employment, benefits & labor alerts...nlrb issues third report on social media in the workplace...

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Employment, Benefits & Labor Alerts:JUNE 2012 – MAY 2013

w w w . B l a n k R o m e . c o m

•NLRBIssuesThirdReportonSocialMediaintheWorkplaceJune 2012 (No. 21)

•SupremeCourtAffirmsthatFLSA“OutsideSalesperson”ExemptionIncludesPharmaceuticalSalesRepresentativesJune 2012 (No. 22)

•NLRBReleasesNewWebpageDescribingProtectedConcertedActivityJune 2012 (No. 23)

•FederalCourtDismissesFormerEmployee’sLactationRightsClaimbutAllowsRetaliationClaimtoProceedJuly 2012 (No. 24)

•NLRBandEEOCQuestionWorkplaceInvestigationPracticesAugust 2012 (No. 25)

•EEOCIssuesDraftStrategicEnforcementPlanSeptember 2012 (No. 26)

•NLRBIssuesSocialMediaDecisionInLineWithActingGeneralCounselReportsSeptember 2012 (No. 27)

•NewJerseyEmployersTakeNotice:NewPayEqualityPostingandNoticeRequirementsOctober 2012 (No. 28)

•NationalLaborRelationsBoardIssuesFirstDecisionAddressing“FacebookFirings”October 2012 (No. 29)

•EEOCIssuesNewGuidanceRelatingtoVictimsofDomesticViolence,SexualAssault,andStalkingOctober 2012 (No. 30)

•NationalLaborRelationsBoardReleasesGuidanceOnAt-WillEmploymentPoliciesNovember 2012 (No. 31)

•InclementWeatherWageandHourIssuesNovember 2012 (No. 32)

•SupremeCourtHearsArgumentsonSupervisorQualificationunderTitleVIINovember 2012 (No. 33)

•EEOCApprovesStrategicPlanEstablishingEnforcementPrioritiesDecember 2012 (No. 34)

•Reminder:AnnualNewYorkWageTheftPreventionActNoticesDueByFebruary1,2013January 2013 (No. 1)

•SignificantLabor&EmploymentDecisionsInStoreFor2013January 2013 (No. 2)

•CourtRulesObamaRecessNLRBAppointmentsUnconstitutionalJanuary 2013 (No. 3)

•NLRBFindsthatEmployeeHandbookPoliciesViolateEmployees’RightsJanuary 2013 (No. 4)

Employment,Benefits&LaborAlerts:June2012–May2013

Full text for these Alerts can be downloaded at www.blankrome.com/EBL2013.

#EBLTrends

•LawsAndRegulationstoWatchin2013January 2013 (No. 5)

•EEOCSaysTerminatingWorkersAfterOneYearofDisabilityLeaveViolatestheADAFebruary 2013 (No. 6)

•DOLIssuesFinalRuleImplementingFMLAAmendmentsRelatingtoMilitaryCaregiversandAirlineFlightCrewsFebruary 2013 (No. 7)

•OFCCPIssuesDirectivetoFederalContractorsontheUseofCriminalRecordsintheHiringProcessFebruary 2013 (No. 8)

•H-1BVisaCapSeasonBeginsApril1,2013February 2013 (No. 9)

•OSHAInvitesPublicCommentonProposedWhistleblowerProtectionsforAffordableCareActFebruary 2013 (No. 10)

•OFCCPRescindsPriorGuidanceandIssuesNewDirectiveRelatingtoPayDiscriminationMarch 2013 (No. 11)

•SecondCircuitClarifiesLiabilityStandardforNon-EmployeeWorkplaceHarassmentClaimsMarch 2013 (No. 12)

•NewFormI-9forEmploymentEligibilityVerificationMarch 2013 (No. 13)

•ThirdCircuitClarifiesStandardforWhistleblowerProtectionUnderSarbanes-OxleyActMarch 2013 (No. 14)

•SecondCircuitHoldsthatArbitrationAgreementsMayBarTitleVIIPattern-or-PracticeDiscriminationClaimsMarch 2013 (No. 15)

•NewNYCLawProtectstheUnemployedfromBiasinHiringMarch 2013 (No. 16)

•SupremeCourtRulingRegardingFLSACollectiveActionLawsuitLeavesImportantQuestionsUnansweredApril 2013 (No. 17)

•SupremeCourtConfirmsThatEquityCannotTrumpClearERISAPlanTermsApril 2013 (No. 18)

•NationalLaborRelationsBoardAgainTargetsEmployerPoliciesMay 2013 (No. 19)

•D.C.CircuitVacatesNLRBRuleRequiringPostingofNoticeofEmployeesRightsMay 2013 (No. 20)

•ThirdCircuitJoinsD.C.CircuitinRulingRecessAppointmentsUnconstitutionalMay 2013 (No. 21)

•EEOCProvidesUpdatedGuidanceRegardingDisabilityDiscriminationMay 2013 (No. 22)

EMPLOYEEBENEFITS&EXECUTIVECOMPENSATIONUPDATES

•WhattheSupremeCourt’sDecisiononHealthCareReformMeansforEmployersJune 2012 (No. 1)

•COLAIncreasesforDollarLimitationsonBenefitsandContributionsOctober 25, 2012 (No. 2)

•DepartmentsIssueProposedRegulationsonWellnessProgramsUnderHealthCareReformNovember 2012 (No. 3)

•AffordableCareActGuidanceonMinimumValueMarch 2013 (No. 1)

Full text for these Alerts can be downloaded at www.blankrome.com/EBL2013.

#EBLTrends

NLRB Issues Third Report on Social Media in the WorkplaceJune 2012 (No. 21)

Employment, Benefits & Labor Alert

National Labor Relations Board ("NLRB") Acting General Counsel Lafe E. Solomon recently issued a third report reviewing seven NLRB decisions involving employer policies governing the use of social media. The report supplements two prior reports issued in January 2012 and August 2011 by the NLRB.

In the detailed decisions, the NLRB found policy provisions in six employer social media policies to be unlawful when they interfered with the rights of employees under the National Labor Relations Act (“NLRA”). The memo reviews one social media policy the NLRB found to be lawful.

The memo provides that ambiguous policies without limiting language or context are more likely unlawful, while “rules that clarify or restrict their scope by including examples of clearly illegal or protected conduct, such that they could not reasonable be construed to cover protected activity, are not unlawful.” Further, the NLRB continued to find that inclusion of a “savings clause,” providing a policy will be administered in compliance with the NLRA, will not cure an otherwise overbroad or ambiguous policy.

In light of these decisions, employers should look carefully at their social networking and disciplinary policies to ensure compliance with the NLRA. If you would like further information about the NLRB's social media report or other information about social media policies, please contact a member of Blank Rome LLP's Employment, Benefits and Labor Practice Group.

Notice: The purpose of this alert is to review the latest developments which are of interest to clients of Blank Rome LLP. The information contained herein is abridged from legislation, court decisions, andadministrative rulings and should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.

SERVICESEmployment, Benefits & Labor

PROFESSIONALSLauren Fox

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Supreme Court Affirms that FLSA "Outside Salesperson" Exemption Includes Pharmaceutical Sales RepresentativesJune 2012 (No. 22)

Employment Benefits & Labor Alert

The Supreme Court of the United States issued an opinion today in Christopher v. SmithKline Beecham Corp., affirming, in a 5-4 decision, the Court of Appeals for the Ninth Circuit's holding that SmithKline Beecham does not have to pay overtime to its pharmaceutical sales representatives. The Supreme Court found that pharmaceutical sales representatives, who visit doctors' offices to discuss pharmaceutical products and obtain nonbinding commitments to prescribe those pharmaceuticals, are "outsides sales people" exempt from the overtime pay requirements of the Fair Labor Standards Act("FLSA").

The FLSA generally requires employers to pay employees overtime pay, but includes limited exemptions for certain employee classifications, including "outside salesmen." InChristopher, the Court analyzed whether pharmaceutical sales representatives made sales within the meaning of the FLSA or merely promoted products to doctors. The Court, rejecting the Department of Labor's narrow interpretation of the exemption as"quite unpersuasive," utilized a functional inquiry into the employees' duties and responsibilities in the context of the pharmaceutical industry's "unique regulatory environment" and concluded that the employees made sales as contemplated by the FLSA. The Court also reasoned that pharmaceutical sales representatives, who are typically well-compensated, were "hardly the kind of employees that the FLSA was intended to protect." The Court therefore concluded that the employees were exempt from the FLSA's overtime requirement.

In light of this decision, employers should review their classification of employees under the FLSA. If you would like further information about the Supreme Court's opinion in Christopher v. SmithKline Beecham and how it may impact your Company, please contact a member of Blank Rome LLP's Employment, Benefits and Labor Practice Group.




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NLRB Releases New Webpage Describing Protected Concerted ActivityJune 2012 (No. 23)


The National Labor Relations Board ("NLRB") recently released a webpage highlighting the rights of employees "to act together to try to improve their pay and working conditions or fix job-related problems, even if they aren't in a union." The webpagedescribes recent NLRB cases from across the country involving protected concerted activity and other rights protected by the National Labor Relations Act. This initiative may signal the NLRB's intent to expand its activity in non-union workplaces.

If you would like further information, please contact a member of Blank Rome LLP's Employment, Benefits and Labor Practice Group.




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Federal Court Dismisses Former Employee's Lactation Rights Claim but Allows Retaliation Claim to ProceedJuly 2012 (No. 24)


A federal district court in Iowa recently held, in Salz v. Casey's Marketing Company, that a former employee cannot maintain a lawsuit under the Fair Labor Standards Act ("FLSA") for an employer's failure to provide reasonable break time and a private space to express breast milk, but that retaliation claims relating to complaints concerning lactation rights may proceed in court. As previously reported, employers with 50 or more employees must provide reasonable break times and a private space for mothers to express milk for one year following a child's birth. In Salz, a former employee alleged that her employer failed to provide a secure and private place to express milk and discharged her after she complained. The court dismissed the claim for violation of lactation rights, holding that an employee may only pursue such a claim by filing a complaint with the United States Department of Labor. However, the Salz court held that the former employee's retaliation claim could proceed in court, as contemplated by the FLSA's anti-retaliation provision.

