Posts Tagged ‘Labor Laws’

Reform-Alert-Header-2014

Update to previous alert from July 26, 2013: Federal agencies release proposed rule on 90-day waiting period limitation

On Feb. 20, the Department of Labor (DOL), Internal Revenue Service (IRS) and the Department of Health and Human Services (HHS) jointly released both the final rule and proposed rule on 90-day waiting periods.

The final rule on waiting periods applies to plan years beginning on or after Jan. 1, 2015. For the 2014 plan year, compliance is based on the proposed rule from 2013, which states that group health plans (including grandfathered, non-grandfathered and self-funded plans) and group health insurance coverage issuers cannot apply a waiting period that exceeds 90 days.

The final rule maintains that eligibility conditions that are not based solely on the passage of time are generally acceptable unless designed to avoid compliance with the 90-day waiting period limitation.

  • If a group health plan conditions eligibility for health care on an employee regularly working a specified number of hours per period (or working full time), and it cannot be determined that a newly hired employee is reasonably expected to meet the required number of hours (or work full time), the health plan may take a reasonable period of time to determine whether the employee meets the plan’s eligibility conditions. A time period designed to determine whether such an employee meets the plan’s eligibility conditions is considered compliant with the 90-day waiting period limitation if coverage is made effective no later than 13 months from the employee’s start date plus, if the employee’s start date is not the first day of a calendar month, the time remaining until the first day of the next calendar month.

Health insurance issuers may rely on the eligibility information reported by employers (or other plan sponsors) and will not be considered in violation of the 90-day waiting period limitation if:

  • Issuers require plan sponsors to make a representation regarding the terms of any eligibility conditions or waiting periods imposed by plan sponsors before an individual is eligible to become covered under the terms of the plan (and requires plan sponsors to update this representation with any applicable changes); and
  • Issuers have no specific knowledge of the imposition of a waiting period that would exceed the permitted 90-day period.

All calendar days are counted beginning on the eligibility date, including weekends and holidays. Employee coverage must begin on or before the 91st day of eligibility.

Proposed rule on waiting periods and orientation periods
The proposed rule on orientation periods may be relied on for the 2014 plan year.

The proposed rule, issued in conjunction with the final 90-day waiting period rule, allows for a “reasonable and bona fide” employment-based orientation period of no more than one month.

During this time the employer and employee can evaluate whether the employment situation is satisfactory, and standard orientation and training processes begin.

The Proposed Rule may be relied on throughout 2014 and if a final rule is more restrictive, reasonable time for compliance will be provided.

More information can be found at:

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*Blue Cross Blue Shield of Michigan is not responsible for the content or practices of the destination website.
The information in this document is based on preliminary review of the national health care reform legislation and is not intended to impart legal advice. The federal government continues to issue guidance on how the provisions of national health reform should be interpreted and applied. The impact of these reforms on individual situations may vary. This overview is intended as an educational tool only and does not replace a more rigorous review of the law’s applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. As required by US Treasury Regulations, we also inform you that any tax information contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.

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Reform-Alert-Header-2014

On Feb. 10, the final regulations for the Employer Shared Responsibility provisions (also referred to as the “employer mandate”) under the Affordable Care Act were released by the Internal Revenue Service and Department of the Treasury.

These final regulations provide different types of safe harbors to employers in 2015, depending on the type of employer or plan offered. The triggers for the tax penalties also vary depending on the type and timing of the safe harbor option an employer may qualify for (and chooses to implement).

Key safe harbors for 2015 are outlined below:

Applicable large employers with 50 to 99 full-time equivalent employees may not be subject to the employer mandate requirements until the first day of their 2016 plan year.

An applicable large employer is not subject to tax penalties for any calendar month in 2015 (and for the portion of the 2015 plan year that falls in 2016 if it has a non-calendar plan year) if it meets all three major requirements and certifies that it qualifies for this safe harbor:

  1. An applicable large employer has at least 50 and no more than 99 full-time equivalent employees during 2014 so that it meets the workforce size requirements.
  2. There are no reductions to an employer’s workforce size or overall hours of service between Feb. 9, 2014 and Dec. 31, 2014.
    • However, reductions made due to “bona fide” business reasons are allowed. The regulations provide examples of “bona fide” reasons that include changes in the economic marketplace, sales of business divisions or other similar reasons.
  3. An applicable large employer must maintain the health coverage it previously offered between Feb. 9, 2014 through Dec. 31, 2015 (or on the last day of the 2015 plan year).

