This extended interview from Employment Law This Week will be of interest to many of our readers. Attorney and co-editor of this blog, Michelle Capezza explains how recent legal developments have prepared employers for their future workforce, which will include artificial intelligence technologies working alongside human employees. She also looks at the strategies employers should start to consider as artificial intelligence is incorporated into the workplace.
As the employer-employee relationship and the meaning of a “workplace” continue to evolve in the “gig” (or “sharing” or “on-demand”) economy, a model of portable employee benefits, which are managed by mobile workers themselves, is gaining appeal. This employee benefits approach is not currently intended to replace employer-provided benefits for all workers but rather to fill a gap for those who may work independently as contractors or as temporary employees, do not have access to workplace benefits, or move from employer to employer quite frequently. Development of such a model, however, calls into question the future of the employer-provided system of employee benefits, which has been under attack in recent years.
As a result of the demise of the employer-provided pension plan and the rise of participant-directed savings plans, workers have already felt the movement away from the paternalistic approach to retirement benefits. This development has not been without controversy, as exemplified by the debates regarding participant savings rates, education regarding investments and fee transparency, and the U.S. Department of Labor’s (“DOL’s”) fiduciary rule regarding investment advice.
Also, on the health care front, the Affordable Care Act has provided a platform for workers to obtain their own individual health insurance in the Marketplace, either through choice or necessity, and the tax benefits of employer-provided health benefits are being threatened in tax reform initiatives. With the implementation of consumer-driven designs, employees are also managing their health spending and insurance choices.
These changes in benefits design and access to employer-provided programs, as well as the rise of the mobile workforce, have provided a foundation for further movement toward portable benefits. This movement continues to manifest itself in several ways, including through:
- President Obama’s call for portable benefits programs. In his fiscal year 2017 budget, President Obama called for the development of programs to provide grants to states and nonprofits to design ways to provide retirement and other employee benefits that can be portable and accommodate contributions from multiple employers. In addition, he called for legislation regarding open multiple employer plans (“MEPs”) among unaffiliated employers to allow for pooled plans and continued contributions when employees move between employers participating in the same MEP. He also proposed requirements to allow part-time workers to participate in plans and measures for easier rollovers to plans. These initiatives would build upon earlier proposals for automatic payroll individual retirement accounts (“IRAs”) and other tax credit initiatives to small businesses.
- Automatic payroll IRA programs and other alternatives. For employers that do not sponsor any retirement savings plans, there is increased momentum for automatic payroll IRAs. To date, at least five states (California, Connecticut, Illinois, Maryland, and Oregon) have enacted legislation that will require certain employers that do not sponsor a retirement plan to enroll employees automatically in a state-run IRA program. New Jersey and Washington have approved retirement marketplaces for eligible employers to shop for retirement savings programs, and many more states are considering alternatives, including state-run IRAs and MEPs. These initiatives follow guidance from the DOL facilitating such efforts (including parameters for state-run IRAs to avoid being subject to ERISA) and complement the U.S. Department of the Treasury’s guidance regarding myRA accounts, as well as President Obama’s agenda. Other legislative proposals include mandates for contributions to plans run by third parties or the federal government. Laws in this area will continue to evolve.
- Portability policy advocates. In “Common Ground for Independent Workers,” an array of businesses, labor organizations, venture capitalists, and other stakeholders in the gig economy have called for policies to ensure a social safety net for all workers. This past May, Uber was among the first employers in the gig economy to come to agreement with the Independent Driver’s Guild, which is working on ways to offer its members a range of portable benefits. Retirement Clearinghouse (“RC”) has advocated for auto-portability plans that move retirement savings assets automatically with workers as they switch jobs. RC has requested an advisory opinion from the DOL to permit negative consent, which would allow plan account balances to roll automatically into a new employer’s plan.
