Archive for April, 2014

Paid Sick Leave Bill on the Move in Legislature

A bill is wending its way through the California Legislature that would require all employers, large and small, to provide their employees with paid sick leave benefits.

AB 1522 provides for statutory penalties and the possibility of litigation for employers that violate the law.

California businesses do not have to provide paid sick leave to employees. In recent years, paid sick leave has become a priority for labor groups, and their efforts have paid off in some cities.

In 2006, San Francisco passed a law requiring all businesses to provide sick days to all employees who work in the city – the first law of its kind in the nation. Since then, a number of cities throughout the country have followed suit, including Seattle, New York and Portland, Oregon. Connecticut was the first state to enact a statewide paid sick leave law.

In particular, AB 1522 would require that:

  • An employee who works in California for seven or more days in a calendar year would be entitled to paid sick days, to be accrued at a rate of no less than one hour for every 30 hours worked.
  • An employee would be entitled to use accrued sick days beginning on the 90th calendar day of employment.
  • An employer could limit an employee’s use of paid sick days to 24 hours or three days in each calendar year.
  • An employer provide paid sick days, upon the request of the employee, for diagnosis, care, or treatment of health conditions of the employee or an employee’s family member, or for leave related to domestic violence, sexual assault or stalking.
  • An employer be prohibited from discriminating or retaliating against an employee who requests paid sick days.


The measure would require employers to post provisions of the law in the workplace so that employees know their rights in terms of paid sick leave. It would also impose certain record-keeping requirements on employers.

The bill passed the Assembly Labor and Employment Committee in March and is awaiting a hearing in the Assembly Appropriations Committee.

Obesity Complicates ADA Compliance for Employers

In April of last year, a Louisiana chemical-dependence treatment clinic agreed to settle for $125,000 a lawsuit filed by the Equal Employment Opportunity Commission on a behalf of a deceased woman who had allegedly been fired due to her being severely overweight.

And in July of 2012, BAE Systems Inc. agreed to pay $55,000 to a 680-pound man whom the company had terminated, despite the fact that at the time of his firing, he was qualified to perform the essential functions of his job as a materials handler, according to the EEOC.

While the EEOC has had a long-standing policy to go after employers that discriminate against the morbidly obese (individuals with body mass indexes of more than 40), the debate has turned to the issue of those who are simply “obese” – having a BMI of 30 or more. From some perspectives, 36% of Americans are obese under this definition.

And while there is no outright guidance from the EEOC about barring disability based on obesity, the threat in this area grew after the American Medical Association (AMA) last year classified “obesity” as a disease.

But, obesity discrimination is not as clear cut as other areas of discrimination (think age, sex, race), and as a result, employers need to be wary of this new litigation danger as it poses many issues for employers.

One problem for employers is that they have to balance the safety of their employees with fair treatment as mandated by the Americans with Disabilities Act.

One the one hand, severely obese employees are more likely to get hurt on and off the job (and take longer to recover), miss work and increase the cost of a company’s overall health premiums. At the same time, you can’t sideline someone for being obese, as you risk violating the ADA.

Employment law attorneys say that while a person with a BMI of 32 may not be eligible to receive special accommodations at work for their “disability,” if that weight was caused by another impairment – like Cushing’s disease – or by medication for depression or a thyroid condition, any adverse employment action based on weight would be a case of disability discrimination.

On the other hand, if an employer kept firing only black individuals who were overweight and not white employees, that would be race discrimination. Or, if the employer were firing or treating poorly older obese workers and not younger ones, it would be age discrimination.

Employment law attorneys are expecting a rush of litigation in the coming years based on obesity discrimination. There are two factors that make such an increase likely:

  • The AMA’s recent pronouncement that obesity is a disease, and
  • The Americans with Disabilities Act Amendments Act (ADAAA), which was signed into law by President Bush in 2008. That legislation made it easier for individuals to claim discrimination if an employer acts adversely against them. One key part of the law states that an individual is disabled if they are “regarded as” disabled by their employer.


The trend

Before the ADAAA, courts generally rejected obesity discrimination claims, unless it could be shown that it was caused by a physiological disorder. But that’s now changing.

