Client Spotlight

The Boston Debate League was created in 2005 to help improve students’ academic achievement. The league offers a host of after-school, weekend, and summer programs to help Boston students become advocates and intellectuals. Competitive academic debate offers a powerful means of engaging students in their own education and reversing negative trends.  Debaters come from across the academic spectrum, including those who do not attend school regularly or are not thriving in the traditional classroom.  The Rev. Dr. Gregory Groover, chair of the Boston School Committee, was this year’s Taking Sides for Success honoree. The event raised over $100,000 from the community to support local debate programs.  The league’s 2012-2013 debate season began on October 19.  Click here to view a complete tournament calendar.

Combating Absenteeism

The zombie apocalypse is upon us. It’s real, and according to recent studies it costs employers billions. But the zombies aren’t taking the form of the undead rising from the grave in a quest to consume the living. Instead, they take the form of exhausted, sick, injured, or demoralized employees showing up to work yet not performing to their full potential.

That’s the conclusion of a new study out of Brigham Young University, which determined that when it comes to damage to employers, the cost ratio of presenteeism versus absenteeism is three to one.

Researchers found that presenteeism was highly correlated with outside factors, including poor health, poor eating habits, financial stress, relationship problems, and other emotional problems originating outside the company. Workers become stressed and distracted and, because they are only human, their problems spill over into the workplace.

According to its chief researcher, the study looked at more than 20,000 workers. Among its findings:

  • Those with bad diets were 66% more susceptible to presenteeism than those with healthy diets.
  • Smokers reported productivity losses 28% more often than nonsmokers.
  • Regular exercisers were 50% less likely than those who only exercised “occasionally” to succumb to presenteeism.

Contributing Factors
In addition to the normal litany of unavoidable minor issues, such as sick children at home or minor financial matters, employee problems can arise if management shuts down important stress valves:

Putting too much emphasis on attendance in workplace performance reviews
Disciplining or stigmatizing workers who call in sick on short notice
Expending managers’ valuable time “verifying” illnesses (a cost sink in itself!)

The Solution
The authors of the study concluded that the use of the cat-o’-nine-tails to improve workplace morale is probably suboptimal. Instead, they suggested some basic leadership and resourcing measures, such as helping managers and workers prioritize what is important and providing “sufficient technological support.” Other suggestions included implementing targeted wellness programs designed to address employees’ specific stressors. For example, where employees may be struggling with financial stressors, distracting them from their work, make financial-planning services available. If health issues are paramount, establish programs to help workers stop smoking, improve eating habits, and address physical and mental health issues.

Lowering presenteeism will require that employers have realistic expectations of workers, help workers prioritize, and provide sufficient technological support. Financial stress and concerns may warrant financial planning services. Health-promotion interventions aimed at improving physical and mental health also may contribute to reducing presenteeism.

Other ideas include sponsoring a workplace flu vaccination program, sending sick workers home immediately, and implementing a “no questions asked” PTO policy, as opposed to segregating sick days and personal-leave days. Leaders can also reward and encourage midline managers who are creative in allowing staffers flexible work arrangements — though care should still be taken to comply with wage and hour laws.

At Cleary, we know how important a comprehensive benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your business objectives, takes into account state and federal laws, and capitalizes on incentives and innovative solutions now being offered.

Update to Federal Service Contracts

The Department of Labor’s Wage and Hour Division has issued a final rule to implement Executive Order 13495, Nondisplacement of Qualified Workers Under Service Contracts. This final rule will be effective once the Federal Acquisition Regulatory Council (FARC) issues regulations for the inclusion of the nondisplacement contract clause in covered federal solicitations and contracts, as required by the Executive Order.

In our last newsletter we told you that this order and final rule requires contractors and subcontractors that are awarded a federal service contract to provide the same or similar services at the same location to, in most circumstances, offer employment to the predecessor contractor’s employees in positions for which they are qualified. Successor contractors are allowed to reduce the size of the workforce and to give first preference to their current employees.

