Sunday, June 28, 2020

Federal Judge Upholds HHS’ Hospital Transparency Rule as U.S. Healthcare Moves One Step Closer Real Price Disclosure

Judge Rejects Argument That Patients Will Be "Confused" & "Frustrated" by Having Access to Real Price of Care

On June 23, 2020, a Federal District Judge ruled in favor of the Trump administration’s final rule requiring hospitals to disclose the "secret" negotiated prices they are paid by insurers. The rule was released on Nov. 15, 2019 (after being originally proposed in March of 2019), and is set to take effect Jan. 1, 2021.

In December 2019, the American Hospital Association (AHA) filed a lawsuit attempting to block the rule’s implementation, stating that a requirement to disclose negotiated prices violated their First Amendment rights.  The AHA further contended that, "the Rule is unjustified because the publication of hundreds of prices will 'confuse' patients and 'frustrate . . . [their] decisionmaking.' Pls.’ Mot. at 27. They further contend that the regulation is unduly burdensome." Civil Action No. 1:19-cv-03619 (CJN), page 33.

Does anyone else find it peculiar that it is not too burdensome to negotiate thousands of different reimbursements from tens of different carriers every couple of years and memorialize those understandings in hundreds of pages of contracts - but it is too burdensome to publish those prices to the public?   The Court ruled that it was within the Department of Health and Human Services’ (HHS) scope to require the disclosure of these negotiated rates, rejecting the AHA’s claims.

What is in the Final Rule?

Hospitals will be required to provide easily accessible billing information to patients. This means having all standard charges available online and in one single data file that can be “read by other computer systems,” according to a Centers for Medicare & Medicaid Services (CMS) press release.  Current federal rules and regulations mandate that hospitals make their retail or "chargemaster" rates available to the public.  But these rates are entirely fictional and capricious.  As the court noted, in this decision on page 16, "chargemaster rates are rarely demanded for payment—again, chargemaster rates are paid for only about 10% of hospital patients, making them anything but the 'standard' price demanded for a hospital’s services."

The charges listed would include “the gross charges, payer-specific negotiated charges, the amount the hospital is willing to accept in cash from a patient, and the minimum and maximum negotiated charges,” according to the initial press release about the final rule.  As part of the final rule, CMS was granted more authority over enforcement. Specifically, the department has greater capability to audit hospitals and issue fines of $300 per day to those who are noncompliant.

This rule, more than any other we've seen in the modern era of American healthcare, actually has the potential to rein in costs.  In the end, Obamacare expanded healthcare access, but it did nothing to rein in costs.  In fact, on the whole, it increased costs by adding bureaucracy, mandatory benefits (even for those who didn't want them) and decreasing consumerism by increasing government payment.  This regulation would actually do more to unleash free-market consumerism in healthcare than any other federal law or regulation since the creation of the Health Savings Account in 2003. 

Next Steps

The rule won’t be effective until Jan. 1, 2021. In that time, hospitals will be working to make the applicable data available online. The AHA is almost certain to appeal the ruling, which could delay the rule’s effective date.

I fully expect the ultimate implementation of this rule to supercharge the use of Referenced Based Pricing, Health Savings Accounts and Individual Coverage Health Reimbursement Accounts, largely explained in my recent article here.  The bottom line is that American healthcare will continue to escalate at two to three times the general inflation rate and become less accessible for greater numbers of people until we minimize the economic impacts of third-party-payment, shine a light on real pricing and place consumers in greater control of healthcare expenditures.  This regulation is a powerful first step in healing an incredibly ill system. 

We will continue to monitor developments and provide updates as necessary.  I sat with Armstrong and Getty in March of 2019 to discuss the initial formulation of this regulation and its potential impact on U.S. healthcare.  That entire post is here and the audio is below.

Wednesday, June 24, 2020

Coronavirus Mental Health and Stress Resources for Employees

In response to the COVID-19 outbreak and subsequent fallout, the following federal resources are available to share with your employees:
  • The Centers for Disease Control and Prevention’s Coping with Stress page provides information about handling the stress of an outbreak, reactions, caring for yourself and your community, who is at a higher risk, and coming out of quarantine.
  • The U.S. Department of Health & Human Services (HHS) offers the following resources:
    • COVID-19 Behavioral Health Resources lists a collection of resources created by federal agencies and their partners to help healthcare providers, caregivers, and the general population prepare for and manage the negative behavioral effects that can accompany a public health emergency.
    • Mental Health and Coping links to resources and advice to help individuals cope and to support their mental and behavioral health during the COVID-19 pandemic. Many of these resources are available in multiple languages.
  • The HHS Substance Abuse and Mental Health Services Administration (SAMHSA) COVID-19 resources page links to resources to help individuals, providers, communities, and states across the country deal with mental health challenges related to the COVID-19 pandemic.
  • The Centers for Medicare & Medicaid Services (CMS) COVID-19 Partner Toolkit links to CMS and HHS materials on COVID-19.
  • The National Council for Behavioral Health’s Resources for COVID-19 provides links to resources for managing mental health during COVID-19 as well as tax, loan, and leave information for employers and employees.
  • The National Association of State Mental Health Program Directors COVID-19 Resource Links page provides federal government COVID-19 compliance resource links, state health department links, and more.
Additionally, the New Jersey Association of Mental Health and Addiction Agencies provides a Federal Resources for COVID-19 page with a wide variety of related material and the ThinkHR with Mammoth blog addresses, “How to support the Mental Health pf Your Employees During COVID-19.”

Tuesday, June 16, 2020

New OSHA COVID-19 Guidance for Reopening

On June 15, 2020, the Occupational Safety and Health Administration (OSHA) released a bulletin reminding employers that safety is a priority within both COVID-19 and common workplace hazards. In all phases of reopening, employers must plan for potential hazards related to COVID-19 and from routine workplace processes. Employee stress, fatigue, and distractions may be increased by the pandemic and must be considered when employers develop their employee return-to-work plan. OSHA advises that employers re-evaluate their return-to-work plans, with employee safety and health as a priority, before trying to increase production or tasks in an effort to catch-up on downtime.

As part of their reopening plans, OSHA recommends employers provide workers with safety and health training reviews and address maintenance issues deferred during a shutdown. Employers should also revisit and update standard operating procedures and remember that exposures to hazards may increase during shutdown and start-up periods. It is important for employers to review and address process safety issues – including stagnant or expired chemicals – as part of their reopening effort. Employers must also remember that retaliating against workers for raising concerns about safety and health conditions is prohibited.

OSHA provides COVID-19-related guidance to help employers develop policies and procedures that address the following issues:
OSHA’s guidance for employers also includes frequently asked questions related to COVID-19 in the workplace such as worksite testing, temperature checks and health screenings, and the need for personal protective equipment. This guidance accompanies the U.S. Department of Labor and U.S. Department of Health and Human Services’ previously developed Guidance on Preparing Workplaces for COVID-19.

