NLRB Releases Updated Bench Book

January 9, 2019

Businesses and representatives involved in labor-management relations disputes likely to fuel actions before the National Labor Relations Board (NLRB) should brush up theirs understanding of NLRB procedures by reviewing the updated Bench Book just released by the just-released NLRB Judges Division.

The Bench Book serves as an NLRB Trial Manual and is designed to provide NLRB judges with a reference guide during hearings.  It is also a useful tool for trial practitioners before the Board because it sets forth Board precedent and other rulings and authorities on certain recurring procedural and evidentiary issues that may arise during a hearing.

As discussed in the Foreword, the basic sources that govern Board ULP hearings are the National Labor Relations Act (NLRA), the Administrative Procedure Act (APA), the Board’s Rules and Regulations and Statements of Procedure, and Board decisions. The Board also applies, so far as practicable, the Federal Rules of Evidence (FRE), and frequently seeks guidance from the Federal Rules of Civil Procedure (FRCP).  

The new Bench Book replaces an earlier version issued in January 2018.  The new January 2019 edition contains citations to numerous additional Board and court decisions and other authorities.  It also contains several new sections, including sections addressing compliance/backpay proceedings and consolidated unfair labor practice (ULP) and representation cases. In addition, certain sections have been substantially reorganized, including those addressing privileged or protected material.

Like the 2018 edition, the new 2019 edition was edited by NLRB Administrative Law Judge (ALJ) Jeffrey Wedekind and contains a Foreword by Chief ALJ Robert Giannasi describing the Bench Book’s history and purpose. 

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 management work, coaching, teachings, and publications.

Ms. Stamer is nationally and internationally recognized for her work assisting businesses, governments, and other entities to develop, implement, administer and defend pragmatic strategies for dealing with employment and other workforce and related compensation, employee benefit,  performance management and internal controls, insurance, health care and finance concerns to manage risk, operations and other business objectives.

Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.

The author of the “Texas Payday Act,” and numerous other highly regarded publications on wage and hour and other human resources, employee benefits and compensation publications, Ms. Stamer is well-known for her 30 years of extensive wage and hour, compensation and other management advice and representation of restaurant and other hospitality, health, insurance, financial services, technology, energy, manufacturing, retail, governmental and other domestic and international businesses of all types and sizes.

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 concerns by her service as a management consultant,  business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; 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; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.

Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns 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, 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 on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.

Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.

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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. 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.


Creative Pay & Time Keeping Requires FLSA Compliance & Risk Management

December 27, 2018

Today’s diverse business environment creates a demand for businesses to think creatively about their employment relationships, including creative scheduling and pay arrangements. While many of these arrangements produce win/win solutions for both the business and its employees, businesses need to use care properly to evaluate and manage minimum wage, overtime, and other wage and hour law responsibilities under the Fair Labor Standards Act (“FLSA”) and applicable state law.

A new Department of Labor Wage and Hour Division (WHD) Fair Labor Standards Act (FLSA) opinion letter published December 21 illustrates this point. WHD Opinion Letter FLSA 2018-28 (Dec. 21, 2018) evaluates FLSA minimum wage and overtime compliance of one employer’s innovative strategy of paying certain hourly employees one hourly rate while the employee was working with clients and a second, lower hourly rate of pay for time that the employee spent traveling between client sites throughout the day.

In WHD Opinion Letter FLSA 2018-28 (Dec. 21, 2018), the WHD expresses reservations about whether the specific practices of the requesting employer for calculating overtime for workers paid different hourly rates for different categories of work during the same work week fulfill the FLSA overtime requirements under certain circumstances, but blessed the compliance of the practice of the employer with the FLSA minimum wage rules.

While only the employer that actually requested the ruling that resulted in the Opinion actually may rely upon the Opinion, the ruling highlights both the potential opportunity for businesses to structure innovative compensation and scheduling arrangements within the requirements of the FLSA and other laws, as well as the legal exposures that employers using innovative staffing and compensation arrangement risk by failing to appropriately manage these responsibilities.

FLSA Minimum Wage & Overtime Requirements Generally

The FLSA generally requires that employers pay covered, nonexempt employees receive at least the federal minimum wage (currently $7.25 per hour) for all hours worked. See 29 U.S.C. § 206(a)(1). According to previously published WHD guidance, WHD will consider an employer to have fulfilled this requirement “if the employee’s total wages for the workweek divided by compensable hours equal or exceed the applicable minimum wage.” See WHD Opinion Letter FLSA2004-8NA (Aug. 12, 2004)(different pay rates for trucking company workers); WHD Field Operations Handbook § 30b02.

In addition to the requirement to pay at least the minimum wage, the FLSA also requires that covered, nonexempt employees receive overtime compensation of at least one and one-half times their regular rate of pay for time worked in excess of 40 hours per workweek. See 29 U.S.C. § 207(a)(1). To  determine the regular rate of pay for purposes of calculating the required overtime, an employer generally divides the employee’s “remuneration for employment” (subject to the exclusions in 29 U.S.C. § 207(e)) by the total hours worked for the workweek. See 29 C.F.R. § 778.109.

WHD Opinion Letter FLSA 2018-28

In WHD Opinion Letter FLSA 2018-28 (Dec. 21, 2018), WHD addressed its views regarding a home health provider’s practice for calculating the wages due to home health aide services that traveled to home health clients’ homes, who were required to travel to different client home locations during the workday. The employer establishes different rates of pay for time spent working with clients versus time spent traveling from location to location.  To calculate weekly pay, that employer multiplied an employee’s time with clients by his hourly pay rate established by the employer for time spent working with clients.  The employer then divides the product by the employee’s total hours worked, which includes both the client time and the travel time. The employer guarantees that the quotient meets both federal and state minimum wage rate requirements.

According to the facts published in the WHD Opinion Letter, the home health provider represented that a typical standard rate of pay is $10.00 per hour with a client including travel time,” and that “[i]f any employee works over 40 hours (total paid hours and [travel] time) in any given workweek, the employer pays the employee time and a half for all time over 40 hours at a rate of $10.00.”

Based upon the factual representations made by the home health agency, WHD ruled the employer’s compensation plan complies with the FLSA’s minimum wage requirements but expressed concern about whether the employer’s practices for calculating overtime complied with the FLSA.

Concerning the FLSA minimum wage compliance, the WHD found that the employers practice fulfilled the FLSA minimum wage requirements because even though the employee’s average hourly pay rate varied from workweek to workweek, the employer always ensured that the average hourly pay rate exceeded the FLSA’s minimum wage requirement for all hours worked.

In contrast, however, WHD expressed concern about the compliance of the employer’s compensation plan with the FLSA’s overtime requirements under certain circumstances. WHD states in the Opinion that the employer will not pay all overtime due to employees whose actual rate of pay exceeds $10 per hour if the employer always assumes a regular rate of pay of $10 per hour when calculating overtime due.  See  29 C.F.R. § 778.107.

