Surviving the Storm: Employee Benefit Compliance & Law Update - - PowerPoint PPT Presentation

Surviving the Storm:

Employee Benefit Compliance & Law Update

September 15, 2016

The ACA 2016: The Affordable Care Act or The Always Changing Act?

George Thompson, Esq. Director, Client Compliance & Regulatory Affairs George.Thompson@MarshMMA.com www.MMA-NewEngland.com

September 2016

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ACA Employer Mandate Fundamentals

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ACA Employer Mandate Fundamentals

• A. Refresher: Are You a Large Employer?

2015: Employers With 100 or more Full Time or Full Time Equivalent Employees Had To Comply With The Employer Mandate. 2016: Employers with Between 50 -99 Full Time or Full Time Equivalent Employees Must Comply With the Employer Mandate

Key points:

• 50 “Full time employees”
• Prior calendar year analysis…need to look at your 2015 headcount.
• Full time equals 30 hours per week.
• Count both full time and employees and full time employee equivalents

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• B. What’s The Counting Methodology For Purposes of Identifying a

Large Employer?

I. Take the sum of the total number of full-time employees (including any seasonal workers) for each calendar month in the preceding calendar year and the total number of FTEs (including any seasonal workers) for each calendar month in the preceding calendar year, and divide by 12. II. The result, if not a whole number, is then rounded to the next lowest whole

• number. If the result of this calculation is less than 50, the employer is not a

large employer for the current calendar year. If the result of this calculation is 50 or more, the employer is a large employer for the current calendar year (2016), unless the seasonal worker exception applies.

ACA Employer Mandate Fundamentals

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ACA Employer Mandate Fundamentals

• C. Example:
• Facts. During each calendar month of 2015, Employer W has 20 full-time

employees each of whom averages 35 hours of service per week, 40 employees each of whom averages 90 hours of service per calendar month, and no seasonal workers.

• Conclusion. Each of the 20 employees who average 35 hours of service per

week count as one full-time employee for each calendar month. (20 employees)

• To determine the number of FTEs for each calendar month, the total hours of

service of the employees who are not full-time employees are aggregated and divided by 120. The result is that the employer has 30 FTEs for each calendar month (40 × 90 = 3,600, and 3,600 ÷ 120 = 30). Because Employer W has 50 full-time employees (the sum of 20 full-time employees and 30 FTEs) during each calendar month in 2015, and because the seasonal worker exception is not applicable, Employer W is an applicable large employer for 2016.

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ACA Employer Mandate Fundamentals

• D. Determining Full Time Employee Status for The Purpose of

Getting An Offer of Health Insurance

30 hour benchmark…Count “hours of service” Special rules for certain types of paid and unpaid leave: i. FMLA leave ii. Jury duty iii. Adjunct Professors

• iv. Break In Service Rules

Treatment of variable hour, part time and seasonal employees Setting of Initial Measurement Period for new hires and Standard Measurement Periods For Ongoing Employees Original 2013/2014 guidance did not address what to with an employee receiving short or long term disability benefits. What to do?

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2016 ACA Employer Mandate “Hours of Service” Change: Disability

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2016 ACA Employer Mandate “Hours of Service” Change: Disability

Issue: Should an employer count Roger’s time on STD/LTD In Order To Determine If Roger Should Get An Offer of Coverage? Keys: Has Roger been terminated? Who paid the premiums?

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2016 ACA Employer Mandate “Hours of Service” Change: Disability

If Roger has been terminated…he is no longer an employee. If Roger’s employer paid the premiums for the STD or LTD benefits …the time associated with that disability leave is counted as an hour of service during the measurement period assuming Roger is not a terminated employee. If the STD or LTD premiums were paid by Roger post tax…the time associated with that disability leave is not counted. IRS Notice 2015-87(Q&A 14)

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ACA Reporting Changes: Employer Mandate Reporting: Forms 1094C and 1095C

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ACA Reporting Changes: Employer Mandate Reporting: Forms 1094C and 1095C

Must file corrected returns in 2016 or deemed not submitted. The 1094-C and 1095-C Forms have changed! Two new line 14 Offer of Coverage codes…. 1J and 1K .These codes are used to reflect conditional offers of coverage to an employee's spouse. A conditional offer is an offer of coverage that is subject to one or more reasonable, objective conditions (for example, an offer to cover an employee's spouse only if the spouse is not eligible for coverage under a group health plan sponsored by another employer. Coordinate with Payroll Vendor if applicable.

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2016 Marketplace Premium Subsidy Notices

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2016 Marketplace Premium Subsidy Notices

What are they? Letters from Marketplace/Exchange advising an employer that an employee received a premium subsidy. The Marketplace does not have the ability to

• penalize. The power to penalize resides with the IRS. Expect to see first wave of

penalties in 3Q 2016. What to do? Recommend that employer’s respond and educate Marketplace of applicable

• defenses. Notify employee as well since if they were wrongly issued a subsidy,

the gov’t can claw the money back.

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Change in Affordability Index from 9.5% to 9.66%

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Change in Affordability Index from 9.5% to 9.66%

IRS Notice 2015-87 Affordability is inflation adjusted each year. Coverage offered by a large employer is “affordable” if the employee cost for self-

• nly coverage is not more than 9.5% of household income or of one of the three

affordability safe-harbors (W-2, Rate of Pay, FPL). Notice 2015-87 confirms that the inflation adjustment: 9.66% for 2016. Penultimate Question: Is the cost of the full time employee’s contribution for single coverage more than 9.66% of the employee’s income?

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IRS Guidance on How an Opt Out Payment, Employer Flex Credit, and a HRA Can Impact the 9.66% Affordability Benchmark

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IRS Guidance on How AN Opt Out Payment, Employer Flex Credit and a HRA Can Impact the 9.66% Affordability Benchmark

IRS Notice 2015-87 (Transition relief for 2016 if plan was in place before December 16, 2015)

• A. Opt Out Payments: Employer pays employee $$$ to decline health
• coverage. The contributed $$$ count towards the affordability analysis

(you add it to the premium!) unless the opt out payment was “conditional.” Example: Employer will pay employee $2000 to decline coverage if it can show that the employee has coverage elsewhere.

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IRS Guidance on How AN Opt Out Payment, Employer Flex Credit and a HRA Can Impact the 9.66% Affordability Benchmark

• B. Employer Flex Payments to FSA: Employer contributions to an

employee’s flexible spending account under Section 125/cafeteria

• plan. The employer contribution may be used only to pay for

employee health coverage or contributed to a health flexible spending account (HFSA) (the Notice calls these “health flex contributions”), but may not be used for other types of benefits (such as life insurance or dependent care) and may not be taken as taxable cash.

