Tag: Employee Benefits

End of the Year Bonuses – Do They Have to Be Shared with My Ex?

The end of the year is coming, and for many employees that means end of the year bonuses will be included in their paychecks this month. Many question whether their bonus should be included as “income” for the purpose of support obligations, as well as equitable distribution in the context of a divorce.

A baseball manager from Arizona, Anthony DeFrancesco, recently faced issues surrounding his year-end bonus and how it related to his support obligations. Mr. DeFrancesco, the manager of the Houston Astros AAA minor league team, was given a $28,000 bonus in 2017 when the Astros won the World Series. The Arizona Appeals Court recently found that the bonus was considered a gift, as opposed to earnings, and he did not have to provide a portion of the bonus to his now ex-wife.

This result is not typically what happens in New Jersey when courts consider whether bonuses are a part of income. In the vast majority of cases, bonuses are awarded to employees for their exemplary work during the preceding year, often resulting from meeting specific targets, going above and beyond the work of a typical employee, and sharing in the success of the company without which the company would have not have otherwise reached. While employees are not legally entitled to bonuses in most cases, bonuses are most often the result of the employee’s hard work. Thus, in the eyes of most courts, the bonus was earned. Any earned income is considered by courts when setting support obligations.

In connection with equitable distribution, money that is earned during the marriage is considered an asset of the marital estate. Therefore, even if the complaint for divorce has already been filed, an end-of-year bonus may be considered a part of the marital estate. For example, if a complaint for divorce is filed on July 1, and an employee receives a bonus of $50,000 at the end of the year for work performed during the previous calendar year, half of that bonus would be attributable to time spent during the marriage.

New Jersey is a court of equity. Arguments can be made that bonuses, or portions of bonuses, should or should not be considered for support and equitable distribution purposes.

Several years ago there was a case in New Jersey in which a private company had been working for many years to go public. One of the company officers had been a long-time employee and, in fact, his dedication to the company to the exclusion of all else contributed to the failure of his marriage. Two years after the divorce complaint was filed, the company went public. The SEC filings noted that the employee received a bonus in excess of $1 million for his dedication to the company and work over the last five years. His wife was successful in her application to reopen the divorce and obtain a portion of that payout due to the evidence that it was for work conducted during the course of their marriage. While this case may be unique, it speaks to why each case has to be evaluated on its own merits, and why each case may have a different result.

COPYRIGHT © 2019, STARK & STARK

For more on spousal support obligations, see the National Law Review Family Law, Divorce and Custody law page.

Dear Former Employee, Here Are a Few Things I Want You to Know

Do you provide terminated employees with information regarding their employee benefits upon termination? If not, consider doing so now—especially if you typically provide a lot of your benefits information on your intranet site, which employees will lose access to upon termination. Even though there is generally no legal requirement to do so, providing departing employees with a letter that includes important reminders and deadlines related to their benefits is beneficial for two reasons: (1) it will save your HR department time by reducing the number of benefits-related inquiries they receive from former employees, allowing them to focus their time on more valuable tasks, and (2) the letter can help defend against a claim by a former employee who loses benefits because they missed a deadline.

Here is a non-exhaustive list of items we recommend including in your letter to exiting employees regarding their benefits:

Remind them of important dates and deadlines, and provide them with other relevant information regarding their benefits, including:

  • The date their medical and other insurance coverages will stop
  • Whether their accrued vacation will be paid out
  • When they can expect to receive their last paycheck
  • If applicable, the deadline to exercise their outstanding stock options
  • Their right to convert their group life insurance coverage to an individual policy
  • The deadline to use their Flexible Spending Account (FSA) balances

    **Note that California recently passed a law that actually requires employers to notify employees starting January 1, 2020 of any deadline to withdraw funds from their FSAs before the end of the plan year, such as when an employee terminates employment.By drafting this letter now, you can get ahead of this requirement!

  • If applicable, the date that their non-qualified deferred compensation payments will begin

Provide them with a list of important documents they should be watching for in the mail to prevent employees from inadvertently throwing these important documents away, including:

  • 401(k) or pension distribution packets
  • COBRA election packets

Remind them to update you and your plan administrators if their address changes (both residential and email addresses), and provide them contact information for whom to send updated information, since you will need this information to send out their final Form W-2 and your plan administrators will need it to be able to provide plan information and notices.

