Archive for January, 2017

EEOC Eyes Employer Actions against Prescription Drug Users

By now you will be aware of the scourge of opioid abuse that’s swept the country over the past decade and the damage it is doing to individuals and families.

Overdoses from legal prescription drugs – mostly opioids and other strong pain relievers – last year surpassed overdoses from street drugs like heroin for the first time.

However, some employers are going too far in trying to prevent employees from taking certain medications while on the job and have as a result run afoul of the Equal Employment Opportunity Commission.

As you would enter an interactive process when trying to make accommodations for an employee’s disability, you must do the same if you have concerns about a worker taking prescription drugs for a medical condition.

Two recent lawsuits illustrate the issues that could spark action by the EEOC.

 

Refusing to hire after drug test

One case, filed in September 2016, concerns a woman who had her job offer by a casino rescinded after she had failed a pre-employment drug test. But the applicant was taking prescription medication for a back and neck impairment, which caused her to fail the test, the EEOC alleges.

Despite the applicant’s explanations and even offering to provide documentation, the casino still refused to hire her, according to the agency.

The EEOC alleges that the company violated the Americans with Disabilities Act (ADA) when refusing to hire the applicant, because she was taking lawful prescription drugs due to a disability.

The lawsuit also challenges the casino’s blanket policy requiring all employees, regardless of whether they work in safety-sensitive positions, to disclose their prescription or non-prescription drug use.

 

Fired for prescription drug use

The EEOC sued a medical center in Georgia for firing one of its doctors after learning that he was taking prescription narcotics to treat chronic pain for which he was undergoing treatment.

He was terminated despite offering to provide a letter from his own doctor explaining why he was taking the medication and receiving spinal injections. The medical center said he would be unable to perform his duties while taking the medications.

The EEOC alleges that the physician could have performed his job safely and competently, and that the medical center failed to enter into a dialogue with him, in violation of the ADA.

 

The takeaway

The Littler Mendelson law firm in a recent blog had the following tips for employers:

  • If you suspect someone is taking prescription narcotics that are affecting their performance, you can have a talk with them. If they have a prescription, you may need to enter into an interactive process with them to try to find ways to accommodate them under the ADA.
  • If they are taking pharmaceuticals for which they do not have a prescription, that is illegal drug use and you can impose discipline for violating your policy against illegal drug use.
  • You can still conduct pre-employment drug tests legally and regulate abuse of drugs in the workplace. But make sure that you account for the need to engage in an interactive process with individuals taking prescription medications and, if necessary, provide reasonable accommodations.
  • Avoid taking adverse actions when you have not gathered all of the facts.
  • You cannot have a policy that requires all employees to divulge the prescription medications they are taking. However, there are exceptions when public safety and the safety of other employees is concerned.

What Does President Trump’s Executive Order on ACA Mean?

Worker repairing  an engine rotor winding of copper wire.

Donald Trump’s first act after assuming the presidency was to sign an executive order that authorizes federal agencies to scale back as many parts of the Affordable Care Act as possible within the confines of the law.

The executive order does not abolish the landmark legislation, but sets the stage for agencies to act immediately on regulations that are deemed overly burdensome. The agencies, particularly the Department of Treasury and the Department of Health and Human Services (HHS), will have wide latitude in making regulatory changes thanks to the broad scope of the order.

But don’t expect immediate changes in the law. Regulations cannot be rewritten, amended or replaced without going through the rule-making process, which includes notice and comment periods. That can take months, or sometimes years.

Another reason you should not expect immediate change is that the order specifically states that agencies can act only “to the maximum extent permitted by law.”

The order came on the heels of the House of Representatives approving a budget blueprint that will allow Republicans to repeal major provisions of the ACA without the threat of a Democratic filibuster in the Senate. But that action can only undo parts of the law that have an effect on the federal budget and they would need some cooperation from Democrats to repeal other parts and forge a replacement.

