| Special #67 - September 8, 2020 |
| | Strategic HR Leadership Series Postponement (Sept. 11th workshop postponed to Oct. 13th)
New Schedule is listed below (New Registration is still available)
Due to the rise of COVID-19 cases in Middle Georgia. We will be postponing the Strategic HR Workshop that is held on September 11th to October 13th. (Note: We at the GEA apologize for having to postpone this series due to the COVID-19 crisis but We are dedicated to delivering this series in full before the end of the year) - Enhancing or Designing a Wage & Salary Administration Plan
October 13, 2020 9:00 AM – 12:30 PM
- Functioning as a Human Resource Strategic Business Partner
Date TBD (October) 9:00 AM – 12:30 PM
- Practical Techniques to Enhance Your Training & Facilitation Skills - Date TBD (November) 9:00 AM – 12:30 PM
- Positively Impacting Employee Behavior through Performance Appraisals, Coaching & Counseling -
Date TBD (November) 9:00 AM – 12:30 PM
- Utilizing HR Metrics to Illustrate & Improve HR's -
Date TBD (December) 9:00 AM – 12:30 PM
- Employment Law Essentials with Constangy, Brooks, Smith & Prophete Attorneys - Date TBD 9:00 AM – 12:30 PM
Visit our website to view the overview of workshops and to register
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| HR and Employment Law News |
| - Constangy.com News & Analysis: A “vaccine” for COVID-19 ERISA litigation Sep. 3, 2020 - 5 ways remote work complicated compliance in 2020 Aug. 31, 2020- What is the difference between an HRA and an excepted benefit HRA? Sep. 7, 2020- ¶47,256 35 percent of U.S. companies do not know when they'll reopen the workplace — SURVEY RESULTS, Sep. 4, 2020- Georgia Department of Public Health COVID-19 Daily Status Report
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| | | | | | Constangy.com News & Analysis: A “vaccine” for COVID-19 ERISA litigation
By Bill McMahon/Winston-Salem Gregg Moran/Tampa Dana Thrasher/Birmingham & David Yudelson/Los Angeles Office
9.3.20 ERISA litigation tends to spike when economic uncertainty or turmoil rises. Although many things contribute to this historically verifiable trend, it is easiest for employers to think about just two of them. First, an employer-sponsored retirement plan, like a 401(k) or pension plan, is likely to suffer from market volatility. Second, employer-sponsored health and welfare plans will see upticks in claims issues during a health crisis. A new virus requires treatment, and coverage (or no coverage) for novel treatments is sure to generate litigation.
Here are some key considerations and preventive measures that every plan sponsor and fiduciary can monitor and implement to avoid a COVID-19-related spike in ERISA litigation.
Retirement plans
Although the 401(k) is the most well-known type of retirement plan, there are also company-sponsored profit sharing plans, pension plans, and employee stock ownership plans. Each of these plans requires fiduciaries to monitor them, and the fiduciary obligation to administer plans prudently under the circumstances that presently exist does not disappear in a pandemic. Market volatility, consumer downturn, and the variety of corporate-level decisions addressing these issues (many of which are entirely justifiable and defensible), create breeding grounds for costly lawsuits that challenge investment decisions and disclosure obligations. As we saw during the Great Recession of 2007-09, these lawsuits often assert claims for breach of fiduciary duty.
Investment menu claims
Failure to diversify investments. All good plans offer some form of investment option designed to cater to participants seeking capital preservation. “Stable Value Funds” or “Target Date Funds” are the perfect choices for many participants due to age, risk tolerance, and other factors. But that does not stop plaintiffs from bringing claims that other options in turbulent times, like money-market options, are the more prudent choice, or that more options in exploding market segments, like pharmaceuticals, should have been on the list.
Improper choice of diversity. Even the most wonderful array of investment options is not going to please all the plan participants all the time. Fund menus that add hedge funds, private equity or commodities-based trading options and the like will face criticisms for trying to offset one risk by allegedly creating too much risk somewhere else. And where there are risks (or even differences of opinions regarding what a “risk” is), lawsuits are an always-present option. Investment options with higher fees, greater volatility potential, or complicated value propositions are the targets here.
