In the new issue of Take 5, our colleagues examine five employment, labor, and workforce management issues that will continue to be reviewed and remain top of mind for employers under the Trump administration:
The new episode of Employment Law This Week offers a year-end roundup of the biggest employment, workforce, and management issues in 2016:
- Impact of the Defend Trade Secrets Act
- States Called to Ban Non-Compete Agreements
- Paid Sick Leave Laws Expand
- Transgender Employment Law
- Uncertainty Over the DOL’s Overtime Rule and Salary Thresholds
- NLRB Addresses Joint Employment
- NLRB Rules on Union Organizing
Watch the episode below and read EBG’s Take 5 newsletter, “Top Five Employment, Labor & Workforce Management Issues of 2016.”
The Affordable Care Act (“ACA”) requires larger employers (50 or more full time equivalents) to offer “affordable” “minimum value” health care to employees working thirty (30) or more hours per week or face the possibility of significant penalties in some cases. Thus the cost of staffing with part time employees may be far less than paying for health insurance for workers working 30 or more hours.
At the same time, ERISA Section 510 (29 USC Section 1140) prohibits discrimination against an employee “for exercising any rights to which he is entitled under the provisions of any employee benefit plan…or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan…”
In a June 15, 2015 article published in Pension & Benefits Daily, we indicated that Marin v. Dave & Buster’s, Inc. et. al. (S.D.N.Y.) will likely be the first of what may be many such cases under the ACA. In this case, an employee who had been full time and working over thirty hours per week had her hours reduced to below thirty the effect of which was that she would not qualify for health insurance. As a result, she brought a putative class action lawsuit alleging a violation of ERISA Section 510. On February 9, 2010 Judge Hellerstein denied the Employer’s motion to dismiss, holding that allegations of intent to deprive plaintiff of health insurance would go to trial. Also of significance was his ruling that ERISA would allow an order requiring the employer to repay the employees if plaintiffs prevailed.
Marin had alleged that
- Company officials told employees that complying with the ACA would cost the Employer over two million dollars and that they were reducing the number of full timers to avoid the liability;
- That at restaurant meetings employees were told they were losing hours and health insurance;
- That a Company official had told a newspaper that the employer was in the process of “adapting to upcoming changes associated with Healthcare reform;” and
- The company reported in SEC filings that “Providing health insurance benefits to employees that are more extensive than the health insurance benefits we currently provide and to a potentially larger proportion of our employees, or the payment of penalties if the specified level of coverage is not provided at an affordable cost to employees, will increase our expenses.”
While defendants will properly argue that they have a right to make entrepreneurial decisions as to the necessary staffing and scheduling to provide the most economic labor cost (see Inter-Modal Rail Employees Assn. v. Atchison, Topeka and Santa Fe. Rlwy, 117 S.Ct. 1513 (1997)), employers should be wary of statements that suggest they are making staffing and scheduling decisions solely or principally on the basis of health care costs. Because of the potential for liability, some potential staffing patterns should be considered with an employer’s attorneys rather than non-attorney advisors. In addition, it may be that the Courts will recognize a difference between lowering hours of existing employees and setting new hire staffing patterns.
It is now clear that these and related issues will be developed over the next few years as more suits are brought and wend their way through the trial and appellate courts. In the meantime employers should be wary of what they say about healthcare issues, the ACA and benefit costs.
To register for this complimentary webinar, please click here.
I’d like to recommend an upcoming complimentary webinar, “EEOC Wellness Regulations – What Do They Mean for Employer-Sponsored Programs? (April 22, 2015, 12:00 p.m. EDT) presented by my Epstein Becker Green colleagues Frank C. Morris, Jr. and Adam C. Solander.
Below is a description of the webinar:
On April 16, 2015, the Equal Employment Opportunity Commission (“EEOC”) released its long-awaited proposed regulations governing employer-provided wellness programs under the American’s with Disabilities Act (“ADA”). Although the EEOC had not previously issued regulations governing wellness programs, the EEOC has filed a series of lawsuits against employers alleging that their wellness programs violated the ADA. Additionally, the EEOC has issued a number of public statements, which have concerned employers, indicating that the EEOC’s regulation of wellness programs would conflict with the regulations governing wellness programs under the Affordable Care Act (“ACA”) and jeopardize the programs currently offered to employees.
