Employee Benefits

EEOC Issues Updated Guidance Regarding COVID-19 Vaccination Incentives

June 9, 2021

By Daniel J. Nugent

Our previous information memo discussed several issues that employers should be aware of when considering whether to provide an incentive to employees to encourage them to receive the COVID-19 vaccine. On May 28, 2021, the Equal Employment Opportunity Commission (EEOC) issued updated guidance to employers on workplace COVID-19 vaccination policies, including guidance on employer-offered COVID-19 vaccine incentives.

Read More >> EEOC Issues Updated Guidance Regarding COVID-19 Vaccination Incentives

Employee Benefits Issues Implicated by Incentivizing Employees to Obtain the COVID-19 Vaccine

March 16, 2021

By Daniel J. Nugent

Many employers are grappling with the decision of whether to provide an incentive (e.g., a cash payment, other form of financial incentive or increased time off) to employees to encourage them to receive the COVID-19 vaccine. Employers wishing to implement a COVID-19 vaccine incentive program should be aware that such a program will likely be considered a “wellness program” which implicates a myriad of legal issues, including issues under the Americans with Disabilities Act (ADA), Genetic Information Nondiscrimination Act (GINA), and Health Insurance Portability and Accountability Act (HIPAA).

Read More >> Employee Benefits Issues Implicated by Incentivizing Employees to Obtain the COVID-19 Vaccine

Long-Awaited Stimulus Relief Bill Has Passed: Key Highlights for Employers

December 30, 2020

By Stephanie H. Fedorka

The long-awaited stimulus relief bill has officially been enacted. On Dec. 21, 2020, Congress passed the Consolidated Appropriations Act, 2021 (Bill), several months after aid had lapsed for many individuals and businesses from the first stimulus bill passed early-on in the COVID-19 pandemic. Congress came together to push through a 5,593 page, $900 billion stimulus package intended to help those individuals and businesses who continue to struggle economically as a result of the ongoing pandemic. After expressing bipartisan criticism of its contents, President Trump finally signed the Bill on Dec. 27, 2020. 

Read More >> Long-Awaited Stimulus Relief Bill Has Passed: Key Highlights for Employers

How Long Does Your CBA Obligate You to Pay for Retiree Health Insurance Coverage?

November 13, 2020

By Richard S. Finkel

If you are a municipal employer in New York State struggling to find the answer to that question, you are not alone. In the absence of express language in your collective bargaining agreement, a definitive response is elusive. So elusive that the Second Circuit Court of Appeals has reached out to New York’s Court of Appeals for guidance. Whatever answer the Court of Appeals returns, if any, the value of a carefully negotiated and precisely drafted collective bargaining agreement cannot be overstated. 

Read More >> How Long Does Your CBA Obligate You to Pay for Retiree Health Insurance Coverage?

Legal Risks Associated With a Retirement Plan's "Missing Participants"

July 2, 2018

By Robert W. Patterson

Administrators of qualified retirement plans have always had to deal with the problem of “missing participants” – that is, terminated vested participants for whom the administrator does not have a current mailing address or other contact information, and participants who refuse to respond to communications from the administrator.  This problem frequently comes to light when a terminated participant nears retirement age or otherwise becomes entitled to receive a plan distribution, because at that time the administrator must contact the participant about distribution options, beneficiary designations, and other matters.  And when a terminated participant approaches age 70½, the necessity of locating him or her becomes more urgent, because plan distributions generally must begin shortly after that age is reached.

Besides being an administrative problem, the inability to locate terminated participants can represent legal risks.  The U.S. Department of Labor (DOL) has asserted that a plan’s inability to locate terminated participants can constitute a breach of duty on the part of the plan’s fiduciaries, in violation of ERISA.  Lost or missing participants can also lead to plan disqualification risks; for example, if “required minimum distributions,” mandated under the Internal Revenue Code, cannot be made.

Read More >> Legal Risks Associated With a Retirement Plan's "Missing Participants"

#MeToo Meets the Internal Revenue Code

February 19, 2018

By Lisa A. Christensen

The "Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for the fiscal year 2018" a.k.a. the Tax Cuts and Jobs Act of 2017 (the "Tax Act") will, among other things, likely make negotiations in connection with sexual harassment or sexual abuse claims more difficult, and settlements for such claims more expensive for employers.

Read More >> #MeToo Meets the Internal Revenue Code

Help Us (and the Code) Help You! Helping Employees/Co-Workers in a Crisis

October 9, 2017

By Lisa A. Christensen

In response to disasters such as hurricanes and earthquakes, the general community comes together to assist those in need — donating our blood, time, money, and belongings.  We respond similarly when one of our co-workers experiences an illness, death, accident, fire, or other severe financial hardship.  Employers often ask us:  “What can we do?”

