Understanding Your EMAC Supplement Determination

Now that the first quarter of 2018 has concluded, employers are receiving “EMAC Supplement Determination” notifications from the Massachusetts Department of Unemployment Assistance (DUA).  Many employers have been unpleasantly surprised by the size of the penalty and want to understand their options.

To help you evaluate your options, we offer the following today:   a refresher on the law,  and an explanation of the reasons an employer may elect to appeal. Detail on what to expect if you choose to appeal will be addressed in a second article next week.

A Summary of the Employer Medical Assistance Contribution (“EMAC”) Supplement

The EMAC Supplement, which went into effect on January 1, 2018, requires that an employer with 6 or more employees working in Massachusetts pay a contribution for each employee who receives health insurance coverage through the MassHealth Agency or ConnectorCare.

The EMAC relies on the definition of “employee” set out in Massachusetts’ unemployment insurance laws.  This means that any regular employee, regardless of full or part-time status, contributes to an employer’s count.  Depending on the length of employment, temporary/seasonal workers may also need to be included.  To be clear, an employee should be included in an employer’s count, and may subject the employer to an EMAC penalty, even where the employee is not qualified for employer-provided benefits under the Affordable Care Act.

The employer will pay a penalty for each employee who receives health insurance through either the MassHealth agency (the Office of Medicaid) or ConnectorCare (available where the household income is less than 300% of the federal poverty line) for fourteen or more consecutive days in the quarter.  The contribution is 5% of annual wages for each non-disabled employee.  Wages are capped at $15,000, rather than actual wages, making the maximum penalty $750 per affected employee per year.

The penalty does not apply for any employee who receives coverage through the MassHealth agency either:  a) on the basis of permanent and total disability, or b) as a secondary payer where the employee is enrolled in the company-sponsored insurance.  Premium assistance does not trigger the penalty.

Note, too, that most individuals who are otherwise eligible for MassHealth will be required to take their employer’s plan if the plan meets the basic coverage criteria and the employer pays at least 50% of the premium. Therefore, if your company pays at least 50% of premiums, you will generally not be subject to the fines.

What We Believe Are Appropriate Bases for an Appeal

At the outset, please note that although we believe that an appeal is appropriate in the circumstances outlined below; this is based on our legal interpretation of the statute and guidance published to date by DUA. We do not know how DUA will handle these appeals, and cannot make any guarantees related to the success of an appeal on any of the grounds set forth below.  What we do know is that this is the first opportunity employers have to challenge the way in which DUA is assessing these penalties, and appealing is the only avenue employers have to contest these assessments.

When considering an appeal, an employer may want to challenge (1) the correctness of the DUA’s decision to find the employer liable for a supplemental payment; and/or (2) the amount of the supplemental payment.  Below, we review a variety of legitimate bases for appeal and also discuss bases we believe will be unsuccessful.

The Employer Should Not be Liable Because…

…The employer is not subject to the law.  A Massachusetts employer, including a not-for-profit employer, with 6 or more employees working in Massachusetts, is subject to the EMAC supplement.  Any regular employee, regardless of full or part-time status, contributes to an employer’s count.  Depending on the length of employment, temporary/seasonal workers may also need to be included.  The employee count is determined each quarter by calculating the average number of employees who worked during or received wages for the pay period that includes the twelfth day of each month of the applicable quarter.  If the employer had fewer than 6 employees for the first quarter of 2018, the employer should not be subject to any EMAC penalties for that quarter.

…The employee does not work in Massachusetts.  An employee is considered to work in Massachusetts if he/she:  a) performs work entirely in Massachusetts; b) performs work in and out of Massachusetts, but the work out of state is incidental to the work within the state.  If the employer’s EMAC Supplement Determination includes employees who do not work within Massachusetts, the employer may wish to appeal the penalties for the out of state employees.

…The employee did not have MassHealth coverage for the required minimum period.  To subject the employer to a penalty, the employee must have received his/her insurance coverage from MassHealth for a continuous period of at least 56 days in the quarter.  If an employee enrolled in or unenrolled from the employer’s coverage during the quarter, this basis for appeal may be considered.

…The employee receives coverage through MassHealth either:  a) on the basis of permanent and total disability, or b) as a secondary payer where the employee is enrolled in the company-sponsored insurance.

…The employer provides affordable coverage.  Employers that offer affordable coverage to their employees should not be assessed an EMAC penalty for any benefit-eligible employee.  MassHealth/Affordable Care Act rules makes these employees ineligible for subsidized coverage.

The Amount of the Penalty is Incorrect

Assuming employer liability is appropriate, you may appeal based on incorrect calculations of the penalty.  The penalty is 5% of annual wages for each non-disabled employee.  Wages are capped at $15,000, rather than actual wages, making the maximum penalty $750 per affected employee per year.

We have learned from this first round of determination notices that, for employees whose actual wages exceed the wage cap, the DUA appears to be front-loading the penalty rather than spreading it evenly among the quarters.  For example, for an employee with $10,000 of actual taxable wages in Q1, the employer was assessed $500.  Hypothetically, the employer would incur a $250 penalty in Q2 and $0 in Q3 and Q4.