The Opinion notes that “neither an employer nor an employee may arbitrarily choose the regular rate of pay; it is an “actual fact” based on “mathematical computation.” Walling v. Youngerman-Reynolds Hardwood Co., Inc., 325 U.S. 419, 424–25 (1945); 29 C.F.R. § 778.108.

On the other hand, the Opinion also states that the employer’s compensation plan would comply with the FLSA’s overtime requirements for all employees whose actual regular rates of pay are less than $10 per hour, as an employer may choose to pay an overtime premium in excess of the required amount. See, e.g., Molina v. First Line Solutions LLC, 566 F. Supp. 2d 770, 779 (N.D. Ill. 2007).

The cautionary lessons from FLSA Opinion 2018-28 echo those WHD previously has issued alerting businesses to the need to use care to properly understand and meet FLSA requirements when structuring and administering two-tier hourly pay or other innovative pay and scheduling arrangements.

The need to attend to the details of FLSA compliance when adopting and administering customized pay arrangements is further illustrated by WHD’s review of the FLSA compliance of a school district employer’s customized pay arrangement for its drivers in FLSA2004-8NA in 2004.  While the WHD found issues with the FLSA compliance of the special arrangement as administered by the school district, guidance provided by the Opinion also makes clear the type of adjustments to the arrangement the employer would need to adopt and apply to continue using the arrangement in its modified form. 

Specifically, FLSA 2004-8NA considered a school district’s contractually negotiated arrangement to pay its drivers pursuant to a contractual arrangement under which the employer agreed to pay regular drivers a specified hourly rate with a minimum guarantee of two hours driving time pay per route/additional assignment. The contract also provided that for an assigned trip of less than two hours, a driver that wanted to receive pay for hte minimum guaranteed time had to perform regular maintenance in the bus garage or other work as assigned by the School District to complete the two hours.  Furthermore, the contract also specified that “Any regular driver may complete a voucher for payment for additional time if their morning or afternoon route exceeds his/her assigned time by one half hour or more” and that the employers only would pay additional wages for the actual added time worked to employees that worked at least 30 minutes or more without rounding to the next hour for calculating wages.  Thus,  an employee that worked an additional twenty-five minutes beyond his/her normal shiftwould not be compensated for the extra time worked.  Meanwhile, a bus driver that returned fifty minutes past the scheduled time received pay for an additional 50 minutes of work.

WHD’s issue with the arrangement was that the rounding practices applied under the arrangement meant that the school district did not ensure that workers were paid at least the minimum wage per hour for all hours worked and might under some circumstances not properly pay overtime due to workers.

While acknowledging that Labor Regulation Section 785.47 allows employers to disregard ‘insubstantial or insignificant periods of time outside the scheduled working hours that cannot practically be precisely recorded as de minimis,  WHD noted that the de minimis rule applies only where a few seconds or minutes of work are involved and where the failure to count such time is due to considerations justified by industrial realities.  It does not allow an employer by contract or otherwise to arbitrarily fail to count as hours worked any part, however small, of the employee’s fixed or regular working time. Where an employer fails to pay an employee for any part of the employee’s fixed or regular working time, however small, this would be considered a violation of the FLSA.

Concerning the FLSA’s requirement that the employer pay hourly employees at least the minimum wage, WHD noted that in non-overtime workweeks or in workweeks in which the overtime provisions do not apply, WHD would consider the employer to have met the minimum wage requirement  if the employee’s total wages for the workweek divided by compensable hours equal or exceed the applicable minimum wage.  WHD added that this principle would apply even if the employer technically did not compensate the emploeye for time which is compensable under the FLSA.

Concerning the overtime requirements of the FLSA, however, WHD had greater reservations.  As WHD noted in the 2004 Opinion, when a covered and non-exempt employee works overtime, a different rule applies. The FLSA overtime rule requires that an employer pay the employee for all hours worked at the agreed rate plus the overtime premium (one-half the regular rate) for all overtime hours.  Therefore, before an employee can be said to be paid statutory overtime compensation due, the employee must first be paid all straight time wages due for all hours worked under any express or implied contract or under any applicable statute (see 29 CFR Part 778.315).  As a result, WHD found that the FLSA overtime requirements would require the employer both to ensure that the employee actually was paid for each hour of straight time at the regular rate of pay plus time and a half of the regular rate of pay for each overtime hour worked.

WHD additionally noted in the 2004 Opinion that the employer also risked violation of Labor Regulation 516.2(a)(7)’s requirement that the employer maintain accurate recordkeeping of hours worked each workday and total hours worked each workweek for covered, nonexempt employees if the payroll records do not accurately record the number of hours worked in one or more of the workdays.

Takeaways For Other Employers About Using Variable Pay Rates & Other Innovative Scheduling & Pay Practices

While other employers actually cannot rely upon  either WHD Opinion Letter FLSA 2018-28, FLSA 2004-8NA, or most other WHD Opinion Letters, WHD Opinion Letters and other publishe guidance, as well as judicial precedent and the enforcement conduct by WHD provide a wealth of valuable insights for other employers about the potential FLSA opportunities and pitfalls of using variable rates of pay or other innovative compensation, scheduling and timekeeping practices for compensating hourly employees.  Employers using or contemplating using innovative compensation, scheduling or recordkeeping practices should should seek assistance from experienced legal counsel with accessing and using this guidance to help reduce the risk that a proposed innovative compensation or other practice for scheduling or paying nonexempt hourly workers will trigger unanticipated FLSA or other liabilities..

Make Wage & Hour Compliance & Risk Management Priority To Reduce Exposures

Aside from using caution to properly calculate and pay overtime for workers paid different rates for different types of work, employers also need to use care to avoid other common FLSA and other wage and hour overtime violations.

With the Trump Administration U.S. Department of Labor Wage and Hour Division (WHD) continuing its aggressive investigation and enforcement of minimum wage, overtime and other Fair Labor Standards Act (FLSA) and other wage and hour laws it used to recover more than $1.2 billion in back pay for workers over the past five years, Agriculture, Amusement, Apparel Manufacturing, Auto Repair, Child Care Services, Construction, Food Services, Guard Services, Hair, Nail & Skin Care Services, Health Care, Hotels and Motels, Janitorial Services, Landscaping Services, Retail, and Temporary Help and other U.S. employers should evaluate their current and past potential liability exposures and consider using the new pilot WHD self-audit Payroll Audit Independent Determination (PAID) program announced by WHD on March 6 or other options to mitigate their liability for their own or temporary or other contract labor’s existing or past minimum wage and hour law violations.

U.S. employers and leaders with wage and hour management authority risk substantial liability from unresolved violations of the FLSA and other federal and state wage and hour laws.

One of the most frequently violated and litigated federal employment laws, the FLSA generally requires that U.S. employers pay nonexempt employees at least $7.25 per hour for all regular compensable hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. In general, FLSA “hours worked” includes all time an employee must be on duty, or on the employer’s premises or at any other prescribed place of work, from the beginning of the first principal work activity to the end of the last principal activity of the workday. Similar state or local laws often also impose higher minimum wage, compensable hour, break and other requirements than federal law requires.