As mentioned above, this is a non-exhaustive list. Consider gathering your HR and benefits professional staff together for a 15-minute brainstorming session about other topics to include. We’re sure you’ll come up with other helpful items.

© 2019 Foley & Lardner LLP

Ruth Bader Ginsburg, Max Scherzer, a $5 million settlement, and How They All Relate to Workplace Parental Leave Policies

Washington Nationals’ pitching ace Max Scherzer recently took parental leave and helped shine a light on a hot employment topic: ensuring that employers’ parental leave policies are fair and gender-neutral.

This issue also gained attention in May 2019 when JPMorgan Chase, one of the world’s largest banks, reached a $5 million settlement about the bank’s parental leave program. As part of the settlement, the bank will make payments to a group of male employees who were discouraged from taking 16 weeks paid parental leave to care for a new child. The settlement also directs JPMorgan Chase to implement a parental leave program that is fair and gender-neutral. JPMorgan Chase denied the allegations.

At first glance, JPMorgan Chase’s parental leave program seemed gender-neutral. It offered 16 weeks of paid leave for “primary caregivers” and 2 weeks for “secondary caregivers.” The bank, however, allegedly applied the policy differently when a male employee versus a female employee requested leave. That is, female employees requesting parental leave were presumed to be the primary caregivers, while male employees were presumed to be the secondary caregivers. The plaintiffs claimed that, for a male employee to receive parental leave as a primary caregiver, he had to show that his spouse or domestic partner had returned to work, or that he was the spouse or partner of a mother who was medically incapable of caring for the child. Female employees who had given birth themselves were not subject to this requirement.

The named plaintiff in the settlement, Derek Rotondo, requested 16 weeks of parental leave as a “primary caregiver” after the birth of his second child. Human resources, according to Rotondo, informed him that a father requesting parental leave would only be considered a “primary caregiver” if he could show that the mother had to return to work before the 16 weeks elapsed, or that she was “medically incapable” of caregiving. Rotondo could not demonstrate either option, and he received only two weeks of parental leave.

Rotondo then filed a charge of discrimination with the Equal Employment Opportunity Commission challenging JPMorgan Chase’s practice of denying primary caregiver leave to fathers. He also filed a class action complaint on behalf of himself and similarly situated individuals. Rotondo received 16 weeks parental leave, and the five thousand other male employees who were denied parental leave as a “primary caregiver” will be compensated from a fund created by the $5 million settlement.

This is not the first time that a step towards gender equality was taken in a case involving male plaintiffs who sought caregiver benefits, only to find out that the benefits are not available to them because they are men. Rotondo was represented by lawyers from the A.C.L.U.’s Women’s Rights Project, which was founded by now-Justice Ruth Bader Ginsburg in the early 1970’s. Ginsburg was an A.C.L.U. lawyer when she argued Moritz v. Comm’r of the Internal Revenue System before the U.S. Court of Appeals for the Tenth Circuit.

Moritz was the first federal court case to hold that discrimination on the basis of sex is unconstitutional. In that case, Moritz claimed a tax deduction for the cost of a caregiver for his mother, but the IRS denied it because the agency only allowed the deduction to be claimed by women and formerly married men. Ginsburg argued that no rational basis in the law exists for treating men and women differently. Moreover, she argued that the proper remedy was to allow men to claim the deduction as well, instead of eliminating the deduction for everyone.

Of course, in some families one parent is the primary caregiver to the children and one parent, for whatever reason, needs to return to work more quickly than their partner. The larger problem (for companies and their employees) is where the employer presumes a connection between an individual’s gender and that individual’s role at home. Doing so presumptively differentiates among employees and their parental leave needs based on sex. The settlement between JPMorgan Chase and their employees demonstrates that companies do so at their own risk.

As Supreme Court Justice Ruth Bader Ginsburg noted, “[w]omen will have achieved true equality when men share with them the responsibility of bringing up the next generation.”

 

© 2019 Zuckerman Law
This article was written by Eric Bachman of Zuckerman Law.
For more on parental leave policies, please see the Labor & Employment page on the National Law Review.