Example: if the employee premium contribution for self-only coverage is $200 per month and the employer “health flex contribution” is $600 for the year ($50 per month), the employee’s required monthly contribution is $150 ($200 – $50).

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IRS Guidance on How AN Opt Out Payment, Employer Flex Credit and a HRA Can Impact the 9.66% Affordability Benchmark

• C. HRA. The employee may use HRA dollars to either pay premiums or
• ther cost-sharing expenses. The HRA must be integrated with the

eligible employer-sponsored health plan. For example, if the employee contribution for self-only coverage under the group major medical plan is $200 per month, and the employer HRA contribution for the year is $1,200 ($100 per month) and may be used either toward premiums for medical, dental or vision or for employee cost-sharing, the employee’s required contribution is $100 per month ($200 – $100).

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Increase in Employer Mandate Penalty for 2016

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Increase in Employer Mandate Penalty for 2016

See Rev. Proc. 2016-43 and IRS Notice 2015-87 The original $2,000 and $3,000 penalty amounts (IRC section 4980H(a) and (b)) are adjusted each year for inflation. 2016 adjusted employer mandate penalty amounts are $2,160 (the class A penalty) and $3,240 (the individual B penalty). Large employers may be subject to penalties if they do not offer affordable, minimum essential coverage to at least 95% of all full-time employees (the “A” penalty) or if they do offer coverage but it is not affordable” or does not provide at least minimum value to at least one full-time employee (the “B” penalty).

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Wellness Plans: The Invasion of the EEOC Regulators

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Wellness Plans: The Invasion of the EEOC Regulators

• A. Regarding Wellness: What the ACA Clearly Provides.

A plan sponsor can use up to a 30% reward/discount or penalty/surcharge associated with a health standard based wellness program. A plan sponsor can use up to a 50% reward/discount or penalty/surcharge associated with a health standard program.

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Wellness Plans: The Invasion of the EEOC Regulators

• B. The 2015 EEOC Wellness Litigation Onslaught

EEOC v. Honeywell (Minn. 2014) If an employee did not complete biometric testing, the employee would be required to pay a $1,500 premium surcharge for health coverage and would not be eligible for contributions (up to $1,500) that the employer would otherwise make to the employee’s health savings account. If an employee’s spouse also did not complete the biometric testing, the employee would be required to pay another $1,000 surcharge for health coverage. Court denies EEOC’s request for TRO and injunctive relief.

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Wellness Plans: The Invasion of the EEOC Regulators

EEOC v. Flambeau (ED Wisc. 2015) (EEOC appealed to the 7th Circuit) Court holds that that an employer did not violate the ADA by requiring its employees to participate in a wellness program, including by undergoing health risk assessments and biometric screenings, as a precondition of participating in the employer’s health insurance plan. ADA “safe harbor” for benefit plans applies. EEOC v. Orion (ED Wisc. 2015) The employer paid 100 percent of the cost of the health plan for employees who completed an HRA and a fitness test. If an employee did not complete an HRA, the employee was required to pay the full cost of the health plan premium. If an employee did not complete the fitness test, the employee was penalized $50. Summary judgment briefs filed. No decision yet.

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Wellness Plans: The Invasion of the EEOC Regulators

Seff v.Broward County (11th Circuit, 2012) An employee complained about a program in which the employer deducted $20 per biweekly paycheck from any employee who did not complete an HRA and biometric screening. Seff court sided with Broward County, relying on an exception under the ADA that provides that the rules on medical examinations do not prohibit employers from “establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks or administering such risks that are based on or are not inconsistent with state law.” The court reasoned that the wellness program fit within this exception because, among other reasons, the employer used aggregate data from the HRAs to classify various employee health risks and decide on the types of benefits that should be offered in the future to reduce plan costs. Court recognizes that the ADA has a “safe harbor” /carve out for medical plans. Court concludes that a bona fide wellness program is a critical part of a medical plan and is exempt form EEOC oversight.

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Wellness Plans: The Invasion of the EEOC Regulators

• C. May 2016 Wellness Regulations: Effective Day 1 of the 2017 Plan Year

What Did the EEOC say about Flambeau, Orion and Broward County? The safe harbor applies to actuarial based risk classification. “The Commission believes that the cases were wrongly decided…the agency has the authority and responsibility to provide its own considered analysis of the statutory provision…”

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Wellness Plans: The Invasion of the EEOC Regulators

EEOC Issues ADA/Wellness Regulations Directed at wellness programs that require employees to ask disability related questions or udergo a medical examination to avoid a penalty/surcharge. Wellness programs need to be “voluntary.” New Notice and confidentiality requirements. A program is not voluntary if it is coercive. A plan sponsor looks to the size of the incentive to determine if the plan is coercive. Maximum incentive is 30% of the total cost of the lowest cost self only coverage if the wellness program is open only to the employee. Example: Total cost of self only coverage is $6,000. Maximum incentive is $1800.

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Wellness Plans: The Invasion of the EEOC Regulators

EEOC ADA/Wellness Regulations and smoking cessation programs 30% cap on incentives apply if there are disability related questions or a medical examination is required. Can go up to 50% if simply asking the employee whether they are a smoker. EEOC Issues Genetic Information Nondiscrimination Act (GINA) Regulations Section 1635.8 Can offer an inducement to an employee whose spouse provides information about the spouses’ health as part of a health risk assessment. Cannot offer an inducement to an employee’s spouse to provide information about his/her health as part of a health risk assessment. Cannot offer an inducement to an employee to provide health information about their children. Cannot condition access to coverage to employee or spouse on making them provide health related information. (No gatekeeper plans).

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Wellness Plans: The Invasion of the EEOC Regulators

GINA and Inducements… 30% limit of the total cost of the lowest cost self only coverage on inducements for participation in Wellness program. Example: Total cost of family coverage is $14,000, self only is $6,000. If employee and spouse participate in wellness program, the max inducement for the employee is $1,800 and $1,800 for the spouse. (30% of $6,000). If a health plan offers several self only coverage options, the 30% is based on the lowest cost option.

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Wellness Rewards and Taxes

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Wellness Rewards and Taxes

April 2016: IRS Publishes General Counsel Memo Regarding Taxation of Wellness Rewards. Chief Counsel Memo Number: 201622031.

