be
                                 payroll-deducted.              granted to anyone.
                             ·   Employees would only         · M any insurance
                                 pay income tax on the          companies will not offer
                                 portion of the benefit (if     coverage to smaller
                                 any) that was paid for         companies on a
                                 by the employer.               voluntary basis.

Employee paid (Voluntary)    ·   Usually there are no         ·   Rates will usually be
Individual LTD                   minimum participation            higher with no employer
Employers may allow (or          requirements.                    contribution.
sponsor) a carrier to meet   ·   Employees will not pay       ·   Contracts are usually
with employees to offer          income tax on benefits           much weaker than what
LTD benefits on an               received.                        an employer could buy
individual basis.            ·   Premiums may be                  for employees.
                                 payroll-deducted.            ·   M ost carriers that
                                                                  provide these benefits
                                                                  require individual
                                                                  meetings with each
                                                                  eligible employee.

LTD seems very confusing…
As employee benefits go, long term disability can be one of the more overwhelming ones to
decipher. For this reason, many employers have been talked into buying contracts that, if
explained, would not satisfy their expectations.

As a service to PIA members, Managed Benefits, Inc. is available to review existing LTD
contracts and/or to assist with the purchasing of a quality LTD program. Company contact
information can be found at the beginning of this book under Sponsors.

                              Workers’ Compensation
What is workers’ compensation?
Workers’ compensation laws are designed to ensure that workers who are injured on the job or
who develop work-related diseases can obtain medical care and income for themselves and their
families without going to court. Before these laws were enacted, injured or ill employees had to
sue employers under common law principles to prove harm. Lawsuits were often difficult to
prove. At the same time, employers wanted to reduce their legal costs from having to fight claims
in court, some of which were clearly frivolous.

In the early 1900’s, states began enacting workers’ compensation laws to take claims out of the
courts. These state laws provided for prompt, sure and reasonable income and medical benefits
for employees, and provided a single remedy to employees so employers would not have to face
slow, costly and uncertain legal action.

Workers’ compensation laws are considered to be “no fault.” The employee does not have to
prove that the employer was negligent by maintaining unsafe working conditions, and the
employer does not have to prove that the employee’s actions were the cause of the injury.

How are workers’ compensation laws administered?
Today, all 50 states have workers’ compensation laws. However, the requirements vary between
the different states. The vast majority of state workers’ compensation plans are operated through
insurance companies, although self-insurance by the employer is permitted in almost all states.

Eighteen states operate a state fund, and in six plans, it is compulsory for the employer to use the
state fund rather than an insurance company.

Who is covered?
Workers’ compensation plans generally cover all employees except casual workers, domestic
workers, and farm workers. M ost states cover part-time workers. In some states, contractors are
also covered. If you are a sole proprietor, some states may allow you not to buy workers’
compensation insurance. You may also have the option to buy coverage for your board members
if you request this coverage on your policy. You can check with your state Department of Labor
to find out how “employee” is defined.

What benefits are provided?
Benefits are payable for all work-related injuries and diseases. Employees can receive periodic
cash payments for temporary and permanent disability and for survivors. Often, there is a brief
waiting period before benefits begin. Complete medical care is also provided for work-related
injuries, including the cost of rehabilitation. There is no waiting period for medical care since the
premise of the workers’ compensation system is to get employees back to work as soon as is

reasonably possible. Benefits vary by state. It is important to have “all states” coverage if you
have employees who work or travel out of your business' state.

Who pays for workers’ compensation?
Employer contributions pay for all of the costs of the workers’ compensation plans. Rates are set
based on the experience of a particular type of occupation in a particular territory. Your
individual policy, if large enough, may be “experience-rated.” Experience rating is the actual loss
experience of the employer. If your experience has been favorable, your experience factor would
be under 1.00 meaning you would receive a credit on the normal rates. If your experience has
been adverse, your experience factor would be over 1.00 resulting in higher than normal rates.
Experience ratings help insurers to charge adequate rates to pay for future loss activity.
Experience ratings encourage employers to run safe shops to reduce their costs.

How can workers’ compensation costs be reduced?
Insurers provide discounts to employers for good safety records and for undertaking preventative
actions such as drug testing and wellness programs in many states. In addition, employers can
request a periodic review of their rating from their insurer to see if any additional savings might
apply. For instance, some printers have been re-designated as quick printers, which makes them
eligible for a reduced rating. A rating can also be appealed if an employer believes it does not
accurately reflect the company’s safety program and record.

M anaged care programs are available from some carriers. A managed care program hooks up an
injured worker with a rehabilitation nurse. These nurses will help get an employee back on job in
a shorter time frame and thus reduce the loss amount. Some carriers have loss control material
and training for your employees to assist you in avoiding or reducing losses and keeping your
premiums down. M any carriers offer dividend programs. A dividend program may be based on
your experience or an “affinity” group’s experience.

Since experience rating is done at the beginning of a policy period it doesn’t give your company a
credit for your actual experience in the current policy year. A dividend is calculated after the
policy has expired and gives the company a refund if its or its group’s experience has been
favorable. It is also possible in some states to self-insure part or all of your workers’
compensation exposure. With self-insurance programs, your premium usually decreases as your
risk increases so it is critical to work with an insurance professional who can adequately advise
you. Check with your PIA affiliate or your workers’ compensation insurer for details on these
and other cost control ideas.

Are there other legal issues I need to be concerned about?
Yes. The Americans with Disabilities Act and Family and M edical Leave Act often conflict with
state workers’ compensation laws. These Acts, as well as state disability and family leave laws,
are based on different outcomes. For instance, the premise behind workers’ compensation is to
get the worker back on the job as quickly as possible – that is the reason for a no-fault system.
However, claims under the ADA and the FM LA are settled through legal proceedings. Some

employees might want to “shop around” to find out which law will result in the greatest benefit.
Because the ADA, FM LA and comparable state laws are fairly new, the case law is very
unsettled. Please contact your state affiliate to answer specific questions for your jurisdiction.

Also, injuries to your workers may stimulate an OSHA investigation. Your insurance carrier or
PIA affiliate may have resources to help you with OSHA requirements such as forklift operation
and right-to-know training for your employees.

What resources are available to me for further information on workers’
·   Contact your PIA affiliate. Affiliates can help you locate insurance and help you understand
    the claims process. They may also have programs to reduce injuries.
·   Each state has a workers’ compensation board to oversee claims, develop statistics, and
    provide guidance to employers and employees. You can locate your state’s board through
    your state Department of Labor or by visiting the Department of Labor’s web pages on
    workers’ compensation at: http://www.dol.gov/dol/esa/public/regs/compliance/owcp/wc.htm
    and clicking on your state.
·   The U.S. Bureau of Labor Statistics can provide information on fatalities, injuries and
    illnesses by state and by industry classification. You can view BLS data at:
·   The U.S. Department of Labor posts a Table of Benefits on its website, which outlines
    important provisions of the law. To view the table, please visit:
    http://www.dol.gov/dol/esa/public/regs/statutes/owcp/stwclaw/stwclaw.htm or call (202) 693-
·   Contact your insurance carrier. M any carriers have loss control and policy information
    available to their customer free of charge. Your carrier may have loss control professionals
    willing to come out and training your employees on lifting techniques, ergonomic issues,
    hearing conservation, and other issues that may help control losses as well as better comply
    with OSHA requirements. For more information on OSHA visit www.osha.gov

Our thanks to Utica National Insurance Group for its assistance in writing this segment. Utica
National Insurance Group specializes in workers’ compensation, property, casualty, errors and
omissions for the graphic arts industry. Utica National Insurance Group has been insuring the
graphic arts industry since 1914. For more information please visit Utica National Insurance
Group at www.uticanational.com.

                        Workplace Wellness Programs
The Health Care Financing Administration noted that national health care expenditures reached
over $2 trillion in 2002. That figure was about 16.6 percent of the nation's gross domestic
product. Effective workplace wellness programs have been shown to contain health care costs,
reduce absenteeism and improve employee health.

The phrase “workplace wellness program” (WWP) refers to a systematic approach taken by an
organization to enhance the health and well being of its employees through work and home based
activities and programs. It promotes health through prevention. WWPs advocate awareness,
education and behavioral and lifestyle changes. Nearly 60 percent of all companies and 95% of
large companies offer some type of health program to encourage employees to take responsibility
for their health. Frequently offered wellness programs include:

·   Smoking cessation
·   Nutrition/weight management
·   Fitness center memberships
·   Cardiovascular risk reduction
·   Stress management
·   Substance abuse/control
·   Prenatal care
·   Fitness evaluation and consultation

What are the benefits to employers offering wellness programs?
Cost savings in health care – The most frequently cited benefit to a WWP is cost savings.
Research conducted by the Health M anagement Resource Center at the University of M ichigan
shows that WWPs save employers $80 - $225 per employee per year in medical costs. M any
employers see workplace wellness programs as a viable way to help temper the rising costs of
health care.

Reduced turnover – The average employee turnover rate in 1999, according to the U.S.
Census of M anufacturers, was 8.5—14 percent depending on the region of the country.
Workplace health programs keep employees healthy and happy. That satisfaction equals reduced
turnover and reduced costs associated with hiring and training new employees.

Recruitment – A WWP is a great recruitment tool to lure top talent. It’s also great for corporate

Productivity and fewer lost work days – Healthier workers translate in more productive
workers who miss fewer days of work and who have fewer workplace injuries.

What legal considerations apply to wellness programs?
COBRA – Wellness programs can cover a broad range of services, from yoga classes to health
care clinics on-site. This raises a questions as to whether or not the programs offered through the
WWP are considered to be a group health plan, and therefore subject to the Consolidated
Omnibus Reconciliation Act (COBRA). To be subject to COBRA, a wellness program must
provide medical care to employees, including amounts paid for the prevention of disease.

The essential question involving wellness programs and COBRA is whether a WWP is used by
employees for the relief of health and medical problems or whether it simply furthers employee
good health. For example, a program with an on-site clinic used for the relief of a condition
would likely be considered a group health plan. However, a yoga class taken by employees for
exercise and recreation would not be covered by COBRA. Therefore, in the case of the clinic,
continued participation by former employees and their families may be required by COBRA,
since it would be part of a group health plan. Each program should be evaluated individually.

HIPPA – The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires
portability and continuity of health coverage. It also prohibits discrimination in health coverage
based on health status. HIPAA's nondiscrimination provisions do not prevent health plans or
issuers from establishing wellness programs or specific incentives to encourage employees to
participate in health promotion and disease prevention programs. Incentives can include
discounts, rebates, or reductions in applicable co-payments or deductibles.

HIPAA's provisions prohibit plans from imposing a penalty on employees for unhealthy
activities. Revised HIPPA guidance distinguishes between a permissible health incentive and an
impermissible health penalty within a WWP. It also addresses the question of permissibility of
nonsmoker discounts. To be permissible under the proposed regulation, WWPs must be "bona
fide wellness programs." (The regulation does not affect employer wellness programs that
promote general health awareness, good health behavior or disease prevention, but do not provide
rewards.) In general, a WWP must offer a limited reward or benefit. For a WWP to be
considered a bona fide wellness program, it must meet four criteria:

·   The total reward for participation is limited
·   The program must be reasonably designed to promote good health or prevent disease
·   The reward must be available to all similarly situated individuals
·   The plan materials must disclose the terms of the program and the availability of a reasonable
    alternative standard. (A reasonable alternative standard would apply when it is unreasonably
    difficult or medically dangerous for an employee to attempt to reach a certain standard. An
    alternative way would need to be developed to help the employee qualify for the reward.)

This revised guidance applies to plan years after July 1, 2001.

What costs are associated with wellness programs?
The cost of setting up wellness programs is typically 1-2 percent of typical medical care costs.
Costs associated with the programs include expenses in the following areas:

·   M anagement
·   Personnel
·   Physical plant
·   M an hours
·   M aintaining and running of program

These expenses must be considered and evaluated by management before deciding to implement
the program. What works for one company may not work for another. Size, for smaller
companies, can be a prohibitive factor.

Where can I find information on setting up a wellness program?
Your insurance provider or disability carrier should be able to offer assistance in setting up a
workplace wellness program.

The Workplace Wellness Council of America (WELCOA) provides information and assistance to
members who want to set up or maintain a WWP. The Internet address is: www.welcoa.org.

The Office of Disease Prevention and Health Promotion offers a program called Healthy People
2010. Healthy People 2010 is a set of health objectives for the nation to achieve over the first
decade of the new century. It can be used by many different people, communities, companies,
professional organizations and others to help them develop programs to improve health. For
more information, visit: http://www.health.gov/healthypeople/document/.

Other internet resources:
The Department of Health and Human Services at www.hhs.gov
The National Center for Chronic Disease Prevention http://www.cdc.gov/nccdphp/

                                   Retirement Plans
Retirement plans offer true “life” insurance. Conventional life insurance products actually protect
against a death risk. Retirement plans protect participants against the risk that they will outlive
their savings or other assets. Retirement plans aim to provide participants an opportunity to
ensure themselves a comfortable life during retirement.

As an employer, am I required to offer a retirement plan?
All private employers are required to contribute to their employees’ Social Security retirement
benefits. Neither federal nor state law requires employers to sponsor retirement plans beyond
Social Security.

What laws apply to retirement plans?
If an employer adopts a plan or contributes to a plan, a federal employee-protection law known as
ERISA (the Employee Retirement Income Security Act of 1974) will govern plan operations.
Tax rules also apply to such plans, including detailed federal tax rules that specify when an
employer’s plan contributions may be deducted, whether or not the investment earnings on plan
funds are currently taxable and when plan benefits are taxed to employees and their beneficiaries.

What’s the “big picture” for employers and employees?
Setting up a retirement plan has long term implications for an employer's operations. Successful
retirement plan sponsorship requires foresight and a long-term financial commitment. It likewise
requires employees to make a commitment to deferring the enjoyment of the fruits of their labor.

If an employer adopts the wrong retirement plan, that commitment may haunt the employer for
many years. Conversely, a prudently designed program that is consistently maintained may
strengthen an employer's capacity to attract good employees and reward their long-term
commitment to the company. By establishing the appropriate plan through the company,
participants have access to a relatively sophisticated savings and investment tool that would be
unaffordable on an individual basis.

What is a qualified retirement plan?
In order for company-sponsored retirement plans to receive the most favorable tax treatment, they
must “qualify” by meeting federally established requirements with respect to participation,
contributions, and benefit pay-outs. Plans must be in writing; cannot discriminate in favor of
owners and highly-paid employees; and benefits must vest within a specific time period. Plans
must be administered by a fiduciary, liable for performing the required duties in a prudent

How should a plan administrator be chosen?
It is worth noting that you should choose your plan administrator carefully.

·   Be sure that the company administering your plan has significant experience in pension
·   Ensure that the company has a commitment to support plan activity beyond simply “selling”
    the plan;
·   Ask for sample documents to ensure the company can communicate the plan to you and your
    employees without excessive jargon so you know what you’re getting and what will be
    required of you over time;
·   Ask about their experience with various plan types;
·   Check on the demographics of their client base to see if they represent companies similar to

Qualified plans have many rules and on-going administrative requirements, but by choosing the
right plan administrator, you can reduce your headaches and ensure your plans meet the letter of
the law.

Are there different varieties of qualified retirement plans?
Yes. The most important distinction is between defined contribution plans and defined benefit
plans. There are important sub-varieties of each of these types of plans.

What is a defined benefit plan?
A defined benefit plan indicates that an employee will receive a definite (or specific) benefit at
some future date. The promised benefit is determined by a detailed plan formula. Typical plan
formulae base the amount of the benefit on factors such as earnings and service. The promised
benefit is to be paid monthly beginning at retirement. The dollar amount of any participating
employee's accrued benefit may be determined as of any date simply by applying the plan
formula to his or her employment situation.

The employer commits to provide the promised benefit on the condition that the plan continues.
(If a plan terminates, the benefits accrued to date must still be provided, usually through the
purchase of annuity contracts or the distribution of lump sum payments with a present value
sufficient to provide the accrued benefit.)

The employer's costs are determined each year through calculations based upon an assumed fund
earnings rate, assumptions about changes affecting the covered group of employees and their
beneficiaries and other factors. If actual fund earnings are less favorable than expected, the
employer must make up the shortfall. Thus, the risk of poor investment performance rests with
the employer. Of course, the employer will benefit if the actual earnings experience is better than
the assumed earnings estimates.

