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HR Matters
DOL Issues Guidance on Medical Certifications.
October 5, 2005
LABOR & EMPLOYMENT NEWS
DOL Issues Guidance on Medical Certifications. Recently the Department of Labor (DOL) issued an opinion letter regarding requirements for obtaining medical certifications for Family and Medical Leave Act (FMLA) leave. Medical certification is a basic qualification for FMLA leave for serious health conditions. If an employee fails to submit a requested medical certification, the leave is not protected by the FMLA. Employers may request a second opinion if they question the validity of the health care provider's certification. The opinion letter clarifies, that since FMLA benefits are based on 12-month periods, employers may request new certification during each new 12-month period to include obtaining second opinions for each new certification. (DOL Opinion Letter FMLA 2005-2-A)
Ohio Federal Appeals Court Denies Attorneys' Fees to Employer in Equal Pay Act Case. Health Care Indemnity (HCI) hired two claims supervisors at the same time (one male and one female), but paid the male supervisor a higher starting salary (female - $39,500; male - $50,800). HCI justified paying the male a higher starting salary because he had more years of experience (female - 2 ½ years; male - 11 years). Although the female supervisor received performance increases and a gift her salary remained lower than her male counterpart. The female supervisor complained to HCI on several occasions about the disparity in salary. When HCI failed to promote the female supervisor to a senior claims supervisor position, she threatened to sue the company. After finding that the female supervisor had used company funds to pay her attorney, HCI gave the female supervisor the option of resigning in lieu of termination. She resigned, and then sued HCI under Title VII and the Equal Pay Act. A district court granted summary judgment to HCI, and awarded it attorneys' fees. Although the Sixth Circuit upheld the grant of summary judgment, it reversed the award of attorneys' fees. The Sixth Circuit noted that although Title VII allows the prevailing party to receive attorneys' fees, the standard is higher for employers than employees. Thus, the employer may receive attorneys' fees if the case is frivolous, unreasonable, or without foundation. Since not all of the female supervisor's claims were frivolous, the Sixth Circuit denied attorneys' fees to HCI. (Balmer v. HCA, Inc.)
Do you have employees interested in permanent residency? The State Department has announced the requirements for the fiscal year 2007 Diversity Immigrant Visa Program, the annual lottery for 50,000 permanent residence visas (i.e., "green cards"). The process for submission is very simple. The applicant must complete the Electronic Diversity Visa Entry Forms electronically at www.dvlottery.state.gov. All entries must be submitted electronically between noon on Wednesday, October 5, 2005 and noon on Sunday, December 4, 2005. The applicant must be a native of a designated country and have a high school education or the equivalent, or must have worked at least two years within the last five years in the U.S. in an occupation that requires two years of training or experience. If you need more information or instructions, please contact Katherine Lasher, 513-629-2752, or Christine Chaille, 513-629-2755.
WORKPLACE HEALTH & SAFETY NEWS
Injury Sustained at Home While Cleaning Company Vehicle is Compensable. Specialty Transportation Services allowed one of its van drivers to take a van home, as parking it would block the other vans at the headquarters. One day, the driver moved a van to her home and parked it in her driveway. While the driver waited for the start of her route, it began to snow. While cleaning the snow off the van, the driver slipped and injured her left hip, thigh, and humerus. The Industrial Commission allowed the claim, which was upheld in court. Normally, an employee injured while traveling to or from a fixed place of employment is not eligible for workers' compensation benefits. However, the driver was not a "fixed-situs" employee because her position required her to be a mobile employee with fluctuating locations during the day. Further, the driver's injuries were in the course and scope of her employment, despite taking place at the driveway of her home because all of the employee's activities were directly connected to her employment. (Tressler v. Specialty Transportation Services, Inc.)
EMPLOYEE BENEFITS & EXECUTIVE COMPENSATION NEWS
Nonqualified Deferred Compensation Plans. As part of the American Jobs Creation Act of 2004, Congress enacted new Code Section 409A, regulating nonqualified deferred compensation plans. In December 2004, the IRS issued guidance which required operational compliance beginning January 1, 2005, but delayed the date by which plan amendments needed to be adopted until December 31, 2005. Now the IRS has published proposed regulations on 409A. An important provision in the regulations is that the document compliance date is extended to December 31, 2006. The regulations also address the timing of deferral elections. Under 409A, deferral elections must be made prior to the first day of the calendar year in which the compensation is earned. Although the IRS had permitted deferral elections for 2005 income to be made as late as March 15, 2005, this exception to the general rule is not carried over for 2006. As a result, elections to defer compensation to be earned in 2006 must generally be made by December 31, 2005. One exception is that deferral elections, with respect to performance based compensation, are timely so long as they are made at least six months before the end of the period over which the compensation is earned. For example, the election to defer a performance bonus based on pre-established criteria and goals which are earned for the 2006 calendar year may be made as late as June 30, 2006. For additional information on how these regulations affect your deferred compensation plans or agreements, please contact a GH&R benefits attorney.
Bankruptcy Law. The Bankruptcy Abuse Prevention and Consumer Protection Act became effective for bankruptcy filings after October 16, 2005. Under the new law, if a participant with a retirement plan loan files for bankruptcy, payroll deduction for the loan repayment may continue as before the filing. Previously, the automatic stay on loan repayments arising from the bankruptcy filing would typically cause a plan loan default with the entire loan being taxable to the participant. Even though the new law prevents a default by permitting payroll deduction authorizations to remain in effect, you should review your plan loan documentation to determine whether the filing for bankruptcy is a mandatory event of default which would trigger acceleration of the loan despite this change in the law. If the bankruptcy filing is an event of default or triggers acceleration of the loan, then the option under the new law to allow the participant to continue making plan loan repayments could be lost.
2006 Benefit Plan Limits. The following are new retirement plan limits effective January 1, 2006 (and corresponding 2005 amounts):
Item/2006/2005
401(k)/403(b)/457(b) employee deferral max./$15,000/$14,000
401(k)/403(b)/457(b) catch up contributions/$5,000/$4,000
Defined contribution annual addition max./$44,000/$42,000
Defined benefit dollar max./$175,000/$170,000
Annual compensation limit/$220,000/$210,000
Highly compensated employee definition/$100,000/$95,000
Social Security wage base/$94,200/$90,000
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HR Matters is a publication of the Graydon Head & Ritchey Human Resources Department, the Employee Benefits & Executive Compensation and Labor & Employment practice groups and their members. Click here to learn more about our team.
HR MATTERS from GH&R
Volume IX, Issue 102 - October 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.