Archive for the ‘2012’ Tag

The New 401(k) Fee Disclosure Rules: From A Small Business Perspective

As of July 1st 2012, the Department of Labor (DOL) requires service providers to disclose all direct and indirect fees associated with the management of 401 (K) retirement plans. The DOL’s intent for the implementation of the fee disclosure rules is to provide investors (employees) with a breakdown of fees as well as to encourage employers who sponsor these plans to “shop” around for service providers and compare costs.

The Employee Benefits Security Administration (EBSA, a division of the DOL responsible for overseeing protection of employee rights regarding pension plans) first proposed the new disclosure rules as part of the Employee Retirement Income Security Act (ERISA). The EBSA recognized the need for transparency of fees and expenses in employer-sponsored 401 (k) plans following the recession and decline in retirement investment in 2010. Efforts to make fees and expenses transparent heightened after a series of class-action lawsuits were filed against large employers, alleging violation of fiduciary duties for undisclosed fees and excessive charges. As a result, the DOL enacted the new disclosure rules in April 2012, but decided to postpone the implementation date to July 2012 to allow service providers time to seek compliance.

Service providers must furnish documentation on:

  • Administrative fees and expenses;
  • Individual fees and expenses;
  • Performance data;
  • Comparison of each investment product available; and
  • Deducted fees and expenses in a dollar amount.

Investors will receive an initial disclosure detailing their investment, record-keeping expenses, and other fees deducted from their 401(k) plan by August 30, 2012 and can anticipate receiving the first quarterly statement listing fees by November 14, 2012.

What does this Mean for Small Business Employers?

 Since the new disclosure rules expose deducted fees and miscellaneous expenses, employers will have the resources they need to evaluate the price of their plans and they can “shop” around for the best service providers. According to Cerulli Associates, there are approximately 500,000 small and mid-size businesses that offer a 401(k) plan. About 10% of the businesses with fewer than 100 employees have a plan and 99% of companies with greater than 50 employees have a plan.  In general, small to midsize employer plans receive less attractive pricing in comparison to large company plans. The new disclosure rules allow employers to view the exact cost of the plan so that they may compare plan options.

 401(k) Fee Disclosure Rules Resource:


California HR: Employee Terms of Employment should be presented in a Written Notice

California Governor Jerry Brown recently signed bills enacting several new employment statutes that will affect the way employers conduct business. One Statue in particular, Section 2810.5, outlines an employer’s responsibility to communicate an employee’s terms of employment in a written notice. Effective January 1, 2012, employers should present the written notice to non-exempt employees at the time of hire and communicate the content in a manner that is deemed understandable by a “reasonable” person.

The written notice should include:

  • The rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or otherwise, including any rates for overtime, as applicable.
  • Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances.
  • The regular payday designated by the employer.
  • The employer’s name, including any “doing business as” names used by the employer.
  • The physical address of the employer’s main office or principal place of business, and a mailing address, if different.
  • The employer’s telephone number.
  • The name, address, and telephone number of the employer’s workers’ compensation insurance carrier.
  • Any other information the Labor Commissioner deems material and necessary.

Employers should notify employees in writing, within seven calendar days, if changes transpire to the information above through a written amendment, new written notice or modified paycheck stub containing the new information. Section 2810.5 does not apply to overtime exempt employees or public sector employees. Additionally, it dose not apply to employees covered by a valid collective bargaining agreement if their regular rate of pay exceeds California’s minimum wage by at least 30% and if their overtime compensation is paid at the proper premium wage rate.

The Labor Commissioner will publish a template sample of the notice in the following months for employers to customize. Employers are encouraged to use the template to ensure compliance.

What do you think about this Statue?

Delay of NLRB Poster Requirement

UPDATE: The National Labor Relations Board (NLRB) poster requirement was postponed due to a pending lawsuit challenging the legality of the new rule.

On April 17th 2012, the U.S Court of Appeals for the District of Columbia placed a temporary hold on the implementation of the NLRB poster requirement, which was slated for launch on April 30, 2012. The delay will remain in effect until the court resolves the pending appeal in NAM V NLRB. In NAM V. NLRB, the trial court affirmed the right of the NLRB to require both unionized and non-unionized employers to post the notice.

The Court of Appeal’s decision to review the case comes just days after the U.S District Court of South Carolina ruled that the NLRB lacks the authority to mandate the posting requirement because it is outside of the Board’s jurisdiction. Employers are not required to post the NLRB notice regarding employee rights to unionize under the National Labor Relations Act (NLRA) until further notice.

According to the NLRB, the intent behind implementing the poster requirement is to increase interest in union activity among employees. This new regulation presents an opportunity for employers to inform employees about their rights and strengthen their resolution process so that employees feel comfortable approaching management without third party involvement. Employers can publicly display the notice in areas visible to all employees, regardless of whether the workplace is unionized or union-free. Additionally, employers may distribute the notice through electronic channels including email, intranet postings, and internet message boards.

The notice can be posted in English and in any other languages spoken proficiently by 20% of the employee population (if employees are not fluent in English). The NLRB provides translations of the notice in the appropriate languages via the NLRB website. Copies of the notice are available online at and at the NLRB’s regional offices. The NLRB Rule considers failure to comply with this federal statue as an “unfair labor practice” and if reported, may lead to an investigation by the NLRB.

The agriculture, railroad, and airline industries  are exempt from compliance because employers of these industries are not within the jurisdiction of the NLRB. Likewise, certain small businesses also are not required to post the notice depending on the annual gross revene of  the business.

Below is a list of industries that fall in the jurisdiction of the NRLB based on the annual  gross revene of the business.


Annual  Gross Revene Amount at which Employers Become Responsible for Compliance

Amusement industry


Apartment houses, condominiums, cooperatives


Art museums, cultural centers, libraries

$1 million



Colleges, universities, other private schools

$1 million

Communications (radio, TV, cable, telephone, telegraph)


Day care centers


Gaming industry


Nursing homes, visiting nurses associations


Hospitals, blood banks, other health care facilities including doctors’ and dentists’ offices)


Hotels and motels


Instrumentalities of interstate commerce


Law firms; legal service organizations


Newspapers (with interstate contacts)


Nonprofit charitable institutions

Depends on the entity’s substantive purpose.

Office buildings; shopping centers


Private clubs


Public utilities

$250,000 or nonretail standard.



Social services organizations


Symphony orchestras

$1 million



Transit systems


Best Practices

  • Although a record of compliance is not mandatory, it is a Best Practice solution for employers to document when, where, and how the notice was posted along with a digital photograph.
  •  Employers can also request employees to sign documentation verifying the receipt of notification.
  •  Employers can discuss the notice with management to develop a strategy on how to respond to employee questions and comments about unionization.
  •  Employers can implement an open door policy to improve communication between management and employees.

Employee Rights under NLRB Rule

  • Right to form, join, or assist labor organizations.
  • Right to self-organization.
  • Right to bargain collectively through representatives of their own choosing.
  • Right to engage in other concerted activities for the purpose of collective bargaining.
  • Right to mutual aid or protection.

Employer Rights under NLRB Rule

  • Right to express feelings about Unions with employees during designated times.
  • Right to keep Union organizers off company property and forbid Union activities during paid working time.
  • Right to prohibit Unions from using e-mail to organize employees, if all personal use of e-mail is also prohibited.
  • Right to hire permanent replacements for employees who are on strike over economic issues.
 Click to download posters

Employee Rights under NLRB Rule (Size 11x 17):

Employee Rights under NLRB Rule (Size 8.5 x 11):