Category Archives: Employee Benefits

Wisconsin’s COVID-19 Response Bill Signed By Governor Evers

By: Daniel Finerty and Melissa Stone

After Assembly Bill 1038 passed on April 14, 2020 and was quickly taken up and passed by the State Senate the following day, Governor Evers took swift action to sign the legislation, known as the COVID-19 Response Bill. 2019 Wisconsin Act 185 (Act) became effective April 16, 2020. The bipartisan bill was passed to ensure Wisconsin is eligible for the federal CARES Act Pandemic Unemployment Assistance by making necessary changes to Wisconsin’s Unemployment Insurance Law, Worker’s Compensation Act and others changes to Wisconsin law.

Unemployment Insurance

One-Week Waiting Period

Historically, an employee filing for unemployment insurance benefits (UI) needed to wait one week after becoming eligible to receive UI benefits before the benefits could be received for a week of unemployment.

However, the Act suspends the application of the one-week waiting period for benefit years that began after March 12, 2020, and before February 7, 2021. See 2019 WI Act 185, Section 38 (creating Wis. Stat. § 108.04(3)(b)). The Act also directs the Department of Workforce Development (DWD) to seek the maximum amount of federal reimbursement for benefits that are, during this time period, payable for the first week of a claimant’s benefit year as a result of the suspension.

Initial Claims

The Act requires DWD to determine whether a claim for UI or a work-share plan is related to the COVID-19 public health emergency declared by the Governor on March 12, 2020. See 2019 WI Act 185, Section 50 (creating Wis. Stat. § 108.07(5)(bm)). If a claim is related to the public health emergency, the Act provides that the regular benefits for that claim for weeks occurring after that date, and before December 31, 2020, will not be charged to an employer’s unemployment insurance reserve account, as is normally the case provided the employer does not fail to “timely and adequately provide any information required by the Department.” As a result, it is critical for employers to respond to UI requests for information to document the claim is related to the public health emergency in order to ensure the financial health of the employer’s UI reserve account.

While there are a number of exceptions, for employers that pay the quarterly payroll taxes, UI benefit charges related to the public health emergency will be charged to the balancing account of the unemployment reserve fund. This fund is the pooled account financed by all employers that pay contributions and is used to pay benefits that are not chargeable to any employer’s account. However, in the case of employers that instead reimburse DWD for benefits directly, the UI benefits are to be paid in the manner specified under current law for certain other circumstances involving benefits chargeable to reimbursable employers. The exceptions to this charging rule include that it only applies those benefits paid through the state UI program; it does not apply to any federal share of CARES Act extended benefits; and it does not apply to work-share program benefits and other exceptions.

The Act also directs the DWD Secretary, to the extent permitted under federal law, to seek advances to the state’s unemployment reserve fund from the federal government, to ensure that all UI tax rates can remain the same through the end of the year.

Changes to Work-Share Program

Under prior law, an employer could utilize a “work-share” structure to keep workers employed who would otherwise be laid off. The program used partial unemployment benefits combined with continued, but reduced, work hours to insulate employees from lay off.

The Act creates a more accessible, modified workshare program for employers to access their unemployment insurance reserve account instead of laying off employees. The Act outlines the following changes to work share plans submitted between April 16, 2020, the Act’s effective date, and December 31, 2020, which will not have to follow the traditional elements of a Work Share Program outlined in our prior E-Alert:

  • Work-share plans must cover at least 2 positions that are filled on the effective date of the work-share program, rather than at least the greater of 20 positions or 10 percent of employees in a work unit under prior law. See 2019 WI Act 185, Section 48 (creating Stat. § 108.062(20)(b)).
  • The maximum reduction in working hours under a work-share program may be either 60 percent of the normal hours per week of the employees included under a work-share plan, or the maximum percent reduction of normal hours per week permissible by federal law, whichever is greater, rather than the 50-percent limitation on reduction of hours under prior law. See 2019 WI Act 185, Section 48 (creating Stat. § 108.062(20)(f)).
  • Work-share plans may cover any employees of the employer instead of being limited to a particular work unit of the employer as provided in the prior law. See 2019 WI Act 185, Sections 41, 48 (amending Stat. § 108.062(1)(b); creating Wis. Stat. § 108.062(20)).
  • Under prior law, if in any week there were fewer than 20 employees included in a work−share program of any employer, the program would terminates on the 2nd Sunday following the end of that week; however, that provision no longer applied to a work− share program that has been approved or modified under the Act. See 2019 WI Act 185, Sections 46 (amending Stat. § 108.062(15)).
  • Employers with an existing work-share plan that was approved by the DWD prior to April 16, 2020 are allowed to submit a plan modification under the modified program requirements. See 2019 WI Act 185, Sections 43m (creating Stat. § 108.062(3r)).

Employers that have existing work-share plans may want to consider requesting a modification to comply with the new requirements, which permit greater flexibility in terms of reductions of hours, can include a smaller number of employees, and are not limited to a particular work unit. Employers looking to apply for a work-share program should ensure their application is in compliance with these changes.

Compliance with Requests for Personnel Files

With regard to any request for an employee’s personnel file, received on or after March 12, 2020, the date of the Governor’s original Emergency Declaration, an employer is not required to provide an employee’s personnel records within 7 working days after an employee makes a request to inspect his or her personnel records, and an employer is not required to provide the inspection at a location reasonably near the employee’s place of employment during normal working hours. See 2019 WI Act 185, Section 35 (creating Wis. Stat. § 103.13 (2m)).

