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DOL Issues New Rules for Joint-Employer Status

The U.S. Department of Labor has issued new and more simplified rules for determining joint-employer status, which can often be found in work involving temporary workers, subcontractors or workers in franchises.

The new rule reverses Obama-era regulations that employers say opened a floodgate of litigation, making it easier for workers to sue more than one entity for labor violations, as for example in these instances:

  • Both the Subway Group and separately owned franchises that own Subway eateries.
  • A business and the subcontractor that it hires to do specific work.
  • A beverage delivery company and the temp agency that sometimes provides it with replacement drivers.

Joint-employer rules are important as they can help determine which employer is responsible for wage and hour violations. But the new rules apply mainly to violations under the Fair Labor Standards Act, when an employee may have, in addition to their employer, one or more joint entities that are jointly and severally liable with the employer for the worker’s wages.

The new non-binding rule, which takes effect March 15, spells out in which circumstances an entity can be considered a joint employer under the FLSA.

Balancing test

The final rule provides a four-factor balancing test when an employee performs work that also benefits another person or entity. It defines an employer as an entity that:

  • Hires or fires the employee;
  • Supervises and controls the employee’s work schedule or conditions of employment to a significant degree;
  • Determines the employee’s rate and method of payment; and
  • Maintains the employee’s employment records

An employer does not have to meet all four factors to be considered a joint employer.

The ruling does seem to fall in line with recent court decisions regarding McDonald’s Corp., which franchisee employees had sued along with the franchisee itself in seeking back wages and overtime.

The National Labor Relations Board in late 2018 approved a settlement between workers and their employer, a McDonald’s franchisee, which absolved franchisor McDonald’s Corp. from any direct joint-employer responsibility.

Also, the U.S. Ninth Circuit Court of Appeals in California decided in October 2018 that McDonald’s was not a joint employer with its franchisee for violations of California wage and hour laws, because the company did not exercise the “requisite level of control” over the workers’ employment.

The takeaway

When the rule becomes effective, it should provide clarity for all parties in a multi-employer or multi-company arrangement.

That said, you should not interpret the new rule as a reason to approach joint-employer responsibility recklessly.

If you use temp workers and/or subcontractors and you provide your employee handbooks and policies to any other entities’ employees, you should include disclaimers that make it clear that the provision of those materials does not create an employment relationship.

You may also want to take this opportunity to examine your relationships with the workers from whom you receive beneficial services, but whom you do not employ directly.


Congress Eliminates the ‘Cadillac’ and Other ACA Taxes

Congress before the new year passed legislation repealing the so-called “Cadillac tax” on generous group health plans, as well as two other taxes, finally putting to bed an issue that has plagued the Affordable Care Act since its inception.

Although it had not yet been implemented, employers didn’t like the Cadillac and labor unions came out against it as well. It was so unpopular that Congress voted twice to delay implementation, which was originally set to start in 2018. The latest start date had been pushed until 2022.

The Cadillac tax, an enacted but not yet implemented part of the ACA, is a 40% levy on the most generous employer-provided health insurance plans — those that cost more than $11,200 per year for an individual policy or $30,150 for family coverage. It was designed to only tax the portion of the premium that was above the threshold.

Effect of repeal on group plans

The tax would have been levied on health plans, which are legal entities through which employers and unions provide benefits to employees. It would have been paid by employers, but its impact on employees would be indirect and would have depended on how firms and health plan managers responded to the tax in offering and designing benefits.

None of these issues now need to concern employers offering group plans.

The tax was eliminated as part of a $1.4 trillion year-end budget bill that President Trump signed in order to keep the government open. Here are all the ACA-related taxes that the legislation eliminated:

  • The Cadillac tax, which had been expected to raise $197 billion over 10 years.
  • Starting in 2021, the health insurance tax, which had been projected to raise $150 billion over the next decade, and
  • The 2.3% excise on the sale of medical devices, which had been expected to generate $25.5 billion in the next 10 years.

Safety Tips That You May Not Have Considered

As the New Year gets underway, now would be a good time to double down on your workplace safety efforts to see if there are any areas that you may be overlooking.

While your safety regimen may be top notch, there is always room for improvement and you can consider these options as recommended by EHS Today:

Practice a 10-second rule

Workers should consider using the 10-second rule before resuming a task after a break or disruption. During this time before resumption, the worker can conduct a mental hazard check, which EHS Today refers to as STEP:
S – Stop before resuming a job or beginning a new task.
T – Think about the task you are about to do.
E – Ensure that any potential hazards have been identified and mitigated.
P – Perform the job.

