The Lilly Ledbetter Fair Pay Act of 2009 eliminates the 180-day statute of limitations for filing an equal pay claim, and clarifies that a discriminatory compensation decision occurs each time a discriminatory paycheck is issued.

Some common sense steps will allow you to avoid discriminatory compensation violations by ensuring fairness of compensation levels and adequacy of documentation.

Recommended Practices for Avoiding Discriminatory Pay Liability Under Ledbetter Act

To protect themselves under the Ledbetter Fair Pay Act, employers should:

1. Ensure you have policies and procedures for documenting the reasons for all compensation decisions.
2. Retain documents and data supporting all pay decisions indefinitely. You never know when an equal pay claim may arise, and now they can be based on events long ago, beyond the scope of staff members’ knowledge or memories.
3. Conduct periodic self-audits to make sure you can explain differences in pay between employees, and make any necessary adjustments.
4. Review past compensation decisions to determine if discriminatory decision-making has occurred, and correct any resulting inequities in current compensation levels.
5. When hiring new employees, analyze the compensation packages of all current employees in the same position, to make sure the candidate does not receive a significantly better package just to get him or her in the door.
6. Keep in mind that discriminatory performance reviews may also be actionable under the Act, because performance reviews are often the basis for compensation decisions.

With such changes to recordkeeping systems and periodic compensation reviews, employers can eliminate any discriminatory pay disparities in the workplace and reduce liability under the Ledbetter Act.

On October 28, 2009, President Obama signed the National Defense Authorization Act for Fiscal Year 2010, which includes the “Supporting Military Families Act of 2009.” This Act contains several amendments to the FMLA’s military leave provisions, and these amendments took effect immediately upon signing.

Photo credit: US Army

FMLA Changes for Employer to Implement Immediately

The new FMLA amendments, effective October 28, 2009:

1. Extend qualifying exigency leave to family members of service members in the regular Armed Forces, not just the National Guard or Reserves, as previously provided.
2. Eliminate the requirement that qualifying exigency leave must be in support of a contingency operation. Now, for members of the regular Armed Forces, covered active duty means duty during any deployment to a foreign country. For members of the Reserves, covered active duty means duty during deployment to a foreign country under a call or order to active duty.
3. Extend military caregiver leave to family members of veterans who were members of the Armed Forces (including the National Guard or Reserves) at any time within five years preceding the medical treatment, recuperation, or therapy necessitating the leave.
4. Revise the definition of “serious injury or illness” for military caregiver leave to include an injury or illness that existed before the beginning of the member’s active duty and was aggravated by service in the line of duty on active duty, whether. manifested before or after the member became a veteran.

Regulations regarding these amendments, as well as new FMLA forms incorporating these changes, will be coming soon. Because these rules are already in effect, employers must immediately revise their FMLA policies and procedures and employee handbooks to comply with these changes.

The federal Genetic Information Nondiscrimination Act (“GINA”) takes effect on November 21, 2009. GINA is a congressional response to scientific and medical advances, including advances in the ability to test DNA in ways that can reveal predisposition to disease or disability, among other personal information. Here is a brief summary of what employers need to know and do immediately about GINA.

Prohibition of Discrimination Based on Genetic Information

Under Title II of GINA, an individual’s genetic information is now among the characteristics protected by federal employment discrimination laws, along with race, sex, age, etc.

Genetic information is defined as information about:

• genetic tests of an individual;
• genetic tests of the individual’s family members;
• manifestation of a disease or disorder in the individual’s family members.

Genetic information does not include:

• information about any noticeable disease or symptoms of an individual that has been diagnosed, is symptomatic, or is being treated;
• information about the sex or age of an individual or the individual’s family member; or
• results of drug or alcohol tests.

GINA prohibits employer use of genetic information in hiring, firing, promotion, compensation, termination, or other terms and conditions of employment. It further prohibits use of such information to limit, segregate, or classify employees, or to deprive individuals of opportunities.

Limitations on Obtaining Genetic Information

Employers may not request or purchase genetic information about an employee or an employee’s family member (with limited exceptions). Employers also may not obtain such information, including family medical history, from job applicants, including during a post-offer medical examination and history. These prohibitions also apply when obtaining information during the ADA interactive process of seeking reasonable accommodation for employee.

