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Ordinary Employee Benefits Issues That Can Cause Extraordinary Problems in M&A Deals

Employee benefits rarely drive corporate transactions, but if the benefits of a target company are not reviewed carefully, they can sometimes derail the transaction.  Even some of the most routine facets of benefit plan administration can result in significant potential financial exposure (e.g., additional employer contributions, taxes, penalties, and fees as well as fees associated with the preparation and filing of IRS and DOL correction program applications) that could negatively affect the overall value of the target company. By identifying issues early in the transaction, the seller can prevent costly purchase price reductions and identify issues that need correction, while the buyer can avoid overpaying for a target and ensure that representation and warranty insurance will be available to cover potential claims. Some of those routine compliance issues include, but are not limited to, the following: Failing to timely file an annual Form 5500.  The DOL can assess a penalty… Continue Reading

Bostock v. Clayton County, Georgia ?Çô What It May Mean for Group Health Plans

The U.S. Supreme Court?ÇÖs recent decision in Bostock v. Clayton County, Georgia held that Title VII of the Civil Rights Act of 1964 protects the employment rights of individuals who are gay, lesbian, or transgender because ?Ç£sex plays a necessary and undisguisable role?Ç¥ in discrimination based on sexual orientation and gender identity. Although this case addressed whether an employer could fire an individual based on sexual orientation or gender identity, there could also be important implications for benefit plans. For example, employees could use the Bostock decision to seek coverage under group health plans for certain procedures that have traditionally been excluded from coverage, such as gender-affirmation surgery, arguing that such exclusions violate the protections under Title VII. If the plan covers implants after a mastectomy but would not cover the same procedure for an individual who is transitioning, the exclusion for transitioning individuals may also be challenged based on… Continue Reading

EEOC?ÇÖs Enforcement Guidance on Pregnancy Discrimination Addresses Contraceptive Coverage

The U.S. Equal Employment Opportunity Commission (?Ç£EEOC?Ç¥) recently issued ?Ç£Enforcement Guidance: Pregnancy Discrimination and Related Issues?Ç¥ (the ?Ç£Guidance?Ç¥) which addresses and clarifies various requirements of the Pregnancy Discrimination Act.?á By way of background, the Pregnancy Discrimination Act was passed in 1978 and amended Title VII of the Civil Rights Act of 1964 (?Ç£Title VII?Ç¥) to confirm that discrimination based on pregnancy, childbirth, or related medical conditions is a form of sex discrimination prohibited by Title VII.?á As applicable to employer-sponsored health plans, the Guidance states that, because prescription contraceptives are available only for women, an employer could violate Title VII by failing to provide coverage of prescription contraceptives (whether for birth control or medical purposes) where it provides coverage for prescription drugs, devices, and services that are used to prevent the occurrence of medical conditions other than pregnancy (the ?Ç£Title VII Contraceptive Mandate?Ç¥).?á The Guidance caveats in a footnote that… Continue Reading

November 2022