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Top 10 for 2011

Employment & Labor, Employee Benefits & Global Immigration Update
February 2011

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Now that we have a whole month of the new year under our belt, it is a good time to focus on some top “to do” items in the employment, employee benefits and immigration arenas.  Here are our top 10 picks for 2011:

1.  Modify handbooks and forms to include GINA inadvertent disclosure safe harbor.  Last year employers should have updated their equal employment opportunity and harassment policies to prohibit discrimination based on the employee’s genetic information because of the Genetic Information Nondiscrimination Act of 2008.  This year, employers need to revise their medical inquiry forms.   Late last year, the Employment Opportunity Commission issued its final regulations on the Genetic Information Nondiscrimination Act (“GINA”).  The regulations provide that if the employer includes language in its medical inquiry forms, including FMLA medical certification forms, to specifically inform the employee and the employee’s health care professional that they should not provide genetic information, the employer is not liable for illegally “acquiring” genetic information if the employee or the health care provider discloses the information anyway.  The acquisition will be deemed inadvertent.  

2.  Go through personnel files to remove documents relating to medical and genetic information regarding an employee Laws such as the Americans with Disabilities Act, the FMLA and state drug testing laws have always required employers to keep information regarding an employee’s health, including FMLA medical certifications, fitness for duty medical tests, reasonable accommodations for a disability, and the results of drug tests, in a separate confidential file instead of the employee’s personnel file.  GINA also requires employers to keep documents regarding an employee’s genetic information, which can include family medical history, confidential.  Although the new EEOC regulations do not require employers to remove genetic information from personnel files if it was placed there before November 21, 2009 (GINA’s effective date), employers are held responsible for using and disclosing that information.  The  better practice is to remove such information now and avoid the risk of use or disclosure.

3.  Review neutral policies and practices for potentially discriminatory effect.  The EEOC’s focus this year will likely continue to be on disparate impact discrimination—specifically neutral workplace policies and practices that have discriminatory effect.  This could include, for example, a blanket prohibition on hiring or employing persons with a felony conviction.  Review employment policies that screen out persons based on seemingly neutral factors to make sure that those factors are clearly job related and consistent with business necessity and that there is not an alternative method that would achieve the policy’s objective with less of an adverse impact on those employees and applicants in protected classes.  

4.  Conduct harassment training, and be sure to emphasize non-retaliation. It is a wise practice to review harassment policies and conduct training on an annual basis.  This practice not only helps curb practices that could result in company liability, it shows employees that your company is serious about prohibiting discriminatory harassment and can help boost employee morale.  Be sure your company’s harassment policies include a prohibition on discrimination and harassment based on genetic information.  The harassment training should inform supervisors and managers that they cannot request or seek out genetic information from an employee and that if the employee discloses such information (including family medical history), the supervisor or manager cannot follow-up and try to obtain additional information.  It is also critical to train employees that retaliation based on protected activity is prohibited and to help employees, especially management employees, understand that prohibited retaliation is much broader than simply disciplining or terminating an employee who complains about discrimination or harassment.  Thanks to a recent U.S. Supreme Court decision, retaliation can now include adverse employment action against people connected to the employee who engaged in the protected activity.  For a good summary of that recent decision, click here

5.  Prepare and implement a social media policy.  The methods by which employees can share information—whether at work or about work—are constantly changing, and so is the law regarding the respective rights of employers and employees with respect to the employees’ use of social media.  Last year the US Supreme Court indicated that an employer may be justified in searching an employee’s personal text messages on an employer provided device if the employer gave the employee clear notice that employees had no right to privacy in messages on such devices.  The EEOC has taken the position that social media interactions, even if outside of work, can give rise to issues under EEO laws.  The new Department of Labor regulations on GINA state that if a supervisor learns about employee genetic information on social media, the supervisor cannot inquire further or use or disclose that information.  Employees also can cause problems if they endorse a company product on social media without clearly disclosing their affiliation with the company.  A good social media policy, whether a stand alone or as part of a broader technology policy, can help minimize your company’s liability and strengthen the company’s rights. But it has to be done correctly.  Earlier this month, the National Labor Relations Board found that an employer social media policy that prohibited employees from disparaging the company or its employees on-line was unlawful. The ruling applies even if the employer is not unionized.  Click here to view article.

