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Businesses Face Increased Wage Costs & Risks From American Rescue Plan Act Of 2021 FLSA Minimum Wage Changes
U.S businesses will face sharply increased wage costs if Senate Democrats succeed in their plan to pass as soon as this week the American Rescue Plan Act of 2021 (the "Act") passed by the House of Representatives on Friday, February 24, 2021.
One of many provisions impacting employers and their employee benefit plans in the Act that Congressional Democrats are pushing through as a COVID-19 relief package, Section 2101 of the Act amends the Fair Labor Standards Act of 1938 ("FLSA") to increase immediately upon enactment the federal minimum wage employers covered by the FLSA must pay to most non-exempt employees ("regular rate") by $2.25 per hour from the current rate of $7.25 to $9.50 per hour, then provides for additional annual increases the gradual increase of the federal minimum wage that will raise the regular rate to $15.00 per hour over the next four years. Beginning in 2026, the Act also provides for annual increases in the regular rate based on the median hourly wage of all employees as determined by the Bureau of Labor Statistics rounded up to the nearest multiple of $0.05. This means the regular minimum wage employers must pay most hourly employees would more than double by 2025 and continue to increase thereafter.
In addition, the Act also phases out current rules allowing employers to pay tipped employees, new employees under age 20 and handicapped employees less than the regular minimum wage over the next five years and raises the minimum wage the FLSA allows employers to pay those employees gradually over the intervening period, with the initial increases slated to take effect upon enactment.
As Senate Majority Leader Chuck Schumer has announced plans to bring the Act before the Senate for a vote as early as this week and President Biden committed to promptly sign the Act that is the centerpiece of the Democrats latest COVID-19 relief package, businesses are likely to feel the impact of the increased minimum wage and other mandates within days if not by month's end.
These amendments will directly and immediately increase labor costs for non-exempt workers as well as employee benefit and fringe benefit costs and obligations tied to compensation or based on FLSA classifications. Other Biden-Harris Administration policies expanding the scope of the FLSA and other federal laws through revisions and enforcement of rules for characterizing workers as employees rather than independent contractors and enforcing expansive joint employer liability rules as well as other announced or expected Biden-Harris Administration proworker regulatory and enforcement changes almost certainly will expand the reach and implications of these changes. The Biden-Harris Administration's January 20, 2021 Memorandum on Regulatory Freeze Pending Review suspended the implementation of the Trump Administration led Labor Department's Final Rule: Independent Contractor Status under the Fair Labor Standards Act slated to take effect on March 8, 2021, which sought to restore and clarify historical more employer friendly policies for distinguishing employee versus independent contractor relationships for purposes of the FLSA, the WHD's withdrawal of previously issued Trump Administration era opinions that applied that Administration's more expansive view of independent contractor status, and WHD's issuance of new opinions articulating and apply applying significantly narrower definitions of independent contractor and broader definitions of employees.
Based on the agenda announced by the Biden-Harris Administration, businesses also should expect the Biden-Harris Administration and private plaintiffs to use these more employee friendly interpretation and enforcement policies to attack employer characterizations of workers as contractors to justify nonpayment of minimum wage and overtime to those workers. Along with being forced to pay unpaid wages and overtime with interest, businesses unsuccessful in defending their worker classification characterizations can expect to face liquidated damage awards to private litigants equal to two times the amount of the back pay liability or in the case of WHD enforcement for repeated or willful violations, civil monetary penalties.
In assessing and managing these risks, businesses should evaluate their potential joint employer exposure to liability for unpaid minimum wage and overtime violations by other businesses providing labor or other services as the Biden-Harris Administration also is expected to seek to apply the much more expansive interpretation of joint employment applied during the Obama Administration abandoned during the Trump Administration.
These misclassification mistakes can be particularly costly. FLSA liabilities arising from misclassification of workers as independent contractors carry significant risk both because businesses often fail to pay required minimum wages or overtime as well as don't keep required time records. The Biden-Harris Administration has made clear that it plans to move quickly to reimplement the regulatory and enforcement practices used during the Obama Administration to aggressively challenge employers' characterization of workers as exempt from the FLSA's minimum wage and overtime rules as independent contractors.
Considering these developments, all U.S. businesses and business leaders are well-advised both to begin preparing to comply with anticipated increases in federal minimum wage rates, as well as well as assess and take appropriate steps to mitigate their exposure to anticipated aggressive efforts to reclassify service providers considered to perform work as independent contractors, as contractors or employees of subcontractors or other businesses or both.
The FLSA reforms are only one of a number of provisions of the Act impacting employers and their employee benefit plans. For more a more comprehensive discussion of the FLSA amendments included in the Act, see here.
Solutions Law Press, Inc. also invites you receive future updates by registering here and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here. For specific information about the these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
Recognized by her peers as a Martindale-Hubble "AV-Preeminent" (Top 1%) and "Top Rated Lawyer" with special recognition LexisNexis® Martindale-Hubbell® as "LEGAL LEADER™ Texas Top Rated Lawyer" in Health Care Law and Labor and Employment Law; as among the "Best Lawyers In Dallas" for her work in the fields of "Labor & Employment," "Tax: ERISA & Employee Benefits," "Health Care" and "Business and Commercial Law" by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years working as an on demand, special project, consulting, general counsel or other basis with domestic and international business, charitable, community and government organizations of all types, sizes and industries and their leaders on labor and employment and other workforce compliance, performance management, internal controls and governance, compensation and benefits, regulatory compliance, investigations and audits, change management and restructuring, disaster preparedness and response and other operational, risk management and tactical concerns.
Most widely recognized for her work with workforce, health care, life sciences, insurance and data and technology organizations, she also has worked extensively with health plan and insurance, employee benefits, financial, transportation, manufacturing, energy, real estate, accounting and other services, public and private academic and other education, hospitality, charitable, civic and other business, government and community organizations. and their leaders.
Ms. Stamer has extensive experience advising, representing, defending and training domestic and international public and private business, charitable, community and governmental organizations and their leaders, employee benefit plans, their fiduciaries and service providers, insurers, and others has published and spoken extensively on these concerns. As part of these involvements, she has worked, published and spoken extensively on these and other federal and state wage and hour and other compensation, discrimination, performance management, and other related human resources, employee benefits and other workforce and services; insurance; workers' compensation and occupational disease; business reengineering, disaster and distress; and many other risk management, compliance, public policy and performance concerns.
A former lead advisor to the Government of Bolivia on its pension project, Ms. Stamer also has worked internationally and domestically as an advisor to business, community and government leaders on these and other legislative, regulatory and other legislative and regulatory design, drafting, interpretation and enforcement, as well as regularly advises and represents organizations on the design, administration and defense of workforce, employee benefit and compensation, safety, discipline, reengineering, regulatory and operational compliance and other management practices and actions.
Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and provides insights and thought leadership through her extensive publications, public speaking and volunteer service with a diverse range of organizations including as Chair of the American Bar Association ("ABA") Intellectual Property Section Law Practice Management Committee, Vice Chair of the International Section Life Sciences and Health Committee, Past ABA RPTE Employee Benefits & Other Compensation Group Chair and Council Representative and current Welfare Benefit Committee Co-Chair, Past Chair of the ABA Managed Care & Insurance Interest Group, past Region IV Chair and national Society of Human Resources Management Consultant Forum Board Member, past Texas Association of Business BACPAC Chair, Regional Chair and Dallas Chapter Chair, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation and many others.
For more information about these concerns or Ms. Stamer's work, experience, involvements, other publications, or programs, see www.cynthiastamer.com or contact Ms. Stamer via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns.
©2021 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™
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Proposed FLSA Joint Employer Rule Would Reduce Business' Joint Employer Wage & Hour Liability
U.S. businesses should move quickly to express strong support for the Joint Employer Status under the Fair Labor Standards Act Rule proposed by the Department of Labor today to help reduce their exposure to liability to pay overtime or other liabilities of subcontractors or other businesses under the Fair Labor Standards Act (FLSA).
The FLSA allows the Labor Department and private litigants to hold businesses jointly and severally liable with the actual employer for minimum wage or overtime back pay and penalties as joint employers when a business is a "joint employer" within the meaning of the FLSA. Many businesses have learned the hard way that they meet the definition of "joint employer" when presented with a Labor Department demand that their business pay the back pay and penalties for another business' FLSA violations. See, e.g.,U.S. Department of Labor Recovers $3.2 Million in Back Wages, Damages, And Penalties from Portland, Oregon, Courier Servicemen.
Since the existing regulations adopted more than 58 years ago don't expressly define "joint employment," whether a joint appointment relationship existed mostly has been decided for a painful facts and circumstances analysis applying judicial precedent for most of the past 50 years. Traditionally the courts have applied a version of the fact intensive analysis of common control like that applied to identify joint employers for collective bargaining purposes under the National Labor Relations Act. Without any statutory or formal regulatory action, however, the Labor Department during the Obama Administration began applying a new definition of joint employment it adopted in sub-regulatory guidance without seeking public comment or following other requirements to adopt a formal regulatory change. As reinterpreted, the Labor Department began enforcing the joint employment rule to hold businesses liable based on even very limited indirect influence over wages or other employment conditions. Under these new standards, for instance, Labor Department auditors have asserted and enforced joint employment liability under the FLSA based on evidence of limited indirect influence over working conditions arising out of the alleged joint employer business operations such as restriction of schedules resulting from access to the worksite restricted by the ordinary business hours of operations of the business or the business' requirement that the employer and its worker comply with federal government contracting requirements. The Labor Department has continued to enforce the joint employee rule using this Obama Era interpretation even after it withdrew the sub-regulatory guidance when the Administration invalidated and barred agencies from enforcing sub-regulatory guidance.
This interpretive change made it significantly more likely that a businesses could face joint employer FLSA liability for a subcontractor or other business' minimum wage, overtime and other FLSA responsibilities. Because the finding of joint employment also results in aggregation of hours worked for the direct employer and all other joint employers, these regulations also made it significantly more likely workers would be considered entitled to overtime in contract labor, manpower and certain other situations where the primary employer's workers worked at multiple job sites. Since the change in interpretation was adopted during the Obama Administration, the Labor Department has Use this modified joint employer interpretation to nail many unsuspecting businesses with liability for overtime due from another employer who provided services with respect to that businesses job sites Even where the worker did not work the overtime hours on that businesses job and the business had no control over deciding whether the overtime hours would be worked at all.
The Proposed Regulation would overrule the hangover Obama-Era interpretation as well as issue a new definition more consistent with judicial precedent and more friendly to business. It calls for a clear, four-factor test—based on well-established precedent—that would consider whether the potential joint employer actually exercises the power to:
hire or fire the employee;
supervise and control the employee's work schedules or conditions of employment;
determine the employee's rate and method of payment; and
maintain the employee's employment records.
Since the Proposed Regulation continues to require fact specific determination, the Proposed Regulation also includes a set of examples that illustrates the application of the Proposed Regulation. While a review of the test and examples makes clear businesses still risk joint employer liability if they intertwine their operations or exercise too much control over another business' employees, the new 4-part test would treat businesses much more fairly than the existing rules. Business is concerned about managing these risks definitely need to act to submit supportive comments during the currently running 60-day comment period. Whether the Proposed Regulation becomes final, all businesses also should evaluate their joint employer liability exposure under the FLSA and other laws from their existing business relationships. Most businesses also will want to consider tightening their existing practices to minimize the risk, regardless of which test ultimately applies going forward. Business is dealing with workers who raise a potential risk of joint employment liability also may want to tighten procedures for verification of compliance with the employers of these workers as well as explore insurance, indemnification or other contractual safeguards to mitigate the risk.
In considering the new Proposed Regulation, businesses and their leaders should keep in mind that wage and hour and worker classification issues are key liability and enforcement areas. Over the past twenty years, the rise in the use of staffing, professional employment, manpower, independent contractor and other outsourcing relationships have prompted growing enforcement and regulatory interest by both Democrat and Republic Administrations and Congress including under the FLSA and other wage and hour laws. See e.g., $1.4M FLSA Back Pay Award Demonstrates Worker Misclassification Risks. Today's Proposed Regulation comes as key Congressional Democrats have continued to fuss about the National Labor Relations Board's proposal last Fall of a joint employer rule substantially similar to the 4-part rule contained in the Proposed Regulation. Businesses Urged To Comment Positively On Proposed NLRB Joint Employment Rule By 12/13/18; NLRB Responds To House Democrats About Private Contractor Participation In Joint Employment Rule Comment Processing. Supporters of the Proposed Rule should prepare to ward off a backlash like the one the NLRB is experiencing to its proposed joint employer rule, even as both parties continue to support stepped up scrutiny and enforcement against overly aggressive worker classification. Employer and other business leaders also should keep in mind that the Proposed Regulation follows the the Labor Department Wage and Hour Division's proposal last month of of an employer-friendly change to its Regular Rate Regulations and an employee friendly Salary Theshold Rule that instantly will convert more than 1 million currently salaried workers to hourly workers See, Proposed FLSA Base Pay Rule Clarifies Overtime Treatment Of Perks; Give Labor Department Feedback On Proposed $124 Per Week Increase In FLSA Salary Threshold & Other Burdensome Rules. Employers and others should submit their written comments to these proposed rules as soon as possible and within the 60-day comment period applicable to that proposed rule change.
Other Defensive Actions To Minimize FLSA Exposures
Whether or not any of these proposed rule changes takes effect, U.S. businesses will want to strengthen their existing practices for classifying and compensating workers under existing Federal and state wage and hour laws, tighten contracting and other compliance oversight in relation to outsourced services, weigh options to clean up exposure areas, review insurance coverages and consider other options to minimize their potential liability under applicable wages and hour laws. Conducting this analysis within the scope of attorney-client privilege is important because the analysis and discussions are highly sensitive both as potential evidence for wage and hour and other legal purposes. Consequently, businesses and their leaders generally will want to arrange for this work to be protected to the extent by attorney-client privilege, work product and other evidentiary protections against discovery by Department, employees or others for FLSA or other workforce enforcement actions.
As a part of this process, businesses and their leaders generally should plan to:
Review subcontractor, temporary, lease employee, independent contractor and other outsourced labor and services relationship for potential risk of worker reclassification and tighten contracting and other procedures;
Audit the position of each employee currently classified as exempt to assess its continued sustainability and to develop documentation justifying that characterization;
Audit characterization of workers obtained from staffing, employee leasing, independent contractor and other arrangements and implement contractual and other oversight arrangements to minimize risks that these relationships could create if workers are recharacterized as employed by the employer receiving these services;
Review the characterization of on-call and other time demands placed on employees to confirm that all compensable time is properly identified, tracked, documented, compensated and reported;
If the employer hires any individuals under age 18, audit and implement appropriate procedures to ensure its ability to demonstrate compliance with all applicable FLSA child labor rules;
If the employer is a government contractor or subcontractor or otherwise performs any services on projects funded with federal or state funds, evaluate the applicability and fulfillment of any special wage, fringe benefit, recordkeeping or other government contracting wage and hour requirements;
If the employer hires foreign agricultural or other workers subject to special conditions and requirements, to review compliance with those special requirements;
Review and tighten existing practices for tracking compensable hours and paying non-exempt employees for compliance with applicable regulations and to identify opportunities to minimize costs and liabilities arising out of the regulatory mandates;
If the employer uses leased, temporary, or other outsourced labor, evaluate contractual, process and other options to support the employer's ability cost effectively to respond to an audit, investigation or enforcement action by the Labor Department or private litigants and if necessary, obtain indemnification or other recovery in the event the employer incurs liability due to the use or practices of the outsourced labor supplier;
If the audit raises questions about the appropriateness of the classification of an employee as exempt, self-initiation of proper corrective action after consultation with qualified legal counsel;
Review and document all workers classified as exempt;
Review of existing documentation and record keeping practices for hourly employees;
Evaluate potential exposures under other employment, labor, tax or related laws or contracts that might be impacted by the findings or actions taken in response to those findings;
Explore available options and alternatives for calculating required wage payments to non-exempt employees and assessing and resolving other concerns;
Identify and calculate other employee benefit, tax or other corrections and associated costs and procedures that may be required as a result of findings or corrective actions resulting from their redress;
Re-engineer work rules, policies, contracts and practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures;
Explore insurance, indemnification and other options for mitigating risks and associated investigation and defense costs; and
Consider self-correction within the new PAID Program or otherwise.
If you need more information or have questions, contact the author, Cynthia Marcotte Stamer. We also invite you to share your own best practices ideas and resources and join the discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions on LinkedIn.
Recognized by her peers as a Martindale-Hubble "AV-Preeminent" (Top 1%) and "Top Rated Lawyer" with special recognition LexisNexis® Martindale-Hubbell® as "LEGAL LEADER™ Texas Top Rated Lawyer" in Health Care Law and Labor and Employment Law; as among the "Best Lawyers In Dallas" for her work in the fields of "Labor & Employment," "Tax: ERISA & Employee Benefits," "Health Care" and "Business and Commercial Law" by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of management focused wage and hour and other employment, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.
Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer's clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors; domestic and international public and private health care, education and other community service and care organizations; managed care organizations; insurers, third-party administrative services organizations and other payer organizations; and other private and government organizations and their management leaders.
Ms. Stamer has extensive experience advising and defending businesses and their management on wage and hour and other workforce, compensation and employee benefit concerns. Throughout her career, Ms. Stamer has continuously worked with these and other management clients to design, implement, document, administer and defend hiring, performance management, compensation, promotion, demotion, discipline, reduction in force and other workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government, accreditation and quality organizations, regulatory and contractual audits, private litigation and other federal and state reviews, investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; prepare and present training and discipline; handle workforce and related change management associated with mergers, acquisitions, reductions in force, re-engineering, and other change management; and a host of other workforce related concerns. Ms. Stamer's experience in these matters includes supporting these organizations and their leaders on both a real-time, "on demand" basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, bankruptcy and other crisis and change management; management, and other opportunities and challenges arising in the course of workforce and other operations management to improve performance while managing workforce, compensation and benefits and other legal and operational liability and performance.
Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, heavily involved in health benefit, health care, health, financial and other information technology, data and related process and systems development, policy and operations throughout her career, and scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues. She regularly helps employer and other health benefit plan sponsors and vendors, health industry, insurers, health IT, life sciences and other health and insurance industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; transactional and other change management; regulatory affairs and public policy; process, product and service improvement, development and innovation; and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompasses advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.
Author of leading works on wage and hour and a multitude of labor and employment, compensation and benefits, internal controls and compliance, and risk management matters and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
For more information about the matters discussed in this article, Ms. Stamer or her services, experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here such as the following:
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If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here. We also invite you to join the discussion of these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions Linkedin or Facebook
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
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Comments Off on Proposed FLSA Joint Employer Rule Would Reduce Business' Joint Employer Wage & Hour Liability	| compensation, compliance, Corporate Compliance, Employee Benefits, Employer, Employers, Employment, Employment Policies, Excepted Benefits, Fair Labor Standards Act, Fringe Benefit, Fringe Benefits, Management, NLRA, Non-Exempt, Risk Management, Salaried, Uncategorized, Worker, Worker Classification	| Tagged: Fair Labor Standards Act, FLSA, Joint Employer, Joint Employment, Minimum Wage, Overtime, salaried, Worker Classification	| Permalink
Government Contractors Get More Time To Comment On Burdens Of OFCCP Proposed Compensation Transparency Disclosure Regs
The U.S. Department of Labor's Office of Federal Contract Compliance Programs is giving employers that are government contractors and the subcontractors working with them more time to comment on for its proposed rule (Proposed Rule) requiring federal contractors and subcontractors to submit an annual Equal Pay Report on employee compensation to the OFCCP. The Proposed Rule is one of several proposed or adopted rules that the Obama Administration hopes will make it easier for federal regulators like OFCCP and private plaintiffs to identify potential violations of federal discrimination rules and enforce their rights under these and other rules.
Like many OFCCP rules promulgated by the Obama Administration in the post-Stimulus Bill era, the Proposed Rule both reaches many contractors that historically might not have been subject to these types of OFCCP reporting requirements and broadens the reporting obligations of government contractors under the OFCCP regulations. The Proposed Rule would apply to companies that file EEO-1 reports, with more than 100 employees, and hold federal contracts or subcontracts worth $50,000 or more for at least 30 days. Through the Equal Pay Report, OFCCP would be able to collect summary employee pay and demographic data using existing government reporting frameworks.
The Proposed Rule seeks to formally implement the directives of the presidential memorandum President Obama signed April 8 instructing the Labor Secretary to propose a rule to collect summary compensation data from federal contractors and subcontractors. The Labor Department originally published a notice of proposed rulemaking in the Federal Register on Aug. 8, with a deadline to submit comments by November. 6. Under an announcement published last week, OFCCP is extending the comment period until Monday, January 5, 2015.
The Proposed Rule is one of several rule changes proposed or adopted by OFCCP and other agencies under the Obama Administration that seek to expand federal oversight and enforcement of federal employment discrimination requirements. In addition to the Proposed Rule, for instance, the OFCCP on September 17, 2014 also recently proposed Proposed Transparency Rule that would prohibit federal contractors from maintaining pay secrecy policies. The Proposed Transparency Rule would prohibit federal contractors and subcontractors from firing or otherwise discriminating against any employee or applicant for discussing, disclosing or inquiring about their compensation or that of another employee or applicant and also will face other new obligations.
Like a similar rule put forth by the National Labor Relations Board, the Proposed Transparency Rule scheduled for publication in the Federal Register on September 17, 2014 would:
Amend the equal opportunity clauses in Executive Order 11246 to afford protections to workers who talk about pay to include the nondiscrimination provision in Executive Order 13665.
Add definitions for compensation, compensation information, and essential job functions, terms which appear in the revised clauses.
Provide that contractors could use against allegations of discrimination under Executive Order 13665 one of the following two defenses as long as that defense is not based on a rule, policy, practice, agreement or other instrument that prohibits employees or applicants from discussing or disclosing their compensation or that of other employees consistent with the provisions in the equal opportunity:
That the action was based on a legitimate workplace rule that does not violate the transparency rule; or
That the adverse action was against an employee, who the employer entrusted with confidential compensation information of other employees or applicants as part of his or her essential job functions, for disclosing the compensation of other employees or applicants, unless the disclosure occurs in certain limited circumstances; and
the Proposed Rule's compensation transparency requirement; or
Add a requirement that Federal contractors to tell employees and job applicants of the nondiscrimination protection created by Executive Order 13665 using specific language dictated by the OFCCP in handbooks and manuals, and through electronic or physical postings.
In addition, OFCCP also is considering requiring government contractors that provide manager training or meetings to include nondiscrimination based on pay in their existing manager training programs or meetings while encouraging other contractors to adopt this as a best practice for minimizing the likelihood of workplace discrimination.
The deadline for comment on that Proposed Transparency Rule is in December.
