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This Strategy May Help You Navigate ‘Wash-sale’ Rule

By Sean Wandrei

 

It is that time of year when taxpayers are looking for ways to reduce their tax liability. It has been a volatile year for the stock and cryptocurrency markets. There may have been some capital gains generated in the beginning of the year when stocks were sold and the markets were doing better than they are now. Now, as the year has progressed, there may be stocks that you are holding that have declined in value. These stocks are ripe for tax-loss harvesting.

Tax-loss harvesting is a strategy used to recognize capital losses by selling capital assets that have declined in value to offset capital gain already recognized. If you have capital gains from stocks that you have sold during the year, you can offset those gains by selling other stocks that have declined in value to generate a capital loss. The capital losses would offset the capital gains that would reduce the amount of taxes that would be paid on those gains by eliminating them. If you end up with capital losses in excess of capital gains during the year, you can deduct up to $3,000 of the net capital loss in the current year. Any capital loss in excess of $3,000 would be carried forward and used to offset future capital gains.

Sean Wandrei

Sean Wandrei

“Tax-loss harvesting is a strategy used to recognize capital losses by selling capital assets that have declined in value to offset capital gain already recognized.”

There could be an issue with this strategy, as the ‘wash-sale rule’ could limit its effectiveness. The wash-sale rule states that, if you are deducting a loss, you cannot buy a ‘substantially identical’ stock or security for 30 days up to the date of sale and 30 days after. If you do, the capital loss may be disallowed. This could be an issue when you sell a stock that you want to stay in, just to generate a capital loss.

‘Substantially identical’ generally means you cannot sell Tesla stock and reacquire Tesla right before or after the sale. If you are selling your Tesla stock just to generate losses and still want to be in Tesla stock, you need to wait 30 days to reacquire it.

What if you are investing in cryptocurrencies? The two most popular cryptocurrencies are Bitcoin and Ethereum, but there are hundreds more that you could invest in. Cryptocurrency prices can be volatile and widely fluctuate throughout the year. Bitcoin has dropped from a price of $66,000 per coin to $16,000 over the past year. Ethereum has seen similar declines over the year.

There may have been many investors who got into the cryptocurrency game hoping to ride the wave of optimism and are now looking at their portfolio, which shows built-in capital losses on their cryptocurrency investments. In 2014, the IRS declared cryptocurrencies to be a capital asset. As of this writing, cryptocurrencies are not stocks or securities and do not fall under the wash-sale rules. There has been some discussion in Washington, D.C. to expand the wash-sale rules to include cryptocurrencies, but as of now, that has not materialized.

If you believe in the underlying blockchain technology and the cryptocurrency associated with it, you may be a long-term investor and want to hold onto the investment believing that there will be future gains. There is an opportunity to reduce your tax liability by selling cryptocurrency that has decreased in value for a capital loss and then buy the same cryptocurrency immediately after the sale. This would not violate the wash-sale rules since cryptocurrency is not viewed as a stock or security. The capital losses generated by this strategy could be used to offset any capital gains that you may have.

Are there some risks with tax-loss harvesting? Of course there are. There is usually a transaction fee associated with buying and selling cryptocurrencies that some exchanges (such as Coinbase, Kraken, or others) charge. This fee could be as high as 4%. Does the cost of the transaction outweigh the tax savings that could be generated from this strategy? As mentioned previously, there are talks of pulling cryptocurrencies into the wash-sale rule, so this should be monitored if you are thinking about this strategy.

Lastly, while tax-loss harvesting defers your capital gains, it does not eliminate them forever. This is a strategy based on the time value of money where tax savings now can be used to invest in more capital assets that will generate income in the future.

As with any tax article, the famous last words: as always, you should see your tax professional advisor if you have any tax questions or concerns.

 

Sean Wandrei is a senior lecturer in Taxation at the Isenberg School of Management at UMass Amherst; [email protected]

Law

A Heads Up

By Briana Dawkins

 

Effective Oct. 24, Massachusetts joined 17 other states in passing the Creating a Respectful and Open World for Natural Hair (CROWN) Act, which bans discrimination against employees, students, and other individuals on the basis of natural or protective hairstyles historically associated with race.

The act applies to Massachusetts employers as well as all Massachusetts school districts, school committees, public schools, non-sectarian schools, and places of public accommodation. At the federal level, CROWN Act legislation has passed the U.S. House of Representatives and is pending in the U.S. Senate.

The Massachusetts version of the CROWN Act amends the definition of ‘race’ contained in the state’s Fair Employment Practices Act, as well as other Massachusetts laws specifically applicable to schools, to include protection against such discrimination on the basis of traits historically associated with race, including, but not limited to, hair texture, hair type, hair length, and ‘protective styles,’ which include braids, locks, twists, Bantu knots, hair coverings, and other formations.

Briana Dawkins

Briana Dawkins

“To ensure compliance with the CROWN Act, employers and schools may want to consider avoiding language in their grooming or personal appearance policies that categorizes specific hairstyles or textures as ‘unkempt’ or, in the alternative, ‘socially acceptable.’ Such choice of words can create a presumption that some hairstyles or textures are less socially acceptable than others.”

The enactment of the CROWN Act in Massachusetts was founded in an incident that occurred at a Greater Boston charter school. In 2017, two Black 15-year-old sisters, Deanna and Mya Cook, were reprimanded at the Boston-area high school in Massachusetts for wearing braided hair extensions. At the time, the school had a hair and makeup grooming policy that prohibited hair extensions. The Cook sisters faced several hours of detention, were threatened with suspension, and, among other reprimands, were even barred from participating on the school’s sports teams after they refused to take down their protective hairstyles.

Thanks to the tenacity and grace of the Cook sisters, the issue reached a very public audience. The Massachusetts attorney general wrote a letter to the school informing the school that the grooming policy was discriminatory and in violation of state and federal law. The Cook sisters’ case also caught the attention of the American Civil Liberties Union of Massachusetts, as well as the NAACP. Then California state Sen. Holly Mitchell drafted the first CROWN Act legislation in 2019, empowering California to take the lead as the first state to enact this legislation.

Massachusetts Gov. Charlie Baker signed the CROWN Act into Massachusetts law earlier this year. While Massachusetts has not yet been confronted with a suit under the CROWN Act, a violation under the expanded protection may result in liability under the state’s anti-discrimination statutes (which provides for the award of lost wages, emotional distress, punitive damages, and attorney’s fees).

Going forward, the Massachusetts Commission Against Discrimination (MCAD) has been tasked with promulgating rules or issuing guidelines regarding the discrimination protections expanded by the CROWN Act. In addition, the Massachusetts Department of Elementary and Secondary Education (DESE) has been authorized to provide written guidance interpreting the Act. Nonetheless, employers and schools should not wait for the MCAD or DESE guidelines and should amend their equal employment opportunity policies, anti-discrimination policies, and any grooming or other appearance-related policies to ensure that the language appropriately reflects the added protections to race as a protected class.

To ensure compliance with the CROWN Act, employers and schools may want to consider avoiding language in their grooming or personal appearance policies that categorizes specific hairstyles or textures as ‘unkempt’ or, in the alternative, ‘socially acceptable.’ Such choice of words can create a presumption that some hairstyles or textures are less socially acceptable than others.

Instead, employers can enforce grooming requirements specific to a certain position or function of the job that apply to all employees regardless of race, hairstyle, or texture, such as a requirement to keep hair away from the face or pulled back. This same approach can apply to school grooming and uniform policies as well. Employers and schools should make efforts to ensure that the policies are enforced equally to all employees, students, and other individuals rather than selectively.

Employers and schools should also inform their managers, teachers, and other employees regarding policy changes and provide training on how to address potential policy violations. These preventive measures will help to ensure a welcoming environment for all hairstyles, textures, and the like that are historically associated with race in the work and school settings as required by the CROWN Act.

 

Briana Dawkins is an associate in Bulkley Richardson’s Employment and Litigation practices.

Law

This Developing Trend Is Moving in the Wrong Direction

By John Gannon, Esq.

 

Quiet quitting is a term many employers are familiar with — it involves a situation where an employee disengages from work and does only the bare minimum in order to get fired and collect unemployment.

Now, employers are firing back with quiet firings.

Quiet firing involves intentionally creating a difficult work environment and/or cutting pay or hours in a way that encourages people to leave voluntarily. In theory, the employee will quickly realize they need to get out and try to find alternate work elsewhere.

On the surface, ‘quietly firing’ a problematic or difficult employee might sound like a good idea. For starters, the manager or supervisor gets to avoid an uncomfortable conversation that will certainly lead to bad feelings and possibly boil over into a confrontation. Second, if the employee who is getting quietly fired is not meeting performance expectations, managers and supervisors avoid needing to coach them and give feedback.

John Gannon

John Gannon

“Managers and supervisors may prefer this method so they do not feel guilty about the end of the employment relationship. And quiet firing can be more easily accomplished in a remote or hybrid environment, as disengaging is easier when you do not have to see someone in the office.”

They can also avoid discussions about the consequences of continued poor performance. Managers and supervisors may prefer this method so they do not feel guilty about the end of the employment relationship. And quiet firing can be more easily accomplished in a remote or hybrid environment, as disengaging is easier when you do not have to see someone in the office.

Finally, some employers may see this as an opportunity to avoid unemployment compensation claims or claims of unlawful termination because employees who resign normally have trouble succeeding with such claims.

Despite what may appear to be advantages for employers who quietly fire employees, employers should resist the urge to utilize use this strategy for a number of reasons. First, creating a hostile work environment could lead to a lawsuit. It is unlawful for an employer to create a hostile work environment that is tied to an employee’s protected characteristics, such as gender or race. Creating a hostile work environment or reducing an employee’s hours could also be considered an adverse employment action, which can lead to claims of discrimination or retaliation.

Employees who are successful with these claims can sometimes recover big damage awards. For example, back in 2018, a jury awarded $28 million in damages to a nurse who succeeded in a retaliation claim against her employer. Part of her claim was that she was being verbally abused by her supervisor. The jury agreed, and the employer had to pay — a lot — for this supervisor’s mistake.

Employees who feel as though they are being squeezed out might resort to avenues other than the courtroom to air their grievances. It is not hard to leave damaging feedback on Glassdoor, a website where current and former employees anonymously review companies. Employees can (and probably will) share their negative feedback with co-workers, which could serve as the catalyst for good employees to start looking for a new job. It’s no secret that hiring and retaining qualified employees seems to be getting harder and harder each day.

Moreover, quiet firing is often the byproduct of a poor manager or supervisor who is unwilling to do one of the more difficult parts of their job — performance management.

So what should employers do? First, leaders should insist on managers and supervisors using traditional methods to address problematic behavior, such as coaching and progressive discipline. Should those efforts prove unsuccessful, managers and supervisors need to be ready to have the difficult conversation necessary to terminate the employee.

HR leaders should also be stepping in to prevent quiet firing from becoming a thing. This should involve regular check-ins with managers to talk about difficult employees and proactively asking how they are trying to solve the problem. Hopefully, the answer is performance management. If it’s not, maybe the manager is the one who needs some coaching and/or discipline. u

 

John Gannon is a partner with the Springfield-based law firm Skoler, Abbott & Presser, specializing in employment law and regularly counseling employers on compliance with state and federal laws, including family and medical leave laws, the Americans with Disabilities Act, the Fair Labor Standards Act, and the Occupational Health and Safety Act; (413) 737-4753; [email protected]

Opinion

Opinion

By Cristina Rivera, LICSW

 

The holidays can be a wonderful time of the year. For some, they mean seasonal gatherings and reconnecting with loved ones. For others, however, they can be emotionally and physically challenging, and this is especially true for many who are in recovery from substance use.

Having a plan for self-care and adhering to strategies that keep one healthy are key for all of us in enjoying the annual celebrations fall and winter bring.

I encourage people to not feel pressured to say “yes” to every obligation, whether that means attendance at a social function, family gathering, or work event. Individuals in recovery often know what environments will assist them in maintaining sobriety or allow the space to not use substances. Set boundaries and choose events that support your goals.

If you attend an event where substances may be easily accessible, prepare in advance. What’s your escape strategy if needed? Plan your arrival and departure, whom you will spend time with, and whom you will not. Having your own transportation allows you to leave if you are feeling uncomfortable. Having someone along to chat with helps if you are feeling the need for extra support.

If you opt out of an event, remember that you can still enjoy time with friends and loved ones. Plan to meet where you feel both comfortable and safe in maintaining your recovery goals.

The holidays may also bring feelings of loneliness as well as negative thoughts that could lead to using substances. I stress with my clients the importance of maintaining contact with people who support them in their recovery. This may be a mentor, therapist, friend, or fellow members of a support group — anyone in their life who is a positive influence and supports their sobriety. A supportive network can mean the difference between remaining substance-free or using a substance again.

It is possible to celebrate the holiday season and maintain your personal goals in recovery. Keeping to your routine and seeking support when needed are going to be very important. The gift of life is invaluable, and during the time of giving, the greatest gift to give yourself is decision making that maintains your recovery goals.

 

Cristina Rivera is director of Outpatient Services, Substance Use Disorders at MiraVista Behavioral Health Center in Holyoke.

Law Special Coverage

A 2022 Year-end Wrap Up and a Look Ahead to 2023

By Justin Goldberg, Esq.

Within the broad realm of employment law, this past year was marked by increased protections to employees through changes to independent-contractor classifications, raising of minimum and service wages, increasing benefits for family and medical leave, safeguarding hairstyles of protected classes, and other changes.

Looking ahead to 2023, it certainly appears to be headed down a similar path, with employee safeguards continuing to solidify. Employee security and compensation guarantees to be a highly litigated issue in the coming year.

Here is a look back — and ahead:

 

U.S. Department of Labor Publishes Independent Contractor Proposed Rule

On Oct. 11, the Biden administration, via the U.S. Department of Labor (DOL), proposed to modify Wage and Hour Division regulations so as to revise its analysis for determining employee or independent-contractor classification under the Fair Labor Standards Act.

This was done with the aim to be more consistent with judicial precedent and the act’s text and purpose. This will mark the administration’s second attempt at undoing the Trump-era standard, which it claims denies basic worker protections such as minimum wage and overtime pay.

Justin Goldberg

Justin Goldberg

“Operating costs will undoubtedly increase if they are required to reclassify their independent contractors as employees, due to the tax liabilities and minimum-wage, labor, safety, and other legal requirements that apply to employees.”

Secretary of Labor Marty Walsh was quoted as saying, “while independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers,” and that “misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages.”

Industries such as gig companies, construction, trucking, home care, janitorial services, delivery, personal services, hospitality, and restaurants that use independent contractors as staff should pay close attention to this anticipated development. Their operating costs will undoubtedly increase if they are required to reclassify their independent contractors as employees, due to the tax liabilities and minimum-wage, labor, safety, and other legal requirements that apply to employees.

The Trump-era rule outlined a multi-factor test (five total) to determine if the worker is an independent contractor or an employee; however, it gave far greater weight to two core factors: the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on personal initiative or investment.

The Biden administration’s proposal would consider those two factors, but include four others for a total of six: investments by the worker and the employer, the degree of permanence of the working relationship, the extent to which the work performed is an integral part of the employer’s business, and the degree of skill and initiative exhibited by the worker.

These six factors guide the analysis of whether the “economic realities of the working relationship” show a worker to be either dependent on the employer for work or in business for themselves based on a “totality of the circumstances.”

Under the proposed modification, no one factor or set of factors is presumed to carry more weight, and the DOL may also consider additional factors beyond those six, if they indicate the worker may be in business for themselves.

 

Increases in the Minimum Wage and Service Rate

Massachusetts employees making minimum wage are going to see a pay increase of 75 cents per hour, effective Jan. 1, 2023, bringing their pay to $15 per hour. This does not include agricultural workers, whose pay remains at $8 per hour. Workers under the service rate (those who provide services to customers and make more than $20 a month in tips) will see an increase of 60 cents per hour, beginning in 2023, as the service rate is now $6.75.

 

Changes to Massachusetts Paid Family and Medical Leave

In 2022, the maximum weekly benefit for Massachusetts Paid Family and Medical Leave is $1,084.31; however, in 2023, it will increase to $1,129.82. Also beginning in 2023, the contribution rate for employers with 25 or more covered individuals will decrease from 0.68% of eligible wages down to 0.63% of eligible wages. Employers should ensure that their wage deductions and contributions are adjusted accordingly. This is the second straight year the contribution rate has decreased.

Employees are still not permitted to use their accrued sick or vacation leave to ‘top off’ their weekly benefit. While there may have been rumors that Massachusetts was planning to change this in 2023, no such change appears forthcoming.

 

The CROWN Act

In 2022, Massachusetts enacted the Creating a Respectful and Open World for Natural Hair (CROWN) Act, making it the 18th state to pass similar legislation (see related story on page XX). This law is aimed at quashing discrimination on the basis of “traits historically associated with race, including, but not limited to, hair texture, hair type, hair length, and protective hairstyles.”

The law further defines “protective hairstyles” to include “braids, locks, twists, Bantu knots, hair coverings, and other formations.” Employers who violate the CROWN Act will be liable for compensatory damages, as well as possible punitive damages and attorneys’ fees.

The CROWN ACT was inspired by two teenage twin sisters’ alleged violation of a school hair and makeup policy that prohibited extensions.

 

Bottom Line

Given the changes that have taken place — and the changes to come — it is a good idea to have your business schedule a check-in with an employment-law firm as we approach 2023.

 

Justin Goldberg is an attorney who specializes in labor and employment-law matters at the Royal Law Firm LLP, a woman-owned, women-managed corporate law firm that is certified as a women’s business enterprise with the Massachusetts Supplier Diversity Office, the National Assoc. of Minority and Women Owned Law Firms, and the Women’s Business Enterprise National Council.

Accounting and Tax Planning

Learning Exercise

By Charles Jacques

 

With the rising costs of higher education, it is even more important to effectively plan for how best to finance your future goals, regardless of what level you are at or pursuing.

Qualified tuition programs (QTPs), or 529 plans, are one possible route that not only supports you in saving for education expenses, but also allows for tax incentives as established by the Internal Revenue Service (IRS).

 

What Is a 529 Plan?

Qualified tuition programs are established and maintained by either a state or educational institution (such as college or university) and are commonly referred to as 529 plans simply because their tax rules are governed by section 529 in the IRS code.

In short, these plans allow a taxpayer to either prepay or contribute to a savings or investment account that can appreciate in value over time, similar to a traditional IRA. When money from the account is later withdrawn by the designated beneficiary, the income will be excluded from federal income, provided, however, that these funds are being used for qualified educational expenses.

Common examples of qualified educational expenses include tuition, fees, books, and even room and board at eligible educational institutions (if at least a half-time student).

Charles Jacques

Charles Jacques

“These plans allow a taxpayer to either prepay or contribute to a savings or investment account that can appreciate in value over time, similar to a traditional IRA.”

How Do I Start a 529 Plan?

These plans can be created online or with the assistance of an investment advisor. Each state offers plans, and if you already have a relationship with a brokerage firm (Edward Jones, Vanguard, Fidelity, etc.), you can also partner with your advisor to set one up. Do keep in mind that, while the distributions are excluded from federal income, tax consequences vary by state. Make sure to research the tax rules for your state before setting up the plan.

 

Are the Taxpayer Contributions Tax-deductible?

Contributions to a 529 plan are not deductible for federal tax; however, some states do allow deductions. Be sure to check your state’s rules when setting up the plan.

 

What If the Beneficiary Doesn’t Use the Money for Qualified Educational Expenses?

The intent of these plans was to provide tax incentives to fund higher education. Distributions used for non-qualified expenses are generally treated as income, and the earnings in the account will also be subject to an additional 10% penalty (with some exceptions). It’s important to verify that the intended expense qualifies before deciding to take the distribution.

 

Who Reports the Income?

When a distribution is made, form 1099-Q will be issued, with information regarding the gross distribution, earnings within the account, and the type of account it is (such as a state or private plan). The individual receiving the distribution will usually be the one reporting the income, with their name on the form.

