Employers | | Page 4

Don’t Get Stuck Paying Another Employer’s Overtime Or Other Backpay

January 13, 2020

No business wants to get hit with a bill or judgement for unpaid overtime or other wages and penalties under the Fair Labor Standards Act (“FLSA”). It’s even worse when the order to pay is for back pay another business owed but didn’t pay. New FLSA joint employer regulations released today update the rules about when your business could get stuck paying another business’ backpay. That’s why all U.S. employers should re-evaluate their potential minimum wage, overtime, recordkeeping and other Fair Labor Standards Acts (“FLSA”) liability exposure from work performed by workers employed by subcontractors or contractors, staffing, leasing, manpower and workforce and other separate business entities in light of the new Final Rule: Joint Employer Status under the Fair Labor Standards Act (“Final Rule”) on determining joint employer status under the FLSA released by the Department of Labor Wage and Hour Division (“Labor Department”). The Labor Department released a copy of the Final Rule to the public today today (January 13, 2020) in anticipation of its scheduled official publication in the Federal Register on January 16, 2019.

Joint Employer Liability Long Standing FLSA Risk

Many businesses and their management are unaware that if their business meets the definition of a “joint employer” for purposes of the FLSA, their businesses could be required to pay unpaid wages and penalties another business owes for failing to pay minimum wage or overtime or other FLSA violations. even though their business never directly employed those workers. This is because the FLSA also makes business that are “joint employers” as defined for purposes of the FLSA jointly and severally liable with the direct employer for proper payment of wages and other compliance with the FLSA. The FLSA requires covered employers to pay their employees at least the federal minimum wage for every hour worked and overtime for every hour worked over 40 in a workweek. To be liable for paying minimum wage or overtime, an individual or entity must be an “employer,” which the FLSA defines in Section 3(d) to include “any person acting directly or indirectly in the interest of an employer in relation to an employee[.]” Under the FLSA, an employee may have—in addition to his or her employer—one or more joint employers. A joint employer is any additional “person” (i.e., an individual or entity) who is jointly and severally liable with the employer for the employee’s wages under the applicable Labor Department regulations.

While both the Labor Department and private litigants have used the joint employer rules and precedent to nail businesses for other employer’s wage and hour liability frequently for the past sixty plus years, Obama Administration changes in the Labor Department’s interpretation and enforcement of the joint employer rule have significantly broadened the scope of relationships found to constitute joint employment to include a broad range of subcontractor and other business relationships not historically recognized as triggering joint employer liability. Historically, joint employer determinations were reached by applying highly subjective, fact specific analysis heavily reliant upon decades of court decisions which required some evidence that the alleged joint employer possessed or exercised some control over the employees to support the finding of joint employment. Under these historical tests, mere benefit from work performed by individuals employed by another employer did not establish a presumption, much less proof of joint employment.

During the Obama Administration, however, the Department of Labor both stepped up its efforts to identify and enforce these joint employer provisions and concurrently without formally issuing new regulations adopted interpretive and enforcement guidelines for finding joint employer status that that significantly broadened the employment relationships that the Labor Department treated as joint employers in a manner that presumed the existence of a joint employment relationship whenever the alleged joint employer benefitted from the performance of work even when the facts showed little or any evidence that the alleged joint employer possessed or exercised any control over the employee or the details of his work. As a consequences, construction and other businesses uses contractors, health care organizations, and a host of other entities were surprised to be nailed with wage and hour liabilities arising from work performed by subcontractors, contractors, and other businesses including overtime liability attributable to work performed for the benefit of other customers of the employer.

Final Joint Employer Rule Changes Rules Effective March 16, 2020

Prompted by the Trump Administration’s broader effort to roll back these and other Obama Era pro-labor rulemaking and enforcement, the new Final Rule seeks to restore and reaffirm the requirement of evidence of the possession of authority or exercise of some traditional employer control by the alleged joint employer. Scheduled to take effect on March 16, 2020, the new Final Rule will continue to recognize two potential scenarios where an employee may have one or more joint employers based on a highly subjective analysis of the factual realities of an alleged joint employer with another business or businesses under two scenarios:

The employee has an employer who suffers, permits, or otherwise employs the employee to work, but another individual or entity simultaneously benefits from that work (“Scenario One”); versus
One employer employs an employee for one set of hours in a workweek, and another employer employs the same employee for a separate set of hours in the same workweek (“Scenario Two”).

The Final Rule modifies and clarifies the Labor Department’s historical joint employer rule as it relates to the determination of joint employment status in Scenario One situations but leaves substantially unchanged its existing rules on joint employer determinations in Scenario Two situations.

Finally, the Final Rule provides several examples of how the Department’s joint employer guidance should be applied in various factual circumstances

Final Rule Modifications To Existing Rules On Joint Employment in Scenario One Situations

Under the Final Rule in a Scenario One situation under which an employee performs work for the employer that simultaneously benefits another individual or entity, the Final Rule adopts a four-factor balancing test to determine whether the potential joint employer is directly or indirectly controlling the employee, assessing whether the potential joint employer:

hires or fires the employee;
supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
determines the employee’s rate and method of payment; and
maintains the employee’s employment records.

Businesses should keep in mind that proof of the exercise of exercise direct control over these details of employment of an employee is not required for a finding of joint employment. Indirect exercise of control is sufficient. Examples of indirect exercise of control recognized in the Final Regulations as supporting joint employer liability include control over an employee through mandatory directions to another employer that directly control the employee. However, indirect control does not include the direct employer’s voluntary decision to accommodate the potential joint employer’s request, recommendation, or suggestion. Similarly, acts that incidentally impact the employee do not indicate joint employer status. For example, a restaurant could request lower fees from its cleaning contractor, which, if agreed to, could impact the wages of the cleaning contractor’s employees. However, this request would not constitute an exercise of indirect control over the employee’s rate of payment.

Like under the prior rules and standards, whether a person is a joint employer under the new standards established in the Final Rule will continue to depend upon all the facts in a particular case, and the appropriate weight to give each factor will vary depending on the circumstances. Moreover, all of these factors need not be present for joint employment to exist. However, the Final Rule states the potential joint employer’s maintenance of the employee’s employment records alone will not lead to a finding of joint employer status. For purposes of its provisions, the Final Rule defines the “employment records” referred to in the fourth factor to mean only those records, such as payroll records, that reflect, relate to, or otherwise record information pertaining to the hiring or firing, supervision and control of the work schedules or conditions of employment, or determining the rate and method of payment of the employee.

Additionally, the Final Rule also notes that additional factors may also be relevant in determining whether another person is a joint employer in this situation, but only when they show whether the potential joint employer is exercising significant control over the terms and conditions of the employee’s work.

The Final Rule also identifies factors that are not relevant to the determination of FLSA joint employer status. For example, the Final Rule specifies that whether the employee is economically dependent on the potential joint employer, including factors traditionally used to establish whether a particular worker is a bona fide independent contractor (e.g., the worker’s opportunity for profit or loss, their investment in equipment and materials, etc.), are not relevant to determine joint employer liability. Economic dependence was an evidentiary factor promoted as evidence of joint employment in several Obama Administration era enforcement actions.

The Final Rule also identifies certain other factors that do not make joint employer status more or less likely under the Act which had been relied upon by the Labor Department under the Obama Administration era interpretation of the FLSA, including:

operating as a franchisor or entering into a brand and supply agreement, or using a similar business model;
the potential joint employer’s contractual agreements with the employer requiring the employer to comply with its legal obligations or to meet certain standards to protect the health or safety of its employees or the public;
the potential joint employer’s contractual agreements with the employer requiring quality control standards to ensure the consistent quality of the work product, brand, or business reputation; and
the potential joint employer’s practice of providing the employer with a sample employee handbook, or other forms, allowing the employer to operate a business on its premises (including “store within a store” arrangements), offering an association health plan or association retirement plan to the employer or participating in such a plan with the employer, jointly participating in an apprenticeship program with the employer, or any other similar business practice.

Additionally, the Final Rule makes clear that a finding of joint employer status in Scenario One situations must be based on an actual exercise of control by the alleged joint employer. In this respect, the Final Rule provides that although an individual or entity’s power, ability, or reserved contractual right to exercise control relating to one or more of the factors may be relevant in determining whether they are an FLSA joint employer, such power, ability, or reserved contractual rights are not in themselves sufficient to establish FLSA joint employer status without some actual exercise of control.

Final Rule Retains Existing Rules On Joint Employment In Scenario Two Situations

The Final Rule did not make any substantive changes to the standard for determining joint employer liability in Scenario Two situations. If the employers are acting independently of each other and are disassociated with respect to the employment of the employee, the Final Rule continues to provide that each employer may disregard all work performed by the employee for the other employer in determining its liability under the FLSA. However, if the factual realities show that the employers are sufficiently associated with respect to the employment of the employee, the Final Rule continues to state that the two businesses are joint employers and must aggregate the hours worked for each for purposes of determining if they are in compliance.

For purposes of the Scenario Two analysis, the Final Rule provides that employers generally will be sufficiently associated if there is an arrangement between them to share the employee’s services, the employer is acting directly or indirectly in the interest of the other employer in relation to the employee, or they share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer. Employers using manpower, staffing, employee leasing or other shared or part time workforces should keep in mind that a finding that their business is a joint employer with the supplier of the workers can result in liability for their business associated both for hours of work performed for the benefit of their business as well as any work the employee worked for another client of the supplier business. As these shared workforces often perform work for several competitors, ironically this often means that a joint employer often ends up payment overtime liability attributable to unpaid overtime or other wages performed for a competitor business or businesses that also are clients of the same partial workforce supplier.

Businesses Should Act To Assess & Mitigate Joint Employer & Other FLSA Liability

The Labor Departments that its adoption of the revisions to the joint employer rule made by the Final Rule will add greater certainty regarding what business practices may result in joint employer status: and promote greater uniformity among court decisions by providing a clearer interpretation of FLSA joint employer status. While the clarifications may help businesses to better predict certain relationships and arrangements that carry a higher risk of joint employer liability exposure, businesses must keep in mind that joint employer determinations under the Final Rule will continue to turn on highly subjective analysis of facts and circumstances that existing precedent suggests often finds the requisite evidence to find a joint employer relationship in many circumstances surprising to many business owners even taking into account the modifications made by the Final Rule, For this reason, virtually all businesses generally will want to critically evaluate their existing and prospective relationships for potential joint employer liability under the FLSA in light of the Final Regulations.

Businesses should look to the guidance in the new Final Rule initially to evaluate whether their existing or prospective relationships meet, or could be restructured to meet all of the requisites to avoid or reduce the risk of findings of joint employer status. When possible, businesses should seek to structure their contractual relationships and business dealings with other businesses to fit as closely as possible with those arrangements that the new Final Regulations identify as not constituting joint employer relationships in form and operation. When engaging in these efforts, businesses need to look beyond their contractual agreements to examine the factual realities of their relationships with other businesses realistically based upon a clear understanding of the historical precedent to avoid mischaracterizing their relationships and their associated risks. For added protection, businesses also should consider seeking contractual representations of compliance, coupled with requirements that other businesses whose employment practices could create joint employment risk provide records and other documentation needed to verify compliance and defend against potential joint employer liability claims.

Concurrently, businesses looking at FLSA joint employer liability risk management also should keep in mind that the new Final Rule only addresses joint employer determinations under the FLSA. This Final Rule does not address “joint employer” status or other characterizations of relationships under other federal employment laws, such as the National Labor Relations Act (NLRA), the Employee Retirement Income Security Act of 1974 (ERISA), the Migrant and Seasonal Agricultural Worker Protection Act, Title VII of the Civil Rights Act, state labor, tax, unemployment, workers’ compensation or other laws, which often apply different standards for finding joint employment or other imputed liability of businesses other than the direct or nominal employer. While different rules apply for those laws, government agencies and private litigants also increasingly successfully assert joint employer or other theories to impute liability to businesses that are not the nominal employer of workers protected by these laws. To effectively plan for a control their broader joint employer risk, most businesses benefit from looking at their exposure holistically taking into account the potential characterization and liabilities under all of these rules concurrently.

Before beginning these assessments, businesses and their leaders are encouraged to engage an attorney experienced in FLSA and other joint employer and other worker classification laws in light of the legally sensitive evidence and discussions inherently involved in this process. Conducting this analysis within the scope of attorney-client privilege helps protector limit the discoverability of sensitive discussions and work product in the event of a Labor Department investigation or litigation.

For More Information

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

Solutions Law Press, Inc. invites you receive future updates by registering on our Solutions Law Press, Inc. Website and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy.

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 Law and Labor and Employment Law and Health Care; 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, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, 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 health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Ms. Stamer’s work throughout her 30 plus year career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services, construction, manufacturing, staffing and workforce and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. As a part of this work, she has continuously and extensively worked with domestic and international employer and other management, employee benefit and other clients to assess, manage and defend joint employer and other worker classifications and practices under the FLSA and other federal and state laws including both advising and and assisting employers to minimize joint employer and other FLSA liability and defending a multitude of employers against joint employer and other FLSA and other worker classification liability. She also has been heavily involved in advocating for the Trump Administration’s restoration of more historical principles for determining and enforcing joint employer liability over the past several years.

Author of hundreds of highly regarded books, articles and other publications, Ms. Stamer also is widely recognized for her scholarship, coaching, legislative and regulatory advocacy, leadership and mentorship on wage and hour, worker classification and a diverse range of other labor and employment, employee benefits, health and safety, education, performance management, privacy and data security, leadership and governance, and other management concerns within the American Bar Association (ABA), the International Information Security Association, the Southwest Benefits Association, and a variety of other international, national and local professional, business and civic organizations including highly regarded works on worker reclassification and joint employment liability under the FLSA and other laws published by the Bureau of National Affairs and others. Examples of these involvements include her service as the ABA Intellectual Property Law Section Law Practice Management Committee; the ABA International Section Life Sciences and Health Committee Vice Chair-Policy; a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and a former JCEB Council Representative and Marketing Chair; Past Chair of the ABA RPTE Employee Benefits and Other Compensation Group and Vice Chair of its Law Practice Management Committee; Past Chair of the ABA Managed Care & Insurance Interest Group; former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Southwest Benefits Association Board member; past Texas Association of Business State Board Member, BACPAC Committee Meeting, Regional and Dallas Chapter Chair; past Dallas Bar Association Employee Benefits Committee Executive Committee; former SHRM Region IV Chair and National Consultants Forum Board Member; for WEB Network of Benefit Professionals National Board Member and Dallas Chapter Chair; former Dallas World Affairs Council Board Member; founding Board Member, past President and Patient Empowerment and Health Care Heroes founder for the Alliance for Health Care Excellence; former Gulf States TEGE Council Exempt Organizations Coordinator and Board member; 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, and involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com 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 available here such as:

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 author and Solutions Law Press, Inc. disclaim, and have no responsibility to provide any update or otherwise notify anyone 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.

©2020 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.

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Posted by Cynthia Marcotte Stamer

2019 OCR Enforcement Shows Getting Defensibly HIPAA Compliant Necessary In 2020!

January 1, 2020

The $65,000 payment and corrective action plan commitments West Georgia Ambulance, Inc. (“West Georgia”) is making to settle Department of Health & Human Services Office for Civil Rights (“OCR”) charges it recurrently violated the Health Insurance Portability and Accountability Act (“HIPAA”) Security Rule and other 2019 HIPAA enforcement sends a clear warning to other HIPAA-covered health plans, health care providers, health care clearighouses and their business associates (“covered entities”) to maintain and be prepared to defend their own HIPAA compliance.

The Western Georgia Resolution Agreement and Corrective Action Plan (“Resolution Agreement”) OCR announced on December 30, 2019 resolves charges resulting from an OCR investigation initiated in response to a HIPAA breach report the Georgia based ambulance company filed in 2013 in which the company, which provides emergency and non-emergency ambulance services in Carroll County, Georgia, disclosed the loss of an unencrypted laptop containing the protected health information (PHI) of 500 individuals. The breach occurred when an unencrypted laptop fell off the back bumper of an ambulance. The laptop was not recovered. West Georgia reported that exactly 500 individuals were affected by the breach.

In the course of its investigation of the breach report, OCR’s investigation uncovered long-standing noncompliance with the HIPAA Rules, including failures to conduct a risk analysis, provide a security awareness and training program, and implement HIPAA Security Rule policies and procedures. Specifically, the Resolution Agreement states that West Georgia:

Did not conduct an accurate and thorough risk analysis of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of all of its ePHI. See 45 C.F.R. § 164.308(a)(1)(ii)(A);
Failed to have a HIPAA security training program, and failed to provide security training to its employees. See 45 C.F.R. § 164.308(a)(5);
Failed to implement Security Rule policies or procedures. See 45 C.F.R. § 164.316; and
Despite OCR’s investigation and technical assistance, “did not take meaningful steps to address their systemic failures.”

To resolve its exposure to the substantially higher civil monetary penalties that OCR could impose for violations of this nature, West Georgia agreed to pay a $65,000 resolution payment to OCR and implement and comply with a corrective action plan that in addition to requiring West Georgia to correct the compliance deficiencies, also subjects West Georgia to two years of OCR monitoring and oversight.

The Resolution Agreement and corrective action plan carry a number of important messages for other health care providers and other Covered Entities. First, the OCR enforcement action against West Georgia coming at the end of yet another heavy HIPAA enforcement year by OCR reminds Covered Entities that OCR is serious about HIPAA enforcement on the heels of its 2018 HIPAA record setting collection of $28.7 million in civil monetary penalties and resolution payments including the single largest individual HIPAA settlement in history of $16 million with Anthem, Inc. See OCR Concludes 2018 with All-Time Record Year for HIPAA Enforcement. While not topping this record, OCR during 2019 now has collected civil monetary penalties and resolution payments totaling more than $15 million from HIPAA Covered Entities and their business associates including:

Second, the Resolution Agreement and various other smaller settlements during the year show HIPAA compliance and enforcement is a concern for smaller provideres and other covered entities, not juswt the huge ones. While the $65,000 settlement payment required by the Resolution Agreement is substantially smaller than the amounts of the civil monetary penalties and many of resolution payments OCR collected in its other 2019 enforcement actions, the West Georgia and other 2019 enforcement actions demonstrate the teeth behind the warning in the OCR Press Release announcing the West Georgia Resolution Agreement from OCR Director Roger Severino that“All providers, large and small, need to take their HIPAA obligations seriously.” With OCR promises to keep up its vigorous investigation and enforcement of the HIPAA requirements, every Covered Entity and business associate should take the necessary steps to verify and maintain their HIPAA compliance and to be prepared to defend their compliance under the Privacy, Security, Breach Notification and HIPAA access and other individual rights mandates of HIPAA.

Third, OCR’s statement in the Resolution Agreement about the failure by West Georgia to meaningfully act to correct compliance deficiencies and cooperate in other corrective action during the period following the breach report highlights the importance for covered entities involved in a breach or other dealings with OCR on a potential compliance concern to behave appropriately to express and exhibit the necessary concern OCR expects regarding the compliance issue to position themselves to request and receive the clemency OCR is empowered under HIPAA to extend when deciding the sanctions for any noncompliance.

Of course meeting the requirements of HIPAA is not the only concern that covered entities should consider as they review and tightened their HIPAA and other privacy and data security procedures. Health care providers and other covered entities also should keep in mind their other obligations to protect patient and other confidential information under other federal laws, the requirements of which also are ever-evolving. For instance, on January 1, 2020 Texas providers like other Texas businesses will become subject to a shortened deadline for providing notice of data breaches under a new law enacted by the Texas Legislature in its last session. Arrangements should be designed to fulfill all of these requirements as well as any ethical or contractual.

Covered entities also should keep in mind that violations of HIPAA can have implications well beyond HIPAA.ramifications beyond HIPAA itself. For instance, heath care providers can face disqualification from federal program participation, licensing and ethics discipline and other professional consequences. Health plans and their fiduciaries also may face Department of Labor and other fiduciary claims, while insurers can face licensing and other regulatory consequences. The Labor Department followed up on previous warnings that health plan fiduciaries duties include a fiduciary duty to protect health plan data by adding HIPAA compliance to certain health plan audits. Insurers, third of art administrators and others also can face duties and liabilities under state insurance and data privacy laws from regulator or private litigant actions.

For More Information

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 health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Scribe for the ABA JCEB Annual Agency Meeting with the Department of Health & Human Services Office of Civil Rights, Vice Chair of the ABA International Section Life Sciences Committee, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and the ABA RPTE Employee Benefits & Other Compensation Group, Ms. Stamer has extensive legal, operational, and public policy experience advising and representing health care, health care and other entities about HIPAA and other privacy, data security, confidentiality and other matters.

Ms. Stamer’s work throughout her 30 plus year career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services, public and private primary, secondary, and other educational institutions, and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. As a part of this work, she has recurrently worked extensively with public school districts and public and private primary and secondary schools, colleges and universities, academic medical, and other educational institutions, insured and self-insured health plans; domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing, utilization management, management services organizations, group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; consultants; investors; EMR, claims, payroll and other technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, employers; and federal and state legislative, regulatory, investigatory and enforcement bodies and agencies on health care, education, and other data privacy, security, use, protection and disclosure; disability and other educational rights; workforce, and a host of other risk management and compliance concerns.

Ms. Stamer is most widely recognized for her decades-long leading edge work, scholarship and thought leadership on health and other privacy and data security and other health industry legal, public policy and operational concerns. This involvement encompasses helping health care systems and organizations, group and individual health care providers, health plans and insurers, health IT, life sciences and other health industry clients prevent, investigate, manage and resolve sexual assault, abuse, harassment and other organizational, provider and employee misconduct and other performance and behavior; manage Section 1557, Civil Rights Act and other discrimination and accommodation, and other regulatory, contractual and other compliance; vendors and suppliers; contracting and other terms of participation, medical billing, reimbursement, claims administration and coordination, Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA and other payers and other provider-payer relations, contracting, 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; meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, ant kickback, 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 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; 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. to establish, administer and defend workforce and staffing, quality, and other compliance, risk management and operational practices, policies and actions; comply with requirements; investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry actions: regulatory and public policy advocacy; training and discipline; enforcement; and other strategic and operational concerns.

Author of leading works on HIPAA and a multitude of other 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 and a former Council Representative, Past Chair of the ABA Managed Care & Insurance Interest Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, 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, 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 extensive publications and thought leadership as well as leadership involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

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.

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Posted by Cynthia Marcotte Stamer

DOJ Omnicare/CVS Suit Highlights Potential Pharmacy Benefit Claims Abuse Exposure For Health Plans, Member Safety Risk

December 18, 2019

A civil health care fraud lawsuit filed by the Department of Justice (“DOJ”) in the U.S. District Court for the Southern District of New York today (December 17, 2019) against the nation’s largest long term care pharmacy provider, Omnicare, and its parent, CVS Healthcare Corporation may signal the advisability for insurers, fiduciaries, administrators and sponsors of insured and self-insured health and other benefit plans providing pharmacy benefits to tighten claims and audit past claims payments for prescription drug claims submitted by Omnicare and other CVS pharmacy providers as well as other pharmacy claims to the pharmacy possessed a valid, current prescription to dispense the drug.

Omnicare Complaint Highlights Potential Prescription Drug Fraud By Billing For Filling Expired Prescriptions

In its U.S. ex rel Bassan complaint in intervention (Omnicare and CVS) complaint DOJ joined by 29 states and the District of Colombia filed suit against Omnicare, and its parent company, CVS Healthcare Corporation for damages and civil penalties under the False Claims Act for fraudulently billing federal healthcare programs for hundreds of thousands of non-controlled prescription drugs that DOJ claims Omnicare illegally dispensed to elderly and disabled individuals in assisted living facilities, group homes, independent living communities, and other non-skilled residential long-term care facilities (“LTC facilities”) without a valid, current prescription.. The States of California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Vermont, Virginia, Washington, Wisconsin, and the District Of Columbia are joining the DOJ in the complaint as co-plaintiffs.

Omnicare is the country’s largest provider of pharmacy services to LTC facilities. It currently operates approximately 160 pharmacies in 47 states across the United States, which dispense tens of millions of prescription drugs to LTC facilities that serve elderly and disabled individuals. CVS acquired Omnicare in May 2015, and shortly thereafter assumed an active role in overseeing Omnicare’s operations, including pharmacy dispensing practices and systems.

The DOJ complaint in the Federal District Court in Manhattan, New York charges that Omnicare illegally dispensed and billed the federal government and patients for antipsychotics, anticonvulsants, and antidepressants Omnicare dispensed to elderly and disabled residents in LTC facilities without proper prescriptions. According to the DOJ complaint from 2010 until 2018, Omnicare and CVS allowed Omnicare pharmacies to dispense non-controlled prescription drugs to tens of thousands of elderly and disabled individuals living in LTC facilities based on prescriptions that had expired, were out of refills, or were otherwise invalid. Omnicare repeatedly disregarded prescription refill limitations and expiration dates that required doctor visits to reevaluate whether the drug should be renewed. Instead of requesting new prescriptions when old ones expired, Omnicare allowed prescriptions to “roll over.” At Omnicare, “rolling over” a prescription meant that when a prescription expired, Omnicare’s computer systems would assign the old prescription a new number and the pharmacy would continue to dispense the drug indefinitely without the need for a prescription renewal. Depending on the computer system used, DOJ claims Omnicare also sometimes assigned a fake number of authorized refills to a prescription – usually 99 allowable refills for Medicare patients – to allow for continuous refilling. DOJ claims that Omnicare pharmacies “rolled over” prescriptions for elderly and disabled individuals living in more than 3,000 residential long-term care facilities, including assisted living facilities operated by the largest long-term care providers in the country, such as Brookdale Senior Living, Atria Senior Living, Sunrise Senior Living Services, and Five Star Senior Living. DOJ charges that Omnicare used these practices to refill prescriptions for patients after the required prescription for refill expired for months, and sometimes years, after the prescriptions expired. The complaint alleged that Omnicare internally referred to these renumbered expired prescriptions as “rollover” prescriptions.