• A. Cash Rewards. The memo sates that any reward, incentive, or other

benefit that is not medical care is included in an employee’s income unless it is an excludable fringe benefit under Code § 132. Code § 132(e) defines an excludable de minimis fringe benefit as any property

• r service the value of which is so small as to make accounting for it

unreasonable or administratively impracticable. IRS reaffirms that cash benefits are never excludable as de minimis benefits, so cash wellness rewards—regardless of the amount—must be included in the employee’s gross income. Note: IRS previously has stated that, under this rule, gift cards are treated the same as cash

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Wellness Rewards and Taxes

• B. Gym Fees and Other Nonexcludable Rewards. The IRS recognizes

that there may be rewards, such as T-shirts, that qualify as de minimis rewards that can be excluded from income. Payment of an employee’s gym membership fees, however, would not be excludable from income because it is a nonexcludable cash benefit. The fair market value of any nonexcludable reward must be included in income and subject to employment taxes

• C. Reimbursement of Premiums Paid Tax-Free Through a Cafeteria
• Plan. In IRS Revenue Ruling 2002-3,the IRS previously addressed

the reimbursement of health insurance premiums paid tax by salary reduction and concluded that the exclusions for health coverage and health benefits from an employee’s income would not apply. The IRS concludes that the result is no different if the premium reimbursements come in the form of rewards under a wellness program.

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New ERISA Violation Penalties Announced: Effective August 1, 2016

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New ERISA Violation Penalties Announced: Effective August 1, 2016

Form 5500 Filing Failure. The current penalty of up to $1,100 per day for failing to file a timely Form 5500 will increase by almost 100% to a maximum of $2,063 per day. Multiple Employer Welfare Arrangements (MEWAs). The current penalty for not including a Form M-1 with the annual Form 5500 will increase from up to $1,100 per day to a maximum of $1,502 per day. Group Health Plan Notice. Failing to inform employees of CHIP coverage

• pportunities will result in a penalty of up to $110 per day, up from $100 per day.

The penalty for failing to furnish the Summary Benefits Coverage notice will increase from up to $1,000 to a maximum of $1,087 per failure. Here is the point: Be aware of your responsibilities and deadlines!

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Proposed Revision to Form 5500 Regulations: Would Apply to 2019 Plan Year

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Proposed Revision To Form 5500 Regulations: Would Apply to 2019 Plan Year

Form 5500 Annual Return/Report is the primary source of information about the

• peration, funding, assets, and investments of pension and employee benefit
• plans. In addition to disclosing important information to plan participants and

beneficiaries, the Form 5500 Annual Return/Report is an essential compliance and research tool for the federal government.

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Proposed Revision To Form 5500 Regulations: Would Apply to 2019 Plan Year

A. More information will be required concerning 401K and pension

• plans. The asset breakouts on the balance sheet component of

Schedule H (Financial Information) would be modified to add more investment categories and subcategories.

I. Require plan administrators to disclose more detailed information about the nature of plans’ administrative expenses. II. New reporting subcategories on Schedule H would be designed to capture amounts paid for salaries, audit, legal, recordkeeping and actuarial fees, and

• ther plan expenses.
• III. Small plans eligible to file on Form 5500-SF (covers fewer than 100

participants) would be required to provide certain additional information about the plans’ investments. Plans will be required to categorize the plans’ investments into one of eight categories, which include cash/cash equivalents, money market funds and publicly traded stock. If a small plan is not invested in one of the eight listed categories, it would not be eligible to file

• n Form 5500

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Proposed Revision To Form 5500 Regulations: Would Apply to 2019 Plan Year

• B. IMPORTANT !: DOL will eliminate for group health plans the current

exemption from Form 5500 reporting for small insured and self-insured welfare benefit plans (less than 100 plan participants).

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New Cause of Actions: Section 510 Cases: Unlawful Interference with ERISA Benefit Rights

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New Cause of Action: Section 510 Cases: Unlawful Interference with ERISA Benefit Rights

Section 510 of ERISA prohibits an adverse employment action being taken against employee for “…for the purpose of interfering with the attainment of any right to which such participant may become entitled under an employee benefit plan.” To establish a prima facie case, a plaintiff must demonstrate that he or she: (1) was eligible for benefits under an ERISA-covered plan; (2) was qualified for the position; and (3) was discharged or denied employment under circumstances that give rise to an inference of discrimination. Dister v. Continental Group, Inc., 859 F.2d 1108 (2d Cir. 1988)

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New Cause of Action: Section 510 Cases: Unlawful Interference with ERISA Benefit Rights

Dave and Buster’s Class Action (2015)… (Marin v. Dave & Buster’s, Inc., S.D.N.Y., No. 1:15-cv-03608) The lead plaintiff alleges that the company slashed her weekly hours from more than 30 to about 17 in order to avoid the ACA's employer mandate. According to the worker, following the reduction in hours, Dave & Buster's dropped her from its health plan, because she failed to work a sufficient number

• f hours to be eligible for coverage. She also saw her weekly wages cut nearly in

half. In the complaint, Dave and Buster’s recent filings with the Securities and Exchange Commission were referenced, pointing to passages in which the company voiced concerns that ACA compliance would increase corporate expenses. February 2016 Development: Court Denies Motion To Dismiss U.S. District Judge Alvin K. Hellerstein holds that employee Maria De Lourdes Parra Marin, adequately plead that her reduction in hours by her employer “[interfered] with the attainment” of her benefit entitlement as prohibited by ERISA.

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Surviving the Storm:

Employee Benefit Compliance & Law Update

September 15, 2016

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• The Affordable Care Act and Financial Considerations
• What Goes Into Setting a Long-Term Benefits Strategy?
• Is Self-Funding Right for Our Organization?
• Pharmacy Solutions – What’s Behind the Curtain?
• Trends in Worksite Wellness and Health Management

Today’s Presentation

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The Affordable Care Act’s financial impact to our clients’ bottom line can potentially alter the overall business plan, beyond just the employee benefit program’s budget.

Strategy for managing costs, compliance and employee benefits in the ACA marketplace.

Affordable Care Act Impact Analysis

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“Help me understand the ACA and manage its financial impact on our business.” “How do I make the ACA work for my business?” “I need a partner that can map the right course for us based on our specific ACA analysis results.” “How can we be sure that our technology partners have the proper reporting in the event we are audited?” “My CEO and CFO have requested a complete review of

• ur company’s ACA exposure. I

need a model that I can trust.”

What we hear from our clients…

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ACA (“Pay or Play”) Impact Analysis

Budget and strategy recommendations for cost impact management Audit to ensure ACA compliance Identification of risks and exposures to penalties for non-compliance or future excise tax

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Validation of Your ACA Strategy

Final ACA strategy and client recommendations are reviewed and approved by ERISA and ACA attorneys.

