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Employment Law Monitor

Insights on Recent Developments in Federal and State Labor & Employment Matters

The Affordable Care Act Part Two – Preparing for 2015

Posted in Employment Policies and Practices

This is the second of a three part series on the Affordable Care Act (“ACA” or “Act”), commonly known as “ObamaCare.”  This post discusses the Employer Mandate, which takes effect January 1, 2015, and certain reporting requirements that will also take effect beginning in 2015.

The Employer Mandate

On January 1, 2015, the so-called “Employer Mandate” goes into effect, requiring large employers to offer health coverage to full-time employees and their dependents (children up to age 26, but not spouses) or risk paying a penalty. As a result, large employers will be forced to make a choice — to either “play” by offering health coverage, or potentially “pay” a penalty to the IRS for failing to offer such coverage. This “play or pay” scheme, called “shared responsibility” in the statute, has become known as the Employer Mandate.

Although the Act defines a large employer as an employer with 50 or more full-time employees, implementation of the Employer Mandate is being phased in.  The Employer Mandate takes effect for employer with 100 or more full-time employees on January 1, 2015 and will apply to employers with 50-99 full-time employees beginning January 1, 2016.

To determine whether a business is  a “large employer” under the Act, the employer must determine whether it employs an average of at least 100 full-time employees on business days during the preceding calendar year.   As previously mentioned, beginning in 2016, the threshold drops to the equivalent of 50 full-time employees during the preceding calendar year.  A full-time employee is any employee who is employed, on average, 30 hours or more  a week or 130 or more hours each month.  Employers with part-time workers must also count “full-time equivalencies” in determining large employer status. “Full-time equivalent employees” are the number of full-time employees an employer would have, based on the hours worked by all employees who are not full-time.  To determine the number of full-time equivalent employees for a calendar month, an employer must calculate the aggregate hours of service (including fractional hours, but not including more than 120 for any one employee) for all employees who are not full-time employees for that month. The employer must then divide the total number of hours worked by its non-full-time employees by 120.  The number of full-time equivalent employees is then added to the number of full-time employees to determine applicable large employer status.  Hours of service include paid time for services performed as well as time for which the employee is paid but does not perform any services due to vacation, holiday, illness, disability, layoff, jury duty, military duty or paid leave of absence.

In addition to counting full-time employees and hours worked by employees who are not full-time, in certain circumstances, the number of employees of “controlled groups” and “affiliated service groups,” as defined by the Internal Revenue Code and applicable Internal Revenue Service (IRS) regulations, will be aggregated toward the full-time employee threshold.  Seasonal employees must also be considered in determining large-employer status.

A large employer under the Act is subject to the Employer Mandate, which requires that the employer offer health coverage to its full-time employees and certain of their dependents.  The coverage must: (1) provide “minimum essential coverage;” (2) be “affordable;” and (3) satisfy a minimum value requirement.  “Minimum essential coverage” typically includes most private health insurance plans and includes coverage under an employer-sponsored group health plan.  Coverage is considered “affordable” if the employee’s contribution or premium for self-only coverage is less than 9.5 percent of the employee’s household income.  Because most employers do not know their employee’s household income, the act provides a safe-harbor for the employer which requires that the cost of the employee-only coverage does not exceed 9.5 percent of the wages reported in Box 1 on the employee’s W-2.  The offered coverage must also meet a minimum value requirement. This generally means that the plan must pay at least 60 percent of the expected health care costs, and the employee is responsible for the remaining 40 percent through copayments, deductibles and coinsurance. While the terms of the specific benefits will vary, essential health benefits (such as annual physicals) must be provided without any annual limits.

If a large employer does not provide benefits for some or all of its full-time employees, the employer will have to pay a penalty in two scenarios. The first scenario occurs when an employer does not offer health coverage to “substantially all” of its full-time employees, and any one of its full-time employees both enrolls in health coverage offered through a State Insurance Exchange and receives a premium tax credit or a cost-sharing subsidy.  In order to be eligible for a subsidy, an employee must have an income between 100 and 400 percent of the federal poverty line and not be offered affordable, minimum value coverage.  In the second scenario, an employer will have to pay a penalty when it provides health care to its employees, but such coverage is deemed inadequate because: (1) it is not “affordable;” (2) does not provide at least “minimum value;” or (3) the employer offers coverage to substantially (but not) all of its full-time employees, and one or more of its full-time employees enrolls in exchange coverage and receives a tax subsidy.  In this second scenario, the employer will owe an “inadequate coverage penalty.”  The inadequate coverage penalty is $3,000 per person and is calculated based on each full-time employee who receives an exchange subsidy. This penalty amount is only for 2015 and will increase based on premium inflation.