Many of the prescription drugs dispensed by Omnicare without valid prescriptions treat serious, chronic conditions, such as dementia, depression, and heart disease. They include antipsychotics, anticonvulsants, cardiovascular medications, anti-depressants, and other drugs that can have dangerous side effects and need to be closely monitored by doctors, particularly when taken in combination with other drugs by elderly patients.

DOJ says these Omnicare practices of illegally dispensing drugs to elderly and disabled individuals living in LTC facilities exposed these vulnerable individuals to a significant risk of harm. In contrast to traditional skilled nursing homes, where residents have access to 24-hour medical care supervised by doctors, assisted living and other non-skilled residential facilities offer more limited medical care, or none at all. In particular, these LTC facilities generally do not have doctors on staff to oversee and monitor residents’ drug therapy. By repeatedly dispensing potent drugs without current and valid prescriptions, Omnicare jeopardized the health and safety of tens of thousands of individuals who continued to take the same drugs for months, and sometimes years, without consulting their doctors to determine whether the medications were still clinically appropriate.

A large percentage of the long-term care residents served by Omnicare are beneficiaries of federal healthcare programs. The complaint charges that along with illegally filling the expired prescriptions, Omnicare knowingly transmitted false information to these federal healthcare programs that made it appear that drug dispensations were supported by current, valid prescriptions from physicians when in fact they were not. By dispensing drugs without valid prescriptions, Omnicare presented, or caused to be presented, hundreds of thousands of false claims to Medicare, Medicaid, and TRICARE that were ineligible for payment in violation of the False Claims Act. In fact, the complaint charges that Omnicare managers exerted pressure on overwhelmed pharmacy staff to fill prescriptions quickly so that Omnicare could submit claims and collect payments on these rollover claims.

Moreover, DOJ says that it possesses evidence that senior management at Omnicare and CVS knew of the practices. The DOJ complaint charges among other things that the Omnicare’s Compliance Department succinctly acknowledged the problem in an internal April 2015 email in which one Regional Compliance Officer stated: “An issue that I am running into more and more in multiple states concerns the ability of our systems to allow prescriptions to continue to roll after a year to a new prescription number without any documentation or pharmacist intervention.” A compliance officer then forwarded the email to the head of Omnicare’s Third Party Audit group, who responded that she had a “potential solution (programmed last year) but no one is rolling it out now.”

In today’s announcement of the lawsuit, Manhattan U.S. Attorney Geoffrey S. Berman said: “As alleged, Omnicare put at risk the health of tens of thousands of elderly and disabled individuals living in assisted living and other residential long-term care facilities by dispensing drugs for months, and sometimes years, without obtaining current, valid prescriptions from doctors. A pharmacy’s fundamental obligation is to ensure that drugs are dispensed only under the supervision of treating doctors who monitor patients’ drug therapies. Omnicare blatantly ignored this obligation in favor of pushing drugs out the door as quickly as possible to make more money. This Office will continue to hold accountable those who put at risk people’s health and safety just to turn a profit.”

Meanwhile, HHS-OIG Special Agent in Charge Scott J. Lampert said: “Failing to consult doctors as to whether prescriptions should be refilled places patients’ health and medical care at serious risk. These automatic rollover refills could have significant consequences for vulnerable people in long term-care facilities. We will continue working with law enforcement partners to protect people depending on these taxpayer-funded government health programs.”

Charges Suggest Potential Advisability For Plan Audit of Prescription Drug Charges To Confirm Supported By Valid Prescription For Dispensed Drugs

The charges made in the complaint filed against Omnicare highlight an area of claims payment eligibility not regularly verified by many pharmacy benefit and other health claims administrators when administering pharmacy benefit claims- the existence of a current valid prescription to support the dispensation of the billed prescription medication. Except for pain management and certain other medications flagged by regulators or benefit systems as subject to heightened abuse risks, many plan administrators regularly take for granted existence of a current, valid script for many common, frequently issued and renewed, low cost prescriptions issued within frequency and other guidelines based upon the assumption that legal and ethical obligations of pharmacists and pharmacies under licensing, Drug Enforcement Agency and other rules generally provides adequate deterrence against abuses like those the DOJ accuses Omnicare of engaging in its complaint. However, growing corporate or other nonprofessional ownership or management of pharmacies and their management coupled with very limited, virtually all complaint driven oversight of federal and state regulatory and ethical agencies is diminishing the frequency and effectiveness of such oversight. As evidenced by the Omnicare complaint, scrupulous pharmacies may leverage opportunities allowed by this limited oversight to dispense and bill for commonly renewed prescription medication without proper orders in a manner that potentially places patients at risk at the expense of plans and their participants, beneficiaries, sponsors and insurers. Plans, insurers, fiduciaries, plan sponsors and administrators concerned about these risks may want to use the Omnicare lawsuit announcement as an opportunity to educate plan members and their caregivers about the importance of monitoring prescriptions, their refills and claims for abuse; audit and encourage plan members and their caregivers of members with claims paid with respect to Omnicare and other pharmacy claims’ and take other steps to assess the adequacy and tighten as appropriate their existing pharmacy benefit review procedures for verification of the existence of a current, valid prescription to mitigate these exposures. These exposures are further heightened by the widespread practice of outsourcing of pharmacy claims to prescription benefit management or other speciality pharmacy claims providers in many health plan designs including vendoirsand service providers owned or managed by parents or related companies of the pharmacy filling and billing for the scripts.

Health plan fiduciaries, administrators and sponsors that discover potential deficiencies in the validity of a prescription or other elements of a received or previously paid prescription benefit or other claim are cautioned to review and follow the applicable ERISA and for insured plans, state insurance, Patient Protection and Affordable Care Act (“ACA”) and contractual claims and appeals timelines and processes. Failure to follow these requirements can undermine the enforceability of plan remedies as well as expose the plan, its insurer or fiduciary to administrative penalties and other liabilities. Additionally, violations of the ACA mandated procedures also in the case of employment based plans also could expose the sponsoring employer or ubnion to liability for self reporting, self-assessment and payment of penalties under Internal Revenue Code Section 6039D. Where relevant regulatory or contractual time periods for denial have already expired either because the claim already was paid or the analysis otherwise was not timely completed in time to meet the deadline, plans may need to rely upon filing health care fraud or other avenues of relief in lieu of attempting to retroactively deny and recoup the questioned amounts in order to avoid violating the ACA and other rules. Plan fiduciaries and administrators also may need to consider the applicability of offering review by an independent medical review organization to fulfill ACA or other similar mandatesfor medical judgement based determinations.

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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 health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

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Posted by Cynthia Marcotte Stamer

OSHA Seeks Small Business Volunteers For Tree Care Safety Panel

December 17, 2019

On December 10, 2019, the Occupational Safety and Health Administration (OSHA) notified the Small Business Administration Office of Advocacy that it plans to convene a small business panel on a possible OSHA Tree Care Operations safety standard in early 2020. OSHA’s potential tree care standard could cover employees who perform tree care operations, such as pruning, maintaining, repairing, or removing trees, as well as establish safe work practices for such operations. Potentially regulated entities would include employers who engage in daily tree care operations, as well as companies, municipalities, and organizations that occasionally perform tree care and removal as part of their primary operations (e.g., residential and commercial construction and remodeling, landscaping, golf course maintenance, power and pipeline clearing, certain agricultural operations, etc.).

The Office of Advocacy is seeking small entity representatives from the potentially regulated sectors to assist the OSHA panel in its review of this possible regulation. Small entity representatives, or SERS, may include small businesses, small non-profits organizations, and small governmental jurisdictions.

Any small business employer who would be affected by this potential regulation, please contact Bruce Lundegren at (202) 205-6144 or Bruce.Lundegren@sba.gov.

Please see OSHA’s webpage for detailed information about this small business panel and rulemaking at https://www.osha.gov/SLTC/treecare/index.html.

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About the Author

Ms. Stamer’s work throughout her 30 plus year career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. As a part of this work, she has continuously and extensively worked with domestic and international employer and other management clients including hospitals, health care systems and other health care organizations, management services organizations, group purchasing organizations; creditors, debtors, bankruptcy trustees and other change organizations; consultants; investors; payroll and other technology and other services and product vendors; products and solutions consultants and developers; self-insured health and other employee benefit plans, their sponsors, fiduciaries, administrators and service providers, insurers and other insurance and risk management clients; as well as federal and state legislative, regulatory, investigatory and enforcement bodies and agencies.

Author of hundreds of highly regarded books, articles and other publications, Ms. Stamer also is widely recognized for her scholarship, coaching, legislative and regulatory advocacy, leadership and mentorship on labor and employment, employee benefits, health and safety, education, performance management, privacy and data security, leadership and governance, and other management concerns within the American Bar Association (ABA), the International Information Security Association, the Southwest Benefits Association, and a variety of other international, national and local professional, business and civic organizations. Examples of these involvements include her service as the ABA Intellectual Property Law Section Law Practice Management Committee; the ABA International Section Life Sciences and Health Committee Vice Chair-Policy; a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and a former JCEB Council Representative and Marketing Chair; Past Chair of the ABA RPTE Employee Benefits and Other Compensation Group and Vice Chair of its Law Practice Management Committee; Past Chair of the ABA Managed Care & Insurance Interest Group; former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Southwest Benefits Association Board member; past Texas Association of Business State Board Member, BACPAC Committee Meeting, Regional and Dallas Chapter Chair; past Dallas Bar Association Employee Benefits Committee Executive Committee; former SHRM Region IV Chair and National Consultants Forum Board Member; for WEB Network of Benefit Professionals National Board Member and Dallas Chapter Chair; former Dallas World Affairs Council Board Member; founding Board Member, past President and Patient Empowerment and Health Care Heroes founder for the Alliance for Health Care Excellence; former Gulf States TEGE Council Exempt Organizations Coordinator and Board member; 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, and involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

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NLRB Restores Pre-Obama Era Union Dues Checkoff Rule

December 16, 2019

In Valley Hospital Medical Center, Inc. d/b/a Valley Hospital Medical Center, 368 NLRB No. 139 (2019), issued today, the National Labor Relations Board overruled 2015 changes governing dues checkoff obligations when a collective bargaining agreement ends implemented during the Obama Presidency when Obama appointees dominated the Board. Today’s decision overturns the pro-labor Lincoln Lutheran of Racine, 362 NLRB 1655 (2015) ruling issued by the Board when it was dominated by a Democrat majority appointed by President Barak Obama as part of his aggressively pro-union agenda.

The decision restores the previously long-standing precedent established and in place since the Board’s 1962 decision in Bethlehem Steel, 136 NLRB 1500 (1962). Under today’s decision, the Board Majority made up by Republican appointees Chairman John F. Ring and Members Marvin Kaplan and William Emanuel held that an employer’s statutory obligation to check off union dues ends upon expiration of the collective-bargaining agreement containing the checkoff provision. The majority found that dues checkoff provisions belong in the limited category of mandatory-bargaining subjects that are exclusively created by the contract and are enforceable through Section 8(a)(5) of the National Labor Relations Act only for the duration of the contractual obligation created by the parties. In the majority’s view, there is no independent statutory obligation to check off and remit employees’ union dues after the expiration of the collective-bargaining agreement even where the contract does not contain a union-security provision. Board Member Lauren McFerran dissented.

Today’s decision overturns a pro-labor ruling entered by the Obama-appointee dominated Board. which expanded the power of unions to compel workers to continue to pay union dues even after expiration of the collective bargaining agreement. It is one in a series of recent actions taken or proposed by the Board in recent months to restore the balance between management and labor upset during the Obama President when the Board was dominated by his nominees.

For More Information

About the Author

Ms. Stamer’s work throughout her 30 plus year career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. As a part of this work, she has continuously and extensively worked with domestic and international employer and other management clients including hospitals, health care systems and other health care organizations, management services organizations, group purchasing organizations; creditors, debtors, bankruptcy trustees and other change organizations; consultants; investors; payroll and other technology and other services and product vendors; products and solutions consultants and developers; self-insured health and other employee benefit plans, their sponsors, fiduciaries, administrators and service providers, insurers and other insurance and risk management clients; as well as federal and state legislative, regulatory, investigatory and enforcement bodies and agencies.

Author of hundreds of highly regarded books, articles and other publications, Ms. Stamer also is widely recognized for her scholarship, coaching, legislative and regulatory advocacy, leadership and mentorship on labor and employment, employee benefits, health and safety, education, performance management, privacy and data security, leadership and governance, and other management concerns within the American Bar Association (ABA), the International Information Security Association, the Southwest Benefits Association, and a variety of other international, national and local professional, business and civic organizations. Examples of these involvements include her service as the ABA Intellectual Property Law Section Law Practice Management Committee; the ABA International Section Life Sciences and Health Committee Vice Chair-Policy; a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and a former JCEB Council Representative and Marketing Chair; Past Chair of the ABA RPTE Employee Benefits and Other Compensation Group and Vice Chair of its Law Practice Management Committee; Past Chair of the ABA Managed Care & Insurance Interest Group; former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Southwest Benefits Association Board member; past Texas Association of Business State Board Member, BACPAC Committee Meeting, Regional and Dallas Chapter Chair; past Dallas Bar Association Employee Benefits Committee Executive Committee; former SHRM Region IV Chair and National Consultants Forum Board Member; for WEB Network of Benefit Professionals National Board Member and Dallas Chapter Chair; former Dallas World Affairs Council Board Member; founding Board Member, past President and Patient Empowerment and Health Care Heroes founder for the Alliance for Health Care Excellence; former Gulf States TEGE Council Exempt Organizations Coordinator and Board member; 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, and involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

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Posted by Cynthia Marcotte Stamer

NLRB Order Directs Settlement Of McDonald’s Unfair Labor Practice Complaints Including Joint Employer Liability Charges Against McDonald’s USA

December 12, 2019

The National Labor Relations Board today (December 12, 2019) ordered an administrative law judge to approve settlements resolving complaints against McDonald’s USA LLC, McDonald’s Restaurants of Illinois, Inc. and 29 franchisees that alleged in a series of complaints that McDonald’s Restaurants of Illinois and the franchisees as joint employers. While the order resolves complaints prosecuted over the past three years against the franchisees which also sought to impose joint and several liability against McDonald’s USA LLC and McDonald’s Restaurants of Illinois, Inc. as joint employers, it highlights the continuing joint employer liability risks that franchisors, general contractors and others with significant involvement in other businesses’ operations to potential joint and several liability for NLRA violations by other businesses.

The order available here resolves a series of complaints filed by the unions that alleged that McDonald’s entities and the franchisees as joint employers:

violated Section 8(a)(1) of the NLRA by threatening food service employees, promising benefits to them, interrogating them, and surveilling their protected activity
violated Section 8(a)(3) and (1) of the NLRA by unlawfully discharging 3 employees and suspending, reducing work hours of, or sending home early 17 others, all in retaliation for their union and other protected concerted activity;
Without charging that McDonald’s USA or McDonald’s Restaurants of Illinois with independently violating NLRA, claimed they should be held jointly and severally liable for alleged violations by the franchisees because they allegedly “possessed and/or exercised” sufficient control over the labor relations policies of the franchisees that to constitute joint employers

After nearly three years of proceedings, the NLRB General Counsel and McDonald’s USA, LLC presented a series of informal settlement agreements resolving all the alleged unfair labor practices that among other things would require the 10 franchisees alleged in the consolidated complaints to have committed violations resulting in back pay liability to contribute to a Settlement Fund totaling $250,000 to benefit potential victims of discrimination or retaliation for concerted activity entitled to a monetary remedy as a result of a breach of a settlement agreement. The proposed settlement would hold McDonald’s of Illinois, Inc. liable along with the franchisees. Notably, however, the proposed settlements would not impose joint and several liability on McDonald’s USA, LLC as a joint employer, to contribute to the Settlement Funds, but does impose obligations on McDonald’s USA, LLC to support the remedies agreed to by McDonald’s Restaurants of Illinois and the franchisees in a series of specific ways. Specifically, the settlements would obligate McDonald USA, LLC to collect the funds ordered to fund the Settlement Fund from the Franchisees and deposit them with the NLRB as well as to issue a Special Notice if a Franchisee, within 9 months of approval of its settlement agreement, breaches its settlement agreement obligations by discharging, reducing hours or suspending a worker or engaging in other prohibited conduct like that alleged in the complaint. In the case of such a violation, a worker discriminated against in violation of the settlement could seek reinstatement or make a claim for payment from the Settlement Fund. Additionally, the settlement agreements also would obligate McDonald’s USA, LLC to send a special notice in the event that a franchisee violates the settlement agreements by repeating one of the practices alleged in the charge that would state that, by the conduct described in the Special Notice, the defaulting Franchisee has violated the NLRA and is not in compliance with a settlement agreement. The Special Notice additionally states that McDonald’s “disavows” the conduct “[s]olely in its role as a party to the [s]ettlement [a]greement,” and that its issuance of the Special Notice does not constitute an admission of joint-employer status.

After the administrative law judge refused to approve the proposed settlement agreements despite the recommendation from the NLRB General Counsel , the NLRB reviewed the administrative law judge’s decision on special appeal.

In overturning and ordering the administrative law judge to approve the settlements, NLRB members Marvin E. Kaplan and William J. Emanuel formed the majority that ruled that applying the “reasonableness” factors set forth in Independent Stave, 287 NLRB 740 (1987), the settlement agreements are reasonable, that they provide a full remedy to all affected employees, and that accepting the settlement agreements would serve the policies underlying the NLRA as well as the NRLB’s longstanding policy of encouraging the amicable resolution of disputes. Member Lauren McFerran dissented in this finding.

While the NLRB order to approve the settlement will resolve the pending actions against the McDonald’s entities and its franchisees, the three year prosecution reminds franchisors and other entities of the continuing readiness of the NLRB and union organizers to pursue joint employer prosecution and joint and several liability against franchisors and other entities that it perceives to possess influence or control over the conduct of separately established businesses found to engage in unfair labor practices or other labor law violations. When evaluating these risks, businesses and their leaders should keep in mind that the test for joint employment under the NLRA as well as the Fair Labor Standards Act, makes it much easier to find joint employment than in tax or certain other areas of employment law. Consequently, employers dealing with union organizing or other concerted action and those doing business with them should ensure they have a clear understanding of these rules and take steps to manage their risk to avoid incurring liability for actions of a franchisee or other entity with whom it does business. Businesses and their leaders also should take note that the NLRB under the Trump Administration recently has adopted new rules intended to role back much more aggressive interpretations of the NLRA’s joint employment rule applied by the democrat appointed majority of the NLRB during the Obama Administration. As the McDonald’s prosecutions resolved by today’s order predated this policy change, it remains to be seen how the new rules will effect joint employer prosecutions going forward. Businesses facing organizing, collective bargaining or other union activity potentially covered by the NLRA should proceed with caution to mitigate their potential exposure to charges.

We hope this update is helpful. If you have questions or need more information about this or other labor and employment developments, please contact the author Cynthia Marcotte Stamer via e-mail Or via telephone at invite or via telephone at (214) 452 -8297.

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

About the Author

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

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

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

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

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

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

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

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

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Posted by Cynthia Marcotte Stamer

2018 US National Health Expenditures Grew Again

December 10, 2019

Total U.S. national healthcare spending in 2018 grew 4.6 percent according to a study conducted by the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS). CMS reports this growth rate was slower than the 5.4 percent overall economic growth as measured by Gross Domestic Product (GDP). Consequently, the share of the economy devoted to health spending decreased from 17.9 percent in 2017 to 17.7 percent in 2018.

Growth in overall healthcare spending has averaged 4.5 percent for 2016-2018, slower than the 5.5 percent average growth for 2014-2015, that was affected by expanded Medicaid and private insurance coverage and increased spending for prescription drugs, particularly for drugs used to treat hepatitis C.

The growth in total national healthcare expenditures was approximately 0.4 percentage point higher than the rate in 2017 and reached $3.6 trillion in 2018, or $11,172 per person.

According to the report, private health insurance, Medicare, and Medicaid experienced faster growth in 2018. The faster growth for these payers was influenced by the reinstatement of the health insurance tax which was applied to private health insurance, Medicare Advantage, and Medicaid Managed care plans. The health insurance tax was a fee imposed on all health insurance providers beginning in 2014 as a part of the funding for the Affordable Care Act (ACA) and was subsequently amended to institute a one-year moratorium on the fee for 2017.

Private health insurance spending(34 percent of total health care spending) increased 5.8 percent to $1.2 trillion in 2018, which was faster than the 4.9 percent growth in 2017. The acceleration was driven in part by an increase in the net cost of private health insurance, which was a result of the reinstatement of the health insurance tax in 2018 following a one-year moratorium in 2017.
Medicare spending (21 percent of total health care spending) grew 6.4 percent to $750.2 billion in 2018, which was faster than the 4.2 percent growth in 2017. The faster growth in Medicare spending in 2018 was influenced by faster growth in the net cost of insurance of Medicare private health plans (mostly Medicare Advantage plans) due to the reinstatement of the health insurance tax in 2018, faster growth in Medicare spending for medical goods and services, and an increase in government administration spending after a reduction in 2017.
Medicaid spending (16 percent of total health care spending) increased 3.0 percent to $597.4 billion in 2018. This was faster than the rate of growth in 2017 of 2.6 percent. The faster rate of growth in 2018 was driven by faster growth in the net cost of insurance for Medicaid managed care plans, also due in part to the reinstatement of the health insurance tax.
Out-of-pocket spending (10 percent of total health care spending) includes direct consumer payments such as copayments, deductibles, and spending not covered by insurance. Out-of-pocket spending grew 2.8 percent to $375.6 billion in 2018, which was faster than the 2.2 percent growth in 2017. Faster out-of-pocket spending growth for retail prescription drugs, durable medical equipment, and dental services more than offset a slowdown in out-of-pocket spending for hospital care.

Health care spending growth was mixed in 2018 for the three largest goods and service categories – hospital care, physician and clinical services, and retail prescription drugs.

Hospital spending (33 percent of total healthcare spending) increased at about the same rate in 2018 as in 2017, growing 4.5 percent and 4.7 percent, respectively, to reach $1.2 trillion in 2018. The steady growth in 2018 was driven by an acceleration in hospital price growth that was offset by slower growth in the use and intensity of hospital services.
Physician and clinical services spending (20 percent of total healthcare spending) increased 4.1 percent to reach $725.6 billion in 2018. This was slower than the rate of growth in 2017 of 4.7 percent. The deceleration in 2018 was driven by slower growth in the use and intensity of physician and clinical services, as physician and clinical price growth accelerated in 2018.
Retail prescription drug spending(9 percent of total healthcare spending) grew 2.5 percent in 2018 to $335.0 billion following slower growth of 1.4 percent in 2017. This faster rate of growth was driven by non-price factors, such as the use and mix of drugs consumed, which more than offset a decline of 1.0 percent in prices for retail prescription drugs.

Additional highlights from the report include:

Sponsors of Healthcare. In 2018, the federal government’s spending on health care increased 5.6 percent, accelerating from growth of 2.8 percent in 2017, and was driven by faster growth in the federally-funded portions of Medicare and Medicaid expenditures. Private businesses’ health care spending increased 6.2 percent in 2018 due primarily to faster growth in employer-sponsored private health insurance premiums. The federal government and households accounted for the largest shares of spending (28 percent each), followed by private businesses (20 percent), state and local governments (17 percent), and other private revenues (7 percent).

The National Health Expenditure estimates have been revised to reflect the most recent and up-to-date source data that is available (and may not have been available for last year’s vintage of the National Health Expenditure Accounts).

The 2018 National Health Expenditures data and supporting information will appear here.

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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 health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

As a primary focus of this work, Ms. Stamer has worked extensively with domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing, utilization management, management services organizations, group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; consultants; investors; technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, insurers, self-insured health plans and other payers, health industry advocacy and other service providers and groups and other health industry clients as well as federal and state legislative, regulatory, investigatory and enforcement bodies and agencies.

Scribe for the ABA JCEB Annual Agency Meeting with OCR, Vice Chair of the ABA International Section Life Sciences Committee, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, the ABA RPTE Employee Benefits & Other Compensation Group, Ms. Stamer is noted for her decades-long leading edge work, scholarship and thought leadership on health and other privacy and data security and other health industry legal, public policy and operational concerns. This involvement encompasses helping health care systems and organizations, group and individual health care providers, health plans and insurers, health IT, life sciences and other health industry clients prevent, investigate, manage and resolve sexual assault, abuse, harassment and other organizational, provider and employee misconduct and other performance and behavior; manage Section 1557, Civil Rights Act and other discrimination and accommodation, and other regulatory, contractual and other compliance; vendors and suppliers; contracting and other terms of participation, medical billing, reimbursement, claims administration and coordination, Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA and other payers and other provider-payer relations, contracting, 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; 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 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; 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. to establish, administer and defend workforce and staffing, quality, and other compliance, risk management and operational practices, policies and actions; comply with requirements; investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry actions: regulatory and public policy advocacy; training and discipline; enforcement; and other strategic and operational concerns.

Author of leading works on HIPAA and a multitude of other 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 and a former Council Representative, Past Chair of the ABA Managed Care & Insurance Interest Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, 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, 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 extensive publications and thought leadership as well as leadership involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her 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.™

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 author and Solutions Law Press, Inc. disclaim, and have no responsibility for the suitability, completeness, accuracy or other content or to provide any update or otherwise notify anyone 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.

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Posted by Cynthia Marcotte Stamer

SBA Hosts Employee Benefits Roundtable 11/21

November 18, 2019

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

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

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

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

Gary Kushner, President and CEO of Kushner & Company

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

Sandra Turner, President of Retirement Plan Specialists, Inc.

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

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

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

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

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

About The Author

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

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

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

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

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

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

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

About Solutions Law Press, Inc.™

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

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

©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.

