When the Trump administration released its health care executive order in late 2017, it identified 3 areas they wanted to target for improvement.The last of the 3 health items are Health reimbursement arrangements (HRAs), which allow workers to buy coverage with tax-free dollars.
When was the last time the company handbook was reviewed? It’s a worthy priority for the new year—or anytime, really. Handbooks are living documents that should be reviewed regularly, especially considering the federal government’s focus on deregulation and ever-changing updates from state legislatures and municipalities. Here are five key issues that may trigger updates:
1. Workplace conduct and social media
Under former President Barack Obama, the National Labor Relations Board (NLRB) scrutinized social media policies and other workplace conduct standards that may limit workers’ rights. For example, in many cases the board considered employee social media posts that are critical of employers a form of protected concerted activity and thus not necessarily grounds for disciplinary action.
With the Trump administration, the pendulum may swing the opposite way, giving employers more leeway to develop workplace conduct rules, said Bruce Sarchet, an attorney with Littler in Sacramento.
Already, the board overruled its previous standard that struck down policies if they could be “reasonably construed” to curb employee discussions about wages and working conditions—even if the policies weren’t intended to do so. “With [the] signal of a sea change in NLRB policy, employers need to pay close attention to the board’s new ‘policies on policies’ as they develop,” said Bonnie Martin, an attorney with Ogletree Deakins in Indianapolis. In the meantime, make sure your handbook’s conduct guidelines are specific and clear.
2. Sexual harassment
With sexual harassment news sweeping the country, make sure your policies spell out exactly how employees can complain and give people multiple outlets for doing so. “Having a policy that requires employees to report incidents to their supervisor isn’t helpful if the supervisor is the one doing the harassing,” said Randi Kochman, an attorney with Cole Schotz in Hackensack, N.J.
Take state requirements into account as well. California, for example, has mandated that content on harassment based on gender identity, gender expression and sexual orientation be included in supervisor training. The change took effect Jan. 1.
3. Parental leave
Leave laws are expanding in many states. In California, for example, businesses with 20-49 employees must offer job-protected baby-bonding leave beginning this year.
Workers in New York will be eligible for paid family leave in 2018, and even in states without such provisions, many businesses are opting to provide paid parental time off.
When updating handbooks, don’t include separate baby-bonding rules for mothers and fathers, Kochman said. While employers can include differing standards for mothers regarding the physical limitations imposed by pregnancy, they should use genderless terms such as “primary caretaker” in their parental leave policies.
4. Disability and other accommodations
An employer’s obligation to provide leave could go beyond the 12 weeks afforded under the federal Family and Medical Leave Act. For example, a request for intermittent leave to treat a medical condition may be considered a reasonable accommodation under the Americans with Disabilities Act.
While the 7th U.S. Circuit Court of Appeals ruled that leave that extends beyond FMLA isn’t considered a reasonable accommodation, the Equal Employment Opportunity Commission and other courts disagree.
That’s why it’s important to carefully review policies and keep up with developing laws.
Medical marijuana case law is also evolving. In 2017, several courts ruled that registered medical marijuana users who were fired or passed over for jobs for using the drug could bring claims under state disability laws.
“HR professionals should review their drug-testing policies and practices and consider consulting counsel before taking any adverse action following a positive drug test for marijuana in a state in which medical or recreational use is legal,” said Cheryl Orr, an attorney with Drinker Biddle in San Francisco.
5. The bigger picture
With all the state and local changes, it may no longer work to have a single handbook with blanket policies for workers in different locations. “Now is a good time to add state supplements to the handbook that are distributed only to employees within the relevant state,” said Jeffrey Pasek, an attorney with Cozen O’Connor in Philadelphia.
As mass shootings have continued with regular frequency in the United States, our country remains deeply divided, not only with the cause of these tragic events, but also on how to stop them from occurring. Many have called for increased gun control, including a ban on assault-style rifles like the AR-15 and universal background check requirements for all firearms transactions. Others have called for fewer restrictions on law-abiding gun owners’ ability to carry concealed firearms at their places of work and on public property, arguing that additional guns on the scene often prevent unnecessary harm.
Employers are caught in the middle of this debate, as they often must resolve the issue of whether employees with concealed carry permits should be allowed to carry their firearms at work. Would doing so make workplaces safer or more dangerous? Are there potential legal liability issues to consider? In making this decision, you need to assess a constellation of legal and policy factors.
