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HR Matters
Warnings regarding workplace databases. More news from the BWC.
June 30, 2005
LABOR & EMPLOYMENT NEWS
Workplace Databases - Potential Goldmines for Identity Thieves. Employers' databases often contain information that could allow identity thieves to open checking or credit card accounts. To protect employees from workplace identity theft, the federal government passed the Fair and Accurate Credit Transactions Act (FACTA) of 2003. Effective June 1, when employers decide to dispose of an applicant's or employee's consumer information, FACTA requires them to destroy the information, using FACTA-approved methods, such as shredding. If an employer elects to use an outside business to dispose of the information, the employer must perform due diligence (e.g., audit report) to ensure that the disposal company complies with FACTA. If an employer violates FACTA, it is liable for an employee's actual damages plus attorney's fees, and punitive damages for willful violations. Please contact us if you need assistance with complying with FACTA.
Ohio Appeals Court Vacates Maintenance Worker's Reinstatement. An employer suspended an employee, who threatened his supervisor. After the incident, another supervisor sent the employee home. As the employee left, he left his keys in a door. The second supervisor noticed the keys and discovered that the employee had made six master keys without authorization. During a human resources investigation of the altercation and improper possession of the master keys, the employee's supervisor reported that the employee came to his home armed with a shotgun following the previous disciplinary action. The human resources investigation also revealed other violent acts by the employee. In view of this information, the employer terminated the employee. Although an arbitrator ordered reinstatement of the employee, and a trial court confirmed this decision, an Ohio Court of Appeals vacated the reinstatement because the employee's violent and threatening conduct violated explicit public policy favoring workplace safety. (Akron Metro. Hous. Auth. v. Local 2517, AFSCME)
WORKPLACE HEALTH & SAFETY NEWS
No Premium Dividend for Employers. The Bureau of Workers' Compensation Oversight Commission voted against a $70 million premium dividend to Ohio employers on their upcoming premiums in large part because of a scandal involving investment losses that has received significant attention in the media.
No Job, No Temporary Total Compensation. An injured worker sustained a work injury on February 15, 2001. Three months later, his employer fired him for unexcused absenteeism. The Industrial Commission denied his application for temporary total compensation (TTC) on the basis that he had voluntarily abandoned his employment. In February 2003, the Industrial Commission allowed the injured worker's claim for injuries to his right upper extremity, so he filed another request for TTC. To qualify for TTC, an injured worker must show that an industrial injury removed him from his job. This requirement cannot be satisfied if the injured worker had no job at the time of his alleged disability. The court found no evidence that the injured worker was employed in February 2003 when he made his second request for TTC. To the contrary, the court found that he was almost entirely unemployed for the two years following his discharge. (State ex rel Eckerly v. Industrial Commission)
EMPLOYEE BENEFITS & EXECUTIVE COMPENSATION NEWS
Medicare Part D - Creditable Coverage Notice. The new Medicare prescription drug benefit, known as Medicare Part D, begins in 2006. Employers that provide prescription drug coverage to individuals who are eligible for Medicare Part D benefits are required to disclose whether the coverage provided is "creditable prescription drug coverage." When an employer provides creditable prescription drug coverage to individuals who are eligible for Part D benefits, those covered individuals may delay enrolling in Medicare Part D and still avoid the higher premiums that can be charged to late enrollees. The Centers for Medicare & Medicaid Services (CMS) recently posted model Creditable Coverage Disclosure Notices that must be provided to all individuals who are eligible for Part D benefits and who are covered, or who apply for, the employers prescription drug coverage. The model notices are published on the CMS website at http://www.cms.hhs.gov/medicarereform/. Employers who contract with Medicare directly or with a Part D plan are exempt from the disclosure notice. The notice must be provided by November 14, the day before the first day of the Part D initial open enrollment period. CMS will publish revised model notices for periods after November 14.
Deferring Performance-Based Compensation in 2005. New Code Section 409A governs nonqualified deferred compensation and provides strict guidelines on when an election to defer compensation must be made. Generally, in order to defer compensation earned in 2005, the election to defer must have been made no later than December 31, 2004. However, additional time is granted for elections to defer performance-based compensation. For performance-based compensation with a performance period of at least 12 months (which includes many bonus programs), the election to defer can be made at any time up to 6 months before the end of the performance period. Accordingly, if a bonus arrangement for the 2005 calendar year qualifies as a performance-based program, an election to defer the bonus must be made on or before June 30.
Revised HIPAA Certificate of Creditable Coverage. Final HIPAA regulations that were published in December 2004 are effective for plan years starting on or after July 1. Included in the preamble to the regulations is a new model certificate of creditable coverage. The certificate of creditable coverage is intended to enable an individual to establish prior creditable coverage for purposes of reducing or eliminating any preexisting condition exclusion imposed on the individual by a subsequent group health plan. The new model certificate of creditable coverage contains a "Statement of HIPAA Portability Rights," that explains in detail the HIPAA limitations on preexisting condition exclusions. Once the HIPAA final regulations are applicable to a group health plan (which is as early as July 1), the new model certificate of creditable coverage (with the Statement of HIPAA Portability Rights) must be used in order to satisfy the notification requirements of the regulations. Please contact a GH&R benefits attorney if you need a copy of the revised certificate.
GH&R NEWS
GH&R Welcomes Lyndsey Cater. The firm is happy to welcome Lyndsey Cater to our Cincinnati office, where she will be working primarily with our employee benefits and executive compensation team. Lyndsey is a 2004 graduate of the University of Cincinnati College of Law and a 2005 graduate of the LL.M. Graduate Tax Program at the Northwestern University School of Law. In 2000, she graduated, cum laude, from Miami University in Ohio with a bachelor's degree in accounting.
HR MATTERS from GH&R
Volume IX, Issue 98 - June 2005
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.