Kegler Brown Managing Labor & Employee Relations Seminar 2013

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Employers today have more responsibility than ever of the management of their workplace. Establishing an effective employee relations program is crucial for managing your most valuable asset, your employees.

The annual Managing Labor & Employee Seminar will specifically addresses the issues facing employers.

The half-day seminar will provide information to better equip you in dealing with workplace management issues including managing employee technology access, preparing employees for Obamacare and the potential pitfalls of FLSA.

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  • Playful and hits home the issues facing employers these days related to portable electronic devices in the workplace. Thanks for sharing.
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  • Employees are using a variety of devices to work in a variety of places.
  • Litigation arising out of data security – much better defense to have a plan and policies than none.Not one size fits all solution
  • Cant eliminate all liabilityNo 1 size fits all answer – solutions are company-specificDetermine which risks you can live with and which may create big problems
  • IT solutions
  • Risks for all devicesIC use personal device for multiple clients
  • Litigation holds – ct and reg sanctions; negative effects on your litigationWiping information – rotating clients; Privacy issues
  • What kind of data you have important financial info not so bad personal identifying health information trade secrets
  • IT solutions
  • Brendan will cover more, but liability
  • Nothing new, just new ways to conduct illegal behavior camera use--disability: Revealed via mobile devicesAccommodations may be necessary to use the devicesEmployees’ personal prejudices in your officeDisabilityProviding accommodations to use devices
  • Collective bargaining agreements International travel
  • IT solutions
  • GPS trackingReview monthly charges – apps, ringtones, etc?
  • Devices are not appropriate for all employeesR&D
  • IT solutions
  • **company owns – company property, just like desk computer, can search and wipe, install software, etc**BYOD – notify and accept risks of doing business on a personal phone upon legitimate request/complaint, access data Nearly all of these problems/liabilities already exist in your workplace.Ensure your policies address the cyber versions of human error and poor decision making. **just like ER computer, if sending harassing text messages, we will read them
  • Analyze the sensitivity of the information your EE handle, the inherent security concerns in your industry, legal regulations you face, and ability to oversee and manage use of such devicesIT
  • Harassment, discrim, driving issues Camera use
  • Timing - (e.g., unless directed to provide an immediate response, respond only during work hours)Address timing for responding to after-hour emails
  • - US Supreme Court Ruled on Health Care Reform under its Taxing Authority- Mandate not a command to obtain health insurance but a tax assessment if fail to do so
  • Who does the Health FSAs impact?:Impacts employers that sponsor health FSAsImpacts employees who participateThe $2,500 limit applies only to salary reduction contributions under Health FSAWhat must be amended?:Cafeteria plans offering a Health FSA must be amended to describe the $2,500 (or lower) limitWhen does the Health FSA apply?:The $2,500 limit on Health FSAs salary reduction contributions applies on a plan-year basis and is effective for plan years beginning after December 31, 2012Constructing the Amendment:May be expressed as a maximum dollar amountMay be expresses as another method of determining the maximum dollar amount of salary reduction contributions to a Health FSAIn no case may the plan permit a participant to make salary reduction contributions for a plan year beginning after December 31, 2012 exceeding the $2,500 limit
  • General Purpose: This reporting is to provide employees with comparable consumer information on the cost of their health care coverage. Who must report?: All employers who provide employer-sponsored coverage during the calendar year must report the cost of that coverage. Includes, Federal, State, Local Government Entities, Churches, and Other Religious Organizations. Where must the information be reported?: Employee’s Form W-2, Wage and Taxes Statement, Box 12, Code DDWhat information included?: Aggregate cost of all reportable benefits that an employee received under all the group health plans in which he or she participated during all or part of the plan year:MandatoryMajor medicalHealth FSA value for the plan year in excess of employee’s cafeteria plan salary reduction for all qualified benefitsHospital indemnity or specified illness(insured or self-funded), paid through salary reduction (pre-tax) or by employerDomestic partner coverage included in gross incomeEmployee Assistance Plan (EAP) providing applicable employer-sponsored healthcare coverage IF employer charges a COBRA premiumOn-site medical clinics providing applicable employer-sponsored healthcare coverage IF employer charges a COBRA premiumWellness programs providing applicable employer-sponsored healthcare coverage IF employer charges a COBRA premium
  • Background:Employee now has choice to chose a plan from a state-run exchangeUnder PPACA, the health benefit exchange will be operational on January 1, 2014Starting March 1, 2013, all employees and new hires must be informed of the new exchangesExchange plans required to limit out-of-pocket costs based on high deductible health plans (HDHPs) that qualify individuals for health savings accounts (HSAs)Notice must inform of two items: 1. Availability of Exchange; and 2. Employee eligibility for premium tax credit or cost-sharing reductionWho is eligible to enroll?:Individuals may enroll if, 1. residing in a state that establishes the exchange;2. not incarcerated, except individuals in custody pending the disposition of charges; and3. lawful residentInformation included in the Notice of Exchange Availability:- Must inform about the existence of the health benefit exchangeMust inform employees about how the Exchanges operateMust inform employees of what circumstances in which they may receive coverageMust inform that if employees purchased a QHP through the exchange they may lose any employer contribution toward the cost of employer-provided coverage, and that all or a portion of the employer contribution to employer-provided coverage may be excludable for federal income tax purposesMust include contact information for customer service resources within the exchange, and an explanation of appeal rights(The Notice need be in print form)Information included in the Notice of Premium Credits & Cost-sharing Subsidies:If the employer contribution is less than 60%, a statement that the employee may be eligible for premium tax credits and cost-sharing reductions if purchasing coverage through the ExchangeIf the employee purchases coverage through the Exchange, a statement that the employee will lose the employer contributions and that the employer contributions are excludable from income taxEligibility for Premium Credits:Qualifying individuals at or below 133% Federal Poverty Level (FPL)Qualifying individuals between 133%-300% FPLQualifying individuals between 300%-400% FPLNo individual above 400% FPL
