Bulletin
The
EMPLOYMENT LAW
|
SURVEYS
|
HUMAN RESOURCES
|
JUNE 2014
TRAINING
HEALTH CARE REFORM COMPLIANCE SERIES PART XXI:
6055 and 6056 Reporting Under the Affordable Care Act Page 1 6055 and 6056 Reporting Under the Affordable Care Act
Page 3 Public Employers: Summer Hiring
Page 4 Is Your Organization a Learning Organization?
Page 5 You Asked: What Is Required for an Employee to be Exempt Under the Executive Exemption?
Page 7 When Is It Reasonable Not to Report Harassment?
Page 8 Body Art in the Workplace
Page 9 Colorado Wage Protection Act Signed by Governor
Page 10 Survey News
Tammeron Trujillo, M. Ed, SPHR, GPHR
The Affordable Care Act (ACA) includes many reporting requirements. Final regulations were just issued on the reporting required by Sections 6055 and 6056 of the Internal Revenue Code. These reports will help the Internal Revenue Service verify that employers and individuals are complying with the ACA. Section 6055 applies to entities that provide minimum essential insurance coverage (MEC) (e.g., health insurance issuers, sponsors of self-insured group health plans, and certain government entities). It requires covered entities to provide reports and statements to employees about their coverage. This information will be used to determine whether individuals are maintaining the MEC required by the individual mandate or if they are liable for the individual mandate penalty. Insurance carriers must complete Section 6055 reporting on behalf of fully insured employers. Section 6055 requires reporting of the following: • The name, address, and identification number of the insurance provider; • the primary covered individual’s name, address, and social security number (in certain circumstances, other identifying information such as a birthdate may be used); • the name and identifying information for that individual’s covered spouse or dependents; and • the number of months each individual was covered and entitled to receive benefits. If coverage is employer-provided, additional information to be reported includes: • The employer’s identification number (EIN), name, and location; and • the identification number if the coverage is a qualified plan under the Small Business Health Options Program (SHOP). Section 6056 requires a different report for fully insured applicable large employers (ALEs), which are those with 50 or more full-time equivalent employees. This report will be used to determine if an individual has been given access to minimum value, affordable health-care coverage for purposes of the employer mandate. Section 6056 reporting includes: • The calendar year for which the information is reported; • the name, address, and employer identification number (EIN) of the ALE; CONTINUED ON NEXT PAGE
Denver 303.839.5177 Scottsdale 602.955.7558 Colorado Springs 719.667.0677 Fort Collins 970.223.4107 Toll Free 800.884.1328
• the name and phone number of a contact person (e.g., owner, employee, or agent) representing the ALE; • a certification that the ALE had a plan available to full-time employees and their dependents that offered minimum value; • the months the plan was available; • each full-time employee’s monthly share of the premium for their own coverage for the lowest-priced plan providing minimum value; and • a monthly count of full-time employees for the calendar year, and each covered employee’s name, address, and social security number. Although submission of these reports is not required until the beginning of 2016 (for the 2015 calendar year), employers should keep them in mind as they plan for employee benefits in 2015 and beyond. Look for more detailed information on these reporting requirements on our Health Care Reform Learning Zone. £
TM
The Learning Zone is a free, members-only, online tool designed to help you navigate the ACA. Enter your organization’s demographics to see the highlighted provisions relevant to your organization. Provisions include a comprehensive summary, key points for understanding, a timeline with effective dates, and much more. To access The Learning Zone, go to MSEC.org.
2 | The Bulletin | June 2014 | MSEC.org
Summer Hiring S. Lorrie Ray, Esq., SPHR
Many counties, municipalities, and special districts find themselves hiring in the summer to staff public amenities and as summer projects get underway. If you are hiring this summer, keep these tips in mind:
Hiring Youth - Follow any federal or state hour or duty restrictions on the work youth can perform. While those 14 and older may work, the duties 14- and 15-year-olds can perform are very limited. Youth cannot work too early in the morning or too late at night. Even though 16- and 17-year-olds may have a drivers’ license, they may not be able to drive for you. See our FYI: Child Labor Requirements for the rules under federal, Arizona, Colorado, Wyoming, New Mexico, and Montana law.
Paperwork - If employment is not “continuous,” you can re-use a returning worker’s I-9 form if: • It was created no more than three years previous – note this is time of creation and not termination and so a different period applies from the retention rule. • It is on a current version of the form, so after March 2013. • The work-authorizing information is still accurate. Continuous employment exists when employer and employee have agreed that employee will work every summer indefinitely and can exist with any type of seasonal employee (e.g., employees who work only during the school year). When in doubt, do a new I-9 form. Neither E-Verify nor Colorado’s affirmation law have rules similar to this, so new forms are always necessary for summer rehires.
