BIZGrowth Strategies

We’re back with our June edition, sharing seven articles and resources to help your organization reach its goals, identify cost savings and accelerate success. You’ll learn about the FTC’s noncompete ban, skilled-based hiring, reducing defined benefit plan costs, fighting ransomware, trending voluntary benefits and more!

FTC's Noncompete Ban: Understanding the Landmark Decision

The Federal Trade Commission (FTC) has made a monumental decision by endorsing a final regulation that prohibits noncompete agreements in most employment relationships. Although pending filing in the Federal Register, the final rule is anticipated to impact an estimated 30 million workers nationwide. Employers should brace for change by addressing its potential implications as soon as possible.

The Rationale Behind the FTC's Decision

The FTC offers several compelling advantages to the change, such as:

• A boost to innovation, resulting in 29,000 additional patents annually
• A 2.7% increase in new business formations (8,500 new companies per year)
• A $500 billion wage increase for workers over the next decade ($524 per worker per year).
• An estimated $200 billion reduction in medical services in the next 10 years

Explaining the FTC Rule Banning Noncompetes

The final rule defines a noncompete clause as an employment provision that restricts, penalizes or prevents a worker from:

• Pursuing or accepting employment with another individual with work scheduled to begin post-employment, under specific terms or conditions; or
• Operating a business in the U.S. post-employment with specified terms or conditions like employee contracts or workplace policies, written or verbal.

Subject to limited exceptions, the final rule mandates:

• Prohibition of noncompete clauses as of the effective date
• Nullification of existing noncompete clauses
• Employers must notify impacted employees that existing noncompete agreements are unenforceable

Noncompete clause enforceability varies by state and local legislatures. States such as California, Minnesota, Oklahoma and North Dakota have prohibited noncompete agreements while others have imposed restrictions on their usage. The proposed FTC rule would govern at the federal level, superseding state laws or judicial interpretations.

Senior Executive & Industry Exemptions

Certain exceptions apply to the recent ruling, including provisions for senior executives and certain industries. A senior executive, comprising less than 1% of the workforce, is identified as earning over $151,164 and holding a policy-making position. Additionally, industries such as nonprofits and insurance, outside the FTC’s jurisdiction, are also exempt from the proposed ruling.

Legal Challenges

Legal challenges have already emerged, with the U.S. Chamber of Commerce filing a lawsuit on April 24, 2024, seeking to block the final rule. The complaint was filed in the U.S. District Court for the Eastern District of Texas, arguing the FTC lacks the authority to establish regulations that define unfair methods of competition. Employers should monitor updates and anticipate potential uncertainty as additional legal obstacles are expected.

Discover new regulations that can impact your business and lead to costly claims and fines in Navigating 2024’s Compliance Risks for Businesses. 

Potential Implications for Employers

The impending regulation will impact businesses and the economy, particularly as 18% of the workforce is bound to noncompete agreements. This figure is notably higher in certain industries like technology. Banning noncompete agreements would allow employees to explore opportunities with competitors or start competitive ventures. The FTC aims to enhance competition among employers, enabling organizations to recruit employees previously restricted by noncompete agreements. This could also alter compensation negotiations as employers will likely rely on alternatively protective clauses to protect their business interests.

Strategies for Employers to Adapt to the FTC Rule

Businesses should proactively review existing employee agreements (e.g., new hire paperwork) for noncompete clauses. Consider alternative measures to noncompete clauses, such as:

Nondisclosure Agreements (NDA)

Outlines confidential information and prevents employees from disclosing it without authorization. NDAs protect sensitive business information, trade secrets, intellectual property, client lists, proprietary technology, financial data and other restricted information.

Nonsolicitation Agreement (NSA)

Restricts employees from soliciting clients, customers, employees or additional business relationships to benefit a competitor or third party. Companies use these features to protect their business interest and prevent departing employees from stealing valuable resources or relationships.

