Category: Labor & Employment

Many New Jersey Employers Must Soon Offer Employee Retirement Savings Plans

The New Jersey Secure Choice Savings Program Act (the “Act”) is set to take effect on March 28, 2022 and will require many employers to offer their own retirement plan or provide access to a State-sponsored program.

This Act impacts all New Jersey businesses that:

  1. have employed at least 25 employees in the State during the previous calendar year;
  2. have been in business at least two years; and
  3. do not already offer a qualified retirement plan.

The Act mandates employers to offer their full and part-time employees a retirement savings in either the form of either a qualified retirement plan (e.g., a 401(k) or 403(b)), or through the New Jersey Secure Choice Savings Program (the “Program”). The State-sponsored Program is an individual retirement account (IRA) where employees contribute a portion of their pretax earnings via automatic payroll deductions.

Employers must first decide whether they want to sponsor a qualified retirement plan or opt for the State-sponsored Program. Those who fail to comply will be subject to penalties ranging from a written warning to a $500 fine per employee. Employers have nine months from the implementation date to comply with the Act. While the anticipated implementation date is March 28, 2022, the Treasury Department website dedicated to the program notes that implementation is not yet operational.

We suggest intermittently checking in on the website.

© 2022 Giordano, Halleran & Ciesla, P.C. All Rights Reserved
For more articles about employment law, visit the NLR Labor & Employment section.

UAE Employment Law Update

2 February 2022 saw the introduction of a new UAE Labour Law in the form of UAE Federal Law No. 33 of 2021, Regulating Labour Relations (“New Law”), repealing the existing UAE Labour Law, UAE Federal Law No. 8 of 1980 as amended (“Previous Law”).  In addition to the introduction of the New Law, a set of companion Executive Regulations were issued on 3 February 2022, fleshing out certain provisions of the New Law.

The following is a non-exhaustive overview of the principal provisions of the New Law and the Executive Regulations.

Whilst the New Law makes several significant introductions, it equally maintains the status quo in others, as such what we see here is more evolution rather than revolution in terms of the regulation of employment relations governed by the New Law.

As with the Previous Law, the New Law does not apply to employees in the Dubai International Financial Centre or the Abu Dhabi Global Market which both have their own standalone employment laws and regulations.  In addition, employees of federal and local government agencies, members of the armed forces, police and security employees and domestic service workers (Article 3(2) of the New Law) are not subject to the New Law.

  1. Employment Arrangements

The New Law and Executive Regulations (Article 5) introduces the following models of work:

  1. Full time – working for a single employer full time;
  2. Part time – working for a single employer part time;
  3. Temporary work – work carried out for a specified time and for a specific task;
  4. Flexible work – work that allows changing work hours to take into account operational needs of an employer;
  5. Remote work – work that is performed outside of the workplace and which may be either full time or part time; and
  6. Job sharing – work is divided between one or more employees on a part time basis.

Furthermore, the Executive Regulations provide that additional employment arrangements can be introduced based on labour market demands.

  1. Work Permits

The Executive Regulations (Article 6) stipulates the types of work permits available and the corresponding processes for obtaining, renewing and cancelling the same are as set in Article 7 of the Executive Regulations:

  1. Work permits for recruitment for employee’s outside of the UAE;
  2. Transfer work permit allowing a non-UAE national’s employment to be transferred between establishments registered with the Ministry of Human Resources and Emiratisation (“MOHRE”/“Ministry”);
  3. Relative work permit allowing a person who is on the residence visa of a family member to work for an employer registered with the MOHRE;
  4. A temporary work permit for where an employer is employed for a job whose performance or completion requires a specified period;
  5. A task work / mission permit allowing for an employer to bring an employee from outside of the country in order to perform temporary work or a specific project for a definite term;
  6. A part time work permit;
  7. A juvenile work permit allowing for an employer to employ a juvenile between the age of 15 and 18;
  8. A student training and employment permit allowing for an employer to train or employ a student over the age of 15;
  9. GCC national work permit allowing employers to employ nationals of other GCC states;
  10. Golden visa work permit allowing the employment of an employee in the UAE who holds a golden visa;
  11. National trainee work permit; and
  12. Self-employment permit allowing individuals to engage in freelance work (under self residence for foreign nationals).

Additional types of work permits may be introduced in accordance with the provisions of the New Law.

  1. Equality and Non-Discrimination

The New Law introduces the prohibition of discrimination on the basis of: race, ethnicity, sex, religion, national origin, or on the grounds of disability (Article 4 of the New Law).

Women are entitled to identical wages for the same work (Article 4(4) of the New Law).

  1. Employment Contracts

Article 10(1) of the Executive Regulations provides the minimum requirements necessary for the purpose of a valid employment contract.

Article 10(2) of the Executive Regulations specifically permits an employer (with the consent of an employee) to add additional provisions (over those stipulated under Article 10(1) of the Executive Regulations) provided that the same are not in contradiction with the provisions of the New Law and the Executive Regulations.

The Ministry shall prepare (pursuant to Article 10(4) of the Executive Regulations) contract forms for:

  1. Full time employment;
  2. Part time employment;
  3. Flexible work employment;
  4. Remote work employment; and
  5. Job sharing employment.

The Ministry may as required introduce further standard form contracts.  It will be interesting to see if free zones (e.g.: JAFZA, DAFZA, DMCC and DDA) which are subject to the New Law follow suite.  At the date of this client alert not all free zones have introduced new standard form contracts in compliance with the New Law and Executive Regulations.

  1. Salary

All employers registered with the Ministry are required to pay employees under the Wage Protection System (“WPS”) (Article 16(1)(b) Executive Regulations).  All wages are to be paid in AED unless agreed otherwise by the contracting parties.  How this will work in practice given WPS has previously provided for payment only AED remains to be seen.

Article 25 of the New Law sets out permitted deductions from an employee’s salary.  Notably Article 25(1)(b) of the New Law puts a limit on the percentage of salary that can be deducted at 20%, it is unclear if this is a given month or during a year.  Consideration will need to be given to circumstances where housing loans or the like are advanced and then repaid.

