overview of critical 2010 developments - squire patton boggs

Squire, Sanders & Dempsey L.L.P. | www.ssd.com

Overview of Critical 2010 Developments

Squire, Sanders & Dempsey L.L.P.Alexandra A. Bodnar

Michael W. Kelly

[email protected]@ssd.com

mailto:[email protected]



Paying Employees

• IRS Rate Change for Mileage – went down to $.50 from $.55 on January 1, 2010. Check for further changes at the end of the year.

• SF Minimum Wage will go up from $9.79 per hour to $9.92 effective January 1, 2011.


Tips on Tips

• Cumbie v. Woody Woo held that mandatory tip pools did not violate the FLSA so long as no tip credit is taken by the employer.

• Lu v. Hawaiian Gardens Casino held employees do not have a private right of action under Labor Code § 351 but observed that tort remedies such as conversion may be available.

• Stay tuned for a lot more claims related to how money is calculated and paid as the number of exemption-based wage and hour cases starts to diminish.


Paying for that @*&! “Paperwork”

• Rutti v. Lojack – Technician sued for payment for travel time and time spent before and after driving to his jobs. The Court found the driving time was not compensable, nor time spent mapping out each days’ route but did say the employer might be liable for time spent at the end of the day transmitting reports because it may have taken more than 10 minutes per day.


A Meal is a Meal

• McFarland v. Guardsmark – Employee sued for unprovided duty free second meal breaks arguing that if the first meal break is an on-duty break, that is akin to a waived meal break so the employer cannot get employee waiver of the second break. This interpretation was supported by the DLSE Manual. The Court rejected this argument and rejected the Manual on the ground that it is a “void regulation.”

• BE WARY OF THE DLSE MANUAL.


Changing Pay Rates to Match Hours

• Parth v. Pomona Valley Hosp. – Employers may change applicable pay rates after employees adopt alternate work week schedule so that employees would end up earning approximately the same amount as if they had worked straight eights.


Individuals May Be Liable Under the FLSA

• Boucher v. Shaw – Chairman/CEO, CFO and Head of HR could be “employers” within the meaning of the FLSA and therefore liable for unpaid wages.


Age Discrimination – RFOA Test

• New proposed EEOC definition of what “reasonable factors other than age” means for purposes of disparate impact cases.

• New rule will emphasize a case-by-case approach to determining reasonableness of practice.

• “Objectively reasonable when viewed from the position of a reasonable employer under like circumstances, both in its design and the way it is administered.”


RFOA Test

• Common business practice• Related to stated business goal• Defined accurately and applied fairly• Assessed adverse impact on older workers• Severity of harm (number affected, degree of injury)

versus corrective steps• Failure to pursue other available options


RFOA Test

• Extent supervisors had unchecked discretion to assess employees subjectively

• Extent supervisors were to evaluate employees based on factors known to be subject to age-based stereotypes

• Extent supervisors were given guidance or training on how to apply factors and avoid discrimination


Expanded EEOC Enforcement of ADA

• Three new cases target alleged discrimination against individuals with diabetes, cancer and severe arthritis.– Employer took stool away from arthritic cashier– Two employees selected for RIF after completing health survey

identifying themselves as diabetic and hypertensive– Employee being treated for cancer asked to work part-time and

was fired because he had exhausted his permitted leave time

• HIV positive status qualifies as a disability under broader ADA standards


Supreme Court to Review “Cat’s Paw” Theory

• Referring to 17th century French fable, theory applies when a biased party uses an unbiased party to perpetrate discrimination under the disguise of a neutral decision or policy.

• U.S. Supreme Court to review the theory arising from a Seventh Circuit decision granting summary judgment to an employer.

• Justice Kagan recused so 8 justices to hear this case.


Supreme Court to Review Third Party Retaliation Theory

• Woman complains of harassment; her fiancée is fired and he sues for retaliation.

• District Court grants summary judgment on basis that statute does not protect people merely associated with a whistleblower.

• Sixth Circuit reversed

• En banc panel reinstated summary judgment for the employer.


Supreme Court Slams Door on Another Employee Challenge to Arbitration

• Court reviewed agreement that stated the arbitrator was to decide “gateway” issues of enforceability.

• Supreme Court held that to be two agreements to arbitrate – one to arbitrate gateway issues and one to arbitrate the substantive claims.

• Supreme Court held District Court to decide “gateway” issues such as unconscionability only when the issue goes to the parties specific agreement to arbitrate gateway issues.


Some Sins May Never Go Away

• Supreme Court held that each time an employer acted based on an old practice that had a discriminatory disparate impact, there was a new violation that triggered a 300-day window to file a charge.

• 1995 civil service test having a disparate impact on African Americans gave rise to a claim in 2006 and later, each time the City referred back to 1995 test results in its hiring.


Court Narrowing Federal Affirmative Defenses

• Whether employer can use the Farragher/Elerth defense was jury question regarding facts and circumstances.

• Employee does not necessarily have a duty to report from manager to manager until finding appropriate one who can take action.

• Employee had reported to manager who was also the alleged harasser.


Courts Officially Rejecting Equal Opportunity Harasser Defense

• Managers sued for making harassing slurs against women could not defend themselves on the basis that they would make slurs against anybody, at any time.


Court Affirms Firing of Whistleblower Supported by Objective Reasons

• Pharma sales employee complained of harassment.

• She was fired for taking expensing a dinner for a doctor and his wife in violation of company policy and national industry standards.

• Court dismissed retaliation claim because employers may terminate whistleblowers for legitimate, non- retaliatory reasons.


Failure to Investigate Complaint Was Not an Independent Adverse Action

• Employee complained about race discrimination and employer did nothing.

• After the employee was fired, she sued claiming the employer’s failure to investigate was retaliation and created a hostile work environment.

• Court rejected arguments, stating that the plaintiff was no worse off by virtue of the failure to investigate.


States Continue To Consider Anti-Bullying Laws

• New York State Senate adopted law creating private right of action.

• Bad stories such as Morrissey suicide continue to force legislative attention.


Good Faith Mistake About Request for OT Pay May Insulate Employee From Termination

• Employee received complaints that he and his co- workers were shorted two hours of OT.

• The Employee reported this to management so the group was paid.

• Employer later learned from security tapes that the employees were wrong and fired the spokesperson for falsifying records (despite fact he offered to pay back the money).

• Appellate Court reversed summary judgment on the ground that the whistle blower’s good faith mistaken belief is protected from employer retaliation.


Darned if you do and darned if you don’t!

• Employer got a letter from a competitor notifying it that a new hire was bound by a non-compete agreement.

• The employer believed it was not enforceable but decided it was not worth the likely litigation so it elected to terminate the employee and move on.

• The employee sued the employer.• Court of Appeal held that employee could sue employer

under Bus. & Prof. Code 16600 for acting based on agreement between employee and third party.


Kin Care Inapplicable to Uncapped Leave Policies

• If Sick Leave policy does not provide for cap on number of days, Kin Care law does not apply.


Class Action Developments

• Appellate Court partially reverses certification of OT and Meal/Rest Period Class on the ground that while common issues predominated OT issue, individual issues predominated break claim.

• State Courts cannot certify FLSA claims on an “opt-out” basis under state law.