Employee Training

Educate workers to understand the significance of protecting intellectual property and client relationships. Offer training on laws related to intellectual property, confidentiality obligations and ethical practices to raise awareness and foster a culture of compliance.

Partner with Legal Counsel

Collaborate with your attorney to establish strong policies and procedures for governing intellectual property and confidential information. Utilize their legal expertise to develop comprehensive employment contracts with provisions related to IP ownership, confidentiality, nondisclosure and nonsolicitation. Clearly define employee obligations and the consequences of any violations. Communicate and enforce these guidelines to ensure organizationwide compliance.

Monitor & Enforce

Utilize technology and procedures to identify and prevent unauthorized access and misuse of intellectual property and client data. Quickly investigate any suspected breaches and take necessary measures to protect the company’s interests.

Ensure Sufficient Insurance Coverage

Despite clear protocols and procedures, challenges can still arise. Employment practices liability insurance offers protection against claims stemming from FTC noncompliance. Additionally, commercial crime insurance protects your business from financial losses due to fraudulent employee activities.

We’re Here to Help Prevent Employment Claims & Fines

Employers must adjust to the FTC's ban on noncompete agreements by seeking alternative solutions and obtaining suitable insurance coverage to reduce risks. A well-rounded risk management strategy is essential for businesses to handle these challenges. Connect with a member of our team for more information on the FTC rule or a thorough assessment of your coverage.

Tearing the Paper Ceiling: Embracing Skills-Based Hiring in Modern HR

Skills-based hiring is not a new trend, but it is gathering steam as employers realize that someone with practical experience or specialized training may be better suited for a position than someone with a degree but limited relevant skills.

Last year, many companies (55%) removed bachelor's degree requirements for some of their positions, with other businesses following suit this year. This shift, often referred to as "tearing the paper ceiling," is changing how organizations evaluate potential candidates.

Traditional hiring practices rely heavily on education. A candidate's resume is filled with information about where they went to school, their GPA, and any honors or awards they received. Yet switching to a skills-based hiring approach provides opportunities to those with non-traditional educational backgrounds who possess the necessary skills.

Benefits of Skills-Based Hiring

Improved Job Performance: Businesses are likelier to find workers who best fit the role. This can lead to higher job performance, increased productivity, and greater employee satisfaction.

Flexibility and Agility: Makes organizations more adaptable and responsive to changing market demands. Businesses can remain agile and competitive by identifying candidates with the precise skills needed to address current challenges.

Cost-Effectiveness: Potentially reduces recruitment costs and streamlines the hiring process, shortens the hiring time, and decreases the risk of mismatched hires, ultimately saving resources over time.

Diversity and Inclusion: Provides opportunities for individuals from diverse backgrounds who may not have had access to traditional education pathways. It promotes inclusivity and expands the talent pool, leading to a more diverse and innovative workforce.

Challenges of Implementing Skills-Based Hiring

While skills-based hiring has many benefits, organizations must also consider challenges when implementing this approach.

Lack of Standardization: One of the main obstacles is the need for standardized measures for evaluating skills. Different from degrees, which come with specific requirements and grading systems, skills can be subjective and difficult to quantify. This makes it challenging to compare candidates objectively.

Bias and Discrimination: Despite efforts toward diversity and inclusion, implicit bias and discrimination can still play a role in hiring. Without objective measures, skills-based hiring may not eliminate these challenges.

Reevaluating Job Descriptions: Organizations must reevaluate their job descriptions and determine which skills are necessary for the role. This process can be time-consuming and require input from multiple departments or team members.

How to Determine if Skills-Based Hiring is Right for Your Company

Evaluate Job Requirements: Start by critically analyzing the skills and competencies required for the roles you are hiring for. Consider whether these skills can be acquired through non-traditional means and whether formal qualifications are essential.

Conduct a Pilot Program: Implement a pilot program for specific roles or departments to test the effectiveness of skills-based hiring. Monitor outcomes and gather feedback from hiring managers and candidates to assess the impact.