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What the Numbers Tell Us: A Benchmark Analysis of the ACA

40%

2 out of 5 employers added a CDHP or took steps to build enrollment in an existing plan to reduce excise tax exposure

5%

Employers plan to stay in the game. Only 5-7% are likely to terminate plans in the next 5 years

Mercer: Living With Healthcare Reform, 2016 Survey Results

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ABC Company “Play or Pay” Analysis Potential Employer Penalty Exposure

*400 full-time (30 or more hours/week) employees *0 part-time (<30 hours/week) employee

⇒ Penalties are only triggered if an employee is not enrolled in the employer plan and receives premium

assistance to purchase marketplace coverage; however, not all those eligible for assistance will actually purchase marketplace coverage

⇒ Future contributions will determine the true potential impact based on coverage selection.

290 60 50

Employee Eligibility

Currently Enrolled in Major Medical Currently Waiving Major Medical Employees Who Would Need to Become Eligible under the ACA

25 40 335

Employee Sufficiency & Affordability

Eligible for Premium Assistance - Not Currently Enrolled Potentially Eligible for Premium Assistance - Currently Enrolled All Other Employees

SAMPLE OUTPUT

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ABC Company “Play or Pay” Analysis – 2017 Potential Employer Cost Scenarios Graph

⇒ The numbers used are estimates based on the current guidance of PPACA. If new guidance is issued the numbers could fluctuate materially. Plans that do not meet the transition relief test of 1/3 eligible or 1/4 enrolled (or 1/2 full-time eligible or 1/3 full-time enrolled) in this analysis might be eligible for limited transition relief, depending on facts and circumstances. $2,041,952 $2,108,074 $2,201,850 $1,189,286 $120,357 $1,189,286 $1,189,286 $2,030,466 $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 Current State in 2017 Compliant Eligibility Strategy Compliant Strategy w/ Penalty Reduction Drop Coverage and Adjust Compensation Drop Coverage without Adjusting Compensation Plan Cost Penalties Additional Penalties* Compensation Adjustment

SAMPLE OUTPUT

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ABC Company “Cadillac” Tax Analysis Plan Cost Timeline Exhibit

• Excise tax estimates are rounded to nearest $5,000
• Trend lines are inclusive of fund amounts
• Projected costs are grossed up by the corporate tax rate where applicable

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 2016 2017 2018 2019 2020 2021 2022

Employer Plan 1

Family Threshold Family 4% Family 6% Family 8% Individual Threshold Individual 4% Individual 6% Individual 8%

Estimated Excise Tax 4% Trend 6% Trend 8% Trend 2020 Employer Plan 1 $0 $0 $0 All Plans $0 $0 $0 2021 Employer Plan 1 $0 $0 $0 All Plans $0 $0 $0 2022 Employer Plan 1 $0 $0 $0 All Plans $0 $0 $0

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CASE STUDY

Implement benefit plan changes to reduce cost while leveraging

• pportunities available through the Marketplace

Employer was facing a significant increase to their health plan due to their employee profile and the requirements of the ACA. Estimated 26% of full time employees would find more affordable coverage at the gold plan level.

The Challenge

Continuing to offer group health plan but establishing unaffordable contribution strategy triggering a qualifying event for the exchange. Robust communication campaign to make employees aware of coverage options

• n the Marketplace

and leverage enrollment resources to support employee interest.

The Solution The Objective

To implement benefit plan strategy to reduce plan costs and leverage

• pportunities available through the

federal Marketplace while maintaining company group plan for those who prefer to stay on company health plan.

Over 500 employees enrolled in the Marketplace.

The Result Annual Client Savings:

$2,997,425 (YR1) $1,368,000 (YR 2+) Savings calculated after Employer ACA penalty

Annual Employee Savings:

Between $504 - $3,336

The Client:

Non-Profit Health Services Provider

3300 employees

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A powerful tool to illustrate future strategies.

Used to develop a 3-5 year strategic plan for a client’s:

 Medical plan  Prescription drug plan  Dental plan  Vision plan

Strategic Forecast Model

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“Healthcare is the only area

• f our business that we are

forced to manage on an annual basis. We need a longer term plan.” “We need to understand how trend and plan changes will impact when/if we trigger the Cadillac tax in 2020.” “We want the ability to understand (real time) how different strategies impact our short and long term healthcare costs.” “I need to understand the cost reduction levers available to us and the financial impact of each.”

What we hear from our clients…

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Interactive healthcare strategy tool reveals client’s funding gap.

Illustrates the glide assuming that no changes are made to address cost

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Assist in the development of a multi-year healthcare strategy Interactively illustrates probable future plan costs Provides a perpetual planning platform

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Forecast Analysis Drives Future Strategies

MMA underwriting team will load

• ur Strategic Forecast Model

with current plan values, contributions, expected trends and various cost management strategies that could be leveraged by the client.

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Opportunity Pyramid Long Term Strategies Short Term Strategies

Consumerism Health Management Contributions Vendor Management Plan Design Funding Method Core Plan Management

Cost Management Options

MMA and the client hold work sessions to review the cost management options and the economic impact. Strategic changes can be built for 3, 4

• r 5 year periods.

Each cost management strategy category has multiple options and associated cost impact data pre- loaded.

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Highlight of Potential Strategic Initiatives

Funding Method

• Evaluate funding, if fully insured, option to reduce cost based on risk and tax / fee savings
• Evaluate pharmacy aggregate purchasing consortiums for better underlying financial terms
• Negotiate and market stop loss
• Increase SSL threshold (based on evaluation of risk and predictive modeling using Verisk)

Plan Design

• Align value-based design with health improvement initiatives
• Consider CDHP design options to drive consumerism and cost awareness
• Balance current plan designs with benefits philosophy & objectives

Vendor Management

• Market all vendors to leverage MMA national agreements and competitive landscape
• Measure and evaluate current disease and large case management programs

Contribution Strategy

• Use contribution credit incentives in health improvement strategy
• Evaluate dependent tier contribution strategies
• Consider defined contribution approach with or without Private Exchange option

Strategic Communications

• Establish/reinforce both benefits and health improvement branding
• Reinforce the importance of good health and value of personal lifestyle behavior change
• Make employees aware of company sponsored benefits and health improvement programs &

resources

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CASE STUDY

Strategic Forecast Model: Long Term Benefit Planning

• Sr. HR Officer was

not pleased with their reactionary planning to annual benefit cost increases. The group did not feel that they had the right tools to project future benefits costs. HR team was tasked by finance to develop a multiyear benefit budget.

The Challenge

MMA obtained the banks benefit data and loaded our Strategic Forecast Model. MMA and banking group agreed on certain trend assumptions. MMA and banking group determined the target employer annual cost change. A formal 5 year pro- forma of costs and the funding gap were developed.