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Posted by Cynthia Marcotte Stamer

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

November 7, 2019

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

For More Information

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

About the Author

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

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

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

About Solutions Law Press, Inc.™

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

Comments Off on College Pays $54,000 To Settle DOJ ADA Lawsuit For Paramedic Program’s Termination of TA With MS | Absenteeism, Academic Medicine, Accommodation, ADA, board of directors, compliance, Corporate Compliance, directors, Disability, Disability, Disability Discrimination, Disability Leave, Education, Educational Privacy, EEOC, EEOC, employee, Employee Benefits, Employer, Employers, Employment, Employment Agreement, Employment Policies, Employment Tax, ERISA, Excise Tax, FICA, health benefit, health Care, health insurance, Income Tax, Labor Management Relations, Management, NLRA, Payroll Tax, Reporting & Disclosure, Retirement Plans, Risk Management, Tax, Tax Fraud, Uncategorized, Unfair Labor Practice, Union, Union elections, Worker Classification | Tagged: ADA, Disability Discrimination, Education, Emergency Medicine, Employees, higher education, MS, news, Paramedic, school, Training | Permalink
Posted by Cynthia Marcotte Stamer

Business Leaders Serve Jail Time For Employment Tax Crimes

November 5, 2019

Business owners and operators and the business’ tax, accounting and other service providers increasingly risk criminal prosecution when involved with a business caught shirking its obligations under the Internal Revenue Code (the “Code”) to report wages and withhold and pay federal income tax and employees’ share of social security and Medicare taxes (collectively known as “FICA taxes”) from employees’ wages and to pay the employer’s share of FICA taxes in addition to the substantial civil tax penalties that the business faces for these actions.

While various Internal Revenue Service (“IRS”) educational and enforcement initiatives across the past decade have expanded awareness among business leaders and their accounting and tax advisors more aware of the the potentially significant civil tax penalties risks aggressive employment tax practices can create for the business, many business owners and operators, and the tax, accounting and payroll service providers often overlook or fail to take seriously their potential personal exposure to civil and increasingly, even criminal liability that can arise from management, consulting or other involvement with businesses engaged in aggressive employment tax practices under the Code. With the Justice Department now increasingly using criminal prosecution of individuals as well as businesses involved in employment tax evasion a key weapon in its effort to combat the “substantial problem” of employment tax fraud, however, business owners, operators, tax counsel, accounting, payroll, staffing and others increasingly must exercise care to avoid subjecting themselves to criminal prosecution and other personal liability when dealing with businesses engaged in aggressive employment tax practices.

Employment Tax Compliance Now High Enforcement Priority

Business noncompliance with their employment tax obligations is a widespread and persistent problem in the United States for a multitude of reasons, not the least of which is budgetary. Employment taxes on employee wages represent nearly 70% of all revenue collected by the IRS and, as of June 30, 2016, more than $59.4 billion of tax reported on Employer’s Quarterly Federal Tax Returns (Forms 941) remained unpaid. When last measured prior to the Justice Department’s kickoff of its current enforcement initiative in 2018, uncollected employment tax violations represented more than $91 billion of the gross Tax Gap and, after collection efforts, $79 billion of the net Tax Gap in the U.S. See Employment Tax Enforcement.

Aside from the budgetary concerns created by the widespread business noncompliance with employment tax responsibilities, the Justice Department considers nonpayment of employment taxes a serious crime. According to its Employment Tax Enforcement page states, “When employers willfully fail to collect, account for and deposit with the IRS employment tax due, they are stealing from their employees and ultimately, the United States Treasury. In addition, employers who willfully fail to comply with their obligations and unlawfully line their own pockets with amounts withheld are gaining an unfair advantage over their honest competitors.”

To stem employment tax violations and encourage greater business compliance with these requirements, the IRS and Justice Department are using a variety of taxpayer outreach, voluntary compliance resolution, and civil and criminal enforcement tools. Along with ongoing educational outreach, for instance, the IRS tries to encourage businesses to voluntarily clean up outstanding employment tax compliance issues by making available various voluntary resolution programs. For instance, the IRS Voluntary Closing Agreement Process – Employment Tax (VCAP – ET) program offers an administrative process businesses not currently under audit may use to “permanently and conclusively” resolve outstanding IRS employment tax liabilities not involving worker classification while its Voluntary Classification Settlement Program (VCSP) for businesses not under audit and Classification Settlement Program for businesses under examination offer options for businesses may use to resolve worker classification associated employment tax liabilities.

Employment Tax Prosecution Rising

Coupled with efforts to obtain greater voluntary compliance through these voluntary resolution programs, however, the IRS and Justice Department Tax Division increasingly partner to investigate and prosecute aggressively businesses and their owners, operators and tax and other service providers for employment tax violations. As the agency responsible for conducting the civil and criminal prosecutions necessary to enforce these rules, the Justice Department brings both civil suits and criminal prosecutions against both businesses and the owners, operators and others that participate or assist businesses to willfully violate the Code’s employment tax rules. While in the past, IRS and Justice Department employment tax enforcement generally focused on high dollar employment tax fraud cases, since making employment tax fraud enforcement a priority in May 2018, the IRS and Justice Department no longer place a dollar threshold on the amount of unpaid employment taxes that could trigger more severe enforcement action. Since this change, Justice Department civil and criminal employment tax fraud prosecutions and convictions have risen significantly, resulting in the Justice Department achieving a long and growing list of civil money judgements to recover unpaid taxes, interest and penalties, permanent injunctions and criminal convictions against businesses and individuals involved in employment tax fraud over the past year.

On the civil front, the Justice Department brings litigation on behalf of the United States to enforce the IRS’ authority to collect unpaid taxes and penalties and pursues permanent injunctions against businesses, payroll and tax advisors and others for violating the Code’s employment tax requirements.

In addition to actions to collect unpaid employment taxes and penalties, the Justice Department also pursues and obtains civil injunctions against employers and their principal officers who willfully fail to truthfully collect, account for and deposit employment which impose various requirements and prohibitions designed to enforce compliance. Injunctions as a Tool to Prevent Pyramiding of Employment Taxes. Among other things, the injunctive relief sought often orders for the businesses and their principal officers to comply with the employment tax rules, provide current notice of each deposit to the IRS, and placing restrictions on their opening or operating new businesses and transfer and dissipation of assets. If a business or individual violates these injunctions, the Justice Department pursues orders of civil or criminal contempt, including incarceration of the principal officer(s), to bring the business into compliance, as well as to recover compensation from the principal officers, the business or both for the damage caused by the contempt. See, e.g., Bailey Chiropractic and Bailey, David (W.D. Pennsylvania – August 21, 2018); Bogart Title INC; Bogart Law Firm; and Bogart, Erik (D. South Carolina – May 25, 2018); Detroit Wholistic Center, Inc and Jesse R. Brown (E.D. Michigan – January 31, 2018); Doctors Hospital 1997 LP and Mohiuddin, Syed Rizwan (S.D. Texas – August 16, 2018); Dr. Robert Lee Beck (Agreed Judgement) (W.D. Texas – May 21, 2018); Easy Method Driving School and Ryan, William (D. Maryland – August 22, 2018); Four State Emergency Equipment LLC; Price, William; Price, Michelle; and West Potomac Fire & Rescue, Inc (D. Maryland – June 15, 2018); Court Permanently Enjoins Baltimore-Area Importer of Stone From Accruing Payroll Tax Liabilities

Criminal Employment Tax Fraud Prosecutions & Convictions Show Justice Department Ready To Nail Businesses & Individuals Cheating On Employment Taxes

While these and other civil enforcement successes are powerful tools in the arsenal of the Justice Department and IRS employment tax enforcement efforts, however, it is the Justice Department’s growing prosecution and success in securing criminal convictions resulting in prison sentences against business owners and operators, tax advisors and others for employment tax fraud that most clearly demonstrates the Justice Department’s announced commitment to employment tax fraud enforcement has real teeth. Over the past year, the Justice Department as racked up an impressive and growing number of federal grand jury criminal tax fraud indictments, convictions and sentences, many of which include prison sentences ordered against business owners, operators, advisors and other individuals convicted of employment tax fraud. See e.g., North Carolina Office Manager Sentenced to Prison for Employment Tax Fraud; see also Recent Criminal Employment Enforcement News.

The criminal employment tax prosecution actions reported by the Justice Department during the just ended month of October 2019 are typical of this prosecutorial trend over the past year. Among others, during October the Justice Department Tax Division announced its employment tax enforcement efforts resulting in it securing separate federal grand jury criminal indictments against staffing business operators in New York and North Carolina.

October Criminal Employment Tax Indictments

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

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

October Criminal Employment Tax Convictions

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

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

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

October Criminal Employment Tax Prison Sentencings

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

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

Enforcement Activity Shows Greater Employment Tax Compliance Needed

With the Justice Department promising to continue to pursue ongoing enforcement effort, businesses, individuals with ownership or management authority over the collection and payment of employment taxes, and their tax, accounting, payroll, staffing and other service providers need to use care to avoid exposing themselves to liability when advising, assisting or dealing with a business engaged in aggressively classifying workers as contractors rather than employees, or otherwise failing to properly track, account for, report and pay over income tax and employment taxes properly.

When evaluate these potential risks, businesses and business leaders responsible for income and employment tax withholding, reporting and payment and those negotiating, reviewing or engaging in transactions with them should be particularly careful when participating in arrangements that the IRS might consider employment tax fraud schemes such as:

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

When evaluating the adequacy of employment tax compliance, proper worker classification is a critical starting point. Business owners, operators and others in the scope of employment tax liability risk should scrutinize the defensibility of how a business classifies those performing services or other work as employees versus independent contractors, employees or contractors of another business or in some other status and document the evidence supporting these characterization and other compliance efforts.

When performing these activities, business owners and operators are encouraged to resist the urge to assume that they can rely upon the contractual or labels of workers as contractors or employed by a staffing, leasing or other service provider to avoid characterization and resulting liability for employment and income tax obligations as the employer of workers. Under the Code the defensibility of these characterizations of workers generally is determined based on whether the facts and circumstances reflect that the business in operation possessed the requisite control to qualify as a common law employer with little or no deference to how the parties have labeled the arrangement or the historical duration of the practices within the organization or its respective industry. Rather, the analysis must focus on evaluating these and other potentially suspect arrangements to realistically assess the likelihood that the IRS or Justice Department could challenge the business’ employment tax practices as willful or other violations of the Code’s employment tax requirements. Wise individuals and businesses operating or dealing with businesses involved in arrangements or practices identified as potentially suspect by the IRS and Justice Department also should pursue contractual, audit and other operational safeguards to document their efforts to require, enforce and monitor compliance and to capture and retain records and other evidence that would be helpful to defend the business’ or their own action in the event the IRS or Justice Department audits or initiates enforcement action with respect to the arrangements in the future.

Tax preparers, tax and other attorneys, accountants and others that participating in operations, preparation of returns, transactions or other activities also should be sensitive to special ethical and legal requirements and standards that can attach to advice or involvement in operations, transactions or providing advice or representation potentially involving practices that might raise employment tax fraud or other employment tax withholding and payment, wage reporting, or related employment tax concerns might arise. See, e.g., IRS Circular 230. Along side of the Justice Department’s civil and criminal employment tax enforcement, tax practitioners, tax preparers, and other third parties expose themselves to discipline for failing to properly report, pay and file employment tax or other returns or other violations of professional standards of tax practice when giving advice or other engaging in other activities adhere to professional standards and follow the law.

Additionally, tax and other professionals are reminded that tax return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website.

Leaders, legal and other advisors, and service providers of businesses involved in these arrangements generally should use care to critically evaluate these should react to the growing enforcement risks and acting to mitigate their own and their organization’s potential exposure to criminal or civil tax or other enforcement. These efforts should start by assessing realistically the likely defensibility of their arrangements and risks of liabily from their own or other associated businesses employment tax or worker classification practices in the event of a challenge based on a realistic assessment of the real acts and circumstances within the scope of attorney-client priviledge as well as seek contractual, audit and other operational safeguards to require and document compliance and to capture and retain records and other evidence that the business might need to defend itself against a future audit or enforcement action associated with these suspect arrangements.

Businesses leaders, advisors and service providers also should keep in mind that aggressive worker classification and employment tax practices generally also extend to a business’ other relationships with workers and service providers such as minimum wage, over time, recordkeeping and other wage and hour; I-9 eligibility to work verification, occupational heath and safety, workers’ compensation, employment discrimination and other worker associated legal obligations also currently subject to heavy worker misclassification and other enforcement. As a consequence, businesses, legal counsel, accounting and other service providers should recognize the need for a holistic review and assessment of risk and planning to manage these risks, as well as the need to use care to safeguard attorney-client privilege and avoid unprotected discussion of sensitive facts and analysis outside the scope of attorney-client privilege with other parties without prior approval of their legal counsel.

For More Information

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

About the Author

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 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.

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

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

About Solutions Law Press, Inc.™

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

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Posted by Cynthia Marcotte Stamer

New $2.15M OCR Penalty Shows Health Plans Risks Of HIPAA Violations

October 23, 2019

Health plans and insurers and their service providers should heed as a warning of the potential perils they could face for violating the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Security and Breach Notification Rules the just-announced $2.15 million plus civil monetary penalty that Jackson Health System (JHS) paid the Department of Health & Human Services Office of Civil Rights (OCR).

While the HIPAA-covered entity that paid the $2,154,000 civil monetary penalty, JHS, is a Florida-based nonprofit academic medical system, rather than a health plan, the $1,500,000 HIPAA resolution payment OCR previously collected from Blue Cross Blue Shield of Tennessee (BCBST) in 2012 for its breaches of HIPAA make clear that health plans and insurers risk similar penalties for HIPAA violations. Consequently, health plans, health insurers and other health care providers and their business associates should construe the JHS civil monetary penalty as evidence of the need to re-verify and remain constantly vigilant about maintaining compliance with HIPAA’s privacy, security and breach notification rules currently and on an ongoing basis.

JHS HIPAA Breaches Found By OCR

The $2.1 million plus payment was required to satisfy a civil monetary penalty assessment OCR imposed in a Notice of Proposed Determination and Notice of Final Determination made public by OCR on October 23, 2019 in response to findings from a series of investigations of HIPAA breach and compliance concerns raised between 2013 and 2016 raised by various HIPAA-mandated breach reports and media reports that raised concerns about improper access disclosure and use of patient PHI between 2013 and 2016. When JHS did not challenge the findings or determination became final. OCR reports JHS has paid the specified $2.154,000 civil monetary penalty.

JHS operates six major hospitals, a network of urgent care centers, multiple primary care and specialty care centers, long-term care nursing facilities, and corrections health services clinics, provides health services to approximately 650,000 patients annually, and employs about 12,000 individuals.

On August 22, 2013, JHS submitted a breach report to OCR stating that its Health Information Management Department lost paper records containing the protected health information (PHI) of 756 patients in January 2013. JHS’s internal investigation determined that an additional three boxes of patient records also were lost in December 2012; however, JHS did not report the additional loss or the increased number of individuals affected to 1,436, until June 7, 2016.

In July 2015, OCR initiated an investigation following a media report that disclosed the PHI of a JHS patient. A reporter had shared a photograph of a JHS operating room screen containing the patient’s medical information on social media. JHS subsequently determined that two employees had accessed this patient’s electronic medical record without a job-related purpose.

On February 19, 2016, JHS submitted a breach report to OCR reporting that an employee had been selling patient PHI. The employee had accessed inappropriately over 24,000 patients’ records since 2011.

According to OCR Director Roger Severino, “OCR’s investigation revealed a HIPAA compliance program that had been in disarray for a number of years. …This hospital system’s compliance program failed to detect and stop an employee who stole and sold thousands of patient records; lost patient files without notifying OCR as required by law; and failed to properly secure PHI that was leaked to the media.”

These and other findings led to the OCR determination in the Notice of Proposed Determination and Notice of Final Determination that JHS failed to provide timely and accurate breach notification to the Secretary of HHS, conduct enterprise-wide risk analyses, manage identified risks to a reasonable and appropriate level, regularly review information system activity records, and restrict authorization of its workforce members’ access to patient ePHI to the minimum necessary to accomplish their job duties. OCR assessed the $2.1 million civil monetary penalty based on these determinations.

The JHS civil monetary penalty is The latest in a growing series of OCR enforcement and regulatory actions that drive home the perils HIPAA-covered health care providers, health plans and insurers, healthcare clearinghouses and business associates risk by failing to responsibly and effectively manage their HIPAA compliance including the one against mega-health plan and business associate, BCBST, that resulted in its payment of a $1,500,000 resolution payment. For details of the BCBS Resolution Agreement and Settlement payment, see here.

OCR enforcement data documents a steady rise in OCR investigation and enforcement activity. OCR set all-time records for HIPAA Enforcement in 2018. Heavy enforcement activity has continued in 2019. Before its October 23, 2019 announcement of the JHS civil monetary penalties, OCR already had announced:

A $10,000 resolution agreement with a dental practice for improperly disclosing patient PHI on social media at the beginning of October;
Its first HIPAA right of access resolution agreement against a health care provider for violating HIPAA’s right of access rules on September 9, 2019 as part of its recently announced HIPAA access rule enforcement initiative;
A $100,000 resolution payment from an Indiana Medical Records Service resulting from a breach of electronic protected health information at a business associate;
The collection of a $3 million resolution payment collected from a Tennessee diagnostic medical imaging services company to settle HIPAA civil monetary penalty exposures arising from a breach that exposed the protected health information of more than 300,000 patients; and
A multitude of other audits and enforcement activities resolved through corrective action without collection of any resolution payment or civil monetary penalties.

Given these and other previously announced enforcement initiatives and actions, all HIPAA covered entities and their business associates are urged to maintain hypervigilance about their own HIPAA compliance with long standing as well as emerging HIPAA requirements taking into account old, recent, and emerging guidance and enforcement activities of OCR. Of course health plans and other covered entities also need to additionally weigh their exposure under various other state and federal law likely to arise from such breaches and the investigation, mitigation and public and customer trust consequences that almost always accompany and frequently exceed the actual HIPAA liability imposed. Considered together, these and other consequences of HIPAA vioations or other sloppy dealings with protected health inforamtion or ther sensitive health care or financial information make a clear case for investing appropriately in HIPAA and related compliance.

For More Information

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. As part of this work, she has worked extensively on employee benefit communication and other employee benefit plan legislative and regulatory policy, design, compliance and enforcement including testifying to the EBSA Advisory Council on Employee Welfare and Pension Benefit Plans in on the effectiveness of employee benefit plan disclosures during 2017 hearings on on reducing the burdens and increasing the effectiveness of ERISA mandated disclosures.

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.™

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

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Posted by Cynthia Marcotte Stamer

Proposed NLRB Employee Definition To Exclude College Study Workers

October 23, 2019

Monday, December 16, 2019 is the new comment deadline for providing feedback to the National Labor Relations Board (NLRB) ion a proposed rule that would exempt undergraduate and graduate students performing services for financial compensation in connection with their studies from the NLRB’s definition of “employee” for purposes of the National Labor Relations Act (NLRA) and other collective bargaining and union organizing and representation laws under the NLRB’s jurisdiction. The extended comment deadline was announced here October 17, 2019.

The original notice of proposed rulemaking published here on September 23, 2019 would exempt ” every student performing teaching, research and any services for compensation, at a private college or university in connection with his or her studies from treatment as an “employee” for purposes of Section 2(3) of the NLRA.

The NLRB says this proposed rulemaking “is intended to bring stability to an area of federal labor law in which the NLRB, through adjudication, has reversed its approach three times since 2000. The NLRB has stated this proposed standard on the exclusion of students from the NLRA definition of employee is consistent with the purposes and policies of the NLRA, which contemplates jurisdiction over economic relationships, not those that are primarily educational in nature.

The proposed regulation is one of several regulatory projects that the now Trump-appointee dominated NLRB has undertaken in the past year in its effort to undue a host of pro-labor changes to NLRB policy changes initiated and enforced during the Obama Administration when President Obama appointees dominated the NLRB and its policies. Another example of these regulatory efforts include the NLRB’s current efforts to reverse a change in interpretation and enforcement of the “joint employer” rules of the NLRA and Fair Labor Standards Act that substantially expanded the imputation of liability for collective bargaining and other labor-management and wage and hour law violations by treating companies as joint employers that received the benefit of work performed even when the recipient company did not control the details of the work or the nominal employer. Employers generally will want to carefully monitor and provide appropriate input on these and other developments.

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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.

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.™

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

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Posted by Cynthia Marcotte Stamer

DOL Proposing To Allow Default Website ERISA Retirement Plan Disclosures

October 22, 2019

Employer and other retirement plan sponsors, plan administrators and other service providers desiring to use website or other electronic communications to distribute retirement plan disclosures required by the Employee Retirement Income Security Act (“ERISA”) in lieu of the much more expensive and time consuming process of sending volumes of paper documents through the mail or other ERISA-compliant means should share their recommendations and support for a proposed regulation announced by the . U.S. Department of Labor Employee Benefit Security Administration (“EBSA”) today (October 22, 2019).

Scheduled for official publication in the Federal Register on October 23, 2019, the Proposed Regulation on Default Electronic Disclosure by Employee Pension Benefit Plans under Employee Retirement Income Security Act would loosen current EBSA electronic disclosure rules by creating a“safe harbor” allowing retirement plans and their administrators greater freedom to use electronic disclosures to meet ERISA-mandated retirement plan disclosures.

ERISA requires retirement plan administrators to furnish multiple documents per year to participants and beneficiaries on a variety of topics. Currently, retirement plan disclosures generally are provided through paper documents distributed by first class mail. because existing regulations requiring plan administrators to use delivery methods “reasonably calculated to ensure actual receipt of the documents” make paper distribution safest.

Historically, the general standards for delivery of required disclosures set forth in 29 CFR 2520.104b-1 require retirement plans and their administrators to incur substantial expense to print and deliver the required disclosure communications via mail or hand delivery. Preparing and providing these disclosures in printed form is costly and time consuming. Since many plan participants never read or cannot find copies of these high dollar printed materials, plan sponsors and administrators long have questioned the appropriateness of these expensive mandates.

As internet accessibility and use have expanded, calls to modernize the general delivery rule to allow electronic delivery or access have picked up steam. Employer and other plan sponsors, plan administrators increasingly have urged EBSA to update is regulations to allow electronic delivery to reduce plan costs and administrative burdens as well as to facilitate participant access to these disclosures on demand through the internet.

In an initial effort to respond to these developments and pressures, EBSA amended the general standards for delivery of required disclosures in 2002 by establishing a regulatory safe harbor for the use of electronic media (the “2002 safe harbor”) under 29 CFR 2520.104b-1(c). Unfortunately, the conditions the 2002 safe harbor imposed on electronic distribution hindered use of electronic delivery as the default method of delivery of retirement plan documents. make n administration recently prompted EBSA to reconsider the 2002 safe harbor. In the new proposed regulation, EBSA proposes to allow retirement plans and their administrators greater latitude to use electronic media to provide ERISA required retirement disclosures under the terms set forth in the proposed regulation. EBSA says this rule change would reduce retirement plan communication costs while enhancing the accessibility of communications to plan participants by leveraging internet technology.

Under the proposed regulation’s safe harbor, retirement plans and their plan administrators still would have to provide ERISA retirement plan disclosures, but their options for distributing these disclosures would expand. In addition to distributing paper notifications by mail, hand delivery or other means “reasonably calculated to ensure delivery,” the proposed regulation would provide an option to use website posting as the default means of distribution provided the participant does not elect to continue to receive paper notification. To take advantage of the option to use website posting, however, plan administrators would have to comply with the safe harbor requirements in the proposed regulation including requirements that:

The plan post the required disclosures on a website that meets the requirements of the safe harbor rule, including system checks for invalid electronic addresses;
Retirement plan administrators would satisfy their obligation to furnish ERISA-required disclosures by making the information accessible online and by furnishing to participants and beneficiaries a notice of internet availability of these disclosures.
A notice of internet availability would be sent to the electronic address of the participant, for example to the participant’s email address.
A notice of internet availability must include, among other things, a brief description of the document being posted online, a website address where the document is posted, and instructions for requesting a free paper copy or electing paper delivery in the future.
A notice of internet availability generally must be sent each time a retirement plan disclosure is posted to the internet website.
To prevent “email overload,” the proposal allows a notice of internet availability to incorporate or combine other notices of internet availability in limited circumstances.

The framework in the proposal is similar to the approach the Securities and Exchange Commission takes for certain investor disclosures. EBSA says the proposed regulation safe harbor also is intended to align with Internal Revenue Service rules about delivering retirement plan disclosures electronically while protecting the option for those participants who prefer paper notices to elect to continue to do so.

EBSA projects the adoption of the proposed regulation would substantially reduce the administrative and financial burden of meeting the ERISA disclosure requirements. In fact, EBSA estimates that elimination or reduction of printed materials, printing and mailing costs associated with furnishing printed disclosures allowed through the expanded use of internet technology to furnish covered disclosures to workers allowed by the safe harbor would produce approximately $2.4 billion net cost savings over the next 10 years for ERISA-covered retirement plans. Meanwhile, EBSA says the requirement in the proposed regulation for plans to continue to provide disclosures in paper form to participants that prefer that option would protect the reliability of disclosures to those participants.

EBSA is inviting plan sponsors, administrators and other stakeholders to submit comments on the proposed regulation generally. In addition, the Notice of Proposed Ruling on the proposed regulation also specifically invites stakeholders to assist EBSA to evaluate whether additional changes to the disclosure requirements in the regulations in the future by inviting input on a broad range of disclosure-related questions and topics, including scope, content, design and delivery of ERISA disclosures.

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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.

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.™

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

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Posted by Cynthia Marcotte Stamer

Salary Threshold Increases Require Employer Review Of Salaried Worker FLSA Exemption Qualification

September 25, 2019

Beginning January 1, 2020, only employees earning at least $684 per week (equivalent to $35,568 per year for a full year worker) can qualify for payment on a salaried basis as employees exempt from the Fair Labor Standards Act (“FLSA”) minimum wage and overtime requirements under the “White Collar Exemption” for executive, administrative, professional, outside sales, computer employees and at least $107, 342 per year to qualify as exempt from the minimum wage and overtime requirements as a “highly compensated employee” (“HCE”).

