Category: Labor & Employment

Department of Labor “DOL” Publishes New Family and Medical Leave Act “FMLA” Regulations – Analysis and Implications

The National Law Review recently featured an article by Rene M. Johnson, Michelle Seldin Silverman, Silvia A. LeBlanc, and Sarah Andrews with Morgan, Lewis & Bockius LLP regarding Family Medical Leave Act Regulations:

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Final rule takes effect on March 8 and makes changes to model certification forms, intermittent leave, exigency and military caregiver leave, and flight crew rules.

On February 6, the U.S. Department of Labor (DOL) published a final rule[1] (Final Rule) that (1) amends the Family and Medical Leave Act (FMLA) regulations addressing the coverage of military caregiver and exigency leaves and (2) revamps eligibility requirements for certain airline industry employees. While the Final Rule will require some changes to most employers’ written FMLA policies and forms, it should not bring about substantial changes to the way most employers administer military caregiver and exigency leaves.

Summary of the Final Rule

This LawFlash provides a detailed analysis of the changes included in the Final Rule. Most importantly, employers should note that the Final Rule does the following:

  • Adds a new category of exigency leave for parental care
  • Increases the maximum number of days from five to 15 calendar days for exigency leave to bond with a military member on rest and recuperation leave
  • Makes effective amendments that extend military caregiver leave to family members of certain veterans with qualifying serious injuries or illnesses
  • Clarifies the scope of exigency leave to family members of those in the regular armed forces
  • Retains the physical impossibility rule, which provides that, where it is physically impossible for an employee to commence or end work midway through a shift, the entire period that the employee is forced to be absent is counted against the employee’s FMLA leave entitlement
  • Retains, but clarifies, the existing regulation regarding the appropriate increments to calculate intermittent and reduced-schedule leave

Employers should also be aware that the DOL has developed several new FMLA forms[2] and has released new guidance regarding the existing definition of “son or daughter.”

Background on FMLA Amendments

As most employers are now well aware, the FMLA was amended in January 2008 to provide the following two types of military family leave for FMLA-eligible employees:

  • Exigency leave: a 12-week entitlement for eligible family members to deal with exigencies related to a call to active duty of service members of the National Guard and reserves
  • Military caregiver leave: a 26-week entitlement for eligible family members to care for seriously ill or injured service members of the regular armed forces, National Guard, and reserves

Less than a year later, Congress again amended the FMLA through the National Defense Authorization Act for Fiscal Year 2010 (FY 2010 NDAA), P.L. No. 111-84. In this act, Congress expanded both types of military family leave by doing the following:

  • Expanded military caregiver leave to include the family members of certain veterans with serious injuries or illnesses who are receiving medical treatment, recuperation, or therapy if the veteran was a member of the armed forces at any time during the five years preceding the date of the medical treatment, recuperation, or therapy
  • Expanded exigency leave to include the family members of those in the regular armed forces but added the requirement that service members be deployed to a foreign country
  • Extended military caregiver leave to the family members of current service members with a preexisting condition aggravated by military service in the line of duty on active duty

The FY 2010 NDAA did not include an effective date, so these changes were presumed effective on October 28, 2009.[3] Later in 2009, Congress also passed the Airline Flight Crew Technical Corrections Act (AFCTCA), P.L. 111-119, to provide an alternative eligibility requirement for airline flight crew employees.

Final Rule Relating to Qualifying Exigency Leave

The Final Rule includes a number of changes relating to qualifying exigency leave. It is important to note that, in response to concerns raised in the comment period, the DOL reaffirmed that, where a qualifying exigency involves a third party, employers may contact that third party to verify the meeting and the purpose of the meeting.

Definition of “Active Duty” — § 825.126(a), Now § 825.126(a)(1) and (a)(2)

The Final Rule replaces the existing definition of “active duty” with two new definitions: (1) “covered active duty,” as it applies to members of the regular armed forces, and (2) “covered active duty or call to covered active duty,” as it applies to members of the reserves.

The new definition of “covered active duty,” as it relates to the regular armed forces, requires that the service member be deployed with the armed forces in a foreign country.[4]

The new definition of “covered active duty or call to covered active duty,” as it relates to reserves members, requires that the service member be under a call or order to active duty during the deployment of the member to a foreign country under a federal call or order to active duty in support of a contingency operation. While the FY 2010 NDAA struck the term “contingency operations” from the FMLA, the DOL has taken the position that members of the reserves must be called to duty in support of a contingency operation in order for their family members to be entitled to qualifying exigency.

Exigency Leave for Child Care and School Activities — § 825.126(a)(3), Now § 825.126(b)(3)

The Final Rule places limits on exigency leave to arrange for child care or attend certain school activities for a military member’s son or daughter. Specifically, the Final Rule states that the military member must be the spouse, son, daughter, or parent of the employee requesting leave in order to qualify for the leave. The child in question could be “the military member’s biological, adopted, or foster child, stepchild, legal ward, or child for whom the military member stands in loco parentis, who is either under age 18 or age 18 or older and incapable of self-care because of a mental or physical disability at the time that FMLA leave is to commence.” The child for whom child care leave is sought need not be the child of the employee requesting leave.

The DOL specifically declined to extend qualifying exigency leave to employees who stand in loco parentis to a child of a military member when that employee does not have the statutorily required relationship with the military member for that leave. For example, while the mother of a military member may take leave to care for the military member’s child, the military member’s mother-in-law is not qualified for such leave, regardless of her relationship with the child, because the military member is not the spouse/son/daughter/parent of the employee requesting leave.

The DOL also declined to provide a specific category of exigency leave to address educational and related services for disabled children, noting that the current regulations are sufficient to cover meetings about eligibility, placement, and services and meetings related to a child’s individualized education plan. The DOL comments make clear that child care and school activity exigency leave does not cover routine academic concerns.

