Category Archives: Legislation

July 3, 2013

ACA Employer Health Care Mandate – “Pay or Play” – Put Off Until 2015

In our Alert a few months ago, we described the so-called “pay or play” penalty provisions affecting employers under the federal health care reform statute known as ACA (the Patient Protection and Affordable Care Act). Yesterday the Obama Administration informally announced that it will delay implementation of pay or play until 2015. Yesterday’s announcement included a promise to publish formal guidance regarding this change within the next week.

Reducing the Complexity of ACA Implementation

The Administration cites complexity of the pay or play requirements as the reason behind this delay in implementation. In response to concerns by businesses that they need more time to understand and comply with the complex law, the Treasury Department states that they are looking to simplify the new reporting requirements. Mark Mazur, Assistant Secretary for Tax Policy at the U.S. Department of the Treasury, wrote: “Just like the Administration’s effort to turn the initial 21-page application for health insurance into a three-page application, we are working hard to adapt and to be flexible about reporting requirements as we implement the law.” Mazur states that the Administration will work with employers, insurers and other reporting entities to voluntarily implement information reporting in 2014 so that they may conduct “real world testing” of reporting systems which should lead to a smoother implementation in 2015.

Look for Additional ACA Guidance Soon

While employers certainly welcome the news that there is more time to comply with ACA mandates, the delay doesn’t mean employers can take the summer off. As noted above, we can expect formal guidance on pay or play implementation in the next week, and additional action may be required after that. In addition, the Administration’s announcement states a hope that employers will voluntarily comply with pay or play in 2014 (including the reporting systems), so that implementation in 2015 will go smoothly. Other provisions of ACA, such as the requirement that individuals have health insurance coverage or pay a penalty (the individual mandate), elimination of pre-existing condition exclusions, and the operation of health insurance exchanges, are still currently scheduled to go into effect on January 1, 2014.

Disclaimer: This article is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal advice and are not intended to create an attorney-client relationship between you and Holland & Hart LLP. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.

June 19, 2013

Wyoming Employers – Time to Pay More Attention to those Unemployment Claims

By Brad Cave

July 1 creates some new incentives for Wyoming employers to participate in the unemployment claims system. Currently, UI benefits are paid to the employee beginning immediately when a deputy clerk of the Wyoming Department of Workforce Services determines that the employee is entitled to benefits. If the employer appeals that determination, and a hearing officer reverses the deputy’s decision, the employer’s account is not charged for the benefits paid under the deputy’s erroneous decision. The same is true if the employer obtains reversal of a decision granting benefits through an appeal to the Unemployment Insurance Commission or the district court.

Effective July 1, this general rule has an exception that all employers should keep in mind. Bowing to federal pressure, the Wyoming Legislature amended the Wyoming Employment Security Law (ironic name for the unemployment benefit statute, isn’t it) to require employers to respond to requests for information from the Department. See, http://legisweb.state.wy.us/2013/Enroll/SF0073.pdf Employers will no longer escape the monetary consequences of erroneous payments if the Department determines that, (1) an erroneous payment of benefits was made because the employer was at fault for failing to respond adequately or on time to a written request for information; and, (2) the employer has established a pattern of failing to respond adequately or on time to such requests. The employer’s responses must be received within fifteen (15) days after the Department sends the request, whether by regular mail or email. What constitutes a pattern of failing to respond remains to be seen – the Legislature said only that the phrase means a “repeated documented failure” to respond to written requests for information, “taking into consideration the number of instances of failure in relation to the total volume of requests by the Department” to the employer.

Action items for Wyoming employers:

1. Maintain documentation of your responses to the Department on unemployment claims. We don’t believe that certified mail is necessary for most employers, but we do suggest keeping copies of all the documentation you return in response to a request. Also, the amendment requires the Department to acknowledge receipt of the requested information within fifteen (15) days if the employer requests such acknowledgement.

2. Some employers use a third-party agent or centralized offices in remote states to respond to unemployment claims. Be sure to notify those who process your UI claims, as the amendment clearly holds the employer responsible for delays or inadequate information from an employer’s agent. Likewise, if you have drug your feet getting back to your UI agent with the necessary information, now is the time to improve your response time so the agent does not blame you for a “pattern of failing to respond.”

3. As always, be very careful about what you (or your agent) say or submit in response to a request for information. A determination for or against an employee regarding unemployment benefits is not “binding, conclusive or admissible” in any subsequent litigation between the employer and employee. But the employer can be bound by what it says were the reasons for termination and the documents it submits to support the termination. Any discrepancy in the employer’s reasons can weaken your objection to the UI claim and be used in other legal proceedings to challenge the legitimacy of your reasons for the termination.

