CBIZ Quarterly Manufacturing and Distribution "Hot Topics" Newsletter (May-Jun 2022)

(Continued on page 2)
1-800-ASK-CBIZ • CBIZ Manufacturing & Distribution National Practice @CBZ
CBIZ BizTipsVideos
CBIZManufacturing&Distribution
Emerging Risks & Liabilities from
Labor Shortages P. 1
Rethinking Total Compensation
to Retain Top Talent P. 5
How the Russia-Ukraine War
Could Affect Your Insurance P. 7
Addressing the Skilled Labor
Shortage in America —
Long-Term Bonus Plans P. 10
EmergingRisks&Liabilities
fromLaborShortages
These past few years have been anything but easy. The manufacturing & distribution industry has experienced unpredictable highs and disruptive
lows, but I hope that our team at CBIZ can help lift at least a little of that weight off your shoulders. During a time of immense change, we strive to give
you timely information which is impactful to your business. Please take a moment to review these insights and feel free to provide any feedback or
suggestions. We work hard for you, your business and your success.
JUNE 2022
ISSUE NO. 13
L
abor shortages have become an
increasing concern across all industry
lines. In fact, a recent study from the
Society for Human Resource Management
(SHRM) reported that nearly 90% of
businesses are experiencing difficulties filling
open positions. Many experts are attributing
these shortages to the pandemic as workers
are reevaluating their employment priorities.
A depleted workforce can have numerous
consequences on your businesses. An
employment shortage may make current
employees overworked and force you to hire
inexperienced or underqualified workers to fill
available positions. Combined, these issues
can not only increase employee errors but
also their likelihood of being involved in on-
the-job accidents. As these risks increase
your business’ liability, it is critical for your
organization to mitigate labor shortages and
related liability concerns.

CBIZ BizTipsVideos PAGE 2
(Continued from page 1)
Labor Crisis
The initial onset of the pandemic saw a record-high
unemployment rate as a significant number of workers
lost their jobs. While the economy eventually reopened
and job availability returned, many individuals have
reassessed their employment arrangements and elected
to remain out of the workforce. Recent employment data
has revealed that the proportion of people who have
been out of work for six months or longer is at its highest
in 60 years. In fact, at the end of 2021, nearly 11 million
positions in the U.S. were unfilled.
Adding to the crisis, existing employees have begun
resigning from their jobs at shocking rates. The U.S.
Bureau of Labor Statistics (BLS) has reported that in the
latter half of 2021, over 4 million Americans voluntarily
left their positions. Termed “The Great Resignation,” this
trend has only compounded the labor crisis.
Factors Contributing to Individuals Opting to Remain
Unemployed or Resigning
Caregiving Responsibilities
The pandemic forced many adults to become primary
caregivers for their loved ones (e.g., children, elderly
relatives). In fact, BLS data confirmed over 3 million
women have exited the workforce since the beginning
of the pandemic. Individuals have found these
additional responsibilities have made it increasingly
difficult to return to their jobs. Adding to the mix, many
daycare services are slow to recover with employment
below pre-pandemic levels. Employees who have
difficulty finding a childcare provider or care for an
elderly relative continue to struggle.
Early Retirement
The pandemic motivated countless employees close
to retirement age to end their careers earlier than
previously planned. An analysis from the Federal Reserve
Bank of St. Louis discovered that over 3 million workers
retired earlier than planned during the pandemic. Some
early retirees were influenced by an overall pandemic
fatigue, significant market income gains and burnout.
Overwhelmingly though, the report found these workers
were primarily concerned with workplace health and
safety as COVID-19 can lead to more severe illness for
older individuals.
New Business Opportunities
Workers are leaving their careers to start new business
ventures or begin a different career. Recent research
found that 25% of employees have made a career change
during the pandemic while new business applications
jumped by nearly 27% between 2019 and 2020.
COVID-19 Apprehension
Some workers have remained out of the workforce based
on ongoing health and safety concerns, especially as
COVID-19 cases continue to fluctuate and new variants
emerge. These apprehensions are especially prevalent
among those who have careers that require close contact
with others or work in enclosed spaces. The U.S. Bureau
of Labor Statistics (BLS) reported in November 2021 that
1.2 million people refused to seek employment based
directly on pandemic concerns. Influenced greatly by the
OSHA emergency temporary standard (ETS) and as more
businesses put requirements in effect, workers have
resigned or remained out of work because of vaccine
apprehensions.
Unsatisfactory Workplace
Prolonged burnout and minimal support have influenced
employees to leave their jobs. Unfortunately, this causes
additional stress for both remaining employees and
employers as workers take on additional duties and
companies struggle to fill positions. A significant number