That means that most of the laws and regulations governing employer plans will likely stay in place for the moment, although it’s unclear for how long.

Trump has been on record saying that the repeal of the law should not take place until a replacement plan is also in place, in order to avoid creating disruptions in the market. He also said that everyone in the United States would be covered.

Here are some of the more relevant passages of the executive order:

“…it is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.”

It also said the HHS secretary and other agency heads “shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision… that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”

As mentioned, the process for making regulations takes time. Proposed regulations have to be drawn up and they have to go out for public comment, including holding hearings so that all sides can argue for or against the changes or recommend adding more changes.

Adding more confusion and concern, Trump senior adviser Kellyanne Conway said that the president may stop enforcing the law’s tax penalty against people who don’t buy insurance. But that move alone could snowball into an ugly scenario where more healthy individuals bale out of their insurance policies, which in turn would likely lead to insurers abandoning the public insurance exchanges.

She said that he would consider repealing the employer mandate quickly, as well. But that may be not be legal as the individual and employer mandates are explicit provisions of the law passed by Congress, and they cannot be overridden by the executive branch.

A Strong Crisis Management Plan Can Save Your Firm

Silhouette of young businessman pushing large stone uphill with copy space

You should hope it never happens to your organization, but unfortunately, a crisis can strike any company at any time.

But if your business suddenly became embroiled in a crisis, would you be prepared to handle it? If you were putting out fires, or a major conflagration, and you didn’t have a crisis management plan in place, how would you respond?

Crises can take many forms, like the death of an owner, one of your products causing death or injury, or if historic flooding suddenly inundates your town, forcing you to cease operations.

To prepare and ensure resiliency, you should think about how a disaster would affect your operations, clients, suppliers, employees and the value and goodwill you’ve built up over the years. And you need to put together a plan for communications during this time.

In a recent article, Inc. magazine recommended the following crisis management steps every company should have in place:

 

  1. Have a plan – Put in place clear objectives that you would want to pursue during a crisis. Objectives should include protecting human life, ensuring that the organization survives and that your stakeholders (clients, suppliers, employees, the public) are kept informed. Include specific actions that you would take in a crisis.
  2. Different responses to different crises – Have plans in place for various crises that could strike your organization.
    If it’s the sudden loss of a key employee or owner, you should prearrange a succession plan and transfers of responsibility.
    If it’s a natural disaster that disrupts operations, have plans in place to ensure that you can continue operating, such as arranging for alternate suppliers, or arranging for an alternative location if you are unable to function in your current facilities.
  3. Be transparent – Being as open and transparent as possible can help stop rumors and head off any negative fallout among the public and media. You can do this by reaching out to the media with press releases and interviews, as well as on social media.
  4. Keep employees informed – It’s extremely important that you keep your employees informed, to keep morale up and so that they can help you keep your operations afloat. This also stops the rumor mill from circulating out of control.
  5. Reach out to clients and suppliers – Head off any misunderstandings by communicating with your customers and suppliers before they learn it from another source. Keep them informed of what’s happened, how it has affected your operations and how it might affect them during this period.
  6. Update early and often – Thanks to smartphones and the Internet, we now live in a 24-hour news cycle. That means you should make updates regularly and as needed, in order to keep all stakeholders informed.

 

Do it now

You should create your crisis management plan when your business is running smoothly and you have time to devote to thinking out a successful strategy.

This also gives you a chance to involve key employees in the process and open it up for brainstorming on how you would handle different crises.

You may want to include in this process advice and input from

  • Members of your leadership team
  • Employees
  • Customers
  • Communications experts
  • Lawyers

 

 

Prepare for ACA Reporting or Suffer Possible Fines

time flies

EVEN THOUGH there are clouds of uncertainty hanging over the Affordable Care Act, applicable large employers are still required to adhere to the IRS filing and reporting regulations or risk financial penalties.

While most of the reporting deadlines will be the same for 2017, the deadlines for distributing forms to employees have changed.