Read more about COVID-19 on OSHA’s website

Thursday, June 11, 2020

New EEOC & OSHA COVID-19 Updates Covering the ADA and Cloth Face Coverings

The EEOC updated it’s What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws - Covering:
  • Employees are not entitled to an accommodation under the Americans with Disabilities Act to avoid exposing a family member who is at higher risk of severe illness from COVID-19 due to an underlying medical condition. 
Although the ADA prohibits discrimination based on association with an individual with a disability, that protection is limited to disparate treatment or harassment. The ADA does not require that an employer accommodate an employee without a disability based on the disability-related needs of a family member or other person with whom she is associated. 
For example, an employee without a disability is not entitled under the ADA to telework as an accommodation in order to protect a family member with a disability from potential COVID-19 exposure. 
  • Steps an employer can take if an employee entering the worksite requests an alternative method of screening due to a medical condition.
This is a request for reasonable accommodation, and an employer should proceed as it would for any other request for accommodation under the ADA or the Rehabilitation Act. If the requested change is easy to provide and inexpensive, the employer might voluntarily choose to make it available to anyone who asks, without going through an interactive process. Alternatively, if the disability is not obvious or already known, an employer may ask the employee for information to establish that the condition is a disability and what specific limitations require an accommodation. If necessary, an employer also may request medical documentation to support the employee’s request, and then determine if that accommodation or an alternative effective accommodation can be provided, absent undue hardship. 
Similarly, if an employee requested an alternative method of screening as a religious accommodation, the employer should determine if accommodation is available under Title VII.
  • Employees age 65 and over are at higher risk for a severe case of COVID-19 if they contract the virus subsequently the CDC has encouraged employers to offer maximum flexibilities to this group. Employers must be mindful that employees over age 65 have protections under the federal employment discrimination laws and are prohibited from involuntarily excluding an individual from the workplace based on his or her being 65 or older, even if the employer acted for benevolent reasons such as protecting the employee due to higher risk of severe illness from COVID-19.
  • Employers may not exclude an employee from the workplace involuntarily due to pregnancy.
  • A right to accommodation based on pregnancy continues during the pandemic.
There are two federal employment discrimination laws that may trigger accommodation for employees based on pregnancy.
First, pregnancy-related medical conditions may themselves be disabilities under the ADA, even though pregnancy itself is not an ADA disability. If an employee makes a request for reasonable accommodation due to a pregnancy-related medical condition, the employer must consider it under the usual ADA rules. 
Second, Title VII as amended by the Pregnancy Discrimination Act specifically requires that women affected by pregnancy, childbirth, and related medical conditions be treated the same as others who are similar in their ability or inability to work. This means that a pregnant employee may be entitled to job modifications, including telework, changes to work schedules or assignments, and leave to the extent provided for other employees who are similar in their ability or inability to work. Employers should ensure that supervisors, managers, and human resources personnel know how to handle such requests to avoid disparate treatment in violation of Title VII.
OSHA, COVID-19, and Cloth Face Coverings - On June 10, 2020, OSHA released frequently asked questions and answers related to COVID-19 and cloth face coverings addressing:
  • The key differences between cloth face coverings, surgical masks, and respirators.
  • That OSHA’s PPE standards do not require employers to provide cloth face coverings because they are not considered personal protective equipment (PPE) and are not intended to be used when workers need PPE for protection against exposure to occupational hazards.
  • OSHA’s recommendation that employers encourage workers to wear face coverings at work for source control purposes. Face coverings are intended to prevent wearers who have COVID-19 without knowing it (i.e., those who are asymptomatic or pre-symptomatic) from spreading potentially infectious respiratory droplets to others (this is source control).
  • Cloth face coverings do not substitute for social distancing measures.
  • Surgical masks or cloth face coverings are not acceptable respiratory protection in the construction industry when respirators are needed but not available due to the pandemic.

Monday, June 8, 2020

Updates to the Paycheck Protection Act Making it More Flexible

Late last week, the President signed legislation (H.R. 7010) enacting the Paycheck Protection Program Flexibility Act (PPPFA) which amends the CARES Act’s Payroll Protection Program (PPP). Here is a brief summary of the changes enacted by the new law: 
  • The timeframe in which borrowers must spend the PPP funds is expanded to 24 weeks (as opposed to 8 weeks) or December 31, 2020, whichever is earlier. This is effective immediately and applicable to all loans as if the language was part of the original CARES Act.
  • The date when workers must be rehired is extended from June 30th to to December 31, 2020.
  • The PPPFA softened rehiring requirements by adding a loan forgiveness exemption based on employee availability from February 15 through December 31, 2020. During this time, loan forgiveness will be determined without regard to a proportional reduction in the number of full-time equivalent employees if the borrower can document in good faith that:
    • They are unable to rehire former employees on February 15, 2020 and are also unable to hire similarly qualified employees for unfilled positions by December 31, 2020; or
    • They are unable to return to their pre-COVID-19 level of business activity (prior to February 15, 2020) because of federal safety and health requirements (issued from March 1, 2020 through December 31, 2020) for sanitation, social distancing, or any other worker or customer COVID-19-related safety requirement.
  • Businesses now have 5 years to repay a loan and the first payment will be deferred for six months after a forgiveness determination. This is only applicable to loans made on or after June 5, 2020.
  • The allocation of funds that must be used for payroll is modified requiring borrowers to spend 60% of the loan on payroll. 40% can be used for other expenses (the prior allocation was 75% payroll / 25% other).
  • Employers may delay paying employer payroll taxes for Social Security through December 31, 2020. 
The Small Business Association and Treasury Department are expected to release detailed guidance on these udpates.

Source: US H.R. 7010

Thursday, June 4, 2020

These States Maximize Your Business & Entrepreneurial Opportunity in a Post-COVID World of Social Unrest

American businesses teeter on the precipice of an onslaught of COVID-19 related lawsuits. The return-to-work decision is a difficult one in every aspect. But the question of employer liability for employees or customers who claim to have contracted the virus in the workplace is about to make things considerably more precarious.

Freedom loving people have always focused on taxation, regulatory burden, state debt and an unencumbered Second Amendment when analyzing whether it is time to move their business or just take their talent to a more appreciative state. The exodus from high tax, legislatively stifling states to states offering more liberty accelerated in recent years as documented regularly by ZeroHedge:
Historically, I used the below metric to show clients, family and friends which locations are likely to present them with the best business, employment and homeownership opportunities.

This then results in these final rankings: 

2020, however, requires the addition of a few more considerations as we now see the potential for crippling business lawsuits due to the coronavirus and widespread social unrest.

Overview of the Employer Liability Rules in Play

In general, workers injured in the workplace will receive compensation and benefits under the applicable state’s workers’ compensation laws. Benefits are provided irrespective of fault and are generally the exclusive remedy for workplace injuries, illnesses, or fatalities. Nearly all workers in the United States are covered by workers’ compensation.

The system is sometimes referred to as a grand bargain between employers and workers. It developed early in the 20th century in response to dissatisfaction with the tort system as a method of compensating workers for workplace injuries, illnesses, or deaths. Under this grand bargain, workers receive guaranteed, no-fault benefits for injuries, illnesses, and deaths, but forfeit their rights to sue their employers absent some form of willful, extremely reckless or grossly negligent employer behavior. Employers receive protection from lawsuits but must provide benefits regardless of fault.

