Friday, February 25, 2011

Breast Pumps and Other Lactation Supplies are Now Deductible Medical Expenses subject to Reimbursement under FSAs, HRAs and HSAs

Bryan Cave LLP Americas | Asia | Europe
To: Our Clients and Friends February 22, 2011 
IRS Reverses Course – Breast Pumps and Other Lactation Supplies are Now Deductible Medical Expenses subject to Reimbursement under FSAs, HRAs and HSAs 
In Announcement 2011-14, the Internal Revenue Service (“IRS”) concluded that breast pumps and supplies that assist lactation are medical care under Section 213(d) of the Internal Revenue Code because they are for the purpose of affecting a structure of the body of the lactating woman. Therefore, these expenses can now be reimbursed under a health flexible spending arrangement, health reimbursement arrangement or health savings account. The IRS had previously taken the position that these expenses were not eligible for reimbursement under these types of plans. In light of this change, the sponsor of one of these types of plans should consider whether a plan amendment, a summary of material modifications to participants, or both, are necessary. 

Employee Benefits & Executive Compensation
Client Service Group 
This Client Alert is published for the clients and friends of Bryan Cave LLP. Information contained herein is not to be considered as legal advice. This Client Alert may be construed as an advertisement or solicitation. © 2011 Bryan Cave LLP. All Rights Reserved. Bryan Cave LLP Americas | Asia | Europe 
Jay P. Warren (212) 541-2110
Carolyn Wolff (314) 259-2206
Serena F. Yee (314) 259-2372 
If you have any questions regarding anything discussed in this Alert, the attorneys and other professionals of the Employee Benefits and Executive Compensation group of Bryan Cave LLP are available to answer your questions. 

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. 
Bryan Cave LLP Americas | Asia | Europe 

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Does Your Organization Have an Effective Compliance and Ethics Program in Place? 
Does Your Organization Have an Effective Compliance and Ethics Program in Place? 
February 23, 2011 William E. Hunt 

We would all agree that interaction with the federal government and its regulatory agencies has become increasingly complex. Nowhere is this more evident than in the area of organizational liability for the misdeeds of corporate officers, agents, and employees. Business organizations are more frequently being held criminally responsible for the misconduct of those who act under their authority. What ultimately happens to those organizations held accountable for criminal conduct is largely determined by rules and regulations promulgated by the United States Sentencing Commission. Starting with the Sarbanes-Oxley Act of 2002, the Commission has broadened and refined is guidelines regarding organizational sentencing. SOX directed the Commission to review and amend as appropriate, the guidelines and policy statements to ensure that the guidelines that apply to organizations are sufficient to deter and punish organizational misconduct.1 The Commission has expanded its Organizational Guidelines as a result. Chapter 8 of the Sentencing Guidelines sets out in great detail, the considerations a sentencing court should undertake when determining how to sentence an organizational defendant. Key to ameliorating punishment is the existence of a viable and effective compliance and ethics program. Organizations should have in place a compliance program tailored to meet the rigorous expectations of the Commission before they come under scrutiny by the authorities. Recognizing the complexities of negotiating all of the requirements set forth in the Guidelines, the commission has now adopted a policy statement encouraging business organizations to “include the use of an outside professional advisor to ensure adequate assessment and implementation of the (compliance program).”2 An effective compliance and ethics program should be designed to prevent and detect criminal conduct, promote an organizational culture that encourages compliance with the law, and should include the following elements: 
Oversight of the program by the organization’s governing authority 
Day-to-day operational responsibility for compliance assigned to specific high level personnel with direct access to the organization’s governing authority. 
Communication of the standards set forth in the program throughout the organization 
Regular training in compliance and ethics 
A publicized system allowing confidentiality for employees reporting criminal conduct without fear of retaliation 
Periodic evaluation of the program’s effectiveness 

Business organizations should be aware of the need for an effective compliance and ethics program and should have their programs reviewed by an advisor familiar with the intricacies of the federal sentencing guidelines. The Sentencing Commission puts it best. “The prior diligence of an organization in seeking to prevent and detect criminal conduct has a direct bearing on the appropriate penalties and probation terms for the organization if it is convicted and sentenced for a criminal offense.”3 ___________________________________ (1) Sarbanes-Oxley Act, Section 805(a)(2)(5). (2) Amendment 744, Effective Nov. 1, 2010. (3) U.S.S.G. Section 8B2.1, Background Note. 

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Do NJ Employees Need to Prove Discharge Under New Jersey’s Whistleblower Law to Obtain Back and Front Pay?

