Businesses Face Increased Wage Costs & Risks From American Rescue Plan Act Of 2021 FLSA Minimum Wage Changes

March 2, 2021

U.S businesses will face sharply increased wage costs if Senate Democrats succeed in their plan to pass as soon as this week the American Rescue Plan Act of 2021 (the “Act”) passed by the House of Representatives on Friday, February 24, 2021.    

One of many provisions impacting employers and their employee benefit plans in the Act that Congressional Democrats are pushing through as a COVID-19 relief package, Section 2101 of the Act amends the Fair Labor Standards Act of 1938 (“FLSA”) to increase immediately upon enactment the federal minimum wage employers covered by the FLSA must pay to most non-exempt employees (“regular rate”) by $2.25 per hour from the current rate of $7.25 to $9.50 per hour, then provides for  additional annual increases the gradual increase of the federal minimum wage that will raise the regular rate to $15.00 per hour over the next four years.  Beginning in 2026, the Act also provides for annual increases in the regular rate based on the median hourly wage of all employees as determined by the Bureau of Labor Statistics rounded up to the nearest multiple of $0.05.  This means the regular minimum wage employers must pay most hourly employees would more than double by 2025 and continue to increase thereafter.

In addition, the Act also phases out current rules allowing employers to pay tipped employees, new employees under age 20 and handicapped employees less than the regular minimum wage over the next five years and raises the minimum wage the FLSA allows employers to pay those employees gradually over the intervening period, with the initial increases slated to take effect upon enactment.  

As Senate Majority Leader Chuck Schumer has announced plans to bring the Act before the Senate for a vote as early as this week and President Biden committed to promptly sign the Act that is the centerpiece of the Democrats latest COVID-19 relief package, businesses are likely to feel the impact of the increased minimum wage and other mandates within days if not by month’s end.

These amendments will directly and immediately increase labor costs for non-exempt workers as well as employee benefit and fringe benefit costs and obligations tied to compensation or based on FLSA classifications. Other Biden-Harris Administration policies expanding the scope of the FLSA and other federal laws through revisions and enforcement of rules for characterizing workers as employees rather than independent contractors and enforcing expansive joint employer liability rules as well as other announced or expected Biden-Harris Administration proworker regulatory and enforcement changes almost certainly will expand the reach and implications of these changes.  The Biden-Harris Administration’s January 20, 2021 Memorandum on Regulatory Freeze Pending Review suspended the implementation of the Trump Administration led Labor Department’s Final Rule: Independent Contractor Status under the Fair Labor Standards Act slated to take effect on March 8, 2021, which sought to restore and clarify historical more employer friendly policies for distinguishing employee versus independent contractor relationships for purposes of the FLSA, the WHD’s withdrawal of previously issued Trump Administration era opinions that applied that Administration’s more expansive view of independent contractor status, and  WHD’s issuance of new opinions articulating and apply applying significantly narrower definitions of independent contractor and broader definitions of employees. 

Based on the agenda announced by the Biden-Harris Administration, businesses also should expect the Biden-Harris Administration and private plaintiffs to use these more employee friendly interpretation and enforcement policies to attack employer characterizations of workers as contractors to justify nonpayment of minimum wage and overtime to those workers.  Along with being forced to pay unpaid wages and overtime with interest, businesses unsuccessful in defending their worker classification characterizations can expect to face liquidated damage awards to private litigants equal to two times the amount of the back pay liability or in the case of WHD enforcement for repeated or willful violations, civil monetary penalties.

In assessing and managing these risks, businesses should evaluate their potential joint employer exposure to liability for unpaid minimum wage and overtime violations by other businesses providing labor or other services as the Biden-Harris Administration also is expected to seek to apply the much more expansive interpretation of joint employment applied during the Obama Administration abandoned during the Trump Administration.

These misclassification mistakes can be particularly costly.  FLSA liabilities arising from misclassification of workers as independent contractors carry significant risk both because businesses often fail to pay required minimum wages or overtime as well as don’t keep required time records.  The Biden-Harris Administration has made clear that it plans to move quickly to reimplement the regulatory and enforcement practices used during the Obama Administration to aggressively challenge employers’ characterization of workers as exempt from the FLSA’s minimum wage and overtime rules as independent contractors.

Considering these developments, all U.S. businesses and business leaders are well-advised both to begin preparing to comply with anticipated increases in federal minimum wage rates, as well as well as assess and take appropriate steps to mitigate their exposure to anticipated aggressive efforts to reclassify service providers considered to perform work as independent contractors, as contractors or employees of subcontractors or other businesses or both. 

More Information

The FLSA reforms are only one of a number of provisions of the Act impacting employers and their employee benefit plans. For more a more comprehensive discussion of the FLSA amendments included in the Act, see here.

Solutions Law Press, Inc. also invites you receive future updates by registering here and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations GroupHR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. 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. For specific information about the these or other legal, management or public policy 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 working as an on demand, special project, consulting, general counsel or other basis with domestic and international business, charitable, community and government organizations of all types, sizes and industries and their leaders on labor and employment and other workforce compliance, performance management, internal controls and governance, compensation and benefits, regulatory compliance, investigations and audits, change management and restructuring, disaster preparedness and response and other operational, risk management and tactical concerns. 

Most widely recognized for her work with workforce, health care, life sciences, insurance and data and technology organizations, she also has worked extensively with health plan and insurance, employee benefits, financial, transportation, manufacturing, energy, real estate, accounting and other services, public and private academic and other education, hospitality, charitable, civic and other business, government and community organizations. and their leaders.

Ms. Stamer has extensive experience advising, representing, defending and training domestic and international public and private business, charitable, community and governmental organizations and their leaders, employee benefit plans, their fiduciaries and service providers, insurers, and others has published and spoken extensively on these concerns. As part of these involvements, she has worked, published and spoken extensively on these and other federal and state wage and hour and other compensation, discrimination, performance management, and other related human resources, employee benefits and other workforce and services; insurance; workers’ compensation and occupational disease; business reengineering, disaster and distress;  and many other risk management, compliance, public policy and performance concerns.

A former lead advisor to the Government of Bolivia on its pension  project, Ms. Stamer also has worked internationally and domestically as an advisor to business, community and government leaders on these and other legislative, regulatory and other legislative and regulatory design, drafting, interpretation and enforcement, as well as regularly advises and represents organizations on the design, administration and defense of workforce, employee benefit and compensation, safety, discipline, reengineering, regulatory and operational compliance and other management practices and actions.

Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and provides insights and thought leadership through her extensive publications, public speaking and volunteer service with a diverse range of organizations including as Chair of the American Bar Association (“ABA”) Intellectual Property Section Law Practice Management Committee, Vice Chair of the International Section Life Sciences and Health Committee, Past ABA RPTE Employee Benefits & Other Compensation Group Chair and Council Representative and current Welfare Benefit Committee Co-Chair, Past Chair of the ABA Managed Care & Insurance Interest Group, past Region IV Chair and national Society of Human Resources Management Consultant Forum Board Member,  past Texas Association of Business BACPAC Chair, Regional Chair and Dallas Chapter Chair, 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, past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation and many others.

For more information about these concerns or Ms. Stamer’s work, experience, involvements, other publications, or programs, see www.cynthiastamer.com or contact Ms. Stamer 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. 

©2021 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™


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.

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.

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.™

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

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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.

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©2019 Solutions Law Press, Inc. 

[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.

 


High Enforcement, New Tip Pool Rules Require Restaurants Reassess & Manage FLSA Risks

April 12, 2018

Restaurant employers should audit and tighten the employee wage, timekeeping and other wage and hour practices to minimize their exposure to heightened enforcement of the Fair Labor Standards Act and other federal wage and hour laws by the U.S. Department of Labor Wage and Hour Division (WHD) allowed WHD to recover more than $189 million in back pay from restaurant employers over the past five years, while also evaluating the implications of the new WHD Field Assistance Bulletin: Amendment to FLSA Section 3(m) Included in Consolidated Appropriations Act, 2018 (FAB) on their ability to legally use tip pools for their tipped employees in light of the enactment by Congress as part of the Consolidated Appropriations Act, 2018 (Act), Pub. L. No. 115-141, Div. S., Tit. XII, § 1201 (Act).

With WHD set to continue the aggressive wage and hour investigation and enforcement practices that it has used to recover more than $1.2 billion in back pay awards from employers over the past five years and having just announced the temporary availability of a pilot voluntary resolution program for employers to use to settle WHD wage and hour liability problems, prompt action is particularly important now.

Restaurants Face WHD Wage & Hour Responsibilities

Restaurant industry employers have been the subject of special wage and hour law investigatory and enforcement by the WHD for the past decade.  In fiscal year 2017 alone, WHD’s enforcement statistics restaurant industry initiative targeting restaurant employers enabled it to successfully recover $42,936,552 for 44,363 from 5,446 cases brought against restaurant employers.  See WHD Fiscal Year Data, Low Wage, High Violation Industries.  See also, Restaurant Owners Beware!

WHD began targeting the restaurant industry for aggressive compliance education, investigation and enforcement and its workers and their representatives for educational outreach after finding widespread noncompliance with minimum wage, overtime and other wage and hour rules throughout the industry.

Federal investigated and enforced by WHD includes the following general rules as well as applicable special rules for tipped employees:

  • Covered non-exempt workers generally are entitled to a federal minimum wage of not less than $7.25 per hour;
  • The 1996 Amendments to the FLSA allow employers to pay a youth minimum wage of not less than $4.25 an hour to employees who are under 20 years of age during the first 90 consecutive calendar days after initial employment by their employer. The law contains certain protections for employees that prohibit employers from displacing any employee in order to hire someone at the youth minimum wage.  Workers under 16 years of age also are subject to special restrictions on their hours of work and the nature of work.  Federal law authorizes substantial additional penalties for violation of certain of these special requirements on youth employment;
  • Wages are due on the regular payday for the pay period covered;
  • Deductions made from wages for items such as cash shortages, required uniforms, or customer walk-outs are illegal if the deduction reduces the employee’s wages below the minimum wage or cuts into overtime pay;
  • Deductions made for items other than board, lodging, or other recognized
    facilities normally cannot be made in an overtime workweek;
  • The employer may take credit for food which is provided at cost but cannot take credit for discounts given employees on food (menu) prices;
  • The employer must pay employees overtime at a rate of at least one and one-half times the employee’s regular rate of pay for each hour worked in excess of 40 hours per week;
  • Equal pay requirements;
  • Family medical leave act requirements under the Family and Medical Leave Act; and
  • Others.

In addition to these generally applicable requirements, the FLSA also includes a number of special rules on restaurant’s compensation of “tipped employees.” These rules which often are the subject for WHD and other challenges are the subject of the amendments made by the Act and new FAB.  For purposes of these rules “tipped employees” are those who customarily and regularly receive more than $30 a month in tips.  Among other things, the FLSA tipped employee rules generally provide that a restaurant employer may consider tips part of wages (“tip credit”) provided by the employer only if it meets specific requirements including:

  • The employer must pay the tipped employee at least $2.13 an hour in direct wages;
  • The employer must ensure that the additional amount of tips a tipped employee receive coupled with the employee’s direct wages equals or exceeds the minimum wage;
  • The employer must inform tipped employees of the provisions about FLSA section 3(m) in advance if the employer elects to use the tip credit.
  • Employees must retain all of their tips, except to the extent that they participate in a valid tip pooling or sharing arrangement.
  • In determining the regular rate for a tipped employee, all components of the employee’s wages must be considered (i.e., cash, board, lodging, facilities, and tip credit).

Act Amends Tip Credit Rules

In addition to managing their overall compliance with the FLSA and other wage and hour rules, many restaurant employers of tipped employees also now much review and update their practices in responses to new rules on tip pools enacted by Congress earlier this year.  The Act amended the FLSA rules concerning tipped employees in several material respects.  The amendments made by the Act focus on tip pools.  Other requirements are left mostly undisturbed.

Specifically, the Act:

  • Prohibits employers from keeping tips received by their employees, regardless whether the employer takes a tip credit under 29 U.S.C. § 203(m);
  • Provides that portions of WHD’s regulations codified at 29 C.F.R. §§ 531.52, 531.54, and 531.59 that barred tip pooling when employers pay tipped employees at least the full FLSA minimum wage and do not claim a tip credit have no further force or effect pending future WHD action.
  • Gives WHD enforcement authority in FLSA sections 16(b) and 16(c) to, among other things, recover all tips unlawfully kept by the employer, in addition to an equal amount in liquidated damages.

Before enactment of the Act, WHD at the direction of the Trump Administration already was considering adopting a Proposed Rule published on December 5, 2017 that would have rescinded a 2011 Obama Administration-era WHD regulation barring tip-sharing arrangements in establishments where the employers pay full Federal minimum wage and do not take a tip credit against their minimum wage obligations.  That 2017 Proposed Rule provided that employers paying a full minimum wage to employees could require these workers to share their tips with other employees, including employees who do not customarily receive tips including restaurant cooks, dishwashers and other traditionally lower-wage classifications.

While WHD has not yet issued final rules implementing the changes enacted by the Act, earlier this week it published  a Field Assistance Bulletin: Amendment to FLSA Section 3(m) Included in Consolidated Appropriations Act, 2018 (FAB) that  discusses its enforcement policy regarding the Act’s amendments pending WHD’s future adoption of regulations.

The FAB states that employers who pay the full regular FLSA minimum wage (currently $7.25 per hour for regular time) to tipped employees are no longer prohibited from allowing employees who are not customarily and regularly tipped—such as cooks and dishwashers—to participate in tip pools. However, employers cannot allow managers or supervisors to participate in the tip pools as the Act equates such participation with the employer’s keeping the tips.

As an enforcement policy, the FAB states that WHD will use the duties test at 29 C.F.R. § 541.100(a)(2)-(4) to determine whether an employee is a manager or supervisor for purposes of section 3(m).

Finally, the WHD states that given the changes made by the Act, WHD will not apply WHD’s July 20, 2017 non-enforcement policy concerning retention of tips by tipped employees paid the full FLSA minimum wage to new investigations beginning on or after March 23, 2018. When an investigation covers periods before and after March 23, 2018, and the employee was paid at least the full FLSA minimum wage, however, the FAB states WHD will only cite violations of section 3(m) if they occurred after March 23, 2018.

In an April 9, 2018 press release issued in connection with its publication of the FAB,  WHD states that it expects to fully address the impact of the 2018 amendments made by the Act through formal rulemaking soon.  In the meantime, restaurant employers using or interested in using tip pools should ensure that their practices are tailored to respond to the FAB guidance as well as to otherwise comply with all WHD and other wage and hour rules.

Enforcement Risks  Merit Heightened Restaurant Compliance 

Confirming and maintaining appropriate wage and hour compliance and risk management is particularly imperative because of the WHD’s ongoing targeted enforcement efforts against industry employers.

The evidence makes clear that the restaurant industry’s high record of noncompliance makes it a continuing target for aggressive wage and hour law oversight, enforcement and compliance outreach by WHD.

To assist and encourage restaurant operators’ voluntary compliance with the FLSA and wage and hour rules, WHD offers a number of tip sheets and other resources specifically focusing on restaurant industry employers on its website as well as conducts other outreach. See e.g., Restaurants and Fast Food Establishments under the Fair Labor Standards Act.  Along with these compliance efforts, however, WHD also targets restaurant employers for aggressive oversight and enforcement, as well as conducts significant outreach educate and encourage state agencies and workers to enforce employee wage and hour rights.  See e.g., U.S. Department of Labor Undertakes Education and Enforcement Initiative To Improve Compliance in Green Bay-Area Restaurants (April 12, 2018);U.S. Department of Labor Sets Up Hotline for Back Wages Owed Employees at New Jersey and New York Houlihan’s Restaurants;  Workers Owed Wages.

Despite WHD’s highly publicized enforcement efforts and substantial compliance outreach to the industry, WHD enforcement statistics reflect that noncompliance remains an industry wide problem.  WHD reports that common violations include worker misclassification of workers, inappropriately claiming tip credit under FLSA 3(m); improperly deducting walkouts, cash register shortages, breakage, cost of uniforms, etc.,  improper classification of employees as exempt employees; and recordkeeping deficiencies.

WHD data also reflects that the WHD is continuing to successfully target restaurant employers aggressively under the Trump Administration.  WHD credits these efforts with allowing it to recover $42 million in back pay from restaurant employers in fiscal year 2017 alone.  2018 enforcement data reflects that WHD is continuing these efforts in 2018 with great success.

For instance, in February, WHD announced that the operator of 14 restaurants in Alabama, Georgia, and Virginia, Taziki’s Restaurants LLC doing business as Taziki’s Mediterranean Café was paying $135,844 to 26 employees to resolve violations of FLSA overtime and recordkeeping provisions.  According to WHD, Taziki’s violated the FLSA by failing to combine the hours that individual employees worked at multiple locations in the same workweek to determine whether overtime was due. Instead, the employer paid each employee with multiple paychecks corresponding to each location. This practice resulted in failure to pay overtime when an employee’s combined hours totaled more than 40 in a workweek.  Investigators also found that Taziki’s Restaurants LLC failed to pay workers for time they spent traveling between restaurants to perform work. This exclusion of work time from the payroll created a record keeping violation, and these previously unrecorded hours also resulted in additional overtime found due.

All indications are that it subsequently still is continuing its vigorous targeting of the industry.  WHD announced its establishment of a hotline for 1,471 current and former Houlihan’s employees of 17 of the restaurant chain’s New Jersey and New York locations to assist them in recovering back wages and liquidated damages.  See U.S. Department of Labor Sets Up Hotline for Back Wages Owed Employees at New Jersey and New York Houlihan’s Restaurants (April 12, 2018); U.S. Department of Labor Undertakes Education and Enforcement Initiative To Improve Compliance in Green Bay-Area Restaurants  (April 12, 2018); U.S. Department of Labor Investigation Results in Tennessee Restaurant Paying $48,197 to Resolve Minimum Wage and Overtime Violations (April 11, 2018).

Meanwhile, state wage and hour law enforcement and private enforcement of federal and state wage and laws also continues to rise, in part as a result of WHD’s concurrent educational outreach to industry workers , plaintiff’s attorneys and union representatives about rights and remedies and outreach, coordination and grant funding to state wage and hour enforcement agencies.

Amid these ongoing risks, WHD recently has given employer a new option for resolving FLSA and other wage and hour law violation exposures.  Under the new pilot self-audit Payroll Audit Independent Determination (PAID) program WHD announced on March 6, WHD says that it will allow 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.

While participation in the PAID program allows a participating employer to settle its exposure to prosecution for those violations by WHD, 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. In addition, acceptance into the program is not available for certain violations and other conditions and limitations apply.  See Employers Should Weigh New DOL PAID Program, Other Options To Manage Rising FLSA Minimum Wage & Overtime Risks.  While employers concerned about potential existing or past violation exposures will need to weigh the new option carefully with the assistance of experienced legal counsel,  the availability of this option coupled with the high risk of enforcement and resulting liability makes it important for employers to assess their potential risk and associated risk mitigation options promptly.  Consequently, restaurant employers are well advised to exercise extreme care to audit within the scope of attorney-client privileged  the adequacy of their practices and records and evaluate options for mitigating their wage and hour exposures with the assistance of legal counsel experienced with wage and hour and related workforce matters.

 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.™

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

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

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

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

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

 


Read Trump Health Care Executive Order

October 12, 2017

President Trump today (October 12, 2017) issued the following that he promised to be the first in a series of executive orders and other administrative actions that his administration will roll out to provide Obamacare relief  for consumers, employers and others by promoting healthcare choice and competition given the continued difficulty by the Republican-led Congress to pass legislation repealing or replacing the health care law.

What actually will result remains to be seen.  Like the January 20, 2017 Executive Order Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal that President Trump signed as his first executive order, the new Executive Order doesn’t actually change anything; it merely directs the agencies to review and propose for implementation changes to regulations and other guidance allowed by law.

On the heels of his announcement of the Executive Order, President Trump moved forward on his promise to take other action on Obamacare by announcing that the Administration will not continue funding for individual subsidies that currently are continued under an Obama Administration action in the absence of Congressional action funding those subsidies.

Concerned parties should monitor and inform themselves about proposed changes in the Executive Order and other actions as they are proposed and develop, and provide timely comments and other input to help influence the shape and content of any changes proposed or adopted in response to the Executive Order.  Solutions Law Press, Inc. will be monitoring developments.   Stay tuned for updates.

Language of Executive Order

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1. Policy.

(a) It shall be the policy of the executive branch, to the extent consistent with law, to facilitate the purchase of insurance across State lines and the development and operation of a healthcare system that provides high-quality care at affordable prices for the American people. The Patient Protection and Affordable Care Act (PPACA), however, has severely limited the choice of healthcare options available to many Americans and has produced large premium increases in many State individual markets for health insurance. The average exchange premium in the 39 States that are using http://www.healthcare.gov in 2017 is more than double the average overall individual market premium recorded in 2013. The PPACA has also largely failed to provide meaningful choice or competition between insurers, resulting in one-third of America’s counties having only one insurer offering coverage on their applicable government-run exchange in 2017.

(b) Among the myriad areas where current regulations limit choice and competition, my Administration will prioritize three areas for improvement in the near term: association health plans (AHPs), short-term, limited-duration insurance (STLDI), and health reimbursement arrangements (HRAs).

(i) Large employers often are able to obtain better terms on health insurance for their employees than small employers because of their larger pools of insurable individuals across which they can spread risk and administrative costs. Expanding access to AHPs can help small businesses overcome this competitive disadvantage by allowing them to group together to self-insure or purchase large group health insurance. Expanding access to AHPs will also allow more small businesses to avoid many of the PPACA’s costly requirements. Expanding access to AHPs would provide more affordable health insurance options to many Americans, including hourly wage earners, farmers, and the employees of small businesses and entrepreneurs that fuel economic growth.

(ii) STLDI is exempt from the onerous and expensive insurance mandates and regulations included in title I of the PPACA. This can make it an appealing and affordable alternative to government-run exchanges for many people without coverage available to them through their workplaces. The previous administration took steps to restrict access to this market by reducing the allowable coverage period from less than 12 months to less than 3 months and by preventing any extensions selected by the policyholder beyond 3 months of total coverage.

(iii) HRAs are tax-advantaged, account-based arrangements that employers can establish for employees to give employees more flexibility and choices regarding their healthcare. Expanding the flexibility and use of HRAs would provide many Americans, including employees who work at small businesses, with more options for financing their healthcare.

(c) My Administration will also continue to focus on promoting competition in healthcare markets and limiting excessive consolidation throughout the healthcare system. To the extent consistent with law, government rules and guidelines affecting the United States healthcare system should:

(i) expand the availability of and access to alternatives to expensive, mandate-laden PPACA insurance, including AHPs, STLDI, and HRAs;

(ii) re-inject competition into healthcare markets by lowering barriers to entry, limiting excessive consolidation, and preventing abuses of market power; and

(iii) improve access to and the quality of information that Americans need to make informed healthcare decisions, including data about healthcare prices and outcomes, while minimizing reporting burdens on affected plans, providers, or payers.

Sec. 2. Expanded Access to Association Health Plans.

Within 60 days of the date of this order, the Secretary of Labor shall consider proposing regulations or revising guidance, consistent with law, to expand access to health coverage by allowing more employers to form AHPs. To the extent permitted by law and supported by sound policy, the Secretary should consider expanding the conditions that satisfy the commonality‑of-interest requirements under current Department of Labor advisory opinions interpreting the definition of an “employer” under section 3(5) of the Employee Retirement Income Security Act of 1974. The Secretary of Labor should also consider ways to promote AHP formation on the basis of common geography or industry.

Sec. 3. Expanded Availability of Short-Term, Limited‑Duration Insurance.

Within 60 days of the date of this order, the Secretaries of the Treasury, Labor, and Health and Human Services shall consider proposing regulations or revising guidance, consistent with law, to expand the availability of STLDI. To the extent permitted by law and supported by sound policy, the Secretaries should consider allowing such insurance to cover longer periods and be renewed by the consumer.

Sec. 4. Expanded Availability and Permitted Use of Health Reimbursement Arrangements.

Within 120 days of the date of this order, the Secretaries of the Treasury, Labor, and Health and Human Services shall consider proposing regulations or revising guidance, to the extent permitted by law and supported by sound policy, to increase the usability of HRAs, to expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with nongroup coverage.

Sec. 5. Public Comment.

The Secretaries shall consider and evaluate public comments on any regulations proposed under sections 2 through 4 of this order.

Within 180 days of the date of this order, and every 2 years thereafter, the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor and the Federal Trade Commission, shall provide a report to the President that:

(a) details the extent to which existing State and Federal laws, regulations, guidance, requirements, and policies fail to conform to the policies set forth in section 1 of this order; and

(b) identifies actions that States or the Federal Government could take in furtherance of the policies set forth in section 1 of this order.

Sec. 7. General Provisions.

(a) Nothing in this order shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

DONALD J. TRUMP

THE WHITE HOUSE,

October 12, 2017

Implications & Actions

The impact of this and other Executive Orders and other Presidential actions depend upon what actions, if any, the agencies determine they are allowed by law to take and how those changes are implemented.  Concerned persons and organizations should begin preparing input to the agencies and monitoring and commenting on proposals and other guidance to help shape the outcome.

