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Northwest OH Legal Blog

Tuesday, December 10, 2013

Informational Pickets by Public Sector Workers: Supreme Court says to SERB, “No strike, no notice.”

Recently, the Ohio Supreme Court ruled R.C. 4117.11(B)(8), requiring public sector union workers to give ten days advance notice to the employer prior to picketing, does not apply to informational picketing.  The case, Mahoning Education Association of Developmental Disabilities v. State Employees Relations Board, arose after the union representing the employees of the Mahoning County Board of Developmental Disabilities (MCBDD) peacefully picketed outside a MCBDD board meeting carrying signs urging MCBDD to reach a settlement with the Union over the terms of a new Collective Bargaining Agreement.  The union did not give any notice to the State Employment Relations Board (SERB) or MCBDD that it intended to picket the meeting, and the picket did not involve any work stoppages or strike activity.

In response to the picket, MCBDD filed an unfair labor practice with SERB alleging the union violated R.C. 4117.11(B)(8) when it failed to give notice to MCBDD of its intent to picket the board meeting.  4117.11(B)(8) states that it is an unfair labor practice to “engage in any picketing striking or other concerted refusal to work without giving written notice to the public employer and to the state employment relations board not less than ten days prior to the action.”  After a hearing, SERB determined that the Union had committed an unfair labor practice by failing to give notice of the picket.

The Union appealed SERB’s determination and eventually the case made its way to the Ohio Supreme Court.  There, the high court noted that there are two different types of picketing.  One type of picketing is the type of picketing that is associated with protests during a strike or work stoppage.  The other type is informational picketing,  This type of picketing involves activity  that expresses “ a grievance not associated with a strike or work stoppage.” The Court went on to determine that in enacting R.C. 4117, the legislature only meant for the notice requirement to apply to picketing associated with a work stoppage or strike and not informational picketing.  Accordingly, the Court determined that no unfair labor practice had occurred.

With no advance notice needed for informational pickets, this Union tool becomes a more useful and fluid way for public sector employees to engage and win support from the public.  Public Sector employees may use the removal of this restriction to their advantage during contentious negotiations and/or grievance settlements.


Thursday, December 5, 2013

How will Employer Mandates under the ACA Affect Union Plans?

Many employers continue to experience frustration as they attempt to untangle the provisions of the Patient Protection and Affordable Care Act (ACA).  Within this Act, there are employer mandates that have been introduced, finalized and confusingly, now delayed.  This delay gives multiemployer plan sponsors more time to understand how employers will be forced to meet the employer mandates and how multiemployer health and welfare plans could be affected.  These employer mandates do include union employees and union-sponsored health care plans are often more highly scrutinized for their adherence to ACA mandates. 

Under the Affordable Care Act, employers  that have an average of at least 50 full-time and 50 full-time equivalent employees  during the preceding calendar year are subject to penalties, characterized as “shared-responsibility payments,” if either of the following scenarios occur:  

1.  If the employer does not offer coverage to at least 95% of full-time employees, a nondeductible assessable payment of $166.67 per month ($2,000 annually) would be multiplied by the number of full-time employees, in excess of the first 30, that work an average of 30 or more hours per week. Collectively bargained employees count in calculating the 95% threshold test, whether the employees' health plan is sponsored by the union or the employer.

2.  If the plan offered to employees does not provide "minimum value" as defined by the Department of Labor or is not affordable, the employer could be subject to a penalty equal to $250 per month ($3,000 annually) times the number of full-time employees who purchase insurance through one of the state or federal exchanges and receive a subsidy (a premium tax credit or cost-sharing reduction).

So how do these regulations specifically apply if employees are in a health plan maintained by a union?  Four conditions must be met to comply with the 95% test: 

1.  The employer must make a contribution to the union plan. Most collective bargaining agreements (CBAs) specify that employers must help fund their employees’ union-provided benefits.

2.  Employees must have an opportunity to enroll in the plan.  This is not a problem that most union plans face because union members are frequently enrolled from the first hour worked under their CBA.  This rule will be even broader after 2014, because employers will be forced to offer coverage to dependents up to age 26, regardless of their marital or employment status.

3.  A health and welfare plan must satisfy the “minimum value” requirement, which means the plan's share of the total allowed costs of benefits must be at least 60%.  Most union health plans already absorb at least 60% of the benefits costs and often pay an even larger share. 

4.  The plan must be “affordable” for the employee. This test is passed if an employee's required contribution toward the lowest-cost self-only option is not greater than 9.5% of his/her wages.