This decision serves as an important reminder that employers should review their policies and practices with respect to break time requested by nursing mothers. In addition, employers should ensure that they do not retaliate in any way against employees who request such break time.

If you would like further information about this recent case or the FLSA's break time requirement, please contact a member of Blank Rome LLP's Employment, Benefits and Labor Practice Group.

Notice: The purpose of this alert is to review the latest developments which are of interest to clients of Blank Rome LLP. The information contained herein is abridged from legislation, court decisions, and administrative rulings and should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.


PROFESSIONALSRichard W. Diaz

Julie E. Reid

www.BlankRome.com

NLRB and EEOC Question Workplace Investigation PracticesAugust 2012 (No. 25)

Employment, Benefits & Labor

Federal agencies have recently shown increased interest in how employers conductworkplace investigations pursuant to the laws they are charged with protecting. First, in Banner Estrella Medical Center, the National Labor Relations Board (the "Board") ruled that a hospital's blanket prohibition on employee discussion of workplace investigations violated the National Labor Relations Act ("NLRA"). In that case, the employer directed employees making a complaint to refrain from discussing the matter with their coworkers while the investigation was ongoing. According to the Board, the blanket prohibition violated the NLRA by infringing on employees' rights to engage in protected, concertedactivity.

Shortly thereafter, according to Lorene F. Schaefer, Esq., of One Mediation, the U.S. Equal Employment Opportunity Commission's Buffalo, NY office stated that, in connection with a discrimination charge, it would investigate whether an employer'swritten policy, warning all employees who participate in internal investigations of harassment that they could be subject to discipline or discharge for discussing "the matter," violates Title VII's anti-retaliation provisions.

These developments call into question practices that many employers utilize in trying tomaintain the confidential nature of investigations.

If you would like further information about these developments or conducting workplace investigations in general, please contact a member of Blank Rome LLP's Employment,Benefits and Labor Practice Group.



PROFESSIONALSRichard W. Diaz

www.BlankRome.com

EEOC Issues Draft Strategic Enforcement PlanSeptember 2012 (No. 26)


On February 22, 2012, the Equal Employment Opportunity Commission ("EEOC") approved a Strategic Plan for Fiscal Years 2012-2016, which included a directive to the EEOC to establish EEOC priorities and to integrate the agency's various responsibilities. Pursuant to that directive, the EEOC recently released a draft Strategic Enforcement Plan ("SEP") for public comment.

The draft SEP highlights five distinct national priorities: (1) eliminating systemic barriers in recruitment and hiring, specifically class-based intentional hiring discrimination and facially neutral hiring practices that have an adverse impact on certain groups; (2)protecting immigrant, migrant and other vulnerable workers; (3) addressing emerging issues, including interpretation and application of the ADA Amendments Act and LGBT (lesbian, gay, bisexual and transgender) coverage under Title VII; (4) preserving access to the legal system, including retaliation and overly-broad waivers; and (5) combating harassment.

Public comments are due by September 18, 2012, 5:00 pm EST and may be submitted by e-mail to [email protected]. The SEP is set to take effect October 1, 2012, and will remain in effect through September 2016 (or until a new SEP is approved by theEEOC).

If you would like further information about the EEOC and its initiatives, please contact a member of Blank Rome LLP's Employment, Benefits and Labor Practice Group.



PROFESSIONALSHarrison Lee

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NLRB Issues Social Media Decision In Line With Acting General Counsel ReportsSeptember 2012 (No. 27)


In its first decision addressing the validity of an employer's social media policy, the National Labor Relations Board ("NLRB") recently invalidated Costco's handbook policy that prohibited employees from electronically posting messages that "damage the Company, defame any individual or damage any person's reputation." See Costco Wholesale Corp., 358 NLRB No. 106. The NLRB found that Costco's employees could reasonably construe the policy as regulating and chilling their right to engage in protected, concerted activity. The NLRB reasoned that "employees would reasonably conclude that the rule requires them to refrain from engaging in certain protected communications (i.e., those that are critical of the Respondent or its agents)."

The NLRB's Costco decision comes on the heels of and aligns with Acting General Counsel Lafe Solomon's prior reports on social media policies, which we reported on in August 2011, February 2012, and June 2012. The decision also serves as a reminder to employers to review the scope of their social media policies and to carefully analyze how they may be construed. The NLRB will likely continue to scrutinize overbroad employer policies and handbooks in an effort to invalidate those that it deems to violate employee rights under the National Labor Relations Act.

If you would like further information about the NLRB's decision and its potential impact on your business or social media policies, please contact a member of Blank Rome LLP's Employment, Benefits and Labor Practice Group.

Notice: The purpose of this alert is to review the latest developments which are of interest to clients of Blank Rome LLP. The information contained herein is abridged from legislation, court decisions, and administrative rulings and should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.



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New Jersey Employers Take Notice: New Pay Equality Posting and Notice RequirementsOctober 2012 (No. 28)


New Jersey Governor Chris Christie recently signed into law new posting and notice requirements for employers, scheduled to take effect November 21, 2012, relating to pay equality under state and federal law. The law, which applies to employers with 50 or more employees, directs employers to "conspicuously post" a notice that details employees' "rights to be free of gender inequity or bias in pay, compensation, benefits or other terms or conditions of employment" under the New Jersey Law Against Discrimination, Title VII of the Civil Rights Act of 1964, and the Equal Pay Act.

In addition to the posting requirement, the law also requires covered employers to distribute a written copy of the notification to each employee (i) within 30 days after the notification form is issued by the New Jersey Department of Labor and Workforce Development ("NJDLWD"); (ii) at the time of an employee's hiring; (iii) annually on or before December 31; and (iv) any time upon first request by an employee. Employers arepermitted to distribute the notice via email, printed material (i.e., pay check insert, brochure, handbook, flyer), or through the employer's internet/intranet site (if the site is for the exclusive use of employees, can be accessed by all employees, and the employerprovides notice to employees of the posting). Upon receipt of the notice, employees will be required to sign an acknowledgement – which must be included with the notice form –and return it to the employer within 30 days. The law requires employers to post anddistribute notices in English, Spanish, and any other language which an employer believes is the first language of a significant number of its employees (if notification in such language is made available by the NJDLWD).

If you would like further information about these New Jersey requirements or other state or federal posting and notice requirements, please contact a member of Blank Rome LLP's Employment, Benefits and Labor Practice Group.




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National Labor Relations Board Issues First Decision Addressing "Facebook Firings"October 2012 (No. 29)


The National Labor Relations Board ("NLRB") recently issued its first decisionaddressing the legality of a termination for an employee's Facebook postings. In Karl Knauz Motors (Case 13–CA–046452), the NLRB adopted an administrative law judge's findings that a car dealership lawfully discharged a salesman due to Facebook postshighlighting an accident at an affiliated dealership that – according to the employer –damaged the reputation of the company and the individuals involved in the accident. The NLRB determined that the salesman's Facebook posts did not involve concerted activity protected by the National Labor Relations Act.

This decision is consistent with the NLRB's increased focus on social media postings and policies, and the NLRB is likely to issue more decisions on these topics in the coming months. If you would like further information about this decision or best practices for social media policies, please contact a member of Blank Rome LLP's Employment,Benefits and Labor Practice Group.



PROFESSIONALSCara S. Friedlander

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EEOC Issues New Guidance Relating to Victims of Domestic Violence, Sexual Assault, and StalkingOctober 2012 (No. 30)


The U.S. Equal Employment Opportunity Commission (EEOC) recently issued guidancehighlighting how Title VII of the Civil Rights Act of 1964 (Title VII) and the Americans withDisabilities Act (ADA) may apply to situations involving applicants and employees who experience domestic or dating violence, sexual assault, or stalking. The guidance provides several examples of employment decisions based on an applicant's or employee's experience with such conduct that may violate Title VII or the ADA. The examples include situations involving stereotypes based on sex or mental illness and caution employers about avoiding disparate treatment, harassment, and retaliation based upon sex or an actual or perceived disability. The guidance serves as an important reminder for employers to ensure that human resources and managementpersonnel are sensitive to these issues.

If you would like further information about this EEOC guidance or about preventingdiscrimination or harassment in general, please contact a member of Blank Rome LLP's Employment, Benefits and Labor Practice Group.



PROFESSIONALSJulie E. Reid

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National Labor Relations Board Releases Guidance On At-Will Employment PoliciesNovember 2012 (No. 31)


The National Labor Relations Board ("NLRB") recently released memoranda analyzingat-will employment clauses in two employee handbooks that the NLRB concluded do not violate the National Labor Relations Act ("NLRA"). Earlier this year, the NLRB determined that a broadly-worded at-will agreement would violate labor law if it precluded an employee from engaging in concerted activity to change his or her at-willstatus.

The new memoranda concern charges alleging that the at-will clauses of a California trucking company and a restaurant in Arizona were so broad that their employees reasonably would think that they could not engage in concerted activity to alter their at-will status. The NLRB explained, however, that one clause explicitly stated that the at-will employment relationship could be changed, so employees would not reasonably assume that their NLRA rights were prohibited. As to the other clause, the NLRB noted that it did not require employees to agree that the employment relationship could not be changed in any way, but merely highlighted that the employer's representatives are not authorized to change it. Thus, neither of the subject clauses reasonably would be interpreted to restrict an employee's rights to engage in concerted activity to change his or her at-will status.

The law involving employee handbook provisions that restrict the future modification of an employee's at-will status remains unsettled. If you have questions about your own at-will employment policies, please contact a member of Blank Rome LLP's Employment,Benefits and Labor Practice Group.