The FLSA and most applicable state and local wage and hour laws also mandate that employers maintain records of the hours worked by employees by non-exempt employees, documentation of the employer’s proper payment of its non-exempt employees in accordance with the minimum wage and overtime mandates of the FLSA, and certain other records and prohibit retaliation by an employer or other person again an employee or other person for asserting rights under the law or cooperating in a WHD investigation about FLSA compliance.

Beyond these FLSA minimum wage and overtime requirements, WHD regulations and court decisions provide guidance on when an employer must treat “on-call” time, travel time, meal and break times, and certain other time periods as compensable hours worked by a non-exempt employee, when “comp time” in lieu of the payment of wages is permitted, various alternative methods for calculating overtime under certain special circumstances, and various other rules applicable to various special circumstances. Other special rules also can apply to businesses employing tipped employees, home workers, child labor, certain farm workers, workers working with special visas, and other special classes or workers.   Furthermore, collective bargaining agreements or other contracts or other federal, state or local laws also sometimes impose additional requirements for employers to pay higher “prevailing wages,” apply special rules for counting compensable work hours, and provide specified fringe benefits or other special compensation or protections or other wages, when the employer is a government contractor or subcontractor covered by the Service Contract Act, the Davis Bacon Act or other similar federal or state statutes.

Over the past decade, WHD and private enforcement of the FLSA and other wage and hour laws generally has skyrocketed in part driven by the Obama Administration’s prioritization on raising the minimum wage, extending federal wage and hour protections, and expanding WHD and other enforcement.  WHD’s success in recovering more than $1.2 billion in back pay for workers over the past five years and other achievements in expanding its own and private oversight and enforcement and the continuation of these efforts under the Trump Administration means all employers need to view wage and hour law as a major liability risk requiring conscientious management.   However, the risk of enforcement is particularly acute for businesses in the following industries, designed for heightened enforcement and other attention as “Low Wage High Violation Industries” based on their particularly high record of noncompliance:  Agriculture, Amusement, Apparel Manufacturing, Auto Repair, Child Care Services, Construction, Food Services, Guard Services, Hair, Nail & Skin Care Services, Health Care, Hotels and Motels, Janitorial Services, Landscaping Services, Retail, and Temporary Help.

Scrutiny & Challenges To Contract & Outsourced Labor Relationships Rising

Beyond assessing their FLSA and other wage and hour compliance and associated exposures from the worker on their own payroll, U.S. employers and their leaders also should take care to carefully evaluate potential exposures from nontraditional services relationships and act to manage those risks.

Misclassification of workers providing services as non-employees increasingly causes U.S. businesses to incur unanticipated FLSA and other wage and hour law liability for back pay, liquidated punitive damages, civil monetary penalties and other liability, in part because of WHD’s stepped up worker education, scrutiny, investigation, and enforcement challenging employers’ treatment of workers as non-employees.

The FLSA and state and local rules generally apply to any workers that the employer who receives its services cannot prove is not its common law employee or an exempt employee within the meaning of the FLSA. The FLSA and most other wage and hour laws generally rules presume that workers rendering services are common law employees of the business in most circumstances. Businesses should evaluate their FLSA exposures from both workers they recognize as common law employees and those performing services in capacities that the business typically does not view as common law or otherwise covered by the FLSA when managing FLSA compliance and evaluating exposures, employers should exercise care not to overlook potential responsibilities and exposures associated with outsourced services provided through relationships characterized by the employer as subcontractors, independent contractors, lease employees, or other common outsourced relationships.

Court decisions and regulations provide guidance for determining when leased, contract, jointly employed, independent contractor or other non-traditionally employed workers will be treated as employees of a business,  As in many other enforcement areas, The WHD and many other agencies increasingly view the misclassification of workers as something other than employees, such as independent contractors, leased employees and other common “outsourced” relationship as a serious problem for affected employees, employers and to the entire economy.

According to the Labor Department, misclassified employees are often denied access to critical benefits and protections, such as family and medical leave, overtime, minimum wage and unemployment insurance and other rights.  The Labor Department also says employee misclassification also generates substantial losses to state and federal treasuries, and to the Social Security and Medicare funds, as well as to state unemployment insurance and workers compensation funds. To address these and other concerns, the Labor Department has joined other agencies like the Internal Revenue Service increasingly is challenging employers’ treatment of workers as exempt from FLSA and other legal obligations as independent contractors or otherwise.

In response to these concerns, WHD published guidance warning employers about misclassification of workers about potential violation of the FLSA by improper misclassification of workers as independent contractors or non-employed. See Department of Labor Issues Guidance of Misclassification of Workers.  DOL’s key points in the guidance are that:

  • Most workers are employees under the broad definitions of the FLSA;
  • No single factor is determinative;
  • Employers should be wary of classifying workers as independent contractors merely because the workers control some aspects of their work; and
  • The ultimate question is whether a worker “is really in business for him or herself (and thus is an independent contractor) or is economically dependent on the employer (and thus is an employee).

Other guidance makes clear that WHD and other agencies concerns about misclassification extend beyond workers labeled independent contractors to include scrutiny of subcontractor, day labor, temporary, leased employee and a broad range of other outsourced services relationships.  See here,

Consistent with these principles, WHD and private litigants in recent years have increasingly scrutinized and successfully challenged employers’ failure to comply with the FLSA’s minimum wage, overtime, recordkeeping and other rules with respect to these outsourced workers.  See e.g., $1.4M FLSA Back Pay Award Demonstrates Worker Misclassification Risks; Employer Faces $2M FLSA Lawsuit For Alleged Worker Misclassification; $754,578 FLSA Settlement Shows Employer Risks From Worker Misclassification, Underpayment;   WHD now both conducts significant worker education outreach and regularly requests and scrutinizes the characterization of and FLSA compliance of outsourced workers in connection with its FLSA investigations and audits.  See e.g. Get the Facts on Misclassification Under the FLSA; Am I an Employee?: Employment Relationship Under the Fair Labor Standards Act (FLSA); Compliance Assistance Page – Fair Labor Standards Act; Elaws: Independent Contractors; Know Your Rights Video Series: Misclassification as an Independent Contractor; WHD Press Releases about employee Misclassification as Independent Contractors.  These and other developments are significantly increasing the likelihood that businesses will face WHD or private litigants challenges to its FLSA compliance relating to workers rendering services as independent contractors, subcontractors or other outsourced services providers.