 

Can I Make a Gift Donation to a 529 Plan?

Yes. Keep in mind, however, that the gift amount is not exempt from the annual $15,000 gift-tax exclusion limit as established by the IRS. The IRS does, however, provide an option for taxpayers who gift up to $75,000 in a single year to split that gift in five equal parts over the next five years (as if it was actually split over those five consecutive years).

For example, if a taxpayer gifted $75,000 during the year, the gifting taxpayer can elect to report $15,000 ($75,000 / 5) in year one, and $15,000 again in the next four subsequent years, thereby not exceeding the annual limit. This election can be made for each unique beneficiary plan.

 

Can I Roll Over the Account Amount to Another Plan?

Yes. Perhaps the beneficiary doesn’t plan to go to college or accrue these qualified higher-education expenses in the foreseeable future. Plan benefits may be transferred from one beneficiary to another in the same family (although the IRS has a vast definition of what constitutes family) with no adverse tax consequences, with the one caveat being that you cannot roll over more than one QTP to a single beneficiary within a 12-month period.

Qualified tuition programs are an option to help fund educational goals and may be a helpful financial strategy when navigating those various costs associated.

 

Charles Jacques, staff accountant at Melanson, specializes in commercial tax returns and planning.

Accounting and Tax Planning Special Coverage

Modern Cost Accounting

By James T. Krupienski

The cost of delivering healthcare has been rising for years, and the current cost-accounting approach may no longer be effective in the post-COVID-19 world. A more modern cost-accounting approach is needed to accurately reflect the true cost of care and improve decision making.

In cost accounting, all of the various costs incurred in running a healthcare organization are tallied and categorized. This information is then used to inform decision makers about how to best allocate their resources. Healthcare cost accounting has traditionally been a very complex and manual process, involving a lot of data entry and number crunching. However, as healthcare organizations have become more data-driven, cost accounting has had to evolve to keep up.

One of the biggest challenges in cost accounting is accurately capturing all of the costs associated with patient care. These costs can include everything from the cost of medications to supplies, overhead, and the cost of labor. Additionally, cost accounting must take into account both direct and indirect costs. Direct costs are those that can be easily traced back to a specific patient or procedure, while indirect costs exist across the entire organization and cannot be directly linked to any one patient or procedure.

Organizations must also consider cost accounting when making decisions about billing and reimbursement. In order to set billing rates that reflect the true cost of care, cost accounting must be as accurate and up-to-date as possible. The pandemic has made this even more challenging, with many new factors, such as the cost of pre-visit COVID-19 testing.

There are several reasons why a more modern cost accounting approach is needed in healthcare post-COVID. First, the pandemic has resulted in a significant increase in the number of patients requiring care, while delivering care has slowed down. This has put a strain on resources and has made it more difficult for healthcare organizations to keep track of their costs in a timely manner.

Second, the pandemic has forced healthcare organizations to rapidly adapt their operations. For example, the pandemic has resulted in an increase in the cost of some supplies and medications. Specifically, personal protective equipment is now in high demand and can be quite expensive. This has made it difficult to accurately track costs using traditional cost-accounting methods, where more time and resources are needed to fully capture all costs.

Third, the pandemic has highlighted the need for better decision making about resource allocation. Cost accounting can help managers to make informed decisions about where to allocate resources in a time of crisis.

Finally, the pandemic has resulted in a change in the way that patients receive care, such as the seismic increase in the use of telemedicine. With more patients being treated at home, there is a need for a cost-accounting approach that takes into account the cost of care delivered outside of the traditional setting.

All of these factors have created a need for a more modern cost-accounting approach that can adapt to the changing landscape of healthcare. Cost-accounting software that is designed specifically for healthcare entities can help organizations to track and manage their costs more accurately. Such software can provide real-time cost data, which is essential in today’s rapidly changing healthcare environment. Additionally, more relevant software can be used to create cost models that can help organizations to make better pricing and reimbursement decisions.

James T. Krupienski

James T. Krupienski

“The current cost-accounting approach may no longer be effective in the post-COVID-19 world. A more modern cost-accounting approach is needed to accurately reflect the true cost of care and improve decision making.”

The bottom line is that a more modern cost-accounting approach is essential for healthcare organizations in the post-COVID world to more accurately track their costs and make informed decisions about pricing and reimbursement. Going about this can be done in a few simple steps.

Understand cost. The first step is to understand the cost drivers of care. Aim to identify the total cost of treatment. The cost of care should be examined in order to understand the costs within the entire treatment process.

Identify cost drivers. The second step is to identify the cost drivers of care. Once cost drivers are understood, healthcare organizations can allocate cost appropriately and make informed decisions about where to allocate resources. To identify cost drivers, ask questions such as, what are the major cost components? What is the cost per unit of care? How do cost vary by patient population?

Allocate cost. The third step is to allocate cost based on clinical and business value, particularly with indirect costs. When cost is allocated based on value, decision makers can make informed choices about where to allocate resources.

Analyze cost. Finally, healthcare organizations must analyze cost data to identify trends and improve cost management. Cost data can also help decision makers understand which cost-saving measures are working and which are not, and how to appropriately bill for their services.

Adopting a more modern cost accounting approach is essential for healthcare organizations to accurately reflect the true cost of care post-COVID. This will help improve decision making, better serve patients, and, ultimately, improve the bottom line.

 

James T. Krupienski is partner, Auditing and Accounting, Health Care Services leader, at Meyers Brothers Kalicka, P.C.

Opinion

Opinion

By Valerie Boudreau

 

It seems like people are talking at each other more than listening to each other these days. Think about how many emails, text messages, voice mails, and other interruptive, one-way communications we send and receive — there’s a lot more talking than active listening going on.

The ability to listen effectively is not only a critical communication skill, but also a strong leadership skill. Active listening allows employees, customers, and co-workers to feel that their ideas, thoughts and perspectives are heard, accepted, and understood.

To become a better listener, you need to understand what is involved in effective communication and develop the techniques to sit quietly and listen — a feat of true discipline and self-control! You must ignore your own needs and focus solely on the person speaking. Here are a few keys to active listening:

• Focus on the person and the message. Focus your entire attention on the speaker, and listen without judging or trying to come back with a response before they’re halfway through speaking. Look at the speaker’s body language in addition to their words.

• Communicate your attention. Use your body language and gestures to let the speaker know you are locked into what they’re saying. Face them directly and make eye contact. Sit or stand in an open position. Smile and nod occasionally.

• Acknowledge what the person is saying. From time to time, use “uh-huh” or “I see” to indicate you are following what the person is saying. This indicates that you are actively listening and following them, not necessarily that you agree with them.

• Don’t interrupt. Interrupting shows impatience and disrespect, especially if you interrupt with an argument rather than a question. It frustrates the speaker and limits your understanding of the message. Allow the speaker to finish each point before asking questions.

• Build rapport. Engage with the speaker by asking questions or reflecting back what you have heard. For example, say, “what I’m hearing you say is…” or “I’m not sure I understand…” This demonstrates that you are paying attention and will allow you to gain more information.

• Be authentic in your response. Your job as the listener is to gain information, perspective, and understanding. Be candid, open, and honest when responding to the speaker, but do so in a respectful manner. If there is conflict or disagreement, focus your response on the issue rather than the person.

As leaders, to make the best decisions for our organizations, we need as much information and as many different perspectives as possible. Active listening encourages people to proactively share information, ideas, thoughts, and perspectives because they know they will be heard and respected.

 

Valerie Boudreau leads the Learning & Development team at the Employers Assoc. of the NorthEast. This article first appeared on the EANE blog.

Banking and Financial Services

Taking the Reins

 

Thomas Meshako

Thomas Meshako

Greenfield Savings Bank (GSB) announced the appointment of Thomas Meshako as president and CEO. He brings to the role more than 40 years of experience in the financial-services industry in New England. He joined GSB in 2016 as treasurer and chief financial officer, and will continue in those roles as well until his replacement is hired.

Meshako was appointed by the board of directors after previous President and CEO John Howland’s resignation was accepted by the board of directors.

“I want to thank John Howland for his more than seven years as the head of the bank,” Meshako said. “John’s leadership and direction throughout the unprecedented time of the pandemic and his dedicated and genuine commitment to the communities we serve solidified the bank’s reputation as a community leader. We are grateful for his contributions to the bank and wish him the best in his future endeavors.”

Howland took over as president and CEO in 2015 from Rebecca Caplice, who had served in that role since 2006. Before joining Greenfield Savings, Howland was president of two banks, most recently the First Bank of Greenwich, based in Greenwich, Conn. He has worked in the financial-services field his entire career and holds a bachelor’s degree from Bowdoin College and a juris doctor degree from the University of Maine School of Law.

Meshako, who earned a bachelor’s degree in accounting from Bentley University in 1982, is a resident of Greenfield, where he lives with his wife, Mary Ann. They have three adult daughters.

Founded in 1869, Greenfield Savings Bank has 180 employees and offices and ATMs throughout Franklin and Hampshire counties. Its branches are located in Greenfield, Amherst, Conway, Hadley, Northampton, Shelburne Falls, South Deerfield, and Turners Falls.

The bank operates the only trust and investment management company headquartered in Franklin County. Total assets under management, including both the bank and the investment management company, exceed $1.4 billion.

Banking and Financial Services

Growing Concerns

By Ian Coddington

 

You may be a business owner looking to expand into a new market, purchase new equipment, or conduct development on a new product or design, but don’t want to use cash from operations. How do you complete this? One of the most common ways to fund these kinds of ventures is through financing, specifically debt financing. To effectively use debt, you need to understand covenants, which may be included in the loan agreement.

This article will help you understand what are covenants and why are they required, how covenants might affect your business, and managing your covenants.

Ian Coddington

Ian Coddington

“Using debt can be an effective way to expand your business, and by understanding the intricacies of bank covenants, you can make better decisions as a business owner.”

Using debt can be an effective way to expand your business, and by understanding the intricacies of bank covenants, you can make better decisions as a business owner.

 

What Are Covenants, and Why Do You Need Them?

Simply put, a covenant is a restriction. When a bank or financial institution underwrites a loan or issues a line of credit to a business, they take on a certain amount of risk.

How likely is the business going to pay in a timely manner?

Will the business pay back the loan?

How volatile is the company’s industry?

What is the collateral for the potential loan?

These are all questions lenders will ask and need to understand before issuing a loan. To protect their investment, the financing may require financial covenants. First, there are positive covenants; for example, you are required to have up-to-date insurance coverage and meet certain ratios. It might sound odd to call these positive, but these are items the bank wants to ensure you have in place to help protect the business.

Negative covenants act in the opposite way. Often times, the bank does not want the company taking on other debt obligations without the bank’s prior approval or until the most recent debt is paid off. In addition, negative covenants are often structured to look at a company’s solvency and not violating financial metrics. These are built into the financing to protect the bank, but also to protect the company and the business owner.

Some of the most common financial ratios and metrics that banks look at for assessing a loan are:

Leverage ratio: cash flow from operations divided by total debt. This ratio measures the number of years to pay off of a debt obligation, the lower the better.

Debt service coverage: net operating income divided by total debt service. This ratio measures the ability to service the current debt. The higher the ratio, the greater the ability of the borrower to repay.

Quick ratio: cash and equivalents, marketable securities, and accounts receivable divided by current liabilities. This ratio tests the ability of a company to pay its current liabilities when they come due with its most liquid assets. A strong quick ratio indicates the company will be able to pay its long-term obligations without needing to sell long-term assets.

 

How Covenants Might Affect Your Business

So you have met with a lender, gone through the approval process, and have your new loan right in front of you. Are you ready to sign it? Make sure you review any financing agreements or amendments with your attorney and accountant. Depending on the type of loan, it could require a compilation, review, or audit-level financial prepared by a CPA.

Financial preparation ranges in complexity: the more complex, the more intrusive and costly. Going from a review-level financial statement to audited financial statements could double your accounting fees that you already pay. This could come as an unwanted surprise if you are not ready for it.

There are changes on the horizon. As bankers look at new loan agreements or new amendments to current loans, be aware of the adoption of new lease accounting standards by the Financial Accounting Standards Board. Companies are not required to implement the new standard until years beginning after Dec. 15, 2021 (effective for fiscal years ending Dec. 31, 2022). This new standard could impact the definition or calculation of specific covenants.

 

Managing Your Covenants

You don’t want to wait until the end of the year to evaluate and determine the company’s overall position of compliance with negative and positive covenants. If you find yourself in a situation of continuously failing your covenants, your overall relationship with a bank might be impacted. To help alleviate this, a company should conduct tax planning and/or obtain advice during the year.

Debt is a great tool in a business owner’s toolbelt to grow their business. By understanding the restrictions, or covenants that a lender might use, you can make a more informed decision about whether debt financing is right for you. You also might use a professional to plan around your new debt to foster a healthy relationship with the bank. Strong creditors lead to happy lenders, which leads to better business for everyone.

 

Ian Coddington is a senior associate with the Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.

Banking and Financial Services

Investing for the Long Run

By Barbara Trombley, CPA, MBA

 

As I write this article, the S&P 500 index, which tracks the performance of 500 large companies in the U.S., is down almost 22% for the year. Even more remarkable is that the Barclays Aggregate Bond Index is down more than 14% year to date. If the average investor had a 60% equities / 40% bond portfolio that followed these two indexes, they would be down 18.8% for the year! This is without any portfolio or advisor fees.

After many years of positive stock market returns, this is extremely unsettling for the average investor. Usually, investing in bonds or ‘fixed income’ serves as a buffer to the stock market by providing what is usually a more conservative return. This year, because of rampant inflation, the Federal Reserve has rapidly increased interest rates. Bond prices and interest rates move in opposite directions, leading to large drops in bond prices and, therefore, a depressed bond market.

Barbara Trombley

Barbara Trombley

“Sometimes during volatile market periods, an advisor may strive to counsel a client to change their withdrawal strategy from their portfolio or offer advice on large purchases that can be financed another way.”

As a financial advisor, I wear many hats. The obvious one is that I provide investment guidance and strive to help my clients make financial choices. A less obvious role that I play is that of cheerleader. At times, some investors are very tempted to sell out of the market when times are bad. They feel nervous and uncomfortable. But history has shown us that investing is a lifelong event. A financial plan needs to be followed in good markets and bad.

There is a J.P. Morgan asset-management study that shows that seven of the best ten days in the stock market occurred within two weeks of the ten worst days. Since Jan. 1, 2002 through the end of 2021, for example, an investor who was fully invested in the S&P 500 would have returned 9.52% year over year (without fees). If the same investor missed the 10 best days in the market during that same time period, their return may have been 5.33% year over year (without fees) — almost half! An advisor will strive to provide guidance and education to prevent their client from making rash decisions.

Another area where an advisor can assist clients during volatile stock-market periods (and other times as well) is, if appropriate, potential tax-loss harvesting. If an investor has money that is not in a retirement plan, they can sell positions held at a loss in order to offset any gains held in other stocks. The investor can also offset $3,000 in ordinary income each tax year (if he or she has already offset gains) and carry forward unused losses to be used against gains in future years.

The investor would want to be aware of wash sales rules, which prohibit selling an investment for a loss and replacing it with the same or a ‘substantially identical’ investment 30 days before or after the sale. This would void the loss that the investor was deliberately trying to achieve. The investor is allowed to sell a stock at a loss and buy a similar one in the same industry so that he or she can continue to have their money working for them. Tax planning in volatile times could be part of your financial plan as well.

Sometimes during volatile market periods, an advisor may strive to counsel a client to change their withdrawal strategy from their portfolio or offer advice on large purchases that can be financed another way. I have often counselled clients on the options available to them, from where to draw money for their monthly expenses. In a volatile market, for many clients, using cash savings to pay monthly expenses can take the stress off a portfolio that has declined.

The greatest benefit to you from using a financial advisor is having someone to listen to you, someone for you to seek out and reassure you that, based on history, industry knowledge, and their experience in the financial world day after day, you can pursue financial independence.

 

Barbara Trombley, MBA, CPA is an owner and financial consultant with Trombley Associates. Securities offered through LPL Financial. Member FINRA/SIPC. Advisory services offered through Trombley Associates, a registered investment advisor and separate entity from LPL Financial. This material was created for educational and informational purposes only and is not intended as ERISA tax, legal, or investment advice. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

Building Trades

Building Trade

Chicopee Mayor John Vieau joins, from left, Revitalize CDC Executive Director Colleen Loveless; Director of Programs Ethel Griffin; and Moyah Smith, board clerk.

 

On Sept. 29, Revitalize Community Development Corp. (CDC) brought its #GreenNFit Neighborhood Rebuild to Chicopee. About 100 volunteers worked on four homes on one block, all in one day. Two of the four homes are owned by U.S. Air Force military veteran families.

“We are so grateful to the city of Chicopee for welcoming us with open arms and supporting our initiative to help make homes safe and healthy for those in need,” said Colleen Loveless, president and CEO of Revitalize CDC, noting that the work the volunteers and building contractors tackled included replacing rotted porches and steps; repairing accessible ramps, roofs, and decks; installing a new shed, windows, storm doors, and gutters; power washing; painting; and yardwork.

Contractors and volunteers get to work.

Contractors and volunteers get to work.

The work was supported financially and with volunteers from American Red Cross and the Chicopee Fire Department, the city of Chicopee, Baystate Health, Berkshire Bank, Blue Cross Blue Shield of Massachusetts, the Center for Human Development, Country Bank, Go Graphix, the MassMutual Foundation, M&T Bank, Ondrick Natural Earth, PeoplesBank, Rocky’s Ace Hardware, TD Bank, and Westfield Bank.

“Our #GreenNFit Neighborhood Rebuild goal is to work on hundreds of homes in targeted neighborhoods, clean up vacant lots, improve playgrounds, and create community gardens,” Loveless said. “Revitalize CDC focuses on making meaningful improvements on homes to help reduce energy use, save money, and create a safe, healthy, and sustainable living environment for our residents and the community.”

Improvements have included installing or retrofitting HVAC systems to allow for oil-to-natural-gas heat and solar conversions; new roofs; energy-efficient windows, doors, and appliances; water-saving plumbing fixtures; electrical upgrades; mold remediation, lead abatement, and pest control; interior and exterior painting; and modifying homes for aging or disabled homeowners, such as building exterior access ramps.

Since Revitalize CDC’s inception in 1992, the organization has repaired and rehabilitated more than 1,100 homes with the help of 10,000 volunteers, investing $42 million into Western Mass. In the past year, Revitalize CDC completed 72 home-repair projects on the homes of low-income families with children, elderly citizens, military veterans, and people with disabilities.

The organiation’s JoinedForces, in partnership with businesses, civic organizations, and other nonprofit agencies, provides veterans and their families with critical repairs and modifications on their homes.

Opinion

Opinion

By Susan Olshuff

 

Feeling the chill in the air? Checking out the golden autumn leaves? Putting the lawn furniture away for the winter? 

As the days get shorter, we might find ourselves thinking about the coming cold months, dreading the chilly bathrooms, worrying about the increasing heating bills, and concerned about the impact on our planet from all the energy we’re using.

Are you ready for what’s coming? Is your home ready?

We know we should really do something to prepare for the coming heating season, but then again, there’s the snowblower that needs to be taken into the shop to be repaired, and the kiddie pool that needs to find its way to the back of the basement or garage, and so much more. We also know that those beautiful golden leaves will soon morph into cold snow.

You may not realize that every time you’ve paid a utility bill over the years, you have been contributing to an energy-efficiency fund that is designated to pay for Mass Save energy-efficiency services that are yours for the taking at no charge. This includes a no-cost energy assessment along with recommendations for how to make changes that will save you energy and money.

Also at no cost, you’ll receive air sealing around those leaky spots that let cold air in, as well as programmable thermostats, water-saving devices, and energy-efficient power strips. You could also receive 75% to 100% off approved insulation. And there are more opportunities, too.

