3. Healthy Workplaces,
Healthy Families Act of 2014
• Governor Brown signed the
HWHFA in September 2014
• Takes effect on July 1, 2015
• Mandates a minimum of 3 paid
sick days per year.
• Company-offered sick/PTO
comply if equal to or better than
state mandate.
2
4. Which Employers Must
Provide the Leave?
3
• Covers most CA employers
• No exclusion for small employers
Exclusions
• Some employees covered by CBAs
• Construction industry + CBA
5. Which Employees Are
Entitled to Leave?
4
• Applies to employees who after
July 1, 2015:
-work in CA;
-30 days or more;
-within a year from
commencement of employment.
6. For What Reasons Can An Employee
Take Paid Sick Leave?
5
• Employee’s own qualifying need; or
• Family member’s qualifying need for
diagnosis, care, or treatment of an
existing health condition; or preventive
care.
7. Notice / Use
• Employee must provide reasonable
notice if need foreseeable.
• If unforeseeable, as soon as practicable.
8. Who Is a Family Member?
• Child (regardless of age or dependent
status)
• Parent
• Spouse/registered domestic partner
• Grandparents/grandchild
• Sibling
7
9. Reasons an Employee Can
Take Paid Leave?
Not limited to sick leave:
• Employee also can use leave if the
employee is a victim of domestic
violence, sexual assault, or stalking.
8
10. When Can Employees Start
Taking Paid Leave?
• Employers may require that employees
wait until the 90th day of employment to
start using paid sick leave.
-But accrual starts from day one.
9
11. Accrual Method
• Under the law, employees accrue one
hour of sick time for every 30 hours
worked (including overtime hours).
• Must report accrual/use on wage
statements.
10
13. Accruals for Exempt Employees
Exempt Employees:
• Accrual is based on a 40-hour week.
• If normal workweek is less than 40
hours, accrual based upon that
employee’s normal workweek.
• Does not matter if employee works
more than 40 hours a week
12
14. Cap on Usage
• Employers can cap use (but not accrual)
of paid sick leave at 24 hours (or three
days) in each year of employment.
13
15. Cap on Accrual
14
• Employer may limit or cap accrual to a
maximum bank of 48 hours or six days
of paid sick time.
16. Carry Over Required
15
• Employees carry over all accrued paid
sick days to the following year of
employment (may impose a six-day
cap).
-Exception = lump sum 3 day method
• Employer still can limit use to 24 hours
a year.
17. Upon Termination
• Not required to pay out accrued sick
leave.
-Exception: employer uses PTO
policy to comply with sick pay
mandate. PTO is always cashed
out.
16
18. Retaliation Prohibited
Employers cannot:
• Deny an employee the right to use
accrued sick time.
• Require an employee to find a
“replacement” for his or her time off.
• Discriminate/retaliate against an
employee for exercising his or her
rights under the Act.
17
19. Sick Pay
To Do:
• Draft sick pay policy for all employees.
• Adjust existing PTO/sick policy to comply with
state mandate.
• Adjust accrual rate, add to pay stubs.
• Be sure to place caps on use and accrual.
• Consider breaking out separate sick pay policy to
avoid “tainting” PTO.
20. City of San Diego Min Wage
Increase / Sick Pay?
• $11.50/hr by January 1,
2017
• 40 hours of sick pay per
hear
Status: June 2016 Ballot
Will it be retroactive?
21. Prevailing Wage
AB 1939: If project deemed “public
works” after the fact, contractor
can recover increased labor costs
associated with prevailing wage
obligations.
SB 266: Tolls statute of limitations
for DIR to bring prevailing wage
assessments.
22. AB 1650 Public Works Projects
“Fair Chance Employment Act”
Public works contractors prohibited
from asking job applicant about
criminal history. (Except where
required by law.)
Does not prohibit subsequent
criminal background checks.
23. AB 1897 – Labor Contractors
Liability for wage violations of “labor contractors” (e.g.
staffing companies)
• Wages
• Workers’ Comp Insurance
• OSHA
Excludes: Companies < 25 employees, or < 6 supplied
workers. Certain PEOs.
To Do: Due diligence on labor contractors.
