Delaware Employment Law Blog

The credit history of a job candidate will be off limits to Illinois employers as of January 1, 2011.  Illinois Governor Pat Quinn signed the bill into law on Tuesday, thereby prohibiting employers from making employment decisions--including the decision whether to hire--based on the individual's credit history.  (See Press Release).

Hawaii, Oregon, and Washington already have similar laws.  And bills are pending in 16 state legislatures that would enact similar prohibitions.  The recent push is likely related to the high unemployment rate--more candidates inevitably will have credit issues as a result of unemployment. Therefore, there are more voices to speak out against employers' use of credit histories for employment decisions. 

Delaware’s law banning calling and texting while driving takes effect in January. Eric Ruth, of the Wilmington News Journal, details what Delaware's new no-cell-phone law does and does not require and, with a few suggestions from Adria B. Martinelli, offers ways that employers can begin to prepare.

Adria also offers some tips for employers who will need to update their policies:

• Ban all cell phone use while driving company-owned vehicles -- even hands-free devices can distract drivers.
• Specifically ban texting and e-mailing while driving. If text messaging must be used, incorporate a strict policy requiring drivers to first find a safe area to park the vehicle.
• Make an exception for emergencies that require police or medical attention.
• Also require all occupants of company-owned vehicles or private vehicles driven on company business to wear seat belts.
• Monitor and enforce the policy.

Health care reform is now law and many of the so called “insurance market reforms” go into effect for most employers on January 1, 2011. However, the portion of the law that will require certain large employers to offer and contribute to employees’ health insurance or pay a penalty are deferred until 2014.

Under the law, effective January 1, 2014, each Applicable Large Employer must offer minimum essential coverage to its full-time employees (and their dependents) or it will be required to pay a penalty for each month that any of its full-time employees purchases health insurance through a state health insurance exchange (“Exchange”) and receives a tax credit or cost-sharing reduction (generally granted to individuals based on income levels).

An Applicable Large Employer is one that employed an average of at least 50 full-time employees during the preceding calendar year. A full-time employee is one who for any month works an average of at least 30 hours or more each week is counted as one employee and those employees who work less than 30 hours per week are counted as proportionate employees based on 30 hours per week. An Applicable Large Employer will be subject to the penalty only if the employer has any full-time employees who are certified as having purchased health insurance through an Exchange and received a tax credit or cost-sharing reduction.

Continue reading "Employers Must Play or Pay Under Health-Care Reform" »

Delaware will join the many states that ban cell-phone use while driving.  The law, signed by Gov. Markell on July 6, will take effect on January 2, 2011. The new law bans texting while driving and the use of hand-held cell phones – meaning a hands-free device will be required to talk on the cell phone while driving. It also bans the use of pagers, PDAs, BlackBerry devices, laptops, games or portable computers, and two-way communication devices while driving. In addition, drivers cannot browse wirelessly or read, write, or send messages while driving.

There are a few exceptions, including for law enforcement, firefighters, EMS technicians, or other operators of emergency vehicles. In addition, two-way mounted radios can be used to communicate with other employees or a central dispatch.

Any violation is primary offense and a civil penalty. The fine for the first offense is $50 and subsequent penalties are between $100 and $200 dollars.

29 other states plus D.C. & Guam ban texting. Delaware will be only the eighth state to ban the use of hand-held phones. Delaware State Police cite 230 crashes in 2009 that involved the use of a cell phone as a distraction. National research shoes that drivers using cell phones are four times more likely to get into crashes causing an injury.

Employer Policies

The new laws don’t require you to have specific policies, but it’s a good idea to remind your employees that they need to follow the law while they’re working. There are many reasons employers should take all the steps they can to make sure their employees are driving safely while on the job. Employers may be legally responsible for the actions of their employees. If one of your employees is negligent, gets into an accident, and injures someone while on the job, the company could be held liable. Furthermore, if the employee is injured, you will likely have a workers’ compensation claim on your hands as well.

For these reasons, consider adopting and enforcing the following policies – some of which go further than Delaware’s new law:

· Ban all cell phone use while driving company-owned vehicles or on company property (even hands-free phones can distract drivers);

· Ban texting and emailing while driving.  If text messaging must be used, incorporate a strict policy requiring drivers to first find a safe area to park the vehicle;

· Make an exception for emergencies that require police or medical attention;

· Require all occupants of company-owned vehicles or private vehicles driven on company business to wear their seat belts, and monitor and enforce the policy. Seat belt use is the single most effective way for vehicle occupants to prevent injuries and fatalities;

· Include a signed acknowledgement of your written policy;

Finally, employers may want to contact their insurance broker or review their insurance policies to make sure your company and your employees are adequately covered.