Employers often face substantial challenges responding to, much less, containing their FLSA exposures when a WHD or a private litigant successfully challenges the employer’s classification of the worker as a non-employee for a variety of reasons.  Beyond the likelihood of violations resulting from the employer’s failure to recognize it might owe minimum wage and overtime duties to the worker, an employer often lacks records and other data needed to fulfill recordkeeping and posting requirements and to accurately demonstrate hours worked and hourly rates to limit resulting back pay exposures because these workers are not treated as part of the employer’s workforce. Obtaining the necessary records to respond to a WHD or other investigation, lawsuit or other action often proves challenging because the independent contractor, leasing company, or other provider or of the services often becomes unavailable, is disincentivized by its own noncompliance or other interests, has failed to maintain necessary documentation or otherwise fails to cooperate in the delivery of these materials.  Furthermore, as leased employee, staffing, independent contractor and other outsourced arrangements invoice services at higher rates of compensation payment than the employer might otherwise have paid a traditionally employed worker, the lack of records and elevated compensation rates tend to push up the compensation used to calculate back pay and other awards. Accordingly, employers utilizing these arrangements should use care in structuring and administering these arrangements properly to evaluate their likely FLSA and other treatment and to manage these risks.

FLSA Big Liability Risk

Under the FSLA and applicable state wage and hour laws, violations of the FLSA and other federal or state wage and hour laws expose employers to substantial back pay, interest and punitive damages, civil monetary penalties for willful or and in the case of willful or repeated violations and in the case of willful violations, criminal prosecution.

Because of the ability to recover liquidated damages and attorneys’ fees in addition to unpaid back pay, private enforcement of the FLSA is common.  The FLSA generally allows employees wrongfully denied wages in violation of the FLSA to bring lawsuits to enforce their rights provided that the WHD has not or does not intervene to enforce those rights on the worker’s behalf.  Workers successfully proving an employer violated their FLSA rights typically can recover back pay, plus liquidated damages, interest, attorneys’ fees and other costs of enforcement from the breaching employer.  In some cases, Corporate officers such as CEOs, CFOs or COOs and other management leaders with control over the breaching employer’s financial affairs also be held personally liable for the unpaid wages  See e.g., Lamonica v. Safe Hurricane Shutters+2013 U.S. App. LEXIS 4599 (11th Cir. 2013)(ruling personal liability for FLSA violations can attach to any individual with control over an employer’s financial affairs who could potentially cause an employer to violate FLSA).

As an alternative to private litigation, the FLSA empowers the WHD to supervise or if necessary, enforce through litigation the rights of workers against a breaching employer to recover back pay plus  liquidated damages in an amount equal to the wrongfully denied wages. WHD also can pursue injunctive relief against noncompliant employers.

When the employer is a repeat offender or willfully violated the FLSA, additional consequences attach.  A violation is “willful” for purposes of FLSA criminal prosecution if it is deliberate, voluntary, and intentional. A fine of up to $10,000 on the first conviction

When an employer’s violation of the FLSA is repetitious or willful, the FLSA empowers WHD to impose civil money penalties (CMPs) against the noncompliant employer in addition to the recovery of back pay and liquidated damages. Intended to discourage future noncompliance by an employer guilty of violating the FLSA, CMPs for a “repeated” violation are assessable when the employer had previously violated the minimum wage or overtime requirements of the FLSA. CMPs for a “willful” violation may be assessed when it can be shown that the employer knew that its conduct was prohibited by the FLSA or showed reckless disregard for the requirements of the FLSA.  CMPs ordinarily are imposed based on violations occurring within the normal two-year investigation period. Where violations are determined to be willful, the investigation will cover a three-year period.

The applicable 2018 CMP amounts, which are adjusted annually for inflation, are as follows:

 

Type of Violation Statutory Citation CFR Citation Maximum Civil Monetary Penalty on or before 1/2/2018 Maximum Civil Monetary Penalty on or after 1/3/2018
Homeworker:

Violation of recordkeeping, monetary, certificate or other statutes, regulations or employer assurances.

29 USC 211(d) 29 CFR 530.302 $1,005 $1,026
Child labor:

(1) Violation of child labor standards (sec 212 or 213(c));

29 USC 216(e)(1)(A)(i) 29 CFR 570.140(b)(1) and 29 CFR 579.1(a)(1)(i)(A) $12,278 $12,529
(2) Violation of child labor standards (sec 212 or 213(c)) that causes the serious injury or death of a minor; 29 USC 216(e)(1)(A)(ii) 29 CFR 570.140(b)(2) and 29 CFR 579.1(a)(1)(i)(B) $55,808 $56,947
(3) Willful or repeated violation of child labor standards (sec 212 or 213(c)) that causes the serious injury or death of a minor 29 USC 216(e)(1)(A)(ii) 29 CFR 570.140(b)(2) and 29 CFR 579.1(a)(1)(i)(B) $111,616 $113,894
(4) Repeated or willful violation of section 206 or 207. 29 USC 216(e) 29 CFR 579.1(a)(2) $1,925 $1,964
Minimum Wage and Overtime:

Repeated or willful violation of section 206 or 207.

29 USC 216(e)(2) 29 CFR 578.3(a) $1,925 $1,964

Although typically reserved for more egregious violations, “willful” violations of the FLSA can trigger criminal prosecution by the Department of Justice. A fine of up to $10,000, or a term of imprisonment of up to six months, or both, on all convictions after the first conviction

In addition to or instead of lawsuits by the Secretary of Labor for back wages or injunctive relief, willful violation of the FLSA also can trigger criminal prosecutions against an employer by the Department of Justice.  Criminal penalties for willful FLSA violations include a fine of up to $10,000, or a term of imprisonment of up to six months, or both, on all convictions after the first conviction.  Since enforcement actions by the DOJ can be brought instead of or in addition to lawsuits by WHD for back wages or injunctive relief, an employer that willfully violates the FLSA can be ordered to pay liquidated damages and back-pay, as well as any court imposed criminal fine or penalty.

Always popular, WHD and private enforcement of the FLSA initially spiked upward following the highly publicized George W. Bush Administration’s implementation of updated FLSA “white collar” regulations regarding the classification of workers as exempt.  The Obama Administration’s highly publicized, but unsuccessful, campaign to increase the minimum wage and aggressive FLSA educational outreach and enforcement further fueled this trend.  While President Trump has opposed proposals to increase the federal minimum wage, he has expressed his commitment to protect workers’ FLSA rights through continued vigorous enforcement of the FLSA minimum wage, overtime and other rules.

As a result of its aggressive enforcement commitments, WHD takes credit for having recovered more than $1.2 billion in back wages on behalf of more than 1.3 million workers over the past five years. See here.  The following WHD enforcement statistics reflect that its commitment to FLSA enforcement has continued during President Trump’s tenure in office.

