What the devil is Massachusetts doing to employer health care contributions?

Last week, Governor Baker signed the awkwardly named, “An act further regulating employer contributions to health care,” which has raised many excellent questions. Once again we think about Bismarck’s quote: laws are like sausages, it is better not to see them being made. Except when laws are passed without regulation or key details, you have to dive into the sausage factory… . Where did this bill come from? Short answer: Governor Baker wanted spending cuts to MassHeath along with an increase in the employer contribution. The House and Senate decided to just implement the increased employer contribution without reforms or regulations. The Governor signed that bill. Surprise! On July 19, Governor Baker issued recommendations for amendments to the State’s Fiscal 2018 budget. A short attachment suggested an increase in the employer medical assistance contribution (EMAC) and introduced the 5% employer fine. Governor Baker indicated that these two changes “must not be considered in isolation of other measures needed to manage spending in the MassHealth program. Absent other reforms, this proposal imposes an unfair burden on Massachusetts’ employers without making the structural reforms essential to MassHealth’s long-term sustainability.” On July 26, the Massachusetts House and Senate both rejected the Governor’s amendments, reenacted the bill, and added an “emergency preamble” that stated: “Whereas, The deferred operation of this act would tend to defeat its purpose, which is to establish forthwith certain employer healthcare contributions, therefore, it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.” There was hopeful speculation from the business community that, given the rejection of his recommendations, the Governor would not sign the reenacted bill. Therefore, many were surprised that the Governor signed the bill after indicating that these changes, without other reforms, imposed an unfair burden on employers was unexpected. The “emergency” adoption of this bill contributed to the lack of information employers are now facing. Questions? You bet! Here are some questions we received last week. We hope this provides clarity, based on the limited information still available: Q: In your email, you said “All Massachusetts employers who have more than five employees must pay a fine – 5% of the employee’s wages – for every employee who receives his or her insurance through MassHealth.” Does this mean that if an employee elects MassHealth instead of the employer-sponsored insurance, the employer has to pay a 5% fine? A: Yes – the employer will pay a 5% fine for each employee who receives health care through MassHealth or subsidized coverage instead of through the employer-sponsored plan. Q: How can the employer know if the employee receives his or her insurance through MassHealth? A: The Governor’s recommendations included some details about employer reporting and tracking. Baker’s recommendations indicated that employers: 1) would need to respond to ad hoc requests from the state; and 2) would need to complete, annually, a “Health Insurance Responsibility Disclosure” form.” However, none of this detail was carried forward into the enacted bill.The bill does not specify what obligations the employer will have with regard to tracking and reporting employee coverage. According to the bill, the department of unemployment will create and publicize regulations that address details including how many days of non-employer coverage will trigger the fines and how the fines will be paid. It is possible that the regulations will also clarify any employer obligations with regard to tracking and reporting employee coverage. We will monitor the developments of the regulations and communicate details as they become available. The fines will be implemented January 1, 2018 – that’s less than five months away. Therefore, employers may not have much time between the publication of the regulations and the effective date of the new law. Employers may wish to start gathering data now to get a sense as to the size of the fines they may face. They may wish to poll employees who are not enrolled in the company-sponsored plan to understand the outside coverage the employee has elected. Q: Does the employer still pay a fine if the individual is covered under MassHealth for free? A: Very few individuals are eligible to receive MassHealth at no cost. We have included a chart that reviews eligibility and premiums. 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.The bill does not currently address whether employers would be subject to fines for individuals who receive MassHealth at no cost. We do know that the fines are paid for non-disabled workers. If an employee receives MassHealth due to his/her disability, the employer would not be subjected to the fine for that employee. Q: I read there is a $750 cap on the fine per employee. Is this true? A: Yes, this is true. The bill indicates that the fine is 5% of an employee’s wages. However, it defines wages in this context as the “unemployment insurance taxable wage base,” which is $15,000. $15,000 * .05 = $750 Q: I understand that the fines are effective January 1, 2018. Will Massachusetts employers be subject to them year after year? A: The bill contains “sunset” language, which indicates these fines will be repealed as of 12/31/19. It’s quite possible that, between now and 12/31/19, the sunset language will be removed or modified to push the date further out. However, as of now, these fines are effective for a two-year period only. Q: Can I question any fines? Is there an offset? A: Yes, The Department of Unemployment Insurance (DUI) will levy the fines and there is procedure to request a hearing. The bill also calls for DUI rates to remain the same to offset the increases in employer contributions for the 2 years the bill is in effect. Q: What makes an individual eligible for MassHealth? A: First, the applicant or member must be a resident of Massachusetts. Second, all those applying in the household must have a social security number or be applying for an SSN. After those basic requirements are met, eligibility is then assessed using a number of factors including citizenship, age, disability, income level, and the availability of other health coverage. We have included a chart that reviews eligibility for the different types of MassHealth coverage. We will continue to communicate with you as we learn more about this bill. In the meantime, please reach out to us with any of your questions!

