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On April 7, 2021, the U.S. Department of Labor (DOL) issued eagerly anticipated guidance on administering COBRA subsidies under the American Rescue Plan Act of 2021 (ARPA). The guidance includes Frequently Asked Questions (FAQs) and various Model Notices and election forms implementing the COBRA Premium Assistance provisions under ARPA, while also announcing the launch of a page dedicated to COBRA Premium Subsidy guidance on its website.
Since ARPA was enacted, employers have been preparing to comply, albeit with many open questions. ARPA requires that full COBRA premiums be subsidized for “Assistance Eligible Individuals” for periods of coverage between April 1, 2021, through September 30, 2021. While this guidance answers important questions on the administration of the subsidies, it does not address many other details on the minds of employers. For example, this guidance does not cover important nuances such as what is an “involuntary termination” in order to qualify for subsidized coverage, how existing separation agreement commitments to subsidize COBRA should be viewed, or details on how the corresponding payroll tax credit will work.
The FAQs are largely directed to individuals and focus on how to obtain the subsidy and how subsidized coverage fits with other types of health coverage that may be available, including Marketplace, Medicaid, and individual plan coverage. We hope that employer directed guidance will follow to fill in the gaps.
Employers will be happy to know that the FAQs confirm a few points that will impact administration. First, eligibility for coverage under another group health plan, including that of a spouse’s employer, will disqualify the employee from the subsidy. Employees must certify on election forms that they are not eligible for such coverage and will notify the employer if they subsequently become eligible for coverage (individual coverage, such as through the Marketplace or Medicaid, will not disqualify an otherwise eligible individual from subsidized COBRA). Failure to do so will subject the individual to a tax penalty of $250, or if the failure is fraudulent, the greater of $250 or 110% of the premium subsidy. The availability of other coverage (which the employer may not know about) does not impact the employer’s initial obligation to identify potential Assistance Eligible Individuals and provide the required notices and election forms.
Soon after enactment, there were also questions circling about whether ARPA applied to small employer plans not subject to COBRA, but rather state “mini-COBRA” laws. The FAQs confirm that the subsidy also applies to any continuation coverage required under state mini-COBRA laws but also notes that ARPA does not change time periods for elections under State law. Further guidance would be welcome on obligations related to small insured plans. The FAQs also confirm that plans sponsored by State or local governments subject to similar continuation requirements under the Public Health Service Act are covered by the ARPA subsidies.
One area that has caused great confusion is how the right to retroactively elect COBRA coverage (to the date active coverage was lost) due to the DOL’s extended deadlines fits with this new election right. While there is more to come on this, the DOL helpfully confirmed that these are two separate rights and thankfully, the FAQs note that the extended deadlines do not apply to the 60-day notice or election periods related to the ARPA subsidies.
The most significant part of the guidance (that we knew was coming but are still happy to see sooner rather than later) are the Model Notices and election materials. The guidance package confirms that employers have until May 31, 2021, to provide the notices of the opportunity to elect subsidized coverage and individuals have 60 days following the date that notice is provided to elect subsidized coverage. Individuals can begin subsidized coverage on the date of their election, or April 1, 2021, as long as the involuntary termination or reduction in hours supporting the election right occurred before April 1, 2021. As previously noted, in no way do these timeframes extend the otherwise applicable 18-month COBRA period.
The Notices include an ARPA General Notice and COBRA Continuation Coverage Election Notice, to be provided to all individuals who will lose coverage due to any COBRA qualifying event between April 1 and September 30, 2021, and a separate Model COBRA Continuation Coverage Notice in Connection with Extended Election Periods, to be provided to anyone who may be eligible for the subsidy due to involuntary termination or reduction in hours occurring before April 1, 2021 (i.e., generally involuntary terminations or reductions in hours occurring on or after October 1, 2019).
Plans will also have to provide individuals with a Notice of Expiration of Period of Premium Assistance 15-45 days before the expiration of the subsidy — essentially explaining that subsidies will soon expire, the ability to continue unsubsidized COBRA for any period remaining under the original 18-month coverage period and describing the coverage opportunities available through other avenues such as the Marketplace or Medicaid. Employers are highly encouraged to use the DOL’s model notices without customization except where required to insert plan or employer specific information.
With the release of the model notices, employers and COBRA administrators now largely have the tools to administer this new election right. The FAQs remind us that the DOL will ensure ARPA benefits are received by eligible individuals and employers will face an excise tax for failing to comply, which can be as much as $100 per qualified beneficiary (no more than $200 per family) for each day the employer is in violation for the COBRA rules. Accordingly, employers will want to begin or continue conversations with COBRA administrators to ensure notices are timely provided to the right group of individuals.
Florida Governor Ron DeSantis signed a new law — the most aggressive of its kind compared to others passed across the country — that protects businesses, educational and religious institutions, governmental entities, and healthcare providers from COVID-19 lawsuits. The new law, which became effective on March 29, shields those covered under it if they can essentially demonstrate a good effort to follow guidelines to prevent the spread of COVID-19. The law is designed to reduce potential liability for COVID-19 claims by imposing high evidentiary burdens and will provide a powerful deterrent to suits filed arising from or related to COVID-19. What do employers need to know about this new law?
Florida’s COVID-19 Shield Law, Explained In A Nutshell
To ensure plaintiffs think twice before filing a lawsuit alleging injuries due to COVID-19, the new law requires that plaintiffs meet the standard for gross negligence and plead any allegations claiming a COVID-19 legal violation “with particularity.” This heightened requirement imposes a higher standard on an individual than if they were merely filing a general negligence or intentional tort claim.
This means that a plaintiff cannot generally point the finger and claim they experienced some COVID-19 injury while working, visiting, or performing some task at or with a covered establishment. From now on, a plaintiff will have to allege facts that identify the who, what, when, where, and how the injury happened in specific detail or their case will be bounced from court.