Work with Vulnerable Populations - A background check may be required. The law requires pre-screening for certain occupations, and it may be wise to do in any case. Having your organization in the news for hiring someone with a record of wrongdoing is not news you want to wake up to some beautiful summer morning.
Not-So-Temporary Employees – Sometimes employees hired don’t leave in the fall. While it is acceptable to have employees designated as temporary without firm date parameters, if an employee stays month-after-month or year-after-year, the temporary designation may no longer be accurate. £
3 | The Bulletin | June 2014 | MSEC.org
Is Your Organization a Learning Organization? Alyssa Leonas, Human Resource Consultant, PHR-CA
What do Microsoft, Johnson & Johnson, General Electric, and Toyota have in common? They continuously focus on innovation and offer innovative products and services. They retain their market advantage in the face of ever-changing needs and desires of their customers. They act more quickly than their competitors do. They are learning organizations. A learning organization is a company that encourages information seeking and knowledge building to continuously grow and change to remain competitive. Learning organizations promote interconnected thinking and a sense of community that generates a greater sense of commitment. Clearly, every organization wants that, but how is it done? Learning organizations do not just develop organically. It takes intentional effort to develop the characteristics present in learning organizations.
Learning organizations understand what is happening outside the organization and use the unique strengths and abilities within the organization to respond quickly and create solutions faster than competitors. It is imperative that the organization cultivate a culture of communication, trust, collaboration, and innovation. According to Peter Senge, there are five characteristics of learning organizations: Systems Thinking is a holistic methodology to study a business via each of its unique parts. Using metrics to track the performance of each component of the business, learning organizations can understand how each area contributes to the business and how they all interrelate. Personal Mastery is each individual’s commitment to the process of learning. A learning organization must have systems to transfer individual learning into organizational learning. Mental Models are assumptions held by individuals or organizations. In a learning organizations, these models must be challenged and the undesirable values and behaviors must be consciously eliminated. Shared Vision creates a common identity throughout the organization that ignites excitement. This is most effective when the source of the vision is the sum of each employee’s vision, as opposed to a vision formed at the top of the organization. Team Learning is the accumulation of individual learning. Open communication is essential to team learning and learning organizations generally have structures in place to facilitate the sharing of knowledge. When these five characteristics are present, an organization has the ability to maintain high levels of innovation and remain competitive. It can quickly respond to customer needs and desires with higher-quality products and services. It is a learning organization. £
4 | The Bulletin | June 2014 | MSEC.org
What Is Required for an Employee to be Exempt Under the Executive Exemption? Tina Harkness, Esq., SPHR
Last month, we discussed the three tests—Salary Level, Salary Basis, and Duties—that an employee must meet to be classified as exempt. This month, we dive more deeply into the Duties Test for the Executive Exemption. Before we get too deep, know that “executives” as the Fair Labor Standards Act of 1938 (FLSA) defines them are very different from the positions we call “executives” today. For FLSA purposes, your executives are your supervisors. To qualify for the Executive Exemption, an employee must:
1 2
Be paid on a salary basis at a rate not less than $455/week Primary duty = management of all or part of the enterprise
Generally, employees who spend more than 50 percent of their time week-in and week-out performing managerial duties will satisfy the primary duty requirement. Management functions recognized by the FLSA include:
• Interviewing, selecting, and training employees • Setting and adjusting their rates of pay and hours of work • Planning, apportioning, and directing their work • Monitoring their productivity and efficiency for the purpose of recommending promotions or other changes in their status
• Handling employee complaints and grievances and disciplining them when necessary • Planning and controlling the budget • Determining the type of materials, supplies, machinery, or tools to be used, or merchandise to be bought, stocked, and sold
• Controlling the flow and distribution of materials or merchandise and supplies • Providing for the safety of the employees and the property Certain routine, management-related tasks may also qualify if they facilitate supervision or the smooth functioning of the business (e.g., maintaining time records, distributing materials/supplies, examining work product). WORDS TO THE WISE: Working supervisors, foremen, leads, and group leaders who regularly perform the same duties as their nonexempt subordinates may be nonexempt depending on the amount of time spent on duties unrelated to supervision.
3
Customarily and regularly direct the work of two or more full-time employees (not volunteers or independent contractors) or their equivalent.
