Employment Matters Blog

The Affordable Care Act—Countdown to Compliance for Employers, Week 5: Health and Human Services (HHS) Wastes No Time Issuing Proposed Rules Modifying Minimum Value Rules

Posted in ACA Compliance Series, Affordable Care Act, IRS

Written By Alden J. Bianchi and Edward A. Lenz

Over the last couple of months, we have followed and reported on a particular ACA compliance strategy under which an employer subject to the Affordable Care Act’s employer shared responsibility (or “pay-or-play”) rules satisfies the requirement to make an offer of coverage under a group health plan that has the look-and-feel of major medical coverage with one significant modification: the plan offers no inpatient hospital coverage or physician services. (For a discussion of the development of these plans, please see our previous posts of September 16, October 14 and November 10.) Following the convention established by promoters of these arrangements, we refer to these arrangements as “minimum value plans” or “MVP arrangements.” Because the monthly premium cost of MVP plans is far less expensive than the cost of traditional major medical coverage that includes inpatient hospital services or physician services, the cost to the employer to make such coverage affordable—and thereby avoiding exposure for assessable payments—is also lowered significantly.

In the weeks prior to November 4, various national news outlets reported that the regulators were less than thrilled with the MVP approach.

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Sixth Circuit Decision Confirms that Employers May Lawfully Choose Not to Hire a Job Applicant with a Prior History as a False Claims Act Whistleblower

Posted in Applicant, whistleblower

Some employers in the health care and other industries who regularly deal with the federal government and are subject to the False Claims Act (“FCA”) have felt helpless in trying to weed out serial whistleblowers in the hiring process. After all, most anti-retaliation provisions prohibit retaliation against both employees and applicants. For example, Title VII of the Civil Rights Act of 1964 expressly prohibits retaliation against both employees and “applicants for employment.” Therefore, it is unlawful under Title VII to refuse to hire an applicant for employment because she complained about discrimination in prior jobs. A recent Sixth Circuit decision in the case of Gary Vander Boegh v Energy Solutions, Inc., has confirmed, however, that job applicants who have a history of reporting alleged FCA violations do not enjoy the same protection: employers can lawfully refuse to hire an applicant because of his prior history as an FCA whistleblower. Continue Reading

Juries and the EEOC Take Aim at Pregnancy Discrimination

Posted in Applicant, California, discrimination, EEOC, pregnancy

Written by Jessica Catlow

Back in the summer, we wrote about the Equal Opportunity Commission’s release of its updated enforcement guidance on pregnancy discrimination claims under the Pregnancy Discrimination Act.  Under the PDA, discrimination based on pregnancy, childbirth or related conditions are a form of sex discrimination.  Two recent cases highlight that both juries and the EEOC intend to take pregnancy discrimination claims seriously.

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The Massachusetts Health Insurance Mandate: Some Good News for Massachusetts Taxpayers

Posted in Affordable Care Act

Written by Patricia Moran

Since 2007, most Massachusetts residents have been required to either obtain health insurance coverage meeting Massachusetts “minimum creditable coverage” standards, or pay a state tax penalty (for 2014, the penalty ranges from $240 to $1104 per year, depending on income).  Effective January 1, 2014, Massachusetts residents are also subject to federal health care reform, which requires most United States citizens to either obtain health insurance meeting federal “minimum essential coverage” standards, or pay a federal tax penalty (for 2014, the federal penalty is generally $95 per person, and increases to $325 in 2015 and $695 in 2016).  (For more information about these minimum requirements, click here and here.)  Many have wondered: could an individual without medical coverage be required to pay both penalties in full?

On November 7, 2014, the Massachusetts Department of Revenue amended its individual mandate regulations (830 CMR 111M.2.1) to answer this question.  In sum: if an individual is required to pay both a Massachusetts and a federal penalty for failure to obtain adequate health care coverage, the amount of the Massachusetts penalty is reduced by the amount of the federal penalty.

The Affordable Care Act—Countdown to Compliance for Employers, Week 6: Labor and Treasury Departments Play Whack-a-Mole with Employer Payment Plans

Posted in ACA Compliance Series, Affordable Care Act

Written by Alden J. Bianchi

Last year, the Department of Labor and the Treasury Department/IRS (Departments) issued guidance on the application of certain of the Affordable Care Act’s insurance market reforms to health reimbursement arrangements (HRAs), certain health flexible spending arrangements (health FSAs) and certain other employer health care arrangements. For an explanation of this guidance, please see our client advisory dated September 25, 2013.  The Departments issued further clarifications in May of this year, which we covered in a previous post.  Collectively, these guidance items addressed plan designs in which employers attempt to subsidize the purchase of health insurance coverage (whether on a pre-tax or after-tax basis) in the individual market (whether or not under a qualified health plan offered through a public exchange).