An employer will certify its eligibility requirements on designated IRS forms (1095-C for self-funded large employers and 1094-C for fully insured large employers) by Jan. 31, 2016. These forms have not yet been issued by the IRS.

Applicable large employers with calendar or non-calendar plan years and new employers may qualify for this safe harbor.

Percentage threshold to offer coverage is 70 percent for all applicable large employers

For all applicable large employers in 2015, including employers with 50 to 99 full-time equivalent employees that do not qualify for the safe harbor described earlier, the employer will be liable for tax penalties only if:

  1. The applicable large employer does not offer coverage to at least 70 percent of full-time employees and their dependents (unless the employer qualifies for the 2015 safe harbor for dependent coverage described later in this alert), and at least one of the full-time employees receives a premium tax credit to help pay for coverage on a Marketplace (Exchange); or
  2. The applicable large employer offers coverage to at least 70 percent of full-time employees and their dependents (unless the employer qualifies for the 2015 safe harbor for dependent coverage), but at least one full-time employee still receives a premium tax credit to help pay for coverage on a marketplace.
    • This may occur because the employer did not offer coverage to that employee or because the coverage that was offered to that employee was either unaffordable to the employee or did not provide minimum value.

This percentage threshold only applies for 2015. The percentage of employees that must be offered coverage to limit employer mandate liability increases from 70 to 95 percent in 2016.

Change in 2015 tax penalty calculation for employers with 100 or more full-time equivalent employees

An employer with 100 or more full time equivalent employees during 2014 is still subject to the tax penalty in 2015 for not offering health coverage to at least 70 percent (will increase to 95 percent in 2016) of its full-time employees and their dependents. This means a tax penalty will be assessed if the employer (a) does not provide health coverage at all, or (b) the employer does not offer coverage to at least 70 percent of its full-time employees and at least one full-time employee receives a premium tax credit on the Marketplace.

For 2015, this tax penalty calculation is different. The tax penalty will be calculated by subtracting 80 full-time employees (instead of 30):

  • 2015: Annual penalty calculation is $2,000 x (number of full-time employees minus 80)
  • 2016: Annual penalty calculation is $2,000 x (number of full-time employees minus 30)

This safe harbor is only available for each calendar month in 2015 (and for any months that fall in 2016 for a 2015 plan year). For example, a group with a July 1 plan year would be able to use the tax penalty calculation above for July 2015 through June 2016.

Applicable large employers with non-calendar year plans

An applicable large employer may receive relief from tax penalties for any month prior to the first day of the 2015 plan year if it meets the following requirements:

  1. Maintained a non-calendar plan year as of Dec. 27, 2012 and not changed its plan year after this date to begin later.
  2. Meets one of the following three tests:
    1. offers affordable coverage meeting minimum value requirements to its eligible employees (under the terms of the non-calendar plan as of Feb. 9, 2014) by the first day of the 2015 plan year
    2. covered at least 25 percent of all employees on any date between Feb. 10, 2013 through Feb. 9, 2014, or offered coverage to at least 33 percent of all employees during the most recent open enrollment period ending before Feb. 9, 2014
    3. covered at least 33 percent of its full-time employees as of any date between Feb. 10, 2013 through Feb. 9, 2014, or offered coverage to at least 50 percent of full-time employees during the most recent open enrollment period ending before Feb. 9, 2014
  3. Offers coverage to at least at least 70 percent of full-time employees and their dependents (unless the employer qualifies for the 2015 safe harbor for dependent coverage) as of the first day of the 2015 plan year.

Note that the relief does not apply to employees also eligible for or covered under a calendar year plan offered by the applicable large employer.

Dependent coverage safe harbor

Another safe harbor is available for applicable large employers with 2015 plan years where dependent coverage:

  1. Is not offered,
  2. Does not meet minimal essential coverage requirements, or
  3. Is offered to some, but not all, dependents

This applies to employers that take steps during 2015 (or the 2015 plan year) to extend coverage to dependents that were previously not offered coverage during the 2013 and/or 2014 plan years. This is not an option for employers that offered, but then dropped, dependent coverage during the 2013 and/or 2014 plan years.

