AI is changing that equation.

According to a new Harvard Business Review report, small businesses are not just increasing their use of AI tools. They are also rethinking how they hire, train, and retain people in response. In fact, 76% of surveyed organizations say they plan to increase their use of AI over the next 12 months, and 79% say AI is driving the need to upskill existing talent.

That should be a wake-up call for small business owners.

The real AI challenge is not just choosing the right software. It is building a workforce that can actually use it well.

The first problem: most SMBs are not fully prepared

The report found that only 19% of respondents say their organization is highly prepared to acquire the AI talent and skills it needs. At the same time, 56% expect difficulty determining what AI skills their organization actually needs, and 49% expect difficulty training or upskilling employees on AI.

That is an important point.

For many small businesses, the biggest obstacle is not lack of interest. It is a lack of clarity.

Owners and leaders know AI matters. What they are less sure about is:

• which roles need AI skills first
• what level of skill matters
• whether to hire new talent or train existing staff
• how to balance technical skills with human judgment

That uncertainty is exactly why many businesses freeze or delay.

The second problem: chasing “AI talent” is not enough

One of the most useful takeaways from the report is that small businesses do not necessarily need to hire pure AI specialists first.

When asked what AI-related skills will be in highest demand over the next two years, respondents pointed first to practical capability:

• experience using AI tools to accomplish tasks
• knowledge of how to implement AI across the organization
• data literacy

That matters because it shifts the conversation from “Who can build AI?” to “Who can use AI effectively in the real world?”

Even more telling, when asked which kind of new hire they would prioritize, 52% chose a candidate with strong relevant industry experience over someone with mostly AI experience. Only 7% said they would prioritize a candidate with a lot of AI knowledge and experience.

That is a big insight for small businesses.

Most SMBs will get more value from employees who understand the business deeply and can apply AI with sound judgment than from someone who only brings technical skills.

Human skills are becoming more valuable, not less

The report also found that 70% of respondents believe AI is driving the need for creativity, intuition, and discernment.

This is one of the most overlooked parts of the AI conversation.

As AI becomes more embedded in everyday work, businesses will need people who can:

• ask better questions
• spot weak outputs
• understand context
• make judgment calls
• protect customer relationships and company culture

In other words, AI is increasing the value of distinctly human strengths.

For small businesses, that is good news. SMBs often win because of relationships, expertise, agility, and hands-on decision-making. Those strengths become even more important in an AI-enabled workplace.

Upskilling is the real competitive advantage

If small businesses cannot outspend larger employers for scarce AI talent, what can they do?

They can train the people they already have.

The report points out that practical, lower-cost learning options can still make a difference, including hands-on experimentation, free courses, and lighter training formats. It also emphasizes that many organizations are reworking how they develop employees because of AI.

That is a much more realistic path for many SMBs.

You do not need to send every employee to an expensive certification program. But you do need a plan.

That plan might include:

• identifying the 2–3 roles where AI could make the biggest difference
• giving those employees time and permission to experiment
• offering basic training on AI tools, prompting, privacy, and accuracy
• helping managers understand how AI changes workflows and expectations
• deciding where human review must stay in place

Cloud-based HR software often provides learning management tools where you can deliver AI upskilling courses to your team. 

Small businesses may actually have the advantage

One of the most encouraging ideas in the report is that SMBs may be better positioned than large companies in one critical area: speed.

The report notes that smaller businesses are often more agile and able to implement new iterations of AI, experiment with use cases, and adjust talent strategies more quickly.

That agility matters.

Large enterprises may have more money, but they also tend to move more slowly. Small businesses can often test faster, adapt faster, and train faster — if they are willing to act.

That means the real opportunity is not trying to beat large employers at their own game. It is building a faster, smarter, more adaptable talent strategy.

What small businesses should do next

If you are a small business owner or leader, here are the practical questions to ask now:

1. Where could AI realistically improve speed, quality, or consistency in our business?
2. Which current employees could be trained to use AI better in those areas?
3. What human strengths do we need to preserve as AI expands?
4. Are we hiring for buzzwords, or for business judgment and adaptability?
5. Do our managers understand how AI is changing roles, expectations, and development needs?
6. Do we have a clear AI policy to mitigate employer liability? 

The businesses that benefit most from AI will not be the ones that panic-hire a few expensive specialists.

They will be the ones that:

• get clear on real use cases
• build skills internally
• hire for judgment and adaptability
• move quickly enough to learn and adjust

That is the new talent playbook.

For small businesses, the goal is not to outspend larger competitors on AI talent.

It is to out-adapt them.

Book a free consultation > 

Clint Parry, MBA, SHRM-SCP is the Business Development Manager at Focus HR. Based in Arizona, Clint works with growing companies to help them turn HR from an administrative burden into a strategic advantage.

The post How AI is Rewriting the SMB Talent Playbook appeared first on Focus HR Inc..

That boundary is quickly dissolving.

Today, financial wellness is shifting from a retirement-only benefit to a whole-person financial strategy. Employers are increasingly recognizing that financial stress is a workplace issue, not just a personal one. They are responding by expanding their total rewards beyond retirement savings to include personalized financial wellness support and they are doing it because it directly improves productivity, retention, and organizational resilience.

Financial wellness is no longer a niche perk. It is becoming a core element of workforce strategy.

The Hidden Cost of Financial Stress

The push toward holistic financial wellness isn’t simply about being a more compassionate employer. It’s a direct response to a growing workforce crisis that is materially impacting business performance.

According to PwC’s 2026 Employee Financial Wellness Survey:

• 59% of full-time employees are stressed about their finances
• 44% say inflation has had a major or severe impact on their financial situation
• More than half of workers have less than $5,000 in emergency savings

Recent 2026 workforce research paints an even more urgent picture for employers managing hourly and frontline teams.

According to The State of Financial Wellness in 2026 report from Tapcheck:

• 78% of workers report feeling financially strained between paychecks
• 85% say they have expenses that cannot wait until payday
• 34% say they cannot make ends meet with their current income

The report also found:

• 79% have less than $2,000 in savings
• 50% do not have retirement savings at all
• 49% carry credit card debt
• 65% carry student loan debt

This is the reality many employees are navigating before they even think about retirement planning.

Employees are not just worried about the future. They are worried about this week.

Gas. Groceries. Rent. Childcare. Utilities. Medical bills.

And when employees are financially overwhelmed, the impact follows them into the workplace.

Financial Stress Is Quietly Hurting Business Performance

The business impact of financial stress is substantial:

• One in three employees says money worries hurt productivity
• Financially stressed employees are nearly five times more likely to be distracted at work
• Financially stressed employees are twice as likely to be actively job hunting
• 73% say they are more attracted to employers that care about their financial wellbeing

The 2026 Tapcheck report also found that employees with access to on-demand pay and financial wellness tools showed measurable improvements in retention and engagement:

• 75% said access to on-demand pay encouraged them to pick up extra shifts
• 62% said they were more likely to apply to a company offering financial flexibility benefits
• 34% said they would consider leaving their current employer for one that offered them

In one employer case study, employees using financial wellness/pay access tools showed a 23% retention boost. Another employer saw retention rates nearly 4.8x higher among employees actively using these programs.

When you look at those numbers through the lens of recruiting costs, turnover, absenteeism, and burnout, financial stress becomes more than an employee issue.

It becomes a business risk hiding in plain sight.

Why the Old Benefits Model Is No Longer Enough

The traditional approach to financial wellness — offering a retirement plan and perhaps a budgeting app buried inside a benefits portal — is quickly becoming outdated.

Employees increasingly need help with:

• Emergency savings
• Debt management
• Day-to-day cash flow
• Healthcare expenses
• Financial education
• Housing affordability
• Retirement readiness
• Caregiving costs

SHRM and broader HR industry reporting in 2026 show a major shift toward integrated financial wellness strategies as employers compete for talent and try to stabilize their workforce amid ongoing economic pressure.

Forward-thinking employers are moving beyond standalone benefits and creating more connected, personalized employee support systems that combine:

• Retirement planning
• Financial coaching
• On-demand pay access
• Flexible benefits
• Healthcare cost education
• Employee assistance resources
• Digital self-service tools

The goal is no longer just helping employees retire someday.