The Solution

The client was able to see the different cost reduction strategies available to them. Client could

• bserve (real time)

the cost impact of each potential strategic change. Based on these findings, the client developed their strategic plan and used this data to populate their long term benefits budget.

The Result

The Objective

Develop a multi-year benefit budget that accurately depicts annual cost increases.

The Client:

Banking Industry

800 employees

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Medical Plan Funding Alternatives

Accurate Data + Quality Modeling = Sound Decision Making

Methodology and data accuracy is the underlying foundation for effective planning.

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• As a fully insured plan, insurance carriers build the fees below into premium rates
• By transitioning to a self-insured funding arrangement, the client would avoid most of

these additional costs

• Estimated savings could be used to offset reserves, which should be factored in to

account for unexpected claim activity

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Component % Impact Projected Cost Impact1 Description Risk Charge2 3% $216,500 Charge built into premium to cover insurer’s profit and risk management Premium Tax ~2% $55,500 Fully-Insured PPO plans are subject to state taxes Total 4-5% $272,000 Total estimated cost attributed to fully- insured plan

Notes:

1Projected cost impact based on the client’s estimated 2016 medical budget of $7.2M 2Profit is built into the risk charge

Fully Insured Plans Subject to Additional Costs

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• In a self-insured arrangement, the client will have the ability to influence plan

design and costs, and avoid some Health Care Reform mandated fees

– Patient Centered Outcomes Research and Reinsurance fees will apply, regardless of funding type – Health Insurance Industry fee, the largest fee of the three, applies to fully insured plans only and could be avoided in a self-funded environment

• Caveat: This is forgiven in 2017 for fully insured groups, but may return in 2018
• Health Insurance fee will increase in later years to 3.5%-4.0%

65

Health Care Reform Fee Component Fully-Insured Self-Insured Patient Centered Outcomes Research Fee (PCORI) $2,500 $2,500 Health Insurance Premiums Assessment @ 2.0% $144,200 $0 Transitional Reinsurance Assessment $32,800 $32,800 Total $179,500 $35,300 Self-Insured Savings1 $144,200

1In addition to savings referenced on previous slide; estimated based on the client’s 2016 medical budget of $7.2M and

estimated membership of 1,204.

Fully Insured Plans Subject to Additional Costs

MARSH & McLENNAN AGENCY, LLC

66

CASE STUDY

Historical Review Reveals Opportunity to Save Healthcare Dollars

Medical loss ratio was consistently

• utperforming the

target loss ratio. Paying for the Health Insurance Premium Assessment at ~2%

• f claims or

$144,000. Fully insured rates resulting in a projected Excise Tax.

The Challenge

Conduct an historical funding analysis to evaluate the possibility of future cost savings by moving from fully insured to self insured. Create appropriate working rates to fund the plan and build reserves. Evaluate impact on future Excise Tax liability.

The Solution

Average annual savings over a 4- year historical review was $880,000 or 13.5%. Annual Health Insurance Premium Assessment of ~$144,000 was eliminated Working rates resulted in no projected Excise Tax .

The Result

The Client:

High Tech

500 employees

MARSH & McLENNAN AGENCY, LLC

Choosing a Funding Arrangement Self-Funded Advantages and Disadvantages

Advantages Disadvantages Self- Funded

• Improved cash flow – claims funded as paid
• Benefit if experience is better than expected
• Employer holds reserves
• Earn interest on reserve liability
• Improved flexibility in designing/customizing

benefits plan

• Escape premium tax and insurance carrier’s

risk charge

• Exempt from state mandated benefits
• More flexibility in administering/interpreting

benefits

• Avoid some health care reform taxes
• Access to improved reporting on claims
• Budgeting more complex – claims expense

fluctuates monthly

• Need for more frequent financial tracking /

claims; stop loss reimbursements

• More complicated legal framework – ERISA

requirements

• May need to audit carrier for claim payment

quality

• Since the liability is not fully-insured, costs

may be higher if claims experience worse than expected (can be hedged through purchase of

aggregate stop loss insurance)

• Exposure to catastrophic claims (can be hedged

through purchase of individual stop loss insurance)

• Typically, fiduciary liability is the client’s

responsibility (but can be “sold” to carrier)

• PCORI and Transitional Reinsurance Feel

Remittance, as well as 6055/6056 Reporting is the client’s responsibility

67

MARSH & McLENNAN AGENCY, LLC

MMA Rx Solutions

Pharmacy Benefits Management A unique approach driving transparency and best in class employer service levels.

MARSH & McLENNAN AGENCY, LLC

“How do I know I am really getting the most competitive pharmacy benefit management (PBM) arrangement for my company?“ “Is it possible to compare my current PBM to other PBM’s in the market?” “Will I have to change my PBM or carve out my pharmacy program to find savings?” “How can I ensure that my pharmacy strategy is not just helping lower costs, but also promoting healthier programs for my employees?” “How can I guarantee my PBM will keep their promised pricing?” Pharmacy questions needing an answer…

MARSH & McLENNAN AGENCY, LLC

The Pharmacy Landscape: 2015 and Beyond Market Conditions

U.S. drug spending increases to $498 billion, an increase of

148%

from 2005

2016

Pharmacy benefits represent

20%

• f cost

2010-15

Specialty drugs represent

40%

• f pharmacy

spending

2015

MARSH & McLENNAN AGENCY, LLC

The Approach

Supporting clients regardless if they are

• n a carve in
• r carve out

contract.

Deep Dive Analytics Pharmacy Contract Expertise Employee Engagement Platform

MARSH & McLENNAN AGENCY, LLC

What drives prescription costs?

Plan Decisions

Unit Cost



PBM Contract



Discounts



Rebates



Plan Design

Employee Decisions



Choice of lower cost drugs



Generic utilization



Choice of pharmacy



Engagement

Utilization Rx COSTS = UNIT COST x UTILIZATION

MARSH & McLENNAN AGENCY, LLC

PBM Comparison Components

Request info from current PBM along with current plan design, reporting, client details, and claim file.

Detailed Audit & Analysis

In-depth audit of current contract performance vs contract terms/guarantees, as well as comparison of current performance vs national PBM

• ffers.

Results Summary

Extensive summary of audit and analysis results, as well as formulary disruption analysis, limited network

• ptions, and

clinical recommendations.

Decision Process

Client to review. Ongoing support with additional analysis as needed.

