SBA Hosts Employee Benefits Roundtable 11/21

November 18, 2019

The Small Business Administration (“SBA”) Advocacy Office will is host an Employee Benefits Roundtable on Thursday, Nov. 21 from 10:00 AM until 12:00 noon at the SBA Headquarters in Washington, D.C. with the following agenda:

Welcome and Introductions (10:00 am – 10:15 am)

  • Charles G. Jeane, Assistant Chief Counsel, SBA Office of Advocacy

Discussion of Small Business Use of Cafeteria Plans (10:15 am – 10:45 am)

  • Gary Kushner, President and CEO of Kushner & Company

Discussion of MEPs and Open MEPs (10:45 am – 11:15 am)

  • Sandra Turner, President of Retirement Plan Specialists, Inc.

Discussion of Adding Annuities as An Option for Plan Participants (11:15 am – 11:45 am)

  • Chantel Sheaks, Executive Director, Retirement Policy, U.S. Chamber of Commerce

Open Discussion/Other Small Business Issues (11:45 am – 12:00 pm).  

The purpose of these roundtable meetings is to exchange opinions, facts, and information and to obtain the attendees’ individual views and opinions regarding small business concerns.  The meetings are not intended to communicate or achieve any consensus positions of the attendees.

Roundtable meetings are open to all interested persons, except the press. Press are excluded in order to facilitate an open and frank discussion about small business-related issues.

About The Author

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation; Former Chair of the RPTE Employee Benefits and Compensation Committee, a current Co-Chair of the Committee, and the former Chair of its Welfare Benefit and its Defined Compensation Plan Committees and former RPTE Joint Committee on Employee Benefits Council (JCEB) Representative, Cynthia Marcotte Stamer is a Martindale-Hubble “AV-Preeminent” practicing attorney and management consultant, author, public policy advocate, author and lecturer repeatedly recognized for her 30 plus years’ of work and pragmatic thought leadership, publications and training on health, pension and other employee benefit,  insurance, labor and employment, and health care  fiduciary responsibility, payment, investment, contracting  and other design, administration and compliance concerns as among the “Top Rated Labor & Employment Lawyers in Texas,” a “Legal Leader,” a “Top Woman Lawyer” and with other awards by LexisNexis® Martindale-Hubbell®; as among the “Best Lawyers In Dallas” for her work in the field of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, in International Who’s Who of Professionals and with numerous other awards and distinctions.

Highly valued for her ability to meld her extensive legal and industry knowledge and experience with her talents as an insightful innovator and pragmatic problem solver, Ms. Stamer advises, represents and defends employer, union, multi-employer, association and other employee benefit plan sponsors, insurers and managed care organizations, fiduciaries, plan administrators, technology and other service providers, government and community leaders and others about health and other employee benefit and insurance program and policy design and innovation, funding, documentation, administration, communication, data security and use, contracting, plan, public and regulatory reforms and enforcement, and other risk management, compliance and operations matters.

Her experience encompasses leading and supporting the development and defense of innovative new policies, programs, practices and solutions; advising and representing clients on routine plan establishment, plan documentation and contract drafting and review, administration, change and other compliance and operations; crisis prevention and response, compliance and risk management audits and investigations, enforcement actions and other dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, Justice, Securities and Exchange Commission, Education and other federal agencies, state legislatures, attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators, and various other foreign and domestic governmental bodies and agencies.

She also provides strategic and other supports clients in defending litigation as lead strategy counsel, special counsel and as an expert witness. Alongside her extensive legal and operational experience, Ms. Stamer also is recognized for her work as a public and regulatory policy advocate and community leader with a gift for finding pragmatic solutions and helping to forge the common ground necessary to build consensus. Best known for her domestic public policy and community leadership on health care and insurance reform, Ms. Stamer’s lifelong public policy and community service involvement includes service as a lead consultant to the Government of Bolivia on its pension privatization project, as well as extensive legislative and regulatory reform, advocacy and input workforce, worker classification, employee benefit, public health and healthcare, social security and other disability and aging in place, education, migration reforms domestically and internationally throughout her adult life.

In addition to her public and regulatory policy involvement, Ms. Stamer also contributes her service and leadership to a professional and civic organizations and efforts including her involvement as the Founder and Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE; Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence; Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; Vice Chair, Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group; current Fiduciary Responsibility Committee Co-Chair and Membership Committee member of the ABA RPTE Section; former RPTE Employee Benefits and Other Compensation Group Chair, former Chair and Co-Chair of its Welfare Plans Committee, and Defined Contribution Plans Committee; former RPTE Representative to ABA Joint Committee on Employee Benefits Council; former RPTE Representative to the ABA Health Law Coordinating Counsel; former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, former Board Member, Continuing Education Chair and Treasurer of the Southwest Benefits Association; Vice President of the North Texas Healthcare Compliance Professionals Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; past Dallas World Affairs Council Board Member, and in leadership of many other professional, civic and community organizations.

Ms. Stamer also is a highly popular public speaker, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, the Society of Professional Benefits Administrators, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients, serves on the faculty and planning committee of many workshops, seminars, and symposia, and on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.

Beyond these involvements, Ms. Stamer also is active in the leadership of a broad range of other public policy advocacy and other professional and civic organizations and involvements. Through these and other involvements, she helps develop and build solutions, build consensus, garner funding and other resources, manage compliance and other operations, and take other actions to identify promote tangible improvements in health care and other policy and operational areas.

Before founding her current law firm, Cynthia Marcotte Stamer, P.C., Ms. Stamer practiced law as a partner with several prominent national and international law firms for more than 10 years before founding Cynthia Marcotte Stamer, P.C. to practice her unique brand of “Solutions law™” and to devote more time to the pragmatic policy and system reform, community education and innovation, and other health system improvement efforts of her PROJECT COPE: the Coalition on Patient Empowerment initiative.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com.

If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2019 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions  Law Press, Inc.™. For information about republication, please contact the author directly. All other rights reserved.


College Pays $54,000 To Settle DOJ ADA Lawsuit For Paramedic Program’s Termination of TA With MS

November 7, 2019

Lanier Technical College, a unit of the Technical College System of Georgia, will pay $53,000 in back pay and compensatory damages and revise its policies and procedures to settle a Justice Department lawsuit alleging the College violated the Americans with Disabilities Act (ADA) by terminating along-time College employee based on her multiple sclerosis filed in the Northern District Of Georgia on November 4, 2019.  In addition to this disability discrimination allegation, the Justice Department complaint also alleges the removed the employee from the teaching schedule for an entire school semester, thus reducing her hours and pay to zero, due to her multiple sclerosis after the employee took three days of sick leave one summer.  The lawsuit and its settlement reminds academic health care and other public and private employers about the need to use appropriate care to avoid inappropriate discrimination against individuals  with disabilities in employment and other operations.