By implementing the suggested policies, employers can ensure their employees are following the law AND that, as an employer, have taken all steps possible to prevent accidents and minimize the company’s liability.

Bonus Benefit

Another potential upside of the cell phone ban, according to the L.A. Times, is improved personal relationships!  According to the article, effective communication while driving is difficult and can lead to relationship problems. 

Federal contractors and subcontractors are subject to a new posting requirement.  Federal contractors and subcontractors (except for acquisition contracts worth less than $100,000 and subcontracts worth less than $10,000) have until June 21, 2010, to post a new notice telling their employees about their rights under the National Labor Relations Act (NLRA), the federal law that governs the relationships between private sector employers and unions. The posting describes the rights of employees to organize into unions and collectively bargain for a contract with their employer. It also describes union and employer conduct that is deemed to be unfair interference with employee rights, and tells employees to contact the National Labor Relations Board if they believe their rights have been violated.

Contractors will be able to download the notice from the Department of Labor’s website and print it out for posting. If the contractor also posts notices to employees electronically, it must also post this notice electronically through a link to the Department of Labor’s Office of Labor-Management Standards (OLMS) website. If a significant number of a contractor’s employees do not speak English well, the contractor must post translated versions of the notice, which will be provided by the OLMS.

The text of the notice and certain other provisions must now also be inserted into federal contracts and subcontracts. The text is available at 29 C.F.R. Part 471 Appendix A (scroll down to page 52).

The Department of Labor’s OLMS has published a Fact Sheet that explains the new posting requirements in detail. Contractors and subcontractors who fail to comply with the requirements risk suspension or cancellation of current contracts and debarment from future contracts

The IRS has issued a News Release explaining to small businesses how they can determine whether they qualify for tax credits pursuant to the Affordable Care Act. These credits are granted to small employers who provide health insurance, as well as additional coverage, such as dental and vision, to employees. The IRS also issued Notice 2010-44 (pdf), which provides more detailed information, including how the credit is calculated.  The Notice also provides more than a dozen examples demonstrating how the credit will work.

The tax credits granted pursuant to the Affordable Care Act are intended to provide tax incentives to small businesses, defined in this instance as having fewer than 25 full-time employees, whose employees earn, on average, less than $50,000 per year. These benefits are available to those small businesses who provide health insurance benefits for which the company pays at least half of the annual cost of individual coverage in 2010. Because the credits are based upon the number of full-time employees, employers with more than 25 employees, some of whom are part-time, may still qualify. Owners of the small business and their family members are not included in the definition of employees.

The credit will range from 25% to 35% of premiums paid by small business employers for tax years 2010 through 2013. Tax-exempt organizations that qualify may receive a credit of up to 25% of the premiums paid. The credit for small businesses will be included as part of the general business credit for 2010. The IRS is still working on the procedure by which tax-exempt entities may claim the credit.

 

See also, Summary of HIRE Act

This post was written by guest blogger, Jennifer R. Noel.  Jenn is an associate in Young Conaway's Tax, Trusts & Estates Section, where she advises clients with respect to local, state, federal, and international tax issues, the legal aspects of the formation and operation of small and emerging growth business enterprises, and the preparation and negotiation of commercial contracts.

Delaware’s legislature has bills pending which may change how some employers credential their employees.

First, there is a bill pending (Senate Bill No. 236) which will remove the provision that allows for the registration of psychological assistants who hold a master’s degree that is “based on a program of studies that is psychological in content and specifically designed to train and prepare psychologists but who is not working toward full licensure as a psychologist.” Pursuant to the bill, a psychological assistant must have completed all the course requirements for a doctoral degree in psychology. A grandfather provision is included for existing registered psychological assistants who maintain their registration. The change limits psychological assistants to those people who meet the experience requirement under §3508(a)(2) for full licensure as a psychologist. The bill was reported out of committee on May 12, 2010.