Cases with Violations Back Wages Employees Receiving Back Wages(duplicated 1)
FY 2011 Minimum Wage 12,450 $29,327,527 89,305
Overtime 11,990 $140,328,012 204,243
FY 2012 Minimum Wage 12,532 $35,270,524 107,005
Overtime 12,462 $148,560,700 218,137
FY 2013 Minimum Wage 12,403 $38,470,100 103,671
Overtime 12,108 $130,703,222 174,197
FY 2014 Minimum Wage 11,042 $36,732,407 106,184
Overtime 11,238 $136,239,001 174,365
FY 2015 Minimum Wage 10,642 $37,828,554 86,229
Overtime 10,496 $137,701,703 173,330
FY 2016 Minimum Wage 10,722 $34,964,350 81,870
Overtime 10,884 $171,917,225 209,819
FY 2017 Minimum Wage 10,687 $31,213,737 69,588
Overtime 10,823 $157,592,682 183,272

Pilot PAID Program May Offer New Option To Resolve WHD Exposures

When an audit uncovers potential violations, some employers may want to explore options to voluntarily resolve their exposures.  To encourage voluntary compliance, the WHD on March 6, 2018 announced a new pilot self-audit Payroll Audit Independent Determination (PAID) program that offered employers accepted into the program after voluntarily disclosing violations to resolve their exposure WHD penalties and liquidated damages commonly assessed by WHD against employers for violating the FLSA minimum wage and overtime violations by:

  • Voluntarily disclosing the violations to WHD before becoming subject to investigation or enforcement and requesting admission to the program;
  • Paying affected workers 100 percent of the unpaid back pay due wrongfully denied by the end of the next full pay period after receiving the summary of unpaid wages from WHD confirming the back pay amount;
  • Working with WHD prospectively to correct noncompliant practices; and
  • Taking other actions to correct and prevent a recurrence of those violations.

Originally slated as a pilot program set to expire after six months, the PAID program remains an opportunity offered by WHD on its website, which also shares “testimonials” from various employers that report having participated in the PAID program.

While participation in the PAID program purpoerts to offer allows a participating employer to settle its exposure to prosecution for those violations by WHD without incurring some of themore extraordinary penalties that WHD is authorized to assess, many practitioners and employers report having achieved similar and in some cases even more favorable outcomes through negotiations conducted outside the PAID program.  Furthermore, many employers may face challenges in using the program as a result of the inability to marshal the required capital to pay 100 percent of the back pay due within the required time period.

Beyond this challenge, employers evaluating whether to seek relief through the new PAID program also may need to weigh a variety of other concerns.

For instance, employers considering participation need to understand that the settlement only addresses potential liability from WHD enforcement.  While WHD’s requirement that a participating employer pay affect 100 percent of any wrongfully denied back pay to the impacted employees generally would reduce the actual back pay damages recoverable by an employee in a private enforcement action, WHD says settlements reached with the WHD under the PAID program does not prevent employees wrongfully denied wages in violation of FSLA from bringing private lawsuits.  Rather, WHD states that it will be purely the employee’s choice whether to accept the payment of back wages the employer agrees to pay under the PAID program settlement. If the employee chooses to not accept the payment, the employee will not release any private right of action. Additionally, if the employee chooses to accept the payment, the employee will not grant a broad release of all potential claims under the FLSA. Rather, the releases are tailored to only the identified violations and time period for which the employer is paying the back wages. The WHD also cautions that regardless of whether the employee accepts or rejects the back pay specified in the PAID program, the FLSA will prohibit employers from retaliating against the employee for his or her choice. Furthermore, while the payment of previously unpaid amounts could reduce the amount of unpaid wages for purposes of determining liability for state wage and hour law violations, the WHD settlement does not directly impact or release liability for any state wage and hour violations.

While any FLSA covered employer may use the program, interested employers should understand that acceptance into the program is not automatic and is not available for all FLSA violations.  Rather, the PAID program only covers potential violations of the FLSA’s overtime and minimum wage requirements that an employer self-identifies and voluntarily discloses and resolves in accordance with its PAID program settlement with WHD.  An employer cannot use the PAID program to resolve any issues for which WHD is already investigating the employer, or which the employer is already litigating in court, arbitration, or otherwise. An employer likewise may not initiate the process when an employee’s representative or counsel has already communicated an interest in litigating or settling the issue.   Employers using the Paid program also must be prepared to correct the noncompliant practices that resulted in the violations settled under the PAID program.  According to the WHD, WHD will not allow employers to use the program to repeatedly resolve the same violations, as this program is designed to identify and correct non-compliant practices. By allowing employers to participate in the PAID program, WHD also does not waive its right to conduct any future investigations of the employer.

Employers contemplating participation in the PAID program generally should conduct a self-audit after updating their understanding of WHD program and compliance assistance materials and other WHD guidance.  Because the information, analysis and discussions conducted in this process may be legally sensitive, employers generally will want to engage qualified legal counsel before initiating these processes to advise and assist the employer about the adequacy and risks of its existing practices, recommendations for redressing known compliance issues and other risks as well as opportunities and procedures for qualifying certain of these actions and discussions for coverage under attorney-client privilege, attorney work product or other evidentiary protections.

Whether or not an employer decides based on the audit to pursue compliance resolution through the PAID program, employers generally should work with their legal counsel within the scope of attorney client privilege to organize and retain documentation of their audit, its findings of compliance and, for any potential compliance issues, corrective actions taken to redress those issues retrospectively and prospectively, and other documentation that the employer might need to pursue resolution under the PAID program or otherwise respond to and defend against a WHD or private charges brought by an employee in the future.

If the employer wishes to pursue resolution of potential violations under the PAID program based on review of the audit findings in conjunction with their legal counsel, the employer in coordination with the legal counsel within the scope of attorney client privilege should work together to prepare and assemble the records and information WHD will expect the employer to provide in the initial phases of the process including:

  • A list of the specific potential violations uncovered
  • The specific employees affected
  • The specific timeframes in which each employee was affected, and
  • The calculation of the amount of back wages the employer believes are owed to each employee.
  • Each of the calculations described above—accompanied by both evidence and explanation concerning how the calculations were made;
  • A concise explanation of the scope of the potential violations for possible inclusion in a release of liability;
  • A certification that the employer reviewed all of the information, terms, and compliance assistance materials;
  • A certification that the employer is not litigating the compensation practices at issue in court, arbitration, or otherwise, and likewise has not received any communications from an employee’s representative or counsel expressing interest in litigating or settling the same issues; and
  • A certification that the employer will adjust its practices to avoid the same potential violations in the future.

After preparing this information, the employer generally will want to arrange for legal counsel to make the preliminary contact to the WHD to request that the WHD admit the employer to the PAID program.  During the preliminary contact, the WHD will require that a list of the specific potential violations, and the identity, specific time frame and back pay amount that employer believes it owes to each affected employee as a prerequisite to considering the request for admission to the program.  If the WHD approves the employer’s request, WHD will require that the employer or its legal counsel on its behalf provide the remaining information listed above.  After evaluating this information, WHD will provide notification of the next steps, including the collection of any other information necessary for WHD to assess and confirm the back wages due for the identified violations.