The mayors of both Springfield and West Springfield have declared October to be Energy Efficiency Month. By focusing now on ‘doing the right thing,’ we can reduce our costs this winter and, at the same time, help our cities work toward their climate goals. You can sign up for your no-cost audit at masssave.com/egs.

Energy efficiency is the cheapest, quickest way to meet our energy needs, cut our bills, and reduce harmful pollution. It’s also an economic engine, amassing a U.S. workforce of nearly 2.4 million at the start of this year in manufacturing, installation, construction, and other fields — most of which can’t be outsourced overseas. Energy Efficiency Day is a collaborative effort of more than 1,000 regional and national organizations.

The the colder it gets, the more people will request this assistance, and the wait time for your home energy assessment will lengthen. So don’t wait — act now. Your wallet will thank you, as will future generations.

 

Susan Olshuff is a town liaison and researcher for ener-G-save, a program of the Harold Grinspoon Charitable Foundation LLC.

Employment

Let the Buyer Beware

By Alexander Marsh and Jeremy Saint Laurent, Esq.

 

Historically, non-competition agreements have been a useful tool for employers to protect their businesses, financials, and proprietary information when a departing employee leaves the company to work for a competitor. Over the past decade, the ways in which non-competition agreements can be used has been restricted.

Indeed, Massachusetts has significantly limited the functionality of non-competes, and California has barred them altogether. Recently, the federal government, vis-a-vis the Federal Trade Commission, has limited their use in corporate mergers and acquisitions.

“In October 2018, Massachusetts practically banned non-competes through the creation of very specific and strict requirements. As a threshold matter, non-competes in Massachusetts cannot be freely used and, rather, must protect a legitimate business interest.”

Alexander Marsh

Alexander Marsh

Jeremy Saint Laurent

Jeremy Saint Laurent

Just four years ago, in October 2018, Massachusetts practically banned non-competes through the creation of very specific and strict requirements. As a threshold matter, non-competes in Massachusetts cannot be freely used and, rather, must protect a legitimate business interest. The definition of legitimate business interest is limited to trade secrets, confidential information of the employer that otherwise does not qualify as a trade secret, or the employer’s good will.

Other alternative restrictive covenant, such as non-solicitation, non-disclosure, and/or confidentiality agreements, must be explored prior to resorting to a non-compete.

Massachusetts further tightened up the ability to implement non-competes by creating a litany of other requirements. The non-compete must:

• Be in writing;

• Be signed by both the employer and the employee and state that the employee has a right to consult a lawyer before signing the agreement;

• Provide notice of the agreement to the employee (the notice requirements change depending on when the employee is asked to sign the agreement); and

• Occur at the beginning of employment or provide notice of the agreement no less than 10 business days before the agreement would become effective and provide additional compensation.

The conduct the agreement seeks to prevent must not violate the public interest. Generally, public policy favors an employee’s ability to move from one job to another without restriction. Only a narrowly tailored agreement to protect a legitimate business interest will fit within public policy.

It is against public policy in Massachusetts to allow for non-compete agreements in certain professions. Non-competes signed by nurses, physicians, psychologists, social workers, and certain employees of broadcasting companies are considered void in Massachusetts. This is to protect public health and the free flow of information and ideas. A non-compete agreement in any of these areas is unenforceable as a matter of law.

Additionally, a non-compete agreement is not valid against a low-wage employee. The law states that employees who are classified as ‘non-exempt’ (typically, employees eligible for overtime pay and hourly wages) under the federal Fair Labor Standards Act may not be required to sign a non-compete agreement.

Non-competes are also prohibited or unenforceable when an employee is terminated without cause or laid off. These workers are not bound by the terms of any non-compete agreement that they have already signed with their employer.

Now, on the federal side, non-competition agreements are coming under scrutiny through corporate mergers and acquisitions. The primary rationale for restricting them is public-policy concerns.

Traditionally, non-compete agreements as part of a corporate merger or acquisition were quite broad in scope and geography. The reason for their broad coverage makes sense: the sale of a business is primarily based upon good will. Buyers understandably would require broad non-competition coverage so, post-sale, they are not competing against a seller who may start or work for a competitor company. In other words, in a business sale, to protect its interest in the business, the buyer would want to restrict the seller’s ability to compete against it.

However, the Federal Trade Commission recently restricted the ability of a buyer to require broad, sweeping language in non-competes. Rather, they must be limited to what is specifically needed to protect portions of the business.

What does all of this mean for companies? Knowing how to properly craft a valid, legally enforceable non-competition agreement is paramount. As with other restrictive covenants, non-competition agreements should be used sparingly and tailored as narrowly as possible to adequately protect your client’s legitimate business interests without being overly restrictive to the employee.

Generally, a one-year duration is considered to be reasonable. Depending on the circumstances, it may be possible to protect your client with a non-compete that has a shorter enforcement period. Again, as a rule of thumb, the shorter the length of restriction, the more likely the non-compete will be enforceable. It may also make sense to explicitly prohibit competition during employment.

 

Jeremy Saint Laurent, Esq. is a litigation attorney who specializes in labor and employment law matters at the Royal Law Firm LLP, a woman-owned, women-managed corporate law firm that is certified as a women’s business enterprise with the Massachusetts Supplier Diversity Office, the National Assoc. of Minority and Women Owned Law Firms, and the Women’s Business Enterprise National Council; (413) 586-2288. Alexander Marsh is a legal assistant at the Royal Law Firm LLP.

Law

Giving Them the Business

By Gina M. Barry, Esq.

 

More often than not, a family business is doomed by the failure of the owners to plan for its continuation. Currently, only 30% of family-run companies succeed into the second generation, and only 15% percent survive into the third generation. Fortunately, with proper planning, most business owners can ensure the continued operation of their business should they become incapacitated or pass away.

Contemplating one’s mortality is not a pleasant activity. Most believe they have plenty of time to plan. Some business owners identify so closely with their business that they simply cannot comprehend the idea of their business being operated by anyone other than themselves. However, when a business owner becomes incapacitated or passes away without a plan in place, the business always falters and often fails.

Gina Barry

Gina Barry

“Currently, only 30% of family-run companies succeed into the second generation, and only 15% percent survive into the third generation.”

The general recommended time to plan for business succession is between the ages of 55 and 65. This timeframe is recommended because most successful business-succession plans include several steps carried out over time. Some succession consultants recommend a three- to five-year plan, while others advocate a five- to 10-year plan. Adequate planning time allows a business owner to test potential successors in different roles and to evaluate their maturity, commitment, business acumen, and leadership abilities. Further, once a successor is chosen, adequate lead time allows the successor to gain expertise so that the business does not falter when the former business owner leaves the business.

More often than not, the head of a family-owned operation chooses a child as a successor. Commonly, more than one child is competent to step into the parent’s shoes, which makes the selection process even more difficult. When a family member is not available, a key employee often fits the bill. Typically, these employees have already displayed the abilities necessary for operating the business.

The business owner should begin by determining three things: when they want to step away from the business, for how long they want to remain active in the company thereafter, and in what capacity they wish to remain involved. Next, the business owner needs to discuss their ideas about the future with their family, senior management team, and key employees. Thereafter, the business owner should begin working with the successor to revise their business plan, thereby allowing them to include any future new products, plans for expansion, growth, or new investment, as well as a candid assessment of the company’s current environment and competitive positioning.

The business owner will also want to develop a financial strategy for actually stepping fully away from the business. A financial strategy, which is perhaps the most significant activity associated with succession planning, protects the company, the family, and the employees against a monetary burden that could doom the entire process to failure. For example, if a business owner intends to leave the business to their children, they must consider any estate taxes their estate may face upon their passing that may require the liquidation of the business, despite best intentions.

It is also critical to obtain an accurate valuation of the business regardless of who will take over or inherit the enterprise. Such a valuation encompasses tangible assets, such as real estate, buildings, machinery, and equipment, as well as intangible assets, such as employee loyalty, manufacturing processes, customer base, business reputation, patents on products, and new technologies. Employing a professional valuation company is recommended, as there are many different factors that affect the value of a business.

Once the business has been valued, it is necessary to determine the method of transferring the business. Some options for transferring a business include gifting, the use of a trust, buy-sell agreements, and life-insurance-funded plans. The choice of successor will strongly influence this decision. Surely, a plan that gives the business to children or family members would differ greatly from a plan that requires a third party to purchase the business owner’s interest. When transferring to a child or related party, the business owner may gift some of the company’s value, whereas, when transferring to an independent third party, the business owner would most likely want to be paid the full fair market value of the business.

As various plans may be established and the specifics of the business must be considered, each different plan must be reviewed on its own merits. The process of choosing a succession plan involves numerous factors, and there are many pitfalls along the way. Thus, it is best to consult with the necessary professionals, such as attorneys, financial advisors, and accountants, to assist with the transition and to allow as much time as possible to plan and make the transition. By doing so, business owners can ensure the vitality of their business for many years to come.

 

Gina M. Barry is a partner with the law firm of Bacon Wilson, P.C. She is a member of the National Academy of Elder Law Attorneys, the Estate Planning Council, and the Western Massachusetts Elder Care Professionals Assoc., and concentrates her practice in the areas of estate and asset-protection planning, probate and trust administration, guardianships, conservatorships, and residential real estate; (413) 781-0560; [email protected]

Law

Case in Point

By Justice Mary-Lou Rup and Briana Dawkins, Esq.

A recent decision from the Massachusetts Supreme Judicial Court (SJC), Commonwealth v. K.W., clarifies the standard for persons seeking to expunge records of criminal court appearances and dispositions from their state criminal records (known as Criminal Offender Record Information, or CORI) and court and criminal justice agency records.

By way of background, it is important to first understand that in Massachusetts, individuals may seek to clear their CORI in one of two ways: through sealing or expungement. If sealed, the record still exists but is unavailable to the general public. If expunged, the record no longer exists.

Petition to Seal Record (Mass. General Laws, Ch. 276, Secs. 100A-100D)

With some exceptions, one can petition the commissioner of Probation to seal disposed cases after a period (three years for misdemeanors and seven years for felonies) beginning on the later of the date of a guilty finding or release from incarceration, with no intervening criminal convictions. A judge can allow immediate sealing if the charge ends with a finding of not guilty or no probable cause, dismissal, or nolle prosequi, and must allow a petition to seal for first-offense convictions (with successful completion of probation), not-guilty findings, dismissals, or nolle prosequi of possession of marijuana or Class E controlled substances or in the presence of a person in possession of heroin, as well as decriminalized offenses.

For other offenses, sealing is discretionary, and the petitioner must show ‘good cause’ — that continued public availability of the record creates a current or foreseeable future disadvantage. If sealed, the courts will report ‘no record’ to criminal background checks, and the individual, if asked (such as on an employment application), can report having no record as to the sealed offense. However, courts, police, criminal-justice agencies, and certain other entities still have immediate access to sealed records.

Petition to Expunge Record (Mass. General Laws, Ch. 276, Secs. 100F-100P)

In 2018, as part of the Criminal Justice Reform Act, the state Legislature created two pathways for individuals to seek expungement. Following the first pathway (referred to as ‘time-based’ expungement), individuals who, before age 21, committed certain low-level offenses may apply to expunge those records.

Following the second pathway (known as ‘reason-based’ expungement), an individual can seek expungement of juvenile and adult criminal court appearances and dispositions by presenting ‘clear and convincing evidence’ that the record was created as a result of false identification or unauthorized use or theft of identity of the petitioner; fraud perpetrated on the court; ‘demonstrable’ error by law enforcement, witnesses, and/or court employees; or an offense that is no longer a crime.

There is a ‘strong presumption’ in favor of expungement of records created as a result of one of the statutory factors. That said, expungement is not automatic. A judge has discretion and must still balance that presumption against any ‘significant countervailing concern’ that may be raised when deciding if expungement is ‘in the best interests of justice.’ If none are raised, the judge must order expungement.

An expungement order results in permanent erasure and destruction of the record of the qualifying offense. Expungement of the record for a qualifying offense will have no effect on the existence of other records related to the same or other incidences.

Sealed or Expunged Records

It is important to understand the policy reasons that support the sealing and expunging of records. As the SJC noted in its recent decision, whether to seal a record ultimately relies on a defendant’s and the Commonwealth’s interests in keeping the information private, which includes “reducing recidivism, facilitating reintegration, and ensuring self-sufficiency by promoting employment and housing opportunities for former criminal defendants.”

With regard to expungement, the SJC stated that by specifically creating the qualifying reason-based factors, the Legislature itself had identified a good cause basis for expungement. Records created as a result of one of those factors “have virtually no bearing on whether the petitioner might commit a criminal act in the future, and their value to society therefore is vanishingly small.”

Once sealed or expunged, a record cannot disqualify a person from examination, appointment, or application for employment with any government agency, or in determining if that person is suitable for the practice of any trade or profession requiring a license.

Any application for employment that seeks information concerning prior arrests or convictions must contain the statements required by the statutes relating to sealing records and expungement of records regarding the applicant’s ability to answer ‘no record’ when records have been sealed or expunged. Employment applications should be reviewed to ensure compliance with the required language.

This article gives a general description of sealed and expunged criminal records. However, procedures for and the effects of sealing and expungement are complicated. Therefore, interested individuals should carefully review Massachusetts General Laws, Chapter 276, sections 100A-U, or seek advice from an attorney.

Justice Mary-Lou Rup is a retired Massachusetts Superior Court judge and now senior counsel at Bulkley Richardson. Briana Dawkins is also an attorney at Bulkley Richardson, where she practices in the employment and litigation groups.

Law Special Coverage

Recent Case Shows the Danger Lurking with ‘Stray Remarks’

 

A recent Massachusetts Appeals Court decision, reversing a lower-court decision to dismiss an age-discrimination complaint, may have repercussions for businesses of all kinds facing a transition in their workforce. The issue — and the ruling — go deeper than just the perceived discrimination itself, however, delving into questions about how much exposure an employer attracts by simply discussing matters of age in the workplace.

By Erica Flores, Esq. and John Gannon, Esq.

 

Erica Flores

Erica Flores

John Gannon

John Gannon

It is common knowledge that older workers are a major part of this country’s workforce. According to U.S. Census Bureau statistics, more than 35% of all essential workers are over age 50, and nearly 15% are over age 60. As the Baby Boomer generation approaches retirement age, employers often wonder whether they can talk to their employees about their retirement plans. Is this allowed, or does it run afoul of age-discrimination laws?

The short answer is that general discussions about retirement plans are fair game. However, the conversation should always be about succession planning and/or transitioning of job duties. And, of course, suggestions about needing “younger” workers must be avoided.

A recent decision from the Massachusetts Appeals Court demonstrates the risks associated with subtle remarks about an aging workforce population coupled with an organizational need to make room for “junior-level talent.”

In Adams v. Schneider Electric USA, the Appeals Court reversed a lower-court decision that dismissed an age-discrimination lawsuit of a 54-year-old employee. The plaintiff in that case was an employee who worked for his employer for many years as an electrical engineer. In January 2017, the employer laid off the employee as part of a larger reduction in force (RIF) related to cost-cutting strategies. The RIF laid off a total of eight employees, all of whom were over age 50. In fact, the employer conducted a series of RIFs over a period of just 10 months that, when combined together, cut 24 employees, all but two of whom were over age 50.

“General discussions about retirement plans are fair game. However, the conversation should always be about succession planning and/or transitioning of job duties. And, of course, suggestions about needing “younger” workers must be avoided.”

The employee sued, claiming his employer terminated him on the basis of his age in violation of Massachusetts law. The lower court dismissed the case before trial, but a divided Appeals Court reversed that decision, concluding that the employee had pointed to enough evidence of age discrimination to require a jury to decide the case.

 

Evidence of Age Discrimination

The majority opinion, joined by three of the five judges who decided the case, found that the Trial Court should not have dismissed the case for multiple reasons. First, the court concluded that there was evidence of a high-level plan to replace aging employees with “early-career” talent and recent college graduates, “from which a jury could find that the RIF itself was tainted even if the person who selected the employees for the RIF [did so] neutrally.” Among this evidence was an October 2015 email from a vice president in the IT department telling an HR professional that the employer needed “age diversity” and “young talent.”

Notably, the comments relied on by the court — including the references to “creating space” for “junior-level talent” and a potential early-retirement program — did not reflect age bias on the part of the person who actually made the decision to include the employee in the RIF. The decision maker had completely neutral, business-based reasons for laying off the plaintiff. In fact, there was evidence in the record that suggested the decision maker and the plaintiff were long-term friends.

Even so, the court felt that there was also evidence demonstrating that, although the decision maker himself did not harbor discriminatory motives, he did have meetings with higher-level managers who were the supposed “architects” of employer’s plan to clear out older employees. Finally, the court pointed to the all-to-obvious fact that all of the employees selected for the January 2017 RIF were over age 50. This fact alone suggested the decision maker “understood the company strategy to discriminate.”

 

Takeaways

Interestingly, the Adams decision was the subject of a strong dissenting opinion joined by two members of the five-judge Appeals Court panel. Among other things, the dissent argued that the majority had departed from the long-standing legal rule that “stray remarks” are insufficient to prove discriminatory bias by holding that the rule can never apply to a manager who has the power to make employment decisions. The dissent also took issue with its apparent intolerance for modern succession planning in industries dominated by aging employees.

For now, though, the majority opinion remains the law, and it will certainly be relied upon by attorneys trying to avoid dismissal in employment cases. What does this mean for employers? For one, it means that management-level employees who have the authority to hire, discipline, promote, terminate, or make other employment decisions must be even more careful about remarks they make in the workplace. Comments that may have previously been brushed aside by courts as nothing more than “stray remarks” may now be considered evidence of a high-level corporate strategy to discriminate against employees in all manner of employment decisions, not just RIFs.

Also, employers who are thinking about succession planning need to be extra careful about the rhetoric they use to describe their concerns, needs, wants, and strategies, especially if their plans involve eliminating jobs. Partnering with employment counsel at an early stage can help reduce legal risk and shield sensitive conversations from being used in any ensuing litigation.

 

Erica Flores and John Gannon are partners with the Springfield-based law firm of Skoler, Abbott & Presser, specializing in employment law and regularly counseling employers on compliance with state and federal laws, including the Age Discrimination in Employment Act; (413) 737-4753; [email protected]; [email protected]

Insurance

Price Pressure

The cost of healthcare, not the COVID-19 pandemic, is now the top healthcare concern facing residents of the Commonwealth. Massachusetts residents reported that only inflation and the cost of housing were greater challenges than the cost of healthcare, according to a new survey commissioned by Blue Cross Blue Shield of Massachusetts.

The survey, conducted by Beacon Research, also found that the cost of care resulted in skipped or delayed healthcare for nearly half of Massachusetts residents.

“As we emerge from the COVID pandemic, we conducted this poll to better understand what Massachusetts residents believe are the key priorities in healthcare.”

“After two years of intense focus on COVID, cost is again the primary healthcare issue facing Massachusetts residents,” said Chris Anderson, founder and president of Beacon Research. “Consumers strongly believe that this is an urgent issue that health plans, the government, and hospitals should be working to address.”

Key findings from the survey included:

• Massachusetts residents are three times more concerned about cost of care over quality, access, or the COVID-19 pandemic;

• Healthcare costs are challenging family finances for nearly two-thirds of Massachusetts residents, trailing only the daily pressure of gasoline and food price increases;

• Eighty percent of Massachusetts residents think it is highly or extremely important to take action on healthcare costs;

• When asked who they think should be doing more to control healthcare costs, residents cited health plans (87%), government (85%), and hospitals (81%);

• Massachusetts residents are putting off needed healthcare (42%) and prescriptions (26%) because of cost; and

• Younger and affluent residents are the most likely to think care is unaffordable.

“As we emerge from the COVID pandemic, we conducted this poll to better understand what Massachusetts residents believe are the key priorities in healthcare,” said Jay McQuaide, senior vice president and chief Communications officer at Blue Cross. “There is a clear call to action in these survey results for those of us in healthcare to do more and to act with greater urgency to address the unsustainable rise in healthcare costs.”