It’s helping them stay financially stable enough to perform well today.

The Rise of Personalized Financial Wellness

As Emily Bailey, President of the East Region at OneDigital, recently noted regarding the changing benefits landscape:

“Financial wellness isn’t a budgeting app in the benefits portal. It’s a coordinated, personalized advisory relationship that helps employees make better decisions across their entire financial life — retirement, healthcare costs, housing, caregiving, income protection.”

Employers are responding quickly.

According to CNBC and EBRI, 70% of employers offered some form of financial wellness initiative in 2025, up significantly from previous years.

The employers gaining a competitive advantage are those connecting financial wellness directly into the employee experience — instead of treating it as a disconnected HR add-on.

That includes:

• Personalized financial education
• Early wage access
• Emergency savings tools
• Integrated retirement planning
• Benefit navigation support
• Financial coaching
• Digital employee self-service platforms

What This Means for Small Businesses

Many small business owners assume these kinds of financial wellness strategies are reserved for large corporations with massive HR departments.

That’s no longer true.

Modern HR technology and outsourced HR partnerships now allow small and mid-sized businesses to offer sophisticated financial wellness tools without building everything internally.

Smart employers in 2026 are increasingly integrating financial wellness into their broader HR and workforce strategy through:

• Modern Human Capital Management (HCM) platforms
• Payroll-integrated financial wellness tools
• Flexible pay solutions
• Benefits education
• Employee self-service technology
• Outsourced HR support
• Data-driven workforce planning

The result?

Employees feel more supported, employers reduce turnover pressure, and HR teams spend less time reacting to workforce stress and more time focusing on growth and culture.

If your business is reviewing benefits strategy, payroll systems, employee retention initiatives, or workforce engagement for 2026, now is the time to evaluate whether your current HR and benefits approach truly supports the realities employees are facing today.

Book a free consultation > 

Clint Parry, MBA, SHRM-SCP is the Business Development Manager at Focus HR. Based in Arizona, Clint works with growing companies to help them turn HR from an administrative burden into a strategic advantage.

The post Why a 401(k) is No Longer Enough: The Shift to Holistic Financial Wellness appeared first on Focus HR Inc..

But if you think 2026 is going to be just another standard renewal year, you need to look at the data.

According to recent projections from Mercer, the total health benefit cost per employee is expected to rise 6.5% on average in 2026, the highest increase since 2010. And for the small group market, the outlook is even steeper. The Kaiser Family Foundation (KFF) reports that small businesses could face a median premium increase of 11% in 2026.

To put that in perspective, the average annual premium for employer-sponsored family health coverage reached nearly $27,000 in 2025, with workers contributing $6,850 out of pocket.  An 11% jump on top of those numbers isn’t just an annoyance, it’s a threat to profitability.

The era of “wait and see” benefits planning is over. If you aren’t actively managing your health care strategy right now, you are already behind.

The Perfect Storm Driving Your Premiums Up

Why the sudden spike? It’s not just general inflation. We are facing a perfect storm of cost drivers that are hitting the small group market particularly hard:

• The GLP-1 Explosion: Specialty medications, particularly GLP-1 drugs used for diabetes and weight loss (like Ozempic and Wegovy), are driving massive pharmacy spend. These drugs are expensive, widely used, and creating major financial exposure for employer plans.
• Industry Consolidation: Hospital systems and health care providers are consolidating, which reduces competition. Less competition means higher prices for care, and insurers are passing those costs directly to you.
• Labor Shortages in Health Care: The ongoing shortage of health care workers means hospitals are paying more to attract and retain staff, further driving up the baseline cost of medical care.
• Market Instability: As costs rise, fewer healthy small businesses are buying traditional group plans, leaving a risk pool with higher average health care needs. This instability makes the small group market more expensive for everyone left in it.

The “Do Nothing” Tax

Doing nothing is a decision, and it’s the most expensive one you can make.

When you wait until 30 days before your renewal to look at your options, you have no leverage. You are forced to either swallow the 11% increase, slash benefits to save money, or shift the burden onto your employees. In fact, since 2010, deductibles have risen by 164% for single coverage plans as employers desperately try to offset premium hikes.

But pushing the cost onto employees has a hidden, secondary consequence: it suppresses wages. Recent surveys from the Federal Reserve Bank of New York suggest that employers are responding to higher insurance costs by scaling back pay increases.

This creates a dangerous cycle for small businesses. If your benefits are shrinking and your wage growth is stagnating, how do you expect to retain top talent?

The data shows many small businesses are simply giving up. According to Experian, only 64% of businesses with 25 to 49 employees offer health benefits today, the lowest level ever recorded.

How to Fight Back: The Strategic Employer’s Playbook

You cannot control the macroeconomic forces driving up health care costs. But you can control how your business responds. The businesses that stay in the game (and win the war for talent) are the ones that fight back strategically.

Here is how:

1. Stop Treating Benefits Like a Transaction

Benefits are not a commodity you buy off a shelf once a year; they are a core component of your human capital strategy. You need to understand what is actually driving your specific claims data. Are your costs spiking because of specialty drugs? High emergency room utilization? You can’t fix what you don’t understand.

2. Proactive Plan Design Actually Works

According to the Business Group on Health, employers predict health care cost trend increases for 2026 will come in at a median of 9%, but that number falls to 7.6% when proactive plan design changes are implemented. Strategic changes—not just slashing coverage—can materially alter your trajectory.

3. Leverage the Power of a Partnership

This is where the game changes for small businesses. You don’t have to navigate this alone. By partnering with a firm like Focus HR (backed by the national resources and purchasing power of OneDigital), you gain access to the kind of strategic benefits consulting, cost-containment strategies, and alternative funding models (like level-funded plans) usually reserved for Fortune 500 companies.

We can help you evaluate pharmacy benefit management controls, explore innovative plan designs, and implement wellness initiatives that actually move the needle on costs.

Don’t wait for the renewal letter to arrive.

Contact Focus HR today to get a head start on your 2026 benefits strategy and explore how our HCM solution can help you contain costs without compromising on care.

Book a free consultation > 

Clint Parry, MBA, SHRM-SCP is the Business Development Manager at Focus HR. Based in Arizona, Clint works with growing companies to help them turn HR from an administrative burden into a strategic advantage.

The post 11% is Just the Beginning: Why Small Businesses Can’t Afford to “Wait and See” on Health Premiums appeared first on Focus HR Inc..

“People are job hopping. Loyalty is dead. If you don’t keep up, they’ll leave.”

But in 2026, something surprising is happening.

Employees aren’t leaving as much as you think.

They’re staying.

And that should worry you more.

The Shift: From Job-Hopping to “Job Hugging”

There’s a new workplace trend emerging: job hugging.

Employees are holding onto their current roles, not because they’re fulfilled, but because they feel uncertain about what’s next.

Economic pressure, layoffs in certain sectors, and rising living costs have changed behavior.

People are thinking:

• “Better the job I know than the risk I don’t.”
• “Now’s not the time to gamble.”

But here’s the problem:

Job hugging looks like retention, but it’s not engagement.

According to a 2026 global engagement report:

• Only 26% of employees are engaged
• Just 25% feel genuinely appreciated
• Less than half see a long-term future with their employer

So while employees are staying…

They’re not necessarily invested.

The Hidden Risk for Small Businesses

Job hugging creates a false sense of security.

Your turnover might look healthy.
Your roles might be filled.
Your team might seem stable.

But underneath:

• Motivation is dropping
• Productivity is inconsistent
• Initiative disappears
• Culture quietly weakens

This is retention without commitment.

And it’s fragile.

Because the moment confidence returns to the market (or a better offer appears) those same employees will move quickly.

Why “Job Huggers” Still Leave

Even employees who are playing it safe have a tipping point.

When they do leave, the reasons are predictable:

• Better pay
• Better benefits
• More flexibility
• Clear career growth

The data shows:

• 69% leave for better pay
• 47% for better benefits

But those are just the triggers.