All defined benefit plans are referred to as pension or annuity plans. Defined benefit plans are
common ingredients of the benefit package available to the employees of most large and many
medium sized business corporations, although 401(k)s are gaining ground in the printing industry.
The use of defined benefit plans is particularly widespread in union plants, although even here,
401(k)s are growing in number.

What is a defined contribution plan?
A defined contribution plan guarantees no specific amount of retirement benefit. Instead, the
amount of retirement benefit that each participating employee receives at retirement depends on
the amount of time an employee has participated in the plan and the rate of investment return on
contributions to the plan. Participants monitor their individual account balances.

Profit sharing plans, money purchase pension plans, stock bonus plans and employee stock
ownership plans are also defined contribution plans.

What is a 401(k) plan?
In general, 401(k) plans are defined contribution plans that enable employees to reduce their
taxable income by making pre-tax contributions to an account through salary reductions.
Employers can match a portion of employees’ contributions.

401(k) plans are the most common form of defined contribution retirement plan and have
experienced tremendous growth over the past two decades, including in the printing industry.
These plans result in significant tax savings. In addition, participants can increase their plan
balance through their own contributions. These plans are particularly attractive to employees
since they are portable and can be rolled into other plans or into an IRA. On the down side, these
plans are not nearly as attractive if the company’s work force is older, since there is less time for
investment dollars to have increased. Further, participants’ money is tied up until they reach 59
½ years in most cases.

Under a bonus-type 401(k) plan, contributions are usually made at the end of the year. A bonus is
provided to all employees, which they in turn can take in taxable cash or invest in a non-taxable
401(k) plan.

Under a thrift-type 401(k) plan, employees prospectively assign a portion of their pre-tax pay by
some percentage to their account. It should be noted that this type of plan is likelier to meet non-
discrimination requirements since it is easier for employees to contribute a small amount per
paycheck rather than a large lump sum once a year.

Keep in mind that there are variations to nearly every plan, including combination bonus-thrift
plans for example, so ask for guidance on options that may suit your company. Often these
variations provide greater flexibility to the employer in terms of contributions, targeting of
benefits, or both.

What are profit sharing plans?
Profit sharing plans provide an opportunity for employees to participate in the company’s profits.
Company contributions may be determined either by fixed formulae or at the discretion of the
board of directors. Often, these plans are attractive small businesses. Because profits can vary
significantly from year to year, the employer is not committed to a fixed annual contribution. The
only requirement is that contributions must be “substantial and recurring” which generally means
a substantial amount must be contributed once every three years. When contributions are made,
they are allocated according to participants’ salaries, years of service, age or a combination of

Cash profit sharing plans are those in which profits are paid directly to employees in cash, check
or stock as soon as profits are determined (this is not a qualified retirement plan). Deferred profit
sharing plans are designed to provide benefits at retirement. Benefits are based strictly upon the
sum total of the contributions made and the investment that results. The plan must provide a pre-
determined formula for allocating contributions make to the plan participants.

What are the benefits of Individual Retirement Accounts?
Individuals not covered by other qualified plans may save for retirement through an individual
retirement account ("IRA"). Under a regular IRA, the income that is generated is tax-deferred
until withdrawal, but your original contribution may or may not be deductible, depending on your
specific circumstances. Since threshold levels change, check with your tax advisor or plan

Under a Roth IRA, you make non-deductible contributions, which allows the tax-free buildup of
income. The income earned on the account is tax-free if you leave the money in the account for
five years after your first contribution and distributions take place after age 59 ½, death, disability
or for first-time home buying (up to $10,000).

What is a Simplified Employee Pension plan (SEP)?
Technically, a SEP is not a qualified plan, but a form of individual retirement arrangement. Some
have called SEPs super IRAs for small businesses. SEPs permit employers to contribute to
Individual Retirement Accounts (IRAs) on behalf of their employees. Employers reduce their
administrative costs because the employees manage their own accounts. Employees are
immediately 100% vested – a significant benefit to employees.

Employers must still comply with certain employee protection rules such as non-discrimination
requirements and contribution limits. Although contributions must be based on a written
allocation formula, the amount can vary from year to year, and no contribution must be made if
the employer so chooses.

What are Savings Incentive Match Plans for Employees (SIMPLEs)?
The idea behind the SIM PLE was to provide small businesses with a type of retirement plan that
avoided many of the non-discrimination hoops that other plans require. SIM PLEs are limited to
businesses with fewer than 100 employees (if the company goes over 100 employees, be sure to
get advice on converting the plan). A SIM PLE plan permits employees to make elective
contributions of up to $8,000 per year (in 2003, increasing annually by $1,000 and then up to
$10,000 in 2005) and requires employers to make matching contributions. Employees must earn
at least $5,000 to participate.

A SIM PLE must be the employer’s only qualified retirement plan, and it may be designed as
either an IRA or a 401(k). Employees have control over their accounts once the account has been
established for one year and they have made initial investment designation decisions.

Under the SIMPLE IRA formula, employers must establish either a dollar-for-dollar match for
employee contributions or the employer may choose to make a contribution of 2 percent of
compensation for each eligible employee. Like most retirement plans, there are early withdrawal
penalties. However, in the case of SIM PLEs, they are particularly harsh – if employees withdraw
contributions in the first two years, they face a 25 percent penalty on the amount withdrawn.

With respect to SIMPLE 401(k) plans, non-discrimination tests are met if each employee’s
elective deferrals are not greater than $8,000 annually (increasing up to $10,000 in 2005) and the
employer matches a certain percentage of employees’ compensation.

SIM PLE plans are easier to administer than most retirement plans, and they do not require an
annual dollar commitment by the employer. On the other hand, contributions are limited to
$8,000 in 2003 and employers lack flexibility in designing the plan to fit the company. All
employees earning a minimum dollar figure can participate.

What are money purchase pension plans?
As the name implies, money purchase pension plans are defined contribution plans in which a
participant's benefit is the account balance at retirement which is typically used to purchase an
annuity. A fixed percentage of the employee’s compensation is contributed to the plan by the
employer each year. This type of plan is easy to administer and allows a higher rate of
contribution than some other plans. However, the employer is required to contribute a specified
percentage of covered payroll annually – even in years when cash flow and earnings are down. If
a business is not financially stable, this might not be the best choice of plan. However, for the
self-employed or where only a few key executives participate, this might be a good option.

How does a non-qualified deferred compensation arrangement work?
Under non-qualified deferred compensation arrangements, company executives typically agree to
defer a portion of their compensation. In order to prevent current taxation of such deferrals, the
election must generally be irrevocable and be entered into before the compensation is earned by
the executive. In addition, it is important that any such deferred compensation arrangement be

unfunded or that any assets held by the employer with a view towards payment of benefits be
clearly and consistently maintained as general assets of the employer subject to the claims of the
employer’s general creditors. The advantage of nonqualified deferred compensation plans is that
executives can defer income for retirement or other purposes in excess of the limits applicable to
qualified retirement plans.

What are excess benefit plans?
Benefits may also be provided under a non-qualified and unfunded excess benefit plan. Such a
plan must be designed solely to provide benefits that could not otherwise be provided because of
the maximum benefit or contribution limitations that apply to qualified retirement plans.

What are 401(k) wrap arrangements?
New rulings of the IRS allow non-qualified plans to be more closely coordinated with qualified
401(k) plans. These qualified and non-qualified paired plans are commonly referred to as 401(k)
wrap arrangements. These arrangements can take various forms. They typically allow eligible
executives to defer compensation to the nonqualified plan with a portion of the deferrals
transferred to the qualified 401(k) plan at a later time. The amount transferred is the maximum
eligible deferral allowed under the 401(k) plan each year for the executive.

How do I determine the best plan for my company?
Determining the right retirement plan for your company depends on your goals for those you
want to benefit. Your PIA affiliate or tax advisor can steer you in the right direction. Before you
meet with potential plan administrators, make some preliminary decisions.

·   Are you primarily interested in providing retirement benefits to company owners, top
    managers, or all your long-term employees?
·   How stable is your company? Can you commit to annual contributions? M atching
·   How much of the administrative burden are you willing to take on?
·   Are you more interested in just sharing profits rather than a long-term commitment to a
    company retirement plan?
·   Why do you want to start a plan – to reward long-term employees, attract highly skilled
    employees, or for other reasons?

Knowing the answers to these types of questions will help a plan administrator determine your
best options. Once you have a plan, employees expect the plan to continue, so take time to make
a wise decision. Your employees will thank you for it.

What types of plans are other graphic communications companies
Companies offer a wide variety of plans, largely depending on size and company wealth.
According to PIA member surveys, the following information may help guide you on company

                              Company Retirement Plans

Firm Size                  1-10     11-20     21-50     51-100 101-250        251+
No plan offered              61.6     31.4       16.1       6.7     3.1          0.0
Company pension plan          2.7       3.0       5.5       6.7     7.8         21.4
IRA plan                      9.5      5.3        4.1       1.9     1.6          0.0
401(k) plan                  10.3     41.4       61.8      83.8    87.5         89.3
Profit sharing plan           6.8     17.2       21.7      22.9    37.5         32.1
ESOP                          1.5      0.0        2.8       1.9     4.7          3.6
Other                        12.5     12.4        7.4       6.7     6.3          7.1

                         Stock Compensation Programs
What employee groups typically participate in stock plans?
Apart from stock purchase plans and stock investments in qualified retirement plans, most stock
and equity-based benefits have historically been limited to upper level management employees.

With the decline of the stock market and the transcendent events of September 11, 2001, interest
in stock-based compensation has declined somewhat. However, employers and employees
looking for better days ahead and searching for ways to cut short-term costs while rewarding
long-term results may be well advised to consider stock-based benefit programs.

Are there any major risks or regulatory concerns that must be
addressed before adopting stock programs?
Yes. State corporate laws generally require company owners to obtain shareholder approval
before offering compensatory stock programs, as do certain tax rules and stock exchange listing
rules. Stock compensation programs raise significant federal and state securities law questions.
Serious proposals have been circulated to change the financial accounting treatment of such
programs. Any company, particularly a private company, considering the adoption of new stock
compensation strategies would be well advised to consider the latest developments affecting the
programs they wish to adopt. In addition, as a result of the failure of Enron the energy giant,
Congress is considering new federal requirements. Consult your tax advisor or plan administrator
for changing requirements.

What are the most popular forms of stock plans?
The most popular stock-based compensation devices include stock options, restricted stock grants
and stock purchase plans.

What are non-qualified stock option s and how do they work?
In the United States, the most commonly offered form of stock compensation is a non-qualified
stock option arrangement. Under a typical non-qualified stock option plan, an employee receives
a grant specifying a number of shares that he or she may purchase and the time period during
which such options may be exercised (purchased). Usually the price is set at the trading price on
the date of grant. Often the options are not immediately exercisable. This permits an employer
simultaneously to reward a key employee and give that employee an incentive to stay until the
options he or she has been given may be exercised. An employee wishing to exercise the options
usually must remain employed for a vesting period. Even after an option is exercisable, it may be
prematurely cancelled (or the exercise period may be shortened) if the employee leaves the

When the employee exercises the options, the difference between the amount paid for the shares
(the exercise price) and the value of the shares on the date of exercise (called the spread) is taxed

to the employee as ordinary income. The employer is permitted a deduction in the same amount.
Upon subsequent sale of the shares by the employees, any further appreciation may result in
capital gains taxes. M any employers make arrangements with brokers to give employees an
opportunity to make so-called “cashless exercises” by simultaneously exercising and selling the

Non-qualified stock option arrangements are popular because they create an incentive for good
employees to stay with the company but do not cost employers anything until after the options are
exercised. However, the arrangements assume that the company stock will appreciate. If the
shares decrease in value, such arrangements will no longer create the intended incentive for
employees to stay through their vesting period.

What are incentive stock options and qualified options?
Incentive stock option plans (ISOs) are governed by strict tax laws. By complying with the IRS
restrictions, an employer may offer options that do not result in any income taxation of the
employee at the time of exercise (on the spread). The employee pays tax at capital gains rates
when the stock is sold at a gain, provided the stock as been held for a specified time period. In
addition to the costs associated with complying with the more complex ISO rules and restrictions,
the employer generally receives no deduction for the spread.

What are restricted stock programs and how do they operate?
M any employers make outright stock grants to key employees without requiring employees to
purchase the shares at an option price. Such grants usually do not vest for several years. (As a
variation, some employers offer options at deep discounts below the current trading price at the
date of grant.)

For example, restricted stock is often used to bolster the morale of key employees who are
holding a significant number of shares, but the trading price has declined below the strike price.
Restricted stock is also commonly used as a sign-on bonus to attract key executive recruits who
may be faced with the loss of non-vested options granted by their current employers.

What are stock purchase plans and what rules apply to such plans?
Public companies often allow employees to purchase their stock without commission charges
through stock purchase plans. Stock purchase plans must satisfy a number of requirements.
Prominent among these is a broad coverage requirement. Generally, all employees must be
allowed to participate other than short-service employees (employed less than one year), part-time
employees (20 hours or less per week), seasonal employees (employed during five or fewer
months each year) and highly compensated employees. All eligible employees must have the
same rights and privileges to purchase shares under the plan. No employee may purchase shares
with a value of greater than $25,000.

Stock purchase plans may permit purchases at a discount. This feature is similar to a stock option
plan, but will trigger special requirements. These include minimum and maximum holding period

requirements. The tax treatment of the employer and the employee on exercises and dispositions
of discounted purchases will depend upon the time and manner of exercise. If the IRS
requirements are met, both parties are taxed in a manner similar to the tax treatment of ISOs. If
these requirements are not satisfied, then both parties are taxed in a manner similar to the tax
treatment of non-qualified options.

Stock purchase plans are popular because they save money for employees who wish to buy
company stock. However, their minimum and maximum holding requirements limit the
employees’ ability to sell the stock when they wish. Such restrictions may force employees to
keep the stock even while its value drastically decreases.

How do ESOPs work?
Employee stock option plans operate as profit sharing plans under which annual contributions are
in shares of the employer’s stock rather than cash. This “cashless” contribution feature can be a
huge benefit to small businesses that need to use their cash for other purposes (such as inventory).
Employees in many public companies and in some privately held companies are permitted or
required to invest a portion of their 401(k) plan accounts in a company stock fund. While not
common in the printing industry, some companies have chosen ESOPs to entice employees to
stay and make them feel a personal stake in the future of the company. However, in times of
market volatility, employees are less likely to see ESOPs as a good retirement tool. Also, the
rules for ESOPs are complex and are likely to grow more complex with time.

What does the future hold?
2003 may not be the best year to start any type of stock plan at your company. As a result of the
failure of Enron and the resulting outcry about the safety of employee participation in “stock”
arrangements, there are likely to be many and significant changes in tax laws and participation
requirements. It should be pointed out that the changes may be less based in fact than they are in
hype, but nonetheless, federal officials will feel forced to react even if the proposed fixes have
little to do with what actually happened at Enron.

Once the dust settles, and particularly if the economy recovers, opportunities for stock
arrangements may be as important as they have been in the past several years. It will be
important to keep alert to problems and opportunities in the next several years.

Am I as an employer required to give sick, vacation, personal, holiday, or any
other type of leave to employees?

No. There is no federal law which requires an employer to provide any type of paid or unpaid
leave to employees, except for Family and M edical Leave (see section that follows) and for
federal contractors. If you provide services to the federal government pursuant to a contract,
whether as a prime contractor or a subcontractor, you are obligated to provide leave as indicated
in the applicable wage determination.

Some states require that certain state holidays be regarded as holidays, for overtime or double pay
purposes. Further, if your employees are covered by a collective bargaining agreement, you are
required to provide all sick, vacation, personal, holiday, and other leave as provided in the
collective bargaining agreement.

Am I required to give time off for federal or state holidays?
Except for federal contractors, there is no law that requires you to give your employees time off
for a federal holiday. Some states may restrict the types of businesses which may be open on
certain days or which mandate a holiday for all businesses. You should check with your state
labor department or PIA affiliate.

Am I required to pay “double-time” to employees working on
Not under federal law. The Fair Labor Standards Act (“FLSA”), the federal law regulating
minimum pay and overtime, does not require you to pay double time for any work performed on a
holiday or weekend. If the employee is a covered nonexempt employee, you are required to pay
one-and-a-half times the employee’s regular rate of pay for any hours worked in excess of 40
hours per work week. In some states, such as California, you may be required to pay one-and-a-
half times the employee’s regular rate of pay for any hours in excess of eight hours per work day.
Some states may require that you regard certain state holidays as days on which you must pay
time-and-a-half or double time. Check with your state or PIA affiliate to see if you are subject to
these requirements.

