[firm] blog logo

ERISA Lawsuit Alleging Worker Misclassification Is A Reminder to Employers to Monitor Their Employee Classifications

A plaintiff recently filed suit against Yum! Brands, Inc. (“Yum”), Taco Bell Corp. (“Taco Bell,” together with Yum referred to herein as, the “Employers”), and various other defendants under ERISA over the alleged misclassification of his employment status. The complaint states that common law employees were eligible to participate in certain retirement plans maintained by the Employers (collectively, the “Plans”) pursuant to the Plans’ governing documents. The plaintiff alleges he met the common law test for employee status but was classified as an independent contractor, instead of an employee, during his 25 years of employment. Specifically, the plaintiff alleges that during the relevant employment periods, the Employers controlled the work he performed and the manner and means by which he performed his work, such as by directing the specific order and sequence of his work and requiring him to attend employee-only events and meetings. The plaintiff further alleges that other… Continue Reading

Group Health Plan Service Contracts Trigger Compensation Disclosures

Among the new requirements that are, or soon will be, imposed on employer-sponsored group health plans subject to ERISA (?Ç£GHPs?Ç¥) by the Consolidated Appropriations Act of 2021 (the ?Ç£CAA?Ç¥) are compensation disclosure requirements which apply to GHPs and certain of their third-party service providers. Background ERISA contains prohibitions on certain transactions between an employee benefit plan, including a GHP and a party-in-interest, such as a third-party service provider.?á Section 408(b)(2) of ERISA provides an exemption from the prohibited transaction rules for reasonable contracts entered into by a plan and a service provider for necessary plan-related services (?Ç£Contract?Ç¥), provided that no more than reasonable compensation is paid for such services (the ?Ç£Prohibited Transaction Exemption?Ç¥). The relevant fiduciary of the plan under ERISA (the ?Ç£Fiduciary?Ç¥) is responsible for determining whether compensation to be paid under the Contract is reasonable in order to comply with the Prohibited Transaction Exemption. Disclosure Requirement under the… Continue Reading

IRS Issues Additional Guidance Regarding COBRA Premium Subsidy

As we previously reported here, the American Rescue Plan Act of 2021 (?Ç£ARPA?Ç¥) provides a 100% COBRA premium subsidy to any qualified beneficiary who is entitled to COBRA coverage due to an involuntary termination of employment or reduction in hours of employment. Employers will receive a tax credit for the cost of COBRA premiums for April 1 to September 30, 2021. The IRS recently issued FAQs addressing many issues related to the subsidy, including: (i) subsidy eligibility, (ii) what qualifies as a reduction in hours or an involuntary termination of employment, (iii) the type of coverage eligible for the subsidy, (iv) when the subsidy period begins and ends, (v) the extended election period, (vi) coordination with the extended deadlines due to the COVID national emergency (?Ç£Outbreak Period Extensions?Ç¥), (vii) payments to insurers, (viii) application to state continuation coverage, and (ix) calculation and claiming of the subsidy tax credit. One of… Continue Reading

IRS Clarifies Taxability of Dependent Care Benefits Provided Pursuant to a Carryover or Extended Grace Period

The IRS recently issued Notice 2021-26 (the ?Ç£Notice?Ç¥), which addresses certain questions that were not specifically answered in the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (enacted as part of the Consolidated Appropriations Act, 2021), and subsequent IRS guidance (collectively, the ?Ç£CAA Guidance?Ç¥). The CAA Guidance addressed the taxability of dependent care benefits provided under a dependent care assistance program (?Ç£DCAP?Ç¥) when a carryover or extended grace period is applied.?á As discussed in our prior blog post here, the CAA Guidance permits employers to adopt (i) a carryover of unused DCAP funds from taxable years 2020 to 2021 and 2021 to 2022 (?Ç£CAA Carryover?Ç¥) or (ii) an extended grace period for incurring DCAP claims for plan years ending in 2020 and 2021 (?Ç£CAA Extended Grace Period?Ç¥). The CAA Guidance confirms that any unused DCAP amounts carried over from one year (?Ç£Prior Year?Ç¥) to, or available in, the subsequent… Continue Reading

HHS Announces Final 2022 Cost-Sharing Maximums under the Affordable Care Act

HHS recently issued its final ?Ç£Notice of Benefit and Payment Parameters for 2022?Ç¥ (the ?Ç£Notice?Ç¥), which includes the maximum annual limitations on cost-sharing that will apply to ?Ç£essential health benefits?Ç¥ in 2022 under non-grandfathered group health plans subject to the Affordable Care Act. For this purpose, cost-sharing generally includes deductibles, coinsurance, copayments, and other required expenditures that are qualified medical expenses with respect to essential health benefits available under the plan. The 2022 limitations are (i) $8,700 for self-only coverage and (ii) $17,400 for other than self-only coverage. The Notice is available here.

