Health Archives - Page 4 of 32 - The National Law Forum

Minimizing National Labor Relations Act Liability for Employers with Non-Unionized Workforces

This post continues our consideration of comments submitted in response to proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA).

Under current law, if a plan provides any mental health or substance use disorder (MH/SUD) benefits in any classification of benefits, benefits for that condition or use disorder must be provided in every classification in which medical/surgical (M/S) benefits are provided. Classifications for this purpose include inpatient, in-network; inpatient, out-of-network; outpatient, in-network; outpatient, out-of-network; emergency care; and prescription drugs. The proposed regulations modify this standard by providing that a plan does not provide benefits for MH/SUD benefits in every classification in which M/S benefits are provided unless the plan provides meaningful benefits for treatment for the condition or disorder in each such classification “as determined in comparison to the benefits provided for medical/surgical conditions in the classification.”

The term “meaningful benefits” is nowhere defined. The regulators nevertheless “recognize that the proposal to require meaningful benefits [ ] is related to scope of services.” “Scope of services” for this purpose generally refers to the types of treatments and treatment settings that are covered by a group health plan or health insurance issuer. The preamble to the proposed regulation invites comments on how the meaningful benefits requirement “would interact with the approach related to scope of services adopted under the 2013 final regulations.” The preamble of the 2013 final regulations addressed an issue characterized as ‘‘scope of services’’ or ‘‘continuum of care’’ but otherwise failed to provide any substance. Two examples from the proposed regulations do, however, give us a sense of what the regulators have in mind.

A plan that generally covers treatment for autism spectrum disorder (ASD), a mental health condition, and covers outpatient, out-of-network developmental evaluations for ASD but excludes all other benefits for outpatient treatment for ASD, including applied behavior analysis (ABA) therapy, when provided on an out-of-network basis. (ABA therapy is one of the primary treatments for ASD in children.) The plan generally covers the full range of outpatient treatments and treatment settings for M/S conditions and procedures when provided on an out-of-network basis. The plan in this example violates the applicable parity standards.
In another example, a plan generally covers diagnosis and treatment for eating disorders, a mental health condition, but specifically excludes coverage for nutrition counseling to treat eating disorders, including in the outpatient, in-network classification. Nutrition counseling is one of the primary treatments for eating disorders. The plan generally provides benefits for the primary treatments for medical conditions and surgical procedures in the outpatient, in-network classification. The exclusion of coverage for nutrition counseling for eating disorders results in the plan failing to provide meaningful benefits for the treatment of eating disorders in the outpatient, in-network classification, as determined in comparison to the benefits provided for M/S conditions in the classification. Therefore, the plan violates the proposed rules.

Notably, the newly proposed meaningful benefits requirement is separate from, and in addition to, the newly prescribed nonquantitative treatment limitation (NQTL) testing standards. These latter standards include a “no more restrictive” requirement, a “design and application” requirement and an “outcomes data and network composition” requirement. A handful of comments nevertheless urge the regulators to add scope of services to its non-exhaustive list of NQTLs. As a result, a plan’s scope of services would be subject to comprehensive NQTL testing. Or, put another way, they would be fed back into the NQTL testing loop. Using the first of the examples above, this would require that ABA therapy to be first compared to the treatment limitations imposed on some M/S benefits in each classification. But what benefits, exactly? The problem is that a plan’s scope of services – what types of treatments a plan will pay for and in what settings – is a high-level plan design feature and not an NQTL.

While reasonable minds can and do differ on much of the substance of the proposed regulations, we doubt that anyone would claim that they streamline or simplify compliance. Compliance with these rules is already complicated and expensive; if the final rule looks anything like the proposed regulations, compliance will only get more complicated and more expensive. The proposed meaningful benefits requirement is intended to prevent plans, as a matter of plan design, from satisfying the parity rules by offering nominal or insubstantial MH/SUD benefits when compared to similar M/S benefits in each classification. Treating a plan’s scope of services as itself a separate NQTL does not advance this goal.

WHO Publishes Guidance for Ethics and Governance of AI for Healthcare Sector

The World Health Organization (WHO) recently published “Ethics and Governance of Artificial Intelligence for Health: Guidance on large multi-modal models” (LMMs), which is designed to provide “guidance to assist Member States in mapping the benefits and challenges associated with the use of for health and in developing policies and practices for appropriate development, provision and use. The guidance includes recommendations for governance within companies, by governments, and through international collaboration, aligned with the guiding principles. The principles and recommendations, which account for the unique ways in which humans can use generative AI for health, are the basis of this guidance.”

