McDermott’s Employee Benefits Blog was recently recognized as one of the Top 10 Compensation and Benefits Blogs by HR Daily Advisor. Thank you to those who follow our blog on a regular basis. We appreciate your support and please contact our editors if you have suggestions on trending topics you’d like to hear more about.
To read the HR Daily Advisor article, click here.
by Todd A. Solomon and Brett R. Johnson
The Illinois Religious Freedom Protection and Civil Union Act, which legalizes civil unions for same-sex and opposite-sex partners, takes effect on June 1, 2011. The law entitles civil union partners to all of the legal rights and obligations that opposite-sex spouses have under Illinois state law by requiring that a party to a civil union be included in any use of the terms “spouse,” “family,” “immediate family,” “dependent,” “next of kin” or other terms that denote a spousal relationship throughout Illinois law. Illinois will recognize as a civil union any same-sex marriage, civil union or substantially similar legal relationship entered into in other states.
The application of the Illinois law is complicated by the intersection of federal and state law. The federal Defense of Marriage Act (DOMA) continues to define a “spouse” as a husband or wife of the opposite sex. A civil union in Illinois will not, therefore, be a “marriage” under DOMA. As a result of DOMA, parties to an Illinois civil union will not be entitled to federal law benefits applicable to opposite-sex spouses (e.g., qualified joint and survivor annuity (QJSA) and qualified pre-retirement survivor annuity (QPSA) benefits under tax qualified retirement plans, COBRA coverage, etc.). Note, however, that on March 16, 2011, both the U.S. House and Senate introduced legislation to repeal DOMA (The Respect for Marriage Act of 2011), and to tie federal law marital status to an individual’s marital status in the State where the individual entered into the marriage. The Respect for Marriage Act bills currently rest with the Judiciary Committees of the House and Senate, and the next step for each (e.g., Committee vote, hearings, Senate and/or House floor vote) is unclear.
Because the new Illinois civil union law may impact areas such as employee benefit plans, employer leave policies (including the Illinois Family Military Leave Act) and any other employer-provided benefits covering spouses, employers should ensure such programs are in compliance with the June 1, 2011 law change. More information on the employee benefit plan implications of the legalization of civil unions in Illinois can be found here, while the impact on Religious Organizations benefits is discussed here.
by Susan M. Nash, Amy M. Gordon, Todd A. Solomon, Raymond M. Fernando and Adrienne Walker Porter
On April 7, 2011, Governor Jerry Brown signed into law California Assembly Bill 36 (AB 36). AB 36 conforms certain California income and employment tax laws to certain changes to the United States Internal Revenue Code (the Code) and Internal Revenue Service (IRS) guidance relating to the favorable tax treatment of health benefits coverage for adult children under age 27. The favorable state tax treatment afforded under AB 36 applies retroactively as of March 30, 2010, which also conforms to the effective date of the parallel provisions under the Code. For a more detailed summary of AB 36, see our related On the Subject, "Health Care Reform: California Adopts Favorable Federal Tax Treatment of Health Coverage for Adult Children Under Age 27."
Background
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the Act), generally requires group health plans that provide dependent coverage for children to continue to make such coverage available for adult children until age 26, beginning as of the first plan year commencing on or after September 23, 2010. Effective as of March 30, 2010, the Act also afforded certain favorable tax treatment under the Code with respect to such coverage. See our related On the Subject, "Health Care Reform: IRS Guidance on Health Coverage for Children Under Age 27."
Discrepancies Between State and Federal Tax Laws
Some states’ tax laws do not automatically conform to corresponding changes in federal tax laws. Thus, although the Act made various changes to the Code relating to the tax treatment of health coverage and reimbursements for children under age 27, some states’ tax laws did not automatically conform to those changes. California recently adopted AB 36 to conform to such changes under the Code.
Next Steps for Employers and Plan Administrators
Employers and plan administrators should take action now in the following ways:
by Ira B. Mirsky and Robin L Greenhouse
On April 14, 2011, President Obama signed legislation that repeals the expanded Form 1099 reporting requirements under the Patient Protection and Affordable Care Act (PPACA) and the Small Business Jobs Act of 2010.