Government contractors or other businesses concerned about the potential burdens of compliance with either of these proposed rules should act promptly to review and submit comments within the comment period.
For Help With Investigations, Policy Updates Or Other Needs
If you need help in conducting a risk assessment of or responding to an IRS, DOL, Justice Department, or other federal or state agencies or other private plaintiff or other legal challenges to your organization's existing workforce classification or other labor and employment, compliance, employee benefit or compensation practices, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469) 767-8872 .
Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 23 years of work helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit and management policies and practices. The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance related matters. She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.
Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:
IRS Announces Employee Plan Cost-Of-Living Adjustments
Encourage Workers To Review Withholding As Part Of Annual Enrollment
OFCCP FAQs On Veteran Hiring & Telework Rules
11/5 Deadline For Many Health Plans To Get Health Plan ID From CMS
New EEOC Lawsuit Challenges Orion Energy Systems Employee Benefit Program Under ADA
Shell Oil/Motiva Enterprises $4.5M FLSA Overtime Backpay Settlement Reminder To Pay Workers Properly
OFCCP Proposes Compensation Transparency Mandates For Government Contractors
Labor Department Adds State Unemployment Insurance To War Against Worker Misclassification
EBSA Invites Input By November 19 On Need for More Regulation Of Investment Windows
Some Group Health Plans Face 8/18 Deadline To Correct Form 8963 Under Notice 2014-47 Risk Adjustment Fee Guidance
HHS Warns Insurers, TPAS Complete ACA Reinsurance & Risk Adjustment Edge Server Pre-Registration Steps By 9/27
House Hearings Consider Authorizing House Lawsuit Challenging Consitutionality of Obama's Health Care Reform Actions
Review & Update HR & Benefit Practices For DOL Proposed Change In FMLA Regs, Other Rules Treating Some Same-Sex Couples As Spouses
Employee & Other Whistleblower Complaints Common Source of HIPAA Privacy & Other Complaints
Consider Fiduciary & Other Risk Management When Planning For ACA Transitional Reinsurance Costs, Other Plan Design Changes
HHS Claims Average $69/Month Cost for Subsidized Coverage Shows ACA Success Challenged
HIPAA Compliance & Breach Data Shares Helpful Lessons For Health Plans, Providers and Business Associates
Review & Update Health Plan Notices, Language & Process For New Guidance On COBRA, Other Key Health Plan Rules
EEOC Suit Against Pipe Fitting Business Shows Disability Discrimination Risks For Employers Hiring Vets With PTSD
PBGC Publishes Multiemployer Plans Valuation and Notice Requirements Final Rule
Post-Windsor Same-Sex Participant Guidance May Require Mid-Year Plan Amendments
Arkansas Judge Finds Arkansas Same-Sex Marriage Bans Unconstitutional; State Asks For Stay Pending Appeal
If you or someone you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information about this communication click here.
©2014 Cynthia Marcotte Stamer, P.C. Non-exclusive license to republish granted to Solutions Law Press, Inc.™ All other rights reserved.
Comments Off on Government Contractors Get More Time To Comment On Burdens Of OFCCP Proposed Compensation Transparency Disclosure Regs	| ADA, Affirmative Action, compensation transparency, Corporate Compliance, EEOC, Employers, Executive Compensation, Government Contractors, Human Resources, Internal Controls, Internal Investigations, Military Leave, Nonresident aliens, OFCCP, Rehabilitation Act, Retaliation, Risk Management, USERRA, VEVRRA, Wage & Hour	| Tagged: Backpay, Employer, Employment, employment law, Fair Labor Standards Act, FLSA, FSLA, Independent Contractor, IT, Labor Department, Minimum Wage, Misclassification, Overtime, Technology, Wage & Hour, wage and hour, Worker Classification	| Permalink
Still Time to Act to Avoid Surprises at Tax-Time
With the year end approaching, employers can help employees get more bank from their paycheck by encouraging the employees to review their withholding before the year end as part of their annual enrollment periods. The Internal Revenue Service (IRS) is recommends tax payers consider taking some of the following steps to avoid owing more taxes or getting a larger refund than necessary to bring the taxes you pay in advance closer to what you'll owe when you file your tax return:
Adjust your withholding. If you're an employee and you think that your tax withholding will fall short of your total 2014 tax liability, you may be able to avoid an unexpected tax bill by increasing your withholding. If you are having too much tax withheld, you may get a larger refund than you expect. In either case, you can complete a new Form W-4, Employee's Withholding Allowance Certificate and give it to your employer. Enter the added amount you want withheld from each paycheck until the end of the year on Line 6 of the W-4 form. You usually can have less tax withheld by increasing your withholding allowances on line 5. Use the IRS Withholding Calculator tool on IRS.gov to help you fill out the form.
Report changes in circumstances. If you purchase health insurance coverage through the Health Insurance Marketplace, you may receive advance payments of the premium tax credit in 2014. It is important that you report changes in circumstances to your Marketplace so you get the proper type and amount of premium assistance. Some of the changes that you should report include changes in your income, employment, or family size. Advance credit payments help you pay for the insurance you buy through the Marketplace. Reporting changes will help you avoid getting too much or too little premium assistance in advance.
Change taxes with life events. You may need to change the taxes you pay when certain life events take place. A change in your marital status or the birth of a child can change the amount of taxes you owe. When they happen you can submit a new Form W–4 at work or change your estimated tax payment.
Be accurate on your W-4. When you start a new job you fill out a Form W-4. It's important for you to accurately complete the form. For example, special rules apply if you work two jobs or you claim tax credits on your tax return. Your employer will use the form to figure the amount of federal income tax to withhold from your pay.
Pay estimated tax if required. If you get income that's not subject to withholding you may need to pay estimated tax. This may include income such as self-employment, interest, or rent. If you expect to owe a thousand dollars or more in tax, and meet other conditions, you may need to pay this tax. You normally pay the tax four times a year. Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay the tax.
Annual enrollment is an excellent time for employees to consider these actions, as their employee benefit elections impact on their withholding and other related tax consequences. Sharing these ideas as part of the enrollment communications can help employees get the most out of their wages and their elections.
If you need help with your organization's management,workforce classification or other labor and employment, compliance, employee benefit or compensation practices, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469) 767-8872 .
House Hearings Consider Authorizing House Lawsuit Challenging Constitutionality of Obama's Health Care Reform Actions
Comments Off on Encourage Workers To Review Withholding As Part Of Annual Enrollment	| compensation transparency, Corporate Compliance, Employers, Employment Agreement, Executive Compensation, Government Contractors, Human Resources, Internal Controls, Internal Investigations, Risk Management, Wage & Hour	| Tagged: Backpay, CAS minimum-wage, Employer, Employment, employment law, Fair Labor Standards Act, FLSA, FSLA, government contractor, Independent Contractor, IT, Labor Department, Misclassification, OFCCP, Overtime, Technology, Wage & Hour, wage and hour, Worker Classification	| Permalink
Facing heightened requirements, audits and scrutiny of their compliance with federal contracting requirements under the Obama Administration, federal government contractors and their subcontractors should review the adequacy of their existing practices and documentation in light of two new Office of Federal Contract Compliance Programs (OFCCP) Frequently Asked Questions (FAQs) concerning veteran hiring requirements and telework positions published October 17, 2014, as well as other recent guidance and enforcement developments.
The October 17 FAQs include :
A FAQ located here on ways in which contractors may store self-identification information in compliance with the revised Section 503 regulations, and provides several options; and
A FAQ located here about how contractors may list jobs that are remote, full-time telework positions in compliance with VEVRAA's mandatory job listing requirement.
Audit and enforcement of discrimination and a host of other government contractor requirements is a key enforcement and audit priority of the Obama Administration. Additionally, the Obama Administration has expanded and tightened a wide range of OFCCP and other government contracting standards, reporting, notice and other requirements as part of its efforts to promote affirmative action, prounion and other regulatory agendas, particularly in light of challenges experienced in enacting legislation implementing these policy goals given the divided control of the House versus Senate in Congress.
Comments Off on OFCCP FAQs On Veteran Hiring & Telework Rules	| compensation transparency, Corporate Compliance, Employers, Employment Agreement, Executive Compensation, Government Contractors, Human Resources, Internal Controls, Internal Investigations, Risk Management, Wage & Hour	| Tagged: Backpay, CAS minimum-wage, Employer, Employment, employment law, Fair Labor Standards Act, FLSA, FSLA, government contractor, Independent Contractor, IT, Labor Department, Misclassification, OFCCP, Overtime, Technology, Wage & Hour, wage and hour, Worker Classification	| Permalink
Shell Oil Co. and Motiva Enterprises LLC, which markets Shell gasoline and other products, will pay $4,470,764 in overtime back wages to 2,677 current and former chemical and refinery employees to settle Department of Labor (Labor Department) charges they violated the Fair Labor Standards Act (FLSA). The settlement with the Labor Department announced September 16, 2014 reminds businesses of the importance of properly tracking and paying workers for all compensable hours in accordance with the FLSA and other laws.
The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour. Workers who are not employed in agriculture and not otherwise exempt from overtime compensation are entitled to time and one-half their regular rates of pay for every hour they work beyond 40 per week. The law also requires employers to maintain accurate records of employees' wages, hours and other conditions of employment, and it prohibits employers from retaliating against employees who exercise their rights under the law.
The settlement resolves charges made by the Labor Department's Wage and Hour Division based on investigations at eight Shell and Motiva facilities in Alabama, California, Louisiana, Texas and Washington, which the Labor Department says found that the companies violated FLSA overtime provisions by not paying workers for the time spent at mandatory pre-shift meetings and failing to record the time spent at these meetings.
The Labor Department also says the investigations also revealed that those eight Shell Oil and Motiva refineries failed to pay workers for time spent attending mandatory pre-shift meetings. The companies required the workers to come to the meetings before the start of their 12-hour shift. Because the companies failed to consider time spent at mandatory pre-shift meetings as compensable, employees were not paid for all hours worked and did not receive all of the overtime pay of time and one-half their regular rate of pay for hours worked over 40 in a workweek. Additionally, the refineries did not keep accurate time records.
Shell, with U.S. headquarters in Houston, is an oil and natural gas producer involved in processing crude oil to manufacture energy products, including gasoline, diesel fuel, jet fuel and petroleum coke. Motiva, which is partially owned by Shell, is a leading refiner, distributor and marketer of fuels in the Eastern and Gulf Coast regions of the United States. It markets petroleum products under the Shell brand.
In addition to paying backpay, Shell and Motiva have signed settlement agreements that call for training of managers, payroll personnel and human resources personnel on the FLSA's requirements. The training will stress the importance of requiring accurate recording and pay for all hours worked with emphasis on pre-and post-shift activities.
The settlement reflects the importance for all employers to properly classify, track and keep records of hours and compensation, and pay workers covered by the FLSA. "Employers are legally required to pay workers for all hours worked," said U.S. Secretary of Labor Thomas E. Perez. "Whether in the international oil industry, as in this case, or a local family-run restaurant, the Labor Department is working to ensure that responsible employers do not experience a competitive disadvantage because they play by the rules."
Employers Should Strengthen Practices For Defensibility
To minimize exposure under the FLSA, employers should review and document the defensibility of their existing practices for classifying and compensating workers under existing Federal and state wage and hour laws and take other actions to minimize their potential liability under applicable wages and hour laws. Steps advisable as part of this process include, but are not necessarily limited to:
Audit of each position current classified as exempt to assess its continued sustainability and to develop documentation justifying that characterization;
Review of existing practices for tracking compensable hours and paying non-exempt employees for compliance with applicable regulations and to identify opportunities to minimize costs and liabilities arising out of the regulatory mandates;
Exploration of available options and alternatives for calculating required wage payments to non-exempt employees; and
Re-engineering of work rules and other practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures.
Because of the potentially significant liability exposure, employers generally will want to consult with qualified legal counsel before starting their risk assessment and assess risks and claims within the scope of attorney-client privilege to help protect the ability to claim attorney-client privilege or other evidentiary protections to help shelter conversations or certain other sensitive risk activities from discovery under the rules of evidence.
Employer Faces $2M FLSA Lawsuit For Alleged Worker Misclassification
OIG 2013 Top Management Challenges List Signals Tightening of Labor Department Enforcement
DOL Sues PBI Bank For Alleged Fiduciary Breach In Sale of ESOP Stock
Agencies Proposes To Treat Certain EAP, Dental and Vision Only Plans As ACA & HIPAA Excepted Benefits
1/1/14 Exchange Enrollment Deadline Extended As Enrollment Still Lags
Businesses Performing Income, Payroll Tax Duties For Employers Confirm Compliance With Updated IRS Procedures
IRS Provides Closed DB Plan Relief, Qualified Plan Changes List & In-Plan Roth Rollovers Guidance
Report Documents Disappointing Lag In American Use of ACA Health Insurance Exchanges Despite Administration's Positive Spin Efforts
IRS To Tax Health Insurers On Assessments To Cover ACA Section 9010 Annual Fee
2014 Standard Mileage Rates Announced
US Labor Department Seeks $300K+ Whistleblower Recovery Against Employer For Firing Worker
Careful Selection & Contracting With Vendors Critical Part of Health Plan Renewals
New Employee Smart Phone App New Tool In Labor Department's Aggressive Wage & Hour Law Enforcement Campaign Against Restaurant & Other Employers
12 Steps Every Employer With A Health Plan Should Do Now No Matter Who Wins the Election
Texas Landscaper's $106,000 In Minimum Wage & Overtime Settlement Reminds Employers To Prepare For FLSA Enforcement
NLRB's Nailing of Bel Air Hotel Reminder RIFs, Other Reengineering & Transactions Impacting Workforce Requirement Proper Risk Management
Tighten Disability Discrimination Defenses As National Disability Employment Awareness Month Promises To Whip Up New Claims & Awareness
Settlement of OFCCP Employment Discrimination Charge Reminder To ARRA, Other Government Contractors Of Heightened Enforcement Risks
$1.25M NLRB Backpay Order Highlights Risks of Mismanaging Union Risks In Health Care & Others M&A Deals
As EEOC Steps Up ADA Accommodation Enforcement, New DOD Apple App, Other Resources Released
$1.5 M HIPAA Security Breach Resolution Agreement Shows Looming HIPAA Risks
Labor Risks Rising For Employers Despite NLRB Loss Of Arizona Secret Ballot Challenge
USI Advisors Will Pay $1.27 Million To Settle Charges It Violated ERISA Fee Disclosure Requirements
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information about this communication click here.
Comments Off on Shell Oil/Motiva Enterprises $4.5M FLSA Overtime Backpay Settlement Reminder To Pay Workers Properly	| Corporate Compliance, Employers, Human Resources, Internal Controls, Internal Investigations, Risk Management, Wage & Hour	| Tagged: Backpay, Employer, Employment, employment law, Fair Labor Standards Act, FLSA, FSLA, Independent Contractor, IT, Labor Department, Minimum Wage, Misclassification, Overtime, Technology, Wage & Hour, wage and hour, Worker Classification	| Permalink
Government contractors should brace for more employee scrutiny, employee organizing and other employee and government pressure on compensation practices if the U.S. Department of Labor's Office of Federal Contract Compliance Programs proceeds with plans to adopt a Proposed Rule on compensation transparency that would prohibit federal contractors from maintaining pay secrecy policies announced by the Obama Administration yesterday (September 15, 2014). Under the terms of the Proposed Rule, federal contractors and subcontractors may not fire or otherwise discriminate against any employee or applicant for discussing, disclosing or inquiring about their compensation or that of another employee or applicant and also will face other new obligations. Government contractors concerned about the potential burdens of compliance with the Proposed Rule should act promptly to review and submit comments on the Proposed Rule within 90 days of its official publication in the Federal Register tomorrow (September 17, 2014).
The Proposed Rule scheduled for publication in the Federal Register on September 17, 2014 would:
Labor Department Adds State Unemployment Insurance To War Against Worker Misclassification EBSA Invites Input By November 19 On Need for More Regulation Of Investment Windows
Comments Off on OFCCP Proposes Compensation Transparency Mandates For Government Contractors	| compensation transparency, Corporate Compliance, Employers, Employment Agreement, Executive Compensation, Government Contractors, Human Resources, Internal Controls, Internal Investigations, Risk Management, Wage & Hour	| Tagged: Backpay, Employer, Employment, employment law, Fair Labor Standards Act, FLSA, FSLA, Independent Contractor, IT, Labor Department, Minimum Wage, Misclassification, Overtime, Technology, Wage & Hour, wage and hour, Worker Classification	| Permalink
The already significant enforcement risks of employers caught misclassifying workers as independent contractors, leased employees or in some other non-employee status are set to rise more as a result of more than $10 million in grants to 19 states announced today (September 15, 2014) by the U.S. Department of Labor (Labor Department). The grants add a new wrinkle to the ever-expanding campaign waged against employers that fail to fulfill legal responsibilities with respect to employees as a result of the misclassification of workers that the Labor Department and other federal and state agencies.
Grants To Help States Employers That Underpay Unemployment Insurance Taxes Due To Misclassification
In the latest wrinkle in its ever-expanding war against employers that avoid providing rights, paying taxes or fulfilling other employer responsibilities toward certain workers misclassified by the employer as independent contractor or in other non-employee statuses, the Labor Department awarded $10,225,183 to 19 states to implement or improve worker misclassification detection and enforcement initiatives in unemployment insurance (UI) programs. For a chart showing the grant recipients and amounts announced today, see here.
"This is one of many actions the department is taking to help level the playing field for employers while workers receive appropriate rights and protections," said U.S. Secretary of Labor Thomas E. Perez. "Today's federal grant awards will enhance states' ability to detect incidents of worker misclassification and protect the integrity of state unemployment insurance trust funds."
According to the Labor Department's announcement of the grants, states will use the funds to increase the ability of state UI tax programs to identify instances where employers improperly classify employees as independent contractors or fail to report the wages paid to workers at all. The states that were selected to receive these grants will use the funds for a variety of improvements and initiatives, including enhancing employer audit programs and conducting employer education initiatives.
While several states have existing programs designed to reduce worker misclassification, this is the first year that the Labor Department has awarded grants dedicated to this effort. The Consolidated Appropriations Act of 2014 authorized this grant funding for "activities to address the misclassification of workers.
Under an innovative, "high-performance bonus" program, four states will receive a share of $2 million in additional grant funds due to their high performance or most improved performance in detecting incidents of worker misclassification. The remaining $8,225,183 was distributed to 19 states in competitive grants. The maximum grant available under the competitive grant award process was $500,000.
Broader War Against Employee Misclassification By Employers
The grants to help states detect and prosecute employer that underpay unemployment insurance contributions is part of a broader and growing campaign against employers that fail to fulfill employment, immigration, tax or other laws by misclassifying workers who by law properly should be treated as common law employees but that the employer treats as working as independent contractors, leased employees or in other non-employed capacities.
Under the Obama Administration, Labor Department, Immigration, tax and other agencies increasingly are successfully identifying and prosecuting businesses for violating the law by misclassification of certain workers as not employed by the business who under the facts and circumstances the agencies view as common law employees of the business. See.g., Boston Furs Sued For $1M For Violations Of Fair Labor Standards Act; Record $2.3 Million+ Backpay Order; Minimum Wage, Overtime Risks Highlighted By Labor Department Strike Force Targeting Residential Care & Group Homes; Review & Strengthen Defensibility of Existing Worker Classification Practices In Light of Rising Congressional & Regulatory Scrutiny; 250 New Investigators, Renewed DOL Enforcement Emphasis Signal Rising Wage & Hour Risks For Employers; Quest Diagnostics, Inc. To Pay $688,000 In Overtime Backpay; Employer Faces $2M FLSA Lawsuit For Alleged Worker Misclassification; OIG 2013 Top Management Challenges List Signals Tightening of Labor Department Enforcement; New Employee Smart Phone App New Tool In Labor Department's Aggressive Wage & Hour Law Enforcement Campaign Against Restaurant & Other Employers; 12 Steps Every Employer With A Health Plan Should Do Now No Matter Who Wins the Election.
The rollout of new health benefit mandates as part of the sweeping reforms enacted under the Patient Protection and Affordable Care Act (ACA) is further expanding the liability of misclassification and the risk of enforcement against employers.
Among other things, the employer mandates of ACA soon will require certain large employers either to provide health coverage meeting the requirements of ACA or pay the "employer penalty" established under Internal Revenue Code Section 4980H. While the rule now is delayed until 2015 for employers with more than 100 or more full-time and full-time equivalent employees and 2016 for employers of 50 or more full-time and full-time equivalent employees, ACA generally relies on the common law employment tests used under the FLSA and other federal and state laws determine which employers are considered large employers. It also requires employers provide other rights to workers who are considered common law employees under these rules.
Comments Off on Labor Department Adds State Unemployment Insurance To War Against Worker Misclassification	| Corporate Compliance, Employers, Human Resources, Internal Controls, Internal Investigations, Risk Management, Wage & Hour	| Tagged: Backpay, Employer, Employment, employment law, Fair Labor Standards Act, FLSA, FSLA, Independent Contractor, IT, Labor Department, Minimum Wage, Misclassification, Overtime, Technology, Wage & Hour, wage and hour, Worker Classification	| Permalink
Health Care Reform Adds Fuel To Enforcement Fire
Employers must ensure they can defend their treatment of workers as as independent contractors or otherwise exempt from wage and hour and overtime requirements and take other steps to manage wage and hour risks that can arise under the Fair Labor Standards Act (FLSA) and other laws to when caught misclassifying workers. That's the clear message the U.S. Department of Labor (Labor Department) is sending to employers by filing lawsuits against employers like the one it recently announced against Wang's Partner Inc., doing business as Hibachi Grill and Supreme Buffet in Jonesboro, and its owner, Shu Wang, to recover $1,997,726 in back wages and liquidated damages for 84 employees.
The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. The requirements generally apply to any workers that the employer who receives its services cannot prove is not its common law employee or an exempt employee within the meaning of the FLSA. In general, "hours worked" includes all time an employee must be on duty, or on the employer's premises or at any other prescribed place of work, from the beginning of the first principal work activity to the end of the last principal activity of the workday. Additionally, the law requires that accurate records of employees' wages, hours and other conditions of employment be maintained. These requirements generally apply for all workers who the facts and circumstances reflect are common law employees and otherwise do not qualify as exempt employees under the FLSA. Violations of these requirements can result significant backpay and other damage awards to private plaintiffs, backpay and penalties assessments or settlements from Labor Department suits, and, if the violation is found willful, criminal liability.
Wang's Partner Inc. Suit
The lawsuit against Want's Partner Inc. shows employers the importance of avoiding improperly classifying workers as independent contractors for purposes of the FLSA. Employers that inappropriately classify workers as independent contractors often fail to maintain appropriate time and other records, pay minimum wage and overtime and violate other FLSA requirements. In general, a business receiving services of a worker generally bears the burden of providing that the worker is not its common law employee under the applicable facts and circumstances test applicable under the FLSA.