Be Careful What You Are Reading and What They Are Writing

• New Jersey Supreme Court held employee had a reasonable expectation of privacy when corresponding with her attorneys using a personal web-mail account on company equipment.

• NLRB held Sears policy prohibiting employees from “disparagement of company’s . . . executive leadership, employees [or] strategy” could chill the exercise of Section 7 rights in isolation but was not a problem when considered in the context of the whole policy.


Surveillance of Union Activity

• Union posted picture of employee organizing committee on its website.

• The following day, a manager told a member of the committee that he liked her picture.

• NLRB held that manager acted improperly because when the manager made a point of commenting on the picture, “he was conveying the impression that he was keeping track of her union activities.”

• Same kind of approach would likely apply to other posts such as Facebook, Twitter, etc.


Federal Developments

• PPACA includes federal requirement for employers to provide reasonable break time and space for nursing mothers.

• FMLA extended to cover same-sex and non-traditional parents.


Federal Laws On the Horizon

• Bill to reverse Gross regarding mixed-motive theories in age discrimination.

• Prohibit discrimination based on employee credit scores and history.

• Prohibiting discrimination based on sexual orientation and gender identity.


State Laws in the Hopper

• Exempts employees in construction, commercial drivers and security from meal periods IF THEY HAVE A CBA covering the topic.

• Mandatory 3-day bereavement leave.• Clarify that meal periods must be taken before end of 6th

hour worked and standards for on-duty meal periods.• Employees who have exhausted sick leave may take 30-

day leave for organ donation.


Leaves of Absence Under Federal and State Law

Michael W. KellyErinn M. Contreras

Squire, Sanders & Dempsey [email protected]

[email protected]




What Will This Session Cover?

• Family and Medical Leaves– Family Medical Leave Act (FMLA)– California Family Rights Act (CFRA)– Pregnancy Disability Leave (PDL)– Paid Family Leave (PFL)

• Disability Leaves– Work-related Disability Leaves– Americans with Disabilities Act (ADA)– Fair Employment and Housing Act (FEHA)


Session Overview, Cont’d

• School Visitation/Activities Leave• Time Off to Vote• Military Leave – Uniformed Services Employment and

Reemployment Rights Act (USERRA)• Leave for Spouses of Military Personnel• Jury Duty or Witness Duty• Domestic Violence/Sexual Assault


Session Overview, Cont’d

• Victims of Serious or Violent Felonies and their Relatives• Family Sick Leave/Kin Care• Emergency Duty as a Volunteer Firefighter, Reserve

Police Officer or Emergency Rescue Personnel• Literacy Education• Drug and/or Alcohol Rehabilitation• Religious Observances


Family and Medical Leave – The Basics

• Federal Law – Family and Medical Leave Act (FMLA)• State Law – California Family Rights Act (CFRA)• FMLA/CFRA entitle eligible employees to take unpaid,

job-protected leave for up to 12 workweeks in a 12- month period

• FMLA and CFRA apply to employers with 50 or more employees

• FMLA and CFRA leave generally run concurrently

Presenter

Presentation Notes

If an employee has 50 or more employees, but has no eligible employees, i.e. because none of its employees work at a worksite with 50 or more employees within a 75-mile radius, the employer nevertheless needs to include a family and medical leave policy in its handbook.


Eligible Employee

• To be eligible for FMLA/CFRA leave, an employee must:– Have one (1) year of service with the employer;– Have worked at least 1,250 hours during the previous

12-month period; and– Work at a worksite with at least 50 employees within

a 75-mile radius of that worksite


Qualifying Events under FMLA and CFRA

• Under the FMLA and CFRA, an eligible employee may take up to 12 workweeks of leave in a 12-month period for any of the following reasons: – For the birth, adoption, or foster placement of a new child, in

which case the leave must be taken within one year of the birth, adoption or placement;

– To care for a child, parent, spouse or registered domestic partner who has a serious health condition; or

– For the employee’s own serious health condition


Additional Qualifying Events under the FMLA

• Military Caregiver Leave – An eligible employee who is the spouse, son, daughter, parent or next of kin of a covered servicemember who is recovering from a serious illness or injury may take up to a total of twenty- six (26) weeks of leave in a single 12-month period to care for the servicemember

• Under the FMLA, an eligible employee may also take 12 weeks of leave for any qualifying exigency arising out of the fact that the spouse, son, daughter or parent of the employee is on, or has been notified of an impending call to, “covered active duty” in the Armed Forces


Qualifying Exigency Leave

• Short notice deployment• Military events and related activities• Childcare and school activities• Financial and legal arrangements• Counseling• Rest and recuperation• Post-deployment activities• Additional activities agreed on by employer and

employee


Pregnancy-Related Disabilities

• Key distinction between FMLA and CFRA is the treatment of pregnancy-related disabilities

• Under the FMLA, pregnancy-related disabilities count against the 12 weeks of FMLA leave

• Under the CFRA, time off related to pregnancy is not included in the definition of a “serious health condition” and does not qualify as CFRA leave

• Instead, employees suffering from pregnancy-related disabilities may take leave under the Pregnancy Disability Leave law (PDL)


What is a Serious Health Condition?

• Any illness, injury or impairment, or physical or mental condition, that involves:– Inpatient care in a hospital, hospice or residential care facility; or– Causes incapacity for more than three consecutive, full calendar

days coupled with continuing treatment or continuing supervision by a health care provider.

• Examples:– 24-hour flu is not considered a serious health condition– A 4-day case of fever and flu would qualify as long as the

employee was under the continuing care of a doctor for treatment


Intermittent Leave

• Leave does not have to be taken in one single 12-week period

• Where leave is for the serious health condition of the employee or his or her parent, child, spouse or registered domestic partner, leave may be taken intermittently or on a reduced work schedule when medically necessary

• Leave increments can be limited to shortest period of time the employer’s payroll system uses to account for absences

• To better accommodate intermittent leaves, an employer may transfer the employee to a comparable position with equivalent pay and benefits


Calculating the 12 weeks of leave

• Four Calculation Methods:– Calendar year– Any fixed 12-month “leave year”, i.e. a fiscal year

or year starting on the employee’s anniversary date

– The 12-month period measured forward from the date of an employee’s first FMLA leave

– A “rolling” 12-month period measured backward from the date an employee uses any FMLA leave


Notice

• Employees wishing to take FMLA/CFRA leave must provide sufficient notice, including the reason for the leave and anticipated time and duration

• Employer may require 30 days notice if the leave is foreseeable• If need for leave is unforeseeable, employee must provide notice

“as soon as practicable under the facts and circumstances of a particular case”

• Employer is responsible for notifying employees of the right to request leave and how requested leave will be counted

• Employer should respond to leave requests as soon as possible, but at least within two business days of receiving the request


Medical Certification

• Employer may require employee to provide medical certification prior to obtaining medical leave

• If practicable, employer should seek the certification within 15 calendar days of the employee’s request

• Certification rules are meant to protect employee’s privacy, so requests for certification should be made to the employee directly (not the medical provider) and should not inquire about the identity of the serious health condition


Whether FMLA/CFRA Leave is Paid or Unpaid

• Paid Family Leave (PFL)– CA employees have right to six (6) weeks of PFL– PFL provides partial wage replacement (up to 55%) for periods

of leave in which (a) the employee needs to care for a child, spouse, parent or registered domestic partner with a serious health condition, or (b) the employee will bond with a new child