The College had employed the terminated employee as a part-time emergency medical technician (EMT) lab assistant for over three years before the events prompting the lawsuit took place.  The essential functions of her job involved assisting instructors in the classroom and in the lab, and perform “check offs” to authorize and certify that the students mastered particular technical competencies (e.g., properly taking blood pressure, starting a patient’s I.V., assessing a patient’s vital signs).  In addition to her employment with the College, the former employee also worked as a paramedic for an unrelated employer.  She continued to work as a full-time paramedic for nearly three years after the College terminated her employment as a part-time lab assistant.

Less than a year into her employment at the College, the former employee was diagnosed with multiple sclerosis (MS) in 2010.   Shortly after her diagnosis the former employee notified among others, notified the Director of the Lanier Paramedicine Technology (PMT) Department, Sam Stone, of her condition and Mr. Stone subsequently discussed her MS and treatment with her over the course of her employment with the College.  According to the Justice Department complaint, the former employee did not require any reasonable accommodations for her disability, remained qualified to perform the essential functions of the part-time lab assistant job, and did so successfully until College discharged her or otherwise altered her compensation, terms, conditions, or privileges of employment.

In 2012, the former employee assisted with classes and labs taught by Instructor Andy Booth.  Instructor Booth managed the work schedule for all the part-time EMT lab assistants who assisted with his classes, including that of the former employee.  This included the ability to remove lab assistants from any shifts they requested.  Director Stone then completed a final review of the semester and approved the schedule and any changes to it.

During the summer of 2012, the former employee had to miss her assigned workdays on two or three occasions due to her MS and its treatment.  She also was on disability leave from her paramedic job for a period during that summer, returning to work full-time in early August.  Following these absences, Instructor Booth on August 30, 2012 sent an email to lab assistants, including the former employee requesting that lab assistants sign up for open shifts on the work schedule, as he was “still short on help.”  The schedule with available shifts was posted for September through December 2012.  The former employee signed up for seven or eight four-hour shifts over the course of the fall semester that same day and emailed Instructor Booth the evening of August 30 to inform him of this.  In her email, she indicated that she was no longer on disability leave from her other job.

Two weeks later, on September 12, 2012, the College removed the former employee from the work schedule for the entire fall semester schedule on the written instructions of Instructor Booth with the approval of Director Stone.   Instructor Booth’s September 12 email instructions to his assistant provided a link to the online work schedule for the lab assistants and stated:  “Any day you see [the former employee], just take her off.”  Director Stone was copied on this email.  That same day, Director Stone replied to Instructor Booth’s email, stating that he had reviewed all of the dates up to December and approved the schedule.  The College knew that, by removing the former employee from the schedule, it was terminating her employment with Lanier.

When the former employee realized that someone removed her from the schedule for the entire semester, she contacted Instructor Booth.  He told the former employee, by text message, that it was Director Stone’s decision and that Director Stone wanted to give the former employee “some time to heal.”  Instructor Booth also stated that Director Stone seemed upset about the former employee missing a few days in the summer due to her MS.  Instructor Booth then directed the former employee to speak to Director Stone.  He did not offer to reinstate her for any of the days she signed up for or for any future dates.

Thereafter, on September 26, 2012, the former employee contacted Director Stone by email.  After telling Director Stone i her email that Instructor Booth said Director Stone was managing the schedule and had wanted to give her “some time to heal,” she reassured him that she appreciated his concern but that she felt she was “OK.”  When Director Stone responded on September 23, he confirmed the correctness of Director Stone’s email and also confirmed that he was concerned with the former employee’s health. He offered to discuss these concerns further with her in private.  He did not offer to reinstate her for any of the days she signed up for or for any future dates.

Later that day, the former employee called Director Stone.  On the call, Director Stone expressed concern about legal and liability issues and whether the former employee was fit to work because of her MS.  He said that he, as the Department Director, had to be concerned about her health and medical issues, because a student could challenge a grade on the basis that her MS made her unfit to evaluate students.   Director Stone also referenced a couple days that the former employee missed work due to her MS during the summer, and stated that she was less reliable than other lab assistants were at that point.  He did not offer to reinstate her for any of the days she signed up for or for any future dates.

Approximately six months later, College removed the former employee from the payroll and changed her payroll status to “terminated.”

On September 26, 2012, the former employee filed a timely charge of discrimination with the United States Equal Employment Opportunity Commission (EEOC), alleging that College terminated her because of her disability in violation of the ADA.  The Justice Department filed the lawsuit after the EEOC referred the former employee’s complaint to it.

Title I of the ADA prohibits covered entities including the College from discriminating against a qualified individual on the basis of disability in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment.  42 U.S.C. § 12112(a); 29 C.F.R. § 1630.4.

The Justice Department complaint against the College charged that the College violated the ADA by discriminating against her on the basis of her disability by:

  • Removing her from the lab assistant work schedule for a semester and reducing her work hours and compensation to zero; and
  • Terminating her on the basis of her disability

As a consequence of these discriminatory actions, the complaint charged the former employee suffered lost earnings, benefits and job advancement opportunities, as well as substantial emotional distress, pain and suffering and other nonpecuniary losses.  The complaint asked the District Court to redress these injuries by:

  • Declaring the College in violation of the Title I of the ADA and its accompanying regulation;
  • Enjoining the College and its agents, employees, successors, and all persons in active concert or participation with it, from engaging in discriminatory employment policies and practices that violate Title I of the ADA;
  • Requiring the College to modify its policies, practices, and procedures as necessary to bring its employment practices into compliance with Title I of the ADA and its implementing   regulation;
  • Ordering the College to train its supervisors and human resource staff regarding the requirements of Title I of the ADA; and
  • Awarding the former employee back pay with interest; the value of any lost benefits with interest; and compensatory damages, including damages for emotional distress, for injuries suffered as a result of Defendant’s failure to comply with the requirements of the ADA;

Under the settlement agreement announced November 7, 2019 by the Justice Department, the College must pay the former employee $53,000 in back pay and compensatory damages, revise its policies and training staff on the ADA to ensure compliance with the ADA, train staff on the ADA, and report to the Justice Department on implementation of the settlement agreement.

Reaching this settlement allowed the College to eliminate its exposure to potentially much greater liability.  In addition to actual lost compensation and benefit damages, a loss at trial could have resulted in a jury award that also ordered the College to pay attorneys’ fees and other costs, interest and exemplary damages of up to $300,000.

For More Information

We hope this update is helpful. For more information about employment discrimination or other labor and employment, compensation, benefits or other related management and compliance concerns or developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

Solutions Law Press, Inc. invites you receive future updates and join discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our Solutions Law Press HR & Benefits Update Compliance Update Group and registering for updates on our Solutions Law Press Website..

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of management focused employment, health care, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications including extensive work with businesses on compliance, risk management and defense.