As in many other enforcement areas, the Labor Department Wage and Hour Division in recent years has stepped up its scrutiny of employer relationships with workers treated as independent contractors. The Labor Department and many other agencies increasingly view the misclassification of workers as something other than employees, such as independent contractors, as a serious problem for affected employees, employers and to the entire economy. According to the Labor Department, misclassified employees are often denied access to critical benefits and protections, such as family and medical leave, overtime, minimum wage and unemployment insurance and other rights. The Labor Department also says employee misclassification also generates substantial losses to state and federal treasuries, and to the Social Security and Medicare funds, as well as to state unemployment insurance and workers compensation funds. To address these and other concerns, the Labor Department has joined other agencies like the Internal Revenue Service increasingly is challenging employers' treatment of workers as exempt from FLSA and other legal obligations as independent contractors or otherwise.
The lawsuit in the Northern District of Georgia against Wang's Partner, Inc. illustrates this trend. One of the growing number of lawsuits and other enforcement actions resulting from this trend, the suit shows the significant exposures that an employer risks by misclassifying workers as independent contractors or otherwise exempt from the FLSA. The Labor Department says an investigation revealed that Wang's Partner Inc. misclassified workers as independent contractors and engaged in numerous violations of the FLSA. The Labor Department seeks $1,997,726 in back wages and liquidated damages for 84 employees.
The Labor Department says investigators from the division's Atlanta district office found that the employer misclassified servers as independent contractors, failed to pay servers and kitchen staff at least the federal minimum wage of $7.25 per hour and failed to pay overtime compensation at time and one-half employees' regular rates for hours worked beyond 40 in a work week. Additionally, the employer did not maintain accurate records of hours worked and wages paid.
In announcing the Wang's Partner Inc. lawsuit, the Labor Department warned employers against similar misclassification of workers. "The U.S. Department of Labor is committed to ensuring that all workers receive the wages to which they are legally entitled," said Secretary of Labor Thomas E. Perez. "We will not stand by while employers use business models that hurt workers, their families and law-abiding employers. This lawsuit illustrates that the department will use every enforcement tool necessary to resolve cases where employees are unlawfully treated as independent contractors, and vulnerable workers are not paid the minimum wage."
FLSA Violations Generally Costly; Enforcement Rising
The Labor Department's prosecutions against employers arising from misclassification of workers document the Labor Department is acting in accordance with this warning. In recent years, misclassification of workers increasingly has become an element in its FLSA and other enforcement actions. According to the Labor Department, misclassified employees are often denied access to critical benefits and protections, such as family and medical leave, overtime, minimum wage and unemployment insurance and other rights. The Labor Department also says employee misclassification also generates substantial losses to state and federal treasuries, and to the Social Security and Medicare funds, as well as to state unemployment insurance and workers compensation funds. To address these and other concerns, the Labor Department has joined other agencies like the Internal Revenue Service increasingly is challenging employers' treatment of workers as exempt from FLSA and other legal obligations as independent contractors or otherwise.Whether due to mischaracterization of workers as independent contractors or as common law employees that qualify as exempt under the FLSA rules, the Labor Department increasingly is acting on its promise to go after employers that violate the FLSA based on worker misclassifications.
In 2012, for instance, First Republic Bank paid $1,009,643.93 in overtime back wages for 392 First Republic Bank employees in California, Connecticut, Massachusetts, New York and Oregon after the Labor Department found the San Francisco-based bank wrongly classified the employees as exempt from the FLSA's overtime and recordkeeping requirements, resulting in violations of the Fair Labor Standards Act's overtime and record-keeping provisions. The Labor Department announced the settlement resulting in the payment on November 27, 2012.
The settlement came after an investigation by the Labor Department's Wage and Hour Division found that the San Francisco-based bank wrongly classified the employees as exempt from overtime, resulting in violations of the FLSA's overtime and record-keeping provisions.
In announcing the settlement with First Republic Bank, the Labor Department warned employers to confirm the appropriateness of their classification of workers. "It is essential that employers take the time to carefully assess the FLSA classification of their workforce," said Secretary of Labor Hilda L. Solis in the Labor Department's announcement of the settlement. "As this investigation demonstrates, improper classification results in improper wages and causes workers real economic harm."
The Wang's Partner Inc and First Republic Bank enforcement actions are not unique. The Labor Department and private plaintiffs alike regularly target employers that use aggressive worker classification or other pay practices to avoid paying minimum wage or overtime to workers. Under the Obama Administration, DOL officials have made it a priority to enforce overtime, record keeping, worker classification and other wage and hour law requirements. See e.g., Boston Furs Sued For $1M For Violations Of Fair Labor Standards Act; Record $2.3 Million+ Backpay Order; Minimum Wage, Overtime Risks Highlighted By Labor Department Strike Force Targeting Residential Care & Group Homes; Review & Strengthen Defensibility of Existing Worker Classification Practices In Light of Rising Congressional & Regulatory Scrutiny; 250 New Investigators, Renewed DOL Enforcement Emphasis Signal Rising Wage & Hour Risks For Employers; Quest Diagnostics, Inc. To Pay $688,000 In Overtime Backpay.
In an effort to further promote compliance and enforcement of these rules, the Labor Department is using smart phone applications, social media and a host of other new tools to educate and recruit workers in its effort to find and prosecute violators. See, e.g. New Employee Smart Phone App New Tool In Labor Department's Aggressive Wage & Hour Law Enforcement Campaign Against Restaurant & Other Employers. As a result of these effort, employers violating the FLSA now face heightened risk of enforcement from both the Labor Department and private litigation.
Health Care Reform Adds Risks, Fuels More Enforcement
Among other things, the employer mandates of ACA, now delayed until 2015, generally will require employers of 50 or more full-time employees either to provide health coverage meeting the requirements of ACA or pay the "employer penalty" established under Internal Revenue Code Section 4980H. While the rule now is delayed until 2015, the employment data for 2014 will be used to determine what employees that an employer must take into account for purposes of this rule. ACA generally relies on the common law employment tests used under the FLSA to make this determination. It also requires employers provide other rights to workers who are considered common law employees under these rules.
Comments Off on Employer Faces $2M FLSA Lawsuit For Alleged Worker Misclassification	| Corporate Compliance, Employers, Human Resources, Internal Controls, Internal Investigations, Risk Management, Wage & Hour	| Tagged: Backpay, Employer, Employment, employment law, Fair Labor Standards Act, FLSA, FSLA, Independent Contractor, IT, Labor Department, Minimum Wage, Misclassification, Overtime, Technology, Wage & Hour, wage and hour, Worker Classification	| Permalink
New Final FLSA Rule Gives Home Workers Minimum Wage, Overtime, Other FLSA Protections
Health care and other parties employing or otherwise engaging the services of home care workers should review and update their policies and practices for scheduling, tracking hours worked and paying these workers to ensure that they comply by January 1, 2015 with a new final rule announced by the U.S. Department of Labor's Wage and Hour Division today (September 18, 2013). Today's announcement of the regulatory changes means employers of home care workers can expect to see costs rise and also will join most other U.S. businesses that must worry about getting caught in minimum wage and overtime enforcement traps.
New Home Care Worker Rules Effective January 2015
Under the new final rule, the Labor Department extends the Fair Labor Standards Act's minimum wage and overtime protections to most of the nation's direct care workers who provide essential home care assistance to elderly people and people with illnesses, injuries, or disabilities beginning January 1, 2015.
The new final rule generally will require that the approximately two million home care workers such as home health aides, personal care aides, and certified nursing assistants will qualify for minimum wage and overtime. Employers engaging these services also generally will need to keep records and comply with other FLSA requirements with respect to these workers as well.
In anticipation of the rollout of these new protections, the Labor Department is kicking off a public outreach campaign to educate home care workers and their employers about the rule change. The Department will be hosting five public webinars during the month of October and has created a new, dedicated web portal here with fact sheets, FAQs, interactive web tools, and other materials.
The Labor Department's focus on home workers is an extension of its expanded regulation and enforcement efforts targeting a broad range of health care industry employers. Home care and other health industry employers should act to manage their rising exposures to minimum wage, overtime and other federal and state wage and hour law risks.
The impending change in the treatment of home care workers is part of a larger commitment by the Obama Administration to both expansion and enforcement of the FLSA's minimum wage and overtime provisions, and a specific program targeting employers in health care and related services industries.
The Obama Administration since taking office has conducted an aggressive campaign seeking to significantly increase the minimum wage under the FLSA and expand other protections. Along with this proactive regulatory agenda, the Obama Administration also specifically is aggressively targeting health care and other caregiver businesses in its enforcement and audit activities. See, e.g. Home health care company in Dallas agrees to pay 80 nurses more than $92,000 in back wages following US Labor Department investigation; US Department of Labor secures nearly $62,000 in back overtime wages for 21 health care employees in Pine Bluff, Ark.; US Department of Labor initiative targeted toward increasing FLSA compliance in New York's health care industry; US Department of Labor initiative targeted toward residential health care industry in Connecticut and Rhode Island to increase FLSA compliance; Partners HealthCare Systems agrees to pay 700 employees more than $2.7 million in overtime back wages to resolve U.S. Labor Department lawsuit; US Labor Dnda epartment sues Kentucky home health care provider to obtain more than $512,000 in back wages and damages for 22 employees; and Buffalo, Minn.-based home health care provider agrees to pay more than $150,000 in back wages following US Labor Department investigation.
Violation of wage and hour laws exposes health care and other employers to significant back pay awards, substantial civil penalties and, if the violation is found to be willful, even potential criminal liability. Because states all have their own wage and hour laws, employers may face liability under either or both laws. Coupled with these and other enforcement efforts against health and other caregiver businesses, today's announcement reflects enforcement risks will continue to rise for employers of home care workers.
In light of the proposed regulatory changes and demonstrated willingness of the Labor Department and private plaintiffs to bring actions against employers violating these rules, health care and others employing home care workers should take well-documented steps to manage their risks. These employers should both confirm the adequacy of their practices under existing rules, as well as evaluate and begin preparing to respond to the proposed modifications to these rules. In both cases, employers of home care or other health care workers are encouraged to critically evaluate their classification or workers, both with respect to their status as employees versus contractor or leased employees, as well as their characterization as exempt versus non-exempt for wage and hour law purposes. In addition, given the nature of the scheduled frequently worked by home care givers, their employers also generally should pay particular attention to the adequacy of practices for recordkeeping.
Of course, the home care and health care industry are not the only industries that need to worry about FLSA enforcement. The Obama Administration is very aggressive in its enforcement of wage and hour and overtime laws generally. For instance, First Republic Bank recently paid $1,009,643.93 in overtime back wages for 392 First Republic Bank employees in California, Connecticut, Massachusetts, New York and Oregon after the Labor Department found the San Francisco-based bank wrongly classified the employees as exempt from the FLSA's overtime and recordkeeping requirements, resulting in violations of the Fair Labor Standards Act's overtime and record-keeping provisions. The Labor Department announced the settlement resulting in the payment on November 27, 2012. The settlement resulted from an investigation by the Labor Department that found the San Francisco-based bank wrongly classified the employees as exempt from overtime, resulting in violations of the FLSA's overtime and record-keeping provisions.
The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also are required to maintain accurate time and payroll records.
While the FLSA provides an exemption from both minimum wage and overtime pay requirements for individuals employed in bona fide executive, administrative, professional and outside sales positions, as well as certain computer employees, job titles do not determine the applicability of this or other FLSA exemptions. In order for an exemption to apply, an employee's specific job duties and salary must meet all the requirements of the department's regulations. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week.
Investigators found that First Republic Bank failed to consider the FLSA's criteria that allow certain administrative and professional employees to be exempt from receiving overtime pay. In fact, the employees were entitled to overtime compensation at one and one-half times their regular rates for hours worked over 40 in a week. Additionally, the bank failed to include bonus payments in nonexempt employees' regular rates of pay when computing overtime compensation, in violation of the act. Record-keeping violations resulted from the employer's failure to record the number of hours worked by the misclassified employees.
"It is essential that employers take the time to carefully assess the FLSA classification of their workforce," said Secretary of Labor Hilda L. Solis in the Labor Department's announcement of the settlement. "As this investigation demonstrates, improper classification results in improper wages and causes workers real economic harm."
The enforcement record of the Labor Department confirms that employers that improperly treat workers as exempt from the FLSA's overtime, minimum wage and recordkeeping requriements run a big risk. The Labor Deprtment and private plaintiffs alike regularly target employers that use aggressive worker classification or other pay practices to avoid paying minimum wage or overtime to workers. Under the Obama Administration, DOL officials have made it a priority to enforce overtime, record keeping, worker classification and other wage and hour law requirements. See e.g., Boston Furs Sued For $1M For Violations Of Fair Labor Standards Act; Record $2.3 Million+ Backpay Order; Minimum Wage, Overtime Risks Highlighted By Labor Department Strike Force Targeting Residential Care & Group Homes; Review & Strengthen Defensibility of Existing Worker Classification Practices In Light of Rising Congressional & Regulatory Scrutiny; 250 New Investigators, Renewed DOL Enforcement Emphasis Signal Rising Wage & Hour Risks For Employers; Quest Diagnostics, Inc. To Pay $688,000 In Overtime Backpay. In an effort to further promote compliance and enforcement of these rules, the Labor Department is using smart phone applications, social media and a host of other new tools to educate and recruit workers in its effort to find and prosecute violators. See, e.g. New Employee Smart Phone App New Tool In Labor Department's Aggressive Wage & Hour Law Enforcement Campaign Against Restaurant & Other Employers. As a result of these effort, employers violating the FLSA now face heightened risk of enforcement from both the Labor Department and private litigation.
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Use New Government Health Care Reform Resources With Care
While large employers are getting an additional year to collect data and make other preparations to comply with the "pay-or-play" rules in the shared responsibility provisions of new Internal Revenue Code Section 4980H under the extension announced by the Administration in early July, all employers still have much to do stay on top of the developing rules and make the arrangements necessary to prepare to comply with the current and 2014 federal health plan mandates of the Patient Protection & Affordable Care Act (ACA) and other federal laws.
As the Departments of Health & Human Services, Labor and Treasury continue to refine and roll out guidance implementing these rules, the agencies recently released various updated resources discussing these evolving rules. Among others, Publication 5093, Healthcare Law Online Resources, lists ACA resources from the IRS, the Departments of Health & Human Services and Labor, and the Small Business Administration. Meanwhile, IRS.gov and HealthCare.gov also have new ACA webpages.
While these updated resources are intended by the agencies to help acquaint businesses with ACA's requirements, businesses and the insurers and administrators that offer health benefit services need to keep in mind that these resources have risk and limitations. As the agencies are continuing to refine the rules, these resources often do not reflect the most current or emerging guidance or status of rules. Additionally, government provided explanations, model forms and resources often incorporate provisions or interpretations that are biased against the interests of the businesses, or contain other provisions that may not fully inform the business to all of its options. Furthermore, because of limitations in jurisdiction and other constraints, guidance issued by an agency or agency that reflects that certain approaches may satisfy the requirements of the rules specifically addressed by the guidance often do not disclose or adequately communicate potential concerns with certain types of actions under other applicable requirements.
For instance, model exchange notices published by the Department of Labor this Spring to assist employers to provide the notifications about federal exchange coverage options that ACA requires employers distribute by October 1 contain many provisions beyond the content actually required to meet the notice requirements. The Labor Department in announcing the model notices indicated that its model language includes discretionary provisions which the Department thought some employers might want to include to minimize questions from employees about employer provided benefits that employees interested in pursuing subsidized coverage could be expected to need to apply for subsidies. While as of now, exchanges and subsidies still are scheduled to come on line January 1, 2014, the Obama Administration extended the employer "pay-or-play" mandate of Code Section 4980 and its associated employer reporting requirements, as well as has established that it does not plan to verify eligibility for subsidies requested by individuals enrolling in exchanges in 2014. Given this, most employers will want to consider carefully the specific content that they wish to include in the exchange notice as they prepare the notice in anticipation of its distribution in October.Accordingly, all businesses dealing with these issues are encouraged to arrange for comprehensive advice from qualified legal counsel familiar with these requirements and other related human resources, health care, insurance and employee benefit issues.
For Help With Compliance, Risk Management, Investigations, Policy Updates Or Other Needs
If you need help with HIPAA and other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other human resources, employee benefit, or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.
Nationally recognized for her extensive work, publications and leadership on HIPAA and other privacy and data security concerns, Ms. Stamer has extensive experience representing, advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical and other privacy and data security, employment, employee benefits, and to handle other compliance and risk management policies and practices; to investigate and respond to OCR and other enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.
A Fellow in the American College of Employee Benefit Counsel, State Bar of Texas and American Bar Association, Vice President of the North Texas Health Care Compliance Professionals Association, the Former Chair of the ABA RPTE Employee Benefit & Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Council Representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer serves as the scribe for the ABA Joint Committee on Employee Benefits agency meeting with OCR. Ms. Stamer also regularly works with OCR and other agencies, publishes and speaks extensively on medical and other privacy and data security, health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her publications and insights on HIPAA and other data privacy and security concerns appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications. For instance, Ms. Stamer for the third year will serve in 2013 as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR. Her insights on HIPAA risk management and compliance often appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, SHRM, HIMMS, the American Bar Association, the Health Care Compliance Association, a multitude of health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others. You can get more information about her HIPAA and other experience here.
In addition to this extensive HIPAA specific experience, Ms. Stamer also is recognized for her experience and skill aiding clients with a diverse range of other employment, employee benefits, health and safety, public policy, and other compliance and risk management concerns.
Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a member of the Editorial Advisory Board and expert panels of HR.com, Employee Benefit News, InsuranceThoughtLeadership.com, and Solutions Law Press, Inc., management attorney and consultant Ms. Stamer has 25 years of experience helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit and management policies and practices. Ms. Stamer often has worked, extensively on these and other workforce and performance related matters. In addition to her continuous day-to-day involvement helping businesses to manage employment and employee benefit plan concerns, she also has extensive public policy and regulatory experience with these and other matters domestically and internationally. A former member of the Executive Committee of the Texas Association of Business and past Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, Ms. Stamer served as a primary advisor to the Government of Bolivia on its pension privatization law, and has been intimately involved in federal, state, and international workforce, health care, pension and social security, tax, education, immigration, education and other legislative and regulatory reform in the US and abroad. She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.
For help with these or other compliance concerns, to ask about compliance audit or training, or for legal representation on these or other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here.
"Pay Or Play" Reprieve Still Leaves Employers Facing Challenging 2014 Health Care Reform Deadlines
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Labor Department Targeting Businesses Violating Overtime, Other Wage & Hour Laws
Company President, Officer Can't Use Bankruptcy To Avoid Liability For Using Plan Money For Company Operations
Boston Hides and Furs Ltd. Sued For $1 Million For Alleged Willful FLSA Wage & Hour Law Violations
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OCR Warns Others Learn From WellPoint's $1.7 M HIPAA Settlement
WellPoint $1.7 M HIPAA Settlement Expensive Lesson On HIPAA Risks Of Leaving PHI Too Accessible In Web-Based Applications
As health plans and health care organizations increasingly jump on the Web-based application bandwagon, managed care company WellPoint Inc. (WellPoint) is learning a $1.7 million lesson about the importance of ensuring Web-based applications and portals that allow access to members or other consumers protected health information (PHI) have the administrative, technical and other security safeguards required by the Health Insurance Portability & Accountability Act (HIPAA) Privacy and Security rules.
The U.S. Department of Health and Human Services (HHS) Office of Civil Rights (OCR) announced late yesterday (July 11, 2013) that WellPoint has agreed to pay $1.7 million to settle OCR charges that WellPoint violated the HIPAA Security Rule and left the electronic protected health information (ePHI) of 612,402 individuals accessible to unauthorized individuals over the Internet by failing to implement appropriate administrative and technical safeguards in its Web-based applications. See WellPoint HIPAA Settlement Press Release.
Web-based application use is increasingly popular among health plans and their wellness programs, as well as health care providers. Employers and health plans use them both in plan administration and offer them to members to use as member tools. Health care providers use them for health care operations, as well as patient engagement and communication tools. The WellPoint settlement illustrates that managed care and other health insurers, health plans and their employer or other sponsors, health care providers, health care clearinghouses (Covered Entities) and their business associates can't let their enthusiasm for the ease of use of these products to compromise the security of PHI.
Rather, health plans and other Covered Entities, employer and other health plan sponsors, their business associates, and the Web and other technology developers, providers and consultants marketing products, services or other solutions should learn from WellPoint's hard lesson by ensuring that current and future Web-based applications, portals and other information system components that are or could be used to provide access to PHI incorporate the Security Rule safeguards both when originally implemented and with each subsequent upgrade.
HIPAA Privacy, Security & Breach Notification Rules Require PHI Safeguards & Other Protections
The Breach Notification Rule added to HIPAA under the Health Information Technology for Economic and Clinical Health, or HITECH Act requires HIPAA-covered entities to notify OCR, affected individuals and the media promptly of a breach of "unsecured protected health information" (UPHI) impacting more than 500 individuals. For smaller breaches, the Breach Notification Rule still requires prompt notice to affected individuals, but allows Covered Entities to disclose the breach to OCR as part of an annual breach report and to forego notification to the media. UPHI generally includes any PHI, whether or not ePHI that is not either secured or destroyed in the way described by the Breach Notification Rules.
In addition to the Breach Notification Rule, most Covered Entities and their business associates also are subject to state laws or regulations that impose similar or additional breach notification and other standards and responsibilities on the protection of personal health or other data including required notification and other responses following a breach of the security of UPHI or other PHI.
WellPoint's $1.7 HIPAA Security Mistake
WellPoint's $1.7 million settlement lesson resulted from an OCR investigation started in response to a breach report WellPoint submitted to comply with the Breach Notification Rules.
According to OCR, the Breach Report indicated that security weaknesses in an online application database left the electronic protected health information (ePHI) of 612,402 individuals accessible to unauthorized individuals over the Internet.
OCR says its investigation indicated that WellPoint did not implement appropriate administrative and technical safeguards as required under the HIPAA Security Rule. According to OCR, WellPoint did not:
Adequately implement policies and procedures for authorizing access to the on-line application database;
Perform an appropriate technical evaluation in response to a software upgrade to its information systems; or
Have technical safeguards in place to verify the person or entity seeking access to electronic protected health information maintained in its application database.
As a result, OCR concluded that from October 23, 2009 until March 7, 2010, WellPoint impermissibly disclosed the ePHI of 612,402 individuals by allowing access to their ePHI maintained in the application database. This data included names, dates of birth, addresses, Social Security numbers, telephone numbers and health information.
Under the resulting WellPoint HIPAA Resolution Agreement, WellPoint must pay OCR a $1.7 million settlement payment as well as take a series of corrective actions to correct the deficiencies in its policies and practices that resulted in the reported breach to minimize future risks of breaches resulting from these deficient.