The guidance focused on one type of generative AI, large multi-modal models (LMMs), “which can accept one or more type of data input and generate diverse outputs that are not limited to the type of data fed into the algorithm.” According to the report, LMMs have “been adopted faster than any consumer application in history.” The report outlines the benefits and risks of LLMs, particularly the risk of using LLMs in the healthcare sector.

The report proposes solutions to address the risks of using LMMs in health care during development, provision, and deployment of LMMs and ethics and governance of LLMs, “what can be done, and by who.”

In the ever-changing world of AI, this is one report that is timely and provides steps and solutions to follow to tackle the risk of using LMMs.

2024: The Year of the Telehealth Cliff

What does December 31, 2024, mean to you? New Year’s Eve? Post-2024 election? Too far away to know?

Our answer: December 31, 2024, is when we will go over a “telehealth cliff” if Congress fails to act before that date, directly impacting care and access for Medicare beneficiaries. What is this telehealth cliff? Let’s back up a bit.

TELEHEALTH COVERAGE POLICIES

Current statute (1834(m) of the Social Security Act) lays out payment and coverage policies for Medicare telehealth services. As written, the provisions significantly limit Medicare providers’—and therefore patients’—ability to utilize telehealth services. Some examples:

If the patient is in their home when the telehealth service is being provided, telehealth is generally not eligible for reimbursement.
Providers cannot bill for telehealth services provided via audio-only communication.
There is a narrow list of providers who are eligible to seek reimbursement for telehealth services.

COVID-19-RELATED TELEHEALTH FLEXIBILITIES

When the COVID-19 pandemic hit in 2020, a public health emergency (PHE) was declared. Congress passed several laws, and the administration acted through its own authorities to provide flexibilities around these Medicare telehealth restrictions. In general, nearly all statutory limitations on telehealth were lifted during the PHE. As we all know, utilization of telehealth skyrocketed.

The PHE ended last year, and through subsequent congressional efforts and regulatory actions by the Centers for Medicare and Medicaid Services (CMS), many flexibilities were extended beyond the end of the PHE, through December 31, 2024. Congress and CMS continue to grapple with how to support the provision of Medicare telehealth services for the future.

CMS has taken steps through the annual payment rule, the Medicare Physician Fee Schedule (MPFS), to align many of the payment and coverage policies for which it has regulatory authority with congressional deadlines. CMS has also restructured its telehealth list, giving more clarity to stakeholders and Congress as to which pandemic-era telehealth services could continue if an extension is passed. But CMS can’t address the statutory limitations on its own. Congress must legislate. CMS highlighted this in the final calendar year (CY) 2024 MPFS rule released on November 2, 2023, noting that “while the CAA, 2023, does extend certain COVID-19 PHE flexibilities, including allowing the beneficiary’s home to serve as an originating site, such flexibilities are only extended through the end of CY 2024.”

THE TELEHEALTH CLIFF

This brings us to the telehealth cliff. CMS generally releases the annual MPFS proposed rule in July, with the final rule coming on or around November 1. If history is any indication, Congress is not likely to act on the extensions much before the current December 31 deadline. This sets up the potential for a high level of uncertainty headed into 2025.

If we go over, this telehealth cliff would directly impact care and access for Medicare beneficiaries. The effects could be felt acutely in rural and underserved areas, where patients have been able to access, via telehealth, medical services that may have been out of reach for them in the past. The telehealth cliff would also impact how providers interact with their patients, and their collective ability to continue to utilize telehealth in a way that has benefited patients and providers alike. It could also influence how health plans choose to cover these services in the private marketplace beyond 2024. Such a dramatic change would impact business decisions for many providers and practices heading into 2025. And, at a time when provider shortages are still a significant issue, it would eliminate an option that has allowed many providers, practices and facilities to extend scarce resources for patient care.

TAKE ACTION

Stakeholders should be raising these concerns to Congress now. There are many ways to engage, including reaching out directly to key Members of Congress, looking for opportunities to testify or submit written testimony for relevant congressional hearings, and participating in organized events where Members of Congress will be present. This cliff can be avoided, but not without a concentrated effort and a lot of noise.

OSHA and NLRB Set Forth MOU to Strengthen Protections for the Health and Safety of Workers: A 2024 Outlook

On October 31, 2023, the National Labor Relations Board (NLRB) and Occupational Safety and Health Administration (OSHA) entered into a Memorandum of Understanding (MOU) to strengthen their interagency partnership. The purpose of this partnership is to establish a process for information sharing, referrals, training, and outreach between the agencies. Additionally, the agencies wish to address certain anti-retaliation and whistleblowing issues through this collaboration.

