Leaf raker, babysitter, waitress, retail salesperson, lawyer. I have had many jobs. Each has had value. Often, the pay and benefits did not match the value. When the value of the job exceeded the remuneration, I looked to find the next job. Continue Reading The Value of Labor Goes Beyond Wages
On a related note to my previous post on pet bereavement leave, my daughter told me about another leave available to those dog-crazy folks in the U.K – “paw-ternity leave.” (Which is very different than “peternity” leave – another name for pet bereavement leave!) Essentially, this type of leave is a maternity/paternity leave for pets.
As first reported by the Mirror, a research study by pet insurance provider Petplan found that almost 1 in 20 new pet owners in the U.K. are offered “paw-ternity” leave by their employers. This leave can be used to settle in and care for a new pet, vet appointments, training, etc. It ranges from a few hours to a few weeks, and is provided in addition to the worker’s usual vacation leave allotment. The article specifically identifies two different companies that formally provide this type of leave – pet food manufacturer Mars Petcare and IT company Bitsol Solutions. Continue Reading “Paw-ternity” Leave?
Following up on my last post about menstrual leave, I heard about another odd leave being offered by a few employers – pet bereavement leave (I also saw a reference to “peternity” leave). Unlike menstrual leave, this is not legally required in any country. But apparently it’s not entirely uncommon among those dog-crazy folks in the U.K. In the U.S., however, there are only a few companies that formally offer this type of leave, as a recent CBS Miami news story notes. In particular, Kimpton Hotels and Restaurants allows managers to grant up to three days off for grieving pet parents, while pet insurance company Trupanion grants one day of bereavement leave.
Why is the leave needed? Sandra Grossman, a pet loss counselor, told the Wall Street Journal in an article on “The Challenge of Grieving for a Pet at Work,” most grieving pet owners need up to a week away from work to get over the initial shock. In addition, a survey referenced in that article noted that nearly 1 in 3 people feel grief and sadness for at least 6 months after the pet’s death.
On Labor Day 2015, President Obama issued an Executive Order that requires certain government contractors and subcontractors to provide up to 7 days of paid sick leave per year. This leave may be used for illness or injury; medical appointments or treatment; caring for an injured or ill family member, or obtaining medical treatment for them; and, in cases involving domestic violence, sexual assault or stalking, to obtain counseling, seek relocation, seek assistance from a victim services organization, take legal action, or to assist a family member with regard to any of these actions. This requirement will be effective for all contracts entered into or renewed on or after January 1, 2017. (More pain for government contractors…)
Along with the Executive Order, the White House also issued a Fact Sheet: Helping Middle-Class Families Get Ahead by Expanding Paid Sick Leave. According to the Fact Sheet, the Executive Order will extend paid sick leave to 300,000 workers on federal contracts and subcontracts. The White House contends that this action will “improve the health and performance of employees,” will make (sub) contractors competitive by bringing their benefits packages in line with leading firms, and will protect the public health by allowing employees with communicable diseases to remain home.
The Fact Sheet also notes that President Obama is urging Congress to pass the long-languishing Healthy Families Act, which would require all employers with 15 or more employees to provide paid sick leave. Because it is unlikely to pass (snowball’s chance in hell, really), President Obama also specifically called upon cities and states to pass sick leave laws.
Here in Maryland, President Obama’s call is falling on receptive ears in the Maryland General Assembly. A paid sick leave bill has been proposed for the past several sessions, and has gained traction each year, but ultimately has not made it out of the House Economic Matters Committee. In response to the Executive Order, the Chairman of the Committee, Representative Dereck E. Davis was quoted by the Washington Post, in an article on Prince Georges County’s attempt to pass a paid sick leave law, as stating, “I think [sick leave is] a bill whose time has come … I think it would be best if we had one bill that governed everyone in the state, but that does not mean that if the locals want to do something stronger, they are definitely encouraged to do so.” According to the Washington Post, Delegate Davis is “committed to using all his power to push a bill out of the House this session.”
As I previously blogged, there are substantial costs and other non-monetary impacts on employers resulting from a paid sick leave mandate. If the state law passes this year, as many people expect it to do, I believe there will be unintended negative consequences for those workers the law is intended to help, as employers seek to deal with the increased costs of doing business in Maryland.