Is Next-Day Pay the Next Big Thing?

Among the hardest-to-find workers in America today are restaurant and retail workers. The current labor market is the tightest in 49 years, and for the past year, there have been roughly a million more open positions in the United States than people looking for work. The hospitality sector always has faced recruitment challenges, but the recently shrinking applicant pool has forced employers to look for creative ways to lure workers to jobs in the food service and retail industries.

“Expedited pay”—also known as “same day pay,” “next day pay,” or “daily pay”—provides employees with all or some portion of their wages without having to wait for the weekly or semi-monthly payroll cycle to conclude. While direct deposit, pay cards, and electronic fund transfers all have shortened the time that employees have to wait to access their funds, PayPal, Apple Pay, Venmo, and the like, in conjunction with Millennials’ and Generation Z’s expectation of seamless and immediate financial transactions, have upped the ante for immediate distribution of wages.

In an effort to address the challenges, several food-service groups are currently test marketing the next-day pay model. For example, Church’s Chicken and Bloomin’ Brands are offering forms of expedited pay in an effort to recruit and retain talent. The expedited process provides workers with almost immediate access to funds to bridge the gap between paydays for expenditures.

There are a variety of vendors and distribution methods for employers to consider. For example, Instant Financial provides immediate access to pay after a worker finishes his or her shift. PayActiv and FlexWage are app platforms through which employers may offer customized pay options to their employees.

Some vendors charge employers for their services while others deduct fees from employees’ pay. These fees vary, and employers will want to understand what they are being charged before either contracting with an app provider or making an app available through a payroll processing service. Similarly, employers may want to ensure that employees understand these fees as well. Additionally, employers may want to review state and local laws regarding whether passing along such fees to employees passes legal muster.

In determining whether to implement expedited pay, employers can ensure that all federal, state, and local minimum wage, overtime, and payday requirements will be met when deciding on a vendor or app for their workforce. Employers may also want to analyze the effectiveness of these expedited pay methods in assisting in recruitment efforts, employee engagement, and reducing turnover.

 

© 2019, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more in employment news please see the National Law Review Labor & Employment page.

Second Circuit Upholds District Court’s Choice of Equitable Remedies Under ERISA and Its Decision to Award Prejudgment Interest at the Federal Prime Rate

The Second Circuit Court of Appeals recently issued an opinion in Frommert v. Conkright, affirming a district court decision regarding appropriate equitable remedies under ERISA and the amount of prejudgment interest to be applied. The Second Circuit’s views on each of these issues should be of interest to plan fiduciaries as well as practitioners.

This litigation has a long history, dating back to 1999, and has generated many court opinions along the way, from the district court level all the way up to the U.S. Supreme Court. Indeed, this is the Second Circuit’s fourth decision in this case. (Readers are likely familiar with this case from the 2010 Supreme Court decision, which addressed the standard of review and held that an honest mistake does not strip a plan administrator of the deference otherwise granted to it to construe plan terms.)

By means of background, the litigation was initiated by Xerox employees who had left the company in the 1980s, received distributions of the retirement benefits they had earned up to that point, and who were subsequently rehired by Xerox. In addition to the issues concerning interpretation of the Plan and related documents, the primary focus of the case was how to account for the employees’ past distributions when calculating their current benefits so as to avoid a “double payment” windfall.

In 2016, the District Court for the Western District of New York issued two decisions that led to the instant appeal. After having been previously directed by the Second Circuit to fashion, in its discretion, an equitable remedy providing appropriate retirement benefits to the rehired employees (referred to as the “New Benefits”), the District Court chose the equitable remedy of reformation and held that the New Benefits should be calculated as if the plaintiffs were newly hired upon their return to Xerox, without any reduction of the benefits to account for prior distributions or any credit for prior years of service. In a second decision later that year, the District Court determined that the plaintiffs were entitled to prejudgment interest at the federal prime rate.