Second, there is a bill pending (House Bill No. 377) for all state contractors in the plumbing and heating, ventilation, air conditioning and air refrigeration (“HVACR”) fields. Currently a licensed contractor from any state can obtain a Delaware plumbing or HVACR license by simply paying a fee and proving that the contractor is licensed elsewhere. Some states do not offer the same reciprocity, and instead require Delaware contractors take a written test, pay a fee, and satisfy all licensing criteria for that state.  This bill eliminates the existing disparity between Delaware and out of state reciprocity requirements.   If an out of state contractor’s home state has provisions similar to Delaware’s, the contractor may obtain a Delaware license through the reciprocity provisions.  If the other state does not offer reciprocity, that state’s resident plumbing and HVACR contractors must go through the full process of becoming licensed in Delaware. The bill was reported out of committee on May 12, 2010.

Third, pending Senate Bill No. 246 would create a Delaware Board of Examiners of Bail Enforcement Agents empowered to enforce standards upon bail enforcement agents. This 9 member board will supplant the primary responsibility of the Secretary of the Department of Safety and Homeland Security regarding licensure and disciplinary regulatory authority. Regulations proposed by the Board would still be subject to the approval of the Secretary. The Bill also requires that licensees operating a bail enforcement company obtain insurance and file proof of insurance with the Board. The bill was reported out of the Senate’s sunset committee on May 12, 2010.

Employers can find out more about pending state legislation and how the legislative process works at http://legis.delaware.gov.

The Patient Protection and Affordable Care Act signed last week by President Obama will affect employers in numerous ways, many of which have not yet been explored in detail, owing to the newness of the law.  One provision of the law that is certain to have a very real impact on employers across the country but that we have heard virtually nothing about is Section 4207.  Section 4207, titled, Reasonable Break Time for Nursing Mothers amends the Fair Labor Standards Act (“FLSA”).  Because it is born to the FLSA, its provisions apply to almost all employers—every employer engaged in interstate commerce of at least $500,000 per year, hospitals, businesses providing medical or nursing care for residents, schools and preschools, and government agencies. 

So, what does the new law require?  Quite a bit. The Act adds the following to Section 7 of the FLSA as a new subsection (r):

An employer shall provide:

(A) a reasonable break time for an employee to express breast milk for her nursing child for 1 year after the child’s birth; and
(B) a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk.

There are some exceptions to these requirements.

First, employers are not required to pay employees who take a breastfeeding break—unless, of course, there is a state law that says otherwise.  Second, an employer with less than 50 employees is exempt from the requirements if the requirements would “impose an undue hardship” by causing it “significant difficulty or expense” as compared to the employer’s size, resources, and the structure of its business. 

The IRS has issued a News Release explaining the new tax benefits that were part of the Hiring Incentives to Restore Employment (“HIRE”) Act. For each worker retained for at least one year, the employer will be entitled to a general business credit of up to $1,000 on its 2011 income tax return, as well as relief from certain employment taxes. These benefits are available to employers who hire and retain certain unemployed workers after Feb. 3, 2010 and before Jan. 1, 2011.

These credits are specifically targeted to help businesses create new positions that will allow them to hire those who are unemployed. If a new hire fills an existing position, the prior employee must have left voluntarily or for cause in order for the employer to qualify for the HIRE Act credits. These credits will be available to a wide variety of employers, including businesses, agricultural employers, tax-exempt organizations, and public colleges and universities. However, household employers cannot claim these benefits. To be eligible, an employee must have been unemployed for at least 60 days, or must have worked less than 40 hours for someone else during such 60-day period, and the employer must obtain a statement certifying this prior period of unemployment from the employee.

Hiring employers will be exempt from paying the employer’s share of Social Security taxes on wages paid to these qualifying workers after the date of enactment, although the employer must still pay its share of Medicare taxes on these wages. Employers must also withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes and Medicare taxes on these wages. These employment tax benefits will be claimed on an employer’s federal employment tax return, most of which are filed on a quarterly basis.

 

*This post was written by guest blogger Jennifer R. Noel.  Jenn is an associate in Young Conaway's Tax, Trusts & Estates Section, where she advises clients with respect to local, state, federal, and international tax issues, the legal aspects of the formation and operation of small and emerging growth business enterprises, and the preparation and negotiation of commercial contracts.

After months of moribundity, the Employee Free Choice Act (“EFCA”) is showing signs of life. Or at least alternative means of imposing some of the major changes included in EFCA, such as greatly decreasing the time of an election campaign and limiting employers’ ability to actively participate in union elections, are being considered. It all depends on the possible confirmation of Craig Becker, whose nomination to the NLRB has been stalled in the Senate but was recently voted out of committee on a party line vote.