Inappropriate Bases for an Appeal

While certainly frustrating and costly, many of the penalties assessed are likely to be valid.  Before you spend time, effort, and money filing an appeal, be sure you’re contesting for one of the reasons recognized by the law, as listed above.

Many employers (logically) believe that they are not subject to the penalty for an employee who is not eligible for company benefits based on hours worked or tenure.  Unfortunately, an employer is subject to the penalty for any part or full-time regular employee who works in Massachusetts regardless of the rules of company benefit eligibility.

Similarly, employers believe that they are not subject to the penalty for an employee who was eligible for benefits, but declined them.  The employee’s rejection of employer coverage does not, in and of itself, provide a basis for appeal.  As explained above, there may be a basis for appeal if the offered coverage was affordable.

Considering an Appeal?  You Must Act Fast. 

First and foremost, the employer must request a hearing in writing delivered to the DUA. The request should identify the reasons for the appeal, setting forth the reasons why the employer claims the determination is erroneous.

The request for a hearing must be filed not more than ten calendar (not business) days after the employer’s “receipt of notice” of the determination.  Most employers receive DUA communications through UI Online.  For these employers, the “Date of Determination” listed on the bill is the date the DUA will presume the employer received the notice.  There are limited exceptions to this, which include communications posted after 5pm, on weekends, or state or federal holidays.  If the employer receives communications via regular mail, the date of receipt is assumed to be three days after the determination notice was mailed.  If the third day falls on a state or federal holiday, Saturday, or Sunday, the notice will be presumed to have been received on the next business day.

Despite the fact that the penalty and appeal process is new for both the DUA and employers, the DUA has indicated that it will not make exceptions and will not consider appeals submitted outside this 10-day timeframe.

To begin the appeal process, an employer should deliver its request to:

EMAC Supplement Program – Appeals
Department of Unemployment Assistance
Charles F. Hurley Building
19 Staniford Street
Boston, MA 02114

You Filed Your Request for an Appeal.  Now What?

First, be aware that your payment obligations are not suspended while the appeal is pending.  Employers who appeal are still responsible to submitting payments in a timely manner.  The DUA will charge interest on unpaid penalties at a rate of 12% per quarter.  The DUA has indicated that it will refund penalties paid if the employer prevails on appeal.

Second, begin preparation for the hearing.  Our next communication will help you do this by answering the many questions you may have, including:

• What will the hearing process entail?
• When will the hearing occur?
• Who will preside over the hearing?
• Who has the burden of proof?
• Will witnesses be called?
• What rules of evidence are followed?
• Must the employer be represented by an attorney?

What Should Employers Do?

Because this law and this process are new, it’s impossible for us to know how the DUA will respond to appeals.  We certainly hope the DUA will give due consideration to all legitimate and timely filed appeals; but we cannot know for certain.  However, if employers don’t appeal, the DUA will go unchallenged and will have no reason to ensure its enforcement aligns with the law.  This is employers’ first opportunity to assert influence.

If you’re questioning whether to appeal, we can help you weigh your options.  If you have already appealed, or plan to appeal, we can assist in generating your appeal or preparing for your hearing.  You can reach us at questions@foleylawpractice.com or (508) 548-4888.

WWYLD 04/24/18 – Is the Company Obligated to Accommodate a Request for Light Duty?

“Are we required to accommodate this request?”  It’s probably the question I’m asked the most, in one variation or another.  Whether an accommodation is or is not required depends on the specific facts, including, but not limited to:  the nature of the request, the job, the size of the employer, and the employer’s past practices.  In this week’s WWYLD, we focus on how precedent impacts the answer to the “are we required to accommodate” question.

Question:  An employee brought a note that he can return from leave to light duty.  Are we required to accommodate?  We allow only 2 light duty workers at one time and we don’t normally accommodate light duty work for an injury/illness that is not job-related. 

You’re not automatically required to accommodate light duty.  Anytime an employee requests a modification to a position on the basis of a disability, you’re required to:  a)  engage in an interactive process with the employee; and b)  review each requested accommodation on a case-by-cases basis to determine whether it can be provided without posing an undue hardship on the company.

The Americans with Disabilities Act (“ADA”) requires that each request for an accommodation be evaluated based on the specific facts surrounding the request.  Because this case-by-case consideration is required, it is generally impermissible to adopt bright-line rules related to the number of accommodations allowed.  Employers should generally avoid policies that state that disability-related leaves will be automatically denied after X duration (though some recent case law is showing a tide change here) or that light duty will be automatically denied after X number of employees have asked.

That is not to say that an employer must approve each light duty request, but that each request must be considered on its own merit.  Maybe light duty poses a hardship in one department but not another.  Or, maybe it’s easier to accommodate light duty in one job than in another job.  The result might still be that that company can only accommodate two requests for light duty at one time because the third would pose an undue hardship.  But, we’re arriving at the answer using a different, and legally-compliant, methodology.

