Last month we told you about the amendment to the Kansas Wage Payment (KWPA), which goes into effect on July 1. In short, the changes greatly expand the circumstances under which employers may make payroll withholdings or deductions without violating the KWPA. To maximize your organization’s ability to avail itself to these new provisions, you should consider having employees (at least the non-exempt ones) sign agreements prospectively authorizing deductions to cover any past or future payroll overpayments, loans, advances, or failure to return or pay for employer-provided merchandise. But be careful in applying your new rights under the KWPA to exempt employees.  Even if making a certain deduction is allowed by Kansas law, doing so could present potential liability under the federal Fair Labor Standards Act (FLSA).  Read on to understand why.

1. as repayment of a loan or advance the employer made to the employee during the course of and within the scope of employment;
2. to recover a payroll overpayment; and
3. to compensate the employer for the replacement cost or unpaid balance of the cost of the employer's merchandise or uniforms purchased by the employee. 

I have worn a beard for most of my adult life, and I appreciate a solid stand of men's facial hair. So I couldn't help noticing an article last week touting a growing industry in Turkey: Turkish mustache transplants. 

For a mere $5,000, the "follicly challenged" can have a cosmetic surgeon enhance their mustache or beard. The procedure is done under local anesthetic and takes only a few hours. In true medical tourism style, the procedures are being offered as part of "transplant packages" that may include additional amenities such as a beachside vacation on Turkey's Mediterranean coast.

If you're looking to boost your masculinity and catch a few rays in the process, this might just be the thing you've been waiting for.

That got me to thinking: This is bound to become wildly popular because - let's face it - who could resist a shot at the mustache of their dreams. Which means it's only a matter of time before we find an employee or two claiming reimbursement under a health FSA, HRA, or HSA for the cost of the procedure. It's medical, so it's covered - right?

Well, not so fast. 

To be reimbursed from a health FSA, HRA, or HSA, expenses generally must be for "medical care," and the tax code specifically excludes cosmetic surgery from the definition of medical care. What counts as cosmetic surgery? Any procedure that "is directed at improving the patient's appearance and does not meaningfully promote the proper function of the body or prevent or treat illness      Continue Reading...

A new technical release from the DOL provides important guidance for employers on the obligation to give employees a notice regarding health coverage available through the public exchanges.

Effective Date. As discussed in a prior post, this notice obligation was scheduled to become effective March 1, 2013, but was delayed until guidance was issued. Under this new guidance, notice must be given to all current employees by October 1, 2013, and must be given to each new employee hired on or after October 1, 2013, within 14 days of the start date.

Covered Employers. Although this notice requirement was enacted as part of health care reform, it applies to employers through the FLSA. So all employers to which the FLSA applies are required to provide the notice. It does not matter whether the employer offers health coverage to employees or whether the employer is subject to the play-or-pay mandates.

Who Gets the Notice? The notice must be given to all employees, whether full-time or part-time and whether or not covered under the employer's health insurance plan. However, notice is not required to be given to dependents or other individuals who may be covered under the employer's plan.

Content Requirements and Model Notice. The notice must provide employees with information about the public exchanges and inform them that they may be eligible for a tax credit to subsidize coverage obtained through the exchange. But the notice must also advise that employees who choose to obtain coverage through the exchange will lose any employer      Continue Reading...

In a decision yesterday out of the Court of Appeals for the D.C. Circuit, the NLRB's notice posting requirement was struck down as invalid. For those of you that have been following along since the start, the NLRB issued the poster rule in August of 2011 and then repeatedly delayed enforcement of the rule as litigation popped up in several federal district courts as to the validity of the rule. The rule, in its simplest form, required employers to post a notice containing information about the ability of employees to seek union representation. Click here for more information on the rule. 

In its decision, the Court held that the rule violated an employer's right to free speech. The Court also addressed a provision in the rule related to the tolling of the statute of limitations for filing a charge based on a violation of the poster rule. This provision was also struck down as invalid. For those that like reading court decisions, this particular portion is a bit convoluted, but interesting for reasons beyond the NLRB poster. The tolling arguments touched on some Title VII and ADEA posting issues and tolling principles used by the EEOC. The Court did not specifically rule on the tolling issues beyond the NLRB poster; however, it did highlight and call into question the validity of tolling in that context as well. 