OCR Warns Learn From WellPoint's Experience
All Covered Entities and their business associates and leaders should heed the lesson sent to them by OCR in announcing the WellPoint settlement and take appropriate steps other to ensure that appropriate policies and safeguards are adopted and applied in selecting and implementing future application or system upgrades, as well as review existing systems to ensure that the security of existing systems and applications have incorporated and apply the requisite safeguards.
OCR made clear that the WellPoint settlement is intended to send a message to Covered Entities and their business associates to ensure that these steps are appropriately taken. The settlement announcement states:
This case sends an important message to HIPAA-covered entities to take caution when implementing changes to their information systems, especially when those changes involve updates to Web-based applications or portals that are used to provide access to consumers' health data using the Internet. Whether systems upgrades are conducted by covered entities or their business associates, HHS expects organizations to have in place reasonable and appropriate technical, administrative and physical safeguards to protect the confidentiality, integrity and availability of electronic protected health information – especially information that is accessible over the Internet.
The settlement announcement also reminds business associates that OCR will begin holding them directly accountable along with their Covered Entity clients for complying with many HIPAA requirements beginning in September, stating:
Beginning Sept. 23, 2013, liability for many of HIPAA's requirements will extend directly to business associates that receive or store protected health information, such as contractors and subcontractors.
Take Documented Steps To Show You Hear OCR's Messages
Covered entities and their business associates and leaders, and vendors and consultants offering services or products to them should take care to conduct careful and well-documented reviews and implement corrective actions necessary to show their applications and systems, policies and practices reflect their strong commitment and action to appropriately protect PHI in accordance with the expectations shown by the WellPoint HIPAA Resolution Agreement and other OCR settlements, OCR's updated HIPAA regulations, and other OCR and industry information.
In addition to the guidance set forth in OCR's Resolution Agreements with WellPoint and other Covered Entities, revisions to OCR's Privacy and Security Rules in OCR's 2013 restatement of its regulations here cause all Covered Entities and their business associates conduct a well-documented reassessment of the adequacy of their existing policies, systems and practices and steps taken to redress any uncovered gaps.
Among other things, the 2013 Regulations:
Revise OCR's HIPAA regulations to reflect the HITECH Act's amendment of HIPAA to add the contractors and subcontractors of health plans, health care providers and health care clearinghouses that qualify as business associates to the parties directly responsible for complying with and subject to HIPAA's civil and criminal penalties for violating HIPAA's Privacy, Security, and Breach Notification rules;
Update previous interim regulations implementing HITECH Act breach notification rules that require Covered Entities including business associates to give specific notifications to individuals whose PHI is breached, HHS and in some cases, the media when a breach of unsecured information happens;
Update interim enforcement guidance OCR previously published to implement increased penalties and other changes to HIPAA's civil and criminal sanctions enacted by the HITECH Act;
Implement HITECH Act amendments to HIPAA that tighten the conditions under which Covered Entities are allowed to use or disclose PHI for marketing and fundraising purposes and prohibit Covered Entities from selling an individual's health information without getting the individual's authorization in the manner required by the 2013 Regulations;
Update OCR's rules about the individual rights that HIPAA requires that Covered Entities to afford to individuals who are the subject of PHI used or possessed by a Covered Entity to reflect tightened requirements enacted by the HITECH Act that allow individuals to order their health care provider not to share information about their treatment with health plans when the individual pays cash for the care and to clarify that individuals can require Covered Entities to provide electronic PHI in electronic form;
Revise the regulations to reflect amendments to HIPAA made as part of the Genetic Information Nondiscrimination Act of 2008 (GINA) which added genetic information to the definition of PHI protected under the HIPAA Privacy Rule and prohibits health plans from using or disclosing genetic information for underwriting purposes; and
Clarifies and revises other provisions to reflect other interpretations and information guidance that OCR has issued since HIPAA was passed and to make certain other changes that OCR found appropriate based on its experience administering and enforcing the rules.
Covered Entities were required to begin complying with most of these rule changes earlier this year. However, delayed compliance dates in the 2013 Regulations allowed Covered Entities and Business Associates to delay updates to pre-existing business associate agreements and the date that OCR would begin enforcing many of the HIPAA Rules directly against business associates to September 23, 2013.
Even without the necessity Settlements like that involving WellPoint, these 2013 Regulations make it imperative that Covered Entities to take the necessary steps to conduct an appropriate and well-documented review and update as needed their systems, policies and practices, business associate agreements, training and documentation.
With self-disclosures of breaches mandated by the Breach Notification Rules and OCR audits and enforcement rising, careful documentation of these activities and its analysis is necessary so that Covered Entities can be in a position to show OCR that the risk assessments required by the Security Rules was conducted as well as the efforts and commitment of the Covered Entity or business associate in the event of a breach investigation or audit. Yesterday's WellPoint HIPAA announcement is just the latest in an ever-growing list of examples of the expensive consequences that can result if a Covered Entity or business associate cannot produce this documentation in response to an OCR audit or investigation. See, e.g. OCR Hits Alaska Medicaid For $1.7M+ For HIPAA Security Breach; OCR Audit Program Kickoff Further Heats HIPAA Privacy Risks; $1.5 Million HIPAA Settlement Reached To Resolve 1st OCR Enforcement Action Prompted By HITECH Act Breach Report; HIPAA Heats Up: HITECH Act Changes Take Effect & OCR Begins Posting Names, Other Details Of Unsecured PHI Breach Reports On Website; Providence To Pay $100000 & Implement Other Safeguards. In contrast, the OCR website also provides a multitude of examples showing how the ability to produce documentation and other evidence showing diligent efforts to comply has helped other covered entities that fall under OCR investigation to avoid or mitigate serious sanctions.
Coupled with statements by OCR about its intolerance, the WellPoint and other settlements provide a strong warning to covered entities of the need to carefully and appropriately manage their HIPAA encryption and other Privacy and Security responsibilities. Covered entities are urged to heed these warning by strengthening their HIPAA compliance and adopting other suitable safeguards to minimize HIPAA exposures.
In response to the 2013 Regulations and these expanding exposures, all Covered Entities should review critically and carefully the adequacy of their current HIPAA Privacy and Security compliance policies, monitoring, training, breach notification and other practices taking into consideration OCR's investigation and enforcement actions against WellPoint and others, emerging litigation and other enforcement data; their own and reports of other security and privacy breaches and near misses; and other developments to decide if additional steps are necessary or advisable. Covered Entities and business associates should document this review in a manner that both reflects the scope and diligence of their activities including relevant considerations and decision-making about identified potential susceptibilities and reasoning about the adequacy of safeguards and other solutions.
Because this review is likely to uncover existing or past deficiencies or breaches, most covered entities and business associates will want to discuss with qualified legal counsel the planned assessment within the scope of attorney-client privilege to understand when and how to conduct the assessment to preserve options to claim attorney-client privilege to protect sensitive work product or discussions that may result in the course of the investigation within the attorney-client communication, work product or other evidentiary privileges, evaluation of the adequacy and appropriateness of the audit and resulting investigations and its documentation, and other assistance in strengthening the defensibility of compliance and risk management activities.
1 Comment	| Corporate Compliance, Employers, GINA, Health Plans, HIPAA, Human Resources, Insurance, Internal Controls, Internal Investigations, Privacy, Risk Management, Whistleblower	| Tagged: Backpay, Employer, Employment, employment law, Fair Labor Standards Act, FSLA, IT, Labor Department, Minimum Wage, Technology, Wage & Hour, wage and hour, Worker Classification	| Permalink
The Department of Health & Human Services Office of Civil Rights (OCR) on June 6, 2013 released an advance copy of to Technical Corrections (Technical Corrections) to the Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notifications Rules Under the Health Information Technology for Economic and Clinical Health Act and the Genetic Information Nondiscrimination Act; Other Modifications to the HIPAA Rules; Final Rule (Omnibus Rule) previously published on January 25, 2013. Health plans, health care clearinghouses, health care providers and their business associates will want to be sure to take into account the Technical Corrections as they rush to update business associate agreements, policies, practices, training and other HIPAA compliance to comply with the Omnibus Rule changes by the September 2013 deadline.
Technical Corrections To Omnibus Rule Released
OCR published the Omnibus Rule to implement changes to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules ("the HIPAA Rules") enacted by the Health Information Technology for Economic and Clinical Health Act ("the HITECH Act") and section 105 of Title I of the Genetic Information Nondiscrimination Act of 2008, as well as to address public comment received on the interim final Breach Notification Rule and to other changes to the HIPAA Rules. The Technical Corrections are scheduled for publication in the Federal Register on June 7, 2013.
The Technical Corrections correct various typographical errors and other oversights in the Omnibus Regulations as originally published. While many of these corrections have limited material impact, certain corrections do have substantive implications. For instance, by correcting errors in references to other provisions of the Omnibus Regulations, the Technical Corrections clarify that the authority of OCR to grant an extension of time pursuant to § 160.508(c)(5) for violations before February 18, 2009 also applies to violations occurring on or after February 18, 2009, as there is for violations occurring prior to February 18, 2009.
Health plans, health care clearinghouses and their business associates will need to review and take into account the Technical Corrections as they work to review and update their policies and practices for handling and disclosing personally identifiable health care information ("PHI") in response to the Omnibus Rule.
Get Moving To Update HIPAA Compliance For New Omnibus Rule Requirements As Amended By Technical Corrections
Covered entities and their business associates have a lot to accomplish between now and September to update their business associates and comply with other changes made by the Omnibus Rule by its September 2013 deadline. Among other things, the Omnibus Regulations:
Implement HITECH Act amendments to HIPAA that tighten the conditions under which Covered Entities are allowed to use or disclose PHI for marketing and fundraising purposes and prohibit Covered Entities from selling an individual's health information without getting the individual's authorization in the way required by the Omnibus Regulations;
Liability & Enforcement Risks Heighten Need To Act To Review & Update Policies & Practices
The restated rules in the Omnibus Rule make it imperative that Covered Entities review the revised rules carefully and updated their policies, practices, business associate agreements, training and documentation to comply with the updated requirements and other enforcement and liability risks. OCR even prior to the regulations has aggressively investigated and enforced the HIPAA requirements. See, e.g., OCR Hits Alaska Medicaid For $1.7M+ For HIPAA Security Breach; OCR Audit Program Kickoff Further Heats HIPAA Privacy Risks; $1.5 Million HIPAA Settlement Reached To Resolve 1st OCR Enforcement Action Prompted By HITECH Act Breach Report; HIPAA Heats Up: HITECH Act Changes Take Effect & OCR Begins Posting Names, Other Details Of Unsecured PHI Breach Reports On Website; Providence To Pay $100000 & Implement Other Safeguards.
Coupled with statements by OCR about its intolerance, the HONI and other settlements provide a strong warning to covered entities of the need to carefully and appropriately manage their HIPAA encryption and other Privacy and Security responsibilities. Covered entities are urged to heed these warning by strengthening their HIPAA compliance and adopting other suitable safeguards to minimize HIPAA exposures.
All Covered Entities should review critically and carefully the adequacy of their current HIPAA Privacy and Security compliance policies, monitoring, training, breach notification and other practices taking into consideration OCR's investigation and enforcement actions, emerging litigation and other enforcement data; their own and reports of other security and privacy breaches and near misses; and other developments to decide if additional steps are necessary or advisable. In response to these expanding exposures, all covered entities and their business associates should review critically and carefully the adequacy of their current HIPAA Privacy and Security compliance policies, monitoring, training, breach notification and other practices taking into consideration OCR's investigation and enforcement actions, emerging litigation and other enforcement data; their own and reports of other security and privacy breaches and near misses, and other developments to decide if tightening their policies, practices, documentation or training is necessary or advisable.
OCR Gives HIPAA Guidance On Safety Disclosures
Former White House Cybersecurity Coordinator Schmidt, Stamer & Others Share Key HIPAA & Other Privacy & Data Security Insights 5/21 In LA
Strengthen Health Plan Privacy Compliance & Risk Management Using Lessons From New OCR Provider & Consumer Tools
Deadline To Send ACA Summary of Benefits & Coverage Adds Pressure To Finalize 2014 Plan Designs As Agencies Add MEC & MV Disclosures To SBC
Study Finds Down Economy, Not Health Care Reform Accounts For Slower Health Care Cost Increases; Projects Renewed Costs When Economy Improves
Peter Madoff 10 Sentence For Defrauding ERISA Plans Reminder Manage Plan Investment Responsibilities
IRS Plans To Issue 2013 Withholding Guidance By 12/31
ESOP, Other Employee Plan Investments In Company Stock Land Plans, Fiduciaries, Sponsors & Others In Hot Water
Confirm Qualified Plans Updated By Reviewing Against 2012 Required Plan Qualification Requirements Change List
Catch Up On Health Reform & Other Key Employee Benefits & Insurance Issues Emerging Issues and Litigation Relating to Life, Health, Disability and ERISA Symposium In Ft. Lauderdale
IRS Shares Rules Allowing Government Plans To Switch Remedial Amendment Cycles
Reminder To Amend Health FSA Plan Terms To Include ACA $2500 Contribution Before 2013 Plan Year Begins
Bank' $1Million Plus Overtime Settlement Shows Risks of Misapplying FLSA's Administrative Exemption
Labor Department Serves The Christmas Light Co. & Its Owner With Holiday Season FLSA Lawsuit
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Premier Insurance Services Pays $120,000 In Back Wages, Damages, Penalties Because Commission-Only Comp Violated Minimum Wage, Overtime Laws
Insurance brokerage and other businesses paying commission-only compensation should review the defensibility of their payment practices in response to the agreement by Premier Insurance Services (Premier) to pay $119,570 in minimum wage and overtime back wages, liquidated damages and civil money penalties.
The settlement arises from an investigation by the U.S. Department of Labor's Wage and Hour Division (DOL) that determined that the insurer willfully violated minimum wage, overtime and record-keeping provisions of the Fair Labor Standards Act (FLSA). According to DOL, its investigators found that the commission-only pay practice used by the Colton, California-based employer at all of its locations resulted in employees being paid below the federal minimum wage and failing to receive an overtime premium for hours worked beyond 40 per week. DOL also charges that Premier failed to maintain employee time records.
The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also are required to maintain accurate time and payroll records.
The FLSA provides that employers who violate the law are, as a general rule, liable to employees for their back wages and an equal amount in liquidated damages. Liquidated damages are paid directly to the affected employees.
Under the settlement, Premier will pay $43,297 in minimum wage and overtime back wages due to 90 employees and an equal amount in liquidated damages. Because of the willful nature of the violations, the employer will also pay $32,976 in civil money penalties.
Premier also signed a settlement agreement with the Labor Department in which it committed to implement a timekeeping system to document employees' hours worked, assure payment of at least the federal minimum wage of $7.25 per hour and accurately determine and pay overtime.
The Premier settlement follows DOL's settlement of a related case last year after investigators discovered similar violations involving Upland, California-based Speedlane Insurance Services. This company was owned and operated by a close relative of Premier's owner. That investigation resulted in $200,000 in back wages due to 96 employees.
The DOL's announcement of the settlements alerts employers of the need to ensure that commission-based compensation meet FLSA requirements.
"Paying employees on a commission-only basis does not give employers a green light to dodge minimum wage and overtime pay requirements," said Priscilla Garcia, director of DOL's West Covina District Office when announcing the Premier settlement. "Premier Insurance Services knowingly violated the most basic labor laws to make a profit at the expense of their employees. This case should put other employers on notice that if they fail to pay their employees in compliance with federal law, our department will not hesitate to investigate. Employers may be found liable not only for back wages, but also for liquidated damages and other penalties." (Emphasis added).
The enforcement record of the Labor Department confirms these risks and reflects DOL's targeting of U.S. employers that violate wage and hour laws.
Under the Obama Administration, DOL officials have made it a priority to enforce overtime, record keeping, worker classification and other wage and hour law requirements. See e.g., Boston Furs Sued For $1M For Violations Of Fair Labor Standards Act; Record $2.3 Millh ion+ Backpay Order; Minimum Wage, Overtime Risks Highlighted By Labor Department Strike Force Targeting Residential Care & Group Homes; Review & Strengthen Defensibility of Existing Worker Classification Practices In Light of Rising Congressional & Regulatory Scrutiny; 250 New Investigators, Renewed DOL Enforcement Emphasis Signal Rising Wage & Hour Risks For Employers; Quest Diagnostics, Inc. To Pay $688,000 In Overtime Backpay. In an effort to further promote compliance and enforcement of these rules, the Labor Department is using smart phone applications, social media and a host of other new tools to educate and recruit workers in its effort to find and prosecute violators. See, e.g. New Employee Smart Phone App New Tool In Labor Department's Aggressive Wage & Hour Law Enforcement Campaign Against Restaurant & Other Employers. As a result of these effort, employers violating the FLSA now face heightened risk of enforcement from both the Labor Department and private litigation.
New OCR HIPAA De-Identification Guidance Among Developments Covered In 12/12 HIPAA Update
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OSHA Citation Of Michigan VA Reminder To Manage Workplace Safety
The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) citation of the Battle Creek Veterans Administration Medical Center, following a safety inspection conducted in July as part of OSHA's Federal Agency Targeting Inspection Program for seven notices of unsafe or unhealthful working conditions reminds employers that OSHA expects employers to maintain safe workplaces.
Under the Occupational Safety and Health Act, federal agencies must comply with the same safety standards as private-sector employers. According to OSHA, its inspection uncovered several repeat safety violations, as well as certain other serious safety violations.
OSHA reports that three repeat safety violations involved failing to evaluate the workplace to identify if permit-required confined spaces were present and label such spaces with danger signs; failing to adequately guard automated laundry equipment to prevent employees from entering the work area, and failing to fully guard the belt and pulley of an air compressor. To issue notices for repeat violations, OSHA must have issued at least one other notice for the same violation at one of the agency's establishments within the same standard industrial classification code, commonly known as the SIC code. OSHA previously has cited U.S. Department of Veterans Affairs facilities in Danville and North Chicago, Illinois, and Minneapolis, Minnesota for the same safety and health violations.
The serious safety violations found included three serious safety violations for unguarded floor openings in the general repair shop; failing to inspect powered industrial trucks prior to placing them in service, and failing to remove trucks from service in need of repair. Additionally, OSHA found a circuit breaker panel was not mounted correctly. OSHA issues a serious notice when it finds a substantial probability that death or serious physical harm could result from a hazard about which the employer knew or should have known.
Beyond the repeated and serious violations, OSHA reports it also found one other-than-serious violation for failing to close unused openings on electrical cabinets and junction boxes. An other-than-serious violation is one that has a direct relationship to job safety and health, but probably would not cause death or serious physical harm.
The medical center has 15 business days from receipt of the notices to comply, request an informal conference with OSHA's area director or appeal the notices by submitting a summary of the agency's position on the unresolved issues to OSHA's regional administrator.
While the medical center and other federal agencies are required to comply with the same OSHA rules as private sector employers, the VA and other federal agencies don't face the same liabilities when cited. OSHA cannot propose monetary penalties against another federal agency for failure to comply with OSHA standards.
The risks for private sector employers is illustrated by another recent OSHA. OSHA recently cited Riddell All-American Sports Co. with eight serious violations following an OSHA investigation, which found that the company exposed workers to multiple safety and health hazards at its San Antonio facility. The violations include failing to ensure electrical equipment was free from recognized hazards, provide adequate machine guarding while employees operate industrial sewing machines and provide a fall protection program to prevent falls from the basket of a powered industrial truck. The Elyria, Ohio-based company, which employs about 25 workers in San Antonio, paints helmets for various sports. Proposed penalties total $44,000. Read the News Release.
Since private sector employers that don't enjoy the VA's immunity liability run much greater risks for failing to maintain workplace safety, including significant civil and in the case of a workplace death, potentially even criminal penalties, private sector hospitals and other organizations should exercise special care to ensure appropriate safety in their workplaces. "The Battle Creek Veterans Administration Medical Center failed to properly ensure the facility was in compliance with established safety and health procedures," said Robert Bonack, director of OSHA's Lansing Area Office. "All employers, including federal employers, are responsible for knowing what hazards exist in their facilities and taking appropriate precautions by following OSHA standards so workers are not exposed to such hazards."
Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 23 years of work helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit and management policies and practices. The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance related matters. She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly at (469) 767-8872 or via e-mail here.
FTC, HIPAA Rules Require Health Plans & Employers Strengthen Data Security on Mobile Devices and Applications
3/13 JCEB Teleconference Explores Foreign Transferees: Outbound, Inbound, Equity And Treaty Issues
Stamer Talks on "What the Wind Blew In: Coping with Health Care Reform: 2013 and Beyond" May 2 At 24th Annual RPTE Spring Symposia In Washington, D.C.
IRS Will Begin Accepting Returns Claiming Education Credits By Mid-February
IRS Shares Procedures Employers Use To Claim Increased Monthly Transit Benefit Exclusion Allowed By Administrative Taxpayer Relief Act
Employers ACA Health Reforms Prohibit Using HRAs To Pay Individual Medical Policy Premiums & Impact Other HRA Arrangements
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Employer Deadline To Give ACA Notice of Exchange Coverage Options Delayed
BNSF OSHA Whistleblower Settlement Gives Employers Insights About Policies OSHA View As Prohibited
OCR Publishes Long-Anticipated Omnibus Restatement of HIPAA Privacy, Security, Breach Notification & Enforcement Rules
IRS Offers New Simplified Option For Businesses Claiming Home Office Deductions For Home-Based Business Owners & Workers
IRS Announces Cost of Living & American Taxpayer Relief Act Income Tax Adjustments
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HHS Releases Final Rule on Health Insurance Market, Rate Review, Pre-Existing Conditions & Other ACA Market Reform Rules
The U.S. Department of Health and Human Services (HHS) on February 22, 2013 released its Final Rule implementing many of the key market reform provisions of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the "Affordable Care Act") applicable to non-grandfathered health plans and health insurance issuers.
The 145 page regulations and associated guidance package scheduled for official publication in the Federal Register on February 27, 2013 clarifies and implements the Affordable Care Act's provisions relating to Guaranteed Availability and Renewability; Health Insurance Premiums; Single Risk Pool; Catastrophic Plans, Utilization Data Collection and Reporting under the Federal Rate Review Program and certain other matters.