CBIZ BizTipsVideos
of employees have quit their roles citing inadequate pay,
poor benefits and a lack of work flexibility (e.g., remote
capabilities, adjustable scheduling).
Individuals have permanently altered their job
expectations and workplace priorities. Economists
anticipate these labor shortages to continue throughout
2022 and beyond. Businesses will be impacted for the
foreseeable future and forced to adjust their current
hiring and retention tactics.
How Labor Shortages Affect Liability Risk
Businesses in all sectors risk sevral liability exposures
as a result of widespread labor shortages. Employers
are often forced to schedule fewer staff members,
overwork current employees and resort to hiring less
skilled applicants. Exhausted and underqualified
workers can increase the risk of workplace accidents as
they’re more likely to cut safety corners or make
careless errors during their daily tasks.
These incidents could lead to major liability concerns
from harm or injuries to both employees and customers.
Overworked and inexperienced employees are also
more likely to miss important project deadlines and
could cause service delays, contribute to disgruntled
customers and increase associated liability problems.
Additionally, staff shortages may influence your
business’ capability to maintain adequate workplace
security and result in liability vulnerabilities including
property and inventory losses.
Industry Risks from Labor Shortages
Construction
The U.S. Chamber of Commerce’s Commercial
Construction Index suggests 55% of contractors have
reported a high level of difficulty in securing qualified
workers. Although the Biden administration has
proposed a $1 trillion infrastructure plan with numerous
commercial construction project opportunities,
an uncertainty of specific projects has challenged
contractors to hire and retain workers. The sector is also
facing staff shortages due to nearly half of construction
workers being over the age of 45 and nearing
retirement. Due to the construction industry’s nature,
labor shortages pose substantial liability risks by way of
elevated (and more severe) job site accidents, project
delays and decreased workmanship.
Manufacturing
Experiencing a major labor crisis, the manufacturing
sector, as reported by BLS, is currently facing over
800,000 job openings. Regardless of the Biden
administration’s attempts to foster a new generation of
manufacturing workers through allocated federal funding
from several executive orders, staff shortages remain a
pressing concern.
Manufacturers have also lowered job requirements
relating to criminal history, legal marijuana usage and
previous work experience to expand their candidate
pool. This change in criteria can unfortunately lead to
an underqualified workforce and influence an increase
in job site accident occurrences and subsequent
liability issues. Recent industry research indicates
inexperienced manufacturing employees contribute to
over one-third (35%) of worksite accidents and related
insurance claims.
Reports have also discovered that 60% of manufacturing
workers have recorded additional stress, muscular
pain and discomfort from being overworked since the
pandemic. This is causing industry concern as these
incidences can create additional accident risks and
Trucking
According to the American Trucking Associations (ATA),
there is currently a driver shortage of more than 80,000
positions, largely fueled by an aging workforce, declining
interest in the profession and certain industry barriers.
Making matters worse, the ATA estimates 160,000
commercial driver positions could be unfilled by 2030.
The driver shortage is so profound that the Biden
administration’s infrastructure plan includes funding for
an apprenticeship pilot program intended to encourage
commercial driver’s license holders under the age of 21
to operate in interstate commerce.
Amid this shortage, many trucking employers have
extended existing employees’ driving schedules and
lowered their driver applicant standards. Such factors
can make employees more likely to be involved in serious
accidents on the road and influence various liability
issues, including driver injuries and fatalities, damaged or
lost inventory, and delivery delays.
Steps to Combat Labor Shortages
1. Enhance Recruiting Process
Recruitment efforts can significantly impact your
organization’s labor shortage. Applicants will judge your
company’s culture and effectiveness based on their hiring
process experience. Recruiters must be creative to keep
your organization forefront through the use of strategic
social media and job board posts, among other strategies.
PAGE 3

