Supreme Court

I’m going to let you in on a little secret.

Not all employment law cases decided by the U.S. Supreme Court matter are of equal significance and importance to employers.

What? How can that be, you say? It’s the SUPREME COURT!  Isn’t everything that they say important?

Well, sort of.

The truth is that sometimes the court decides thick procedural issues disguised as an employment law case.  But from a practical matter, how the court rules in these cases probably isn’t going to affect how most employers run their businesses. 

One case that is likely to be decided this year in just such a fashion is Genesis Healthcare Corp v. Symczyk, which was argued earlier this month.   Jon Hyman, over at the Ohio Employer’s Law Blog, sums up the principle at issue here:

Let’s say an employee sues you, claiming that you withheld certain wages owed under the Fair Labor Standards Act. In addition to defending the lawsuit, you make her what is called an “offer of judgment” to make her whole for all wages she claims she is owed (including any liquidated damages and attorneys’ fees). Does the offer render her lawsuit—that she not only brought on her own behalf, but also sought on behalf of a class of similarly situated co-workers—moot? Alternatively, does the fact that she sought relief on behalf of others keep her lawsuit alive, despite the fact that she no longer has any personal skin in the game? 

I have a difficult time believing this case is going to impact more than just a few wage & hour cases.  Most employment law cases never get an offer of judgment made on them and typically involve more than one person.  While it may impact the tactics in class actions, the overwhelming majority of employers will never have to deal with a class action ever.

Put another way, this case is not likely to have any impact on how employers manage their workforce on a day-to-day basis.

So, if you like reading about the U.S. Supreme Court and the intracacies of procedures, this case should be right up your alley. For most employers though, it’s a reminder that not all employment law cases are of equal importance.

President Obama was re-elected to a second term last night (something forecasted by stats guru Nate Silver). What does it mean for employers?

Four More Years

I won’t go quite as far as fellow blogger Jon Hyman, who said this morning that “it just doesn’t matter” who won last night.  I think it matters in part.

But the impact for employers will probably be far less than was suggested during the campaign season.  Much will depend on the level of compromise that comes out of Washington.

Here are four areas where we should keep an eye on:

  • “Obamacare” — With Obama’s re-election, the idea that universal healthcare will somehow be repealed is done.  With implementation of key provisions due in 2014, employers who have been on the fence about the changes that are required to their benefit system should now start moving forward.  Verdict: It’s happening.
  • NLRB — The National Labor Relations Board has been flexing its muscle under Obama’s first term.  This political agency will likely try to continue to push forward changes to election rules and posters — even as the litigation regarding those items promises to slow things down.   This is one area that employers ought to pay close attention to. Verdict: NLRB remains an agency to watch.
  • ENDA — The Employment Nondiscrimination Act, which would prohibit employers nationwide from discriminating against employees based on their sexual orientation, has been discussed a lot. But with same-sex laws passing in Maine and Maryland, the sentiment in the country appears to be shifting.  While this won’t have much impact in Connecticut (where state law already prohibits such discrimination), I wouldn’t be surprised to see a new push for this bill’s passage.  Verdict: Some compromise bill is likely on ENDA.
  • Paycheck Fairness Act — Stephanie Thomas of the Proactive Employer blog suggests this morning that the gender pay gap was an issue in the last term and will remain a priority in the next term.  (Check out her post for other potential issues.) I tend to agree with her, but with a Republican-controlled House of Representatives, it’s hard to see how a compromise is going to be shaped here.  Verdict: My guess is that we won’t see passage of this bill anytime soon.

But as I said before, it’s still too early to figure out what the next four years will bring.  Even driving into work, I heard a dozen differing opinions about what the election “means”.  We tend to overstate the results from elections on the morning after, and I think the same applies here.

The fact is we’ve had gridlock on the Hill for the last two years; no employment laws have been passed. Will the gridlock in Washington continue? Perhaps.  But if it starts to break, then perhaps we will start to see some more compromise measures being passed.


Regardless of your political affiliation, you have to appreciate the magnitude of the moment.

Sweeping health care insurance legislation has passed Congress. (The Senate will still take up  the "reconciliation" part of the bill which will make some additional modifications because the House only approved of the Senate version.)

So, now’s the time to ask: What does this mean for employers?

