On August 22, 2017, in AARP v EEOC, a federal court found that regulations allowing employers to offer large incentives under workplace wellness programs were arbitrary. The court did not vacate (nullify) the rules due to concerns about disrupting employers’ existing programs. Instead the court has ordered the responsible agency, the Equal Employment Opportunity Commission (EEOC), to review and reconsider its regulations.


The EEOC regulates and enforces provisions of the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) that affect workplace wellness programs. Employers with 15 or more workers generally are prohibited from requiring employees to undergo medical exams or answer disability-related questions (unless needed for certain job-related health/safety exams). An exception is allowed for wellness programs that are “voluntary,” but the meaning of voluntary has long been debated.

For many years, the EEOC failed to issue regulations defining voluntary while at the same time unofficially asserting that programs were not voluntary if the employee was required to provide private health information to earn a reward or avoid a penalty. In 2015, the EEOC finally proposed rules on the matter, which were finalized in 2016 and took effect January 1, 2017. In an about-face from its prior assertions, the EEOC rules allow employers to offer wellness program incentives of up to 30% of the health plan’s cost. The AARP, on behalf of its membership, sued in federal court alleging that the 30% threshold was too high to be considered a voluntary program.

(The Health Insurance Portability and Accountability Act (HIPAA), a separate federal law primarily regulated by the Department of Labor (DOL), not the EEOC, permits group health plans, including wellness programs, to offer incentives of up to 30% of plan cost. AARP did not challenge the HIPAA rules. HIPAA’s incentive cap applies only to health-contingent programs, however, while the EEOC’s ADA and GINA rules are broader and include both participatory-only and health-contingent wellness programs.)

In AARP v EEOC, the U.S. District Court for the District of Columbia found that the EEOC failed to justify how it had determined its new definition of a voluntary program. The court ordered the EEOC to reconsider its regulations and to file a status report by September 21, 2017 that includes a proposed schedule for the review.

Employer Considerations

Last week’s court ruling did not vacate the EEOC’s wellness program rules. They remain in force and employers may use them as guidance in designing and administering their workplace programs. At the same time, however, employers will want to be mindful that the current rules are under review and may be revised in the future. Also, employers whose wellness programs offer large incentives for providing individual health information need to consider whether their program may be challenged through private litigation. Employers are encouraged to work with their benefit advisors and legal counsel to ensure their wellness programs are consistent with rules under HIPAA, and, if applicable, under the ADA and GINA.

Originally Published By ThinkHR.com

The U.S. Department of Labor has issued compliance guidance for benefit plans, employers and employees, and service providers who are impacted by Hurricane Harvey. The guidance generally provides relief from various ERISA requirements and time limits for entities in the disaster area. This follows the Internal Revenue Service (IRS) announcement extending certain filing dates, including Form 5500.

Key excerpts from the DOL guidance include:

“The Department recognizes that some employers and service providers acting on employers’ behalf, such as payroll processing services, located in identified covered disaster areas will not be able to forward participant payments and withholdings to employee pension benefit plans within the prescribed timeframe. In such instances, the Department will not–solely on the basis of a failure attributable to Hurricane Harvey–seek to enforce the provisions of Title I with respect to a temporary delay in the forwarding of such payments or contributions to an employee pension benefit plan to the extent that affected employers, and service providers, act reasonably, prudently and in the interest of employees to comply as soon as practical under the circumstances….

“With respect to blackout periods related to Hurricane Harvey, the Department will not allege a violation of the blackout notice requirements solely on the basis that a fiduciary did not make the required written determination….

“The Department recognizes that plan participants and beneficiaries may encounter an array of problems due to the hurricane, such as difficulties meeting certain deadlines for filing benefit claims and COBRA elections. The guiding principle for plans must be to act reasonably, prudently and in the interest of the workers and their families who rely on their health plans for their physical and economic well-being. Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits in such cases and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established timeframes.”

The DOL also released FAQs for Participants and Beneficiaries Following Hurricane Harvey. The eight-page FAQ covers issues regarding health plan claims, COBRA continuation coverage, and collecting retirement plan benefits.

Originally Published By ThinkHR.com

The change in the regulations that would increase the salary threshold for overtime exemption that was all over the news for the last several months may now be decided by the end of June.