CONTINUED ON NEXT PAGE
5 | The Bulletin | June 2014 | MSEC.org
WORDS TO THE WISE: Supervisors who supervise only a small number of employees may not spend enough time performing managerial duties to meet the “primarily engaged” requirement.
4 Authority to hire/fire, advance/promote, or change status of employee or make suggestions/recommendations that are given particular weight
WORDS TO THE WISE: “Particular weight” considers whether it is part of the supervisor’s job to make suggestions/recommendations and the frequency with which they are made by the supervisor and followed by the company. Supervisors do not have to be the ultimate or only decisionmaker to be exempt. OTHER WRINKLES: Equity owners with at least a 20 percent interest in the business are exempt if actively engaged in management. The salary level and the salary basis requirements do not apply to equity owners. In addition, when a business has more than one establishment, the employee in charge of each establishment may be considered exempt. Remember, the employer has the burden of proving that exempt status is proper. A determination of whether an employee is exempt is based on a review of all the circumstances. State wage/hour law must be reviewed for additional requirements. Next month, we will tackle the Duties Test for the Administrative Exemption. £
On March 13, 2014, President Obama issued a memorandum directing Secretary of Labor Thomas Perez to update the overtime regulations of the Fair Labor Standards Act (FLSA). The intent of the update is to narrow the “white-collar” exemptions (i.e., executive, administrative, and professional), making overtime available to “millions” more workers. Before final regulations can be enacted, federal the U.S. Department of Labor is required to solicit participation from affected parties, create proposed rules, allow public comment on the proposed rules, and draft final regulations, followed by a waiting period between publication of final regulations and their effective date, thereby allowing regulated parties time to comply. We recommend that you use this lag time to review your your exempt classifications under the current regulations.
6 | The Bulletin | June 2014 | MSEC.org
When Is It Reasonable Not to Report Harassment? Mark J. Flynn, Esq., SPHR
The U.S. Supreme Court’s 1998 Faragher/Ellerth decisions created an affirmative defense to harassment claims in situations where a supervisor creates a hostile work environment for a subordinate employee, but no tangible employment action has occurred. To take advantage of the affirmative defense, an employer must prove: 1) it exercised reasonable care to prevent and correct the harassing conduct and 2) the employee unreasonably failed to take advantage of corrective opportunities or otherwise avoid harm. Until recently, the second element of the affirmative defense—the expectation that employees report violations—has not received much attention. The Tenth Circuit Court of Appeals changed that with a recent decision where it held the employer failed to prove both elements of the affirmative defense. Kramer v. Wasatch County Sheriff’s Office (10th Cir. 2014). The Kramer decision answers the question, when is it reasonable for an employee not to complain? The answer is when there are concrete reasons to think it would be useless to complain or a complaint would result in harm. The issue becomes the reasonableness and credibility of that perception given the totality of the circumstances. Generalized fear of retaliation, without more, does not excuse a failure to complain. However, under certain circumstances, the court said, it is reasonable to believe that it would be futile and potentially harmful to an employee to complain. Ms. Kramer worked in the jail and later as a court bailiff in the Sheriff’s Office. When Kramer’s complaint of sexual harassment including sexual assault and rape finally came out, it was through her coworkers. Kramer confided in them that her supervisor had sexually assaulted her and raped her. One of the coworkers told the sheriff and an investigation followed, which the court found inadequate and punitive to Kramer. The facts in Kramer are lengthy and extreme. While working in the jail, Kramer first complained to the sheriff about girl-of-the-day screensavers, men viewing pornography on work computers, and inappropriate sexual remarks made to her. The sheriff’s response included acting out the inappropriate behavior at a staff meeting with Kramer playing the victim. “That’s sex harassment,” the sheriff stated, “don’t do it.” When Kramer complained again because nothing changed, Kramer’s harasser informed her that the sheriff said she should “just to stay out of the jail.” When Kramer began displaying a hand-made sign on her desk that read, “Sex harassment will not be tolerated, it will be judged,” the sheriff gave her a written warning and did not ask her about any ongoing harassment. More serious conduct followed. Repeated requests for a foot rub by her supervisor progressed over time to grabbing, groping, kissing, and rape. Along the way, he made it clear to Kramer that her job depended on her keeping quiet. He also took tangible employment actions against her by denying her leave, threatening her with a bad performance evaluation, and giving her undesirable assignments. The court decided that any reasonable employee, not just Kramer, would be dissuaded from complaining under the circumstances. Employers should be aware that court’s analysis in Kramer can apply under less severe facts. The sheriff’s poor handling of Kramer’s initial complaints, in combination with the bad acts of her supervisor, drove the court to decide that it was reasonable for Kramer not to complain about more severe conduct later. This combination took away the employer’s ability to assert the affirmative defense. This is something employers should avoid. Employers need to respond promptly to employee complaints, conduct thorough investigations, and, where violations are found, take actions reasonably designed to stop the conduct from occurring again. £
7 | The Bulletin | June 2014 | MSEC.org
Body Art In the Workplace Cindy Prado-Gutierrez, Human Resource Consultant, CCP, CBP, GPHR
Self-expression through body art is becoming more common and accepted. Some forms of body art, however, may not be appropriate for work.