Solutions Law Press, Inc. is preparing initial analysis of this Executive Order and will be closely monitoring and updating this analysis.  Follow up to learn more and stay abreast of new 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 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.

Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality, governmental and other highly regulated employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes. Author of numerous works on privacy and data security, Ms. Stamer‘s experience includes involvement in cyber security and other data privacy and security matters for more than 20 years.

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

Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.

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

About Solutions Law Press, Inc.™

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

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

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

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

©2017 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.


Dealing With HR, Benefits & Other Headaches From Equifax and Other Data Breach

October 6, 2017

As businesses continue to struggle to comply with the growing plethora of federal and state laws mandating data security, the identity theft and cyber security epidemic keeps growing.

As human resources and other business leaders work to guard their own data and respond to employee demands for assistance in responding to breaches of their personal financial and other data, this weeks’ announcement that embattled credit monitoring giant Equifax has been awarded the exclusive contract to provide taxpayer identification and fraud prevention services to the Internal Revenue Service has many questioning whether these investments are futile.

The IRS’ announcement comes despite the September 7, 2017 announcement by Equifax of a data breach of its records impacting sensitive personal information of millions of consumers including:

  • The names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers of an estimated 143 million U.S. consumers;
  • Credit card numbers for approximately 209,000 U.S. consumers,
  • Certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers,and
  • Personal information for certain U.K. and Canadian consumers.

The huge breach already was creating many headaches for many businesses and their human resources departments before the IRS announced the award of the contract to Equifax. Due to the massive size of the breach, mist companies have been required to respond to concerns of workers impacted directly by the breach as well as requests of employees and identity theft protection companies that the business consider offering cybersecurity protection for employees or customers.

Beyond helping their workforce understand and cope with the news, many businesses and employee benefit plans also face the added headache of needing to investigate and respond to concerns about their own potential responsibilities to provide breach notification or take other actions. This added headache arises due to their or their plans’ use of Equifax or vendors utilizing Equifax to run employee or vendor background checks or carry out internal employee or employee benefit plan, customer or other business activities. These involvements often give rise to duties to conduct investigations and potentially provide notification or other responses to employees, applicants, benefit plan members, contractors or customers whose data may have been impacted under the Fair and Accurate Credit Transactions Act (FACTA), the Health Insurance Portability and Accountability Act (HIPAA), the Employee Retirement Income Security Act (ERISA) Fiduciary Responsibility rules or various other federal and state laws and regulations, vendor contracts or their own data privacy or security policies.

When notification is recommended or required, human resources and other business leaders also have to consider if modifications should be considered to standard protocols recommended to data breach victims. Notification and registration as an identity theft victim with Equifax long has been a standard part of the federal and state government recommended protocol for recommended to consumers impacted by identity theft or other data breaches. See,e.g., IRS Taxpayer Guide To Identity Theft. Although government agencies as of yet have not changed this recommendation to remove Equifax reporting, many consumers and others view reporting to Equifax as akin to the fox watching the hen house. Consequently, employers and other parties helping consumers respond to the breach often receive push back or questions from consumers about the appropriateness and security reporting to Equifax in light of its breach.

Beyond evaluating and handling their own legal responsibilities to investigate and deal with any breach impacting their data, employers and other business leaders also likely are or should consider what claims against Equifax, other vendors and business partners involved with Equifax and their own liability insurers are available and warranted to help cover the costs and potential liabilities for the business arising from the breach and it’s fall out.

As employers and other businesses work through these issues, They should keep in mind that the fallout is likely to continue for years and be further complicated by past and subsequent breaches impacting other governmental and private organizations. Human resources, employee benefits and other businesses and their leaders can expect to experience challenges dealing with fraudulent uses of misappropriated information as well as demands that they tighten up their background check, data security and usage and other practices and documentation to mitigate risks from the compromised data.

Human resources, employee benefits and other business leaders need to secure the assistance of counsel experienced in guiding their organizations through these and other challenges.

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.

Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality, governmental and other highly regulated employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes. Author of numerous works on privacy and data security, Ms. Stamer‘s experience includes involvement in cyber security and other data privacy and security matters for more than 20 years.

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

Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.

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

About Solutions Law Press, Inc.™

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

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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 provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.

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

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

©2017 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.


DOL Aggressively Targeting Restaurants For Wage & Hour & Child Labor Law Violations

November 3, 2016

Restaurant employers beware! Restaurants are the target of a highly successful, U.S. Department of Labor Wage and Hour Division (WHD) restaurant enforcement and compliance initiative that WHD already has used to nail a multitude of restaurants across the country for “widespread violations” of Fair Labor Standards Act (FLSA) minimum wage, overtime, child labor and other wage and hour laws (WH Law).

Having reportedly found WH Law violations in “nearly every one” of the WH Law investigations conducted against restaurant employers during 2016 and recovered millions of dollars of back pay and penalties from restaurants caught through investigations conducted under its WHD Restaurant Enforcement Initiative, WHD Administrator Dr. David Weil recently confirmed WHD plans to expand the restaurant employers targeted for investigation and other efforts to punish and correct WH Law violations under the Restaurant Enforcement Initiative through 2017 in an October 5, 2016 WHD News Release: Significant Violations In The Austin Restaurant Industry Raise Concerns For Us Labor Department Officials (News Release).

The News Release quotes Administrator Weil as stating:

The current level of noncompliance found in these investigations is not acceptable …WHD will continue to use every tool we have available to combat this issue. This includes vigorous enforcement as well as outreach to employer associations and worker advocates to ensure that Austin restaurant workers receive a fair day’s pay for a fair day’s work.

Given the substantial back pay, interest, civil or in the case of willful violations, criminal penalties, costs of defense and prosecution and other sanctions that restaurant employers, their owners and management can face if their restaurant is caught violating FLSA or other WH Laws, restaurants and their leaders should arrange for a comprehensive review within the scope of attorney-client privilege of the adequacy and defensibility of their existing policies, practices and documentation for classifying, assigning duties, tracking regular and overtime hours, paying workers and other WH Law compliance responsibilities and opportunities to mitigate risks and liabilities from WH Law claims and investigations.

Many Restaurants Already Nailed Through Restaurant Enforcement Initiative

Even before the planned 2017 expansion of its Restaurant Enforcement Initiative, WHD’s enforcement record shows WHD’s efforts to find and punish restaurants that violate WH Laws are highly successful. Restaurant employers overwhelmingly are the employers targeted by WHD in the vast majority of the WH Law settlements and prosecutions announced in WHD News Releases published over the past two years, including aggregate back pay and penalty awards of more than $11.4 million recovered through the following 31 actions announced by WHD between January 1, 2016 and October 31, 2016:

Enforcement Actions Highlight Common Restaurant WH Law Compliance Concerns

Restaurant employers, like employers in most other industries, are subject to a host of minimum wage, overtime and other requirements including the FLSA requirement that covered, nonexempt employees earn at least the federal minimum wage of $7.25 per hour for all regular hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also are required to maintain accurate time and payroll records and must comply with child labor, anti-retaliation and other WH Law requirements.

The News Release identified some of the common violations WHD uncovered in these investigations included employers:

  • Requiring employees to work exclusively for tips, with no regard to minimum-wage standards;
  • Making illegal deductions from workers’ wages for walkouts, breakages, credit card transaction fees and cash register shortages, which reduce wages below the required minimum wage;
  • Paying straight-time wages for overtime hours worked.
  • Calculating overtime incorrectly for servers based on their $2.13 per hour base rates before tips, instead of the federal minimum wage of $7.25 per hour.
  • Failing to pay proper overtime for salaried non-exempt cooks or other workers;
  • Creating illegal tip pools involving kitchen staff;
  • Failing to maintain accurate and thorough records of employees’ wages and work hours.
  • Committing significant child labor violations, such as allowing minors to operate and clean hazardous equipment, including dough mixers and meat slicers.

Use Care To Verify Tipped Employees Paid Properly

Based on the reported violations, restaurants employing tipped employees generally will want to carefully review their policies, practices and records regarding their payment of tipped employees. Among other things, these common violations reflect a widespread misunderstanding or misapplication of special rules for calculating the minimum hourly wage that a restaurant must pay an employee that qualifies as a tipped employee.  While special FLSA rules for tipped employees may permit a restaurant to claim tips (not in excess of $5.12 per hour) actually received and retained by a “tipped employee,” not all workers that receive tips are necessarily covered by this special rule. For purposes of this rule, the definition of “tipped employee” only applies to an employee who customarily and regularly receives more than $30 per month in tips.

Also, contrary to popular perception, the FLSA as construed by the WHD does not set the minimum wage for tipped employees at $2.13 per hour. On the contrary, the FLSA requirement that non-exempt workers be paid at least the minimum wage of $7.25 per hour for each regular hour worked also applies to tipped employees. When applicable, the special rule for tipped employees merely only allows an employer to claim the amount of the tips that the restaurant can prove the tipped employee actually received and retained (not in excess of $5.13 per hour) as a credit against the minimum wage of $7.25 per hour the FLSA otherwise would require the employer to pay the tipped employee. Only tips actually received by the employee may be counted in determining whether the employee is a tipped employee and in applying the tip credit.  If a tipped employee earns less than $5.13 per hour in tips, the restaurant must be able to demonstrate that the combined total of the tips retained by the employee and the hourly wage otherwise paid to the tipped employee by the restaurant equaled at least the minimum wage of $7.25 per hour.

Furthermore, restaurant or other employers claiming a tip credit must keep in mind that the FLSA generally provides that tips are the property of the employee. The FLSA generally prohibits an employer from using an employee’s tips for any reason other than as a credit against its minimum wage obligation to the employee (“tip credit”) or in furtherance of a valid tip pool.

Also, whether for purposes of applying the tip credit rules or other applicable requirements of the FLSA and other wage and hour laws, restaurant employers must create and retain appropriate records and other documentation regarding worker age, classification, hours worked, tips and other compensation paid and other evidence necessary to defend their actions with respect to tipped or other employees under the FLSA and other WH Law rules. Beyond accurately and reliably capturing all of the documentation required to show proper payment in accordance with the FLSA, restaurants also should use care to appropriately document leave, discipline and other related activities as necessary to show compliance with anti-retaliation, equal pay, family and medical leave, and other mandates, as applicable.  Since state law also may impose additional minimum leave, break time or other requirements, restaurants also generally will want to review their policies, practices and records to verify their ability to defend their actions under those rules as well.

Child Labor Rules Require Special Care When Employing Minors

While hiring workers under the age of 18 (minors) can help a restaurant fulfill its staffing needs while providing young workers valuable first time or other work experience, restaurants that hire minors must understand and properly comply with any restrictions on the duties, work hours or other requirements for employment of the minor imposed by federal or state child labor laws.

As a starting point, the legal requirements for employing minors generally greater, not less, than those applicable to the employment of an adult in the same position.  Employers employing workers who are less than 18 years of age (minors) should not assume that the employer can pay the minor less than minimum wage or skip complying with other legal requirements that normally apply to the employment of an adult in that position by employing the minor in an “internship” or other special capacity. The same federal and state minimum wage, overtime, safety and health and nondiscrimination rules that generally apply to the employment of an adult generally will apply to its employment of a worker who is a minor.

Beyond complying with the rules for employment of adults, restaurants employing minors also must ensure that they fully comply with all applicable requirements for the employment of minors imposed under the FLSA child labor rules and applicable state law enacted to ensure that when young people work, the work is safe and does not jeopardize their health, well-being or educational opportunities.   Depending on the age of the minor, the FLSA or state child labor rules may necessitate that a restaurant tailor the duties and hours of work of an employee who is a minor to avoid the substantial liability that can result when an employer violates one of these child labor rules.

The FLSA child labor rules, for instance, impose various special requirements for the employment of youth 14 to 17 years old. See here.  As a starting point, the FLSA child labor rules prohibit the any worker less than 18 years of age from operating or cleaning dough mixers, meat slicers or other hazardous equipment. Depending on the age of the minor worker, the FLSA child labor rules or state child labor laws also may impose other restrictions on the duties that the restaurant can assign or allow the minor to perform.  Restaurants hiring any worker that is a minor must evaluate the duties identified as hazardous “occupations” that the FLSA child labor rules prohibit a minor of that age to perform here as an “occupation” and take the necessary steps to ensure the minor is not assigned and does not perform any of those prohibited activities in the course of his employment.

In addition to ensuring that minors don’t perform prohibited duties, restaurants employing minors also comply with all applicable restrictions on the hours that the minor is permitted to work based on the age of the minor worker.  For instance, the FLSA and state child labor rules typically prohibit scheduling a minor less than 16 years of age to work during school hours and restrict the hours outside school hours the minor can work based on his age.  Additional restrictions on the types of jobs and hours 14- and 15-year-olds may work also may apply.

Compliance with the FLSA child labor rules is critically important for any restaurant or other employer that employs a minor, particularly since the penalties for violation of these requirements were substantially increased in 2010, as Streets Seafood Restaurant learned earlier this year.

According to a WHD News Release, Street’s Seafood Restaurant paid $14,288 in minimum wage and overtime back wages and an equal amount in liquidated damages totaling $28,577 to eight employees, and also was assessed a civil money penalty of $14,125 for FLSA child labor violations committed in the course of its employment of four minors ages 15 to 17. Specifically, investigators found Street’s Seafood Restaurant:

WHD’s announcement of the settlement resolving these child labor laws quotes Kenneth Stripling, director of the division’s Birmingham District Office as stating:

Employing young people provides valuable experience, but that experience must never come at the expense of their safety …Additionally, employers have an obligation to pay employees what they have legally earned. All workers deserve a fair day’s pay for a fair day’s work. Unfortunately, Street’s Seafood violated not only child labor laws, but has also shorted workers’ pay. The resolution of this case sends a strong message that we will not tolerate either of those behaviors.

Restaurants Must Act To Minimize Risks

Beyond WHD’s direct enforcement actions, WHD also is seeking to encourage private enforcement of WH Law violations by conducting an aggressive outreach to employees, their union and private plaintiff representatives, states and others. Successful plaintiffs in private actions typically recover actual back pay, double damage penalties plus attorneys’ fees and costs. The availability of these often lucrative private damages makes FLSA and other WH Law claims highly popular to disgruntled or terminated workers and their lawyers.  When contemplating options to settle claims WH Law claims made by a worker, employers need to keep in mind that WHD takes the position that settlements with workers do not bar the WHD from taking action unless the WHD joins in the settlement and in fact, past settlements may provide evidence of knowingness or willfulness by the employer in the event of a WHD prosecution.  The substantial private recoveries coupled with these and other WHD enforcement and other compliance actions mean bad news for restaurant employers that fail to manage their FLSA and other WH Law compliance.  Restaurant employers should act within the scope of attorney-client privilege to review and verify their compliance and consult with legal counsel about other options to minimize their risk and streamline and strengthen their ability to respond to and defend against audits, investigations and litigation.

Beyond verifying the appropriateness of their timekeeping and compensation activities and documentation, restaurants and staffing or management organizations working with them also should use care to mitigate exposures that often arise from missteps or overly aggressive conduct by others providing or receiving management services or staffing services. All parties to these arrangements and their management should keep in mind that both parties participating in such arrangements bear significant risk if responsibilities are not properly performed.   Both service and staffing providers and restaurants using their services should insist on carefully crafted commitments from the other party to properly classify, track hours, calculate and pay workers, keep records, and otherwise comply with WH Laws and other legal requirements.  Parties to these arrangements both generally also will want to insist that these contractual reassurances are backed up with meaningful audit and indemnification rights and carefully monitor the actions of service providers rendering these services.

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 and management consultant, author, public policy advocate and lecturer widely known for work, 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. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares shared her thought leadership, experience and advocacy on these and other concerns by her service in the leadership of a broad range of other professional and civic organization including 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, 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; former Board Compliance Chair and Board member of the National Kidney Foundation of North Texas, 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, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Council, 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.

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, employee benefits, compensation, and other regulatory and operational risk management. Examples of her many highly regarded publications on these matters include the “Texas Payday Law” Chapter of Texas Employment Law, as well as thousands of other publications, programs and workshops these and other 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. For additional information about Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

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

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

©2016 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ All other rights reserved.


Ranching Employers: Labor Department Tightening H-2A VISA Rules For Employing Range Workers

October 19, 2015

Ranching businesses that employ foreign workers with H-2A VISAs to herd sheep, goats, cattle or other range livestock (“Herders”) should begin preparing to comply with significant changes in the Labor Department regulations governing the recruitment and employment of Herders made in the new Labor Department Final Regulation on Temporary Agricultural Employment of H-2A Foreign Workers in the Herding or Production of Livestock on the Range (Final Rule).

The Final Rule available for review here significantly modifies the Labor Department’s existing rules on the employment of Herders under the H-2A VISA program in ways likely to affect the practices of virtually all ranching businesses that current employ such workers.  These changes include the consolidation of the currently separate set of rules for Herders working cattle versus those working other hooved livestock into a single rule, significant changes to the wage and other employment conditions that ranching businesses must meet when employing Herders, and streamlining certain procedures employers can use to apply for H-2A visas for Herders.

Ranching businesses and other employers that presently employ or contemplate employing Herders under the H-2A VISA program will want to consult with legal counsel for assistance in evaluating the effect of these rules on the employment of Herders to adjust practices and budgets as necessary to comply with these new requirements.

  • Single Rule For All Herding Jobs

As a starting point, the new Final Rule establishes a single regulation covering all H-2A VISA jobs related to the herding or production of livestock on the range. The Department currently administers separate procedures through two distinct Training and Employment Guidance Letters; one covering the herding and production of only sheep/goats and the other covering other livestock (e.g. cattle).  The Final Rule will apply to Herders working in jobs relating to the herding of all species of domestic hooved animals customarily raised on the range under a single, integrated rule.  It generally will cover jobs typically performed on call 24 hours per day, 7 days per week.  It will apply to work:

  • Performed on the range for the majority of workdays (more than 50 percent);
  • Generally requiring the use of range (including remote, non-mobile) housing, where the work sites are not near enough to the worker’s residence or ranch to permit the worker to reasonably return to a fixed housing location; and
  • Consisting entirely of duties and activities that are, or are closely and directly related to, herding and livestock production. (An enhanced definition includes examples of duties that are and are not closely and directly related.)

For this purpose, the Final Rule defines “range” as any area located away from the ranch headquarters where the herder is required to constantly attend to the livestock, evaluated based on the totality of the circumstances using a multi-factor test. Factors include whether the land is uncultivated, involves wide expanses, such as thousands of acres, and/or is located in remote, isolated areas; and whether the work typically requires range housing to enable the herder to constantly attend to the herd.

  • Wage Requirement Changes

The Final Rule also will change the rules for determining the wages that employers must pay Range Workers.  The Final Rule mandates that employers pay a wage, that equals or exceeds the highest of the monthly AEWR (described more below), collective bargaining agreement, or applicable minimum wage set by court or law (e.g., Federal, State or local minimum wage), free and clear at least twice monthly during the entire certified period of employment.

The new AEWR will be an amount set by the Labor Department on the effective date of the Final Rule or thirty days from its publication. The new AEWR will apply to all pending and future requests for prevailing wages, as well as all open certifications.  Relative to the new AEWR, the Final Rule establishes a new methodology for setting the monthly AEWR for all range occupations using the current Federal minimum wage ($7.25/hour) as the basis for an initial national monthly wage rate, calculated based on a 48-hour workweek. This initial AEWR for range occupations will be adjusted annually based on the Employment Cost Index for wages and salaries (ECI), beginning in 2017.  The Final Rule also specifies that to convert the hourly wage rate to a monthly wage rate, the Labor Department multiplies the hourly wage rate by 48 hours and 4.333 weeks.  Finally, the Final Rule provides for a a two-year transition phase in of the new AEWR starting with requiring 80 percent of the full wage from the effective date of the Final Rule through calendar year 2016, then 90 percent in calendar year 2017, and full implementation beginning in calendar year 2018.

The Department of Labor says these changes are needed to correct “wage stagnation” over the past 20 years.  In other words, employers should expect to see wage costs rise.

  • Stricter Rage Worker Housing & Other Employment Condition Requirements

The Final Rule also tightens the required housing and other employment conditions that ranchers must fulfill when employing Herders on the range.  The Labor Department says these changes are made to better protect U.S. workers doing essentially the same jobs as H-2A workers by preventing adverse effect on U.S. worker’s wages and working conditions.   For instance, the Final Rule:

  • Establishes specific standards for range housing used for range workers, identifies the circumstances in which heating equipment is required.  It also states that “range housing” includes housing that is remote, but need not be mobile and provides for SWA inspection at least every three years, while permitting SWAs to inspect more often.
  • Clarifies that the employer must disclose in the job order and provide range workers all tools, supplies, and equipment required by law, by the employer, or by the nature of the work to perform the duties assigned in the job offer safely and effectively, without charge or deposit charge. Additionally, the Final Rule continues the requirement that employers provide workers with an effective means of communicating with persons capable of responding to the worker’s needs in case of an emergency.
  • Requires employers to provide adequate food, free of charge, and adequate potable water to range workers. The Final Rule also quantifies the minimum amount of potable water the employer must provide (4.5 gallons per day for drinking and cooking purposes). Where potable water cannot be transported to the worker by motorized vehicle, the Final Rule allows the employer to rely on natural sources of water provided that it provides the worker with the means to test and render that water potable.
  • Streamlined Filing Requirements 

The Final Rule also streamlines the H-2A VISA application process by allowing employers to file H-2A applications directly with the Chicago National Processing Center (NPC) simultaneously with the H-2A Application for Temporary Employment Certification, Form ETA-9142A.  This change eliminates the current requirement that employers first file the H-2A application with the State Workforce Agency (SWA),  It also allows  and allowing agricultural associations of employers, who file as joint employers with one or more of their members in more than two contiguous states, to file a single “master application” and job order covering the workforce needs of each association-member. Identifies specific eligibility criteria for jobs covered by these procedures and provides that non-range duties and activities are governed by the general H-2A procedures and standards.

  • Changes To Recruitment Requirements

The Final Rule also modifies certain of the recruitment rules.  Some of the more notable recruitment rule changes are that the Final Rule:

  • Brings consistency to job order clearance by having job orders for all range occupations remain active until 50 percent of the work contract period has elapsed.
  • Requires that all range occupation jobs appear in the DOL’s national electronic repository until 50 percent of the work contract period for the job opportunity(ies) has elapsed, so U.S. workers may easily learn about these job openings and make themselves available for work to employers from across the nation.
  • Expands the waiver previously applied to range sheep and goat herding occupations to all range herding and livestock production occupations so that newspaper advertisement is not required.
  • Period of Need

The Final Rule specifies that employers hiring range workers for herding or production of sheep or goats may list a period of up to 364 days on the application and job order, consistent with longstanding practice.  In contrast, employers hiring range workers for herding or production of other livestock may list a maximum period of 10 months, consistent with longstanding practice.

These impending changes will require most employers of Range Workers to make significant adjustments in their practices as well as their budgets.  To help prepare for these changes and preserve valuable lead time to respond, employers of Range Workers should consult with qualified legal counsel for assistance in evaluating the implications of these new rules on their current practices and with planning to respond to these changes.

For Help With Investigations, Policy Updates Or Other Needs

Recognized as a “Top” attorney in employee benefits, labor and employment and health care law extensively involved in health and other employee benefit and human resources policy and program design and administration representation and advocacy throughout her career, Cynthia Marcotte Stamer is a practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., a member of Stamer│Chadwick │Soefje PLLC, author, pubic speaker, management policy advocate and industry thought leader with more than 27 years’ experience practicing at the forefront of employee benefits and human resources law.

Ms. Stamer helps management manage. Ms. Stamer’s legal and management consulting work throughout her 28 plus year career has focused on helping organizations and their management use the law and process to manage people, process, 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 works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance.  She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.

A Fellow in the American College of Employee Benefit Counsel, past Chair and current Welfare Benefit Committee Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group,  an ABA Joint Committee on Employee Benefits Council Representative and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer is recognized nationally and internationally for her practical and creative insights and leadership on health and other employee benefit, human resources and insurance matters and policy.

Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.  Best-known for her extensive work helping health care, insurance and other highly regulated entities manage both general employment and management concerns and their highly complicated, industry specific corporate compliance, internal controls and risk management requirements, Ms. Stamer’s clients and experience also include a broad range of other businesses.  Her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes.  Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.

Ms. Stamer also uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, ex-patriot and medical tourism, on site medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities.

As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others.

She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large-scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.

Ms. Stamer also is deeply involved in helping to influence the Affordable Care Act and other health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations.  She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally.  A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting and other JCEB agency meetings.  She also works as a policy advisor and advocate to many business, professional and civic organizations.

Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, 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 publications.

She also currently or previously 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. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.  She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see www.cynthiastamer.com, or www.stamerchadwicksoefje.com   the member of contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

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

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

©2015 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press. All other rights reserved.


Obama Administration Proposal Would Extend FLSA Minimum Wage & Overtime Requirements To 5 Million+ Workers

June 30, 2015

U.S. should brace for potentially huge increases in their federal minimum wage overtime costs and liabilities if the U.S. Department of Labor Wage and Hour Division (WHD) implements a Proposed Fair Labor Standards Act Rule Change (Proposed Rule) that would extend overtime pay rights to nearly 5 million additional workers by guaranteeing overtime pay to most salaried workers earning less than an estimated $50,440 next year.  While the Proposed Rule has not yet been published in the Federal Register, the WHD released a prepublication copy for public review in connection with President Obama’s announcement of plans to implement the change yesterday.