The new legislation eliminates the requirement to expand tax information reporting, beginning in 2012, for payments in excess of $600.00 either (i) for the purchase of goods or merchandise; or (ii) made to a corporation, on Forms 1099-MISC. The legislation also eliminates the requirement that recipients of rental income from real estate, but who are not otherwise considered engaged in the trade or business of renting property, be required to issue Forms 1099-MISC reporting payments of $600.00 or more that are made in the course of earning the rental income (for payments to a service provider, such as a painter, plumber, or accountant). Before the enactment of PPACA, payments under each of these circumstances, or to these categories of recipients, would generally have been exempt from the tax information reporting rules under Section 6041(a) of the Code and the Regulations thereunder.
For more information please contact your regular McDermott attorney.
by Stephen D. Erf, Heather Egan Sussman, Christopher Scheithauer and Sabrina E. Dunlap
The law is not new – it’s just being applied to our newest forms of communication: Twitter, Facebook and others. Even the legal framework is relatively straightforward: Section 7 of the National Labor Relations Act (NLRA) protects “concerted activities,” which include circumstances where employees seek to “initiate or induce” group action for “mutual aid or protection.” In today’s workplace, activities such as blogging, or posting messages on social networking websites, can be considered concerted activity, and unless the activity falls within one of the exceptions to the NLRA’s protections (e.g., confidentiality breaches, extreme disloyalty, etc.), the law limits an employer’s control over what employees may write and post.
In one recent case, the National Labor Relations Board (Board) accused American Medical Response of Connecticut Inc. (AMR) of violating Section 7 when it terminated an employee for allegedly criticizing her boss on Facebook. In its complaint against AMR, the union argued that the company had been interfering with, restraining and coercing employees in exercising their protected rights under Section 7 of the NLRA. The parties reached a settlement on the eve of trial, which required AMR to clarify and narrow its policy.
Even more recently, the Board’s Manhattan office has announced plans to file a complaint against Thompson Reuters over its Twitter policy. In 2010, an employee reportedly tweeted in response to a management inquiry, “One way to make this the best place to work is to deal honestly with [union] members.” The Board claims the company then improperly disciplined her pursuant to the Twitter policy by chastising her for making the statement.
While we will have to wait for the complaint to see exactly what the Board takes issue with (and the company denies the allegations), this case involves a union, so it is easier for an employer to see the potential for NLRA landmines in that workplace. But what many employers do not realize is that Section 7 applies equally to nonunionized workforces.
In the wake of these NLRB complaints, what does this mean for all U.S. employers? If you have not already done so, you should be reviewing your social media policy:
In addition, an overly broad or vague policy alone may violate the NLRA, so you should consider taking steps now to narrow and clarify your policy to avoid becoming the next Board target.
by Heather Egan Sussman and Stephen Erf
The Equal Employment Opportunity Commission (EEOC) recently released the final regulations intended to simplify implementation of the Americans with Disabilities Act Amendments Act (ADAAA). In the ADAAA, which went into effect on January 1, 2009, Congress directed the EEOC to revise its Americans with Disabilities Act (ADA) regulations to conform them to changes made by the ADAAA. Though the ADAAA and these final regulations do not change the definition of a covered “disability” under the ADA—a physical or mental impairment that substantially limits one or more major life activities—the ADAAA and the final regulations made significant changes to how those terms are to be interpreted. In particular, the regulations set forth a list of principles to guide the determination of whether a person has a disability, and provide that the definition should be construed as broadly as possible under the law. The most significant changes to the ADA are as follows:
The final regulations state that the question of whether an individual meets the definition of disability should not demand “extensive analysis,” and that the focus in cases brought under the ADA should be whether covered entities have complied with their non-discrimination and reasonable accommodation obligations and whether discrimination has occurred, not whether the individual meets the definition of a covered disability. The intended effect of these changes is to make it easier for an individual seeking protection under the ADA to establish that he or she has a disability within the meaning of the ADA, though whether that is true in practice, and how the EEOC chooses to enforce the changes, remains to be seen.
by Joseph S. Adams, Todd A. Solomon and Brian J. Tiemann
Employers should take action now to prepare for requests for benefit coverage from employees planning to enter into a civil union once a new law legalizing civil unions for same-sex or opposite-sex partners takes effect in Illinois on June 1, 2011. The most common requests for benefits for a civil union partner are likely to be coverage under the employer’s medical, dental and vision plans, and survivor annuity coverage under defined benefit pension plans.