The Fifth Circuit Court of Appeals has granted the U.S. Department of Labor (DOL) another 60-day extension of time to file its final reply brief in the in the pending appeal of a nationwide injunction issued by a federal district court in Texas blocking implementation of the DOL’s final overtime rule. As we reported at the time, the final rule, which raised the salary threshold for the white collar overtime exemptions, was scheduled to go into effect on December 1, 2016. The final brief is now required to be filed by June 30, 2017. In its unopposed motion, the DOL stated that the extension was necessary “to allow incoming leadership personnel adequate time to consider the issues” and noted that the nominee for Secretary of Labor has not been confirmed.

As a result of the extension, it is not likely that employers will see any resolution of this issue until midsummer at the earliest. This also assumes that President Trump’s nominee for Secretary of Labor, Alexander Acosta, is confirmed within the next few weeks.
By Rick Montgomery, JD
Originally Published ThinkHR

Proposed regulations for revising and greatly expanding the Department of Labor (DOL) Form 5500 reporting are set to take effect in 2019. Currently, the non-retirement plan reporting is limited to those employers that have more than 100 employees enrolled on their benefit plans, or those in a self-funded trust. The filings must be completed on the DOL EFAST2 system within 210 days following the end of the plan year.

What does this expanded number of businesses required to report look like? According to the 2016 United Benefit Advisors (UBA) Health Plan Survey, less than 18 percent of employers offering medical plans are required to report right now. With the expanded requirements of 5500 reporting, this would require the just over 82 percent of employers not reporting now to comply with the new mandate.

While the information reported is not typically difficult to gather, it is a time-intensive task. In addition to the usual information about the carrier’s name, address, total premium, and payments to an agent or broker, employers will now be required to provide detailed benefit plan information such as deductibles, out-of-pocket maximums, coinsurance and copay amounts, among other items. Currently, insurance carriers and third party administrators must produce information needed on scheduled forms. However, an employer’s plan year as filed in their ERISA Summary Plan Description, might not match up to the renewal year with the insurance carrier. There are times when these schedule forms must be requested repeatedly in order to receive the correct dates of the plan year for filing.

In the early 1990s small employers offering a Section 125 plan were required to fill out a 5500 form with a very simple 5500 schedule form. Most small employers did not know about the filing, so noncompliance ran very high. The small employer filings were stopped mainly because the DOL did not have adequate resources to review or tabulate the information.

While electronic filing makes the process easier to tabulate the information received from companies, is it really needed? Likely not, given the expense it will require in additional compliance costs for small employers. With the current information gathered on the forms, the least expensive service is typically $500 annually for one filing. Employers without an ERISA required summary plan description (SPD) in a wrap-style document, would be required to do a separate filing based on each line of coverage. If an employer offers medical, dental, vision and life insurance, it would need to complete four separate filings. Of course, with the expanded information required if the proposed regulations hold, it is anticipated that those offering Form 5500 filing services would need to increase with the additional amount of information to be entered. In order to compensate for the additional information, those fees could more than double. Of course, that also doesn’t account for the time required to gather all the data and make sure it is correct. It is at the very least, an expensive endeavor for a small business to undertake.

Even though small employers will likely have fewer items required for their filings, it is an especially undue hardship on many already struggling small businesses that have been hit with rising health insurance premiums and other increasing costs. For those employers in the 50-99 category, they have likely paid out high fees to complete the ACA required 1094 and 1095 forms and now will be saddled with yet another reporting cost and time intensive gathering of data.

Given the noncompliance of the 1990s in the small group arena, this is just one area that a new administration could very simply and easily remove this unwelcome burden from small employers.

Originally published by www.ubabenefits.com


0818On December 1, 2016, the Department of Labor (DOL) will implement changes raising the minimum compensation for exempt employees to $47,476 annually. While salary is just half of a two-part equation that includes a duties test of essential job functions, scrutiny is under way to analyze compensation and find solutions to avoid conflict with the new rule. Many employers are asking: Why not just have all employees work 40 hours and get approval for overtime?

The statutory definition of “employ” is “to suffer or permit to work.” The phrase “suffer or permit” to work does not mean “approve.” Hence, any time a nonexempt employee works, the employee must be compensated. A nonexempt employee cannot volunteer to work off the clock, so activities as innocuous as an employee arriving early and just starting their day become problematic. Common advice is to issue progressive discipline for employees who work unapproved overtime, but writing up a good employee for what they reasonably perceive to be initiative can open a new can of worms.

