Affordable Care Act Update
The Patient Protection and Affordable Care Act (PPACA) mandates all individuals be covered by health insurance, including requiring States to set up health insurance exchanges. Below are several recent developments regarding the PPACA.
• Deadline Extended to Provide Notice to Employees Regarding Health Insurance Exchanges
The PPACA requires that applicable employers, in accordance with Department of Labor (“DOL”) regulations, provide written notice to employees informing them about the existence of health insurance exchanges, the services provided by these health insurance exchanges, and the manner in which employees may contact a health insurance exchange. Employers were originally required to provide this notice by March 1, 2013. On January 24, 2013, the DOL extended this deadline indefinitely in order to have additional time to coordinate the DOL’s activities in this area with the activities of the Department of Health and Human Services and the Internal Revenue Service (“IRS”). Employers may now wait until the DOL issues new guidance regarding the notice provisions under the PPACA.
• IRS Proposes Regulations on Employer Penalty
Starting in 2014, employers will either have to offer minimum essential health insurance benefits for full-time employees or pay significant penalties. The IRS recently issued proposed regulations regarding how penalties will be assessed on “large” employers (i.e., those with 50 or more full-time or full-time equivalent employees). The penalties will be assessed as follows:
• No coverage offered: For a given month beginning after 2013, if an employer does not offer minimum essential coverage to “substantially all” of its full-time employees and their dependents, and a full-time employee obtains subsidized health insurance exchange coverage, the employer must pay a monthly penalty equal to $166.67 multiplied by the number of its full-time employees in excess of 30 for any calendar month.
• Coverage offered, but is considered to be not affordable: If an employer offers minimum essential coverage to substantially all of its full-time employees and their dependents, but a full-time employee still obtains health insurance exchange coverage and receives a premium subsidy (because the employer’s coverage failed to meet the minimum value or affordability test), the employer must then pay a monthly penalty equal to the lesser of the penalty determined above or $250 multiplied by the number of full-time employees who are certified as having subsidized health insurance exchange coverage for any calendar month.
Employers are required to offer coverage to an employee’s dependents (which the proposed regulations define as an employee’s child who is under 26 years of age), however, whether the coverage is affordable is evaluated by looking only at the affordability of employee-only coverage. The cost of dependent coverage does not have an effect on the affordability calculation.
No penalty is triggered unless at least one full-time employee obtains subsidized health insurance exchange coverage. An employee can obtain subsidized health insurance exchange coverage only if his or her household income is between 100 percent and 400 percent of the federal poverty line (which is currently $11,490 for individuals and $23,550 for a family of four), he or she enrolls in health insurance exchange coverage, and is not eligible for Medicaid (or other government coverage), and either no employer coverage is offered or the employer coverage offered fails to meet either the minimum value test or the affordability test.
The IRS is accepting comments on the proposed regulations until March 18, 2013, and will be holding a public hearing on April 23, 2013.
• OSHA Proposes Regulations for Whistleblower Complaints
The PPACA added a section to the Fair Labor Standards Act expressly prohibiting employers from retaliating against employees for: 1) receiving a federal tax credit or subsidy to purchase insurance from the employer or through a health insurance exchange; 2) providing information to the employer, the federal government, or the state attorney general relating to any violation of Title I of the PPACA or any act that the employee reasonably believed to be a violation of Title I (relating to insurance company accountability requirements, such as the prohibition on lifetime limits on coverage or pre-existing condition exclusions); 3) testifying, assisting, or participating in a proceeding concerning a violation of Title I; or 4) objecting or refusing to participate in any activity that the employee reasonably believes to be a violation of Title I. Employees who believe they have been retaliated against may file a complaint with the Occupational Safety and Health Administration (OSHA), which enforces the whistleblower provisions of the PPACA. OSHA recently issued proposed regulations implementing these whistleblower provisions, including procedures and timeframes for handling retaliation complaints.
