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Inside Compensation

Developments in Employee Benefits & Executive Compensation

NLRB Continues to Limit Employers’ Actions Governing Employees’ Use of Social Media

Posted in Employment

We previously noted that the National Labor Relations Board (“NLRB”) takes the position that the National Labor Relations Act (“NLRA”) protects employees’ use of social media for certain purposes, and these protections apply regardless of whether the employees are covered by a collective bargaining agreement.  Our colleagues at InsidePrivacy recently posted a blog post discussing new rulings from the NLRB concluding that two employees of a sports bar and restaurant were unlawfully discharged for their participation in a Facebook discussion criticizing their employer.  For a discussion of these cases, see NLRB Finds Employee’s Facebook “Like” and Comment Protected By Labor Law.

What to Do with Missing Participants: Department of Labor Provides Guidance

Posted in Defined Contributions Plans

When a defined contribution plan terminates, the plan administrator must distribute participants’ accounts as soon as administratively feasible.  However, participants do not always update the plan administrator when their contact information changes, and some participants may not be responsive when the plan administrator requests directions on how to distribute their accounts.

On August 14, 2014, the DOL published guidance describing the plan administrator’s fiduciary obligations in such a situation.  The guidance focuses on two questions.  First, what steps must a plan administrator take to try to locate a missing participant?  Second, if a plan administrator fails to locate a participant after taking any required search steps, what must the plan administrator do with the balance of the participant’s account?  The DOL guidance does not directly address analogous situations under defined benefit plans or health and welfare plans, but is likely to have relevance to them as well. Continue Reading

Reducing Pension Costs By Increasing Defined Benefit Pensions: Kodak’s Innovative Approach

Posted in Defined Benefit Plans

Kodak recently announced that it is increasing the benefits provided under its defined benefit plan.  Kodak will credit an additional 3% of pay each year under its cash balance pension plan instead of making a matching contribution of up to 3% of pay under its 401(k) plan.  In connection with this change, Kodak announced that it is reducing its pension costs.  Providing benefits under a defined benefit pension plan can be more efficient, allowing a company to provide a greater benefit for the same cost as a matching or nonelective contribution to its 401(k) plan.  Covington is advising Kodak with respect to this pension change.  For additional analysis, see Jerry Geisel’s article in Business Insurance.

ACA Prohibits Discrimination Against Licensed Providers

Posted in Health Plans, Welfare Plans

One of the more obscure provisions of the Affordable Care Act says that a group health plan may not discriminate against “any health care provider who is acting within the scope of that provider’s license or certification under applicable State law.”  What on earth does this provision mean?  Apparently not even the federal government is sure. Continue Reading

New Medicare Tax Makes FICA Errors Harder to Correct

Posted in Employment Tax, Executive Compensation (US)

Withholding and paying FICA tax on nonqualified deferred compensation can be a tricky business.  Because special timing rules apply to FICA tax, employers can’t simply withhold and pay FICA tax when they pay deferred compensation to the employee.  Instead, FICA tax is due when the deferred compensation vests (or, in some cases, when the amount of the deferred compensation can be determined).

It is not always easy to tell when these triggering events occur.  In fact, it is sometimes hard to tell whether compensation is “deferred compensation” that is subject to the special timing rules.  Employers faced with these complications often discover long after the fact that they have failed to withhold and pay FICA tax on deferred compensation when the tax was due.  The additional 0.9% Medicare tax introduced in 2013 makes these errors much more difficult to correct. Continue Reading

IRS Releases ACA Reporting Forms

Posted in Health Plans, Welfare Plans

Starting in 2015, the Affordable Care Act imposes burdensome new reporting requirements on employers and insurers that provide group health coverage.  We described the reporting requirements in earlier posts, here and here.

Employers and other reporting entities have anxiously awaited the IRS forms on which these reports will be made, so that they can program and test their computer systems, develop administrative procedures, coordinate reporting responsibility with their affiliates, and make arrangements with their business partners to collect and report the necessary information.  The IRS posted drafts of the reporting forms on its website yesterday.  Unfortunately, however, the instructions to the forms—which are expected to provide much of the detail programmers will need—will not be available until August. Continue Reading

Key Component of Affordable Care Act Might Be Invalid

Posted in ERISA Litigation, Health Plans, Welfare Plans

Yesterday two federal courts of appeal reached opposite conclusions on the question whether individuals in 34 states are eligible for federal subsidies when they purchase health insurance coverage.  Depending on how this issue is resolved, it could have a significant impact on the future of the Affordable Care Act, including the employer mandate scheduled to take effect in 2015. Continue Reading

Health Plans Have an Extra Year to Prepare for ICD-10—And They Might Need It

Posted in Health Plans, Welfare Plans

Group health plans with 50 or more participants, including self-insured plans, must be able to conduct electronic transactions in accordance with HHS standards and operating rules.  One of the more challenging aspects of the electronic transaction rules has been the transition to the new International Classification of Diseases, 10th Revision (ICD-10) codes for health claims. Continue Reading

EEOC Issues New Guidance on Pregnancy Benefits

Posted in Employment, Fringe Benefits, Health Plans, Welfare Plans

The Equal Employment Opportunity Commission has issued new enforcement guidance explaining when an employer’s policies affecting pregnant employees might violate federal law.  The new guidance appears in an updated chapter of the EEOC’s enforcement manual, and in a related set of questions and answers.  Among other topics, the new guidance addresses the rights of pregnant employees under employer health plans, fringe benefit programs, and other benefit plans. Continue Reading

Health Plans Must Certify Ability to Conduct Electronic Transactions

Posted in Health Plans

By December 31, 2015, group health plans must complete a testing process and certify that they are able to conduct electronic transactions in accordance with uniform standards and operating rules.  Plans must also ensure that third-party administrators and other outside vendors are in compliance with the electronic transaction rules if the vendors conduct transactions on the plans’ behalf.

December 2015 might seem a long way off to group health plan sponsors and administrators focused on ACA’s shared responsibility rules.  Plan sponsors should bear in mind, though, that compliance with the certification requirements for electronic transactions can involve significant lead time.  Failure to comply carries substantial penalties.  Accordingly, group health plan sponsors that have not already addressed the electronic transaction rules might wish to develop a timetable for compliance. Continue Reading