Analytics and Expertise

MARSH & McLENNAN AGENCY, LLC

CASE STUDY

Pharmacy Savings Through Market Intelligence

Frustration with the pharmacy spend trend increase experienced over the last four years with PBM. Exposure to Excise Tax

The Challenge

• Engaged MMA Rx

Solutions

• Evaluation of PBM

contract

The Solution

Multiple PBMs submitted bids with over $100,000 worth of savings Current PBM adjusted contract and pricing to retain the case Reduced exposure to the Excise Tax

The Result

The Objective

Evaluate the current pharmacy arrangement and decrease the steadily rising pharmacy spend. $95,000.00 $100,000.00 $105,000.00 $110,000.00 $115,000.00 $120,000.00 $125,000.00

Savings

PBM 1 PBM 2 PBM 3 Incumbent

The Client:

Health Care

600 employees

MARSH & McLENNAN AGENCY, LLC

Leading organizations to a culture of health and improved wellbeing.

Integrating Health Promotion with Health Protection.

Wellness and Health Management

MARSH & McLENNAN AGENCY, LLC

Chronic Disease Leading Cause of Death & Disability in the United States

• Examples: Heart disease, stroke, cancer, type 2

diabetes, obesity, arthritis, etc.

• As of 2012, about half of all adults—117 million

people—had one or more chronic health conditions.

• 1 in every 4 adults have multiple chronic

conditions (Schiller, 2014)

• 75% of all heath care expenditures are a result of

a chronic disease (CDC, 2015)

• Results from a PricewaterhouseCoopers survey

found that indirect costs (e.g., days missed at work) were ~4X higher for individuals with chronic

• disease. (PricewaterhouseCoopers, 2010).
• Gaps in care, over-utilization, failure to coordinate

care = 34% of healthcare costs (Don Berwick, 2015)

76

MARSH & McLENNAN AGENCY, LLC

An Epidemic of “Lifestyle Disease”…

77

MARSH & McLENNAN AGENCY, LLC

Evidence shows that workplace health programs have the potential to:

• Promote healthy behaviors
• Improve employees' health knowledge and skills
• Help employees get necessary health screenings, immunizations,

and follow-up care

• Reduce workplace exposure to substances and hazards that can

cause diseases and injury.

The Solution… Health Management

78 Source: US Department of Labor: http://www.dol.gov/ebsa/newsroom/fswellnessprogram.html

Culture Employee Well-Being Retention

MARSH & McLENNAN AGENCY, LLC

“Wellness” vs. Health Management

• Generic vs. Targeted
• Idea-based vs. Evidence-Based
• Focus on Culture vs. Focus on Outcomes
• Separated vs. Integrated

79

April 25, 2017

MARSH & McLENNAN AGENCY, LLC

High Performing Health Plans - Sample Criteria for Evaluation

Exchanges Cost Transparency Tool Spousal Surcharge Spousal Carve Out Voluntary Benefits Strategy Health Advocate Telemedicine HDHP with Account Funding Level of Account Incentive Contributions Value Based Design Reference Based Pricing Tiered Benefits Participatory Wellness Premiums Participatory Account Contribution Participatory Tobacco Surcharge Financial Education Communication Communication EAP Rx Carve Out Case & Disease Management Carve Out Claim Audit Dependent Audit Centers of Excellence Funding Verisk Health Health Risk Assessment & Biometrics Health Contingent Wellness Premiums Health Contingent Account Contribution Tobacco Free Workplace Health Contingent Tobacco Surcharge Wellness Budget Formal Wellness Program C-Level Employer Engagement Spousal Access & Participation Onsite Fitness Facilities Onsite Medical Facilities

= In place today

80

Consumerism & Behavior Health Improvement

• Consumerism and

Behavior: – 14 out of 36

• Health Improvement:

– 25 out of 46

• Total:

– 39 out of 82

MARSH & McLENNAN AGENCY, LLC

Types of Employer-Sponsored Health Management Programs

81

Company Policies Tobacco-Free Workplaces Flex-time for Physical Activity Participatory Rewards for: Health Assessments Biometric Screenings Health Contingent Rewards for: Tobacco Non-Use BMI or Blood Pressure Criteria

MARSH & McLENNAN AGENCY, LLC

Health Management at Marsh & McLennan Agency Best Practices

Personal Health Assessment Biometric Screening Preventive/ Routine Care Tobacco Cessation Lifestyle & Behavior Change

Meaningful Incentives

Best Practices Reasoning: Best Practices

Personal Health Assessment

• Provide employees and their dependents with individualized feedback on their health status and

recommendations for reducing health risks

• Provide employers with a mechanism to identify wellness program needs and evaluate change in the

population's behavior

Biometric Screening

• Allows employers to collect more accurate and objective measures of employee health and offers the

potential for identifying individuals with undiagnosed conditions

Preventive/ Routine Care

• Builds relationship with physician, encourages regular care so conditions are caught earlier and health is

maintained

Tobacco Cessation

• Tobacco use is the single most preventable cause of disease, disability, and death in the United States.

Lifestyle & Behavior Change

• Implementing programs that address specific population health or lifestyle risks is crucial to measurable
• utcomes of a program over time.

Meaningful Incentives

• Carrot vs. Stick: Carrots are anticipated desirable rewards to influence the performance of a group, Sticks

are negative consequences for undesirable behavior or actions-used to motivate

• Participation and engagement is higher when incentives tied to the health plan are implemented (i.e.

healthcare premium reductions, premium holidays, HSA/HRA contributions)

82

MARSH & McLENNAN AGENCY, LLC

What’s Next for Wellness?

• Data-driven, customized approaches to population health management.
• “Carved out” wellness initiatives

‒ Distinct wellness budgets; third party vendors

• Using technology to engage employee populations (especially

remote/disperse employees) ‒ Wearable devices; Mobile applications; telemedicine

• Integrating wellness programs with medical plan design and premium

differentials

• Redesigning workplaces

‒ Standing desks, Relaxation rooms

• Making smoking cessation a priority

‒ Worksite policies; surcharges

• Promoting overall well-being

‒ Financial wellness, Stress management; etc.

83

MARSH & McLENNAN AGENCY, LLC

84

CASE STUDY

A Total Workplace Wellness Program

Program lacks clear

• utcomes and

incentive

• pportunities for all

participants. Insufficient reporting –health measurables

• btained but lack

trend aggregate data necessary to monitor progress. A minimal focus on low to medium risk employee population. A missing correlation between wellness activities and health care costs.

The Challenge

Increased emphasis

• n low/medium risk

employee population. Incorporation of spouses to foster wellness at work/home. Development of a multi-year outcome based incentive. The availability of wellness tools including onsite screenings, health scorecard, access to

• nline wellness

resources, and an

• nsite health coach.