Under the proposed regulations, employees will have 180 days from the date of the alleged retaliation to file a complaint with OSHA. Once the employee makes a showing that the protected activity was a contributing factor in the adverse employment action, the employer must then show by clear and convincing evidence that it would have taken the same action regardless of the protected activity. Employees who have been retaliated against may receive reinstatement, compensatory damages, backpay, and costs and expenses, including attorneys’ fees. If the employee’s complaint is found to have been brought in bad faith, the employer may be awarded up to $1,000 in attorneys’ fees. A complaint is proper so long as the employee had a subjective, good faith and objectively reasonable belief that the conduct was retaliatory. An employee may file a complaint in federal court if a final agency decision is not issued within 210 days of filing with the agency or within 90 days after the agency issues its final decision. OSHA has issued a Fact Sheet summarizing whistleblower protection under the PPACA.
OSHA will be accepting comments on the proposed regulations for 60 days beginning on February 27, 2013.
The Department of Labor Issues Final FMLA Regulations
On February 5, 2013, the twentieth anniversary of the Family Medical Leave Act (FMLA), the Department of Labor announced final regulations implementing amendments to the FMLA that expand the military leave provisions and clarify certain existing FMLA provisions. The new regulations make the following changes to the FMLA:
• Qualifying Exigency Leave: Qualifying exigency leave has been extended to family members of Regular Armed Forces members as well as the National Guard and Reserves. The regulations add a new category of qualifying exigency leave. Eligible employees are now permitted to take parental care leave to care for a military member’s parent (which in most cases will be the in-law of the employee requesting FMLA leave), when the parent is incapable of self-care and the need for leave arises out of the military member’s covered active duty.
In addition, the amount of time that may be taken under qualifying exigency leave to spend time with a military member on rest and recuperation has been increased from five to fifteen days.
Finally, qualifying exigency leave is permitted for childcare and school activities. The regulation clarifies that, while the military member must be the spouse, parent, or child of the eligible employee, the child for whom leave is sought need not be a child of the employee requesting the leave (so long as the child is the son or daughter of the military member).
• Military Caregiver Leave for a Veteran: The FMLA permits eligible employees to take up to 26 weeks of leave to care for the serious illness or injury incurred in the line of duty of a covered servicemember, including veterans, provided they were a member of the Armed Forces at any time during the five-years preceding the date of the medical treatment, recuperation, or therapy. The regulations state that this five-year period does not include the time between the enactment of the National Defense Act Authorization Act (October 28, 2009) and the effective date of the regulations (March 8, 2013).
• Calculation of FMLA Leave: The regulations clarify that an employer may not require an employee to take more leave than necessary to address the circumstances that precipitated the need for leave. In addition, the regulations reiterate that FMLA leave must be tracked using the smallest increments of time that the employer uses for other forms of leave, so long as it does not exceed one hour.
• Clarification of the Physical Impossibility Rule: The physical impossibility rule permits employers to delay reinstatement where it is physically impossible for the employee to return to the job mid-shift. The regulations emphasize that this rule applies “solely to situations in which it is truly physically impossible to return the employee to work” and not where it is merely inconvenient.
• Application of GINA: The Genetic Information Nondiscrimination Act (“GINA”) created broad prohibitions on the collection, use, and disclosure of genetic information in the workplace. The new regulations provide that FMLA records containing family medical histories or genetic information (e.g., certifications, medical histories, etc.) must be maintained in a manner that is consistent with the confidentiality requirements of GINA.
The regulations are effective March 8, 2013. The Department of Labor has issued revised model forms to comply with the new regulations.
