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OSHA Looking Out for Temporary Workers’ Safety
The summer months often spur an influx in the hiring of temporary workers throughout the region. Unfortunately, some employers do not have programs in place to ensure proper training and compliance with safety standards for employees who are not on the path to permanent employment. Seeking to remedy this scenario, on April 29, 2013, the U.S. Department of Labor’s Occupational Safety and Health Administration (“OSHA”) released a memo detailing their new initiative to protect temporary employees from workplace hazards.
The memo, written by enforcement director Thomas Galassi, says OSHA has received “a series of reports of temporary workers suffering fatal injuries during the first days on a job. In some cases, the employer failed to provide safety training, or if some instruction was given, it inadequately addressed the hazard, and this failure contributed to their death.”
OSHA field inspectors will be using a newly created code in their information system to denote when temporary workers are exposed to safety and health violations. Further, the inspectors will be assessing whether the workers received required training in a language and vocabulary understandable to them. Recently, OSHA teamed with the American Staffing Association and employers that use staffing agencies to promote the use of best practices in relation to the safety of temporary workers.
In Kentucky, employers in the equine and agricultural industry rely heavily on temporary workers to carry out their business. The new focus on these employees should cause employers to pay special attention to their training practices and compliance with workplace safety standards. If you are an employer and would like more information on OSHA regulations and compliance, contact the labor and employment attorneys at McBrayer, McGinnis, Leslie & Kirkland, PLLC.
Brandon K. Johnson is an Associate in the Louisville, KY office of McBrayer, McGinnis, Leslie & Kirkland, PLLC. Mr. Johnson practices primarily in the areas of insurance defense, employment law, and general litigation. He can be reached at bjohnson@mmlk.com or at (502) 327-5400.
This article is intended as a summary of state and federal law and does not constitute legal advice.
Tightening the Belt & Loosening Enforcement: Effects of the Sequester on Employment Issues
In the months before it took effect, there was a great deal of political finger-pointing and intense debates on the looming sequester. The sequester, a plan implemented through the Budget Control Act of 2011, affects every “program, project and activity” of the federal government by reducing funding to the aforementioned. The cuts aim to save $1.2 trillion over ten years, with defense and domestic discretionary spending both on the chopping block. This year, $85 million dollars will be saved from a requested outlay of $3.803 trillion dollars.
Since the cuts took effect on March 1, 2013, media attention on the issue has waned. While the political noise has died down, local, state, and federal agencies are still very much entrenched in the topic. Officials at all levels are figuring out how to continue operations as normal when their resources are being reeled in by the government. Agencies have no choice but to tighten their belts by issuing mandatory unpaid days off (“furloughs”), hiring freezes, and other extreme measures to compensate for cuts to their department.
In light of the monetary deductions, the National Labor Relations Board (“NLRB”) has announced that its employees may be required to take up to twenty-two furlough days. Equal Employment Opportunity Commission (“EEOC”) employees may be forced to take 8.5 furlough days. The Occupational Safety & Health Administration (“OSHA”) froze new hires and bonuses. Department of Labor (“DOL”) agencies will reduce travel and training expenses.
The sequester not only imposes real consequences to employees who work for these federal agencies, but also serious impediments to labor law rights and regulations. Employers who are involved in agency charges, administrative hearings, or lawsuits before any of the above-named tribunals will likely feel the effects. At minimum, delays in processing and investigations of claims can be expected. More serious consequences are possible. OSHA chief David Michaels has stated that over 1,000 fewer compliance consultations will be made in wake of their funding cuts. An increasing number of EEOC cases may find their way into court, as a claim that goes unheard by the agency for more than 180 days must receive a “right to sue” status.
Although the sequester is in its infancy stages and the full extent of its accompanying problems is unknown, it is clear that there will be real effects on employers and employees everywhere. As workplace agencies and employers are finding out in a most unpleasant manner, everything—even budget cuts—comes at a price.
