Employment and Benefits Law Update

An Employment &
Benefits Law Update
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White Collar Exemptions
Overtime Pay and More
Bob Horton
Tim Garrett
Lymari Cromwell
Stephanie Roth

White Collar Exemptions
Includes:
► Executive
► Administrative
► Professional
► Outside Sales
► Computer Employees
► Highly Compensated Employees
Requires:
► Paid on a salary basis (exceptions for outside sales and
computer employees) at certain level
► Certain job duties

Salary Level Test
Increase To $913 Per Week
► 40th percentile of weekly earnings for salaried
workers
► $47,476 annually
► Increase from current level of $455/week or
$23,660/year
► “HCE” salary level to $134,004 per year
Automatic Increases Every 3 Years – based
on lowest wage census region
Effective December 1, 2016

What Did Not Change?
Job Duties
► Had invited comment
Definition of “Paid on Salaried Basis” Except:
► Other forms of pay can satisfy up to 10%
► Quarterly (or more frequent) nondiscretionary
bonuses, incentive pay, and commissions
► Rules for making up shortfall
No change in exceptions for outside sales,
lawyers, doctors

Some “Good” News
Lower salary level than expected
Delayed effective date
Opportunity for audit and reclassification
without typical “red flags”
Other compensation can be included
No change in duties
► But likely was considered
► Keeping the “concurrent” concept likely triggered
high salary component

Next Steps and
Possible Impact
Audit – Evaluate Options for Those Below Salary Level
Keep Same Hours and Same Pay
► Re-Classification to non-exempt
► Pay overtime on hours worked over 40/week
Keep Same Pay, Decrease in Hours Worked
► Excess hours now passed to other/new positions
► Try to “limit” overtime
Increase Salary to Meet New Threshold,
Job Otherwise Unaffected

Next Steps and
Possible Impact
Re-Classify and Decrease Hourly Rate to Approximate
Same Pay
► Estimate overtime hours
► Reduce hourly rate to keep pay same
Re-Classify to Non-Exempt
► Morale Issue
► Keep up with hours worked
► Changes in benefits possible
Streamlined Management Structure
“Ripple Effect” if Salary Increased
“Limit” Overtime Increases Work Off Clock Risk

Other Options Available
Salary with Overtime Pay – Non-exempt
► At 1.5 times
► At “hybrid” (0.5 times and 1.5 times)
Fluctuating Workweek Pay – Non-exempt
► Must have a “clear understanding” (put in writing)
► Hours must truly fluctuate
► Must be paid on a salary basis
► Hours over 40 compensated at 0.5 times the
effective hourly rate for that week

Federal Guidance on
Restroom Access for
Transgender Employees

EEOC Fact Sheet: Bathroom Access Rights
for Transgender Employees Under Title VII
Fact Sheet released in May 2016
Transgender: people whose gender identity
and/or expression is different from the sex
assigned to them at birth
► Surgery/medical procedures not necessary to
be considered transgender
Macy v. Dep’t of Justice, 2012: EEOC rules that
discrimination based on transgender status is a
form of sex discrimination under Title VII

EEOC Fact Sheet: Bathroom Access Rights
for Transgender Employees Under Title VII
Lusardi v. Dep’t of the Army, 2015: EEOC rules that:
► Denying transgender employee access to common restroom
corresponding to the employee's gender identity is sex
discrimination;
► Employer cannot condition this right on the employee
undergoing or providing proof of surgery or any other medical
procedure;
► Employer cannot force the transgender employee to use a
single-user restroom; and
► Anxiety, confusion and discomfort of other employees cannot
justify discriminatory terms and conditions of employment.
According to the EEOC, contrary state law is NOT a
defense under Title VII.

OFCCP Final Rule Regarding
Sex Discrimination
Issued June 2016
Federal contractors covered by EO 11246
Sex discrimination/harassment includes
discrimination/harassment based on
transgender status
Transgender employees must be allowed to
use the restroom corresponding to their
gender identity

OSHA: A Guide to Restroom
Access for Transgender Workers
Issued June 2015
OSHA’s Sanitation Standard 1910.141:
Employers are required to provide employees
with access to sanitary toilet facilities.
Employers may not impose “unreasonable
restrictions” on employee use of sanitary
facilities, and therefore, employees “should”
be permitted to use the sanitary facilities that
correspond with their gender identity.

