Connecticut Employment Lawyer & Attorney : Daniel Schwartz : Stamford, Hartford New Haven, CT

Although I've been sounding the alarm bells for the last two months or so, on the new COBRA subsidy provisions, I've had informal discussions with various colleagues that suggest that some employers are either ignorant of the new rules or do not believe that the rules apply to them. Here are three areas why most employers in Connecticut need to be concerned.

1.     State Mini-COBRA Laws Will Piggyback on the New Federal COBRA Subsidy.  While federal COBRA only applies to employers with 20 or more employees, Connecticut has a parallel COBRA statute that applies to all other employers with group health plans (except those that self-insure).  Why is this important? Because the new federal COBRA subsidy provisions will ALSO apply to those employees who are covered under a state COBRA rule as well.

The rules are slightly different. For example, if the state mini-COBRA rules apply, the insurer is responsible for sending out notices to former employees who may be eligible for assistance.  In addition, the extended election period that, in essence, reopens the period for former employees to elect COBRA, does not apply for employers subject only to the state mini-COBRA.

Thus, for employers with less than 20 employees, you may still need to comply with the new COBRA subsidy provisions.

2.     There Are Significant Penalties for Failure to Provide Notices by April 18, 2009.  With the deadline to send out notices -- particularly to former employees -- coming up as early as Saturday, April 18, 2009 for many situation, employers who are scrambling to get the work done may be considering just postponing it.  However, any such postponement carries with it significant risks. 

Although the new law appears to be silent as to the exact penalties that will apply, it appears the standard penalties under COBRA or other federal laws may apply. Thus, plan sponsors (mostly likely, employers) who fail to provide the notice could be subject penalties of up to $110 per day under ERISA and an excise tax penalty of $100 per notice (with limits) under the Internal Revenue Code. The penalty or excise tax may apply to each Qualified Beneficiary. In addition, individuals may have a cause of action to sue for COBRA coverage and receive the benefits that should have been offered, as well as attorneys’ fees and “other relief.”

3.      Employers That Pay COBRA Premiums Under a Severance Plan or Agreement May Want to Modify Them.  The most recent guidance provided by the federal government clarified that the subsidy applies only to amounts actually charged to the assistance eligible individual for COBRA continuation coverage. Therefore, employers who contribute to an assistance eligible employee’s COBRA premium will not be able to recapture this amount.  As a result, these employers may want to consider restructuring their severance policies so that they can get a tax credit for those amounts.

There's much more to the new COBRA subsidy rules than first meet the eye. If you're still confused, it's not too late to sign up to the teleconference that I'll be giving this Friday, through BLR. 

As always, consult with a local attorney to determine how the new law applies to your business.

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Among employment law professionals and human resource personnel, the last year has been full of changes.  Among the more technical changes are thenew COBRA Subsidy provisions that were passed with the stimulus bill earlier this year.

April 18th is a big deadline for some of the implementation of the provisions -- providing notices to some former employees about their rights under COBRA and providing some of them with a second opportunity to enroll.  (I've covered those notices before in an earlier post.)  

Still lost? Well, there are several good resources available out there (includingthe Department of Labor website itself).  There's even a FAQ for employers from the DOL. 

If you're looking for something more in-depth, I'll be giving an audio (i.e. telephone) conference this Friday, April 17th for Business and Labor Reports.  You can sign up directly through the BLR website. 

Overall, the Act requires employers to provide notice to “assistance eligible individuals” (AEIs) who have lost or will lose their jobs between September 1, 2008, through December 31, 2009, of their the right to pay reduced COBRA premiums of 35 percent for periods of coverage beginning on or after February 17, 2009, with available coverage lasting up to 9 months following the separation of employment.

Here's a free sneak preview of one suggestion employers need to be considering now: Figure out who has left employment since September 1, 2008 and particularly those who have been involuntarily terminated. That subset may now be eligible for some assistance with COBRA payments and notices will need to be sent to them promptly.

Time is ticking on compliance. Use this week to catch up. 

Any suggestions that have made it easy on you that you can share with other employers? Feel free to comment below.  (Remember, however, that I cannot respond to questions due to ethics rules.)

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The Connecticut Department of Labor late today posted brand-new guidance (available here) comparing the new federal FMLA regulations with the existing Connecticut regulations.   For employers struggling to adopt the new FMLA regulations with Connecticut's FMLA rules, this document is a must-read because there are some very real and significant differences now that will arise --- at least until those differences are handled via statutory and regulatory amendments.   

A little background first: the 30 page document is the work of Attorneys Heidi Lane and Jennifer Devine in the Office of Program Policy who enforce the CFMLA on a daily basis.  The document, as noted in the cover, is an attempt to provide Connecticut employers with as much information as possible to modify their policies.

But as the cover also explains, there is likely to be a formal rule-making change (with appropriate notice period) this year to address some of the differences that are now arising between federal and Connecticut regulations.  The Department will also be holding a seminar on the interplay between federal and Connecticut regulations on February 26, 2009 for a nominal fee of $25.