Brandon K. Johnson is an Associate in the Louisville, KY office of McBrayer, McGinnis, Leslie & Kirkland, PLLC. Mr. Johnson practices primarily in the areas of insurance defense, employment law, and general litigation. He can be reached at bjohnson@mmlk.com or at (502) 327-5400.
This article is intended as a summary of state and federal law and does not constitute legal advice.
Contemplate Before You Terminate: Rules of Termination
Donald Trump makes it look easy. With a simple statement (“You’re fired!”), the employee gets up and exits the boardroom. And like that, the underachiever is nixed from the show, ushered into a limo, and never seen again (at least, until the “All-Star” season). If only the real world was that easy. The decision to terminate an employee can give any employer anxiety, even if it is undoubtedly for the betterment of the business. This sense of dread is not without warrant; termination can be a legal landmine. Even terminating “at-will” employees requires cautious consideration. You can cover your bases, though, by carefully drafting policies, adhering to procedures, and relying on some common sense. Before any action is taken, review these simple rules that can protect you from a lawsuit.
Determine the employee’s status
If someone is an “at-will” employee, he or she can be terminated any time, for any reason. Yes, you can fire someone simply because you do not like them. Review any existing employment agreements or contracts that could be deemed to negate the at-will status. If an employee is not at will, then they usually have a set period for employment and a termination is governed by an employment contract that likely includes a provision requiring termination “for cause.” In such an instance, you must remember to review the contract and follow its terms before terminating that employee.
It should be noted that even if all of your employees are at-will, you are still not out of the proverbial woods. At-will employees can file post-employment lawsuits for a variety of reasons. Any employee, no matter the status, can claim that he was terminated, at least in part, because of a legally protected category (such as gender, religion, disability or age). An employee can also always allege he was terminated for exercising a legal right, such as taking a leave as permitted under the Family and Medical Leave Act, or for refusing to engage in illegal activity. The term “at-will” is not an insulator for liability but there are steps an employer can take to protect itself against claims of wrongful discharge.
Documentation
The key to avoiding termination lawsuits is documentation. All instances of substandard performance or misconduct should be documented (even for at-will employees). The recording of these things can provide support for the termination. Check records to see if an employee has received a previous warning or has been written up—evidence of past problems can go a long way in justifying a termination decision which negates against wrongful termination.
On the other hand, if an employee recently received a raise or earned a stellar performance review, then a sudden discharge may raise suspicion if other factors are present. A positive paper trail can indicate termination was predicated upon illegitimate (and perhaps unlawful) reasons.
Review company policies and procedures
Take time to review the company policies and procedures to make sure the punishment fits the crime. For example, if you are considering firing an employee who violated the company dress code, but the employee manual says that such an offense first requires a warning, you may be left to explain why you did not abide by your own rules.
If the employee manual is silent, consider whether treatment of this employee is consistent with the treatment of others similarly-situated. Consistency is crucial. An experienced HR employee can help you determine if uniformity in management decisions is present.
Calm down and investigate
Never, ever (ever!) explode on an employee and end the outburst by telling him he is fired. Acting out of anger or frustration can just cause more problems. An employee whose termination is preceded with yelling or other emotion-driven acts is much more likely to become disgruntled. There may be times when a sudden discharge seems warranted, however, best practices dictate that you should suspend an employee first and conduct an investigation. This will give you time to cool off and collect evidence of the wrongful act.
More often, though, a decision to terminate may not be so clearly defensible. If an investigation is required, act promptly. Document your findings, and remain neutral in your treatment of the suspect employee (and the accuser employee, if there is one) until the facts are uncovered.
Cut the cord face-to-face
When it is time to let the person go, do not take the easy way out by writing an email or letter. Not only is this impersonal, but things in writing can be misinterpreted. Likely, if you do put something in writing, the employee will read it, think it over, and then confront you about the decision. It is better for all involved to handle the issue head-on and with a witness present.