Prohibiting transgender employees from using
restrooms consistent with their gender identity,
or segregating them by requiring them to use
gender-neutral or other specific restrooms,
“singles those employees out and may make
them fear for their physical safety.”
Such restrictions may also result in employees
avoiding using restrooms while at work, which
can lead to “potentially serious physical injury or
illness.”

Transgender employees should have
access to the common restroom of their
choosing
► It is unreasonable to require them to use a
gender neutral restroom
► Employer may provide a gender neutral
restroom as an option for employees
► May also provide multiple-occupant, gender-
neutral restroom facilities with lockable single
occupant stalls

Employer may replace common, sex-
segregated restrooms with single-
occupancy restrooms
Number of Employees Minimum # of Single Occupancy
Restrooms
1 to 15 1
16 to 35 2
36 to 55 3
56 to 80 4
81 to 110 5
111 to 150 6
Over 150 1 add’l for each add’l 40 employees

Tips
Treat transgender issues with the same sensitivity and
caution as you would any other gender-based issue
that arises in the workplace.
If you do not currently have transgender employees,
be proactive. Develop a plan/policy to ensure that the
matter is handled appropriately when the need arises.
Train management and HR.
Do not condition workplace changes on
surgical/medical transition.
► For example, changing name, gender-specific pronouns,
personnel records, bathroom access, etc.

BREAK
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EEOC Final Rules on Employer
Wellness Programs
Susan Bilbro
Douglas Dahl
Stephanie Roth

Wellness Programs Overview
What are wellness programs?
► Health promotion and disease prevention programs and
activities
► Offered to employees as part of an employer-sponsored group
health plan or separately as benefit of employment
- Health risk assessment (HRA)
- Biometric screening for risk factors like high blood pressure or
cholesterol
- Educational health-related information or programs
- Nutrition classes
- Weight loss programs
- Smoking cessation programs
- Onsite exercise facilities

Two Categories of Wellness
Programs
Participatory
► Reward not based on a health
factor
► Wellness requirements N/A
► Examples:
- Fitness center reimbursement
- HRA or screening, regardless of
results
- Smoking cessation program,
regardless of quitting
Health-Contingent
► Reward based on health factor
► Wellness rules apply
► Examples:
- “Activity-only” – walking program
or certain amount of weekly
exercise
- “Outcome-based” – reduce
cholesterol or blood pressure

Wellness Rules for Health-Contingent
Programs under HIPAA and ACA
Health-contingent programs must be available to all
similarly-situated individuals and must:
► Be reasonably designed to promote health or prevent disease
► Give an annual opportunity to qualify for reward
► Limit the amount of reward/penalty to no more than:
- 30% of total cost of coverage; or
- 50% if designed to prevent/reduce tobacco use
► Provide a reasonable alternative standard (or waiver)
► Disclose availability of reasonable alternative standard in plan
materials discussing program

How Does ADA Apply to
Wellness Programs?
ADA prohibits employers from discriminating against
individuals on the basis of disability
Generally restricts employers from obtaining medical
information from applicants and employees
► Exception: Employers can make inquiries about employee’s
health or do medical exams that are a part of a “voluntary”
employee “health program”
ADA requires employers to make wellness programs
available to employees without regard to disability status,
to provide reasonable accommodations, and to keep
medical information confidential

EEOC Final Rule on Wellness
Programs and ADA
Final rule applies prospectively - applicable as of the first
day of the first plan year that begins on or after January 1,
2017
Provides guidance on:
► What constitutes a “health program” – “reasonably designed”
► What constitutes “voluntary”
► Financial incentive limits
► Additional confidentiality requirements

Final ADA Rule on Wellness
Programs – Health Program
What is a “Health Program”?
► Includes medical examinations and disability-related inquiries
► Must be reasonably designed to promote health or prevent
disease
► Would it be okay to ask employees to complete an HRA and/or
undergo a biometric screening:
- For the purpose of alerting them to health risks?
- Without providing results, follow-up information or health advice?
- For the purpose of compiling aggregate information to design and offer
health programs aimed at specific conditions?
- For the purpose of giving an employer information to estimate future health
costs?