In light of this likely temporary amendment to the personnel record requirement, employers can provide copies of personnel files by mail to ensure social distancing in a reasonable period of time and may charge an employee reasonable costs for copying the file, which may not exceed the actual cost of reproduction.

Worker’s Compensation

Under prior Wisconsin worker’s compensation law, in order for a COVID-19 claim to be found compensable, medical and factual evidence must be provided that documents by a “preponderance of the evidence” that the employee contracted the COVID-19 virus while at work, as opposed to some other community source. This means that there are facts strong enough to prove the probability that the virus, parasite or bacteria claims arose out of employment.  The compensability of COVID-19 cases should be decided on a case-by-case basis following an investigation of the relevant factual background. In the absence of this preponderance of evidence, it cannot be concluded that that the employee sustained an injury while performing services arising out of or incidental to employment, and the claim may be denied.

However, the Act created new conditions of liability for COVID-19 claims as it relates to “First Responders” only. See 2019 WI Act 185, Section 33 (creating Wis. Stat. § 102.03(6)). That section provides the following changes:

  • “First Responders” are defined as an employee or volunteer employee that provides fire-fighting, law enforcement, or medical treatment of COVID-19, who have regular, direct contact with, or are regularly in close proximity to, patients or members of the public requiring emergency services within the scope of the “First Responders” work for the employer. See 2019 Act 185, Section 33 (creating Stat. § 102.03 (6)(a)).
  • If the “First Responder” is exposed to persons with confirmed cases of COVID-19 in the course of employment, there is now a rebuttable presumption in favor of the employee that the COVID-19 injury is caused by the employment and is work-related. See 2019 Act 185, Section 33 (creating Stat. § 102.03 (6)(b)).
  • The “First Responders” injury must have occurred between March 12, 2020 and ending 30 days after termination of Governor Evers’ Public Health Emergency Order, which, as a result of an subsequent Order, is now set to continue past from April 24, 2020 until May 26, 2020, or until a superseding order is issued. See 2019 Act 185, Section 33 (creating Stat. § 102.03 (6)(b)).
  • The “First Responders” injury must be supported by a positive COVID-19 test or by a specific diagnosis by a physician. See 2019 Act 185, Section 33 (creating Stat. § 102.03 (6)(c)).
  • This is a rebuttable presumption. If an employer or insurer has credible evidence that the “First Responder” was exposed to COVID-19 outside of the work for the employer, the compensability of the claim may be challenged. See 2019 Act 185, Section 33 (creating Stat. § 102.03 (6)(d)).

This change to Wisconsin worker’s compensation law only applies to “First Responders,” as defined in the Act. It does not apply to all employees classified as “essential” during the crisis. The Act creates a presumption that whenever a “first responder” on the front line of the State’s COVID-19 response gets COVID-19, the injury is work-related. The burden is then on the employer and insurer to present credible factual evidence to rebut the new statutory presumption in order to deny liability for the claim.

The Act contained a second amendment to the Worker’s Compensation Act. Under existing worker’s compensation law, there is an additional benefit of up to $13,000.00 available to an employee that sustains injury as a result of exposure in the workplace over a period of time to toxic or hazardous substances or conditions. See Wis. Stat. § 102.565. Under the Act, this additional benefit does not apply to a “First Responder” who claims presumed injury under the other changes outlined by the Act. See 2019 Act 185, Section 33 (creating Wis. Stat. § 102.565 (6)).

For more information about these changes, please contact your Lindner & Marsack, S.C. attorney at (414) 273-3910.

Work-Share Programs – A Viable Option For Employers Reducing Employee Hours Due to COVID-19

By: Daniel Finerty and Laurie Petersen

A Work‐Share Program (“program” or “plan”) is a benefit plan for which Wisconsin businesses can apply to the Unemployment Insurance Division of the Department of Workforce Development (“UI Division” or “DWD”). The program is designed to help both Wisconsin businesses and their employees by allowing businesses to tap the funds in their unemployment insurance reserve to offset wage reductions and keep employees working.

Instead of laying off workers, a qualified employer, after approval of its program application, can plan to reduce work hours across a work unit. After approval, work hour reductions can be implemented when the program becomes effective. The plan’s effective date is the Sunday of the 2nd week after approval or any Sunday after that day specified in the plan, whichever is later, and generally last for a 6-month period. Workers whose hours are uniformly reduced under the plan can receive unemployment benefits that are pro‐rated for the partial work reduction from the employer’s unemployment insurance account. As a result, a plan, once approved, can help employers avoid layoffs, mitigate the unemployment insurance reserve account impact of more dramatic workforce reductions, allow workers to remain employed and ensure employers can retain trained staff during these times of reduced business activity caused by COVID-19.

More relevant for employers may be the fact that employees working under an approved plan may be eligible to receive the $600/week recently included in the CARES Act. Even if the plan includes more than 32 hours of work or more than $500 in wages per week (both facts that would normally make an employee ineligible for unemployment insurance benefits), the employees may still be entitled to unemployment insurance benefits through an approved program. Workers eligible for at least $1 in unemployment benefits as a result of participation in an approved program, or otherwise, will likely also be eligible for the $600/week federal payment. Just this week, the Department of Workforce Development revealed that it has entered into an agreement to receive this funding from the U.S. Department of Labor. DWD expects its system modifications to be in place and able to accept the CARES Act claims by April 21, 2020, and expects to have the first checks issued around April 28, 2020. These dates are subject to change based on circumstances that arise.

