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Kendra Roberson has experience advising clients on a broad spectrum of employee benefits matters including tax-qualified retirement plans, employee stock ownership plans, executive compensation arrangements, stock option and other equity-based compensation plans, cafeteria plans, VEBAs, self-insured medical plans, and other health and welfare plans.  Her experience includes plan design and drafting, regulatory compliance, ERISA litigation, and handling employee benefits matters and plans in corporate transactions.  In addition, Ms. Roberson has extensive experience advising employers and state governments on compliance with the Patient Protection and Affordable Care Act (“PPACA”).

Existing rules in Europe require, and proposed rules in the U.S. would require, companies and financial institutions to have in place effective clawback policies.  Under such policies, employers have the ability to recover compensation paid to employees when certain events occur or information comes to light that could have an adverse effect on the employer.  The aim, of course, is to create a direct link between reward and conduct so as to promote good corporate behavior and ensure effective risk management.

Clawback provisions have been around for a number of years and they are now a fairly well-known feature in a variety of different bonus and equity incentive programs. They often complement other measures that employers can deploy to address adverse events and circumstances, the most common of which is the ability to forfeit or downward adjust unvested compensation. With executive scrutiny and accountability on the rise, the significance of these policies and their effectiveness will undoubtedly be put to the test.  This article looks briefly at the legal and practical challenges companies face at each stage of a clawback policy – from design and implementation to operation and enforcement.


Continue Reading Learning to Live with Clawbacks: The New, Long String on Executive Compensation

On January 20, the Department of Labor’s Wage and Hour Division (WHD) issued new guidance on joint employment under the Fair Labor Standards Act (FLSA).  The guidance marks the third time in recent years that WHD has stressed the broad definition of “employment” under the FLSA, following June 2014 guidance on joint employment in the home health care industry and July 2015 guidance on misclassification of employees as independent contractors.  WHD’s consistent focus reiterates that the agency believes that many workers are classified incorrectly and will focus its enforcement activity on these areas.

Continue Reading DOL Issues Guidance on Its Broad View of Joint Employment

The Equal Employment Opportunity Commission (“EEOC”) has requested that the United States District Court of Minnesota stop Honeywell from implementing a wellness program that would provide financial incentives for undergoing biometric screenings.  The EEOC is challenging Honeywell’s program on grounds that it would violate the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”).  The EEOC’s request is a surprising development because, as recently as last year, the EEOC stated that it has not taken a position on whether and to what extent providing a financial reward to participate in a wellness program violates the ADA.  In addition, EEOC staff have not previously given any public indication that providing incentives to spouses for participating in a wellness program violates GINA.  Consequently, many employers provide financial rewards to encourage participation in wellness programs up to the limits permitted by the Health Insurance Portability and Accountability Act (“HIPAA”), as amended by the Affordable Care Act (“ACA”).  Employers that offer financial rewards (or impose financial penalties) for participation in wellness programs that request medical information or involve medical examinations should take note of this development.

Update:  On November 3, 2014, the District Court judge denied the EEOC’s request.


Continue Reading EEOC Seeks to Stop Use of Financial Incentives for Wellness Program Participation

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

Many employers will face two significant new reporting requirements for employee health coverage starting next year:

  • Section 6055 Return:  Employers and insurers that provide minimum essential coverage must report information to the IRS about each covered individual for each month, and provide a copy of the report to covered employees and retirees.
  • Section 6056 Return:  Employers with at least 50 full-time employees must report additional information to the IRS (with a copy to the employee) to confirm that the employer offers health coverage that is affordable and provides minimum value to full-time employees and their dependents.

Final regulations (available here and here) adopt the reporting requirements proposed last fall, with only modest changes.  (We described the proposed requirements in our earlier post: Health Coverage Reporting Rules Create New Burdens for Employers.)  These are some of the challenges employers will confront as they prepare to comply with the new requirements:

No Further Extension of the Reporting Deadline

The IRS announced last year that it would waive the reporting penalties for coverage provided in 2014.  The final regulations do not provide any further extension of the reporting deadline.  Accordingly, the first reports will be due early in 2016 for health coverage provided in 2015.

Employers will have to develop administrative systems and procedures to collect the required information, and many employers will wish to engage outside vendors to help them comply with the new reporting requirements.  These arrangements generally must be in place by January 1, 2015, when the new requirements take effect.

No Electronic Statements Unless the Employee Consents 

An employer must provide individual statements to employees showing the health coverage information reported to the IRS for the employee and the employee’s family.  Although employers had requested rules that would allow them to furnish these statements electronically, the final regulations continue to provide that an employer may furnish an electronic statement only if the individual consents.  The consent rules will make electronic delivery impractical for many employers.

The employer’s request for consent must refer to the specific forms that the employer wishes to provide electronically.  Accordingly, even if an employer has previously received the employee’s consent to furnish other forms (such as Form W-2) electronically, or has received a general consent to furnish all forms electronically, these consents will not extend to the new health coverage statements.
Continue Reading Final Health Coverage Reporting Rules Offer Employers Little Relief

The final shared responsibility regulations under the Affordable Care Act, issued earlier this month, in large part maintain the rules set forth in the proposed regulations.  However, there are several ways in which the final regulations modify or clarify these rules.  Below is a top ten list (which we’re sure David Letterman would use if he were a benefits lawyer) of things to know about the final regulations.

The rules govern the requirement that employers with at least 50 full-time employees could owe a “shared responsibility” excise tax if they fail to offer group health coverage.  One penalty (known as the “A” penalty) applies if an employer fails to offer group health coverage to 95% of its employees on every day of a month and at least one employee purchases coverage through an exchange with a federal subsidy; the “A” penalty each month is an excise tax of 1/12 of $2,000 for each full-time employee in excess of 30.  Even if the employer meets the 95% test, a separate penalty (known as the “B” penalty) applies if the employer fails to offer affordable health coverage to an employee, and the employee purchases coverage through an exchange with a federal subsidy; the “B” penalty each month is an excise tax of 1/12 of $3,000 per each such employee who actually purchases coverage through an exchange with a federal subsidy.  A “full-time employee” is a common-law employee who works an average of at least 30 hours per week. (You will find a more detailed description of the shared responsibility rules here and here.)

Below are our top 10 highlights of the final regulations:
Continue Reading Top Ten Things to Know about the Final Shared Responsibility Regulations

Employers should be aware that the Department of Human Services (“HHS”) is stepping up its enforcement of requirements for covered entities, such as group health plans, to adopt and implement policies and procedures for protecting and securing protected health information in accordance with the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).  As our

The Obama administration recently issued final regulations implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addition Equity Act of 2008 (the “MHPAEA”).  The regulations implement the MHPAEA’s prohibition against imposing limits on mental health and substance use disorder benefits that are more restrictive than the limits on medical and surgical benefits.  The final regulations largely preserve interim final regulations that have been in effect since July 1, 2010, with some clarifications that were announced previously in less formal guidance.

The final regulations, not surprisingly, require parity between medical/surgical benefits, on the one hand, and mental health/substance use disorder benefits, on the other, when both are provided under an employer’s major medical plan.  However, in determining whether the parity is achieved, employers will need to consider separate arrangements, such as employee assistance plans and wellness programs.  The failure to consider plans other than the major medical plan could result in noncompliance with the mental health parity rules. 

The penalty for failing to comply with the new requirements is an excise tax of $100 per day per affected participant.  In frequently asked questions that were issued with the final regulations, the Departments indicated that ensuring compliance through audits and other mechanisms is a high priority.
Continue Reading Could Smoking Cessation Programs Violate Mental Health Parity Rules? Traps for the Unwary in Recent Regulations