May 29, 2013

October 1 Deadline for Employers to Provide Notice of Health Care Exchange

By Elizabeth Nedrow

Employers recently were given the green light on a notice requirement related to health care reform.

The central feature of much of health care reform is the exchange system. No later than October 1, 2013, employers must provide each employee a written notice:

Informing the employee of the existence of the exchange including a description of services provided by the exchange, and the manner in which the employee may contact the exchange to request assistance;
Explaining that the employee may be eligible for a premium tax credit if the employee purchases a qualified health plan through the exchange; and
Including a statement informing the employee that if the employee purchases a qualified health plan through the exchange rather than choosing employer-offered health coverage (if any), the employee may be foregoing the employer's contribution (if any) to the employer-offered health coverage, as well as a statement that such employer contributions are often excludable from income for federal income tax purposes.

Read our entire alert on this notice requirement here.

May 7, 2013

Small Colorado Employers Face Higher Damages for Discrimination Claims

By Mark Wiletsky and Steve Gutierrez

Small businesses beware: your employees now have more incentive to sue you. As of January 1, 2015, employees can recover compensatory and punitive damages for employment discrimination claims against businesses that employ between one to fourteen people under Colorado’s Job Protection and Civil Rights Enforcement Act of 2013, signed into law by Governor John Hickenlooper on Monday, May 6, 2013. But don’t despair. By taking some proactive steps now, businesses can minimize their exposure to potential claims.

Increased Exposure for Small Employers

Colorado’s new anti-discrimination law changes the landscape for small employers by allowing compensatory and punitive damages against Colorado’s small businesses (with 1-14 employees), along with attorneys’ fees and costs to the employee if he or she prevails, back pay, front pay, interest, and other potential relief. Thankfully, the new Colorado law contains some safeguards against outrageous damage awards that would likely put small employers out of business. For businesses with 1-4 employees, compensatory and punitive damages are capped at $10,000. For businesses with 5-15 employees, such damages are capped at $25,000. Businesses with greater than 15 employees are subject to the existing damages caps found in the federal anti-discrimination laws.

The availability of these damages to employees of businesses with fewer than 15 employees will likely result in more discrimination cases filed in Colorado against small businesses, significantly raising the potential exposure for small business owners. That is especially true given that such claims may be filed in state court, which is often viewed by attorneys representing employees as a more favorable forum for such claims.

Age Discrimination No Longer Cut Off at Age 70

The Job Protection and Civil Rights Enforcement Act of 2013 also eliminates the age 70 cutoff for age discrimination claims brought under Colorado law. This brings the state law into line with the federal Age Discrimination in Employment Act which does not have an upper age limit. Consequently, employees age 40 and older are protected from employment discrimination under both state and federal law.

Good Faith Efforts May Avoid Punitive Damages

Under the new Colorado law, employers will not be subject to punitive damages if they can demonstrate good-faith efforts to prevent discriminatory and unfair employment practices in the workplace. In addition, no punitive damages are available in a lawsuit involving a claim of failure to make a reasonable accommodation for a disability if the employer can demonstrate good-faith efforts to identify and make a reasonable accommodation that would provide the disabled employee with an equally effective opportunity and would not cause an undue hardship on the employer’s operation. Small businesses should begin those good-faith efforts now so that policies and procedures to prevent and respond to discrimination are in place when the law goes into effect.

Steps Small Businesses Should Take to Minimize Risk

Unfortunately for small businesses, the mere threat of a lawsuit, however meritless, may stretch tight resources to the breaking point. That is why it is so important to take proactive measures now, which will help minimize the risk of such lawsuits. Among other things, small businesses should:

1) Adopt and distribute policies that prohibit discrimination, harassment, and retaliation in the workplace. Require new and existing employees to acknowledge their receipt of these policies, preferably on an annual basis.

2) Train supervisors, managers and employees. Everyone in the workplace should be trained on your anti-discrimination policies and procedures with specialized training provided to supervisors and managers who must recognize harassment and discrimination and know what to do when they observe it or receive a complaint. In small workplaces, dealing with complaints of discrimination or retaliation can be difficult. Still, if you address it promptly and appropriately, you will be in a better position to avoid or defend against a claim.

3) Document performance issues. We often see meritless lawsuits filed because legitimate performance concerns were not shared with the employee or appropriately documented. If an employee has performance issues, be sure to get it in writing. Focus on the problem, give concrete examples, and warn the employee that a failure to achieve immediate and sustained improvement may result in termination.

