An employee stock option program also enhances a company’s benefits package, without substantially increasing the employer’s benefits costs. For many employees, this can also be an excellent introduction to stock ownership. It may motivate some employees to take more interest in their retirement programs and become more confident to invest in additional securities. Employers that are contemplating an employee stock option program should meet with their financial advisor or attorney to create a balanced and legal program. Some of the details that must be determined include how much stock will be offered, how do employees qualify for the program, future stock option levels and whether the program is a permanent part of the benefits package.

Because owning stock may be a totally new experience for many employees, it’s important that all the details of a program are included in the employee handbook. An employee stock option program is also an excellent opportunity for employers to provide employees with personal finance training or seminars. From employees’ perspective, they want to understand the exact benefits, procedures and policies of owning stock in their companies. For example, they should learn that there are two forms of employee stock options: nonqualified, which the largest percentage of employees can choose, or qualified, or incentive stock options, known as ISOs, that have been created for executives.

Employee stock options can be a great employee benefit. Employers, however, should carefully develop a program that protects their interests and provides an opportunity for employees to take pride in their ownership and demonstrate that pride in the productivity and efficiency of their work.

The secret to an effective employee professional development program is that employees must have enough self-motivation to participate in a program with a positive attitude; he or she must be willing to be trained, absorb the material and apply it to their jobs.

You can help your employees find that motivation with these strategies:

• Make examples of your already self-motivated employees. Every company has some employees that don’t’ require external motivation. Not only are they self-motivated, but also will readily accept any opportunities you offer to improve their professional skills and advance in the company. As your highly motivated employees apply their new skills, those employees who require motivation will be virtually forced to participate in your employee development program to work at a higher pace or in new ways. These employees will also realize that those that have received additional training have an advantage when it comes to raises, bonuses and advancement.
• Talk with employees regularly about your development program. Don’t wait until an annual employee evaluation meeting to present, promote and discuss your program. When you do talk with employees individually don’t tell them what skills they need to improve or learn. Instead, ask them to evaluate themselves and tell you how they would improve their skills and productivity. This approach also allows you and the employee to look forward rather than at past errors or problems.
• Put yourself to the test. You’re not just a business owner and employer, but also a leader. A demonstration of your leadership is that you, other company executives and managers also participate in appropriate professional development programs. Your employee program can include a segment where you and your managers share what you’ve learned with your employees.

In the new economic climate of the 21^st century, an employee development program is an essential element of a growing, successful business being driven by highly motivated, productive, trained and rewarded employees.

Workers that are provided employee discount programs equate the value to more than 5% in additional wages according to the studies of one company in the industry. Some employees report saving as much as $1,000 a year on products and services they planned to or did purchase. Compared to most employee benefits, an employee discount program costs employers little or nothing.

Many larger companies are able to manage an employee discount program internally, but smaller businesses don’t have human resources departments or professionals to administer such a program. Because an employee discount program is a growing trend in the employee benefits field, there are now companies that specialize in serving small businesses to develop, implement and manage these programs. These employee-discount-program services companies maintain relationships with thousands of vendors and are now utilizing Internet-based systems that save even more money for employers and employees. The services companies can provide employers with tracking of the use of employee discount program, so they can be revised and updated to make the benefit even more valuable.

An employee discount program is another employee-benefits tool that small business owners can implement to be more competitive when trying to retain key employees. Employees of the smallest businesses can now benefit from similar discounts that their corporate counterparts receive, as well as discounts from local businesses.

According to a recent Hewitt Associates study, employees in the U.S. will need more than 15 times their final pay to reach their retirement goals. The upside is that this number hasn’t increased, but still more than 80% of all workers are not likely to accumulate enough financial resources to retire as they expected, especially when considering inflation and healthcare costs.

For many workers, the simple solution is to start saving, since 26 percent of eligible employees currently do not contribute to a retirement plan. For other employees, they are faced with increasing their contribution rate, regularly, and some will have to work longer, so they can save more. According to one expert, people who continue to work until age 67 are likely to reach 98% of their retirement financial goals.

Employers can have a role in helping employees improve their retirement funding, and not just by giving employees raises, bonuses and resuming or increasing 401(k) matching contributions. As the economy improves, many employers will be able to increase employee wages, etc. What many progressive employers are doing is to offer personal-finance training or advice from experts to help and encourage employees to save. This is a kind of employee benefit that is very cost-effective, since it also serves as an employee retention method.