Do NJ Employees Need to Prove Discharge Under New
Jersey’s Whistleblower Law to Obtain Back and Front Pay?
By: Beth Lincow Cole
The New Jersey Supreme Court will soon release its opinion in an important case concerning whether an employee can recover front and back pay or other economic damages without evidence of a constructive or actual job termination under the Conscientious Employee Protection Act (CEPA).

That law is New Jersey’s whistleblower law, which defines retaliatory behavior as “the discharge, suspension or demotion of an employee, or other adverse employment action taken against an employee in the terms and conditions of employment.” N.J.S.A. § 34:19-2(e).

In Donelson v. DuPont Chambers Works, 412 N.J. Super. 17 (App. Div. 2010), the New Jersey Appellate Division ruled that under CEPA, an employee is not entitled to front or back pay or other economic damages in the absence of a constructive or actual termination. Thus, the court found damages may not be collected if an employee leaves voluntarily. The case was argued before the New Jersey Supreme Court on October 30, 2010.

About Beth Lincow Cole
Employment Law Attorney Beth Lincow Cole has skillfully helped business owners and
managers head off the unwanted and unnecessary lawsuits that can arise in the workplace.
Drawing on her successful legal experiences both in and outside the courtroom, Beth Lincow
Cole understands how to protect employers. By developing solid pre- and post-employment
procedures for her clients, she assures that they are legally protected.
Beth Lincow Cole has worked for large regional and national law firms, focusing solely on
employment issues, on behalf of management within a wide range of industries. Whether you are
a start up company with basic questions about personnel files or a larger company with questions
about an employee’s Family Medical Leave, Beth Lincow Cole can help. Drawing on her
experiences, she counsel’s companies in the following practice areas:
• Defense in administrative agency matters such as before the DOL, EEOC, PHRC or
• Department of Labor Audits
• Discrimination
• Downsizing/Reduction in Force
• Drug Testing
• Employment Contracts and Severance Agreements
• Employment Law Compliance
• FMLA and other family leave laws
• Independent Contractors/Contingent Workforce
Please contact the firm to find out how the Law Office of Beth Lincow Cole can protect your

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Thursday, February 24, 2011


Smaller Reporting Companies Entitled to 2 Year Exemption
February 2011

As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, the Securities and Exchange Commission adopted rules governing shareholder approval of executive compensation (“say-on-pay”) and “golden parachute” arrangements. These rules give shareholders of domestic companies with shares registered for trading with the SEC advisory votes on executive compensation, the frequency of say-on-pay votes, and golden parachute compensation arrangements and require additional disclosure regarding the foregoing. 

The say-on-pay and “say-when-on-pay” rules apply to all shareholder meetings at which directors will be elected, except that a “smaller reporting company” (generally a company with less than $75 million of market value of shares held by non-affiliates) is not required to comply until January 21, 2013. 

Rules requiring enhanced disclosure and advisory votes on golden parachute arrangements apply to all merger and takeover filings after April 25, 2011, and affect all related SEC filed forms, including proxy statements, Rule 13e-3 Transaction Statements, and Schedule TO filings. 

The say-on-pay and say-when-on-pay votes do not require a preliminary proxy filing or apply to foreign private issuers. “Say on Pay” and “Say When on Pay” An issuer required to comply with the say-on-pay rules must hold an advisory vote of its shareholders not less frequently than once every three years and, every six years, must hold an advisory vote regarding the frequency of its say-on-pay votes. 

The rules do not include any specific language or form for the resolutions to be adopted, although the say-on-pay resolution must reference the compensation disclosed in accordance with SEC rules (including the Compensation Disclosure and Analysis ). Correspondingly, the CD&A must discuss whether and to what extent the issuer has taken into account the results of the most recent say-on-pay vote in determining compensation policies and decisions. Additional disclosure in the proxy materials of the reasons for and effect and frequency of the various votes under the new rules also is required. 

Regarding say-when-on-pay votes, the rules require the form of proxy to give shareholders a choice among one, two, or three years or to abstain. The SEC has expanded the Form 8-K requirement to report shareholder voting results to include the say-on-pay and say-when-on-pay votes and also requires the issuer within 150 days after a meeting at which a say-when-on-pay vote was held to amend the Form 8-K reporting the outcome of that vote to disclose the issuer’s decision in light of that vote regarding how frequently it will conduct say-on-pay votes. 