Before a plaintiff can even access the doors of the courthouse, the law requires that a plaintiff show on the face of the complaint that the defendant deliberately ignored COVID-19 prevention guidelines. Further, they will need to submit into evidence a signed affidavit from a doctor stating with reasonable medical certainty that an injury or death caused by COVID-19 was a result of the defendant’s actions. If a court determines that the plaintiff has not met their duty, the case will be dismissed and can only to refiled if the plaintiff complies with this provision.
As a result of the new law, if a plaintiff is able to survive the statutory immunity, they must still show by clear and convincing evidence that the defendant was at least grossly negligent and that the defendant’s gross negligence was the proximate cause of their alleged COVID-19 related injury, which is not an easy showing. Prior to the new law, proof of liability for COVID-19 claims could have already been challenging largely due to the difficulty of proving causation.
Key Takeaways for Employers
Entities covered by the law should be aware that it is retroactive – but does not apply to cases that have already been filed. The new law provides a one-year statute of limitations from the date that the alleged injury accrues.
You should first make sure that you fall under the definition of the entities that are protected by the new law if you wish to be protected by this litigation shield. Additionally, you will need to be able to objectively demonstrate that you complied with federal, state, and local COVID-19 prevention guidelines. Critically, you will not just be expected to comply with the guidelines but should also focus on the ability to demonstrate compliance in the event compliance is disputed.
You can demonstrate your compliance by publishing written policies and procedures designed to implement the latest CDC guidance to reduce the potential for the spread of COVID-19, providing training to all employees regarding effective COVID-19 mitigation efforts, and designing your workplaces to allow for appropriate social distancing.
Federal and state anti-discrimination agencies have issued guidance for employers that want to require workers to get a COVID-19 vaccine—but at least one lawsuit has claimed that employers can’t mandate a vaccine that is approved only for emergency use. While this argument might not hold up in court, employers should be aware of the risks associated with a vaccine mandate.
When employees refuse a vaccine, the employer should address their concerns and explain the reasons why the company has adopted a mandatory vaccination policy. An open dialogue and education will be key, as will following FDA updates in this regard and consulting with legal counsel.
There are many reasons why an employee may be unwilling to receive a COVID-19 vaccine, and employers may need to explore reasonable accommodations, particularly with employees who have disability-related and religious objections to being vaccinated.
Distribution of COVID-19 vaccines has been issued under the Food and Drug Administration’s (FDA’s) Emergency Use Authorization (EUA) rather than the FDA’s usual processes. But the FDA has said that the vaccine has met its “rigorous, scientific standards for safety, effectiveness and manufacturing quality” and that “its known and potential benefits clearly outweigh its known and potential risks.”
An employee who recently filed a lawsuit challenging an employer’s vaccine mandate argued that the EUA states that people must have “the option to accept or refuse administration of the [vaccine]” and be informed “of the consequence, if any, of refusing administration of the [vaccine] and of the alternatives to the [vaccine] that are available and of their benefits and risks.”
Although the employee in the case works in the public sector, many employment relationships in the private sector are at-will, which means either the employer or the worker can terminate the employment for any lawful reason. An employer that mandates a vaccine may argue the consequence of refusing a vaccine is being fired.
“Consensus in the legal community has been that, at least in the private sector, employers may require at-will employees to be vaccinated, subject to accommodations that may be required for medical or religious reasons,” said Kevin Troutman, an attorney with Fisher Phillips in Houston, and Richard Meneghello, an attorney with Fisher Phillips in Portland, Ore.
The U.S. Equal Employment Opportunity Commission (EEOC) has issued guidance indicating that employers generally can mandate COVID-19 vaccinations. “The EEOC specifically addressed vaccinations that are authorized or approved by the FDA,” noted Anne-Marie Vercruysse Welch, an attorney with Clark Hill in Birmingham, Mich.
The California Department of Fair Employment and Housing (DFEH) also recently said that the Fair Employment and Housing Act (FEHA) generally allows employers to mandate vaccines that have been approved by the FDA. The DFEH specially noted that the FDA has authorized and recommended three COVID-19 vaccines—all of which have been authorized under an EUA.
But vaccine mandates may still be risky for employers. It is possible that employees who are terminated for refusing to receive a vaccine authorized by the FDA under an EUA could try to pursue claims for wrongful termination in violation of public policy. The viability of such claims will depend on applicable state law regarding a potential public policy exception to at-will employment and how courts—state and federal—construe the EUA wording.
The regulatory framework is still unclear and a number of states are considering legislation that would prohibit employers from requiring employees to receive a COVID-19 vaccine. If these bills become law, the uncertainty regarding the EUA issue will become moot in those states, at least as of the time the laws go into effect.
The EEOC issued guidance stating that employees may be exempt from employer vaccination mandates under the Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act of 1964 (Title VII) and other workplace laws.
California’s guidance noted that the FEHA prohibits employers from discriminating against employees or job applicants based on a protected characteristic—such as age, race or sex—and requires employers to explore reasonable accommodations related to a worker’s disability or sincerely held religious beliefs.
“If an employee has a medical condition or sincerely held religious belief that would prevent them from being able to be vaccinated, their employer must go through the interactive process to determine if a reasonable accommodation is available,” Welch said. She recommended that employers have accommodation forms available to employees to begin the interactive process and document the steps the employer took to attempt to arrive at a reasonable accommodation.
Accommodations could take various forms, depending upon the employee’s job and setting. Employers may offer remote work, change the physical workspace, revise practices or provide a leave of absence. In each situation, the employer must determine whether an accommodation would enable the employee to safely perform the essential functions of their job.