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Inclement Weather Wage and Hour IssuesNovember 2012 (No. 32)


Inclement weather can raise unique wage and hour issues under the Fair Labor Standards Act. While employee safety always should be a paramount consideration in the event of inclement weather, employers also must remain mindful of wage and hour implications.

With respect to exempt employees, for example, employers may not dock their pay ifthey are sent home on account of inclement weather after working a partial day. The employer must pay them for the entire day. If an exempt employee misses a full day of work when the workplace is open, however, the employee's salary may be deducted for the missed time. In the event the workplace is closed for less than a week, generally the exempt employees must be paid for those days although an employer may require an exempt employee to use paid time off to the extent it is permissible under state law. An employer does not need to pay an exempt employee if the workplace is closed for anentire week and the employee performs no work during that week.

Non-exempt employees generally only must be paid for the hours they actually work. Accordingly, an employer ordinarily does not need to pay non-exempt employees for hours not worked if they were scheduled to work but sent home early for inclement weather. Some states, however, have "reporting time pay" laws that may require an employer to pay a non-exempt employee a specified amount for showing up to work even if the employee is sent some because of inclement weather.

If you have questions about how to handle your own weather-related wage and hour issues, please contact a member of Blank Rome LLP's Employment, Benefits and Labor Practice Group.



PROFESSIONALSMichael L. Ludwig

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Supreme Court Hears Arguments on Supervisor Qualification under Title VIINovember 2012 (No. 33)


On November 26, 2012, the U.S. Supreme Court heard oral arguments in Vance v. Ball State University, a case that may resolve a split between the federal appellate courts regarding the definition of a "supervisor" for purposes of employer liability under Title VII. The First, Seventh, and Eighth Circuits have held previously that to be a supervisor, an employee must have the power to hire, fire, demote, promote, transfer or discipline other employees. By contrast, the Second, Fourth, and Ninth Circuits have held that any employee with the authority to direct and oversee an alleged victim's daily work may be considered a supervisor for purposes of Title VII. The distinction is significant because if an alleged harasser is a supervisor, the employer generally will be held vicariously liablefor the supervisor's conduct unless the employer can prove that it had an effective anti-harassment policy in place and the employee failed to utilize the employer's preventative or corrective measures. The Supreme Court is expected to issue its decision by next June.

The Vance case is an important reminder that employers should work to ensure that employees who may be considered supervisors understand the breadth of potential employer liability under Title VII. If you have questions about the Vance case or Title VII, please contact a member of Blank Rome LLP's Employment, Benefits and Labor Practice Group.




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EEOC Approves Strategic Plan Establishing Enforcement Priorities December 2012 (No. 34)


The U.S. Equal Employment Opportunity Commission ("EEOC") recently approved aStrategic Enforcement Plan to establish national enforcement priorities and integrate enforcement responsibilities throughout the EEOC's various offices. The Plan promotes more strategic use of agency resources, which the EEOC hopes will have a "sustainableimpact" in reducing and deterring discriminatory workplace practices. The Plan identifies six national priorities: (1) eliminating barriers in recruitment and hiring; (2) protectingimmigrant, migrant and other vulnerable workers; (3) addressing emerging and developing employment discrimination issues; (4) enforcing equal pay laws; (5) preserving access to the legal system; and (6) preventing harassment through systemic enforcement and targeted outreach. In addition to the national priorities, the Plan also seeks the development of local and federal sector priorities and seeks to ensure "consistent and integrated enforcement" throughout the private, public, and federal sectors.

If you would like further information about the EEOC's Strategic Enforcement Plan or initiatives, please contact a member of Blank Rome LLP's Employment, Benefits and Labor Practice Group.




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Reminder: Annual New York Wage TheftPrevention Act Notices Due By February 1, 2013January 2013 (No. 1)

Employment, Benefits and Labor

As previously reported, the New York Wage Theft Prevention Act(“WTPA”) requires employers with employees in New York to provide anannual written Notice of Pay Rate to their New York employees betweenJanuary 1 and February 1 of each year. The notices must be given to allNew York employees, including exempt employees such as executivesand managers, and are required even if an employee’s pay rate has notchanged in the past year.

The notices must be provided in English and in any other primarylanguage used by an employee (if the New York State Department ofLabor has provided notice templates for that language). Noticetemplates presently are available in English, Spanish, Chinese, Korean,Polish, Russian and Haitian Creole. Employers must have eachemployee sign and date the notice, and are required to maintain allnotices and employee acknowledgements for six years. Employers whofail to timely provide notices may be assessed damages of up to $50per week, per employee.

If you would like further information about the New York WTPA noticerequirement or other wage and hour compliance issues, please contacta member of Blank Rome LLP's Employment, Benefits and LaborPractice Group.Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion,and is not a substitute for the advice of counsel.

SERVICESEmployment,Benefits &Labor

PROFESSIONALSRichard W.Diaz

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http://www.blankrome.com/index.cfm?contentID=37&itemID=2673

http://www.labor.ny.gov/formsdocs/wp/ellsformsandpublications.shtm

http://www.labor.ny.gov/formsdocs/wp/ellsformsandpublications.shtm



Significant Labor & Employment Decisions InStore For 2013January 2013 (No. 2)


In 2012, the Supreme Court of the United States, several state SupremeCourts, and the National Labor Relations Board (“NLRB”) issued anumber of significant labor and employment law decisions. As a newyear begins, employers should be aware of the following cases that areexpected to set important labor and employment precedents in 2013:

Vance v. Ball State University

As previously reported, on November 26, 2012, the Supreme Court ofthe United States heard oral argument in this case to resolve a splitbetween federal appellate courts regarding the definition of a“supervisor” for purposes of liability under Title VII. Specifically, theCourt will decide whether “supervisor” liability: (1) applies broadly to allemployees who an employer vests with the authority to direct andoversee an alleged victim’s daily work; or (2) is limited to those who havethe power to “hire, fire, demote, promote, transfer, or discipline.” TheCourt’s determination will have a significant impact on employerexposure to Title VII lawsuits, workforce management, andanti-harassment training.

Genesis HealthCare v. Symczyk

In this important Fair Labor Standards Act (“FLSA”) case, the SupremeCourt of the United States will determine whether an FLSA collectiveaction becomes moot after the named plaintiff receives an offer ofjudgment that provides full relief. In the decision under review, theUnited States Court of Appeals for the Third Circuit held that a motion forconditional certification of a collective action “relates back” to the datethe complaint was originally filed and is not affected by an offer ofjudgment absent undue delay by the named plaintiff. By contrast, the



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Ninth and Eleventh Circuits have held that a full offer of judgment to thenamed plaintiff does moot a putative collective action. The Court’sresolution of this circuit split is expected to impact an important tool thatemployers have relied upon in an effort to confront the recent deluge ofcollective wage-and-hour litigation.

D.R. Horton Inc. v. NLRB

In February, the United States Court of Appeals for the Fifth Circuit willhear D.R. Horton’s appeal of a NLRB ruling that class action waivers inemployee arbitration agreements violate federal labor law. The controversial NLRB decision called into question the growing practice ofincluding class action waivers in employee arbitration agreements. Although the Fifth Circuit’s decision will be noteworthy, many observersexpect this case to reach the Supreme Court of the United States.

University of Texas Southwestern Medical Center v. Nassar

On January 18, 2013, the Supreme Court of the United States agreed toconsider whether Title VII’s retaliation provision, and similarly wordedstatutes, require a plaintiff to prove a more arduous but-for causation –that an adverse action would not have been taken by an employer butfor a retaliatory motive – or instead require proof only that the employerhad a mixed motive, meaning that a retaliatory motive was one of severalreasons for the adverse employment action. The Court’s decision isexpected to provide much-desired clarity on the standard of proof.

If you would like further information about any of these cases, pleasecontact a member of Blank Rome LLP's Employment, Benefits andLabor Practice Group.Notice: The purpose of this alert is to review the latest developments which are ofinterest to clients of Blank Rome LLP. The information contained herein is abridgedfrom legislation, court decisions, and administrative rulings and should not beconstrued as legal advice or opinion, and is not a substitute for the advice of counsel.

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Court Rules Obama Recess NLRB AppointmentsUnconstitutionalJanuary 2013 (No. 3)


A unanimous three-judge panel from the District of Columbia CircuitCourt of Appeals announced a decision in Noel Canning v. NLRB thatoverturned President Obama’s controversial National Labor RelationsBoard (“NLRB”) recess appointments from last year. The Court held thatthe President abused his powers by appointing three NLRB members onJanuary 4, 2012 during a brief Senate recess. The Court found that thePresident can make recess appointments only when the Senate hasformally adjourned between sessions. Considering the “text, history, andstructure of the Constitution,” the Court reached the “inescapableconclusion that the Framers intended something specific by the term ‘theRecess,’ and that it was something different than a generic break inproceedings.” The NLRB no longer has a quorum to operate as a resultof this ruling.

If you would like further information about this ruling, please contact amember of Blank Rome LLP's Employment, Benefits and Labor PracticeGroup.Notice: The purpose of this alert is to review the latest developments which are ofinterest to clients of Blank Rome LLP. The information contained herein is abridgedfrom legislation, court decisions, and administrative rulings and should not beconstrued as legal advice or opinion, and is not a substitute for the advice of counsel.


PROFESSIONALSLucas T.Hanback

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NLRB Finds that Employee Handbook PoliciesViolate Employees' RightsJanuary 2013 (No. 4)


The National Labor Relations Board ("NLRB") held recently that severalof DirecTV's employment policies violated Section 8(a)(1) of the NationalLabor Relations Act ("NLRA") because those policies unlawfullyrestricted employee communications that are protected by the NLRA.The NLRB held that policies prohibiting employees' contact with themedia and requiring employees to contact public relations personnelbefore speaking to the media unlawfully restricted protectedcommunications. The NLRB also found that the company'sconfidentiality rules, which prohibited releasing information concerningthe "job," fellow employees, and employee records, were unlawful andoverbroad.