A program requires an employer to apply to the UI Division, as outlined in Wis. Stat. § 108.062. To do so, the employer must certify the following conditions to meet the required elements of a work-share program, or plan. The applicant employer must:

  • Specify the work unit in which the plan will be implemented, including the affected positions, and the names of the employees filling those positions on the date of submittal. “Work unit” is defined as an operational unit of employees designated by an employer for purposes of a work-share program, which may include more than one work site.
  • Provide for inclusion of at least 10 percent of the employees in the affected work unit on the date of submittal and for initial coverage under the plan of at least 20 positions that are filled on the effective date of the work-share program. In this regard, the plan must include the greater of 20 positions or 10% of the employees in a work unit. Here are some examples:
  • If there are 20 employees in a work unit, the plan must include all 20 employees in unit;
  • If 100 employees in a work unit; the plan must include at least 20 employees in unit; and,
  • If 1000 employees in a work unit; the plan must include at least 100 employees in unit (10%).
  • Specify the period or periods when the plan will be in effect, which may not exceed a total of 6 months in any 5-year period within the same work unit.
  • Provide for apportionment of reduced working hours equitably among employees in the work-share program.
  • Exclude participation by employees who are employed on a seasonal, temporary, or intermittent basis.
  • Apply only to employees who have been engaged in employment with the employer for a period of at least 3 months on the effective date of the work-share program and who are regularly employed by the employer in that employment. A work-share program becomes effective on the later of the Sunday of the second week beginning after approval of a work-share plan or any Sunday after the effective date specified in the plan.
  • Specify the normal average hours per week worked by each employee in the work unit and the percentage reduction in the average hours of work per week worked by that employee, exclusive of overtime hours, which shall be applied in a uniform manner and which shall be at least 10% but not more than 50% of the normal hours per week of that employee.
  • Describe the manner in which requirements for maximum federal financial participation in the plan will be implemented, including a plan for giving notice, where feasible, to participating employees of changes in work schedules.
  • Provide an estimate of the number of layoffs that would occur without implementation of the plan.
  • Specify the effect on any fringe benefits provided by the employer to the employees who are included in the work-share program other than fringe benefits required by law. Generally, the employer must maintain coverage under any defined benefit or defined contribution retirement plan for employees who receive work-share benefits under the same terms and conditions as if the employees were not included in the program. In addition, the employer must maintain any health insurance coverage in place under the same terms and conditions as if the employees were not included in the program.
  • Include a statement affirming that the plan is in compliance with all employer obligations under applicable federal and state laws.
  • Indicate whether the plan includes employer-sponsored training to enhance job skills and acknowledge that the employees in the work unit may participate in training funded under the federal Workforce Innovation and Opportunity Act, 29 USC 3101 to 3361, or another federal law that enhances job skills without affecting availability for work, subject to department approval.

Generally, work-share programs that contain all the required elements must be approved by the UI Division and can be modified during that period to account for changes in business conditions. While current employer experience indicates that work-share program approval takes about a week, it is possible that additional delays may occur due to the generally increased workload being handled by the UI Division. Also, the DWD is advocating some potential statutory changes that may broaden coverage to include more significant hour reductions, perhaps, up to 60%; however, that change would require an amendment by the Legislature and approval by the Governor.

Once approved, the business’s unemployment insurance reserve account will be charged for the payments to employees for the weeks specified in the approved program, similar to unemployed workers who receive unemployment benefits. However, by contrast to laying off employees that will collect unemployment, the business keeps these employees working, realizes the economic benefit of that work, ensures that economic challenges tie the employees to the employer’s workforce and ensures an adequate cushion for employees whose hours are subject to reduction.

Notably, while an employer’s work-share program can be in effect for a total of six months in any five-year period within the same work unit, that same employer is not prohibited from and can, in fact, have multiple plans for different work units.

If approved, it is critical for employers to explain the impact of the work-share plan upon the impacted employees to ensure an understanding of what will happen. In general, the employees will receive an amount equal to the employee’s regular benefit amount multiplied by the employee’s proportionate reduction in hours worked for that week as a result of the Work-Share Program.

Employees under an approved plan do not need to register for work or conduct a work search while in the plan; thus, these employees will be further tied into the employer’s workforce by the plan. However, employees must be available for work with the employer participating in the plan, should the employer need extra hours beyond what is anticipated.

An employer is not restricted by the plan from either terminating an employee or accepting an employee’s resignation. The employee’s eligibility for UI benefits after termination or resignation will be subject to the normal analysis.

More information on Work-Share Programs can be found on the Unemployment Insurance Division website. Interested employers can complete the Work-Share Plan Application and send or fax it to the UI Division:

Address:

DWD-Unemployment Insurance
Employer Service Team
P.O. Box 7942
Madison, WI 53707

Fax:   (608) 267-1400

For more information about the benefits of Work-Share Plans, please contact your Lindner & Marsack, S.C. attorney at (414) 273-3910.

Addressing COVID-19 Workplace Issues: Responding to Employers’ Most Common Questions

By:  Oyvind Wistrom and Sally Piefer

The NBA has suspended play.  The NCAA tournament has been cancelled.  The World Health Organization (WHO) has now declared that the COVID-19 Coronavirus is a pandemic.  Either your business has already been directly or indirectly affected or it inevitably will be affected by COVID-19.  What can you do as an employer?  The following tips should help you navigate the novel issues created by this unprecedented situation.