Let’s turn to the differentiation between workers’ compensation and non-workers’ compensation-related requests.  Because of associated cost benefits, employers are often inclined to treat workers’ compensation accommodations differently than non-workers’ compensation accommodations.  Employers will often allow an employee on leave for a work-related injury to take many months off.  But, would seek to terminate an employee on non-workers’ compensation leave shortly after the legally protected period.  Similarly, employers will often go out of their way to return a workers’ compensation employee to work – accommodating restrictions without question.  But, the employer would not desire to accommodate the non-workers’ compensation employee in the same way.  It seems logical, because one has associated costs the other does not.  But, it poses a great deal of legal risk.  To not run afoul of discrimination laws, employers must treat employees on leave the same, regardless of whether the leave is or is not related to a workplace injury or illness.  And, employers must treat employees requesting accommodations the same, regardless of whether the restrictions are related to a workplace injury or illness.  If an employer were to allow an employee injured on the job to remain on leave for 2 years, the employer has opened the door for another employee to be entitled to a 2-year leave.  If the employer allows light duty for a workers’ compensation employee, the employer would then have to allow light duty for a non-workers’ compensation employee or risk a claim of disability discrimination and retaliation.

The interactive process can be intimidating and confusing.  We can guide you through each step.  Please reach out at (508) 548-4888 or info@foleylawpractice.com

Wisconsin Further Confines Employers’ Use of Restrictive Covenants, including Non-Solicitation Agreements

Employers operating in Wisconsin are likely familiar with Wisconsin’s restrictive covenant statute which is quite…well…restrictive on employers.  While the statute has been in place for decades, a recent decision by the Wisconsin Supreme Court places even further limitations on the language and circumstances of these agreements.

Background

Under Wisconsin law, an agreement by an employee to “not compete with his or her employer” during or after employment is only enforceable “if the restrictions imposed are reasonably necessary for the protection of the employer or principal.”  And, any covenant that imposes an “unreasonable restraint” is void, even portions that would otherwise be legal.

For decades, a five-part test has been used by the Wisconsin courts to determine whether a restrictive covenant is reasonable.  To be reasonable, the restraint must:

1. Be necessary for the protection of the employer;
2. Provide a reasonable time limit;
3. Provide a reasonable territorial limit;
4. Not be harsh or oppressive as to the employee; and
5. Not be contrary to public policy

Extension of the Law to Non-Solicitation Agreements

In Manitowoc Co. v Lanning,[1] the court reviewed not a noncompete agreement, but a non-solicitation agreement.  Lanning’s employment agreement contained the following:  “I agree that…for a period of two years from the date [of termination], I will not (either directly or indirectly) solicit, induce or encourage any employee(s) to terminate their employment…or to accept employment with any competitor, supplier or customer…”

In Lanning, the Wisconsin Supreme Court first reviewed whether Wisconsin’s restrictive covenant statute extends beyond non-compete agreements to non-solicitation agreements, or non-solicitation of employees.  Because the statute indicates that “any covenant” that imposes an unreasonable restraint is invalid, the Court reasoned for the first time that a non-solicitation agreement would be subject to the law.  The Court then applied the five-factor test outlined above and determined that the agreement was unreasonable and, as a result, wholly unenforceable.  In particular the Court found the use of the term “any and all employees” of the 13,000 member company overly broad. The $1 million award was vacated, which alleged Lanning had recruited 9 employees to his new employer.

What Should You Do in the Wake of Lanning?

• If you operate in the state of Wisconsin and you utilize restrictive covenants, carefully review the language of your existing agreements. It is likely they will not comply with the narrow non-solicitation analysis the Court employed.
• Updating agreements with current employees to be binding post Lanning is tricky: changes must be backed by consideration — each party must give something and get something.
• Consider the interests your company must necessarily protect and ensure the restrictive language is tailored, specifically to the employee, to address those interests. Even agreements that contain limits on time and territory could be deemed unnecessary for the protection of the employer.  For example, Lanning’s agreement was found to be unreasonably restrictive because it prohibited him from recruiting any and all employees and was not limited to a specific group of employees.
• Remember: you do not have to abandon valuable restrictive covenants and non-solicitation agreements altogether. Agreements personalized to your company’s needs, the employee, and the Wisconsin law can be valid and useful protections.

We stand ready to help you evaluate, update, and re-execute your restrictive covenants.  We can be reached at questions@foleylawpractice.com or 844-204-0505.

[1] 2018 WI 6

WWYLD – 4/10/18 – The DOL’s New Approach for Tip Pooling

Just a few days ago, the Department of Labor (“DOL”) issued a bulletin that speaks to the DOL’s changed position with regard tip pooling.  As readers with tipped employees know, tip pooling is the practice of sharing tips amongst employees.

Historically, the Fair Labor Standards Act (“FLSA”) stated that tip pooling was only permissible if:

• Employees were paid below minimum wage; and
• Employers claimed a tip credit; and
• The tips were distributed only to “customarily and regularly” tipped employees

But, in July of 2017, the DOL indicated that it would not enforce its regulations prohibiting tip pooling amongst employees who are paid minimum wage.  The DOL indicated this non-enforcement policy would be taken while new regulations were drafted and adopted.  In late March 2018, Congress amended the language of the FLSA to align with the DOL’s position.