If you are nervous about how the employee will handle the news, then take time to “script” how you would like it to go. By planning the encounter, you will be less likely to deviate from the objective or make the meeting more excruciating than it has to be. Termination is like pulling off a Band-Aid—it hurts less if you do it in one sweeping motion. Before the meeting, remember to:
- Arm yourself with any documentation you may need to back up your reason for the decision.
- Decide who else you would like to be present in the room; it is always a good idea to have an unbiased party privy to the meeting.
- Be stern in what in what company items or information must be handed over before departure and review with the employee any non-compete or confidentiality clauses that have been signed.
- State exactly how long the employee has to remove his belongings and self from the premises. If you do not want it to disrupt the office environment, consider letting the employee gather his things during off-hours with the accompaniment of security or personnel.
- If there is any chance of violent retaliation, have a procedure in place beforehand for removing the employee from the premises and consider having company security personnel on-hand.
Before you sit down with the employee, you should contemplate the issue of severance pay. Any time an employee is fired, there is possibility that legal action will follow. To avoid this, a severance agreement can be negotiated with the employee. The employee will sign a release foregoing their right to sue in exchange for something of value. Keep in mind that the exchange does not have to be money, but can be something intangible, such as an agreement to provide positive job references or to not contest unemployment benefits.
To ensure that your agreement will hold up if challenged in court, make sure any agreement is in writing, signed by the employee, and states that the waiver of right to sue is knowing and voluntary. You will also want to allow the employee some time to consider signing it and in certain circumstances, the law sometimes requires a twenty-one day consideration period. Also always allow the employee to review the document with an attorney if he so chooses.
The wrap-up
Once the employee is out the door, you can breathe a sigh of relief. But know there is still work to be done. A terminated employee may be legally entitled to benefits, such as COBRA or vested 401(k) or pension benefits. You will want to check with your HR staff or an attorney about the necessary procedures for compliance with these. You will also have to issue the employee’s final paycheck, which may have to include payment for accrued or unused vacation days.
Letting go of an employee is rarely as easy as Mr. Trump makes it look, but with some planning and forethought, you can traverse the legal landmine safely.
Cynthia L. Effinger, an Associate of the firm, joined McBrayer, McGinnis, Leslie & Kirkland, PLLC in 2012. Ms. Effinger has a broad range of legal experience gained through 13 years of practice throughout the Commonwealth of Kentucky where her clients conduct business. Ms. Effinger’s practice is concentrated in the areas of employment law and commercial litigation. She also has experience with First Amendment litigation, securities litigation and complex litigation. Ms. Effinger can be reached at ceffinger@mmlk.com or at (502) 327-5400, ext. 316.
This article is intended as a summary of state and federal law and does not constitute legal advice.
Twitter: Little Statements with Big Consequences for Companies, cont.
Earlier this week, I gave some advice on how to protect your business’s Twitter account. The hijacking of a Twitter account can have an incredibly negative impact on your business. If you missed it, review the advice I offered in my earlier post and consider these additional steps.
Watch out for strange emails
Twitter will never ask you to provide your password via email, a direct message, or @reply. Twitter will never ask you to download something or sign-in to a non-Twitter website. So, if you get an email or message prompting you to do any of these things, don’t. If you receive a suspicious email, delete it (preferably without opening) and immediately visit https://Twitter.com to change your password. Emails like this are “phishing” for personal, online information that they can use to hack into your accounts. If the folks at Twitter believe your account has been phished or hacked, they may reset your password to prevent access. In this event, they will email you a link to where you can reset the password on your own. The password reset link is always available on the Twitter website, so you can visit it directly.
In addition to watching out for strange emails, be sure to use caution when sending your own. It is good practice to verbally communicate the log-in information with those who have user-access. If your name and password are in an email, the email may be sent to the wrong person internally or may be accessed externally via hackers.