All employers that had 50 or more full-time and full-time equivalent employees in 2015 would be considered applicable large employers under the ACA for 2016, meaning they would be required to report in 2017 on offers and the provision of health insurance coverage during the past year.

Even if an applicable large employer didn’t offer health coverage to employees, it is still required to report.

 

The deadline change

The IRS scrapped the Jan. 31 deadline for distributing Form 1095-C to employees, as it had found that many employers needed more time to gather the information required to prepare the forms.

Here’s what you need to know:

  • The deadline for distributing Form 1095-C is deferred to March 2, 2017 from Jan. 31. The form must be addressed and mailed, or distributed by hand, on or before the due date.
  • Any extension requests that employers have filed for providing the forms will be void.
  • This extension applies for tax year 2016 only.

 

The IRS deadlines (Forms 1094-C and 1095-C)

The IRS filing deadlines for coverage year 2016 are as follows:

  • Deadline to file paper forms with the IRS is Feb. 28.
  • Deadline to file electronically with the IRS is March 31.

 

Extensions

Employers can obtain a 30-day extension by completing Form 8809, which must be filed in advance of the due date for the returns.

As soon as you feel you can’t report on time, you should file for the extension as they are not automatically approved. Extension filing instructions can be found on page six of the instructions for the forms.

 

Penalties for not reporting

The IRS considered the reporting period of the start of 2016 as a warm-up and was lenient with companies that didn’t file. But this year promises to be different, and it’s important that you meet the deadlines or face sizeable fines.

Here’s what you can expect:

  • $260 per return for failing to file correct information.
  • $260 for each failure to provide a correct payee statement.
  • There are limits to the size of the penalties unless there is

“intentional disregard” to file and furnish the required statements.

 

The IRS may waive penalties due to reasonable cause. But if you plead ignorance, that likely won’t be good enough.

The Five Most Common Types of Employee Fraud, Theft

Hacker in is stealing information at home

At some point, the odds are that every company will be affected by some form of employee theft or outright fraud.

According to the Association of Certified Fraud Examiners’ global “Report to the Nations on Occupational Fraud and Abuse” for 2016, the median loss from a single case of employee fraud was $120,000 in 2015 in the U.S. and in nearly 25% of the cases, losses were more than $1 million.

With technology, fraud has in some ways become easier, but at the same time, it typically leaves a trail of electronic breadcrumbs that may be hard to disguise.

Here we look at the five main types of employee fraud, and what you can do to thwart it from occurring.

 

  1. Purchase order fraud

This is typically carried out in one of two ways:

  • The employee initiates purchase orders for goods that he diverts for personal use, or
  • The employee sets up a phantom vendor account, into which he pays fraudulent invoices – with funds eventually being diverted to the employee.

 

  1. Company credit cards

Employees that have company credit cards may use them for illegitimate purposes to purchase items, or on entertainment and travel. Some of the common types of fraudulent use of credit cards are fuel purchases, airfares, home supplies, meals that are not work-related and entertainment.

 

  1. Payroll fraud

There are typically three ways that an employee can pull off payroll fraud:

  • Setting up phantom employees on your payroll systems, who are paid like regular employees but the funds are diverted to the perpetrator’s account.
  • Paying out excessive overtime.
  • Continuing to pay employees after they die or after they leave your employ.

 

You should have systems in place to detect whether you have more than one employee with the same bank account number or the same address, unusually high overtime payments and if dead or terminated employees are still on your payroll.

 

  1. Sales and receivables

Some employees may collude with vendors to make payments for services never rendered or products never received.

 

Other times, you may have sales reps who inflate sales to receive higher commissions or bonuses.

 

  1. Data theft

This involves an employee stealing important company data, like trade secrets, personally identifiable information, client credit card numbers or client lists. In some cases, the employee would provide this data to third parties.

You may be able to detect this kind of theft by running tests to see if a database has been accessed by an employee without access privileges, or if reports were generated by employees without authorization. You may be able to also run tests to find out if any employees have sent e-mails with attachments that include sensitive company data.