Golden Parachute Arrangements Under the new rules, companies must provide additional disclosure regarding executive compensation arrangements in connection with change-in-control transactions – for both the acquiror and the target – in narrative and tabular formats. Intended to ensure that such information is available to shareholders no matter how the transaction is structured, the rules are expansive in defining the transactions to which they apply, including mergers, acquisitions, consolidations, and proposed sales or other dispositions of all or substantially all of an issuer’s assets. In addition to expanded disclosure, companies must now also provide a separate shareholder advisory vote on these golden parachute arrangements.

Loeb & Loeb's Financial Reform Task Force monitors key issues surrounding approval of the Dodd-Frank Wall Street Reform and Consumer Protection Act that are relevant to a broad spectrum of firm clients in the financial services industry. The multidisciplinary Task Force is comprised of attorneys across core practice areas - including general corporate, private equity, securities, mergers and acquisitions, consumer protection and banking and finance - who are focused on analyzing the historic legislation and interpreting the significant business implications for financial institutions and commercial companies nationwide. For more information about the content of this alert, please feel free to contact any member of our Financial Reform Task Force.

This client alert is a publication of Loeb & Loeb LLP and is intended to provide information on recent legal developments. This client alert does not create or continue an attorney client relationship nor should it be construed as legal advice or an opinion on specific situations.
Circular 230 Disclosure: To assure compliance with Treasury Department rules governing tax practice, we inform you that any advice (including in any attachment) (1) was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty that may be imposed on the taxpayer, and (2) may not be used in connection with  promoting, marketing or recommending to another person any transaction or matter addressed herein.

This publication may constitute "Attorney Advertising" under the New York Rules of Professional Conduct and under the law of other jurisdictions.
© 2011 Loeb & Loeb LLP. All rights reserved.

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Slalom Consulting to expand after 'phenomenal year'

Slalom Consulting to expand after 'phenomenal year'
Posted on Tuesday, February 22, 2011 5:57:10 PM GMT   |   Post a comment
AUTHOR: Sam Reynolds

This morning, the folks at Slalom Consulting made public the company's financial results for fiscal year 2010. After a highly successful year, the firm has reported "record revenue" of $209 million and an employee headcount just north of 1,000 for the first time. John Tobin, co-founder and national general manager of the Seattle-based IT and strategy outfit, was keen to hail the year as a positive omen for more record-breaking achievements to come. "We had a phenomenal year," Tobin said in a press release. "I couldn't be happier with our team's performance. During difficult economic times, we really stepped up and delivered on our mission to help our clients win on their most strategic initiatives."

Slalom's $209 million revenue haul marks a 46 percent increase from revenue in 2009, a remarkable increase for a firm of its size. Slalom has grown rapidly since its conception in 2001, hitting the 1,000 employee mark midway through 2010, and firm execs see last year's superb performance as a jumping-off point for further growth. In fact, this morning's press release asserts that Slalom "is expecting to hire more than 400 new employees in 2011."

Not only will consulting candidates see a nationwide roll-out effort from Slalom recruiters this year, the firm has targeted New York City as the site of a soon-to-be headquarters on the East Coast for this traditionally Western consultancy. The release confirms: "Slalom plans to continue its geographic expansion strategy by opening a New York office in 2011."

This round of good news from the Slalom camp is but the latest development in the firm's rise from anti-Big Four start-up (co-founder Tobin is an ex-Ernst & Young consultant) to darling consultancy; in just ten years the firm has garnered an impressive collection of industry awards, with its unique local (nearly 100 percent travel free) consulting model drawing attention from Consulting Magazine and, of course, Vault. CEO Brad Jackson reserved special praise for company culture, which he believes is a major factor in Slalom's meteoric rise. "I am thrilled to see the aggressive investments we are making in building solutions that will help our Fortune 500 clients implement their strategies," he said of the financial results. "We are truly creating a one-of-a-kind business model where our clients, employees, families, friends, strategic partners and communities all win."
About the Author
Sam Reynolds is Vault's consulting editor, covering the latest news and trends affecting the consulting industry, as well as providing insight and thoughtful discussion. Formerly a newspaper writer and reporter, Sam graduated from the College of Charleston with a BA in English.
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Wednesday, February 23, 2011

Tax Benefits for Job Seekers

Tax Benefits for Job Seekers
February 18, 2011
Nobody likes preparing their taxes (and if you do, search for tax accountant jobs now!), but they're one of the many inevitable pains of life, like going to the dentist or paying road tolls. While we can't make the process disappear, we can help job seekers and anyone who dealt with job loss last year understand what can and can't be deducted as a job search expense on your tax return. 
By now, you should have received your W-2 and other tax forms in the mail so it's time to get cracking. Before you begin, make sure you have all of your important documents together. This year, the IRS has partnered with a number of companies to provide free filing services to taxpayers who meet eligibility requirements, found at

