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Employee Benefits Blog

Insights on Employee Benefits and Executive Compensation

German Employment Update – Obesity May Qualify as Severe Disability

Posted in Employment

European employers should exercise caution in the event of the dismissal of an obese employee.  The European Court of Justice (ECJ) determined that obesity may qualify as severe disability if it significantly restricts participation in working life (ECJ, judgment of December 18, 2014 in Case C-354/13).  This decision may be relevant not only for dismissals but also in hiring decisions. In order to avoid undue discrimination, an employment rejection letter should in no way whatsoever refer to the applicant’s weight.  The plaintiff in the present case was an obese nursery teacher who filed a suit against his employer, the Danish community Billund, because of his dismissal.  The employer argued that the dismissal was due to declining numbers of children being registered.  The nursery teacher argued that the reason for his dismissal, after 15 years of employment, was his obesity, which constituted undue discrimination due to disability.

The ECJ clarified that European Union law does not contain a general prohibition with respect to obesity discrimination in employment.  Nevertheless, obesity may qualify as severe disability if it significantly interferes with full and equal participation in working life.  This can happen in cases of a particularly serious obesity of long duration, which causes physical, intellectual and mental impairment.  According to this definition, the cause of the obesity is irrelevant.  Now, following the decision of the ECJ, the Danish trial court has to decide if the nursery teacher’s obesity significantly interferes with full and equal participation in working life.

The decision of the ECJ may have significant impact on German employment law.  Up until now, only conditions resulting from obesity (e.g., diabetes or chronic back pain) qualified as a severe disability.  Following the decision of the ECJ, obesity itself may qualify as severe disability.  It remains to be seen whether – and, if so, at which level –the ECJ will establish thresholds under which a dismissal or a rejection of an applicant is considered discriminatory due to obesity.  Until then, the decision of the ECJ gives rise to considerable legal uncertainty.

IRS Publishes Final Forms and Instructions on Information Reporting Under the Affordable Care Act

Posted in Health and Welfare Plans

The Internal Revenue Service (IRS) published final forms and instructions addressing information reporting requirements applicable to employers and insurers under Internal Revenue Code Sections 6055 and 6056. The reporting requirements are effective for tax years beginning in 2015, with the first report due in 2016 for 2015 coverage.

The Affordable Care Act (ACA) generally requires individuals (with limited exceptions) to maintain minimum essential coverage or pay an individual shared responsibility payment with their annual federal income tax return. The IRS will use the information reported by employers and insurers under the information reporting requirements of the ACA to determine individual compliance with the individual shared responsibility requirements and to determine individual eligibility for premium tax credits.

Reporting of Minimum Essential Coverage

Code Section 6055 imposes annual information reporting requirements on insurers, employers that self-insure group health plans and certain other providers of minimum essential health insurance coverage. These entities are required to file annual returns reporting information about the entity and specific information for each individual for whom minimum essential coverage is provided. Covered entities will report the required information to the IRS and to covered individuals on Form 1095-B (click here for instructions). Entities should use Form 1094-B to transmit Form 1095-B to the IRS.

Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans

Code Section 6056 imposes annual information reporting requirements on applicable large employers (generally defined as employers with 50 or more full-time employees) that are subject to the employer shared responsibility provisions of Code Section 4980H. These large employers are required to report to the IRS the health insurance or self-insured health care coverage the employer provides to its full-time employees. The return filed with the IRS will describe the health care coverage the employer provides to its full-time employees, including a list of full-time employees, the coverage offered to each full-time employee and the months to which the coverage applied. Entities will report the required information to the IRS on Form 1095-C (click here for instructions), and to each of their full-time employees. Entities should use Form 1094-C to transmit Form 1095-C to the IRS.

Next Steps

Employers sponsoring group health plans should prepare for compliance with the ACA’s information reporting requirements by reviewing their systems to ensure they are able to capture the necessary information to be reported to the IRS based on the above forms.

Supreme Court Rejects Sixth Circuit’s Yard-Man Inferences in M&G Polymers USA, LLC v. Tackett

Posted in Benefit Controversies, Health and Welfare Plans

M&G Polymers USA, LLC v. Tackett, a recent unanimous decision by the Supreme Court of the United States, is a game changer. By expressly repudiating the U.S. Court of Appeals for the Sixth Circuit’s 1983 Yard-Man decision and the many decisions following it, the Supreme Court rejected three decades of Sixth Circuit law inferring that retiree health benefits are vested for retirees’ lives, and provided new clarity in interpretation of retiree medical benefits under collective bargaining agreements.

Read the full article.

Employers with Group Health Plans: Have You Notified State Regulators of the Breach?

Posted in Health and Welfare Plans, Privacy and Data Security

Data security breaches affecting large segments of the U.S. population continue to dominate the news. Over the past few years, there has been considerable confusion among employers with group health plans regarding the extent of their responsibility to notify state agencies of security breaches when a vendor or other third party with access to participant information suffers a breach. This On the Subject provides answers to several frequently asked questions to help employers with group health plans navigate the challenging regulatory maze.