Expensive or self-dealing choices. Some plans offer actively managed funds in lieu of index funds because, though index funds are often less pricey, actively managed funds can outperform the market in rough times and can be more attractive to some participants. Often, actively managed funds are alleged to be tied to a self-dealing incentive to the plan sponsor, the investment manager, or both, and a lack of prudence by the plan sponsor and fiduciaries for failing to see that the active management was generating excessive fees to the plan.
ESOP and company stock fund claims
ESOPs and company stock funds get their own category because they consist only of the company stock. If the company is suffering, the value of the company stock will suffer. Typically, company stock will suffer even more than the stock market at large. Participant lawsuits sometimes attempt to put fiduciaries with special knowledge about the company in the uncomfortable position of navigating between laws requiring disclosure of important information to plan participants and laws forbidding insider trading.
Disclosure claims
These claims typically involve what the plan participants allege they were told (or not told) relative to what the company knew and when the company knew it. Although not every event or decision is required to be reported or explained to participants, and plan communications to participants always require caution, keeping contact with plan participants and vendors is an area that can shore up an employer’s defenses.
- The vaccine: Monitor investments and vendors, and document your fiduciary decision process.
- Always monitor and regularly evaluate the fees charged by your investment managers and the funds.
- Consider whether to add or delete funds based on the investment policy and objectives, in light of the current conditions.
Practice the “Three Ds” = Deliberate, Decide, and Document. When making investment decisions, document what you discussed and the reasons for making the decisions and choices you made. You are not judged by 20-20 hindsight, but by how well and how often you followed a reasonable and prudent process. If you are in doubt about how to properly consider, document, or implement a policy, communications seeking advice from your attorney are generally protected from disclosure.
- Communicate responsibly with participants. Send the required account statements, and notices of any important changes. Encourage participants to use the educational or investment advisory services your plan offers.
- Review the distribution terms of your plans and stay in contact with your record keeper.
- Special note about multiemployer (Taft–Hartley) plans
For employers who contribute to Taft-Hartley plans, now is a time to recognize that these plans typically have only three ways to add revenue: acquiring new members, receiving employer contributions, and lawsuits to collect contributions or for withdrawal liability. This means that employers can expect such plans, which still have to pay certain benefits now depending on their terms, will face funding challenges beyond those that were already affecting them before COVID-19. We expect claims alleging withdrawal liability and delinquent contributions to grow in the coming months, and have seen an increase in lawsuits nationwide in this area.
Health and other welfare plans
Most of the litigation arising under ERISA for health and welfare plans stems from the denial of benefits. These can be denials of long-term disability claims, denials of certain treatment options, or loss of coverage. They are defended based on the decisional process, the terms of the plan, and the peculiar facts of the case.
In the face of COVID-19, while some of the rules for deadlines and distributions for retirement plans have been relaxed under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, health and welfare plans face unique challenges regarding coverage issues and claims involving COVID-19 illness-related events. Very recently, the Employee Benefits Security Administration released EBSA Disaster Relief Notice 2020-01, which provides the following suggestions for fiduciaries:
- Act reasonably, prudently, and in the interest of the covered workers and their families who rely on their health, retirement, and other employee benefit plans for their physical and economic well being.
- Make reasonable accommodations to prevent the loss of benefits or undue delay in benefits payments, and attempt to minimize the possibility of loss of benefits because of failure to comply with pre-established timeframes.
- Account for compliance roadblocks, and consider grace periods and other relief where appropriate, when physical disruption to a plan or service provider’s principal place of business makes it impossible to comply with pre-established timeframes for certain claims decisions or disclosures.
The vaccine: Maintain contact with your third party administrator and be ready for more claims.
The plan terms and claims decision process are always the paramount concerns. ERISA requires you to follow both, and the proposed ESBA guidance suggests that claims deadlines and other parts of the process must not be strictly applied.