You may or may not have eliminated the following benefits, but many companies have to survive until the economy becomes robust again.

1.     Luxury Perks: Executives and many other employees certainly enjoyed the free limo service to and from the airport, high-priced client dinners and rewards programs that included paid vacations and expensive electronic toys; however, this is one benefit that many experts think will never return.

2.     Pension Plans: This benefit had been virtually eliminated before the recession of 2009, so that event only reduced the number of plans further. In fact, studies show that only 21% of private-sector employees have defined-benefit pensions today. Most employers have replaced pension plans with 401(k)s and other retirement programs.

3.     401(k) Employer Match: This was one of the few cash-flow-reduction strategies available to employers during the recession. One research group reported that 34% of U.S. employers had reduced or eliminated their matching contributions during the period April 2008 – March 2009. It was a double-whammy for employees; their employers’ contribution to 401(k)s plummeted at the same time the weakened stock market shrank employees’ retirement accounts.

4.     Salaries, Raises and Bonuses: This is one “species” of employee benefits that many experts expect to survive, and even thrive, once the economy rebounds, although a 2099 employment trend survey indicated that more than half the companies surveyed had to cut or lock salaries. During the recession and the recovery period (which will include all of 2010 and probably much of 2011), many employees have had and will have to be content with just having a job.

5.     Educational Tuition Support: The 2009 survey of an educational group revealed that only 29% of U.S. employers offered tuition reimbursement or scholarships to recent M.B.A. graduates. Thirty-seven percent received that support during 2008. This is another double-whammy for employees (and at least a single for employers), since they can’t improve their knowledge either to qualify for advancement and a higher wage/salary with their employers or be better prepared than their competitors in the labor market if they become unemployed. Employers may have had to cut this assistance, but it doesn’t help further the education of their workforce, so it can be more productive and efficient.

6.     Holiday Parties: According to recent trends and the experts, this employee benefit is likely to go the way of the dinosaurs at many companies—never to return! While 87% of companies hosted holiday parties during 2006, the number dwindled to 81% for 2009; and another 15% said there wouldn’t be parties during 2010.

Of course, many of these employee benefits are more important and marginally necessary than others; others are nice, but unnecessary. (The expensive wining and dining of a client to “influence” him or her to sign a contract is no longer very effective.) Employers and employees must both be patient during the recovery period, and then re-assess which employee benefits will continue or be re-instituted.

In many cases, employers will choose to maintain health-insurance benefits for their employees, but how they justify that decision is based on a rather complicated calculation and specifics of the new law. Although the penalty is termed an “employer penalty” under the new law, in fact, employees are more likely to “pay” the cost.

As any economist will tell you, the number of employees working for any particular company is based on total compensation costs—wages, benefits, etc. Employers then create compensation packages according to what workers want. For example, a company with an above-average number of young female employees will probably offer various maternity-related benefits. That same economist will also state that as the cost of health care (or any) benefits increases, the amount available for wages or other compensation decreases. The opposite is also true: less dollars spent on benefits is more dollars for wages and, to remain competitive, most employers must maximize the wages they offer.

That leads to a somewhat complicated decision for employers: Does the penalty plus the additional wages employees will need to buy health insurance on the open market cost less than providing employees with full coverage (but at a lower wage)? The complication doesn’t end there, however. Remember, whatever a company contributes to the cost of employees’ insurance coverage is not taxable income, so the tax savings is also a factor in the calculation.The decision is even more complicated for employers who decide to eliminate health insurance coverage. During the out years (2014) of the health reform package, poor and some middle-class families will receive incentives to obtain health insurance. Those with an income a third more than the federal poverty level can choose to be covered through Medicaid. Other families (with incomes four times the poverty level) will receive tax credits to help pay for health care. The individual mandate will require everyone to buy insurance or face a penalty.

Various health care industry and government studies project that when the entire health care reform package takes effect (after 2014), only a very small percentage of employees will lose coverage from their employers. These studies also suggest that even though employers with mostly low-wage workers are more likely to eliminate health insurance benefits, the numbers will not be significant.

From an economic and employer point-of-view, fewer companies offering employee health insurance coverage is not necessarily a bad trend for employers or employees. Workers will be subsidized when they buy coverage on the open market and employers’ compensation packages will be more efficient, which results in attracting better employees and keeping them longer.