Blue Cross reported that it is working with others in healthcare to responsibly moderate the growth in healthcare spending. Among the steps the company is taking are collaborating with physicians and hospitals to achieve contracts that reflect the community’s serious concerns related to healthcare costs; advancing next-generation, value-based payments; better supporting members managing chronic conditions; and managing pharmacy spending — the company’s most-used benefit — to ensure members are getting high-quality, clinically appropriate prescription drugs.

 

Thought Leadership

 

 


 

 

The Role of SD-WAN in Securing the Expanding Network Perimeter

Software-defined wide area networking (SD-WAN) is one of the most rapidly adopted technologies of the past decade. According to a study published by Dell’Oro Group, the worldwide sales of SD-WAN technologies are forecasted to grow at double-digit rates over each of the next five years to surpass $3.2 billion in 2024. This growth is certainly a testament to some of the more well-known benefits of SD-WAN technology, such as centralized network policy management, network flexibility and application-aware routing. More recently, SD-WAN has emerged as a key component for building more flexible, integrated security frameworks.
With SD-WAN, branch offices become part of an enterprise’s larger network topology, with their own Internet egress. Corporate devices can access the Internet via multiple endpoints, adding a layer of complexity to network security. However, if properly configured and equipped, SD-WAN can

Insurance

Counting the Cost

By HUB International New England

 

When do you need to list your teen driver on your car-insurance policy, and how can you make this additional coverage fit in your budget?

It is certainly not inexpensive to get car-insurance coverage for a new teen driver. When a teen driver is added to their parent’s policy, the typical insurance premium for a one-car family is likely to increase by 40% to 50%. If you’re a multi-car family, then you will probably see your insurance rates rise even higher. And if you’re opting to reward your new driver with a car and expecting them to secure their own insurance policy, you should prepare yourself — or your teen — to pay at least a couple thousand dollars in car-insurance costs.

So we understand why parents might want to hold off on getting auto insurance for their teen driver until absolutely necessary. However, even if you think your teen will only occasionally be borrowing the family car, the fact is they are now a licensed household member. As such, if you do not add them to your current policy as a covered driver, you risk being denied by your insurance carrier for any future claims, having your coverage terminated, or both.

In addition, should you decide you want to shop around for a better car-insurance rate, you will also need to make sure your teen driver is listed on all of your insurance applications so that you get an accurate quote and adequate coverage.

 

Six Tips for Saving Money

At HUB International, we have several strategies for saving money that we discuss with our clients:

• You can take advantage of discounts such as Good Student, which rewards teens with a grade point average of ‘B’ or higher. If your student is eligible for this discount, it may save you hundreds of dollars on your car-insurance premium.

• Completing defensive-driving courses can also earn you and your teen significant monetary credits toward your policy premium. Even more, your teen will hopefully drive away from this course with a better understanding of how to keep safe behind the wheel. Since even minor fender benders can drive up your insurance costs, it’s critical that your teen — as well as all other family members listed on your policy — do their best to keep their driving record clean of any accidents and moving violations.

• Investing in accident forgiveness can limit the financial impact in the event your teen does get in a car accident. Since 16-year-olds have higher crash rates than drivers of any other age, we recommend that our clients with teens strongly consider this endorsement, which can cancel out the surcharge points that are typically assessed by your insurer after an accident.

• Sharing a vehicle with your teen rather than giving them their own vehicle may allow you to classify your youngster as an occasional driver rather than the primary driver, which is another excellent way to keep your insurance rate lower. If you decide, however, that your teen will need a car of their own, it may make financial sense and keep your insurance costs down to assign them as the primary driver of the family vehicle that is the least expensive.

• Are you adding a vehicle to your household for your teen to drive? Look for a car with safety elements, such as anti-lock brakes, airbags, and anti-theft devices, as insurers will often reward you for having these features with lower car-insurance rates.

• Monitoring your teen driver with today’s technology can not only help you keep an eye on your teen when they are on the road, but also earn you discounts on your car-insurance premium. Some insurers are now offering devices to parents that can be installed under a car’s dashboard and create a report card of your teen’s driving behavior. Information may include the number of miles the car covers, how fast your teen is driving, the hours the car is on the road, and how often your teen slams the brakes. Insurers with this program are providing discounts ranging from 15% to 30% to drivers who achieve predetermined safe-driving benchmarks.

• Raising your deductibles lowers your premiums. However, this is only a smart choice if you are comfortable knowing that you might end up having to pay a larger share of costs for an accident out of your own pocket.

 

What Are the Options?

The team at HUB International has helped thousands of families across New England adapt to having a teen driver in their home. We know that your child’s newfound independence is exciting but may also cause you some stress and anxiety. But we can help make sure you and your teenager are insured properly.

While there is a natural desire to look for ways to cut costs on your insurance as your teen becomes a full-time driver — and drives up the cost of your premium — it’s definitely not the time to decrease your coverage limits or eliminate optional coverages. In an effort to save money, you could leave your teen and all other drivers in your home dangerously underinsured and at financial risk should they be involved in an accident.

Instead, it’s an excellent time to review your current auto policy with your insurance agent. We strongly recommend that our clients with teens carry more coverage than the state’s minimum required auto-insurance levels and that they opt for additional coverages such as collision and comprehensive. We also want to make sure that they are taking advantage of commonly overlooked car-insurance policy options that can save them money, stress, and time, like Bundle & Save, Disappearing Deductible, and Loan/Lease Gap Endorsement.

Finally, because teen drivers are, unfortunately, an accident-prone age group, once your child gets behind the wheel, your liability risk inevitably increases. So it’s not a bad idea to consider adding an umbrella policy to your insurance solutions for those worst-case scenarios where your teen is in an accident and is found at fault for bodily injuries to others or damage to other people’s property. For a minimal investment, this type of coverage may give you the peace of mind that your savings, investments, retirement accounts, and your family’s financial future are protected from an accident-related liability claim.

HUB, along with our partners, is committed to improving driver safety. Nationwide, well over half of new drivers crash in their first two years behind the wheel. Safety Insurance has partnered with the In Control Family Foundation to improve driver safety in Massachusetts. The In Control program offers a half-day, hands-on driver skills-development program that teaches drivers to avoid the most common and serious collisions. In Control’s crash-prevention training course has been shown to reduce crashes by new drivers by 70%.

With Safety Insurance, you can save 5% on your auto insurance by completing In Control’s crash-prevention training course, as well as saving more than 70% on the course itself.

Contact HUB for all of your insurance needs, and for additional information on programs such as In Control, call (833) 462-2554.

Insurance

Water, Water Everywhere

By Peter Normand

 

According to a 2020 report from the First Year Foundation, there were 336,000 properties in Massachusetts alone that were at some level of risk for flooding. This number is 65% higher than the existing flood maps indicate.

The heavy rains of last summer and the claims that followed got me wondering what the future holds. We are beginning to feel the impacts of climate change in more severe and less predictable weather. How valid are our flood maps? What can property owners do to protect their property in an uncertain future? If you haven’t talked about flood insurance with your insurance agent yet, now is the time.

Banks require flood insurance on all properties that are located in a flood zone per existing flood maps. Why do they do this? Commercial and homeowners policies exclude flood as a cause of loss. Nearly all of my commercial insurance clients who have flood insurance have purchased it to satisfy a loan requirement. Nearly everyone else is rolling the dice — most stating that, since they aren’t in a flood zone, it’s not an issue. After a very wet summer of 2021, however, the conversation is changing, even if this summer has been drier.

Let’s start off by defining what a flood is. Floodsmart.gov notes that “flood insurance covers losses directly caused by flooding. In simple terms, a flood is an excess of water on land that is normally dry, affecting two or more acres of land or two or more properties.” Just because there is water in your basement doesn’t mean it’s a flood. In fact, water seeping into a foundation without the above definition being met would not be covered by flood insurance. When determining whether or not there is coverage, the cause of the flooding that damages your property does matter.

On the market side, there are more options than ever, with more carriers offering a flood product. This leads to more flexibility for our insureds. For example, some markets allow for multiple properties on a single policy, some carriers offer limits in excess of NFIP (National Flood Insurance Program) limits to adequately insure the value of the property, there are replacement cost (RC) and actual cash value (ACV) valuations, and more competition has created market pressure on premiums, especially for properties outside of flood zones.

With changing weather patterns and other unknowns, it’s reassuring to know that there are options. If you haven’t considered flood insurance in the past, or have been putting it off, now is the time to talk to you insurance agent. There is an expanding market with options to meet your specific exposures and needs.

 

Peter Normand is a Commercial Lines account executive and RiSC consultant with Webber & Grinnell Insurance.

Opinion

Opinion

By Mark Adams

 

Employers have an obligation to maintain a workplace free from unlawful harassment and discrimination. When it comes to the pillars and strategies for achieving this outcome, many focus upon their efforts and resources on training their management and employees. Others focus on promoting and reinforcing positive behaviors and conduct in support of their values and culture to pull their workforce together, foster greater employee engagement, and thereby collectively root out such inappropriate and unlawful conduct. Most, if not all, enforce existing policies or practices for compliance and employee-relations purposes.

Yet despite the myriad paths to take (whether individually or concurrently), one tool that is critical towards supporting all of them is the need to conduct effective and thorough investigations.

Internal investigations are a powerful tool. Done effectively, they can help mitigate and control the risk that an organization may face when a dispute or complaint surfaces. Is termination warranted? Some other form of discipline? Or no discipline at all? A thorough and objective investigation can provide the foundation and backbone to justify whatever action management chooses to take in response to a situation, especially if challenged by others or by opposing legal counsel (if litigation later ensues).

Investigations can also serve as a deterrent against inappropriate conduct occurring in the workplace in the first place. While some perpetrators will succumb to the temptation of engaging in bad conduct when they are not being supervised or when they feel management will not be able to get to the bottom of it, they may think twice or not do something at all when management has a reputation of taking complaints seriously and conducting investigations thoroughly.

Then there is the engagement benefit that comes with investigations. Employees often feel disengaged if they feel they don’t have a voice in the workplace when their concerns are ignored or are not addressed. Such disengagement can have severe consequences for a company. It can lead to lost productivity and turnover, and when it involves questions of illegal conduct, it can also lead to employees going elsewhere to air their concerns (such as by filing a complaint with a state or federal anti-discrimination agency or going to court).

By contrast, employers who conduct investigations in a timely, thorough, and objective manner can engender trust and credibility among their employees, and with that gained trust, employees are more likely than not to utilize an employer’s internal complaint- and problem-resolution procedures rather than going outside the organization.

Employers who ignore conducting them altogether do so at their peril. In an opinion handed down by the U.S. Court of Appeals for the Second Circuit, the court described the failure to investigate a sexual harassment complaint as follows: “an employer’s investigation of a sexual-harassment complaint is not a gratuitous or optional undertaking; under federal law, an employer’s failure to investigate may allow a jury to impose liability on the employer” (Malik v. Carrier Corp.).

So, do you have a plan for how internal investigations are to be conducted? Will it be by someone from inside the organization? If so, are they trained on how to conduct workplace investigations? Will you use an outside resource to conduct them on your behalf? Or will you evaluate which path to take on a case-by-case basis? For employers, it is important to have answers to these questions and have either the internal or external resources in place to be able to respond promptly. Failing to do so can lead to delay or inaction altogether, which can create greater risk.

 

Mark Adams, director of Compliance for the Employers Assoc. of the NorthEast, leads EANE’s HR Services Team. This article first appeared on the EANE blog; eane.org

 

Community Spotlight Special Coverage

Community Spotlight

By Mark Morris

Mayor Nicole LaChapelle

Mayor Nicole LaChapelle’s priorities have included housing, business development, infrastructure, schools, and the emerging cannabis sector.

 

 

When people ask Easthampton Mayor Nicole LaChapelle to list her priorities for the city, her answer is always, “housing, housing, housing, and housing.”

And there’s a reason for that — actually, several of them, which LaChapelle summed up in this poignant way: “Easthampton is the cool-kid city.”

By that, she meant that this former mill town has become a destination for businesses, but also a very desirable place to live because of its arts, culture, attractive neighborhoods, and recreational spaces. That mix has created a need for housing — a major need.

“If we don’t put a huge focus on housing, and if we don’t get housing units done by 2025, our city will be in trouble,” said the mayor, adding that her administration has, indeed, focused significantly on this issue, and it has yielded results, such as the One Ferry project, an initiative that is creating not only new housing but retail and office space as well.

Several old mill buildings on Ferry Street are undergoing a massive effort converting the former factories there to condominiums and rental housing, as well as some retail and office space.

So far, the renovation work has focused on three buildings: 3 Ferry St. was finished in 2020, and it is now fully occupied with residents and several businesses. Meanwhile, 5 Ferry St. consists mainly of apartments with condominiums on the top floor; it is expected to open later this year.

“All but two condos are sold at 5 Ferry St., and the developer reported a 65% lease rate,” LaChapelle said, adding that “70% occupancy is usually the goal for a new development, so they are right there.”

Work has also begun on Building 7, scheduled to open in 2024. When complete, the three buildings will add nearly 150 units of housing to Easthampton.

“The Ferry Street project is what we hoped it would be, a spark for community development and neighborhood pride,” the mayor said. “Watching the progress at the site has been a real confidence booster for the city.”

While housing is indeed a priority, it is just one of many priorities in a community that has seen a great deal of change, evolution, and growth over the past quarter-century, and is poised for more of all the above.

“COVID was a huge challenge for businesses. This site allows them to respond to those challenges and to build more resiliency for changes in the future.”

Other focal points for LaChapelle and her administration include new business development, business-sector recovery from COVID, infrastructure, schools, growth of the city’s emerging cannabis sector, and more, and the mayor reports progress on all these fronts, especially those involving assistance and mentoring to small businesses.

Many are included in a broad initiative called Blueprint Easthampton. Designed to promote entrepreneurial innovation, the initiative also emphasizes partnerships with key constituents in the community such as nonprofit organizations and educational institutions.

Keith Woodruff

Keith Woodruff was one of the first local business owners to open an online store on the Shop Where I Live site.

LaChapelle said Blueprint Easthampton is like an octopus in the way it keeps reaching out to different areas. One notable partnership is with the Coalition for Community Empowerment, a collaboration with the Massachusetts LGBT Chamber of Commerce, the Black Economic Council of Massachusetts, and Lawyers for Civil Rights. They have embarked on a statewide program to provide small-business technical assistance and open paths to entrepreneurs from at-risk populations. LaChapelle said at least a dozen businesses in Easthampton have benefited in some way from this effort.

“At a deeper level, three businesses have received grants, and two others have signed up for extensive business coaching,” LaChapelle said, explaining that startup businesses often have to realign their ideas to serve the market that exists.

“In one case, a baker had a business plan based on a delivery and storefront model,” she noted. “After coaching from the coalition, she realized her idea would work better without the storefront.”

For this, the latest installment of its Community Spotlight series, BusinessWest takes an in-depth look at Easthampton, the many forms of progress being seen there, and what’s next for the ‘cool-kid city.’

 

‘Shop Where I Live’

In January, LaChapelle began her third term as mayor. Unlike her previous terms, which each lasted two years, the mayor’s term now runs four years. It’s a change that makes long-term planning easier on many fronts.

“With a four-year term, the mayor isn’t distracted with campaigning after only 18 months,” she said. “The longer term also makes it easier to manage the timing of grant cycles.”

The longer term is beneficial when coping with pressing issues, said LaChapelle, adding, again, that there are many of them, especially in a community that has become home to small businesses across many sectors, from technology to the arts to hospitality, that were negatively impacted by the pandemic.

In partnership with the Greater Easthampton Chamber of Commerce, the city secured a grant from the state’s Rapid Recovery Plan, which was set up to address the economic impact COVID-19 had on cities and towns. The grant resulted in an online retail effort run by the chamber known as easthampton.shopwhereilive.com.

Moe Belliveau, executive director of the chamber, explained that the Shop Where I Live program is an Amazon-type experience involving local businesses.

“Many businesses don’t have the resources or the time to set up online shopping, so this site makes that possible,” she said.

Consumers can choose offerings from several local businesses, put them all into an online shopping cart, and make one payment. Because the site is supported by a state grant, it’s open to all Easthampton businesses whether they belong to the chamber or not.

Moe Belliveau

Moe Belliveau said Shop Where I Live will help businesses respond to economic challenges both now and in the future.

“For members, this will be an ongoing benefit,” Belliveau said. “For non-members, the first year is free, then they can choose to join the chamber or pay a service fee to remain on the site.”

Each merchant can offer up to 100 products in their online store, said Belliveau, adding that Shop Where I Live is not restricted to retail operations. Services such as health clubs, web developers, and insurance agents can be found there, too.

“COVID was a huge challenge for businesses,” Belliveau said. “This site allows them to respond to those challenges and to build more resiliency for changes in the future.”

KW Home, an interior-design firm and retail showroom, was one of the first businesses to open an online store on Shop Where I Live. Owner Keith Woodruff expects the site to benefit his business going forward.

“For the last two years I’ve had to operate by appointment only with limited hours,” he explained. “Many consumers are still concerned about shopping in person, so having the online store will be a big help.”

KW Home is an example of a business that provides a service and sells products. Most of Woodruff’s work is driven by working with clients to present design plans specific to their homes and then providing the furniture, lighting fixtures, and other items to execute the plan.

He said 80% of what he sells are special orders for clients. Most items run the gamut from a specific type of fabric for a chair or couch to custom window treatments. He also carries items in limited fabric offerings that are more easily available and work well with the online store.

“In order to make the launch date of June 30, I put only a few items on the site,” Woodruff said. “As this rolls out, I plan to add smaller accessories on there to give people more choices.”

 

Work in Progress

One of the many disruptions COVID caused was the nature of where people work. Even now, some people have returned to their worksites, some continue to work from home, while others have left their jobs to pursue the business idea they’d always wanted to try.

Amid these changing dynamics, Belliveau conducted research on how best to use the space at the chamber office on Union Street. The result is a new co-work space called Work Hub on Union.

“We’re looking to address folks who still work from home but need a temporary space, as well as entrepreneurs who are just starting out but are not yet ready for a permanent space,” said Belliveau, adding that the chamber will remain on site, so those in Work Hub can benefit from its support.

“We are designing this so the furniture can be moved around to create educational space,” she explained. “We’ll be able to run things like development programs and entrepreneurial support programs. In short, it’s a much more productive use of the space.”

While inclusivity is a big part of Blueprint Easthampton, so is accessibility. Working with two land trusts, the city recently bought 22 acres of land near Mount Tom that connect to state-owned property. The purchase was intended to save the land from development. Instead, that area will soon have an ADA-accessible trailhead that goes up to the summit of the mountain.

“I ran on improving accessibility for everyone, so this project makes me very proud,” LaChapelle said.

Riverside Industries was a partner in the trail project. Located in the center of Easthampton, Riverside’s mission is “empowering people of all abilities to help them achieve their highest potential and live their best lives.” It is best-known for placing people with intellectual and developmental disabilities into employment throughout Hampshire, Hampden, and Franklin counties.

Lynn Ostrowski Ireland, president and CEO of Riverside, said anyone can use the new trail because it can accommodate manual or electric wheelchairs, and the ascent along the trail is no greater than the inclines in Riverside’s Cottage Street headquarters.

As someone who has previewed the trail, Ostrowski Ireland reported the summit view is “beyond spectacular.”

“There are plenty of places along the trail to pull off and take a break or just to stop and enjoy the view along the way,” she said. “We will definitely bring clients there and let their families know about it, too. It’s really something everyone can enjoy.”

Natural surroundings like Mount Tom are part of the attraction for new students at Williston Northampton School. The private college-prep school approaches the fall with a full enrollment. Ann Hallock, director of communications at Williston, said 495 students will be on campus, hailing from all over the U.S. as well as 30 different countries.