The FLSA currently requires that covered employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also must maintain accurate time and payroll records. The FLSA provides that employers who violate the law are liable to employees for their back wages and an equal amount in liquidated damages. Liquidated damages are paid directly to the affected employees.

These FLSA rules generally apply to all common law employees other than those that the employer can prove meet the requirements of one of a limited number of exemptions to these rules.  The Proposed Rule would change the requirements for one of the exemptions most commonly relied upon by employers for not paying overtime to salaried workers – the “White Collar Exemption.”

Since 1940 and last updated by the WHD while President George W. Bush was President, generally have required an employer prove that an employee meets each of three tests for one of the FLSA’s White Collar Exemptions to apply:

  • The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed;
  • The amount of salary paid must meet a minimum specified amount; and
  • The employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations.

Among other things, the Proposed Rule if adopted as presently proposed would update current WHD regulations governing which executive, administrative, and professional employees (white collar workers) qualify as exempt from the FLSA minimum wage and overtime requirements often referred to as the “White Collar Exemption”:

  • Immediately raise the threshold under which most salaried workers are guaranteed overtime to equal the 40th percentile of weekly earnings for full-time salaried workers. As proposed, this would raise the salary threshold from $455 a week ($23,660 a year) to a projected level of $970 a week ($50,440 a year) in 2016.  WHD says nearly doubling the minimum salary threshold for a worker to qualify as exempt “minimizes the risk that employees legally entitled to overtime will be subject to misclassification based solely on the salaries they receive, without excluding from exemption an unacceptably high number of employees who meet the duties test.”;
  • Increase the total annual compensation requirement needed to exempt highly compensated employees (HCEs) to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually); and
  • Establish a mechanism for automatically updating these qualifying standard salary and HCE total annual compensation requirements.

Beyond these changes, the WHD also is considering various changes to the duties test and invites suggestions for additional occupational examples in the current White Collar Exemption as well as comments on whether its regulations should require employers to take into account nondiscretionary bonuses when determining whether an employee meets the standard salary requirement.

The Administration claims that the Proposed Rule is needed to workers and their employers with greater “clarity” about when workers qualify for overtime.  Employers concerned about minimum wage, overtime and other wage and hour costs should recognize that the Proposed Rule would accomplish this clarification by substantially expanding the income and number of white collar workers that entitled to be paid in accordance with the FLSA’s minimum wage and overtime rules.

Even without the adoption of the Proposed Rule, U.S. businesses already face huge and ever-growing FLSA minimum wage, overtime and recordkeeping exposures.  The availability of substantial actual and punitive damages plus attorneys fees and difficulties that unprepared employers frequently encounter meeting their burdens of proof make wage and hour and overtime claims attractive lawsuits for disgruntled employees and their plaintiff’s counsel.  Meanwhile, the pro-worker’s rights Obama Administration has made enforcement of these rules a high priority.  Increasingly, the reach of these exposures has expanded further as plaintiffs and the WHD have challenges effectively many employers’ classification of workers as independent contractors.  See  $1.4M FLSA Back Pay Award Demonstrates Worker Misclassification Risks.  Amid these already substantial exposures, most employers will view proposals to expand the scope of workers eligible for FLSA rights and protections as extremely concerning.

Employers concerned about the potential implications of this rule should begin reviewing the Proposed Rule in preparation of providing comments and feedback to members of Congress, the WHD through its rulemaking comment process, and the public.  The deadline for commenting to the WHD will be 60 days from the date of publication of the Proposed Rule in the Federal Register.

For Legal or Consulting Advice, Legal Representation, Training Or More Information

If you need help responding to these new or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, help updating or defending your workforce or employee benefit policies or practices, or other related assistance, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Recognized as a “Top” attorney in employee benefits, labor and employment and health care law extensively involved in health and other employee benefit and human resources policy and program design and administration representation and advocacy throughout her career, Cynthia Marcotte Stamer is a practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., a member of Stamer│Chadwick │Soefje PLLC, author, pubic speaker, management policy advocate and industry thought leader with more than 27 years’ experience practicing at the forefront of employee benefits and human resources law.

A Fellow in the American College of Employee Benefit Counsel, past Chair and current Welfare Benefit Committee Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group,  an ABA Joint Committee on Employee Benefits Council Representative and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms.Stamer is recognized nationally and internationally for her practical and creative insights and leadership on health and other employee benefit, human resources and insurance matters and policy.

Ms. Stamer helps management manage. Ms. Stamer’s legal and management consulting work throughout her 27 plus year career has focused on helping organizations and their management use the law and process to manage people, process, 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 helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance.  She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.  Well known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes.  Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.

Ms. Stamer uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, ex-patriate and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities.  As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others.  She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.

Ms. Stamer also is deeply involved in helping to influence the Affordable Care Act and other health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations.  She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally.  A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting and other JCEB agency meetings.  She also works as a policy advisor and advocate to many business, professional and civic organizations.

Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, 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 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. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.  She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see www.cynthiastamer.com, or www.stamerchadwicksoefje.com   the member of contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

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

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

©2015 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press. All other rights reserved.


Government Contractors Get More Time To Comment On Burdens Of OFCCP Proposed Compensation Transparency Disclosure Regs

November 2, 2014

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs is giving employers that are government contractors and the subcontractors working with them more time to comment on for its   proposed rule (Proposed Rule) requiring federal contractors and subcontractors to submit an annual Equal Pay Report on employee compensation to the OFCCP.  The Proposed Rule is one of several proposed or adopted rules that the Obama Administration hopes will make it easier for federal regulators like OFCCP and private plaintiffs to identify potential violations of federal discrimination rules and enforce their rights under these and other rules.

Like many OFCCP rules promulgated by the Obama Administration in the post-Stimulus Bill era, the Proposed Rule both reaches many contractors that historically might not have been subject to these types of OFCCP reporting requirements and broadens the reporting obligations of government contractors under the OFCCP regulations.  The Proposed Rule would apply to companies that file EEO-1 reports, with more than 100 employees, and hold federal contracts or subcontracts worth $50,000 or more for at least 30 days. Through the Equal Pay Report, OFCCP would be able to collect summary employee pay and demographic data using existing government reporting frameworks.

The Proposed Rule seeks to formally implement the directives of the  presidential memorandum President Obama signed April 8 instructing the Labor Secretary to propose a rule to collect summary compensation data from federal contractors and subcontractors. The Labor Department originally published a notice of proposed rulemaking in the Federal Register on Aug. 8, with a deadline to submit comments by November. 6. Under an announcement published last week, OFCCP is extending the comment period until Monday, January 5, 2015.

The Proposed Rule is one of several rule changes proposed or adopted by OFCCP and other agencies under the Obama Administration that seek to expand federal oversight and enforcement of federal employment discrimination requirements.  In addition to the Proposed Rule, for instance, the OFCCP on September 17, 2014 also recently proposed Proposed Transparency Rule that would prohibit federal contractors from maintaining pay secrecy policies. The Proposed Transparency Rule would prohibit federal contractors and subcontractors from firing or otherwise discriminating against any employee or applicant for discussing, disclosing or inquiring about their compensation or that of another employee or applicant and also will face other new obligations.

Like a similar rule put forth by the National Labor Relations Board, the Proposed Transparency Rule scheduled for publication in the Federal Register on September 17, 2014 would:

  • Amend the equal opportunity clauses in Executive Order 11246 to afford protections to workers who talk about pay to include the nondiscrimination provision in Executive Order 13665.
  • Add definitions for compensation, compensation information, and essential job functions, terms which appear in the revised clauses.
  • Provide that contractors could use against allegations of discrimination under Executive Order 13665 one of the following two defenses as long as that defense is not based on a rule, policy, practice, agreement or other instrument that prohibits employees or applicants from discussing or disclosing their compensation or that of other employees consistent with the provisions in the equal opportunity:
    • That the action was based on a legitimate workplace rule that does not violate the transparency rule;  or
    • That the adverse action was against an employee, who the employer entrusted with confidential compensation information of other employees or applicants as part of his or her essential job functions, for disclosing the compensation of other employees or applicants, unless the disclosure occurs in certain limited circumstances; and
    • the Proposed Rule’s compensation transparency requirement; or
  • Add a requirement that Federal contractors to tell employees and job applicants of the nondiscrimination protection created by Executive Order 13665 using specific language dictated by the OFCCP in handbooks and manuals, and through electronic or physical postings.
  • In addition, OFCCP also is considering requiring government contractors that provide manager training or meetings to include nondiscrimination based on pay in their existing manager training programs or meetings while encouraging other contractors to adopt this as a best practice for minimizing the likelihood of workplace discrimination.

The deadline for comment on that Proposed Transparency Rule is in December.

Government contractors or other businesses concerned about the potential burdens of compliance with either of these proposed rules should act promptly to review and submit comments within the comment period.

For Help With Investigations, Policy Updates Or Other Needs

If you need help in conducting a risk assessment of or responding to an IRS, DOL, Justice Department, or other federal or state agencies or other private plaintiff or other legal challenges to your organization’s existing workforce classification or other labor and employment, compliance,  employee benefit or compensation practices, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469) 767-8872 .

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 23 years of work helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices. The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.   She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

If you or someone 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 or updating your profile here. For important information about this communication click here.

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 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.

©2014 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


Encourage Workers To Review Withholding As Part Of Annual Enrollment

October 23, 2014

Still Time to Act to Avoid Surprises at Tax-Time

With the year end approaching, employers can help employees get more bank from their paycheck by encouraging the employees to review their withholding before the year end as part of their annual enrollment periods.  The Internal Revenue Service (IRS) is recommends tax payers consider taking some of the following steps to avoid owing more taxes or getting a larger refund than necessary to bring the taxes you pay in advance closer to what you’ll owe when you file your tax return:

  • Adjust your withholding.  If you’re an employee and you think that your tax withholding will fall short of your total 2014 tax liability, you may be able to avoid an unexpected tax bill by increasing your withholding. If you are having too much tax withheld, you may get a larger refund than you expect. In either case, you can complete a new Form W-4, Employee’s Withholding Allowance Certificate and give it to your employer. Enter the added amount you want withheld from each paycheck until the end of the year on Line 6 of the W-4 form. You usually can have less tax withheld by increasing your withholding allowances on line 5. Use the IRS Withholding Calculator tool on IRS.gov to help you fill out the form.
  • Report changes in circumstances.  If you purchase health insurance coverage through the Health Insurance Marketplace, you may receive advance payments of the premium tax credit in 2014. It is important that you report changes in circumstances to your Marketplace so you get the proper type and amount of premium assistance. Some of the changes that you should report include changes in your income, employment, or family size. Advance credit payments help you pay for the insurance you buy through the Marketplace. Reporting changes will help you avoid getting too much or too little premium assistance in advance.
  • Change taxes with life events.  You may need to change the taxes you pay when certain life events take place. A change in your marital status or the birth of a child can change the amount of taxes you owe. When they happen you can submit a new Form W–4 at work or change your estimated tax payment.
  • Be accurate on your W-4.  When you start a new job you fill out a Form W-4. It’s important for you to accurately complete the form. For example, special rules apply if you work two jobs or you claim tax credits on your tax return. Your employer will use the form to figure the amount of federal income tax to withhold from your pay.
  • Pay estimated tax if required.  If you get income that’s not subject to withholding you may need to pay estimated tax. This may include income such as self-employment, interest, or rent. If you expect to owe a thousand dollars or more in tax, and meet other conditions, you may need to pay this tax. You normally pay the tax four times a year. Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay the tax.

Annual enrollment is an excellent time for employees to consider these actions, as their employee benefit elections impact on their withholding and other related tax consequences.  Sharing these ideas as part of the enrollment communications can help employees get the most out of their wages and their elections.

For Help With Investigations, Policy Updates Or Other Needs

If you need help with your organization’s management,workforce classification or other labor and employment, compliance,  employee benefit or compensation practices, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469) 767-8872 .

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 23 years of work helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices. The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.   She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

If you or someone 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 or updating your profile here. For important information about this communication click here.

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 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.

©2014 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


OFCCP FAQs On Veteran Hiring & Telework Rules

October 21, 2014

Facing heightened requirements, audits and scrutiny of their compliance with federal contracting requirements under the Obama Administration, federal government contractors and their subcontractors should review the adequacy of their existing practices and documentation in light of two new Office of Federal Contract Compliance Programs (OFCCP) Frequently Asked Questions (FAQs) concerning veteran hiring requirements and telework positions published October 17, 2014, as well as other recent guidance and enforcement developments.

  • The October 17 FAQs include :
    A FAQ located here on ways in which contractors may store self-identification information in compliance with the revised Section 503 regulations, and provides several options; and
  • A FAQ located here about how contractors may list jobs that are remote, full-time telework positions in compliance with VEVRAA’s mandatory job listing requirement.

Audit and enforcement of discrimination and a host of other government contractor requirements is a key enforcement and audit priority of the Obama Administration.  Additionally, the Obama Administration has expanded and tightened a wide range of OFCCP and other government contracting standards, reporting, notice and other requirements as part of its efforts to promote affirmative action, prounion and other regulatory agendas, particularly in light of challenges experienced in enacting legislation implementing these policy goals given the divided control of the House versus Senate in Congress.

For Help With Investigations, Policy Updates Or Other Needs

If you need help in conducting a risk assessment of or responding to an IRS, DOL, Justice Department, or other federal or state agencies or other private plaintiff or other legal challenges to your organization’s existing workforce classification or other labor and employment, compliance,  employee benefit or compensation practices, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469) 767-8872 .

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 23 years of work helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices. The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.   She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

If you or someone 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 or updating your profile here. For important information about this communication click here.

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 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.

©2014 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


Shell Oil/Motiva Enterprises $4.5M FLSA Overtime Backpay Settlement Reminder To Pay Workers Properly

September 16, 2014

Shell Oil Co. and Motiva Enterprises LLC, which markets Shell gasoline and other products, will pay $4,470,764 in overtime back wages to 2,677 current and former chemical and refinery employees to settle Department of Labor (Labor Department) charges they violated the Fair Labor Standards Act (FLSA).  The settlement with the Labor Department announced September 16, 2014 reminds businesses of the importance of properly tracking and paying workers for all compensable hours in accordance with the FLSA and other laws.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour. Workers who are not employed in agriculture and not otherwise exempt from overtime compensation are entitled to time and one-half their regular rates of pay for every hour they work beyond 40 per week. The law also requires employers to maintain accurate records of employees’ wages, hours and other conditions of employment, and it prohibits employers from retaliating against employees who exercise their rights under the law.

The settlement resolves charges made by the Labor Department’s Wage and Hour Division based on investigations at eight Shell and Motiva facilities in Alabama, California, Louisiana, Texas and Washington, which the Labor Department says found that the companies violated FLSA overtime provisions by not paying workers for the time spent at mandatory pre-shift meetings and failing to record the time spent at these meetings.

The Labor Department also says the investigations also revealed that those eight Shell Oil and Motiva refineries failed to pay workers for time spent attending mandatory pre-shift meetings. The companies required the workers to come to the meetings before the start of their 12-hour shift. Because the companies failed to consider time spent at mandatory pre-shift meetings as compensable, employees were not paid for all hours worked and did not receive all of the overtime pay of time and one-half their regular rate of pay for hours worked over 40 in a workweek. Additionally, the refineries did not keep accurate time records.

Shell, with U.S. headquarters in Houston, is an oil and natural gas producer involved in processing crude oil to manufacture energy products, including gasoline, diesel fuel, jet fuel and petroleum coke. Motiva, which is partially owned by Shell, is a leading refiner, distributor and marketer of fuels in the Eastern and Gulf Coast regions of the United States. It markets petroleum products under the Shell brand.

In addition to paying backpay, Shell and Motiva have signed settlement agreements that call for training of managers, payroll personnel and human resources personnel on the FLSA’s requirements. The training will stress the importance of requiring accurate recording and pay for all hours worked with emphasis on pre-and post-shift activities.

The settlement reflects the importance for all employers to properly classify, track and keep records of hours and compensation, and pay workers covered by the FLSA.  “Employers are legally required to pay workers for all hours worked,” said U.S. Secretary of Labor Thomas E. Perez. “Whether in the international oil industry, as in this case, or a local family-run restaurant, the Labor Department is working to ensure that responsible employers do not experience a competitive disadvantage because they play by the rules.”

Employers Should Strengthen Practices For Defensibility

 To minimize exposure under the FLSA, employers should review and document the defensibility of their existing practices for classifying and compensating workers under existing Federal and state wage and hour laws and take other actions to minimize their potential liability under applicable wages and hour laws.  Steps advisable as part of this process include, but are not necessarily limited to:

  • Audit of each position current 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;
  • Review of 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 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 of existing documentation and record keeping practices for hourly employees;
  • Exploration of available options and alternatives for calculating required wage payments to non-exempt employees; and
  • Re-engineering of work rules and other practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures.

Because of the potentially significant liability exposure, employers generally will want to consult with qualified legal counsel before starting their risk assessment and assess risks and claims within the scope of attorney-client privilege to help protect the ability to claim attorney-client privilege or other evidentiary protections to help shelter conversations or certain other sensitive risk activities from discovery under the rules of evidence.

For Help With Investigations, Policy Updates Or Other Needs

If you need help in conducting a risk assessment of or responding to an IRS, DOL, Justice Department, or other federal or state agencies or other private plaintiff or other legal challenges to your organization’s existing workforce classification or other labor and employment, compliance,  employee benefit or compensation practices, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469) 767-8872 .

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 23 years of work helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices. The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.   She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

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

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 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.

©2012 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


OFCCP Proposes Compensation Transparency Mandates For Government Contractors

September 16, 2014

Government contractors should brace for more employee scrutiny, employee organizing and other employee and government pressure on compensation practices if the U.S. Department of Labor’s Office of Federal Contract Compliance Programs proceeds with plans to adopt a Proposed Rule on compensation transparency that would prohibit federal contractors from maintaining pay secrecy policies announced by the Obama Administration yesterday (September 15, 2014). Under the terms of the Proposed Rule, federal contractors and subcontractors may not fire or otherwise discriminate against any employee or applicant for discussing, disclosing or inquiring about their compensation or that of another employee or applicant and also will face other new obligations.  Government contractors concerned about the potential burdens of compliance with the Proposed Rule should act promptly to review and submit comments on the Proposed Rule within 90 days of its official publication in the Federal Register tomorrow (September 17, 2014).

The Proposed Rule scheduled for publication in the Federal Register on September 17, 2014 would:

  • Amend the equal opportunity clauses in Executive Order 11246 to afford protections to workers who talk about pay to include the nondiscrimination provision in Executive Order 13665.
  • Add definitions for compensation, compensation information, and essential job functions, terms which appear in the revised clauses.
  • Provide that contractors could use against allegations of discrimination under Executive Order 13665 one of the following two defenses as long as that defense is not based on a rule, policy, practice, agreement or other instrument that prohibits employees or applicants from discussing or disclosing their compensation or that of other employees consistent with the provisions in the equal opportunity:
    • That the action was based on a legitimate workplace rule that does not violate the transparency rule;  or
    • That the adverse action was against an employee, who the employer entrusted with confidential compensation information of other employees or applicants as part of his or her essential job functions, for disclosing the compensation of other employees or applicants, unless the disclosure occurs in certain limited circumstances; and
    • the Proposed Rule’s compensation transparency requirement; or
  • Add a requirement that Federal contractors to tell employees and job applicants of the nondiscrimination protection created by Executive Order 13665 using specific language dictated by the OFCCP in handbooks and manuals, and through electronic or physical postings.
  • In addition, OFCCP also is considering requiring government contractors that provide manager training or meetings to include nondiscrimination based on pay in their existing manager training programs or meetings while encouraging other contractors to adopt this as a best practice for minimizing the likelihood of workplace discrimination.

For Help With Investigations, Policy Updates Or Other Needs

If you need help in conducting a risk assessment of or responding to an IRS, DOL, Justice Department, or other federal or state agencies or other private plaintiff or other legal challenges to your organization’s existing workforce classification or other labor and employment, compliance,  employee benefit or compensation practices, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469) 767-8872 .

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 23 years of work helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices. The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.   She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

If you or someone 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 or updating your profile here. For important information about this communication click here.

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 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.

©2014 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


Labor Department Adds State Unemployment Insurance To War Against Worker Misclassification

September 15, 2014

The already significant enforcement risks of employers caught misclassifying workers as independent contractors, leased employees or in some other non-employee status are set to rise more as a result of more than $10 million in grants to 19 states announced today (September 15, 2014) by the U.S. Department of Labor (Labor Department).  The grants add a new wrinkle to the ever-expanding campaign waged against employers that fail to fulfill legal responsibilities with respect to employees as a result of the misclassification of workers that the Labor Department and other federal and state agencies.

Grants To Help States Employers That Underpay Unemployment Insurance Taxes Due To Misclassification

In the latest wrinkle in its ever-expanding war against employers that avoid providing rights, paying taxes or fulfilling other employer responsibilities toward certain workers misclassified by the employer as independent contractor or in other non-employee statuses, the Labor Department awarded $10,225,183 to 19 states to implement or improve worker misclassification detection and enforcement initiatives in unemployment insurance (UI) programs. For a chart showing the grant recipients and amounts announced today, see here.

“This is one of many actions the department is taking to help level the playing field for employers while  workers receive appropriate rights and protections,” said U.S. Secretary of Labor Thomas E. Perez. “Today’s federal grant awards will enhance states’ ability to detect incidents of worker misclassification and protect the integrity of state unemployment insurance trust funds.”

According to the Labor Department’s announcement of the grants, states will use the funds to increase the ability of state UI tax programs to identify instances where employers improperly classify employees as independent contractors or fail to report the wages paid to workers at all. The states that were selected to receive these grants will use the funds for a variety of improvements and initiatives, including enhancing employer audit programs and conducting employer education initiatives.

While several states have existing programs designed to reduce worker misclassification, this is the first year that the Labor Department has awarded grants dedicated to this effort. The Consolidated Appropriations Act of 2014  authorized this grant funding for “activities to address the misclassification of workers.

Under an innovative, “high-performance bonus” program, four states will receive a share of $2 million in additional grant funds due to their high performance or most improved performance in detecting incidents of worker misclassification. The remaining $8,225,183 was distributed to 19 states in competitive grants. The maximum grant available under the competitive grant award process was $500,000.

Broader War Against Employee Misclassification By Employers

The grants to help states detect and prosecute employer that underpay unemployment insurance contributions is part of a broader and growing campaign against employers that fail to fulfill employment, immigration, tax or other laws by misclassifying workers who by law properly should be treated as common law employees but that the employer treats as working as independent contractors, leased employees or in other non-employed capacities.

Under the Obama Administration, Labor Department, Immigration, tax and other agencies increasingly are successfully identifying and prosecuting businesses for violating the law by misclassification of certain workers as not employed by the business who under the facts and circumstances the agencies view as common law employees of the business.  See.g.,  Boston Furs Sued For $1M For Violations Of Fair Labor Standards Act; Record $2.3 Million+ Backpay Order; Minimum Wage, Overtime Risks Highlighted By Labor Department Strike Force Targeting Residential Care & Group Homes; Review & Strengthen Defensibility of Existing Worker Classification Practices In Light of Rising Congressional & Regulatory Scrutiny; 250 New Investigators, Renewed DOL Enforcement Emphasis Signal Rising Wage & Hour Risks For EmployersQuest Diagnostics, Inc. To Pay $688,000 In Overtime Backpay; Employer Faces $2M FLSA Lawsuit For Alleged Worker Misclassification; OIG 2013 Top Management Challenges List Signals Tightening of Labor Department Enforcement; New Employee Smart Phone App New Tool In Labor Department’s Aggressive Wage & Hour Law Enforcement Campaign Against Restaurant & Other Employers; 12 Steps Every Employer With A Health Plan Should Do Now No Matter Who Wins the Election.

The rollout of new health benefit mandates as part of the sweeping reforms enacted under the Patient Protection and Affordable Care Act (ACA) is further expanding the liability of misclassification and the risk of enforcement against employers.

Among other things, the employer mandates of ACA soon will require certain large employers either to provide health coverage meeting the requirements of ACA or pay the “employer penalty” established under Internal Revenue Code Section 4980H.  While the rule now is delayed until 2015 for employers with more than 100 or more full-time and full-time equivalent employees and 2016 for employers of 50 or more full-time and full-time equivalent employees, ACA generally relies on the common law employment tests used under the FLSA and other federal and state laws determine which employers are considered large employers.  It also requires employers provide other rights to workers who are considered common law employees under these rules.

Employers Should Strengthen Practices For Defensibility

 To minimize exposure under the FLSA, employers should review and document the defensibility of their existing practices for classifying and compensating workers under existing Federal and state wage and hour laws and take other actions to minimize their potential liability under applicable wages and hour laws.  Steps advisable as part of this process include, but are not necessarily limited to:

  • Audit of each position current 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;
  • Review of 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 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 of existing documentation and record keeping practices for hourly employees;
  • Exploration of available options and alternatives for calculating required wage payments to non-exempt employees; and
  • Re-engineering of work rules and other practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures.