No one really knows. Oh, you’ve been hearing lots of commentators talk about how lots of jobs will be lost (or saved) as a result of this.  Or they will talk about what this means for our country.   But in truth, it’s much like looking at a crystal ball — you’re much more likely to get a distorted picture than a real one.

So rather than guess about what will happen for employers in the future (or speculate about future changes that may or may not be made), let’s talk about what we know.   

Employers are not, technically, required to provide health insurance to their workers under the bill that passed.  But if employers with 50 or more employees do not provide health insurance, they will be required to pay a fine of $2000 per worker each year if any worker receives federal subsidies to purchase health insurance. Fines will be applied to entire number of employees minus some allowances (under the formula — at least in the reconciliation bill — the first 30 employees are probably not going to be counted).

But again, here’s the most important part: If you are an employer will less than 50 employees, you will not be impacted directly from this bill because you will not be penalized if you don’t offer health insurance.  

For those employers that do offer coverage, you’re not out of the woods just yet. Under the passed bill, if the employee finds the insurance too expensive because it would represent too much a percentage of their income, the employee may purchase insurance on the open market (or at least the marketplace of exchanges that the measure also establishes).  The employer would then be required to provide a voucher to the employee on the percentage that the employer would have kicked in had the employee chose to continue with the employer-sponsored plan.

There is an additional provision for employers of 200 or more employees: If you, as an employer, do offer health insurance to your employees, then you will have to automatically enroll those employees in the plan.  

So, you might be wondering, should I start planning for this? Well, unlike some of the COBRA-subsidy provisions that have gone into effect immediately, this law has a great deal of buffer built in.  In fact, many of these provisions do not start until January 1, 2014 — or nearly four years from now.

But there are others that go into effect more quickly, including a provision to require employers to extend coverage to include adult children (up to age 26) of employees. 

As you might expect from a 2000 page bill, there are certainly other provisions that might affect employers. Various blogs and publications have begun summarizing some of those provisions including Business Insurance and Washington Employment Law Update.  I expect we’ll hear more this week too as everyone starts to analyze it in more detail.

For employers that have low-cost workers, there is no doubt that this measure will have some impact because of the penalties that may be applied if health insurance is not offered. But how much of an impact that will be will have to be determined by each company on a case-by-case basis.

For now, each employer should consider appointing a small group of employees (including those from human resources and finance areas) to figure out what health care reform will mean to that employer.  And stay tuned, I don’t expect we’ve heard about this for the last time.  

At the CBIA Annual Meeting last night, I had the pleasure of hearing a keynote address by Elizabeth Teisberg, co-author of the book: Redefining Health Care: Creating a Value-Based Competition on Results.  Her presentation focused on the importance of taking a comprehensive approach to health care reform — one that controls costs, improves patient outcomes and creates greater value for our health care dollars.

Her presentation has important implications for employers of all sizes — a fact emphasized in an article she wrote earlier this year on "Rethinking the Role of Employers".  Indeed, instead of just worrying about which plan has the lowest co-pays, she emphasizes that employers should instead be thinking of the plans that provide the greatest value:

The most important single change necessary is for employers to think about healthcare in terms of value, not cost. Value is the health outcomes achieved for the money spent. Cost includes not only the immediate, short-term costs of treatment but the long-term costs of ongoing care as well as the indirect cost of poor health. The goal should be to increase value, not reduce the short-term costs of health benefits. New research on value-based health care delivery reveals some powerful, and ultimately optimistic, principles.

How to start moving towards this model? Interestingly, it’s a step that some employers have already focused on: creating an aggressive approach to wellness, prevention, screening, and active management of chronic conditions.

But beyond that, she highlighted two employers that have taken an even more aggressive approach to creating value for their employees — offering to pay for care at world-class hospitals like the Mayo Clinic in Minnesota. What’s notable about this? The employees are in states like WyomingA good summary of their success can be found here. 

Why Mayo? The article explains:

The approach in Wyoming is a twist on efforts by insurers and Medicare, the U.S. health program for the elderly and disabled, to encourage better care by rewarding hospitals that meet national quality standards.

In doing so, the employers can actually lower their costs by making sure that employees get the best care the first time around.

As open enrollment season approaches, Ms. Teisberg’s suggestions for employers may be a way to start making healthcare a win-win proposition for employers and employees alike.