“We consider our location in Easthampton to be a unique selling point of the school,” Hallock said. “Students love the location, especially being able to walk into town for restaurants or visit shops or go for hikes on Mount Tom. Parents like all that too when they come to visit their kids.”

Williston students also get involved with several local organizations, such as the Easthampton Community Center and the Emily Williston Library.

When classes begin in the fall, the new Mountain View School, housing students in grades K-8, will be fully open to all its students. As the finishing touches were added this year, middle-school students moved in during the spring. Now that construction is complete, the elementary students will begin their classes at Mountain View in the fall.

With the new school project done, LaChapelle has shifted her attention to finding a reuse for the Maple Street, Center, and Pepin schools, the three buildings replaced by Mountain View. Later this summer, the mayor will issue a request for proposals that she hopes will attract the attention of developers who are planning their next construction season.

Naturally, the mayor would like to see the buildings turn into housing.

“Depending on how they are developed, the three buildings could add as many as 150 rental housing units,” she said. “Realistically, we’re hoping to see 70 to 80 units get added to the housing rolls, with 20% to 25% of those designated affordable.”

The search for a developer comes after 18 months of residents working with a consultant to determine the needs and wishes of each neighborhood where the schools are located.

“It’s exciting because every step of the way, we have been talking with residents about the buildings,” the mayor said. “The residents have done an amazing job, and after all their input, it’s safe to say the people have spoken.”

When the people spoke and voted to allow cannabis sales in Easthampton, no one knew what the impact might be on the city. In the beginning, there were fears of higher crime, underage use of cannabis, and fire-suppression issues in the shops. Now, with five dispensaries operating in the city, LaChapelle said none of those concerns came to pass.

Instead, the biggest effect was increased wear and tear on their roads.

“The revenue we’ve received from cannabis has largely been spent on our roads because they have been heavily impacted with the additional traffic,” she told BusinessWest.

The mayor added that it’s actually good news that the impact was on roads because many of them weren’t in good shape before cannabis came to town.

“We had to reprioritize which roads get paved because suddenly there are thousands more people driving on these roads,” she said.

 

Bottom Line

Now that the city is in a good place with its budget and has improved its bond rating since COVID, LaChapelle is reflective on how far Easthampton has come.

“I’m super proud of the people in our city departments and their leaders in how they’ve taken all our projects head on,” she said. “I feel we haven’t dropped any of the balls we were juggling before COVID.”

She quickly added that, because Easthampton is such a desirable place to live, there’s plenty of work to be done going forward.

That’s the reality when you’re the ‘cool-kid city.’

Education

A Class Act

By Keara Moulton

 

Educational assistance programs provide access to learning opportunities for staff members to gain new skills and maintain up-to-date knowledge in their field with financial assistance from their employer.

This is a commonly offered employer benefit, but not all business owners might be aware of the current opportunity to expand this offering.

Keara Moulton

Keara Moulton

“Whether your business already has an educational assistance program in place or you are considering providing one as a benefit soon, this can be a great recruitment and retention program.”

The CARES Act of 2020 included an expansion of Section 127, which allows employers to expense payments to employee student loans in addition to previously allowed payments on tuition, fees, books, and supplies. This expansion was extended through Dec. 31, 2025 by the Taxpayer Certainty and Disasters Tax Relief Act.

Whether your business already has an educational assistance program in place or you are considering providing one as a benefit soon, this can be a great recruitment and retention program. With the expansion to include public and private student-loan payments toward both principal and interest, employers have the potential to provide educational assistance not only to employees currently enrolled in courses, but also to recent graduates who are already making monthly payments using their post-tax income.

To qualify as an educational assistance program, the plan must be written, accessible to all employees, and spell out what the money can be used for. The business can either directly pay the educational institution or student-loan servicer on behalf of the employee, or they can pay the employee directly and then potentially request a receipt of employee payments if their specific written plan requires it.

If the total payments for educational assistance are under $5,250, the employee will not be taxed on this additional benefit. However, if the payments for tuition and loan assistance exceed $5,250, the employee would then pay taxes on the overage as it would now be included in box 1 of their W-2.

Recently, we had a local business reach out to inquire about the potential implementation of an educational assistance program that takes advantage of this expansion of Section 127. One of their key questions was ‘is this something you think we should offer to employees, knowing that we handle payroll in house using QuickBooks?’ Ease of implementation to process this pre-tax contribution will vary with the type of QuickBooks product the business uses (i.e. desktop or online).

QuickBooks payroll will need to be set up to accept and track the payments by going through the CARES Act section to check off the applicable pay items to include. With this expansion available through 2025, your employees can benefit from it for more than three years if your bookkeeper can adapt your program to your payroll system now.

This fringe benefit does mean that employees who receive this money will not be able to claim any of the tax-free education expenses (the amount received under $5,250) as the basis for another deduction or credit on their 1040 tax return. This includes the Lifetime Learning Credit and Student Loan Interest Deduction. However, the Lifetime Learning Credit is limited to a maximum of $2,000 per return and is non-refundable. In other words, the employee could use the credit to pay any tax owed, but they wouldn’t receive any of the tax credit back as a refund.

This credit is also phased out completely if the employee has an adjusted gross income over $69,000 as a single filer or $138,000 if married filing jointly. Moreover, the Student Loan Interest Deduction is limited to $2,500 and is eliminated by a phaseout if adjusted gross income is more than $85,000. With the income limits in place on the credits and deductions currently available to individual students and student-loan borrowers, this expansion to Section 127 has the potential to benefit a broader base of employees than the credits and deductions.

If you have any questions about how this might affect your educational assistance program or any other programs, deductions, or credits, please feel free to reach out for detailed tax advice. u

 

Keara Moulton is an associate at the Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.

Employment

Employers Should Look at Each Candidate as an Individual

By Kelly Moulton and Mia McDonald

 

In the midst of the Great Resignation, employers are desperate to hire new staff. Insider Intelligence reports that in 2022, approximately 20.2% of the U.S. population will be made up of Generation Z, meaning employers will increasingly need to turn to this group to fill roles.

Born between the years of 1997 and 2012 and sometimes called ‘screenagers’ for their attachment to mobile devices and upbringing in a digital environment, the strengths and weaknesses of Gen Z, as well as what they have to offer to the workforce, differ significantly from previous generations in some ways, but mirror their predecessors in other ways.

Kelly Moulton

Kelly Moulton

Mia McDonald

Mia McDonald

Edward Segal, in his Forbes article, “How and Why Managing Gen Z Employees Can Be Challenging for Companies,” discussed the challenges Gen Z applicants present to employers. Among those, noted several executives, are a lack of discipline and patience as well as the need to develop a work ethic.

Gen Z is not unique in facing broad generational criticisms. Baby Boomers and Millennials can relate to the struggle of being defined by their generation. But just like prior generations, Generation Z is diverse in its composition, motivations, and beliefs. Working to understand each of these components can help generate success for both employers and Gen Z employees, while increasing Gen Z commitment to the employer.

Raised in different decades and growing up utilizing different technologies, it can be a challenge to integrate intergenerational individuals employed in the same workplace. But with the influx of young workers entering the market, employers need to continue to learn and adapt so they can obtain and retain the best applicants, just as they require their new hires to adapt, learn, and grow within their roles.

A great way to help acclimate new hires to the community and culture of the workplace is to integrate them into a working team of established professionals who can help ease their introduction. This is a strategy we both experienced when we started at Meyers Brothers Kalicka.

MBK created a space where both of us could work directly and collaboratively with a team of other young professionals, allowing us to quickly meet and bond with co-workers in various specialties. This made for a welcoming, and less intimidating, entrance into the firm and the demands of public accounting in particular. This strategy also provides a broad base of different people to go to with questions, improves motivation and accountability, and fosters a teamwork-driven environment.

“Gen Z is not unique in facing broad generational criticisms. Baby Boomers and Millennials can relate to the struggle of being defined by their generation. But just like prior generations, Generation Z is diverse in its composition, motivations, and beliefs.”

Another important consideration is that many Gen Z workers entering the employment market have just completed school during a global pandemic. This has fostered adaptability to different styles of working and learning, as many recent graduates were required to manage their own time and resources with remote education. Employers should try to mirror this and offer similarly flexible work hours and locations.

Companies need to ask themselves, are we truly devoted to our employees maintaining work-life balance? Taking this non-traditional approach can, in turn, allow employees to pursue other interests and certifications. Generation Z is very aware of the importance of mental healthcare, often seeking out employers that understand and support a balance between their work and personal pursuits, from time with friends and famil to higher education or community events. Allowing more flexibility for staff ultimately makes for a happier work environment and more productive, connected employees.

Employers can successfully integrate and take advantage of the strengths of Gen Z new hires if they take a multi-faceted and individualized approach. This can be encompassed with the collaborative work environment, as well as flexible work hours and locations arranged to accommodate the needs of each individual. Employers need to allow for independence — showing that they trust and value contributions — while also setting clear expectations and providing consistent feedback to foster growth. This will create a sense of empowerment, which will be a vital trait for these future leaders.

For this more hybrid, flexible strategy to work effectively, communication is essential. Whether it be a quick phone call, email updates, or regular in-person check-ins, setting standards for communication will help to keep everyone on the same page.

It is important to understand that there is no cookie-cutter approach that will work in all cases, and employers should not try to generalize a strategy for all young applicants. Perhaps the most important thing employers can do is set aside preconceived notions about the generation, and instead look at each candidate as an individual. They should consider the ways in which each individual learns best, as well as the specific projects assigned. What is the overarching goal of the project, and what is the key takeaway that can be taught? Where can we allow for flexibility to best accommodate their needs and set them up for success?

For Gen Z applicants, it is important to remember that what is valued most by employers is a positive attitude and a willingness to learn. Beyond this, new hires and even current employees should always look for ways they can pull down tasks from higher-ups; offering time to check in and help on any available tasks will show initiative and generate more respect. Employ your strengths in digital communication and technology, but be open-minded and use your first few years to further diversify and learn as much as you can from those around you. Immerse yourself in your environment and seek out opportunities to bond with your co-workers and make connections. Networking not just outside of your company but within it as well will help hires work well with a variety of people and grow invaluable interpersonal skills that cannot be taught in a textbook.

With compromises in attitude and an appreciation for change and development from everyone in a workplace, employers will be able to reap the benefits of the upcoming generation of workers and future leaders.

 

Kelly Moulton and Mia McDonald are associates at the Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.

Law

Use with Caution

By Amelia J. Holstrom, Esq. and Trevor Brice, Esq.

 

Over the past several years, employers have turned to various software-based recruitment and employment screening tools to evaluate applicants and employees. The software, which uses artificial intelligence and various algorithms to make decisions, often helps employers evaluate more applicants in a shorter period of time, select individuals for interviews, or evaluate current employees for raises or advancement at the business.

But could the use of this software be creating legal liability for your business? Maybe.

In May, the Equal Employment Opportunity Commission (EEOC), the federal agency that enforces federal anti-discrimination in employment laws, issued guidance to employers, titled “The Americans with Disabilities Act and the Use of Software, Algorithms, and Artificial Intelligence to Assess Job Applicants and Employees.” The guidance addresses three main areas, or ways, in which software-based screening tools may violate the Americans with Disabilities Act (ADA), if employers are not careful.

First, the EEOC guidance reminds employers that if their software-based screening tool does not have a process for individuals to request accommodations that may be necessary for an individual with a medical condition to be fairly and accurately rated by the software or use the software, it may violate the ADA. Under the ADA, employers are required to provide reasonable accommodations to applicants and employees. For example, it may be a reasonable accommodation to allow a visually impaired applicant or employee to be evaluated through a non-computer-based screening tool.

Amelia J. Holstrom, Esq.

Amelia Holstrom

Trevor Brice

Trevor Brice

“The EEOC warns employers that without proper safeguards, a software-based screening tool may unintentionally (or intentionally) screen out individuals with disabilities.”

Second, the EEOC warns employers that without proper safeguards, a software-based screening tool may unintentionally (or intentionally) screen out individuals with disabilities. The EEOC specifically referenced ‘chatbot’ screening tools, which are designed to engage in communications online through texts and emails. A chatbot might be programmed with an algorithm that rejects all applicants who mention in conversation with the chatbot that they have a gap in their employment history. If this gap in employment is due to a medical condition, then the chatbot may function to screen out the applicant unlawfully due to their disability, even though the individual would be capable of performing the essential functions of the position for which they were applying with (or without) an accommodation.

Finally, the EEOC guidance reminds employers that if a software-based screening tool asks questions that require employees to disclose medical conditions or other disability-related information, it may be an unlawful, disability-related inquiry that violates the ADA.

The guidance also cautions employers that they can be liable for discrimination caused by software-based screening tools, even if the employer did not create the tool. In other words, utilizing software developed by an outside vendor does not insulate an employer from liability.

Although the EEOC highlighted several issues that might make the use of software-based screening tools problematic under the ADA, it also provided employers with guidance on steps they can take to help mitigate their risk, including, but not limited to: making it clear how an individual may request an accommodation related to the screening tool or the use of the software; promptly and appropriately responding to all requests for such accommodations; thoroughly questioning the methodology used by the software the businesses uses, including asking the software provider whether it was developed with individuals with disabilities in mind and what the software provider did to make the interface accessible to individuals with disabilities; and asking the software provider if it attempted to determine if any algorithm used by the software disadvantages individuals with disabilities.

Employers should not expect the concerns raised by the EEOC over the use of software-based screening tools to stop at the ADA. Just weeks before the EEOC issued this guidance, the EEOC filed a lawsuit against iTutorGroup Inc., Shanghai Ping’An Intelligent Education Technology Co. Ltd., and Tutor Group Ltd., alleging that the companies’ online recruitment software was programmed to automatically reject female applicants over age 55 and male applicants over age 60 in violation of the Age Discrimination in Employment Act.

Given the growing use of software-based screening tools, it is imperative that employers thoroughly evaluate their own software and their vendor-provided software for any possible discriminatory bias and seek legal advice with regard to their evaluation whenever appropriate. u

 

Amelia Holstrom is a partner with the Springfield-based law firm Skoler Abbott, and Trevor Brice is an associate with Skoler Abbott; (413) 737-4753.

Law

Rallying Cry

On July 13, the Massachusetts State Senate unanimously passed a bipartisan bill protecting providers, residents, and visitors to the Commonwealth who engage in legally protected reproductive and gender-affirming healthcare.

“An Act Expanding Protections for Reproductive and Gender-affirming Care” includes provisions preventing the Commonwealth’s cooperation with ‘bounty-style’ anti-abortion and anti-gender-affirming care laws in other states, mandates health-insurance coverage for abortion and abortion-related care with no cost sharing, ensures access to emergency contraception, and provides confidentiality to providers of reproductive and gender-affirming care.

“We cannot let other states threaten Massachusetts pregnant and transgender people or the providers who take care of them,” said Senate President Karen Spilka. “Massachusetts will not waver in protecting our residents’ rights. The Legislature prepared for the end of Roe v. Wade by passing the ROE Act in 2020, which ensured the continuation of reproductive healthcare services when we could no longer count on the federal government. Now, we must prepare our Commonwealth for the potential further erosion of our rights and protections at the federal level. I want to thank my colleagues in the Senate for their swift and decisive action.”

The bill, filed by state Sen. Cindy Friedman, expands on her amendment to the Senate FY 2023 budget, which was filed in response to the leaked U.S. Supreme Court opinion on Dobbs v. Jackson and adopted by the Senate in late May.

Friedman, Senate chair of the Joint Committee on Health Care Financing and the lead sponsor of the bill, called the legislation “a monumental step forward in Massachusetts, as we are seeing increasingly more anti-abortion and anti-gender-affirming care legislation rise across the country. We must do everything to protect the rights of our providers, patients, and visitors to the Commonwealth. As we further realize the impact of the U.S. Supreme Court’s decision in Dobbs v. Jackson in our Commonwealth, we will continue to fight these attacks on reproductive and gender-affirming care with meaningful action.”

State Sen. Adam Gomez added that the bill sends a clear message: “we will not let the rights of pregnant or transgender people be threatened in our state. The decision handed down a few weeks ago from the United States Supreme Court means the criminalization of a deeply personal healthcare decision made between a child-bearing person and their doctor. This criminalization will disproportionately impact low-income communities, communities of color, and single parents. This legislation will ensure that these vulnerable groups will not have to worry in our state when it comes to their reproductive health.”

Under the legislation, physicians, nurses, physician assistants, pharmacists, psychologists, genetic counselors, and social workers are insulated from legal action in Massachusetts courts as a result of providing healthcare services that are legal in Massachusetts. This language specifically protects reproductive and gender-affirming healthcare, which has been the target of laws passed in states like Texas and Oklahoma that seek to limit this critical care beyond their states’ borders. This bill also allows anyone who faces abusive litigation in another state for providing legally protected reproductive and gender-affirming care services to sue in Massachusetts court to obtain a judgment, including actual damages, expenses, costs, and reasonable attorney’s fees.

The governor would be prevented under the legislation from extraditing someone to another state to face charges for an abortion, gender-dysphoria treatment, or another protected service, except when required by federal law or unless the acts forming the basis of the investigation would also constitute an offense if occurring entirely in Massachusetts. Law-enforcement agencies in Massachusetts would also be prohibited from assisting any investigation by federal authorities, another state, or private citizens related to legally protected reproductive and gender-affirming healthcare provided in the Commonwealth.

Courts would similarly be barred from ordering anyone in Massachusetts to testify or produce documents for lawsuits involving those practices, and judges could not issue any summons in a case concerning those healthcare services unless the offense in question would also violate Massachusetts law.

An amendment was adopted during debate requiring public higher-education institutions to work with the Department of Public Health (DPH) to create a medication-abortion readiness plan which must provide medication abortion at a health center on campus or provide a referral to a nearby healthcare facility offering abortion care. It also creates a trust fund for public higher-education institutions to support the implementation of their medication-abortion readiness plans.

“The Senate has taken important steps to confront the threats posed reproductive and gender-affirming healthcare in our state posed by new, draconian laws being passed across the nation,” said state Sen. Michael Rodrigues, chair of the Senate Committee on Ways and Means. “Though these changes are unprecedented, we in Massachusetts are continuing to demonstrate that we are prepared to defend the rights of all of our residents.”

In response to stories about women not receiving access to abortion care in Massachusetts currently allowed under the existing state law, an amendment was adopted to clarify the circumstances that treating physicians must consider when determining whether to provide later-in-pregnancy abortion care. The amendment requires such determinations to be made by the treating physician and patient. To ensure hospitals are complying with the law, the amendment also requires healthcare facilities providing these services to file their procedures and processes for providing services consistent with the law with DPH.

Additional amendments would identify areas of the state with limited abortion access to increase care to those areas and allow pharmacists to prescribe and dispense hormonal contraceptive patches and self-administered oral hormonal contraceptives. The bill implements a statewide standing order to ensure that emergency contraception can be dispensed at any pharmacy in the Commonwealth.

In addition, the legislation requires the Group Insurance Commission and commercial health-insurance carriers to cover abortions and abortion-related care and ensure Massachusetts patients are not charged a cost-sharing amount, such as deductibles, co-payments, or similar charges, for such coverage. It also requires MassHealth to cover abortion and abortion-related care and ensures enrollees are not charged a cost-sharing amount for prenatal care, childbirth, postpartum care, abortion, or abortion-related care.

The bill also allows individuals engaged in the provision, facilitation, or promotion of reproductive and gender-affirming healthcare to enroll in the Secretary of the Commonwealth’s Address Confidentiality Program. This action will increase the safety of those who may face threats or violence outside of the workplace in their personal lives or at their residences.

With a version of a bill expanding protections for reproductive and gender-affirming care having passed both branches of the Legislature, a conference committee will be appointed to resolve differences between the bill’s two versions.

