Best Best & Krieger News Feed

Play hard. Play fair. Play together.

01 Nov 2016 00:00:00 -0800

Join Best Best & Krieger LLP at the 2016 CALPELRA 41st Annual Training Conference in Monterey, Calif.

BB&K Speakers:

Isabel Safie and Katrina Veldkamp
"ACA Implementation: What Comes Next?"
Although it seems that the ACA is finally in full effect, the IRS continues to publish new guidance, and aspects of the ACA are in flux or have not yet been implemented. For example, the Cadillac tax – although it has been delayed until plan years beginning on or after Jan. 1, 2020, it is moving forward – in this session you’ll learn about its application and how it will impact your health benefit programs. This session will also focus on recent IRS guidance regarding ACA implementation, including new limitations on health reimbursement arrangement coverage and the effect of cash-in-lieu/opt-out programs on affordability calculations. In this session, you’ll also learn what the presenters have learned from the first year of employer reporting and what employers should change in 2017.
Wednesday, Nov. 2
1:30 - 3 p.m.

Alison Alpert and Joseph Sanchez
"You Can't Say That! Free Speech Issues In Public Employment"
Public employees’ right to free speech is more limited than that of the general public. Whether or not a public employer may take disciplinary action against an employee for speech-related conduct, however, is based on a developing body of case law that provides certain balancing tests and guidelines to determine if the speech is protected under the First Amendment. In this session, you’ll learn how you can legally address employee speech that impairs your agency's mission. The session will also highlight issues involving free speech in cyberspace, union speech, and special rules involving high-level policymakers.
Wednesday, Nov. 2
3:30 - 5 p.m.

Arlene Prater
"Severance and Last Chance Agreements: How to Negotiate and Draft Agreements That Comply With the Law and Protect Your Agency"
Drafting an agreement that best protects your agency, is acceptable to employees’ representatives, and complies with current legal standards can be a challenge. This session starts with an introduction to the benefits of using these agreements and then covers specific provisions and standards, such as complying with recent EEOC and NLRB enforcement actions, restrictions on employment and employee behavior, Public Records Act and Brown Act requirements, waiving due process rights, and use for creative resolutions of discipline and layoff disputes.
Thursday, Nov. 3
10:30 a.m. - Noon

Alison Alpert
"When an Employee Says, 'I’ve Got My Medical Marijuana Card,' What Can an Employer Do?"
Medical marijuana is in the news. As many states, including California, pass laws for the legal use of medical marijuana, employers are left questioning their drug use policies. Explore this important issue in light of federal and state law and existing employer policies. You’ll learn whether an employer can discipline an employee for off-hours and off-site use or influence, when it is pursuant to a valid prescription, or for off-hours and off-site recreational use, whether employers can still lawfully implement zero-tolerance drug use policies, and whether medical marijuana use must be accommodated. You’ll also learn how employers might accommodate medical marijuana use, if they choose. Learn what should be included in your policies to ensure that any discipline will be upheld on appeal, and leave this session feeling relaxed, knowing you’ve learned how to comply with the law.
Thursday, Nov. 3
3:30 - 5 p.m.

When
Tuesday, Nov. 1 - Friday, Nov. 4

Where
Portola Hotel & Spa at Monterey Bay
Two Portola Plaza
Monterey, CA 93940

and

Monterey Marriott
350 Calle Principal
Monterey, CA 93940

For more information or to register, click here.

LCC Annual Conference

05 Oct 2016 00:00:00 -0800

Join Best Best & Krieger LLP at the 2016 League of California Cities’ Annual Conference in Long Beach, Calif.

BB&K Speakers

Ruben Duran: “Understanding Public Service Ethics Laws and Principles (AB 1234 Training)”
Wednesday, Oct. 5
9 - 11 a.m.

Alisha Winterswyk: “Complying with CEQA, Brown Act, and Other Public Noticing Requirements”
Thursday, Oct. 6
8 - 9:30 a.m.