The real issue builds over time:

• Feeling undervalued
• Lack of recognition
• Weak leadership connection
• No clear path forward

Job huggers don’t leave suddenly.

They leave when something finally gives them a reason to.

The Engagement Gap: Where Businesses Are Losing

Here’s the uncomfortable truth:

Most businesses don’t have a retention problem.

They have an appreciation and connection problem.

Employees who feel appreciated are:

• 12x more likely to find work meaningful
• 17x more likely to see a long-term future

And yet only 1 in 4 employees feel that way.

That’s the gap.

Don’t Mistake Stability for Strength

If your team isn’t leaving, that’s not necessarily a sign everything is working.

In 2026, the real question isn’t “Are people staying?”
It’s “Are they engaged, supported, and set up to succeed?”

Because job hugging is temporary.
Engagement is what lasts.

This is where many small businesses get stuck—caught between rising expectations, limited time, and increasing HR complexity.

The businesses that move forward are the ones that step back, reassess, and build a more intentional approach to their people strategy.

If you’re heading into 2026 and unsure whether your HR, leadership, and employee experience are truly aligned (or just “holding together”) it’s worth taking a closer look.

At Focus HR, we help small businesses move beyond reactive HR and build the structure, support, and strategy needed to retain the right people for the right reasons.

If you’re ready to strengthen engagement, reduce risk, and build a team that actually wants to stay, start with a conversation.

Book a free consultation > 

Clint Parry, MBA, SHRM-SCP is the Business Development Manager at Focus HR. Based in Arizona, Clint works with growing companies to help them turn HR from an administrative burden into a strategic advantage.

The post The Retention Myth: Why Your Employees Aren’t Leaving (Yet) appeared first on Focus HR Inc..

The focus is no longer just on updating the language in your plan documents; it’s about proving your systems actually work. From payroll feeds to recordkeeping, auditors and controllers are now scrutinizing the “how” behind your retirement plan data. Whether it’s managing the new Roth catch-up mandates or tracking long-term, part-time eligibility, the margin for error is shrinking.

For many SMBs, these HR and payroll pain points are becoming acute. This guide breaks down the critical 2026 milestones, the practical steps to take right now, and how Focus HR can help you navigate this transition with confidence—turning a compliance burden into a competitive advantage.

At‑a‑Glance: Key SECURE 2.0 Milestones for 2026

On top of SECURE 2.0, a fast‑growing number of states now require many private‑sector employers to either offer a qualified retirement plan or enroll employees in a state‑run program. As of early 2026, states with active or phased‑in mandates include California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Minnesota, New Jersey, Nevada, New York, Oregon, Rhode Island, Vermont, Virginia, Massachusetts and Washington.

These programs typically operate as automatic‑enrollment Roth IRAs with default deferral rates (often around 3–5%) and auto‑escalation, with penalties for employers that ignore registration or contribution deadlines. For multi‑state SMBs, that means retirement compliance is now a two‑layer issue: you must satisfy SECURE 2.0 at the federal level and, in mandate states, either:

• Prove you offer a qualifying employer‑sponsored plan (such as a 401(k)), or
• Register and participate in the applicable state program.

The New Era of Operational Audits

SECURE 2.0 doesn’t expressly change audit standards, but in practice it is driving more intensive operational scrutiny from auditors and fiduciaries because of the added complexity around payroll feeds, eligibility tracking, and Roth treatment of catch‑up contributions.

Auditors and plan fiduciaries are increasingly focused on:

• How your payroll system feeds compensation and deferral data to your recordkeeper
• Whether you are correctly applying plan compensation definitions for contribution and testing purposes
• Whether eligibility (especially for part‑timers and new hires under auto‑enrollment) is being applied on time and consistently
• How your systems identify and treat Roth versus pre‑tax deferrals, including catch‑up contributions for higher‑earning employees

That scrutiny raises both your risk profile and your documentation expectations. SMBs that rely on manual workarounds or disconnected systems are the ones most likely to see findings, corrections, or avoidable penalties.

1. Tackle Mandatory Roth Catch‑Up Contributions

Beginning January 1, 2026, SECURE 2.0 changes the rules for catch‑up contributions made by certain higher‑earning employees age 50 or older. For these employees, catch‑up contributions must generally be made as Roth (after‑tax) contributions.

In practice:

• The rule applies to employees age 50+ whose FICA wages in the preceding calendar year exceed the statutory SECURE 2.0 ‘high-earner’ threshold (145,000 dollars in the statute, indexed annually; the exact dollar amount for 2026 will depend on IRS inflation adjustments)
• If your plan does not offer Roth contributions, affected employees will effectively lose the ability to make catch‑up contributions once the rule is in force.

The final IRS regulations treat the statutory requirement as effective January 1, 2026, but generally apply the detailed regulatory framework beginning in 2027. For 2026, employers are expected to follow a reasonable, good‑faith interpretation of the statute, not simply ignore it and wait.

Your Action Plan

• Review your plan now. Confirm whether your 401(k)/403(b) plan currently allows designated Roth contributions. If it does not, coordinate with your advisor and recordkeeper to add a Roth feature as soon as possible.
• Update payroll and HR systems. Configure your systems to:
  • Look back at prior‑year FICA wages to identify employees over the high‑earner threshold.
  • Automatically treat their age‑50+ catch‑up contributions as Roth contributions starting in 2026.
• Align communications. Update employee communications and enrollment materials so higher‑earning participants understand that their catch‑up contributions will be Roth and what that means for their taxes and retirement strategy.

2. Address Automatic Enrollment Mandates

For 401(k) and 403(b) plans established after December 29, 2022, SECURE 2.0 generally requires automatic enrollment and automatic escalation for plan years beginning after 2024. These provisions are designed to boost participation, but they also introduce real operational complexity.

Key points:

• New plans must automatically enroll eligible employees at a default deferral rate between 3% and 10% of compensation.
• The default rate must automatically increase at least 1% per year until it reaches at least 10%, but not more than 15%.
• Certain plans are grandfathered (for example, those established before December 29, 2022) or exempt (such as some small and new businesses, SIMPLE plans, and certain church/governmental plans), but mergers and acquisitions can complicate grandfathered status.

Your Action Plan

• Confirm your plan’s status. Verify whether your plan is grandfathered or subject to the new automatic enrollment and escalation rules. Pay special attention if you’ve merged plans or completed an acquisition.
• Leverage available tax credits. Eligible small employers may also qualify for a dedicated $500 per‑year tax credit for three years when they add an automatic‑enrollment feature, on top of the separate startup plan tax credit that can be worth up to $5,000 per year for new plans.
• Use the correction safe harbor. SECURE 2.0 enhances the safe harbor for fixing automatic enrollment and automatic escalation failures. If you discover that employees should have been auto‑enrolled or auto‑escalated but were not, you may correct the failure without making full make‑up contributions for missed deferrals if:
  • Correct deferrals begin within 9½ months after the end of the plan year in which the error occurred, and
  • You provide a timely notice (generally within 45 days of starting correct deferrals).

Getting these mechanics right is a classic “HR/payroll meets benefits” project: your systems must be able to identify who should be auto‑enrolled, at what rate, and when increases should apply.

3. Master Long‑Term, Part‑Time Employee Tracking

SECURE 2.0 expands retirement plan access for long‑term, part‑time (LTPT) employees, building on and modifying earlier SECURE 1.0 rules. For plan years beginning in 2025 and beyond, employees working at least 500 hours in two consecutive years must generally be allowed to make elective deferrals, even if they do not meet your normal service‑based eligibility rules.

This creates a multi‑year tracking requirement that many SMEs are not currently set up to handle.

Your Action Plan

• Audit your historical data. Confirm that your payroll system can track and report hours of service across multiple years, and identify employees who have met the 500‑hours‑for‑two‑years standard.
• Flag and enroll LTPT employees. Build processes to:
  • Automatically flag LTPT employees as they become eligible.
  • Offer them enrollment and begin deferrals on a timely basis.
• Coordinate with your recordkeeper. Ensure that eligibility data and hire/rehire dates are flowing cleanly between payroll and your recordkeeper, so plan operations and documents match.