Additionally, the NLRB found that a provision limiting employees' directcontact with law enforcement was unlawfully overbroad to the extent thatit restricted employee communications with the NLRB or other lawenforcement officials about wages, hours, and working conditions. Thecompany's intranet policy, which prohibited blogging and other socialmedia postings about "company information," was also found to beoverbroad as read in conjunction with the company's confidentialitypolicy in its handbook.

If you have any questions about this decision or your employmentpolicies in general, please contact a member of Blank Rome LLP's Employment, Benefits and Labor Practice Group.Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion,and is not a substitute for the advice of counsel.



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Laws and Regulations to Watch in 2013January 2013 (No. 5)


President Obama begins his second term in office with a dividedCongress, and it is unlikely that any major employment legislation willpass in 2013. Nevertheless, the Department of Labor (“DOL”) isexpected to issue significant regulations and there are several state lawdevelopments to follow this year:

Disability and Veteran Hiring Rules

The DOL’s Office of Federal Contract Compliance Programs is expectedto issue final regulations requiring federal contractors to (1) set a hiringgoal of having seven percent of their workforce made up of people withdisabilities and (2) hire more veterans. The proposed disability andveteran hiring rules – issued in April 2011 and December 2011,respectively – drew significant criticism from the contractor communitydue to their burdensome recordkeeping and data analysis requirements.

DOL Persuader Activity Rule

As previously reported, in June 2011, the DOL issued a proposed rulenarrowing the “advice” exception to the Labor-Management Reportingand Disclosure Act (“LMRDA”). The LMRDA requires employers todisclose arrangements with labor relations consultants (includingattorneys) where the consultant undertakes activities to persuadeemployees concerning their rights to organize and bargain collectively. Currently, the exception exempts arrangements where the consultantdoes not directly contact employees and provides only oral or writtenmaterials to the employer. The proposed rule, however, would limit theadvice exception to “oral or written recommendations” from a consultantto an employer and significantly expand the circumstances whereemployer-consultant arrangements must be disclosed. Despite therecent resignation of Labor Secretary Hilda Solis, the final rule is still



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anticipated sometime in 2013.

Proliferation of State “Facebook Laws”

In 2012, six states – California, Delaware, Illinois, Maryland, Michiganand New Jersey – enacted legislation preventing employers and/oracademic institutions from mandating that employees and/or applicantsprovide login information to their personal social media accounts. Weanticipate that more states will join these early adopters throughout2013. In fact, social media legislation has been introduced or is pendingin at least 18 states.

Increase of State Minimum Wage

Either through legislation or inflation indexing, ten states implemented anincrease in their minimum wage effective January 1, 2013. Severalmore states – including New Jersey and New York – are expected tostrongly consider raising their minimum wage rate in 2013.

If you have any questions regarding these pending administrative rulesor state law developments and their potential impact on yourorganization, please contact a member of Blank Rome LLP'sEmployment, Benefits and Labor Practice Group.Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion, andis not a substitute for the advice of counsel.

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EEOC Says Terminating Workers After One Yearof Disability Leave Violates the ADAFebruary 2013 (No. 6)


In EEOC v. United Parcel Service Inc., a case pending in the UnitedStates District Court for the Northern District of Illinois, the EqualEmployment Opportunity Commission (“EEOC”) has taken the positionthat an employer’s policy to automatically terminate employees who areunable to return to work after 12 months of disability leave violates theAmericans with Disabilities Act (“ADA”). The EEOC’s litigation positionconflicts with substantial prior case law, including recent appellatedecisions from the Eighth and Tenth Circuits holding that the ADA’sreasonable accommodation provision does not require employers toprovide indefinite leave to their employees. The district court has notruled on the merits of the EEOC’s position, but the court recently allowedthe agency to proceed with its claim on a class-wide basis.

The EEOC’s litigation position could affect many employers whose ADApolicies prohibit indefinite leave. If you would like further informationabout the ADA or leave of absence policies, please contact a member ofBlank Rome LLP's Employment, Benefits and Labor Practice Group.Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion,and is not a substitute for the advice of counsel.



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DOL Issues Final Rule Implementing FMLAAmendments Relating to Military Caregivers andAirline Flight CrewsFebruary 2013 (No. 7)


Marking the 20th anniversary of the enactment of the Family and MedicalLeave Act (“FMLA”), the U.S. Department of Labor (“DOL”) issued a finalrule implementing amendments to the FMLA which expanded militaryfamily leave provisions and incorporated special eligibility provisions forairline flight crewmembers and flight attendants. The new rule alsoclarifies other provisions of the FMLA including calculation of leave forintermittent or reduced schedules.

The new rule expands the military family leave provisions under theFMLA in several important ways. For example, employees may nowtake qualifying exigency leave to care for family members serving in theRegular Armed Forces in addition to the National Guard or Reserves. The rule also allows employees to take military caregiver leave to carefor servicemembers with injuries or illnesses that existed prior to activeduty and were aggravated in the line of duty. The DOL has postedexplanatory information and guidance on its website: www.dol.gov/WHD/fmla/2013rule/.

If you would like further information about the FMLA Amendments andhow they may impact your business, please contact a member of BlankRome LLP's Employment, Benefits and Labor Practice Group.Notice: The purpose of this alert is to review the latest developments which are of interest to clients of BlankRome LLP. The information contained herein is abridged from legislation, court decisions, and administrativerulings and should not be construed as legal advice or opinion, and is not a substitute for the advice ofcounsel.


INDUSTRIESAviation


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http://www.dol.gov/WHD/fmla/2013rule/


OFCCP Issues Directive to Federal Contractors onthe Use of Criminal Records in the Hiring ProcessFebruary 2013 (No. 8)


The Office of Federal Contract Compliance Programs ("OFCCP")recently issued a directive to federal contractors and subcontractors ontheir use of criminal records in the hiring process. Noting that nearly onein three adults now has a criminal record, and that racial and ethnicdisparities are reflected in incarceration rates, the OFCCP advisedcontractors that hiring policies and practices that exclude workers withcriminal records may run afoul of anti-discrimination laws. The OFCCPstated that recent guidance issued by the Equal Employment OpportunityCommission ("EEOC") on the use of criminal records will assistcontractors in implementing practices that are in compliance with theirnon-discrimination obligations and in ensuring that any criminal conductexclusions are job related and consistent with business necessity. Inaddition, the OFCCP recommended that contractors adhere to theEEOC's suggested "best practices," including requiring individualizedassessments that are narrowly tailored to the specific circumstances ofthe job at issue.

If you would like further information about this OFCCP directive or theuse of criminal records in the hiring process, please contact a member ofBlank Rome LLP's Employment, Benefits and Labor Practice Group. Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion, andis not a substitute for the advice of counsel



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H-1B Visa Cap Season Begins April 1, 2013February 2013 (No. 9)


New H-1B visa petitions can be filed with the United StatesCitizenship & Immigration Services beginning April 1, 2013.Employers seeking to hire professional, foreign workers shouldcontact Blank Rome's Immigration Team. The annual H-1Bnumerical quota is expected to be reached earlier than in previousyears. Therefore, employers hoping to use the H-1B program arerecommended to begin the filing process as early as possible.

Background

The H-1B visa is an attractive option for employers that rely on thetemporary employment of foreign professionals in the United States.Specifically, this visa category offers work authorization to foreignnationals employed in specialty occupations. A "specialty occupation" isbroadly defined as a position requiring at least a Bachelor's degree in aspecific academic field. Based on this criterion, the H-1B visa captures awide-range of occupations, making it especially popular among U.S.employers.

Congress has set an annual limit for new H-1B visas at 65,000 per fiscalyear (with an additional 20,000 reserved for occupations requiring anadvanced degree from a U.S. institution). Given the H-1B visa'sversatility and popularity, the annual quota is often reached shortly afterthe filing period opens.

The Importance of Early Preparation

The demand for H-1B visas is expected to be higher this year than inrecent years. Last year, the quota was met on June 11, 2012. The quotafor FY 2014 visas is therefore expected to be met even closer to theApril 1, 2013 filing date. Petitions are accepted on a"first-come-first-serve" basis. Any applications filed after the cap is met


Immigration

PROFESSIONALSManuela M.Morais

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will be returned and cannot be re-filed until the following year.

To maximize the chances that your H-1B petition is included in the cap,all materials should be completed and ready for submission by thebeginning of April. However, gathering the necessary supportingdocumentation can be time-consuming. Preparation will includeassembling background and education documents, drafting and signingletters and forms, and submitting a Labor Condition Application (LCA) tothe Department of Labor (DOL) for certification. Early preparation is thusessential.

To be in the best position to file new H-1B petitions before the cap isexhausted, LCAs should be submitted to the DOL by the beginning ofMarch, and petitions should be ready for filing during the first week ofApril.

Selecting Blank Rome for your H-1B Filing Needs

Blank Rome's Immigration Team is part of the firm's Employment,Benefits, and Labor Practice. Our seasoned immigration attorneys andspecialists are ready to handle your H-1B filing needs. Whether this isyour first time petitioning for a foreign worker, or whether your companyhas utilized the H-1B visa in the past, we are ready to provide the levelof support and attention you require.

To learn more, please contact Helena Astolfi ([email protected]),John Connelly ([email protected]), Manuela Morais([email protected]) or another member of Blank Rome LLP'sEmployment, Benefits and Labor Practice Group.

- Authored by John Connelly, Esq.Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion,and is not a substitute for the advice of counsel.

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mailto:[email protected]




OSHA Invites Public Comment on ProposedWhistleblower Protections for Affordable Care Act February 2013 (No. 10)


The U.S. Department of Labor's Occupational Safety and HealthAdministration ("OSHA") published an interim final rule on February 27,2013 in the Federal Register governing whistleblower complaints underthe Affordable Care Act. Section 1558 of the Act prohibits employersfrom retaliating against employees who report alleged violations ofinsurance company accountability policies or participate in a proceedingconcerning a violation. It also protects workers from retaliation forreceiving a tax credit or cost-sharing reduction due to participation in aHealth Insurance Exchange or Marketplace.