Ryan Baron: “Energy Reliability: Understanding the Natural Gas and Electricity Nexus”
Thursday, Oct. 6
Noon

Gail Karish and Christy Marie Lopez: “The Advance of Wireless Infrastructure”
Thursday, Oct. 6
4:15 - 5:30 p.m.

Isabel Safie and Katrina Veldkamp: “Reducing Pension and OPEB Costs”
Thursday, Oct. 6
4:15 - 5:30 p.m.

Jordan Ferguson: “What Municipalities Can Do About the Coming Drone-pocalypse”
Friday, Oct. 7
10:30 - 11:45 a.m.

When
Wednesday, Oct. 5 - Friday, Oct. 7

Where
Long Beach Convention Center
300 E Ocean Blvd
Long Beach, CA 90802

For more information or to register, click here.

BEST IN LAW: Employers need to heed Obamacare Reporting Rules

22 Mar 2015 00:00:00 -0800

BY ISABEL SAFIE

Compliance with reporting obligations is always important for any employer, but the employer reporting requirements under the Affordable Care Act pack a significant penalty that makes compliance particularly important.

In fact, employers could be subject to penalties of up to $100 per return and $200 per employee for failing to timely file the required returns or furnish specified statements to employees.

Thus employers, whether private or governmental, will need to ensure that they have systems in place to collect certain data pertaining to health coverage provided in 2015 and later that will need to be reported to the IRS beginning in 2016.

The reports provide the IRS with information used to determine if employers are subject to penalties under the “play-or-pay” rule or whether individuals are subject to penalties under the individual mandate.

The reporting procedures will be similar to those used in connection with the W-2 Form used to report annual wages. Consistent with the requirements, Form 1095-B or 1095-C will need to be prepared for each employee covered by the reporting obligations and filed with the IRS using a transmittal Form 1094-B or 1094-C.

Certain small employers will need to use the “B series” forms to report minimum essential coverage, while the “C series” forms will be used by employers subject to the play-or-pay rule to provide the IRS with information to determine whether penalties are applicable.

Minimum Essential Coverage (Forms 1094-B and 1095-B)

Generally, “minimum essential coverage” includes an insured plan or coverage offered in the small or large group market or a self-insured group health plan. The good news for most small employers, generally those that are not subject to the play-or-pay rule, is that they will not be required to submit any of the returns discussed here. This is because the obligation to report data connected to minimum essential coverage falls on the insurance carrier rather than the employer, unless the coverage is provided on a self-insured basis.

Small employers that provide minimum essential coverage on a self-insured basis will be required to use the B-series forms to report certain employee information, including names, addresses and other key information.

In contrast, the insurance carrier is responsible for reporting insurance coverage provided by small employers on an insured basis. Thus, employers providing minimum essential coverage through an insurance carrier that assumes the risk of providing health coverage for insured events will have no filing obligation. Most small employers provide minimum essential coverage on an insured basis and, therefore, will not be subject to this filing requirement.

Reporting by Applicable Large Employers (Forms 1094-C and 1095-C)

All applicable large employers will be required to make an annual report to the IRS with respect to each full-time employee. The returns must contain various items of information including:

Whether the employer offers coverage to the employee
The employee’s share of the cost for self-only coverage
Number of full-time employees for each month
Name, address and Social Security number of each full-time employee

Applicable large employers with 50 to 99 full-time and full-time equivalent employees are required to file annual returns even if they are eligible for transition relief and exempt from the play-or-pay rule until 2016.

Filing Deadlines

Statements must be furnished to employees on or before Jan. 31 of the filing year. Copies of the information return filed with the IRS can be used for this purpose. The returns must be filed with the IRS on or before Feb. 28, or March 31 if filing electronically.

