Posts

Several new, highly public developments showcase prominent executives being subjected to significant financial penalties, loss of employment and reputational damage arising from allegations that they bore responsibility for corporate scandals to which they contributed, directly or indirectly.

Even though these developments are unique in their nature and scope, the sheer magnitude of the penalties asserted and the intensity of the media coverage are likely to attract significant attention in the executive community. They’ve been page-one news; people are noticing and boards may be expected to react.

McDermott’s Michael Peregrine authored an article for Forbes in which he discusses how the spotlight on individual accountability is getting a little bit brighter.

Access the full article.

Originally published on Forbes, February 2020

https://www.employeebenefitsblog.com/2020/03/the-accountability-pendulum-nudges-back-towards-executives/

In our global economy, Coronavirus (COVID-19) raises serious concerns for employers in all industries. Workers may be on the front lines caring for patients and developing vaccines, travelling for business, or in close contact with individuals who travel or may have been affected. At this time, there is no vaccine or medication approved to prevent or treat the COVID-19 disease. Therefore, preparedness and prevention are crucial. Frontline responders must be especially vigilant as they deliver care and anticipate the challenges this uncharted territory presents.

McDermott’s Coronavirus Resource Center, brought to you by a multi-disciplinary team, will keep you informed of the latest developments and provide comprehensive insight to help you navigate this crisis with your employees, including:

  • Frequently asked questions for US and multi-national employers
  • Recent news updates
  • Podcasts
  • Upcoming events

Access the resource center.

https://www.employeebenefitsblog.com/2020/03/coronavirus-resource-center-preparedness-planning-for-businesses/

The US Supreme Court handed workers a big win by preserving a six-year deadline to file ERISA class actions as the standard, but employers have already seized on language in Justice Samuel Alito’s opinion as a road map for how to impose a shorter deadline.

Justice Alito ended the unanimous opinion—which affirmed the Ninth Circuit’s ruling that ERISA grants workers six years to sue except under special circumstances—by listing several tactics employers can use to invoke a three-year statute of limitations.

McDermott’s Richard Pearl contributes to a Law360 article discussing the decision, including how employers should respond.

Access the full article.

Originally published on Law360, February 2020

See Richard Pearl’s January 2019 On the Subject on this case: Ninth Circuit Clarifies ‘Actual Knowledge’ for ERISA’s Statute of Limitations

https://www.employeebenefitsblog.com/2020/03/employers-lose-intel-high-court-suit-but-get-gift-from-alito/

One of the big questions for the employee ownership field is, why has the number of US employee-owned firms failed to grow significantly over the last couple of decades?

An upcoming paper from Fifty by Fifty proposes that the barrier to growth is a lack of agency. Employees don’t have the knowledge, skills or capital to pursue a buyout of their employer; and employers, knowing little about the benefits of selling to employees, are more likely to respond to an opportunity that knocks on their door, such as an offer from a private equity firm or a strategic buyer. McDermott’s Ted Becker and Erin Turley share their thoughts on the guidelines in a recent article published on Medium.

Access the full article.

Originally published on Fifty by Fifty, January 29, 2020

https://www.employeebenefitsblog.com/2020/02/investor-guidelines-for-shared-value-creation-in-employee-ownership-transitions-unveiled/

One in five job applicants say an interviewer flirted with them during a job interview, and more than half of them flirted back, according to a survey by background-screening firm JDP. Of the 1,997 people surveyed, 58% of the women flirted back and 71% of the men reciprocated. The attraction may not have been mutual, though. Many job applicants may believe they have no choice but tao flirt back in order to land the job.

McDermott’s Maria Rodriguez contributes to a SHRM article discussing the findings of the JDP survey, including what male and female interviewees worry about most. The article also addresses how job interview flirters can and should be disciplined in the workplace.

Access the full article.