The Solution

A personal health scorecard and incentive program has motivated participants to improve their

• health. A 17%

positive change was

• bserved in the overall

health of the City’s employees and their spouses. Being able to accurately track the health risk trends of its employees the City

• bserved that 24% of

employees improved their health measures, 69% stayed the same and 7% worsened.

The Result

The Client:

350 employees

Municipality

The Objective

Implement an increased focus

• n low to medium risk

employees, as well as a continued focus on the high risk population.

MARSH & McLENNAN AGENCY, LLC

85

• ACA – Identify risks, set strategy for cost management, and audit for

compliance

• Long-term planning reveals important funding gaps, allowing your team

to be strategic and proactive

• Self funding is viable for most employers and an important component
• f benefit planning due diligence
• A thorough review of PBM contractual terms often

reveals big opportunities for savings

• Healthier Workforce  Lower Costs & Higher Productivity 

PROFITABILITY

A Recap

Surviving the Storm:

Employee Benefit Compliance & Law Update

September 15, 2016

Connecting Law Students with Companies for a Real-World Educational Experience

Corporate Counsel Clinical Externship Program

Goals Within RWU Legal Education: “The Transactional Training Experience”

• Deep, practical knowledge of the corporate counsel practice

setting, the internal client, corporations and business, relevant substantive law and skills, transactional practice

• Problem-solving, exercising judgment, drafting and

negotiating contracts, writing for business, communicating and presenting, collaborating, advising and counseling, and developing cultural competence

• Professional development through self-directed learning,

goal-setting, learning from experience, networking, and working effectively with supervisors

• Professional identity, professionalism, confidentiality, ethics

2L or 3L Law Student, enrolled Supervising Lawyer, 4+ Director/Full-time Faculty Member

Field Training: “Substantial Lawyering Experience”

2, 3, or 5 days For credit Fall/Spring, 15 weeks

Student Learning Goals &

Professional Development

An Externship Education: Accountable

Intentional & aware Self-assessing Active Reflective Contextual Modeling Meaningful projects Regular feedback Hands-on Fullest exposure Role-modeling Mentoring STUDENT SUPERVISOR

15+ Participating Companies 100+ Program alums 15 student cap per semester, fall & spring

Companies here - Companies anywhere

Textron Fenway Sports Group Moran Shipping Agencies IGT Sensata Technologies Domenica Maritime CVS Health FGX International Care New England Gilbane Amica Insurance IDC/Newport Experience Swarovski

Substantive Projects, U.S. and International in Scope

Corporate governance Energy Business contracts Procurement & Sales Intellectual Property Real Estate Data and cybersecurity Litigation Compliance (employment, FCPA, healthcare) Transportation Health Environmental Construction Ethics Antitrust Mergers & Acquisitions Maritime/Shipping

Benefits to the Companies

Direct: Weekly resource to look at issues more closely, keep more current on law Fresh perspective and approaches to legal and business issues Useful legal research, writing, and drafting products Intrinsic: Partnership with RI’s only law school Interaction with local legal community & its newest members Teach and mentor about industry, in-house practice, current role of attorneys Help new lawyers develop as professionals and legal thinkers Help new lawyers network with broader legal community

• See. Plan. Do.

Day-to-day Exposure to Intersection of Law & Business

Law GRAD PREPARED to add value

Please contact me with any questions:

Cecily Banks Professor of Experiential Education Director, Corporate Counsel Clinical Externship Program Roger Williams University School of Law 401.254.4563 cbanks@rwu.edu

Surviving the Storm:

Employee Benefit Compliance & Law Update

September 15, 2016

ERISA Developments

Brooks Magratten, Pierce Atwood LLP

September 15, 2016

ERI SA

Every Ridiculous Idea Since Adam

100

W hat Law Controls?

ERISA Non-ERISA

101

W hen Does ERI SA Apply?

• Private Employer
• r Union
• Employee Benefit

Plan

W hat are ERI SA Plans?

• Pension
• Health
• Sickness
• Accident
• Disability
• Life Insurance
• AD&D Coverage
• Vacation
• Apprenticeship or

Training

• Day Care Services
• Scholarship Funds
• Prepaid Legal

Services

Church Plans

Governm ent Plans

Safe Harbor

Can You Have Just a Little ERI SA?

W hy Do W e Care?

• Reporting: Form 5500
• Fiduciary Duties
• Plan Documentation
• Plan amendments
• Statutory Penalties
• Minimum Funding Requirements
• PBGC protection
• Claim Procedures
• Litigation Benefits

W ho Are The Fiduciaries?

Fiduciaries

A person is a fiduciary to the extent they: (i) Exercise any discretionary authority or discretionary control respecting plan management or exercises any authority or control respecting management or disposition of assets; (ii) Render investment advice for a fee or other compensation; (iii)Have any discretionary authority or discretionary responsibility in the administration of the plan.

Prohibited Transactions

A fiduciary… shall not cause a plan to engage in:

(A) sale or leasing of property between the plan and a party in interest; (B) lending money between a plan and a party in interest; (C) furnishing goods, services… between a plan and party in interest; (D) transfer of plan assets to a party in interest; (E) acquisition of employer security or real property in violation of §407(a).

Liability for Breach of Fiduciary Duty

Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries shall be personally liable to make good to such plan any losses to the plan and to restore to the plan any profits which have been made through use of plan assets… .

Failure to Provide Plan Docum ents

A Plan administrator’s failure to respond to a written request for plan documents within 30 days can result in a penalty of up to $100 per day of noncompliance.

W hat are Plan Docum ents?

• Plan Document
• SPD
• Insurance Policy
• Annuity Contract
• Trust Agreement
• Certificate of Insurance
• Internal memos

I m pact of Am ara

What happens when the HR Department misrepresents benefits to which an employee may be entitled?

Courts Can Order Plan Reform ation

Amara opens door to plan reformation and estoppel as a basis to change Plan terms.

ERI SA § 5 1 0 Claim s

No person may discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which they are entitled under a Plan.

So W hat Does This All Mean?

• Know if you are

in ERISA

• Know who the

fiduciaries are

• Have fiduciary

liability coverage

• Perform a Plan

audit regularly

Questions?

72 Pine Street Providence, RI 02903

Brooks Magratten

bmagratten@pierceatwood.com

PH / 401.490.3422

Surviving the Storm:

Employee Benefit Compliance & Law Update

September 15, 2016

Hot Topics in Employment Law 2016

Mark J. Pogue, Pierce Atwood LLP

September 15, 2016

Rhode I sland I dentity Theft

Protection Act of 2015 (R.I. Gen Laws §11-49.3-1 et seq.)