You can follow all the other provisions of this rule under the Federal Register, 29 CFR Part 9. Hopefully this rule will become finalized before year end, as it has been discussed extensively for the past four years.

Questions regarding the order may be addressed to Timothy Helm, Chief, Branch of Government Contracts Enforcement, Wage and Hour Division, U.S. Department of Labor, Washington, DC 20210; telephone number (202) 693-0064.


Changes to the 2012 Service Contract Act Health and Welfare Fringe Benefit rates were disclosed on June 11, 2012. The new SCA health and welfare benefits were increased to $3.71 per hour and are posted on the Wage Determination Online ( and Wage and Hour Division (WHD) ( websites.

The HISTORY, Solicitation/Contracts Affected and Wage Determinations for the State of Hawaii on this memorandum are basically the same as the previous memorandums issued by the Department of Labor covering this subject.

Go to and click on the Library page for a copy of this memorandum.

Remember, as in the past, do not provide your Service Contract Act employees this change until it has been modified into your contract by the Contracting Activity, which is usually on the anniversary date of your contract.

Types of Wage Determinations

In addition to the basic four types of wage determinations (Area Standard, Nonstandard, Collective Bargaining Agreements, and Contract-Specific), there have been some questions pertaining to other types of wage determinations.

Nationwide wage determinations and hourly day rate (usually for captains of vessels) wage determinations do not specify the odd or even health and welfare rates. On these you should go to the section of the wage determinations that specifies what health and welfare benefit rates apply. Those are the rates to utilize.

Questions about this should be addressed to the Contracting Activity of the Department of Labor in Washington, DC.

Service Contract Act Training Courses

The Professional Services Council (PSC) is offering its two-day Service Contract Act training in Arlington, VA, on October 31–November 1, 2012, in conjunction with the DOL and DOD panels that will be present. If interested, go to or call PSC at 703-875-8059.

At Cleary, we know how important a comprehensive benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your fringe-benefit obligations and provides your employees with valuable benefits.

Protecting Your 401K

If you’re changing employers, one of the many transitions you’ll face is what to do with the money you’ve accumulated in your 401(k). Making the right choice can keep you on track for a financially secure retirement, but making the wrong choice can wind up costing you plenty. Let’s take a look at your options.

Cashing Out

Unless you’re facing a financial emergency that leaves you no other option, it’s usually a bad idea to cash out your 401(k). Why? For starters, tapping your retirement funds early accelerates tax liability and can subject you to stiff penalties.

You’ll owe federal income taxes – and, depending on where you live, maybe state and local income taxes as well – on any cash you withdraw, as well as an additional federal penalty of 10% if you’re younger than age 59 . (One exception: If you’re older than age 55 when you leave your job, you may be exempt from this penalty. Ask your tax adviser.) Bear in mind that your employer also is generally required to withhold 20% of your distribution as a down payment on your federal income tax bill.

In addition, by withdrawing funds you’ll not only reduce the size of your nest egg but also lose its tax-deferred growth potential. The combined effect of significant tax penalties and lost appreciation potential can be enormous.

Leaving Your 401(k) or Other Qualified Plan Account Alone

As long as your account has at least $5,000 in it, by law you can’t be forced out of the plan, and your simplest option may be to do nothing and maintain your existing qualified-plan account.

There can be many reasons to choose this option. For example, your old plan may offer a particularly good lineup of investment choices. Or perhaps your new employer’s plan is significantly inferior to your current one, or restricts eligibility for participation to employees with at least one year of service.

Whatever the reason, if you’re happy with your old 401(k) account, you may not want to change a thing.

Rolling Your Account Over

Although you can keep your old 401(k) account active, you won’t be able to make additional contributions to it after you switch jobs. If you wish to streamline the number of accounts you own, consider rolling over your 401(k) savings into your new employer’s 401(k) plan – or into an IRA.

