Temporary Waiver of ACA Penalties for Small Employers’ Individual Insurance Premium Reimbursement Plans

affordable-care-act-generic-graphic-hearstLast week, the IRS announced the waiver (for 2014 and the first half of 2015) of the penalty for “small” employers that reimburse employees for individual health insurance premiums. To the IRS, “small employer” means an employer that normally employs fewer than the equivalent of 50 full-time (30 hours/week) employees. You can read the entire notice here.

We have previously posted about the IRS and DOL position that employer reimbursement of employees’ individual health insurance premiums—either inside or outside of a public exchange—are “group health plans” that violate the Affordable Care Act’s insurance market reforms (links to our related posts follow this one). This latest IRS notice confirms their previously announced position, and clarifies that even a reimbursement program that treats the reimbursement as taxable gross income to employees (“after-tax”) violates the ACA if the employer makes the payment only as reimbursement for health care and not to employees who do not have those expenses.

We expect the ACA rules and deadlines to continue to evolve, so we are advising our clients to stay tuned and check in with legal counsel if in doubt over compliance requirements and non-compliance penalties.  We will continue to keep you posted as news develops.

 

 

Illinois Enacts Secure Choice Savings Program

Illinois Secure Choice Savings ProgramOn January 4, 2015, outgoing Illinois Governor Patrick Quinn signed The Illinois Secure Choice Savings Program Act, requiring any business in operation for at least two years that has 25 employees or more in Illinois, and that does not have a qualified retirement plan, to offer its employees an individual retirement savings plan by June 1, 2017.

Covered employers will be required to enroll employees into a newly created, state-sponsored Roth IRA program that comes with a default 3% payroll deduction contribution. Employers will not be required to contribute. Employees will be able to choose a different contribution amount or opt out of the program entirely, though supporters say they expect most employees who currently have no retirement savings option at work will choose to participate.

None of this will happen immediately. The Act contains only an outline of the program and provides for a board to be appointed that will design the final program during a planned 24-month startup period. But before the board can take significant action, it must obtain start-up funding for the program, through future state appropriations or donations. Once the board obtains funding and designs the program, employers will have nine more months to enroll employees before facing penalties.

We will keep you informed once solid information and directives are available.

The Courts Continue to Debate Restrictive Covenant Enforcement in Illinois – UPDATED 2/20

From time to time, other attorneys with our firm will contribute blog posts on items that may be of interest to members of the labor and employment law community. Today, we are fortunate to have a post contributed by Jason Hirsh, a partner in Levenfeld Pearlstein’s Litigation Group. Jason’s post discusses current Illinois cases at the forefront of labor and employment law that frequently come up when employers draft, or seek to enforce, restrictive covenants in their employment agreements in this changing legal climate . . .

employent contract

Courts in Illinois are in the midst of a significant legal debate relative to whether a post-employment restrictive covenant involving an at-will employee can be enforced if the employee has less than two years of continued employment. This two-year bright line rule first blossomed in the often cited Fifield v. Premier Dealer Servs., Inc., 373 Ill.Dec.379 (1st Dist. 2013) decision. The debate continues to play out in the Chicago federal court.

In Montel Aetnastak, Inc. v. Miessen, 998 F.Supp.2d 694, 716 (N.D. Ill. 2014), Judge Castillo refused to apply the two-year bright line rule presumably adopted in Fifield. Judge Holderman, on the other hand, in Instant Technology, LLC v. Defazio, 12 C 491, __ F.Supp.2d __, 2014 WL 1759184 at *14 (N.D. Ill. 2014), took a contrary view.

On February 6, 2015, in Bankers Life and Casualty Company v. Richard Miller, et al., Case No. 14 CV 3165, Judge Shah waded into this controversy and rejected the two-year bright line rule. Instead, Judge Shah concluded that not only has “the Illinois Supreme Court not spoken on this issue”, but that case law does not support the argument that two years of employment is “necessary” to support a restrictive covenant.

This is a critically important issue affecting employers. Given the obvious uncertainty in the area of restrictive covenant enforcement, we recommend other forms of consideration, such as bonus payments, be considered.

Read the Bankers Life and Casualty Company v. Richard Miller, et al., Case No. 14 CV 3165 decision.