Some employees might refuse to receive a vaccine for reasons that aren’t legally protected, such as a general distrust of vaccines. Employers need to be very thoughtful as they consider whether to mandate vaccines because employers may have to fire a material portion of their workforce who refuse to be vaccinated or allow some employees to ignore a company policy–which can lead to discrimination risks and employee morale issues.
“Most employers are encouraging vaccination rather than requiring it,” Welch observed.
Coburn recommended that employers focus on the following measures to encourage employees to receive a vaccination:
Employers that want to offer incentives should be mindful of wellness program limitations and offer alternative ways for employees who cannot get vaccinated to receive the incentives, Coburn noted.
One of Congress’s goals in the American Rescue Plan Act of 2021 (ARPA) was to provide enhanced unemployment benefits and continued healthcare coverage to employees who lose their jobs as a consequence of the COVID pandemic. The latter goal was achieved by the federal government agreeing to pick up the cost of such individuals’ COBRA coverage for up to six months beginning April 1, 2021. Individuals who voluntarily terminate their employment are not entitled to the COBRA subsidy.
Administering and communicating the new COBRA subsidy will pose challenges to employers. Here are the key features of the subsidy:
The subsidy automatically commences on April 1 for eligible individuals who are receiving COBRA coverage on that date. If a qualified beneficiary paid for COBRA coverage during the subsidy period, they must be reimbursed for such payment within 60 days after making the payment.
Employers, at their option, can elect to give qualified beneficiaries the opportunity to change their current coverage and choose different coverage as long as the cost of the new coverage does not exceed the cost of their current coverage. There is no requirement that employers provide this option to eligible individuals currently receiving COBRA coverage.
In contrast, employers must give former qualified beneficiaries who previously waived or dropped their COBRA rights but would be eligible for the subsidy if they had elected and maintained such coverage (i.e., those qualified beneficiaries who as of April 1, 2021, would still have time left in their original COBRA coverage period) the opportunity to take advantage of the subsidy. This will be an administrative challenge because it means employers will have to (i) identify such qualified beneficiaries, (ii) notify them of the availability of the subsidy, and (iii) provide a window for them to elect COBRA coverage. Unlike the current COBRA rules, which generally would require the coverage to commence retroactively to the date coverage was lost, this special election allows qualified beneficiaries to commence their coverage on April 1. The period for making this special election begins on April 1 and ends 60 days after the date the qualified beneficiary is provided the notification.
The COBRA subsidy ends before the expiration of the six-month period if the individual’s maximum COBRA coverage period ends earlier or the individual becomes eligible for other group health coverage or Medicare. Individuals receiving the COBRA subsidy must notify the plan administrator when they become eligible for other group health or Medicare coverage, and might be subject to penalties if they fail to do so. The ARPA does not explain whether eligibility for other coverage requires actual enrollment in, or mere eligibility to enroll in, other coverage.
The ARPA requires employers to update their current COBRA forms to explain the special subsidy rights and include other specified information. In addition to using the updated forms for those who become eligible for COBRA on or after April 1, the new forms have to be provided to qualified beneficiaries who became eligible for COBRA coverage before April 1 (assuming their original COBRA coverage period did not end before April 1). The Department of Labor (DOL) is required to provide model language for the election notice by April 10.
In addition, the ARPA creates a new notification requirement. Specifically, qualified beneficiaries who qualify for the subsidy must be provided a “Notice of Expiration of Period of Premium Assistance” that explains the date when their subsidy will end and certain other specified information. Generally, this new notice must be provided no more than 45 days before and no less than 15 days before the date the subsidy will end. The notice does not have to be provided to qualified beneficiaries whose subsidies end because their COBRA period ends. The DOL is required to provide a model notice for this requirement by April 25.
Penalties apply if these notices are not provided, so employers should be careful to ensure their notices are updated to include all of the required information and are distributed in a timely manner.
In sum, employers will have to develop a game plan for complying with the new COBRA subsidy. Challenges include identifying all of the eligible individuals who are entitled to the subsidy, updating COBRA forms, and providing timely notifications. Employers’ communication strategy also should take into account the extended election periods individuals have for electing COBRA coverage under prior DOL and Treasury guidance.
President Biden’s latest COVID-19 stimulus package – the American Rescue Plan – has been passed by Congress and will become law once the president signs it into effect this Friday (3/12/21). The measure provides $1.9 trillion in economic relief, with many of the specific items directly affecting employers. What do businesses need to know about this finalized legislation?
What Is Not Included In The American Rescue Plan?
Before examining the areas of law that changed, it is just as important to review portions of the initial proposal which were not included in the final version signed by the president. The three most critical pieces NOT included:
What You Should Do: While these provisions did not make it into the final American Rescue Plan, the White House and Democratic leaders have stated their intent to introduce new legislation in the future to fulfill these campaign promises.
Extension Of FFCRA Tax Credits
The federal Families First Coronavirus Response Act (FFCRA) expired on December 31, 2020 – and with it, covered employers’ obligation to provide emergency paid sick leave and emergency family and medical leave. Shortly before the end of the year, Congress extended the tax credit for employers who voluntarily continued to provide such paid leave through March 31, 2021.
President Biden’s original vision for the American Rescue Plan proposed to extend and expand emergency paid leave obligations in several key areas. However, the House version of the current COVID-19 relief bill does not extend the employer obligation to provide paid leave. Instead, the legislation merely extends the tax credit for voluntary provision of leave through September 30, 2021 and makes related changes. These provisions of the relief bill include the following:
Even though the current legislation does not extend the employer mandate to provide paid FFCRA leave, this is likely not the last conversation on this topic. There are indications that the Biden administration may attempt to resurrect pieces of the American Rescue Plan that did not make it into this bill into subsequent legislation in the near future.