Exigency Leave for Rest and Recuperation — § 825.126(a)(6), Now § 825.126(b)(7)

The Final Rule increases the maximum number of days from five to 15 calendar days for exigency leave to bond with a military member on rest and recuperation leave, beginning on the date the military member begins his or her rest and recuperation leave.

The actual amount of leave provided to the employee should be consistent with the leave provided by the military to the member on covered duty. For example, if the military allows a member 10 days of rest and recuperation leave, the employee is entitled to 10 days. The leave may be taken intermittently, or in a single block, as long as the leave is taken during the period of time indicated on the military member’s rest and recuperation orders.

New Exigency Leave for Parental Care — Now § 825.126(b)(8)

The Final Rule adds parental care as a qualifying exigency for which leave may be taken. This allowance tracks the child care exigency provision and allows parental care exigency leave for the spouse, parent, son, or daughter of a military member in order to do the following:

  • Arrange for alternative care for a parent of the military member when the parent is incapable of self-care and the covered active duty or call to covered active duty status of the military member necessitates a change in existing care arrangements
  • Provide care for a parent of the military member on an urgent, immediate-need basis (but not on a routine, regular, or everyday basis) when the parent is incapable of self-care and the need to provide such care arises from the covered active duty or call to covered active duty status of the military member
  • Admit or transfer a parent of the military member to a care facility when the admittance or transfer is necessitated by the covered active duty or call to covered active duty status of the military member
  • Attend meetings with staff at a care facility for a parent of the military member (e.g., meetings with hospice or social service providers) when such meetings are necessitated by the covered active duty or call to covered active duty status of the military member

The military member’s parent must be incapable of self-care, which is defined as requiring active assistance or supervision to provide daily self-care in three or more “activities of daily living” (e.g., grooming, dressing, and eating) or “instrumental activities of daily living” (e.g., cooking, cleaning, and paying bills).

Final Rules Relating to Military Caregiver Leave

Certification Provisions for Caregiver Leave — § 825.310

The existing regulations limited the type of healthcare providers authorized to certify a serious injury or illness for military caregiver leave to providers affiliated with the U.S. Department of the Defense (DOD) (e.g., a Veterans Affairs facility (VA) or DOD-TRICARE provider). The Final Rule eliminates this distinction and allows any healthcare provider authorized under section 825.125 to certify injury or illness under the military caregiver provisions. In doing so, the DOL recognized that private healthcare providers might be unable to make certain military-related determinations to certify that the serious injury or illness is related to military service. Therefore, the Final Rule will allow providers to rely on determinations from an authorized DOD or VA representative on these issues.

Because of this change, the Final Rule will allow for second and third opinions on certifications of military caregiver leaves for non-DOD/VA providers. The Final Rule does not alter the prohibition on second and third opinions when the certification has been completed by a DOD/VA authorized provider.

The DOL has developed new Forms WH-385 and WH-385-v to help employers meet the FMLA’s certification requirements. While the use of the forms is optional, employers may not require any information beyond what is authorized by regulation.

Leave to Care for a Covered Service Member with a Serious Injury or Illness — § 825.127

As employers will recall, military caregiver leave provides a 26-week leave entitlement for eligible family members to care for seriously ill or injured military members. The existing regulations specifically excluded former members of the regular armed forces, former members of the National Guard and reserves, and members on the permanent disability list from the definition of a “covered service member.” The Final Rule will remove this exclusion so that military caregiver leave now applies to former members of the military.

Definition of “Covered Veteran” for Caregiver Leave — § 825.127

The existing regulations did not define “covered service member” with regard to veterans. The Final Rule will remedy this gap and include veterans in the applicable definition. Specifically, covered service members include (i) a covered veteran (ii) who is undergoing medical treatment, recuperation, or therapy (iii) for a serious injury or illness.

A “covered veteran” is defined as a member of the armed forces, National Guard, or reserves who was discharged or released under conditions other than dishonorable at any time during the five-year period prior to the first date the eligible employee takes FMLA leave to care for the covered veteran.

Employers need to be aware that the Final Rule excludes the period between October 28, 2009, and March 8, 2013 (the effective date of the Final Rule) from the five-year “look back” for covered veteran status. This grace period attempts to address complexities stemming from the DOL’s position that military caregiver leave did not become effective for veterans until its proposed rules became final.

Furthermore, the Final Rule reiterates the DOL’s position that leave provided to veterans under this provision before March 8, 2013, cannot be counted against an employee’s leave entitlement because companies provided it voluntarily before the effective date of the Final Rule. It is unclear if the courts will agree with this interpretation, and employers should proceed with caution.

Definition of “Serious Injury or Illness” — § 825.127

The Final Rule clarifies that a serious injury or illness can include a preexisting condition aggravated by military service in the line of duty on active duty. The Final Rule explains that a preexisting injury or illness generally will be considered to have been aggravated in the line of duty where there is an increase in the severity of such injury or illness during service, unless there is a specific finding that the increase in severity is due to the natural progression of the injury or illness.

Under the Final Rule, a current member of the armed forces must have a serious injury or illness that renders the member medically unfit to perform the duties of the member’s office, grade, rank, or rating.

The Final Rule also defines “serious injury or illness” of a covered veteran. Like the definition of “serious injury or illness” for military service, the serious injury or illness of a covered veteran must be incurred in, or preexisting but aggravated by, the line of duty on active duty. The serious injury or illness of a covered veteran also must be one of the following:

  • A continuation of a serious injury or illness that was incurred or aggravated when the covered veteran was a member of the armed forces and that rendered the service member unable to perform the duties of the service member’s office, grade, rank, or rating
  • A physical or mental condition for which the covered veteran has received a U.S. Department of Veterans Affairs Service-Related Disability Rating (VASRD) of 50% or greater, with such VASRD rating being based, in whole or in part, on the condition precipitating the need for military caregiver leave
  • A physical or mental condition that substantially impairs, or would do so absent treatment, the covered veteran’s ability to secure or follow a substantially gainful occupation by reason of a disability or disabilities related to military service
  • An injury, including a psychological injury, on the basis of which the covered veteran has been enrolled in the Department of Veterans Affairs Program of Comprehensive Assistance for Family Caregivers

The DOL noted that, while the definition of a covered veteran’s “serious injury or illness” includes conditions that impair the ability of a veteran to work, covered veterans may be employed. The DOL offers the example of a veteran with post-traumatic stress disorder who is able to work because of medical treatment but who may still need care from a family member for other reasons (e.g., to drive the veteran to medical appointments or to assist the veteran with basic medical needs).

