Wage and Hour Compliance Priorities for 2014

Recently, Adam R. Long, a Member in McNees Wallace & Nurick LLC's Labor and Employment Law Group, prepared a White Paper regarding Wage and Hour Compliance Priorities for 2014.

Employers should conduct regular and comprehensive wage and hour audits that examine all facets of the employer's pay practices to ensure compliance with the myriad wage and hour laws. That said, we recognize that HR professionals, in-house counsel, and senior management have very limited time and resources to devote to wage and hour compliance. This complimentary white paper discusses specific areas where employers should focus their wage and hour compliance efforts in 2014.
 

Click to view the entire white paper.

DOL Audits of Employer-Sponsored Group Health Plans Now Include Healthcare Reform Compliance

This post was contributed by Stephen R. Kern, Esq., a Member in the Employee Benefits Practice Group.

The U.S. Department of Labor (the "DOL") has recently enhanced its enforcement activities with respect to group health plans by significantly increasing the number of audits it is conducting. In addition, the DOL's audit letters contain significant document requests that are directed specifically at compliance with the Patient Protection and Affordable Care Act ("PPACA" or "healthcare reform") compliance obligations. For example, the DOL's audit letters now include the following:

  • Age 26 mandate – Plans must provide a sample of the written notice describing the enrollment rights for dependent children up to the age of 26 that has been used by the plan since September 23, 2010. 
     
  • Prohibition on rescissions of coverage – If the plan has rescinded coverage, it must supply a list of all affected individuals and a copy of the written notice provided 30 days in advance of each rescission. The DOL will analyze whether the reason for the rescission complies with the healthcare reform standard of fraud or intentional misrepresentation of a material fact.
     
  • Monetary limits on essential health benefits – Plans that have imposed dollar limits since September 23, 2010 must provide documentation showing the limits that are applicable for each year. A plan must also provide a sample of the notice that it sent to participants stating that the plan's lifetime limits had been eliminated. 
     
  • Grandfathered plan status – Employers that are retaining grandfathered plan status must provide documentation to substantiate that status, as well as a copy of the notice that is part of the plan's documents and has been provided to participants and beneficiaries.
     
  • Choice of Provider Notice – Nongrandfathered plans must provide a copy of the notice informing participants of the right to designate their choice of certain providers as well as a list of participants who received the notice. 
     
  • Claims and external review – Nongrandfathered plans must provide samples of the claims and appeals forms that have been used since September 23, 2010 plus the contracts with any independent review organizations or third party administrators that are providing the required external reviews. 

In light of this recent DOL audit activity, employers should carefully document their files regarding these healthcare reform compliance issues. To assist employers in this regard, the DOL recently published a very useful checklist entitled "Self-Compliance Tool for Part 7 of ERISA: Affordable Care Act Provisions" on its website. The DOL compliance tool allows employers to engage in a step-by-step analysis of their level of compliance with the healthcare reform requirements that are currently effective. In addition to the compliance issues referenced above, the compliance tool also deals with summary of benefits and coverage, emergency care, and preventive services. 

The increased scope of the DOL's group health plan audits echoes the recent expansion of other DOL investigations and audits of employers (e.g., wage and hour audits, and other areas of labor and employment law compliance – see our recent blog article for more information).  If you have any questions regarding DOL audits or PPACA, please do not hesitate to contact any member of our Labor & Employment and Employee Benefits Practice Groups.

Investigations/Audits of Employers by DOL Increase and Expand in Scope

This post was contributed by Joseph S. Sileo, Esq., a new addition to McNees Wallace & Nurick LLC's Labor and Employment Law Practice Group.  McNees recently welcomed Joe, Jennifer LaPorta Baker and Jennifer J. Walsh in Scranton, Pennsylvania

The Department of Labor (DOL) routinely investigates and audits employers to ensure compliance with a variety of important labor and employment laws. Historically, wage and hour (overtime) compliance under the Fair Labor Standards Act has been the most common subject of the DOL's enforcement efforts.

Fueled by additional resources, funding and staffing, the DOL is increasing its enforcement efforts both in terms of frequency and scope. This concerning trend means that employers can expect an increase in the number of investigations and that such investigations, once initiated, will cover a broader range of compliance issues and dig deeper into those issues under review. In this regard, our clients are reporting that, in addition to typical wage and hour issues, expanded DOL inquiries as a matter of course now include review of other laws, such as the Family and Medical Leave Act, and even the Patient Protection and Affordable Care Act. It is also common for DOL investigations to "spread," resulting in the inquiry ultimately moving into areas other than the initial issue under review.

DOL audits can be inconvenient, disruptive and costly. If a violation is found, the DOL will attempt to compel remedial/corrective action, which may require an employer to revise its policies and pay damages. In the case of a wage and hour violation, for example, an employer may be liable for any unpaid overtime over the course of the past two to three years for each affected employee. Given the potential consequences, it is typically best to seek the advice of counsel at the onset of an audit. 