If I provide sick, vacation, personal, or holiday leave, do I have to pay
my employees while they are using leave?
It depends. First, most employers provide paid sick and vacation leave. But, in general, you are
not required to pay employees for time not worked, such as vacations, sick leave, or holidays
(federal or otherwise) if that is what your policy provides.

If I provide sick, vacation, personal, or holiday leave, am I required to
carry over any time not used during the year that it was accrued?
Not under federal law. You can allow employees to carry over all, some, or none of the leave
they have accrued. But note, some states, like California, regard accrued vacation as a form of
compensation. Therefore, the employee can never ‘lose’ it. You can decide to cap vacation
accruals and pay for any additional hours earned or compel the employee to use the vacation

Can I cap the number of hours of leave an employee can accrue?

If I provide sick, vacation, personal, or holiday leave, do I have to pay
out any leave that is not used if an employee quits or is terminated?
Not under federal law. Some states, like California, regard vacation pay as deferred
compensation earned while the employee is employed and, therefore, employees must be paid for
accrued, unused vacation when they end their employment. You should check with your state or
PIA affiliate with respect to the specific requirements.

What is a leave sharing bank?
Some very large employers, often in the public sector, have instituted a leave sharing bank which
allows employees to donate unused leave to create a pool or bank of paid leave which can be
allocated to employees who need additional paid leave because of an extended absence due to
medical reasons. As long-term disability insurance becomes more common, leave banks may
become less common. Leave banks result in significant record-keeping burdens.

Are there any tax consequences of allowing employees to participate
in a leave sharing bank?
For bona fide employer-sponsored leave-sharing arrangements, the amounts paid by the employer
to a leave recipient pursuant to the plan are included in the gross income of the recipient under
section 61 of the Internal Revenue Service Code as compensation for services provided by that
recipient to the employer. These amounts are considered "wages" for purposes of the Federal
Insurance Contributions Act, the Federal Unemployment Tax Act, the Railroad Retirement Tax
Act, the Railroad Unemployment Repayment Tax, and income tax withholding, unless excluded
therefrom under a specific provision of the Code. An employee who surrenders leave to the
employer or deposits leave in the leave bank does not realize any income and incurs no deductible
expense or loss either upon the surrender or deposit of the leave or its use by the recipient.

What do other graphic communications companies offer in terms of
sick, vacation, personal, holiday or other types of leave to employees?
The following statistics are from PIA surveying of member companies in 2002:

                                 Company Paid Holidays

Firm Size                    1-10     11-20     21-50     51-100 101-250         251+
Average # of days               8.2      8.2        8.3       8.4     8.6           9.3

·   On average union employers provided 9.5 days, non-union employers provided 8.3, and
    combination shops offered 9.2.

·   M ost typically, companies offered the following days as vacation days: New Year’s Day,
    M emorial Day, Independence Day, Labor Day, Thanksgiving Day, day after Thanksgiving,
    Christmas Eve, Christmas Day.

                                 Company Paid Sick Leave
                        Years of Service and Corresponding Sick Days

Number of years worked        Management/Administrative            Production/Technical
                                  Average # of days                  Average # of days
             1                          5.88                               6.69
             3                          7.15                               8.16
             5                          8.26                               9.46
            10                          9.70                              10.91
            15                         10.91                              12.00
            20                         11.67                              12.64

                                 Company Paid Vacation

Number of years worked        Management/Administrative            Production/Technical
                                 Average # of weeks                 Average # of weeks
             1                         1.49                                1.48
             3                         2.02                                1.99
             5                         2.52                                2.48
            10                         2.93                                2.94
            15                         3.16                                3.21
            20                         3.28                                3.32

                                      Sample Policies

                                          Paid Vacation

There are many ways to develop a paid vacation policy. Below are just a small sample of some
of the options you might want to consider.

Paid vacation leave is available to eligible employees to provide opportunities for rest, relaxation,
and personal pursuits. [If you are a [category] employee, you] or [You] will be eligible for paid
vacation leave as described in this policy.

Your paid vacation leave is based on the number of years you are employed with the Company.
Your paid vacation days will increase with the length of your employment as shown in the
following schedule:

          Total # of years          Total # of               Accrual rate (days/full
          of employment          days of vacation          month of continuous service)
         Less than 2                    10                            0.83
         Between 2 and 5                15                            1.25
         Over 5 years                   20                            1.67

You begin to accrue paid vacation leave [as soon as you start working for the Company] or [after
you have been employed for [[ninety (90)]] days].

Vacation requests must be in writing and submitted to [your supervisor/Human Resources] by
[January 15] of each year for approval. [Your supervisor/Human Resources] must approve your
request before you take any vacation time off. Seniority will be the overall determining factor in
the case of conflicting vacation requests.

You must take vacations in one-week blocks unless an exception is obtained. In order to schedule
vacations so that they do not interfere with service to our customers, we ask that you take one
week of vacation during the winter months and one week of vacation during the summer months.

(Option 1) You must use your accrued paid vacation leave in year it accrues. Unused paid
vacation leave will be lost each December 31. You will not be entitled to carry unused paid
vacation leave into the following year or receive payment for it unless authorized by
[position/department] solely at [his or her/its] discretion. The only exception to this rule will be
for new Employees who begin working after [June 30], who may carry over unused paid vacation
leave accrued during the first calendar year of employment. Thereafter, those employees must
also use all accrued vacation leave in the year it accrues and will not be allowed to carry unused
paid vacation leave into the following year or receive payment or it.

(Option 2) If you do not use your paid vacation leave before [December 31], you may carry [all]
or [up to ______] days forward to the next year. If your total amount of unused paid vacation
leave reaches a cap equal to [two times] your total number of paid vacation days, you will not
accrue any further paid vacation leave.

Upon termination of employment, you [will/will not] be paid for unused paid vacation leave.


                                         Paid Sick Leave

The Company will provide paid sick leave benefits to an eligible employee for periods of
temporary absence due to illnesses or injuries. You are eligible for paid sick leave if you are a
[full-time] and/or [part-time] employee.

[Immediately after you have been employed] or [After you have been employed for [[ninety
(90)]] days], you will begin to accrue paid sick leave at the rate of [.42 days for every full month
of service] for a total of [five (5)] paid sick days per year. Paid sick leave may be used in
minimum increments of [one hour].

(Optional) Unused paid sick leave will be allowed to accrue until it totals a maximum of [thirty
(30)] calendar days. If your accruals reach this maximum, further accrual will stop until your
accrued and unused paid sick leave is reduced below the limit.

(Optional) Unused paid sick leave will be allowed to accrue indefinitely.

You may use paid sick leave days for an absence due to your own illness or injury [or that of an
immediate family member].

If you are unable to report to work due to illness or injury, you must notify [your
supervisor/Human Resources] before the scheduled start of your workday. You must call before
the start of each day you are going to be absent.

A physician's statement verifying the illness or injury causing your absence is required for
absences in excess of [three (3)] consecutive days as a condition of your using paid sick leave.

Before returning to work from an absence of [ten (10)] calendar days or more, you must provide a
physician's verification that you are medically able return to work.

Upon termination of employment, you [will/will not] be paid for unused paid sick leave.

As an additional condition of eligibility for paid sick leave you must apply for any disability
benefits to which you are entitled and any other available compensation or benefits, such as
workers' compensation. Paid sick leave supplements any payments you are eligible to receive
from state disability insurance, workers' compensation or disability insurance programs. The
combination of your after-tax paid sick leave and other compensation and benefits for any week
cannot exceed your normal after-tax weekly earnings.

Sick leave will not be counted as time worked for calculating overtime pay.


                                    Unpaid Personal Leave

The Company will consider granting a personal leave of absence without pay to an eligible
employee who wishes to take time off to fulfill personal obligations. Requests for unpaid
personal leave will be evaluated based on a number of factors, including anticipated workload and
staffing available during the proposed period of absence. You are eligible for unpaid personal
leave if you have been employed by the Company for more than [one (1)] year]. As soon as you
become aware of the need for personal leave, you should submit your request to

You may request up to [thirty (30)] calendar days of unpaid personal leave within any [36-month]
period. If the maximum period of unpaid personal leave proves insufficient, consideration will be
given to a written request for a single extension of no more than [ten (10) calendar days].

You [may/must] take any available [vacation leave and/or sick leave] as part of your unpaid
personal leave.

Subject to the terms, conditions, and limitations of the applicable plan, the Company will
continue to provide health insurance benefits [for the full period of the personal leave] or [until
the end of the first full month of the personal leave/until the end of the month in which the
personal leave begins. At that time, you will become responsible for the full cost of these benefits
if you wish the coverage to continue. When you return from personal leave, benefits will be
provided again by the Company according to the applicable plan.]

Paid vacation and sick leave accruals will be suspended while you are on unpaid personal leave
and will resume upon your return to active employment.

When your unpaid personal leave ends, a reasonable effort will be made to return you to the same
position or, if it is not available, to a similar available position for which you are qualified.
However, the Company cannot guarantee your reinstatement.

If you fail to report to work promptly at the expiration of the unpaid personal leave, the Company
will assume that you have resigned.

Unpaid personal leave will not be counted as time worked for calculating overtime pay.


                                      Paid Personal Leave

If you are a full-time employee and after you have been employed by the Company for [one (1)
year], you will be eligible for [two (2)] days of paid personal leave at the end of each calendar
quarter. For example, if you began working on [June 15], you will be eligible for [two (2)] paid
personal leave days on [September 30], and two more on [December 31]. You must use your
paid personal leave before the next anniversary of the date on which you became eligible for it.
Paid personal leave days may not be carried over to the next calendar quarter.

You [will/will not] be paid for [all/up to four (4)] unused paid personal leave days if you could
not use your paid personal leave days during the time allowed because of scheduling issues if
your employment is terminated for any reason other than for cause.

Paid personal leave will not be counted as time worked for calculating overtime pay.


                                      Paid Holiday Leave

The Company will grant you paid time off on the federal holidays listed below:

               New Year's Day (January 1)
               M artin Luther King, Jr. Day (third M onday in January)
               Presidents' Day (third M onday in February)
               M emorial Day (last M onday in M ay)
               Independence Day (July 4)
               Labor Day (first M onday in September)
               Columbus Day (second M onday in October)
               Veterans' Day (November 11)
               Thanksgiving (fourth Thursday in November)
               Christmas (December 25)

In the event that the holiday occurs on a Saturday, you will receive the preceding Friday off. If
the holiday occurs on a Sunday, you will receive the following M onday off.

If a holiday occurs while you are on an approved paid absence (e.g., vacation, sick leave, etc.),
you [will/will not] be charged with the holiday as part of your vacation.

There may be occasions when the Company will require you to work on a holiday. If you are
eligible for holiday pay, you will receive [holiday pay in addition to your regular wages] or [time
off on another date with pay at your regular hourly rate] for the hours worked on the holiday.

If you are an eligible employee, you will be granted [two (2)] floating holidays in each calendar
year. To be eligible, you must have been employed by the Company for [ninety (90)] days [as a
[[category]] employee]. If you were hired after June 30, you will be granted [one (1)] floating
holiday for the that calendar year after your first [ninety (90)] days. If you were hired after

September 30, you will not be granted any floating holidays for that calendar year. Floating
holidays must be scheduled with the prior approval of [your supervisor/Human Resources].


                                         Paid Time Off

Instead of vacation days, sick days, etc., the Company has a system of paid personal leave days
which can be used for vacations, illnesses, deaths in the family, religious holidays or any other

You must request permission to use paid leave days substantially in advance of the date on which
you would like your leave to begin. In most cases, this means that you must submit your request
to [your supervisor/Human Resources] at least [one month] in advance. Requests for vacation
must be submitted [ninety (90)] in advance.

Requests for paid leave will be evaluated based on a number of factors, including anticipated
workload and staffing available during the proposed period of absence. In the case of an illness
where advance notice is not practical or possible, you must present a doctor's excuse to [your
supervisor/Human Resources] when you return to work for absences in excess of three
consecutive days.

Paid leave days can be used as they accrue. However, you may not take off more than [ten (10)]
days at a time. [No] or [A maximum of [[ten (10)]] unused paid leave days may be carried over
from year to year. Any unused paid leave days which exceed the [ten (10)] day maximum carry-
over will be [paid to you in cash on the first payday which follows the end of the calendar year]
or [forfeited]. Upon termination of your employment, you will be paid for any unused paid leave
days that have accrued through your last day of work.

You will accrue PTO in accordance with the following schedule:

           Total # of years             Accrual rate               Total # of PTO days
           of employment               (days/calendar
                                      quarter worked)
        Less than 1                           2                           up to 8
        Between 1 and 3                      2.5                            10
        Between 3 and 5                       3                             12
        M ore than 5                          4                             16

You will be considered to have worked a calendar quarter only if you began to work prior to the
first day of the second month in the calendar quarter and continue to work through the end of that
calendar quarter.

                          Family and Medical Leave Act
The Family and M edical Leave Act requires that employers with 50 or more employees provide
up to 12 weeks of unpaid leave in a 12-month period to eligible employees. In some states or
localities, such as the District of Columbia, there may be a law that sets a lower threshold number
of employees (e.g., 20) to begin coverage. You should check with your PIA affiliate or state
labor department to determine if there is a lower threshold. See attached chart of state FM LA

At the end of the FM LA leave, an employee must be returned to his or her job or another of
substantially similar compensation, benefits, and working conditions.

Keep in mind that if you provide paid sick, vacation, and personal leave, under federal law you
can require your employees to exhaust all paid leave during the unpaid FM LA leave. Some
jurisdictions (e.g., District of Columbia) permit the employee to choose whether to use paid leave
during an FM LA leave. See attached Notice of FM LA Rights for more information.

Who is eligible to receive FMLA leave?
Under federal law, an employee must have worked one year for the employer and 1250 hours in
the previous 12-month period. Leave is available for a “serious health condition” of the
employee or to the employee’s immediate family or for the arrival of a child, either by childbirth
or adoption. A “serious health condition” is one that causes at least a three-day absence and/or
the continuing treatment by a physician. “Immediate family” means parent, spouse, or child but
can be extended to others for whom the employee is the primary caregiver. Some states have
broader coverage definitions. See the sample FM LA policy for more information.

Must FMLA leave be taken in ‘chunks’?
No. At the employer’s discretion, intermittent leave is available for short periods for visits to
doctors or similar events. In practice, the employer’s “discretion” is usually exercised by finding
a mutually satisfactory time for the employee’s leave.

How do I know if an employee wants FMLA leave?
You must provide a way for employees to request leave and require that employees do so. See
sample FM LA request form. Further, you must inform employees that all leaves taken for
conditions that qualify for FM LA leave (sickness, disability, workers comp injury, Americans
with Disabilities Act accommodation) will be treated as FM LA leave. See attached Employer
Response to Employee Request for FM LA leave.

Doesn’t that cause administrative headaches?
M aybe. But there is no other way to keep track of and gain some control over the use (and abuse)
of FM LA leave. See the sample FM LA policy for more information.

If I employ more than 50 employees, must I have a written FMLA
If you have an Employee Handbook, you must include an FM LA policy. In any case, because of
the complexities of the FM LA, it is strongly advised that you have a written FM LA policy that
you can give to employees or post on your website. See the sample FM LA policy for more

Can I ask an employee to provide a doctor’s note if the employee is
out on sick leave?
Yes. And you should. M ost employers require a note if an employee is out for three days.

If an employee is out on FMLA leave for an extended period, can I ask
for updated doctor’s notes?
Yes. You can request a new doctor’s note every 30 days, and you should.

I have two facilities but neither one has 50 employees. Do I have to
provide FMLA leave?
If the facilities are within 75-miles of each other, you must aggregate the employees for FM LA
purposes. If the total is 50 or more, then employees at both plants are covered.

If I have to impose a layoff (or termination) during someone’s FMLA
leave, is that person protected from layoff?
If the person on leave would have been laid off (or terminated) regardless of FM LA status, then
you may lay off that person. Otherwise, taking FM LA leave cannot be used as the reason for
imposing any ‘burden’ on the employee.