The commentary in the Final Rule also makes it clear that, although a military member’s Social Security Disability Insurance determination is not dispositive of having a qualifying serious injury or illness, a private healthcare provider might consider the determination in his or her assessment.

Special Rules for Airline Flight Crews

The AFCTCA, which took effect on December 21, 2009, provides that an airline flight crew employee will meet the hours-of-service eligibility requirement if he or she has worked or been paid for not less than 60% of the applicable total monthly guarantee (or its equivalent) and has worked or been paid for not less than 504 hours (not including personal commute time or time spent on vacation, medical, or sick leave) during the previous 12 months. Airline flight crew employees continue to be subject to the FMLA’s other eligibility requirements.

The Final Rule includes provisions to align the existing regulations with the passage of the AFCTCA. Employers should note that the regulations applicable to airline flight crews in the Final Rule are wholly contained in a separate, newly titled subpart, “Subpart H – Special Rules Applicable to Airline Flight Crew Employees,” and are not integrated into the existing regulations by topic.

Hours-of-Service Requirement — § 825.801

Because the AFCTCA established a special hours-of-service requirement for airline flight crew employees, the DOL has adopted new section 825.801, which largely tracks the DOL’s 2012 proposal. Airline flight crew employees may become eligible under the FMLA (as amended by the AFCTCA) if they have either the required number of “hours worked” or “hours paid” during the previous 12-month period.

The Final Rule provides that an airline flight crew employee can meet the hours-of-service requirement under the FMLA if he or she (1) meets the standard eligibility threshold contained in section 825.110 (1,250 hours/12 months) or (2) has worked or been paid for not less than 60% of his or her applicable monthly guarantee and has worked or been paid for not less than 504 hours.

For airline employees who are on reserve status, the “applicable monthly guarantee” is defined in new section 825.801(b)(1) as the number of hours for which an employer has agreed to pay the employee for any given month. For airline employees who are not on reserve, the applicable monthly guarantee is the minimum number of hours for which an employer has agreed to schedule such employee for any given month.

The Final Rule clarifies that employers have the burden of proof in showing that an airline flight crew employee is not eligible for leave.

Calculation of Leave — § 825.802

The Final Rule allows airline flight crews up to 72 days of leave during any 12-month period to use for one or more of the following reasons: as an employee’s basic leave entitlement for the employee’s own illness; to care for an ill spouse, child, or parent; for the birth or adoption of a child or placement of a child in the employee’s home for foster care; or for exigent circumstances associated with the employee’s spouse, son, daughter, or parent on covered active duty. This entitlement is based on a uniform six-day workweek for all airline flight crews, regardless of time actually worked or paid, multiplied by the statutory 12-workweek entitlement. Airline flight crews are entitled to up to 156 days of military caregiver leave.

When a flight crew employee takes intermittent or reduced-schedule leave, the Final Rule requires employers to account for the leave using an increment no greater than one day.

Recordkeeping Requirements — § 825.802

In addition to the recordkeeping requirement applicable to all employers under the FMLA, the Final Rule requires airline employers to maintain any records or documents that specify the applicable monthly guarantee for each type of employee to whom the guarantee applies, including any relevant collective bargaining agreements or employer policy documents that establish the applicable monthly guarantee, as well as records of hours worked.

Other Changes Universal to the FMLA

Increments of Intermittent FMLA Leave — § 825.205

The existing version of section 825.205(a) defined the minimum increment of FMLA leave to be used when taken intermittently or on a reduced schedule as an increment no greater than the shortest period of time that the employer uses to account for other forms of leave, provided that it is not greater than one hour. According to the comments of the Final Rule, the DOL intended to emphasize that an employee’s entitlement should not be reduced beyond the actual leave taken and therefore added language to paragraph (a)(1), stating that an employer may not require an employee to take more leave than is necessary to address the circumstances that precipitated the need for leave. This change does not necessitate action for any employer already complying with the shortest increment rule.

The DOL further clarified that the additions to section 825.205(a) underscore the rule that if an employer chooses to waive its increment-of-leave policy in order to return an employee to work at the beginning of a shift, the employer is likewise choosing to waive further deductions from the FMLA entitlement period. In other words, if the employee is working, the time cannot count against FMLA time, no matter what the smallest increment of leave may be.

The DOL had proposed to remove the language in section 825.205(a) that allowed for varying increments at different times of the day or shift in favor of the more general principle of using the employer’s shortest increment of any type of leave at any time. However, the Final Rules does not incorporate this change. Employers who account for use of leave in varying increments at different times of the day or shift may also do so for FMLA leave, provided that the increment used for FMLA leave is no greater than the smallest increment used for any other type of leave. An employer can account for FMLA leave in smaller increments at its discretion.

The existing version of section 825.205(a)(2) included a provision on physical impossibility, which provided that, where it is physically impossible for an employee to commence or end work midway through a shift, the entire period that the employee is forced to be absent is counted against the employee’s FMLA leave entitlement. The DOL had proposed to either (1) delete this provision or (2) add language emphasizing that it is an employer’s responsibility to restore an employee to his or her same or equivalent position at the end of any FMLA leave as soon as possible.

The Final Rule retains the physical impossibility provision with clarifying language that the period of physical impossibility is limited to the period during which the employer is unable to permit the employee to work prior to or after the FMLA period.