Programs - Voluntary
What is a “voluntary” health program?
► Does not require employees to participate
► Does not deny coverage under any employer group health plan
or benefit package for non-participation or limit extent of benefits
- Could you allow employees who participate in a wellness program to enroll
in a comprehensive health plan, while offering non-participants only a less
comprehensive plan?
► Does not take any adverse action, retaliate against, or coerce
employees who choose not to participate
► Provides written notice to explain what medical information will
be obtained, how it will be used, who will receive it, restrictions
on its disclosure, and the methods used to prevent improper
disclosure

Programs – Financial Incentives
Incentives are limited to 30% of the total cost of self-only
coverage. Specifically:
► If employee must be enrolled in a particular health plan to
participate in the wellness program, incentive is limited to 30% of
the total cost of the self-only version of the plan in which
employee is enrolled
► If employee may be enrolled in any of the employer’s self-only
health plans in order to participate, the incentive is limited to
30% of the lowest cost self-only health plan the employer offers
► If employer does not offer a health plan, but offers a wellness
program open to all employees, the incentive is limited to 30% of
the total cost to a 40-year old non-smoker purchasing self-only
coverage under the second-lowest cost Silver Plan available to
the employee on the Exchange

Programs – Financial Incentives
What about tobacco cessation incentives?
► 30% limit does not apply if the wellness program
merely asks employees whether or not they use
tobacco (or whether they ceased using tobacco by
the end of the program)
- That is, employer can offer an incentive for these programs
up to 50% of the cost of self-only coverage
► 30% limit does apply if employer requires biometric
screening or other medical test for the presence of
tobacco or nicotine

Final ADA Rule on Wellness Programs –
Reasonable Accommodations
Even if a wellness program does not include disability-
related inquiries or medical examinations, employers
must provide reasonable accommodations to enable
employees with disabilities to earn whatever financial
incentive the employer offers
► Covered entity would need to provide reasonable
accommodations for both participatory and health-contingent
wellness programs
► Example: if an employee can earn an incentive by attending a
nutrition class, a sign language interpreter should be provided for
a deaf employee

Programs – Confidentiality
Final rule adds two new requirements to existing ADA
regulations on confidentiality
An employer:
► May only receive information collected by a wellness program in
aggregate form that does not disclose, and is not reasonably
likely to disclose, the identity of specific individuals except as
necessary to administer the plan
► May not require an employee to agree to the sale, exchange,
transfer, or other disclosure of medical information or to waive
confidentiality protections under the ADA in exchange for an
incentive or as a condition for participating in a wellness
program, except to the extent permitted by the ADA

Final GINA Rule on
Wellness Programs
GINA generally prohibits employers from using genetic
information in making decisions about employment, and
restricts employers from requesting, requiring, or
purchasing genetic information
► Exception: Employers may acquire genetic information as part of
voluntary health or genetic services offered to employees or their
family members
Final rule applies prospectively - applicable as of the first
day of the first plan year that begins on or after
January 1, 2017
Clarifies an employer may offer a limited incentive for an
employee’s spouse to provide information about the
spouse’s current or past health status as part of a
voluntary wellness program

Final GINA Rule on
Wellness Programs
Final GINA rule only applies where a portion of the wellness
program incentive offered is for an employee’s spouse to answer
questions about health status or to take a medical examination
► Does not apply where incentives are made available in exchange for
an employee’s spouse engaging in certain activities (e.g., attending a
weight loss program, exercising a certain amount each week) that do
not require obtaining information about current or past health status
Wellness programs that ask for genetic information must be
“reasonably designed” – similar requirements to ADA final rule
Financial incentives have the same limits as those under ADA
final rule, but are in addition to any employee incentive, so that
combined total inducement can be no more than twice the cost of
30% of self-only coverage

Final GINA Rule on
Wellness Programs
Confidentiality – adds to existing provisions:
► Final rule prohibits employers from requiring an employee or
spouse to agree to the sale, exchange, transfer, or other
distribution of health information in exchange for an inducement
or as a condition of participating in a wellness program
► Genetic information gathered as part of wellness program must
be disclosed to employers only in aggregate terms
Other Revisions
► Final rule prohibits employers from denying access to health
insurance or any package of benefits to, or retaliating against,
any employee whose spouse refuses to provide information
about his/her current or past health status to an employer
wellness program

Affordable Care Act –
Nondiscrimination in Health
Programs and Activities

ACA – Nondiscrimination in
Health Programs and Activities
Agenda:
► Background of ACA Section 1557
► When is Section 1557 effective?
► Entities subject to Section 1557
► What does Section 1557 prohibit?
► What affirmative action does Section 1557
require?
► What next?

