Employment Matters Blog

The Affordable Care Act—Countdown to Compliance for Employers, Week 23: The Impact of Employment Contract Terms on Variable Hour Employee Status

Posted in ACA Compliance Series, Affordable Care Act, IRS

Written by Alden J. Bianchi

For applicable large employers (i.e., employers who employed at least 50 full-time and full-time equivalent employees on business days during the preceding calendar year) endeavoring to comply with the Affordable Care Act’s employer shared responsibility rules, determining an employee’s status as “full-time” is critically important. Final regulations implementing the Act’s employer shared responsibility requirements establish two methods—(1) the monthly measurement method and (2) the look-back measurement method—for making that call. The latter, the look-back measurement method, further classifies newly-hired employees as full-time, variable hour, seasonal or part-time. Of these, what constitutes a “new variable hour employee” has proved to be far and away the most confusing.

A recently published set of Questions & Answers made available by the American Bar Association’s Section of Taxation, Employee Benefits Committee, provides some helpful insights into the IRS’s view of which employees may be properly classified as “variable hour.” The Q&As are based on a presentation made by IRS and Treasury officials at the Tax Section’s Employee Benefits Committee May 2014 meeting in Washington, D.C. The Q&As reflect the unofficial, individual views of the government participants, which do not necessarily represent formal agency policy. Thus, they may not be relied on as precedent. They are, nevertheless, useful in gaining an understanding of how the regulators think the rules ought to work. One particular Q&A (Q&A 25), entitled “Determining Whether a New Employee is a Variable Hour Employee,” deals with the effect of the terms of an employment contract on variable hour status. The IRS response also elucidates other important aspects of the rules governing variable hour employees.

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Having Employees Sign Non-Compete Agreements After They Have Already Started Working Could Be A Big Problem For Some Employers

Posted in employee mobility, non solicitation, Non-compete, restrictive covenants

Written by Brandon Willenberg

A non-compete agreement is a vital tool that companies use to protect their confidential and trade secret information and their customer and employee relationships. Employers, of course, want to avoid the trouble of running to court to enforce their non-compete agreements, but if they do, they better make sure their non-competes will withstand a judge’s scrutiny. Otherwise, they’ll end learning the hard way, like WorkflowOne did this week courtesy of the federal district court in Hawaii.

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California Supreme Court Nixes Certification Denial Ruling Against Newspaper Carriers Classified as Independent Contractors

Posted in California, class action, independent contractor, misclassification, Wage and Hour

By George Patterson

The California Supreme Court recently held that a trial court needed to revisit its class certification decision regarding newspaper carriers who alleged that they should have been classified as employees rather than independent contractors.  The trial court erred, the Court said, by focusing not on differences in the newspaper’s right to control the individual plaintiffs’ work, but on variations in how it exercised that right.

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Back to the Basics: Non-Compete Lost to a Superseding-Agreement Clause

Posted in employee mobility, Non-compete, restrictive covenants

Written by Jennifer Rubin and Erin Horton

With so much focus on the reasonableness of restrictive covenants, it’s easy to forget that non-competes are plain old contracts—nothing more. And when it comes to enforcing non-competes, basic contract law still applies.

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The EEOC Releases Updated Enforcement Guidance on Pregnancy Discrimination and Related Issues

Posted in ADA, Affordable Care Act, Disability discrimination, discrimination, EEOC, pregnancy, Reasonable accommodation, Supreme Court, Title VII

Written by Michael Arnold

The EEOC released its updated enforcement guidance on pregnancy discrimination yesterday — the first time it’s done so in more than 30 years. You can access the guidance and related documents here.

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The Affordable Care Act—Countdown to Compliance for Employers, Week 24: Can Offers of Group Health Plan Coverage Under Code Section 4980H Qualify as “Bona Fide Fringe Benefits” for Service Contract Act Purposes?

Posted in ACA Compliance Series, Affordable Care Act, DOL, IRS

Written by Alden J. Bianchi

The Employer Shared Responsibility provisions of the Affordable Care Act (“ACA”) generally require “applicable large employers” (i.e., employers who employed at least 50 full-time and full-time equivalent employees on business days during the preceding calendar year) to offer group health plan coverage or face the prospect of having to pay an assessable payment. The McNamara-O’Hara Service Contract Act of 1965—a/k/a the “Service Contract Act” or “SCA”— generally applies to Federal contracts. Contractors subject to the SCA must pay prevailing wage rates and fringe benefits to service employees employed on contracts to provide services to the federal government. The latter fringe benefit obligation may, however, be discharged by paying cash in lieu of fringe benefits. Under the SCA, fringe benefit payments required by Federal or state law (“mandated benefits”) may not be used to satisfy the employer’s fringe benefit obligations.

The Wage and Hour Division of the U.S. Department of Labor, in a June 11, 2012 memorandum, determined that “employer contributions that are made to satisfy the employers’ obligations under the Hawaii-mandated prepaid Health Care Act may not be credited toward meeting the contractor’s obligations under SCA.”  The Wage and Hour Division has not yet opined on whether offers of group health plan coverage are “mandated benefits.”

The answer to that question has important consequences to Federal contractors and subcontractors that are subject to the SCA. Should the Wage and Hour Division determine that the ACA is a benefit mandate, group health plan coverage provided to employees to reduce or eliminate exposure under Code § 4980H would not count toward the $3.71/hour fringe benefit obligation.

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Employee Benefits: Important Wellness Plan and Mental Health/Substance Use Disorder Parity Effective Dates Have Arrived!

Posted in Affordable Care Act, DOL, Healthcare, HIPAA, IRS

Written by Patricia Moran

Employers and insurers offering medical plans: take note! Two important final regulations issued jointly by the IRS, DOL and HHS (the “Departments”) are now in effect.  New Mental Health/Substance Use Disorder Parity regulatoins apply for plan years (or, in the individual market, policy years) beginning on or after July 1, 2014. For plans and policies which operate on a calendar year, there is still time (until January 1, 2015) to comply; however, plans and policies with a July 1 plan or policy year must comply now. In addition, new wellness regulations are effective for plan or policy years beginning on or after January 1, 2014.

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Pay Careful Attention to Pregnancy Accommodation Requests as EEOC Plans New Enforcement Guidance

Posted in ADA, Disability discrimination, discrimination, EEOC, pregnancy, Reasonable accommodation, Supreme Court

My article on pregnancy accommodations and the Young v. UPS case, which the Supreme Court will hear in its next term, was published in Thompson’s ADA Compliance Guide August 2014 Newsletter.