Helping your employees and co-workers can be as easy as 1-2-3, once you crack the Code.  The Internal Revenue Code, that is.  If you know where to look, you can find some real win-win options.

  1. Tax-Free Employer Payments:  Employers may make direct payments (i.e., “qualified disaster relief payments”) that are tax-free to employees AND deductible by employers.
  2. Employer-Sponsored Public Charities:  Another more flexible (and perpetual) option is to form a public charity in as little as a single day.  An emergency assistance fund backed up by an employer-sponsored public charity can boost workplace morale and enhance an employer’s familial culture.  The employer and employees may make tax-deductible donations which are provided (directly and tax-free) to other employees/former employees affected by disasters and other hardships.
  3. Leave-Based Donation Programs:  Employers can adopt leave-based donation programs whereby employees donate leave time to be paid by the employers to a charity.  The employees will not be taxed on the donated leave, nor will they be able to claim a charitable deduction on their individual tax returns.  Employers may take a deduction for the employees’ contributions without regard to the normal limitations on corporate charitable donations.

In addition to the above, the IRS, DOL, and PBGC have granted multiple forms of relief to taxpayers impacted by the hurricanes and other disasters, and President Trump recently signed the “Disaster Tax Relief and Airport and Airway Extension Act of 2017,” which, among other things, provides emergency tax relief for individuals and employers.

Watch for an upcoming Bond Client Alert providing more detail on all of these relief programs.

We want to send our best wishes to the entire Bond family (all of our friends, colleagues, and clients) already affected by the recent storms and those currently in the path of Hurricane Nate.  Our thoughts are with you and we are ready to help.

Author’s Note:  Many thanks to first-year Bond associate Stephanie Fedorka for her assistance with this blog article.  Her research time does not constitute a charitable donation to anyone other than the author.


Cybersecurity and Employee Benefit Plan Fiduciary Duties: Going Beyond HIPAA

April 26, 2016

By Lisa A. Christensen
It seems as though we hear about new cybersecurity issues every day -- from traditional hacking incidents to the increasingly sophisticated phishing, malicious apps and websites, social engineering, and ransomware attacks.  Employee benefit plan sponsors likely have a fiduciary duty to ensure participant information and plan assets are protected from the growing number of cyber threats (to the extent possible, given the ever-changing cybersecurity landscape), AND, perhaps more importantly, that there is a plan in place to respond to a data breach and mitigate any associated damages. For many years now, health plan sponsors have been subject to a variety of privacy and security rules under the Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”).  Health plan sponsors are (among other things) required to enter into contracts with TPAs and other service providers called “business associate agreements” that spell out the parties’ obligations under HIPAA in connection with the plan’s HIPAA-protected information or “PHI.” Notwithstanding HIPAA’s broad scope, it is important to note that HIPAA only establishes the floor (i.e., the bare minimum requirements) when it comes to privacy and security of PHI.  Health plan sponsors also should consider including references to state data breach notification laws and cyber liability insurance in business associate agreements (or related services agreements) in addition to the HIPAA minimums. Although HIPAA does not extend to retirement plans, and retirement plan sponsors are not required to enter into specific agreements with TPAs governing the privacy and security of participants’ personally identifiable information or “PII,” ERISA’s fiduciary duties nonetheless likely apply.  Although the DOL has yet to weigh in on fiduciary duties raised by cybersecurity issues, retirement plan sponsors should consider including both “HIPAA-like” and expanded cybersecurity provisions in contracts with TPAs that govern the privacy and security of participants’ PII and plan assets.  Examples include, but are not limited to, provisions that:  (1) address the TPA’s data security policies and procedures; (2) restrict the use of and access to PII; (3) explain the TPA’s obligations in the event of a data breach or security incident (i.e., investigation, notification of the plan sponsor and participants, mitigation, remediation, etc.); (4) specify liability for cybersecurity incidents, including the requirement to maintain adequate cyber liability insurance; and (5) provide for the ability to terminate the applicable services agreement, without additional or early termination fees, in the event of a data breach or other security incident, at the discretion of the plan sponsor. Finally, in recognition of the fact that participant information also needs to be protected while in the hands of the plan sponsors (including from their employees as well as external cyber threats), plan sponsors should include any plan-related PHI or PII in their organizational cybersecurity efforts.