CBIZ BizTipsVideos
2. Increase Pay
Competitive wages can help you retain existing workers
and attract top talent. Offering sign-on bonuses may
also improve hiring capabilities.
3. Offer Additional Benefits
Employee benefits can also assist in maintaining an
ample workforce. Flexible work schedules, remote
work capabilities and paid time off show employees
your commitment to their work-life balance. Tuition
reimbursement programs can promote continued
employee learning, and a 401(k) assists workers to plan
for their futures. A generous childcare plan could also
attract parents who are conflicted between childcare
and work amid unpredictable school and daycare
closures. The BLS found an estimated 8.1 million
women are out of work, with many experts suggesting
this is directly related to childcare issues.
4. Improve Work Environment
A toxic work environment is a common reason for
employee complaints and resignation. A healthy
workplace demonstrates your commitment to employee
wellbeing and can make your organization stand out
to applicants. Forbes reported that 89% of employees
receiving workplace wellbeing initiatives are more likely
to recommend their employer to others. As mental
health, stress, burnout and social isolation continue
to be major concerns, many candidates are prioritizing
work-life balance. Employers must respond to and
support their desire for this balance.
5. Reward Existing Employees
Employers can also use rewards and incentives to help
retain current workers. These incentives may include
monthly bonuses for top performers or extra discounts
on business merchandise (if applicable). You can also
encourage and offer opportunities for development
and growth. Workers continue to value the growth
opportunities and leadership training. Experts suggest
that employees who experience a career progression
are 20% more likely to remain with their company.
6. Strengthen Retention Strategies
A recent survey conducted by the Society for Human
Resource Management (SHRM) found 47% of HR
professionals recognize retention and turnover at their
primary workforce challenge. Employee turnover goes
beyond a temporary interruption as it can affect morale as
employee workloads increase when their colleagues depart.
Retention strategies keep employees motivated, increase
loyalty and affect overall productivity. Recommendations
include providing mentorship programs, investing in your
workforce’s career progression, focusing on management’s
leadership skills, recognizing employee contributions and
creating an overall positive workplace culture.
Measures to Minimize Potential Labor Shortage
Liability Risks
Ensure Effective Onboarding Processes
Especially if labor shortages require you to hire
inexperienced workers, it is critical to have proper
onboarding protocols in place. These procedures can
equip new employees with the knowledge and resources
they need to succeed in their roles. You can also utilize
our Onboarding Scorecard to assess whether your
organization is doing enough to support new hires.
Provide Routine Training
Regardless of their experience, you should encourage all
workers to engage in regular, job-specific safety training.
This instruction will help promote a culture of safety,
minimize the risk of workplace accidents and decrease
You should also review and upgrade all new hire training
processes as they are essential in retention. Collaborating
with knowledgeable employees and utilizing regular
training sessions will encourage new workers while they
establish their skill sets. Retention rates are significantly
higher for companies that provide recent hires with
considerable training opportunities.
Schedule Regular Check-Ins
Maintaining an open line of communication with workers
is vital. Keeping in touch will motivate your employees to
share safety concerns or other work-related issues that
may arise. This will allow you to remedy these problems
before they cause liability incidents.
We’re Here to Help
No industry is safe from the effects of the current labor
market. Employee shortages can influence multiple liabili-
ties for your organization. Being proactive is the best step
in protecting your organization. Connect with a member of
our team for additional risk management guidance.
DISCLAIMER: This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional
advice. This information is general in nature and may be affected by changes in law or in the interpretation of such laws. The reader
is advised to contact a professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in
connection with the use of this information and assumes no obligation to inform the reader of any changes in laws or other factors that
could affect the information contained herein.
PAGE 4