Employers further bear the burden of capturing and recording all time worked. Documenting compensable time is complicated when reviewing the variations of what constitutes work time. The non-exhaustive list includes:

  • Waiting or on-call time when it is on the employer’s premises (for example, waiting for a shift replacement to arrive)
  • Work-related training activities (including travel time if they are off-site
  • Eating meals while checking emails or answering phones
  • Work travel outside of the employee’s normal commute
  • Answering work emails or completing reports after work hours
  • Attendance at required company functions, including volunteer activities and social events

Even with a sophisticated time-keeping system, capturing all hours is a challenge. So what are some solutions? View the latest UBA Compliance Advisor, “Salary Considerations under the New DOL Standards,” which reviews workable solutions using salary increases, bonuses or incentives—as well as important considerations when paying nonexempt staff on a salary basis.

Originally published by United Benefit Advisors – Read More

By Carol Taylor
Director of Compliance and Health Plan Collaborative,
D & S Agency, A UBA Partner Firm

SafeHarborThe new Department of Labor (DOL) overtime exemption rules increase the salary threshold from $23,660 a year to $47,476 annually, beginning December 1, 2016. This means that employees earning less than the threshold can no longer be considered salaried and exempt from overtime pay.

While the DOL has indicated that the regulations will have a minimal effect on wages, there are other factors not taken into account in their impact estimations. Employers need to be mindful of several employee benefit classifications, as well as the potential impact on other laws, such as the Patient Protection and Affordable Care Act (ACA).

First and foremost, employers need to revisit their ACA affordability calculations and safe harbors now.

There are three affordability safe harbors for the ACA that employers use to satisfy the requirement to offer affordable, minimum value coverage or face the employer shared responsibility taxes and fines. Since employers don’t know and aren’t allowed to ask about family income, the regulatory agencies developed the safe harbors to compensate for that lack of information.

The three safe harbors are the Federal Poverty Level safe harbor, the W-2 Box 1 earnings safe harbor, and the rate of pay safe harbor.

The safe harbor applies to the single-only premium of the lowest cost plan offered to employees, even though they may enroll in a different tier of coverage or plan. To determine the safe harbor amounts, the regulatory agencies set the percentage used in the calculation. For 2014, the amount was 9.5 percent, in 2015 it was 9.56 percent, and for 2016 is 9.66 percent.

To calculate the safe harbor, the employer would choose the one that best applies to them. There are some cases where employers don’t have a choice between methods because of the interplay between the regulations and the way employees are compensated. For example, many restaurants will have to use the W-2 Box 1 safe harbor instead of the rate of pay safe harbor due to restrictions on the use of rate of pay for employees who receive tips.

Since many employers use the rate of pay safe harbor for affordability, they need to account for the change from salaried to hourly calculations. For example, in the case of a salaried employee currently making $25,000 per year, the new overtime exemption rules require that the employee be reclassified as hourly since he or she earns less than the threshold. Being salaried, the employee currently cannot pay more than $201.25 per month, or $46.45 per week, for coverage ($25,000 divided by 12, times 0.0966).

However, now that the employee has to be reclassified as an hourly employee, the employer can only use a 30-hour week to calculate affordability, even though the person may work 40 hours. The employee’s $25,000 annual salary is equivalent to $12.02 per hour ($25,000 divided by 2,080, which is 52 weeks times 40 hours). Using the 30-hour workweek (130 hours per month), the affordability number now becomes $150.94 monthly, or $34.83 per week (130 hours times $12.02 is $1,562.60, times 0.0966).

Simply put, prior to the DOL rule, this employer could charge as much as $201.25 a month for the lowest cost employee-only plan for an employee making $25,000 a year. Under the new rules, and the forced change to an hourly rate of pay, this employer can only charge up to $150.94 a month for the lowest cost employee-only plan.

This could cause further financial strain on the employer, if it must modify its contributions to medical plans to bring them into the affordable range, which is a difference of more than $50 per month, per employee.

Employers should review their affordability calculations, now with the understanding that their policy renewal time may not be until after the new overtime exemption rules go into effect. This also affects when advance notice must be given to the affected workers. In most cases, this is no later than 60 days prior to any changes regarding benefit plans or contributions. The advance notice could also be problematic when employee contributions are made pre-tax, as in the case of cafeteria plans.

For employers using the look-back method for tracking and counting hours, it is imperative that they look at those potential changes now, before going into an administrative period and subsequent stability period. Employers using the measurement and look-back method are very limited in the circumstances that allow an employee to be moved from full-time to part-time status (and thus, dropped from benefits) during a stability period.

Likewise, if other benefits are classed, it could also affect employee eligibility for coverage. Many times life or disability coverage is different for salaried versus hourly employees. This could result in a loss of benefits for some employees.

