Law School for Non-Profit Organizations Presentation for United Way of Washington County, Washington County Bar Association & Washington County Community Foundation
Employment Law: Pension, Benefits, Liability & Policies
1. Employment Law: Pension, Benefits,
Liability & Policies
The Insurance Perspective of Employment Issues
October 19, 2012
Presented By:
- Todd Whiteman
Property Casualty
- Rick Enscoe
Employee Benefits
2. Overview
Employment Practices Liability – EPLI
• Definition &Types of claims
• Claim Scenarios
Directors & Officers – D&O
• Definition & Types of claims
• Claim Scenarios
Policy Structure & Coverage
• Process and requirements
Protection Prior To Claims
Employee Handbooks
• What to include
Workers Compensation
• Overview
• Compliance 2
3. Overview
Types of Employee Benefits
• Group Benefits – Disclosure Requirements and Compliance
• Pension Plans – Disclosure Requirements and Compliance
Employee Benefits Legal Compliance
• Cafeteria Plans
• PPACA
• COBRA
• FMLA
• ERISA
• Fringe Benefits
• Health Insurance
• HIPAA
• HSA’s, FSA’s and other Tax Favored Plans
• Medicare Secondary Payer
• Summary Plan Description
Introduction to Disclosure Requirements for Defined Contribution Plans
Introduction to Disclosure Requirements for Defined Benefit Plans
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4. EPLI
Employment Practices Liability – EPLI
Definition: Coverage for suits or claims brought against an employer for:
- Wrongful Termination
- Wrongful Hiring Practices
- Sexual Harassment
- Failure To Promote
- Employee Rights Violations
- Breach Of Contract
- Emotional Distress / Stress
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5. EPLI
Scenarios
1. The executive assistant to the Chief Financial Officer was terminated for
divulging confidential information to staff regarding impending company
layoffs. A suit was brought by the assistant for retaliation and sexual
harassment as she claimed the CFO always made suggestive comments
and improperly touched her. $420,000 claim payment
2. A claim was brought by a former employee for religious discrimination.
She alleged the hiring practices of the Insured were unlawful because they
stated they would only hire Christian workers. Once it was learned that the
plaintiff was not a Christian, she was passed up for a promotion. $345,000
claim payment.
3. An overnight supervisor at a residential facility for disable adults was
found sleeping on the job. After an immediate termination the claimant
alleged racial discrimination even though the majority of the supervisors
employed by the insured were the same race. The insured was not found
liable but defense costs exceeded $30,000.
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6. D&O
Directors & Officers – D&O
Definition: Coverage for suits or claims brought against an employer and the
individual Directors and Officers for:
- Organization Mismanagement
- Supervisory Actions / Inactions
- Lack Of Due Diligence By The Board Or Committees
- Breach Of Duty
- Misappropriation Of Funds
- Breach Of Contract
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7. D&O
Scenarios
1. A grant making foundation receiving private donations was
alleged to have used those funds for purposes not associated with
the foundation’s underlying mission. A group of supporters sued the
foundation’s board alleging misappropriation of funds and breach
of duty. Defense costs exceeded $65,000.
2. Government grant given to the foundation to finance an international
event was not enough to cover the expenses of the event. Government
brought suit against the foundation as monies were used for other
purposes than financing the event.
3 The Executive Director was terminated due to unauthorized spending of
the center’s funds. The executive director then sued for wrongful
termination.