What is body art? It generally includes piercing, tattooing, branding, cutting, insertion of implants, and dental ornamentation that modifies, decorates, changes, or alters the appearance and/or form of the body. Can an employer establish restrictions for body art? In general, employers have discretion to restrict body art as long as those restrictions are not discriminatory. Employers may generally place limits on the number, size, placement, or visibility of the art or on the display of art (e.g., images or slogans) that may be demeaning or otherwise offensive (i.e., racially offensive, sexually explicit, violent, or profane). Must an employer accommodate body art? Employers must provide a reasonable accommodation for an employee’s sincerely held religious beliefs or practices, unless it can show undue hardship. An accommodation based on national origin or cultural considerations may also be required (e.g., some tattoos worn by Asian or Pacific Islanders). What might a body art guideline include? • A clear, valid business reason for the guideline with evidence to support the guideline. For example, if customer perception is given as a reason, the company should have evidence that customer perception is impacted. • A statement that the employer will evaluate visible body art on a case-by-case basis • A statement that the employee’s manager has the discretion to require an employee to conceal his or her body art or remove any attachment to a body piercing or other modification for safety reasons or other reasons considered reasonable and necessary to comply with the guideline. • Expected terms of placement, number, and content of the art • A prohibition against art or messaging that is offensive, hostile, or provocative. • Examples of what is permitted such as standard cosmetic tattoos (e.g., eyebrow tattoos and standard ear piercing). • Examples of what is not permitted (e.g., any form of body art or modification that is on the face, scalp, ears, neck, or hands of an employee). • A statement that accommodation may be made for body art that conforms to the employee’s religious beliefs or cultural practices and a process for an employee to bring those issues forward.
Other considerations may include: • The age of the workforce, since body art is more prevalent with younger employees. (36 percent of 18-25 year olds and 40 percent of 26-40 years have at least one tattoo.) • The general level of acceptance of body art among customers and clients. • The amount of customer interaction an employee has. • The importance to the employer of diversity in the workplace. • The possibility that the company will miss hiring top talent because of an applicant’s or an employee’s body art. Contact MSEC for assistance in developing a body art guideline and before making a decision to decline an employee’s request for accommodation of body art. £ 8 | The Bulletin | June 2014 | MSEC.org
Colorado Wage Protection Act Signed by Governor Curtis Graves, Esq., SPHR
Inspired perhaps by the U.S. Department of Labor, which has hired some 300 additional investigators since 2010 to probe wage theft complaints, the bill that eventually became the Colorado Wage Protection Act of 2014 was originally squashed by business interests more than a year ago. The bill returned without the criminal penalties business groups found so unpalatable and passed through both chambers of the General Assembly in the first week of May. Sponsored by state Senator Jessie Ulibarri (D-Commerce City), the Act amends Colorado law to assist employees in receiving unpaid wages more quickly. It also authorizes the director of the Division of Labor in the Colorado Department of Labor and Employment to establish an administrative procedure to adjudicate wage claims of $7,500 or less and issue citations and notices of assessments for the amounts due. Any party dissatisfied with a decision rendered by the Division of Labor will be able to appeal the decision to the appropriate district court. Under the new law, Colorado employers will be subject to the following changes:
• The scope of wage claims will expand to include violations of state minimum wage; • employers will need to maintain records reflecting information in an employee’s pay statement for at least
three years after payment of the wages and make the records available to both the employee and the State;
• the law will require employers to mail a check for wages to an employee’s last known address within 60 days after the check was due if an employer is otherwise unable to deliver the check to the employee.
Colorado law currently provides that to recover penalties in an action for unpaid wages, an employee is required to make a written demand for payment. Penalties are increased if the employer’s failure to pay is willful. The Act changes existing law as follows:
• Failure to respond to a written demand creates a rebuttable presumption that the failure to pay is willful; • service of a small claims court complaint now constitutes a written demand for payment; • potential employer penalties will be reduced if the employer made a legal tender to the employee of the
amount of wages the employer believes in good faith are due the employee within 14 days of receipt of a written demand by the employee.