6.  Review your company’s independent contractor relationships, fix any misclassification and train supervisors and managers on proper handling of independent contractors.  Last year, the U.S. Department of Labor (the “DOL”), and the Treasury Department have announced an interagency Misclassification Initiative involving millions of dollars, new personnel, and more audits designed to root out misclassification of employees as independent contractors.  This year, the DOL has reaffirmed its commitment to this issue and commented in its January 2011 web chat regarding its proposed rulemaking that would require employers, among other things, to conduct a classification analysis on any workers whom the employer seeks to exclude form FLSA coverage and to disclose that analysis to the workers.   Employers would be wise to get ahead of the game and conduct an analysis now and correct any misclassification problems before the DOL comes knocking.  Because the degree of control exercised over a worker is a significant factor in determining independent contractor status, employers should train supervisors and managers in how to properly interact with independent contractors so they do not inadvertently give those contractors a basis on which to argue that they are employees. 

7.  Prepare for and implement health care reform requirements effective in 2011.  With employer responsibility provisions still three years away, 2011 may not be as hectic as 2010 when the Patient Protection and Patient Affordable Care Act (“PPACA”) prompted many group health plan changes.  But employers must nevertheless be aware of the following new health care reform requirements and developments expected in 2011:

  • Employers must report the value of health coverage on W-2s.  This requirement applies to 2011 W-2s issued in 2012.  The W-2s must include the cost of employer-sponsored medical, prescription drugs, vision and dental coverages, plus any employer contributions to FSAs, HSAs, HRAs (but not salary reduction contributions).  Employers must adjust their payroll systems to track these amounts.
  • Uniform summaries of coverage.  By March 2011, HHS is expected to issue standards to be used by employer-sponsored plans and insurers in developing summaries of coverage that they will have to start using as of March 2012.  Experts are puzzled as to how it will be possible to include all the material required (explanations of benefits, limitations, coverage exceptions, information on cost sharing, uniform definitions of standard insurance and medical terms, etc.) and yet keep to the 4-page limit “in easily understood language” mandated under the PPACA.  Employers who have self insured group health plans should look out for the HHS standards and start preparing their summaries as early as possible.  Employers who sponsor insured plans should look to the insurers to prepare the summaries.
  • Effective internal/external review procedures.   Non-grandfathered plans must have an “effective” internal and external claim and appeal procedure as of 1/1/2011, although some requirements were postponed until 6/1/2011.  To be “effective,” the internal process must incorporate several new standards (for example, urgent care claims must be answered within 24 hours, instead of 72 hours).  The external review process may comply with State requirements if such, at a minimum, incorporate the consumer protections in the NAIC Uniform Model Act.  Otherwise, new federal requirements modeled on the NAIC apply.
  • Insured plans become subject to nondiscrimination rules. Previously, 105(h) non-discrimination rules applied only to self-funded plans.  The PPACA provides that rules “similar” to those applicable to self-funded plans must now be used for insured plans.  Given the vagueness of the statutory language, compliance and enforcement of this nondiscrimination requirement has been deferred until the agencies issue guidance on how 105(h) principles will apply to insured plans.  Employers sponsoring these plans should be on the lookout for such guidance.
  • Definition of “essential health benefits.”  The PPACA prohibits lifetime and annual dollar limits on essential health benefits, but allows limits on non-essential health benefits.  However, what constitutes an “essential” health benefit has yet to be defined (for example, does acupuncture qualify?).  HHS is expected to issue regulations soon – another important development to follow during 2011.

8.  If your company is publicly traded, make sure your 2011 proxy statement complies with the Dodd- Frank Wall Street Reform and Consumer Protection Act. The Act encompasses a number of new requirements for public companies. One of the most significant requirements is Say-on-Pay. Beginning with the 2011 proxy season, shareholders of public companies are entitled to an advisory vote on the company’s executive compensation practices. Essentially, companies must hold a non-binding vote on the compensation of the company’s named executive officers. The 2011 proxy must also include a separate non-binding resolution on how often such a vote on compensation will occur (every one, two or three years).

9.  Conduct an internal I-9 audit. Our new Congress will find one immigration-related area of agreement with the President: worksite focused enforcement through I-9 audits and prosecutions for noncompliant companies. Don't wait until you receive the 72-hour Notice of Inspection to find out if you have a problem. 

10.  Make sure your new foreign national hires can continue working for you. That foreign student you hired on their student work permit will need to transition to a work visa soon or you'll lose them. The H-1B visa quota for fy 2011 will be hit any day, so apply now to avoid losing valuable new employees. Once the quota is hit, new work visas won't be available until October 2011.  

If you have questions regarding these or any other issue related to employment, immigration or employee benefits, please feel free to contact us.