24. SB 477 – Foreign Labor Contractors
• Obtain foreign workers for California companies? Register with
Labor Commissioner by Jan 1 2016
• Employer who knowingly contracts with a non-registered
contractor faces fines
• Prohibits overcharging foreign workers for housing.
• To do:
Review contracts for
registration and
indemnification
25. AB 1660 Undocumented Resident
Driver’s License
Amends FEHA.
National origin discrimination
includes DMV license issued
to illegal residents.
Prohibits asking for driver’s
license, unless permitted by
law. (I-9, drivers.)
26. AB 2751 Retaliation Penalty
• Amends Lab.C. §98.6, 1019, 1024.6
• Existing $10,000 civil penalty for
retaliation – e.g. false immigration report
• Now awarded to affected employees.
• Protects workers’ right to update of SSN,
name, or federal authorization to work
(narrowed prior rule).
27. OSHA
New Reporting Requirements
• Report within 24 hours if
hospitalization
• Eye losses, amputations
24 hours
• Certain vehicle accidents
Effective January 1, 2015
28. Cal OSHA
• 50% penalty reduction for
abatement of hazard
• New: submit proof of
abatement prior to penalty
reduction.
• Also: require abatement of
serious hazards during
appeals.
29. Unemployment Insurance
• SB 1314 – Reconsideration and Appeals
-As of July 1, 2015:
-Deadline extended from 20-30 days
• SB 1083 – UI Disability Certification
-On or before January 2017:
-EDD will use opinion of a Physician Assistant
30. SB 1360 Rest & Recovery Periods
• Amends Lab.C. §226.7
• Rest breaks and heat
recovery periods are paid
time (on the clock).
• Declaratory of Existing
Law
• Follows SB 435, granting
1 hour pay for missed
recovery periods.
32. Employee Expenses
Cochran v. Schwan’s Home
Service Inc., 228 Cal.App.4th
1137 (2014).
Issue: Employees with “unlimited
data plans” use personal cell
phones for company business.
Must a company reimburse the
employees?
33. Employee Expenses
Cochran v. Schwan’s Home Service Inc.
Answer: Yes.
• If use of cell phone is mandatory, then must
pay a “reasonable percentage” of phone bill.
-What is “mandatory”?
-What is a “reasonable percentage?
34. Employee Expenses
Cochran v. Schwan’s Home Service Inc.,
To Do:
(1) Inventory “mandatory” cell phone use.
(2) Limit/prohibit use by employees.
(3) Study usage/typical costs.
(4) Consider a fixed amount reimbursement, with
offer to pay for business-related excess
charges.
35. Arbitration
Iskanian v. CLS Transportation, 59 Cal.4th 348 (2014).
• Allows class action arbitration waivers to be
enforceable under California law.
-Procedures that interfere with the Federal
Arbitration Act (FAA) are preempted.
-Overturns previous CA Supreme Court precedent
-BUT no PAGA waivers.
To Do: Use/revise arbitration agreements
37. 4 Types of Employees
Full Time Employee – 30 Hours/wk (1,560/yr)
Part Time Employee – 29 or less hours worked/week
Variable Hour Employee:
Unable to reasonably determine if this employee is
expected to work 30 or more hours/week
New Employee that works 30+ can still be considered
“Variable” if employment is expected to be of limited
duration. (Retail worker during Christmas)
Seasonal Employee
Does not work for more than 120 consecutive days
38. Who must you offer benefits to?
• All Full Time Employees
(30+ Hours per Week)
• All Employees who qualify
after ‘Measurement Period’
39. Measurement Periods…in 2015
To determine who is eligible, the ACA allows for very specific look back periods.
• Measurement Period: 3-12 Months
• Period is determined by the employer
• If employee does not work an average of 30 hours/week during this period, they are
not eligible
• Administrative Period: Up to 60 days (per CA law)
• This is when you would apply a waiting period and enroll the employee who was
deemed eligible
• Stability Period: No shorter than 6 months and
must be at least as long as Measurement Period
• Employee must be enrolled during this time, regardless of their hours worked
41. Political Landscape
Washington is fractured.
The GOP is struggling
with comprehensive
health reform strategy, as
is the Democratic
leadership.
The good news is that
there are some small
signs of bipartisan
cooperation!
