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Hurry up and Spend the Money?

Hurry up and Spend the Money?

January 28, 2016

Authored by: Jennifer Stokes

Money Money MoneyIt’s like a simple set of facts on a law school exam with an answer that defies logic. And, yet, Supreme Court precedent has brought us to this illogical conclusion. Facts: Participant agrees to reimburse the plan money it has spent on his medical care. Participant sets aside money to reimburse the plan, but then spends all of the money himself before reimbursing the plan. Question: If the money cannot be traced, can the plan recover the amount it is owed from the participant’s other assets? Answer: Last week, the Supreme Court ruled in Montanile v. Bd. of Trustees of the Nat’l Elevator Indus. Health Benefit Plan that a health plan cannot enforce an equitable lien against a participant’s general assets when the participant has already spent the fund

SCOTUS Meant What It Said & Said What It Meant: Dudenhoeffer Imposes Higher Pleading Standards

Stock DropIn a rebuke to the Ninth Circuit, the Supreme Court granted the Amgen defendants’ petition for certiorari, reversed the Ninth Circuit’s judgment and remanded the case for further proceedings consistent with its opinion in the district court. The unanimous per curiam opinion was issued without further briefing and oral argument, an unusual step in civil cases. The substance of the opinion and its handling by summary disposition sends a clear message: the Court meant what it said in Dudenhoeffer when it stressed the role of motions to dismiss in “divid[ing] the plausible sheep from the meritless goats” and crafted new liability requirements that plaintiffs must plausibly allege are met in order to state a claim. Admittedly, we steal liberally from Judge Kozinski’s dissent in Amgen in characterizing the

Managing FMLA Fraud: Avoid Negative Commentary

Managing FMLA Fraud: Avoid Negative Commentary

January 26, 2016

Authored by: Christy Phanthavong and Chris Rylands

ThinkstockPhotos-496854082This last post in our three-part series on managing FMLA fraud is about how negative commentary – including emails with smiley face emoticons – can subvert an effort to show that a termination decision was based on an honest belief that the employee was misusing FMLA leave. (The first two posts in our series are available here and here.)

The case of Apatoff v. Munich Re Am. Servs., No. 11-7570, 2014 U.S. Dist. LEXIS 106665 (D.N.J. Aug. 1, 2014), involved an employee who took extended FMLA leave for asthma. Over the holidays, video surveillance showed the employee shopping on more than one occasion and carrying boxes as she moved into a new home. Based on this evidence, she was

New DOL Guidance Regarding Joint Employment Under the FMLA

New DOL Guidance Regarding Joint Employment Under the FMLA

January 25, 2016

Authored by: Christy Phanthavong and Chris Rylands

On January 20, 2016, the federal Department of Labor (“DOL”) issued guidelines to employers on the subject of “joint employment.” Most of the buzz regarding the DOL’s publications centers around the new “Administrator’s Interpretation” of joint employment under the Fair Labor Standards Act (“FLSA”) and the resulting implications for joint liability under federal wage-and-hour laws.

However, the DOL didn’t stop with the FLSA. Instead, the DOL also issued a new “Fact Sheet”, Fact Sheet #28N, addressing joint employment principles under the Family and Medical Leave Act (“FMLA”).

Joint employment exists when an employee is employed by two or more employers, such that both employers have responsibilities under the FMLA. Fact Sheet #28N does not provide a detailed discussion of when joint employment will be found to exist for FMLA purposes, noting instead that the analysis is the same under the FMLA as under the

California Court Recognizes Same-Sex Marriage a Week Prior to Windsor

Earlier this month, the U.S. District Court for the Northern District of California recognized the retroactive application of United States v. Windsor.

In Schuett v. FedEx Corporation, plaintiff and her long-time same-sex partner, Lesly Taboada-Hall were married in a civil ceremony on June 19, 2013. Taboada-Hall, a fully-vested participant in the FedEx Pension Plan, passed away the following day from cancer. As of the date of Taboada-Hall’s death, marriage licenses for same-sex couples were not available in California due to enforcement of Proposition 8, a voter-enacted ban on same-sex marriage. Six days later, the U.S. Supreme Court issued its landmark Windsor decision declaring Section 3 of the Defense of Marriage Act (DOMA) unconstitutional.

Here’s where this gets interesting. On August 6, 2013, plaintiff filed a Petition to Establish the Fact, Date, and Place of Marriage, as permitted by California Health & Safety

PEOs: A remedy for ACA reporting requirements?

PEOs: A remedy for ACA reporting requirements?

