lynchburg l&e powerpoint

10/9/2013

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3 2 n d A n n u a l L a b o r & E m p l o y m e n t S e m i n a r

w w w. w o od sr o g er s . c o m

What’s Hiding Under Your Bed?

Legal Update

10/9/2013

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Jekyllor

Hyde?

Strange case of the NLRB, DOL, and EEOC

BREAK

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SafeguardingYour Assets

Non-Compete

Agreements

• Disfavored in Virginia

• The Virginia Supreme Court Reverses Itself in Home Paramount Pest Control

• The Sixth Time Is The Charm: The Virginia Supreme Court

Finally Enforces a Non‐Compete in Preferred System Solutions

• Preferred System Solutions May Not Represent A Trend

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Scope of Restricted

Activities

Time Restrictions

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Geographic Scope

Non-Competes Outside the

Employment Context

• In connection with sale of business

• Between companies

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Drafting Tips

• Describe the business

• Describe the employee

• Narrowly tailor restrictions

• If non‐compete is incorporated into a general employment agreement, carefully review the

termination provisions

• Require disclosure of and adherence to prior obligations

Drafting Tips

• Include assignability clause

• Include choice of law, jurisdiction and venue provisions, as well as an authorized for

injunctive relief

• Be careful about including arbitration clauses

• Include a provision noting ability of employee to seek legal counsel

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Non-Solicitation Agreements

• Limit the restriction to customers of whom the employee has knowledge

• Ensure the employer can identify its customers

• Be mindful of the passage of time during the restricted period

• Be careful with “prospective customers”

• Prohibit only “competitive” solicitation

Non-Disclosure Agreements

• Limit confidentiality clauses to “confidential” information

• Ensure that NDA gives more protection than the Virginia Uniform Trade Secrets Act

• Expand the Scope of Former Employees’ Obligations

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The ACA Is Here!

Face Your Fears

Individual and Small Business Health Option (“SHOP”) Exchanges (aka “Marketplace”)

• ERs with 50 or fewer FTEs can enroll

• Open enrollment October 1, 2013 – March 31, 2014

• Annual enrollment October 15, 2014 – December 7, 2014.

• January 1, 2016, Virginia will allow ERs with 100 or fewer EEs to enroll in SHOP

Health Care

Exchanges

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SHOP exchanges:

• Allow small employers to offer plans from multiple insurers

• receive single bill and write single check.

• Small employers may be eligible for a tax credit of up to 50% of ER’s premiums

Full Implementation Delayed:

• Single SHOP plan expected in 2014‐ERs only allowed to select 1 plan to offer their EEs

• In 2015, ERs will be allowed to select multiple plans for EEs to choose from.

Shop Exchanges

• Must Provide “Essential Health Benefits” including:

• Ambulatory patient services

• Emergency services

• Hospitalization

• Maternity and newborn care

• Mental health and substance abuse services

• Prescription drugs

• Rehabilitative and habilitative services and devices

• Laboratory services

• Preventive and wellness services and chronic disease management

• Pediatric services, including oral and vision care

Must match other benefits provided by the state’s designated “benchmark plan”

• ER Plans need not offer all of the EHBs

Insurance Offered

Through Exchange

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In 2014, there will be no underwriting (evaluating health conditions and risk) in the individual and small group markets (adjusted community rating)

Premiums can only be adjusted based on four criteria:

1. Age (cannot vary more than 3x among adults = 85 yr. old premium cannot be more than 3X that of 21 yr. old)

2. Geographic Area

3. Family Size

4. Tobacco Use (cannot vary more than 1 ‐ 1.5x)

Health status & gender cannot be considered

Premium Limitations

Insurers Must Satisfy Medical Loss Ratio (currently in effect)

– Large group market:

• 85% of premium must be spent on patient care

– Individual/small group market:

• 80% of premium must be spent on patient care

On June 20, 2013, HHS reported that consumers saved $3.9 billion in premiums in 2012 due to the MLR

Medical Loss Ratio

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Must obtain “minimal essential coverage”

• Employer‐sponsored coverage (including COBRA coverage and retiree coverage)

• Coverage purchased in the individual market

• Medicare coverage (including Medicare Advantage)

• Medicaid coverage

• Children's Health Insurance Program (CHIP) coverage

• Certain types of Veterans health coverage

• TRICARE

Exceptions

• Religious objections• Income below threshold for filing taxes (~10K for individuals)• If premium cost is more than 8% of Income• Less than 3 mo. gap in coverage• Catch‐all “hardship”

Individual MandateBeginning January 1, 2014

Minimum essential coverage does not include:

• specialized coverage, such as coverage only for vision care or dental care,

• workers' compensation,

• disability policies, or

• coverage only for a specific disease or condition.