How Focus HR Streamlines Your SECURE 2.0 Compliance

Navigating SECURE 2.0 is not just a legal exercise; it’s a systems and workflow challenge that touches HR, payroll, and finance every pay period. This is where a dedicated HR and payroll partner can make a measurable difference.

At Focus HR, we specialize in turning complex compliance demands into practical, repeatable processes.

Fiduciary Support and Expert Plan Management

We offer access to a Multiple Employer Plan (MEP) 401(k) structure in which Focus HR serves as a 3(16) plan administrator and 3(38) investment fiduciary. That means we assume key administrative and investment‑related fiduciary responsibilities, helping reduce your day‑to‑day burden while keeping the plan aligned with evolving SECURE 2.0 requirements.

Seamless Payroll and HRIS Integration

Our integrated HRIS platform unites payroll, benefits, and retirement plan administration in a single system. That integration helps:

• Track prior‑year wages to identify high‑earning employees subject to the Roth catch‑up rules
• Monitor hours over multiple years to ensure LTPT employees become eligible on time
• Reduce manual rekeying and reconciliation between payroll and the recordkeeper, lowering the risk of operational errors that auditors will flag

Keeping You on Track for Key Deadlines

Our team of certified professionals monitors legislative and IRS guidance so your plan documents and operations are updated by the applicable SECURE 2.0 deadlines. We work with you to:

• Map which SECURE 2.0 provisions apply to your plan
• Implement necessary operational changes in payroll and HRIS
• Coordinate timely plan amendments, including items with general 2026 deadlines and those with later amendment dates under IRS Required Amendments guidance

With a strong client‑retention track record, our focus is on building a compliance framework that supports your long‑term goals: attracting and retaining talent, offering competitive retirement benefits, and avoiding costly, time‑consuming corrections.

Turn 2026 Pressure into a Strategic Advantage

The “2026 Crunch” is real, but it doesn’t have to be chaotic. While the legislation adds layers of complexity, it also offers a unique opportunity to modernize your benefits. By acting now, you aren’t just avoiding penalties—you’re building a more attractive, automated, and inclusive workplace.

By getting ahead of the Roth catch-up mandate and mastering auto-enrollment today, you protect your high-earners from surprises and leverage valuable tax credits that benefit your bottom line. With Focus HR as your partner, SECURE 2.0 stops being a regulatory hurdle and starts being a catalyst for a stronger people strategy.

Don’t wait until the December deadline is at your doorstep. Let’s ensure your systems are ready for the scrutiny of 2026 and beyond.

Ready to simplify your compliance?

Book a brief conversation with Clint Parry here to see how Focus HR can take the retirement burden off your plate.

The post SECURE 2.0: Your 2026 Compliance Crunch Time is Here appeared first on Focus HR Inc..

Health care costs are climbing again. Specialty drugs are reshaping pharmacy spend. Federal legislation is changing tax-advantaged accounts. Employees expect flexibility, mental health support, and family benefits — not just a basic health plan.

Benefits are no longer an administrative task.

They are a competitive strategy.

Here’s what small business owners need to know about the biggest benefits trends shaping 2026 and how to respond without blowing up your budget.

1. Health Care Costs Are Rising, Again

Projections show health care costs increasing between 6.5% and 10%+ in 2026, depending on industry and region. For small employers, that’s significant.

The biggest drivers include:

• GLP-1 medications (used for diabetes and weight loss)
• Specialty and biologic drugs
• Cancer treatments and cell/gene therapies
• Ongoing medical inflation and provider labor costs

Employers typically absorb most of these increases. But many are reaching a breaking point.

What Small Businesses Should Do

• Start renewal conversations earlier than usual.
• Analyze claims data before making plan design changes.
• Consider level-funded or alternative funding strategies where appropriate.
• Evaluate pharmacy benefit management and formulary controls.
• Communicate clearly with employees about cost drivers.

Waiting until renewal week limits your options.

2. GLP-1 Medications Are Forcing Tough Coverage Decisions

GLP-1 drugs like semaglutide and tirzepatide are driving massive pharmacy spend. Around 12% of Americans report using them for weight loss, and prescriptions have tripled since 2020.

With costs averaging $1,000 per month per employee, long-term coverage creates major financial exposure for small employers.

In 2026, the first oral GLP-1 therapies are entering the market, and more than 100 obesity-related drugs are in clinical development.

This is not a short-term trend.

The Real Question for Employers

Do you cover weight-loss GLP-1s?
If yes, under what criteria?
If no, how do you communicate that decision?

There is no universal answer, but there must be a strategy.

3. Legislative Changes Are Expanding Benefit Planning Options

The One Big Beautiful Bill Act (OBBBA) introduces several changes effective January 1, 2026:

• Expanded HSA eligibility for individuals using Direct Primary Care (DPC)
• Increased dependent care FSA limits
• New tax-advantaged savings accounts for children (“Trump Accounts”)
• Expiration of enhanced ACA subsidies

For small businesses, this means new opportunities — and new compliance considerations.

Smart Move

Review:

• HSA eligibility policies
• FSA limits and employee communications
• Payroll system updates for contribution changes
• Long-term impact of ACA subsidy expiration on workforce demographics

Benefits compliance in 2026 is not “set it and forget it.”

4. Specialty Drugs and Advanced Therapies Are Reshaping Plans

Nearly 80% of new FDA approvals now fall into specialty categories.

This includes:

• Biologics
• Biosimilars
• CAR-T and gene therapies
• Advanced cancer treatments

While biosimilars may offer cost relief over time, specialty drugs continue to dominate plan spend.

For small employers, even one high-cost claim can materially impact renewal rates.

Practical Strategy

• Review stop-loss coverage levels.
• Evaluate specialty pharmacy management.
• Ask your broker or advisor how risk pooling is structured.
• Explore cost-containment strategies without harming employee care.

Ignoring specialty trends is not an option in 2026.

5. Mental Health Is Now a Core Benefit — Not a Perk

Burnout and emotional strain remain high. Research shows:

• 76% of employees report at least one symptom of burnout.
• Depression alone costs U.S. employers billions annually in lost productivity.

Mental health support is now expected, especially by Millennials and Gen Z.

Common additions in 2026 include:

• Telebehavioral health access
• Expanded EAP programs
• Manager training to identify burnout
• Flexible schedules to reduce stress
• Wellness stipends or mindfulness tools

The ROI is real. The World Health Organization estimates a 4:1 return on mental health investment.

6. Family and Fertility Benefits Are Expanding

With infertility affecting roughly 9–11% of reproductive-age adults, demand for fertility coverage continues to rise.

In 2026, employers may offer:

• Fertility coverage as an excepted benefit
• HSA-compatible fertility reimbursements
• IVF support options
• Caregiver and eldercare assistance
• Enhanced parental leave policies

Even small employers are finding ways to offer targeted family benefits to stay competitive.

7. Personalization and Flexibility Are Driving Retention

The “one-size-fits-all” benefits model is fading.

Employees increasingly want to choose benefits aligned with their life stage:

• Younger workers may prioritize mental health or student loan support.
• Parents may prioritize childcare or expanded health coverage.
• Mid-career professionals may focus on retirement and financial wellness.

Small businesses that allow some level of benefit customization often see stronger retention and engagement.

Benefits Are Now Strategic

In 2026, benefits are no longer just about compliance or checking a box during renewal season.

They impact:

• Recruiting
• Retention
• Productivity
• Culture
• Financial stability
• Risk exposure

Small businesses that approach benefits reactively often face:

• Sudden premium spikes
• Employee dissatisfaction
• Coverage gaps
• Compliance exposure
• Budget surprises

Those who plan proactively gain leverage.

What Small Businesses Should Be Asking Right Now

1. Do we truly understand what’s driving our health care costs?
2. Are we communicating benefits clearly and strategically?
3. Are we using the right funding model?
4. Are we competitive — without overspending?
5. Are we positioned for regulatory changes in 2026?

Benefits are not just a cost center.

Handled correctly, they are a stability engine.

Small businesses cannot outspend large corporations on benefits.

But they can out-strategize them.

Thoughtful plan design, smart funding decisions, proactive compliance, and employee-focused communication can turn benefits from a financial strain into a competitive advantage.

