Playing with Employees' Hours Could Get You in Hot Water under the ACA and FLSA

By:  Kara Maciel, Adam Solander and Lindsay Smith

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. 

Delay In "Employer Mandate" Regulations Impacts Hospitality Employers - Especially Those With Seasonal Employees or Fluctuating Work Weeks

By Kara Maciel and Adam Solander

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.

ACA's Employer "Pay or Play" Mandate Delayed - What Now for Employers?

A recent article in Bloomberg BNA's Health Insurance Report will be of interest to hospitality industry employers: "ACA's Employer 'Pay or Play' Mandate Delayed - What Now for Employers?" by Frank C. Morris, Jr., and Adam C. Solander, colleagues of ours, based in Epstein Becker Green's Washington, DC, office. Following is an excerpt:,,

The past few weeks have changed the way that most employers will prepare for the employer ‘‘shared responsibility'' provisions of the Affordable Care Act (ACA). Over the past year or so, employers have scrambled to understand their obligations with respect to the shared responsibility rules and implement system changes, oftentimes with imperfect information to guide their efforts to comply with ACA.

Understanding the difficulties that both employers and the health insurance exchanges or marketplaces would have, the Internal Revenue Service (IRS) on July 2 issued a press release stating it would delay the shared responsibility provisions and certain other reporting requirements for one year, until Jan. 1, 2015.

On July 9, the IRS published Notice 2013-45 (Notice), providing additional information on the one-year delay. Specifically, the following three ACA requirements are delayed:

  1. The employer shared responsibility provisions under Section 4980H of the Internal Revenue Code (Code), otherwise known as the employer mandate;
  2. Information reporting requirements under Section 6056 of the Code, which are linked to the employer mandate; and
  3. Information reporting requirements under Section 6055 of the Code, which apply to self-insuring employers, insurers, and certain other providers of ‘‘minimum essential coverage,'' as defined by ACA.

The IRS notice clarifies that only the above three requirements are delayed. The notice does not affect the effective date or application of other ACA provisions, such as the premium tax credit or the individual mandate. Given the fact that the law itself is not delayed, the notice has raised significant issues for employers despite their being generally pleased with the mandate and penalty delay. This article will discuss the impact of the delay and some of the issues that employers should consider as a result of the delay.

Click here to download the full article in PDF format. The attached file is reproduced with permission from Health Insurance Report, 19 HPPR 28, 7/31/13. Copyright © 2013 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com

Stuart Gerson: 4th Circuit Upholds Employer Mandate Under Commerce Clause, Tax Power

Our Epstein Becker Green colleague Stuart M. Gerson recently commented in an article titled "4th Circuit Upholds ACA's Employer Mandate, Says Insurance Regulation Within Commerce," by Mary Anne Pazanowski, in Bloomberg BNA's Health Care Daily Report. Following is an excerpt:

A unanimous U.S. Court of Appeals for the Fourth Circuit July 11 declared the Affordable Care Act's employer mandate a valid exercise of Congress's power to regulate commerce under the U.S. Constitution's Commerce Clause (Liberty University Inc. v. Lew, 4th Cir., No. 10-2347, 7/11/13).

In an opinion co-authored by Judges Diana Gribbon Motz, James A. Wynn Jr., and Andre M. Davis, the court held that the mandate is ‘‘simply an example of Congress's longstanding authority to regulate employee compensation offered and paid for by employers in interstate commerce.''

The ruling comes in a case filed by Liberty University Inc. and two individual plaintiffs that challenged both the individual and employer mandates. Treasury Secretary Jacob Lew has been substituted as a defendant in place of former Secretary Timothy Geithner.

Stuart Gerson, a former acting U.S. attorney general who is now an attorney with Epstein Becker Green in Washington, told BNA July 11 that ‘‘there is considerable force to the Fourth Circuit's view that health insurance decisions affect employment, which itself is a matter of interstate commerce.''

He predicted that, if the case returns to the Supreme Court—as seems likely based on a July 11 press release from the university's attorneys—there would be four solid votes to uphold the Fourth Circuit's ruling. But, he said, ‘‘it is difficult to predict how the chief justice and the other four conservative justices come out on this point.'' He added, though, that ‘‘one must at least recognize that there is a difference between an individual's decision not to engage in commerce and the clear commercial activity in which Liberty indisputably engages.''