Assess Current Workforce: Evaluate the skills and competencies of your current employees. Identify any existing gaps and determine if skills-based hiring practices could address them.

Seek Expert Guidance: Consult with HR professionals and industry experts with skills-based hiring experience. Their insights can help you navigate potential challenges and implement best practices.

Next Steps for Adopting Skills-Based Hiring

Develop Competency Frameworks: Create detailed competency frameworks that outline the specific skills and behaviors required for each role within your organization. These frameworks will serve as the foundation for your skills-based hiring efforts.

Invest in Assessment Tools: Invest in assessment tools and methodologies that effectively evaluate candidates' skills. These may include practical tests, simulations, work samples, and other performance-based assessments.

Train Hiring Managers: Provide hiring managers with training and resources to help them understand the principles of skills-based hiring and encourage them to adopt a more open-minded approach to candidate evaluation.

Foster a Culture of Continuous Learning: Promote a continuous learning and development culture within your organization. Encourage employees to upskill and reskill, making it clear that career growth is based on competencies rather than credentials.

Monitor and Adjust: Continuously monitor the success of your skills-based hiring initiatives and be prepared to adjust as needed. To measure the impact, gather data on key metrics, such as time-to-hire, employee performance, and retention rates.

Tearing the paper ceiling through skills-based hiring is more than just a trend; it's a transformative approach to talent acquisition that can drive diversity, innovation, and business success. By focusing on the specific skills and competencies that genuinely matter, businesses can unlock new opportunities for their organizations and prospective employees. 

Equal or Equitable – The Family Business Owner’s Dilemma

Consider a scenario where a family business owner grapples with how to equalize inheritances for his four children; two are active in the business while two have careers separate from the family business. Most of the family wealth, which is illiquid, is tied to the business. Upon the death of the parents, the family faces the vexing problem of how to provide the children with equitable shares of the business without liquidating the business.

Buyout Inactive Successor Owners

One approach would be to leave it to the siblings who are running the business to buy out their other siblings. This raises a number of issues, including assessing the fair market value of the business, determining the length of the payout period and whether interest would be paid until the buyout is complete. A real concern would be the prospect of short selling some or most of the business’ assets to buyout the siblings who are not active.

Equal Payout

Another alternative is to leave the business to all four children equally. This presents another set of challenges as the two active children would now have to involve their inactive siblings in the business’ decision making. Further, the business may not be able to financially support everyone. If that was the case, the wishes of the business owner for continuity and family harmony would be in jeopardy.

Survivorship & Single Life Policies Solutions

A simple, more elegant solution is for the business to purchase life insurance on the owner, naming the children who are not active in the business as the beneficiaries. If the spouse is alive or the owner has significant health issues, a survivorship policy might be the appropriate choice. The policy could also be purchased personally and put in an irrevocable life insurance trust. In this case, the amount of the coverage would be equal to 50% of the fair market value of the business, split between the two inactive children. Upon the death of the business owner (for a single life policy) and the spouse (for a survivorship policy), the two children operating the business would inherit the business, while the other children would each receive 25% of the tax-free death benefit of the life insurance policy. The business continues on, and each child receives an equitable inheritance.

With the help of a professional advisory team, including a CPA, attorney, financial planner and insurance agent, an estate equalization plan (also known as an inheritance equalization plan) can be developed to pass on a family business, allowing the owner to enjoy their wealth and success while ensuring that the next generation is taken care of – whether or not they are involved in the business.

Connect with one of our trusted advisors to learn more.

A Guide to Reducing Your Defined Benefit Plan Costs

As a plan sponsor, finding new ways to save money on your defined benefit plan can be a challenge — especially while carrying out other critical tasks for your organization. In this guide, you’ll learn about various strategies to help you lower your defined benefit plan costs while ensuring your plan remains compliant.

Ransomware attacks skyrocketed in 2023, with victims worldwide paying a staggering $1.1 billion to regain access to their data. No organization is safe – these attacks target businesses of all sizes and across all industries.

