The federal stimulus package is called the American Recovery and Reinvestment Act. The Act allows qualified beneficiaries who are eligible for COBRA due to an involuntary termination to pay 35% of the cost of the COBRA coverage. The remaining 65% of the plan cost will be paid by the U.S. government. An employer gets reimbursed for the 65% of the plan cost when it files its 941 for payroll taxes. The subsidy eligibility ends on December 31, 2009.
The Act is retroactive in that the coverage applies to all employees involuntarily terminated from September 1, 2008, to February 16, 2009, and to their qualified beneficiaries, even if they did not elect COBRA coverage when it was offered to them. So, that means employers have to contact employees and beneficiaries terminated during that time frame by April 18, 2009 (60 days after the February 17, 2009 enactment date).
In addition to the regular COBRA notice, an employer should send a supplemental notice to affected individuals with additional information including, for example, information about the individual’s right to the subsidy and the conditions on the subsidy, a description of the obligation of the individual to notify the employer of eligibility under another group health plan or Medicare, and the penalty for failure to provide this notification. The DOL is required to provide a sample notification form by March 19, 2009.
Unfortunately, the Act does not define the term “involuntary termination”, so any involuntary termination is covered. Accordingly, employees who are terminated for poor performance, attendance problems, and other reasons appear to be eligible for the subsidy. Employees who are terminated for gross misconduct, however, are not covered, since a termination for gross misconduct is not a qualifying event under COBRA.
The subsidy is equal to 65% of the monthly COBRA premium for the qualified beneficiary for up to 9 months. The subsidy applies to medical, dental, and vision benefits. It does not apply to medical flexible reimbursement accounts. Employees and other qualified beneficiaries are required to pay the other 35% of the premium.
Wednesday, March 11, 2009
Tuesday, March 3, 2009
What's the Ledbetter Fair Pay Act?
A female employee is hired by an employer in 2009 and receives 24 paychecks, each reflecting a discriminatory pay practice by the employer because of his disability. How long of a period does the she have to file a complaint with the EEOC alleging pay discrimination under the Americans with Disabilities Act?
The answer is governed by Lilly Ledbetter Fair Pay Act of 2009, Public Law No. 111-2, 123 Stat. 5. The Ledbetter Act was drafted to overturn the Supreme Court's May 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co.
The new law adds a provision to Title VII, which provides:
"unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice."
So, the law treats each and every discriminatory paycheck as a new discrimination, thus re-starting the 180-day clock (300 days if the charge is also covered by state or local fair employment laws).
The answer is governed by Lilly Ledbetter Fair Pay Act of 2009, Public Law No. 111-2, 123 Stat. 5. The Ledbetter Act was drafted to overturn the Supreme Court's May 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co.
The new law adds a provision to Title VII, which provides:
"unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice."
So, the law treats each and every discriminatory paycheck as a new discrimination, thus re-starting the 180-day clock (300 days if the charge is also covered by state or local fair employment laws).
Wednesday, February 11, 2009
Don't Text and Drive!
The press has widely reported the perils of using a cell phone while driving. Certainly, every company whose employees travel by car in the scope of their employment should have a policy that prohibits the use of a cell phone while driving. There have been recent cases where employers have been held liable for injuries suffered by persons involved in accidents caused by the employee's cell phone use.
Some states prohibit cell phone use while driving unless a driver is using a hands free device. Unfortunately, Georgia has yet to regulate cell phone use. Studies have shown that it is a distraction and can cut down on reaction times while driving. Since employers have a duty to keep their employees safe, they should implement policies to prevent needless cell phone related accidents.
Of course, cell phone use goes beyond being on the phone. With the increase use of smart phones, persons are just as likely to be text messaging as they are to be on the phone with someone. Text messaging while driving can be more dangerous than talking on a cell phone because it usually requires both hands to type, as well as looking down at the smart phone (and not at the road). In response to "texting while driving", several states have completely banned the practice by drivers. These states are: Alaska, California, Connecticut, District of Columbia, Louisiana, Minnesota, New Jersey and Washington. Unlike many seat belt laws, most of the states that have banned text messaging while driving make it a primary offense, meaning law enforcement can stop a driver for the offense (as opposed to secondary, where the police can pull a driver over for something like a broken tail light and then can add an offense such as texting or not wearing a seat belt).
So, companies should amend their policies and procedures to address "texting while driving", particularly where state law addresses the subject.