What you CAN deduct:
-    Employment and outplacement agency fees that you pay while looking for a job in your current occupation. Note that if an employer pays you back for those fees a year later, you must include that amount in your adjusted gross income up to the amount of your tax benefit for the previous year.
-    Any money spent preparing and mailing copies of your resume to prospective employers, as long as you're looking for a job in your present occupation.
-    Traveling expenses to and from an interview or area, but only if the trip is to look for a new job in your present occupation. You can use the standard business mileage rate of 50 cents per mile to figure your car expenses.
-    Long distance phone calls to potential employers while looking for a job in your current occupation.
-    Legal fees related to doing or keeping your job
-    Annual licensing or regulatory fees for your trade, business or profession

If you haven't caught it yet, you may only deduct job search expenses while looking for a job in your current occupation.

What you CAN'T deduct:
-    Any expenses related to looking for a job in a new occupation
-    Clothing or other grooming (hair cut, manicures, etc.) expenses to prepare for an interview
-    A home office used for your job search
-    Expenses and fees for classes taken to learn new skills outside of your current occupation
-    You may not deduct job search expenses if there was a substantial break between the end of your last job and the beginning of a job search
-    You can't deduct job search expenses if you're looking for a job for the first time

See the IRS Publication 529 for more information about what job search expenses can and can’t be deducted.

For those dealing with a job loss:
-    Severance pay, unemployment compensation are taxable, as well as payments for any accumulated vacation or sick time (See IRS Publication 17 for more info.)
-    Unemployment insurance benefits up to 26 weeks are taxable, as well as your extended benefits up to an additional 13 weeks (See IRS Publication 525 for more info.)
-    Withdrawals from your pension plan are taxable unless they are transferred to a qualified plan, such as an IRA (See IRS Publication 575 for more info.)
-    Moving costs from a change in your job location may be deductible, though it depends on certain criteria, such as the distance moved and timing of the move (See IRS Publication 521 for more info.)

True, taxes can be difficult, but there are benefits for job seekers who were actively looking for a new job in their occupation. Hopefully these tips can help you maximize your 2010 tax return.

DISCLAIMER: All information was found on the IRS website. If you have questions or are uncertain about any of the above points, please contact the Internal Revenue Service or a legal aid. This post is for guidance only.

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Monday, February 21, 2011

Help Soldiers Get Back to Work (PART 3- FINAL: How to Handle Employees Who Are Called to Active Military Duty)

Help Soldiers Get Back to Work (PART 3- FINAL)
Federal law guarantees reemployment for those serving in the Reserves and National Guard, but the transition from battlefield to workplace can be fraught with difficulties not addressed in any policy manual.
By Vince Winkel | Mar 21, 2005 

Citizen soldiers returning from Iraq, Afghanistan and elsewhere are no doubt relieved to find their civilian jobs waiting for them. But while federal law guarantees reemployment for those serving in the Reserves and National Guard, the transition from battlefield to workplace can be fraught with difficulties not addressed in any policy manual.

Many employers and soldiers will soon be entering this uncharted territory. Of the 1.2 million people serving in the Reserves and National Guard, 400,000 have been mobilized since September 11, 2001, with 140,000 of them currently serving in Iraq and elsewhere, according to the US Department of Defense.

"It's a hardship on everyone -- the employer, the employee and temporary workers," explains Angelika Lamie, a senior master sergeant with the Montana Air Guard. "When [employers] have an employee called to active duty, most of the questions are about what the law is."

That law is the Uniformed Services Employment and Reemployment Rights Act (USERRA). It was passed by Congress in 1994 to provide reemployment protection and other benefits to those engaged in military service. Now, for the first time since its passage, the Department of Labor has issued proposed regulations interpreting employer responsibilities under USERRA. These provide reemployment rights to veterans and reservists returning from active duty and require that reservists and service members returning from active duty to their previous civilian employers be given all the benefits of employment as if they had been continuously employed.

Employers Doing Their Part

US Department of Defense officials say that overall, employers are doing their part during these difficult times. "They are doing a tremendous job," says Dave Patel of the National Committee for Employer Support of the Guard and Reserve (ESGR) in Washington, an agency within the Office of the Assistant Secretary of Defense for Reserve Affairs. "Hundreds of employers are going above the requirements of USERRA. They are really supporting what our Guard and Reserve folks are doing in Iraq."