To reduce the negative impact and potential liabilities associated with a forced government audit, particularly in the face of the DOL's more aggressive and expanded enforcement approach, employers are advised to review relevant employment practices and polices, and to periodically conduct internal compliance self-audits, before any outside investigation occurs. Our Labor & Employment Practice Group can assist you with reviewing employment polices/practices, conducting internal self-audits, and responding to any DOL compliance inquiry. Please do not hesitate to contact any member of our Group for assistance with these issues and any questions you may have.

Top Ten Wage & Hour Developments in 2012 for Pennsylvania Employers

Recently, Adam R. Long, a Member in McNees Wallace & Nurick LLC's Labor and Employment Law Group prepared a White Paper regarding the Top Ten Wage and Hour Developments in 2012 for Pennsylvania Employers. 

For Pennsylvania employers, 2012 was another eventful year in the world of wage and hour law. Even in the absence of new federal legislation, a number of noteworthy developments occurred at both the federal and state levels, confirming that wage and hour compliance remains a moving target for employers. This complimentary white paper summarizes ten of the more significant wage and hour developments in 2012 for Pennsylvania employers.

Click to view the entire white paper.

Healthcare Reform Update: IRS Regulations Address Full-Time Status of Nine-Month Education Employees

This post was contributed by Eric N. Athey, Esq., a Member in McNees Wallace & Nurick LLC's Labor and Employment Practice Group.

The Patient Protection and Affordable Care Act ("PPACA") requires "large employers" (i.e., those regularly employing 50 or more full-time equivalents) to provide "affordable" health coverage of "minimum value" to "full-time employees" and their dependents. The term "full-time employee" is defined to include those who are employed "an average of at least 30 hours of service per week." Effective January 1, 2014, large employers who fail to provide such coverage to all of their full-time employees and dependents may be subject to "shared responsibility" monetary penalties. These penalties will be triggered whenever a full-time employee (or his or her dependent) of a large employer qualifies for and uses a tax subsidy or credit to purchase coverage on a health care exchange.

School districts, colleges and other educational organizations preparing to comply with PPACA should begin by analyzing whether all of their "full-time employees" (as defined in the law) are offered coverage that is affordable and of minimum value. A common question raised by schools and colleges is whether summer break periods may be counted when calculating whether a 9-month (or 10-month) employee is employed an average of 30 hours per week. Until recently, the answer appeared to be yes. However, proposed regulations issued by the Internal Revenue Service ("IRS") on December 28, 2012 state otherwise.

The new proposed regulations provide that employers may use "initial measurement periods" and "standard measurement periods" of up to 12 months in duration for purposes of calculating whether new and ongoing employees are employed for an average of at least 30 hours of service per week. However, the regulations further state that "educational organizations" may not account for "employment break periods" of at least four consecutive weeks in duration when making calculations as to average hours of service. 

The proposed regulations permit educational organizations to take either of two approaches with respect to employment break periods (e.g., summer break periods) when making determinations as to average hours of service: 1) the employment break period may be excluded when calculating average hours during the measurement period; or 2) the employee may be credited with hours of service during the employment break period at a rate equal to his or her average hours of service during non-break periods. When calculating average hours of service, no more than 501 hours of service during employment break periods are required to be excluded (or credited) by an educational organization per employee each calendar year.

Notably, shorter break periods of less than four consecutive weeks may be factored into average hour of service determinations. However, the proposed regulations make it clear that "hours of service" are not limited to hours actually worked.  The new regulations define an "hour of service" to include "each hour for which an employee is paid, or entitled to payment by the employer for a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence…." For this reason, shorter breaks will be treated as "hours of service" to the extent they are paid.

The proposed regulations contain a number of other clarifications regarding PPACA's shared responsibility provisions; however, the "employment break period" requirements will surely be of greatest interest to educational organizations. Additional information regarding the new regulations will be posted on our blog at www.palaborandemploymentblog.com. Although the proposed regulations are not yet final, the IRS has indicated that employers may rely upon them until additional guidance is issued. The IRS has invited public comments to the new proposed regulations. Comments may be submitted in written or electronic form on or before March 18, 2013. 

Health Care Reform Update - Five Compliance Issues Employers Should Focus on Now

This post was contributed by Eric N. Athey, Esq., a Member in McNees Wallace & Nurick LLC's Labor and Employment Law Group. A version of this post appeared in an Employer Alert published by McNees Wallace & Nurick LLC's Labor and Employment Group in October 2012. The Employer Alert can be accessed here.

The Patient Protection and Affordable Care Act (“PPACA”), otherwise known as Health Care Reform, is now 2 ½ years old. It narrowly survived its first major legal challenge with the Supreme Court’s decision in July. PPACA survived its second big hurdle with the re-election of President Obama earlier this month. While many of PPACA’s biggest requirements do not take effect until 2014, employers and health plans must be mindful of the flurry of compliance requirements that will soon take effect under the Act. Here is a quick look at the PPACA compliance issues that employers and health plans should be focused on now:

Is Your Health Plan Ready to Disclose SBCs?