While portions of the new law will go into effect immediately upon the Gov. Hickenlooper’s signature, the major portions affecting employers will not take effect until January 1, 2015. MSEC will continue to monitor the bill’s progress and alert its membership to any changes. £
9 | The Bulletin | June 2014 | MSEC.org
Survey News 2014 Health & Welfare Plans Survey – Arizona, Colorado, and Wyoming The 2014 Health & Welfare Plans Survey has been published. There were 473 participants located throughout Colorado and Wyoming, and 47 participants in Arizona. Data for this survey can be accessed online by geographic location, by organization employment size, and by industry type.
Health Care Costs Data from the survey show the average monthly COBRA rate for coverage is: Average Monthly COBRA Rate for 2014 Health Coverage Type of Coverage
AZ
CO
WY
Single
$452.96
$527.60
$554.02
Employee + spouse
$962.41
$1,093.04
$1,049.96
Employee + child(ren)
$856.10
$976.97
$921.81
$1,371.90
$1.539.77
$1,411.49
Family
The average percent of health coverage paid by the employer is: Average % of 2014 Health Coverage Paid by the Employer Type of Coverage
AZ
CO
WY
Single
76%
85%
83%
Employee + spouse
68%
70%
73%
Employee + child(ren)
69%
71%
76%
Family
66%
68%
72%
Organizations offering a High Deductible Health Plan (HDHP) were reported by 51percent of Arizona respondents, 48 percent of Colorado, and 50 percent Wyoming respondents. Fifty-five percent of Arizona respondents, 52 percent of Colorado, and 57 percent of Wyoming respondents are also offering an HSA and/ or HRA as an option to employees. What cost containment techniques did respondents use? Cost Containment Techniques Utilized:
AZ
CO
WY
Changed their carrier or level/kind of coverage.
9%
17%
14%
Increased employee contribution for single coverage.
26%
28%
29%
Increased employee contribution for family coverage.
30%
33%
29%
Raised deductible, coinsurance levels and/or copay level.
30%
28%
21%
Sixty-two percent of Arizona respondents reported having a premium increase at last renewal, with an average increase of 7 percent, 78 percent of Colorado respondents reported an average increase of 9 percent, and 60 percent of Wyoming respondents reported an average increase of 4 percent. CONTINUED ON NEXT PAGE
10 | The Bulletin | June 2014 | MSEC.org
2014 Personnel Pulse Survey This recently published survey includes metric data for 2013 Turnover, Job Absence Rate, Cost of Benefits, Compensation Expense, and 2014 Tenure Rates. Also collected this year was 2013 FMLA Usage Rate and 2014 Executive Benefits. This report contains data reported by 218 organizations in Arizona, Colorado, and Wyoming.
Survey Highlights Turnover data for Colorado and Arizona decreased some from 2012, but Wyoming showed a sharp increase. All Employee Turnover
Employee Initiated Turnover
2013
2012
2013
2012
AZ
21.3%
25.1%
15.0%
17.5%
CO
16.9%
17.6%
12.6%
12.1%
WY
29.7%
16.0%
21.0%
12.2%
For voluntary separations, we asked employers the primary reason employees gave for leaving. The majority response was “New Job” – Colorado 54 percent, Arizona 57 percent, and Wyoming 14 percent. The largest percentage for Wyoming was “Compensation” 29 percent. “Personal Reasons” was listed for Colorado at 19 percent of responses, Arizona 29 percent, and Wyoming 14 percent. Survey results are available at MSEC.org.
Special Studies
Notice of Surveys 2014 Public Library Compensation Survey
Surgical – RN First Assistant 8 health care organizations. 13A/14
Cardiac Catheterization Position 7 health care organizations. 15A/14
This survey reports data from 27 Public Libraries located throughout Colorado. The Public Library Compensation Survey contains salary data for 29 benchmark positions displayed by operating budget as well as an individual data line for each participant. Also included are percentages of the operating budget allocated for personnel, books and materials, and the average premium paid bilingual employees. £
Landfill Operator 4 organizations. 18A/14
Housing Assistance for Emergency Response Personnel 4 p ublic employers in select Colorado resort towns. 19A/14
To request copies of the surveys, please contact the MSEC Surveys Department. Copies of these resources are available to authorized personnel of MSEC members. Call 800.884.1328, email surveys@msec.org, or go online to MSEC.org.
Thank you for reading The Bulletin
11 | The Bulletin | June 2014 | MSEC.org