As the Department estimates that these changes will cause more than 1.3 million additional workers to qualify for minimum wage and overtime pay, employers who treat any employees as exempt from FLSA overtime, minimum wage and recordkeeping requirements based on the FLSA White Collar or HCE Exemption should reconfirm continued applicability of the exemption and take other steps in preparation for the January 1 rule change.

White Collar & HCE Exemption Salary Threshold Increase On January 1, 2020

A final rule announced by the U.S. Department of Labor Wage and Hour Division (“WHD”) on September 24, 2019 and currently awaiting assignment for official publication in the Federal Register will raise the minimum earnings threshold that WHD regulations require as a prerequisite to an employer treating an employee as exempt from the FLSA under the White Collar Exemption for the first time since 2004[1]. WHD estimates that the increase in the salary threshold implemented by the final rule will make 1.2 million additional workers entitled to minimum wage and overtime pay and that an additional 101,800 workers will be entitled to overtime pay as a result of the increase to the HCE compensation level.

Under the final rule, beginning January 1, 2020, the salary threshold amount for the White Collar Exemption will increase from $455 per week to $684 per week.

In addition to these changes in the White Collar Exemption salary threshold, the final rule also will:

Increase the total annual compensation level for “highly compensated employees (HCE)” from the currently-enforced level of $100,000 to $107,432 per year;
Revise the special salary levels for workers in U.S. territories and in the motion picture industry as follows:
- Maintain the current special salary level of $380 per week for American Samoa because minimum wage rates there have remained lower than the federal minimum wage;
- Set a special salary level of $455 per week for employees in Puerto Rico, the U.S. Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands; and
- Increase the special “base rate” threshold for employees in the motion picture producing industry. proportionally to the increase in the standard salary level test, resulting in a new base rate of $1,043 per week (or a proportionate amount based on the number of days worked).
Permit nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to an employee to be counted as compensation to the employee to satisfy up to 10% of the standard White Collar Exemption salary threshold ($68.40 per week) for purposes of determining if the employee earns sufficient compensation to satisfy the salary threshold for the White Collar Exemption but not the HCE Exemption; and
Announce the intention by the WHD to increase these threshold amounts more regularly in response to inflation through notice and rulemaking, while abandoning a prior proposal to accomplish these updates automatically through inflation indexing.

Treatment of Nondiscretionary Bonuses and Incentive Payments

In the final rule, in recognition of evolving pay practices, the Department also permits employers to use nondiscretionary bonuses and incentive payments to satisfy up to 10 percent of the standard salary level. For employers to credit nondiscretionary bonuses and incentive payments toward a portion of the standard salary level test, they must make such payments on an annual or more frequent basis. This is just one of the fringe benefit related refinements WHD recently made or proposed to make to its regulations that impact the implications of noncash compensation and other perks in the past couple years. See e.g., Proposed FLSA Base Pay Rule Clarifies Overtime Treatment Of Perks. Understanding the existing and proposed rules and enforcement positions is important for employers to properly manage their FLSA obligations.

If an employee does not earn enough in nondiscretionary bonus or incentive payments in a given year (52-week period) to retain his or her exempt status, the Department permits the employer to make a “catch-up” payment within one pay period of the end of the 52-week period. This payment may be up to 10 percent of the total standard salary level for the preceding 52-week period. Any such catch-up payment will count only toward the prior year’s salary amount and not toward the salary amount in the year in which it is paid

Employer Actions Required

Employers paying or planning to any employee on a salaried basis in reliance upon the employer’s treatment of that employee as covered by the White Collar Exemption or HCE Exemption to the FLSA minimum wage and overtime rules should evaluate whether that employee continues to qualify for coverage under the applicable exemption taking into account the modifications implemented by the final rule. By December 31, 2020, employers of any employee currently classified and paid on a salaried basis in reliance upon the White Collar or HCE Exemptions will need to:

Confirm whether the employee earns sufficient compensation to qualify for continued coverage by the applicable exemption taking into account the changes implemented by the final rule;
For employees disqualified for continued classification as exempt due to the increase in the required salary threshold, either increase the compensation that the employer pays the employee to meet the increased threshold or reclassify as nonexempt and treat the disqualified employee as covered by the FLSA minimum wage, overtime, timekeeping and recordkeeping requirements no later than January 1, 2020; and
For any employee who will not qualify for exemption after January 1, 2020, implement necessary procedures to ensure that the applicable time and other recordkeeping, minimum wage and overtime requirements are met.

Employers anticipating that they will employ employees impacted by the changes of the final rule also generally will want to take into account these impending changes when reviewing and designing their base, incentive and other compensation and benefit practices for these employees as well as in compensation, budget, product or service bidding and contracting and other impacted business practices.

When conducting this analysis and planning employers should keep in mind that while the final rule allows employers satisfy up to 10% of the salary threshold for the White Collar Exemption with nondiscretionary bonuses and incentive payments paid to the employee, nondiscretionary bonuses and incentive payments will not count as compensation for purposes of the HCE threshold. Employers also should carefully review existing guidance to verify their understanding of what bonuses and incentive payments qualify as nondiscretionary for purposes of the WHD regulations as employers frequently underestimate and inappropriately fail to take into account bonus or other incentive compensation when calculating overtime that WHD views as nondiscretionary and therefore required to be included when calculating and paying overtime.

Additionally, employers relying upon the White Collar Exemption to treat employees as exempt from the FMLA are encouraged to reconfirm that any employee paid on a salary basis otherwise continues to fulfill all conditions required to qualify for that exemption. WHD enforcement history contains an already voluiminous and continuously growing list of employers nailed for FLSA minimum wage and overtime violations due to their reliance upon overly optimistic or otherwise inappropriate determinations regarding the applicability of the White Collar Exemption to various members of their workforces. Employers should keep in mind that employers bear the burden of proof when raising the White Collar or other exemptions as a defense to a minimum wage, overtime, recordkeeping or other FMLA violation.

Employers staffing or making use of labor or services provided by employee leasing, temporary staffing, day labor, contractors, or other contingent worker sources also are encouraged to keep in mind the growing aggressiveness by WHD and private litigants in challenging and obtaining reclassification of contingent workers as employees of the businesses receiving these services, holding the recipient of these contingent worker services liable as a joint employer or both. Given the growth in both the frequency and success of these challenges, businesses using contingent workforce workers generally should (1) realistically reevaluate their potential exposure to minimum wage and overtime liability from services received from contingent workers; and (2) pursue opportunities to mitigate these exposures by reconfiguring these relationships, contracting for assurances and access to documentation necessary to prove that the contingent workforce provider properly classifies and pays minimum wage and overtime and maintains time and other records, and ensuring that the business can access records that it likely would need to investigate and defend itself against potential FLSA liability claims that the WHD or a private litigant might assert against it with regard to services performed by contingent workers.

Need more information about this article or have questions about your company’s responsibilities under the FLSA or other wage and hour, leave or other workforce, compensation or employee benefit concerns? You can contact the author of this update, Cynthia Marcotte Stamer, by e-mail here or telephone her at (214) 452.8297.

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 Labor and Employment Law and Health 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, and a Fellow in the American College of Employee Benefit Counsel, 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 public speaker widely known for 30+ years of management focused employment, compensation and employee benefits and other workforce and performance management, public policy leadership and advocacy, coaching, teachings, and publications.

Highly valued for using her detailed legal and operational knowledge and experience to help clients find and implement pragmatic strategies and solutions, Ms. Stamer’s clients include health industry, employee benefit, insurance and financial services and a diverse array of other 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; manage labor-management relations, comply with requirements, investigate and respond to government, accreditation and quality organizations, regulatory and contractual audits, private litigation and other federal and state reviews, investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; prepare and present training and discipline; handle workforce and related change management associated with mergers, acquisitions, reductions in force, re-engineering, and other change management; and a host of other workforce related concerns on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as ongoing engagements on 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.

Current ABA Intellectual Property Section Law Practice Management Committee Chair; ABA International Section Life Sciences & Health Committee Vice Chair; ABA RPTE Section Employee Benefits & Other Compensation Group Past Group Chair and a current or past Chair of various of its committees, ABA Health Law Managed Care & Insurance Interest Group Past Chair and , a Fellow in the American Bar Foundation and the Texas Bar Foundation and the author of a multitude of highly regarded publications on wage and hour and other labor and employment, compensation and benefits, performance management and other related concerns, Ms. Stamer also is widely recognized for her extensive authorship, work and leadership on leading edge employment, health care, employee benefits and other compensation, benefits, health and safety, insurance and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.

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.™

PBGC Clarifies Multiemployer Plan Merger & Transfer Guidance

PBGC Simplifies Coverage Determination Process

Government Contractors Must Update NLRB Posters

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Relationships Matter

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

NOTICE: Copyright to the article set forth above is retained by Cynthia Marcotte Stamer, who has granted Solutions Law Press, Inc. a limited nonexclusive license to republish this work but otherwise retains the copyright to this work and content. These and other intellectual property rights are protected by federal and state law against unauthorized use or republication. For information about republication or other use, contact the author..

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.

[1] A 2016 final rule to change the overtime thresholds was enjoined by the U.S. District Court for the Eastern District of Texas on November 22, 2016, and was subsequently invalidated by that court. As of November 6, 2017, the U.S. Court of Appeals for the Fifth Circuit has held the appeal in abeyance pending further rulemaking regarding a revised salary threshold. As the 2016 final rule was invalidated, the Department has consistently enforced the 2004 level throughout the last 15 years.

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Posted by Cynthia Marcotte Stamer

Government Contractors Must Update NLRB Posters

May 29, 2019

Federal contractors and subcontractors must update the National Labor Relations Act rights notice that Executive Order 13496, “Notification of Employee Rights Under Federal Labor Law.” requires be displayed.

The U.S. Department of Labor updated the poster to reflect a new telephone number for the National Labor Relations Board (NLRB), the agency responsible for enforcing the NLRA, as well as contact information for individuals who are deaf or hard of hearing. No other changes or updates were made at this time.

Federal contractors and subcontractors can obtain the updated poster at no cost by downloading it from the Department’s Office of Labor-Management Standards (OLMS) website at https://www.dol.gov/olms/regs/compliance/EO13496.htm.

We hope this update is helpful. We also invite you to share your own best practices ideas and resources and join the discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our Solutions Law Press HR & Benefits Update Group or COPE: Coalition On Patient Empowerment Groupon LinkedIn or Project COPE: Coalition on Patient Empowerment Facebook Page.

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.

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.

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.™

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.

Comments Off on Government Contractors Must Update NLRB Posters | compliance, Construction, Corporate Compliance, Employers, Employment, Employment Policies, government employer, HR, Human Resources, Labor Management Relations, Management, OFCCP, Uncategorized, Union | Permalink
Posted by Cynthia Marcotte Stamer

Health Plans Should Prepare For Plan Fallout Of HHS Rule Requiring Manufacturers Disclose Drug Prices

May 9, 2019

On Wednesday, May 8, 2019, Health and Human Services(“HHS”) Secretary Alex Azar announced the adoption of a Medicare and Medicaid Programs; Regulation to Require Drug Pricing Transparency Final Rule (the “Rule”) by the Centers for Medicare & Medicaid Services (“CMS”) requiring direct-to-consumer television advertisements for prescription pharmaceuticals covered by Medicare or Medicaid to include the list price – the Wholesale Acquisition Cost – if that price is equal to or greater than $35 for a month’s supply or the usual course of therapy.

Part of President Trump’s American Patients First blueprint, the 102 page Rule seeks to increase transparency for patients and bring down overall drug costs both for patients and for the Medicare and Medicaid programs.

Effective 60 days after its official publication in the Federal Register on May 10, 2019, the Rule will require direct-to-consumer television advertisements for prescription drug and biological products covered by Medicare or Medicaid to include the list price – the Wholesale Acquisition Cost – if that price is equal to or greater than $35 for a month’s supply or the usual course of therapy, with the prices updated quarterly.

According to CMS, the 10 most commonly advertised drugs have list prices ranging from $488 to $16,938 per month or usual course of therapy. CMS believes patients should know what a drug costs as they discuss their options with their doctor.

While pharmaceutical drug manufactures generally must obtain approval from the FDA Office of Prescription Drug Promotion (ODPD) for advertising, OPDP does not review price information in prescription drug advertisements. Consequently, HHS says ODPD will not require a manufacturer that simply adds price information to a direct-to-consumer advertisement as required by § 403.1202 of the Rule unless the price information explicitly or implicitly incorporates safety or efficacy information about the drug, or makes express or implied claims about the safety or efficacy of the drug.

In addition to the Rule, HHS continues to review a number of other rules and proposals it hopes to further advance the American Patients First blueprint initiative to improve drug price transparency and inform consumer decision making by fixing opaque systems, changing incentives that drive costs or other undesirable behaviors by pharmaceutical companies, prescription benefit management (“PBM”) companies, health insurers and plans, providers and patients.

Health plan, their employer and other sponsors, insurers, PBM and other vendors and others should anticipate that the new Rule and other elements and initiatives of the Trump Administration American Patients First blueprint will impact plan design and administration both by directly impacting PBM and pharmaceutical costs, products, formularies and arrives and by fueling a host of new discussions by patients and their providers about pharmaceutical drug selection. In addition to impacting existing plan features and their administration, health plans, their fiduciaries, administrators and insurers should prepare for a predictable surge in scrutiny by plan

members about health plan prescription drug formularies that in many cases will fuel new appeals and challenges to the plan denials, formularies and other impacted features. Health plan fiduciaries, administrators, PBMs and other vendors, employer and other sponsors should anticipate and begin preparing both to handle these new health plan demands and ideally, to educate patients and their caregivers to use the new information to

make better health care choices.

If you have questions or would like more information about the new Rule or other developments impacting your health plan design or administration, please contact the author directly.

If you found this article of interest, Solutions Law Press, Inc. invites you to check out other Solutions Law Press, Inc. publications. We also invite you to share your own best practices ideas and resources and join the discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our Solutions Law Press HR & Benefits Update Group or COPE: Coalition On Patient Empowerment Groupon LinkedIn or Project COPE: Coalition on Patient Empowerment Facebook Page.

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.

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.

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.™

Health Plans Should Prepare For Plan Fallout Of HHS Rule Requiring Manufacturers Disclose Drug Prices

Congress Moves To Enact Federal Paid Leave Rules

$3 Million OCR Touchstone Settlement Warns Health Plans of Perils of HIPAA Violations

Employer Faces 5 Years Imprisonment For Not Paying Employment & Income Tax Withholding To IRS

Health Plans Must Share PHI To Apps When Members Request, Responsible For Security On Plan-Sponsored Apps

NLRA Not Violated By Employers Termination of Union Dues Withholding In Response To Wisconsin Right To Work Law

Tell Employees, Plan Members About April 27 National Prescription Drug Take Back Day

Proposed FLSA Joint Employer Rule Would Reduce Business’ Joint Employer Wage & Hour Liability

Proposed FLSA Base Pay Rule Clarifies Overtime Treatment Of Perks

Federal Veterans Hiring Benchmark Resets 3/31 To 5.9%; Prepare For Audits & Other Enforcement

Consider Employee Recess In Your Employee Wellness Programs

Use 3/26 Diabetes Alert Day Resources To Jumpstart Your Diabetes Management & Cost Containment Efforts

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

Employee Transportation Deduction Rules Changed

2019 Mileage Rates Adjusted; Employee Unreimbursed Mileage & Relocation Mileage Deductions Unavailable In 2018 and 2019

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.

Comments Off on Health Plans Should Prepare For Plan Fallout Of HHS Rule Requiring Manufacturers Disclose Drug Prices | Claims, Claims Administration, compliance, Consumer Protection, Corporate Compliance, Drug & Alcohol, drug pricing, EBSA, Education, employee, Employee Benefits, Employer, Employers, ERISA, Fiduciary Responsibility, health benefit, Health Benefits, health Care, health care transparency, health insurance, health plan, Health Plans, HR, Human Resources, Insurance, insurers, Leadership, Managed Care, Management, Medicare Part D, Patient Empowerment, pbms, Physician, PPO, Prescription Drugs, prescription drugs, Reporting & Disclosure, third party administrators | Tagged: blueprint, Health Care, Health Plans, pbm, Prescription Drugs, transparency | Permalink
Posted by Cynthia Marcotte Stamer

Congress Moves To Enact Federal Paid Leave Rules

May 8, 2019

U.S. employers should start giving clear feedback to Congress about proposals to impose new federal paid family leave requirements on U.S. employers likely to move quickly through Congress given strong bipartisan Congressional and Presidential support. The push for enactment of federal paid leave legislation comes amid the enactment of a patchwork of state and local state paid leave laws over the past decade.

Strong bi-partisan Congressional support for expanded federal support for paid family leave was evident from statements and testimony at the House Ways and Means Committee Full Committee Hearing on Paid Family and Medical Leave: Helping Workers and Employers Succeed this morning.

In fact, Republican Representative Tom Brady, the Ranking Minority Member of the Committee, stated in his opening statement at the start of the hearing, “Today the question isn’t whether to expand paid family leave, but how best to achieve it.”

With the majority of Congress supporting federal legislation to expand the availability of paid family leave, U.S. employers should make sure to communicate their preferences about the “how” to Congress whole time remains to influence those decisions.

While both parties and the President Trump support expanded federal support for paid leave, the two Parties differ widely about the how federal legislation should promote paid family leave.

Republicans generally are urging the extension and support the “carrot” incentive approach they began in the last Congress when they led the enactment of The Paid Family and Medical Leave Tax Credit, doubling of the Child Tax Credit to its largest amount in history, increase of the Child Tac Credit refundability, and expansion of its availability to 8 million more families as part of the Tax Cuts and Jobs Act. The new paid leave credit reimburses qualifying businesses up to 25 percent of the cost of providing paid leave to their workers. In this first-ever pilot program, businesses can get help for offering up to 12 weeks of paid leave. Republicans now support continuation and possible expansion of these incentives.

In contrast, Democrats advocate Congress using a “stick” approach by mandating that employers provide paid family leave or government sponsored programs through a plethora of proposals including, for instance instance:

S. 840, the Healthy Families Act and H.R. 1784, the Healthy Families Act would require covered employees of 15 or more employees to provide 1 hour of paid sick leave for care of self or a family member for every 30 hours an employee works that employees could carryover to subsequent years if not used with substantial penalties imposed employers; and

H.R. 1185: FAMILY Act introduced by Democrat Representative Rosa DeLauro with 185 co-sponsors would establish government sponsored accounts to provide paid family leave.

In his comments this morning, Representative Brady noted the need to tailor paid mandates to account for differences in employer needs, stating: “As we work to expand access to paid medical leave, there are real concerns that a new one-size-fits-all Washington mandate limits family flexibility, could be extremely costly, and will lead to higher taxes on workers, reduced job benefits, or harmful cuts in education, Social Security, or Medicare to pay for the new mandate.

in addition, before the hearing the highest ranking Republicans on the Subcommittees for Select Revenue Measures, Worker and Family Support, and Social Security respectively, Representatives Kevin Brady, Adrian Smith, Jackie Walorski, and Tom Reed, sent a letter to Ways and Means Chairman Richard Neal (D-MA), urging the emphasis of incentives over “one size, fits all mandates.”

With both parties pushing to enact their preferred paid family leave approach, employers concerned about the cost and other challenges of a federal paid family leave mandate should review and provide feedback to key Congressional committees and members as soon as possible.

If you want addition information or assistance in reviewing or responding to these proposals, please contact the author directly.

We also invite you to share your own best practices ideas and resources and join the discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our Solutions Law Press HR & Benefits Update Group or COPE: Coalition On Patient Empowerment Groupon LinkedIn or Project COPE: Coalition on Patient Empowerment Facebook Page.

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.

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.

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.™

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.

Comments Off on Congress Moves To Enact Federal Paid Leave Rules | compliance, Corporate Compliance, Disability Plans, Employee Benefits, Employee Handbook, Employer, Employers, Employment, Employment Discrimination, Family Leave, Fringe Benefit, Fringe Benefits, Uncategorized | Permalink
Posted by Cynthia Marcotte Stamer

$3 Million OCR Touchstone Settlement Warns Health Plans of Perils of HIPAA Violations

May 6, 2019

Health plans, their sponsoring employers and unions, insurers, fiduciaries, administrators, insurers and other service providers should learn from the $3 million lesson a Franklin, Tennessee-based diagnostic medical imaging services provider is learning about the heavy penalties a health plan, health care provider, health care clearinghouse or business associate (“Covered Entity”) risks if a post-data breach investigation by the U.S. Department of Health and Human Services (“HHS”) Office for Civil Rights (“OCR”) shows the Covered Entity breached the privacy, data security, business associate agreement and breach notificataion rules of the Health Insurance Portability and Accountability Act (HIPAA) Security and Breach Notification Rules before or after the breach.

Under a new OCR Resolution Agreement and Corrective Action Plan announced May 6, 2019, Touchstone Medical Imaging (“Touchstone”) must pay $3,000,000 to OCR and adopt a corrective action plan to settle OCR charges it violated HIPAA arising from an OCR investigation of Touchstone’s handling of a 2014 breach. Around May 9, 2014, the Federal Bureau of Investigation (“FBI”) and OCR notified Touchstone that one of its FTP servers allowed uncontrolled access to PHI that allowed search engines to index the PHI of more than 300,000 of Touchstone’s patients, which remained visible on the Internet even after the server was taken offline. While Touchstone initially claimed that no patient PHI was exposed, in the course of OCR’s investigation, Touchstone subsequently admitted PHI of more than 300,000 patients was exposed including, names, birth dates, social security numbers, and addresses. As a result of its delayed acknowledgement of the occurrence of the breach on May 9, 2014, Touchstone did not provide notice of the breach until October, 2014, months after OCR and FBI notified it of the breach. See here.

OCR’s investigation found Touchstone breached HIPAA before and after the breach. OCR’s investigation found before the breach, Touchstone failed to conduct an accurate and thorough risk analysis of potential risks and vulnerabilities to the confidentiality, integrity, and availability of all of its electronic PHI (ePHI), and failed to have business associate agreements in place with its vendors, including their IT support vendor and a third-party data center provider as required by HIPAA. OCR also found Touchstone did not thoroughly investigate the security incident until several months after notice of the breach from both the FBI and OCR. Consequently, Touchstone’s notification to individuals affected by the breach also was untimely.

To resolve OCR charges arising from these events, Touchstone agreed to pay OCR $3,000,000. In addition to the monetary settlement, Touchstone will undertake a robust corrective action plan that includes the adoption of business associate agreements, completion of an enterprise-wide risk analysis, and comprehensive policies and procedures to comply with the HIPAA Rules.

The Resolution Agreement illustrates the expensive price Covered Entities risk from failing to conduct risk assessments, obtain business associate agreements and fulfill other HIPAA requirements before a breach, then failing to promptly investigate, provide notification and redress a breach when discovered. Covered Entities should learn from the painful lesson learned by Touchstone by reconfirming the adequacy of their current HIPAA compliance and using care to timely and adequately investigate and provide notification if and when a breach occurs.

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 health industry, health and other 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; 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 encompassess 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 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 compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. 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; a 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.™

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.

Comments Off on $3 Million OCR Touchstone Settlement Warns Health Plans of Perils of HIPAA Violations | Association Health Plan, board of directors, Cafeteria Plans, CHIP, church plan, Civil Monetary Penalties, Claims, compliance, Corporate Compliance, Cybercrime, Data Breach, Data Security, employee, Employee Benefits, Employer, Employers, health benefit, Health Benefits, health Care, health insurance, health insurance marketplace, Health IT, health plan, Health Plans, HIPAA, HIPAA, HR, HSA, Human Resources, Identity Theft, Insurance, insurers, Internal Investigations, Managed Care, Management, Medicare Part D, MEWA, multiple employer plan (Meps), Patient Empowerment, Prescription Drugs, preventive care, Risk Management, Uncategorized | Tagged: Health Plans, HIPAA, OCR, Privacy, Resolution agreement | Permalink
Posted by Cynthia Marcotte Stamer

Employer Faces 5 Years Imprisonment For Not Paying Employment & Income Tax Withholding To IRS

May 1, 2019

The owner of a Greenville, Ohio, glass company faces sentencing to up to five years in prison and a $250,000 fine in addition to paying $500,000 plus in restitution to the Internal Revenue Service (“IRS”) after she plead guilty to failing to truthfully account for and pay employment taxes. The guilty plea of 64- year old Gail Cooper announced by Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division is one of a multitude of criminal tax convictions the Justice Department already has obtained in 2019.

Cooper was the sole owner of Greenville Architectural Glass LLC (GAG) during the years 2007 through 2015. GAG primarily installed glass in commercial and residential buildings for clients in Ohio. GAG paid wages to its employees during the years 2013 through 2015. As the person responsible for GAG’s finances, Cooper was required to withhold federal income taxes and Social Security and Medicare taxes from employees’ wages and pay those amounts to the Internal Revenue Service (IRS). Cooper was also required to file quarterly employment tax returns with the IRS. Although Cooper caused GAG to withhold taxes from employees’ wages, she neither paid those amounts over to the IRS, nor filed the required quarterly returns for the first quarter of 2013 through the second quarter of 2015. Cooper also failed to pay over to the IRS unemployment taxes.

As part of her plea agreement, Cooper also admitted that she filed false individual income tax returns for the years 2008 – 2010 on which she understated GAG’s gross receipts and overstated its expenses.

Cooper also admitted in plea documents that she willfully failed to file income tax returns for the years 2011 through 2014, which would have reported her income from GAG and other sources. Cooper paid a professional tax return preparer to complete returns for those years, but Cooper never filed them.

U.S. District Judge Thomas M. Rose set sentencing for Aug. 2, 2019. Cooper faces up to five years in prison and a $250,000 fine. Cooper admitted that her conduct caused a loss to the government of more than $500,000, and agreed to pay restitution to the IRS.

This and other criminal tax convictions drive home the criminal exposures employers and their management leaders face for failing to properly withhold and pay employment taxes and employee income withholding as required by the Internal Revenue Code. Businesses and their leaders involved with businesses that have failed to properly withhold and pay income or employment tax withheld should seek advice of qualified legal counsel admitted to practice before the U.S. Tax Court and IRS for assistance understanding and taking corrective action to resolve or mitigate their potent civil or criminal liability exposure.