This new disclosure requirement takes effect for open enrollment periods beginning on or after September 23, 2012 (or plan years beginning on or after that date). In a nutshell, insurers must now provide four-page summaries of benefits and coverage (“SBCs”) to group health plans (“GHPs”) within 7 days after a plan applies for coverage with the insurer. GHPs must, in turn, SBCs to plan participants without charge as part of any written application materials that are distributed for enrollment. Individuals also have the right to request an SBC at any time and must receive it within 7 days of the request. A sample SBC is available on the U.S. Department of Labor’s (“DOL”) website at www.dol.gov/ebsa. Additionally, a 60-day advance notice requirement now applies to “material modifications” affecting the content of an SBC; however, special disclosure rules apply in plan renewal situations. Willful failures to comply with these disclosure requirements may trigger a fine of up to $1000 per violation; however, the DOL has indicated that the agency’s focus will be primarily on compliance assistance, not enforcement, as employers work to comply with this new requirement in the coming months.

Is Your Company Prepared for W-2 Reporting of Health Coverage?

W-2 forms for 2012 (to be issued in early 2013) must report the aggregate cost of applicable employer-sponsored group health plan coverage – this includes both employer and employee cost shares. Employers filing fewer than 250 W-2 forms for the preceding calendar year are currently exempt from this requirement. Ancillary benefits such as long-term care, HIPAA excepted benefits (i.e., certain dental and vision plans), disability and accident benefits, workers’ compensation, fixed indemnity insurance and coverage for a specific illness or disease are excluded from the value to be reported. Similarly, the IRS has issued guidance allowing employers to exclude reporting of contributions to consumer-directed health plans such as HRAs and FSAs in most instances. The value of coverage under an Employee Assistance Program (“EAP”) may also be excluded if the coverage does not qualify as a COBRA benefit. The IRS has issued guidance (Notice 2012-9) approving three methods for calculating the value of coverage: 1) the COBRA applicable premium method (COBRA premium less the 2% administrative charge); 2) the premium charged method (for insured plans); and 3) the modified COBRA method (when an employer subsidizes the COBRA premium).

Which of Your Employees Qualify as “Full-time” Under PPACA?

PPACA defines a full-time employee as one who is employed on average at least 30 hours per week. This definition is significant for several reasons under the Act. First, only employers who employ 50 or more full-time equivalent employees are subject to the “shared responsibility” penalties that take effect in 2014. Secondly, the shared responsibility penalties are only triggered if an employer has a full-time employee who is certified to receive a premium tax credit or cost-sharing reduction due to the employer’s failure to provide affordable coverage that meets minimum value requirements. Finally, the 90-day maximum waiting period for coverage that takes effect in 2014 only applies to full-time employees.

 Since so much under PPACA turns on an employee’s “full-time” status, it is critical for employers to understand which of their employees fall under this classification. Employers do not always know whether an employee will regularly work 30 hours per week at the time of hire – particularly in the case of seasonal and variable hour employees. On August 31, 2012, the IRS issued Notice 2012-58 to clarify how these situations should be handled. In brief, an employer may use an “initial measurement period” of between 3 to 12 months to determine whether a newly hired seasonal or variable hour employee has worked an average of 30 hours per week. Upon making this determination, the new employee’s coverage status remains in effect for the duration of a “stability period.” A new employee’s initial stability period may not be more than one month longer than the initial measurement period. Under the guidance, an “ongoing employee’s” full-time status is thereafter subject to redetermination under similar measurement rules. Of course, if an employee is expected to regularly work full-time when hired, the 90-day maximum waiting period that takes effect in 2014 applies.

 Is Your Coverage “Affordable” and of “Minimum Value”?

The “shared responsibility” penalties apply to employers with over 50 employees that either do not offer health coverage or offer coverage that is either not “affordable” or does not provide “minimum value” under PPACA. Although these penalties are not scheduled to take effect until 2014, it may take some time for employers to weigh their options and plan accordingly. Coverage that costs an employee over 9.5% of his or her gross household income is not considered affordable under PPACA. One question that remains unanswered at this point is how an employer is to determine an employee’s gross household income since that amount will presumably include income from dependents as well as non-wage income. The DOL has announced that coverage costing an employee no more than 9.5% of his or her wage earnings will fall under an affordability “safe harbor.” This may lead some employers to set employee health care contributions as a percentage of their earnings rather than as a percentage of the premium cost or fixed amount.

 In order for a plan to be of “minimum value”, it must offer “minimum essential coverage” and the plan must pay at least 60% of covered expenses. The federal agencies have yet to issue comprehensive guidance on these key concepts; however, as employers consider changes to their health plans, they must keep minimum essential benefits, minimum value and affordability in mind.

 Will Your Health FSA Be Ready for 2013 Changes?

Effective for plan years beginning in 2013, health FSA plans may only reimburse up to $2500 in qualifying expenses per participating employee. Employers offering health FSA plans will have until December 31, 2014 to amend their plans to reflect this new limit. This change, in combination with PPACA’s already-effective prohibition on reimbursement for non-prescribed over-the-counter medications, will likely steer more employers away from health FSAs and toward other types of consumer-directed health plans, such as HRAs and HSAs.

 PPACA compliance has become a time-consuming responsibility for many HR and benefits professionals. Companies that are ready to tackle these five issues will be well-positioned to take on the major changes that are scheduled to take effect in 2014.