Since 1975, the NLRB and OSHA have engaged in cooperative efforts during investigations. According to NLRB General Counsel Jennifer Abruzzo and OSHA Assistant Secretary Doug Parker, the MOU seeks to strengthen this interoffice coordination in an effort to provide greater protection for workers to speak out on unsafe working conditions without fear of punishment or termination.

Exchange of Information

According to the MOU, the NLRB and OSHA “may share, either upon request or upon the respective agency’s own initiative, any information or data that supports each agency’s enforcement mandates, whether obtained during an investigation or through any other sources.” This information may include complaint referrals and information in complaint or investigative files. The MOU notes that this information will be shared only if it is relevant or necessary to the recipient agency’s enforcement responsibilities and ensures that the sharing of information is compatible with the purposes of the agency that is collecting the records.

For example, if OSHA learns during an investigation that there are potential victims of unfair labor practices who have not filed a complaint with the NLRB, OSHA will explain the employees’ rights and provide them with the NLRB’s phone number and web address. Additionally, if an employee files with OSHA an untimely complaint of retaliation, OSHA may then advise the employee to file a complaint with the NLRB, because the NLRB has a six-month time limit for filing such complaints whereas OSHA’s time limit is only 30 days. As a result, employers may be facing both agencies during an investigation.

Coordinated Investigations and Enforcement

The NLRB and OSHA will determine whether to conduct coordinated investigations and inspections in order to facilitate appropriate enforcement actions. If coordinated investigations occur and there are overlapping statutory violations, each agency may take relevant enforcement actions. In practice, employers should assume that if either agency is conducting an investigation into alleged retaliation, that agency will consider involving the other.

Takeaways for Employers

Heading into 2024, employers can expect to see more interagency coordination between the NLRB and OSHA during investigations. While the two agencies remain separate, there is a clear entanglement of enforcement action as the NLRB seeks to increase federal agency collaboration. As such, employers may presume that information collected by one agency will be provided to the other. As the agencies seek to increase worker protection across the board, employers will want to ensure that their management personnel are trained and up-to-date on the anti-retaliation and whistleblowing provisions of the Occupational Safety and Health Act and the National Labor Relations Act.

5 Trends to Watch: 2024 Artificial Intelligence

Banner Year for Artificial Intelligence (AI) in Health – With AI-designed drugs entering clinical trials, growing adoption of generative AI tools in medical practices, increasing FDA approvals for AI-enabled devices, and new FDA guidance on AI usage, 2023 was a banner year for advancements in AI for medtech, healthtech, and techbio—even with the industry-wide layoffs that also hit digital and AI teams. The coming year should see continued innovation and investment in AI in areas from drug design to new devices to clinical decision support to documentation and revenue cycle management (RCM) to surgical augmented reality (AR) and more, together with the arrival of more new U.S. government guidance on and best practices for use of this fast-evolving technology.
Congress and AI Regulation – Congress continues to grapple with the proper regulatory structure for AI. At a minimum, expect Congress in 2024 to continue funding AI research and the development of standards required under the Biden Administration’s October 2023 Executive Order. Congress will also debate legislation relating to the use of AI in elections, intelligence operations, military weapons systems, surveillance and reconnaissance, logistics, cybersecurity, health care, and education.
New State and City Laws Governing AI’s Use in HR Decisions – Look for additional state and city laws to be enacted governing an employer’s use of AI in hiring and performance software, similar to New York City’s Local Law 144, known as the Automated Employment Decisions Tools law. More than 200 AI-related laws have been introduced in state legislatures across the country, as states move forward with their own regulation while debate over federal law continues. GT expects 2024 to bring continued guidance from the EEOC and other federal agencies, mandating notice to employees regarding the use of AI in HR-function software as well as restricting its use absent human oversight.
Data Privacy Rules Collide with Use of AI – Application of existing laws to AI, both within the United States and internationally, will be a key issue as companies apply transparency, consent, automated decision making, and risk assessment requirements in existing privacy laws to AI personal information processing. U.S. states will continue to propose new privacy legislation in 2024, with new implementing regulations for previously passed laws also expected. Additionally, there’s a growing trend towards the adoption of “privacy by design” principles in AI development, ensuring privacy considerations are integrated into algorithms and platforms from the ground up. These evolving legal landscapes are not only shaping AI development but also compelling organizations to reevaluate their data strategies, balancing innovation with the imperative to protect individual privacy rights, all while trying to “future proof” AI personal information processing from privacy regulatory changes.
Continued Rise in AI-Related Copyright & Patent Filings, Litigation – Expect the Patent and Copyright Offices to develop and publish guidance on issues at the intersection of AI and IP, including patent eligibility and inventorship for AI-related innovations, the scope of protection for works produced using AI, and the treatment of copyrighted works in AI training, as mandated in the Biden Administration Executive Order. IP holders are likely to become more sophisticated in how they integrate AI into their innovation and authorship workflows. And expect to see a surge in litigation around AI-generated IP, particularly given the ongoing denial of IP protection for AI-generated content and the lack of precedent in this space in general.