During this webinar, Epstein Becker Green attorneys will:
- summarize the EEOC’s recently released proposed regulations
- discuss where the EEOC’s proposed regulations are inconsistent with the rules currently in place under the ACA and the implications of the rules on wellness programs
- examine the requests for comments issued by the EEOC and how its proposed regulations may change in the future
- provide an analysis of what employers should still be concerned about and the implications of the proposed regulations on the EEOC’s lawsuits against employers
Who Should Attend:
- Employers that offer, or are considering offering, wellness programs
- Wellness providers, insurers, and administrators
To register for this complimentary webinar, please click here.
My colleagues Frank C. Morris, Jr., Adam C. Solander, and August Emil Huelle co-authored a Health Care and Life Sciences Client Alert concerning the EEOC’s proposed amendments to its ADA regulations and it is a topic of interest to many of our readers.
Following is an excerpt:
On April 16, 2015, the Equal Employment Opportunity Commission (“EEOC”) released its highly anticipated proposed regulations (to be published in the Federal Register on April 20, 2015, for notice and comment) setting forth the EEOC’s interpretation of the term “voluntary” as to the disability-related inquiries and medical examination provisions of the American with Disabilities Act (“ADA”). Under the ADA, employers are generally barred from making disability-related inquiries to employees or requiring employees to undergo medical examinations. There is an exception to this prohibition, however, for disability-related inquiries and medical examinations that are “voluntary.”
Click here to read the full Health Care and Life Sciences Client Alert.
One day before the U.S. Department of Labor’s Family & Medical Leave Act (“FMLA”) same-sex spouse final rule took effect on March 27, 2015, the U.S. District Court for the Northern District of Texas ordered a preliminary injunction in Texas v. U.S., staying the application of the Final Rule for the states of Texas, Arkansas, Louisiana, and Nebraska. This ruling directly impacts employers within the hospitality industry who are located or have employees living in these four states.
In United States v. Windsor, the U.S. Supreme Court struck down Section 3 of the Defense of Marriage Act (“DOMA”) as unconstitutional, finding that Congress did not have the authority to limit a state’s definition of “marriage” to “only a legal union between one man and one woman as husband and wife.” Significantly, the Windsor decision left intact Section 2 of DOMA (the “Full Faith and Credit Statute”), which provides that no state is required to recognize same-sex marriages from other states. Further to the President’s directive to implement the Windsor decision in all relevant federal statutes, in June 2014, the DOL proposed rulemaking to update the regulatory definition of spouse under the FMLA. The Final Rule is the result of that endeavor.
As we previously reported, the Final Rule adopts the “place of celebration” rule, thus amending prior regulations which followed the “place of residence” rule to define “spouse.” For purposes of the FMLA, the place of residence rule determines spousal status under the laws where the couple resides, notwithstanding a valid out-of-state marriage license. The place of celebration rule, on the other hand, determines spousal status by the jurisdiction in which the couple was married, thus expanding the availability of FMLA leave to more employees seeking leave to care for a same-sex spouse.
The Court’s Decision
Plaintiff States Texas, Arkansas, Louisiana, and Nebraska sued, arguing the DOL exceeded its authority by promulgating a Final Rule that requires them to violate Section 2 of the DOMA and their respective state laws prohibiting the recognition of same-sex marriages from other jurisdictions. The Texas court ordered the extraordinary remedy of a preliminary injunction to stay the Final Rule pending a full determination of the issue on the merits.
The court first found that the Plaintiff States are likely to succeed on at least one of their claims, which assert that the Final Rule improperly conflicts with (1) the FMLA, which defines “spouse” as “a husband or wife, as the case may be” and which the court found was meant “to give marriage its traditional, complementarian meaning”; (2) the Full Faith and Credit Statute; and/or (3) state laws regarding marriage, which may be preempted by the Final Rule only if Congress intended to preempt the states’ definitions of marriage.
The court then held that the Final Rule would cause Plaintiff States to suffer irreparable harm because, for example, the Final Rule requires Texas agencies to recognize out-of-state same-sex marriages as valid in violation of the Texas Family Code.
Lastly, although finding the threatened injury to both parties to be serious, the court decided that the public interest weighs in favor of a preliminary injunction against the DOL. The court found in favor of upholding “the stability and consistency of the law” so as to permit a detailed and in-depth examination of the merits. Additionally, the court pointed out that the injunction does not prohibit employers from granting leave to those who request leave to care for a loved one, but reasoned that a preliminary injunction is required to prevent the DOL “from mandating enforcement of its Final Rule against the states” and to protect the states’ laws from federal encroachment.