What Employers Should Do Now
In the race for talent, it is important for employers to consider their own philosophy concerning employee benefits and the types of programs that they desire to offer their workers, whether full time, part time, contingent, or otherwise. It is also necessary to assess compliance with any programs that may be mandated by changing laws. In this evolving landscape, an employer should:
- examine its organization’s workforce and determine which benefits programs are desirable to attract, motivate, and retain these workers in a competitive marketplace;
- identify any gaps in benefits offerings and consider how to fill those gaps;
- monitor legislation affecting employee benefits and applicable compliance requirements; and
- determine whether its organization is subject to laws that will require it to comply with certain government-mandated programs when no applicable benefit program is otherwise offered by the employer, and decide whether it is instead desirable to establish, or expand coverage under, an employer-sponsored plan.
A version of this article originally appeared in the Take 5 newsletter “Five Trending Challenges Facing Employers in the Technology, Media, and Telecommunications Industry.”
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 technology, media, and communications 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.
In a complimentary webinar on February 20 (1:00 p.m. ET), our colleagues Frank C. Morris, Jr., and Adam C. Solander will review the ongoing impact of the Affordable Care Act (ACA) on employers and their group health plans.
The Treasury Department and the Internal Revenue Service recently issued highly anticipated final regulations implementing the employer shared responsibility provisions of the ACA, also known as the employer mandate. The rules make several important changes in response to comments on the original proposed regulations issued in December 2012 and provide significant transition relief.
Objectives of the webinar are to:
- Provide an overview of the shared responsibility rules
- Discuss how the changes to the rules will affect employers of all sizes
- Analyze special rules for seasonal, educational, and other employees and those with breaks in service
- Provide insight into compliance issues affecting employers
- Discuss strategies for compliance
- Provide a roadmap of future ACA regulations
Our colleague Frank C. Morris, Jr., at Epstein Becker Green wrote the December issue of Take 5, with five key action items for employers in 2014. Following is an excerpt:
It’s December, and human resources professionals and law departments are reflecting on the issues addressed in 2013 and giving thanks for incident-free holiday parties. But the big question is this: What issues should get priority attention for 2014 as part of a proactive approach to workplace issues and limiting potential employment and labor law claims? This month’s Take 5 provides a “Top 5″ list of action items to maximize the use of your time and resources for optimum results in 2014. …
- Consider Whether Your Organization Should Adopt Mandatory Arbitration Agreements and Seek to Bar Class/Collective Actions in 2014
- Enhance the Accessibility of Your Organization’s Website to Individuals with Disabilities
- Ensure That Proper Exempt/Nonexempt and Independent Contractor/Employee Determinations and Updated Job Descriptions Are in Place in 2014
- Update Confidentiality and Non-Compete Agreements to Better Protect Intellectual Property and Human Capital Assets in a High-Technology, BYOD, Mobile World
- Consider Key Employer ACA Issues for 2014
I recently coauthored an article in TechLifeSciNews, “The Affordable Care Act: Technology Companies Must Continue Compliance Efforts,” with Gretchen Harders, one of my colleagues in the Employee Benefits practice at Epstein Becker Green.
Following is an excerpt:
Technology companies are in the unique position of developing new products and technologies for the healthcare industry, while at the same time acting in the role of employer subject to the healthcare reform mandates under the Patient Protection and Affordable Care Act of 2010, as amended (“ACA”). Whether the company is availing itself of the small employer healthcare insurance policies offered on the state Health Insurance Marketplaces (Exchanges) or timely complying with the large employer healthcare mandates applicable to its existing group health plans, a technology company must address the impact of healthcare reform and bottom line costs to the business.
All employers sponsoring group health plan programs are subject to the complex and voluminous requirements imposed on such programs by ACA. As widely reported, in July the Obama administration delayed the effective date of the annual reporting and assessment of shared responsibility payments under the employer mandate to 2015. These requirements were originally to take effect in 2014 and now employers with 50 or more full-time equivalent employees (as determined under ACA) will have an additional year before the employer reporting requirements under this component of the ACA must be met and employer penalties could be imposed.