In each of these pronouncements, the Departments clarified that arrangements of all stripes that seek to provide cash subsidies for the purchase of individual market coverage are themselves group health plans subject to the Act’s insurance market reforms and other requirements. As a consequence, schemes claiming that employers can comply with the Act by simply providing cash subsidies do not work as advertised.  Despite the Department’s efforts, a handful of promoters have consistently failed to get, or have purposely chosen to ignore, the proverbial memo. A recent set of FAQs makes short shrift of two arrangements—after tax subsidies and a pre-tax reimbursement arrangement—that are on solid regulatory ground. These arrangements are not now and never were (in our view) viable, and their promotion was both reckless and irresponsible. The Departments’ treatment of a third arrangement—giving employees with high claims risk a choice between group health plan enrollment or cash—is well-intentioned and may even be the “right” result. But it rests (again in our view) on less solid legally and regulatory ground.

Set out below are the FAQs’ questions together with our reaction:

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The Affordable Care Act—Countdown to Compliance for Employers, Week 7: IRS Puts the Kibosh on Health Plans that Fail to Cover Hospital or Physician Services

Posted in ACA Compliance Series, Affordable Care Act, IRS

Written by Alden J. Bianchi

In a previous post, we described an Affordable Care Act compliance strategy—referred to commercially as a “minimum value plan” or “MVP”—that involves an offer of group health plan coverage that, while similar in most respects to traditional major medical coverage, carves out inpatient hospital services. A subsequent post warned of rumors that regulators were less than thrilled with these arrangements, and that in all likelihood the Treasury Department/IRS and the Department of Health and Human Services (the “Departments”) would take steps to require that plans purporting to provide minimum value cover such services.

On November 3, 2014, the Departments announced their intent to retroactively revise their respective minimum value regulations so that plans that fail to provide substantial coverage for in-patient hospitalization services (or for physician services) will not qualify as minimum value. The Departments’ announcement also included some limited transition relief, and imposed some additional notice requirements.

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Lawsuit against LinkedIn Latest in Battle over Use of Big Data in Employment

Posted in Applicant, background checks, class action, consumer report

Written by Robert Sheridan

Following up on a topic discussed recently in this space, a class action filed last month against LinkedIn represents just the latest development in the burgeoning battle over defining the permissible and impermissible uses of big data in the employment arena.

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Federal Judge Denies EEOC’s Petition for Temporary Restraining Order; Allows Employer to Penalize Employees Who Decline to Participate in Employee Wellness Program

Posted in ADA, EEOC

Written by Gauri Punjabi

Last week, we blogged about the EEOC’s recent litigations involving employee wellness programs, including the Honeywell case where the EEOC sought to prohibit Honeywell from penalizing employees who decline to participate in the company’s wellness program.  On Monday, a Minnesota federal district court judge denied the EEOC’s TRO application, striking an initial blow to the EEOC’s attempts to impose restrictions on such programs.

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NLRB Shows Some Restraint in its Protection of Employee Social Media Communications: Employee Termination Arising From “Egregious” and “Insubordinate” Facebook Posts Was Legal Under the NLRA

Posted in NLRB, social media

Written by Erin C. Horton

In the wake of the NLRB’s aggressive crackdown on social media policies, many employers have asked: “Is there any limit to what employees can post on social media about their employers?”  It appears that there is.  Just last week, a former employee of the Richmond District Neighborhood Teen Center in San Francisco learned this the hard way when the Board dismissed his complaint that the Center violated Section 8(a)(1) of the National Labor Relations Act after it pulled a rehire offer after it discovered that he participated in an inappropriate Facebook exchange.

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Lights Out for a 401(k) Investment Fund? Don’t Forget the Blackout Notice Rules

Posted in Employee Benefits

My colleague Patty Moran authored an advisory about reviewing Sarbanes-Oxley Blackout Notice Rules when changing a 401(k) investment fund. The advisory describes the origin of the Blackout Notice Rules, the rules’ requirements and penalties for noncompliance, and next steps.