Considerations in Designing Severance Plans and Arrangements for Tax-Exempt Organizations

There are numerous reasons why organizations exempt from taxation under Internal Revenue Code Section 501(c) (3), as amended (the “Code” and, such organizations, “Tax-Exempt Entities”) may offer severance payments to employees who incur involuntary terminations of employment. For example, severance that is conditioned on the departing employee’s execution of a release of claims in favor of the Tax-Exempt Entity can reduce the likelihood of costly and burdensome litigation. Similarly, payment of severance may reduce the risk of negative publicity for the Tax-Exempt Entity by diminishing resentment felt by departing employees. Severance may also help retain existing employees by providing them with a measure of economic security that can dissuade them from seeking alternative employment, particularly if they suspect that the Tax-Exempt Entity has encountered budgetary shortfalls and may be implementing near-term workforce reductions. For these and other reasons, many Tax-Exempt Entities have either implemented or are considering implementing severance programs. Tax-Exempt Entities should be aware of unique opportunities and recent IRS regulations that impact the design of severance programs. This article discusses key decisions and planning opportunities for Tax-Exempt Entities to consider when designing and implementing severance plans and individual severance arrangements. Tax-Exempt Entities face a number of legal and regulatory challenges in establishing severance arrangements, particularly with respect to executive-level severance, as discussed in more detail in Part I. Part II discusses the legal parameters around using Code Section 403(b) retirement savings plans to offer severance to employees with lower levels of compensation.

Read full article.

White House Urges Suspension of DOL Fiduciary Rule

The future of the fiduciary rule—originally set to be implemented this upcoming April—remains uncertain after the White House directed the United States Department of Labor (DOL) to reevaluate, defer implementation and consider rescinding the controversial new fiduciary rule on February 3, 2017. In response to the White House, the acting US Secretary of Labor announced that the DOL will now consider its legal options to delay the applicability date to comply with the President’s directive. McDermott’s ERISA practice will closely monitor these developments and provide additional guidance as it becomes available.

Read full article here.

The Challenges of the Trump Administration’s Vow to “Repeal and Replace” the Affordable Care Act

In the presentation “ACA Repeal/Replace Under the Trump Administration,” Susan Nash discusses the implications of President Trump and the GOP’s immediate vow to “repeal and replace” the Affordable Care Act (ACA), which was enacted in 2010 by the Obama Administration to reform the health care system in the US. A complete repeal is unlikely since many ACA changes will require a filibuster proof majority vote in the Senate. However, some changes can be made unilaterally through Executive action by Republicans through Budget Reconciliation, a special legislative process created by Congress to allow for expedited voting on bills that directly impact reviews and expenditures.

The presentation also highlights several proposals that the GOP has been working on to replace ACA, the non-enforcement of market reform requirements, the possible outcomes for the Trump Executive Order and the immediate ramifications for the insurance markets and millions of Americans.

View the presentation slides here.

White House Urges Suspension of DOL Fiduciary Rule

The future of the fiduciary rule—originally set to be implemented this upcoming April—remains uncertain after the White House directed the United States Department of Labor (DOL) to reevaluate, defer implementation and consider rescinding the controversial new fiduciary rule on February 3, 2017. In response to the White House, the acting US Secretary of Labor announced that the DOL will now consider its legal options to delay the applicability date to comply with the President’s directive. McDermott’s ERISA practice will closely monitor these developments and provide additional guidance as it becomes available.

Read full article here.

Understanding Equal Pay Laws and Avoiding and Defending Pay Equity Claims

The federal government’s focus on pay equity and pay data, and the passage of groundbreaking equal pay laws in a number of states, has been one of the biggest employment law developments of 2016. Litigation involving pay equity claims has also risen in the past year. Given the increased focus on pay equity from these multiple sources, employers are well-advised to examine their compensation policies and practices.  Understanding and applying the varying tests for pay equity under federal and state statutes can pose a challenge, however.

On January 24, McDermott hosted an in-depth webinar to discuss the federal Equal Pay Act; state equal pay laws; the EEOC’s pay data rule; how to conduct a pay equity study; and employer defenses to pay equity claims.

To view the archived presentation slides, please click here.

To view the archived webinar, please click here.

What You Need to Know About President Trump’s Executive Order on Immigration Issues

Over the past week, President Donald J. Trump signed three Executive Orders involving US immigration issues. The Executive Order signed on January 27, 2017, was somewhat unexpected in terms of its focus and the extent of its reach. Entitled “Protecting the Nation from Foreign Terrorist Entry into the United States,” the order has an immediate impact on millions of legal immigrants, nonimmigrants and US businesses.

Since the order was signed, there have been numerous announcements from the US Department of Homeland Security, including US Citizenship & Immigration Services and US Customs & Border Protection, as well as the US Department of State. Many of these announcements have been contradictory or have been superseded immediately by other information. This is an ever-changing situation, but the following information is current as of press time:

  • Nonimmigrant and immigrant visa processing has been suspended for nationals of Iraq, Iran, Syria, Libya, Somalia, Sudan and Yemen.
  • Issuance of visas has been suspended for a period of 90 days. The US embassies and consulates have cancelled immigrant visa appointments for the month of February. Further cancellations are expected.
  • Suspension of visa processing does not include those traveling on diplomatic visas; NATO visas; C-2 and C-3 visas for UN and foreign transit; and G-1, G-2, G-3 and G-4 visas.
  • Nationals of Iraq, Iran, Syria, Libya, Somalia, Sudan and Yemen in possession of valid nonimmigrant and immigrant visas are barred from entry to the United States for a period of 90 days.
  • Immediately after the Order was signed, many nationals of the aforementioned countries boarded flights to the United States. These travelers experienced long waits in the inspections area, only to be denied admission to the United States. At the present time, airlines will not board individuals from the aforementioned countries who hold nonimmigrant or immigrant visas.
  • Nonimmigrant and immigrant visas of nationals of Iraq, Iran, Syria, Libya, Somalia, Sudan and Yemen have been provisionally revoked.
  • Revocation goes hand-in-hand with the ban on travel to the United States, but it is still unknown whether those holding such visas will need to have them reissued in the future or if their visa status will be reinstated in some manner.
  • Nationals of Iraq, Iran, Syria, Libya, Somalia, Sudan and Yemen may be issued visas or granted other immigration benefits on a case-by-case basis if the Secretaries of State and Homeland Security determine it is in the national interest to issue visas or benefits to such individuals.
  • At the present time no procedure has been announced for requesting review of a visa application under the “national interest” exception.
  • It has been determined that nationals from the seven countries who are US permanent residents will be readmitted to the United States as being in the national interest, provided no derogatory information about an individual is uncovered.
  • The policy on readmission of permanent residents was a tremendous relief to many who initially feared being stranded abroad despite their permanent resident status. Although such individuals are being readmitted to the United States, they may experience lengthy inspection delays at US airports before being admitted to the United States.
  • The Visa Interview Waiver Program has been suspended for a period of 90 days.
  • Under the program, nationals of certain countries who were frequent travelers to the United States were able to have their nonimmigrant visas reissued without interview at a US consulate or embassy. Because of the suspension, anyone who needs to have a visa reissued must follow the usual procedure for scheduling an interview at a US consular post. It is unknown how many individuals will be subject to the suspension; therefore there may be substantial delays in securing a visa appointment at a consular post in the future.
  • The Visa Interview Waiver Program is separate and distinct from the Visa Waiver Program, which allows nationals of select countries to travel to the United States as visitors for periods of up to 90 days without a visa. At the present time there have been no changes to this program.
  • The US refugee program has been suspended for 120 days.
  • The suspension applies to all refugees from any country. The Order indicates that the refugee program will be reviewed to determine procedures to ensure that refugees are appropriately screened prior to admission to the United States.
  • Sources have indicated that naturalization and citizenship applications continue to be adjudicated for applicants from all countries, including the seven listed countries. Additionally, interviews continue to be conducted for immigrant visa petitions and applications for adjustment of status filed in the United States. This policy may vary from office to office and may change in the future. The status of nonimmigrant visa petitions filed on behalf of individuals from the seven countries is currently unknown, although rumors have circulated that such petitions are currently being held without adjudication until further notice.

The Executive Order has left many questions unanswered and many individuals stranded outside the United States. The impact on families, businesses, nonprofit organizations, medical facilities, scientific research centers and universities has been profound. The Order indicates there may be other countries added to the list, raising concerns among nationals from other countries. Clearly, anyone who is a national of one of the seven countries and who is in the United States with a valid nonimmigrant visa should not leave the United States. It is recommended that nationals of the seven countries who are permanent residents carefully consider their travel needs before scheduling travel. Other foreign nationals who will be traveling and need to have a visa reissued while abroad should be sure to plan their consular visit well in advance of their departure from the United States and leave enough time abroad for the visa to be issued.

Three Key Employee Benefit Plan Issues for Health Systems in 2017

Health system employers should make sure they are familiar with three key employee benefit issues: (1) the new Department of Labor (DOL) fiduciary rule that currently becomes effective April 10, 2017 (but may be delayed in the near future under the new administration); (2) recent excessive fee litigation filed against universities (and now health care systems such as Essentia Health) maintaining Code Section 403(b) fee plans; and (3) new Code Section 457(f) regulations. Each of these issues present risks and opportunities for health systems in 2017.

Read full article here.

Highlights of Record Retention Requirements Applicable to Employee Benefit Plans

In the presentation “Highlights of Record Retention Requirements Applicable to Employee Benefit Plans,” Todd A. Solomon detailed the general rules of The Employee Retirement Income Security Act of 1974 (ERISA). He discussed several specific record-keeping requirements for employee benefit plans and a number of general requirements that imply a duty to retain records, for example general fiduciary duties, plan distribution requirements, COBRA requirements and qualified medical child support requirements.

View the presentation slides here.

DOL Finalizes New Disability Claim Rules for Welfare and Retirement Benefit Plans

The US Department of Labor’s Employee Benefit Security Administration recently released final rules on the adjudication of disability claims under welfare and retirement plans (the Final Rule). The purpose of the Final Rule is to add procedural protections and safeguards that are aimed at providing a full and fair claims review process for disability benefit claims, similar to those applicable to group health plans under the Affordable Care Act. The Final Rule also contains helpful guidance for claims and appeals procedures under all types of ERISA plans.

Read the full article here.

Northern District of Texas Blocks Enforcement of the Non-Discrimination Regulations of the ACA

On December 31, 2016, the US District Court for the Northern District of Texas issued an opinion and order in Franciscan Alliance, Inc. et al v. Burwell, which preliminarily enjoins the US Department of Health and Human Services from enforcing, on a nationwide basis, certain portions of the regulations under Section 1557 of the Affordable Care Act that prohibit discrimination based on gender identity and termination of pregnancy. Two similar cases are pending in the US District Court for the District of North Dakota.

Read the full article here.

LexBlog