What You Should Do: Determine which, if any, state and local paid sick leave laws may apply to you as many have been extended beyond the December 31, 2020 expiration of the FFCRA paid leave mandate. In addition, you should continue to monitor developments at the federal level. Although an extension of paid leave was not included in this stimulus package, it is still on the Biden administration’s and many members of Congress’s “to do” list. We could see new leave mandate proposals in the immediate future, so this will be one area to watch closely.
Boost For Vaccine Efforts
The American Rescue Plan provides over $15 billion aimed toward enhancing, expanding and improving the nationwide distribution and administration of vaccines, including the support of efforts to increase access, especially in underserved communities, to increase vaccine confidence and to fund more research, development, manufacturing, and procurement of vaccines and related supplies as needed. The upshot? We may see the widespread proliferation of vaccine availability even earlier than expected.
What You Should Do: Despite developments indicating that vaccines are likely to become much more widely available in the short term, many employers remain unprepared to deal with related issues. Those issues include not only the initial administration process, but also the extent to which the greater prevalence of vaccinated employees may (or may not) affect your safety protocols in terms of mask mandates, physical distancing, and related rules.
Relief For Small Businesses
The American Rescue Plan Act provides additional funding for small businesses, with a focused effort on those in hard-hit industries like restaurants and bars. The new bill provides $25 billion for a new Small Business Administration program focused on supporting restaurants and other food and drinking establishments. These grants are available for up to $10 million for those eligible and can be used to pay expenses like payroll, mortgage, rent, utilities, and food and beverages.
The bill provides an additional $7 billion for the Paycheck Protection Program, which provides small businesses with the potential for 100% forgivable loans. The additional PPP funding brings the total for the current round of the program to over $813 billion. Likewise, both bills expand PPP eligibility for certain nonprofit organizations.
The new law also provides $15 billion to the Economic Injury Disaster Loan (EIDL) Advance program designed to provide economic relief to businesses currently experiencing a temporary loss of revenue due to COVID-19. Like the PPP, the EIDL program is administered through the SBA to help qualifying businesses meet financial obligations and operating expenses that could have been met had the disaster not occurred. Priority funding is also allocated to businesses with less than 10 employees that the pandemic has severely impacted.
Finally, the law includes funding under the Shuttered Venue Operators Grant (SVOG) program, which had previously appropriated $15 billion in the December 2020 stimulus package. Eligible entities for the SVOG include live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, and talent representatives. Eligible entities for the SVOG program can also qualify for loans under the PPP.
What You Should Do: If you’re a small business operating in a hard-hit industry such as the hospitality sector, you should quickly determine eligibility for funding. Even if you’re not a bar or a restaurant, you might still be eligible for economic assistance through the various grants or loan programs detailed in the plan if the COVID-19 pandemic has severely impacted your business.
President Biden considers it imperative that workers impacted by the pandemic not lose out on emergency enhanced unemployment benefits, but the expanded unemployment assistance under the CARES Act and Stimulus 2.0 are set to expire soon in mid-March. Without an extension, millions of unemployed Americans impacted by the COVID-19 pandemic would be impacted. Luckily, both the House’s and Senate’s versions of the American Rescue Plan increase and further extend these unemployment benefits. However, there were some key differences between the two versions of the proposal, and the finalized version differs from the initial proposal.
The finalized legislation retains the $300 per week unemployment benefits, however, the version signed into law extends these benefits until September 6, which is more in alignment with Biden’s proposed outline for the American Rescue Plan.
Another major change related to the unemployment benefits in the finalized version is the addition of a provision making the first $10,200 in unemployment received in 2020 non-taxable for households with incomes under $150,000. This provision will go a long way to address the looming concerns for the millions of Americans currently on unemployment insurance.
What You Should Do: There is not much for employers to do in response to this provision of the bill, as it is primarily geared toward workers. However, it is important to understand the lay of the land in terms of unemployment insurance, as certain industries may face obstacles in hiring for certain positions for the time being. You should be aware that the benefits will expire on September 6 and adjust your hiring plans accordingly.
The American Rescue Plan means that the federal government will send $1,400 stimulus checks on top of the $600 payments issued through the December stimulus bill. Under the structure agreed to during lawmaking negotiations, the payments will phase out at a quicker rate for those at higher income levels compared with the initial proposal floated by President Biden. Those earning $75,000 per year and couples earning $150,000 will still receive the full $1,400-per-person benefit but those earning more than $80,000 and couples earning more than $160,000 will not be eligible.
Tax Credits And Benefits
The bill expands three important tax credits: the child tax credit, the earned income credit, and the employee retention credit. The bill also increases certain health and pension benefits.
The bill also provides for a 100% COBRA premium subsidy effective April 1 through September 2021 for those who are involuntarily terminated and want to remain on their employer’s health insurance. The employer would pass along the subsidy so that qualifying individuals would pay nothing for their COBRA coverage during this period.
Finally, the bill expands the class of those who are entitled to help with the cost of their insurance under the Affordable Care Act. Consumers would be able to receive assistance if their premiums exceed 8.5% of their incomes rather than the current income cutoff of $51,000. The bill provides over $24 billion to shore up childcare facilities which have been hit particularly hard by the pandemic. It provides help to childcare workers making less than $12 per hour.
We will keep a close eye on further legislative proposals and provide updates as warranted.
The COVID-19 extensions that the DOL and IRS had issued last year as part of their “Joint Notice” were set to expire at midnight on February 28th. For weeks, many have been asking the DOL and IRS for guidance on how to handle the statutorily-mandated expiration, and as a result of the lack of guidance, most plans, TPAs, insurers, and COBRA administrators had to make a judgment call as to how to proceed.
But – with 2 days to spare – DOL finally issued Disaster Relief Notice 2021-01 on February 26th.