Of course, Gerson said, if the conservatives on the high court vote to uphold Liberty's challenge to the employer mandate, Chief Justice John G. Roberts Jr. ‘‘could again perform the legerdemain and create a fifth vote for affirmance by holding that the employer man- date is supportable under the tax power as was the individual mandate in NFIB. The Fourth Circuit's alternative reasoning allows for this result.''

ACA Creates Unique Compliance Issues for Hospitality Employers

Bloomberg BNA's Daily Labor Report recently published an article I coauthored with my Epstein Becker Green colleague Adam C. Solander: "For Employers with High Turnover and Large Numbers of Seasonal Workers, the ACA Creates Unique Compliance Issues." (Click to download the article in PDF format.)

Following is an excerpt:

The Affordable Care Act provides unique compliance obligations for employers in certain industries, such as the retail, lodging, restaurant, and grocery sectors, many of which employ large numbers of part-time and seasonal employees, and may comprise multiple smaller employers.

Of paramount concern for these employers, as for all employers, is the impending application of the shared responsibility rules. The guidance to date has been very much a mixed bag for these high-turnover industries. Some of the shared responsibility provisions will have a greater impact on these industries because of their size and employee mix, while others provide useful interpretations that will lessen some of the negative impacts of these rules.

This article will briefly examine the four major steps required under the shared responsibility rules in the context of these industries. These include: (1) determining whether the business is subject to the shared responsibility rules; (2) identifying the number of full-time employees a particular employer may have; (3) examining the way the shared responsibility rules relate to high-turnover industries; and (4) identifying strategies for compliance.

As background, the employer shared responsibility rules provide that ‘‘applicable large employers'' with 50 or more full-time employees (including full-time equivalent employees) will be subject to a tax penalty if any full-time employee receives a premium tax credit or cost-sharing reduction to purchase health coverage through a health insurance exchange.

Generally, an employee is eligible for a cost-sharing subsidy if: (1) an employer does not offer the majority of its full-time employees (and their dependents) the opportunity to enroll in coverage; or (2) an employer offers its full-time employees the opportunity to enroll in coverage, but the coverage is ‘‘unaffordable'' or does not provide ‘‘minimum value.''

Conceptually, the shared responsibility rules are not difficult to understand. However, as with all things ACA, the devil is in the details and the details are what complicate shared responsibility compliance for high- turnover industries.

More on the ACA Employer Mandate Delay: Employers Get Welcome Relief from Penalties Until 2015, but Many Questions Remain

I’ve posted a client advisory on the recent ACA employer mandate delay, with my colleagues Frank C. Morris, Jr.; Elizabeth Bradley; and Adam Solander. We explore the ramifications and unresolved issues that employers should consider. Following is an excerpt:

In reaction to employers' concerns about the many difficulties posed in efforts to comply with the Employer Mandate provisions of the Affordable Care Act ("ACA"), the Obama administration ("Administration") announced late yesterday that it is delaying the implementation of the penalty provisions and other aspects of the shared responsibility regulations until 2015. While the delay may have been to accommodate stakeholder requests, the delay also may have accommodated the Administration in connection with its readiness to implement the Employer Mandate. This delay could be a precursor to other implementation delays as the Administration seeks to make the ACA's implementation successful, especially in light of intense scrutiny as to implementation and an inability to amend the law in Congress.

Read the full advisory: Employer Mandate Delayed—Employers Get Welcome Relief from Penalties Until 2015, but Many Questions Remain.

ACA Webcast, March 5 - What Hospitality Employers Need to Know Now!

Presented by:  Gretchen Harders and Kara M. Maciel

Tuesday, March 5, 2013 at 12:00pm EST / 9:00am PST

To Register, please click here

Please join Epstein Becker Green’s Labor & Employment practitioners as we continue to review the Affordable Care Act and its ongoing impact on hospitality employers and their group health plans and programs.

This webcast will provide an update on the implementation of the law including planning for 2014 and beyond and will focus on how the law will impact hospitality employers both large and small, and what they should do now to plan for it.

During this program, Epstein Becker Green practitioners will:
 
• Review the ACA implementation timeline
• Discuss the structure of the law and basic concepts affecting hospitality employers 
• Discuss critical employer decision making and planning for 2014
• Review alternative plan design options available to hospitality employers
• New developments

Registration Is Complimentary and Reservations are Limited

Don't Miss This Opportunity!   To Register, please click here.

