Stimulus Bill Provides COBRA Changes

The American Recovery and Reinvestment Act of 2009, better known as the "Stimulus Bill," will be signed into law on February 17, 2009. Although the primary thrust of the Stimulus Bill is aimed at the current economy, among its many varied provisions are important changes to employer COBRA obligations.

COBRA provides employees and their dependents who otherwise might lose health benefits the right to continue benefits at group rates for up to eighteen months (and sometimes longer). In most instances, the employee pays the cost of COBRA - the monthly insurance premiums.

The Stimulus Bill provides a COBRA subsidy for eligible employees and former employees, and a corresponding payroll tax credit to employers for the cost of the subsidy. Specifically, the employer will pay sixty-five percent of the health insurance premiums for up to nine months. The amount paid then will be applied as a credit towards the employer's payroll taxes. The employee would remain responsible for the remaining thirty-five percent of the premium cost.

Eligible employees for the subsidy are those who have been involuntarily terminated from employment between September 1, 2008 and December 31, 2009, and who have an annual individual income of less than $125,000 or a family income of less than $250,000.

Since the COBRA changes apply retroactively to those employees involuntarily terminated on or after September 1, 2008, eligible employees who initially declined COBRA coverage must be given an additional sixty day period to elect COBRA coverage with the new subsidy. Employers will need to send qualified employees and their beneficiaries amended COBRA notices. For those who then elect coverage, the coverage period would begin on February 17, 2009, not on the original date of employee termination.

Employers also will need to amend their standard COBRA notices for the remainder of 2009. The U.S. Department of Labor is expected to issue model notices by mid-March.

Posted by Thamer E. "Chip" Temple, III

Mandatory E-Verify Participation Put On Hold

Under a final rule issued November 13, 2008, the United States government (specifically, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council) amended federal procurement regulations to require federal contractors to verify worker employment eligibility through the Department of Homeland Security's E-Verify system. This final rule was the result of an executive order that President Bush issued last year mandating use of the system to address, in part, the problem of employment of illegal aliens.

The new rule requires government contractor employers to use E-Verify to determine the eligibility of all new hires and to confirm the eligibility of all existing employees working on federal contracts. Prior to this rule, use of the E-Verify system has been voluntary.

Many groups, including the Society for Human Resources Management, the U.S. Chamber of Commerce, and the American Council on International Personnel, questioned the mandatory imposition of a voluntary process. They claim the government exceeded its authority in requiring participation. Other groups, such as the Center for Immigration studies, commended expansion of the E-Verify system as an important way to reduce the illegal labor pool.

The final rule was to take effect on January 15, 2009. As a result of a lawsuit filed in a Maryland federal court challenging the propriety of the new rule, the government initially agreed in early January to delay the rule's implementation until February 20th. The government now has agreed to delay implementation until at least May 21st in order to allow the new Obama Administration an opportunity to review the rule and consider the broad range of options. The pending lawsuit will remain on the court's docket, but by agreement court proceedings will be suspended for the time being.

At this point, it is uncertain whether the regulation will be implemented later, if at all. In the meantime, federal contractors are relieved of the immediate obligation to comply, but they may voluntarily participate in the system.

Posted by Thamer E. "Chip" Temple, III

Featured Legal Commentator

Chip Temple will be the featured legal commentator at Managed Benefits, Inc.'s comprehensive course on the new Family and Medical Leave Act (FMLA) regulations. For more information on the course, contact Managed Benefits, Inc. at bworthington@managedbenefits.com.

Posted by: Thamer E. "Chip" Temple, III

The New FMLA Regulations

The New FMLA Regulations

New regulations under the federal Family and Medical Leave Act (FMLA) will take effect on January 16, 2009. The regulations are lengthy, spanning more than 700 pages. Here are some highlights.

Continuing Treatment

The concept of “continuing treatment from a health care provider” is an important part of the definition of a “serious health condition,” which in turn is a prerequisite for most types of FMLA leave. Continuing treatment now requires a visit to the health care provider within seven days of the first day of incapacity, two visits within thirty days (absent extenuating circumstances that prevent a timely follow-up), and, with a chronic condition, at least two visits per year.

Employee Eligibility

To be eligible for FMLA leave, an employee must have been employed with the employer for at least twelve months and worked at least 1,250 hours during that time. The new regulations clarify, however, that the twelve months of service need not be consecutive. Prior service without an absence of seven years or longer must be counted toward the twelve month goal. Additionally, if an employer permits an employee to take non-FMLA leave (such as a general leave of absence) before an employee is eligible for FMLA leave, and the employee becomes eligible while on the non-FMLA leave, the leave taken before eligibility does not count toward the twelve week per year FMLA allotment. Rather, the employee in this situation would be entitled to the non-FMLA leave plus the full twelve week FMLA allotment.

Holiday Calculations

Counting holidays towards the FMLA leave allotment depends on timing of the leave taken. The holiday will count toward the allotment if the employee is taking a full week of FMLA leave during the week with a holiday. But if an employee takes less than a full week of FMLA leave during a week with a holiday, the holiday will not count toward the FMLA allotment unless the employee otherwise would have been required to work on that holiday.

Light Duty

An eligible employee may accept light duty instead of taking FMLA leave. If the employee does so, the light duty work does not count against the employee’s twelve week FMLA allotment. Essentially, the employer’s FMLA obligations are deferred until the light duty assignment is completed or the twelve month period in which the FMLA leave is taken has ended.


Authentication and Clarification of Medical Certifications

Select employer representatives now may contact an employee’s healthcare provider directly for purposes of authenticating information on a medical certification form without obtaining an employee’s permission. Subject to HIPAA restrictions, select employer representatives also may contact the health care provider for purposes of clarifying information provided on the certification.

Notice Requirements

Under the new regulations, an employee must adhere to the employer’s usual and customary notice requirements for requesting foreseeable FMLA leave. This can include written notice. An employee’s failure to comply can be grounds in some instances for delaying or denying the requested FMLA leave. Employers, on the other hand, still must provide written notice to employees of FMLA rights by posting and in handbooks or other policy statements provided at the time of hire. Additionally, employers are required to give written notice of employee rights, eligibility and the designation of FMLA leave within five business days of becoming aware of the employee’s need for leave.

Military Service Member-Related Leave

The new regulations explain the various rights and responsibilities under the National Defense Authorization Act, which extends FMLA-like leave for eligible employees (i) to tend to exigencies arising from a service member’s call to duty, and (ii) to care for a family member who becomes ill or injured as a result of military service.

These regulatory changes reflect an intensive effort to balance existing burdens between employers and employees without constricting the basic rights Congress granted more than fifteen years ago. For those dissatisfied on either side, the complaints largely belong with the 1993 Congress, not the regulatory scheme now. However, these regulations do heighten the importance of employers carefully maintaining precise records about FMLA leave, employee eligibility, and employer/employee compliance. In most instances, it is the employer’s obligation to justify actions taken.

Posted by Thamer E. "Chip" Temple III.

Employment Law Overview

A substantial part of the firm's practice is in the area of labor relations and employment law. We advise management and executives in all aspects of the workplace, including discharge challenges, leave issues, compensation, trade secret protection and personnel policies. Should litigation arise, we defend our clients against charges of discrimination, harassment, retaliation, FLSA issues and any other claim brought by employees.

The firm also regularly handles such traditional labor relations matters such as arbitration, picketing, strikes and job actions. We provide representation on charges before the National Labor Relations Board, and supervise union organizing campaigns and elections.

Keep watching this blog for updates on Employment Law, or visit the Employment Law practice area of our website for more information.