As part of the Consolidated Appropriations Act, 2018, Congress amended the FLSA so that it is now permissible to pool tips among employees, even if those employees’ hourly wages meet or exceed the federal minimum wage.  The amendment also allows for non-customarily tipped employees, like cooks and dishwashers, to participate in tip pooling.  Managers and supervisors remain barred from accepting tips or participating in tip pools. 

Note that this addresses changes to federal law only.  Some states have state-specific laws related to tipped employees.  Depending on the state(s) in which you operate, you’ll need to ensure you’re complying with your state’s law.

With that background, let’s turn to a related WWYLD question.

Question:  We run a small restaurant with few employees.  We keep our overhead costs low so that we can provide the highest quality food to our customers.  I’m the owner, but also the chef and the manager.  I sometimes serve customers as well.  Because we share duties, can we share tips? 

Answer:  Some of your employees may be able to share tips, but as the owner/manager, you are prohibited from participating in a tip pool.  The DOL has stated that any individual who meets the following criteria is a “manager” or “supervisor” and cannot participate in a tip pool:

• An individual whose primary duty is management of the enterprise;
• An individual who customarily and regularly directs the work of two or more other employees; and
• An individual who has influence over or authority to hire/fire/promote other employees.

Though you are prohibited from participating in a tip pool, you could consider implementing a “house” or “administrative” charge.  Generally, these charges are set percentages that are automatically added to a customer’s bill.  The funds from these charges can be used for multiple purposes, but are often used to supplement the wages of employees otherwise prohibited from receiving tips/participating in tip pools.  Courts have found that such charges are permissible so long as customers clearly understand that the charges do not equate to a tip.

WWYLD 4/5/18 – Is the Worker an Independent Contractor or Employee?

Yesterday, Tim Kenneally wrote about the interaction of the federal and state laws.  As Tim explained, anytime both federal and state laws apply, the law that affords the employee the most protection is the law that controls.  In Tim’s blog, the applicable laws addressed exempt versus non-exempt classifications.  But, there are many, many situations in which federal and state laws differ, including leaves of absence, overtime, meals & breaks, COBRA, final pay, and workers’ compensation.  It’s the employer’s obligation to know which laws apply; and, it can be daunting.

A recent question about independent contract classification provides another great example of federal and state laws interacting.  The Federal DOL recently retracted some Obama-era guidance that had employers erring on the side of caution and categorizing workers as employees.  But, many states have state-specific laws with regard to independent contractor classification.  In today’s example, we review two states:  Wisconsin and Massachusetts.  You don’t operate in either state?  I urge you to read on nonetheless as the concept remains important:  many states have tests that limit the classification of a worker as an independent contract.

Question:  Are there some rules that outline what it means to be a contractor versus an employee? Are there guidelines for what a contractor is/is not and what an employee is/ is not?

Determination of the working relationship is a pretty hot topic right now.  Some big-name companies like FedEx, Amazon, and Uber have been sued for alleged improper classification of individuals as independent contractors.  Unfortunately for our purposes, most of these cases have either settled (so, we don’t know how a court would rule), been dismissed on technicalities, or remain unresolved.  To add complexity, in 2015 and 2016 the Department of Labor provided some specific guidance on independent contractors.  But, just a few months ago that guidance was retracted by the current administration.  This is all to say that it’s not a straightforward answer.  Each relationship should be assessed on a situation by situation basis.

Federal Law
At a federal level, both the Department of Labor (DOL) and the Internal Revenue Service (IRS) provide rules for determining the worker’s relationship.

DOL

The Department of Labor uses the Fair Labor Standards Act (FLSA) definition of employ very broadly to include “to suffer or permit to work.” This is one of the broadest definitions of employment under the law. When applying the FLSA’s vague definition, workers who are economically dependent upon the business of the employer, regardless of skill level, are considered to be employees, and most workers could be employees.  On the other hand, independent contractors are workers with economic independence who are in business for themselves. There are a number of “economic realities” factors that guide the DOL’s assessment of whether an individual should be appropriately classified as an independent contractor. Permanency of the relationship; control; and whether the services rendered are part of the principal’s business are some of the factors.

IRS

Three categories are relevant in determining whether the individual would be more appropriately categorized as an employee or independent contractor by the IRS:

• Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?  Greater company control indicates an employer/employee relationship
• Financial: Are the business aspects of the worker’s job controlled by the payer (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)?  Greater payer control indicates an employer/employee relationship
• Type of Relationship:
  • Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)?  Such things would indicate an employer/employee relationship
  • Will the relationship continue?  An ongoing relationship would indicate an employer/employee relationship
  • Is the work performed a key aspect of the business?  If the individual is performing work that is a key aspect of the business, an employee/employer relationship may be more appropriate.  For example, if a landscape company needs lawnmowing, the individual doing the mowing would be an employee.  But, if the owner of several retail shops needs someone to mow the lawns outside the shops, they would hire the mower as an independent contractor, not an employee.  This is because the landscape company is in the business of maintaining lawns.  But, the retails shops are in the retail business, not the lawnmowing business.