The theory goes that if Becker, who is currently Associate General Counsel of the SEIU, is confirmed by the full Senate, giving former union lawyers a 3-2 majority on the Board, strange (and bad) things may occur. Becker’s past published writings include such one-sided suggestions as excluding employers from participating in pre-election hearings to determine an appropriate bargaining unit, preventing employers from alleging that union campaign conduct coerced employees, and prohibiting employers from conducting mandatory meetings of employees at any time during the campaign (instead of only during the 24 hours before the election, as at present).

Given Becker’s extreme views, the theory goes, new NLRB Chairperson Wilma Liebman should have no trouble getting the majority of the Board to agree to embark on expanded rulemaking and in that fashion, impose many of the EFCA changes indirectly. Liebman has made no secret of her interest in having the Board expand its rulemaking activity, instead of limiting itself to ruling on cases presented to it.

Delaware's anti-discrimination laws have been amended to include
sexual orientation as a protected class.  

S.B. 121 passed the General Assembly on June 24, 2009, and was signed by Gov. Markell on July 2, 2009.  The law took effect immediately.

Additional Key Information

• Sexual orientation is defined exclusively to mean "heterosexuality, homosexuality, or bisexuality." 

• Religious organizations are exempted from the law.

• The law does not require employers to offer health, welfare, pension, or other benefits to domestic partners to the extent offered to spouses of married employees.

Employee Handbook Update
Handbooks should be updated to reflect the new law.  Manuals now should also prohibit discrimination based on sexual orientation.  Please contact any of the attorneys in our Employment Law Department to learn how this new law may affect other policies in your organization or with any other employment-related questions. 

Delaware employers should prepare to add another protected characteristic to their list.  Late last night, the Delaware General Assembly passed Senate Bill 121, which would prohibit discrimination based on sexual orientation. It passed the Senate after a three-hour debate. 

The bill is headed to Gov. Jack Markell for signature.  The Delaware News Journal reports that Rep. Pete Schwartkopf (D-14th Dist.), who helped push the bill through the House, has said that Markell is expected to sign.   

The bill had been introduced every year for the past decade without success.  Five of those bills had passed the House but stalled in Senate committees.  We reported on an earlier version of the bill, which passed the House in March but died in the Senate Executive Committee.  A full version of the bill is linked below.

What do Delaware and Colorado employers have in common? If Delaware House Bill 231 is passed, both states will require employers to grant employees leave to attend school-related functions for their children. Unlike Colorado’s law, which applies only to employers with 50 or more employees, Delaware’s law would apply to all employers. In a nutshell, Delaware’s law would grant working parents 16 hours of unpaid leave per year to attend school-related events.

If passed, the law would require that all Delaware employers, regardless of size, permit employees to attend classroom activities, school meetings and extra-curricular school events related to the employee’s child if the meetings or classroom activities cannot be scheduled during non-work hours, up to 16 hours a year, per child. The time off can be taken in increments of up to 4 hours. The only consolation to small employers is that employers with ten or fewer employees working at one location could limit the number of employees who may take leave on any one day.

Any time off taken under the new law would be unpaid (like FMLA leave), but the employee could substitute any “available leave” such as vacation and personal days to be compensated for this time.

The only responsibility of the employee requesting such leave would be to provide at least 48 hours advance notice of the leave and make a reasonable effort to schedule the leave so as not to unduly disrupt the operations of the employer. The employer can request written verification of the event.

Any employer who violates this section shall be subject to a civil penalty between $1,000 and $5,000 per violation.

One interesting question is whether sick leave would be considered “available leave.” “Available leave” is defined in the statute as “annual or vacation leave, personal leave, compensatory leave or other similar leave provided to an employee with pay by an employer.” Unlike the Colorado law, Delaware’s statute does not explicitly identify “sick leave” as leave that could be used for this purpose. One would expect employees who have paid sick leave to attempt to use this leave, prior to other types of accrued leave.

Although the leave is unpaid, it could potentially present a considerable burden on smaller employers. Under the statute, an employer with 11 employees, 5 of whom requested leave to attend the same school-related function, would be required to let them all attend. It makes more sense to limit the statute to larger employers, like the FMLA, and like Colorado did in its similar law.

We’ll keep you posted on the progress of this bill.