In the first case cited in this article, the employer agreed in a settlement to pay for allegedly discriminating against a former worker who was 527 pounds.

The settlement came after a federal judge in the Eastern District of Louisiana, ruling in EEOC vs. Resources for Human Development Inc., denied both of the defendant’s motions for summary judgment in an order holding that severe obesity is an impairment within the meaning of the ADA. The court concluded that severe obesity may qualify as a disability regardless of whether it is caused by a physiological disorder.

In the other case, when the 680-pound worker was let go from his job, the linchpin of the case was that the employer failed to engage in any discussion with him to determine whether reasonable accommodations would have allowed him to continue to perform his duties.


Employer strategies

In the wake of the AMA’s declaration, it may be more difficult for employers to argue that obesity is not a disability. Employers may also expect to see an increase in claims brought by obese individuals.  Even individuals who are overweight or moderately obese may argue that they too may qualify as disabled.

Also, under the ADAAA’s “regarded as” prong, employees need only show that the employer took action based on its assumptions or beliefs about the employee’s obesity, even if in reality that impairment did not substantially limit a major life activity.

Accordingly, even if the plaintiff does not have an actual disability, simply showing that they were subjected to an action based on the perception that their weight was a physical impairment, may be enough. Similarly, jokes about an employee’s weight may also lead to claims of disability harassment.

To minimize potential liability, you must be vigilant about potential obesity-related claims. This not only means recognizing that the prohibition against discrimination may extend to obese employees, but also an employer’s efforts to handle requests for reasonable accommodation from overweight individuals.

And employers must be careful to avoid any suggestion that employees who are overweight are prevented from doing certain jobs on account of their weight.

Some in Small Group Market to See Health Insurance Rate Decreases: CMS

A new study predicts that nearly 70% individuals and families who get their insurance through small group plans will see their premiums increase in 2015, and the rest will see decreases.

The report by the Centers for Medicare and Medicaid Services (CMS) did not estimate just how premiums would change, as the goal was just to give an indication of how many people would see increases in the premiums they pay.

A variety of health insurance analysts and surveys have predicted that premium rates will increase by an average of just 7% in 2015, which is well below the double-digit increases that some observers have anticipated in recent months.

Besides general cost inflation, a recent article in Forbes magazine notes that health care spending skyrocketed in February of this year by $13 billion nationwide, compared to February 2013. That additional spending could also spur insurers to raise rates.

But increases are not likely to be dramatic because insurers have less leeway than before to raise rates, due to the Affordable Care Act.

The ACA requires adjusted community rating for plan years beginning on or after January 1, 2014. Specifically, premium rates in the individual and small group market charged for non-grandfathered health insurance coverage may only be varied on the basis of the following four characteristics:

  • Individual or family enrollment
  • Geographic area  – premium rates can vary by the area of the country
  • Age – premium rates can be higher for an older applicant than for a younger one, but the ratio of premiums cannot exceed 3:1 for adults
  • Tobacco use – premium rates can be higher for smokers, but the ratio cannot exceed 1.5


Prior to the enactment of the ACA, health insurers were able to vary premiums based on the health status of a group, group size, and industry code or classification. Smaller firms could charge higher premiums for high-risk work and groups with sick employees, and could increase premiums after a single employee received a new diagnosis.

But, since the ACA took effect, insurers may no longer have the ease of variability with insurance premiums. Consequently, CMS acknowledges the considerable uncertainty that exists in whether small employers will terminate existing health insurance coverage for employees, or send employees to the individual market exchanges.

Although CMS says that while federal subsidies and premium tax credits could make it cheaper for some employees to purchase coverage from the public exchanges, it notes that it could be financially attractive for small employers to continue providing coverage if they have relatively healthy employees.


Premium impact estimates

Numerous studies for Wisconsin, Maine and Ohio, as well as the entire U.S., all estimate an increase in group premium rates, with the elimination of health status as an impact rating factor. While an estimated 65% of small employers previously offered health insurance with below-average premium rates, CMS projects that those small firms will increase their premiums to average rates.