The U.S. Supreme Court’s decision in Obergefell v. Hodges, in which it held that same-sex couples have a constitutional right to marry, made headlines. This decision has a practical impact on employers – particularly on those with operations in states that to date had not recognized the validity of same-sex marriages.
There are a number of employment rights and benefits that are affected by the Supreme Court’s ruling. These include the following:
- Federal Family and Medical Leave Act leave, as well as family/medical-type leaves under State laws. The Department of Labor had previously announced a “place of celebration” rule, meaning that if the marriage is valid in the State in which the marriage took place, the FMLA will protect an employee needing leave to care for his or her spouse, regardless of where the employee lives (including in those States that do not recognize same-sex marriage). This ruling, however, means that leave rights under State laws, which may not have previously applied, must be extended to same-sex spouses as well. This includes such statutorily-provided leaves such as sick leave, family and medical leave, domestic violence leave, military family leaves, and Flexible Leave Act leaves (which enable employees to use paid leave for purposes of family illness).
- Employment policies. If your policies provide other rights for spouses, such as bereavement leave, same-sex spouses will be covered. You should also update any policy definitions to ensure that same-sex spouses are not excluded. Remove any references to “husband” or “wife,” and replace them with “spouse.”
- Employee benefits. Your insurance, pension, and retirement plans may need to be updated. You should consult your plan administrators and benefits attorneys regarding any required changes. In addition, employees may wish to change beneficiary designations. COBRA will apply to same-sex spouses.
- Employee contact information. Employees may also wish to update basic contact information as to their spouses.
- Employee tax information. In addition, employees may wish to adjust withholding information to account for a now-legally recognized same-sex spouse. Income imputed from employer contributions for a same-sex spouse’s health coverage will not be subject to federal income taxes. Employees will also be able to use flexible spending accounts to cover a same-sex spouse’s medical costs on a pre-tax basis.
- Marital status discrimination. Same-sex spouses will be entitled to protection under State marital status discrimination laws.
Employers did not need another reason to complain about the burdens of the Affordable Care Act (“ACA”). Most of us know that the law includes onerous obligations on employers that have made human resources and benefits personnel’s jobs increasingly difficult. For example, you have to figure out if the law applies to your organization (how many full-time and FTE employees do you have?), to whom you have to offer coverage (full-time, part-time, variable hour, seasonal employees?), what coverage you have to offer (minimum essential coverage that is affordable and meets the minimum value test), how to tell if the coverage you are offering is affordable (something about 9.5% of the employee’s W-2 wages, right?), how to track employees’ hours, etc., etc., etc.!
Well, I am sorry to say that for those of you that use temporary or contract workers, you have another thing to worry about under the ACA. Specifically, you need to determine whether you have to offer those temporary or contract workers health insurance benefits. The ACA requires that an applicable large employer offer health insurance benefits to its full-time employees (those that work on average 30 or hours more a week). The ACA uses the well-known IRS control test to determine who is an “employer.” That is, it does not matter what the agreement between the temporary agency and your organization spells out. If your organization exercises sufficient control over the temp or contractor employee, it will be deemed the common-law employer of that employee. And if that is the case, under ACA, your organization will be obligated to offer health care coverage to full-time workers, regardless of whether you categorize them as “temps,” “temps-to-hire” or “independent contractors.”
That being said, however, the ACA provides a workable option that enables you to – in essence – take credit for an offer of health insurance benefits by the temporary or staffing agency. Specifically, if the temporary staffing agency offers coverage that passes muster under the ACA, you can take credit for that offer. This option is spelled out in the preamble to the ACA Final Regulations on the employer shared responsibility requirements. The provision reads:
… if certain conditions are met, an offer of coverage to an employee performing services for an employer that is a client of a professional employer organization or other staffing firm (in the typical case in which the professional employer organization or staffing firm is not the common law employer of the individual) (referred to in this section IX.B of the preamble as a ‘‘staffing firm’’) made by the staffing firm on behalf of the client employer under a plan established or maintained by the staffing firm, is treated as an offer of coverage made by the client employer for purposes of section 4980H. For this purpose, an offer of coverage is treated as made on behalf of a client employer only if the fee the client employer would pay to the staffing firm for an employee enrolled in health coverage under the plan is higher than the fee the client employer would pay to the staffing firm for the same employee if the employee did not enroll in health coverage under the plan.