Author of numerous highly regarding publications on disability and other discrimination and other employment, employee benefit, compensation, regulatory compliance and internal controls and other management concerns affecting health care, education, insurance, housing and other operations, Ms. Stamer’s clients include health care, insurance and financial services, educational and other employer and services organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors;   domestic and international public and private health care, education and other community service and care organizations; managed care organizations; insurers, third-party administrative services organizations and other payer organizations; and other private and government organizations and their management leaders.  In addition to her legal and management operations work. Ms. Stamer’s experience includes 30 plus years’ of  legislative and regulatory policy advocacy and drafting, design, compliance and enforcement including testifying to the EBSA Advisory Council on Employee Welfare and Pension Benefit Plans in  on the effectiveness of employee benefit plan disclosures during 2017 hearings on on reducing the burdens and increasing the effectiveness of ERISA mandated disclosures  as well as advice, representation, advocacy and testimony to and before and other work with various foreign governments, Congress, state legislatures, and a multitude of federal, state and local agencies.

Throughout her 30 plus year career, Ms. Stamer has continuously worked with these and other management clients to design, implement, document, administer and defend hiring, performance management, compensation, promotion, demotion, discipline, reduction in force and other workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; manage labor-management relations, comply with requirements, investigate and respond to government, accreditation and quality organizations, regulatory and contractual audits, private litigation and other federal and state reviews, investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; prepare and present training and discipline;  handle workforce and related change management associated with mergers, acquisitions, reductions in force, re-engineering, and other change management; and a host of other workforce related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, bankruptcy and other crisis and change management; management, and other opportunities and challenges arising in the course of workforce and other operations management to improve performance while managing workforce, compensation and benefits and other legal and operational liability and performance.

A Fellow in the American College of Employee Benefit Counsel and Past Chair of both the ABA Managed Care & Insurance Interest Group and it’s RPTE Employee Benefits and Other  Compensation Group, Ms. Stamer also has leading edge experience in health benefit, health care, health, financial and other plan, program and process design, administration, documentation, contracting, risk management, compliance and related process and systems development, policy and operations; training; legislative and regulatory affairs, and other legal and operational concerns.

A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompasses advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.

Author of leading works on a multitude of labor and employment, compensation and benefits, internal controls and compliance, and risk management matters and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

For more information about Ms. Stamer or her work, services, experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here.

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.  We also invite you to join the discussion of these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our Health Plan Compliance Group or COPE: Coalition On Patient Empowerment Groupon LinkedIn or Project COPE: Coalition on Patient Empowerment Facebook Page.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission and its content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion.otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2019 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication or the topic of this article, please contact the author directly. All other rights reserved.


Business Leaders Serve Jail Time For Employment Tax Crimes

November 5, 2019

Business owners and leaders of companies caught cheating on employment tax obligations increasingly face prison sentences for allowing their companies to fail to withhold, account for, report and pay over to the Internal Revenue Service (IRS) federal income tax, as well as the employees’ share of social security and Medicare taxes (collectively known as FICA taxes) and the employer’s share of FICA taxes in accordance with the Internal Revenue Code (Code). The lengthening list of business leaders nailed for their company’s employment tax violations sends a clear warning to other business owners and operators to ensure their businesses don’t get caught shirking on their own employment tax obligations.

Whether for aggressively misclassifying common law employees as contractors, underreporting wages, or other deliberate or other means, willful violations with employer income and FICA tax requirements historically has been common. Sadly, many employers continue to engaged in these activities in blissful ignorance of the Justice Department’s high priority employment tax fraud investigation and prosecution that already has produced an impressive and growing number of federal grand jury criminal tax fraud indictments, convictions and sentences across the country.  With this priority enforcement continuing, business owners and leaders should act to reduce their own personal susceptibility to potential tax fraud and other liability by carefully assessing and documenting their efforts to verify the adequacy of their own company’s worker classification and income and employment tax withholding and payment practices.

October Indictments Of Staffing Firm Owner Operators

The October successes of the Tax Division alone demonstrate the dangers owneres and executives face if their company cheats on employment tax obligations.  These sucesses included securing separate federal grand jury criminal indictments against staffing business operators in New York and North Carolina.  On October 24, for instance, the Justice Department announced that a New York grand jury had issued criminal tax indictments against the owner/operator of a Long Island City, New York temporary employment staffing businesses including PTP Staffing Associates Inc. (PTP), and PPS Associates Inc. (PPS).  The indictments charge that as the alleged sole owner of PTP and PPS, Heppenheimer was required to collect, account for, and pay to the IRS federal employment taxes withheld from the wages of PTP and PPS employees, but from 2013 through 2017, failed to report more than $270,000 in employment taxes to the IRS.  If convicted, Heppenheimer faces a statutory maximum sentence of five years imprisonment for each count charged, plus substantial monetary penalties, supervised release, and restitution.  Owner of New York City Temporary Staffing Firms Indicted for Employment Tax Fraud

Mere days later, the Justice Department also announced that a North Carolina federal grand jury had indicted Rebecca Adams and her daughter Elizabeth Wood with conspiring to defraud the United States government by withholding taxes from employees’ paychecks and failing to pay those taxes over to the Internal Revenue Service (IRS).  See e.g., Owners of Greensboro Temporary Staffing Firms Indicted for Employment Tax Fraud.  The indictment alleges Adams and Wood created Forms W-2 for the staffing business employees but failed to file these forms with the government as required. Instead of paying the taxes withheld from employees, the indictment alleges that Adams and Wood used the funds to pay for personal expenses, such as a personal maid, personal landscaping services, and pet spa services. The staffing business allegedly changed names twice, even though it did not otherwise change its actual business operations. Adams was also charged with tax evasion based on her allegedly evading payment of more than $400,000 in previously assessed employment taxes and penalties to the IRS. If convicted, both defendants face significant punishment.  If convicted on these charges both Adam and Woods can expect their punishment will include prison time.  Adams and Wood each face a statutory maximum sentence of five years in prison for each charge of conspiracy, employment tax fraud, and tax evasion, plus probation and monetary penalties.

October Employment Tax Convictions Of Business Owner/Operators

Along with securing these new criminal tax indictments, the Justice Department also was successful in obtaining new criminal tax convictions against business owners in West Virginia and Florida for employment tax violations.