OFCCP. On February 26, 2013, the Office of Federal Contract Compliance Programs (OFCCP) announced that it was rescinding two enforcement guidance documents on pay discrimination originally issued in 2006, and that it was adopting a new flexible, fact-based approach to analyze compensation discrimination. Under the new directive, which becomes effective on February 28, 2013, the OFCCP will now apply Title VII principles to determine whether a contractor’s pay practices are discriminatory. This case-by-case approach will require the use of a range of investigative and analytical tools. Investigators will work with statisticians and attorneys to determine the appropriate methods to use in a particular investigation. When analyzing compensation data for potential systemic discrimination, the OFCCP may conduct comparative analyses of very small groups or individuals to determine if discrimination has occurred. Unlike Title VII, where an employee must first complain of a wage disparity, the OFCCP will look for pay discrimination regardless of whether a worker has complained. The OFCCP will evaluate, on a case-by-case basis, information from the contractor regarding the factors considered in making compensation decisions (e.g. a qualification or skill that the worker brings to the position such as experience, or a job-related element such as tenure in position). The OFCCP may seek a remedy for compensation discrimination regardless of whether individual workers have expressed any concern about their compensation. More information regarding the new directive, including upcoming webinars, may be found here.
Religious Accommodation. The Court of Appeals for the Fourth Circuit recently upheld an employee’s termination because the requested religious accommodation would result in an undue hardship on the company. In EEOC v. Thompson Contracting, Grading, Paving & Utilities, Inc., the EEOC brought suit against the company on behalf of a dump truck driver whose religious beliefs prevented him from working from sunrise to sunset on Saturday Sabbath. As an accommodation, the employer offered to allow the employee to swap shifts and use paid personal leave for the Saturdays he was unable to work. After missing three Saturday shifts, the employer terminated the dump truck driver, and the EEOC sued on his behalf. The EEOC argued that the company had three possible reasonable accommodations: 1) it could have hired another driver to perform the Saturday work; 2) it could have created a pool of substitute drivers from its current employees in other positions; or 3) it could have transferred the dump truck driver to the position of general equipment operator. The trial court ruled in favor of the employer, and the Court of Appeals affirmed this decision. In so ruling, the Court of Appeals held that excusing the dump truck driver from Saturday work would impose more than a de minimis cost to the company, resulting in an undue hardship on the conduct of its business. The Court of Appeals also rejected the proposed transfer to another position as the EEOC failed to put forth any evidence to show that the company reasonably believed that the dump truck driver would have accepted a transfer.
Union Robo-Call Campaign Upheld. The Court of Appeals for the Sixth Circuit recently upheld a union’s robo-call campaign against a hospital. In Ashland Hospital v. SEIU, the union engaged in a two-day automated robo-call campaign to protest the hospital’s proposal to increase the employees’ share of the healthcare costs. The automated robo-call system placed telephone calls to residents in the hospital’s service area and played a prerecorded message criticizing the hospital’s plans. The robo-call offered the opportunity for residents to connect directly to the hospital to express concerns over the hospital’s treatment of its employees, but did not disclose the union’s involvement in the call. As a result of the robo-call campaign, the hospital received a large volume of incoming calls that overwhelmed its main lines that supported calls to and from emergency services and patient rooms. The hospital sued alleging that the robo-calls violated the Telephone Consumer Protection Act (TCPA), which prohibits abusive telemarketing practices, including making any call to an emergency telephone line. The union argued that its robo-call campaign did not violate the TCPA because a real person was required to exercise independent judgment to actually connect to the hospital. The trial court agreed with the union and dismissed the hospital’s suit. The Court of Appeals affirmed this dismissal, finding it dispositive that the union did not actually make any telephone call to the hospital during the robo-call campaign; rather, the robo-call connected residents to the hospital only after the resident proactively opted to be connected. The Court of Appeals also rejected the hospital’s argument that the robo-call campaign violated the TCPA’s provision prohibiting automated dialing system from tying up multiple telephone lines. Because the calls to the hospital were made by residents, and were not the product of a wholly automated process, the TCPA was not implicated.