Many of those progressive employers base their decision on the conclusions of a recent white paper. It was prepared by a Web-based business that advises employers how to cut their taxes when they include employees’ commuter costs in their benefits packages. The white paper results include interesting data and recommendations that will help employers understand and justify this additional benefit.

• An Employee Omnibus Survey by SHRM (January 2009) shows that 39% of employees are concerned about the rising cost of commuting and would like benefits to cover or subsidize those expenses.
• Where commuter benefits have been added, the average commuter saved almost 40% of the cost of a transit ticket. In Detroit, that equates to a commuter cost of $12 per week for a two-way bus ticket.
• Employees who don’t use mass transit for various reasons can benefit instead from commute-related parking expenses, vanpools and bicycle allowances.
• For employees who can only commute by car, pre-tax benefits can be used for commute-related parking, and are available as parking vouchers, debit cards or direct payments to vendors.
• Employers can save 10% or more on payroll taxes since the employee commuting costs they pay are deducted from employer’ and employees’ taxable incomes.
• The green benefit can be expressed quantitatively, as one person switching to public transit can reduce daily carbon emissions by 20 pounds, or more than 4,800 pounds, annually.

Employers may find this special employee benefit a competitive advantage because it can improve employee retention. It’s also an important signal to employees that the company is doing its best to expand benefits, even if, in reality, it has had to reduce or freeze traditional benefits.

What is clear from the Study is that employers and employees are taking the long view and each of their benefits objectives have shifted. Employers are now more focused on controlling the cost of benefits, instead of employee retention. Improving employee productivity is another major goal of employers as a means to be more cost-effective and competitive. Having learned the wisdom of taking the long view, employees are now saving more and reducing personal debt. Although negative economic conditions are easing, employees are still concerned about their family finances and expect to continue to receive benefits from their employers as a safety net.

The Study also shares strategies that employers can implement to maximize both the quality of benefits for employees and the value of benefits for employers. For example, employers are more aware of their employees’ retirement benefit program and realize the value of making sure the program serves the needs of management and retiring/retired workers. The Study also revealed that employers have noticed that employees’ retirement plans have changed, which has helped to emphasize the value of retaining older and highly experienced employees. A secure and long-lasting retirement plan, with many options, is one of the benefits employees are looking to employers to provide as part of that safety net.

The IRS’s initiative is called the National Research Project (NRP) audit program. It will audit 2,000 randomly selected companies during each of the next three years, starting February 2010. Small and large companies, for-profit and non-profit companies, and public and private companies will be included in the study. The IRS will be looking at those companies that submitted Form 941 as well as other company records. According to the IRS, the purpose of the program is to obtain data to serve as benchmarks for a new audio selection policy. The IRS wants to learn more about worker classification, fringe benefits, non-filers and executive compensation. Another 60,000 employers can also expect regular and annual employment tax audits.

Many states are legislating new laws to examine more closely the employer/employee relationship in terms of wages and taxes to be paid. New Jersey can suspend (either temporarily or permanently) any state business licenses of an employer in violation of the state’s new statues. Maryland and Delaware have passed new legislation specifically as it relates to the construction and landscaping industries. Pennsylvania is in the process of enacting a similar law for those industries. Various fines can be assessed for employers who fail to comply.

Many (if not most) employers are familiar with the common law and the IRS and Social Security Administration’s 20-factor method to define an employee versus an independent contractor. The 20-factor method and other IRS materials on this subject are meant to serve as guidelines for employers, accountants and auditors. Interpretation of the findings of this method depends on the circumstances and the occupations being assessed. In simplest terms, a worker is considered an employee if his or her employer controls and supervises the employee’s goals and the methods the employee uses to achieve expected results. An independent contractor must only follow the directions of those contracting for his or her services in terms of the goals to be achieved. Unlike employees, independent contractors are free to choose whatever methods work best for them to provide the services promised.

Any company that utilizes the services of independent contractors would be best served to evaluate these relationships, so they don’t become targets of these new laws and their penalties.

This provision modifies the federal Fair Labor Standards Act (FLSA), including the previous rule that employees should be compensated for short rest breaks. Nursing mothers can be exempted from that compensation. In addition, employers with less than 50 employees may not be subject to this “nursing mother” provision of health care reform if it causes a hardship in the workplace.

Some state laws protect employees’ health care rights even further, including breastfeeding on the job. Employers are encouraged to determine their exact compliance of federal and state statues.