CBIZ BizTipsVideos
RethinkingTotal
Compensationto
RetainTopTalent
I
t’s no secret that top talent expects to
be paid top dollar. Even with a developed
recruiting program, strong company
culture and great work-life balance, it’s
difficult for companies to attract and
retain the best employees without an all-
inclusive compensation strategy. Add in the
combination of high inflation, talent shortages
and the Great Resignation, and we’re left with
a hyper-competitive labor market.
Unlike 2020, employees now have the upper
hand in the proverbial “seller’s market.” In
an unprecedented time for attracting and
retaining talent, CEOs and CHROs must think
outside of the box to motivate and retain top
performers and explore new ways to increase
the value of total compensation offered.
Base Salary vs. Total Compensation
Before making any changes to your
compensation strategy, it’s important to first
understand the difference between base
salary and total compensation.
Base Salary — The amount per hour or year
an employee is paid. This is the figure that
appears on the employee’s paycheck. This
number does not include bonuses, benefits or
any other perks.
PAGE 5

CBIZ BizTipsVideos
Total Compensation — Everything an employee receives
in exchange for working for your company. This includes
a base salary, bonuses, incentives, benefits, on-site
amenities and any other perks you offer. Some typical
benefits included in total compensation are:

■ Health insurance

■ Vision & dental insurance plans

■ Disability & life insurance policies

■ Retirement plans

■ Performance bonuses
Creative Ways to Boost Total Compensation
Beyond base pay increases, there are many unique
ways that organizations can add additional value to their
total compensation package and reward and retain key
employees. The following are just a few.
Employee Stock Ownership Programs (ESOPs) —
ESOPs come with several benefits for employees and
employers. They could very well be claimed as the most
important form of remuneration for employees of any
organization. From a company’s perspective, they can be
useful in maintaining the liquidity of the company. From
an employee’s standpoint, it’s a reward for their loyalty
to the company.
Paid Training Stipend — Companies that include a paid
training stipend in their total compensation package
show an investment in their employees’ career success.
Additionally, offering training opportunities helps to upskill
and develop existing employees so they can perform their
jobs more effectively and become strong leaders.
Executive Bonus Plans — When it comes to retaining
top talent, employers need to get creative with benefit
offerings. Through a 162 executive bonus plan,
companies can offer life and/or disability income
insurance to their key employees.
Employer-Paid Individual Term Life Insurance — Finding
a way to provide top performers with a valuable benefit
— one that won’t be too hard on the bottom line and is
easy to administer — could be an ideal solution to reward
their contributions. With Focus 10 Life, a fringe benefit,
non-voluntary and employer-paid program, 20 or more
employees in full-time, white-collar occupations are
eligible for guaranteed level premiums for 10 years.

HowtheRussia-UkraineWar
CouldAffectYourInsurance
Labor Crisis
The initial onset of the pandemic saw a record-high
unemployment rate as a significant number of workers
lost their jobs. While the economy eventually reopened
and job availability returned, many individuals have
reassessed their employment arrangements and elected
to remain out of the workforce. Recent employment data
has revealed that the proportion of people who have
been out of work for six months or longer is at its highest
in 60 years. In fact, at the end of 2021, nearly 11 million
positions in the U.S. were unfilled.
Adding to the crisis, existing employees have begun
resigning from their jobs at shocking rates. The U.S.
Bureau of Labor Statistics (BLS) has reported that in the
latter half of 2021, over 4 million Americans voluntarily
left their positions. Termed “The Great Resignation,” this
trend has only compounded the labor crisis.
Caregiving Responsibilities
The Russia-Ukraine War has created multiple impacts
across the globe, effecting not only your business
operations but potentially also your insurance coverage.
The Russian invasion has already brought repercussions to
inflation, supply chains and cybersecurity and could mean
higher commercial insurance premiums and decreased
capacity across all lines. Companies directly operating with
the Russian government or businesses could see further
concerns as additional sanctions may affect their ability to
secure or make claims against existing policies.
Regardless of where your business conducts business,
numerous risks from the Russia-Ukraine War could have
repercussions for the insurance market.
Political Risk
When conducting business abroad, most companies
focus on overall strategy — how to increase sales and
market share while limiting costs. One aspect of doing
business abroad that often goes overlooked is political
risk. This exposure can be financially devastating and
bring foreign operations to a halt if your organization is
not properly prepared.
In general, a political risk is any action taken by a foreign
party, such as a governmental body, that could, or
potentially could, affect the local business climate. These
actions can cause companies and investors to suffer
financial losses as a result of sweeping political changes
or instability in the country. Common political risks and
impacts for investors and exporters include:
Legal & Regulation Changes
When governments introduce new laws or change their
existing regulatory framework, business operations
may be negatively impacted. Governments often target
foreign businesses or certain industries with unfavorable
restrictions that could potentially eliminate the viability of
conducting business abroad altogether.
Import & Export Restrictions
Sudden changes in import and export restrictions can
greatly increase the cost of doing business abroad.