If all four of these conditions are met, a union employer may categorize union employees among workers offered minimum essential coverage under the union benefits plan. Many employers and benefit plan sponsors found this employer mandate under the Affordable Care Act to be cumbersome and restrictive.  This may be why the Department of Labor delayed this employer mandate by one year with Notice 2013-45, pushing the effective date of employer penalties to 2015.   While this delay may seem unsettling, it also gives employers and plan sponsors time to take a deep breath and consider the following:

1.  Union employees are included in Affordable Care Act’s employer mandate requirements;

2.  Multiemployer plans must offer coverage to dependents up to age 26 including step children, foster children or legally adopted children. 

3.  Multiemployer plans should be analyzed to be sure that enrollment provisions and procedures meet the requirements for giving employees an effective opportunity to enroll, including times to enroll and proper notice of availability of coverage and benefits options.


Tuesday, December 3, 2013

The New Normal: Negotiating in the Age of Health Insurance Exchanges

As full implementation of the Patient Protection and Affordable Care Act (PPACA) gets closer, the topic of President Obama’s signature legislation is increasingly coming up during negotiations for new collective bargaining agreements and open enrollment periods for the 2014 health insurance coverage.  This discussion may start with the Employer threatening to drop insurance coverage and sending everyone to the Health Insurance Exchange to purchase their own individual insurance.  Other times, it is the members, frustrated with their current health insurance, that are expressing a desire to move onto the exchanges.  Unfortunately, in many cases both the employers and members have been informed by the media outlets they listen too.  Consequently, negotiations on health care are often being driven by misinformation and misconceptions on both sides of the table.  Although a full overview of the PPACA is far too complex to address in this article, the following remarks will hopefully give you a better understanding of how one aspect of the law—the Health Insurance Exchanges—work and how they may affect negotiations.

On October 1, the Health Insurance Exchange began accepting applications for individual insurance coverage for the 2014.  Problems with the rollout notwithstanding, the Exchanges are here to stay.  Because these exchanges were not designed for people that already receive insurance through their employer, this should not apply to most public employees.  Despite this fact, the topic of Health Insurance Exchanges has begun to enter into discussions during contract negotiations.

To understand how the Exchanges may affect bargaining it is first necessary to have a basic understanding of the Employer Mandate.  The Employer Mandate requires any employer with more than 50 employees to offer affordable health care to all full-time employees.  If an employer chooses to not offer insurance to its employees, they will be fined $2,000 for each full time employee minus thirty ($2,000 x (# of employees – 30)).  Although this may sound like a lot, this is probably substantially less than what the employer is paying for insurance coverage.  For example, in 2013, SERB reported that the average public entity paid an average of $5,532 per year to cover an employee getting single coverage and $14,385 per year for an employee on family coverage. Because of this disparity, some public employers have begun to explore the possibility of dropping insurance and paying the fine.  This would then allow employees to potentially purchase subsidized care on the exchange.

While dropping health insurance may present a “win” for the employer, many employees feel that it will also produce a “win” for them.  This feeling among employees is usually predicated on two basic assumptions.  (1)  if the employer drops health care employees will receive the money the employer would have spent on health care in compensation; and (2) employees will pay less for insurance on the exchanges and will be able to “pocket” some of the extra compensation the employer is giving them to purchase health care. A variant of this second proposition is that the employee can “pocket” all of the extra compensation and buy health insurance when they actually get injured or sick.  You may have heard this referred to as “buying insurance at the emergency room.”

First, it is important to note that the “buying insurance at the emergency room” concept is part of the misinformation and misunderstanding as to how the law works.  Insurance in the Health Insurance Exchanges, like the insurance you purchase through your employer, has an open enrollment period.  For 2014 this period began on October 1, 2013 and runs through March 31, 2014.  In subsequent years, the open enrollment period will be from October 15 through December 15 of the year preceding the year in which the insurance will take effect.  If a person fails to sign up for insurance during the open enrollment period, they will not be allowed to sign up later unless they have a major life event such as marriage or divorce that changes their eligibility status.  In other words, you will not be able to “buy insurance at the emergency room.”  You will be uninsured and face paying the full cost of that emergency room visit and subsequent care out of your own pocket.  In addition, people that intend to carry out this “strategy” should be reminded that they will also face a tax penalty that could be as much as $2,085 by 2016.