Originally published on SHRM, February 2020

https://www.employeebenefitsblog.com/2020/02/flirting-at-job-interviews-is-common/

An increasing number of jurisdictions around the country, including parts of California, New York and Washington, DC, are mandating that employers provide commuter benefit programs that allow employees to pay for commuting costs on a pre-tax basis. While the requirements are similar across most jurisdictions, there are specific rules for which employees are covered under the different laws and other key distinctions. When budgeting and developing these programs, employers should be mindful of the different conditions under state and local law to ensure that commuter benefits meet all applicable requirements.

 

City/County/StateCitationCovered EmployersCovered EmployeesReimbursement Limit
Berkeley, CABerkeley Commuter Benefit Program Ordinance B.M.C. 9.88 (TRACCC)Berkeley employers with 10 or more employees, including those who work outside the geographic boundaries of BerkeleyAny person who has performed an average of at least 10 hours of work per week for compensation within the geographic boundaries of Berkeley for the same employer within the previous 12 months and qualifies as an employee entitled to minimum wage payments under the California minimum wage lawSame as IRS (“up to the maximum level allowed by federal tax law”)
Richmond, CARichmond Commuter Benefits Ordinance Ord. No. 22-09 N.S. s. 1, 7-21-09Richmond employers for which an average of 10 or more persons per week perform work for compensation, including those who perform work outside the geographic boundaries of RichmondAny person who performs an average of at least 10 hours of work per week for compensation over a 90-day period within the geographic boundaries of Richmond for the same employer and qualifies as an employee entitled to minimum wage payments under the California minimum wage law.Same as IRS (“up to the maximum level allowed by federal tax law”)
San Francisco, CASan Francisco Environment Code Sec. 421 (Commuter Benefits Program)San Francisco employers for which an average of 20 or more persons per week perform work for compensation (full-time, part-time and temporary employees are counted, as are employees who work outside the geographic boundaries of San Francisco)Any person who performs an average of at least 10 hours of work per week for compensation within the geographic boundaries of San Francisco for the same employer within the previous calendar month and qualifies as an employee entitled to minimum wage payments under the California minimum wage lawSame as IRS (“up to maximum level allowed by federal tax law”)
San Francisco Bay Area (Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, southwestern Solano and southern Sonoma Counties)Government Code Section 65081 (Bay Area Commuter Benefits Program)Any employers for which an average of 50 or more full-time employees per week perform work for compensation within the geographic area covered by the ordinanceAn employee who has performed at least an average of 20 hours per week within the previous calendar month within the geographic area covered by the ordinanceSame as IRS (“up to the maximum amount allowed by federal tax law”)
New JerseyP.L. 2019, Chapter 38 (NJ Transit Benefits Law)Every employer in New Jersey that employs at least 20 employeesAll employees not covered by a collective bargaining agreementSame as IRS (“at the maximum benefit levels” allowable under federal law)
Seattle (not effective until January 1, 2020; enforcement begins January 1, 2021)Seattle Municipal Code Title 14 Chapter 14.30 (Commuter Benefit)Employers who employ 20 or more employees (including full-time, part-time, and temporary employees, and those who work outside of Seattle)Employees who work an average of 10 hours or more per week in Seattle in the previous calendar monthSame as IRS (“up to the maximum level allowed by federal law”)
Washington, DC D.C. Act 20-385 (Sustainable DC Omnibus Amendment Act of 2014)Employers located in Washington, DC, with 20 or more employeesFull-time and part-time employees who (a) perform 50% of their work in Washington, DC, or (b) whose employment is based in DC, and a substantial amount of their work is performed in DC with less than 50% of their work performed in any other stateSame as IRS (“the maximum amount that may be deducted . . . pursuant to section 132(f)(2) of the Internal Revenue Code”)

 

https://www.employeebenefitsblog.com/2020/02/summary-of-commuter-benefit-laws-current-as-of-feb-3-2020/

Healthcare providers and insurers are still making tons of rookie mistakes on patient privacy, turning themselves into easy enforcement targets, according to Roger Severino, director of the US Department of Health and Human Services.