  • An assessable payment to an applicable large employer for two coverage failures in regards to certain full-time employees: 1. Large employers not offering health coverage; 2. Large employers offering coverage with employees who qualify for premium tax credits or cost-sharing reductionsThe applicable statute: (a) Large employers not offering health coverage (26 USC Section 4980H)If— (1) any applicable large employer fails to offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer- sponsored plan (as defined in section 5000A (f)(2)) for any month, and (2) at least one full-time employee of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee, then there is hereby imposed on the employer an assessable payment equal to the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.1/12 of $2,000 per month. (b) Large employers offering coverage with employees who qualify for premium tax credits or cost-sharing reductions (1) In generalIf— (A) an applicable large employer offers to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A (f)(2)) for any month, and (B) 1 or more full-time employees of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee, then there is hereby imposed on the employer an assessable payment equal to the product of the number of full-time employees of the applicable large employer described in subparagraph (B) for such month and an amount equal to 1/12 of $3,000. (2) Overall limitation The aggregate amount of tax determined under paragraph (1) with respect to all employees of an applicable large employer for any month shall not exceed the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.For purposes of calculating the penalty, the number of individuals employed is reduced by 30. 26 USC 4980H(c)(2)(D). Please note that where employees are aggregated, then there is only one 30 employee reduction that is spread on a pro rata basis among the employers in the group. -Who is the applicable employer?:An employer, with respect to a calendar year, that employed an average of 50 or more FTE on business days during the preceding calendar year[more detail on next slide]-What is the applicable payment amount?:26 USC Sec 4980H(c)- The term “applicable payment amount” means, with respect to any month, 1/12 of $2,000-Look-Back/Stability Period Method:IRS acknowledged month-to-month calculation (discussed on next slide) as difficult and suggest this method. Under this method, an employer would determine if an employee is full-time by looking at a period of 3-12 months (“the measurement period”) to determine whether the employee averages at least 30-hours of work per week or at least 130 hours of service per calendar year[more discussion]
  • Definition:Section 4980H(c)(4) provides that a full-time employee with respect to any month is an employee who is employed on average at least 30 hours of service per week (or, under proposed regulations, at least 130 hours of service per month)Seemingly, under the 130 hour rule, a non-FTE (including seasonal employees) is taken into account in the FTE calculation A worker who is an employee under the common-law testFull-time employees status are determined on a monthly basis Employer is to count each FTE employed during the preceding year as one FTE for that yearSteps to determine # of FTEs for each calendar month in the preceding year:Calculate the aggregate number of hours of service (not ore than 120 hours of service for any employee) for all employees who were not FTEs for that monthDivide the total hours of service in step 1 by 120. This is the number of FTEs for the calendar monthSteps to determine # of FTEs in the preceding calendar year:Calculate the number of full-time employees (including seasonal) for each calendar month in the preceding yearCalculate the number of FTEs (including seasonal) for each calendar month in the preceding year (as described in the previous section Steps to determine # of FTEs for each calendar month in the preceding year)Add the number of FTEs from steps 1 and 2 for each of the 12 months in the preceding yearAdd up the 12 monthly numbers in step 3 and divide the sum by 12. (this is the avg number of the employer’s FTEs for the preceding calendar year)If the number of FTEs in step 4 is less than 50, the employer is not an applicable large employer for the current calendar yearIf the number of FTEs in step 4 is 50 or more, determine whether the “seasonal employee exception” applies. If it does apply, the employer is not an applicable large employer for the current calendar year. If the seasonal exception does not apply, the employer is an applicable large employer for the current calendar yearHours of Service Calculation:Calculation of hours for service for hourly employeesEmployees paid on hourly basis are hourly employeesEmployers required to calculate actual hours of services from records or hours worked and hours for which payment is made or dueCalculation of hours for services for non-hourly employeesEmployees not paid on hourly basis are non-hourly basisEmployer would be permitted to calculate the number of hours of service under any three methods:1. counting actual hours of service from records of hours worked and hours for which payment is made or due for vacation, holiday, illness, incapacity, etc.2. using a days-worked equivalency method whereby the employee is credited with eight hours of service for each day for which the employee would be required to be credited with at lest one hour of service under the rule in Section III.C3. using a weeks-worked equivalency of 40 hours of service per week for each week for which the employee would be required to be credited with at least one hours of service under the rule in Section III.C
  • Background:One of two tests, the other being the Affordability Test, to ensure that the coverage offered by an employer is adequateIf fail will have to pay the assessment taxHowever, the tax will only need to be paid if, in addition to the test’s failure, one or more FTEs receive a premium assistance tax creditMinimum Value Test- I.R.C. Sec 36B(c)(2)(C)(ii)Employer-provided coverage provides minimum coverage if:The plan’s share of the total allowed costs of benefits provided under the plan is at least 60% of such costs for a single plan