Confidentiality

Any genetic information an employer may have must be treated as confidential medical information and stored in separate medical files.

Posting Requirement

As with many other employment laws, GINA includes a posting requirement in order to provide accurate information to applicants and employees.

The EEOC currently provides two options http://www1.eeoc.gov/employers/poster.cfm for meeting this requirement with free downloads:

1. a supplement to the existing “EEO is the law” poster; and
2. an amended “EEO is the law” poster.

Additionally, a number of companies provide commercial employment poster services, advantages of which may include that they combine state and federal posting requirements and that they provide larger, laminated posters and automatic updates, by subscription, for any required changes.

Health Insurance Requirements

Title I of GINA prohibits the use of genetic information by group or individual health insurers in setting eligibility or premium or contribution amounts. It does not, however, prohibit underwriting based on the individual’s current health status, and does not mandate coverage for any particular tests or treatments.

GINA also prohibits health insurers from requesting or requiring individuals to submit to genetic tests, but does not prevent treating physicians from requesting such tests.

Employees’ Rights and Remedies

Individuals have the same rights and remedies for violations of GINA as for violations of Title VII. These include reinstatement, hiring, promotion, back pay, injunctive relief, monetary and non-monetary damages (including compensatory and punitive damages), and attorneys’ fees and costs.

Employers Must Act Now

Regulations supporting GINA will be issued soon. In the meantime, employers must prepare for GINA immediately by:

• revising post-offer medical exams and histories to comply with GINA;
• reviewing policies and procedures to make sure genetic information is not otherwise sought; and
• posting the new EEOC poster or supplement.

A federal subsidy of continued health coverage under COBRA is one of the main “ease-the-pain” provisions of the Stimulus Act enacted February 17, 2009 (the American Recovery and Reinvestment Tax Act of 2009).

This provision is intended to keep the recession from swelling the ranks of the uninsured, by making COBRA coverage more affordable for involuntarily terminated employees and their dependents.

photo credit: Laertes via flickr

The new COBRA provision is effective immediately, and it retroactively benefits employees terminated involuntarily since September 1, 2008. The new employee COBRA rights are accompanied by new employer notice obligations.

The following is a summary of these new rights and obligations.

Stimulus Act COBRA Subsidy

Currently, COBRA allows continuation of health care coverage that would otherwise terminate due to specified “qualifying events,” but payment is the covered individuals’ responsibility.

In contrast, the Stimulus Act provides “assistance-eligible individuals” a federal subsidy of 65% of their normal COBRA premiums for up to 9 months.

• They can continue coverage under COBRA for 35% of the normal premium.
• The government pays the remaining 65% through payroll tax credits.
• This subsidy is not taxable income to “assistance eligible individuals.”

Who Qualifies as an “Assistance-Eligible Individual”?

The COBRA subsidy is available to employees and covered family members eligible for COBRA coverage between September 1, 2008, and December 31, 2009, if:

1. The reason for loss of health coverage is involuntary termination.
   • Involuntary termination is not defined in the Act. Employees permanently laid off for economic reasons obviously qualify.
   • The Conference Committee report explains that Congress intended to cover all involuntary terminations — even for cause — except those involving “gross misconduct” (COBRA is inapplicable to these anyway).
   • The subsidy is not available for other COBRA qualifying events (such as divorce, resignation, reduction in hours, or covered child attaining the age limit).
2. The individual properly elects COBRA coverage pursuant to new election rules allowing retroactive election in some situations in which COBRA would otherwise be unavailable (see below).

The COBRA subsidy is unavailable to taxpayers with modified adjusted gross incomes of over $145,000 ($290,000 for joint filers) or their dependents.

• Any subsidy payments improper under this rule will be recaptured through additions to income tax for the year in which received.
• This recapture phases in pro rata for taxpayers with modified adjusted gross income over $125,000 ($250,000 joint).
• Because taxable income is not determined until the tax year is over, relatively highly-paid individuals may be able to benefit from the subsidy, subject to recapture. They also have the express right to waive the opportunity to this benefit, avoiding any possible tax issues.