Among other thing, the Final Regulations:
Clarify the approach HHS will use to enforce the applicable requirements of the Affordable Care Act with respect to health insurance issuers and group health plans that are nonfederal governmental plans
Amend the standards for health insurance issuers and states on reporting, utilization, and collection of data under the federal rate review program
Revise the timeline for states to propose state-specific thresholds for review and approval by the Centers for Medicare & Medicaid Services (CMS)
Allow health insurance issuers to vary the premium rate for health insurance coverage in the individual and small group markets only based on family size, geography, and age and tobacco use within limits
Direct health insurance issuers to offer coverage to and accept every employer or individual who applies for coverage in the group and individual market, subject to certain exceptions including how these requirements inter-relate with the Affordable Care Act's restrictions on pre-existing condition limitations and exclusions
Direct health insurance issuers to renew or continue in force coverage in the group and individual market, subject to certain exceptions
Codify the requirement that issuers maintain a single risk pool for the individual market and a single risk pool for the small group market (unless a state decides to merge the markets into a single risk pool)
Outline standards for enrollment in catastrophic plans for young adults and people who cannot otherwise afford health insurance
Amend the standards under the rate review program in 45 CFR part 154 by among other things, changing the timeline for states to propose state-specific thresholds for review and approval by CMS, requiring health insurance issuers to submit data relating to proposed rate increases in a standardized format specified by the Secretary of HHS and modifying criteria and factors for states to have an effective rate review program
Along with responding to these regulations, health insurers, group health plans and their insurers and others need to stay tuned. These regulations are just one of a deluge of regulations and other interpretations that HHS and other agencies are rolling out in the rush to meet the impending deadlines for the implementaton of the Affordable Care Act. For instance, along with this guidance, HHS along with the Internal Revenue Service and Employee Benefit Security Administration also last week issued FAQ XII, which discusses the co-pay, deductible and certain other aspects of the cost sharing limits of the Affordable Care Act. In previous weeks, the agencies also have issued or proposed regulations about waiting period, employer shared responsibility, essential health benefits, and various other elements of the rules. Additional guidance is impending.
If you need help with other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other human resources, employee benefit, or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.
Nationally recognized as a knowledgable and innovative health benefit thought leader by business and government leaders for her extensive work, publications and leadership on health benefit and insurance and other related employee benefits, insurance, human resources and health care matters, Ms. Stamer has advised and defended employer and other health plan sponsors, administrators and fiduciaries, insurers, and others about benefit design, compliance, administration and defense for more than 25 years. Her work includes highly pragmatic, leading edge work helping clients to design, deploy, administer and defend catastrophic, mini-med, expatriate and medical tourism, occupational injury and 24-hour coverage, HRA, HSA HFSA and other defined contribution, Medicare Advantage, and other health plans, policies and practices to comply with the Affordable Care Act, HIPAA, ERISA, COBRA, Mental Health Parity, Internal Revenue Code, labor and employment, privacy, managed care and insurance and other federal and state laws and regulations.
In addition to her extensive legal resume, Ms. Stamer also is a highly regarded industry thought leader and author with extensive involvement in the leadership of a broad range of professional and civic organizations. For instance, Ms. Stamer is the founder and executive director of the Coalition for Responsible Health Care Policy and its PROJECT COPE; The Coalition on Patient Empowerment; a Fellow in the American College of Employee Benefits Counsel, the American Bar Association and the State Bar of Texas; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group; the Immediate Past Chair of the ABA RPTE Employee Benefit & Other Compensation Committee and the current ABA RPTE Employee Benefit & Other Compensation Committee Welfare Benefits Committee Co-Chair; a Council Member of the ABA Joint Committee on Employee Benefits; Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; Immediate Past Gulf States Area TEGE Council Exempt Organization Coordinator; a current or former Editorial Advisory Board Member of Insurance Thought Leadership, HR.com, Employee Benefit News, the BNA Employee Benefits CD-Rolm and various other BNA HR and Employee Benefits publications; a former national board member and Dallas Chapter President of WEB, Network of Benefits Professionals; a former Southwest Benefits Association Board Member; the past Dallas HR Government Relations Committee Chair; a former SHRM Region IV Board Member and National Consultants Forum Board Member,; past Dallas Bar Association Employee Benefits & Compensation Committee Chair, and a former Texas Association of Business State Board and Regional and Dallas Chapter Chair.
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Thinking about or using mobile devices and applications in your heath care, health plan, workforce or related operations or struggling to meet the demands of employees, plan members or others to allow use of these tools? Be sure that you've taken appropriate steps to design, implement and manage legal responsibilities and risks associated with the development and use of these tools.
While the popularity, accessibility and cost-effectiveness of mobile devices and applications provides a strong incentive for health and other employee benefit plans, employers, their business associates, workforce members and customers to use mobile devices and applications, the use of these technologies and applications to collect, access, or use personal health care, financial, or other sensitive information presents special challenges and risks. Unfortunately, as the use of these tools proliferates, federal officials are increasingly concerned that the data security protections afforded by many of the devices and applications in use on these highly popular smart phone, tablet and other mobile devices and applications is highly lacking. See FTC Settlement With Mobile Device & App Developer Shows Developers & Businesses Need To Manage Mobile App & Data Security.
As federal regulators and law enforcement responds to growing concerns about cyber security and other risks, heath care, health plan and other businesses, their employees, customers, and other business partners jumping on the mobile device and application bandwagon, health, application bandwagon, and the device and application developers developing and offering these tools must take appropriate steps to manage the personal health, financial, and other sensitive information and data that these tools use, create, access or disclose.
Of course, most health plan sponsors, fiduciaries, administrators and service providers already recognize the need to use care when dealing with health plan data. The Health Insurance Portability & Accountability Act (HIPAA) generally requires that health care providers, health plans, health care clearinghouses and their businesses associates safeguard personal health care information or "PHI" and restrict its use, access and disclosure in accordance with the extensive and highly detailed requirements of the Privacy, Security and Breach Notification Regulations of the Department of Health & Human Services Office of Civil Rights (OCR).
OCR's collection of several multi-million dollar settlements as well as its statements in its recent restated HIPAA regulations and other OCR guidance make clear that OCR views HIPAA as imposing significant responsibilities upon covered entities and their business associates to safeguard and restrict access to PHI on mobile devices and applications. OCR's Long-Anticipated Omnibus HIPAA Privacy, Security, Breach Notification & Enforcement Rule Tightens Privacy Requirements, Require Action; Breaches resulting from the loss or theft of unencrypted ePHI on mobile or other computer devices or systems has been a common basis of investigation and sanctions since that time, particularly since the Breach Notification rules took effect. OCR Pops Idaho Hospice In 1st HIPAA Breach Settlement Affecting < 500 Patients; Providence To Pay $100000 & Implement Other Safeguards; OCR Hits Alaska Medicaid For $1.7M+ For HIPAA Security Breach; OCR Audit Program Kickoff Further Heats HIPAA Privacy Risks; $1.5 Million HIPAA Settlement Reached To Resolve 1st OCR Enforcement Action Prompted By HITECH Act Breach Report; HIPAA Heats Up: HITECH Act Changes Take Effect & OCR Begins Posting Names, Other Details Of Unsecured PHI Breach Reports On Website. These actions and statements of OCR provide a clear warning to HIPAA-covered entities and their business associates to expect significant consequences for failing to properly encrypt and safeguard ePHI used, accessed or disclosed on mobile devices and applications.
Of course, HIPAA isn't the only law and health plans should not be the only area of concern when employers or their health or other employee benefit plan fiduciaries and service providers are considering mobile device and application use. In addition to HIPAA's health plan requirements concerning PHI, mobile devices and applications used in connection with employment, benefit plan, and related operations also can trigger a host of privacy, data security and other rules requiring data security and other safeguards. Federal laws like the Internal Revenue Code, the Fair Credit Reporting Act, Graham-Leech-Biliey, the Fair & Accurate Credit Transactions Act (FACTA) or other Federal Trade Commission (FTC) Rules, state data security, data breach, identity theft or other privacy rules or both are just a few of the many and constantly expanding regulatory requirements that can apply. Depending on the nature of the data and the circumstances of the unanticipated use or disclosure, invasion of privacy or other common or statutory laws also may come into play.
With the use of these applications by consumers and business proliferates, Congress, OCR, the FTC, state regulators and others are upping the responsibilities and the liability of businesses that fail to appropriately consider and implement security in their mobile devices and applications. Following on OCR's restatement of its HIPAA regulations, the Obama Administration's announcement of new cyber security initiatives, and a plethora of other federal and state regulatory and enforcement actions against businesses for data security missteps, the FTC recently launched a campaign to ensure that companies secure the software and devices mobile device and application providers provide consumers.
Earlier this month, the FTC introduced Mobile App Developers: Start with Security, a new business guide that encourages app developers to aim for reasonable data security.
On June 4, 2013, the FTC also plans to host a public forum on malware and other mobile security threats in order to examine the security of existing and developing mobile technologies and the roles that various members of the mobile ecosystem can play in protecting consumers.
Along side this educational outreach, the FTC also is moving to punish businesses that fail to act responsibly to protect sensitive data. This trend is illustrated by the FTC's announcement this week of its first settlement with a mobile device manufacturer.
FTC Charges Against HTC America
This week, the FTC announced that mobile device giant HTC American, Inc. will to settle FTC charges that the company failed to take reasonable steps to secure the software it developed for its smart phones and tablet computers and introduced security flaws that placed sensitive information about millions of consumers at risk.
A leading mobile device manufacturer in the United States, HTC America develops and manufactures mobile devices based on the Android, Windows Mobile, and Windows Phone operating systems. HTC America has customized the software on these devices in order to differentiate itself from competitors and to comply with the requirements of mobile network operators.
In its first-ever complaint against a mobile device or application developer, the FTC charged HTC America failed to incorporate and administer appropriate safeguards for personal financial and other sensitive data accessed and used in these applications when designing or customizing the software on its mobile devices. Among other things, the complaint alleged that HTC America failed to provide its engineering staff with adequate security training, failed to review or test the software on its mobile devices for potential security vulnerabilities, failed to follow well-known and commonly accepted secure coding practices, and failed to establish a process for receiving and addressing vulnerability reports from third parties.
To illustrate the consequences of these alleged failures, the FTC's complaint details several vulnerabilities found on HTC America's devices, including the insecure implementation of two logging applications – Carrier IQ and HTC Loggers – as well as programming flaws that would allow third-party applications to bypass Android's permission-based security model.
Due to these vulnerabilities, the FTC charged, millions of HTC devices compromised sensitive device functionality, potentially permitting malicious applications to send text messages, record audio, and even install additional malware onto a consumer's device, all without the user's knowledge or consent. The FTC alleged that malware placed on consumers' devices without their permission could be used to record and transmit information entered into or stored on the device, including, for example, financial account numbers and related access codes or medical information such as text messages received from healthcare providers and calendar entries about doctor's appointments. In addition, malicious applications could exploit the vulnerabilities on HTC devices to gain unauthorized access to a variety of other sensitive information, such as the user's geolocation information and the contents of the user's text messages.
Moreover, the FTC complaint alleged that the user manuals for HTC Android-based devices contained deceptive representations, and that the user interface for the company's Tell HTC application was also deceptive. In both cases, the security vulnerabilities in HTC Android-based devices undermined consent mechanisms that would have otherwise prevented unauthorized access or transmission of sensitive information.
HTC America Settlement
The settlement not only requires the establishment of a comprehensive security program, but also prohibits HTC America from making any false or misleading statements about the security and privacy of consumers' data on HTC devices. Under the settlement agreement, HTC American must:
Fix vulnerabilities found in millions of HTC devices;
Establish a comprehensive security program designed to address security risks during the development of HTC devices; and
Undergo independent security assessments every other year for the next 20 years.
HTC America and its network operator partners are also in the process of deploying the security patches required by the settlement to consumers' devices. Many consumers have already received the required security updates. The FTC is encouraging consumers using HTC America applications to apply the updates as soon as possible.
The FTC Commission vote to accept the consent agreement package containing the proposed consent order for public comment was 3-0-2, with Chairman Jon Leibowitz not participating and Commissioner Maureen Ohlhausen recused. The FTC will publish a description of the consent agreement package in the Federal Register shortly.
In accordance with FTC procedures, the settlement agreement will be subject to public comment through March 22, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit comments electronically or in paper form using instructions in the "Invitation To Comment" part of the "Supplementary Information" section. Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.
Act To Manage Mobile Application Device & Security
Given the expanding awareness, expectations and enforcement of OCR, FTC and others, health care, health plan and other industry participants deciding whether and when to use, or allow others to use mobile devices or applications to access data or carry out other activities and the mobile device or other technology developers and providers offering products or services to these organizations must get serious about security.
These and other related activities send a clear message that health care, health insurance mobile device and application users and developers must incorporate and administer appropriate processes and safeguards to protect PHI, personal financial and other sensitive data. In response to these developments, industry mobile device and application developers and the health care, health insurance and other businesses must consider carefully before deploying or allowing others to deploy or use these tools in relation to data within their operations or systems. Before and when using or permitting customers, business partners, employees or others to use tools, these organizations must ensure the adequacy of the design and security safeguards for their devices, software and applications, as well as their disclaimers and associated consumer disclosures and consents. Because of the special legal and operational expectations for these organizations, health care, health insurance and other industry provides must resist pressure to allow the use of these tools unless and until they can verify that these legal and operational requisites are fulfilled.
Hear Stamer Speak On "Coping With Health Care Reform Now" At 2/14 Dallas ICEBS Meeting
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Cynthia Marcotte Stamer will share her insights on health and welfare benefit challenges for multinational employers as one of the featured panelists on the "Foreign Transferees: Outbound, Inbound, Equity And Treaty Issues" Teleconference hosted by the American Bar Association Joint Committee on Employee Benefits on March 13, 2013 from 10:00-11:30 a.m. Central Time.
Intended to help broad-based U.S. and European community benefits attorneys and others seeking to understand common and unique issues associated with employee transferees, granting of equity compensation and associated treaty issues, including:
Basic issues associated with transfers including granting of past service credits, vesting and distribution issues
Case studies involving employee transfers between the U.S. and the UK.
Use of international deferred compensation programs.
Unique health and welfare issues associated with international transfers.
Interesting/Global equity issues to avoid.
Moderated by Elizabeth Drigotas, PriceWaterhouseCoopers, Washington, DC, the program will feature a diverse and highly experienced group of distinguished government and private speakers including:
M. Grace Fleeman, Senior Technical Reviewer, Branch 1, (Associate Chief Counsel International)), Internal Revenue Service, U.S. Department of the Treasury, Washington, DC (invited)
Andrew C. Liazos, McDermott Will & Emery, Boston, MA
Matthew Preston, Clifford Chance, London, UK
Cynthia Marcotte Stamer, Cynthia Marcotte Stamer, PC, Addison, TX.
To register or for additional information, see here.
About Ms. Stamer
Sought out nationally and internationally as an industry thought leader and problem solver, attorney, Cynthia Marcotte Stamer has more than 25 years experience helping domestic and foreign private and public businesses, employer and union plan sponsors, health and other employee benefit plans, associations, their fiduciaries, administrators, and vendors, group health, Medicare and Medicaid Advantage, and other insurers, governmental and community leaders and others develop, implement, administer and defend creative, legally compliant and operationally effective health and other employee benefit, employment, insurance, pension and retirement, health care, workers' compensation and workforce plans, practices, and policies.
Recognized in International Who's Who, the founder and Executive Director of Project COPE: The Coalition on Patient Empowerment and its affiliate, the Coalition on Responsible Health Policy; a Fellow in the American College of Employee Benefits Counsel, American Bar Association, and State Bar of Texas; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Immediate Past Chair of the ABA RPTE Employee Benefit & Other Compensation Committee, current ABA RPTE Employee Benefit & Other Compensation Committee Welfare Benefits Committee Co-Chair and Substantive Groups Committee Member, and a Council Member of the ABA Joint Committee on Employee Benefits, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, and Immediate Past Gulf States Area TEGE Council Exempt Organization Chair, Ms. Stamer helps these and other clients. to design, document, administer and defend managed care and insurance programs, processes, and products; to monitor and manage evolving regulatory, contractual and fiduciary obligations and risks; to draft, negotiate, interpret and enforce managed care and other contracts, plan documents, insurance policies, administrative services agreements, and other agreements, policies, procedures and controls; to credential, monitor and manage fiduciaries, service providers, consultants and others providing services relating to programs; to conduct and defend litigation, audits, and other enforcement actions; to deal with legislators, regulators, auditors and others; and to fulfill legal obligations, mitigate legal risks and improve operational effectiveness.
As a core focus of her practice, Ms. Stamer continuously counsels, represents and defends self-insured and insured managed care and health, disability and welfare, pension, deferred compensation and other employee benefit plans; employer, association, insurer, and other employee benefit and insurance program sponsors; plan fiduciaries, administrators, brokers, consultants and other service providers; Medicare and Medicaid Advantage and other group, individual, stop-loss and other reinsurance, fiduciary liability and other insurers; health and insurance technology and other outsourcing companies; human resources, insurance and employee benefit consulting organizations; and other insurance, employee benefit and human resources industry clients, domestic and foreign governments and others about a diverse range of employee benefit, insurance, employment, tax, regulatory, risk management, public policy and related matters.
Ms. Stamer's health benefit experience includes extensive and highly-innovative dealings with insured and self-insured managed care, defined contribution, indemnity and other health benefit, disability, life, occupational injury, Medicare and Medicaid Advantage, and other welfare benefit and insurance plans and policies; and a wide range of other employee benefits, compensation, insurance, equity and other related arrangements. Her work includes leading edge development and use of 24-hour coverage and other occupational injury, ex-pat and other medical tourism products, HRA, HSA, HRA and other defined contribution, hi-deductible, deductible reimbursement, min-med and other limited benefit plans, 24-hour and occupational benefit, fraternal benefit and association, and other medical programs as well as a broad range of claims, appeals, audit, and other administrative processes and tools designed to promote defensibility and mitigate risks.
Along side this domestic work, Ms. Stamer also has extensive international experience. A primary drafter of the Bolivian Social Security privatization law with extensive domestic and international regulatory and public policy experience, Ms. Stamer also has worked extensively domestically and internationally on design, administration, operations, compliance, public policy and regulatory, and other challenges arising in the administration of multinational workforces and populations. Throughout her career, Ms. Stamer has advised both U.S. based businesses and foreign owned or operated businesses about design and administration of employment, employee benefit, worker's compensation, employment tax, occupational safety, discipline and promotion, collective bargaining, recruiting, compliance, risk management and other personnel practices for multinational workforces. She has worked extensively on the design and administration of pension, severance, health and other benefit and compensation programs for their multinational workforce. She assists businesses with cross-border and domestic employment, consulting, independent contractor, subcontractor, employee leasing and other staffing and vendor agreements; multinational Foreign Corrupt Practices Act, Federal Sentencing Guidelines, and other compliance programs and practices; design, drafting, interpretation, implementation, and coordination pension, health care, severance, education, insurance, employment, tax, unemployment, disability, and other programs and requirements; represents and advises businesses, associations and government agencies before U.S. and foreign governments in connection with tax, employment, and other compliance matters, trade relationships and missions, public policy advocacy.
A widely published author and highly sought out speaker whose HR & Benefits Update has been recognized as among the "Top 50" HR Blogs To Watch, Ms. Stamer also regularly authors materials and conducts workshops and professional, management and other training on employee benefits, human resources, health care and other compliance and management topics for the ABA, Aspen Publishers, the Bureau of National Affairs (BNA), SHRM, World At Work, Insurance Thought Leadership, Government Institutes, Inc., Solutions Law Press, Inc., the Society of Professional Benefits Administrators, HealthLeaders, Managed Care Executive, CEO Magazine, Business Insurance and many other industry, professional and business publications. An Editorial Advisory Board Member of the Institute of Human Resources (IHR/HR.com), Employee Benefit News, and other publications, Ms. Stamer also regularly serves on the faculty and planning committees of a multitude of symposium and other educational programs. For more details about Ms. Stamer's services, experience, presentations, publications, and other credentials or to inquire about arranging counseling, training or presentations or other services by Ms. Stamer, see www.CynthiaStamer.com. Ms. Stamer also is widely recognized for her regulatory and public policy advocacy, publications, and public speaking on privacy and other compliance, risk management concerns. For the past two years, Ms. Stamer has serve as the appointed scribe for the ABA Joint Committee on Employee Benefits annual agency meeting with OCR and has lead numerous programs for the ABA and others on this topic. Her insights on HIPAA risk management and compliance frequently appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, the American Bar Association, the Health Care Compliance Association, a multitude of health industry, health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others.
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SLP Readers Get $400 Discount To Learn Key Health Care Reform Coping Strategies At 2/21-22 Employer Health & Human Capital Strategy Congress In Lake Mary, FL
Solutions Law Press, Inc. (SLP) readers qualify for up to a $400 discount on their registration to learn key insights from on strategies for charting the path forward to drive employee wellness, strengthen the workforce and impact global business competitiveness in the face of the impending health care reforms of the Patient Protection & Affordable Care Act from SLP Editor/Author Cynthia Marcotte Stamer and other leading employer health care decision makers at the 8th Annual Employer Health & Human Capital Strategy Congress that the World Health Congress is hosting on February 21-22, 2013 at The Westin Lake Mary, Orlando North Conference Center in Lake Mary, Florida.
Nationally recognized industry thought leader and attorney SLP Editor attorney Cynthia Marcotte Stamer will help kick off the program when she joins a panel of prominent HR leaders discussing "Assessing Alternatives and Opportunities: Defined Contribution and Exchanges-What are the Long-Term Implications on Your Human Capital Strategy" beginning at 9:30 a.m. on February 21, 2013.
Following this keynote panel, attendees also will learn other key ideas and strategies to help their organizations cope with Health Care Reform as they participate in a host of other insightful and timely presentations by dynamic team of prominent HR and other industry experts and network with other management and human resources leaders .including:
John Rother, National Coalition on Health care
Shawn Leavitt, Carlson Companies
Rebecca Mariet Lynn-Crockford, Suntrust Banks, Inc
Jo-Ann Gastin, Lockton Companies, LLC
Paul Grundy, M.D., Patient-Centered Primary Care Collaborative
Roger C. Merring, M.D., Perdue Farm Inc.
Sam Nussbaum, Wellpoint, Inc.
Benjamin H. Hoffman, M.D., GE Energy
Bruce Sherman, MD, Employers Health Coalition
For a full agenda and other details on the program, see here.
SLP Reader Registration Discount
SLP is delighted to announce that the World Health Congress is offering SLP readers the opportunity to claim a $400 discount off the otherwise applicable registration fee when registering for the program. To register and claim this discount, enter registration code "GHH925" at the designated location when registering for the program here.
Sought out nationally and internationally as an industry thought leader and problem solver, SLP Editor and author attorney, Cynthia Marcotte Stamer has spent more than 25 years helping private and public employers, employer and union plan sponsors, health and other employee benefit plans, associations, their fiduciaries, administrators, and vendors, group health, Medicare and Medicaid Advantage, and other insurers, governmental and community leaders and others develop, implement, administer and defend creative, legally compliant and operationally effective health and other employee benefit, employment, insurance, health care and workforce plans, policies, practices, operations and policies.