– ALL California employees covered by State Disability Insurance qualify for PFL; there are no other eligibility requirements

– Employer may require use of up to 2 weeks vacation before PFL– Where employee is entitled to PFL benefits and leave under

FMLA or CFRA, employee can require that PFL benefits run concurrently with FMLA or CFRA leave


Use of Vacation Time During FMLA/CFRA Leave

• Employee may elect or employer may require use of accrued vacation time during FMLA/CFRA leave

• Employer may require use of sick time where leave is for serious health condition of employee or a close family member


Benefits Continuation During FMLA/CFRA Leave

• Employers are obligated to continue providing health benefits under any group health plan during periods of FMLA/CFRA leave

• Obligation starts on date leave first begins and continues for the duration of the leave, up to a maximum of 12 workweeks in a 12-month period

• Employees are also entitled to participate in employee benefit plans, including life insurance, short-term or long- term disability, and pension and retirement plans, to the same extent and under the same conditions as would apply to leave for any reason other than family medical


Right to Reinstatement

• Employees returning from leave are guaranteed reinstatement to the same or comparable position

• Comparable position = virtually identical to the employee’s original position in terms of pay, benefits, and working conditions, including privileges, prerequisites, and status, involves same or substantially similar duties and responsibilities, and is located at the same or a proximate geographical work-site


When Reinstatement May be Denied

• When the employee’s position has ceased to exist for reasons unrelated to the employee’s absence prior to his or her return from leave

• If the employee taking the leave is a key employee (salaried and among the highest paid 10 percent), and the denial of reinstatement is necessary to prevent substantial and grievous economic injury to the operations of the employer

• Key - employer must notify employee of intent to refuse reinstatement at the time the employer determines refusal is necessary


Recent Updates to the FMLA

• Expanded Definition of “Son or Daughter”– Wage and Hour Division of the Department of Labor now takes

the position that an eligible employee can take leave for the birth, bonding or to care for the child of a domestic partner or same sex domestic partner, as well as other children for whom an employee has responsibility for day-to-day care or financial responsibility, even though the employee has no biological or legal relationship with the child

• Expanded Definition of “Covered Servicemember” for Military Caregiver Leave– Now includes veterans who were members of the Armed Forces

at any time during the preceding five years, if the veteran is undergoing medical treatment, recuperation, or therapy for a serious injury or illness


Expanded Definition of “Serious Injury or Illness” for Military Caregiver Leave

• For current members of the Armed Forces, a serious injury or illness is one that “ ‘existed before the beginning of the member’s active duty and was aggravated by service in the line of duty on active duty in the Armed Forces’ that may render the member medically unfit to perform the duties of the member’s office, grade, rank, or rating.” (Previously, it was an injury or illness incurred in the line of active duty.)

• For veterans, a serious injury or illness is one that is “a qualifying injury or illness that was incurred by the member in line of duty on active duty in the Armed Forces (or existed before the beginning of the member’s active duty and was aggravated by service in line of duty on active duty in the Armed Forces) and that manifested itself before or after the member became a veteran.”


Expanded Definition of “Covered Active Duty” for Qualifying Exigency Leave

• 2010 National Defense Authorization Act expands the definition of “covered active duty” to include members of the Armed Forces, not just the National Guard of Reserves

• “Covered Active Duty” for members of regular component of Armed Forces = duty during deployment with the Armed Forces to a foreign country

• “Covered Active Duty” for members of the reserve component of Armed Forces = duty during deployment with the Armed Forces to a foreign country under a call or order to active duty in a contingency operation


Pregnancy Disability Leave (PDL)

• Applies to employers with five (5) or more employees• Provides employees up to four (4) months leave for a

disability due to an employee’s pregnancy, childbirth or a related medical condition

• Disabled by pregnancy means, in the employee’s health care provider’s opinion, the employee is: unable to work; unable to perform any one or more of the essential job functions; or unable to perform these functions without undue risk to herself, the successful completion of her pregnancy, or to other persons

• Includes prenatal care, severe morning sickness, doctor- ordered bedrest, childbirth and recovery from childbirth


Intermittent Leave under PDL

• Like FMLA/CFRA, leave does not need to be taken in one continuous period of time

• Leave can be taken on an as-needed basis when medically advisable

• Minimum leave increment may be limited to the shortest period used by an employer’s payroll system

• Employer may temporarily transfer the employee to an alternate position with equivalent pay and benefits, and employer must reasonably accommodate a temporary transfer if medically advisable


Notice under PDL

• Employers are obligated to notify employees of their right to take PDL leave

• Employees have a duty to notify their employers of their intention to take such leave

• Notice requirements under FMLA/CFRA also apply to PDL


Benefits Accrual During PDL

• PDL time is unpaid• Employer does not need to continue employee benefits

during the leave, subject to FMLA requirements of benefits continuation

• Most women on PDL are eligible for state disability insurance

• If employer pays for other temporary disability leaves or continues health benefits for other leaves, it must do the same for employees on PDL

• Employer may require use of sick leave; use of vacation is up to the employee


Reinstatement after PDL

• An employee returning from leave within four months is entitled to reinstatement in her original position, unless:– She would not otherwise have been employed in the same position at

the time reinstatement is requested because of a legitimate business reason unrelated to her taking the leave; or

– The means of preserving her job would substantially undermine the employer’s ability to operate safely and efficiently

• If an employee cannot be reinstated in same position, she has a right to reinstatement to an available comparable position

• Available = open on date of reinstatement, or within 10 days• Comparable = similar in pay, location, job content and promotional

opportunities


Work-Related Disability Leave

• Workers’ compensation laws requires employers to grant leaves of absence to employees who are temporarily disabled due to a work-related injury or illness

• Employee may not be discharged or discriminated against in any manner because the employee has filed a workers’ compensation claim

• Workers’ compensation is complex and highly regulated. Consult with counsel for specific rules and regulations governing workers’ compensation


Americans with Disabilities Act (ADA) and Fair Employment and Housing Act (FEHA)

• ADA and FEHA require employers to provide “reasonable accommodations” to disabled individuals in hiring, firing, benefits, and other terms, conditions and privileges of employment

• ADA – applies to employers with 15 or more employees• FEHA – applies to employers with 5 or more employees


Definition of Disability

• Under FEHA – a disability is a physiological condition which “limits” a major life activity such as working, sleeping, procreating, and interacting with others.