Federal Court Holds That FLSA's "Fluctuating Workweek" Method of Overtime Compensation Violates PA Law

This post was contributed by Adam R. Long, a Member in McNees Wallace and Nurick LLC's Labor and Employment Group.

In the wage and hour realm, even the most knowledgeable Pennsylvania employers often are unaware of potential compliance pitfalls presented by state law. Like the FLSA, the Pennsylvania Minimum Wage Act ("PMWA") contains overtime and minimum wage requirements applicable to Pennsylvania employers. The PMWA is similar, but not identical, to the FLSA, and compliance with the FLSA does not always guarantee compliance with this state law. For example, unlike the FLSA, the PMWA does not contain a specific overtime and minimum wage exemption for employees in computer-related occupations. Thus, a computer professional in Pennsylvania who safely falls within the FLSA exemption still may be entitled to overtime compensation pursuant to the PMWA. In other words, compliance with the FLSA could result in overtime liability for the unwary Pennsylvania employer.

Earlier this week, a federal court in Pennsylvania highlighted another area where the requirements of the FLSA and PMWA arguably differ. In Foster v. Kraft Foods Global, Inc. (pdf), the employer compensated non-exempt employees pursuant to the "fluctuating workweek" method of overtime compensation. Under the fluctuating workweek method, an employee receives a guaranteed fixed weekly salary for all straight-time earnings, regardless of the number of hours worked, and an additional one-half of the employee's regular rate for all hours worked over forty in the workweek. The employee's regular rate may change (or "fluctuate") from week to week, because it is based upon the employee's actual hours worked. The fluctuating workweek method of overtime compensation is expressly permitted by the FLSA's regulations and used by many employers to compensate non-exempt employees on a fixed salary basis while minimizing overtime costs.

The court in Foster held that, contrary to the FLSA's regulations, the PMWA's regulations do not allow payment of only an additional one-half of the regular rate for overtime hours pursuant to the fluctuating workweek method. Instead, the court found that the PMWA requires that employees compensated under this method receive an addition one and one-half of their regular rate for overtime hours, essentially eliminating this method of compensation's primary advantage to employers.

Pennsylvania employers who compensate non-exempt employees pursuant to the fluctuating workweek method should reevaluate their practices in light of the Foster decision. The decision serves as a stark reminder for all Pennsylvania employers, even those who do not use the fluctuating workweek method, that FLSA compliance may be only half the wage and hour battle. All Pennsylvania employers should be aware that the requirements of the FLSA and the PMWA are not identical and ensure compliance with both laws.

Current Trends in State Labor and Employment Law

This post was contributed by Tony D. Dick Esq., an Associate in McNees Wallace & Nurick LLC's Labor and Employment Practice Group in Columbus, Ohio.

Political and economic tensions continue to influence employment-related legislation at the state level. As we approach the halfway point in the year, there are several noteworthy trends in state employment law that you should be aware of in order to proactively address potential high risk areas for your operation and stay compliant with the law. Below is a summary of some of the hot-button issues affecting employers at the state level.

The “Ban the Box” Movement

Some 65 million adults in the United States have a criminal record. According to a recent survey, more than half of all employers utilize criminal background checks to screen out prospective employees with criminal convictions. Recognizing the high recidivism rates for convicted criminals who cannot find work, more than 3 dozen states, counties, and local municipalities have implemented “ban the box” legislation in the last couple years.

Under these laws, employers are restricted from asking about a job seeker’s criminal history on an initial application. Depending on the specific law, an employer can inquire about a prospective employee’s criminal history either during the interview phase or after a conditional offer of employment. Proponents of “ban the box” laws argue that by preventing employers from inquiring about an applicant’s criminal history on the initial application, the applicant with a criminal conviction on his record will have a higher likelihood of receiving a job interview where he can attempt to impress the employer with his qualifications and job skills. Among the states that have adopted such laws are Connecticut, Hawaii, Massachusetts, Minnesota and New Mexico. Municipalities with “ban the box” ordinances include Philadelphia, Baltimore, Boston, Chicago, Cincinnati, Cleveland, Seattle and Washington D.C.

Considering Credit History in Hiring

More than a half dozen states limit the use of an applicant’s credit history in the hiring process. Another 20 states have bills pending that would regulate employment credit checks. The majority of these proposed laws would prohibit employers from using consumer credit information in the hiring process, unless the sought-after job involves financial decision-making or the handling of sensitive information. In contrast, New Jersey’s pending bill would ban the use of credit information in any employment situation by adding financial status as a protected category under the state’s anti-discrimination law.

Social Media and Privacy

As Congress and other states debate the issue, Maryland became the first state to make it illegal for employers to ask job applicants and employees for their social media passwords, or to retaliate for an employee’s refusal to do so.
 

The issue was brought to light when a number of job applicants were not hired by the Maryland Department of Public Safety and Correctional Services after providing their Facebook login credentials to the department. The department contended it was searching for gang affiliations, but finding none, it still found cause on the applicants’ Facebook pages not to hire them. The department eventually voluntarily dropped the practice.

Other states with similar pending legislation include California, Illinois, Michigan, Minnesota, Missouri, New York, New Jersey, South Carolina and Washington.