With the threat so prevalent, it's imperative to revisit cybersecurity best practices. This article explores key steps outlined by the U.S. Department of Commerce in their publication, Ransomware Risk Management: A Cybersecurity Framework Profile. These steps allow organizations to fortify their defenses and improve their ability to recover from ransomware attacks.

Employee Education Against Ransomware

The fight against ransomware starts with your employees. Here's how to empower them to be your first line of defense:

• Scrutinize Attachments and Links: Phishing emails are a common entry point for ransomware. Train employees to be wary of emails from unknown senders, especially those with urgent tones or enticing attachments. Encourage them to hover over links before clicking to see the full URL and advise them never to open attachments unless they're expecting them from a trusted source. Running a quick antivirus scan on suspicious attachments can also provide an extra layer of security.
• Maintain a Professional Digital Divide: Blurring the boundaries between personal and professional online activity can open the door to vulnerabilities. Using personal email, social media or chat applications on a work computer can expose your network to malware. Similarly, logging in with work credentials on personal devices can pose significant risks.
• Secure Your Network: Unknowingly, personally owned devices like laptops and smartphones can harbor malware. Combat this risk by enforcing a policy requiring prior IT approval before connecting personal devices to the work network. This allows your IT team to ensure these devices meet security standards and minimizes the risk of introducing vulnerabilities through unauthorized connections.

Patching the Gaps Against Ransomware

Ransomware thrives on exploiting weaknesses in systems. Here's how to minimize those vulnerabilities:

• Patching is Paramount: Software companies regularly release patches to fix security holes in their programs. These patches are crucial for plugging vulnerabilities that ransomware could exploit. Establish a system for checking for available patches regularly (ideally, automated) and prioritize their installation as soon as possible. 
• Zero Trust, Maximum Security: The "zero trust" approach assumes no user or device on the network is inherently trustworthy. This means every access attempt, regardless of origin, needs verification. Implement multifactor authentication and granular access controls to ensure only authorized users can access specific network functions.
• App Control: Your systems should only allow authorized applications to run. Configure your operating systems and security software to create an "allow list" of approved applications. This prevents unauthorized or potentially risky programs from running, effectively shutting the door on many ransomware threats before they can even start wreaking havoc.

Early Ransomware Detection and Rapid Response

Early detection is critical in mitigating ransomware damage. Here are key strategies to quickly identify and stop these threats:

• Multilayered Defense: Antivirus software is a crucial first line of defense, but it's not foolproof. Consider additional security software that scans emails, external storage devices and your network in real time. 
• Monitoring Your Network Pulse: It’s vital to continuously monitor user activity within your network directory. Unusual changes, such as unauthorized login attempts or file modifications, could indicate a ransomware attack in progress. Security software can monitor these activities and raise red flags if suspicious behavior is detected, allowing you to intervene quickly before the attack spreads.
• Building a Wall Against Malicious Sites: Ransomware can be downloaded from compromised websites. Utilize web filtering solutions that block access to known malicious web addresses or those exhibiting suspicious behavior. This proactive approach can significantly reduce the risk of employees accidentally triggering a ransomware infection.

Limiting Ransomware Reach Within Your Network

Even after an initial breach, you can limit the damage a ransomware attack inflicts. Here's how:

• Limit Privilege Access: Standard user accounts with multifactor authentication make it harder for attackers to gain extensive control. Reserve administrator privileges for those who truly need them.
• Thwarting Brute Force Attacks: Cybercriminals often use automated tools to guess passwords.  Implement measures like login delays or automatic account lockouts after a certain number of failed attempts.
• Micromanaging Access: Assign access to systems and data on a "need-to-know" basis and regularly review user permissions. This ensures that only authorized personnel can access sensitive information.
• Immutable Backups: Traditional backups can be overwritten by ransomware, rendering them useless. Consider immutable backups, which create unchangeable copies of your data. These act as a historical record, allowing you to restore data to a clean state before the attack.
• Secure Remote Access:  If remote access is necessary, utilize secure VPN connections.