4) Arbitration agreements. Consider whether it would be appropriate to have employees sign an arbitration agreement. Such agreements take discrimination claims out of the civil court system, and generally allow for a more streamlined resolution. However, arbitration is not necessarily cheaper than a court proceeding; in fact, in some cases it might cost more. Be sure to consider all the benefits and burdens of arbitration before relying on such agreements. And if you prefer arbitration, make sure your agreement complies with all applicable legal requirements.

Essentially, small employers need the same policies and procedures to deal with discrimination as larger employers do, even though many smaller employers simply do not have the same resources. Take the next 18 months before the law becomes effective to educate yourself, your supervisors and your employees on discrimination issues and take the steps that will help minimize your risk to the damages that will be available soon to aggrieved employees.

May 6, 2013

Colorado Restricts Employers’ Use of Credit Reports

By Mark Wiletsky

Employers using credit reports to evaluate applicants and employees take note: Colorado recently enacted the “Employment Opportunity Act” limiting the use of credit reports in employment decisions. In passing this law, Colorado joins eight other states–California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington–in restricting employers from obtaining and/or using credit history information when evaluating applicants and employees. The new Colorado law exempts certain job positions from the prohibition on the use of credit reports, but the exceptions are very fact specific. Employers need to analyze the job responsibilities of the position at issue in order to determine if they may use credit information under this new law.

Prohibition on the Use of Consumer Credit Information for Employment Purposes

Effective July 1, 2013, section 8-2-126 of the Colorado Revised Statutes provides that an employer shall not use consumer credit information for employment purposes unless the credit information is substantially related to the employee’s current or potential job. This means that Colorado employers are prohibited from using credit information in the employment context except in those limited situations where credit or financial responsibility is substantially related to the job. The type of information prohibited under this law includes any written, oral or other communication of information that bears on a consumer’s creditworthiness, credit standing, credit capacity or credit history. This includes a credit score, but does not include the name, address or date of birth of an employee associated with a social security number.

“Substantially Related” Analysis Looks to Job Responsibilities

When determining whether a particular position falls within the exception where credit information is “substantially related to the employee’s current or potential job,” employers may not rely on an informal, best-guess determination. Instead, employers must carefully analyze whether the job in question meets the parameters detailed in the new law.

Under Colorado’s law, “substantially related to the employee’s current or potential job” is defined to apply to positions that:

1) Constitute executive or management personnel or officers or employees who constitute professional staff to executive and management personnel, and the position involves one or more of the following:

A) Setting the direction or control of a business, division, unit or an agency of a business;

B) A fiduciary responsibility to the employer;

C) Access to customers’, employees’, or the employer’s personal or financial information (other than information ordinarily provided in a retail transaction); or

D) The authority to issue payments, collect debts or enter into contracts; OR

2) Involves contracts with defense, intelligence, national security or space agencies of the federal government.

Consider this example: you are hiring a human resource specialist who will administer employee benefits within your company. May you obtain and use a credit report on applicants for this position? Assuming this position does not involve federal defense, intelligence, national security or space agency contracts, you first must determine if this position is an executive or management position, or alternatively, if this position is considered professional staff to an executive or manager. In our example, the employee benefits specialist position may or may not be an executive or management position at your company. If not, the position may be considered professional staff to an executive or manager if the position reports to an HR Director, Vice President or other similar high level manager or officer. If we assume this position meets this threshold determination, you next must analyze if the position involves one or more of the four areas of responsibilities where credit information will be deemed substantially related. Because an employee benefits specialist is likely to have access to employees’ personal and perhaps financial information, it appears to fall within the third area of responsibility where credit information will be deemed substantially related to the job, but the answer is certainly not clear-cut.

Requesting Employee Consent to Obtain a Credit Report

In addition to the prohibition on the use of credit information for employment purposes, the new Colorado law prohibits employers or their agents from requiring an employee to consent to a request for a credit report that contains information about the employee’s credit score, credit account balances, payment history, savings or checking account balances, or savings or checking account numbers as a condition of employment unless:

1) The employer is a bank or financial institution;

2) The report is required by law; or

3) The report is substantially related to the employee’s current or potential job andthe employer has a bona fide purpose for requesting or using information in the credit report and is disclosed in writing to the employee.

The written disclosure requirement here is a new procedural step with which most employers meeting this exception will not be familiar. Employers meeting these criteria now need to provide applicants/employees with a notice of their business purpose for requesting credit information.