In addition, CMS estimates that 35% of small firms will have rate reductions. However, the agency notes that “in reality” there will be many more factors that will alter employers’ decisions to offer coverage. As a result, the true impact on premium costs remains uncertain.

ACA Small Group Deductible Limits Repealed

President Obama has signed into law a bill that deletes a provision of the Affordable Care Act that limited deductibles in small group health plans.

The repeal was part of a larger piece of legislation– the Protecting Access to Medicare Act of 2014 – that delays for a year a scheduled 24% reduction in payment for doctors who treat Medicare patients.

The removal of the deductible cap of$2,000 for individuals and $4,000 for family coverage applies to plans for employers of 50 or fewer full-time workers, up until 2016, when the definition of small group changes to 100 or fewer full-time employees.

The deductible limit repeal, which immediately took effect retroactively to March 10, 2010, was originally intended to take effect for plans that take effect this year.

Implementation of the ACA regulation had barred insurance companies from taking into account an employer’s health flexible spending accounts or health retirement account contributions for the purposes of determining compliance with deductible limits.

But the regulation had the unintended effect of basically forcing some small employers to purchase plans with lower deductibles if they were to continue offering coverage. And the lower-deductible plans included significantly higher premiums in many cases.

But not all small group plans were affected. Insurance companies in some states were able to avoid the deductible limit rules thanks to exceptions created by the Centers for Medicare and Medicaid Services, as well as in Health and Human Services regulations.

These changes allowed plans to exceed the $2,000 and $4,000 deductible limits if it helped the plan achieve the lowest allowable actuarial value of 60% (meaning that 60% of health services are covered by the insurer).

At this point, we will have to wait and see if insurers in the small group market start offering policies that exceed the now-repealed limits. If they do, it will give small employers more choice.

As your broker, we will let you know during your next renewal if small group plans with higher deductibles come back on the market as a result of this law change.



The Heat’s Coming, Protect Your Outdoor Workers!

AS SUMMER approaches employers with outside workers need to make sure that they are in compliance with Cal/OSHA’s heat illness prevention standard to protect their employees, and also to avoid being cited.

Over the years the heat illness standard has evolved as more is learned about how heat illness works.  The following covers the major elements of the standard.

Access to water

•          Locate the water containers as close as practicable given the working conditions and layout of the worksite.

•          Keep it readily accessible, move it with the workers!

•          Encourage the frequent drinking of water.

•          Remind workers not to wait until they are thirsty.


Shade up at 85 degrees

•          When temperatures reach 85, you must have and maintain one or more areas of shade at all times, when employees are present.

•          Locate the shade as close as practical to the area where employees are working.

•          Provide enough shade to accommodate at least 25% of the employees on the shift at any one time.  However, retain the ability to permit access to all workers that request it at all times.


High-heat procedures

When the temperature equals or exceeds 95 degrees:

•          Ensure effective communication.

•          Observe employees for alertness and signs and symptoms of heat illness.

•          Give more frequent reminders to drink plenty of water.

•          Closely supervise new employees, for the first 14 days.



Ensure all employees and supervisors are trained before beginning work that should reasonably be anticipated to result in a heat illness. Make sure all employees and supervisors are trained in:

•          The environmental and personal risk factors for heat illness, as well as the added burden of heat load on the body

•          Your company’s heat illness prevention procedures

•          Importance of frequent consumption of small quantities of water

•          Types of heat illness, common signs and symptoms

•          Importance of acclimatization

•          Reporting signs or symptoms of heat illness to a supervisor

•          Procedures for responding to possible heat illness

•          Procedures to follow when contacting emergency medical services, providing first aid, and if necessary transporting employees.


Written procedures

•          Integrate your procedures into the IIPP.

•          Maintain the procedures on site or close to the site, so that they can be  made available to employees and Cal/OSHA inspectors.

•          You can find sample procedures here:

As Health Coverage Costs Rise, Employers Mull Private Exchanges

A new study has shown that health insurance cost inflation for group plans continues to slow, ebbing to 4.1% in 2013 (after plan changes). But while that’s the lowest level in 15 years, inflation is still spurring employers to look for new ways of cost-cutting.