On October 21, two West Virginian business owners plead guilty today to conspiring to defraud the United States regarding their employment taxes and individual income taxes in a Federal District Court in West Virginia.   According to court documents, Russell and Karen Rucker, a married couple, operated Rucker, Billups and Fowler Inc. (RBF), an insurance agency located in Huntington, West Virginia. Russell Rucker was the president of RBF and since approximately late 2013, Karen Rucker served as a financial officer. Between September 2015 and September 2018, the Ruckers withheld approximately $143,226 in payroll taxes from the wages of RBF’s employees, which they did not pay over to the IRS. Instead, the Justice Department charged the Ruckers diverted portions of the withheld funds for their own personal benefit. For instance, from 2014 through 2016 the Ruckers continued to pay themselves over $500,000 in salary.  The Justice Department also charges that in response to IRS collection efforts in an attempt to conceal funds from the IRS, the Ruckers deposited money into the bank account of another individual, attempted to evade IRS levies by using a series of bank accounts that they did not disclose to the IRS, and by paying their mortgage and many other bills in cash.  The Justice Department also claims the Ruckers also attempted to evade payment of $114,911 of Russell Rucker’s 2001, 2002, and 2005 individual income taxes by disguising paychecks issued to Russell Rucker as non-taxable “note proceeds and failed to file their individual income tax returns and RBF’s corporate returns for 2014 through 2017. The Justice Department valued the intended tax loss caused to the IRS by their conduct is more than $250,000.  Currently awaiting sentencing scheduled on January 27, 2020, the Ruckers each face a statutory maximum sentence of five years in prison as well as monetary penalties, a period of supervised release, and restitution.  See West Virginian Business Owners Plead Guilty to Failing to Pay Employment Taxes and Individual Income Taxes.

Less than a week later, the Justice Department achieved another prosecutorial success when Miami, Florida business owner Ricardo Betancourt plead guilty on October 29 to causing the multiple parcel delivery businesses he owned and operated in South Florida to fail to pay over employment taxes.  According to the Justice Department, Betancourt’s multiple South Florida parcel delivery businesses earned gross revenues of more than $100 million and employed hundreds of employees.  Betancourt as the owner and operator of these businesses was responsible for ensuring the businesses collected and paid over to the IRS the employment taxes withheld from employees’ paychecks.  The Justice Department charged that Betancourt withheld payroll taxes from his employees, but deliberately failed to pay over those withholdings and other associated taxes to the IRS.  The Justice Department claimed that in 2013 and 2014, Betancourt did not pay over approximately 97 percent of the federal employment taxes he withheld from his employees. In 2015 and 2016, Betancourt did not pay over any of the federal employment taxes he withheld from his employees. For the quarter ending December 2016, Betancourt admitted that he failed to truthfully account for and pay over payroll taxes of approximately $727,478.  In his sentencing currently scheduled for February 12, 2020, Betancourt faces a statutory maximum sentence of five years in prison as well as a period of supervised release, restitution, and monetary penalties.  See Miami Business Owner Pleads Guilty to Employment Tax Fraud.

October Criminal Sentencing Of Business Owners For Employment Tax Violations

The prison sentences imposed in October also show business owners criminally convicted on employment tax related tax evasion and tax fraud charges should expect to serve time in prison.  Take the sentencing of Gail Cooper, who was sentenced for the employment tax crimes she committed as owner of a commercial and residential glass installation company, Greenville Architectural Glass (GAG). According to the Justice Department, as the owner of GAG responsible for GAG’s finances, Cooper was legally responsible for ensuring that GAG properly withheld and paid over to the IRS federal income, Social Security and Medicare taxes on the wages GAG paid to its employees during the years 2013 through 2015. Cooper was also required to file quarterly employment tax returns with the IRS. Although Cooper caused GAG to withhold taxes from employees’ wages, the Justice Department shared she neither filed the required quarterly returns for the first quarter of 2013 through the second quarter of 2015, nor paid the withheld amounts over to the IRS. Cooper also failed to pay over to the IRS unemployment taxes. In all, Cooper caused more than $280,000 in payroll taxes not to be paid.  Furthermore, the Justice Department also charged Cooper filed false individual income tax returns for 2008, 2009, and 2010, on which she understated GAG’s gross receipts and overstated its expenses. Cooper caused GAG’s bookkeeper to manipulate and delete entries in the company’s accounting records. Specifically, she directed the bookkeeper to delete invoices from the software after GAG received payment from a client to make it appear as if GAG had not received the payment. Cooper also paid personal expenses with business funds, including utility bills for her residence and rental properties, and caused these to be classified as business expenses. After filing fraudulent returns for 2008-2010, Cooper did not file any individual income tax returns for the next several years. In total, the Justice Department charged Cooper’s conduct caused a tax loss of $587,516 to the United States.  As punishment for these criminal convictions, U.S. District Judge Thomas M. Rose on October 29th ordered Cooper to serve 14  months in prison, two years of supervised release and pay restitution to the IRS in the amount of $659,262.39. Ohio Glass Company Owner Sentenced to Prison For Not Paying Employment Taxes.

That same day, Justice Department Tax Division prosecutors also obtained a 24 month prison sentence against a Tulsa, Oklahoma computer software development company owner for his criminal conviction on failing to account for and pay over employment taxes withheld from his employees’ wages.  According to documents and information provided to the Court, as the owner and operator of Tulsa-based Zealcon Corporation, Earnest J. Grayson Jr. was responsible for withholding, and paying over to the IRS payroll taxes on the wages paid to Zealcon employees. For the period January 2014 through June of 2016, Justice Department prosecutors showed  Grayson caused a tax loss of approximately $1 million by intentionally not paying to the IRS income and social security taxes withheld from Zealcon employees’ wages and the employer portion of social security taxes due from Zealcon on those wages.  As punishment for these crimes, Grayson was sentenced to serve a 24 month prison sentence, ordered to pay restitution to the IRS in the amount of $904,091, and to serve three years of supervised release.  Owner of Tulsa Software Company Sentenced to Prison for Employment Tax Fraud.

Successful Criminal Prosecutions Show Success of  Justice Department  & IRS Prioritization of Employment Tax Enforcement

These October criminal prosecutions are not aberrations, but instead are the result of the successes the Justice Department Tax Division is experiencing from the high prioritization it has given civil and criminal employment tax enforcement since 2018.  Beginning in May, 2018, the Justice Department Tax Division made civil and criminal employment tax enforcement a top priority.  The Justice Department views employer violations of these requirements as a widespread and substantial problem.  Employment taxes on employee wages represent nearly 70% of all revenue collected by the IRS and, as of June 30, 2016, more than $59.4 billion of tax reported on Employer’s Quarterly Federal Tax Returns (Forms 941) remained unpaid. When last measured prior to the Justice Department’s kickoff of its current enforcement initiative in 2018, the Justice Department said, employment tax violations represented more than $91 billion of the gross Tax Gap and, after collection efforts, $79 billion of the net Tax Gap in the U.S. See Employment Tax Enforcement.  The Justice Department also considers the nonpayment of employment taxes serious misconduct by employers. Its Employment Tax Enforcement page states, “When employers willfully fail to collect, account for and deposit with the IRS employment tax due, they are stealing from their employees and ultimately, the United States Treasury. In addition, employers who willfully fail to comply with their obligations and unlawfully line their own pockets with amounts withheld are gaining an unfair advantage over their honest competitors.”  Of course, in addition to these criminal prosecutions, the IRS and Justice Department also are pursuing civil tax enforcement.