Solutions Law Press, Inc. hopes you enjoyed this article. We also invite you to share your own best practices ideas and resources and join the discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our Solutions Law Press HR & Benefits Update Group or COPE: Coalition On Patient Empowerment Groupon LinkedIn or Project COPE: Coalition on Patient Empowerment Facebook Page.

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.

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.

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.™

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.

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Posted by Cynthia Marcotte Stamer

Health Plans Must Share PHI To Apps When Members Request, Responsible For Security On Plan-Sponsored Apps

April 30, 2019

Health plans must deliver electronic protected health information (“ePHI”) to electronic applications or software (“apps”) used by plan members, and are responsible under the Health Insurance Portability & Accountability Act (“HIPAA”) Privacy and Security Rules for the security of electronic protected health information (“ePHI”) on apps they sponsor or provide, according to new guidance from the Department of Health & Human Services (“HHS”) Office of Civil Rights (“OCR”).

With health plans and their sponsors and insurers increasingly offering or promoting the use of apps to plan members members to access, maintain and use their health information, health plans, health care providers, health care clearinghouses and their business associates (“covered entities”) covered by HIPAA must understand and be prepared meet their HIPAA responsibilities to provide and protect ePHI to and on these apps, but may want to rethink sponsoring or providing a particular app for that purpose.

New HIPAA FAQ guidance (the “FAQs”) from OCR that addresses the implications of HIPAA on covered entities responsibility when asked to share or for ePHI shared or stored on apps or application programming interfaces (“APIs”) systems, covered entities have a legal obligation to disclose ePHI to an app when subjects of the ePHI or their personal representatives request such disclosures. However, the FAQs also state a covered entity or its business associates won’t be responsible for the security of the data shared to the app unless it sponsors or provides it.

pends upon whether the AP or API interface provider is a business associate of the covered entity versus just a third-party provider whose involvement and receipt of the PHI is requested and arranged by the subject of the PHI.

Covered Entities Obligated To Disclose ePHI to Apps Chosen By Individuals

The FAQs make crystal clear that covered entities do not have the option of refusing to share ePHI to an app when requested to do so by the subject of the ePHI or its personal representative. The FAQs states that covered entities cannot refuse to disclose ePHI to an app chosen by an individual because of concerns about how the app will use or disclose the ePHI it receives. In this regard, the FAQs state that the HIPAA Privacy Rule generally prohibits a covered entity from refusing to disclose ePHI to a third-party app designated by the individual if the ePHI is readily producible in the form and format used by the app. See 45 CFR 164.524(a)(1), (c)(2)(ii), (c)(3)(ii).According to the FAQ, the HIPAA Rules do not impose any restrictions on how an individual or the individual’s designee, such as an app, may use the health information that has been disclosed pursuant to the individual’s right of access. For instance, a covered entity is not permitted to deny an individual’s right of access to their ePHI where the individual directs the information to a third-party app because the app will share the individual’s ePHI for research or because the app does not encrypt the individual’s data when at rest.According to the FAQs, the liability a covered entity or business associate bears for sharing ePHI to an App under the HIPAA Privacy, Security, or Breach Notification Rules (HIPAA Rules) depends on the relationship between the covered entity and the app.

Breaches of Health Information Disclosed To An App

If an app that is neither a covered entity nor a business associate of the covered entity under HIPAA receives ePHI at the request of the subject or its personal representative, the FAQ states that the shared ePHI is no longer subject to the protections of the HIPAA Rules. Thus if the individual’s app – chosen by an individual to receive the individual’s requested ePHI – was not provided by or on behalf of the covered entity (and, thus, does not create, receive, transmit, or maintain ePHI on its behalf), the covered entity would not be liable under the HIPAA Rules for any subsequent use or disclosure of the requested ePHI received by the app. For example, the covered entity would have no HIPAA responsibilities or liability if such an app that the individual designated to receive their ePHI later experiences a breach. See also, See also OCR FAQ 2039, “What is the liability of a covered entity in responding to an individual’s access request to send the individual’s PHI to a third party.In contrast, however, the FAQ states that if the app was developed for, or provided by or on behalf of the covered entity – and, thus, creates, receives, maintains, or transmits ePHI on behalf of the covered entity – the covered entity could be liable under the HIPAA Rules for a subsequent impermissible disclosure because of the business associate relationship between the covered entity and the app developer. For example, if the individual selects an app that the covered health care provider uses to provide services to individuals involving ePHI, the FAQs state that the health care provider may be subject to liability under the HIPAA Rules if the app impermissibly discloses the ePHI received.

Transmission of ePHI to App Using Unsecured Method

The FAQs also address the potential exposures of covered entities and their business associates arising from the transmission of ePHI to an App using an unsecure method. According to the FAQs, the access rights HIPAA guarantees to individuals allows an individual to request that a covered entity to direct their ePHI to a third-party app in an unsecure manner or through an unsecure channel. See 45 CFR 164.524(a)(1), (c)(2)(ii), (c)(3)(ii). For instance, an individual may request that their unencrypted ePHI be transmitted to an app as a matter of convenience. The FAQ states that a covered entity that transmits ePHI through an unsecured means under such circumstances would not be responsible for unauthorized access to the individual’s ePHI while in transmission to the app. With respect to such apps, however, the FAQs also suggest that the covered entity may want to consider informing the individual of the potential risks involved the first time that the individual makes the request.

Post Transmission Exposure of Covered Entity’s EHR Systems Developer

The FAQ also discusses the potential exposure of a covered entity’s electronic health record (EHR) system developer under HIPAA after completing the transmission on behalf of a covered entity of ePHI to an app designated by the subject of the ePHI. According to the FAQs, the exposure of the HER system developer depends on the relationship, if any, between the covered entity, the EHR system developer, and the app chosen by the individual to receive the individual’s ePHI. A business associate relationship exists if an entity creates, receives, maintains, or transmits ePHI on behalf of a covered entity (directly or through another business associate) to carry out the covered functions of the covered entity. A business associate relationship exists between an EHR system developer and a covered entity. If the EHR system developer does not own the app, or if it owns the app but does not provide the app to, through, or on behalf of, the covered entity – e.g., if it creates the app and makes it available in an app store as part of a different line of business (and not as part of its business associate relationship with any covered entity) – the EHR system developer would not be liable under the HIPAA Rules for any subsequent use or disclosure of the requested ePHI received by the app.If the EHR system developer owns the app or has a business associate relationship with the app developer, and provides the app to, through or on behalf of, the covered entity (directly or through another business associate), however, the FAQs state the EHR system developer then potentially could face HIPAA liability (as a business associate of a HIPAA covered entity) for any impermissible uses and disclosures of the health information received by the app. For example, if an EHR system developer contracts with the app developer to create the app on behalf of a covered entity and the individual later identifies that app to receive ePHI, then the EHR system developer could be subject to HIPAA liability if the app impermissibly uses or discloses the ePHI received.

Covered Entity’s Duty To Enter Into Business Associate Agreement Depends Upon Relationship

Likewise, the FAQs also state that whether HIPAA requires a a covered entity or its EHR system developer to enter into a business associate agreement with an app designated by the individual in order to transmit ePHI to the app depends upon the relationship between the app developer and the covered entity and/or its EHR system developer. A business associate is a person or entity who creates, receives, maintains or transmits PHI on behalf of (or for the benefit of) a covered entity (directly or through another business associate) to carry out covered functions of the covered entity. An app’s facilitation of access to the individual’s ePHI at the individual’s request alone does not create a business associate relationship. Such facilitation may include API terms of use agreed to by the third-party app (i.e., interoperability arrangements).HIPAA does not require a covered entity or its business associate (e.g., EHR system developer) to enter into a business associate agreement with an app developer that does not create, receive, maintain, or transmit ePHI on behalf of or for the benefit of the covered entity (whether directly or through another business associate). However if the app was developed to create, receive, maintain, or transmit ePHI on behalf of the covered entity, or was provided by or on behalf of the covered entity (directly or through its EHR system developer as the covered entity’s business associate), then a business associate agreement would be required.

Health Plan & Other Covered Entity Take Aways

The new FAQ raises several action items for health plans, their sponsoring employers or unions, fiduciaries, administrators, brokers and insurers as well as other covered entities. Among other things, health plans and other covered entities must recognize and be prepared currently to provide PHI to subjects of that information on the apps of the requesting individual’s preference within the time frames dictated by HIPAA. Health plans and other covered entities need to recognize that the FAQs reflect this is a current, not future responsibility.

Second, health plans, health care providers and others that have or are considering providing apps or other tools to health plan members or patients for use in accessing or using PHI also generally need to recognize that the health plan or health care provider generally will bear responsibility under HIPAA for the adequacy of the security of the apps provided by or on behalf of the health plan or health care provider. Given the general responsibility to provide PHI to any apps designated by a subject of PHI, many health plans and health care providers may wish to reconsider whether providing or endorsing a particular app continues to make sense taking into account the HIPAA data privacy and security responsibilities and risks attendent to maintaining the security of PHI stored and accessed using those tools. Those electing to provide apps or other tools need to take steps to ensure the current and future adequacy of the data security of the app and its associated storage and other components including any future modifications to those tools.

Furthermore, health plans and other covered entities also should consider the advisability of revising existing notices and authorizations in response to the new FAQs. For instance, health plans, health care providers and others supplying PHI to an app designated by the requesting individual may want to consider revising forms to document the direction and consent of the requestor to the electronic delivery of the PHI to the designated app to better position themselves to claim the protection against liability for breaches on these subject designate apps described in the FAQs. Meanwhile, health plans or other covered entities providing apps also may wish to weigh options for supplementing disclosures to mitigate potential risks from use or failure to upgrade apps that might be viewed as covered entity provided or sponsored.

Certainly, before sponsoring or allowing a business associate to offer or provide an app or other similar solution, health care providers and other covered entities must ensure that the business associate agreement requirements of HIPAA are met from the app developer and others providing services or the app as business associates to the covered entity. Covered entities also should take steps to ensure that the interfaces between the apps and other systems are properly secured at the point of implementation and during any subsequent upgrades keeping in mind that OCR guidance expects covered entities to reconfirm security for any system, software or app upgrades. Meeting this expectation for apps within the possession of patients or plan members can present special challenges requiring careful planning.

Have questions about the new FAQs or other health care regulatory developments or their implications on your organization, contact the author. You also are invited to stay abreast of these and other health care developments by participating in our Solutions Law Press, Inc. Linkedin HR & Benefits Update LinkedIn Group or COPE: Coalition On Patient Empowerment Group or Project COPE: Coalition on Patient Empowerment Facebook Page.

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 health industry, health and other 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; 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 encompassess 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.

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.™

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.

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Posted by Cynthia Marcotte Stamer

NLRA Not Violated By Employers Termination of Union Dues Withholding In Response To Wisconsin Right To Work Law

April 29, 2019

A Wisconsin employer did not violate the National Labor Relations Act (“NLRA”) by ceasing to deduct union dues from employees’ paychecks for remittance to their certified union in response to Wisconsin’s enactment of a right-to-work law that curtailed dues checkoff, or communicating with employees about this action according the National Labor Relations Board ruling in Metalcraft of Mayville, Inc. (April 17, 2019).

In Metalcraft of Mayville, Inc., a Board Majority made up of Board Chairman John Ring and Board member William Emmanuel ruled found that the Wisconsin based employer Metalcraft of Mayville, Inc. (“Metalcraft”) lawfully discontinued dues checkoff following the effective date of a Wisconsin right to work law that included provisions addressing permissible dues checkoff arrangements because the employer reasonably believed that its employees’ dues-checkoff authorizations did not conform to Wisconsin’s recently enacted right-to-work law. The Board Majority also found that communications that Metalcraft sent directly to workers about its cessation of dues deductions did not violate the NLRA.

The Metalcraft of Maryville, Inc. decision arose from a complaint filed against Metalcraft, a fabricator of metal and manufacturer of lawn maintenance equipment by the union certified to represent the assemblers, maintenance employees, and welders at the Metalcraft plant located in Mayville, Wisconsin.

On March 9, 2015, the Wisconsin legislature enacted a right to work law that among other things provided that “[n]o person may require, as a condition of obtaining or continuing employment, an individual to . . . [b]ecome or remain a member of a labor organization [or p]ay any dues, fees, assessments, or other charges or expenses of any kind or amount, or provide anything of value to a labor organization.” Wis. Stat. Sec. 111.04(3)(a). The Wisconsin law also provided that contract provisions that violated its dues checkoff prohibitions were void, Wis. Stat. Sec. 111.04(3)(b) and that any person violating Section 111.04(3)(a) would be guilty of a Class A misdemeanor and subject to a fine of up to $10,000 or imprisonment up to 9 months, or both. Wis. Stat. Sec. 939.51, 947.20. Additionally, the Wisconsin law prohibits dues-checkoff authorizations unless they are revocable by the employee upon 30 days’ notice. Id. Sec. 111.06(l)(i).

The Wisconsin right-to-work law first applied to the parties’ collective bargaining agreement when it renewed on June 5, 2016. See 2015 Wis. Act. 1 Sec. 13. When the law took effect, the existing collective bargaining agreement included a number of union-security and dues-checkoff provisions including a provision that required Metalcraft to deduct union dues from the employee’s “first payroll check in each month” pursuant to authorizations signed by employees before the new right to work law took effect and to remit those dues to the Union by the 15th of the month.

On June 2, 2016, the Union sent the Metalcraft a letter, acknowledging the law’s applicability to the parties’ agreement and stating the Union’s position that, “[a]s dues check-off is governed by federal law, that issue need not be addressed. Your employees have the right to opt out of the Union during the 15 day window period listed on their dues check-off authorization.” However the union apparently did not make any effort to communicate this new option to its members at the plant.

On June 3, Metalcraft notified the Union that it believed the dues check requirement and checkoff authorization form did not comply with the right-to-work law and that it would no longer enforce them after June 4. Thereafter, Metalcraft did not deduct or remit union dues in June, July, August, or September 4.

In connection with its cession to deduct union dues, Metalcraft also sent employees represented by the union various correspondence about its decision to cease deducting union dues from their pay. In a June 4 letter to employees, Metalcraft among other things, told these employees:

… [A]fter June 4, the law prohibits requiring employees to pay Union dues. To do so would be a Class A Misdemeanor or a crime under Wisconsin law. If you want to pay Union dues, it is now your decision and it’s entirely voluntary. . . . . Currently you pay $59.30 per month or $711.60 per year in Union dues. All together our employees’ payments of Union dues are about $255,000 per year. Based on the signed authorization for Union dues, we believe it is a violation of the Right-to-Work law. Therefore, effective after June 4, we will no longer deduct the $59.30 from your paycheck per month.

On June 7, Metalcraft sent union employees another letter containing several questions and answers, including the following:

Q: Look at the yearly total we pay the union, where is all that money going?

A: Much of the information about the distribution of union dues is publicly accessible. For example you can Google IAM and find answers to your questions directly from the source or other sources if you want to find out more.

Q: Why should I pay them anything after they screwed up the contract negotiations?

A: This is a personal choice that every individual has to decide on their own and how they will handle their money.

Q: Do I have to sign a new authorization card? The union has not shown me anything.

A: This is a personal choice that every individual has to decide on their own of whether they will continue to be a paying member of the union or not.

On June 24, Metalcraft sent a letter to the Union indicating that it would resume deducting and remitting dues if the Union submitted new, legally compliant checkoff authorizations signed by employees after June 5.

On June 27, Metalcraft sent employees another letter with more questions and answers, including these:

Q: Other people had told me that I should pay union dues myself with a direct deduction from my checking account. Should I do that?

A: Whether to pay union dues, and whether to give the union access to your checking account is up to each individual to decide. Such a decision is voluntary and it is your choice. The Company has been as clear as possible with the Union that we acknowledge that we have a legal obligation to collect Union dues from employees as soon as the union presents signed dues checkoff authorization forms that comply with the state law requirement that such decisions are voluntary. The Company intends to honor and follow Article 25 of the contract. The Company does not wish to break the law by collecting dues under the current authorization forms that were signed by employees prior to June 5, 2016 when they were told that such a payment was a condition of employment. The Company will not break the law. ….

Q: Do I have to pay union dues and sign a new authorization form to check-off dues to work at Metalcraft? A: No. The Law in Wisconsin changed and after June 4, 2016, the mandatory payment of union dues is illegal and you cannot be forced to pay union dues.

The Union wants you to pay $59.30 per month. You do not have to pay union dues to work at Metalcraft; that’s $711.60 per year or .34 cents for each hour you work.
The decision is yours and it’s purely voluntary!
You do not have to sign a new authorization card; it is your decision and it is purely voluntary.
By the IAM giving you a new authorization form, the union now recognizes that the old forms were signed when dues were required and mandatory. That’s changed!

On October 3, the Union gave the Respondent new “Membership Application and/or Check-Off Authorization” forms signed by employees. The first page of the new form was identical to that of the old form. However, the new forms in the record do not contain the Notice that was printed on the old forms. The Respondent promptly resumed deducting and remitting dues for employees who signed authorizations after June 4.

Based on this evidence, the Board Majority ruled that Metalcraft did not unlawfully modify the collective bargaining agreement when it stopped honoring dues-checkoff authorizations because it reasonably believed the dues-checkoff authorizations did not conform to applicable law.

The Board Majority explained that the Board ordinarily will not find a midterm contract modification if the respondent establishes that it had a sound arguable basis for its belief that the contract authorized its action. See Bath Iron Works Corp., 345 NLRB 499, 502 (2005), affd. sub nom. Bath Marine Draftsmen’s 5 156 NLRB 411 (1965), enfd. 376 F.2d 52 (2d Cir. 1967), cert. denied 389 U.S. 843 (1967). Assn. v. NLRB, 475 F.3d 14 (1st Cir. 2007). Where the dispute is solely one of contract interpretation and there is no evidence of animus, bad faith, or intent to undermine the union, the Board does not seek to determine which of two equally plausible contract interpretations is correct. Phelps Dodge Magnet Wire Corp., 346 NLRB 949, 951 (2006); NCR Corp., 271 NLRB 1212, 1213 (1984). Applying these positions to the evidence, the Board Majority took note that the Wisconsin statute expressly voided checkoff provisions inconsistent with its provisions and the collective bargaining agreement expressly provided that dues checkoff would be administered in accordance with applicable law. Accordingly, the Board Majority ruled that Metalcraft did not violate the NLRA by ceasing to withhold and transmit the dues because it had a “sound, arguable basis” for interpreting the parties’ agreement as not requiring the continuation of dues checkoff under those circumstances.

The Board Majority also ruled that Metalcraft’s communications to employees regarding its cessation to withhold dues from paychecks also were lawful and did not constitute direct dealing in violation of its duty to bargain with the Union.

An employer engages in direct dealing in violation of Section 8(a)(5) where:

The employer communicates directly with union-represented employees,
For the purpose of establishing or changing wages, hours, and terms and conditions of employment or undercutting the union’s role in bargaining, and
Such communication was made to the exclusion of the union.

See Southern California Gas Co., 316 NLRB 979 (1995).

While the Board Majority found the first and third elements met, it ruled that the employer was not seeking to establish or change a term or condition of employment or undercut the Union’s role in bargaining when making the communication but rather reminding employees that they now had the option not to authorize the dues checkoff. The Board Majority also concluded that since the communication related to a change in law the Board Majority construed as incorporated by reference into the collective bargaining agreement, the Board also concluded that Metalcraft had no duty to bargain with the Union over the validity of the authorizations before ceasing to honor them. Accordingly, the Board Majority concluded that Metalcraft did not unlawfully bypass the Union in communicating its decision to employees directly.

Based on these findings, the Board Majority overruled and reversed the prior Administrative Law Judge finding that the employer had illegally modified its collective bargaining agreement with the union by failing to deduct and remit dues to the Union from June to September 2016 in violation of Section 8(a)(5) and (1) of the NLRA and that the employer’s related communications to employees constituted direct dealing with employees prohibited by NLRA §§ 8(a)(5) and (1) that undermined the Union in violation of NLRA § 8(a)(1), its cessation of dues checkoff was lawful.

While the current Board Majority ruled Metalcraft’s cessation to withhold dues and direct communications with employees covered by the collective bargaining agreement in response to Wisconsin’s enactment of the right to work law restricting dues checkoffs did not violate the NLRA, employers should take note that the lone remaining democratic appointee on the Board, Board Member Lauren McFerran disagreed with the ruling of the Board Majority. In her dissenting opinion, Board Member McFerran argued among other things that the Taft-Hartley Act totally preempted the Wisconsin law’s dues checkoff provisions. She also argued that Metalcraft’s cessation to withhold dues and communications with employees directly inherently were in opposition to the union and conducted in bad faith and without adequate communication to the union. As a result, she proposed that the Board issue an order finding that Metalcraft’s cessation to withhold dues and direct communication with workers both violated the NLRA which would have compelled Metalcraft to take various corrective actions as set forth in her dissenting opinions. Employers should keep in mind that the views expressed in this dissenting opinions likely would become the majority view if and when the political make up of the Board is changed in the future by the appointment of a future board member during a Democratic Presidency. As a result, while enjoying the current more employer friendly attitude of the existing NLRB, employers dealing with collective bargaining concerns should continue to exercise care when handling these and other union-management relations matters.

Solutions Law Press, Inc. hopes you found this update of interest and nvites you to share your thoughts and ideas and join the discussion about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our HR & Benefits Updates Group on LinkedIn.

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 labor-management relations and other employment, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

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.

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.™

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.

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Posted by Cynthia Marcotte Stamer

Tell Employees, Plan Members About April 27 National Prescription Drug Take Back Day

April 11, 2019

Employers and their health plans should encourage employees, health plan members and their families to dispose of outdated and unused medications cost effectively on the upcoming National Prescription Drug Take Back Day on April 27, 2019.

Led by the Drug Enforcement Administration (DEA), for several years, the National Prescription Drug Take Back Day celebrations provide U.S. families an opportunity to safety dispose of unused or expired prescription pain and other medications cost effectively by dropping them off at one of 4,000 collection sites.

Expired and unused medications present a host of safety risks.

Educating employees, plan members and their family about the importance of properly disposing of unused and expired medication is important. Medications generally only should be used by the patient for whom they are prescribed and within the period before their scheduled expiration. Keeping unused or expired medication creates a host of risks for patients and others in their families and communities. Unneeded or unused painkillers, attention and anxiety medications and other prescriptions often are diverted to recreational or other use by patients other than the individual for whom they were prescribed.

Risk also can arise when a patient prescribed a medication consumes it after its originally intended consumption period. Pain, anxiety or other prescription medications used after their originally intended period of use may create safety issue due to interactions with conditions or medications not contemplated when originally ordered, may be used with good intentions for the wrong purposes, or even used by patients in an unsafe or abusive manner. Patients may delay or undermine their recovery from a new condition by self-treating a new condition by taking previously physician prescribed antibiotics or other medications ineffective or contraindicated for the new condition the patient seeks to treat.

Expired medications also create risks from loss of potency or other instability that can occur after their expiration date. As a consequence, disposing of extra or expired medication is an important part of safe medication management.

On the other hand, disposing of unused or outdated medication can be challenging. Throwing medication in unsecured trash disposal creates risks of improper access, contamination of water and other environment or both. Washing unused medications down the drain or flushing them down toilets also creates contamination concerns. However, finding a no or low-cost place to dispose of unneeded or expired medication historically has been challenging. While many pharmacies offer disposal packages, chargers to use these services generally are expensive.

National Prescription Drug Take Back Day helps educate Americans about the need for timely proper medication disposal and management while also providing a cost effective means for disposing of unused medications safely. Individuals can drop off unneeded prescription drugs at one of the 4,000 collection sites identifiable using the Site Collection Locator.

Health plans, employers, health care providers, churches, schools, parent teacher associations and other community organizations are encouraged to help spread the word and encourage participation in the April 27 observances using the free promotional materials or other related resources included in the National Prescription Drug Take Back Day Toolbox.

Tips and tools for medication management are just some of the tools and training included in the Family Health Care Toolkit Resources and Program authored by Ms. Stamer. Want to learn more? Know other challenges, issues or resources? Solutions Law Press invites you to join the discussion and learn and share more about health, disability and aging challenges, needs, resources and victories on Facebook @projectcopecoation and/or in the Project Cope LinkedIn Group. Learn and discuss about Human Resources and employee benefit practices and requirements by joining the discussion in our HR & Benefits Compliance Group.

About The Author

Recognized by LexisNexis® Martindale-Hubbell® as a “AV-Preeminent” (Top 1%/ the highest) and “Top Rated Lawyer,” with special recognition 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 “Health Care,” “Labor & Employment,” “Tax: Erisa & Employee Benefits” and “Business and Commercial Law” by D Magazine, the author of this update is widely known for her 29 plus years’ of work in health care, health benefit, health policy and regulatory affairs and other health industry concerns as a practicing attorney and management consultant, thought leader, author, public policy advocate and lecturer.

Throughout her adult life and nearly 30-year legal career, Ms. Stamer’s legal, management and governmental affairs work has focused on helping health industry, health benefit and other organizations and their management use the law, performance and risk management tools and process to manage people, performance, quality, compliance, operations and risk. 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 supports these organizations and their leaders on both a real-time, “on demand” basis as well as outsourced operations or special counsel on an interim, special project, or ongoing basis with strategic planning and product and services development and innovation; workforce and operations management, crisis preparedness and response as well as to prevent, stabilize and cleanup legal and operational crises large and small that arise in the course of operations.

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 also has extensive health care reimbursement and insurance experience advising and defending health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and 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. Heavily involved in health care and health information technology, data and related process and systems development, policy and operations innovation and a Scribe for ABA JCEB annual agency meeting with OCR for many years who has authored numerous highly-regarded works and training programs on HIPAA and other data security, privacy and use, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues including meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and many other concerns.