Employers need to plan for these changes now, since December is likely a very busy time for most employers with end of year responsibilities. Make sure you know what changes will need to occur before the requirement sweeps in on December 1, including any advance notification requirements.

For more information, download UBA’s Compliance Advisor, “Overtime Exemption Rules Arrive”.

Read more here …

By Danielle Capilla
Chief Compliance Officer at United Benefit Advisors

After a long wait, the Department of Labor (DOL) has released the revisions to the white collar overtime exemption rules in the Fair Labor Standards Act. The new rule becomes effective on December 1, 2016.

Generally speaking, the Fair Labor Standards Act applies to employees of “enterprises.” Enterprises are:

  • A federal, state, or local government agency
  • A hospital; or an institution primarily engaged in the care of the sick, the aged, or the mentally ill or developmentally disabled who live on the premises (it does not matter if the hospital or institution is public or private or is operated for profit or not-for-profit)
  • A pre-school, elementary or secondary school or institution of higher learning (e.g., college), or a school for mentally or physically handicapped or gifted children (it does not matter if the school or institution is public or private or operated for profit or not-for-profit)
  • A company or organization with annual dollar volume of sales or receipts in the amount of $500,000 or more

Employees may still be covered even if an employer isn’t an enterprise, due to interstate commerce requirements.

Non-exempt, or “overtime eligible,” workers in the United States are entitled to time-and-a-half pay for their hours worked after 40 hours in a week. Some specific jobs are considered exempt, such as airline employees, farmworkers, seamen on American vessels, switchboard operators, and executive, administrative, professional and outside sales employees who are paid on a salary basis.

The “white collar” or “EAP” exemption covers executive, administrative, professional, outside sales, and computer employees. The white collar exemption salary level was last set in 2004 at $455 a week or $23,660 a year. That salary level is now below the federal poverty level for a family of four. The new standard is $913 a week or $47,476 annually.
For information on how a white collar employee qualifies for an overtime exemption—as well as the threshold for highly compensated employees and how to calculate salary—download UBA’s Compliance Advisor, “Overtime Exemption Rules Arrive”.

Read more here …

By Bill Olson
Chief Marketing Officer at United Benefit Advisors

DOL-CTA-BLOGNot many things incite more fear than receiving a notice that you’re about to have an audit, especially from the Department of Labor (DOL). The DOL is a cabinet-level department of the U.S. federal government responsible for occupational safety, wage and hour standards, unemployment insurance benefits, re-employment services, and some economic statistics. It is headed by the U.S. Secretary of Labor.

What can trigger a DOL audit? Usually it’s one of two things — either a complaint, which leads to an investigation, or it’s totally random. While a DOL audit may or may not be triggered by the following, there are certain ways in which employers expose themselves to unnecessary risks:

  1. Not submitting Form 5500 reports on time if they have 100 or more participants
  2. Not having Summary Plan Descriptions (SPDs) for each Employee Retirement Income Security Act (ERISA) covered benefit or not using an SPD wrap document. Read more on the perils of neglecting written policies and procedures.
  3. Not completing all the various annual employee notifications such as Medicare Part D, Children’s Health Insurance Program (CHIP), Mental Health Parity Act (MHPA), Newborns’ and Mothers’ Health Protection Act (NMHPA), Women’s Health and Cancer Rights Act (WHCRA), Patient Protection and Affordable Care Act (ACA), Health Insurance Portability and Accountability Act (HIPAA), Health Exchange, etc.
  4. Not generating Summary of Material Modification (SMM) whenever there are material changes to benefits and then not saving these SMMs for future reference
  5. Not keeping Section 125 Premium Only Plan (POP) and flexible spending account (FSA) documents current and accurate
  6. Not filing Form 1095/1094 reports in a timely fashion, or if having conflicting information on these reports
  7. Not properly following the controlled group rules for owners of multiple organizations

Audit-proof your company with UBA’s latest white paper: Don’t Roll the Dice on Department of Labor Audits. This free resource offers valuable information about how to prepare for an audit, the best way to acclimate staff to the audit process, what the DOL wants, and the most important elements of complying with requests.

Read more here…

By Danielle Capilla

Chief Compliance Officer at United Benefit Advisors

CafeteriaLineThe Employee Retirement Income Security Act (ERISA) was signed in 1974. The U.S. Department of Labor (DOL) is the agency responsible for administering and enforcing this law. For many years, most of ERISA’s requirements applied to pension plans. However, in recent years that has changed, and group plans (called “welfare benefit plans” by ERISA and the DOL) now must meet a number of requirements.