10 Market Predictions for 2024 from a Healthcare Lawyer

As a healthcare lawyer, 2023 was a pretty unusual year with the sudden entrance of a number of new players into the healthcare marketplace and a rapid retrenchment of others. With innovation showing no signs of slowing down in the year ahead, healthcare providers should consider how to adapt to improve the patient experience, increase their bottom line, and remain competitive in an evolving industry. Here are 10 personal observations of the past year that may help you plan for the year ahead.

Health tech will continue to boom. Without a doubt, in my practice, health tech exploded, and understandably. In the face of tight margins, healthcare technology may offer the promise of immediate returns (think revenue cycle). But it is also important to understand the context. Health tech offers the promise of quick implementation relative to construction of clinical space, and it can be accomplished without additional clinical staff or regulatory oversight, potentially resulting in a prompt return on investment. Advancing technologies and AI will enable real-time, data driven surgical algorithms and patient-specific instruments to improve outcomes in a variety of specialties.
Value-based care is here to stay. Everyone is interested in value-based care. In the past, value-based care was simply aspirational. Now, there are significant attempts to implement it on a sustained basis. It is not a coincidence that there has also been significant turnover in healthcare leadership in the past few years, and that has likely led to more receptivity.
Expansion of value-based care models. There has been considerable activity around advanced primary care and single-condition chronic disease management. We are now starting to see broader efforts to manage care up and down the continuum of care, involving multi-specialty care and the gamut of care locations. Increased pressure to lower costs will result in increased volumes in lower cost, ambulatory settings.
Regulatory scrutiny will continue to increase. For most, this is a given. In 2023, we saw increased scrutiny up and down the continuum, whether related to pharmaceutical costs, regulation of pharmacy benefit managers, healthcare transaction laws, or innovations in thinking around healthcare from the Federal Trade Commission. With the impending election, it is likely healthcare will receive considerable attention and scrutiny.
Private equity (“PE”) will resume the march – with discipline. In my practice, PE entities rethought their growth strategies to focus on how to bring acquisitions to profitability quickly, from a “growth at all costs” mind set. Now there appears to be an increasing focus on operations and an emphasis on making realistic assumptions to underly growth. This has led to a more realistic pricing discipline and investment in management teams with operational experience.
Partnerships. There is an increasing trend towards partnerships between PE entities and health systems. Health systems are under considerable financial stress, and while they do not universally welcome PE with open arms, some systems do appear open to targeted partnerships. By the same token, PE entities are beginning to realize that they require clinical assets that are most readily available at health systems. This will continue in 2024.
The rise of independent physician groups. There is increasing activity among freestanding physician groups. Some doctors are leery of PE because they believe it is solely focused on profits. Similarly, many physicians are reluctant to be employed by health systems because they believe they will simply become a referral source. While we are not likely to see a return to 2002, where many PE and health system physician deals were unwound, we will see increasing growth by independent physician groups.
Continued consolidation. The trend towards consolidation in healthcare is nowhere near ending. To assume risk (the ultimate goal of value-based care), providers require scale, both vertically and horizontally. While segments of healthcare slowed in 2023, a resumption of growth is inevitable.
Increased insolvencies. Most healthcare providers have very high fixed costs and low margins. Small swings in accounts receivable collections, wages, and managed care payments can have a large impact on entities that are just squeezing by.
New entrants. Last year saw several new entrants to the healthcare marketplace nationally. Who in 2023 would have thought Best Buy would enter the healthcare marketplace? There is still plenty of room for new models of care, which we will see in 2024.

2024 promises to be an interesting year in the healthcare industry.

