The Vita Blog February 2018

Question: An employee confided to our HR department about an incident that made her uncomfortable, where her supervisor made a comment about her skirt. How should we handle this?

Answer: A company has an affirmative duty to conduct a thorough investigation every time it is made aware that harassment may be taking place in the organization. Inappropriate sexual comments, discrimination based upon gender and/or sexual orientation, and inappropriate behavior all fall under the definition of illegal sexual harassment. The Equal Employment Opportunity Commission (EEOC) and state agencies take harassment complaints seriously, and failing to conduct an investigation could leave a company subject to liability for a sexual harassment discrimination claim as well as owing damages if the company does not act immediately.

Although not every inappropriate comment will be viewed as harassment, every report of such should be treated with respect and followed up in accordance with company policy. Typically, the nature of the complaint will determine how you should begin the investigation. In the case of your employee, consider taking the following steps:

• Listen to your employee’s concern with consideration and advise the employee that the company takes reports of wrongdoing seriously and will investigate thoroughly, and that confidentiality will be observed to the extent practical to protect everyone’s privacy.
• Ask if the employee had responded to her supervisor and let the supervisor know that the comments made her uncomfortable.
• Ask if there were any other witnesses to the comments and if this was a one-time remark or if comments on the employee’s appearance have occurred previously with the employee or others.
• Determine what the employee wants or expects will be done as a result of bringing this concern to you (either simply wanting the remark(s) to stop or more aggressive action).
• Tell the employee that you will be investigating this issue and addressing it with the involved party to make him or her aware that the comments caused discomfort so that the company can ensure that this no longer occurs.
• Let the employee know that retaliation for making a report of misconduct or harassment is forbidden by the company and that she should immediately advise you of any perceived retaliation or of further incidents of misconduct or harassment.
• Be sure that during the initial interview with the employee, you obtain:
• The description of each incident, including date, time, place, and nature of conduct.
• A description of her responses to the individual with each incident.
• The names of any witnesses to the alleged incident.
  
  

Although this type of situation can be difficult when the accused party holds a supervisory position in the company, the law still holds the company accountable for following up on complaints of inappropriate behavior, conducting a prompt and impartial investigation, and taking appropriate action if the claim is substantiated.

If the investigation does not result in a violation of company policy or harassment, the matter should still be addressed with the supervisor and others in management to ensure future issues do not arise.

Question: Are there any requirements for a company to provide legal notices in languages other than English for employees who do not speak English?

Answer: The Department of Labor provides many legal notices and posters in multiple languages, but some posters are available only in English. In most cases there is no requirement for a company to provide legal notices to employees in a language other than English. However, there are exceptions for notices for the Family and Medical Leave Act (FMLA), Migrant and Seasonal Agricultural Worker Protection Act (MSPA), Executive Order 13496 (Notification of Employee Rights Under Federal Labor Laws), Occupational Safety and Health Administration (OSHA), and in some state statutes. 

For FMLA, you are required to provide the notice for workers in another language if your workforce includes a significant portion of workers who are not literate in English. MSPA requires you provide the notice in Spanish or another language common to migrant or seasonal agricultural workers who are not fluent or literate in English. Finally, for Executive Order 13496, federal contractors and subcontractors are required to post translations of both the physical and electronic postings if a significant portion of a contractor’s workforce is not proficient in English. The required notices should be in the languages the employees speak. Lastly, OSHA regulations require employers to provide employees with information and training on hazardous chemicals in the workplace. If the employees do not understand English, the employer must inform and train the employees in the language that they understand. 

Some final thoughts around posting notices: Even though you are not legally required to provide most legal notices in a language other than English, it’s important to consider the needs of your employees. Ultimately, you want your employees to understand their rights and responsibilities for their own well being and the for the best interests of the company. As a best practice, if you have employees whose first language is not English, make a concerted effort to accommodate them and provide legal notices in languages they can understand.

This article has been published in partnership with ThinkHR.

Marijuana regulations are rapidly changing, keeping both employers and lawmakers on their toes. With expanding legislation legalizing medical and recreational marijuana spreading across the country, what used to be a clear workplace policy enforced by HR and safety managers — zero tolerance — is becoming hazier.

A recent Gallup poll reported that 64 percent of Americans support legalization. Legal marijuana sales were predicted to reach $9.7 billion in North America last year, marking a 33 percent increase over 2016, according to cannabis industry analyst Arcview Market Research. This report also predicts that the legal cannabis market will grow 28 percent annually by 2021 as more states legalize marijuana for recreational use and today’s markets mature, as long as the federal government doesn’t crack down on state-legal cannabis.