The Final Rule also clarifies that the rule stated in section 825.205(c), which addresses when overtime hours that are not worked may be counted as FMLA leave, applies to all FMLA qualifying reasons and not just serious health conditions.

The DOL had proposed to add section 825.205(d), which would have provided a methodology for calculating leave for airline flight crew employees, but noted in the comments to the Final Rule that this language will now appear in section 825.802.

Recordkeeping Requirements — § 825.500

The Final Rule adds a sentence to section 825.500, reminding employers of their obligation to comply with the confidentiality requirements of the Genetic Information Nondiscrimination Act of 2008 (GINA). To the extent that records and documents created for FMLA purposes contain “family medical history” or “genetic information” as defined in GINA, employers must maintain such records in accordance with the confidentiality requirements of title II of that act. The DOL noted that GINA permits genetic information obtained by the employer, including family medical history, in FMLA records and documents to be disclosed consistent with the requirements of the FMLA.

Eligible Employees — § 825.110

The Final Rule makes clarifications to note that the protections afforded by the Uniformed Services Employment and Reemployment Rights Act (USERRA) extend to all military members, both active duty and reserve, returning from USERRA-qualifying military service. The DOL noted in the comments to the Final Rule that the previous regulation may have been unclear in that USERRA rights apply to employees returning from service in the regular armed forces.

Forms

The regulations will no longer include model forms as a part of the appendices. These forms will remain available on the DOL’s website. The practical implication of this change is that the DOL will be able to make changes to the forms without going through the formal rulemaking process. The DOL has made small modifications to the model forms. For example, Form WH-384 was modified to refer to a military member, use the term “covered active duty,” and contain the requirement that the member be deployed to a foreign country. The Final Rules has also created new forms for the certification of a serious injury or illness of a covered veteran—Forms WH-385 and WH-385-v.

New Administration Interpretation

In addition to the Final Rule, the DOL has recently published Administrator’s Interpretation No. 2013-1 (Administrator Interpretation), which provides clarifications to the existing definition of “son or daughter,” as it applies to an individual who is 18 years of age or older and incapable of self-care because of a mental or physical disability.[5]Employers should note the following important provisions set forth in the Administrator Interpretation:

  • The FMLA regulations adopt the Americans with Disabilities Act’s (ADA’s) definition of “disability” as a physical or mental impairment that substantially limits a major life activity.[6]
  • The FMLA regulations define “incapable of self-care because of mental or physical disability” as when an adult son or daughter “requires active assistance or supervision to provide daily self-care in three or more of the ‘activities of daily living’ or ‘instrumental activities of daily living.'”[7] Determinations with respect to the disability of the son or daughter should be made in accordance with the ADA.
  • The age of onset of the disability is irrelevant to this analysis. The adult son or daughter must also have a qualifying serious health condition, and the parent must be “needed to care” for the son or daughter, which is defined as including physical care, transportation for healthcare, and psychological comfort and reassurance for a son or daughter whose serious health conditions require inpatient or home care.
  • The definition of a “son or daughter” under the covered military leave entitlement is distinct from the definition for basic coverage. However, the same son or daughter could qualify a parent for both types of leave. For example, if an employee exhausts 26 weeks of military caregiver leave in one FMLA year, this same employee can take FMLA leave to care for that same son or daughter in subsequent years due to the adult child’s serious health condition, as long as all other FMLA requirements, such as the 1,250 hours-of-service rule, are met.

Implications

Employers should review their FMLA policy, internal processes, and any associated forms to ensure that they comply with the Final Rule and new Administrator Interpretation. Employers who have offered leave pursuant to the veteran’s provisions prior to March 8, 2013, should contact counsel when counting that leave against an employee’s entitlement.

[1]. View the Final Rule here.

[2]. View the new forms here.

[3]. Notably, the DOL has taken the position that the 2009 statutory amendments relating to leave to care for a veteran will not actually go into effect until March 8, 2013-the date when the Final Rule becomes effective. Because caregiver leave for veterans is limited to those needing treatment within five years of discharge from the military, the DOL has provided a special formula for calculating caregiver leave for family members of veterans discharged between 2009 and 2013. We recommend consulting with counsel with respect to this formula.

[4]. The Final Rule clarifies that active duty orders will generally specify whether a member’s deployment is to a foreign country. To further the point, the Final Rule defines “deployment” with the armed forces to a foreign country as deployment to areas outside of the United States, the District of Columbia, or any territory or possession of the United States, including deployment in international waters.

[5]. View the Administrator Interpretation here.

[6]. 29 C.F.R. § 825.122(c)(2).

[7]. 29 C.F.R. § 825.122(c).

Copyright © 2013 by Morgan, Lewis & Bockius LLP

 

United Kingdom Employment Compensation Payments Increase

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Annual increase on certain statutory payments takes effect from 1 February.

On 1 February, the annual increase on certain statutory payments comes into effect. The key changes are the following:

  • Maximum unfair dismissal compensatory award: £74,200 (increase from £72,300)
  • Maximum unfair dismissal basic award: £13,500 (increase from £12,900)
  • Cap on a week’s pay for certain statutory calculations: £450 (increase from £430)
  • Maximum statutory redundancy pay: £13,500 (increase from £12,900)

Other increases will take effect in April 2013, including increases in statutory maternity pay and statutory sick pay, and the level of national minimum wage will increase in October 2013.

Additionally, on 17 January, the government announced that the cap on the unfair dismissal compensatory award will change. Beginning around summer 2013, unfair dismissal compensation will be capped at the lower of the statutory cap (currently £74,200) and 12 months’ pay. This is a major change in UK employment law and one that employers will welcome because the financial risk of dismissing an employee who earns less than the statutory cap will be reduced. However, it is likely to mean that more employees will make discrimination or whistleblowing claims, for which no statutory cap applies.