Current published guidance states that after WHD assesses the back wages due, it will issue a summary of unpaid wages. WHD will also issue forms describing the settlement terms for each employee, which employees may sign to receive payment. The release of claims provided in the form will match the previously agreed-upon language and, again, must be limited to only the potential violations for which the employer had paid back wages. The PAID program settlement will require the employers to pay the back pay amounts confirmed in the summary of unpaid wages promptly and in full by the end of the next payroll period after receiving the WHD summary of wages confirming the back pay amounts required.

Audit & Act To Mitigate FLSA & Other Wage & Hour Risks

Regardless of whether an employer elects to pursue using the new PAID program, all FLSA covered employers generally should consult with legal counsel within the scope of attorney-client privilege to assess the defensibility of their existing practices for classifying and compensating workers under existing Federal and state wage and hour laws, tighten contracting and other compliance oversight in relation to outsourced services, and about using the PAID program and other options to minimize their potential liability under applicable wages and hour laws.  Conducting this analysis within the scope of attorney-client privilege is important because the analysis and discussions are highly sensitive both as potential evidence for wage and hour and other legal purposes.  Consequently, businesses and their leaders generally will want to arrange for this work to be protected to the extent by attorney-client privilege, work product and other evidentiary protections against discovery by WHD, employees or others for FLSA or other workforce enforcement actions.

As a part of this process, businesses and their leaders generally should plan to:

  • Review subcontractor, temporary, lease employee, independent contractor and other outsourced labor and services relationship for potential risk of worker reclassification and tighten contracting and other procedures;
  • Audit the position of each employee currently classified as exempt to assess its continued sustainability and to develop documentation justifying that characterization;
  • Audit characterization of workers obtained from staffing, employee leasing, independent contractor and other arrangements and implement contractual and other oversight arrangements to minimize risks that these relationships could create if workers are recharacterized as employed by the employer receiving these services;
  • Review the characterization of on-call and other time demands placed on employees to confirm that all compensable time is properly identified, tracked, documented, compensated and reported;
  • If the employer hires any individuals under age 18, audit and implement appropriate procedures to ensure its ability to demonstrate compliance with all applicable FLSA child labor rules;
  • If the employer is a government contractor or subcontractor or otherwise performs any services on projects funded with federal or state funds, evaluate the applicability and fulfillment of any special wage, fringe benefit, recordkeeping or other government contracting wage and hour requirements;
  • If the employer hires foreign agricultural or other workers subject to special conditions and requirements, to review compliance with those special requirements;
  • Review and tighten existing practices for tracking compensable hours and paying non-exempt employees for compliance with applicable regulations and to identify opportunities to minimize costs and liabilities arising out of the regulatory mandates;
  • If the employer uses leased, temporary, or other outsourced labor, evaluate contractual, process and other options to support the employer’s ability cost effectively to respond to an audit, investigation or enforcement action by WHD or private litigants and if necessary, obtain indemnification or other recovery in the event the employer incurs liability due to the use or practices of the outsourced labor supplier;
  • If the audit raises questions about the appropriateness of the classification of an employee as exempt, self-initiation of proper corrective action after consultation with qualified legal counsel;
  • Review and document all workers classified as exempt;
  • Review of existing documentation and record keeping practices for hourly employees;
  • Evaluate potential exposures under other employment, labor, tax or related laws or contracts that might be impacted by the findings or actions taken in response to those findings;
  • Explore available options and alternatives for calculating required wage payments to non-exempt employees and assessing and resolving other concerns;
  • Identify and calculate other employee benefit, tax or other corrections and associated costs and procedures that may be required as a result of findings or corrective actions resulting from their redress;
  • Re-engineer work rules, policies, contracts and practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures;
  • Explore insurance, indemnification and other options for mitigating risks and associated investigation and defense costs .
  • Pursue self-correction within the new PAID Program or otherwise.

Many employers also will want to consider adopting or strengthening their use of arbitration agreements, strengthening contract compliance, audit, indemnification and other contractual safeguards in staffing and other outsourcing contracts and broadening employment practices and other liability insurance coverage to mitigate and manage these exposures.

For additional information, please contact the author or other qualified legal counsel with health industry wage and hour and other labor and employment experience.

 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 management work, coaching, teachings, and publications.

Ms. Stamer is nationally and internationally recognized for her work assisting businesses, governments, and other entities to develop, implement, administer and defend pragmatic strategies for dealing with employment and other workforce and related compensation, employee benefit,  performance management and internal controls, insurance, health care and finance concerns to manage risk, operations and other business objectives.

Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.

The author of the “Texas Payday Act,” and numerous other highly regarded publications on wage and hour and other human resources, employee benefits and compensation publications, Ms. Stamer is well-known for her 30 years of extensive wage and hour, compensation and other management advice and representation of restaurant and other hospitality, health, insurance, financial services, technology, energy, manufacturing, retail, governmental and other domestic and international businesses of all types and sizes.

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 concerns by her service as a management consultant,  business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; 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; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.

Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns 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, 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 on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.

Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.

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 including:

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 advice 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, please contact the author directly. All other rights reserved.

 


Reminder To Report Moving Expense Reimbursements As Taxable Income

December 18, 2018

Businesses that reimburse employee moving expenses should review their practices in response to changes to the Internal Revenue Code rules on qualified moving expenses. The requirement to treat moving expenses as taxable is just one of many changes to the treatment of fringe benefits and compensation under the Internal Revenue Code (“IRC”) as part of the tax reforms enacted last year.

Under previous law, payment or reimbursement of an employee’s qualified moving expenses were not subject to income or employment taxes.

Under last year’s tax reform legislation, however, employers generally must include all moving expenses, in employees’ wages, subject to income and employment taxes.

Exception
Generally, members of the U.S. Armed Forces can still exclude qualified moving expense reimbursements from their income if:

  • They are on active duty
  • They move pursuant to a military order and incident to a permanent change of station
  • The moving expenses would qualify as a deduction if the employee didn’t get a reimbursement

Transition rule
There is a transition rule under the new law. Under this rule, certain payments or reimbursements aren’t subject to federal income or employment taxes. This includes amounts that:

  • An employer pays a third party in 2018 for qualified moving services provided to an employee prior to 2018.
  • An employer reimburses an employee in 2018 for qualified moving expenses incurred prior to 2018.

To qualify for the transition rule, the payments or reimbursements must be for qualified expenses which would have been deductible by the employee if the employee had directly paid them before Jan. 1, 2018. The employee must not have deducted them in 2017.

Corrections
Employers who have included amounts covered by the exception or the transition rule in individuals’ wages or compensation can take steps to correct taxable wages and employment taxes.

More information:

  • The changes to the tax treatment of moving expense reimbursements is one of many changes passed last year. For more information or help with these or other workforce, compensation and benefits concerns, contact the author.
  • 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.