A primary drafter of the Bolivian Social Security privatization law with extensive domestic and international regulatory and public policy experience, Ms. Stamer also has worked extensively domestically and internationally on public policy and regulatory advocacy on health and other employee benefits, human resources, insurance, tax, compliance and other matters and representing clients in dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, HUD and Justice, as well as a state legislatures attorneys general, insurance, labor, worker's compensation, and other agencies and regulators. Her Patient Empowerment Toolkit™, Play4Life Community Program™, and other patient empowerment, health care quality, and other industry thought leadership, advocacy and solutions have drawn the attention of business, government and community leaders for their insightfulness and practicality.
A widely published author and highly sought out speaker whose HR & Benefits Update has been recognized as among the "Top 50" HR Blogs To Watch, Ms. Stamer also regularly authors materials and conducts workshops and professional, management and other training on employee benefits, human resources, health care and other compliance and management topics for the ABA, Aspen Publishers, the Bureau of National Affairs (BNA), SHRM, World At Work, Insurance Thought Leadership, Government Institutes, Inc., Solutions Law Press, Inc., the Society of Professional Benefits Administrators, HealthLeaders, Managed Care Executive, CEO Magazine, Business Insurance and many other industry, professional and business publications. An Editorial Advisory Board Member of the Institute of Human Resources (IHR/HR.com), Employee Benefit News, and other publications, Ms. Stamer also regularly serves on the faculty and planning committees of a multitude of symposium and other educational programs. For more details about Ms. Stamer's services, experience, presentations, publications, and other credentials or to inquire about arranging counseling, training or presentations or other services by Ms. Stamer, see www.CynthiaStamer.com or contact Ms. Stamer directly via email here or (469) 767-8872.
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Cynthia Marcotte Stamer will a featured panelists discussing "What the Wind Blew In: Coping with Health Care Reform: 2013 and Beyond" on Thursday, May 2, 2013 at 24th Annual RPTE Spring Symposia at the Capital Hilton in Washington, DC. The Symposia scheduled to take place on May 2–3, 2013 will cover a broad range of timely topics on real estate, trusts and estates and other related concerns. To register, review the full agenda or get additional information about the Symposium, see here.
A noted Texas-based employee benefits and employment lawyer with extensive involvement in the leadership of the ABA and other professional organizations involved in employee benefits, health care and workforce matters, is nationally and internationally known for her innovative leadership and work as an attorney, consultant, policy advocate, speaker and author helping businesses, governments, and communities on health and other insurance and employee benefits, patient education and empowerment, wellness and disease management, and other programs, policies, and processes. For more than 24 years, Ms. Stamer's legal practice has focused on advising and representing employers, insurers, health care providers, community leaders and governments about health care and employee benefits policy and process improvement, quality, performance management, education, compliance, communications, risk management, reimbursement and finance, and other related matters. In addition to her legal practice, Stamer also extensively consults and provides leadership to a broad range of clients, professional and civic organizations, and others on strategies for improving the health care system and the ability of health care providers, payers, employers, community organizations, government agencies to promote the ability of patients and their families to access cost-effective, quality, affordable health care and other resource needs. She also has worked extensively with a broad range of business and government clients on health care, pension, social security, workforce, insurance and many other related policy matters.
In addition to her service with the ABA, Ms. Stamer also is active in the leadership of a broad range of other professional and civil organizations. For instance, Ms. Stamer presently serves as Executive Director of Project COPE, the Coalition on Patient Empowerment and the Coalition for Responsible Healthcare Policy; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Committee and its representative to the ABA Joint Committee on Employee Benefits and Vice Chair of its Welfare Benefits Committee; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; and as the Gulf Coast TEGE Council TE Committee Coordinator. She previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early retirement intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association; on numerous seminar faculties and in many other professional and civic leadership and volunteer roles.
Author of the hundreds of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer's insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. Nationally known for her work on health care reform and related matters, Ms. Stamer also regularly conducts training and speaks on these and other management, compliance and public policy concerns. For additional information about Ms. Stamer, upcoming training, publications or other materials or events, see here or contact Ms. Stamer directly via email here or (469) 767-8872.
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As preparations continue for the Jan. 30 opening of the 2013 filing season for most taxpayers, the Internal Revenue Service has announced that it beginprocessing of tax returns claiming education credits n by the middle of February.
Taxpayers using Form 8863, Education Credits, can begin filing their tax returns after the IRS updates its processing systems. Form 8863 is used to claim two higher education credits — the American Opportunity Tax Credit and the Lifetime Learning Credit.
The IRS emphasized that the delayed start will have no impact on taxpayers claiming other education-related tax benefits, such as the tuition and fees deduction and the student loan interest deduction. People otherwise able to file and claiming these benefits can start filing Jan. 30, 2013
As it does every year, the IRS reviews and tests its systems in advance of the opening of the tax season to protect taxpayers from processing errors and refund delays. The IRS discovered during testing that programming modifications are needed to accurately process Forms 8863. Filers who are otherwise able to file but use the Form 8863 will be able to file by mid-February. No action needs to be taken by the taxpayer or their tax professional. Typically through the mid-February period, about 3 million tax returns include Form 8863, less than a quarter of those filed during the year.
The IRS remains on track to open the tax season on January 30 for most taxpayers. The January 30 opening includes people claiming the student loan interest deduction on the Form 1040 series or the higher education tuition or fees on Form 8917, Tuition and Fees Deduction. Forms that will be able to be filed later are listed on IRS.gov.
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Since the enactment of the Patient Protection & Affordable Care Act (ACA), many employers searching for health plan solutions may have been asked to consider replacing or modifying their existing insured or self-insured group health plan with a "health reimbursement arrangement" (HRA) or other arrangement which would reimburse employees for premiums paid for individual health insurance policies. New guidance released on Thursday, January 24, 2013 indicates that such arrangements are prohibited as part of the ACA health care reforms.
"FAQS About Affordable Care Implementation (Part XI)" (FAQ) available here issued by the Departments of Labor, Health and Human Services (HHS), and the Treasury (collectively, the Agencies) on January 24, 2013 sends a clear message to employers that trying to escape ACA or other federal group health plan mandates by replacing their traditional insured or group health plans or policies with health reimbursement arrangements (HRAs) or other arrangements under which the employer agrees to provide a fixed defined contribution to be used to buy or reimburses employees for buying individual health insurance generally won't pass legal muster. The FAQ also indicates that employers sponsoring HRAs that only reimburse medical expenses, not individual health insurance premiums also need to review their arrangements to verify that those programs also comply with ACA and other applicable rules.
Concerning the use of HRAs to pay for individual health insurance policy premiums, the FAQ states that PHS Act Section 2711 generally prohibits an employer-sponsored HRA cannot be integrated with individual market coverage or with an employer plan that provides coverage through individual policies. Under ACA, employers that improperly offer arrangements that violate PHS Section 2711 or other group health plans risk exposing themselves to liability for significant unanticipated health benefit claims, as well as other penalties and costs. Therefore, employers that have or are contemplating arrangements that provide or reimburse premiums for individual health insurance coverage are urged to contact qualified legal counsel with documented experience with ACA and other group health plan requirements for advice before establishing or continuing such arrangements.
The FAQ's guidance about the use of individual insurance policies to arrange coverage for employees is one of several issues addressed in the FAQ and part of a wave of new guidance that has and is emerging as the Obama Administration moves to full implementation of the ACA reforms. Employers, plan fiduciaries, insurers, and others involved in the design or administration of health benefit programs need to monitor carefully this emerging guidance as they move quickly to tailor their programs in response to these evolving rules. For help monitoring or responding to these evolving rules, contact the author of this update, Cynthia Marcotte Stamer.
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The Department of Labor has extended the deadline for employers to notify employees about the existence of and their rights under the health exchanges required by new Section 18B of the Fair Labor Standards Act (FLSA), as added by Section 1512 of the Patient Protection & Affordable Care Act (ACA). The extension announced in Frequently Answered Question (FAQ) here provides a welcome temporary reprieve to employers who otherwise would have been required to notify employees by March 1, 2013.
As part of the impending implementation of ACA's health care reform, FLSA § 18B generally requires each applicable employer provide each employee a written notice (Exchange Notice) in accordance with regulations promulgated by the Secretary of Labor:
Informing the employee of the existence of Exchanges including a description of the services provided by the Exchanges, and the way the employee may contact Exchanges to request assistance;
If the employer plan's share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the Code) if the employee purchases a qualified health plan through an Exchange; and
If the employee purchases a qualified health plan through an Exchange, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes. The Department of Labor expects that the timing for distribution of notices will be the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges.
Before the Department's announcement in the FAQ, the deadline for employers to begin giving employees Exchange Notices was the later of March 1, 2013 or at the time of hiring. The FAQ extends this deadline until a date to be set by the Department in future guidance, which the Department expects will require employers to distribute the notices in the late summer or fall of 2013 to coordinate with the open enrollment period for Exchanges.
According to the announcement of the delay, the Department delayed the impending March 1, 2013 deadline to give the (Exchange Notice) to better coordinate with related Health and Human Service and Internal Revenue Service efforts and to allow more time to comply and to distribute the Exchange Notices to employees at a meaningful time.
In addition to providing added time to provide the Exchange Notice, the Department also has announced that it is considering providing model, generic language that employers could use to provide the Exchange Notice. to satisfy the notice requirement. As a compliance alternative, the Department also is considering allowing employers to meet the Exchange Notice requirement by providing employees with information using the employer coverage template as discussed in the preamble to the Proposed Rule on Medicaid, Children's Health Insurance Programs, and Exchanges: Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange Eligibility Appeals and Other Provisions Related to Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and Medicaid Premiums and Cost Sharing (78 FR 4594, at 4641), which will be available for download at the Exchange web site as part of the streamlined application that will be used by the Exchange, Medicaid, and CHIP.
The Exchange Notice is just one of a multitude of notices and other mandates that ACA requires that employers or their health plans, insurers, or both to meet. Although the Exchange Notice gives employers a little more time to provide the Exchange Notices, employer and other health plan sponsors, fiduciaries, administrators and insurers are urged to continue to diligently move forward to update their plans, communications, processes and other arrangements to comply with existing and impending ACA mandates while keeping a watchful eye on for additional guidance that may require additional tailoring of these arrangements.
Stay tuned for updates about future guidance on complying with the notice requirement under FLSA section 18B and other developments.
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Cynthia Marcotte Stamer will share key information and practical strategies for "Coping with Health Care Reform Now" at the Dallas Chaper ICEBS Valentines Day luncheon meeting on February 14, 2012. The meeting is scheduled from 11:30 a.m. to 1:30 p.m on February 14, 2012 at Haggar Clothing Company at 11511 Luna Road, Dallas, Texas . Interested persons may register or get other details at http://www.dfwiscebs.org.
With the initial debate about the Constitutionality of the Patient Protection & Affordable Care Act (ACA) decided and making a Congressional reprieve highly improbable, employer and other health plan sponsors, insurers, fiduciaries and administrators are scrambling to update plan documents, communications, processes and procedures to meet current ACA and other health plan rules, while bracing to cope with the sweeping health care reforms slated to take effect in 2014. These already daunting tasks are made more challenging by the continuing uncertainty of the constantly evolving regulations, evolving marketplace, increases in health plan costs and ever-shrinking corporate budgets.
To help health plan sponsors, fiduciaries, administrators and insurers deal with the tough business of implementation, attorney Cynthia Marcotte Stamer will discuss practical strategies, legal updates and other information needed for to cope with health care reform now and to prepare to meet future health plan regulations and challenges including:
The Latest On Key ACA & Other Health Care Reform Regulations Such As ACA's Requirements On Fees Employers Sponsoring Self-Insured Health Plans & Insurers Must Pay To Fund The Patient-Centered Outcomes Research Institute, Contraceptive and Other Preventive Services, Nondiscrimination, Essential Health Benefits, Internal Claims and Appeals and External Review, Medical Loss Ratios, Large Employer Automatic Enrollment, Summary of Benefits & Coverage, Culturally & Linguistically Appropriateness, Value-Based Insurance Design, Wellness Programs, Exchanges, the Employer Pay-Or-Plan Mandates, Wellness Reporting, Wellness Programs, W-2 Reporting of Employer Provided Health Coverage, Employer Plan Minimum Value & The Premium Tax Credit And Other ACA & Other Federal Health Plan Mandates;
Key Changes To HIPAA Privacy Regulations & What Health Plans & Employers Should Expect To Be Required To Do To Comply With These Changes By the September, 2013 Deadline;
What's Happened, Happening & Likely To Happen With Exchanges;
A 12-Step Practical Process For Helping Employers Managing ACA & Other Health Plan Compliance Responsibilities & Risks; and
Tips On What To Watch For And Options For Maintaining Flexibility To Respond To Evolving Rules; and
Answer Common Questions That Health Plan Sponsors and Administrators Are Struggling With Submitted By Audience Members
Registrants are encouraged to help shape the program to reflect their questions and concerns by e-mailing their proposed questions prior to the program to cstamer@solutionslawyer.net. The program's educational* discussion will be tailored taking into account this input with significant time set aside to share practical information and possible approaches for addressing questions and concerns of shared concern identified from this audience input.
A Fellow in the American College of Employee Benefits Counsel, the American Bar Association & the State Bar of Texas, recognized in International Who's Who, and Board Certified in Labor & Employment Law, Cynthia Marcotte Stamer is nationally and internationally recognized for her extensive and highly practical, solutions-oriented health plan work, advocacy, publications, programs and leadership.
For more than 25 years, Ms. Stamer has advised and represented private and public employers, employer and union plan sponsors, employee benefit plans, associations, their fiduciaries, administrators, and vendors, group health, Medicare and Medicaid Advantage, and other insurers, governments and others on health and other employee benefit, employment, insurance and health care compliance, risk management, public policy, administration and defense. Throughout her career, Ms. Stamer has worked extensively with employer and other health plan sponsors, insurers, plan administrators and other service providers, outsourcers and others to develop innovative health benefit programs and solutions and to document, administer and defend those arrangements in the mist of rising costs, evolving regulations and changing markets.
A primary drafter of the Bolivian Social Security privatization law with extensive regulatory and public policy experience, Ms. Stamer has been involved domestically and internationally as an advocate and advisor on health care, pension and Social Security, workforce and insurance reform and regulation. She presently serves as the scribe for the ABA JCEB Annual Agency Meeting with the Office of Civil Rights. She also represents clients in dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, HUD and Justice, as well as a state legislatures attorneys general, insurance, labor, worker's compensation, and other agencies and regulators.
Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and the ABA RPTE Employee Benefits Group, Ms. Stamer presently serves as Co-Chair of the ABA RPTE Section Welfare Plan Committee; Vice Chair of the ABA TIPS Employee Benefit Committee; as a Council Representative of the ABA Joint Committee on Employee Benefits; an Editorial Advisory Board Member for the Institute of Human Resources (IHR/HR.com), Employee Benefit News and Insurance Thought Leadership; Editor and Publisher of various Solutions Law Press, Inc. publications, and previously served on the Editorial Advisor Board of the the BNA Employee Benefits CD-Rolm.
A popular and prolific author and speaker, Ms. Stamer's Solutions Law Press, Inc. HR & Benefits Update publication was recognized as one of the Top 50 Human Resources Blogs To Watch in 2012. Ms. Stamer regularly authors materials and conducts workshops and professional, management and other training on employee benefits, human resources and related topics for the ABA, Aspen Publishers, the Bureau of National Affairs (BNA), SHRM, World At Work, Government Institutes, Inc., the Society of Professional Benefits Administrators and many other organizations. She also regularly serves on the faculty and planning committees of a multitude of symposium and other educational programs. For more details about Ms. Stamer's services, experience, presentations, publications, and other credentials or to inquire about arranging counseling, training or presentations or other services by Ms. Stamer, see www.CynthiaStamer.com.
* Registrants are reminded that this discussion is provided for general information and educational purposes. Accordingly, registrants are reminded that the discussion does not constitute legal advice, a substitute for legal advice or establish an attorney-client or other professional relationship.
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Review and update your policies and be careful how you handle employee reports of injury or safety concerns. That's the message of the settlement recently announced with BNSF Railway Co. of Fort Worth, Texas (BNSF). BNSF has signed a settlement with the Occupational Safety and Health Administration (OSHA) to voluntarily revise several personnel policies that OSHA alleged violated the whistleblower provisions of the Federal Railroad Safety Act. The law protects railroad workers from retaliation for, among other acts, reporting suspected violations of federal laws and regulations related to railroad safety and security, hazardous safety or security conditions, and injuries.
The whistleblower provisions of the 22 statutes enforced by OSHA protect employees who report violations of various commercial motor vehicle, airline, nuclear, pipeline, environmental, railroad, public transportation, maritime, consumer product, health care reform, securities, food safety, and consumer financial reform laws and regulations.OSHA charged that BNSF Policies of assigning points to workers reporting safety violations or injuries and other practices deterred or penalized workers protected by the whistleblower provisions of the law.
The major terms of the BNSF settlement available at http://www.whistleblowers.gov/acts/bnsf_accord.html include:
Changing BNSF's disciplinary policy so that injuries no longer play a role in determining the length of an employee's probation following a record suspension for a serious rule violation. As of Aug. 31, 2012, BNSF has reduced the probations of 136 employees who were serving longer probations because they had been injured on-the-job.
Eliminating a policy that assigned points to employees who sustained on-the-job injuries.
Revising a program that required increased safety counseling and prescribed operations testing so that work-related injuries will no longer be the basis for enrolling employees in the program. As part of the negotiations leading up to the accord, BNSF removed from the program approximately 400 workers.
Instituting a higher level review by BNSF's upper management and legal department for cases in which an employee who reports an on-duty personal injury is also assessed discipline related to the incident giving rise to the injury.
Implementing a training program for BNSF's managers and labor relations and human resources professionals to educate them about their responsibilities under the FRSA. The training will be incorporated into BNSF's annual supervisor certification program.
Making settlement offers in 36 cases to employees who filed whistleblower complaints with OSHA alleging they were harmed by one or more of the company's previous policies.
Between August 2007, when OSHA was assigned responsibility for whistleblower complaints under FRSA, and September 2012, OSHA received 1,206 FRSA whistleblower complaints. The number of FRSA whistleblower complaints that OSHA currently receives surpasses the number of whistleblower complaints that OSHA receives under any of the other 21 whistleblower protection statutes it enforces except for Section 11(c) of the Occupational Safety and Health Act of 1970. More than 60 percent of the FRSA complaints filed with OSHA involve an allegation that a railroad worker has been retaliated against for reporting an on-the-job injury.
"Protecting America's railroad workers who report on-the-job injuries from retaliation is an essential element in OSHA's mission. This accord makes significant progress toward ensuring that BNSF employees who report injuries do not suffer any adverse consequences for doing so," said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels. "It also sets the tone for other railroad employers throughout the U.S. to take steps to ensure that their workers are not harassed, intimidated or terminated, in whole or part, for reporting workplace injuries."
"Ensuring that employees can report injuries or illnesses without fear of retaliation is crucial to protecting worker safety and health," said Michaels. "If employees do not feel free to report injuries or illnesses, the employer's entire workforce is put at risk because employers do not learn of and correct dangerous conditions that have resulted in injuries." Read the News Release.
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Health plans, their employer or other sponsors, insurers, fiduciaries, administrative service providers and other business associates have a lot of work to do.
Health plans, health care clearinghouses and their business associates will need to review and update their policies and practices for handling and disclosing personally identifiable health care information ("PHI") in response to the omnibus restatement of the Department of Health & Human Services ("HHS") Office of Civil Rights ("OCR") of its of its regulations (the "2013 Regulations") implementing the Privacy and Security Rules under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The Rulemaking announced January 17, 2013 may be viewed here.
The 2013 Regulations Overview
Since 2003, HIPAA generally has required that health care providers, health plans, health care clearinghouses and their business associates ("Covered Entities") restrict and safeguard individually identifiable health care information ("PHI") of individuals and afford other protections to individuals that are the subject of that information. The 2013 Regulations published today complete the implementation of changes to HIPAA that Congress enacted when it passed the Health Information Technology for Economic and Clinical Health (HITECH) Act in 2009 as well as make other changes to the prior regulations that OCR found desirable based on its experience administering and enforcing the law over the past decade.
Since passage of the HITECH Act, OCR officials have warned Covered Entities to expect an omnibus restatement of its original regulations. While OCR had issued certain regulations implementing some of the HITECH Act changes, it waited to publish certain regulations necessary to implement other HITECH Act changes until it could complete a more comprehensive restatement of its previously published HIPAA regulations to reflect both the HITECH Act amendments and other refinements to its HIPAA Rules. The 2013 Regulations published today fulfill that promise by restating OCR's HIPAA Regulations to reflect the HITECH Act Amendments and other changes and clarifications to OCR's interpretation and enforcement of HIPAA.
The restated rules in the 2013 Regulations make it imperative that Covered Entities review the revised rules carefully and updated their policies, practices, business associate agreements, training and documentation to comply with the updated requirements and other enforcement and liability risks. OCR even prior to the regulations has aggressively investigated and enforced the HIPAA requirements.
The commitment of OCR to enforcement most recently was demonstrated by its recent settlement with Hospice of North Idaho (HONI). On January 2, 2013, OCR announced HONI will pay OCR $50,000 to settle potential HIPAA violations that occurred in connection with the theft of an unencrypted laptop computer containing ePHI. The HONI settlement is the first settlement involving a breach of ePHI affecting fewer than 500 individuals.
While the HONI settlement marks the first settlement on a small breach, this is not the first time OCR has sought sanctions against a covered entity for data breaches involving the loss or theft of unencrypted data on a Laptop, storage device or other computer device. Rather, OCR continues to rollout a growing list of enforcement actions demonstrating the potential risks of HIPAA violations are significant and growing. OCR Hits Alaska Medicaid For $1.7M+ For HIPAA Security Breach; OCR Audit Program Kickoff Further Heats HIPAA Privacy Risks; $1.5 Million HIPAA Settlement Reached To Resolve 1st OCR Enforcement Action Prompted By HITECH Act Breach Report; HIPAA Heats Up: HITECH Act Changes Take Effect & OCR Begins Posting Names, Other Details Of Unsecured PHI Breach Reports On Website; Providence To Pay $100000 & Implement Other Safeguards.
In response to the 2013 Regulations and these expanding exposures, all Covered Entities should review critically and carefully the adequacy of their current HIPAA Privacy and Security compliance policies, monitoring, training, breach notification and other practices taking into consideration OCR's investigation and enforcement actions, emerging litigation and other enforcement data; their own and reports of other security and privacy breaches and near misses; and other developments to decide if additional steps are necessary or advisable. In response to these expanding exposures, all covered entities and their business associates should review critically and carefully the adequacy of their current HIPAA Privacy and Security compliance policies, monitoring, training, breach notification and other practices taking into consideration OCR's investigation and enforcement actions, emerging litigation and other enforcement data; their own and reports of other security and privacy breaches and near misses, and other developments to decide if tightening their policies, practices, documentation or training is necessary or advisable.