Overall, the document notes that some changes can be adopted immediately because they conform to the "practice" of the Department of Labor or are a "reasonable interpretation". Other provisions cannot, particularly because Connecticut's FMLA statute and regulations are just different. A rule of thumb is that where the state regulations are more favorable to the employee, those state provisions will be followed. 

Because of that "rule of thumb", employers now need to be very cautious in adopting the new federal regulations. Indeed, all of the regulatory changes that were favorable to employees (or at least neutral) will be followed by the CTDOL, but all of the federal FMLA changes that were favorable to employers will not.  [This is not the Department's fault, per se, but rather the way Connecticut's statute has been written.] So, that change to the "perfect attendance" bonus rule under federal law? Out. That provision allowing employers five business days to give notice to affected employees, instead of two? Gone as well.

So what are some of the highlights?

• The CTDOL will allow for the adoption of the new FMLA notice, designation and certification forms (available here) with certain very notable exceptions. In particular, forms WH-381 (Eligibility Notice) and WH-382 (Designation notice) will need to be provided to employees within TWO business days, not the five allowed under the new federal regulations. Expect a change to the state regulations to make it consistent with federal law, but until that happens, Connecticut employers still need to follow the 2 day limitation.
  
  In addition, "key employee" and "fitness for duty" provisions differ from the new FMLA regulations. Employers should review the specific regulations and consider eliminating some of the language on the forms to conform with Connecticut law.
   
• The new federal regulations also dictate that employees must provide notice of their absences consistent with their employer's policy. However, the CT DOL indicates that Connecticut law is not as strict and merely requires"timely verbal or other notice". Thus, until this regulation is amended, Connecticut employers applying CTFMLA will need to show more flexibility.
   
• As for the certification forms (WH-380E and WH-380F), those can be used with one notable exception. The new forms have a section where the doctor is to indicate a "diagnosis"; the CT DOL states that an employer may not request a diagnosis under CTFMLA. A formal change to Connecticut regulations will be needed to adopt this particular change. These forms must also be given to employees within TWO business days, not five as allowed under FMLA.
   
• Overall, the CTDOL adopts the changes to the definitions of "serious health condition" that dictate that employees visit doctors within certain specified periods of time.
   
• While the new FMLA regulations allow for the denial of a "perfect attendance" bonus/award to employees who take FMLA, Connecticut regulations do not allow this. Thus, until the regulations are amended in Connecticut, employers in CT cannot deny perfect attendance awards to employees who take CTFMLA leave.
   
• The federal FMLA regulations permit an employer to contact the employee's health care provider in limited circumstances, but the Connecticut rules do not. This distinction will remain.
   
• For "fitness for duty" requests, the CTDOL notes that employees need only provide a "simple statement of an employee's ability to return to work". While the federal regulations allow for a more detailed certification, the CTDOL has indicated that it cannot follow this provision.

The document is a vital piece of information for employers' compliance efforts and I applaud the department's efforts in providing employers this information in a fairly short period of time.

But it now highlights the fact that the legislature and CTDOL should act quickly to eliminate some of the awkward differences that will now arise between federal and state FMLA.

For employers, continue to seek appropriate legal counsel on implementing the federal regulations but make sure that any analysis includes application of Connecticut regulations where appropriate.

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News about the WARN Act keeps surfacing in everything from law firm closings to bakery layoffs. 

While I've touched on the subject before, the Connecticut Law Tribune this week published a longer piece that I've written on the basics of the act for employers, particularly those in Connecticut.  You can download the article here.  

In my view, this Act is one of the easiest for companies to comply with, and yet, time and again, we see examples of employers who do not follow its mandates.

Perhaps the most important takeaway from the piece is the fact that WARN is not a mandatory severance law but rather a mandatory notice law.  Once the notice is providing within the required timeframe to both employees and various public officials, then the company is -- for the most part -- off the hook here. 

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The Connecticut Supreme Court today, in a per curiam decision, affirmed an appellate court decision that held that the time period for filing an employment discrimination complaint under state law (not federal) begins on the date the employee's employment actually ends, not the date that the employee received notice that his or her employment would end.

The court's decision in Vollemans v. Wallingford (available here), is devoid of any analysis concluding that the Appellate Court's decision was thorough and that any "further discussion by this court would serve no useful purpose."  (I should note that the decision will not "officially" be released until October 21, 2008.)

The Appellate Court decision, available here, essentially declined to file the 1980 landmark Supreme Court case of Delaware State College v. Ricks, which held that the notice date given to employees started the running of the statute of limitations period.  The appellate court decision here said that the remedial purpose behind the state's ant-discrimination laws differs from the federal laws.

For employers, this decision is yet another reminder of the split in interpretations arising between federal and state anti-discrimination laws. Despite some of the restrictions placed on litigants in federal court, state courts have been -- in general -- much more lenient in some of their interpretations.  Expect more state discrimination claims to be followed where the laws interpreting federal and state laws contrast.

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Earlier this week, I discussed the benefits of providing notice to employees who may be affected by mass layoffs and plant closings, by complying with the Worker Adjustment and Retraining Notification (WARN) Act.