IRS Announces that Purchases of Personal Protective Equipment are Tax Deductible

In Announcement 2021-7 (the ?Ç£Announcement?Ç¥), the IRS clarified that the costs to purchase personal protective equipment (?Ç£PPE?Ç¥), such as masks, hand sanitizers, and sanitizing wipes, for the primary purpose of preventing the spread of COVID-19, are tax deductible as a medical expense. Specifically, the amounts paid for PPE will be treated as amounts paid for medical care under Section 213(d) of the Internal Revenue Code. The costs of PPE are also eligible to be paid or reimbursed by health flexible spending arrangements, Archer medical savings accounts, health reimbursement arrangements, and health savings accounts. However, if the PPE expense is paid or reimbursed by such an arrangement or account, then the expense will not be tax deductible as a medical expense. The IRS also stated that group health plans may be amended to provide for the reimbursement of PPE expenses incurred for any period beginning on or after January 1, 2020… Continue Reading

New Required COBRA Premium Subsidy

Beginning on April 1, 2021, the American Rescue Plan Act of 2021 (“ARPA“) will provide a 100% COBRA premium subsidy (the ?Ç£Subsidy?Ç¥) to any qualified beneficiary who is entitled to COBRA coverage due to an involuntary termination of employment or reduction in hours of employment. Under the ARPA, the federal government will reimburse the employer, in the form of a tax credit, the cost of the premiums for up to six months, from April 1 to September 30, 2021. Specifically, the Subsidy will end on the earliest of: (i) September 30, 2021; (ii) the date the qualified beneficiary becomes eligible for other health plan coverage or Medicare; or (iii) the date the qualified beneficiary?ÇÖs COBRA coverage period ends. Further, any individual who would have been eligible for the Subsidy, had he or she previously elected, or continued, COBRA coverage, will have another opportunity to elect COBRA coverage under a special… Continue Reading

Court Finds Exclusion for Autism Treatments Violates the Mental Health Parity and Addiction Equity Act

In Doe v. United Behavioral Health, No. 4:19-CV-07316-YGR (N.D. Cal. Mar. 5, 2021) a federal district court in California recently considered a plaintiff?ÇÖs claim that an exclusion from coverage for ?Ç£applied behavior analysis?Ç¥ and ?Ç£intensive behavioral therapies?Ç¥ (the ?Ç£ABA/IBT Exclusion?Ç¥) used to assist children with Autism Spectrum Disorder (?Ç£Autism?Ç¥) violated the federal Mental Health Parity and Addiction Equity Act (the ?Ç£Parity Act?Ç¥). The plaintiff, as the representative of her minor son who was diagnosed with Autism, was covered under an employer-sponsored, self-funded group health plan subject to ERISA.?á The court held that the ABA/IBT Exclusion violated the Parity Act for two reasons. First, the court found that the ABA/IBT Exclusion, on its face, created a separate treatment limitation applicable only to services for a mental health condition (in this case, Autism). Second, the court concluded that the ABA/IBT Exclusion constituted a more restrictive limitation for a mental health condition than… Continue Reading

IRS Clarifies Optional Flexible Spending Account and Cafeteria Plan Enhancements

In 2020, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (the ?Ç£Act?Ç¥) was enacted. The Act is part of the Consolidated Appropriations Act of 2021. The Act provides employer sponsors of cafeteria plans, including health flexible spending accounts (?Ç£HFSAs?Ç¥) and dependent care flexible spending accounts (?Ç£DCFSAs?Ç¥) (collectively, ?Ç£FSAs?Ç¥), with helpful new options for easing the normal FSA use-it-or-lose-it and mid-year election change rules. Generally, the Act provides for (i) flexibility with respect to carryovers of unused FSA amounts from the 2020 and 2021 plan years (?Ç£Enhanced Carryover?Ç¥); (ii) extension of the permissible period for incurring FSA claims for plan years ending in 2020 and 2021 (?Ç£Enhanced Grace Period?Ç¥); (iii) a special rule regarding post-termination reimbursements from HFSAs during plan years 2020 and 2021 (?Ç£HFSA Post-Termination Option?Ç¥); (iv) a special claims period and carryover rule for DCFSAs when a dependent ?Ç£ages out?Ç¥ during the COVID-19 public health emergency; and… Continue Reading

Before Cleaning Out Files, Brush Up on Record Retention Requirements

Our world is filled with paper and electronic records, and the HR departments at most companies are no exception. Enrollment forms, notices, plan documents, summary plan descriptions, benefit statements, and service records are just a few of the records that fill the HR department?ÇÖs file cabinets and computer storage. While it might be tempting to clean out files, plan sponsors should exercise care before disposing of any files relating to benefits under a plan. A clean desk today could create headaches tomorrow. Generally, ERISA requires an employer to retain plan records to support plan filings, including the annual Form 5500, for at least six years from the filing date (ERISA ?º107) and to maintain records for each employee sufficient to determine the benefits due or that may become due to such employee (ERISA ?º209), with no time limit on such requirement. In addition, HIPAA requires retention of the policies and… Continue Reading

July 2021
S M T W T F S
 123
45678910
11121314151617
18192021222324
25262728293031

Archives