Reduce Fiduciary Risk With An Effective Investment Policy

January 5, 2016

Human resource officers and managers are often asked to chair or sit on a retirement plan committee responsible for administrative tasks.  In this role, a committee member takes on fiduciary responsibilities to plan participants and beneficiaries, and can be held personally liable for fiduciary breaches under Federal law.  As legal counsel, we endeavor to manage this risk for our clients through guidance on good governance, indemnification protection, and the adoption of effective policies.  Effective management of employee benefit plans will meet this fiduciary duty to participants while at the same time improving results for employees and minimizing potential liability exposure of plan managers. We are sometimes asked to review a proposed investment policy statement or IPS related to a 401(k) or 403(b) retirement plan.  Although these plans are not required to have an IPS, we recommend having one as a guide for prudent plan administration.  Most plan service providers and record keepers will have a standard form or model available for use by the employer adopting the plan.  Models can be useful, but any model should not be adopted without discussion and agreement with its terms.  Because an IPS is a policy of the employer in its role as plan administrator, and not one of the outside record-keeper or financial consultant, it’s important for a plan committee to discuss and “own” its policies.  Furthermore, a carefully-designed policy will not create additional responsibilities for a plan committee or officer beyond those imposed by law. An effective IPS will describe the roles and duties of a plan committee, other responsible officers, or plan service providers.  It provides a framework and process for investment decisions as well as indemnification for employees who are charged with fiduciary duties.  In many cases, there may be a financial advisor or consultant who is engaged to carry out the policy in some capacity.  Once a policy has been discussed and adopted, it is an aid in running efficient committee meetings and in working effectively with outside service providers.  Adopting a well-crafted IPS is an important element of prudent plan administration. An IPS should not dictate how many investment choices will be available for participants or the asset categories to be covered by plan options.  Using factors described in the policy, a plan committee can handle the tasks of monitoring current options, assessing their potential for future performance, and making changes in a plan’s fund options.  By creating and following a disciplined investment policy, a plan committee greatly reduces its risk of fiduciary liability when investment markets become volatile. There is a downside in adopting an IPS and then ignoring it.  Our experience has been, however, that once discussed and adopted, an IPS brings better focus and engagement by committee members, more efficient meetings, and a higher level of fiduciary performance on behalf of plan participants.  We have developed model policies that, together with proposals from plan service providers, can form the basis for your own policy.

ACA 2015 Reporting Delayed (Slightly)

December 29, 2015

Under the heading of “better late than never,” the IRS has recognized that “some employers, insurers, and other providers of minimum essential [i.e., health] coverage need additional time to adapt and implement systems and procedures to gather, analyze, and report” the information required on Forms 1094-B, 1095-B, 1094-C, and 1095-C for the 2015 calendar year.  It has delayed the due dates for providing the required forms to both individuals and the IRS as follows:
  • The due date for providing forms to individuals on 1095-B and 1095-C is extended from February 1, 2016 to March 31, 2016.
  • The due date for filing with the IRS is extended from:
    • February 29, 2016 to May 31, 2016 if not filing electronically (for employers who filed fewer than 250 W-2s in the prior year), and
    • March 31, 2016 to June 30, 2016 if filing electronically.
Employers or other coverage providers who do not comply with the extended due dates are subject to penalties, which may be abated for reasonable cause based on facts and circumstances. Because of the delay, individuals who file tax returns based on other information from their employers about their offers of coverage for purpose of determining whether they are eligible for a premium tax credit for health insurance marketplace coverage will not be required to file amended tax returns once they receive their Forms 1095-C or any corrected 1095-C.

For-Profit "Religious Employers" May Exclude Certain Contraceptives From Preventive Care Requirement Under the Affordable Care Act

June 30, 2014

On June 30, 2014, the U.S. Supreme Court held, in Burwell v. Hobby Lobby Stores, Inc., that a for-profit corporation is a “person” that has religious rights under the Religious Freedom Restoration Act of 1993 ("RFRA").  Therefore, guidance under the Affordable Care Act ("ACA") that requires all 20 FDA-approved contraceptive measures to be covered with no employee cost sharing as a part of women’s “preventive services” does not apply to closely-held businesses where this mandate interferes with the ability to conduct business in accordance with their religious beliefs.  The Court determined that the $100 per day, per person, penalty that applies under the ACA for failure to satisfy the contraceptive mandate was a “substantial burden” on those corporations.  That burden could not be relieved by dropping health coverage and paying the (also substantial) $2,000 per employee annual penalty that would apply if even one employee got subsidized coverage on a state or federal exchange, according to the Court. The Court had difficulty reconciling ACA regulations that provide employees of nonprofit religious corporations access to contraceptives by requiring that insurers provide a contraceptive rider at no cost to the employer or employees.  This, the Court noted, provides a path to satisfying the government’s compelling interest in guaranteeing cost-free access to the challenged contraceptive methods.  However, the economies of this measure (saving the insurance companies the cost of undesired pregnancies) does not translate to self-funded health plans where the third-party administrator obtains no cost savings.  Third party administrators have no economic interest in the performance of self-funded plans, because all claims are paid from the general assets of employers, or from trusts. In New York, the Hobby Lobby decision would apply only to self-funded plans.  New York Insurance Law Sections 3221(l)(16) and 4330(cc)(1) require health insurance contracts to include a rider covering all FDA-approved contraceptive drugs and devices.  The exception for “religious employers” is both narrow and specific, requiring that all of the following conditions be met:

  • The inculcation of religious values is the purpose of the entity;
  • The entity primarily employs persons who share the religious tenets of the entity;
  • The entity primarily serves persons who share the religious tenets of the entity; and
  • The entity is a nonprofit organization.