Countries often center their tariff and trade barrier
strategies on protecting consumers and domestic
companies. Further, an embargo or the cancellation
of an import license can spell disaster for a business
operating abroad.
Transfer Risk
In some instances, businesses may not be able to
convert the local currency into dollars. When this
happens, foreign buyers may not be able to pay
exporters. Worse still, if currency restrictions are in
place, the value of cash held in a foreign market may
depreciate relative to the dollar.
Foreign Government Breach of Contract
When a contract breach occurs (e.g., non-payment,
unwarranted contract termination), it can create losses
for businesses. This can happen without warning, and
the financial loss can be difficult to recover.
Expropriation
This occurs when a government or other public agency
seizes, sometimes unlawfully, private property in the
name of public interest. Your business can lose both
physical assets and revenue.
Political Turmoil
Unsafe conditions due to war, terrorism, civil strife or
other forms of political violence can force your business
to completely abandon its investment.
The type and potential impact of political risk varies
by country. It’s important to remember that stability
varies by country. Political risk tends to be greater
in developing regions. The U.S. Department of
Commerce provides a general overview of various risks
of conducting business internationally.
Mitigating Risks
While political risk is nearly unavoidable in some
cases, there are ways to prepare before conducting
business abroad. Best practices that businesses can
leverage include:

■ Identify risk exposures that may be
encountered based on several factors, one
being geopolitical. Your risk manager can
inventory these political risks and rank them
based on their impact to your business.
Examining political trends can help anticipate
future events and government action.

■ Quantify potential risks using common
measurement tools, including discounted
cash flow analysis, organizational network
evaluations and enterprise risk management.
These tools will help your company predict
maximum probable losses, market share
changes and potential customer loss. Based on
this information, your business can appraise
if the risk of doing business abroad is still
profitable following a major political risk.

■ An effective course of action can reduce a
risk’s probability and its potential effects. While
political risk is difficult to eliminate entirely, your
business can utilize previously gathered data
to implement preventive tactics. Approaches
can include reevaluating your investment type,
seeking new in-country relationships, revising
your operational setup and redistributing capital
allocations.

■ When conducting business abroad you must
consistently monitor political risks and integrate
any data and findings into a formal risk
management process.

■ Speak with your broker to initiate political risk
insurance to counteract any gaps in protection.
This security can safeguard your physical assets,
foreign funds, contracts and much more.
Supply Chain & Inflation Risks
Currently, many merchant shipping vessels near Ukraine
have been targeted by the Russian military. Insurers
are either refusing coverage for vessels sailing in the
Black Sea or demanding enormous premiums. These
interruptions will continue to cause problems for the
already suffering supply chain. Forbes recently reported
nearly 400,000 businesses worldwide (90% U.S.-
based) rely on Russian suppliers while another 250,000
businesses (90% U.S.-based) rely on Ukrainian suppliers.
The most recent Russian and Ukrainian trade figures
(2019) from the Office of the United States Trade
Representative include:
Mineral Fuels ($13 billion)
The top import commodity from Russia to the U.S.
includes fossil fuels, such as crude oil and natural gas.
As Europe relies on Russia for nearly 40% of their natural
gas and crude oil consumption, additional sanctions to
the country could cause significant impacts to an already
weak global supply chain and inflation implications.
Industrial Metals ($3.6 billion)
Russia and Ukraine lead the global production of metals
such as aluminum, nickel, copper and iron ore. The
conflict could significantly cause difficulties for the U.S.
construction and manufacturing industries that are
already suffering from supply shortages and inflation.

