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Christen Sewell

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Christen Sewell counsels private and public companies and executives on all aspects of employee benefits and executive compensation.

Christen has a particular focus on benefits issues for start-ups and emerging growth companies, including:

  • Advising on the design, compliance, and administration of stock options and equity-based plans and arrangements.
  • Drafting and negotiating executive compensation arrangements, including, employment, retention, change in control, and separation agreements.

Christen also advises clients on:

  • Tax-qualified retirement plans
  • Health and welfare plans
  • Non-qualified deferred compensation arrangements
  • Bonus and incentive plans
  • Corporate transactions (M&A, joint ventures, financings, spin-offs, public offerings, SPACs)

Christen’s expertise covers:

  • Code Section 409A deferred compensation rules
  • Tax rules governing equity compensation
  • Golden parachute rules under Code Section 280G
  • ERISA
  • COBRA
  • PPACA
  • GINA
  • HIPAA
Contact: Read more about Christen SewellEmail

Recent legislation allows employers to continue offering first-dollar telehealth coverage without jeopardizing the ability to contribute to a health savings account (“HSA”), but only through the end of the 2024 plan year.

Background – HSA Eligibility

Employees can make and receive pre-tax contributions to HSAs to use for qualified medical expenses. To be “eligible” to make or receive contributions to an HSA, you (a) must be covered by a high deductible health plan (“HDHP”), and (b) may not have other non-HDHP coverage that covers benefits before the HDHP deductible has been met.

Certain types of coverage, like dental and vision care, is disregarded in determining whether an individual is “eligible” to contribute to an HSA. Disregarded coverage does not have to be coordinated with HDHPs. This means that participants can receive “first-dollar” coverage for disregarded coverage and still be eligible to make or receive contributions to an HSA.…

Continue Reading Employers Can Continue to Cover Telehealth Benefits Before HDHP Deductible Is Met

On October 1, 2022, the District of Columbia’s new ban on non-compete agreements (the Ban on Non-Compete Agreements Amendment Act of 2020, as amended by the Non-Compete Clarification Amendment Act of 2022 (the “Act”)) went into effect. The final version of the Act is far less restrictive than originally anticipated and permits non-competes with highly compensated employees, non-competes paired with long-term incentives, and certain anti-moonlighting policies.

Key Takeaways

  • As of October 1, 2022, non-competes are prohibited in the District with limited exceptions.
  • Generally, employers can still enter into the following types of non-competes with District employees:
    • Non-competes with highly compensated employees that do not exceed one year; provided 14 days’ advance notice is given to the employee. 
    • Non-competes paired with a long-term incentive.
    • Non-competes entered into in connection with the sale of a business.
  • The Act permits specified workplace policies like confidentiality or non-disclosure policies, anti-moonlighting policies/outside employment restrictions, and conflict of interest policies. However, the employer must provide the policies to employees before October 31, 2022, within 30 days after acceptance of employment, and any time such policy changes.
  • Violations of the Act carry both administrative penalties and civil liability.
  • Prohibited non-compete agreements in effect before October 1, 2022, are not subject to the Act and remain in effect. However, employers should consult with legal counsel before amending these agreements.
  • Non-solicitations of customers and employees are not explicitly considered non-competes under the Act.
  • The Act does not apply to the terms of a valid collective bargaining agreement.

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Continue Reading D.C.’s Scaled-Back Non-Compete Ban Is In Effect

Employers that have employees residing in California are now required by AB 1554 to provide notification in two different forms to employees about deadlines for withdrawing funds from flexible spending accounts (“FSAs”).  One of the forms of notification may be electronic.  Examples of permissible notification forms include: e-mail, telephone, text message, mail, or in-person.  The notice requirement purports to apply to all FSAs, including dependent care FSAs, health care FSAs, and adoption assistance FSAs.  Virtually all other aspects of implementing the law are left open to interpretation.
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Continue Reading California’s New FSA Notice Requirement Leaves Employers Asking Questions

The extent to which a participant in a tax-qualified defined benefit plan has standing to sue the plan’s fiduciaries for mismanagement of plan assets has long been unclear. The argument against standing is that the participant has not suffered any injury because the participant would receive the same benefit from the plan regardless of the outcome of the lawsuit.
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Continue Reading Supreme Court Closes Door to Participant Challenges to Defined Benefit Plan Investments

On May 27, 2020, the Department of Labor (“DOL” or “Department”) published a final rule providing an alternative safe harbor for furnishing ERISA pension plan disclosures electronically on a website or via email.  We previously blogged about the proposed rule here.  This post provides an overview of the final rule and highlights some key changes from the proposed rule.

As we previously noted, electronic disclosure has been permitted since 2002 under a safe harbor that allows plan administrators to electronically disclose ERISA documents to individuals who are “wired at work” or individuals who have affirmatively consented to electronic delivery.  This new safe harbor is an alternative to the 2002 safe harbor.  Plan administrators of pension plans may rely on either the new safe harbor, the 2002 safe harbor, both, or neither.  Significantly, however, the new safe harbor is limited to pension plans.  The 2002 safe harbor remains available for welfare plans.…

Continue Reading Electronic Disclosure Rule for Pension Plans Finalized

Consider a situation in which a former employee alleges that he or she did not receive a COBRA election notice. That’s the notice that must be provided to group health plan participants when they lose coverage as a result of certain events, including termination of employment, and that gives the participants information regarding their rights and obligations to elect COBRA continuation coverage. If a court finds that the employer failed to provide the notice, the court could (1) allow the employee to retroactively elect coverage after the election period otherwise would have ended, (2) award statutory penalties of up to $110 per day to the employee, or (3) provide other relief to the employee. There is also an excise tax for COBRA failures, including failure to provide a COBRA election notice, of $100 per day per failure. An employer must report the excise tax on Form 8928, and the statute of limitations generally would not start running unless and until the employer does so.

