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Employee Benefits Law Report Reporting on recent trends and developments affecting employee benefits

Author Archives: Ann Caresani

Posts by Ann Caresani

NLRB classification of athletes as employees highlights a health care reform land mine

Posted in Employment Issues, Health Care Reform

Employers have always been concerned about the potential for worker reclassification, but health care reform and a recent NLRB decision take this issue to an entirely new level.  “Large” employers who offer coverage will be required to offer coverage to “all” of their “full-time workers,” defined as at least 95% of employees working 30 hours per week. An employer that offers coverage to only 94% of its full-time employees, and has one employee who enrolled on an exchange with a premium credit, will be subject to annualized penalties of $2,000 per full-time employee, less the first 30 employees. This draconian …


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Protected health information and health care plan design

Posted in Employment Issues, Health and Welfare Plans

On our sister blog — Employer Law Report – our partner Brian Hall wrote about the likely availability of an Alzheimer’s blood test, and the impact of new genetic testing in the context of employer sponsored group health care plans and wellness programs. Brian spoke of the “imaginary line” that separates protected health information from human resources decision-makers, supervisors and managers, and mentioned a plethora of employee protections, including HIPAA, GINA, ADA, and ERISA Section 510. The Patient Protection and Affordable Care Act also added another set of employee protections. Each of these laws sets forth different standards for burden …


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Facebook brag underscores the enforceability of confidentiality clauses in settlement agreements

Posted in ERISA Fiduciary Compliance, ERISA Litigation

Settlement agreements are fairly common in the ERISA / employee benefits area. We typically do not need “unique” provisions for these agreements, beyond making sure all the proper parties are named and that ERISA is referenced. But two issues typically require extra attention: confidentiality provisions, and payment method (including tax withholding and reporting). As discussed in our sister blog, a party might quietly violate a confidentiality provision, and get away with it without causing any real harm. But when a party shares settlement information with a child who has both a Facebook page and poor judgment, the ramifications can …


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Audits of Benefit Plan Financials – What They Are and Are Not

Posted in Health and Welfare Plans, Other Articles

Department of Labor investigations of employee benefit plans can be challenging experiences for employers. The time demand can be a significant drain on the business, and the employer needs to be concerned about potential issues the investigator may raise. We believe the best defense is a good offense: we like our clients to take their responsibilities seriously well before an investigation. But employers are sometimes surprised that an investigator asks questions that were not asked by the auditors who conducted independent financial statement audits over the years. As a JD/CPA (double geek) I can tell you this audit is only …


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ERISA preemption is complicated – except when it isn’t

Posted in ERISA Fiduciary Compliance, ERISA Litigation, Other Articles

In light of health care reform, we anticipate ERISA preemption cases to start popping up more frequently. Two recent decisions demonstrate that ERISA preemption is complicated, except when it isn’t. In Liberty Mutual Ins. Co.v Donegan, Second Circuit Judge Dennis Jacobs explains the complicated nature of ERISA preemption. This opinion may be helpful for anyone to develop a better understanding of the topic and its history. (Shameless plug alert: you also may want to see the preemption chapter that I edit in ERISA: A Comprehensive Guide.)

Then there is the decision that demonstrates when preemption isn’t complicated.  Seventh


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What to Do About Employee Benefits When The Company is Headed Towards Insolvency

Posted in Executive Compensation, Fringe Benefits, Retirement Plans

If you are a board member or senior executive of a company that is rapidly failing, what do you about employee benefits? No one has ever liked my answer: freeze the benefits. This is counterintuitive advice for someone who is trying to keep the company afloat, and who would be personally affected by the loss of benefits. But let me explain why this is so important, using a complaint that was recently filed by the DOL, and the facts as they were alleged.

In January 2010, Home Valu ceased operations due to financial difficulties. Creditors then filed an involuntary petition …


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Join Us for Our Upcoming Webinar: Are You Ready for the New OFCCP Regulations?

Posted in Employment Issues, Other Articles

If you are a federal contractor or subcontractor, you will want to be sure your team is ready to handle its expanded affirmative opportunity requirements. Consider participating in Porter Wright’s upcoming OFCCP regulation webinars, or passing this invitation along to the person responsible for compliance.