Employee May Be Allowed to Explain Circumstances Affecting Credit

In those cases when an employer is permitted to use credit information because it is substantially related to the job, an employer may ask the employee to explain any unusual or mitigating circumstances that affected their credit history. For example, if the credit report shows delinquent payments, the employer may inquire further allowing the employee to explain circumstances that may have caused the delinquencies, such as an act of identity theft, medical expense, a layoff, or a death, divorce or separation.

Adverse Action Disclosure Required

If the employer relies on any part of the credit information to take adverse action regarding the employee or applicant, the employer must disclose that fact and the particular information relied upon to the employee. This disclosure must be made to the employee in writing but can be made to an applicant via the same medium in which the application was made (e.g., if the application was submitted electronically, this disclosure may be sent electronically).

FCRA Obligations Still Apply

Employers who are permitted to obtain and use credit reports under the Colorado law must also comply with the requirements of the Fair Credit Reporting Act (FCRA) in order to obtain a credit report from a consumer reporting agency. These additional FCRA duties include:

1) Providing a clear and conspicuous written disclosure to the applicant/employee before the report is obtained, in a document that consists solely of the disclosure, that a consumer report may be obtained;

2) Getting written authorization from the applicant/employee before obtaining the report;

3) Certifying to the consumer reporting agency that the above steps have been followed, that the information being obtained will not be used in violation of any federal or state equal opportunity law or regulation, and that, if any adverse action is to be taken based on the consumer report, a copy of the report and a summary of the consumer's rights will be provided to the consumer;

4) Before taking an adverse action, providing a copy of the report and a summary of FCRA consumer rights to the applicant/employee; and

5) After an adverse action is taken, sending an adverse action notice to the employee/applicant containing certain FCRA-required statements.

Credit Check Compliance

Colorado employers need to review and update their background check policies as they relate to conducting credit checks on applicants and existing employees. In addition to FCRA obligations, employers wishing to use credit reports have additional restrictions and duties under state law.

Employers now must analyze whether each position for which they wish to obtain credit reports meets the “substantially related to the employee’s current or potential job” criteria. If the position meets that criteria and the employer wishes to obtain a credit report on an applicant or existing employee, the employer first must provide a written disclosure to the applicant/employee describing the bona fide purpose of obtaining the credit information. If the credit report reveals questionable or negative information, the employer may (but is not required to) ask the applicant/employee to explain any unusual circumstances that may have led to the unfavorable credit information. If the employer rejects the applicant/employee for the position based in any way on the credit report, the employer must provide the required FCRA adverse action notices as well as a written explanation of the particular information in the report that led to the employer’s decision.

Multi-state employers face unique challenges when obtaining and using credit reports for employment purposes as they must comply with various state laws that now restrict such use. Given the intricacies of complying with the FCRA and applicable state laws, employers are wise to consult with their counsel to review and update their credit check policies.

April 25, 2013

Tips for Complying with Utah’s Internet Employment Privacy Act

By Elizabeth Dunning

Effective May 14, 2013, Utah employers may not request employees or applicants to disclose information related to their personal Internet accounts. The Internet Employment Privacy Act(IEPA), recently signed into law by Utah Governor Gary R. Herbert, prohibits employers from asking an employee or applicant to reveal a username or password that allows access to the individual’s personal Internet account. In addition, employers may not penalize or discriminate against an employee or applicant for failing to disclose a username or password. A similar restriction applies to higher educational institutions through passage of the Internet Postsecondary Institution Privacy Act.

With enactment of the IEPA, Utah becomes the fifth state to pass legislation that limits an employer’s access to social media accounts, joining California, Illinois, Maryland and Michigan. New Mexico passed a similar law shortly after Utah and New Jersey’s law passed the legislature and is awaiting the governor’s signature. A bill introduced in February in the U.S. House of Representatives called the Social Networking Online Protection Act (H.R. 537) is stuck in committee.

Public Online Accounts Are Fair Game under the IEPA

The IEPA does not restrict or prohibit employers from viewing or using online information about employees and applicants that the employer can obtain without the employee’s username or password. Any online information that is available to the public may be accessed and viewed by employers without violating the IEPA. Consequently, individuals who set privacy settings on their online accounts to allow “public” access effectively opt themselves out of any protections offered by this new law.