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8. EPLI / D&O
Policy Structure & Coverage
Limits – typically $1,000,000 per claim with the same amount in the aggregate
Limits – Shared aggregate over all coverages can be provided to lower the cost
Deductible / Retention – amount the insured will pay in advance of the carrier
covering the claim or amount the claim payment will be reduced at
settlement
Claims Made – type of policy triggering coverage when the claim is made, not
when the occurrence happened
Retro Date – date coverage was first purchased
Full Prior Acts – coverage back to the inception of the organization
Reporting Period – determines when the claim must be reported for coverage
to apply. In a claims made and reported policy the claim must be turned in
during the same policy period that the insured receives notice of claim
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10. EPLI / D&O
Protection prior to claims
- Employee Handbooks
- HR Department Policies and Procedures
- Board and Management
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11. Employee Handbook
What should be included
Employment Policies
- Drug Free Workplace
- Employment Authorization
- Employees With Disabilities
- Equal Employment Opportunity
- Life Threatening Illnesses
- No Solicitation/Distribution
- Open Door
- Introductory Period
- Sexual Harassment
- Whistle Blower
- Anti-Discrimination
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12. Employee Handbook
What should be included
Leave and Benefits
- Annual Leave
- Benefits Overview
- Cobra
- Compensation
- Military Leave
- Tuition Reimbursement
- FMLA (Family and Medical Leave Act)
- General Policies / Absences
- Jury Duty
- Holidays
- Leave without Pay
- Paid Tim Off (PTO)
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13. Employee Handbook
What should be included
Conditions Of Employment
- Email / Internet / Social Media
- Confidentiality
- Harassment
- Personal Conduct
- Safety & Security
- Discipline
- Resignation
- Standards Of Professionalism
- Termination
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14. Employee Handbook
What should be included
Compensation and Administrative
- Emergency Procedures
- Employee Information
- Employee Departure
- Reference Checks
- Employee Privacy
- Hours
- Overtime
- Performance Appraisals
- Punctuality and Attendance
- Smoking
- Employee Acknowledgment
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15. Workers Compensation
Overview
Generally, workers’ compensation insurance coverage is mandatory for all
employers who have one or more employees, whether they’re part-time or
full-time, including family members.
Coverage ensures medical and wage-loss benefits to employees who are
injured during the course of their job. Employers who so provide coverage are
protected against lawsuits filed by injured workers.
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16. Workers Compensation
Compliance
The requirement to insure workers’ compensation liability is mandatory for
any employer who:
- employs at least one employee who could be injured or develop a work-
related disease in this state, or
- could be injured outside the state if the employment is principally
localized in Pennsylvania, or
- could be injured outside the state, while under a contract of hire made in
Pennsylvania, if the employment is not principally localized in any state, if
the employment is principally localized in a state whose workers’
compensation laws do not apply, or the employment is outside the
United States and Canada
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17. Workers Compensation
Penalty & Example
Section 305 of the Pennsylvania Workers’ Compensation Act specifies that an
employer’s failure to insure its workers’ compensation liability is a criminal
offense and classifies each day’s violation as a separate offense with a fine up
to $500 per offense, either a third-degree misdemeanor or, if intentional, a
third-degree felony.
CAS Home Health Care Inc., owned by Sean Williams, in Philadelphia, pleaded
guilty to five misdemeanor counts of the third degree on Nov. 9, 2011, in
Philadelphia County Court of Common Pleas for failing to insure its workers'
compensation liability. Judge David C. Shuter placed CAS Home Health Care
Inc. on probation for a period of five years, ordered it to pay all court costs
and restitution to the Uninsured Employers Guaranty Fund in the amount of
$71,397.43. The bureau's Compliance Unit reports that CAS Home Health Care
Inc. is now in compliance with Pennsylvania workers' compensation law.
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18. Employee Benefits
Employee Benefits
There are two types of employee benefits:
• Those that the employer must provide by law (social sec./workers comp.)
• Those that the employer offers to compensate their employees ( health
and retirement
Both have legal and tax implications for the employer
EMPLOYERS MUST KEEP THE FOLLOWING IN MIND:
• Which Benefits covered by law (such as FMLA)
• Which Benefits that are voluntary and the laws that apply to each (COBRA)
• For each benefit determining who is the covered
• Making sure that each is classified in the correct class
• Which benefits are regulated by federal/state laws
Health and retirement plans fall under ERISA.
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19. Employee Benefits Legal
Compliance
Employee Benefits Legal Compliance
CAFETERIA PLANS
• Also known as Section 125 plans
• POP plans
• FSA’s (2013 law limits contributions to $2500)
• PPACA has a number of laws that impact cafeteria plans
PPACA enacted March 23, 2010
• Minimum Value
• Information Reporting on Health Insurance Coverage
• Disclosure of Return Information
• Small Business Health Care Tax Credit
• FSA’s (eliminated OTC drugs unless prescription is obtained)
• Medical Device Tax
• Health Insurance Premium Tax (2014)
• Health Coverage for older children (< age 27)
• Tax on Indoor Tanning Salons
• W-2 Health Coverage Reporting
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20. Employee Benefits Legal
Compliance
Employee Benefits Legal Compliance
PPACA (cont.)