Independent Contractor Update: A bill targeting the construction industry has been introduced   in the Delaware General Assembly. "The Construction Industry Independent Contractor Act,” HB129,   which is similar to one that failed to pass during the last legislative session, creates a presumption that an individual performing a service “in the making of improvements to real property” is an  employee rather than an independent contractor.  To overcome that heavy burden, an employer must prove that the individual is free from control or direction over the performance of that service, the service is outside the usual course of the employer’s business or performed outside of all of the employer’s places of business [seemingly impossible to prove in the context of a construction employer, who travels from place to place], and the individual is customarily engaged in “an independently established trade, occupation, profession or business.”

And woe to the employer who misclassifies, either unwittingly or knowingly.  The law not only contains criminal fines and imprisonment penalties, it also authorizes civil suits, including class actions, and allows attorney’s fee awards to prevailing plaintiffs. An employer who knowingly misclassifies an individual can also be debarred from working on public projects. The law also makes the Secretary of Labor the judge, jury and executioner, authorizing administrative monetary penalties if he or she decides that there has been a violation, subject only to a hearing that can be requested after the initial decision has been made.

Since the Act only applies  to individuals, employers wishing to engage legitimate independent contractors may wish to require them to incorporate or form limited liability companies before entering into an agreement for construction-related services.  As an alternative, the cautious employer may want to rely heavily on temporary job services, with the individual remaining an employee of the service company, which would be responsible for taxes, withholdings and other legal requirements.  Of course these approaches will cost more money, and one wonders why, in the midst of an economic crisis, the Delaware General Assembly would want to create additional financial burdens for companies. The only message that can be inferred from this one-sided legislation is that Delaware is less friendly to business than it used to be.

See prior posts about Independent Contractors: Employee Misclassification Prevention Act Update, Construction-Industry Employers Should Be Aware of Proposed Legislation, Pennsylvania House Passes Construction Industry Independent Contractor Act, Delaware Legislation Proposes to Criminalize Employment Law. 

Delaware’s employment discrimination law is a step closer towards being amended. On March 26, 2009, a bill was introduced to the Delaware House of Representatives that proposes to add the term “sexual orientation” to the already-existing list of prohibited practices of discrimination in Delaware. If enacted, the legislation would forbid discrimination against a person on the basis of sexual orientation in housing, employment, public works contracting, public accommodations, and insurance. In addition, the proposed legislation provides that Delaware’s Superior Court (its trial court) would, in the first instance, hear and adjudicate alleged criminal violations of equal accommodations, fair housing and employment discrimination.

Tax-Free Qualified Transportation Fringe Benefits

By now, most employers are aware that they can provide tax-free transportation fringe benefits of parking, transit pass, van pooling and bicycle commuting reimbursement benefits to their employees. What never seemed appropriate from a policy (and fairness) viewpoint was that the monthly exclusion amount for parking far exceeds the amount allowed for transit passes and van pooling. In addition, employees can simply be reimbursed for the cost of their monthly parking while only transit passes (if available) are the only means of providing the benefit for public transportation. A “transit pass” is any pass, token, fare card, voucher, or similar item entitling a person to transportation (or transportation at a reduced price):

(1) on mass transit facilities (whether or not publicly owned), including, for example, rail, bus, and ferry; or

(2) provided by any person in the business of transporting persons for compensation or hire, if this transportation is in a highway vehicle with a seating capacity of at least six adults (excluding the driver).

Beginning in January 2009, the maximum monthly exclusion for parking is $230 and the maximum exclusion for transit passes and van pooling is $120. The monthly exclusion for bicycle commuting reimbursement is $20.

ARRA Increases Transit Pass And Van Pooling Benefit Exclusion

ARRA has temporarily leveled the playing field for tax exempt transportation fringe benefits. Beginning in March 2009 and through December 2010, the maximum exclusion for transit passes and van pooling will be the same as the exclusion for parking. Thus, for the remainder of 2009, transit passes and van pooling benefits valued up to $230 per month will be excluded from the income of the employees who receive such benefits. For 2010, the monthly exclusion for parking, transit passes and van pooling will the inflation adjusted $230 exclusion amount for parking. The exclusion for bicycle commuting reimbursement benefits remains unchanged by ARRA.

Salary Deferrals for Pre-Tax Transportation Fringe Benefits

Employers who cannot afford the increased benefits (or any transportation fringe benefits) can adopt an arrangement to permit their employees to pay for parking, van pooling and transit passes from their compensation with pre-tax dollars, up to the monthly exclusion amount. And, unlike cafeteria plans that require generally irrevocable annual elections to defer income, the pre-tax transportation fringe benefit arrangement can permit employees to change their deferral amounts monthly so long as the change relates only to income that is not yet payable to the employee.