Another consideration when thinking about going to the exchanges is that although some employees may be able to purchase insurance for less on the exchanges this will not necessarily apply to all members.  As a general rule, the health insurance offered on the exchanges will cost more than what you are paying now.  This is because your current employer subsidizes, or pays a percentage of the premium.  The Health Insurance Exchanges also offer subsidies, but you are only eligible for the subsidies if your employer does not offer affordable coverage (affordable coverage means that no more than 9.5% of your household income goes towards paying insurance premiums) or offers no coverage at all. Generally, if your employer offers health insurance, you may purchase health insurance on the Exchange, but you will pay full price.

If your employer drops insurance, then you may be eligible for subsidies on the exchange.  Subsidies are calculated based on the cost of the second lowest silver plan offered in your ratings area.  The Silver Plan pays for 70% of medical expenses while you pay the rest.  Although you can purchase a more expensive plan than Silver such as Gold (paying 80%) or Platinum (paying 90%) the amount of your subsidy will not change.  You will have to make up the difference out of your own pocket.  Conversely, if you feel you do not need very much health insurance coverage you can opt for a bronze plan (paying 60%).  Again, you will still receive the same subsidy as you would if purchasing a silver plan only now that subsidy will pay for a larger percentage of the premium, costing you less out of pocket.

Three factors ultimately determine the amount of your subsidy.  First, Ohio is broken down into 17 ratings areas.  In each ratings area, there are a different number of plans being offered.  Depending on how many plans are being offered and where you live in the state, the prices for insurance on the Exchange will vary.  In general, plans offered in urban areas will be priced lower than in rural areas.  Because subsidies are based off of the overall costs, a person living in a rural county will receive a larger subsidy than if that same person living in an urban county.   Also, those with a higher household income will receive a smaller subsidy than those with lower incomes.  As a third variant, the larger your family the more likely you will be to receive a subsidy.  If you would like to know approximately how much a Silver Plan would cost you, and how much of a subsidy you are eligible for, the Kaiser Foundation offers a subsidy calculator at   http://kff.org/interactive/subsidy-calculator/.

Finally, many employees believe that the money their employer is saving by cancelling insurance will be passed on to them.  However, this is a risky assumption to make.  First, it is unlikely that the employer will give employees the exact amount that they were paying towards premiums.  At a minimum, employers that choose to go this route will have to pay the $2,000 per person fine.  This, no doubt, would be deducted from any extra compensation you might receive.  Also, employers may wish to pocket even more of the saving to help their bottom line. Some employers will even argue that the subsidy employees will receive from the Federal Government will replace the subsidy the employer was paying making it unnecessary for them to give any extra compensation to employees.

If your employer is considering moving you to the exchanges and brings up these points, a helpful argument might be to point out that the compensation you previously received in insurance was a bargained for exchange.  In many cases, members accepted lower wage increases to ensure that their share of the premium costs did not rise.  To eliminate this compensation now without offering anything in return would destroy that bargain.  Also, as noted above subsidies in the exchanges will affect the members unequally and cannot be counted as a one for one on the exchange.

If the employer does agree to roll some of their cost saving over to employees this can be done in two ways.  One way would be to simply roll it into wages.  The other way would be to provide a stipend.  Without knowing the specific situation, it is difficult to say which would be better.  However, one thing to consider is the long term effects of both options.  If the extra compensation is rolled into wages, this will be a one-time thing.  The next time that the employer negotiates with you they are unlikely to give any additional bump to the wage increase to compensate for the rise in health insurance.  Given that the medical inflation rate for next year is 6.5% this means that a larger share of the insurance costs will land on employee’s shoulders in future years further eroding any wage increase they may see.

You may also consider having the employer provide a stipend for medical insurance.  If this route is taken, it may be easier to bargain for increases in the stipend that keep pace with medical inflation in future years.  On the downside, money paid out in the health care stipend may not be counted towards your wages when determining your pension at the end of your career.

Like it or not, the PPACA is here to stay.  Undoubtedly, as the law matures, so will the negotiation strategies used by the OPBA and the employers.  As negotiations take place under the law, it is important to understand how the law works and what effects your decisions may have.  Although the above information should be helpful in your endeavors you should give careful consideration to any proposals that may have a long term effect on your health insurance, do your own research, and be careful to not fall prey to the misinformation that is out there.  


Wednesday, November 27, 2013

Internal Revenue Service Announces Special Per Diem Rates for Business Travel Expenses Incurred on or after October 1, 2013

The Internal Revenue Service (“IRS”) has announced the special per diem rates that can be used to substantiate the amount of business expenses incurred for travel away from home on or after October 1, 2013. Use of these rates to set per diem allowances permits employers to treat the amount of certain categories of travel expenses as substantiated, without requiring that employees prove the actual amount of those expenses. (Employees must still substantiate the time, place, and business purpose of their travel expenses.)