FDA Announces Draft Supplemental Guidance on Menu Labeling

Today FDA announced an update to its Menu Labeling Supplemental Guidance which addresses implementation of menu nutrition labeling requirements. The menu labeling rules only apply to standard menu items offered by “covered establishments,” which are defined as restaurants and similar retail food establishments with 20 or more locations doing business under the same name and offering for sale substantially the same menu items, as well as restaurants and similar retail establishments that register to voluntarily subject themselves to the menu labeling requirements. (21 CFR 101.11).
The menu labeling regulations require disclosure of calories on menu and menu boards, and require that other nutrition information (e.g., fat, sugar, protein) be available in written form on the premises and provided to the customer upon request. Notably, the menu labeling regulations do not require disclosure of “added sugars” as is now required on packaged foods.
The draft update includes two new Q&As which (1) clarify that nutrition information can be provided on third party platforms (TPPs) through which food is ordered and delivered and (2) that added sugars may voluntarily be declared.
Although FDA accepts comments on any guidance at any time, comments on the draft new Q&As are due by February 12, 2024, to ensure they are considered before FDA begins work on final versions.

COVID Vaccine Class Action Reminds Employers to Individually Consider Accommodations

Tyson Foods, Inc. (“Tyson”) is no stranger to religious accommodation lawsuits over the impact of its COVID-19 vaccine mandate given its continued efforts to operate through the height of the pandemic in 2021—but the battle just heated up with a proposed class action complaint filed in the Eastern District of Arkansas.

Tyson’s recent troubles derive from its 2021 vaccine mandate (the “Vaccine Mandate”) requiring all leadership team members to be vaccinated by September 24, 2021, all corporate team members to be vaccinated by October 1, 2021, and all other team members to be vaccinated by November 1, 2021. The Vaccine Mandate coincided with an OSHA rule (which the Supreme Court subsequently ruled unconstitutional) requiring workers with at least 100 workers to be vaccinated or to produce weekly test results showing that they were virus-free. Tyson, a huge company with warehouse operations, clearly fell within its ambit and had strong incentives to keep its workforce safe.

Notably, while in place, the OSHA rule required employers to grant medical and religious exemptions from the mandate. Likewise, Tyson’s Vaccine Mandate required Tyson to afford reasonable accommodations to employees with sincerely-held religious beliefs that prevented them from receiving the vaccine, as required by the OSHA rule. However, various plaintiffs have alleged that the only accommodation typically offered to religious objectors was to be placed on an unpaid leave of absence called LOA+, which lasted approximately one year. Plaintiffs claim that requests to telework were refused in favor of this unpaid leave.

One of the first suits to be filed was Reed, et al., v. Tyson Foods, Inc., No. 21-CV-01155-STA-JAY, 2022 WL 2134410 (W.D. Tenn. June 14, 2022), in which several plaintiffs sought injunctive relief against the Vaccine Mandate in part on religious and disability theories under Title VII and the ADA. Though parts of the case were allowed to proceed, these specific claims were dismissed without prejudice for failure to exhaust administrative remedies. Tyson also succeeded on defeating religious claims based on the Religious Freedom Restoration Act (“RFRA”) on a motion to dismiss in another Tennessee case, after failing to secure dismissal in another, similar case based on Title VII and the RFRA. Compare Johnson v. Tyson Foods, Inc., No. 21-CV-01161-STA-JAY, 2023 WL 3901485 (W.D. Tenn. June 8, 2023) with Hayslett v. Tyson Foods, Inc., 636 F. Supp. 3d 900 (W.D. Tenn. 2022). The latter case settled out-of-court in July 2023.

Beyond these, Tyson also faced other single-plaintiff suits on religious vaccine accommodation grounds in Tennessee, Kentucky, and Missouri, with varying results. Matthews v. Tyson Foods, Inc., No. 1:22-CV-1192-STA-JAY, 2023 WL 25733 (W.D. Tenn. Jan. 3, 2023)(motion to dismiss denied under Tennessee state law); Collins v. Tyson Foods, Inc., No. 1:22-CV-00076-GNS, 2023 WL 2731047 (W.D. Ky. Mar. 30, 2023)(motion to dismiss granted under RFRA, ADA, and Kentucky state law, but denied under Title VII); Reese v. Tyson Foods, Inc., No. 3:21-05087-CV-RK, 2021 WL 5625411 (W.D. Mo. Nov. 30, 2021) (motion to dismiss granted as to public policy and invasion of privacy claims, but denied under state discrimination law). Some of these cases were subsequently settled, as well.

On November 16, 2023, plaintiff Sarah Pearson brought a proposed class action complaint in Pearson v. Tyson Foods Inc., 4:23CV01080, purporting to represent:

All Arkansas based Tyson employees or former Arkansas based Tyson employees who worked remotely (telework) prior to August 3, 2021, who requested a religious accommodation to continue working remotely (telework) in response to Tyson’s COVID Vaccine Mandate, and who were instead placed on LOA+ by Tyson;

and

All Arkansas based Tyson employees or former Arkansas based Tyson employees who worked remotely (telework) prior to August 3, 2021, who requested a religious accommodation when Tyson ended its COVID Vaccine Mandate on October 31, 2022, and who were subsequently not reinstated to the same job and terminated.