Generally, ERISA applies to:

  • Health insurance – medical, dental, vision, prescription drug, health reimbursement arrangements (HRAs) and health flexible spending accounts (FSAs) (Health savings accounts are not governed by ERISA but the related high deductible health plan is.)
  • Group life insurance
  • Disability income or salary continuance unless paid entirely by the employer from its general assets
  • Severance pay
  • Funded vacation benefits, apprenticeship or other training programs, day care centers, scholarship funds, and prepaid legal services
  • Any benefit described in section 302(c) of the Labor Management Relations Act (other than pensions on retirement or death)

Cafeteria plans, or plans governed by IRS Code Section 125, allow employers to help employees pay for expenses such as health insurance with pre-tax dollars. Employees are given a choice between a taxable benefit (cash) and two or more specified pre-tax qualified benefits, for example, health insurance. Employees are given the opportunity to select the benefits they want, just like an individual standing in the cafeteria line at lunch.

Cafeteria plans are not ERISA plans, but many of the components benefit plans offered through a cafeteria plan are subject to ERISA. This is because a cafeteria plan serves as a vehicle for employees to elect benefits and pay for them. This can create confusion for plan sponsors when they determine what ERISA obligations they have in relation to their cafeteria plan, as well as to their individual offerings.

Only certain benefits can be offered through a cafeteria plan and not all benefits offered under a cafeteria plan can or will be subject to ERISA. Employers should take care to understand the distinctions and interplay between ERISA requirements and cafeteria plan requirements. Request UBA’s ACA Advisor, “Reporting and Plan Documents Under ERISA and Cafeteria Plan Rules” for comprehensive information on reporting, Form 5500, and requirements for plan documents.

Read More …

By Bill Olson
Chief Marketing Officer at United Benefit Advisors

auditAs the likelihood of an audit from the U.S. Department of Labor increases, every organization should be prepared so that this potential disaster can be handled with confidence. Conducting a mock audit can be key part of your prevention and preparation strategy.

As with any major issue of government compliance, it’s often necessary to meet with the appropriate management and staff of a company and familiarize them with the entire audit process. Those who will meet with the auditor should be coached
 to understand that they need to answer any question truthfully, but don’t go any further. Sometimes when people are nervous, they have a tendency to ramble or a need to explain their answer. This should be avoided at all costs. Michael J. Cramer, JD, Compliance Officer at Beneflex Insurance Services (a UBA Partner Firm), says that a great way to help reduce the potential anxiety during an interview by a DOL auditor is to hold a mock interview and that the employer’s attorney and advisor go through this with you. This will help most personnel to feel confident and comfortable during the process. Also, if the auditor asks a question, or requests information that does not pertain to your organization, never hesitate to say that it’s “not applicable.” This is better than trying to make an answer fit or worse, not answering the question at all. Deanna Johnson, Director of Compliance at Benefit Insurance Marketing (a UBA Partner Firm), stresses that if the staff doesn’t understand a question on the audit, or is not sure what the question is truly asking, then they should ask the auditor before they arrive to clarify what they need rather than make an assumption.

Similar to just answering the question and only the question, Josie Martinez, Senior Partner and General Counsel at EBS Capstone (a UBA Partner Firm), notes to never provide more documentation than what is requested. She adds that once you have all the documentation in place, identify the specific document(s) that responds to the request and then highlight the exact location on that document. After all, what good is giving them a box of documents and telling the auditor, “good luck, it’s in there.” The goal is to get the auditor out of your office as quickly as possible.

Whether it’s your company’s legal department, senior staff, or any other group of employees, make sure to empathize with their concern during a DOL audit. No matter how well prepared you and your company may be, there is bound to be some trepidation. Assuming you are indeed prepared for a DOL audit, remember that confidence breeds confidence. Show your employees that the situation is well in hand and they have nothing to fear.

To further prep your team and minimize resource drain, UBA is offering new white paper that can help employers:

  • Learn how to audit-proof your company
  • Avoid the worst mistake you can make
  • Conduct a mock audit
  • Get an auditor out of your office as quickly as possible

After downloading the new UBA white paper “Don’t Roll the Dice on Department of Labor Audits”, be sure to also request UBA’s audit checklist and sample interview questions!

Read More …

Dear Ron, Thank you so much for generously supporting [us] and our AIDS walk team this year. It was a lovely foggy Sunday morning in Golden Gate Park, with thousands of folks walking to fight AIDS. It has been a pleasure working with you over the years. You have saved us LOTS of money! I want you to know how much we appreciate all that you do!

- San Francisco, Non-profit organization