  1. What if an employee reports to work with flu-like symptoms – what can we do as an employer?

If any employee presents themselves at work with a fever or difficulty breathing, employers may ask such employees if they are experiencing influenza-like symptoms, such as fever or chills and a cough or sore throat.  Employers must maintain all information about employee illness as a confidential medical record in compliance with the Americans with Disabilities Act (ADA).  If an employee is experiencing these symptoms, the employee should be directed to seek immediate medical evaluation.  It is also recommended that employers train supervisors on how to recognize these symptoms, while stressing the importance of not overreacting to situations in the workplace potentially related to COVID-19 in order to prevent panic among the workforce.

  1. Can we ask an employee to stay home or leave work if they exhibit symptoms of the COVID-19 coronavirus or the flu?

Yes.  The Center for Disease Control (CDC) has made it clear that employees who exhibit influenza-like symptoms at work during a pandemic should leave the workplace and be asked to stay home.  Employees who have symptoms of acute respiratory illness are recommended to stay home until they are free of a fever (100.4º F), signs of a fever, or any other symptoms for at least 24 hours, without the use of fever-reducing or other symptom altering medicines.  Now that the COVID-19 virus has been declared a pandemic by the WHO, the Equal Employment Opportunity Commission (EEOC) has stated that advising workers to go home is not disability-related if the symptoms presented are akin to the seasonal influenza.  An employer may therefore require workers to go home if they exhibit symptoms of the COVID-19 coronavirus or the flu without running afoul of the EEOC’s interpretation of the ADA.

  1. Can an employer take an employee’s temperature at work to determine whether they might be infected?

Maybe.  The ADA places restrictions on the inquiries that an employer can make into an employee’s medical status, and the EEOC considers taking an employee’s temperature to constitute a “medical examination” under the ADA.  The ADA prohibits employers from requiring medical examinations and making disability-related inquiries unless (1) the employer can show that the inquiry or exam is job-related and consistent with business necessity, or (2) the employer has a reasonable belief that the employee poses a “direct threat” to the health or safety of the individual or others that cannot otherwise be eliminated or reduced by reasonable accommodation.

The EEOC takes the position during a pandemic that employers should rely on the latest CDC and state or local public health assessments to determine whether the pandemic rises to the level of a “direct threat.”  The assessment by the CDC as to the severity of COVID-19 will likely provide the objective evidence needed for a medical examination.  If COVID-19 becomes widespread, as determined by state or local health authorities or the CDC, then employers would likely be permitted to take an employee’s temperature at work.  However, as a practical matter, an employee may be infected with COVID-19 without exhibiting any symptoms such as a fever, so temperature checks may not be the most effective method for protecting your workforce.

  1. An employee of ours has tested positive for COVID-19. What should we do?

In addition to sending the employee with the positive test home, you should send all employees who worked closely with that employee home for a 14-day period of time to ensure the infection does not spread.  Make sure the affected employee identifies all individuals who worked in close proximity (within six feet) with them in the previous 14 days to ensure you have a full list of those who should be sent home.  When sending the employees home, do not identify by name the infected employee or you could risk a violation of the ADA.  You may also want to consider asking a cleaning / remediation company to undertake a deep cleaning of your affected workspaces. If you work in a shared office building or area, you should inform building management so they can take whatever precautions they deem necessary.

  1. Can an employee refuse to come to work because of fear of COVID-19 infection?

Employees are only entitled to refuse to report to work if they believe they are in imminent danger.  Section 13(a) of the Occupational Safety and Health Act (OSH Act) defines “imminent danger” to include “any conditions or practices in any place of employment which are such that a danger exists which can reasonably be expected to cause death or serious physical harm immediately or before the imminence of such danger can be eliminated through the enforcement procedures otherwise provided by this Act.”  This is a relatively high standard that requires a “threat of death or serious physical harm,” or “a reasonable expectation that toxic substances or other health hazards are present, and exposure to them will shorten life or cause substantial reduction in physical or mental efficiency.”

For an employee to refuse to report for work, the threat must be immediate or imminent, which means that an employee must believe that death or serious physical harm could occur within a short period of time.  Requiring travel to certain areas of the world or requiring employees to work with patients in a medical setting without personal protective equipment at this time may rise to this threshold.  Most work conditions in the United States, however, would not presently meet this threshold.  Each case must be evaluated on its own merits and employers should seek to determine whether their workplace creates imminent danger to employees.

  1. May an employer require a new employee to have a post-offer medical examination to determine their general health status?

Yes, the ADA allows a medical examination of a new employee as long as it is required only after a conditional offer of employment is made.  The medical examination is permitted so long as all entering employees in the same job category are required to undergo the medical examination and the information obtained regarding the medical condition or history of the applicant is collected and maintained on separate forms and in separate medical files and is treated as a confidential medical record.

Employers may also ask if they are experiencing any symptoms of COVID-19 – fever, cough, shortness of breath or other acute respiratory symptoms.  If the applicant or new employee answers yes, then you can ask them to delay starting for 14 days.  Be sure to maintain the confidentiality of the responses.

  1. May an employer encourage employees to telework (i.e., work from an alternative location such as home) as an infection-control strategy during a pandemic?

Yes.  Telework is an effective infection-control strategy that is also familiar to ADA-covered employers as a reasonable accommodation.  In addition, employees with disabilities that put them at high risk for complications of pandemic influenza may request telework as a reasonable accommodation to reduce their chances of infection during a pandemic.  An employer is not required to provide telework as an option to all employees, but is recommended that if the opportunity is presented to a certain classification of employees, all other employees in that job classification should similarly be permitted to telework.

