The health care reform mandate to provide no-cost coverage for women's contraception and sterilization (see our prior coverage here) has proven  controversial. Now a federal court in Colorado has issued an order preventing the government from enforcing the requirement against a private employer that objects to the requirements on religious grounds. Although several organizations across the country have sued to bar the enforcement of this requirement, the Colorado case is the first in which a court has ruled that the requirement may not be enforced. Other courts have dismissed challenges to this requirement.

The substantive and procedural legal background to this case is fairly complex.  But boiled down, the court concluded the employer stood a good chance of proving that the contraception mandate would violate the Religious Freedom Restoration Act - a federal statute that is intended to ensure there is no substantial burden placed by the government on the free exercise of religion. Based on the likelihood of harm to the employer, the court temporarily barred the government from enforcing the requirement.

There are several unique aspects to this case.

• The employer is a private employer, not a church or religious-oriented non-profit organization. But its owners have taken very specific steps to provide that the business will be operated in a manner consistent with the owners' religious beliefs, which the court found persuasive in evaluating whether the contraception requirement might burden the free exercise of religion.
• The employer's group health plan is not a grandfathered plan, and the employer does not qualify for      Continue Reading...

OSHA recently established a website section devoted to providing construction-industry employers with fall-protection information.  Statistics show that falls are the most likely cause of on-the-job fatalities in the industry, and OSHA is making a concerted effort to reduce the number of fall-related incidents in the industry.

For employers, this new outreach website provides a single location with links to a wide variety of educational materials on the topic.  This includes short summaries of the various regulations related to fall-protection issues, as well as materials that can be used to train employees on these various concerns.  The OSHA fall-protection website section can be found here.

The federal Department of Health and Human Services (HHS) recently announced that it has entered into a resolution agreement with the Alaska Department of Health and Social Services (which operates the Alaska Medicaid program) to settle potential violations of the HIPAA security rule.

The underlying facts are painfully simple. [read: Yes, this could happen to you.] A computer technician for the Alaska agency had a USB thumb drive stolen from the technician's car. The thumb drive potentially contained electronic protected health information about individuals covered through the Alaska Medicaid program. (There was no evidence that data on the drive had, in fact, been accessed.) The agency reported the potential breach to HHS, as required under the HITECH breach-notification rules. HHS began its investigation within three months after the notification.

To resolve this potential violation of the HIPAA security rule, the Alaska agency agreed to pay a "resolution amount" of $1.7 million and enter into a corrective-action plan that, among other things, allows HHS to closely monitor the agency's HIPAA compliance for the next three years.

Although a state Medicaid program operates on a much larger scale than a private employer's group health plan, this investigation and resolution agreement show that HHS will take HIPAA compliance by health plans just as seriously as compliance by health-care providers and other covered entities. It is imperative that health plans have proper privacy and security policies and procedures in effect and assess security risks. Those policies, procedures, and assessments must be periodically reviewed and updated to      Continue Reading...

I was interviewed for and quoted in an article (subscription required) in today's Wichita Business Journal highlighting the risk that an employer's wellness program might cross the line and result in the collection of employee genetic information in violation of the federal Genetic Information Nondiscrimination Act (GINA). The article is short and so does not get into the nuances of what is permitted and what is not, but the basic point is a good one: If you're asking employees to fill out a health risk assessment or similar questionnaire, you need to be thinking about the GINA requirements.

Here are some specific points to keep in mind:

1. If you're using a vendor to run your wellness program, they likely will understand the law, but it's still your responsibility to make sure you're in compliance. At a minimum, you'll want to review (with legal counsel) the questionnaires and other documents employees will be asked to complete to see if there are any red flags.
2. Genetic information, as defined for purposes of GINA, is broader than you might think. Family medical history, for example, is considered genetic information.
3. Although the safe bet is to simply not request that employees provide family medical history or other genetic information, there are circumstances when it can be ok. In general, disclosures in connection with a wellness plan that are entirely voluntary and not made in connection with health insurance enrollment or underwriting are permitted.

I have an article in the July edition of the ABA Health eSource (an online publication of the American Bar Association Health Law Section) discussing various considerations for group health plans that receive MLR rebates. It expands on some of our prior coverage on MLR rebates (see, for example, here) and addresses both ERISA and tax issues. Rebates are due from insurers by August 1, so employers with insured group health plans could be seeing checks any day now.

Over the last several months the Penn State/Sandusky story has taken numerous twists and turns.  For the most part, the final chapter has been written on most of the participants.  The main perpetrator, Sandusky, has been convicted on a significant number of criminal offenses and will spend the rest of his life in jail.  Penn State has been hit with significant NCAA penalties and is defending itself from a range of civil claims.  The once revered head coach, Joe Paterno, has died and his reputation destroyed. 