The guidance tells us that all of the above factors should be considered:  “There is no magic or set number of factors that makes the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.  The key is to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.”

The 3-category analysis is used now rather than the 20-factor test employed by the IRS for many years.

Wisconsin
Unlike the federal law’s broad reliance on any number of factors, Wisconsin gives us specifics.  Under WI law, to be properly classified as an independent contractor, all nine of the following factors must be met.  The individual must:

1. Maintain a separate business
2. Obtain a Federal Employer Identification Number or has filed business or self-employment income tax returns with the IRS based on the work or service in the previous year.
3. Operate under specific contracts
4. Be responsible for operating expenses under the contract
5. Be responsible for satisfactory performance of the work under the contracts
6. Be paid per contract, per job, by commission or by competitive bid
7. Be subject to profit or loss in performing the work under the contracts
8. Have recurring business liabilities and obligations
9. Be in a position to succeed or fail if business expenses exceed income

 

The WI department of workforce development provides concise descriptions of each factor and also provides links to cases that further explain the factors.  The information is available here:  https://dwd.wisconsin.gov/worker_classification/wc/ninepart/

Massachusetts
Massachusetts favors the employee status and uses a three prong-test.  To be classified as an independent contractor, all three parts must be answered with a “yes.”  If any one part is “no,” the individual should be categorized as an employee.

1. Is the worker free from the Company’s control and direction in performing the service both under a contract and in fact?  To be free from an employer’s direction and control, a worker’s activities and duties must actually be carried out with independence and autonomy.  For example, an independent contractor completes the job using his or her own approach without instruction and also dictates the hours that he or she will work on the job.
2. Does the worker provide a service that is outside the Company’s usual course of business?  Typically, a worker who performs the same type of work that is part of the normal service delivered by the employer may not be treated as an independent contractor.
3. Is the worker customarily engaged in an independent trade, occupation or profession?  The particular service to be performed must be “similar in nature” to the independently established trade of the worker.  An independent contractor must represent his or herself to the public as “being in business” to perform the same or similar services that he or she is performing for the company.

Let’s Summarize:

• Each time you form a working relationship, perform an individualized assessment of the relationship.
• Consider the factors outlined by both federal and state laws.
• The law that affords the most protections to the worker applies. Here, that would mean that if the worker would be categorized as an employee under either federal or state law, the worker must be categorized as an employee.
• If you have questions on how to classify workers, we can help. We offer a Position Classification Audit service to identify potential pitfalls of independent contractors and wage and hour issues. It is an efficient and easy way to protect your business. If you would like more information about this service or any other questions, please contact (508) 548-4888 or info@foleylawpractice.com

WWYLD – 03/28/18 – Early Termination of COBRA Coverage

In this week’s “What Would Your Lawyer Do” post, we take on a continuation of healthcare coverage, or “COBRA,” issue.  Generally, an individual may be entitled to COBRA for a maximum of either 18 or 36 months, depending on the nature of the basis for entitlement (the “qualifying event”).  But, coverage can be terminated before that 18 or 36-month mark in certain situations.  That’s the topic of this week’s WWYLD.

Question:  A former employee reached out to say that his new employer’s benefits are not as comprehensive as ours.  So, although he’s eligible for benefits at his new employer, he’d prefer to stay on our plan via COBRA.  Can he do that?  In general, when can we terminate an employee’s COBRA?

To be able to terminate COBRA coverage before the maximum coverage period is reached, both the law and the plan must allow it.

Under COBRA, coverage may be terminated before the maximum coverage period is reached if:

• The employer ceases to maintain any group health plan;
• Premiums are not paid in full on a timely basis;
• A qualified beneficiary begins coverage under another group health plan after electing continuation coverage;
• A qualified beneficiary becomes entitled to Medicare benefits after electing continuation coverage; or
• A qualified beneficiary engages in conduct that would justify the plan in terminating coverage of a similarly situated participant or beneficiary not receiving continuation coverage (such as fraud).

To address the current situation:  the law states that, to terminate coverage early, the former employee must be “covered” under another plan.  The determining factor is actual coverage, not entitlement.  In this case, the employee’s COBRA benefits cannot be terminated early because he has not enrolled in the new employer’s benefits and, therefore, he is not covered by the new employer’s plan.  Because the law prohibits early termination, the terms of the plan don’t come into play.

But, you ask about other situations in which you can terminate COBRA early.  Let’s do some hypotheticals.

Hypothetical #1:  A former employee elected COBRA and then elected the new employer’s coverage.  The employee wants to remain on the COBRA plan as well.  Can he?  We know from the information above that the law states the former employer can terminate COBRA in this situation.  So, the answer hinges on the terms of the plan document.  Most plan documents have a section that directly and specifically addresses COBRA.  Investigate the contents of your plan document, or work with your agent to understand the COBRA-related terms.  If the plan document is silent, the former employer could not terminate COBRA coverage early. The employee could have coverage under both the new and former employer (messy as that might be for the employee).  But, if the plan document specified that coverage terminates early upon election of coverage with the new employer, COBRA could be terminated early.