• Under the ADA – an individual has a disability if he or she:– Has a physical or mental impairment that substantially limits

one or more major life activities; – Has a record of having such an impairment; or– Is regarded as having such an impairment

• Key – It is more difficult to prove a disability under the ADA than it is under FEHA


The Interactive Process

• Employers are obligated to cooperate and interact with employees or applicants to determine whether a reasonable accommodation would enable the employee to perform the essential functions of the job

• If an employee or applicant asks for a reasonable accommodation, the employer must respond timely, act in good faith, and interact with the employee to determine an effective reasonable accommodation

• Employers must train supervisors and managers to recognize and anticipate employees in need of accommodations


Reasonable Accommodations

• Reasonable accommodations include:– The acquisition or modification of equipment and devices– Making existing facilities accessible– Job restructuring, including modified work schedules and

reassignment to a vacant position– Elimination of non-essential job functions

• Unreasonable accommodations are those that impose an undue hardship on the employer or accommodations that involve significant or excessive cost


Steps to Undertake During the Interactive Process

• Employer should analyze the position, identifying the job’s purpose and essential functions (should be in the job description)

• Employer should consult with the individual to ascertain the job-related limitations imposed by the disability, and discuss how those limitations may be overcome with a reasonable accommodation

• Employer should ask the employee what he or she would like as an accommodation

• Once the employer has met with the employee, the employer should identify the potential accommodations and weigh the pros and cons of each


Interactive Process, cont’d

• Most importantly, employer should consider whether the accommodation will enable the individual to perform the job’s essential functions

• Employer should give priority to the accommodation the employee feels is best, but should implement the accommodation that is most appropriate to both the employee and the employer

• If an accommodation is selected that was not one preferred by the employee, the employer should have a legitimate business reason for doing so


School Visitation/Activities Leave

• Employers with 25 or more employees working at the same location must allow a parent, grandparent or guardian to take up to forty (40) hours per year, but no more than eight (8) hours per month, to participate in activities at the child’s kindergarten-grade 12 school, including a licensed day care facility

• All employers, regardless of size, must allow a parent, grandparent or guardian of a pupil to appear at a school discipline conference

• Employees must give reasonable notice to employer• Employees may be required to first use vacation, personal

leave or compensatory time off; otherwise, time off is unpaid


Time Off to Vote

• Employee’s with insufficient time to vote outside of work hours may take time off to vote at a statewide election at the beginning or end of the employee’s shift

• Employee may take off no more than two hours without loss of pay, provided he or she has given at least two working days’ notice that time off is desired

• Employer must allow employees as much time off as necessary for the employee to vote, but is only required to pay for 2 hours

• Employers must post a notice detailing this right at least 10 days before every statewide election


Military Leave – Uniformed Services Employment and Reemployment Rights Act (USERRA)

• Employers must grant employees unpaid leave to serve in the U.S. Armed Forces, including the Army, Navy, Air Force, Marines, the Army or Air National Guard, the U.S. Coast Guard, or the Uniformed Health Service.

• Applies to all employees holding a job other than a temporary position

• Employee must give advance written or oral notice, unless military necessity precludes providing notice, or if giving notice is impossible or unreasonable


USERRA and Benefits

• Employer does not have to compensate employees on military leave

• Employees can elect to use accrued vacation or similar leave during military leave

• Employers cannot require the use of accrued vacation• Employees on military leave are entitled to the same benefits

provided to employees on other forms of leave• Employers must permit the employee to continue employee-

sponsored coverage for up to 18 months • Military leave is counted as active employment for purpose of

determining hours work requirement under FMLA and CFRA


Reinstatement Rights under USERRA

• Employees who take military leave, at least up through a five-year limit, are entitled to reemployment unless they receive a dishonorable or bad-conduct discharge.

• Employee must give notice of intent to return to work• Service < 91 days

– reemployment in position employee would have attained if he or she had remained continuously employed, so long as the employee is qualified for the job or may become qualified with reasonable efforts.

– If not qualified, individual must be reemployed in position he or she occupied prior to service


Reinstatement Rights, cont’d

• Service > 91 days– Same right as those with less than 91 days service, except that if

the employee cannot be reemployed in the position he or she would have attained or if reemployment in the employee’s former position is impossible, the employee must be reemployed in a position equivalent in pay, rank and seniority to the position for which they are qualified

• All employers must comply with USERRA, unless they can show that reemployment is impossible, unreasonable or creates an undue hardship


Job Protection Under USERRA

• Returning servicemembers that served between 31 and 180 days are protected from discharge, except for cause, for six months following reemployment

• Returning servicemembers that served more than 180 days cannot be discharged, except for cause, for one year after they return to work


Leave for Spouses of Military Personnel

• Employers with 25 or more employees must allow eligible employees to take up to 10 days of unpaid leave when the employee’s spouse is on leave from deployment during a period of military conflict

• Eligible employee = works at least an average of 20 hours per week, and whose spouse is a member of the Armed Forces, National Guard or Army Reserves who has been deployed to an area designated as a combat zone during a period of military conflict


Jury Duty or Witness Duty

• Employers may not discriminate against employees for taking time off to serve as a juror at trial or when the employee is the victim of a crime and is required to appear as a witness

• Employees must give reasonable notice of leave for need to employer

• Whether an employer must pay wages depends on an employee’s status as exempt or non-exempt


Domestic Violence/Sexual Assault

• Employees who are victims of domestic violence or sexual assault are entitled to time off to take actions to protect the health or safety of the employee or his or her child, including seeking a restraining order or other injunctive relief (applies to all employers regardless of size)

• Employers with 25 or more employees must provide victims of domestic violence or sexual assault time off from work to attend to issues arising out of domestic violence or sexual assault, including seeking medical attention, going to domestic violence shelters or programs and getting counseling

• Period of leave can be capped at 12 weeks• Leave is unpaid, although employee can elect to use vacation time• Reasonable advance notice is required when feasible


Victims of Serious or Violent Felonies and their Relatives

• All employers must permit an employee who is a victim, the immediate family member of a victim, the registered domestic partner of a victim, or the child of a registered domestic partner of a victim, of a serious or violent felony to be absent from work to attend judicial proceedings

• Leave for this purpose is unpaid, but an employee may elect to use vacation time or other compensatory time


Family Sick Leave/Kin Care

• Employers are not required to provide paid sick leave to employees

• Employers that do provide sick leave must permit the employee to use at least one-half of the yearly sick leave accrual to attend to an illness of a child, parent, spouse, domestic partner, or child of a domestic partner.

• Conditions that apply to sick leave used by an employee may also apply to sick leave used to care for a sick child, parent, domestic partner, or spouse.


Emergency Duty as a Volunteer Firefighter, Reserve Police Officer, or Emergency Rescue Personnel

• Employers must provide leaves of absence for employees who are required to perform emergency duty as a volunteer firefighter, a reserve police officer, or emergency rescue personnel

• In addition, employers with 50 or more employees must allow leaves of absence for up to 14 days per year for fire or law enforcement training

• Time off for this purpose is unpaid


Literacy Education

• Employers with 25 or more employees must reasonably accommodate and assist an employee in enrolling in an adult literacy education program

• Compensation is not required• As long as the employee performs his or her job

satisfactorily, he or she cannot be terminated for revealing a problem with illiteracy

• Employers may deny accommodating the employee if to do so would impose an undue hardship on the employer


Drug and/or Alcohol Rehabilitation

• Employers with 25 or more employees must reasonably accommodate an employee’s voluntary participation in an alcohol and/or drug rehabilitation program, provided the accommodation does not impose an undue hardship on the employer

• Employer must take reasonable steps to safeguard the employee’s privacy

• An employer may refuse to hire or may discharge an employee because of the employee’s current use of alcohol and/or drugs, or where the employee is unable to perform his or her duties, or cannot perform them in a manner which would not endanger his or her health and safety or the health and safety of others


Religious Observances

• Employers must reasonably accommodate an employee’s request for time off to observe religious holidays if such time off does not pose an undue hardship on the employer

• Undue hardship is determined on a case-by-case basis• Examples of reasonable accommodations may include:

make-up time, flexible work schedules, change of job assignments and time off


Questions?

www.ssd.com


Avoiding Wage and Hour Violations (Including How to Properly Calculate

Regular Rates of Pay)Michael W. Kelly

Casey J.T. McCoySquire, Sanders & Dempsey L.L.P.