Keep your computer up-to-date
Company browsers and operating systems should always be updated with the most current versions. All computers should have some kind of program which protects against viruses, spyware, and adware. By keeping your software in good overall health, you make the chance of a Twitter hack less likely.
Be on the lookout for two-factor authentication
There are online accounts (Facebook, for example) which require or offer users the option of two-factor authentication. With the slew of recent Twitter hackings, Twitter will no doubt soon be offering two-factor authentication to increase its security. This two-factor authentication should be used by all businesses, if not also for personal accounts. Two-factor authentication is a process in which a user is sent a randomly generated code to enter along with their user name and password when logging in. This code can be sent via text message to users’ mobile phones. Thus, even if a hijacker discovers your password, access will be denied without the random code. Think of it as another lock on your company’s social media door.
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If an errant tweet does make it onto your company’s Twitter feed, swift action is necessary. You should have a social media crisis plan in place so that the problem can be handled immediately and effectively. The plan may involve steps such as changing passwords, sending an email to clients and customers explaining your account has been compromised, or tweeting out an apology to followers.
A 140-character message can do a lot of damage to your business. Take preventive steps to curb the likelihood of this happening. Just like every company should have a lock on the front door, every social media account should be bolted with security to keep out evil-doers.
Amy D. Cubbage is Of Counsel in the Louisville office of McBrayer, McGinnis, Leslie & Kirkland, PLLC. She concentrates her practice in litigation in the areas of employment, complex tort and commercial litigation, including class actions, toxic torts and mass torts. Ms. Cubbage may be reached at (502) 327-5400, ext. 308 or acubbage@mmlk.com.
This article is intended as a summary of state and federal law and does not constitute legal advice.
Twitter: Little Statements with Big Consequences for Companies
Twitter is under attack. In recent months, accounts belonging to media giants CBS, BBC, and NPR have all been temporarily taken over by hackers. The Associated Press is the most recent victim. On April 23, 2013, a false statement about explosions at the White House and the President being injured sent shock waves through the Twitter-sphere. The real surprise is the effect the single tweet had in the real world: the Standard & Poor’s 500 Index dropped so sharply moments after the frightening tweet that $136 billion in market value was wiped out. While the hacking of these massive media outlets make headlines, everyday businesses are not safe from the threat, either. In February of this year, a hacker changed the @BurgerKing feed to resemble that of McDonald’s, putting the McDonald’s logo in place of Burger King’s. The hackers posted offensive claims about company employees and practices. If accounts belonging to well-established companies like these are vulnerable, so is yours. If a tweet can have a profound impact on the nation’s stock market, imagine what an ill-contrived tweet could do to your business.
Business owners may have the knee-jerk reaction to delete their Twitter account, but despite the recent blemishes to its security, Twitter remains one of the most important social media sites out there. Just recently, the Securities Exchange Commission made clear that companies could use social media like Twitter when announcing key information in compliance with Regulation Fair Disclosure. Twitter is not just a marketing or PR tool—Twitter is business. And you should never turn your back on existing business. So instead of hanging up your hashtags, consider some steps that can make your Twitter account safer.
Limit Access
Not every employee should have access to the company’s Twitter account. In fact, hardly anyone should, except a few designated employees like the marketing director or business owner. While those with access may never do anything harmful to the account, the more people who have the log-in information, the more likely it is to fall into the wrong hands.
Create a strong password
I know, you already have too many passwords to remember. But a creative password is your best defense against someone seeking to break into your account. Employers should, at minimum, have unique passwords for their most commonly used media sites; please do not use the same word for your Facebook, LinkedIn, and Twitter account. Once a hacker figures it out, they have control of your entire social media presence.
When creating a password, avoid using anything that would be too common. “Password,” “1234,” or the business’s name should never be the only thing standing between you and a hacker. The longer the password, the better. Use a mix of uppercase and lowercase letters, numbers, and symbols.
Don’t stop here! There are more steps you can take to protect your business’s account. Check back on Wednesday when I’ll offer some more helpful tips.
