Monthly Archives: February 2015

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.

 

 

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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