NOT Minimum Essential Coverage

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In 2014, Penalty will be the greater of:

– Percentage of Income (phase in)• 1% in 2014• 2% in 2015• 2.5% in 2016

– Specific Dollar Amount (phase in)• $95 in 2014• $325 in 2015• $695 in 2016

– Cannot exceed national average premium for Bronze Level Plan (where individual’s cost is 40%)

IRS will collect by offsetting refund (cannot use liens or levies)

Individual Mandate

Employer Mandates

Pay or Play Mandate

Delayed

• The Play or Pay Mandate has been delayed until 2015.

• Large ERs will not be subject to “no offer” or “unaffordable” coverage penalties until 2015.

• Other provisions of the ACA are unaffected by the delay. For example:

– 90 day waiting period limitation

– ER obligation to send Marketplace Notices to EEs

– ER obligation to ensure that Summaries of Benefits Coverage are being sent by the insurer to EEs

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DOL has provided two model notices:

1. One for ERs who do not offer a health plan;

2. One for ERs who offer a health plan to some or all employees.

In 2014, new EEs must be provided with notice within 14 days of start date.

Exchange Notice to Employees

• SBC is short summary of Benefits & Coverage

– Insurance company typically prepares

– DOL has sample versions

– 2014 version includes:

• Minimum Essential Coverage and

• Minimum Value representations

• ER is charged with ensuring that all employees receive

• ERs must provide:

– With written application materials for enrollment

– At open enrollment/renewal

– After request for special enrollment

– mid‐year if a plan change affects SBC

– Upon EE request

• Willful failure to provide can result in $1,000.00 fine per failure

Summary of Benefits

Coverage & Uniform

Glossary of Terms

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W-2 Reporting Requirements

ERs required to report value of plans on EEs W‐2

• Currently in effect

• Value reported will not be taxed

• Aggregation rules do not apply

Transition Relief:

• Employers filing fewer than 250 Forms W‐2 for the previous calendar will not be required to report the cost of coverage

• Transition Relief remains in effect until modified by IRS Regulations

1. Fail to offer coverage for any month to Full Time EE & Dependents* (no offer)

2. Fail to cover 60% of cost of EE’s benefits* (not minimum value)

OR

3. EE’s share of premium exceeds 9.5% of EEs household* income (unaffordable)

AND

4. One or more Full‐Time EE obtains subsidy or tax credit through Exchange

• B/T 100% and 400% of poverty level

– 400% FPL: Individual = $45,960; Family of 4= $94,200– 100‐138% eligible for Medicaid if VA agrees to expand

OR

• EE’s share of employer premium exceeds 9.5% of EE’s family income

*See safe harbor methods

Employer Mandate

Large Employers Subject to

Penalty

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What is a Large Employer?

• Average of 50 FTEs during the prior calendar yr.

• Full‐time : Average of 30 hrs/ wk

• FTEs: total monthly hrs for all PT EEs / 130 hrs

• FTEs Example:

• 8 PT EEs each with 85 hrs per mo. (approx. 20 hrs per week) + 45 Full‐Time= 50.23 (8*85 = 680; 680/130 = 5.23; 5.23+45=50.23)

Related companies:

• Treated as single ER if they satisfy the IRS “Control Group” Test • (IRC § 414(b), (c), (m) or (o) ):

• Ex. Parent‐Subsidiary or Brother‐Sister

Large Employer

Penalties

Calculating Hours:

• Do not deduct for paid time off

• Seasonal: working less than 120 days per yr. = Excluded from calculation

• Special Leave—ex. Unpaid FMLA leave may not be counted to reduce avg. hours

• See Safe Harbors

Anti‐Abuse Proposed Rules:

• Cannot use Staffing Agencies to avoid large employer status

• Ex. have 2 staffing agencies employee same individual for 20 hrs. per/wk. each and loan to “client” ER for total of 40 hrs. per/wk.