Hypothetical #2:  A former employee elected COBRA and then became entitled to Medicare.  The plan document states that coverage is terminated upon entitlement to, and election of, Medicare.  Can coverage be terminated early?  The law states that the former employer can terminate COBRA early when the employee becomes entitled to Medicare.  The determining factor is entitlement to Medicare, not coverage.  But, the plan document indicates that the employee must be enrolled in Meidicare before COBRA terminates.  Because the plan document is more restrictive than the law, the plan document controls.

Note, too, that some states have state-specific COBRA laws, often called “mini-COBRA.”  A mini-COBRA may provide more employee protections than the federal law alone.  For example, an employer in Massachusetts cannot terminate COBRA early even if the employee actually signs up for coverage under a new group health plan if that plan would not cover the employee’s pre-existing condition.

Questions about COBRA?  We can help.

WWYLD – 03/20/18 – Is There a Timeline for “Temporary?”

A few weeks ago, Angela Snyder wrote about the DOL’s new guidance regarding interns. In her article, Angela discussed considerations related to intern pay. Another issue that often arises with regard to interns is employment status—should the intern be hired as a “regular” or “temporary” employee? That’s the topic of this week’s WWYLD.

Question: Our handbook indicates that a “temporary” employee is someone who works for the organization for three months or less. A manager has asked if we can hire an employee on a temporary basis for a 4-month engagement. Are there any legal restrictions on what constitutes “temporary” employment?

In general, “temporary” is defined by the employer not the law. Legally, employees are “at will” (which means employment can be terminated at any time by either the employer or the employee) unless a contract or agreement assures otherwise.  A temporary status or probationary period does not affect the at will status.  But, there are other legal considerations for temporary employees. Let’s start there and finish with some operational considerations.

The Affordable Care Act (“ACA”): Many employers have policies that state that certain benefits, including health insurance, are not made available to temporary employees. The ACA requires that employers (with 50 or more employees) offer health insurance that is affordable and provides minimum value to their full-time employees. The ACA states that a waiting period of up to 90 days is permissible. Therefore, if a full-time (defined as working 30 or more hours/week), temporary employee remains employed beyond 90 days, he or she is legally entitled to benefits, regardless of company policy. This is one reason many employers limit temporary employment to three months or less.

Title VII: It is lawful and nondiscriminatory to provide different benefits and privileges to different employees based on employment status (regular vs. temporary, exempt vs. non-exempt, full-time vs. part-time). But an employer could open itself up to claims of discrimination if employees doing similar jobs are categorized differently and, therefore, receive different benefits and privileges. Let’s say, for example, that employee A and employee B have the same job title and both have 6-months of tenure. Employee A is “regular” and employee B is “temporary.” The employer only provides benefits to regular employees with at least 90 days of tenure. Employee B could assert a claim that he is being retained at the temporary status to avoid providing benefits, and this is an adverse action that relates to the employee’s membership in a protected class. Again, this is not to say that temporary employment, or that providing different benefits to temporary employees, is unlawful or discriminatory. Employers must ensure they have legitimate non-discriminatory business reasons for classifying employees as they do.

Operational Considerations:

• Ensure you have well-documented policies regarding temporary employees. Consistently apply the policy.
• Ensure you have well-written job descriptions that clearly outline the duration of the specific assignment.
• Before the job is posted, clearly document the business need for hiring an employee on a temporary, rather than regular, basis.
• Monitor the duration of the assignment to ensure it aligns with policy and the job description. Where the assignment goes beyond the scope of the policy/job description, consider changing the employment status—moving to regular employment or moving to termination.
• Monitor the hours worked to ensure compliance with the ACA.

 

Questions about employment status? Please reach out.

WWYLD – 03/16/18 – Time Off Under FMLA to Care for an Adult Child

Question:  An employee is requesting time off to be with her adult daughter who is having a procedure done at the hospital.  Could the employee be entitled to FMLA leave?

This employee could be entitled to FMLA leave, but the employer may request additional information to definitively determine entitlement.  The employee’s eligibility for FMLA leave will depend on the following factors:  1) whether the employee’s adult child has “serious health condition” 2) whether the employee’s adult child is “incapable of self-care;” and 3) whether the employee is “needed to care for” the child.

To be eligible for FMLA leave, an employee must work for a covered employer and:

• have worked for that employer for at least 12 months; and
• have worked at least 1,250 hours during the 12 months prior to the start of the FMLA leave; and,
• work at a location where at least 50 employees are employed at the location or within 75 miles of the location.

1)  Serious Health Condition

An eligible employee is entitled to up to a total of 12 workweeks of unpaid leave in a 12-month period:

• for the birth of a son or daughter, and to care for the newborn child;
• for the placement with the employee of a child for adoption or foster care, and to care for the newly placed child;
• to care for an immediate family member (spouse, child, or parent — but not a parent “in-law”) with a serious health condition; and
• when the employee is unable to work because of a serious health condition.