The average annual cost of coverage for both employers and workers has increased to $12,535 in 2014, compared with $11,938 last year, according to a survey of 595 large companies by Towers Watson, a benefits consultant, and the National Business Group on Health (NBGH), a Washington-based employer lobbying organization. On average, most employers had their workers pay 25% of the amount in 2013, a bit more than the year prior.

This year, it looks like rates are trending up 4.4% after plan changes. Meanwhile, more employers are experimenting with higher-deductibles and copays.

And while some employers have sent their workers to the public health care exchange, many employers – leery about the government-run marketplaces – have turned to private exchanges, according to the study.

The study shows that if you actively work to keep control of your costs, you can beat those averages. Best performers (defined as respondents that have maintained cost increases at or below the Towers Watson/NBGH median for each of the past four years) fared much better than other employers. Their cost trends (after plan changes) between 2010 and 2013 averaged 1.6%.

Of the executives surveyed, 67% agreed to a moderate or great extent that private health exchanges would provide a viable option for active employees as early as 2015. But many employers are in wait-and-see mode, as they want to make sure that private exchanges are a viable option.

Seventy-one percent of respondents said that evidence that private exchanges can deliver greater value than current self-managed models would be a reason to seriously consider offering one.

Writes Towers Watson: “In short, while private exchanges have already proved to be an effective option for retiree health, most employers are taking a wait-and-see approach for their active employees.”

Private exchanges have a similar design to the public exchanges that were created by the Affordable Care Act. They are only open to employees of companies that contract with these private exchanges for their workers’ health insurance.

They operate in much the same way as a public exchange and allow employees to choose health plans from a menu of carriers and different deductible and copay structures. Some private exchanges also include the same types of tiers found in public plans, including the “metal plans” – bronze, silver, gold and platinum.

Like the public exchanges, though, the theory is that by being part of an exchange that offers multiple plans, insurers will compete more aggressively on price. They would also push for better deals with hospitals and doctors and do better managing potentially expensive diseases.


More choice for employees

Private exchanges also may appeal to employees because they can choose the kind of plan they want instead of having their employer choose for them. Being part of a private exchange also gives individuals the opportunity to switch plans from year to year if they are unhappy with the doctor network and/or the claims administration, or if the cost for their plan is growing faster than for others.

Only a small fraction of the 122 million workers now getting coverage through employers is currently enrolled in these private exchanges, but the number could rise if the Towers Watson study predictions hold true.

Private exchanges will offer a viable alternative to employer-sponsored coverage as early as next year, 66% of the companies surveyed predicted. That said, they are waiting for evidence of private exchanges’ effectiveness in helping employers and employees control costs, and as well of the quality of care for their covered employees. Some are starting by having their Medicare-eligible retirees access coverage through private exchanges.

Meanwhile, employers are trying to find new ways to control health costs. Some successful strategies include operating clinics at the worksite and experimenting with different kinds of networks of hospitals and doctors, said Towers Watson.

And while they plan to continue to pay for coverage, they are looking at ways they could reduce their financial commitment by scaling back what they pay for dependents’ coverage, for example.


Safety for Your Baby Boomer Construction Workers

The average age of a construction worker is now in the 40s. In the construction industry as a whole, baby boomers (people born between 1946 and 1964) represent 40% of the workforce, according to the Center for Construction Research and Training.

The nature of construction work presents many hazards for workers, many of which may not appear until late into a person’s career. Research suggests that long-term construction work impacts a worker’s musculoskeletal system.

In addition, any time an older worker suffers a workplace injury, they are more likely to be out of commission – and the road to recovery is longer.

Because of the physical demands of the work, construction workers who are employed have to be healthier than the general population, but the same physical demands cause workers with injuries or illness to leave the industry.

We know that 10% of construction workers do not return to work after an injury, and that construction workers with a musculoskeletal disorder (MSD), lung disease or injury are more likely to retire on disability than workers with the same conditions in less physically demanding work.

When compared to workers in an office environment, construction workers are also less likely to have health insurance and have an increased likelihood of developing a chronic disease as they age. Their odds also increase for developing lung disease, stroke, back problems and arthritis.

