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Steering through Paid Sick LeaveAdministration at TeslaPrepared by Aon National Absence Management PracticeAon Health & Benefits / February 16, 2016
Steering Through Paid Sick Leave Tesla MotorsJanelle Tucker - Benefits Analyst Overview of Paid Sick LeaveRachel Arnedt - Vice President, LegalConsulting Practice Paid Sick Leave DesignSander VanderWerf, M.S. - Vice President,Absence Management Consulting PracticeNational Absence Management PracticeProprietary & Confidential February 16, 20162
A competitive, growingorganization requires:Employees focusedand availablePolicies andadministration thatminimize frictionNational Absence Management PracticeProprietary & Confidential February 16, 2016Tesla Motors delivers extraordinary customer experience throughinnovation and dedication to serviceTarget AreaDescriptionEmployee Demographics Approx. 10,000 employeesAverage age 35.7 years15.9% femaleInterns, part-time employeesManufacturing, Corporate, Sales & ServiceGeographic Considerations Large CA-based employee populationExpanding nationallyIndustry High techManufacturingCulture Service excellenceInnovationProvide competitive benefitsBusiness Drivers Recruit and retain talentManage and support growthCost and risk management3
Tesla—The “Before” StoryA competitive, growingorganization needs to know:ObjectivesExperienceEmployee Satisfaction Compliance – whatis required?Administration –who does what?Communication –who knows what “I”should do?National Absence Management PracticeProprietary & Confidential February 16, 2016Confusion regarding benefits and processConfusion regarding paid & unpaidmaternity related leavesDelay and/or inaccuracies in paycoordinationEase of Use Poor employee experience regardingcoordination between CA SDI and client’sSTD benefitEmployer of Choice Maternity and paternity benefits laggedbehind market peersAdministrative Ease Manual processes needed to ensurepayment accuracyEarly RTW coordination not supportedOwnership for RTW was unclearCompliance 7/1/15 California HW&HF sick lawComplexity of multiple CA regulationsCost/Financial Risk An appetite to assume greater risk4
Action Plan—Taking ControlGoals for a competitive,growing organization:ObjectivesExperienceEmployee Satisfaction Compliance—federaland state (disability,paid sick & FML)Administration—positiveexperience:Ease of Use VDI and STD—same report andadministrationEmployer of Choice Maternity disability benefit 100%Paid parental leaveEnhanced VDI benefitAdministrative Ease RFP to select a vendor partnerPartner align culturally—innovative,consultative, & employee focusSpecific and personalizedcommunications Communication—everyone knowswhat to expectNational Absence Management PracticeProprietary & Confidential February 16, 2016Single point of contact—CA SDI, STD &FMLTelephonic Q&A—with/without a leaveeventCompliance Provide sick days for employees noteligible to participate in PTO planCost/Financial Risk Self-fund the STD and VDI plansIncrease the STD maximum durationfrom 13 weeks to 26 weeks5
Goals Achieved—Compliant, Enhanced ProgramsA competitive, growingorganization invests:Compliance—providepaid sick time topreviously ineligibleemployeesActionCost ImplicationsSelf-fund VDI Self-fund STD &Maximum DurationSTD/LTD EP 180 day Funding—increaseself-funded riskEnhance Paid Parental Oversight—enhanceto improve EEexperience &program,communication andmanagementChange STD & LOAAdministrators Compliance CA PaidSick National Absence Management PracticeProprietary & Confidential February 16, 2016Feasibility study demonstratedsignificant surplus, resulting in thefunding of a better additional STDbenefitNet Savings for TeslaFuture positive impact to LTDexperience, reduces false positives in180 day plan vs. prior 90 day planCost-Neutral for TeslaCost per week of 170K (6 weekbenefitAdditional Cost to TeslaImproved employee advocacy model,custom administration with TPANet Savings for TeslaEnhanced PTO design created CAPSL compliance and morecompetitiveAdditional Cost to Tesla6
Prevalence of U.S. State & Local Paid Sick Leave LawsExisting laws in: CA, CT, MA, OR District of Columbia 26 otherjurisdictions &counting!Source: National Partnership for Women and FamiliesNational Absence Management PracticeProprietary & Confidential February 16, 20167
Overview of Typical Paid Sick Leave Law eriodAccrualHoursCapsDaysUsage CapsUse of PaidTime OffPlansAccrualCapsNational Absence Management PracticeProprietary & Confidential February 16, 2016FrontloadingPurposesOwn medicalconditionCare of afamilymemberLegalTrackingAntiretaliation8