Copyright © 2013 by Morgan, Lewis & Bockius LLP

DOL, IRS, and HHS Put the Brakes on Stand-Alone Health Reimbursement Arrangements Used to Access Health Insurance Coverage in the Individual Market

The National Law Review recently featured an article regarding Health Reimbursement Arrangements written by Alden J. Bianchi and Gary E. Bacher of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.:

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In a set of Frequently Asked Questions1 (FAQs) posted to the Department of Labor’s website on January 24, the Departments of Health and Human Services, Labor, and Treasury (the “Departments”) put a stop to an approach to health plan design under which employers furnish employees with a pre-determined dollar amount (a “defined contribution”) that employees can apply toward the purchase of health insurance coverage in the individual health insurance market.

An arrangement under which an employer provides an amount of money to employees to pay for unreimbursed medical expenses or for individual market premiums is itself a “group health plan.” Such an arrangement is referred to and regulated under the Internal Revenue Code as a “health reimbursement arrangement” or “HRA.”2 The HRA approach described above is referred to as a “stand-alone HRA” to distinguish it from arrangements in which the HRA is paired with an employer’s group health plan. This latter HRA design is referred to as an “integrated HRA.”

The rules governing HRAs stand in contrast to cafeteria plans and medical flexible spending arrangements, which pave the way for employee contributions to be paid with pre-tax dollars. Where employee contributions are limited to premiums, the cafeteria plan is referred to colloquially as a “premium-only” plan. Where employees can set aside their own money to pay for certain medical expenses including co-pays and co-insurance with pre-tax dollars, the arrangement is referred to as a “medical flexible spending arrangement” or “medical FSA.” Medical FSAs can include employer money (typically in the form of “flex credits”), but they cannot be used to pay health insurance premiums.

While some vendors have begun to market stand-alone HRAs, it was never clear that HRAs used to access individual market coverage could pass muster under the Patient Protection and Affordable Care Act (the “Act”) or other applicable laws. The regulatory hurdles, both before and after 2014, include the following:

  1. Before 2014, carriers issuing coverage in the individual market are free to impose all manner of underwriting conditions, which raise the specter of discrimination based on health status in violation of Title I of the Health Insurance Portability and Accountability Act (HIPAA). These concerns disappear commencing in 2014 as a consequence of the Act’s comprehensive overhaul of health insurance underwriting practices.
  2. The Act generally prohibits group health plans and health insurance carriers from imposing lifetime or annual limits on the dollar value of essential health benefits. In prior guidance, the regulators gave a “pass” to integrated HRAs, but not to stand-alone HRAs.
  3. Because individual market products are age rated, the same coverage will cost more in the hands of an older employee than in the hands of a similarly-situated younger employee. Before 2014, the variations in premium costs are a matter of state law; from and after 2014, the Act establishes a federal floor under “modified community rating” rules that permit a disparity of no more than 3:1. Under either regulatory regime, a flat dollar amount is thought to raise questions under the Age Discrimination in Employment Act (ADEA). Under the ADEA, variations in premiums are permitted only where the added cost charged to an older employee is justified by the actuarially-adjusted cost of providing the benefits to the older employee.

The FAQs cite the Act’s ban on lifetime and annual limits as the basis for their objection to stand-alone HRAs used to access individual market coverage. Specifically, the FAQs note that—

“[A]n HRA is not considered integrated with primary health coverage offered by the employer unless, under the terms of the HRA, the HRA is available only to employees who are covered by primary group health plan coverage provided by the employer. …”

The Departments state their objections unequivocally: an HRA used to purchase coverage in the individual market cannot be considered integrated with that individual market coverage. Therefore, such an arrangement does not satisfy the requirements Act prohibiting group health plans and health insurance carriers from imposing lifetime or annual limits on essential health benefits. The Departments also made clear that an employer-sponsored HRA may be treated as integrated with other coverage only if the employee receiving the HRA is actually enrolled in that coverage. Thus, if an HRA credits additional amounts to an individual only when he or she does not enroll in the employer’s group health plan, the HRA will not comply with the Act.

Recognizing the potential hardship to existing stand-alone HRAs, the FAQs include a special rule for amounts credited or made available under HRAs in effect prior to January 1, 2014. Whether or not an HRA is integrated with other group health plan coverage, unused amounts credited before January 1, 2014 may be used after December 31, 2013 to reimburse medical expenses without running afoul of the Act. If the HRA did not prescribe a set amount or amounts to be credited during 2013, then the amounts credited cannot exceed the amount credited for 2012.

©1994-2013 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

NLRB Appointments are “Constitutionally Invalid”

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The D.C. Circuit Court of Appeals has invalidated the appointments of three members of the National Labor Relations Board who were designated on January 4, 2012. On January 25, 2013, the Court issued its ruling in Noel Canning v. NLRB, et al. Docket No. 12-1115.  http://www.cadc.uscourts.gov/internet/opinions.nsf/ 13E4C2A7B33B57A85257AFE00556B29/$file/12-1115-1417096.pdf. In Noel Canning, the employer sought to prohibit enforcement of a February 8, 2012 NLRB decision concluding it violated the National Labor Relations Act.

The Court granted the Petition of Noel Canning on the basis that the NLRB lacked a sufficient quorum of members when it reached its decision. In February 2012, the NLRB was putatively staffed with a full complement of five members. However, three of those members were appointed by the President, without confirmation by the Senate, on January 4, 2012. The NLRB maintained the appointments were legitimate “recess” appointments made while the Senate was out of session. The Petitioner argued that, in fact, the Senate was in pro forma session and as such, the President had no constitutional authority to make “recess appointments” of the NLRB members.

The D.C. Circuit agreed with the Petitioner that the President’s appointments were “constitutionally invalid.” As such, the Board did not have a “quorum for the conduct of business” on the date of its decision as only two members of the NLRB were properly seated.