Do I have to pay employees who are out on FMLA leave or otherwise
provide benefits?
FM LA leave is unpaid. However, during an FM LA leave, you must provide benefits to the
employee on leave on the same terms that the employee enjoyed while working. So, if you have
a non-contributory health plan, the employee on FM LA leave receives health insurance. If that
employee paid for family coverage (or contributed to her own coverage), you may require the
employee on FM LA leave to continue to pay for coverage. Some employees ‘advance’ health
coverage and deduct it once the employee returns to work. If you wish to do so, please make that
part of your policy and have your employee agree to the arrangement in writing. In addition, you
may want to require that employees can accrue additional benefits only while they are on
company-paid leave. See the attached FM LA Health reimbursement agreement.

Do you have to provide FMLA leave to an employee who has suffered
an injury covered by workers’ compensation?
You should require that the employee use up FM LA leave while on any qualifying leave,
including workers’ compensation leave.

What is PTO?
PTO means “paid time off.” A PTO policy aggregates all leave (such as vacation, holiday,
personal and sick leave) and allows an employee to use his or her leave to which he or she is
entitled for whatever reason. You may still require a doctor’s note if someone is ill for three days
or more and you may still require that vacation leave be scheduled in advance.

The FM LA has had the unintended effect of reducing the significance of the type of leave being
used because all paid leave is usually exhausted during an FM LA leave. In response to that and
in order to ease the administrative burden of keeping track of the type of leave being used by
employees, some employers have implemented a PTO leave policy. (See sample PTO policy in
the Sick/Vacation Leave section.)

                                        Sample Policies

                               Family and Medical Leave Policy

If you are an eligible employee, the Company will grant you leave under the Family and M edical
Leave Act (the "Act") for up to twelve weeks per year. For this purpose "a year" means [the
twelve month period following the date on which you previously began any leave under the Act
while employed by the Company/the calendar year/the Company's fiscal year/each twelve month
period following the date on which you began working for the Company].

The Company will grant a leave if you cannot work because of a serious health condition that
prevents you from performing the functions of your position. A serious health condition is an
illness, injury, impairment or physical or mental condition that involves in-patient care in a
hospital, hospice, or residential medical care facility, or continuing treatment by a health care
provider as defined in the Act.

The Company also will grant a leave for the birth of your child, the placement of a child with you
for adoption or foster care, or when you are needed to care for a child, spouse, or parent who has
a serious health condition.

Family leave or medical leave, or both, is available in addition to, and not in lieu of, sick leave,
personal leave, vacation time, etc. However, employees will be asked to exhaust all available
paid leave, including workers’ compensation leave and disability leave, during their Family
Leave and M edical Leave before using unpaid leave.

a.     Eligibility
       To be eligible for a leave under the Act, you must have been employed by the Company
       for at least 12 months and must have worked at least 1,250 hours during the 12-month
       period preceding the start of the leave.

b.     Application
       If you desire a leave pursuant to the Act, you must complete, sign, and submit an
       Application for Leave of Absence (the "Application") to [position/department]. When the
       need for leave is foreseeable, such as planned medical treatment or the anticipated birth of
       a child, you must submit the Application not less than 30 days before the date the leave is
       to begin. In addition, if the proposed leave is for elective medical treatment, you must
       schedule the treatment so as not to disrupt the operations of the Company. When the need
       for leave is not foreseeable, you must submit the Application as far in advance of the date
       the leave is to begin as is practicable.

       A leave pursuant to the Act may be taken on an intermittent (rather than on an
       uninterrupted) basis or on a reduced schedule if medically necessary because of your
       serious health condition or that of your spouse, child, or parent, or for the birth or a child
       or the placement of a child with you for adoption or foster care. Intermittent leave is not
       required under FM LA and may be allowed only upon the employer’s agreement.

c.   Certification
     The Application must have attached to it a written certification from your health care
     provider, except when the reason for the requested leave is the birth of your child or the
     placement of a child with you for adoption or foster care.

     The written certification must state: (1) the date on which the serious health condition
     commenced; (2) the probable duration of the condition; and (3) the appropriate medical
     facts regarding the condition and its duration. If the basis for the proposed leave is your
     own serious health condition, the written certification must also include a statement that
     you are unable to perform the functions of your position. If the basis for the proposed
     leave is the serious health condition of a spouse, child, or parent, the written certification
     must also include a statement that you are needed to care for the spouse, child, or parent,
     as well as an estimate of the time you are needed to provide the care.

     In its discretion, and at its own expense, the Company may require a written opinion by a
     second health care provider after you submit the written certification. If the second
     opinion differs from the written certification, the Company may require an examination by
     a third health care provider, the identity of whom will be agreed upon by the Company
     and you. If you are granted a leave because of a serious health condition, the Company on
     a reasonable basis may require periodic re-certification by your medical care provider.

d.   Conditions
     The following conditions apply to an approved leave pursuant to the Act:
     (1) During the leave, the Company may require you to periodically report on your status
     and intention to return to work;
     (2) If you engage in other work or employment during the leave, you will be considered
     to have violated the terms of the leave and to have voluntarily terminated your
     employment with the Company;
     (3) If the leave is on an intermittent basis or on a reduced schedule basis, the Company
     may require you to temporarily transfer to an alternative position that accommodates your
     recurring absences or part-time schedule;
     (4) If you and your spouse are both employed by the Company, the two of you are
     entitled to a total of 12 weeks of leave, rather than 12 weeks leave each, if the leave is for
     the birth of your child, the placement of a child with you for adoption or foster care, or the
     care of a parent who has a serious health condition; and

     If during the leave you indicate that you do not intend to return to work, or if after
     completion of the leave you do not to return to work, you will be required to reimburse the
     Company for the cost of payments made to maintain your benefits during the leave.

e.    Compensation and Benefits
     The Company will require you/You have the right] to apply any part of your accrued paid
     vacation leave, personal leave, or family leave to any unpaid leave taken under the Act.
     [The Company also will require you/You also have the right] to apply any part of your
     accrued paid sick leave to any unpaid leave taken because of a serious health condition to
     you or for you to care for your child, spouse or parent who has a serious health condition.

     Leave under the Act will not result in the loss of any employment benefit you may have
     accrued before the date the leave starts. During the period of the leave, however, you
     must arrange with the Company or its insurance carrier to pay the premium contributions
     for continuation of your group insurance coverages if applicable.

f.   Return
     Upon returning from a leave taken because of your own serious health condition, you
     must present a written certification from your health care provider stating that you are able
     to perform the essential functions of your job with or without reasonable accommodation.
     At that time, the Company will place you in your former position, or if the former position
     is not available, in an equivalent position with equivalent compensation and benefits. If
     you are able to return to work but not able to return to your former position, a suitable
     position for you will be sought. If such a place is available, you will be compensated at
     the rate for that job, without reference to your compensation of your former position. If
     no position is available, you will be placed on a preferential hiring list.

     If you do not return to work upon the expiration of the leave, you will be considered to
     have voluntarily terminated your employment. Under no circumstances will a leave (other
     than a disability leave) be approved for longer than a period of 12 weeks.

     [If you are a "highly paid" or "key" employee, there may be circumstances where your
     employment by the Company will be terminated upon the expiration of the leave. You are
     a "key" or "highly paid" employee if you are a salaried employee who is among the
     highest paid 10 per cent of those employees working within 75 miles of the Company
     location at which you are assigned. The Company will respond in writing to your written
     inquiry as to whether you are a "highly paid" or "key" employee.]

                                                  Quick Reference Chart of State Family and Medical Leave Laws - Private Sector (as of December 2000)*

                  No. of Employees         Employee Eligibility                          Birth of a Child             Adoption                    Foster Care              Family Member Illness    Employee Illness

California        50 or more               12 months; 1,250 hours in preceding y ear     12 weeks                     12 weeks                    12 weeks                 12 weeks                 12 weeks

                  5 or more                                                              4 months (females only )

Colorado          Not specified            Not specified                                                              Same leave available to
                                                                                                                      employ ee for birth of

Connecticut       75 or more               12 months; 1,000 hours in preceding y ear     16 weeks over 2 y ears       16 weeks over 2 y ears      16 weeks over 2 y ears   16 weeks over 2 y ears   16 weeks over 2 y ears
District of       20 or more               One y ear continuous; 1,000 hours in          16 weeks over 2 y ears       16 weeks over 2 y ears      16 weeks over 2 y ears   16 weeks (very broad     16 weeks in addition to
Columbia                                   preceding year                                                                                                                  definition of "family    other leave
Hawaii            100 or more              6 months continuous                           4 weeks                      4 weeks                                              4 weeks

Iowa              4 or more                Not specified                                 8 weeks (females only)

Kentucky          All                      Not specified                                                              6 weeks; child under 7

Louisiana         15 or more               Not specified                                 4 months (females only )
Maine             15 or more               12 consecutive months                         10 weeks over 2 y ears       10 weeks over 2 y ears                               10 weeks over 2 y ears   10 weeks over 2 y ears

Massachusetts     6 or more                6 months or 3 consecutive months with 2       8 weeks (females only)       8 weeks (females only)
                                           weeks notice of leave

Minnesota         21 or more               12 consecutive months; average hours a        6 weeks                      6 weeks                                              Accrued sick leave for
                                           week of ½ the full-time equivalent                                                                                              illness of child

Montana           All                       Not specified                                Reasonable period for

New Jersey        50 or more               12 months; 1,000 hours in preceding y ear     12 weeks                     12 weeks                                             12 weeks
New York          Not specified            Not specified                                                              Same amount of leave
                                                                                                                      granted to employ ee upon
Oregon            25 or more               180 day s; 25 hours/week                      12 weeks                     12 weeks                    12 weeks                 12 weeks                 12 weeks

Rhode Island      50 or more               12 consecutive months                         13 weeks                     13 weeks                                             13 weeks                 13 weeks

Tennessee         100 or more              12 consecutive months full-time               4 months

Vermont           15 or more               12 months; 30 hours/week                                                                                                        12 weeks                 12 weeks
                  10 or more               Same                                          12 weeks                     12 weeks

Washington        1 or more                All employ ees                                                                                                                  Accrued sick leave to
                                                                                                                                                                           care for ill child

Wisconsin         50 or more              52 consecutive weeks; 1,000 hours in          6 weeks                       6 weeks                                              2 weeks                  2 weeks
                                          preceding year
* States omitted from the chart have not y et adopted State family or medical leave legislation applicable to the private sector.

                                 ME MOR AN D U M
WH-381 - Employer Response to Employee Request for Federal Family or Medical Leave


               Employee name
               Employer representative

S UBJECT:      Request for Federal Family or Medical Leave

You notified us of your need for family or medical leave on                                   . The
reason for your requested leave was:

        Birth of your child, or the placement of a child with you for adoption or foster care

        A serious health condition that makes you unable to perform the essential functions of
        your job
        A serious health condition affecting a relative for which you are needed to provide

You informed us that you need leave to begin on                             and anticipate leave
continuing until                         .

You have the right under the FM LA for up to 12 weeks of unpaid leave in a 12-month period for the reasons
listed above unless specified otherwise at the bottom of this form. Be aware that your health benefits must be
maintained during your period of unpaid leave under the same conditions as if you continued to work. Also,
you have a right to reinstatement to the same or equivalent job with the same pay, benefits, and terms and
conditions of employment when you return from leave. If you do not return to work following FM LA leave for
a reason other than: (1) the continuation, recurrence, or onset of a serious health condition which would entitle
you to FM LA leave; or (2) other circumstances beyond your control, you may be required to reimburse us for
our share of health benefit premiums paid on your behalf during your FM LA leave.

This is to inform you that:

1.      You are      eligible    not eligible for FM LA leave.

2.      The requested leave       will     will not be counted against your annual FM LA leave

3.      You        will       will not be required to provide medical certification of a serious health
        condition. If required, you must provide certification by                      (must be at least
        15 days after you are notified of this requirement) or we may delay the commencement
        of your leave until the certification is submitted.

4.      You may substitute accrued paid leave for unpaid FM LA leave. We        will      will not
        require that you substitute accrued paid leave for unpaid FM LA leave. The following
        conditions will apply if paid leave is used: (Explain)

5(a).   Premium payments for health benefits will continue if you normally pay a portion of your premiums.
        Arrangements for payment were discussed with you and you have agreed to make the premium
        payments according to the following schedule: (set forth dates.)

5(b).   You have a minimum 30-day grace period in which to make premium payments. Your
        group health benefits will be canceled if your timely payment is not made, provided we
        notify you in writing at least 15 days before the date when your health coverage will
        lapse, or, at our option, we may pay your share of the premiums during FM LA leave and
        recover these payments from you when you return to work. We           will      will not pay your
        share of health benefit premiums while you are on leave.

5(c).   We        will    will not do the same with other benefits (e.g., life insurance,
        disability insurance, etc.) while you are on FM LA leave. If we pay your premiums for
        other benefits while you are on leave, you      will     will not be expected to reimburse us
        for these payments made on your behalf when you return from leave.

6.      You      will     will not be required to present a fitness-for-duty certificate prior to
        being restored to employment. Your return to work may be delayed until the certification
        is provided if such certification is required but not received.

7(a).   You       are      are not a “key employee” as described in the FM LA regulations. If
        you are a “key employee,” we may deny your restoration to employment following your
        leave if restoration will cause substantial and grievous economic injury to us.

7(b).   We       have    have not determined that restoring you to employment at the
        conclusion of FM LA leave will cause substantial and grievous economic injury to us.
        (Explain below.)

8.      You      will      will not be required to furnish us with periodic reports every
        (specify appropriate due dates for periodic reports) of your status and intent to return
        to work while you are on leave. If circumstances of your leave change and you are able
        to return to work earlier than the date specified on this form, you     will     will not be
        required to provide us at least two work days prior to the date when you intend to report
        to work.

9.      You      will     will not be required to furnish recertification relating to a serious health
        condition. (Explain below if necessary.)


    Certification of Health Care Provider under the Family Medical Leave
                                  Act of 1993
1. Name of Employee:

2. Name of Patient (if different from employee):

3. Does the patient’s condition1 qualify as a serious health condition under any of the categories outlined in the
   attached description of a “serious health condition” under the FM LA?
         None of the above:

4. Describe the medical facts supporting your decision. Include a brief statement on how the medical facts
   support the definition of a “serious health condition” under the FM LA.

5a. When did the condition commence? (Specify a date.)

5b. How long did the condition last? (Specify a period of dates.)

5c. How long will the patient be incapacitated2 , if condition is still present?

  Here and for the rest of this form, the information requested rel ates only to the condition for which the employee is taking FMLA

 “ Incapacity” is defined to mean inability to work, attend school or perform other regular daily activities due to the serious health
condition, treatment therefor, or recovery therefrom.
5d. Will it be necessary for the employee to work on an intermittent schedule or less than a full schedule as a
    result of the condition (including treatment described in item 6
    below)?            Yes            No            Don’t know

   If yes, give the probable duration:

5e. If the patient’s condition is a chronic condition (condition #4) or a pregnancy, state whether the patient is
    presently incapacitated and the likely duration and frequency of
    episodes of incapacity:

6a. Provide an estimate of the probable number of treatments if additional treatments will
     be required for the condition:

Provide an estimate, if applicable, of the probable number and interval between treatments, actual or estimated
dates of treatment, if known, and the period required for recovery if the patient will be absent from work or
other daily activities because of an
intermittent or part-time treatment schedule:

6b. State the nature of treatments, if any, that will be performed by another health
    services provider (e.g., physical therapist):

6c. Provide a description of a regimen of treatment (e.g., prescription drugs, physical
    therapy requiring special equipment) if a regimen of continued treatment of the
    patient is required under your supervision:

7a. Is the employee unable to perform work of any kind (if absent from work on medical
    leave) due to the employee’s own condition (including absences due to pregnancy or
    a chronic condition)?

            Yes            No              Don’t know

7b. If some type of work is permissible, is the employee unable to perform one or more of the essential
    functions of the employee’s job? (The employee or employer should provide you with information about the
    essential job functions.)

            Yes             No             Don’t know

7c. If neither questions 7a or 7b apply, is it necessary for the employee to be absent from work for treatment?

            Yes             No             Don’t know

8a. Does the patient require assistance for basic medical care, personal needs or safety, or for transportation if
    leave is required to care for a family member of the employee with a serious health condition?

            Yes             No             Don’t know

   If no, would the employee’s presence to provide psychological comfort be beneficial
   to the patient or assist the patient’s recovery?

            Yes             No             Don’t know

8b. Indicate the probable duration of care if the patient will need intermittent or part-time
    care only.

   Signature of Health Care Provider                               Type of Practice

   Print Name of Health Care Provider

   Address of Health Care Provider                                 Telephone Number

The employee requesting leave to care for a family member must complete this part.