Take advantage of OSHA training

The OSHA Outreach Training Program provides training for workers and employers on the recognition, avoidance, abatement and prevention of safety and health hazards in workplaces. The program also provides information regarding workers’ rights, employer responsibilities, and how to file a complaint.

Through this program, workers can attend 10-hour or 30-hour classes delivered by OSHA-authorized trainers. The 10-hour class is intended for entry-level workers, while the 30-hour class is more appropriate for workers with some safety responsibility.

Through this training, OSHA helps to ensure that workers are more knowledgeable about workplace hazards and their rights.

Reward employees for attention to safety

Many companies reward individual employees who are especially mindful of safety procedures. Rewards don’t have to be extravagant. Low-cost rewards such as $10 gift cards for everyday necessities (gas, groceries, fast food) are perfect for on-the-spot rewards or as redemption options in a point-accumulation program.

Communicate with non-English speaking workers

Non-English speaking laborers have more workplace accidents than their peers. Some safety experts blame this on the language barrier that may exist. The language barrier may keep them from reporting workplace hazards and they may not understand your safety instructions.

If you have non-English speaking workers:

  • Ensure that training is fully understood.
  • Try to get any safety training materials also printed up in Spanish, and other languages prevalent in your workplace.
  • If you have one, provide them contact in your organization that speaks their language, so that they can get answers to any questions they may have or to report concerns.

Urge your employees to speak up

Let your workers know that there will be no retribution for reporting perceived workplace hazards, no matter how minor. You can also implement the third suggestion above and reward employees that point out safety issues.

Temp workers need safety awareness too

Temporary workers often slip through the cracks when companies are training staff on safety. And it’s easy to forget when you get a temp that comes in for a day or two that they need to be aware of the hazards in the workplace and how to avoid getting injured.

The issue is especially important in terms of your company getting cited. Federal OSHA has made the safety of temporary workers one of its priorities. OSHA in 2014 published a guide for protecting temporary workers. To access the guide and for tips, check out: www.osha.gov/temp_workers/

Make your training engaging

The best safety training programs are those that employees remember. Some good ways to make sure the information is retained include using real-life examples, story-telling, skits and strong video presentations.

Do more than OSHA requires

OSHA’s regulations are meant to be comprehensive, but every workplace is different and for a truly effective safety program you should fine-tune your safety requirement specifically for your workplace. In other words, you can go a step beyond what OSHA requires.

Watching each other’s back

You should also instill a sense of responsibility among your staff to look out for each other. If a worker sees another performing a job in an unsafe manner, the worker should step in to offer assistance. This can be done without being intrusive or confrontational.

Some good approaches include: “Hey, would you like me to watch out for your safety?” and “As you know, you need to be wearing cut-resistant gloves to perform that task.”

Establish a leadership-driven safety culture

A safe workplace starts from the top. The company’s leadership needs to buy into its safety culture. “If your employees see leadership investing time and money into workplace safety, they’ll understand that it’s a priority for your company. And ultimately, they’ll make it a priority for themselves as well,” EHS Today writes.


Happy New Year!

As we are all waiting for a New Year with hope, we would like to thank you for the opportunities you have given us and wish a better New Year for you and your family. Cheers to a prosperous 2020!


Happy Holidays!

Happy Holidays! Wishing you every happiness this holiday season and throughout the coming year.


The Difficulty of Dealing with Workers with Substance Abuse Problems

With the opioid epidemic continuing to sweep the nation, more and more workers are battling addiction than ever before.

But if you as an employer suspect or know one of your staff has a substance abuse problem, you need to be careful about how you approach them and try to deal with the issue.

Even if many employees can keep their addictions under wraps in the workplace, not all of them can. According to a survey conducted by the website drugabuse.com, which offers educational content and recovery resources to people dealing with addiction:

  • 23% of workers surveyed said they had used drugs or alcohol on the job.
  • 60% said they had used alcohol on the job work (not including office parties or functions).
  • 23% said they’d smoked marijuana on the job.

On top of that, 75% of U.S. employers say they’ve been affected in some way by an employee’s substance abuse. That can include:

  • Employee theft to support the habit.
  • Mistakes that cost the company money and lost business.
  • Workplace accidents.
  • Accidents that injure third parties.
  • Reduced productivity because of presenteeism.

