Employee Benefits

The Internal Revenue Service has announced in a notice in the Federal Register (77 FR 3202) that it will hold a public hearing in Washington, D.C. on June 5, 2012, to discuss proposed regulations relating to the determination of governmental plan status. The proposed regulations were previously published in the Federal Register on Nov. 8, 2011, (our Nov. 7, 2011, bulletin regarding the proposed regulations can be found here). Outlines of the topics to be discussed at the public hearing must be received by Feb. 6, 2012.

If you have any questions or need additional information regarding the public hearing and how the proposed rulemaking may impact your governmental plan, please contact Mary Beth Braitman, Terry A.M. Mumford, Katrina Clingerman, Lisa Harrison or your Ice Miller Employee Benefits attorney.

On April 14, 2011, the IRS issued Notice 2011-38 to announce an extension of the voluntary pilot program that allowed a plan administrator to truncate an individual payee's nine-digit identifying number on paper Forms 1099-R (including substitute and composite substitute statements) issued for calendar years 2009 and 2010.  The original pilot program was announced in Notice 2009-93 and you can read our summary on the original pilot program here. In order to allow for more time to evaluate the pilot program, the IRS has extended the program as to paper Forms 1099-R furnished for calendar years 2011 and 2012. As in the prior announcement, Notice 2011-38 does not apply to forms filed with the IRS, electronically furnished payee statements, and payee statements not in the Form 1098, 1099, or 5498 series (such as a Form W-2).

Read the entire alert about the IRS Pilot Program.

In previous articles in this space, we have suggested that employers should review their employment handbooks for rules and policies that may be found unlawful under the National Labor Relations Act (Act). On March 31, the National Labor Relations Board (Board) issued another such reminder to us all.

Read about the National Labor Relations Board policy.

On March 18, 2011, the Department of Labor (DOL) issued Technical Release 2011-01 (2011 Technical Release) to provide an extension of the non-enforcement period relating to certain interim procedures for internal claims and appeals under the Patient Protection and Affordable Care Act (PPACA). The Technical Release serves to extend and modify the original non-enforcement period that was provided under Technical Release 2010-02 (2010 Technical Release), issued by the DOL on Sept. 20, 2010. The 2011 Technical Release gives employers that sponsor non-grandfathered group health plans yet more time to comply with PPACA's requirement to have an effective internal claims and appeals process, which is generally effective for plan years beginning on or after Sept. 23, 2010.

Read the entire article on the extended delay in enforcement of internal claims and appeals.

Months of speculation came to an end March 24, 2011 when the Equal Employment Opportunity Commission (EEOC) issued its final amended regulations implementing the Americans with Disabilities Act Amendments Act (ADAAA), which took effect on January 1, 2009.

The EEOC's final regulations, which are effective 60 days from their publication in the Federal Register on March 25, 2011, contain significant changes from the pre-Amendments Act ADA. Consistent with Congress's stated purpose in passing the ADAAA, the new regulations expand the ADA's coverage by lowering the standard for proving disability. Although the new regulations do little to quell employer fears of increased liability under the ADAAA, the EEOC has retreated, at least incrementally, from some of the more controversial positions it took in the proposed regulations.

This article highlights some of the more significant changes effected by the final ADAAA regulations, and their likely impact on employers, noting where the EEOC has pulled back from positions it took in its proposed regulations.

Read the entire article about the final ADAAA regulations.

Everyone would probably agree that kittens are cute, cuddly and playful. But a recent decision of the United States Supreme Court has made playing with cats more risky for employers.

The case in question, Staub v. Proctor Hospital, involved what is known as the "cat's paw theory" of proving employment discrimination. Under this theory, it is generally recognized that an employer can be liable for employment discrimination even when the person who made the adverse employment decision was unbiased if the decision was influenced by the discriminatory acts and animus of a non-decision maker (such as biased reports of misconduct). The decision maker is considered to be the "paw" of the discriminatory cat. Over the years the courts have differed somewhat in their application of this theory.

Read the entire article.

State legislators walking out, organized labor sitting in. Terms like "right to work" and "collective bargaining" have been grabbing headlines, as have more stilted versions like "right to work for less" and "Collective bargaining – we bargain, you collect." Probably not since 1981 and the firing of the air traffic controllers by President Reagan has such a rumpus been raised over labor issues that have no foundation in the National Labor Relations Act. That's right – the Act has no jurisdiction here.

Read the entire article.