COVID-19 now has states, employers and the federal government scrambling to come to grips with how the resulting illnesses and deaths will impact employer tort liability and workers’ compensation laws. Beyond the worker impact of COVID-19, businesses must further consider tort suits brought by customers and venders who claim that the business failed to act as a reasonably prudent business in the same or similar circumstances and that failure resulted in a COVID-19 infection. This legal upheaval is no small matter, no matter how it is approached. As stated by The Hill:
One U.S. law firm suggested coronavirus litigation could be “the new asbestos,” referring to a wave of personal injury litigation in the 1970s and '80s related to the carcinogenic material that was once commonly used in building construction.

“If you just let it all go now, it would be a disaster,” said David Rivkin, a partner at Baker Hostetler, who supports Congress granting businesses temporary immunity. “It would be a tsunami of lawsuits. Hundreds have already been filed.”

Therefore, as we review the list of states presenting entrepreneurs and businesses with the best opportunity to thrive, it makes sense to take an early look at how states plan to handle business liability for COVID-19 as well as the states most (and least) likely to have destructive riots and looting.   
States Seeking to Shield Business from Onerous Lawsuits  

“Bless this immunity.” - Tool, Fear Inoculum

From The Hill:
Many states have granted some form of liability immunity to health care workers and facilities. Utah and North Carolina have gone the furthest, passing laws that offer the strongest immunities yet for a range of industries as stay-at-home orders and business closures are eased.

In Utah, Gov. Gary Herbert (R) signed legislation earlier this month that makes all businesses and individuals immune from litigation based on others’ exposure to coronavirus on their property, with exceptions for things like willful misconduct. Oklahoma lawmakers have sent similar legislation to its governor.

North Carolina’s law is narrower than Utah’s and applies to “essential businesses” as defined in the state’s emergency declaration, but still offers more protection than other states.

At least six states — Alabama, Illinois, Louisiana, Ohio, South Carolina and Wyoming — have introduced legislation that would also shield more than just health care workers and facilities, according to the National Conference of State Legislatures (NCSL).
Alabama Governor Kay Ivey signed a proclamation that provides liability protections for businesses, healthcare providers, and other covered entities during the COVID-19 pandemic. I provides that businesses are not liable for a person’s death, injury, or property damage that results from an act or omission related to COVID-19, in any way, unless clear and convincing evidence otherwise proves that the harm was caused by the entity’s wanton, reckless, willful, or intentional misconduct.

The proclamation also creates a standard of care, which requires entities to reasonably attempt to comply with applicable public health guidance in response to COVID-19; and protects businesses from liability for damages from mental anguish, emotional distress, or for punitive damages.

States Making Things Worse for Employers

All that I'm to do
Calculating steps away from you” – Tool, Fear Inoculum

As David Lindsay and Erinn Rigney wrote at the National Law Review:
Perhaps the most significant pronouncement was by California Governor Gavin Newsom, who issued an executive order on 6 May 2020 that establishes a rebuttable presumption in workers’ compensation claims, presuming that covered workers who are diagnosed with COVID-19 contracted the illness at work, without the employee having to provide any further proof. Although this presumption is rebuttable—meaning that an employer can provide evidence to refute the presumption, it is likely to be a high burden for employers to meet, especially given the wide variety of ways COVID-19 can be transmitted. Further, California extended the presumption to any worker who reported to work outside of the home at the direction of their employer and received a positive test or physician diagnosis, a far broader category of workers than most other states. Therefore, in California, most eligible workers’ claims relating to on-the-job COVID-19 exposure likely will be covered by workers’ compensation.  
Riots Destroying Your Investment

On the good news front, auto, homeowners, and business insurance policies generally include coverage for property losses caused by riots and civil commotions. Standard business property insurance policies provide coverage for the structure of the building as well as the contents inside. Furthermore, Business Interruption (BI) coverage generally does reimburse losses when a covered peril forces a business to temporarily close its doors and pays employees, venders, rent and electric bills.

Nevertheless, this coverage is far from an inoculum against the perils of social unrest. Sixty percent of businesses with less than 100 employees do not even have (BI) coverage. For those that do, the lost income is calculated on a 12-month, look-back assessment of a business’ income prior to the date of loss. This means a business that has been shut or operating at a limited capacity due to COVID-19 will receive a reduced payout for any business income claims due to the recent rioting and looting.

Furthermore, no business owner wants to deal with the cleanup, claim process and resultant escalation in premiums after the fallout of such social unrest. So, as we consider the freest and most economically viable states for relocation, it makes sense to also factor in that state’s proclivity for social unrest and rioting. The below map was created at 11:30 AM PST on May 31, 2020 in the midst of the protests and social unrest resulting from the horrific alleged murder of George Floyd at the hands of former Minneapolis police officer Derek Chauvin. As of the time of this post, Derek Chauvin has been charged with 2nd degree murder in Minnesota.

Interactive US Map of Active Protests and Riots as of 11:30 AM PST on May 31, 2020.

As you can see from this map, some of the freest and most desirable states for business and employment also happen to be some of the least likely places that a business will confront rioters and looting. Montana, Idaho, Wyoming and the Dakotas form a 5-state zone remarkably free from social unrest and property damage.

Best States in 2020-2021 

Before 2020, businesses and entrepreneurs were leaving deep blue states for greener pastures in less encumbered jurisdictions. The pandemic, social unrest and devastating economic collapse coupled with the fact that so many more people are learning they can effectively do their job remotely through video-conferencing platforms will only accelerate this trend. Additionally, some states now seek to encourage the reopening of business by shielding employers from an onslaught of lawsuits due to complains that employees and customers could have contracted COVID-19 in the workplace. Conversely states like California seek to pin that responsibility on employers by creating a presumption that an employee’s sickness resulted from the workplace.

Utah, North Carolina, Wyoming and Alabama’s bold leadership in this regard elevate those states status for consideration in the new, post-pandemic workplace. In Utah and Oklahoma’s cases, you could argue that it might move them up into the top 10. While Alabama and North Carolina’s efforts are good for business, they are not enough to overcome those states’ weaker performance in other economic indices.

Choice of jurisdiction matters. As we move through ever-increasing tumultuous times, that choice becomes that much more important. California, New York, New Jersey and Illinois have co-opted individual liberties, saddled their people with an unsustainable debt, regularly punish the job creators and entrepreneurs while also being the most likely states to encounter social unrest. Meanwhile, South Dakota, Wyoming, Idaho, New Hampshire and Tennessee reward hard work, creativity and honor constitutional freedoms. Keep that in mind as you vote with the location your homes and businesses.

Tuesday, June 2, 2020

California Legislators Propose 4 New Employee Leave Laws to Go with the Existing NINE

From CalChamber
Even in the face of the coronavirus pandemic and a historic economic shock, the Legislature is considering legislation to increase the cost on employers of maintaining workers on the payroll. That is why these bills have been tagged as Job Killers.

AB 3216 (Kalra) proposes to expand several existing leaves, including leave under the California Family Rights Act (CFRA), pregnancy disability leave, and sick leave, and create paid emergency leave.  AB 2999 (Low) proposes to create a new 10-day leave of absence for bereavement leave.  Supporters claim that the leaves of absence are generally “unpaid” (except for sick leave and the new emergency leave) and therefore should not be a burden on employers.  Just because a leave is “unpaid,” does not mean there is not a cost.  Usually left out of the discussion is the method of enforcement, which is one of the biggest cost factors.  And, these proposed leaves cannot be viewed in isolation, but must be considered as a part of the existing leaves California already offers. ...