If 2026 is going to bring higher costs and higher expectations, the solution isn’t panic. It’s planning.

If you want to get ahead before your renewal, Focus HR can help explore benefits plan options. Get in touch today.

The post Small Business Benefits in 2026: What’s Changing — and What Smart Employers Are Doing About It appeared first on Focus HR Inc..

On paper, you might think you’re “covered” because you have a broker for health insurance and a plan provider for your 401(k). In reality? Much of the heavy lifting lands right back in your lap. And the complexity multiplies with every employee, policy, and compliance requirement you take on.

The Hassles of Benefits Administration

Brokers are great at designing plans and negotiating rates, but usually not built for day-to-day maintenance. That burden typically falls to the employer. If you’re the one managing benefits, here’s what that often looks like: 

• Open enrollment headaches – running meetings, chasing paperwork, and fielding questions.
  
• Employee life changes – handling plan changes for marriage, divorce, or birth, etc.
  
• Ongoing questions – “I lost my insurance card,” “How do I file a claim?” “Am I eligible for coverage yet?”
  
• COBRA administration – allows temporary maintenance of employer-provided health insurance after job loss or reduced hours, usually for 18-36 months
  
• Compliance paperwork – 1094 and 1095 generation, Section 125 Plan rules, 5500 preparation.
  
• Billing and reconciliation – auditing invoices across medical, dental, vision, and ancillary plans.

Multiply this across multiple plans and dozens of employees, and suddenly benefits administration becomes a full-time job. As we wrote in When Benefits Go Sideways: The Hidden Risk of Broker-Led Benefits Administration, relying on brokers alone can expose you to costly errors.

The Complexities of 401(k) Plans

401(k) plans add another layer of complexity — and risk. Employers are responsible for:

• Eligibility and contribution tracking
• Nondiscrimination testing
• Loan disbursements and distributions
• Investment reviews
• Payroll integration and remittance
• Compliance notices and Form 5500 filings
  

And here’s the kicker: as a plan sponsor, you may also carry fiduciary liability. Under ERISA, fiduciaries can be held personally liable for mismanagement, putting your personal assets at risk.

Why Outsourcing Beats DIY

The truth is, most small businesses don’t have the expertise or bandwidth to manage benefits and retirement plans effectively. Internal staff may wear many hats, but they’re rarely specialists in this space.

That’s where outsourcing changes the game. At Focus HR, we:

• Provide full benefits administration—from open enrollment meetings to COBRA tracking to invoice audits. (see: A True Employee Benefits Administration Solution)
  
• Serve as both the 3(16) administrative fiduciary and 3(38) investment fiduciary on retirement plans, taking liability off your plate.
  
• Deliver a streamlined employee benefits portal for elections and information.
  
• Field employee questions directly, so you don’t have to play middleman.

Instead of juggling employees, vendors and paperwork, you can simply say: “Call Focus HR.”  We handle the rest.

The Bottom Line

Benefits and retirement plans should be a competitive advantage, not a source of stress. But when managed in-house, they too often create inefficiency, wasted time, and unnecessary risk.

So as year-end approaches and you plan for 2026, ask yourself: Are you spending more time managing benefits and 401(k) compliance than growing your business?

If the answer is yes, it might be time to rethink your approach.

 Request a Free Consultation

The post Overcoming the Hassle of Small Business Benefits & 401(k) Administration appeared first on Focus HR Inc..

During a recent onboarding process, our team uncovered a number of benefit-related discrepancies that serve as a cautionary tale—not because anyone involved wasn’t doing their job, but because no one had full visibility across the entire system. It’s a situation we see more often than we’d like, and it highlights just how easy it is for errors to slip through the cracks when oversight is fragmented.

What we found

As our Implementation team reviewed benefit deduction and plan information, they discovered:

• Incorrect deduction amounts
• Mismatched or missing plan codes
• Employees assigned to the wrong plans
• Inaccurate benefit contributions in payroll

These weren’t just minor slip-ups. Left unaddressed, these errors can lead to:

• Incorrect W-2s and tax filings
• Employee confusion or mistrust in their benefits
• Difficult conversations with brokers, bookkeepers, and employees
• Unplanned rework during year-end or audit periods

It’s not just about numbers not lining up—it’s about the experience your team has with your business. When employees see a deduction they weren’t expecting or worry that their coverage is wrong, it undermines confidence and leads to unnecessary stress.

Why These Errors Happen

In setups where benefits are managed externally, businesses often rely on multiple parties—HR, payroll, brokers, and bookkeepers—to manually transfer and cross-check information. But with no centralized system or oversight, mistakes can go unnoticed until it’s too late.

At the heart of the issue is a simple gap: no one is asking the critical questions:

• Are the deductions showing correctly in payroll?
• Do they align with the plan documents?
• Are the enrollments and plan tiers accurate?
• Are these deductions correct based on eligibility rules and rates?
• Will these benefit deductions be reflected correctly on W-2s?

When a broker isn’t integrated with your payroll system, they often can’t answer these questions. And unless your bookkeeper is reviewing benefit data line-by-line against plan rules, these issues may not surface until year-end—or an employee points them out.

And by that point, the damage is done.

There’s a Better Way

At Focus HR, our approach is different—by design. We don’t just drop your benefit selections into payroll and hope for the best. Instead, our all-in-one HR platform integrates benefits enrollment, payroll, and employee records in one place. Here’s how we improve the benefits experience:

• The benefits enrollment engine is built directly into the HR platform
• Deduction data feeds automatically into payroll—no manual entry
• Employees can access their benefits and deduction info 24/7 in their self-service portal
• We conduct a monthly audit of all benefit carrier invoices to monitor for inconsistencies and flag issues before they escalate

This level of oversight eliminates many of the common pitfalls we saw in this client’s setup. It creates a cleaner, more accurate experience for your business and your team.

The Real Cost of Complexity

When benefits are handled by third parties with little visibility into payroll or HR operations, complexity creeps in. And with complexity comes risk—of errors, noncompliance, rework, and employee dissatisfaction.

Just a few of the consequences include:

• W-2s that don’t match reality
• Employee confusion over coverage and deductions
• Time-consuming rework at year-end
• Strained relationships between HR, finance, and outside vendors

It’s a hidden cost that can quietly erode your operations—and your people’s confidence in them.

Simplify Your Benefits, Simplify Your Business

If your broker can’t tell you whether your payroll deductions match your plan documents—or whether your employees are on the right tier—you might have a problem. 

At Focus HR, we don’t just manage benefits—we ensure they’re accurate, compliant, and fully aligned with your payroll. It’s all about reducing risk, increasing transparency, and delivering a better employee experience.

We specialize in simplifying the complex. From compliance to benefits to payroll, our integrated platform and hands-on support take the stress out of HR—so you can focus on what really matters: growing your business.

The post When Benefits Go Sideways: The Hidden Risk of Broker-Led Benefits Administration appeared first on Focus HR Inc..

The SECURE Act 2.0 includes a provision that allows victims of domestic abuse to access their retirement funds without the usual 10% early withdrawal penalty. This is a crucial lifeline for individuals facing financial hardship due to abusive situations. Specifically, victims can withdraw up to $10,000 or 50% of their retirement savings (whichever is less) without that penalty. While the withdrawal is still subject to income tax, this provision offers immediate financial relief, enabling victims to escape abusive environments without the added burden of financial penalties.

Why This Matters to Your Business

Supporting employees during crises isn’t just a moral imperative; it makes good business sense. A safe and supportive workplace boosts employee retention, morale, and productivity. Small businesses often foster close relationships with employees, and if a team member is experiencing domestic abuse, knowing about this provision can be a powerful way to offer support. It allows HR professionals to have empathetic conversations with employees, offering guidance on accessing retirement funds and connecting them with other crucial resources.

The Stark Reality: Domestic Violence Statistics

The statistics surrounding domestic violence are alarming and underscore the importance of this provision:

• Nearly 3 in 10 women and 1 in 10 men have experienced rape, physical violence, or stalking by a partner with significant impacts on their lives.
• 1 in 4 women and 1 in 7 men have experienced severe physical violence by an intimate partner.
• Intimate partner violence affects over 12 million people annually in the U.S.