Are You Ready for the New OFCCP Regulations?
Wednesday, January 15, 2014
2:15 p.m. EST

The most sweeping changes in federal affirmative action regulations in many years take effect in March 2014. The new regulations expand the affirmative action requirements for covered veterans and disabled persons. For the first time, federal contractors and subcontractors will …


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ESOP Trustee Indemnification Stymied by Arbitrator’s Legally Unsupportable Analysis – Schafer v. Multiband Corp.

Posted in ERISA Fiduciary Compliance, ESOPs, Retirement Plans

I am not a fan of binding arbitration in the context of ERISA plans, and a new Sixth Circuit decision, Schafer v. Multiband Corp., demonstrates why.

Two individuals (Schafer and Block) founded a company. As part of a series of corporate transactions, two employee stock ownership plans (“ESOPs”) were formed. Schafer and Block were appointed as trustees of the ESOPs, and entered into indemnification agreements with mandatory arbitration clauses. While the DOL was investigating its suspicion that the ESOPs had purchased stock at inflated prices, and with knowledge of this, Multiband entered into a purchase agreement to buy the …


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Frommert v. Conkright “Actuarial Heresy” is Back Again

Posted in ERISA Fiduciary Compliance, ERISA Litigation, Retirement Plans

Frommert v. Conkright, the Xerox “actuarial heresy” floor-offset plan case is back. This time, the Second Circuit has ruled that the new interpretation of the plan is unreasonable, and that ERISA’s “notice provisions” were violated.

Stating, “SPDs are central to ERISA,” the Court concluded that the SPD (summary plan description) did not satisfy 29 C.F.R. § 2520.102-3(l) because the SPD did not describe the offset provision in question in more detail. The Court held, “the Plan and its related SPDs violate ERISA’s notice provisions” and “Plaintiffs’ notice claims fall under Section 502(a)(3).” Frommert has been remanded to the district …


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Supreme Court Takes on Fifth Third Bancorp v. Dudenhoeffer ESOP Dispute

Posted in ERISA Litigation, ESOPs, Other Articles

As I mentioned in my Heimeshoff v. Hartford blog, the U.S. Supreme Court has agreed to review Dudenhoeffer v. Fifth Third Bancorp, now captioned Fifth Third Bancorp v. Dudenhoeffer. The Court granted certiorari on the question as originally framed:

Whether the Sixth Circuit erred by holding that Respondents were not required to plausibly allege in their complaint that the fiduciaries of an employee stock ownership plan (“ESOP”) abused their discretion by remaining invested in employer stock, in order to overcome the presumption that their decision to invest in employer stock was reasonable, as required by [ERISA], …


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Heimeshoff v. Hartford: Supreme Court Upholds ERISA Plan Document’s Three-Year Statute of Limitations for Benefit Claims

Posted in ERISA Litigation, Retirement Plans

I have been blogging about ERISA basic principles and respect for boundaries, and just got a little help from the U.S. Supreme Court. In Heimeshoff v. Hartford Life & Accident Insurance Company, a unanimous decision, the Court upheld the three-year statute of limitations set forth in the terms of the ERISA benefit plan document. The Court held that while a cause of action does not commence until the plan issues a final denial in the claims appeal process, the plan and its participants can agree to commence the limitation period before that time (here, at the proof of …


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Sixth Circuit 502(a)(3) Windfall in Rochow v. Life Insurance Company of North America — ERISA’s Delicate Balance Goes So Far Off Kilter That I Am Queasy

Posted in ERISA Fiduciary Compliance, ERISA Litigation

When you think about it, balance is really important. It is hard to imagine how we all stand steady on a planet that is rotating on its access and rotating around the sun. The last earthquake I experienced left me queasy afterward, and that is how I feel after reading a new decision. Curses (or thank you?) to Brian Hall, editor of our sister blog, employerlawreport.com, for forwarding.