To prevail at the summary judgment stage and avoid a trial, some courts hold that the plan administrator has the burden of proving that the election notice was properly sent to the employee. So, what evidence does the plan administrator need to establish that the notice was sent? According to a recent decision, a declaration of the employer’s normal business practices may not be enough to win a motion for summary judgment.…

Continue Reading Benefit Plan Record Retention – A Cautionary Tale from Louisiana

Many lawsuits against employer group health plans hinge on the enforceability of the plan’s anti-assignment provision. ERISA does not give providers the right to sue for plan benefits. A provider’s lawsuit must be derived from the participant’s right to plan benefits. In other words, the participant must assign his or her right to the provider. Even with such an assignment, a provider will lack standing to bring a lawsuit if the ERISA plan has a valid and enforceable anti-assignment clause. (ERISA itself generally prohibits assignment of retirement plan benefits, but the ERISA prohibition on assignment does not apply to health and welfare plans.)

While courts have generally held that anti-assignment provisions are enforceable, states have begun weighing in on the side of providers in an attempt to keep these lawsuits alive. But can a state law invalidate anti-assignment clauses in plans subject to ERISA and mandate that benefits be assignable to a healthcare provider? The Fifth Circuit, in Dialysis Newco, Inc. v. Community Health Systems Group Health Plan, 938 F.3d 246 (5th Cir. 2019), recently invalidated a Tennessee law that sought to do just that.…

Continue Reading Will Your Group Health Plan’s Anti-Assignment Clause Defeat Provider Claims?

On November 14, 2018, the Department of the Treasury and the Internal Revenue Service issued proposed regulations updating the 401(k) plan regulations for hardship distributions from section 401(k) plans.  In particular, these proposed amendments reflect statutory changes including recent changes made by the Bipartisan Budget Act of 2018.  Plan sponsors of 401(k) plans have been awaiting guidance as they make plan design choices for 2019.  While the proposed regulations do not explicitly say that plan sponsors can rely on the proposed regulations, we would not be surprised if the final regulations closely track the proposed regulations.  Comments are due January 14, 2019.  These proposed rules also affect 403(b) plans, but the rules are somewhat different – consult with legal counsel.

Key Takeaways

The proposed changes affecting 401(k) plans are summarized below, but the key takeaways from the proposed regulations include:

  • 401(k) plans must eliminate the 6-month suspension on participant contributions following a hardship withdrawal no later than January 1, 2020; plans will not be permitted to impose a suspension after that date.
  • 401(k) plans can lift the suspension on participant contributions beginning January 1, 2019, even for hardship withdrawals taken before January 1, 2019. For example, if a participant in a calendar year plan took a hardship distribution in the latter half of 2018, the plan could be amended to lift the suspension beginning January 1, 2019.
  • The proposed regulations replace the “facts and circumstances” test for determining whether a distribution is necessary to satisfy a financial need with a “general standard” that requires a representation by the participant that he or she has insufficient cash or other liquid assets to satisfy the financial need. 401(k) plans may apply the new “general standard” for distributions on and after January 1, 2019, or may continue to apply the “facts and circumstances” test through December 31, 2019.  Notably, if a plan elects to apply the new “general standard” beginning in 2019, plans are not obligated to require the participant representation until January 1, 2020.
  • Beginning January 1, 2019, safe harbor contributions may also be distributed on account of an employee’s hardship. The preamble explains this is because safe harbor contributions are subject to the same distribution limitations applicable to QNECs and QMACs, which are available for hardship distributions beginning January 1, 2019.

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Continue Reading Proposed Changes to Hardship Distribution Rules Affect 401(k) Plans

Taxpayers may treat the $6,900 original annual contribution limit for family coverage to health savings accounts (“HSAs”) as the limit for 2018, according to IRS guidance released on April 26, 2018 (press release; IRS Rev. Proc. 2018-27).  Employers that took steps to comply with the reduced limit may need to take action.

As discussed in our earlier blog post, the contribution limit for family coverage to HSAs for 2018 was reduced by $50 from $6,900 to $6,850.  Bowing to pressure from stakeholders who explained to the Treasury Department and IRS that implementing the reduction would impose administrative and financial burdens, the IRS announced that for 2018, taxpayers with family coverage under a high deductible health plan may treat $6,900 as the maximum deductible HSA contribution.

This is welcome relief for employers that had not yet taken steps to comply with the reduced limit.  However, for employers that already informed participants of the change and took steps to modify salary reduction elections or return contributions in excess of the lower limit, this guidance likely triggers additional action.…

Continue Reading Original HSA Family Contribution Limit to Remain in Place for 2018

Changes to cost of living adjustments for health savings accounts (“HSAs”) by the Tax Cuts & Jobs Act of 2017 (the “Act”) caused a $50 decrease in the contribution limit for family coverage to HSAs for 2018.  The limit was reduced from $6,900 to $6,850 (original limit here; revised limit here).

This affects only 2018 contributions for employees with family coverage who have exceeded or made elections that will exceed the original HSA contribution limit for 2018.…

Continue Reading HSA Family Contribution Limit Reduced for 2018