These numbers highlight that domestic violence isn’t a fringe issue; it could be impacting someone in your workplace right now. Whether the abuse is physical, emotional, or financial, its consequences can significantly affect an employee’s performance and well-being.

Creating a Culture of Support

As an employer, you can go beyond simply being aware of the SECURE Act 2.0. Here’s how to cultivate a supportive environment:

• Education is Key: Ensure your team is aware of the SECURE Act 2.0 and other relevant resources. Utilize various communication channels, from educational materials and seminars to one-on-one discussions with HR.
• Open Communication: Foster a workplace where employees feel safe discussing personal struggles. A designated support person in HR can provide a listening ear, offer guidance, and connect employees with external resources.
• Holistic Support: Go beyond retirement withdrawals. Offer financial counseling, connections to domestic violence shelters, and legal assistance.
• Recognize the Signs: Train managers and supervisors to recognize potential signs of domestic abuse, such as changes in behavior, performance, or attendance. This training should also emphasize a sensitive and supportive approach.
  

The Human Element

Ultimately, supporting employees during difficult times is about showing you care. It’s about building a culture of empathy and trust. Small business owners often play a mentoring role for their employees. Understanding provisions like the SECURE Act 2.0 allows you to offer tangible support when it’s needed most, making your team feel valued and empowered. Given the prevalence of domestic violence, it’s highly likely that some of your employees are facing these challenges. Being knowledgeable about available resources, including this crucial provision within the SECURE Act 2.0, allows you to be a true ally.

Arizona Domestic Violence Resources:

1. Arizona Coalition to End Sexual and Domestic Violence (ACESDV)
   • Website: www.acesdv.org
   • ACESDV offers advocacy, support, and resources to survivors of domestic violence. They work on a state-wide level to provide education, policy advocacy, and direct support to victims.
2. National Domestic Violence Hotline – Arizona
   • Phone: 1-800-799-SAFE (1-800-799-7233)
   • Website: www.thehotline.org
   • The Hotline offers confidential support and crisis intervention. It’s available 24/7 and helps victims with safety planning, finding shelters, and legal advice.
3. Emerge
   • Phone: (520) 795-4266
   • Website: emergecenter.org
   • Emerge Center Against Domestic Abuse provides critical services such as crisis intervention, safety planning and emergency shelter to support families as they rebuild their lives.
4. Sojourner Center
   • Phone: (602) 244-0089
   • Website: www.sojournercenter.org
   • Sojourner Center provides shelter, housing assistance, legal support, and counseling services for those affected by domestic violence. They also offer a children’s program to support young survivors.
5. Safe Nest
   • Phone: 1-877-354-0883
   • Website: www.safenest.org
   • Although based in Nevada, Safe Nest provides valuable resources for Arizona residents as well, including a hotline for victims and access to shelters and relocation assistance.

The post SECURE Act 2.0: A Lifeline for Domestic Violence Survivors (and Why it Should Matter to Every Small Business Owner) appeared first on Focus HR Inc..

Here’s the eye-opener: studies show poor mental health costs the global economy a staggering $16 trillion by 2030. That’s trillion, with a “T.”  And for businesses, the cost is just as real, with untreated depression costing nearly $10,000 per employee each year.

So, what can you do?  This guide will explore the surprising truth about mental health in the workplace, the hidden costs of neglecting it, and most importantly, specific actions you can take to cultivate a thriving, supportive environment for your team.

Let’s stop accidentally sabotaging your business and its most valuable asset: your people.

The Do’s:

Studies show that 57 percent of workers are more loyal, productive and take less time off when employers support their mental well-being. Here’s how you can do it: 

1. Promote Open Communication
   • Encourage Dialogue: Create a culture where employees feel safe to talk about their mental health without fear of stigma or repercussions. This can be facilitated through regular check-ins, mental health days, and open forums for discussion.
   • Train Managers: Equip managers with the skills to recognize signs of mental distress and respond appropriately. Training can include identifying symptoms of stress, anxiety, and depression, and knowing how to have supportive conversations.
2. Provide Resources and Support
   • Provide Resources: Offer access to mental health resources, such as Employee Assistance Programs (EAPs), counseling services, and mental health hotlines. Ensure employees know how to access these resources confidentially. Even if you are a small business who cannot afford an EAP, there are a lot of local or online services available you can make your employees aware of. 
   • Mental Health Days: Allow employees to take time off specifically for mental health reasons, similar to sick days.
   • Workshops and Seminars: Consider hosting occasional workshops or seminars on stress management, mindfulness, and other mental health topics. These sessions can equip employees with tools to manage their mental health effectively.
3. Foster Work-Life Balance
   • Encourage Time Off: Promote the use of vacation days and personal time off to prevent burnout. Ensure employees understand the importance of taking breaks to recharge.
   • Limit Overtime: Avoid excessive overtime demands, which can contribute to stress and burnout. Encourage employees to set boundaries and maintain a healthy work-life balance.
4. Regularly Assess and Improve
   • Surveys and Feedback: Conduct regular surveys to gauge the mental health of employees and use the feedback to make necessary adjustments in policies and practices.
   • Ongoing Training: Provide continuous education on mental health to keep all employees informed and aware of how to maintain their well-being and support their colleagues.
5. Build a Positive Work Culture

• Recognition and Appreciation: Regularly acknowledge and appreciate employees’ contributions. Positive reinforcement can boost morale and create a supportive atmosphere.
• Team Building Activities: Organize team-building activities and social events to foster a sense of community and belonging among employees.

6. Confidentiality and Respect
   • Privacy Protection: Handle all mental health issues with the utmost confidentiality. Ensure that any information shared by employees is protected and only disclosed with their consent.
   • Respect Individual Needs: Recognize that each employee’s experience with mental health is unique. Tailor support and accommodations to meet individual needs effectively.

The Don’ts:

1. Avoid Stigmatizing Mental Health
   • Negative Language: Refrain from using stigmatizing language or making assumptions about an employee’s capabilities based on their mental health status.
   • Dismissive Attitude: Never dismiss an employee’s mental health concerns or treat them as less serious than physical health issues.
2. Don’t Ignore Warning Signs
   • Early Intervention: Pay attention to early signs of mental health issues, such as changes in behavior, productivity, or attendance. Ignoring these signs can lead to more severe problems down the line.
   • Inaction: Failing to act on reported issues can exacerbate the situation. Always take employee concerns seriously and respond promptly.
3. Avoid Overstepping Boundaries
   • Respect Autonomy: Do not pry into employees’ personal lives or force them to disclose details they are not comfortable sharing. Support should be offered without infringing on personal privacy.
   • Medical Advice: Employers and managers should not attempt to provide medical advice. Direct employees to appropriate mental health professionals for diagnosis and treatment.
4. Don’t Implement One-Size-Fits-All Solutions
   • Individualized Support: Recognize that what works for one employee may not work for another. Avoid blanket policies and instead focus on flexible, individualized support plans.
   • Rigid Policies: Be adaptable in your approach to supporting mental health. Rigid policies may not account for the varying needs of employees.

Legal Obligations for Employers

Understanding and adhering to legal obligations is crucial for small businesses when addressing mental health in the workplace. Here are key legal requirements:

1. Americans with Disabilities Act (ADA)
   • Non-Discrimination: Prohibits discrimination against employees and job applicants with disabilities, including mental health conditions.
   • Reasonable Accommodations: If an employee with a mental health condition discloses their disability and requests a reasonable accommodation to perform their job duties, employers must engage in an interactive process to explore options. This could include flexible work schedules, modified workloads, or access to mental health resources. However, employers are not obligated to provide accommodations that would cause them “undue hardship.”
2. Family and Medical Leave Act (FMLA)
   • The FMLA allows eligible employees to take unpaid, job-protected leave for serious medical conditions, which can include mental health issues. Here’s what it means for employers:

• Leave Eligibility: If an employee meets the FMLA’s eligibility criteria (worked for at least 12 months, worked a certain number of hours, and works at a location with 50 or more employees within 75 miles), they may be entitled to take up to 12 weeks of leave for a serious medical condition. Employers are required to approve the leave and hold the employee’s job.

