Our colleague NJ Supreme Court Rules That the LAD Protects Registered Medical Cannabis Users.

Following is an excerpt:

On March 10, 2020 the New Jersey Supreme Court ruled that under the New Jersey Law Against Discrimination (“LAD”), employees who legally use cannabis as permitted by the state’s Compassionate Use of Cannabis of Medical Marijuana Act[i] (“Compassionate Use Act”) may not be fired because they use medical cannabis and that such employees are entitled to reasonable accommodation. In a brief opinion, the Court substantially adopted the Appellate Division’s reasoning in Wild v. Carriage House Funeral Holdings, Inc., about which we previously wrote.

Wild was employed by Carriage House Funeral Home as a licensed funeral home director.  While working a funeral, a vehicle he was driving was hit by a driver who allegedly ran a stop sign.  Following the accident, Wild was taken to the hospital, but was not administered a drug test because he told the Emergency Room doctor about his license to possess medical marijuana and the physician told him that therefore no test was required because the results would be positive. Wild had not previously told his employer of his use of medical marijuana and after learning of it, Carriage House terminated his employment. …

Read the full article here.

Our colleague Colorado Mandates 4 Days of Paid Leave for COVID-19 Testing.

Following is an excerpt:

On March 10, 2020, Colorado Governor Jared Polis issued an executive order directing he Colorado Department of Labor and Employment (“DLE”) to create emergency rules to “ensure workers in food handling, hospitality, child care, health care, and education can get paid sick leave to miss work if they exhibit flu-like symptoms and have to miss work awaiting testing results for COVID-19.”

The DLE issued the Colorado Health Emergency Leave with Pay (“HELP”) Rules, which mandates four days of paid sick leave for employees in certain industries who have flu-like symptoms to receive COVID-19 testing. …

Read the full article here.

Our colleague   .

Following is an excerpt:

The IRS Office of Chief Counsel recently issued a memo which, in a surprise to many, concluded that the filing of the Affordable Care Act (“ACA”) Forms 1094-C and 1095-C (“C Forms”) does not start the statute of limitations on the Employer Shared Responsibility Payments (“ESRP”) under Internal Revenue Code (“Code”) § 4980H and, in fact, that there is no statute of limitations with respect to ESRP assessments.

In short, the ESRP is a penalty that may be assessed against “applicable large employers” (“ALEs”)[1] when, in certain circumstances, a full-time employee obtains a premium tax credit for health coverage purchased on an Exchange.  Employers file C Forms annually to report information about their offers of health care coverage to employees so that the IRS can assess potential ESRP liability under Code § 4980H.  Until the memo’s issuance, the consensus opinion was that the filing of the C Forms started the Code’s general 3-year statute of limitations that runs from the date a “return” is filed or the return’s due date, whichever is later.  The instructions on the C Forms, in fact, refer to the C Forms as “returns” and advise filers to keep copies of information returns and supporting documents for at least three years from the returns’ due date. …

Read the full article here.

We encourage our readers to visit Workforce Bulletin, the newest blog from our colleagues at Epstein Becker Green (EBG).

Workforce Bulletin will feature a range of cutting-edge issues—such as sexual harassment, diversity and inclusion, pay equity, artificial intelligence in the workplace, cybersecurity, and the impact of the coronavirus outbreak on human resources—that are of concern to employers across all industries. EBG’s full announcement is here.

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Delaware is reminding its employers that a safe, drug-free workplace can pay.  On February 1, the state’s Department of Insurance (the “Department”) amended its regulations to emphasize the availability of workers’ compensation insurance discounts of up to 19 percent for employers who participate in the Delaware Workplace Safety Program (the “Program”), and who implement a drug-free workplace program at their worksites.  The amended regulations took effect on February 11, 2020.