The interim final rule establishes procedures and time frames for filingcomplaints, OSHA investigations and determinations, appeals, andAdministrative Review Board and judicial review of the final decision.Comments will be accepted until April 29, 2013.

For more information regarding whistleblower protections under theAffordable Care Act, please contact a member of Blank Rome LLP'sEmployment, Benefits and Labor Practice Group.Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion,and is not a substitute for the advice of counsel.



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http://www.gpo.gov/fdsys/pkg/FR-2013-02-27/pdf/2013-04329.pdf


OFCCP Rescinds Prior Guidance and Issues NewDirective Relating to Pay DiscriminationMarch 2013 (No. 11)


The Office of Federal Contract Compliance Programs (“OFCCP”)rescinded prior guidance on pay discrimination investigations andissued a new Compensation Directive, effective February 28, 2013,governing procedures to be used in reviews of federal contractor andsubcontractor compensation systems and practices. The OFCCP statedthat the prior guidance documents too narrowly limited the types ofinformation that it could consider in its investigations of paydiscrimination and have not proved effective. The new Directive isdesigned to align compensation investigations with Title VII’scase-specific standards and allow the OFCCP to utilize a broader, moreflexible approach. The new investigation procedures apply to OFCCPcompliance reviews scheduled on or after February 28, 2013 as well asto certain open reviews to the extent they do not conflict with priorguidance or procedures.

If you would like further information about the OFCCP’s revisedguidance on pay discrimination investigations, please contact a memberof Blank Rome LLP's Employment, Benefits and Labor Practice Group.Notice: The purpose of this alert is to review the latest developments which are ofinterest to clients of Blank Rome LLP. The information contained herein is abridgedfrom legislation, court decisions, and administrative rulings and should not beconstrued as legal advice or opinion, and is not a substitute for the advice of counsel.



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http://www.dol.gov/ofccp/regs/compliance/directives/dir307.htm


Second Circuit Clarifies Liability Standard forNon-Employee Workplace Harassment Claims March 2013 (No. 12)


The U.S. Court of Appeals for the Second Circuit recently clarified thelegal standard for claims of non-employee workplace harassment,adopting and applying non-binding liability guidelines promulgated by theEqual Employment Opportunity Commission (“EEOC”). In Summa v.Hosftra University, the Second Circuit held that under Title VII of the CivilRights Act of 1964, an employer may be liable for acts of harassmentcommitted by non-employees where (1) the employer has some controlor other legal responsibility with respect to the conduct of suchnon-employees, and (2) the employer knows or should have known ofthe harassing conduct and fails to take immediate and appropriatecorrective action.

The Second Circuit’s decision is the first federal appellate court opinionto adopt the EEOC’s non-employee harassment guidelines. The decisionalso serves as an important reminder that all employers shouldimplement and maintain effective procedures for quickly andappropriately responding to harassment complaints. If you would like further information about this recent case or employerbest practices for responding to complaints of harassment, pleasecontact a member of Blank Rome LLP's Employment, Benefits andLabor Practice Group. Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion,and is not a substitute for the advice of counsel.


PROFESSIONALSAndrew B.Cohen

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New Form I-9 for Employment EligibilityVerification March 2013 (No. 13)


On March 8, 2013, the United States Citizenship and ImmigrationServices released a new version of Form I-9, Employment EligibilityVerification (identified as Rev. 03/08/13). The new form is available forimmediate use, and employers must begin using the updated Form forall new hires starting May 7, 2013.

Notable changes to the Form I-9 include:

Updated Instructions: The instructions are now six pages inlength and provide better guidance about the obligations for bothemployees and employers. The revisions include a clearerexplanation about when Form I-9 must be completed and when itmust be updated.Updated Layout: Form I-9 has been expanded from one to twopages, excluding the instructions and the list of acceptabledocuments. Formatting and layout changes were intended tomake completing the form easier for both employees andemployers. Employers should be sure to include the employee'sname in the first field on page two.Changes to Section One - Employee Information andAttestation: New data fields were added to Section One. The newdata fields request the employee's foreign passport information,telephone number, and e-mail address. These new fields wereadded in an effort to facilitate employment verification matchingwith the E-Verify system.Changes to Section Two - Employer or AuthorizedRepresentative Review and Verification: Section Two nowincludes an expanded document entry field. The new responsefields were included to accommodate scenarios where anemployee provides a combination of List A documents.


PROFESSIONALSManuela M.Morais

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Additionally, there is now additional space for informationregarding SEVIS registration and Employment AuthorizationDocuments (EAD). The Certification area also has beenredesigned to clarify the three attestations an employer makeswhen certifying the Form.

As a reminder, new hires must complete Section One (now page one ofthe revised form) no later than the first day of employment. Theemployer must review the employee's original documents verifyingidentity and employment authorization and complete Section Two (nowon page two of the revised form) within three business days of theemployee's first day of employment.

Completing a new, revised Form I-9 for existing employees is requiredonly if employment eligibility must be re-verified on or after May 7, 2013.Employers should use caution when identifying those employeesrequiring reverification. Unnecessary reverification may have theunintended effect of violating the Immigration and Nationality Act'santi-discrimination provision.

If you have questions regarding the employer's responsibility forverifying employment eligibility or any other immigration-related issues,please contact Helena Astolfi ([email protected]), John Connelly([email protected]), Manuela Morais([email protected]) or another member of Blank Rome LLP'sEmployment, Benefits and Labor Practice Group.

- Authored by John Connelly, Esq. Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion,and is not a substitute for the advice of counsel.

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Third Circuit Clarifies Standard for WhistleblowerProtection Under Sarbanes-Oxley ActMarch 2013 (No. 14)


The U.S. Court of Appeals for the Third Circuit recently held that that anemployee is entitled to whistleblower protection under theSarbanes-Oxley Act (“SOX”) if the employee has an objective“reasonable belief” that his or her employer is committing fraud orsecurities violations. In Wiest v. Lynch, the court explained that thestatute’s whistleblower protections apply where an employeedemonstrates (1) “a subjective, good-faith belief that his or her employerviolated a provision listed in SOX” and (2) that such belief is “objectivelyreasonable.”

The Third Circuit’s decision departs from prior opinions by the First,Fifth, and Ninth Circuits, which apply a higher standard of proof thatrequires employees to “definitively and specifically” articulate theexistence of a violation of law. In light of the Third Circuit’s less stringentstandard for whistleblower claims, employers should continue to takeemployee complaints regarding potential fraud or other securitiesviolations seriously and conduct appropriate investigations into suchallegations.

If you would like further information about the Third Circuit’s Wiestdecision or employer best practices for responding to employeeconcerns and complaints, please contact a member of Blank RomeLLP's Employment, Benefits and Labor Practice Group.Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion,and is not a substitute for the advice of counsel.



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Second Circuit Holds that Arbitration AgreementsMay Bar Title VII Pattern-or-PracticeDiscrimination Claims March 2013 (No. 15)


In a decision that may have significant implications for employmentdiscrimination claims, the U.S. Court of Appeals for the Second Circuitruled on March 21, 2013 that employees who have signed arbitrationagreements with their employers may be barred from litigating Title VII“pattern-or-practice” discrimination claims. In Parisi v. Goldman Sachs &Co., the court held that Title VII does not grant employees a substantivestatutory right to bring pattern-or-practice discrimination claims. “Pattern-or-practice” simply refers to a method of proof and does notconstitute a “freestanding cause of action.” Accordingly, arbitrationagreements prohibiting class actions, which include pattern-or-practicediscrimination claims, do not impermissibly preclude employees fromvindicating substantive statutory rights and will be enforced.

The Second Circuit’s decision confirms that employee arbitrationagreements may provide employers with an important tool to avoid classaction discrimination claims. However, the decision does not prohibitemployees from using pattern-or-practice evidence to establish individualdiscrimination claims and does not affect the Equal EmploymentOpportunity Commission’s authority to pursue pattern-or-practice claimson behalf of a class of employees.

If you would like further information about the Second Circuit’s Parisidecision or guidance on how to best protect against employee claimsunder Title VII, please contact a member of Blank Rome LLP'sEmployment, Benefits and Labor Practice Group. Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion, andis not a substitute for the advice of counsel.



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New NYC Law Protects the Unemployed from Biasin HiringMarch 2013 (No. 16)


An expansive new law provides that, effective June 11, 2013, employersin New York City may no longer exclude unemployed job seekers fromconsideration for possible employment based on their unemployment.The amendment to the City’s Human Rights Law treats “unemployment”as a protected characteristic and permits applicants to file a complaintwith the New York City Commission on Human Rights or in court if anapplicant believes he or she was discriminated against based onunemployment. An applicant may also establish an unlawfuldiscriminatory practice by an employer by showing that a policy orpractice of the employer results in a disparate impact on theunemployed.

The law allows employers to consider an applicant’s unemployment inlimited circumstances and provides employers with certain defenses andother rights. For example, an employer may evaluate circumstances ofan applicant’s separation from prior employment and consider“substantially job-related qualifications” (such as requisite certificationsand credentials, education, and experience). Additionally, employers arepermitted to give priority or limit the hiring process to internal candidates.The law applies to all employers of four or more employees with limitedexceptions for those subject to civil service laws or a collectivebargaining agreement.

A narrower law protecting unemployed applicants went into effect in theDistrict of Columbia in May 2012. Oregon and New Jersey have laws inplace prohibiting advertisements for vacancies from includingemployment as a job qualification. None of these other laws establish aprivate cause of action permitting applicants to sue prospectiveemployers directly.


PROFESSIONALSMargaretElizabethPatterson

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If you would like further information about this new New York City law orsimilar laws which may affect your business, please contact a memberof Blank Rome LLP's Employment, Benefits and Labor Practice Group.Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion,and is not a substitute for the advice of counsel.