UPDATE (2/20/15) 
On the heels of Bankers Life, on February 13, 2015, in Cumulus Radio Corp. v. Olson, et al., Case No. 15-cv-1067 (C.D. Ill.2015), Judge McDade of the federal court in Peoria, Illinois granted an employer’s motion for a temporary restraining order stating “the Court does not believe that the Illinois Supreme Court would adopt the bright-line test announced in Fifield.”  Judge McDade added that the two-year bright line rule “suffers from a number of analytical problems that make it unsatisfying.”  Judge McDade also stated it also suffers from a “failure to give weight to the reason that an employee’s at-will employment ended.”  Favoring a case-by-case analysis, akin to that suggested by Bankers Life, Judge McDade further criticized the two-year bright line rule stating “[s]uch a rule is overprotective of employees, and risks making post-employment restrictive covenants illusory for employers subject completely to the whimsy of the employee as to the length of his employment.”

 

Are You Ready for 2015?

checkEach year, LP’s Labor & Employment Practice Group is pleased to provide a short checklist of steps that all companies should consider taking to measure their readiness for the coming year. We hope that you find this 2015 Labor and Employment Law Checklist a helpful guide to best practices for the year ahead.

2015 Labor and Employment Law Compliance Checklist

Amendments to Illinois Eavesdropping Statute Signed Into Law

IMG_1128On December 30, 2014, former Illinois Governor Pat Quinn signed into law a revised version of an eavesdropping statute that the Illinois Supreme Court had struck down as unconstitutionally overbroad last March. Under the revised law, it is a criminal act to record a private conversation or to intercept, record, or transcribe a private electronic communication without the consent of all parties to the communication. The law defines private as any oral or written communication between two or more people in which the parties have a “reasonable expectation” that the communication will remain private. Previously, recording anyone in Illinois (even in public) was illegal without permission.

Employers should implement policies prohibiting nonconsensual recording of private workplace conversations and beware of taping interviews, telephone conversations, investigatory interviews, disciplinary meetings, or any workplace conversations—even for legitimate business reasons—if consent of all parties is not obtained or there is an argument that the communications being made are private. Employers are encouraged to work with legal counsel to ensure their policies and practices do not conflict with National Labor Relations Board rules by restricting employees’ right to record non-private conversations in the workplace. Also, employer policies relating to employee use of company email systems need to ensure that employees do not have a “reasonable expectation” in the privacy of personal communications sent over those systems.

House Passes the “Save American Workers” Act, but Senate Approval Unclear and Veto Promised

houseLogoPrintLast week, the U.S. House of Representatives passed the Save American Workers Act (H.R. 2575), a bill that would change the definition of “full-time” work under the Affordable Care Act’s employer mandate from 30 to 40 hours per week.  However, it remains to be seen whether the Senate will approve the measure (many commentators are saying it won’t) and the White House has promised to veto it.

Currently, covered businesses must provide health insurance for their full-time employees, with the ACA defining “full-time” as thirty hours or more a week.  The Save American Workers Act would raise the threshold for full-time status to 40 hours per week, thus decreasing the number of employees to whom employers are required to provide insurance.

The bill, which had the support of some Congressional Democrats, has the support of many business groups, including the National Retail Federation, National Restaurant Association, and the U.S. Chamber of Commerce, who said the ACA’s full-time work definition goes against longstanding practices and would cause harm to both employers and employees if allowed to stand.

U.S. Chamber and Business Groups File Suit to Block New NLRB Election Rule

National Labor Relations Board Building SignThis week, the U.S. Chamber of Commerce and several business trade groups announced that they jointly filed a complaint in federal court against the National Labor Relations Board (NLRB), seeking to strike the Board’s new “ambush” election rule that shortens the period between the filing of a union election petition and the election itself. The NLRB adopted the rule on Dec. 12, 2014 in a 3-2 vote. If not overturned, the rule is set to go into effect on April 14, 2015. See our previous post here.

The complaint alleges that the new rule violates the National Labor Relations Act, the Administrative Procedure Act, and employers’ free speech and constitutional right to due process. Read the press release here.

Joining the Chamber in the lawsuit are the Coalition for a Democratic Workplace (CDW), National Association of Manufacturers (NAM), National Retail Federation, and Society for Human Resource Management (SHRM). Worth noting is that this is only the third time SHRM has challenged a federal regulation in court.

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