The Legal Climate

Nine states and the District of Columbia have legalized marijuana for recreational use: Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, Vermont, and Washington. Twenty-nine other states have legalized medical marijuana. Federal laws still maintain that marijuana is an illegal Schedule 1 drug, and the Occupational Health and Safety Administration (OSHA) supports consistent testing and regulation of the drug in the workplace.

Businesses have a duty to protect employees and customers by providing a safe and healthy work environment. Historically, this meant that employers could develop and administer a zero tolerance policy against substance abuse in the workplace with the right to test for the presence of those substances. Multi-state employers may find it confusing to apply the policy consistently across the organization with operations in states that have different laws about marijuana. Are they still able to use a consistent policy across the organization or does it need modification based upon the differing state laws?

What about testing for cannabis intoxication based on reasonable suspicion? Edible products, oils, and vape devices delivering concentrated THC in effect eliminate the tell-tale odor once associated with the drug. Further, tests for marijuana could yield positive results even if the drug hasn’t been used recently. One development is that there are new oral swab tests on the market that can detect actual impairment through saliva with a shorter detection window that contrasts with urine tests that don’t necessarily correspond to current impairment levels.

Where Employers Stand Now

For states without marijuana laws, employers can keep the current zero tolerance policy. Federal contractors subject to the Drug-Free Workplace Act can continue to follow the requirements under the law to maintain eligibility for those contracts.

In states where medical marijuana is allowed, however, employers may have a duty to accommodate its usage, like accommodations for other prescription drugs. The accommodations might include moving the employee to a less safety-sensitive position, changes in work hours, or other accommodations that would be considered reasonable and not cause undue hardship to the business. Employers should consult with legal counsel if these situations arise.

While the situation is still hazy, for employers in states with legalized recreational marijuana, most experts believe that employers can continue enforcing policies restricting marijuana use on the job.

For now, review your current drug and alcohol policy. Seek legal counsel if operating in areas where marijuana is legal to ensure that any court interpretations are considered in drafting or refining the policy. Next steps should include the following:

• Define what is considered substance abuse and what types of substances are covered under the policy.
• Outline the process the company will take for determining reasonable suspicion for testing, the procedures for allowing the employee to remain at work or be sent home, and the penalties for infractions of the policy.
• Affirm that employees who disclose medical issues or request accommodations relating to a disability will be protected from discrimination and retaliation.
• If testing is part of the policy, review options for the oral swab technology that could yield better results for recent marijuana usage.
• Communicate the policy to all employees.
• Train managers regarding the policy, procedures to follow, and how to detect signs of impairment.
  

In conclusion, even though the trend continues towards legalizing medicinal and recreational marijuana, none of the laws extend to employers being required to allow its use in the workplace or to allow an employee to work impaired. Maintaining a policy and consistent practice that balances safety concerns with business needs is important to protect the business, its customers and employees.

This applies to all employers offering medical plan coverage. The online disclosure must be completed by March 1, 2018 (assuming a calendar year ERISA plan).

Overview

Federal law requires that employers provide annual notification of the Medicare Part D Prescription Benefit "creditability" to employees prior to October 15th.  However, that same law also requires plan sponsors to report creditability information directly to the Centers for Medicare and Medicaid Services (CMS) within 60 days of the first day of the ERISA plan year.  Many employers have a January 1 ERISA plan year (which may – or may not – coincide with your renewal or policy year); so for many employers, the deadline is in a couple of weeks!

 Mandatory Online Creditable Coverage Disclosure 

Virtually all employers are required to complete the online questionnaire at the CMS website, with the only exception being employers who have been approved for the Retiree Drug Subsidy (RDS).  This disclosure requirement also applies to individual health insurance, government assistance programs, military coverage, and Medicare supplement plans.  There is no alternative method to comply with this requirement!  Please remember that you must provide this disclosure annually.

The required Disclosure Notice is made through completion of the disclosure form on the CMS Creditable Coverage Disclosure web page.  Click on the following link: CMS Disclosure Form.

Employers must also update their questionnaire if there has been a change to the creditability status of their prescription drug plan, or if they terminate prescription drug benefits altogether.

 Detailed Instructions and Screenshots Available

If you would like additional information on completing the online disclosure, a detailed instruction guide is available online.  The instructions also include helpful screenshots so that you will know what data to have handy.  Click on the following link:  CMS Notification Instruction Guide.