January 21, 2016

Authored by: benefitsbclp

IRS AheadSigned into law in December 2014 and effective January 1, 2016, the Small Business Efficiency Act (“SBEA”) provides welcome federal statutory recognition of Professional Employer Organizations (“PEOs”). PEOs, who act as “co-employers”, are becoming popular for many small to mid-size businesses struggling to maintain compliance with an ever-increasing volume of regulations impacting human resources and benefits compliance.

In the past, many states individually recognized PEOs through licensing or registration statutes, and there were only a handful of pieces of federal guidance concerning how PEOs should be treated under federal law. The SBEA changes the federal legal landscape by instituting a voluntary certification process for PEOs. By completing this voluntary certification process, a PEO has clear statutory authority to collect and remit taxes on behalf of their clients. Businesses can breathe a sigh of relief

EEOC Faces Another Defeat in its War Against Wellness Programs

The U.S. Equal Employment Opportunity Commission (“EEOC”) has steadfastly maintained that any wellness program that is not voluntary violates the Americans With Disabilities Act (“ADA”). In 2014, the Chicago District Office of the EEOC filed lawsuits against Orion Energy Systems, Honeywell International, Inc. and Flambeau, Inc. alleging that their respective wellness programs were not voluntary since employees who refused to complete a health risk assessment and/or biometric screening were financially penalized. In a case of first impression in the Seventh Circuit, the U.S. District Court for the Western District of Wisconsin granted summary judgment on December 31, 2015, in favor of the defendant in EEOC v. Flambeau.

Factual Background

Flambeau implemented a wellness program for 2011 in which employees who completed both a health risk assessment and biometric testing received a $600 credit. The health risk assessment included questions about the employee’s medical history,

Managing FMLA Fraud: Investigate, Don’t Assume

Managing FMLA Fraud: Investigate, Don’t Assume

January 19, 2016

Authored by: Christy Phanthavong and Chris Rylands

ThinkstockPhotos-112707613Continuing our three-part series on managing FMLA fraud (see our initial post here), this post addresses the importance of conducting a reasonable investigation, prior to taking adverse action, to develop a supportable “honest belief” of FMLA fraud.

The case of Hosler v. Fulkroad, No. 13-cv-1153, 2015 U.S. Dist. LEXIS 80801 (M.D. Penn. June 23, 2015), provides an excellent example of this principle. The employee requested leave for surgery and recovery, and submitted a doctor’s note in support of the request. The employer purportedly doubted the need for leave and terminated the employee while she was out.

Not only did the jury find in favor of the employee on her FMLA interference claim, but the court awarded liquidated damages, finding no credible evidence that the employer had a reasonable, good faith basis

Managing FMLA Fraud: Using Your Policy To Your Advantage

Managing FMLA Fraud: Using Your Policy To Your Advantage

January 11, 2016

Authored by: Christy Phanthavong and Chris Rylands

ThinkstockPhotos-466150788This post is the first in a three-part series of posts on managing FMLA fraud with tips from recent cases. In Alexander v. Bd. of Educ. of City Sch. Dist., No. 14 Civ. 8553, 2015 WL 2330126 (S.D.N.Y. May 14, 2015), for example, the court provided guidance on how FMLA policies can help support a termination decision when an employee misuses FMLA leave.

The employee in Alexander told her employer she needed intermittent FMLA leave to take her child to physical therapy appointments. Her request was approved after a doctor’s note confirmed the need for leave. Subsequently, the child refused to attend the appointments. Rather than update her employer about the situation, however, the employee attended classes while on leave during the scheduled appointment times. Trouble arose for the employee when she submitted

Changes to User Fees for Voluntary Correction Program (VCP) Submissions

On January 4, 2016, the Internal Revenue Service published its annual update of user fees Rev. Proc. 2016-8 for various letter ruling and determination letter requests. The 2016 update now includes user fees and guidance for Voluntary Correction Program (VCP) submissions under the Employee Plans Compliance Resolution System. In many cases the user fee for VCP submissions is reduced under Revenue Procedure 2016-8. The revised fee schedule for employee plan user fees (including VCP submissions) is effective February 1, 2016.

Below are the current user fees for regular VCP submissions for qualified plans and 403(b) plans as set forth in Section 12.02 of Revenue Procedure 2013-12.*

Participants Revenue Procedure 2013-12 Fee 20 or fewer participants $750 21 to 50 participants $1,000 51 to 100 participants $2,500 101 to 500 participants $5,000 501 to 1,000 participants $8,000 1,001 to 5,000 participants $15,000 5,001 to 10,000 participants $20,000

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