Article 26 of the New Law provides that a minimum wage may be set in the future.

  1. Contract Term

One fundamental change under the New Law is the abolition of unlimited term contracts.  The New Law introduces a maximum fixed term of 3 years (Article 8(3) of the New Law), albeit it is our understanding that employers which are Dubai onshore entities will continue to be granted only 2 year work permits and as such fixed term contracts in such instances will be granted on the basis of 2 year renewable terms.

Fixed term contracts may be extended for up to a 3 year period (noting comments above regarding visa terms) or shorter periods one or more times and a renewal does not necessarily have to involve express written notice and consent, instead it can be extended implicitly (Article 8(5) of the New Law).

  1. Probationary Period

As with the Previous Law, probationary periods can run for a period not to exceed 6 months (Article 9(1) of the New Law)).  An employer wishing to terminate during a probationary period must provide at least 14 days’ notice to terminate.  In the event that an employee wishes to terminate (Article 9(1) of the New Law during the probationary period, the employee must: provide at least 30 days’ notice where they wish to take on employment with another employer in the UAE (Article 9(2) of the New Law); or provide at least 14 days’ notice where the employee wishes to leave the UAE (Article 9(3) of the New Law).

  1. Employer Obligations

An employer may not assign work to an employee that is “fundamentally different” to the work agreed in the employment contract (Article 12 of the New Law).

An employer is obliged amongst other things to: keep employee files in accordance with the provisions of Article 13(1) of the New Law; invest in the development of skills of employees (Article 13(5) of the New Law); bear the costs of private healthcare in accordance with corresponding legislation (Article 13(8) of the New Law); and provide its employees (upon the employee’s request) at termination with a confirmatory notice setting out date of joining, date of expiry, total service, last wage, job title and the reason for termination, even if the contents of that letter reduces the ability of the exiting employee to gain employment (Article 13(11) of the New Law).

  1. Employee Obligations

The employee is under various obligations pursuant to Article 16 of the New Law, these include but are not limited to obligations of: confidentiality (Article 16(4) of the New Law); developing functional and professional skills (Article 16(8) of the New Law); and honesty and professionalism in the performance of work (Article 16(2) of the New Law).

  1. Working Hours / Overtime

Subject to exceptions under the Executive Regulations, the maximum working hours for an employee is 8 hours a day or 48 hours per week, with an emphasis on the word “or” (Article 17(10) of the New Law).

Article 15(1) of the Executive Regulations stipulates specific circumstances where time spent by an employee travelling to their workplace will count towards their working hours.  As a general rule such travel time does not apply (Article 17(3) of the New Law).

Overtime payment mechanisms are set out under Article 19 of the New Law.  A maximum of 2 hours overtime a day is permitted (Article 19(1) of the New Law).  Overtime is paid at a 25% uplift of basic salary save where the hours of overtime take place between 10pm and 4am when overtime is paid at a 50% uplift of basic salary (Article 19(3) of the New Law).

If work is required on a rest day the overtime payment is paid at a 50% uplift of basic salary (Article 19(4) of the New Law).

Overtime entitlement does not extend to those categories of employees set out in Article 15(4) of the Executive Regulations. Furthermore such categories of worker are also exempt from the maximum work hours.  Employees who are exempt include directors and board Chairman and persons holding supervisory positions, it remains to be seen how this will work in practice.

  1. End of Service Gratuity

The rules regarding the payment of end of service gratuity under the New Law introduce two key changes: 1) the concept of deductions to gratuity entitlement where an employee terminates their employment (prior to the completion of 5 years’ service) is removed; and 2) the law is now specific in terms of UAE nationals employed in the private sector having no rights to end of service gratuity.  All other gratuity provisions remain as per the Previous Law i.e. gratuity is payable after 1 years’ continuous service, calculated only against base salary, capped at 2 years’ salary and calculated on the basis of 21 days base salary for the first 5 years of service and 30 days base salary for service over 5 years.  Entitlement to gratuity for part years served after the conclusion of the first year of continuous service remain.

It is worth noting that the New Law does (under Article 51(8)) leaves the possibility that end of service may be replaced by an alternative pensions system likely to be similar to the DEWS system operational in the Dubai International Financial Centre.

Article 53 of the New Law provides that all employee entitlements are to be paid within 14 days from the date of contract expiration.

Article 29 of the Executive Regulations places controls on what deductions an employer can make against end of service gratuity.  This does include the repayment of loans (Article 29(1)(a) of the Executive Regulations).

Article 30 of the Executive Regulations regulates how end of service will be paid to employees who are not full time employees.

  1. Labour Claims

Article 55(1) of the New Law provides that where an employee has a claim against their employer and the claim does not exceed AED 100,000, then any court fees which would be normally payable by the employee are waived.

  1. Holiday Entitlement

The New Law provides for a minimum holiday entitlement of 30 days (typically this is reflected in employment contracts as 25 working days) (Article 29(1) of the New Law).  For new employees holiday entitlement accrues at 2 days per month for the first 6 months of service.

Part time workers are entitled to holiday pursuant to the requirements of Article 18 of the Executive Regulations.

Article 19 of the Executive Regulations provides that where an employer has allowed for the carry over of balance of unused holiday entitlement (Article 29(5) of the New Law).  Article 19(1) of the Executive Regulations provides that an employee may carry forward no more than half of their annual leave into the following year.

Article 19(2) of the Executive Regulations provides that where an employee’s service is terminated, a cash allowance for accrued but unused holiday at the date of termination is payable based on basic salary.

  1. Maternity Leave

Article 30 of the New Law provides 60 days of maternity leave, 45 days at full pay and 15 days at half pay.  Additional unpaid leave is available in certain medical circumstances.

For employees returning from their maternity leave, and for a period not exceeding 6 months from the date of delivery shall be entitled to 2 daily rest periods for breastfeeding not to exceed an hour each day of entitlement.