  • General Purpose: Help assist enrollees (employees) better understand and evaluate health insurance coverageWhat is it?:1 of 2 required forms, the second being the uniform glossary of terms, that summarizes health plans’ benefits and coverage. A form intended to cause employers and insurers to take competitive steps on the price and quality of benefitsWhen should it be given?:The PPACA requires the SBC be given to applicants prior to enrollment or re-enrollment, i.e., first open enrollment period after 9-23-2012 Who gives it?:Insured or insured health plans and plan administrators of self-insured health plans via paper or electronic formProvided as soon as practicable following receipt of the application but no later than seven (7) business days following receipt of applicationTo what does it apply?:All group health plansHealth Reimbursement Arrangements (HRAs) (not constituting “Excepted Benefits”)Need to know regarding HRAsEmployer-funded and offered in conjunction with high-deductible planAllows group to offer high-deductible plans while helping employees pay for covered cost shares (e.g. deductibles, coinsurance, copayments)An HRA integrated with other major medical coverage need not separately satisfy the SBC requirements; SBC can be prepared for the other major medical coverage To what does it not apply?:Group health plans that provide “Excepted Benefits” (e.g. Benefits that fall under one of the following: 1. Worker’s compensation or similar, Credit-only insurance, Automobile medical payment insuranceWhat is its appearance?:No longer than four (4) pagesPrint no smaller than 12-point font Language understandable to average enrolleeContent must contain uniform definitions, copayments, and other costs sharing provisions(2 disclosure requirements)Items to be included:12 required items+1 (coverage examples for common benefits scenarios adopted by the Health and Human Services (HHS)Failure to comply:Subject to fine up to $1,000 for each failureSubject to an excise tax reporting requirement for group health plans under IRC Sec. 4980D
  • Background:Governed by Dept. of Labor (DOL) and Dept. of Health and Human Services (DOHHS)ACA requires health insurance issuers to submit data on premium revenues spent on clinical services and quality improvement, also known as Medical Loss Ratio (MLR)If the percentage does not meet minimum standard, issuers required to issue rebatesMinimum Standard: 1. Large Group Market (50+ employees)= health insurers spend at least 85% of premium dollars received from policies on a combination of medical care claims and activities to improve health care quality2. Individual and Small Group Plans= spend at least 80% of premium dollars “”Based on statewide information Employers’ Duty:Policyholders (employers) must ensure the rebate is used for the benefit of subscribers Rebates may only be used for the benefit of participants in the plan that generated the rebatesEmployers’ Distribution of Rebates:Create a Plan Document Provision prescribing how distributions from insurance companies will be treated[]Employers’ Distribution Absent Plan Document Provision:1. Policyholders that sponsor plans subject to ERISAIn considering allocation approaches, the plan fiduciary may weigh the costs to the plan and the ultimate plan benefits and may allocate shares of the rebate among plan participants under any method that is “reasonable, fair, and objective” under the circumstancesPortion of rebates that are “plan assets” may be distributed to plan participants in cash, used to enhance benefits, applied to reduce participant premiums or otherwise used in accordance with the terms of the plan, which could include payment of administrative expensesPlan Assets: Under ERISA, insurance rebates attributable to employee contributions are considered plan assetsWhen handling MLR rebates, employer must determine the extent to which the amounts received must be treated as “plan assets” under ERISA2. Policyholders that are non-federal governmental group health plansPolicyholder use the amount of the rebate that is proportionate to the total amount of premiums charges in subsequent policy years to subscribers who were covered under the group health plan at the time the rebate is receivedPolicyholder may either limit the premium reduction to subscribers who were covered under the option generating the rebate or make a cash refund to those individualsPolicyholder may determine whether to evenly divide the rebate among all subscribers, to divide it based on each subscriber’s actual contributions, or to apportion it on any other reasonable basis3. Plans that are neither ERISA nor governmental plansPolicyholder must agree in writing with insurer that rebate will be paid to subscribers in the same manner as required for non-Federal governmental plansIf no agreement, insurer pays full amount (including amount based on the premiums paid by the policyholder) to subscribers in equal amountsIncome Tax Treatment of Rebates- Tax implication on employers for using MLR rebates for the benefit of employers Tax treatment depends on whether the employee paid for coverage with pre-tax or after-tax dollars[more information if preferred]
  • Taxes:Medicare Tax; Wages Hospital Tax on High Income Tax PayersMedicare Tax Unearned IncomeShared Responsibility- Individual Mandate TaxTax on non-qualified HAS and Archer MSA Medical ExpensesCorporate Estimated Tax ShiftTax on Medical Device Manufacturers (not on employers, but may be important to know with regards to possible increase in medical devices)Fees:Penalties for Employers for No Coverage and Unaffordable CoverageCorporate Clinical Effectiveness Research Fee
  • Who Regulates?:Department of Labor, which has not promulgated binding rulesDOL plans to complete rulemaking by 2014Until such rules are promulgated, employers are not required to comply with automatic enrollmentTo whom does it apply?:Applies to to Employers to which the FLSA applies and that have 200 or more full-time employeesWhat must employer do?:Must automatically enroll new FTE in one of the employer’s health benefit plansMust continue the enrollment of current employees in a health benefits plan offered through employerWhat should be included in the Automatic Enrollment Program?:- Include adequate notice and opportunity for an employee to opt out of any coverage the individual or employee were automatically enrolled in
  • Exempt employee vs. Formerly exempt employee
  • The training, even though it includes actual operation in the employer’s facilities, is similar to training that would be given in a vocational school (this means the training is “fungible,” or interchangeable, and can be used by the employee in another position with another employer);The training is for the benefit of the trainee;The trainees do not displace regular employees but work under close observation;The employer that provides the training derives no immediate advantage from the trainees’ activities and at least on occasion, its operation may actually be impeded;The trainees are not necessarily entitled to a job at the completion of the training period; andBoth the employer and the trainees have an understanding that the trainees are not entitled to wages for the time spent in training.