For each, Pearson recites the allegations required to sustain a class action: numerosity (in excess of 50 putative class members, per her complaint), commonality, typicality, and adequacy. These allegations can prove tricky in the case of sincerely-held religious beliefs and leaves of absence, but not necessarily impossible. Compare Robinson v. Gen. Motors Co., No. 4:15-CV-158-Y, 2015 WL 13731154 (N.D. Tex. Oct. 21, 2015) (denying class certification in part because “determining individual class members would require the Court to wade through thousands of leave requests and evaluate each individual’s circumstance . . . to determine whether a GM employee even qualifies . . .”) with Jennings v. St. Luke’s Health Network, Inc., No. 5:23-CV-1229, 2023 WL 5938755 (E.D. Pa. Sept. 12, 2023) (denying without prejudice motion to strike class action allegations in religious discrimination vaccine case, pending discovery).

Here, Pearson’s complaint reveals numerous specific allegations which are likely specific to her, including that Tyson offered her an in-person job in a different city once the Vaccine Mandate ended, which she declined. However, it remains to be seen if Tyson’s alleged policy of placing all religious objectors on leave may break through the barriers to commonality, typicality, and adequacy otherwise posed by, e.g., different religions, belief systems, communications with human resources, and leave requests.

Following these recent developments, employers are advised to remember that religious discrimination accommodation requests should not be taken lightly, and should result in an individualized interactive process with each employee. Even apparently implausible religious beliefs, associated with religions that do not otherwise espouse such beliefs, may be (or be deemed by a court to be) sincerely-held.

Chicago Employers: Prepare for New Paid Leave Ordinance Effective 31 December 2023

On 9 November 2023, the Chicago City Council passed the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance¹(the Ordinance). The Ordinance takes effect on 31 December 2023, and replaces Chicago’s current paid sick leave ordinance.² Under the Ordinance, starting 1 January 2024, Chicago employees are entitled to up to 80 hours of paid time off in a 12-month period, with 40 hours allocated to paid sick leave and 40 hours allocated to general paid leave.

The Ordinance comes eight months after the Illinois legislature’s enactment of the Illinois Paid Leave for All Workers Act (PLAWA),³ which goes into effect on 1 January 2024 and guarantees that Illinois workers can earn or accrue up to 40 hours of paid leave per year that may be used for any reason. Although employers covered by the Ordinance are exempt from PLAWA,⁴the Ordinance adopts PLAWA’s purpose of providing general paid leave to employees in addition to paid sick leave.

METHOD FOR ACCRUAL, CARRYOVER, AND FRONTLOADING

The Ordinance provides that a covered employee⁵ will accrue one hour of general paid leave and one hour of paid sick leave for every 35 hours worked. Both general paid leave and paid sick leave are accrued in hourly increments and the total accrual for both forms of leave is capped at 40 hours in a 12-month period. At the end of the 12-month period, covered employees are allowed to carryover up to 16 hours of general paid leave and up to 80 hours of paid sick leave to the subsequent 12-month period. Chicago employers may also choose to “front-load,” or grant, 40 hours of paid leave or 40 hours of paid sick leave (or both) on the first day of employment or on the first day of the 12-month period. If an employer elects to front-load general paid leave hours, the employer is not required to allow employees to carry over unused general paid leave hours to the following 12-month period. However, employers must allow employees to carry over up to 80 hours of paid sick leave into the next 12-month period even if the leave is front-loaded.

USE OF LEAVE

Employers must allow covered employees to use accrued paid sick leave after completing 30 days of employment, and use accrued general paid leave after completing 90 days of employment. An employer may set a reasonable usage minimum increment, not to exceed four hours per day for paid leave or two hours per day for paid sick leave. If a covered employee’s scheduled workday is less than such minimum increments, then the minimum increment of time cannot exceed the covered employee’s regular scheduled workday.