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Supreme Court Ruling Regarding FLSA CollectiveAction Lawsuits Leaves Important QuestionsUnansweredApril 2013 (No. 17)


In a widely anticipated decision, the Supreme Court of the United Statesheld in Genesis HealthCare Corp. v. Symczyk that a putative Fair LaborStandards Act (“FLSA”) collective action was properly dismissed wherethe lead plaintiff’s claim was moot and no other plaintiffs had joined thelitigation. However, the Court’s April 16, 2013 opinion left unansweredimportant questions regarding the interplay between individual offers ofjudgment and collective litigation under the FLSA, including whether aplaintiff’s refusal to accept an offer of judgment that would fully satisfyhis or her claim renders the claim moot.

In Symczyk, the plaintiff-appellee’s district court complaint alleged thather employer failed to compensate employees for work performedduring scheduled meal breaks. Before any other employees joined thelitigation, the employer made an offer of judgment that would havesatisfied the plaintiff’s individual claim. Although the plaintiff did notaccept the offer, the district court nonetheless dismissed as moot boththe individual and collective action claims. The United States Court ofAppeals for the Third Circuit agreed on appeal that the plaintiff’sindividual claims were moot, but reinstated the plaintiff’s collective actionclaims.

Because the Third Circuit had restored her collective action claims, theplaintiff did not challenge the mootness of her individual claim before theSupreme Court. The Court thus assumed, without deciding, that thisaspect of the Third Circuit’s decision was correct. From thisassumption, the Court held that a “straightforward application ofwell-settled mootness principles” also required dismissal of the plaintiff'scollective action claims, as the plaintiff did not have any personal


PROFESSIONALSMargaretElizabethPatterson

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interest in representing other employees who had not yet joined the suit.

The Supreme Court’s decision left unresolved a significant split amongthe federal Courts of Appeals. Whereas the Third Circuit had heldpreviously that an unaccepted offer of judgment may moot a plaintiff’sindividual claim, other Courts of Appeals have held that the viability of aplaintiff’s claim is not affected by her decision to reject a fully satisfactoryoffer of judgment. This undecided issue, highlighted in a dissentingopinion joined by four of the Court’s nine justices, leaves importantquestions unanswered for plaintiffs and defendants alike in putativecollective action matters where an offer of judgment is made.

If you would like further information about this decision, please contact amember of Blank Rome LLP's Employment, Benefits and Labor PracticeGroup.Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion,and is not a substitute for the advice of counsel.

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Supreme Court Confirms That Equity CannotTrump Clear ERISA Plan TermsApril 2013 (No. 18)


The United States Supreme Court recently clarified the scope ofequitable relief available under the Employee Retirement IncomeSecurity Act (“ERISA”), holding inU.S. Airways, Inc. v. McCutchen thatequitable principles cannot trump the unambiguous terms of an ERISAbenefit plan. The Court also confirmed that, where plan terms are notclear, equity may be used to supplement any ambiguous or missingprovisions.

The Court’s April 16, 2013 decision is a victory for plan sponsors andconfirms that participants cannot appeal to equity to challenge clear, butadverse, plan provisions. However, the decision also highlights theimportance of careful and thorough drafting of ERISA plan documents. In future cases, plan participants will likely seek to highlight ambiguitiesand perceived holes in plan documents in an effort to avoid unfavorableterms, especially where a plan does not provide its administrator withdiscretion to interpret ambiguity.

If you would like further information regarding the Supreme Court’s McCutchen decision or assistance with the drafting or review of yourcompany’s ERISA plan documents, please contact a member of BlankRome LLP's Employment, Benefits and Labor Practice Group.Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion,and is not a substitute for the advice of counsel.


PROFESSIONALSFrederick G.Sandstrom

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National Labor Relations Board Again TargetsEmployer Policies May 2013 (No. 19)


The National Labor Relations Board (“NLRB”) recently ruled in TargetCorp., 359 NLRB No. 103 (Apr. 26, 2013), that Target Corporationmaintained policies in violation of the National Labor Relations Act(“NLRA”). The case arose after a union challenged the election resultsafter it lost an organizing drive to unionize Target employees in a NewYork store. The NLRB found that Target had engaged in unlawfulelection activity, and it also scrutinized Target’s policies and foundoverbroad information security, dress code and access policies. Inaddition, the NLRB found Target’s no-solicitation and no-distributionpolicy overbroad because it prohibited certain activity, including“commercial” solicitation, at all times on Target premises. As a result ofthe unlawful policies, the NLRB required Target to distribute revisedpolicies and post an NLRB notice relating to the violations in all its storesnationwide.

The NLRB also rejected Target’s argument that the NLRB lacked theauthority to rule based on Noel Canning v. NLRB, 705 F.3d 490 (D.C.Cir. 2013), in which the United States Court of Appeals for the D.C.Circuit found the NLRB lacks a quorum because the President’s recessappointments were constitutionally invalid. The NLRB held that until theissue is definitively settled through litigation, it must fulfill its responsibilityunder the NLRA to act.

If you would like further information about the NLRB’s recent decision,please contact a member of Blank Rome LLP's Employment, Benefitsand Labor Practice Group.Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion,and is not a substitute for the advice of counsel.



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D.C. Circuit Vacates NLRB Rule Requiring Postingof Notice of Employees' Rights May 2013 (No. 20)


In a well-publicized victory for employers, the United States Court ofAppeals for the D.C. Circuit recently vacated the National LaborRelations Board (“NLRB”) final rule requiring employers to post noticesof employees’ rights. As we reported in April 2012, the D.C. Circuit hadpreviously enjoined the rule, which would have required that allprivate-sector employers subject to the National Labor Relations Act(“NLRA”) post a notice of employees’ rights, including the right tounionize. The most recent decision, in National Association ofManufacturers v. NLRB, held that the rule could not be reconciled withthe requirements of the NLRA.

The D.C. Circuit also addressed whether the NLRB lacked the authorityto promulgate the rule under the court’s decision Noel Canning v.NLRB, 705 F.3d 490 (D.C. Cir. 2013), which invalidated a number ofPresident Obama’s recess appointments to the NLRB and deprived theNLRB of a quorum. Ultimately, the D.C. Circuit stated that, to the extentNoel Canning applied, the NLRB had a valid quorum when the rule wasfiled. Thus, the Court held that the rule would have been valid underNoel Canning even though the NLRB lost its quorum before the rule waspublished.

If you would like further information about the D.C. Circuit’s recentdecision, please contact a member of Blank Rome LLP's Employment,Benefits and Labor Practice Group.Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion,and is not a substitute for the advice of counsel.



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Third Circuit Joins D.C. Circuit in Ruling RecessAppointments UnconstitutionalMay 2013 (No. 21)


In a 2-1 decision in NLRB v. New Vista Nursing and Rehabilitationissued on May 16, the Third Circuit Court of Appeals invalidatedPresident Obama’s recess appointment of former Member Craig Beckerto the National Labor Relations Board (“NLRB”). The Court held that “theRecess of the Senate” in the Recess Appointments Clause refers only tobreaks between sessions of the Senate (i.e., “intersession breaks”). Because Becker was invalidly appointed during a two-week break withina session, the Court ruled that the three-member NLRB panel in whichhe participated lacked the requisite number of members to exercise theBoard’s authority and vacated the panel’s decision and order regardingNew Vista’s bargaining obligations.

As we previously reported, the D.C. Circuit earlier reached a similarconclusion in Noel Canning v. NLRB. On April 25, 2013 the NLRB filed apetition for a writ of certiorari asking the U.S. Supreme Court to reviewthe Noel Canning decision.

If you would like further information about this ruling, please contact amember of Blank Rome LLP's Employment, Benefits and Labor PracticeGroup.


PROFESSIONALSColleen A.Carolan

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EEOC Provides Updated Guidance RegardingDisability Discrimination May 2013 (No. 22)


The U.S. Equal Employment Opportunity Commission ("EEOC") on May15, 2013 released updated guidance on protections against disabilitydiscrimination for employees and job applicants with cancer, diabetes,epilepsy, and intellectual disabilities. The guidance reflects changes tothe definition of disability made by the Americans with DisabilitiesAmendments Act, which made it easier for an individual to establish thathe or she had a disability and was entitled to protection againstworkplace discrimination. The updated "Questions & Answers"documents address when employers may obtain medical informationfrom applicants and employees, what accommodations individuals withthese conditions may need, how to handle safety concerns, and whatemployers can do to prevent and remedy disability-based harassment.

If you would like further information about the EEOC's guidance ordisability-related issues, please contact a member of Blank Rome LLP's Employment, Benefits and Labor Practice Group.Notice: The purpose of this alert is to review the latest developments which are of interest toclients of Blank Rome LLP. The information contained herein is abridged from legislation, courtdecisions, and administrative rulings and should not be construed as legal advice or opinion,and is not a substitute for the advice of counsel.



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What the Supreme Court’s Decision on Health Care Reform Means for EmployersJune 2012 (No. 2)

Employee Benefits & Executive Compensation Update

After many months of speculation, the Supreme Court of the United States ruled yesterday that the central provision of Health Care Reform, the individual health insurance mandate, is constitutional. The result is that this provision and the other provisions of the Patient Protection and Affordable Care Act will remain intact. Accordingly, employers should act now to ensure that they are in compliance with currently effective provisions of the law, as well as those that are slated to come into effect in the coming months and years.

Background

On March 23, 2010, President Obama signed into law the Patient Protection andAffordable Care Act (P.L. 111-148) ("Health Care Reform"). The centerpiece of Health Care Reform is the requirement that, with limited exceptions, all individuals must be covered by an employer-provided health plan or individual health insurance policies that provide "minimum essential coverage" (i.e., the "individual mandate") beginning in 2014. In order to help individuals find such coverage at a reasonable expense, states must set up insurance exchanges and individuals will be provided with tax credits to help pay insurance premiums. Employers will have the choice to offer compliant health coverage for employees or pay significant penalties ("pay or play").