While most employers don't expect to deal with employee issues as horrible as those Penn State has been faced with, there are some lessons that can be learned from Penn State's fall. 

1. Make sure your organization has a process by which complaints of wrongdoing can be made.  This process should include multiple avenues for an employee to bring a complaint forward.
2. No matter how loved and adored a leader in an organization may be, the leader should not be above reproach.  Any allegations made must be investigated and taken seriously. 
3. If that investigation determines an allegation has merit, take action to protect the victim in the situation.  Ensure the victim is aware of the actions/investigation and are on notice to bring future concerns to the employer.
4. Protect complaining parties and/or witnesses from all forms of retaliation.  This includes making sure employees are aware of these protections so they are comfortable bringing forward any concerns in the first place.
5. Do not sweep any wrongdoing under the      Continue Reading...

The IRS has posted a set of FAQs to its website that provide guidance on withholding the new 0.9% Medicare tax that will apply beginning in 2013.

The new tax was enacted as part of health care reform and goes into effect with respect to wages paid on or after January 1, 2013. The tax is an additional 0.9% on all wages received in excess of a threshold amount. The threshold amount is $200,000 in the case of a single individual and $250,000 in the case of a married individual who files a joint tax return. But regardless of an employee's marital status or household income, employers are required to begin withholding the tax once they have paid an employee $200,000 in wages during a year.

Example. An employee has received $180,000 in wages during 2013 and then receives a bonus of $50,000 in December 2013. In addition to all other required tax  withholding, the employer must withhold the new 0.9% Medicare tax on $30,000 of the bonus.

Some of the clarifications provided in the FAQs:

• The obligation to withhold the new tax only applies once an employee has received $200,000 in wages and only to the extent wages for the year exceed $200,000. 
• Non-cash taxable fringe benefits provided to an employee who has received at least $200,000 in other taxable wages are subject to the new tax, even though not paid in cash.
• The withholding requirement does apply to tipped employees who receive more than $200,000 in taxable wages. Withholding is      Continue Reading...

We have put out an Issue Alert describing ten basic considerations for employers regarding the new Summary of Benefits and Coverage (SBC) required as part of health care reform. The Issue Alert has more details, but the bottom line is that many employers will need to begin complying with this requirement in the next few months. Now that we know health care reform is sticking around for a while, it's time to begin thinking about things like who will be responsible for preparing the SBC and how (and when) it will be distributed to plan participants and beneficiaries.

The Department of Labor (DOL) has updated its Self-Compliance Tool for Part 7 of ERISA: HIPAA and Other Health Care-Related Provisions to address the requirements of the Mental Health Parity and Addiction Equity Act of 2008. The tool provides a detailed checklist of various requirements that group health plans must comply with, and will be useful to employers and plan administrators wanting to confirm their plans are up to speed. The Mental Health Parity provisions are addressed in Part II of the checklist.

One of the more confusing work authorization scenarios I see clients dealing with relates to when a foreign student is authorized to work in the United States.  The default rule is that a student in the U.S. with an F visa (the typical one used by students) is not permitted to work.  Students typically gain the ability to work in limited ways.  A student may gain work authorization via a curricular practical training program (CPT) or via an optional practical training program (OPT).  These programs differ quite a bit.  A student working via CPT will have the ability to work for a limited period of time and for a specific employer as part of a school sponsored training program.  A student working via OPT will have an employment authorization document (EAD) which will allow a much longer period of employment with no specific employer restrictions.  If your company employs a foreign student, make sure you carefully evaluate whether the individual has proper work authorization documents to work for your company and ensure you carefully note the expiration of that work authorization.   

The Department of Health and Human Services (HHS) has issued three new Q&As updating its guidance on the medical loss ratio (MLR) rules. Although the guidance is directed primarily at insurance carriers, it provides some helpful information to employers and participants in insured group health plan about new notices they may be receiving in the near future.

• For plans that will be receiving MLR rebates, the carrier must provide a rebate notice to all "subscribers," which includes all current plan participants. Those participants should be receiving notices on or before August 1, 2012.
• For insurers that meet the MLR standard, a notice to that effect must be provided to all plan participants with the first "plan document" distributed on or after July 1, 2012. The guidance clarifies that the notice may be provided separately (i.e., distributed before any plan documents are distributed). The guidance also provides examples of documents that constitute "plan documents" for this purpose.

For our prior coverage of MLR rebates and the important considerations that apply under ERISA if and when a rebate is received, click here.