But what exactly does the WARN Act require and who is covered? Here are some basic answers to some basic questions. As always, those who need more information should seek legal counsel and review the applicable laws.   In addition, some states have additional requirements that must be complied with; this post just discusses the WARN Act.

Who's Covered?

Not all employers are covered. Employers who have 100 or more full-time employees are covered. But employers who have 100 or more full-time AND part-time employees who, in total, work more than 4000 hours per week are also covered.  Most governments are not covered, but some quasi-public and public entities may be covered.

When Does WARN Apply?

As I discussed in my prior post, there are two types of events that are covered  by WARN -- plant closings and mass layoffs. "Employment Losses" within each of them triggers some notice requirements.  All of these terms have a definition though. 

"Plant closings" are a permanent or temporary shutdown of a "single site of employment" (though it can also be one or more facilities or operating units within a single site of employment), so long as the shutdown results in an employment loss at that site for 50 or more full-time employees during any 30-day period.

"Mass layoffs" are a reduction in force (that is also not the result of a plant closing) that results in an employment loss at a single site of employment during any 30- day period for at least 50 employees.  These 50 or more employees must also make-up at least 33 percent total employees (excluding any part-time employees). This will also be satisfied if there are at least 500 employees (excluding any part-time employees) affected by the mass layoff as well.

What Is An "Employment Loss"?

Despite its term, the term "employment loss" is fairly broad.  It means either:

1. a termination of employment for reasons other than a discharge for cause, voluntary departure, or retirement,
2. a layoff longer than six months (which indicates that the employee may return after the "layoff", or 
3. a reduction in hours of more than 50 percent during each month of any six-month period.

What Notice Is Required? 

A WARN notice must be given to each employee at least 60 days before a plant closing or mass layoff.  However, if there is a union, the notice must be given to the union representative of the affected employees. 

In Connecticut, notice must also be provided to the Connecticut dislocated worker unit (see below) and the chief elected official of the local government where the closing or layoff is occurring. 

The Website for the Connecticut Department of Labor has some more specifics on the notice required:

Written notification should be printed on company letterhead, signed by the authorized employer representative, and addressed to:

Rapid Response Unit
Connecticut Department of Labor
200 Folly Brook Boulevard
Wethersfield, CT 06109-1114

This notification should include: the name and address of the employment site where the plant closing or mass lay off will occur; the date(s) of proposed closing or mass layoff; the number of affected workers, and address of their collective bargaining representative and chief elected officer if applicable; and, the name, address, and telephone number of the employer representative to contact regarding the closing or mass layoff.

Interestingly enough, the DOL site also encourages employers to seek legal counsel regarding the notices. 

As with lots of federal laws, there are some exceptions and some tricky questions that arise such as what happens when you have multiple layoffs within a short time that don't trigger WARN individually but would collectively, and what happens in situations that are not foreseeable (plant burns down and must therefore close immediately). 

The U.S. Department of Labor has some additional guidance on this issue for those types of situations in this employer's guide.

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Six months ago, I predicted a renewed emphasis on reduction in force laws and regulations with the possibility of an economic slowdown looming.  With six months left to go in the year, I'm still feeling good (if you can feel "good" about such things) about that prediction. 

Is the economy still on the yellow brick road or are we walking deeper into the forest filled with lions, tigers and bears?

The statistics from the Equal Employment Opportunity Commission do not paint a rosy picture.  

The numbers of discrimination claims filed with the EEOC are up.  

And up by a lot.

In fact, the EEOC reported a 21 percent increase in charges for the first quarter of 2008, over the same period last year. 

So what can employers do? I talked a few weeks ago about one aspect of reductions in force -- namely compliance with the OWBPA (Older Worker Benefit Protection Act) and how compliance with that law can avoid one pitfall associated with a reduction in force. 

But another law that is commonly misunderstood is the WARN (Worker Adjustment and Retraining Notification) Act.  WARN is not a mandatory severance law; in other words, it doesn't mean that employers need to give employees severance when they are affected by a mass layoff or plant closing.

What WARN does require is that the employer give notice to employees who may be affected by a plant closing or mass layoff.  The Department of Labor has prepared this fact sheet for employers to answer some of the basic questions.   It is a law that is, frankly, fairly easy to comply with, and yet there are still some employers who are facing class actions for their alleged failure to comply. 

In addition to notice to employees, the employer must also notify the Connecticut Department of Labor of its proposed actions.  The state then posts them in monthly reports available here.  You can view July's report here.

What is fascinating about the reports thus far is that Connecticut has, as of now, avoided some of the mass layoffs that have plagued some of the other states.  The June reports for Connecticut show only 400 or so employees statewide who received WARN notices.  Moreover, numbers released over the weekend show that Connecticut employers have added jobs, not eliminated them.  Whether this trend continues will be an item to watch for in the second half of 2008.

In an upcoming post, I'll highlight some of the particulars of WARN in more detail.  Until then, try to avoid the fields of sleeping flowers.

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