On June 22, 2017, Senate Republicans released a draft of the Better Care Reconciliation Act (BCRA), their much-anticipated version of the legislation to “repeal and replace” the Affordable Care Act (ACA). Despite rumors of a re-write of the American Health Care Act that passed in the House of Representatives by a narrow vote on May 4, the BCRA largely mirrors the structure and certain key measures of the House version (see our previous alert dated May 5, 2017). On the other hand, the BCRA has already been criticized by the more vocal opponents of the ACA in the Senate for not going far enough to eliminate measures established under the ACA. The Senate could vote on the BCRA as early as next week, but given the uncertainty surrounding its success, it is likely to undergo amendments prior to then. This alert provides an overview of key provisions of the BCRA and how, as drafted, it would affect aspects of the ACA.
In an article published by Employee Benefit News, Bass, Berry & Sims attorney Doug Dahl provided guidance for employers who now must comply with the Department of Labor’s (DOL) fiduciary rule. After months of delay, the rule went into effect on Friday, June 9, 2017, and provided guidance on who is considered a fiduciary under the new rule. Doug outlined the actions that employers and other plan sponsors should consider, such as identifying whether advisors are fiduciaries or have conflicts of interest, communicating plan details and watching IRA rollovers to ensure plan providers are not recommending specific plans or investments. However, not all plans are created equal. “The smaller a plan is, the more likely [it is] that you’re going to have conflicted advice under the new rule,” said Doug. “The key is knowing who the company’s investment fiduciaries are and making sure they are complying with the responsibilities they have toward the retirement plan and its participants.”
The full article, “What Employers Should Do To Ensure Fiduciary Rule Compliance,” was published on June 11, 2017, by Employee Benefit News and is available online.
The unwinding continues. The U.S. Department of Labor (DOL) recently announced the withdrawal of the Obama administration’s previously issued informal guidance on independent contractors and joint employers.
In a very brief statement, the DOL announced that it was withdrawing a 2016 interpretation of the Fair Labor Standards Act (FLSA) which expanded the joint employer standard from one requiring a business to have direct control over an employee to a more broad and ambiguous standard of indirect control.
Bass, Berry & Sims attorney Doug Dahl commented on the Department of Labor’s (DOL) new fiduciary rule that will impact how and when an individual is treated as a fiduciary under ERISA if that person provides investment advice. While many expected a further delayed applicability, parts of the new rule will take effect June 9, 2017. Because of the new regulations, “some advisors may decide to exit the retirement planning sector of the financial industry or they may close up shop altogether rather than deal with lawsuits and enforcement issues,” said Doug.
In an article published by InvestmentNews, Bass, Berry & Sims attorney Doug Dahl provided insight on a recent district court ruling which allowed allegations that using multiple record-keeping firms in 403(b) retirement planning breaches fiduciary duty to continue. With many other prominent institutions involved in similar litigation, this particular lawsuit targets Emory University, and the decision to move forward could potentially impact the success of similar claims in those other cases. The plaintiffs claim that using multiple record-keeping systems burdens participants with fees because it is cost prohibitive and doesn’t adequately leverage assets to drive lower pricing. “This is a relatively new, or at least a newly successful, claim,” said Doug. While the article notes that it is still unclear whether there is anything necessarily wrong with the use of multiple service providers, Doug adds “I think the fact that the claim continued is definitely noteworthy.”
The full article, “Use of Multiple Record Keepers Could Hurt Defendants in 403(b) Lawsuits,” was published by InvestmentNews on May 19, 2017, and is available online.
In a big win for California employers, the California Supreme Court ruled on May 8, 2017 that employers are not required to provide employees with a “day of rest” on a “rolling seven-day basis,” but must only ensure that employees receive no less than an average of one day of rest for every seven-day workweek in a calendar month. This means that employers may, from time to time, require that employees work seven consecutive days, as needed, without fear of running afoul of an ambiguous provision of the California Labor Code, which requires that every employee receive one day of rest for each seven days worked.
On May 4, 2017, the House of Representatives narrowly passed a bill that will repeal and replace the 2010 Patient Protection and Affordable Care Act (ACA). The Republican-backed American Health Care Act (AHCA) passed in the House with a final vote of 217 to 213. President Trump, the Trump Administration, and House Speaker Paul Ryan consider this a major win. However, the AHCA may face significant opposition in the Senate, so it is uncertain whether the AHCA in its current form will become law.
Since 2009, many large retailers in California have been sued for failing to provide “suitable seating” in accordance with the state’s wage orders. Some of those employers have recently been forced to pay significant settlement awards, providing another cautious reminder to employers of the importance of complying with California’s suitable seating requirements.
In an article published by SHRM online, Bass, Berry & Sims attorney Doug Dahl discussed protected genetic information and wellness program design. The article outlines recent legislation proposed by the House Education and Workforce Committee that intended to clarify differences between the wellness program rules under several federal statutes and regulations. The bill subsequently stalled in the House of Representatives because many opponents believe the legislation allowed businesses to use the genetic information employees provided through wellness programs in negative ways.
While the definition of genetic information is broad, as Doug points out in the article, “[t]he disease of a family member, including a spouse or adopted child, and how it is manifested is considered genetic information. Obesity is the primary issue many wellness programs are designed to help. Heart health is another focus, as are smoking cessation and mental health issues.”
The full article, “Bill to Harmonize Wellness Program Requirements May Have Stalled,” was published by SHRM online on April 20, 2017, and is available online.
In an article published by Law360, Bass, Berry & Sims attorney Tim Garrett provided insight on the continued increase in employment discrimination lawsuits, which may be due in part to fee-shifting in such lawsuits. Fee-shifting is a mechanism by which a prevailing party in a lawsuit can require the losing party to pay the reasonable attorneys’ fees of the prevailing party. The concept sounds fair, but in employment discrimination cases the only party who benefits from fee-shifting is the employee. Employers are hopeful that a new law recently passed in Ohio will start a new trend to reverse what employers perceive as unfairly one-sided fee-shifting. Time will tell whether a new trend has begun, and the new law at least may spark an interesting public policy debate.
The full article, “A New Fee-Shifting Trend In Employer Discrimination Cases?,” was published by Law360 on April 18, 2017, and is available online.
Additional insights can be found in my earlier blog post on the topic, “Employer Recovery of Fees and Costs in Discrimination Cases – Is There a Trend Starting?,” published on March 31, 2017.