The plaintiffs appealed both decisions. As to the remedy, the plaintiffs argued that the “new hire” remedy fashioned by the District Court was inadequate, and the court should have chosen a calculation of New Benefits that was more favorable to them using either surcharge or estoppel. The Second Circuit was not persuaded. In affirming the District Court’s decision, the Second Circuit noted that each of the equitable approaches considered for calculating the New Benefits were imperfect and even the new hire approach had its flaws. Nevertheless, it found that the District Court did not abuse its discretion in selecting this method. The Second Circuit pointed out that the new hire approach accounted for the time value of money and better balanced the competing interests of the Plan Administrator and the plaintiffs. Having determined there was no abuse of discretion by the District Court, the Second Circuit found it unnecessary to address whether relief would alternatively have been proper pursuant to different equitable remedies such as surcharge or estoppel.

The plaintiffs also argued that the District Court was affirmatively required to interpret the Plan, which might have yielded a higher benefits award. Again, the Second Circuit was not persuaded, finding that this argument ran afoul of one of its prior decisions in the case finding that the District Court need not engage in plan interpretation if it determined an appropriate equitable remedy existed. Citing to Cigna v. Amara, the Second Circuit reaffirmed that district courts generally may avoid interpreting a pension plan and instead fashion equitable remedies for ERISA violations where the plan is “significantly incomplete” and misleads employees, and reformation is among the equitable remedies available.

As to the issue of prejudgment interest, the plaintiffs sought the New York statutory interest rate of nine percent, whereas the Plan Administrator proposed the federal post-judgment interest rate of 0.66 percent. The District Court rejected the state statutory interest rate as too high and the federal rate as too low. It awarded prejudgment interest at the federal prime rate of 3.5 percent, explaining that it struck an appropriate balance and fairly compensated the plaintiffs. Noting that the District Court enjoyed broad discretion as to whether to grant prejudgment interest in the first place and to select a rate, the Second Circuit upheld the decision, finding that the District Court had carefully considered all the relevant factors and thoroughly explained its reasoning for using the federal prime rate.

 

Copyright © 2019 Robinson & Cole LLP. All rights reserved.
This post was written by Jean E. Tomasco of Robinson & Cole LLP.

How Does the 21st Century Cures Act Affect Employee Benefits?

21st century curesThere are two key benefits takeaways for employers in the bipartisan 21st Century Cures Act, which President Obama signed into law on December 13, 2016.

The act, which passed both houses of Congress by large majorities, is designed to increase funding for medical research, ease the development and approval of experimental treatments, and reform federal mental healthcare policy.

Mental Health Parity Rules

Employers can expect increased enforcement, along with stricter interpretations, of the existing federal mental health parity rules in coming months and years.

Though the act does not expand requirements under the Mental Health Parity and Addiction Equity Act, Title XIII of the act directs the secretaries of the Department of Health and Human Services, the Department of Labor, and the Treasury to issue guidance within 12 months related to compliance with the mental health parity rules. The act also calls for increased coordination between federal and state authorities in enforcing the mental health parity rules.

In addition, when a group health plan or insurer is found to have violated the mental health parity rules five times, the secretaries are directed to audit the plan’s or insurer’s documents the following year to “help improve compliance” with the rules. By including such specific compliance measures directly within the act, Congress appears to be encouraging increased enforcement of the mental health parity rules in the coming months and years.

The act does make one substantive “clarification” to the existing mental health parity rules. If coverage is offered for eating disorder treatment, then the treatment (including residential treatment) must be provided consistent with the mental health parity rules.

Standalone HRAs for Small Employers

The Affordable Care Act effectively prohibited employers from offering employees health reimbursement arrangements that were not integrated with other group health plans (standalone HRAs).

The act rolls back that rule slightly—though only for employers that are not “large employers” for ACA purposes (generally, those that have 50 or more full-time equivalent employees) and that do not offer any health plan to employees.

Title XVIII of the act creates qualified small employer health reimbursement arrangements (QSEHRAs) which are available for plan years starting after 2016. A QSEHRA is an arrangement funded solely with employer money that provides for payment or reimbursement of medical care expenses, up to $4,950 per year for individuals ($10,000 per year for families). In addition, a QSEHRA must generally be provided to all eligible employees of the employer on the same terms, and the employer must provide notice to the eligible employees. These QSEHRAs could permit reimbursements for individual health insurance premiums, which is also generally not permitted under the ACA. In addition, QSEHRAs are not subject to the Consolidated Omnibus Budget Reconciliation Act’s (COBRA) continuation coverage requirement.