“I was proud to vote yes on comprehensive legislation to strengthen reproductive and gender-affirming protections in Massachusetts,” state Sen. Jo Comerford said. “Safe, legal, and affordable reproductive and gender-affirming healthcare are public-health necessities. I’m grateful to Senate President Spilka, Senator Cindy Friedman, and Senate colleagues for leading a robust response to the national assault on reproductive and trans rights, and I look forward to beginning work on the Senate Reproductive Health Working Group with a strong focus on equity.”

Manufacturing

Making Change

 

The manufacturing tech industry is building back fast, undeterred by significant labor and supply-chain challenges. To maintain this momentum, manufacturers should navigate elevated risks while advancing sustainability priorities. That’s the takeaway, at any rate, from a recent Deloitte report exploring five manufacturing industry trends that can help organizations turn risks into advantages and capture growth.

It’s unusual to see positive economic indicators paired with historic labor and supply-chain challenges. But this is the trajectory for the U.S. manufacturing industry in 2022 emerging from the pandemic. The recovery gained momentum in 2021 on the heels of vaccine rollout and rising demand. As industrial production and capacity utilization surpassed pre-pandemic levels this year, strong increases in new orders for all major subsectors signal growth continuing in 2022.

However, optimism around revenue growth is held in check by caution from ongoing risks. Workforce shortages and supply-chain instability are reducing operational efficiency and margins. Business agility can be critical for organizations seeking to operate through the turbulence from an unusually quick economic rebound — and to compete in the next growth period. As leaders look not only to defend against disruption but strengthen their offense, our 2022 manufacturing-industry outlook examines five important trends to consider for manufacturing playbooks in the year ahead.

 

1. Preparing for the future of work could be critical to resolving current talent scarcity. Record numbers of unfilled jobs are likely to limit higher productivity and growth in 2022, and last year we estimated a shortfall of 2.1 million skilled jobs by 2030. To attract and retain talent, manufacturers should pair strategies such as reskilling with a recasting of their employment brand.

Shrinking the industry’s public perception gap by making manufacturing jobs a more desirable entry point could be critical to meeting hiring needs in 2022. Engagement with a wider talent ecosystem of partners to reach diverse, skilled talent pools can help offset the recent wave of retirements and voluntary exits.

Manufacturing executives may also need to balance goals for retention, culture, and innovation. As flexible work is taking root in offices, manufacturers should explore ways to add flexibility across their organizations in order to attract and retain workers. Organizations that can manage through workforce shortages and a rapid pace of change today can come out ahead.

 

2. Manufacturers are remaking supply chains for advantage beyond the next disruption. Supply-chain challenges are acute and still unfolding. There’s no mistaking that manufacturers face near-continuous disruptions globally that add costs and test abilities to adapt. Purchasing manager reports continue to reveal systemwide complications from high demand, rising costs of raw materials and freight, and slow deliveries in the U.S.

Transportation challenges are likely to continue in 2022 as well, including driver shortages in trucking and congestion at U.S. container ports. As demand outpaces supply, higher costs are more likely to be passed on to customers.

Root causes for extended U.S. supply-chain instability may include overreliance on low inventories, rationalization of suppliers, and hollowing out of domestic capability. Supply-chain strategies in 2022 are expected to be multi-pronged. Digital supply networks and data analytics can be powerful enablers for more flexible, multi-tiered responses to disruptions.

 

3. Acceleration in digital technology adoption could bring operational efficiencies to scale. Manufacturers looking to capture growth and protect long-term profitability should embrace digital capabilities from corporate functions to the factory floor. Smart factories, including greenfield and brownfield investments for many manufacturers, are viewed as one of the keys to driving competitiveness.

More organizations are making progress and seeing results from more connected, reliable, efficient, and predictive processes at the plant. Emerging and evolving use cases can continue to scale up from isolated in-house technology projects to full production lines or factories, given the right mix of vision and execution.

U.S. manufacturers have room to run with advanced manufacturing compared to many competitors globally. Advanced global ‘lighthouse’ factories showcase the art of the possible in bringing smart manufacturing to scale. Investment in robots, cobots, and artificial intelligence can continue to transform operations. Foundational technologies such as cloud computing enable computational power, visibility, scale, and speed. Industrial 5G deployment may also expand in 2022 along with advances in technology and use cases.

 

4. Rising cybersecurity threats are leading the industry to new levels of preparedness. High-profile cyberattacks across industries and governments in the past year have elevated cybersecurity as a risk-management essential for most executives and boards. Surging threats during the pandemic added to business risk for manufacturers in the crosshairs for ransomware.

An expanding attack surface from the connection of operational technology (OT), information technology (IT), and external networks requires more controls. Legacy systems and technology weren’t purpose-fit for today’s sophisticated network challenges. Now, remote-work vulnerabilities leave manufacturers even more susceptible to breaches.

Manufacturers should look not only at their cyberdefenses, but also at the resiliency of their business in the event of a cyberattack. Cybercriminals can cause harm beyond intellectual-property theft and financial losses, using malware that now ties in AI and cryptocurrencies. They can also shut down operations and disrupt entire supplier networks, compromising safety as well as productivity. A patchwork of regulations for different industries could be consolidated under the current administration’s ‘whole-of-nation’ approach to protect critical infrastructure. The potential for additional oversight is likely to prompt more industrials to rethink preparedness for crisis response.

 

5. Manufacturers are likely to bring more resources and rigor to advancing sustainability. The fast rise of environmental, social, and governance (ESG) factors is redefining and elevating sustainability in manufacturing as never before. Cost of capital can be tied to ratings on ESG, making it a priority for organizational financial health and competitiveness. Expectations for reporting on diversity, equity, and inclusion metrics in manufacturing will likely continue to rise. Board diversity, while progressing slowly, is also showing some momentum. To attract talent and appeal to workforce expectations, most manufacturers are making ESG efforts more visible.

Depending on a manufacturer’s end markets, environmental accountability is increasingly a focus. To develop and deliver against net-zero or carbon-neutral goals, more organizations are dedicating or redesigning sustainability roles and initiatives and quantifying efforts and results around energy consumption. And the fast-evolving ESG landscape may require close monitoring in 2022 for manufacturers.

Many organizations are complying voluntarily within a complex network of reporting regulations, ratings, and disclosure frameworks. But regulators globally are also moving toward requiring disclosure for more non-financial metrics. Proactive approaches may help manufacturers stay ahead of the change and create competitive advantage.

Law Special Coverage

Implementing Such an Initiative Can Provide a Number of Benefits

By Kylie Brown and Tanzania Cannon-Eckerle

Diversity, equity, and inclusion (DE&I) initiatives are being discussed more than ever in conference rooms, boardrooms, human-resources departments, and administrative offices. This is exciting, and for companies implementing these initiatives, one of the benefits incurred will be the creation of internal processes and procedures that will mitigate perceptions of discrimination and harassment in the workplace.

Massachusetts law requires that businesses maintain a harassment- and discrimination-free workplace. The law states, in summary, that it is unlawful to discriminate or harass in the workplace because of race, color, religious creed, national origin, or sex.

According to the related laws, a Massachusetts company has a duty to maintain a workplace that is free of discrimination and harassment. It would be fiction to state that it is possible for a company to ensure that it maintains an idyllic workplace for everyone. There are too many unique and diverse humans, too many variables. The good thing is the law does not require a company create an idyllic retreat.

However, it does require companies to do their due diligence to create and maintain a discrimination- and harassment-free workplace, and if something does occur that might meet the definition of discrimination or harassment, a company must address the matter in a timely fashion and implement remedial measures when and where necessary. As such, companies must prepare to manage the possibility of these occurrences. It would be most beneficial if a company did not wait to implement remedial measures in response to wrongdoing or after an incident has occurred; the programs should already be in place.

DE&I initiatives provide a multitude of benefits to an organization with returns that are both ethically and financially calculable, including assisting in the creation of discrimination- and harassment-free workplaces.

It can be difficult to calculate a financial return on prevention; however, in the realm of discrimination and harassment, prevention can be calculated by the declining costs of litigation. Creating a workplace that assures that policies are created to prevent harassment and discrimination, and that procedures are implemented to enable the consistent and equitable application of policies to all employees, will cause a decline in the appearance of harassment and discrimination and will diminish legal costs to a company — and costs to the company’s reputation.

The reason why DE&I initiatives work so well in this manner is because DE&I initiatives foster equity in the application of all workplace mechanisms and thus, once firmly established, naturally create a workplace environment free of discrimination and harassment, to the extent practicable. This is because, once DE&I initiatives are firmly established, most employees will feel a sense of belonging as they will feel heard and have a sense of empathy for their colleagues which fosters a team-oriented culture and problem-solving mindset. That not only prevents lawsuits, but it will also save money in the form of retention. Furthermore, data has shown that productivity and creativity increase, as does employee wellness.

Kylie Brown

Kylie Brown

Tanzania Cannon-Eckerle

Tanzania Cannon-Eckerle

“It can be difficult to calculate a financial return on prevention; however, in the realm of discrimination and harassment, prevention can be calculated by the declining costs of litigation.”

Unfortunately, many companies have leaders who have not identified DE&I as a cost-savings measure, or many leaders don’t know where to start. This article cannot, in the limited space provided, cover the entirety of what can be discussed in the realm of DE&I. However, we seek to plant a ‘can-do’ seed of desire to create DE&I initiatives in one’s workplace as a means of creating safe and discrimination- and harassment-free workplaces, by showing that creating such a workplace just takes a plan and a commitment to execute.

This article is one of a series that seeks to assist businesses with an inside-out approach, using existing resources to set up a sound foundation to grow a robust DE&I initiative within their company, and to create a workplace that is discrimination- and harassment-free while also becoming more ethical and more financially successful. It doesn’t have to be perfect. It can be tweaked along the way.

First, we start at the beginning. Let’s demystify DE&I.

 

What Does DE&I Even Mean? And What About Belonging?

Let’s broaden the concept to DE&I and B, or belonging.

Diversity means to be composed of different elements or offer variety. In application to the workplace, this translates to different people, through race, gender, and/or sexual orientation, with different cultural, social, and economic backgrounds, bringing their thoughts and ideas to the table.

Equity is the act of giving everyone in your pool of diversity fair treatment in access, opportunity, and advancement in the workplace, through processes and procedures implemented in a consistent manner. It’s recognizing we don’t all start from the same playing field and carries an idea of fairness and neutrality. That’s the difference between equity and equality.

Inclusion means being included in or involved in material decision making in the workplace at the appropriate level, and having the freedom or enterprise-level permission to weigh in on items of import that are relevant to one’s job and actually being heard. Identification of stakeholders are important here.

Belonging is what happens when a company has a strong foundation of continued diversity, equity, and inclusion processes, protocols, habits, and other customs of practice, and having a sense of being accepted as one’s authentic self at work that is supported by equity and inclusion. The goal should be to have an engrained DE&I model that is engrained in every aspect of the company so that it becomes common practice.

 

Where to Start?

First and foremost, focusing on DE&I must be in line with the overall business mission, values, and objectives in order to be successful. Second, there must be buy-in from all levels of the organization. Identifying what it will take to get that buy-in is important and will vary depending upon the audience. Third, identify the DE&I goals and why these are the goals. This is most likely dependent on what industry your company belongs to and how your company is structured.

Fourth, create a DE&I committee and identify who should be on the committee, and provide them with defined authority to act. This will create company accountability for continuing on with the initiatives. Fifth, do gap assessment. Where is the company now? Where does the company hope to be? What needs to be accomplished get there? What are the potential obstacles? How will they be overcome?

 

Gather Data

Focus on the return on the investment (know your audience). The return on investment might look different for the frontline supervisors than it does for procurement or accounting. Analyze the upfront costs, such as change in recruitment tactics, utilizing more networking forums, and potentially creating new roles to support the new business outlook

Where can we implement DE&I initiatives? DE&I can be external, by using diverse vendors, or internal, by establishing an equitable approach to handing out assignments. Every time a new business development is discussed, whether internally or externally, it creates another opportunity to include DE&I.

Identify stakeholders and talk to them. Encourage discussion on the topic of DE&I. Discuss their opinions on issues that impact them in the workplace. Gathering employee opinions and concerns will enable the company to make positive changes that will prevent issues and increase employee engagement. Hold open-forum discussions such as town-hall listening sessions — not talking sessions, where company executives talk at employees. These are great opportunities to listen to others and allow all staff to be heard.

A review of company documentation should be conducted to find existing areas where improvements may be needed. Obtaining statistical knowledge and data of the current demographics throughout the general workplace, as well as upper-level management, will help assist you in realizing where there is a need to implement DE&I.

 

Sell It

Make DE&I identifiable in the company mission. Make it a part of the company brand if possible. Involve company leaders in the celebration of meeting goals around DE&I initiatives. It is vital to get leadership support for the success of any DE&I initiative. Sell it to all employees. Create a well-thought-out communication plan. It is important that companies are knowledgeable about the prospective initiatives so they can answer any and all questions that may arise.

The company should support its initiatives by marketing them internally and externally to the general population, which could lead to potential exposure to overall business growth and development.

 

Implement It

At the core of implementing a successful DE&I program is implementing it in a manner consistent with the company mission, vision, and strategy. Including DE&I initiatives in your business model provides business growth opportunities and positive employee relations.

Implementation can start with recruitment, attracting different people from different backgrounds in order to bring new ideas to the table. Infuse DE&I in the employee-relations program by creating policies that are developed with the input of a cross-section of stakeholders and are consistently applied in an equitable manner.

Infusing all company mechanisms with DE&I approaches will be justified by the quantifiable growth and development it produces, as well as the prevention of discrimination and harassment lawsuits — and by the sense of belonging the company’s workforce maintains.

 

Kylie Brown is an associate attorney at the Royal Law Firm who specializes in labor and employment-law, and Tanzania Cannon-Eckerle is the firm’s chief administrative and litigation officer, who specializes in business and labor and employment law with certifications in Diversity, Equity and Inclusion and Workplace Investigations. The Royal Law Firm is a woman-owned, women-managed corporate law firm that is certified as a women’s business enterprise with the Massachusetts Supplier Diversity Office, the National Assoc. of Minority and Women Owned Law Firms, and the Women’s Business Enterprise National Council.

Technology

How Old Is the Water?

Dr. LeeAnn Munk

Dr. LeeAnn Munk collects water samples in Salar de Atacama.

 

A groundbreaking new study recently published in the journal Earth’s Future and led by researchers at UMass Amherst in collaboration with the University of Alaska Anchorage, is the first to comprehensively account for the hydrological impact of lithium mining. Since lithium is the key component of the lithium-ion batteries that are crucial for the transition away from fossil fuels and toward green energy — as well as necessity in many of today’s high-tech devices — it is critical to fully understand how to responsibly obtain the precious element.

Previous studies have not addressed two of the most important factors in determining whether lithium is obtained responsibly: the age and source of the water the lithium is found in. This first-of-its-kind study is the result of more than a decade of research, and it suggests that total water usage in the Salar de Atacama, a massive, arid Chilean salt flat encompassing approximately 850 square miles, is exceeding its resupply — though, as the team also points out, the impact of lithium mining itself is comparatively small. Lithium mining accounts for less than 10% of freshwater usage, and its brine extraction does not correlate with changes in either surface-water features or basin-water storage.

Lithium, said David Boutt, professor of Geosciences at UMass Amherst and one of the paper’s co-authors, is a strange element. It’s the lightest of the metals, but it doesn’t like to be in a solid form. Lithium tends to occur in layers of volcanic ash, but it reacts quickly with water. When rain or snowmelt moves through the ash layers, lithium leaches into the groundwater, moving downhill until it settles in a flat basin where it remains in solution as a briny mix of water and lithium. Because this brine is very dense, it often settles beneath pockets of fresh surface water, which float on top of the lithium-rich fluid below. These freshwater lagoons often become havens for unique and fragile ecosystems and iconic species such as flamingos.

More than 40% of the world’s proven lithium deposits are located in the Salar de Atacama, the site of the research. The Salar de Atacama is host to a number of ecologically unique wildlife preserves and is also the ancestral home of several Atacameño indigenous communities, with whom the UMass team worked. Because the salt flats are so ecologically sensitive and depend on scarce supplies of fresh water, the use of water in the Salar de Atacama runs the risk of disturbing both the ecological health of the region and indigenous ways of life.

Yet, up until now, there has been no comprehensive approach to gauging water use or lithium mining’s impact in the Salar de Atacama.

“To understand the environmental effect of lithium mining,” says Brendan Moran, a postdoctoral research associate in Geosciences at UMass Amherst and the lead author of the paper, “we need to understand the hydrology in the region the lithium is found. That hydrology is much more complex than previous researchers have given it credit for.”

To illustrate the complexity, and the previous misconception about the Salar de Atacama’s hydrology, Moran and Boutt drew on the metaphor of a bank account. Imagine that you get a paycheck every month; when you go to balance your checkbook, as long as your monthly expenditures don’t exceed your monthly income, you are financially sustainable. Previous studies of the Salar de Atacama have assumed that the infrequent rainfall and seasonal runoff from the mountain ranges that ring it were solely responsible for the water levels in the salt flats, but it turns out that assumption is incorrect.

Using a variety of water tracers that can track the path that water takes on its way to the Salar de Atacama, as well as the average age of water within different water bodies, including surface waters and sub-surface aquifers, Moran and his colleagues discovered that, though localized, recent rainfall is critically important, more than half of the freshwater feeding the wetlands and lagoons is at least 60 years old.

“Because these regions are so dry, and the groundwater so old,” Moran said, “the overall hydrological system responds very slowly to changes in climate, hydrology, and water usage.”

At the same time, short-term climate changes, such as the recent major drought and extreme precipitation events, can cause substantial and rapid changes to the surface water and the fragile habitats they sustain. Given that climate change is likely to cause more severe droughts over the region, it could further stress the area’s water budget.

To return to the accounting metaphor, the paycheck is likely getting smaller and isn’t coming monthly, but over a period of at least 60 years, which means researchers need to be monitoring water usage on a much longer time scale than they currently do, while also paying attention to major events, like droughts, in the region.

Complete hydrological monitoring requires additional tools paired with these geochemical tracers. The UMass and UAA teams used water usage data from the Chilean government and satellite imagery, which allowed them to assess the changing extent of wetlands over the past 40 years, as well as rain gauges and satellite measurements to determine changes in precipitation over the same period.

Given how long it takes for groundwater to move within the basin, “the effects of water overuse may still be making their way through the system and need to be closely monitored,” Moran said. “Potential impacts could last decades into the future.”

Ultimately, this comprehensive framework, which was funded by BMW Group and BASF, is applicable far beyond the Salar de Atacama. “It’s a modern approach to water management,” Boutt said.

Opinion

Opinion

By Pam Thornton

 

The legalization of marijuana across Massachusetts, Connecticut, and now Rhode Island has further increased the complexity of how we manage drug use in our workplaces. Employers are being forced to re-evaluate their position and practices around maintaining a safe and drug-free workplace.

Although employers may need to revise their drug-testing and accommodation policies, no state law requires employers to tolerate on-the-job drug use, intoxication, or impairment. Communication with your employees, a solid workplace drug policy, and enforcement of your practices can go a long way to keeping your workplace drug-free.

The recent mindset of some employees has really surprised many leaders and HR practitioners. Employees have always known that they can’t come to work under the influence of alcohol or any other controlled substance, for that matter, but with the sweeping legalization of recreational marijuana, employees are taking liberties and showing up to work impaired because “it’s now legal.”

It’s important for employers to educate and overcommunicate. Putting it out there, that even though it’s legal, it’s not acceptable to possess or use in the workplace, really needs to be said from the top down, across all functions and in multiple ways. Practically speaking, this means even having conversations to confirm that marijuana isn’t allowed in the workplace smoking area or at the outdoor company picnic, for instance. Clear communication with some specific examples can really help to get everyone on the same page.

Employers are trying to get qualified employees in the door to do the work in this tight labor market and are thinking long and hard about whether or not they really need to drug test for marijuana. They are weighing the upside of drug testing with the multiple requirements varying by state, with the downside being the risk of not being able to attract or retain talented people. Marijuana is still illegal under federal law, however, and companies that have these specific requirements still need to adhere to these standards.