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This post was written by Guest Blogger, Timothy J. Snyder, Esq., Chair of the Tax/Trusts & Estates and Benefits Section at Young Conaway.  Tim has posted several important pieces on the impact on employers of the recently passed Economic Stimulus package.  For employers who haven't yet gotten up to speed on the numerous ways in which ARRA is changing the world of employee benefits, Tim's posts are a great place to start, beginning with the very helpful Guidance for Employers on the New COBRA Subsidy.  Also, be sure to get the new forms provided by the U.S. Department of Labor and the IRS, which you can do at these posts:  DOL Releases Model COBRA Notices and  Stimulus Package's COBRA Subsidy: Guidance Update.

Maribeth L. Minella has also provided helpful commentary on the employment-related effects Stimulus Package.  Her previous posts include:

Stimulus Package Provides for Employee Whistleblower Protection

American Recovery & Reinvestment Act Provides Tax Benefits for Some Employers

Governors Reject Stimulus Funds Marked for Expanding Unemployment Benefits

More Employer Compliance Issues from Stimulus Package

Stimulus’ COBRA Premium Subsidy Puts Burden on Employers

Model COBRA Notices have been released by the U.S. Department of Labor (DOL).  There are four Model COBRA Notices in all, which are required to effectuate the provisions of the 65% governmental subsidy of COBRA premiums enacted as part of ARRA.

The Four Model COBRA Notices

The first model COBRA Notice is the General Notice.  It has been released in a full-length version, consisting of 13 pages, and an abbreviated version, totaling 9 pages in length.  The abbreviated version constitutes the second model COBRA Notice.

The General Notice informs Qualified Beneficiaries (QBs) of their right to elect COBRA coverage, the cost of the coverage, and the provisions of the COBRA premium subsidy--all in a Q & A format. The full version should be used for a QB who has just incurred a qualifying event and is entitled to elect COBRA coverage.The abbreviated version is to be provided to those QBs who had a qualifying event on or after September 1, 2008, and who are currently enrolled in COBRA coverage.

The third Notice is the Notice in Connection with Extended Election Periods.  This Notice is to be provided to those QBs who

• are or would be eligible for the subsidy but are not now enrolled in COBRA coverage; or
• were enrolled in COBRA coverage and subsequently discontinued coverage with regard to qualifying events that occurred on or after September 1, 2008, and on or before February 16, 2009.

The Fourth Notice is for use by insurers that provide group health-insurance coverage to persons who became eligible for continuation coverage under a state law.  The DOL points out that the continuation coverage requirements vary among states, and insurers must modify this model notice as necessary to conform it to the applicable state law.  All of the Notices have optional pages to be used if the employer chooses to allow the QBs to elect alternative, cheaper medical coverage.

All of the Notices include a form entitled Request for Treatment as an Assistance Eligible Individual.  This form must be completed by the QBs and returned to the employer for a determination by the employer of whether the QBs are entitled to the COBRA subsidy. If the employer determines that the QB is not entitled to the subsidy, the QB can appeal that denial to the DOL.

Now What?

Now that the DOL has issued the Model Notices, employers can begin notifying QBs of the availability of the COBRA premium subsidy available under ARRA. 

• All QBs who had qualifying events on or after September 1, 2008, and had not elected COBRA by February 17, 2009.
• Those QBs already covered by COBRA on February 17, 2009 must be provided with the appropriate Notice no later than April 18, 2009.

The subsidy must be provided beginning with the March 2009 COBRA coverage. At this point, it doesn’t seem that employers would be able to get the appropriate notices out to the QBs and make a determination of whether they are entitled to the subsidy in time for the payment of the April COBRA premiums. Therefore, employers should get the Notices out as soon as possible so that the QBs can return the completed forms and employers can make the determinations regarding a QB’s status as an Assistance Eligible Individual in time for the payment of the May premiums.  This means that the employers will be providing the Assistance Eligible Individuals with either refunds or credits for the amount of the premiums that they paid for March and April coverage that exceeded 35% of the premiums.