These rules will take effect on January 1, 2017, which means that eligible employers could begin offering a QSEHRA next month. For small employers that offered a standalone HRA before January 1, 2017, the act will extend certain transition relief. HRAs that qualify under Notice 2015-17 will continue to qualify for transition relief through the end of 2016.

ARTICLE BY Timothy J. Stanton & Jessica E. Kuester of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

© 2016, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

The Supreme Court Rules in Favor of Same-Sex Marriage: Employer Next Steps

What should employers be thinking about in the benefits arena now that the US Supreme Court has ruled in Obergefell v. Hodges that all states must issue marriage licenses to same-sex couples and fully recognize same-sex marriages lawfully performed out of state?

We suggest that employers consider whether the following plan design changes, health plan amendments, and/or administrative modifications are necessary:

  • Review employee benefit plans’ definition of “spouse” and consider whether the Court’s decision will affect the application of the definition (e.g., if the plan refers to “spouse” by reference to state laws affected or superseded by the Obergefell decision). Qualified pension and 401(k) plans generally conformed their definitions of spouse to include same-sex spouses post-Windsor to comply with Internal Revenue Code provisions that protect spousal rights in such plans, but health and welfare plans may not have been so conformed.

  • Communicate any changes in the definition of spouse or eligibility for benefits to employees and beneficiaries, as applicable.

  • Update plan administration and tax reporting to ensure that employees are not treated as receiving imputed income under state tax law for any same-sex spouses who are covered by their employer-sponsored health and welfare plans (to the extent that coverage for opposite-sex spouses would otherwise be excluded from income).

  • If an employer currently covers unmarried domestic partners under its benefit plans, it may want to consider whether to eliminate coverage for such domestic partners on a prospective basis (and therefore only allow legally recognized spouses to have coverage). Employers that make that type of change also will need to determine the timing and communication of such a change.

  • Employers with benefit plans that treat same-sex spouses differently than opposite-sex spouses should consider whether to maintain that distinction. Even though nothing in Obergefell expressly compels employers to provide the same benefits to same-sex and opposite-sex spouses, and self-insured Employee Retirement Income Security Act (ERISA) health and welfare plans are not subject to state and municipal sexual orientation discrimination prohibitions, we believe these types of plan designs are likely to be challenged.

ARTICLE BY Andy R. Anderson & Lindsay M. Goodman of Morgan, Lewis & Bockius LLP

Copyright © 2015 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

U.S. Supreme Court Declines to Hear Wisconsin’s Same-Sex Marriage Case: How Does This Affect the Administration of an Employer’s Employee Benefits?

Michael Best Logo

On Monday, October 6, 2014, the U.S. Supreme Court denied certiorari in Wolfe v. Walker. As employers will recall, in June 2014, U.S. District Court Judge Crabb found that Wisconsin’s 2006 constitutional amendment barring recognition of same-sex marriages violated the equal protection clause of the U.S. Constitution. In September 2014, the Seventh Circuit affirmed that decision. The Supreme Court’s action means that Judge Crabb’s decision stands.

What Is the Effect of the Supreme Court’s Ruling? Hereafter, Wisconsin and its respective governmental subdivisions must issue same-sex marriage licenses and must recognize same-sex marriages, whether formed in Wisconsin or in other jurisdictions. Moreover, the ruling affects employer-provided employee benefits.

Eligibility for Health Plan Coverage. The ruling has different implications depending upon the type of health plan at issue. For ERISA plans, there is some uncertainty regarding how this will play out moving forward because of ERISA preemption. Following the 2013 U.S. Supreme Court decision in United States v. Windsor, the Department of Labor announced in guidance that it would interpret the terms “spouse” and “marriage” to include same-sex marriages valid in the state of celebration. However, since it appears that neither Windsor nor Wolf nor the DOL guidance addresses private discrimination or imposes an obligation on employers to provide same-sex benefits, ERISA may still preempt a state discrimination law.

There is an additional nuance under state insurance laws. The Department of Health and Human Services (HHS) has mandated that health insurance issuers providing policies that cover spouses ensure that same-sex spouse coverage is also available to consumers. The guidance HHS provided, however, does not mandate that employers obtaining that coverage actually offer the benefit. It is unclear how this will play out under state insurance law (which applies to insured ERISA plans) and further guidance from the state is required.