Sexual Orientation Discrimination

As it stands, Title VII does not prohibit discrimination on the basis of sexual orientation. However, an increasing number of states and local municipalities are amending their anti-discrimination laws and ordinances to protect homosexuals from workplace discrimination and harassment. Currently, 21 states prohibit sexual orientation discrimination under state anti-discrimination statutes, while 16 also protect gender identity.

E-Verify and Immigration Status

E-Verify is an Internet-based system that allows an employer, using information reported on an employee's Form I-9, to determine the eligibility of that employee to work in the United States. The program is free and, for most employers, it is completely voluntary. However, 17 states specifically require employers to use E-Verify in at least some circumstances. For example, in Arizona, all employers are required to use E-Verify to determine the eligibility of their employees. In Florida, only state contractors and subcontractors must use the system. A whole host of states have varying E-Verify proposals pending.

Mandatory Paid Sick Leave

In 2011, Connecticut became the first state to pass legislation mandating paid sick leave. Under the law, most service industry employers with more than 50 employees are required to provide paid sick leave to each of their service workers who have worked a minimum of 680 total hours and averaged at least 10 hours of work per week in the previous quarter. Qualifying employees get one hour of paid sick leave for every 40 hours worked, up to 40 hours of paid sick leave per year. San Francisco, Milwaukee, Seattle and the District of Columbia have also passed mandatory paid sick leave bills in recent years. Philadelphia passed a bill that takes effect on July 1 which amends the city’s minimum wage and employee benefits ordinance to require employers who contract with or receive financial assistance from the city to provide full-time employees who work on those contracts or projects with paid sick days. A much broader paid sick leave bill was vetoed by Philadelphia’s mayor last year. Arizona, Massachusetts, Hawaii, Pennsylvania, Wisconsin and Washington are among the states currently considering their own paid sick leave legislation.

Workplace Bullying

Although there are currently no state laws that prohibit general workplace bullying, 13 states, including New York, Massachusetts, Illinois, Wisconsin, and Washington, are considering such legislation. In contrast to Title VII, which requires workplace harassment to be based on some particular protected trait to be actionable (e.g. race, sex, national origin), each of the proposed bills would prohibit abusive conduct, regardless of the worker’s protected status, so long the conduct was sufficiently deliberate and offensive. Employers and their allies have been able to turn back previous attempts to pass similar legislation arguing that it would encourage frivolous lawsuits and force employers to act as a sort of civility police. It remains to be seen whether any of the pending legislation gains any traction.

Conclusion

Employers must stay current on these ever-changing employment law trends, and we will continue to keep you up-to-date on these issues.  In addition, we will be hosting our Annual Labor and Employment Law Seminar on June 1, 2012, which will cover labor and employment law developments and trends.  You can obtain more information about our seminar and register by  clicking here (pdf)

OSHA Publishes Game Plan for Workplace Violence-Related Inspections

This post was contributed by Eric N. Athey, Esq., Co-Chair of the McNees Wallace & Nurick LLC Labor and Employment Group. 

Homicide has consistently been one of the top four causes of work-related fatalities over the past decade, with an average of 590 incidents per year. Shockingly, in 2009, homicide was the leading cause of work-related death for women. The Occupational Safety and Health Administration has addressed the hazard of workplace violence from time to time over the past fifteen years in various ways, including publication of specific guidelines for high-risk industries such as late-night retail, health care and social services. However, to date, there is no OSHA general industry standard addressing this serious hazard.

Although there is presently no OSHA general industry standard for preventing workplace violence, OSHA has cited some employers for failing to address serious known risks under Section 5(a)(1) of the Occupational Safety and Health Act - also known as the "general duty clause." Basically, the general duty clause requires employers to provide a workplace free from recognized hazards. Citations under the general duty clause may arise where an OSHA inspector discovers evidence that an employer knew (or should have known) of individual or industry-specific risks of violence and failed to take feasible steps to prevent or minimize them. Given the persistence of the problem, OSHA recently took another step toward developing a standard approach to the issue.

On September 8, 2011, OSHA issued an "Instruction" to its Regional Offices titled "Enforcement Procedures for Investigating or Inspecting Workplace Violence Incidents." The Instruction is intended to facilitate a uniform approach to workplace violence inspections that are triggered due to: (1) a complaint, referral, or a fatality or catastrophic event in the workplace; or (2) as part of a programmed inspection where there is recognition of the potential for violence in the industry or where the hazard is identified and existing. The OSHA Instruction makes clear that inspections generally won't be considered in response to a single co-worker threat of violence and that such individualized issues should be referred to the appropriate government agency.

The OSHA Instruction lists three basic criteria that Regional Offices must consider when determining whether a workplace violence inspection is appropriate: (1) whether there are known risk factors in the particular workplace; (2) evidence of employer and/or industry recognition of the potential for workplace violence in OSHA-identified high risk industries, such as late night retail, healthcare and social services; and (3) whether there are feasible abatement methods available to address the risks.