Please estimate the period during which you will provide care and the type of care you will provide, including a
schedule if you will take intermittent leave or if it will be
necessary for you to work less than a full schedule.

                   Employee Signature                                            Date

    A “serious health condition” means an illness, injury, impairment, or
        physical or mental condition involving one of the following:
1. Hospital Care
   Inpatient care (i.e., an overnight stay) in a hospital, hospice, or residential medical care facility, including any
   period of incapacity or subsequent treatment in connection with or consequent to such inpatient care.

2. Absence Plus Treatment
   A period of incapacity or more than three consecutive calendar days (including any subsequent treatment or
   period of incapacity relating to the same condition), that also involves:

       (a) Treatment 3 two or more times by a health care provider, by a nurse or physician’s assistant under direct
       supervision of a health care provider, or by a provider of health care services (e.g., physical therapist)
       under orders of, or on referral by, a health care provider; or

        (b) Treatment by a health care provider on at least one occasion which results in a
       regimen of continuing treatment 4 under the supervision of the health care provider.

3. Pregnancy
       Any period of incapacity due to pregnancy, or for prenatal care.

4. Chronic Conditions Requiring Treatments
       A chronic condition which:
       (a) Requires periodic visits for treatment by a health care provider, or by a nurse or physician’s assistant
       under direct supervision of a health care provider;

         (b) Continues over an extended period of time (including recurring episodes of a single underlying
         condition); and

         (c) M ay cause episodic rather than a continuing period of incapacity (e.g., asthma, diabetes, epilepsy,

5. Permanent/Long-Term Conditions Requiring S upervision
  A period of incapacity which is permanent or long-term due to a condition for which treatment may not be
  effective. The employee or family member must be under the continuing supervision of, but need not be
  receiving active treatment by, a health care provider. Examples include Alzheimer’s, a severe stroke, or the
  terminal stages of a disease.

6. Multiple Treatments (Non-Chronic Conditions)
  Any period of absence to receive multiple treatments (including any period of recovery therefrom) by a health
  care provider or by a provider of health care services under orders of, or on referral by, a health care provider,
  either for restorative surgery after an accident or other injury, or for a condition that would likely result in a
  period of incapacity of more than three consecutive calendar days in the absence of medical intervention or

  Treatment includes examinations to determine if a serious health condition exists and evaluations of the condition. Treatment does
not include routine physical examinations, eye examinations, or dental examinations.
  A regimen of continuing treatment includes, for example, a course of pres cription medication (e.g., an antibiotic) or therapy
requiring special equipment to resolve or alleviate the health condition. A regimen of treatment does not include the taking of over-
the-counter medications such as aspirin, antihistamines, or salves; or bed-rest, drinking fluids, exercise, and other similar activities that
can be initiated without a visit to a health care provider.
treatment, such as cancer (chemotherapy, radiation, etc.), severe arthritis (physical therapy), kidney disease

      Bereavement Leave, Jury Duty, Voting Leave, General
              Parental Leave and Severance Pay
Must an employee be granted bereavement leave when a relative dies?
Not under federal law. Whether to grant this type of leave is within the discretion of the
employer. The sample policy reflects the discretionary nature of this type of leave. In addition,
the policy below caps the amount of time that eligible employees may take off for bereavement
leave. Of course, if you are required under the terms of a collective bargaining agreement to
grant bereavement leave, you should comply with the agreement.

According to 2002 PIA surveying, the following sizes of graphic communications companies
offer bereavement leave:

                            Company Paid Bereavement Leave

Firm Size                     1-10      11-20      21-50     51-100     101-250      251+
Percentage of companies
offering leave                 61.90     81.43      88.60       95.00      97.40       96.67

Must I grant employees leave to serve on jury duty? What about for
being a witness?
Very likely for jurors. Under the Federal Jury Systems Improvement Act of 1978 (“JSIA”),
which applies to jury service in Federal court, employees who serve on a jury in Federal court
must be permitted to serve and should be granted the benefits normally provided to workers who
take leaves of absence. The JSIA, however, does not require employers to pay employees while
they serve on jury duty. M any states also have jury duty statutes. Some state laws require that
employees be fully compensated for jury duty, requiring the employer to make up the difference
between their normal pay and the stipend for serving on a jury. You should check with your state
or PIA affiliate for the specific requirements. As for witnesses, if someone is subpoenaed, you
must permit the employee to appear. No federal laws address the issue of time off or pay.
Remember that subpoenas for depositions (as opposed to trials) can be ‘negotiated’ with the
issuing lawyer to minimize the impact on your work schedule.

According to 2002 PIA surveying, graphic communications companies offered paid time off for
jury duty or they make up the difference between court paid jury duty fees and company wages as

                               Company Paid Jury Duty Leave

Firm Size                     1-10      11-20      21-50      51-100     101-250      251+
% of companies offering
fully paid jury duty           37.04      35.09      42.70       55.29      59.38       56.52
% of companies offering
partially paid jury duty       12.96      28.07      34.83       32.94      34.38       39.13

Must employees be granted leave to vote?
M aybe. While there is no Federal law requiring employers to grant voting leave, many states
have laws requiring employers to grant time off to vote. M ost state laws on voting leave
prescribe the amount of time the employee is allowed to take and whether pay may be deducted
during such leave. You should check with your PIA affiliate or state for specific requirements.

Must I grant employees parental leave?
There is no federal law requiring employers to grant “parental leave” to attend to their children’s
non-medical activities. However, some states require employers to grant employees parental
leave to attend or participate in a child’s school-related activities. This leave can be as much as
24 hours of leave per year. Contact your affiliate for specific requirements.

Must I provide severance pay to employees when their employment
There is no Federal law that requires employers to provide severance pay to employees when
their employment ends.

According to 2002 PIA surveying, graphic communications companies offer serverance pay as

                             Company Provided Severance Pay

Firm Size                  1-10         11-20      21-50      51-100     101-250      251+
% of companies that have
a severance pay policy   5.63             11.54      18.85       18.27      42.31       43.33

             Amount of Se verance Pay Offered

Number of years service         Average # of days
          1                           8.20
          3                          12.43
          5                          16.90
         10                          22.21
         15                          26.74
         20                          31.02

                                      Sample Policies
                                     Bereavement Leave

The Company will consider granting a bereavement leave of absence [with/without] pay to an
eligible employee who wishes to take time off from work to attend the funeral and/or make any
necessary arrangements associated with the death of a member of the employee's immediate
family. Requests for bereavement leave will be evaluated based on a number of factors, including
anticipated workload and staffing available during the proposed period of absence. You are
eligible to request bereavement leave if you are a [category] employee.

(Optional) Up to [three (3)] days of paid bereavement leave will be provided to eligible
employees. You are eligible if you are a [category] employee.

(Optional) Bereavement pay is calculated based on your regular rate of pay at the time of absence
and will not include any special forms of compensation, such as incentives, commissions,
bonuses, or shift differentials.

(Optional) Bereavement leave will be granted in the absence of unusual operating requirements.
You [may/must] take any available [sick leave and/or vacation leave] if additional time off is

"Immediate family" means your [spouse, parent, child, sibling, grandparent or grandchild, your
spouse's parent, child, or sibling, or your child's spouse, or any legal dependent. Consideration
will also be given to treating as immediate family any other person whose association with you
was similar to any of these relationships.]


                                           Jury Leave

(Alternative 1) You must give a copy of your jury duty notice to [position/department] as soon as
you receive it to assure adequate staffing during your absence. If you have been a full-time
employee for more than [ninety (90)] days and have promptly notified [position/department], the
Company will pay [the difference between] your salary [and your jury duty payment] for up to
[seven (7)] days. You must immediately return to work on the day your jury is discharged if the
discharge occurs before [________ A.M ./P.M .]. Otherwise you must return to work on the next
scheduled workday. As soon as you return to work, you must submit proof of your service to

(Alternative 2) The Company encourages you to fulfill your civic responsibilities by performing
jury duty when required. If you are a [category] employee, you may request up to [two (2)
weeks] of [paid/unpaid] jury duty leave over any [two (2)] year period.

Pay for jury duty leave will be calculated at your base pay rate times the number of hours you
would otherwise have worked on the days of jury duty.

If you are required to perform jury duty beyond the period of paid jury duty leave, you may use
any other accrued paid leave (e.g., vacation leave) or may request an unpaid jury duty leave of

You must give a copy of your jury duty summons to [position/department] as soon as possible so
that arrangements can be made to accommodate your absence. Of course, you are expected to
report for work whenever the court schedule permits.

You will be expected to request to be excused from jury duty if, in the Company's judgment, your
absence would create serious operational difficulties.

You will [not] continue to accrue vacation and sick leave during jury duty leave. You must
immediately return to work on the day your jury is discharged if the discharge occurs before [
        A.M ./P.M .]. Otherwise, you must return to work on the next scheduled workday. As
soon as you return to work, you must submit proof of your service to [position/department].


                                        Witness Leave

The Company will grant you leave to appear as a witness if you are subpoenaed to do so.
If you are subpoenaed by the Company, you may receive paid leave at your base rate for the
entire period of witness duty at the Company's sole discretion.

(Alternative 1) If you are subpoenaed by someone other than the Company, you will be granted a
maximum of [eight (8)] hours of paid leave to appear in court as a witness.

(Alternative 2) If you are subpoenaed by someone other than the Company, you will be granted
unpaid time off to appear in court as a witness.

You are free to use any paid accrued leave (e.g., vacation leave) to receive compensation for any
period of absence for witness duty that would otherwise be unpaid.

The subpoena must be shown to [position/department] immediately after you receive it so that
operating requirements can be adjusted, if necessary to accommodate your absence. You are
expected to report for work whenever the court schedule permits.


                                         Voting Leave

The Company encourages you to fulfill your civic responsibilities by participating in elections.
Generally, you should be able to find time to vote either before or after your regular work
schedule. If you are unable to vote in an election during your non-working hours, the Company
will grant you up to [two] hours of [paid/unpaid] leave to vote. In that case, you must request

time off to vote from [position/department] at least [two (2)] working days before the election
day. Advance notice is required so that the necessary time off can be scheduled at the beginning
or end of the workday, whichever provides the least disruption to the normal work schedule.
If you have been given time off, you must submit a voter's receipt to [position/department] as
soon as you return to work after voting.


                                          Parental Leave

The Company understands that parents are involved in their children’s education. If you need to
take time off in order to attend or participate in your child’s school-related activities, please notify
[position/department] at least seventy-two hours in advance. In order to reduce disruption of
appointments with teachers or other meetings that you can schedule, please arrange these early or
late in your shift.

                                      Military Leave
What is the law regarding military leave and reemployment rights of
employees who are called up or volunteer to serve in the military?
Under the Uniformed Services Employment and Reemployment Rights Act of 1994,
(“USERRA”), it is unlawful for an employer to refuse to grant an employee’s military leave of
absence or to discriminate in employment or reemployment based on military service, including
non-career service. Accordingly, it is unlawful for an employer to deny initial employment,
reemployment, retention in employment, promotion, or any benefit of employment with respect to
a person who is a member of or performs, who applies to be a member of or perform, or who is
obligated to perform service in a uniformed service.

Are all employers covered by USERRA?
Yes. Employer coverage is very broad. All private sector, state, and federal employers regardless
of size – “any person, institution, organization, or other entity that pays a salary or wages for
work performed or that has control over employment opportunities” – are covered by USERRA.
USERRA also applies where employees work for multiple employers or are referred to work –
such as construction industry employers – and to successor employers, even where the returning
veteran was an employee of a predecessor company prior to departing for military service, and
that company has been sold, merged or acquired by a different entity.

Are all employees covered by USERRA?
Yes, employee coverage is also very broad. The definition of a covered employee is “any person
employed by an employer.” This includes part-time and seasonal employees, except where their
pre-military positions are “brief or non-recurrent” and “cannot reasonably be expected to continue
indefinitely or for a significant period,” such as a single project with a definite completion date.
However, employees must meet certain eligibility requirements, discussed below.

The non-discrimination and non-retaliation provisions of USERRA also cover applicants for
employment. An applicant may not be refused initial employment or reemployment based on
past, present or future military service, or military status.

Who are eligible employees under USERRA?
An employee is entitled to reemployment rights and maintenance of employment benefits only if
the person returning from military service meets five eligibility criteria:

·   The person must have held a civilian job with the employer;
·   The person must have given advance notice to the employer that he or she was leaving the job
    for service in the uniformed services;
·   The period of military service must not have exceeded five (5) years (with certain

·     The person must have been released from service with a non-disqualifying discharge; and
·     The person must have reported back to the civilian job in a timely manner or have submitted a
      timely application for reemployment.

Does it make any difference if an employee is called up from the
reserves or enlists voluntarily?

Are U.S. employees working overseas for U.S. companies covered
under USERRA? What are my company’s obligations if Canadian
employees working for my company in the U.S. are called to active
duty in the Canadian National Guard?
USERRA applies to all U.S. employees, wherever they are employed. So, U.S. employees
working overseas for an U.S. company are entitled to the rights and protections of USERRA just
as if they were working in the United States. The law does not apply, however, to citizens of
other countries or to uniformed services of other countries.

Are all types of military service covered by USERRA?
Yes. This includes services in the Armed Forces (Army, Navy, Air Force, M arines and Coast
Guard) and their reserve units, and the National Guard. It also includes service in the
commissioned corps of the Public Health Service and “any other category of persons designated
by the President in time of war or emergency.”

Does it make any difference under USERRA what types of military
duties are to be performed or the limited duration of such duties?
No. In addition to active duty, USERRA covers training (on active or inactive duty), full-time
National Guard duty, and absences due to fitness-for-duty examinations, as well as funeral honors
duty performed by members of the National Guard or reserves. The duration of such duties may
be only several hours per day, several weeks or months, or may be several years. However, some
benefits are adjusted to reflect the length of service.

Does USERRA differentiate between active duty, temporary duty, or indefinite

No. The terms “temporary” and “indefinite duty” are not addressed in USERRA.

Is there a limit to the amount of military leave an employer must
Yes. There is a five-year cumulative service limit (i.e., continuous or intermittent periods of
military service cumulatively counted) on the amount of military service for purposes of

reemployment rights under USERRA. In fact, however, the 5-year limit is really a “floor” on the
length of service, since there are broad exceptions for service that exceeds the 5-year limit. Such
exceptions include:

·   National Guard and reservist training (i.e., the two-week annual training sessions and monthly
    weekend drills required by law are exempt from the 5-year limitation);
·   Service where a person, through no fault of his own, is unable to obtain a release from service
    within the 5-year limit (e.g., where persons are involuntarily retained on active duty beyond
    the expiration of their obligated service date);
·   Service under an involuntary order to active duty, or to remain on active duty, during a
    domestic emergency or for national security;
·   Service by persons under involuntary order or by volunteers who receive an order to active
    duty, or to remain on active duty, due to a war or national emergency declared by the
    President or Congress;
·   Active duty by volunteers supporting “operational missions” (other than war or national
    emergency) for which selected reservists have been ordered to active duty; and
·   Service by volunteers ordered to active duty in support of a “critical mission or requirement”
    (e.g., where the secretary of one or more of the Armed Forces designates a particular military
    operation as a “critical mission or requirement.”)

What employment actions are covered by USERRA?
Just about everything. It is unlawful for an employer to deny initial employment, reemployment,
retention in employment, promotion, or any benefit of employment on the basis of past, present or
future military service, to a person who is a member of or performs, applies to be a member of or
perform, or who is obligated to perform, service in a uniformed service. It is also unlawful to
retaliate against a person on the basis of their exercise of any right under USERRA, whether or
not the person has performed military service.

Is prior notice to the employer required for leave of absence for
military duty?
Yes, but barely. Unless precluded by military necessity, advance notice must be provided either
orally or in writing. However, the law does not specify how far in advance such notice must be
given. If you give employees any information about USERRA, you should ask employees to
provide you with as much advance notice as possible and tell them that failure to provide notice
could result in denial of the protection of USERRA.

If I have a number of employees who are called to active duty at a duty
station near their worksite but have free time during the day and want
to come back to work on a part-time basis, do I have an obligation
under USERRA to take them back?
The employer has no obligation under USERRA to allow employees to work while they are
performing service in the uniformed services, but may do so if they wish.