By Michelle Capezza
The New Jersey Technology Council (NJTC) is a not-for-profit, trade association which focuses on connecting decision-makers and thought-leaders from technology and technology support companies through access to financing opportunities, networking, and business support. Through its programs, the NJTC provides timely business information to help its members grow and succeed and provides forums for member companies to work together to advance New Jersey’s, and the region’s, status as a leading technology center.
At NJTC’s Annual Meeting held in July at The Palace in Somerset, NJ, the NJTC furthered its mission by hosting a series of discussions on topics of import to today’s technology companies. The meeting was abuzz with various conversations and idea exchanges on such issues as early stage/angel investments, energy efficiency, representation and warranties insurance for transactions, IT support issues, co-working spaces and The Affordable Care Act. The goal of each discussion was to identify top priorities and brainstorm regarding solutions to achieve these goals. My partner Gretchen Harders and I had the privilege of leading the discussion at the annual meeting on The Affordable Care Act and explored several top priorities with NJTC members as a result of the Act including: (i) importance of self-audits of health plan compliance efforts to date and establishment of a compliance plan going forward, (ii) attention to plan documentation, recordkeeping, reporting and disclosure requirements, and (iii) attention to fiduciary responsibilities with respect to company health programs. As technology companies continue to grapple with the requirements of the Act, as well as the business opportunities that present itself in the health care industry, we at Epstein Becker Green are well positioned to assist. As an NJTC Ambassador, I am also inspired by the strides being made in the region’s technology community.
Highlights of the various discussions are found on pages 14 and 15 of the August 2013 issue of TechNews.
On May 8, 2013, the Employee Benefits Security Administration of the Department of Labor (the “DOL”) issued Technical Release 2013-02 (the “Release”) providing important guidance under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”) with regard to the requirement that employers provide notices to their employees of the existence of the Health Insurance Marketplace, generally referred to previously as the Exchange. These employee notices must be provided to existing employees no later than October 1, 2013. This deadline is intended to correspond to the open enrollment period for the Marketplace commencing October 1, 2013 for coverage through the Marketplace beginning January 1, 2014. The Release includes temporary guidance and two model employee notices of the Marketplace upon which employers may rely. The Release further provides an updated model election notice for group health plans for purposes of the continuation coverage provisions under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) to include information of the health coverage options offered to individuals through the Marketplace for comparative purposes.
Employee Notice of the Marketplace. The Affordable Care Act amended the Fair Labor Standards Act (“FLSA”) to require employers to issue employees a notice of the health coverage options available under the Marketplace. The FLSA requirement was required to have been satisfied on or before March 1, 2013; however, given the regulatory delays in establishing and approving the Marketplace, the DOL extended the deadline. The guidance under this Release is temporary through the applicability date of October 1, 2013, but may be relied upon until future guidance and regulations are issued.
Which employers are required to comply with the notice requirements?
Whether or not required to “pay or play” under the Affordable Care Act, all employers subject to the FLSA must provide the employee notice. The FLSA generally applies to employers that employ one or more employees and are engaged in or produce goods for interstate commerce. The FLSA also covers, among other things, hospitals, schools, institutions of higher education and federal, state and local government agencies. To determine whether an employer is subject to the FLSA, the DOL provides an internet assistance tool at http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp.
Which employees must receive the notice?
Employers must provide the employee notice to each employee whether or not the employee has part-time or full-time status. It does not matter whether the employee is enrolled or eligible to enroll in a group health plan. A separate notice is not required to dependents or other individuals who may become eligible for coverage under the plan, but are not employees.
What information must the notice provide?
The employee notice must contain the following information:
- The existence of the Marketplace;
- The contact information and description of services offered on the Marketplace;
- A statement that the individual may be eligible for a premium tax credit if the employee purchases a qualified plan on the Marketplace; and
- A statement that if the employee purchases a qualified plan on the Marketplace, the employee may lose the employer contribution to any health benefit plan offered by the employer and all or a portion of employer contributions may be excluded from federal income.