Under this enforcement initiative, the Justice Department partners with the IRS in targeting for criminal and civil enforcement employers that violate their legal responsibility to collect and pay over to the IRS federal income tax, as well as the employees’ share of social security and Medicare taxes (collectively known as FICA taxes) withheld from employee’s wages as well as to pay the employer’s share of FICA taxes using a combination of civil and criminal tools.  It pursues money judgments, permanent injunctions, and criminal convictions that often carry substantial prison sentences, restitution and financial penalties against businesses and their owners and operators who fail to comply with their employment tax obligations and to collect outstanding amounts assessed against entities and responsible persons. It also pursues criminal investigations and prosecutions against those individuals and entities who willfully fail to comply with their employment tax responsibilities, as well as those who aid and assist them in failing to meet those responsibilities.

In the face of this ongoing enforcement effort, businesses and those with ownership or management authority over the collection and payment of employment taxes should use care to ensure the business properly classifies workers as employees versus contractors or in some other status, that wages are properly tracked and income tax and employment taxes properly are calculated, withheld and paid over to the IRS.  Proper worker classification is a critical starting point of these compliance efforts. When another person performs work for a business, the business first must classify correct whether that person is its employee versus an independent contractor or the employee or contractor of another business. Businesses and business leaders responsible for income and employment tax withholding, reporting and payment should be particularly careful when participating in arrangements that the IRS might consider employment tax fraud schemes such as:

  • “Pyramiding” of employment taxes, which the IRS views as a fraudulent practice where a business withholds taxes from its employees but intentionally fails to remit them to the IRS. Businesses involved in pyramiding frequently file for bankruptcy to discharge the liabilities accrued and then start a new business under a different name and begin a new scheme.
  • Abusive employee leasing arrangements where the business contracts with outside businesses to handle all administrative, personnel, and payroll concerns for employees where the leasing entity fails to properly report wages and withhold and payover income or employment taxes to the IRS.  The IRS and other agencies often pursue tax collection and other enforcement actions against businesses that have used leasing or other staffing businesses when the leasing or staffing company fails to properly report, withhold or pay over income and employment taxes to the IRS.
  • Paying workers in whole or partially, in cash without properly accounting for, withholding and paying income or employment taxes due on a worker’s wages where the facts and circumstances indicated the worker qualified as a common law employee of the business; or
  • Filing false payroll tax returns understating the amount of wages on which taxes are owed, or failing to file employment tax returns to evade employment or other taxes.

 

When evaluating the adequacy of employment tax compliance, business owners and operators are encouraged to resist the urge to assume that they can rely upon the contractual or labels of workers as contractors or employed by a staffing, leasing or other service provider to avoid characterization and resulting liability for employment and income tax obligations as the employer of workers. Under the Code the defensibility of these characterizations of workers generally is determined based on whether the facts and circumstances reflect that the business in operation possessed the requisite control to qualify as a common law employer with little or no deference to how the parties have labeled the arrangement. Leaders must critically evaluate these and other potentially suspect arrangements to realistically assess the likelihood that the IRS and Justice Department will agree with the company’s treatment; seek contractual, audit and other operational safeguards to require compliance and to capture and retain records and other evidence that the business might need to defend itself against a future audit or enforcement action associated with these suspect arrangements.

For More Information

We hope this update is helpful. For more information about worker classification and employment tax compliance and enforcement or other labor and employment developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

Solutions Law Press, Inc. invites you receive future updates and join discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our Solutions Law Press HR & Benefits Update Compliance Update Group and registering for updates on our Solutions Law Press Website.

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About the Author

For more information about the IRS and Justice Department employment tax enforcement activities, contact the author of this article. Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of management focused employment, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications including extensive work with businesses on tax and other worker classification compliance, risk anagement and defense.

Businesses involved in these arrangements generally should use care to critically evaluate these and other potentially suspect arrangements to verify their likely defensibility in the event of a challenge based on a realistic assessment of the actual facts and circumstances; seek contractual, audit and other operational safeguards to require compliance and to capture and retain records and other evidence that the business might need to defend itself against a future audit or enforcement action associated with these suspect arrangements.

For More Information

We hope this update is helpful. For more information about worker classification and employment tax compliance and enforcement or other labor and employment developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

Solutions Law Press, Inc. invites you receive future updates and join discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our Solutions Law Press HR & Benefits Update Compliance Update Group and registering for updates on our Solutions Law Press Website.

.

About the Author

For more information about the IRS and Justice Department employment tax enforcement activities, contact the author of this article. Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of management focused employment, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications including extensive work with businesses on tax and other worker classification compliance, risk anagement and defense.

Author of numerous highly regarding publications on worker classification and other employment, payroll, and employee benefit tax compliance publications, Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors;   domestic and international public and private health care, education and other community service and care organizations; managed care organizations; insurers, third-party administrative services organizations and other payer organizations;  and other private and government organizations and their management leaders.  As part of this work, she has worked extensively on employee benefit communication and other employee benefit plan legislative and regulatory policy, design, compliance and enforcement including testifying to the EBSA Advisory Council on Employee Welfare and Pension Benefit Plans in  on the effectiveness of employee benefit plan disclosures during 2017 hearings on on reducing the burdens and increasing the effectiveness of ERISA mandated disclosures.

Throughout her 30 plus year career, Ms. Stamer has continuously worked with these and other management clients to design, implement, document, administer and defend hiring, performance management, compensation, promotion, demotion, discipline, reduction in force and other workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; manage labor-management relations, comply with requirements, investigate and respond to government, accreditation and quality organizations, regulatory and contractual audits, private litigation and other federal and state reviews, investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; prepare and present training and discipline;  handle workforce and related change management associated with mergers, acquisitions, reductions in force, re-engineering, and other change management; and a host of other workforce related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, bankruptcy and other crisis and change management; management, and other opportunities and challenges arising in the course of workforce and other operations management to improve performance while managing workforce, compensation and benefits and other legal and operational liability and performance.

A Fellow in the American College of Employee Benefit Counsel and Past Chair of both the ABA Managed Care & Insurance Interest Group and it’s RPTE Employee Benefits and Other  Compensation Group, Ms. Stamer also has leading edge experience in health benefit, health care, health, financial and other plan, program and process design, administration, documentation, contracting, risk management, compliance and related process and systems development, policy and operations; training; legislative and regulatory affairs, and other legal and operational concerns.

A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompasses advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.

Author of leading works on a multitude of labor and employment, compensation and benefits, internal controls and compliance, and risk management matters and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

For more information about Ms. Stamer or herexperience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here.

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.  We also invite you to join the discussion of these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our Health Plan Compliance Group or COPE: Coalition On Patient Empowerment Groupon LinkedIn or Project COPE: Coalition on Patient Empowerment Facebook Page.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission and its content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion.otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2019 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication or the topic of this article, please contact the author directly. All other rights reserved.