The impact of the decision is likely substantial. In an appearance before the Oversight Committee of the U.S. House of Representatives on February 1, 2012, Dinsmore Labor Practice Group Chair Mark Carter testified, that if the recess appointments on January 4, 2012 were determined to be improper “every administrative decision and every administrative rule or regulation implemented by the National Labor Relations Board will be subject to appeal or attack.” http://oversight.house.gov/wp-content/uploads/2012/02/2-1-2012_Carter-Full.pdf.

Carter testified that if the appointments were invalidated, as they have been, “the actions of the NLRB will be ultra vires” and every decision and regulation will be subject to attack. The NLRB has been active both in the arenas of decision-making and regulatory action over the past year. If the decision of the D.C. Circuit is upheld, the decisions of the Agency since January 4, 2012 may have no mandatory impact on employers, unions or employees.

The NLRB reacted to the decision on the afternoon of January 25 by insisting that the remaining recess appointees, Richard Griffin and Sharon Block, will continue to perform their statutory duties and issue decisions along with Chairman Mark Pearce. House Oversight Committee Chairman Darrell Issa (R – CA) called upon the NLRB to “take the responsible course and cease issuing further opinions until a constitutionally-sound quorum can be established.” Chairman Issa stated “(t)he unconstitutionally appointed members of the NLRB should do the right thing and step down.”

© 2013 Dinsmore & Shohl LLP

Women Really CAN Have it All – Ridding the Legal Field of “The Mommy” / “Tiger Lady” Oxymoron

The National Law Review recently published a book review of, Women Really CAN Have it All – Ridding the Legal Field of “The Mommy” / “Tiger Lady” Oxymoron, by Heidi R. Wendland of The National Law Review / The National Law Forum LLC:

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Long gone is the notion that a woman’s place is at home. Anne Murphy Brown has had her own success in balancing motherhood with a legal career as a litigator, corporate attorney and currently as an Assistant Professor and Director of Legal Studies at Ursuline College. Anne Murphy Brown finds more than 20 other women who have enjoyed the same successes and profiles them in Legally Mom: Real Women’s Stories of Balancing Motherhood and Law Practice. She does an excellent job in making this book relevant to every woman by carefully selecting a diverse array of women to profile. She finds women practicing at law firms and at governmental agencies. She also profiles women who have started their own law firms, who pursue a legal career from home, and who work as in house counsel at corporations. Each chapter contains a different woman’s personal experience and perspectives in balancing motherhood and her legal career. While all of these women face unique challenges depending on which course of work they pursue in the legal field, a common theme prevails throughout the entire book. The recipe for success of “having it all” is the same: these women have been successful because they have had support, drive, and a realistic grasp on their own personal limitations.

Many of the women within Legally Mom are able to pursue a career and be a mother because they have strong support from their husbands. Their husbands help split the parenting duties allowing the mother to keep up with the demands of her career. Other women profiled are not as lucky, and have to find support outside of the home. Some find support from family members in the form of child care. Others find support from within their workplace through understanding bosses, flexible hours, and policies enacted for mothers within the firm such as paid time off, nursing rooms, and child care offered on the premises. Anne Murphy Brown also provides the reader with a great resource: www.mamalaw.com . This website was created by a group of career moms to serve as a forum for other career moms to lend support to each other.

All the women profiled share a desire to succeed as both a mother and a lawyer. The book demonstrates how women have to fight for their right to pursue a career while being a mother and every woman profiled gives excellent advice as to how to do so. They have to be comfortable in confronting their bosses in order to achieve what they want. In fact, one woman profiled mentions an excellent point that it is to a firm’s detriment to not be flexible for women attorneys. Law firms and companies lose many educated women to motherhood because they do not enact policies that provide for flexibility to pursue both. This interesting perspective gives the reader a great negotiating tool when confronting her employer.

Women who want both a career and to be a mother must still acknowledge that there are limits since there are only 24 hours in a day. The women in the book all prioritize their lives in different ways and give advice as to how to live with the choices they make. In the end, the women do what works best for their own unique situation.

For some women profiled, being a mother and pursuing a legal career was something they always knew they wanted to balance. For other women profiled, being a mother was an afterthought and it was not until they had established themselves within their career did they consider starting their families. Every woman who is considering whether it is possible to be a mother and pursue a legal career should read this book. Every woman who thinks it is impossible to have both should certainly read this book. While woman have a huge task in front of them when deciding to be a mother and a career lady, this book proves it is not impossible. With effective time management, a woman can pursue a successful career and be a good mother. Legally Mom serves to enhance the feeling of female camaraderie in a traditionally male dominated career of law, and will no doubt inspire every reader and continue the movement for change and women empowerment.

Copyright ©2012 National Law Forum, LLC

Refresher on the “Step-up” Process for Service Personnel

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A common question our Education Law Practice Group deals with relates to how the “step-up” process works for service personnel.

The “step-up” process is found in W. Va. Code 18A-4-15, which in relevant part, states:

Any regular service person employed in the same building or working station and the same classification category of employment as the absent employee shall be given the first opportunity to fill the position of the absent employee on a rotating and seniority basis. In such case the regular service person’s position is filled by a substitute service person. A regular service person assigned to fill the position of an absent employee has the opportunity to hold that position throughout the absence. For the purpose of this section only, all regularly employed school bus operators are considered to be employed within the same building or working station.

Let’s discuss some common scenarios we often see.