Severino made headlines in 2017 for expressing interest in punishing a “big, juicy, egregious” privacy breach, and seemingly followed through with a $16 million settlement stemming from Anthem Inc.’s megabreach involving 79 million patients. But, an emphasis on smaller violations makes sense in light of the OCR’s recent acknowledgement of limits on its penalty powers, said Edward G. Zacharias, a McDermott partner.

Access the full article.

Originally posted on Law360, February 2020

https://www.employeebenefitsblog.com/2020/02/hipaa-boss-sees-low-hanging-fruit-ripe-for-enforcement/

For 2020, legislation enacted in December of 2019 dramatically increases penalties imposed by the Internal Revenue Code (the Code) for late filing of certain employee benefit plan notices and reports. In addition, a final rule published by the Department of Labor (DOL) makes inflation adjustments to a wide range of penalties. Learn the penalty amounts that apply beginning in 2020.

Access the full article.

https://www.employeebenefitsblog.com/2020/02/up-up-and-away-2020-increased-penalties-for-employee-benefit-plans/

Certain employers might prefer to avoid hiring nicotine users: smokers, dippers and vapers alike. U-Haul International Inc. is doing so, with a policy that went into effect on February 1. Thus, this is an opportune moment to examine why employers might consider doing likewise, the legal ramifications of such policies and the alternatives for encouraging healthier workforces.

McDermott’s Jacob M. Mattinson, Aaron Sayers and Erin Steele contribute to a Law360 article exploring the practical and legal considerations related to a workplace nicotine ban, the impact on healthcare costs, whether employers can use health plan information to fire nicotine users once hired, and how other employers are addressing the costs of nicotine usage in their workforces.

Access the full article.

Originally published on Law360, January 2020

https://www.employeebenefitsblog.com/2020/02/what-to-know-before-enforcing-a-nicotine-free-workplace/

The United Kingdom is no longer a member of the European Union and has entered into a transition period until December 31 2020, unless an extension of 1 or 2 years is agreed by July 1 2020 (the Brexit Long Stop Date).

During this transition period, the UK will continue to trade with the EU in much the same way as it did before its exit. Negotiations will take place throughout this year to determine the future permanent relationship between the UK and the EU.

The UK’s Prime Minister, Boris Johnson, has repeatedly stated that the transition period will not be extended beyond the end of this year. This is an ambitious deadline to reach a comprehensive agreement with the EU and the possibility of a “no deal” Brexit remains an event for which companies should prepare.

Against this backdrop, this update summarises the current status of the UK’s relationship with the EU and sets out some of the key legal implications associated with a “no deal” scenario for certain areas—one of which being employment, which we examine here.

Employment

In either a deal or “no deal” scenario after the implementation period, there is little if any change expected in relation to UK employment laws in the short term.

The Government’s position has been reasonably consistent during the period since the Brexit vote in June 2016. The Secretary of State with responsibility for employment law told Parliament on 7 November 2016 that the Government would “entrench all existing workers’ rights in British law, whatever future relationship the UK has with the EU”. While Prime Minister, Theresa May reiterated on numerous occasions that the Government “will not only protect workers’ rights, but enhance them”.

Boris Johnson has made similar promises about protecting workers’ current rights but was criticized for the omission from the 2020 Withdrawal Agreement of a section in previous versions of the European Union (Withdrawal Agreement) Bill requiring the Government to report on divergence from new EU rights in the future.

In relation to current employment rights, the Government has issued a series of technical notices which confirm that, in the event of a “no deal” Brexit, workers in the UK will continue to enjoy the rights they are currently entitled to under EU law with one key exception (relating to European Works Councils—discussed further below). To achieve this, the 2020 Withdrawal Act provides for EU law (with necessary technical drafting amendments) to be imported into UK law on Brexit Day.