Five Actions Hospitality Employers Should Consider Taking to Comply with the Affordable Care Act

By Greta Ravitsky

I wrote the January 2013 edition of Take 5: Views You Can Use, a newsletter published by the Labor and Employment practice of Epstein Becker Green.

In it, I summarize five actions that hospitality employers should consider taking in 2013 as the DOL steps up its audit efforts under the leadership of the reenergized Obama administration,

  1. Assess the Workforce
  2. Choose Whether to “Pay” or to “Play”
  3. Evaluate Existing Wellness Programs and/or Implement New Wellness Programs to Enhance Employees’ Health Profiles and to Avoid or Minimize the “Cadillac Tax”
  4. Understand and Be Ready to Comply with New Tax-Related Changes and Requirements
  5. Conduct Self-Audits to Ensure Compliance

The following is an excerpt:

With the U.S. presidential election behind us, it is clear that the Patient Protection and Affordable Care Act (“Affordable Care Act”) is likely here to stay, having survived a U.S. Supreme Court case challenge last June. While affected employers can avoid facing penalties until 2014 for not making health care coverage available to their workforce, the U.S. Department of Labor (“DOL”) has begun auditing employers’ group health plans for compliance with other requirements of the law that are already in effect. As the DOL steps up its audit efforts under the leadership of the reenergized Obama administration, below are five actions that employers should consider taking in 2013.

Read the full version on EBGlaw.com.

IRS Releases New Affordable Care Act Guidance on the Employer Mandate

By: Kara M. Maciel, Adam Solander, Brandon Ge and Philo Hall

As we blogged about previously, the Affordable Care Act provides unique compliance obligations for hospitality employers, many of whom employ large numbers of part-time and seasonal employees.  On December 28, 2012, the Internal Revenue Service (“IRS”) released a Notice of Proposed Rulemaking (“NPRM”) on Shared Responsibility for Employers Regarding Health Coverage (the “Employer Mandate”) under the Affordable Care Act (“ACA”). The NPRM largely incorporates previously released guidance on the subject (IRS Notices 2011-36, 2011-73, 2012-17, and 2012-58).  Employers may rely on these proposed regulations for guidance until final regulations are issued.

Comments on the NPRM are due to the IRS by March 18, 2013.  The IRS has also scheduled a public hearing on April 23, 2013 to receive feedback on these issues. The Employer Mandate requirements under the NPRM take effect on January 1, 2014.

Overview

The Employer Mandate provides that employers with 50 or more full-time employees (including full-time equivalent employees) will be penalized if any full-time employee receives a premium tax credit or cost-sharing reduction to purchase health coverage through an Affordable Health Insurance Exchange (“Exchange”). Generally, an employee is eligible for a cost-sharing subsidy if: (1) an employer does not offer its full-time employees the opportunity to enroll in coverage; or (2) an employer offers its employees the opportunity to enroll in coverage, but the coverage is “unaffordable” or does not provide “minimum value.”

Applicable Large Employers

Under ACA, employers are considered to be “applicable large employers” and, therefore, subject to the Employer Mandate if they employ 50 or more “full-time” employees or a combination of “full-time” and part-time employees that equals 50 “full-time” equivalent employees.  

A full-time employee is an employee (including seasonal employees) who provides an average of 30 hours of service per week.  To calculate the number of “full-time equivalent” employees, an employer must aggregate the number of hours worked by all part-time employees (including seasonal employees) and divide this figure by 120.  The average monthly number of full-time employees plus “full-time equivalents” for the preceding calendar year determines whether an employer is an “applicable large employer.”

There is a seasonable employee exception, which applies when an employer’s workforce exceeds 50 full-time employees for no more than 120 days or four calendar months (which need not be consecutive) during a calendar year if the employees in excess of 50 during that period were seasonal employees. Employers may use a reasonable, good faith interpretation of the term seasonal worker until the IRS issues further guidance.

For purposes of determining whether an employer employs at least 50 full-time employees, companies that have common ownership or are otherwise related (such as certain franchises) will be combined using a test codified at Section 414 of the Internal Revenue Code.  However, this aggregation rule will not be applied to companies for the purposes of determining potential liability and payment amount under the Employer Mandate.