Lower-back injuries are a common injury experienced among construction workers. Also, as people age, they naturally lose strength and muscular endurance, which could have an effect on their ability to carry heavy loads. They may also lack the flexibility of younger workers and experience trouble working in awkward positions, making them more prone to a workplace injury.


Risk factors for older workers

Work ability is a measure of the balance between work and personal capacity, and older age is linked to a reduction in both quality of life and work ability.

The Work Ability Index (WAI) was developed in the early 1980s to identify factors that would sustain work as people age. The questionnaire is now available in 26 languages and is commonly used in research worldwide.

Physical workload is an important determinant of work ability among construction workers, and in turn work ability is highly predictive of disability among such workers. A construction worker between the ages of 45 and 54 with a low WAI and severe low-back pain has a 40-fold increased probability of disability retirement compared to a construction worker without those risk factors.

New research shows that reducing obesity, smoking and manual materials handling, plus improving the worker’s control over their own tasks, can keep construction workers successfully employed.

A study of U.S. construction roofers found that workers over 55 had lower physical functioning and were more likely to have both a chronic medical condition and an MSD.

The study found that older age, reduced physical function, and lack of job accommodation among these roofers were each predictive of early retirement. It also found that construction roofers who had received job accommodation for an MSD or a medical condition were four times less likely to retire compared to workers with similar medical status but without accommodation.

Some form of job accommodation was offered to more than 30% of the workers in the study, and many of the accommodations were relatively simple, such as allowing more time to accomplish a task or changing the work schedule; few employers provided new tools or equipment.


Culture change

Experts agree that a culture change is needed to alter certain employer and worker behaviors and practices, such as:

 “Dealing with the pain”  – This old-school belief is that pain is naturally part of the job when performing construction work, and that whining about it is for sissies. But, if something hurts while performing work, the worker should stop and tell his supervisor.

Not asking for help when they should – This is particularly common when workers are lifting a heavy load that they think they could have easily hoisted when they were younger. This is dangerous and risks serious injury, which will take longer to recover from for a worker older than 40.

Workers who are set in their ways – Many veterans are resistant to change in work processes or in using tools.

Rushing – A mentality of getting the job done quickly without following proper safety procedures.

Poor health – Try to address the importance of staying physically fit and not smoking in order reduce the chances of workers injuring themselves at work and, if they do, increasing their chances of an early recovery.

In addition to increasing awareness of these attitudes, using the proper tools and work practices is important. Employers should also recognize the importance of job rotation among workers to help prevent repetitive-motion injuries.

Shifting focus from hazardous to safe work practices will help reduce injuries and keep older and more experienced employees safe and healthy on the job.

One Wrong Step in the Interactive Process for ADA Can Cost You

One small mistake in the interactive process to determine whether you can reasonably accommodate a “disabled” worker can result in getting sued under the Americans with Disabilities Act.

A federal court issued a decision recently that an ADA case brought by a worker who was denied the opportunity to show she could perform essential job tasks can now go to trial. That’s despite the fact that the employer had engaged in the interactive process with the disabled worker, but had called off a planned demonstration after a panel and experts had concluded that the planned accommodation would create a workplace safety hazard.

This case is applicable to any employer with more than five employees in California under the Fair Employment and Housing Act, and to employers of 15 or more workers under the ADA.

The decision by the United States District Court in the southern district of Indiana illustrates how one innocent misstep in the interactive process can end up costing you. At this point the case still has to go to trial, but it could result in damages against the employer in question, GE.

In the case at hand, English vs. General Electric Co., a woman had worked for GE as an assembler since 1985. She sustained an injury to her rotator cuff in 2007 and doctors permanently forbade her to reach above her shoulders with either arm.

Two years later, she was promoted to the position of repair job operator based on her seniority with the employer. Shortly thereafter, GE’s medical staff concluded that her shoulder disability and doctors’ restrictions prevented her from performing the essential functions of the job.

To ensure fairness, the employer initiated a formal ADA reasonable accommodation process and her case was referred to an accommodation review committee, which was charged with determining if she could perform the job with any specific accommodations.