Notice 2021-01 sets forth the DOL and IRS’ position that the COVID-19 extensions will continue past February 28th, and that all such extensions must be measured on a person-by-person basis – which was not clear from the prior guidance. Plans, TPAs, insurers, and COBRA administrators may have to reconsider their administrative practices in light of this new direction.
The original Joint Notice (85 Fed. Reg. 26351 (May 4, 2020) required that health and retirement plans toll a number of deadlines for individuals during the COVID-19 National Emergency, plus a 60-day period (the “Outbreak Period”) starting March 1, 2020.
But, as described in Footnote 4 of the Joint Notice, ERISA and the Code limit DOL and Treasury’s ability to toll deadlines to one year (“Tolling Period”).
The deadlines impacted in the Joint Notice are:
When there has been disaster relief guidance in the past, these periods have not bumped up against the statutorily-imposed one-year limit, so this COVID-19 extension is new territory – hence all the requests for the agencies to issue guidance regarding the expiration date.
In this late-breaking Notice 2021-01, DOL says it coordinated with HHS and IRS, and the agencies are interpreting the Tolling Period to be read on a person-by-person basis.
Specifically, DOL says that the Tolling Period ends the earlier of:
This means that each individual has his or her own Tolling Period!
For example, a COBRA Qualified Beneficiary (QB) has 60 days to elect COBRA, counted from the later of their loss of coverage or the date their COBRA election notice is provided. Under the Joint Notice, a QB’s 60-day deadline was tolled as of March 1, 2020, until the end of the Outbreak Period (that is, until the end of the National Emergency + 60 days).
At the end of the Outbreak Period, the deadlines would start running again, and the QB would have their normal 60-day COBRA election period (or the balance of their election period if it started before March 1, 2020).
BUT – with the 1-year expiration, DOL’s new Notice 2021-01 says that the one-year period does not end on February 28, 2021 for all individuals, but rather each individual has his/her own one-year Tolling Period.
For all of these examples, the tolling would end earlier if the National Emergency ends. In that case, the election period would end 60 days after the end of the National Emergency.
Notice 2021-01 also says that DOL recognizes that enrollees may continue to encounter COVID issues, even after the one-year Tolling Period expiration. DOL says that the “guiding principle” is for plans to act reasonably, prudently, and in the interest of the workers and their families. DOL says that plan fiduciaries should make “reasonable accommodations to prevent the loss of or undue delay in payment of benefits . . . and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.”
Notice 2021-01 does not provide any direction regarding what would constitute a “reasonable accommodation.” It sounds like plans may need a process to consider whether to continue to waive deadlines on a case-by-case basis, but without any guidance as to what parameters to apply. And DOL suggests that failure to do so could be a fiduciary issue.
Regarding communicating these changes to enrollees, DOL says:
DOL seems to be saying that plans may need to notify each individual when his or her one-year extension is about to be up and should include information about the Health Insurance Marketplace. In addition, plans may need to update prior communications that did not anticipate this new DOL interpretation.
DOL says it acknowledges that there may be instances when plans or service providers themselves may not be able to fully and timely comply with pre-established timeframes and disclosure requirements. DOL says that where fiduciaries have acted in “good faith and with reasonable diligence under the circumstances,” DOL’s approach to enforcement will be “marked by an emphasis on compliance assistance,” including grace periods or other relief.
Employers wanting to require workers to get a COVID-19 vaccination should be prepared to respond to workers’ concerns and make reasonable accommodations under federal and state law.
Mandating vaccinations could have benefits for employers and employees alike. Vaccinations will likely decrease the risk of spreading the virus in the workplace, reduce absenteeism, increase productivity and decrease employee health care costs. On the other hand, employees may react poorly to mandatory vaccination policies.
“Most employers are choosing to inform, educate and encourage their employees to consider the vaccine,” observed Katherine Dudley Helms, an attorney with Ogletree Deakins in Columbia, S.C. However, she noted, there may be industries where vaccination is critical and a mandatory approach makes sense.
“Even then, employees should be informed and educated as to why the business felt that approach was necessary,” she said. “If the employer has made the vaccine mandatory, it needs to be sure that it is ready to terminate or otherwise address employees who refuse and who are not entitled to a reasonable accommodation.”
Employers that require vaccinations may face discrimination claims if they deny accommodation requests based on medical or religious objections.
The Equal Employment Opportunity Commission (EEOC) issued guidance stating that employees may be exempt from employer vaccination mandates under the Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act of 1964 (Title VII) and other workplace laws.
Under the ADA, an employer can have a workplace policy that includes “a requirement that an individual shall not pose a direct threat to the health or safety of individuals in the workplace.”
If a vaccination requirement screens out a worker with a disability, however, the employer must show that unvaccinated employees would pose a “direct threat” due to a “significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation.”
If an employee who cannot be vaccinated poses a direct threat to the workplace, the employer must consider whether a reasonable accommodation can be made, such as allowing the employee to work remotely or take a leave of absence.
Title VII requires an employer to accommodate an employee’s sincerely held religious belief, practice or observance, unless it would cause an undue hardship on the business. Courts have said that an “undue hardship” is created by an accommodation that has more than a “de minimis,” or very small, cost or burden on the employer.
The definition of religion is broad and protects religious beliefs and practices that may be unfamiliar to the employer. Therefore, the employer “should ordinarily assume that an employee’s request for religious accommodation is based on a sincerely held religious belief,” according to the EEOC.
Helene Hechtkopf, an attorney with Hoguet Newman Regal & Kenney in New York City, said an employer will need to evaluate the employee’s job functions, whether there is an alternative job that the employee could do that would make vaccination less critical and how important it is to the employer’s operations that the employee be vaccinated.