A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy and governmental and regulatory affairs experience, Ms. Stamer also is widely recognized for regulatory and policy work, advocacy and outreach on healthcare, education, aging, disability, savings and retirement, workforce, ethics, and other policies. Throughout her adult life and career, Ms. Stamer has provided thought leadership; policy and program design, statutory and regulatory development design and analysis; drafted legislation, proposed regulations and other guidance, position statements and briefs, comments and other critical policy documents; advised, assisted and represented health care providers, health plans and insurers, employers, professional. and trade associations, community and government leaders and others on health care, health, pension and retirement, workers’ compensation, Social Security and other benefit, insurance and financial services, tax, workforce, aging and disability, immigration, privacy and data security and a host of other international and domestic federal, state and local public policy and regulatory reforms through her involvement and participation in numerous client engagements, founder and Executive Director of the Coalition for Responsible Health Policy and its PROJECT COPE: the Coalition on Patient Empowerment, adviser to the National Physicians Congress for Healthcare Policy, leadership involvement with the US-Mexico Chamber of Commerce, the Texas Association of Business, the ABA JCEB, Health Law, RPTE, Tax, Labor, TIPS, International Life Sciences, and other Sections and Committees, SHRM Governmental Affairs Committee and a host of other involvements and activities. 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, 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 has worked closely with a diverse range of health care providers, managed care, insurance and other health care payers, quality assurance, credentialing, technical, research, public and private social and community organizations, foreign and US federal, state and local agencies and others on health care, aging, disability, savings and other process improvement, change management; regulatory affairs and public policy and other concerns.

Recognized for her pragmatic and insightful thoughleadership, 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 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, Insurance Thought Leadership and many other prominent publications and speaks and conducts training for a broad range of professional organizations.. Health Care Compliance Association, Atlantic Information Service, and others.

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

About Solutions Law Press, Inc.™

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

Comments Off on Tell Employees, Plan Members About April 27 National Prescription Drug Take Back Day | Consumer Protection, Drug & Alcohol, Employee Benefits, Employer, Employers, Employment, health insurance, health plan, Health Plans, Human Resources, insurers, Managment, Prescription Drugs, Uncategorized, Wellness Programs | Permalink
Posted by Cynthia Marcotte Stamer

Proposed FLSA Joint Employer Rule Would Reduce Business’ Joint Employer Wage & Hour Liability

April 1, 2019

U.S. businesses should move quickly to express strong support for the Joint Employer Status under the Fair Labor Standards Act Rule proposed by the Department of Labor today to help reduce their exposure to liability to pay overtime or other liabilities of subcontractors or other businesses under the Fair Labor Standards Act (FLSA).

The FLSA allows the Labor Department and private litigants to hold businesses jointly and severally liable with the actual employer for minimum wage or overtime back pay and penalties as joint employers when a business is a “joint employer” within the meaning of the FLSA. Many businesses have learned the hard way that they meet the definition of “joint employer” when presented with a Labor Department demand that their business pay the back pay and penalties for another business’ FLSA violations. See, e.g.,U.S. Department of Labor Recovers $3.2 Million in Back Wages, Damages, And Penalties from Portland, Oregon, Courier Servicemen.

Since the existing regulations adopted more than 58 years ago don’t expressly define “joint employment,” whether a joint appointment relationship existed mostly has been decided for a painful facts and circumstances analysis applying judicial precedent for most of the past 50 years. Traditionally the courts have applied a version of the fact intensive analysis of common control like that applied to identify joint employers for collective bargaining purposes under the National Labor Relations Act. Without any statutory or formal regulatory action, however, the Labor Department during the Obama Administration began applying a new definition of joint employment it adopted in sub-regulatory guidance without seeking public comment or following other requirements to adopt a formal regulatory change. As reinterpreted, the Labor Department began enforcing the joint employment rule to hold businesses liable based on even very limited indirect influence over wages or other employment conditions. Under these new standards, for instance, Labor Department auditors have asserted and enforced joint employment liability under the FLSA based on evidence of limited indirect influence over working conditions arising out of the alleged joint employer business operations such as restriction of schedules resulting from access to the worksite restricted by the ordinary business hours of operations of the business or the business’ requirement that the employer and its worker comply with federal government contracting requirements. The Labor Department has continued to enforce the joint employee rule using this Obama Era interpretation even after it withdrew the sub-regulatory guidance when the Administration invalidated and barred agencies from enforcing sub-regulatory guidance.

This interpretive change made it significantly more likely that a businesses could face joint employer FLSA liability for a subcontractor or other business’ minimum wage, overtime and other FLSA responsibilities. Because the finding of joint employment also results in aggregation of hours worked for the direct employer and all other joint employers, these regulations also made it significantly more likely workers would be considered entitled to overtime in contract labor, manpower and certain other situations where the primary employer’s workers worked at multiple job sites. Since the change in interpretation was adopted during the Obama Administration, the Labor Department has Use this modified joint employer interpretation to nail many unsuspecting businesses with liability for overtime due from another employer who provided services with respect to that businesses job sites Even where the worker did not work the overtime hours on that businesses job and the business had no control over deciding whether the overtime hours would be worked at all.

The Proposed Regulation would overrule the hangover Obama-Era interpretation as well as issue a new definition more consistent with judicial precedent and more friendly to business. It calls for a clear, four-factor test—based on well-established precedent—that would consider whether the potential joint employer actually exercises the power to:

hire or fire the employee;
supervise and control the employee’s work schedules or conditions of employment;
determine the employee’s rate and method of payment; and
maintain the employee’s employment records.

Since the Proposed Regulation continues to require fact specific determination, the Proposed Regulation also includes a set of examples that illustrates the application of the Proposed Regulation. While a review of the test and examples makes clear businesses still risk joint employer liability if they intertwine their operations or exercise too much control over another business’ employees, the new 4-part test would treat businesses much more fairly than the existing rules. Business is concerned about managing these risks definitely need to act to submit supportive comments during the currently running 60-day comment period. Whether the Proposed Regulation becomes final, all businesses also should evaluate their joint employer liability exposure under the FLSA and other laws from their existing business relationships. Most businesses also will want to consider tightening their existing practices to minimize the risk, regardless of which test ultimately applies going forward. Business is dealing with workers who raise a potential risk of joint employment liability also may want to tighten procedures for verification of compliance with the employers of these workers as well as explore insurance, indemnification or other contractual safeguards to mitigate the risk.

In considering the new Proposed Regulation, businesses and their leaders should keep in mind that wage and hour and worker classification issues are key liability and enforcement areas. Over the past twenty years, the rise in the use of staffing, professional employment, manpower, independent contractor and other outsourcing relationships have prompted growing enforcement and regulatory interest by both Democrat and Republic Administrations and Congress including under the FLSA and other wage and hour laws. See e.g., $1.4M FLSA Back Pay Award Demonstrates Worker Misclassification Risks. Today’s Proposed Regulation comes as key Congressional Democrats have continued to fuss about the National Labor Relations Board’s proposal last Fall of a joint employer rule substantially similar to the 4-part rule contained in the Proposed Regulation. Businesses Urged To Comment Positively On Proposed NLRB Joint Employment Rule By 12/13/18; NLRB Responds To House Democrats About Private Contractor Participation In Joint Employment Rule Comment Processing. Supporters of the Proposed Rule should prepare to ward off a backlash like the one the NLRB is experiencing to its proposed joint employer rule, even as both parties continue to support stepped up scrutiny and enforcement against overly aggressive worker classification. Employer and other business leaders also should keep in mind that the Proposed Regulation follows the the Labor Department Wage and Hour Division’s proposal last month of of an employer-friendly change to its Regular Rate Regulations and an employee friendly Salary Theshold Rule that instantly will convert more than 1 million currently salaried workers to hourly workers See, Proposed FLSA Base Pay Rule Clarifies Overtime Treatment Of Perks; Give Labor Department Feedback On Proposed $124 Per Week Increase In FLSA Salary Threshold & Other Burdensome Rules. Employers and others should submit their written comments to these proposed rules as soon as possible and within the 60-day comment period applicable to that proposed rule change.

Other Defensive Actions To Minimize FLSA Exposures

Whether or not any of these proposed rule changes takes effect, U.S. businesses will want to strengthen 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, weigh options to clean up exposure areas, review insurance coverages and consider 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 Department, 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 the Labor Department 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; and
Consider self-correction within the new PAID Program or otherwise.

If you need more information or have questions, contact the author, Cynthia Marcotte Stamer. We also invite you to share your own best practices ideas and resources and join the discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions on LinkedIn.

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 wage and hour and other employment, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Ms. Stamer has extensive experience advising and defending businesses and their management on wage and hour and other workforce, compensation and employee benefit concerns. Throughout her 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.

Author of leading works on wage and hour and 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 the matters discussed in this article, Ms. Stamer or her services, experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

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.

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

Comments Off on Proposed FLSA Joint Employer Rule Would Reduce Business’ Joint Employer Wage & Hour Liability | compensation, compliance, Corporate Compliance, Employee Benefits, Employer, Employers, Employment, Employment Policies, Excepted Benefits, Fair Labor Standards Act, Fringe Benefit, Fringe Benefits, Management, NLRA, Non-Exempt, Risk Management, Salaried, Uncategorized, Worker, Worker Classification | Tagged: Fair Labor Standards Act, FLSA, Joint Employer, Joint Employment, Minimum Wage, Overtime, salaried, Worker Classification | Permalink
Posted by Cynthia Marcotte Stamer

Proposed FLSA Base Pay Rule Clarifies Overtime Treatment Of Perks

March 28, 2019

Employers frustrated with the current Fair Labor Standards Act (“FLSA”) rules defining what forms of payment employers must count as part of an employee’s “regular rate” when calculating overtime should evaluate and consider expressing support for the Department of Labor’s proposal announced today (March 28, 2019) to update its more than 50-year old regulations implementing the regular rate requirements under section 7(e) of FLSA in 29 C.F.R. Parts 548 and 778. Officially scheduled for publication in the May 28, 2019 Federal Register, employers and other interested persons may review the unofficial text of the Notice of Proposed Rulemaking (“Proposed Rule”) released with the Labor Department’s announcement of its proposal today. The Proposed Rule also will make substantive changes to the Labor Department’s current FLSA regulations about the treatment of “call back pay” and its base pay rules.

Regular Rate For Overtime

The FLSA generally requires employers to pay non-exempt employees overtime pay of at least one and one-half times the “regular rate” of pay for all hours worked in excess of 40 hours per workweek. Regular rate requirements define what forms of payment employers include and exclude in the “time and one-half” calculation when determining workers’ overtime rates. The existing rules define the regular rate to include both the base hourly rate of pay and certain bonus and other compensation and perks. As the Trump Administration supports these proposed changes, employers should start evaluating their implications in anticipation of the Labor Department’s adoption of a Final Rule. At the same time, businesses supporting the rule or desiring refinements to its provisions also will want to submit comments to the Labor Department no later than the May 18 comment deadline.

Ambiguities in the current more than 50-year-old Labor Department regulations implementing the regular rate requirement rules discourage employers from offering more perks to their employees because of uncertainty about whether the perks are required to be included in the regular rate of pay for purposes of calculating overtime pay. In many other cases, employers that mistakenly fail to include bonuses, benefits and other perks often experience the unfortunate surprise of getting nailed with unexpected back pay and penalties obligations through Labor Department audits or private litigation.

The Proposed Rule primarily focuses on defining when employers must count bonuses, benefits, and other perks in an employee’s regular rate of pay when calculating overtime. As proposed, the Proposed Rule would confirm that employers may exclude the following from an employee’s regular rate of pay:

the cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services;
payments for unused paid leave, including paid sick leave;
reimbursed expenses, even if not incurred “solely” for the employer’s benefit;
reimbursed travel expenses that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System and that satisfy other regulatory requirements;
discretionary bonuses, by providing additional examples and clarifying that the label given a bonus does not determine whether it is discretionary;
benefit plans, including accident, unemployment, and legal services; and
tuition programs, such as reimbursement programs or repayment of educational debt.
that employers do not need a prior formal contract or agreement with the employee(s) to exclude certain overtime premiums described in sections 7(e)(5) and (6) of the FLSA; and
that employers may exclude pay for time that would not otherwise qualify as “hours worked,” including bona fide meal periods,from an employee’s regular rate unless an agreement or established practice indicates that the parties have treated the time as hours worked.

In addition, the Proposed Rule also would make two substantive changes to the existing regulations on “call-back pay” and to its “basic rate” regulations.

Call-Back Pay

The Proposed Regulation would eliminate the current restriction in Labor Regulation §§ 778.221 and 778.222 that “call-back” pay and other payments similar to call-back pay must be “infrequent and sporadic” to be excludable from an employee’s regular rate, while maintaining that such payments must not be so regular that they are essentially prearranged.

Basic Rate

The Proposed Rule also proposes an update the Labor Department’s “basic t rate” regulations.

Under the current regulations, employers using an authorized basic rate may exclude from the overtime computation any additional payment that would not increase total overtime compensation by more than $0.50 a week on average for overtime work weeks in the period for which the employer makes the payment.

The Proposed Regulation would change the current $0.50 limit to 40 percent of the federal minimum wage (currently $2.90.” The Labor Department is inviting comments on if 40 percent is an appropriate threshold in its request for comments on the Proposed Regulations.

Comment on the Proposed Rule & Other FLSA Rule Changes

Employers commenting on the Proposed Rule also should keep in mind that its publication comes on the heals of the Labor Department’s proposal of a new Proposed Salary Threshold Rule that if adopted will increase to $679 per week the minimum salary an employee must earn to qualify for coverage by the “white collar” overtime exemption. This would effectively raise the amount an employer must pay any worker it wants to treat as exempt under the white collar overtime exemption from $23,660 annually to $35,308 annually. The adoption of this proposed Salary Threshold Rule as proposed overnight will disqualify a million plus currently salaried workers to hourly employees entitled to overtime under the FLSA.

Businesses concerned about the Proposed Rule or the Proposed Salary Threshold Rule should submit their feedback as comments to the applicable proposal during the applicable comment period. May 28 is the deadline for employers and other interested persons to submit comments of support or other input on the Proposed Rule to change the regular rate determination rules.

Other Defensive Actions To Minimize FLSA Exposures

Whether or not the either of these proposed rule changes takes effect, U.S. businesses will want to strengthen 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, weigh options to clean up exposure areas, review insurance coverages and consider 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 Department, 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 the Labor Department 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; and
Consider self-correction within the new PAID Program or otherwise.

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 wage and hour and other employment, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Throughout her 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.

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

About Solutions Law Press, Inc.™

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.

Comments Off on Proposed FLSA Base Pay Rule Clarifies Overtime Treatment Of Perks | Attorney-Client Privilege, board of directors, Brokers, business travel, Child Labor, compensation, compliance, Construction, Corporate Compliance, corporate governance, employee, Employee Benefits, Employee Handbook, Employer, Employers, Employment, Employment Policies, enforcement, Executive Compensation, Exempt, Fair Labor Standards Act, FLSA, HR, Human Resources, Insurance, Internal Controls, Internal Investigations, Labor Management Relations, Management, Managment, officers, Overtime, Telecommuting, Uncategorized, Union, Workforce | Tagged: Employer, FLSA, wage, Wage & Hour | Permalink
Posted by Cynthia Marcotte Stamer

Federal Veterans Hiring Benchmark Resets 3/31 To 5.9%; Prepare For Audits & Other Enforcement

March 27, 2019

The just announced March 31, 2019 update of the the Annual Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) hiring benchmark for federal government contractors and subcontractors changes to 5.9% provides an important reminder to U.S. employers to review and tighten the compliance of their recruiting, hiring, employment, compensation and benefits, and other policies and practices to withstand growing scrutiny and enforcement risks under federal laws.

Government contractors, subcontractors and other U.S businesses should reconfirm their compliance with the new benchmark and other VEVRAA requirements for dealing with veterans in light of the Trump Administration’s continuing emphasis on enforcing it and other federal laws protecting active duty military and veteran servicemen and women. As part of these enforcement efforts the Office of Federal Contract Compliance Programs (“OFCCP”) has announced it plans to incorporate VEVRAA Focused Reviews into the Corporate Scheduling Announcement List next fiscal year.

The Department of Labor announced the new 5.9% 2019 benchmark today (March 27, 2019). At the same time, it also updated national and state information in the VEVRAA Benchmark Database for federal contractors and subcontractors who calculate an individualized hiring benchmark using the five-factor method.

With already large active duty and veteran population set to grow as the withdrawal of troops from Afghanistan and other deployments continues, the need for employers to properly honor the rights of active duty and returning service members under VEVRAA, USERRA, the expanded military related medical leave rules of the Family & Medical Leave Act and other applicable laws is more important than ever. For many businesses, active duty and veteran service members constitute valuable sources of qualified workers amid an increasingly competitive labor market. On the other hands, the special legal obligations and protections afforded these workers requires that businesses use care to meet these obligations. Failing to meet or exceed hiring benchmarks or other noncompliance with federal requirements and goals can cause federal contractors and subcontractors to incur liability for breaching federal contracts and laws. In addition, employers generally face substantial employment liability for violating VEVRRA, the Uniformed Services Employment and Reemployment Act or other applicable federal or state laws. See, e.g. Enforcement e.g., Michael Sipos and Gary Smith v. FlightSafety Services Corporation, Co. Consent Decree (April 4, 2013); Mervin Jones v. Jerome County Sheriff’s Office, ID complaint (January 7, 2013); Service Members to Receive $39 Million for Violations of the Servicemembers Civil Relief Act; Justice Department Settles Disability Discrimination Case Involving Disabled Veteran in Utah; Justice Department Reaches $12 Million Settlement to Resolve Violations of the Servicemembers Civil Relief Act by Capital One; and Justice Department Files Complaint Against Forsyth County, North Carolina, Sheriff for Violating the Employment Rights of Army National Guard Soldier.

VEVRRA & USERRA Protections For Active Duty Military & Veterans

Affirmative action hiring by government contractors and subcontractors is one of the VEVRRA requirements for government contractors and subcontractors to provide assistance to and protect returning veterans from employment discrimination.

One of two key federal laws specifically prohibiting discrimination against returning veterans, VEVRRA applies only to government contractors and subcontractors. The other law, the Uniformed Services Employment and Reemployment Rights Act (USERRA), applies to virtually all U.S. employers.

Among other things, VEVRAA and its implementing regulations impose affirmative action requirements that require federal contractors and subcontractors to monitor and improve efforts to recruit and hire “protected veterans.” Protected veterans generally include veterans who are:

Disabled veterans: Those who are “entitled to compensation…under laws administered by the Secretary of Veterans Affairs” or “those who were released from active duty because of a service-connected disability;
Recently separated veterans;
Active duty wartime or campaign veterans;
Campaign badge veterans; and
Armed Forces service medal veterans.

Among other things, VEVRAA and its implementing Final Regulations generally require government contractors and subcontractors:

To set a hiring benchmark by either: (1) adopting a benchmark based on the national percentage of veterans currently in the workforce (5.9% effective March 31, 2019); or (2) creating an individualized benchmark based on their own interpretation of the best available data nationally and within their state/region.
Invite voluntary self-identification of applicants and employees as protected veterans. Pre-offer invitation to self-identify will involve asking whether the applicant believes that s/he is a protected veteran under VEVRAA without asking about the particular category of protection. Post-offer self-identification will request information regarding the specific category of protected veteran status. For Sample self-identification forms for both pre- and post-offer forms, see Appendix B Part 60-300 of the Final Regulation.
Comply with OFCCP reviews including providing on-site and off-site access to documents needed for compliance and focused reviews.
Track and report the effectiveness of veteran recruiting and hiring efforts by collecting specified data, which also must be retained for three years.
Provide access to job listings that identify the employer as a federal contractor in a format that can be used by veterans’ Employment Service Delivery Systems (ESDS).
Use mandated language in federal contracts (including subcontracts) to communicate the contractor’s obligations to employ and advance protected veterans.
Find and use appropriate outreach and positive recruitment activities like the Department of Defense Transition Assistance Program; the National Resource Directory and other sources contractorsfeel will be helpful in identifying and attracting veterans.

While VEVRRA only applies to government contractors and subcontractors, USERRA generally applies to all employers.

USERRA generally provides that an individual who leaves a job to serve in the uniformed services is generally entitled to continue medical coverage for up to 26 months while absent for a qualifying military leave, reemployment by the previous employer upon timely return from military leave and, upon reemployment, to restoration of service, promotion, benefits and other rights of employment.

As part of these reemployment rights, qualifying service members timely returning from military leave are entitled to receive credit for benefits, including employee pension plan benefits, that would have accrued but for the employee’s absence due to the military service. USERRA’s pension-related provisions generally require that pension plans treat a service member who is called to active duty as if the service member had no break in service for purpose of the administration of pension benefits when the service member timely returns to employment at the end of a military leave. In addition to these pension rights, USERRA also requires employers honor other rights to employment, promotion and other benefits and rights of employment.

Beyond these VEVRRA and USERRA employment rights, service members taking or returning from active duty often enjoy various other employment and other protections under various other federal and state laws, many of which have been expanded in recent years.

As many veterans suffer return with physical, cognitive or emotional injuries and conditions, veteran applicants and employees may qualify for the disability discrimination, accommodation, privacy and other protections of the Americans with Disabilities Act (ADA) and, in the case of government contractors and subcontractors, the Section 503 of the Rehabilitation Act.

Under requirements of the Soldiers’ and Sailors’ Civil Relief Act (SSCRA), creditors including a pension plan, employer loan program or credit union generally are required to drop interest charges down to 6 percent on debt owed by those called to active duty for the period of such military service. Further, under the Employee Retirement Income Security Act (ERISA), the loan will not fail to be a qualified loan under ERISA solely because the interest rate is capped by SSCRA. These and other provisions of federal law often require pension and profit-sharing plans that allow plan loans to change loan terms and tailor other special treatment of participants who are on military leave.

In addition to the specific protection given to a service member, employers also need to be ready to honor certain family leave protections afforded to qualifying family members or caregivers of service members added to the Family & Medical Leave Act (FMLA) in recent years. As amended to include these military leave related protections, the FMLA may require certain employees who are the spouse, son, daughter, or parent of a military member to take to 12 weeks of FMLA leave during any 12-month period to address the most common issues that arise when a military member is deployed to a foreign country, such as attending military sponsored functions, making appropriate financial and legal arrangements, and arranging for alternative childcare. This provision applies to the families of members of both the active duty and reserve components of the Armed Forces. Meanwhile, the “Military Caregiver Leave” provisions added to the FMLA may entitle certain employees who are the spouse, son, daughter, parent or next of kin of a covered service member to up to 26 weeks of FMLA leave during a single 12-month period to care for the service member who is undergoing medical treatment, recuperation, or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list, for a serious injury or illness incurred or aggravated in the line of duty on active duty. These provisions apply to the families of members of both the active duty and reserve components of the Armed Forces. The expansion of these requirements, updating of regulation, and rising enforcement by private plaintiffs and the government make it advisable that businesses take all necessary steps to ensure their employment practices, employee benefit plans, fringe benefit programs and other practices are updated and administered to comply with the current requirements of VEVRRA, USERAA, SSCRA, the FMLA and other applicable federal and state laws.

Special care also generally is needed when designing and administering employment based health benefit programs to avoid violating federal eligibility rules prohibiting discrimination against service members, to properly offer continuation coverage and reinstatement during and following periods of service by employees and family members, and to avoid improper denial of coverage or coordination of benefit rules with military and veteran health benefits.

Given the potential liabilities that can result from noncompliance with these and other federal employment rules and requirements protecting active military and veteran service men and women, U.S. employer generally should reconfirm and carefully monitor and document their compliance with these laws to minimize their liability exposure. Where employers use subcontractors or otherwise outsource work, these businesses also should consider require their subcontractors and other service providers to contract to comply with these requirements, to supply data and other documentation that the employer might need to complete reports or otherwise defend its compliance, to cooperate in audits and other investigations, and to participate and cooperate with employer initiated compliance audits as well as government audits and investigations.

Need more information about veterans’ employment or other Human Resources, employee benefits, compensation or other performance and compliance management, check out the extensive training and other resources available on the author’s website or contact the author, Cynthia Marcotte Stamer.

We also invite you to share your own best practices ideas and resources and join the discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our Health Plan Compliance Group or COPE: Coalition On Patient Empowerment Groupon LinkedIn or Project COPE: Coalition on Patient Empowerment Facebook Page.

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 has advised, trained, coached and defended businesses, employee benefit plans and others, published, and problem solved on opportunities and challenges relating to employment, benefits consumer, health care, disability and other rights and needs of active duty and veteran service people and their families.

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 health care, financial, tax, HR and technology, privacy, data security and breach; health care, 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.

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

About Solutions Law Press, Inc.™

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.

Comments Off on Federal Veterans Hiring Benchmark Resets 3/31 To 5.9%; Prepare For Audits & Other Enforcement | Affirmative Action, Civil Rights, Construction, Employee Benefits, Employee Handbook, Employer, Employers, Employment, Employment Discrimination, Employment Policies, enforcement, Government Contractors, HR, Human Resources, Leave, Military Leave, OFCCP, Uncategorized, USERRA, veterans, VEVRAA, VEVRRA, Wage & Hour, Worker | Tagged: Affirmative Action, Discrimination, Employee Benefits, Employer, Employment, Government Contractors, Health Insurance, Health Plans, veterans | Permalink
Posted by Cynthia Marcotte Stamer

Consider Employee Recess In Your Employee Wellness Programi

March 27, 2019

Adding employee recess to the workday schedule could be a cost effective wellness tool based on health research recently reported by the National Institutes on Health (“NIH”).

Sedentary work and lifestyles fuel many of the heath risks and costs targeted by employer and health benefit employee wellness programs.

With most American adults now spending an average of 11 to 12 hours a day sitting, sedentary work and life styles present leading disease and health cost drivers. Research showing long periods of sitting increase the risk of heart disease and death overall make finding ways to counteract the negative health effects of sedentary lifestyles a key objective of many wellness and public health initiatives. However questions exist about the effectiveness and return on investment of many of the wellness program strategies and tools in the marketplace in producing meaningful changes in employee health or health related behavior.