But Patel still has concerns over some issues veterans returning to the workplace face, such as post-traumatic stress disorder. The National Center for Post-Traumatic Stress Disorder in Washington says that issue could affect more than 30 percent of combat veterans. "It’s hard for those who have never served to understand the mind-set," Patel explains. "And most HR professionals in this country don’t have a great understanding of post-traumatic stress." With modern travel, a reservist can be in Baghdad Friday and back in his hometown by Sunday. But that doesn’t mean he should be back at the job on Monday, Patel says.

How to Help 

The most important thing for employers to remember is that returning to work is a radical shift, experts say. Some soldiers have spent months at war, encountering life-and-death situations on a daily basis. Some have seen their close friends and comrades killed or seriously injured. When they return to civilian work, it’s a big adjustment.

The best thing to do? Don’t rush them back into the workplace. Other tips: 

1. Welcome reservists back with open arms and make them feel like valuable members of the workforce.
2. Give them time to reestablish family relationships.
3. Be careful about comments and questions about their military experiences, especially if they were involved in combat.
4. By the same token, respect privacy. If soldiers wish to discuss their experiences, let them; if they don’t, don’t pursue it.
5. Familiarize yourself with the USERRA.
It's clear that an increasing number of employers will need to be up to speed on USERRA-related issues. After more than three years of extended deployments and uncertain futures for Reserve and Guard troops, the Pentagon is now considering even longer tours of duty.

Where to Get Help - Where should you look for support? Here are several options:
Employer Support of the Guard and Reserve (ESGR), (800) 336-4590. This agency is eager to work with employers and help answer questions about USERRA.
The Department of Labor, (866) 487-WAGE. This site includes a thorough explanation of USERRA, as well as a help section to address questions and concerns.
Military One Source, (800) 342-9647, offers support for employees if they return to civilian life and need financial counseling or help with other issues.

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Brave New Policy: Extensive Benefits For Military Reservists Should you cover dependent health care for deployed troops? (PART 2)

Brave New Policy: Extensive Benefits For Military Reservists Should you cover dependent health care for deployed troops? (PART 2: How to Handle Employees Who Are Called to Active Military Duty)
By Stephanie Clifford |      @stephcliff       | Sept. 1, 2006  
The Idea When the Iraq war started, Tom Holcom, president of Pioneer Financial Services, knew some of his employees would be called up. His Kansas City, Missouri, company sells financial products, like loans, to members of the military. Thirty percent of the staff are either current or former members of the military or they have spouses who are. Holcom thought Pioneer should offer generous benefits to deployed troops, even at a substantial cost.

Any Precedents? Employers are required by law to rehire reservists when they return from duty, at the same salary, seniority, and benefits. Some companies go beyond that: Wachovia pays soldiers on active duty their full salary, plus benefits, even while they are deployed. Toyota Motor Sales U.S.A. covers the difference between a worker's military and civilian salaries. Not every employer handles the situation well, however. The Department of Defense received 3,845 complaints from reservists last year, most of them related to disputes between employers and soldiers concerning returning to work, pay rate, or an allegation of discrimination.

The Pros Pioneer's military-heavy staff would surely appreciate it if the company provided superior treatment for deployed military personnel, plus there would be an obvious marketing benefit.

The Cons Providing additional benefits is always costly, and would be in this case, even if only a handful of Pioneer's employees were deployed.

The Decision Pioneer convened groups of military spouses and retired military members to ask them what benefits would help most during deployments. These suggestions were synthesized into a set of generous policies, which Holcom okay-ed. First, Pioneer provides workers with a paid vacation week before they are sent overseas. Then, during a deployment, the company pays workers the greater of the difference in salary or $2,000 a year for two years. Pioneer also continues to pay 80 percent of workers' health insurance so they won't have to switch policies. The firm covers a family's Internet and cell phone expenses and installs Web cams in homes. An HR rep checks in with each family monthly and sends holiday cards and care packages to soldiers and their families. Finally, when soldiers return to work, profit sharing is re-instituted as if they had never left.

The Outcome Good, though costly. Holcom estimates he spends more than $100,000 a year on the program for the four reservists currently overseas. But Pioneer's good deeds have not gone unnoticed. The company has won an award from the Department of Defense, and has convinced several area companies to adopt similar policies.