A “serious health condition” means an illness, injury, impairment, or physical or mental condition that involves:

• any period of incapacity or treatment connected with inpatient care (i.e., an overnight stay) in a hospital, hospice, or residential medical care facility; or
• a period of incapacity requiring absence of more than three calendar days from work, school, or other regular daily activities that also involves continuing treatment by (or under the supervision of) a health care provider; or
• any period of incapacity due to pregnancy, or for prenatal care; or
• any period of incapacity (or treatment therefore) due to a chronic serious health condition (e.g., asthma, diabetes, epilepsy, etc.); or
• a period of incapacity that is permanent or long-term due to a condition for which treatment may not be effective (e.g., Alzheimer’s, stroke, terminal diseases, etc.); or,
• any absences to receive multiple treatments (including any period of recovery therefrom) by, or on referral by, a health care provider for a condition that likely would result in incapacity of more than three consecutive days if left untreated (e.g., chemotherapy, physical therapy, dialysis, etc.).

2)  Incapable of Self Care

A “child” is defined as a biological, adopted, or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis who is either under 18 years of age or is 18 years of age or older and “incapable of self-care because of a mental or physical disability” at the time FMLA leave is to commence.

An individual will be considered “incapable of self-care” for FMLA leave purposes if he or she requires active assistance or supervision in three or more activities of daily living or instrumental activities of daily living.

• The FMLA regulations include the following as examples of “activities of daily living”:
  • Caring appropriately for one’s grooming and hygiene
  • Bathing
  • Dressing
  • Eating
• The FMLA regulations provide the following examples of “instrumental activities of daily living”:
  • Cooking
  • Cleaning
  • Shopping
  • Taking public transportation
  • Paying bills
  • Maintaining a residence
  • Using telephones and directories
  • Using a post office

3)  Needed to Care For

To be eligible for leave, the employee will be “needed to care for” her daughter.  The employee would be considered “needed to care for” her daughter if the daughter is unable to care for his or her own basic medical, hygienic, or nutritional needs or safety, or unable to transport herself to the doctor/treatments, because of a serious health condition. “Needed to care for” also includes providing psychological comfort and reassurance that would be beneficial to a son or daughter with a serious health condition who is receiving inpatient care or home care.

Suggested Steps

With regard to #1 and #2, the employer can ask that the employee obtain documentation from the daughter’s medical provider that answers the following:

• Dates associated with the care the daughter requires;
• Appropriate medical facts about the condition;
• A statement of the care the daughter requires

With regard to #3, it is permissible to ask the employee for a brief explanation of why the employee is needed to care for her daughter.  This information would come from the employee herself and does not need to be supported by a request/recommendation from a medical provider.  If this information was shared in previous communications, those communications between the employee and the employer could be adequate to support #3.

Questions about FMLA?  We can help.

WWYLD – 3/6/18 – Accommodations for Nursing Mothers

Question:  Can you clarify the law regarding break time for nursing mothers?  What is meant by “reasonable break time?”  Does this mean employees can take the break anytime they want, even if the department is particularly busy?

The Federal Affordable Care Act (“ACA”) created employer obligations with regard to break time for nursing mothers.  Under the ACA, an employer is required to provide “reasonable break time for an employee to express breast milk for her nursing child for one year after the child’s birth each time such employee has need to express the milk.” Employers are also required to provide “a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk.”

This section of the ACA is implemented through the Fair Labor Standards Act (“FLSA”), and applies only to “non-exempt” employees, unless state law requires otherwise.  Therefore, if you operate in a state that does not have a specific law addressing lactation or pregnancy-related accommodations, you are only legally obligated to provide break time for nursing to your non-exempt employees.  The Department of Labor “encourages employers to provide breaks to all nursing mothers regardless of their status under the FLSA.”  And, we recommend, as a best practice, that employers provide break time to all nursing mothers, regardless of whether the employee is exempt or non-exempt.

Depending on the states in which it operates, an employer may have state-specific obligations.  For example, as of April 1, 2018, Massachusetts employers must comply with the Pregnant Workers Fairness Act, which requires that employers provide reasonable accommodations for an employee’s “pregnancy or any condition related to the employee’s pregnancy,” including the need to express breast milk.  The Act indicates that accommodations may include:  a) more frequent or longer paid or unpaid breaks; and b) a private non-bathroom space for expressing breast milk.  (The Act provides a longer list of example accommodations; I’ve simply highlighted two here.)

State-specific employee protections are certainly not limited to Massachusetts.  Arkansas, California, Colorado, Connecticut, D.C., Hawaii, Illinois, Maine, Mississippi, Montana, New Mexico, New York, Rhode Island, Vermont, Virginia, and Oregon all have laws that protect workplace lactation.  (This interactive MAP provides a nice summary.)

So, how many breaks are reasonable?  For how long?  The ACA does not define “reasonable” break time and the guidance is limited.  The DOL indicates that break time should be provided “as frequently as needed by the nursing mother” and that “the frequency of breaks needed to express breast milk as well as the duration of each break will likely vary.”

