DOL

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 ERISA Advisory Council held a hearing last week on “Model Notices and Disclosures for Pension Risk Transfers.”  The Council, which advises the Secretary of Labor on the Labor Department’s administration of ERISA, is working to develop model disclosures to participants who receive lump sum offers in connection with de-risking transactions.  While the Council is focused on lump sums offered in connection with limited election windows, the model disclosures might apply any time an individual is offered a lump sum distribution in lieu of an annuity benefit.

The Council heard testimony from several witnesses, many of whom proposed text or offered suggestions to be included in model disclosures—including testimony by our own Robert Newman of Covington & Burling LLP.  While the Council deliberates, employers conducting lump sum windows might wish to consider some of the disclosures suggested at the hearing.
Continue Reading ERISA Advisory Council Considers Model Lump Sum Window Disclosures

Two cases decided in January—one by the Sixth Circuit and another by the District Court for the District of Columbia—offer a cautionary tale to plan sponsors who rely on a statute or regulation that allows retroactive amendments to tax-qualified plans. Both cases involved a change to the interest and mortality assumptions that pension plans use to calculate the minimum amount of a lump sum distribution. The change was expressly authorized by a statute, but the Pension Benefit Guaranty Corporation said “not so fast”—leaving the plan sponsors responsible for several million dollars in additional liabilities.

The cases offer a cautionary tale for plan sponsors: practices that are permitted in one context will not necessarily be accepted in other contexts. For this reason, it is important to conduct a thorough analysis before relying on agency guidance or accepted practice.Continue Reading Two Recent Cases Offer Cautionary Tale to Plan Sponsors Relying on IRS Guidance

A recent GAO Report offers interesting insight into the Department of Labor’s thinking on electronic disclosure.

For the better part of the last ten years, many plan sponsors and service providers have been pushing for more flexibility to provide required disclosures electronically.  In particular, they have asked the Labor and Treasury Departments to replace an existing “opt in” regime with an “opt out” regime.  Instead of requiring affirmative consent to distribute communications electronically, many plan sponsors and service providers would like the default to be electronic disclosure–with an opportunity to elect to receive paper.

In 2011, the Department of Labor issued a public request for information regarding electronic disclosures.  The responses included thoughtful suggestions for moving toward an “opt out” regime while still ensuring that important communications are actually received.  The Department has not formally taken action in response to the RFI, but comments included in the GAO report offer insight into the Department’s thinking.

The GAO report summarizes the existing Labor and Treasury rules on electronic disclosure, and offers three suggestions for improvement:
Continue Reading Electronic Disclosure: Which Way Are We Going?

The Department of Labor’s Office of Inspector General recently issued a report detailing concerns with the valuation of alternative investments (such as private equity funds, hedge funds, and real estate) held by ERISA plans.  ERISA requires plan sponsors and fiduciaries to value investments for several purposes, including to determine funding obligations, select investments, monitor investment performance, and file accurate financial statements.  The report notes that many plan fiduciaries rely on valuations provided by managers of alternative investments without analyzing the basis for the valuation or seeking independent review.  The report suggests that this practice poses substantial risks to the retirement system and urges the Labor Department to require more rigorous valuation methodology.
Continue Reading ERISA Plans’ Valuation of Private Equity and Other Alternative Investments Draws Increased Scrutiny

The Department of Labor issued a technical release today addressing the effect of the Supreme Court’s decision in U.S. v. Windsor on employee benefit plans.  The Windsor decision struck down section 3 of the Defense of Marriage Act, thereby requiring the federal government to recognize same-sex marriages that are recognized under state law.  The IRS

On July 31st, the Office of Federal Contract Compliance Programs (“OFCCP”) of the Department of Labor submitted to the Office of Management and Budget (“OMB”) a final rule revising federal regulations regarding affirmative action for individuals with disabilities by covered federal contractors and subcontractors. If adopted, the regulations would mark the first time the federal

The Departments of Treasury, Labor, and Health and Human Services (collectively, the “Departments”) recently issued a set of Frequently Asked Questions (Part XV) (the “FAQs”), which provide that, starting in 2014, employers and health insurance issuers must implement two new requirements under ACA that apply to non-grandfathered group health plans:

(1) a prohibition on discriminating against health care providers that are licensed or certified under state law; and

(2) a mandate to cover routine patient costs or services for participation in certain clinical trials for life-threatening diseases.

The FAQs state that the Departments do not intend to issue regulations implementing these two requirements in the near future and therefore employers and health insurance issuers must implement the requirements based on a good-faith, reasonable interpretation of the statutory provisions.  The FAQs also delay, until at least 2015, implementation of requirements to disclose publicly certain information regarding group health plans, such as financial information, cost-sharing requirements, and data on claim denials and enrollment.
Continue Reading New FAQs Issued on Nondiscrimination, Clinical Trial, and Reporting Requirements under the Affordable Care Act

On April 23, 2013, the Departments of Labor, Health and Human Services and the Treasury (the “Departments”) issued an updated template and sample completed template for summaries of benefits and coverage (“SBCs”) that must be provided for coverage beginning in 2014.  The Departments also released Frequently Asked Questions that include the following guidance:

  • The only change to the existing SBC template is the addition of statements regarding whether a group health plan offers minimum essential coverage that meets the requirements for providing minimum value.  (See ACA’s Cost-Sharing Limitations on Employer Health Coverage for an explanation of the minimum essential coverage and minimum value requirements.)  If an employer or issuer is unable to modify the SBC template to include this additional information and continues to use the template provided for 2013, the new information for 2014 may be disclosed in a separate document that is provided with the SBC.  No other changes have been made to the SBC template, including to the examples that must be included, to the instructions for providing SBCs, or to the uniform glossary.
  • The Departments have extended for another year enforcement relief that they issued last year.  Pursuant to this relief, the Departments will not impose penalties on plans and issuers that are working diligently and in good faith to provide the required SBC content in a format that is consistent with the final regulations.  In addition, the Departments have also extended the safe harbor for providing SBCs electronically to participants and beneficiaries in connection with their online enrollment or online renewal of coverage under the plan.
  • Because annual limits on essential health benefits will no longer be permissible starting in 2014, a plan may, at its option, delete the following row that appears on the first page of the SBC template:  “Is there an overall limit on what the plan pays?”.  Otherwise, the plan should answer “no” to this question.
  • If an educational institution, such as an institution of higher education, maintains insured health coverage for its students, the institution will have met its requirements for providing SBCs if another party, such as the health insurance issuer, timely provides completed SBCs to the students.
    Continue Reading Departments Publish Updated SBC Template, Making Few Changes for 2014