Under the employer mandate a dependent is a biological and/or adopted child of an employee who has not reached age 26. This excludes foster children and stepchildren (only for the employer mandate). It also excludes an employee’s spouse being considered as a dependent.

Points for clarification

The employer shared responsibility provision does not apply to employers with less than 50 full-time equivalent employees.

Employers affected by the employer mandate are encouraged to seek their own legal counsel as each employer’s situation will be unique to the type of safe harbor that an employer may qualify for.

More information can be found at:

Additional guidance is pending.

 

*Blue Cross Blue Shield of Michigan is not responsible for the content or practices of the destination website.

The information in this document is based on preliminary review of the national health care reform legislation and is not intended to impart legal advice. The federal government continues to issue guidance on how the provisions of national health reform should be interpreted and applied. The impact of these reforms on individual situations may vary. This overview is intended as an educational tool only and does not replace a more rigorous review of the law’s applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. As required by US Treasury Regulations, we also inform you that any tax information contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.

Masud Labor Law GroupEmployers are always looking for new ways to limit their exposure to employment law claims.  Throughout the 1990s and early 2000s, mandatory arbitration clauses in employment agreements were the alternative dispute resolution program of choice.  Employers adopting these mandatory arbitration clauses believed that they would get a better, faster, and cheaper resolution of their disputes than they would in court.  For many employers, however, arbitration has not been the panacea that they had hoped for.  Instead, the arbitration process has often proved to be an unsatisfactory double-edged sword for employers as a result of several specific disadvantages of arbitration.            

1.         Filing fees and arbitrator fees are expensive.  Most employers involved in arbitration are quite surprised how expensive the filing fees and arbitrator fees are.  For example, in employment arbitration cases filed with the American Arbitration Association (“AAA”) involving disputes arising out of an employer-promulgated arbitration agreement, the “employer shall pay the arbitrator’s compensation unless the employee, post dispute voluntarily elects to pay a portion of the arbitrator’s compensation.”  In addition, in cases before a single AAA arbitrator, “a nonrefundable fee in the amount of $925 is payable in full by the employer, unless the plan provides that the employer pay more.”  These costs do not include any costs associated with selecting a location of the arbitration.  Even if AAA is not used as a dispute resolution service and the parties select their own arbitrator, an arbitrator’s fee often exceeds $1,000 a day.   

2.         Arbitrators are less likely to dismiss a claim.  Arbitrators have an economic incentive to let the case proceed as long as possible since they are typically paid by the hour. Therefore, many arbitrators are less receptive to employer motions to dismiss employee claims. 

3.         Lack of appellate review.   Another problem with using an arbitrator to decide employment disputes is the inherent lack of meaningful appellate review.  An arbitration award is final and binding on both parties unless it is procured by corruption or fraud, the arbitrator was obviously biased or engaged in specific misconduct, or there was no valid arbitration agreement between the parties. 

4.         Arbitrators frequently “split the baby.”  In other words, arbitrators frequently issue a compromise decision, finding in favor of the employee on part of the claim and the employer on part of the claim.  One of the main reasons arbitrators do this is because they hope to be selected as an arbitrator in the future.  If an arbitrator becomes known for being too employee and/or too employer friendly in his/her decisions, he/she may not be selected as an arbitrator in the future.   

As a result of these disadvantages with arbitration, employers have continued their quest to find a better method of limiting their exposure to employment law claims.  The newest method utilized by employers to attempt to lessen their financial exposure to employment law claims is the jury trial waiver.  Jury trial waivers provide that the right to a jury trial is waived for any claim or cause of action arising under the employee’s employment agreement or out of the employment relationship.  Jury trial waivers give employers the benefits of a judicial forum without the expense and uncertainty of a jury trial. In most jurisdictions, after all, it is the jury’s  – not the judge’s – unpredictability that concerns employers.  Most importantly, however, is the fact that a jury trial waiver avoids the disadvantages of arbitration agreements for employers as discussed above. 