Amy D. Cubbage is Of Counsel in the Louisville office of McBrayer, McGinnis, Leslie & Kirkland, PLLC. She concentrates her practice in litigation in the areas of employment, complex tort and commercial litigation, including class actions, toxic torts and mass torts. Ms. Cubbage may be reached at (502) 327-5400, ext. 308 or acubbage@mmlk.com.
This article is intended as a summary of state and federal law and does not constitute legal advice.
Another Facebook Case, Another Lesson Learned, cont.
On Monday, you learned the basic facts of a new Facebook/employer-related ruling out of New Jersey. How did the court rule? The New Jersey federal court held that the plaintiff’s deletion of his Facebook account during the discovery phase of litigation did constitute spoliation of evidence. The court considered the plaintiff’s action so egregious that it resulted in an “adverse inference” instruction against him at trial.
The plaintiff, Gatto, claimed that he had acted reasonably in deleting his account because he could not be certain that it was the defendants who were accessing it and that the permanent deletion of the information was not within his (but, rather Facebook’s) control. The court disagreed and noted, “Litigants in federal court have a duty to preserve relevant evidence that they know, or reasonably should know, will likely be requested in reasonably foreseeable litigation…”
The court’s ruling affirms that plaintiffs who fail to preserve relevant social media through the course of discovery may face harsh sanctions. Furthermore, it confirms that social media is accessible by employers. However, a word of caution: employers should never request an employee’s password information to his or her social media account in the regular course of employment. (See previous blog articles on the topic here and here.) The effect of this ruling only extends to situations in which there is pending employer versus employee litigation. If employers find themselves in the same situation as the Gatto defendants, a request should be made through counsel for the subject employee’s social media accounts (Facebook, Twitter, LinkedIn, etc.) immediately. These online outlets may be a source of valuable information that can be used to rebut claims.
If you are an employer and find yourself faced with a pending lawsuit or have a question regarding a personnel matter, contact the employment and labor law attorneys at McBrayer, McGinnis, Leslie & Kirkland, PLLC. We are here to help.
Jaron Blandford is a member of McBrayer, McGinnis, Leslie & Kirkland, PLLC and is located in the firm’s Lexington office. Mr. Blandford focuses his practice on civil litigation with an emphasis in all areas of labor and employment law. He can be reached at jblandford@mmlk.com or (859) 231-8780.
Another Facebook Case, Another Lesson Learned
There is no shortage of recent court rulings dealing with implications and consequences of social media. One of the latest comes from a New Jersey federal court and its holding should get employers’ attention. In Gatto v. United Airlines and Allied Aviation Servs., et al., No 10-CV-1090 (D.N.J., March 25, 2013), the plaintiff, Frank Gatto, was employed as a ground operations supervisor at John F. Kennedy Airport. He brought suit against United Airlines claiming that, while he was unloading baggage, a United Airlines aircraft caused a set of fueler stairs (owned by Allied Aviation) to crash into him. Gatto claimed that the resulting injuries rendered him permanently disabled.
After the suit was filed, the defendants made a request for documents and information that related to Gatto’s social media account. The request was based on defendants’ suspicion that Gatto’s Facebook posts detailed physical and social activities that would be inconsistent with his claimed injuries and damages. Gatto refused to comply with the request and a U.S. Magistrate Judge ordered him to execute an authorization for the release of his Facebook records and provide access to the account by disclosing his password to defendants.
Counsel for United thereafter accessed the account and printed portions of Gatto’s Facebook page. This action prompted Facebook to send a notification to Gatto advising him that his account had been accessed from an unfamiliar IP address. Upon notification, Gatto proceeded to deactivate his account. Facebook permanently deleted the data fourteen days later, in accordance with its company policy.
Defendants asked for sanctions against Gatto for purposely deleting evidence. So, how did the court rule on this matter? Did Gatto intentionally destroy the evidence of his social media accounts? Did the employer have a right to ask for it? Check back on Wednesday to learn about the court’s ruling.