As most of you are painfully aware, it is incredibly hot outside.  This week the temperatures will continue to exceed 100 degrees.  While most of us understand that the intense heat poses a health risk, it is probably safe to say that we don't fully appreciate just how dangerous the heat can be.  Each spring OSHA issues press releases highlighting the dangers of working in the heat; however, there are no specific safety standards related to avoiding heat injuries.  This does not mean that your company won't receive a citation should heat related injuries occur in your workplace.

OSHA typically issues citations to employers when the employer violates some specific written safety standard established by regulation.  In addition to these written standards, OSHA may rely on the general duty clause within the OSH Act to issue citations.  The general duty clause requires employers to maintain a workplace free of recognized hazards.  In a recent decision, an OSHA citation alleging an employer violation of the general duty clause following an employee heat injury was upheld by an administrative law judge.  In the particular case, an employee died from a heat stroke.  The supervisor's failure to recognize the obvious symptoms of the heat injury resulted in OSHA's issuance of the citation.

The simple message to other employers is to ensure your workforce is adequately trained with respect to heat injuries and to apply as many safety measures as possible to avoid the onset of a heat injury.  A failure to do so may expose your workers to serious injury and your company to significant penalties. 

Back in December 2011, the Office of Federal Contract Compliance Programs (OFCCP) proposed rules that would impose new requirements on all federal contractors regarding employment opportunities for individuals with disabilities. Its most dramatic proposal would establish a seven percent nationwide utilization goal for employees with disabilities. In other words, OFCCP would expect seven percent of all employees within any job group—regardless of industry, location, or availability—to be individuals with a disability. OFCCP also solicited feedback on additional proposals, including use of utilization “ranges” in lieu of a fixed 7 percent target and “sub-goals,” which would establish a two percent utilization target for individuals with particularly severe or targeted disabilities. Under the current rules, federal contractors are not required to meet any particular numerical utilization goal. 

The majority of the remaining proposed changes relate to additional data collection and record-keeping requirements, such as (1) requirements to invite applicants and (on an annual basis) employees to self-identify as an individual with a disability, and (2) requirements to maintain records related to the number of individuals with a disability applying for and hired into positions. Other proposals in the new rules would impose specific outreach obligations on contractors, such as a requirement that contractors engage in at least three specific types of outreach efforts to recruit individuals with disabilities.

The period for public comment on the OFCCP’s proposed rules closed in February, and final regulations, implementing the OFCCP’s proposals, perhaps with some modification, are widely expected to be published by the end of 2012. Additional information regarding the proposed rules is      Continue Reading...

Now that the dust has settled some on the Supreme Court's decisions regarding health care reform (see our prior coverage here and here), it's time to begin thinking about some of the new mandates that are coming online in the next few weeks and months. First up: coverage of women's preventive-health-care services by non-grandfathered plans, which may be required as soon as August 1, 2012.

Although some of the regulatory guidelines on this mandate were released as recently as February and March of this year, it seems like an eternity ago with all that's happened in the meantime. So here's a refresher.

• For plan years beginning on or after August 1, 2012, non-grandfathered plans are required to cover women's preventive-health-care services without cost sharing, as part of the plan's general coverage of preventive-care services.
• The services required to be covered are based on guidelines issued by the Health Resources and Services Administration (HRSA). They include: (1) well-woman visits; (2) screening for gestational diabetes; (3) breastfeeding support, supplies, and counseling; and (4) all FDA-approved contraceptive methods and sterilization procedures.
• Certain religious employers are exempt from the requirement to cover contraceptive services, but the exemption is a narrow one. For this purpose a religious employer is one that (1) has the inculcation of religious values as its purpose; (2) primarily employs persons who share its religious tenets; (3) primarily serves persons who share its religious tenets; and (4) is a non-profit organization that is exempt from the requirement      Continue Reading...

The first of several HR Box Lunch Workshops is set to begin.  There is still time to get signed up to attend the sessions.  Click here for more information on the upcoming sessions and click here to sign up.  Hope to see you there.

A new ruling from the IRS (Rev. Rul. 2012-19) addresses when dividends and dividend-equivalents paid to an employee in connection with restricted stock or restricted-stock units (RSUs) will qualify as performance-based compensation for purposes of the deduction limitation under Code Section 162(m).

Note. This ruling is of particular relevance to publicly traded companies. They are limited by Code Section 162(m) in their ability to deduct compensation paid to a "covered employee," unless the compensation is qualifying performance-based compensation.

The ruling concludes that rights to dividends and dividend-equivalents must be analyzed separately from the underlying restricted stock or RSUs to determine whether they qualify as performance-based compensation.