Full-Time Employees

An employee’s hours of service include each hour for which the employee is paid for performance of services, or entitled to payment even when no work is performed (for example, due to vacation, illness, or leave of absence).

Previous guidance proposed, and the NPRM adopted, a “look-back stability safe harbor method” for determining whether employees worked the requisite average of 30 hours per week to be considered full-time. Generally, under this approach, employers are allowed to select a period of time between three months and one year to use as a “measurement period” to determine if an employee worked an average of 30 hours a week.  If an employee provided 30 hours of service per week during the “measurement period,” then the employer must treat the employee as a full-time employee for a corresponding “stability period” regardless of the number of hours of service the individual works over that time period. Generally, an employer must use the same look-back period for all employees but may use different periods for certain categories of employees.

Offer of Coverage/Dependent Coverage

The Employer Mandate imposes liability on employers who do not offer their full-time employees the opportunity to enroll in minimum essential coverage. One of the more controversial aspects of the NPRM is that it requires employers to offer coverage to not only full-time employees, but their dependents as well. The NPRM defines dependents as children up to age 26, but does not include spouses in the definition.

To provide employers sufficient time to implement these changes, the NPRM provides a transition relief period with respect to dependent coverage for 2014. Under this relief, any employer that takes steps in 2014 to fulfill its obligations to offer coverage to dependents of full-time employees will not be liable for any tax payment under the law solely on account of failing to offer coverage to dependents in plan year 2014.

Determination of Affordability and Minimum Value

If an employer offers full-time employees the opportunity to enroll in minimum essential coverage, the employer will still be liable if the coverage is either “unaffordable” or does not provide “minimum value.” Coverage is affordable if the employee’s premium obligation for self-only coverage does not exceed 9.5 percent of the employee’s household modified adjusted gross income. Because, household income is not readily known to employers, the NPRM provides three safe harbors that provide more certainty with regard to the affordability of coverage.

The minimum value standard will be further addressed in subsequent guidance. A calculator will be available that will be similar to the actuarial value calculator provided by the U.S. Department of Health and Human Services. A plan will be deemed to provide minimum value if it covers at least 60 percent of the total allowed cost of benefits that the plan is expected to incur.

Calculation of the Penalty

If an applicable large employer does not offer coverage or offers coverage to less than 95 percent of its full-time employees, it must pay a penalty of $2,000 for each full-time employee (minus the first 30) if any employee receives a premium tax credit.

For employers that offer coverage for some months but not others during a calendar year, the penalty will be computed separately for each month in which the employer did not offer coverage.

This penalty will be equal to 1/12th of $2,000 for each full-time employee employed for the month (minus up to the first 30 depending on whether the employer is related to other employers).

If an employer offers coverage to 95 percent or more of its full-time employees, it must nonetheless pay the tax penalty if one or more full-time employees receive a premium tax credit on the basis of the coverage not being “affordable” or not providing “minimum value.” This penalty will be equal to 1/12th of $3,000 for each full-time employee who received a premium tax credit for the month.  The NPRM provides that the amount paid under this scenario cannot exceed the amount the employer would have had to pay if it did not offer coverage.

EBG counsels clients on ACA implementation requirements and will continue to track developments in the area.

Affordable Care Act Webinar, January 9 - To Pay or To Play: An Analysis of the Shared Responsibility Rules

Please join Epstein Becker Green’s Health Care & Life Sciences and Labor & Employment practitioners as we continue to review the Affordable Care Act and its ongoing impact on hospitality employers and their group health plans.

In less than a year, hospitality employers employing at least 50 full-time employees will be subject to the Employer Shared Responsibility provisions. Under these provisions, if hospitality employers do not offer health coverage or do not offer affordable health coverage that provides a minimum level of value to their full-time employees, they may be subject to a tax penalty under the proposed regulations just issued by the Internal Revenue Service.

During this program, Epstein Becker Green practitioners will:

  • Review the basics of the Employer Shared Responsibility provisions and proposed regulations
  • Define employer status under the proposed regulations
  • Clarify the definition of "full-time" employees and dependents who must be offered coverage
  • Discuss the determination of affordable and minimum value coverage
  • Review employer liabilities and penalties

This is the third session in the Employer Affordable Care Act Webinar Series for employers on upcoming rules and regulations implementing the Affordable Care Act. Please stay tuned for upcoming webinars on:

  • Exchange Implementation
  • Essential Health Benefits
  • Quality Reporting
  • And others...