• “Client” will be considered common law ER.

Calculating Full Time Employees

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If Large Employer Does Not Offer Coverage to 95% of its Full‐time EEs & Dependents:

Penalty

• $2,000 (per yr.) x # of Full‐Time EEs in excess of 30 (including those actually offered coverage)

• $166.67 per mo. x (# Full‐Time EEs – 30)

Assessed until no EE receives subsidy or ER offers qualifying plan

“No Offer Penalty”

Dependent Defined:

Child under 26 is a dependent

• Transition relief is provided for ERs that do not currently provide coverage for dependent children, but take steps to do so in 2014

• No penalty will be assessed if based solely on failure to cover child

Spouses ARE NOT dependents

• Spousal coverage is not required and need not be affordable

Offer of Dependent Coverage

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Even if Coverage is Offered to Full‐Time EEs :

• Subject to penalty if coverage is unaffordable or fails to provide minimum value:

– (1) Premium is exceeds 9.5% of EE’s household income (unaffordable)

or

– (2) Employer is not covering 60% of costs (fails to offer minimum value)

• Penalty

– $3,000 (per yr.) x # of Full‐Time EEs receiving subsidy

– $250 per mo., per Full‐Time EE

– Cannot exceed penalty for no coverage

“Unaffordable Coverage Penalty”

Offer of Coverage Safe Harbor:

• ER deemed to Offer Coverage to Full‐Time EEs in any month where:

• It offers coverage to all but 5% (or, if greater, 5 EEs) of its full‐time EEs and their dependent children

• EEs failure to enroll will not count against ER

• Loss of coverage from EE failure to pay required contribution will not count against ER

• ER must offer opportunity to enroll (or decline) at least once per year

Offer of Coverage Safe

Harbor

Play-or-Pay Proposed

Regulations

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W‐2 Wages• ER’s lowest‐cost, self‐only coverage does not exceed 9.5% of EEs W‐2 wages

• Regardless of actual cost of dependent coverage

• Safe harbor is lost if contribution rates are adjusted mid‐year.

“Rate of Pay”• ER’s lowest‐cost, self‐only coverage does not exceed 9.5% of approximate monthly

earnings

– If hourly EE = Hourly Rate X 130 hours per month

– If Salary EE = Monthly Salary

• Only if wages/salary are not reduced during the calendar year

“Federal Poverty Line”• ER’s lowest‐cost, self‐only coverage does not exceed 9.5% of monthly federal poverty line

for individuals

• 2013 FLP for individuals = $11,490 x 9.5% / 12 mo. = $90.96 monthly premium

Affordability Safe Harbor


Regulations

Anticipated Minimum Value Safe Harbors (set plans that are deemed to meet 60% actuarial costs):

Plan 1• $3,500 integrated medical and drug deductible

• 80% plan cost sharing

• $6,000 max out of pocket limit for EE cost sharing

Plan 2• $4,500 integrated medical and drug deductible

• 70% plan cost sharing


• and

• $500.00 HSA ER contribution

Plan 3• $3,500 medical deductible

• No drug deductible

• 60% medical cost sharing


• 75% drug cost sharing

• Drug co‐pays of $10/$20/$50 for 1st, 2nd, and 3rd prescription drug tiers

• 75% co‐insurance for specialty drugs

Minimum Values Safe

Harbor


Regulations

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Set Plans Must Offer Benefits Used in the MV Calculator

Medical• Emergency Room Services

• All Inpatient Hospital Services

• Primary Care Visit to Treat an Injury or Illness (exc. Well Baby, Preventive, and X‐rays)

• Specialist Visit

• Mental/Behavioral Health and Substance Abuse Disorder Outpatient Services

• Imaging (CT/PET Scans, MRIs)