For now the poster rule looks to be on its death bed, but one never knows what appeal may arise or what another Court of Appeals might have      Continue Reading...

Immigration and Customs Enforcement (ICE) just provided employers with some troubling guidance on the pre-population of the employee information (Section 1) portion of the I-9 form. Employers with robust human resources systems that integrate the I-9 form into the mix may have reason to be concerned about this problematic new guidance.  

According to ICE, the pre-population of Section 1 is not acceptable under any circumstance. The ICE position is that the employee must complete Section 1 of the I-9 form themselves. The notion that the data placed into Section 1 originates from employee provided data carries no weight with ICE. The ICE view is that any pre-population of the I-9 form based on data input into a human resources system is unacceptable. 

Employers that continue to utilize this practice may find themselves at significant risk should ICE conduct an audit of the employer's I-9 process. This change in position is a fairly dramatic shift in ICE's position on this employer practice. It also seems to be a bit of a drastic change, considering the employee is reviewing and signing the data placed into Section 1. One can only hope ICE changes direction on this decision.

Buried deep within new regulations on the arcane "minimum value" requirement is important new guidance on how employer wellness incentives will impact both the minimum value and affordability analysis with respect to employer-provided health coverage.

Most Wellness Impact is Disregarded. The rule described in the regulation is fairly simple, although not favorable to employers. For purposes of determining whether health coverage is affordable to employees, any reward associated with participation in a wellness program (other than related to tobacco use) is ignored. This generally has the effect of increasing the amount the employee is treated as contributing toward the cost of coverage, thereby making the coverage less affordable.

Example. Assume, employees generally are required to pay $200 per month for employee-only coverage. But if the employees participate in a health risk assessment and basic biometric screening, they receive a discount of $50 per month (making the monthly cost $150). For purposes of determining whether the coverage is affordable, the employees are treated as having to pay $200 per month for coverage, even though they may actually qualify to pay only $150 per month.

There is a similar rule for minimum value, to the extent the wellness incentive impacts the cost-sharing structure of the plan (deductible, coinsurance, or copayments). Non-tobacco wellness programs are ignored in determining the plan's cost sharing, which impacts the determination whether the plan provides minimum value. For example, if a plan has a $2,000 deductible but provides a $500 reduction for participating in a non-tobacco-related wellness plan, the plan      Continue Reading...

We are now up to Part XV of the tri-agency FAQs providing guidance on various ACA-related issues.

The most important guidance in these FAQs relates to the treatment of mini-med plans that obtained a waiver from the prohibition on annual limits. But the FAQs also acknowledge, in so many words, that there are some issues on which further guidance simply will not be provided before 2014, so we're going to have to use our best judgment.

Changing the Plan Year on Mini-Med Plans. Employers and insurance carriers offering mini-med plans were required to obtain a waiver from the prohibition on annual limits. Under the waiver program, plans were allowed to continue until the end of the plan year ending in 2014. Creative employers and carriers began exploring whether they could change their plan years now and effectively extend waiver through most of 2014. For example, a plan with a plan year ending June 30 might change to a plan year ending November 30 and rely on the waiver until November 30. 

These FAQs provide, unequivocally, that a change in the plan year will not be effective to extend a plan's waiver. The waiver only applies until the end of the plan year ending in 2014, based on the plan year the plan was using when it applied for the waiver.

In other words, nice try.

Why would this matter? Well, it now appears that mini-med coverage extending into 2014 will be sufficient to allow employers with fiscal year plans to avoid some of the      Continue Reading...

A bill was introduced last week to amend the FMLA. The proposed changes focus on expanding the family relationships covered under the law. The bill expands coverage to allow leave to care for adult children, siblings, grandchildren, grandparents, parent-in-law, and same-sex spouses or domestic partners. Stay tuned as this proposal begins its journey through Congress.

State legislatures continue to debate and pass laws restricting employer behaviors with respect to the access to employee/applicant social media accounts. 