8.     During a pandemic, may an employer require its employees to adopt infection-control practices, such as regular hand washing, in the workplace?

Yes.  Requiring infection control practices, such as regular hand washing, coughing and sneezing etiquette, and proper tissue usage and disposal, does not implicate the ADA.  The messages you should be giving to your employees are:

  • Wash your hands often with soap and water for at least 20 seconds. If soap and water are not available, use an alcohol-based hand sanitizer.
  • Avoid touching your eyes, nose, and mouth with unwashed hands.
  • Avoid close contact with others, especially those who are sick.
  • Refrain from shaking hands with others for the time being.
  • Cover your cough or sneeze with a tissue, then throw the tissue in the trash.
  • Clean and disinfect frequently touched objects and surfaces.
  • And, perhaps most importantly, tell employees to stay home if they are sick.

9.     Can we require employees who are sent home or who do not report for work to use accrued PTO time?

Yes.  At least under Wisconsin law, an employer may require employees to use accrued PTO time if they are unable or unwilling to report to work – this is the case even if the employer shuts down a facility and the employee is therefore unable to work.  The only exception in Wisconsin would be with respect to employees who suffer from a serious health condition under the Wisconsin FMLA.  In such cases, an employer is not permitted to mandate that employees use their personal PTO time during the pendency of the Wisconsin approved portion of the FMLA leave (two weeks).  After an employee has used up their two-week allotment of Wisconsin FMLA, an employer can then mandate that PTO be utilized.

  1. As Spring Break is approaching, what questions can I ask about employees’ personal vacations?

You can ask your employees whether they have traveled to any locations the CDC or state health officials have indicated are destinations with a risk of community-spread coronavirus—currently about 30 countries in Europe (along with China, Iran, Japan, Singapore, South Korea, Taiwan & Thailand).  Check the CDC website for a list of current countries (https://wwwnc.cdc.gov/travel).  The CDC recommends that anyone traveling to these countries should stay home for 14 days from the time the employee left the country and to practice social distancing.  Some employers have initiated mandatory time away from work if employees are returning from a country on the CDC list.

You can also ask employees whether they been on a cruise ship.  If on a cruise ship in the last 14 days, the employee should stay home for 14 days if a case of Coronavirus was reported on the ship during the cruise.  Otherwise, it does not appear the CDC is currently recommending any work-related social distancing – unless the person is exhibiting symptoms – fever, cough, trouble breathing.  However, the situation is in constant flux, so you may want to check the CDC website or contact legal counsel for up to date guidance.

Lindner & Marsack, S.C. represents employers in all areas of labor and employment law.  If you have any other labor or employment matter involving your business, please either contact Oyvind Wistrom at owistrom@lindner-marsack.com or Sally Piefer at spiefer@lindner-marsack.com, or any other attorney you may work with at the firm.

 

A CLEARLY WRITTEN PLAN DOCUMENT PROTECTS THE PLAN’S ADMINISTRATOR FROM A FIDUCIARY BREACH

By:  Alan M. Levy

What happens when employee benefit plan participants are not accurately informed of their rights?  Who is liable for an error or a failure to inform a participant or beneficiary about their eligibility for benefits?  The best protection for a plan fiduciary is often a clear, well-written current plan document.

Employers sponsor employee benefit plans and typically appoint an owner or management official to be the plan’s official administrator.  Insofar as that party controls collection, investment, or disbursal of a plan asset, he/she is a fiduciary.  Third party administrators (“TPAs”) who perform day-to-day plan operations dealing with participants typically insist on administrative agreements which state that the plan sponsor – not the TPA – is the fiduciary who must act “with an eye single for the interest of the participants and beneficiaries.”  Donovan v. Bierwirth, 680 F.2d 263, 271 (2nd Cir. 1962); ERISA, § 404(A)(1).  A fiduciary risks personal liability if he/she causes a loss to a participant or beneficiary by failing to act “in accordance with the documents and instruments governing the plan.”  ERISA, § 404(a)(1)(D).  Two recent appellate decisions relied on adherence to those plan documents in dismissing breach of fiduciary duty allegations that participants and beneficiaries were not adequately informed of their benefit rights.

In Vest v. Resolute FP US Inc., 905 F.3d 985 (6th Cir. 2018) the United States Court of Appeals for the Sixth Circuit explained that a fiduciary may breach his/her duty to disclose plan benefits and rules if “(1) an early retiree asks a plan provider about the possibility of the plan changing and receives a misleading or inaccurate answer or (2) a plan provider on its own initiative provides misleading or inaccurate information about the future of the plan or (3) ERISA or its implementing regulations required the employer to forecast the future and the employer failed to do so.”  Id. at 987.  The surviving beneficiary in that case alleged a fiduciary breach because neither the TPA nor the fiduciary informed the deceased employee that he had a right to convert his group life insurance coverage to an individual policy when he ceased employment.  The case was dismissed, in part, because the plan’s summary plan description gave sufficiently clear information to satisfy any notification obligation.