According to IRS rules, per diem allowances must be paid at or below the applicable federal per diem rate, a flat rate or stated schedule, or in accordance with another IRS-specified rate or schedule. The amount deemed substantiated, however, is the lesser of— 

  • the allowance or
  • the federal per diem for the same set of expenses.

The IRS notice sets forth rates for use under the optional high-low substantiation method, special rates for transportation industry employers, and the rate for taxpayers taking a deduction only for incidental expenses.

For travel within the continental United States, the optional high-low method allows employers to use one per diem rate for high-cost locations and another for all other locations.  (The federal per diem rates are location-specific.)  Employers may use the high-low method for substantiating lodging, meals, and incidental expenses, or for substantiating meal and incidental expenses only (“M&IE”).

Beginning October 1, 2013, the high-low per diem rates that can be used for lodging, meals, and incidental expenses will increase to $251 for travel to high-cost locations and $170 for travel to other locations.  The high-low M&IE rates will remain at $65 for travel to high-cost locations and $52 for travel to other locations.  The announcement includes several changes to the list of high-cost locations.  No locations were removed from the list.

The special rate for the incidental expenses deduction that applies beginning October 1, 2013 is unchanged at $5 per day. Final federal travel regulations issued in October 2012 kept the narrower definition of incidental expenses adopted by the interim regulations, so the expenses covered by that rate have not changed.

The IRS’s per diem rules can greatly simplify the process of substantiating business travel expense amounts. Per diem allowances that are deemed substantiated may be retained by the employee, even if such allowances exceed what the employee actually spent.  However, if an employer pays more generous allowances (exceeding what will be deemed substantiated) than permitted under IRS rules, the employer must require substantiation, require return of the excess, or treat the excess as taxable wages.  Otherwise, the entire allowance may become taxable.

 If you have any questions or concerns regarding this communication, please do not hesitate to call Allotta | Farley Co., L.P.A. at (419) 535-0075 or email megarner@allottafarley.com.


Thursday, November 21, 2013

Workers' Compensation Wage Loss

Presently the Industrial Commission and the Bureau of Workers’ Compensation have proposed new wage loss rules. The new rule at Ohio Administrative Code 4125-1-01 would replace the current wage loss rules.  Essentially the requirements for job search remain the same, however, the search will be based on a more fluid “good faith effort”. The job search still must be “consistent, sincere, and best attempt to obtain suitable employment that will eliminate the wage loss.”  There are a number of factors that will be considered by the BWC and Industrial Commission in determining whether the type of searches and the manner of search has met the good faith criteria.  The injured worker will be allowed for the first 60 days to search for suitable employment within their skill level but after 60 days has gone by and no requisite work has been found they must also search for entry level or unskilled work. Even if an individual finds a job and is filing for working wage loss they will still be required to submit searches for every week that they are asking for working wage loss. Any failure to conduct an appropriate job search is considered to be a voluntary limitation of their income and could result in a reduction in their working wage loss compensation.  Supposedly these new work rules are to take into account the location where the individual lives and the ability to find employers within his area of residency.  However, the rule still appears to require attempts to submit applications and treat the searching for work as a job itself.


Tuesday, November 19, 2013

DOL Says ‘Spouse' and ‘Marriage' in ERISA Include Same-Sex Legally Married Couples

The terms “spouse” and “marriage” under the Employee Retirement Income Security Act and related guidance should be read to include same-sex legally married couples, the Department of Labor's Employee Benefits Security Administration said in Technical Release 2013–04. “The term ‘spouse' will be read to refer to any individuals who are lawfully married under any state law, including individuals married to a person of the same sex who were legally married in a state that recognizes such marriages, but who are domiciled in a state that does not recognize such marriages. Similarly, the term ‘marriage' will be read to include a same-sex marriage that is legally recognized as a marriage under any state law,” according to the guidance, issued Sept. 18, 2013.


Read more . . .


Tuesday, November 12, 2013

Welcome to Our New Website

As part of our ongoing efforts to better serve our clients, Allotta Farley Co., L.P.A. is proud to launch its new website.  As you can see, the new website contains a blog within which we will periodically post articles that address timely and important issues affecting our clients.  Those who visit our website have the ability to subscribe to the blog, which will enable subscribers to receive useful information as it is posted on the blog.  We invite you to subscribe by clicking on the subscription options in the upper right margin of the web page.

As always, we appreciate the feedback we receive from our clients.  If there are topics that you wish to see addressed in our blog, please forward your ideas to us at jamier@allottafarley.com.


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