43. Is it still possible that the judiciary
branch could unravel health reform?
The Supreme Court just granted “certiorari” in
the King v. Burwell case, which challenges to
the ability of the federal government to issue
health insurance premium tax credits and
enforce the employer mandate via federally
facilitated and partnership exchanges.
The Supreme Court will consider the case in
2015 with oral arguments on March 4 and a
decision likely at the end of June 2015.
If premium subsidies in federal exchange states
are struck down, that doesn’t mean that the
insurance policies subsidy recipients are
enrolled in are struck down too, just the means
82% of exchange consumers are using to pay
for those subsidies.
44. How Will Congress Respond?
“What the King case does is gives us an opportunity and a reason to come to a consensus sooner
so, when we get the ruling of the Supreme Court in June, we are then prepared to say, ‘Here is
what is better for the American people in terms of affordability, quality and choice,’”
Sen. John Barrasso (R-WY), Chairman of the Senate Republican Policy
Committee.
“If [the justices] do what I think they should do — if they really read the law and act according to
the way the law is written — then we’re going to have a real problem in America. The
American public’s going to be asking us to act at that point in time. So we’ve got to figure that
out.”
Sen. Ron Johnson (R-WI), who is up for reelection in 2016 in a state that Obama carried
twice.
“The onus is on us to present a logical solution prior to that case ever being heard. Maybe the
court will feel more confident making a decision if in fact there is a legislative solution [to the
subsidy problem] that is realistic.” - Senator Richard Burr (R-NC)
45. Potential Congressional Action in ‘15
Targeted PPACA repeal and change measures that focus particularly on aspects of
the law that impact jobs and employers
◦ 40 Hour Bill
◦ Employer Reporting
◦ Scope of Employer Mandate (50-99)
◦ Small Group Size 1-100
Exchange Improvements
◦ Subsidies
◦ Functionality for Agents and Others
◦ SEP Changes
Market Reforms
◦ Age Band Relief
◦ Composite Rating
◦ Copper Plan/Out of Pocket Changes
Small Business Tax Credit Changes
HIT Tax Delay
46. 40 Hours is Full-Time (Proposed)
Introduced on January 6 and on January 8
House passed H.R. 30 by a vote of 252-172.
Senators Susan Collins (R-ME) and Joe Donnelly (D-IN)
sponsored S. 30: Forty Hours is Full Time Act
Obama Administration has already issued a veto threat
CBO Score is $53.2 billion over 10 years
GOP has to figure out how to get to 67 votes in the
Senate.
Senate HELP hearing on legislation expected by the end
of January
47. Employer Limitations on Paying Individual
Premiums
The Obama Administration continues to clarify their position that if an
employer creates some type of premium reimbursement arrangement to pay for
health coverage, then such arrangements are subject to all federal health law
market reform requirements, even if the reimbursement is for individual
insurance coverage premiums.
The Departments’ prior guidance explains that employer health care
arrangements, such as HRAs and employer payment plans, are group health
plans.
That means such arrangements are subject to the group market reform
provisions of the Affordable Care Act, including the prohibition on annual
limits under Public Health Service Act (PHS Act) section 2711 and the
requirement to provide certain preventive services without cost sharing under
PHS Act section 2713.
Such employer health care arrangements will not violate these market reform
provisions when integrated with a group health plan that complies with such
provisions. However, an employer health care arrangement cannot be
integrated with individual market policies to satisfy the market reforms.
Consequently, such an arrangement may be subject to penalties, including
excise taxes under section 4980D of the Internal Revenue Code.
50. Section 6055 – Individual
Reporting
Purpose of 6055 is to aid the IRS in
enforcing the individual mandate.