3. Occupational Safety and Health Act (OSHA)
   • Safe Work Environment: Employers must ensure a safe and healthy work environment, which includes addressing workplace stress and other factors that can impact mental health.
4. State and Local Laws
   • Additional Protections: Be aware of and comply with state and local laws that may provide additional protections and obligations regarding mental health.

Proactive Steps for Small Businesses

1. Implement Mental Health Policies
   • Develop clear policies that outline the support available to employees, procedures for reporting concerns, and steps the company will take to address mental health issues.
2. Regular Mental Health Training
   • Provide ongoing training to staff on mental health awareness, including recognizing signs of mental distress and knowing how to respond appropriately.
3. Promote a Healthy Work Environment
   • Foster a work environment that prioritizes mental health through initiatives such as stress management workshops, wellness programs, and promoting a healthy work-life balance.
4. Monitor and Evaluate
   • Continuously monitor the effectiveness of mental health initiatives through employee feedback and regular evaluations. Be prepared to adjust policies and practices based on what works best for your team.

Supporting Struggling Employees

As a small business owner, you wear many hats.  Ensuring your team performs at their best is crucial, but what happens when an employee’s performance dips?  The answer can be complex, especially if mental health challenges are a factor. Here is what we recommend: 

1. Initiate a conversation:

• Schedule a private meeting with the employee to discuss their performance issues.
• Approach the conversation with empathy and concern, focusing on the specific performance concerns and their impact on the business.
• Avoid accusatory language or assumptions about the cause of the performance issues.

2. Open the door for disclosure (optional):

• Let the employee know that you’re concerned about their well-being and offer support if they’re comfortable sharing the reason behind their struggles.
• You can say something like, “I’ve noticed a change in your performance recently. Is there anything going on that might be impacting your ability to focus on your work?”
• Remember: You cannot force the employee to disclose their mental health condition.

3. Explore options:

• Depending on the employee’s disclosure or if they choose not to share, discuss potential solutions. This may involve:
  • Offering flexible work arrangements (remote work, adjusted hours)
  • Short-term leave for mental health reasons (if applicable and company policy allows)
  • Lightened workload or reassignment of tasks
  • Providing information about Employee Assistance Programs (EAPs) or other mental health resources.

4. Document everything:

• Keep a record of the conversation, including the date, time, and key points discussed.
• If the situation escalates to legal action, having a documented record of the conversation can help demonstrate that you, as the employer, acted in good faith and took reasonable steps to address the performance issues. It can also show that you offered support and accommodations.
• Under the Americans with Disabilities Act (ADA), employers are required to engage in an “interactive process” with employees who may have a disability impacting their work. Keeping a record shows you fulfilled this obligation.

5. Follow-up:

• Depending on the agreed-upon solutions, schedule follow-up meetings to monitor progress.
• Offer continued support throughout the process.

Prioritizing employee well-being isn’t just the right thing to do – it’s a strategic advantage. By fostering a supportive environment that addresses mental health, you can unlock a wave of benefits: increased productivity, higher employee satisfaction, and reduced turnover. This translates to a stronger, happier team and a more successful business.

Remember, creating a mentally healthy workplace is a journey, not a destination. It requires ongoing commitment, a culture of empathy, and proactive management.  If you’d like to dive into this topic further, feel free to reach out to our team for a free consultation. 

The post How to Deal with Mental Health Issues in Small Businesses: Do’s and Don’ts for Employers appeared first on Focus HR Inc..

ACA Compliance: What Businesses with 50 or Fewer Employees Need to Know

1. Exemption from Employer Mandate: Businesses with fewer than 50 full-time employees (FTEs) are not required to offer health insurance to their employees. However, if they choose to provide health coverage, it must meet the Minimum Essential Coverage (MEC) standards outlined by the ACA. Additionally, any employer choosing to offer employee benefits must contribute a minimum of 50% of the employee-only premium of the lowest cost plan for a particular carrier.
2. Voluntary Compliance Benefits: Even though offering health insurance is not mandatory for small businesses, doing so can be beneficial. Providing health coverage can help attract and retain employees, improve workplace morale, and potentially qualify the business for tax credits under the Small Business Health Care Tax Credit program. Additionally, if employers decide to offer health benefits, they may also be required to extend COBRA rights to any employees who separate from the business. Federally, this applies to all businesses with 20 or more employees. However, some states, like Arizona, require all employers that offer benefits to also extend COBRA rights.
3. State MiniCOBRA: For states with MiniCOBRA laws, employers may need to offer medical coverage with a 5% fee added to the premium (compared to the 2% fee under Federal COBRA) if the employee had been enrolled for 90 continuous days. All states except Alabama, Alaska, Delaware, Hawaii, Idaho, Indiana, Michigan, Montana, and Pennsylvania have State MiniCOBRA laws in place.
4. Reporting Requirements: If a small business with less than 50 FTEs chooses to offer health insurance, then they become subject to ACA reporting requirements. In this case, they would need to track and document employee health insurance information and file Forms 1095-C and 1094-C with the IRS.
5. Understanding Penalties: While the employer mandate penalties do not apply to businesses with fewer than 50 employees, failing to meet reporting requirements can result in significant fines. It is essential to stay informed about the latest reporting guidelines and deadlines to avoid these penalties.

For a full overview of how ACA impacts small businesses, please visit https://www.healthcare.gov/small-businesses/learn-more/how-aca-affects-businesses/. 

ACA Compliance: What Businesses with Over 50 Employees Need to Know

1. Employer Mandate: Businesses with 50 or more full-time employees or FTEs are subject to the employer mandate, also known as the employer-shared responsibility provision. They must offer affordable health insurance that provides minimum value to at least 95% of their full-time employees and their dependents.
2. Affordability and Minimum Value Standards: The health insurance offered must be affordable, meaning the employee’s contribution to the premium for self-only coverage should not exceed 8.39% of their household income. Additionally, the coverage must meet the ACA’s minimum value requirements, which ensure that the plan covers at least 60% of the total allowed cost of benefits.
3. Penalties for Non-Compliance: There are two primary penalties for large employers who fail to comply with the ACA requirements:
   • 4980H(a) Penalty: This penalty applies to large employers (those with 50 or more full-time equivalent employees) who fail to offer minimum essential coverage to at least 95% of their full-time employees and their dependents, and at least one full-time employee receives a premium tax credit (PTC) for purchasing coverage through the Marketplace. For tax year 2024, the penalty is $2,970 per full-time employee (excluding the first 30 employees). This represents a slight increase from the 2023 penalty of $2,880.
   • 4980H(b) Penalty: This penalty applies to large employers who offer health insurance that is either unaffordable or does not provide minimum value, and at least one full-time employee receives a PTC. The penalty amount for tax year 2024 is $4,460 per full-time employee receiving a PTC. This is an increase from $4,320 in 2023.
4. Comprehensive Reporting: Large employers must accurately document and report their compliance with the ACA’s requirements. This includes tracking employee eligibility, offers of coverage, and the acceptance or declination of coverage. Timely and accurate reporting to the IRS and applicable states is essential to avoid penalties.

What’s Changed with ACA?

1. Increased Penalty Amounts: The penalty amounts for non-compliance have increased. The 4980H(a) penalty is now $2,970 per full-time employee (excluding the first 30 employees), and the 4980H(b) penalty is now $4,460 per full-time employee receiving a premium tax credit (PTC). It’s important to note that these penalties are assessed on a monthly basis. So, the annual penalty amounts translate to $247.50 per month for the 4980H(a) penalty and $372 per month for the 4980H(b) penalty in 2024.

2. Updated Affordability Threshold: The affordability threshold for employer-sponsored health insurance has decreased to 8.39% of an employee’s household income in 2024. This means a larger portion of an employee’s salary can go towards their premium while still being considered affordable under the ACA.

3. Potential for Increased Scrutiny on Reporting: While the core reporting requirements haven’t changed significantly, the IRS may be focusing more on enforcing existing rules. This could mean stricter penalties for inaccurate or incomplete reporting in 2024. Businesses should ensure they are up-to-date on any clarifications or updates from the IRS.