Overview of California Paid Sick Leave Law RequirementsEligibilityMust work 30days a year inCAIncludes parttime, per diem &tempsAvailable for useafter 90 daysAccrualAccrualsbegins at hiredate1 hour forevery 30 hrs.workedCarryoverFrontloadoptionNational Absence Management PracticeProprietary & Confidential February 16, 2016CapsUsage: 24 hrs.or 3 daysCan set 2 hrs.minimum for useAccrual: 48 hrs.or 6 days peryearPurposesFMLA plusFamily: sibling,grandparent,grandchildVictims ofdomesticviolence, sexualassault &stalkingLegalTrack availabletime and usageon pay stubsRetain recordsfor 3 yearsAnti-retaliationclause9
Navigating the Complex Web of Leave Compliance: CA ExampleCFRAWorkers’CompKin CareLeaveState and ermDisabilityPaid eaveNational Absence Management PracticeProprietary & Confidential February 16, 201610
Developing an Action Plan for Compliance Offer a single national plan covering allemployees/regulations?– Or, a national plan with some local tweaks?On-goingOversightPayrollCapabilities– Or, a national plan for all non-regulatedjurisdictions and a local plan for allregulated jurisdictions?– Or, a separate plan for employee’s notTrackingandReportingCosteligible for other paid leave benefits? Is it time to re-evaluate paid time off benefits?Notice &TrainingPolicy andProcessReview– Change to a PTO plan?– Change from a PTO to separate—vacationand sick time benefits? How best to be compliant supporting broaderorganizational goals?National Absence Management PracticeProprietary & Confidential February 16, 201611
Employers Considering How to Comply—Same Plan for Everyone?Paid Time Off Will the PTO plan meet eligibility, accrual, carryover,use requirements, etc.?Paid Time Off Sick Does the PTO plan exclude any employees (part-time,interns, etc.)?Vacation Sick Is it best to separate time for vacation/personal fromsick?National Absence Management PracticeProprietary & Confidential February 16, 201612
Design Options Example—Projected Cost ModelingProposalAdditional Sick DaysTotal days offNationwide compliance5 Days (40 hours)15 PTO/5 sickCA state requirement3 Days (24 hours)15 PTO/3 sickReduction of PTO bankfrom 15 to 12 days0 Days12 PTO/3 sick Cost occurs only if additional sick time is used Does not include temporary staffing sick time cost Does not include staff replacement costNational Absence Management PracticeProprietary & Confidential February 16, 2016Copyright 2014 Tesla Motors, Inc.1313
Tesla Proposed Design—Sick Plan Transition CaliforniaUpdate PTO PolicyDevelop CommunicationsEvaluate Time &AttendanceTrain ManagersDevelop PSL Policy for EENot Eligible for PTOMeasure ImpactAnnual cost increase to provide new paid sickleave for internsNational Absence Management PracticeProprietary & Confidential February 16, 201614
The Evolving Paid Sick Leave Environment—The Four “C”CompliantCostCultureCompetitive Get it Maintain it Cost neutral Measure it Treat fairly Treat allemployeesthe same Recruit andretain Employer ofchoiceNational Absence Management PracticeProprietary & Confidential February 16, 201615
Questions and AnswersNeedDirections?National Absence Management PracticeProprietary & Confidential February 16, 201616
Legal DisclaimerThis publication contains general information only, and Aon Hewitt, or any of its affiliates, is not, bymeans of this publication, rendering accounting, business, financial, investment, legal, tax, or otherprofessional advice or services. This publication is not a substitute for such professional advice orservices, nor should it be used as a basis for any decision or action that may affect your business.Before making any decision or taking any action that may affect your business, you should consult aqualified professional adviser. No Aon company shall be responsible for any loss whatsoever sustainedby any entity or person who relies on this publication. Not intended to be used as legal advice orguidance, Aon Hewitt suggests employers seek formal legal counsel before amending leave policies orprocesses.National Absence Management PracticeProprietary & Confidential February 16, 201617
Administration— positive experience Compliance—federal and state (disability, paid sick & FML) Objectives Experience Employee Satisfaction Single point of contact—CA SDI, STD & FML Telephonic Q&A—with/without a leave event Ease of Use VDI and STD—same report and administration