Epstein Becker Green Presenters:
Mark E. Lutes
Frank C. Morris, Jr.

Adam C. Solander

Wednesday, January 9, 2013
1:00 - 2:00 pm EST
10:00 - 11:00 am PST

Registration Is Complimentary and Webinar Space Is Limited

Don't Miss This Opportunity! To Register, please click here.

Contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com for more information. If you missed the first two webinars in the New ACA Implementation Regulation series, the audio recording and presentation slides are now available.

Affordable Care Act Webinar Recording and Presentation Slides Now Available

On Tuesday, December 18, Epstein Becker Green attorneys Gretchen Harders, Frank C. Morris, Jr., and Adam C. Solander offered a one-hour webinar titled “What Employers Need to Know Now!” as the second webinar in a series on the New ACA Implementation Regulations: Employer Impact.

The webinar included:

  • ACA implementation timeline
  • Structure of the law and basic concepts affecting hospitality employers
  • Critical employer decision making and planning for 2014
  • Alternative plan design options available to hospitality employers

The webinar recording and presentation slides for “What Employers Need to Know Now!” are now available. Contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com, to obtain a password to download the files.

ACA Webinar, Dec. 18: What Employers Need to Know Now!

Please join Epstein Becker Green’s Health Care & Life Sciences, Employee Benefits, and Labor & Employment practitioners as we continue to review the Affordable Care Act and its ongoing impact on hospitality employers and their group health plans and programs.

Since the Presidential election, The U.S. Department of Health and Human Services is moving quickly to implement the Affordable Care Act. Rules have been released in the past few weeks concerning participation in federal exchanges, discrimination based on pre-existing conditions, essential health benefit requirements, and expanded employment-based wellness.

During this program, Epstein Becker Green practitioners will:

  • Review the ACA implementation timeline
  • Discuss the structure of the law and basic concepts affecting hospitality employers
  • Discuss critical employer decision making and planning for 2014
  • Review alternative plan design options available to employers

This is the second in the Employer Affordable Care Act Webinar Series for hospitality employers on upcoming rules and regulations implementing the Affordable Care Act. Please stay tuned for upcoming webinars on:

  • Exchange Implementation
  • Shared Responsibility
  • Calculation of Full-time Employees
  • Quality Reporting
  • And others…

Presenters: Gretchen Harders Frank C. Morris, Jr. Adam C. Solander

Registration Is Complimentary and Seating Is Limited

Don’t Miss This Opportunity! To Register, please click here.

In addition to this blog, EBG’s PPACA and HEAL blogs will also post ACA regulatory developments.

For additional Information, please contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com.

Employer Affordable Care Act Webinar Series

Please join Epstein Becker Green’s Health Care & Life Sciences and Labor & Employment practitioners in a webinar series for Hospitality employers.

On Friday, November 30, Epstein Becker Green attorneys Frank C. Morris, Jr., and Adam C. Solander offered a one-hour webinar titled “The New Wellness Program Regulations, Part of a Webinar Series on the New ACA Implementation Regulations: Employer Impact.”

The webinar discussed:

  • the proposed regulations and the impact these regulations could have on your overall wellness strategy
  • areas where employer comment is needed
  • recent wellness litigation trends
  • where EEOC fits in the picture

This was the first in the Employer Affordable Care Act Webinar Series for Hospitality employers on upcoming rules and regulations implementing the Affordable Care Act.  Please stay tuned for upcoming webinars on:

  • Exchange Implementation
  • Shared Responsibility
  • And others …

Registration is complimentary.

In addition to this blog, EBG’s PPACA blog will also post regulatory developments.

For additional Information, please contact
Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com, or Lisa Blackburn at 202/861-1887 or
lblackburn@ebglaw.com.

Timeline of Highlights for Employer Group Health Plan Compliance with the Affordable Care Act

Now that the Supreme Court of the United States has upheld essentially all of the provisions of the Obama administration's Affordable Care Act ("ACA"), hospitality employers are faced with looming deadlines to bring their group health plans into compliance with the ACA's numerous new requirements. We have prepared for employers a timeline of the highlights of the upcoming deadlines for compliance with the ACA that apply to non-grandfathered group health plans.

Click here to access a copy of the timeline.