Employers that mandate vaccines will have more issues to consider beyond providing reasonable accommodations. For instance, can an employer be held liable if a worker has an adverse reaction to the vaccine?
A severe allergic reaction to the vaccination is possible but rare, according to the U.S. Centers for Disease Control and Prevention (CDC).
“If an employer mandates vaccines, there is likely coverage for injury or illness under the employer’s workers’ compensation policy, but employers should check with their carriers,” Hechtkopf said. “If an employer merely encourages employees to obtain a vaccine, coverage under workers’ compensation policies may not be available.”
Employers must also be careful about collecting medical information. “If an employer requires employees to provide proof that they have received a COVID-19 vaccination from a pharmacy or their own healthcare provider, the employer cannot mandate that the employee provide any medical information as part of the proof,” according to the CDC.
Additionally, Helms noted, a number of states are contemplating legislation that would prohibit businesses from making the COVID-19 vaccination mandatory. So employers will have to monitor the rules in each applicable location.
Employers that plan to require employees to get a vaccine should develop a written policy, Hechtkopf said.
If a significant portion of the workforce refuses to comply with a vaccine mandate, the employer will be put in the very difficult position of either adhering to the mandate and terminating the employees or deviating from the mandate for certain employees, noted Brett Coburn, an attorney with Alston & Bird in Atlanta. This can increase the risk of discrimination claims.
“Rather than implementing mandates that could lead to such difficult decisions, employers may wish to focus on steps they can take to encourage and incentivize employees to get vaccinated,” he said. For example, employers may want to:
Regardless of whether the policy is for mandatory or voluntary vaccinations, Helms said, employers should communicate clearly and often with the workforce as to why the company believes that vaccinations are important and let employees know that other COVID-19 precautions remain in place.
On January 29, 2021, the Occupational Safety and Health Administration (OSHA) published “Protecting Workers: Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace.” The Guidance incorporates much of the existing guidance from the Centers for Disease Control and Prevention (CDC), adds to guidance OSHA previously issued, and reflects strategies and practices familiar to many employers.
The Guidance, which is intended for non-healthcare employers, is not mandatory and does not have the same legal effect as an OSHA standard. Nevertheless, it provides insight into OSHA’s views and previews what the agency may include in an Emergency Temporary Standard (ETS), which the Biden administration has directed OSHA to consider and potentially implement by March 15, 2021.
OSHA’s Guidance provides all employers an important opportunity to review their COVID-19 prevention strategies. While most of the Guidance is not new, it provides a handful of new recommendations employers may want to consider adding to their current COVID-19 protocols. The new recommendations include:
1. Establish a system to communicate and provide training to all employees on the employer’s COVID-19 policies and establish an avenue for employees to report COVID-19-related concerns anonymously, without fear of retaliation. All such communications should be in languages employees understand and provided in a manner accessible to individuals with disabilities.
2. Make COVID-19 vaccines available at no cost to all eligible employees and provide information and training on the benefits and safety of vaccinations. While OSHA does not specify the information or training it suggests employers provide, the Guidance references CDC’s “Frequently Asked Questions About COVID-19 Vaccination.”
3. Don’t distinguish between workers who are vaccinated and those who are not. All vaccinated employees should continue to wear a mask, socially distance, and follow other COVID-19 protocols (e.g., exclusion from the workplace following COVID-19 exposure). This is necessary because, as OSHA explains, at this time, “there is not evidence that COVID-19 vaccines prevent transmission of the virus from person-to-person.”
4. Provide all workers with face coverings (i.e., cloth face coverings and surgical masks), unless their work task requires a respirator, at no cost.
OSHA recommends that employers provide all workers with face coverings, which include cloth face coverings and surgical masks, for use in the workplace with limited exception and unless their work tasks require a respirator (such as an N95 filtering facepiece respirator) or would present a hazard. OSHA also recommends that employers consider acquiring masks with clear coverings over the mouth for all workers to facilitate lip-reading for employees who are deaf or have a hearing deficit. OSHA further recommends that employers require all other individuals at the workplace over the age of two, such as visitors or customers, to wear face coverings. Where employees with disabilities cannot wear a certain type of face covering, employers should discuss the possibility of providing a reasonable accommodation using an interactive process. OSHA’s Guidance on reasonable accommodations for face covering requirements dovetails with guidance on reasonable accommodations previously provided by the Equal Employment Opportunity Commission (EEOC).
OSHA has explained in previous guidance that cloth face coverings are not personal protective equipment (PPE), but can be used as recommended by CDC as a preventive measure in an employer’s COVID-19 exposure control plan. The new Guidance acknowledges that cloth face coverings can reduce exposure for the person wearing the covering in some instances.
The rest of the Guidance reviews additional practices and protocols that OSHA suggests are necessary for an effective COVID-19 prevention program. These are as follows:
1. Assign a coordinator. OSHA recommends assigning a workplace coordinator to be responsible for COVID-19 issues. The coordinator should administer the COVID-19 prevention program on the employer’s behalf.
2. Conduct a hazard assessment. It is important for employers to identify where and how workers may be exposed to COVID-19 and implement responsive COVID-19 hazard controls. As OSHA points out, it is important to consult with employees, especially those who are in the trenches, when conducting the assessment to understand the realities of the workplace.
3. Identify a combination of measures that will prevent and limit the spread of COVID-19. OSHA provides a hierarchy of controls, prioritizing engineering controls that eliminate the COVID-19 hazard entirely, followed by administrative policies and PPE to protect workers from COVID-19 hazards. OSHA lists several commonly recognized measures that employers should take and provides details to assist employers to implement these measures effectively:
a. Separate and send home infected or potentially infected people from the workplace.