  1. Sick Leave

Following the completion of a probation period, an employee is entitled (under Article 31 of the New Law) to sick leave of no more than 90 consecutive or intermittent days each year based on: a) 15 days full pay; b) 30 days with half pay; and c) the period thereafter unpaid.

An employer may terminate the service of an employee after sick leave has been exhausted (Article 31(5) of the New Law).

Article 20(1) of the Executive Regulations recognises that no sick leave will be paid where illness relates to abuse of drugs or alcohol or a violation of an employer’s safety instructions.

  1. Various Leaves

The New Law (Article 32 and Article 21 of the Executive Regulations) introduces a number of additional leave entitlements including parental leave, study leave, mourning leave, sabbatical leave for UAE nationals performing national or reserve service.  Unpaid leave entitlement is covered under Article 33 of the New Law.

  1. Wrongful Termination

The arbitrary dismissal provisions under the Previous Law have been abolished and replaced by Article 47 of the New Law, which provides that an employee’s termination is unlawful if the termination relates to: a) filing a serious complaint with the Ministry; or b) filing a case against the employer which has proven to be correct.

Any successful wrongful termination claim compensation is capped at 3 months of salary- subject to the court’s discretion.

  1. Non-Competes

Article 10 of the New Law allows non-compete provisions to be applied to protect legitimate business interests.  Such non-competes are not to exceed 2 years.

Article 12 of the Executive Regulations provides that in order for a non-competition clause to apply then the following must be specified: a) geographical scope; b) term not to exceed 2 years; and c) nature of work that is being prohibited.

Any non-compete provision will have no standing where the employer has terminated the employee’s employment.  Article 12(2) provides that the enforcement of any non-compete requires the employer to demonstrate damage arising from the breach.

Article 12(c) of the Executive Regulations provides that certain categories of employee may not be subject to non competes.

  1. Suspension

An employer may suspend an employee for a period of 30 days for the purposes of conducting a disciplinary investigation (Article 40(1) of the New Law).  During that suspension period an employer is entitled to suspend half of the suspended employee’s salary.  Insofar as the employee is not terminated following their suspension, the employee’s suspended salary shall be repaid.

Further suspension rights exist where an employee has been accused of assault or criminal behaviour involving fraud or dishonesty.

  1. Disciplinary Rules

Article 39 of the New Law together with Article 24 of the Executive Regulations regulate disciplinary rules and sanctions, which broadly speaking run from written notices, wage deductions and suspensions.

  1. Termination of Employment

Article 42 of the New Law provides that a contract of employment can be terminated as follows: a) mutual agreement; b) expiry of a contract term unless renewed; c) death of the employee or permanent incapacity; d) final judgment involving a prison sentence of greater than 3 months; e) closure of the employer; f) insolvency of the employer; or g) failure of the employee to renew their work permit.

Under Article 43 of the New Law, either party is entitled to terminate the contract of employment for any legitimate reason, provided that notice is given.  Minimum notice is 30 days and maximum notice is 90 days.

Article 44 of the New Law is in effect the new Article 120 from the Previous Law.  Article 44 sets out circumstances in which termination without notice can occur.

Article 46 of the New Law provides that an employee’s service cannot be terminated by an employer before exhausting all sick leave.

  1. Compliance

Employers are required to ensure that unlimited term employment contracts are converted to fixed term arrangements in accordance with the New Law and Executive Regulations within 1 year of the adoption of the New Law, i.e., 2 February 2023.

The provisions of the New Law and Executive Regulations apply to all unlimited term contracts governed pursuant to the Previous Law.

© 2022 Bracewell LLP
For more articles on UAE legal updates, visit the NLR United Arab Emirates section.

Five U.S. Immigration Law Trends to Watch in 2022

A series of significant developments in U.S. immigration law has already marked the beginning of 2022 and more can be expected.

In January, the Biden Administration unveiled a series of policies aimed at attracting and retaining international talent in STEM (science, technology, engineering, and math) fields. U.S. Citizenship and Immigration Services (USCIS) and Customs and Border Protection (CBP) have made strides in rolling out work authorization for dependent spouses of holders of visas in the E (Treaty Trader or Treaty Investor) and L (Intra-company Transfer) categories, thereby eliminating the need for a separate application for work authorization. Meanwhile, the Department of Justice (DOJ) has remained active in enforcement of the Immigration and Nationality Act (INA) immigration anti-discrimination provisions, with several settlements in 2021 involving allegations of discrimination preventing discrimination against U.S. workers and a renewed focus on investigating claims of document abuse in Form I-9 completion, maintenance, and reverification. This overlaps with the continued I-9 flexibility in response to the COVID-19 pandemic granted by Immigration and Customs Enforcement (ICE), which remains in effect until April 2022. All of this follows on the heels of ongoing discussion in Congress of possible immigration reform (as most recently reflected in the Build Back Better bill).

Below are five areas to keep an eye on in the year ahead.

STEM-Related Policy Changes

New policies rolled out by the Biden Administration seek to provide greater predictability and clarity for pathways for international STEM talent, by way of the F-1 student, J-1 exchange visitor, O-1 extraordinary ability, and EB-2 National Interest Waiver Immigrant visa categories:

  • F-1 STEM OPT: The Department of Homeland Security (DHS) announced 22 new fields of study added to the STEM Optional Practical Training (OPT) program to enhance the contributions of nonimmigrant students studying in STEM fields. These new fields, listed in a Federal Register notice, include Bioenergy, Forestry, Human-Centered Technology Design, Cloud Computing, Climate Science, Earth Systems science, Economics, Computer Science, Geobiology, Data Science, and Business Analytics. DHS is also creating a process for the public to request a degree be added or removed from the designated degree list.
  • J-1 Exchange Visitors: The Department of State will allow J-1 Exchange Visitors enrolled in a pre-doctoral STEM program to qualify for an extension of up to 36 months for purposes of practical training in 2022 and 2023. This expansion of the J-1 program was rolled out in response to a Joint Statement of Principals in Support of International Education and pressure from Department-designated sponsors to increase STEM opportunities for international students.
  • O-1 Visas: USCIS released detailed guidance describing how entrepreneurs can qualify for O-1 (Individuals with Extraordinary Ability or Achievement) classification, including references to specific sources of evidence in STEM-related fields. The new guidance also expands on what constitutes a “field” of endeavor to include accomplishments in different but related occupations. In addition, it clarifies the use of comparable evidence to satisfy the regulatory criteria (see O-1 Visas Abound: USCIS Provides Detailed Guidance on O-1 Visa Eligibility).
  • EB-2 NIW Expansion: USCIS announced updated guidance on adjudicating requests for National Interest Waivers (NIW) regarding job offers and labor certification requirements for advanced degree professionals and individuals with exceptional ability, specifically in STEM-related fields. The new guidance grants certain evidentiary considerations to persons with advanced degrees in STEM fields, especially in focused critical and emerging technologies as determined by the National Science and Technology Council or the National Security Council. Under the new guidance, USCIS also considers an advanced degree in a STEM field tied to a proposed endeavor as an “especially positive factor” to show the individual is well-positioned to advance an endeavor of national importance.

E and L Spousal Work Authorization

USCIS announced new guidance in November 2021 clarifying that L-2 and certain E-2 spouses will no longer need employment authorization documents (EADs) to work. The guidance resulted from a court-approved settlement of ongoing litigation in response to extraordinarily long delays to obtaining EADs. As of January 31, 2022, spouses entering the United States in L-2 or E-2 status may obtain work authorization at the border by asking CBP to give them a “spousal” designation in their I-94 record that can be used for Form I-9 Employment Eligibility Verification purposes.

Department of Justice Immigration Anti-Discrimination Enforcement

While the DOJ and its Immigrant and Employee Rights Section have begun diversifying the scope of investigations, their enforcement of anti-discrimination provisions of the INA remains focused on protecting U.S. citizen workers. Several settlements in 2021 involved allegations of discrimination against U.S. citizen workers. The settlements resolved reasonable cause findings of discrimination against U.S. workers in Program Electronic Review Management (PERM) recruitment methods and H-2B (temporary non-agricultural) visa worker sponsorship programs, respectively. They reflect an ongoing trend following settlements that resolved allegations of discrimination in several companies’ PERM recruitment methods, despite adherence to the Department of Labor’s Labor Certification regulations.

ICE I-9 Flexibility Continues

On March 20, 2020, DHS announced that it would exercise prosecutorial discretion to defer the physical presence requirements associated with the Form I-9 Employment Eligibility Verification. This policy has been periodically extended, most recently to April 30, 2022. Under the guidance, employers can complete the Form I-9 verification process remotely for employees who work exclusively in a remote setting due to COVID-19-related precautions. However, employers must conduct in-person verification of identity and employment eligibility of such employees within three days of returning to the work location.

Immigration Reform

More business immigrant visas would become available under the most recent iteration of the Build Back Better reconciliation bill. If approved by the Parliamentarian and passed as it stands, the bill would make more immigrant visas available by:

  • Recapturing unused visa numbers from 1992 to 2021;
  • Retaining the availability of Diversity Visas from fiscal years 2017 to 2021; and
  • Making it possible for individuals with approved employment-based immigrant visas and priority dates more than two years away to file applications for adjustment of status by paying an additional $1,500 fee.

The bill also would substantially increase many filing fees. Rather than depositing those fees into the USCIS account, the supplemental fees would be deposited into the U.S. Treasury’s general funds. Another attempt at immigration reform has been introduced by House Republicans, the Dignity Act. The Dignity Act proposes paths to permanent residence and citizenship for certain undocumented individuals in exchange for more border security and mandating E-Verify. The fate of immigration reform remains in flux and should be a point of contention in the upcoming elections.

Jackson Lewis P.C. © 2022

Article By Otieno B. Ombok of Jackson Lewis P.C.

For more articles on immigration, visit the NLR Immigration section.

New York To Require Licensure of Pharmacy Benefit Managers

In an effort to counteract rising prescription drug costs and health insurance premiums, New York Governor Hochul signed S3762/A1396 (the Act) on December 31, 2021.  This legislation specifies the registration, licensure, and reporting requirements of pharmacy benefit managers (PBMs) operating in New York. The Superintendent of the Department of Financial Services (Superintendent) will oversee the implementation of this legislation and the ongoing registration and licensure of PBMs in New York. Notably, this legislation establishes a duty of accountability and transparency that PBMs owe in the performance of pharmacy benefit management services.

Though the Governor only recently signed the Act, on January 13, 2022, an additional piece of legislation, S7837/A8388, was introduced in the New York Legislature.  If passed, this legislation would amend and repeal certain provisions proposed in the Act.  As of the date of this blog post, both the Senate and Assembly have passed S7837/A8388, and it has been delivered to the Governor for signature. Anticipating that Governor Hochul will sign S7837/A8388 into law, we have provided an overview of the Act, taking into account the impact that S7837/A8388 will have, and the changes that both make to the New York State Insurance, Public Health, and Finance Laws.

New York State Insurance Law: Article 29 – Pharmacy Benefit Managers

The Act adds Article 29 to the Insurance Law.  The Section includes, among other provisions, definitions applicable to PBMs, as well as licensure, registration, and reporting requirements, as detailed below.