 

NLRB v. Specialty Healthcare: The Hot Debate Rages On

By: Paul Rosenberg

Last week the National Labor Relations Board (“NLRB”) urged the U.S. Court of Appeals for the Sixth Circuit to uphold its controversial Specialty Healthcare decision.  The NLRB’s 3-1 split decision in Specialty Healthcare and Rehabilitation Center of Mobile, overturned a 1991 decision and held that an employer that challenges a proposed bargaining unit on the basis that it improperly excludes certain employees is required to prove that the excluded workers share “an overwhelming community of interest” with those in the proposed unit. 

The NLRB argued its ruling merely codifies an old standard – not created a new one.  The NLRB also asserted that it is only required to approve an appropriate bargaining unit – not the most efficient unit or the one that is the most convenient for the employer.  On the contrary, in its brief before the Court, the company argued that the NLRB's decision to approve the “mini unit” represented a “sea change” that will have an impact not merely in the health care industry, but in all cases falling within the board's jurisdiction.  That brief argued that the “overwhelming community of interest” standard effectively makes every discrete job classification (i.e. job title) a viable bargaining unit and essentially delegates unit determination to the petitioning union.

Congress has also entered into the fray.  Earlier this week, South Carolina Senator Graham announced that he would introduce an amendment to the Labor, Health and Human Services appropriations bill when the Senate Appropriations Committee marks it up.  The measure would ban the use of federal funds to implement the Specialty Healthcare ruling.  Senator Graham explained the legislation is necessary to protect the private sector: 

You expect an agency not to become a political advocacy group, and this ruling is just creating havoc in the private sector when the private sector is not doing fine.

Hospitality employers should continue to monitor whether Specialty Healthcare is allowed to stand.  Should the ruling remain in-tact, UNITE HERE, IUOE and other labor unions will have an open road to cherry pick job titles within departments.  To prepare for this possibility hotels’ executive committees should conduct quarterly reviews with department heads to determine if there are weak areas within specific departments which may be susceptible to organizing.  Once areas of vulnerability are discovered they should be promptly corrected.

Doing It Right: New Considerations for International Hospitality Groups

By: Jay P. Krupin and Dana Livne

Historically, the United States has continuously attracted international commerce and investment. In recent years, in spite of a challenging economic situation, international hospitality groups continue to seek opportunities in the US for financial growth, promotion, and strategic reasons. When they do so, they must comply with unfamiliar and complex labor and employment laws which are constantly changing. In the US especially, the increasingly litigious environment can affect every step of the enterprise – right from the start. Particularly, in a presidential election year, international hospitality groups that are planning to hire and employ a workforce in the US are advised keep apprised of legal shifts in these three important areas:

Health Care Reform

The Patient Protection and Affordable Care Act, also known as “Health Care Reform,” was enacted into law to extend and amend health insurance coverage to employees in the United States. Earlier this month, the U.S. Supreme Court heard oral arguments on the law’s validity, and a decision is expected in June 2012. Hospitality groups, in particular, will need to plan ahead in light of the decision and prepare to manage significantly increasing costs of coverage.

Management-Labor Relations

In the United States, trade unions have reemerged as a power base to ostensibly represent employees’ interests. The current state of the US economy, concerns about job security, the critical status of pension funds, and recent health care reforms will continue to collectively strengthen the unions’ hands in 2012 and 2013. Unsurprisingly, there have been recent waves of pressure from the National Labor Relations Board (“NLRB”) on employers.

A number of updates in this area will have major implications for hospitality providers in the US, including:

  • New notice posting requirements obliging employers to display posters informing workers of their right to unionize.
  • The appropriate standard to be applied in determining the scope of a bargaining unit is undergoing radical changes.
  • The NLRB amending its rules to make it easier for unions to organize employees through changing its election process.

Social Media

No business sector is immune to the profound impact social media is having on the workplace. Hospitality employers seeking to hire may be tempted to base employment assessments on data attained through social media. However, there is a very thin line that must be carefully navigated when basing employment decisions on information gathered through the use of social media. Any social media policies an employer may wish to enforce on its workforce in the US will also need to be crafted creatively and be cognizant of content which is legally protected “concerted activity.” Such a policy will ensure that seemingly disproportionate social media policies do not result in charges of discrimination on the basis of union membership, while effectively protecting the valid business interests of the employer.