Within days of writing the Dudenhoeffer v. Fifth Third Bank blog about a threat to ERISA’s delicate balance and importance of boundaries, we have yet another Sixth Circuit decision that blazes …


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Dudenhoeffer v. Fifth Third Bank at the U.S. Supreme Court: DOL Brief and the ESOP Sponsor / Fiduciary Boundary Dispute

Posted in ERISA Litigation, ESOPs

The DOL has filed a brief with the U.S. Supreme Court in the Dudenhoeffer v. Fifth Third Bank employee stock ownership plan (“ESOP”) dispute that made me think about Boundaries, a book about the importance of establishing boundaries, and compelling respect for those boundaries. In designing ERISA, Congress forged a delicate balance between protecting benefit plans and encouraging employers to provide those benefit plans. The U.S. Supreme Court reminded us in CIGNA v. Amara that this delicate balance includes carefully distinguishing the roles of plan sponsors and fiduciaries, even when one entity (e.g., the employer) wears both hats. The …


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Employee Benefit Plan Limits – Reference Chart for 2014 and Prior Cost-of-Living Adjustments

Posted in Retirement Plans

The Internal Revenue Code sets forth various dollar limitations on benefits, contributions, compensation under employee benefit plans. The IRS has announced limits for 2014 tax years. For your reference, the IRS Cost-of-Living Adjustments summarizes these dollar limitations, as modified by the IRS for cost-of-living adjustments (COLAs), for 2014 and prior years.…


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October 1, 2013 Health Care Reform Exchange Notice Deadline for All Employers Subject to the FLSA

Posted in Health Care Reform

As a reminder, under health care reform, all employers to which the Fair Labor Standards Act (“FLSA”) applies, not just “applicable large employers,” are required to distribute health care exchange notices to their employees by October 1, 2013.  Given that health care reform is chock full of big penalties, it puzzled me that I couldn’t find a penalty for failure to provide this notice. Last week, the DOL published Frequently Asked Questions that confirmed, “there is no fine or penalty under the law for failing to provide the notice.” Nonetheless, health care reform involves so many inter-related statutes, pages of …


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Join Porter Wright and GBQ for a breakfast seminar on Friday, October 11 on ESOPs

Posted in ESOPs

Employee Stock Ownership Plans (ESOPs):
A Tax-Advantaged Strategy for Growth, Liquidity and Succession Planning

In an uncertain tax and financial environment, business owners are increasingly looking at ESOPs as a potential strategy for tax-preferred growth and business succession planning. Join Porter Wright and GBQ Consulting LLC as we present a morning seminar discussing the ins and outs of ESOPs.

Friday, October 11
8:00 – 8:30 a.m.

Registration and Breakfast

8:30 – 10:30 a.m.
Program

Topics to be discussed include:

  • What is an ESOP?
  • Why adopt an ESOP?
  • ESOP financing considerations
  • ESOP valuation considerations
  • Tax planning for selling shareholders
  • Is an

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Porter Wright Presents Employee Relations Seminar Halloween Edition: Toil and Trouble . . .

Posted in Health Care Reform, Other Articles

Employee Relations Seminar Halloween Edition:
Toil and Trouble…

Please join the labor and employment group of Porter Wright as we address issues that will help keep your workforce out of trouble.

Tuesday, Oct. 8, 2013
7:45 – 8:30 a.m.
Registration and Breakfast
8:30 a.m.- 11:45 a.m.
Program

Lockkeepers Restaurant
8001 Rockside Road
Valley View, OH 44125

Topics Include:

Beware! New Employment Cases That Will Curl Your Hair

Ghost Stories: What Is Happening Now In Workers’ Compensation

Ghosts, Goblins & Ghouls: Data and Devices That Never Stop Giving

Boo! Are You Afraid Of The Deadlines?  Health Care Law Update

There is …


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HIPAA Omnibus Rule – September 23, 2013 Deadline Reminder

Posted in Health and Welfare Plans

We hope you had a wonderful summer!  Back in May, we alerted our readers to the deadline for complying with the HIPAA Omnibus Rule:  September 23, 2013. That may have seemed like a long way off at the time, but here it is September already.  Health care plan sponsors who have not yet taken action to ensure compliance with the Rule need to make this a priority.  For example, plan sponsors may need to update and distribute new notices of privacy practices, revise and execute new and/or revised business associate agreements, and ensure that their privacy and security policies …


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Technology Law Source 2.0

Posted in Porter Wright News

We wanted to take a moment to share the redesigned Porter Wright Technology Law Source blog with you.