Resources for ACA Compliance in 2024:

• Internal Revenue Service (IRS): The IRS website is a comprehensive resource for information on ACA compliance, including the employer mandate, reporting requirements, and penalty information. (https://www.irs.gov/)
• Department of Labor (DOL): The DOL website provides information on employee benefits security, including health insurance. (https://www.dol.gov/)
• Healthcare.gov: The official website for the Health Insurance Marketplaces. Businesses can find information on plan options and subsidies available to their employees. (https://www.healthcare.gov/)
• Arizona Department of Insurance: This website provides information on Arizona-specific health insurance regulations, including potential requirements that may apply beyond the federal ACA mandate. (https://benefitoptions.az.gov/insurance)

Navigating ACA compliance can be confusing, but it doesn’t have to be. Focus HR can help your business understand the rules, ensure you’re meeting your obligations, and avoid penalties. Contact us today for a free consultation!

The post Demystifying ACA Compliance for Businesses of All Sizes in 2024 appeared first on Focus HR Inc..

Update: Court Blocks FTC’s Noncompete Rule for Plaintiffs – On July 3, 2024, a federal judge issued a preliminary injunction delaying the FTC’s noncompete rule for the plaintiffs in a lawsuit, including Ryan, LLC and the U.S. Chamber of Commerce, until litigation concludes. This development suggests the rule might be struck down. Employers should continue monitoring the legal challenges and maintain their current practices until the rule’s fate is decided.

For years, non-compete agreements protected small businesses by preventing key employees from jumping ship to join a competitor. But a recent Federal Trade Commission (FTC) ban on such agreements gives your employees greater freedom, which only intensifies the challenge of retaining your top employees. 

Fortunately, small business owners can still work toward creating a workplace that fosters company loyalty and improves company retention.

What the Ban Means for Your Business

According to a recent article in the Wall Street Journal, the FTC ban has brought mixed reactions. While employees celebrate the freedom they have to explore other roles, some employers are pushing back against the decision.

It’s easy to understand why. A ban on non-compete agreements raises the possibility that some employees might leave your company, taking valuable knowledge and experience to your competitors. 

According to Gallup, the cost to replace a salaried employee can be 1.5-2x their annual salary, meaning thousands and thousands of dollars.

The Ban in Summary

The FTC banned most non-compete clauses between employers and workers, with exceptions for existing agreements with high-earning executives and certain business sales. This rule applies to employees, independent contractors, and volunteers. However, it’s unclear if it applies to non-profits.

The key points for employers are:

• Wait and see: The rule faces legal challenges and may not take effect. There’s no penalty for existing non-compete agreements.
• What is Banned: Almost all new non-compete agreements and existing ones for non-executives.
• Exceptions: Existing non-compete agreements for “senior executives” earning over $151,164 and sale-of-business situations.
• Notice: Employers must notify impacted workers before the effective date (likely around September 4th, 2024). The FTC provides sample language for these notices.  However, the FTC’s rule is currently being challenged in court, and it’s unclear if it will be enforced. Hold off on sending them until closer to the (currently uncertain) effective date.
• Non-Profits: The rule’s applicability to non-profits is a point of contention. Stay updated on court challenges to see if the final ruling exempts non-profits based on their tax status.
• Explore Alternatives: Nondisclosure agreements and non-solicitation agreements (with limitations) are still allowed. “Garden leave” (paying a leaving employee) and fixed-term contracts remain options.
• Impact: Employers may need to adjust hiring and retention strategies.

The rule aims to increase worker mobility and competition while facing legal challenges. Companies should monitor the situation and consider seeking legal advice.

Next Steps for Businesses 

Remember, this is a rapidly evolving situation. By staying informed, adopting a wait-and-see approach, and exploring alternative methods, employers can minimize disruption and adapt to the changing landscape.

As the legal landscape unfolds, we recommend thinking about the below: 

Identify Senior Executives

In the wait and see period before the notice deadline, companies should strategically utilize this time. One key action item is identifying which current “senior executives” might qualify for the exception to the non-compete ban. Remember, these are individuals who not only make over $151,164 annually but also hold decision-making authority for the entire organization, aligning with the SEC’s definition of an executive officer.  

By pinpointing these key personnel, companies can then determine if there’s a strategic advantage to having them sign new non-compete agreements before the rule’s effective date, assuming it’s upheld in court. This would require careful consideration, as the legal landscape is still developing. Consulting with legal counsel can help navigate the potential benefits and drawbacks of pursuing new non-compete agreements with senior executives.

Explore Alternatives

While non-compete clauses are largely off the table, there are still ways to protect your business interests. Non-disclosure agreements (NDAs) remain a strong option to safeguard confidential information like trade secrets. You can also explore carefully crafted non-solicitation agreements that focus on preventing the employee from soliciting clients or colleagues, but be mindful not to restrict their ability to find new work altogether. 

Additionally, “garden leave” arrangements, where a departing employee continues to receive pay and benefits but isn’t actively working, can offer a buffer period. Finally, fixed-term contracts can be used for specific projects or roles, though they come with their own legal considerations. It’s always wise to consult legal counsel as this is a complex situation. 

Focus on Building a Strong Company Culture

While major employers are looking to reverse the ban, it’s unclear how successful these efforts will be. In the meantime, small businesses will have to redouble their efforts in creating a strong company culture.

Think of the ban as an opportunity. Now is your chance to evaluate your current workplace culture and develop new retention strategies for the future. Here are some strategies that can help you retain your most valuable employees.

Focus on Competitive Compensation and Benefits

Your employees will be less likely to search elsewhere when they feel valued and well-paid. Conduct regular salary reviews and communicate your schedule for raises or bonuses. Offer competitive benefits packages that go beyond healthcare, such as retirement options and matching contributions.

If your business is small, consider non-monetary benefits such as additional time off or paid leave to work on community volunteer projects. Even unpaid benefits can have a surprising impact on helping employees feel valued.

Offer Flexible Working Hours

Many employees seek that coveted work-life balance, and they can find it when their employer offers flexible working hours. For some, this is a simple matter of giving employees leeway on their starting and ending times. In other cases, you can allow employees to work from home on a hybrid work schedule.

This is nothing new. Recent research shows that 35% of workers who can work from home currently do so on a full-time basis, while 41% work on a hybrid schedule. This can be ideal for retaining busy parents or just giving your workers the breathing room they need to feel comfortable in your workplace.

Invest in Professional Development

Data from Pew Research Center shows that 63% of workers who quit claim that their employer provided “no opportunity for advancement.” You don’t have to offer every employee a career track, but it may help to invest in professional development resources to give workers a greater reason to stick around.

Professional development can take many forms. You might give your workers an opportunity to attend local conferences or industry events. You could also invest in online training through popular sites such as LinkedIn Learning or Udemy. Employees will appreciate the chance to learn and grow and may be less likely to search elsewhere for employment.

Create a Positive Work Environment

Your workplace culture has a major impact on your employees’ well-being. Fostering a culture of collaboration, communication, and mutual respect will help employees feel supported, valued and understood. Consider instituting a mentoring program where employees can connect with experienced workers. This creates a web of relationships that deepen your team members’ connections to each other and the company itself.

Recognizing your employees’ contributions can also help them feel like part of a team. Go beyond “employee of the month” programs by featuring individual bios on your social media channels or publicly recognizing employees at workplace events.

Foster Open Dialogue

Do you know your employees’ career goals? If not, it never hurts to ask. By learning what your workers’ long-range goals are, you can better align your processes and culture so that workers feel supported in their ambitions.

Some HR managers go as far as to conduct employee engagement or “pulse” surveys. These periodic surveys can provide a valuable “temperature check” and identify struggling employees early on. This allows you to intervene and develop retention strategies before receiving the two-week notice.

Build a Winning Team

As a small business owner, you know that every challenge is also an opportunity. By focusing on building a strong employer brand, you can win the retention race and keep your best people on board. Focus HR can help! Contact us to request a consultation if you need HR advice for your small business.

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