The Workplace Safety Program

First implemented in 1989, the Program offers an opportunity for qualified, participating employers to lower their workers’ compensation insurance premiums by passing Department-conducted safety inspections of their worksites and by “maintaining a safe place to work.”  In order to be eligible for a discount on its workers’ compensation insurance premiums, an employer must have been in business for at least three years and pay an annual workers’ compensation insurance premium of $3,161 or higher.  In addition, the amended regulations require employers to submit a Workplace Safety Program Questionnaire to the Department that discloses details about the effectiveness of the employer’s health and safety program; data on the adequacy and effectiveness of the employee training program; the employer’s efforts to identify and eliminate potential hazardous conditions; and workplace injury data for the previous three years.

The Department will notify each eligible employer seven months before the eligible employer’s policy renewal date and provide instructions as to how to apply for a workplace safety credit.  After applying for the Program, employers must initially undergo two inspections by the Department.  The first is a scheduled worksite inspection.  If the employer passes this scheduled inspection, and is accepted into the Program, a second, unannounced inspection will be made within the year to confirm the initial certifications of safety in the workplace.  An employer is only entitled to the premium credit if each of its Delaware work locations successfully passes both inspections.  Once the employer qualifies only a single, unannounced inspection is required annually to maintain participation in the Program.

Drug-Free Workplace Considerations

The amended regulations direct inspectors to consider whether the employer’s program includes a written drug-free workplace policy, a Drug-Free Workplace poster certified by the Department or other vendor, and a description of the employer’s Employee Assistance Program or evidence of other available drug and alcohol counseling resources, including a list of treatment centers.  Inspectors will also review a description of the employer’s drug-free workplace training program, which must be completed by all employees within 30 days of their start date, and the methods the employer uses to document completion of such training.

Helpfully, the regulations now provide employers with a detailed list of items that must be included in their drug-free workplace policy.  Among other things, compliant policies must:

  • State that the policy concerns the protection of both employees and guests;
  • Describe the conduct prohibited under the policy;
  • Announce the employer’s intent to comply with all applicable federal and state laws and regulations;
  • Describe any pre-employment testing, reasonable suspicion testing, and post-incident testing or other drug testing policy;
  • Provide a list of substances prohibited at the workplace;
  • Specifically note whether marijuana is a prohibited substance in the workplace;
  • State the employer’s policy regarding the use of prescription medications and the employee’s duty to notify the testing laboratory of such substances;
  • State the employer’s policy on employee consumption of alcohol on premises, which must describe the when alcohol consumption is permitted and whether the employer permits alcohol use on premise outside of normal working hours;
  • List any and all employee drug testing procedures, including if the testing is conducted by an independent laboratory, whether the testing includes or is limited to urine testing, the employee’s right to refuse testing and the consequences for so doing, if the employee will be compensated for their time spent testing, and whether the employer covers the cost of the drug test;
  • Explain the consequences for a positive drug-test result for applicants and employees, including whether either has a right to offer an explanation for the positive result;
  • Include a confidentiality statement; and
  • Provide a method for ensuring and documenting that all applicants and current employees receive details of the employer’s drug-free policy.

Though the new regulations appear to be onerous, the inspector’s recommendation as to whether an employer should receive a workplace safety credit, and the amount of the discount, is based, in part, on a compliant drug-free workplace program.

Interaction with Legalized Marijuana

Employers opting to take part in the Program should be aware that the regulations require compliant drug-free workplace policies to expressly state whether marijuana (cannabis) is a prohibited substance in the workplace.  Thus, it is important for employers to understand how this requirement intersects with the regulation of marijuana under state law.

While the recreational use of marijuana has not been legalized in Delaware, the state has decriminalized the possession or private use of small (personal) quantities of marijuana.  Moreover, the Delaware Medical Marijuana Act legalized the medical use of marijuana by registered cardholders (qualifying patients under the law).  Neither law requires employers to permit the use of marijuana at the workplace, but the Medical Marijuana Act does prohibit employers from discriminating against individuals based solely on the person’s status as a cardholder or a positive drug test for marijuana components or metabolites.  Therefore, in crafting a compliant drug-free workplace policy, employers should take this non-discrimination provision into account.