 Helpful Tip for Vita Benefits Group Clients

The Medicare Part D creditability status of your medical plans is outlined in the Welfare Summary Plan Description that we provide to all clients.  Please refer to this document as you will need this information to complete the online disclosure. 

This article has been published in partnership with ThinkHR.

Question: Our company is considering adopting a paid family leave program for employees. I think I read something indicating paid family leave was addressed in the tax bill that passed late last year. Is that true?

Answer: First of all, kudos to you. Paid family and medical leave policies are a great benefit for employers to adopt to stay competitive in the current market and have become a necessity in the several states that have adopted paid family leave laws or regulations.

To answer your question, you are correct. The federal Tax Cuts and Jobs Act enacted in late 2017 creates § 45S of the IRS Code to provide certain employers a tax credit for offering paid family and medical leave to employees. To be eligible for the credit, the employer’s paid family and medical leave policy must:

• Be voluntarily implemented by the employer (i.e., the employer cannot be in a state or locality that requires employers to provide paid family and medical leave). Additionally, leave paid by a state or local government does not count.
• Be adopted in writing.
• Provide pay for at least two weeks of a full-time employee’s family and medical leave. Part-time employees must also be offered a commensurate amount of paid leave on a pro rata basis, taking into account the number of hours a part-time employee is expected to work each week compared to an equivalent full-time employee. The credit maxes out at 12 weeks of paid family and medical leave.
• Provide that employees will be paid at least 50 percent of their normal pay while on leave.

The amount of the credit an eligible employer receives depends on the level of pay provided to employees. Employers who choose to pay employees at the 50 percent threshold will receive a 12.5 percent tax credit; the credit increases by 0.25 percent (capping at 25 percent overall) for each percentage point above 50 percent of normal pay the employer pays employees on leave. For example, if an eligible employer chooses to pay employees on paid family and medical leave 60 percent of their normal pay, then an eligible employer’s tax credit would be 15 percent.

The tax law defines qualifying employees as those who meet the definition of employee under the Fair Labor Standards Act of 1938 (29 USC § 203(e)), who have worked for the employer for at least one year and, for the preceding year, had compensation of 60 percent or less of the compensation threshold for highly compensated employees. Paid family and medical leave is leave that is protected under the Family and Medical Leave Act (FMLA). If the employee’s leave is paid vacation leave, personal leave, or other medical or sick leave, then that is not eligible family and medical leave for purposes of the tax credit.

Employers that are not subject to the FMLA may also receive tax credits for paid family and medical leave if they otherwise provide employees the same protections under the FMLA and meet the other requirements discussed above, such as having a written policy. The policy must ensure that the employer will not interfere with, restrain, or deny an employee the ability to take leave pursuant to the policy or retaliate against any employee for exercising their rights under the policy.

This tax credit is not currently a long-term benefit for employers. Instead, it is in effect for two years and sunsets on December 31, 2019 unless re-enacted by Congress.

If you choose to voluntarily implement a paid family and medical leave policy, we recommend you consult with counsel to ensure your written policy meets all technical requirements of the new tax law.

This article has been published in partnership with ThinkHR.

Wage and hour laws and regulations are always a hot topic. Many employers spent a good part of 2016 ensuring compliance with the Department of Labor (DOL) Wage and Hour Division’s proposed changes to overtime rules that were scheduled to go into effect in 2016. More recently, the DOL issued new guidance for classifying unpaid interns. Thus, as compliance with wage and hour laws remains in the forefront of discussion, this is a great opportunity for employers to evaluate their job descriptions to ensure employees are properly classified under wage and hour laws.

An employee’s job description plays an important role in determining whether the employee is exempt from overtime compensation and minimum wage requirements under the Fair Labor Standards Act of 1938 (FLSA). The FLSA requires nonexempt employees be paid federal minimum wage (or more, if state or local laws or ordinances require more generous compensation) for all hours worked and overtime pay of time and a half the regular rate of pay for all hours worked over 40 in a workweek.

Minimum wage and overtime pay requirements do not apply to exempt employees — those that are employed as bona fide executive, administrative, professional, and outside sales employees, as well as certain computer employees. Exempt employees are paid on a salary basis and must meet a test specific to their respective duties (duties test) to determine whether they are eligible for the exempt status.