“Different Coverage” COBRA Option Under Stimulus Act

Assistance-eligible individulas may receive the subsidy for coverage different than they had while employed, but only if:

1. The employer chooses to offer this different coverage.
2. The unsubsidized premium for such coverage is no higher than the premium for their coverage during employment.
3. Such coverage is also offered to active employees at the time.
   • It is unclear whether this means active employees must be able to change to the different coverage immediately — rather than only at normal open enrollment times — or only that it must be an option available to active employees under normal election procedures.
4. The different coverage is not one of the following:
   • Coverage providing only dental, vision, counseling, and/or referral services
   • A flexible spending arrangement.
   • Coverage consisting primarily of first-aid services, prevention and wellness care, and/or similar care in an employer-maintained on-site medical facility.
5. The individual elects the different coverage within 90 days after notice of this option.

Extended Election Period Under Stimulus Act

The Act provides an extended election period to assistance-eligible individuals who did not initially make a timely COBRA election or who did so but lost COBRA coverage due to premium nonpayment:

• They may elect subsidized COBRA between the Act’s enactment date (February 17) and 60 days after receiving notification of the Act’s subsidy provisions.
• If they do, subsidized COBRA is not retroactive to the termination date as if a timely election had been made initially. Rather, it starts with the first coverage period after the enactment date. (For a typical plan whose coverage periods are calendar months, such coverage will begin March 1, 2009.)
• Coverage elected under the extended election period terminates when it would have if elected during the original election period.

New Employer COBRA Notice Obligations Under Stimulus Act

Who Is Entitled to Notice?

The new notice obligations apply to three groups of assistance-eligible individuals:

1. Those who lost coverage on or after September 1, 2008, but before the Act’s enactment, who are already receiving COBRA coverage or are still in their initial COBRA election period.
2. Those who lost coverage on or after September 1, 2008, but before the Act’s enactment, who are not receiving COBRA because their initial election period expired and they did not elect COBRA or they elected it but their coverage was cancelled for premium nonpayment.
3. Those losing coverage due to involuntary termination after the Act’s enactment.

Notice to the first two groups of individuals requires a special effort to identify them all and retroactively provide them with the additional information required (seel below).

Notice to the third group can be accomplished going forward by promptly changing existing COBRA notice procedures.

Notice may be accomplished by amending existing notice forms or using a separate document.

What Must Notices Say?

Notices must include these facts:

1. That premium subsidy is available, and under what conditions (displayed prominently).
2. That the option to enroll in different coverage is available — if the employer permits this.
3. Description of extended election period and duration of coverage if elected during this period.
4. Name, address, and phone number of plan administrator and anyone else maintaining relevant information in connection with premium subsidy.
5. Description of obligation to notify plan if a covered individual becomes eligible for coverage under another group health plan or for benefits under Title XVIII of the Social Security Act (events terminating COBRA) and the penalty for failure to do so.

When Must Notices Be Sent?

Notices must be sent within 60 days of the February 17, 2009, enactment.

The Department of Labor is to prepare model notices within 30 days of enactment.

Therefore, employers will have to be ready to implement the new model notices on very short notice (30 days following DOL preparation of the model notices, if DOL is on time). Employers can prepare their own notices and forms, but it is probably preferable to use government-specified ones.

In the meantime, employers should prepare a list of all assistance-eligible individuals entitled to notice based on terminations before enactment (not just employees, but all covered family members).

For assistance-eligible individuals involuntarily terminated after enactment but before the DOL notices are available, employers’ options include:

• Sending the current COBRA notice, following up with a second notice on the subsidy when the DOL provides its notices.
• Sending the current COBRA notice, with an accompanying insert briefly mentioning the new subsidy and stating they will soon receive more detailed information and forms.
• Preparing a complete, tailor-made notice and form and beginning full compliance immediately.

Mechanics of Implementing COBRA Subsidy Under Stimulus Act

Assistance-eligible individuals pay only the 35% portion of COBRA premium. Then “the person to whom premiums are payable” will be reimbursed the remaining 65% by having it treated as as payroll taxes paid. Specifically:

• The remaining 65% will be a credit offsetting payroll tax liability.
• If it exceeds payroll tax liability, it will be credited or refunded as if it were an overpayment of payroll taxes.
• The credit is claimed on Line 12a of the January 2009 revision of Form 941, with the number of individuals provided COBRA premium assistance disclosed on Line 12b.