Developing and implementing a policy that outlines the specifics of the law required by your state and clearly defines use and possession parameters is critical. Properly training managers to be able to identify the signs of impairment will assist in the applicability and enforcement of the policy and can protect everyone. These are different times that we are living in and complicated at best when it comes to this subject, but the employer still has the right to require a drug-free workplace. The burden of outlining and reinforcing common-sense guidelines is one that the employer will bear, but the advantages are sure to be beneficial in the long run.

 

Pam Thornton is director of Strategic HR Services at the Employers Assoc. of the Northeast. This article first appeared on the EANE blog; eane.org

Community Spotlight

Community Spotlight

By Mark Morris

Karl Stinehart, left, and Russ Fox

Karl Stinehart, left, and Russ Fox say Southwick’s goal is preserve its high quality of life while also creating needed business tax revenue.

 

Southwick residents love the natural beauty and the many recreation choices their town offers but they also like reasonable tax rates.

Russell Fox, chair of the Southwick Select Board, said to accomplish both means business development must be part of the equation to ease the tax burden.

“It’s a balancing act that the Select Board takes very seriously,” said Fox, who has been a selectman off and on (mostly on) for more than 40 years. “I would not want to see families who have lived in town for generations say they can no longer afford to stay here.”

A balancing act indeed, as last year residents made it know that they will support some business development proposals, but not all. After the town’s planning board and select board had approved a $100 million project involving the online used car seller Carvana, residents expressed a number of concerns about the size of the project and its impact on the community.

The site where the Carvana project was proposed is a 90-acre parcel on College Highway near Tannery Road. After residents rejected Carvana, Karl Stinehart, chief administrative officer for Southwick said the owner of the property has since come up with a creative solution.

“The parcel will be broken into five lots,” Stinehart said. “We can now look to attract a retail store or a light manufacturer, something that won’t have the negative impact of a large facility.”

That’s the kind of progress that gets the attention of Eric Oulette, executive director of the Greater Westfield Chamber of Commerce.

“It’s a great idea for them to split up that parcel to make it more attractive for smaller businesses,” Oulette said. Currently, 13 Southwick businesses belong to the Greater Westfield Chamber.

Stinehart pointed to the town’s tax rate of $16.98 per thousand for both residential and businesses as another incentive for economic development in Southwick. Oulette agreed.

“Southwick’s tax rate is competitive and should help the town to attract more business there,” Oulette said.

Overall, there are many types of development happening in this recreational town, both commercial and residential.

“It’s a balancing act that the Select Board takes very seriously. would not want to see families who have lived in town for generations say they can no longer afford to stay here.”

That list includes Faded Flowers LLC, which has been cleared to build a cannabis-growing facility. Stinehart said town voters have approved this facility, which will grow and process cannabis for commercial distribution. At the same time, voters have rejected hosting any retail dispensaries in town.

“We are in the early stages of this project,” Stinehart said. “They have done some site work but have not yet built the facility. Once complete there will be a lag time before the business is productive, so we are a long way from seeing any revenue for the town.”

Meanwhile, the Greens of Southwick is a development of custom-built homes on the land that was formerly Southwick Country Club. Located on both sides of College Highway, the west side of the development features 25 lots, with only two still available. More recently work began on the east side of the property where 38 lots are planned. Phase one of the east side has only three lots available.

On the other side of town, a 100-unit condominium project near the intersection of Depot Street and Powder Mill Road has also been approved.

“When those are built, the people who live there will have close access to the Rail Trail and can easily walk to the center of town,” said Stinehart.

While all these new homes will create additional tax revenue, residents who live on Lake Congamond are begrudgingly contributing more to the town’s tax coffers due to improvements to their current homes.

For several years, many of the modest homes on the shores of the lake are getting major renovations by their owners. As a result, these lakefront residences are now assessed at a higher tax rate than before the reno work.

“People are very upset with us about their increased taxes and we tell them how the state sets the tax rate, we have nothing to do with it,” said Fox.

For this, the latest installment of its Community Spotlight series, BusinessWest takes an in-depth look at Southwick and the ongoing efforts to create that balance that Fox spoke of.

 

Work and Play

Calling the lake a tremendous asset to Southwick, Fox also noted that part of the American Rescue Plan Act (ARPA) funds the town received were used to install weir gates on Congamond.

“Weir gates help us address flood control and keep contaminated water from flowing into the lake,” Fox said. Every spring the town treats the lake with aluminum sulfate or “alum” to keep algae blooms down and improve water quality. Without the weir gates, contaminated water from flash floods would back up into the lake and negate the alum treatment. That affects the health of the lake, and the town budget, as Southwick spent $600,000 for the alum treatment.

Looking longer term, Fox said the town would like to dredge certain areas of the lake to keep it healthy.

“Lakes die naturally from sediment that keeps increasing over the years on the lakebed,” he explained. “Right now, there is an estimated six feet of sediment on the bottom of Lake Congamond.”

Because Congamond acts as a recharger for the aquifer, Fox is also hoping to start a dialogue with Westfield and West Springfield, as both communities get their water from the aquifer.

“It might be beneficial for all three towns to kick in to dredge the lake to make sure it keeps providing clean water,” he said.

Most of the $1.4 million Southwick received in its first allotment of ARPA funds was spent on a water project of a different sort, a new water pump and filtration station.

“This is a benefit to every water ratepayer and helps the town with improved water pressure,” said Fox.

Like nearly every town, Southwick has plenty of paving projects to tackle. Stinehart said town officials plan to use some of the ARPA money to fix roads in town but there’s a hitch. Budgets for road projects are set long before any paving happens.

“Because asphalt is petroleum-based, our paving projects now cost much more than we had planned,” Stinehart said. “The price inflation shortens the length of roads we can cover for that amount of money.”

As Southwick has an open-meeting form of government, big decisions are determined directly by residents.

“Everything we do must ultimately be approved by the voters at the Town Meeting,” said Fox. “I tell people all the time it’s the purest form of government.”

Stinehart explained several areas where voters have decided to make investments in their community.

“We continue to expand our paramedic EMS service which is run by the Fire Department,” he noted. “We’re adding more people so we can deliver that service at the highest level.”

Southwick is the lead community for a shared services grant to fund one full time and one part time nurse. In addition to Southwick, the nurses will cover Granville, Tolland, Blandford, Russell and Montgomery and serve in a visiting nurse-type of role. Stinehart explained that because of COVID, some people are still reluctant to go to medical facilities for routine treatment. With several towns taking part, the need for the service can be addressed at a more reasonable cost for everyone.

“It’s tough for one small community to budget for having a nurse on call, but with several towns paying it becomes more affordable for each town and it’s financially worthwhile for the nurse,” Stinehart said.

Southwick at a glance

Year Incorporated: 1770
Population: 9,502
Area: 31.7 square miles
County: Hampden
Residential Tax Rate: $17.59
Commercial Tax Rate: $17.59
Median Household Income: $52,296
Family Household Income: $64,456
Type of Government: Open Town Meeting; Select Board
Largest Employers: Big Y; Whalley Computer Associates; Southwick Regional School District
*Latest information available

When entering Southwick drivers are greeted with a welcome sign that brands the town as a “recreational community.” One notable recreation spot in town is The Wick 338, the motocross course that continues to grow in prominence in the sport. On July 9, the course will host the Southwick National Motocross Championship, which will be televised nationally on NBC.

“Based on ticket sales so far, the organizers are anticipating one of the largest events ever,” said Fox. “I hope they have good weather for it.”

The town also hosts two popular golf courses with The Ranch and Edgewood Country Club. Stinehart discussed a new golf game in town that has begun to take off: disc golf.

“The folks at the New England Disc Golf Center have told us people are playing hundreds of rounds of disc golf every week,” Stinehart said. “It’s a relatively new sport that’s gaining in popularity.”

Southwick is still basking in the glow of its 250th anniversary celebration. Though 2020 was the actual year of the anniversary, COVID forced the town to delay scheduled events and create new ones. In a “making lemonade out of lemons” kind of way, Fox remarked that they were able to celebrate the 250th for two years instead of just one.

“In 2020 we had a rolling parade where we drove floats into neighborhoods and then last year we held a traditional parade,” Stinehart said. “We’re still selling souvenirs from the event.”

 

Something to Celebrate

The anniversary celebration was so successful, the organizing committee had a surplus after all the costs were covered. That money will be used to make improvements to the town green and renovate the memorial to veterans who were Southwick residents.

“It’s a good use of the money and it will improve the municipal center of our community,” Stinehart said.

Reflecting on the anniversary, Fox said even with a two-year celebration, COVID prevented them from holding all the activities they would have liked to host.

At that point, Stinehart quipped, “Well, there will be a 275th anniversary.”

Women in Businesss

It Can Be Challenging, but It’s a Great Way to Take the Initiative

By Lauren Foley

 

After graduating college and entering the workforce there are endless opportunities and lessons to learn as a young woman in business. The expectations and opportunities of a first job are not always taught in the classroom.

While some of those expectations are directly related to skills and job functions, there are more intangible ones that are expected of people who enter the business world. Soft skills such as growing your outreach, building clientele, and developing relationships, are heavily valued and weighted in the career of business. As women in business, we want to empower ourselves to grow our careers and position ourselves for success. It is imperative that we advocate for our career path and grow our worth in our chosen professions. Well, how does a newly graduated woman enter the workforce and gain growth in these areas in their career? It is simple, networking.

Lauren Foley

“The purpose of networking is to gain connections with other business individuals to create working and professional relationships. Connections can provide many opportunities for young professionals ranging from cliental referrals, job offers, event sponsorships, achievement recognition, and even learning opportunities.”

Before jumping in, the first step is to understand the basic goal of networking. The purpose of networking is to gain connections with other business individuals to create working and professional relationships. Connections can provide many opportunities for young professionals ranging from cliental referrals, job offers, event sponsorships, achievement recognition, and even learning opportunities. The positive outcomes span even farther. By forming connections with other people in similar positions, you create a new network of people who can provide resources to each other, and connections that enable each other to grow.

Where are you networking, how do you do it, and why? Are you looking to create a connection with a specific person who has influence in your field or community? Are you looking to make an introduction within a specific service that would be necessary to advance your career? Are you looking to find more ways to get more involved in your community and be of service? It is important to understand why you are attending each event you attend before you engage. Networking can take place in many different atmospheres such as attending a BBQ, going to an awards’ ceremony, or attending a convention. Your choice in events to attend should be in alignment with your purpose of networking. When looking for a referral source, individuals should look for a working relationship. A working relationship refers to the idea that if the other person’s client needs a service you provide, then they would refer the client to you and vice versa. Those looking for a working relationship should attend a networking event that is sponsored or put on by a local organization where other business professionals associated with the field will also attend — think maybe a trade show, chamber of commerce, or specific public roundtables. If the purpose of networking is to find new clients, then attending a business event or local young professionals’ event where others are just starting their career is the perfect place to create ground-level relationships that could lead to gaining clients.

It is especially important for new professionals to feel empowered at networking event. It can sometimes feel easier to stick to the people you know at an event rather than to approach a stranger and strike up a conversation. A great approach to avoid this issue, is to scope the room, remember your purpose and use the buddy system to approach new people. When using the buddy system, it allows both individuals to have more confidence when starting to network because they can lean on each other while still being able to meet new people.

Remember, there are many ways to network, and some events might work better than others for you depending on your personality and your overall expectations. There are also events that will provide a more specific purpose of networking than others, so it is always important to note how the events went to determine if they are worth your time in the future.

It is great best practice to touch base internally with whoever went to the event to get their feedback. Who did everyone meet? What did they enjoy at the event? Were there any important follow-up tasks post event? What was the overall outcome? Having a quick internal conversation post event can increase the value your networking activities because you will remember who to follow up with, and as previously mentioned, weigh whether you would like to attend again in the future.

Overall, networking as a young women can be challenging but it is a great way to take the initiative to grow our own careers. It can help you advance your career faster while also improving your client service and relationship skills. While the benefits may not feel immediate in nature, networking is a terrific way to get your name out there, create learning points, and gain opportunities as a young professional. So, understand the value you could receive by meeting the right person, and start planning what is most important to you and your career. It is a skill that takes some time to learn, so practice makes perfect and get out there and grow your ‘Net.’

 

Lauren Foley is an associate at the Holyoke-based accounting firm, Meyers Brothers Kalicka, P.C.

Wealth Management

It’s Not Just About the Money

By Pat Grenier

We have a well laid out plan for how our wealth-building investment portfolios will provide us with the lifestyle we want, confidence in our financial strategy that we believe we deserve, and the legacy we want to leave our loved ones.

Inflation, rising interest rates, high gas prices, the war in Ukraine are non-trivial distractions that test our ability to stay calm and focused. As Mike Tyson once said, “everyone has a plan ‘till they get punched in the mouth.”

Pat Grenier

Pat Grenier

For many depending on their 401k plans, their IRAs and/or their investments, this is a gut-wrenching feeling. It certainly is painful to watch the value of our monies depreciate — especially in an inflationary environment. Emotions can take over and cause anxiety, nervousness, and fear. You are not alone. These feelings are real and may drive the person into a decision that may be irrational, absolutely the wrong one at the wrong time.

Until we address these feelings with facts and common sense, we will not be able to make rational decisions about our investments and the impact it will have on our lives.

As a start, let’s put the current market environment in perspective. As with any market decline, we don’t know when it will hit bottom or how long it will take for markets to come back. What we do know, and history has proven, is that market corrections occur periodically and have been short-lived:

 

As much as anyone would like to avoid these declines, they are an inevitable part of investing.

Looking back at the 15 largest single-day percentage losses in the S&P 500 since 1960, we see that investors are rewarded for staying the course:

Warren Buffett said it best “American magic has always prevailed, and it will do so again.” Can you think of a year where there was not an event that had a negative impact on the economy and investments? It is reassuring to know that despite these annual headwinds, the U.S. economy is resilient and has always recovered.

As much as the fearmongers want us to believe the world is falling apart, we should know better than to listen to the 24/7 negative news cycles. For our own sanity, we need to focus on the positive. Our economy continues to open after the closures due to the Covid pandemic, there are plenty of jobs for anyone that needs one and consumers are still spending. To our surprise many corporations for the first quarter of this year reported higher-than- expected earnings. In addition, in spite of higher mortgage interest rates, pending home sales rose in May. This should provide us with optimism for the economy, even if the ride is bumpy.

Famed British Banker, Sir Baron Nathan Rothchild, is credited with the phrase “buy on the sound of canons, sell on the sound of trumpets.” The old adage ‘buy low and sell high’ makes sense but is one of the most difficult principles to follow and act upon.

Markets decline on negative news. The negativity creates fear, but the decline presents an opportunity to reassess our investments, our allocation, our risk tolerance and to take advantage of quality investments that may have been beyond our reach. If time is on your side, buying on sale makes sense.

It is not just about the money. Investing is about having the right frame of mind to make our money work efficiently and effectively.

 

Pat Grenier, CFP® is president and founder of Springfield-based Grenier Financial Services; (413) 736-6712; [email protected]

Securities and advisory services offered through Cadaret Grant & Co., an SEC Registered Investment Advisor and member FINRA/SIPC. Grenier Financial Advisors and Cadaret Grant are separate entities.

Wealth Management

A Different Playing Field

By Jeff Liguori

 

When markets slide, investors’ knee jerk reaction is to draw parallels to difficult markets in the past.

The most recognizable episode in recent history is the Great Financial Crisis (GFC) of 2008-09. The S&P 500 peaked in October 2007, followed by a crushing sell off that bottomed out in March ’09 — but not before losing 56% of its total value, a near total collapse of the financial system, and several high-profile bankruptcies.

A significant contributor to that grueling bear market was the decline in home prices. Real estate was a bubble that overinflated; the ‘pop’ led to a meltdown in our financial system due to intricate investment products linked to mortgages, over-leveraged home buyers, and inordinate risk assumed by some large investment banks. When that very large balloon deflated, there was no place to hide until the buyer of last resort — our federal government — stepped in with a bailout.

Jeff Liguori

Jeff Liguori

“This is not that housing market. When it cools – and it will – there should be enough demand to maintain stability.”

There are some eerie similarities in today’s investment landscape. Home prices have trended drastically higher as pent-up demand, fueled by excessive liquidity and a strong economy, has caused a buying frenzy in many markets. Speculation, specifically in crypto currency and “meme” stocks, prompted unsophisticated and inexperienced investors to buy assets about which little was known. The quick success of those speculators was widely publicized through social media, which caused a feedback loop that then further inflated the bubble as it drew more neophytes into the ‘game.’ We’ve seen this movie before, and it doesn’t end well.

Following the playbook of the GFC, should we expect a high-profile bankruptcy of a major financial institution, or a collapse in the housing market, or — heaven forbid — both and maybe more? We keep hearing that we’re in a bear market and a recession is all but guaranteed, so what now?

First, from a macro economic standpoint, today’s economy is quite different than what we experienced 13 years ago. Take real estate. Yes, home prices have skyrocketed and the market for buyers is possibly as tight as it has ever been. But the number of homes being bought with cash is at the highest level since 2005; transactions not subject to financing by the buyer represent almost one quarter of all transactions. For perspective, cash transactions at the peak of the market in 2007 were almost 40% lower than they are today. Mortgage debt is almost always the greatest liability for a consumer; that liability was significantly higher during the 2008-09 recession. And bank-lending standards today have made it more difficult for less creditworthy consumers to take on mortgages because of the Great Financial Crisis. This is not that housing market. When it cools – and it will – there should be enough demand to maintain stability.

The number of first-time home buyers, or housing formation, declined during the 2010s, mostly due to a combination of younger adults living with their parents, and a move toward urban centers where renting is more prevalent. But one of the consequences of the pandemic, that was impossible to predict, was the spark in housing demand. Major employers allowed workers to work remotely, which enabled growth in desirable suburban and rural real estate markets. We may be on the doorstep of housing formation trend that persists for a very long time, a long-term positive for the economy. Prices should normalize in the near term, but demand for housing remains intact.

The real crisis may be a lack of supply. But that is an article for another time.

Second, speculative bubbles are a natural consequence of a strong economy. We have all seen or heard of the Tik Tok millionaires, who seemingly made their fortune overnight, then spread the get-rich-quick gospel on social media, thus influencing more risky behavior — the very definition of a bubble. However, when equity markets decline substantially in a short time — the tech-heavy Nasdaq was down nearly 32% for the year in June – this risky behavior gets flushed out.

Look at this statistic, courtesy of Sundial Research: On June 16, 90% of the stocks that comprise the S&P 500 were down on the day. This occurred five times in the in the seven trading sessions leading up to June 16. There are zero historical precedents for that level of selling over a seven-day period, which is a sign of capitulation by inexperienced investors, necessary for a bottoming process in stock prices.

Many variables contribute to economic weakness, and with the Fed raising rates to battle inflation, it may lead to a recession. How quick is hard to predict. But this is not 2008. Consumer balance sheets are much healthier, with manageable levels of debt relative to income. Stocks have already discounted many of the negatives associated with tighter financial conditions and higher inflation.

As investors we move from fear to greed and back again. Strong emotions that are exploited by the media. Perhaps the Fed can navigate through this, or some type of peaceful settlement occurs in Ukraine, relieving inflationary pressure, and the adjustment in all asset prices is just that — a necessary adjustment in a healthy economy. Perhaps we should instead be thinking of long-term opportunity. That scenario doesn’t seem to be the narrative today, which, as a contrarian, makes me think it is more likely than not.

 

Jeff Liguori is the co-founder and chief Investment officer of Napatree Capital, an investment boutique with offices in Longmeadow as well as Providence and Westerly, R.I.; (401) 437-4730.

Insurance

On the Rise

By Lisa Johnson

 

You have probably noticed higher prices in many areas of your life. From gas to groceries, prices are going up, with the U.S reaching inflation levels never seen before — and the insurance industry is not immune to this trend. Across the industry in most markets and with most insurance companies, whether you’ve had a claim or not, home-insurance premiums are rising due to a variety of factors.