Internet Privacy. On January 28, 2013, the Maryland Attorney General’s Office announced that it formed an Internet Privacy Unit. The new Unit is focused on protecting the privacy of online users and managing privacy risks, including: geo-location tracking, cyberbullying, data collection, and data breaches. In collaboration with the Consumer Protection Division, the Unit will monitor companies to ensure they are in compliance with state and federal consumer protection laws, including the Children’s Online Privacy Protection Act, which restricts companies, in most cases, from collecting personal information from children under 13 years old. The Unit will also examine weaknesses in online privacy policies and work with major industry stakeholders and privacy advocates to provide outreach and education to businesses and consumers about privacy rights. Finally, the Unit will pursue enforcement actions to ensure consumers’ privacy is protected. To review the press release issued by the Attorney General’s Office, click here.
Misclassification of Workers as Independent Contractors in D.C. The Workplace Fraud Amendment Act of 2012 imposes liability on employers in the District of Columbia for misclassifying employees as independent contractors. Under the new law, a D.C. employer will be assessed a penalty of $1,000 to $5,000 for each employee it improperly classifies as an independent contractor. D.C. employers must keep records for at least three years containing information regarding the: 1) name, address, occupation, and classification of each employee or independent contractor; 2) the rate of pay for each employee, or method of payment for the independent contractor; 3) the classification of each individual; 4) the amount that is paid each pay period to each person; 5) the hours that each person worked each day and each work week; 6) for each person that is classified as an independent contractor, evidence supporting that classification; and 7) other information that may be required by regulation.
Employers must provide all individuals classified as an independent contractor with a written notice of such classification at the time of hire. The notice must contain an explanation of the individual’s classification and the Mayor’s contact information. Failure to provide the written notice is evidence of a knowing violation and the employer shall be liable for a penalty of $500 for each individual that the employer failed to notify. The Act contains an anti-retaliation provision, which prohibits employers from discriminating or taking any adverse action against a person for: 1) complaining to the Mayor that the employer violated the Act; 2) bringing an action or initiating a proceeding alleging a violation of the Act; 3) testifying in an action alleging a violation of the Act; or 4) assisting in an investigation by providing information to a litigant in a civil action. Workers may bring a civil action in any court of competent jurisdiction to collect any lost or denied wages, employment benefits, or other compensation lost because of a misclassification in addition to liquidated damages, compensatory damages, and any other appropriate relief, including reinstatement, backpay, and treble damages for lost wages. The law was enacted on February 11, 2013, however, before it becomes final, it is subject to a 30-day Congressional review period, and must be published in the D.C. Register.
With advances in technology, telecommuting has become commonplace in the American workplace with many employers offering the option in some form. Any employer who offers telecommuting for its workers should make sure it has guidelines in place that outline the employer’s expectations of the telecommuting employee. Before permitting an employee to telecommute, an employer should evaluate whether the employee’s job can be performed remotely, and if so, whether the employee can work remotely on a full-time or more limited basis. In making this determination, employers should consider whether the employee requires access to confidential data and, if so, whether the employer has appropriate safeguards in place such that the employee can securely work remotely.
Once it is determined that telecommuting is appropriate, the employer must adopt telecommuting guidelines. Effective telecommuting guidelines should specify what days the employee will be permitted to telecommute, the hours he or she is expected to be working, and either specify the exact location from which the employee is expected to telecommute (e.g., from home), or require that the employee be at a location where he or she has access to a computer and can be reached by telephone and/or e-mail. The guidelines should address what equipment is necessary for the employee to telecommute (e.g., high speed internet access, a computer, a landline telephone, etc.); however, the employer should also make clear that the employee will not be reimbursed for any expenses incurred by the employee in making arrangements to telecommute. For non-exempt employees, an employer will want to make sure that there is an effective system in place to accurately account for all hours worked to ensure that the employer is complying with all applicable wage and hour laws, including those relating to overtime. Finally, the employee must know that the telecommuting arrangement can be withdrawn by the employer, in its discretion, for any reason.
For greater clarification of any of these issues, you may contact any Shawe Rosenthal attorney.