Definitions

Section 2901 incorporates the definitions of “pharmacy benefit manager” and “pharmacy benefit management services” of Section 280-a of the Public Health Law.  “Pharmacy benefit management services” is defined as “the management or administration of prescription drug benefits for a health plan.”  This definition applies regardless of whether the PBM conducts the administration or management directly or indirectly and regardless of whether the PBM and health plan are associated or related. “Pharmacy benefit management services” also includes the procurement of prescription drugs to be dispensed to patients, or the administration or management of prescription drug benefits, including but not limited to:

  • Mail service pharmacy;
  • Claims processing, retail network management, or payment of claims to pharmacies for dispensing prescription drugs;
  • Clinical or other formulary or preferred drug  list  development or management;
  • Negotiation  or  administration  of  rebates, discounts, payment differentials, or other incentives,  for  the  inclusion  of  particular prescription  drugs  in a particular category or to promote the purchase of particular prescription drugs;
  • Patient compliance, therapeutic intervention, or  generic  substitution programs;
  • Disease management;
  • Drug utilization review or prior authorization;
  • Adjudication  of appeals or grievances related to prescription drug coverage;
  • Contracting with network pharmacies; and
  • Controlling the cost of covered prescription drugs.

A “pharmacy benefit manager” is defined as any entity that performs the above listed management services for a health plan.  Finally, the term “health plan” is amended to encompass entities that a PBM either provides management services for and is a health benefit plan or reimburses, in whole or in part, at least prescription drugs, for a “substantial number of beneficiaries” that work in New York.  The Superintendent has the discretion to interpret the phrase “substantial number of beneficiaries.”

Registration Requirements

PBMs currently providing pharmacy benefit management services must register and submit an annual registration fee of $4,000 to the Department of Financial Services (DFS) on or before June 1, 2022 if the PBM intends to continue providing management services after that date. After June 1, 2022, every PBM seeking to engage in management services must register and submit the annual registration fee to DFS prior to engaging in management services. Regardless of when a PBM registers, every PBM registration will expire on December 31, 2023.

Reporting Requirements

On or before July 1 of each year, each PBM must report and affirm the following to the Superintendent, which includes, but is not limited to:

  • Any pricing discounts, rebates of any kind, inflationary payments, credits, clawbacks, fees, grants, chargebacks, reimbursement, other financial or other reimbursements, inducements, refunds or other benefits received by the PBM; and
  • The terms and conditions of any contract or arrangement, including other financial or other reimbursement incentives, inducements, or refunds between the PBM and any other party relating to management services provided to a health plan including, but not limited to, dispending fees paid to pharmacies.

The Superintendent may request additional information from PBMs and their respective officers and directors. Notably, the above documentation and information are confidential and not subject to public disclosure, unless a court order compels it or if the Superintendent determines disclosure is in the public’s best interest.

Licensing Requirements

The Superintendent is also responsible for establishing standards related to PBM licensure.  The Superintendent must consult with the Commissioner of Health while developing the standards.  The standards must address prerequisites for the issuance of a PBM license and detail how a PBM license must be maintained.  The standards will cover, at a minimum, the following topics:

  • Conflicts of interest between PBMs and health plans or insurers;
  • Deceptive practices in connection with the performance of management services;
  • Anti-competitive practices connected to the performance of management services;
  • Unfair claims practices in connection with the performance of pharmacy benefit managements services;
  • Pricing models that PBMs use both for their services and for payment of services;
  • Consumer protection; and
  • Standards and practices used while creating pharmacy networks and while contracting with network pharmacies and other providers and in contracting with network pharmacies and other providers.  This will also cover the promotion of patient access, the use of independent and community pharmacies, and the minimization of excessive concentration and vertical integration of markets.

To obtain a license, PBMs must file an application and pay a licensing fee of $8,000 to the Superintendent for each year that the license will be valid.  The license will expire 36 months after its issuance, and a PBM can renew their license for another 36-month period by refiling an application with the Superintendent.

New York State Public Health Law: Amendments to Section 280-a

Duty, Accountability, and Transparency of PBMs

As briefly mentioned above, the Act also amends Public Health Law 280-a.  Notably, this legislation imposes imposes new duty, accountability, and transparency requirements on PBMs.  Under the new law, PBMs interacting with a covered individual have the same duty to a covered individual as the PBM has to the health plan for which the PBM is performing management services. PBMs are also compelled to act with a duty of good faith and fair dealing towards all parties, including, but not limited to, covered individuals and pharmacies. In addition, PBMs are required to hold all funds received from providing management services in trust.  The PBMs can only utilize the funds in accordance with its contract with their respective health plan.

To promote transparency, PBMs shall account to their health plan any pricing discounts, rebates, clawbacks, fees, or other benefits it has received. The health plan must have access to all of the PBMs’ financial information related to the management services the PBM provides it.  The PBMs are also required to disclose in writing any conflicts of interest PBMs shall disclose in writing any conflicts of interests, as well as disclose the terms and conditions of any contract related to the PBM’s provision of management services to the health plan, including, but not limited to, the dispensing fees paid to pharmacies.

New York State Finance Law: Addition of Section § 99-oo

If enacted, S7837/A8388 will add Section 99-oo to the Finance Law.  This law would create a special fund called the Pharmacy Benefit Manager Regulatory Fund (Fund).  The New York State Comptroller (Comptroller) and Commissioner of Tax and Finance will establish the Fund and hold joint custody over it. The Fund will primarily consist of money collected through fees and penalties imposed under the Insurance Law.  The Comptroller must keep Fund monies separate from other funds, and the money shall remain in the Fund unless a statute or appropriation directs its release.

Looking Forward: PBM Regulation in New York and Beyond

In a January 2, 2022, press release, Governor Hochul touted the Act as “the most comprehensive [PBM] regulatory framework” in the United States.  The Governor has made clear her intent to regulate PBMs, and New York lawmakers appear to just be getting started.  PBMs in New York and throughout the United States should anticipate their state’s legislatures introducing and enacting more laws and regulations.

©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.
For more about pharmacies, visit the NLR Healthcare section.

New, Immigration-Friendly Mission Statement for USCIS

USCIS has changed its mission statement again – this time to adopt a more immigration-friendly stance.