For plans that are not subject to ERISA, the preemption argument disappears. Thus, such non-ERISA plans failing to offer such coverage may now violate Wisconsin’s Fair Employment Act, which prohibits discrimination on the basis of sexual orientation and marital status. Even so, those plans that are exempt from ERISA because they constitute “church plans” may be able to assert a religious exemption from discrimination rules.

Employers contemplating providing only opposite-sex spousal benefits should be in close contact with their legal counsel regarding the risks associated with such a decision. Further, it will be very important to ensure that “spouse” is defined with precision in the plan materials.

Imputed Income. Previously, the Wisconsin Tax Code treated employer-provided coverage for same-sex spouses of employees as taxable income and Wisconsin employers were required to treat such coverage as imputed income for Wisconsin withholding purposes. Now that Judge Crabb’s decision has been permitted to stand, Wisconsin employers must stop imputing income for state tax purposes to employees who receive coverage for same-sex spouses (and certain dependents). Employers will also need to pay attention to how the Wisconsin Department of Revenue addresses the taxation of income that was previously imputed; that is, how employees and employers might recover excess amounts withheld by the state government based upon imputed income in prior months and years.

Note, nothing has changed as it relates to domestic partners benefits – employees are still subject to imputed income where the employee obtains coverage on behalf of his or her domestic partner.

Family and Medical Leave. As we advised in a June client alert, family and medical leave under the state law is largely unaffected by this decision because domestic partner coverage was already contemplated by the state law and same-sex spouses were deemed domestic partners for such purposes.

On a federal level, this decision accelerates the effective date of proposed regulations issued earlier this year by the U.S. Department of Labor in response to Windsor. Earlier this year, the Department of Labor issued proposed regulations to change the FMLA’s definition of spouse from an individual who is recognized as a spouse under the state law in the place of the employee’s residence to an individual who is considered legally married to the employee based upon the laws of the state of celebration. These regulations are not yet finalized. Nevertheless, the Supreme Court’s decision means that even under the current regulations Wisconsin same-sex married couples will be considered spouses for purposes of FMLA administration.

What should employers do now?

  • Account for those same-sex couples who may have been married in a state that permitted same-sex marriage or who are newly married in Wisconsin;

  • Determine if modification of benefit plan materials may be necessary;

  • Determine the appropriateness of a special enrollment opportunity to couples married in other jurisdictions prior to the Supreme Court’s ruling who would not otherwise be eligible for a HIPAA special enrollment opportunity based upon the date of the wedding; and

  • Determine if modification of FMLA policy/forms is warranted based upon the changes.

© MICHAEL BEST & FRIEDRICH LLP
ARTICLE BY

Charles P. Stevens
OF
Michael Best & Friedrich LLP

Wisconsin Federal Court Recognizes Same-Sex Marriage: How Does This Affect the Administration of an Employer’s Employee Benefits?

Michael Best Logo

On Friday, June 6, 2014, Judge Crabb of the U.S. District Court for the Western District of Wisconsin issued a decision finding that Wisconsin’s constitutional amendment recognizing marriages only between men and women violates the Equal Protection Clause of the U.S. Constitution.

Unlike several other federal judges who have considered the issue, Judge Crabb did not make her ruling immediately effective. Instead the Court asked the plaintiffs’ lawyers in the case to help her fashion an injunction to implement her ruling. The plaintiffs have until June 16, 2014, to submit this proposal. The State asked for clarification on the June 6, 2014 ruling and requested that the court stay its decision until it made a final decision on the scope of the injunctive relief. On June 9, 2014, the court denied the State’s motion. In response, the State appealed Judge Crabb’s decision to the U.S. Court of Appeals for the Seventh Circuit in Chicago and requested an immediate stay of Judge Crabb’s order. The Seventh Circuit has solicited arguments from the parties to determine whether it has jurisdiction of the matter.

In response to Judge Crabb’s decision, many of the State’s counties have begun issuing marriage licenses to same-sex couples in the state. Others have declined to do so and have, instead, sought guidance from counsel or the Attorney General.

