Labor and Employment Law Update - November 2010

While the amendments to the ADA have been in effect since January 1, 2009, the EEOC still has not published its final regulations as to its position on what is required by the new amendments. What is clear from the amendments is that many more employees now qualify as disabled and are entitled to reasonable accommodations. No longer is it required that a disability be long term or permanent. And even medical conditions controlled by medication leave an employee disabled. Human resources involvement and management training are important steps to take, so that correct decisions can be made. While a reasonable accommodation may not be what the employee wants, an interactive process as to how the employee can perform his or her essential job duties has to occur. What it means to do one’s job is still being and will continue to be litigated. The courts are all over the field as to what part of one’s job one needs to do to remain employed. Recently, a claim was brought against an employer because it only let an outside salesperson work two hours a day for four months from the employee’s hospital bed. She, her attorney, and her physicians all said she could do 100% of her job from her hospital bed. The friendly and obliging employee doctor will continue to be a problem.

The Office of the Contract Compliance Program (OFCCP) is determined to require all hospitals to have full blown affirmative action plans. Medicare and Medicaid funding does not create eligibility. Nor does providing hospital services for insurance companies create eligibility. But OFCCP has been successfully arguing that the provision of health care services through governmental agencies do count toward the annual threshold of $50,000 of federal services being provided, so that a fullblown affirmative action program needs to be developed and maintained. In a recent administrative law judge’s decision, the provision of more than $50,000 of medical services to the Department of Defense’s uniformed services people triggered the need for a full-blown affirmative action plan. The creation and maintenance of such a plan is complicated, burdensome and costly. The Department of Defense argued in the case that if affirmative action plan obligations were imposed on the more than 500,000 TRICARE providers in the U.S., it would no longer be able to provide the health care needed by the military and their family members as many providers would decline participation in its program. But the OFCCP rejected the Department of Defense’s argument. It is a viable alternative depending on the revenue being generated by a TRICARE contract for a particular provider, for the provider to cancel or not enter into a contract which requires a full-blown affirmative action plan given the complex and individual requirements of such a plan and the oversight the OFCCP can impose.

The Department of Justice (spurred on by a number of unions) and various disgruntled employees continue to bring lawsuits against hospitals which share wage and benefit information. These anti-trust lawsuits bring big settlements as any damages awarded in an anti-trust lawsuit are tripled and attorney fees are awarded. Recently there was a $4.5 million settlement in New York. Similar actions are pending in Detroit, Michigan and San Antonio, Texas. Earlier there was a $22.8 million settlement with a class of temporary nurses in Arizona.

Already coverage for adult children under the age of 26 (27 in Wisconsin) has to be provided. The following is an outline of many of the most significant changes with which an employer and its health insurer will have to deal.


• Group health plan requirements effective for plan years beginning after September 22, 2010 (unless grandfather exception applies).

 - Prohibition against preexisting condition exclusions for enrollees under age 19

 - Prohibition against lifetime limits and annual limits

 - Prohibition against rescissions

 - Requirements for coverage of specified preventive health services

 - Prohibition against discrimination under insured plans based on salary

 - Required rebates of excessive revenues from insurers of group or individual health plans (including grandfathered plans) to enrollees (not applicable to self-insured group health plans)

- Required internal and external appeals processes

• Prohibition against “dumping” employees into temporary high risk pools effective July 1, 2010 to December 31, 2013

• Prohibition against reimbursements from HRAs, FSAs, HSAs and Archer MSAs for over-thecounter drugs after 2010

• Simple cafeteria plans available to small businesses and selfemployed individuals for years after 2010

• Form W-2 reporting of cost of employer-sponsored health coverage after 2010

 • Increase in penalty taxes for nonqualified distributions from HSAs and Archer MSAs after 2010 (from 10% to 20% for HSAs and from 15T to 20% for Archer MSAs)

 • Requirement to provide explanations of coverage developed by Health and Human Services after March 22, 2012

• Quality of care reporting requirements after March 22, 2012

• Elimination of deduction for Medicare Part D subsidy after 2012

• $2,500 cap on contributions to health FSAs after 2012

• Increase in Medicare tax on employees and self-employed individuals with high incomes (but not employers) and new Medicare tax on individuals, estates and trusts with high investment income effective after 2012

• Increase in floor on medical expense deduction for individuals from 7.5% to 105 after 2012 (after 2017 for seniors)

 • Requirement of employers subject to the Fair Labor Standards Act (“FLSA”) to inform employees of the existence of the Exchanges effective after February 28, 2013, subject to the issuance of regulations

Then in 2014, there will be insurance exchanges, individual health insurance mandates, penalties for not complying with mandate, guaranteed coverage, no exclusions for pre-existing conditions, limited 90-day waiting periods, new employer reporting responsibilities and much more.

In 2018, the excise tax on high-cost employee-sponsored health coverage begins. While the implementation of these numerous changes to group health insurance will fall on insurance companies, employers will have to monitor their insurer’s compliance with the law.

With the Democratic appointees firmly entrenched, the NLRB has begun to change prior NLRB precedents. This will continue for some time. Recently it changed the calculation of interest procedure on back pay and other monetary awards. Daily compounded interest will now be applied “categorically whenever a back pay award is appropriate.”

Another new change is that notices of unfair labor practice case orders must now be posted in both paper form and electronically.

The parameters of an employer’s right to restrict employee use of social networking continue to be established. The NLRB’s Hartford office has recently filed a charge against an employer for firing an employee who criticized her supervisor on a social networking site. The NLRB office asserts that an employee’s criticism of her supervisor on Facebook is protected conduct under the NLRA (co-workers responded to her criticism). The case will be heard in early 2011.

The new investigators the Federal Wage and Hour Division has hired are beginning to expand the number of inspections being done. The significant class action lawsuits continue to grow.

The EEOC regulations still restrict the use of wellness programs. However, employers continue to expand the use of wellness programs. It is likely that the adoption of wellness programs and the scope of such programs will continue to grow.


von Briesen & Roper Legal Update is a periodic publication of von Briesen & Roper, s.c. It is intended for general information purposes for the community and highlights recent changes and developments in the legal area. This publication does not constitute legal advice, and the reader should consult legal counsel to determine how this information applies to any specific situation.