Reporting Requirements Pursuant to Sections 6055 and 6056 of the ACA

On March 5, 2014, the U.S. Department of the Treasury and the IRS released final rules to implement the information reporting provisions for certain employers under the ACA.  These rules are available here. Beginning in 2015, all employers affected by the Employer Mandate are subject to yearly reporting requirements. On August 28, 2014, the IRS released draft instructions for Forms 1094-C and 1095-C, and other forms required by the ACA. Employers that are subject to the Employer Mandate will use the new forms to report health insurance coverage offered under employer-sponsored plans in accordance with the Act.

Under the ACA, employers subjected to the Employer Mandate must report certain information including: (1) information about the entity providing coverage, including contact information; and (2) which individuals are enrolled in coverage, with identifying information, and the months for which they were covered (Section 6055).  Employers will also have to report: (1) information about the employer offering coverage (including contact information and the number of full-time employees; and (2) information about the coverage (if any) offered to each full-time employee (by month) including the lowest employee cost of self-only coverage offered.

Final versions of the forms are not yet available.  Drafts of the forms (as of October 5, 2014) are available at the following links:  1094-C and 1095.

 

Paid Sick Leave Continues to Gain Traction in New Jersey

Posted in Employment Policies and Practices, Wage and Hour and Executive Compensation

Last week, Trenton and Montclair became the latest in a series of New Jersey municipalities to pass paid sick leave ordinances, joining East Orange, Irvington, Jersey City, Newark, Passaic and Paterson.  Under both the Trenton and Montclair legislation, which are largely modeled after the measures previously adopted by Newark in January, employers with 10 or more workers must provide their employees with up to 40 hours of paid sick time accrued on an annual basis, with smaller employers only being required to offer up to 24 hours of paid sick time per year.  Employees earn one hour of paid sick leave for every 30 hours worked.  However, irrespective of the employer’s size, child care, home health care and food service workers are entitled to the full 40 hours of paid benefits per year.

At the same time, the New Jersey Legislature continues to review proposed State-wide legislation designed to provide paid sick leave in a more uniform fashion.  Under the current proposals (Assembly Bill A2354 and Senate Bill S785), New Jersey employees would accrue one hour of paid sick leave for every 30 hours worked, up to a total of 40 hours of earned paid sick time annually for employers with less than 10 workers, and up to 72 hours per year for employers meeting or exceeding the 10 employee threshold.  If employees do not use all of their accrued hours in a year, they would be permitted to carry them forward for an additional year.  Employers would also be required to maintain detailed records concerning employees’ accrued paid sick time hours, and the legislation would clearly define when employees could be required to provide advance notice of sick time and/or documentation to their employers.  Employers would further be prohibited from retaliating against any employees using their paid sick time.

Given the current trend of state and local governments enacting paid sick leave laws, now is the time for employers to consult with counsel to ensure that their handbooks, policies and practices comply with the recent, and anticipated, changes in the law.

The Affordable Care Act – Where Are We Now?

Posted in Employment Policies and Practices

This is the first of a three part series on the Affordable Care Act (“ACA” or “Act”), commonly known  as “ObamaCare.”

The ACA was signed into law in March of 2010 with the goals of increasing the quality and affordability of health insurance, lowering the uninsured rate by expanding public and private insurance coverage, and reducing the costs of healthcare for individuals and the government.  Since that time, the ACA has been the subject of much debate.  Having survived a challenge to the United States Supreme Court, the ACA is officially the “law of the land” albeit with some changes.  One of the most anticipated and debated provisions of the ACA is the “employer mandate,” which will be phased in starting January 1, 2015.  With the public discussions and news reports focusing on the employer mandate and, earlier in the year, the health insurance exchanges, there was very little reported on the fact that most of the provisions of the ACA have already gone into effect. This post summarizes the employment related provisions of ACA that are currently in effect.

Regulations

Earlier this year the Department of Labor, Treasury, and Health and Human Services adopted final regulations regarding minimum essential health insurance coverage.  In February, these agencies jointly announced the publication of final regulations implementing a 90-day limit on waiting periods for health coverage.  Described as a “common sense measure that helps workers access employer-sponsored health insurance,” the final regulations require that no group health plan or group health insurance issuer may impose a waiting period that exceeds 90 days after an employee is otherwise eligible for coverage.  Employers, however, can generally impose other conditions for eligibility such as meeting certain sales goals or successfully completing an orientation program.   In addition, employers can generally require employees to complete a certain number of hours before becoming eligible for coverage, as long as the requirement is capped at 1200 hours.  The rules do not require coverage be offered to any particular individual or class of individuals.