Wage and Hour

• Back to Basics• Calculating Regular Rate• Updates


Wage and Hour: Back to Basics

• Minimum Wage: Current = $8.00 (Federal = $7.25) **San Francisco = $9.79

• Hours Worked: CA: All time employee is suffered or permitted to work, whether or not required to do so, and subject to control of an employer– Employer knows or has reason to believe– Unauthorized OT: if you have a policy, you can discipline employee, but

still have to compensate if know or have reason to believe OT worked– Preparatory and concluding activities (“donning and doffing” and start up

and shut down times) – Travel time– Training time– “Off the Clock” and Off-Site Work



• Time Keeping: CA law: Must keep record of hours of non-exempt employees– When employee begins workday– When employee begins meal period (DLSE position)

• Cannot have time clock automatically deduct a meal period– When employee ends meal period (DLSE position)– When employee ends the workday

• Exception: when all employees leave at once (e.g. dismissal bell)



Meal Periods

• 5 hours or less – no meal period

• Over 5 hours but not more than 6 hours – 1 waivable 30 minute meal period

• Over 6 hours and up to 10 hours – one 30 minute unpaid off duty meal period (not waivable)

• More than 10 hours – two thirty-minute unpaid off duty meal periods (the second one is waivable if 1st not waived; if work more than 12 hours, 2nd

meal period not waivable)• Must be taken before the 6th

hour of work? (California Supreme Court case pending)



• On Duty Meal Period:– Nature of the work prevents the employee from bring relieved of

all duty (tough standard to meet)– Voluntary written agreement– Employee has right to revoke– Employee permitted to eat while on duty



Rest Periods:

• Less than 3.5 hours – not legally entitled to rest period

• 3.5 hours to 6 hours – one ten- minute rest period

• More than 6 hours to 10 hours – two ten-minute rest periods

• Over 10 hours – three ten- minute rest periods

• Issue re Additional Rest Breaks Pending before CA Supreme Ct.



• Meal and rest periods: Meaning of “provide” is pending before California Supreme Court

• Practical Tips for Meal and Rest Periods:– Detailed policy– Recordkeeping for meal periods– Employee Affirmation/Certification– Monitor Compliance– Manager training



• Employee Classifications:– Non-Exempt = entitled to overtime– Exempt = not entitled to overtime

• White Collar Exemptions: – Both California and the FLSA provide an exemption from both

minimum wage and overtime pay for employees who are employed in bona fide:

• Executive;• Administrative;• Professional; or• Outside sales capacity

– Certain computer employees also may qualify as exempt under the FLSA and California law



• Three Test for Exemption:– Salary level

• CA: Certain computer professionals = minimum fixed salary of $79,050 per year or $37.94 per hour (as of today)

– Salary basis• Deductions• Must be paid the full salary for any week in which the employee

performs any work (subject to certain limited exceptions)– Job duties

• Primarily engaged in exempt work that requires exercise of discretion and independent judgment

• “Primarily” – more than 50% of work time• Actual job duties



• Deductions From Salary – “No-Docking Rule”:– An employee is not paid on a salary basis if deductions from the

predetermined salary are made for absences occasioned by the employer or by the operating requirements of the business

– If the employee is ready, willing and able to work, deductions may not be made for the time when work is not available



• Permitted Salary Deductions:– Absence from work for one or more full days of personal

reasons, other than sickness or disability– Absence from work for one or more full days due to sickness or

disability if deductions made under a bona fide plan, policy or practice of providing wage replacement benefits for these types of absences

– To offset any amounts received as payments for jury fees, witness fees or military pay

– Proportionate part of employee’s full salary may be paid for time actually worked in the first and last weeks of employment

– Unpaid leave taken pursuant to the Family and Medical Leave Act (but not clear in California)



• Overtime: California’s 5 Zones– Time and one-half

• Over eight hours in a single workday • Over 40 hours in a single workweek • First eight hours on seventh consecutive day in a workweek

– Double time• Over 12 hours in a single workday• Over eight hours on the seventh consecutive day in a workweek

– Anti-Pyramiding• You are not required to pay for both hours over eight in a workday

and hours over 40 in a workweek; You pay the greater of the two• Easy Method: Keep two columns but do not lose track of double

time


Wage and Hour: Regular Rate

• Overtime computed on basis of employee’s “regular rate” of pay

• Must be at least statutory minimum• Employee’s “regular rate” is computed as an hourly rate

but might not be the employee’s hourly rate of pay– If hourly non-exempt employee paid solely at a single hourly

rate, the “regular rate” is the employee’s hourly rate– If salaried non-exempt employee, divide employee’s weekly

salary by total number of hours salary intended to cover up to maximum of 40 hours (CA law; under Federal law divide by total hours worked)



• If hourly or salary and also receives other includable compensation (ex. bonus), must include in regular rate

• Exclusions from regular rate:– Gifts and special-occasion payments, provided amounts not

measured by or dependent on hours worked– Payments for hours not worked (vacation, holiday, illness, etc.)– Uncontrolled standby– Pay for duty-free meal periods– Call-back minimum guarantee– “show up” or “reporting” pay– Discretionary bonuses



• Exclusions for regular rate (cont.)– Other benefit plan contributions– Extra compensation paid for overtime– Extra compensation paid for weekends, holidays and days of

rest


Wage and Hour: Regular Rate Calculations

• Calculating Overtime on Salary for Periods Other Than A Workweek:– If paid salary for a fixed number of hours during a period longer

than a workweek, such as a month or year, must translate into its weekly equivalent before regular rate can be calculated

– Assume: $2,600 monthly salary and no other compensation and salary is compensation for 40 hours of work a week

– Convert to weekly by multiplying by 12 and dividing by 52 ($2,600 x 12 = $31,200; $31,200 ÷ 52 = $600 per week

– Regular rate = $600 ÷ 40 = $15.00



• Calculating OT on a Bonus:– Only “discretionary” bonuses may be excluded from regular rate– If non-discretionary, must include in calculation– Assume: $500 productivity bonus, covers 3 months, employee

worked 480 straight time hours and 20 overtime hours– $500/500 hours = $1.00/hour; half-time = $.50– Overtime on Bonus = 20 x 0.50 = $10.00– Total bonus payment = $510.00



• Calculating OT Where Employee Works at Two Rates:– Employee earns $13/hour on Job 1 and $15/hour on Job 2– In single workweek, employee works 27 hours on Job 1 and 22

on Job 2– Job 1 Earnings: $351.00 ($13 x 27)– Job 2 Earnings: $330.00 ($15 x 22)– Total Straight-Time Earnings: $681.00 (for 49 hours)– Blended Rate: $13.90/hour ($681.00 ÷ 49)– OT Premium Rate: $6.95 ($13.90 ÷ 2)– OT Premium Ray: $62.54 ($6.95 x 9)– Total Comp: $743.54 ($681.00 + $62.54)


Wage and Hour: Regular Rate Calculation

• Calculating OT Where Employee Paid on Commission with Draw– Assume: $5,000 incentive compensation; monthly draw of