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Webinar: Employee Benefits for Same-Sex Partners

Posted in Employment

Employee Benefits for Same-Sex Partners
Clear Law Institute Webinar – for 25% off use discount code ‘Solomon25′

In this interactive webinar, attorney Todd Solomon—who literally wrote the book on domestic partner benefits—discusses the impact of these rulings and the steps employers should take now to ensure that they are in compliance with all applicable laws for same-sex partners.

Recent U.S. Cases Highlight Liability Risks to Executives in Mining, Heavy Industrial Transactions

Posted in Executive Compensation

Historically, corporate executives rarely faced personal or criminal liability resulting from mining or environmental accidents in the United States. Several criminal cases stemming from two recent disasters, however, indicate that the tide may be turning. These disasters, the repercussions of which have been playing out recently in the U.S. criminal courts, should put private equity and strategic investors in the mining and heavy industrials space on alert. Thorough due diligence into a target’s past operations and compliance record is more important than ever before.

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A Simplified Norm to Represent an Expanding Power: the Right to Listen in on Employees’ Phone Calls and the Standardization of French Privacy Law

Posted in Employment, Privacy and Data Security

Since 2001, the French Court of Cassation has made a continuous effort to refine and, in some circumstances, narrow the scope of the right to privacy in the workplace with a view to reaching a fair and balanced approach. The January 6, 2015 declaration of the French Data Protection Authority (CNIL) further highlights this trend towards the standardization of information collection at work, and serves to clarify and expand the right of employers to listen in on employees’ phone calls at work.

Background

In the landmark 2001 “Nikon Case,” the Court of Cassation ruled that “an employee has the right to the respect of his private life – including the right to the secrecy of correspondence – on the work premises and during working hours.” This announcement was qualified, however, and the court further refined that unless marked by the employee as “private,” the documents and files created by an employee on a company-computer for work purposes are presumed to be professional, which means that the company can access those documents and files without the employee’s presence. This can lead to an employer using such emails against an employee in the case of employment termination. Nonetheless, employers have an obligation under privacy and labor laws to inform employees about the collection and use of their personal data.

Building off of this decision, in October 2014, the French Social Supreme Court held that evidence gathered against an employee from data that had not previously been declared to and registered with CNIL was de facto illegal.

The French Labor Code and the French Data Protection Act both stipulate rules for the use of monitoring software by employers in the event that an employer wishes to establish such mechanisms. In particular, the employer must submit information to and engage in consultation with the works council, provide information to employees impacted by the software and make a formal declaration of the proposed monitoring activities to CNIL.

CNIL Declaration: Movement Toward a Simplified Norm

Continuing this trend, the declaration issued by the CNIL on January 6, 2015, further demonstrates not only how important the CNIL is, but also how the area of data protection is evolving and become more standardized in France.

This recent declaration established that employers wishing to record their employee’s telephone communications must first declare such information by filling out a simplified declaration form in lieu of a normal declaration form. After effectuating this simplified declaration, an employer will have the ability to listen to and record employee conversations for the purpose of employee training, evaluation and betterment of the quality of service.

While this declaration serves to grant employers permission to monitor employees, it also imposes upon them a number of restrictions: (i) the employee must be notified and informed of his or her right to refuse such recordings and (ii) the employee may only keep recordings for a period of six months. The information gathered from such recordings, however, may be kept for a reasonable period of time.

The issuance of this simplified norm for employee monitoring of phone calls at work may not greatly affect the practical daily lives of employers or employees, but it does speak volumes about the power that the CNIL retains to impact labor law. The CNIL’s declaration creates a sort of exception to normal procedure. Most often, the adoption of a simplified norm corresponds with the daily needs of businesses and administrations as the CNIL deems fit. In deciding to isolate the procedure for employee monitoring and by reclassifying the declaration procedure, the CNIL is highlighting and reacting to just how deep the issue of data protection has permeated the world of labor law.

IRS Permits Puerto Rico-Qualified Plans in U.S. Group Trusts, Extends Deadline for Certain Puerto Rico Spin-Offs

Posted in Retirement Plans

The U.S. Internal Revenue Service (IRS) recently issued Revenue Ruling 2014-24, which expressly permits retirement plans that are tax qualified only in Puerto Rico (Puerto Rico-only plans) to continue to pool assets with U.S.-qualified plans in Revenue Ruling 81-100 group trusts (group trusts) now and in the future.  The ruling is welcome relief for Puerto Rico plan sponsors, institutional investors, and trustees, who previously were relying on transition relief that permitted Puerto Rico-only plans to participate in U.S. group trusts for only a limited time without facing potential disqualification of the participating U.S. plans and trusts.

Revenue Ruling 2014-24 also extends the deadline for sponsors of certain retirement plans qualified in both the United States and Puerto Rico (dual-qualified plans) that participated in a group trust to make a tax-free transfer of benefits for Puerto Rico employees to a Puerto Rico-only qualified plan prior to January 1, 2016.  Eligibility is limited only to dual-qualified plans that participated in a group trust as of January 10, 2011.

Read the full article.