What This Means for Employers
Although the stay of the Final Rule is pending a full determination of the issue on the merits, the U.S. Supreme Court’s decision in Obergefell v. Hodges likely will expedite and shape the outcome of the Texas court’s final ruling. In Obergefell, the Supreme Court will address whether a state is constitutionally compelled under the Fourteenth Amendment to recognize as valid a same-sex marriage lawfully licensed in another jurisdiction and to license same-sex marriages. Oral arguments in Obergefell are scheduled for Tuesday, April 28, 2015, and a final ruling is expected in late June of this year.
Before the U.S. Supreme Court decides Obergefell, however, employers in Texas, Arkansas, Louisiana and Nebraska are advised to develop a compliant strategy for implementing the FMLA—a task that may be easier said than done. Complicating the matter is a subsequent DOL filing in Texas v. U.S. where the DOL contends that the court’s order was not intended to preclude enforcement of the Final Rule against persons other than the named Plaintiff States, and thus applies only to the state governments of the states of Texas, Arkansas, Louisiana, and Nebraska.
While covered employers are free to provide an employee with non-FMLA unpaid or paid job-protected leave to care for their same-sex partner (or for other reasons), such leave will not exhaust the employee’s FMLA leave entitlement and the employee will remain entitled to FMLA leave for covered reasons. We recommend that covered employers that are not located and do not have employees living in one of the Plaintiff States amend their FMLA-related documents and otherwise implement policies to comport with the Final Rule, as detailed in EBG’s Act Now Advisory, DOL Extends FMLA Leave to More Same-Sex Couples. Covered employers who are located or have employees living in one of the Plaintiff States, however, should confer with legal counsel to evaluate the impact of Texas v. U.S. and react accordingly, which may depend on the geographical scope of operations.
Our colleagues Adam C. Solander, August Emil Huelle, Stuart M. Gerson, René Y. Quashie, Amy F. Lerman, Frank C. Morris, Jr., Kevin J. Ryan, and Griffin W. Mulcahey contributed to Epstein Becker Green’s recent issue of Take 5 newsletter. In this special edition, we address important health care issues confronting hospitality employers:
- Potential ACA Changes Impacting Health Care Employers Under the New Congress
- Pending Supreme Court Cases Involving the Affordable Care Act
- Telemedicine and Employers: The New Frontier
- Wellness Programs Under EEOC Attack—What to Do Now
- Employer-Sponsored, On-Site Health Care
Our colleague August Emil Huelle at Epstein Becker Green has an Employee Benefits Insight Blog post that will be of interest to many of our readers: “Legislation Introduced to Change Full-Time Employee Definition under the Affordable Care Act.”
Following is an excerpt:
On January 7, 2015, U.S. Senators Susan Collins (R-ME) and Joe Donnelly (D–IN) along with Lisa Murkowski (R-AK) and Joe Manchin (D-WV) introduced the Forty Hours is Full Time Act, legislation that would amend the definition of a “full-time employee” under the Affordable Care Act to an employee who works an average of 40 hours per week. In the coming days, the House is expected to vote on its own version of this legislation, the Save American Workers Act.
The teeth of the Affordable Care Act have the ability to sink excise taxes on employers who do not offer affordable healthcare coverage to full-time employees, which the Affordable Care Act defines as employees who work an average of 30 hours per week. In announcing the introduction of the legislation, Senator Collins argued that the current definition “creates a perverse incentive for businesses to cut their employees’ hours so they are no longer considered full time.” The implication being that the Forty Hours is Full Time Act will increase employee wages because the employers who reportedly reduced employee hours below 30 per week in an effort to avoid costs associated with providing healthcare coverage to employees (or the tax for not providing coverage to employees) are the same employers who will raise employee hours above 30 per week if they are not faced with such costs.
Read the full blog post here.
As the Employer Mandate compliance deadline looms for employers under the Affordable Care Act (“ACA”) and employers are closely monitoring employee hours, it is critical that employers take appropriate and lawful steps to record all hours worked by an employee. If employers try to play games and manipulate how time records are maintained, they could find themselves in hot water under both the ACA and the Fair Labor Standards Act (“FLSA”).