While you can have policies in place that bar employees from working under the influence – under threat of firing – it’s a trickier matter if one of them comes to you to tell you they have a problem.

The Americans with Disabilities Act protects workers who:

  • Have successfully completed a rehab program and have stopped taking the drug that caused them to enter the substance abuse program,
  • Who are currently in a rehab program, or
  • Who have been wrongly accused of having a substance abuse problem.

It’s also a challenge for employers to know the difference between an employee who may have been taking one Vicodin every day for years for pain but continues to do a great job, or someone who needs treatment. Taking the wrong action can set you up for being sued, and it’s hard to win a case if the employee is taking medication as prescribed by a physician.

What you can do

There are ways that employers can legally find out if employees are taking opioids. You can set a policy that requires employees to disclose if they are taking prescription medications that may cause impairment or come with warnings about drowsiness.

This is legal under Equal Employment Opportunity Commission regulations as long as the policy is companywide.

But if you think you have a worker on staff who has a substance abuse problem, you need to go through an interactive process as prescribed by the ADA.

Steps under the interactive process start with talking to a worker you think has a substance abuse problem or is taking medication that could create a safety risk, to see if there is some way you can accommodate them. That could include:

  • Restructuring their job.
  • Offering a leave of absence to let them get treatment.
  • Modifying their schedule so they don’t have to work after they have taken their medication.
  • Reassigning them to a vacant position that will not put them or others at risk.

If you have an employee who has been on leave to get treatment for their substance abuse, you can ask them to take a fitness-for-duty exam to make sure they are up for resuming their old job.


Get an Early Start on Open Enrollment

As open enrollment is right around the corner, now is the time to make a plan to maximize employee enrollment and help your staff select the health plans that best suit them.

You’ll also need to make sure that you comply with the Affordable Care Act if it applies to your organization, as well as other laws and regulations.

Here are some pointers to make open enrollment fruitful for both your staff and your organization.

Review what you did last year

Review the results of last year’s enrollment efforts to make sure the process and the perks remain relevant and useful to workers.

Were the various approaches and communication channels you used effective and did you receive any feedback about the process, either good or bad?

Start early with notifications

You should give your employees at least a month’s notice before open enrollment, and provide them with the materials they will need to make an informed decision.

This includes the various health plans that you are offering your staff for next year.

Encourage them to read the information and come to your human resources point person with questions.

Help in sorting through plans

You should be able to help them figure out which plan features fit their needs, and how much the plans will cost them out of their paycheck. Use technology to your advantage, particularly any registration portal that your plan provider offers. Provide a single landing page for all enrollment applications.

Also, hold meetings on the plans and put notices in your staff’s paycheck envelopes.

Plan materials

Communicate to your staff any changes to a health plan’s benefits for the next plan year through an updated summary plan description or a summary of material modifications.

Confirm that their open enrollment materials contain certain required participant notices, when applicable – such as the summary of benefits and coverage.

Check grandfathered status

A grandfathered plan is one that was in existence when the ACA was enacted on March 23, 2010, and is thus exempt from some of the law’s requirements.

If you have a grandfathered plan, talk to us to confirm whether it will maintain its grandfathered status for the next plan year. If it is, you must notify your employees of the plan status. If it’s not, you need to confirm with us that your plan comports with the ACA in terms of benefits offered.

ACA affordability standard

Under the ACA’s employer shared responsibility rules, applicable large employers must offer “affordable” plans, based on a percentage of the employee’s household income. For plan years that begin on or after Jan. 1 of next year, the affordability percentage is 9.86% of household income. At least one of your plans must meet this threshold.

Get spouses involved

Benefits enrollment is a family affair, so getting spouses involved is critical. You should encourage your employees to share the health plan information with their spouses, so they can make informed decisions on their health insurance together.

Also, encourage any spouses who have questions to schedule an appointment to get questions answered.


Protect Your Firm from Hacking by Disgruntled Former Employees

While hacking by outsiders is posing a larger and more significant threat to companies of all sizes, the threat of insider jobs – particularly by disgruntled former employees – is often an even bigger one.

These attacks, carried out with malicious intent to hamstring a company’s operations, can cause serious problems. Take, for example, the following recent events:

  • A former employee of Spellman High Voltage Electronics Corp. is facing charges after strange things started happening to the company’s systems after he resigned, due to allegedly being passed over for a promotion.