NLRB Responds To House Democrats About Private Contractor Participation In Joint Employment Rule Comment Processing

March 22, 2019

National Labor Relations Board (“NLRB”) Chairman John F. Ring responded today  letter to the March 14, 2019 letter of House Ways & Means Chairman Robert “Bobby” Scott and Ways and Means Committee Subcommittee on Health, Employment, Labor, and Pensions Chairwoman Frederica Wilson expressing concerns about the NLRB’s use of contractors to aid it in processing the nearly 29,000 comments the NLRB received in response to its Notice of Proposed Rulemaking (“Proposed Rule”) proposing standards for determining when the NRLB will treat two businesses as a single employer for purposes of the National Labor Relations Act (“NLRA”).

The NLRB has engaged outside contractors to assist the NLRB to process, classify and code the nearly 29,000 comments it received in response to the Proposed Rule during the comment period that ended in December, 2018.  In their March 14, 2019 letter, Congressman Scott and Congresswoman Wilson expressed “concern” about reports that the NLRB planned to outsource “review of public comments” to a private contractor the and demanded the NRLB respond to their demand for information and documents.

The Proposed Rule  

The Proposed Rule published by the NRLB last year would overrule a definition of joint employment implemented by NLRB order during the Obama Administration when Democratic appointees dominated NLRB during the Obama Administration.  A finding of joint employment by the NLRB results in the NLRB treating  a separate business that does not directly employ workers employed by a second business as a single employer, both of which are jointly and severally liable for complying with and breaches of NLRB rules on union organizing, collective bargaining and other NLRA protected activities even where the business is not under common ownership or control with the business that actually is the true employer of the workers.

The Proposed Rule seeks to overrule an interpretive position adopted by the NLRB during the Obama administration under which unions could use limited indirect involvement or control by a business Including limited involvement by general contractors subcontractors as the basis for having that business be treated as a joint player for purposes of union organizing in collective-bargaining obligations under the NLRB.

During the Obama Administration, the NLRB by Board order and without  following regulatory rulemaking procedures or providing any opportunity for public comment expanded the circumstances where a business is treated as a joint employer to include situations where the business does not have direct control over the worker in such a way that it imperils businesses that contract  to receive services under independent contractor or subcontractor agreements from businesses with unionized workers or involved in organizing campaigns.  As modified during the Obama Administration, the NLRB could find a business liable as a joint employer based on very limited, indirect influence on terms of work such as setting the hours that a job site is available for the performance of work or requiring compliance with workplace safety or other contractual standards including those required to comply with federally imposed government contracting requirements. Congressman Scott and Congresswoman Wilson, both members of the current Democratic Majority in the House well known for their pro-labor  positions, oppose the changes set forth in the Proposed Rule.

Outsourcing Inquiry & Response

In his March 22, 2019 Letter, Chairman made clear that the NRLB has not outsourced the substantive analysis of the comments to a private contractor.  Rather, he explained that the NRLB merely has engaged an outside private contractor a General Services  Administration (“GSA”)-approved temporary employment agency, contracted through the GSA bid process to provide temporary support on a limited, short-term basis to
perform the initial sorting and coding of the public comments.   The Chairman stated that the use of these outside service providers to sort and code the response is a more cost effective alternative to completing this work than using NLRB legal staff and frees up the NLRB lawyers to perform their legal responsibilities for the NLRB.

The Proposed Rule enjoys significant support within the business community and among Republican leaders, but is widely opposed among Congressional Democrats.  The Trump Administration is expected to approve some version of the Proposed Rule soon.

About The Author

Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation; Former Chair of the RPTE Employee Benefits and Compensation Committee, a current Co-Chair of the Committee, and the former Chair of its Welfare Benefit and its Defined Compensation Plan Committees and former RPTE Joint Committee on Employee Benefits Council (JCEB) Representative, Cynthia Marcotte Stamer is a Martindale-Hubble “AV-Preeminent” practicing attorney and management consultant, author, public policy advocate, author and lecturer repeatedly recognized for her 30 plus years’ of work and pragmatic thought leadership, publications and training on health, pension and other employee benefit,  insurance, labor and employment, and health care  fiduciary responsibility, payment, investment, contracting  and other design, administration and compliance concerns as among the “Top Rated Labor & Employment Lawyers in Texas,” a “Legal Leader,” a “Top Woman Lawyer” and with other awards by LexisNexis® Martindale-Hubbell®; as among the “Best Lawyers In Dallas” for her work in the field of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, in International Who’s Who of Professionals and with numerous other awards and distinctions.

Highly valued for her ability to meld her extensive legal and industry knowledge and experience with her talents as an insightful innovator and pragmatic problem solver, Ms. Stamer advises, represents and defends employer, union, multi-employer, association and other employee benefit plan sponsors, insurers and managed care organizations, fiduciaries, plan administrators, technology and other service providers, government and community leaders and others about health and other employee benefit and insurance program and policy design and innovation, funding, documentation, administration, communication, data security and use, contracting, plan, public and regulatory reforms and enforcement, and other risk management, compliance and operations matters. Her experience encompasses leading and supporting the development and defense of innovative new policies, programs, practices and solutions; advising and representing clients on routine plan establishment, plan documentation and contract drafting and review, administration, change and other compliance and operations; crisis prevention and response, compliance and risk management audits and investigations, enforcement actions and other dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, Justice, Securities and Exchange Commission, Education and other federal agencies, state legislatures, attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators, and various other foreign and domestic governmental bodies and agencies. She also provides strategic and other supports clients in defending litigation as lead strategy counsel, special counsel and as an expert witness. Alongside her extensive legal and operational experience, Ms. Stamer also is recognized for her work as a public and regulatory policy advocate and community leader with a gift for finding pragmatic solutions and helping to forge the common ground necessary to build consensus. Best known for her domestic public policy and community leadership on health care and insurance reform, Ms. Stamer’s lifelong public policy and community service involvement includes service as a lead consultant to the Government of Bolivia on its pension privatization project, as well as extensive legislative and regulatory reform, advocacy and input workforce, worker classification, employee benefit, public health and healthcare, social security and other disability and aging in place, education, migration reforms domestically and internationally throughout her adult life. In addition to her public and regulatory policy involvement, Ms. Stamer also contributes her service and leadership to a professional and civic organizations and efforts including her involvement as the Founder and Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE; Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence; Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; Vice Chair, Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group; current Fiduciary Responsibility Committee Co-Chair and Membership Committee member of the ABA RPTE Section; former RPTE Employee Benefits and Other Compensation Group Chair, former Chair and Co-Chair of its Welfare Plans Committee, and Defined Contribution Plans Committee; former RPTE Representative to ABA Joint Committee on Employee Benefits Council; former RPTE Representative to the ABA Health Law Coordinating Counsel; former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, former Board Member, Continuing Education Chair and Treasurer of the Southwest Benefits Association; Vice President of the North Texas Healthcare Compliance Professionals Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; past Dallas World Affairs Council Board Member, and in leadership of many other professional, civic and community organizations. Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, the Society of Professional Benefits Administrators, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients, serves on the faculty and planning committee of many workshops, seminars, and symposia, and on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.