The first step in any workplace safety hazard assessment is to eliminate the hazard. In the case of COVID-19, that means removing infected or potentially infected people from the workplace. We recommend that employers communicate clear expectations to employees and adopt employee and visitor screening practices consistent with state and local requirements and recommendations.
OSHA explains that most employers will follow a symptom-based strategy for identifying, separating, and sending workers home. OSHA also recognizes that there are some circumstances where “employers may consider a COVID-19 test-based strategy.”
b. Implement physical distancing in all communal work areas.
OSHA explains that the “best way to protect individuals is to stay far enough away so as not to breathe in particles produced by an infected person.” Keeping 6 feet of distance is generally recommended, but it is “not a guarantee of safety, especially in enclosed spaces or those with poor ventilation.” To increase physical distance, it is often important to limit the number of people in one place at any given time and increase physical space between people. OSHA recommends numerous strategies that many employers have adopted over the past 10 months, including telework, flexible work hours, staggered shifts, delivery of remote services, limiting the size of meetings, and using visible cues to encouraging distancing, to name a few.
c. Install barriers where physical distancing cannot be maintained. OSHA recommends installing transparent shields or other solid barriers at fixed workstations where workers cannot maintain 6 feet from other people.
f. Use applicable PPE to protect workers from exposure. When other measures cannot be implemented or do not protect workers fully, the Guidance concludes that current OSHA standards require that employers provide PPE as a supplement to other controls. (As discussed above, OSHA maintains that cloth face coverings are not PPE.) The standards referenced in the Guidance include OSHA’s PPE and respiratory protection standards, 29 CFR 1910, Subpart I, which require employers, at a minimum, complete a written hazard assessment to determine the need for PPE and PPE appropriate for the hazard and corresponding procedures and training. Therefore, employers are responsible for determining when and what PPE is necessary to protect workers while in the workplace. If an employer determines that an employee must wear PPE while at work and to perform a job safely, the PPE should be provided at no cost to workers and maintained in a safe condition. In application to COVID-19, CDC has addressed when PPE is necessary for job tasks that require interactions with individuals known or suspected of having COVID-19 and, depending on the task, recommends PPE consisting of surgical masks or respirators, such as the filtering facepiece respirators (e.g., N95) or personal air purifying respirators (PAPRs), with eye and face protection (i.e., face shields), protective gowns, and gloves.
4. Consider protections for workers at higher risk for severe illness. Workers with disabilities may be entitled to “reasonable accommodations” under state and federal law to protect them from the risk of contracting COVID-19. The EEOC discusses reasonable accommodations that could offer protection to an employee who is at higher personal risk from COVID-19 due to a pre-existing disability in D.1 of its “What You Should Know About COVID-19 and the ADA and Rehabilitation Act.” OSHA encourages employers to consider whether workers who have an increased personal risk of contracting a severe respiratory illness from COVID-19 (including older adults and anyone who has a serious medical condition) can do some or all of their work at home or in a less densely occupied, better ventilated workplace.
5. Establish a system for communicating effectively with workers. Employers should ask workers to report, without fear of reprisal, symptoms of COVID-19, possible COVID-19 exposures, and possible COVID-19 hazards at work. Similarly, employers should establish channels for communicating important information to employees and, of course, communicate with workers in a language they understand.
6. Educate and train workers on COVID-19 policies and procedures. OSHA recommends that, along with training workers on company policies, employers educate workers about the basic facts about COVID-19, including how it is spread. This can go a long way to helping workers understand why proper distancing, appropriate face coverings, and other measures are important to protect them. OSHA outlines a number of other topics that should be included in worker and supervisor training. OSHA recommends that the training be in plain language that workers understand (including non-English languages and American Sign Language or other accessible communication methods, if applicable).
7. Instruct workers who are infected or potentially infected to stay home and isolate or quarantine. OSHA recommends attendance policies that are non-punitive.
8. Minimize the negative impact of quarantine and isolation on workers. OSHA recommends that, “when possible,” employers allow workers to telework, use paid sick leave, if available, or consider implementing paid leave. Employers that were covered under the Families First Coronavirus Response Act (FFCRA), generally employers with less than 500 employees, can still take advantage of tax credits in connection with voluntarily providing paid leave for COVID-19 related reasons through March 31, 2021.
9. Isolate and send home workers who show symptoms at work.
10. Perform enhanced cleaning and disinfection after people suspected or confirmed to have COVID-19 have been in the workplace. Employers should follow CDC’s guidance, which includes increasing air circulation, cleaning, and disinfection using an EPA-registered disinfectant identified for use against SARS-CoV-2, the virus that causes COVID-19. Employers are required to comply with existing OSHA standards, including those related to hazard communication and PPE appropriate for exposure to cleaning chemicals.
11. Provide guidance on screening and testing. Employers should follow state and local guidance for screening and viral testing (as distinguished from antibody testing) in workplaces. Employers that adopt workplace testing programs should inform workers of testing requirements. We recommend employers review recent guidance from the CDC placing a new emphasis on informed consent prior to testing.
12. Record and report COVID-19 infections and deaths as required by existing OSHA regulations. Employers must record work-related cases of COVID-19 illness on their Form 300 Logs if certain criteria are met. An employer has an obligation to record an employee’s COVID-19 illness if: the exposure is work-related, it results in a fatality, lost workdays, job restrictions or transfers, or otherwise requires medical treatment beyond first aid. Employers must report to OSHA a COVID-19 illness if an employee is admitted to the in-patient service of a hospital within 24 hours of a workplace exposure to COVID-19 or if an employee dies within 30 days of a workplace exposure to COVID-19. In the case of a hospitalization, an employer has 24 hours to report to OSHA from when the in-patient hospitalization occurs or when the employer learns of the hospitalization if the latter occurs later. In the case of a fatality, the employer must report a work-related COVID-19 death within 8 hours of the death or within 8 hours of learning of the employee’s death, if the death occurred within 30 days of the workplace exposure. These are fact-driven, often complicated, analyses and not every employee who tests positive for COVID-19 needs to be recorded on an employer’s OSHA 300 Log or reported to OSHA, for that matter.