Scenario 1: Employee “A” is regular bus operator that is on an approved leave of absence (“LOA”) that was requested in writing and approved by the board of education. The LOA is expected to extend beyond thirty days. When an employee receives a LOA from the board, and the leave will extend for more than thirty days, W. Va. Code 18A-4-15 requires the board to post the assignment and fill it per W. Va. Code 18A-4-8b. The assignment is awarded to the most senior regular employee in the classification that applies, and if no regular employee is interested, bus operators on preferred recall, and if none, substitutes bus operators that might apply. Suppose that in the instant, Employee “B”, the most senior regular bus operator bids and receives the assignment. “B” finds the route more attractive than his or her route because it is closer to home, or is short (or some other reason). Keep in mind this is not a “step-up” for “B”. As for “B’s” regular assignment though, you have to permit “step-up” (not posting it), which is offering “B’s” assignment to the regular bus drivers via seniority based rotation. Let’s say regular Employee “C” wants “B’s” assignment via the “step-up” up process. If “C” “steps-up”, “C” will remain in that assignment until “B” returns. A substitute bus driver via rotation (whoever is next on the list) will substitute for “C”. You do not allow “step-up” to “C’s” regular assignment. “Step-up” happens once.

Scenario 2: Employee “A” is a regular bus operator out from work using sick leave. “A” has not requested in writing an approved LOA from the board. It appears that “A” is going to be absent for an extended period of time (lets’ say five to sixty days). The board does not post it after the twentieth day (that is a common myth). Instead, the board utilizes the “step-up” process of W. Va. Code 18A-4-15 and offer “A’s” assignment to the most senior bus operators via seniority based rotation. If a regular bus operator “steps-up” (let’s say “B”), a substitute next on the bus operator list is called for “B”. “Step-up” does not continue on-and-on-and-on. A substitute is called for “B”. Yes a substitute with little seniority might get lucky if s/he is next in line on the substitute list.

Always keep in mind that if a substitute is initially called for “A’s” assignment (which is often the case because the board might not know the absence could extend for a few days), but after that initial day it appears the regular employee will continue to be absent, the board should offer “step-up” per W. Va. Code 18A-4-15 to regular employees, who then bump the substitute out. The Grievance Board encourages this process (see Decision). And again, if a regular employee “steps-up”, a substitute is then called for the regular employee who took the opportunity to “step-up”.

The “step-up” process is not fun from a personnel standpoint, especially when there is not sufficient time to contact regular employees, in emergency situations, or in situations when it is not known that the regular employee’s absence will be beyond a day or so, etc. But we hope the above sheds some light on the proper use of the “step-up” process compared to the posting process. For additional grievances decision on the “step-up” process, see Garner, Mullins, McMillen, and Prickett.

© 2013 Dinsmore & Shohl LLP

Employers Can Obtain Refund for Excess FICA Tax Paid as Result of Increased Excludable Limit for Transit Benefits

The National Law Review recently published an article, Employers Can Obtain Refund for Excess FICA Tax Paid as Result of Increased Excludable Limit for Transit Benefits, written by Maureen O’Brien and Ruth Wimer, Esq., CPA with McDermott Will & Emery:

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On January 11, 2013, the Internal Revenue Service published Notice 2013-8 providing a special administrative procedure for employers with respect to 2012 transit pass benefits.  The American Taxpayer Relief Act retroactively increased the monthly transit benefit exclusion under Section 132(f)(2)(A) of the Internal Revenue Code for commuter highway vehicles or transit passes from $125 per participating employee to $240 per participating employee for the 2012 calendar year (the monthly transit benefit exclusion for parking remains at $240).  The notice addresses employers’ questions regarding the retroactive application of the increased exclusion, which can result in both decreased FICA and federal income tax liability.  Employers acting promptly, in many cases by January 31, may have less administrative burden in obtaining a benefit for themselves and their employees with respect to the retroactive increase for employer-provided transit benefits.

Background

Section 132(a)(5) of the Internal Revenue Code provides that any fringe benefit that is a qualified transportation fringe is excluded from gross income for federal income tax purposes, and the FICA rules allow for the same exclusion.  The term “qualified transportation fringe” includes (when provided by an employer to an employee) transportation in a commuter highway vehicle between home and work and any transit pass (Transit Benefits), or qualified parking.  Prior to the enactment of the American Taxpayer Relief Act (ATRA), the 2012 monthly limit for qualified parking was $240, and the monthly limit for other Transit Benefits was $125.  ATRA amended Section 132(f)(2) to increase the maximum monthly excludable amount for Transit Benefits to an amount equal to the maximum monthly excludable amount for qualified parking (i.e., $240), effective retroactively beginning on January 1, 2012.

As a result of ATRA, employers that provided Transit Benefits in excess of the pre-ATRA maximum monthly excludable amount may be able to obtain a refund of FICA amounts paid on such benefits.  Generally, corrections of overpayments of FICA tax are made when an error has been ascertained using either the adjustment process or using the refund claim process, and requires a Form 941-X to be filed for each quarter in which excess FICA taxes were reported.  (Correction of over-withheld federal income tax can not be made until after the year-end in which the over-withholding occurred.)

IRS Notice 2013-8 provides a special administrative process to obtain a refund for excess FICA tax paid as a result of the retroactive amendment on the monthly excludable limit for Transit Benefits.  To benefit from the retroactive increase in the excludable limits for Transit Benefits, the employer must have actually paid amounts for Transit Benefits in excess of the limit either from its own resources or from employee salary deferrals.

Employers that have not yet filed their fourth quarter Form 941 for 2012 must repay or reimburse their employees the over-collected FICA tax on the excess transit benefits for all four quarters of 2012 on or before filing the fourth quarter Form 941.  The employer, in reporting amounts on its fourth quarter Form 941, may then reduce the fourth quarter wages, tips and compensation reported on line 2, the taxable social security wages reported on line 5a and Medicare wages and the tips reported on line 5c by the excess transit benefits for all four quarters of 2012.  By taking advantage of this special administrative procedure, employers will avoid having to file Forms 941-X, and will also avoid having to file Forms W-2c.

Employers that have already filed the fourth quarter Form 941 must use Form 941-X to make an adjustment or claim a refund for any quarter in 2012 with regard to the overpayment of tax on the excess transit benefits after repaying or reimbursing the employees or, for refund claims, securing consents from its employees.  Similarly, employers that, on or before filing the fourth quarter Form 941, have not repaid or reimbursed some or all employees who received excess transit benefits in 2012 must use Form 941-X to make an adjustment or claim for refund with respect to the excess transit benefits provided to those employees, and must follow the normal procedures.