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IRS Says Eligible Home-Based Businesses May Deduct up to $1,500; Saves Taxpayers 1.6 Million Hours A Year
The Internal Revenue Service (IRS) has announced a simplified option that many owners of home-based businesses and some home-based workers may use to figure their deductions for the business use of their homes.
In tax year 2010, the most recent year for which figures are available, nearly 3.4 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction).
The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually.
"This is a common-sense rule to provide taxpayers an easier way to calculate and claim the home office deduction," said Acting IRS Commissioner Steven T. Miller. "The IRS continues to look for similar ways to combat complexity and encourages people to look at this option as they consider tax planning in 2013."
The new option provides eligible taxpayers an easier path to claiming the home office deduction. Currently, the IRS generally requires a home-based business to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers claiming the optional deduction will complete a significantly simplified form.
Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method.
Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees are still fully deductible.
Current restrictions on the home office deduction, such as the requirement that a home office must be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.
The new simplified option is available starting with the 2013 return most taxpayers file early in 2014. Further details on the new option can be found in Revenue Procedure 2013-13, posted on IRS.gov. Revenue Procedure 2013-13 is effective for taxable years beginning on or after January 1, 2013, and the IRS welcomes public comment on this new option to improve it for tax year 2014 and later years. There are three ways to submit comments.
E-mail to: Notice.Comments@irscounsel.treas.gov. Include "Rev. Proc. 2013-13" in the subject line.
Mail to: Internal Revenue Service, CC:PA:LPD:PR (Rev. Proc. 2013-13), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
Hand deliver to: CC:PA:LPD:PR (Rev. Proc. 2013-13), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC, between 8 a.m. and 4 p.m., Monday through Friday.
The deadline for comment is April 15, 2013.
If you need help with these or other health benefit or other human resources, employee benefit, insurance, compensation or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.
A Fellow in the American College of Employee Benefit Counsel, State Bar of Texas and American Bar Association, Vice President of the North Texas Health Care Compliance Professionals Association, the Former Chair of the ABA RPTE Employee Benefit & Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Council Representative, and Past Chair of the ABA Health Law Section Managed Care & Insurance Section, Ms. Stamer is nationally and internationally recognized for her experience and skill aiding clients with a diverse range of employment, employee benefits, health and safety, public policy, and other compliance and risk management concerns.
Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a member of the Editorial Advisory Board and expert panels of HR.com, Employee Benefit News, InsuranceThoughtLeadership.com, and Solutions Law Press, Inc., management attorney and consultant Ms. Stamer has 25 years of leading edge experience helping employers; health and other employee benefit plans and their sponsors, administrators, fiduciaries; TPAs, insurers, governments, employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit and management policies and practices. Her experience includes extensive work representing advising these and other clients, governmental bodies, insurance and financial services organizations, third party administrators and others to develop, design, defend and administer creative health, disability, severance and other employee benefit and compensation arrangements, products and services. She also helps these and other clients monitor, address and respond to federal, state, and international health care and insurance and other regulatory, legislative, audit and enforcement developments. Ms. Stamer has worked, extensively on these and other workforce and performance related matters. In addition to her continuous day-to-day involvement helping businesses to manage employment and employee benefit plan concerns, she also has extensive public policy and regulatory experience with these and other matters domestically and internationally. A former member of the Executive Committee of the Texas Association of Business and past Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, Ms. Stamer served as a primary advisor to the Government of Bolivia on its pension privatization law, and has been intimately involved in federal, state, and international workforce, health care, pension and social security, tax, education, immigration, education and other legislative and regulatory reform in the US and abroad. She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly. Ms. Stamer regularly works with agencies, publishes and speaks extensively on human resources and employee benefits, medical and other privacy and data security, health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her publications and insights on HIPAA and other data privacy and security concerns appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications. You can get more information about her HIPAA and other experience here.
If you need help with these or other compliance concerns, wish to ask about arranging for compliance audit or training, or need legal representation on other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here.
Learn Latest On OCR New HIPAA De-Identification Guidance
Solutions Law Press, Inc.™ provides business and management information, tools and solutions, training and education, services and support to help organizations and their leaders promote effective management of legal and operational performance, regulatory compliance and risk management, data and information protection and risk management and other key management objectives. Solutions Law Press, Inc.™ also conducts and assists businesses and associations to design, present and conduct customized programs and training targeted to their specific audiences and needs. For additional information about upcoming programs, to explore becoming a presenting sponsor for an upcoming event, e-mail your request to info@Solutionslawpress.com These programs, publications and other resources are provided only for general informational and educational purposes. Neither the distribution or presentation of these programs and materials to any party nor any statement or information provided in or in connection with this communication, the program or associated materials are intended to or shall be construed as establishing an attorney-client relationship, to constitute legal advice or provide any assurance or expectation from Solutions Law Press, Inc., the presenter or any related parties. If you or someone else you know would like to receive future Alerts or other information about developments, publications or programs or other updates, send your request to info@solutionslawpress.com. CIRCULAR 230 NOTICE: The following disclaimer is included to comply with and in response to U.S. Treasury Department Circular 230 Regulations. ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.
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Revenue Procedure 2013-15 provides the 2013 cost-of-living adjustments for inflation for certain items. The guidance includes adjustments to the tax tables, including items whose values were specified in the American Taxpayer Relief Act of 2012 (ATRA), such as:
The beginning of the 39.6% income tax brackets;
The beginning income levels for the limitation on certain itemized deductions; and
The beginning income levels for the phaseout of the personal exemptions[
In addition Revenue Procedure 2013-5 modifies Revenue Procedure 2011-52 to reflect an amendment to section 132(f)(2) made by ATRA concerning qualified transportation fringe benefits. Specifically, for 2012, the monthly limitation regarding the aggregate fringe benefit exclusion amount for transit passes and transportation in a commuter highway vehicle is $240.
Revenue Procedure 2013-15 will be published in Internal Revenue Bulletin 2013-5 on January 28, 2013.
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Employers and others collecting, retaining or reporting employee or other tax identification numbers or other sensitive information for tax withholding or reporting purposes should take appropriate steps to protect that information against possible identity theft or other misuse.
The wealth of sensitive personal identification information and financial records makes tax records a highly attractive source of data for identity thieves. According to the Internal Revenue Service (IRS), tax-related identity theft incidents have risen significantly in recent years. Identity theft case receipts increased by more than 650 percent from FY 2008 to FY 2012. At the end of FY 2012, the IRS had almost 650,000 identity-theft cases in its inventory servicewide. The IRS reports the problem has grown worse as organized criminal actors have found ways to steal the Social Security numbers (SSNs) of taxpayers, file tax returns using those taxpayers' names and SSNs, and obtain fraudulent tax refunds. Then, when the real taxpayer files a return claiming the refund, that return is rejected. The impact on victims is significant. More than 75 percent of taxpayers filing returns are due refunds, which average some $3,000 and are not paid until the IRS fully resolves a case.
When the IRS Commissioner testified in 2008 about identity theft before a Senate Finance Committee hearing. he stated: "My overall goal as the IRS Commissioner is that when a taxpayer [who is an identity theft victim] contacts us with an issue or concern, we have in place a seamless process that gets the issue resolved promptly." Later that year, the IRS established an "Identity Protection Specialized Unit" (or "IPSU"), which was designed to provide centralized assistance to victims of identity theft. The National Taxpayer Advocate supported the commitment to centralized and prompt victim assistance.
Since that time, the IRS has created numerous task forces and other teams in recent years in an attempt to improve its identity theft processes, yet victims still face the same "labyrinth of procedures and drawn-out timeframes for resolution" that they faced five years ago. The IRS is instructing its employees to advise identity theft victims that it will take 180 days – half a year – to resolve their cases. Complicated cases inevitably will take longer. Thus, the IRS's procedural changes are not providing faster relief.
The report also says the IRS has decided to reverse course and decentralize victim assistance. It recently created specialized units within each of 21 individual functions to work on identity theft cases, apparently under the belief that most identity theft cases involve a single issue that the relevant specialized unit can work most efficiently. The report expresses concern about this backtracking from a centralized approach.
The Taxpayer Advocate Service (TAS) itself handled nearly 55,000 identity theft cases in FY 2012, most of which involved multiple issues that required actions by multiple units. The report expresses concern that creation of 21 specialized units will erode the centralized role of the IPSU, require taxpayers to speak with multiple functions, increase the time it takes to resolve cases, and heighten the risk that some issues may not be addressed.
"Taxpayers need 'one-stop shopping' – a single point of contact they can work with to resolve all issues in their cases – and the IRS needs a 'traffic cop' to make sure that all units complete their actions and that parts of cases do not fall through the cracks," Olson said. "And six months is an unacceptable period of time to expect taxpayer-victims to wait. The IRS must do more to provide the prompt and seamless assistance to identity theft victims that Commissioner Shulman promised."
While the IRS continues to work on protecting taxpayer data against theft and investigating and resolving tax-related identity theft cases, businesses that collect, retain and report employee, contractor or other personal financial information for tax related or other purposes are urged to take steps to protect the data that they collect and retain against identity theft. Since identity theft may begin when a worker misrepresents his or her identity at the commencement of employment, many employers find it beneficial to take reasonable steps to verify the identity and veracity of the documentation that a worker presents when commencing employment. Once data is collected, businesses and others that have access to personal financial information or other data collected for tax purposes need to recognize their responsibility to safeguard that information against improper use and disclosure under the Internal Revenue Code as well as other applicable laws. If confronted with a "no-match" letter from the Social Security Administration or a complaint or other indication that a worker may have misrepresented his or her identity, or another indication of a breach of this data, businesses should contact experienced legal counsel to aid in the proper investigation of these concerns and the resolution of concerns resulting from this investigation. Where appropriate, the business may need to report its concerns to the IRS or advise a worker or other party reporting a likely identity theft of taxpayer information to the TAS or other appropriate officials.
Businesses needing assistance with investigation or mitigation of a potential theft of tax or other sensitive data, see www.cynthiastamer.com or contact attorney Cynthia Marcotte Stamer.
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As part of its continuing effort to boost retirement savings among Americans, the Internal Revenue Service is reminding low- and moderate-income workers to take steps now to save for retirement and earn a special tax credit in 2012 and the years ahead. Employers sponsoring retirement plans where low participation by low- and moderate income workers adversely impacts the ability of the plan to meet applicable nondiscrimination tests may want to consider incorporating information about the availability of the saver's credit into their plan related communications as an added tool for helping these workers recognize the potential benefits of contributing.
The saver's credit helps qualifying low to moderate income workers offset part of the first $2,000 workers voluntarily contribute to IRAs and to 401(k) plans and similar workplace retirement programs. Also known as the retirement savings contributions credit, the saver's credit is available in addition to any other tax savings that apply.
The saver's credit can be claimed by:
Married couples filing jointly with incomes up to $57,500 in 2012 or $59,000 in 2013;
Heads of Household with incomes up to $43,125 in 2012 or $44,250 in 2013; and
Married individuals filing separately and singles with incomes up to $28,750 in 2012 or $29,500 in 2013.
Eligible workers still have until April 15, 2013 to make qualifying retirement contributions and get the saver's credit on their 2012 tax return by setting up a new individual retirement arrangement or adding money to an existing IRA. However, elective deferrals (contributions) must be made by the end of the year to a 401(k) plan or similar workplace program, such as a 403(b) plan for employees of public schools and certain tax-exempt organizations, a governmental 457 plan for state or local government employees, and the Thrift Savings Plan for federal employees. Employees who are unable to set aside money for this year may want to schedule their 2013 contributions soon so their employer can begin withholding them in January.
Like other tax credits, the saver's credit can increase a taxpayer's refund or reduce the tax owed. Though the maximum saver's credit is $1,000, $2,000 for married couples, the IRS cautioned that it is often much less and, due in part to the impact of other deductions and credits, may, in fact, be zero for some taxpayers.
A taxpayer's credit amount is based on his or her filing status, adjusted gross income, tax liability and amount contributed to qualifying retirement programs. Form 8880 is used to claim the saver's credit, and its instructions have details on figuring the credit correctly.
In tax-year 2010, the most recent year for which complete figures are available, saver's credits totaling just over $1 billion were claimed on more than 6.1 million individual income tax returns. Saver's credits claimed on these returns averaged $204 for joint filers, $165 for heads of household and $122 for single filers.
The saver's credit supplements other tax benefits available to people who set money aside for retirement. For example, most workers may deduct their contributions to a traditional IRA. Though Roth IRA contributions are not deductible, qualifying withdrawals, usually after retirement, are tax-free. Normally, contributions to 401(k) and similar workplace plans are not taxed until withdrawn.
Other special rules that apply to the saver's credit include the following:
Eligible taxpayers must be at least 18 years of age.
Anyone claimed as a dependent on someone else's return cannot take the credit.
A student cannot take the credit. A person enrolled as a full-time student during any part of 5 calendar months during the year is considered a student.
Certain retirement plan distributions reduce the contribution amount used to figure the credit. For 2012, this rule applies to distributions received after 2009 and before the due date, including extensions, of the 2012 return. Form 8880 and its instructions have details on making this computation.
Begun in 2002 as a temporary provision, the saver's credit was made a permanent part of the tax code in legislation enacted in 2006. To help preserve the value of the credit, income limits are now adjusted annually to keep pace with inflation. More information about the credit is on IRS.gov.
©2013 Cynthia Marcotte Stamer, P.C. Non-exclusive license to republish granted to Solutions Law Press, Inc.™ All other rights reserved
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Employers and other self-insured group health plan sponsors and health insurers, adjust your budgets and prepare to open up your wallets to pay additional fees mandated by the Patient Protection and Affordable Care Act ("PPACA").
Self-insured employers and health insurers generally must begin paying a new fee imposed as part of PPACA. PPACA generally requires that health insurance policy issuers and plan sponsors of self-insured health plans pay the new fee for policy and plan years ending on or after October 1, 2012, and before October 1, 2019 or policy and plan years ending on or after October 1, 2012, and before October 1, 2019. July 31, 2013 is the deadline for reporting and payment of the first fee payment required by these provisions.
The Internal Revenue Service (IRS) and Department of Treasury published final regulations ("Regulations") implementing these new rules on December 6, 2012. These Regulations include many provisions that are likely to come as a surprise to many employer and other health plan sponsors. Health insurers, employers and other sponsors of self-insured health plans and others responsible for their funding and administration need to review these regulations and make other arrangements to budget for and timely report and pay this required fee.
New Fees Help Fund New Patient-Centered Outcomes Research Institute
PPACA amended the Internal Revenue Code ("Code") to require the new fee to help fund the establishment and operation of the new Patient-Centered Outcomes Research Institute (the ''Institute'') to be created by PPACA. Congress intends that the Institute will be a private, nonprofit corporation charged with conducting research to help assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing the quality and relevance of evidence-based medicine through the synthesis and dissemination of comparative clinical effectiveness research findings.
PPACA added new Sections 4375, 4376, and 4377 to the Code to provide a funding source for the Trust Fund. These new Code Sections impose require issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to pay the new fee by July 31, 2012 for each plan year beginning after September 30, 2012 and before October 1, 2019 to fund the Patient-Centered Outcomes Research Trust Fund (the "Trust Fund"), which in turn will help pay the costs of the Institute.
Code Section 4377(c) provides that the fees imposed by sections 4375 and 4376 are treated as taxes for purposes of subtitle F of the Code (sections 6001 through 7874 that set forth the rules of federal tax procedure and administration).
Fee Amount Calculation & Payment
As amended by PPACA, the Code requires that employers sponsoring self-insured group health plans and most health insurers file a return and pay a fee equal to $1 multiplied by the average number of lives covered under the plan or policy by July 31, 2012. The amount of this fee will increase to $2 multiplied by the average number of lives for post-September 30, 2013 plan years. For post-September 30, 2014 plan years, the Code provides for further adjustments in the fee based on increases in the projected per capita amount of National Health Expenditures.
To meet this requirement, health insurers and plan sponsors must file a Form 720, Quarterly Federal Excise Tax Return along with the required payment once a year on or before July 31 of the calendar year following the last day of the policy year or plan year for which the fee is required to report and pay the fee.
Overview of ACA Rules Requiring Payment of Fee
The Code now separately assesses a fee on issuers of health insurance policies and on plan sponsors of self-insured health plans for each policy year ending on or after October 1, 2012 and before October 1, 2019. Code Section 4375 requires payment of a fee by "issuers" of "specified health insurance policies." Code Section 4376 requires "sponsors" of self-insured health plans to pay a fee.
Each of these Code Sections basically uses the same formula to calculate the required fee owing by a health insurance issuer or a self-insured plan sponsor. The amount of the required fee due on July 31, 2013 for plan years beginning on or before October 1, 2013 will be one dollar multiplied by the average number of lives covered by the policy or plan. The fee due on July 31, 2014 for plan years beginning between October 2, 2013 and October 1, 2014 is set to increase to two dollars multiplied by the average number of lives covered under the policy. For policy or plan years ending on or after October 1, 2014, PPACA provides for additional increases in the required fee based on increases in the projected per capita amount of National Health Expenditures. See Treas. Reg. §§ 46.4375–1; Rejecting arguments that Congress only intended to require that either the insurer or the plan sponsor pay a fee annually, the Regulations construe these requirements as obligating both a self-insured health plans sponsor and an insurer to pay a separate fee annually, even if the fee is assessed upon the same lives.
The Preamble to the Regulations states that a self-insured plan sponsor must pay the fee with respect to arrangements where the plan design layers a self-insured portion of the plan with an insured portion, even though the insurer also must pay the fee with respect to the insured portion.
The fee calculation differs slightly for purposes of determining the fee a self-insured plan sponsor owes versus the fee owed by an insurer. Regardless, however, the Regulations state that for purposes of calculating these numbers, retirees and beneficiaries continuing coverage under the group medical coverage continuation rules generally count. The Preamble to the Regulations states that the IRS views retiree-only plans and COBRA coverage subject to the tax imposed under Code § 4375 and plan sponsors may be required to pay the tax under Code § 4376. Concerning retiree-only coverage, the Preamble states:
Although group health plans that have fewer than two participants who are current employees (such as retiree-only plans) are excluded from the requirements of Code chapter 100 (setting forth requirements applicable to group health plans such as portability, nondiscrimination, and market reform requirements), this exclusion does not apply to Code §§ 4375 and 4376 because these sections are in chapter 34; and
For self-insured arrangements, Code § 4376(c)(2)(A) states explicitly that an applicable self-insured health plan includes a plan established or maintained by one or more employers for the benefit of their employees or former employees.
Section 4376 Fee For Self-Insured Plan Sponsors
Applicability of Code Section 4376 Fee To Self-Insured Health Plans. The fee under Code Section 4376 applies to the plan sponsor of an applicable self-insured health plan.
Section 4376(c) defines an applicable self-insured health plan as any plan for providing accident or health coverage if any portion of the coverage is provided other than through an insurance policy, and the plan is established or maintained by either:
One or more employers for the benefit of their employees or former employees;
One or more employee organizations for the benefit of their members or former members;
Jointly by one or more employers and one or more employee organizations for the benefit of employees or former employees;
By a voluntary employees' beneficiary association described in Code Section 501(c)(9); or
By any organization described in section 501(c)(6), or (6) if not previously described, by a multiple employer welfare arrangement (as defined in section 3(40) of the Employee Retirement Income Security Act ("ERISA"), a rural electric cooperative under ERISA Section 3(40)(B)(iv), or a rural telephone cooperative association under ERISA Section 3(40)(B)(v). See Code § 4376; Regulation §46.4376–1(a), (b)(1).
Code Section 4376(b)(1) requires that the plan sponsor of a self-insured health plan pay the required fee for self-insured health plans imposed by Section 4376(a). For this purpose, Code Section 4376(b)(2) defines a plan sponsor as:
The employer in the case of a plan established or maintained by a single employer;
The employee organization in the case of a plan established or maintained by an employee organization;
The association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the plan in the case of: (1) a plan established or maintained by two or more employers or jointly by one or more employers and one or more employee organizations; (2) a multiple employer welfare arrangement; or (3) a voluntary employees' beneficiary association described in Code Section 501(c)(9); or
The cooperative or association that establishes the plan in the case of a plan established or maintained by a rural electric cooperative or rural telephone cooperative association within the meaning of ERISA.
Regulation § 46.4376-2(b)(2) defines plan sponsor to mean the following:
The employer for a self-insured health plan established or maintained by a single employer;
The employee organization for a self-insured health plan established or maintained by an employee organization;
The joint board of trustees for a multiemployer plan within the meaning of Code §414(f));
The committee, in the case of a multiple employer welfare arrangement within the meaning of Section 3(40) of the Employee Retirement Income Security Act ("ERISA");
The cooperative or association that establishes or maintains an applicable self-insured health plan established or maintained by a rural electric cooperative under ERISA § 3(40)(B)(iv) or rural cooperative association under ERISA 3(40)(B)(v);
The trustee, in the case of an applicable self-insured health plan established or maintained by a voluntary employees' beneficiary association under Code § 501(c)(9) not merely serving as a funding vehicle for a plan that is established or maintained by an employer or other person;
In the case of an applicable self-insured health plan the plan sponsor of which is not previously described, the person identified by the terms of the document under which the plan is operated as the plan sponsor, or the person designated by the terms of the document under which the plan is operated as the plan sponsor for Code § 4376 purposes, provided that designation is made in writing, and that person has consented to the designation in writing, by no later than the date by which the return paying the fee under section 4376 for that plan year is required to be filed, after which date that designation for that plan year may not be changed or revoked, and provided further that a person may be designated as the plan sponsor only if the person is one of the persons establishing or maintaining the plan (for example, one of the employers that establishes or maintains the plan with one or more other employers or employee organizations); or
Where an applicable self-insured health plan sponsor is not previously and for which no identification or designation of a plan sponsor has been made under the prior paragraph the plan sponsor means, each employer that establishes or maintains the plan with respect to employees of that employer, each employee organization that establishes or maintains the plan with respect to members of that employee organization, and each board of trustees, cooperative, or association that establishes or maintains the plan.
While the fee will impact most health insurance policies and self-insured plans, the Code does exempt a few arrangements. See Code § 4376. Regulation § 46.4376-1(b)(2) construes these exemptions to include the following categories of programs:
A plan that provides benefits substantially all of which are excepted benefits for purposes of the HIPAA Portability Rules under Code § 9832(c). Pursuant to this provision, for instance, the Regulations state that a health flexible spending arrangement (health FSA) under Code § 106(c)(2)) that satisfies the requirements to be treated as an excepted benefit under Code § 9832(c) and Regulation § 54.9831–1(c)(3)(v) is not an applicable self-insured health plan. However, a health FSA that is not treated as an excepted benefit under Code § 9832(c) and Regulation § 54.9831–1(c)(3)(v) is an applicable self-insured health plan.