Are there time limits for returning employees to report back to work
following completion of military service?
Yes. The time limits for reporting back to work depend on the length of the returning employee’s
military service. The longer the service, the greater the length of time for reporting back to work.
The reporting time limits are:

·   Service of 1 to 30 days:
    Not later than the beginning of the first regularly scheduled work period on the first full
    calendar day following completion of service and the expiration of eight hours (i.e., an 8-hour
    “rest period”) after a reasonable period allowing for safe transportation home from the place
    where military service was performed. In some circumstances, time limits for returning to
    work may be “as soon as possible” if reporting on the first regularly scheduled work period is
    “impossible or unreasonable through no fault of [the returning employee].”
·   Service of 31 to 180 days:
    Not later than 14 days following completion of military service, or “as soon as possible” if the
    failure to make timely application is through no fault of the returning employee. Also, for
    returning employees whose length of service is more than 30 days, an employer may require
    the employee to provide documentation that: (1) the application is timely; (2) the leave has
    not exceeded the 5-year limit; and (3) the separation from military service was not
·   Service of 181 days or more:
    Not later than 90 days from completion of military service.

Am I allowed to fill the position of an employee who is away on
military leave?
An employer may hire a new employee or transfer an existing employee to perform the work of
the employee on military leave. Upon return from military service, however, the returning
employee is entitled to reemployment. The position into which a returning employee is reinstated
is based on the length of military service.

For returning employees whose military service was for 1 to 90 days, the position is the one the
person held or would have held had the person remained continuously employed without
interruption for military service so long as the person is qualified to perform the job or can
become qualified after reasonable efforts by the employer. Where military service was for 91 or
more days, USERRA establishes the following order of priority:

·   The position the person held or would have held as described above;
·   A position of like seniority, status, and pay, so long as the person is qualified for the job or
    can become qualified after reasonable efforts by the employer; or
·   Where the person cannot become qualified, any other position that most nearly approximates
    those positions described above, with no loss of seniority, even if the position is of lesser
    status and pay.

How does the employer determine the positions for which the
employee qualifies?
In effect, an “escalator” principal is used to determine positions to which a returning employee is
entitled upon reemployment. Under USERRA, a returning employee is entitled not only to
reemployment, but is also entitled to the position, seniority rights, salary, or benefits the
employee would have attained “with reasonable certainty” if continuously employed.

“Stepping back on the seniority escalator” means, of course, that the position may not necessarily
be the same one the returning employee previously held. It may be the same position, a better
position (seniority-based promotion), or a worse position, or no position at all (e.g., seniority-
based reduction-in-force).

As a practical matter, the ‘escalator’ clause works best in jobs where time in grade is the crucial
factor in raises, promotion, or advancement. But even in a ‘blue collar’ context, it would be next
to impossible to advance an apprentice to journeyman status just because the requisite number of
years may have passed, with no advancement of skill. The difficulties are probably multiplied in
‘white collar’ settings where experience dealing with such factors as emerging markets and new
products and technology is far more critical to a promotion decision than time in grade. On the
other hand, if skills acquired in the military increase a returning employee’s value to the
company, there is no reason that employee should not be offered a better position than was held
prior to service.

I know I must re-hire a returning serviceman or woman. What other
job protection does he/she have?
Depending on length of service, for up to the first year back at work, you can only terminate “for

Returning employees who were in military service for more than 180 days may not be discharged
or terminated except “for cause” for a period of one year after reemployment. Those who were in
military service for 180 or less but more than 30 days may not be discharged or terminated except
“for cause” for six months after reemployment. Returning employees who were in military
service for 30 days or less are not entitled to the special protections from “at-will” discharge or

Even then, the burden on the employer is particularly challenging if the termination is for
performance reasons. Part of the reason for the period of special protection is to allow the
returning service member time to regain job skills that might have been dulled by the period of
military service or to learn new skills. However, other ‘good causes,’ such as absenteeism,
insubordination, fighting, theft, etc., provide valid bases for termination.

If my company is going through a reduction in force, can I layoff a
veteran on leave or one who has recently returned?
USERRA does not protect a service member from a bona fide reduction in force. The law
provides a “changed circumstances” exception, where the employer’s circumstances have
changed so much that reemployment would be impossible to unreasonable, including a reduction-
in-force that would have included the returning employee had he been on the job.

Note: If the RIF is based on seniority, you must add the time in the uniformed service to the
employee’s total. Otherwise, USERRA offers no added protection.

Also, a departing employee may knowingly waive certain leave-of-absence benefits and rights not
based on seniority, through clear written notice of intent not to return to work after military

If, during a layoff, I decide to protect the employees out on military
leave, does USERRA protect me from claims of discrimination (e.g.,
adverse impact on women)?
No. There is no provision in USERRA that would protect an employer who provided such
generous treatment to employees serving in the uniformed services from other actions.

What workplace accommodation s are required for returning
employees who incurred or aggravated disabilities while in military
service? What is the relationship of USERRA to the Americans with
Disabilities Act (ADA)?
The reemployment requirements under USERRA are more generous to employees than the ADA.
The ADA only requires employment of individuals who are qualified to perform the essential
functions of a position, while USERRA requires training or retraining of persons returning from
military service who are not currently qualified for the position so that they may become
qualified. Both laws require the employer to make “reasonable accommodations” to the returning
employee’s disabilities.

The following three-part reemployment scheme is required for persons with disabilities incurred
or aggravated while in military service:

·   The employer must make reasonable efforts to accommodate a person’s disability so that he
    can perform the position he would have held if he had remained continuously employed.
·   If, despite reasonable accommodation efforts, the person is not qualified for the position due
    to his or her disability, the person must be employed in a position of equivalent seniority,
    status, and pay, so long as the employee is qualified to perform the duties of the position or
    could become qualified to perform them with reasonable efforts by the employer.

·   If the person does not become qualified for the position after reasonable efforts by the
    employer, he must be employed in a position that most nearly approximates the prior position
    in terms of seniority, status, and pay.

In addition, the deadline for reinstatement may be extended for up to two (2) years for returning
employees who are convalescing due to a disability incurred or aggravated during military

Am I required by USERRA to pay an employee who is on military leave
of absence?
No. Some employers, however, voluntarily offer differential pay (difference between civilian pay
and military pay) for a set period or provide a specific number of paid military leave days.

As discussed below, continuation of health insurance for employees on military leaves of absence
is treated like COBRA, where the employees may elect to pay for continued coverage. Some
employers voluntarily compensate employees for military leave and some employers also pay (or
substitute paying for) the health insurance premiums for COBRA coverage for a certain periods
of time to maintain dependent coverage.

May I require that an employee use other forms of leave, paid or
unpaid, for purposes of military service? What if the employee wants
to use other leave?
USERRA forbids an employer from requiring an employee to use his or her vacation, annual or
similar leave during such period of military service. The employee is permitted, but not required,
to request that such military service be counted by the employer as vacation, annual or similar
leave with pay. Some employees, for example, may want to use these other forms of leave as a
way of receiving additional compensation where such leave is paid leave.

What types of benefits are affected by USERRA?
In addition to reemployment rights for returning employees, USERRA also protects other terms
and conditions of employment. Protections extend to benefits, such as: vacation pay, health
plans, and pensions, stock options, bonuses, seniority rights, and severance pay.

What benefits are employees returning from military service entitled to
under USERRA?
The answer depends on whether benefits are seniority-based (determined or accrued based on
length of service) or payroll-based (accumulated based on compensation for work performed).

Departing employees must be treated for their period of military service as if they are on furlough
or leave of absence. Reemployed service members are entitled to the seniority rights and all
benefits based on seniority that they would have attained with “reasonable certainty” had they

remained continuously employed. If, however, benefits are not seniority-based, the returning
employees are entitled only to those rights and benefits provided by the employer to other
employees based on contract, employer practice, policy, agreement, or plan.

Whatever the non-military leaves of absence involved (e.g., annual leave, vacation leave,
medical/sick leave, etc.), “the most favorable treatment” provided to other employees must be
accorded to the returning service member. USERRA does not require that a returning employee
be entitled to greater benefits than a person would have been entitled to if the person had
remained continuously employed.

How are health benefits treated under USERRA for employees on
military leaves of absence?
For absences of less than 30 days, health benefits continue as if the employee is continuously
employed. For absences of 31 days or more, health coverage stops and is treated as if under
COBRA coverage, even when employees would be exempt from coverage (i.e., employers with
fewer than 20 employees). The employee may elect to pay for COBRA coverage for a period of
up to 18 months or for the period of military service (plus the time allowed to apply for
reemployment), whichever is a shorter period.

The person cannot be required to pay more than 102 percent of the full premium or, if military
service was for fewer than 30 days, more than the normal employee share of the premium.

Health insurance must be reinstated the day the employee returning from military service is
reinstated, with no waiting period or exclusion for preexisting condition. Health insurance must
be restored immediately, even if the returning employee’s position is temporarily unavailable,
e.g., for one or two weeks. This requirement also applies to the returning employee’s dependents
that are covered under the health plan.

Does USERRA’s health coverage continuation requirement run concurrently with
the employer’s COBRA obligations or does COBRA 18-month opportunity begin
after the USERRA 18-month coverage is exhausted?

The USERRA and COBRA periods of continuation coverage generally run concurrently, rather
than consecutively. (For more general information on health benefits for National Guard and
reserve members who are called up, see http://askpwba.dol.gov/091101faq.html#section1.)

Many large companies offer domestic partner benefits. How do the
benefits requirements under USERRA affect domestic partner
benefits? How should I handle benefits for domestic partners?
Anyone who is qualified under a particular benefits plan as the employee’s dependent should be
provided dependent benefits rights in accord with USERRA. Do not use USERRA as a means to
diminish your benefits.

How are pension/retirement plans treated under USERRA for
employees on military leaves of absence?
USERRA provides special treatment for pension/retirement plans, including defined benefit
plans, defined contribution plans, and profit sharing plans. It also makes provisions for multi-
employer plans.

M ilitary service is treated as service with the employer for purposes of vesting and benefit
accrual, meaning that upon return from military service the person must be treated as not having
incurred a break in service with the employer maintaining a pension plan. Further, no forfeiture
of benefits already accrued is permitted and returning employees are not required to be re-
qualified for participation in the pension plan.

The employer is obligated to continue to maintain the employee’s pension/retirement plan
benefits while the employee is on military leave and thereafter to continue to make contributions
to its pension or profit-sharing plans on behalf of a reemployed person returning from military
service in the same manner as if the person had been continuously employed. Defined benefit
plans should not require employers to make specific contributions, but may increase the
employee’s benefit upon the granting of service credits to returning employees.

The employer is liable to the pension plan for funding benefits and, upon the employee’s return
from military service, for making contributions on behalf of the reemployed person to a pension
or profit-sharing plan that the employer would have made if the person had been continuously

Entitlement to accrued benefits contingent on employee contributions or elective deferrals depend
upon the extent to which the returning employee pays such contributions or makes deferrals. In
that regard, a returning employee must be allowed to contribute any amount that would have been
contributed had the person been continuously employed. The returning employee is allowed a
period of up to three (3) times the period of military service, but no longer than five (5) years, to
make up such missed contributions. Sponsors of defined contribution plans who provide
‘matching contributions’ will have to make additional contributions to “match” any contributions
made by returning employees, as you would for any employee contributions.

What remedies are available for violations of USERRA? Who enforces
the law?
The U.S. Department of Labor’s Veterans’ Employment and Training Service (VETS) is
authorized to investigate and resolve complaints, although the filing of complaints with VETS is
optional and not required before filing a lawsuit. To enforce rights against an employer under
USERRA, a returning veteran may institute a private action in United States District Court or
request assistance of a United States Attorney in prosecuting the claim.

Available remedies include:

·   An order compelling reinstatement to the appropriate position;
·   M onetary damages, including backpay and benefits; and
·   Attorneys’ fees, expert witness fees, and court costs. In cases of “willful” violations of
    USERRA, the award of back pay or lost benefits may be doubled.

Does USERRA apply to state military duty or governor call-ups of
National Guard members?
No. But protection for such duty is generally provided by state statutes and, in most instances, is
comparable to protections provided under USERRA. However, where the President of the United
States orders state National Guard call-ups, such as a Homeland Defense call up, USERRA

                                        Sample Policies
                                          Military Leave

If you belong to a branch of the M ilitary Reserve or National Guard which requires you to train
each year, you will be allowed to take up to two (2) weeks off [with/without] pay. You must give
a copy of your training orders to [position/department] as far in advance of the training date as
possible to assure adequate staffing in your absence.

If you are drafted, volunteer for military service, or are called to active duty, you will be granted
military leave without pay. You must give [position/department] a copy of your orders as soon as
you receive them to ensure adequate staffing during your absence. If you apply for re-
employment after completion of your military service, you will be reinstated in accordance with
the Veterans Re-Employment and Readjustment Act.

                                          Military Leave

The Company will grant you military leave [with/ without] pay, [unless you occupy a temporary
position,] for you to attend scheduled drills or training or if you are called to active duty with the
armed services.

(Alternative #1) You will receive partial pay for two-week training assignments and shorter
absences. Upon presentation of satisfactory military pay verification data, you will be paid the
difference between your normal base compensation and the pay (excluding expense pay) you
receive from other sources for the military duty. The portion of any military leave in excess of
two (2) weeks will be unpaid. However, you may use any other accrued paid leave for the excess

(Alternative #2) You will continue to receive full pay while on leave for up to two weeks of
military leave. The portion of any military leave in excess of two weeks will be unpaid.
However, you may use any accrued paid leave for the excess absence.

(Alternative #1) Subject to the terms, conditions and limitations of the applicable plan for which
you are otherwise eligible, the Company will continue to provide health insurance benefits for the
full period of any military leave.

(Alternative #2) Subject to the terms, conditions, and limitations of the applicable plan, the
Company will continue to provide health insurance benefits until the end of the first full month
after which the military leave begins.

(Alternative #3) Subject to the terms, conditions, and limitations of the applicable plans the
Company will continue to provide health insurance benefits until the end of the month in which
the military leave begins.

(Alternative #1) Paid vacation and sick leave will continue to accrue during your military leave.

(Alternative #2) Paid vacation and sick leave will be suspended during your military leave.

(Alternative #3) Paid vacation and sick leave will be suspended upon the [thirtieth (30th)] day of
your military leave.

If you are on a two-week active duty training assignment or inactive duty training drill, you are
required to return to work for the first regular work day after the end of training, allowing
reasonable travel time.

If you are on a longer military leave, applicable state and federal laws will govern your re-
employment rights, as will your right to have your time in the military service treated as though
you were continuously employed for purposes of determining benefits based on length of service,
such as job seniority rights.

                                 Group Legal Services
M ore and more, employers are offering legal benefits to employees that provide basic legal work,
such as the creation or modification of wills and trusts, advice and consultation, representation in
civil, traffic and criminal actions, etc. Statistics vary, but generally show that employees typically
incur major expenses without such a plan and often need to take time off from work to deal with
legal problems.

How are these benefits offered and what are the incentives?
There are a number of ways legal service programs can be offered.

·   As an ad hoc reimbursement program that requires no formal structure or plan. These plans
    lack any tax incentive for employers or employees.
·   As a qualified legal services plan under which the employer excludes legal benefits from
    employees’ gross income. A formal written plan that complies with IRS regulations is
    required. Employers may contribute to some or all of the cost.
·   As a qualified legal services plan, but as part of a Section 125 cafeteria plan.
·   As a voluntary benefit program in which employees can enroll and pay for through payroll
    deductions. This plan offers no tax advantages.
·   Through an established Employee Assistance Program (EAP). Under an EAP, the level of
    service may be limited.

What are some of the typical benefits under a group legal plan?

Depending on the plan and the wishes of employees, benefits can greatly vary. Below is a list of
the typical types of benefits that can be offered.

·   Advice and consultation
·   Drawing of wills or other legal documents
·   Adoption proceedings
·   Representation in civil and criminal actions
·   Representation in traffic offenses
·   Domestic relations problems
·   Real estate transactions
·   Consumer complaints
·   Landlord-tenant actions
·   Estate planning
·   Bankruptcy
·   Probate and administration of estates
·   Immigrations
·   Living trusts

What is the cost of a group legal plan?

The cost and funding of a group legal plan will vary depending on the following factors:

·   Benefits to be offered
·   Number of members to be covered
·   M arital status and ages of dependents
·   Geographic location of members
·   Coverage for dependents

Typical coverage runs from $20-$50 a month, depending on the level of service offered.
Depending on how the employer wants to setup the program, the employer may pay for all of the
cost or share the cost with the employee.