Breaks for Nursing Mothers

The ACA also amended the Fair Labor Standards Act (“FLSA”) to include mandatory break time for nursing mothers.  Employers are required to provide “reasonable break time for an employee to express breast milk for her nursing child for 1 year after the child’s birth each time such employee has need to express the milk.”  Employers are also required to provide a place other than a bathroom that is “shielded from view and free from intrusion” which may be used by the employee to express milk.  Employers with less than 50 employees are not subject to the break time requirement if compliance with the provision would impose an undue hardship.  Whether compliance would be an undue hardship is determined by looking at the difficulty or expense of compliance for a specific employer in comparison to the size, financial resources, nature, and structure of the employer’s business.  All employees who work for the covered employer are counted when determining whether this exemption may apply.

Whistleblower Protections

Notably, in addition to health insurance reforms including the aforementioned requirements under the ACA, Section 1558 of Title I of the ACA protects employees from retaliation for reporting violations of the various reforms found in Title I and receiving a premium tax credit or a cost sharing reduction for enrolling in a qualified health plan. Employees who believe they have been retaliated against in violation of Title I of the Act may file a complaint with OSHA.

Our next post will discuss the Employer Mandate, which will require that as of January 1, 2015, all employers with the equivalent of 100 or over full-time equivalent employees to purchase health insurance for their workers or pay a penalty will take effect (also known as the Employer Mandate).  Employers with 50 or more full-time equivalent employees will be subject to the Employer Mandate starting January 1, 2016.  We will also discuss certain reporting requirements that will also take effect beginning in 2015.

OSHA Issues Final Rules On Reporting Injuries In The Workplace

Posted in Employment Policies and Practices

OSHA recently passed new rules requiring employers to notify OSHA of a fatality within eight (8) hours of the death.  The new rules also require employers to file a report with OSHA for each in-patient hospitalization of an employee or situations where an amputation or eye-loss has occurred.  The report must be made within 24 hours of the incident.  OSHA defines in-patient hospitalization as a “formal admission to the in-patient service of a hospital or clinic for care or treatment.”  Employers can make the report in person to the OSHA area office, by a toll-free number, 1-800-321-OSHA, or by electronic submission on OSHA’s website, www.osha.gov.  The reporting obligations apply to all employers, even those that are exempt from OSHA’s recordkeeping requirements.  The new rules will go into effect on January 1, 2015.

As a result of this change, OSHA will likely perform more inspections of establishments where serious injuries or fatalities occur.  As always, it is imperative for employers to be proactive in an effort to minimize unsafe conditions in the workplace.  At the same time, employers need to develop procedures to address serious injuries or fatalities that may occur in their establishment.  To this end, employers should educate their managers and supervisors of OSHA’s new reporting requirements.  By taking these steps, employers can protect their employees and minimize their liability resulting from workplace accidents.

City of Passaic Latest to Pass Paid Sick Leave Policy

Posted in Employment Policies and Practices, Wage and Hour and Executive Compensation

On Tuesday, September 2, 2014, the City Council of Passaic unanimously passed an Ordinance requiring paid sick leave for its workers by a seven to zero vote, joining Newark (previously reported on here)  and Jersey City in mandating paid sick leave for private workers within those cities.

Passaic’s new law requires private employers to allow employees to earn one hour of paid sick leave for every thirty hours worked.  Employers with ten or more employees must allow their workers up to forty hours of paid sick leave per calendar year.  Employers with under ten employees must allow their workers up to twenty-four hours of paid sick leave per calendar year.  These paid sick days can be used for workers to care for themselves, their spouse or civil union partner, children, siblings, parents, grandparents, or grandchildren.  Employees may be paid for unused, accrued paid sick leave, or carry over some accrued paid sick leave to the following calendar year.  Employers that violate the new Ordinance may be fined up to $2,000 per violation and may be required to pay the employee for any unlawfully withheld paid sick leave.  Employers must also provide written notice to employees of their rights under the law, as well as post information about the Ordinance at their place of business.  The new law becomes effective in January 2015.

A copy of the Ordinance is available here.

Because of the new law, employers in the City of Passaic should review their current paid sick leave policies to determine compliance with the Ordinance, including its notice and posting requirements.