Because of the potentially significant liability exposure, employers generally will want to consult with qualified legal counsel before starting their risk assessment and assess risks and claims within the scope of attorney-client privilege to help protect the ability to claim attorney-client privilege or other evidentiary protections to help shelter conversations or certain other sensitive risk activities from discovery under the rules of evidence.

For Help With Investigations, Policy Updates Or Other Needs

If you need help in conducting a risk assessment of or responding to an IRS, DOL, Justice Department, or other federal or state agencies or other private plaintiff or other legal challenges to your organization’s existing workforce classification or other labor and employment, compliance,  employee benefit or compensation practices, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469) 767-8872 .

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 23 years of work helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices. The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.   She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

If you or someone 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 or updating your profile here. For important information about this communication click here.

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 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.

©2014 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


Government Contractor SCA Violation Costs It $2M & 3 Year Government Contracts Disbarrment

January 20, 2014

A nearly $2 million settlement agreement with a California-based government contractor announced January 15, 2014 by the U.S. Department of Labor Wage and Hour Division (DOL) illustrates why U.S. businesses providing goods and services directly or as subcontractors to the federal government should use care to properly compensate workers and comply with other requirements applicable to government contractors.

Lesson From Lange Trucking Inc.

According to the DOL, Lange Trucking Inc. will pay $1,979,779 in 401(k) pension benefits to 515 drivers working on U.S. Postal Service contracts to resolve DOL charges that the company violated the McNamara-O’Hara Service Contract Act by not paying drivers required fringe benefits. The settlement also debars from eligibility for any further service contracts from any U.S. government agency for three years the company, along with its President, William A. Langenhuizen; Vice President, William H. Langenhuizen; Secretary Treasurer, Antoinette Langenhuizen; Vice President, Robert Langehuizen; and Vice President of Finance, Lisa Kulak.  The Wage and Hour Division reported the settlement January 15, 2013 here.

The SCA applies to every contract entered into by the United States or the District of Columbia, the principal purpose of which is to furnish services in the United States through the use of service employees. The SCA requires that contractors and subcontractors performing services on covered federal contracts in excess of $2,500 must pay their service workers no less than the wages and fringe benefits prevailing in the locality.

DOL reports that Wage and Hour investigators found that Lange Trucking failed to fully fund the drivers’ 401(k) plan, resulting in a violation of the SCA. Wage and Hour has investigated the company several times in the past. Lange Trucking paid $500,000 of the unpaid benefits while Hoovestol Inc., which is based in Eagan, Minn., acquired the company subsequent to the violations and voluntarily agreed to fund the remaining $1.48 million in benefits. Hoovestol, which cooperated fully with the Wage and Hour Division during its investigation, has also: corrected record-keeping procedures, overhauled the plan to ensure timely payments into the plan going forward, posted wage determinations at the work site and made information about the contracts accessible to employees.

Audits and Enforcement Rising

Government contractors face rising risks of audit and enforcement of their compliance with federal contracting requirements.  The Obama Administration has made audit and enforcement of compliance a lead priority.

The risk of audit generally affects all federal government contractors and subcontractors.  However, contractors providing services on projects funded from the $787 billion of stimulus funding provided under the American Recovery and Reinvestment Act of 2009 (“ARRA”) signed into law by President Barack Obama in February, 2009 are even more at risk.  ARRA-funded contracts are subject to special procedures under the Office of Federal Contract Compliance Programs (“OFCCP”) “Procedures for Scheduling and Conducting Compliance Evaluations of American Recovery and Reinvestment Act of 2009 (ARRA) Funded Contractors” issued July 7, 2009.  See OFCCP Order No. ADM 0901/SEL the “ARRA Procedures”).

Businesses providing services or supplies on ARRA funded projects directly or as subcontractors be considered government contractors, required to comply with the equal employment opportunity requirements of  Executive Order 11246, as amended (EO 11246); Section 503 of the Rehabilitation Act of 1973,as amended (Section 503); and the Vietnam Veterans’ Readjustment Assistance Act of 1974, as amended, 38 U.S.C. 4212 (VEVRAA).   OFCCP has made clear that it will conduct compliance evaluations and host compliance assistance events to ensure that federal contractors comply and are aware of their responsibilities under EO 11246, Section 503 and VEVRAA.

Beyond the heightened risks of enforcement due to the Obama Administration’s emphasis, government contractors and subcontractors also need to use care to monitor and maintain compliance with evolving requirements.  In some cases, such as in the case of ARRA-funded projects, the applicability and requirements have been expended to extend to businesses or projects that historically might have qualified as exempt from government contractor rules.

In addition, the rules themselves are evolving in response to the regulatory and enforcement activism of the Obama Administration.  In recent years, for instance, the Obama Administration has made audit and enforcement of federal disability, veterans and other nondiscrimination, affirmative action and other laws and rules for government contractors and other employers.  An example of these evolving rules is reflected in the recent posting by the OFCCP of a third round of Frequently Asked Questions (FAQs) answering questions from contractors and the general public about provisions in the recently published Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act (Section 503) Final Rules.  These FAQs address implementation issues, such as the schedule for contractors to come into compliance with the affirmative action requirements of Subpart C of the new regulations.

In light of these developments, government contractors and subcontractors will want to review and verify their compliance with requirements as well as the adequacy of their recordkeeping and other documentation, as well as take other appropriate steps to manage their risks.

For Assistance or More Information

If you have questions or need help with these or employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 25 years of work, advocacy, education and publications on cutting edge health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, HR.com, Insurance Thought Leadership, Solutions Law Press, Inc. and other publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications. Her widely respected publications and programs include more than 25 years of publications on health plan contracting, design, administration and risk management including a “Managed Care Contracting Guide” published by the American Health Lawyers Association and numerous other works on vendor contracting.  You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here .  You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail by creating or updating your profile here. You can reach other recent updates and other informative publications and resources.

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©2013 Cynthia Marcotte Stamer.  Nonexclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.

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You can review other recent human resources, employee benefits and internal controls publications and resources and additional information about the employment, employee benefits and other experience of Ms. Stamer here /the Curran Tomko Tarski LLP attorneys here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here or e-mailing this information to Cstamer@CTTLegal.com or registering to participate in the distribution of these and other updates on our Solutions Law Press HR & Benefits Update distributions here. For important information concerning this communication click here.    If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to support@SolutionsLawyer.net.

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Employer Faces $2M FLSA Lawsuit For Alleged Worker Misclassification

December 26, 2013

Health Care Reform Adds Fuel To Enforcement Fire

Employers must ensure they can defend their treatment of workers as as independent contractors or otherwise exempt from wage and hour and overtime requirements and take other steps to manage wage and hour risks that can arise under the Fair Labor Standards Act (FLSA) and other laws to when caught misclassifying workers.  That’s the clear message the U.S. Department of Labor (Labor Department) is sending to employers by filing lawsuits against employers like the one it recently announced against Wang’s Partner Inc., doing business as Hibachi Grill and Supreme Buffet in Jonesboro, and its owner, Shu Wang, to recover $1,997,726 in back wages and liquidated damages for 84 employees.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. The requirements 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.  In general, “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. Additionally, the law requires that accurate records of employees’ wages, hours and other conditions of employment be maintained. These requirements generally apply for all workers who the facts and circumstances reflect are common law employees and otherwise do not qualify as exempt employees under the FLSA.  Violations of these requirements can result significant backpay and other damage awards to private plaintiffs, backpay and penalties assessments or settlements from Labor Department suits, and, if the violation is found willful, criminal liability.

Wang’s Partner Inc. Suit

The lawsuit against Want’s Partner Inc. shows employers the importance of avoiding improperly classifying workers as independent contractors for purposes of the FLSA. Employers that inappropriately classify workers as independent contractors often fail to maintain appropriate time and other records, pay minimum wage and overtime and violate other FLSA requirements.  In general, a business receiving services of a worker generally bears the burden of providing that the worker is not its common law employee under the applicable facts and circumstances test applicable under the FLSA.

As in many other enforcement areas, the Labor Department Wage and Hour Division in recent years has stepped up its scrutiny of employer relationships with workers treated as independent contractors.  The Labor Department and many other agencies increasingly view the misclassification of workers as something other than employees, such as independent contractors, 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.

The lawsuit in the Northern District of Georgia against Wang’s Partner, Inc. illustrates this trend.  One of the growing number of lawsuits and other enforcement actions resulting from this trend, the suit shows the significant exposures that an employer risks by misclassifying workers as independent contractors or otherwise exempt from the FLSA. The Labor Department says an investigation revealed that Wang’s Partner Inc. misclassified workers as independent contractors and engaged in numerous violations of the FLSA.  The Labor Department seeks $1,997,726 in back wages and liquidated damages for 84 employees.

The Labor Department says investigators from the division’s Atlanta district office found that the employer misclassified servers as independent contractors, failed to pay servers and kitchen staff at least the federal minimum wage of $7.25 per hour and failed to pay overtime compensation at time and one-half employees’ regular rates for hours worked beyond 40 in a work week. Additionally, the employer did not maintain accurate records of hours worked and wages paid.

In announcing the Wang’s Partner Inc. lawsuit, the Labor Department warned employers against similar misclassification of workers.  “The U.S. Department of Labor is committed to ensuring that all workers receive the wages to which they are legally entitled,” said Secretary of Labor Thomas E. Perez. “We will not stand by while employers use business models that hurt workers, their families and law-abiding employers. This lawsuit illustrates that the department will use every enforcement tool necessary to resolve cases where employees are unlawfully treated as independent contractors, and vulnerable workers are not paid the minimum wage.”

 FLSA Violations Generally Costly;  Enforcement Rising

The Labor Department’s prosecutions against employers arising from misclassification of workers document the Labor Department is acting in accordance with this warning.  In recent years, misclassification of workers increasingly has become an element in its FLSA and other enforcement actions.  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.Whether due to mischaracterization of workers as independent contractors or as common law employees that qualify as exempt under the FLSA rules, the Labor Department increasingly is acting on its promise to go after employers that violate the FLSA based on worker misclassifications.

In 2012, for instance, First Republic Bank paid $1,009,643.93 in overtime back wages for 392 First Republic Bank employees in California, Connecticut, Massachusetts, New York and Oregon after the Labor Department found the San Francisco-based bank wrongly classified the employees as exempt from the FLSA’s overtime and recordkeeping requirements, resulting in violations of the Fair Labor Standards Act’s overtime and record-keeping provisions.  The Labor Department announced the settlement resulting in the payment on November 27, 2012.

The settlement came after an investigation by the Labor Department’s Wage and Hour Division found that the San Francisco-based bank wrongly classified the employees as exempt from overtime, resulting in violations of the FLSA’s overtime and record-keeping provisions.

In announcing the settlement with First Republic Bank, the Labor Department warned employers to confirm the appropriateness of their classification of workers.  “It is essential that employers take the time to carefully assess the FLSA classification of their workforce,” said Secretary of Labor Hilda L. Solis in the Labor Department’s announcement of the settlement. “As this investigation demonstrates, improper classification results in improper wages and causes workers real economic harm.”

The Wang’s Partner Inc and First Republic Bank enforcement actions are not unique.  The Labor Department and private plaintiffs alike regularly target employers that use aggressive worker classification or other pay practices to avoid paying minimum wage or overtime to workers.  Under the Obama Administration, DOL officials have made it a priority to enforce overtime, record keeping, worker classification and other wage and hour law requirements.  See e.g.,  Boston Furs Sued For $1M For Violations Of Fair Labor Standards Act; Record $2.3 Million+ Backpay Order; Minimum Wage, Overtime Risks Highlighted By Labor Department Strike Force Targeting Residential Care & Group Homes; Review & Strengthen Defensibility of Existing Worker Classification Practices In Light of Rising Congressional & Regulatory Scrutiny; 250 New Investigators, Renewed DOL Enforcement Emphasis Signal Rising Wage & Hour Risks For EmployersQuest Diagnostics, Inc. To Pay $688,000 In Overtime Backpay

In an effort to further promote compliance and enforcement of these rules,  the Labor Department is using  smart phone applications, social media and a host of other new tools to educate and recruit workers in its effort to find and prosecute violators. See, e.g. New Employee Smart Phone App New Tool In Labor Department’s Aggressive Wage & Hour Law Enforcement Campaign Against Restaurant & Other Employers.    As a result of these effort, employers violating the FLSA now face heightened risk of enforcement from both the  Labor Department and private litigation.

Health Care Reform Adds Risks, Fuels More Enforcement

The rollout of new health benefit mandates as part of the sweeping reforms enacted under the Patient Protection and Affordable Care Act (ACA) is further expanding the liability of misclassification and the risk of enforcement against employers.

Among other things, the employer mandates of ACA, now delayed until 2015, generally will require employers of 50 or more full-time employees either to provide health coverage meeting the requirements of ACA or pay the “employer penalty” established under Internal Revenue Code Section 4980H.  While the rule now is delayed until 2015, the employment data for 2014 will be used to determine what employees that an employer must take into account for purposes of this rule.  ACA generally relies on the common law employment tests used under the FLSA to make this determination.  It also requires employers provide other rights to workers who are considered common law employees under these rules.

Employers Should Strengthen Practices For Defensibility

 To minimize exposure under the FLSA, employers should review and document the defensibility of their existing practices for classifying and compensating workers under existing Federal and state wage and hour laws and take other actions to minimize their potential liability under applicable wages and hour laws.  Steps advisable as part of this process include, but are not necessarily limited to:

  • Audit of each position current 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;
  • Review of 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 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 of existing documentation and record keeping practices for hourly employees;
  • Exploration of available options and alternatives for calculating required wage payments to non-exempt employees; and
  • Re-engineering of work rules and other practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures.

Because of the potentially significant liability exposure, employers generally will want to consult with qualified legal counsel before starting their risk assessment and assess risks and claims within the scope of attorney-client privilege to help protect the ability to claim attorney-client privilege or other evidentiary protections to help shelter conversations or certain other sensitive risk activities from discovery under the rules of evidence.

For Help With Investigations, Policy Updates Or Other Needs

If you need help in conducting a risk assessment of or responding to an IRS, DOL, Justice Department, or other federal or state agencies or other private plaintiff or other legal challenges to your organization’s existing workforce classification or other labor and employment, compliance,  employee benefit or compensation practices, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469) 767-8872 .

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 23 years of work helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices. The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.   She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

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New Final FLSA Rule Gives Home Workers Minimum Wage, Overtime, Other FLSA Protections

September 18, 2013

Health care and other parties employing or otherwise engaging the services of home care workers should review and update their policies and  practices for scheduling, tracking hours worked and paying these workers to ensure that they comply by January 1, 2015 with a new final rule announced by the U.S. Department of Labor’s Wage and Hour Division today (September 18, 2013). Today’s announcement of the regulatory changes means employers of home care workers can expect to see costs rise and also will join most other U.S. businesses that must worry about getting caught in minimum wage and overtime enforcement traps.

New Home Care Worker Rules Effective January 2015

Under the new final rule, the Labor Department extends the Fair Labor Standards Act’s minimum wage and overtime protections to most of the nation’s direct care workers who provide essential home care assistance to elderly people and people with illnesses, injuries, or disabilities beginning January 1, 2015.

The new final rule generally will require that the approximately two million home care workers such as home health aides, personal care aides, and certified nursing assistants will qualify for minimum wage and overtime.  Employers engaging these services also generally will need to keep records and comply with other FLSA requirements with respect to these workers as well.

In anticipation of the rollout of these new protections, the Labor Department is kicking off a public outreach campaign to educate home care workers and their employers about the rule change. The Department will be hosting five public webinars during the month of October and has created a new, dedicated web portal here with fact sheets, FAQs, interactive web tools, and other materials.

The Labor Department’s focus on home workers is an extension of its expanded regulation and enforcement efforts targeting a broad range of health care industry employers. Home care and other health industry employers should act to manage their rising exposures to minimum wage, overtime and other federal and state wage and hour law risks.

The impending change in the treatment of home care workers is part of a larger commitment by the Obama Administration to both expansion and enforcement of the FLSA’s minimum wage and overtime provisions, and a specific program targeting employers in health care and related services industries.

The Obama Administration since taking office has conducted an aggressive campaign seeking to significantly increase the minimum wage under the FLSA and expand other protections.  Along with this proactive regulatory agenda, the Obama Administration also specifically is aggressively targeting health care and other caregiver businesses in its enforcement and audit activities. See, e.g. Home health care company in Dallas agrees to pay 80 nurses more than $92,000 in back wages following US Labor Department investigation; US Department of Labor secures nearly $62,000 in back overtime wages for 21 health care employees in Pine Bluff, Ark.; US Department of Labor initiative targeted toward increasing FLSA compliance in New York’s health care industry; US Department of Labor initiative targeted toward residential health care industry in Connecticut and Rhode Island to increase FLSA compliance; Partners HealthCare Systems agrees to pay 700 employees more than $2.7 million in overtime back wages to resolve U.S. Labor Department lawsuit; US Labor Dnda epartment sues Kentucky home health care provider to obtain more than $512,000 in back wages and damages for 22 employees; and Buffalo, Minn.-based home health care provider agrees to pay more than $150,000 in back wages following US Labor Department investigation.

Violation of wage and hour laws exposes health care and other employers to significant back pay awards, substantial civil penalties and, if the violation is found to be willful, even potential criminal liability.   Because states all have their own wage and hour laws, employers may face liability under either or both laws.   Coupled with these and other enforcement efforts against health and other caregiver businesses, today’s announcement reflects enforcement risks will continue to rise for employers of home care workers.

In light of the proposed regulatory changes and demonstrated willingness of the Labor Department and private plaintiffs to bring actions against employers violating these rules, health care and others employing home care workers should take well-documented steps to manage their risks.  These employers should both confirm the adequacy of their practices under existing rules, as well as evaluate and begin preparing to respond to the proposed modifications to these rules.  In both cases, employers of home care or other health care workers are encouraged to critically evaluate their classification or workers, both with respect to their status as employees versus contractor or leased employees, as well as their characterization as exempt versus non-exempt for wage and hour law purposes.  In addition, given the nature of the scheduled frequently worked by home care givers, their employers also generally should pay particular attention to the adequacy of practices for recordkeeping.

Of course, the home care and health care industry are not the only industries that need to worry about FLSA enforcement.   The Obama Administration is very aggressive in its enforcement of wage and hour and overtime laws generally.  For instance, First Republic Bank recently paid $1,009,643.93 in overtime back wages for 392 First Republic Bank employees in California, Connecticut, Massachusetts, New York and Oregon after the Labor Department found the San Francisco-based bank wrongly classified the employees as exempt from the FLSA’s overtime and recordkeeping requirements, resulting in violations of the Fair Labor Standards Act’s overtime and record-keeping provisions.  The Labor Department announced the settlement resulting in the payment on November 27, 2012.  The  settlement resulted from an investigation by the Labor Department that found the San Francisco-based bank wrongly classified the employees as exempt from overtime, resulting in violations of the FLSA’s overtime and record-keeping provisions.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also are required to maintain accurate time and payroll records.

While the FLSA provides an exemption from both minimum wage and overtime pay requirements for individuals employed in bona fide executive, administrative, professional and outside sales positions, as well as certain computer employees, job titles do not determine the applicability of this or other FLSA exemptions. In order for an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the department’s regulations. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week.

Investigators found that First Republic Bank failed to consider the FLSA’s criteria that allow certain administrative and professional employees to be exempt from receiving overtime pay. In fact, the employees were entitled to overtime compensation at one and one-half times their regular rates for hours worked over 40 in a week. Additionally, the bank failed to include bonus payments in nonexempt employees’ regular rates of pay when computing overtime compensation, in violation of the act. Record-keeping violations resulted from the employer’s failure to record the number of hours worked by the misclassified employees.

“It is essential that employers take the time to carefully assess the FLSA classification of their workforce,” said Secretary of Labor Hilda L. Solis in the Labor Department’s announcement of the settlement. “As this investigation demonstrates, improper classification results in improper wages and causes workers real economic harm.”

 FLSA Violations Generally Costly;  Enforcement Rising

The enforcement record of the Labor Department confirms that employers that improperly treat workers as exempt from the FLSA’s overtime, minimum wage and recordkeeping requriements run a big risk.  The Labor Deprtment and private plaintiffs alike regularly target employers that use aggressive worker classification or other pay practices to avoid paying minimum wage or overtime to workers.  Under the Obama Administration, DOL officials have made it a priority to enforce overtime, record keeping, worker classification and other wage and hour law requirements.  See e.g.,  Boston Furs Sued For $1M For Violations Of Fair Labor Standards Act; Record $2.3 Million+ Backpay Order; Minimum Wage, Overtime Risks Highlighted By Labor Department Strike Force Targeting Residential Care & Group Homes; Review & Strengthen Defensibility of Existing Worker Classification Practices In Light of Rising Congressional & Regulatory Scrutiny; 250 New Investigators, Renewed DOL Enforcement Emphasis Signal Rising Wage & Hour Risks For EmployersQuest Diagnostics, Inc. To Pay $688,000 In Overtime Backpay In an effort to further promote compliance and enforcement of these rules,  the Labor Department is using  smart phone applications, social media and a host of other new tools to educate and recruit workers in its effort to find and prosecute violators. See, e.g. New Employee Smart Phone App New Tool In Labor Department’s Aggressive Wage & Hour Law Enforcement Campaign Against Restaurant & Other Employers.    As a result of these effort, employers violating the FLSA now face heightened risk of enforcement from both the  Labor Department and private litigation.

Employers Should Strengthen Practices For Defensibility

 To minimize exposure under the FLSA, employers should review and document the defensibility of their existing practices for classifying and compensating workers under existing Federal and state wage and hour laws and take other actions to minimize their potential liability under applicable wages and hour laws.  Steps advisable as part of this process include, but are not necessarily limited to:

  • Audit of each position current 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;
  • Review of 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 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 of existing documentation and record keeping practices for hourly employees;
  • Exploration of available options and alternatives for calculating required wage payments to non-exempt employees; and
  • Re-engineering of work rules and other practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures.

Because of the potentially significant liability exposure, employers generally will want to consult with qualified legal counsel before starting their risk assessment and assess risks and claims within the scope of attorney-client privilege to help protect the ability to claim attorney-client privilege or other evidentiary protections to help shelter conversations or certain other sensitive risk activities from discovery under the rules of evidence.

For Help With Investigations, Policy Updates Or Other Needs

If you need help in conducting a risk assessment of or responding to an IRS, DOL, Justice Department, or other federal or state agencies or other private plaintiff or other legal challenges to your organization’s existing workforce classification or other labor and employment, compliance,  employee benefit or compensation practices, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469) 767-8872 .

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 23 years of work helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices. The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.   She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

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

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 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.

©2012 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


Use New Government Health Care Reform Resources With Care

July 22, 2013

While large employers are getting an additional year to collect data and make other preparations to comply with the “pay-or-play” rules in the shared responsibility provisions of new Internal Revenue Code Section 4980H under the extension announced by the Administration in early July, all employers still have much to do stay on top of the developing rules and make the arrangements necessary to prepare to comply with the current and 2014 federal health plan mandates of the Patient Protection & Affordable Care Act (ACA) and other federal laws.

As the Departments of Health & Human Services, Labor and Treasury continue to refine and roll out guidance implementing these rules, the agencies recently released various updated resources discussing these evolving rules.   Among others, Publication 5093, Healthcare Law Online Resources, lists ACA resources from the IRS, the Departments of Health & Human Services and Labor, and the Small Business Administration.  Meanwhile, IRS.gov and HealthCare.gov also have new ACA webpages.

While these updated resources are intended by the agencies to help acquaint businesses with ACA’s requirements, businesses and the insurers and administrators that offer health benefit services need to keep in mind that these resources have risk and limitations.  As the agencies are continuing to refine the rules, these resources often do not reflect the most current or emerging guidance or status of rules.  Additionally, government provided explanations, model forms and resources often incorporate provisions or interpretations that are biased against the interests of the businesses,  or contain other provisions that may not fully inform the business to all of its options.  Furthermore, because of limitations in jurisdiction and other constraints, guidance issued by an agency or agency that reflects that certain approaches may satisfy the requirements of the rules specifically addressed by the guidance often do not disclose or adequately communicate potential concerns with certain types of actions under other applicable requirements.

For instance,  model exchange notices published by the Department of Labor this Spring to assist employers to provide the notifications about federal exchange coverage options that ACA requires employers distribute by October 1 contain many provisions beyond the content actually required to meet the notice requirements.  The Labor Department in announcing the model notices indicated that its model language includes discretionary provisions which the Department thought some employers might want to include to minimize questions from employees about employer provided benefits that employees interested in pursuing subsidized coverage could be expected to need to apply for subsidies.  While as of now, exchanges and subsidies still are scheduled to come on line January 1, 2014, the Obama Administration extended the employer “pay-or-play” mandate of Code Section 4980 and its associated employer reporting requirements, as well as has established that it does not plan to verify eligibility for subsidies requested by individuals enrolling in exchanges in 2014.  Given this, most employers will want to consider carefully the specific content that they wish to include in the exchange notice as they prepare the notice in anticipation of its distribution in October.Accordingly, all businesses dealing with these issues are encouraged to arrange for comprehensive advice from qualified legal counsel familiar with these requirements and other related human resources, health care, insurance and employee benefit issues.