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How to Handle Employees Who Are Called to Active Military Duty (PART 1)

How to Handle Employees Who Are Called to Active Military Duty (PART 1)
February 21, 2011 11:45:00 AM EST

At the center of every business is perhaps its greatest asset: employees. The contributions provided by each member are essential to keeping your company afloat. And some of the most dedicated members of your team also serve as Guard and Reserve members.

"They bring a professionalism to the workplace," says Art Yerecic, president of Yerecic Label, a New Kensington, Pennsylvania-based packing label company. "There's a lot of pluses that they bring to an organization, [such as] self-discipline. They understand the chain of command and teamwork."

There are thousands of military employees, and veterans, working for civilian establishments nationwide, but what do you do when one of them is called to active duty? These four tips can help make the transition process for your company and your service employee a smooth one.

How to Handle Employees Who Are Called to Active Military Duty: Know the Law

As an employer, you're required under the Uniformed Services Employment and Reemployment Rights Act (USERRA) to follow certain laws regarding the care of your military employees, the bulk of which mandates employment and reemployment rights and, in some cases, benefits to employees who take leave from work to perform military service.

"In 2003, right after September 11, I was called to active duty on a Homeland Security mission," says retired Staff Sgt. Brian Hurst, who's currently vice president of manufacturing at Yerecic Label and has worked there for 18 years. "It was supposed to be a one-year mission but turned into a two-year mission. "

While your human resources team should know the extensive details of USERRA, understanding the demands of your services employees often leads to a stronger working relationship.

USERRA, enacted in 1994, protects job rights and benefits for veterans and Guard and Reserve members. The U.S. Department of Labor, Veterans Employment and Training Services (VETS) created a website that provides answers to all of the questions you, or your military employees, may have. From posters to summaries, to fact sheets and FAQs, the DOL site is the first place a business owner should go for assistance. The USERRA Advisor is an interactive website, also a part of the DOL webpage, which includes two clear categories, labeled Employer Issues and Employee Issues, making it easy to navigate through.

These are three key facts every employer should know about how USERRA effects their business.
According to USERRA, an employer is required to:
• Provide employees a notice of their rights and benefits under USERRA. It is up to the discretion of the employer in determining how to do so (e.g. Posting fact sheets, sending e-mails, etc.)
• Ensure the reemployment of a uniformed worker's position upon their return from performing military service. This law lasts for five years.
• Continue providing health-plan coverage for up to 24 months, if applicable, for the service employee and their dependents while he or she is serving.

Still, sometimes you'll find it necessary, depending on the circumstance, to deal with each leave of absence on a case-by-case basis. If you're unsure about anything, call your local VETS office.

"[Our] general practice is to create our policies by interpreting statutes in a way most beneficial to the employee," says Chris Galy, director of talent acquisition and military network leader at Intuit, a software company located in Mountain View, California. "So conflicts rarely arise."

But if they do, the Employer Support of the Guard and Reserve (ESGR), an organization within the Department of Defense, serves as the middleman between you and your service employees.

"We do provide neutral mediation if issues can't be easily resolved," says Mandi Rumble, ESGR's public service specialist, who admits that the organization's main mission is to support service member and their families.

How to Handle Employees Who Are Called to Active Military Duty: Develop a Policy

Military duty can often be spontaneous, extended and frequent, so your best bet is to create a policy as a reference point for all of your staff to follow. Granted most of your guidelines will more than likely mirror the UESRRA, but it's crucial to a have a clear set of instructions to help troubleshoot any procedural issues.

Southern Company, based in Atlanta, Georgia and is one of the Southwest's largest energy companies. Valerie Hendrickson, the company's spokesman, says, "More than 12 percent of our current population have served or are serving. We have a dedicated human resources call center, who provide detailed process and procedural-based information regarding our military employees."

Like Southern Company, which has two sets of policies on the topic located on the company's internal website, the University of Notre Dame, an independent, national Catholic university located in Notre Dame, Indiana, has also crafted a policy seperate from UESRRA. These types of policies often stipulate:

• Pay eligibility
• The ability to use vacation time or personal days
• Benefits during leave
• The details of reinstatement
• Notification requirements and procedures
• How leave should be reported on time cards
• Hiring replacement staff

Intuit, a company with more than 7,000 employees, focuses on training its staff early on. "Educating employees of their rights and benefits begins during our new hire orientation," Galy says, "and extends throughout their tenure with Intuit through the support of their leadership teams and our human resources team. Where questions do come up, the Department of Labor, Department of Veterans Affairs, and the ESGR are all great resources."

How to Handle Employees Who Are Called to Active Military Duty: Prepare for the Readjustment
Priming your staff for the absence of an employee for an extended period of time can be difficult without a plan.