Findings of research recently announced by NIH suggests giving employees movement breaks for as little as 30 minutes a day could counteract the adverse health effects of their sedentary work. See Light activity may lower harmful effects of sitting.

According to NIH, a study of nearly 8000 people aged 45 or older found as little as 30 minutes of light activity per day may reduce the risk of death incurred by sitting. Replacing sitting with just a few minutes of movement at a time provided health benefits.

NIH reports researchers found that any amount of activity was better than sitting. People who swap 30 minutes of sitting for 30 minutes of light-intensity activity per day would have a 17% lower risk of death. Light-intensity activities include walking and doing chores that require moving around.

People who swap 30 minutes of sitting for 30 minutes of moderate to vigorous physical activity per day would have a 35% lower risk of death from any cause. These types of activities can include jogging, bicycling, and playing sports.

But people didn’t have to move for a full 30 minutes in a row to benefit. Even smaller intervals to break up periods of sitting—including from just 1 to 5 minutes of activity—reduced the risk of death.

NIH also reports positive effects of movement were seen regardless of age, race, weight, smoking and drinking patterns, or existing health problems.

Small amounts of movement mainly benefitted people who didn’t already have an active lifestyle. For people who had a low activity level overall, taking modest activity breaks made a big difference in the risk of death. For people who already had a high level of activity during the day, however, no additional benefit was seen from a little extra movement.

The findings of the health benefit of movement breaks is consistent with findings of a growing series of other recent health studies showing getting adults and children moving during the day even for short periods during the day can produce major heath benefits. See, e.g. Brief Activity Breaks May Benefit Children’s Health ; Physical Activity Program Helps Maintain Mobility; Moderate Exercise May Improve Memory in Older Adults. The message is clear: Even modest increases in activity can reduce risk for many serious conditions, including heart disease, diabetes, certain kinds of cancer, and some types of depression and cognitive disorders.

The research also shows that the health benefits can come from engaging in light or moderate movement activities as little as 30 minutes a day even if these activities are broken up and not participation in traditional exercise. Healthful physical activity includes exercise as well as many everyday activities, such as doing active chores around the house, yard work, or walking the dog.

Aerobic activities that make heart and blood vessels by healthier by causing individuals to breathe harder can include brisk walking, dancing, swimming, and playing basketball. Strengthening activities, like push-ups and lifting weights, help make your muscles and bones stronger and can also improve balance.

While the benefits of movement are clear, too many employees fail to do it. Although most people know that physical activity is a good thing, most adults nationwide don’t meet even the minimum recommended amounts of physical activity of at least 30 minutes of brisk walking or other moderate activity, 5 days a week.

NIH-funded research has found that environment—where people live, work, or go to school—can have a big impact on how much individuals move and even how much they weigh. These findings suggest employers and communities can do many things to encourage their people to fit movement into their sedentary lifestyles.

To create a work or other environment that encourages employees to get moving, NIH suggests looking for opportunities to change the environment so activity is an easier choice for workers to make.

Some suggestions include:

Structuring meetings, job duties and other activities to require or encourage sedentary workers to stand up, walk and move around periodically throughout the day;

Providing access to walking sidewalks, trails and other places workers can walk and encouraging workers to use them;

Encouraging workers to walk or take public transportation to lunch or other meetings when feasible rather than drive;

Encouraging people to walk and talk rather than sitting while holding discussions;

Encouraging workers to find waking buddies to walk to lunch or share other exercise breaks or activities with in and outside the workplace;
Encouraging management and employees to incorporate stretching or other movement breaks into meetings and other gatherings; and
Encouraging people to take the stairs and walk to meet fellow employees in person rather than communicating by phone or e-mail when practical.

While each workplace presents different opportunities and challenges, the message from the research is clear: Getting your people moving can produce meaningful health and health and disability cost savings. Maybe it’s time for your company to add short movement recesses to its employees’ day to capitalize on these benefits.

Want to learn, share or discuss other human resources, benefits and compensation, or health and wellness management developments and ideas? We invite you to share your own best practices ideas and resources and join the discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating in and contributing to the discussions in our Health Plan Compliance Group or COPE: Coalition On Patient Empowerment Groupon LinkedIn or Project COPE: Coalition on Patient Empowerment Facebook Page.

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, she is nationally recognized for her leading edge work, publications, advocacy and programs on making compliant wellness and disease management programs that work and other health and disability plans and management strategies and concerns.

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.

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.™

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.

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Posted by Cynthia Marcotte Stamer

Use 3/26 Diabetes Alert Day Resources To Jumpstart Your Diabetes Management & Cost Containment Efforts

March 26, 2019

Employers, health plans and others concerned about managing the high medical, disability and other costs of Type 2 Diabetes should use today’s annual Diabetes Awareness Day observances and resources to beef up their efforts and tools.

With 1 in 3 adult Americans at risk for Type 2 diabetes, the Centers for Disease Control (“CDC”) and other public and private organizations partnering in The National Diabetes Prevention Program are urging all Americans, their health plans, state and local agencies and communities to protect themselves and join their fight to prevent or delay Type 2 diabetes.

Celebrated every year on the fourth Tuesday in March, Diabetes Alert Day promotes awareness of the prevalence and risks of undiagnosed or unmanaged Type 2 Diabetes to Americans, American taxpayers, health benefit programs and their communities.

More than 30 million people in the United States have diabetes and an additional 84 million adults—over a third—have prediabetes, and 90% of them don’t know they have it.
Diabetes is the 7th leading cause of death in the United States (and may be underreported).
Type 2 diabetes accounts for about 90% to 95% of all diagnosed cases of diabetes; type 1 diabetes accounts for about 5%.
In the last 20 years, the number of adults diagnosed with diabetes has more than tripled as the American population has aged and become more overweight or obese
Undiagnosed or unmanaged Type 2 diabetes threatens serious and disabling medical risks for afflicted individuals that also are financially costly for patients and their families, their health plans, taxpayers and communities.

Type 2 diabetes usually starts during adulthood; however, children, teens, and young adults increasingly also are developing it. Since Type 2 diabetes symptoms often develop over several years and can go on for a long time without being noticed it’s important individuals know the factors for Type 2 Diabetes and that people with these symptoms visit their doctor promptly.

Fortunately, Type 2 Diabetes and its costs often can be prevented or minimized through appropriate diagnosis and treatment. That’s why the CDC and its partners are urging all Americans, the employers, health plans, health care providers and communities to join the fight against Type 2 Diabetes.

To start with, the CDC and its partners ask every American to learn their risk for diabetes by taking the online Type 2 Diabetes Risk and promote use of CDC-recognized lifestyle change programs to individuals suffering or at risk for Type 2 diabetes.

The CDC and its partners also are asking American families, health care providers, employers and their health benefit programs, federal, local and state governments and communities to help identify and get people at risk or suffering from Type 2 diabetes involved in making appropriate lifestyle changes and other activities to help manage their Type 2 Diabetes and offers a multitude of free tools and resources to help promote Type 2 Diabetes Awareness and assist in its prevention and treatment.

Employers and their health plans and insurers should consider participating in Diabetes Alert Day and using some of the resources provided by CDC and other partners to beef up their Type 2 and other Diabetes prevention, screening and management efforts. Appropriate use of these resources could help mitigate exposure to the high medical, disability, productivity and other costs that employers and their health plans generally incur when employees or their family members suffer from undiagnosed or unmanaged diabetes. When utilizing these resources, however, employers and their health plan fiduciaries, insurers and administrators are reminded to use care to implement and administer these wellness and other programs in a manner that complies with the Americans With Disabilities Act (“ADA”), Health Insurance Portability & Accountability Act, Internal Revenue Code and other federal and state requirements concerning the design and administration of wellness and disease management programs including recent updates in the Equal Employment Opportunity Commission’s regulations and enforcement positions under the ADA.

Learn more about Type 2 Diabetes cost modeling, screening, prevention and other participant education resources in our companion article in the Project Cope: Coalition for Patient Empowerment Newsletter. We also invite you to share your own best practices ideas and resources and join the discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our Health Plan Compliance Group or COPE: Coalition On Patient Empowerment Groupon LinkedIn or Project COPE: Coalition on Patient Empowerment Facebook Page.

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.

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, FMLA and other leave, 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.

For more information about Ms. Stamer or her 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.™

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.

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Posted by Cynthia Marcotte Stamer

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

March 22, 2019

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

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

The Proposed Rule

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

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

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

Outsourcing Inquiry & Response

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

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

About The Author

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

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

About Solutions Law Press, Inc.™

©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.

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Posted by Cynthia Marcotte Stamer

2019 Mileage Rates Adjusted; Employee Unreimbursed Mileage & Relocation Mileage Deductions Unavailable In 2018 and 2019

March 20, 2019

Employers, employees and other taxpayers should use care to properly take into account recent changes in Internal Revenue Code (“Code”) rates and deduction rules reporting or when projecting, reporting or claiming mileage reimbursements or deductions for 2018 and 2019.

Employers, employees and other taxpayers should use care properly to take into account recent changes in the rates and rules for deducting mileage and business, charitable and medical mileage and other travel expenses under the Internal Revenue Code (“Code”).

Historically, the Code has allowed individual taxpayers to claim deduct either actual expenses incurred or the applicable standard deduction for business, medical or charitable mileage and other travel expenses. While most employers, employees and other taxpayers understand the Internal Revenue Service (“IRS”) adjusts applicable standard mileage rates annually, many are unaware the recent tax law changes generally prohibit employees, but not certain other income earners, from claiming a mileage deduction for business mileage. Many employees or other individual taxpayers also do not realize that different deduction rates apply to businesses versus charitable and medical mileage expenses. Understanding these nuances is important to avoid making mistakes in projecting, reporting or deducting mileage expenses and reimbursements.

2019 Standard Mileage Deduction Rates

The Code generally allows a taxpayer to elect either to claim a deduction for substantiated actual mileage and other transportation expenses or or an amount computed using the applicable standard mileage rate declared by IRS for that taxable year under mileage reimbursement policy, whichever is greater from the gross total income. However, different applicable standard mileage rates apply to mileage for business, charitable, medical or moving expenses and the IRS adjusts each of these standard mileage rates annually.

Notice 2019-02 sets 2019 standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes. The notice also provides the amount taxpayers must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan. For 2019, the applicable standard mileage rates are as follows:

The standard mileage rate for transportation or travel expenses is 58 cents per mile for all miles of business use (business standard mileage rate);
The standard mileage rate is 14 cents per mile for use of an automobile in rendering gratuitous services to a charitable organization under § 170;
The standard mileage rate is 20 cents per mile for use of an automobile: (1) for medical care described in § 213; or (2) as part of a move for which the expenses are deductible under § 217(g).

Unreimbursed Employee Travel Expense & Moving Expense Deduction Suspension

Even though the IRS has published standard mileage rates for use of an automobile for medical care or as part of a deductible move, most taxpayers incurring these expenses will not be able to claim any deduction for these expenses. While the Code historically allowed employees and other taxpayers to claim an itemized deduction for business, charitable or medical care related transportation expenses, Section 11045 of the Tax Cuts and Jobs Act, Public Law 115-97, 131. Stat. 2054 (December 22, 2017) (the “Tax Act”) suspends the deductions of unreimbursed employee travel expenses and for relocation expenses for the 2018 through 2026 tax years. Specifically, the Tax Act amended the Code to prohibit employees from claiming unreimbursed employee travel and relocation mileage deductions for the 2018 through 2026 tax years. Historically, the Code allowed employees filing itemized tax returns to include unreimbursed employee transportation expenses among the itemized expenses deductible in excess of the two percent of their adjusted gross income. In connection with its expansion of the standard individual deductions, however, the Tax Act suspends all miscellaneous itemized deductions subject to the two-percent of adjusted gross income floor under Code § 67, including unreimbursed employee travel expenses, for taxable years beginning after December 31, 2017 and before January 1, 2026. In contrast, however, the Tax Act does not suspend the deduction in determining adjusted gross income of travel expenses or other expenses incurred in the production of income by independent contractors or other non-employee taxpayers. Since unreimbursed travel expenses of employees are subject to the adjusted gross income floor under Code § 67, employees cannot claim an itemized deduction for unreimbursed employee travel expenses for 2018 or 2019. In contrast, the Tax Act did not suspend the deduction for expenses incurred in the production of income. Consequently, independent contractors and other non-employees still can deduct travel expenses as expenses incurred in connection with the production of income on line 24 of Schedule 1 of Form 1040 (2018), not as an itemized deduction on Schedule A of Form 1040 (2018), using either their actual expenses or the annually applicable business standard mileage rate.

In addition, Section 11049 of the Tax Act also generally suspends the deduction for moving expenses for the 2018 through 2026 . However, this suspension does not apply to members of the Armed Forces on active duty who move pursuant to a military order and incident to a permanent change of station to whom § 217(g) applies. Thus, except for taxpayers to whom § 217(g) applies, the standard mileage rate for the use of an automobile as part of a move occurring during the suspension will not apply during the suspension period.

Proper calculation of applicable mileage related tax deduction depends upon taxpayers properly taking into account the suspension of the deductions for unreimbursed employee travel and relocation expenses for the 2018 through 2026 tax years and using the correct standard mileage rate. Employees impacted by these expenses should take into account these modifications when calculating and completing their tax withholding forms and projecting their tax liability. Because many employees may not be aware of these changes, employees with employees likely to be impacted by these changes may wish to alerting their employees to these changes. Employers that previously provided employee handbooks or other communications to employees containing explanations discussions of the implications of travel or relocation expenses inconsistent with the current tax rules also should take immediate steps to withdraw or correct those communications.

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.

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, FMLA and other leave, 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.

For more information about Ms. Stamer or her 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.™

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.

Comments Off on 2019 Mileage Rates Adjusted; Employee Unreimbursed Mileage & Relocation Mileage Deductions Unavailable In 2018 and 2019 | compensation, compliance, Corporate Compliance, employee, Employee Benefits, Employee Handbook, Employer, Employers, Employment, Employment Policies, family leave, Fringe Benefit, Fringe Benefits, HR, Human Resources, Leave, Management, medical leave, Military Leave, veterans, VEVRAA | Tagged: Employee, Employee Benefits, Employer, Human Resources, Mileage Deduction, Moving expenses, Relocation Expenses | Permalink
Posted by Cynthia Marcotte Stamer

Employers Risk FMLA Violation By Delaying FMLA Notification, Designation While Employees Use Other Leave

March 19, 2019

A new U.S. Department of Labor’s Wage and Hour Division (WHD) Family and Medical Leave Act (“FMLA”) opinion letter says warns employers not to delay providing FMLA notice or designating a leave as FMLA-covered when coordinating FMLA protected leave with otherwise available paid or unpaid leave.

FMLA Opinion 2019-1-A states that a FMLA-covered employer must designate as FMLA protected and, absent extenuating circumstances, must provide notice of the designation of the leave as FMLA protected within five business days of the date the employer has enough information to determine an employee has experienced a FMLA qualifying event. The Opinion says this designation and notice must happen even if the employee would prefer that the employer delay the designation of the absence as a FMLA protected leave until the employee exhausts other available leave.

According to WHD, its FMLA regulations require employers to provide a written “designation notice” to an employee within five business days—absent extenuating circumstances—after the employer “has enough information to determine whether the leave is being taken for a FMLA-qualifying reason.” Failure to provide timely notice requirement may constitute an interference with, restraint on, or denial of the exercise of an employee’s FMLA rights. 29 C.F.R. §§ 825.300(e), 825.301(e). Consequently, the Opinion concludes that the employer is responsible in all circumstances for designating leave as FMLA-qualifying and giving notice of the designation to the employee within five days of learning if events triggering the FMLA eligibility. 29 C.F.R. § 825.300(d).

The Opinion also emphasizes that employers cannot delay the designation of a leave as FMLA protected and provision of notice while a FMLA-eligible employee uses otherwise available leave. While acknowledging that the FMLA permits an employer to require, or to permit an employee to elect, to “substitute” accrued paid leave (e.g., paid vacation, paid sick leave, etc.) to cover any part of the unpaid FMLA entitlement period,the Opinion states that “[t]he term substitute means that the paid leave provided by the employer … will run concurrently with the unpaid FMLA leave.” 29 C.F.R. § 825.207(a) (emphasis added). While acknowledging that the FMLA allows employers to adopt leave policies more generous than those required by the FMLA. 29 U.S.C. § 2653; see 29 C.F.R. § 825.700, the Opinion also says an employer may not designate more than 12 weeks of leave—or more than 26 weeks of military caregiver leave—as FMLA-protected. See, e.g., Weidner v. Unity Health Plans Ins. Corp., 606 F. Supp. 2d 949, 956 (W.D. Wis. 2009) (citing cases for the principle that “a plaintiff cannot maintain a cause of action under the FMLA for an employer’s violation of its more-generous leave policy”).

Furthermore, the Opinion also openly rejects and disagrees with the Ninth Circuit’s holding in Escriba v. Foster Poultry Farms, Inc., 743 F.3d 1236, 1244 (9th Cir. 2014) that an employee may use non-FMLA leave for an FMLA-qualifying reason and decline to use FMLA leave in order to preserve FMLA leave for future use. Instead, the Opinion adopts the position that once an eligible employee communicates a need to take leave for an FMLA-qualifying reason, neither the employee nor the employer may decline FMLA protection for that leave. See 29 C.F.R. § 825.220(d) (“Employees cannot waive, nor may employers induce employees to waive, their prospective rights under FMLA.”); Strickland v. Water Works and Sewer Bd. of City of Birmingham, 239 F.3d 1199, 1204 (11th Cir. 2001) (noting that the employer may not “choose whether an employee’s FMLA-qualifying absence” is protected or unprotected by the FMLA). Accordingly, the Opinion concludes that when an employer determines that leave is for an FMLA-qualifying reason, the qualifying leave is FMLA-protected and counts toward the employee’s FMLA leave entitlement. Once the employer has enough information to make this determination, the employer must, absent extenuating circumstances, provide notice of the designation within five business days. Therefore, the employer may not delay designating leave as FMLA-qualifying or providing notification, even if the employee would prefer that the employer delay the designation.

The Opinion also clarifies the WHD’s interpretation of the FMLA limits the protection of the FMLA to the statutory period set by the FMLA. In this respect, the Opinion states, “An employer is also prohibited from designating more than 12 weeks of leave (or 26 weeks of military caregiver leave) as FMLA leave.” Thus, while acknowledging that “[a]n employer must observe any employment benefit program or plan that provides greater family or medical leave rights to employees than the rights established by the FMLA.” under 29 C.F.R. § 825.700, the Opinion also states that “providing such additional leave outside of the FMLA cannot expand the employee’s 12-week (or 26-week) entitlement under the FMLA.” Therefore, the Opinion states that if an employee substitutes paid leave for unpaid FMLA leave, the employee’s paid leave counts toward his or her 12-week (or 26-week) FMLA entitlement and does not expand that entitlement.

As many employers currently coordinate and administer their FMLA and other leaves inconsistently with the positions stated in the Opinion, employers generally should consult with experienced legal counsel within the scope of attorney client privilege about the implications of the guidance set forth in the Opinion on their existing practices and about whether any corrective action or modifications are advisable in light of the Opinion to minimize potential exposure to FMLA liability. In connection with this review, employers also generally will want to evaluate their other paid and unpaid military, medical, maternity/paternity, adoption and other absence and leave policies and associated employee benefit plans to confirm that these designs continue to operate as intended and that current coordination practices comport with existing guidance.

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.

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, FMLA and other leave, 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.

For more information about Ms. Stamer or her 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.™

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.

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Posted by Cynthia Marcotte Stamer

Give Labor Department Feedback On Proposed $124 Per Week Increase In FLSA Salary Threshold & Other Burdensome Rules

March 19, 2019

Employers concerned about minimum wage, overtime and other liability from the Proposed Salary Threshold Rule (“Proposal”) that if adopted will increase the minimum salary for the Fair Labor Standards Act (“FLSA”) “white collar” overtime exemption from $23,660 annually to $35,308 annually. If adopted as proposed, the Proposal overnight will disqualify a million plus currently salaried workers to hourly employees that their employers will be required to pay minimum wage and overtime under the FLSA. Businesses concerned about the Proposal or other burdensome minimum wage or overtime requirements under the FLSA need to tell the Labor Department about these rules burdensome effects on business.

Proposal To Raise Minimum Salary For Overtime Exemption

The Labor Department Proposal if adopted will increase to $679 per week the minimum amount that an employer must pay an employee to treat that employee as exempt from the minimum wage or overtime rules of the FLSA regardless of the role or position of the employee. This means that an additional million plus employees overnight no longer would qualify to be paid as salaried rather than hourly employees. The Proposal

Under currently enforced FLSA rules, employers generally must treat any employee earning less than $455 per week ($23,660 annually) as a non-exempt employee. This generally means that the employer must pay the employee at least minimum wage for regular time and must pay overtime to the worker for any hours worked in excess of 40 hours per week.

The Labor Department set the minimum weekly earnings level of $455 per week in 2004. The Proposal if adopted will increase the minimum required earnings an employee must earn to qualify for exemption from minimum wage and overtime rules more than $124 per week to $679 per week (equivalent to $35,308 per year).

The Department also is asking for public comment on the Proposal’s language for periodic review to update the salary threshold. An update would continue to require notice-and-comment rule making rather than calling for automatic adjustments to the salary threshold for inflation.

Speak Up About Proposal & Other FLSA Burdens On Business

Businesses concerned about Proposal to increase the salary threshold or other burdensome FLSA rules or enforcement policies should seize the opportunity to provide feedback.

To start with, businesses should submit comments about the Proposed Rule electronically at www.regulations.gov as soon as possible before the 60-day comment period runs in mid-May.

Additionally, concerned businesses also should consider participating in events like the Small Business Roundtables that the Small Business Administration (“SBA”) Office of Advocacy plans to host to discuss the Proposal to hear directly from small businesses about the impact of the proposed rule. Currently SBA plans to host three roundtables:

Thursday April 4, 2019 – 2:00 pm – 4:00 pm (EDT) at the University of South Florida Port Tampa Bay, Building 1101 Channelside Dr., Suite 210, Tampa, FL 33602;
Thursday April 11, 2019 – 2:00 pm – 4:00 pm (EDT) at the SBA Headquarters, Eisenhower Room B 409 Third Street SW, Washington, DC 20416 (Call-in option available); and
Tuesday April 30, 2019 – 9:00 am – 11:00 am (CDT) at the Mobile Area Chamber of Commerce 451 Government St., Mobile, Alabama 36602

Interested parties must RSVP to Janis.Reyes@sba.gov to participate. Note that while SBA reports that SBA has invited Labor Department staff, the Labor Department has not confirmed its acceptance of these invitations yet. Also, because comments expressed during these roundtables do not take the place of submitting written comments to the regulatory docket, concerned businesses should also still comment on the Proposal. However adverse feedback from business expressed at this meeting could help to motivate SBA to express opposition or other negative feedback on the Proposal.

Other Defensive Actions To Minimize FLSA Exposures

Whether or not the Proposal takes effect, all U.S. businesses will want to strengthen 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, weigh options to clean up exposure areas, review insurance coverages and consider 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 Department, 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 compensible 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 the Labor Department 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; and
Consider self-correction within the new PAID Program or otherwise.

If you need more information or have questions, contact the author, Cynthia Marcotte Stamer.

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 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.™

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.

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Posted by Cynthia Marcotte Stamer

IRS Updates Plan Exemption & Exempt Organization Approval Procedures & Group Name

March 15, 2019

Tax exempt organizations and tax exempt employee benefit plans take note. The Internal Revenue Service (IRS) exempt organization determination procedures are changing.

Revenue Procedure 2019-5 updates the Exempt Organization determination letters procedures. Changes include:

Adding references to “new” Form 1024-A, Application for Recognition of Exemption Under Section 501(c)(4) of the Internal Revenue Code

Clarifying that the IRS won’t rule on a request under IRC Section 501(c)(6) for an organization whose purpose relates to a controlled substance that is illegal under federal law

Increasing user fees for certain miscellaneous determinations from $1,000 to $2,000

Changing the name of the Office of Associate Chief Counsel, Tax Exempt and Government Entities, to the Office of Associate Chief Counsel, Employee Benefits, Exempt Organizations and Employment Taxes.

These changes will impact processes for submitting approval applications and other exempt organization, VEBA, fraternal benefit association and qualified employee plan dealings with the IRS. Impacted organizations, their leaders and advisors will want to adjust accordingly.

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.

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.

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.™

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.

Comments Off on IRS Updates Plan Exemption & Exempt Organization Approval Procedures & Group Name | 401(k), compensation, compliance, Corporate Compliance, defined benefit plan, Defined Benefit Plans, defined contribution plan, Defined Contribution Plans, Employee Benefits, Employer, Employers, Employment Tax, ESOP, Exempt, HR, Human Resources, MEWA, multiple employer plan (Meps), Patient Protection & Affordable Care Act, Plan Admistrator, Retirement Plans, Tax, tax exemption, Tax Qualification, third party administrators, Union | Permalink
Posted by Cynthia Marcotte Stamer

IRS Updates 2019 Compensation Table

March 14, 2019

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

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

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

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

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

About the Author

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

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.

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.™

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.

Comments Off on IRS Updates 2019 Compensation Table | 105(h), 401(k), 4980H, ACA, board of directors, Brokers, church plan, compensation, compliance, Corporate Compliance, defined benefit plan, Defined Benefit Plans, defined contribution plan, Defined Contribution Plans, directors, Employee Benefits, Employer, Employers, Employment, Employment Policies, Employment Tax, ESOP, FICA, Health Benefits, health insurance, Health Plans, HR, Human Resources, Internal Revenue Code, IRC, multiple employer plan (Meps), pension plan, retirement plan, Retirement Plans, Retirements, Tax Qualification, Uncategorized | Permalink
Posted by Cynthia Marcotte Stamer

Labor Department Proposes Increasing FLSA Salary Threshold To $679 Per Week

March 7, 2019

Employers concerned about managing their overtime liability should review and provide prompt feedback to the U.S. Department of Labor (Department) on a Notice of Proposed Rulemaking (NPRM) that would make an additional million plus American workers eligible for overtime under the Fair Labor Standards Act (“FLSA”) by increasing the minimum amount an employee must earn to be eligible for treatment as FLSA exempt to $679 per week.