For Help With Compliance, Risk Management, Investigations, Policy Updates Or Other Needs

If you need help with HIPAA and other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other human resources, employee benefit, or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Nationally recognized for her extensive work, publications and leadership on HIPAA and other privacy and data security concerns, Ms. Stamer has extensive experience representing, advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical and other privacy and data security, employment, employee benefits, and to handle other compliance and risk management policies and practices; to investigate and respond to OCR and other enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

A Fellow in the American College of Employee Benefit Counsel, State Bar of Texas and American Bar Association, Vice President of the North Texas Health Care Compliance Professionals Association, the Former Chair of the ABA RPTE Employee Benefit & Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Council Representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer serves as the scribe for the ABA Joint Committee on Employee Benefits agency meeting with OCR. Ms. Stamer also regularly works with OCR and other agencies, publishes and speaks extensively on medical and other privacy and data security, health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.  Her publications and insights  on HIPAA and other data privacy and security concerns appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.   For instance, Ms. Stamer for the third year will serve in 2013 as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR.  Her insights on HIPAA risk management and compliance often appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, SHRM, HIMMS, the American Bar Association, the Health Care Compliance Association, a multitude of health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others.  You can get more information about her HIPAA and other experience here.

In addition to this extensive HIPAA specific experience, Ms. Stamer also is recognized for her experience and skill aiding clients with a diverse range of other employment, employee benefits, health and safety, public policy, and other compliance and risk management concerns.

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a member of the Editorial Advisory Board and expert panels of HR.com, Employee Benefit News, InsuranceThoughtLeadership.com, and Solutions Law Press, Inc., management attorney and consultant Ms. Stamer has 25 years of experience helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices.   Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.  In addition to her continuous day-to-day involvement helping businesses to manage employment and employee benefit plan concerns, she also has extensive public policy and regulatory experience with these and other matters domestically and internationally.  A former member of the Executive Committee of the Texas Association of Business and past Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, Ms. Stamer served as a primary advisor to the Government of Bolivia on its pension privatization law, and has been intimately involved in federal, state, and international workforce, health care, pension and social security, tax, education, immigration, education and other legislative and regulatory reform in the US and abroad.  She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.

For help  with these or other compliance concerns, to ask about compliance audit or training, or for legal representation on these or other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

“Pay Or Play” Reprieve Still Leaves Employers Facing Challenging 2014 Health Care Reform Deadlines

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


OCR Warns Others Learn From WellPoint’s $1.7 M HIPAA Settlement

July 12, 2013

WellPoint $1.7 M HIPAA Settlement Expensive Lesson On HIPAA Risks Of Leaving PHI Too Accessible In Web-Based Applications

As health plans and health care organizations increasingly jump on the Web-based application bandwagon, managed care company WellPoint Inc. (WellPoint) is learning a $1.7 million lesson about the importance of ensuring Web-based applications and portals that allow access to members or other consumers protected health information (PHI) have the administrative, technical and other security safeguards required by the Health Insurance Portability & Accountability Act (HIPAA) Privacy and Security rules.

The U.S. Department of Health and Human Services (HHS) Office of Civil Rights (OCR) announced late yesterday (July 11, 2013) that WellPoint has agreed to pay $1.7 million to settle OCR charges that WellPoint violated the HIPAA Security Rule and left the electronic protected health information (ePHI) of 612,402 individuals accessible to unauthorized individuals over the Internet by failing to implement appropriate administrative and technical safeguards in its Web-based applications. See WellPoint HIPAA Settlement Press Release.

Web-based application use is increasingly popular among health plans and their wellness programs, as well as health care providers.  Employers and health plans use them both in plan administration and offer them to members to use as member tools.  Health care providers use them for health care operations, as well as patient engagement and communication tools.  The WellPoint settlement illustrates that managed care and other health insurers, health plans and their employer or other sponsors, health care providers, health care clearinghouses (Covered Entities) and their business associates can’t let their enthusiasm for the ease of use of these products to compromise the security of PHI.

Rather, health plans and other Covered Entities, employer and other  health plan sponsors, their business associates, and the Web and other technology developers, providers and consultants marketing products, services or other solutions should learn from WellPoint’s hard lesson by ensuring that current and future Web-based applications, portals and other information system components that are or could be used to provide access to PHI incorporate the Security Rule safeguards both when originally implemented and with each subsequent upgrade.

HIPAA Privacy, Security & Breach Notification Rules Require PHI Safeguards & Other Protections

The Breach Notification Rule added to HIPAA under the Health Information Technology for Economic and Clinical Health, or HITECH Act requires HIPAA-covered entities to notify OCR, affected individuals and the media promptly of a breach of “unsecured protected health information” (UPHI) impacting more than 500 individuals.  For smaller breaches, the Breach Notification Rule still requires prompt notice to affected individuals, but allows Covered Entities to disclose the breach to OCR as part of an annual breach report and to forego notification to the media. UPHI generally includes any PHI, whether or not ePHI that is not either secured or destroyed in the way described by the Breach Notification Rules.

In addition to the Breach Notification Rule, most Covered Entities and their business associates also are subject to state laws or regulations that impose similar or additional breach notification and other standards and responsibilities on the protection of personal health or other data including required notification and other responses following a breach of the security of UPHI or other PHI.

WellPoint’s $1.7 HIPAA Security Mistake

WellPoint’s $1.7 million settlement lesson resulted from an OCR investigation started in response to a breach report WellPoint submitted to comply with the Breach Notification Rules.

According to OCR, the Breach Report indicated that security weaknesses in an online application database left the electronic protected health information (ePHI) of 612,402 individuals accessible to unauthorized individuals over the Internet.

OCR says its investigation indicated that WellPoint did not implement appropriate administrative and technical safeguards as required under the HIPAA Security Rule.  According to OCR, WellPoint did not:

  • Adequately implement policies and procedures for authorizing access to the on-line application database;
  • Perform an appropriate  technical evaluation in response to a software upgrade to its information systems; or
  • Have technical safeguards in place to verify the person or entity seeking access to electronic protected health information maintained in its application database.

As a result, OCR concluded that from October 23, 2009 until March 7, 2010, WellPoint impermissibly disclosed the ePHI of 612,402 individuals by allowing access to their ePHI maintained in the application database. This data included names, dates of birth, addresses, Social Security numbers, telephone numbers and health information.

Under the resulting WellPoint HIPAA Resolution Agreement, WellPoint must pay OCR a $1.7 million settlement payment as well as take a series of corrective actions to correct the deficiencies in its policies and practices that resulted in the reported breach to minimize future risks of breaches resulting from these deficient.

OCR Warns Learn From WellPoint’s Experience

All Covered Entities and their business associates and leaders should heed the lesson sent to them by OCR in announcing the WellPoint settlement and take appropriate steps other to ensure that appropriate policies and safeguards are adopted and applied in selecting and implementing future application or system upgrades, as well as review existing systems to ensure that the security of existing systems and applications have incorporated and apply the requisite safeguards.

OCR made clear that the WellPoint settlement is intended to send a message to Covered Entities and their business associates to ensure that these steps are appropriately taken.  The settlement announcement states:

This case sends an important message to HIPAA-covered entities to take caution when implementing changes to their information systems, especially when those changes involve updates to Web-based applications or portals that are used to provide access to consumers’ health data using the Internet. Whether systems upgrades are conducted by covered entities or their business associates, HHS expects organizations to have in place reasonable and appropriate technical, administrative and physical safeguards to protect the confidentiality, integrity and availability of electronic protected health information – especially information that is accessible over the Internet.

The settlement announcement also reminds business associates that OCR will begin holding them directly accountable along with their Covered Entity clients for complying with many HIPAA requirements beginning in September, stating:

Beginning Sept. 23, 2013, liability for many of HIPAA’s requirements will extend directly to business associates that receive or store protected health information, such as contractors and subcontractors.

Take Documented Steps To Show You Hear OCR’s Messages

Covered entities and their business associates and leaders, and vendors and consultants offering services or products to them should take care to conduct careful and well-documented reviews and implement corrective actions necessary to show their applications and systems, policies and practices reflect their strong commitment and action to appropriately protect PHI in accordance with the expectations shown by the WellPoint HIPAA Resolution Agreement and other OCR settlements, OCR’s updated HIPAA regulations, and other OCR and industry information.

In addition to the guidance set forth in OCR’s Resolution Agreements with WellPoint and other Covered Entities, revisions to OCR’s Privacy and Security Rules in OCR’s 2013 restatement of its regulations here cause all Covered Entities and their business associates conduct a well-documented reassessment of the adequacy of their existing policies, systems and practices and steps taken to redress any uncovered gaps.

Among other things, the 2013 Regulations:

  • Revise OCR’s HIPAA regulations to reflect the HITECH Act’s amendment of HIPAA to add the contractors and subcontractors of health plans, health care providers and health care clearinghouses that qualify as business associates to the parties directly responsible for complying with and subject to HIPAA’s civil and criminal penalties for violating HIPAA’s Privacy, Security, and Breach Notification rules;
  • Update previous interim regulations implementing HITECH Act breach notification rules that require Covered Entities including business associates to give specific notifications to individuals whose PHI is breached, HHS and in some cases, the media when a breach of unsecured information happens;
  • Update interim enforcement guidance OCR previously published to implement increased penalties and other changes to HIPAA’s civil and criminal sanctions enacted by the HITECH Act;
  • Implement HITECH Act amendments to HIPAA that tighten the conditions under which Covered Entities are allowed to use or disclose PHI for marketing and fundraising purposes and prohibit Covered Entities from selling an individual’s health information without getting the individual’s authorization in the manner required by the 2013 Regulations;
  • Update OCR’s rules about the individual rights that HIPAA requires that Covered Entities to afford to individuals who are the subject of PHI used or possessed by a Covered Entity to reflect tightened requirements enacted by the HITECH Act  that allow individuals to order their health care provider not to share information about their treatment with health plans when the individual pays cash for the care and to clarify that individuals can require Covered Entities to provide electronic PHI in electronic form;
  • Revise the regulations to reflect amendments to HIPAA made as part of the Genetic Information Nondiscrimination Act of 2008 (GINA) which added genetic information to the definition of PHI protected under the HIPAA Privacy Rule and prohibits health plans from using or disclosing genetic information for underwriting purposes; and
  • Clarifies and revises other provisions to reflect other interpretations and information guidance that OCR has issued since HIPAA was passed and to make certain other changes that OCR found appropriate based on its experience administering and enforcing the rules.

Covered Entities were required to begin complying with most of these rule changes earlier this year.  However, delayed compliance dates in the 2013 Regulations allowed Covered Entities and Business Associates to delay updates to pre-existing business associate agreements and the date that OCR would begin enforcing many of the HIPAA Rules directly against business associates to September 23, 2013.

Even without the necessity Settlements like that involving WellPoint, these 2013 Regulations make it imperative that Covered Entities to take the necessary steps to conduct an appropriate and well-documented review  and update as needed their systems, policies and practices,  business associate agreements, training and documentation.

With self-disclosures of breaches mandated by the Breach Notification Rules and OCR audits and enforcement rising, careful documentation of these activities and its analysis is necessary so that Covered Entities can be in a position to show OCR that the risk assessments required by the Security Rules was conducted as well as the efforts and commitment of the Covered Entity or business associate in the event of a breach investigation or audit. Yesterday’s WellPoint HIPAA announcement is just the latest in an ever-growing list of examples of the expensive consequences that can result if a Covered Entity or business associate cannot produce this documentation in response to an OCR audit or investigation. See, e.g.  OCR Hits Alaska Medicaid For $1.7M+ For HIPAA Security Breach; OCR Audit Program Kickoff Further Heats HIPAA Privacy Risks$1.5 Million HIPAA Settlement Reached To Resolve 1st OCR Enforcement Action Prompted By HITECH Act Breach Report; HIPAA Heats Up: HITECH Act Changes Take Effect & OCR Begins Posting Names, Other Details Of Unsecured PHI Breach Reports On Website; Providence To Pay $100000 & Implement Other SafeguardsIn contrast, the OCR website also provides a multitude of examples showing how the ability to produce documentation and other evidence showing diligent efforts to comply has helped other covered entities that fall under OCR investigation to avoid or mitigate serious sanctions.

Coupled with statements by OCR about its intolerance, the WellPoint and other settlements provide a strong warning to covered entities of the need to carefully and appropriately manage their HIPAA encryption and other Privacy and Security responsibilities. Covered entities are urged to heed these warning by strengthening their HIPAA compliance and adopting other suitable safeguards to minimize HIPAA exposures.

In response to the 2013 Regulations and these expanding exposures, all Covered Entities should review critically and carefully the adequacy of their current HIPAA Privacy and Security compliance policies, monitoring, training, breach notification and other practices taking into consideration OCR’s investigation and enforcement actions against WellPoint and others, emerging litigation and other enforcement data; their own and reports of other security and privacy breaches and near misses; and other developments to decide if additional steps are necessary or advisable.  Covered Entities and business associates should document this review in a manner that both reflects the scope and diligence of their activities including relevant considerations and decision-making about identified potential susceptibilities and reasoning about the adequacy of safeguards and other solutions.

Because this review is likely to uncover existing or past deficiencies or breaches, most covered entities and business associates will want to discuss with qualified legal counsel the planned assessment within the scope of attorney-client privilege to understand when and how to conduct the assessment to preserve options to claim attorney-client privilege to protect sensitive work product or discussions that may result in the course of the investigation within the attorney-client communication, work product or other evidentiary privileges, evaluation of the adequacy and appropriateness of the audit and resulting investigations and its documentation, and other assistance in strengthening the defensibility of compliance and risk management activities.

For Help With Compliance, Risk Management, Investigations, Policy Updates Or Other Needs

If you need help with HIPAA and other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other human resources, employee benefit, or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Nationally recognized for her extensive work, publications and leadership on HIPAA and other privacy and data security concerns, Ms. Stamer has extensive experience representing, advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical and other privacy and data security, employment, employee benefits, and to handle other compliance and risk management policies and practices; to investigate and respond to OCR and other enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

A Fellow in the American College of Employee Benefit Counsel, State Bar of Texas and American Bar Association, Vice President of the North Texas Health Care Compliance Professionals Association, the Former Chair of the ABA RPTE Employee Benefit & Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Council Representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer serves as the scribe for the ABA Joint Committee on Employee Benefits agency meeting with OCR. Ms. Stamer also regularly works with OCR and other agencies, publishes and speaks extensively on medical and other privacy and data security, health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.  Her publications and insights  on HIPAA and other data privacy and security concerns appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.   For instance, Ms. Stamer for the third year will serve in 2013 as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR.  Her insights on HIPAA risk management and compliance often appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, SHRM, HIMMS, the American Bar Association, the Health Care Compliance Association, a multitude of health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others.  You can get more information about her HIPAA and other experience here.

In addition to this extensive HIPAA specific experience, Ms. Stamer also is recognized for her experience and skill aiding clients with a diverse range of other employment, employee benefits, health and safety, public policy, and other compliance and risk management concerns.

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a member of the Editorial Advisory Board and expert panels of HR.com, Employee Benefit News, InsuranceThoughtLeadership.com, and Solutions Law Press, Inc., management attorney and consultant Ms. Stamer has 25 years of experience helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices.   Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.  In addition to her continuous day-to-day involvement helping businesses to manage employment and employee benefit plan concerns, she also has extensive public policy and regulatory experience with these and other matters domestically and internationally.  A former member of the Executive Committee of the Texas Association of Business and past Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, Ms. Stamer served as a primary advisor to the Government of Bolivia on its pension privatization law, and has been intimately involved in federal, state, and international workforce, health care, pension and social security, tax, education, immigration, education and other legislative and regulatory reform in the US and abroad.  She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.

For help  with these or other compliance concerns, to ask about compliance audit or training, or for legal representation on these or other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

“Pay Or Play” Reprieve Still Leaves Employers Facing Challenging 2014 Health Care Reform Deadlines

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


Consider OCR Technical Corrections When Updating Privacy Practices & Agreements For Omnibus Restatement of HIPAA Privacy, Security, Breach Notification & Enforcement Rules

June 6, 2013

The Department of Health & Human Services Office of Civil Rights (OCR) on June 6, 2013 released an advance copy of to Technical Corrections  (Technical Corrections) to the Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notifications Rules Under the Health Information Technology for Economic and Clinical Health Act and the Genetic Information Nondiscrimination Act; Other Modifications to the HIPAA Rules; Final Rule (Omnibus Rule) previously published on January 25, 2013.  Health plans, health care clearinghouses, health care providers and their business associates will want to be sure to take into account the Technical Corrections as they rush to update business associate agreements, policies, practices, training and other HIPAA compliance to comply with the Omnibus Rule changes by the September 2013 deadline.

Technical Corrections To Omnibus Rule Released

OCR published the Omnibus Rule to implement changes to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules (“the HIPAA Rules”) enacted by the Health Information Technology for Economic and Clinical Health Act (“the HITECH Act”) and section 105 of Title I of the Genetic Information Nondiscrimination Act of 2008, as well as to address public comment received on the interim final Breach Notification Rule and to other changes to the HIPAA Rules.  The Technical Corrections are scheduled for publication in the Federal Register on June 7, 2013.

The Technical Corrections correct various typographical errors and other oversights in the Omnibus Regulations as originally published.   While many of these corrections have limited material impact, certain corrections do have substantive implications.  For instance, by correcting errors in references to other provisions of the Omnibus Regulations, the Technical Corrections clarify that the authority of OCR to grant an extension of time pursuant to § 160.508(c)(5) for violations before February 18, 2009 also applies to violations occurring on or after February 18, 2009, as there is for violations occurring prior to February 18, 2009.

Health plans, health care clearinghouses and their business associates will need to review and take into account the Technical Corrections as they work to review and update their  policies and practices for handling and disclosing personally identifiable health care information (“PHI”) in response to the Omnibus Rule.

Get Moving To Update HIPAA Compliance For New Omnibus Rule Requirements As Amended By Technical Corrections

Covered entities and their business associates have a lot to accomplish between now and September to update their business associates and comply with other changes made by the Omnibus Rule by its September 2013 deadline. Among other things, the Omnibus Regulations:

  • Revise OCR’s HIPAA regulations to reflect the HITECH Act’s amendment of HIPAA to add the contractors and subcontractors of health plans, health care providers and health care clearinghouses that qualify as business associates to the parties directly responsible for complying with and subject to HIPAA’s civil and criminal penalties for violating HIPAA’s Privacy, Security, and Breach Notification rules;
  • Update previous interim regulations implementing HITECH Act breach notification rules that require Covered Entities including business associates to give specific notifications to individuals whose PHI is breached, HHS and in some cases, the media when a breach of unsecured information happens;
  • Update interim enforcement guidance OCR previously published to implement increased penalties and other changes to HIPAA’s civil and criminal sanctions enacted by the HITECH Act;
  •  Implement HITECH Act amendments to HIPAA that tighten the conditions under which Covered Entities are allowed to use or disclose PHI for marketing and fundraising purposes and prohibit Covered Entities from selling an individual’s health information without getting the individual’s authorization in the way required by the Omnibus Regulations;
  • Update OCR’s rules about the individual rights that HIPAA requires that Covered Entities to afford to individuals who are the subject of PHI used or possessed by a Covered Entity to reflect tightened requirements enacted by the HITECH Act  that allow individuals to order their health care provider not to share information about their treatment with health plans when the individual pays cash for the care and to clarify that individuals can require Covered Entities to provide electronic PHI in electronic form;
  • Revise the regulations to reflect amendments to HIPAA made as part of the Genetic Information Nondiscrimination Act of 2008 (GINA) which added genetic information to the definition of PHI protected under the HIPAA Privacy Rule and prohibits health plans from using or disclosing genetic information for underwriting purposes; and
  • Clarifies and revises other provisions to reflect other interpretations and information guidance that OCR has issued since HIPAA was passed and to make certain other changes that OCR found appropriate based on its experience administering and enforcing the rules.

Liability & Enforcement Risks Heighten Need To Act To Review & Update Policies & Practices

The restated rules in the Omnibus Rule make it imperative that Covered Entities review the revised rules carefully and updated their policies, practices, business associate agreements, training and documentation to comply with the updated requirements and other enforcement and liability risks.  OCR even prior to the regulations has aggressively investigated and enforced the HIPAA requirements.  See, e.g.,  OCR Hits Alaska Medicaid For $1.7M+ For HIPAA Security Breach; OCR Audit Program Kickoff Further Heats HIPAA Privacy Risks$1.5 Million HIPAA Settlement Reached To Resolve 1st OCR Enforcement Action Prompted By HITECH Act Breach Report; HIPAA Heats Up: HITECH Act Changes Take Effect & OCR Begins Posting Names, Other Details Of Unsecured PHI Breach Reports On Website; Providence To Pay $100000 & Implement Other Safeguards.

Coupled with statements by OCR about its intolerance, the HONI and other settlements provide a strong warning to covered entities of the need to carefully and appropriately manage their HIPAA encryption and other Privacy and Security responsibilities. Covered entities are urged to heed these warning by strengthening their HIPAA compliance and adopting other suitable safeguards to minimize HIPAA exposures.

All Covered Entities should review critically and carefully the adequacy of their current HIPAA Privacy and Security compliance policies, monitoring, training, breach notification and other practices taking into consideration OCR’s investigation and enforcement actions, emerging litigation and other enforcement data; their own and reports of other security and privacy breaches and near misses; and other developments to decide if additional steps are necessary or advisable.   In response to these expanding exposures, all covered entities and their business associates should review critically and carefully the adequacy of their current HIPAA Privacy and Security compliance policies, monitoring, training, breach notification and other practices taking into consideration OCR’s investigation and enforcement actions, emerging litigation and other enforcement data; their own and reports of other security and privacy breaches and near misses, and other developments to decide if tightening their policies, practices, documentation or training is necessary or advisable.

For Help With Compliance, Risk Management, Investigations, Policy Updates Or Other Needs

If you need help with HIPAA and other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other human resources, employee benefit, or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Nationally recognized for her extensive work, publications and leadership on HIPAA and other privacy and data security concerns, Ms. Stamer has extensive experience representing, advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical and other privacy and data security, employment, employee benefits, and to handle other compliance and risk management policies and practices; to investigate and respond to OCR and other enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

A Fellow in the American College of Employee Benefit Counsel, State Bar of Texas and American Bar Association, Vice President of the North Texas Health Care Compliance Professionals Association, the Former Chair of the ABA RPTE Employee Benefit & Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Council Representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer serves as the scribe for the ABA Joint Committee on Employee Benefits agency meeting with OCR. Ms. Stamer also regularly works with OCR and other agencies, publishes and speaks extensively on medical and other privacy and data security, health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.  Her publications and insights  on HIPAA and other data privacy and security concerns appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.   For instance, Ms. Stamer for the third year will serve in 2013 as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR.  Her insights on HIPAA risk management and compliance often appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, SHRM, HIMMS, the American Bar Association, the Health Care Compliance Association, a multitude of health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others.  You can get more information about her HIPAA and other experience here.

In addition to this extensive HIPAA specific experience, Ms. Stamer also is recognized for her experience and skill aiding clients with a diverse range of other employment, employee benefits, health and safety, public policy, and other compliance and risk management concerns.

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a member of the Editorial Advisory Board and expert panels of HR.com, Employee Benefit News, InsuranceThoughtLeadership.com, and Solutions Law Press, Inc., management attorney and consultant Ms. Stamer has 25 years of experience helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices.   Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.  In addition to her continuous day-to-day involvement helping businesses to manage employment and employee benefit plan concerns, she also has extensive public policy and regulatory experience with these and other matters domestically and internationally.  A former member of the Executive Committee of the Texas Association of Business and past Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, Ms. Stamer served as a primary advisor to the Government of Bolivia on its pension privatization law, and has been intimately involved in federal, state, and international workforce, health care, pension and social security, tax, education, immigration, education and other legislative and regulatory reform in the US and abroad.  She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.

For help  with these or other compliance concerns, to ask about compliance audit or training, or for legal representation on these or other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


Sequester Will Cut ACA Small Businesses Health Care Tax Credits

March 5, 2013

Even as small and other businesses are struggling to cope with rising rates and impending new rules under the Patient Protection and Affordable Care Act (ACA), small businesses now must deal with being sideswiped by sequester.

Sequester will hurt certain small employers that were counting on the Small Business Health Care Tax Credit (SBHCTC) to afford health care coverage for their employees.

Under the sequester requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, certain automatic budget cuts went into effect on March 1, 2013. These required cuts include an 8.7% reduction to the refundable part of the SBHCTC for otherwise qualifying small employers under Internal Revenue Code § 45R. As a result, employers qualifying for the SBHCTC should expect to see an 8.7% percent reduction in the amount of reimbursement received for health premiums under the SBHCTC. The sequestration reduction rate will apply until the end of the fiscal year on September 30, 2013 or intervening Congressional action, at which time the sequestration rate is subject to change.

Aside from the effects of sequester, small and other businesses health care costs and responsibilities continue to be shaped by a deluge of new rules rolling out under ACA, the Health Insurance Portability & Accountability Act (HIPAA),  the Family & Medical Leave Act, and a host of other laws.  Stay tuned here for more updates.  

