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HR Matters
Cap Reached on H-1B Visas
June 29, 2006
LABOR & EMPLOYMENT NEWS
Cap Reached on H-1B Visas. The United States Citizenship and Immigration Service (USCIS) announced on June 1, 2006 that the numerical cap for the H-1B program for temporary professional workers had been exhausted for fiscal year 2007 - four full months before the start of the fiscal year. This is the fourth year in a row that the cap has been reached. For alternate visa options when seeking to legally employ immigrants, please contact GH&R attorney Kathy Lasher at 513-629-2752.
Companies Handling Medicaid Payments Must Comply with Federal False Claims Act. By January 1, 2007, companies that receive or make annual payments of more than $5 million under Medicaid, must establish written employee and vendor policies and procedures regarding the federal False Claims Act. The requirements include a detailed explanation of whistleblower rights, administrative remedies, and state laws pertaining to civil or criminal penalties for false claims. Also, companies must provide an explanation of their policies and procedures for detecting and preventing fraud, waste, and abuse. Companies with employee handbooks are expected to include information regarding these new requirements in their handbooks. Additionally, some states have enacted their own "false claims" legislation. Any state that enacts this legislation may receive an additional 10 percent of any recovery. For more information, please contact a GH&R Labor & Employment attorney.
DOL Gives Advice on Deductions from Exempt Employees' Salaries. Improper deductions from exempt employees' salaries could jeopardize their exemption under the Fair Labor Standards Act (FLSA). In a recent Opinion Letter, DOL informed an employer that it could not impose a fine on exempt employees for damaging company cellular telephones or laptop computers, either by deducting the fines from the employee's salaries, or by requiring the employees to pay the fines "out of pocket." DOL's rationale for prohibiting such deductions or "out of pocket" payments from exempt employees is that their salaries would then no longer be "guaranteed" as required by the FLSA. DOL reiterated its "long-standing position" that exempt employees must receive their full predetermined salary and that the 2004 revisions to the FLSA did nothing to change this approach. Further, DOL advised the employer that it could not impose fines on nonexempt employees if the fine would reduce their earnings below the minimum statutory wage (currently $5.15/hour). To discuss how this development may impact your company, please contact a GH&R Labor & Employment attorney.
WORKPLACE HEALTH & SAFETY NEWS
Employer's "Loaned Servant" Argument Rejected. Artis Stinnett worked for Buckeye Metal Company, and was injured while making a delivery to one of its customers, Halcore Group. The injury occurred when a Halcore employee used a forklift to move a scrap metal receptacle that struck Stinnett and seriously injured his left knee, ankle, and foot. Stinnet filed a personal injury lawsuit against Halcore. To protect itself from tort liability, Halcore claimed Stinnet as one of its employees under the "loaned servant" doctrine. That doctrine shields employers from tort liability under the Ohio Workers' Compensation Act. The doctrine applies to employees who are placed under the control of a customer. In this case, the court found that because Halcore gave no instructions to Stinnet other than where to deliver the receptacles and exercised no control over him through its employees, that Stinnett could not be considered a loaned servant. (Stinnett v. Halcore Group, Inc.)
401(k) Plan Amendments Needed. At the end of 2004, the IRS published final regulations that made many changes to 401(k) plans. These new regulations are effective for any plan year that begins on or after January 1, 2006. While not all of the changes will affect every 401(k) plan (e.g., some of the changes only apply to safe harbor plans), some of the changes do affect all plans. Thus, all 401(k) plans must be amended to comply with the new regulations. Generally, a calendar year plan would be required to amend the plan by the last day of the plan year in which the amendment is first effective.
Medicare Part D Model Disclosure Notice. Under Medicare Part D regulations, group health plans offering prescription drug coverage to Medicare Part D eligible individuals (including active and retired employees and beneficiaries) must provide a disclosure notice. The Centers for Medicare & Medicaid Services (CMS) recently finalized the guidance and model notices that were originally published in March 2005. There are only a few changes, including an updated model notice regarding creditable and non-creditable coverage. CMS also clarified that the late enrollment penalty for Part D eligible individuals who go without creditable coverage for 63 days or longer increases by at least 1 percent of the national benchmark premium for each month without coverage. CMS sets and publishes the premium each year. This guidance became effective May 15, 2006 and the model notices are intended for use on or after that date. To access the model disclosure notices go to http://www.cms.hhs.gov/CreditableCoverage/02_CCafterMay15.asp.
Deadline for Deferring Bonus Earned in 2006. Legislation enacted in 2004 created new restrictions regarding the ways executives can defer compensation and limiting how and when this compensation can be distributed. Usually, employees must make their deferral elections before the beginning of the year for compensation that will be earned that year. However, a special rule exists for performance based compensation or bonuses. Employees have until June 30, 2006 to defer bonuses earned during the 2006 calendar year that will be paid in 2007.
Conversions of IRAs into Roth IRAs in 2010. On May 17, 2006, the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) was signed into law. This new law eliminates the $100,000 modified AGI limit on conversions of traditional IRAs to Roth IRAs for tax years beginning after December 31, 2009. Under current law, only taxpayers with income of $100,000 or less are allowed to convert part or all of their IRA into a Roth IRA. The elimination of the AGI limit for 2010 will afford a significant portion of taxpayers the opportunity to convert and realize the benefits of the Roth IRA. However, this provision is controversial and could be repealed prior to its effective date.
This Newsletter is a periodic publication of Graydon Head & Ritchey LLP and should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and you are urged to consult your own advisor concerning your situation and any specific legal question you may have.