In DeRogatis v. Bd. of Trustees of the Welfare Fund of the IUOE Local 15, 904 F.3d 174 (2nd Cir. 2018), the Second Circuit reached a similar conclusion.  The widow of a deceased employee alleged that two “non-fiduciary, ministerial employees” on the plan staff had given her husband incorrect information, causing her to receive less than maximum survivor benefits.  Therefore, she claimed, the individual trustees should be held liable for a breach of their fiduciary duty because they failed to adequately supervise the plan employees’ work.  The court rejected the trustees’ defense that they could not be liable for any unintentional misrepresentations made by the non-fiduciary administrative staff, but went on to rule against the widow because the:

“summary plan description (“SPD”) clearly communicated the eligibility requirements for the various pension and survivor benefits available . . . thereby satisfying the . . . fiduciary duty to provide complete and accurate information.”

Id. at 179.

These cases demonstrate the importance of clear, accurate, and timely plan documents.  Whether or not the TPA or the office staff fail to explain rules and procedures fully and correctly, the participants and beneficiaries may and must rely on the information in the plan documents.  So long as the documents received by the participants are clear and correct, the fiduciaries have satisfied their obligation and should not be personally liable for any misunderstanding about the documents’ statement of rights.

Should you have any questions about the obligations, duties, and protections of a plan fiduciary, or should your employee benefit plan documents need an update or a review, please contact me or another attorney here at Lindner & Marsack, S.C.

Final Rule Implementing Executive Order Mandating Paid Sick Leave by Federal Contractors Published

By Jerilyn Jacobs

Last week, the Department of Labor published a Final Rule regarding implementation of Executive Order 13706, which requires certain federal contractors to provide paid sick leave to their employees.  The Final Rule applies to contracts where the solicitation was issued or the contract was awarded on or after January 1, 2017.

Under the Final Rule, applicable federal contractors will be required to provide employees with one hour of paid sick leave for every 30 hours worked on or in connection with a covered federal contract, up to 56 hours.  Employees may use paid sick leave for the following reasons:

  • To care for the employee’s own illness and other health care needs, including preventative health care;
  • To care for a family member who is ill or needs health care, including preventative health care (the Final Rule takes an expansive view of the types of family relationships that are covered, extending beyond individuals with biological or legal ties to the employee); and
  • For purposes related to being the victim of domestic violence, sexual assault or stalking, or assisting a family member or loved one who is such a victim.

The four major types of federal contracts that fall under the Final Rule are procurement contracts for construction covered by the Davis-Bacon Act (DBA), service contracts covered by the McNamara-O’Hara Service Contract Act (SCA), concessions contracts, including any concessions contracts excluded from the SCA by the Department of Labor’s regulations at 29 CFR 4.133(b), and contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.

The Executive Order and Final Rule do not apply to contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the federal government that are subject to the Walsh-Healy Public Contracts Act (PCA).  However, where a PCA-covered contract involves a substantial and segregable amount of construction work that is subject to the DBA, employees whose wages are governed by the DBA or the Fair Labor Standards Act (FLSA), including those who qualify for an exemption from the FLSA’s minimum wage and overtime provisions, are covered for the hours spent performing work on or in connection with such DBA-covered construction work.

As to employees working on contracts covered by a collective bargaining agreement (CBA), if the CBA already provided the employee with at least 56 hours of paid sick time per year, then the other requirements of the Executive Order and the Final Rule do not apply to the employee until the date the CBA terminates or January 1, 2020, whichever is first.  If the CBA provides less than 56 hours or seven days, in cases where the CBA refers to days rather than hours, the contractor must provide covered employees with the difference between the amount provided under the CBA and 56 hours in a manner consistent with the Executive Order and Final Rule or the terms and conditions of the CBA.

The Final Rule also provides that employees can carry over up to 56 hours of unused paid sick leave from year to year while they work for the same contractor on covered contracts. Further, contractors are required to reinstate employees’ accrued, unused sick leave if the employee returns to work within 12 months after a job separation, unless the employee was paid for unused sick leave upon separation.

Employees can use as little as an hour of paid sick leave at a time.  An employee’s request to use paid sick leave may be made orally or in writing.  Advance notice can be required where the need for leave is foreseeable, and a contractor can require supporting documentation if the employee is absent three or more consecutive full days.

For further reference, the Final Rule may be found at https://www.federalregister.gov/documents/2016/09/30/2016-22964/establishing-paid-sick-leave-for-federal-contractors

 

Three Lindner & Marsack Attorneys to Present at the State Bar of Wisconsin Health, Labor & Employment Law Institute

Lindner & Marsack’s Tom Mackenzie, Laurie Petersen and Daniel Finerty will share expertise on a variety of employment law matters at the State Bar of Wisconsin’s 2016 Health, Labor, and Employment Law Institute, an event is designed to share comprehensive information to help attorneys stay current on new developments that impact health, labor and employment law practice.

The conference will be held at the Wilderness Hotel and Golf Resort in Wisconsin Dells on August 18-19 and the agenda includes:

  • Tom Mackenzie will co-present NLRB Update: The Changing Landscape of Labor with Jennifer Abruzzo, Deputy General Counsel to the National Labor Relations Board. The focus will be on ever-changing issues faced by today’s employers including topics critical to health care employers such as the use of cameras and videotaping in the workplace, “English only” policies, civility and confidentiality rules and other updates regarding recent changes to the election rules (Breakout Session 1: Thursday, August 18th at 10:05 a.m.).
  • Daniel Finerty will present Advanced Issues in Health Care Employee Background Checks to further review the applicable federal and state law regarding background checks and review recent examples of missteps in the hiring process and claims filed by applicants (Breakout Session 3: Thursday, August 18th at 1:25 p.m.).
  • How to Fire Someone the Right Way will be presented by Laurie Petersen along with Richard Rice of Fox & Fox, S.C. The session will explain that it is best to provide a legitimate, clearly-articulated business reason for termination in order to prevent costly litigation and obtain the best result (Breakout Session 3: Thursday, August 18th at 2:35 p.m.).
  • Lindner & Marsack will co-host a complimentary Thursday Evening Social Hour and Cocktail Reception for conference attendees (Thursday, August 18th at 4:50 p.m.).