Some states prohibit cell phone use while driving unless a driver is using a hands free device. Unfortunately, Georgia has yet to regulate cell phone use. Studies have shown that it is a distraction and can cut down on reaction times while driving. Since employers have a duty to keep their employees safe, they should implement policies to prevent needless cell phone related accidents.
Of course, cell phone use goes beyond being on the phone. With the increase use of smart phones, persons are just as likely to be text messaging as they are to be on the phone with someone. Text messaging while driving can be more dangerous than talking on a cell phone because it usually requires both hands to type, as well as looking down at the smart phone (and not at the road). In response to "texting while driving", several states have completely banned the practice by drivers. These states are: Alaska, California, Connecticut, District of Columbia, Louisiana, Minnesota, New Jersey and Washington. Unlike many seat belt laws, most of the states that have banned text messaging while driving make it a primary offense, meaning law enforcement can stop a driver for the offense (as opposed to secondary, where the police can pull a driver over for something like a broken tail light and then can add an offense such as texting or not wearing a seat belt).
So, companies should amend their policies and procedures to address "texting while driving", particularly where state law addresses the subject.
Wednesday, February 4, 2009
Do you give notice when you layoff employees?
The obligation to give notice of a layoff depends upon whether the company is engaging in a mass or group layoff or a single layoff situation. If the WARN Act applies to the layoff in a group layoff situation (or more typically, where a plant or location completely closes down), that can require a 60-day notification to all effected employees.
State law may address this issue as well, but this typically falls into a question of an employer's comfort level with the employees and how they will react to the layoff. Assuming that it is one person effected by the layoff, would giving advance notice to that person result in possible sabotage? Would it cause the person to lack productivity until his/her last day of work? Does it create a security risk because that person has access to sensitive information?
In some case, an employer might consider some giving as a courtesy to the employee to allow him/her a jump on finding other employment (which could also cut down on the length of an unemployment claim).
Finally, an employer can offer a severance package which would typically be under the condition that the employee have at least 21 days to consider the offer (assuming it would be in compliance with the ADEA and the OWPBA). The last date of employment can be a future date or be in the past. In this sense, a severance package can be used to provide advance notice of a layoff.
State law may address this issue as well, but this typically falls into a question of an employer's comfort level with the employees and how they will react to the layoff. Assuming that it is one person effected by the layoff, would giving advance notice to that person result in possible sabotage? Would it cause the person to lack productivity until his/her last day of work? Does it create a security risk because that person has access to sensitive information?
In some case, an employer might consider some giving as a courtesy to the employee to allow him/her a jump on finding other employment (which could also cut down on the length of an unemployment claim).
Finally, an employer can offer a severance package which would typically be under the condition that the employee have at least 21 days to consider the offer (assuming it would be in compliance with the ADEA and the OWPBA). The last date of employment can be a future date or be in the past. In this sense, a severance package can be used to provide advance notice of a layoff.
Monday, December 22, 2008
Employee Time Off Does Cost You
We all know that the cost of training new hires and recruiting new employees is more than just paying new salaries and recruiting fees. However, did you know that your basic employee absence carries a significant cost?
According to a new study by Mercer, the cost of an employee absence averages about 36 percent of base payroll. Mercer surveyed over 450 organizations. It found that direct costs (such as pay provided to an employee for time not worked) and indirect costs (such as replacement labor costs and lost time) of employee absence run almost 36% of base payroll, the majority of which(26.6 percent) are attributed to “planned” absences like vacations. However, “unplanned incidental” absences (like sick days) amount to 6% of payroll.
The study suggests that employer can reduce these costs by having sound benefits and attendance policies; effect absence management and administration; and identifying the underlying causes of employee absence.
According to a new study by Mercer, the cost of an employee absence averages about 36 percent of base payroll. Mercer surveyed over 450 organizations. It found that direct costs (such as pay provided to an employee for time not worked) and indirect costs (such as replacement labor costs and lost time) of employee absence run almost 36% of base payroll, the majority of which(26.6 percent) are attributed to “planned” absences like vacations. However, “unplanned incidental” absences (like sick days) amount to 6% of payroll.
The study suggests that employer can reduce these costs by having sound benefits and attendance policies; effect absence management and administration; and identifying the underlying causes of employee absence.
Tuesday, December 16, 2008
Should You Get Credit for Pregnancy Leave?
Does the Pregnancy Discrimination Act (PDA) require employers to credit pregnancy-related time off in calculating pension benefits if the time off occurred before the law was enacted?