In 2018, USCIS, under the Trump Administration, changed its mission statement to align with President Donald Trump’s focus on enforcement, strict scrutiny, and extreme vetting. The statement did not emphasize customer satisfaction, i.e., the satisfaction of petitioners, applicants, and beneficiaries. The change in emphasis was stark and did not go unnoticed. Instead, the mission statement focused on protecting and serving the American people and ensuring that benefits were not provided to those who did not qualify or those who “would do us harm ….” The 2018 statement did not speak of the United States as a “nation of migrants” and it focused on efficiency while “protecting Americans, securing the homeland, and honoring our values.”

The new 2022 USCIS mission statement reflects President Joe Biden’s belief that “new Americans fuel our economy as innovators and job creators, working in every American industry, and contributing to our arts, culture, and government.” Accordingly, he has issued executive orders directing the various immigration agencies to reduce unnecessary barriers to immigration. The 2022 mission statement also reflects President Biden’s directions and USCIS Director Ur M. Jaddou’s “vision for an inclusive and accessible agency.” Director Jaddou “is committed to ensuring that the immigration system . . . is accessible and humane . . . [serving] the public with respect and fairness, and lead with integrity to reflect America’s promise as a nation of welcome and possibility today and for generations to come.”

According to Director Jaddou, USCIS will strive to achieve the core values of treating applicants with integrity, dignity, and respect and using innovation to provide world-class service while vigilantly strengthening and enhancing security. On February 3, 2022, Director Jaddou, along with her deputies, briefed the nation on the agency’s efforts to improve service at USCIS. The leaders of the agency made clear that USCIS knows it must continue to eliminate backlogs, cut processing times, reduce unneeded Requests for Evidence and interviews, eliminate inequities in processing times across service centers and improve the contact center, among other things, to achieve its goals. Using streamlining and technological innovation, USCIS hopes to make itself much more consumer-oriented.

Article By Forrest G. Read IV of Jackson Lewis P.C.

For more immigration legal news, click here to visit the National Law Review.

Jackson Lewis P.C. © 2022

New Jersey Employers Now Required to Provide Written Notice Before Using Tracking Devices in Employee Vehicles

On January 18, 2022, New Jersey Governor Phil Murphy signed into law Assembly Bill No. 3950. Under the law, private employers in New Jersey must provide employees with written notice before using tracking devices on vehicles operated by employees. The law takes effect on April 18, 2022.

The law defines “tracking device” as “an electronic or mechanical device which is designed or intended to be used for the sole purpose of tracking the movement of a vehicle, person, or device.” Devices “used for the purpose of documenting employee expense reimbursement” are excluded from the definition of “tracking device.” Notably, the law applies regardless of whether the employee uses a company-owned vehicle or the employee’s personal vehicle.

The New Jersey law expressly states that it does not “supersede regulations governing interstate commerce, including but not limited to, the usage of electronic communications devices as mandated by the Federal Motor Carrier Safety Administration.”

An employer that knowingly uses a tracking device on an employee-operated vehicle without providing written notice to the employee will be subject to a civil penalty in an amount not to exceed $1,000 for the first violation and not to exceed $2,500 for each subsequent violation.

This article was written by Robin Koshy and Steven Luckner of Ogletree Deakins law firm.

State Treasurers Call on SEC to Investigate Apple’s Nondisclosure Agreements

In a January 30, 2022 letter to SEC Chair Gensler, eight State treasurers requested that the SEC investigate Apple’s nondisclosure agreements and whether Apple misled the SEC about their use of nondisclosure provisions in employment and post-employment agreements.  According to the January 30th letter, “multiple news reports have stated that whistleblower documents demonstrate Apple uses the very concealment clauses it repeatedly claimed it does not use . . .”  The January 30th letter also points out the importance of permitting employees to report unlawful conduct and the need for shareholders to have accurate information about workplace culture.

The SEC can investigate whether Apple’s alleged use of concealment clauses in agreement and policies violates the SEC’s anti-gag rule, which prohibits any “person” from taking “any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement . . . .”  Exchange Act Rule 21F-17, 17 C.F.R. § 240.21F-17.

The purpose of the anti-gag rule is to facilitate the disclosure of information to the SEC relating to possible securities law violations.  As explained in the release adopting the SEC’s whistleblower rules, “an attempt to enforce a confidentiality agreement against an individual to prevent his or her communications with Commission staff about a possible securities law violation could inhibit those communications . . . and would undermine the effectiveness of the countervailing incentives that Congress established to encourage individuals to disclose possible violations to the Commission.”  Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release no. 34-64545 (May 25, 2011).

The SEC has taken enforcement actions for violations of Rule 21F-17, most of which are focused on employer agreements and policies that have the effect of impeding whistleblowing to the SEC.  These enforcement actions have strengthened the SEC’s whistleblower program by encouraging whistleblowers to report fraud and encouraging employers to revise their NDAs and policies to clarify that such agreements and policies do not bar lawful whistleblowing.

Apple’s market capitalization of approximately $2.8 trillion renders it the world’s most valuable company.  If Apple is using concealment clauses and unlawful NDAs to silence whistleblowers, then Apple shareholders may not have an accurate and complete picture of the company’s financial condition and risks, including Apple’s ESG-related risks and risks stemming from its potential violations of anti-trust laws.  Accordingly, it will be critical for the SEC to take enforcement action if it finds that Apple has violated the SEC’s anti-gag rule.

By some estimates, fraud and other white-collar crime costs the US economy $300 billion to $800 billion per year.  To combat fraud, regulators and law enforcement need the assistance and cooperation of whistleblowers to detect and effectively prosecute fraud.  But there are many substantial risks that deter whistleblowers from coming forward, including the risk of being sued for breaching a confidentiality agreement.  The continued success of whistleblower reward programs will hinge in part on regulators taking a firm stand against agreements and policies that impede whistleblowing.

For more information on unlawful restrictions on whistleblowing, see the article De Facto Gag Clauses: The Legality of Employment Agreements That Undermine Dodd-Frank’s Whistleblower Provisions.

This article was written by Jason Zuckerman and Matthew Stock of Zuckerman Law. For more articles relating to NDAs, please click here.