Currently, there are four bills pending that will expand or create a new leave of absence on employers with at least a single employee:
  • AB 3216 (Kalra) – 12 weeks of leave under CFRA a year, 4 months of pregnancy disability leave,  80 hours of emergency leave/year, and at least 3 days of paid sick leave/year 
  • AB 2999 (Low) – 10 days of bereavement leave per year 
  • SB 1383 (Jackson) – unlimited time off from work for a school closure or day care closure 
  • AB 2992 (Weber) – protected time off for an employee who is a victim of a crime or a family member who is a victim of a crime ...
These proposed leaves of absence are in addition to the existing leaves of absence California already has in place:

Pregnancy Disability Leave:  Applies to employers with 5 or more employees, 4 months of protected leave;

Military Spouse Leave:  Applies to employers with 25 or more employees and allows an employee to take up to 10 days to spend time with a military spouse who has been deployed in military conflict;

Organ Donation Leave:  Applies to employers with 15 or more employees and provides eligible employees with up to 60 days of protected leave in a year to donate an organ;

Bone Marrow Leave:  Applies to employers with 15 or more employees and provides eligible employees with up to one week of paid protected leave in a year to donate bone marrow;

Paid Sick Leave/Kin Care:  Applies to employers with one or more employees and requires 1 hour of paid sick leave for every 30 hours worked.  Half of all accrued sick leave must be used to care for a sick family member;

School Activities Leave:  Applies to employers with 25 or more employees and provides eligible employees with up to 40 hours of leave per year to participate in school activities with their children;

School Appearance Leave:  Applies to any employer with one or more employees and requires them to provide employees with time off in order to appear at school on a child’s behalf with regard to school suspension;

Domestic Abuse/Sexual Assault/Stalking Leave:  Applies to any employer with 25 employees or more and requires an employer to provide an indefinite leave of absence to an employee who is seeking services or medical attention as a result of domestic violence, sexual assault, or stalking;

New Parent Leave Act: Applies to employers with 20 or more employees and requires a 12-week protected leave of absence for bonding with a new child.
Full story.  

Monday, June 1, 2020

Carriers Are Going To Start Rebating Employer Health Insurance Plans - No, You Can't Pocket That Money

Because of the tremendous downturn in healthcare spending during March and April, many carriers are compelled under PPACA's Medical Loss Ratio rules to rebate some of those savings back to your employer plans.  As a reminder, unless the employer pays for one-hundred percent of all medical benefits (with no employee contributions) the employer has to share those savings with employees commensurate with the amount of premium the employees paid or by using the money to benefit the health plan.   

Here is what Healthcare Finance is reporting:   
... Health plans are mandated to spend at least 80% [85% in the large-group market] of their revenues on medical care. When they make more than that, they have to give money back to the purchasers.

Insurers are doing this now, rather than later, according to the Advisory Board's practice manager Rachel Sokol, who spoke during the company's weekly meeting on the impact of COVID-19 to payers.
Insurers want to create immediate value for members, instead of waiting for 2021, she said.

"That's why we're seeing the premium discounts now," Sokol said.

Among those insurers refunding money, UnitedHealthcare said it would provide more than $1.5 billion in initial assistance, including customer premium credits, because its members have been unable to access routine or planned care due to the COVID-19 pandemic. ...

Who Gets What

The portion of the rebate that must be treated as a plan asset depends on who paid the insurance premiums. For example:

þ  If the premiums were paid entirely out of trust assets, the entire rebate amount is a plan asset;

þ  If the employer paid 100 percent of the premiums, the rebate is not a plan asset and the employer can retain the entire rebate amount;

þ  If participants paid 100 percent of the premiums, the entire rebate amount is a plan asset; and

þ  If the employer and participants each paid a fixed percentage of the premiums, the percentage of the rebate equal to the percentage of the cost paid by participants is a plan asset.

Under the DOL’s guidance, employers are generally prohibited from retaining a rebate amount greater than the total amount of premiums and other plan expenses paid by the employer.

Using Plan Asset Rebates

Once an employer determines that all or a portion of an MLR rebate is a plan asset, it must decide how to use the rebate for the exclusive benefit of the plan’s participants and beneficiaries. Dept. of Labor Technical Release No. 2011-04 identifies the following methods for applying the rebates:

·        The rebate can be distributed to participants under a reasonable, fair and objective allocation method.

·        If distributing payments to participants is not cost-effective because the amounts are small or would cause tax consequences for the participants, the employer may use the rebate for other permissible plan purposes, such as applying it toward future participant premium payments or benefit enhancements.

If a plan provides benefits under multiple policies, the employer must make sure to allocate the rebate for a particular policy only to the participants who were covered by that policy. According to the DOL, using a rebate generated by one plan to benefit another plan’s participants would be a breach of fiduciary duty.  


Startling Healthcare Retirement Costs Projected for Folks Planning to Retire in 2020

These are the highest retirement projections I've seen:   
  • A healthy 65-year-old couple retiring in 2020 is projected to spend approximately $351,000 in today’s dollars ($535,000 in future dollars) on healthcare over their lifetime. 
    • Expenses at age 85 are estimated to be 234% higher than that at age 65.
  • A healthy 45-year-old couple is projected to spend approximately $505,000 in today’s dollars ($1.4 million in future dollars) on healthcare over their lifetime.
  • The estimated 2020 annual premium plus out-of-pocket cost for a healthy 65-year-old is $4,700.
  • A healthy 67-year-old couple is projected to spend 34% of their Social Security benefit on healthcare in 2020.  

How the Coronavirus Pandemic Impacted Healthcare Spending in One Image

Spending on health services dropped sharply in March and April 2020 compared to the previous year, according to personal consumption expenditure data from the Bureau of Economic Analysis. Across all health care services, which do not include pharmaceutical drugs, expenditures were down -38% in April 2020 compared to April last year.  

Friday, May 29, 2020

Benefit News Clips, Week Ending May 29th

Majority of employers help with cost of COBRA coverage for furloughed employees
May 28, 2020 – Wolters Kluwer (one-time registration may be required)
Excerpt: “Due to the COVID-19 pandemic, employers have made changes to their workforce, according to a recent report from the International Foundation of Employee Benefit Plans (IFEBP). The Employee Benefits in a COVID-19 World: April 2020 Survey Report found that 31 percent have temporarily furloughed workers, 29 percent have reduced worker hours, and 21 percent have laid off workers.”

School’s Out For Summer: Unavailability Of Child Care And The FFCRA
May 26, 2020 – Fisher Phillips LLP
Excerpt: “In response to Question 93 in its FFCRA Questions and Answers, the USDOL recently clarified that employees may not take paid leave to care for children because school is closed for the summer. However, the USDOL further advised that employees may be eligible to take leave if their child’s care provider during the summer — including a camp or other program in which the employee’s child is enrolled — is closed or unavailable due to a COVID-19 related reason.”