What are the DOL model notice(s)?
The DOL has provided two model employee notices available on its website, one for employers who do not offer a health plan and one for employers who offer a health plan to some or all employees. The Release provides that employers may use the model notice(s) provided the notice(s) include the information described above.
The model employee notice for employers who do not offer health coverage includes the information described above, as well as an explanation of the impact of the availability of employer health coverage on the employee’s eligibility for subsidies on the Marketplace. The model employee notice does not require the employer to provide specific contact information for the Marketplace in the state where the employee resides, but rather refers the employee to the http://www.healthcare.gov website for contact information for the Marketplace in the employee’s area. This model employee notice requires the employer to provide contact information for the employer, including the employer’s EIN. This is the information an employee will need to include in an application for a premium subsidy on a Marketplace.
The model employee notice for employers who do offer health coverage generally includes the same information as the model employee notice for employers who do not offer health coverage. This model employee notice does, however, require the employer to provide contact information to obtain more information about the employer’s health care coverage. The disclosure requires the employer to state whether the health care coverage is offered to all employees and, if not to all employees, a description of those employees eligible for health care coverage. It also requires the employer to state whether it offers dependent coverage and which dependents are eligible. Finally, the employer is required to disclose whether the health care coverage offered meets the minimum value standard and that the cost of coverage is intended to be affordable. The Department of Treasury and Internal Revenue Service recently issued proposed guidance to assist employees in assessing whether the coverage offered provides minimum value. See our prior blog post New Proposed Guidance for Determining Whether Employer-Sponsored Health Plan Provides Minimum Value.
The model employee notice includes optional information that an employer may provide to the employee based on the Marketplace Employer Coverage Tool to better understand their coverage choices, including whether the employee is eligible in the next three months for employer coverage, whether the employer offers a health plan that meets the minimum value standard, the premium for employee-only coverage under the lowest-cost plan that meets the minimum value standard if the employee received the maximum discount for any tobacco cessation program, and what changes the employer will make for the next plan year. Although this information is optional, it may be to an employer’s benefit to demonstrate, where appropriate, that its plan is providing minimum value and is affordable.
When must the employee notice be provided and what are the acceptable delivery methods?
Current employees before October 1, 2013 must be provided with the notice no later than October 1, 2013. Beginning October 1, 2013, the employer must provide each new employee the notice at the time of hire, which will be considered timely provided in 2014 if provided within 14 days of the employee’s start date.
The employee notice must be provided free of charge in writing in a manner calculated to be understood by the average employee. The employee notice may be provided by first class mail or electronically if in accordance with the DOL’s electronic disclosure safe harbor.
COBRA Model Notice. Under COBRA, an individual who was covered by a group health plan the day before a qualifying event occurred may be eligible to elect COBRA continuation coverage. These qualified beneficiaries must be provided with an election notice within 14 day after the plan administrator receives notice of a qualifying event. The COBRA election notice is required to include specific information.
The DOL updated its model COBRA election notice to provide information about the Marketplace for the purposes of informing qualified beneficiaries that they may also be eligible for a premium tax credit to pay for coverage offered through the Marketplace. It also includes clarification on the limit on pre-existing conditions exclusions beginning in 2014. Such information is not specifically required under the Affordable Care Act and should have no impact on whether an employer is subject to the employer responsibility penalties if in fact a former employee obtains coverage on the Marketplace.
The Release provides that the use of the model COBRA election notice completed appropriately will be considered good faith compliance with the COBRA election requirements. The model COBRA election notice does not provide a specific deadline or compliance date. Employers may wish to review their existing COBRA election notices for changes relating to the Affordable Care Act.
Employers have long been waiting for specific guidance from the DOL on the employee notice requirements. Now that it is here, compliance should be addressed well before the October 1, 2013 deadline.