Filing Tax Returns and Making Tax Payments: Best Practices During the Pandemic and Beyond

With staffing shortages and service center closures, it should come as no surprise that the IRS has faced a number of challenges during the pandemic. A couple of the biggest challenges have been in the opening and processing of taxpayer correspondence and in the processing of tax returns. As National Taxpayer Advocate, Erin Collins, stated in her Annual Report to Congress, “Paper is the IRS’s Kryptonite, and the IRS is buried in it.”

Going into 2022, the IRS has a significant backlog of unprocessed taxpayer correspondence and unprocessed returns. The estimates are staggering.

  • Five million pieces of unprocessed taxpayer correspondence
  • Over 11 million unprocessed tax returns, including:
    • Six million individual income tax returns
    • 2.3 million amended individual tax returns
    • 2.8 million business returns (income tax and employment tax returns)

The 2022 tax filing season, which opened on Thursday, January 24 for individual income tax returns, has the potential to create even more challenges for the IRS. Below is a list of best practices taxpayers can follow to ensure timely processing of their payments, tax returns, and claims for refund. These practices apply to individuals and required filing for businesses.

  • File returns and make payments electronically.
  • If you must file a paper return or mail in a payment to the IRS, send the return or payment to the proper address via USPS Certified Mail, Return Receipt Requested. Using this method will assist in resolving timely filing and/or timely payment penalties assessed by the IRS.
  • Properly notate your tax payment and include the form number, tax period and your social security number or employer identification number.
  • Respond to notices from the IRS in a timely manner.

In addition to the above, the IRS has offered a few filing tips for individuals.

  • Fastest refunds by e-filing, avoiding paper returns: Filing electronically with direct deposit and avoiding a paper tax return is more important than ever to avoid refund delays. If you need a tax refund quickly, do not file on paper – use software, a trusted tax professional or IRS Free File.
  • Filing 2021 tax return with 2020 tax return still in process: For those whose tax returns from 2020 have not yet been processed, 2021 tax returns can still be filed. For those in this group filing electronically, here’s a critical point: taxpayers need their Adjusted Gross Income, or AGI, from their most recent tax return at time of filing. For those waiting on their 2020 tax return to be processed, make sure to enter $0 (zero dollars) for last year’s AGI on the 2021 tax return. Visit Validating Your Electronically Filed Tax Return for more details.

More individual filing tips from the IRS can be found here.

If you have unpaid taxes or unfiled returns, you need an experienced tax attorney to represent you in your dealings with the IRS or the Department of Justice. An accountant or enrolled agent is not protected by the attorney-client privilege.

© 2022 Varnum LLP
For more articles about tax returns, visit the NLR Tax type of law section.

District Court Declines to Dismiss 401(k) Fee Litigation Case in First Decision Post-Hughes

In the first decision since the Supreme Court’s ruling in Hughes v. Northwestern Univ., No. 19-1401, 595 U.S. ___ (U.S. Jan. 24, 2022) (discussed further here), a Georgia federal district court held in favor of plaintiffs and declined to dismiss allegations that defendant’s 401(k) plan included costly and underperforming funds and charged excessive recordkeeping fees. Specifically, plaintiffs alleged that defendants breached ERISA’s fiduciary duty of prudence by: (1) offering retail share class mutual funds despite the availability of identical lower-cost institutional share classes of these same funds; (2) including actively managed mutual funds which were more expensive than available passively managed funds; (3) selecting and maintaining underperforming funds; and (4) overpaying for recordkeeping services.

In declining to dismiss plaintiffs’ investment management fee claims, the district court relied heavily on Hughes. The court expressed its view that Hughes “suggested” that a defined contribution plan participant may state a prudence claim by merely alleging that the plan offered higher priced retail class mutual funds instead of available identical lower-cost institutional class funds. The district court also rejected defendant’s argument that plaintiffs’ claims should be dismissed in part because the plan offered a variety of investment options that participants could select, including lower-cost passive investment options. The district court explained that Hughes rejected this exact argument in holding that a fiduciary’s decisions are not insulated merely by giving participants choice over their investments and that fiduciaries have a continuing duty to monitor plan investments.

The court declined to dismiss plaintiffs’ recordkeeping claims because plaintiffs plausibly alleged that the plan paid nearly double the fees charged by similarly sized plans and that defendant failed to monitor those costs. In regards to plaintiffs’ underperformance claims, the court held that the existence and extent of the alleged underperformance was better left for summary judgment given the parties’ differing views on the issue.

Proskauer’s Perspective

While plaintiffs seemingly scored a victory in the first decision since Hughes, the decision does not indicate that this will (or should be) the trend. First, the district court issued its decision one day after Hughes was decided without the benefit of additional briefing, which would have likely included briefing on the Supreme Court’s direction that district courts give “due regard” to the reasons why a fiduciary made the challenged decisions. Second, the district court appears to have, at a minimum, over-emphasized the Supreme Court’s holding as to the plausibility of mutual fund retail share class claims; the Supreme Court did not hold directly or in dicta that a plaintiff may survive dismissal merely by alleging the availability of identical lower-cost mutual fund share classes.

The case is Goodman v. Columbus Reg’l Healthcare Sys., 2022 U.S. Dist. LEXIS 13489 (M.D. Ga. Jan. 25, 2022).

© 2022 Proskauer Rose LLP.
For more articles about 401(k) plans, visit the NLR Labor & Employment section.