Under current overtime regulations, the minimum salary someone can be paid to be considered an exempt employee is $455 per week, though that is expected to increase once the final overtime rule is amended and implemented. To that end, on July 26, 2017, the DOL issued a request for information (RFI) to gather stakeholder feedback regarding the salary level ($917 per week) implemented by the final rule. It is expected that the final salary rule will lie somewhere in the middle of the current $455 and originally proposed $917 range, though the DOL also appears to be exploring multiple standard salary levels.

Job descriptions provide significant evidence when applying the above-mentioned duties test and help determine whether an employee (even those currently making a salary of $455 per week) truly qualifies for exemption. If kept current and accurate, they provide the employer with a form of irrefutable written record that clearly establishes an employee’s duties and exempt status during a wage and hour audit.

Job descriptions should explain the essential tasks of the position, any elements required for the position, and any necessary individual and professional qualifications (such as experience, education, physical ability, and language proficiency), and should reflect the employer’s expectations for an employee’s output, performance, and conduct. If the nature of a position has changed over time, such as if certain position duties have been eliminated due to a change in the employer’s business, the market, or the industry, or if an employee in a position is required to take on more duties for the employer, then updating job descriptions to reflect the current requirements of the job may provide the employer with protections against any future employee-based claim that the job description does not accurately reflect job duties or that an employee has been misclassified under wage and hour laws.

One of the best methods for auditing current positions held by one or more employees is to obtain feedback from the employee. This protects an employer in both wage and hour and other employment law matters. While employees should not be permitted to create their own job descriptions, they have vital information about what they do on a day-to-day basis and how they view their position requirements. By obtaining this information, an employer may limit exposure to claims that job descriptions don’t accurately reflect the position.

Of course, there is always a delicate balance involved in creating and maintaining job descriptions. A job description should not be too detailed; however, it should include as many job duties and expectations as possible, while providing employers a sufficient amount of flexibility. There are certain requirements that should always be included in a job description:

• Physical requirements for the position (such as lifting, standing, walking).
• Special attendance requirements.
• Exposure to particular weather, chemicals, or other hazards involved.
• Unusual job stress or requirements.
• Special work requirements (frequent overtime, some nights and weekends required, etc.).
• Reservation of the employee’s need to perform other duties as required by business needs.

The job description should not include any duties an employee would not be expected to perform.

Ideally, employees will regularly be updated about any changes to their job descriptions. This informs employees of job expectations, gives them the opportunity to provide feedback, and protects the employer from any claim that the job has changed and does not accurately reflect the current position.

Ensuring accurate and up-to-date job descriptions aids employers in other areas of employment law. Therefore, employers have even more incentive to regularly review and update job descriptions. Employers may choose to consult with employment counsel when auditing and/or updating their job descriptions.

In recent years, prescription drug pricing has catapulted to the top of the news cycle for healthcare. It is often cited as the top driver of ever-increasing healthcare spending in the U.S. and medical cost trend in general. The pricing and distribution of prescription drugs has many elements that affect overall prescription drug cost. Let’s examine one of the largest elements: Pharmacy Benefit Managers (PBM).

A PBM is the intermediary between a health plan, pharmacy, and prescription drug manufacturer. Some of the responsibilities of a PBM include:

• Review and process prescription drug claims
• Contract with retail pharmacies for competitive drug pricing
• Develop and manage drug formularies, which is the list of covered drugs for a carrier or medical plan
• Operate mail order pharmacy programs
• Operate specialty pharmacy programs
• Negotiate discount or rebate programs with various drug manufacturers
• Establish clinical programs and policies
• Provide member tools/resources

PBMs are a critical intermediary in containing costs, as drug manufacturers continue to increase the price of existing drugs (remember the EpiPen price hike in 2016?) and new high cost drugs continue to enter the market (like Sovaldi at $1,000 a pill, or $85,000 for the full regimen). In an effort to contain rising costs, PBMs review both the effectiveness of a drug and the underlying manufacturer’s cost of a drug to determine coverage and tier within a prescription drug formulary. For example, if there are two drugs that provide the same treatment, but one costs more than the other, the more expensive version may have a higher copay/higher tier, or possibly even be excluded from coverage all together. PBMs also ensure appropriate utilization of drugs by placing restrictions such as requiring prior authorization, or step-therapy before covering the drug.

From a consumer standpoint, these actions seem like painful annoyances and roadblocks to obtaining necessary prescriptions. However, from an employer standpoint, the oversight of PBMs prevents improper drug spending and helps to reduce overall prescription drug plan spend. Self-insured employers have long been aware of the role of PBMs, as many large self-insured employers use PBMs as their direct prescription drug plan and even share in savings through drug manufacturer rebates. Employers with fully-insured plans have no control over PBM selection and do not participate in any drug manufacturer rebates. However, self-insured employers should still be mindful of the PBM’s role in their plan, since prescription drug spending and utilization directly impact a carrier’s renewal rate increase each year.