Looking Ahead

To ensure eligibility and to take advantage of the potential discounts, eligible Delaware employers should begin reviewing their workplace safety programs, establish a plan for training their employees, and review existing drug testing and/or drug-free workplace policies.  Reviewing these policies also offers employers an opportune time to consider how they are treating applicants and employees who use marijuana—medically or recreationally—and ensuring that their policies are both compliant with the Workplace Safety Program and the Medical Marijuana Act’s prohibition of discrimination against medical marijuana users.

We have written extensively on mandatory vaccination policies and employers’ obligations to accommodate requests for exemption based on religious or disability grounds.  The Fifth Circuit Court of Appeals has issued a recent decision that provides helpful guidance to employers who mandate vaccinations.  In Horvath v. City of Leander, No. 18-51011 (5th Cir. Jan. 9, 2020), the Fifth Circuit held that the defendant City of Leander did not violate a firefighter’s religious freedom when it discharged the firefighter after he refused to choose either of two accommodations to the municipality’s vaccination requirement.

In 2016, the City mandated that all personnel be vaccinated against tetanus, diphtheria, and whooping cough (TDAP).  Plaintiff, an ordained Baptist minister, objected on religious grounds, claiming the vaccination violated his beliefs in the sanctity of life and his conscience.  In response, the municipality offered two different accommodations: (1) transfer to a code enforcement position that did not require vaccination; or (2) wear a respirator and other equipment while on duty, submit to testing for possible disease when warranted, and monitor and record his temperature.  Plaintiff refused both accommodations, rejecting the first accommodation outright and saying he would accept the second accommodations only upon certain conditions.  As a result, the City fired him.

Plaintiff pursued federal and state law religious discrimination claims, among others.  On summary judgment, the Court found in favor of the City, holding that the proposed transfer to a code enforcement job constituted a reasonable accommodation.  The Fifth Circuit affirmed. The Court was unpersuaded by plaintiff’s argument that the proposed transfer was not a reasonable accommodation because the duties were less desirable and the shift would have prevented him from working his second job.  While plaintiff may have preferred the duties and hours of the firefighting position, such preference did not make the transfer offer unreasonable nor did the reduction in income due to loss of an outside job.  Instead, plaintiffs are entitled only to a reasonable accommodation, not their preferred accommodation.  Because the transfer offer was reasonable, the Court declined to analyze the second offer.

Employers who have, or are considering implementing, a mandatory vaccination policy of any kind should take note of the City’s actions in this case.  The City properly responded to Plaintiff’s religious objection by offering multiple accommodations and engaging in the interactive process.  As the Fifth Circuit’s decision suggests, only one reasonable accommodation is necessary to meet an employer’s obligation.  If, thereafter, an employee refuses to accept a reasonable accommodation, an employer may take adverse action – including termination of employment – against the noncompliant employee.

Sponsors of health plans have long known that the only constant in life is change. In 2020, that is surely to remain true.

Ding-Dong! The Cadillac Tax Is Dead!

On December 20, 2019, as part of the year-end appropriations bill, the Affordable Care Act’s (ACA) so-called 40% “Cadillac Tax” on high-cost health plans was finally, after much lobbying and other efforts by sponsors and health care payers, put to an end with a full repeal. The “Cadillac Tax” was currently scheduled to take effect in 2022 (after two delays), and would have taxed employer-sponsored plans worth more than $10,200 for “self-only” coverage and $27,500 for other coverage (in 2018 and would have been indexed for inflation in future years). The tax was initially intended to help reduce health care costs and pay for the ACA.

Compliance Note:  Plan sponsors should note, however, that the reporting of the value of employer-provided coverage on the Form W-2 in Box 12, using Code DD, did not change. As a result, employers should continue to report the value on Form W-2.