Background of ACA
Section 1557
Passed in 2010 as part of the initial ACA legislation
► 2 paragraphs in the 2700-page bill
► “I haven’t read every word of that, I promise,” Justice
Stephen Breyer said to a lawyer arguing the case. “So
what do you propose that we do other than spend a year
reading all this?”
► Has been effective since 2010, but little is known about
enforcement since then
In general, prohibits discrimination on basis of race,
color, national origin, sex, age, and disability (Really
Cool, No SAD) in any health program or activity

Background of ACA Section 1557
Statute directs Secretary of Health and
Human Services to adopt regulations to
implement requirement
Proposed regulations issued in September
2015
► Asked for public comment
Final regulations published by HHS on
May 18, 2016
► 100 pages, including preamble

When is ACA Section 1557
Effective?
Section 1557 has been effective since 2010
Because of this, OCR is unwilling to delay
effective date of final rules
Final rules are effective on July 18, 2016
Notice requirements effective 90 days later
However, if the rule requires changes to
health insurance or group health benefit
design, rule is effective first day of first plan
year beginning on or after January 1, 2017

What entities are subject to
ACA Section 1557?
Rule applies to any:
► Health program or activity, any part of which
receives “federal funding” (except Medicare Part
B payments)
► Health program or activity administered by HHS,
including Federal Marketplace
► Health program or activity administered by States
(i.e., State Marketplaces)
► Entities subject to rules are called “covered
entities”

ACA Section 1557
What constitutes “federal funding” that
triggers the requirements?
► Any grant, loan, credit, subsidy, contract or
any other arrangement where the federal
government provides funds, federal
personnel, or real or personal property.
► Limited to federal funding from HHS, for now

ACA Section 1557
What is a health program or activity?
► Includes providing or administering health-related services
or insurance and providing assistance in obtaining same
► Importantly, all of the operations of an entity principally
engaged in providing health programs or activities are
considered “health programs or activities” for purposes of
the rule
- Examples are hospitals, health clinics, community health
centers, group health plans, health insurance issuers,
physician’s practices, nursing facilities, etc.
- This means that an entity which receives federal funds for just
one plan or activity is subject to the rule with respect to all of its
activities

ACA Section 1557
Are employers in their capacity as employers subject to the
rules?
► Employers are covered by the rule with respect to their own
employee health benefit programs if:
- the employer is principally engaged in providing or administering health
programs or activities (i.e., hospitals, physician practices, etc.)
- the employer received federal funds to fund the employer’s health
benefit program (HHS funds to support employer wellness programs)
► Rules do NOT extend to hiring, firing, promotions, or terms and
conditions of employment outside the employee health benefit
program context
Group health plans themselves are subject to the rule if they
receive federal funds from HHS (i.e., Medicare Part D
Subsidies, Medicare Advantage)

ACA Section 1557
Does rule apply to a covered entity’s TPA services?
► Yes and No.
► Proposed regulations led many to believe that self-insured plans
would be subject to rules if their TPA was a covered entity
► Final regulations say that where TPA is responsible for the
decision or action alleged to be discriminatory (e.g., claim
processing), the TPA will be subject to rules.
► On the other hand, where responsibility for the decision or action
alleged to be discriminatory lies with the employer (i.e., benefit
design), whether the employer is subject to the rules depends on
whether the employer is a covered entity
► If employer is not subject to the rules, OCR has indicated it will
refer the matter to other federal agencies that have authority
(e.g., EEOC)

What discrimination does
ACA Section 1557 prohibit?
An individual shall not, on the basis of race, color,
national origin, sex, age or disability, be:
► Excluded from participation in,
► Denied the benefits of, or
► Subjected to discrimination under any health program
or activity
What this means – HHS’ existing rules under Title
VI, Title IX, Age Discrimination Act, Rehabilitation
Act apply to health programs/activities

As applied to health coverage, discrimination
would include: denying or limiting coverage,
denying a claim, imposing additional cost
sharing, and using discriminatory marketing
practices or benefit design
OCR did say:
► reasonable medical management techniques are
allowed
► rules do not require coverage of any particular
procedure or treatment

Examples
► Does not allowing mammograms to men and
younger women, without a known family
history, violate 1557?
- No
► TPA of self-insured plan denies a claim
because an individual’s last name suggests a
certain national origin. Does 1557 apply or
referral of plan to EEOC?
- 1557 applies because TPA discretion

