Professional Service Agreement

Week in Review

June 19, 2015

IRS transition relief for small companies offering employer payment plans ends on June 30
Under the Patient Protection and Affordable Care Act (ACA), employers are no longer allowed to reimburse employees for individually purchased health insurance policies, because they violate the ACA’s market reforms. However, the IRS had issued transition relief for small employers that offered this type of arrangement to provide them with additional time to obtain group health coverage. Small employers should be aware that this transition relief is ending on June 30, 2015. Any small employer that still offers this type of arrangement after June 30 could be subject to an excise tax of $100 per employee per day until the violation is corrected. Since 1961, the IRS had sanctioned the reimbursement by an employer of individually purchased health insurance policies. IRS rules permitted an employer to reimburse employees for premiums paid for individual policies without that reimbursement being included in income. However, the ACA contains certain market reforms that apply to group health plans. Two of the reforms that come into play with respect to employer payment plans are the annual dollar limit prohibition and the preventive services requirements. The IRS provided small employers with transition relief from the $100 per employee per day excise tax. The IRS said it would not assess penalties against a small employer that pays or reimburses its employees for individual health insurance premiums or Medicare Part B or Part D premiums between January 1, 2014 and June 30, 2015. For purposes of this temporary relief, a small employer is an entity that employed an average of fewer than 50 full-time employees (including full-time equivalent employees) during a period of at least six consecutive calendar months, as chosen by the employer, during 2013, for purposes of determining the employer's status in 2014, and during 2014, for purposes of determining the employer’s status in 2015.

Battle over United Airline’s reasonable accommodation transfer policy ends with $1M settlement
United Airlines will pay over $1 million to resolve an EEOC lawsuit challenging the transportation giant’s policy of making those who require transfers as a reasonable accommodation under the ADA compete for vacant positions. The litigation garnered national attention in a lengthy and complicated battled that began in the Northern District of California, moved to the Northern District of Illinois, and took a trip to the Seventh Circuit that did not turn out well for the airlines. The EEOC challenged the United Airline’s transfer policy on the grounds that it violated that ADA, which requires employers to provide reasonable accommodations to employee or job applicants with disabilities unless doing so would impose an undue hardship. The commission contended that by requiring workers with disabilities to compete for vacant positions for which they were qualified and which they needed in order to continue working, the practice often prevented employees with disabilities from continuing their employment with the company. The Seventh Circuit found that "the ADA does indeed mandate that an employer assign employees with disabilities to vacant positions for which they are qualified, provided that such accommodations would be ordinarily reasonable and would not present an undue hardship to the employer." The Supreme Court denied United Airline’s petition for cert on May 28, 2013. On June 11, the district court approved the consent decree resolving the suit. Under the deal, United Airlines will pay $1,000,040 to a small class of former employees with disabilities and will make policy changes nationally. The company will revise its ADA reassignment policy, train employees with supervisory or HR responsibilities about the policy changes, and provide reports to the EEOC on disabled employees who were denied a position as part of the ADA reassignment process. "If a disability prevents an employee from returning to work in his or her current position, an employer must consider reassignment," EEOC Regional Attorney William Tamayo commented. "As the Seventh Circuit's decision highlights, requiring the employee to compete for positions falls short of the ADA's requirements. Employers should take note: When all other accommodations fail, consider whether your employee can fill a vacant position for which he or she is qualified."

Walmart settles suit over manager’s alleged harassment of Gambian Muslim employee
Wal-Mart Stores East, LP, has agreed to pay $75,000 and furnish significant equitable relief to bring to an end the EEOC’s national origin and religious harassment and retaliation lawsuit on behalf of an employee who is Gambian and a Muslim. The purported discrimination in violation of Title VII was allegedly at the hands of a store manager. The employee, an asset protection coordinator, was harassed by the store manager at the Walmart store in Landover Hills, Maryland, according to the EEOC’s complaint. The store manager frequently made offensive comments about the employee’s national origin and religion, the federal agency said in a June 12 release, including telling him that he should "go back to Africa," mocking his accent, and saying that "all Muslims do is blow up buildings and people." After the employee complained about the harassment, which was directed not only to him but also to other employees, and participated in discrimination investigations, things got worse. According to the EEOC, the store manager unlawfully retaliated against the employee, including threatening to fire him, placing him in a one-year "coaching period," and telling other employees not to cooperate with him in the performance of his job duties. In addition to the $75,000 in monetary relief that will go to the employee, the 30-month consent decree approved by the court enjoins Wal-Mart Stores East from future discrimination based on national origin or religion or from engaging in unlawful retaliation.

New Oregon law will protect employees who ask about or disclose wages
Oregon Governor Kate Brown has signed legislation that makes it an unlawful employment practice to discipline an employee who inquires about or discloses wage information, with a limited exception. The measure also provides protection to an employee who makes a charge, files a complaint, or institutes a proceeding stemming from the disclosure of the wage information made by the employee. Where the law is violated, aggrieved employees have the right to a private cause of action. The new law is effective January 1, 2016. Among other things, H.B. 2007 makes it an unlawful employment practice for an employer to “discharge, demote or suspend, or to discriminate or retaliate against, an employee with regard to promotion, compensation or other terms, conditions or privileges of employment” because the employee has:

• Inquired about, discussed or disclosed the employee’s own wages or the wages of another employee; or
• Made a charge, filed a complaint, or instituted, or caused to be instituted, an investigation, proceeding, hearing, or action based on the wage information disclosure made by the employee.

There is an exception that removes theses protections when employees who have access to employee wage information as part of their job functions disclose employee wages to individuals not authorized to access that information, unless the disclosure is made in response to a charge or complaint or is in furtherance of an investigation, proceeding, hearing, or action, including investigations conducted by the employer. An aggrieved individual may file a civil action in circuit court, which may order injunctive relief and any other equitable relief that may be appropriate, including but not limited to reinstatement or the hiring of employees with or without back pay. Back pay is limited to the two-year period immediately preceding the filing of a complaint with the Commissioner of the Bureau of Labor and Industries, or if a complaint was not filed before the action was commenced, the two-year period immediately preceding the filing of the action. The court may also award the prevailing party costs and reasonable attorney fees at trial and on appeal. Stay tuned to see if additional states follow suit.