If you are inclined to take credit for the offer of coverage by the temporary staffing agency, you should make sure the agreement (including what the additional fee will be) is clearly spelled out in writing. In addition, while the regulations are silent on what the additional fee must be, it should be more than a token.
Now, if this seems like a headache for your organization to take on at this time, I remind you that the ACA requires applicable larger employers (defined as those with 100 or more employees in 2015; 50 or more employees in 2016) to offer coverage to “substantially all” of its full-time employees. “Substantially all” means 70% in 2015 and to 95% in 2016. Therefore, if your percentage of temporary employees falls within the less than 30% this year or 5% next year of full-time employees who are not being offered benefits, you may be fine in terms of ACA compliance. But obviously, you must carefully track the numbers of temporary employees you are using, as compared to the total workforce (including those temp agency/contractor employees) to ensure you stay within those percentages.
So my brilliant partner, Liz Torphy-Donzella (who also serves as General Counsel for the Maryland Chamber of Commerce), was a guest on WYPR’s “Midday with Dan Rodricks” show yesterday. She was invited to provide the management perspective on paid sick leave laws, while Jason Perkins-Cohen of the Job Opportunities Task Force, a Baltimore-area pro-worker advocacy group, presented the arguments in favor of such legislation. You can listen to a recording of the show here.
As management lawyers, we do not question the moral underpinnings of paid sick leave laws. (We’re not that heartless!) Of course, low-wage employees should not be forced to choose between going to work sick (or sending a sick child to school) and staying at home without pay. Of course, there are societal benefits to keeping sick employees from spreading infection in the workplace – to co-workers and customers. Of course, employers who provide such benefits build employee loyalty. And most of our clients who can afford to give sick leave do so – for the very reasons noted here.
As Liz pointed out during the show, what we object to is making paid sick leave a legal mandate, with all of the consequent results. It is clear that small employers suffer the most immediate impact as a result of paid sick leave. Although the economy has improved, many smaller businesses are still struggling and will continue to struggle to make a profit, and any added expenses – even arguably minor ones – can make the difference between making it and breaking it.
Now, I know that proponents of sick pay laws argue that paid sick leave actually reduces costs to employers. They say, for example, other employees won’t get sick if sick employees stay home, which increases productivity. They also say that employee turnover will be less, which reduces training costs for new employees. But the federal Bureau of Labor Statistics has calculated the cost of paid sick leave at $.34 per hour, per employee. This works out to $707 per year for each full-time employee! Even for a small employer, this works out to thousands of dollars per year in increased labor costs.
Employers who already provide sick leave, including most larger ones, may not object to proposed sick leave laws – after all, they’re already giving this benefit. However, they should still be aware that there are negative consequences to laws that mandate sick leave, even for them. These laws are very specific in the amount of sick leave that must be accrued, how and when it can be used, carryover requirements, and recordkeeping and notice provisions. They protect the use of sick leave from disciplinary consequences, meaning that an employer cannot implement a no-fault attendance policy that counts any absence – including time off when sick – as an occurrence (of course, not including legally protected leave like FMLA and ADA – and we all know how challenging that can be to manage!). It is certain that most, if not all, of these employers’ existing sick leave policies do not comply with one or more of these requirements, which will require possibly significant revisions to those policies. More importantly, these employers will lose the flexibility to develop sick leave policies that best fit their organizations, because the law imposes a one-size-fits-all sick leave policy. In addition, multi-state employers may end up with difference sick leave policies in different states, which will be an administrative nightmare to manage.
And back to the small employer – many of them do not have a Human Resources staff to manage the process and paperwork associated with sick leave, particularly to ensure compliance with the very technical requirements imposed by these laws. Moreover, the additional recordkeeping requirements are a new burden that the small employer may not be equipped to assume.
For all employers, these laws also provide a new basis for employees to sue. And in this litigation-happy society, you can be sure that they will.