          On February 24, 2011, the Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury issued final regulations under 31 CFR Part 1010 addressing the reporting of foreign financial accounts and the form used to file these reports (Form TD-F 90-22.1, Report of Foreign Bank and Financial Accounts, which is commonly referred to as the "FBAR" form). While the language in the final regulations is substantially consistent with the proposed FBAR rules that were published one year ago (read our March 10, 2010 summary of the proposed regulations), the FinCEN clarifies and revises certain provisions regarding which persons will be required to report accounts and which accounts will be reportable, as well as any specific exceptions to the filing requirements.

          The final rules are effective March 28, 2011, and apply to FBARs required to be filed by June 30, 2011, for foreign financial accounts maintained in 2010 and for reports required to be filed for all subsequent years. In addition, filers who properly deferred their filing obligations under IRS Notice 2010-23 (which extended the FBAR filing due date from June 30, 2010 to June 30, 2011 for certain groups) may, but are not required to, apply the provisions of the final rule in determining their FBAR filing requirements for reports due June 30, 2011, for foreign financial accounts maintained in years beginning before 2010.

          Note that the regulations under the Bank Secrecy Act (BSA) have been reorganized; therefore, the text of the final FBAR regulations have been renumbered for consistency. The regulations that were originally under 31 CFR 103.24 in their proposed form now appear under 31 CFR 1010.350 as the final regulations.

Applicability to Governmental Pension Plans

          The regulations still exempt governmental pension plans from the FBAR filing requirements. The proposed rules were accompanied by proposed revisions to the FBAR instructions which, among other things, specifically exempted governmental entities from the filing requirements, as follows:

A foreign financial account of any governmental entity is not required to be reported on an FBAR by any person. For purposes of this form, governmental entity includes: (1) a college or university that is an agency or instrumentality of, or owned or operated by, a governmental entity; and (2) an employee retirement or welfare benefit plan of a governmental entity. (Emphasis added.)

          While the FinCEN states in the preamble that the FBAR instructions have been revised to reflect the language adopted in the final regulations, the instructions were not included in the final regulations, and the rules do not explicitly make the above statement. However, when the final FBAR instructions are released, we expect they will include this exemption. In addition, the final rules retain the language from the proposed rules excepting from the filing requirements persons who have a financial interest in or signature or other authority over an account of any State or any political subdivision thereof. 31 CFR 1010.350(c)(4).

          Thus, the rules provide a filing exemption for the accounts of governmental pension plans, both with respect to the plan itself and with respect to the plan's employees with signature authority over foreign investments. The exemption is applicable for accounts held during 2010 and subsequent years. In addition, both pension plan employees with signature authority over accounts but no financial interest in those accounts who took advantage of the extension provided in IRS Notice 2010-23, and pension plans having commingled funds, none of which were mutual funds, which did not file an FBAR for prior years in reliance on Notice 2010-23, may rely on the final regulations to determine whether the delayed filing is now required.

          For more information about FBAR, the final rule, and how the FBAR materials may impact your governmental plan, please contact Mary Beth Braitman, Terry A.M. Mumford, Katrina M. Clingerman,  Lisa Harrison, or your Ice Miller LLP employee benefits attorney.

Checking job applicants' credit history, a common screening practice of many employers, has come under attack from state legislatures, private litigants and the U.S. Equal Employment Opportunity Commission (EEOC).  In August 2010, Illinois enacted the Employee Credit Privacy Act, making it the fourth state to ban employers from inquiring about the credit histories of job applicants or employees, or obtaining copies of their credit reports.  Three months later, Loudy Appolon, an applicant for employment at the University of Miami's Miller School of Medicine, filed a class action lawsuit against the university after it informed her she would not be hired because of her credit history.  Just last month, the EEOC sued Kaplan Higher Education over its use of credit histories in the hiring process.

The common thread binding all of these challenges to the consideration of credit records in the hiring process is the claim that this practice discriminates against African Americans, Hispanics and perhaps other protected groups.

Read the entire article about using credit checks in the hiring process.

In a decision handed down Jan. 24, 2011, the United States Supreme Court took another step toward the establishment of a national "just cause" standard by broadly interpreting the anti-retaliation provisions contained in Title VII of the Civil Rights Act of 1964 to include roughly everybody and his brother – or in this case, everybody and her fiancé.

Read the entire article about anti-retaliation provisions of Title VII.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law No. 111-203 (Dodd-Frank) was signed into law on July 21, 2010.  Among other changes to securities law, Dodd-Frank imposes registration and other obligations, including fiduciary duties, upon municipal advisors who engage in certain activities with respect to "municipal entities."  See Section 975 of Dodd-Frank.  These new obligations include the requirement, which became effective Oct. 1, 2010, to register with the Securities and Exchange Commission (SEC).  In addition, Dodd-Frank grants the Municipal Securities Rulemaking Board (MSRB) regulatory authority over municipal advisors, so municipal advisors will be required to comply with the MSRB's registration and other requirements as well as those of the SEC.