Jaron Blandford is a member of McBrayer, McGinnis, Leslie & Kirkland, PLLC and is located in the firm’s Lexington office. Mr. Blandford focuses his practice on civil litigation with an emphasis in all areas of labor and employment law. He can be reached at jblandford@mmlk.com or (859) 231-8780.
Do You Need Employment Practices Liability Insurance?
According to the 2012-2013 Edition of Jury Award Trends and Statistics, the national median award for employment practice claims in 2011 was $325,000, up from $172,500 in 2010. This figure confirms what many in the employment law community already know to be true, that the number of employment practices claims has increased, and with that increase there has been an increase in the size of awards over the years as well. There is no reason to believe that this trend will not continue, and no business should believe itself to be immune from employment practice claims.
Every business of size should seriously consider carrying Employment Practices Liability Insurance (“EPLI”) to protect itself from employment-related claims, which can encompass everything from sexual harassment, to wrongful termination, to defamation. Although a business’s first line of defense should always be thorough up-to-date and well written HR procedures and policies, EPLI coverage can be a valuable lifeline when an expensive and lengthy lawsuit is looming and it just may save your business from financial ruin.
Costs of EPLI policies vary greatly; the price is generally based on your business type, size and associated risk of employment practices. Insurance companies will normally want to review copies of the HR forms, policies, and manuals to assess risk probability. If you seeking EPLI, there are some things you should be looking for in a policy. These include, but are not limited to,
- A broad definition of “insured,” so that all directors, officers, and employees are covered;
- A broad definition of “claim,” so that criminal, civil, and administrative proceedings are covered, as well as arbitrations and investigations;
- A practical deductible that can be met if the insurance is needed;
- A carve-out for claims under federal statutes; if an employee brings a whistleblower claim for exercising rights pursuant to certain statutes such as COBRA, ERISA, or OSHA, you will likely want these claims to be covered by the policy; and
- A choice of counsel provision so that the business can utilize an employment attorney that is familiar with the business, locality, governing law, and particular claim.
As an added bonus, some EPLI insurers even offer additional services free to their customers, such as a call-in line for general employment questions or sample employee handbooks. EPLI can offer peace of mind and valuable protection in the increasingly litigious employment law arena, and the attorneys at McBrayer, McGinnis, Leslie & Kirkland, PLLC, are happy to provide assistance in this area.
Luke A. Wingfield is an associate with McBrayer, McGinnis, Leslie & Kirkland, PLLC. Mr. Wingfield concentrates his practice in employment law, insurance defense, litigation and administrative law. He is located in the firm’s Lexington office and can be reached at lwingfield@mmlk.com or at (859) 231-8780.
This article is intended as a summary of federal law and does not constitute legal advice.
“Why Does She Get To Do That?” Handling Questions about Employee ADA Accommodations
The Americans with Disabilities Act (“ADA”) requires any employer with fifteen or more employees to provide reasonable accommodations to individuals with disabilities, as long as doing so does not result in “undue hardship” to the employer. A reasonable accommodation can be any change in the work place that helps a person with a disability to enjoy equal employment opportunities. The ADA has very strict guidelines about when and how an employer may inquire about an employee’s disability. What happens, though, when a non-ADA employee asks you, the employer, why another employee is receiving perceived preferential treatment?
The ADA strictly prohibits employers from disclosing medical information about employees, but even if privacy rules are adhered to, some accommodations will be obvious to others. For example, consider these situations:
- A diabetic employee takes more scheduled breaks than others so that he can eat small meals.
- An employee with temperature sensitivity is allowed to wear a modified dress code.
- An employee who experiences seizures is receiving a service dog and, as a result, she must leave work to train with the animal for two weeks.
Obvious accommodations that are incorrectly viewed as “special treatment” can lead to an uncomfortable work environment. An ADA-employee may choose to disclose their disability and accommodation(s) with their co-workers, but if they do not, an employer needs to know how to handle the situation.