Similar to the PLAWA, general paid leave under the Ordinance may be used for any reason and employees cannot be required to provide a reason for or documentation to support the leave. Paid sick leave may be used for the same reasons set forth under the current Chicago paid sick leave ordinance, including:

For illness or injury, or for the purpose of receiving professional care, which includes preventive care, diagnosis, or treatment for medical, mental, or behavioral issues, including substance use disorders;
For a family member’s illness, injury, or order to quarantine, or to care for a family member receiving professional care;
For domestic violence, or if a covered employee’s family is the victim of domestic violence;
If the covered employee’s place of business is closed by order of a public official due to a public health emergency, or the employee needs to care for a family member whose school, class, or place of care has been closed; or
For the covered employee to obey an order issued by the mayor, the governor of Illinois, the Chicago Department of Public Health, or a treating healthcare provider requiring the employee to stay at home to minimize the transmission of a communicable disease; to remain at home while experiencing symptoms or sick with a communicable disease; and to obey a quarantine order or an isolation order issued to the employee.

REQUESTING LEAVE

For general paid leave, an employer may require a covered employee to provide reasonable notice not to exceed seven days prior to the need for leave and may require preapproval to ensure continuity of business operations. An employer may also require seven days’ notice for paid sick leave. If the need for paid sick leave is not reasonably foreseeable, an employer may require a covered employee to give notice as soon as is practicable by notifying the employer by phone, email, or other means. The Ordinance defines “reasonably foreseeable” as including, but not limited to, prescheduled appointments with health care providers and court dates in domestic violence cases.

If a covered employee uses paid sick leave to be absent for more than three consecutive work days, the employer may require certification that the paid sick leave was used for a qualifying purpose. For health-related paid sick leave, this certification can be documentation signed by a licensed health care provider. For domestic violence-related paid sick leave this certification can be a police report, court document, or a signed statement from an attorney, a member of the clergy, or a victim services advocate. An employer may not delay the commencement of paid sick leave or delay payment of wages based on not receiving the required documentation or certification. However, an employer can take disciplinary action, up to and including termination, against a covered employee who uses paid sick leave for purposes other than those described in the Ordinance.

PAYMENT OF PAID LEAVE AND PAID SICK LEAVE

The Ordinance sets forth general requirements relating to the payment of general paid leave and paid sick leave. General paid leave and paid sick leave must be compensated at the employee’s regular rate of pay, including health care benefits. The regular rate of pay for nonexempt or hourly employees is calculated by dividing the employee’s total wages by total hours worked in full pay periods of the prior 90 days of employment. Wages do not include overtime pay, premium pay, gratuities, or commissions. Employers must pay an employee for their general paid leave and paid sick leave by the next regular payroll period after the time off was taken.

PAYMENT OF PAID LEAVE UPON TERMINATION

Under the Ordinance, an employer with 50 covered employees or less is not required to pay out any accrued, unused general paid leave upon termination. An employer with 51 to 100 covered employees (Medium Employer) must pay out accrued, unused general paid leave, up to 16 hours, until 31 December 2024. On or after 1 January 2025, a Medium Employer must pay all accrued, unused paid general leave upon an employee’s termination for any reason. Unless otherwise provided in a collective bargaining agreement, an employer cannot enforce a contract or a policy that requires the employee to forfeit any earned general paid leave upon separation from employment. Employers are not required to pay out accrued, unused paid sick leave.

Further, all unused paid sick leave and paid general leave is retained by the covered employee if the employer sells, transfers, or assigns the business to another employer and the employee continues to work in the City of Chicago.

EXISTING LEAVE POLICIES AND UNLIMITED PAID TIME OFF PROGRAMS

If a covered employee accrues paid sick leave before 1 January 2024 and the employer’s existing paid time off policy does not comply with the Ordinance, then on 1 January 2024, any paid sick leave that the covered employee is entitled to will rollover to the next 12-month period.

For employers that have recently adopted “unlimited paid time off policies,” the Ordinance provides that employers may offer unlimited paid time off policies and so long as the covered employer provides unlimited paid time off at the beginning of employment or the start of a 12-month period, there is no requirement to permit carryover of unused general paid leave to the next year. However, employees must still be allowed to carry over up to 80 hours of paid sick leave. Although the covered employer may still require reasonable notice for both foreseeable and unforeseeable reasons for leave, it may not require preapproval for such leave. Further, if the employer has an unlimited paid time off policy, upon separation from employment (or transfer outside of the City of Chicago’s boundaries), employers must pay the monetary equivalent of 40 hours of general paid leave less the amount of general paid leave used by the covered employee during the prior 12-month period preceding separation of employment (or transfer outside of the City of Chicago’s boundaries). Finally, employers must still comply with the other requirements in the Ordinance related to the administration of general paid leave and paid sick leave.