While we can’t rely on this as official guidance, the US Department of Health and Human Services provides an “Employees’ Guide to Breastfeeding and Working” that indicates the following in the “When to Express Milk” section:  “Express milk for 10-15 minutes approximately 2-3 times during a typical 8-hour work period. Remember that in the first months of life babies need to breastfeed 8-12 times in 24 hours. So you need to express and store milk during those usual feeding times when you are away from your baby. This will maintain a sufficient amount of milk for your childcare provider to feed your baby while you are at work. The number of times you need to express milk at work should be equal to the number of feedings your baby will need while you are away. As the baby gets older, the number of feeding times may decrease. When babies are around 6 months old and begin solid foods, they often need to feed less often. Many women take their regular breaks and lunch period to pump.  Others talk to their supervisor about coming in early and/or staying late to make up the time needed to express milk. It usually takes 15 minutes to express milk, plus time to get to and from the lactation room.” (https://www.womenshealth.gov/files/assets/docs/breastfeeding/business-case/employee’s-guide-to-breastfeeding-and-working.pdf)

Because the frequency and duration are dictated by the needs of the employee/nursing mother, you, as the employer, are somewhat limited in what you can do.  However, there are some things to consider:

• Minimize unnecessary breaks by requiring the use of PTO or by making them unpaid (to the extent permitted).  The law does not require that the breaks be paid, unless the employer provides paid breaks.  Even then, the employer is not required to pay for all breaks, only the number stated in the employer’s policy.  If you provide two paid breaks to your employees, nursing mothers would be allowed to take two of her nursing breaks as paid, but any beyond that could be unpaid/use PTO.  Remember, you can’t dock an exempt employee’s pay based on the quantity of work performed.  But, you can deduct from a PTO bank.
• Talk to the employee(s).  Nothing in the law prohibits or limits an employer’s right to talk to the employee about how to most effectively schedule the breaks.  You are well within your rights to meet with this employee (or any/all employees who request additional break time) and discuss different ideas for accommodating the employee’s needs while also causing the least amount of disruption to the company.

WWYLD – 2/27/18 – Sexual Harassment Training

We’re excited to tell you about a new development here on the Foley & Foley blog.  Each week, we’ll be posting a “What Would Your Lawyer Do” article that will present our thoughts on an interesting employment law question.  It may be an answer to a question that arises in your world all the time.  Or, maybe it’s a question you’ve never faced before.   Either way, we hope you’ll find the questions and answers interesting, informative, and – if we’re really on a roll – entertaining.

Question: Which states require sexual harassment training?  Where required, what does training have to look like?  And, how do I know which employees must take the training? 

Three states, California, Connecticut, and Maine, require that private employers conduct sexual harassment training.  Multiple additional states require that public employers provide training.  And, many states do not specifically require training, but strongly recommend it and cite the delivery of training as a way to lower risk and demonstrate adherence to anti-discrimination and anti-harassment laws.

• California
  • Who must conduct training?  Any employer that operates in the state of California and has at least 50 employees.  The number of employees is based on total employees, not just those in California.  Therefore, if an employer has just one employee in California, but at total of 50 or more, the employer is subject to the California law.
  • Who must participate in training?  Supervisors who themselves are employed in California.  It’s the supervisor’s location that matters.  If a Massachusetts-based supervisor supervises California-based employees, that supervisor is not required to participate in training.  The law broadly defines “supervisor” as someone “with authority to hire, fire, assign, transfer, discipline, or reward other employee” or “anyone with the authority to effectively recommend (but not take) these actions, if exercising that authority requires the use of independent judgment.”
  • What are the specifications of the training?  Training must occur within 6 months of the individual becoming a supervisor and every two years thereafter.  Training must be at least two hours in duration and take place in an interactive setting where questions can be answered by a trainer.  Training must cover specific topics and include methods for assessing comprehension.
• Connecticut
  • Who must conduct training?  Any employer that operates in the state of Connecticut and has at least 50 employees.  Like California, Connecticut bases the number of employees on total employees, not just those in Connecticut.
  • Who must participate in training?  Unlike California, Connecticut looks at the location of the person being supervised.  To comply with Connecticut law, employers must provide training to any supervisor who supervises a Connecticut employee.  Connecticut defines a supervisor as: “any individual who has the authority, by using her or his independent judgement, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward or discipline other employees, or responsibility to direct them, or to adjust their grievances or effectively to recommend such actions.”
  • What are the specifications of the training?  Training must occur within 6 months of the individual becoming a supervisor.  Subsequent training is not required, but the state recommends that employers provide training every three years to cover any changes in the law.  Training must be at least two hours in duration and take place in a “classroom like setting” that allows participants to ask questions and receive answers.
• Maine
  • Who must conduct training?  Any employer that operates in the state of Maine and has at least 15 employees in Maine.  Unlike California and Connecticut, Maine looks only at the number of employees in the state.  If an employer has 15 employees in Maine, but they are quite decentralized, the employer may be exempt from providing the required training.
  • Who must participate in training?  Maine’s requirement is not limited to supervisors – all Maine-based employees must take training within one year of hire.
  • What are the specifications of the training?  Maine doesn’t have a specific required duration or format for the training, but does provide a checklist of content that must be covered.

Have questions on required training?  Need assistance developing training sessions?  Looking to update your sexual harassment policy?  We can help.