When You Can be Around Others After You Had or Likely Had COVID-19
May 24, 2020 – The U.S. Centers for Disease Control and Prevention
Excerpt: “I think or know I had COVID-19, and I had symptoms. You can be with others after…I tested positive for COVID-19 but had no symptoms. If you continue to have no symptoms, you can be with others after…”

FFCRA FAQ: Must an Employee Enroll their Child in a Summer Program as a Precondition to Taking FFCRA Leave if the Program is Cancelled?
May 22, 2020 – Littler Mendelson P.C.
Excerpt: “But I also am worried FAQ #93 is a trap for employers. It seems pretty clear that many of your employees will be able to show that…”

COVID-19 Return to Work: Wage & Hour Claims for Loss of Exempt Classification
May 21, 2020 – World at Work
Excerpt: “Under the FLSA, exempt employees must be paid their entire salary for the week even if the employer has them work less than a full week. Therefore, simply paying an exempt employee a pro-rated reduced salary is not permissible. Rather, employers must implement proportional salary reductions in advance and provide employees with notice of the change.”

Tenth Circuit Upholds Health Plan's Denial of Surrogacy Expenses
May 21, 2020 – Thomson Reuters
Excerpt: “Despite being informed in 2011 by the plan's claims administrator that the plan did not cover surrogate maternity, the participant acted as a surrogate in 2013 and 2015. The plan covered the participant's pregnancy expenses for the 2013 surrogacy, apparently because it was unaware that the participant was acting as a surrogate.”

COBRA in the Time of COVID-19
May 20, 2020 – Foley & Lardner LLP
Excerpt: “COBRA compliance requires extra attention right now. There has been a wave of litigation surrounding COBRA election notices. Regulatory agencies have extended certain COBRA deadlines due to the COVID-19 pandemic. And the Department of Labor recently released new COBRA model notices. Now, more than ever, employers need to take COBRA seriously and ensure that they are prepared to address these issues.”

Wednesday, May 27, 2020

Updated Employee Leave Requirements for Coronavirus in California, Nevada & Oregon

In response to COVID-19, states have passed new laws and issued new regulations and guidance about employee leave taken for reasons related to the coronavirus. These provisions are in addition to the federal Emergency Paid Sick Leave and Emergency Family and Medical Leave Expansion requirements passed in March.  States, cities and counties are updating these rules and regulations often, so make sure to check back with the relevant links below to see what changes may have been made.   


The California Labor Commissioner has issued FAQs on employee leave options, compensation and salary in the context of COVID-19. In addition, Governor Newsom issued an executive order requiring large employers to provide up to 80 hours of paid leave for food sector workers for certain COVID-19-related reasons. Covered workers include farm workers, grocery workers and food delivery workers, among others. The measure was intended to provide paid leave for employees not covered by FFCRA’s paid leave provisions. Click here for more information.

  • Los Angeles—Mayor Eric Garcetti has issued a public order, effective April 10, 2020, requiring up to 80 hours of supplemental paid sick leave for certain workers for specified COVID-19-related reasons. The order applies to private employers with 500 or more employees within the city of Los Angeles, or 2,000 or more employees within the United States. The order includes employer and employee exemptions, and pay caps apply. The city has issued rules to implement the order.
  • Los Angeles County—Under an urgency ordinance, employees in unincorporated areas of Los Angeles County are entitled to 80 hours of supplemental paid sick leave for specific COVID-19-related reasons, retroactive to March 31, 2020. Part-time employees receive paid sick leave equal to their average two weeks’ pay. Pay is capped at $511 per day and $5,110 total. 
The ordinance applies to employers with 500 or more employees nationally, but employers covered by the FFCRA or the state order requiring paid leave for food sector employees are exempt. Employees who are emergency responders or health care providers, as defined in the ordinance, are not entitled to the leave.
  • San Francisco—As of April 17, 2020, the San Francisco Public Health Emergency Leave Ordinance requires employers with 500 or more employees worldwide to provide their San Francisco employees with up to 80 hours of emergency paid sick leave for certain coronavirus-related purposes. Click here for FAQs from the city on the new law.
The city of San Francisco has also passed the Workers and Families First Program, providing $10 million to businesses with employees in San Francisco to provide five days of sick leave beyond employers’ existing policies. The additional sick leave is available only to employees who have exhausted their currently available sick leave, have exhausted or are not eligible for federal or state supplemental sick leave, and whose employer agrees to extend sick leave beyond current benefits. The city has released an employer guide on the program.

The city has also published guidance on San Francisco Paid Sick Leave and the coronavirus.
  • San Jose—San Jose has passed a paid sick leave ordinance, effective April 8 – Dec. 31, 2020, in response to the COVID-19 crisis. The ordinance is meant to fill the gaps left by the FFCRA, and it requires employers to provide eligible employees with up to 80 hours of paid sick leave for specified COVID-19 related reasons. The city has issued FAQs on the ordinance.
Nevada ­­­

The Nevada Labor Commissioner’s Office has issued guidance on employees’ use of leave for COVID-19 purposes under the state’s new paid leave law. According to the guidance, employees may elect to use available paid leave or other applicable leave while out on a mandatory government quarantine, but employers may not require that employees use the leave for this purpose.


The Oregon Bureau of Labor and Industries issued a temporary rule clarifying that Oregon family leave covers an employee’s absence to care for his or her child whose school or place of care has been closed in conjunction with a statewide public health emergency declared by a public health official.

Oregon has also issued guidance on the use of sick time (which may also be used for public health school closures) in the context of COVID-19.  

This post is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.  

New Study Underscores Importance of Physical Activity in the Avoidance of Dementia

This study has been accepted for publication and undergone full peer review.  "Factors independently associated with the risk of developing dementia included increasing age, diabetes and lack of physical exercise."  

Summary of Results:  
  • Diabetes increased the risk of dementia by 51%.  
  • Compared to no physical exercise, engaging in 3 days a week of physical exercise reduced the risk of dementia by 37%.   
  • Compared to no physical exercise, engaging in 5 day sa week of physical exercise reduced the risk of dementia by 59%. 

Sunday, May 24, 2020

Employee Health Screening Apps are Coming - Proceed with Caution

COVID-19 and the resultant business and economic freeze may very well prove to be the largest global event occurring in any of our lifetimes.  The loss of lives, livelihoods, businesses and long term effects on mental health and culture are far from complete, yet already devastating.  Now, employers grapple with the most significant decision they are likely to ever make: when to come back to work and how.

Many employers will be lured into the siren song of safety above all else and succumb to a balancing act that tips heavily in favor of control and surveillance over individual liberty.  I fully understand the impetus.  Employers find themselves in a tricky Catch-22.  They must do that which is reasonable to protect the health and safety of their workers without trampling on employee privacy, health or liberty. 

As the attorneys at Ropes & Gray LLP point out, "[e]mployers looking to introduce these apps may point to their duty under the Occupational Safety and Health Act (“OSHA”) to furnish to workers 'employment and a place of employment, which are free from recognized hazards that are causing or are likely to cause death or serious physical harm.'"  But as Americans, we have far more individual liberty protection than people in the Asian countries that are months ahead of us and have already implemented sever state, local and employer controls.  For example, "China has already introduced virtual health checks, contact tracing and digital QR codes to limit the movement of people. Antibody test results could easily be integrated into this system."