Utah Restriction Applies to Accounts Used Exclusively for Personal Communication

In prohibiting employers from requiring disclosure of online usernames and passwords, the IEPA draws a distinction between personal Internet accounts and those used for business related communications. The law only restricts employer access to personal online accounts that are used by an employee or applicant exclusively for personal communications unrelated to any business purpose of the employer. It does not, however, restrict access to accounts created, maintained, used or accessed by an employee or applicant for business related communications or for a business purpose of the employer.

In practice, the line between personal and business related accounts may be blurred as many employees use their personal online presence to network and communicate for business reasons. Consider the sales person who uses his or her LinkedIn account to communicate with potential buyers within a particular industry, or the CPA who posts tax reminders on his or her Facebook page. Are those accounts accessible under the IEPA since they are not used “exclusively” for personal communications? A plain reading of the law suggests that may be the case, thereby watering down the potential protections offered by the IEPA to applicants and employees.

Steps for Complying with the IEPA

Utah employers should review their HR forms, policies and practices to ensure that they do not ask applicants and/or employees to provide a username or password to their personal Internet accounts. Train supervisors and managers not to ask for this information as well. In fact, take the opportunity to remind supervisors and managers not to “friend” subordinates on personal online platforms, such as Facebook. In addition, reinforce that employees and applicants may not be penalized or treated adversely for failing to provide a username or password for personal online accounts.

Remember, too, that even though the IEPA does not prohibit accessing an employee’s or applicant’s public social media accounts, viewing such information creates other risks. Employers may view information regarding the individual’s religion, race, national origin, disability, age, or other protected group status that could give rise to a discrimination claim. Furthermore, online information is unreliable and ever-changing, meaning that employers should not rely on what they see online when making employment decisions. To stay out of trouble, consult with legal counsel before viewing or using social media in the employment context.

For more information about permissible actions and potential damages under the Utah Internet Employment Privacy Act, please see our Client Alert.

March 27, 2012

Furor Over Facebook Continues

By Mark Wiletsky

Following up on my post last week, the flap over employers asking applicants to turn over their passwords to social media accounts, such as Facebook, rages on. Two senators–Sens. Richard Blumenthal (D-Conn.) and Charles Schumer (D-N.Y.)–on March 25 asked the Department of Justice and the EEOC to investigate this practice (http://blumenthal.senate.gov/newsroom/press/release/blumenthal-schumer-employer-demands-for-facebook-and-email-passwords-as-precondition-for-job-interviews-may-be-a-violation-of-federal-law-senators-ask-feds-to-investigate). Facebook joined the fray by warning employers about this practice, and of course the ACLU has raised concerns as well (http://www.cnn.com/2012/03/23/tech/social-media/facebook-employers/index.html?hpt=hp_t3). Is this issue being overblown? Other than media reports about a couple of public entities, it is unclear how many employers are demanding applicants turn over passwords to social media accounts as a condition of employment (or consideration for employment). Still, the heightened media attention is a good reminder for employers to review their hiring practices and their social media policies. If you have not yet read the NLRB's January 25, 2012 Operations Management Memo (http://www.nlrb.gov/news/acting-general-counsel-issues-second-social-media-report), I recommend doing so. Even though I disagree with certain aspects of the Memo, it provides some good examples of things to avoid in both social media policies and discipline/termination situations involving social media–for Union and non-Union work environments.

March 23, 2012

Hiring and Social Media: Beware

By Mark Wiletsky

Should you require prospective employees to provide you with access to their Facebook page and other social media accounts, as a condition of being considered for the job? Some public agencies apparently are doing so. But Richard Blumenthal, a Democratic senator from Connecticut, is writing a bill to prohibit the practice. (Not surprisingly, you can find more information about his proposed bill by visiting his Facebook page: http://www.facebook.com/dickblumenthal). Relying on social media for hiring decisions can be risky, but it happens. People Google a candidate’s name, check LinkedIn profiles, browse a Facebook page, or surf the web to see if they can learn some information about the candidate. It’s so easy to do, and there is so much information about people on the web that it is hard to resist. The problem is that the information on the Internet may or may not be relevant to the job. The information also might disclose protected characteristics that you would not otherwise know from simply reviewing a job application (e.g., a person’s race, a disability, etc.). My own thought is that for most private employers, it is not a good idea to require candidates to turn over passwords to their social media accounts. Regardless of whether the candidate agrees to do so, it is clearly not a voluntary decision, and it raises a host of potential problems for private employers, beyond even the typical problem of not hiring someone due to a protected characteristic, e.g., what happens if someone at the company loses the password, abuses it, or protects it but is later accused of being responsible for hacking into the account? The law in this area continues to evolve, but I would avoid becoming a “test case” for having gone too far.