Addressing the Change

Judge Crabb’s decision, and issuance of Wisconsin same-sex marriage licenses, has injected some uncertainty into benefit plan administration in Wisconsin. Based upon the state of the prior law, it is likely that a Wisconsin employer will have more employees with domestic partners than employees with same-sex spouses through legal marriages formed elsewhere. Nevertheless, same-sex benefits are certainly an evolving issue for employers.

Family and Medical Leave

Registered and unregistered domestic partners were already covered under the Wisconsin Family and Medical Leave Act. Because an unregistered domestic partnership does not require a formal filing with a county clerk, it appears that the state law in this context is relatively unaffected.

On the other hand, the federal FMLA is substantially affected. The definition of spouse under the federal regulations requires that the marriage must be recognized by the state of residence. Most FMLA policies do not distinguish between same-sex and opposite-sex partners. Consequently, if Judge Crabb’s decision stands, requests for FMLA leave relating to same-sex spouses must be recognized under both federal and Wisconsin law if the leave is otherwise appropriate under the law.

Until the ramifications of the injunctive language are known, employers should pay particular attention to the language of their FMLA policies before making any determination about FMLA requests. Depending on how the courts ultimately rule, an employer’s FMLA policy may or may not require amendment. Regardless, if an employee asks about leave for a same-sex spouse, legal counsel should be consulted.

Benefits

The status of the law will remain uncertain until Judge Crabb makes a decision regarding whether to issue an injunction and the form such an order would take. If an injunction is issued and then stands following the anticipated appeal, employers who employ employees who have a same-sex spouse would no longer impute Wisconsin income tax for health coverage, and would otherwise recognize such spouse for all legal purposes. Because of the uncertainty in the current climate, employers should consider whether to continue imputing income for benefits provided to same-sex spouses until such time as transitional guidance is issued by the Wisconsin Department of Revenue on this issue.

Nothing has changed as it relates to unmarried domestic partners—these individuals are still subject to imputed income where the individual obtains coverage on behalf of his or her domestic partner.

Because employee benefits rules are largely governed by federal law, many same-sex marriage changes in employee benefits have been observed already since the U.S. Supreme Court’s Windsor decision of last year. If the Judge Crabb ruling stands, the most significant change for Wisconsin employers will likely pertain to Wisconsin tax treatment of family health coverage.

What should employers do in response?

  • Account for those same-sex couples who may have been married in a state that permitted same-sex marriage or who are newly married in Wisconsin following Judge Crabb’s decision;
  • Examine if modification of FMLA policy/forms is warranted based upon the changes; and
  • Examine if modification to benefit plan materials may be necessary.
Article By:

Charles P. Stevens
Kirk A. Pelikan
Of:
Michael Best & Friedrich LLP

Do Your Plans Include a Time Limit on a Participant’s Right to Sue?

Poyner Spruill

 

Some, but far from all, employee benefit plans set a limit on the amount of time a participant has to file a lawsuit claiming benefits under the plan.  Until recently, however, not all courts would recognize these plan imposed lawsuit filing deadlines.  The Supreme Court case of Heimeshoff v. Hartford Life, decided in December 2013, changed that by ruling that employee benefit plan contractual provisions that limit the time to file a lawsuit to recover benefits are enforceable, provided the time limitations are not unreasonably short or contrary to a controlling statute.

The Heimeshoff decision involved a plan that provided a participant must file a lawsuit to recover benefits within three years from the date proof of loss was due.  The Supreme Court decision found that the three year limitation period was not too short, noting the plan’s internal claims review process would be concluded in plenty of time for a participant to file a lawsuit to recover benefits. Based on the court’s reasoning, it appears likely that a shorter limitation on filing claims might also be upheld as long as there is sufficient time for the participant to file a lawsuit once the claims procedure period has ended.

While Heimeshoff involved a disability plan, the decision applies equally to all ERISA covered health and welfare plans, retirement plans, and top hat plans.

So, do your employee benefit plans include a limitation on the time a participant has to file a lawsuit to recover benefits?  Don’t assume that they do.  Many plans do not provide a time limit for filing a lawsuit, and now would be a great time to amend those plans to add the limitation.

Article by:

Of:

Poyner Spruill LLP