$2,500 paid semi-monthly; pay periods are on 16th and 1st; all draws will be applied against incentive compensation at end of month

– Assume: employee works 45 hours 1st week of month but does not earn incentive compensation until end of month; works no additional overtime after 1st week



• Calculating OT Where Employee Paid on Commission with Draw (cont.)– Week 1 = $1,250 ÷ 45 = $27.77/hour = regular rate; half time =

$13.88• Overtime on draw = $13.88 x 5 = $69.40• Total payment = $1,319.40 ($1,250 + $69.40)

– End of month reconciliation = $5,000 ÷ 177 (assume 4.3 weeks/month + 5 OT hours) = $28.25/hour = regular rate; half time = $14.13

• Overtime on commission = $14.13 x 5= $70.63• Total payment = $3,750 ($5,000-$1250) + $1.23 ($70.63-$69.40) =

3,751.23• Total payment for month = $5,070.63 ($1,319.40 + $3,751.23)



• What Should Employees End of Month Statement Show:– October 1- 15 = 85 hours; 5 OT hours; Rate $27.77

• ($1,250) Draw; ($ 69.40) OT payment– October 1 -15 readjusted rate = $28.25

• $1,250 Draw; $70.63 OT• $1.23 readjusted OT payment

– October 16-31 = 92 hours; 0 OT hours; Rate $28.25• $3,750 commission; $0 OT

– Total Gross = $3,751.23


2009-2010 Wage and Hour Updates

• Preliminary and Postliminary Activities– Bamonte v. City of Mesa (9th Cir. 2010) 598 F.3d 1217– Rutti v. Lojack, Corp. (9th Cir. 2010) 596 F.3d 1046

• Wage Statements– Morgan v .United Retail Inc. (2010) 186 Cal.App.4th 1136

• Employee Status– Pellegrino v. Robert Half Int’l (2010) 181 Cal.App.4th 713– D’Este v. Bayer Corp. (9th Cir. 2009) 565 F.3d 1119

• Employer Status– Martinez v. Combs (2010) 49 Cal.4th 35


2009-2010 Wage and Hour Updates (cont.)

• Kin Care Statute– McCarther v. Pacific Telesis Group (2010) 48 Cal.4th 104

• Tip Pooling– Lu v. Hawaiian Gardens Casino, Inc. (2010) 50 Cal. 4th 592

• Meal Periods– Still waiting for ruling in Brinker– McFarland v. Guardsmark, LLC (N.D. Cal 2008) 538 F.Supp.

1209, aff’d, 558 F.3d 1236 (9th Cir. 2009)

• Class Actions– Faulkinbury v. Boyd & Assoc., Inc. (2010) 185 Cal.App.4th 1363– Arenas v. El Torito Restaurant, Inc. (2010) 183 Cal.App.4th 723


Wage and Hour: Best Practices

• Be Proactive in Ensuring Compliance• Review Payroll Practices and Policies• Timekeeping• Provide Wage and Hour Training to Managers• Review Exempt and Non-Exempt Classifications• Ensure Compliance with Meal and Rest Break Policies• Thoroughly Review All Independent Contractor

Relationships


The Wage and Hour Audit

• An independent assessment of a company’s compliance with current employment and labor laws

• Assessment can include:– A review of job descriptions– Interviews with employees and supervisors– Analysis of interview results– A report of results to the company– Recommendations of corrective measures– Suggestion of ongoing strategies and solutions to avoid future

misclassification• Independent review of policies in employee handbook

– If you have out-of-state employees, consider more than one handbook


Immigration: Updates and Changes on the Horizon

Gregory A. WaldSquire, Sanders & Dempsey L.L.P.

[email protected]


OVERVIEW OF TOPICS

• Developments in enforcement and immigration compliance

• Current adjudication trends• Possible changes: administrative and legislative• Impact on specific industries


Immigration: The Debate Continues


0

500

1000

1500

2000

2500

FY 09 FY 09 FY 10

I-9 Inspections

Enforcement: Refocused

Source: DHS 2010


Enforcement: Ratcheted Up

• Since January 2009, more than 3200 employers audited• Since January 2009, ICE has issued over $50 million in

fines against employers for I-9 violations• 180 employers criminally charged in FY 2010• Final orders of Notice of Fines up 300% from FY 2009• Abercrombie & Fitch fined $1,047,110 for I-9 violations

– ICE “uncovered numerous technology-related deficiencies”– No indication of knowing hire/employment of unauthorized

workers– Initial inspection commenced in 2008; predated new regulations

covering electronic storage of I-9s


I-9 Electronic Signature and Storage

• Final rule effective 8/23/10• Clarifies that employers must complete I-9 within 3 business (not

calendar) days from hire– USCIS guidance advises not to count day of hire, but no official

recognition from ICE, the enforcer• May use paper, electronic systems or combo• Fully accessible with indexing system• Permissible to change electronic systems• Audit trail not required for form viewing, but audit trail must show

creation, completion, updates, modifications, alterations and corrections to I-9

• Not required to provide to employee unless requested


E-Verify - Update

• Now used by 225,000 + employers (almost two-fold from last year)• Pilot program with funding through 9/30/2012• States requiring for all employers:

– Arizona– Mississippi– South Carolina– Utah

• Required for public employers and state contractors in: Colorado, Georgia, Idaho, Minnesota, Missouri, Nebraska, North Carolina, Oklahoma, Rhode Island and Virginia

• Six other states considering E-Verify legislation• DHS expected to institute self check program within few months


Target: Federal Contractors?

• Federal Contractors: Litigation settled and since September 2009, all federal contractors to enroll with FAR E-Verify clause: – Applies to contracts of 120 days performance and value of $100,000 – Exceptions include:

• Sub-contracts under $3000• Commercially Available Off-the-Shelf (COTS) items• Contracts for work performed outside the US and territories

– Unlike standard E-Verify, prospective and existing employees working on contract must be verified in system

• 225 federal contract employers debarred in FY 2010 due to immigration violations– Entered into the Excluded Parties List System (EPLS) – Immediate suspension and barred from competing on all federal

government contracts


Here to Serve? Adjudicators now the Enforcers

• Administrative Site Visit and Verification Program (ASVVP) [Fraud Detection and National Security Division – FDNS]– Investigators and contractors (Site Inspectors) dispatched to H-1B and

L-1 employers without warning– Random or targeted fraud investigations– Verifying existence of petitioner, legitimate business, beneficiary

working and being paid consistent with petition• USCIS using extrinsic sources: verification or “gotcha”?