Medical, Dental and Vision Benefits. Employers with medical, dental or vision plans insured with contracts issued in Illinois will be required to extend coverage to an employee’s civil union partner if the plan provides coverage for other employees’ spouses. Employers that are required to or that voluntarily choose to extend such coverage to an employee’s civil union partner will need to ensure that the employee is properly taxed on these benefits. Because civil unions are not recognized under federal law, employers must impute income to the employee for federal income tax purposes, unless the partner qualifies as a “dependent” of the employee pursuant to Section 152 of the Internal Revenue Code. However, because civil union partners in Illinois are entitled to all of the rights and benefits as spouses, the value of employer-provided medical, dental and vision coverage is not taxable for Illinois state income tax purposes.
Retirement Benefits. The Illinois civil union law will not require non-government employers with qualified retirement plans to extend spousal benefits to civil union partners since these plans are regulated solely by federal law. However, employers may want to consider amending their plans if they want to provide full parity in benefits for civil union partners. Employers with defined contribution plans may want to identify civil union partners as default beneficiaries in the event an employee fails to designate a beneficiary or if the beneficiary predeceases the employee. Another option with respect to defined contribution plans is to permit an employee to obtain an optional hardship withdrawal for IRS-recognized expenses related to a civil union partner. Employers with defined benefit pension plans may want to permit an employee’s benefit to be paid over the joint life of the employee and his or her civil union partner and/or to allow a civil union partner to receive a death benefit if the employee dies before retirement.
More information on the employee benefit plan implications of the legalization of civil unions in Illinois can be found here.
by Joan-Elisse Carpentier, David J. Levine and Raymond Paretzky
On December 22, 2010, U.S. Citizenship & Immigration Services will require all companies and individuals petitioning for certain nonimmigrant status to use a new Nonimmigrant Visa Petition (Form I-129), which requires all petitioners for an H-1B, H-1B1 Chile/Singapore, L-1 or O-1A visa to answer questions regarding release of controlled technology or technical data to the beneficiary of the petition. All such petitioners are required to certify the petitioner has reviewed the Export Administration Regulations and the International Traffic in Arms Regulations, and has determined that either a license is not required to release such technology or data to the foreign beneficiary or that the petitioner will prevent access of such technology or data to the foreign person until any such license or authorization is obtained.
This is an update to the recent blog post discussing the new criminal offender record information legislation and its impact on hiring in Massachusetts. The Massachusetts Commission Against Discrimination (MCAD), has now issued a fact sheet to explain how it interprets the "ban the box" provisions of the new law. While the fact sheet is not formal regulation and it does not carry the force of law, it is important guidance for any employer hiring in Massachusetts. This is because the MCAD is the agency that investigates alleged violations of the law and that can assess damages against an employer where the MCAD determines – based on its own interpretation of the law – that the employer has violated the “ban the box” requirements.
The fact sheet appears to expand the new legislation in two key ways. First, the MCAD interprets the phrase “initial written job application” to mean any written communication with applicants before the interview. A plain reading of the statute’s reference to the “initial written application form,” would seem to allow employers to ask applicants about criminal history at any time other than on the application. Despite this, the fact sheet explains that the MCAD “will presume that a written application or form requesting criminal background information prior to an interview is part of the ‘initial written application.’” (emphasis added).
Second, the MCAD seems to interpret the law as covering applications received by candidates in Massachusetts even where the position for which they are applying is located elsewhere. The fact sheet does permit multi-state employers subject to this legislation to use standard application forms with questions about criminal history, but only if the forms contain “explicit instructions” that Massachusetts applicants should not respond and that pre-interview inquiries about criminal history are not permitted under Massachusetts law. The fact sheet explains that “the employer’s disclaimer must be clear and unambiguous, in boldface type and placed and printed to attract the reader’s attention.”
A court may ultimately decide that the MCAD has overstepped its bounds with its interpretation, but until that happens, employers who are hiring in Massachusetts and who want to avoid an enforcement action by the MCAD should review the fact sheet and conform their hiring procedures.
For more information on the new fact sheet, click here.
by Heather Egan Sussman and Sabrina Dunlap
The Massachusetts Governor recently signed into law an act reforming the Commonwealth’s criminal offender record information system. Under this new law, most Massachusetts employers will now be prohibited from asking about criminal history on an initial written job application. Massachusetts is among a growing number of states to "ban the box" on job applications.
The most significant provisions directly affecting Massachusetts employers are as follows:
Employers that plan to hire in Massachusetts should reexamine application forms and employment policies to ensure compliance with the new law.
For more information and analysis on the new law, click here.
Subscribe