It is no surprise that international hospitality groups can become the target of government scrutiny, especially in the run-up to the Presidential Elections. When setting up operations in a new country, hiring and employing a new workforce is a crucial process. Early planning and preparation will put the employer in a much stronger position to steer these upcoming waves of change and ensure the success of the operation in the US. Doing it right – from the start – will have positive consequences for business productivity and, ultimately, the bottom line.

Health Reform's Unique Impact on Hospitality Employers

By:  Kara M. Maciel

Over six months ago, Congress passed the most significant and comprehensive health reform law (“PPACA”) that employers have faced in decades. The hospitality industry, in particular, will be confronted with unique challenges to comply with PPACA’s regulations, including a broader definition of a full time employee, expanded employee protections with respect to breaks and whistleblower rights, and notice requirements. As the hospitality industry attempts to grapple with the myriad of new compliance obligations, there has been widespread confusion over what health care reform consists of and what employers must do immediately and in the coming years to comply. In this blog series, we will analyze specific challenges that hospitality employers will face in response to health reform.  

New Definition of Full Time Employee

Hoteliers, restaurateurs, and other hospitality employers regularly rely on part-time employees for a majority of their workforce. The nature of the jobs and the high turnover results in many employees working 25- 30 hours per week, with some working more during busier times of year or as a result of fluctuating occupancy levels. For example, hotel banquet or restaurant private dining staff may work more hours per week during the winter holiday season when many companies host large parties for employees and clients.   

Under PPACA, a full time employee is now defined as an employee who works at least 30 hours per week. If an employer has at least 50 full time employees, employers are required to provide “minimum essential” health coverage by 2014 or else potential financial penalties could be assessed. Accordingly, hospitality employers must evaluate their workforce to determine if they could reach this key 50 full time employee threshold, by looking at the hours worked by all employees, including part-time employees, in a given month. This poses unique challenges to hoteliers and restaurateurs when employees fluctuate their hours working over 30 hours per week in one month, but not the next. Under PPACA, the employee would be eligible for health benefits retroactively for the month he or she qualifies, and then could be cut off from the plan the next month if he or she fails to meet the hours requirement. 

Depending on the employer’s ability to provide “minimum essential” coverage, PPACA’s new definition of full time employee will force hospitality employers to change how they plan for and manage health costs. Some employers may decide to alter their scheduling and hiring decisions to manage health costs. A restaurant may decide to replace all part-time staff with full-time employees to ensure coverage under PPACA or, alternatively, increase the number of part-time employees so more people can work the hours and decrease the number of employees eligible for health benefits. In either event, evaluating the workforce and developing strategic plans to address the number of employees is essential to confront PPACA’s requirements and manage costs. 

Break Time for Nursing Mothers – But Where?

Effective immediately, all hospitality employers must provide unpaid, reasonable break time to non-exempt, female employees who are nursing to express milk for up to one year after the birth of the child. The Department of Labor has issued a Fact Sheet regarding the new break requirement. 

The employer must provide a designated break room that cannot be a restroom and that must be shielded from view and free of intrusion. For hoteliers, this space could include a vacant guest room or other private meeting space. But what about for restaurants or other hospitality employers that do not have separate private office or meeting space? Restaurants will have to evaluate their space to provide a location for hostesses, waitresses, cooks and chefs who work in the public space. This requirement could easily pose a logistical challenge for these employers. For small employers (less than 50 employees), this break time can be exempted from this provision if the employer can demonstrate undue hardship.

Accordingly, all employers should determine where such break time should occur, and update their handbooks, policies and procedures in order to properly notify employees of their rights to take an unpaid break for nursing. Also, all managers should be trained in the new break requirements, and advised that any adverse actions taken against an employee for requesting break time could result in exposure to a retaliation claim.   

Conclusion: Health care reform will have significant impact on the hospitality industry across the United States. By knowing PPACA’s unique challenges and requirements, hoteliers will be able to make informed decisions and understand how to implement the new obligations. As identified above, employers should already be taking a number of steps to comply with the Act’s requirements and begin to prepare for future obligations. Stay tuned for Part II of this series in which we will discuss expanded whistleblower protections for employees, potential penalties for failing to provide health coverage, and grandfathered health plans. 

For more information on PPACA and the impact on the health care delivery system, check out our colleagues’ blog Heath Reform Musings.