The information reporting requirements are lengthy and complex. Although reporting will not occur until early 2016, it is important for employers that will be responsible for these reporting obligations to take proactive action in 2015 to facilitate the reporting obligation. Therefore, it is important for employers to do the following:

Review and understand the reporting requirements.
Obtain copies of the reporting forms and identify the information that will need to be gathered and reported.
Identify the employees for whom reports will need to be submitted.
Designate a responsible person to gather the necessary information.
Calendar applicable deadlines to ensure that statements and returns are submitted timely.

*This article first appeared in The Press-Enterprise on March 22, 2015. Republished with permission.

Play-or-Pay Reprieve for Some Employers

23 Mar 2014 00:00:00 -0800

By Isabel C. Safie

Certain employers may be eligible for a delay in implementing the Affordable Care Act’s employer-shared responsibility mandate, also known as the play-or-pay rules, according to the final rules that were released in February.

However, certain conditions have to be met to be eligible for this relief and it is only temporary.

The play-or-pay rules were intended to go into effect on Jan. 1, 2014 for most large employers (those with at least 50 full-time-equivalent employees) during the prior calendar year. However, the first delay in the implementation of these rules came last year when the effective date was pushed back to the first day of the plan year beginning on or after Jan. 1, 2015.

Aware of the burden that complying with the play-or pay rules has placed on employers yet committed to moving forward with this critical element of the Affordable Care Act, the administration has opted to de- lay the implementation of the play-or-pay rules one more year, to Jan. 1, 2016, for certain large employers.

This additional delay allows for a gradual phase-in of the play-or-pay rules to ease the burden on some employers. For those employers who are eligible for the one year delay but which have already begun to comply with the rules, this delay merely offers an opportunity to further test out the sufficiency of their coverage.

To determine if an employer is eligible to take advantage of the one-year delay, the government has determined that an employer must meet the following four requirements:

1. The employer must have employed 50 to 99 full-time employees (including fulltime- equivalent employees) during 2014. For this purpose, the measuring period must be between 6 and 12 consecutive months. (Employers with less than 50 fulltime employees, including full-time equivalent employees, are not subject to the play-or-pay rules.)

2. The employer cannot reduce the size of its workforce or the overall hours of service of its employees during the period of Feb. 9- Dec. 31, 2014, solely for the purpose of becoming eligible for this delay. A reduction in the number of employees or hours worked for legitimate business reasons, such as due to the loss of a contract, a downturn in the economy or poor employee performance, will not affect eligibility for this one-year delay.

3. The employer cannot eliminate or reduce the health coverage it offers to employees during the period beginning on Feb. 9, 2014 and ending on the last day of the plan year beginning in 2015 (e.g., Dec. 31, 2015 for calendar year plans). To comply with this requirement, the employer must generally maintain the same or better rate of contribution toward the cost of employee-only coverage. Additionally, the employee-only coverage offered to employees must cover at least 60 percent of the total cost of medical services provided under the plan. Also, the employer cannot alter the eligibility terms of the plan such that the class of employees to whom coverage was offered on Feb. 9, 2014 is reduced.

4. The employer must certify, on a form to be designated by the Internal Revenue Service, that it satisfies these requirements. Final rules on the information reporting obligations under the play-or-pay rules (released on March 10) confirm that this certification will be made on the same form used to satisfy these obligations. Therefore, employers who are eligible for the one year delay will still need to comply with the information reporting requirements by submitting the designated form in 2016 for plan years beginning in 2015.

Notably, this delay may not be the last. A fact sheet released by the Treasury Department concurrently with the final rules suggests that compliance may continue to be a moving target as it advises that further delays may be warranted. With so much uncertainty on the timing of the implementation of these rules, it is important for employers to remain well-informed.

* This article first appeared in The Press-Enterprise on Mar. 23, 2014. Republished with permission.

Employers May Allow Unused Amounts in Health FSAs to be Carried Forward for An Entire Year

04 Nov 2013 00:00:00 -0800

The Internal Revenue Service recently released Notice 2013-71, which provides an alternative to the Grace Period Rule for health flexible spending arrangements (FSA). Under this alternative, cafeteria plans may now allow employees to carry over up to $500 of unused amounts remaining in a health FSA at the end of the plan year into the immediately following plan year. If implemented by the employer, the carryover method does not affect the $2,500 annual limitation on health FSA contributions.