 

Focusing your efforts

According to the report, most theft occurs at one or more of the following stages:

  • Procurement
  • Payment
  • Expense

 

If you are going to do any employee monitoring, these are the places that you may want to first focus your efforts and monitoring.

The Association of Certified Fraud Examiners says that by analyzing transactions in these areas (such as with continuous monitoring systems that are driven by data analysis), it is often possible to test for a wide range of employee fraud, as well as bribery and conflicts of interest.

 

Higher positions, higher losses

Finally, it is worth noting that when owners, executives or directors commit the fraud, financial damages are steepest.

Median losses from fraud are:

  • Owner/executive: $703,000
  • Manager: $173,000
  • Employee: $65,000

 

 

 

 

Pre-existing Conditions Weight Heavily on Workers’ Comp Claims

A multiple exposure illustrating the progressive rehabilitation of a patient recovering. He begins in a wheelchair, then walks with crutches and finally walks without assistance. It is shot against a black background with the legs blending from a sitting position to walking.

Your workers’ underlying health can greatly affect the amount of time they are off the job recovering from a workplace injury.

A new study has found that workers with pre-existing health issues like hypertension, obesity and mental health spend 60% more time recovering from workplace injuries than healthy workers. And because those injured workers are collecting wage-replacement indemnity benefits during that time, the cost of a claim increases in kind.

The findings illustrate the importance of trying to keep your workers healthy through wellness programs and access to health insurance.

The findings in the study of more than 7,000 workers’ compensation claims by Newport Beach, Ca.-based Harbor Health Systems found that in addition to increased claim duration, these underlying health issues affect the cost of claims, increase temporary total disability (TTD) days, recidivism (aggravating of the original injury), and lead to more litigation and surgery.

 

The study looked at seven “comorbidities”:

  • Obesity
  • Diabetes
  • Hypertension
  • Addiction
  • Mental health
  • Tobacco use and
  • Multiple comorbidities (one or more of the above)

 

Shocking outcomes

The results of the study were a confirmation that underlying health problems will worsen outcomes.

The two comorbidities that have the greatest impact are multiple comorbidities and obesity, followed by addiction, mental health and hypertension, with diabetes and tobacco having the lowest impact.

Relationships between comorbidities – such as the link between obesity and diabetes – can exacerbate complications and health risks. The age of the injured worker is another factor that is associated with comorbidities and can complicate the management of a claim.

 

Duration and cost

  • For claims involving multiple comorbidities, claim duration increased by 76%.
  • For claims involving addiction, duration increased 67%.
  • For claims involving obese individuals, duration increased 55%.
  • For claims with multiple comorbidities, total incurred costs increased 341%.
  • Claims in all the comorbidity groups had significantly higher TTD days compared to the control group.
  • TTD days increased by 285% for multiple comorbidities claims and 274% for addiction-related claims.

 

Litigation

  • Litigation rates for claims with multiple comorbidities increased 147%.
  • Litigation rates for addiction-related claims increased 224%.
  • Litigation rates for mental health-related claims rose 248%.

 

The takeaway

Employers can encourage their employees to improve their health through company wellness plans and ensure that they have access to health insurance to treat their medical issues.

Claims management experts say that insurance company adjusters need to intervene early in cases where injured workers are saddled with these comorbidities.

 

 

 

 

Be Prepared for Changing ACA Landscape

Concept of problem in business

With president-elect Donald Trump and Congressional Republicans vowing to repeal the Affordable Care Act, employers that have spent the last few years preparing for and complying with the law have a right to be concerned about what’s in store.

While leaders in Congress have promised to swiftly put an end to the ACA, it’s not clear how fast it would happen, if at all, and what, if anything, would replace it.

Blue Cross/Blue Shield recently issued an alert about what its policy team had learned and is anticipating.