Preparing for Recovery

Even with the best defenses, ransomware can sometimes slip through. Here's how to ensure a swift and smooth recovery:

• Plan for the Unexpected: Develop a comprehensive incident response plan. This plan should outline roles, communication strategies and clear decision-making protocols in the event of an attack. Regularly test and update this plan to ensure everyone involved knows their responsibilities.
• Backup and Beyond: Regular data backups are a must. However, simply backing up data isn't enough. Store backups securely and ensure they're isolated from your main network. Test your restore process regularly to guarantee you can retrieve data quickly and efficiently.
• Assemble Your A-Team: Ransomware attacks can be a multifaceted challenge. Maintain a list of key contacts, including law enforcement, legal counsel and cybersecurity professionals. Having a team of experts ready to respond can save valuable time and resources during a crisis. Think of them as your emergency response team prepared to help you navigate the complexities of a ransomware attack.

The above strategies can significantly reduce your organization's risk of ransomware attacks. Implementing these measures is the first step towards improved cybersecurity. If you have any gaps in your current defenses or specific concerns or simply want to tackle one of these steps at a time, be sure to partner with a team of experienced cybersecurity professionals who can help you navigate the process and develop a comprehensive ransomware risk mitigation strategy. Connect with our team today.

If your organization is looking for creative ways to enhance your benefits package without substantially increasing costs, consider voluntary benefits. These optional, employee-paid offerings can enhance your total rewards and increase employee retention — all while having little to no impact on your bottom line.

In this article, we outline four types of voluntary benefits employers should consider including in their employee benefits package.

Top Voluntary Benefits to Consider

Dental Insurance

Dental coverage is a commonly offered voluntary benefit option that is highly valued by employees. Like medical insurance, dental coverage is offered in several types of plans:

• Dental health maintenance organization (DHMO) - Coverage is only provided when employees visit dentists who are in-network with their insurance plan. 
• Dental preferred provider organization (DPPO) - Coverage is provided with in- or out-of-network dental care providers, but employees will typically pay less with an in-network dentist. 
• Dental indemnity plan - Coverage is provided for any dentist employees choose, with no difference in cost. 
• Discount dental plan - This type of plan is a common option for reducing dental costs without regular insurance coverage; with this plan, employees pay for all dental care at an agreed-upon discounted rate. 

Why Offer Dental Insurance?

Employees have come to expect that their employer will provide them with access to dental insurance, so not including it in your offerings could be detrimental to employee attraction and retention. This coverage is relatively inexpensive to add to your benefits package, and employees with dental plans are often healthier and avoid more costly health problems down the line. The pros of offering dental insurance far outweigh the cons.

Vision Insurance

Like dental insurance, vision insurance is a common voluntary benefit employees expect to have access to. Vision coverage is available in two basic types of plans:

• Vision benefits plan - This type of plan is regular insurance coverage. Depending on the specific plan, coverage may differ between in- and out-of-network eye doctors. Employees will typically pay a portion of their eye care cost through a deductible and coinsurance or copayments. 
• Discount vision plan - With this option, employees can choose to reduce vision costs without regular insurance coverage. They pay for all their vision care, but at a reduced rate. 

Why Offer Vision Insurance?

Regular eye care yields a large payoff, according to a recent VSP® Vision Care study known as the VSP Eye Health Management Program. This study found that eye examinations uncovered diabetes 20% of the time, hypertension 30% of the time and high cholesterol 65% of the time before the individual’s other health care providers detected the problems.

Researchers concluded that for every dollar invested in vision insurance for eye exams, employers were reaping an additional 94 cents in value.

Disability Insurance

Not only does disability insurance fill the gaps in financial protection offered by other programs like Social Security, but it is also a highly sought-after component of a competitive benefits package. Offering disability insurance is a win/win — employees appreciate the peace of mind they receive as their income replacement benefits are being paid and employers can use the resources offered by insurers to manage time and productivity losses and find the most effective way to return employees to work.