Here, too, the “3 D’s” rule the day: Deliberate, Decide, and Document. If you follow the plan terms and process, while exercising the discretion the plan document should afford you, then you will be best positioned to deal with novel claims issues related to COVID-19. Understand that striving to maintain coverage and benefits for employees up front can save litigation expenses later.
Because this article is prescriptive, if you have questions or would like more information or education about fiduciary compliance and training, please reach out to the Employee Benefits Practice Group. If you are threatened or served with litigation, the ERISA Litigation Practice Group is here to help defend your business and employee benefit plans.
For a printer-friendly copy, click here.
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| | | | 5 ways remote work complicated compliance in 2020
From monitoring employee productivity to upholding federal anti-discrimination laws, HR had to meet new compliance challenges.
AUTHOR Sheryl Estrada PUBLISHED Aug. 31, 2020
In late February 2020, the Centers for Disease Control and Prevention advised businesses to start preparing for the spread of COVID-19, specifically by transitioning to telework. Companies that did not have a standard remote work policy in place had to quickly develop, test and deploy telework procedures. For many employers, beginning the daily operations of a totally remote workforce amid a pandemic and a pending economic recession had its challenges, including adherence to compliance protocols.
HR departments had to figure out how to fulfill notice posting requirements, for example. And, although HR leaders did not have the same visibility as in a typical office environment, the U.S. Equal Employment Opportunity Commission requirements remained to uphold federal anti-discrimination laws such as Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act. Meanwhile, questions remained on how to review employees’ identity and employment authorization documents in person to meet U.S. Immigration and Customs Enforcement requirements.
Companies with employee productivity and security concerns also had to decide whether or not to use monitoring technologies. Some may consider the practice intrusive, but it’s very common, according to Fred Cate, senior fellow at the Center for Applied Cybersecurity Research at Indiana University. "I would be surprised if there's no monitoring," Cate told HR Dive in a previous interview. How much work employees perform while working from home, the use of intellectual properties and log-on and log-off times are reviewed by employers, he said.
HR Dive produced the following reports exploring the compliance challenges that companies faced.
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| | | | What is the difference between an HRA and an excepted benefit HRA?
(Sep. 7, 2020)
taken for GEA HR Answers Now
Issue: Your company would like to add a health reimbursement arrangement (HRA) alongside its group health plan. What is the difference between a group health plan HRA and an excepted benefit HRA (EBHRA)?
Answer: Employer-funded HRAs have been available for well over a decade and may be provided tax-free to employees enrolled in group high-deductible health plans. HRAs must be entirely employer-funded; cover only medical expenses not covered under another health plan; and follow the nondiscrimination requirements under Internal Revenue Code Sec. 105(h). Employees enrolled in the group health plan HRA can use the funds in the HRA to pay for out-of-pocket medical expenses.
EBHRAs, available as of January 1, 2020, may be offered alongside group health plans; however, employees do not have to be enrolled in the group health plan to participate in the EBHRA. EBHRAs are capped at $1,800 (in 2020) to pay for premiums for COBRA, dental, vision, and short-term medical plans. The accounts may not provide reimbursement of premiums for individual, group (other than COBRA), or Medicare coverage. After meeting these requirements, EBHRAs are not subject to group health plan rules, including the market reforms under the Patient Protection and Affordable Care Act (ACA).
Identifying the HRA that is best for your company depends on three things:
1. the amount that will be contributed to the HRA;
2. the employees who will be covered; and
3. the out-of-pocket expenses allowed.
Source: Revenue Ruling 2002-41, I.R.B. 2002-28, June 26, 2002; Final Rule: Health Reimbursement Arrangements and Other Account-Based Group Health Plans, 84 FR 28888, June 20, 2019, https://www.govinfo.gov/content/pkg/FR-2019-06-20/pdf/2019-12571.pdf.