Beyond these involvements, Ms. Stamer also is active in the leadership of a broad range of other public policy advocacy and other professional and civic organizations and involvements. Through these and other involvements, she helps develop and build solutions, build consensus, garner funding and other resources, manage compliance and other operations, and take other actions to identify promote tangible improvements in health care and other policy and operational areas.

Before founding her current law firm, Cynthia Marcotte Stamer, P.C., Ms. Stamer practiced law as a partner with several prominent national and international law firms for more than 10 years before founding Cynthia Marcotte Stamer, P.C. to practice her unique brand of “Solutions law™” and to devote more time to the pragmatic policy and system reform, community education and innovation, and other health system improvement efforts of her PROJECT COPE: the Coalition on Patient Empowerment initiative.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as the following:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2018 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions  Law Press, Inc.™   For information about republication, please contact the author directly.  All other rights reserved.


IRS Updates 2019 Compensation Table

March 14, 2019

Employee benefit plan sponsors, fiduciaries, administrators and advisors should review and update their benefit and compensation plan designs and testing in response to the just released tables of covered compensation under § 401(l)(5)(E) of the Internal Revenue Code and related regulations for the 2019 plan year in new Revenue Ruling 2019-06.

The new tables are available in the advance release copy of Revenue Ruling 2019-06, scheduled for official publication in Internal Revenue Bulletin 2019-14 on April 1, 2019.

The Revenue Ruling provides tables of covered compensation under § 401(l)(5)(E) of the Internal Revenue Code and related regulations for the 2019 plan year.

For this purpose, covered compensation is average of the contribution and benefit bases in effect under section 230 of the Social Security Act for each year in the 35 year period ending with the year in which an employee attains social security retirement age.

As the change will impact plan contribution limits, discrimination testing and other plan and contribution design and administration, employer and other plan sponsors, fiduciaries, administrators and service providers should evaluate the effects of the adjustments so as to maximize their ability to anticipate and respond to the adjustments.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of management focused employment, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors;   domestic and international public and private health care, education and other community service and care organizations; managed care organizations; insurers, third-party administrative services organizations and other payer organizations;  and other private and government organizations and their management leaders.

Throughout her 30 plus year career, Ms. Stamer has continuously worked with these and other management clients to design, implement, document, administer and defend hiring, performance management, compensation, promotion, demotion, discipline, reduction in force and other workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government, accreditation and quality organizations, regulatory and contractual audits, private litigation and other federal and state reviews, investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; prepare and present training and discipline;  handle workforce and related change management associated with mergers, acquisitions, reductions in force, re-engineering, and other change management; and a host of other workforce related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, bankruptcy and other crisis and change management; management, and other opportunities and challenges arising in the course of workforce and other operations management to improve performance while managing workforce, compensation and benefits and other legal and operational liability and performance.

Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, heavily involved in health benefit, health care, health, financial and other information technology, data and related process and systems development, policy and operations throughout her career, and scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues. She regularly helps employer and other health benefit plan sponsors and vendors, health industry, insurers, health IT, life sciences and other health and insurance industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; vendors and suppliers; deal with Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA, state insurance law and other private payer rules and requirements; contracting; licensing; terms of participation; medical billing, reimbursement, claims administration and coordination, and other provider-payer relations; reporting and disclosure, government investigations and enforcement, privacy and data security; and other compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; HIPAA administrative simplification, meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA, HEDIS and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.

A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompasses advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.

Author of leading works on a multitude of labor and employment, compensation and benefits, internal controls and compliance, and risk management matters and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here such as the following:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2019 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication or the topic of this article, please contact the author directly. All other rights reserved.


Finalize 2019 Withholding Prep In Light of Notice 2018-92

December 13, 2018

Employers should invite employees to update their Form W-4 withholding and finalize other 2019 payroll and income tax withholding arrangements based on guidance for 2019 published by the IRS and Treasury Department in Notice 2018-92 on November 26, 2018.

Many U.S. employers had delayed making changes to their income and payroll tax withholding pending the anticipated release by the IRS and Treasury Department of a revised Form W-4 and related income and payroll tax guidance updated to reflect changes to the Internal Revenue Code enacted as part of the Tax Cut and Jobs Act (P.L. 115-97)(“Trump Tax”) at the end of 2017.

Following the enactment of Trump Tax, most businesses have operated in reliance upon interim guidance published by the agencies at the beginning of the year to carryout their 2018 withholding obligations.

Until recently, the IRS and Treasury Department were expected to complete for use in 2019 the major overhaul of the Form W-4 and related guidance in response to the Trump Tax amendments to Sections 3402, 3405 and other Code rules.  When the revision of the Form W-4 proved more complex than anticipated, however, the IRS and Treasury Department in September, 2018 announced that release of the newly designed and updated Form W-4 would be delayed from 2019 to 2020.

In Notice 2018-92, IRS and the Treasury Department provides interim guidance to employers and their workers on income tax withholding for 2019 pending agencies issuance of regulations implementing the changes, as well as requests comments on certain withholding procedures from concerned parties.  For the most part, Notice 2018-92 continues the interim guidance that IRS and Treasury previously published for 2018.  Specifically, Notice 2018-92:

  • Announces that the 2019 Form W-4 will be similar to the 2018 Form W-4,
  • Addresses new TCJA “withholding allowance” terminology,
  • Continues until April 30, 2019 Notice 2018-14’s temporary suspension of the requirement to furnish new Forms W-4 within 10 days for changes resulting solely from the TCJA,
  • Provides that, for 2019, the default rule when an employee fails to furnish a Form W-4 will continue to be single with zero withholding allowances,
  • Allows taxpayers to take into account the qualified business income deduction under section 199A to reduce withholding under section 3402(m),
  • Announces that the IRS and Treasury intend to update the regulations under section 3402 to explicitly allow taxpayers to use the online withholding calculator or Publication 505, Tax Withholding and Estimated Tax, in lieu of the worksheets to Form W-4,
  • Requests comments on alternative withholding methods under section 3402(h),
  • Announces that the IRS and the Treasury Department intend to eliminate the combined income tax withholding and employee FICA tax withholding tables under Treas. Reg. § 31.3402(h)(4)-1(b),
  • Modifies notification requirements for the withholding compliance program, and
  • Provides that for 2019, withholding on annuities or similar periodic payments where no withholding certificate is in effect is based on treating the payee as a married individual claiming 3 withholding allowances  under § 3405(a)(4).