Disability insurance replaces a percentage of pre-disability income if an employee cannot work due to illness or injury for a specified time, protecting workers and their families against financial catastrophe by helping them meet daily expenses and maintain their standard of living.

Why Offer Disability Insurance?

Disability insurance is both an employee benefit and a health and productivity tool. The rehabilitation and management tools available from most insurers can yield significant savings to employers. While helping your employees avoid financial disaster, disability insurance also helps you mitigate the indirect costs of disabilities, such as finding replacement workers and the costs incurred by time and productivity losses.

Critical Illness Coverage

If your employees suffer a critical illness, they will not have adequate protection under normal medical and disability insurance plans to cover their expenses. Some of the costs associated with critical injuries are not even covered on many plans.

To combat these expensive medical costs and strengthen your employees’ financial safety net, consider providing critical illness insurance coverage for your employees. This coverage provides a lump sum benefit for the six leading critical illnesses and health events:

• Cancer 
• Heart attack 
• Stroke 
• Major organ transplant 
• Kidney failure 
• Coronary artery bypass graft 

Why Offer Critical Illness Coverage?

There are various benefits of offering critical illness insurance. This coverage complements high deductible health plans (HDHPs) by eliminating employees’ worries of having to pay for a high deductible in the middle of suffering a major illness. Critical illness coverage also serves as an affordable way for employers to fill gaps in coverage and can act as a recruiting tool or help compensate for changes in core medical plans.

The Value of Voluntary Benefits

Voluntary benefits can cost your organization little to nothing to offer, provide great value through cost efficiency and convenience to your employees, aid recruitment efforts, and help build loyalty and retention among employees.

Looking for more guidance on voluntary benefits? Click here to explore CBIZ Voluntary Benefits Solutions.

In today's dynamic business landscape, companies strive to attract and retain top talent while ensuring equitable compensation practices. Achieving this delicate balance often requires specialized expertise, prompting many organizations to seek the guidance of compensation consultants. But what exactly does a compensation consultant do, and why should you consider working with one?

What is a Compensation Consultant?

A compensation consultant is a seasoned expert who specializes in advising organizations on various aspects of compensation management. These professionals possess a deep understanding of market trends, industry benchmarks, regulatory requirements and best practices in compensation design.

Their primary objective is to help companies develop competitive, equitable and sustainable compensation structures that align with their strategic goals.

Why Should You Work with a Compensation Consultant?

Did you know that for the first time in six years, compensation has trumped career growth as the number-one reason employees job hunt? Partnering with a compensation consultant enables a wealth of expertise and industry knowledge to be brought to the table, allowing organizations to make informed decisions about their compensation practices. By leveraging their insights, companies can ensure that their compensation strategies remain competitive and compliant with evolving regulations.

Additionally, compensation consultants provide an objective perspective on compensation matters, helping companies avoid common pitfalls and biases. Whether it's addressing pay disparities, designing motivating incentive plans or navigating complex legal requirements, these experts offer invaluable guidance that can mitigate risks and enhance overall organizational performance.

Moreover, working with a compensation consultant can yield significant cost savings in the long run. By optimizing compensation structures and aligning them with business objectives, companies can improve employee engagement, reduce turnover and enhance productivity — all of which contribute to a healthier bottom line.

How to Select a Compensation Consultant

When choosing a compensation consultant, it's essential to consider their expertise, reputation and track record. Look for professionals with relevant certifications (such as Certified Compensation Professionals) and a proven history of success in your industry. Additionally, seek recommendations from trusted sources and conduct thorough due diligence before making a decision.

Starting your search for a compensation consultant? Connect with our team to learn how we can help your business stay competitive in today’s labor market.

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DISCLAIMER: This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. This information is general in nature and may be affected by changes in law or in the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.