SCOTUS’s HOUSE CALL on Healthcare Industry: The Economic Impact of Mandatory Vaccination

The Supreme Court of the United States in a per curiam opinion on Jan. 13 ruled that the Secretary of HHS (United States Department of Health and Human Services) did not exceed his statutory authority in requiring that, in order to remain eligible for Medicare and Medicaid reimbursement, all healthcare providers except for physician offices not regulated by CMS (Centers for Medicare & Medicaid Services), organ procurement organizations, portable X-Ray suppliers and certain healthcare professionals solely engaged in fully remote telehealth, must insure that their employees be vaccinated against Covid-19. The Court in a 5-4 decision maintained that the Secretary had adequately examined alternatives to mandatory vaccination even though the Final Interim Rule went into effect immediately with no sunset provision nor any revisions or assessment of public comment which is usually required under 5 U.S.C. Sections 553(b), 553(c). Interestingly, the Court, both in its decision and its dissent, failed to consider the scientific data on natural immunity, the incident of Covid infection and recovery among healthcare workers, or the significant easing of both hospitalizations and mortality data from the most recent Covid mutation, which is now considered the dominant strain of infection, Omicron.[1] Of even greater concern coming from its decision is a possible grave consequence (unintended or not) of having nearly 3 million healthcare workers fired between the end of January and end of March 2022.

The decision will spur many healthcare providers to either consider downsizing its healthcare platform (eliminating elective surgeries, closing maternity wards, diverting critical patients to other facilities, moving patients into home care more rapidly, etc.) or seeking protection under the bankruptcy code to obtain some breathing room. According to the American Hospital Association (“AHA”), post-pandemic, and even before the Mandate decision, the collective turnover across ICU’s, nursing units and emergency departments has risen from 18% to 30%.[2] There is no doubt that when a nurse leaves a healthcare organization, the vacancy affects the cost of operation many more times the amount of salary paid to the nurse. According to Nursing Solutions, Inc., the average period of time it takes to fill a nursing position is 85 days — and more than three months for a specialized nursing position. While a replacement nurse is located, the healthcare organization must rely on “travelers” and direct care staffing agencies charging super competitive rates. Just in the last year the use of costly employment agencies to cover gaps in staffing is up by 250% over the last year, according to the Florida Health Care Association, Oct. 25, 2021. A turnover of a single nurse whose salary ranges from $28,800 to $51,700 can translate to an average of $3.6-$6.5 million cost to the healthcare organization, given such factors as the cost of reduced productivity of an employee in the weeks leading up to their departure, time between the departure and employee’s replacement, paid overtime to cover the replacement, hi-cost outside staffing agency fees, advertising for open positions, conducting background checks and credential verifications, training onboard new employees and climbing the learning curve on the new clinical culture.[3]

None of the above costs take into account additional expense burdens for healthcare organizations coming from the mounting labor shortage at the nursing assistant and home health aides level, which are considering leaving the healthcare setting in droves and making more money and less aggravation in the retail field. Bloomberg reports that there will be a shortfall of 3.2 million lower-wage workers among all the healthcare organizations by 2026.[4] What is the economic effect of the mandate on healthcare organizations? Well, it’s obvious that by early Spring of this year, there will be fewer healthcare workers and the costs of providing healthcare will go up in spite of an injection of an additional $10 billion of Phase 4 Provider Relief Funds under the CARES ACT. Will the economic stress create more interest in turning to bankruptcy alternatives to allow these organizations time to adjust to the new normal? Even before the mandate was issued, the AHA projected that hospitals would lose over $54 billion dollars in net income during 2021. That loss comes after accounting for the infusion of $176 billion in CARES ACT funding, which didn’t directly address the current dilemma of loss of manpower. It would be likely that the losses for 2022 will be even more dramatic. Additionally, what is not taken into account in these figures is the deepening insolvency affecting the Long Term Care Industry, where 86% of nursing homes and 77% of assisted living facilities have indicated that their workforce situation has gotten worse over the last three months.[5]

Certainly, the upcoming additional economic stress among heath care organizations from potential depletion of manpower will present several challenges within a bankruptcy setting. For one, practitioners will need to navigate how best to utilize post-petition cash between important manpower related objectives such as retention bonuses, paid time off, overtime payments, staffing agencies’ fees, recruiting, advertising, credentialling, and new employee policies, and equally demanding needs such as rent and other critical healthcare vendors. Particular attention will be given to carefully tailored DIP financing to insure the viability of the organization while in bankruptcy and through its exit. While private equity has taken larger and larger roles in healthcare, and its desire to utilize roll-ups and consolidations, specialists in healthcare financial advising will have to be employed to assist the economic constituencies in understanding the mechanism for exiting the bankruptcy, given the balancing act between workforce equilibrium and quality of continued care. Ultimately, more healthcare organizations will require strong healthcare insolvency professional guidance to find an appropriate refuge and fresh start in the trying months to come.

FOOTNOTES

[1]  Of note concerning the timing of its decision and its rationale based on the science, one of the Justices in oral argument believed that in January 2022, there were over 100,000 children in the US currently in the ICUs when the actual total was far less.  Additionally, though the Wall Street Journal reported on January 26, 2022 that the Centers for Disease Control and Prevention (“CDC”) stated that Covid-19 deaths in the U.S. topped 2,100 a day, the highest in nearly a year, the article quotes Robert Anderson, chief of mortality statistics, who says, “You can have a disease that is for any particular person less deadly than another, like Omicron, but if it is more infectious and reaches more people, then you’re more likely to have a lot of deaths.”  As this article is going to print, see, also, Dr. Martin Makary, “The High Cost of Disparaging Natural Immunity to Covid,” Wall Street Journal, Jan. 26, 2022, concluding that “the superiority of natural immunity over vaccinated immunity is clear”.

[2]  Dave Muoio, Pandemic-Era overtime, agency staffing costs U.S. hospitals an extra $24B per year, Fierce Healthcare, Oct. 8, 2021.

[3] See 2021 NSI National Health Care Retention & RN Staffing Report, published by NSI Nursing Solutions, Inc., March 2021.

[4]  Lauren Coleman Lochner, US Hospitals Pushed to Financial Ruin as Nurses Quit During Pandemic, Bloomberg, Dec. 21, 2021.

[5] See FTI Healthcare Industry Sector Outlook, FTI Consulting, December 2021.

This article was written by Frank P. Terzo of Nelson Mullins law firm. For more information about vaccine mandates, please click here.