While PBMs are supposed to help reign in prescription drug costs, as of late, they are also under the microscope for being part of the overall prescription drug spend problem. For instance, CVS Health, a nationwide drug store, is purchasing Aetna, an established nationwide health insurer. With the announcement of the proposed purchase, both CVS and Aetna are touting prescription drug savings as a positive result of the merger, which would benefit consumers. Naysayers point to the merger of United Healthcare and PBM OptumRx as an example of why it won’t work, as that merger did not provide as much direct-to-consumer savings as hoped. Those opposed to the acquisition also say such mergers simply make it easier for the newly-formed company to reap greater savings from manufacturer negotiations since savings would not have to be shared between the insurance carrier and PBM – and do not get passed onto the consumer at all.

Also in the news, Anthem Blue Cross is set to break-up with the largest stand-alone PBM (Express Scripts) in 2020 and is embroiled in a lawsuit with them over negotiated drug price savings. Drug manufacturers are pointing fingers at PBMs for not passing along drug savings in the form of rebates to plan sponsors and consumers, instead, pocketing the money for themselves. In turn, groups such as the Health Transformation Alliance comprised of over forty high-profile companies are putting pressure on PBMs for increased transparency in their pricing, rebates, and discounts.

Given all the activity around CVS and Aetna, Anthem and Express Scripts, and Amazon trying to enter the prescription drug market, and higher cost medications and gene therapies coming to market, PBMs will remain in the spotlight for at least the next few years to come!

This article has been published in partnership with ThinkHR.

Question: Any recommendations on how to conduct an internal wage and hour audit?

Answer: Yes, we do! First, kudos to you and your organization for considering this practice. Some organizations don’t conduct wage and hour audits because they can be costly and time consuming. However, choosing to conduct them shows that you are being proactive and trying to protect your organization from legal and financial liability due to non-compliance with federal Fair Labor Standards Act (FLSA) and state wage and hour laws. You should conduct these audits periodically, such as at the beginning of your fiscal year, when your organization undergoes restructuring, or when there are significant changes to FLSA regulations and state wage and hour laws.

As general guidelines, when you conduct an internal wage and hour audit, consider the following:

• Determine the nature and scope of the audit. 
  Which employees, positions, and issues do you want to review? Which records will you review? For example, job descriptions, payroll records, performance documents? What changes in the law may be driving the audit?
• Determine who in your organization should lead the audit.
  Typically, these audits are led by a senior human resources leader or a senior company manager, though employers may choose to conduct them under the direction or guidance of inside or outside legal counsel for compliance or other legal strategy purposes. If the audit is not conducted under the direction of legal counsel, it’s always a good idea to consult your employment law counsel or tax advisor (depending on the issue) about any legal or compliance questions that may arise during the process.
• Identify what you want to document about the audit.
  At the very least, document the scope, purpose, and results of the audit. As a best practice, you should also document who is conducting the audit, any issues discovered, and the plan for how you will address these issues.
• Consider some of the common issues that may drive Department of Labor (DOL) audits and include them in your audit. 
  DOL audits are usually done in response to complaints received about an organization. Some of the common complaints revolve around whether:
  • Workers are properly classified as either: (1) exempt or nonexempt from overtime, or (2) independent contractors or W-2 employees.
  • Overtime pay is properly calculated
  • Compensable time is accurately captured and recorded.
  • Employees are given adequate opportunities to take meal and rest breaks.
  • Employers are complying with scheduling regulations and child labor laws.
  • Payroll practices meet various requirements.

Keep in mind the DOL can conduct a wage and hour audit at any time and is not required to provide you with notice. Additionally, many factors — internal and external — could cause your organization to suddenly be out of compliance with wage and hour laws. Incorporating periodic internal wage and hour audits into your annual business practice as a precautionary measure may help minimize risks to your organization. 

Finally, while conducting an internal audit is important, be aware of other legal implications that could arise from the auditing process. If you discover federal or state wage and hour law violations during the audit, you could expose your company to a willful violation of wage and hour laws in subsequent litigation if you do not correct the issues immediately. Consulting with outside legal counsel during your audit process can help mitigate your risks in the event that your wage and hour practices are challenged.