One day after issuing its decision in Hobby Lobby, the Supreme Court issued orders in six other cases that were decided by various federal appellate courts relating to religious objections to covering contraceptive measures in employee health plans.  Those orders signify that the Court’s reasoning in Hobby Lobby may not necessarily be limited to the four methods of contraception that were challenged in that case (two “morning-after” type drugs and two intrauterine devices), and may extend to all 20 FDA-approved contraceptive methods. It remains to be seen how employees in a self-funded health plan maintained by a religious employer can obtain contraceptive coverage without cost, as the Supreme Court suggests.  Undoubtedly, the Obama Administration and the Department of Health and Human Services are puzzling over changes to the ACA guidance to achieve this goal without violating the RFRA.  

Court of Appeals Issues Decision Regarding Vesting of School District Retiree Health Insurance Benefits

March 19, 2014

By Robert F. Manfredo
On December 12, 2013, the New York Court of Appeals issued a decision in Kolbe v. Tibbetts, in which the Court addressed whether the Newfane Central School District could unilaterally alter the health insurance benefits of certain retirees of the District.  The Court held that the retirees had a vested right to the same health insurance coverage until they turned 70 years of age that was in place under the collective bargaining agreements ("CBAs") that were in effect at the time of their retirement.  The Court also rejected the District's contention that it was entitled to change retiree health insurance benefits under the New York Insurance Moratorium Law, holding that the Insurance Moratorium Law does not apply to health insurance benefits that have vested under CBAs. While they were employed by the District, the plaintiffs were part of a non-instructional bargaining unit represented by the CSEA.  The CBAs in effect at the time of their retirement provided for certain health insurance benefits, including a two-tiered prescription drug coverage co-pay system and an option to participate in a flexible spending benefit program.  Each of the plaintiffs’ CBAs contained an identical section related to health insurance benefits for retirees, stating that “[t]he coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires” and “full-time employees who retire . . . shall be entitled to receive credit toward group health insurance premiums” until they reach age 70.  In January 2010, after each of the plaintiffs had retired, the District executed a successor CBA which implemented changes to the co-pay system and flexible spending benefit program, and the District informed the retirees that those changes for current bargaining unit employees would also be applied to the retirees. The plaintiffs commenced an action against the District alleging breach of contract and seeking declaratory relief.  The plaintiffs moved for summary judgment on their claims and the District cross-moved for summary judgment, arguing, in part, that its modification to the retirees’ health insurance benefits was permitted under the Insurance Moratorium Law.  The Supreme Court granted the plaintiffs’ motion for summary judgment.  The Appellate Division reversed the Supreme Court's decision (with two judges dissenting), and granted the District's cross-motion for summary judgment. The Court of Appeals reversed the decision of the Appellate Division.  Although the Court recognized that contractual obligations do not ordinarily survive beyond the termination of a collective bargaining agreement, the Court held that “[r]ights which accrued or vested under the agreement will, as a general rule, survive termination of the agreement.”  In considering the specific language set forth in the CBAs, the Court held that the plaintiffs had a vested right “to the ‘same coverage’ during retirement as they had when they retired, until they reach 70.” The District argued that it was permitted under the Insurance Moratorium Law to modify the retirees' health insurance benefits because a corresponding modification was made to the health insurance benefits for active employees.  The Insurance Moratorium Law provides, in relevant part, that a school district is prohibited from “diminishing the health insurance benefits provided to retirees . . . unless a corresponding diminution of benefits or contributions is effected . . . from the corresponding group of active employees for such retirees.”  The Court held that the Insurance Moratorium Law only applies in those instances where a school district attempts to change health insurance benefits that were voluntarily conferred, not where the benefits were “negotiated in the collective bargaining context.”  Accordingly, the Court held that the Insurance Moratorium Law did not permit the District to reduce retiree health insurance benefits simply because it negotiated a corresponding change to the health insurance benefits of active employees. In light of the Court’s decision in Kolbe v. Tibbetts, school districts and municipalities should make sure to review the retiree health insurance provisions in their CBAs before making a decision that could impact the health insurance benefits of retirees, and should consult with their legal counsel before implementing changes to retiree health insurance benefits.