Which is better? It depends on your particular needs. Even though there aren’t major differences between the two options, both have their benefits and drawbacks.

If you’re planning to participate in your new employer’s 401(k) and you don’t already have an IRA, rolling over to the new 401(k) may be the more streamlined option because you’ll have only one account to keep track of.

But an IRA offers an important advantage: It can provide you with more flexibility. If you want to own a specific mutual fund or security in your retirement account, you can find an IRA custodian that will allow you to do so.

A 401(k), by contrast, limits you to the options your employer chooses to make available to you. Some plans offer a broadly diversified collection of strong-performing funds. Others are limited to only a few funds with middling track records. If you’re not sure about the quality of your new plan, your financial adviser can help you evaluate it.

Keep in mind that IRAs can have their downsides, too. For one, they typically charge investors modest administrative fees, while employers typically pick up the costs involved with a 401(k) plan. Also, IRAs can’t allow loans, while some 401(k) plans do. (Ask your 401(k) administrator about the specific benefits available to you.) On the other hand, IRAs offer more opportunities for penalty-free withdrawals before age 59 .

Go Direct

Whichever option you choose, a direct rollover is usually best. For instance, a rollover IRA into platinum or any other precious metal for that matter could act as an inflation hedge. With a direct rollover, you never take formal possession of your funds. The administrator of your old 401(k) plan transfers your assets directly to your new 401(k) administrator or IRA custodian. In some cases, the check will first be sent to you to hand over to your new administrator. As long as the check isn’t made out to you personally, this is still considered a direct rollover.

An indirect rollover is when you take personal possession of your assets before ultimately rolling them over. In this case, if you don’t redeposit the funds within 60 days, it’s considered a distribution, and you’ll owe income taxes and, generally, an additional 10% early-withdrawal penalty.

Your former employer also will be required to withhold 20% of your account value for federal income taxes, even though you’re then doing a tax-free rollover. Generally, this option doesn’t make sense. If you wind up having withholding, don’t forget to replace this amount when you roll over the funds within 60 days to avoid additional taxes and penalties.

Keep Saving

The good news is that changing jobs doesn’t have to mean interrupting your retirement savings plan. Avoid the expensive trap of cashing out your 401(k), and you can continue to make progress toward your long-term financial goals.

Presented by John Steiger, ChFC, AEP Certified Financial Planner

At Cleary, we are committed to a holistic approach of protecting and preserving our clients’ financial assets. Give us a call today at 617-723-0700 and let us know how we can help you.

Home and Automobiles in Living Trusts

As individuals and families look to preserve their assets against the uncertainty of tomorrow, the formation of a living trust is a viable estate-planning technique. It is not uncommon for a home and other major assets such as bank accounts, investments, and sometimes automobiles, to be transferred to a trust for that purpose.

Although attorneys handling the formation of the trust address the insurance implications, it is necessary to notify your insurance agency. In the case of a home, the name of the trust as well as those of the trustees must be added to the homeowner’s policy as “additional insured.” This is necessary for the asset to continue to be properly covered by your insurance policy.

The same holds true if you transfer the ownership of your automobile to your trust.

“When you put property in a living trust, the trust becomes its owner, which is why you must transfer the title to the property from your own name to that of the trust.”1 Thus, it is important that the applicable insurance policy (whether it is home or auto) reflects the insurable interest of the deeded owner of the property. In most cases the occupant (a beneficiary of the trust) is the named insured, and the trust or trustee is an additional insured on the policy. Most insurance carriers do not charge an additional premium to add a trust to a policy.

If the ownership of your home or automobile has been transferred to a trust, please contact your Cleary representative to discuss.

Concerned about your personal insurance coverage? At Cleary, our experienced Personal Lines department will work with you to evaluate your insurance needs, identify exposures, and create a customized insurance portfolio. Give us a call today at 617-723-0700.