As part of the same bill, two other ACA taxes were also repealed: (i) the health insurance tax, and (ii) the 2.3% tax on medical devices. While the repeal of the medical device tax is effective beginning in 2020, the repeal of the health insurance tax is not effective until 2021, so sponsors of fully-insured health plans will need to wait another year for any premium savings passed on from insurers due to the repeal of the tax.

It’s Alive! The PCORI Fee Is Extended for 10 Years

The ACA imposes a fee on insurers of specified health insurance policies and plan sponsors of self-insured health plans to help fund the Patient-Centered Outcomes Research Institute (PCORI). 2019 was supposed to be the last year that most sponsors paid the PCORI fee. The fee has now been extended for 10 years, through plan and policy years ending before October 1, 2029.

The fee is required to be reported once a year on the second quarter IRS Form 720 (Quarterly Federal Excise Tax Return) and paid by its due date, July 31. The fee is based on the average number of lives covered under the policy or plan. For plan years ending from October 1, 2018 through September 30, 2019, the dollar amount was $2.45 per covered life.

Compliance Note:  Sponsors of self-insured health plans should continue to add payment of the PCORI fee to their compliance calendars, monitor applicate rates, and budget for the payments for the next 10 years. Insurers of fully-insured health plans are responsible for reporting and paying the PCORI fee.

Where We’re Going We Don’t Need Roads! Health Coverage Opportunities and Uncertainty

 2020 ushers in two new health reimbursement arrangements (HRAs). Proposed regulations were issued in 2018 as reported here and final regulations were issued in June 2019. The final rules allow HRAs and other account-based group health plans to be integrated with individual health insurance coverage or Medicare, if certain conditions are satisfied (an Individual Coverage HRA). The final rules also set forth conditions under which certain HRAs and other account-based group health plans will be recognized as limited excepted benefits (an Excepted Benefit HRA).

While 2020 brings these new health coverage options, it remains to be seen if there will be significant uptake from employers to disrupt the traditional group health plan coverage model. With the demise of the Cadillac Tax, plan sponsors are still likely to continue to grapple with the rising costs of health coverage and the ever-changing legal landscape. Questions remain:

  • Will the ACA survive? As reported previously, the decision in Texas v. U.S. declaring that the ACA is unconstitutional in its entirety because of the individual mandate continues to make its way through the courts to determine the issue of severability and will ultimately be decided by the U.S. Supreme Court
  • Will proposed legislative “fixes” and enhancements to expand access to Health Savings Accounts (HSAs) pass this year? Will HSAs dominate in a post-ACA world?
  • Will new Association Health Plan regulations be upheld, giving smaller companies more options to pool together to offer group health plan coverage?
  • How will the results of the Presidential election affect health coverage options in future years?

Answers to these and other questions could have a significant impact on plan sponsors (and their employees’) health care options and choices in the coming months and years. However, one answer remains clear: there will certainly be more change.

A bill to amend the New Jersey Millville Dallas Airmotive Plant Loss Job Notification Act, also commonly referred to as the New Jersey WARN Act (“NJ WARN Act”), which the New Jersey Senate passed on December 16, 2019, if enacted, will create significant financial liability for covered New Jersey employers that undergo a mass layoff, or a transfer or termination of operations, by requiring the employer pay severance to both full-time and part-time employees.

The NJ Warn Act, enacted in 2007, requires New Jersey private employers with 100 or more full-time workers to provide 60-day notice to affected full-time employees in the event of a mass layoff or a transfer or termination of operations and applies to establishments with a single location or in a group of contiguous locations (e.g., group of buildings in an office park). It mandates payment of severance only when a covered employer fails to provide the employees with the required amount of notice of termination or lay-off.

Under the proposed legislation, New Jersey employers would be required to pay affected employees one week severance for every full year of employment, irrespective of whether the employer provided the required amount of WARN Act notice to employees. The severance amount would be enhanced by an additional four weeks’ per affected employee, where the employer failed to give the required amount of notice.