Read the entire alert regarding municial advisor registration under Dodd-Frank Act.

The H-1B visa category is the most common classification available to foreign professionals working in the U.S.  This category, however, is subject to an annual quota or "cap" each fiscal year, and based on numbers recently released by U.S. Citizenship and Immigration Services, the cap for fiscal year 2011 is expected to be exhausted very soon.  Employers should also note that a revised form for H-1B and certain other nonimmigrant filings requires employers to make attestations regarding "deemed exports" or the release of controlled technology or technical data to foreign nationals.  While the regulations regarding release of this type of information to foreign nationals are not new, employers should review their export control compliance procedures to ensure they have appropriate plans and policies in place to comply with the attestation requirement.

Read the entire article on the H-1B visa.

Employment Laws to Focus on in 2011

Goodbye 2010, hello 2011.  As we settle in to 2011 after a busy holiday season, we must refocus on the year ahead.  For most of us, this time of year brings New Year's resolutions and planning for the upcoming year.  For employers, this time should include reviewing their employment policies and procedures and making any necessary updates to ensure compliance with the various changes in the law that occurred in 2010.

Read the article which provides an overview of some of the employment related statutes and regulations that arose in 2010.

A new federal rule was proposed by the National Labor Relations Board (NLRB) on Dec. 21, 2010, that is bound to please unions and trouble employers.  Under the new rule, most private employers would be required to display posters informing workers about their right to form a union, to bargain with their employers, to distribute union literature and to engage in other union activity.  In addition to "posting" the union rights information on bulletin boards and in other prominent locations, the rule would also require employers who communicate by e-mail or other electronic means to post the notice electronically.

The proposed rule comes on the heels of the recess appointment of former union lawyer Craig Becker to the NLRB.  The new rule also comes as unions continue to struggle to reverse a long trend of declining union membership in the private sector.  The latest figures show that just 7.2 percent of private sector employees belong to a union.

The proposed rule could take effect after a 60 day comment period.

The dynamic between defamation and legitimate workplace fact investigation remains vitally important for employers.  A recent Indiana Supreme Court decision provides important support for employees bold enough to report workplace misconduct.

Most people know that making false statements about someone may lead to a claim of defamation or slander.  Under Indiana law, accusing someone of criminal or occupational misconduct raises the specter of defamation "per se" under Indiana law.  Defamation "per se" constitutes an important weapon for wrongly accused employees, and a real danger for employees reporting workplace misconduct.

Read the full article about protection for workplace investigations.
 

In Notice 2010-91, the Internal Revenue Service (IRS) provided interim guidance on the application of the withholding requirements under Section 3402(t) of the Internal Revenue Code (Code) to payments made by payment cards, such as credit, debit and gift cards.  Code Section 3402(t) was added by the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) to provide that the United States government, every state and political subdivision thereof, and every instrumentality of the foregoing making any payment to a person providing property or services must deduct and withhold from such payment a tax equal to three percent of the payment.  TIPRA contains exceptions for several types of payments, such as wages, retirement benefits and retirement plan contributions, and also exempts payments made by state or local government if that entity makes annual payments of less than $100 million.  Under TIPRA, Code Section 3402(t) originally applied to payments made after Dec. 31, 2010, but with the enactment of the American Recovery and Reinvestment Act of 2009, the effective date was amended so that the withholding requirements apply only to payments made after Dec. 31, 2011.

Continuously "Naughty" Employees Could be a Liability

This installment of the Informed Employer is brought to you because of that one employee who, despite your best efforts to insulate your business from any number of employment law liabilities, will inevitably go off and do something so colossally stupid that you could not have possibly prepared for it.  Yes, just when you think you have drafted every policy and trained your employees accordingly, one of your supervisors takes his sales team to the top of a hill and…

…waterboards a team member.
 
Read the entire article about problematic employees.
 

On November 15, 2010, the Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) issued an Amendment to the interim final rule relating to a group health plan's status as a "grandfathered" plan under the Patient Protection and Affordable Care Act (PPACA).  The interim final rule, which was published by the Departments on June 17, 2010, provides that if an employer or employee organization enters into a new policy, certificate or contract of insurance after March 23, 2010, the policy, certificate or contract of insurance would cease to be a grandfathered plan, and thereby, lose the plan's exemption from several coverage mandates under the PPACA (although an exception applied to collectively bargained insured plans).  The Amendment to the interim final rule reverses this position and permits an insured group health plan to change health insurance coverage without ceasing to be a grandfathered plan.  The change provides parity with self-insured group health plans, which are permitted under the interim final rule to change third-party administrators without losing grandfathered status.

Read the entire alert.