The minimum weekly earnings level of $455 per week was set in 2004. The proposed regulation would increase the salary threshold using current wage data projected to January 1, 2020 from $455 to $679 per week (equivalent to $35,308 per year).

The Department also is asking for public comment on the NPRM’s language for periodic review to update the salary threshold. An update would continue to require notice-and-comment rulemaking.

The NPRM maintains overtime protections for police officers, fire fighters, paramedics, nurses, and laborers including: non-management production-line employees and non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, and construction workers. The proposal does not call for automatic adjustments to the salary threshold.

The proposal to change the salary threshold in the NPRM follows a prior attempt by the Department of raise the threshold in 2016. The U.S. District Court for the Eastern District of Texas enjoined a 2016 final regulation that would have raised the threshold on November 22, 2016. Since November 6, 2017, the U.S. Court of Appeals for the Fifth Circuit has held in abeyance the Department’s appeal of the District Court’s ruling pending further rulemaking by the Department. In the 15 years since the District Court enjoined its 2016 final rule, the Department consistently has enforced the 2004 salary threshold level.

Employers concerned about the proposed increase in the salary threshold or other elements of the NPRM should submit comments about the proposed rule electronically at www.regulations.gov within the 60 day period following publication, in the rulemaking docket RIN 1235-AA20.

The NPRM proposing to increase the salary threshold for qualification as a FLSA-exempt employee is only one of a number of proposed rule changes that could significantly impact employer liabilities and costs.

Coupled with the Department’s continuing aggressive attacks against contract labor and other worker misclassification as well as other minimum wage, overtime and other FLSA rules, all employers should shore up 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, weigh options to clean up exposure areas, review insurance coverages and consider 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 Department, 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; and
Consider self-correction within the new PAID Program or otherwise.

If you need more information or have questions, contact the author, Cynthia Marcotte Stamer.

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.

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.

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.™

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Posted by Cynthia Marcotte Stamer

Record-Setting 2018 Enforcement Show Proactive Health Plan HIPAA Compliance & Risk Management Need

February 7, 2019

Health plans and their employer and other sponsors, fiduciaries, administrators and other service providers, as well as health care providers, health care clearinghouses and their business associates (“Covered Entities”) should reconfirm the adequacy of their Health Insurance Portability and Accountability Act (“HIPAA”) compliance and risk management in light the U.S Department of Health and Human Services Office of Civil Rights (“OCR”) February 7, 2019 announcement that its 2018 year-end $3 Million Resolution Agreement with California-based Cottage Health increased OCR’s already record-setting enforcement recoveries in 2018 to nearly $28.7 million in a year already distinguished by OCR’s collection of a record-setting $16 million resolution payment against health insurance giant Anthem. Along with acting to ensure their own organization’s ability to defend their HIPAA compliance, Covered Entities and their leaders also should take advantage of the opportunity to provide input to OCR on opportunities for simplifying and improving OCR’s HIPAA regulations and enforcement by submitting relevant comments by February 12, 2019 to a Request for Information published by OCR in December that invites suggestions for simplifying or making other improvements to OCR’s current HIPAA guidance as well as monitoring and responding to other new and proposed regulatory developments.

2018 Cottage Health Resolution Agreement

According to OCR’s February 7, 2019 announcement, Cottage Health agreed in OCR’s final settlement of 2017 to pay OCR $3 million and to adopt a substantial corrective action plan to settle charges of HIPAA violations resulting from OCR’s investigations into two HIPAA Breach notifications Cottage Health filed regarding breaches of unsecured electronic protected health information (ePHI) affecting over 62,500 individuals.

A December 2, 2013 breach notification that the removal of electronic security protections by a Cottage Health contractor rendered ePHI such as patient names, addresses, dates of birth, diagnoses/conditions, lab results and other treatment information of 33,349 individuals on a Cottage Health server accessible for download without a username or password from the internet to anyone outside Cottage Health. In an update to its original report filed on July 2, 2014, Cottage Health increased the number of individuals affected by this breach to 50,917. OCR’s investigation determined that security configuration settings of the Windows operating system permitted access to files containing ePHI without requiring a username and password. As a result, patient names, addresses, dates of birth, diagnoses, conditions, lab results and other treatment information were available to anyone with access to Cottage Health’s server.
A December 1, 2015, that the misconfiguration of a server following an IT response to a troubleshooting ticket, exposed unsecured ePHI including patient names, addresses, dates of birth, social security numbers, diagnoses, conditions, and other treatment information of 11,608 individuals over the internet.

Based upon its investigation into the two breach reports, OCR concluded Cottage Health violated HIPAA by failing to conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of the ePHI; failed to implement security measures sufficient to reduce risks and vulnerabilities to a reasonable and appropriate level; failed to perform periodic technical and non-technical evaluations in response to environmental or operational changes affecting the security of ePHI; and failed to obtain a written business associate agreement with a contractor that maintained ePHI on its behalf.

To resolve its exposure to potentially must greater civil monetary sanctions that OCR might seek for such potential violations under HIPAA’s civil monetary sanction rules, Cottage Health entered into December, 2018 Resolution Agreement to pay the $3 million settlement and undertake what OCR characterizes as “a robust corrective action plan to comply with the HIPAA Rules.” Among other things, the corrective action plan requires Cottage Health to:

Conduct an enterprise-wide risk analysis of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of ePHI held by Cottage Health (“Risk Analysis”) that OCR views as satisfactory to meet the requirements of 45 CFR 164.308(a)(1)(ii)(A);
Develop and implement a risk management plan to address and mitigate any security risks and vulnerabilities identified in the Risk Analysis acceptable to OCR;
Implement a process for regularly evaluating environmental and operational changes that affect the security of Cottage Health’s ePHI;
Develop, maintain, and revise, as necessary, written policies and procedures to comply with the Federal standards that govern the privacy and security of individually identifiable health information under 45 C.F.R. Part 160 and Subparts A, C, and E of Part 164 (the “Privacy Rule” and “Security Rule”).
Distribute to and conduct training on the HIPAA policies and procedures from all existing and new members of the Cottage Health workforce with access to PHI. Additionally, Cottage Health require all workforce members that have access to PHI to certify their receipt of, understanding and commitment to comply with the HIPAA Policies before allowing access to PHI and must deny access to PHI to any workforce member that has not provided the required certification.
Submit to ongoing notification and reporting requirements to keep OCR informed about its compliance efforts.

2018 Record Setting HIPAA Enforcement Year

The final Resolution Agreement negotiated by OCR in 2018, the $3 million Cottage Health Resolution Agreement signed on December 11, 2018 added to an already record-setting year of HIPAA enforcement recoveries by OCR. In addition to recovering the single largest individual HIPAA settlement in history of $16 million with Anthem, Inc. OCR’s recovery of the following HIPAA settlements and fines totaling nearly $28.7 million surpassed its previous 2016 record of $23.5 million by 22 percent.

Date	Name	Amount
Jan. 2018	Filefax, Inc (settlement)	$ 100,000
Jan. 2018	Fresenius Medical Care North America (settlement)	$ 3,500,000
June 2018	MD Anderson (judgment)	$ 4,348,000
Aug. 2018	Boston Medical Center (settlement)	$ 100,000
Sep. 2018	Brigham and Women’s Hospital (settlement)	$ 384,000
Sep. 2018	Massachusetts General Hospital (settlement)	$ 515,000
Sep. 2018	Advanced Care Hospitalists (settlement)	$ 500,000
Oct. 2018	Allergy Associates of Hartford (settlement)	$ 125,000
Oct. 2018	Anthem, Inc (settlement)	$ 16,000,000
Nov. 2018	Pagosa Springs (settlement)	$ 111,400
Dec. 2018	Cottage Health (settlement)	$ 3,000,000
Total (settlements and judgment)		$ 28,683,400

Aside from the previously discussed Cottage Health Resolution Agreement OCR announced on February 7, 2019, these OCR 2018 enforcement recoveries included:

FileFax Resolution Agreement. In January 2018, OCR settled for $100,000 with Filefax, Inc., a medical records maintenance, storage, and delivery services provider. OCR’s investigation found that Filefax impermissibly disclosed protected health information (PHI) by leaving the PHI in an unlocked truck in the Filefax parking lot, or by granting permission to an unauthorized person to remove the PHI from Filefax, and leaving the PHI unsecured outside the Filefax facility.
Fresenius Medical Care North America Resolution Agreement. In January 2018, OCR also settled for $3.5 million with Fresenius Medical Care North America (FMCNA), a provider of products and services for people with chronic kidney failure. FMCNA filed five breach reports for separate incidents occurring between February 23, 2012 and July 18, 2012, implicating the electronic protected health information (ePHI) of five FMCNA owned covered entities. OCR’s investigation revealed that FMCNA failed to conduct an accurate and thorough risk analysis of potential risks and vulnerabilities to the confidentiality, integrity, and availability of all of its ePHI. Additional potential violations included failure to implement policies and procedures and failure to implement a mechanism to encrypt and decrypt ePHI, when it was reasonable and appropriate to do so under the circumstances.
MD Anderson ALJ Ruling. In June 2018, an HHS Administrative Law Judge ruled in favor of OCR and required The University of Texas MD Anderson Cancer Center (MD Anderson), a Texas cancer center, to pay $4.3 million in civil money penalties for HIPAA violations. OCR investigated MD Anderson following three separate data breach reports in 2012 and 2013 involving the theft of an unencrypted laptop from the residence of an MD Anderson employee and the loss of two unencrypted universal serial bus (USB) thumb drives containing the unencrypted ePHI of over 33,500 individuals. OCR’s investigation found that MD Anderson had written encryption policies going back to 2006 and that MD Anderson’s own risk analyses had found that the lack of device-level encryption posed a high risk to the security of ePHI. Despite the encryption policies and high risk findings, MD Anderson did not begin to adopt an enterprise-wide solution to encrypt ePHI until 2011, and even then it failed to encrypt its inventory of electronic devices containing ePHI between March 24, 2011 and January 25, 2013. This matter is under appeal with the HHS Departmental Appeals Board.
MMC/BWH/MGH Resolution Agreements. In September 2018, OCR announced that it has reached separate settlements totaling $999,000, with Boston Medical Center (BMC), Brigham and Women’s Hospital (BWH), and Massachusetts General Hospital (MGH) for compromising the privacy of patients’ PHI by inviting film crews on premises to film an ABC television network documentary series, without first obtaining authorization from patients.
ACH Resolution Agreement. In September 2018, OCR also settled with Advanced Care Hospitalists (ACH), a contractor physician group, for $500,000. ACH filed a breach report confirming that ACH patient information was viewable on a medical billing services’ website. OCR’s investigation revealed that ACH never had a business associate agreement with the individual providing medical billing services to ACH, and failed to adopt any policy requiring business associate agreements until April 2014. Although ACH had been in operation since 2005, it had not conducted a risk analysis or implemented security measures or any other written HIPAA policies or procedures before 2014.
Allergy Associates Resolution Agreement. In October 2018, OCR settled with Allergy Associates, a health care practice that specializes in treating individuals with allergies, for $125,000. In February 2015, a patient of Allergy Associates contacted a local television station to speak about a dispute that had occurred between the patient and an Allergy Associates’ doctor. OCR’s investigation found that the reporter subsequently contacted the doctor for comment and the doctor impermissibly disclosed the patient’s PHI to the reporter.
Anthem Resolution Agreement. In October 2018, Anthem, Inc. also paid $16 million to OCR and agreed to take substantial corrective action to settle potential violations of the HIPAA Rules after a series of cyberattacks led to the largest U.S. health data breach in history. Anthem filed a breach report after discovering cyber-attackers had gained access to their IT system via an undetected continuous and targeted cyberattack for the apparent purpose of extracting data, otherwise known as an advanced persistent threat attack. After filing their breach report, Anthem discovered cyber-attackers had infiltrated their system through spear phishing emails sent to an Anthem subsidiary after at least one employee responded to the malicious email and opened the door to further attacks. OCR’s investigation revealed that between December 2, 2014 and January 27, 2015, the cyber-attackers stole the ePHI of almost 79 million individuals, including names, social security numbers, medical identification numbers, addresses, dates of birth, email addresses, and employment information.
Pegosa Springs Medical Center. In November 2018, Pagosa Springs Medical Center (PSMC), a critical access hospital, paid $111,400 to OCR to resolve potential violations concerning a former PSMC employee that continued to have remote access to PSMC’s web-based scheduling calendar, which contained patients’ ePHI, after separation of employment. OCR’s investigation revealed that PSMC impermissibly disclosed the ePHI of 557 individuals to its former employee and to the web-based scheduling calendar vendor without a business associate agreement in place.

These 2018 Resolution Agreements reaffirm the growing risks that Covered Entities and their business associates run by failing to take adequate steps to prevent and respond to breaches of ePHI and otherwise to maintain their compliance with HIPAA. Covered entities and business associates and their leaders should recognize and respond to these growing risks by reevaluating and strengthening their HIPAA compliance and risk management efforts to minimize the likelihood of violations and enhance their ability to mitigate potential liability that can result from breaches of HIPAA by responding efficiently and effectively.

Other Regulatory & Enforcement Developments

In addition to reaffirming their ongoing compliance with the longstanding requirements of HIPAA and other related federal and state laws, Covered Entities also should use care to carefully monitor and respond to new regulatory and other developments that might create new responsibilities or new opportunities to simplify their HIPAA compliance. In this respect, Covered Entities should take note of the 2018 and ongoing efforts by OCR to develop and publish new rules and other guidance intended to help health care providers and other Covered Entities, patients and caregivers and others understand their rights and responsibilities when dealing with protected health information in relation to patients afflicted with substance abuse and mental illness. Undertaken as part of the Trump Administration’s broader effort to combat opiate and other substance abuse within the United States, OCR in October published a package of guidance on How HIPAA Allows Doctors To Respond To The Opioid Crisis. Covered Entities and others concerned with the management of patients afflicted with substance abuse and mental illness should evaluate this guidance to understand and tailor their practices to respond to OCR’s perspectives of how HIPAA impacts the use, access and disclosure of protected health information as part of these efforts.

Covered Entities and others concerned about HIPAA compliance and interpretation also should carefully monitor and provide appropriate and timely input on developing HIPAA guidance that could impact their operations. In this regard, Covered Entities with ideas about opportunities for improving existing HIPAA guidance are encouraged to submit comments to OCR by February 12, 2019 in response to its Request for Information on improving care coordination and reducing the regulatory burdens of the HIPAA Rules published on December 12, 2018. In that RFI, OCR invites input from the public on how the HIPAA Privacy Rule, could be modified to:

Encourage information-sharing for treatment and care coordination;
Facilitate parental involvement in care;
Address the opioid crisis and serious mental illness;
Account for disclosures of PHI for treatment, payment, and health care operations as required by the HITECH Act;
Change the current requirement for certain providers to make a good faith effort to obtain an acknowledgment of receipt of the Notice of Privacy Practices; and/or
Otherwise simplify or improve the existing HIPAA rules.

As a part of these efforts, Covered Entities and other concerned parties also should anticipate that OCR will be focusing heavily in the upcoming year on the potential HIPAA privacy and security implications of efforts by its sister agency, the Office of the National Coordinator for Health Information Technology (“ONC”), to promote greater interoperability of electronic medical records discussed in ONC’s recent 2018 Report to Congress: Annual Update on the Adoption of a Nationwide System for the Electronic Use and Exchange of Health Information (“Report”).

Under the 21st Century Cures Act, Congress gave ONC authority to enhance innovation, scientific discovery, and expand the access and use of health information through provisions related to:

The development and use of upgraded health IT capabilities;
Transparent expectations for data sharing, including through open application programming interfaces (APIs); and
Improvement of the health IT end-user experience, including by reducing administrative burden.

These priorities seek to increase nationwide interoperability of health information and reduce clinician burden. The Report says increases in the adoption of health IT means most Americans receiving health care services now have their health data recorded electronically. However, this information is not always accessible across systems and by all end users—such as patients, health care providers, and payers—in the market in productive ways. While the Report states ONC intends to move forward to promote efforts to help ensure that electronic health information can be shared safely and securely where appropriate to improve the health and care of all Americans, these activities inherently will raise many HIPAA concerns and challenges. Covered Entities and others concerned with these activities will want to carefully monitor the concurrent activities of OCR and ONC as these efforts progress, both to help tailor their planning and compliance efforts to respond to the anticipated demand for greater interoperability as required by ONC and to help shape these rules by providing timely input as appropriate in response to these developments.

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.

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.™

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.

©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.

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Posted by Cynthia Marcotte Stamer

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.

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.

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.™

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Posted by Cynthia Marcotte Stamer

ONC New Emphasis On Health IT Interoperability Promises New Demands & Opportunities

January 8, 2019

Interoperability will be a key priority for the Office of the National Coordinator for Health Information Technology (“ONC”) going forward.

That’s the message in the just released 2018 Report to Congress: Annual Update on the Adoption of a Nationwide System for the Electronic Use and Exchange of Health Information (“Report”).

The planned shift to demand greater interoperability promises to create new demands for employer-sponsored health plans, health insurers and others involved in the healthcare delivery and payment processes. Health plans and their insurers and sponsors should begin preparing for these new demands, as well as to leverage the new opportunities and manage the new risks they will create.

The Report describes barriers, actions taken, and recommendations as well as ONC’s path forward to implement the 21st Century Cures Act.

Under the 21st Century Cures Act, Congress gave HHS authority to enhance innovation, scientific discovery, and expand the access and use of health information through provisions related to:

The development and use of upgraded health IT capabilities;
Transparent expectations for data sharing, including through open application programming interfaces (APIs); and
Improvement of the health IT end user experience, including by reducing administrative burden.

These priorities seek to increase nationwide interoperability of health information and reduce clinician burden..

Current Status

The Report says increases in the adoption of health IT means most Americans receiving health care services now have their health data recorded electronically. However, this information is not always accessible across systems and by all end users—such as patients, health care providers, and payers—in the market in productive ways. For example:

Despite the individual right to access health information about themselves established by the HIPAA Privacy Rule, patients often lack access to their own health information, which hinders their ability to manage their health and shop for medical care at lower prices;

Health care providers often lack access to patient data at the point of care, particularly when multiple health care providers maintain different pieces of data, own different systems, or use health IT solutions purchased from different developers; and

Payers often lack access to clinical data on groups of covered individuals to assess the value of services provided to their customers.

The Report says these limitations create several problems, including:

Patients should be able to easily and securely access their medical data through their smartphones. Currently, patients electronically access their health information through patient portals that prevent them from easily pulling from multiple sources or health care providers. Patient access to their electronic health information also requires repeated use of logins and manual data updates.

For health care providers and payers, interoperable access and exchange of health records is focused on accessing one record at a time.
Payers cannot effectively represent their members if they lack computational visibility into which health care providers offer the highest quality care at the lowest cost. Without the capability to access multiple records across a population of patients, health care providers and payers will not benefit from the value of using modern computing solutions—such as machine learning and artificial intelligence—to inform care decisions and identify trends.
Payers and employer group health plans which purchase health care have little information on health outcomes. Often, health care providers and payers negotiate contracts based on the health care provider’s reputation rather than on the quality of care that health care provider offers to patients. Health care providers should instead compete based on the entire scope of the quality and value of care they provide, not on how exclusively they can craft their networks. Outcome data will allow payers to apply machine learning and artificial intelligence to have better insight into the value of the care they purchase.

Current Barriers

According to the Report, HHS heard from stakeholders over the past year that barriers to interoperable access to health information remain, including technical, financial, trust, and business practice barriers. These barriers impede the movement of health information to where it is needed across the care continuum. In addition, burden arising from quality reporting, documentation, administrative, and billing requirements that prescribe how health IT systems are designed also hamper the innovative usability of health IT.

Current and Upcoming Actions

The Report states HHS has many efforts to help ensure that electronic health information can be shared safely and securely where appropriate to improve the health and care of all Americans.

ONC also reports Federal agencies, states, and industry have taken steps to address technical, trust, and financial challenges to interoperable health information access, exchange, and use for patients, health care providers, and payers (including insurers). HHS aims to build on these successes through the ONC Health IT Certification Program, HHS rulemaking, health IT innovation projects, and health IT coordination.

In accordance with the Cures Act, HHS is actively leading and coordinating a number of key programs and projects. These include continued work to deter and penalize poor business practices and that HHS conducted multiple outreach efforts to engage the clinical community and health IT stakeholders to better understand these barriers, challenges, and health care provider burden.

Recommendations

The Report makes the following overarching recommendations for future actions HHS plans to support through its policies and that the health IT community as a whole can take to accelerate progress:

Focus on improving interoperability and upgrading technical capabilities of health IT, so patients can securely access, aggregate, and move their health information using their smartphones (or other devices) and health care providers can easily send, receive, and analyze patient data.

Increase transparency in data sharing practices and strengthen technical capabilities of health IT so payers can access population-level clinical data to promote economic transparency and operational efficiency to lower the cost of care and administrative costs.

Prioritize improving health IT and reducing documentation burden, time inefficiencies, and hassle for health care providers, so they can focus on their patients rather than their computers.

The Report also says interoperable access underpins HHS’s efforts to pursue a health care system where data are available when and where needed.

ONC intends to particularly focus on promoting open APIs. Open APIs are technology that allow one software program to access the services provided by another software program and can improve access and exchange of health information. ONC says APIs can:

Support patients’ ability to have more access to information electronically through, for example, smartphones and mobile applications. HHS applauds the emergence of patient-facing applications that allow patients to access, aggregate, and act on their health information; and

Allow payers to receive necessary and appropriate information on a group of members without having to access one record at a time.
Increase institutional accountability, support value- based care models, and lead to competitive medical care pricing that benefits patients.

The Report claims patients, health care providers, and payers with appropriate access to health information can use modern computing solutions to generate value from the data. Improved interoperability can strengthen market competition, result in greater quality, safety, and value for the healthcare system, and enable patients, health care providers, and payers to experience the benefits of health IT.

Prepare For Enhanced Operability Requirements

ONC’s plan to achieve greater interoperability presents new business and compliance planning opportunities and challenges for health care providers, health insurers and other payers, health data and information technology (IT) providers and others. Among other things, participants in the healthcare system and their suppliers will need to prepare to comply with new expectations and mandates for interoperability. Meeting these demands will require financial expenditures as well as present technological challenges.The increased availability and access to electronica medical records and information resulting from these changes also a can be expected to drive new challenges and demands. Among other things, businesses relying on control of health information or records to influence or control patience, reimbursement, or other business value need to reevaluate and adjust their business models accordingly.

Improve accessibility and interoperability also is likely to create new expectations and demands by patients, payers, other providers and perhaps most significantly for providers and payers, regulators. Participants in the system will need to understand these applications and prepare to both defend their business performance as well as their compliance taking into account these new demands.

Amid all of this, of course, providers, pears, and their business associates can anticipate continued if not enhanced demands for enhanced data security and privacy protections and accompanying enforcement of these standards.

As ONC move forward on its plans to enhance interoperability, all concerned stakeholders will want to monitor developments and provide thoughtful and timely input. The time to get started is now. ONC and it’s sister agency, the Office of Civil Rights currently are inviting public comments about how to achieve these and other health IT and privacy improvements. Those interested in providing input should make sure their comments are submitted by the applicable deadlines next month.

ONC and it’s sister agency, the Office of Civil Rights currently are inviting public comments about how to achieve these and other health IT and privacy improvements. Read the full Report here and share your input by the specified deadlines.

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.

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 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.™

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.

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Posted by Cynthia Marcotte Stamer

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
FY 2011	Overtime	11,990	$140,328,012	204,243
FY 2012	Minimum Wage	12,532	$35,270,524	107,005
FY 2012	Overtime	12,462	$148,560,700	218,137
FY 2013	Minimum Wage	12,403	$38,470,100	103,671
FY 2013	Overtime	12,108	$130,703,222	174,197
FY 2014	Minimum Wage	11,042	$36,732,407	106,184
FY 2014	Overtime	11,238	$136,239,001	174,365
FY 2015	Minimum Wage	10,642	$37,828,554	86,229
FY 2015	Overtime	10,496	$137,701,703	173,330
FY 2016	Minimum Wage	10,722	$34,964,350	81,870
FY 2016	Overtime	10,884	$171,917,225	209,819
FY 2017	Minimum Wage	10,687	$31,213,737	69,588
FY 2017	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.

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.

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.™

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Posted by Cynthia Marcotte Stamer

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:

Circular E: Employer’s Tax Guide
Instructions for Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund

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.

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.

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.™

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.

©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.

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Posted by Cynthia Marcotte Stamer

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.

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

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

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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.

Comments Off on Court Ruling Obamacare Unconstitutional Leaves Obamacare Future Uncertain As Annual Enrollment Period Ends | 4980D, 4980H, 5000, 6039D, ACA, Affordable Care Act, Association Health Plan, Claims, Claims Administration, compensation, compliance, Consumer Protection, Corporate Compliance, EBSA, Employee Benefits, Employer, Employers, EMR, ERISA, Fiduciary Responsibility, Form 5500, health benefit, Health Benefits, health Care, Health Care Reform, health insurance, health insurance marketplace, health plan, Health Plans, health reform, HIPAA, HR, HSA, Human Resources, Insurance, insurers, Managed Care, Managment, Medicare Part D, Mental Health, Mental Health Parity, MEWA, Obamacare, Patient Empowerment, Patient Protection & Affordable Care Act, Patient Protection and Affordabel Care Act, Patient Protection and Affordable Care Act, Physician, Plan Admistrator, PPO, Premium Subsidies, Prescription Drugs, preventive care, Protected Health Information, Provider, provider contracting, Reporting & Disclosure, Risk Management, SBC, Tax, Tax Credit, Tax Qualification, TCJA Tax Reform, third party administrators, Uncategorized, Wellness Programs, Worker Classification, Workers' Compensation, Workforce, zane benefits | Permalink
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