If confronted with a question about an ADA accommodation, you should generally inform the inquiring employee that you have policies in place for those who may face difficulties in the office. You should not disclose who the person experiencing the disability is (even if it is obvious) or what the disability is. Emphasize that the business, and employees, must respect the privacy of every employee.
In addition, consider what you can do before inquiries start. Although employers are not under an obligation to explain the ADA to employees, it could be beneficial to outline the Act in your employee manual. By doing so, you will help employees become familiar with its rules and regulations. Training is another way to educate your work force. If employees know disability information is confidential, they will be less likely to ask.
You can also designate in your handbook who an employee should speak with in the event an accommodation is needed. Employees may feel as though they have to share their need with the boss, but it is a smart policy to have employees instead discuss the issue with an HR manager or department. HR personnel should be more familiar with the ADA and its requirements. If needed, the HR personnel can then share the information with necessary parties.
The ADA safeguards fairness for all in the work place. By knowing how to discuss the topic appropriately and lawfully, you will ensure that no employee feels slighted by another’s reasonable accommodation, as well as protecting the privacy of the employee requiring the accommodation. As with all employment issues, if a question arises which you or your HR professional is unsure how to answer, contact legal counsel before you act.
Preston Clark Worley is an associate with McBrayer, McGinnis, Leslie & Kirkland, PLLC. Mr. Worley concentrates his practice in employment law, land development, telecommunications, real estate and affordable housing. He is located in the firm’s Lexington office and can be reached atpworley@mmlk.com or at (859) 231-8780.
This article is intended as a summary of state and federal law and does not constitute legal advice.
Are You Going to Play or Pay? Part II
On Monday, we discussed how to determine if you are a “large employer” for purposes of the ACA’s employer mandate. Once you know whether the mandate is applicable, the next step is to know what you will be signing up for if you decide to “play.” The mandate requires you to offer “minimum essential health coverage” that is “affordable” to all full-time employees in 2014. Of course, you need to know what these vague terms really mean. Here’s a general description:
- “Minimum essential health coverage”: The plan must pay at least 60% of the expected health care costs. The remaining 40% may be paid by the employee through co-pays, deductibles, or co-insurance.
- “Affordable”: The employee’s share of the premium for employee-only coverage must not exceed 9.5% of his or her income. Employers must offer dependent coverage, but the cost of this coverage does not factor into the affordability calculation.
Employers are not required to provide coverage for all employees. There is a safe harbor provision so that no penalties will apply for any month in which an employer offers coverage to all but 5% of its full-time employees (or five full-time employees for employers with less than 100 employees). In simple terms, you must offer coverage to 95% of your employees, not all of them.
Likewise, you need to know what you are going to “pay” if you forego providing coverage. Large employers risk extensive penalties, both for failing to offer coverage to their full-time employees and for failing to offer “affordable” coverage to full-time employees and their dependents. If you do not offer coverage, you will face a penalty of $2,000 for every employee in excess of 30. If the coverage offered is not affordable, you risk a penalty of $3,000 for every full-time employee who receives a tax credit or reduction under the new, ACA-created Exchanges.
Before you decide to play or pay, make sure you know the rules of the game. The mandate is detailed, complicated, and comes with costly penalties. Employers must determine which course of action is best for them; many are seeking professional advice. If you need someone to help you understand the mandate and how it will affect you, contact the employment law attorneys at McBrayer, McGinnis, Leslie & Kirkland.
Benjamin L. Riddle is an associate in the Louisville, Kentucky office. Mr. Riddle is a member of the firm’s Litigation team, where he focuses his practice on employment law, commercial disputes and personal injury matters. Mr. Riddle can be reached at (502) 327-5400, ext. 305 or briddle@mmlk.com
This article is intended as a summary of newly enacted federal law and does not constitute legal advice.