• Enacted July 2, 2015
• Effective July 2, 2016
• Repeals Rhode Island Identity Theft

Protection Act of 2005

123

Key Provisions:

• Act requires implementation and

maintenance of “risk-based information security program”

• Program must contain “reasonable security

procedures and practices appropriate to the size and scope of the organization; the nature of the information; and the purpose for which the information was collected”

• Program objective: “protect the personal

information from unauthorized access, use, modification, destruction or disclosure”

124

W ho I s Subject To The Act?

• “A municipal agency, state agency, or person

that stores, collects, maintains … uses … . personal information about a Rhode Island resident”

• Personal information: a person’s name stored

in combination with (inter alia)

• Social Security number
• Medical information
• Health insurance information
• E-mail address with any required …

password that would permit access to an individual’s personal … account.”

125

Obligations I m posed by Act:

• Implement and maintain security

program

• Provide notice of any disclosure or

security breach “that poses a significant risk of identity theft of any resident of Rhode Island whose personal information was, or is reasonably believed to have been, acquired by an unauthorized person

• r entity”

126

Penalties for Violation:

• “Reckless”: up to $100 per record
• “Knowing and willful”: up to $200 per

record

• Attorney General may bring civil action
• No private cause of action provided

127

I m plications for Em ployers:

• Must maintain personal information in

accordance with Act

• New predicate offense for Whistleblower

claim, retaliation claim

128

Hall v. City of New port et al.

1 3 8 A.3 d 8 1 4 ( R.I . June 2 , 2 0 1 6 )

• Suit by the Hall family against RIPTA (and
• thers) alleging that RIPTA negligently

failed to supervise its employee, Budlong

• Summary judgment granted to RIPTA;

trial court held RIPTA owed no duty of care to Halls

129

Hall v. City of New port, cont.

• R.I. Supreme Court reverses
• Affirms that RIPTA owed duty to Halls to

exercise reasonable care in supervising Budlong

• Holds that duty of supervision extends to

“conducting a full investigation” into complaints about Budlong

Question Can employees assert tort claim against employers under Hall?

130

Massachusetts Pay Equity Act ( S. 2 1 1 9 )

• Enacted August 1, 2016
• Becomes effective July 1, 2018

131

Key Provisions

• Requires that male and female workers be

paid the same for “comparable” work. (Expands protection of Federal Equal Pay Act and M.G.L. c. 151B, which already require same pay for doing the “same” job.)

• Enumerates factors which may justify

variations in wages

• Forbids “pay secrecy” policies
• Limits use of salary history in hiring process

132

“Com parable W ork”

• Defined as work that involves

“substantially similar skill, effort and responsibility and is performed under similar working conditions”

133

Factors Justifying W age Disparities

• “A system that rewards seniority with the

employer”

• “A merit system”
• A system of earnings based on “quantity or

quality of production, sales or revenue”

• Geographic location of job
• Education, training or experience to the

extent related to job

• Travel

Note: Employers may not lower comp “solely in

• rder to comply” with law

134

Affirm ative Defense to Pay Discrim ination Claim s

• Available to employers who have
• i) audited their pay practices within

prior three years, and

• ii) demonstrated “reasonable progress

… towards eliminating compensation differentials based on gender for comparable work.”

135

Penalties for Pay Discrim ination

• Damages in the amount of unpaid wages
• Liquidated damages
• Attorney fees
• Private cause of action; 3-year limitations

period

136

“Pay Secrecy” Policies

• Act bans policies which prohibit

employees from “inquiring about, discussing or disclosing information about either the employee’s own wages, or

• ther employee’s wages”
• But employers need not disclose an

employee’s wages to another employee or third party

• No retaliation against employees who

inquire about wages

137

Use of Salary History in Hiring

• Employers may not seek applicant’s salary

history from applicant or her current or former employer

• May obtain from public sources
• Caveat: applicants may authorize (in writing)

an employer to “confirm” salary history – but

• nly after an offer of employment with

compensation has been made

• Employers may not require applicants to

meet a minimum or maximum salary history to be eligible for job

138

Em ployee Handbooks – Should You Have One?

139

Benefits

• 1. Sets out organization’s mission and

values

• 2. Sets out rules of the workplace (hours,

vacation, dress code, disciplinary policy, anti-discrimination policies, meal breaks)

• 3. Showcases benefits
• 4. Useful against employee claims (zero

tolerance policies, no expectation of privacy, at will status, internal complaint procedure)

140

Risks

• 1. Risk of creating contract of employment

and defeating at-will status

• 2. Risk of locking employer in to rigid

progressive discipline protocol

• 3. Risk of misstating laws
• 4. The more you say, the more ammunition

you give them

141

Tips For Mitigating Risks

• 1. Disclaimer – handbook not intended to form

contract of employment, or otherwise modify at-will status

• 2. Discipline – process offered for illustration
• nly; employer reserves right to impose

whatever discipline it deems appropriate in circumstances

• 3. Summaries of law – offered as convenience
• nly; no guarantee up-to-date; consult

attorney

• 4. Employee signature reflects receipt; intent

to comply; understanding that employee should inquire if any questions

142

Social Media Policies

Do you even need one?

143

Argum ents Against

• Only a tiny fraction of posts are
• bjectionable
• Social media is just another way to

communicate

• Makes organization look bureaucratic
• Redundant
• NLRB, court rulings confusing

Zappos: “Be real, and use your best judgment”

144

National Labor Relations Act

Section 7 – guaranties employees the right to engage in “concerted activities for the purpose of collective bargaining or other mutual aid and protection.” Application by NLRB in social media cases:

• Hispanics United of Buffalo (Facebook)
• JT’s Porch Saloon & Eatery (Facebook)
• Arizona Daily Star (Twitter)

145

Benefits Of A Social Media Policy

• Sets expectations for appropriate

behavior

• Protects employers

146

Things To I nclude

• Prohibition against speaking for the

company, unless authorized (“these tweets are my own”)

• Prohibition against disclosure of proprietary

information (the more specific, the better)

• Prohibition against discriminatory remarks,

harassment, threats of violence and similar inappropriate or unlawful conduct (Walmart)

• Identity of person who can answer questions
• Make it a separate document

147

Be Careful About Prohibiting

• “Offensive” postings (GM)
• Postings that “damage the company” or

“any person’s reputation” (Costco)

148

72 Pine Street Providence, RI 02903

Mark A. Pogue

mpogue@pierceatwood.com

PH / 401.490.3416

Surviving the Storm:

Employee Benefit Compliance & Law Update

September 15, 2016