The Code generally requires employees that experience a change that reduces the number of withholding exemptions that the employee qualifies to claim to notify their employer and complete a new Form W-4 within 10 days of a specified event date.  Interim relief published by the IRS and Treasury Department provides relief to workers whether the change in withholding eligibility results solely due to a Code change enacted as part of Trump Tax.  Otherwise, however, employees generally still remain obligated to keep their withholding up-to-date.  Since employees often are unaware of or overlook this responsibility, employers generally should encourage workers to review and update their Form W-4 withholding elections in connection with annual enrollment periods and in conjunction with other life or other changes likely to affect the withholding eligibility of the worker.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of management focused employment, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors;   domestic and international public and private health care, education and other community service and care organizations; managed care organizations; insurers, third-party administrative services organizations and other payer organizations;  and other private and government organizations and their management leaders.

Throughout her 30 plus year career, Ms. Stamer has continuously worked with these and other management clients to design, implement, document, administer and defend hiring, performance management, compensation, promotion, demotion, discipline, reduction in force and other workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government, accreditation and quality organizations, regulatory and contractual audits, private litigation and other federal and state reviews, investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; prepare and present training and discipline;  handle workforce and related change management associated with mergers, acquisitions, reductions in force, re-engineering, and other change management; and a host of other workforce related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, bankruptcy and other crisis and change management; management, and other opportunities and challenges arising in the course of workforce and other operations management to improve performance while managing workforce, compensation and benefits and other legal and operational liability and performance.

Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, heavily involved in health benefit, health care, health, financial and other information technology, data and related process and systems development, policy and operations throughout her career, and scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues. She regularly helps employer and other health benefit plan sponsors and vendors, health industry, insurers, health IT, life sciences and other health and insurance industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; vendors and suppliers; deal with Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA, state insurance law and other private payer rules and requirements; contracting; licensing; terms of participation; medical billing, reimbursement, claims administration and coordination, and other provider-payer relations; reporting and disclosure, government investigations and enforcement, privacy and data security; and other compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; HIPAA administrative simplification, meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA, HEDIS and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.

A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompasses advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.

Author of leading works on a multitude of labor and employment, compensation and benefits, internal controls and compliance, and risk management matters and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here such as the following:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2018 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication or the topic of this article, please contact the author directly. All other rights reserved.


Identity Theft Scan Targets Employee Tax Records

December 7, 2018

The Internal Revenue Service is warning human resources and other business leaders about a growing wave of identity theft and W-2 scams targeting sensitive tax data employers collect on their employees. The warning highlights one of the many growing data breach exposures businesses must manage as identity thieves become ever more sophisticated.

Such data like Form W-2 data – is highly valued by identity thieves. While identity thieves use a variety of tactics to steal this information including hacking into the IRS’ own systems, the IRS this week is warning about one scheme that the IRS says has become one of the more dangerous email scams.

All employers are targets for the W-2 scam, according to the IRS.

Here’s how it works:

  • These emails appear to be from an executive or organization leader to a payroll or human resources employee.
  • The message usually starts with a simple greeting, like: “Hey, you in today?”
  • By the end of the email exchange, all of an organization’s Forms W-2 for their employees may be in the hands of cybercriminals.
  • Because payroll officials believe they are corresponding with an executive, it may take weeks for someone to realize a data theft has occurred.
  • Generally, the criminals are trying to quickly take advantage of their theft, sometimes filing fraudulent tax returns a day or two.

The IRS warns this scam is such a threat to taxpayers that a special IRS reporting process has been established. The IRS says employers victimized should:

  • Email dataloss@irs.gov to notify the IRS of a W-2 data loss and provide contact information. In the subject line, type “W2 Data Loss” so that the email can be routed properly. The business should not attach any employee personally identifiable information data.
  • Email the Federation of Tax Administrators at StateAlert@taxadmin.org to get information on how to report victim information to the states.
  • File a complaint with the FBI’s Internet Crime Complaint Center. Businesses and payroll service providers may be asked to file a report with their local law enforcement agency.
  • Notify employees. The employee may then take steps to protect themselves from identity theft. The Federal Trade Commission’s www.identitytheft.govprovides guidance on general steps employees should take.
  • Forward the scam email to phishing@irs.gov.
  • The IRS also recommends the following resources:
  • The IRS alert reminds businesses again about the growing challenges they face guarding sensitive tax, health and other employee benefit plan and other data about employees, customers, business partners and others. Aside from the disruptions businesses incur to organizations and relationships with employees, customers, business partners or others and often tremendous costs of investigation and mitigation, breaches also commonly trigger substantial legal liability under a myriad of federal and state laws and regulations, contracts, and common law tort claims. Businesses generally and Human Resources, tax and other systems and operations should take well documented steps to prevent and prepare for a potential breach.
  • About the Author

    Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of management focused employment, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

    Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving and author of “What To Do When Your Employee’s Personal Life Becomes Your Business@ and a multitude of other highly regarded works on data protection and breach, her work includes career-long, leading edge involvement counseling and representing human resources, employee benefit, insurance and financial, tax, healthcare and other businesses about data and other sensitive information privacy and breach.

    Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors;   domestic and international public and private health care, education and other community service and care organizations; managed care organizations; insurers, third-party administrative services organizations and other payer organizations;  and other private and government organizations and their management leaders.

    Throughout her 30 plus year career, Ms. Stamer has continuously worked with these and other management clients to design, implement, document, administer and defend hiring, performance management, compensation, promotion, demotion, discipline, reduction in force and other workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government, accreditation and quality organizations, regulatory and contractual audits, private litigation and other federal and state reviews, investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; prepare and present training and discipline;  handle workforce and related change management associated with mergers, acquisitions, reductions in force, re-engineering, and other change management; and a host of other workforce related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, bankruptcy and other crisis and change management; management, and other opportunities and challenges arising in the course of workforce and other operations management to improve performance while managing workforce, compensation and benefits and other legal and operational liability and performance.

    Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, heavily involved in health benefit, health care, health, financial and other information technology, data and related process and systems development, policy and operations throughout her career, and scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues. She regularly helps employer and other health benefit plan sponsors and vendors, health industry, insurers, health IT, life sciences and other health and insurance industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; vendors and suppliers; deal with Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA, state insurance law and other private payer rules and requirements; contracting; licensing; terms of participation; medical billing, reimbursement, claims administration and coordination, and other provider-payer relations; reporting and disclosure, government investigations and enforcement, privacy and data security; and other compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; HIPAA administrative simplification, meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA, HEDIS and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.

    A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompasses advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.

    Author of leading works on a multitude of labor and employment, compensation and benefits, internal controls and compliance, and risk management matters and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

    For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

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    ©2018 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication or the topic of this article, please contact the author directly. All other rights reserved.