Average 2013 Merit Increases

By Mark Soycher

CBIA human resources experts

Q: We’ve heard that the average 2013 projected merit increase for companies in Connecticut is between 2% and 3%. Does that sound about right?

CBIA recently surveyed members on that very topic. We asked employers to indicate planned or projected average merit increases. Here was the response:

Overall

Plant/Hourly: 1.95%

Admin/Clerical: 2.34%

Exempt (non-manager) 2.39%

Manager 2.39%

Executive 1.96%

Excluding Firms Giving 0%

Plant/Hourly: 2.72%

Admin/Clerical: 2.77%

Exempt (non-manager) 2.89%

Manager 2.92%

Executive 2.94%

A roughly 3% increase among companies giving raises appears to reflect a consensus among consultants and researchers. The figure is similar to last year’s average merit increase and represents an incremental rise over the last few years.

For more information on CBIA surveys on such topics as executive compensation and employee opinions, contact Phillip Montgomery, director of compensation services, at 860.244.982 or phillip.montgomery@cbia.com.

Q: Last month, we completed open enrollment for employee health insurance. We’ve had to update our payroll processing data to reflect changes in employee premium contribution amounts. Can we still use the old forms signed by employees authorizing paycheck deductions for group insurance premium contributions?

A: First, it’s good that you’ve complied with the state labor law that requires an employee’s written authorization for payroll deductions for health insurance premium payments.

Connecticut wage payment laws are very specific about when and how employers may withhold money from a worker’s paycheck, dividing such deductions into three categories, the first of which relates to your question.

Deductions for employee contributions toward group health premiums require the employee’s written authorization and may be documented on any form you choose. So at a minimum, it would be important to insert the new deduction amount and have the employee initial the revised form, or you may complete a new form for the employee to sign. Either approach complies with the law and avoids any misunderstanding regarding the amount. Otherwise, an employee complaint to the labor department challenging the amount withheld may result in your being denied the right to deduct it, yet still having to pay the group insurance premium until proper authorization is obtained.

Deductions in the second category, those required for regular payroll tax withholdings, may be made without employee authorization. In fact, failure to make necessary withholding tax and FICA tax deductions can land you in deep trouble with the IRS and the state Department of Revenue Services.

The third category, deductions for a variety of purposes: such as repayment of vacation pay advances, personal loans, employee purchases, disability benefit premiums, and payroll savings programs: require written employee authorization on a form that has been approved by the state labor commissioner. Once approved, you are allowed to use the form repeatedly without approval for each instance it is used.

The state Department of Labor (DOL) has published sample forms, making it easy to submit a request for approval online. If you already have a form you prefer to use for miscellaneous deductions, you may request that it be approved by submitting a copy via email or regular mail. If it is inadequate in any respect, the labor commissioner will indicate revisions needed for approval.

If you are using an unapproved form, or no form at all (verbal agreements are wonderful until the time comes for enforcement against an individual whose memory is short), it would be advisable to update your documentation by reaffirming the arrangement using an approved form. Otherwise, in the event of a complaint, you might be directed by a DOL investigator to cease deductions from the paycheck and to pay the employee amounts previously deducted illegally. Your employee may still be obligated to pay amounts agreed upon, and you may have the legal right to repayment, but you may be left enforcing the transaction in some manner other than as a deduction from the employee’s paycheck, such as through small claims court.

Do you have a question related to employment law, wage and hour issues, or human resources? Members can get free information from CBIA’s experts by calling 860.244.1900.