Employers that have not furnished 2012 Forms W-2 to their employees should take into account the increased exclusion for transit benefits in calculating the amount of wages reported in box 1, Wages, tips, other compensation; box 3, Social security wages; and box 5, Medicare wages and tips.  Employers that have repaid or reimbursed their employees for the over-collected FICA taxes prior to furnishing Form W-2 should reduce the amounts of withheld tax reported in box 4, Social security tax withheld, and box 6, Medicare tax withheld, by the amounts of the repayments or reimbursements.

In all cases, however, employers must report in box 2, Federal income tax withheld, the amount of income tax actually withheld during 2012.  The additional income tax withholding will be applied against the taxes shown on the employee’s individual income tax return (Form 1040, U.S. Individual Income Tax Return).  The same procedures are available to filers of other employment tax returns reporting FICA taxes (e.g., the related Spanish-language return or return for U.S. possessions) and to filers of employment tax returns reporting taxes under the Railroad Retirement Tax Act.

© 2013 McDermott Will & Emery

EEOC Outlines Enforcement Priorities in Approved Plan

The National Law Review recently published an article, EEOC Outlines Enforcement Priorities in Approved Plan, written by Kelly H. Kolb of Fowler White Boggs P.A.:

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The U.S. Equal Employment Opportunity Commission (EEOC) recently approved a Strategic Enforcement Plan (SEP) aimed at establishing national enforcement priorities and more effectively integrating enforcement responsibilities across the Commission’s 54 offices.

As part of the plan, the EEOC has identified six national priorities:

  • Eliminating barriers in recruiting and hiring;
  • Protecting vulnerable workers (such as immigrant workers);
  • Addressing emerging and developing employment discrimination issues;
  • Enforcing equal pay laws;
  • Preserving access to the legal system; and
  • Preventing harassment through systemic enforcement and targeted outreach.

The SEP notes that the EEOC will continue its focus on systemic discrimination, using individual discrimination charges as a vehicle to investigate all of the employment practices of employers. The EEOC will also pay particular attention to use of criminal background checks during the hiring process, an issue we have discussed in other newsletters and on radio, to LGBT discrimination, disability discrimination and to pregnancy discrimination claims.

The SEP lays out an aggressive agenda for the EEOC. Employers are well advised to take precautionary steps now to insulate against a possible EEOC “pandemic”.

©2002-2013 Fowler White Boggs P.A.

Sixth Circuit Affirms Dismissal of “Reverse” Racial Discrimination Claim Against Cracker Barrel

The National Law Review recently published an article, Sixth Circuit Affirms Dismissal of “Reverse” Racial Discrimination Claim Against Cracker Barrel, written by Kyle P. Konwinski of Varnum LLP:

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In Martinez v. Cracker Barrel Old Country Store Inc., Case No. 11-2189 (6th Cir. Jan. 10, 2013), in a published decision, the Sixth Circuit affirmed the dismissal of a “reverse” racial discrimination claim arising out of Cracker Barrel’s termination of the plaintiff’s position as a retail manager at a Flint, Michigan Cracker Barrel.

The plaintiff was a general manager of a Cracker Barrel store for ten years.  Cracker Barrel terminated the plaintiff because she violated company policy when she made remarks during conversations regarding the Haiti earthquake, the plight of those in Haiti, and the use of a “bridge card” as a “ghetto card.”  The plaintiff, a Caucasian, contended that similarly situated African Americans were treated more favorably than her—i.e., not fired for making similar remarks.

Interestingly, the Sixth Circuit noted that a claim of “reverse” racial discrimination under federal law requires a showing of “background circumstances supporting the suspicion that the defendant is that unusual employer who discriminates against the majority.”  Because the plaintiff also brought a claim alleging race discrimination under Michigan’s law, however, she did not need to satisfy this heightened standard of proof to establish a claim because Michigan does not require a heightened standard of proof for reverse discrimination claims.

The Sixth Circuit dismissed the claims because, first, the plaintiff did not come forward with direct evidence of reverse discrimination because her evidence required an inference that Cracker Barrel terminated her based on race.  Second, the plaintiff did not come forward with sufficient evidence that another similarly situated employee was treated more favorably—the plaintiff was differently situated in the management structure of the store and also engaged in more pervasive and severe conduct.  Therefore, the Sixth Circuit found that the plaintiff could not establish a prima facie case of discrimination.

© 2013 Varnum LLP

NLRB Now Permits Front Pay in Lieu of Reinstatement in Board Settlements

The National Law Review recently published an article by John T.L. Koenig of Barnes & Thornburg LLP regarding A Recent NLRB Ruling:

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The National Labor Relations Board “NLRB” has traditionally refused to include the concept of front pay in lieu of reinstatement in formal Board settlements. As such, if an employer was interested in resolving an NLRB case that involved employee terminations, but not interested in bringing those terminated employees back to work, the only avenue was a non-Board settlement. That may change based on a new guidance memo the Acting General Counsel issued Jan. 9, 2013.

Noting that most agreements involving waivers of reinstatement in exchange for payment of front pay “are entirely non-Board” settlements, and that Agency policy should favor Board settlements, not discourage them, the AGC “decided to modify existing policy to permit Agency settlements to include front pay.” The Board’s Case Handling Manual will be revised to reflect this change. The updated manual instructs that offers of front pay in lieu of reinstatement be communicated to alleged discriminatees, but without pressuring them to waive reinstatement. The Region is “serving only as a conduit for the proposal” pursuant to the updated language in the Manual.

The memo also requires that waiver of reinstatement be in writing, unless otherwise authorized by Operations-Management in a particular case. The full memo with updated language in the Case Handling Manual can be found here.

© 2013 BARNES & THORNBURG LLP