New Jersey’s “Ban the Box” Legislation Signed Into Law

Posted in Employment Policies and Practices, Harassment, Discrimination and Retaliation

Last week, New Jersey Governor Chris Christie signed the Opportunity to Compete Act (Bill S2124) into law, thereby barring New Jersey employers from inquiring about job applicants’ criminal histories during the preliminary job application process.  Known more commonly as “Ban the Box” legislation, the Opportunity to Compete Act makes New Jersey the sixth state in the nation (following Hawaii, Illinois, Massachusetts, Minnesota and Rhode Island) to extend such protections to job applicants in the private sector.

The legislation precludes employers who employ 15 or more employees from requiring job applicants to identify information about their criminal histories when filling out a job application, or from listing information in job postings which suggests that individuals with a criminal record will not be considered for the position.  However, the law still allows employers to investigate applicants’ criminal histories after an initial interview or earlier if the issue is raised by the applicant himself/herself.  Employers violating the Opportunity to Compete Act will face fines of $1,000 for a first offense, $5,000 for a second offense, and $10,000 for each subsequent violation.  The law is scheduled to take effect on March 1, 2015.

As reported in this earlier blog post, the legislation is designed to assist capable, qualified individuals with criminal backgrounds to avoid recidivism and have a fair opportunity to apply for jobs without being judged at the outset based on their troubled histories.  The enacted legislation, however, does provide employer exemptions for jobs where criminal background checks are mandated by law or for certain sensitive, security-related positions.

In contrast to the “Ban the Box” restrictions imposed on employers’ job applications, the New Jersey Appellate Division recently expanded employers’ rights to curtail job applicants’ ability to sue.  In the Appellate Division’s June 2014 decision in Rodriguez v. Raymours Furniture Co. Inc., Case No. A-4329-12T3, the Court ruled that New Jersey employers may limit the applicable statute of limitations for prospective employees seeking to sue their employers via the inclusion of a clear, unambiguous and reasonable provision in job applications.  In that case, an individual’s claims under the New Jersey Law Against Discrimination, which carries a two (2)-year statute of limitation, were dismissed after he was deemed to have waived the statute’s protections by signing the company’s employment application, which shortened the applicable statute of limitations to six (6) months.

Given the recent developments in the law under the Opportunity to Compete Act and the Rodriguez decision, it is recommended that New Jersey employers seek legal counseling and guidance with their job application processes and policies.

EEOC Issues Guidelines on Pregnancy Discrimination in the Workplace

Posted in Employment Policies and Practices, Harassment, Discrimination and Retaliation

For the first time in 30 years, on July 14, 2014, the Equal Employment Opportunity Commission (“EEOC”) has issued comprehensive guidelines for employers dealing with pregnant employees in the workplace (the “Guidance”).  Employers must remember that while EEOC guidance is not law, the Agency’s position on such topics will be relied upon by the courts.  The Guidance is available at: [http://www.eeoc.gov/laws/guidance/pregnancy_guidance.cfm]

The Guidance is extensive and addresses the treatment of pregnant and non-pregnant workers under the Pregnancy Discrimination Act (“PDA”) which amends Title VII of the Civil Rights Act of 1964 (“Title VII”), the Americans with Disabilities Act and the Family and Medical Leave Act.  Some of the highlights of the Guidance include the EEOC’s position on the following topics:

  • Employers may not discriminate against employees who are pregnant, or against a woman with a medical condition relating to pregnancy or childbirth, all of which is prohibited as sex discrimination;
  • The PDA requires employers to provide pregnant workers with equal access to employment benefits such as leave, light duty and health benefits; and
  • The Americans With Disabilities Act (“ADA”), with its broader definition of “disability,” applies to individuals with pregnancy-related impairments.

Of particular note, the Guidance “discourages” employers from even asking employees about pregnancy and other gender-related issues.  In addition, the Guidance establishes that employers must offer light duty to pregnant employees if they offer such positions to non-pregnant employees.  The Guidance also addresses the requirement that employers provide health insurance benefits that treat pregnancy-related costs in the same manner as non-pregnancy related costs.  The Guidance is extensive and addresses other issues not discussed in this post.

Practically, the Guidance provides “Best Practices” for employers to consult to avoid claims related to pregnancy.  Employers are well advised to become familiar with such practices.

The PDA, Title VII and the ADA apply to private employers with 15 or more employees, as well as government employers, labor organizations, employment agencies, and apprenticeship and training programs.

Employers are also reminded of the Patient Protection and Affordable Care Act’s amendment to the Fair Labor Standards Act, which establishes the requirement that employers provide a reasonable break time and private place for breastfeeding employees to express milk.