What benefits are not included?
Typically, certain legal services are specifically excluded from coverage, usually because they are
very expensive types of litigation, require specific expertise, or may cause problems for the
company offering the benefit to its employees. Legal services that are usually excluded from
group plan coverage include:

·   Class actions
·   Routine tax matters
·   Actions relating to an outside business or profession of the employee or family member
·   Actions involving the employer and/or its contracted benefits provider.

There might be additional types of coverage, riders and/or limitations depending on the legal
service plan provider your company chooses.

If I add a qualified group legal plan as part of my Section 125 cafeteria
plan, will the benefit also be excluded from state taxes?
No. Some states do not exclude all benefits the IRS recognizes as excludable under qualified
Section 125 plans. For example, the IRS allows to be excluded from federal taxable wages:

    ·   Group term life insurance
    ·   Accident or health insurance
    ·   Participation in a 401(k) retirement plan
    ·   Dependent care assistance program
    ·   Group legal services plan.

Some states only allow the first three benefits to be excluded from taxable wages. The rest are
included as taxable income for state income tax purposes. Check with your cafeteria plan
administrator about taxable income questions.

How do I set up a qualified group legal plan?
Because there are ERISA reporting and disclosure requirements, employer provided group legal
plans should be set up with a qualified administrator. To find a qualified Section 125
administrator, contact your local PIA office or a benefits broker.

Are there other tax issues I need to be concerned about with respect
to group legal plans?

Yes. The plan administrator should consult with a tax expert every year to ensure that employer
contributions for these plans are excludable from employees’ gross income.

                                  Financial Services
M ore and more, employers are offering their employees financial service benefits for recruitment
and retention. M ost often these services include membership in a credit union and/or financial
planning and investment counseling.

What are credit unions and who are their members?
A credit union is a nonprofit, cooperative financial institution owned and run by its members.
They offer basic services to members and are similar to commercial banks. The volunteer board
that runs each credit union is elected by the members.

Who can join a credit union?
To join a credit union, you must be eligible for membership. Each institution decides who it will
serve. Credit unions are set up by geography or affiliation. M embers of a group, club, employer,
etc., can set up their own credit union or join an existing one. Usually, immediate family
members of employees may join as well.

Is membership in a credit union portable?
Yes. If employees leave your employment, they may continue membership in the credit union.

Are there credit unions for graphic arts employees?
Yes. In many parts of the country local PIA affiliate associations have setup credit unions.

Alabama:              PIA of the South                       http://www.pias.org/
Arkansas:             PIA of the South                       http://www.pias.org/
       Printing Industries Assn. of San Diego               http://www.piasd.org/
       Printing Industries Assn. of So. California          http://www.piasc.org/
       Printing Industries of No. California                http://www.pincnet.com/
Kentucky:             PIA of the South                      http://www.pias.org/
Louisiana:            PIA of the South                      http://www.pias.org/
Maine:                Printing Industries of New England    http://www.pine.org/
Massachusetts:        Printing Industries of New England    http://www.pine.org/
Mississippi:          PIA of the South                      http://www.pias.org/
Missouri:             Printing Industries of St. Louis      http://www.pistl.org/
New Hampshire:        Printing Industries of New England    http://www.pine.org/
Rhode Island:         Printing Industries of New England    http://www.pine.org/
Tennessee:            PIA of the South                      http://www.pias.org/
Texas: Printing and Imaging Assn of M idAmerica             http://www.piamidam.org/
Vermont:              Printing Industries of New England:   http://www.pine.org/
West Virginia:        PIA of the South                      http://www.pias.org/

Are federal credit unions safe?
Yes. Federal credit unions are insured by the National Credit Union Share Insurance Fund
(NCUSIF), which was created by Congress in 1970 to insure members’ deposits in credit unions
up to the $100,000 federal limit. Administered by the National Credit Union Administration, the
NCUSIF is backed by the "full faith and credit" of the U.S. Government.

Are there non-federally insured credit unions?
Yes. There are state credit unions in the following states that are not federally insured: Alabama,
California, Idaho, Illinois, Indiana, M aryland, Nevada, Ohio, and Puerto Rico.

Are state credit unions safe?
Yes. They are safe up to the level that accounts are insured by the state in which the credit union
is licensed.

What types of services can a credit union offer to my employees?
Depending on the credit union, the following is a list of typical services:

·   Checking and savings accounts
·   ATM machine access
·   Secured and unsecured loans
·   Auto and mortgage loans
·   Credit cards
·   Internet or dial-in access
·   “Kitty” clubs
·   Financial counseling and investing
·   Auto purchase service
·   Auto and home owners insurance
·   M oney market accounts
·   Certificates of deposits

What are financial planning and investment counseling services?
These are professional services where employees can obtain financial advice and money
management services for retirement planning, creating and managing trusts, debt counseling,
college education planning, and services for investing.

Where can you obtain such services?
Federal or state credit unions, local banks, and investment brokerage houses offer these services.

Are there tax advantages for providing such a service?
Usually there are no tax advantages for the employer or employee. M ostly, employers make the
service available to employees through a group discount and then service and costs are left up to
the employee.

Are there costs for the employer?
Usually there aren’t any specific costs other than the administrative time to set up a program with
a vendor.

                        Training/Educational Assistance
A program through which an employer provides financial assistance to employees to attend
college level classes or gain professional certification is known as a Tuition Assistance Program
(TAP). Corporations also offer employees assistance to attend individual training courses, either
in-house or off-site.

Do many graphic arts companies offer tuition or educational
Data from the 1999-2000 PIA Survey of Printing Management and Administrative Compensation
say that 55.2 percent of U.S. printers are offering some form of TAP. The percentage of
employers offering TAPs increases with the number of people they employ. Please see the chart

Firm Size                 % Offering Tuition Assistance
1-10 Employees                        39.8
11-20 Employees                       51.9
21-50 Employees                       59.4
51-100 Employees                      66.3
101-250 Employees                     73.7
251+ Employees                        79.3

What are the benefits of a TAP?

·   Section 127 of the Internal Revenue Code exempts TAP benefits from taxation
·   A TAP increases retention, especially among younger workers and female employees
·   A TAP provides a recruitment tool for employers
·   A TAP increases the skill base of the company’s workforce
What is the cost to employers?
Corporate America spends approximately $11 billion annually on college education classes and
certifications to ensure that employees are learning needed skills and receiving degrees. The cost
for the training/course depends on several factors. These factors include:

·   Whether the employee will attend a college level class, certification program, seminar or
    training program.
·   The percentage of the overall cost the employer will be covering. M ost employers pick up
    100 percent of the costs, especially in the case of training for job-related skills. However,
    some employers pay a certain percentage of the cost of the class/training, especially with
    college classes. Employers may pay 50-75 percent. Others put dollar caps on training
    allowances for employees.
·   Depending on where the class or training is offered, travel expenses may come into play.

Section 127 of the Internal Revenue Code allows public or private employers to provide up to
$5,250 per year to each of their employees in tax-free reimbursement for tuition, books, and fees
for job- or non-job related education. Like any other benefit, employers are not required to
provide Section 127 benefits to their employees. If a company chooses to provide Section 127
educational assistance benefits to its employees, the employer must offer the benefits to all
employees on a nondiscriminatory basis.

Watch for changes to tuition reimbursement laws in Congress. There is increasing interest in
providing a credit against income tax for information technology training expenses.

How is the training/certification paid for?
·   Employers may offer reimbursement plans. Reimbursement plans pay the employee back
    after successful completion of the course; usually a minimum grade of “C” is required for
·   Scholarships are offered by professional organizations or through associations and
·   M ost PIA affiliates have scholarship opportunities. Contact your local PIA affiliate for more
·   The Print and Graphics Scholarship Fund (PGSF), a not-for-profit, private, industry-directed
    organization dispenses undergraduate college scholarship and graduate fellowship assistance
    to talented men and women interested in graphic communications careers. For more
    information, please contact PGSF at (412)741-6860 (ext. 309) or at www.gain.net. (This
    program is administered through the Graphic Arts Technical Foundation.)
·   M oney is also often set aside in corporate training budgets for classes or certifications.

What type of certification is available in the printing industry?
The National Council for Skills Standards in Graphic Communications is a non-profit skills
standards setting and certifying organization serving the graphic communications industry.
National Council Skill Standards are a list of competencies — what an operator should know and
be able to do — written for the expert level of performance. Skill standards are available for:

    ·   Electronic Imaging
    ·   Sheetfed and Web Offset Press
    ·   Flexographic Press
    ·   Finishing and Distribution

Skill standards define the competency requirements for successful performance. When operators
successfully complete an examination, they receive certification, which means they possess the
knowledge and skills essential for performance as defined by the skill standards. Skill
certification by the National Council will provide recognized proof of professional achievement.
Skill standards are also being used by employers to identify specific skills needed for a job, write
job descriptions, analyze individual performance and guide the development of in-house training.

In-house versus outside training
M any times employers have people on staff who are qualified to do training for their fellow
employees. This type of training is a cost-effective way to raise skill sets. However, sometimes
it is necessary to bring a trainer into your facility from an outside company or group. An outside
trainer often increases credibility, and therefore buy-in, on the part of the trainee and offers a
unique set of skills that may not exist in an organization. According to the Graphic Arts
Technical Foundation (GATF), the most frequent type of training done in the printing industry is
technical training. M ost often, this training is done by professional trainers either at the client site
or at a training facility like GATF. GATF offers technical training in the following areas:

·   Pre-press
·   Press
·   Off-set press
·   Introductory courses
·   Production operations

Customized training is also available. PIA and local PIA affiliates offer seminars and
conferences around the country. Conferences offered for many management fields include:

·   Human Relations
·   Printing Industry Financial Executives
·   Digital Printing

                     Sample Tuition Policies and Agreements
                       Tuition Reimbursement Polic y - Sample #1

[Company Name] believes that educational opportunities are important for employees. We will
reimburse full-time, regular employees for tuition, according to the following terms:

·   The class is offered at an accredited college or university and it is pertinent to your career
·   A grade of “C” or better must be achieved in the coursework
·   Reimbursements are limited to $3000 per participating employee per calendar year
·   Tuition reimbursement request forms must be completed, signed by your supervisor and
    submitted to the HR Department (or company owner) for approval prior to course registration.
    Approval will not be given retroactively.
·   Reimbursements will be made when a transcript indicating the grade earned in the class and a
    receipt for expenses incurred is given to [Company designate].

I understand that this is an indebtedness to [Company Name] and that if I resign or am discharged
from [Company Name] within one year or less from the completion of the course, I agree to repay
the percentage of [Company Name] tuition assistance as follows:

       Within six months of completing the course(s):       100 percent

       Between six months and one year of completing
       the course:                                          50 percent

* Specialized non-academic training, such as computer classes, that benefit [Company Name] are
separate from the tuition plan, as are seminars. These will be handled on an individual basis, with
supervisor approval.

                         TUITION ASSISTANCE REQUEST FORM

I, ______________________________, request that [Company Name] reimburse me in the
amount of $ _____, which is the tuition cost for enrolling in [Name of Course] _____________at
[Name of Institution]________________, commencing on _______________.

I understand that I must receive a grade of C or better in the course to receive tuition assistance.
Also, I must submit a transcript indicating successful competition of the class, my final grade, and
a receipt for expenses before I will be reimbursed the amount indicated above.

I understand that if I resign or am discharged from [Company Name] within one year or less from
the completion of the course, I agree to repay the percentage of [Company Name]’s tuition
assistance as follows:

       Within six months of completing the course(s):        100 percent

       Between six months and one year of completing
       the course:                                           50 percent

By signing below, I am authorizing [Company Name] to deduct from my last paycheck any
outstanding tuition assistance per the above schedule. M inimum wages will be left in this last
paycheck, as required by law. If my last paycheck is insufficient to pay back the amount that I
owe, I promise to repay [Company Name] the remainder of my tuition reimbursement within
three months of leaving [Company Name] employ. I understand that my obligation to repay
[Company Name] for the tuition reimbursement is enforceable in a court of law.

Approved____________________ Date _________________

Approved ___________________          Date _________________

Agreed and acknowledged by: ___________________              Date _____________

                       Tuition Reimbursement Polic y - Sample #2

[Company Name] wants to assist you in maintaining and upgrading your job related skills. With
prior approval, we will reimburse you for the cost of the program after successful completion of
the course. Successful completion will require that you pass the course with a minimum grade of
C or that you receive a certificate of successful completion if the course is not graded. The
course/class must be related to your job or to the printing field.


                       Tuition Reimbursement Polic y - Sample #3

Full-time employees are eligible to apply for tuition assistance after one year of employment.
After approval from the Company, employees are eligible for reimbursement upon successful
completion of the approved course(s) at an accredited institution. [Company Name] will
reimburse the employee 100 percent of the tuition, registration, book, and lab fees.


Internet Resources

IRS Code

M aster Printers’ Sommer/Viehman Scolarship-
http://www.gain.org/servlet/gateway/PIA_GATF/awards/mpa/M PAprod.html#Scholar

PIA training programs

GATF Training Programs

National Council for Skills Standard

                                  Flexible Schedules
What are flexible schedules?
Due to the varied nature of the graphics arts industry, companies use a wide array of work periods
to meet production schedules, provide incentives to employees, and better serve their customers.
Flexible schedules are individual or departmental schedules with different start and end times, but
with a set of core hours worked. For example, an 8 a.m. to 5 p.m. normal schedule might be
modified for employees to start as soon as 6 a.m. and as late as 10 a.m. The end times and lunch
breaks are modified as well.

What are the pros and cons of flexible schedules?
Pros for the employee
· Greater autonomy in determining work hours can reduce stress on and off the job
· Better opportunities to balance work, family, and leisure
· Often increased productivity and job satisfaction
· Alleviation of commuting issues

Pros for the employer
· Usually reduced absenteeism, tardiness, overtime
· Reduced employee turnover
· Better morale

· Time-keeping may be a burden if your time tracking system cannot handle different schedules
· Supervisors may get frustrated at coordinating schedules, giving advance instructions, or
  delegating authority
· Additional administrative time will be required for scheduling
· Flexible schedules may not be feasible for production workers unless the entire shift or
  department switches to a different start and end time.

What are some different types of schedules used in the industry?

·   Traditional 8 hour, 5 day workweek (40 hours total)
·   10 hour, 4 day workweek
·   12 hour, 3 day workweek
·   5-4/9. First week, 9 hours for 5 days (M onday-Friday). Second week, 9 hours for 4 days.

What about evening and night shifts?
Depending on your equipment expenses and sales volume, you might consider evening and
possibly night shifts. Most graphic arts firms pay a shift premium to hourly employees who work
evening and night shifts.

What about rotating shifts?
M any employees who normally have an evening or night shift would have the opportunity to
enjoy more family and recreational activities, but for others rotating shifts could cause problems
at home, such as with child care issues. Employees need to pay attention to their sleeping
patterns and eating habits in order to make a transition from one shift to another. Employers
might enjoy lower turnover as a result of evening and night shifts, but accident rates may go up.

What about overtime?
Generally, hours of overtime go down when 10 or 12 hour shifts are implemented.

At a federal minimum, overtime pay (time and a half of regular hourly wages) must be paid for
time worked over 40 hours in a workweek.

Some states require overtime to be paid for hours worked over eight hours in a day. Plus, some
states require that vacation and/or holiday time be included in the calculation of overtime. See
your local PIA affiliate for your applicable state law.

What is the industry practice for overtime?
For most small graphic arts firms, overtime is paid for time worked over 40 hours in a workweek.
Overtime is paid for Saturdays and Sundays, even if the hours worked do not amount to over 40
hours in the workweek. For survey data on graphic arts industry overtime practices, see
www.gain.net to order PIA’s Production Worker Compensation Survey 2001-2002.

What factors should I consider before implementing a flextime policy?
·   Communication problems that may occur during non-core periods if the hours of certain
    employees do not overlap
·   The coordination of projects may become difficult, particularly if the work of individual
    employees is highly interdependent
·   The interaction of the firm with both suppliers and customers may suffer if employees cannot
    be reached at certain non-core times. This is accentuated if contact must be made with an
    individual working in a different time zone.
·   If the work flow of a company is uneven and more importantly unpredictable, a situation of
    insufficient staffing could occur during a non-core period. A report due on very short notice
    could be required yet certain essential employees might not be available.

What is job sharing?
Job sharing is two or more people performing the duties of a single job on a part-time basis, but
their cumulative work time is the equivalent of one full-time employee.

Recruitment and retention issues might be reduced if the company can find two good workers
who want to work part-time in the position. Full-time benefits would not have to be offered.