Constitutional Challenge & Supreme Court Ruling

In response to the enactment of Health Care Reform, several parties, including a joint effort of 26 states, challenged its constitutionality, particularly that of the individual mandate. Challengers to the law argued that the individual mandate was an abuse of Congress’s federal authority under the Commerce Clause of the United States Constitution. They concluded that because this key piece of the law is unconstitutional, the entire law must also be overturned.

The court challenges to Health Care Reform reached several Federal Circuit Court of Appeals, but the results were conflicting. The Fourth and Sixth Circuit Court of Appeals found the individual mandate to be constitutional. The Eleventh Circuit Court of Appealsfound that the individual mandate was unconstitutional, but did not find the entire law to be invalid.

The Supreme Court agreed to resolve the split among the Circuits, and did so yesterday, in a 5-4 opinion in the matter of National Federation of Independent Business v. Sebeliusauthored by Chief Justice John Roberts. The Supreme Court found that, while theindividual mandate is not a valid exercise of Congress’s power under the Commerce Clause, it is constitutional under Congress’s taxing authority. The Supreme Court also found that while Health Care Reform’s expansion of Medicaid programs is constitutional, the federal government may not threaten States that do not comply with these new standards with the loss of their existing funding.

What does this mean for Employers?

The results of yesterday’s Supreme Court decision mean that nothing has changed for employers subject to Health Care Reform. Below is a summary of the Health CareReform rules and requirements (many that are already in effect) that employers should

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ExecutiveCompensation


PROFESSIONALSBarry L. Klein

Kari Knight Stevens

re-familiarize themselves with now to avoid significant penalties for noncompliance:

Application

Health Care Reform applies to both fully-insured and self-insured employer health plans. The extent to which these plans are subject to certain aspects of the law, however, depends on whether the plan is considered "grandfathered" or "non-grandfathered." Grandfathered plans include any group health plan or individual plan that was in existence on March 23, 2010. The Departments of Health and Human Services, Labor and Treasury have issued a comprehensive set of regulations regarding how a group health plan loses grandfathered status. For more information, click here and here.

Currently Effective Requirements of Health Care Reform

Generally beginning in 2011, the following requirements went in effect under Health Care Reform:

Requirements Applicable to Grandfathered Plans

No lifetime benefit limits.

No revocation of coverage (except for fraud/intentional conduct).

Limited restrictions on annual limits.

Requirement of plan coverage of dependent children up to age 26 if thedependent is not eligible to enroll in another employer-sponsored health plan.

No preexisting condition exclusions for enrollees under age 19.

Requirements Applicable to Non-Grandfathered Plans

No lifetime benefit limits.

No revocations of coverage (except for fraud/intentional conduct).

No restrictions on annual limits on the dollar value for "essential health benefits" as determined by the Department of Health and Human Services ("HHS").

Requirement for coverage of certain preventive health services andimmunizations without cost to covered individuals.

No discrimination in favor of higher-wage employees for fully-insured group health plans (self-insured group health plans had previously been subject to this rule under Section 105(h) of the Internal Revenue Code) [currently subject to a delayed effective date].

No preexisting condition exclusions for enrollees under age 19.

Requirement for plan coverage of dependent children up to age 26.

New rules for processing claims appeals.

Additional Programs

Reinsurance: Employers could apply to be covered by a temporary program that is currently in place that provides reimbursement to employers whose group health plans cover individuals who retire, do not currently qualify for Medicare, and are between the age of 55 and the date on which the individual is eligible for Medicare. Employers providing such coverage may qualify for reimbursement of up to 80 percent of the costs of providing the coverage to such individuals. The reimbursements must be used to lower costs in the employer's plan. Applications to participate in this program were due by May 5, 2011. The temporary program expires on January 1, 2014.

Small Business Tax Credit: Qualifying small businesses currently receive a federal tax credit to offset up to 35 percent of health insurance costs. Beginning in taxable years after 2013, the employer must participate in an insurance exchange in order to claim the credit, which may be up to 50percent, and may only claim the credit for up to two years after 2013.

Requirements of Health Care Reform Not Yet Effective

Coverage Disclosure

Summaries of Benefits and Coverage: Generally beginning with the first open enrollment period on or after September 23, 2012, employers must

provide a summary of benefits to each employee that is not more than four pages in length, that is written in a culturally and linguistically appropriate manner, and contains certain content related to covered benefits, exclusions, cost sharing, and continuation coverage. Failure to comply may result in a penalty of up to $1,000 for each failure.

Tax Related Changes

Form W-2 Reporting: Beginning with Form W-2s issued for employees with respect to 2012, employers must report the cost of employer provided health coverage. Employers who do not comply face substantial penalties of $200 per Form W-2, capped at $3 million per employer. Certain exemptions apply. For more information click here.

FSA Limitations: Effective January 1, 2013, contributions to a flexible spending account for medical expenses are limited to $2,500 per year, increased annually by a cost of living adjustment.

Medicare Tax Adjustments: Effective January 1, 2013, the employee-side Medicare Part A tax rate increases from 1.45 percent to 2.35 percent on individuals earning more than $200,000 (indexed) and married couples filing jointly earning more than $250,000 (indexed). There is no correspondingincrease in the employer-side payroll taxes. Health Care Reform also imposes a 3.8 percent tax on unearned income for higher-income taxpayers, for which the thresholds are not indexed.

"Pay or Play" – Health Insurance Exchanges

Beginning in 2014, states will begin to operate health insurance exchanges for both the individual and the small group market. These exchanges are intended to provide affordable coverage to those who seek to purchase coverage due to the individual mandate. Exchanges will offer insurance that complies with new federal standards for "essential health benefits."

Employer Penalties: While there is no mandate that an employer provide health care coverage, effective 2014, Health Care Reform imposes a fine on employers if an employee purchases health insurance through an exchange and receives a federal credit towards such purchase. Presumably an employee would do this only if his or her employer does not offer coverage orthe coverage is expensive. The fines are as follows:

� Employers (1) with more than 50 employees; (2) that do not offer health care coverage; and (3) have at least one full-time employee (FTE) who receives a premium tax credit from the federal government will be fined $2,000 per FTE per year. In calculating the number ofFTEs, the first 30 FTEs are subtracted.

� Employers (1) with more than 50 employees; (2) that offer health carecoverage; and (3) have at least one FTE who receives a premium tax credit from the federal government will be fined the lesser of $3,000 for each FTE employee receiving a credit or $2,000 for each FTE.

� In determining the number of FTEs, an employer must aggregate the number of hours of service of non-FTEs for a month and divide by 120 to determine the number of additional FTEs it should add to its actual number.

Notification: Beginning on March 1, 2013, employers must provide writtennotice to current employees—and new employees as they are hired—of the existence of a health insurance exchange and how the employee may contact the exchange to request assistance. If the employer's share of the total costs of benefits is less than 60 percent of the costs (actuarial value), the employermust inform each employee that he or she may be eligible for a premium tax credit if the employee purchases insurance through the exchange, but that the employee will lose the employer contribution (if any) made with respect to health coverage.

IRS Reporting: Effective January 1, 2014, employers with more than 50 FTEs must certify to the IRS whether they offer employees minimum essential coverage, the length of any waiting period, monthly premiums, the employer's share of the total costs of benefits, number of FTEs per month, and identifying employee information, including whether the employee was covered under any benefit plan. The IRS may by regulation require additional information. Employers must also provide employees with notice of the information provided to the IRS.

Additional Provisions

Automatic Enrollment: Beginning on a date to be specified by the Department of Labor in future guidance (no sooner than 2015), employers with more than 200 FTEs that offer health insurance will be required to

automatically enroll employees in a group health plan if a plan is offered by that employer. Employees must be given reasonable advance notice and the opportunity to elect to enroll in a different level of coverage, if available, or to opt-out altogether.

More Requirements for Grandfathered Plans:

� Pre-existing Condition Exclusions: Effective January 1, 2014, theprohibition of pre-existing condition exclusions for all ages applies to all enrollees in grandfathered plans.

� Dependent Coverage: Effective January 1, 2014, grandfathered group health plans must provide for adult dependent children up to age 26 regardless of whether they are offered other employer-provided coverage.

� Coverage limits. Any remaining annual limits on benefits under grandfathered plans must be eliminated.

No Excessive Waiting Periods: Effective for plan years beginning on or after January 1, 2014, group health plans may not impose waiting periods in excess of 90 days.

Increased Incentive Percentages under Health and Wellness Programs:Health Care Reform increases the maximum incentive available under outcome based wellness programs to 30 percent of the total cost of coverage and authorizes the Secretaries of Labor, Treasury, and HHS to increase theincentive percentage limitation to 50 percent by regulations.

Excise Tax on Insurers of High-Cost Plans: Beginning on January 1, 2018, Health Care Reform imposes an excise tax with respect to employer-sponsored group health plans (both self-funded and fully-insured) whose annual premiums exceed $10,200 for an individual and $27,500 for family. The bill indexes the threshold premium to the consumer price index for urban consumers (CPI-U) beginning in 2020. In addition, threshold amounts will be increased for retirees age 55 and older who are not eligible for Medicare and for employees in high-risk professions. The tax is equal to 40 percent of thevalue of the plan that exceeds the threshold amounts.

This summary does not address all of Health Care Reform provisions applicable to employers. If you have any additional questions or concerns, please contact a member of Blank Rome’s Employee Benefits and Executive Compensation Group.

Notice: The purpose of this newsletter is to review the latest developments which are of interest to clients of Blank Rome LLP. The information contained herein is abridged from legislation, court decisions and administrative rulings and should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.

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COLA Increases for Dollar Limitations on Benefits and ContributionsOctober 25, 2012

Employment, Benefits & Executive Compensation

The Internal Revenue Service announced cost-of-living adjustments applicable to dollar limitations for qualified plans and other items for tax year 2013.