For example, if an employee is granted restricted stock that qualifies as performance-based compensation but is also given the right to receive dividends with respect to the restricted stock without regard to whether the performance conditions are satisfied with respect to the restricted stock, the dividends will not qualify as performance-based compensation and will be subject to the deduction limitation under Section 162(m). But if the arrangement provides that the dividends will be accumulated and paid to the employee only if and when the performance-based conditions on the restricted stock are satisfied, the dividends also will qualify as performance-based compensation.

The IRS has provided two important pieces of new guidance regarding Code Section 83, which governs the taxation of property (e.g., stock and stock options) transferred in exchange for the performance of services.

First, new regulations have been proposed that would revise or clarify the standards on when property is subject to a "substantial risk of forfeiture" for purposes of Section 83. (This is a key consideration, because property transferred in connection with the performance of services generally is not taxable so long as it is subject to a substantial risk of forfeiture.)

• Conditions Other Than Service or Performance. The proposed regulations would clarify that a substantial risk of forfeiture may be established only through a service condition (e.g., a vesting schedule) or a condition related to the purpose of the transfer (e.g., a performance-based condition). For example, an obligation to sell property back to the employer in lieu of transferring it to a third party would not qualify as a substantial risk of forfeiture.
• Likelihood That Condition Will Occur. The proposed regulations would clarify that, in determining whether a performance-based condition is a substantial risk of forfeiture, the likelihood that the condition will occur must be considered, in addition to considering the likelihood that the condition will be enforced. For example, if stock transferred to an employee will be forfeited if the employer's gross receipts fall by 90% over the three-year period after the transfer, the likelihood that gross receipts actually will fall by that amount must be considered in      Continue Reading...

What better time to consider the issue of immigration than on the eve of the 4th of July.  As our nation of immigrants gathers together to celebrate the birth of our nation, the issue of immigration reform should continue to garner attention over the next year.  In the last month, the U.S. Supreme Court upheld the central piece of the controversial Arizona immigration statute and the Obama White House announced an intention not to enforce deportation against a selected group of young illegal aliens.  Both events have sparked significant interest in the issue around the country and should fuel a continued debate over immigration reform.  While the Supreme Court's upholding of the "show me your papers" provision seemed to garner more attention, the enforcement suspension is likely to result in a much larger impact to employers and illegal aliens.  The Department of Homeland Security (DHS) will provide more detail in the coming weeks regarding President Obama's announcement, but the short version is that a status called deferred action will be conferred on those who meet the limited eligibility criteria set forth by DHS.  Once that status is granted, those individuals will be able to apply for and receive work authorization documents.  As DHS publishes the program criteria, there is bound to be a significant amount of attention paid to this issue.  This upcoming debate may provide some momentum for a more comprehensive set of immigration reforms.  For more information on the enforcement suspension click here.

Chambers USA, a national research publication, recently released its rankings of law firms in Kansas. Foulston Siefkin LLP was ranked first-tier in the key practice areas of Labor & Employment, Corporate/Mergers & Acquisitions, General Commercial Litigation, and Real Estate. The firm's Labor & Employment team was "noted for its extremely timely, focused and effective service, particularly in regards to employment litigation and counseling, but also on the traditional labor side."  Eight of the firm's attorneys were recognized as leading lawyers in the Labor & Employment field: Don Berner; Boyd Byers; Jay Rector; Doug Stanley; Doug Hanisch; Jeff Hurt; Trish Thelen; and Wyatt Wright.  Chambers USA rates lawyers and law firms based on exhaustive research, including interviews with practicing attorneys, their clients, and other industry leaders familiar with the legal market.

The federal department of Health and Human Services (HHS) has released a comprehensive audit protocol that describes in detail the manner in which it will audit compliance by covered entities with the HIPAA privacy, security, and breach-notification rules. The protocol gives group health plans and other covered entities a useful (albeit thorough) checklist for evaluating their compliance with these rules and, if necessary, taking steps to shore up their records, policies, and procedures on issues HHS is sure to review in the event of an audit.

There are 165 separate audit points in the protocol, and not all of them will be relevant for every covered entity. But for group health plans, the following will be of particular interest:

• Organizational Requirements for Group Health Plans. "Inquire of management as to whether the plan documents restrict the use and disclosure of PHI by the plan sponsor. Obtain and review a sample of plan documents. Verify if the use and disclosure of PHI by the plan sponsor is restricted. Verify what information the sponsor does obtain and how it is used."
• Notice of Privacy Practices. "Obtain and review the notice of privacy practices and evaluate the content relative to the specified criteria given to individuals by the covered entity." And for group health plans specifically: "Obtain and review the formal or informal policies and procedures in place regarding the provision of the notice of privacy practices. For a selection of individuals, obtain and review the individuals' files for the past year to      Continue Reading...