Beyond any employer's legal analysis (which is undoubtedly important) the cultural differences in the United States should oblige employers to proceed with more than a modicum of caution.  We have a vast network of federal, state, local and employment laws and regulations protecting our individual liberties.  What's more is that inherent and deep love for liberty embedded in our Constitution and our core as a people.  American was founded on the concept that liberty outweighs security.  As Benjamin Franklin wrote famously in the Pennsylvania Assembly's 1755 reply to the Governor
Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.
Ropes & Gray nicely summarized these points as such:  
Because of contact-tracing apps’ intrusive nature and the laws discussed above, employer-required or employer-implemented electronic contact tracing could be viewed as overreaching. These concerns would be heightened for an employer seeking to implement a blanket requirement that all employees must install and use the app, or seeking to gather and use COVID-19 data of employees when they are off duty. As such, any employer-implemented program should be carefully designed, reviewed, and vetted. In general, consent-based approaches will be easier to implement, particularly if the consent, even if opt-out, is prominent and comprehensive notice of how the information will be used is provided. ...

Finally, public fear of government and corporate mass surveillance is well established. As such, employers may encounter considerable resistance if they require (or even strongly encourage) installation of these apps on employees’ personal smart phones, which have large amounts of personal data and are already subject to heightened legal protections.
Behemoth corporations are now lining up to create such apps.  Google, Apple, Microsoft and UnitedHealth are all working on projects to gather up as much as possible about your employees' health and report some of that data back to you.  And while none of these companies have discussed going quite this far, Natalie Kofler & Françoise Baylis writing at Nature asked us to:  
Imagine a world where your ability to get a job, housing or a loan depends on passing a blood test. You are confined to your home and locked out of society if you lack certain antibodies.

It has happened before. For most of the nineteenth century, immunity to yellow fever divided people in New Orleans, Louisiana, between the ‘acclimated’ who had survived yellow fever and the ‘unacclimated’, who had not had the disease1. Lack of immunity dictated whom people could marry, where they could work, and, for those forced into slavery, how much they were worth. Presumed immunity concentrated political and economic power in the hands of the wealthy elite, and was weaponized to justify white supremacy.

Something similar could be our dystopian future if governments introduce ‘immunity passports’ in efforts to reverse the economic catastrophe of the COVID-19 pandemic. The idea is that such certificates would be issued to those who have recovered and tested positive for antibodies to SARS-CoV-2 — the coronavirus that causes the disease. Authorities would lift restrictions on those who are presumed to have immunity, allowing them to return to work, to socialize and to travel. This idea has so many flaws that it is hard to know where to begin.
Kofler and Baylis went on to list ten reasons they think immunity passports are a bad idea.  And while they are looking at a different legal and moral question (government immunity passports vs. employer health tracking apps) note how many of these reasons apply to employers as well: 
  1. COVID-19 immunity is a mystery
  2. Serological tests are unreliable
  3. The volume of testing needed is unfeasible
  4. Too few survivors to boost the economy
  5. Monitoring erodes privacy
  6. Marginalized groups will face more scrutiny
  7. Unfair access
  8. Societal stratification
  9. New forms of discrimination
  10. Threats to public health
On the purely legal front, here is how Ropes & Gray came down on the most prevalent question I've heard from employers:  
Can I require my employees to download a contact-tracing app as a condition of continued employment?

In general, private employers likely could lawfully mandate that employees utilize a contact-tracing app, provided that the mandatory program is administered in a manner that is no more intrusive than necessary to meet the legitimate business concern. The permissibility of a contact-tracing app may vary based on differing employment settings, the employer’s business necessity for employee proximity, and whether the employer can implement less intrusive measures to provide a safe environment. For instance, a professional services firm, where the vast majority of employees can (or do) work remotely and thus present no immediate danger to anyone else in the workplace, may have difficulty showing the app is a business necessity and not more intrusive than necessary. On the other hand, an industrial meat-processing plant that requires in-person presence and where the nature of the work prevents social distancing within the plant may readily make the required showing, but note that the app may not be effective if these employees do not keep their smart phones on their person during the work day and, instead, store them in a locker off the factory floor.

Further, employers must ensure that the app is used in a non-discriminatory manner and that any medical or other personal information the employer obtains is stored confidentially and separate from employees’ personnel files. Employers would likely be required to cover the costs associated with the apps or the acquisition of smart phones to run the apps for employees who do not already own smart phones. Employers should seek to obtain consent from employees that authorizes the employer to obtain, use, and disclose to public health officials employee health information and geolocation data, as well as installation of the software for contact assessment and tracing.

Public employers may also mandate use of a contact-tracing app. However, in addition to satisfying the requirements noted above, they must consider the equal protection and due process implications. In particular, with respect to due process, public employers likely must ensure that there is a post-determination appeal process for anyone who has been denied access to the workplace as a result of being identified as COVID-19 positive or at risk based on his/her geolocation contacts. Voluntary employee participation programs may be more defensible from a privacy law perspective, but will require widespread adoption for public health effectiveness.
What about an app that relies solely on an individual's own self-reported COVID-19 diagnosis or symptoms?  This approach definitely helps to alleviate the legal and ethical burdens an employer will face in the process, but the application can only operate as reliable as the integrity of the individual inputting the data.  So while this may help an employer feel that it is doing that which is reasonable to protect other employees, it really might just be engaging in a form or modern-day, corona-security virtue signaling.   

Employers must also consider the inevitable data leaks and hacks that will arise from these third party apps.  The resultant HIPAA violations, credit monitoring, cleanup and public relations nightmare that will follow will be no small matter.  It never is after any sort of employer or third-party leak or hack.  In fact, many employers are surprised to learn that an employee's medical record is worth more to hackers than their credit card
Security experts say cyber criminals are increasingly targeting the $3 trillion U.S. healthcare industry, which has many companies still reliant on aging computer systems that do not use the latest security features.

“As attackers discover new methods to make money, the healthcare industry is becoming a much riper target because of the ability to sell large batches of personal data for profit,” said Dave Kennedy, an expert on healthcare security and CEO of TrustedSEC LLC. “Hospitals have low security, so it’s relatively easy for these hackers to get a large amount of personal data for medical fraud.” ...

The data for sale includes names, birth dates, policy numbers, diagnosis codes and billing information. Fraudsters use this data to create fake IDs to buy medical equipment or drugs that can be resold, or they combine a patient number with a false provider number and file made-up claims with insurers, according to experts who have investigated cyber attacks on healthcare organizations.  
Medical identity theft is often not immediately identified by a patient or their provider, giving criminals years to milk such credentials. That makes medical data more valuable than credit cards, which tend to be quickly canceled by banks once fraud is detected.
Stolen health credentials can go for $10 each, about 10 or 20 times the value of a U.S. credit card number, according to Don Jackson, director of threat intelligence at PhishLabs, a cyber crime protection company. He obtained the data by monitoring underground exchanges where hackers sell the information.
What about the strategic storage and use of your data?  Did you happen to notice that one of the giant corporations listed earlier in this post is also a massive, nationwide health insurer?  For that entity, every bit of granular data it can extract about your employees allows it to increase your premium as well as its shareholders' profits.  Employer health plans should always follow one simple rule in health data management - never, under any circumstance, disclose more about employee health status than absolutely necessary under the law.  I generally take this rule one step further as a broker and attorney working in the field.  I never, under any circumstances, want to obtain or possess any health or private information than is absolutely necessary under the law.  Possessing or knowing that data, or, allowing it to be held in more places than necessary simply open up the employer to more liability and headaches than necessary.  