Agri-Commodities ($1.5 billion)
Russia and Ukraine exports account for more than 25%
of the world’s trade in wheat, 20% of corn sales and 80%
of sunflower oil. U.S. total imports of agricultural products
from Russia totaled $69 million in 2019. As the struggle
continues, companies should expect prices for these
commodities to continue to increase, as well as supplies
from Ukraine depleting.
Trade Credit Insurance
In today’s business climate, most organizations are
expected to extend credit to their customers, as it
enhances purchasing power and creates opportunities
that may not have been available otherwise. However,
offering credit is a balancing act, as late payments or
customer insolvency can put stress on your organization’s
cash flow and profitability. Organizations collaborating
with foreign governments and businesses have additional
risk as foreign companies and laws are not as protective
as in the U.S.
Fortunately, your business can secure trade credit
insurance to protect your investment. Trade credit
insurance, also known as credit insurance or export credit
insurance, is a form of insurance that transfers risk for
businesses seeking to protect their accounts receivable
against nonpayment.
Trade credit insurance is designed to protect businesses
against the risk of nonpayment of goods or services
by their domestic or international buyers. In essence,
policies protect against nonpayment as a result of buyer
insolvency or nonpayment after an agreed number of
months following the due date.
Risks that can be insured under trade credit insurance
include:

■ Nonpayment or late payment

■ Customer bankruptcy, insolvency or similar legal
status

■ Nonpayment following an event outside the
buyer’s or seller’s control
It should be noted that insured risks must have a direct
link with the delivery of goods or services, otherwise they
are uninsurable.
For insurers, the goal of a trade credit insurance policy is
not only to indemnify losses as they arise but also help
businesses prevent foreseeable losses from occurring
in the first place. This may be a viable option for any
organization conducting business overseas, not just in
Ukraine or Russia, to protect their investments.
The current conflict’s negative implications on the
supply chain and inflation will not only cost your
organization more money initially but also will affect
your insurance policies. As the cost for supplies and
services continue to increase, insurers will be forced
to pay more toward claims. In addition, your current
policies could be underfunded and cost you if you were
to need protection.
Cybersecurity Risks
The Russia-Ukraine War could raise the risks of
cyberattacks and lead to already higher cyber liability
premiums. Nation-state attacks, a common Russian
tactic, have become a global concern. This trend sees
cybercriminals work on behalf of a nation-state. They
traditionally direct their criminal activities toward critical
infrastructures. As the United Nations and the North
Atlantic Treaty Organization (NATO) continue to support
the Ukrainian government, the risk for U.S. companies is
real. Along with cyber liability coverage, your organization
should implement recommended cyber procedures and
policies, including:

■ Minimizing cyber intrusions by implementing
multi-factor authentication, updating your cyber
prevention software and utilizing cloud services
for backups.

■ Increase your capability to detect breaches by
empowering your cyber or IT personnel to quickly
identify unusual network behavior.

■ Establish a crisis-response team to quickly
respond to potential cybersecurity incidents.

■ Conduct tabletop exercises and penetration
testing.
We’re Here to Help
The Russia-Ukraine War is just one of many international
incidents and conditions that could affect your business,
regardless if you conduct business internationally or
domestically only. The world has become a global market
that provides many opportunities for businesses to
expand and generate additional revenue. Unfortunately,
these expansions can also provide additional risks that
are beyond your control.
Fortunately there are several coverage opportunities
that will provide protection to your business against
international risks. We also recommend your company
stay diligent and proactive to potential domestic
implications from foreign influences. If you have questions
about your current coverage or additional protection
you may need to do business overseas, connect with
a member of our team.