Shortly after he left, employees at Spellman began reporting that they were unable to process routine transactions and were receiving error messages. An applicant for his old position received an e-mail from an anonymous address, warning him, “Don’t accept any position.” And the company’s business calendar was changed by a month, throwing production and finance operations into disorder.

The mayhem cost his former employer more than $90,000, and he was arrested. “The defendant engaged in a 21st-century campaign of cyber-vandalism and high-tech revenge,” said Loretta Lynch, the United States attorney for the Eastern District.

  • A former employee of McLane Advanced Technologies was sentenced to 27 months in prison and ordered to pay $35,816 in restitution after pleading guilty to hacking into McLane’s systems and deleting payroll files to the point that staff could not clock in and the company could not issue payroll checks.

He was upset after the company had fired him and then refused to help him obtain unemployment benefits.

  • A network engineer, who was fired by the American branch of Gucci, stands accused of breaking into the computer systems of the Italian luxury goods organization, shutting down servers and deleting data.

The New York County District Attorney’s office accuses the former employee of using an account that he had secretly created while employed by Gucci to access the network after his employment was terminated.

He has been charged with computer tampering, identity theft, falsifying business records, computer trespass, criminal possession of computer-related material, unlawful duplication of computer-related material, and unauthorized use of a computer. The intrusion is said to have cost the company some $200,000.

What you can do

With these cases in mind, there are internal steps you can take to avoid this sort of thing happening at your company.

Route all offsite access through a VPN – This can typically prevent someone from entering your system altogether. But, once you have such a system in place, all outside connections need to be logged and monitored for suspicious activity.

Test your disaster recovery plan – You need to have a disaster recovery plan in place that includes backing up data every day, just in case someone deletes it from your servers. That way, if data is deleted you can immediately switch to a back-up IT environment.

A lot of times, organizations do disaster recovery, but unless they practice the actual recovery, they don’t know if it will work, and it doesn’t matter whether they have a physical or a virtual environment. So, don’t forget to test any plans you have.

Block unapproved software – Sometimes your employee hackers will install extra software that makes it easier for them to root through your system and create havoc. You should have systems in place that do not allow anybody to install unapproved software.

Disable ex-employee accounts and passwords – Whenever an employee or contractor ceases to work at your business – or in the case of layoffs, beforehand – you must disable their network access, accounts and passwords. You should regularly review which users have access to your systems, and know that changing passwords and resetting access rights is essential when a member of your staff leaves your employment.

Think like a malicious insider – IT managers must think like an inside attacker, and identify the weak points of their infrastructure that they themselves would exploit were they so inclined. As a senior manager, you should ask your IT managers just what they are doing to thwart any possible insider attacks.

Make suspect behavior cause for concern – Watch for human-behavior warning signs, such as complaining to others about the company and a more than usual amount of time spent accessing company data on your network. Develop a response plan for when such signs get spotted.

Beware resignations, terminations – Most insider attacks occur within a narrow window. Most people who steal intellectual property or destroy systems do so within 30 days of resignation. Accordingly, keep a close eye on departing or departed employees, and what they viewed.

If someone resigns who has had access to your most sensitive company information, including trade secrets, you need to pay special attention to ensure it’s not compromised.

Marshal forces – Businesses that prepare for attacks in advance tend to better manage the aftermath. When it comes to combating cases of suspected insider threat, include human resources, management, upper management, security, legal and software engineering.


IRS Eases Access to Chronic Disease Treatment

New guidance from the IRS will help people enrolled in high-deductible health plans get coverage for pharmaceuticals to treat a number of chronic conditions.

Under the guidance, medicinal coverage for patients with HDHPs that have certain chronic conditions – like asthma, heart disease, diabetes, hypertension and more – will be classified as preventative health services, which must be covered free with no cost-sharing under the Affordable Care Act.

The background

The guidance, which takes effect immediately, is the result of a June 24 executive order issued by President Trump directing the IRS to find ways to expand the use of health savings accounts and their attached HDHPs to pay for medical care that helps maintain health status for individuals with chronic conditions.

The executive order was in response to a number of reports that have shown that people with HDHPs will often skip getting the medications they need or take less than they should because they cannot afford to foot the full cost of the medication even before they meet their deductible.

This can lead to worse issues like heart attacks and strokes, which then require more and even costlier care, according to the guidance.