Employers will be presented with countless advertisements and arguments for installing some form of health-tracking application as we consider how to return to the workplace.  And I know that many of these arguments will be good ones.  I just fear that the counterbalancing arguments in favor of liberty, privacy and lawful data protection will be outweighed in this process as there won't be any gigantic multinational corporations lined up to profit from the sale of common sense, individual liberty and employee privacy. 

Saturday, May 23, 2020

Managing COVID-19 Risks in the Workplace (Webinar)

DOL Final Rule: Overtime and Fluctuating Workweek

Earlier this week, the U.S. Department of Labor (DOL) announced a final rule allowing employers to pay bonuses, premium payments, or other additional pay, such as commissions and hazard pay using the fluctuating workweek method of compensation. For overtime purposes, these supplemental payments must be included in the calculation of the regular rate unless they are excludable under the federal Fair Labor Standards Act (§§ 7(e)(1) – (8)). Currently, this fluctuating workweek method may not be used by employers who compensate their employees with bonuses or other incentive-based pay.

The Fair Labor Standards Act (FLSA) requires that employers pay their nonexempt employees overtime of at least one and one-half times their regular rate for all hours worked over 40 in a workweek. The regular rate is computed for each workweek and is all remuneration for employment, with some exclusions, divided by the number of hours worked. The regular rate is determined by dividing the total pay in any workweek by the total number of hours actually worked.

Fluctuating Workweek Method

The fluctuating workweek method allows employers to calculate overtime pay for nonexempt employees who are paid a set salary for hours that fluctuate each week.  An employer may use this method to compute overtime compensation when:
  • The employee’s work hours fluctuate from week to week;
  • The employee receives a fixed salary that does not vary with the number of hours they work in the workweek, whether few or many;
  • The amount of the employee’s fixed salary is enough to pay them at least the applicable minimum wage for every hour they worked in workweeks when they worked the most hours;
  • The employee and the employer have a clear and mutual understanding that the employee’s fixed salary is compensation (apart from overtime premiums and any bonuses, premium payments, commissions, hazard pay, or other additional pay of any kind not excludable from the regular rate under FLSA §§ 7(e)(l) – (8) for the total hours worked each workweek regardless of the number of hours; and
  • The employee receives overtime pay, in addition to their fixed salary and any bonuses, premium payments, commissions, hazard pay, and additional pay of any kind, for all overtime hours worked at no less than one-half the employee’s regular rate of pay for that workweek.
Since the salary is fixed, an employee’s regular rate will vary from week to week and is determined by dividing the amount of the salary and any non-excludable additional pay received each workweek by the number of hours worked in the workweek.

Payment for overtime hours, at no less than one-half of this rate, is compliant because these hours have already been compensated at the straight time rate (by payment of the fixed salary and non-excludable additional pay). Payment of any bonuses, premium payments, commissions, hazard pay, and additional pay of any kind is compatible with the fluctuating workweek method of overtime payment, and such payments must be included in the calculation of the regular rate unless excludable under § 7(e)(1) through (8).
Scenario and Example

The DOL provides the following scenario and example to demonstrate overtime and a fluctuating workweek:
Scenario: An employee whose hours of work do not customarily follow a regular schedule but vary from week to week, whose work hours never exceed 50 hours in a workweek, and whose salary of $600 a week is paid with the understanding that it constitutes the employee’s compensation (apart from overtime premiums and any bonuses, premium payments, commissions, hazard pay, or other additional pay of any kind not excludable from the regular rate under §§ 7(e)(1) – (8)) for all hours worked in the workweek.
Example: If during the course of four weeks this employee receives no additional compensation and works 37.5, 44, 50, and 48 hours, the regular rate of pay in each of these weeks is $16, $13.64, $12, and $12.50, respectively. Since the employee has already received straight time compensation for all hours worked in these weeks, only additional half-time pay is due for overtime hours. For the first week the employee is owed $600 (fixed salary of $600, with no overtime hours); for the second week $627.28 (fixed salary of $600, and 4 hours of overtime pay at one-half times the regular rate of $13.64 for a total overtime payment of $27.28); for the third week $660 (fixed salary of $600, and 10 hours of overtime pay at one-half times the regular rate of $12 for a total overtime payment of $60); for the fourth week $650 (fixed salary of $600, and 8 overtime hours at one-half times the regular rate of $12.50 for a total overtime payment of $50).
The DOL included a disclaimer that this final rule was submitted to the Office of the Federal Register (OFR) for publication, and is currently pending placement upon public inspection at the OFR and publication in the Federal Register. The current version of the final rule may vary from the published version if minor technical or formatting changes are made during the OFR review process. Importantly, only the version published in the Federal Register is the official final rule.

The final rule is effective 60 days after final publication.

Read the announcement and final rule.  

Friday, May 22, 2020

California's In Trouble: 340,000 Public Employees With $100,000+ Paychecks Cost Taxpayers $45 Billion

From ZeroHedge:
Despite California’s $54 billion budget deficit and $1 trillion unfunded pension liability, there are 340,390 government employees bringing home six-figure salary and pension checks. Recently, though, Gov. Gavin Newsom asked U.S. taxpayers for a bailout.
The governor wrote a letter to Congress requesting $1 trillion in coronavirus 50-state aid. Then, House Speaker Nancy Pelosi obliged by adding $500 billion for the states into the HEROES Act – the bill passed and now awaits action in the Senate.
Here, in part, is why California is asking for taxpayers help.  

Our auditors at found truck drivers in San Francisco making $159,000 per year; lifeguards in LA County costing taxpayers $365,000; nurses at UCSF making up to $501,000; the UCLA athletic director earning $1.8 million; and 1,420 city employees out-earning all 50 state governors ($202,000). 
Using our new interactive mapping tool, quickly review (by ZIP code) the 340,390 California public employees and retirees who earn more than $100,000 and cost taxpayers $45 billion (FY2018-9). Just click a pin and scroll down to see the results rendered in the chart beneath the map. 
Here are a few examples of what you’ll uncover:
  • 109,627 teachers and school administrators – including the CEO of Summit Everest charter schools Diane Tavenner ($450,115); and superintendents Michael Lin ($443,875) at Corona-Norco Unified; Polly Bove ($395,257) at Fremont Union High; Christopher Hoffman ($351,885) at Elk Grove Unified; and Al Mijares ($348,276) at the Orange County Dept. of Education.
  • 66,403 college and university employees – including the athletic director at UCLA, Daniel Guerrero ($1.8 million), who is retiring amid criticisms that his teams lost too frequently. The school’s football coach, Charles (Chip) Kelly ($3.3 million), compiled a 7-17 record during his first two years and is the most highly compensated public employee in the state. Furthermore, there are 11,310 college and university employees making more than $200,000.
  • 62,204 State of California employees – including a nurse, Ito Chikako, at the University of California, who made $501,391 – paid through the state system. David Winsor Sirkin, Sr. Psychiatrist at Correctional & Rehabilitative Services, made $409,399. Corrections paid two dentists $385,596 last year. The chief regulator at barbering & cosmetology made $124,296.
  • 45,718 city and town employees – including 1,420 municipal administrators and employees who out-earned the California governor – the highest paid state governor ($202,000). Highly compensated city managers included Deanna Santana (Santa Clara – $396,158); Paul Arevalo (West Hollywood — $353,603); Fredrick Cole (Santa Monica – $342,780); David Ready (Palm Springs – $340,149); Edward Shikada (Palo Alto – $329,080); and Scott Ochoa (Ontario – $328,500).
Reaching out to all governments mentioned, Santa Clara responded saying that their city is complex and they compete for talent in Silicon Valley. Palm Springs responded by saying the city manager is cutting his pay by 20-percent to $288,579. 
In 2017, we found that 44 lifeguards in Los Angeles County cost taxpayers between $200,000 and $365,000. Today, it’s worse with salaries comprising only about half the total cost when including overtime, extra pay and benefits. 
In total, $45 billion in cash compensation flows to local and state government workers across California earning six figures. Our auditors did not include the cost of benefits. 
We also haven’t included the payroll costs of at least 28,000 federal employees making $100,000+ within the executive agencies based in California. ...