For Help With Compliance, Risk Management, Investigations, Policy Updates Or Other Needs

If you need help with other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other human resources, employee benefit, or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Nationally recognized as a knowledgable and innovative health benefit thought leader by business and government leaders for her extensive work, publications and leadership on health benefit and insurance and other related employee benefits, insurance, human resources and health care matters, Ms. Stamer has advised and defended employer and other health plan sponsors, administrators and fiduciaries, insurers, and others about benefit design, compliance, administration and defense for more than 25 years.  Her work includes highly pragmatic, leading edge work helping clients to design, deploy, administer and defend catastrophic, mini-med, expatriate and medical tourism, occupational injury and 24-hour coverage, HRA, HSA HFSA and other defined contribution, Medicare Advantage, and other health plans, policies and practices to comply with the Affordable Care Act, HIPAA, ERISA, COBRA, Mental Health Parity, Internal Revenue Code, labor and employment, privacy, managed care and insurance and other federal and state laws and regulations.

In addition to her extensive legal resume, Ms. Stamer also is a highly regarded industry thought leader and author with extensive involvement in the leadership of a broad range of professional and civic organizations.  For instance, Ms. Stamer is the founder and executive director of the Coalition for Responsible Health Care Policy and its PROJECT COPE; The Coalition on Patient Empowerment; a Fellow in the American College of Employee Benefits Counsel, the American Bar Association and the State Bar of Texas; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group; the Immediate Past Chair of the ABA RPTE Employee Benefit & Other Compensation Committee and the  current ABA RPTE Employee Benefit & Other Compensation Committee Welfare Benefits Committee Co-Chair; a Council Member of the ABA Joint Committee on Employee Benefits; Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; Immediate Past Gulf States Area TEGE Council Exempt Organization Coordinator; a current or former Editorial Advisory Board Member of Insurance Thought Leadership, HR.com, Employee Benefit News, the BNA Employee Benefits CD-Rolm and various other BNA HR and Employee Benefits publications; a former national board member and Dallas Chapter President of WEB, Network of Benefits Professionals; a former Southwest Benefits Association Board Member; the past Dallas HR Government Relations Committee Chair; a former SHRM Region IV Board Member and National Consultants Forum Board Member,; past  Dallas Bar Association Employee Benefits & Compensation Committee Chair, and a former Texas Association of Business State Board and Regional and Dallas Chapter Chair.

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a member of the Editorial Advisory Board and expert panels of HR.com, Employee Benefit News, InsuranceThoughtLeadership.com, and Solutions Law Press, Inc., management attorney and consultant Ms. Stamer has 25 years of experience helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices.   Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.  In addition to her continuous day-to-day involvement helping businesses to manage employment and employee benefit plan concerns, she also has extensive public policy and regulatory experience with these and other matters domestically and internationally.  A former member of the Executive Committee of the Texas Association of Business and past Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, Ms. Stamer served as a primary advisor to the Government of Bolivia on its pension privatization law, and has been intimately involved in federal, state, and international workforce, health care, pension and social security, tax, education, immigration, education and other legislative and regulatory reform in the US and abroad.  She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly. 

For help  with these or other compliance concerns, to ask about compliance audit or training, or for legal representation on these or other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


Premier Insurance Services Pays $120,000 In Back Wages, Damages, Penalties Because Commission-Only Comp Violated Minimum Wage, Overtime Laws

March 2, 2013

Insurance brokerage and other businesses paying commission-only compensation should review the defensibility of their payment practices in response to the agreement by Premier Insurance Services (Premier) to pay $119,570 in minimum wage and overtime back wages, liquidated damages and civil money penalties.

The settlement arises from an investigation by the U.S. Department of Labor’s Wage and Hour Division (DOL) that determined that the insurer willfully violated minimum wage, overtime and record-keeping provisions of the Fair Labor Standards Act (FLSA).  According to DOL, its investigators found that the commission-only pay practice used by the Colton, California-based employer at all of its locations resulted in employees being paid below the federal minimum wage and failing to receive an overtime premium for hours worked beyond 40 per week. DOL also charges that Premier failed to maintain employee time records.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also are required to maintain accurate time and payroll records.

The FLSA provides that employers who violate the law are, as a general rule, liable to employees for their back wages and an equal amount in liquidated damages. Liquidated damages are paid directly to the affected employees.

Under the settlement, Premier will pay $43,297 in minimum wage and overtime back wages due to 90 employees and an equal amount in liquidated damages.  Because of the willful nature of the violations, the employer will also pay $32,976 in civil money penalties.

Premier also signed a settlement agreement with the Labor Department in which it committed to implement a timekeeping system to document employees’ hours worked, assure payment of at least the federal minimum wage of $7.25 per hour and accurately determine and pay overtime.

The Premier settlement follows DOL’s settlement of a related case last year after investigators discovered similar violations involving Upland, California-based Speedlane Insurance Services. This company was owned and operated by a close relative of Premier’s owner. That investigation resulted in $200,000 in back wages due to 96 employees.

The DOL’s announcement of the settlements alerts employers of the need to ensure that commission-based compensation meet FLSA requirements.

“Paying employees on a commission-only basis does not give employers a green light to dodge minimum wage and overtime pay requirements,” said Priscilla Garcia, director of DOL’s West Covina District Office when announcing the Premier settlement. “Premier Insurance Services knowingly violated the most basic labor laws to make a profit at the expense of their employees. This case should put other employers on notice that if they fail to pay their employees in compliance with federal law, our department will not hesitate to investigate. Employers may be found liable not only for back wages, but also for liquidated damages and other penalties.” (Emphasis added).

FLSA Violations Generally Costly;  Enforcement Rising

The enforcement record of the Labor Department confirms these risks and reflects DOL’s targeting of U.S. employers that violate wage and hour laws.

Under the Obama Administration, DOL officials have made it a priority to enforce overtime, record keeping, worker classification and other wage and hour law requirements.  See e.g.,  Boston Furs Sued For $1M For Violations Of Fair Labor Standards Act; Record $2.3 Millh ion+ Backpay Order; Minimum Wage, Overtime Risks Highlighted By Labor Department Strike Force Targeting Residential Care & Group Homes; Review & Strengthen Defensibility of Existing Worker Classification Practices In Light of Rising Congressional & Regulatory Scrutiny; 250 New Investigators, Renewed DOL Enforcement Emphasis Signal Rising Wage & Hour Risks For EmployersQuest Diagnostics, Inc. To Pay $688,000 In Overtime Backpay In an effort to further promote compliance and enforcement of these rules,  the Labor Department is using  smart phone applications, social media and a host of other new tools to educate and recruit workers in its effort to find and prosecute violators. See, e.g. New Employee Smart Phone App New Tool In Labor Department’s Aggressive Wage & Hour Law Enforcement Campaign Against Restaurant & Other Employers.    As a result of these effort, employers violating the FLSA now face heightened risk of enforcement from both the  Labor Department and private litigation.

Employers Should Strengthen Practices For Defensibility

 To minimize exposure under the FLSA, employers should review and document the defensibility of their existing practices for classifying and compensating workers under existing Federal and state wage and hour laws and take other actions to minimize their potential liability under applicable wages and hour laws.  Steps advisable as part of this process include, but are not necessarily limited to:

  • Audit of each position current 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;
  • Review of 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 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 of existing documentation and record keeping practices for hourly employees;
  • Exploration of available options and alternatives for calculating required wage payments to non-exempt employees; and
  • Re-engineering of work rules and other practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures.

Because of the potentially significant liability exposure, employers generally will want to consult with qualified legal counsel before starting their risk assessment and assess risks and claims within the scope of attorney-client privilege to help protect the ability to claim attorney-client privilege or other evidentiary protections to help shelter conversations or certain other sensitive risk activities from discovery under the rules of evidence.

For Help With Investigations, Policy Updates Or Other Needs

If you need help in conducting a risk assessment of or responding to an IRS, DOL, Justice Department, or other federal or state agencies or other private plaintiff or other legal challenges to your organization’s existing workforce classification or other labor and employment, compliance,  employee benefit or compensation practices, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469) 767-8872 .

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 23 years of work helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices. The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.   She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

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

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©2012 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


OSHA Citation Of Michigan VA Reminder To Manage Workplace Safety

March 1, 2013

The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) citation of the Battle Creek Veterans Administration Medical Center, following a safety inspection conducted in July as part of OSHA’s Federal Agency Targeting Inspection Program for seven notices of unsafe or unhealthful working conditions reminds employers that OSHA expects employers to maintain safe workplaces.

Under the Occupational Safety and Health Act, federal agencies must comply with the same safety standards as private-sector employers.  According to OSHA, its inspection uncovered several repeat safety violations, as well as certain other serious safety violations.

OSHA reports that three repeat safety violations involved failing to evaluate the workplace to identify if permit-required confined spaces were present and label such spaces with danger signs; failing to adequately guard automated laundry equipment to prevent employees from entering the work area, and failing to fully guard the belt and pulley of an air compressor. To issue notices for repeat violations, OSHA must have issued at least one other notice for the same violation at one of the agency’s establishments within the same standard industrial classification code, commonly known as the SIC code. OSHA previously has cited U.S. Department of Veterans Affairs facilities in Danville and North Chicago, Illinois, and Minneapolis, Minnesota for the same safety and health violations.

The serious safety violations found included three serious safety violations for unguarded floor openings in the general repair shop; failing to inspect powered industrial trucks prior to placing them in service, and failing to remove trucks from service in need of repair. Additionally, OSHA found a circuit breaker panel was not mounted correctly. OSHA issues a serious notice when it finds a substantial probability that death or serious physical harm could result from a hazard about which the employer knew or should have known.

Beyond the repeated and serious violations, OSHA reports it also found one other-than-serious violation for failing to close unused openings on electrical cabinets and junction boxes. An other-than-serious violation is one that has a direct relationship to job safety and health, but probably would not cause death or serious physical harm.

The medical center has 15 business days from receipt of the notices to comply, request an informal conference with OSHA’s area director or appeal the notices by submitting a summary of the agency’s position on the unresolved issues to OSHA’s regional administrator.

While the medical center and other federal agencies are required to comply with the same OSHA rules as private sector employers, the VA and other federal agencies don’t face the same liabilities when cited.  OSHA cannot propose monetary penalties against another federal agency for failure to comply with OSHA standards.

The risks for private sector employers is illustrated by another recent OSHA.  OSHA recently cited Riddell All-American Sports Co. with eight serious violations following an OSHA investigation, which found that the company exposed workers to multiple safety and health hazards at its San Antonio facility. The violations include failing to ensure electrical equipment was free from recognized hazards, provide adequate machine guarding while employees operate industrial sewing machines and provide a fall protection program to prevent falls from the basket of a powered industrial truck. The Elyria, Ohio-based company, which employs about 25 workers in San Antonio, paints helmets for various sports. Proposed penalties total $44,000. Read the News Release.

Since private sector employers that don’t enjoy the VA’s immunity liability run much greater risks for failing to maintain workplace safety, including significant civil and in the case of a workplace death, potentially even criminal penalties, private sector hospitals and other organizations should exercise special care to ensure appropriate safety in their workplaces.  “The Battle Creek Veterans Administration Medical Center failed to properly ensure the facility was in compliance with established safety and health procedures,” said Robert Bonack, director of OSHA’s Lansing Area Office. “All employers, including federal employers, are responsible for knowing what hazards exist in their facilities and taking appropriate precautions by following OSHA standards so workers are not exposed to such hazards.”

For Help With Compliance, Risk Management, Investigations, Policy Updates Or Other Needs

If you need help in conducting a risk assessment of or responding to an IRS, DOL, Justice Department, or other federal or state agencies or other private plaintiff or other legal challenges to your organization’s existing workforce classification or other labor and employment, compliance,  employee benefit or compensation practices, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469) 767-8872 .

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 23 years of work helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices. The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.   She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly at (469) 767-8872 or via e-mail here

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


HHS Releases Final Rule on Health Insurance Market, Rate Review, Pre-Existing Conditions & Other ACA Market Reform Rules

February 25, 2013

The U.S. Department of Health and Human Services (HHS) on February 22, 2013 released its Final Rule implementing many of the key market reform provisions of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”) applicable to non-grandfathered health plans and health insurance issuers. 

The 145 page regulations and associated guidance package scheduled for official publication in the Federal Register on February 27, 2013 clarifies and implements the Affordable Care Act’s provisions relating to Guaranteed Availability and Renewability; Health Insurance Premiums; Single Risk Pool; Catastrophic Plans, Utilization Data Collection and Reporting under the Federal Rate Review Program and certain other matters. 

Among other thing, the Final Regulations:

  • Clarify the approach HHS will use to enforce the applicable requirements of the Affordable Care Act with respect to health insurance issuers and group health plans that are nonfederal governmental plans
  • Amend the standards for health insurance issuers and states on reporting, utilization, and collection of data under the federal rate review program
  • Revise the timeline for states to propose state-specific thresholds for review and approval by the Centers for Medicare & Medicaid Services (CMS)
  • Allow health insurance issuers to vary the premium rate for health insurance coverage in the individual and small group markets only based on family size, geography, and age and tobacco use within limits
  • Direct health insurance issuers to offer coverage to and accept every employer or individual who applies for coverage in the group and individual market, subject to certain exceptions including how these requirements inter-relate with the Affordable Care Act’s restrictions on pre-existing condition limitations and exclusions
  • Direct health insurance issuers to renew or continue in force coverage in the group and individual market, subject to certain exceptions
  • Codify the requirement that issuers maintain a single risk pool for the individual market and a single risk pool for the small group market (unless a state decides to merge the markets into a single risk pool)
  • Outline standards for enrollment in catastrophic plans for young adults and people who cannot otherwise afford health insurance
  • Amend the standards under the rate review program in 45 CFR part 154 by among other things, changing the timeline for states to propose state-specific thresholds for review and approval by CMS, requiring health insurance issuers to submit data relating to proposed rate increases in a standardized format specified by the Secretary of HHS and modifying criteria and factors for states to have an effective rate review program

Along with responding to these regulations, health insurers, group health plans and their insurers and others need to stay tuned.  These regulations are just one of a deluge of regulations and other interpretations that HHS and other agencies are rolling out in the rush to meet the impending deadlines for the implementaton of the Affordable Care Act.  For instance, along with this guidance, HHS along with the Internal Revenue Service and Employee Benefit Security Administration also last week issued FAQ XII, which discusses the co-pay, deductible and certain other aspects of the cost sharing limits of the Affordable Care Act.  In previous weeks, the agencies also have issued or proposed regulations about waiting period, employer shared responsibility, essential health benefits, and various other elements of the rules.   Additional guidance is impending.  

For Help With Compliance, Risk Management, Investigations, Policy Updates Or Other Needs

If you need help with other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other human resources, employee benefit, or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Nationally recognized as a knowledgable and innovative health benefit thought leader by business and government leaders for her extensive work, publications and leadership on health benefit and insurance and other related employee benefits, insurance, human resources and health care matters, Ms. Stamer has advised and defended employer and other health plan sponsors, administrators and fiduciaries, insurers, and others about benefit design, compliance, administration and defense for more than 25 years.  Her work includes highly pragmatic, leading edge work helping clients to design, deploy, administer and defend catastrophic, mini-med, expatriate and medical tourism, occupational injury and 24-hour coverage, HRA, HSA HFSA and other defined contribution, Medicare Advantage, and other health plans, policies and practices to comply with the Affordable Care Act, HIPAA, ERISA, COBRA, Mental Health Parity, Internal Revenue Code, labor and employment, privacy, managed care and insurance and other federal and state laws and regulations.

In addition to her extensive legal resume, Ms. Stamer also is a highly regarded industry thought leader and author with extensive involvement in the leadership of a broad range of professional and civic organizations.  For instance, Ms. Stamer is the founder and executive director of the Coalition for Responsible Health Care Policy and its PROJECT COPE; The Coalition on Patient Empowerment; a Fellow in the American College of Employee Benefits Counsel, the American Bar Association and the State Bar of Texas; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group; the Immediate Past Chair of the ABA RPTE Employee Benefit & Other Compensation Committee and the  current ABA RPTE Employee Benefit & Other Compensation Committee Welfare Benefits Committee Co-Chair; a Council Member of the ABA Joint Committee on Employee Benefits; Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; Immediate Past Gulf States Area TEGE Council Exempt Organization Coordinator; a current or former Editorial Advisory Board Member of Insurance Thought Leadership, HR.com, Employee Benefit News, the BNA Employee Benefits CD-Rolm and various other BNA HR and Employee Benefits publications; a former national board member and Dallas Chapter President of WEB, Network of Benefits Professionals; a former Southwest Benefits Association Board Member; the past Dallas HR Government Relations Committee Chair; a former SHRM Region IV Board Member and National Consultants Forum Board Member,; past  Dallas Bar Association Employee Benefits & Compensation Committee Chair, and a former Texas Association of Business State Board and Regional and Dallas Chapter Chair.

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a member of the Editorial Advisory Board and expert panels of HR.com, Employee Benefit News, InsuranceThoughtLeadership.com, and Solutions Law Press, Inc., management attorney and consultant Ms. Stamer has 25 years of experience helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices.   Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.  In addition to her continuous day-to-day involvement helping businesses to manage employment and employee benefit plan concerns, she also has extensive public policy and regulatory experience with these and other matters domestically and internationally.  A former member of the Executive Committee of the Texas Association of Business and past Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, Ms. Stamer served as a primary advisor to the Government of Bolivia on its pension privatization law, and has been intimately involved in federal, state, and international workforce, health care, pension and social security, tax, education, immigration, education and other legislative and regulatory reform in the US and abroad.  She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly. 

For help  with these or other compliance concerns, to ask about compliance audit or training, or for legal representation on these or other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

 

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


FTC, HIPAA Rules Require Health Plans & Employers Strengthen Data Security on Mobile Devices and Applications

February 23, 2013

Thinking about or using mobile devices and applications in your heath care, health plan, workforce or related operations or struggling to meet the demands of employees, plan members or others to allow use of these tools?  Be sure that you’ve taken appropriate steps to design, implement and manage legal responsibilities and risks associated with the development and use of these tools.

While the popularity, accessibility and cost-effectiveness of mobile devices and applications provides a strong incentive for health and other employee benefit plans, employers, their business associates, workforce members and customers to use mobile devices and applications, the use of these technologies and applications to collect, access, or use personal health care, financial, or other sensitive information presents special challenges and risks. Unfortunately, as the use of these tools proliferates, federal officials are increasingly concerned that the data security protections afforded by many of the devices and applications in use on these highly popular smart phone, tablet and other mobile devices and applications is highly lacking.  See FTC Settlement With Mobile Device & App Developer Shows Developers & Businesses Need To Manage Mobile App & Data Security.

As federal regulators and law enforcement responds to growing concerns about cyber security and other risks, heath care, health plan and other businesses, their employees, customers, and other business partners jumping on the mobile device and application bandwagon, health, application bandwagon, and the device and application developers developing and offering these tools must take appropriate steps to manage the personal health, financial, and other sensitive information and data that these tools use, create, access or disclose.

Of course,  most health plan sponsors, fiduciaries, administrators and service providers already recognize the need to use care when dealing with health plan data.  The Health Insurance Portability & Accountability Act (HIPAA) generally requires that health care providers, health plans, health care clearinghouses and their businesses associates safeguard personal health care information or “PHI” and restrict its use, access and disclosure in accordance with the extensive and highly detailed requirements of the Privacy, Security and Breach Notification Regulations of the Department of Health & Human Services Office of Civil Rights (OCR).

OCR’s collection of several multi-million dollar settlements as well as its statements in its recent restated HIPAA regulations and other OCR guidance make clear that OCR views HIPAA as imposing significant responsibilities upon covered entities and their business associates to safeguard and restrict access to PHI on mobile devices and applications. OCR’s Long-Anticipated Omnibus HIPAA Privacy, Security, Breach Notification & Enforcement Rule Tightens Privacy Requirements, Require Action;  Breaches resulting from the loss or theft of unencrypted ePHI on mobile or other computer devices or systems has been a common basis of investigation and sanctions since that time, particularly since the Breach Notification rules took effect.  OCR Pops Idaho Hospice In 1st HIPAA Breach Settlement Affecting < 500 Patients; Providence To Pay $100000 & Implement Other Safeguards  OCR Hits Alaska Medicaid For $1.7M+ For HIPAA Security Breach; OCR Audit Program Kickoff Further Heats HIPAA Privacy Risks$1.5 Million HIPAA Settlement Reached To Resolve 1st OCR Enforcement Action Prompted By HITECH Act Breach Report; HIPAA Heats Up: HITECH Act Changes Take Effect & OCR Begins Posting Names, Other Details Of Unsecured PHI Breach Reports On WebsiteThese actions and statements of OCR provide a clear warning to HIPAA-covered entities and their business associates to expect significant consequences for failing to properly encrypt and safeguard ePHI used, accessed or disclosed on mobile devices and applications.

Of course, HIPAA isn’t the only law and health plans should not be the only area of concern when employers or their health or other employee benefit plan fiduciaries and service providers are considering mobile device and application use.  In addition to HIPAA’s health plan requirements concerning PHI, mobile devices and applications used in connection with employment, benefit plan, and related operations also can trigger a host of privacy, data security and other rules requiring data security and other safeguards.  Federal laws like the Internal Revenue Code, the Fair Credit Reporting Act, Graham-Leech-Biliey, the  Fair & Accurate Credit Transactions Act (FACTA) or other Federal Trade Commission (FTC) Rules, state data security, data breach, identity theft or other privacy rules or both  are just a few of the many and constantly expanding regulatory requirements that can apply.  Depending on the nature of the data and the circumstances of the unanticipated use or disclosure, invasion of privacy or other common or statutory laws also may come into play.

With the use of these applications by consumers and business proliferates, Congress, OCR, the FTC, state regulators and others are upping the responsibilities and the liability of businesses that fail to appropriately consider and implement security in their mobile devices and applications.  Following on OCR’s restatement of its HIPAA regulations, the Obama Administration’s announcement of new cyber security initiatives, and a plethora of other federal and state regulatory and enforcement actions against businesses for data security missteps, the FTC recently launched a campaign to ensure that companies secure the software and devices mobile device and application providers provide consumers.

Earlier this month, the FTC introduced Mobile App Developers: Start with Security, a new business guide that encourages app developers to aim for reasonable data security.

On June 4, 2013, the FTC also plans to host a public forum on malware and other mobile security threats in order to examine the security of existing and developing mobile technologies and the roles that various members of the mobile ecosystem can play in protecting consumers.

Along side this educational outreach, the FTC also is moving to punish businesses that fail to act responsibly to protect sensitive data.  This trend is illustrated by the FTC’s announcement this week of its first settlement with a mobile device manufacturer. 

FTC Charges Against HTC America

This week, the FTC announced that mobile device giant HTC American, Inc.  will to settle FTC charges that the company failed to take reasonable steps to secure the software it developed for its smart phones and tablet computers and introduced security flaws that placed sensitive information about millions of consumers at risk.  

A leading mobile device manufacturer in the United States, HTC America develops and manufactures mobile devices based on the Android, Windows Mobile, and Windows Phone operating systems. HTC America has customized the software on these devices in order to differentiate itself from competitors and to comply with the requirements of mobile network operators.   

In its first-ever complaint against a mobile device or application developer, the FTC charged HTC America failed to incorporate and administer appropriate safeguards for personal financial and other sensitive data accessed and used in these applications when designing or customizing the software on its mobile devices. Among other things, the complaint alleged that HTC America failed to provide its engineering staff with adequate security training, failed to review or test the software on its mobile devices for potential security vulnerabilities, failed to follow well-known and commonly accepted secure coding practices, and failed to establish a process for receiving and addressing vulnerability reports from third parties.

To illustrate the consequences of these alleged failures, the FTC’s complaint details several vulnerabilities found on HTC America’s devices, including the insecure implementation of two logging applications – Carrier IQ and HTC Loggers – as well as programming flaws that would allow third-party applications to bypass Android’s permission-based security model.

Due to these vulnerabilities, the FTC charged, millions of HTC devices compromised sensitive device functionality, potentially permitting malicious applications to send text messages, record audio, and even install additional malware onto a consumer’s device, all without the user’s knowledge or consent. The FTC alleged that malware placed on consumers’ devices without their permission could be used to record and transmit information entered into or stored on the device, including, for example, financial account numbers and related access codes or medical information such as text messages received from healthcare providers and calendar entries about doctor’s appointments. In addition, malicious applications could exploit the vulnerabilities on HTC devices to gain unauthorized access to a variety of other sensitive information, such as the user’s geolocation information and the contents of the user’s text messages.

Moreover, the FTC complaint alleged that the user manuals for HTC Android-based devices contained deceptive representations, and that the user interface for the company’s Tell HTC application was also deceptive. In both cases, the security vulnerabilities in HTC Android-based devices undermined consent mechanisms that would have otherwise prevented unauthorized access or transmission of sensitive information.

HTC America Settlement

The settlement not only requires the establishment of a comprehensive security program, but also prohibits HTC America from making any false or misleading statements about the security and privacy of consumers’ data on HTC devices. Under the settlement agreement, HTC American must:

  • Fix vulnerabilities found in millions of HTC devices;
  • Establish a comprehensive security program designed to address security risks during the development of HTC devices; and
  • Undergo independent security assessments every other year for the next 20 years.

HTC America and its network operator partners are also in the process of deploying the security patches required by the settlement to consumers’ devices. Many consumers have already received the required security updates. The FTC is encouraging consumers using HTC America applications to apply the updates as soon as possible.

The FTC Commission vote to accept the consent agreement package containing the proposed consent order for public comment was 3-0-2, with Chairman Jon Leibowitz not participating and Commissioner Maureen Ohlhausen recused. The FTC will publish a description of the consent agreement package in the Federal Register shortly.