The following supporting documentation for the credit must be maintained, according to the IRS:

• Information on receipt of assistance-eligible individuals’ 35% premium shares, including dates and amounts,
• For insured plan, copy of invoice or other supporting statement from insurance carrier and proof of timely payment of full premium to insurance carrier
• For self-insured plan, proof of premium amount and coverage provided to assistance-eligible individuals
• Attestation of involuntary termination, including date, for each covered employee whose involuntary termination is the basis for subsidy eligibility
• Proof of each assistance-eligible individual’s eligibility for COBRA coverage between September 1, 2008, and December 31, 2009, and of their election of COBRA coverage
• SSN’s of all covered employees, amount of subsidy reimbursed for each, and whether subsidy was for 1 person or 2 or more

In most instances, the employer is “the person to whom premiums are payable,” who may claim the reimbursement, except where coverage is through a multiemployer plan, in which case the plan itself can claim the reimbursement.

The IRS and Treasury will be providing further details regarding this credit process through regulations.

Employers’ Action Checklist

• Calendar the notice deadline — 60 days after February 17, 2009 (February 18, 2009).
• Decide whether to offer a different coverage option to assistance-eligible individuals.
• Coordinate efforts with insurer, multiemployer plan, or third-party administrator, as appropriate, including determining who will issue notices, collect COBRA premiums from assistance eligible individuals, and recover.
• Identify all assistance-eligible individuals based on involuntarily terminations since September 1, 2008.
• Decide whether to create your own notices and forms or await those from the DOL.
• Begin coordinating with payroll department or payroll service as needed to recover the COBRA subsidy through payroll tax credit using revised IRS Form 941.
• Establish procedures for handling elections of subsidized COBRA by individuals who already paid in full, through rebates or credits against future payments.

We will continue to analyze this new legislation and will provide further updates to you as we become aware of them. In the meantime, we would be happy to discuss your compliance strategy, and help you begin complying with the new requirements.

Useful Links

• IRS Press Release February 26, 2009: IRS Releases Information to Help Employers Claim COBRA Medical Coverage Credit on Payroll Tax Form
• IRS FAQs: COBRA — Answers for Employers
• Department of Labor Stimulus Act COBRA Table of Contents
• Department of Labor COBRA FAQs (general FAQs on COBRA, updated with Stimulus Act information)
• Department of Labor FAQs About COBRA Premium Reduction For Workers And Their Families

In November 2006, Missouri voters approved an increase in Missouri minimum wage from $5.15 an hour to $6.15, with automatic annual increases thereafter to match increases in the Consumer Price Index.

Federal minimum wage law permits states to impose higher rates, which is now the case in Missouri, as the federal minimum, at $6.55, is significantly lower than the Missouri. For all employers subject to the Missouri law, the higher Missouri rate prevails.

Pursuant to the 2006 law, Missouri minimum wage increased to $6.65 an hour in 2007.

Effective January 1, 2009, it became $7.05 per hour. For tipped employees, the minimum rate is now $3.52 per hour.

Factors Reducing the Impact of the Increase in Missouri Minimum Wage

Missouri businesses with annual gross income below $500,000 are exempt.

Many businesses are not affected because they are already paying a higher rate in order to attract and retain good workers.

And, as one commentator points out, the federal minimum wage is rising later in 2009 as well, and then, at least for a while, Missouri will not be out of step with the rest of the nation:

When the federal minimum rises in July to $7.25 an hour, it will trump the Missouri minimum, taking some fuel from the state opponents’ fire. But, because the Missouri voters tied state increases to CPI changes, the controversy is likely to continue with each annual change…unless opponents succeed in overturning the law.

Update Your Posters

There is a new poster reflecting the new rate. It is available for free download at http://www.dolir.mo.gov/posters2.htm. Fancier versions (e.g., colored, laminated, combined with other required state and federal posters, etc.) are available from many commercial sources.

For More Information About Missouri Minimum Wage, See FAQs About Missouri′s Minimum Wage Law from Missouri Department of Labor Standards