13. Implement protections from retaliation and set up an anonymous process for workers to report COVID-19-related hazards. OSHA explains that the Occupational Safety and Health Act prohibits employers from discriminating against an employee for raising “a reasonable concern about infection control related to COVID-19.”
14. Comply with existing OSHA standards. OSHA reminds employers that all OSHA standards that apply to protecting workers from infection, including requirements for PPE, respiratory protection, sanitation, protection from bloodborne pathogens, and requirements for employees to access medical and exposure records, remain in place. As mentioned above, while there is no OSHA standard specific to COVID-19, employers still have an obligation under the General Duty Clause to “provide a safe and healthful workplace that is free from recognized hazards that can cause serious physical harm or death.”
Employers should consider the following next steps:
The year 2020 highlighted the need for all of us to be agile, adjusting and responding as our world shifted, science evolved, and best practices for responding to COVID-19 developed and changed. This year is shaping up in a similar manner.
Article courtesy of Jackson Lewis
Days before his inauguration, President-elect Joe Biden outlined an agenda for COVID-19 relief and economic recovery that includes federal aid for health care expenses, such as providing subsidized COBRA coverage.
The relief and stimulus proposals in Biden’s $1.9 trillion American Rescue Plan package range from asking Congress for additional $1,400 checks for low- and middle-income wage earners to reimbursing employers with 500 or fewer employees for providing paid leave. Other provisions focus on helping consumers with health care expenses.
According to a Jan. 14 fact sheet from the Biden-Harris transition team, the new administration will immediately ask Congress to:
“Roughly two to three million people lost employer-sponsored health insurance between March and September, and even families who have maintained coverage may struggle to pay premiums and afford care,” according to the transition team’s fact sheet. “Together, these policies would reduce premiums for more than 10 million people and reduce the ranks of the uninsured by millions more.”
Employers may require terminated workers who choose to continue coverage under the employer-sponsored health plan for up to 18 months to pay for COBRA coverage, with premiums limited to the full cost of the coverage plus a 2 percent administration charge. That cost, however, is not affordable for many newly unemployed workers.
During the pandemic, some employers are choosing to pay for the COBRA coverage of former employees who were laid off, or to do so for current employees who lost group health plan coverage when they were furloughed or had their hours reduced.
Last April, the Department of Labor and the IRS issued regulations extending the deadlines for COBRA notices, elections and premium payments from March 1, 2020, until 60 days after the end of the ongoing COVID-19 national emergency. “While the usual statutory penalties for COBRA violations should not apply [for now], failing to notify COBRA-qualified beneficiaries of their rights may increase the likelihood of a breach of fiduciary duty claim,” Emily Meyer, an attorney with Cohen & Buckman in New York City, wrote in November.
Among other health care-related agenda items, the new administration will ask Congress to:
The fate of the health care provisions is uncertain at this time. Congressional Democrats welcomed Biden’s proposals. Rep. Steven Horsford, D-Nev., for instance, issued a statement saying he was “glad to see that the plan provides critical subsidies [for COBRA and ACA plans] to help American families access health care during this critical time.”
Republicans have criticized the extent of the new proposals, estimated to cost an addition $1.9 trillion over existing relief. Efforts by Congress “should be strategic, focusing on families and small businesses in need,” said Sen. Rick Scott, R-Fla.
Every year Applicable Large Employers (ALEs) must file and furnish their ACA information to the IRS and their employees, respectively. Failing to do so can result in significant IRS penalty assessments.
To recap, only groups with 50 or more full time or equivalent employees or those groups under 50 with self funded medical coverage are required to furnish their employees with copies of either the 1095-B or 1095-C forms (based on group size)
Employers will need to be sure you meet the following IRS deadlines for complying with the ACA’s Employer Mandate for 2020:
Failing to meet these deadlines can result in penalties under IRC 6721/6722, which the IRS is issuing through Letter 972CG. If you receive one of these notices, you only have 45 days from the issue date to respond to the penalty notice.
For the 2020 tax year, the penalties associated with failing to comply with IRC 6721/6722 for employers with average gross receipts of more than $5 million in the last three years are as follows:
Failure to timely file and furnish correct information returns
If employers file ACA information returns with the IRS no more than 30 days after the deadline they could be subject to a $50 penalty per return not filed, not to exceed an annual maximum of $556,500. If the ACA information returns are 31 or more days late, up to August 1, 2021, the penalty per return jumps up to $110, not to exceed an annual maximum of $1,669,500. After August 1, the penalty amount steepens to $270 per return, not to exceed an annual maximum of $3,339,000. For intentional disregard, meaning the deadline was missed willfully, the penalty more than doubles to $550 per return with no annual maximum limit.
The penalty amounts for employers with gross receipts of $5 million or less in the last three years will have the same penalty amounts per return with lower annual maximums, except in the case of intentional disregard. For more information on the penalty schedules for failing to meet the IRS deadlines click here.
As if the penalties for failing to meet the filing and furnishing deadlines weren’t enough, the IRS is also issuing penalties to employers that fail to comply with the ACA’s Employer Mandate. As a reminder to employers in conjunction with the Employer Shared Responsibility Payment (ESRP), the ACA’s Employer Mandate, Applicable Large Employers (ALEs), organizations with 50 or more full-time employees and full-time equivalent employees, are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is affordable for the employee, or be subject to Internal Revenue Code (IRC) 4980H penalties. These penalties are being issued through IRS Letter 226J.