  • Kinder Morgan to pay more than $830,000 in overtime back wages to 4,659 employees, resolving US Labor Department lawsuit
  • Kegler Brown Managing Labor & Employee Relations Seminar 2013

    1. 1. Federal Legislation
    2. 2. Department of Labor» Wage-Hour Division» OFCCP4
    3. 3. Equal Employment Opportunity Commission » Strategic Enforcement Plan
    4. 4. Reconsider Your Background ChecksThe National Labor Relations Board» Protected Concerted Activity6
    5. 5. The Affordable Health Care Act
    6. 6. What Are We Talking About?» The wall between work and personal time is gone.» Mobile devices enter the work realm in two ways: o Company provides devices or pays for work use o Employees use their own personal devices for work purposes (BYOD)» Work on mobile devices creates two categories of potential liability: » Data and Security » Employee Behavior
    7. 7. What I Want You to Do
    8. 8. What I Want You to Do» Acknowledge the potential problems.» Make informed business decisions. o Should you provide devices or encourage employees to work on personal devices? o How can you limit your liability?» Revise and enforce your policies.
    9. 9. The Skinny» Use of mobile devices to work is a risk no matter what.» The only way to guarantee your ability to access and control information on a device is to own it.» BUT you can manage risks by adopting policies and agreements that fit your risk tolerance, trust assessment, and regulatory context.
    10. 10. Data-Related LiabilityYour security is only as good as the practices of your most careless employee.
    11. 11. Data Security» Protection against third parties o Independent Contractors o Lost or stolen devices o Malicious software o Gateway to the Cloud» Protection within the company o Employee access
    12. 12. Preserving & Collecting Data from Devices » Litigation holds, record retention, and investigations » Terminated employees » Wiping information » Employee Privacy o Evidence of a disability o GPS tracking
    13. 13. Data-Related Liability» Government enforcement actions» Civil penalties» Litigation o Third-party rights in the data » Breach of contractual obligations » Breach of statutory obligations
    14. 14. Behavior-Related LiabilityYou can teach an old dog new tricks.
    15. 15. Wage and Hour Issues» Nonexempt Employees o Off-the-clock work» Work during unpaid leave
    16. 16. Acceptable Use» Harassment» Discrimination» Distracted driving o Liability for damages to persons injured » Verdicts and settlements in the $15-25 million range
    17. 17. Termination of Employment» Owning the phone number» Return or wiping of the device» Cutting off access
    18. 18. Conduct a Self-AuditCheck yo’self before your wreck yo’self.
    19. 19. Important Questions» What issues already exist in the company?» What data is mobilized in your workplace? o Do third parties have rights in this data?» Who needs mobile access to what?
    20. 20. To Buy or Not to Buy?» Company purchases and owns the device» Compensate employees for the work use of a personal device o Stipends o Reimbursement» Employee use their own device (BYOD) o Less security o Less control over use
    21. 21. Company-Issued DevicesPros – Control Cons – MonitoringCompany owns the phone number, Choosing the right provider and plansoftware, and data transmittedCan deactivate or wipe the device Monitoring useremotelyMore monitoring acceptable Setting a precedent GPS tracking Financial responsibility for lost or damaged devices? Tech support?
    22. 22. Devices Are Not Appropriate for All Employees.» Does the employee work with sensitive information?» Is availability of the employee critical?» Is the employee organized and responsible?
    23. 23. High Risk Employees» Senior executives whose data is more likely to be relevant in litigation» Those who handle trade secret/sensitive information» Sales staff who have a hold on the goodwill of customers and who will continue to use the phone number if they leave» Nonexempt staff who could claim “off the clock” work» Contractors or other contingent workers who may be performing work on their personal device for other customers
    24. 24. Modify Company PoliciesA change will do you good.
    25. 25. Agreements as a Precondition to Use» Reduce expectations of privacy» Notify employees of risks» Require consent to reasonable access, such as: o Install security software o Copy data to meet litigation hold demands and record retention obligations o Remotely wipe the device of company information
    26. 26. Data Security» Limit types of data accessible from mobile devices o Passwords and encryption o “Sandbox”» Limit use of cloud-based storage to company data» Report lost/stolen devices» No friends or family» Provide IT support
    27. 27. Acceptable Use» Company liable for use during the course of employment o All other company policies apply to use » Harassment, discrimination, etc. o Address mobile issues » Distracted Driving – explain what to do
    28. 28. Limit Wage and Hour Liability» If working outside of work hours, consider: o Managers and supervisors may be the problem o Employees must record all time worked o Prior written authorization to work remotely via mobile devices
    29. 29. Revise Exit Interview Process» What devices has employee used?» What information may be stored on employee’s own devices?» Can you preserve personal information during wipe of company information?» Disable all employee’s devices’ access to company systems.