Looking More Like COVID-19 Will Reduce Employer Medical Claims in 2020

From SHRM:    
The coronavirus may end up lowering health care costs for self-insured employers this year, as medical treatment for noninfected patients declines during the pandemic, according to new reports. Health care actuaries who in April predicted a spike in group health plan costs now have reservations about those earlier forecasts, and they are uncertain about the outlook for plan premiums in 2021. ... 
COVID-19 could reduce employer health care costs for self-insured employers by as much as 4 percent in 2020, according to a May study ... that analyzed estimates of infection levels in the U.S. In April, a similar study conducted ... projected that costs for large employers could rise by as much as 7 percent due to COVID-19 testing and treatment, echoing forecasts by other consultancies and health industry groups. 
In a self-funded (or self-insured) group health plan, the employer assumes the financial risk of paying for employees' health care claims under the cost-sharing terms of the plan. ... 
Looking ahead to 2021, 'additional financial risks come from the potential adverse consequences from missed wellness visits, immunizations and services that otherwise would have been delivered,' [one expert] said. 'It is not unreasonable to assume that we'll see an increase in case complexity due to these missed services, and though the extent is debatable, it will likely be dependent on how long people continue to avoid care.' ...

Thursday, May 21, 2020

Accommodating At-risk Employees Under the ADA Amid a Global Pandemic

The Americans with Disabilities Act (ADA) requires employers to provide reasonable accommodations to employees who need it. These accommodations can be straightforward and may include installing a wheelchair ramp, adding text-to-voice software on a computer or making some alterations to the height of a desk. When employers are fortunate, the accommodation needed for an employee to perform their job is fairly obvious. 

But what happens when the return to work potentially prevents employees from safely accomplishing their work? For employees who have a greater risk of contracting the coronavirus disease COVID-19, this is could be grim. 

This post compiles some guidance from the Equal Employment Opportunity Commission (EEOC) to help employers during the coronavirus pandemic. The guidance focuses on ADA accommodations as they pertain to “at-risk” employees. 

Question 1: What does an employee need to do in order to request reasonable accommodation from their employer because they one of the medical conditions that the CDC says may put them at higher risk for severe illness from COVID-19?
Answer 1: An employee—or a third party, such as an employee’s doctor—must let the employer know that she needs a change for a reason related to a medical condition (here, the underlying condition). Individuals may request accommodation in conversation or in writing. While the employee (or third party) does not need to use the term “reasonable accommodation” or reference the ADA, she may do so.

The employee or her representative should communicate that she has a medical condition that necessitates a change to meet a medical need. After receiving a request, the employer may ask questions or seek medical documentation to help decide if the individual has a disability and if there is a reasonable accommodation, barring undue hardship, that can be provided.
Question 2: The CDC identifies a number of medical conditions that might place individuals at “higher risk for severe illness” if they get COVID-19. An employer knows that an employee has one of these conditions and is concerned that his health will be jeopardized upon returning to the workplace, but the employee has not requested accommodation. How does the ADA apply to this situation?
Answer 2: First, if the employee does not request a reasonable accommodation, the ADA does not mandate that the employer take action.

If the employer is concerned about the employee’s health being jeopardized upon returning to the workplace, the ADA does not allow the employer to exclude the employee—or take any other adverse action—solely because the employee has a disability that the CDC identifies as potentially placing him at “higher risk for severe illness” if he gets COVID-19. Under the ADA, such action is not allowed unless the employee’s disability poses a “direct threat” to his health that cannot be eliminated or reduced by reasonable accommodation.

The ADA direct threat requirement is a high standard. As an affirmative defense, direct threat requires an employer to show that the individual has a disability that poses a “significant risk of substantial harm” to his own health under 29 C.F.R. section 1630.2(r). A direct threat assessment cannot be based solely on the condition being on the CDC’s list; the determination must be an individualized assessment based on a reasonable medical judgment about this employee’s—not the disability in general—using the most current medical knowledge and/or on the best available objective evidence. The ADA regulation requires an employer to consider the duration of the risk, the nature and severity of the potential harm, the likelihood that the potential harm will occur and the imminence of the potential harm. Analysis of these factors will likely include considerations based on the severity of the pandemic in a particular area, the employee’s own health (for example, whether the employee’s disability is well-controlled) and his particular job duties. A determination of direct threat also would include the likelihood that an individual will be exposed to the coronavirus at the worksite. Measures that an employer may be taking in general to protect all workers, such as mandatory social distancing, also would be relevant.

Even if an employer determines that an employee’s disability poses a direct threat to his own health, the employer still cannot exclude the employee from the workplace—or take any other adverse action—unless there is no way to provide a reasonable accommodation (absent undue hardship). The ADA regulations require an employer to consider whether there are reasonable accommodations that would eliminate or reduce the risk so that it would be safe for the employee to return to the workplace while still permitting performance of essential functions. This can involve an interactive process with the employee. If there are not accommodations that permit this, then an employer must consider accommodations such as telework, leave or reassignment (perhaps to a different job in a place where it may be safer for the employee to work or that permits telework). An employer may only bar an employee from the workplace if, after going through all these steps, the facts support the conclusion that the employee poses a significant risk of substantial harm to himself that cannot be reduced or eliminated by reasonable accommodation. 
Question 3: What are examples of accommodation that, absent undue hardship, may eliminate (or reduce to an acceptable level) a direct threat to self?
Answer 3Accommodations may include additional or enhanced protective gowns, masks, gloves or other gear beyond what the employer may generally provide to employees returning to its workplace. Accommodations also may include additional or enhanced protective measures, for example, erecting a barrier that provides separation between an employee with a disability and co-workers/the public or increasing the space between an employee with a disability and others. Another possible reasonable accommodation may be elimination or substitution of particular “marginal” functions (less critical or incidental job duties as distinguished from the “essential” functions of a particular position). In addition, accommodations may include temporary modification of work schedules (if that decreases contact with co-workers and/or the public when on duty or commuting) or moving the location of where one performs work (for example, moving a person to the end of a production line rather than in the middle of it if that provides more social distancing).

These are only a few ideas. Identifying an effective accommodation depends, among other things, on an employee’s job duties and the design of the workspace. An employer and employee should discuss possible ideas; the Job Accommodation Network ( also may be able to assist in helping identify possible accommodations. As with all discussions of reasonable accommodation during this pandemic, employers and employees are encouraged to be creative and flexible.