In what appears to be one of the first lawsuits challenging how hours are recorded under the ACA, an employee filed a putative collective action against Sun Holdings, LLC, a fast food franchisee. The employee, a busboy at a Golden Corral restaurant, alleged that his managers required him to work under his real name and an alter ego to avoid paying him for all hours worked. This set-up allegedly was designed to avoid having to pay overtime compensation under the FLSA and to count him as a full-time employee eligible to receive health benefits under the ACA.
Accurate calculation and recording of the total number of hours worked by an employee is essential to compliance with the provisions of both the FLSA and the ACA. Under the FLSA, an employer must pay an employee at least the minimum wage for all hours worked. An employer must also provide overtime compensation at one and a half times the employee’s regular rate of pay for any hours worked in excess of 40 hours per week, unless that employee is classified as exempt. Therefore, if an employer attributes some amount of time worked by one employee to an alter ego through which the employee cannot claim his time, the employee may be deprived of the overtime compensation he has earned.
Additionally, the ACA only provides benefits to employees who reach a certain amount of hours and binds employers with a certain amount of employees meeting that hour threshold. The ACA applies to employers with 50 or more employees working 30 or more hours per week. Only those employees working 30 hours or more per week are entitled to the health care coverage required by the ACA. Therefore, an employee may lose the benefits to which he would otherwise be entitled if a portion of his hours worked is attributed to someone else, causing him to fall below the 30-hour minimum. Furthermore, an employer may avoid the obligations of the ACA if it records 30 hours or more of work time for less than 50 of its employees. Although the Employer Mandate, which puts the employer-provided coverage into effect, does not kick in for large employers until January 1, 2015, applicability of the ACA depends upon the size of the affected workforce during the prior calendar year.
A claim of this kind could be very costly for an employer because, as is the case here, such claims are often brought as collective actions. In this case, the employee filed his claim on behalf of himself and all others similarly situated. Although the amount of unpaid wages and liquidated damages he seeks only amounts to approximately $15,000.00, the franchisee owns roughly 400 restaurants in Texas and Florida. Thus, a court award, or even a settlement, could be quite significant.
These allegations demonstrate the importance of correctly tracking employee hours and ensuring that an employee receives compensation and benefits in accordance with the total amount of hours worked. Often times, this may mean training your managers as to the correct protocol for recording and compensating hours worked and monitoring to ensure managers are following that protocol.
Importantly, this case forecasts what could be an emerging and growing area of litigation under the ACA, so employers must be ever vigilant about putting into practice protocols that ensure they are complying with the ACA and not manipulating hours to avoid the Employer Mandate’s requirements. Considering that an analysis under the Employer Mandate’s look-back methodologies should be done this year, any changes to employees’ hours should be closely reviewed with legal counsel. Although overtime compensation and benefits coverage can create increased financial burdens on employers, the cost of not complying can be even greater.
On February 10, 2014, the Treasury Department and the Internal Revenue Service issued highly anticipated final regulations implementing the employer shared responsibility provisions of the Affordable Care Act, also known as the “employer mandate.” The employer mandate requires that large employers offer health coverage to full-time employees or pay a penalty.
The rules make several changes in response to comments on the original proposed regulations issued in December 2012, as well as provide significant transition relief. Most notably, under the new regulations:
· An employer with 50 to 99 full-time employees does not have to comply until 2016 provided that it does not reduce the size of its workforce or overall hours of service in order to gain this transition relief. Such employers must also maintain any health coverage offered as of February 9, 2014.
· Employers with 100 or more full-time employees will have to comply starting in 2015.
· For 2015 only, employers do not need to offer coverage to dependents of full-time employees, defined as children up to the age of 26. This requirement applies in 2016 and beyond.
While much of the media attention has focused on the delays in the employer mandate, it is important for hospitality employers that have seasonal employees or fluctuating work weeks to be aware of other notable provisions. In particular:
· The final regulations provide a bright-line definition for “seasonal employee,” clarifying that seasonal employees are those who work six months or less annually. Therefore, employees who work six months or less in a year generally will not be considered full-time employees.
· The final regulations create a “weekly rule,” under which full-time employee status for certain calendar months is based on hours of service over four-week periods and for certain other calendar months on hours of service over five-week periods.
Shortly, the Treasury Department and Internal Revenue Service are also expected to issue final regulations addressing the employer reporting requirements needed to enforce the employer mandate.