The "known risk factors" listed in the OSHA instruction are:
 

  • Working with unstable or volatile persons in certain healthcare, social service or criminal justice settings.
  • Working alone or in small numbers.
  • Working late at night or during early morning hours.
  • Working in high-crime areas.
  • Guarding valuable property or possessions.
  • Working in community-based settings, such as community mental health clinics, drug abuse treatment clinics, pharmacies, community-care facilities and long- term care facilities.
  • Exchanging money in certain financial institutions.
  • Delivering passengers, goods or services.
  • Having a mobile workplace such as a taxicab.

The OSHA Instruction includes a number of examples to demonstrate how an OSHA Area Director must apply the above factors when determining whether a workplace violence inspection is warranted.

Perhaps of most relevance to employers, the Instruction details the types of information that OSHA inspectors should look for when conducting a workplace violence inspection, including (a) the existence of security personnel; (b) whether there is a workplace violence prevention program that is updated and enforced; (c) whether the employer has conducted hazard assessments; and (d) whether appropriate training has been provided to employees and supervisors. Inspectors may also interview employees and review documentation relating to the employer's handling of aggressive or abusive employees, employee medical records, workers' compensation records and OSHA injury/illness records.

The Instruction reaffirms that the general duty clause is the primary legal basis for citing employers who fail to address serious workplace violence hazards of which they are (or should be) aware. However, the OSHA Instruction makes it clear that there must be a feasible means of abatement in order to support a citation under the general duty clause. Addendum B to the Instruction lists a variety of potential abatement measures, including hazard analyses, structural changes to minimize risks, employee training, engineering controls (e.g. alarms and metal detectors), administrative controls (e.g. closer communication with police) and workplace violence prevention programs. An employer who fails to explore these steps in the face of a known hazard will have a hard time defending a citation on the basis that the hazard cannot be abated. Such abatement efforts should be well documented and available for inspection upon request by an OSHA inspector.

In sum, the new OSHA Instruction regarding workplace violence does not change the law pertaining to workplace violence; however, it provides OSHA inspectors with a framework for analyzing this hazard in the workplace and for issuing citations under the general duty clause. Employers in industries with an inherent risk of violence, particularly those who employ workers that are exposed to the "known risk factors" listed above, are well advised to study the OSHA Instruction and implement appropriate abatement measures.
 

Recent OFCCP Settlement Makes Case For Affirmative Action Self-Audits

This post was contributed by Rick L. Etter, Esq., an Associate in McNees Wallace & Nurick LLC's Labor and Employment Group.

Recently, Alcoa Mill Products Inc. agreed to pay over $500,000 in back wages to 39 female and minority applicants who were rejected for jobs at the company's plant in Lancaster, PA. The payment was part of a settlement that resolved a finding by the Office of Contract Compliance Programs (OFCCP) that Alcoa Mill Products discriminated against Hispanic, African-American and female applicants for material handler positions. During a scheduled compliance review, the OFCCP determined that the company's hiring process for material handlers had a disparate impact on minority and female applicants. In addition to paying back wages, Alcoa Mill Products agreed to extend job offers to nine of the class members, to spend at least $20,000 on training, and to revise its selection process for material handlers.

This case is a cautionary tale for government contractors. The outcome in this case could have been avoided if the company would have conducted an affirmative action self-audit. A self-audit would have revealed the problems in the selection process before they were uncovered by the OFCCP.

If you are a government contractor, now is the time to consider an affirmative action self-audit. An affirmative action self-audit would enable you to uncover and remedy mistakes that contractors commonly make, including critical mistakes concerning the hiring process, applicant tracking, adverse impact analyses, compensation analyses, and record retention. Of course, a self-audit is effective only if it is conducted before the contractor receives the OFCCP's notice of compliance review. This is because once that notice is received a contractor has only 30 days to submit its affirmative action program and supporting documents. To get the most out of the process, contractors are best served by conducting a self-audit well in advance of notice of an OFCCP audit.

McNees Wallace & Nurick's Labor and Employment Group can assist you with performing a self audit and with preparing for an OFCCP compliance review.  You can contact McNees by clicking here.

GOVERNMENT CONTRACTS CARRY HIDDEN RISKS AND RESPONSIBILITIES

This post was contributed by Schaun D. Henry, Esq., a Member in McNees Wallace & Nurick LLC's Labor and Employment Practice Group.

In this difficult economy, funding sources can be scarce. The financial climate makes government contracts appear quite lucrative. Every industry should seriously consider the ramifications of their actions on other areas of the business when entering into government contracts. We frequently see situations where the sales force of an organization enters into a contract without coordination with the sections of the business responsible for compliance with the multiple reporting procedures, that often go along with government contracts. In fact, there have been a number of occasions where a company's contracting agents had no idea that the work being secured for the company would result in significant reporting requirements. Two relatively new developments should give companies pause when considering government contracting.