Many cafeteria plans offering health FSAs presently use the Grace Period Rule. That rule allows any amount left in a health FSA at the end of a plan year to be used for the reimbursement of qualified expenses in the first 2½ months of the immediately following plan year. Any amounts not used during the grace period are then forfeited. The Notice allows employers to eliminate the Grace Period Rule, and instead allow up to $500 to be carried into the next year. The carried over amount is then available for reimbursement of qualified expenses during the entire plan year.

Employers that currently have a grace period will need to determine whether it should be replaced by the carryover method. Employers that wish to implement the carryover method, whether or not they currently use the Grace Period Rule, will need to amend their cafeteria plan. The amendment must be adopted by the last day of the plan year from which amounts may be carried forward, and may take effect retroactively to the beginning of that year if plan participants are informed of, and the plan is operated in accordance with, the carryover method. Further, the Notice provides that the carryover method may be adopted for plan years beginning in 2013 if the amendment is adopted by the last day of the plan year that begins in 2014.

For more information about the carryover method, please contact the authors listed at right in the firm’s Employee Benefits group, or your BB&K attorney.

Disclaimer: BB&K legal alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.

The Affordable Care Act’s Play or Pay Rules Have Been Delayed

03 Jul 2013 00:00:00 -0800

Yesterday, the Administration announced that the Affordable Care Act’s employer shared responsibility payments, better known as the Play or Pay rules, will not go into effect until 2015. All public and private employers subject to the rules that do not offer affordable coverage providing minimum value to full-time employees in 2014 will not be subject to penalties. The Department of Treasury will publish formal guidance shortly. Proposed rules related to the informational reporting requirements are expected sometime this summer. The Employee Benefits group of Best Best & Krieger will issue additional Legal Alerts when the guidance and proposed rules are released.

If you have any questions about the delay in the Play or Pay penalties or the Affordable Care Act, please contact John Wahlin, Isabel Safie or Allison De Tal in the firm’s Employee Benefits group, or your BB&K attorney.

Disclaimer: BB&K legal alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.

The Affordable Care Act’s Patient-Centered Outcomes Fee Deadline is Approaching

24 Jun 2013 00:00:00 -0800

As part of the Affordable Care Act, insurance companies offering certain health insurance policies and employers, including public agencies, that sponsor certain self-insured plans may be responsible for reporting and paying a Patient-Centered Outcomes Research Institute fee (PCORI Fee) by July 31. The Patient-Centered Outcomes Research Institute was established by the Affordable Care Act to aid patients, health care providers and policy-makers in making informed health decisions through the advancement of clinical effectiveness research. The Institute is funded, in part, by fees imposed on issuers of health insurance policies and sponsors of self-insured health plans.

Self-insured health plans, such as group health plans, health reimbursement arrangements (HRA) and limited types of flexible spending accounts (FSA), are subject to the PCORI Fee for policy years ending after September 30, 2012 and before October 1, 2019. The PCORI Fee, however, does not apply to plans that offer only what are considered “excepted benefits” under the Internal Revenue Code. Examples of “excepted benefits” include stand-alone dental or vision plans, or FSAs funded solely with employee salary reduction contributions.

The PCORI Fee for plan years ending after September 30, 2012 but before October 1, 2013 is $1.00 multiplied by the average number of lives covered under the plan. The fee increases to $2.00 for plan years ending after September 30, 2013 but before October 1, 2014, and in subsequent years is adjusted for increases in health care spending. The regulations provide three alternative methods to determine the average number of lives covered by a self-insured health plan, and in some cases multiple self-insured plans of a single employer will be treated as a single plan. The PCORI Fee is considered a deductible ordinary and necessary business expense.