As far as filing fees go, unlike with arbitration the employee, and not the employer, is responsible for paying the filing fee at the time the employee’s complaint is filed.  In federal court, the filing fee for a complaint is $350.00 with or without a jury demand.  In Michigan, for complaints filed in the circuit courts without a jury demand, the fee is $150.00.  In addition, unlike with arbitration, neither party pays any fees for the trial court judge in either federal or state court as the judges are paid by the government.  Because bench trials are typically slower, less private, and more costly for employees than arbitration, fewer employees may choose to bring a discrimination claim.  In addition, because a trial court judge has no economic incentive to let litigation proceed, he/she may be more likely to grant a motion for summary judgment or a motion to dismiss in order to clear his/her docket.  Next, unlike with arbitration, an employer that is dissatisfied with a trial court judge’s decision in a bench trial is entitled to a full appellate review.  On appeal, the appeals court will review the trial court judge’s findings of fact under a clearly erroneous standard and the trial court judge’s conclusions of law under a de novo standard. Finally, when it comes to deciding cases, a trial court judge is less likely to split the baby since they do not have an economic incentive to be selected again in the future. 

While a waiver of jury trial is permissible in the state and federal courts of Michigan, there are strict requirements that must be satisfied in order for the waiver to be enforceable.  Employers that are interested in drafting and/or implementing a waiver of jury trial policy should contact their labor and employment law attorneys. 

For more information on this or any other labor and employment law topic, please contact Masud Labor Law Group at (989) 792-4499.

Photo of Attorney Brian SwansonAbout the Author

Brian Swanson graduated from Wayne State University Law School where he received awards for academic excellence.  While attending law school, Brian participated in Moot Court and also served as editor-in-chief.   Brian received his undergraduate degree from Grand Valley State University in Allendale, Michigan.  Before joining Masud Labor Law Group, Brian obtained extensive litigation experience in both state and federal courts as an associate with a Bloomfield Hills labor and employment law firm.

This article is published by the Masud Labor Law Group, and is intended as general information only.  This article is not intended to provide legal advice or opinion, as such advice may only be given when related to specific fact situations.  Questions or comments concerning this article should be directed to the Masud Labor Law Group, 4449 Fashion Square Blvd., Ste. 1, Saginaw, Michigan, 48603, (989) 792-4499.  E-Mail:  mps@masudlaborlaw.com.  ©Masud Labor Law Group 2010.  All rights reserved.  Reproduction of this article in whole or in part, without express permission from the Masud Labor Law Group is prohibited.

In our litigious society, nearly every employer knows that it may become the target of a lawsuit by past, present or prospective employees. Even if a lawsuit is without merit, the costs of defending the lawsuit are significant in terms of time, lost income, and litigation expenses, including attorney and expert witness fees.  As employees increasingly continue to attack the employment practices of their employers, the insurance industry is stepping up its efforts to provide Employment Practices Liability Insurance (“EPLI”) protection for its customers.  EPLI helps protect the employer by covering defense litigation costs and providing liability coverage for all or part of a judgment that may be rendered adverse to the employer.

A well-designed EPLI policy can provide the employer with protection against employment related claims such as wrongful termination, sexual harassment, discrimination, negligent hiring or retention, defamation, invasion of privacy, Family and Medical Leave Act (“FMLA”), and Americans with Disabilities Act (“ADA”) claims.  Traditional insurance policies, including “umbrella” policies, directors and officers liability policies, and workers’ compensation, generally exclude these employment-related claims. 

There is no “standard” EPLI policy for employers.  There are a number of insurance companies which offer EPLI policies and there are many variations in what different insurance companies will provide in terms of coverage, competitive pricing, and quality of legal representation.  A significant consideration for the employer in selecting an EPLI policy should be whether the EPLI carrier will allow the employer to select counsel of its own choice to defend them (i.e., a defense law firm that specializes in labor and employment law).  Many employers are not aware of a provision in nearly every EPLI policy whereby the insurance companies retain the right to select defense counsel.  Not surprisingly, this fact is not always made clear to employers at the time the EPLI policy is purchased. 

Unfortunately, the insurance carrier does not always select defense counsel who specializes in labor and employment matters when litigation arises.  The result to employers is that cases are assigned to lawyers in some distant law firm having no prior relationship with the insured employer whatsoever, and no experience with the local courts and judges.  In fact, all too often, an employer’s difficult and complex employment-related circumstance is pulled from the employer’s labor and employment lawyer who has handled the case up to the point of litigation, and is transferred to a new lawyer who lacks even the most basic knowledge of labor and employment law or of the employer’s business practices.  Thus, employers frequently have to incur unnecessary costs while the newly assigned counsel starts over and becomes educated about a case that the employer’s labor and employment law attorneys have already lived with the employer.  In short, many employers are not getting what they thought they bargained for in their EPLI claims, even though they are paying top dollar for coverage.