"The challenge is primarily felt at the small team level, where the loss of an employee for six months to a year can be disruptive," Galy says. "[We] offer managers coaching and support in reorganizing around their work so that we can optimize their team's effectiveness."

One of the easiest ways to prepare for the readjustment is to plan ahead. In most cases, service members are informed of their pending leave date. It's their job, under UESRRA, to give you a written or verbal notice. When that happens, that's your cue to start planning. Whether you have to bring in someone new or train your current staff, take advantage of the last few workdays, or weeks, you have with your service employee.

"On my first deployment, prior to leaving, I spent three months [training] the guy who was going to replace me," Hurst says.

How to Handle Employees Who Are Called to Active Military Duty: Show Support

As difficult as it is to readjust your company after an employee leaves, it's nothing compared to the transition from staff member to soldier.

Companies like Intuit, Southern Company and Yerecic Label are a few examples of businesses that go above and beyond to support military employees. These companies, along with more than 58,000 others, have signed statements of support with the ESGR to do everything possible to employ, encourage and aid Guard and Reserve service members and their families.

What sets these three companies apart for the rest is the fact that they're all recipients of the 2010 Freedom Award, the highest Department of Defense award given to only 15 employers a year.

"These are companies that go well above what the law requires," Rumble says. "They're not just doing little things; they are doing highly supportive, highly motivated things for these service members."

In 2008, Hurst and two other employees at Yerecic were deployed to Iraq. They were gone for 13 months. Yerecic continued their full pay and benefits for the duration of their leave. Unrequired gestures such as that is what motivates military employees to nominate their company for the Freedom Award in the first place.

You may not be able to do much but sending a care package, an e-mail or providing family support speaks volumes for your employee.

"Understanding what a citizen soldier goes through is a big help," says Hurst, who retired after serving 16 years in the Army National Guard and four in the Marine Corps. "One day you're wearing a tie and shirt to work and the next you're wearing fatigues—that's a big shock."

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Saturday, February 19, 2011

More IRS Rumblings About Rollovers as Business Start-Ups

 More IRS Rumblings About Rollovers as Business Start-Ups 
2/16/2011 Justin W. Stemple 
Rollovers as Business Start-Ups – affectionately referred to by the IRS as ROBS – are arrangements in which someone uses existing retirement funds to purchase a business without taking a taxable distribution from an IRA or retirement plan. In many cases the retirement funds are the only significant source of personal assets that an entrepreneur has available to fund the acquisition of a business. ROBS may be structured in a way that complies with IRS regulations; however, over the past few years the IRS has made it very clear that it will closely scrutinize ROBS for compliance. 
In the past year the IRS initiated a ROBS project to identify common compliance failures, to identify noncompliant ROBS and to design compliance strategies. The project focused on ROBS that applied for and received an IRS determination letter on the form of their retirement plan but did not file a Form 5500 annual report. The IRS contacted the plan sponsors and requested certain recordkeeping and administrative information, including: 
Whether the plan continues to exist 
Whether contributions had been made 
Information on the rollover of assets into the ROBS plan 
Participant information 
Stock valuation and stock purchase records 
General business information 
Why no Form 5500 was filed 

The preliminary results of the ROBS project showed that there have been some ROBS success stories where the acquired business was sustainable; however, the IRS found that most had failed or were on the way to failing. The arrangements led to a very high rate of bankruptcy, both personal and business. In those cases the entrepreneur lost both the business and the retirement savings. 
The IRS also reported the common compliance failures that it found with ROBS: 
Plan sponsors failed to file Form 5500. The IRS found many plan sponsors believed they were exempt from the Form 5500 filing requirement because of an exemption for single individual plans with assets under a certain dollar amount. That exemption does not apply when the plan itself, through its employer stock investments, owns the business. 
After the initial employer stock investment, plans were amended to prevent other participants from purchasing employer stock, which may be discriminatory. 
Plan sponsors failed to value the employer stock in the ROBS plan. 
Plan sponsors failed to file Form 1099-R for rollovers into the ROBS plans. 
ROBS arrangements are often an attractive source of funds for potential small business owners, but they must be implemented and administered carefully to remain in compliance with IRS regulations. The ROBS project is ongoing and we will keep you apprised of new developments. In the meantime, if you have a ROBS arrangement or are considering one, you need to be aware that the risk of these arrangements is higher than ever and maintaining the plan in compliance with IRS requirements has become more important than ever. 
Please contact us if you would like to discuss ROBS arrangements. 
Legal Updates by JD Supra

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Tuesday, February 15, 2011

Key Components of a Business Plan

PRESENTED BY: Executive Leadership, LLC 
SPECIALIZING IN: Changing Careers/ Career Transformation & Executive Development / Coaching

Key Components of a Business Plan
by Dan Lavinsky

A good business plan has ten key components. Providing a comprehensive assessment of each of these components is critical in attracting investors.