In accordance with FTC procedures, the settlement agreement will be subject to public comment through March 22, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit comments electronically or in paper form using instructions in the “Invitation To Comment” part of the “Supplementary Information” section. Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

Act To Manage Mobile Application Device & Security

Given the expanding awareness, expectations and enforcement of OCR, FTC and others, health care, health plan and other industry participants deciding whether and when to use, or allow others to use mobile devices or applications to access data or carry out other activities and the mobile device or other technology developers and providers offering products or services to these organizations must get serious about security. 

These and other related activities send a clear message that health care, health insurance mobile device and application users and developers must incorporate and administer appropriate processes and safeguards to protect PHI, personal financial and other sensitive data.  In response to these developments, industry mobile device and application developers and the health care, health insurance and other businesses must consider carefully before deploying or allowing others to deploy or use these tools in relation to data within their operations or systems.  Before and when using or permitting customers, business partners, employees or others to use tools, these organizations must ensure the adequacy of the design and security safeguards for their devices, software and applications, as well as their disclaimers and associated consumer disclosures and consents.  Because of the special legal and operational expectations for these organizations, health care, health insurance and other industry provides must resist pressure to allow the use of these tools unless and until they can verify that these legal and operational requisites are fulfilled.

For Help With Compliance, Risk Management, Investigations, Policy Updates Or Other Needs

If you need help with other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other human resources, employee benefit, or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Nationally recognized for her extensive work, publications and leadership on HIPAA and other privacy and data security concerns, Ms. Stamer has extensive experience representing, advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical and other privacy and data security, employment, employee benefits, and to handle other compliance and risk management policies and practices; to investigate and respond to OCR and other enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

A Fellow in the American College of Employee Benefit Counsel, State Bar of Texas and American Bar Association, Vice President of the North Texas Health Care Compliance Professionals Association, the Former Chair of the ABA RPTE Employee Benefit & Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Council Representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer serves as the scribe for the ABA Joint Committee on Employee Benefits agency meeting with OCR. Ms. Stamer also regularly works with OCR and other agencies, publishes and speaks extensively on medical and other privacy and data security, health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.  Her publications and insights  on HIPAA and other data privacy and security concerns appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.   For instance, Ms. Stamer for the third year will serve in 2013 as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR.  Her insights on HIPAA risk management and compliance often appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, SHRM, HIMMS, the American Bar Association, the Health Care Compliance Association, a multitude of health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others.  You can get more information about her HIPAA and other experience here.

In addition to this extensive HIPAA specific experience, Ms. Stamer also is recognized for her experience and skill aiding clients with a diverse range of other employment, employee benefits, health and safety, public policy, and other compliance and risk management concerns. 

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a member of the Editorial Advisory Board and expert panels of HR.com, Employee Benefit News, InsuranceThoughtLeadership.com, and Solutions Law Press, Inc., management attorney and consultant Ms. Stamer has 25 years of experience helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices.   Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.  In addition to her continuous day-to-day involvement helping businesses to manage employment and employee benefit plan concerns, she also has extensive public policy and regulatory experience with these and other matters domestically and internationally.  A former member of the Executive Committee of the Texas Association of Business and past Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, Ms. Stamer served as a primary advisor to the Government of Bolivia on its pension privatization law, and has been intimately involved in federal, state, and international workforce, health care, pension and social security, tax, education, immigration, education and other legislative and regulatory reform in the US and abroad.  She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly. 

For help  with these or other compliance concerns, to ask about compliance audit or training, or for legal representation on these or other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


3/13 JCEB Teleconference Explores Foreign Transferees: Outbound, Inbound, Equity And Treaty Issues

February 19, 2013

Cynthia Marcotte Stamer will share her insights on health and welfare benefit challenges for multinational employers as one of the featured panelists on the “Foreign Transferees:  Outbound, Inbound, Equity And Treaty Issues” Teleconference hosted by the American Bar Association Joint Committee on Employee Benefits on March 13, 2013 from 10:00-11:30 a.m. Central Time.

  • Intended to help broad-based U.S. and European community benefits attorneys and others seeking to understand common and unique issues associated with employee transferees, granting of equity compensation and associated treaty issues, including:
  • Basic issues associated with transfers including granting of past service credits, vesting and distribution issues
  • Case studies involving employee transfers between the U.S. and the UK.
  • Use of international deferred compensation programs.
  • Unique health and welfare issues associated with international transfers.
  • Interesting/Global equity issues to avoid.

 Moderated by Elizabeth Drigotas, PriceWaterhouseCoopers, Washington, DC, the program will feature a diverse and highly experienced group of distinguished government and private speakers including:

  • M. Grace Fleeman, Senior Technical Reviewer, Branch 1, (Associate Chief Counsel International)), Internal Revenue Service, U.S. Department of the Treasury, Washington, DC (invited)
  • Andrew C. Liazos, McDermott Will & Emery, Boston, MA
  • Matthew Preston, Clifford Chance, London, UK
  • Cynthia Marcotte Stamer, Cynthia Marcotte Stamer, PC, Addison, TX.

To register or for additional information, see here.   

About Ms. Stamer

Sought out nationally and internationally as an industry thought leader and problem solver, attorney, Cynthia Marcotte Stamer has more than 25 years experience helping domestic and foreign private and public businesses, employer and union plan sponsors, health and other employee benefit plans, associations, their fiduciaries, administrators, and vendors, group health, Medicare and Medicaid Advantage, and other insurers, governmental and community leaders and others develop, implement, administer and defend creative, legally compliant and operationally effective health and other employee benefit, employment, insurance, pension and retirement, health care, workers’ compensation and workforce plans, practices, and policies. 

Recognized in International Who’s Who, the founder and Executive Director of Project COPE:  The Coalition on Patient Empowerment and its affiliate, the Coalition on Responsible Health Policy; a Fellow in the American College of Employee Benefits Counsel, American Bar Association, and State Bar of Texas; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Immediate Past Chair of the ABA RPTE Employee Benefit & Other Compensation Committee, current ABA RPTE Employee Benefit & Other Compensation Committee Welfare Benefits Committee Co-Chair and Substantive Groups Committee Member, and a Council Member of the ABA Joint Committee on Employee Benefits, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, and Immediate Past Gulf States Area TEGE Council Exempt Organization Chair, Ms. Stamer helps these and other clients. to design, document, administer and defend managed care and insurance programs, processes, and products; to monitor and manage evolving regulatory, contractual and fiduciary obligations and risks; to draft, negotiate, interpret and enforce managed care and other contracts, plan documents, insurance policies, administrative services agreements, and other agreements, policies, procedures and controls; to credential, monitor and manage fiduciaries, service providers, consultants and others providing services relating to programs; to conduct and defend litigation, audits, and other enforcement actions; to deal with legislators, regulators, auditors and others; and to fulfill legal obligations, mitigate legal risks and improve operational effectiveness.

As a core focus of her practice, Ms. Stamer continuously counsels, represents and defends self-insured and insured managed care and health, disability and welfare, pension, deferred compensation and other employee benefit plans; employer, association, insurer, and other employee benefit and insurance program sponsors; plan fiduciaries, administrators, brokers, consultants and other service providers; Medicare and Medicaid Advantage and other group, individual, stop-loss and other reinsurance, fiduciary liability and other insurers; health and insurance technology and other outsourcing companies; human resources, insurance and employee benefit consulting organizations; and other insurance, employee benefit and human resources industry clients, domestic and foreign governments and others about a diverse range of employee benefit, insurance, employment, tax, regulatory, risk management, public policy and related matters.

Ms. Stamer’s health benefit experience includes extensive and highly-innovative dealings with insured and self-insured managed care, defined contribution, indemnity and other health benefit, disability, life, occupational injury, Medicare and Medicaid Advantage, and other welfare benefit and insurance plans and policies; and a wide range of other employee benefits, compensation, insurance, equity and other related arrangements. Her work includes leading edge development and use of 24-hour coverage and other occupational injury, ex-pat and other medical tourism products, HRA, HSA, HRA and other defined contribution, hi-deductible, deductible reimbursement, min-med and other limited benefit plans, 24-hour and occupational benefit, fraternal benefit and association, and other medical programs as well as a broad range of claims, appeals, audit, and other administrative processes and tools designed to promote defensibility and mitigate risks.

Along side this domestic work, Ms. Stamer also has extensive international experience.  A primary drafter of the Bolivian Social Security privatization law with extensive domestic and international regulatory and public policy experience, Ms. Stamer also has worked extensively domestically and internationally on design, administration, operations, compliance, public policy and regulatory, and other challenges arising in the administration of multinational workforces and populations.  Throughout her career, Ms. Stamer has advised both U.S. based businesses and foreign owned or operated businesses about design and administration of employment, employee benefit, worker’s compensation, employment tax, occupational safety, discipline and promotion, collective bargaining, recruiting, compliance, risk management and other personnel practices for multinational workforces. She has worked extensively on the design and administration of pension, severance, health and other benefit and compensation programs for their multinational workforce. She assists businesses with cross-border and domestic employment, consulting, independent contractor, subcontractor, employee leasing and other staffing and vendor agreements; multinational Foreign Corrupt Practices Act, Federal Sentencing Guidelines, and other compliance programs and practices; design, drafting, interpretation, implementation, and coordination pension, health care, severance, education, insurance, employment, tax, unemployment, disability, and other programs and requirements; represents and advises businesses, associations and government agencies before U.S. and foreign governments in connection with tax, employment, and other compliance matters, trade relationships and missions, public policy advocacy.

A widely published author and highly sought out speaker whose HR & Benefits Update  has been recognized as among the “Top 50” HR Blogs To Watch, Ms. Stamer also regularly authors materials and conducts workshops and professional, management and other training on employee benefits, human resources, health care and other compliance and management topics for the ABA, Aspen Publishers, the Bureau of National Affairs (BNA), SHRM, World At Work, Insurance Thought Leadership, Government Institutes, Inc., Solutions Law Press, Inc., the Society of Professional Benefits Administrators, HealthLeaders, Managed Care Executive, CEO Magazine, Business Insurance and many other industry, professional and business publications. An Editorial Advisory Board Member of the Institute of Human Resources (IHR/HR.com), Employee Benefit News, and other publications, Ms. Stamer also regularly serves on the faculty and planning committees of a multitude of symposium and other educational programs.  For more details about Ms. Stamer’s services, experience, presentations, publications, and other credentials or to inquire about arranging counseling, training or presentations or other services by Ms. Stamer, see www.CynthiaStamer.com.  Ms. Stamer also is widely recognized for her regulatory and public policy advocacy, publications, and public speaking on privacy and other compliance, risk management concerns.  For the past two years, Ms. Stamer has serve as the appointed scribe for the ABA Joint Committee on Employee Benefits annual agency meeting with OCR and has lead numerous programs for the ABA and others on this topic.  Her insights on HIPAA risk management and compliance frequently appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, the American Bar Association, the Health Care Compliance Association, a multitude of health industry, health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others.

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


SLP Readers Get $400 Discount To Learn Key Health Care Reform Coping Strategies At 2/21-22 Employer Health & Human Capital Strategy Congress In Lake Mary, FL

February 5, 2013

Solutions Law Press, Inc. (SLP) readers qualify for up to a $400 discount on their registration to learn key insights from on strategies for charting the path forward to drive employee wellness, strengthen the workforce and impact global business competitiveness in the face of the impending health care reforms of the Patient Protection & Affordable Care Act from SLP Editor/Author Cynthia Marcotte Stamer and other leading employer health care decision makers at the 8th Annual Employer Health & Human Capital Strategy Congress that the World Health Congress is hosting on February 21-22, 2013 at The Westin Lake Mary, Orlando North Conference Center in Lake Mary, Florida.

About the Program

Nationally recognized industry thought leader and attorney SLP Editor attorney Cynthia Marcotte Stamer will help kick off the program when she joins a panel of prominent HR leaders discussing “Assessing Alternatives and Opportunities:  Defined Contribution and Exchanges-What are the Long-Term Implications on Your Human Capital Strategy” beginning at 9:30 a.m. on February 21, 2013.

Following this keynote panel, attendees also will learn other key ideas and strategies to help their organizations cope with Health Care Reform as they participate in a host of other insightful and timely presentations by dynamic team of prominent HR and other industry experts and network with other management and human resources leaders .including:

  • John Rother, National Coalition on Health care
  • Shawn Leavitt, Carlson Companies
  • Rebecca Mariet Lynn-Crockford, Suntrust Banks, Inc
  • Jo-Ann Gastin, Lockton Companies, LLC
  • Paul Grundy, M.D., Patient-Centered Primary Care Collaborative
  • Roger C. Merring, M.D., Perdue Farm Inc.
  • Sam Nussbaum, Wellpoint, Inc.
  • Benjamin H. Hoffman, M.D., GE Energy
  • Bruce Sherman, MD, Employers Health Coalition

For a full agenda and other details on the program, see here.

SLP Reader Registration Discount

SLP is delighted to announce that the World Health Congress is offering SLP readers the opportunity to claim a $400 discount off the otherwise applicable registration fee when registering for the program.  To register and claim this discount, enter registration code “GHH925” at the designated location when registering for the program here.

About Ms. Stamer

Sought out nationally and internationally as an industry thought leader and problem solver, SLP Editor and author attorney, Cynthia Marcotte Stamer has spent more than 25 years helping private and public employers, employer and union plan sponsors, health and other employee benefit plans, associations, their fiduciaries, administrators, and vendors, group health, Medicare and Medicaid Advantage, and other insurers, governmental and community leaders and others develop, implement, administer and defend creative, legally compliant and operationally effective health and other employee benefit, employment, insurance, health care and workforce plans, policies, practices, operations and policies. 

Recognized in International Who’s Who, the founder and Executive Director of Project COPE:  The Coalition on Patient Empowerment and its affiliate, the Coalition on Responsible Health Policy; a Fellow in the American College of Employee Benefits Counsel, American Bar Association, and State Bar of Texas; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Immediate Past Chair of the ABA RPTE Employee Benefit & Other Compensation Committee, current ABA RPTE Employee Benefit & Other Compensation Committee Welfare Benefits Committee Co-Chair and Substantive Groups Committee Member, and a Council Member of the ABA Joint Committee on Employee Benefits, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, and Immediate Past Gulf States Area TEGE Council Exempt Organization Chair, Ms. Stamer helps these and other clients. to design, document, administer and defend managed care and insurance programs, processes, and products; to monitor and manage evolving regulatory, contractual and fiduciary obligations and risks; to draft, negotiate, interpret and enforce managed care and other contracts, plan documents, insurance policies, administrative services agreements, and other agreements, policies, procedures and controls; to credential, monitor and manage fiduciaries, service providers, consultants and others providing services relating to programs; to conduct and defend litigation, audits, and other enforcement actions; to deal with legislators, regulators, auditors and others; and to fulfill legal obligations, mitigate legal risks and improve operational effectiveness.

As a core focus of her practice, Ms. Stamer continuously counsels, represents and defends self-insured and insured managed care and health, disability and welfare, pension, deferred compensation and other employee benefit plans; employer, association, insurer, and other employee benefit and insurance program sponsors; plan fiduciaries, administrators, brokers, consultants and other service providers; Medicare and Medicaid Advantage and other group, individual, stop-loss and other reinsurance, fiduciary liability and other insurers; health and insurance technology and other outsourcing companies; human resources, insurance and employee benefit consulting organizations; and other insurance, employee benefit and human resources industry clients, domestic and foreign governments and others about a diverse range of employee benefit, insurance, employment, tax, regulatory, risk management, public policy and related matters.

Ms. Stamer’s health benefit experience includes extensive and highly-innovative dealings with insured and self-insured managed care, defined contribution, indemnity and other health benefit, disability, life, occupational injury, Medicare and Medicaid Advantage, and other welfare benefit and insurance plans and policies; and a wide range of other employee benefits, compensation, insurance, equity and other related arrangements. Her work includes leading edge development and use of 24-hour coverage and other occupational injury, ex-pat and other medical tourism products, HRA, HSA, HRA and other defined contribution, hi-deductible, deductible reimbursement, min-med and other limited benefit plans, 24-hour and occupational benefit, fraternal benefit and association, and other medical programs as well as a broad range of claims, appeals, audit, and other administrative processes and tools designed to promote defensibility and mitigate risks.

A primary drafter of the Bolivian Social Security privatization law with extensive domestic and international regulatory and public policy experience, Ms. Stamer also has worked extensively domestically and internationally on public policy and regulatory advocacy on health and other employee benefits, human resources, insurance, tax, compliance and other matters and representing clients in dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, HUD and Justice, as well as a state legislatures attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators.  Her Patient Empowerment Toolkit™, Play4Life Community Program™, and other patient empowerment, health care quality, and other industry thought leadership, advocacy and solutions have drawn the attention of business, government and community leaders for their insightfulness and practicality.

A widely published author and highly sought out speaker whose HR & Benefits Update  has been recognized as among the “Top 50” HR Blogs To Watch, Ms. Stamer also regularly authors materials and conducts workshops and professional, management and other training on employee benefits, human resources, health care and other compliance and management topics for the ABA, Aspen Publishers, the Bureau of National Affairs (BNA), SHRM, World At Work, Insurance Thought Leadership, Government Institutes, Inc., Solutions Law Press, Inc., the Society of Professional Benefits Administrators, HealthLeaders, Managed Care Executive, CEO Magazine, Business Insurance and many other industry, professional and business publications. An Editorial Advisory Board Member of the Institute of Human Resources (IHR/HR.com), Employee Benefit News, and other publications, Ms. Stamer also regularly serves on the faculty and planning committees of a multitude of symposium and other educational programs.  For more details about Ms. Stamer’s services, experience, presentations, publications, and other credentials or to inquire about arranging counseling, training or presentations or other services by Ms. Stamer, see www.CynthiaStamer.com or contact Ms. Stamer directly via email here or (469) 767-8872.

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


Stamer Talks on “What the Wind Blew In: Coping with Health Care Reform: 2013 and Beyond” May 2 At 24th Annual RPTE Spring Symposia In Washington, D.C.

January 28, 2013

Cynthia Marcotte Stamer will a featured panelists discussing “What the Wind Blew In: Coping with Health Care Reform: 2013 and Beyond” on Thursday, May 2, 2013 at 24th Annual RPTE Spring Symposia at the Capital Hilton in Washington, DC. The Symposia scheduled to take place on May 2–3, 2013 will cover a broad range of timely topics on real estate, trusts and estates and other related concerns. To register, review the full agenda or get additional information about the Symposium, see here.  

About Ms. Stamer

A noted Texas-based employee benefits and employment lawyer with extensive involvement in the leadership of the ABA and other professional organizations involved in employee benefits, health care and workforce matters, is nationally and internationally known for her innovative leadership and work as an attorney, consultant, policy advocate, speaker and author helping businesses, governments, and communities on health and other insurance and employee benefits, patient education and empowerment, wellness and disease management, and other programs, policies, and processes.  For more than 24 years, Ms. Stamer’s legal practice has focused on advising and representing employers, insurers, health care providers, community leaders and governments about health care and employee benefits policy and process improvement, quality, performance management, education, compliance, communications, risk management, reimbursement and finance, and other related matters.  In addition to her legal practice, Stamer also extensively consults and provides leadership to a broad range of clients, professional and civic organizations, and others on strategies for improving the health care system and the ability of health care providers, payers, employers, community organizations, government agencies to promote the ability of patients and their families to access cost-effective, quality, affordable health care and other resource needs.  She also has worked extensively with a broad range of business and government clients on health care, pension, social security, workforce, insurance and many other related policy matters.

In addition to her service with the ABA, Ms. Stamer also is active in the leadership of a broad range of other professional and civil organizations. For instance, Ms. Stamer presently serves as Executive Director of Project COPE, the Coalition on Patient Empowerment and the Coalition for Responsible Healthcare Policy; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Committee and its representative to the ABA Joint Committee on Employee Benefits and Vice Chair of its Welfare Benefits Committee; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; and as the Gulf Coast TEGE Council TE Committee Coordinator.  She previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early retirement intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association; on numerous seminar faculties and in many other professional and civic leadership and volunteer roles. 

Author of the hundreds of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs, HealthLeaders, Modern Healthcare, 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 publications. Nationally known for her work on health care reform and related matters, Ms. Stamer also regularly conducts training and speaks on these and other  management, compliance and public policy concerns.  For additional information about Ms. Stamer, upcoming training, publications or other materials or events, see here  or contact Ms. Stamer directly via email here or (469) 767-8872.

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


IRS Will Begin Accepting Returns Claiming Education Credits By Mid-February

January 28, 2013

As preparations continue for the Jan. 30 opening of the 2013 filing season for most taxpayers, the Internal Revenue Service has announced that it beginprocessing of tax returns claiming education credits n by the middle of February. 

Taxpayers using Form 8863, Education Credits, can begin filing their tax returns after the IRS updates its processing systems. Form 8863 is used to claim two higher education credits — the American Opportunity Tax Credit and the Lifetime Learning Credit.

The IRS emphasized that the delayed start will have no impact on taxpayers claiming other education-related tax benefits, such as the tuition and fees deduction and the student loan interest deduction. People otherwise able to file and claiming these benefits can start filing Jan. 30, 2013

As it does every year, the IRS reviews and tests its systems in advance of the opening of the tax season to protect taxpayers from processing errors and refund delays. The IRS discovered during testing that programming modifications are needed to accurately process Forms 8863.  Filers who are otherwise able to file but use the Form 8863 will be able to file by mid-February. No action needs to be taken by the taxpayer or their tax professional.  Typically through the mid-February period, about 3 million tax returns include Form 8863, less than a quarter of those filed during the year.

The IRS remains on track to open the tax season on January 30 for most taxpayers. The January  30 opening includes people claiming the student loan interest deduction on the Form 1040 series or the higher education tuition or fees on Form 8917, Tuition and Fees Deduction. Forms that will be able to be filed later are listed on IRS.gov.

For Help With Compliance, Risk Management, Investigations, Policy Updates Or Other Needs

If you need help with other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other human resources, employee benefit, or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Nationally recognized for her extensive work, publications and leadership on HIPAA and other privacy and data security concerns, Ms. Stamer has extensive experience representing, advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical and other privacy and data security, employment, employee benefits, and to handle other compliance and risk management policies and practices; to investigate and respond to OCR and other enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

A Fellow in the American College of Employee Benefit Counsel, State Bar of Texas and American Bar Association, Vice President of the North Texas Health Care Compliance Professionals Association, the Former Chair of the ABA RPTE Employee Benefit & Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Council Representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer serves as the scribe for the ABA Joint Committee on Employee Benefits agency meeting with OCR. Ms. Stamer also regularly works with OCR and other agencies, publishes and speaks extensively on medical and other privacy and data security, health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.  Her publications and insights  on HIPAA and other data privacy and security concerns appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.   For instance, Ms. Stamer for the third year will serve in 2013 as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR.  Her insights on HIPAA risk management and compliance often appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, SHRM, HIMMS, the American Bar Association, the Health Care Compliance Association, a multitude of health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others.  You can get more information about her HIPAA and other experience here.

In addition to this extensive HIPAA specific experience, Ms. Stamer also is recognized for her experience and skill aiding clients with a diverse range of other employment, employee benefits, health and safety, public policy, and other compliance and risk management concerns. 

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a member of the Editorial Advisory Board and expert panels of HR.com, Employee Benefit News, InsuranceThoughtLeadership.com, and Solutions Law Press, Inc., management attorney and consultant Ms. Stamer has 25 years of experience helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices.   Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.  In addition to her continuous day-to-day involvement helping businesses to manage employment and employee benefit plan concerns, she also has extensive public policy and regulatory experience with these and other matters domestically and internationally.  A former member of the Executive Committee of the Texas Association of Business and past Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, Ms. Stamer served as a primary advisor to the Government of Bolivia on its pension privatization law, and has been intimately involved in federal, state, and international workforce, health care, pension and social security, tax, education, immigration, education and other legislative and regulatory reform in the US and abroad.  She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly. 

For help  with these or other compliance concerns, to ask about compliance audit or training, or for legal representation on these or other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


Employers ACA Health Reforms Prohibit Using HRAs To Pay Individual Medical Policy Premiums & Impact Other HRA Arrangements

January 27, 2013

Since the enactment of the Patient Protection & Affordable Care Act (ACA), many employers  searching for health plan solutions may have been asked to consider replacing or modifying their existing insured or self-insured group health plan with a “health reimbursement arrangement” (HRA) or other arrangement which would reimburse employees for premiums paid for individual health insurance policies. New guidance released on Thursday, January 24, 2013 indicates that such arrangements are prohibited as part of the ACA health care reforms.

 “FAQS About Affordable Care Implementation (Part XI)” (FAQ) available here issued by the Departments of Labor, Health and Human Services (HHS), and the Treasury (collectively, the Agencies) on January 24, 2013 sends a clear message to employers that trying to escape ACA or other federal group health plan mandates by replacing their traditional insured or group health plans or policies with health reimbursement arrangements (HRAs) or other arrangements under which the employer agrees to provide a fixed defined contribution to be used to buy or reimburses employees for buying individual health insurance generally won’t pass legal muster.  The FAQ also indicates that employers sponsoring HRAs that only reimburse medical expenses, not individual health insurance premiums also need to review their arrangements to verify that those programs also comply with ACA and other applicable rules.