    Court Ruling Obamacare Unconstitutional Leaves Obamacare Future Uncertain As Annual Enrollment Period Ends

    December 15, 2018

    A ruling by a Federal District judge on Friday (December 14, 2018) ruled unconstitutional the Patient Protection and Affordable Care Act (ACA) touches off a new wave of uncertainty about the future of the massive healthcare reform law commonly known as Obamacare just as the enrollment period for 2019 health coverage ended. While Federal District Judge Reed O’Connor finds in his ruling released on Friday that amendments passed by Congress last December robbed the ACA of its original constitutionality, only time will tell if the ruling actually will end the ACA reforms or the effect of such ruling on the hotly debated ACA reforms and other statutory and regulatory reforms Congress and the Trump Administration subsequently prospectively or retrospectively. Consequently, health plans, their employer and other sponsors, insurers, administrators, and fiduciaries; health care providers, consumers and others will need to watch developments closely.

    Justice O’Connor’s decision was released one day before the last day of the enrollment period for Americans to elect whether and what coverage, if any, to enroll in through the Obamacare exchanges for calendar 2019.

    In Texas v. US, Texas Governor Greg Abbott and other Republican governors challenged the constitutionality of the ACA following passage of the Tax Cuts and Jobs Act of 2017 (TCJA). The plaintiffS argued the TCJA rendered the ACA unconstitutional because it repealed the individual mandate of the ACA upon which the Supreme Court previously found the ACA constitutional.

    In the 2012 decision in Nat’l Fed’n of Indep. Businesses v. Sebelius (NFIB), 567 U.S. 519, 530–38 (2012) written by Chief Justice Roberts, the Supreme Court ruled that Congress could not rely upon the Commerce Clause for Constitutional authority to enact the ACA.  However, the Supreme Court nevertheless found the Individual Mandate provisions of the ACA preserved the constitutionality of the ACA as a constitutional exercise of Congress’ Taxing Power.

    In Texas v. US, the plaintiff governors argue that the repeal of the Individual Mandate as part of Congress’ passage of the TCJA last December robbed the ACA of its constitutionality.  They say it is no longer fairly readable as an exercise of Congress’s Tax Power and continues to be unsustainable under the Interstate Commerce Clause. They further urge that  if they are correct, the balance of the ACA is untenable as inseverable from the Invalid Mandate. Judge O’Connor agreed with the plaintiff’s in his ruling on Friday.  Now it remains to be seen if his ruling  will face and withstand the appeal and if so, what effect it will have on Obamacare overall and other subsequent statutory and regulatory reforms.

    While only time will tell whether the decision stands and its effect, the path to clarity promises to be filled with more drama and uncertainty.   Former US Attorney General Jeff Sessions previously had stated that the Justice Department under his leadership would not expend resources to defend the ACA.  It remains to be seen how the Justice Department will not respond in light of his recent resignation.  Even if the Justice Department does not step up to defend Obamacare, it is likely that states like California that have intervened in support of the ACA in the litigation will attempt to appeal the action.  Assuming that an appeal proceeds, a Court of Appeals would hear the appeal before an almost certain appeal by the losing side in that appeal to the United States Supreme Court, where President Trump’s new appointee would hear the action.  Along with the possibility that these Courts will uphold the trial court’s ruling, either of these appeals courts could overrule the trial court in whole or in part. Thus, subsequent appeals decisions could:

    • Reverse Judge O’Connor’s ruling entirely, leaving The ACA intact in its current form; or
    • Uphold part but not all of the decision, leaving some parts in place but not others.

    pending further decisions, it remains unclear if subsidies, prohibitions against preexisting conditions, guaranteed issue, cost regulations, benefit and coverage mandates and other insurance reforms, health care billing and other reforms will survive.

    Meanwhile, regardless of the outcome of the appeals, the decision and its fallout almost certainly will touch off more debate in Congress.  With health care reform already a hot topic, more Congressional battles were inevitable. However the decision adds a new and significant wrinkle to the politics of the health reform fight.

    In January November’s election will cause the leadership of the House of Representatives is set to transfer from Republicans to Democrats while leaving control over the Senate in the hands of Republications.  With leadership of the two legislative bodies split, Democrats are unlikely to be able to use their new control of the House to enact legislation that would overrule outright an adverse decision by the courts. Consequently, Democrats will have an uphill battle if the court decision stands unless and until they can regain Senate control. Instead they are likely to be related to the role occupied by the House the past 4 years in which bills to enact the Democrat vision will pass the House only to die a quick death in the Republican controlled Senate or face veto by the Republican President.

    On the other hand, Republicans also could not overcome a decision unfavorable to their agenda for the opposite reason: Despite control of the majority in the Senate and having a Republican President opposed to the ACA, Republicans can’t enact legislation without winning a majority of votes in the House.

    On the other hand, either party can and almost certainly will use its veto power over the other party’s agenda. The fight likely will spill over into budget, immigration, workforce and other jet legislation that otherwise might and should enjoy bipartisan support in Congress.

    As the litigation proceeds, concerned parties will want to keep a close eye of the Courts, the regulation and enforcement actions of the Trump Administration and the Congress.

    Meanwhile, it is important to keep in mind that implementation of Judge O’Connor’s decision is stayed pending appeal.

    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 managed care and other health industry, health and other benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

    Past Chair of the ABA Managed Care & Insurance Interest Group, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer is nationally recognized as a thoughtleader in health benefits and health care matters domestically and internationally.  She has been continuously involved the design, regulation, administration and defense of managed care and other health and employee benefit, health care, human resources and other staffing and workforce arrangements, contracts, systems, and processes.  As a continuous component of this work, Ms. Stamer has worked closely with these and other clients on the design, development, administration, defense, and breach and data recovery of health care, workforce, insurance and financial services, trade secret and other information technology, data and related process and systems development, policy and operations throughout her career.

    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.

    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;  managed care organizations, insurers, self-insured health plans and other payers and their management; public and private, domestic and international hospitals, health care systems, clinics, skilled nursing, long-term care, rehabilitation and other health care providers and facilities; medical staff, health care accreditation, peer review and quality committees and organizations; managed care organizations, insurers, third-party administrative services organizations and other payer organizations; billing, utilization management, management services organizations; group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; claims, billing and other health care and insurance technology and data service organizations; other health, employee benefit, insurance and financial services product and solutions consultants, developers and vendors; and other health, employee benefit, insurance, technology, government and other management clients.

    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.

    Beyond her public policy and regulatory affairs involvement, Ms. Stamer also has extensive experience helping these and other clients to design, implement, document, administer and defend 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; private litigation and other federal and state health care industry investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other 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, and change management; workforce and operations management, and other opportunities and challenges arising in the course of their operations.

    Ms. Stamer also has extensive health care reimbursement and insurance experience advising and defending plan sponsors, administrators, insurance and managed care organizations, health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and employer and association group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions. Scribe for the ABA JCEB annual agency meeting with HHS OCR, she also has worked extensively on health and health benefit coding, billing and claims, meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical, workforce, consumer financial and other data confidentiality and privacy, federal and state data security, data breach and mitigation, and other information privacy and data security concerns.