Many of these factors are out of your control, as well as your agent’s and insurance company’s. Many current conditions, including increased costs of material and labor, as well as an ongoing shortage of workers, mean you may see a rise in your premiums at renewal time.

Home-insurance rates are determined by the likelihood of a homeowner filing a claim and the potential risks involved. Rates are driven by numerous standard factors, including amount of coverage needed, age of the home, location, liability issues, and previous claims. Other influences caused by national trends also contribute to rates.

Why are home-insurance rates going up? The biggest cause is the rise in inflation. When prices rise, the cost of living and owning a home increases, which in turn influences home insurance rates. These rate increases are happening in insurance companies across the country.

Home-insurance premiums can be affected by influences outside of your control. Various nationwide factors are impacting the cost to rebuild homes, leading to the need for more coverage in case of a claim. Some of the trends that are driving up costs include higher material costs and supply-chain issues. For instance, materials to rebuild homes are up 26%. Labor shortages are resulting in longer construction and claims-handling times, which also impact the cost of claims.

 

Higher Material Costs

From record high prices to shortages of materials, the home-building industry has seen lengthy delays, increased prices, and a large number of postponed projects. These higher prices for construction projects, renovations, and repairs lead to higher costs for homeowners.

With the price of building materials — such as drywall, shingles, lumber, and copper wiring — up an average of 26%, homes have become more expensive to fix and replace. According to a survey by the National Assoc. of Home Builders, this is the largest single-year increase in the survey’s history. Ninety-three percent of contractors are impacted by the increased price of materials, which leads to higher replacement costs when insurance claims are filed.

 

Increased Shipping Costs and Delays

The pandemic has impacted almost every part of the global supply chain, causing shipping delays and higher prices. When shipping ports get overwhelmed and backed up, it impacts the time it takes to get materials to homeowners and the cost of delivering the materials.

From appliances to plumbing fixtures, it’s taken weeks and months longer to get building supplies, which previously had taken days to procure. In fact, 94% of Fortune 1000 companies have reported supply-chain disruptions from COVID-19.

Globally, RBC Capital Markets reported that 77% of ports are experiencing abnormally long times to turn around traffic. In fact, Freightos.com marketplace data shows that, in September 2021, China-to-U.S. ocean shipments took an average of 73 days to arrive at their final destination, 83% longer than in September 2019.

 

Higher Labor Costs

Builders often hire subcontractors who handle electrical, drywall, plumbing, and other areas of construction. With the current labor shortages, higher costs are needed to secure skilled laborers or obtain the needed materials. This, in turn, has forced home builders to factor in higher costs for construction and remodeling work.

Eighty-nine percent of contractors are having a hard time finding craft workers, and 88% of firms are experiencing project delays. Additionally, the U.S. is seeing a drop in the number of Americans becoming tradespeople. The National Electrical Contractors Association reports that 7,000 electricians join the field annually, but 10,000 retire. This shortfall results in higher prices and longer wait times for home projects.

 

Auto Insurance Affected, Too

Home insurance isn’t the only coverage impacted by current trends. Auto insurance is also experiencing increases due to national trends. Used-car prices are up 40%, the cost of labor for repairs is up, car parts are costlier and harder to obtain due to supply-chain issues, and rental car costs are up 30%. These factors and others are contributing to a rise in auto-insurance rates.

It might be time to review your home and auto policies with an agent to make sure your coverages are appropriate in the current inflationary market.

 

Lisa Johnson is chief operating officer for Amherst-based Encharter Insurance; (413) 658-3410.

 

Sources: NAHB, AGC, Accenture, U.S. Bureau of Labor Statistics, AutoRentalNews, CCC Intelligent Solutions, CNBC. All products are underwritten by The Hanover Insurance Company or one of its insurance company subsidiaries or affiliates. This material is provided for informational purposes only and does not provide any coverage.

 

Insurance

Changing Rules of the Road

LexisNexis Risk Solutions recently released its 2022 U.S. Auto Insurance Trends Report, which aggregates annual market data about driving behaviors, auto-insurance shopping, underwriting, and claims to help insurers better navigate myriad evolving trends impacting the U.S. auto-insurance industry.

This year’s report analyzes 2021 data, detailing how the industry continues to navigate the aftermath of pandemic-induced supply shortages, inflation, and new driving behaviors, and provides insights for insurance carriers to help improve their workflows with an eye on streamlining consumer experience.

One of the big questions within the U.S. auto-insurance industry heading into 2021 was whether it would see a rebound to more normal driving and shopping patterns, or if the industry is undergoing a revolution in the wake of the pandemic that would compel insurers to think about the policy life cycle differently.

“The jury is still very much out on the long-term effects of these market trends impacting the auto-insurance industry,” said Adam Pichon, vice president and general manager of Auto and Home Insurance at LexisNexis Risk Solutions. “While we have seen some traditional patterns re-emerge with respect to miles driven and insurance shopping volumes, we saw another roller-coaster year due to volatile activity in claims severity, insurance switching, more serious traffic violations, and vehicle purchasing due to macroeconomic conditions.

“Add to that increasing consumer interest in telematics data and an active regulatory and legislative environment,” he went on, “and we are seeing more signs of a revolution in the industry than a rebound. Insurers who arm themselves with accurate and comprehensive data are poised to price and rate more accurately, handle claims more efficiently, and improve customer experience in the face of evolving market stressors.”

 

Another Turbulent Year

Auto-insurance shopping and new policy-growth numbers were volatile for the second year in a row, shaped largely by continued pandemic-related influences.

• Changes in driving behavior — including riskier driving behaviors such as distracted driving — created a notable shift in the driving-violation data mix reported. An abnormal rise in major speeding violations coincided with another yearly increase in traffic fatalities.

• Claims severity increased even as more normal driving patterns returned, particularly in the second half of the year. While severity of claims have increased, the number of ‘touches’ required to close a claim has not improved, with 29% of consumers reporting having to speak with three or more people to get their claim settled.

• Vehicle shortages and supply-chain issues led to reduced car sales and slowed the adoption of advanced driver-assistance systems after gains in recent years. And with fewer cars available, vehicle purchases were suppressed, which meant auto-insurance shopping was down, as vehicle purchases account for as many as one in three auto insurance shopping events.

• Miles driven, which is a strong predictor of loss cost frequency, rebounded to traditional seasonal patterns exhibited in 2019, and carriers could see a significant benefit in more accurate and frequent mileage readings from connected vehicles.

• According to a December 2021 LexisNexis Risk Solutions survey of U.S. consumers, 71% are interested in the of use telematics-enabled usage-based insurance for purposes of discounts. However, consumer adoption remains much lower, presenting a significant opportunity for both consumers and insurers.

• Changes in the regulatory environment are putting pressure on core rating variables as some states are introducing legislation designed to restrict the types of data used for risk-based insurance scoring. This could be harmful to consumers, as 85% of new U.S. consumer auto-insurance policies issued to consumers in 2021 benefited from products that leverage data and analytics.

“When you consider all the variables at play, I do think the assertion by LexisNexis Risk Solutions that we are in a revolution of sorts in the insurance industry is apt,” said Karlyn Carnahan, head of Insurance, North America at Celent. “Like no time I can ever recall, insurers are reliant on data and analytics to not only assess risk, but also to provide a more seamless experience for the customer from point of quote all the way through the claims process. Across the insurance continuum, data is oil that keeps the engine running.”

 

Considerations for the Road Ahead

We could be headed for another year of vehicle and insurance shopping volatility in year-over-year growth rates. Additionally, current economic uncertainty and continued risky driving behaviors suggest claims severity will remain high. Finally, LexisNexis Risk Solutions will continue to watch the regulatory environment closely in support of consumers and carriers.

“The insurance industry is in a critical phase,” Pichon said. “There are so many unknowns, and insurers, no matter the size, who adapt by using data and analytics to enhance their workflows and meet customers where they are will be positioned to make better, more informed decisions and gain market share.”

Special Coverage Wealth Management

It’s a Time to Stay Focused and Think Strategically

By Barbara Trombley, CPA

If you have a retirement account, as many of us do, it is hard not to follow what is going on in the financial markets today. We are officially in a bear market, defined by a drop of 20% or more in a broad market index.

The Dow Jones Industrial Average crossed into bear market territory on June 13 of this year. Unfortunately, bear markets may plummet even deeper than the 20% threshold and may do so over a prolonged period. It is a tough time to be an investor during this scenario but, eventually, the market finds a bottom and investors feel comfortable once again to begin buying, putting an end to the bear market.

Bear markets are usually the result of a recession or some other financial strain. We are not officially in a recession, but many experts think that one is coming. A recession is defined as a significant decline in economic activity that lasts for months or years. This often means that unemployment rises as companies fail or shrink to control costs. Corporate profits fall causing a decline in stock market prices.

Usually, a bear market signifies tougher economic times ahead. Unfortunately, bear markets are ‘normal’ and happen periodically. We actually experienced a short bear market at the beginning of the pandemic. Bear markets tend to be much shorter than bull markets (when stocks rise over a period of time). They also tend to be less statistically severe, with average losses of 33% compared with bull market average gains of 159%, according to data compiled by Invesco.

“It is a tough time to be an investor during this scenario but, eventually, the market finds a bottom and investors feel comfortable once again to begin buying, putting an end to the bear market.”

What should an investor do during a bear market? Risk tolerance, asset allocation and your age really come in to play right now. The percentage of equities in your portfolio should match your risk tolerance and age. For instance, if you are in your thirties and forties and are investing in your 401(k), you could be very aggressive and have a large percentage of equities.

If this is the case, then you should be thrilled to make your monthly deposit into your account. You are buying stocks ‘on sale’ and you have many years to make up any temporary losses in your account. Even if you are a few years from retirement, and depending upon you situation, a bear market could be seen as an opportunity to purchase stocks at a discount.

A prolonged bear market for someone approaching retirement or a new retiree could mean making some changes to your lifestyle. For example, you could limit withdrawals from your investment account and/or eliminate panic selling. When you withdraw money or sell in a bear market it is considered “locking in the losses.” Perhaps you can cut spending or pick up an extra job for the short term, until the economy is on more stable footing.

There are financial products available that could potentially be suitable in many portfolios. In some cases when determined appropriate, an annuity could be used to create more stable income, a REIT (Real Estate Investment Trust) could be used to help diversity a portfolio and many insurance companies offer products with downside protection. Consult your financial advisor for different ideas to help address the volatility in your portfolio.

Perspective is key to a good night’s sleep when dealing with market volatility. Downturns are a normal occurrence in the stock market. Since 1932, bear markets have occurred, on average, every 56 months (about four years and eight months), according to S&P Dow Jones Indices. Make sure to keep emergency funds in the bank to keep market withdrawals to a minimum. Do not make rash changes to your portfolio. There is a saying that ‘time in the market beats timing the market.’ It is very hard to predict the exact best day to sell a stock or to buy a stock. Missing the best days in the stock market, over time, can seriously undermine your performance. Having a plan and sticking to it could yield the best results in the long term.

If you are a new investor, you may want to proceed cautiously. One potential strategy is to dollar cost average any funds that you have into the market (spread the investment over a period of time). This way you are buying at different price points in the market. Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.

No one is predicting when the market bottom will happen, and it is nearly impossible to time. I believe you should see to have a well-diversified portfolio with a mixture of asset classes, though there is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Always remember the adages “This too shall pass” and “Time is on your side.” Those people that have been investing for a while have been through many economic downturns and have survived and, most likely, thrived if they have stayed the course and stuck to their plan!

 

Barbara Tromblay is a financial advisor and CPA with Wilbraham-based Tromblay, CPA: (413) 596-6992. Securities offered through LPL Financial. Member FINRA/SIPC. Advisory services offered through Trombley Associates, a registered investment advisor and separate entity from LPL Financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Insurance Special Coverage

A Policy of Purpose

After a long career growing FieldEddy (later HUB International New England) into one of the region’s most notable insurance success stories, Sam Hanmer called it quits, figuring he’d enjoy an early retirement. But he didn’t, in fact, enjoy it. So, three years later, with a renewed sense of passion and purpose, he got back in the game, purchasing two local agencies, with the intention to grow them further, with an eye toward cultivating the next generation of leadership.

By Stephen Carter

If not for the pandemic, Sam Hanmer said, he might have stayed retired.

Or maybe not.

A long stretch when COVID-19 largely shut down the world certainly didn’t add to whatever enjoyment his retirement years — which began in the spring of 2018 — were bringing him, but the truth, he admitted, is that early retirement simply didn’t suit him.

“Quite honestly, I was hanging around doing nothing every day and had a lack of purpose in my life,” said Hanmer, whose more than three-decade career in insurance was highlighted by the rapid growth of FieldEddy in the early years of this century and its acquisition by Hub International in 2014. “I said, ‘OK, I have to go do something. This is crazy; I’m too young. None of my friends are retired. I’m a golfer, but not a passionate golfer.’ So retirement didn’t sit well with me.”

As noted, COVID didn’t help — Hanmer’s bulldog, Santino, was his “pandemic dog,” a companion during those isolating months — and not even the golf courses were open for a while. Simply put, he was restless.

“I figured, I’ve got plenty of earning years left, so I went back to what I know,” he said, noting that he honored his non-compete agreement with HUB before jumping back into the insurance business. After bidding on another agency and falling short, he purchased the two locations of LeBel, Lavigne & Deady Insurance (in Chicopee and Springfield) in May 2021, rebranding them as the Rush Insurance Group. Then, in November, he bought Towne Insurance Agency in Agawam, changing the name to Towne Insurance Group; it may eventually be part of the Rush name as well.

“I got back in the business,” he said. “I needed something to do, and it’s what I knew.”

Back in the 1980s, when Hanmer graduated from UMass Amherst, his father was the majority owner of a firm known then as Field, Eddy, and Bulkley, but Hanmer didn’t go to work for him right away. When he later joined the family business, he started in sales but moved to the financial side when the treasurer suffered a heart attack and had to leave the company for some time. After his father retired in 1995, Hanmer stepped into the role of CEO.

It wasn’t long before he started to capitalize on a trend within the industry — many small, mom-and-pop operations struggling to adjust to changes and technology began looking in earnest for exit strategies — to grow by acquisition.

insurance business with a new venture

Sam Hanmer tried retirement, but it didn’t suit him, so he returned to the insurance business with a new venture

Over the next two decades, the firm acquired a number of agencies, including the Curtis and Hodskins agencies in Monson, Aliengena in Palmer, LDS in Three Rivers, Meadows in East Longmeadow, Remillard in South Hadley, Buckley Bridge in Windsor Locks, and both BPI and Lawson, Marino & Bertera in Springfield.

The 160-year-old firm, later branded FieldEddy, was still growing its footprint when it became part of the HUB International family in 2014, where Hanmer remained in a leadership role for three and a half years, then retired.

For a while, anyway.

 

A Different Perspective

Looking back to his un-retirement decision early last year, Hanmer figures it was probably inevitable, pandemic or not.

“I’m very happy I made the call to do it. I’ve had people, friends in the business, say, ‘why did you get back into this business?’ But it’s a good business, it really is, and they know it.

“But after a while, it can get old,” he went on. “So for me, taking three years off and coming back was a like a recharge. I was in the business 30-something years, and after 30 years, anything can get a little tiring. You take a few years off and realize — in my case, at least — retirement wasn’t working, and you come back with a different lens because you had three years off. So I’m excited and having fun in the business — probably more fun now than I had back in the day.”

Hanmer has navigated a number of changes in the sector, including the rise of direct writers like Geico and Progressive, who poured into Massachusetts after state regulations were changed to stimulate competition. But Hanmer, like other independent agents, has always countered that evolution by emphasizing the value of relationships in his business.

“The direct writers have captured a fair amount of the Massachusetts business, and you saw a big pitch years ago about online sales from direct writers. Now you see Geico offices popping up because they finally understand it is a relationship business. Geico’s done phenomenally; they don’t have to put offices up, but they’re starting to build offices you can walk into. And Progressive probably does 80% of their business through independent agents. People don’t know that.”

The other factor that’s been affecting the insurance world over the past 20 years — and remains a factor today — is consolidation, and there’s a place, Hanmer said, for locally owned companies in that landscape.

“Consolidation has been happening in all sectors, and that’s very much the case in the insurance-agency world,” he noted. “Everything is going to the nationals, and the local insurance agencies are dwindling. But we’re still local people.”

The main challenge is one of scale, he said, noting that the size of HUB certainly helped the former FieldEddy grow its business because of the buying power of a national firm. “And they have a lot of what I would call specialty units that focus on a particular sector. It’s powerful. It served us well.

“But I still think there are a group of middle-market buyers, smaller businesses that get lost in the shuffle with the nationals, and I think there’s a big opportunity for smaller local agencies to capture that business,” he went on. “A lot of national players actually walk away from that business. And in Western Mass., that’s 90% of businesses.”

So, against the backdrop of continued consolidation and with his accumulated years of experience, Hanmer saw an opportunity to be successful.

“It certainly was a scary thought to get back in, and come up with some capital in order to get back in, knowing that things have changed in three years — although they didn’t change as much as I thought they would have.”

Elaborating, he said he discussed coming back with friends and colleagues, and they led him to believe the business had changed quite a bit, even in the three years he was away.

“And there is change in the system environment, in the software we use, some of the peripheral things, but the actual dynamics of the business didn’t change. Once I got back in, I said, ‘this is what I anticipated.’”

It’s a landscape where relationship building and the consultative approach still matter, he explained.

“That’s never gone away. I’d rather be your consultant than your salesman. If someone buys from me, great, but if they don’t, and I’ve helped them, that’s fine too, because at some point, that will come around. Maybe they’ll talk to a friend. Even if I don’t ever get their business, that approach works. It doesn’t necessarily work quickly, but this is a marathon, not a sprint.”

He paused for a moment. “Well, I’m sprinting a little bit, because there will be retirement at some point ahead of me.”

 

Leaving a Legacy

For now, though, Hanmer is focused on growing his three offices, which offer personal, commercial, and employee-benefit lines — the latter being new for both agencies.

“My makeup isn’t to sit back. I absolutely plan on growing it through organic growth and organic sales and through further acquisitions, for sure,” he told BusinessWest. But he wants to leave his enterprise in healthy shape when that second retirement does come around — and, presumably, sticks.

“I’m hoping this time around to create something where a perpetuation might be internal instead of selling it externally to a national brand. If I can get a few young guys — and women — in here who are passionate about the business and want to keep it going, I would definitely perpetuate it internally, just create a little annunity for myself, as opposed to just cashing out. That’s the plan. Plans change, but that’s the plan.”

Bringing in young professionals is a national challenge, however.

“It’s hard. This industry is struggling to attract young people who want to be in the insurance business. It’s hard to get young people energized or even want to talk to you. They’d rather be in a dot-com; they’d rather be in a startup in Boston. There’s all kinds of things they’d rather do than sell insurance.”

One reason is that insurance isn’t an instant-gratification career, he explained.

“It’s a recurring-revenue business, which means your first few years are tough because you have to build a book of business. It’s a commission-based business, so once you build your business, you can create a recurring-revenue compensation program. It can be lucrative if you stick it out, but most people won’t stick it out because the first few years are lean. If they can manage through their first few years and have thick enough skin not to worry about the public perception of insurance, it can be a very lucrative job.”

The negative perception arises, Hanmer said, because insurance is something everyone needs, but they don’t want to pay for it. “They love having it when they have a problem, but if they’ve never had a problem, they say, ‘I can’t believe I spent all this money on insurance.’”

Hanmer found he needed insurance, too — not the product, but the career. He needed it more, in fact, than putting on a green or puttering around a house, or whatever activities he and Santino — who now goes to work with his owner every day — might get up to.

In other words, Hanmer needed to feel the spark of working again, so that’s what he did. And he found that spark.

“I definitely made the right decision,” he said. “I’m really happy.”

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