– Dunn & Bradstreet, Google and others– Social Networking Memo – “provides an excellent vantage point for

FDNS to observe the daily life of beneficiaries and petitioners”• DOL/WHD continuing with H-1B/LCA audits

– August 2010, computer consulting company in GA fined nearly $1million for back wages and interest


Adjudication Challenges

• Scrutiny of L-1A and L-1B petitions continues at USCIS and Consulates– USCIS personnel changes at California Service Center

• H1-B Neufeld Memo on Employer-Employee relationship– Applies “conventional master-servant” analysis to establish right of

control over employee– Targeted against outsourcing but wider application– If beneficiary owns majority stake in petitioner, memo intimates no

employer-employee relationship– New documentary requirements to establish eligibility, incl. pay stubs,

W-2s, work schedules, time sheets, work product, job offer letters, itineraries, employment contracts and other employment history records

– Some required to produce contracts, statement of work, work orders between petitioner and clients if beneficiary will work at client premises

– Spill over to other visa categories

Presenter

Presentation Notes

Director Mayorkas shaking things up; Grassley fires back; CIS may be more politicized in its ranks than in recent memory Neufeld Memo examples:


H-1B Cap Update

• Congressionally mandated cap at 65,000 per USCIS fiscal year– 20,000 additional allocated to US Advanced degrees– 6,800 additional visas allocated to US-Singapore

and US Chile Free Trade Agreements• USCIS fiscal year begins 10/1 and ends 9/30• Earliest filing date is April 1st prior to start of FY:

– FY 2008 cap reached on 4/2/2007– FY 2009 cap reached on 4/1/2008 – FY 2010 cap reached on 12/21/09– FY 2011 (as of 10/15/10) 42,800 and 15,700 used


Errata

• Effective 11/23/10 USCIS fees increasing 5 – 30%• Employment-based immigrant visa backlog expected to

endure through of next year• I-94w eliminated for Visa Waiver applicants, now ESTA• $14 ESTA filing fee (valid for 2 years)• Additional filing fees for H-1B ($2000) and L-1 petitions

($2250) if: – Employ 50 or more in US– More than 50% of US employees in H-1B, L-1A or L-1B status

• USCIS processing has slowed due to above• DOL’s PERM processing has improved


Legal Challenges: Federal vs. Local


Arizona: Ground Zero of Immigration Debate

• SB1070 – made AZ state crime to be in US illegally:– Required police to determine immigration status of those

stopped, detained or arrested if “reasonable suspicion” unlawfully present

– Crime for failing to carry immigration status documents– US District Court issued preliminary injunction in August 2010

preventing key provisions from taking effect– Set for hearing before 9th Circuit Court of Appeal in November

• US Supreme Court is reviewing Legal Arizona Workers Act challenge (including E-Verify requirement and State licensing enforcement), Chamber of Commerce v. Candelaria

Presenter

Presentation Notes

Preemption doctrine, with regard to Immigration enforcement, at heart of many ongoing legal challenges Recent decision of Lozano v. City of Hazelton 3rd Circuit Court of Appeal upheld permanent injunction invalidating a city ordinance that attempted to regulate employment of, and rental of housing to, undocumented immigrants. Will SCOTUS directly address preemption, and specifically E-Verify in Chamber of Commerce case is an open question


Comprehensive Immigration Reform Act of 2010

• Latest CIR proposal introduced by Senators Menendez (D-NJ) and Leahy (D-VT)

• Similar to previous proposals and includes:– Border enforcement “triggers” must be met before legalization– Enhances penalties for fraud and misuse of visas, passport and social

security numbers– Mandates an E-Verify system within 5 years for all employers– Creates new fraud-resistant social security card and shores up accuracy

of SSA database– Creates commission to monitor labor market and need for temporary

workers through H-2C (guest worker) visa– Recruitment requirements for H-1B and L-1 sponsors and caps at 50%

of US workforce – Legalization of undocumented – Lawful Prospective Immigrant (LPI)


But Who Needs Congress . . . Possible Administrative Remedies

• Leak of recent internal memos discussing administrative alternatives to CIR

• Possible registration and work authorization of undocumented

• Expansion of EB-5 (Immigrant Investor Visa) to foster economic growth

• Path to green card easier for F, O, TN, P, and E visa holders (dual intent)

• Extend work authorization for H-4 dependents• EADs for 2 years and automatic work authorization upon

renewal


Industry Focus

Health Care• CIR 2010 would ease immigration for nurses and foreign trained

physicians to address shortages• Legislative or administrative changes could foster immigrant

investment in growth areas like health care and bio tech Hospitality• Proposed changes to prevailing wages for H-2B

(seasonal/temporary non-ag workers) may result in higher wage requirements

• CIR 2010 could bring greater liberalization of H-2B including portability with US worker protections

• ICE will continue to target for I-9 audits and enforcement


Industry Focus

Agriculture• H-2A regulations revamped to withdraw Bush era streamlining with

more intended protections for US workers • CIR 2010 includes AgJobs (1.35 million visas for undocumented)Technology• Current environment of hostility towards H-1B and L-1 employers

not likely to abate in near term• CIR 2010 establishes more restraints for H-1B and L-1 employers

but liberalizes L-1s for small companies• Administrative proposals expand work and travel authorization for

green card applicants and dependent H-4s • CIR 2010 would alleviate employment-based immigrant backlog


THANK YOU

GREGORY [email protected]


Health Care Reform: What Employers Need to Know

Gregory J. VivianiSquire, Sanders & Dempsey L.L.P.


Health Care Reform

• Patient Protection and Affordable Care Act (P.L. 111- 148, March 23, 2010)

• Health Care and Education Reconciliation Act of 2010 (P.L. 111-152, March 30, 2010)


Application of the PPACA

• Laws apply to medical and prescription drug plans. Do not apply to separate dental and vision plans

• Law does not appear to apply to a separate retiree only plan


Provisions Effective First Plan Year After September 23, 2010

• No Lifetime or Annual Dollar Limits

• No Pre-Existing Conditions • Extension of Dependent

Coverage to age 26• Required Preventive Care • Patient Protections • Rescission

• Nondiscrimination Rules • Group Health Plan Reporting

Requirements • Appeals Process • Standard Benefit Summaries• Plan Transparency Rules


Provision Effective in 2014 Plan Year

• Limitations on Waiting Periods• Expansions of Prohibited Discrimination Based on

Health Status and New Wellness Plan Rules• No Discrimination Against Health Care Providers • Required coverage for clinic trial volunteers


Insurer Rules

• Insurer Rebates – Effective for the first plan year after September 23, 2010.

• Restrictions on Insurer Rate Designs in the Small Group and Individual Market – Effective in 2014.

• Insurers must make coverage available to all applicants in the small group and individual markets. Effective in 2014.

• Insurers must provide guaranteed renewability of coverage in the small group and individual markets. Effective in 2014.

• Insurers in the small group and individual market are required to offer insurance that has an “essential health benefits” package of coverage. In addition, cost-sharing for plan participants and policy holders cannot exceed certain limits. Effective in 2014.


Impact on Collective Bargaining Agreements

• No broad-based PPACA exemption for collectively bargained plans

• If CBA ratified before march 23, 2010, all PPACA effective dates are delayed until the day after day the collective bargaining agreement terminates

• Exception appears to only apply to the bargaining employees

• Not clear whether an extension of the CBA would extend the PPACA effective dates


Grandfather Plans

• Definition of Grandfathered Plan A plan that provides coverage to at least one participant and was in

existence on March 23, 2010 Rules apply separately to each Benefit Package – e.g. PPO, HMO

and indemnity arrangementsRequirements to maintain grandfather status

• Documentation Requirements• Disclosure Requirements• Continuing Enrollment• Anti-Abuse Rules – Grandfathered Plan Status Lost


Laws That Do Not Apply to Grandfathered Plans

• Preventive Care. • Nondiscrimination Rules. • Group Health Plan Reporting Requirements. • Appeals Process. • Patient Protections.• Prohibited Discrimination Based on Health Status.• No Discrimination Against Health Care Providers.• Required coverage for clinic trial volunteers.• Restrictions on Insurer Rate Designs in the Small Group and

Individual Market. • Plan “disclosure” rules pertaining to a wide range of things, such as

claims payment policies, enrollment, cost-sharing, etc.