New Jersey Senate Bill Aimed at Protecting Job Applicants With Criminal History

Posted in Employment Policies and Practices, Harassment, Discrimination and Retaliation

Earlier this month, the New Jersey State Senate Budget and Appropriations Committee advanced a bill seeking to bar employers from inquiring about the criminal history of job applicants during initial interviews and on job applications.  Captioned as the “Opportunity to Compete Act”, Bill S2124 is aimed at affording job applicants with criminal backgrounds an opportunity to avoid early screening by employers based solely on their troubled pasts.  If the legislation is enacted, employers with 15 or more employees over the course of 20 calendar weeks will be precluded from asking an applicant questions about his/her criminal history or from conducting a criminal background check until after making a conditional job offer.  Employers breaking the law would face fines starting at $1,000 and capping at $10,000 based on the number of violations.  Exemptions from the Opportunity to Compete Act would apply to jobs in which criminal background checks are mandated by law or positions involved in law enforcement and homeland security, amongst others.

Backed by the New Jersey Institute for Social Justice, the bill is designed to assist criminal convicts returning to the labor force to live productive lives and avoid recidivism.  On the other hand, several employer and industry groups have expressed opposition to the bill, fearing that it unfairly restricts a company’s decisions on who to consider for employment and their means of doing so.  However, under the proposed legislation, while employers are prohibited from initially screening for job candidates with criminal backgrounds, they would still be able to later reject such applicants based on a subsequent review of their criminal histories.

Newark’s Paid Sick Leave Ordinance to Take Effect on June 21, 2014

Posted in Employment Policies and Practices

As we previously posted on March 20, 2014, the City of Newark, New Jersey passed a paid sick leave ordinance (the “Ordinance”), which requires private employers to provide paid sick leave to employees who work at least 80 hours per year in Newark.  According to the City of Newark’s official website, the Ordinance will take effect on June 21, 2014. A copy of the Ordinance can be found by clicking here.

Under the Ordinance, employees of private-sector employers who work at least 80 hours per year in Newark are eligible to earn such paid sick time. The Ordinance, however, specifically exempts public employees, employees of construction unions covered by collective bargaining agreements, and employees covered by collective bargaining agreements that specifically waive paid sick leave requirements. Employers with ten or more employees are required to provide up to 40 hours of paid sick leave per year. Employers with fewer than ten employees are required to provide up to 24 hours of paid sick leave per year. Child care workers, home health workers, and food service workers can accrue up to 40 hours of paid leave time in any given year, regardless of the number of employees their employer employs.

By June 21, 2014, employers in the City of Newark (and others who may be subject to the Ordinance) must notify employees of their rights under the Ordinance by providing written notice to each employee at the commencement of his/her employment, or as soon thereafter as practicable, concerning the Ordinance. Employers are also required to post a notice of worker’s rights under the Ordinance in a “conspicuous location around the workplace.” The notice required by the Ordinance must be posted in English and any language spoken by at least ten percent (10%) of the employer’s workforce. The City of Newark has not yet issued a “model notice” for employers to follow, and in the interim, employers subject to the Ordinance should prepare a written notice which conveys the keys terms of the Ordinance for their employees.

The City of Newark has also posted a list of Frequently Asked Questions (“FAQ’s”) on its website, which provides helpful information and can be found by clicking here.

Employers subject to the Ordinance should review their current paid sick leave policies to ensure they comply with the Ordinance. Employers should also prepare the proper notices required by the Ordinance, and post and distribute the required notices by no later than June 21, 2014.

Attention New York City Employers: New Unpaid Intern Protections to Take Effect June 14, 2014

Posted in Employment Policies and Practices, Harassment, Discrimination and Retaliation

As we previously posted on April 16, 2014 (click here), the recently-passed “unpaid intern” amendments to the New York City Human Rights Law (the “NYCHRL”) will become effective this weekend on June 14, 2014.  The timing of the amendments could not be more appropriate as many New York City employers are in the early days of their summer internship programs.  The amendments broaden the scope of the existing NYCHRL protections to include unpaid interns, who will now have the same rights as employees to sue employers for discrimination and harassment based upon their age, sex, race, national origin, disability or sexual orientation, amongst other protected class categories.

Under the amended statute, “interns” are defined as temporary workers, closely supervised by existing staff, whose work provides them with training or supplements an educational experience in a way that is intended to benefit those individuals.  This definition applies equally to all interns regardless of whether they are paid or unpaid.  If they have not done so already, New York City employers are strongly encouraged to review their discrimination and harassment policies and procedures to ensure that they are adequately protecting interns (and themselves) under the new amendments.