© 2017 FOLEY & FOLEY, PC, ALL RIGHTS RESERVED

Workplace Posters are Free. Really.

Clients often receive pressing, official-looking notices urging the purchase of mandatory employment law postings. While you do have to post, you do not have to buy. Although some states also try to sell posters which is really cheap, all required postings are available free of charge (keep scrolling).  Please see the links below, from the federal government and states where we practice:

Federal: United States Department of Labor – Wage and Hour Division

Massachusetts: Labor and Workforce Development – Massachusetts Workplace Poster Requirements

California: http://www.taxes.ca.gov/payroll_tax/postingreqbus.shtml

Connecticut: https://www.ctdol.state.ct.us/gendocs/Labor_Posters.htm

Georgia: https://dhs.georgia.gov/department-labor-required-workplace-posters

Illinois: https://www.illinois.gov/idol/Employers/Pages/posters.aspx

Kansas:  http://www.dol.ks.gov/Laws/Posters.aspx

Maine: http://www.maine.gov/labor/posters/

Maryland: https://www.dllr.state.md.us/oeope/poster.shtml

Minnesota:  http://www.dli.mn.gov/ls/posters.asp

Missouri: https://labor.mo.gov/posters

New Hampshire: https://www.nh.gov/labor/forms/mandatory-posters.htm

New York: https://labor.ny.gov/workerprotection/laborstandards/employer/posters.shtm

North Carolina:  http://www.nclabor.com/posters/posters.htm

Oregon:  http://staging.apps.oregon.gov/boli/TA/Pages/Req_Post.aspx

Pennsylvania: http://www.hrm.oa.pa.gov/workplace-support/required-postings/Pages/default.aspx

Texas: http://www.twc.state.tx.us/businesses/posters-workplace

Utah: https://laborcommission.utah.gov/divisions/UOSH/RequiredPosters.html

Vermont: http://labor.vermont.gov/

Wisconsin:  https://dwd.wisconsin.gov/dwd/posters.htm

As always, should you have any questions including information for additional state postings, please contact us. We can help. Mike@foleylawpractice.com or 508-548-4888

Why Many Executive Orders are Hot Air

On May 4, 2017, President Trump signed an Executive Order Promoting Free Speech and Religious Liberty.  Could this order allow discrimination against LGBTQ individuals and women, as feared?   Will this impact the workplace? No. Here is the line to remember: Existing laws cannot be overturned by Executive Orders.

Let’s take a look at this Order as a good example. The portion of the Order that pertains to Federal law is:

_Sec_. _4_. _Religious Liberty Guidance_. In order to guide all agencies in complying with relevant Federal law, the Attorney General shall, as appropriate, issue guidance interpreting religious liberty protections in Federal law.

Attorney General Jeff Sessions can issue guidance until the cows come home: The US Equal Employment Opportunity Commission (EEOC) does not answer to him.  The EEOC is an independent federal agency charged with enforcing federal laws against illegal discrimination in the workplace. Laws like the ADA, ADEA, FLSA, FMLA and Title VII are under the purview of the EEOC for enforcement and guidance. Congress may make changes to the laws and the courts can overrule, clarify or uphold the laws.

Executive Orders might be good optics but cannot impact the rule of federal. state or local law in the workplace.