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The split among appeals courts over whether Title VII of the Civil Rights Act of 1964 prohibits sexual orientation discrimination deepened Feb. 26, as the 2nd U.S. Circuit Court of Appeals ruled that it does. The decision makes it likely that the Supreme Court ultimately will have to rule on the issue, said Michelle Phillips, an attorney with Jackson Lewis in White Plains, N.Y.
Two appellate courts now agree with the Equal Employment Opportunity Commission’s (EEOC’s) position that Title VII protects against discrimination based on sexual orientation.
“Claims of sexual orientation discrimination are increasingly being litigated,” said Sam Schwartz-Fenwick, an attorney with Seyfarth Shaw in Chicago. “[A]n increasing number of courts are finding that such claims can be brought under Title VII, the law remains in flux. This uncertainty will continue until the Supreme Court addresses the issue or Congress passes clarifying legislation.”
He recommended that employers increase their sensitivity to issues related to sexual orientation in the workplace during this period of uncertainty.
Phillips noted that 22 states plus the District of Columbia prohibit sexual orientation discrimination.
Fired Gay Skydiver Sues
In the 2nd Circuit case, a skydiving instructor sued his former employer, alleging he was fired from his job after he revealed to a female customer that he was gay. He told her this to calm her worry about being strapped tightly to him during the jump. Her boyfriend complained to the employer following this disclosure and alleged that the skydiver touched her inappropriately, and the instructor was discharged. He alleged sex discrimination under Title VII, asserting that he was fired because he failed to conform to male sex stereotypes and because he was gay.
The plaintiff died in a skydiving accident, but his estate continued with the claim. The district court dismissed his Title VII claim. It held that the plaintiff had failed to show gender stereotyping under Title VII based on his sexual orientation. In addition, it noted that prior case law in the 2nd Circuit held that Title VII did not prohibit discrimination based on sexual orientation.
2nd Circuit Changes Course
During oral arguments before the 2nd Circuit in this case, the EEOC advocated for a broad reading of Title VII that encompassed sexual orientation. But the Justice Department argued that Title VII’s prohibition on sex discrimination did not extend to claims of sexual orientation discrimination, Schwartz-Fenwick noted.
The 2nd Circuit reversed, overruling prior case law and determining that sexual orientation should be treated as a subset of sex discrimination for several reasons:
The 2nd Circuit also observed that the EEOC and the 7th Circuit had reversed their previous views that Title VII did not bar sexual orientation discrimination, Schwartz-Fenwick noted.
But in 2017, the 11th Circuit held that Title VII did not extend to sexual orientation, he observed. The Supreme Court declined to review the 11th Circuit Court’s decision in December 2017.
The other federal appeals courts—namely the 1st, 3rd, 4th, 5th, 6th, 8th, 9th and 10th Circuits—have also held that sexual orientation is not expressly covered by Title VII, said Sean Crotty, an attorney with Honigman in Detroit. The Supreme Court may want to see more recent opinions from the circuits on the issue before granting review, he said.
The 2nd Circuit encompasses Connecticut, New York and Vermont.
The new federal tax law, signed by President Trump in December, contains a number of provisions that will impact the workplace and employers. One specific change has to do with the Family and Medical Leave Act (FMLA). As many are aware, FMLA requires employers to provide certain employees with up to 12 weeks of job-protected leave annually for specified family and medical reasons. The leave may be paid or unpaid.
To encourage employers to provide eligible employees with paid leave under FMLA, the new tax law provides eligible employers with a new business credit equal to 12.5% of the amount of wages paid to “qualifying employees” during any period in which such employees are on family and medical leave as long as the rate of payment under the program is at least 50% of the employee’s normal wages. The credit increases from 12.5% by 0.25 percentage points (but not above 25% of wages) for each percentage point by which the rate of payment exceeds 50%. The credit can be used to lower an employer’s taxable income, subject to limitations, and applicable alternative minimum tax. The amount of paid family and medical leave used to determine the tax credit for an employee may not exceed 12 weeks.
To be eligible for the credit, an employer must have a written policy that provides all qualifying full-time employees with at least two weeks of annual paid family and medical leave. Part-time employees are also to be allowed a commensurate amount of leave on a pro rata basis. Qualifying employees are those who have worked for the company for at least one year and were paid no more than 60% of the compensation threshold for highly compensated employees in the previous year. (For 2018, 60% of the compensation threshold is equal to 60% x $120,000 = $72,000.)