1. Executive Summary. The Executive Summary provides a succinct synopsis of the business plan, and highlights the key points raised within. The Executive Summary must communicate to the prospective investor the size and scope of the market opportunity, the venture’s business and profitability model, and how the resources/skills/strategic positioning of the Company’s management team make it uniquely qualified to execute the plan. The Executive Summary must be compelling, easy-to-read, and no longer than 2-4 pages.
2. Company Analysis. This section provides a strategic overview of the company and describes how the company is organized, what products and services it offers/will offer, and goes into further detail on the company’s unique qualifications in serving its target markets.
3. Industry Analysis. This section evaluates the playing field in which the company will be competing, and includes well-structured answers to key market research questions such as the following:
What are the sizes of the target market segments? 
What are the trends for the industry as a whole? 
With what other industries do your services compete?
4. Analysis of Customers. The Customer Analysis section assesses the customer segment(s) that the company serves. In this section, the company must convey the needs of its target customers. It must then show how its products and services satisfy these needs to an extent that the customer will pay for them
5. Analysis of Competition. This section defines the competitive landscape of your business. It identifies who the direct and indirect competitors are, assesses their strengths and weaknesses and delineates your company’s competitive advantages.
The first five sections of a business plan are critical because in most cases, investors will not read the full plan. As such, winning the investor’s interest early is critical. In addition to providing background on the full business opportunity, these sections provide the market research to back up the business’ potential, another critical factor in gaining an investment.
The first five components of a business plan provide an overview of the business opportunity and market research to support it. The remaining five components of the plan focus mainly on strategy, primarily the marketing, operational, financial and management strategies that that firm will employ. This following details these elements.
6. Marketing Plan. The marketing plan details your strategy for penetrating the target markets. Key components include the following:
   A description of the company’s desired strategic positioning
   Detailed descriptions of the company’s product and service offerings and potential product extensions
   Descriptions of the company’s desired image and branding strategy
   Descriptions of the company’s promotional strategies
   An overview of the company’s pricing strategies
   A description of current and potential strategic marketing partnerships/ alliances

7. Operations/Design and Development Plans. These sections detail the internal strategies for building the venture from concept to reality, and include answers to the following questions:
   What functions will be required to run the business?
   What milestones must be reached before the venture can be launched?
   How will quality be controlled?

8. Management Team. The Management Team section demonstrates that the company has the required human resources to be successful. The business plan must answer questions including:
   Who are the key management personnel and what are their backgrounds? What management additions will be required to make the business a success?
   Who are the other investors and/or shareholders, if any?
   Who comprises the Board of Directors and/or Board of Advisors?
   Who are the professional advisors (e.g., lawyer, accounting firm). 
9. Financial Plan. The Financial Plan involves the development of the company’s revenue and profitability model. It includes detailed explanations of the key assumptions used in building the model, sensitivity analysis on key revenue and cost variables, and description of comparable valuations for existing companies with similar business models.
In addition, the financial plan assesses the amount of capital the firm needs, the proposed use of these funds, and the expected future earnings. It includes Projected Income Statements, Balance Sheets and Cash Flow Statements, broken out quarterly for the first two years, and annually for years 1-5. Importantly, all of the assumptions and projections in the financial plan must flow from and be supported by the descriptions and explanations offered in the other sections of the plan. The Financial Plan is where the entrepreneur communicates how he/she plans to “monetize” the overall vision for the new venture.
10. Appendix. The Appendix is used to support the rest of the business plan. Every business plan should have a full set of financial projections in the Appendix, with the summary of these financials in the Executive Summary and the Financial Plan. Other documentation that could appear in the Appendix includes technical drawings, partnership and/or customer letters, expanded competitor reviews and/or customer lists.
Expertly and comprehensively discussing these components of an business plan helps entrepreneurs to better understand their business opportunity and assists them in convincing investors that the opportunity may be right for them too.
About the Author:
As President of Growthink Business Plans, Dave Lavinsky has helped the company become one of the premier business plan development firms. Since its inception, Growthink has developed over 200 business plans. Growthink clients have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share.