This post was written by Guest Blogger, Timothy J. Snyder, Esq., Chair of the Tax/Trusts & Estates and Benefits Section at Young Conaway.  Tim posted earlier this month offering very helpful Guidance for Employers on the New COBRA Subsidy.  Maribeth L. Minella has also provided helpful commentary on the employment-related effects Stimulus Package.  Her previous posts include:

Stimulus Package Provides for Employee Whistleblower Protection

American Recovery & Reinvestment Act Provides Tax Benefits for Some Employers

Governors Reject Stimulus Funds Marked for Expanding Unemployment Benefits

More Employer Compliance Issues from Stimulus Package

Stimulus’ COBRA Premium Subsidy Puts Burden on Employers

Download this

, which includes forms published by the IRS, and has been updated to include the Model Notices. The package is a PDF, best viewed with Adobe Acrobat 9.  (Download Reader 9.)

Included in the package are the following:

• IRS Revised Form 941 (Employers Quarterly Federal Tax Return)
• IRS Instructions for Revised Form 941
• DOL FAQ and Fact Sheet
• DOL Flyer for Employers
• Model COBRA Notice: General Notice (full)
• Model COBRA Notice: General Notice (abbr.)
• Model COBRA Notice: Notice in Connection with Extended Election Periods
• Model COBRA Notice: Request for Treatment as an Assistance Eligible Individual

The American Recovery and Reinvestment Act of 2009 (ARRA) provides certain employees the opportunity to collect a subsidy equal to 65% of COBRA continuation premiums for themselves and their families for up to 9 months.  We've posted about the new COBRA subsidy previously and those posts contain important details on how the subsidy affects employers.  Here it is, though, in a nutshell:

Workers who have lost their jobs may qualify for a 65 percent subsidy for COBRA continuation premiums for themselves and their families for up to nine months.

Eligible workers will have to pay 35 percent of the premium to their former employers.

To qualify, a worker must have been involuntarily separated between Sept. 1, 2008, and Dec. 31, 2009. Workers who lost their jobs between Sept. 1, 2008, and enactment, but failed to initially elect COBRA because it was unaffordable, get an additional 60 days to elect COBRA and receive the subsidy.

This subsidy phases out for individuals whose modified adjusted gross income exceeds $125,000, or $250,000 for those filing joint returns. Taxpayers with modified adjusted gross income exceeding $145,000, or $290,000 for those filing joint returns, do not qualify for the subsidy.

The IRS and U.S. Department of Labor have posted several helpful documents recently.  We've packaged them for you in one nice little PDF Portfolio for your easy reference.

Included in the package are the following:

• IRS Revised Form 941 (Employers Quarterly Federal Tax Return)
• IRS Instructions for Revised Form 941
• DOL FAQ and Fact Sheet
• DOL Flyer for Employers

For our previous posts, see:

Guidance for Employers on the New COBRA Subsidy

Stimulus Package Provides for Employee Whistleblower Protection

American Recovery & Reinvestment Act Provides Tax Benefits for Some Employers

Governors Reject Stimulus Funds Marked for Expanding Unemployment Benefits

More Employer Compliance Issues from Stimulus Package

Stimulus’ COBRA Premium Subsidy Puts Burden on Employers

The COBRA subsidy in the Economic Stimulus Plan (ARRA), will be available to “Assistance Eligible Individuals.” To qualify, the employee must satisfy two requirements. First, the employee must have been involuntarily terminated for reasons other than gross misconduct between September 1, 2008, and December 31, 2009. Second, the employee must have either (a) declined COBRA; or (b) elected COBRA but dropped off for a reason that would not have disqualified him for coverage (for example, inability to pay the premiums).

Assistance Eligible Individuals who were not covered by COBRA on the date of the enactment of ARRA must receive a notice of their right to elect COBRA by April 18, 2009. If they do elect coverage, the coverage and the subsidy will be effective March 1, 2009. The subsidy is for 65% of the COBRA premium.

For those individuals who are already on COBRA, employers have 60 days to effectuate the COBRA subsidy. If the Assistance Eligible Individuals pay the full premium for March and April 2009 coverage, the employer can either give them a credit for the subsidy against future premiums or refund the subsidy to them. Individuals on COBRA must also receive notice of the subsidy by April 18, 2009. The United States Department of Labor (DOL), was directed in ARRA to produce a model notice for the subsidy.