• Rehabilitative Speech Therapy

• Rehabilitative Occupational and Rehabilitative Physical Therapy

• Preventive Care/Screening/Immunization

• Laboratory Outpatient and Professional Services

• X‐rays and Diagnostic Imaging

• Skilled Nursing Facility

• Outpatient Facility Fee (e.g., Ambulatory Surgery Center)

• Outpatient Surgery Physician/Surgical Services

Drug• Generics

• Preferred Brand Drugs

• Non‐Preferred Brand Drugs

• Specialty High‐Cost Drugs

Minimum Values Safe

Harbor


Regulations

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Section 1558 of the PPACA prohibits retaliation against employees who provide

information that the employee believes to be a violation of

PPACA, Title I.

OSHA and the Affordable Care Act

Whistleblower Protections

Protection is available for employees who provide or who are “about to” provide an employer, the federal government or a state attorney general with information

about violations of Title I.

Whistleblower Protection

BROAD

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Retaliation and Discrimination Against Employees

Acts of unlawful retaliation and discrimination may include such actions as:

• Demotion or reassignment to a less desirable position

• Denial of overtime, benefits or promotion

• Harassment, intimidation or threatening behavior

• Reduction in pay or hours

• Wrongful discharge or termination

• Taking adverse action against an employee because he/she received a health care tax credit or cost sharing reduction

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for Employees

• After OSHA issues (within 60 days) its findings and order, either party may appeal and request a full hearing before a DOL administrative law judge. If OSHA finds the evidence supports the retaliation claim, OSHA’s order

may require the employer to reinstate the employee, pay back pay, compensatory damages, restore benefits, awards attorney’s fees, and provide other relief to make the employee whole.

• OSHA’s findings and order will become final unless they are appealed within 30 days.

• If OSHA does not issue a final order within 210 days after the date an employee files a complaint, the employee may file a complaint in federal district court.42


for Employees

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February, 2013

Whistleblower

Fact Sheet

Burden of proof under Section 1558 favors employees.

an employee must demonstrate, by a preponderance of the evidence, (direct or circumstantial) that the protected activity was a motivating (contributing) factor (not the, but a)in the alleged adverse employer action, while the employer must show, by clear and convincing evidence, that the employer would have taken the same action in the absence of the protected activity.

The employer’s burden of proof is a much higher standard than the employee’s preponderance of the evidence.44


Favors Employees

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Employers will therefore find it more difficult to defend ACA retaliation claims than the typical employment discrimination case.

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for Employees

Trick or Treat

Organizational Change

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• Employee Information

• Assemble and Review All Relevant Documentation

HR Considerations

Employment-related Documents &

Information

• Union Status

• Non‐Union Status

HR Considerations

Labor Relations

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• Pending Matters

• Types of Cases

• Closed Matters

• Threatened Litigations

HR Considerations

Assessment of Pending and Past

Litigation

• Necessity for RIF

• Number of affected employees

• Affected departments/jobs

• Selection criteria

• Projected time frame

• Operational/administrative and other costs implementing RIF

• Necessity of retaining employees until RIF date

RIF Considerations

Economic Objectives

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• Hiring freeze vs. displacements

• Transfers

• Elimination/consolidation of positions

• Exit incentives

• Exit incentives followed by or concurrent with involuntary layoffs

• Retention bonuses during RIF period

RIF Considerations

Selecting the Method for

Downsizing

• Who are the decision‐makers

• Forms used/procedural safeguards for selection

• Legitimate basis for selecting particular employees

• Are employees represented by a union?

• Is seniority recognized?

• Bumping rights

• Transfer opportunities

RIF Considerations

Selection of Employees for RIF

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• WARN Act

• Breach of Contract

• Union organizing issues

RIF Considerations

Legal Risks

• Will the RIF affect any whistle‐blowers or give rise to public policy issues?

• Will the RIF affect any person whose pension or retiree benefits are about to vest?

• Will the RIF affect any person on FMLA, workers’ compensation or other form of leave?

• Will the RIF have an adverse impact on any protected group of individuals or could it otherwise be viewed

as discriminatory?