    30. 30. Evaluate Insurance Coverage» Does your insurance cover additional “cyber- risks” that mitigate the data-related risks?» Verify incidents arising form employees’ use of their personal devices are covered by company insurance policies.
    31. 31. Parting Thoughts» A multi-disciplinary solution is best.» Analyze existing policies to determine how they relate to and impact employees’ use of personal devices.
    32. 32. Thank You!Kailee Goold, Associatekgoold@keglerbrown.com (614) 462-5479
    33. 33. Relationship Problems» Three Main Types of Employees Facing Discipline: 1) Currently incompetent but can become competent. 2) Currently incompetent and will not ever become competent. 3) Self-gratification focused. They are more concerned with benefitting themselves, which causes misfeasance and nonfeasance.
    34. 34. I’m Telling You, I’m Telling YouThe Importance of Communication
    35. 35. Communicate the Rules» Brendan Feheley’s “Hot Stove” Example
    36. 36. Remember How That Lasted for a Day? The Importance of Documentation
    37. 37. What to Document» Performance Problems» Misconduct, Workplace Rule Violations, Employee Disputes» Absenteeism and Tardiness
    38. 38. How to Document» Be factual, not conclusory» Be accurate» Never consider or mention protected classes or protected activities» Avoid sugarcoating» Give details and examples» State consequences clearly» Write as a neutral observer, without emotion
    39. 39. Employee Evaluations» Make them Count! o Be Honest o Be Comprehensive o Be Accurate o Be Specific o Evaluate Performance, not Personality o Provide Deadlines
    40. 40. Dump Truck the Evidence» Barnette v. City of Charlotte
    41. 41. Documentation Must Be Accurate» Jaszcyszyn v. Advantage Health Physician Network o A fairly simple case of Facebook idiocy that might not have been filed but for the employer’s inaccurate information.
    42. 42. Consistency in Application» Brown v. Ryder Sys. Inc. o A black employee was terminated allegedly for tardiness and failure to meet performance goals.
    43. 43. Screaming That I’m Right The Disciplinary Procedure
    44. 44. Progressive Discipline» Warnings» Suspension» Termination
    45. 45. Additional Considerations During the Termination Process» Officer or Director?» Fiduciary?» Non-Compete Agreement?» Triggering Benefit Plan Language» Firing out of kindness» Immediately secure all personnel files & evidence
    46. 46. Cushion the Blow» Ways to make an exit easier on the employee» Ways to make an exit easier on the company» Ways to make termination easier on the person doing the terminating
    47. 47. Up in the Air
    48. 48. Thank You! Jeffrey C. Miller, Director jmiller@keglerbrown.com (216) 586-6651
    49. 49. Patient Protection and Affordable Care Act (PPACA)Presented By:Ralph E. BreitfellerStefan ThomasKegler, Brown, Hill & RitterA Legal Professional Association
    50. 50. AFTER 12/31/13 TBD 2013 Liability 12/31/13 Noticeability 10/1/31 Group Health Plans 1/31/13 Exchange1/1/13 W-2HAS/FSA Health Care Reform Timeline IMPORTANT EVENTS IN 2013
    51. 51. Amending Health Flexible Spending Arrangements (FSAs)
    52. 52. W-2 Reporting
    53. 53. Notices to Employees for theExchange & Premium Tax Credits Notice of Exchange Notice of Premium Credits Availability & Cost-Sharing Subsidies Employer contribution < 60% = Employee Existence of Health Benefit Exchange may be eligible for premium tax credits and cost-sharing subsidies Employee purchases through Exchange = How the Exchanges operate Employee will lose employer contributions and employer contributions are excludable from income tax Under what circumstances employees may receive coverage Employees purchase QHP through Exchange may lose employer contribution and all or portion of employer contribution to employer-provided coverage may be excludable for federal income tax purposes Contact information for customer service resources within Exchange and explanation of appeal rights
    54. 54. EMPLOYER SHAREDRESPONSIBILITYTHE FUNCTIONALITY OF THE EMPLOYERS’ SHARED RESPONSIBILITY
    55. 55. What is “Shared Responsibility?”EMPLOYERS’ SHARED RESPONSIBILITY
    56. 56. Calculating Full-Time Employees (FTEs)EMPLOYERS’ SHARED RESPONSIBILITY
    57. 57. EXAMPLE 1: Hourly-paid employee(i) Employer K’s taxable year is the calendar year. Employer Ks payrollrecords indicate that Employee A was an hourly employee who worked173 hours per month for January through November of 2014, worked 93hours in December of 2014 and was paid for 80 hours of annual leave inDecember of 2014 (for a total of 173 hours for December of 2014).(ii) Employee A had more than 130 hours of service in each month incalendar Year(iii) Employee A was a full-time employee of Employer K for each monthduring calendar year 2014.
    58. 58. EXAMPLE 2 : Non-Hourly Employee(i) Same facts as Example 1, except that in calendar year 2014, Employee Bis a non-hourly employee who worked for Employer K five days per week for50 weeks, and was paid 80 hours of vacation leave for two weeks (40 hoursper week). Employer K applies the days worked equivalency for EmployeeB.(ii) Employee B is credited with 40 hours of service for each week in the 2014calendar year (50 weeks worked and 2 weeks for which payment wasmade).(iii) Employee B averaged at least 30 hours of service per week during eachmonth in calendar year 2014.(iv) Employee B is a full-time employee of Employer K in each month incalendar year 2014.