Concerning the use of HRAs to pay for individual  health insurance policy premiums, the FAQ states that  PHS Act Section 2711 generally prohibits an employer-sponsored HRA cannot be integrated with individual market coverage or with an employer plan that provides coverage through individual policies.  Under ACA, employers that improperly offer arrangements that violate PHS Section 2711 or other group health plans risk exposing themselves to liability for significant unanticipated health benefit claims, as well as other penalties and costs. Therefore, employers that have or are contemplating arrangements that provide or reimburse premiums for individual health insurance coverage are urged to contact qualified legal counsel with documented experience with ACA and other group health plan requirements for advice before establishing or continuing such arrangements.

The FAQ’s guidance about the use of individual insurance policies to arrange coverage for employees is one of several issues addressed in the FAQ and part of a wave of new guidance that has and is emerging as the Obama Administration moves to full implementation of the ACA reforms.  Employers, plan fiduciaries, insurers, and others involved in the design or administration of health benefit programs need to monitor carefully this emerging guidance as they move quickly to tailor their programs in response to these evolving rules.  For help monitoring or responding to these evolving rules, contact the author of this  update, Cynthia Marcotte Stamer.

For Help With Compliance, Risk Management, Investigations, Policy Updates Or Other Needs

If you need help with other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other human resources, employee benefit, or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Nationally recognized for her extensive work, publications and leadership on HIPAA and other privacy and data security concerns, Ms. Stamer has extensive experience representing, advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical and other privacy and data security, employment, employee benefits, and to handle other compliance and risk management policies and practices; to investigate and respond to OCR and other enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

A Fellow in the American College of Employee Benefit Counsel, State Bar of Texas and American Bar Association, Vice President of the North Texas Health Care Compliance Professionals Association, the Former Chair of the ABA RPTE Employee Benefit & Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Council Representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer serves as the scribe for the ABA Joint Committee on Employee Benefits agency meeting with OCR. Ms. Stamer also regularly works with OCR and other agencies, publishes and speaks extensively on medical and other privacy and data security, health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.  Her publications and insights  on HIPAA and other data privacy and security concerns appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.   For instance, Ms. Stamer for the third year will serve in 2013 as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR.  Her insights on HIPAA risk management and compliance often appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, SHRM, HIMMS, the American Bar Association, the Health Care Compliance Association, a multitude of health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others.  You can get more information about her HIPAA and other experience here.

In addition to this extensive HIPAA specific experience, Ms. Stamer also is recognized for her experience and skill aiding clients with a diverse range of other employment, employee benefits, health and safety, public policy, and other compliance and risk management concerns. 

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a member of the Editorial Advisory Board and expert panels of HR.com, Employee Benefit News, InsuranceThoughtLeadership.com, and Solutions Law Press, Inc., management attorney and consultant Ms. Stamer has 25 years of experience helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices.   Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.  In addition to her continuous day-to-day involvement helping businesses to manage employment and employee benefit plan concerns, she also has extensive public policy and regulatory experience with these and other matters domestically and internationally.  A former member of the Executive Committee of the Texas Association of Business and past Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, Ms. Stamer served as a primary advisor to the Government of Bolivia on its pension privatization law, and has been intimately involved in federal, state, and international workforce, health care, pension and social security, tax, education, immigration, education and other legislative and regulatory reform in the US and abroad.  She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly. 

For help  with these or other compliance concerns, to ask about compliance audit or training, or for legal representation on these or other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


Employer Deadline To Give ACA Notice of Exchange Coverage Options Delayed

January 25, 2013

The Department of Labor has extended the deadline for employers to notify employees about the existence of and their rights under the health exchanges required by new Section 18B of the Fair Labor Standards Act (FLSA), as added by Section 1512 of the Patient Protection & Affordable Care Act (ACA).  The extension announced in Frequently Answered Question (FAQ) here provides a welcome temporary reprieve to employers who otherwise would have been required to notify employees by March 1, 2013.

As part of the impending implementation of ACA’s health care reform, FLSA § 18B generally requires each applicable employer provide each employee a written notice (Exchange Notice) in accordance with regulations promulgated by the Secretary of Labor:

  • Informing the employee of the existence of Exchanges including a description of the services provided by the Exchanges, and the way the employee may contact Exchanges to request assistance; 
  • If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the Code) if the employee purchases a qualified health plan through an Exchange; and
  • If the employee purchases a qualified health plan through an Exchange, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes. The Department of Labor expects that the timing for distribution of notices will be the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges. 

Before the Department’s announcement in the FAQ, the deadline for employers to begin giving employees Exchange Notices was the later of March 1, 2013 or at the time of hiring. The FAQ extends this deadline until a date to be set by the Department in future guidance, which the Department expects will require employers to distribute the notices in the late summer or fall of 2013 to coordinate with the open enrollment period for Exchanges. 

According to the announcement of the delay, the Department delayed the impending March 1, 2013 deadline to give the (Exchange Notice) to better coordinate with related Health and Human Service and Internal Revenue Service efforts and to allow more time to comply and to distribute the Exchange Notices to employees at a meaningful time. 

In addition to providing added time to provide the Exchange Notice, the Department also has announced that it is considering providing model, generic language that employers could use to provide the Exchange Notice. to satisfy the notice requirement.  As a compliance alternative, the Department also is considering allowing employers to meet the Exchange Notice requirement by providing employees with information using the employer coverage template as discussed in the preamble to the Proposed Rule on Medicaid, Children’s Health Insurance Programs, and Exchanges: Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange Eligibility Appeals and Other Provisions Related to Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and Medicaid Premiums and Cost Sharing (78 FR 4594, at 4641), which will be available for download at the Exchange web site as part of the streamlined application that will be used by the Exchange, Medicaid, and CHIP. 

The Exchange Notice is just one of a multitude of notices and other mandates that ACA requires that employers or their health plans, insurers, or both to meet.  Although the Exchange Notice gives employers a little more time to provide the Exchange Notices, employer and other health plan sponsors, fiduciaries, administrators and insurers are urged to continue to diligently move forward to update their plans, communications, processes and other arrangements to comply with existing and impending ACA mandates while keeping a watchful eye on for additional guidance that may require additional tailoring of these arrangements. 

Stay tuned for updates about future guidance on complying with the notice requirement under FLSA section 18B and other developments.

For Help With Compliance, Risk Management, Investigations, Policy Updates Or Other Needs

If you need help with other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other human resources, employee benefit, or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Nationally recognized for her extensive work, publications and leadership on HIPAA and other privacy and data security concerns, Ms. Stamer has extensive experience representing, advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical and other privacy and data security, employment, employee benefits, and to handle other compliance and risk management policies and practices; to investigate and respond to OCR and other enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

A Fellow in the American College of Employee Benefit Counsel, State Bar of Texas and American Bar Association, Vice President of the North Texas Health Care Compliance Professionals Association, the Former Chair of the ABA RPTE Employee Benefit & Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Council Representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer serves as the scribe for the ABA Joint Committee on Employee Benefits agency meeting with OCR. Ms. Stamer also regularly works with OCR and other agencies, publishes and speaks extensively on medical and other privacy and data security, health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.  Her publications and insights  on HIPAA and other data privacy and security concerns appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.   For instance, Ms. Stamer for the third year will serve in 2013 as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR.  Her insights on HIPAA risk management and compliance often appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, SHRM, HIMMS, the American Bar Association, the Health Care Compliance Association, a multitude of health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others.  You can get more information about her HIPAA and other experience here.

In addition to this extensive HIPAA specific experience, Ms. Stamer also is recognized for her experience and skill aiding clients with a diverse range of other employment, employee benefits, health and safety, public policy, and other compliance and risk management concerns. 

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a member of the Editorial Advisory Board and expert panels of HR.com, Employee Benefit News, InsuranceThoughtLeadership.com, and Solutions Law Press, Inc., management attorney and consultant Ms. Stamer has 25 years of experience helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices.   Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.  In addition to her continuous day-to-day involvement helping businesses to manage employment and employee benefit plan concerns, she also has extensive public policy and regulatory experience with these and other matters domestically and internationally.  A former member of the Executive Committee of the Texas Association of Business and past Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, Ms. Stamer served as a primary advisor to the Government of Bolivia on its pension privatization law, and has been intimately involved in federal, state, and international workforce, health care, pension and social security, tax, education, immigration, education and other legislative and regulatory reform in the US and abroad.  She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly. 

For help  with these or other compliance concerns, to ask about compliance audit or training, or for legal representation on these or other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


Hear Stamer Speak On “Coping With Health Care Reform Now” At 2/14 Dallas ICEBS Meeting

January 23, 2013

Cynthia Marcotte Stamer will share key information and practical strategies for  “Coping with Health Care Reform Now” at the Dallas Chaper ICEBS Valentines Day luncheon meeting on February 14, 2012.  The meeting is scheduled from 11:30 a.m. to 1:30 p.m on February 14, 2012 at Haggar Clothing Company at 11511 Luna Road, Dallas, Texas .  Interested persons may register or get other details at http://www.dfwiscebs.org.

With the initial debate about the Constitutionality of the Patient Protection & Affordable Care Act (ACA) decided and making a Congressional reprieve highly improbable, employer and other health plan sponsors, insurers, fiduciaries and administrators are scrambling to update plan documents, communications, processes and procedures to meet current ACA and other health plan rules, while bracing to cope with the sweeping health care reforms slated to take effect in 2014.  These already daunting tasks are made more challenging by the continuing uncertainty of the constantly evolving regulations, evolving marketplace, increases in health plan costs and ever-shrinking corporate budgets.

To help health plan sponsors, fiduciaries, administrators and insurers deal with the tough business of implementation, attorney Cynthia Marcotte Stamer will discuss practical strategies, legal updates and other information needed for to cope with health care reform now and to prepare to meet future health plan regulations and challenges including:

  • The Latest On Key ACA & Other Health Care Reform Regulations Such As ACA’s Requirements On Fees Employers Sponsoring Self-Insured Health Plans & Insurers Must Pay To Fund The Patient-Centered Outcomes Research Institute, Contraceptive and Other Preventive Services, Nondiscrimination, Essential Health Benefits, Internal Claims and Appeals and External Review, Medical Loss Ratios, Large Employer Automatic Enrollment, Summary of Benefits & Coverage, Culturally & Linguistically Appropriateness, Value-Based Insurance Design, Wellness Programs, Exchanges, the Employer Pay-Or-Plan Mandates, Wellness Reporting, Wellness Programs, W-2 Reporting of Employer Provided Health Coverage, Employer Plan Minimum Value & The Premium Tax Credit And Other ACA & Other Federal Health Plan Mandates;
  • Key Changes To HIPAA Privacy Regulations & What Health Plans & Employers Should Expect To Be Required To Do To Comply With These Changes By the September, 2013 Deadline;
  • What’s Happened, Happening & Likely To Happen With Exchanges;
  • A 12-Step Practical Process For Helping Employers Managing ACA & Other Health Plan Compliance Responsibilities & Risks; and
  • Tips On What To Watch For And Options For Maintaining Flexibility To Respond To Evolving Rules; and
  • Answer Common Questions That Health Plan Sponsors and Administrators Are Struggling With Submitted By Audience Members

Registrants are encouraged to help shape the program to reflect their questions and concerns by e-mailing their proposed questions prior to the program to cstamer@solutionslawyer.net. The program’s educational* discussion will be tailored taking into account this input with significant time set aside to share practical information and possible approaches for addressing questions and concerns of shared concern identified from this audience input.

About Ms. Stamer

A Fellow in the American College of Employee Benefits Counsel, the American Bar Association & the State Bar of Texas, recognized in International Who’s Who, and Board Certified in Labor & Employment Law, Cynthia Marcotte Stamer is nationally and internationally recognized for her extensive and highly practical, solutions-oriented health plan work, advocacy, publications, programs and leadership.

For more than 25 years, Ms. Stamer has advised and represented private and public employers, employer and union plan sponsors, employee benefit plans, associations, their fiduciaries, administrators, and vendors, group health, Medicare and Medicaid Advantage, and other insurers, governments and others on health and other employee benefit, employment, insurance and health care compliance, risk management, public policy, administration and defense. Throughout her career, Ms. Stamer has worked extensively with employer and other health plan sponsors, insurers, plan administrators and other service providers, outsourcers and others to develop innovative health benefit programs and solutions and to document, administer and defend those arrangements in the mist of rising costs, evolving regulations and changing markets.

A primary drafter of the Bolivian Social Security privatization law with extensive regulatory and public policy experience, Ms. Stamer has been involved domestically and internationally as an advocate and advisor on health care, pension and Social Security, workforce and insurance reform and regulation.  She presently serves as the scribe for the ABA JCEB Annual Agency Meeting with the Office of Civil Rights. She also represents clients in dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, HUD and Justice, as well as a state legislatures attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators.

Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and the ABA RPTE Employee Benefits Group, Ms. Stamer presently serves as Co-Chair of the ABA RPTE Section Welfare Plan Committee; Vice Chair of the ABA TIPS Employee Benefit Committee; as a Council Representative of the ABA Joint Committee on Employee Benefits; an Editorial Advisory Board Member for the Institute of Human Resources (IHR/HR.com), Employee Benefit News and Insurance Thought Leadership; Editor and Publisher of various Solutions Law Press, Inc. publications, and previously served on the Editorial Advisor Board of the the BNA Employee Benefits CD-Rolm.

A popular and prolific author and speaker, Ms. Stamer’s Solutions Law Press, Inc. HR & Benefits Update publication was recognized as one of the Top 50 Human Resources Blogs To Watch in 2012. Ms. Stamer regularly authors materials and conducts workshops and professional, management and other training on employee benefits, human resources and related topics for the ABA, Aspen Publishers, the Bureau of National Affairs (BNA), SHRM, World At Work, Government Institutes, Inc., the Society of Professional Benefits Administrators and many other organizations. She also regularly serves on the faculty and planning committees of a multitude of symposium and other educational programs. For more details about Ms. Stamer’s services, experience, presentations, publications, and other credentials or to inquire about arranging counseling, training or presentations or other services by Ms. Stamer, see www.CynthiaStamer.com.

* Registrants are reminded that this discussion is provided for general information and educational purposes. Accordingly, registrants are reminded that the discussion does not constitute legal advice, a substitute for legal advice or establish an attorney-client or other professional relationship.

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

©2013 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


BNSF OSHA Whistleblower Settlement Gives Employers Insights About Policies OSHA View As Prohibited

January 18, 2013

Review and update your policies and be careful how you handle employee reports of injury or safety concerns.  That’s the message of the settlement recently announced with BNSF Railway Co. of Fort Worth, Texas (BNSF).  BNSF has signed a settlement with the Occupational Safety and Health Administration (OSHA) to voluntarily revise several personnel policies that OSHA alleged violated the whistleblower provisions of the Federal Railroad Safety Act. The law protects railroad workers from retaliation for, among other acts, reporting suspected violations of federal laws and regulations related to railroad safety and security, hazardous safety or security conditions, and injuries.

The whistleblower provisions of the 22 statutes enforced by OSHA protect employees who report violations of various commercial motor vehicle, airline, nuclear, pipeline, environmental, railroad, public transportation, maritime, consumer product, health care reform, securities, food safety, and consumer financial reform laws and regulations.OSHA charged that BNSF Policies of assigning points to workers reporting safety violations or injuries and other practices deterred or penalized workers protected by the whistleblower provisions of the law. 

The major terms of the BNSF settlement available at http://www.whistleblowers.gov/acts/bnsf_accord.html include:

  • Changing BNSF’s disciplinary policy so that injuries no longer play a role in determining the length of an employee’s probation following a record suspension for a serious rule violation. As of Aug. 31, 2012, BNSF has reduced the probations of 136 employees who were serving longer probations because they had been injured on-the-job.
  • Eliminating a policy that assigned points to employees who sustained on-the-job injuries.
  • Revising a program that required increased safety counseling and prescribed operations testing so that work-related injuries will no longer be the basis for enrolling employees in the program. As part of the negotiations leading up to the accord, BNSF removed from the program approximately 400 workers.
  • Instituting a higher level review by BNSF’s upper management and legal department for cases in which an employee who reports an on-duty personal injury is also assessed discipline related to the incident giving rise to the injury.
  • Implementing a training program for BNSF’s managers and labor relations and human resources professionals to educate them about their responsibilities under the FRSA. The training will be incorporated into BNSF’s annual supervisor certification program.
  • Making settlement offers in 36 cases to employees who filed whistleblower complaints with OSHA alleging they were harmed by one or more of the company’s previous policies.

Between August 2007, when OSHA was assigned responsibility for whistleblower complaints under FRSA, and September 2012, OSHA received 1,206 FRSA whistleblower complaints. The number of FRSA whistleblower complaints that OSHA currently receives surpasses the number of whistleblower complaints that OSHA receives under any of the other 21 whistleblower protection statutes it enforces except for Section 11(c) of the Occupational Safety and Health Act of 1970. More than 60 percent of the FRSA complaints filed with OSHA involve an allegation that a railroad worker has been retaliated against for reporting an on-the-job injury.

“Protecting America’s railroad workers who report on-the-job injuries from retaliation is an essential element in OSHA’s mission. This accord makes significant progress toward ensuring that BNSF employees who report injuries do not suffer any adverse consequences for doing so,” said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels. “It also sets the tone for other railroad employers throughout the U.S. to take steps to ensure that their workers are not harassed, intimidated or terminated, in whole or part, for reporting workplace injuries.”

“Ensuring that employees can report injuries or illnesses without fear of retaliation is crucial to protecting worker safety and health,” said Michaels. “If employees do not feel free to report injuries or illnesses, the employer’s entire workforce is put at risk because employers do not learn of and correct dangerous conditions that have resulted in injuries.”   Read the News Release.

For Help With Investigations, Policy Updates Or Other Needs

If you need help in conducting a risk assessment of or responding to an IRS, DOL, Justice Department, or other federal or state agencies or other private plaintiff or other legal challenges to your organization’s existing workforce classification or other labor and employment, compliance,  employee benefit or compensation practices, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469) 767-8872 .

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 23 years of work helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit  and management policies and practices. The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance related matters.   She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly. 

About Solutions Law Press, Inc.

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested in exploring other Solutions Law Press, Inc. ™ tools, products, training and other resources here and reading some of our other Solutions Law Press, Inc.™ human resources news here including the following:

  • New OCR HIPAA De-Identification Guidance Among Developments Covered In 12/12 HIPAA Update

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 or updating your profile here. For important information about this communication click here. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 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.

©2012 Cynthia Marcotte Stamer, P.C.  Non-exclusive license to republish granted to Solutions Law Press, Inc.™  All other rights reserved.


OCR Publishes Long-Anticipated Omnibus Restatement of HIPAA Privacy, Security, Breach Notification & Enforcement Rules

January 17, 2013

Health plans, their employer or other sponsors, insurers, fiduciaries, administrative service providers and other business associates have a lot of work to do.

 Health plans, health care clearinghouses and their business associates will need to review and update their  policies and practices for handling and disclosing personally identifiable health care information (“PHI”) in response to the omnibus restatement of the Department of Health & Human Services (“HHS”) Office of Civil Rights (“OCR”) of its of its regulations (the “2013 Regulations”) implementing the Privacy and Security Rules under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).  The Rulemaking announced January 17, 2013 may be viewed here.

The 2013 Regulations Overview

Since 2003, HIPAA generally has required that health care providers, health plans, health care clearinghouses and their business associates (“Covered Entities”) restrict and safeguard individually identifiable  health care information (“PHI”) of individuals and afford other protections to individuals that are the subject of that information.  The 2013 Regulations published today complete the implementation of changes to HIPAA that Congress enacted when it passed the Health Information Technology for Economic and Clinical Health (HITECH) Act in 2009 as well as make other changes to the prior regulations that OCR found desirable based on its experience administering and enforcing the law over the past decade.

Since passage of the HITECH Act, OCR officials have warned Covered Entities to expect an omnibus restatement of its original regulations.  While OCR had issued certain regulations implementing some of the HITECH Act changes, it waited to publish certain regulations necessary to implement other HITECH Act changes until it could complete a more comprehensive restatement of its previously published HIPAA regulations to reflect both the HITECH Act amendments and other refinements to  its HIPAA Rules. The 2013 Regulations published today fulfill  that promise by restating OCR’s HIPAA Regulations to reflect the HITECH Act Amendments and other changes and clarifications to OCR’s interpretation and enforcement of HIPAA.

Among other things, the 2013 Regulations:

  • Revise OCR’s HIPAA regulations to reflect the HITECH Act’s amendment of HIPAA to add the contractors and subcontractors of health plans, health care providers and health care clearinghouses that qualify as business associates to the parties directly responsible for complying with and subject to HIPAA’s civil and criminal penalties for violating HIPAA’s Privacy, Security, and Breach Notification rules;
  • Update previous interim regulations implementing HITECH Act breach notification rules that require Covered Entities including business associates to give specific notifications to individuals whose PHI is breached, HHS and in some cases, the media when a breach of unsecured information happens;
  • Update interim enforcement guidance OCR previously published to implement increased penalties and other changes to HIPAA’s civil and criminal sanctions enacted by the HITECH Act;
  • Implement HITECH Act amendments to HIPAA that tighten the conditions under which Covered Entities are allowed to use or disclose PHI for marketing and fundraising purposes and prohibit Covered Entities from selling an individual’s health information without getting the individual’s authorization in the manner required by the 2013 Regulations;
  • Update OCR’s rules about the individual rights that HIPAA requires that Covered Entities to afford to individuals who are the subject of PHI used or possessed by a Covered Entity to reflect tightened requirements enacted by the HITECH Act  that allow individuals to order their health care provider not to share information about their treatment with health plans when the individual pays cash for the care and to clarify that individuals can require Covered Entities to provide electronic PHI in electronic form;
  • Revise the regulations to reflect amendments to HIPAA made as part of the Genetic Information Nondiscrimination Act of 2008 (GINA) which added genetic information to the definition of PHI protected under the HIPAA Privacy Rule and prohibits health plans from using or disclosing genetic information for underwriting purposes; and
  • Clarifies and revises other provisions to reflect other interpretations and information guidance that OCR has issued since HIPAA was passed and to make certain other changes that OCR found appropriate based on its experience administering and enforcing the rules. 

Liability & Enforcement Risks Heighten Need To Act To Review & Update Policies & Practices

The restated rules in the 2013 Regulations make it imperative that Covered Entities review the revised rules carefully and updated their policies, practices, business associate agreements, training and documentation to comply with the updated requirements and other enforcement and liability risks.  OCR even prior to the regulations has aggressively investigated and enforced the HIPAA requirements.  

The commitment of OCR to enforcement most recently was demonstrated by its recent settlement with Hospice of North Idaho (HONI).  On January 2, 2013, OCR announced HONI will pay OCR $50,000 to settle potential HIPAA violations that occurred in connection with the theft of an unencrypted laptop computer containing ePHI. The HONI settlement is the first settlement involving a breach of ePHI affecting fewer than 500 individuals. 

While the HONI settlement marks the first settlement on a small breach, this is not the first time OCR has sought sanctions against a covered entity for data breaches involving the loss or theft of unencrypted data on a Laptop, storage device or other computer device.  Rather, OCR continues to rollout a growing list of enforcement actions demonstrating the potential risks of HIPAA violations are significant and growing.  OCR Hits Alaska Medicaid For $1.7M+ For HIPAA Security Breach; OCR Audit Program Kickoff Further Heats HIPAA Privacy Risks$1.5 Million HIPAA Settlement Reached To Resolve 1st OCR Enforcement Action Prompted By HITECH Act Breach Report; HIPAA Heats Up: HITECH Act Changes Take Effect & OCR Begins Posting Names, Other Details Of Unsecured PHI Breach Reports On Website; Providence To Pay $100000 & Implement Other Safeguards.

Coupled with statements by OCR about its intolerance, the HONI and other settlements provide a strong warning to covered entities of the need to carefully and appropriately manage their HIPAA encryption and other Privacy and Security responsibilities. Covered entities are urged to heed these warning by strengthening their HIPAA compliance and adopting other suitable safeguards to minimize HIPAA exposures. 

In response to the 2013 Regulations and these expanding exposures, all Covered Entities should review critically and carefully the adequacy of their current HIPAA Privacy and Security compliance policies, monitoring, training, breach notification and other practices taking into consideration OCR’s investigation and enforcement actions, emerging litigation and other enforcement data; their own and reports of other security and privacy breaches and near misses; and other developments to decide if additional steps are necessary or advisable.   In response to these expanding exposures, all covered entities and their business associates should review critically and carefully the adequacy of their current HIPAA Privacy and Security compliance policies, monitoring, training, breach notification and other practices taking into consideration OCR’s investigation and enforcement actions, emerging litigation and other enforcement data; their own and reports of other security and privacy breaches and near misses, and other developments to decide if tightening their policies, practices, documentation or training is necessary or advisable.

For Help With Compliance, Risk Management, Investigations, Policy Updates Or Other Needs

If you need help with HIPAA and other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other human resources, employee benefit, or other compliance, risk management, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Nationally recognized for her extensive work, publications and leadership on HIPAA and other privacy and data security concerns, Ms. Stamer has extensive experience representing, advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical and other privacy and data security, employment, employee benefits, and to handle other compliance and risk management policies and practices; to investigate and respond to OCR and other enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.