The Withdrawal Agreement also provides that EU law will continue to apply during the transition period until the Brexit Long Stop Date. Employment law rights derived from EU law (such as anti-discrimination rights, collective consultation obligations, TUPE regulations, family leave and working time rights) will therefore be maintained for this transition period as a minimum.

However, some comfort can be taken from the Political Declaration setting out the Framework for the Future Relationship between the EU and UK (which accompanied the Withdrawal Agreement) which includes a commitment to work together to safeguard “high standards of … workers’ rights” and a statement that the future relationship must ensure open and fair competition, including provisions on social and employment standards.

European Works Council

The only substantive changes relate to European Works Councils (EWCs), which cannot continue to function as they do currently post-Brexit Long Stop Date.

The Withdrawal Agreement provides that no new requests to set up an EWC or information and consultation procedure can be made after the Brexit Long Stop Date.

For existing EWCs, the impact of Brexit will depend on the terms of the EWC. For EWCs which are not governed by UK law, the default position is that UK employees will no longer be entitled to have representatives on the EWCs, and the UK delegates’ seats will need to be reallocated, unless the parties to the EWC agreement agree otherwise.

Those governed by UK law will need to designate another EU country to govern the EWC. The choice of which alternative law will apply should be carefully considered in light of the fact that it will have strategic implications for the composition of the EWC and national legal concepts to which it will be subject.

Changes to Employment Laws in the Future?

In theory, Parliament could make future legislative changes to employment law, but these are likely to be limited given the commitments given by the Government and, in the event of a no deal Brexit, the practicalities of negotiating any future trade arrangements with the EU.

In terms of case law, under the 2020 Withdrawal Act, in theory at least, the Supreme Court could re- examine and potentially overturn doctrines derived from European case law. Much-litigated issues such as holiday pay could, therefore, theoretically at least, be re-opened. However, again, in light of the reassurances given about the continued protection of employment rights, any significant roll-back would be surprising.

Immigration

Immigration is an area that has the ability to have significant impact on some employees and their families.

If the UK leaves the EU with a deal, it has been agreed that there will be a “transition period” from Brexit Day to the Brexit Long Stop Date (being December 31 2020 at the time of writing). During the transition period, free movement will effectively continue between the UK and the EU.

The UK Government has promised that, whether or not there is a Brexit deal, under the “EU Settlement Scheme” all EEA nationals and their families living and working in the UK as at December 31 2020 will have the continued right to reside and work in the UK and to acquire rights of permanent residence in the UK after five years of qualifying residence.

The scheme came into effect on March 29 2019. The Government has stated that applications for Settled or Pre-Settled Status must be made before the end of June 2021 if there is a Brexit deal (or December 31 2020 in the event of a “no deal” Brexit), to protect an individual’s rights to remain in the UK.

The latest information on the “EU Settlement Scheme” is published by the UK government. Please see https://www.gov.uk/settled-status-eu- citizens-families for further information.

Practical Steps for Employers

The key impact will be for employers who recruit or second employees cross-border. Employers with affected employees will wish to ensure that they are familiar with the “Settled Status” procedure and the relevant deadlines.

Employment Taxes: Social Security

EU regulations currently help internationally mobile employees pay social security contributions in only one Member State. In the event of a “no deal” Brexit, these regulations will cease to have effect in the UK post-Brexit Long Stop Date. Although the UK has legislated for the status quo to continue, whether it will do so will depend entirely on reciprocal action by the EU, which has not been agreed. The UK had a limited number of agreements with some, but not all, of the EU Member States before the regulations took effect; however, these are far less comprehensive than the EU regulations, and may be limited in duration and scope.

Employers will therefore need to review the social security status of employees moving into or out of the EU, and will also need to review all international working arrangements to determine whether new social security obligations are triggered.

https://www.employeebenefitsblog.com/2020/02/brexit-update-effects-on-employment/