The subsidy is available for nine months or until the end of the COBRA coverage period, if sooner. It will not otherwise extend the COBRA coverage period. Those whose employment terminates involuntarily before December 31, 2009, will be entitled to the subsidy, which means that the subsidy will be provided through September 2010. The subsidy is phased out for single individuals with adjusted gross income between $125,000 and $145,000, and $250,000 to $290,000 for those filing joint returns. The COBRA subsidy is otherwise not taxable to the recipients. The employer is reimbursed for the subsidy by taking a credit against its payroll tax deposit obligation and will be reported on the revised Form 941. If the COBRA subsidy amount exceeds the employer’s payroll tax obligation, the employer will receive a refund from the IRS.

The government information being issued to assist employers and employees in administering the subsidy is being posted on the Internet. The DOL and the IRS both have posted documents to guide employers through the administration of the new subsidy. (See the DOL’s “COBRA Continuation Coverage Assistance Under The American Recovery and Reinvestment Act of 2009” with links to a COBRA Premium Fact Sheet and COBRA FAQs, and the IRS’s “COBRA: Answers for Employers”).

This post was written by Guest Blogger, Timothy P. Snyder, Esq., Chair of the Tax/Trusts & Estates and Benefits Section at Young Conaway.  Maribeth L. Minella has also provided helpful commentary on the Stimulus Package.  Her previous posts include:

Stimulus Package Provides for Employee Whistleblower Protection

American Recovery & Reinvestment Act Provides Tax Benefits for Some Employers

Governors Reject Stimulus Funds Marked for Expanding Unemployment Benefits

More Employer Compliance Issues from Stimulus Package

Stimulus’ COBRA Premium Subsidy Puts Burden on Employers

Employers will be impacted by the Stimulus Package.  We've previously addressed the impact the $787 billion Economic Stimulus Package (a.k.a. the American Recovery & Reinvestment Act (the “Recovery Act”)), will have on employers' obligations with respect to COBRA, the Children's Health Insurance Program Reauthorization Act (CHIPRA), as well as the potential impact on available state unemployment-insurance benefits and tax implications.   This post highlights the McCaskill Amendment – the Act’s whistleblower-protection provision.

The amendment, introduced by Claire McCaskill (D-MO), includes several provisions.  First, the amendment proposes to permit inspector-general investigations.  Second, it proposes to gives employees rights to jury trials.  Third, it requires employers that receive Stimulus funds to inform employees of their new whistleblower rights.

That’s right employers, the Act imposes yet another obligation.

Under the Amendment, an employee of any non-federal employer receiving Stimulus funds may not be discharged, demoted, or otherwise discriminated against as a reprisal for disclosing, including a disclosure made in the ordinary course of an employee’s duties, to the Board, an inspector general, the Comptroller General, a member of Congress, a State or Federal regulatory or law enforcement agency, a person with supervisory authority over the employee, a court or grand jury, the head of a Federal agency (yes, the list is that long!) information that the employee reasonably believes is evidence of:

• gross mismanagement of an agency contract or grant relating to Stimulus funds,
• a gross waste of Stimulus funds,
• a substantial and specific danger to public health or safety related to the implementation or use of Stimulus funds,
• an abuse of authority related to the implementation or use of Stimulus funds, or
• a violation of law, rule, or regulation related to an agency contract or grant awarded or issued to Stimulus funds.

Whew.

Not only is the list of potential topics quite broad, but the threshold for an employee complaint is quite low.  The standard is simply what the employee reasonably believes. A person alleging reprisal under the amendment is deemed to have affirmatively established the occurrence of the reprisal if he can demonstrate that his whistle blowing was a contributing factor in the reprisal.

A whistleblower can premise his case on circumstantial evidence, including: evidence that the official undertaking the reprisal knew of the disclosure, evidence that the reprisal occurred within a period of time after the disclosure such that a reasonable (there’s that word again!) person could conclude that the disclosure was a contributing factor in the reprisal.

Employers, if you want to rebut the whistleblower’s case, you need to do so under the rigor of clear and convincing evidence. An employer needs to show that it would have taken the action constituting the reprisal in the absence of the disclosure.

Finally, the McCaskill Amendment does not preempt, preclude, or limit state law. The amendment provides rights in addition to existing whistleblower laws.

The bottom line is that the amendment gives employees the right to act as watchdogs for how an entity spends its Stimulus funds, which is not entirely a bad thing. In fact, we can all be watchdogs and use the federal government’s website, www.recovery.gov, which has been set up to allow taxpayers to figure out where Recovery Act money is going. Nonetheless, the amendment, like the other portions of the Act previously highlighted, burdens employers with one more responsibility.