So, in light of these costs, what will happen? We can look to San Franciso’s example (they passed a sick leave law in 2006). According to a study done by the Institute for Women’s Policy Research, 1/3 of employers increased work demands, reduced hours, or reduced employee compensation as a result of the law. Thus, this law hurt many of the very employees it was meant to help. 14% of employers reported a negative impact on profitability. One result of this is that many San Francisco restaurants are adding a 2-4% surcharge to checks to cover paid sick and health benefits, and a survey by San Francisco Gate found that 2/3 of respondents deducted that amount from the server’s tip!
Bottom line – forcing employers to comply with expensive and extensive mandates is damaging to business, and can end up hurting those workers whom the mandates intend to help.
The IRS has released final regulations on how the new health care law defines “affordable” coverage. Generally speaking, workers must have access to affordable health care from their employers, or the employer faces a penalty. The IRS regulations now make clear that the government will deem a plan affordable so long as the individual worker’s premium is not more than 9.5% of the worker’s household income. The government will not measure affordability against family coverage.
This is an important clarification and gives employers a powerful incentive to make individual coverage very inexpensive, and shifts costs to family coverage. Of course, as some health care advocates have noted, this defeats the entire purpose of the health care law because these same families cannot afford costly health insurance from their employers and will be ineligible for tax credits and other subsidies to help off-set premiums since those benefits are only available to workers whose employer provided insurance is not “affordable.” The IRS listened to those concerns through the rule-making process, but still decided that “affordability” would be based on individual coverage. (For a good background piece on this issue, check out this NY Times story from last August).
As for how an employer should determine “household income,” the IRS has adopted a safe harbor that allows an employer to look at the employee’s W-2 wages and compare 9.5% of the W-2 amount to the employee’s contribution to health care for that year. This safe harbor will be available through 2014.
The new health care law forces many employers to make practical decisions about what type of coverage, if any, to offer employees (because, for some employers, dropping coverage entirely and paying the associated penalty of $3,000 might make more financial sense). The new IRS regulations confirm that in designing benefits packages, employers should focus on making individual coverage inexpensive, not necessarily family coverage.
Some interesting tidbits of Maryland labor and employment news:
- According to the Daily Record, Pepsi Bottling Group and a group of employees have settled an overtime compensation case in the U.S. District Court of Maryland. As part of the settlement, about 60 employees will share an award of $187,275, with attorneys’ fees and administrative costs bringing the total cost of the case to just over $270,000. The named plaintiff, Avary Lehigh, claimed that for about a year, he performed work “off-the-clock” at the behest of his supervision. The Daily Record includes an interesting breakdown of the settlement — the $187,275 split between 60 plaintiffs means that each plaintiff walks away with about $3,100 (including a $9000 incentive fee to Mr. Lehigh). On the other hand, the Plaintiff’s attorneys at Crone & McEvoy make out with $64,273.
- The Baltimore Business Journal has an interesting story on the hidden costs of ADA regulations. The regulation in question comes from the Justice Department and requires that all ATM machines be usable by blind people. Under the regs, ATMs must now have a voice compnent that speaks instructions to blind people and helps guide them through the process of using an ATM. While the goal is laudable, the compliance costs are enoromous — the cost of replacing an ATM machine is a surprising $30,000 to $60,000. This is a major cost for small banks, but they have few options — non-compliance can result in a first fine of $55,000, followed by another fine of $110,000, plus the possible exposure to individual ADA lawsuits. The Journal estimates that the cost nationwide is $500 million dollar for this ADA fix.
- The Baltimore Sun reports that the Baltimore County Council has tabled a proposal that would have changed pension calculations for county employees represented by AFSCME. Right now, the County includes overtime pay in pension calculations — undoubtedly resulting in increased pension costs. The County was poised to change that, but backed down after organized labor mounted heavy pressure. The controversey underscores the continued tension between pensions found in the public sector — that tend to be very generous and include perks like overtime pay in the pension formula — and “pensions” in the private sector, which are all but extinct (at least traditional pensions; most employers do offer 401Ks and the like). Estimates differed as to how much money the proposal would have saved, but estimates ranged from $200,000 to $500,000 — not chump change in lean economic times for the County.