    59. 59. EXAMPLE 3: Applicable Large Employer(i) In each month in calendar year 2014, Employer L has 20 full-timeemployees, 30 FTEs, and no seasonal employees.(ii) Because Employer L has 50 FT employees (20 full-timeemployees + 30 FTEs) during each month of 2014 and the seasonalemployee exception is not applicable, Employer L is an applicablelarge employer for calendar year 2015.
    60. 60. EXAMPLE 4: Seasonal Employees(i) In calendar year 2014, Employer N has 40 full-time employees for Januarythrough December none of whom are seasonal employees. In addition,Employer N also has 80 seasonal full-time employees that work for Employer Nfrom September through December. Employer N has no FTEs.(ii) Before applying the seasonal employee exemption, Employer N has 40fulltimeemployees during each of eight calendar months of 2014, and 120 full-timeemployees during each of four calendar months of 2014, resulting in an averageof 66.5 employees for the year (rounded down to 66 full-time employees), anaverage greater than the average of at least 50 full-time employees requiredfor applicable large employer status. However, in this example, Employer N’sworkforce exceeded 50 fulltime employees (counting seasonal employees) forno more than four calendar months (treated as the equivalent of 120 days) incalendar year 2014, and the employees in excess of 50 during those monthswere seasonal workers.(iii) Accordingly, because of the seasonal employee exemption, Employer N isnot an applicable large employer for calendar year 2015.
    61. 61. EXAMPLE 5: Seasonal and Other FTEs(i) Same facts as in Example 4, except that Employer N has 20 FTEs inAugust, some of whom are seasonal employees.(ii) The seasonal employee exemption is not available if the number of anemployer’s FT employees (including seasonal employees) exceeds 50employees for more than 120 days during the calendar year. Employer Nhas at least 50 FT employees for a period greater than four calendarmonths (treated as the equivalent of 120 days) in calendar year 2014.Therefore, Employer N is not eligible for the seasonal employee exception.As a result, Employer N averages 68 FT employees in 2014: [(40 x 7) + (60 x 1)+ (120 x 4)] ÷ 12 = 68.33, rounded down to 68.(iii) Accordingly, Employer N is an applicable large employer for calendaryear 2014
    62. 62. Plan Requirements1. Affordability test.1. Minimum Essential Coverage Test.2. Minimum Value Test.
    63. 63. Affordability TestCoverage is considered “unaffordable” if the required employeecontribution towards the cost of self-only coverage exceeds 9.5% of theemployee’s household income.
    64. 64. 1. What is the Employee’s contribution for single coverage?2. Does it exceed 9.5% of employee’s wages reported in Box 1 of the W-2? If yes, then not affordable and look to the safe harbor. If no, then it is “affordable”.Safe Harbor 1 (rate of pay): Does employee contribution exceed 9.5% of computed monthly wage? If not, then fit into safe harbor. For hourly employee, hourly wage x 130. For salaried employee, monthly wage as of January 1, 2014.Safe Harbor 2 (Federal Poverty Level): Does employee contribution exceed 9.5% of the most recently published Federal Poverty Level ($11,490 in lower 48 states)? If not, fit into the safe harbor.
    65. 65. The “Minimum Value” TestEMPLOYERS’ SHARED RESPONSIBILITY
    66. 66. • Ambulatory • Hospitalization • Prescription Drugs Services • Maternity/Newborn • Laboratory Services• Emergency Care Services Essential Health Benefits EMPLOYERS’ SHARED RESPONSIBILITY
    67. 67. OTHER ITEMS
    68. 68. Summary of Benefits & Coverage (SBC)
    69. 69. Medical Loss Ratio Rebates Employer’s Distribution Duty Distribution Plan Document Plans Subject to Non-Federal Group Plans; Neither ERISA ERISA Health Plans nor Governmental
    70. 70. Taxes & Fees
    71. 71. Automatic Enrollment
    72. 72. Not Permissible Permissible Eligibility Waiting Period Conditions Based Exceeding 90 Solely on Lapse of Days a Time Period of No More Than 90 Days Other Eligibility Conditions Unless Designed to Avoid 90-Day ComplianceWaiting PeriodsEMPLOYERS’ SHARED RESPONSIBILITY
    73. 73. Other Miscellaneous Summary Items1. 1/1/14, no annual limits on dollar amount of essential coverage.2. 1/1/14, no preexisting coverage exclusions.3. Individual shared responsibility.4. Anti-Retaliation Provisions:  Employee reporting alleged violations  Employee going to exchange
    74. 74. ContactRalph Breitfeller Tom Sigmund Stefan Thomasrbreitfeller@keglerbrown.com tsigmund@keglerbrown.com sthomas@keglerbrown.com(614) 462-5427 (614) 462-5462 (614) 462-5484
    75. 75. Presented by Brendan Feheley
    76. 76. Introduction For a weddin present Ledbetter gave his son Amos two hundred dollars. Two weeks later he asked him, "Watcha do with the money, son?" "Ah bought me a wristwatch, Pappy!" answered the boy. "Yew dumb ignoramous!" yelled his father. "Yew should av bought yoreself a rifle!" "A rifle? What fer?" "Supposn one day yew cum home and find some guy sleepin wid yore wife," explained the older redneck. "Watcha gonna do? Wake him up and ask him what time it is?“» Keeping time and compensating employees for time “worked.”