• Medical Loss Ratio (rebates to consumers)
COBRA - Consolidated Omnibus Reconciliation Act of 1985
• Group health plans with 20 or more employees (50% rule)
• Part time employees are counted fractionally by hours
• Qualified Beneficiaries are eligible
• Review of Qualifying Events
• QB must notify plan administrator within 60 days
• The QB has 45 days from that date to pay initial premium
• Premium charges can be 102% of the premium
• Cobra disabled persons may extend the coverage 11 more months (29
months) plans may charge 150% of the premium]
• Medicare Entitlement 36 months
• State Mini Cobra
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21. Employee Benefits
Employee Benefits Legal Compliance
Family and Medical Leave Act of 1993
• Unpaid job protected leave for certain family and medical events
• Events include; childbirth, adoption, serious health condition of the
employee or immediate family member (spouse, child or parent)
• 12 weeks unpaid during any 12 month period
• Health Benefits must be maintained
• Military Caregiver and Qualifying Exigency Leave recently expanded
• 26 weeks for military care giver to a covered service member (includes
veterans
• Be mindful of State variations of the law
• Be mindful how FMLA defines the terms
• Incapable of Self Care or Instrumental Activities
• Physical or mental disability
• “in loco parentis”
• Posting notices/notice from employees
• Medical Recertification's
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22. Employee Benefits
Compliance
Employee Benefits Legal Compliance
Fringe Benefits
• Major forms of fringe benefits are health insurance plans, retirement plans
and paid time off
• Employees Gross income can be effected (auto usage) but will not be
reflected for benefits like moving expenses, retirement planning services,
meals etc.
Health Insurance – Related Laws
• CHIPRA
• COBRA
• ERISA
• FMLA
• GINA
• Mental Health Parity Act
• Mental Health Parity and Addiction Equity Act
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23. Employee Benefits
Compliance
Employee Benefits Legal Compliance
• Newborns’ and Mothers’ Health Protection Act
• USERRA
• Women’s Health and Cancer Rights Act of 1998
• HIPAA
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25. Employee Benefits
Compliance
Employee Benefits Legal Compliance
Summary Plan Description
• Employers over 100 lives must provide to all benefits participants
• What the plan provides
• How it operates
• When the employee can participate
• How service and benefits are calculated
• How to file claims and appeals
• Cost Sharing provisions
• How preventive services are covered
• Provisions for the use of network providers
• Provisions requiring pre-authorizations
• Annual 5500 filings required; plan numbers must match
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26. Employee Benefits
Employee Benefits Legal Compliance
Medicare Secondary Payer
• Medicare is not responsible for paying first
• Your group health plan pays first if the following conditions apply:
- 65 or older covered by your current employer
- Employer has 20 or more employees and covers the same services as
Medicare
- Medicare will pay amounts not paid by your group plan up to the
Medicare approved amounts.
• Medicare is secondary payer to:
- Group Health Insurance
- Auto/liability insurance
- Workers Comp
- Federal Black Lung
- Veterans Administration’
- End Stage Renal Disease
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27. Pensions
Pensions
• Defined Benefit Plan Disclosure Requirements (handouts)
• Defined Contribution Disclosure Requirements (handouts)
• 401 (k) Disclosure Requirements (handouts)
• 403 (b) Disclosure Requirements (handouts)
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28. Contact Information
Todd Whiteman Rick Enscoe
Property Casualty Employee Benefits
Enscoe Long Insurance Group, LLC Enscoe Long Insurance Group, LLC
80 Emerson Lane, Suite 1305 80 Emerson Lane, Suite 1305
Bridgeville, PA 15017 Bridgeville, PA 15017
412-206-0364 412-206-0363
twhiteman@enscoelong.com renscoe@enscoelong.com
www.enscoelong.com www.enscoelong.com
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