The latest move is a significant step that should greatly reduce the cost burden on individuals with chronic conditions, as many of the medications they need to treat their diseases can be extremely expensive.

The IRS, the Treasury Department and the Department of Health and Human Services have listed 13 services that can now be covered without a deductible, and have promised to review add or subtract services from the list on a periodic basis, according to the guidance.

Here is the full list of the treatments, and the conditions they are for:

Angiotensin-converting enzyme (ACE) inhibitors – Congestive heart failure, diabetes, and/or coronary artery disease.

Anti-resorptive therapy – Osteoporosis and/or osteopenia.

Beta-blockers – Congestive heart failure and/or coronary artery disease.

Blood pressure monitor – Hypertension.

Inhaled corticosteroids – Asthma.

Insulin- and other glucose-lowering agents – Diabetes.

Retinopathy screening – Diabetes.

Peak-flow meter – Asthma.

Glucometer – Diabetes.

Hemoglobin A1c testing – Diabetes.

International Normalized Ratio testing – Liver disease and/or bleeding disorders.

Low-density lipoprotein testing – Heart disease.

Selective serotonin reuptake inhibitors – Depression.

Statins – Heart disease and/or diabetes.

The items above were chosen because they are low-cost, proven methods for preventing chronic conditions from worsening or preventing the patient from developing secondary conditions that require further and more expensive treatment.


Off-the-clock Work Ban Can Save You from Legal Troubles

Wage and hour lawsuits are on the rise, usually with non-exempt employees claiming they weren’t paid either for overtime or for work they may have performed before or after their shift.

But, if you have ironclad policies in place, you can greatly minimize both the chances of being sued and also losing the case.

One California case illustrates how one employer, thanks to its policies on prohibiting work off the clock, was able to avoid a trial and payment of damages after an appeals court threw out a potential class-action suit by employees claiming they hadn’t been paid for overtime work for which their employer lacked knowledge.

The California Appellate Court dismissed the case, Jong vs. Kaiser Foundation Health Plan, finding that Kaiser could not be held liable for overtime pay because:

  • The company explicitly prohibited off-the-clock work;
  • The employee worked off-the-clock contrary to this policy; and
  • The employer had no actual or constructive notice of the employee’s unapproved off-the-clock work and, thus, could not be liable.

This case illustrates the importance of putting your off-the-clock policy in writing and following through with consistent enforcement.

The case

In 2009, Kaiser reclassified its outpatient pharmacy manager (OPMs) as non-exempt as part of a settlement of an earlier lawsuit in which it had been accused of improperly classifying OPMs as exempt.

After Kaiser had reclassified its OPMs, three OPMs filed suit, alleging that Kaiser refused to pay overtime and that it had not adjusted the responsibilities of OPMs so that they could perform their jobs in 40 hours a week.

OPMs were also required to hit budget targets and Kaiser had disciplined one of the OPMs for going over budget, partly due to overtime that he reported and was paid for. In the lawsuit, the OPM asserted that Kaiser knew or should have known about the off-the-clock hours that he worked and therefore should have paid the unreported overtime.

In dismissing the lawsuit, the court cited the plaintiff’s deposition that he was aware of Kaiser’s overtime rules, including that it would pay for overtime work even if it had not been pre-approved. The OPM had also signed an affirmation acknowledging that off-the-clock work was prohibited.

During his deposition, the OPM also said that he wasn’t sure if any of his managers knew he was working off the clock. He also had not recorded his off-the-clock work and didn’t know how many hours he’d worked off the clock.

The takeaway

This case illustrates the importance of having strong and well-documented policies, including procedures for requesting approval for overtime as well as a prohibition on off-the-clock work.

Kaiser was granted case dismissal thanks to its explicit policies on off-the-clock work and that it had required its employees to sign an acknowledgment that they would not work off the clock.

You may want to consider instituting policies and procedures that are similar to Kaiser’s if you want to avoid any off-the-clock work complaints. Its policies were:

  • All non-exempt employees will be paid overtime for all overtime hours recorded.
  • All non-exempt employees should be clocked in whenever they are working.
  • All non-exempt employees must request approval to work overtime.
  • All non-exempt employees are required to sign an attestation form acknowledging that they will not work off the clock.

You should review your wage and hour policies with an employment attorney and implement policies and procedures that can keep your firm from being sued by employees for overtime, meal break, and off-the-clock violations.

Your last line of defense should be an employment practices liability policy. For more information on such coverage, call us.


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