The bill, drafted in response to recent corporate bankruptcies, most notably that of Toys R Us, which resulted in job loss for thousands of New Jersey employees, does not limit the liability for paying the severance to the employer entity alone. Significantly, the bill imposes the obligation to pay severance to the decision makers directly or indirectly responsible for the lay-off or termination decision by defining the term “employer,” for the purposes of severance, to include:

any individual, partnership, association, corporation, or any persons or group of persons acting directly or indirectly in the interest of an employer in relation to an employee, and includes any person who, directly or indirectly owns and operates the nominal employer or makes the decision responsible for the employment action that gives rise to a mass layoff subject to notification.

In addition, the bill among other things:

  • Removes the distinction between part-time and full-time employees. Thus, part-time employees would be:
    • Counted in determining whether an employer meets the 100 employee threshold for being a covered employer;
    • Counted in determining whether a termination, transfer or layoff meets the threshold for required notice, e.g., 50 or more employees representing at least 1/3 of the employer’s total workforce; and
    • Entitled to notice and to severance.
  • Broadens the definition of “Establishment” to include all of an employer’s New Jersey locations (not just those that are contiguous); and
  • Counts employees who “report to an establishment” in determining whether a mass layoff meets the threshold for required notice.

If enacted, the legislations would become effective 180 days after signing.

Our colleague Steven M. Swirsky .

Following is an excerpt:

The National Labor Relations Board, in its December 17th decision in Apogee Retail LLC d/b/a Unique Thrift Store, has reversed its prior rule and held that employer requirements that employees treat workplace investigations as confidential are “presumptively lawful.”  The Apogee decision overturns the Board’s 2015 Banner Estrella decision, which had required that an employer seeking to impose confidentiality in connection with a workplace investigation was required to prove, on a case by case basis, that the integrity of an investigation would be compromised without confidentiality.

The Board concluded that the framework set forth in Banner Estrella improperly placed the burden of proving that confidentiality was necessary on the employer and was inconsistent with the Board’s test developed in The Boeing Company for determining whether a facially neutral rule unlawfully interfered with employees’ rights under Section 7 of the National Labor Relations Act. …

Read the full article here.

On December 19, 2019, New Jersey enacted legislation amending the New Jersey Law Against Discrimination (“NJLAD”) to add a definition for “Race” – which has always been a protected category under the NJLAD – and for the term “Protective hairstyle.”  The Amendment, referred to as the “CROWN Act” (short for “Create a Respectful and Open Workspace for Natural Hair Act”), amends the NJLAD to add the following to the statute’s list of definitions:

“Race” is inclusive of traits historically associated with race, including, but not limited to, hair texture, hair type, and protective hairstyles.

“Protective hair styles” includes, but is not limited to, such hairstyles as braids, locks, and twists.

The Amendment, which became effective immediately upon signing, essentially codifies portions of enforcement guidance (“Guidance”) issued earlier this year by the state’s Division on Civil Rights, about which we previously wrote. The Guidance, which reflects the DCR’s interpretation of the NJLAD, but is not statutory, provides directives to employers that are not in the Amendment, but which will now carry more weight because of it.  Of note, although the Amendment specifically includes hairstyles associated with Black persons in the definition of “protective hair styles,” the Guidance also includes, hairstyles associated with particular religions such as payot (sidelocks) worn by Orthodox Jewish men and Sikh persons who wear uncut hair.

With the Amendment, New Jersey becomes the third state (following California and New York) to ban discrimination based on hair and hairstyles.  Some cities, including New York City and Cincinnati, have also enacted laws prohibiting hair-based discrimination. Other states are also considering similar legislation. Given this trend, all employers – not just those in New Jersey and other locales with such laws on the books – should consider reviewing their workplace grooming and appearance policies and, in particular, their enforcement of such policies, to confirm that they are applied in a nondiscriminatory manner.