On the other hand, poor communication and follow-through might result. It is often difficult to
recruit two individuals who want to work the position, and replacing one of the team can present
morale problems. Coverage during vacation and sick leave may present production issues.

            Dress Codes or Personal Appearance Policies
M any companies are currently offering casual dress codes as a benefit for their employees.
According to CareerPath.com, casual dress in the workplace is now the second most popular
employee perk. Beginning in the late 1990’s, employers began establishing casual dress codes as
an inexpensive way to improve the morale of employees. However, many of these same
employers are now arguing against casual dress. In fact, a recent survey by M anagement
Recruiters International, Inc. found that more than one third of employers think that business
casual has gone too far.

What is business casual dress?
Business casual is the trend toward a more casual style of office dress. However, the definition of
business casual means different things to different people. The best understanding of business
casual is that you are dressed for business but you are not wearing a suit. For women this
generally means a dress, skirt with a dress blouse, or dress pants with a silk shirt. For men the
business casual code translates into dress pants and shoes, a buttoned shirt and a sports jacket.
Senior management often sets the tone for what is acceptable.

What percentage of employers offer casual dress?
According to the Society for Human Resource M anagement, 87 percent of companies permit
some form of relaxed dress at least once a week.

Why offer a casual dress code in your workplace?
·   A casual dress policy improves employee morale
·   Casual dress is perceived as an added benefit
·   Informal attire saves employees time and money
·   Casual dress can be used in recruiting and serves as a retention tool
·   Wearing casual clothes improves productivity
·   M anagement is seen as more flexible and open

When is casual dress inappropriate?
The main arguments against casual dress codes are that casual dress does not provide a sense of
professionalism and that it can lead to slacking. Also, employees with client contact should wear
business attire, as should those who can be seen by clients in the course of everyday business to
portray a more professional demeanor. Casual dress codes only should apply to employees who
rarely come in face to face contact with clients. In the printing industry, casual dress may not be
appropriate for a salesperson out making sales calls, but may be appropriate for a graphic artist
who spends the majority of her time in the office with little contact with clients. Here are some
items that should be prohibited in a policy to avoid problems:

·   Slogans or pictures on T-shirts
·   Torn pants or jeans
·   Extremely baggy shorts or pants
·   Jeans, jogging suits, or sweat suits
·   Revealing attire
·   Loose footwear such as flip-flops
·   Gang attire (eg. bandana, certain colors, etc.)

What are some tips for establishing a casual dress policy?
·   Consider the culture of your company.
·   Use the casual dress policy on a trial basis.
·   M ake guidelines very specific. Define "corporate casual" or "business casual."
·   Use photographs of people wearing appropriate casual attire.
·   Ask managers to meet privately with employees who do not dress appropriately to advise
    them about appropriate casual attire.
·   M ake sure the casual dress code does not violate any legal policies to avoid cases of
·   Retailers such as Brooks Brothers and M acy's sponsor business casual seminars for
    companies, complete with employee fashion shows.
·   Book stores offer a variety of books on dress codes that include pictures.

What legal considerations apply to casual dress codes or personal
appearance policies?
Civil rights violations can occur when it comes to dress codes and personal appearance policies.
While there is no federal law governing dress codes, most employers may implement whatever
dress guidelines they feel are appropriate, as long as they do not discriminate on the basis of
gender, race, religion, disability, or any other federally protected status. However, the dress code
should be based on business need.

The issue of dress codes when they conflict with religion is an area that must be handled with
great care. For example, Federal Express agreed to alter its personal appearance policy in M ay
2001. The change came on the heels of a religious discrimination charge filed against FedEx by a
M uslim employee. The employee alleged that FedEx’s policy of no beards, which ultimately led
to his discharge, violated Title VII of the Civil Rights Act. His religious beliefs prohibit him
from removing his beard. FedEx was ordered to pay the employee damages.

When a dress or personal appearance code requirement conflicts with an employee’s belief
system, the employer must carefully review the situation and accommodate the employee’s
religious belief unless denial of the accommodation can be justified by business necessity. The
courts have upheld an employer’s right to restrict long hair or robes when it poses a safety risk or
a risk to public health. In these cases where religious rights are at issue, every effort should be
made to accommodate the individual before prohibiting the long hair or other practice. Contact
your PIA affiliate or an attorney if you have questions.

                                Sample Dress Code Policy
                                     Business Attire Polic y

It is important for all employees to project a professional image of [Company Name]. To create
this image to patients, visitors, and guests, [Company Name] has implemented a dress code
policy. This policy applies to all personnel, with the exception of employees who are required to
wear uniforms.

The following list is a guideline of appropriate and inappropriate attire.

Appropriate Business Attire
· Dresses (length cannot be more than three inches above the knee)
· Suits/pant suits/ties
· Skirts (length cannot be more than three inches above the knee)
· Blouses/shirts
· Blazers
· Vests
· Walking shorts/skorts in business suitable fabrics (length cannot be more than 3 inches above
  the knee)
· Pants in business suitable fabrics
· Any type of business shoe (heels, flats, etc.)

Inappropriate Business Attire
· Any type of denim
· Casual/sport T-shirts (including logo merchandise)
· Casual shorts
· Stirrup pants and leggings
· Casual sandals, athletic or canvas shoes, casual boots, clogs
· Flannel shirts

Certain days of the year may be designated as casual days. The following list is a guideline of
clothing that is appropriate and inappropriate on those days:

Appropriate Casual Day Attire
· T-shirts (solid colors only)
· Pants/leggings/stirrups
· Tennis shoes
· Denim shirts/dresses/skirts
· Company logo sweatshirt

Inappropriate Casual Da y Attire
· Shorts
· Non-company logo clothing (sport teams, cartoon characters)
· Jeans (blue or colored)

·   Thong type sandals
·   Halter tops

[Company Name] reserves the right to amend this policy at any time.

For additional dress policies, please visit GAIN at www.gain.net.

Internet Resources

http://www.gain.net – PIA’s website contains additional information

Depending on the size of your company and the location, there are several ways transportation
and parking can be value-added benefits to your employees. The two most common types are
assigned parking as an incentive reward and subsidies for public transportation and parking
(Section 132 plan).

How can a company use parking as an incentive?
M any companies have long had Employee of the M onth parking spaces. If your company has
such a program and think it is not valued, ask how employees would feel if the program ended. If
the same few employees keep receiving the space, perhaps it is time to review the administration
of the Employee of the M onth program. Improved, rather than stellar, performance might
motivate some under-achievers to do better and be recognized for their efforts.

What costs are involved with a parking incentive program?
The cost of such a program is usually just administrative time and the cost of the parking space if

How can subsidies for public transportation and parking be used?
Transportation and parking reimbursement and/or vouchers can be a qualified transportation
benefit, thus possibly excludable from gross income. There are two categories for this:

·   Transportation in a commuter highway vehicle (vanpool) or transit pass
·   Qualified parking.

Tax benefits are provided under the Transportation Equity Act for the 21st Century (Internal
Revenue Code Section 132 and TEA-21) and the Taxpayer Relief Act of 1997.

What program options do I have?
The chart below shows a number of ways that transportation and parking plans can be used.

Alternative Mode of              Transit                  Vanpool              Qualified Parking
Incentive                Up to $100/month,         Up to $100/month,    Up to $180/month,
                         $1,200/year, for          $1,200/year, for     $2,160/year, for
                         transit expenses          vanpool expenses     parking at or near an
                                                                        employer’s work site
                                                                        or at a facility from
                                                                        which employee
Employer Tax             Employers give their    Employers give their   Employers give their
Benefit                  employees up to         employees up to        employees up to
                         $100/month to           $100/month to          $180/month for
                         commute via transit;    commute via vanpool; qualified parking; get
                         get a tax deduction     get a tax deduction    a tax deduction and
                         and save on payroll     and save on payroll    save on payroll tax
                         tax since not included tax since not included since not included in
                         in gross income         in gross income        gross income
                                    or                      or                      or
                         Employers allow         Employers allow        Employers allow
                         employees to use pre- employees to use pre- employees to use pre-
                         tax income to pay for tax income to pay for tax income to pay for
                         transit; employers      vanpooling;            qualified parking;
                         save on payroll tax (at employers save on      employers save on
                         least 7.65% savings)    payroll tax (at least  payroll tax (at least
                                    or           7.65% savings)         7.65% savings)
                         A combination of both              or                      or
                         up to statutory limits  A combination of both A combination of both
                                                 up to statutory limits up to statutory limits
Employee Tax             Employees receive up      Employees receive up      Employees receive up
Benefit                  to $100/month tax free    to $100/month tax free    to $180/month tax free
                         (not on their W-2         (not on their W-2         (not on their W-2) for
                         form)                     form)                     qualified parking
                         or                                   or                        or
                         Employees pay for         Employees pay for         Employees pay for
                         commute benefit with      commute benefit with      commute benefit with
                         pre-tax income and        pre-tax income and        pre-tax income and
                         save on income tax        save on income tax        save on income tax
                                    or                        or                        or
                         A combination of both     A combination of both     A combination of both

A vanpool or transit pass can be provided in addition to qualified parking for a total benefit of up
to $380/month or $4,560/year.

How does a parking cash out program work?
Employers may wish to establish a parking cash out program whereby employees may choose to
cash out the value of employer-provided parking (typically leased), forego parking, and receive
the taxable cash value of the parking or receive a tax-free transit or eligible vanpool benefit up to
$100 per month. The employer transfers its expenditure for the parking space, assuming it is
leased, to a direct payment to the employee. If the employee accepts the cash value rather than a
tax-free transit or vanpool benefit, then the employee also incurs payroll and income taxes on the
amount. The employer only incurs payroll taxes on the cash value provided. This additional
compensation will allow the employee to finance other commuting modes that are not considered
qualified transportation fringe benefits, such as walking, bicycling, or carpooling.

What tax considerations apply?
While separately administered, transportation reimbursement plans (Section 132 plans) are
similar to Section 125 Flexible Spending Accounts. Employees elect to set aside a portion of
each paycheck to pay for qualified expenses. M onthly maximums are $175/month for parking
and $100/month for mass transit, as of January 1, 2002. After expenses are incurred, employees
submit receipts and claims for reimbursement from their account(s).

Section 132 plans have a few key differences from Section 125 plans as follows:
· No plan documents or Summary Plan Descriptions (SPD) are required
· No discrimination testing is required
· Elections may be made every month
· Unused elections will be rolled forward to subsequent months and years.

What are qualified expenses for a Section 132 plan?
The following fares/expenses are considered to be qualified expenses:

·   Bus
·   Train
·   Ferry
·   Subway
·   Vanpool
·   Parking expenses for lots near the employee's office location or mass transit/vanpool station

What if an employee is a van pool driver and has parking expenses as
well? Can both expenses be claimed?
Yes. Combination parking and transit/vanpool benefits are allowable under Section 132 plans.
The "prime member" (generally the person to whom the space is assigned) who utilizes
commercial parking and travels via vanpool or transit to work can collect both the parking benefit
and the transit/vanpool benefit. Only one "prime member" of the vanpool arrangement can
collect both benefits.

Do benefit levels increase?
Federal law and some state laws have a cost of living increase each year for the benefit levels.
On the federal level, after 2002, cost of living increases will occur in $5.00 increments.

Do states and local jurisdictions have additional benefits or
restrictions on local tax benefits?
Yes. Before setting up a Section 132 Transportation Benefit Plan, employers are advised to
determine if local or state governments provide any additional incentives or limits. Some states
or cities may have higher limits for state tax deductions or additional tax incentives for
employers. Some states may actually apply payroll or income taxes even if the federal
government does not. Commonly, the local mass transit authority or your payroll vendor are
good resources for this local information.

Some states and metropolitan areas have significant credits available to employers and employees
for car/van pools. If a state or metropolitan area has reached certain air quality limits, then some
mandatory programs may be in effect (e.g. California). Contact your local PIA affiliate for more
information (www.gain.net).

                         Relocation/Housing Services
Employers are increasingly developing relocation/housing policies to encourage employees to
join the company or to ease the transition for employees moving to another location.

What types of relocation services are available?
Relocation services can include any of the following. These items may have tax benefits for the
employee or employer.
· Travel arrangements
· Goods transportation
· Auto shipping/insurance
· Storage services
· Pet transportation
· Packing/crating services

What types of destination services are available?
Destination services are even more varied than relocation services. Below are just a few of those
offered by different companies.

·   Home purchase or rental tours
·   Real estate brokerage arrangements
·   Temporary housing
·   Destination storage services
·   Relocation information
    · Area information
    · Housing costs
    · Neighborhood/school info
    · Entertainment/culture

What tax considerations apply?
The federal government and the states provide tax benefits to employers and employees for
relocation costs. You should contact your tax advisor for specifics in your state. Typically,
transportation, packing, insurance, storage and mileage can be deducted for qualified expenses.
The following are resources you might wish to check on.

“Guide to M oving Expenses”
      Contact the IRS Problem Solving Line at 1-800-829-1040 to request a copy
“How to Deduct Moving Expenses”
      Go to www.atlasvanlines.com to request a copy

There are many nationwide companies to help employers develop relocation policies and
implement them. M any can be found through the internet or your local phone book.

                         Employee Concierge Services
Increasingly, employees are finding it difficult to take care of their personal needs and
responsibilities outside of their workday. M ore and more families have two full-time workers.
Some 40 percent of workers either work overtime or bring work home at least once a week. Not
surprisingly, a Xylo Report found that 75 percent of employees take care of personal
responsibilities on the job, while 36 percent say they take care of personal responsibilities at work
on a daily basis. To reduce the amount of time that employees use for non-work activities while
on the job, employers may wish to consider concierge services.

What are employee concierge services?
A concierge performs duties similar to an old-fashioned personal assistant or hotel concierge.
Employees need to find the right gift, make appointments and reservations, and find local
resources. In the case of an employee concierge, that might include finding a plumber, a house
closer to work, or an orthodontist for the kids. Rather than an employee spending an hour
researching these needs on-line, in the newspaper, or in the phone book, the concierge does the
work while the employee stays focused on the job.

What services should be offered?
Employers often survey their employees to see what types of services would be most valued and
which take the most time to accomplish. In general, the employer pays for the concierge’s time.
The employee pays for any costs of services or goods obtained through the concierge. To
determine whether a concierge service would benefit your business, begin by finding out whether
employees are having as much difficulty balancing work and personal needs as you think they
might be. This can be done by asking through a survey if they spend time doing personal
business at work, and if so, the amount of time they spend. Also ask what types of services
would be most valued and used and how much the employees would use the separate services.
This will give an indication (but only an indication) of the time, and therefore cost, of the
concierge service.

What type of companies should consider concierge services?
While it might seem that larger employers would most use concierge services, there is growing
usage in companies with 9-50 employees. This is particularly true in companies where most
employees are full-time, hours worked are from 9 to 5, most of the employees have children, and
there are two full-time workers in the family household. Size of company should not be the
consideration in determining need. Rather, the employer should realistically look at the value of
increasing the amount of time employees focus on the job rather than on personal responsibilities.

Which employees should be eligible for the benefit?
As a morale consideration, all employees should be able to use concierge services if they are
offered. However, an employer can limit the amount of usage by part-time employees, such as
only three requests per month.

What are the benefits to the employer?

·   Recruitment – both the service itself and the attitude of the employer toward employees’
    needs help with recruitment
·   Retention of employees is greater
·   Productivity is significantly increased

What service options sh ould I consider?
The sky’s the limit with respect to what services employees might want, and the list might change
as employees see the value of the service. Often, employers will provide the five highest ranked
services determined by an employee survey. Below are the most typical services offered.

·   Shopping – gifts, groceries, etc.
·   Lunch delivery
·   Ordering flowers, booking tickets, catalog ordering, etc.
·   Finding local services – plumbers, real estate agents, dentists
·   M aking reservations
·   M aking medical appointments
·   Dry-cleaning pick up
·   Home services – waiting for the electrician, plumber, etc.
·   Taking the car for service
·   Lawn care
·   Bill paying
·   Event planning

What are the downsides of offering concierge services?

·   Cost – this will depend on the number of services offered and the amount of employee usage
·   Removal of service – if the service is removed at a future date, it can have a significant impact
    on morale

Where do I find concierge services?
There are several national employee concierge services and many local ones. Check on-line and
your local phone book (sometimes listed as hospitality services). These companies hire
individuals who are resourceful and service-oriented. By using an outside service, you are
usually provided usage reports so you can change the program as new needs arise.


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