    Author of leading works on a multitude of health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative and CLE and Marketing Committee Chair, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer’s health industry clients include public health organizations; public and private hospitals, healthcare systems, clinics and other health care facilities; physicians, physician practices, medical staff, and other provider organizations; skilled nursing, long-term care, assisted living, home health, ambulatory surgery, dialysis, telemedicine, DME, Pharma, clinics, and other health care providers; billing, management and other administrative services organizations; insured, self-insured, association and other health plans; PPOs, HMOs and other managed care organizations, insurance, claims administration, utilization management, and other health care payers; public and private peer review, quality assurance, accreditation and licensing; technology and other outsourcing; healthcare clearinghouse and other data; research; public and private social and community organizations; real estate, technology, clinical pathways, and other developers; investors, banks and financial institutions; audit, accounting, law firm; consulting; document management and recordkeeping, business associates, vendors, and service providers and other professional and other health industry organizations; academic medicine; trade associations; legislative and other law making bodies and others.

    A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about contracting, credentialing and quality assurance,  compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Author of works on Payer and Provider Contracting and many other managed care concerns, Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.

    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:

    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, please contact the author directly. All other rights reserved.


    2/11/19 Deadline To Tell OCR How To Improve HIPAA

    December 13, 2018

    February 12, 2019 is the deadline for health plans and their sponsoring employers, fiduciaries and business associates, as well as health care providers, health care clearinghouses, health care consumers, employer and other concerned persons to provide input on reducing the regulatory burdens of the Health Insurance Portability and Accountability Act (HIPAA) Privacy, Security and Breach Notification Rules in response to the December 12, 2018 invitation of the U.S. Department of Health and Human Services (HHS), Office for Civil Rights (OCR).

    OCR issued the invitation for public comment in a December 12, 2019 Request for Information (RFI).  The RIF seeks input from the public on how OCR’s HIPAA Privacy and other Rules could be modified to further the HHS Secretary’s goal of promoting coordinated, value-based healthcare. This RFI is a part of the Regulatory Sprint to Coordinated Care, an initiative led by HHS Deputy Secretary Eric Hargan.

    HHS developed the HIPAA Rules to protect individuals’ health information privacy and security interests, while permitting information sharing needed for important purposes. However, in recent years, OCR has heard calls to revisit aspects of the Rules that may limit or discourage information sharing needed for coordinated care or to facilitate the transformation to value-based health care. The RFI requests information on any provisions of the HIPAA Rules that may present obstacles to these goals without meaningfully contributing to the privacy and security of protected health information (PHI) and/or patients’ ability to exercise their rights with respect to their PHI.

    OCR’s December 12, 2018 press release concerning the RFI indicates that OCR is looking for candid feedback about how the existing HIPAA regulations are working in the real world and how OCR can improve them to improve quality of care and eliminate undue burdens on covered entities while maintaining robust privacy and security protections for individuals’ health information.

    In addition to requesting broad input on the HIPAA Rules, the RFI also seeks comments on specific areas of the HIPAA Privacy Rule, including:

    • Encouraging information-sharing for treatment and care coordination
    • Facilitating parental involvement in care
    • Addressing the opioid crisis and serious mental illness
    • Accounting for disclosures of PHI for treatment, payment, and health care operations as required by the HITECH Act
    • Changing the current requirement for certain providers to make a good faith effort to obtain an acknowledgment of receipt of the Notice of Privacy Practices

    Public comments on the RFI are due by February 11, 2019.

    The RFI follows up on OCR’s announcement of another series of high dollar resolution agreements against covered entities and business associates for alleged breaches of HIPAA’s Privacy or Security Rules, as well as publication of various new guidance intended to help patients, their families, covered entities, business associates and others understand when HIPAA restricts or allows the release of protected health information by covered entities and business associates in mass shooting or other disaster situations, when dealing with patients with substance abuse or mental health conditions and in various other scenarios.  Covered entities, their business associates as well as employer and other health plan sponsors, fiduciaries and others involved with protected health information transactions and disclosures should review this new guidance and evaluate its implications on their actions and practices in addition to sharing input with OCR about opportunities to improve existing HIPAA Rules.

    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 managed care and other health industry, health and other benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

    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, Ms. Stamer has been continuously involved the design, regulation, administration and defense of managed care and other health and employee benefit, health care, human resources and other staffing and workforce arrangements, contracts, systems, and processes.  As a continuous component of this work, Ms. Stamer has worked closely with these and other clients on the design, development, administration, defense, and breach and data recovery of health care, workforce, insurance and financial services, trade secret and other information technology, data and related process and systems development, policy and operations throughout her career.

    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.

    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;  managed care organizations, insurers, self-insured health plans and other payers and their management; public and private, domestic and international hospitals, health care systems, clinics, skilled nursing, long-term care, rehabilitation and other health care providers and facilities; medical staff, health care accreditation, peer review and quality committees and organizations; managed care organizations, insurers, third-party administrative services organizations and other payer organizations; billing, utilization management, management services organizations; group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; claims, billing and other health care and insurance technology and data service organizations; other health, employee benefit, insurance and financial services product and solutions consultants, developers and vendors; and other health, employee benefit, insurance, technology, government and other management clients.

    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.

    Beyond her public policy and regulatory affairs involvement, Ms. Stamer also has extensive experience helping these and other clients to design, implement, document, administer and defend 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; private litigation and other federal and state health care industry investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other 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, and change management; workforce and operations management, and other opportunities and challenges arising in the course of their operations.

    Ms. Stamer also has extensive health care reimbursement and insurance experience advising and defending plan sponsors, administrators, insurance and managed care organizations, health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and employer and association group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions. Scribe for the ABA JCEB annual agency meeting with HHS OCR, she also has worked extensively on health and health benefit coding, billing and claims, meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical, workforce, consumer financial and other data confidentiality and privacy, federal and state data security, data breach and mitigation, and other information privacy and data security concerns.

    Author of leading works on a multitude of health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative and CLE and Marketing Committee Chair, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer’s health industry clients include public health organizations; public and private hospitals, healthcare systems, clinics and other health care facilities; physicians, physician practices, medical staff, and other provider organizations; skilled nursing, long-term care, assisted living, home health, ambulatory surgery, dialysis, telemedicine, DME, Pharma, clinics, and other health care providers; billing, management and other administrative services organizations; insured, self-insured, association and other health plans; PPOs, HMOs and other managed care organizations, insurance, claims administration, utilization management, and other health care payers; public and private peer review, quality assurance, accreditation and licensing; technology and other outsourcing; healthcare clearinghouse and other data; research; public and private social and community organizations; real estate, technology, clinical pathways, and other developers; investors, banks and financial institutions; audit, accounting, law firm; consulting; document management and recordkeeping, business associates, vendors, and service providers and other professional and other health industry organizations; academic medicine; trade associations; legislative and other law making bodies and others.

    A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about contracting, credentialing and quality assurance,  compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Author of works on Payer and Provider Contracting and many other managed care concerns, Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.

    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:

    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, 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.

    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.