Executive Order 11246 requires that all government contractors undertake affirmative action in the hiring of traditionally disenfranchised groups where the contractor or subcontractor has a government contract of $10,000 or more. Contractors who have contracts of $50,000 or more must prepare, maintain and comply with a written affirmative action program. Compliance with affirmative action plans is onerous enough, but the bigger issue is that these plans may be classified as admissible evidence to prove reverse discrimination. See Stimeling v. Board of Education Peoria Public School Dist To be sure this issue has been visited in the past by appellate courts, with recent case law successes in the reverse discrimination field. See Christianson v. Equitable Life Assurance Society, 767 F.2d 340, (7th Cir. 1985).  At least one court has recently found that a former employee of the Peoria School District in Illinois could use the existence of the District's affirmative action plan as evidence of discriminatory intent, so long as other evidence of intent was also present. This case is evidence of the fact that Office of Federal Contract Compliance Programs' ("OFCCP") mandates for affirmative action plans can create hidden dangers to a company. These factors should be considered prior to entering into any government contract.

The second fairly new issue of concern is the fact that government contractors are now required to disclose the compensation earned by certain company executives. This information will be made publicly available once it has been reported to the government. An amendment to the federal acquisition regulation which became effective March 1, 2011, requires all contractors and first-tier subcontractors to report the executive compensation (in all forms) of their top five most highly compensated executives for the contractor's previous fiscal year (the amendment has been in place since July 2010, and has been implement in phases).  The reports will be applicable to all contracts where the prime contract is for $25,000 or more. Contractors and first-tier subcontractors must report the information by the end of the month following the month of the award of the contract and annually thereafter. Many companies will be less than thrilled about such information becoming public.

The wise move is to think long and hard about entering into any government contract. Once the decision is made, companies would do well to recognize the risks of such contracts and take steps to limit those risks. Here are some dos and don'ts when considering entering into government contracts:

• Advise your sales force of the potential attendant requirements of any government contract.

• Require sales executives to get approval of a management official before proceeding with any government contract.

• Carefully examine all requirements of the contract before signing.

• Assign reporting requirements to a specific entity within the company.

• Know the end date for the contract. You are not required to continue any contract-related reporting or other record keeping after the completion of the contract. Doing so may subject the company to discrimination claims and unnecessary scrutiny.

Should you require additional information about any of the information discussed above, please feel free to contact Schaun Henry at (717) 237-5346.
 

Federal Agencies Ease Grandfathering Restrictions Under Health Care Reform Regulations

This post was contributed by Eric N. Athey, Esq., a Member in McNees Wallace & Nurick LLC's Labor and Employment Law Practice Group.

As 2011 approaches, perhaps the biggest compliance issue for employers under the Patient Protection and Affordable Care Act ("PPACA") is whether it is advisable to retain "grandfathered" status for their health plan.  Our June 17, 2010 blog article discusses the interim federal regulations governing grandfathered status and the "do's and don'ts" for plans that wish to maintain that status.  One of the more controversial provisions in those regulations is the "change of carrier" provision.  Under the interim regulations, a grandfathered health plan loses its grandfathered status if the sponsoring employer enters into a new policy, certificate, or contract of insurance after March 23, 2010.  In other words, for most plans, changing carriers after March 23, 2010, would defeat grandfathered status – even if the benefits available through the new carrier did not change.

The change of carrier provision made little sense for several reasons.  First, it presented an obstacle for employers who sought to obtain more competitive premium rates from other carriers to provide the same or better coverage.  Secondly, it arguably gave additional leverage to insurance carriers when negotiating rate increases, since the loss of grandfathered status was a disincentive for employers to switch plans.  Finally, the restriction did not seem to advance the regulatory goal of containing employee cost-sharing requirements.

Fortunately, the change in carrier provision is now a thing of the past.  On November 17, 2010, the regulating agencies jointly issued an "amendment" to the interim grandfather regulations which effectively removed the change of carrier provision from the regulations.  Importantly, the amendment does not apply retroactively, only prospectively for all such changes that are effective on or after November 15, 2010.  For any plan that enters into a new agreement with a carrier, it is the date on which the coverage becomes effective – not the date on which the plan entered into the new contract or policy – that applies for purposes of this rule.  Thus, this amendment will not apply to plans for which such changes became effective prior to November 15, 2010; those plans still lose their grandfather status under PPACA.

Prospectively, grandfathered group health plans may now change carriers without losing grandfathered status, provided the change does not involve a reduction of benefits or increase in cost-sharing that would defeat grandfathered status under the June 17 regulations.  However, the amendment only applies to group health plans; it does not apply to policies issued on the individual market.  Employers who are presently (or will soon be) considering a change in carriers for their group health plan may now do so without fear of losing grandfathered status by virtue of the change.

If you have any questions regarding the recent amendment to the grandfathering rules or any other aspect of PPACA, please consult our prior posts or contact any of the attorneys in our Labor and Employment Practice Group.

OFCCP Jurisdiction Extended to More Hospitals and Health Care Providers

Today, Rick L. Etter, Esq. and Schaun D. Henry, Esq. of McNees Wallace & Nurick LLC's Labor and Employment Group issued an Employer Alert entitled "OFCCP Jurisdiction Extended to More Hospitals and Health Care Providers."

The Employer Alert discusses the jurisdiction of the Office of Federal Contract Compliance Programs (OFCCP), which was recently extended to cover hospitals and other health care providers that provide services to participants of the Department of Defense’s (DOD) TRICARE program.