The Conference also features an optional paid lunch with Tammy H. Scheidegger, Ph.D. According to Dr. Sheidegger, while “having it all” seems to go hand-in-hand with being “successful,” research on happiness, and the emerging science of neuro-counseling, is shifting the happiness paradigm and providing a clear roadmap for how “having enough” is actually the way to balance all aspects of one’s life.

Watch for live updates on Twitter at the #2016HLE conference from Daniel Finerty (@DanielFinerty). A full schedule and registration information is available at http://hle.wisbar.org/schedule.html.

Lindner & Marsack, S.C. has represented management exclusively in all facets of labor, employment, employee benefits and workplace injury defense law since 1908.  Call Tom, Laurie or Daniel at (414) 273-3910 regarding any of their #2016HLE topics, or visit http://www.lindner-marsack.com/ to learn more about the firm and how our experienced and innovative attorneys can help your business.

PROPOSED EEOC WELLNESS PLAN REGULATIONS FOCUS ON COVERAGE, INCENTIVES AND VOLUNTARINESS OF PARTICIPATION

On April 20, 2015, the Equal Employment Opportunity Commission published its proposed regulations regulating employer wellness plans under the Americans with Disabilities Act.  The proposed rules attempt to strike a balance between allowing wellness plans to offer incentives for employee participation while, at the same time, limiting incentives to defined percentages in order to prevent economic coercion that could render a participant’s provision of medical information involuntary.

While the proposed rules will be reviewed in depth on April 28, 2015 at our Annual Compliance/Best Practice Seminar (please register by clicking here), here are some of the basics regarding the proposed rules:

  • The proposed rules re-assert the EEOC’s position that employee health programs that include disability-related inquiries or medical examination (including inquiries or medical examinations) that are part of a health risk assessment or medical history must be voluntary in order to comply with the Americans with Disabilities Act. By contrast, employee health programs that do not include disability-related inquiries or medical examinations are not covered by the proposed rules. While a smoking cessation program that asks participants if they smoke and provide information regarding how to quit is not subject to the proposed rules, a biometric screening or other medical examination that tests for nicotine or tobacco is a medical examination.
  • The proposed rules adopt the already existing HIPAA limitation, as amended by the Affordable Care Act, on wellness plan incentives. The proposed rules clarify that an employer may offer limited incentives up to a maximum of 30% of the total cost of employee-only coverage to promote an employee’s participation in a wellness program that includes disability-related inquiries or medical examinations as long as participation is voluntary. Note that the EEOC does not distinguish between whether the incentive is provided in the form of a reward or penalty. While the proposed rules acknowledge the HIPAA/ACA limitation which permits plans to offer incentives as high as 50% of the total cost of employee coverage for tobacco-related wellness programs, such as smoking cessation programs, the proposed rules are clear that such programs are not covered by the regulations. Again, programs that do not contain disability-related inquiries or medical examination are not covered by the proposed rules.
  • The proposed rules specifically define “voluntary,” a critical term to the ADA analysis. Companies should ensure their wellness plans that includes disability-related inquiries or medical examinations are be voluntary and comply with the ADA by ensuring the plan:
    • Does not require employees to participate;
    • Does not deny coverage under any of its group health plans or particular benefits packages within a group health plan for non-participation or limit the extent of such coverage (except pursuant to allowed incentives); and
    • Does not take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees within the meaning of Section 503 of the ADA, at 42 U.S.C. 12203.
  • In addition, in order to be voluntary, a plan must provide notice to participants that:
    • Is written so that employees from whom the information is being gathered are reasonably likely to understand it;
    • Describes the type of medical information that will be obtained and the specific purpose for which it will be used; and,
    • Describes the restrictions on disclosure of the employee’s medical information, the employer representatives with whom the information will be shared and the methods the employer will employ to prevent improper disclosure of the medical information including HIPAA-related protections.
  • Employer wellness plans should provide opportunities for reasonable accommodation for employees with disabilities to fully participate and earn any reward or avoid any penalty offered by the plan, absent undue hardship, by providing a reasonable alternative standard for the employee or providing an individual waiver. For example, if an employer’s wellness plan’s outcome-based program requires employees to achieve an average blood sugar level of 140 or less, the employer may have to provide a reasonable alternative standard to allow participation by diabetic employee for whom that goal is not achievable.

More information regarding the proposed rules and best practices for ensuring your Company’s wellness plan complies with the proposed rules will be provided on April 28, 2015. We will also present an annual review of developments in labor and employment law and discuss the National Labor Relations Board’s “quickie” election rules which went into effect on April 15, 2015, among other topics. Please register to join us for the half-day educational seminar by clicking here.

With Same-Sex Marriage Permissible In Many States, Plan Sponsors Should Clarify the Rights Of Affected Children

By: Alan M. Levy and John E. Murray

Two years ago, in United States v. Windsor, the U.S. Supreme Court held that the Defense of Marriage Act (“DOMA”) is unconstitutional in its requirement that “marriage” be defined as restricted to heterosexual couples.  After that, regulations were issued which treated same-sex married couples as entitled to the same federal benefits and rights as opposite-sex couples, such as joint tax returns, classification of dependents for health and retirement benefits governed by federal law, and FMLA rights.  Now, either by legislation or judicial determination, 37 states and the District of Columbia permit the same treatment as the federal rule.