NOTICE AND POSTING

Similar to the current Chicago paid sick leave ordinance, a covered employer must post in a conspicuous place a notice advising covered employees of their right to paid time off. The Ordinance also sets the following requirements:

The employer must provide the same notice to the covered employee with the first paycheck issued to the employee, as well as on an annual basis with a paycheck issued within 30 days of 1 July.
In every pay stub or wage statement to the covered employee, the employer must provide a written notification stating the updated amount of paid leave and paid sick leave available to the employee.
The employer must notify employees at least five calendar days before any changes to the employer’s paid time off policy are made.
The employer must provide employees with a 14-day written notice of changes to its paid time off policies that affect the employees’ final wages.
The employer must notify the covered employee in writing that the employee may request payout of their accrued, unused paid leave time when the employee has not been offered a work assignment for 60 days.

PENALTIES FOR VIOLATION, DAMAGES, AND PRIVATE CAUSE OF ACTION

Any employer who violates the Ordinance may be subject to fines between US$1,000 and US$3,000 for each separate offense. If the employer violates the notice requirements, then the employer may be fined US$500 for the first violation and US$1,000 for any subsequent violation. Each day a violation occurs constitutes a separate and distinct offense.

Further, an employer who violates the Ordinance may be liable to the affected employee for damages equal to three times the full amount of any leave denied or lost by reason of the violation, plus interest, costs, and reasonable attorney’s fees paid by the employer to the covered employee. The Ordinance also provides for a private right of action, which is available to covered employees on 31 December 2023 for violations related to paid sick leave and 1 January 2025 for violations related to general paid leave.

Chicago employers should review their current paid time off policies and payroll systems for compliance and should consider consulting their labor and employment attorneys for assistance in developing a policy that meets the requirements of the Ordinance. The lawyers of our Labor, Employment, and Workplace Safety practice regularly counsel clients on a wide variety of issues related to paid leave policies and are well positioned to provide guidance and assistance to clients on this significant development in Illinois.

FOOTNOTES

¹Chi., Ill., Mun. C. Chi. § 6-130 (2023).

²Chi, Ill., Mun. C. Chi. § 6-105 (2023).

³Paid Leave for All Workers Act, Pub. Act No. 102-1143 (Jan. 1, 2024).

⁴See Sang-yul Lee, et al., Illinois Guarantees One Week of Paid Leave for All Workers, K&L Gates (Mar. 15, 2023), https://www.klgates.com/Illinois-Guarantees-One-Week-of-Paid-Leave-for-All-Workers-3-15-2023. Employers covered by local paid sick leave ordinances, such as the Ordinance, are exempt from PLAWA so long as such municipality has an ordinance in place on January 1, 2024. See 820 ILCS § 192/15(p).

⁵A “covered employee” is defined as an Employee who works at least two hours for a Chicago employer in any particular two week period. See Chi., Ill., Mun. C. Chi. § 6-130-010 (2023).

Legal Considerations for Healthcare Providers

Navigating the Physician and Non-Physician Relationship

Relationships between physicians and other healthcare professionals are highly regulated and can be complex to navigate. With non-physicians performing more services, including medical services with physician supervision, a variety of questions arise. What scope of services can be provided? What level of supervision is required? Can a non-physician have an ownership or related
interest in the entity providing services? With licensure on the line, it is critical to understand the legal requirements of the state where your practice operates.

What is the Corporate Practice of Medicine Doctrine (CPOM)?

Aimed at protecting patients, the CPOM restricts private ownership of medical corporations in an effort to prevent interference with a physician’s medical judgment. Although most states prohibit the corporate practice of medicine, every state provides exceptions. As with most laws, the exceptions vary by state.

Is it a Medical Service or Not?

What may seem like a simple question can be anything but. For example, a standard facial may be performed at a spa by a non-physician, but if the facial includes treatment that effects the tissue beneath the skin it crosses into the area of medical services. These nuances inform who can perform the service and with what level of physician supervision. What constitutes physician supervision is an additional area for consideration necessary to defining the physician/non-physician relationship and compensation.

Can Healthcare Providers Manage a Practice?

A Non-medical services provided by a healthcare professional require additional consideration with respect to corporate structure and compensation. Management services agreements are one way to afford a non-physician a greater stake in the practice. These agreements define the relationship and compensation associated with the provision of managerial and administrative services for a practice.

What Should I Know About Restrictive Covenants?

In the competitive medical field of today, healthcare providers should have a clear understanding of any restrictions before entering into a relationship with a physician or non-physician, switching practices, creating a new practice, forming
a relationship with multiple practices or terminating a relationship. It is important to understand any potential restrictive covenants and their impact, as you may want to challenge or negotiate those terms.

Category: Health

Minimizing National Labor Relations Act Liability for Employers with Non-Unionized Workforces

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