Technology Law Source is designed for readers to quickly and easily learn about concepts that cut across the traditional lines of intellectual property and extend to evolving technologies, as well as concerns  with privacy and data security.

Our authors routinely update the blog to provide the latest news and information about a range of areas relating to the industry, including:

  • Copyright
  • Data breach
  • Data security
  • Database management
  • Electronic commerce
  • Electronic discovery
  • Electronic medical records
  • Enforcements, disputes, and litigation
  • HIPAA and HITECH Act

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U.S. Supreme Court decision: U.S. Airways, Inc. v. McCutchen

Posted in ERISA Litigation

The United States Supreme Court issued an opinion today in an ERISA case regarding the breadth of Section 502(a)(3) relief, and the common-fund doctrine. While the decision was unanimous on the primary issues, the Court surprised us with a 5-to-4 split on a secondary issue. Overall, the decision in U.S. Airways, Inc. v. McCutchen is favorable for employers sponsoring health care plans. The decision is also favorable for health care plan participants in the aggregate because it allows for control of plan costs, and premiums, at a critical time when plans are gearing up for 2014 health care reform cost …


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Employer Excise Taxes Under Health Care Reform – Contraceptive Coverage Mandate, New Proposed Regulations and HHS Due Process and Privacy Report Deadline Was 1/1/13

Posted in Health and Welfare Plans, Health Care Reform

As you may have heard, the U.S Supreme Court denied Hobby Lobby an injunction against the PPACA contraceptive coverage mandate. Employers who maintain health care plans are required to pay excise taxes for failure to comply with a particular aspect of the law, regardless of whether coverage is affordable. As we previously explained, these nondeductible taxes are computed per affected individual, per day, and they may be substantial. Hobby Lobby will purportedly accrue taxes of $1.3 million per day if it continues to maintain its plan, but fails to provide the mandated coverage.

On December 28, the IRS issued


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Circuit Decision Reminds Employers: Get Your Ducks in a Row at the EEOC Charge Stage and, for Goodness Sake, Know Your Own Policies

Posted in ERISA Litigation, Health and Welfare Plans

On our sister blog — Employer Law Report Sara Jodka analyzes a recent case — Gaglioti v. Levin Group, Inc. (6th Cir. Dec. 13, 2012), which serves as a good reminder to employers to pin down their reasoning for terminating an employee at the start, and stick to it.

In addition to his other claims, Gaglioti claimed that he was fired in response to the company’s fear of higher health costs for his wife, and that this was discriminatory under ERISA Section 510. Such a claim requires the plaintiff to establish “(1) prohibited employer conduct (2) taken for the …


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‘Tis the Season For Holiday Workplace Issues – Download our Holiday eBook for Employers

Posted in Employment Issues

Last week, on our sister blog the Employer Law Report, we ran a five-part series that addressed the Top 5 Holiday Headaches for Employers. We have taken the series, along with a special “stocking stuffer” that tackles three prickly FMLA holiday questions, and wrapped them up for you into an eBook. For your reference, the topics included in the eBook are:

  1. Three FMLA Stocking Stuffers: How to Avoid a Big Lump of Coal
  2. Avoiding Holiday Party Liability When the Office Santa Tries to Teach His Employees a Few “Reindeer Games”
  3. Being Inclusive Without Being A Grinch
  4. “Holiday Attire” Does

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How Do You Jack a 401(k) Plan? Santomenno v. John Hancock Life Insurance Company

Posted in ERISA Litigation, Retirement Plans

If you are the fiduciary of an ERISA plan that invested in John Hancock group variable annuity contracts, we hope you have heard that three individuals have filed a lawsuit, claiming to be representing your plan and its participants and beneficiaries. You will not be receiving service of process.

Santomenno v. John Hancock Life Insurance Company is an “excessive fee” case. The Third Circuit held that a participant may bring ERISA Sections 502(a)(2) and (3) claims without first making demand upon the plan trustee who entered into the contract with the defendant, and without joining the plan trustee. The U.S. …


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