The PCORI Fee must be reported on the recently revised IRS Form 720, which is due along with the fee by July 31 of the calendar year that immediately follows the last day of the plan year to which the fee applies. For calendar year self-insured health plans first subject to the PCORI Fee for 2012, the Form 720 and payment of the PCORI Fee are due by July 31, 2013.

If you have questions about whether your business or agency’s self-insured plans are subject to the PCORI Fee, or about the implementation of the Affordable Care Act in general, please contact John Wahlin, Isabel Safie or Allison De Tal in the firm’s Employee Benefits group, or your BB&K attorney.

CalPERS Issues Additional Guidance on Its Implementation of PEPRA

22 Jan 2013 00:00:00 -0800

CalPERS recently provided guidance on the implementation of some of the provisions of the Public Employees’ Pension Reform Act (PEPRA) in Circular Letter 200-063-12. The Letter identifies a simple procedure for employers to certify that equal sharing of normal cost by new members will impair an MOU, thereby delaying compliance with this PEPRA requirement. The Letter also outlines how to determine if a new employee is a classic member exempt from most of PEPRA’s key requirements.

PEPRA requires equal sharing of normal cost for new members unless it would impair the terms of a contract (such asan MOU) in effect on January 1, 2013. If an MOU had expired prior to the first of the year and negotiations to renew the MOU were still in progress after January 1, the impairment exception will not apply.

If an employer determines that an MOU would be impaired by this requirement, CalPERS must be given written notice, signed by the employer’s presiding officer (e.g., city manager or general manager). The Letter introduces a form (PERS-CASD-800) which employers must use to unilaterally certify to CalPERS that the terms of a qualifying MOU would be impaired if the requirement that new members pay an equal share of the normal cost were imposed. A separate form must be submitted for each MOU. When the qualifying MOU expires, is renewed, extended or terminates, the employer must immediately notify CalPERS and begin compliance with the equal sharing of normal cost requirement.

It is also important for employers to identify new employees that are not considered new members under PEPRA. CalPERS refers to these employees as classic members. Classic members are not subject to PEPRA’s reduced benefit formulas, increased retirement age, limitations on pensionable compensation or the requirement that they equally share the normal costs of the applicable retirement formula.

The Letter provides a form (PERS-CASD-801) which allows employers to shift some of the burden of establishing a new employee’s status to the employee. Employers must provide the form to all new employees upon hire and use the information the employee provides to enroll him or her in CalPERS through my|CalPERS. My‌|CalPERS will determine whether the employee is a classic member or a new member and will also determine the proper retirement benefit formula. Employers are required to retain the form with the employee’s employment records.

If you have any questions about Circular Letter 200-063-12 or general questions on how PEPRA affects your agency, please contact John Wahlin, Isabel Safie or Allison De Tal in the firm’s Employee Benefits practice group, or your BB&K attorney.

Disclaimer: BB&K e-Bulletins are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.

CalPERS Identifies Special Compensation Items That May be Reported as Pensionable Compensation

07 Jan 2013 00:00:00 -0800

In recently released Circular Letter 200-062-12, CalPERS identifies items of compensation, recognized by Section 571 of the California Code of Regulations as special compensation for classic members, that may be reported as pensionable compensation for new members if those items satisfy certain requirements. Classic members are defined as employees enrolled in CalPERS or another California public retirement system with reciprocity prior to January 1, 2013.

Only the following Section 571 special compensation items are expressly excluded from the definition of pensionable compensation – bonuses, management incentive pay, EPMC value, off-salary schedule pay, temporary upgrade pay and uniform allowance. All the other items can be reported as pensionable compensation, but only if they are:

Part of the normal monthly rate of pay or base pay;
Paid in cash to similarly situated members of the same group or class of employment;
Paid for services rendered during normal working hours; and
Paid pursuant to publicly available pay schedules.