At the present time, six states (CA, IL, MI, MD, NM, and UT)  have passed legislation on this topic and there will likely be others in time. The primary focus of the legislation to date has been to prohibit employers from requiring candidates/employees to provide passwords and access to private accounts. Most of the state efforts have not tried to prevent employers from reviewing publicly available items published via social media. 

This trend is likely to continue and employers with multi-state operations should be paying attention to these developing statutory enactments. Furthermore, even if you are in a state that doesn't prohibit you from requiring employees to show you private social media areas, you might consider whether you truly want to engage in that type of behavior. There is a pretty strong element of it just not feeling right. Those are the types of feelings jurors and other fact finders are likely to have as well. In addition, who knows what those private pages/areas are going to teach you. There are plenty of facts that you don't really want to know when considering a candidate/employee and their future with your company.

The latest set of Affordable Care Act FAQs (Part XIV) announces the release of updated templates for the SBC and uniform glossary. The updated templates are designed to provide employers and insurers with tools to comply with the SBC requirement for the second year of applicability.

Note that many fiscal-year plans may not yet have begun their first year of applicability for the SBC requirement, which essentially begins with the first open-enrollment period beginning on or after September 23, 2012.

Limited Template Changes. The updated templates reflect only two significant changes. They add language for describing whether the coverage does (or does not) provide minimum essential coverage (MEC), and they add language for describing whether the coverage does (or does not) provide minimum value (MV). There is no change in the language describing whether benefits are (or are not) subject to annual limits, and the template keeps the same two coverage examples (childbirth and diabetes).

Extended Enforcement Relief. Perhaps the most significant guidance in the FAQs is an extension of much of the helpful enforcement relief that was provided through previous FAQs. For example:

• Compliance emphasis. IRS, DOL, and HHS will continue to emphasize "assisting (rather than imposing penalties on) plans, issuers and others that are working diligently and in good faith to understand and come into compliance with the new law" (Part VIII, Q2) and "will not impose penalties on plans and issuers that are working diligently and in good faith to comply" (Part IX, Q8).
• Electronic distribution. The additional safe      Continue Reading...

Kansas employers are often frustrated about the seeming ease with which employees qualify for unemployment benefits, even when they are fired for bad behavior, or when they quit over what the employer perceives as a trifle. Substitute House Bill 2105, signed by Governor Brownback on April 16, amends numerous provisions of the employment security statutes, including definitional sections that determine disqualification for benefits.  The new law will go into effect on July 1, 2013.  Among the changes, the new legislation:  (1) increases the taxable wage base for contributions made by employers; (2) links to the state’s unemployment rate the number of weeks a person is eligible for unemployment benefits; (3) revises numerous definitions, including “good cause,” “misconduct,” and “gross misconduct”; and (4) strengthens existing provisions related to drug and alcohol testing and terminations resulting from positive tests.  

The U.S. Supreme Court issued an opinion last week (U.S. Airways v. McCutchen) affirming a health plan’s right to enforce express plan language allowing it to recover benefits paid on behalf of a participant when the participant later recovers those benefits from a third party. But the court created a new wrinkle with respect to a plan's obligation to share in the costs of that recovery.

Background. The facts of the case are fairly straightforward. An employee was injured in a car accident, and the plan paid $66,866 in benefits related to those injuries. The employee then sued the individual who caused the accident and recovered $110,000. 40% of the recovery went to the employee’s lawyer, leaving a net recovery of $66,000. The plan claimed it was entitled to the remaining $66,000 based on language in the plan giving it the right to be reimbursed out of any third­-party recoveries. The employee resisted paying the full $66,000 to the plan on the basis that it would be unfair for the plan to be reimbursed off the top without sharing in any of the costs of the recovery.

Plan Terms Control. The court first addressed whether general equitable principles (fairness, essentially) could override the express terms of the plan. In other words, could the participant defend against the plan's express right to reimbursement by asserting it was unfair? The court said no. The plan terms are controlling, even if they arguably work an unfair result.

But there was more.

Sharing the Costs of Recovery.      Continue Reading...