1 Chapter 5, page 2, American Bar

Contract Surety Bonds

You don’t hear about government entities using stimulus funds on uncompleted public works projects despite numerous contractor failures during the recent economic downturn. Why is this? Public works projects have a third-party guarantee that ensures that projects are completed and that all bills to subcontractors and suppliers are paid. This guaranty is offered by a surety company and the guarantee is known as a surety bond.

The surety concept is not new. Originally it involved an individual providing surety for another individual. As a result of federal taxpayer losses on uncompleted construction and service contracts in the late 19th century, there have been several pieces of legislation enacted to protect taxpayers from these types of losses. The late 1800s saw the advent of well-funded corporate sureties stepping into the surety bond marketplace. They served as a mechanism to encourage trade over long distance.

Currently, the Miller Act at the national level and “little” Miller Acts at the state level require a surety bond in place on all public projects. However, they do have varying thresholds as to when they are required. For instance, a performance bond is not required on federal contracts under $100,000.

An entity looking to obtain surety “credit” must pass a rigorous prequalification process, much like obtaining a bank loan. The surety evaluates the contractor’s credit, financials, and experience to determine if it will extend surety credit. This process also serves to assist government entities in making sure that only the most qualified contractors are able to bid on government work.

As the New England Regional Director of the National Association of Surety Bond Producers, we work in conjunction with the surety industry to make certain smaller and minority contractors get qualified to participate on government contracts. If you have any questions or think you may be a candidate for a contract surety bond, contact Michael Regan at Cleary Insurance.

At Cleary, we will evaluate your business exposures and work with you to develop a comprehensive plan to safeguard your business. We are members of the National Association of Surety Bond Producers (NASBP), the professional organization for agents that also specialize in surety bonding. Give us a call today at 617-723-0700.

Automated External Defibrillators in the Workplace

Automated external defibrillators (AEDs) significantly improve survival rates for sudden cardiac arrest victims. AEDs are easy to use and inexpensive, with the cost for a unit starting around $1,200. They are an important consideration to protect your employees and your customers. Commercial properties, health clubs, restaurants, and retail establishments are especially likely to see sudden cardiac arrest cases in customers. AEDs are also an important consideration for the office, job site, or manufacturing area to protect employees.

OSHA estimates that there are 890 deaths due to cardiac arrest outside of hospitals each day. CPR can buy time but often will not result in resuscitation. The chances of survival diminish by 7% to 10% for each minute that passes after the onset of cardiac arrest. Studies indicate that survival rates rise to the 50% to 60% range when a shock from an AED is administered within three to five minutes.

AEDs are extremely easy to use. The devices provide verbal instructions for the user throughout the process. Manufacturers typically provide a DVD for training along with printed instructional material. It is certainly recommended that at least some employees receive formal training, but the devices are designed to be operated without prior experience.

The cost of AEDs has fallen over the years, so that a quality machine can be purchased in the $1,200 to $1,500 range. The units self-test daily and provide a verbal/visual warning if the batteries are low or the pads obsolete. Batteries typically last for five years and can be replaced when used up.

Most states have passed legislation providing certain legal immunity to AED operators in order to encourage their use. For example, the Massachusetts “Good Samaritan Law” states that a person who “attempts to render emergency care including, but not limited to, cardiopulmonary resuscitation or defibrillation, and does so without compensation, shall not be liable for acts or omissions” (MGL —Chapter 112, Section 12V). A number of states require that certain businesses, such as health clubs, have at least one AED on site.

AEDs are proven life savers, affordable and easy to use. Installing them in the workplace and encouraging CPR training demonstrate a strong commitment to employee and customer welfare. We recommend that you consider adding AEDs to your workplace.

The following websites provide additional information about AEDs:

At Cleary, we will evaluate your business exposures and work with you to develop a comprehensive plan to safeguard your business. Give us a call today at 617-723-0700.