Thus, these items are not automatically considered pensionable compensation. In fact, as currently documented, it is unlikely that many special compensation items in MOUs and employment policies would satisfy either the first or last requirements. As a result, many of these items may need to be restructured to be recognized as pensionable compensation.

However, restructuring special compensation items may not be a simple task due to labor and fiscal considerations. Further, CalPERS has yet to provide guidance as to how they can be integrated into a new member’s normal monthly rate of pay or base pay. Thus, until further guidance is issued, employers should determine which items of special compensation can be considered pensionable compensation and which will need to be restructured.

On this note, CalPERS has begun the regulatory process to codify the information provided in this circular letter. We expect that this process will also provide guidance on how each of the four requirements can be satisfied. However, until such regulations are issued, items listed in the circular letter that meet the four requirements may be reported as pensionable compensation.

If you have any questions about Circular Letter 200-062-12 or how the Public Employees’ Pension Reform Act may affect your agency, please contact John Wahlin, Isabel Safie, or Allison De Tal in the firm’s Employee Benefits practice group, or your BB&K attorney.

Rules Under the Federal Health Care Law Apply to Employers That Receive Medical Loss Ratio Rebates

30 Jul 2012 00:00:00 -0800

Employers that receive medical loss ratio rebates from their health insurance companies must take steps to ensure that the rebates are properly handled. Government and private sector employers are subject to different rules that dictate the use of the rebates and what percentage of the rebate, if any, must be passed along to employees. If all or a portion of the rebate is passed along to employees, the tax and reporting obligations, however, are generally the same for all employers.

To increase transparency, the Patient Protection and Affordable Care Act, recently upheld by the U.S. Supreme Court, requires health insurance companies to publicly report how premium dollars are spent. In an effort to ensure that individuals receive value for their premium dollars, the Act also requires insurance companies to issue a rebate if insufficient premium revenue is spent on medical care and activities that improve health care quality. Health insurance companies required to issue rebates for 2011 must do so no later than August 1, 2012. The rebate will be paid to the entity, often an employer, that paid the insurance premiums. Rebates owed to employers may be paid in the form of a premium credit or a lump-sum payment or reimbursement to an account if the premium was paid with a debit or credit card.

Employers must be prepared if they receive a medical loss ratio rebate in the form of a lump-sum payment. If a state or local government employer receives a rebate, a portion of the rebate may have to be used for the benefit of its employees. For private sector employers receiving a rebate, the Department of Labor has issued guidance on how to allocate the rebate.

Finally, if employers pass all or some of the rebate to employees, the employer must understand its tax and reporting obligations. Most employees will pay their portion of health insurance premiums on a pre-tax basis through the employer’s cafeteria plan. These employees will be subject to federal income and payroll taxes on the portion of the medical loss ratio rebate they receive – regardless of whether it is paid in cash or in the form of reduced health insurance premiums. Thus, the employer will not only need to withhold from such payments and pay the employer share of payroll taxes, but will also have to report such payments as wages. However, medical loss ratio rebates paid to employees who contribute to health insurance premiums on an after-tax basis will not typically be subject to federal income or payroll taxes.

For guidance on how your business should administer a medical loss ratio rebate, please contact John Wahlin, Isabel Safie or Allison De Tal in the firm’s Employee Benefits group, or your BB&K attorney.

Disclaimer: BB&K Legal Alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.

Related BB&K Legal Alerts:

The Impact of Health Care Reform on Employers (July 5, 2012)
New Health Care Law: IRS Issues Guidance on Health Plan Coverage of Adult Children (April 30, 2010)
New Health Care Law Requires Immediate Attention by Many Employers (April 9, 2010)
Supreme Court Upholds Obama Health Care Law (June 28, 2012)

Related Articles:

Grandfathering Plans Under the Nation's New Health Care Law, John Wahlin, The Press-Enterprise (August 25, 2010)
What Can Small Businesses Do to Take Advantage of the New Insurance Tax Rules of Health Care Reform?, John Wahlin, San Diego Daily Transcript (May 3, 2010)