RIF Considerations

Legal Risks

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• Moral Issues

• To whom they should be offered

• Window of time to accept

• Age discrimination issues

• Document voluntary nature of incentives

• Availability of benefits to employees who announce retirement prior to availability of exit incentive

RIF Considerations

Exit Incentives

• Severance pay

• Early retirement enhancement

• Social Security supplements

• Special vesting of retirement benefits

• Outplacement services

• Factors to consider when selecting type of benefit

RIF Considerations

Potential Benefits That May Be Offered

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• Does release make it more likely an employee will seek counsel?

• Do incentives provide sufficient consideration for release?

• Are you required to seek OWBPA‐complying release?

• What state‐specific requirements may be necessary to secure release?

• ERISA issues?

RIF Considerations

Seeking Releases

• Designation of RIF decision‐making team and allocation of specific responsibilities

• Implementation and documentation

• Time frame

• Maintaining the secrecy of the program until implementation

• New documentation/administrative forms

• Integrating RIF with existing termination/layoff polices

RIF Considerations

Implementing the RIF

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• Communication of the program

• Handling individual terminations

• Securing company property from selected employees

• News release

RIF Considerations

Implementing the RIF

• Employer coverage

• Employee coverage

• Workers who are offered a transfer to another site of employment outside of a reasonable commuting

distance

WARN ACT Considerations

General Provisions

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Plant closing

Mass layoff

What is an “Employment Loss”?

Window period


What Triggers Notice?

• General principals

• Sale of business where purchaser elects to keep all or most of the employees

• Sale of business where purchaser elects to purchase assets, but does not accept

employees


Special Rules for Sale of Business

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• Closing of temporary facility or completion of particular project

• Strikers


Exemptions

• Chief elected officer of the exclusive representative(s) or bargaining agency(s) of

affected employees

• Unrepresented individual workers who may reasonably be expected to experience an

employment loss

• State dislocated worker unit and the chief elected official of local government


Who Must Receive Notice?

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• No particular form required

• Notice must be specific

• Content

• Extension of notice

• Record


Form and Content of Notice

• Method of delivery

• Waiver invalid


Serving WARN Notices on Employees

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• General Rule

• Exceptions


Notification Period

• Private right of action

• Penalties


Enforcement

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How to Tame

Troublesome

Employees

The Beast

Is Lurking

Guard Against Hiring the

Beast

Top 10 General Tips

1. Prepare for the interview beforehand by establishing job requirements for the vacant position. Define the skills needed to meet these job requirements.

2. Do not write comments on original applications, as these applications and any comments thereon may be discoverable and could subsequently be used against you should litigation arise down the road.

3. Look for gaps in employment history, educational background, etc.

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Beast

top 10 General Tips4. Take notes, but be careful as to the content of your

comments.

5. Explain to the applicant the duties and responsibilities of the available position and ask if the applicant can meet these job requirements.

6. Avoid improper questions regarding an applicant's race, sex, religion, marital status, national origin or disability.

7. Don’t ask questions which seem neutral but can garner illegal information.

8. Advise applicants of the next step in the selection process and follow up with each applicant interviewed, where possible.


Beast

General Tips

9. In order to protect the at‐will employment relationship, avoid making any recruitment statements about job security.

10. Beware of the EEOC’s position on an employer’s consideration of criminal background record information in employment screening.

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Progressive Discipline

General

In order to manage effectively and efficiently, supervisors should: • Discuss deficiencies during the year as they occur.

• Keep proper documentation.

• Provide specific goals and recommendations as to what is expected and what is needed for acceptable performance.

• Just as poor performance must be communicated throughout the year, so should exceptional performance. In other words, do not be afraid to pat an employee on the back for a job well done.

Get Rid of the Beast Without Getting Bitten

Evaluation of adverse Employment Decisions

1. Termination usually requires us to avoid bad facts.

2. Beware of the following danger signals:»Long Service

»History of Satisfactory/Good Performance

»Lack of Documentation

»Sudden Changes in Performance Evaluations

»Departure from Personnel Policies

»Disparate Treatment

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lynchburg l&e powerpoint

Documents

e n t s e

b o r e

sr o g

c o mwhats

strange case