For purposes of the credit, any leave paid for by a State or local government or required by State or local law shall not be taken into account in determining the amount of paid family and medical leave provided by the employer. For example, if a jurisdiction, such as Chicago has an ordinance that provides paid sick leave for FMLA-permitted purposes, an employer will not qualify for the business tax credit if the paid leave is provided to be in compliance with the ordinance. As a result, it is important that the employer have a clear policy in place.
The Secretary of Treasury will determine whether an employer or an employee satisfies applicable requirements for the employer to be eligible for the tax credit based on information provided by the employer as the Secretary determines to be necessary or appropriate.
If the employee takes a paid leave for other reasons, such as vacation leave, personal leave, or other medical or sick leave, this paid leave will not be considered to be family and medical leave for purposes of the credit.
The credit is effective for wages paid in taxable years starting on January 1, 2018. It is set to expire for wages paid in taxable years beginning after December 31, 2019.
President Donald Trump signed the Federal Register Printing Savings Act of 2017 (the Act) on January 22 to end the two-day government shutdown. In addition to funding the government for two-and-a-half weeks, the Act delays the onset of the Affordable Care Act’s (ACA’s) “Cadillac Tax” by two more years. The Cadillac Tax was originally intended to go into effect in 2018, but President Obama delayed the effective date until 2020. The Act now delays the Cadillac Tax until 2022.
The Act also extended the Children’s Health Insurance Program (CHIP) funding for six years.
The Cadillac Tax is a 40% tax on the value of employer-sponsored health coverage that exceeds certain benefit thresholds. It is widely unpopular with employer groups and, as we have previously reported, Congress has expressed a strong bipartisan desire to repeal the Cadillac Tax entirely.
In the meantime, the US Department of the Treasury has not issued guidance on the Cadillac Tax since before the initial delay, and therefore, it is likely that the Act will further delay any additional Cadillac Tax guidance.
Many Applicable Large Employers (ALE’s) have already started received Letter 226J from the IRS that indicates their proposed assessment of a penalty under the Employer Shared Responsibility provision of the Patient Protection and Affordable Care Act (ACA).
Letter 226J outlines several things for the ALE receiving it. The letter will tell the ALE what the proposed penalty assessment could be and will also state whether the assessment is based on an “A” or “B” Penalty. An “A” Penalty is assessed when at least one full-time employee is provided a premium tax credit when the employee obtains coverage in the healthcare marketplace exchange. An ALE may be subject to a “B” Penalty if employees decline substandard coverage (aka coverage offered is not affordable) offered by the ALE and then receive a tax credit when obtaining coverage from the marketplace exchange. The letter also provides a list to the ALE of the full-time employees that received a premium tax credit and therefore created the potential for a penalty under the ACA.
It is very important for ALE’s to respond to Letter 226J and do so in a timely manner. The IRS provides 30 days, from the date of issuance, for ALE’s to respond, and if no response is made by the ALE, the IRS will conclude the employer does not disagree with the proposed assessment. ALE’s should not assume that because they received a letter that they will owe a penalty or that the amount outlined in the letter is the amount they will ultimately pay to the IRS for non-compliance with the ACA. Additionally, if no response is made to the IRS, the IRS will demand payment by issuing notice CP 220J. Only once the notice and demand for payment is received is the ALE required to make the penalty payment. Letter 226J is not requesting any payment but is giving ALE’s the chance to respond/disagree with the decision initially made by the IRS & Marketplace.
Letter 226J clearly outlines instructions on how to respond to the letter if the ALE feels that it is not liable for the proposed penalty. ALE’s will complete Form 14764 responding to the IRS that it does not agree with the penalty determination. The ALE will provide the IRS with a signed statement explaining why it does not agree with the determination. Any supporting documentation should be provided to the IRS (for example, records indicating dates of termination of employees, proof that the ALE offered coverage to full-time employees) and any other information requested in Letter 226J. The ALE should also make any changes to the Employee Premium Tax Credit (PTC) Listing that was enclosed with Letter 226J. The Employee PTC Listing (Form 14765) will be included with Letter 226J and Form 14764 (ESRP Response). The Employee PTC Listing identifies each employee who received a PTC by month and also the line 14 and line 16 indicator codes that were provided on the employee’s 1095-C form. If the ALE provided the incorrect indicator codes on form 1095-C, the Employee PTC Listing provides a line for the ALE to correct the codes used.
Once the IRS receives the response to Letter 226J, it will acknowledge that it has received the response by sending the ALE a version of Letter 227. There are 5 versions of Letter 227, and the ALE will receive the appropriate version, acknowledging receipt of their response and an outline of any further action that may be required.