Recently, several ramifications of these rules have become apparent.  For example, if a health plan covers dependents of employees, the child of an employee’s same-sex marriage is a dependent.  Similarly, an employee’s same-sex spouse is entitled to a survivor pension, which includes both payment upon the employee’s death and the requirement of the spouse’s written agreement if the employee declines joint and survivor benefits to maximize the retirement benefit during his/her own lifetime.

Some plans may be able to provide these spousal and dependent benefits under their present language.  Others may require amendments to plan documents and summary plan descriptions.  While some issues about same-sex marriage are scheduled for Supreme Court consideration this term, that case will not affect the federal rules which limit the application of DOMA to ERISA plans.

Plan administrators and fiduciaries are encouraged to review their programs and make all necessary modifications to comply with these rules.  If there are any questions about the rules, existing benefit documents, or practices, please contact Alan Levy or John Murray here at Lindner & Marsack, S.C.  We will be happy to assist you in this activity.

Supreme Court Alters Pregnancy Accommodation Requirements for Employers

By Kristofor L. Hanson

The U.S. Supreme Court on March 25, 2015, issued a decision that alters the landscape for employers under the Pregnancy Discrimination Act (“PDA”).  In the decision, the Court held that employers are now required to assess their ability to accommodate a pregnant employee’s restrictions in a manner consistent with efforts to accommodate other employees under similar restrictions.

The case, Young v. UPS, Inc., No. 12-1226 (March 25, 2015), involved a pregnant UPS employee, Peggy Young, whose pregnancy restricted her lifting to 20 pounds, then again to 10 pounds, as her pregnancy progressed.  Her job required her to lift items as heavy as 70 pounds and to assist in moving packages weighing up to 150 pounds.  UPS had a policy that called for light duty assignments for employees injured on the job, employees with suffering from conditions that qualified as disabilities under the Americans with Disabilities Act, and for those employees who had lost their Department of Transportation license.  Young sought an accommodation similar to those the company had provided for employees with similar restrictions.  UPS said that she was not entitled to an accommodation because pregnancy did not fall within one of the three categories for which it provided accommodations.

The District Court dismissed Young’s case, determining that UPS’s decision complied with the PDA, because Young could not demonstrate that she was “similarly situated” to employees in the three categories for whom UPS provided accommodations: 1) she was not injured on the job; 2) she was not legally restricted from working like those who lost or had suspended their DOT certifications; and 3) she was not disabled under the law.  The 4th Circuit Court of Appeals upheld the District Court’s decision and stated that Young more closely resembled “an employee who injury his back while picking up his infant child or . . . an employee whose lifting limitation arose from her off-the-job work as a volunteer firefighter,” neither of whom would qualify for an accommodation under UPS’s policy.

Young presented facts that showed that UPS was able to accommodate other employees who had lifting restrictions similar to hers.  She also presented evidence that other employees had indicated they were willing to assist her with lifting and moving packages.  In addition, a shop steward testified that UPS had no issues with accommodating employees except when a pregnancy situation arose.

The PDA provides, in relevant part, that employers must treat “women affected by pregnancy . . . the same for all employment-related purposes . . . as other persons not so affected but similar in their ability or inability to work.”  The Supreme Court’s analysis determined that this language is intended to provide pregnant women with accommodations provided to other employees who are similarly limited in their work.  Because Young provided evidence that other employees with similar restrictions were regularly accommodated by UPS, the Supreme Court overturned the lower courts and remanded the case.  The District Court will now analyze whether Young presented sufficient evidence to move her case beyond summary judgment under the new standard articulated by the Supreme Court.

The decision places an onus on employers to treat a pregnant employee as they treat other employees who have restrictions similar to the pregnant employee.  Previously, employers were not required to do that.  Rather, employers could limit accommodations as UPS did.  Employers must now analyze pregnant employees’ restrictions on a case-by-case basis to determine whether they are offering accommodations to other employees with like restrictions.  If they are, employers should do the same for pregnant employees.  As the Supreme Court asked, “[W]hen the employer accommodated so many, could it not accommodate pregnant women as well?”  According to the Supreme Court, the answer to that question could very well be, “Yes.”

If you have questions about this material, please contact Kristofor Hanson by email at khanson@lindner-marsack.com or by phone at (414) 273-3910, or any other attorney you have been working with here at Lindner & Marsack, S.C.

Registration is now open for our Annual Compliance/Best Practices Seminar!

Registration and a continental breakfast will be served beginning at 7:30 a.m.  Click here to register.

April 28, 2015

8:00 a.m. – 12:00 p.m.

Sheraton Milwaukee Brookfield Hotel

375 South Moorland Road Brookfield, Wisconsin

This FREE half-day event will address current topics in labor, employment, benefits and worker’s compensation law and provide employers across industries with practical and creative solutions for addressing their toughest workplace legal challenges.

SESSION TOPICS INCLUDE:

  • Annual Labor & Employment Update (Plenary)
  • Wellness Plans – Ensure ADA Compliance & Avoid EEOC Litigation
  • Steps To Avoid The Retaliation Claim Trap
  • Worker’s Compensation Update
  • The National Labor Relations Board And Its Impact On Non-Union Employers