2 Forms:
◦ 1094-B – Transmittal of Health
Coverage Information
◦ 1095-B – Health Coverage
1095-A is out this year for individuals
that received a subsidy from Covered
CA
51. Section 6056 – Employer
Reporting
“…The purpose of 6056 reporting is to assist with the
administration of the employer shared responsibility
provisions of the ACA…” (Federal Register/Vol. 78, No. 174)
Applies to all entities with 50+ FTE’s (aka “applicable
large employer”)
Entities with 250+ W2’s MUST file 6056 electronically
Each Full Time employee is a separate return
52. Section 6056– Employer
Reporting
Employer also has 2 Forms:
◦ 1094-C – Transmittal of Employer
Provided Health Insurance Offer
and Coverage Information
This document is an aggregate
report on your employee population
◦ 1095-C – Employer provided
health insurance offer and
coverage
◦ This report is PER EMPLOYEE
53. Employer communications with employees,
Exchanges and the IRS
Source: Ernst and Young Washington Council
Step 1
►Employer provides
employees with
information about
coverage and availability
of Exchanges
Step 2
►Employee provides
Exchange with
information to determine
eligibility for the premium
tax credit
Step 3
►Exchange verifies
information and makes
preliminary eligibility
determination regarding
the premium tax credit
Step 4
►Exchange notifies
employer that employee
may receive a premium
tax credit
►Employer has right to
appeal Exchange’s
determination of
employee’s eligibility
within 90 days
Step 5
►Employer files information
with IRS and employee –
►§ 6056 requirements
►Employee files personal
return
Step 6
►Assessment of
employer tax penalties
►Employer has right to
appeal tax liability to
IRS
54. Department of Labor (DOL) Audits
• New Auditors1,800
• Goal of $1.7B in
fines from
Businesses
$1.7B
55. What is on an actual Audit?
Summary Plan Description (SPD)
Wrap Document
Benefit Booklets
Summary of Benefits and
Coverage (SBC)
Documents describing
employees cost and benefits
List of individual(s) who directly or indirectly
administer plan
Specimen of all COBRA notices
Grandfathered Health Plan notices
56. Checklist (most critical items)
Summary Plan Description (SPD)
◦ Provides employee info on when they can enroll, how
service and benefits are calculated, when and in what
form benefits are paid, and how the file a claim for
benefits
Also:
◦ Cost sharing provisions (including premiums, deductibles
coinsurance and copayment amounts
◦ Preventive Services coverage
◦ Provider networks
57. Wrap Plan Document
◦ All-ERISA covered benefit plans must, by law, be
administered with a written plan document.
Insurance contracts generally contain most required
provisions…but…not all federal laws are contained in state
based insurance contracts
◦ Provides additional legal protection for the employer
All Insurance Plan contracts
◦ Master application, renewals, etc.
Checklist (most critical items)
58. Employee Handbook
When was the last time you reviewed?
◦ Have you updated your waiting period?
◦ Does your handbook reflect 30 hours
being full time?
◦ Have you adjusted the definition for
Seasonal Employees?
◦ Did you introduce a “Measurement Period?”
If so, is it noted in your handbook?
◦ Have you included the definition of a
“Variable Hour” employee?
◦ Do you have proof your employees
all received their handbook?
59. Employee Handbook (cont.)
• Good Text vs. Bad Text
- Vague = Bad
- Too many words = Bad
- Specific = Good
- Concise = Good
60. Employee Handbook (cont.)
• Most important thing to remember:
- Clear, concise communication on
- What makes an employee eligible (or ineligible)
- How much are you asking them to pay
- And how frequently
- What is the COBRA continuation availability
- Notification of Covered California as an option
63. Step #1: Do the easy stuff
Review and update your employee handbook
Does your insurer plan to allow Grandmothering?
◦ Is it the best option? Did you do it?
Is your waiting period in compliance with CA/ACA rules?
◦ 4 options (sometimes):
1st of the month following date of hire
1st of the month following 30 days
1st of the month following 60 days
90 Days
64. Step #2: Adopt Notice Requirements
Install a compliant Wrap Document
◦ SPD & Plan Doc (+ federal legal jargon)
Plan to distribute SBC’s & SMM (if applicable)
Adopt new COBRA notice
Distribute Exchange notices
Distribute Grandfathered plan notifications (if applicable)
65. Step #3: An eye on the future
Determine if you will be subject to the Employer
Reporting requirements in Section 6056 of the ACA
(covered earlier).
Non-Discrimination rules are forthcoming
◦ Are you excluding any class of employees from eligibility?
Does a tax favored arrangement (HSA/FSA/HRA) make
sense?
Is your current employer contribution strategy still making
sense?
◦ Is it sustainable?
Take advantage of all your resources.