Sex Discrimination
► OCR said discrimination “on the basis of sex”
includes:
- Pregnancy, false pregnancy, termination of pregnancy,
childbirth or related medical conditions, sex stereotyping and
gender identity
► Gender identity includes “gender expression” and
“transgender status”
► OCR did not resolve whether discrimination on basis
of sexual orientation violates Section 1557
- However, support as matter of policy

Sex Discrimination
► Under rule, (a) individuals cannot be denied access to
health care or coverage based on their sex, (b) covered
entities must treat individuals consistent with gender
identity, and (c) automatic exclusion or limitations of all
coverage related to gender transition is unlawful on its face
- In looking at a specific service related to transition care, OCR
will start by asking whether service is available when not related
to gender transition (e.g., hysterectomy)
- Determine whether explanation for denial is legitimate and not pretext
for discrimination
- However, rules do not require coverage of any particular
procedure/treatment for transition-related care

Sex Discrimination
► Rumble v. Fairview Health Services (unreported,
D. Minn. March 16, 2015)
- Rumble, a transgender man, filed suit against hospital and
physician group
- Came into ER with fever and genital pain
- Alleged that he was neglected, misgendered and subjected
to an assaultive physical exam
- Defendants filed motions to dismiss
- Court said Rumble’s allegations, if true, could violate Section
1557

Examples
► Does requirement to treat individuals
consistent with gender identity mean that
pelvic exam can be denied for individual who
identifies as a transgender male?
- No
- Illustrates exception to rule. Can’t deny service
that is ordinarily available only to one gender just
because an individual’s sex at birth or gender
identity is different from the one to which services
are ordinarily available

Examples
► Would a covered entity be required to provide
a traditional prostate exam to a transgender
male who doesn’t have a prostate?
- Common sense, no
► TPA of self-insured plan threatens to expose
an employee’s transgender or disability status
to employee’s employer. Violation of 1557 or
referral to EEOC?
- 1557 violation because TPA discretion

Examples
► TPA of self-insured plan (which is a covered
entity) denies gender transition surgery under
plan which excludes coverage for all general
transition services. Which entity violated 1557?
- OCR will address complaint against employer
► Hospital’s employee benefit plan publishes
material intended to dissuade employees from
seeking transition services. Violation of 1557?
- Most likely

ACA Section 1557
Religious exemption available under Section 1557?
► No
► OCR said certain protections already exist in Federal law
regarding religious beliefs
- Specifically discussed abortion (Marketplace Plans, not
essential health benefit)
► OCR did not adopt Title IX’s religious exemption
- Said there are significant differences between educational and
health care contexts
► However, OCR made clear that where application of
Section 1557 would violate federal protections for religious
freedom/conscience, application not required

What affirmative action does
ACA Section 1557 require?
Federal financial assistance
► Submit written form assuring compliance with Section
1557
Responsible Employee and Grievance Procedures
► Each covered entity that employs 15 or more persons
- Designate one employee to coordinate compliance with
1557, including investigation
- Adopt grievance procedures, provide for prompt/equitable
resolution

Language Services and Auxiliary Aids
► CE must provide language assistance services free of
charge
► CE must offer qualified oral interpreters/translators to
LEP individuals if providing would result in meaningful
access to health care services
► CE must make communications with disabled
individuals as effective as communications with others
► CE must post taglines (in either top 15 or 2
languages) alerting LEP individuals that language
services are available
► Sample taglines provided

Notice Requirement
► Final rule requires covered entities to take initial and continuing
steps to notify beneficiaries, enrollees, applicants:
- That CE does not discriminate on basis of Really Cool, No. SAD in
health activities
- That CE provides appropriate auxiliary aids/services where necessary
and free of charge
- That CE provides language assistance services for LES
- Who is the CE’s compliance coordinator and how to file a grievance
- How to file a discrimination complaint with OCR
► Model Notice is provided
► Post in significant communications, in physical locations, on
websites

What Next?
Employers should first identity whether they
or their health plans are covered entities
If yes, employers should begin to determine
what needs to be done to comply with
language service and notice requirements
Draft and post/distribute notices
► Deadline is October 16, 2016
Close look at health programs or activities to
determine any hidden discrimination

Speakers:
Susie Bilbro – sbilbro@bassberry.com
Lymari Cromwell – lcromwell@bassberry.com
Douglas Dahl – ddahl@bassberry.com
Tim Garrett – tgarrett@bassberry.com
Bob Horton – rhorton@bassberry.com
Stephanie Roth – sroth@bassberry.com
Follow Us
@BassBerryLabor
Blog: bassberrylabortalk.com

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