CBIZ BizTipsVideos
AddressingtheSkilledLaborShortage
inAmerica—Long-TermBonusPlans
T
he current labor market in the United States is
facing a critical issue — a growing shortage of
workers who possess the necessary technical
skills to meet employer demand. One of the main factors
driving this issue is slowing population growth. The 2020
Census shows U.S. population growth fell from 13.2%
in 2000 to 7.4% in 2020 — the slowest pace since the
Great Depression. Unlike the Great Depression, this
slowdown is part of a long- term trend tied to an aging
population, decreased fertility rates, lagging immigration
and, of course, COVID-19. While labor shortage is not
a completely new issue, the short-term and long-term
trends outlined below combine to increase the likelihood
of this skilled labor shortage continuing for years to come.
Labor Trends

■ Long-Term Trends
○
Shifts in demographics, aging workforce,
slowing population growth
○
Lack of vocational training, apprenticeships
and trade school graduates
○
Falling labor force participation rates and
employees switching companies

■ Short-Term Trends
○
Changes in demand and availability due to
COVID-19
These factors combine to put increasing pressure
on employers to not only attract the best available
candidates to fill these open positions but also to retain
the valuable skilled employees they have on staff.
The Long-Term Bonus Plan (LTBP) Solution
The question becomes, how does a company position
themselves to attract and retain the necessary skilled
labor in their industry within current regulations? In
most cases this employee population would not fall
within traditional nonqualified arrangements, such as
a supplemental executive retirement plan. This is due,
in many cases, to the number of employees who would
receive the benefit exceeding the nonqualified regulations
and/or compensation would not fit the definition of a
“top hat” plan. A long-term bonus plan (LTBP) allows a
company to provide a valuable benefit that can be offered
to a larger population outside of the traditional executive
and director groups.
Mechanics of LTBP

■ The employer enters into an agreement with
a group of employees to provide an employer
contribution to a long-term bonus plan.

■ The contributions are subject to a vesting
schedule and benefits are paid upon completion
PAGE 10
SHARE OF US EMPLOYERS REPORTING TALENT SHORTAGES
80%
60%
40%
20%
0%
2009
19%
39%
14%
40%
52%
32%
49%
46% 46%
69%
2013
2011 2015 2018
2010 2014
2012 2016 2019

of the vesting period.

■ In order to avoid being subject to ERISA, a LTBP
will be acceptable as long as the total vesting
and payout period is no more than 10 years,
with seven years being more conservative.

■ The contributions are not currently taxable to
the participants and account earnings accrue
on a tax deferred basis.

■ When the benefit is distributed, it becomes tax-
deductible to the employer and reportable as
income to the participants.

■ Benefits remain subject to claims of creditors of
the employer until paid out to the participants.
Who Benefits from an LTBP?
While the term skilled labor may bring certain industries,
fields or occupations to mind, the current shortage is wide
reaching. Industries across nearly the entire labor market
are experiencing some level of deficiency.
Long-term bonus plans offer a straightforward and
valuable benefit to both the company and its skilled
workforce.
For further discussion on the features, mechanics and
examples of long-term bonus plans, visit www.cbiz.com/
retirement.
CBIZ Financial Solutions, Inc. is a Broker/Dealer, member
FINRA, SIPC and registered investment adviser.
1-800-ASK-CBIZ • CBIZ Manufacturing Distribution National Practice @CBZ
NUMBER OF JOB OPENINGS PER EVERY UNEMPLOYED WORKER, BY INDUSTRY
Education and health services
0 1 2
Professional and business services
Financial activities
Mining and logging
Government
Information
Leisure and hospitality
Wholesale and retail trade
Durable goods
Transportation, warehousing
and utilities
Manufacturing
Nondurable goods
Construction
2.26
1.9
1.78
1.63
1.45
1.4
1.39
1.22
1.19
1.16
1.06
0.88
0.74
© Copyright 2022. CBIZ, Inc. NYSE Listed: CBZ. All rights reserved.

CBIZ Quarterly Manufacturing and Distribution "Hot Topics" Newsletter (May-Jun 2022)

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