The committee scheduled a demonstration during which the employee was going to show that she could perform the essential job functions with the assistance of a three-step stool. But that demonstration was canceled because the committee determined that the stool would create a safety hazard, as it would be too close to the assembly line tracks’ ball bearings and pin rollers. They also said the stool would block workers’ movements around the assembly line.

The position was awarded to another employee, and the employee sued under the ADA accusing the employer of failing to engage in the interactive process.

GE moved to have the case thrown out of court via a motion for summary judgment, but the local court denied the motion, which the company appealed to the US District Court. That court eventually upheld the lower court’s decision, paving the way for the case to proceed to trial.

During the appeals process, GE presented testimony from the accommodation committee members that the employee still would not have been able to do the essential functions of the position, even if given the requested three-step stool.

The company also cited the opinion of a workplace ergonomics consulting firm that analyzed five possible accommodations for the employee and found that none of them would have completely eliminated the excessive shoulder flexion problems the employee would experience in this new position.

But the district court concluded that, nonetheless, the employer should have allowed the employee to demonstrate whether she could or could not do the job with the three-step stool.

The court wrote: “The scheduled demonstration could have definitively shown that GE could not safely accommodate Ms. English’s disability, or it might have proven to GE that it could indeed provide Ms. English an accommodation. But unfortunately, GE chose not to go through with the demonstration, and this litigation ensued.”

The takeway
If you have a disabled employee who requests reasonable accommodation to perform their job, you must enter into an interactive process and document all of the steps you take to determine whether you can or cannot accommodate the worker. You should have in place plans for how you would conduct the interactive process.

There is also a workers’ comp angle here, as a serious workers’ comp injury can later turn into a permanent disability that requires accommodation. If you don’t play your cards right, you can be sued for breaching the ADA in such a case, as well.

Be Prepared for the Inevitable: a DOL Audit

The Department of Labor has said it wants to audit all employee benefit plans in the country by the end of 2015.

While it may be hard-pressed to meet that goal, the DOL will be out in full force to audit employers’ health plans to ensure they comply with the Affordable Care Act. All employers that provide employee benefits to their workers need to be prepared when the DOL comes knocking.

During an audit, the DOL will review health and welfare plan documents and other plan materials to ensure. These are essentially compliance audits. They want to see if you have all of the correct documents and that you are administering those documents in a way that is consistent with federal laws and regulations.

The DOL will levy fines for non-compliance.

According to audits that were reported to the trade news website Employee Benefits Advisor, DOL agents will be asking for:

• Plan documents for each plan, along with any amendments. (Content in all plan documents must comply with ERISA regulations.)
• Trust agreement (if any) and all amendments.
• Current summary plan descriptions.
• Form 5500 and accompanying schedules for the most recent plan year and previous three years. This form is used to file an employee benefit plan’s annual information return with the DOL. It should include not only health plan information but also 401(k), IRAs, money purchase plans and stock bonus plans.
• A listing of all current service providers, and those from the past three years.
• All current contracts with administrative service providers on the plan, and most current fee schedules.
• All insurance contracts between plan and service providers.
• Name, address and telephone number of the plan administrator.
• Sample HIPAA certificate of creditable coverage, and proof of compliance with on-time issuance of COBRA notices.
• Notice of special enrollment rights, and a record of dates when the notice was distributed to employees.
• Written eligibility criteria for plan enrollment.
• Documentation regarding all mandatory employee notices, i.e., ERISA Statement of Rights, Women’s Health and Cancer Rights Act notice, etc.
• Copy of most recent monthly bill for premiums (if any) from insurance carrier(s).
• Copy of check, wire transfer or other methods of payment for insurance premium (if any).
• Enrollment form(s) for the plan.
• Employee handbook (if any).
• All documentation of claim adjudication and payment procedures.
• Fidelity bond (if any).

The fines involved can add up quickly. And while the DOL does not publish a schedule of its fines, it was documented by Employee Benefits Advisor that breaches of ERISA reporting and disclosure requirements are penalised at $110 a day, per person.

And it notes that most fines for non-compliance under the ACA are not tax-deductible, either.