Grandfathered Plans: Changes That Could Result in Loss of Status

• Current regulations would cease to be grandfathered if policy or certificate is changed or non-renewed. Agencies considering modifying this rule.

• Elimination of all or substantially all benefits to diagnose or treat a particular condition.

Presenter

Presentation Notes

To maintain status, the regulations generally prohibit a plan from taking actions that would significantly increase the cost of current coverage for a participant and, in the case of insured plans, force the participant to switch carriers.



• Any increase in a percentage cost-sharing requirement (as of March 23, 2010) e.g. a co-insurance percentage

• An increase in a fixed amount copayment that exceeds the greater of:– $5, medical inflation indexed from March, 2010.– A “maximum percentage increase” - 15% + the percentage rate

of medical inflation since March of 2010.• An increase in a fixed-amount cost-sharing requirement

that is other than a co-payment.– E.g. deductibles and out-of-pocket limits.– A “maximum percentage increase” - 15% + the percentage rate

of medical inflation since March of 2010

Presenter

Presentation Notes




• Decrease in the “employer contribution rate”.Rate based on the COBRA cost for the coverage period including March 23, 2010.Rate based on employer paid percentageReduction in the percentage cannot be more than 5 percentage points (e.g. 90% down to 85%)

Presenter

Presentation Notes



Coverage of Children to Age 26

• Without regard to dependent status• Does not require any type of children to be covered (e.g.

stepchildren)• Uniform plan terms – cannot charge an employee more

for an over age child• 30 day enrollment period• If Plan grandfathered, prior to 2014, do not have to cover

if other employer coverage is available


No Lifetime or Annual Dollar Limits

• Very high transitional rule for annual limits ($750,000 in 2011). Phased out completely in 2015.

• Applies to “essential health benefits”• 30 day enrollment period for employees or dependents

previously excluded• notice to employees required


Preventive Care

• No cost-sharing• Various government agencies to provide a list of types of

care• In-network may be required • Plan may still regulate frequency, method, treatment and

setting


Rescission

• Rules apply after coverage has begun• No retroactive termination unless

FraudIntentional misrepresentation


Elimination of Pre-Existing Conditions

• Children under age 19 – first plan year after September 23, 2010

• All others – 2014 Plan year • Would apply when changing insurance coverage


Claims Appeals

• Follow current DOL Regulations, with modifications• Fuller disclosure of what diagnosis, treatment and denial

codes mean• External Review

Not for eligibility to participate in the planConducted by an independent review organization

• Notices and other communications in Non-English language

Under 100 participants – 25% literate only in the non-English language100 or more participants – if lesser of 10% or 500 participants literate only in the non-English language


Employer Mandate Tax

• Effective in 2014

• Applies to Employers with 50 or more full-time employees– Full-time employees = 30 or more hours per week – Count part-time employees as full-time equivalents.

Each month aggregate all hours of all part-time employees and divide by 120

– Have to consider all employees within a controlled group of companies under IRC Section 414

– Examine number of employees on business days in the preceding calendar year

– Predecessor employer rules will apply– Seasonal worker exception



• Examines whether the employer plan – Is offered to full time employees and their dependents.

Dependents – not defined in the lawCommon law spouses?Domestic partners?Stepchildren?

– Has Minimum Essential Coverage (comprehensive medical coverage)



• If the employer does not have a plan or does not have a plan that provides minimum essential health benefits to all full-time employees and their dependents – $2,000 tax triggered with respect to full-time employees

• Amount is $166.67 per month ($2,000.00 annually) x the total number of full-time employees over 30

– Penalty excludes first 30 employees • E.g., employer with 70 full-time employees that fails to offer

insurance would pay a penalty of $80,000 annually – 40 employees * $2,000 = $80,000



• If the employer does have a plan that provides minimum essential health benefits for all full-time employees and their dependents – $3,000 tax can be triggered with respect to certain full-time employees

who opt out of the plan and buy coverage through an Exchange Amount is $250.00 pre month ($3,000.00 annually) for most employees who opt out

– Exception - Tax only applies if the employee is eligible for tax credits when buying insurance from the Exchange

Employee not eligible for credits if (1) the employer plans pays for 60% of the cost, and (2) the employee does not have to pay more for coverage than 9.5% of the employee’s household incomeEmployee not eligible for credits if household income exceeds 400% of the poverty line



• Notes about the taxTax penalties for failing to provide coverage do not apply in relation to part-time employees (under 30 hours per week)Controlled group rules do not appear to apply for purposes of determining the tax. Each employer appears to be separately subject to the tax, even if that employer is part of a larger controlled group. Not clear if this result was intended.


Health Care Reform: What Employers Need to Know

Gregory J. VivianiSquire, Sanders & Dempsey L.L.P.


Developing Defensible Employee Discipline and Performance

Improvement ProgramsMichael W. Kelly

Angela N. O’RourkeSquire, Sanders & Dempsey L.L.P.





PROGRESSIVE DISCIPLINE

• Should every employer have a progressive discipline policy?

• Does it have to be in writing?

• Does having a progressive discipline policy mean that there is no flexibility in selecting punishment or excusing minor violations?


10 Best Practices for Employee Discipline

#1

KNOW YOUR POLICIES AND TRAIN THOSE WHO HAVE TO

ENFORCE THEM



#2

GET THE WHOLE STORY



#3

USE A FORM



#4

BE OBJECTIVE



#5

DOCUMENT PROMPTLY AND THOROUGHLY



#6

GIVE THE EMPLOYEE AN OPPORTUNITY TO EXPLAIN



#7

GET THE EMPLOYEE’S ACKNOWLEDGEMENT



#8

THE PUNISHMENT SHOULD FIT THE CRIME



#9

BE CONSISTENT



#10

WHEN POSSIBLE, USE DISCIPLINE IN A POSITIVE WAY


PERFORMANCE IMPROVEMENT PLANS

What is a Performance Improvement Plan or PIP?

Why put an employee on a PIP?

• Employees are an investment• Enhance employee performance• Protect your company

Presenter

Presentation Notes

Don’t just document discipline – demonstrate an effort to rehabilitate the employee – if after that the employee has not improved, then take more severe action as appropriate



Aren’t my employees at will?

• Termination without justification may lead to a wrongful termination claim

• Exceptions to at will employment

Presenter

Presentation Notes

Exceptions – employment contracts; statutory considerations; public policy exceptions (whistleblowers); good faith and fair dealing (upcoming bonus); implied contract (handbooks, etc).



FIVE STEPS TO DRAFTING A PIP

1. Describe what happened to prompt the PIP.



2. Identify measurable improvement goals for the duration of the PIP.

Presenter

Presentation Notes

Date(s) for interim performance evaluations if necessary.



3. List what training and support will be provided.



4. EAP referral as needed.



5. Request and document the Employee’s response and suggestions.


PROGRESSIVE DISCIPLINE AND PIPs

HYPOTHETICALS

overview of critical 2010 developments - squire patton boggs

Documents