    77. 77. A penny a day…» Feb. 12, 2013: kgb USA Inc. agrees to $1.3 million dollar settlement of claims relating to minimum wage violations for misclassified workers working on piece rates.» January 16, 2013: The Children’s Place agrees to pay $1.5 Million relating to off-the-clock claims.» January 8, 2013: Rite-Aid agrees to pay $21 Million settlement relating to claims of allegedly misclassified assistant store managers and co- managers» May 2012: Columbus, Ohio Bar/Restaurant Group owners pay $250,000.00 to settle claims alleging illegal tip pool.
    78. 78. We’re all Professionals Here 2 possible problems#1. “We pay him on salary, he can work as many hours as we want.” NO!!!!!!!!!!!!!!» In order to be Exempt must meet TWO criteria o Must be paid a salary of $455.00 per week o Must also have duties that meet one of the 5 exemptions » Executive » Administrative » Professional/Creative » Computer » Outside Sales
    79. 79. We’re all Professionals Here#2 Misclassification of EmployeesMost problems occur with outside sales and administrative exemptions.» Administrative exemption: o whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices; whether the employee carries out major assignments in conducting the operations of the business; . . . whether the employee has authority to commit the employer in matters that have significant financial impact; . . . whether the employee provides consultation or expert advice to management; . . . [and] whether the employee investigates and resolves matters of significance on behalf of management o Rules and Parameters that govern job are less likely to be considered Administrative» Blotzer v. L-3 Communs. Corp., 2012 U.S. Dist. LEXIS 173126 (D. Ariz. Dec. 5, 2012) o Field Inspectors not covered by administrative or executive exemption.» Christopher v. SmithKline Beecham Corp., 635 F. 3d 383 (Sup. Ct. June 18, 2012) o Pharmaceutical Sales Reps are outside sales people, thus exempt! » Petitioners obtain nonbinding commitments from physicians to prescribe respondent’s drugs. This kind of arrangement, in the unique regulatory environment within which pharmaceutical companies operate, comfortably falls within the catchall category of “other disposition.”
    80. 80. There Aint No Free Lunch» Meal periods o Employee chooses to sit at desk during lunch and eat... » The employee must be completely relieved from duty for the purposes of eating regular meals. Ordinarily 30 minutes or more is long enough for a bona fide meal period. » The employee is not relieved if he is required to perform any duties, whether active or inactive, while eating. For example, an office employee who is required to eat at his desk or a factory worker who is required to be at his machine is working while eating. o Automatic lunch breaks in computer system are MAJOR problem.» Break times o You offer 2 15-minute breaks per day (unpaid of course) » Employee chooses to take 3 10 minute breaks. » Problem? o Affordable Care Act » Nursing Mother Break
    81. 81. Hours worked» “I’m really glad you got that new iPhone. Now you and Siri can keep on working all night long.” o Don’t rely on lack of knowledge » Phone bills » E-mail records o Be careful about reliance on “de-minimus” exception » Only applies on small increments of time (not half hour phone calls).» Electronic technology issues o Who has access? o On what devices? » If employees have access you should assume they’re using it.
    82. 82. Improper Deductions (from your revenue) » Uniforms o You can make employees pay for their uniforms, but... » Can’t take the employees wages below minimum. » Need in writing in Ohio. » Pro-rata deduction is ok. » Remember laundry and maintenance costs. » Other Deductions o “For the Benefit of the Employer”
    83. 83. Deductions» Other Deductions o Tools used in the employees work o Damages to the employers property by the employee or any other individuals o Financial losses due to clients/customers not paying bills, and theft of the employers property by the employee or other individuals. » Even if an economic loss suffered by the employer is due to the employees negligence. o Employers may not avoid FLSA minimum wage and overtime requirements by having the employee reimburse the employer in cash for the cost of such items in lieu of deducting the cost from the employees wages.
    84. 84. Deductions from Salaried Employees» Most times, can’t do it. o If employee works at all during the workday they need to be paid.» What happens when they exhaust paid leave and need to miss a half day? o Still get paid, absence still an absence.» When can you deduct pay? o When an employee is absent from work for one or more full days for personal reasons (not sickness or disability); o For absences of one or more full days due to sickness or disability (have to have a policy or practice of providing compensation for salary lost due to illness); o To offset amounts employees receive as jury or witness fees, or for temporary military duty pay; o For penalties imposed in good faith for infractions of safety rules of major significance; o For unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions; o In the employees initial or terminal week of employment if the employee does not work the full week; or o For unpaid leave taken by the employee under the federal Family and Medical Leave Act.
    85. 85. Independent Contractor» Test 1. The extent to which the services rendered are an integral part of the principals business. 2. The permanency of the relationship. 3. The amount of the alleged contractors investment in facilities and equipment. 4. The nature and degree of control by the principal. 5. The alleged contractors opportunities for profit and loss. 6. The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor. 7. The degree of independent business organization and operation.» Certain factors which are immaterial o the place where work is performed, o the absence of a formal employment agreement, o or whether an alleged independent contractor is licensed by state/local government.
    86. 86. Independent Contractor» Tips o Is the individual doing what another employee is or would be doing in a full-time capacity? o How long is the relationship expected to last? o Is the individual holding themselves out to other businesses? o One individual or many? o Incorporated?