An employee assistance program, disease management program, or wellness program if the program does not provide significant benefits in the nature of medical care or treatment.
A plan that, as demonstrated by the facts and circumstances surrounding the adoption and operation of the plan, was designed specifically to cover primarily employees who are working and residing outside the United States (as defined in § 46.4377–1(a)(3)). See Regulation § 46.4376–1(b)(ii).
Where the same plan sponsor maintains multiple self-insured arrangements Regulation § 46.4376(b)(iii) specifies that the employer may treat two or more arrangements established or maintained by the same plan sponsor that provide accident and health coverage other than through an insurance policy and that have the same plan year as a single applicable self-insured health plan for purposes of reporting and calculating the Code § 4376 fee.
Calculation Of Self-Insured Plan Fee Under Code § 4376
Regulation § 46.4376-1 requires that a self-insured plan sponsor determine the number of covered lives for purposes of calculating the fee using on of the following methods:
The actual count method where the plan sponsor adds the totals of lives covered for each day of the plan year and divides that total by the number of days in the plan year;
The snapshot method, the plan sponsor adds the totals of lives covered on a date during the first, second, or third month of each quarter of the plan year (or more dates in each quarter if an equal number of dates is used in each quarter), and divides that total by the number of dates on which a count was made in accordance with rules set forth in the Regulations. For instance, Each date used for the second, third and fourth quarter must be within three days of the date in that quarter that corresponds to the date used for the first quarter, and all dates used must fall within the same plan year. If a plan sponsor uses multiple dates for the first quarter, the plan sponsor must use dates in the second, third, and fourth quarters that correspond to each of the dates used for the first quarter or are within three days of such corresponding dates, and all dates used must fall within the same plan year. The 30th and 31st day of a month are treated as the last day of the month for purposes of determining the corresponding date for any month that has fewer than 31 days. The number of lives covered on a designated date using this method may be determined using either the snapshot factor method or the snapshot count method set forth in the Regulations. In the snapshot factor method, the number of lives covered on a date is equal to the sum of: (1) the number of participants with self-only coverage on that date; plus (2) the number of participants with coverage other than self-only coverage on the date multiplied by 2.35. In the snapshot count method, the number of lives covered on a date equals the actual number of lives covered on the designated date. The plan sponsor must use the same method of calculating the average number of lives covered under the plan consistently for the duration of the plan year. However, a plan sponsor may use a different method from one plan year to the next.
The Form 5500 method, where the plan sponsor determines the average number of lives covered under a plan for a plan year as the result of the sum of the total participants covered at the beginning and the end of the plan year, as reported on the Form 5500 or Form 5500–SF for the applicable self-insured health plan, divided by 2. This method is only available if the Form 5500 is filed by the due date for payment of the fee. This means where a plan administrator extends filing beyond July 31, the plan sponsor cannot use this method.
The Regulations establish a special rule for lives covered solely by the fully-insured options under an applicable self-insured health plan. Under this special rule, when an applicable self-insured health plan provides accident and health coverage through fully insured options and self-insured options, the plan sponsor is permitted to disregard the lives that are covered solely under the fully-insured options in determining the lives covered taken into account for the actual count method, the snapshot method, and the Form 5500 method.
As for insured plans, the Regulations also provide special rules for determining the fee the first year the fee is in effect. Under this rule, for a plan year beginning before July 11, 2012, and ending on or after October 1, 2012, a plan sponsor may determine the average number of lives covered under the plan for the plan year using any reasonable method.
Section 4375 Fee For Insurers
The fee under Code Section 4375 generally applies to issuers of a "specified health insurance policy." Code Section 4375(c) generally defines a specified health insurance policy as any accident or health insurance policy (including a policy under a group health plan) issued with respect to individuals residing in the United States. Code Section 4377(a)(1) defines accident and health coverage as any coverage that, if provided by an insurance policy, would cause the policy to be a specified health insurance policy under Code Section 4375. See Treas. Reg. § 46.4375–1.
Policies Subject To Fee. Regulation § 46.4377–1(a) defines a "specified health insurance policy" as "any accident and health insurance policy (including a policy under a group health plan) issued with respect to individuals residing in the United States" other than those recognized as exempt by the Regulation. The Regulation makes clear that this includes any policy that provides accident and health coverage to an active employee, former employee, or qualifying beneficiary, as continuation coverage required under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) or similar continuation coverage under other Federal law or state law.
However Regulation § 46.4377-1(a)(ii) exempts the following arrangements from the definition of a specified health insurance policy.
Any insurance policy if substantially all of its coverage is of excepted benefits described in Code Section 9832(c);
Any group policy issued to an employer where the facts and circumstances show that the group policy was designed and issued specifically to cover primarily employees who are working and residing outside of the United States for purposes of Regulation § 46.4377–1(a)(3);
Any stop loss or indemnity reinsurance policy; or
Any insurance policy to the extent it provides an employee assistance program, disease management program, or wellness program if the program does not provide significant benefits in the nature of medical care or treatment.
Fee Calculation. The amount of the fee an insurer must pay for a policy for a policy year under Code § 4375 is equal to the product of the average number of lives covered under the policy for the policy year, multiplied by the applicable dollar amount for that policy year.
The applicable dollar amount multiplier is $1 for the fee due on October 1, 2013; $2 for the fee due on October 1, 2014, and the adjusted amount for fees due after October 1, 2014.
Determination Of The Average Number Of Lives Covered. To determine the average number of lives covered under a specified health insurance policy during a policy year, the Regulation requires an issuer to use one of the following methods:
The actual count method, where the issuer determines the average number of lives covered under a policy for a policy year under the actual count method by adding the total number of lives covered for each day of the policy year and dividing that total by the number of days in the policy year;
The snapshot method, where the issuer determines the average number of lives covered under a policy for a policy year by adding the totals of lives covered on a date during the first, second, or third month of each quarter (or more dates in each quarter if an equal number of dates is used for each quarter), and dividing that total by the number of dates on which a count is made. Each date used for the second, third and fourth quarters must be within three days of the date in that quarter that corresponds to the date used for the first quarter, and all dates used must be within the same policy year. If an issuer uses multiple dates for the first quarter, the issuer must use dates in the second, third, and fourth quarters that correspond to each of the dates used for the first quarter or are within three days of such corresponding dates, and all dates used must be within the same policy year. The 30th and 31st day of a month are treated as the last day of the month for purposes of determining the corresponding date for any month that has fewer than 31 days (for example, if either March 30 or March 31 is used as a counting date for a calendar year policy, June 30 is the corresponding date for the second quarter);
The member months method, where the issuer determines the average number of lives covered under all policies in effect for a calendar year based on the member months (an amount that equals the sum of the totals of lives covered on prespecified days in each month of the reporting period) reported on the National Association of Insurance Commissioners ("NAIC") Supplemental Health Care Exhibit filed for that calendar year. Under this method, the average number of lives covered under the policies in effect for the calendar year equals the member months divided by 12; or
The state form method, where an insurer not required to file NAIC annual financial statements may determine the number of lives covered under all policies in effect for the calendar year using a form filed with the issuer's state of domicile and a method similar to the member months method if the form reports the number of lives covered in the same manner as member months are reported on the NAIC Supplemental Health Care Exhibit. See Regulation § 46.4375–1(c)(2)(i).
Issuers must use the same method of calculating the average number of lives covered under a policy consistently for the duration of the year and must use the same method of computing lives for all policies for which a liability is reported on a Form 720, "Quarterly Federal Excise Tax Return," for a particular year. Regulation § 46.4375–1(c)(2)(ii). However, the Regulation allows an issuer that determines the average number of lives covered by using the actual count method or the snapshot method to change its method of computing the average lives covered to the snapshot method or actual count method, respectively, provided that the issuer uses the same method for computing the average lives covered for all policies for which a liability is reported on the Form 720 for that year. Regulation § 46.4375–1(c)(2).
The Regulations also impose various other special rules. For instance, the Regulations state that if the issuer elects to determine the average number of lives covered for all policies in effect during a calendar year using the member months method or the state form method, the applicable dollar amount with respect to such issuer's policies for such calendar year is the applicable dollar amount for policy years ending on December 31 of such calendar year, except that the applicable dollar amount with respect to such an issuer's policies for calendar year 2019 is the applicable dollar amount for policy years ending on September 30, 2019. The Regulations provide various examples of these calculations to illustrate the rules.
The Regulations also provide special rules for the first year and the last year the fee is in effect for an insurer. See Regulation § § 46.4375–1(c).
Plans, Insurers Should Evaluate Options, Plan To Pay Required Fees
The impending obligation provides yet another reason that employers and other self-insured plan sponsors, administrators, insurers, and vendors should re-evaluate their existing health plan designs and costs. Most health insurers and self-insured health plan sponsors will want not only to budget for the impending additional costs associated with these fees, but also evaluate options for mitigating their impact, as well as the costs and administrative burden of tracking and making the required filings. For instance, insurers and plan sponsors of programs subject to these new fees generally will want to evaluate which of the options for collecting the data and calculating the fees will most benefit them. Also, where plan designs used by particular employer or other plan sponsors include both insured and self-insured features, the insurer, plan sponsor and their advisors may want to consider the advisability of restructuring or redesigning plans to mitigate fees or administrative or other expenses. In all cases, parties should audit their programs to ensure that each program and its element is identified and properly taken into account to avoid inadvertent oversights resulting in penalties or other avoidable costs.
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$50K Settlement Shows Small Breach Reports Carry Enforcement Risk
Properly encrypt and protected electronic protected health information (ePHI) on laptops and in other mediums! That's the clear message of the Department of Health and Human Services (HHS) Office of Civil Rights (OCR) in its announcement of its first settlement under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Security Rule involving a breach of ePHI of fewer than 500 individuals by a HIPAA-covered entity, Hospice of North Idaho (HONI).
In announcing the settlement against HONI, OCR sent a clear message that OCR stands ready to penalize these health care providers, health plans, healthcare clearinghouses and their businesses associates (covered entities) when their failure to properly secure and protect ePHI on laptops or in other systems results in a breach of ePHI even when the breach affects fewer than 500 individuals.
OCR Director Leon Rodriguez reiterated OCR's expectation that covered entities will properly encrypt ePHI on mobile or other devices in OCR's announcement of the HONI settlement. "This action sends a strong message to the health care industry that, regardless of size, covered entities must take action and will be held accountable for safeguarding their patients' health information." said OCR Director Leon Rodriguez. "Encryption is an easy method for making lost information unusable, unreadable and undecipherable."
In light of this latest clear warning, health plans and their fiduciaries, sponsors and administrators, health care providers, health care clearinghouses and their business associates should review plans, practices and data security as affecting ePHI and other protected health information on mobile and other devices.
HONI Settlement For Small Breach Notification
On January 2, 2013, OCR announced HONI will pay OCR $50,000 to settle potential HIPAA violations that occurred in connection with the theft of an unencrypted laptop computer containing ePHI. The HONI settlement is the first settlement involving a breach of ePHI affecting fewer than 500 individuals. Read the full HONI Resolution Agreement here.
OCR opened an investigation after HONI reported to HHS that an unencrypted laptop computer containing ePHI of 441 patients had been stolen in June 2010. HONI team members regularly use Laptops containing ePHI their field work. Over the course of the investigation, OCR discovered that HONI had not conducted a risk analysis to safeguard ePHI or have in place policies or procedures to address mobile device security as required by the HIPAA Security Rule. Since the June 2010 theft, HONI has taken extensive additional steps to improve their HIPAA Privacy and Security compliance program.
HIPAA Security & Breach Notification For ePHI
The HONI settlement is notable because it marks the first time OCR has sanctioned a covered entity as a result of an OCR investigation stemming from the covered entity's report of a breach of unsecured protected health information involving fewer than 500 individuals under new breach notification rules added to HIPAA in 2009.
Under the originally enacted requirements of HIPAA, covered entities and their business associates are required to restrict the use, access and disclosure of protected health information and establish and administer various other policies and safeguards in relation to protected health information. Additionally, the Security Rules require specific encryption and other safeguards when covered entities collect, create, use, access, retain or disclose ePHI.
The Health Information Technology for Economic and Clinical Health (HITECH) Act amended HIPAA, among other things to tighten certain HIPAA requirements, expand its provisions to directly apply to business associates, as well as covered entities and to impose specific breach notification requirements. The HITECH Act Breach Notification Rule requires covered entities to report an impermissible use or disclosure of protected health information, or a "breach," of 500 individuals or more (Large Breach) to the Secretary of HHS and the media within 60 days after the discovery of the breach. Smaller breaches affecting less than 500 individuals (Small Breach) must be reported to the Secretary on an annual basis. Since the Breach Notification Rule took effect, OCR's announced policy has been to investigate all Large Breaches and such investigations have resulted in settlements or other corrective action in relation to various Large Breaches. Until now, however, OCR has not made public any resolution agreements requiring settlement payments involving any Small Breaches.
While the HONI settlement marks the first settlement on a small breach, this is not the first time OCR has sought sanctions against a covered entity for data breaches involving the loss or theft of unencrypted data on a Laptop, storage device or other computer device. In fact, OCR's first resolution agreement – reached before Congress added the HIPAA Breach Notification Rules to HIPAA – stemmed from such a breach. Providence To Pay $100000 & Implement Other Safeguards. Breaches resulting from the loss or theft of unencrypted ePHI on mobile or other computer devices or systems has been a common basis of investigation and sanctions since that time, particularly since the Breach Notification rules took effect including breaches of ePHI involving compromised health plan information. See, e.g., OCR Hits Alaska Medicaid For $1.7M+ For HIPAA Security Breach. Coupled with statements by OCR about its intolerance, the HONI and other settlements provide a strong warning to covered entities to properly encrypt ePHI on mobile and other devices.
Furthermore, the HONI settlement also adds to growing evidence of the growing exposures that health care providers, health plans, health care clearinghouses and their business associates need to carefully and appropriately manage their HIPAA encryption and other Privacy and Security responsibilities. See OCR Audit Program Kickoff Further Heats HIPAA Privacy Risks; $1.5 Million HIPAA Settlement Reached To Resolve 1st OCR Enforcement Action Prompted By HITECH Act Breach Report; HIPAA Heats Up: HITECH Act Changes Take Effect & OCR Begins Posting Names, Other Details Of Unsecured PHI Breach Reports On Website. Covered entities are urged to heed these warning by strengthening their HIPAA compliance and adopting other suitable safeguards to minimize HIPAA exposures.
In the face of rising enforcement and fines, OCR's initiation of HIPAA audits and other recent developments, covered entities and their business associates should tighten privacy policies, breach and other monitoring, training and other practices to reduce potential HIPAA exposures in light of recently tightened requirements and new enforcement risks.
In response to these expanding exposures, all covered entities and their business associates should review critically and carefully the adequacy of their current HIPAA Privacy and Security compliance policies, monitoring, training, breach notification and other practices taking into consideration OCR's investigation and enforcement actions, emerging litigation and other enforcement data; their own and reports of other security and privacy breaches and near misses, and other developments to decide if additional steps are necessary or advisable.
New OCR HIPAA Mobile Device Educational Tool
While OCR enforcement of HIPAA has significantly increased, compliance and enforcement of the encryption and other Security Rule requirements of HIPAA are a special focus of OCR.
To further promote compliance with the Breach Notification Rule as it relates to ePHI on mobile devices, OCR and the HHS Office of the National Coordinator for Health Information Technology (ONC) recently kicked off a new educational initiative, Mobile Devices: Know the RISKS. Take the STEPS. PROTECT and SECURE Health Information. The program offers health care providers and organizations practical tips on ways to protect their patients' health information when using mobile devices such as laptops, tablets, and smartphones. For more information, see here. For more information on HIPAA compliance and risk management tips, see here.
If you need help monitoring HIPAA and other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other human resources, employee benefit, or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.
Employers should make reviewing and tightening their worker classification and pay practices a high priority in light of the continuing aggressive investigation and enforcement of minimum wage, overtime and other federal pay law violations by the U.S. Department of Labor (Labor Department) Wage and Hour Division (W&HD).
Latest Enforcement Shows Commitment
The Labor Department's strong commitment to the investigation and enforcement of federal wage and hour law violations is reflected in its announcement of yet another wave of successful enforcement actions against a wide range of employers during December including the following:
Car Wash Employees Receive Back Wages. Labor Department officials say Genter's Detailing Inc. in Frisco, Texas, has paid 53 detail and car wash employees $22,345, following a W&HD investigation that found the employer violated the Fair Labor Standards Act (FLSA) by making illegal deductions from employees' wages for damages to dealership vehicles, resulting in wages below the federal minimum of $7.25 per hour. The company provides car wash and detailing services to car dealerships in the Dallas-Fort Worth area, in Katy and in Austin. More Details Here.
Oklahoma Electrical Services Company Pays Back Wages. Labor Department officials report Lighthouse Electric Inc. in Tulsa, Okla., has paid $42,452 in overtime back wages to 18 current and former electricians following an investigation that found Lighthouse Electric improperly failed to pay employees for time spent traveling to and from their facility to a work site in violation of the FLSA. More Details Here.
Web-based Auto Company Violated FLSA. Labor Department Officials report Auto Cricket Corp., doing business as AutoCricket.com, has agreed to pay $76,589 in back wages to 414 employees following a W&HD investigation that found the company deducted short rest periods as non-work hours from employee totals of hours worked in violation of the FLSA. Additionally, the company paid overtime for hours worked beyond 80 during a biweekly pay period, instead of time and one-half for all hours worked over 40 in a seven-day workweek. More Details Here.
South Carolina Restaurants Pay $391,000 in Back Wages. Labor Department officials report that three San Jose Mexican restaurants, individually owned and operated by Eraclio Leon, Gregorio Leon Sr. and Antonio Leon, have agreed to pay $390,960 in back wages to 37 employees after the W&HD found the South Carolina businesses violated the FLSA by failing to properly compensate employees for all work hours. Investigators determined that tipped employees, such as servers, were paid direct wages below $2.13 per hour and kitchen staff were paid flat salaries each month. More Details Here.
San Francisco Grocer to Pay Back Wages to 25 Workers. The Labor Department announced a U.S. District Court has ordered Casa Guadalupe to pay $110,071 in overtime back wages and liquidated damages to 25 current and former employees at its three San Francisco stores. The Labor Department also assessed $11,687 in civil penalties against the employer because of the willful and repeat nature of the violations. The grocery store chain admitted not paying required overtime wages. Investigators found similar violations in 2010 that resulted in $6,496 in overtime back wages due to three workers. More Details Here.
Environment Services Company Pays Back Wages To Misclassified Environmental Scientists. The Labor Department also announced that Groundwater and Environmental Services Inc., doing business as GES, will pay $187,165 in back wages to 69 employees after the W&HD found FLSA violations resulting from the company's misclassification of junior environmental scientists and junior baseline samplers as exempt from overtime pay. The company collects water samples from property owners in close proximity to oil and gas well drilling sites for baseline sampling surveys. The investigation was part of a Wage and Hour Division's multiyear enforcement initiative focused on the oil and gas industry. More Details Here.
Oklahoma Manufacturer Pays $85,000 for Overtime. Labor Department officials announced Deerebuilt LLC in Ardmore, Okla., has paid $85,105 in overtime back wages to 112 current and former employees following a W&HD investigation that found that the employer paid "straight time" for all hours worked, failing to pay overtime at time and one-half employees' regular rates of pay for hours worked beyond 40 in a workweek, as required by the FLSA. The employer paid employees for overtime hours worked on weekends with separate checks, at straight-time rates. More Details Here.
Oklahoma City Company Faulted for FLSA & Davis-Bacon Violations. The Labor Department announced that Mallett Plumbing and Utility Co. in Oklahoma City has paid $100,264 in back wages to 19 current and former plumbers after an investigation found violations of the FLSA and the Davis-Bacon Act. The W&HD says the company failed to pay workers for overtime and failed to pay prevailing wage rates and fringe benefits. A W&HD investigation found Mallett Plumbing and Utility paid straight time for all hours worked and failed to pay employees the required wages and fringe benefits applicable to the classifications of work they performed while working on building alterations and construction projects for the Health Resources and Services Administration and the Federal Aviation Administration. More Details Here.
The Christmas Light Co. Inc. According to the Labor Department, an investigation by its Dallas Wage and Hour Division office found that The Christmas Light Co. Inc. violated the FLSA by failing to pay 233 installers and removers the minimum and overtime wages and keep records required by law. The complaint filed in the Northern District of Texas seeks back wages and liquidated damages of nearly $500,000 and an injunction against future violations of the FLSA.
The enforcement record of the Labor Department confirms that the Labor Department's suit against the Christmas Light Co. Inc. lawsuit is reflective of a strong enforcement commitment targeting U.S. employers using aggressive worker classification or other pay practices to avoid paying minimum wage or overtime to workers. Under the Obama Administration, DOL officials have made it a priority to enforce overtime, record keeping, worker classification and other wage and hour law requirements. See e.g., Boston Furs Sued For $1M For Violations Of Fair Labor Standards Act; Record $2.3 Millh ion+ Backpay Order; Minimum Wage, Overtime Risks Highlighted By Labor Department Strike Force Targeting Residential Care & Group Homes; Review & Strengthen Defensibility of Existing Worker Classification Practices In Light of Rising Congressional & Regulatory Scrutiny; 250 New Investigators, Renewed DOL Enforcement Emphasis Signal Rising Wage & Hour Risks For Employers; Quest Diagnostics, Inc. To Pay $688,000 In Overtime Backpay. In an effort to further promote compliance and enforcement of these rules, the Labor Department is using smart phone applications, social media and a host of other new tools to educate and recruit workers in its effort to find and prosecute violators. See, e.g. New Employee Smart Phone App New Tool In Labor Department's Aggressive Wage & Hour Law Enforcement Campaign Against Restaurant & Other Employers. As a result of these effort, employers violating the FLSA now face heightened risk of enforcement from both the Labor Department and private litigation.
Review existing practices for tracking compensable hours and paying non-exempt employees for compliance with applicable regulations and to identify opportunities to minimize costs and liabilities arising out of the regulatory mandates;
If the audit raises questions about the appropriateness of the classification of an employee as exempt, self-initiate proper corrective action after consultation with qualified legal counsel;
Review existing documentation and record keeping practices for hourly employees;
Explore available options and alternatives for calculating required wage payments to non-exempt employees;
Consider advisability of tracking hours and activities of employees considered exempt;
Evaluate and manage risks of outsourced labor such as leased, contract or other similar "off-payroll" workers;
Re-engineerwork rules and other practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures; and
Consider and properly coordinate worker classification for health and other employee benefit plan eligibility and other purposes to mitigate risks from unanticipated employee benefit liabilities resulting from misclassification.
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Department of Labor (Labor Department) officials are pointing to a more than $1 million backpay settlement paid by First Republ