WORKPLACE COMPLIANCE IN THE TRUMP-ERA: IT IS NOT ABOUT TWITTER

 

It has been noted politicians campaign in poetry and govern in prose.  That may sound too lofty to describe current times, but the sentiment remains: promises made on the campaign trail do not easily translate into law. We have a Republican President and a Republican Congress, which historically has meant a more business-friendly regulatory environment.  Yet as the first 100 days will show, unwinding is neither quick nor easy. The Affordable Care Act has not been repealed and little is on the horizon. The President’s Budget Blueprint for 2018 proposes to slash the Department of Labor’s (DOL) budget by 21%. What does this mean for employers right now, or even over the next year?

In short, not a lot. Meanwhile, state and local governments are legislating like mad to fill the gaps that could be created by proposed budget cuts and executive orders. President Trump is an active Twitter user but as detailed below, that communication belies the actual activity of the federal government. #Realtalk

Are employers off the hook for federal mandates? Not so fast. Most of the federal regulations that govern the workplace remain in place and, given the inability to repeal the much lamented ACA, may not change at all.

Below is a quick overview of the current federal landscape under President Trump. Without actual policy as a guide, we are using the President’s proposed budget as a crystal ball. Please note that many states, including Massachusetts and California, have stricter mandates than the federal laws:

THE FUTURE OF DOL/OSHA/EEOC ENFORCEMENT

The President has proposed $2.5 Billion in cuts to the U.S. Department of Labor’s (“DOL”) operating budget. Because Congress has to approve the budget this is only an outline of the actual budget.  The blue print is short on details, but does expressly call for reduced funding for grant programs, job training programs for seniors and disadvantaged youth, and support for international labor efforts.  It also proposes to eliminate the U.S. Chemical Safety and Hazard Investigation Board (“CSB”) – an independent, federal, non-enforcement agency that investigates chemical accidents at certain facilities.  These cuts account for $500 million dollars of the DOL budget. The blueprint does not specify where the other $2 billion in cost savings will come from, except to say more funding responsibility will go to the states.  If approved by Congress—a big if–the cuts will involve a loss of funds that could be distributed heavily through DOL’s enforcement programs. This will include the EEOC and OSHA. Yet the process by which these agencies collect fines is a valuable revenue generator and unlikely to end easily.

At this point, the likelihood of the final budget looking like the proposed one is total conjecture. Furthermore, even with the expected cuts to the DOL’s enforcement and regulatory programs, it is important to recall that under the last Republican administration—no fan of regulation– the DOL still enforced the law. Moreover, as the federal government delivers more labor enforcement responsibility to the states, employers will increasingly be forced to work to achieve compliance on two fronts, instead of one.

RIGHT NOW

Every administration has used the media as a means of furthering and communicating its chosen agenda, and the Trump administration is no exception.  The choices the administration makes in what it chooses to publicize likely signal the administration’s direction; but also shape the public’s perception of what it is actively doing.  The Trump administration and President Trump in particular use social media and news reports for the purpose of shaping the public’s understanding their activity.  From a compliance standpoint, this actually creates risk for employers.

Despite the President’s proposed budget and awaited confirmation of a new Labor secretary, the New York Times reported  that DOL enforcement actions continue.  In a departure from past practice, the department has stopped publicizing fines against companies. As the New York Times points out, the Obama administration used the announcements as an enforcement tool, and a means to influence employers.  However, the announcements also served as an important window for employers into the DOL’s current position on important compliance issues such as wage and hour or OSHA safety enforcement.  If a company in the same industry was recently fined for a practice, that action provided others in the industry with important notice to examine their practice.  Employers no longer have this benefit.  Furthermore, those who believe that the lack of information surrounding DOL enforcement means they no longer have to worry about the threat of an audit do so at their own peril.  At the present, and until the new budget is confirmed months from now, agency enforcement has not changed.  For those inclined to believe the confirmation of the new Labor secretary will change that should keep in mind that DOL audits are a money-maker for the agency.  There seems to be little reason for them to stop.

WHAT TO DO

The last few years have seen a seismic change in the number of employment laws on both the state and federal level.  If it has been a few years since your organization has updated its employee handbook, you have a compliance problem on your hands.  Updating your handbook and policies is an important step to mitigate risk.

And remember, statutes, regulatory guidance and case opinions published by the courts are what impact compliance obligations, not the news. What happens on Twitter does not reflect the actions of the agencies of the federal government. #Really