Code Section 2013 2012 2011 2010 2009 2008 2007 2006

401(a)(17)/404(l)AnnualCompensation

$255,000 $250,000 $245,000 $245,000 $245,000 $230,000 $225,000 $220,000

402(g)(1) ElectiveDeferrals

17,500 17,000 16,500 16,500 16,500 15,500 5,500 15,000

415(b)(1)(A) DB Limits 205,000 200,000 195,000 195,000 195,000 185,000 180,000 175,000

415(c)(1)(A) DC Limits

51,000 50,000 49,000 49,000 49,000 46,000 45,000 44,000

414(v)(2)(B)(i)Catch-upContributions

5,500 5,500 5,500 5,500 5,500 5,000 5,000 5,000

414(v)(2)(B)(ii) SimpleCatch-up Contributions

2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500

408(k)(2)(C) SEPMinimumCompensation

550 550 550 550 550 500 500 450

408(k)(3)(C) SEPMaximumCompensation

255,000 250,000 245,000 245,000 245,000 230,000 225,000 220,000

408(p)(2)(E)SimpleMaximum Contributions

12,000 11,500 11,500 11,500 11,500 10,500 10,500 10,000

409(o)(1)(C) ESOP

1,035,000 1,015,000 985,000 985,000 985,000 935,000 915,000 885,000

Distribution Limits 205,000 200,000 195,000 195,000 195,000 185,000 180,000 175,000

414(q)(1)(B)HCECompensation Threshold

115,000 115,000 110,000 110,000 110,000 105,000 100,000 100,000

416(i)(1)(A)(i) Key Employee

165,000 165,000 160,000 160,000 160,000 150,000 145,000 140,000

SERVICESEmployee Benefits


PROFESSIONALSBarry L. Klein

Notice: The purpose of this newsletter is to review the latest developments which are of interest to clients of Blank RomeLLP. The information contained herein is abridged from legislation, court decisions and administrative rulings and should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.

457(e)(15) Deferral Limits 17,500 17,000 16,500 16,500 16,500 15,500 15,500 15,000

Taxable Wage Base

113,700 110,000 106,800 106,800 106,800 102,000 97,500 94,200

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Departments Issue Proposed Regulations on Wellness Programs Under Health Care ReformNovember 2012 (No. 3)

Employee Benefits & Executive Compensation

On November 20, the Department of Labor’s Employee Benefits Security Administration(EBSA), U.S. Department of Health and Human Services (HHS), and the Treasury Department issued proposed rules titled “Incentives for Nondiscriminatory Wellness Programs in Group Health Plans.” On the same day, the EBSA also issued a fact sheet on wellness programs as they relate to Health Care Reform. The proposed rules would be effective for “grandfathered” and “non-grandfathered” group health plans in plan years beginning on or after January 1, 2014.

Prior to Health Care Reform, rules regarding wellness programs for group health plans were included in regulations promulgated under HIPAA. These rules set for the distinction between “participatory wellness programs” (those that provide an award formere participation in a wellness program regardless of outcome) and “health-contingent wellness programs” (programs that require individuals to meet a specific health-related standard in order to receive an incentive). Under the prior rules, health-contingentwellness program incentives were limited to 20 percent of the cost of coverage and additional requirements regarding eligibility, purpose, and alternatives under such programs needed to be satisfied in order for such programs not to be considered discriminatory under HIPAA.

The proposed rules retain most of the prior rules governing both participatory and health-contingent wellness programs, but: (i) codify certain key changes under Health CareReform; and (ii) offer clarifications with respect to the design of health-contingent wellness programs and the reasonable alternatives such programs must offer under the law. These changes and clarifications include:

� Incentives offered under health-contingent wellness programs may be increased from 20 percent to 30 percent of the total cost of employee-only coverage under the plan (or the total cost of coverage in which the participant is enrolled if dependents are eligible to participate). In the case of programs designed to prevent or reduce tobacco use, the maximum award may further increase to 50percent.

� Health-contingent wellness programs have always been required to provide a reasonable alternative to obtaining incentives if the proposed standard was unreasonably difficult or medically inadvisable to attempt to achieve. The proposed rules build upon this rule through:

� Providing that if a reasonable alternative standard is an educational program, the plan cannot require individuals to find such a program on their own, nor may the plan require individuals to pay for the program. Similarly, the plan must pay for the cost of any weight loss program offered as a reasonable alternative.

� Continuing to permit group health plan sponsors to obtain physicianverification that an individual’s health factor makes it unreasonably difficult for the individual to satisfy, or medically inadvisable for the individual to attempt to satisfy, the otherwise applicable standard. However, under the proposed rules it would not be reasonable for a plan to seek verification of a claim that is obviously valid based on the nature of the individual’s known medical condition.

� Issuing new language to communicate to health-contingent wellness program participants the opportunity for a reasonable alternative toobtaining an incentive as follows:Your health plan is committed to helping you achieve your best health


ExecutiveCompensation

PROFESSIONALSKari Knight Stevens

status. Rewards for participating in a wellness program are available to all employees. If you think you might be unable to meet a standard for a reward under this wellness program, you might qualify for an opportunity to earn the same reward by different means. Contact us at ______________________ and we will work with you to find a wellness program with the same reward that is right for you in light of your health status.

� Further confirming that adverse benefit determinations regarding theavailability of a reasonable alternative standard under a health-contingent wellness program qualify for Federal external review under Health Care Reforms claims and appeals procedures.

� Health-contingent wellness programs must be reasonably designed to promote health or prevent disease. The proposed rules clarify that where the initial standard for the reward is based on a measurement, test or screening, health plans will be required to offer a different, reasonable means of qualifying for the reward to any individual who does not meetthe standard based on the measurement, test or screening. For example, a health plan that ties an incentive to a target body mass index (“BMI”) will meet this requirement if it offers the same incentive to a participant who does not meet the BMI target but who complies with a reasonable exercise program.

The Departments seek comments regarding the proposed regulations and other wellness program related issues, which must be submitted by January 25, 2013.

During the past several years, wellness programs have increased in popularity among employers as a means to control costs and to encourage healthy behavior in their workforce. The proposed rules offer important developments impacting wellness programs, particularly though permitting more meaningful incentives and through clarifying several unanswered questions left from the prior rules. Employers should actnow to consider how the proposed rules will impact their wellness programs beginning in 2014 and to plan any changes or enhancements to their programs. In addition to the proposed rules, employers must also continue to be mindful of other laws that impact upon wellness programs such as the Americans with Disability Act, the GeneticInformation Nondiscrimination Act, and federal and state tax and privacy laws.

If you have any questions about the proposed rules and how they impact your company’s wellness program, please contact a member of Blank Rome’s Employee Benefits andExecutive Compensation Group.

Notice: The purpose of this newsletter is to review the latest developments which are of interest to clients of Blank Rome LLP. The information contained herein is abridged from legislation, court decisions, andadministrative rulings and should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.

www.BlankRome.com

Employee Benefits & Executive Compensation March 2013 No. 1

© 2013, Blank Rome LLP. Notice: The purpose of this newsletter is to review the latest developments which are of interest to clients of Blank Rome LLP. The information contained herein is abridged from legislation, court decisions and administrative rulings and should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.

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Affordable Care Act Guidance on Minimum Value

The Government has issued significant guidance that employers must consider as they prepare to manage their potential liabilities under the Affordable Care Act (“ACA”). The pay or play rules under ACA are generally effective for employers January 1, 2014 and the guidance makes it abundantly clear that employers should not wait until late in 2013 to make plans for 2014.

Background Effective 2014, employers with more than 50 full time

equivalent employees may have to pay significant ex-cise taxes (euphemistically called and referred to herein as “shared responsibility payments”) if any full-time em-ployee uses a tax credit or a “cost sharing reduction” to purchase health care coverage in a state exchange. There are several ways an employer may manage or ameliorate this liability. Chief among them is to offer all full-time em-ployees the opportunity to enroll in health care coverage that is both “affordable” and provides “minimum value.” An employee who has such an opportunity is not eligible for the premium tax credit and therefore, even if he or she purchases coverage on the exchange, such purchase will not trigger a shared responsibility payment.

Minimum ValueA plan provides “minimum value” or “MV” if the per-

centage of “allowed costs” expected to be paid by the plan (and not the employees) in the aggregate is at least

60% of such costs. Employees typically pay costs through such things as deductibles and co-payments. These pay-ments are often called “cost sharing” or “out of pocket”. The higher the employees’ cost sharing, the lower the plan’s expected share of the total allowable costs.

In recent guidance, HHS confirmed that this deter-mination is made on an aggregate basis tested against national utilization data and is not on a plan specific ba-sis. Simplistically, if a plan imposes a $1,000 deductible and the national data show that 90% of all individuals in the national database incur annual costs of less than $1,000, then most of the total costs of the plan would be expected to be paid by employees and therefore the plan may in fact not provide MV.

HHS has provided a calculator which may be accessed at http://cciio.cms.gov/resources/regulations/index.html. We encourage all of our clients to access the calculator, input their plan specific design parameters and determine whether the MV for the plan is at least 60%. Presumably if you work with a broker, the broker should be able to help you. If the MV is not at least 60%, plan sponsors will have to decide whether to reduce employee cost sharing or be subject to the shared responsibility payment regime and, in the latter case, plan sponsors will have to consider other ways to reduce the shared responsibility payment liability.

HHS guidance also provides the following alternatives to the MV calculator:

http://cciio.cms.gov/resources/regulations/index.html

Employee Benefits and Executive Compensation

Blank Rome • 2

For additional information, please contact:

Barry L. Klein 215.569.5403 • [email protected]

• HHS will establish design base safe harbors that presumably will not require significant number crunching and data input.• An actuary may certify that the plan provides MV if the plan includes features that are not “suitable” for the MV calculator method or the design based safe harbors.• A plan in the “small group market” will be deemed to provide MV if it meets any of the levels of coverage (bronze, silver, gold or platinum) of products offered in the exchange.

Certain amounts paid by the employer into an HSA or HRA are counted as amounts paid by the plan and, therefore, will improve the plan’s MV score.

Comment: With the finalization of the MV rules, together with the earlier finalization of the rules for identify-ing full time employees, now is the time to start the analysis for 2014.