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| | | | ¶47,256 35 percent of U.S. companies do not know when they'll reopen the workplace — SURVEY RESULTS,
(Sep. 4, 2020) taken from GEA HR Answers Now
Many businesses hoped to reopen their workplaces after Labor Day, but a new survey of managers and executives suggests a long, uncertain road ahead. 35 percent say the timing of when their companies will reopen the workplace is unknown.
The Conference Board survey also found that only about 60 percent of companies have consulted their workers about their levels of readiness and comfort in returning to the workplace. In addition, despite talk of a looming vaccine and its benefits, just 5 percent say its wide availability would be a significant factor in the timing of a return to the workplace. The findings also reveal that, while most companies have mandated certain protocols for employees arriving at work, only 67 percent are requiring screening, testing, or temperature checks.
No reopening date. Over a third of companies have not set a date for reopening. In addition:
- 39 percent of companies plan to reopen by the first quarter of 2021.
- 13 percent of companies have remained open throughout the pandemic.
- The highest levels of uncertainty: Miami (46 percent), Seattle (43 percent), San Diego (42 percent), Washington, DC (41 percent), and San Francisco (41 percent).
Vaccine not top of mind. For reopening, a vaccine is not top of mind. According to the survey,
- Just 5 percent thought the widespread availability of a vaccine would be a significant factor in the timing of a return to the workplace.
- This low ranking likely reflects concern about the viability of a vaccine with a significantly shorter clinical trial time. It also likely reflects concern about the legal implications for any corporate mandate to get the vaccine as a condition for returning.
What businesses are/are not doing. The most and least frequent actions businesses are taking to safeguard their workers include:
- Most frequent: Purchasing safety equipment (e.g., masks, thermometers, contactless entry devices, sanitization devices) (82 percent); Creating new workplace policies requiring social distancing (e.g., limiting size of in-person meetings or usage of common areas) (80 percent); and Preparing workspace for return of workers (e.g., deep cleaning or disinfecting) (78 percent).
- Least frequest: Providing childcare options for workers (e.g., on-site childcare, flexible scheduling to meet childcare needs) (19 percent); and Implementing safety measures and/or policies specifically for workers taking public transportation (e.g., requiring more frequent screening or providing extra safety supplies for workers who use public transportation or shared shuttles) (13 percent).
Worker sentiment. Only about 60 percent of businesses have chosen to survey workers about their levels of readiness and comfort in returning to the workplace. However, those businesses that did survey workers were more likely to put all safeguard measures in place, including top employee concerns.
"Companies that sought worker sentiment about their comfort levels were more likely to implement safety measures specifically for workers taking public transportation, revise work-from-home policies, and provide childcare options," said Rebecca Ray, Executive Vice President of Human Capital at The Conference Board. "Notably, these top worker concerns were low on the overall list of safeguards that organizations are implementing, indicating that they are more important to employees than employers may realize. This disconnect reinforces the need for companies to receive buy-in from their most precious resource – their people – especially about matters as consequential as this one."
Staggered timing. Despite fairly consistent health organization guidance regarding social distancing, only 46 percent planned for staggered shifts within the workday or work week to reduce worker contact. Moreover, only 46 percent plan to create staggered timing for business units or workers to reenter the workplace.
Screening. Sixty-seven percent of companies are requiring screening, testing, or temperature checks for returning workers. However, The Conference Board says such actions may not have universal backing due to the fear of litigation—specifically relating to who is asked to come back into the workplace—along with the efficacy of these protocols.
About the survey. The survey polled more than 1,100 businesspersons across 20 US metropolitan statistical areas (MSAs). The respondents—primarily C-suite executives, vice presidents, and senior managers—represent a cross-section of industries. The online survey was fielded from August 19th –26th.
Source: The Conference Board.
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Georgia Department of Public Health COVID-19 Daily Status Report: Updated 3pm daily
Update from 09/03/2020 (State of Georgia)
Confirmed Cases 283,807 Deaths 6,044
Hospitalizations 25,538 ICU Admissions 4,687 Visit Georgia Department of Health website for more information: |
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Georgia Employers' Association |
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