 

Administration moves

Blue Cross/Blue Shield noted that three executive actions could occur shortly after Trump is sworn into office:

  • His administration could order the Treasury Department and the IRS to stop enforcing penalties on taxpayers who do not enroll in health insurance.
  • The administration could stop defending lawsuits that challenge the legality of health insurance subsidies that are paid to insurers that insure low-income individuals who purchase coverage on public exchanges. If that happens, it could send shockwaves through the industry, financially affecting a number of insurance companies and leading to market disruptions, Blue Shield predicts.
  • The administration could prevent payments related to the transitional reinsurance program. Republicans have argued that payments from the program must go to the Treasury before health plans. The administration could redirect $5 billion owed to plans for the 2016 plan year, which would zero out payments that are expected in mid-2017.

 

Congressional action

Anything Congress will want to do in the near term will need bipartisan support because the minority-party Democrats could mount a filibuster in the Senate to keep any significant legislation from moving forward. However, Democrats’ hands would be tied if Republicans change the law during the budget reconciliation process.

Republicans could:

  • Move to repeal parts of the ACA that have implications for the federal budget, such as eliminating:
  • ACA tax credits
  • The Medicaid expansion
  • The individual and employer mandate penalties
  • Various ACA taxes used to pay for health reform.

 

That said, parts of the law that don’t affect the budget, like the ban on insurers from refusing coverage based on pre-existing conditions and dependent coverage to age 26, would need legislation.

  • Introduce legislation to kill the ACA and replace it with provisions they espouse, such as:
  • High-risk pools
  • Allowing individuals and businesses to buy insurance across state lines
  • Overhauling the Medicaid program.

 

For now though, the only thing employers can do is to watch what’s going on in Congress and follow developments with us. We’ll keep you posted on what’s happening.

Change could come suddenly, or it may be drawn out for years as repealing the law without a strong replacement would leave millions of Americans in a bind – and many of them would include the same people that voted for Trump as president and Republicans in Congress.

 

 

New Law Tightens Use of Smartphones while Driving

handsfree

As you know, California already has laws against using a phone while driving without a hands-free device or texting while driving.

But because it basically was written before the proliferation of smartphones, the state law does not cover the many new uses for phones, like live chat, posting on social media or using a myriad of apps that require user interaction.

Obviously, using a smartphone in any capacity behind the wheel is as, if not more, dangerous as driving while texting.

Well, now there’s a law for that!

Starting Jan. 1, 2017, a new law will dictate where you can put your phone and how you can use it while driving.

Specifically, the new law prohibits a motorist from driving “while holding and operating” a hand-held wireless telephone or a wireless electronic communication device, as defined by the code.

Under the law, drivers can use their smartphones if they are mounted on a vehicle’s windshield like a GPS or on the dashboard or center console “in a manner that does not hinder the driver’s view of the road.”

Also, the driver must be able to activate or deactivate a feature or function “with the motion of a single swipe or tap of the finger.”

In other words, you will not be allowed to hold the phone in your hand while driving…period.

If you are caught using your phone while driving, you could face a $20 fine and $50 for each subsequent offense.

You will be allowed to make a single tap or swipe on your phone as long as the phone is mounted or fixed to the vehicle.

So, if you are one of the many who use their phone’s GPS navigational system, music features or Bluetooth function, you will need to place your device in a mount.

 

Existing laws

California also has on the books two other laws addressing the use of mobile phones while driving.

  • Ban on handheld phones – The first law bans all drivers from using handheld cellphones while driving. The law does not affect passengers.
    Drivers under 18 are barred from using even the hands-free function.
    The fine for a first offense, including penalty assessments, is $76. A second offense will cost you $190.
  • Ban on texting while driving– A separate law prohibits texting while driving. Under this law, you may not write, send or read text-based communications while driving – this includes text messages, instant messages and e-mail.
    The base fine for violating this law is $20 for the first offense and $50 for each subsequent offense. However, additional penalty assessments can make the fine more than double the base amount.

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