    87. 87. Comp Time.» First, comp time cannot be provided in lieu of overtime pay by a private employer. 29 U.S.C. § 207(o).» Second, under the limited circumstances where a public employer may award compensatory time off instead of paying overtime wages, the comp time must be 1.5 hours off for every one hour of overtime worked.» Also a problem for exempt employees o Salary is a mark of executive status because the salaried employee must decide for himself the number of hours to devote to a particular task. In other words, the salaried employee decides for himself how much a particular task is worth, measured in the number of hours he devotes to it. o ????
    88. 88. Training, Testing & Orientationo Orientation » Pay employees for time! » Employees subject to the FLSA must be paid for all time spent "in physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business." Tennessee Coal, Iron & R.R. Co. vs. Muscoda Local 123, 321 U.S._590, 598 (1944)o Testing: » Pre-employment drug testing: NOT COMPENSABLE » On-Job testing: 6 factorso Training: Depends on who is benefitting from training and whether it’s mandatory.
    89. 89. Interns» 6 Factor test o The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment; o The internship experience is for the benefit of the intern; o The intern does not displace regular employees, but works under close supervision of existing staff; o The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded; o The intern is not necessarily entitled to a job at the conclusion of the internship; and o The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.» DOL 2010 Fact sheet o Very Very Narrow interpretation
    90. 90. Waiting Time» Key question: Was employee engaged to wait or waiting to be engaged?” o Key is employer control » Was employee free and clear of duties? » Do they have to stay on your premises? » If no, how far can they go, and how quickly have to return if called? o Have a policy explaining everything » Employee initial.
    91. 91. Travel Time» Work Performed While Traveling: Any work that an employee is required to perform while traveling must be counted as hours worked.» Home To Work Travel (Commuting): Compensable if (1) the employee starts their workday before the commute; (2) the employee performs work while commuting; (3) the employee drives the employer’s vehicle; (4) the employee is commuting to a special assignment out of town; or, (5) the employee is commuting in an emergency situation.» Travel That is All in the Days Work: Time spent by an employee in travel as part of his/her principal activity, such as travel from job site to job site during the workday, is work time and must be counted as hours worked.» Travel Away from Home Community: Travel that keeps an employee away from home overnight is travel away from home. Travel away from home is work time when it cuts across the employees regular workday or corresponding hours on nonworking days. o Normally compensable except time spent in travel away from home outside of regular working hours as a passenger on an airplane, train, boat, bus, or automobile.
    92. 92. Travel Time Tips» Give orders day before o If have to receive in morning... Compensable» Plan out-of-town travel outside work hours when possible o Plane flight between noon and 3 is compensable, between 7pm and 10pm not compensable.» Carpooling is good.» If employee has non-fixed situs then get agreement on area to be covered.
    93. 93. Tips & Tip Credit» Tipped employees are those who customarily and regularly receive more than $30 per month in tips.» Tips are the property of the employee. (Regardless of whether the employee is a “tipped employee”)» The maximum tip credit that an employer can currently claim under the FLSA is $5.12 per hour o (the minimum wage of $7.25 minus the minimum required cash wage of $2.13).» Tip credit does not apply to any tipped employee unless the employee has been informed of these tip credit provisions. o Get in writing» Sums distributed to employees from service charges cannot be counted as tips received.» Credit Card fees: Can only deduct the amount you actually pay in fee. o So pick lowest amount and automatically deduct that.» Tip pooling or sharing arrangement only valid when among employees who customarily and regularly receive tips. o Can’t include managers or other employees who aren’t “tipped employees”
    94. 94. Different Work- Different Wages» Exempt/Non-Exempt issues o What is employee’s primary duty?» Tip Credit problems: Employee employed both as a maintenance person and a waitperson, the tip credit is available only for the hours spent by the employee in the tipped occupation.» Weighted Average: If employee works two jobs and works overtime general rule is has to be paid weighted average of two jobs. o Unless agreement with employee that overtime will be paid at the rate paid for the work. » Get agreement in writing.
    95. 95. BonusesThe following bonus payments are excluded from overtime: o payments made for gratuitous reasons; o bonuses made as gifts on special occasions that arent measured by, or dependent on, hours worked, production, or efficiency; o discretionary bonuses (the payment and amount of the bonus is solely your discretion and the employee is not entitled to it under any contract, agreement, or promise); » Can’t have a formula » Attendance bonus. Not ok. o bonuses made as profit-sharing payments from a bona fide profit-sharing plan, trust, or savings program that conforms to Department of Labor (DOL) regulations.» Put a letter in a file with the bonus.
    96. 96. Commissions» "regular rate of pay" includes commissions o Means overtime often times includes added payment. » E.g. Inside sales employee gets paid $200 dollar base salary plus $500 commission for a week. Employee works 50 hours that week. Regular rate =$14.00 OT rate = $21.00. Employee owed $70.00 in compensation for week. o Don’t back into the regular rate. » No “de-minimus for wages owed”
    97. 97. Conclusion1. Little problems can easily become big problems when applied to entire workforce.2. With travel time, if it seems simple, it’s probably wrong. Come up with policies governing travel and have them reviewed.3. Watch deductions!4. Paying someone a salary DOES NOT make them exempt.
    98. 98. Thank You!Brendan Feheley, Associate bfeheley@keglerbrown.com (614) 462-5482

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