The Supreme Court will take up this issue in AT&T Corp. v. Hulteen. The plaintiffs were granted time off from pregnancy prior to the enactment of the PDA. Years later, the plaintiffs are now seeking to get the time off taken for pregnancy credited as service time for purposes of calculating their pensions. Essentially, the plaintiffs are asking for the law to retroactively apply because if it does not, they are being discriminated against because of pregnancy.
The plaintiffs may benefit from the 1986 decision in Bazemore v. Friday, which allowed black workers to challenge a pay scale that went into effect before Title VII was enacted.
On the other hand, the Court's 2007 decision in Ledbetter v. Goodyear Tire and Rubber holds that "The fact that pre-charging period discrimination adversely affects the calculation of a neutral factor like seniority … that is used in determining future pay does not mean that each new paycheck constitutes a new violation and restarts the EEOC charging period", which would mean that the claims may fail.
Either way, it is an interesting case.
The Supreme Court will take up this issue in AT&T Corp. v. Hulteen. The plaintiffs were granted time off from pregnancy prior to the enactment of the PDA. Years later, the plaintiffs are now seeking to get the time off taken for pregnancy credited as service time for purposes of calculating their pensions. Essentially, the plaintiffs are asking for the law to retroactively apply because if it does not, they are being discriminated against because of pregnancy.
The plaintiffs may benefit from the 1986 decision in Bazemore v. Friday, which allowed black workers to challenge a pay scale that went into effect before Title VII was enacted.
On the other hand, the Court's 2007 decision in Ledbetter v. Goodyear Tire and Rubber holds that "The fact that pre-charging period discrimination adversely affects the calculation of a neutral factor like seniority … that is used in determining future pay does not mean that each new paycheck constitutes a new violation and restarts the EEOC charging period", which would mean that the claims may fail.
Either way, it is an interesting case.
Tuesday, November 25, 2008
Take Proper Care with Layoffs
With the economy spiraling downwards, many companies have chosen to layoff staff in an effort to reduce costs or to streamline operations. Layoffs raise a number of legal issues that make it imprudent to simply let an employee go without forethought.
1. If you plan on offering an employee severance, you must consider that if the offer differs between similarly situated employees (either offered in the past or at the same time), you may run afoul of the federal employment discrimination laws. You must be mindful of laying off persons in protected classes, such as race, religion, disability, national origin, or sex. If you offer a lesser severance to an employee in a protected class, you may be facing an EEOC discrimination charge.
2. Severance agreements must comply with certain laws and contain certain disclosures in order to be legally enforceable. This is particularly true when you are offering severance to an employee over the age of 40. The Older Workers' Benefit Protection Act which is contained within the Age Discrimination in Employment Act, contains certain requirements that mandate an employee be able to make a "knowing and voluntary waiver" if the severance is in exchange for giving up any claims against the company that the employee might have.
3. If you are closing an entire facility or laying off a group of employees, you may be required to give 60 days notice prior to the layoffs under WARN Act.
4. If you have laid off employees based on "least best" performers, you should have solid documentation to support the reasons why the employee was a low performer. If you have not maintained documentation on performance, you will have difficulty in challenging an unemployment claim or in justifying why you laid a certain employee off over another (which again, may get into a discrimination claim).
1. If you plan on offering an employee severance, you must consider that if the offer differs between similarly situated employees (either offered in the past or at the same time), you may run afoul of the federal employment discrimination laws. You must be mindful of laying off persons in protected classes, such as race, religion, disability, national origin, or sex. If you offer a lesser severance to an employee in a protected class, you may be facing an EEOC discrimination charge.
2. Severance agreements must comply with certain laws and contain certain disclosures in order to be legally enforceable. This is particularly true when you are offering severance to an employee over the age of 40. The Older Workers' Benefit Protection Act which is contained within the Age Discrimination in Employment Act, contains certain requirements that mandate an employee be able to make a "knowing and voluntary waiver" if the severance is in exchange for giving up any claims against the company that the employee might have.
3. If you are closing an entire facility or laying off a group of employees, you may be required to give 60 days notice prior to the layoffs under WARN Act.
4. If you have laid off employees based on "least best" performers, you should have solid documentation to support the reasons why the employee was a low performer. If you have not maintained documentation on performance, you will have difficulty in challenging an unemployment claim or in justifying why you laid a certain employee off over another (which again, may get into a discrimination claim).
Subscribe to:
Posts (Atom)