One means of avoiding this undesirable result is for the employer to specify its counsel of choice in the event of litigation at the time of purchasing the policy.  It is important for an employer to make this selection when first purchasing or renewing a policy because, thereafter, insurance carriers often refuse to allow employers to choose counsel.  If you are purchasing or renewing an EPLI policy, or even general liability coverage, be sure to insist on your counsel of choice early in the process

For more information on this or any other labor and employment law topic, please contact Masud Labor Law Group at (989) 792-4499.

About the Author

Brian Swanson graduated from Wayne State University Law School where he received awards for academic excellence.  While attending law school, Brian participated in Moot Court and also served as editor-in-chief.   Brian received his undergraduate degree from Grand Valley State University in Allendale, Michigan.  Before joining Masud Labor Law Group, Brian obtained extensive litigation experience in both state and federal courts as an associate with a Bloomfield Hills labor and employment law firm.

This article is published by the Masud Labor Law Group, and is intended as general information only.  This article is not intended to provide legal advice or opinion, as such advice may only be given when related to specific fact situations.  Questions or comments concerning this article should be directed to the Masud Labor Law Group, 4449 Fashion Square Blvd., Ste. 1, Saginaw, Michigan, 48603, (989) 792-4499.  E-Mail:  mps@masudlaborlaw.com.  ©Masud Labor Law Group 2010.  All rights reserved.  Reproduction of this article in whole or in part, without express permission from the Masud Labor Law Group is prohibited.

The Patient Protection and Affordable Care Act of 2010 (also known as Health Care Reform), requires that employers shall provide breastfeeding employees with “reasonable break time” including a private, non-bathroom place to express breast milk during the workday, up until their child’s first birthday. The Act places no limits on the number of breaks that must be provided or how long a break time must be in order to be considered “reasonable.” In regard to the “private place, other than a restroom,” where breastfeeding employees are to express breast milk, the Act requires that such an area provide privacy such that those expressing milk are “shielded from view and free from intrusion from coworkers and the public.”

Only employers with less than 50 employees are exempt from the Act, and only if compliance with the law “would impose an undue hardship by causing the employer significant difficulty or expense.” Although employers are not required to pay breastfeeding employees during the mandated lactation breaks, in view of state and federal and state employment statutes against disparate treatment and the Fair Labor Standard Act’s compensable time provisions, employers should consider all relevant laws and circumstances if they plan to consider lactation breaks as unpaid.  Employees may not be retaliated against for exerting their rights under the new law.

This new law takes effect immediately.  Thus, Michigan employers need to immediately review and change their employment practices, rules and policies regarding their employees’ break times to make certain that they are not violating the law. This includes immediately informing managers and supervisors of the new legal requirements and the need to avoid any alleged retaliatory acts.  This also includes establishing a shielded private place outside of a restroom where breastfeeding employees can take their lactation breaks without intrusion.

Please feel free to contact Masud Labor Law Group at (989) 792-4499 for assistance in complying with the new law.  The Masud Labor Law Group is available to provide employers with needed reviews, training, rules and policies changes, and to answer any other employment questions or concerns. 

 About the Author

Richard R. Vary graduated cum laude from Thomas M. Cooley Law School where he received an American Jurisprudence Book Award in Administrative Law.  While attending law school, he was a member of the Michigan Department of State Police and served on the Department’s Emergency Services Team.  Dick has considerable litigation experience in civil and criminal trials and appeals in both state and federal courts, including the Sixth Circuit Court of Appeals.  Before joining Masud Labor Law Group, Dick served as an Assistant United States Attorney conducting federal criminal prosecutions, grand jury investigations, and defending civil suits against federal agencies. 

This article is published by the Masud Labor Law Group, and is intended as general information only.  This article is not intended to provide legal advice or opinion, as such advice may only be given when related to specific fact situations.  Questions or comments concerning this article should be directed to the Masud Labor Law Group, 4449 Fashion Square Blvd., Ste. 1, Saginaw, Michigan, 48603, (989) 792-4499.  E-Mail:  mps@mpslaborlawyers.com.  ©Masud Labor Law Group 2010.  All rights reserved.  Reproduction of this article in whole or in part, without express permission from the Masud Labor Law Group is prohibited.