TRICARE is the federal government's health care program for active duty service members, National Guard and Reserve members, retirees, and their families. TRICARE provides health care services through networks of civilian health care professionals, institutions, pharmacies and suppliers.

To read the Employer Alert click here.
 

First Wave of Health Care Reform Requirements Take Effect For Plan Years Beginning on or After September 23, 2010

This post was contributed by Eric N. Athey, Esq., a Member in McNees Wallace & Nurick LLC's Labor and Employment Law Practice Group.

The Patient Protection and Affordable Care Act ("PPACA") (pdf), otherwise known as the Health Care Reform Law, is hundreds of pages long and contains dozens of requirements affecting employers, health care providers and group health plans. Implementation of these new requirements will be staggered over the next eight years, with many of the most sweeping changes taking effect in 2014. However, for some employers and plans, a very important implementation date is imminent.

When Must Your Plan Comply?  Group health plans and health insurance issuers are required to comply with a host of PPACA's requirements by the first "plan year" beginning on or after September 23, 2010. For plans that operate on a calendar plan year basis, this means a compliance deadline of January 1, 2011. Employers who are uncertain of the start date of their next plan year should find it in the "general information" section at the back of their plan booklet or consult their employee benefits professional.

Requirements Affecting All Plans.  There are two types of requirements that will take effect for the upcoming plan year – the first group applies to all group health plans and the second applies only to plans that are considered "non-grandfathered" under recently issued interim federal regulations (pdf). The requirements that apply to all plans are as follows:

  • Extension of dependent coverage to children up to age 26;
  • Elimination of lifetime dollar limits on essential benefits and gradual elimination of annual limits;
  • Elimination of pre-existing condition exclusions for children under age 19;
  • Elimination of retroactive rescissions of coverage (except for fraud, misrepresentation and non-payment);
  •  Elimination of reimbursement for most over-the-counter medications under HRAs, HSAs and FSAs and an increased excise tax for non-qualified distributions under these plans (effective January 1, 2011).

Additional Requirements for Non-Grandfathered Plans.  As noted above, non-grandfathered plans have several additional requirements to comply with for plan years beginning on or after September 23, 2010. A non-grandfathered plan is one that was either established after March 23, 2010 or which existed beforehand but lost grandfathered status by making a disqualifying change to benefits after that date. These additional requirements include:Additional Requirements for Non-Grandfathered Plans. As noted above, non-grandfathered plans have several additional requirements to comply with for plan years beginning on or after September 23, 2010. A non-grandfathered plan is one that was either established after March 23, 2010 or which existed beforehand but lost grandfathered status by making a disqualifying change to benefits after that date. These additional requirements include:

  • Implementation of certain non-cost preventive health services;
  • Implementation of new required appeals processes;
  • Compliance with rules prohibiting discrimination in favor of highly compensate individuals for fully insured plans; and
  • Protection of a participant's right to designate a primary care physician; and
  • Implementation of a participant's right to obtain emergency care and OB-GYN services without prior authorization

Although opponents of PPACA hope to repeal the law through the election process or block its enforcement via litigation , those efforts will likely take years to be resolved. The requirements listed above take effect in the near term and employers should work with their benefits professionals to ensure that their plans are up to date by the first plan year following September 23, 2010. For additional information regarding these requirements and the "grandfathering" regulations, consult our prior posts or contact any of the attorneys in our Labor and Employment Group.

Don't use Revised I-9 Form: USCIS Delays Rule Changing List of Documents Acceptable to Verify Employment Eligibility until April 3, 2009

U.S. Citizenship and Immigration Services (USCIS) announced today it has delayed by 60 days, until April 3, 2009, the implementation of an interim final rule entitled “Documents Acceptable for Employment Eligibility Verification”.  The Revised I-9 was to take effect on February 2, 2009. 

The delay will provide DHS with an opportunity for further consideration of the rule and also allows the public additional time to submit comments. A notice announcing the delay was transmitted today to the Federal Register.  In addition, USCIS has reopened the public comment period for 30 days, until March 4, 2009.

Employers must complete a Form I-9 for all newly hired employees to verify their identity and authorization to work in the United States, but should not use the Revised Form.  The interim final rule will amend regulations governing the types of acceptable identity and employment authorization documents employees may present to their employers for completion of the Form I-9.  Under the interim rule, employers will no longer be able to accept expired documents to verify employment authorization on the Form I-9.

UPDATE:  There are no further delays in use of the revised I-9 Form and further compliance resources have been issued by the USCIS (click here for more information).

ADA Amendments Act Webinar: December 4, 2008

Webinar Registration

Congress recently passed legislation amending the Americans with Disabilities Act, which will greatly expand the coverage of the Act.  On Thursday December 4, 2008, McNees Wallace & Nurick will host a 45 minute webinar to discuss these new changes to the ADA and what employers should know before the amendments take effect on January 1, 2009.  Please join Samuel N. Lillard and Michael A. Moore, attorneys with McNees Wallace & Nurick’s Labor & Employment Law Practice Group, as they tell you exactly what the new legislation means for employers and what your business should do to comply with the new amendments and avoid costly litigation.

Thursday, December 4, 2008 12:00 PM - 1:00 PM EST : Online Registration link here.